VIETNAM BUSINESS NEWS HEADLINES NOVEMBER 29

Renewable energy on the rise in Vietnam

VIETNAM BUSINESS NEWS HEADLINES NOVEMBER 29

Vietnam is increasing its portion of renewable energy while reducing that of fossil energy to promote sustainable development, ensure energy security and reduce carbon emissions while at the same time boosting economic development, improving the people’s access to clean energies and creating more jobs for the community, experts said at a seminar in the Mekong Delta province of Hau Giang on November 24.

Over the past two years, Vietnam has been the leader in developing solar power in the Association of Southeast Asian Nations. As of June 2020, Vietnam’s total capacity of renewable energy, mainly solar power, reached 5,500 MW. Renewable energies currently account for 10% of the country’s total power production.

According to the amended seventh national power plan, the Mekong Delta region is expected to become an energy hub in the south. Many Mekong Delta cities and provinces have recently taken practical measures to boost the development of renewable energies, especially wind and solar power.

Some localities have combined hi-tech agricultural production with rooftop solar power production, which helps improve locals’ incomes, ensure energy security, protect the environment and promote sustainable development.

According to Nguy Thuy Khanh, executive director of the Green Innovation and Development Center (Green ID), the Politburo’s Resolution No. 55 on energy development strategies until 2045, which was issued in February 2020, urges breakthrough policies to boost the development of renewable energies, replace fossil energy by renewable energies as much as possible, diversify energy sources, reduce the portion of coal-fired power and encourage the private sector to invest in renewable energies.

According to the resolution, Vietnam Electricity has to purchase the entire amount of electricity produced by renewable energy plants for 20 years. Besides, the Government offers incentives on capital, import tariffs, corporate income tax and land rentals for investors in renewable energy.

Late this month, the Ministry of Industry and Trade will submit the draft eighth national power plan to the prime minister. According to the draft plan, the country will not develop new coal-fired power plants in the 2026-2030 period, while boosting investment into wind and solar power.

On the occasion of the seminar, Green ID, the Hau Giang Province Department of Industry and Trade and Ecotech Vietnam Technology Investment and Trading JSC, signed a memorandum of understanding to support a 100 MW rooftop solar power project worth VND200 billion that will be kick-started in the province next year.

According to Khanh, Vietnam’s shift from fossil energy to renewable energy is in line with the global trend.

In China and India, whose new coal-fired power projects’ capacities have accounted for 85% of the world’s total since 2005, the number of newly licensed coal-fired power projects has dropped drastically. Meanwhile, in 2018, the United States shut down coal-fired power plants with a total capacity of 17.6 GW.

“We all know that fossil energy has fallen into decay, while renewable energies are emerging,” Khanh concluded.

ADB loan helps Indonesia promote renewable energy

The Asian Development Bbank (ADB) has approved a 600-million-USD loan to help PLN, Indonesia’s state-owned power company, expand electricity access and promote the use of renewable energy in the eastern region of the country.

The loan was granted to the second phase of the Sustainable Energy Access in Eastern Indonesia–Electricity Grid Development Programme to support efforts by PLN to expand electricity access and improve service quality in nine provinces, including Kalimantan, Maluku, and Papua.

The first phase of the programme began in 2017 and covered eight provinces in Sulawesi and Nusa Tenggara.
 
ADB Southeast Asia Energy Director Toru Kubo said on November 25 that the programme will boost sustainable, equitable, and reliable access to electricity among the communities in remote eastern Indonesia, including through the use of solar and other renewable sources.

It will also support eastern Indonesia’s economic recovery from the pandemic and contribute to equitable and resilient growth, he added.

At present, expanded electrification in eastern Indonesia is a key part of the government’s infrastructure investment plan, with the goal of electricity for all by 2024. The Indonesian government plans to increase the share of renewable energy in the total energy mix to 23 percent by 2025, up from 13 percent in 2016. It also hopes to eliminate diesel use from electricity generation.

The loan is expected to support PLN's efforts to install medium and low voltage distribution infrastructure to provide electricity to 1.55 million new customers in nine provinces by 2024./.

ACB becomes 5th largest investment of VOF

VinaCapital Vietnam Opportunity Fund (VOF), the flagship fund of VinaCapital, announced that Asia Commercial Bank (ACB) had become its 5th largest investment.

VOF said it continued to buy more shares of ACB in October. This is the 6th largest bank by market capitalisation in Viet Nam and a leading commercial bank in the retail and small and medium enterprise (SME) segments. With its experience in the development of digital banking, VinaCapital said it would share such insights with ACB's leaders.

ACB accounted for 4.9 per cent of VOF’S total net asset value (NAV) at the end of October, equivalent to nearly US$46.3 million.

ACB is currently listed on the HNX but the bank has submitted an application to transfer listing to HoSE in mid-October.

VinaCapital expects the bank to be listed on HoSE in December 2020 or January 2021 and may enter the VN-30 basket, which consists of the 30 largest companies listed on HoSE in terms of market capitalisation.

According to the 9-month business report, ACB recorded pre-tax profit of VND6.4 trillion ($227.1 million), 15 per cent higher than the same period in 2019, equivalent to 84 per cent of the 2020 plan. Post-tax profit reached VND5.13 trillion.

ACB on November 18 also announced the signing of a 15-year exclusive bancassurance partnership with Sun Life Vietnam Insurance Co Ltd.

VOF’s total NAV reached nearly $945 million at the end of October, up 2 per cent from the previous month. In 10 months, the fund's NAV growth was 10.7 per cent, compared with the 2.3 per cent-decrease of VN-Index in the same period.

VOF attributed its positive performance to its persistent investments in industries with high resilience, especially companies that benefit from policies such as public investment and FDI inflows.

So far this year, construction material stocks recorded the best growth in prices of 44.7 per cent. Steel giant Hoa Phat Group (HPG) currently accounts for the largest proportion of 15.7 per cent in VOF’s total net asset value (NAV), reporting growth of 59 per cent.

Consumer goods stocks ranked second with an increase of 8 per cent since the beginning of the year, as evidenced by Vinamilk (VNM) increasing 14.5 per cent and accounting for 4.4 per cent of VOF’s NAV.

Precise policy desired for e-commerce boom

With plenty of local consumers often cursed by scams or shoddy goods ordered through cross-border online shopping sites, it is hoped that stringent research into a decree amendment from the Ministry of Industry and Trade (MoIT) will help to protect them.

Nguyen Thai An, a 29-year-old officer in Ba Dinh district of Hanoi, recently bought an H&M cardigan from a US dealer through Shopee during a sale. At outlets in Vietnam, it was on sale for VND700,000 ($30) but the dealer sold it for only VND200,000 ($8.70).

However, An received the item in the wrong size. “I repeatedly asked for an exchange or compensation but failed to get one anything,” An told VIR. “In fact, the actual price I paid for it exceeded the original outlet price when large taxes and logistic costs for overseas transportation were added.”

The outstanding growth of e-commerce in Vietnam has led to a lack of quality in online shopping experiences, especially for those like An who purchase goods from overseas. Due to the hoops having to be jumped through, purchasers of shoddy goods are unlikely to claim compensation from foreign vendors for receiving wrong orders, and mostly accept to lose money or try to sell the faulty items on at severely low prices.

Pham Lan Nhi, an import dealer living in Japan, told VIR that along with receiving wrong items, consumers may often receive low-quality or fake goods from overseas. “Most dealers I know have used the trick of selling both authenticated goods and fake goods to lessen business costs. In some cases, only if customers are lucky will they receive authenticated goods.”

Nhi said that the local demand for overseas goods has constantly increased, and so vendors are in need to hold a tremendous supply that greatly costs them.

At the inauguration ceremony of Tiki’s Joy Buy cross-border online function, CEO Tran Ngoc Thai Son said that allowing consumers to purchase goods from overseas will help the company meet the huge demand for international goods that a large part of local vendors cannot match.

In attempting to clean things up in e-commerce, the Ministry of Industry and Trade (MoIT) is drafting an amendment for Decree No.52/2013/ND-CP, dated 2013 on e-commerce. In particular, the draft decree will outline the responsibility of operators of e-commerce platforms where overseas vendors are running the business.

Accordingly, operators of e-commerce platforms will have to be obligated to determine the identifiers of the foreign vendors before allowing them to operate on the sites. That is similar to the regulation of requiring operators to determine identifiers of local vendors.

However, the regulation is planned to initially target the top five leading e-commerce operators in Vietnam, or any such group with market share larger than 10 per cent.

Three out of the four largest e-commerce platforms – Tiki, Shopee, and Lazada – currently meet the critera, while Sendo does not yet carry cross-border functions.

Nguyen Minh Long, director of Dragon Law Company, told VIR that the adjustment is extremely essential as the quality of items is a big concern fuelled by the evolution of cross-border trade.

“Tightening conditions in entering the market will aid qualified merchants’ business in Vietnam, and also help prevent fraud on online shopping sites,” said Long. “The adjustment is also in line with the Politburo’s Resolution No.50-NQ/TW dated August 20, 2019 on perfecting institutions and policies and improving the quality and effectiveness of foreign investment cooperation to 2030.

Long said that to make regulations more effective, it is necessary to issue suitable sanctions strong enough to force operators to enhance their obligations in assuring a healthy online trading climate. Moreover, the adjustment of Decree 52 also demands adjustment of other regulations to reach a uniformed state.

“Each platform runs under different methods, so policymakers should carefully research them before performing any changes,” said Long.

For instance, Tiki initially operates under the business-to-customer model, being mainly responsible for the quality of goods traded on its platforms. Tiki already has to work with genuine businesses that get licensed for operations and attain product origin certificates However, Shopee runs under the customer-to-customer model, playing an intermediary role, and so is not deemed responsible for buyer- related problems.

Do Truc Quynh, PR lead at Shopee Vietnam, told VIR that the company commits to protecting the interests of customers, and to assure a safe and secure shopping climate. Specifically, Shopee has been working with relevant ministries to update and adjust the company’s policies in be in line with regulations.

“We have comprehensive measures in place to pre-empt, detect, and remove counterfeit products. This includes monitoring and preventing prohibited and restricted items taken by our listing team via a software system and violation reporting function,” said Quynh. “We also focus on investing in infrastructure and specialised human resources to expand the ability of monitoring and managing selling activity on Shopee.”

Ban Viet Securities to sell all 29.42 million shares in DIG

Ban Viet Securities Co (VCSC) on Wednesday announced its plan to sell all 29.42 million shares in Development Investment Construction JSC (DIG), equivalent to 9.59 per cent of DIG.

The transaction is expected to take place from November 26 to December 25, via put-through or order matching method.

DIG ended Wednesday at VND21,100 per share. At this price, VCSC is expected to collect VND630 billion (US$27.3 million), significantly higher than VCSC's initial investment of VND495.6 billion.

Taekwang Vina previously sold more than 28 million DIG shares and was no longer a major shareholder from October. Before that, Khahomex also sold 16 million DIG shares after more than one year as a major shareholder.

In November, DIC approved the plan to sell 8.26 million treasury shares to supplement capital for production and business activities. The transaction, conducted via order matching and put-through methods, is expected to be completed in the fourth quarter of this year.

In the first nine months of 2020, DIG's net revenue reached VND1.87 trillion, up 44.9 per cent year on year. Pre-tax profit reached VND172 billion and after-tax profit was VND131.2 billion, up 40.5 per cent over the same period in 2019.

In 2020, DIC aims to achieve VND2. trillion in revenue and VND650 billion in pre-tax profit. In the first nine months of this year, the company achieved nearly 75 per cent of the revenue plan, but it still fell short of the profit target assigned. 

Five start-ups win Grab Ventures Ignite support

Grab Vietnam on Tuesday announced bePOS, Stringee, GoDee, Papaya and Vbee as the five winners of the first Grab Ventures Ignite, an accelerator programme dedicated to Vietnamese early-stage start-ups.

Launched in July this year, Grab Ventures Ignite has been supporting 13 start-ups by equipping them with practical knowledge and experience for their businesses to thrive in the new normal.

All participating start-ups have had the opportunity to learn how to raise funds and rapidly scale, better market their products and protect their bottom lines as well as to deepen their understanding of Viet Nam’s macroeconomic landscape to emerge even stronger from the COVID-19 crisis. They also got the opportunity to join mentorship with senior leaders of Grab and world-class experts of its programme partners.

Grab Ventures Ignite helps Grab realise its aim to accelerate tech entrepreneurship and grow a thriving tech start-up ecosystem in Viet Nam.

Viet Nam is the first country in Southeast Asia that Grab launched Grab Ventures Ignite, in support of the Government’s national strategy to create 10 technology unicorns by 2030.

The programme is implemented in partnership with Viet Nam National Innovation Centre under Ministry of Planning and Investment, in association with Singapore’s Infocomm Media Development Authority (IMDA), Gobi Partners, Toong, YKVN, Microsoft and Amazon Web Services.

Speaking at the award ceremony, Vu Quoc Huy, Deputy Director of Viet Nam National Innovation Centre, said: “Viet Nam’s technology start-up ecosystem is on the rise and the environment for investment is also very advantageous for tech start-ups to flourish. This is a strong foundation and a motivation for the government and leading tech companies to continue developing Viet Nam's start-up ecosystem."

Nguyen Thai Hai Van, Managing Director of Grab Vietnam said: “Many start-ups have challenges over scaling past the early stage due to difficulties in optimising funds, scaling effectively in a high-growth and dynamic market, pivoting business models to cope with the rapidly changing landscape.

“As Southeast Asia's homegrown tech company that has successfully built a pan-Southeast Asia business, we understand the problem, we know how to scale and we would like to share that with Vietnamese start-ups through Grab Ventures Ignite. Batch one of Grab Ventures Ignite ignites a next chapter for all to dream bigger, innovate better and scale up faster to create an outsized impact on the entire tech start-up ecosystem in Viet Nam.”

Pham Nguyen Bach, CEO of bePOS, one of the five winners, told Viet Nam News the programme offered potential partnership opportunities with winning start-ups.

“It enables us to access and leverage Grab's vast market access, technology capabilities and expertise in Viet Nam to expand our suite of products and services,” he said.

Tran Duy Dong, Deputy Minister of Planning and Investment, said: “Viet Nam targets to create 10 technology unicorns by 2030 and over the years, the Government has been introducing a lot of initiatives to help promising Vietnamese start-ups flourish. But there is an increasing need for better, stronger participation of private companies like Grab to help start-ups develop business opportunities and grow the tech ecosystem in the country.

“When we are entering the new normal and international economies are shifting in a way that benefits Viet Nam, the opportunity is ripe for us to become a tech start-up hub in the Southeast Asia region where we can drastically promote innovation and digitalisation and our star-tups can internationalise their fast-growing business to succeed in the long term.” 

Seizmic shifts in Vietnamese real estate market

The third session of Vietnam M&A Forum 2020 gathered experts and key leaders from Vietnam's leading real estate developers. Moderated by Michael Piro, COO, Indochina Capital, the session's participants shared their thoughts on market prospects and what needs to be improved to realise the market's potential.
 
The third session of the Vietnam M&A Forum 2020 gathered experts and key leaders from Vietnam's leading real estate developers. Moderated by Michael Piro, COO, Indochina Capital, the session's participants shared their thoughts on market prospects and what needs to be improved to realise the market's potential.

We are currently observing a lot of foreign capital looking to invest in offices and industrial properties. Foreign investors selling their assets in Vietnam does not mean they are withdrawing from the market, they are just diversifying their portfolio.

There is a shift from hospitality to office and industrial in the next five years.FDI pouring into Vietnam, residential land bank running out in major cities, and portfolio shifts of major developers to industrial real estate are pushing us to look beyond major cities, to explore new frontiers.

Average deal value in Vietnam is still inferior to neighbouring markets such as Malaysia, Thailand, or Singapore. Many foreign developers setting up investment teams in the Asia-Pacific region and Vietnam have had to step back.

Many M&A deals in Vietnam are considered extremely successful as the new owner/developer effectively integrated new projects into their portfolio and expansion strategy, introducing better-positioned, higher quality products to the market.

2020 is an interesting year for Vietnam with developers making quite good headways. Despite being impacted globally by COVID-19, Vietnam's real estate market has reported around $3.4 billion of incoming foreign direct investment for the first 10 months of this year

The scale of M&A in Vietnam is about $8.7 million, this is not as large as in other countries, such as Thailand where the market is valued at $18.5 million. Many foreign investors feel the need to set up offices in Vietnam, but carrying out these plans is still hard.

Foreign investors will propose M&A deals if they can find good companies. I used to work with many investors and saw that bank support is one of the factors that can attract them in larger numbers.

There are three things to look out for while seeking an M&A deal: partners, strategies, and business structure. People should not only look at the projects but also at the partners who will go with them in the future, and then options to restructure the projects.

Last year, we talked about hospitality and residential as the most active segments. This year we should focus more on accommodation. Despite having smaller populations, the second-tier cities of Vietnam are attracting developers. Bac Ninh, Haiphong, Binh Duong, Long An, Bac Lieu are most in the cross-hairs.

Three factors lead to a successful transaction are the right partner, right development strategy, and right restructuring plans.

VEC seeks advance capital for Ben Luc-Long Thanh expy project

Vietnam Expressway Corporation, the investor of the Ben Luc-Long Thanh expressway project, has asked the governments of HCMC and Dong Nai Province to allocate capital in advance for the site clearance and compensation work of the project.

Only 2% of the land needed for the project has yet to be cleared, but the investor is incapable of affording the compensation. The corporation is waiting for the competent agencies to come up with solutions over capital issues at the project, the local media reported.

Until date, Dong Nai has advanced more than VND10 billion as compensation for 19 households. Meanwhile, the HCMC government has yet to respond to VEC’s proposal on the advance to compensate 17 households.

If the investor is provided capital for site clearance and compensation, it can immediately continue work on the project after the competent agencies allocate capital for it.

According to the HCMC Department of Transport, the municipal government has received VEC’s proposal and assigned the municipal Department of Planning and Investment to consider it.

The city has handed over to the investor land lots taken from more than 1,100 households in Binh Chanh District. However, 17 other households have yet to be compensated.

In addition, 12 households in Nha Be District have yet to hand over their land.

As of now, the 57.8-kilometer Ben Luc-Long Thanh expressway project has been 78.28% complete. However, packages on construction, consulting and supervision, capital for which was borrowed from the Japan International Cooperation Agency, and packages using loans from the Asian Development Bank have been suspended.

The project, which requires an estimated investment of VND31.32 trillion in the first phase, will help connect the southwestern region with the Ba Ria-Vung Tau and Dong Nai provinces and link expressways and national highways with Cai Mep-Thi Vai and Sao Mai-Ben Dinh port complexes and the Long Thanh International Airport.

Bac Lieu seeks to boost renewable energy development

The Mekong Delta province of Bac Lieu has halted the development of two coal-fired thermal power projects and has called for investments in renewable energy projects.

Le Van Hoang, deputy director of the provincial Department of Industry and Trade, said that according to the adjusted National Power Development Planning VII, Bac Lieu will have two coal-fired thermal power plants with a combined capacity of 1,200 megawatts. However, the province had asked for the prime minister’s permission to stop the two projects as they might cause a high risk of environmental pollution and affect the marine ecosystem in the province as well as its seafood farming plan.

According to the department, the province, with a coastline of 56 kilometers and strong winds, has potential for renewable energy projects, including wind, solar and biomass energy.

At present, the Bac Lieu 1 and 2 wind power plants, which were invested in by Cong Ly Company and have a total annual capacity of 99.2 megawatts and 62 wind turbines, are operating stably. They are expected to produce more than 1.1 billion kilowatt hours of electricity by the end of this year.

The province has proposed adding two new wind power projects with a combined capacity of 200 megawatts to the adjusted National Power Development Planning VII.

Moreover, the province has successfully called for an investment of US$4 billion in the 3,200-megawatt Bac Lieu liquefied natural gas-fired thermal power plant. Delta Offshore Energy Company, the investor of the project, is speeding up the completion of procedures to kick off the project early next year and complete it by 2027.

As for rooftop solar power projects, the Bac Lieu Department of Industry and Trade has coordinated with other relevant departments and agencies to launch a program to provide consulting for the installment of rooftop solar power systems across the province.

 

By October 2020, 607 households and entities in the province had installed rooftop solar power systems.

After being put into operation, these renewable energy projects will contribute significantly to the province’s industry and become a driving force for its socioeconomic development and economic restructuring and a premise for Bac Lieu to become a renewable energy center of the country.

Hoa Binh District of the province is developing a model that combines solar power generation and shrimp farming.

Billions of dollars from Japan expected to flow into Vietnam via M&A deals

Thousands of billions of U.S. dollars of accumulated capital from Japanese firms are awaiting investment opportunities in various foreign markets, including Vietnam, which has drawn attention from investors thanks to potential merger and acquisition (M&A) deals.

Masataka Sam Yoshida, global head of the Cross-border Division at RECOF Corporation, told the Vietnam M&A Forum 2020 in HCMC on November 24 that M&A deals involving Japan’s companies in the local market are on the rise and will surge after the coronavirus outbreak.

Yoshida attributed the potential strong wave of investment inflows from Japan into Vietnam to the demand from Japanese firms for a new market with young human resources to expand their reach.

As of late October, as many as 21 M&A transactions between Vietnam and Japan had been conducted, making Vietnam rank fifth among countries with a high rate of M&A deals with Japan.

Yoshida said that some 2,000 Japanese firms are doing business in Vietnam, and the country is regarded as a safe and potential investment destination. As such, when travel restrictions are removed, a huge wave of investment inflows from Japan will enter Vietnam.

“Japanese firms’ interest in the Vietnamese market is huge, even during the coronavirus pandemic,” said Yoshida.

Speaking at the forum, Deputy Minister of Planning and Investment Tran Quoc Phuong said that M&A activities in Vietnam are expected to recover from mid-2021 due to some key policies of the Government.

“Despite multiple challenges and difficulties, the market will see a positive recovery of M&A activities in 2021 and the next few years,” Phuong said.

India aims to become major seafood supplier for Vietnam

As one of Vietnam's major suppliers of raw seafood material, Indian seafood businesses are keen to share their experience with the country to develop the seafood industry while local businesses are being encouraged to invest in the aquaculture and seafood processing sector in India. 

Aditya Dash, a representative of the Federation of Indian Industry made the statement during the opening session of the online fisheries expo and conference which opened with the theme of 'FISH MART' on November 25 with the aim of helping Vietnamese firms explore business opportunities and share their farming experiences with Indian partners.

During the course of the event, Le Hang, a representative of the Vietnam Association of Seafood Exporters and Producers (VASEP), briefed participants on an overview of the Vietnamese aquatic industry in recent times, along with prospects of co-operation in the field and the goals of the domestic seafood industry moving forward.

The country has so far exported seafood products to 160 foreign markets globally, with revenue reaching between US$8 and US$9 billion per year.

Most notably, shrimp exports make up between 40% and 45% of total export value, while tra and basa fish make up 22% and 25%, respectively.

During the initial nine months of the year, despite the impact of the novel coronavirus (COVID-19) epidemic, the nation grossed approximately US$6 billion from exporting aquatic products.

The Vietnamese fisheries sector aims to contribute roughly 30% of the GDP of the agro-forestry-fishery industry by 2030, with total output of fishery products reaching 10 million tonnes.

Following the signing of 16 Free Trade Agreements (FTAs) with the world’s major seafood consumption markets, the local fisheries sector is able to increase exports in the long-term as a means of fulfilling the set target.

At present, India represents a major supplier of raw seafood material for Vietnam. During the nine-month period, the country imported US$188 million of seafood products from India, posting a year-on year increase of 26% and accounting for some 15% of the nation’s total seafood import turnover.

Green tourism – an emerging trend in post-COVID-19 landscape

The growing trend of green tourism and rural tourism experience is anticipated to thrive in the near future as it starts to replace traditional tourism services at hotels and resorts, according to Ngo Hoai Chung, deputy director of the Vietnam National Administration of Tourism (VNAT).

Chung notes that eco-agriculture and healthcare tourism models are expected to provide a boost to tourist numbers, with the demand for high-end services at resort farms poised to increase considerably in the future.

Luu Duc Ke, deputy director of Viet Media Travel Corporation, says Hanoians typically try to escape the bustle of city life and seek eco-tourism sites in order to experience rural life. In addition, the eco-agriculture tourism model will serve to increase the acceleration of socio-economic developments in various localities.

According to the travel executive, tours for the purpose of savouring scenic views of terraced fields during the ripening rice season in the northern mountainous districts of Mu Cang Chai, Hoang Su Phi, and Pu Luong, or orchard gardens in Luc Ngan district, 113km away from Hanoi capital, can be considered a diverse tourist experience for visitors.

Meanwhile, guests visiting the northern mountainous province of Ha Giang are able to gain greater insights into the unique culture and customs of ethnic minority groups through participating in interesting activities alongside farmers, such as growing vegetables, or processing bee honey or “snow Shan tea”.

The central province of Quang Nam has designed tours, enabling guests to experience a range of farming activities, explore the real life of local farmers, and gain knowledge of the history and culture of regional craft villages.

These tours take visitors to sites such as Thanh Dong vegetable village, Thanh Ha pottery village, Trem Tay village, Dai Binh fruit village, Loc Yen ancient village, and Tra Que vegetable village.

According to the UN’s projections, 68% of the world's population will be living in urban areas by 2050. This means that the trend of eco-agriculture tourism will only increase in the future as tourists turn to green nature to enjoy a new experience.

Experts discuss Việt Nam's digital economic development post-COVID-19

Việt Nam was constantly looking for new driving forces for growth and the country had leveraged opportunities from digital and e-commerce for economic growth, according to CIEM director Nguyễn Thị Hồng Minh.

The Central Institute for Economic Management (CIEM) held a seminar titled 'Việt Nam's digital economic development post-COVID-19: Some requirements and roadmaps for institutional reform' in Hà Nội on Wednesday.

The world was witnessing rapid changes from the fourth industrial revolution with breakthroughs in many fields, including the digital wave of the manufacturing sector, said Minh.

Recognising its importance, many countries had concretised their digital economic development priorities, she added.

The COVID-19 pandemic had made the Vietnamese Government and the business community more interested in the digital economy, noted the director.

At the event, the CIEM’s Department General Economic Issues and Integration Studies released a report aimed at assessing policy priorities, implementation and the realities of digital economic development in Việt Nam.

At the same time, the report identified conditions and requirements for institutional reform for the inclusive development of the digital economy and proposed a roadmap for digital economic development in Việt Nam.

The CIEM director proposed solutions for the development of the digital economy, including ensuring a safe network security environment, completing competition policies, amending tax laws to regulate digital-based activities, enhancing the effectiveness of intellectual property protection, and regulating regulations related to the labour market and social security in the digital context and infrastructure.

Trần Minh Tuấn, deputy director of the National Institute of Information and Communications Strategy, said there should be open data policies, allowing public access to encourage analysis, creation and development of applications from open data.

In addition, the technology applied in smart city development needed to conform to international standards and be compatible with other countries to be able to transfer data between economies in the context of global integration, added Tuấn.

During the transition to a digital economy, labour relations would be repositioned as partnerships, employer-employee relations.

With Việt Nam's participation in new-generation free trade agreements such as the CPTPP and EVFTA, there must be changes in these regulations to create favourable conditions for both users as well as labourers.

“In addition to the normal regimes, participating in the labour market will ensure workers’ technology skills improved, contributing to the success of building a digital economy in Việt Nam," said a representative of the CIEM’s Department General Economic Issues and Integration Studies. 

International financing key to develop Vietnam's power sector: Officials

Vietnam needs 150 billion USD to invest in power projects in the next 10 years, equal to half the country’s current gross domestic product (GDP), which raises demand for international financing.

Dang Huy Dong, head of the Institute for Planning and Development, provided this estimate and emphasised that given the current size of the domestic capital market, for at least the next five years, the economy cannot meet the capital requirements for the development of the power sector.

Dong made this statement at the seminar on International Financing for Independent Power Projects on November 25 in Hanoi.

Since 2015, Vietnam has transitioned to a low-middle-income country which reduces its access to concessional sources of finance from development partners such as Official Development Assistance (ODA).

“Therefore, capital can only be mobilised from international financial institutions,” he said.

The international capital market is very large with tens of thousands of billions of US dollars, more than enough to satisfy Vietnam’s capital need. However, Dong said such capital flows are highly competitive, running on supply-demand principles and certain standards, which requires borrowers to comply.

In February this year, the Politburo issued Resolution No. 55-NQ/TQ on Vietnam’s strategic orientations for energy development through 2030 and with an outlook to 2045.

To meet the target of a total capacity of all power sources reaching 125-130GW and total power output of 550-600 billion kWh by 2030, the resolution has laid out the task of researching and completing the funding mechanism for the power sector.

Nguyen Duc Hien, vice chairman of the Central Economic Commission, said attracting private and foreign direct investment in the power industry as well as in independent power projects includes many difficulties, while funding from the State budget and ODA sources is limited.

He said loans from domestic credit institutions are restrained because energy projects require large capital sources but the central bank’s requirements on credit policy hamper lending to this sector. In addition, foreign direct investment (FDI) in the power sector also has some problems in the field of foreign exchange management such as foreign currency conversion, money transfer and exchange rate risk.

With a total investment of nearly 13-15 billion USD per year, the size of the Vietnamese market is attractive enough for investors, Hien said but noted Vietnam needs to attach importance to the role of the national credit rating as it will help the Government, financial institutions and businesses reduce the cost of raising capital in international markets./.

Positive growth trajectory likely

The expected economic growth rate for next year may not be out of reach if a surge in local production and exports, as well as public investment, materialises.

The government is boosting public investment, which will help reach growth goals, photo Le Toan
Deputy Minister of Planning and Investment Tran Quoc Phuong told VIR that the Ministry of Planning and Investment (MPI) is designing feasible scenarios for economic growth next year, with the target of about 6 per cent considered achievable.

“Despite massive difficulties including those caused by COVID-19, this target will be met, even without a vaccine for the virus which would keep many economies in negative growth,” Phuong said.

Under the MPI’s forecasts, if the pandemic is well controlled, tourism and numerous other sectors such as aviation, hotels, and services could revive and flourish strongly after being almost frozen for many months. Still, Phuong remained cautious, saying, “Currently, no-one can confirm the end of the situation if there is no vaccine available.”

But opportunities are still seen as propellants for economic growth next year.

“The most important for GDP growth is the industrial sector, which is recovering, followed by agriculture and services,” Phuong noted.

In 2020, the index of industrial production (IIP) still reported positive growth. Specifically, the IIP has continuously increased over the last few months, at 3.6 per cent on-month and 5.4 per cent on-year in October, while it was 2.3 per cent in September and 3.5 per cent on-month in August.

State-run Electricity of Vietnam reported that its performance has been reviving over the past few months, with its total 10-month revenue from electricity sales reaching over VND330 trillion ($14.34 billion), up 2.84 per cent on-year. In October alone, the rate increased 6.53 per cent on-year.

The group’s gross output of industry in the 10 months is estimated to be VND294.5 trillion ($12.8 billion), up 3.08 per cent on-year.

In any economy like Vietnam’s, the performance of the power sector reflects how the economy is performing as a whole, with electricity being a vital input for production. The figures show that domestic production, especially industrial production, is increasing after months of being seriously affected by the pandemic which has forced enterprises to reduce their production and general business operations.

One of the key driving forces for economic growth of 2021 is, according to Phuong, the recovery of exports, a good measure for the performance of production.

“In previous times, GDP growth was often equal to half of the export growth. But now, the scale of exports and GDP are both big so the growth levels are almost the same,” Phuong explained.

In the first 10 months of this year, export growth was always maintained at a positive rate despite the health crisis. In October the trade surplus was $2.94 billion, which is the highest amount among the first 10 months, while export turnover in the same period was $229.8 billion, up 2.7 per cent on-year, approximately equal to GDP growth of the economy.

The International Monetary Fund (IMF) last week released its latest forecast for Vietnam, stating that the country will grow at a positive level for 2020 as a whole. “Thanks to Vietnam’s swift actions to contain the economic fallout of COVID-19, growth this year is expected to be 2.4 per cent, among the highest in the world,” said the IMF in a statement. “Macroeconomic policies should remain accommodative, especially fiscal policy, until the recovery is firmly underway.”

According to the IMF, the GDP scale of Vietnam this year is estimated at $340.6 billion, exceeding Singapore ($337.5 billion) and Malaysia ($336.3 billion), and ranking fourth in ASEAN.

In order to secure 2021’s economic growth, the MPI also highlighted the role of public investment. The disbursement of public investment of 2020 is fairly strong, with 42.2 per cent in the increase of October, and 34.4 per cent rise of the first 10 months over the same period of last year.

“The sharp rise of public investment disbursement, which has significantly contributed to the GDP growth of the country, will be a key driver for recovery in 2021,” Phuong stressed. “The target of 6 per cent or even more will be absolutely possible if all measures are carried out synchronously and drastically.”

Financial infrastructure support for post-pandemic economic recovery in Asia-Pacific

The International Finance Corporation (IFC) and the APEC Business Advisory Council (ABAC) – with support from the State Bank of Vietnam and the Swiss Secretariat for Economic Affairs (SECO) – co-organised the eighth APEC Financial Infrastructure Development Network (FIDN) Conference on November 26, 2020. 

The eighth APEC Financial Infrastructure Development Network Conference is held on November 26
To be held both virtually and physically (for those based in Vietnam) in Ho Chi Minh City, this year’s event focused on the theme of “Financial Infrastructure Support for Post-Pandemic Economic Recovery in Asia-Pacific”. 

About 150 representatives from ministries and other government agencies, think-tank organisations, and financial institutions, value chain lead firms, suppliers, and distributors across the Asia-Pacific region attended the event. Speakers from APEC members countries shared their thoughts and led discussions on how to enable policies to expand financing for participation of micro-, small-, and medium-sized enterprises (MSMEs) in supply chains in the context of COVID-19. 

In particular, the meeting discussed various issues on which policy makers in APEC developing economies are seeking technical advice – the required enabling environment for non-deposit-taking lenders (NDTLs) to support MSME finance and supply chain finance, how governments and market participants can collaborate to develop e-ID and e-KYC (Know Your Customer) services for the digital economy and digital finance including online supply chain finance (SCF), and how financial infrastructure services can support post-COVID-19 recovery in general.

“As financial markets are increasingly globalised, a more robust regional financial infrastructure network will support the development of trade among economies, thus facilitating stable economic development in each APEC economy,” Qamar Saleem, IFC Asia-Pacific manager for Financial Institutions Group Advisory Services.

“We have been partnering with the IFC, the State Bank of Vietnam, and the Ministry of Justice over the past few years to develop a movable finance market, which is essential for supply chain financing in the country. We will continue intensifying efforts to expand financing for MSMEs participating in supply chains,” said Jonash Grunder, Deputy Head of Cooperation, Embassy of Switzerland to the Socialist Republic of Vietnam.

In Vietnam, financial services are one of the critical elements for improving the competitiveness of supply chains. SCF that links buyers, suppliers, and financial institutions will enable suppliers and distributors to optimise their working capital management by converting their sales receivables and inventories to cash and giving them lower-cost financing. It will also allow suppliers to conduct more open-account transactions, making them more attractive to global buyers.

Vietnam’s foreign trade volume has increased in recent years as free-trade agreements are opening new market opportunities for local businesses. However, the lack of working capital and transaction banking services such as SCF partially hinders producers and suppliers, especially MSMEs, from accepting large orders or developing new relationships with their value chain actors. As a result, the share of receivables and inventory registered as movable collateral in Vietnam is just about 30 per cent, compared with 60 per cent in China and 80 per cent in mature markets globally. 

Meanwhile, Vietnam has great potential for SCF which was estimated to reach $33 billion in 2018. However, to reach that level, there are some areas where Vietnam could have been considered deepening the market. Development of regulatory framework on SCF, participation of third-party collateral management companies, development of commercial finance companies including factoring finance companies and non-deposit taking lenders, and an e-platform for supply chain financing are among the key areas for improvements to establish an enabling ecosystem for SCF to flourish in Vietnam.

IFC, in partnership with SECO, is implementing a multi-year advisory programme to facilitate supply chain financing for Vietnamese SMEs by improving the regulatory framework, sector infrastructure, capacities of SCF providers, and awareness of SME suppliers. Increasing access to supply chain finance solutions, subsequently, will help them grow their businesses, expand into new markets, and drive Vietnam's economy.

Vietnam, Russia’s Udmurtia Republic seek to boost trade bond

An online workshop to promote trade cooperation between Vietnam and the Udmurtia Republic, a federal subject of Russia, took place on November 27, bringing together representatives from enterprises of both sides.

In his opening speech, head of the Udmurtia Republic Alesander Brechalov briefed participants on Udmurtia’s economic potential, saying that he expects the event will help the two sides’ enterprises understand each other's proposals.

Udmurtia ranks first in terms of cheese production and third in milk production in Russia, he said, adding that the Udmurtia has two cities with investment incentives and four industrial parks being available for serving businesses.

He expressed his hope for expanding cooperation with Vietnam.

For his part, General Director of the Trade Promotion Agency of the Ministry of Industry and Trade of Vietnam Vu Ba Phu said the workshop offers a good chance to introduce cooperation potential to the two sides in particular, and between Vietnam and Russia in general, especially in the context of severe impacts posed by the COVID-19 pandemic on global business and trade.

The agency will work closely with the Russian Trade Office in Vietnam to further boost trade cooperation between the two countries.

Vyacheslav Kharinov, Chief Representative of the Russian Trade Office in Vietnam expressed his wish that Udmurtia businesses will increase contact with Vietnamese partners to access this growing market.

In the first nine months of 2020, bilateral trade between Vietnam and Russia reached 4.1 billion USD, up 8 percent year on year, said head of the Vietnam Commercial Affairs Office in Russia Duong Hoang Minh.

Vietnam attends 17th China – ASEAN Expo

The 17th China – ASEAN Expo (CAEXPO) opened in Nanning of China’s Guangxi province on November 27, with leaders of ASEAN member states, including Prime Minister Nguyen Xuan Phuc, delivering speeches in the form of pre-recorded videos at the ceremony.

In his speech, PM Phuc affirmed that the ASEAN – China cooperation still maintains a positive growth, especially in economy and trade. China has been ASEAN’s largest trade partner for 10 consecutive years. In the first six months of this year, ASEAN became China’s largest trade partner for the first time with a bilateral turnover of 300 billion USD, 20 percent of which was contributed by Vietnam.

Amid the COVID-19 pandemic, ASEAN and China have been one of a few pairs of partners worldwide to post positive growth in their bilateral trade since early this year.

Vietnam has always boasting the largest number of exhibitors and stalls at all CAEXPO editions so far, he noted, adding that Vietnam will keep its online show until the end of the year, offering more opportunities for businesses.

This year’s CAEXPO is taking place from November 27-30 in both online and offline forms with the theme of “Building the Belt and Road, Strengthening Digital Economy Cooperation”

Vietnamese businesses have authorized their branches, sales agents or partners headquartered in China to participate in the event.

The over 2,000sq.m Vietnam area attracts the participation of nearly 80 enterprises operating in different fields such as agro-forestry-fishery, processed food, wood products, handicrafts and tourism.

The Vietnamese Ministry of Industry and Trade also organized a general stall to promote the image of the nation as well as its trade and investment potential and outstanding export products.

Source: VNA/VNN/VNS/SGGP/VOV/NDO/Dtinews/SGT/VIR 

 
 

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