BUSINESS NEWS HEADLINES MAY 14

Target of one million firms a tall order amid COVID-19

 
     

BUSINESS NEWS HEADLINES MAY 14
Businesses have to review their targets, strategies and activities to affirm their position and establish new supply chains. — Photo cafef.vn


 
 
 
 The target of one million businesses by 2020 could be hard to hit with the ongoing COVID-19 pandemic. However, there is optimism regarding the task.

Figures from the General Statistics Office showed that nearly 37,600 new firms were established in Viet Nam, with registered capital of a combined VND445.2 trillion (US$19.1 billion) in the first four months of this year, down 13.2 per cent in number.

In April, the country had more than 4,000 companies stopping operations, increasing 68 per cent from the previous month. The number of dissolved enterprises totalled over 3,000. The number of dissolved firms or those halting operations was up to 42,000.

The reason was due to the COVID-19 pandemic, causing a downturn for both the global economy and Viet Nam. This has made firms face difficulties and had to go bankrupt.

General Director Nguyen Bich Lam said the target of having one million new businesses in 2020 was extremely hard and even impossible.

Lam said though the number of companies resuming operations increased by 2.1 per cent in the period, the number was much lower than that of the same period last year. If the country could maintain last year's record growth rate of more than 138,000, the total number of businesses is expected to reach 900,000 this year.

However, economist Nguyen Minh Phong has a more positive view, saying that the COVID-19 pandemic would pose a big challenge for the set target, but there is still the potential to complete it.

The country now has 5 to 7 million household businesses which have scale and effectiveness similar to small-and-medium sized enterprises (SMEs). In addition, the Ministry of Finance submitted a proposal to the National Assembly to approve new policies to give financial supports for SMEs as well as new firms established from household businesses. Accordingly, there would be policies for corporate income tax reductions or exemptions for such firms.

Phong expected that the number of new enterprises in Viet Nam would see a breakthrough this year thanks to the support policies.

“Although it is not really sure, but with many expectations, we will strive to achieve the goal of one million businesses. From 2021, we believe that there will be new breakthroughs,” Phong added.

He said there would be new changes in the market in a state of “new normal”, including requirements of improving product quality, the interruption of traditional supply chains to open new business opportunities, new sectors and new partners. Especially, there would be new modern business methods based on e-commerce platforms.

Businesses therefore have to review their targets and strategies as well as activities to affirm their position and establish new supply chains.

“Firms should pay attention to upgrading technologies to improve quality and competitiveness. They should have scenarios for different situations in the future," he added. 

Da Nang's port gains 37 percent profit growth in Q1 
 

BUSINESS NEWS HEADLINES MAY 14
Giant cranes unload containers from a cargo ship at the Tien Sa Port in Da Nang City. The port reported a 37 per cent growth in the first quarter of 2020.


 Although economic growth was impacted by COVID-19 in the first quarter of 2020, Da Nang Port Joint Stock Company earned revenue of VND224.4 billion ($9.75 million) from sales and services, earning gross profit of VND70.09 billion ($3.04 million) and $2.44 million after tax profit (nearly 37 per cent growth).

In a report released on Thursday, the company said it would achieve revenue of VND855 billion ($37.1 million), and profit after tax of VND240 billion ($10.43 million) in 2020.

Following a 37 per cent growth in the first quarter, interest per share of Da Nang Port company (CDN) on the Ha Noi Stock Exchange was valued at VND567, an increase of VND153 in comparison to the same period last year.

The company earned VND184 billion (US$8 million) after tax profit in 2019, a 24.86 per cent year-on-year growth.

It said Tien Sa Port handled 10.4 million tonnes including 470,000TEUs (twenty-foot equivalent units) in 2019, up 20.29 per cent.

According to the report, the company has 99 million shares with total value of VND1.35 trillion ($58.86 million), of which 75 per cent are owned by Viet Nam National Shipping Lines, or VINALINES (equivalent to VND990 billion, or $43.03 million). Wan Hai Lines from Singapore has 20.26 per cent of the company’s total shares.

Tien Sa port, which was a key hub in central Viet Nam and met international logistics standards in the region connecting the East-West Economic Corridor that links Laos, Thailand, Myanmar and Viet Nam, received on average 23 ships from 15 shipping agencies per week.

It allows access to 70,000DWT (deadweight tonnage) ships, and 150GT (gross tonnage) cruise ships.

According to the Ministry of Transport, Da Nang City’s port system, including Tien Sa, Lien Chieu and Son Tra, would handle 29 million tonnes of cargo by 2030.

New high-tech park to be built in Đồng Nai

The Viet Nam-Korea Techno Park Investment and Development Joint Stock Company (VKTP) has proposed to Dong Nai Province the investment and construction of Techno Park, a Viet Nam-South Korea high tech park project.

The project is scheduled to have registered investment capital of US$150 million and be built on an area of about 300 hectares. Its location is near the Long Thanh International Airport as well as river ports and seaports to facilitate transport for import and export of goods.

This park is expected to attract a total investment of $2-3 billion from high-tech companies after six years of operation.

Cao Tien Dung, Chairman of the People's Committee of Dong Nai, said this project is suitable with the provincial policies on investment. One of the project's goals is to build a high-tech incubation centre that will support technology transfer to Vietnamese businesses.

In the late 1990s, the techno park model was born in South Korea to support small and medium-sized businesses, especially start-up companies developing new technologies, according to VKTP.

The first Techno Park in Viet Nam would support training of high quality human resources for the technological sector, and research and development of globally competitive high-tech products. At the same time, this park will also be a manufacturing area of high-tech products that have high added value and reach international standards, a VKTP representative Le Hoai Quoc told the Dau tu (Investment) newspaper.

The project will attract investment from high-tech enterprises of Viet Nam, South Korea and other countries and territories to development the core sectors of Industry 4.0 in Viet Nam. They include new computing technologies, microchips, semiconductors, blockchain, artificial intelligence and robots, advanced materials, multi-dimensional printing, unmanned aerial vehicles, biotechnology, neuroscience and environmental integration.

Quoc said the Viet Nam Techno Park will also be an independent intermediary organisation to link universities, manufacturers and the Government and support for businesses investing in the park.

This park will have many functional areas such as a research and development (R&D) centre, a human resource training centre, a high-tech innovation and incubation centre and a high-tech product production area. 

Bac Giang will boost domestic lychee consumption due to difficulties in export

Bac Giang Province will promote domestic consumption of lychees due to difficulties faced in exporting this kind of fruit this year.

If Bac Giang could not export lychees this year due to the COVID-19 pandemic, the province would focus on promoting domestic consumption as Viet Nam is a potential market with about 90 million people, according to Chairman of Bac Giang Province People's Committee Duong Van Thai.

This is one of the province's three scenarios for consuming this fruit this year. The other two scenarios are lychees could still be exported, Thai said.

This year, Bac Giang Province has over 28,000ha of lychees with an estimated output of over 160,000 tonnes, an increase of 10,000 tonnes year-on-year.

Of which, Bac Giang has 19 lychee growing areas granted codes by Japanese side to export lychees with a total area of 103ha, and an estimated output of 600 tonnes in Yen The and Luc Ngan districts.

According to the Ministry of Industry and Trade, customs clearance for import and export goods is still being implemented slowly at the northern border gates due to the strict pandemic prevention measures. This has affected the export of many kinds of fruit, including lychee.

The ministry has recommended enterprises exporting farm produce, including lychees, to consider transporting of export goods by train to reduce volume of goods getting held up at the border gates.

Minister of Agriculture and Rural Development Nguyen Xuan Cuong said his ministry has actively worked with provinces and cities producing agricultural products, especially Bac Giang and Hai Duong which account for 50 per cent of the total lychee output nationwide, to develop solutions on boosting consumption of those products.

In 2020, Hai Duong has a total lychee area of about 9,750 hectares producing an estimated output of 45,000 tonnes, nearly double compared to 2019. 

Dien Quang Light Bulb to become technology solution provider

 Profits of Dien Quang Light Bulb (DQC) last year fell to their lowest level in 10 years at VND27 billion (more than US$1.1 million) and would fall more this year, attendees were told at the firm’s annual general meeting of shareholders in Ha Noi.

Due to the COVID-19 pandemic, the light bulb producer divided the 2020 business plan into two scenarios. In the first, if the pandemic was under control and the firm returned to normal operations in Q3, it estimated revenue of VND610 billion, a reduction of 26 per cent and profit before tax of VND1.86 billion, a strong decrease of 95 per cent from 2019.

In the second scenario, if the pandemic persisted beyond Q3 and the firm could return to normal by Q4, the revenue would decrease by 35 per cent to VND543 billion and the firm expected to see a loss of VND9.6 billion in profit before tax.

In the meeting last Friday, the firm also planned to review and cut costs by at least 20 per cent and would not pay dividends in 2020.

By the end of Q1, DQC recorded net revenue of VND191 billion and net profit of VND3 billion, reductions of 15 per cent and 65 per cent respectively from Q1, 2019.

The firm said lower results were due to the impact of COVID-19 on its increasing finance for long-term investments, administration costs and technology while the price of shares plummeted.

DQC Chairman Ho Quynh Hung told shareholders: “We need to suffer losses to spend on technology for the future.”

Established in 1973, DQC is one of the largest light bulb manufacturing and lighting equipment producers in the country. However, in recent years, its business has continuously decreased due to fiercer competition and declining demand. Normal light bulbs have been replaced by LEDs and other smart products.

At the meeting, the firm’s leaders said it will transform from a pure light bulb producer into a smart light solution provider. To do it, the firm has been building a the high-tech Dien Quang factory, restructuring its distribution system as well as spending more on R&D of smart products.

On May 12, shares of the light bulb producer closed down 0.8 per cent at VND17,550 each on the Ho Chi Minh Stock Exchange. 

Eximbank reduces pre-tax profit target by 40%

The Viet Nam Export Import Commercial Bank (Eximbank) has adjusted its business plan for this year due to the impact of the COVID-19 pandemic.

The bank reduced its profit before tax target by 40 per cent from VND2.2 trillion (US$93.6 million) to VND1.3 trillion.

However, the profit is still 22 per cent higher than the results achieved last year.

Eximbank determined to focus on supporting and sharing difficulties with customers in parallel with business stabilisation in order to ensure benefits for employees and shareholders, Nguyen Canh Vinh, the bank's acting general director, said .

The bank would have appropriate action plans but still ensure the stability and safety for its system, Vinh added.

The director also said that the capital adequacy ratio of the bank was controlled at a high level and other liquidity ratios were guaranteed within high thresholds in accordance with regulations by the State Bank of Viet Nam. 

VFCA wants to cut trading during massive sell-off sessions

The Viet Nam Financial Consulting Association (VFCA) has recently asked for securities transactions to be suspended during massive sell-off sessions to stabilise the market.

The VFCA sent a letter to the Prime Minister and the Ministry of Finance on May 6 asking for a mechanism that reduces or disconnects securities transactions during these sessions.

Due to the impacts of COVID-19, global stock markets have experienced a number of sell-off sessions, leading many to fall sharply.

The association said so far this year, the VN-Index had fallen 20 per cent, and experts still estimated a further decline due to the complicated economic situation.

"Although the market has recently recorded some stability, these types of sell-off sessions may occur more frequently,” it said.

Other stock exchanges around the world had applied temporary measures to prevent sell-off sessions and calm investors.

“It is necessary to develop market regulations such as reducing the trading time or even temporarily suspending transactions in sessions when sell-offs occur,” the VFCA said.

It said the VN-Index could drop 30 per cent in the long run, so a mechanism was needed to reduce the fluctuation band on the HoSE from 7 per cent to 2 per cent, and on the HNX from 10 per cent to 3 per cent. The association said such reductions had been applied during previous financial crises.

It also suggested cutting the trading time in the morning session and leaving just one hour for trading in the afternoon session. Currently, the afternoon session lasts 3.5 hours.

If the reduction didn't work, VFCA suggested cancelling trading for 30 minutes if the VN-Index dropped 5 per cent lower than the reference price for three days in a row.

If the VN-Index dropped over 6 per cent price for three days in a row, trading should be stopped for one hour.

In the letter, VFCA also proposed a cut to securities services fees to support and encourage investors.

It also asked for a change to regulations related to foreign investors such as foreign ownership in listed enterprises. The association asked to speed up the process of deploying products serving foreign investors like non-voting depository receipts (NVDR) to help foreign investors increase their stakes in local firms, and accept new electronic settlement methods as well as regulations on money transfers and other payments to boost the liquidity of the stock market.

The VFCA also asked for specific legal provisions to attract FDI enterprises to the local stock market and a legal corridor to promote the liquidity of the corporate bond market.

Expanded Duyen Hai 3 Thermal Power Plant to go into commercial operation this month

The state council for acceptance testing of construction works has permitted Electricity of Vietnam (EVN) to put the Expanded Duyen Hai 3 Thermal Power Plant project in the Mekong Delta province of Tra Vinh into commercial operation.

The thermal power plant extension project at the Duyen Hai thermal power complex located in Dan Thanh commune, Duyen Hai district, includes a 600MW power unit. The unit was scheduled to supply approximately 3.9 billion kWh to southern provinces and cities. The project has a total investment capital of $986.95 million.

In 2014, Sumitomo Corporation received an engineering, procurement and construction (EPC) contract to construct a supercritical power station in the 688MW Duyen Hai 3 coal-fired thermal power station expansion project of Power Generation Corporation 1, a power subsidiary of state-run utility EVN.

The construction of the project was kicked off in December 2014 and the expanded plant was expected to go into commercial operation in 2018. However, according to the report of the National Steering Committee for Power Development, the construction of Duyen Hai 3 expanded project was behind schedule.

Sumitomo and sub-contractors’ weakness in management and operation capacity, in addition to the delays in supplying machinery and equipment, are the major reasons of falling behind schedule.

Especially, the fire at the construction site in March 2018, caused by the carelessness of the sub-contractor Jurong Engineering Ltd., will extend the delays in the construction of the project.

Duyen Hai 3 is one of four power projects developed at Duyen Hai Power Centre with a combined generation capacity of 4,348MW as outlined in the nation’s power development master plan between 2011 and 2020 with a vision towards 2030. The centre occupies a total area of 879 hectares.

International media: Vietnam a reliable destination for investors post-COVID-19

The international media has continuously lauded Vietnam for its successful containment of COVID-19, making it a reliable destination for investors seeking to resume production.

Canada’s Globalnews.ca quoted advisors to foreign corporations as saying Vietnam’s success in the fight against COVID-19 has helped improve confidence among investors. “After proclaiming success in containing the coronavirus, Vietnam is positioning itself as a safe place to do business,” it wrote.

Thailand’s Bangkok Post said that while most Southeast Asian stocks fell during low-volume trade on May 6, Vietnam’s market jumped more than 2%, its best session in more than a month.

The international media has also highlighted the recovery in certain sectors of Vietnam’s economy. Japan’s Nikkei Asian Review carried the news that Apple will produce 3 million to 4 million AirPod wireless earphones, constituting 30% of total production, in Vietnam in the second quarter.

In tourism, TTG Asia has published survey results revealing that up to 45 percent of Chinese tourists want to visit Vietnam on their first foreign trip of 2020.

Regarding its successful COVID-19 response, The Economist magazine has published an article mentioning Vietnam’s simple and low-cost measures, notably strictcontact tracing and quarantining thousands of suspected cases.

Trà Vinh to expand clam farming areas

Trà Vinh Province plans to expand breeding clams on more than 15,000ha of alluvial grounds along coastal areas, with priority given to poor households, Phạm Minh Truyền, director of the province’s Department of Agriculture and Rural Development, said.

Truyền said the provincial People’s Committee would also set up more co-operatives and co-operative groups in localities. 

The Nha Trang Institute of Oceanography in the south-central province of Khánh Hòa will carry out a survey to evaluate 15,000ha of alluvial grounds in coastal areas for clam farming.

The Cửu Long (Mekong) Delta province of Trà Vinh has seven clam co-operatives and co-operative groups with 2,000 members. They breed clams on more than 3,500 hectares of alluvial grounds, with annual output of 4,000 tonnes.

Since the beginning of April, local clam breeders from clam co-operatives and co-operative groups have released more than 170 tonnes of clam seeds on about 180ha of water surface areas.

Of these, Thành Đạt and Ba Vinh clam co-operatives in Duyên Hải Town have released 101 tonnes of clam seeds on 101ha of water surface areas.

Around 73 tonnes of clam seeds have been released on 80ha of water surface areas by Tiến Thành Clam Co-operative and Long Hòa Co-operative Group in Châu Thành District.

Clam breeders earn an average profit of VNĐ50 million (US$2,135) per hectare each year.

Phạm Văn Trường, director of Tiến Thành Clam Co-operative, said local clam breeders have several advantages as the price of clam seeds is not high and there is no shortage of seeds.

The co-operative buys clam seeds at VNĐ15,000-22,000 ($0.64-0.94) per kilogramme, a decrease of VNĐ3,000-5,000 ($0.13-0.21) per kilogramme compared to previous crops.

HCM City recovers more than VND1.1 trillion in tax

 HCM City Tax Department has fined a number of tax violators and managed to reclaim more than VND1.1 trillion (US$51 million) for the State budget in the first four months of this year.

According to the department, after reviewing nearly 9,000 tax records, it found many cases of incorrect tax declarations that led to the lower tax collection for the city.

During the period, the department also checked a total of 5,112 enterprises and carried out 234 tax inspections, finding a number of cases of fraud and tax evasion.

It said domestic enterprises still owed tax debt of more than VND32.834 trillion in the first quarter, up by 34.6 per cent compared with Q4, 2019.

Bac Giang will boost domestic lychee consumption due to difficulties in export

Bac Giang Province will promote domestic consumption of lychees due to difficulties faced in exporting this kind of fruit this year.

If Bac Giang could not export lychees this year due to the COVID-19 pandemic, the province would focus on promoting domestic consumption as Viet Nam is a potential market with about 90 million people, according to Chairman of Bac Giang Province People's Committee Duong Van Thai.

This is one of the province's three scenarios for consuming this fruit this year. The other two scenarios are lychees could still be exported, Thai said.

This year, Bac Giang Province has over 28,000ha of lychees with an estimated output of over 160,000 tonnes, an increase of 10,000 tonnes year-on-year.

Of which, Bac Giang has 19 lychee growing areas granted codes by Japanese side to export lychees with a total area of 103ha, and an estimated output of 600 tonnes in Yen The and Luc Ngan districts.

According to the Ministry of Industry and Trade, customs clearance for import and export goods is still being implemented slowly at the northern border gates due to the strict pandemic prevention measures. This has affected the export of many kinds of fruit, including lychee.

 

The ministry has recommended enterprises exporting farm produce, including lychees, to consider transporting of export goods by train to reduce volume of goods getting held up at the border gates.

Minister of Agriculture and Rural Development Nguyen Xuan Cuong said his ministry has actively worked with provinces and cities producing agricultural products, especially Bac Giang and Hai Duong which account for 50 per cent of the total lychee output nationwide, to develop solutions on boosting consumption of those products.

In 2020, Hai Duong has a total lychee area of about 9,750 hectares producing an estimated output of 45,000 tonnes, nearly double compared to 2019. 

Bac Ninh banks offer support to keep businesses afloat

 Banks in Bac Ninh Province are offering reduced interest rate loans to businesses to help them during the COVID-19 pandemic.

Nguyen Huong Giang, chairwoman of Bac Ninh People's Committee, said the support is crucial to ensure companies stay afloat during these troubled times.

Financial institutes have also sped up the reform of administrative procedures to reduce the time it takes to review loan applications.

Nguyen Thac Quang, Deputy Director of the State Bank’s Bac Ninh branch, said as of April 28, banks and credit institutions restructured debts of 831 enterprises with a total value of about VND3.6 trillion. They also provided new loans with preferential interest rates for 2,228 customers with a total value of about VND9.3 trillion.

Since April 1, the Bank for Agriculture and Rural Development (BIDV)’s branch in Bac Ninh has had a credit package of VND100 trillion with annual interest rates that have reduced by 1-2.5 per cent compared to interest rates before the pandemic.

This has helped firms stabilise production and business, said Nguyen Trong Chi, deputy director of the BIDV’s Bac Ninh branch.

The branch has also reviewed production, business and damages of 96 enterprises in Bac Ninh that have borrowed a total of VND1.7 trillion from the BIDV, especially enterprises in tourism, agriculture and exports.

The bank found that many of them saw a dramatic drop in sales and some had to stop business. Other enterprises lacked materials, equipment and workers.

A drop in revenue has left many companies feeling the pinch, and some have struggled repaying interest for loans, he said, adding that this will lead an increase in bad debts over the rest of the year.

Vietcombank’s branch in Bac Ninh has also had a credit package of VND30 trillion with interest rates falling by 2-2.5 per cent compared to pre-pandemic rates to help companies.

Enterprises producing essential goods can obtain loans with a reduction of 2.5 per cent in annual interest rates to 4.5-5 per cent, said Bui Thi Ngoc Bich, director of Vietcombank’s Bac Ninh branch.

In addition, the bank has cut bank transfers fees for organisations and individuals from April 1 until December 31.

Nguyen Kim Cuong, Director of the Bac Ha Transport Cooperative, said his business had borrowed a mid-term capital worth VND40 billion from the BIDV Bac Ninh with an annual interest rate of 10.5 per cent and a working capital of VND16 billion with an annual interest rate of 8.5 per cent.

However because fewer people had been travelling by bus, the bank had reduced those interest rates to 9.5 per cent for the mid-term loan and 7.5 per cent for the working capital.

It also offered a special support package with new loans with interest rates of 7 per cent per year.

This created good conditions for the cooperative to cope during the pandemic as well as prepare ways to resume operations after the country gradually gets back to normal, Cuong said.

Giang also said that Bac Ninh had promoted administrative reforms to support businesses in resuming production.

The province had specific plans to improve further the business and investment environment, including the implementation of online public administrative services.

The provincial Department of Industry and Trade had asked for a review of the situation and demand for input materials.

It was hoped the results of that review would find ways to ensure sufficient supply for production activities.

The province would also restructure its economy developing high technology, the support industry and agriculture.

Bac Ninh had assessed labour situations to support people who have lost their jobs due to COVID-19 and help businesses find alternative labour if needed, Giang said.

The Bac Ha Transport Cooperative had to suspend 120 buses and revenue in the first three months of the year fell by 40 per cent compared to 2019.

The company made no money in the whole of April.

However, the cooperative must still pay wages during the suspension period to maintain its skilled workforce for when the buses get back on the road. 

Central bank slashes rates to aid post-pandemic recovery

The State Bank of Viet Nam on Tuesday decided to slash many rates by up to 0.5 percentage points for the second time in 30 days in a bid to get the economy back on track after the COVID-19 pandemic.

The rate cuts take effect today (May 13).

Under Decision No 918/QD-NHNN, the refinance rate was cut from five per cent per year to 4.5 per cent and the rediscount rate from 3.5 per cent to 3 per cent. In addition, overnight lending rates for electronic interbank payments and loans to offset capital shortages in clearance between the central bank and domestic banks were cut from 6 per cent to 5.5 per cent per year.

The offering rate for valuable papers through the open market was reduced from 3.5 per cent to 3 per cent per year.

On the same day, the central bank also issued Decision No 919/QD-NHNN about the maximum rates for deposits in Vietnamese dong at credit institutions and foreign banks.

Accordingly, the rates for demand deposits and deposits with terms of one month or less were cut from 0.5 per cent per year to 0.2 per cent. For deposits with terms from one month to less than six months, the rate was cut from 4.75 per cent to 4.25 per cent, and from 5.25 per cent to 4.75 per cent for deposits with terms from one month to less than six months at micro-finance institutions and public credit funds.

Under Decision No 920/QD-NHNN, lending rates for economic sectors regulated in Circular No 39/2016/TT-NHNN were also reduced. The maximum lending rate for short-term loans in Vietnamese dong was slashed from 5.5 per cent per year to 5 per cent, while the rate for short-term loans provided by public credit funds and micro-finance insitutions were cut from 6.5 per cent to 6 per cent.

The cuts aim to aid the country's recovery as the COVID-19 pandemic continues to hit the global economy forcing many central banks to cut rates and launch unprecedented stimulus packages to prop up weakening domestic economies and global markets.

On March 16, the State Bank of Viet Nam also cut a series of rates by up to 0.5 percentage points which took effect from March 17.

Governor of the State Bank of Viet Nam Le Minh Hung met with Prime Minister Nguyen Xuan Phuc and the business community last Saturday and said that efforts would be made to ensure adequate capital for the economy.

Hung also added that the central bank might consider allowing raising credit growth targets for credit institutions from the plan of 14 per cent set at the beginning of this year.

The central bank’s statistics showed that as of April 28, credit growth had risen 1.32 per cent since the end of 2019.

Exchange-traded fund VFMVN Diamond debuts on bourse

The exchange-traded fund VFMVN Diamond officially listed more than 10.2 million fund certificates worth VND102 billion (US$4.3 million) on the Ho Chi Minh Stock Exchange (HoSE) on Tuesday under the code FUEVFVND.

The certificates closed the first trading day at VND10,500 apiece, lower than the reference price of VND11,693.36 per certificate.

ETF VFMVN Diamond is a fund that mimics VN Diamond, one of the three indices, together with VN Fin Lead and VN Fin Select, introduced by HoSE last November.

Stocks must meet certain conditions in terms of market cap, transaction value, and foreign ownership to be included in the VN Diamond Index.

They should also have foreign ownership of at least 95 per cent of the limit and the remaining stake foreign investors can buy should not be worth more than VND500 billion ($21.5 million).

The market cap of individual stocks is 15 per cent of the index and any one industry must not account for more than 40 per cent.

According to HoSE, ETF VFMVN Diamond can invest in all sectors of the stock market not prohibited by law.

Its investment assets include stocks listed and traded on Vietnamese stock exchanges, deposits at commercial banks in accordance with relevant legal regulations, derivative securities listed and traded on Vietnamese stock exchanges, and rights and assets associated with securities in its portfolio.

The listing of the fund certificates is expected to help diversify products in the stock market and offer more investment options.

The State Securities Commission of Viet Nam issued a certificate of registration to ETF VFMVN Diamond on April 27. 

Vinamilk’s long-term outlook forecast to be positive

The COVID-19 pandemic would impact performance of Vietnam Dairy Products Joint Stock Company (Vinamilk) this year, but the long-term outlook for the dairy producer was still positive, experts forecast.

Experts from Fitch Solutions said despite short term challenges, they continue to see long-term growth potential for Vinamilk, given the strong growth outlook for dairy consumption in Viet Nam; its ongoing international push; the company's ongoing investment in its supply chain and capacity expansion; and its strong financial position. The company is well-positioned to benefit from the industry's growth as it is a well-known brand with a large distribution network.

“We are also positive on Vinamilk's internationalisation strategy, aiming at boosting exports as well as at investing abroad to source products and/or sell to local consumers. Vinamilk still relies heavily on the unstable Iraqi market, highlighting its internationalisation strategy has been slow so far,” the experts said.

Vinamilk remains focused on expanding exports going forward, looking mainly at Africa, Southeast Asia and the Middle East. In 2020, the company secured an export licence in China and plans to export condensed milk there. Although China's dairy imports are growing at a very fast pace and is an attractive market, Fitch noted it is an extremely competitive market which may prove difficult to enter.

According to the experts, Vinamilk continues to enjoy strong margins relative to its peers, thanks to its ability to control expenses and maintain a very low level of debt. Vinamilk also regularly records positive and elevated free cash flows. This bodes well for the company's future expansion plans.

“We therefore believe Vinamilk will remain an outperformer in the industry over a multi-quarter horizon, owing to its efficiency, cost control and emphasis on high-demand growth markets,” Fitch said. 

SSI increases charter capital to $259.3 million with bonus share issue

SSI Securities Corporation has increased its charter capital to over VND6.029 trillion (US$259.3 million), 1,001 times the capital it had at the time of establishment.

The country’s largest securities company issued nearly 83 million shares with a face value of VND10,000 as it paid dividends to shareholders at the rate of 16 per cent.

As of March 31 it had assets of more than VND27 trillion ($1.16 billion).

It paid dividends of 10 per cent in cash last October.

The company said it sees the economic downturn due to the Covid-19 pandemic as an opportunity to evaluate, review and seek new directions and make its business model more efficient.

Eximbank reduces pre-tax profit target by 40%

The Viet Nam Export Import Commercial Bank (Eximbank) has adjusted its business plan for this year due to the impact of the COVID-19 pandemic.

The bank reduced its profit before tax target by 40 per cent from VND2.2 trillion (US$93.6 million) to VND1.3 trillion.

However, the profit is still 22 per cent higher than the results achieved last year.

Eximbank determined to focus on supporting and sharing difficulties with customers in parallel with business stabilisation in order to ensure benefits for employees and shareholders, Nguyen Canh Vinh, the bank's acting general director, said .

The bank would have appropriate action plans but still ensure the stability and safety for its system, Vinh added.

The director also said that the capital adequacy ratio of the bank was controlled at a high level and other liquidity ratios were guaranteed within high thresholds in accordance with regulations by the State Bank of Viet Nam. 

VFCA wants to cut trading during massive sell-off sessions 
 
 The Viet Nam Financial Consulting Association (VFCA) has recently asked for securities transactions to be suspended during massive sell-off sessions to stabilise the market.

The VFCA sent a letter to the Prime Minister and the Ministry of Finance on May 6 asking for a mechanism that reduces or disconnects securities transactions during these sessions.

Due to the impacts of COVID-19, global stock markets have experienced a number of sell-off sessions, leading many to fall sharply.

The association said so far this year, the VN-Index had fallen 20 per cent, and experts still estimated a further decline due to the complicated economic situation.

"Although the market has recently recorded some stability, these types of sell-off sessions may occur more frequently,” it said.

Other stock exchanges around the world had applied temporary measures to prevent sell-off sessions and calm investors.

“It is necessary to develop market regulations such as reducing the trading time or even temporarily suspending transactions in sessions when sell-offs occur,” the VFCA said.

It said the VN-Index could drop 30 per cent in the long run, so a mechanism was needed to reduce the fluctuation band on the HoSE from 7 per cent to 2 per cent, and on the HNX from 10 per cent to 3 per cent. The association said such reductions had been applied during previous financial crises.

It also suggested cutting the trading time in the morning session and leaving just one hour for trading in the afternoon session. Currently, the afternoon session lasts 3.5 hours.

If the reduction didn't work, VFCA suggested cancelling trading for 30 minutes if the VN-Index dropped 5 per cent lower than the reference price for three days in a row.

If the VN-Index dropped over 6 per cent price for three days in a row, trading should be stopped for one hour.

In the letter, VFCA also proposed a cut to securities services fees to support and encourage investors.

It also asked for a change to regulations related to foreign investors such as foreign ownership in listed enterprises. The association asked to speed up the process of deploying products serving foreign investors like non-voting depository receipts (NVDR) to help foreign investors increase their stakes in local firms, and accept new electronic settlement methods as well as regulations on money transfers and other payments to boost the liquidity of the stock market.

The VFCA also asked for specific legal provisions to attract FDI enterprises to the local stock market and a legal corridor to promote the liquidity of the corporate bond market. 

Vietnam Airlines to launch more domestic routes

National flag carrier Vietnam Airlines said on May 12 that it will launch five more domestic routes this month with tickets priced from 99,000 VND (4.3 USD) for one-way trips, exclusive of fees and taxes.

The new routes are expected to meet rising public demand before the peak summer travel season and respond to the campaign “Vietnamese people travel Vietnam” launched by the Ministry of Culture, Sports and Tourism.

They include the Ho Chi Minh City – Tuy Hoa route with one daily round-trip flight from May 16, the Hai Phong – Nha Trang with three round-trip flights per week from May 20, and the Vinh -Da Lat with three weekly round-trip flights.

There will be four weekly round-trip flights between Vinh and Buon Ma Thuot from May 19, and three others between Thanh Hoa and Buon Ma Thuot from May 27.

Further information could be found at Vietnam Airlines’ website www.vietnamairlines.com, its mobile app, Facebook page www.facebook.com/VietnamAirlines or customer care hotline 1900 1100./.

Singapore to build farms on carpark rooftops

Singapore will convert the rooftops of nine multi-storey carparks into farms to grow vegetables and other food crops to meet domestic demand.

The Singapore Food Agency and the Housing Board (HDB) said on May 12 that the project is one of the strategies adopted by the SFA to realize Singapore’s 30 by 30 goal, which aims to produce 30 percent of the country's nutritional needs locally by 2030.

The project is slated to begin in the latter half of 2020, and the farms will be up for tender for a term of three years.

According to the SFA, it will continue working with the HDB to expand the project.

Singapore currently imports more than 90 percent of its food supply./.

HCM City firms expect further support to overcome difficulties

A lack of raw materials and falling consumption demand in foreign markets are challenging enterprises in Ho Chi Minh City. Many of them are hoping for specific policies to help them overcome these difficulties and resume economic activities.

According to the municipal Department of Industry and Trade, the index of industrial production (IIP) posted a year-on-year reduction of 2.6 percent in the first four months. The April index was down 8.3 percent against March and 9.9 percent year-on-year.

The city’s export value reached 3.9 billion USD, down 5 percent month-on-month.

Most commodities saw decreases due to a fall in consumption demand among the city’s importers and the postponement and cancellation of multiple orders.

A report by the municipal Statistics Office showed that China remained the largest export market for Ho Chi Minh City’s businesses with a combined export turnover of 3.4 billion USD in the first four months, or 26.3 percent of the total. It was followed by the US, with 2.1 billion USD, the European Union, 1.5 billion USD, and Japan, 1.08 billion USD.

Local businesses operating in industrial production said that they have been hard hit by the COVID-19 pandemic.

Pham Van Viet, Chairman of the Viet Thang Jean Company and Vice Chairman of the Ho Chi Minh City Garment and Textile – Embroidery Association, said that after material supplies from China was interrupted, garment and textile enterprises had faced difficulties caused by the postponement and cancellation of orders from the US and European markets.

Viet said that many enterprises have had 60-70 percent of their orders cut due to the pandemic, so some have focused on producing face masks and protective gear.

Many acknowledged that the biggest difficulty they are facing is import markets. Therefore, they really need practical support polices from the Government to overcome these difficult times.

Not only domestic firms, but foreign investors and FDI enterprises are expecting assistance from State management agencies.

According to the AHK World Business Outlook 2020 released by the Association of German Chambers of Commerce and Industry (DIHK), German enterprises expect that Vietnam’s economy will recover in the mid-term.

Up to 72 percent of respondents said they will continue to invest in Vietnam, while 27 percent plan to recruit more workers. Some 82 percent said they have been forced to cut revenue growth targets for 2020 due to the pandemic.

Respondents also identified market demand and economic policies as major challenges for Vietnam’s development over the next 12 months, adding that the pandemic has hurt their business at different levels and from different perspectives.

Some 86 percent of the surveyed enterprises said the suspension of entry and exit and the imposition of travel limits have greatly affected their operations. About 59 percent said their supply chains have been disrupted, while 55 percent have seen orders of goods cancelled and 50 percent have postponed new investment plans.

Chairman of the European Chamber of Commerce (EuroCham) Nicolas Audier hailed the Vietnamese Government’s rapid response to ensure economic stability.

He said COVID-19 is a fast-moving health crisis, and it is creating unprecedented challenges for businesses of all shapes and sizes and in all sectors and industries. Therefore, further actions could soon be required to help both domestic and foreign enterprises weather this storm and get back to business as usual as soon as possible.

“EuroCham is committed to Vietnam’s long-term economic growth, and our members remain available to share their insights and recommendations to help minimise the disruption of COVID-19 on business operations and – above all – to protect the health and wellbeing of people in Vietnam,” he added./.

 
 

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