Capital funneled into priority fields: central bank
Credit has been provided for production and business activities and the priority fields while loans for high-risk areas have been further tightened so far this year, the State Bank of Vietnam (SBV) reported.
At a press conference in Hanoi on October 1, SBV Deputy Governor Dao Minh Tu said the central bank has kept steering the monetary policy in a proactive, flexible and prudent manner, and coordinating it with the fiscal policy and other macro-economic policies to control inflation, support economic growth, and stabilise the monetary and forex markets.
As of September 24, the M2 money supply had increased 8.58 percent compared to the end of 2018. The liquidity of the credit organisation system has been ensured.
For 2019, the SBV targets that the M2 money supply and credit will grow about 13 percent and 14 percent, respectively, which can be adapted to the reality.
Interest rates have been aligned with developments in the macro-economy and the monetary market, Tu said, noting that amidst many foreign central banks’ reduction of interest rates, the SBV cut annual benchmark interest rates by 0.25 percent on September 16 to continue helping with the economy and the credit organisation system’s liquidity.
Regarding the forex market, he pointed out the relatively stable exchange rates, which have been adjusted in line with the reality, the market’s ensured liquidity, smooth transactions in foreign currencies, and the satisfied legal demand for foreign currencies.
The Deputy Governor said thanks to those moves, the banking sector has basically met businesses and people’s demand for capital.
As of September 24, outstanding loans provided for the economy had grown 8.64 percent from the end of 2018, he noted.
For the rest of 2019, the SBV will continue promoting capital supply for production and business fields, especially the priority ones, and facilitating businesses and people’s access to credit.
Statistics also show improvements relevant to non-cash payment.
In the first seven months of 2019, financial transactions via the internet numbered more than 226 million with a combined value of some 10.9 quadrillion VND (470.2 billion USD), respectively up 51.8 percent and 18.3 percent year on year. Meanwhile, there were nearly 202 million transactions via mobile phone worth over 2.09 quadrillion VND, up 104.9 percent and 155.3 percent, respectively./.
Businesses are crucial to socio-economic development: Deputy PM
Businesses are the main force of the nation to promote economic growth, social development, and employment.
That statement was made by Deputy Prime Minister Trinh Dinh Dung during the Vietnam Business Forum 2019 in the central coastal city of Da Nang on Saturday.
The country now houses more than 715,000 active businesses and more than five million business households. The number of entrepreneurs is estimated at 5-7 million.
The business sector accounts for 60 per cent of the national gross domestic product (GDP) and about 70 per cent of the State budget revenue, and employs tens of millions of people, the official said.
The private sector is playing a decisive role in the economy, making up 43.3 per cent of the GDP since 2016.
According to the Deputy PM, the Government will focus on building a 10-year development strategy as well as national, regional and provincial planning schemes for 2030 to develop the country into a modern industrialised society.
He called on businesses to redouble efforts to restructure products, investment, administration and human resources based on the market’s demands while paying more attention to building brands and business culture.
Entrepreneurs should be pioneers in science and technology as well as promoting innovation and optimising advantages from the Fourth Industrial Revolution to create high-quality and globally competitive products, the official said.
He asked the Vietnamese business community to strengthen coordination and proactively improve their operation and expand international trade relations as well as make use of opportunities from new-generation bilateral and multilateral free trade agreements.
The Deputy PM also called on them to take the lead in abiding by the laws while paying attention to social responsibility, green and sustainable development, and having specific actions to protect the environment.
Nearly 416 million USD mobilised through G-bonds in September
The State Treasury raised more than 9.65 trillion VND (415.87 million USD) via 15 auctions of Government bonds (G-bonds) at the Hanoi Stock Exchange (HNX) in September.
Up to 86.8 percent of the G-bonds offered were sold last month.
The annual interest rates were 3.15 percent for the five-year, 3.54 percent for the seven-year, 3.97 – 4.40 percent for the 10-year, 4.24 – 4.75 percent for the 15-year, 4.9 percent for the 20-year, and 5.23 percent for the 30-year bonds.
Compared to August, the sum of money mobilised from the G-bonds was down 11 percent while the annual interest yield dropped 0.12 – 0.22 percent.
As of September 30, the total value of G-bonds hit more than 1.1 quadrillion VND, according to the HNX./.
Vietnam and Singapore expand co-operation in innovation and technology
Vietnam and Singapore will expand co-operation in innovation and technology, particularly through the former’s National Innovation Centre, a new area of partnership to sit alongside more traditional avenues.
As one of the Singaporeans who visited Vietnam’s Ministry of Planning and Investment (MPI) 14 years ago to begin bilateral economic connectivity between the two countries, Peter Ong, chairman of Enterprise Singapore (the Singaporean government agency championing enterprise development), has been delighted to contribute to the achievements of bilateral co-operation. Now, returning to the MPI with 10 experts and entrepreneurs of innovation, Ong claimed that innovation and technology are the new areas in which Singapore wants to co-operate with Vietnam.
“The delegation of Enterprise Singapore to Vietnam this time involves representatives from research centres and training facilities. They can support Vietnam’s National Innovation Centre (NIC) project with human resources and 4.0 strategies,” Ong said.
Located at the Hoa Lac High-tech Park, the NIC headquarters will cost about $74 million, which will come from local and foreign firms, not from the state budget.
Deputy Minister of Planning and Investment Nguyen Duc Trung stated that his ministry will suggest an agency to work with the Singaporean side regarding workforce training. For the operation and management of the NIC, “We hope to learn experience from Singapore,” he stressed.
Besides this, he also expressed Vietnam's wish to connect the two countries’ startup ecosystems.
Ong said, “Each country has its own development and demand. Singaporean agencies will be able to adjust solutions to suit Vietnam’s situation.”
Soon after Prime Minister Nguyen Xuan Phuc agreed to speed up the building of the NIC, Vietnam and Singapore have taken part in many activities to promote co-operation.
During an official visit to Vietnam earlier this year, Singaporean Deputy Prime Minister Teo Chee Hean proposed that the two sides should promote creative spaces for businesses, particularly young entrepreneurs and startups, while Vietnam’s prime minister called for co-operation in innovation and technology from Singapore.
At the connecting conference for the two economies in March, Minister of Planning and Investment Nguyen Chi Dung and Singaporean Minister for Trade and Industry Chan Chun Sing agreed to add innovation and technology as the seventh field of collaboration as a priority. The Singaporean side suggested reforming co-operation in education and training associated with technology. Singapore will provide 50-100 scholarships for outstanding Vietnamese students to study at its leading technology universities.
Vietnam has asked Singapore to join efforts to implement new initiatives in the agreement on economic connectivity and encourage Singaporean businesses to put forth new co-operation proposals and increase investment in the country.
At the conference, the ministry’s Department of Science, Education, and Natural Resources and Environment signed an MoU with the Singapore Manufacturing Federation (SMF) to enhance business and project opportunities in high-tech parks, with SMF member companies and businesses to promote innovation and entrepreneurship ecosystems in Vietnam.
Recognising the important role of entrepreneurship and innovation over the past two decades, the Singaporean government has invested in programmes to encourage entrepreneurship in technology. During that process, Enterprise Singapore has helped members overcome the challenges of Industry 4.0, built trust of Singaporean products and services, and brought global opportunities to enterprises, turning Singapore into an innovation and startup hub.
As the leader of a prestigious training facility in Singapore, Hee Joh Liang, chairman of Singapore Polytechnic International Pte., Ltd., said, “The most important issue for Singapore when building its 4.0 strategy is not to leave labourers behind. That’s why we built the Skills for Future programme.”
In his opinion, human resources always play an important role in the economy, particularly in the context of Industry 4.0. “We tried to work out how to improve our workforce. That’s why we visited developed countries like Germany and Switzerland to find out why they are so successful and the answer is skills,” Liang said. According to him, along with a lot of skill frameworks for the labour force, the Singaporean government also works with SMEs to understand their situation and their demand.
“We help enterprises with what Industry 4.0 is and where they are, what they need to do to reach 4.0, and showing them what skills their employers lack, based on the government’s skill frameworks,” Liang added.
Meanwhile, according to Ong, the most important thing after workforce is helping companies transform and overcome the fear of using technologies. “It took us a long time to change the mindsets of both enterprises and workers on this. We have proven to enterprises and their people that they can do it and they will be successful,” Ong explained. “Before giving out detailed training programmes, we also helped labourers and enterprises to be more confident and comfortable to move forward in Industry 4.0."
Ong also said that Singapore has built an ecosystem where connection among enterprises and research centres is very tight. Ong gave the example of JTC LaunchPad, a site over six acres which offers a nurturing environment for startups in Singapore. This environment has helped them have the chance to share and learn from each other through common use of equipment and workshops.
Trung of the MPI has been impressed with Singapore’s good preparations for development. He expressed his strong wish to attain support and practical experience from the city-state. “Singapore’s models have been completed and are operating well while Vietnam’s is currently in the ideation phase,” Trung said.
Mentioning the fields that the NIC is to focus on – smart manufacturing with increasing automation; smart cities; environmental technologies; digital media; and network security applications – Trung stated that it is not easy to build projects to transform all industries in Vietnam. “Skills for the future are important but challenging for Vietnam, whose economic scale is not huge, particularly when most of the workforce is untrained.”
Checking-in for new 4.0 flight tech
As the aviation market continues to post impressive financial results throughout 2018 and 2019, Vuong Anh Duc, CEO of AM5 Consulting, shared his overview of the development of Industry 4.0 in the world of aviation, and in Vietnam in particular.
As Industry 4.0 is approaching, it has completely changed the perception we have of the IT industry and how IT is impacting society. Industry 4.0 brings technology closer to us than ever before, with its influence extending to every single field of our daily life.
Industrial revolutions have traditionally occurred every century, yet the 44-year gap between Industry 3.0 in 1969 and the onset of Industry 4.0 in 2013 shows us how the cycle of new generations of industrial revolution seems to be shortening.
In Vietnam and elsewhere, Industry 4.0 is now a trend and daily topic of conversation in the mass media. A search on Google brings up millions of results on what Industry 4.0 is and discussions around this topic, which can be confusing. However, there can be no debate over how the 4.0 era has changed the aviation industry.
Industry 4.0 is transforming technology in four main areas: AI, cloud computing, the Internet of Things (IoT), and big data – the four that have now entered into and reshaped the aviation industry in a number of ways.
Firstly, when buying tickets for a flight, we can process the order online, download the airline’s mobile app for ticketing, or contact their call centre and pay with credit card, QR code, or many other online payment methods.
This is the IoT, through which we have access to many different aviation services, allowing us to buy tickets easily and conveniently thanks to a connection system of interrelated computing devices, and mechanical and digital machines.
Secondly, we are able to register with the airline’s customer loyalty programme, saving all of our information, booking details, and flight status, earning points from each transaction. We can then spend the points earned not only on aviation activities but also in other fields of telecommunications, banking, finance, and retail, and are now officially a part of big data.
Tech-savvy customers must be used to the effectiveness of AI technology. Identifying passengers, performing check-in, baggage screening, and quickly resolving issues regarding future flights are some of the tasks AI has been carrying out for the aviation industry.
Paper tickets are no longer needed, as we can use a QR code to pass through the check-in area and airport security as well as the boarding gate.
When a customer is new to any airport, the map application integrated in their phone can immediately help to determine where they are and where to go, providing specific directions. If a flight is delayed for any reason, the automatic switchboard will send a message or email to notify of the change in flight status within minutes.
Passport presentations are now handled automatically, and biometric identification is taken care of through peripherals without necessarily checking fingerprints. Now, we no longer have to worry about missing urgent calls and emails, or completing important work every time we travel by air.
Advances in technology have also reached in-flight shopping, as we can order goods during the flight and receive them immediately on arrival, or have items delivered home.
Upon landing, a phone will be transferred to a proper telecommunications network, with messages or notifications providing information about the destination.
We can also have easy access to any public transportation, allowing us to leave the airport for our next destination via internet-enabled services.
All of the information is managed on big data and stored by cloud computing technology for easy and convenient management and implementation by service providers.
By offering us these practical benefits, Industry 4.0 helps us save a great deal of time and effort so that we can accomplish more tasks in less time.
Vietnam’s economy remains resilient amid weaker external environment
Vietnam’s economy is forecast to maintain healthy growth in 2019 and 2020 at 6.8 percent and 6.7 percent, respectively, after growing robustly at 7.1 percent last year, the Asian Development Bank (ADB) said in a press brief about an update of its flagship annual economic publication launched today.
In the Asian Development Outlook (ADO) 2019 Update, ADB noted that while Vietnam’s gross domestic product growth moderated in the first half of 2019, it will remain resilient this year and next year despite a weaker external environment.
Inflation forecasts are revised down to 3.0 percent from 3.5 percent for 2019 and 3.5 percent from 3.8 percent for 2020.
“Despite a slowdown in export growth due to the escalation of the trade conflict between the United States (US) and the People’s Republic of China (PRC) and the consequent downturn in global trade, the economy remains healthy thanks to continued strength in domestic demand and sustained inflows of foreign direct investment,” said ADB Country Director for Vietnam Mr. Eric Sidgwick. “Prospects for domestic consumption continues to be positive, supported by rising incomes, buoyant employment, and moderate inflation.”
The recent signing of a free trade agreement with the European Union promises to further open market access for trade and investment, as does the regional Comprehensive and Progressive Agreement for Trans-Pacific Partnership.
A recent amendment to the Public Investment Law should improve public investment by accelerating processes, simplifying procedures, and enabling faster disbursement of public investment.
While retaining the growth outlook for Vietnam for this year and the next, the report highlighted significant risks to the forecast. Further escalation of the US–PRC trade tension and continuing global economic slowdown could shrink global trade, which will adversely impact the country’s trade performance and economic growth.
Vietnamese enterprises speed up to achieve export goal
According to the Ministry of Industry and Trade, growth in export turnover has been imbalanced with exports to the US, the EU, Japan and South Korea remaining steady whereas exports to China dropping heavily in both volume and value.
For instance, export turnover of agricultural products in the first eight months of this year merely reached US$11.27 billion, down 8.8 percent over the same period last year. Although fiber and yarn products still kept a growth of 16 percent by the beginning of September, value added was not high. So far, export turnover has dropped by more than 10 percent over the same period last year.
Mr. Vu Duc Giang, chairman of the Vietnam Textile and Apparel Association, explained that the fact that China's continuous devaluation of the renminbi has created a wide gap between the US dollar and the Chinese renminbi. Meanwhile, Vietnamese enterprises import cotton from the US then produce and export yarn to China so margins lessen. Enterprises who signed contracts with payments in Chinese renminbi saw sharper decline in profits. In addition, other yarn importers of Vietnam, namely Turkey, South Korea and Egypt, continuously applied trade remedies and raised import tariffs on this product, weakening competitive edge of Vietnamese yarn.
According to Mrs. Ly Kim Chi, chairwoman of the Food and Foodstuff Association of Ho Chi Minh City, Chinese authorities have promulgated several new regulations, such as all farmed or nature fish products must be taken from registered factories and when making customs declaration exporters must show health certificates issued by Vietnam. China also announced some regulations relating to goods administration and supervision, especially increasing control on quarantine. These have caused several difficulties for export.
However, other products, including electricity, electronics, machinery spare parts, electronic components, computers, rubber, plastic, food and foodstuff showed positive signals by constantly posting a steady growth of above 10 percent since the beginning of this year. Noticeably, export turnover of cell phones of all kinds and components in August reached $5.91 billion, an increase of 48.1 percent over the previous month, sending eight-month export turnover to $33.39 billion. This impressive growth was contributed by exporting to the US, the EU, Japan and South Korea. At the present, the US and the EU remain the key export markets of this product, accounting for more than 60 percent of total export turnover.
There are only three months left until the end of this year. According to experts, in order to achieve export goal, enterprises should be more active in searching and expanding market, diversifying goods supply and export markets. Commercial counsellor of Vietnam in Australia said that many enterprises have actively switched from raw material export to processed and branded product export. Market approach was also upgraded intensively and tightly with foreign distribution channels. This has helped Vietnamese enterprises to standardize quality and design of goods since production phase as well as reduce risks of recalling their goods for not meeting export requirements. As for food processing industry, enterprises have also actively participated in restaurant and hotel supply chains then will step by step approach consumers and enter deeply into the market.
Mr. Vu Duc Giang shared that although fiber and yarn industry of Vietnam declined sharply in export turnover, garment firms have seen a sudden rise in the number of orders shifting from China. Mr. Tran Viet Anh, vice chairman of Business Association of Ho Chi Minh City, said that since the beginning of this year, many enterprises have changed their production technology towards focusing on environmentally friendly products, technical plastic or export plastic products that are not in the list of products that are imposed tariffs or restricted from use. Therefore, it can make up for total export turnover of the industry.
According to economic experts, there are only three months left to speed up to achieve the goal of export growth. Based on the ability as well as flexibility in searching and changing export markets of Vietnamese enterprises, it is possible for them to obtain export goal of this year.
Data by the General Department of Vietnam Customs show that by the end of August this year, total import and export turnover hit $337.22 billion, up 8.1 percent, or $25.18 billion, over the same period last year. Of which, exports reached $171.3 billion, up 8.1 percent and imports touched $165.92 billion, up 8 percent. This has contributed to sending trade surplus in the first eight months of this year to reach $5.37 billion.
HCMC ranks second in FDI attraction in nine months
In 59 provinces and cities having FDI projects in the first nine months of 2019, Hanoi attracted most investment with registered capital reaching US$6.15 billion accounting for 23.5 percent of the country’s total, followed by HCMC with $4.52 billion and Binh Duong with $2.52 billion.
According to the Foreign Investment Agency under the Ministry of Planning and Investment, the value of newly registered and additional capital in FDI projects as well as capital contribution and share purchase by foreign investors reached $26.16 billion, up 3.1 percent over the same period last year.
Of these, 2,759 projects were granted investment certificates, up 26.4 percent over the same period in 2018. Registered capital totaled $10.97 billion accounting for 77.7 percent of the number in the same period in 2018.
In addition, 1,037 projects increased investment by $4.79 billion, up 23.3 percent. There were 6,502 deals of capital contribution and share purchase by foreign investors with the total value of $10.4 billion, a year on year increase of 82.3 percent.
In 19 fields which foreign firms invested in Vietnam, manufacturing and processing was the most attractive with $18.09 billion accounting for 69.1 percent of total registered capital. Real estate ranked second with $2.77 billion while retail and wholesale ranked third with nearly $1.4 billion.
Of 109 nations and territories investing in Vietnam, Hong Kong (China) took the lead with the total investment of $5.89 billion including $3.85 billion spent on share purchase of Hanoi based Vietnam Beverage Company. The runner-up was South Korea with $4.62 billion. Singapore ranked third with $3.77 billion and Japan outstripped China to rank fourth with $3.06 billion.
Projects with significant scales include Hong Kong Beerco Limited’s share purchase of Vietnam Beverage with the total capital of $3.85 billion, LG Display Hai Phong which increased investment capital by $410 million and a steel radial tires project by Chinese investors in Tay Ninh province with the total funds of $280 million.
Gov’t approves funding for Trung Luong-My Thuan expressway project
Prime Minister Nguyen Xuan Phuc has approved allocating VND2.186 trillion (US$94 million) from the State budget to finance the cash-strapped Trung Luong-My Thuan expressway project in the southern province of Tien Giang, the project owner told The Saigon Times today, September 27.
Mai Manh Hong, general director of the BOT Trung Luong-My Thuan JSC as owner of the VND9.6-trillion project, said the Prime Minister okayed the funding during his working visit to the province today.
According to Hong, the PM has asked the Ministry of Planning and Investment, the Ministry of Finance and the government of Tien Giang to disburse the funds as soon as possible.
He added that his company has worked with three lenders – Vietnam Bank for Industry and Trade, Bank for Investment and Development of Vietnam and Vietnam Bank for Agriculture and Rural Development – to speed up the appraisal of the project’s credit plan so that they could sign a syndicated loan contract with the project’s developers.
The project relies on three sources of capital: the investors’ equity, State capital and bank loans. It might face a shortage of capital as Vietnam Prosperity Commercial recently withdrew as a lender.
As such, bank loans for the project are likely to be cut to VND5.8 trillion compared to its initial requirement of up to VND7.08 trillion in credit.
During his visit today, the PM urged the relevant sides to work closely together so that the expressway could be opened to traffic at the end of next year, allowing commercial operations to start in April 2021, on schedule.
Work on the project is roughly 27% complete, according to the general director.
The project is experiencing a capital shortage, as the VND3 trillion in funding provided by the project owner and contractors is now depleted. The newly approved funding from the Government is expected to fund construction works.
The four-lane expressway will be some 51 kilometers long, with 4.5 kilometers of access roads, through five outlying districts of the Mekong Delta province of Tien Giang. It will start at the intersection of Than Cuu Nghia T-Junction and HCMC-Trung Luong Expressway and end at the intersection with National Highway 30.
The expressway is expected to shorten travel times between HCMC and the Mekong Delta provinces, bolster the socioeconomic growth of Vietnam’s southwest region and reduce traffic congestion on National Highway 1.
Olam, agro co-ops join to improve farmer livelihoods in Mekong Delta
Olam International Ltd, a leading global food and agri-business company, has joined forces with a Vietnamese hi-tech agro firm and agriculture cooperatives across the Mekong Delta to increase the incomes of local rice farmers.
The Singapore-based firm signed a cooperation agreement with Hieu Nhan Hi-tech Agriculture JSC and 19 cooperatives in the provinces of An Giang, Bac Lieu, Dong Thap and Can Tho on September 24.
Under the agreement, Olam and Hieu Nhan will purchase, process, and export rice supplied by the cooperatives between 2019 and 2020. The rice products are to meet international rice market requirements on product quality and safety, particularly maximum residue limits.
The signing ceremony was part of the second phase of the Better Rice Initiative Asia and Market-Oriented Smallholder Value Chains project. It is to be carried out in the three Southeast Asian countries, including Indonesia, Thailand, and Vietnam, under a public-private partnership between Olam and the German Federal Ministry for Economic Cooperation and Development, operating from 2018 to 2022.
In Vietnam, the project has been launched under the same partnership format between the Department of Cooperatives and Rural Development under the Ministry of Agriculture and Rural Development, GIZ and Olam.
The project seeks to improve the livelihoods of 10,000 rice farming households in the four localities in the delta by offering comprehensive solutions, ranging from farming techniques to market approaching skills.
In particular, the project focuses on forming organizations of farmer groups and improving capabilities of partners joining the value chain, including farmers, cooperatives, suppliers, processors, and exporters.
The signing ceremony marks the first important step for the upcoming sustainable cooperation on the rice value chain in the delta.
Nine-month export revenue picks up 8.2 percent
Vietnam exported 194.3 billion USD worth of products in the first nine months of the year, a year-on-year surge of 8.2 percent, the Ministry of Industry and Trade said.
According to the ministry, 30.7 percent of the export turnover was contributed by the domestic economic sector, and 69.3 percent by the foreign-invested sector.
The US continued to be the largest importer of Vietnam as it splashed out 44.9 billion USD on purchasing Vietnamese goods, followed by the EU (31.1 billion USD), ASEAN (19.4 billion USD), Japan (15.1 billion USD), and the Republic of Korea (14.5 billion USD).
During the period, 26 products achieved an export turnover of more than 1 billion USD, with five of them posting more than 10 billion USD in export value.
To be more specific, shipments of telephones and spare parts fetched 38.6 billion USD; electronic products, computers and spare parts, 25.4 billion USD; garments and textiles, 24.8 billion USD; footwear, 13.3 billion USD; and machines, equipment and spare parts, 12.9 billion USD. They all recorded a good growth of 5.1 percent, 16.9 percent, 10.4 percent, 13.5 percent and 7.5 percent, respectively.
On stark contrast, exports of agro-fishery products experienced a substantial drop, with the sharpest falls seen in shipments of coffee (20.7 percent) and rice (9.7 percent).
Experts said that shipments of agricultural products and seafood depended much on the Chinese market, and once the Chinese Government tightened import standards, Vietnamese exporters would find it hard to bring their products to this market. Meanwhile, local firms maintained export advantage in the US, the EU, the Republic of Korea and Japan, with most of the exports being electronic products, garments-textiles, and footwear./.
SOEs need solutions to improve production, business efficiency
As State-owned enterprises (SOEs) have many functions in the local economy, they struggle to fulfil their main task of doing business, so they need solutions to improve business efficiency, according to experts.
The SOEs should continue to play a role as an example in terms of productivity and efficiency and hold a dominant position in the domestic economy.
According to the Central Institute for Economic Management (CIEM), SOEs must be real enterprises. That means they must give priority to production and business efficiency, said Nguyen Dinh Cung, an economic expert and former CIEM Director.
There is still debate over whether State-owned enterprises should be considered instruments to regulate the domestic economy as well as stabilising the macro-economy.
This has caused difficulties for the restructuring and equitisation of SOEs, Cung said.
The efficiency of State capital investment is increasing, but it is still lower than the investment efficiency of other economic sectors. When analysing the profitability and labour efficiency ratios of the SOE sector, experts found that the sector had higher than average ratios but they did not accurately and fully reflect the efficiency of most SOEs because the sector's total profit depends on a few large SOEs operating in low-competition industries, such as mining, telecommunications and energy, Pham Duc Trung, head of CIEM’s Enterprise Innovation and Development Department told Dau tu (Investment) newspaper.
In comparison with highly competitive industries, like trade, construction and manufacturing, the performance of SOEs is lower than that of enterprises in other sectors. Many SOEs have not met requirements of financial security with high debt and they are likely to collapse when facing a poor business environment.
"Competitive pressure has revealed limitations in the business of SOEs," Trung said.
The SOEs can only compete when they are given autonomy to do business according to permitted business activities. But so far, the SOEs do not have complete autonomy, Cung said.
The Government has asked the Ministry of Planning and Investment to amend and supplement Decision 58/2016/QD-TTg on criteria for classification of State enterprises and State-invested enterprises and the list of State-owned enterprises under restructure in the 2016-2020 period.
The goal of the amendment is to separate key economic sectors and public sectors from the sectors that should mobilise investment capital from society and determine a reasonable percentage of state ownership in enterprises to attract foreign investors and really change corporate governance.
The Government also requires separating production and supply of public products and services and products and services for social security from production and business activities for profit of enterprises.
According to the CIEM report, at present, the SOEs dominate in many sectors.
In the telecommunications industry, Viettel, VNPT, MobiFone have occupied large market shares, with rates of 51.5 percent, 28.4 percent and 12.7 percent, respectively. Viettel accounted for 60 percent of the telecom industry revenue in 2018, with 234 trillion VND (10.2 billion USD).
In the banking sector, in 2018, State-owned commercial banks accounted for 44 percent of total assets, 25 percent of total charter capital, 48 percent of the capital mobilisation market and 50 percent of the lending market in the credit organisation system.
Meanwhile, power plants belonging to State-owned corporations such as EVN, PVN and TKV accounted for about 87 percent of the electricity generation market.
In the mining industry, State-owned enterprises produced 97 percent of clean coal and directly exploited all output of crude oil or joined with partners to refine all of them.
The SOE sector has more efficiency in operations when the efficiency of State capital investment at SOEs is gradually improved. The percentage of SOEs that suffered losses decreased to 15.4 percent in 2017 from the average rate of 17.2 percent in the period of 2011-2015, Trung said.
But these figures have not convinced experts that the sector with strong development has contributed nearly 30 percent to the national GDP growth, especially when comparing the SOE sector with businesses of other sectors./.
Vietnam's dynamic industrial future
Vietnam's industrial future requires close collaboration among industry sectors, the government, and the educational sector. Tindaro Danze, head of digital industries and vice president of Siemens Vietnam, writes about how the country can exploit and adapt to Industry 4.0 and build up its dynamic future.
Just for a minute, imagine what a futuristic Vietnam looks like to you. What do you see? Clean energy, flying cars, avatar robots? While this still may be some time away, great ground is being broken to develop the digitalisation technologies and processes that are making previously sci-fi ideas a reality.
The Internet of Things has already brought so many of our previous fantasies into reality. Consider the smartphone – with apps that have revolutionised the way our daily life functions, from personal trainers on demand and social media, to convenient banking and virtual shopping tours. This vast social, economic, and work-style change is now infiltrating the industrial sector worldwide. This process of digitalising industrial technologies and processes is widely known as Industry 4.0.
Industry 4.0 is able to change our industrial processes from being lengthy, complicated, and expensive to near-immediate, simple, and cost-effective, and it is all centred on value creation and the customer experience. Classic business-to-business transactions converge with business-to-consumer transactions.
This shift is being driven by the Generation Z customer, typically defined as someone born after the mid-1990s. They expect a customised experience and a sense of individualism in their purchasing choices. This generation has grown up with the concept of a 3D printer ready to create any idea into reality. Manufacturers need to evolve with their customers becoming more agile and innovative.
All manufacturing industries are under great pressure to excel in the several key performance indicators. These include speed (the time to market), flexibility (producing customised products), quality (to compete in a globalised market), and efficiency (creating more output for the same input). In order to excel in these key areas, Siemens sees the future of automation revolving around six major levers:
- AI is the lynchpin of the future of automation vision. Its application in the automation space will convert passive assets into self-learning objects that can continuously improve and enable automated process optimisation;
- Edge computing that involves a decentralised computing approach provides value by distributing intelligence/insight generation across multiple assets, helping manufacturers avoid transferring all the process data into an external cloud for analysis;
- Augmented reality transfers the dashboard from control rooms onto the shop floor, potentially enabling operators and shop floor personnel with real-time process know-how. This is especially critical in the future where we see a shortfall in automation skill sets in many developed markets;
- Blockchain technology, a ledger of transactions that can be shared in a digital network, is expected to help support and enable transactions and traceability within a future network-of-factories model. The network model will be characterised by open hardware designs; secure, co-operative supply chains; and a royalty model for shared designs. Blockchain, from an automation standpoint, will drive more transparency into customer-supplier transactions, thereby improving efficiencies and reducing operating costs;
- Cognitive engineering includes bringing principles of cognitive psychology to the design, development, and operations of engineering systems. Besides that, system engineering which is still largely a manual process can achieve high degrees of innovation and ingenuity using this technology lever, supporting manufacturers in reducing operational costs and improving productivity;
- The field of autonomous systems is a subfield of AI, robotics, and information engineering that can enable sedentary assets with navigation capabilities using real-time information. Autonomous systems will greatly improve productivity on the shop floor.
However, this revolution extends far beyond the industrial sector itself. A recent research report released by Deloitte demonstrates how Industry 4.0 is globally changing workplace attitudes and cultures, social mindsets, educational priorities as well as economic structures.
Perhaps the single greatest change Industry 4.0 brings to Vietnam is the movement from being static to being dynamic in operating their businesses. If we went back in time to visit a factory 10, 20, or even 30 years ago, you may find that little has changed. The factory floor would be buzzing with workers who had clocked-in, attended a daily briefing, and got to work manually executing their specific function for the rest of the day.
Problems with machinery or changes in the factory line due to product changes or product modifications could disrupt the day’s work. This process is slow and it could potentially threaten product quality as it demonstrates a lack of flexibility and ultimately harms efficiency. According to an article released by McKinsey, less than 30 per cent of manufacturing companies are actively rolling out Industry 4.0 technologies at scale. This means that the static model – which does little to achieve an increase in the aforementioned factors of speed, flexibility, quality, and efficiency – is still greatly dominating the manufacturing sector.
Industry 4.0 creates dynamic opportunities that minimise disruptions to the manufacturing process, increasing speed and flexibility while improving quality and efficiency.
Recent research has found that one major factor why manufacturers are not fully embracing an Industry 4.0 model is the fear of the unknown. The Asia-Pacific region stands out particularly in having this concern. Only 8 per cent of executives in the region interviewed in Deloitte’s recent report “The Fourth Industrial Revolution is Here – Are you Ready?” believe that they are equipped with the necessary capabilities to guide their enterprise through this time of change and 20 per cent of the respondents even raised concerns on the potential social upheavals and questions of income inequality which may come along with this transformation.
These results obviously show hesitations in full-heartedly investing in Industry 4.0 transformation programmes. While the fear of the unknown is understandable, digitalisation remains binary – the winner takes it all. Manufacturers who cannot or will not embrace Industry 4.0 will fall behind as they simply will not compete with those who do.
The fear of the unknown will only be overcome with collaboration between governments, the industrial sector, and the educational sector. This co-operation will ensure value creation for society as a whole and each element is not stranded individually, but stronger together.
Government stakeholders pave the way forward by standardising legal frameworks, especially with regards to data management and digital infrastructure. Meanwhile, the industrial sector must prepare their workforce by scaling up digital competence throughout their enterprise, from the shop floor to the top floor. The educational sector, on the other hand, plays a vital role to provide young talent with the necessary toolkits to increase employability in this new age.
Learn-to-learn in this context may be the most important lesson to be incorporated in the 4.0 curriculum, shifting from a content-centred approach towards developing adaptive skills as the centrepiece of education.
Global players such as Siemens are required to set the tone in driving such collaboration. At Siemens Vietnam, this is exactly what we aim to do with our initiatives at various universities and vocational schools throughout Vietnam, while at the same time being a sparring partner for government institutions such as the Ministry of Industry and Trade in discussing the needs for a 4.0 landscape in Vietnam.
One example of Siemens dedication to scaling up competence is our recently launched Digital Academy, SITRAIN, in the heart of Ho Chi Minh City. It is the result of our commitment to creating value for society by offering professional education.
We are well on our way to a future that is only limited by our imagination. Vietnam has a great path ahead and each step towards embracing digitalisation brings us closer to our dreams. The great interest the government has in investing in education and technology, as well as the co-operation it is building with multinational organisations, is creating a framework for Vietnam to own the Fourth Industrial Revolution.
The young people of Vietnam are educated and well-versed in increasingly agile skills and racing ahead into the digital future. So go ahead, take a minute, and keep imagining. The future is closer than you think.
Central Highlands localities, Japan boost collaboration
A seminar on strengthening cooperation between the Central Highlands localities and Japan took place in the Central Highlands province of Dak Lak on October 7.
The event was held with the aim of pushing up the connectivity between regional localities and representative offices of the Japanese government and representatives of the Japanese business community in Vietnam. It also served as a forum for the two sides to have an insight on the policies, measures and projects to accelerate cooperation in various field in the time to come.
Speaking at the function, head of the Foreign Ministry’s Consular Department Nguyen Hoang Long hailed Japan as a partner of top significance of Vietnam.
With abundant natural resources, the Central Highlands region holds great potential of developing agro-forestry, processed industry, clean energy and tourism. Its major industry plants for export include coffee, pepper, rubber, vegetables and flowers.
The region is also well-positioned to develop solar and wind power.
Participants were briefed on the region’s potentials, strengths, development orientations and incentives for business projects.
Representatives from Japanese agencies expressed their interest in expanding business operations in Vietnam, including the Central Highlands, saying that the country has become the second most attractive destination for Japanese companies.
Shinji Hirai, chief representative of the Japan External Trade Organisation and Vice Chairman of the Japanese Business Association in Ho Chi Minh City, said regional localities hold potential in agriculture, modern technology, post-harvest processing and renewable energy, cultural and tourism exchange with Japan./.
Can Tho looks for foreign support to economic development, urban management
The Mekong Delta city of Can Tho hopes to receive support from the World Bank (WB) and the State Secretariat for Economic Affairs (SECO) of Switzerland in institutional building, renovation, development of smart city, climate change adaption, and training human resources, said Chairman of the municipal People’s Committee Le Quang Manh on October 7.
During a working session in the province to discuss potential partnership programmes on economics, trade and urban management between Can Tho and the two agencies, Manh said the city wants to learn from experience and good models in the world in administrative reform, and to perfect policies through the assistance of the WB and the SECO.
Municipal authorities are focusing on promoting economic restructuring and improving quality and competitiveness for its farm produce in regional and global markets through building key production areas and applying high technologies, and fully tapping local resources, he said.
He added that the city hopes the WB will assist in expanding markets for the locality’s agricultural products, applying new technologies in agricultural production and building brands for farm produce and goods, and accessing ordinary capital resources (OCR).
Ousmane Dione, Country Director of the WB in Vietnam, praised the city’s economic growth as well as transition from a rural economy to an urban economy, saying that the WB's expert group will work with local officials and technical staff to determine investment priorities and appropriate areas to serve Can Tho’s socio-economic development goals.
Accordingly, the WB suggested Can Tho participate in technical assistance projects to enhance agricultural competitiveness and hi-tech agricultural technical assistance.
The bank will also support the city in calling for and attracting corporations and enterprises to invest in production, processing and consumption of local agricultural and aquatic products; connecting businesses with cooperatives and households in the production and consumption of products.
Regarding human resources training, the WB is ready to help higher education institutions in Can Tho collaborate with foreign universities to expand education related to knowledge of artificial intelligence trends to apply to the e-government model.
For his part, Chief Representative of SECO in Vietnam Marcel Reymond said the Switzerland will assist Can Tho in urban development in a sustainable and highly adaptable manner to climate change in Vietnam.
The official said he hopes that through the budget support programmes from the SECO and the WB, Can Tho will play a leading role in enhancing urban resilience and scaling up models of natural disaster response to other localities in the Mekong Delta./.