Covid-19 may weigh on Vietnam banks’ performance: Fitch Ratings
Fitch Rating keeps the positive rating outlook for Vietnamese banks.
The Covid-19 outbreak will hit Southeast Asian banking sectors through weaker economic growth, slower credit growth and dampened profitability, and Vietnam’s banking industry will also take a hit, Fitch Ratings has said in a note.
In Vietnam, reduced tourism, disrupted manufacturing supply chains and weaker external demand are likely to put pressure on corporate profitability, and may weigh on banks' asset quality, although tourism-related sectors are only a small part of Fitch-rated banks’ credit portfolios.
"Banks are likely to face slower credit and profit growth rather than take heavy hits to asset quality. However, Vietnam banks have very limited capital to buffer against prolonged weakening in profitability, or to stimulate credit growth if directed by the government."
An economic slowdown would also test the quality of the newly extended consumer loans, the rating agency added.
The rating outlook for Vietnamese banks is positive, in line with that of the sovereign (BB/Positive), although upward sovereign rating momentum could be affected by an extended outbreak.
Fitch Ratings said that banks in tourism-dependent Thailand and China-exposed Singapore likely to be the most affected by the Covid-19 outbreak. However, Singaporean and Thai banks have sufficient loss-absorption buffers to withstand this pressure, although the impact will depend on the extent and duration of the outbreak.
Banks in Singapore and Thailand have announced relief measures, which should alleviate some near-term asset quality and profitability pressures. For Singapore, the measures include a moratorium on principal repayments for 6-12 months on SME property loans and some retail mortgage loans.
For Thai banks, they include a moratorium on principal for up to one year for tourism-related loans, and relief measures on credit-card and personal-loan debt.
Other markets have announced stimulus packages, and Thailand, Indonesia, Malaysia and the Philippines have cut interest rates.
US remains Vietnam’s largest export market in first two months
The US was the largest export market of Vietnam in the first two months of 2020 with export revenue of US$9.8 billion, an increase of 19.6% over the same period last year, according to the General Statistics Office (GSO).
The EU was the runner-up with export revenue of US$5 billion, down 7.7%. China came in third with export revenue of US$4.8 billion, up 3.7% over the same period last year.
ASEAN, Japan and the Republic of Korea were also among the leading export markets of Vietnam during the two-month period.
The data from the GSO showed that despite negative impacts from the Covid-19 epidemic, Vietnam has remained on an upward trend in import and export revenue, thanks in part to Samsung’s export of their new phone, the Galaxy S20, in February.
Vietnam’s total import and export revenue was estimated to have reached US$74 billion in the first two months of this year, up 2.4% against the same period last year. Of the total, export revenue was reported at US$36.9 billion, an increase of 2.4%, and import revenue was posted at US$37.1 billion, up 2.4% over the corresponding period last year.
Several export items posted high export revenue including phones and components at US$6.9 billion (up 2.3%), electronics, computers and components at US$5.4 billion (up 26.7%), and garments and textiles at US$4.5 billion (down 1.7%).
In the January-February period, some products saw high import revenue such as electronics, computers and components at US$8.6 billion (up 17.1%), machinery, equipment and components at US$5.3 billion (down 3.7%) and phones and components at US$2.1 billion (up 17.2%).
US groups getting busy in the ASEAN
American corporations are pushing trade and investment into Southeast Asia, especially Vietnam, enhancing bilateral economic ties.
The US-ASEAN Business Council (USABC) has just announced that a 40-strong business delegation from the United States will launch an investment promotion programme in Vietnam on March 3-6, aiming to expand trade and investment co-operation in the Southeast Asian country.
Meanwhile, 460 US corporations have been allowed to export meat to Vietnam, according to Vietnam’s Deputy Minister of Agriculture and Rural Development Le Quoc Doanh, who was at a roundtable with representatives of associations and US investors in Washington D.C. on February 24. “Currently, there are 210 others registering to export seafood to Vietnam,” he said.
Over the years, the US has been Vietnam’s third-biggest trade partner while Vietnam is the 16th biggest for the US.
According to the General Department of Vietnam Customs, in January Vietnam’s total value of exports to the US reached $4.7 billion while the US exported to Vietnam $988 million in goods. In 2019, the numbers were $61.35 billion and $14.37 billion, an increase 29.1 and 12.7 per cent respectively compared to 2018.
Meanwhile, according to the USABC, the ASEAN ranks fourth as a goods export market for the US, while the US is also the fourth-largest trading partner for the ASEAN. The US exported $75 billion in goods and $31 billion in services to the ASEAN last year, up 59 per cent over a decade. The total value of US-ASEAN bilateral trade has increased 28 per cent, from $177 billion to $227 billion in a decade.
Along with trade, the number of US investors choosing the ASEAN for their long term operations has increased recently.
Last week, GE Renewable Energy signed a contract with Angat Hydropower Corporation to rehabilitate the 218MW Angat plant located in the Philippines to limit power outage of the 53-year-old plant as much as possible. Once fully upgraded in 2023, the power output of the plant will increase by around 4 per cent, bringing it to 226.6MW, supplying more than 90 per cent of Metro Manila’s potable water needs and supporting the irrigation of 25,000 hectares of farmland.
Meanwhile in Singapore, by the end of last year GE had invested $60 million over 10 years in its current Global Repair Service Center to create a new high efficiency air-cooled (HA) global repair engineering and development centre to add approximately 160 highly skilled jobs and provide local support for HA power plant operators in Asia. It will become GE’s largest gas turbine repair site, servicing its HA and aero-derivative gas turbines.
Earlier, in a meeting with Vietnam’s Deputy Minister of Planning and Investment Vu Dai Thang, Wouter Van Wersch, chairman cum CEO of GE ASEAN said that the group plans to expand investment into important fields which contribute to development of socio-economy in Vietnam such as energy, renewable energy, solar power, electrification and liquefied electrification.
GE currently has a presence in all ASEAN member states, excepting Laos, becoming a partner for dynamic growth in the region.
Google is another case planning to land in the Southeast Asia. According to Nikkei, so far the giant has been also moving aggressively to shift production of its Pixel smartphone from China to Vietnam where the corporation will build a low-cost supply chain in region that will serve as a springboard for its growing hardware ambitions.
Accordingly, Google will raise production capacity to 8-10 million smartphones this year, double that of last year.
Not only Google, the US car rental group Hertz with more than 10,000 branches in the world in last August announced its entry into the Vietnamese market through its domestic franchise partner, New City Rent A Car, to provide guests with a range of moving services and convenient car delivery system.
Eoin MacNeill, vice president of Hertz Asia-Pacific, emphasised that Vietnam had been evaluated as a country with a high growth rate in terms of both economy and tourism so opportunities for groups like Hertz are vast. Along with this fast and vibrant development, the demand for car rental businesses is increasing, and the demand for professional service quality is also greater.
Data from the Foreign Investment Agency under the Ministry of Planning and Investment shows that from the start of the year to February 20, the US has 18 new projects registered at $8.5 million. Total US newly-registered, newly added, and stake acquisition investment was $42.19 million.
Meanwhile the United Nations Conference on Trade and Development’s ASEAN Investment Report 2019 indicated that although the total capital poured into the region from the US declined compared to the previous year, the ASEAN was still the first selection for many US investors, with Singapore and Indonesia named the most attractive destinations.
Thailand-based Super Energy invests in solar power plant in Vietnam
Thailand-based Super Energy's subsidiary invested in a solar power plant project with the total installed capacity of 50MW in Phu Yen, Vietnam.
Super Energy Corporation Pcl. – a corporation headquartered in Thailand – officially announced its subsidiary's investment in a solar power plant project with the total installed capacity of 50MW in Phu Yen province, Vietnam.
Solar Energy (Hong Kong) 3 (SSE-HK3), the subsidiary, would purchase 100 per cent of Thinh Long Phu Yen Solar Power (TLPY) from four existing shareholders. The total transaction would roughly value at around $51.158 million, according to its notification of investment to the Stock Exchange of Thailand.
The TLPY project is located in Phu Yen province, Vietnam and has been selling electricity since June 30, 2019 under a Power Purchase Agreement with 9.35 US cents per kWh feed-in tariff for a period of 20 years from the date of commercial operation.
Super Energy has also splashed out on several projects in Vietnam in line with its goal of acquiring renewable energy companies in Southeast Asia and expanding its operation in China, Japan, and Australia.
Phu Yen is regarded as central Vietnam’s third-strongest locality in the development of public solar power projects after Danang and Hoi An.
Previously, this central province built a solar-powered watering system for a sugarcane farm in Son Hoa district and a 30MW biomass power plant.
As of September 2019, Thai direct investment in Vietnam has exceeded $10.4 billion, concentrating on industrial production, processing, and manufacturing.
So far, the largest Thai investment project in Vietnam is the Long Son Petrochemical complex based in the southern province of Ba Ria-Vung Tau’s Long Son commune, with the total investment of $5.4 billion. The complex is expected to be completed in 2023.
145.9-million-USD wind power plant to be built in Tra Vinh
Construction of Hiep Thanh wind-power plant at a cost of nearly 3.37 trillion VND (145.9 million USD) began in the Mekong Delta province of Tra Vinh late last week.
Twenty percent of the total investment comes from its investor - Ecotech Tra Vinh Renewable JSC - while the remainder is loans provided by the investment fund Climate Investment One of the Netherlands and Korean Samtan International Co, the online newspaper congthuong.vn reported. The plant covers a site of more than 2,700ha in the coastal commune of Hiep Thanh in Duyen Hai township and has a designed capacity of 78MW from 18 turbines. Vice Chairman of the provincial People's Committee Tran Anh Dung said the plant will supply 300 million kWh of electricity annually while creating up to 100 jobs for local workers. The plant is expected to be completed in mid-2021.
JB Financial to expand footprint in Vietnam, Myanmar, and Cambodia
South Korea-headquartered JB Financial emphasised that it would actively pursue M&A opportunities overseas, including ramping up investment in Vietnam and its neighbours.
Headquartered in Jeonju, South Korea, JB Financial owns four subsidiaries – Jeonbuk Bank, Gwangju Bank, JB Woori Capital, and JB Asset Management. The firm now has a market cap of $855.8 million.
In a conference call last month, Ki-hong Kim, chairperson of JB Financial, said that the firm has an interest in overseas operations and the non-banking sector as the two largest axes for its expansion.
Previously, Kim also highlighted that JB Financial would increase its footprint in Vietnam, Myanmar, and Cambodia for overseas businesses. Hence, looking for potential tie-up deals is one of the most feasible ways to penetrate into these markets.
“Southeast Asian nations are growing fast, while their banking infrastructure is growing,” Kim said. “Korea’s banking industry has matured, so we should turn to overseas markets spearheaded by consumer finance services.”
According to The Investor, Kim believed a decent performance and a well-established network in Southeast Asian countries are of utmost importance to the firm’s strategies.
“Once we find the right time, we will definitely carry on M&A in Cambodia. Also with an office in Vietnam, we are waiting for chances to strengthen our lending business,” Kim added.
Last December, Kwangju Bank, a commercial bank subsidiary of JB Financial, purchased Morgan Stanley's Vietnam-based subsidiary Morgan Stanley Gateway Securities JSC for VND382.4 billion ($16.63 million), The Investor reported.
Kwangju Bank would also inject VND600 billion ($26 million) into the Vietnamese brokerage.
The successful deal is expected to pave the way for JB Financial to broker real estate and infrastructure investment in Vietnam for Korean investors.
Also, the firm plans to underwrite Vietnamese firms’ issuance of mezzanine instruments such as convertible bonds and bond warrants, as well as M&A opportunities through the acquired Vietnamese company.
Covid-19 estimated to cost tourism sector US$7 billion
Due to the impact of the Covid-19 outbreak, the number of tourists has fallen by 60%, leading to an estimated loss of US$7 billion for the local tourism sector, said Minister and Chairman of the Government Office Mai Tien Dung.
At a press briefing on March 3, Minister Dung said the disease is spreading in many countries and territories worldwide, including important partners of Vietnam, such as Japan, South Korea and European countries.
The disease has significantly affected various sectors, causing a shortage of laborers and stagnant local production and business activities. Many firms, especially small and medium ones, have narrowed or even suspended their operations.
Despite the virus outbreak, the local socioeconomy remained stable in the first two months of the year, Dung remarked, adding that the country had earned US$36.9 billion in exports in the period, up 2.4% year-on-year.
However, many other sectors are encountering difficulties, especially tourism, aviation and transport. Many hotels are on the verge of being shut down and some tourist sites are deserted.
Nevertheless, the country cannot open its doors to all foreign tourists.
The Government is willing to accept short-term economic losses to protect the lives and health of local residents, international tourists and foreigners in Vietnam. Ministries, agencies and localities must not be lax and must continue making strong efforts to curb the disease, Dung added.
The Ministry of Planning and Investment was assigned to ask the prime minister to issue a directive on immediate solutions to remove obstacles to maintain production and business activities amid the Covid-19 outbreak.
Accordingly, specific tasks will be assigned to ministries, agencies and localities, with a focus on the tourism, aviation, trade and service sectors.
The directive should include solutions to promote epayments; cut costs for enterprises; boost production and trade activities; remove difficulties facing the tourism sector; enhance investment and disbursement; and address problems in manpower to support laborers losing jobs due to the disease.
At the press conference, Deputy Minister of Health Nguyen Thanh Long noted that Vietnam has controlled the disease well and has solutions to address the development of the epidemic.
For example, with the disease spreading rapidly in South Korea, Vietnam has asked South Korean citizens to make health declarations before allowing them to enter Vietnam, suspended the issuance of a visa-waiver program for travelers from South Korea and quarantined all incoming travelers from South Korea or those having transited through this country.
CBU automobile imports in Feb fall steeply
Vietnam’s completely-built-up (CBU) automobile imports last month dropped a staggering 59.9% in volume and 57.2% in value year-on-year, according to the General Department of Vietnam Customs.
Although February’s car import volume and value soared by over 40% and 21% versus January at 6,000 cars worth US$134 million, respectively, the country recorded continuous declines in automobile imports in the first two months of the year against the same period last year, reported Nguoi Lao Dong newspaper.
Specifically, over 4,200 cars of all kinds were imported into the country in January, with total value reaching US$111 million. This import volume fell by 2,349 units compared with December 2019.
Further, the import volume in January plummeted by 63% year-on-year. This month also witnessed the lowest automobile import volume over the past year.
Among the imported vehicles during the January-February period, under-nine-seat cars originating in Southeast Asian countries made up the majority, especially those from Thailand and Indonesia.
US coalition requests probe into hardwood plywood products from Vietnam
The Trade Remedies Authority of Vietnam recently received information that the US Department of Commerce was requested to launch an anti-dumping and countervailing investigation on certain hardwood plywood products imports from Vietnam by the Coalition for Fair Trade of Hardwood Plywood.
Therefore, the Trade Remedies Authority of Vietnam sent an official dispatch to the Vietnam Timber and Forest Product Association to notify the situation. Last year, the export turnover of hardwood plywood products was US$309 million, an increase of 950 percent compared to that in 2016. therefore
According to the petitioner, as hardwood plywood products imported from China were imposed anti-dumping and countervailing duties, Chinese manufacturers shipped parts of these products to Vietnam for mere assembly before exporting them to the US. The petitioner accused hardwood plywood assembling factories in Vietnam and manufacturing factories in China of being associate companies that commit acts of evading anti-dumping and anti-subsidy duties applied to Chinese products. Therefore, the petitioner was asking the DOC to issue a final scope ruling or launch anti-circumvention proceedings on this product and complete its review within 45 days.
Earlier, in January 2018, DOC levied anti-dumping and countervailing duty orders on hardwood plywood from China with the anti-dumping rate at 183.36 percent and countervailing rate from 22.98 percent to 194.9 percent. As a result, the export turnover of hardwood plywood products in China dropped drastically from around $800 million in 2018 to around $300 million in 2019. Meanwhile, exports from Vietnam increased rapidly, from $63 million in 2017 to $187 million in 2018 and $309 million in 2019.
To resolve this problem, the Trade Remedies Authority will hold a meeting on March 5 to find a solution. To protect the rights and interests of export enterprises, the Trade Remedies Authority asked the Vietnam Timber and Forest Product Association to inform relevant enterprises of Vietnam to actively deal with this problem. At first, enterprises need to quickly review and give their opinions about the contents of the petition and send them to the DOC as soon as possible. In case that the DOC initiates the investigation, enterprises should engage and cooperate with the investigator to ensure positive results for the case.
Vietnam banking system eases pressure on US$10 billion loans for clients
The current Covid-19 epidemic has led to delay in debt payment and higher rates of bad and overdue debts , according to a senior official of the State Bank of Vietnam.
Over the last three weeks, banks in Vietnam have eased pressures on VND222 trillion (US$9.6 billion) loans for 44,000 customers in forms of rescheduling of debt payment, lowering of interest rates and fees, according to the State Bank of Vietnam (SBV).
The current Covid-19 epidemic has led to delay in debt payment and higher rates of bad and overdue debts, said Nguyen Quoc Hung, director of SBV’s Credit Department, at a meeting on March 2.
Hung cited a report from 23 banks as saying said that over VND926 trillion (US$40.02 billion) in outstanding loans were affected by Covid-19, accounting for 14.27% of total outstanding loans of these banks and 11.3% of the system.
A number of sectors are facing direct hits from the epidemic, including agriculture, trade, tourism, transportation, footwear, electronics, education.
According to the SBV, over 30 commercial banks have agreed to cooperate with the National Payment Corporation of Vietnam (NAPAS) in waiving online transaction costs for customers, an effort to promote non-cash payment.
Additionally, the National Credit Information Center of Vietnam (CIC) has reduced its service fees in an attempt for banks to reduce interest rates and provide greater access to credits for individual customers and enterprises.
As credit in the first two months expanded at 0.77% year-on-year, lower than the growth rate of 1.07% recorded in the same period last year, Bao Viet Securities Company (BVSC) expected businesses’ demand for loans will continue to decrease under the impacts of the Covid-19 epidemic.
The Ministry of Planning and Investment has forecast Vietnam’s GDP growth to slow to a 7-year low of 5.96% in 2020. Meanwhile, Fitch Solutions, a subsidiary of Fitch Group, has revised down its GDP growth forecast for Vietnam to 6.3% from 6.8% previously.
Samsung Vietnam earns US$4.3 billion in profit in 2019
The profit, however, was lower than US$4.7 billion Samsung made in 2018, marking a decline in Samsung Vietnam’s profit for a second consecutive year.
Four major subsidiaries of Samsung in Vietnam in 2019 reached a combined US$65.8 billion, a slight decline from US$67.1 billion recorded one year earlier, and made a profit of US$4.3 billion, according to Samsung’s consolidated financial statement.
The profit, however, was lower than US$4.7 billion in 2018, marking a decline in Samsung Vietnam’s profit for a second consecutive year.
Unlike the other three sister companies, Samsung Display Vietnam (SDV) saw its revenue down from US$18.1 billion in 2018 to US$14.3 billion in 2019, leading to a decrease of 40% in SDV’s profit.
Meanwhile, revenue of Samsung Electronics Vietnam Thai Nguyen (SEVT) climbed 9% year-on-year to US$28.2 billion, and that of Samsung Electronics Vietnam Bac Ninh (SEV) slightly declined to US$19.2 billion from US$19.5 billion a year earlier.
Samsung Electronics Ho Chi Minh (SEHC), another subsidiary of Samsung in Vietnam, recorded an increase of 10% year-on-year in revenue to US$4.2 billion.
In the global market, Samsung’s after-tax profit suffered a sharp decline of 50% from US$38 billion in 2018 to US$18.7 billion in 2019.
According to Samsung's statistics, around 50% of Samsung's smartphones and tablets are produced in Vietnam and exported to 128 countries and territories, including the US, Europe, Russia and Southeast Asia.
In the 2008 – 2018 period, Samsung increased its total investment in Vietnam from US$670 million to over US$17.3 billion, a 26-fold increase.
In early March, Samsung Vietnam started construction its largest R&D center in Southeast Asia in the West of Hanoi for investment capital of US$220 million. The company expected Vietnam would not only be its largest production hub, but also a strategic base for R&D.
Vietnam longs for foreign experts in science and technology
Overseas Vietnamese and foreign experts when performing science and technology tasks in Vietnam are entitled to an agreed salary.
Overseas Vietnamese and foreign experts are encouraged to join science and technology research in Vietnam, according to a prime ministerial decree issued recently, the Government Portal reported.
Accordingly, overseas Vietnamese and foreign experts are entitled to the policies prescribed in the decree when presiding over or participating in national scientific and technological tasks or making practical contributions to Vietnam’s socio-economic development.
Specifically, overseas Vietnamese are hired to take on the leadership positions of public science and technology organizations, and assigned to preside over science and technology projects funded by the state budget at all levels. Besides, they are entitled to being granted scientific and technological titles in accordance with the Law on Science and Technology.
When performing science and technology tasks in Vietnam, overseas Vietnamese and foreign experts are entitled to an agreed salary. In addition, their expenses for attending international conferences and seminars related to their job in Vietnam will also be covered by state funds, once a year.
Moreover, the Vietnamese government will provide them financial support to organize scientific and technological seminars in the country, assist them with funding for publication of research results in prestigious international scientific journals and registration for protection of intellectual property rights to inventions.
Overseas Vietnamese and foreign experts can participate in programs and schemes to promote cooperation and attract Vietnamese abroad and foreign experts to participate in science and technology activities in Vietnam.
Real estate transactions in Hanoi plunge in Jan-Feb on coronavirus fears
Hanoi, the city of a nine-million population, needs approximate 600,000 apartments per year.
Transactions of real estate in Hanoi sharply fell in the first two months this year due to impacts of the outbreak of a novel coronavirus.
Announcements on real estate sales in January fell 21% from the previous year and annoucenments on searching property products dropped 31% on-year, according to the municipal government’s website.
The spread of Covid-19 made people hesitant to come to the site for the location, position, and direction of the apartment or house of their interest, Nguyen Quoc Anh, deputy general director of real estate news website Batdongsan.com.vn, explained.
Anh attributed fears for the epidemic to the hesitance, saying that real estate transactions became low in the priority list of customers.
A number of events relating to launching ceremony, customer care services, and introducing samples had been cancelled between January and February, Mr. Anh was quoted as saying.
Another reason attributing to the limited number of transactions in the first two months was people’s indifference in this sector after the biggest holiday – the Lunar New Year or Tet holiday, Anh said.
Despite few transactions, prices of real estate, mainly detached houses and apartments, in Hanoi remained unchanged in the two-month period, the expert said.
To aid the market, Anh said the government should provide some incentives including lower interest rates. The preferential policy would enable people at ages of 25-35 to buy houses or apartments instead of those aged between 45 and 60 like before.
Chairwoman of BRG Group honored with Woman of Impact Award
Nguyễn Thị Nga, Chairwoman of BRG Group, has been named first Vietnamese lady entrepreneur to receive Woman of Impact Award at 2020 Women Entrepreneurship Summit.
Recognising Nga’s significant achievements and contributions to the ASEAN economy, business leaders at the Summit bestowed upon her the prestigious 2020 Impact Award.
This annual award is only granted to the most exceptional businesswomen in the region who have proven impact, recorded contributions to the economy and illustrated innovative practices in their respective industry. This event also provides prominent local and international women business leaders a platform to share their inspiring stories of success to help encourage other aspiring businesswomen to grasp the secrets of entrepreneurial success.
“To me, being a female entrepreneur is a great honor. I am not only a woman of my own family but also a person who has acquired the ability to foster inspiration inside a large ‘business family’ consisting of 22,000 committed staff – my company, BRG Group,” explained Chairwoman Nga to attendees of the event.
Conveying the message of "making the impossible possible" through her story of constructing the Sheraton Grand Danang Resort in record time to serve APEC 2017 gala dinner for 21 world leaders and 600 VIP guests, Nga clearly demonstrates that female entrepreneurs in the region possess the knowhow to build understanding, achieve success and overcome difficulties in order to expand businesses and contribute to a country's socio-economic wellbeings.
“Be persistent in the pursuit of your passion and aspiration; and never stop contributing to the advancement of your community and the development of your Motherland. Do it with all your heart and mind. I can do it, and all women can do it,” Nga insisted.
Under her leadership, BRG Group is currently a pioneering multi-sector business that includes core disciplines such as golf courses, hotels and resorts, property development and the US$4.2 billion Smart City Hanoi project in Việt Nam. BRG Group also boasts many outstanding real estate projects such as ‘Le Grand Jadin Sài Đồng’, a new urban area in Hà Nội’s Long Biên District and ‘The Legend’, an exclusive, Hilton Hotel linked, luxury apartment tower, which is said to be the only of its kind in Việt Nam.
Within the ASEAN business community, Nga is currently a member of the bloc’s Vietnam Business Advisory Council and for the second time holds the role of chair of the ASEAN Business Awards 2020; an association that supports many businesses across the ASEAN region by helping them to connect and expand business opportunities.
EVFTA – important solution to achieve growth targets: minister
The EU-Vietnam Free Trade Agreement (EVFTA) is a new stride in the country’s integration process and also an important solution to achieve growth targets of the industry and trade sector amid adverse developments in the global environment.
Minister of Industry and Trade Tran Tuan Anh made the remark at a meeting in Hanoi on March 4 that discussed preparations for the EVFTA implementation as this deal is expected to take effect this July.
He stressed that to reap good implementation results, organisations and agencies of the whole political system, especially the industry and trade sector, need to engage in the work.
Luong Hoang Thai, Director of the ministry’s Multilateral Trade Policy Department, said the EU will finish relevant procedures at the European Council on March 12 and be ready for the agreement enforcement. As it had actively drafted documents for the implementation before the EVFTA was submitted to the European Parliament, the agreement could be carried out immediately.
Meanwhile, Vietnam has also completed much work in this regard, he noted, adding that the Ministry of Industry and Trade (MoIT) has submitted a dossier on the EVFTA ratification to the Government, and the Government’s Office has asked the Ministry of Justice to coordinate with other ministries and sectors to consider legal documents that need to be issued or amended to implement the EVFTA.
Thai said to accelerate the ratification, the MoIT should step up working with the Government’s Office, the President’s Office and the National Assembly’s Committee for External Relations to finish the dossier seeking ratification and serve legislators’ verification of the EVFTA and adoption consideration.
The EVFTA, along with the EU-Vietnam Investment Protection Agreement, was ratified by the European Parliament on February 12.
The two documents were signed in Hanoi on June 30 last year, featuring intensive, extensive and comprehensive commitments covering economy, trade, investment and sustainable development issues.
The EVFTA, in particular, is hoped to create a major push for Vietnam’s exports and help diversify the country’s export markets./.
Another solar power plant to begin operation in Ninh Thuan
A new solar power plant is scheduled to become operational in the south-central province of Ninh Thuan in June, following an engineering, procurement and construction (EPC) contract inked between Ninh Thuan Energy Industry JSC and Sharp-NSN joint venture earlier this week.
The Phuoc Ninh solar power plant is expected to supply about 75 million kWh of electricity after being put into operation, using solar panels and a 40MVA substation. Construction on the plant has been completed and it is ready for equipment to be installed so that it can begin operation in June.
Early in April 2019, the Ninh Thuan Energy Industry JSC – a member of T&T Group and the Electricity Power Trading Co (EVN EPTC) – an arm of Vietnam Electricity (EVN) group inked a power purchase deal for its solar power projects.
Under the deal, the Ninh Thuan Energy Industry JSC will sell electricity to EVN EPTC with the price regulated in Prime Minister Nguyen Xuan Phuc’s April 2017 Decision on mechanisms to encourage the development of solar power projects in Vietnam.
For Ninh Thuan, the State has also offered incentives and preferential policies to ensure its socio-economic development in 2018-2023, including to facilitate the development of solar power projects.
Ninh Thuan aims to become the renewable energy centre of the country. Blessed with abundant sunshine and wind year-round, the province is home to 25 solar power projects.
The province has a high level of sunshine hours (2,467) per year and solar radiation per square metre (1,700kWh), making it ideal for solar energy projects.
Under the province’s green energy plan, it is expected to reach a total capacity of 1,500MW in wind energy and 3,912MW in solar energy by 2030./.
Retail sales, service revenues up in two months
Viet Nam’s total retail sales and service revenue rose 8.3 per cent year-on-year to over VND863.9 trillion (US$37.4 billion) in the first two months of this year, according to the General Statistics Office (GSO).
Of which, retail sales of goods in January-February were estimated at VND674 trillion, up 9.8 per cent against the same period last year.
Increases were seen in the sales of automobiles (up 11.2 per cent), gasoline and oil (up 11 per cent), household appliances, tools, and equipment (up 9.5 per cent), garment-textile (up 8.9 per cent), food and foodstuff (up 8.6 per cent), vehicles (up 7.1 per cent), and cultural and education products (up 4.7 per cent).
Localities recording significant growth in retail sales include Quang Ninh Province (13.8 per cent), Hai Phong City (13.6 per cent), Thanh Hoa Province (11.9 per cent), Nghe An Province (10.9 per cent) and Ha Noi (10.5 per cent).
Revenues from accommodation and catering services in the two-month period were estimated at VND95 trillion, up only 1.7 per cent year-on-year due to the impact of the acute respiratory disease caused by the novel coronavirus SARS-CoV-2 (COVID-19).
Declines in accommodation and catering service revenues was reported in most localities, including Khanh Hoa Province (24.2 per cent), Lam Dong Province (10.2 per cent), Ha Noi (8.1 per cent), Can Tho City (5.6 per cent), and HCM City (5 per cent).
Travel service revenues reached VND7.4 trillion, up 1.1 per cent year-on-year. Slight growth was seen in some cities and provinces such as Binh Thuan Province (5.3 per cent), Da Nang City (1.5 per cent) and Ha Tinh Province (0.8 per cent).
Revenues from other services rose 5.2 per cent year-on-year to VND87.5 trillion.
Overlapped regulations key issue to SOE performances: State capital commission
Regulatory overlapping was the biggest problem at State-owned enterprises (SOEs) since they were handed over to the Commission for the Management of State Capital at Enterprises, officials have said.
According to vice chairwoman Nguyen Thi Phu Ha, the commission was responsible for managing State capital at 19 large-cap SOEs.
Among the 19 are the National Oil and Gas Group (PetroVietnam), the Vietnam National Petroleum Group (Petrolimex), the Vietnam Rubber Group (VRG), Vietnam Electricity (EVN) and the Vietnam National Railway Corporation (VNR).
Under Decree 131/2018/ND-CP issued by the Government in late September 2018, the business conditions at the SOEs should remain unchanged after they were handed over to the commission.
But there were still problems, Ha said at a Government meeting on Tuesday.
Minutes from the ministries that used to manage the State capital at the 19 SOEs showed the companies had not accomplished nearly 260 tasks, she said.
These tasks had been assigned and were supposed to be completed before the SOEs were moved to the commission, she said.
Some projects were still facing problems after 10-20 years, she added.
“Some projects are not in line with existing policies, and management units have been asked for clarification,” she told the meeting.
“The SOEs must ensure State capital is preserved and used efficiently. If not, they are required to report to the commission,” Ha said.
Regulatory overlapping had made it difficult for the SOEs to either operate by themselves or ask for State funding, according to the vice chairwoman.
VNR is among the companies that has had problems with business operations. The company has asked the commission to hand back control to the Ministry of Transport.
Before the commission took charge of the State capital in VNR, the Government had funded the company through the Ministry of Transport. After two years, the ministry is still in charge of providing operating capital for the company and manages railway assets, even though the company is now managed by the commission.
That means if VNR was to operate independently, the Government needed to amend several policies on procurement, railway operation and public asset management, according to VNR chairman Vu Anh Minh.
Vice Chairwoman Ha said the Prime Minister had asked the transport ministry and the commission to work together to find a solution for the case.
Steelmakers hit hard by virus outbreak
Vietnamese steelmakers were in need of State support to minimise the damage caused by the outbreak of the novel coronavirus (COVID-19), which could well reach a pandemic as dozens of countries reported new infections, said industry leaders and experts.
The virus outbreak, which started in China, had hurt the country’s steel industry in many ways, said vice chairman of the Vietnam Steel Association (VSA) Trinh Khoi Nguyen.
Nguyen said demand for Vietnamese steel had fallen sharply as construction projects were halted and rigid measures were taken by countries to monitor the flow of goods.
According to the VSA, steel consumption across the country had dropped by 35 per cent and exports had fallen by 20 per cent. Other steel-related products also reported a 30-40 per cent drop in demand.
For example, Thai Nguyen Iron and Steel Company (TISCO) said sales had plummeted to 14,000 tonnes (just over 23 per cent of its sales target for February). The corporation said even in the best-case scenario, it would only reach 75 per cent of its quarterly target.
The steelmaker said it’s in the process of reviewing stockpiles and negotiating with suppliers and buyers to ensure production continued.
On the supply side, steelmakers have been feeling the effect of a raw material shortages as major suppliers including China, Japan and South Korea were all struggling to cope with the virus outbreak with production grinding to a halt.
The association has urged the Government to come up with policies to support the industry, including cutting interest rates and extending credit lines. At the same time, actions must be taken to ensure a steady supply of raw materials across the border.
VTMSteel was among the hardest hit by the outbreak as its factory is located close to the Viet Nam-China border and the company heavily relies on trade between the two countries for raw materials. As the company’s stockpiles fell, operations would likely stop in March.
The Vietnam Steel Corporation (VNSTEEL) has been talking with customs and border authorities to find ways to speed things up on both sides. Meanwhile, steelmakers must also start seeking other sources of raw materials, VNSTEEL said.
Tran Tuan Anh, minister of industry and trade, said his officials had been holding talks with their Chinese counterparts to find ways to help enterprises resume production as soon as possible.
Truong Thanh Hoai, head of the ministry's department of industry, said the ministry had made recommendations to the Government to reduce key industries’ reliance, including the steel sector, on China and South Korea as major raw material suppliers. Meanwhile, the department has been working alongside firms to hold trade promotions to help Vietnamese products find new markets.
Minister urges provinces to boost fight against IUU fishing
Minister of Agriculture and Rural Development Nguyen Xuan Cuong has urged 28 coastal provinces to promote further actions against illegal, unreported and unregulated (IUU) fishing.
That could help Viet Nam’s fishery sector remove the yellow card this year after the EC's third inspection in mid-2020, he said.
The Ministry of Agriculture and Rural Development (MARD) reported an inspection delegation of the European Commission’s Directorate-General for Maritime Affairs and Fisheries (DG-Mare) is scheduled to visit Viet Nam from May 25 to June 5 to inspect implementation of the EC recommendations fighting IUU fishing.
If the EC inspection team continues to find illegal fishing in the third inspection this year, Viet Nam will not be able to remove the yellow card and may even receive a "red card" (banning imports), according to MARD.
The fight against IUU fishing is an important factor for the EC's decision of removing the yellow card or not, the MARD reported.
Therefore, Minister Cuong has requested the 28 coastal provinces to promote the fight against IUU fishing and effectively implement the Fisheries Law. The provinces must strictly control fishing vessels entering and leaving ports, product origin traceability, as well as fishing diaries and reports.
Nguyen Quang Hung, deputy director of MARD's General Department of Fisheries, said as of January this year, Viet Nam had 13,150 ships with cruise monitoring equipment installed, including 2,372 ships with a length of over 24m and 10,778 ships with a length of 15m-24m. That means 92 per cent of the total of over-24m-long ships have cruise monitoring equipment while only 37 per cent of ships with a length of 15m-24m have this equipment.
Cuong said after two inspections in June 2018 and November 2019, the EC’s inspection team recognised Viet Nam’s co-operation, transparency and honesty in providing and exchanging information during their time in Viet Nam.
The country’s significant improvements in the monitoring, control and surveillance of fishing vessels have been noted and the management process and organisation of fishing vessels through ports are carried out flexibly and effectively.
Viet Nam has also made great efforts to install fishing vessel monitoring systems, disseminate regulations to vessel owners and implement gear marking fishing vessels based on the EC’s recommendations.
The EC’s inspection team also acknowledged Viet Nam’s efforts in increasing the management of fishing density through freezing offshore fishing fleets. Viet Nam has completed a legal framework for fishing activities, including the Fisheries Law.
The sector has remained weak in managing foreign vessels visiting local ports to import fishery products. The traceability has not yet met the EC's requirements.
According to MARD, due to the EU yellow card for Viet Nam's seafood products, Viet Nam's exports to the EU fell by 6.5 per cent to US$390 million in 2018 and by 11.5 per cent to $345.2 million in 2019.
From being the second largest import market for Viet Nam's seafood, after the yellow card, the EU has dropped to fifth, and its imports have decreased from 18 per cent to 13 per cent of Viet Nam’s exports.