BUSINESS NEWS SEPTEMBER 24

Shrimp export falls 8.1 percent in eight months

BUSINESS NEWS SEPTEMBER 24

Vietnam exported 1.93 billion USD worth of shrimp during January-August, down 8.1 percent from the same period last year, according to the Ministry of Agriculture and Rural Development’s Directorate of Fisheries.

The pace of reduction in exports has slowed down due to positive export growth in July. Last month, shrimp export reached some 334 million USD, posting a year-on-year increase of 13.4 percent.

The country saw good growth in exports to eight major markets like the EU, Japan, the US, mainland China, the Republic of Korea, Canada, Australia and China’s Taiwan.

The Vietnam Association of Seafood Exporters and Producers (VASEP) expected shrimp exports to grow further this year to a value of more than 4 billion USD thanks to robust signs in the market.

According to the association, the shrimp sector will make breakthroughs in exporting to 28 European Union countries, with estimated export value of 1 billion USD, as it will enjoy low import tariffs once the EU-Vietnam Free Trade Agreement takes effect.

Another positive sign comes from the US market. Most recently, The US Department of Commerce (DOC) released the final results of the 13th period of review (POR 13), officially imposing zero percent tariffs on 31 Vietnamese shrimp exporters.

VASEP General Secretary Truong Dinh Hoe said the preliminary tariff would encourage local firms to promote shrimp shipments to the US in the coming months because they had faced many challenges in exporting this kind of seafood to the American market, including anti-dumping tariffs.

A lower tariff will help Vietnamese shrimp compete better with other foreign rivals, he said.

Giving his comments on shrimp shipments in the coming months, Hoe stressed demands for shrimp normally increase in the end of the year, particularly, orders from the US have increased while the nation is reducing purchase from India, Thailand and China.

Furthermore, India’s shrimp harvest season has ended, giving room for global shrimp to surge.

The Directorate of Fisheries suggested local producers work to ensure product traceability and quality, while VASEP said that it is necessary to promote exports of high-added value products to avoid anti-dumping tariffs in foreign countries.

Chicken breeders complain about hefty losses

Chicken breeders in the southern region are facing great losses due to the oversupply.

According to chicken farm owners in Dong Nai, Binh Duong and Ba Ria-Vung Tau provinces, broiler chicken prices dropped by VND18,000-20,000 per kilo compared to April. At present, one kilo of live broiler chicken is just VND10,000-14,000.

Nguyen Dinh Long, an owner of a chicken farm in the Ba Ria-Vung Tau Province, said that if the situation continued, some farms would suffer from bankruptcy as the average breeding cost for one kilo of chicken is up to VND24,000-28,000 per kilo.

Bui Van Thanh in Dong Nai whose farm is home to 200,000 chickens said that he faces a loss of VND42,000 for every three kilos. He is selling around 20,000 per week, making a loss of VND600 million.

“Despite the huge losses, we have still tried to maintain the breeding after pouring big investment into this,” Thanh added.

Nguyen Van Ngoc, Vice Chairman of Southeastern Poultry Association, said that the chicken industry is witnessing the oversupply.

When the African swine fever happened, many people have turned into using chicken, instead of pigs. Meanwhile, chicken imports have increased, affecting local chicken breeders.

Doan Ngoc Tho, director of THO Group which specialises in poultry products, said one tonne of imported chicken into Vietnam is just around USD1,000, equal to around VND24,000 per kilo, including taxes.

The General Customs Department reported that in the first seven months of this year, Vietnam imported 142,190 tonnes of chicken worth a total USD120 million, up 10% on-year.

Pham Thi Ngoc Ha, general director of San Ha Ltd. Co., said that her company signed a contract to buy chickens of some farms for the distribution to supermarkets.

Pham Thi Huan, general director of Ba Huan Ltd. Co., said the chicken price decline has been attributed to the massive sale following storms and flooding and the prices would recover in the next ten years.

Expo facilitates mechanical engineering industry in the north

The 7th International Precision Engineering, Machine Tools and Metalworking Exhibition & Conference (MTA HANOI 2019) will return to the capital city next month, striving to make greater contributions to the mechanical engineering sector in the north.

With the theme of “We are Industry 4.0 ready!”, the upcoming exhibition will witness the participation of 158 businesses from 15 countries and territories including those from South Korea, Japan, Hong Kong, Taiwan, Singapore, Germany, the UK and the US.

Covering an area of 5,500sq.m, the three-day event will showcase products and advanced technologies from around the globe relevant to the mechanical engineering sector. Especially, it will highlight the most innovative solutions of Industry 4.0 in order to apply the technology in production.

Speaking at the press meeting held in Hà Nội on Friday, William Lim, Project Director, Engineering Events at Informa Markets, praised Việt Nam’s impressive economic performance over the past ten years with an average GDP growth at 6 per cent, driven by strong domestic demand, export-oriented-manufacturing as well as increasing foreign direct investment.

Việt Nam’s economy this year is expected to grow by around 6.8 per cent – the fastest rate in Southeast Asia, Lim said, adding that MTA HANOI has also enjoyed strong growth in line with the domestic economy.

This year’s edition will be held from October 16-18 at the International Centre of Exhibition in the capital city.

Nguyễn Thanh Hòa, country manager of Japanese Makino Vietnam Co which has participated in MTA HANOI for years, said that the exhibition has witnessed increases in scale and number of exhibitors year by year. He described the event as an opportunity for exhibitors and visitors to exchange information and seek new trade partners.

A conference discussing the manufacturing industry in Việt Nam and “Made in Việt Nam” goods and another on mechanical engineering firms in the context of Industry 4.0 will be also held on the sidelines of the event which will be co-organised by Informa Markets and VCCI Exhibition Service Co.

Known as the “backbone” of Việt Nam’s economy, the mechanical engineering industry is striving to apply advanced technology, produce high-quality products and join the global value chain by 2035.

Export volume of the mechanical manufacturing industry was expected to account for 35 per cent of the total mechanical output by 2020, 40 per cent by 2030 and 45 per cent by 2035.

MTA HANOI 2018 recorded more than 5,000 trade visitors from 15 countries and regions and 308 group delegations, marking a healthy increase of 37.5 per cent in comparison with the previous edition.

BSR earnings get boost as crude import tax turns zero

The latest scrapping of the crude import tax could help local firm Binh Son Refinery and Petrochemical Co Ltd (BSR), securities firms have reported.

The Government on Tuesday decided import tax on crude oil would be slashed to zero per cent from the current 5 per cent on November 1.

BSR will get indirect benefit from the decision as a zero tax rate will allow the firm to diversify the sources of crude used as input for production, Viet Capital Securities Co (VCSC) said.

Zero tax will help BSR reduce its dependence on the US, Southeast Asia and West Africa imports, VCSC said.

This is the opportunity for local oil refiners to access cheap crude imports as domestic crude supply has shown signs of declining recently, boosting demand for crude imports in the future.

BSR will be able to buy crude from the Azeri oil field in Azerbaijan, which is equal to Bach Ho crude in terms of quality and can be mixed at different formulas, according to BSR general director Bui Minh Tien.

The refinery will be able to raise its gross profit margin by 1.3 per cent (in 2020), according to HCM City Securities Corp (HSC).

After the news was released, BSR shares soared 8.6 per cent to VND10,100 (US$0.43) per share on Wednesday. But its shares fell back 2 per cent to end Thursday at VND9,900 per share.

BSR debuted on UPCoM on March 1, 2018 at VND22,400 per share. After 1.5 years, the firm shares have dropped total 55.8 per cent.

In the first half of 2019, BSR recorded nearly VND51 trillion ($2.19 billion) worth of combined revenue and VND900 billion worth of post-tax profit.

The figures accounted for 52 per cent and 30.6 per cent of the full-year plans but declined by 23.3 per cent and 69.5 per cent year on year.

BSR is now refining 85 per cent of domestic crude and 15 per cent of crude imports. From 2020, the company will be able to take control of buying crude from international suppliers.

According to the General Customs Department, Viet Nam imported total 5.48 million tonnes of crude, worth $2.6 billion, in the first eight months. The figures recorded in 2018 were 5.17 million tonnes in volume and $2.74 billion in value.

ACV’s operation methods to be approved this year: BVSC research

After the Aviation Corporation of Viet Nam (ACV) equitised, assets at flight operations areas still belong to the State, leading to the failure of ACV to perform necessary maintenance, according to the analysis team of Bao Viet Securities Joint Stock Company (BVSC).

Currently, the runways at Noi Bai and Tan Son Nhat International Airports have deteriorated and could pose a threat to flight safety. Therefore, ACV and the Ministry of Transport (MoT) have tried to negotiate and unify the options as well as submitted to the Government to be able to repair and maintain the flight area soon.

There are three options submitted by the MoT. The first one is the Government will lease the flight areas and ACV will have to pay an annual rental fee to the State. The cost of investment and maintenance of the flight zone will be covered by the Government.

The second option is that ACV will participate in the bidding and prepay for flight zone assets. ACV is responsible for the operation, investment, and maintenance of these assets.

Thirdly, the State increases the ownership of ACV to 100 per cent and the State assigns flight zones to ACV for management and operation.

BVSC estimates that the second option is the most feasible, which helps the runways receive maintenance as quickly as possible thanks to ACV's experience and available capital, and this option is likely to be approved.

However, in terms of ACV's business activities, the growth of international and domestic visitors is slowing down. Accordingly, in the first six months of 2019, ACV recorded VND8.91 trillion (US$383.84 million) of revenue and over VND3.7 trillion after-tax profit, an increase of 12 per cent and 19.9 per cent year-on-year, respectively.

From January to June, ACV served 37 million domestic visitors corresponding to the growth of passengers over the same period of 7.5 per cent. This growth has improved slightly compared to 2018 but is still lower than the high growth period 2013-2016. This downtrend continued and recorded an increase in international arrivals to 13.4 per cent (in 2018 the growth in international arrivals was 21 per cent).

BVSC supposed that the growth of domestic passengers will continue to be around 7 per cent in the coming years due to the pivot to international airlines of low-cost airlines as well as the limitations of aviation infrastructure.

Tour business Vietravel to make UPCoM debut


BUSINESS NEWS SEPTEMBER 24

The Vietnam Travel and Marketing Transport JSC (Vietravel) will trade 12.6 million shares on the Unlisted Public Company Market (UPCoM) on September 27.

The company’s trading code is VTR and debuting price is VND40,000 (US$1.72) per share, valuing the firm at VND504 billion ($21.67 million), according to the Ha Noi Stock Exchange.

With a trading band of 40 per cent on either side on debut day, Vietravel shares may swing between VND24,000-56,000 per share.

The company had been the Tracodi Tour Centre under the Transport and Industry Development Investment Corporation (Tracodi).

It was renamed Vietravel in 1995 and equitised in 2014. The two largest shareholders now are chairman Nguyen Quoc Ky and Saigon Travel, holding 9.07 per cent and 16.22 per cent of the business.

Vietravel has no foreign shareholders. It has stakes in 10 subsidiaries and one associate business.

The company is planning to set up its aviation arm Vietravel Airlines, which will be headquartered in the central province of Thua Thien-Hue with charter capital of VND700 billion.

This will be the sixth airline in Viet Nam after the likes of Vietnam Airlines, Vietjet, Vasco, Bamboo Airways and Jetstar Pacific.

In February, the firm received a licence from the provincial Department of Planning and Investment.

The plan is being review by the Civil Aviation Authority of Vietnam (CAAV) and it will be submitted to the Prime Minister for approval.

In the first half of this year, Vietravel’s net revenue is estimated at nearly VND3.98 trillion, a year-on-year increase of 6 per cent.

The company’s pre-tax profit reached around VND30 billion, up 26 per cent compared to the same period last year and achieving 44 per cent of the year’s plan.

In 2019, the firm targets revenue of more than VND8.61 trillion and after-tax profit of VND60.8 billion.

Realty, construction firm delays 2016 dividend payout again

The Song Da Urban and Industrial Zone Investment and Development JSC (Sudico) has delayed the 2016-17 cash dividend payouts again.

The company plans to pay dividends for the two years on December 31, 2020. It previously scheduled the payments for 2016 financial year on September 30, 2019 and for 2017 financial year on September 30 and December 31, 2019.

Cash dividend payout rates for the two years are set at 10 per cent each, meaning every shareholder will receive VND1,000 per share for each share they have.

This is the fifth time Sudico has delayed paying dividend for financial year 2016.

The company plans to use its revenue worth VND285.5 billion (US$12.3 million) from selling products and services in Nam An Khanh urban area and other projects to pay shareholders dividends.

However, its partners have failed to pay debts to the company, leading to the delay of dividend payouts.

Sudico shares are being listed on the Ho Chi Minh Stock Exchange, falling 1.5 per cent to end Friday at VND16,500 ($0.71) per share.

In the first six months, Sudico earned nearly VND197 billion worth of revenue, six-fold last year’s figure, and VND18 billion worth of post-tax profit, down 65.6 per cent yearly.

Hai Phong JSC proposes to build container teminals in Lach Huyen Port

The Ministry of Planning and Investment has proposed the Prime Minister to approve Hai Phong Port JSC’s investment in construction of two container terminals 3 and 4 in Lach Huyen Port.

The total project investment is about VND6.9 trillion, of which VND3.1 trillion or 45 per cent of the total investment, comes from Hai Phong Port JSC and VND3.8 trillion or 55 per cent of the total investment from commercial loans, Nguyen Canh Tinh, acting director of the Viet Nam National Shipping Lines (Vinalines), parent of Hai Phong Port JSC, told the Giao thong (Transport) newspaper.

The two container terminals will be built at Lach Huyen Port in the Dinh Vu-Cat Hai Economic Zone, Cat Hai District, Hai Phong City.

They will have a total length of 750m and are ability to receive ships with a capacity up to 8,000-TEU (twenty-foot equivalent unit).

The project building two container terminals includes investment in technical infrastructure and equipment, capable of receiving 1 - 1.1 million TEU of goods per year, Tinh said.

The project is to serve the relocation of Hoang Dieu Port, ensuring competitiveness and development of the Hai Phong Port JSC for the long-term.

If it gets the Government’s approval, the project will start construction from 2020 and be completed in 2025. Of which, container terminal 3 will be put into operation from 2022.

Container terminals 1 and 2 came into operation in May 2018 and have served container ships and general ships with a capacity of about 1.1 million TEU per year.

In the period of 2020-25, with a scale of nine terminals, including six container terminals and three general terminals, the Lach Huyen Port can receive 4,000-TEU general ships and 8,000-TEU container ships, according to the approved planning of Lach Huyen Port under the Hai Phong international port system to 2020 and the detailed planning of the Northern seaport group to 2020, with a vision to 2030.

Go-Viet trumpets empty claims of leading food delivery?

 

While Go-Viet is exuding confidence about shooting to the top of the food delivery sector only a year after starting operations, the coverage of drivers, the brand's age, delivery time, and the satisfaction rate of customers tell a different story.

According to the latest report published by market research firm GCOMM, the six most popular online food delivery apps in Vietnam are GrabFood, Now.vn, Go-Food, Lala, Vietnammm, and Lixi.

In the context of the fierce competition, Lala had to throw in the towel, admitting that it cannot keep up with Grab’s super app. The company switched to supplying sales solutions for restaurants. Besides, Ahamove transferred into providing transport solutions for e-commerce platforms, promising the fastest delivery time on the market.

A company’s true standing in the market comes from real comparison and independent survey, rather than the company itself. Go-Viet issued statistics to shot its leading position in the food delivery market, including 6 million cups of bubble tea delivered, while the number of meals, orders, and restaurant partners also soaring throughout its first year. In fact, the coverage of Go-Viet's drivers is still quite sparse on the street.

However, according to experts, the figures are not persuasive enough, as for instance Now is more of a household name thanks to their better driver coverage. A key to success could be delivery time, helping players determine their position in the market because the quality of the food mostly depends on its freshness. According to a recent survey by GCOMM, 65% of consumers agreed that time delivery is the most important factor to choose a food delivery service. In this regard, Grab easily beats competition while Ahamove has just a little smaller driver fleet of 60,000 who are always ready to lend a hand to apps lacking shippers.

Nguyen Thi Hoa, an office worker from Ho Chi Minh City, said that she is satisfied with the service quality of Grab and Now due to the suitable fees, short delivery time, and professional drivers.

“Friends kept recommending Go-Food to me because of their massive promotions and I decided to give them a whir, but I had to wait for a long time and the drivers kept calling me consecutively to confirm the address, which was inconvenient,” Hoa said.

Another survey of GCOMM that summarised responses from 600 customers in Ho Chi Minh City and Hanoi in December 2018, showed that Grab ranks first in the food delivery market in customer satisfaction with service quality and delivery speed. The runners up are Now and Go-Food.

According to customers, Go-Food cannot hold a candle to other players when it comes to service quality and delivery time due to the sparse coverage of its drivers. In addition, Go-Viet’s policy that allows customers to book more than one order at the same time also results in problem.

Working for Go-Viet from the first days, Nguyen Tan T. from Nha Be district said that working conditions and benefits to drivers were more attractive at the beginning. Now, Go-Viet has decreased massive incentive programmes for drivers and made the bonus policy stricter.

“The app often has errors in positioning, something drivers have been complaining about for so long, to no avail. Besides, in some cases, customers place the same order twice, and the driver arriving later is left hanging with the order in his hands,” T said.

Pham Minh T. from Ho Chi Minh City, who has been working for Go-Viet for two months, said, “The position error occurs very frequently and the real address is often 1-2 kilometres from the position located on the app. This forces drivers to keep calling customers to make sure of the address.

The war in the food delivery sector is becoming fiercer by the way as players are pouring money to get an edge and increase driver coverage – however, despite testaments and boasts by many, few can put a dent into Grab’s dominance. 

Harnessing AI for healthcare revolution

In the not-so-distant future, AI will be an integral part of healthcare, allowing for faster, more reliable diagnosis and treatment while at the same time opening up opportunities no-one knew even existed.

In the past, patients were diagnosed and treated in the same way – without regard to each individual being fundamentally unique. However, the healthcare sector is now departing from evidence-based medicine to precision medicine to tailor diagnostics and therapy to the circumstances and personal needs of each and every patient.

Nowadays, data is surrounding people and AI can help us take in and use all this data. In fact, people are surrounded by AI in every waking moment of every day. When people look something up on Google, they become part of the deep learning algorithm. Clicking on any of the suggested links serves as feedback for Google. The more people search for a term and the more they click on a particular link, the more it will come up in subsequent searches. And this is just one example of deep learning and AI that are permeating even our most mundane daily activities.

A report from Accenture highlighted the value of AI in healthcare, concluding that it is worth its hefty cost. Accordingly, AI can save $150 billion annually on healthcare spending in the United States.

In a talk with VIR about the potential of AI in healthcare, Prof Dr Mathias Goyen, chief medical officer in Europe at GE Healthcare, the leading global medical technology and life sciences company, said that AI can help at the individual, department, and enterprise levels.

At the individual level, AI can be implemented in machines, devices, as well as CT, MRI, and ultrasound systems. The AI can be used before, during, or after the scan. Instead of manually processing slices, GE Healthcare makes a smart scanner which will free up technicians to spend more time explaining findings to patients and talking with doctors.

“We have built-in AI capabilities on our MRI systems that can automatically detect where the brain is, and it automatically suggests the right sequence and automatically suggests the optimal cross-sectional images, or slices, of the brain to acquire,” Goyen explained, taking only one example of how AI can be used before scanning.

Another possibility is to use AI during the scan. In ultrasound, the radiologist usually starts the scan, finds the region of interest, and then they press a button. The algorithm built into the machine can differentiate, in this case, between arteries and veins, based on different flow profiles. This enables people with less experience to read an ultrasound scan, which will be a great boon in rural areas where there is no doctor to do the scan, only a nurse.

After the image is taken, AI can support the diagnosis. One condition that doctors in the hospital fear is pneumothorax, better known as a collapsed lung. It can be deadly unless detected on time. In fact, it may take several hours before the radiologist actually views the image.

GE Healthcare has also developed a portable mobile X-ray system that has built-in AI capability to alert technicians when the algorithm detects a case of collapsed lung. The system was built by analysing and comparing the images to a large database of other images from patients with collapsed lungs, and has a 95 per cent likelihood of correct diagnosis.

“It is immaterial whether the radiologist is better than the AI or vice versa. It is about increasing the chances of timely diagnosis,” Prof Goyen emphasised.

In addition to machines, AI can be used to streamline the workflow in an entire radiology department. AI and deep learning can, first of all, streamline MRI protocols for efficiency without sacrificing image quality, which drives down examination time by 16 per cent.

In addition, imaging insights help optimise the radiology workflow and electronic patient records. As the examination time is reduced, doctors can scan more patients in the same amount of time, and productivity goes up. With the help of AI, waiting times can be reduced from six to two weeks. “A nice side effect is that the revenue increases at the end of the year because the more patients they scan, the more money the hospital earns,” said Prof Goyen.

Globally, GE Healthcare applies AI for predictive analytics to better manage the patient flow throughout the hospital. Two bottlenecks are the ER and the ICU department, the room with a lot of screens showing a lot of data such as the number of vacant or occupied beds, the number of patients, and wait time.

GE Healthcare has already developed 11 command centres across the world, which streamline workflow to increase the number of patients coming to the ICU every day. “In Toronto, by using the command centre, they were able to increase daily visits by 8 per cent and, importantly, they can virtually add an equivalent of 23 beds. They do not physically add those beds but the beds are used at a higher efficiency because you have full transparency of where the free beds in the hospital are, while manual calling does not give you an accurate reading,” said Prof Goyen.

This is not fiction, most of these applications are already reality, and the pace of development is also helping to reduce the cost of these technologies, gradually making them more feasible and providing superior healthcare to people across the globe.

New app HeyU joins delivery market

Newcomer HeyU is extending its reach to Ho Chi Minh City with a new super app with the explicit intent of taking a chunk out of the market share of Grab-Food, Go-Food, and Now.

On September 9, 2019, HeyU Vietnam Technology JSC officially set foot in Ho Chi Minh City after two years of developing its driver/rider partner network in Hanoi, as well as released a new multi-service application to take on the super apps of Grab and Go-Jek. Accordingly, the app will offer online shopping, e-wallet tied to a bank account, food delivery, and other services.

HeyU (formerly San Ship) is a fast delivery application for inner Hanoi and Ho Chi Minh City. It is a sharing economy model connecting shipper and shops, providing solutions to manage orders and optimising delivery time by plotting the shortest route.

The company's main commitments include not raising prices during rush hours and delivering every order within 55 minutes, while allowing shippers to collect multiple orders at the same time to increase their performance and revenue.

Ho Chi Minh City, the next market of HeyU following Hanoi, is expected to be a major market providing three times as many orders and clients than Hanoi, raising the total daily order volume of the app to 100,000.

Pham The Anh, CEO of HeyU, said: "We hold our clients above all and always stress service quality and customers' rights, so we provide a lot of supporting policies like compensating customers with a maximum of VND3 million ($130) if an order is lost, and promise to handle every dispute within an hour."

HeyU received $500,000 investment from Shark Nguyen Hoa Binh, chairman of NextTech Group, last year and is expected to collect $3 million from its upcoming Series A capital round.

PwC: Considerations for HR leaders in the new era of work

Companies should be proactive in upgrading their workforce for the digital era, while not neglecting the other fundamental obligations that an employer has to its employees, according to regional experts from PwC at an event held recently in Ho Chi Minh City.

A new survey of over 22,000 adults across 11 economies released by PwC – a global assurance, advisory, tax, and legal services firm – finds that the speed of change brought by technology is pushing workers across the globe to adapt.

The majority of workers (61 per cent) are positive about the impact of technology on their day-to-day work and 77 per cent of people would learn new skills now or completely retrain to improve their future employability.

Yet the support they receive from employers is not up to par, according to PwC experts from Southeast Asia at the roundtable discussion with HR leaders of Vietnam-based firms.

Most businesses are failing to take the necessary actions to grow or add future-ready talents to their organisations, for example by using data analytics to make workforce decisions or creating a compelling work experience for employees.

Findings from PwC’s report titled Preparing for tomorrow’s workforce, today reinforce these statements. The 2018 report finds that although more than 70 per cent of survey respondents in Southeast Asia think using data analytics in workforce decisions is important, only 34 per cent actually do so.

Meanwhile, 68 per cent of respondents in the region view mobility as important, but only 44 per cent have effective mobility and collaboration programmes in place to make the best use of talent across borders.

“Everywhere in the world, the future of the workforce will rely on highly-skilled workers. The situation in Vietnam is no exception,” said Nicole Wakefield, PwC’s Southeast Asia Management Consulting leader.

She added that employees and employers should think less about jobs and roles and more about the bundle of skills that they have and need in the digital world. It is this bundle of critical skills that will be the most important asset when setting up for success.

“Providing a culture of lifelong learning, upskilling, and growth mindset will be a priority for companies and their workforce. Learning will no longer be an activity that is only done once or twice a year in a formal classroom setting," Wakefield explained. “Rather, it will become a regular part of someone’s daily and weekly working journey as they continue to adapt and evolve.”

Upskilling and employee experience aside, employers should also pay due attention to the core obligations they have towards their workforce.

The term “employment tax” takes centre stage here. Employment tax can be understood as any obligation that an employer has in respect of its employees. Not only does it encompass paying employees on time, but it also includes fulfilling social security obligations and meeting regulatory requirements such as employment tax withholding, year-end reporting, as well as employee wellbeing, among others.

According to the Paying Taxes 2019 report by PwC and the World Bank Group, globally, tax authorities are collecting as much employment tax as profit tax (corporate tax). The changing legislation landscape in Vietnam reflects this global trend.

The changing legislation landscape in Vietnam reflects this global trend. For example, effective from December 1, 2018, social insurance contributions are payable by foreign individuals working in Vietnam under employment contracts with an indefinite term or a definite term of one year or more.

With this change, employers must start making contributions for foreign employees at the relevant employer contribution rates.

Elsewhere in Southeast Asia, legislative and technological changes are also causing disruption. Other employment tax trends in the region include more aggressive and targeted tax audit activities using data analytics, focusing on payroll audits and employer obligations. Quicker access to information and collaboration amongst regulatory authorities are also on the rise.

“These trends and challenges warrant a greater focus on developing a comprehensive employment tax framework, focusing on acquiring the necessary tax expertise, tax engagement structure, and risk management. This framework should include an employment tax strategy that is aligned to the wider tax and business strategy,” said Brittany Chong, Global Mobility Services leader at PwC Vietnam.

Chong added: “Forward-looking HR leaders are well-advised to take a holistic view of all the aspects of maintaining a productive workforce. Digital upskilling has been the buzzword recently and it should indeed be a focus. However, that does not mean that companies can afford to neglect compliance obligations with regards to their employees.”

ACV to come back 100 per cent state-owned enterprise?

If the proposal of the Ministry of Transport is approved, Airports Corporation of Vietnam (ACV) will return to being a 100 per cent state-owned company after its equitisation in April 2016.

The Ministry of Transport (MoT) has recently tabled a proposal for the prime minister on the re-acquisition of the foreign-owned stake in ACV to make it once again a wholly state-owned company in order to ensure national security.

At present, MoT is currently the largest shareholder of ACV with 95.4 per cent. With the market cap of VND180 trillion ($7.82 billion) as of September 3, ACV is the sixth largest enterprise on the Vietnamese stock market. It is also an attractive stock in the eyes of a number of foreign investment funds, including Dragon Capital and VinaCapital.

According to the MoT, after the equitisation of ACV, the ministry was left in charge of the assets relating to aviation infrastructure and airports. Thus, the arrangement of capital for maintaining runways, parking bays, and terminals, as well as machines and equipment directly serving flight operations such as ILS precision takeoff systems are the responsibility of the state – and ACV does not have the competence to deal with them.

To date, numerous infrastructure elements, including runways and parking bays at Tan Son Nhat and Noi Bai International Airports are overloaded and are falling into disrepair. The MoT reported this problem to the prime minister and proposed the government to arrange VND4.2 trillion ($182.6 million) from the mid-term public investment fund. However, there is no regulation for using the mid-term investment fund, especially the one for 2016-2020, for the maintenance of the aviation segment.

The MoT also proposed that it is necessary to link ACV's responsibility in managing and exploiting aviation infrastructure with the responsibility to invest, upgrade, and expand aviation projects. Thus, in the proposal, the ministry also wants all public aviation infrastructure transferred to ACV until 2025, after which it would review and return them to the government.

This would allow ACV to invest in upgrades or the maintenance of aviation infrastructure, which it normally could not do because these assets are being managed by the state.

ACV has expressed interest in becoming the investor of numerous aviation projects, including building Terminal T3 at Tan Son Nhat International Airport, rebuilding the old Na San Airport in Son La with the investment capital of VND2.3 trillion ($100 million), as well as joining key items at Long Thanh International Airport in the southern province of Dong Nai. Besides, most recently, ACV is racing Vietjet to become the investor of the expansion project of Dien Bien Phu Airport.

Vietnamese firms to attend first India-CLMV trade meeting

A delegation of 15 Vietnamese businesses will attend the First India-CLMV (Cambodia, Laos, Myanmar and Vietnam) Reverse Buyer Seller Meet in Chennai, India, from October 14-18.

The event aims at implementing Indian cooperation activities with the CLMV countries, as part of the Indian Government's Act East Policy, with a focus on promoting cooperation with the ASEAN region, including CLMV nations.

The Ministry of Industry and Trade (MoIT) will organise the trip for the Vietnamese enterprises to learn about import and export potential between Vietnam, CLMV countries and India; as well as the needs, requirements and standards of the market.

The event will also promote and introduce Vietnamese goods and learn about Indian goods and those of other CLMV countries.

The Vietnamese companies will join business to business (B2B) trade connection, connect directly with CLMV and Indian businesses, meet and work with a number of large distributors in the Indian market.

The MoIT also revealed that the participating firms mainly operate in the field of agriculture and fisheries; chemicals and petrochemicals; medical and pharmaceutical products; recycled energy; building infrastructure for connection; devices; cars and automobile components; and service.

The Ministry of Finance postpones plan of tax increase on hot rolled steel coil


BUSINESS NEWS SEPTEMBER 24

The Ministry of Finance has postponed its plan of increasing the most-favoured nation (MFN) tariff on imported hot rolled steel coil (HRC) from zero per cent to 5 per cent after collecting opinions from businesses and experts.

In its latest proposal for revision of Decree No 125/2017/ND-CP on export duty schedule, preferential import duty schedule and list of commodities and their flat tax rates, compound tax rates and outside tariff quota rates, the ministry has suggested not increasing the MFN tariff on HRC products.

According to the ministry, the previous plan was derived from the concern that the worsening of US-China trade tensions could lead to a massive influx of cheap Chinese steel to the Vietnamese market, negatively affecting local steel manufacturers.

Every year, Viet Nam imports more than eight million tonnes of hot rolled steel coil for domestic production, of which Chinese products account for 40 per cent.

The ministry also estimated the increase in MFN tax rate from zero per cent to 5 per cent would bring an additional VND3.15 trillion (US$135.3 million) to the State budget. But the actual number could be lower since businesses would seek imports from other countries with preferential tax rates of zero per cent such as South Korea and ASEAN countries.

In its response to the ministry’s previous plan, the Viet Nam Steel Association (VSA) suggested not increasing the tax as it would not limit Chinese steel import as China is part of the free trade agreement with ASEAN countries. Under this agreement, China enjoys a zero per cent preferential import duty on HRC into Viet Nam.

Meanwhile, the tax hike would limit supply from other markets which do not have agreements with Viet Nam such as Taiwan, Australia and India.

Hot rolled steel coil is a raw material used to produce cold rolled steel and other pre-painted galvanized steel sheets, and the increase in tax would make Vietnamese steel products more expensive, diminishing the competitiveness of local manufacturers.

"If tax is raised by 5 per cent, the average price of raw materials in Viet Nam will be 8-9 per cent higher than the world price, pushing up the price of finished products," VSA said in its document.

The Ministry of Industry and Trade has also proposed not to hike the MFN tax rate as the HRC production of domestic manufacturers has not met demand and export.

VSA’s statistics showed that demand for hot rolled steel in Viet Nam is currently about 10-11 million tonnes per year but local production capacity is only four million per year, meeting 30-40 per cent of the consumption.

The figure is expected to increase to 60-70 per cent when the Hoa Phat Dung Quat iron and steel production complex and Formosa Ha Tinh Corp’s additional mills start operation next year.

VSA President Nghiem Xuan Da welcomed the ministry’s latest decision of delaying its tax increase proposal.

"All members [of the association] are excited with the ministry’s decision, especially in the context of rising international trade tensions. We hope that the Government will continue supporting domestic manufacturers and the common interests of consumers, ensuring the sustainable development of the steel industry,” he told Nguoi Lao Dong newspaper.

 
 
 
 
 
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