Digital economy to constitute one-third of Vietnam's GDP in 2030
Vietnam has established the goal to boost the digital economy share in the national GDP to 20 percent in 2025 and to 30 percent 5 years later, according to the newly released Resolution No.52 NQ/TW of the Politburo, which was signed on September 27 by Party General Secretary and State President Nguyen Phu Trong on ‘guidelines and policies to actively participate in Industry 4.0’.
As stated by this new Resolution, Industry 4.0 has brought about several chances as well as challenges for each nation, organization, and individual. Therefore, the Central Party and the Government instruct that related industries and state units promote the implementation of science and technology while enthusiastically improve the capacity to join in this important revolution.
Certain drawbacks in Vietnam include the low level of active participation in Industry 4.0 and limited policies at the moment. In addition, the human resources and current infrastructure are still not able to answer the needs of advanced technologies and the digital transformation process. Along with that, innovation is not truly the driving force for socio-economic development due to the newly born national innovative system and the lack of synchrony.
As a result, many businesses are passive in applying new technologies in their operation, leading to the so small-scale digital economy but the serious state of security crimes.
According to Resolution No.52NQ/TW, the main subjective cause of those problems is the inadequate awareness of the public about Industry 4.0 and the restricted strategic forecast about the effects of science-technology on socio-economic aspects in Vietnam.
Adding to that, government management as to this field cannot keep up with the reality since the cooperation between ministries and industries or between the central unit and local authorities is quite loose.
Understanding these weaknesses, the Politburo instructs that active participation in Industry 4.0 must become the prioritized strategic mission of the whole country in both the short and long term. This action must closely connect to the globalization process. Furthermore, the awareness about the nature of Industry 4.0 must be raised for a stronger determination to innovate thinking and to achieve breakthroughs in socio-economic development.
Opportunities created by Industry 4.0 must be timely caught in order to boost working performance and competitiveness of Vietnam, to effectively manage the society via certain researches and technology transfers, especially in key industries. It is expected that Vietnam will reach the leading position in the region and the whole world in some fields, the Resolution affirms.
It is also directed that negative effects of Industry 4.0 should be actively prevented and coped with so that the national security, social justice, and sustainable development are guaranteed.
The general goal according to Resolution No.52NQ/TW is to take full advantage of all chances brought by Industry 4.0 to boost the growth models and to restructure the current economy in order to make strategic breakthroughs, modernize the country, promote the strong development of digital economy, use science-technology to significantly and sustainably grow, obtain high-level human resources, guarantee social welfare of the public, assure the national security, and protect the natural environment.
Detail goals drawn from the new Resolution is that in 2025, Vietnam should maintain the 3rd position of ASEAN nations in the Global Innovation Index (GII), upgrade the digital infrastructure to reach the developed level in the region, have 100 percent broadband Internet coverage in the nation.
These are to ensure that the digital economy share will account for around 20 percent of the national GDP, with the working performance of over 7 percent per year; the digital transformation process in state and Party units or politburo-socio organizations is basically completed.
In addition, Vietnam should be in the Top-4 leading nations in ASEAN regarding digital government as evaluated by the United Nations, with at least three smart cities in the three key economic regions in the North, Central, and South.
The Resolution also states that in 2030, Vietnam should be in the Top-40 leading nations in the world regarding GII. The 5G mobile network should totally cover the whole country so that the public are able to access low-cost broadband Internet. The digital economy must constitute more than 30 percent of the national GDP, with the working performance increase of about 7.5 percent per year on average. The formation of the digital government should be fully completed. There should be a chain of smart cities in key economic regions in the North, Central, and South, closely connected to the regional and global counterparts.
According to this Resolution, the vision to 2045 is that Vietnam will become one of the smart centers for production and services, one of the leading innovative startup centers in Asia, having high working performance and full capacity to master state-of-the-art technologies in all fields.
To achieve these goals, Resolution No.52 NQ/TW clearly declares that there must be innovative thinking in socio-economic management and improvement in the institution. Creativity and pilots should be welcomed as to practical issues. The attitude of indifference, lack of confidence, or subjectivism should be avoided at all cost.
All forces in the society are promoted for the active and long-term participation of both the inner and outer resources in the digital economy, while the leading role of the Central Party and the Government are to be guaranteed.
Certain policies and guidelines must be adequately implemented, including the unification in awareness and thinking; an increase in the Party’s leading role, the Government’s management, and the participation of Vietnam’s Fatherland Front as well as politburo-socio organizations; a focused development of necessary national infrastructure and national innovative capacity; a priority on human resources growth and key industries; a boost in throughout globalization, digital transformation process among state units.
Vietnam - Cambodia trade and investment promotion conference held
Prime Minister Nguyen Xuan Phuc and his visiting Cambodian counterpart Samdech Techo Hun Sen co-chaired the Vietnam – Cambodia trade and investment promotion conference 2019 in Hanoi on October 4.
About 500 delegates from ministries, agencies and the two countries’ business communities attended the event.
Addressing the conference, PM Phuc welcomed Cambodian investors to Vietnam and asked Vietnamese firms to invest responsibly and sustainably in Cambodia.
PM Hun Sen, for his part, called on Vietnamese firms to continue investing in Cambodia in fields of its demand such as agriculture, tourism, transportation, logistics, construction, education and technical training.
He said the Cambodian government is striving to improve business environment via dialogue mechanism between the government and enterprises, cut business costs and devise new draft law on investment and exclusive economic zones.
The Cambodian PM spoke highly of the signing of the Vietnam – European Union free trade agreement and expressed interest in bilateral trade and transportation, saying that the Cambodian government is studying measures to further promote the construction and connectivity of expressways in the southern economic corridor in the Greater Mekong Sub-region.
According to Minister of Planning and Investment Nguyen Chi Dung, Vietnam invested in 178 projects worth nearly 2.8 billion USD in Cambodia as of September 2019. Cambodia ranked third among the 76 countries and territories invested in by Vietnam. During the period, the total Vietnamese investment in the country neared 50.4 million USD, up 49.5 percent year on year, mostly in agriculture, banking, telecommunications – information technology, manufacturing and processing.
Cambodia also poured 63.7 million USD in 21 projects in Vietnam in the fields of agro-forestry-fisheries, trade, transportation, manufacturing and processing. In the first nine months of this year, Cambodia’s investment in Vietnam reached 3.2 million USD.
Trade between the two countries is forecast to reach 5 billion USD before 2020, he said.
On the occasion, the two leaders signed three memoranda of understanding on trade infrastructure connectivity along border areas, construction and transfer of a model market to Cambodia, and raising two-way trade.
A memorandum of understanding on cooperation between the Vietnamese Ministry of Planning and Investment and the Council for Development of Cambodia was also signed./.
Vietnam’s industrial growth hits four-year high
The value added for the entire industrial sector in the first nine months of 2019 grew 9.56% compared to the same period last year, which is the highest it has been within the last four years, according to the General Statistics Office (GSO).
The manufacturing industry continued to record the largest increase in the Index of Industrial Production (IIP) at 11.37%, followed by electricity generation and distribution at 10.7%.
The IIP for water supply and waste treatment went up 8.43% while the mining sector began to see a slight growth at 2.68%, after years of decline, thanks to a surge in coal exploitation.
Some major industrial products with high IIP growth during the January-September period were crude iron and steel at 49.1%, petroleum at 40.3%, televisions at 19.3% and aquatic feeds at 14%.
In the meantime, the production of fabrics from natural fibers increased by 12.8% year-on-year, followed by the manufacturing of chemical paints at 12.6%, clean coal at 12.2% and mobile phones at 12.2%.
Trade surplus expected for 2019
A major trade surplus since early this year, particularly a soar in electronics exports, is expected to enable the Vietnamese economy to continue enjoying the fruits of trade in 2019.
The General Statistics Office (GSO) reported that in the first nine months of this year, despite headwinds in the global market causing a reduction in consumption and imports, the economy witnessed a US$5.9 billion trade surplus, with total export turnover of US$194.3 billion, up 8.2% year-on-year.
TradingEconomics, a global provider of economic indicators, released its fresh econometric calculation last week, indicating that Vietnam may reap a big trade surplus this year.
“Looking forward, we estimate the balance of trade in Vietnam to stand at US$2 billion in 12 months’ time. In the long-term, the figure is projected to trend around US$1.6 billion in 2020, according to our econometric models,” the firm said.
TradingEconomics’ optimistic projection on Vietnam’s trade this year is based on the country’s strong exports since early this year, notably including a surge in electrics exports, and positive impacts from free trade agreements (FTA) including the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the EU-Vietnam FTA (EVFTA) which have led to a rise in foreign direct investment, a major part of which is focused on export-oriented manufacturing.
According to the Ministry of Industry and Trade’s (MoIT) latest report on Vietnam’s industrial production and exports, there are many favourable factors to help Vietnam boost its exports from now until the year’s end (see box) and continue to enjoy a trade surplus this year.
One of the key drivers of the nine-month exports is the boosted shipment of electronics items led by Samsung, LG, and Canon.
Specifically, in the first nine months of the year, exports of mobile phones and their spare parts reached US$38.6 billion, accounting for 19.9% of Vietnam’s total export turnover, and up 5.1% year-on-year. In addition, the export turnover of computers and their spare parts hit US$25.4 billion, up 16.9.3% year-on-year.
“Samsung’s products will continue greatly supporting the domestic phone manufacturing industry to develop stronger in the third and fourth quarters of the year, with the Thanksgiving and Christmas holidays being peak shopping seasons in the country,” stated the MoIT report. “At present, the business and production plans of Samsung and LG in Vietnam are going well.”
According to the MoIT, production of electronics and electric items has been strongly recovering since the second quarter of the year. For example, in August alone, the index of industrial production of this industry grew 20.1% month-on-month and 5% year-on-year.
“This is a very positive signal of this industry following its year-on-year minus growth in the first six months of 2019,” stated MoIT Deputy Minister Cao Quoc Hung. “The key reason is Samsung having launched its high-end Galaxy Note 10 and Galaxy Note 10+ smartphones, and boost exports.”
The products come with upgraded specifications and 5G support, Samsung said, with a suggested retail price of VND22.99 million (US$1,000) and VND26.99 million (US$1,170) for the Note 10 and 10+, respectively.
At a recent government press conference, government spokesperson Mai Tien Dung cited Prime Minister Nguyen Xuan Phuc, noting that not only has there been a continued climb in exports led by foreign-invested enterprises but exports created by Vietnamese firms have also been increasing strongly.
“Following their relatively-high growth in 2018, domestic enterprises have continued painting a rosy export picture in the first eight months of 2019, with a year-on-year growth rate of 13.9%, nearly doubling the economy’s export growth of 7.3% year-on-year, and tripling the 4.6% growth rate recorded by foreign enterprises,” Dung said. “It is expected that 2019 will continue seeing a big trade surplus.”
According to the GSO, in the first nine months of this year, Vietnamese enterprises created US$59.57 billion in export turnover, up 16.4% year-on-year, and holding 30.7% of the economy’s total export turnover, up from 28.8% in the same period last year. Meanwhile, foreign-invested enterprises generated US$134.73 billion, up 5% year-on-year and accounting for 69.3% of the economy’s total export turnover.
According to Minister of Planning and Investment Nguyen Chi Dung, until the year’s end, the economy will have more opportunities to boost exports thanks to spillover effects from free trade agreements including the CPTPP and the EVFTA.
“These agreements have helped further strengthen the confidence of investors and enterprises in conducting business and production in Vietnam, especially in the manufacturing and processing sector, creating a solid propellant for businesses to boost exports and for the whole economy to reap greater trade growth including a big trade surplus in 2019,” he stated.
Last year, Vietnam harvested a high trade surplus of US$7.21 billion despite the US-China war dampening global demand.
Notably, over the past year, while the US and China, which are the largest export markets of Vietnam, have been engaging in duelling import tariff impositions, Vietnam’s exports to the US market remain on an uptrend and those to China have slightly decreased.
Specifically, in the first nine months of 2019, total export turnover from the US, which is the largest purchaser, was US$44.9 billion, up 28.2% year-on-year, and that from China, which is the third largest buyer, totalled US$27.8 billion, down 3.8% year-on-year.
Key drivers for Vietnam to expand exports until the year’s end
· The remaining months of the year will be the peak time for enterprises to boost production, especially the groups of consumer electronic goods such as phones and TVs, as there will be a rise in consumption demand.
· Vietnam’s export turnover in the third quarter of 2019 is expected to be higher than that in the second quarter, because many products will be produced for export. Periodically, exports often soar during the remaining months of the year due to high demand related to festivals and holidays.
· Vietnam’s exports to the US market will continue soaring as US importers boost the hunt for goods that can replace Chinese ones. This is a big opportunity for Vietnam, especially in the sectors of electronics, fishery, woodwork, and farm produce.
· The Department of Commerce has announced its final decision after the 13th period of review of anti-dumping tariff on Vietnamese warm-water shrimp exported to the US in the period from February 1, 2017, to January 31, 2018. Accordingly, 31 Vietnamese enterprises will be given a 0 % import tax rate for their shrimp exports to the US, including many big exporters such as Minh Phu, C.P. Vietnam, and Camimex. Currently the US is a large importer of Vietnamese shrimp products.
Five Vietnamese startups join VIISA Acceleration Program
VIISA announced the five potential startups joining its Acceleration Program Batch 6 on September 28.
It received over 100 applications for the acceleration program during the two-month application period, an increase of more than 20 per cent compared to the previous intake.
For this latest batch, VIISA applied a new methodology for filtering out and selecting startups. A minimum of four hours was spent on each startup, including at least two face-to-face interviews with VIISA’s management team, in order to gain as much understanding as possible about their businesses.
After all matters were considered and fair terms agreed, the five potential startups from various sectors (traveltech, edtech, e-commerce, and fintech) will join VIISA on the three-month program journey.
The five startups joining the VIISA Acceleration Program Batch 6 in September are:
BeeKrowd is an equity crowdfunding platform that supports startups with fundraising and makes the privilege of investing in startups come true for small investors. BeeKrowd strongly believes that besides traditional ways of fundraising (angels, VCs, and sharks), a new approach like equity crowdfunding has huge potential in Vietnam.
BoxShop is a tech-driven O2O platform for fashion, helping emerging local brands display and sell designed clothing in inspired boutiques. It gathers them in one-place and has a system to manage all activities, from warehousing to point-of-sale. BoxShop will conduct PR and marketing to reach more consumers and help local brands sell their products both offline and online. BoxShop is a modern fashion marketplace for women.
EcomEasy is a leading e-commerce solutions company whose focus is on continually finding new ways to make e-commerce easier and more successful. Its integrated capabilities encompass all aspects of the e-commerce value chain, covering IT solutions, store operations, digital marketing, customer services, warehousing, and fulfillment.
Hachium is an e-learning platform that helps instructors create websites to teach and sell online courses in ten minutes without programming skills.
TripHunter is an automatic trip planning platform for free independent travelers to build their personalized itineraries in minutes and book all-in-one. Travelers need only select their destinations, travel time, and interests, and will receive optimized and personalized trip plans. TripHunter is positioned as the must-have application providing a massive database of travel information to help travelers explore anywhere in Vietnam and the world.
The VIISA Acceleration Program Batch 6 marks major upgrades to the program’s structure while maintaining the core factors that have been VIISA’s most valuable assets in accelerating startups’ growth.
The three-month program provides participating startups with investment in cash plus an undisclosed amount of supporting services such as co-working space, Amazon Web Services, HubSpot, Google Cloud, Mapbox, and Zendesk, etc.
VIISA also commits to referring startups to resourceful local corporate partners (for e.g. FPT and Dragon Capital), cultivating cutting-edge practices and principles to help companies strive for as many meaningful tractions as possible and connect founders with potential investors who might join their journey to support them achieve greater milestones further down the road.
Finally, startups that graduate from the VIISA Acceleration Program will stand a good chance of obtaining follow-on funding of up to $200,000 from VIISA Investment Track when they secure a new round of funding from other investors.
“Batch 6 marks our third anniversary of running the acceleration program,” said Mr. Hieu Vo, Program Director and Board Member of VIISA. “We witness a better-structured curriculum and more refined content, where founders and their businesses are the core focus of the program. This new approach has enabled us to support the right startups with appropriate growth stages. We truly aim to raise the bar in standards for our program management team. We all hope for another successful acceleration batch.”
VIISA is expecting to showcase its Batch 6 startups at its signature Investment Day event, which is scheduled for early December. Investment Day will see startup pitches from Batch 6 and some portfolio companies, presented to more than 100 investors, mentors, and corporate partners from all over the globe.
In his closing address, Mr. Duc Tran, CEO of VIISA, officially called for startups to participate in the Acceleration Program Batch 7, with further information available on VIISA’s website. The VIISA Acceleration Program Batch 7 is expected to be launched in spring 2020.
New drive in smart city development
A modern city with many public facilities and utilities serving people, suitable investment attraction, and effectively supporting the policy of relaxing Hanoi’s inner city are the targets of a smart city project in accordance with the development master plan of the Nhat Tan-Noi Bai area.
In the Fourth Industrial Revolution era, investing in smart cities is not only a trend but also a new drive for developing urban areas. Already many countries in the ASEAN bloc have announced ambitious plans. Besides the pioneering Singapore, Myanmar and the Philippines are also building high-tech green cities with unmanned vehicles, and robots. Elsewhere, Thailand has the goal of creating 100 smart cities by 2022.
In Hanoi this week, a smart city project will be officially implemented, marking the start of building an e-government in the capital city.
According to Nguyen Thi Nga, president of project investor BRG Group, when completed, the smart city will create a highlight for the space and architecture of the gateway to the capital, creating a driving force to develop urban areas in the north of the Red River, creating many jobs, and contributing to the socio-economic development of Hanoi.
Over the past five years, the demand for investment and construction of smart cities in Vietnam has appeared alongside plans from authorities of Hanoi, Ho Chi Minh City, and Danang, but until the new smart city project in Hanoi is licensed, people may not feel the effects or understand fully what a modern city can achieve.
It is hoped that the use of energy in smart cities in general will be optimised by integrating energy management systems in buildings and apartments with central energy management systems along with using renewable energy.
Throughout Hanoi, a smart public transportation system, including high-volume urban transport such as buses and subways, will be built to help reduce using personal vehicles and ensure quick and convenient transportation of residents. Especially, the smart city and the centre of the capital will be connected synchronously through Urban Railway No.2, which will originate from Tran Hung Dao street in the hub of the capital.
Smart city residents can be almost guaranteed safety thanks to a modern security management system. There aims to be advanced monitoring and warnings systems, along with flood controlling and rainwater reusing systems. Besides that, there will be a smart classroom system with lessons from foreign teachers via virtual classes.
Cashless payment methods will be applied to enhance the smart consumption experience of residents.
Currently, Hanoi has prioritised implementing information systems and professional data in big data centres, ensuring connection and sharing with national data facilities. So far, the capital has completed building data of eight million residences serving for management work of the city. In addition, Hanoi has also built the WAN net for the whole city, and applied one-door electric linking systems in different fields like public administration, education, and healthcare.
Nguyen Duc Chung, Chairman of Hanoi People’s Committee, said, “The Vietnamese government has been facilitating Hanoi to develop into a green, civilised, and friendly capital which is a smart urban area with management based on new technologies and smart infrastructure with the aim to serve people better and build an open and friendly community.”
At recent meetings, many experts emphasised the position and role of the northern Red River region, in which Dong Anh rural district will play the role in easing the urban population. Besides that, the city also advocates relocating hospitals, universities, and offices of ministries and agencies out of the city centre.
Nga of BRG Group emphasised that the group will pay attention to inherited and long-term values. Containing the essence for solving urban issues around the world, the smart city is expected to become the key to unlock new development drivers for the future, in Hanoi, Vietnam, and further afield.
Experience and know-how from Japan in developing smart cities will be applied in Hanoi’s smart city project. As a result, it is expected that the project will bring the city long-term economic and social values, addressing the current inadequacies in Hanoi such as overload, traffic congestion, and pollution.
With such convenience, a smart city can be a liveable urban area, contributing to the strong development of the region as a whole.
An Giang pushing up efforts to accelerate project pace
The government of the southernmost province of An Giang are taking a raft of measures to effectively support investors.
In January, Nam Viet Binh Phu Aquaculture Co., Ltd., a member of the privately-held Nam Viet Group, began its high-tech aquaculture project in Chau Phu district, encompassing over 600 hectares with total investment value touching VND4 trillion ($174 million).
This is one of the projects which were awarded investment proposal approval at the An Giang Investment Promotion Conference 2018. Similarly, a string of other projects which received investment certificates at last year’s conference have been in full tilt to speed up construction.
The solar power plants Van Giao 1 and Van Giao 2 in Tinh Bien district, both consisting of over 60ha space with an annual capacity of 50MWP, developed by Van Giao Solar Power JSC, and valued a combined VND2.28 trillion ($99 million) have launched.
A high-tech agriculture zone in Tri Ton district, developed by Lu Gia Green Agriculture Ltd., enjoying over 500ha space and valued at VND2 trillion ($87 million), commenced partial operation, with work continuing in other parts.
Hanh Phuc Rice JSC are in the land acquisition phase of their plan to build an export rice processing plant in Tri Ton district. The plant will cover an area of over 16ha, and is valued at VND1.1 trillion ($47.8 million).
Meanwhile, a high-tech 160ha seafood breed facility costing VND200 billion ($8.7 million) initiated by Viet Uc Tra Fish JSC is now under construction in Tan Chau.
According to An Giang Department of Planning and Investment, at the province’s major investment conference last December, the province conferred investment proposal approvals on 26 projects valued at a combined VND27 trillion ($1.17 billion).
Of the projects, two have commenced operation, whereas seven projects with a combined value of VND4.8 trillion ($210 million) have completed legal setup and are under construction.
Four projects worth VND3.7 trillion ($161 million) have completed land acquisition, have engaged in making land procedures, and are waiting for construction permits. Another 12 projects, valued at VND12.3 trillion ($533 million) are in the land acquisition and legal setup stage.
Ten other projects which had their investment undertakings signed at last year’s investment promotion conference, with total investment value amounting to VND105 trillion ($4.56 billion) have also reported positive performances.
Most investors are proactive in facilitating investment procedures with support from provincial leaders and local authorised management agencies.
According to Pham Thanh Nhon, deputy director of An Giang Department of Planning and Investment, after the success of last year’s event, the provincial management has paid close attention to increasing the pace of projects getting investment proposal approval and signing MoUs. At the same time, the relevant management agencies have been urged to take effective measures to make the province more appealing to investors.
Furthermore, the chairman of An Giang People’s Committee last year enacted Decision No.237/QD-UBND on the establishment of a working group to facilitate projects’ implementation in the province. He acts as head of the working group, with committee standing members acting as deputy heads.
Meanwhile, the working group’s members are leaders of relevant management agencies and chairmen of district and town people’s committees, whose major duties are facilitating projects’ execution and solving investors’ problems in a timely manner.
In addition, An Giang Department of Planning and Investment recently submitted Plan No.309/KH-UBND to the provincial People’s Committee, with the intention of supporting investors who plan to make inroads into the province.
Each particular agency has been assigned to certain phases in the investment process to aid investors effectively, oversee the projects’ implementation, and make periodical reports to the provincial leaders.
Under guidance from the provincial leaders, the three departments of Planning and Investment, Natural Resources and Environment, and Construction were directed to set up consultancy and support teams to help investors address issues.
“These achievements come from a strong commitment of the whole political system, as well as the message of An Giang government to investors: businesses’ success is the province’s success, therefore the province will do its utmost to accompany investors’ in the journey to success,” said Nhon.
EY Law Vietnam appoints new partner
Ernst & Young Law Vietnam LLC (EY Law Vietnam) has appointed Michael Beckman as a partner in its rapidly growing practice.
Michael has 20 years of experience in corporate finance, mergers and acquisitions, and commercial law. Prior to joining EY Law Vietnam, he worked at several international law firms focusing on securities and M&A transactions. Michael is a member of the bar in New York and California and a licensed foreign lawyer in Vietnam.
Dmitry Tetiouchev, Law leader, EY Asia-Pacific, commented, “We are delighted to have Michael join the expanding EY law team in Vietnam. His appointment is yet another example of the ongoing EY commitment to provide quality legal, tax, and advisory services to EY clients in Vietnam and the broader region.”
Robert King, Tax leader, EY Vietnam, added, “The experience and skills Michael brings to EY Law Vietnam will help us achieve growth in Vietnam and Indochina and make law an integral part of the range of EY service offerings in the region.”
Michael has previously advised many leading Vietnamese companies and multinationals on a wide range of corporate, commercial, and regulatory issues facing their businesses including advising them on entering the Vietnamese market, strategic investments, and M&A.
Michael is a vice chair of the Board of Governors of the American Chamber of Commerce in Vietnam and a member of the Board of the Vietnam Business Forum.
“The opportunity to be part of such a highly-regarded team of legal professionals with footprint across the globe and multidisciplinary teams was integral in my decision to join EY. The team is well-placed to assist clients with the complex challenges and help deliver compelling local and international services for clients,” Michael Beckman said.
E-transaction market developed toward digital economy
Despite remarkable progress, the e-transaction market still fails to meet the demand of sustainable development. E-transactions need to become even more popular in anticipation of a digital economy.
Vietnam has a firm foundation for e-commerce. Vietnam is among the 78% countries that have e-transactions and 75% of countries that have cyber security laws.
The country has more than 64 million internet users, 57% of the population have social network account, and 67% of internet users have conducted online transaction.
The Vietnamese government pays special attention to taking advantage of the 4th Industrial Revolution and has implemented adopted policies to boost e-commerce.
According to the National Electronics Authentication Center of the Ministry of Information and Communications, there are 12 centers licensed to provide digital signature authentication services and 1.1 million working digital certificates of authority.
Ministries, sectors, and localities are now using more than 144,000 digital certificates. The Ministry of Information and Communication plans to boost digital signature authentication and ensure e-transaction security.
Deputy Minister of Information and Communication Nguyen Thanh Hung said, “The National Electronics Authentication Center cannot do everything by itself. It needs to cooperate with other agencies, association, and enterprises to remove barriers to using digital signatures. We license and collect fees to ensure our management. We hope that state agencies ensure security and reliability in e-transactions.”
According to the General Statistics Office, Vietnam’s revenue from online shopping has increased 30%, reaching 8 billion USD. Customers mainly use shopping apps like Shoppe, Lazada, or Tiki or social networks like Facebook or Zalo to shop. Revenue from online shopping is expected to reach 13 billion USD by 2020.
Improving infrastructure and public knowledge, awareness and trust in e-commerce and strengthening information security is the way to promote e-commerce.
The State must establish the infrastructure and create an environment to develop e-commerce while enterprises need to optimize their business models and invest more in technology.
Tuna exports endure sluggish growth
Vietnam’s tuna exports saw sluggish growth during August with export value reaching approximately US$65 million, a rise of nearly 3 per cent against the same period last year, bringing the total export value during the eight-month period to US$494 million, according to the Vietnam Association of Seafood Exporters and Producers (VASEP).
The export of tuna to the EU fell by 6.3 per cent to nearly US$92 million in the reviewed period. Despite this, exports to the Italian and Spanish markets have risen as the both European nations now represent the two largest import markets of Vietnamese tuna within the EU bloc.
Meanwhile, tuna exports to the Netherlands suffered a drop of 11.5 percent to close to US$15 million in the first eight months of the year.
Aside from a decline in exports to the EU, Israel, and China, tuna exports to Canada also showed signs of decline during August.
In spite of Vietnam’s tuna exports to the ASEAN bloc growing during August, this growth was not enough to compensate for the fall in previous months. As a result, the tuna export value during the first eight months of the year dipped 0.9 per cent to only US$33 million.
Currently, the country's fresh, frozen, and dried tuna exports to the ASEAN market have experienced an upward trend, while canned tuna exports to the regional grouping have endured a downward trend.
Tuna exports to the Japanese market in August remained strong, reaching US$3.2 million, a rise of 48 per cent against the same period last year.
After enjoying growth rate of 31 per cent in August, the country’s tuna exports to the US showed positive signs for the future. As a result, the total tuna export value to the vast market during the eight-month period rose 56 per cent in comparison to last year’s corresponding period.
Frozen tuna fillet makes up the largest proportion of the nation’s total tuna exports to the US at 63 per cent. Despite accounting for a smaller proportion of the market, the export of canned tuna products has significantly increased.
VASEP forecasts that tuna exports will enjoy an average growth rate during the remaining months of the year.
Vietnamese exporters to take advantage from e-commence platform
Au Tuan Long, CEO of King Bread Joint Stock Company, a chain of bakery products based in HCM City, said his company would sell bakery products via online sites in the near future.
Selling via online or franchise channels would help promote the company’s brand in domestic and foreign markets, he said.
However, he noted that the company lacked confidence to pursue the full array of online channels because of a lack of knowledge about e-commerce, especially cross-border e-commerce.
Speaking at the “Digital Transformation - Gateway to the Global Market” forum in HCM City on Wednesday, experts said that many small and medium-sized companies (SMEs) had little experience in e-commerce and lacked information about the field.
Nguyen Thi Phuong Trang, business development director at Innovative Hub, the event’s organiser, said there was high demand for online sales of Vietnamese products and urged SMEs to place products on such platforms.
“Buyers from 200 countries would recognise that our products have good quality and competitive prices,” she said.
One of the challenges facing SMEs in using e-commerce platforms for exports is the lack of quality human resources.
Training staff in online store design, trading options, logistics, payment methods, and global online markets are all necessary, according to Trang.
In addition, SMEs face challenges in accessing online trading activities because many of the firms are still tiny scale.
Steven Zheng, CEO of Hangzhou SOR Business Consulting Co. Ltd, said that SMEs should keep an eye on new markets.
SMEs need to change their way of thinking and made quality products for e-commerce, he said, adding that overseas consumers are interested in Vietnamese products both online and offline.
“Buyers not only want to search for offline products at shops, showrooms or fairs, but also need to search for products online.”
For example, an exporter of black garlic, which formerly was exported mostly to Asian markets, had never considered that the African market would have high demand for the product, experts said.
A number of Vietnamese products have very good quality and extremely competitive prices, but consumers around the world are not aware of them because they are not available online.
Zoe Zuo, managing director of Innovative Hub, said that quality Vietnamese products could reach global buyers through online platforms in more than 190 countries.
“Digital transformations can lower the cost and increase the efficiency of businesses, resulting in faster growth,” he said.
Experts have said online import and export activities of Vietnamese SMEs are expected to increase. The Viet Nam e-business index report found that 32 per cent of SMEs have established businesses with foreign partners through online channels.
Joining B2B e-commerce platforms will help export enterprises directly approach customers, thereby expanding opportunities in the global market and reducing costs of traditional trade promotions such as fairs and exhibitions. Companies will also be able to more easily open offices in other markets.
A representative from the E-commerce Development Centre (under the Ministry of Industry and Trade’s Viet Nam E-commerce and Information Technology Agency), said that Vietnamese enterprises have been using online trading floors to find foreign partners and customers.
For traditional trading platforms, many businesses encounter cumbersome procedures and huge expenditures looking for foreign partners or implementing trade promotion programmes.
On the other hand, online import and export channels can reduce costs and time for businesses, especially SMEs looking for business partners, carrying out trade promotions, marketing products, and implementing transactions and payments, according to the representative.
Viet Nam is one of the fastest growing economies in Southeast Asia, and with a stable governance and ease of doing business, Vietnamese SMEs are likely to succeed in joining the global e-commerce trade.
According to the ministry’s Viet Nam E-commerce and Digital Economy Agency, e-commerce has had strong growth with the highest rate of 30 per cent in 2018, rising to US$7.8 billion revenue from $4 billion in 2015.
If the growth rate of 2019 and 2020 continues at 30 per cent each year, revenue by 2020 would reach $13 billion.
A drop may not be too worrisome
Contrary to predictions that Vietnam would emerge as one of the destinations for the outflows of international capital from China, foreign investment capital poured into Vietnam during the past eight months suffered a setback. More importantly, the decline was seen even in countries which are traditionally best investors in Vietnam, such as Japan and South Korea. Is this phenomenon really a source of worries?
Statistics obtained from the Foreign Investment Agency under the Ministry of Planning and Investment show that the total foreign direct investment (FDI) capital in the first eight months of this year reached only US$13.1 billion, a drastic dive of 31% year-on-year. Of this figure, the newly registered capital was US$9.1 billion and the increased capital of operation projects was US$3.9 billion, a drop of 32% and 29%, respectively, compared with the same period last year.
Considering the strongest magnets of FDI into Vietnam recently, the deepest plunges were noted in realty, wholesale and retail, and electrical power generation and distribution. The sectors of processing, manufacturing and construction were the only exceptions when it comes to sustained growth.
This is a surprise situation as many have opined that the Sino-American trade war would considerably redirect FDI inflows from China to Vietnam. But what has happened so far paints a different picture. Many would want to know what the real reasons are and whether it is a permanent or a temporary trend (1 & 2).
The statistics may indicate concerns over FDI in Vietnam over the past eight months. Versus a growth of 188% from Chinese FDI, that from Korea and Japan fell by 41% and 70% year-on-year, respectively. Similarly, FDI from Singapore and Thailand also dropped by 42% and 44% compared to a year earlier.
Traditionally, Japan, Korea and Singapore are Vietnam’s big sources of FDI as they have led the way in the country’s foreign investment scoreboard. More precisely, Korean enterprises have pledged total registered capital of US$65 billion in Vietnam, followed by Japan (US$58 billion) and Singapore (US$49 billion). Meanwhile, Chinese FDI totaled US$15 billion, ranking seventh among 132 countries and territories in Vietnam .
The above tallies may deepen initial concerns and turn them into worries. FDI from Japan, Korea and Singapore is often poured into manufacturing or processing projects that are on Vietnam’s wish list with which she could improve the competitiveness of her enterprises via technology transfer. By contrast, Chinese FDI remains obscure as regards sectors and objectives. What’s more, even when Chinese manufacturing or processing businesses arrive in Vietnam, the technology to be brought in is still a big question, given the fact that a great deal of Chinese FDI projects have caused serious pollution in Vietnam.
However, all the above figures and induction are obtained merely from the registered capital. Meanwhile, real disbursed FDI capital in the first eight months topped US$12 billion, a 6.3% rise over the same period last year (3).
To come up with better appraisal of the future trend we should delve deeper into the reasons. That Chinese enterprises have boosted their investment in Vietnam in recent months is quite understandable. The Sino-American trade war has lingered on, which may last up to 10 years, according to some sources. Chinese firms should therefore be proactive by moving some of their investment to another country to minimize negative impacts. Vietnam is no exception in this regard as the surge of Chinese FDI has also been recorded in Thailand and Indonesia.
Over the past months, the Korean economy has faltered with her GDP dropping 0.4% in the first quarter of this year and rising merely 1% in the second quarter, the lowest among the 34 developed economies included in the Organization for Economic Cooperation and Development (OECD). The Korean lackluster economic performances have caused her won to shed 6.3% of its value against the U.S. dollar since early this year, which is why Korean investors have stayed aloof from making investment overseas.
Furthermore, Korean enterprises working in processing and manufacturing industries have been adversely affected by Japan’s restrictions on the export of high-tech materials.
During the same period, Japanese overseas investment still sustained positive growth, even reaching a 100% growth rate in Q1-2019 as Japanese carmakers and electronic manufacturers expanded production facilities in America and Europe.
All considered, the fall of FDI in Vietnam may not have set a new trend. Furthermore, that central banks worldwide have cut their interest rates would prompt entrepreneurs to seek more opportunities in emerging markets. Last but not least, Vietnam herself is building a new strategy for FDI attraction which prioritizes high-tech and environment-friendly projects.
If we take into account all the pros and cons, more investment in infrastructure may be among the breakthroughs.