BUSINESS NEWS HEADLINES FEB. 19

Pharmaceuticals, milk, and livestock in for stiffer competition with EVFTA

BUSINESS NEWS HEADLINES FEB. 19

Pharmaceuticals, milk, and livestock will face increasing competitive pressure from imported products from the EU after the EU-Vietnam Free Trade Agreement (EVFTA) comes into effect, according to the latest report by VnDirect Securities Corporation.

On February 12, the European Parliament ratified the EU-Vietnam Free Trade Agreement (EVFTA) and the EU-Vietnam Investment Protection Agreement (EVIPA). The two agreements are expected to boost trade and investment between Vietnam and the EU in the next decade and facilitate Vietnam to further integrate into the global supply chain.

The reduction of tariffs on goods imported from the EU will increase the opportunities of Vietnamese businesses to access high-quality machines, equipment, and new technologies from Europe at lower prices. This will help Vietnamese businesses improve labour productivity as well as increase high-tech content, thereby opening opportunities for Vietnamese enterprises to integrate more deeply into the global value chain.

However, the penetration of European goods into Vietnam will create competitive pressure forcing domestic manufacturers to reduce production costs while improving product quality. Finally, Vietnamese consumers will be the biggest beneficiaries.

Accordingly, around half of EU pharmaceutical exports will be duty-free immediately, and the rest after seven years. The reduction of import duties on pharmaceutical products from the EU will increase the pressure on domestic manufacturers.

Frozen pork meat will also be duty-free after seven years, dairy products after five years, and processed food after seven years, and chicken after 10 years. Currently the EU’s livestock products exported to Vietnam are subject to tariffs of 10-40 per cent. The reduction of import tariff on livestock products from the EU will improve their penetration of the Vietnamese market and pose significant competition to domestic products.

Some European countries are famous in dairy products. The reduction of duties on milk products imported from the EU will increase the competitive pressure on domestic milk manufacturers. However, the EVFTA also opens up opportunities for Vietnamese dairy companies to gain more access to production technology and milk ingredients from Europe, which are highly appreciated for quality and food safety, thereby contributing to improving the quality of domestic dairy products.

It is estimated that Vietnam’s export value to the EU could jump by about 20 per cent in 2020, 42.7 per cent in 2025, and 44.4 per cent in 2030 compared to the scenario without the EVFTA. At the same time, Vietnam’s imports from the EU would also increase, but at a lower pace.

Accordingly, Vietnam commits to abolishing 48.5 per cent of tariffs lines on goods exported from the EU immediately after EVFTA takes effect, equivalent to 64.5 per cent of total import value from the EU. Within 10 years of the EVFTA in effect, Vietnam commits to abolishing over 98.3 per cent of the tariff lines on EU exports, equivalent to 99.8 per cent of total import value from the EU.

Currently, the EU is Vietnam’s fourth-largest supplier of goods. EU exports to Vietnam mainly include machinery, chemicals, and transportation equipment, which are essential for the transformation and modernisation of the Vietnamese economy.

Sabeco streamlines operations fueled the profit

Sabeco recorded a drop in revenue in the fourth quarter while generating a rise in after-tax profit thanks to optimising expenses and raising the price of its products.

Sabeco (HSX: SAB) has just published its business report for the fourth quarter of 2019. Accordingly, its revenue fell by 7 per cent while after-tax profit rose by 17 per cent. According to Viet Capital Securities, its sales performance was impacted by the rumours around SAB’s owner.

Last October, false information reached the public about SAB being under the ownership of a Chinese company. However, the news was quickly stamped out as Deputy Minister of Industry and Trade Do Thang Hai affirmed that ThaiBev subsidiary Vietnam Beverage seized 53.59 per cent of SAB’s shares at a National Assembly meeting in the same month.

Otherwise, the after-tax profit improved because of a hike in the price of Saigon Lager products in last August and Saigon Special products in October. Also, the decline in costs for materials and cost-optimisation measures for transportation have contributed significantly to the performance.

ThaiBev denies it will sell stake in SabecoThaiBev struggling to offload SabecoHeineken sells 5.2 million Sabeco's stocks
For the full year of 2019, Sabeco recorded a 5 per cent growth in revenue and a 21 per cent increase in after-tax profit. For the next year, Sabeco's business is forecast to not maintain the double-digit output growth due to Decree No.100/2019/ND-CP outlining sanctions for drink-driving, according to the latest report of SSI Research. Specifically, under the impact of the new regulation, growth may be 6-7 per cent in 2020.

The decree's effects on Vietnamese beer producers have been outlined in detail by VIR in a previous article.

According to Decree No.100/2019/ND-CP, drunk car drivers shall be fined between VND6-40 million ($260-1,750) instead of the previous fine of about VND19 million ($825) if tests show that alcohol content exceeds 80mg per 100ml of blood or 0.4mg per litre of breath. Additionally, their licences shall be revoked for 22-24 months compared to just 4-6 months previously.

Meanwhile, drunk motorcyclists shall be imposed fines of VND2-8 million ($87-348) and their licences shall be suspended for 22-24 months if tests confirm alcohol content in blood or breath. Drunk cyclists shall be fined up to VND600,000 ($26).

Vietravel in choppy waters after CODIV 19 drives down profit

The coronavirus epidemic is just another drop in the troubles ailing Vietravel that has just reported a loss in the last quarter of 2019.

According to the Vietnam National Administration of Tourism, in the next three months, the Vietnamese tourism industry will be hurt by the novel coronavirus (CODIV 19) to the tune of about $5.9-7.7 billion. The number of home and foreign travellers will reduce by at least 50 per cent, which is the main reason for the damage, as Chinese travellers account for more than half .

The current epidemic is bad news for Vietravel as the company recorded a loss of VND14 billion ($608,700) in the last quarter of 2019, according to the company's consolidated financial report.

The after-tax profit of Vietravel in 2019 was only VND39.93 billion ($1.74 million), down 32 per cent compared to 2018.

It is notable that the company's ratio of profit to net sales is quite low, less than 1 per cent. In 2018, the net revenue of Vietravel was more than VND7 trillion ($304,350), and the after-tax profit of the parent company was VND56 billion ($2.43 million), according to its consolidated financial report from the year.

Thus, the decline in the tourism sector's revenue in the first quarter of 2020 will put pressure on the company in the following quarters. The company's late entry into the aviation industry has also been hampered by the impacts of the epidemic, pushing off the timeline of profitability.

It is known that the company issued more than VND700 billion ($30.43 million) of bonds to set up Vietravel Airlines. These are 24-month bonds with an interest rate of 9.25 per cent a year for the first 15 months and an increase of 11 per cent a year for the remaining time.

The revenue of Vietravel mainly comes from selling domestic and foreign tours. In its 2019 prospectus, Vietravel set the target to maintain its leading position in the country and become a top 10 travel company in Asia.So far, the company has yet to announce its goals for 2020.

At the end of September 2019, Vietravel traded on UPCoM with the code VTR and was the first domestic travel company to go on the stock exchange. The initial reference price was VND40,000 ($1.74) per share. The peak for the stock was VND90,980 ($3.96) in October. Currently, the stock is trading at around VND43,000 ($1.87).

Regarding the impact of CODIV 19, Vietravel's representative told Saigon Tiep Thi Online that the company had to cancel about 100 tours for nearly 2,000 customers to China and vice versa between January 22 and the end of February.

“In case the customer cannot choose an alternative tour instead, Vietravel will refund the tour cost in full. With the cancellation of tours to China, in addition to causing damage to our revenue, we will have to take on additional costs for visa applications and cancellation fees to service providers,” the Vietravel representative shared.

Korea Investment Management (KIM) acquires Vietnamese fund manager

Korea Investment Management has been approved to acquire all of the shares issued by local Hung Viet Fund Management JSC.

The Chairman of the State Securities Commission (SSC) has recently issued Decision No.89/QD-UBCK dated February 11, 2020 approving the transaction of Hung Viet Fund Management JSC's shares.

Accordingly, all shareholders of Hung Viet Fund Management JSC transferred altogether 2.5 million shares, equivalent to 100 per cent of its charter capital, to Korea Investment Management Co., Ltd. (KIM – 99 per cent) and two foreign individual shareholders, Yun Hang Jin and An Jong Hoon (0.5 per cent each)

KIM is a familiar name in Vietnam’s securities market with assets under management in the scale of billions of dollars. KIM Vietnam Growth Securities Master Investment Trust is KIM’s biggest fund in Vietnam with assets under management of $850 million.

In the beginning of 2018, Vietnam's securities market witnessed a surge in foreign capital inflows from Korea, with KIM taking the spotlight. Besides investing in bluechip stocks, KIM also has a number of VFMVN30 ETF fund certificates.

Paving the way for paramount infrastructure projects

Vietnam is pushing ahead and removing obstacles in order to attract more investment into infrastructure development and meet the United Nations’ related Sustainable Development Goals (SDGs).

Deputy Minister of Planning and Investment Tran Quoc Phuong told VIR that the ministry is expediting the collection of ideas and feedback from ministries, localities, and the business community to have “high-quality input” for the draft Law on Public Private Partnerships, before submitting it to the National Assembly for discussion this October.

“We expect that the draft law will be adopted soon, so that we can have a sound legal framework to attract infrastructure investment. Without such a law, it would be quite difficult to attract this type of investment,” Phuong said. “One of the key points of the law is the risk-sharing mechanism between the government and the investor, and such a mechanism is now under discussion.”

Infrastructure in Vietnam refers to many sectors, like telecommunications, power, transport, water and sanitation, rural and urban roads, railways, bridges, and seaports.

Under the draft law, the government proposed two options for risk sharing mechanisms in terms of revenue. Firstly, the government would bear a maximum of 50 per cent of losses between the actual revenue and the committed one in the contract. Secondly, financiers will commit to share with the government not less than 50 per cent of the difference in proceeds between the actual and the committed figures.

Nobufumi Miura, chairman of the Japanese Chamber of Commerce and Industry, said that many Japanese investors are interested in implementing infrastructure projects in Vietnam. However, they need a clear public-private partnership (PPP) framework for them to carry out these projects.

“To encourage overseas participation in PPP projects, it is vital that the government clarifies the risk allocation between the government and the private party, and provides comprehensive support for the private party to ensure a reasonable return from their investment,” said Miura.

Vietnam released Decree No.63/2018/ND-CP in 2018 on PPP investment. However, Phuong asserted that a law on PPP would help protect investors’ rights and benefits more effectively.

Last week, Standard Chartered Bank released its report “Opportunity2030: The Standard Chartered SDG Investment Map”, stating that in Vietnam, the greatest SDG investment opportunities are found in transport infrastructure and improving digital access, both key indicators of SDG 9, which encourages improvement in industry, innovation, and infrastructure.

Opportunity2030 states that achieving universal digital adoption – a combination of mobile phone subscriptions rates and internet connectivity – will require private-sector investment of around $24.4 billion between now and 2030, while significantly improving Vietnam’s transport infrastructure will require an estimated private-sector investment of $20.1 billion.

The potential private-sector investment opportunity in the water sector is smaller, but as 11 per cent of Vietnam’s population still do not have access to clean water and sanitation (a key SDG 6 indicator), investment will make a real impact.

To help achieve universal access by 2030 will require an estimated private-sector investment of $1.3 billion.

At last month’s meeting between the government and localities, Prime Minister Nguyen Xuan Phuc stated that in 2020, the government will boost the construction of many major infrastructure projects and facilities in the power, water, traffic, and urban development sectors.

Waste-to-power plant of T&T-Hitachi Zosen JV added to PDP VII

The waste-to-power plant, developed by a joint venture between T&T Group and Hitachi Zosen Corporation, came a step closer to construction after being approved to be added into the adjusted Power Development Planning VII.

The prime minister has approved the Ministry of Industry and Trade’s proposal to add Xuan Son waste-to-power electricity project to the adjusted Power Development Planning VII.

The project will be located in Ba Vi district, Hanoi and will be connected to the national grid with the capacity of 15.5MW by incinerating 1,000 tonnes of waste a day.

Earlier in March 2018, T&T Group and Hitachi Zosen Corporation signed an MoU to develop waste-to-power electricity plants in Hanoi. Accordingly, the two parties would establish a joint venture to build the first project in Hanoi and a number of others later on.

T&T and Hitachi Zosen would create the design, collect capital, build, and operate the plant.

This is the first project of T&T in Hanoi and would serve as the premise for upcoming projects in other places.

In September 2019, Thai Nguyen People’s Committee approved T&T Group's plans to develop an industrial waste treatment plant with the total investment capital of VND3.6 trillion ($156.52 million). VND720.46 billion ($31.32 million) of this investment capital is the group’s equity while the remaining VND2.88 trillion ($125.22 million) will come from loans.

Covering an area of 28.53 hectares in Pho Yen town, the construction of the project will be divided into two phases. The first phase will cost VND2.03 trillion ($88.26 million) and has the capacity of treating 300 tonnes of industrial waste and 300 tonnes of harmful waste a day. In addition, the plant will generate 13MW of power.

The construction of the second phase is expected to be kicked off in 2023 with a total investment capital of VND1.56 trillion ($67.83 million). This phase will have a daily treatment capacity of 600 tonnes of industrial waste and medical waste. Besides, it will be able to treat 300 tonnes of harmful liquid waste a day.

State capital in Viglacera to be fully divested in 2010

The Construction Ministry will divest the remaining State capital in ceramic and tile producer Viglacera Corporation this year, said head of the ministry’s Enterprises Management Department Dao Minh Thanh.

The State capital in Viglacera now accounts for 38.85 percent following previous divestments.

The firm also elected a new board of directors at the annual shareholder’s meeting, and listed more than 448.3 million shares on the Ho Chi Minh Stock Exchange.

Viglacera also won the “World Class” title of the Global Performance Excellence Award (GPEA) awarded by the Asia-Pacific Quality Organisation in 2019.

This is the only Vietnamese firm to receive the “World Class” title in the large-scale production category of the 2019 GPEA, the only formal international recognition of performance or business excellence./.

Smoother path expected after bumpy week for oil

Despite global oil prices experiencing a tumultuous week due to the huge drop in Chinese oil demand, some Vietnamese oil and logistics businesses remain positive about the future.

Following the coronavirus outbreak, global oil prices have suffered a sharp decline, with the price of crude falling to a year low on February 4 as traders reacted to the magnitude of the health crisis in China. Brent, the global oil benchmark, fell by 1.3 per cent to $55.91 a barrel in the afternoon, and West Texas Intermediate dropped as much as 2.2 per cent, trading 0.5 per cent lower at $51.33.

China is in oil oversupply as the spread of the virus has hampered travel demand in the country. Bloomberg pointed out that Chinese crude need has fallen by about three million barrels per day, equal to 20 per cent of total consumption.

China-based oil and gas company Sinopec Corporation was forced to cut about 600,000 barrels per day in February, or 12 per cent – the biggest drop in the last 10 years. Moreover, nearly 20 independent refineries in the eastern area of Shandong have reduced operations by 30-50 per cent over the past few weeks.

The Organization of Petroleum Exporting Countries (OPEC) is currently locked in talks over how to deal with the crisis, and is reportedly considering an informal proposal to curb output by about 500,000 barrels a day.

Amid the worrying situation, gasoline prices in Vietnam have recorded a slight decrease since January 31. E5 RON 92 price slumped to VND19,268 (84 US cents) per litre, RON95 went down to VND20,122 (87 US cents) per litre, and diesel oil price dropped to VND16,136 (70 US cents) per litre.

Nguyen Duyen Cuong, deputy general director of Binh Son Refining and Petrochemical JSC (BSR), the operator of the Dung Quat oil refinery, told VIR that as China occupies 17 per cent of global GDP, the fall in oil price caused by the health crisis will keep impacting the local petroleum industry. The oil refineries in the whole world estimate to cut 3-5 per cent capacity, affecting petrochemicals.

“To deal with the burden, BSR will keep boosting negotiations with oil field owners by comparing the common price in the market to get the most favourable purchasing price. Besides this, the company will also optimise purchasing domestic oil to increase profits,” said Cuong.

The drop in oil prices has resulted in a shortfall in the national budget. Last year, the government submitted $65 per barrel as an estimate (up $15 against 2017) to the National Assembly. However, the price of crude is currently around $51.

If this downtrend lasts, the country’s largest petrol distributor Petrolimex’s state budget contribution will drop significantly, impacting the performance of national energy projects. In the event that average crude price falls to $50 per barrel, the national budget will face a deficit of VND10-12 trillion ($435-$522 million). On the Unlisted Public Company Market, on January 31 Petro Vietnam Oil Corporation’s stock immediately fell by 7.69 per cent to VND7,200 (31 US cents). As of February 6, its value remained VND7,100 (30 US cents), up 1.43 per cent against the previous day’s price.

Meanwhile, on January 31 BSR also dropped by 6.17 per cent to VND7,600 (33 US cents). By the end of February 6, it was VND7,800 (34 US cents), up 4 per cent from the day before. Petrolimex is in the same situation. On February 6, its stock rose by 0.97 per cent to VND52,000 ($2.26) despite a fall of 4.33 per cent on the last day of January.

Experts cited progress in the race to develop a coronavirus vaccine as the main reason behind the modest upturn of the oil market, with the morning of February 6 seeing a recovery of 2 per cent.

Francis Perrin, a senior research fellow at IRIS Capital, agreed that crude oil price will continue to nosedive if the number of infection cases sharply increases. Nevertheless, Perrin predicted the epidemic would only have a short-term effect on the industry, as “China has to consume oil, and the Chinese economy will be forced to recover, so the price will recover in the long term.”

Contrary to China’s 85 per cent decline in traffic capacity, the travel and logistics industries in Vietnam have yet to experience much impact from the oil price decline. Na Ji Won, general director of South Korea-based logistics firm H&Friends, told VIR that although global crude oil price is falling sharply, it has yet to affect transportation costs.

“Logistics is one of our main activities and currently, the cargos we transfer by air or by sea still cost the same even though crude oil price has gone down. When gasoline prices rise, the carriers will add to the cost,” said Won. “Even if gasoline prices fall, transportation prices might not decrease as the market price fluctuations are a distinct possibility.”

A representative of Haiphong Bus Transport Co., Ltd. also said, “The slight decrease in oil price has not been enough to impact our business, but the outbreak has raised fears among the public, leading to a recent reduction in passengers.”

Agriculture receiving substantial support

Local authorities and enterprises are trying to relieve the burden on farmers who are directly suffering losses.

On February 5 and 6, over 100 out of 362 fruit trucks were allowed through the Friendship Border Gate and Dong Dang Station, having been stuck at the Chinese border since January 31. Major exported goods were agricultural products, including chilli and fresh fruit.

This was the result of China closing wholesale and border markets such as Pingxiang Shi due to the coronavirus, or nCoV, epidemic.

 

Nguyen Cong Truong, vice chairman of Lang Son People’s Committee, spoke at an urgent conference hosted by the Ministry of Agriculture and Rural Development (MARD) last week.

“Although the goods can enter into China, they are still stuck because the wholesale markets will be shut until February 8,” said Truong. “If the situation doesn’t improve, they will keep the markets closed. Therefore, farmers should remain calm and store their goods on the farm until the markets have re-opened.”

Truong disclosed the unfortunate news that some of the stricken traders have been forced to sell their goods at drastically reduced prices. “Hundreds of trucks are stuck at the border gates, so buyers are paying just VND3,000-4,000 (13–17 US cents) per kilogramme of dragon fruit and VND1,000 (3 US cents) per kg of watermelon,” he said.

Meanwhile, Pham Van Canh, Vice Chairman of the Mekong Delta province of Long An, where 2,000 tonnes of dragon fruit are still in stock, said that by the end of February the province will harvest 30,000 additional tonnes of the fruit.

According to Canh, 75 per cent of Long An’s dragon fruit is exported to China. Some 30 per cent, equal to 300 containers, was deposited at a price of VND40,000-50,000 ($1.70-2.20) per kg and was intended for export from January 27 to February 29. However, the importer has cancelled the order.

“Another buyer cancelled 200 containers of dragon fruit that they agreed to buy at the price of VND50,000 ($2.20). Now they want to pay the farmers VND5,000 (20 US cents) per kg,” Canh said.

Canh’s view is that over the years, the price of dragon fruit in the province has been set by Chinese buyers. As sales are usually conducted without contracts, this poses significant risks for local farmers. Therefore, Canh urged the MARD to negotiate and find a way to support the farmers.

Speaking at the MARD conference, Minister of Agriculture and Rural Development Nguyen Xuan Cuong said the ministry is actively co-ordinating with the trade offices of Vietnamese embassies around the world to promote trade for agricultural exports.

“In 2020, the ministry will organise export promotion missions to the United Arab Emirates, the United States, Brazil, Japan, Russia, Australia, New Zealand, South Korea, Indonesia, Myanmar, and European countries,” Cuong said.

He also said that the MARD will continue to work with the Trade Office of the Embassy of Vietnam in China to deploy trade promotion and market development delegations in key localities of China, as soon as China brings the nCoV outbreak under control.

Regarding immediate solutions in the context of a prolonged epidemic, the MARD proposed that localities promote goods and agricultural products for consumption in retail systems, prioritising the domestic market.

Meanwhile, on February 5, Deputy Minister of Industry and Trade Tran Quoc Khanh issued a written request to Vietnam Logistics Business Association (VLBA) to recommend that its members support farmers by reducing warehousing costs and transportation.

Responding to Khanh’s proposal, VLBA chairman Le Duy Hiep said that he will mobilise members to reduce storage costs (particularly cold storage) by 10-20 per cent.

The State Bank of Vietnam and other commercial banks met with businesses affected by the epidemic to discuss credit solutions to support them, such as interest rate reduction, debt restructuring, and even debt freezing, in the hope of maintaining normal activities and transactions.

Meanwhile, acknowledging the difficulties resulting from goods piling up at the border, Lang Son province’s leaders agreed to only charge usual parking fees, foregoing any additional charges for the waiting time. Drivers and owners have also been provided with free accommodation.

Along with authorities and logistics businesses, supermarkets like Big C and Hapro have moved to support farmers.

Nguyen Thi Phuong, deputy general director of Central Group Vietnam, told VIR that with 37 supermarkets which serve 70 million consumers, Big C can help to consume 2 per cent of the total export of fruits. “The local authorities have contacted us regarding the fruit currently stuck at the border. We will support the farmers by purchasing watermelon and dragon fruit at a price of VND6,000 (26 US cents) and VND14,000 (60 US cents) per kg, and will continue to do so until the products have stabilised,” she said.

Meanwhile, Vu Thanh Son, general director of Hapro Mart, said that as a company providing agricultural products domestically and abroad, Hapro immediately contacted trade centres in the south to promote export activities to Hapro’s traditional markets.

“Other exporters should follow suit, so we can change the market from China. We also buy their products to provide to the domestic market through our market systems,” he said.

Exported vehicles entering China will be controlled by a specialised driver crew under strict medical supervision. These people will be given a medical examination and isolation at the border when returning to Vietnam.

When the freight vehicles from China pass, drivers and cargo owners will be given a medical examination before customs clearance, then the freight trucks will be directed to a separate gathering area. Drivers and cargo owners are only allowed to stay in the quarantined area until the import and export of goods is completed. Vehicles imported before leaving the gate to go inland will be disinfected, with a comprehensive epidemic prevention room under strict control to prevent coronavirus.

The Ministry of Agriculture and Rural Development encourages owners not to transport goods to the border because if the Chinese side does not accept, the goods will be left in stock and they will have to cover all the related expenses.

Acute respiratory syndrome associated with the novel coronavirus is dangerous for the health of both humans and the global economy. The epidemic impcts Vietnam’s agricultural sector in three aspects.

Firstly, it directly impacts agricultural trade because China is a huge agricultural export market for Vietnam, accounting for 24 per cent of Vietnam’s total exports. However, the epidemic has reduced 14 per cent of Vietnam’s export value to the country, particularly since January. By the end of January and into early February, right after the Lunar New Year, trade between the two countries was congested.

Secondly, it impacts investment. The outbreak of the epidemic has limited travel and thus connections for entrepreneurs between the two countries.

Thirdly, it impacts contract signings. Chinese partners have come to the final steps of considering the granting of official licenses to some goods, but due to the epidemic, delegations from both sides cannot carry out working visits.

Therefore, the effects caused by coronavirus to agriculture in Vietnam are huge and could last for a long time.

So far, the Ministry of Agriculture and Rural Development has held a conference to implement solutions for provinces exporting agricultural products, associations, enterprises, entrepreneurs, and farmers.

Accordingly, we will review the volume of agricultural products and groups of goods exported to China until the end of the year to give out different scenarios. In addition, we will promote domestic products, serving the large consumer market.

Besides this, we will also focus on deep processing. Processing enterprises must closely connect with material areas to reduce the volume of exported fresh products.

Although goods have been re-exported to China through border gates, the ministry still asks the logistics sector to check their cold storage to support farmers and maintain the quality of agricultural products for longer time.

Particularly, we have thought of restructuring the industry based on linking chains. It is time to reduce exporting raw material and unprocessed products, along with seeking new markets.

Besides the current epidemic, we are also getting ready to fight against bird flu, or H5N1, which has appeared in Hunan province in China. H5N1 has some types which can infect humans, with a high rate of casualties. This year will see two months of wet weather from April, which is very convenient for viruses and epidemics to develop.

Hunan is quite close to Vietnam and our poultry is quite popular, the most popular it has ever been, in fact. If we do not prevent the virus, it will heavily impact domestic agriculture. Therefore, we sent chairpersons of provinces and cities an urgent electric document, No.735/CD-BNN-TY, on implementing synchronised solutions to prevent bird flu.

According to the data of General Department of Customs, the total value of imports and exports between Vietnam and China in January was only $8.29 billion, down 25.8 per cent compared to December and 11.8 per cent compared to the same period last year.

In the three working days after the Lunar New Year holiday (January 30 and 31 and February 1), the total average export value of Vietnam to China reached $82.1 million per day, while import value was only $182.8 million per day, equal to 63 and 70 per cent, respectively, of normal working days throughout January.

Khánh Hoà Province to restructure tourism, promote new products

Authorities in Khánh Hoà Province have stepped up efforts to promote new tourism markets to mitigate the fallout of the Covid-19 epidemic.

The province’s tourism industry has largely depended on the Chinese market, and deputy director of the provincial Tourism Department, Nguyễn Thị Lệ Thanh, said the new coronavirus (Covid-19) outbreak has hit it badly.

It is important to restructure the market, she said.

According to a report by the province Department of Tourism, the epidemic has caused the province to lose all Chinese tourists.

Lê Kim Nhựt of the Nha Trang – Khánh Hoà Tourism Association said the tourism industry has to resolve a serious crisis since many Russian and South Korean tourists, besides those from HCM City and Hà Nội, have also cancelled their trips to Nha Trang.

“While it is difficult to forecast the future activities of Chinese tourists, other tourist markets are expected to recover after the next two or three months.”

This is an opportunity for the province to rebuild its amusement plans and programmes, he said.

“We have receive some positive signals from Chinese partners who have made plans to bring guests back to Nha Trang when the epidemic is contained.”

Trần Việt Trung, director of the Khánh Hoà Department of Tourism, said the province’s tourism industry, the Nha Trang – Khánh Hoà Tourism Association and other relevant agencies are looking for ways to restructure the tourist market.

High-income visitors from China would be targeted after the epidemic is over, he said.

“Affordable tours for international visitors to Nha Trang and Khánh Hoà have encountered some problems so far. As such, the department will focus on improving the general service quality to attract more guests from Russia and South Korea.”

According to Trung, at two upcoming international tourism fairs in Hà Nội and HCM City, the department will organise activities to promote the domestic market.

It would help Nha Trang in particular and Khánh Hoà in general to minimise the impact of the epidemic once it is contained and achieve steady growth, he said.

Đào Trọng Tùng, chairman of the Tourism Businesses Association welcoming Chinese visitors, said during this difficult period, travel agencies should focus on studying new products and potential markets.

Nhựt said the epidemic has provided authorities with a chance to review existing tourism products.

Some agencies have come up with new programmes to attract visitors from South Korea, Japan, Malaysia, and India, he said.

“Authorities should avoid unfair competition since Khánh Hoà has unique advantages in terms of nature, sea and islands.”

Thanh said Khánh Hoà has for long been aware of potential tourism risks since Chinese tourists accounted for 70 per cent of all total international visitors.

With the epidemic, the province’s tourism development plan needs to have a clearer picture, he added.

Ca Mau looks for measures to achieve export turnover target

The southern province of Ca Mau is working hard to support local enterprises to realise the target of US$1.2 billion in export turnover set for this year amid the unexpected developments of the novel coronavirus (COVID-19).

The provincial People’s Committee will take drastic measures to improve the investment and business environment, and push ahead with a project on enhancing the efficiency and sustainable development of the shrimp industry to 2025.

Incentives will be made to encourage the application of advanced techniques in farming and aquaculture, and clean technologies in processing, in order to improve the output and quality of products.

During a recent meeting, Chairman of the People's Committee Nguyen Tien Hai asked relevant departments and sectors of the locality to keep a close watch on the situation in order to keep local enterprises updated, thus helping them proactively prepare production and processing plans.

Local enterprises would also benefit from preferential policies on capital and interest rates, he said.

According to the provincial Department of Industry and Trade, the newly-ratified European Union-Viet Nam Free Trade Agreement (EVFTA) would help Viet Nam expand shrimp shipments to European markets.

Export enterprises in Ca Mau should strive to fully tap opportunities brought about by the agreement to increase the export turnover of shrimp and other key products, it said.

Local firms generated an estimated $60 million from exports in January, 2020, up 7 per cent year-on-year. Their main export markets were the US, Japan, South Korea, Canada, Australia, China, and European nations.

In 2019, overseas shipments earned the firms nearly $1.2 billion, 4 per cent than previous year.

Industrial sector’s growth likely to hit almost 3% in Q1

Viet Nam’s industrial sector in the first quarter is projected to grow 2.68 per cent compared to the same period last year if the novel coronavirus (COVID-19) outbreak is brought under control, according to the General Statistics Office (GSO).

Of which, the manufacturing and processing industry, that accounts for the lion’s share of the industrial sector, will be the hardest hit. This industry is likely to expand just 2.38 per cent instead of 10.47 per cent if the virus is handled.

Industries using materials imported from China are also badly affected as the country is a major supplier of materials and accessories for Viet Nam.

Other industries that will be affected include textile, garment, leather and footwear. In the first three months of this year, the textile industry is expected to grow 1.9 per cent, while the garment sector is forecast to contract 1.5 per cent and the leather and shoe production industry is likely to expand 0.5 per cent. Without the COVID-19 epidemic, the growth of these industries would have reached 10.5 per cent, 7.9 per cent and 8.5 per cent, respectively.

The production of motor vehicles and metals may also slow in the first quarter, rising only 6.9 per cent and 5.2 per cent, respectively. Meanwhile, electronics, computers and optical devices production will possibly see a decline of 2.3 per cent in this period.

Without the epidemic, production would have grown 9.3 per cent for motor vehicles, 9.6 per cent for metal products and 2.4 per cent for the group of electronics, computers and optical devices.

If this epidemic lasts until the end of the second quarter, the industrial sector’s growth is forecast to reach nearly 7 per cent in the first half of this year. In this scenario, the manufacturing and processing industry is estimated to gain growth of 8.51 per cent.

The GSO has proposed the Government take supportive measures for enterprises that suffer significant impacts from the coronavirus epidemic, such as seeking alternative suppliers, reducing export-import tariffs and boosting domestic consumption, said its General Director Nguyen Bich Lam.

Those are the enterprises operating in the industries of manufacturing, exporting and importing industrial products, especially textiles, leather, electronics, cars, steel, and food and foodstuff processing enterprises.

To stabilise domestic production, Lam said the GSO has proposed the Government to continue managing macro-economic policies to control inflation and maintain stability in the macro-economy as well as the monetary market.

At the same time, the Government should follow issues relating to import and export, including key export products, major export markets and material imports for production, to solve problems of import and export enterprises.

The Government is advised to address bottlenecks, including administrative procedures, to accelerate the implementation of major public investment projects nationwide, thus boosting socio-economic development.

Hanoi, HCM City office markets comparable with regional metropolises

Hanoi and Ho Chi Minh City are among few regional metropolises offering high investment returns in 2019.

Hanoi and Ho Chi Minh City were listed among Asia-Pacific official markets which outperformed in 2019 and continue performing well in 2020, according to leading professional services firm JLL.

The emerging markets of Ho Chi Minh City and Hanoi together with Bangkok and Manila in Southeast Asia posted high initial yields, JLL said in a latest report, adding that the markets offered high investment returns via both yield compression and rent growth, supported by favorable demographic profiles.

According to the report, in the last quarter of 2019, HCM City’s office market witnessed Grade A and B’s rents soaring to a decade high, reaching US$29.1 per square meter (sq.m).

This was supported by strong demand and higher rental rates in newer office developments, explained JLL, a firm specializing in real estate and investment management.

Landlords continued to have strong bargaining power this quarter given the restless rental growth amid limited stock, it added.

Meanwhile, in Hanoi in the same quarter 2019, both Grade A and B submarkets recorded a higher net absorption in comparison to the previous quarter, indicating stable demand.

The occupancy rate continued to increase and reached 93.0%, in which the Grade A submarket posted a rate of 94.0%.

JLL forecast the demand for office space in the next ten years will continue to grow strongly by 8-10% annually in Ho Chi Minh City as the economy develops.

The proportion of the population employed in services is estimated to rise from 30% to 40%. This provides a great opportunity for developers to acquire sites to build more office space to cater to new companies and expansionary demand.

Nonetheless, on a regional basis, returns in 2020 are generally forecast to be smaller than in 2019, as rent growth and yield compression may both slow down during the year relative to last year, JLL said in the report.

 
 

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