BUSINESS NEWS HEADLINES MAY 25

Japanese newspaper: EVFTA to lift Vietnam’s post-pandemic growth

BUSINESS NEWS HEADLINES MAY 25

Japanese daily Nihon Keizai ran an article on May 20 saying that the EU-Vietnam Free Trade Agreement (EVFTA), to be ratified by Vietnam’s legislature shortly, will benefit not only the two signatories but also businesses from other countries.

It noted that the two will eliminate 99 percent of import tariffs within a decade, which will help Vietnam increase its exports to the bloc, which accounts for some 15 percent of the country's total. Japanese enterprises working in Vietnam are also expected to benefit from the deal.

As the world third-largest apparel exporter behind China and Bangladesh, the space for Vietnam to bolster its garment exports remains huge. Several Japanese companies are producing apparel in Vietnam, notably Fast Retail - the owner of the well-known Uniqlo brand - and also manufacturing auto spare parts and machinery for export to Europe. The EVFTA will therefore help them expand production and enter Europe more easily.

Conversely, the EU ships aircraft and automobiles to Vietnam. With a population of around 97 million, the third-largest in Southeast Asia, and with an average income per capita of about 3,500 USD each year, Vietnam is forecast to see growing domestic consumption.

As the first country in Southeast Asia to normalise economic activities following the COVID-19 pandemic, the EVFTA is expected to boost Vietnam’s exports in the near future, the paper wrote./.

Mobile World Investment Corp to lower profit target by 30 per cent

Mobile World Investment Corporation (MWG) is seeking its shareholders’ approval on plans to adjust down both revenues and net profit this year, citing difficulties caused by the COVID-19 pandemic.

In the documents sent to shareholders before its annual shareholders’ meeting, expected on June 6, the company projects its consolidated net revenue will reach VND110 trillion (US$4.72 billion) by year-end while the after-tax profit is estimated at VND3.45 trillion ($148 million).

These numbers are 10 per cent lower than its initial revenue target and 30 per cent lower than its net profit goal set for 2020. The previous plans were VND122.45 trillion in net revenue and nearly VND4.84 trillion in net profit.

This plan is still a challenge for the company, according to the document, as the disease broke out in the peak period for selling mobile phones and electronic devices following the massive cancellation of sport events, so its two chains – The Gioi Di Dong and Dien May Xanh – will not have many opportunities to improve sales in the second half of the year.

Meanwhile, food and essential consumer goods are still in the expansion stage and have yet to bring in much profit.

The new plan is 8 per cent higher than last year’s revenue but 10 per cent lower than 2019’s profit. In 2019, MWG earned total sales of VND102.2 trillion and net profit of VND3.84 trillion.

This is the first time the company has set a lower profit target than the previous year.

The company’s chairman Nguyen Duc Tai last week told investors that revenue has improved in May but cautioned difficulties ahead, predicting purchasing power would likely decline this year and even next year due to falling incomes of consumers.

In the first three months, MWG reported net revenue of VND29.35 trillion and net profit of VND1.13 trillion. The company has recently updated its business results in April with revenues of VND7.3 trillion, down nearly 20 per cent from more than VND9.1 trillion recorded in 2019’s same month.

In particular, the total sales of The Gioi Di Dong and Dien May Xanh in April decreased by about 30 per cent year-on-year and the company had to close a large number of stores during the social distancing period.

MWG shares have lost about 27 per cent this year, being traded around VND87,000 ($3.73) per share on the Ho Chi Minh Stock Exchange. 

Bamboo Airways plans to launch more domestic and international air routes

Bamboo Airways has set a target of doubling its domestic air routes to 60 by the end of 2020, and raising the number of international routes from six to 25, with that to the US expected to be re-launched in late 2021 or early 2022.

The carrier’s Chairman Trinh Van Quyet made the statement on Tuesday, given the fact that the COVID-19 pandemic has been basically controlled in Viet Nam.

To serve the plan, the airline is intending to buy 60 General Electric (GE) engines and related services in 2020 with a total value of US$2 billion to serve the Boeing 787-9 Dreamliner fleet it is ordering.

It will hire more planes this year, instead of purchasing more, to facilitate the expansion plan, Quyet stated.

Bamboo Airways, he went on, is operating 45-50 domestic flights a day, and is scheduled to raise the number to over 100 in early June, or equal to 80 per cent of the frequency before the COVID-19 happened.

The airline is expected to go public on the stock market in the fourth quarter of 2020 after the initial plan of being listed in the second quarter was postponed due to the pandemic.

In the first quarter, it posted a loss of over VND1.5 trillion (US$64.2 million) due to a remarkable reduction of both domestic and international flights. 

Da Nang proposes halting sightseeing fees to tourist attractions

The tourism industry based in the coastal city of Da Nang has put forward a range of tourism stimulus packages including exempting visitors from paying for tickets when visiting tourist attractions in the city in the near future.

The proposal was originally made during a recent meeting held between members of the provincial Tourism Department as they devised plans in which to stimulate the domestic tourism industry in the post-pandemic period following the novel coronavirus. 

At present, the central city has launched an initial tourism stimulus package titled "Danang Thank You" and assigned the provincial Department of Tourism to co-ordinate actions with relevant agencies in an attempt to organise the "Fantastic Da Nang Festival 2020" scheduled for between June and September this year.

With an added boost from tourism stimulus packages, the coastal city is anticipated to attract approximately 2.4 million visitors during the second half of the year, with total tourism revenue climbing to over VND9 trillion.

Moreover, approximately 120 travel firms have joined the city in promoting the scheme as a means of stimulating domestic tourism demand, with discounts for travel services on offer ranging from 30% to 50%.

The total expenditure with regard to the participation of travel firms in the city’s tourism stimulus programme is estimated to reach between VND15 billion and 20 billion.

Most notably, the Department of Tourism has proposed providing exemptions for visitors to tourist attractions across the city, such as the Ngu Hanh Son landscape site, also known as the Marble Mountains, and museums for three months as part of a range of activities aimed at stimulating domestic tourism.

Plummeting exports hit hard by COVID-19 impact during first half of May

Vietnam’s exports to foreign markets have suffered a dramatic downturn since April as a result of the negative economic impact caused by the novel coronavirus (COVID-19) pandemic, after recording positive growth throughout the first quarter of the year, according to the Ministry of Industry and Trade. 

The country bagged an estimated US$8.22 billion from exports during the first half of May, the lowest level of revenue since the start of the year. Meanwhile, its import turnover reached approximately US$9.2 billion, resulting in a trade deficit of roughly US$1 billion throughout the reviewed period. 

According to a statement made by the Ministry of Industry and Trade, with the COVID-19 epidemic spreading globally since mid-March, global supply chains have been severely disrupted, therefore significantly affecting the country’s export-import activities.

With trade activities since April being greatly impacted as a result of the COVID-19 pandemic, the negative trend is anticipated to continue moving into the second quarter as some of Vietnam’s major trading partners such as the United States, the European Union, and Japan are the hardest hit and it is unlikely that they will rebound in the short-term period.

At present, the majority of importers have moved to cancel orders in April and May, while also temporarily halting negotiated orders from June onwards.

This postponement can be attributed to the fact that several countries globally have imposed lockdowns in an attempt to slow the spread of the COVID-19, leading to a shortage of raw material sources from the beginning of March that are necessary for the domestic footwear industry in addition to local garment and textile firms.

If the COVID-19 is successfully brought under control ahead in the second quarter of the year, the country’s exports are expected to bounce back during the second half of the year. This rejuvenation will offer fresh impetus to the country’s economic growth due to the recovery of global consumption demand and the competitive advantages brought about by the EU-Vietnam Free Trade Agreement (EVFTA) when it takes effect later this year.

Despite posting a trade deficit in the first half of May, Vietnam’s import-export turnover since the beginning of the year reached roughly US$177 billion, with the country enjoying a trade surplus of approximately US$1.4 billion.

Electronics, spare parts export posts impressive growth

Computers, electronics and spare parts have surpassed garment to become the second largest currency earner in first four months of this year, according to the General Statistics Office.

Specifically, the sector raked in 12.14 billion USD during the period, up 26 percent year-on-year.

Of the figure, 3.42 billion USD was from China, up 40.9 percent.

Other major markets include the European Union with 1.55 billion USD, down 6.3 percent; the US 2.67 billion USD, or a 2.1-fold increase; Hong Kong 945 million USD, up 33.6 percent; and the Republic of Korea 851 million USD, down 9.7 percent./.

Cambodia plans electricity price cut to revive economy

The Cambodian government has issued a plan on reducing electricity tariffs for firms in four key sectors – manufacturing, agriculture, commercial and service – for five months to beef up the economy plagued by the COVID-19 pandemic.

Accordingly, starting from June, electricity bills are expected to be reduced by 25 percent based on previous averages from January to March of this year.

The Electricity Authority of Cambodia will issue details of the electricity tariff next week before the programme is implemented next month, The Phnom Penh Post newspaper quoted Victor Jona, director-general of the ministry’s General Department of Energy, as saying.

The country’s National Committee for Combating COVID-19 last week discussed easing restrictions and reopening businesses in priority sectors.

In fact, Cambodian people are gradually returning to their usual routines as no new infections were recorded over the past month and 122 infected cases were discharged from hospitals.

Or Vandine, spokeswoman for the Ministry of Health, revealed some sectors which could be allowed to reopen such as restaurants, entertainment establishments and schools.

However, she warned that as the government charts a course to recovery from the pandemic, it is necessary for everyone to be responsible for preventing a second wave of coronavirus outbreak./.

Banks roll out preferential credit packages

Many commercial banks have unveiled preferential credit packages for both individual and corporate customers.

Sacombank has a 16 trillion VND (686.2 million USD) package.

Individual customers who do not have loans and are using its products and services can get credit at interest rates starting at 6 percent for short-term loans and 7 percent for medium-term loans for their business.

Consumer loans for purposes like buying a car and buying/building/repairing properties will be given loans at interest rates starting from 7.5 percent for short tenors and 8 percent for the long term.

Corporate customers can get loans starting at 5 percent if they meet certain conditions.

The offer is valid until June 12 for individual customers and August 11 for corporate customers.

An Binh Joint Stock Commercial Bank (ABBANK) has a war chest of 2.3 trillion VND (98.7 million USD) to be lent at interest rates starting at 6.5 percent to small and medium-sized enterprises in priority sectors such as food, beverages, rice, construction, supply of machinery and equipment to works using State capital, pharmaceuticals, medical equipment including masks and protective equipment, retail, logistic services, petroleum, and electronic accessories.

Besides reducing interest rates by up to 2.5 percentage points to corporate customers affected by the COVID-19 pandemic, Viet Capital Bank has also launched several preferential credit packages worth a total of 6 trillion VND (257.4 million USD) for SMEs.

These will be deployed until year-end./.

Cambodia inks deal with IRRI to improve rice sector

Cambodian Ministry of Agriculture, Forestry and Fisheries on May 20 signed an agreement with the International Rice Research Institute (IRRI) aiming at improving the country’s rice sector through promoting research and enhancing productivity and resiliency.

Signatories to the agreement were Cambodian Minister of Agriculture, Forestry and Fisheries  Veng Sakhon and IRRI Regional Representative for Southeast Asia Yurdi Yasmi.

The IRRI representative said the agreement marked an important step forward in the traditional collaboration over the past more than four decades between the IRRI and Cambodia in the context of Cambodia’s rice sector facing such challenges as climate change, diseases, drought and declining productivity.

The Cambodian Government places strategic importance in strengthening the role of the agricultural sector, with rice-based farming systems central in generating jobs, ensuring food security, reducing poverty, and developing rural areas. The IRRI’s assistance has contributed remarkably to helping Cambodia increase its rice output from 2.4 million tonnes in 1993 to 10.8 million tonnes last year.

According to statistics of the Cambodian Ministry of Agriculture, Forestry and Fisheries, the country produced 31 million tonnes of food in 2019, generating income of 10 billion USD. Among its food exports, rice was the top foreign currency earner with 620,264 tonnes shipped abroad last year, bringing in 500 million USD./..

Thai economy to return to normal in three years

The Thailand Development Research Institute (TDRI) has forecast that Thailand is likely to take up to three years to return to normal economic conditions similar to 2019.

Speaking at a seminar titled "New Normal for Business Sector" held by the Thai Chamber of Commerce (TCC), Somkiat Tangkitvanich, TDRI's president, said this economic crisis triggered by the coronavirus outbreak is expected to be bigger than the 2008 global financial crisis.

He said TDRI expects it will take a year to 18 months to make and distribute a vaccine, and up to three years for the Thai economy to return to 2019 levels.

According to Somkiat, Thailand is in a transitional period, with lockdown measures starting to ease and many businesses allowed to reopen. However, he insisted tight control measures are still needed to curb a second wave of the outbreak. The business sector needs to come up with new business practices to adapt to a changing business environment.

Despite massive fiscal stimulus packages and monetary easing, CIMB Thai Bank (CIMBT) predicted the Thai economy could continue falling sharply this quarter, with GDP contraction possibly below the 12.5 percent seen in the second quarter of 1998.

Thailand’s full-year GDP growth contracted by 7.6 percent 22 years ago when the economy reeled from the Asian financial crisis in 1997.

"We project a sharp fall of GDP in the second quarter by 14 percent from the previous year," said Amonthep Chawla, head of research at CIMBT.

Amonthep said exports could continue to plunge from weak global demand and continual lockdowns in major economies. The number of tourist arrivals in the second quarter should drop sharply from travel restrictions.

The private sector will likely remain weak for both consumption and investment, following a decline in both farm and non-farm income and a lack confidence among consumers and investors, he said.

Thailand's economy contracted by 1.8 percent year-on-year and 2.2 percent quarter-on-quarter on a seasonally adjusted basis for the first quarter, mainly attributed to the COVID-19 outbreak affecting the lucrative tourism industry, external demand and domestic private consumption.

The economy could shrink by about 10 percent year-on-year in the second half, but quarterly growth could recover, he said./.

Exports to China projected to bounce back: MoIT

Exports to China may bounce back in the time to come thanks to rising demand as the northern neighbour further contains COVID-19, according to the Ministry of Industry and Trade (MoIT).

Bilateral trade hit more than 35 billion USD in the first four months of this year, of which Vietnam earned 12.7 billion USD from exports, a year-on-year increase of 22.1 percent.

China is Vietnam’s second-largest export market, with 15.7 percent of the total, behind the US, which has the lion’s share of 24.9 percent.

Vietnam purchased goods worth 22.38 billion USD from China in the four-month period, down 1.6 percent year-on-year.

Vietnam’s trade deficit with China fell to 9.68 billion USD from over 12 billion USD in the same period last year.

The recent re-opening of a number of auxiliary border gates and crossings has helped revitalise bilateral trade.

Even though the pandemic has forced countries to restrict movement, which hurt trade, Vietnam has bolstered trade activities through online channels and expanded its export markets, the ministry said.

The Vietnam Trade Promotion Agency (VIETRADE) at MoIT and the Department of Commerce in China's Guangxi province held the Vietnam-China online trade conference in April, with more than 150 enterprises in farm produce and foodstuff taking part.

To remove bottlenecks in exports, MoIT suggested the Government allow the resumption of trade activities at all borders.

Border gates and crossings already permitted to re-open include Binh Nghi, Na Hinh, Na Nua, and Po Nhung in Lang Son province and Bac Phong Sinh and Ka Long in Quang Ninh province.

When deciding upon the re-opening of other gates, authorities in border localities have been asked to consider the current circumstances while giving priority to disease prevention and control./.

Indonesia’s car export predicted to halve in 2020

Indonesia’s car exports are forecast to drop by 50 percent in 2020 due to large-scale social restrictions amid the COVID-19 pandemic, according to Association of Indonesian Automotive Manufacturers (Gaikindo).

In April, the country’s domestic car sales nosedived by more than 90 percent year-on-year.

Gaikindo also slashed Indonesia’s car export target to 175,000 units in 2020 from the initial target of 350,000 to 400,000 units.

Chairman of Gaikindo Yohannes Nangoi said it will be difficult for the country to reach its export target of 1 million cars by 2025.

Indonesia’s consumer confidence index plummeted to its lowest level in 12 years as consumers expressed pessimism amid the pandemic, according to a recent Bank Indonesia (BI) survey.

Yohannes said the health crisis threatened 1.5 million automotive industry workers in the country, though Gaikindo members agreed to avoid layoffs./.

Indonesia's manufacturing industry struggles over capital shortage

Indonesia’s manufacturing industry is facing two main obstacles in terms of limited cash and working capital flows amidst the COVID-19 pandemic in the country, said Industry Minister Agus Gumiwang Kartasasmita on May 20.

According to the minister, one of the solutions to the limitations of capital flows is to facilitate credit restructuring. Meanwhile, working capital is needed to restart industrial activities, when the situation returns to normal. As such, he said there should be efforts to encourage investment, in addition to promoting export markets.

The minister added that to solve these challenges, the Ministry of Industry alone cannot promote the recovery of manufacturing industry, but needs coordination with other ministries and industries so that the industrial sector can recover quickly after the COVID-19 pandemic is over.

The Indonesian government is preparing a number of economic stimulus packages, including tax incentives, thus the industry must continue to operate in the context of social distancing.

According to the Central Statistics Agency (BPS), manufacturing is the largest contributor to Indonesia's Gross Domestic Product (GDP), accounting for 19.98 percent of the GDP in the first quarter of 2020. However, the industry grew only 2.06 percent during the period, lower than its 3.85-percent growth recorded in the same quarter last year./.

FPT Software partners with OutSystems to develop low-code platforms in Japan

Vietnam’s largest tech firm FPT Software has signed a partnership agreement with global software firm OutSystems to develop low-code platforms, in a bid to strengthen the foothold of both in the Japanese market.

FPT will provide a comprehensive range of services, from development and operation to maintenance of software applications on its low-code platform.

Low-code, as defined by OutSystems, is a software development approach that enables the delivery of applications faster and with minimal hand-coding.

Rather than writing thousands of lines of complex code and syntax, low-code platforms allow users to build complete applications with modern user interfaces, integrations, data, and logic quickly and visually.

Arnold Consengco, OutSystems’s Northeast Asia and Japan Regional Vice President, said FPT has a large number of resources, multi-language capabilities, and a strong position in Japan.

He expressed his belief that the two sides will be successful in building an ecosystem and expand opportunities in the market./.

OVs urged to develop distribution channels for Vietnamese goods

 

Vice Chairman of the Hanoi People’s Committee Nguyen Doan Toan signed a document on May 20 calling for the involvement of overseas Vietnamese in introducing and developing distribution channels abroad for Made-in-Vietnam goods in the 2020-2024 period.

The plan is part of activities to speed up the “Vietnamese people give priority to using Vietnamese goods” campaign among Vietnamese communities abroad and to raise export turnover and increase the use of Vietnamese products by overseas Vietnamese.

It also targets greater sales of Vietnamese goods at shopping centres and supermarkets in foreign countries, especially those in regions where a large number of Vietnamese expats live.

Attention will also be paid to enhancing connections between businesses in Vietnam and overseas and building establishments that can perform testing on requirements and regulations in line with international standards./.

Indonesia attracts 4.1 billion USD worth of net inflow

Indonesia posted a net inflow of 4.1 billion USD from April to May 14, after recording a net outflow of 5.7 billion USD in the first quarter of 2020, said Bank Indonesia (BI) Governor Perry Warjiyo on May 19.

According to the official, the foreign capital inflow began to improve again from April 2020 driven by easing global financial market uncertainties, high competitiveness of domestic financial assets, and favourable outlook for the Indonesian economy.

Meanwhile, foreign exchange reserves increased to 127.9 billion USD at the end of April, which was equivalent to financing 7.8 months of imports.

The figure is more than enough to meet import and debt payments and exchange rate stabilization, Perry said.

The central bank also estimated the current account deficit in 2020 to be below 2 percent of gross domestic product (GDP) from an initial estimate of 2.5-3 percent of GDP./.

Tra Vinh farmers expand organic rice areas

The Mekong Delta province of Tra Vinh has encouraged farmers to expand environmentally friendly organic rice fields that have improved the quality of rice and soil fertility.

In Cau Ngang, more than 100 farmers in Cau Ngang’s My Hoa, Kim Hoa, Vinh Kim and Hiep Hoa communes signed a contract in 2017 with a company to grow organic rice on a total area of 82ha.

The company provided farmers with techniques such as sowing, fertilising, disease management and harvest methods. The company also supplied materials, and it guaranteed outlets for the farmers.

In the first organic rice crop, the farmers earned a profit of 30 million VND (1,300 USD) per hectare per crop, up 6 million VND (260 USD) compared to normal farming methods.

Organic rice fields use less fertiliser and do not use chemicals. Farmers can also breed aquatic species in ditches in the rice fields to earn additional income, or rotate rice and aquatic species on the same fields.

Thach Mara, who has planted organic rice in Hiep Hoa commune since 2017, said rice grown under organic standards develops well and adapts to climate change.

In his first crop, his 0.4ha rice field had a yield of 6 tonnes per ha, up one tonne compared to traditional farming methods. He expanded the organic rice area to 0.7ha this year.

Tran Hong Nghiep, an agricultural official in Hiep Hoa, said to encourage farmers to grow organic rice, the commune guarantees outlets for farmers and link them with others who produce organic rice.

The commune’s organic rice cooperative group has called on farmers to join the group which can easily link up with companies and access government support policies.

The group now has 49 members who grow a total of 52ha of organic rice.

Its members who rotate organic rice cultivation and black tiger shrimp or giant river prawn breeding on their rice fields earn a profit of 50 - 60 million VND (2,200 - 2,600 USD) per ha for each shrimp crop.

Nguyen Ngoc Hai, Deputy Director of the provincial Department of Agriculture and Rural Development, said that farmers, companies and the State have developed linkages under the organic model, which has improved the value and quality of the province’s rice.

Besides the health benefits of organic food, organic farming improves soil fertility and protects aquatic resources.

Tra Vinh grows more than 200,000ha of rice each year, but has only a few hundred ha of rice planted under organic standards.

The coastal province plans to increase its organic rice area to 1,000ha by the end of this year and to 2,500ha by 2030, according to the department./.

Electronics, spare parts export posts impressive growth

Computers, electronics and spare parts have surpassed garment to become the second largest currency earner in first four months of this year, according to the General Statistics Office.

Specifically, the sector raked in 12.14 billion USD during the period, up 26 percent year-on-year.

Of the figure, 3.42 billion USD was from China, up 40.9 percent.

Other major markets include the European Union with 1.55 billion USD, down 6.3 percent; the US 2.67 billion USD, or a 2.1-fold increase; Hong Kong 945 million USD, up 33.6 percent; and the Republic of Korea 851 million USD, down 9.7 percent./.

Thailand’s e-commerce projected to grow 35 percent this year

Thailand's e-commerce, excluding business-to-business engagement, is expected to grow 35 percent to 220 billion THB (nearly 7 billion USD) in 2020.

Local media quoted Thanawat Malabuppha, Chief Executive of price comparison shopping website Priceza and President of the Thailand e-Commerce Association, as saying that in the post-COVID-19 world, the online channel and e-commerce are no longer an alternative option, but rather a means of survival.

The country's e-commerce through business-to-consumer and consumer-to-consumer is projected to jump to 220 billion baht in 2020, accounting for 4-5 percent of total retail.

Thanawat estimated e-commerce could reach 25 percent of Thailand's total retail, similar to China, in 5-10 years.

In 2019, e-commerce retail sales were valued at 163 billion THB, making up 3 percent of total retail. E-marketplace value accounted for 47 percent of e-commerce, followed by social media 38 percent and brands' own websites 15 percent./.

Tho Xuan Airport strives to serve five million passengers per year by 2030

Tho Xuan Airport in the central province of Thanh Hoa plans to serve five million passengers and 25,000 tonnes of goods each year by 2030, online newspaper laodong.vn reported.

The Civil Aviation Administration of Viet Nam (CAAV) has outlined a plan to develop the airport by 2030 with a vision toward 2050 which has been sent to the Ministry of Transport for approval.

Under the plan, Tho Xuan will become an international airport capable of receiving wide-body aircraft such as the Boeing B787-9 and Airbus A350-900 by 2030.

The CAAV said the airport’s capacity has grown significantly in recent years, leaving behind its previous growth predictions. However, the last plan set for Tho Xuan was approved in 2013 and modified in 2014.

The airport served nearly 91,000 passengers in 2013 when it received its first flight. The number soared to one million in 2019.

Located in Sao Vang Town, Tho Xuan District, the airport plays an important role in aviation transportation and national overflight protection.

In 2018, the Ministry of Transport agreed to upgrade Tho Xuan to an international airport.

The ministry has also assigned the CAAV to study and adjust the plan where necessary. 

ETFs to make no changes in investment lists: SSI Research

There may be no changes in the lists of investees by exchange-traded fund (ETF) indices in the upcoming quarterly review, SSI Research has forecast.

The calculation of investees’ proportion in the FTSE Vietnam Index and MVIS Vietnam Index must be finished by May 29 so review announcements are made on June 5 and June 12, respectively.

The quarterly review will be complete on June 19.

SSI Research – the research division of brokerage firm SSI Securities – predicted there will be no changes in the two indices’ lists of investees.

As of May 15, the total value of investment made by FTSE Vietnam Swap UCITS ETF declined to 199 million euro (US$218.3 million) from February.

The list of investees by FTSE Vietnam ETF contains 18 stocks traded on the Ho Chi Minh Stock Exchange (HoSE).

The fund is expected to increase investment in three stocks – Vingroup (VIC), Vinhomes (VHM) and Vietcombank (VCB).

Vingroup and Vinhomes shares will account for 15 per cent of the total portfolio, up 0.5-1.11 percentage points while Vietcombank shares will take an 8.65 per cent stake in the list, up 2.22 percentage points.

The fund is forecast to cut its investment in the remaining 15 stocks such as dairy producer Vinamilk (VNM; down 1.69 percentage points), Vincom Retail (VRE; down 0.28 percentage points), and steel maker Hoa Phat (HPG; down 0.32 percentage points).

FTSE Vietnam ETF is managed by the London-based asset firm FTSE Russell, focusing on Vietnamese equities.

The MVIS Vietnam Index, developed by the US investment management firm VanEck, is expected to raise investment in Vingroup, Vinhomes, Vietcombank and steel producer Hoa Phat.

On the other hand, shares of Vinamilk, Masan, PetroVietnam Power (POW), sugar firm Thanh Thanh Cong-Bien Hoa (SBT), and insurer Bao Viet Holdings (BVH) are among divestment targets.

Shares of Vinamilk, Vietcombank, Vingroup, Thanh Thanh Cong-Bien Hoa, Vinhomes gained between 0.3 per cent and 1.4 per cent on Thursday while Masan and Vincom Retail shares dropped 0.6 per cent and 0.8 per cent.

Real estate Landmark Holding shares dive on delisting decision

Shares of Landmark Holding JSC tumbled for a second day after the firm was delisted by force from the Ho Chi Minh Stock Exchange (HoSE).

The petrochemical and real estate trading firm’s shares (HoSE: LMH) plunged 6.5 per cent to trade at VND1,000 apiece on Thursday. Shares dived 7.0 per cent on Wednesday.

On Tuesday, the southern bourse HoSE announced more than 25.62 million shares of Landmark Holding will be delisted on June 19.

The decision was made after audit firm made a disclaimer of opinion on the company’s 2019 financial report.

The disclaimer of opinion is often the worst type of feedback an auditor may have on a firm’s financial report. It means the auditor is unable to form an opinion as there are insufficient proof in the financial statement.

On April 27, HoSE warned Landmark Holding shares could be delisted for the same reason.

The company debuted on HoSE on October 12, 2018 at VND11,200 (US$0.48) per share. Shares reached the highest of VND16,590 apiece on July 25, 2019 before nosediving ever since.

Landmark Holding is known as the investor of several real estate projects in Ha Noi, including the Manhattan Tower in Thanh Xuan District. But the company quit the project in August 2019.

US, Indian tech firms bring logistics route optimisation solutions to VN

US technology consulting firm KMS Solutions has entered into a strategic partnership with Indian company Locus, a pioneer in deep-tech supply chain solutions, to introduce the latter’s smart logistics software to the Vietnamese, Thai and Cambodian markets.

The technologies will enable enterprises in those countries to enhance efficiency, transparency and consistency in last-mile delivery and overall supply chain operations.

With built-in machine learning and proprietary algorithms, Locus’ route optimisation software recommends the most efficient routes for delivery, meaning routes that allow drivers to deliver the most items in the shortest time and at the lowest cost.

KMS Solutions will provide consultancy and help instal a number of Locus’ software products such as Route Optimization, Real-time Tracking, Last-mile delivery, and Analytics.

All are hand-picked for its clients in Viet Nam, Thailand, and Cambodia.

Omnichannel retailing has led to a rise in demand for delivery services, which makes last-mile logistics a key area of investment for enterprises, especially those in retail, e-commerce and distribution.

However, offsetting last-mile delivery costs while satisfying demand for quick delivery remains a problem for most of them.

“To solve the last-mile delivery challenge, enterprises increasingly employ innovative logistics solutions such as route optimisation,” Seema Bhandari, partnership director at Locus, said. 

More land violations discovered on Phu Quoc Island

The Government Inspectorate has pointed out various violations at constructions built on agricultural lands on Phu Quoc Island, including large hotels. 

According to the inspectorate, from 2016 to June 2018, the authorities failed to monitor or control the rapid rise of spontaneous urban areas on agricultural land. There are 577 plots of land that cover 495ha in nine towns and communes. 737 houses have been built, of which 96 are on agricultural land.

From 2011 to April 2018, the urban management order teams of Phu Quoc Island and nine towns and communes discovered and reported various violations in constructions including 700 illegal constructions on agricultural land. 1,000 administrative fine orders were issued but only 46% were applied.

The inspectorate also found several illegal constructions in functional areas but the local authorities failed to inspect, monitor thoroughly and were slow to deal with the problems.

The construction of the Seashell 5 Hotel was started in January 2016 when its building permit already expired. Only in January 2018 was the violation detected by the inspectorate of the Ministry of Construction. The hotel investor was reported and fined. After the investor was fined, on February 8, 2018, the management board of Phu Quoc Economic Zone issued a building permit for the construction.

They also built two more attics that cover 600 square metres and are five metres taller than permitted. The illegal constructions will be dealt with in accordance with the law.

Building without a permit violation is also found at the Pullman Resort of the European resort and eco-tourism project invested by Milton Company.

Kien Giang Province's inspection team carried out the inspection from April 2 to August 17. But only two months later that the management board of Phu Quoc Economic Zone issued the building permit for the constructions at the European resort and eco-tourism project.

Electronic Certificates of Origin proves key to bolstering trade with India

The approval of Electronic Certificates of Origin (e-CO) is set to play an important role in meeting the trade target of US$15 billion set by both leaders of Vietnam and India, according to Vietnamese Ambassador to India Pham Sanh Chau at the “India - Vietnam Virtual Business Meet 2020" online seminar held on May 21.

The event was jointly held by the Vietnamese embassy’s trade office in India, the Confederation of Indian Industry, the Vietnam Chamber of Commerce and Industry, and other relevant agencies.  

In the country’s role as the ASEAN Chair in 2020, Vietnam has been actively exchanging information with other ASEAN member countries with regard to the Indian proposals to use electronic certificates of origin, with several countries restricting travel in the context of the complicated nature of the novel coronavirus (COVID-19) epidemic, noted ambassador Chau.

This move comes following the nation receiving a proposal from the Indian Government on April 17 which urged consideration to be made and approval to be granted to the e-CO via the Indian electronic portal for the benefits of tariff preferences in line with the ASEAN-India Free Trade Agreement.

The embassy also offered a report to the Government Office in which it requests all relevant ministries to grant approval to the Indian proposals swiftly in an effort to remove difficulties faced by local firms that have been severely affected by the COVID-19 pandemic.

The Vietnamese diplomat went on to emphasis that any delays in accepting the e-CO will cause great damage to domestic businesses and make it far more challenging to reach the bilateral trade turnover target of US$15 billion which has been set by the end of the year.

Majority of travel operators in HCM City resume operations

Approximately 60% of tourism businesses based in Ho Chi Minh City have reopened following their temporary shutdown to combat the novel coronavirus (COVID-19) epidemic, with most firms in need of financial support in order to maintain future operations.

Information on the rejuvenation of enterprises in the southern city’s tourism sector was released by Nguyen Thi Anh Hoa, Deputy Director of the Ho Chi Minh City Department of Tourism, during recent talks with a Voice of Vietnam (VOV) reporter. 

According to Hoa, firms which returned to work will now mainly focus on the domestic tourism market, while suspended tourism businesses are set to primarily concentrate on inbound and outbound market segments.

The fourth quarter of the year will see a number of travel operators reopen as they wait on developments around the world regarding COVID-19 control efforts, as well as waiting for an official announcement from the State with regard to welcoming international visitors.

At present, the Ho Chi Minh City Department of Tourism is implementing a range of policies to extend the payment of tax and rent, in addition to offering electricity price support, credits for businesses, while serving as a bridge that connects firms with competent agencies in order to facilitate the implementation of incentive policies.

The majority of enterprises are currently in need of financial support in order to realise capital rotation, pay staff salaries, and pay necessary expenses as a means of maintaining operations.

The Department has so far received requests from about 50 firms who wish to receive credit support packages. This list of businesses has been transferred to the State Bank branch in Ho Chi Minh City from which commercial banks are ready to take steps in order to provide timely support for enterprises that operate in the tourism industry.

Due to the impact of the COVID-19 epidemic, tourism businesses are at risk as they are mostly small and medium-sized firms which lack close linkages in order to be fully capable of coping with the fallout from the epidemic, Hoa said.

“This time is essential for businesses to restructure, rebuild alliances, links, and single out which product segments are their strengths. Simultaneously, they need to restructure human resources and the tourism market so as to gain a reputation and a competitive brand on the domestic and international tourism market,” she added.

Vietnam Railways bets on upgrades


In the wake of the positive impact of digitalisation, state-owned railway giant Vietnam Railways is focusing more on technology application as a way to increase both customer experience and operational efficiency. However, the path remains bumpy given a long history of traditional infrastructure. 

Vietnam Railways (VNR) has just begun to apply freight management system software on the national railway network after some trials. It is the result of co-operation between VNR and FPT Information System Co., Ltd., which is assisting the former in overhauling its traditional freight governance. The software enables the giant to deploy network administration in management and operation of locomotives and railroad cars along with freight management. With the new deployment, the traditional recording and exchanging information by phone is replaced with data entry and information exchange on the system.

“This system can digitalise the entire transportation process, including standardising reporting and statistical forms, helping administrators manage more efficiently and therefore saving on cost and reducing manual works,” said Phan Quoc Anh, deputy general of VNR.

This is one of several applications that the railway industry has deployed in recent times. Previously, VNR has also co-operated with e-wallet startup MoMo to launch a new e-service that allows mobile phone users to purchase train tickets online through an app.

Like most industries, digital transformation is making huge impacts on rail transport, motivating it to make positive changes. The traditional measurements for rail transport performance requirements remain, but there are added advantages in the application of digital technologies.

For railways, the main impact of digitalisation is on the model of operation. Technologies like AI, big data, cloud computing, and autonomous driving will impact the industry. These technologies are expected to create a new environment in which rail operators will need to be more agile, act more quickly, and change continuously in order to succeed in their mission amid stiffening competitions from rivals.

Given all these factors, transformation is inevitable and not just an option. VNR is aware of this, with council members recently approving a scheme on technology application for this decade, focusing on business governance along with safety within management, mechanics, transport, and infrastructure.

Specifically, for business governance, VNR will gradually strengthen AI-backed analysis systems, establish a sci-tech research and development centre as well as IT centres, and also upskill manpower. In railway safety, it aims to digitalise all data related to traffic safety, management, training, communications, analysis, accident warnings, and risk management.

Regarding mechanics, VNR will invest in automation of manufacturing factories so as to develop into two modern manufacturing sites to assembly locomotives and railroad cars, and produce spare parts with localisation rate increasing to 50 per cent for locomotives and over 70 per cent for railroad cars. In terms of transport, the giant will increase connection with other means of transport such as road, sea, and air while ensuring rising application of technologies to ensure safety and increase service quality, administration, operation, and capacity.

In spite of the moves, digital transformation in the railway sector faces a challenge in technology application due to underdeveloped infrastructure. Unlike other sectors, railways infrastructure has been downgraded in recent times.

To deal with the problem, the Ministry of Transport in mid-May started a long-awaited VND7 trillion ($304.35 million) package to upgrade the North-South railway network. However, it will take the railway industry about two years to finish, meaning that the technology application for infrastructure cannot proceed right away. “The upgrading will be completed in late 2021. The railway industry will face difficulties to keep the frequency and capacity of train operation during the period,” VNR chairman Vu Anh Minh told VIR. “Even completed, technology application remains a hard task because of unsynchronous and not-modern-enough infrastructure.”

According to the national railway development strategy, the industry is estimated to require VND110 trillion ($4.78 billion) by 2030 to revamp the existing network. With the limited state budget, calling for private investment is a priority. VNR is betting on its new restructuring plan which is set to be approved by the government in the near future, in which it plans to dump its monopoly in cargo transport by divesting stake in cargo transport. Moreover, it also hopes that the master plan on management, use, and operation of national railway infrastructure in line with 2018’s Decree No. 46/2018/ND-CP dated March 14, 2018 on management, use and operation of national railway infrastructure will be soon approved. This would enable the group to take the initiative with its investment plans and to be looked upon more favourably when calling for private investment in upgrading stations and logistics facilities, as well as developing stations that enjoy commercial advantages.

Vietnam’s railway industry is attracting interest among international investors from the likes of Japan, France, China, Germany, and the United States, who are all seeking business opportunities in anticipation of huge future demands to upgrade and develop the system.

 
 

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