VIETNAM BUSINESS NEWS AUGUST 5

Farm produce exports grow strongly despite COVID-19

Despite complicated developments of the COVID-19 pandemic, export revenues from agricultural products have increased strongly so far this year, greatly contributing to the country’s economic growth.

According to the Ministry of Agriculture and Rural Development (MARD), with export revenues of 28.6 billion USD, up 26.7 percent year on year, and import turnover of 24.7 billion USD, the agriculture sector enjoyed a trade surplus of 3.9 billion USD in the first seven months of 2021.

Deputy Minister of Agriculture and Rural Development Phung Duc Tien said that export revenues of major agricultural products hit 12.2 billion USD, a year-on-year rise of 15.1 percent, while earnings from forestry products rose 54 percent to about 10.2 billion USD, seafood up 12 percent to 4.9 billion USD and livestock increased 16 percent to 245 million USD.

Particularly, strong growth was seen in exports of product groups with revenues of over 2 billion USD, including rubber, wooden furniture and aquatic products, he said.

In order to complete the target of about 44 billion USD in exports of farm produce in 2021 in the context of COVID-19, MARD has coordinated closely with ministries, sectors and localities to roll out comprehensive measures to adjust production plans and crop structure to ensure the highest productivity.

At the same time, the sector will strengthen processing of the products and expand export markets, while working to remove trade and technical barriers for Vietnamese farm produce in foreign markets.

The ministry will foster connectivity among businesses, localities and Vietnamese representative offices abroad to increase exports of agricultural products, especially lychee and longan to the EU, UK, China and Japan, while making risk assessments of cassava residue for exporting to China./.

Container freight trains from Vietnam to Belgium help boost railway logistics services

Container freight trains from Vietnam to Belgium will open up a new cooperation direction to increase benefits of railway logistics services, Deputy General Director of the Rail Transport and Trade Joint Stock Company (Ratraco) Nguyen Hoang Thanh told the Vietnam News Agency (VNA).

The first train departed from Hanoi’s Yen Vien station on July 20 for Liege city of Belgium, where the goods continued to be transported to Rotterdam of the Netherlands by lorries.

The second train left the Yen Vien station on July 27, while the third and fourth are expected to set off on August 5 and August 10.

This is the result of cooperation between the Vietnamese railway sector and Maersk Lines of Denmark, Thanh said, adding that the Vietnamese side is in charge of packing goods into containers at warehouses and transporting them to the Yen Vien station and then to the country's border with China.

Regarding the issue that Vietnamese railways cannot operate a train on its own to provide direct freight transport services to Europe instead of just serving as an intermediary to supply logistics services, Thanh said that at this time, it is very difficult for the sector to organise a rail transport route from Vietnam to Europe.

At present, Vietnam's railway infrastructure remains limited, as it can only set up a 23-carrriage train while the Asia-Europe freight train must have a minimum of 41 carriages.

Therefore, Vietnam's railways must cooperate with other partners to ensure the necessary conditions, he said.

However, Thanh said that cooperation with major businesses such as Maersk Lines – the world’s largest container shipping company – will open up more opportunities for Vietnam’s railway industry.

Seafood industry urges vaccination for workers as 70 per cent of factories are closed

The Vietnam Association of Seafood Exporters and Producers (VASEP) has just sent an official dispatch to the prime minister and the Ministry of Agriculture and Rural Development, requesting vaccination for their workers as more than 70 per cent of businesses had to halt production.

Less than a third of seafood producers can operate even at reduced headcounts. Photo: baodautu.vn
VASEP has also appealed to the government to implement mass vaccination for workers at the soonest to maintain stable production and export.

Due to the COVID-19 pandemic, many businesses and factories have carried out the “three on the spot” mechanism, in which workers execute their tasks, take their meals, and rest after work at the same place to keep safe. However, businesses have found it extremely difficult to maintain stable production while costs have skyrocketed considerably.

According to VASEP, 270 enterprises, mainly located in the Mekong River Delta and the South Central provinces, have strictly implemented the "three on the spot" model.

Almost all localities in the area have also directed businesses to only maintain their operations if they can follow the “three on the spot” or “one road, two locations” mechanism to prevent infections at factories and industrial parks.

According to VASEP, only about 30 per cent of seafood enterprises in the southern provinces can comply with "three on the spot" production. The remaining 70 per cent had to close.

Besides, even though some factories can operate, they can only maintain active staffing at 30-50 per cent while the rest had to quit or take unpaid leave.

Truong Dinh Hoe, general secretary of VASEP said that although fighting against the pandemic is the top priority at the moment, it is still necessary for the government to support businesses in maintaining production and the circulation of essential goods and restore production and export.

Apart from people working at health facilities and related officials who have to come into contact with people, the elderly, and people with underlying diseases, workers in production in factories in industrial zones should also be prioritised for vaccination.

“Adding workers at seafood processing plants to the list of people for immediate vaccination will maintain both exports and production while securing jobs for many workers, including farmers and fishermen exploiting the sea and producing raw materials,” Hoe said.

Besides, VASEP suggested that the implementation of the "three on the spot" model is only a temporary initiative that is not sustainable over a longer timescale. Therefore,it is necessary to adopt a flexible plan for enterprises that are temporarily suspending production so that they can resume production by the end of the year and meet increased export orders.

For example, enterprises will actively coordinate with the Centers for Disease Control and Prevention (CDC) to organise testing for their employees twice a month. The test samples will be sent to the health agency, with those testing negative receiving permission to pass through transport check points. The CDC will also organise testing for enterprises once a month, thus ensuring each worker is tested three times a month.

Vietnamese dragon fruits seek export market in India, Pakistan

The office of the Ministry of Industry and Trade, on the morning of August 3, informed the press that the Trade Promotion Agency in association with the Vietnamese Embassy in India and the Vietnamese Embassy in Pakistan would hold an online trade conference to introduce and promote the export market for Vietnamese dragon fruits to Indian and Pakistanis partners.

This event is a part of the national program on trade promotion in 2021 to support dragon fruit growing localities, and enterprises and cooperatives that supply Vietnamese dragon fruits to update information on the current situation, trends, and market demand, search and connect with buyers, distribution systems, and importers in India and Pakistan. Thereby, it will strengthen the export promotion of fresh dragon fruits and products from Vietnam to these two potential new markets.

The conference is expected to take place on August 5.

According to the report of the Ministry of Industry and Trade, dragon fruit is grown in many localities across the country. However, the capital of this agricultural product is Binh Thuan Province. According to the Department of Agriculture and Rural Development of Binh Thuan Province, the province currently has 33,750 hectares of dragon fruits, of which 11,000 hectares meet the VietGAP standards, and 517 hectares meet the GlobalGAP ones. In 2020, the output of dragon fruits harvested here reached nearly 700,000 tons.

For a long time, Binh Thuan dragon fruits have been mainly exported to the Chinese market. Recently, the Covid-19 pandemic has affected the export of agricultural products to China in general and Vietnamese dragon fruits in particular. Some border gates stop customs clearance for some time to control the pandemic, leading to a backlog of goods. Therefore, accelerating trade promotion and seeking new markets for Vietnamese dragon fruit and agricultural products is the current new requirement.

Industrial property segment sees rising FDI despite new COVID-19 outbreak

Industrial property segment sees rising FDI despite new COVID-19 outbreak hinh anh 1

Despite a new outbreak of COVID-19 in Vietnam, the industrial property segment saw positive signs with new industrial zones established and key industrial projects beginning operations, according to a report by Savills Vietnam.

This year has witnessed new M&A deals and improvement in industrial land supply. The largest manufacturing projects in the first half of 2021 came from Hong Kong (China) and Singaporean investors that targeted northern Quang Ninh and Bac Giang provinces.

Vietnam’s FDI inflows rose by 3.8 percent year-on-year to 10.5 billion USD in the first seven months of 2021, with processing and manufacturing taking the lead, raking in 7.9 billion USD, or 47.2 percent of the total, data from the Ministry of Planning and Investment showed. The real estate came third with registered FDI of 1.16 billion USD.

“By region, the North received the majority of newly registered manufacturing investments with a substantial 1.97 billion USD, representing a 64 percent share,” said John Campbell, Manager of Savills Vietnam’s Industrial Services. The South followed with 728 million USD (23 percent), while the Central region attracted 395 million USD (13 percent).

In terms of provinces, Bac Giang received the highest amount of newly registered manufacturing capital with 589 million USD, closely followed by Quang Ninh with 569 million USD, and Bac Ninh with 222 million USD. Representing the South, Binh Duong came in fourth with 208 million USD.

For foreign investors, Hong Kong invested the highest amount of manufacturing FDI during the period with over 852 million USD, accounting for a 27 percent market share. Singapore was in the second place with 655 million USD (21 percent), followed by China with 549 million USD (18 percent), and the Republic of Korea with 330 million USD (11 percent).

John said the largest manufacturing projects in the first half of the year were from Jinko Solar and Fukang Technology from Hong Kong and Singapore investing 498 million USD and 270 million USD in Quang Ninh and Bac Giang, respectively.

Regarding new projects, Logos Property’s 81,000-sq.m project in the Vietnam-Singapore Industrial Park (VSIP) Bac Ninh 1 is expected to begin operation in the fourth quarter of 2021. New player in the market, KCN Vietnam Group JSC, acquired a significant 250-hectare land plot with an investment of 300 million USD, aiming to develop premium, sustainable factories and warehouses for rent in Vietnam with a national portfolio spanning across Bac Giang, Hai Phong, Hai Duong, Dong Nai and Long An.

He also noted that various new M&A deals have been inked this year. Boustead Projects Co. Ltd., for example, singed an options agreement for the proposed acquisition of 49 percent stake in KTG & Boustead Industrial Logistics JSC. If successful, the partnership will consist of 13 real estate seed assets amounting to 141 million USD in gross asset value covering about 840,000 sq.m of land and about 550,000 sq.m of gross leasable area, he added.

ESR Cayman Limited, the largest Asia-Pacific-focused logistics real estate platform, and BW Industrial Development JSC (BW), the leading logistics and industrial real estate developer and operator in Vietnam, have entered into a joint venture to develop 240,000 sq.m in My Phuoc 4 Industrial Park near Ho Chi Minh City. The partnership marks ESR’s entry into Vietnam, expanding the group’s Asia-Pacific footprint in the high-growth Southeast Asia region./.

Cashew nut exports projected to enjoy positive growth in third quarter

Vietnamese cashew nut exports are anticipated to see robust growth ahead in the third quarter of the year due to growing demand in both the United States and the EU, according to the Ministry of Industry and Trade.

Statistics released by the General Department of Vietnam Customs indicate that the country exported 50,000 tonnes of cashew nuts worth US$324 million in July, representing a rise of 19.6% in volume and 33.5% in value compared to the same period from last year.

Throughout the initial seven months of the year, the country shipped 324,000 tonnes of cashew nuts worth US$1.97 billion abroad, an increase of 21.4% in volume and 14% in value compared to last year’s corresponding period.

Despite cashew exports to the US and EU markets enduring a decline, the export proportion to the Asian market saw an increase from 28.02% in the second quarter of last year to 33.59% in the second quarter of this year.

Meanwhile, the US reduced cashew imports from the Vietnamese market during the past five months of the year, with turnover reaching US$341.61 million, a decline of 17.7%.

In contrast, France increased its cashew imports from the Vietnamese market in the reviewed period as turnover reached US$34.41 million, marking a rise of 36.2%.

Moreover, Japanese cashew imports from the nation also increased by 4.5% to reach US$12.92 million, with the market share of Vietnamese cashew nuts as part of Japan's total import value accounting for 38.97% during the opening five months of the year.

According to industry experts, cashew exports are projected to record positive growth moving into the third quarter of the year, with the US being the largest consumer of Vietnamese cashew nuts, followed by France.

Despite this expected growth, the cashew sector is anticipated to face a number of hurdles amid complicated developments relating to the fourth wave of the COVID-19 pandemic, including high transportation costs and a shortage of empty containers.

The Import-Export Department has therefore recommended that the cashew industry strive to fully tap into the Asian market, including China, Japan, and other niche markets in the EU moving forward.

Local firms are therefore encouraged to use other forms of transportation, such as utilising rail networks, in order to transport goods directly to the EU market.

FMCG groups made aware of trends

Fast-moving consumer goods groups are bearing the brunt of disruptions caused by pandemic restrictions, leading to price hikes and product shortages in the market.

Diana Unicharm JSC last week said that its distributors in Ho Chi Minh City and some southern provinces have found it too complex to transport various sanitary products to retail stores in the same city or province, because these items have not been classified as essential goods in some localities.

Diana Unicharm is one of the leading manufacturers in personal hygiene products in Vietnam possessing well-known brands including Diana sanitary napkins, Bobby diapers, and E’mos tissue brand.

If the blockages in the supply chain are not removed, the products will soon be in short supply in the market, affecting health and hygiene, warned the company.

Ho Chi Minh City and other southern provinces only allow trucks with essential goods to travel during the social distancing period under Directive No.16/CT-TTg released in March 2020 on measures for preventing and controlling COVID-19. However, due to the differences in classifying essential products among localities, some fast-moving consumer goods (FMCG) manufacturers are facing difficulties to move products within the southern region.

In some provinces, milk and other drinks were considered non-essential, making it hard for businesses to deliver certain products to retailers.

Last week, the Ministry of Industry and Trade proposed the government to issue a list of goods “prohibited from circulation” instead of a list of “essential goods”. This proposal aims to remove issues for businesses in transporting essential goods at this time. Like other manufacturing industries, FMCG groups are required to maintain a COVID-19 bubble or the three-on-spot plan for its workers to live, eat, and work at factories. This has put more pressure on these businesses to maintain manufacturing activities and supply products to end-users.

Processed food producer Vissan announced last week that it would cease operations. The company has detected coronavirus infection cases among its workers although it had established a COVID-19 bubble on site. Vissan is responsible for nearly 29 per cent of the goods supplied to Ho Chi Minh City during the social distancing period. Retailers are sourcing products from other suppliers to make compensation for the shortage from Vissan.

The disruptions among FMCG manufacturers are likely to cause price hikes. As reported by Wall Street Journal, Unilever was grappling with higher costs for ingredients, packaging, and transportation, which would likely lower its full-year profitability. Thus, the London-listed consumer goods giant said it would step up price increases across the world, having already raised prices 1.6 per cent in the second quarter. Other producers, including Procter & Gamble, have also warned of rising prices this year.

In the second quarter, Kantar Worldpanel Vietnam’s report showed that the increase of average paid price for FMCG (+2-3 per cent) is higher than the previous quarter and the average consumer price index (+1.5 per cent). However it is still lower than the same period last year. Given the worsening COVID-19 situation with an all-time high number of confirmed cases in July, the report said rising prices are inevitable as raw material costs increase due to stricter lockdowns. This is more likely to elevate further in the next two months.

According to Peter Christou, commercial director of Kantar Worldpanel Vietnam, because of price increases of ingredients, logistics, transportation, and others, producers cannot maintain current prices and may need to pass on price increases to consumers.

“They are concerned that if they increase prices, retailers and consumers will have negative reactions and cut back on their products or stop buying altogether. They need to understand the price elasticity – at which point consumers are willing to pay more for a given product by different consumer groups in order to manage the risk,” Christou said. “This time, the impact is more severe, with more cases and tougher lockdowns, and therefore the impact on household finances and job security is greater because it impacts people’s ability to go to work and do business, and therefore get paid.”

According to Kantar’s latest survey on consumer confidence in June, up to 40 per cent of households in the country’s biggest cities are struggling. The lower-income groups are even more affected with half of them facing financial restraint. There will be a spending cut on luxury and less essential categories and a downtrend in many other categories.

In terms of shopping behaviours, consumers started to stock up essentials such as packaged foods at the end of May, but not at a level seen in 2020’s first wave of coronavirus infections. Kantar’s data showed that the share of minimarkets has grown to almost the same level as hypermarkets and supermarkets in June. With new and even tighter restrictions together with a more severe impact on people’s income, there will be changes in consumers’ daily routines, with potential new behaviours emerging in the long term. Thus, FMCG producers will have to monitor the changes to adjust their strategy during the pandemic, the survey concluded.

E-commerce sees strong growth during pandemic

The Covid-19 pandemic has shaken the core of many businesses and industries that are now facing innumerable difficulties and challenges, with many struggling to stay afloat even as the pandemic continues unabated.

However, during this extremely difficult phase, the financial industry has shown immense resilience and still maintains growth largely due to a strong shift towards online payment methods. This opinion has been shared and discussed a lot recently by financial experts both globally as well as within the country.

The above view of financial experts is consistent with the development and growth of the financial market in Vietnam. After many years of promoting non-cash payment methods the results are still not as expected, even though this form of payment witnessed amazing growth and popularity during lengthy periodic social distancing phases since April 2020.

Data shows that in the first twenty days of the month the whole country implemented Directive No. 16/CT-TTG, and the average transaction value through the inter-bank electronic payment system increased by 8.85%. During the last four months of 2020, domestic payments via bank cards increased by 26.2% in quantity and 15.7% in value; and payments via internet channels increased by 3.2% in quantity and 45.7% in value. In particular, payments via mobile phones increased by 189% in quantity and 166.1% in value, as compared to the same period in 2019.

This positive growth continued until the end of November 2020, when the number of payment transactions via mobile phones reached about 1,044 million transactions with value of nearly VND 10.900.000 bn, an increase of 118.5% in quantity and 121% in value, as compared to the same period in 2019. The number of payment transactions via the internet reached nearly 421.8 million with value of around VND 24.600.000 bn, up by 10.8% in volume and 24.4% in transaction, as compared to the same period in 2019.

According to the latest statistics published by the State Bank of Vietnam, by the end of April 2021, transactions via the internet channels increased by 65.9% in quantity and 31.2% in value; transactions via mobile phones increased by 86.3% in volume and 123.1% in value; and transactions via QR Code channels increased 95.7% in quantity and 181.5% in value.

Some statistics show that during the time of the Covid-19 pandemic, many people had access to cashless payment methods for the first time. For example, in 2020 the number of registered users of Momo e-wallet were 23 million, an increase by nearly two times compared to 2019. In 2020, the number of transactions of Momo e-wallet crossed 403 million transactions, with transaction value of about US$ 14 bn, an increase by 3.5 times compared to 2019.

In 2020, the number of new openings for bank cards also increased sharply. Domestic card online payment transactions through the Vietnam National Payment Services Joint Stock Company (NAPAS) also grew quite well compared to 2019, with the number of transactions increasing by about 185% and the transaction value increasing by around 200%.

The pandemic is being seen as a catalyst for explosive growth of mobile apps usage. Many people agree that the growth of the non-cash payment field has grown vastly during the Covid-19 pandemic. The pandemic has made many people more afraid to use paper currency because cash is being believed to be one of the factors that can spread the infectious disease. Moreover, as many businesses have had to close down and people have to accept strict social distancing, it is much more convenient to order for supplies online and pay online for almost all goods and services.

Vietnam has currently around 79 payment service providers offering services via the internet, besides also 44 service apps via mobile phones. Other than these, many payment institutions are also connected to e-commerce exchanges.

In the first quarter of 2021, the growth rate of total value of e-commerce transactions increased by 5.5 times compared to the fourth quarter of 2020. Accordingly, non-cash payment channels via cards and e-wallets also increased due to the fear of using paper currency by consumers. Moreover, before this trend took off, e-commerce platforms had combined with payment units to deploy dual incentives for users to prioritize electronic payments, which added to the push for non-cash payment popularity.

According to a report by the Vietnam E-commerce Association (VECOM), the Covid-19 pandemic has had a profound and deeply lasting impact on the economy and society, including e-commerce platforms. Vietnam's e-commerce is expected to grow by about 15% and reach a scale of about US$13.2 bn. During the Covid-19 pandemic, the online payment industry has continued to grow strongly. In only the first six months of 2020, businesses recorded an increase of 81% in domestic card payments and sales through e-commerce channels.

However, although non-cash payment methods have changed significantly, this change has only occurred mainly in urban areas, focused more on technology savvy young people. Although cash payments have declined, they are still the main form of payment. Therefore, despite the growth of the non-cash payment system, more efforts are still needed to establish its wide scale usage.

Currently, the legal framework to meet the requirements for new business models and products and services based on technology for non-cash payments is also being promoted. For example, the State Bank of Vietnam has just completed a draft for a new Decree on non-cash payments and developed a Decree on a controlled trial mechanism for Fintech activities in the banking sector to submit to the Prime Minister for promulgation of Project to develop non-cash payment for the 2021 to 2025 period, with a pilot implementation of mobile money.

 

According to Ms. Pham Chau Loan, Deputy Head of Digital Channel Development of Partners of Vietcombank, the Covid-19 pandemic has had a strong impact on consumer behavior which is seeing a radical shift. At this time, many people are working from home and hence have limited contact with the outside world.

In such a situation, non-cash payment methods solve many problems. These methods are now being considered as solutions to save the economy in the future, and for consumer activities to continue to flow continuously and conveniently as normal in future. In 2020, many economies saw sudden negative growth, but Vietnam's GDP growth remained positive at 2.91%, which was partly due to the growth of e-commerce platforms and e-payment methods.

EVFTA, CPTPP bring about great economic benefits for Vietnam

Vietnam has enjoyed significant economic benefits, especially in terms of exports, from new-generation free trade agreements (FTAs) such as the EU-Vietnam Free Trade Agreement (EVFTA) and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), according to a report sent to the prime minister by the Ministry of Industry and Trade.

Thanks to these FTAs, Vietnam’s exports to the European Union (EU) and member states of the CPTPP have seen positive achievements despite the complicated Covid-19 situation, the ministry said in the report.

Data of the ministry showed that two-way trade between Vietnam and the EU reached US$55.4 billion in 2020, falling 1.8% from 2019. The country exported goods worth US$40.1 billion to the EU, while it imported US$15.3 billion, leading to a trade surplus of US$24.8 billion last year with the bloc.

Vietnam’s biggest importers among the European countries in 2020 were Belgium (US$2.3 billion), Germany (US$6.6 billion), the Netherlands (US$6.9 billion), France (US$3.3 billion) and Italy (US$3.1 billion).

The country’s key products for exports to the EU were footwear, plastics, rice, textiles and garments, and vegetables and fruits.

Meanwhile, two-way trade between Vietnam and member states of the CPTPP amounted to US$79 billion in 2020, increasing 1.9% year-on-year.

Vietnam exported goods worth US$38.7 billion to these countries and spent US$40.3 billion on imports, leading to a trade deficit of US$1.6 billion last year.

Particularly, the country’s export value to Mexico and Canada surged 11.8% and 12.1% year-on-year, respectively.

Vietnam’s key products for exports to member states of the CPTPP included seafood, footwear, textiles and garments, peppercorn, wood and wooden products, and machinery and equipment.

The EVFTA and CPTPP have also helped Vietnam attract more foreign direct investment (FDI).

According to the Ministry of Industry and Trade, FDI of the CPTPP members to Vietnam reached US$11.6 billion in 2020, soaring 23.4% compared with 2019. Meanwhile, EU investors poured US$1.4 billion into the country last year, falling 6.7% year-on-year.

However, data of the Vietnam Chamber of Commerce and Industry (VCCI) showed that only 29% of Vietnamese companies that export goods to CPTPP member states have enjoyed tariff incentives as regulated by the agreement.

Besides, only 38 of 63 cities and provinces in the country have import/export activities with the EU.

VCCI suggested that trade and investment potential from the EVFTA and CPTPP remains high and Vietnamese enterprises should try harder to take advantage of these FTAs.

Chinese smartphone brands accounts half of Vietnam market in Q2/2021

Vietnam’s smartphone shipments witnessed 11 per cent growth on-year in the second quarter, with Chinese original equipment manufacturers (OEMs) capturing around half of the market, according to Counterpoint Research’s Monthly Vietnam Channel Share Tracker.

Pent-up demand and a new user base coming from the feature phone segment largely contributed to this growth.

Compared to past seasonal trends, the market performed well during the first two months of the quarter while the third one witnessed a drastic fall in shipments as Vietnam faced its highest ever spike in COVID-19 cases.

Samsung topped the market with a 37 per cent share riding on the Galaxy M31, Galaxy A12, and Galaxy A02s as top models. Xiaomi captured the second spot with 17 per cent driven by the Redmi 9 series and Note 10 series. OPPO and vivo took the third and fourth spots. The OPPO A series smartphones were the volume driver for the brand while the Y-series grabbed the share for vivo in Vietnam. Apple continued to do well in Vietnam and became the fifth-largest smartphone brand in the market. Vietnamese consumers hold a greater aspirational value for Apple, which helps the brand.

Smartphone shipment share of Top 5 brands in Vietnam, Q2/2021 against Q2/2020. Source: Counterpoint
Research Associate Debasish Jana said, “The Vietnamese smartphone market is constantly growing. Multiple factors are driving this growth, such as the shift towards smartphones from feature phones, increased economic stability, and promotions from OEMs.”

He added that online channels were increasingly playing a significant role in the market, especially after the pandemic. With COVID-19 restrictions shutting down offline stores, the share of the online channel rose on-year during the quarter to capture 14 per cent of the total smartphone market.

Vietnam has already started its 5G trials, with Viettel becoming the country’s first operator to do so. Vinaphone and VNPT will follow suit. Although it may take a couple of years to have a countrywide 5G network, we can consider this a good start. Currently, 5G capable smartphones have a 14 per cent share of the Vietnamese market. We can expect it to grow in the coming days as operators are gearing up to launch 5G services.

Although Vietnam is currently going through a fresh wave of the pandemic, Counterpoint expects the country to bounce back soon as it has contained the surge quite well in the past.

Habeco reports decrease in revenue in second quarter

The brewer Habeco reported bleak business, with revenue dropping in the second quarter due to the fourth wave of the COVID-19 pandemic.

According to its business statement for the second quarter, between April and June, Habeco acquired VND1.94 trillion($84.34 million) in net revenue, down 10 per cent on-year. Its revenue in the second quarter declined by 13 per cent on-year.

As a result, its gross profit was VND511 billion ($22.2 million), down 10 per cent on-year.

Amid the ongoing pandemic, the group’s expenses for operation and management decreased over year, however, there has been a marked rise in sales expenses, including advertisements, promotion programmes, and delivery.

In general, in Q2, the brewer acquired VND205 billion ($8.91 million) in pre-tax profit, down 25 per cent on-year. Profit was four times higher than in Q1, however, it is the lowest second-quarter profit of the company since 2015.

In the first half, Habeco’s net revenue and gross profit reached VND3.32 trillion ($144.34 million) and VND229 billion ($9.95 million), up 15 and 57 per cent on-year, respectively.

Habeco's H1 business results are brighterthan last year because in H1/2020 the company suffered a loss of VND100 billion ($4.34 million) due to the dual impact of the pandemic and Decree No.100/2019/ND-CP on administrative sanctions for road traffic and rail transport violations, applicable since January 1, 2020.

Habeco is the second largest domestic brewer in Vietnam, following Sabeco. This brewer currently holds 18.4 per cent of the market share.

Tax cuts proposed to support businesses rocked by pandemic

The Tax Policy Department under the Ministry of Finance is drafting a proposal on tax reduction to support individuals and businesses affected by the COVID-19.

The MoF is preparing further tax support for businesses hit by COVID-19. Photo: tinnhanhchungkhoan.com
Specifically, there could be four different measures for tax reduction and exemption on late payment interest for businesses and individuals.

(i) Reducing 30 per cent of corporate income tax (CIT) payable in 2021 for enterprises and organisations as applied in 2020;

(ii) Reducing 50 per cent of payable tax amount arising from production and business activities in the third and fourth quarters of 2021 for vulnerable business households and individuals doing business in all industries;

(iii) Reducing 30 per cent of value-added tax for enterprises and organisations operating in a number of service sectors;

(iv) Exemption of late payment interest arising in 2020 and 2021 for enterprises and organisations incurring continuous losses in 2018, 2019, and 2020.

It is estimated that the implementation of solutions proposed can reduce budgetary revenue by about VND20 trillion ($869.57 million).

In addition, the MoF is also studying and reporting to the prime minister several solutions to reduce land rents for 2021.

"The reduction of taxes, land rent, and late payment interest will put pressure on the state budget, but in the long term, it will have a great impact on the whole society, demonstrating the government's companionship to support vulnerable businesses," a representative from the MoF said.

HCMC’s retail sales drop sharply in July

HCMC’s total retail sales of goods and services in July were estimated at VND51,576 billion, dropping 27.7% from June and 42.2% compared with the same period last year.

The retail sales of goods alone were VND35,780 billion, falling 20.1% month-on-month and 25.1% year-on-year.

Revenue from catering and accommodation services reached VND1,156 billion, falling 52.9% month-on-month and 84.1% year-on-year.

Of the figure, revenue from accommodation services dropped 26.8% month-on-month and 73.7% year-on-year to VND123 billion.

Meanwhile, revenue from catering services dropped 54.8% month-on-month and 84.8% year-on-year to VND1,033 billion.

The city earned hardly anything from travel services as the tourism industry has been shut down due to the raging  Covid-19 pandemic.

Revenues from other services were estimated at VND14,640 billion, declining 39.4% from the previous month and 56.5% compared with the same period last year.

Of them, revenues from real estate services reached VND9,831, falling 40.3% month-on-month and 53.2% year-on-year.

The city’s total retail sales of goods and services from January to July were estimated at VND583,192 billion, falling 1.8% compared with the same period last year.

Of the figure, the retail sales of goods reached VND335,788 billion, accounting for 57.6% of the total and increasing 2.2% year-on-year.

Specifically, the sales of food and foodstuffs rose 5.9% year-on-year and accounted for 17.6% of the total retail sales of goods.

The sales of household appliances, tools and equipment fell 0.6% and accounted for 14.7% of the total, while that of oil and gas rose 8.2% and accounted for 9.4%.

Data of the General Statistics Office showed that the country’s total retail sales of goods and services from January to July amounted to nearly 2.8 quadrillion, increasing 0.7% compared with the same period last year.

Excluding inflation, the total retail sales of goods and services in the seven-month period fell 0.74% year-on-year.

In July alone, the total retail sales of goods and services of the country reached VND339,000, falling 8.3% from June and 19.8% from the same period a year ago.

Food suppliers channel logistics resources to address demand

Supermarkets, pharmacies, and logistics firms gearing up to supply food to consumers are now scrambling with the large amounts of undelivered orders amidst a shortage of shippers.

Guardian Vietnam is among 20 companies in retail and logistics to support the “Veggies Campaign,” an initiative launched by Ho Chi Minh City Department of Industry and Trade. The health and beauty retailer is now leveraging its store coverage and capability in sourcing and logistics to bring essentials such as vegetables, rice, and eggs to residents of Ho Chi Minh City, mitigating the impact of the current food crisis and providing support for farmers in other southern provinces.

About 12 tonnes of fresh vegetables and 6,000 eggs have been sold every day across 66 Guardian stores in the city. Although it has faced obstacles in mounting the operation, the team is committed to ensuring the quality of fresh produce in their inventory and pricing them within the cap set by the local authorities, as reported by Retail Analysis.

Another company, VinShop, has also joined the same initiative. VinShop is a mobile app allowing grocery store owners to get hundreds of products from suppliers in one order within a day. With 5,000 points of sale in the city, it has quickly arranged its supply chain to meet the growing demand for fresh produce.

Vo Duy Phu, chief of Growth and Marketing at One Mount Distribution, which owns VinID & VinShop, told VIR, “VinShop has heavily invested in technology infrastructure, the warehouse system, and also an extensive delivery team, helping us to speed up progress and set up the supply chain for fruit and vegetables within just a few days. However, our grocers do not have much experience and competitive advantages in selling such items. Therefore, they have to gradually learn how to preserve and sell the items properly to their customers.”

Meanwhile, Nhat Tin Logistics is actively channelling all its resources to participate in the programme. General manager Nguyen Van Tu said, “Since July, Nhat Tin Logistics has implemented price-stabilisation points to sell fruits and vegetables at its post offices. The initiative aims to facilitate consumers to buy food at reasonable prices so that people can feel secure during social distancing. Thanks to the citywide network of post offices and a fleet of hundreds of trucks, Nhat Tin Logistics can provide about 5-10 tonnes of fruits and vegetables per day to consumers.”

Tu noted that the company is preparing to launch mobile points of sale named Mobile Post, an improved truck model that functions and operates like a mobile post office selling various types of goods. The new solution will make shopping more convenient and bring essential items closer to consumers during the pandemic.

After solving the problem of ensuring a smooth supply chain from the suppliers to points of sale, many supermarkets and retail chains continue to face new difficulties in distributing goods to consumers because delivery services are being tightened.

According to Saigon Co.op, the volume of goods at points of sale is gradually stabilising and starting to increase when the transportation and gathering of goods from provinces to Ho Chi Minh City has been more convenient than at the beginning of the implementation of social distancing. However, the backlog of online orders is still quite large and the delivery of goods to customers is also facing a lot of issues due to new regulations narrowing the list of goods to be delivered.

Nguyen Vu Diem Thi, marketing director of Saigon Co.op, said that a list of more than 100 essential goods will be sent to areas in need. Each area will send a focal point to record the needs of the people and then aggregate them into an order. Saigon Co.op will deliver goods to the focal point to redistribute to individuals and households in locked-down and quarantined areas twice a week.

The AEON supermarket system has also decided to suspend online sales in the southern region from July 26 due to difficulties in finding shippers. AEON Vietnam supermarkets are focusing on processing old orders of customers ordered by phone, messages, and app, and stopped receiving online orders, including purchases by phone and through Grab or Now applications.

“Completely meeting people’s online shopping needs in the context of applying social distancing measures has become a huge challenge for supermarkets,” said a representative of AEON Vietnam.

To address the need for essential goods, AEON organised nine mobile selling outlets in Ho Chi Minh City from July 27, double compared to the previous week and providing more than 10 tonnes of essential goods to hundreds of households in the three districts of Tan Phu, Binh Tan, and District 6.

Foreign lenders offer up new capacities in Vietnam

Taiwanese and South Korean financial institutions are pinning their faith on Vietnam’s equity market thanks to the tremendous growth opportunities, underpinned by the greater demand and skyrocketing liquidity in the country’s stock exchange landscape.

Last week, SSI Securities Corporation – Vietnam’s largest brokerage – inked a $100 million credit facility agreement with a consortium of leading Taiwanese financial institutions, including Union Bank of Taiwan, Taipei Fubon Commercial Bank, Bank of Taiwan, Taiwan Shin Kong Commercial Bank, and Hua Nan Commercial Bank, among other institutions.

The 12-month unsecured syndicated loan package, with preferential rates, is slated to be disbursed in two different phases.

Particularly, Union Bank of Taiwan and Taipei Fubon Commercial Bank are the mandated lead arrangers and bookrunners of the deal.

Last December, SSI broke fresh ground when the brokerage signed a mortgage loan agreement of $85 million with a group of nine foreign banks, led by Taipei-headquartered Union Bank of Taiwan.

Previously in 2019, SSI also wrapped up a $55 million loan from a group of foreign lenders led by Bank SinoPac to become the first security company in Vietnam to access unsecured foreign loans.

In mid-May, a consortium of seven Taiwanese financial institutions, led by First Commercial Bank, earmarked a syndicated loan package of $44 million to Ho Chi Minh Securities Company (HSC).

The syndicated loan for HSC is the first that First Commercial has made since the bank’s establishment of its Ho Chi Minh City branch. A bank representative said, “First Commercial and partners appreciate HSC’s firm position in the domestic market, with sustainable growth, a foundation of financial and risk management meeting international standards. This loan will help HSC continue to implement its development strategy in the coming years.”

In April, a group of foreign banks, including Taipei Fubon Commercial Bank Vietnam, Cathay United Bank Vietnam, and Woori Bank Vietnam (Bac Ninh branch) rolled out a $60 million syndicated loan for VietinBank Securities – the brokerage arm of state-owned lender VietinBank. Woori Bank specifically provided $50 million, while Taipei Fubon and Cathay United provided $10 million altogether.

In March, VietinBank Securities also successfully secured a $30 million syndicated loan with a 12-month tenure from a group of four Taiwanese lenders. These types of deals would lay a concrete foundation for the brokerage to boost its activities in terms of margin lending, international loan advisory, and financing arrangements.

Besides loan contracts, Taiwanese exchange-traded funds (ETFs), such as Fubon FTSE Vietnam ETF, have also increased their footprint in the Vietnamese equity landscape. As of July 26, the fund’s scale reached nearly $566 million, becoming the most active ETF in the country.

Nguyen Ngoc Anh, director of Investment Banking Division of SSI, told VIR, “Unsecured syndicated loans which involve a consortium of lenders is having a real moment here in Vietnam thanks to the domestic stock market’s tremendous growth opportunities.”

“However, foreign financial institutions also often grant unsecured credits based on borrowers’ financial soundness, reputation, transparency, future outlook, potential growth, and how their propositions outweigh others competitors.”

Source: VNA/VNS/VOV/VIR/SGT/SGGP/Nhan Dan/Hanoitimes 

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