UK newspaper spotlights Vietnam’s emergence in global supply chain

Multinationals are looking to set up their bases in Vietnam despite various challenges that the country poses as a manufacturing destination, according to the Financial Times in the UK.

The newspaper cited Michael Kokalari, chief economist of VinaCapital in Ho Chi Minh City, as saying that more and more foreign companies are moving their production activities to Vietnam, and one prominent example is Apple, which began mass production of some of its AirPods wireless earbuds in Vietnam in the second quarter of this year when most of the world was in lockdown to contain the spread of COVID-19.

According to Financial Times, Vietnam’s labour markets are not as deep as China’s. Industrial park space is in brisk demand, especially around HCM City, where the bulk of Vietnam’s clothing, furniture and other exporters are based.

The newspaper, however, noted businesspeople say the Vietnamese market is adjusting to all these difficulties, even amid the pandemic. Many projects to construct industrial parks are on their way. For example, GLP, Asia’s biggest warehouse operator, is developing projects in Hanoi and HCM City, and plans to invest 1.5 billion USD over three years as it promotes its business in Vietnam./.

Disbursement of State budget capital in 2020 highest in past decade

The disbursement of State budget capital reached an estimated 91.1% of the plan set for the year and rose 34.5% year-on-year, the highest rate in the 2011-2020 period.

This is the result behind the acceleration of public investment disbursement as part of efforts to maintain economic growth amid difficulties posed by the COVID-19 pandemic.

Latest updates by the General Statistics Office (GSO) show that total social investment in 2020 increased 5.7% year-on-year to over VND2.16 quadrillion (US$93.71 billion at current rate), and equivalent to 34.4% of the GDP.

Of the figure, VND729 trillion was sourced from the state sector, up 14.5%; VND972.2 trillion came from the non-state sector, rising by 3.1%; and VND463.3 trillion was from the foreign direct investment sector, down 1.3%.

The GSO said the country attracted a total of US$28.5 billion in FDI in the year, falling 25% compared to last year.

There were 2,523 newly-registered projects with US$14.6 billion in investment, down 35% in number and 12.5% in capital, respectively.

A total of US$6.4 billion was added to 1,140 existing projects, a year-on-year increase of 10.6%, while capital contributions and share purchases by foreign investors stood at US$7.5 billion, down 51.7%.

The disbursement of FDI in the year totaled an estimated US$20 billion, down 2% year-on-year.

Long-term prospects for Vietnamese ties with Middle East, Africa

To adapt to the ‘new normal’ and recover from future economic challenges, Vietnam and countries in the Middle East and Africa have made efforts to promote economic reform this year, thereby strengthening international connectivity and expanding into new potential markets.

Many of Vietnamese products are favourites with people in the Middle East and Africa thanks to diverse designs, affordable price and quality.

In the context of the novel coronavirus (COVID-19) pandemic disrupting bilateral co-operation plans this year, both Vietnam and countries in the Middle East and Africa have moved to strengthen political and diplomatic relations in a variety of flexible ways, according to Deputy Minister of Foreign Affairs Dang Minh Khoi.

“We have actively promoted online diplomacy to maintain bilateral co-operation with regional countries despite the disruption of reciprocal visit exchanges between the two sides,” Deputy Minister Khoi said in a recently published article.

According to Deputy Foreign Minister, Vietnamese Deputy Prime Minister and Foreign Minister Pham Binh Minh and other leaders from the Foreign Ministry have held dozens of online phone talks with their counterparts throughout the region. This is largely aimed at discussing major directions and measures to strengthen political relations and promote economic, trade, investment, and health co-operation, as well as ensuring the maximum interests of Vietnamese citizens and businesses throughout the region.

Many Vietnamese ministries, sectors, localities, and businesses have made efforts to conduct consultations, joint committee meetings, and online exchanges with regional partners in order to seek and boost new co-operation opportunities.

“Health diplomacy has become a bright spot in relations between Vietnam and the Middle East and Africa,” Deputy Minister Khoi wrote. He added that while many countries in the region have struggled to deal with COVID-19, the Vietnamese Government has actively provided medical supplies, including face masks, to traditional African friends such as Algeria, Mozambique, and Angola. During phone talks and exchanges, Vietnam has also shared its experience in disease prevention and health co-operation.

“The Middle East - Africa countries highly appreciated Vietnam’s assistance, considering this as a vivid manifestation of the traditional friendship, loyalty, and solidarity between the two sides, thus elevating the image of Vietnam as a friend, a reliable and responsible partner for regional friends,” said the Deputy Minister.

Huge potential to exploit Middle East and African markets

The Middle East and Africa is a vast market consisting of 70 countries and territories, with a population of approximately 1.6 billion, and a GDP of roughly US$5,000 billion. Being rich in natural resources, the Middle East accounts for three-quarters of the world’s oil and gas reserves, while Africa is one of the world’s largest raw material markets.

Deputy Minister Khoi stated that economic, trade, and investment relations between Vietnam and the region have enjoyed many substantial gains. Despite the impact of COVID-19, bilateral trade turnover is anticipated to reach US$17.5 billion this year, of which Vietnam is likely to rake in US$9 billion from exports.

Many Vietnamese export items have also penetrated these markets and secured a foothold, with items favoured and appreciated by local people for their designs, affordable price, and quality. In addition, Vietnam has imported plenty of products from the Middle East and Africa for domestic production and processing.

In an effort to overcome difficulties faced in trade, Deputy Minister Khoi said Vietnamese ministries have proactively supported enterprises to access new and potential markets, whilst also getting involved in regional and global production and supply chains through many initiatives and activities. Most notably, the global Halal food market forum, held in late November, opened a new and potential market for Vietnamese processed agricultural, forestry, and aquatic products.

Furthermore, according to the Deputy Foreign Minister, Vietnam has actively promoted the signing of legal frameworks to facilitate bilateral co-operation with the region. The continued implementation of Vietnamese telecommunication investment projects in a number of African countries this year has been highly appreciated by the various Governments and people of beneficiary countries.

Nikkei Asia: Vietnam seen fully recovering in 2021

Nikkei Asia, Japan's major media group has been appreciative of the prospect of Vietnam's economic recovery in 2021, with a forecast growth rate of 10.9%.

According to Nikkei Asia, Southeast Asia's six leading economies are expected to face diverging fiscal paths in 2021, with Vietnam, Indonesia and Malaysia gaining from pre-pandemic levels while Singapore, the Philippines and Thailand struggle to return to health.

Nikkei compiled the International Monetary Fund's country-based projections for real gross domestic product, setting the 2019 figures as a baseline of 100. Vietnam, Indonesia and Malaysia all scored above the 100 mark for 2021, meaning their economies are seen expanding next year compared with the level before the coronavirus outbreak in 2019.

Still, all six countries face continued uncertainties from the epidemic, as well as the new incoming administration in the US.

Vietnam is forecast to lead the group with a projected growth index of 108.4. S&P Global predicts the Vietnamese economy will expand 10.9% in real terms in 2021, more than any other country in the Asia-Pacific, following a 2.91% uptick this year.

The country was also the only one of the six to log real economic growth in 2020, thanks to its quick success in curbing the coronavirus pandemic. Its leadership also bolstered effective demand through public projects ahead of the Communist Party Congress that begins there in January.

"Many global companies are flocking to Vietnam, which is a boon to its exports," said Yuta Tsukada at the Japan Research Institute. Given the low production costs in the country, Tsukada sees more companies shifting operations there from China, should the trade war between Washington and Beijing continue.

Indonesia came in second with a growth index of 104.5. The so-called omnibus law on job creation signed by President Joko Widodo in November is expected to give companies greater freedom and help attract foreign investment when it takes effect. Malaysia, with an index of 101.3, could also see exports of mainstay products like electronics recover once the global economy stabilizes.

Meanwhile, Singapore, the Philippines and Thailand are not expected to cross the 100 mark until 2022.

IMF: Vietnamese economy to see full recovery in 2021

Six of Southeast Asia’s leading economies are expected to face diverging fiscal paths ahead in 2021, with Vietnam, alongside Indonesia and Malaysia, returning to pre-pandemic levels, according to data released by the International Monetary Fund (IMF).

Elsewhere in the region, it is anticipated that Singapore, the Philippines, and Thailand will all see their economies struggle to fully recover.

Business website Nikkei compiled the IMF's country-based projections in order to calculate real gross domestic product, setting 2019’s figures as a baseline of 100.

In line with this, Vietnam, Indonesia, and Malaysia all scored above the 100 mark for the projections ahead in 2021, thereby meaning that their respective economies are expected to expand next year compared to the level before the novel coronavirus (COVID-19) outbreak in late 2019.

Most notably, Vietnam nation is forecast to lead the group, with a projected growth index of 108.4. Indeed, S&P Global predicts that the Vietnamese economy will expand 10.9% in real terms ahead in 2021, more than any other country in the Asia-Pacific region, following a 2.91% rise recorded this year.

According to Nikkei, the country was also the only one of the six to witness real economic growth this year due to its swift and thorough success in curbing the spread of COVID-19.

"Many global companies are flocking to Vietnam, which is seeing boon in its exports," says Yuta Tsukada of the Japan Research Institute.

Given the typical low production costs in Vietnam, Tsukada believes that more companies will follow the trend of shifting operations from China, particularly if the trade war between the United States and China continues.

Furthermore, Indonesia came second with a growth index of 104.5. Whilst, Singapore, the Philippines, and Thailand are not expected to exceed the 100 mark until 2022.

According to Nikkei, despite differences in terms of their individual forecasts, all six countries could be impacted by global developments relating to COVID-19, in addition to the policies of US President-elect Joe Biden after he takes office on January 20.

Differences between UKVFTA and EVFTA

Although the UK-Vietnam Free Trade Agreement (UKVFTA) inherits basic contents from the EU-Vietnam FTA (EVFTA), there remain differences between the two deals, said Vietnamese Trade Counsellor in the UK Nguyen Canh Cuong.

Cuong, who participated in negotiation processes of the two agreements, said that commitments to reducing import taxes following the roadmap in the EVFTA and UKVFTA are the same.

However, the UK’s commitments to tariff exemption under quotas on 12 Vietnamese agricultural products are different from those of the EU.

Vietnamese negotiators made efforts and reached tariff quotas for fragrant rice, which are expected to help Vietnamese rice have a competitive advantage and expand the market share in the UK.

In addition, Vietnam’s commitment to opening the service market for British businesses is not as similar as in EVFTA because UK enterprises’ strength and demand to access the Vietnamese market is not the same as that of EU enterprises.

Cuong said that the UKVFTA is a significant gift that the two governments present to the business communities amid the challenging winter.

The deal not only helps remove tariff and non-tariff barriers for two-way trade, but also is the Governments’ guarantee making businesses secured in selecting markets and partners for strategic investment, production and distribution plans.

The agreement will contribute to developing and modernising the economy, creating more jobs, increasing labourers’ incomes, and promoting social progress and environmental protection, he stated.

To take advantage of opportunities brought by the agreement, Vietnamese enterprises should speed up digital transformation, the application of advanced technology, and learn about the UK’s laws and business methods.

Malaysia places anti-dumping duties on flat-rolled steel from Vietnam

Malaysia has moved to impose anti-dumping duties on certain flat-rolled steel products that originate from Vietnam, along with those from China and the Republic of Korea (RoK), for five years.

According to the Malaysian Ministry of International Trade and Industry (MITI), the duties imposed on flat-rolled products of non-alloy steel plated or those coated with aluminum and zinc, come following an anti-dumping investigation carried out on behalf of the Malaysian industry.

The inquiry conducted by the MITI found that subject merchandise is being imported into Malaysia at a price which is lower than the selling price in the three countries named in the investigation.

Moving forward, the nation will be levied duties at between 3.06% and 37.14%, while China will be taxed at between 2.18% and 18.88%, with the RoK taxed between 9.98% and 34.94%.

The duties initially came into effect on December 12 and are set to be imposed until December 11, 2025.

This comes after Malaysia had previously imposed a provisional anti-dumping duty on non-alloy steel products that are plated or coated with aluminum and zinc which originate from China, the RoK, and Vietnam. Moving forward, the anti-dumping duty on these products will be effective for a period of 120 days from August 14.

Bac Ninh takes lead in industrial production value

Bac Ninh province, an industrial hub in northern Vietnam, has ranked first nationwide in terms of industrial production value this year, posting a figure of 1,128 trillion VND (48.9 billion USD), up 2.9 percent year-on-year despite COVID-19.

Local industrial production rose 3.7 percent in the first quarter but fell sharply in the following two, when restrictions were imposed, according to the provincial Department of Industry and Trade.

However, it added, the industrial sector has manufactured and exported new products since September. Supporting industries have also shown signs of good growth.

As a result, its index of industrial production surged 22.4 percent in the fourth quarter.

Contributing to the full-year industrial expansion, processing and manufacturing continued playing a key role, with growth of 3 percent, data showed.

The province is the second-largest exporter in Vietnam, with over 38.9 billion USD worth of goods shipped abroad in 2020, up 14.3 percent against 2019.

It ranked sixth in foreign investment attraction, with 1,628 projects and 19.9 billion USD in capital as at the end of the year, and eighth in gross regional domestic product (GRDP), estimated at 122.74 trillion VND, up 1.36 percent.

Deputy Director of the Department of Industry and Trade Pham Khac Nam said that to obtain breakthroughs in industrial and trade development amid the coronavirus outbreak, Bac Ninh has taken drastic action in disease prevention and control and maintained an optimal investment climate.

Enterprises themselves have also complied with anti-pandemic requirements and made proactive moves to overcome difficulties and promote production, such as stockpiling materials and seeking new supply sources.

He added that as the pandemic is forecast to remain a complex matter in 2021, provincial authorities will order local businesses and people to step up prevention and control efforts while the former will work with the Ministry of Industry and Trade to seek new partners and markets to enhance industrial production./.

Hoa Lac hi-tech park envisioned to become smart sci-tech hub: minister

Minister of Science and Technology Huynh Thanh Dat has laid stress on the Party and Government’s policy of building Hoa Lac hi-tech park into a smart ecosystem for science-technology development, contributing to the national socio-economic development.

At a conference held by the park’s management board on December 30, Dat said the park’s development needs mechanism and policy support from competent agencies of the National Assembly and Government, as well as coordination of relevant organisations.

To become attractive to both domestic and foreign hi-tech projects, the park should sharpen its focus on improving its organisational structure, studying measures to welcome new investment flow as foreign firms are shifting their business to Vietnam, promoting cooperation with universities in training and technology transfer, as well as enhancing international cooperation.

Dat highlighted that all of the investment projects should be carried out in line with the Party’s guidelines.

Hoa Lac hi-tech park, established in 1998 under the Ministry of Science and Technology, is the first and largest of its kind in Vietnam. It covers a total area of approximately 1,600 hectares on the outskirts of Hanoi.

After a long time of development, the park has welcomed large investment projects from prestigious investors such as Vingroup, Viettel, VNPT, FPT and Hanwha, among others.

On the day, the park’s management board presented investment plans to Ha Tay Pharmaceutical JSC’s project which is capable of turning out nearly 5 billion tonnes of product per year, and the NGS software development centre which is developed by NGS Telecommunication & Equipment JSC./.

All of imported frozen food samples in HCM City negative for SARS-CoV-2

The tests of all of the 100 samples of imported frozen food in Ho Chi Minh City have turned out negative for the corona virus SARS-CoV-2, the municipal Food Safety Management Authority said on December 30.

The testing was carried out in accordance with the instructions of the Ministry of Health, the HCM City People’s Committee, and the Food Safety Management Authority.

A total of eight working groups had been established to collect the samples that were tested by the city Institute of Public Health.

Earlier, the novel coronavirus had been detected on the packaging of imported frozen food in some countries.

As of December 30 evening, the total cases of COVID-19 in Vietnam had risen to 1,456, according to the National Steering Committee for COVID-19 Prevention and Control.

Of the infections, 693 are domestically-transmitted cases. The fatalities stand still at 35.

Among the active patients, 10 people tested negative for the virus once, 10 others twice and 10 thrice./.

Cai Mep Int’l Terminal receives massive container ship

MSC Oliver, one of the world’s largest container ships, has docked at the Cai Mep International Terminal (CMIT) in Ba Ria - Vung Tau province earlier this week.

The MSC Oliver, one of the biggest vessels of Mediterranean Shipping Company (MSC) headquartered in Geneva, Switzerland, was the largest ever ship to dock in Vietnam.

It has a dead weight tonnage (DWT) of 199,273, with a capacity of more than 19,224 twenty-foot equivalent units (TEUs).

The ship docked at CMIT to handle nearly 6,000 freight containers, equivalent to 10,000TEUs of exported, imported and transshipped goods.

Nguyen Xuan Ky, deputy general director of the CMIT, said the docking of the ship would help promote the capacity of Vietnam’s seaport system and its position in the global supply chain.

Located in the southern province of Ba Ria - Vung Tau’s Phu My Town, CMIT is one of the largest terminals at the Cai Mep-Thi Vai deep-water gateway port complex.

It can serve cargo vessels with a loading capacity up to 214,000DWT.

Many shipping lines around the world are using container ships with large capacity. To serve such large ships, seaports need to be able to efficiently receive and handle the container ships, ensuring that they enter and exit the port safely.

MSC is the world’s second largest shipping company with more than 500 vessels sailing 200 different routes between 500 ports in 155 countries worldwide.

To meet rising global freight demand, the company has ordered new mega ships, each with capacity of up to 23,000 TEUs./.

Legal proceedings started against case of COVID-19 Patient 1440

Director of An Giang province’s Department of Public Security, Col. Dinh Van Noi, announced on December 30 that the department’s Investigation Security Agency has issued a decision to begin legal proceedings in a case of organising illegal entry into Vietnam in the local district of An Phu on December 24.

Noi said that the investigation detected signs of criminal activity in the case, and decided to commence legal proceedings to expand investigations.

The province’s Department of Public Security is coordinating with the provincial Border Guard and An Phu district authorities in catching those that helped COVID-19 Patient 1440 illegally enter Vietnam.

It is a complicated case of community concern and affects the entire country’s disease prevention efforts, he said.

He called on anyone who has information relating to the criminal ring to call 0947 664 882.

Earlier, after determining that Patient 1440 had illegally entered Vietnam at An Phu district’s border with Cambodia and then travelled to Vinh Long province in a car, the provincial Department of Public Security coordinated with the Departments of Public Security of Vinh Long, Dong Thap, Soc Trang, Can Tho city and HCM City to trace people who had close contact with the patient.

Patient 1440 entered Vietnam illegally with five other people, three of whom then tested positive for the coronavirus./.

Vietnam targets healthily competitive energy market

Vietnam intends to develop a healthily competitive energy market under State regulation, according to a project approved recently by Prime Minister Nguyen Xuan Phuc.

The project on competitive energy market development through 2030 with a vision towards 2045 covers three sub-sectors - coal, gas, and electricity - which play a core role in energy production and consumption in the country.

It is expected to contribute to satisfying the requirements of socio-economic growth, reaching targets and policies set by the Party and the State and enhancing international integration.

Other objectives lie in diversified investment and business methods, the efficient exploitation and use of energy resources, and connectivity among the three sub-sectors.
The gas market will maintain its present model to 2025, which allows contractors and investors of new gas projects to sell gas directly to households or the Vietnam Oil and Gas Group (Petro Vietnam)’s subsidiary, the PV Gas.

In the coal market, State-owned enterprises will have a core role to play in exploitation, production, and business during the period. The sub-sector is also set to attract more foreign businesses and private investors, especially regarding coal imports.

Vietnam plans to consolidate and perfect the competitive wholesale power market in the next five years and put into operation a retail power market in line with the Prime Minister’s Decision No 63/201/QD-TTg dated November 8, 2013./.

PM agrees on development of three new IPs in Dong Nai

Prime Minister Nguyen Xuan Phuc has approved a proposal from the Ministry of Planning and Investment to add three industrial parks (IPs) in southern Dong Nai province to the national planning for IP development towards 2020.

The three new IPs are the 253-ha Long Duc 3 in Long Duc commune, Long Thanh district; Bau Can-Tan Hiep, on 2,627 ha in Bau Can commune and Tan Hiep commune in Long Thanh district; and Xuan Que-Song Nhan, covering 3,595 ha in Xuan Que and Song Nhan communes in Cam My district.

No adjustments have been made to the IPs already in the planning.

The leader ordered the southern province to amend its land use planning to prepare land for the new IPs, and ensure that the parks match the infrastructure of the locality and do not harm the local environment.

The People’s Committee of Dong Nai was requested to develop housing and socio-cultural facilities for workers at the IPs./.

Vietnam, Cuba seek ways to raise trade to 500 million USD

Vietnam and Cuba sought measures to increase two-way trade to 500 million USD in 2025 during the 38th meeting of the Vietnam-Cuba Inter-Governmental Committee, held online on December 30.

The meeting was co-chaired by Vietnamese Minister of Construction Pham Hong Ha and Cuban Minister of Foreign Trade and Investment Rodrigo Malmierca Diaz.


According to Ha, the two sides will work closely to effectively implement the Vietnam-Cuba FTA to increase two-way trade.

The two nations will speed up negotiations for the restructuring of Cuban businesses’ debts to Vietnamese companies to ensure the expansion of trade ties and maintain the stability of rice supply to Cuba, he said.

The Vietnamese side will continue to encourage and create favourable conditions for businesses from both sides to invest in new projects in each other’s market, said Ha, who suggested the Cuban Government create favourable conditions for Vietnamese-invested projects to operate smoothly and create an attractive environment for Vietnamese firms to develop new projects in Cuba.

The FTA became effective on April 1, 2020. Vietnam will continue to supply rice to Cuba and implement investment projects in the country, while a number of agreements in agriculture were also signed.

Two-way trade stood at 262 million USD in 2019 and 102 million USD in the first 10 months of 2020. Vietnam has maintained stable rice supply to Cuba.

Both sides have also effectively carried out a coffee tree development plan in the 2016-2020 period and a rice production project in Cuba in the 2019-2023 period.

However, Ha held that two-way trade has yet to match potential and suffered a sharp downturn in 2020. He emphasised the need to deal with problems in the implementation of investment projects in both countries as well as in Vietnam’s rice exports to Cuba.

Vietnam is Cuba’s second-largest trade partner in Asia and one of the 20 most promising partners of the country, according to the Cuban minister.

Cuba has faced numerous challenges due to the impact of COVID-19 on socio-economic sectors, especially tourism. It posted negative growth of 11 percent for 2020.

The country has adopted socio-economic strategies and plans towards 2030, while planning to apply currency unification from January next year, he said.

The minister added that Cuba will also reform and complete economic models and control COVID-19 to resume tourism and production activities.

Meanwhile, Vietnam is estimated to post GDP growth of 2.91 percent in 2020, among the highest in the world.

The country has attracted 28.5 billion USD in foreign investment while maintaining economic balance and macro-economic stability. It also successfully performed the role of ASEAN Chair and non-permanent member of the UN Security Council in 2020.

Vietnam and Cuba plan to continue the efficient implementation of a food development project in the 2019-2023 period while strengthening cooperation in healthcare, pharmaceuticals, and bio-technology.

Along with maintaining the implementation of reached agreements, the two sides will also seek new cooperation opportunities in the fields of finance-banking, trade, investment, construction, transport, labour, culture, sports and tourism, and science-technology.

At the end of the meeting, the two sides signed the minutes and a number of cooperation deals.

The next meeting of the Vietnam-Cuba Inter-Governmental Committee is scheduled for 2021 in Vietnam./.

FPT Software launches office in India

Vietnam’s largest ICT firm FPT Software has opened a new office in India, adding to its global footprint of more than 50 offices across the Asia Pacific, Europe, North America, and the Middle East.

The company is set to build this branch into a Global Delivery Centre within the next three years, its 23rd worldwide.

The new branch, FPT India, is based in the country’s southern Hyderabad city, one of the top outsourcing destinations in India and also home to more than 600,000 IT employees. Here the company joins other IT industry leaders such as Infosys, Tata Consulting Services, Accenture and Wipro, among others.

“FPT Software’s expansion to the India market demonstrates our strong resources and capabilities, as well as representing our commitment to accelerating digital transformation in the Asia Pacific region”, said Phung Sy Bay, FPT India CEO.

“The IT industry is a key driver of India’s economy. The IT workforce here is highly skilled, multilingual, capable of carrying out 24/7 shift work, as well as having a wealth of experience and technical know-how. I believe that we have huge potential to tap into, helping more and more Indian clients transform their business operations and gain competitive edges in the market”, he added.

FPT India is now working with multiple industry giants in various sectors, such as aviation, healthcare, telecommunications, and automotive. Due to high customer demands and the branch’s expansion ambition, the company is actively looking to recruit more than 1,000 technology professionals in delivery, managed services, and project management within the first three years.

Since 2019, FPT Software shifted its core strategy and service offering to digital transformation, after two decades of leading Southeast Asia in IT outsourcing. The company aims to become a billion-dollar IT and digital transformation services provider by 2024./.

FTA, RCEP key driver for Cambodia’s post-COVID-19 economic growth

The recently-signed Cambodia-China Free Trade Agreement (FTA) and the Regional Comprehensive Economic Partnership (RCEP) free trade pact are expected to be a key driver to reboot Cambodia's economic growth in the post-COVID-19 era.

Cambodia signed the bilateral FTA with China on October 12 and the RCEP trade pact with 14 other Asia-Pacific countries on November 15.

Spokesman for the Cambodian government Phay Siphan said the two pacts will greatly contribute to boosting Cambodia's economy and improving the people's livelihoods when they enter into force.

The two agreements show the countries’ unity towards a community of common destiny, he said in a recent interview with China’s Xinhua news agency, adding that they will provide Cambodia greater market access with no tariff barriers.

Cambodia’s Ministry of Commerce secretary of state and spokesman Seang Thay said through the two trade deals, the ties in economics, trade and investment between Cambodia and China as well as other RCEP countries would be further broadened.

Affected by the COVID-19 pandemic, Cambodia's economy in 2020 is projected to register its slowest growth since 1994.

Deputy Prime Minister and Minister of Economy and Finance Aun Pornmoniroth said the growth would shrink by 1.9 percent this year, making the gross domestic product (GDP) value worth 27.6 billion USD.

The ADB forecasts better growth for Cambodia in 2021, saying that the country’s growth would expand by 5.9 percent./.

Vietnamese, Indian garment-textile firms seek partnership chances

Vietnamese and Indian businesses sought partnership opportunities in garment and textile sector during an online conference held by the Vietnamese Trade Office in India and the Indian Importers Chambers of Commerce and Industries (IICI) on December 30.

According to A. Sakthivel, Chairman of the Apparel Export Promotion Council under the Ministry of Textiles of India, garment and textile sector makes up more than 2 percent to the country’s gross domestic product (GDP).

The sector has created jobs for more than 45 million labourers and made up 15 percent of the country’s total export revenue in the 2018-2019 fiscal year, he noted, pointing out that the garment-textile market of India is estimated to worth 100 billion USD in the 2018-2019 fiscal year.

For his part, Bui Trong Thoan from the Vietnam’s Association of Foreign-Invested Enterprises said that Vietnam has been a bright spot in the gloomy global economy, and among the few countries posting positive growth in 2020 with economic expansion of 2.91 percent, total import-export revenue of 543.9 billion USD and trade surplus of 19.1 billion USD.

Meanwhile, Pham Minh Huong, former Managing Director of the Vietnam Garment and Textile Group (Vinatex), noted that Vietnam is the current third largest garment-textile exporter in the world after China and India.

As of the end of December 2020, export revenue of the product had hit 34 billion USD, down 14 percent year on year, marking the first year of reduction after decades of growth of about 10-15 percent.

However, in 2021, the sector is projected to enjoy a 9-15 percent rise in export, she stated.

Over the years, India has been a supplier of materials for garment-textile firms in Vietnam, providing 7 percent of total imported materials to Vietnam in the first 11 months of this year./.

Logistics costs see unprecedented rise due to lack of empty containers

The Import and Export Sub-Department, has received complaints from businesses and business groups about a shortage of containers that has led to an unprecedented increase in shipping tariffs, Tran Thanh Hai, its deputy director, said.

The cost of transporting a container to EU countries now is around US$10,000 as against a normal rate of $1,500-1,800, he said.

The COVID-19 epidemic means EU countries and the US buy goods from East Asia but cannot return empty containers because of border closures, he explained.

Nguyen Dinh Tung, chairman and general director of fruit exporter Vina T&T Group, said there was a shortage of containers for shipping dry goods while the cost of shipping to the US has increased by nearly three times since last year.

Dang Phuc Nguyen, general secretary of the Viet Nam Fruit and Vegetable Association, said the lack of containers was because exports have been booming and ship crews taking them are quarantined on reaching foreign ports.

The Viet Nam Logistics Business Association said part of the cause is that Viet Nam is a trade surplus country. In the third quarter exports increased by 11 per cent year-on-year, it said.

Besides, due to the weather, the transportation of empty containers back from the US, Japan and China has been difficult, it said.

The container scarcity usually peaks at the end of the year, and the Covid-19 pandemic has worsened the situation, it said.

To overcome the above situation, Viet Nam Logistics Business Association depots should be tasked with repairing empty containers to reduce the waiting time for them, and ships should work closer with depots and accurately notify their empty containers situation, experts said.

Consignors needed to make use of containers efficiently and quickly so that they could be used by others, it added.

Hanoi ranks second in attracting foreign investment

About US$3.72 billion in foreign direct investment (FDI) poured into Hanoi in 2020, according to the municipal Statistics Office.

This figure made the capital the second largest destination of FDI in the country over the past year.

The city's gross regional domestic product (GRDP) increased by 3.98% compared to 2019.

Its industrial production index increased by 4.7% over the previous year, while development investment capital in the city reached more than VND413 trillion, a year-on-year rise of 9%. Budget revenue reached more than VND280 trillion, up 3.9%.

The service sector in 2020 increased by 3.29% over the previous year (contributing 2.1 percentage points to GRDP growth), much lower than the 7.27% increase in 2018 and 7.59% in 2019, due to the impact of the COVID-19 pandemic.

Export revenue reached US$16 billion, up 1.8% over the same period last year due to the negative impact of the pandemic and low overall demand across the world.

In 2020, the city had 26.4 thousand newly established enterprises, a decrease of 2% compared to 2019 with registered capital estimated at VND337.7 trillion, down 13%.

National Innovation Centre to break ground soon

The National Innovation Centre will officially break ground on January 9, 2021, along with the organisation of the Vietnam International Innovation Expo 2021.

The Ministry of Planning and Investment (MPI) has just announced holding the Vietnam International Innovation Expo (VIIE) in Hoa Lac Hi-Tech Park on January 9, 2021. “This is the first international innovation expo that gathers all shareholders of the Vietnam innovation ecosystem,” Tran Duy Dong, Deputy Minister of Planning and Investment said.

There will be 150 shops to show off their products, technology, and solutions at VIIE 2021, which is expected to lure in around 10,000 visitors during the two-day event.

Notably, the expo will see the participation of numerous large technology companies like Viettel, Vingroup, MoMo, CMC, and local businesses like Sunshine, Hanaka, and foreign-invested firms Samsung, Hyosung, Intel, Dell, Hitachi, and Siemens.

Startups, small- and medium-sized enterprises (SMEs), research and development centres, institutes, and universities will also join this event.

“With the participation of dozens of venture funds and big corporations, the event will be a good platform for connectivity and networking with startups and SMEs,” Deputy Minister Tran Duy Dong said.

Various cutting-edge technologies related to smart factory (such as robots and turbines), smart city, digital technology (5G, fintech, and e-payment), environmental and agricultural technologies, and some other innovative solutions will be showed off at the expo.

“VIIE is not only the place to introduce and honour achievements of innovation but also contributes to developing a new playground for innovation activities of all participators like people, businesses, disadvantaged community, international organisations, and technology corporations,” added Dong.

The expo is expected to be held annually to enable Vietnam to be a regional destination of innovation in the new era, as well as confirm the pioneering role of the MPI to mobilise resources and connect stakeholders to promote economic growth based on science-technology and innovation, according to the MPI deputy minister.

In addition to the expo, another important event to be held on the same day is the ground-breaking ceremony of the NIC.

“This is the result of the MPI and the NIC's work to build the physical infrastructure to connect innovation stakeholders, and an important milestone for the NIC,” Dong said that NIC will be a convergence point for local and foreign businesses and organisations, institutes, labs, working place of talents, experts, and scientists.

The NIC is established in Decision No.1269/QD-TTg dated October 2, 2019. “Establishing the NIC is a significant step of the government to realise the Politburo's Resolution No.52-NQ/TW on guidelines and policies for the nation's proactive involvement in Industry 4.0,” said Dong.

In order to seize Industry 4.0 opportunities, the MPI has been actively promoting and carrying out the three tasks of creating Vietnam Innovation Network to gather overseas talents, establishing the NIC, and building a national strategy on Industry 4.0.

Of these, Vietnam Innovation Network has already gathered more than 1,000 members across 14 countries, opening representative offices in five countries and going to set some up in Canada, Singapore, South Korea, and the UK.

New PPP legislation brings new motivation to private health funding

Domestic and international private investors are expected to venture further into health initiatives in Vietnam with new, more favourable rules taking effect from January 1, 2021, changing the investment picture in the lucrative sector.

Quang Khoi General Hospital, one of the leading privately-run hospitals in the central region, is preparing to kick off the construction of a new facility in 2021 to cash in on growing healthcare demands.

“We will kick off the 2.5-hectare construction soon and put the new buildings into operation in 2023, with a capacity of 100 beds and an entertainment area for the elderly with the capacity to welcome 200,” Nguyen Van Khoi, board chairman at Quang Khoi General Hospital, told VIR.

Licensed by the Ministry of Health (MoH) to reform from a clinic to a general hospital in 2018, it has developed strongly ever since. It is estimated that Quang Khoi welcomes about 120,000 turns of patients each year, thus contributing to meeting the healthcare needs of the locals and helping ease the overload at central hospitals.

Quang Khoi is an example of an investment move among domestic private businesses in the health sector, which has been in need of huge capital for future development amid state budget constraints and growing demands for high-quality health services.

According to experts at the World Bank and the International Finance Corporation, other countries alongside Vietnam are facing growing pressures on public services, especially healthcare. Thus, attracting private investment via public-private partnership (PPP) is considered the optimal solution for healthcare sector development.

A senior official at the MoH told VIR that, “The health sector is carrying out heavy tasks amid the challenges. Thus, we are encouraging private investors to join to fulfil our targets.”

“We are considering and appraising procedures for some PPP projects in healthcare infrastructure and medical equipment," the official added. "We are willing to welcome private investors to join.”

Thus far, despite the sector's importance, private investment in healthcare remains low due to some shortcomings, including a lack of a legal framework for PPP investment.

Tran Tien Quan, general secretary of the Vietnam Private Hospital Association, said that private investors are strongly interested in the healthcare sector. However, they are mostly concerned about the policy framework. They are waiting for changes to go ahead with investment projects.

Now some legal concerns are expected to be solved with the new Law on PPP Investment, which will take effect fron January 1, 2021 to become the key piece of legislation governing PPP transactions in the country.

According to the PPP law, health remains one of the priority sectors for PPP investment, thus creating an official legal framework for PPP in the healthcare sector.

Regarding the investment guarantee, investors of such projects will be ensured the right to access and use the land and other public assets.

Specifically, the state will hand over or lease land or allow them to use other public assets to implement PPP contracts. Moreover, PPP businesses will enjoy incentives in tax, land-use fee, land-leasing fee, and more in line with the prevailing rules on tax, land, and investment.

Moreover, the enforcement of the sector’s development strategies, growing market demands for qualified healthcare services, and the enforcement of the EU-Vietnam Free Trade Agreement (EVFTA) are the motivation to leverage private investment in healthcare.

The EVFTA is expected to lure in more EU firms as the landmark FTA will open the Vietnamese market in fields that businesses have been seeking particular solutions to for years, such as intellectual property rights (IPR), direct pharmaceuticals imports, and tenders, among others.

Pham Van Hoc, chairman of Hung Vuong General Hospital in the northern province of Phu Tho, said that the room for private investment in healthcare remains wide open.

In Latin America and Asia, private healthcare makes up 20-30 per cent while in the United Kingdom it is 10 per cent, 24 per cent in Thailand, and 93 per cent in India, but in Vietnam the figure only sits at 5.4 per cent.

At present, cities and provinces have been developing their healthcare systems and calling for private financiers from home and abroad to join. For instance, Hanoi planned to develop 15 new hospitals over five years by the end of 2020, with 5,000 beds worth VND8.6 trillion($373.9 million) in total. The city has especially been prioritising 100 per cent foreign-invested facilities with services using advanced technology, while encouraging investment in new urban areas.

In similar moves, Ho Chi Minh City has called for private investment in the local sector across 14 PPP ventures with a total investment capital of VND15 trillion ($652.17 million).

Experts said that the new PPP legislation will help increase the healthcare sector’s attraction, thus contributing to fulfilling the sector’s important tasks in the future.

Developer portfolios in restructure phase

Real estate developers are actively restructuring their products towards mid- and low-end segments to be more suitable to the real demands of the market.

According to Nguyen The Nhien, deputy general director of Hung Thinh Land, the group has had to scale down its business due to the pandemic, and is carrying out more market research into its investment strategy. “We are changing in the three key fields of developing more affordable products, offering reasonable price, and phasing out processes of payment to clients,” Nhien said.

According to the Ministry of Construction (MoC), the structure of real estate products in the Vietnamese market now is not sustainable with less proportion of affordable products, while this is now occupying the highest demand from buyers.

In 2020, 65 per cent of launched products in Ho Chi Minh City consisted of high-end and luxury grade products. In Hanoi, around 70 per cent belongs to the mid-end and upper segments.

Le Hoang Chau, chairman of the Ho Chi Minh City Real Estate Association, told VIR that the product’s supply is unbalanced. “The demand of affordable units (those under $1,000 per square metre) is now very high; however, the supply is now at around 22 per cent of the total market,” Chau said.

He added that the mid-end unit ranging from VND25-40 million ($1,000-1,700 per square metre) is occupying around 45 per cent and the high-end segment over $1,700 is occupying less than 40 per cent. The remainder only belongs to low-end and affordable housing.

“We have many times suggested that developers restructure their project portfolios moving towards affordable products, low-cost housing, and social housing,” Chau said.

Such affordable housing is a key segment for the market, which has the highest liquidation because it can meet the major demand from buyers. The developers however are less interested in the segment due to high costs alongside lower returns of benefit on offer.

“It is hard for us to offer affordable products because we are bogged down in bureaucratic procedures,” said a representative from one developer in the country.

The lack of affordable housing has led to price hikes and fewer opportunities for mid-income earners to own accommodation.

Many developers have now expanded their portfolios to the outskirts and satellite towns of Hanoi and Ho Chi Minh City, where land funds are more readily available.

In Hanoi, with a range of bridges planned to be set up across the Red River, areas such as Vinh Phuc, Bac Ninh, Bac Giang, and Hung Yen are becoming primed for many affordable projects. In Ho Chi Minh City, Dong Nai, Long An, Binh Duong, and Lam Dong are also becoming magnets for many developers.

According to Kiet Vo, associate director at CBRE Vietnam, satellite cities and provinces are chosen by many developers where the land and demand is available.

“Projects are moving to these locations where developers can have project sites easier and the demand for mid-end to affordable housing is high,” Kiet said.

Meanwhile Nguyen Xuan Thanh, public policy lecturer at Fulbright Vietnam, cited that in the next five years, apart from the land available, an improved infrastructure system will kick off industrial and tourism properties, as well as speed up industrialisation for areas neighbouring the major cities.

“This is a big push for developing real estate market in satellite cities and provinces,” Thanh said.

The MoC is now completing a resolution to encourage lower cost housing development, which will then go on to the government for approval.

“The limited supply of affordable housing is driving up prices in the whole market, especially as new supply continues to be restricted by the review process and demand keeps rising,” said Nguyen Van Dinh, vice chairman of the Vietnam National Real Estate Association.



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