VIETNAM BUSINESS NEWS JULY 14

Proposal to establish cargo airline rejected

The Civil Aviation Authority of Vietnam (CAAV) has rejected IPP Air Cargo JSC’s proposal to establish an airline specializing in cargo transport, saying that the establishment of new airlines will only be considered after 2022, once the aviation market recovers.

According to CAAV, the delay in the consideration of the establishment of the cargo airline is aimed at minimizing the supply-demand imbalance amid the Covid-19 pandemic, affecting the local aviation sector’s sustainable development, the local media reported.

The authority will continue keeping a close watch on the market and the developments of the pandemic and report to the Ministry of Transport about the possibility of the establishment of a cargo airline after 2022.

Vietnamese air carriers have been operating flights transporting cargo and even loading cargo in cabins, to increase their revenues during the pandemic.

As of June 28, seats on nine aircraft have been removed so that they can be used to transport cargo, comprising five of Vietnam Airlines and four of Vietjet. In addition, some aircraft have been allowed to transport cargo without removing their seats.

The proportion of air carriers’ revenue from cargo transport activities during the pandemic period has tripled that of the pre-pandemic period.

IPP Air Cargo, whose chairman is businessman Johnathan Hanh Nguyen, is an arm of Imex Pan Pacific—a retailer that makes up nearly 70% of Vietnam's luxury items market.

IPP Air Cargo airline has a total investment of VND2.4 trillion, including 30% of IPP Air Cargo JSC’s equity and 70% mobilized.

IPP Air Cargo expected to be granted the air transport license in the third quarter of this year and launch its first flight in the second quarter of next year.

If approved, IPP Air Cargo will operate five planes in its first year of operation, seven in the second year and 10 in the third year.

Market rebound led by surging large-caps

Shares rebounded on Tuesday as a surge from large-cap stocks boosted indices but the market was still impacted by strong selling pressure.

On the Ho Chi Minh Stock Exchange (HoSE), the benchmark VN-Index edged up 0.10 per cent to close at 1,297.54 points.

Market breadth was positive as 112 stocks declined while 265 increased.

Market liquidity was lower than Monday with a trading value of more than VND15.9 trillion (US$690.8 million), equivalent to some 539.6 million shares traded on the southern market.

After a sharp drop on Monday, the Vietnamese market rebounded Tuesday with the support of large-cap stocks.

“The bottom-fishing cash flow has returned to the market but cautious sentiment still prevailed, hindering the growth of the indexes. The market in the morning session continuously struggled around the reference level,” said financial news site cafef.vn.

Banking stocks traded differently with Vietinbank (CTG), Vietcombank (VCB), Vibank (VIB) and Lien Viet Post Bank (LPB) all dropping. Military Bank (MBB), Maritime Bank (MSB), VPBank (VPB) closed at the reference level while Asia Commercial Bank (ACB), Bank for Investment and Development of Vietnam (BID), HDBank (HDB) and Techcombank (TCB) recovered at the end of the session.

Securities stocks also performed well such as SSI Securities Corporation (SSI), VNDirect Securities Co (VND) and MB Securities (MBS).

Notably, penny stocks were the darlings of the market with some strong gainers like Truong Thanh Furniture Corporation (TTF), Hoang Quan Consulting-Trading-Service Real Estate Corporation (HQC), and Dong A Plastic Joint Stock Company (DAG). They all hit the ceiling prices.

“The VN-Index struggled around reference level in the morning and although selling pressure increased in the afternoon session, the demand appeared at the end of the session and helped the index close with a slight gain,” said BIDV Securities Co.

“Investment cash flow increased again although foreign investors were net sellers on both HoSE and HNX.

“In addition, market breadth turned positive with liquidity declining compared to the previous session. According to our assessment, the current demand is still not strong enough to help the index reverse and the market may still see slight drops this week,” it said.

The VN30-Index, tracking the 30 biggest stocks in market value, decreased 0.15 per cent to 1,440.87 points. Nineteen of the VN30 basket rose, while three stocks decreased.

On the Ha Noi Stock Exchange (HNX), the HNX-Index rose 1.27 per cent to close at 296.70 points.

Nearly 100.8 million shares were traded on the northern bourse, worth VND2 trillion.

Vn-Index may recover from 1,260

The index lost a total of 123.97 points, causing evaporation of over VND464.3 trillion (US$20.16 billion) in the HoSE’s market capitalization.

Following a sharp decline of 50.84 points or 3.77% in yesterday’s trading session to 1,296.3, securities firms expect the benchmark Vn-Index to continue declining to around 1,260 before recovering.

Since the launch of the new trading system on the Ho Chi Minh City Stock Exchange (HoSE) on July 5, the Vn-Index has witnessed major declines of 3.99% on July 6, 2% on July 9, and 3.77% on July 12 at the latest.

Overall, the index lost a total of 123.97 points, or 8.73% in the past six trading sessions, causing evaporation of over VND464.3 trillion (US$20.16 billion) in HoSE’s market capitalization.

Experts shared the view that such decline came from investors’ concern over the current Covid-19 situation that could pose severe consequences on enterprises’ performance, and eventually the economy.

This came from the fact that the pandemic evolution was the main factor causing several dips of the Vn-Index in the past, with the largest plunge of 74 points or 6.67% on January 28.

SHS Securities Company said there remained some positive sides in yesterday's session, however, including a sharp rise in market liquidity at an all-time high of VND37.1 trillion ($1.61 billion) and foreign investors returning to a net purchase position of over VND1.4 trillion ($61 million).

Several correction phases brought the price-to-earnings (P/E) ratio of the Vn-Index to 16.5x, which is considered attractive given the market’s P/E at 18x in past months.

“Investors could start buying in when the Vn-Index returns to the supporting zone of 1,260,” it noted.

Viet Capital Securities also expects investors to jump back to the market when stocks are at low-zone value, especially those with the largest market cap in Vn30 Index.

“If the Vn30 Index could return to the 1,460-mark, there is a high chance of recovery, otherwise, the market may face further correction periods,” stated the securities firm.

Vietcombank Securities noted recent sell-offs in the past sessions provides an opportunity for market stability, as such, investors could look at stocks with healthy financial conditions and low decline level compared to the average, noting they could lead the market recovery once good news arrives.

Australia helps Vietnam develop hi-tech agriculture hinh anh 1

Banks reach consensus on cutting rates for virus-hit enterprises

Commercial banks have agreed to lower their lending rates to support enterprises that have been badly affected by the COVID-19 pandemic following a meeting of the Vietnam Banks Association (VNBA) with its members.

They met on July 12 to discuss and reach consensus on the implementation method and the period for cutting rates on current loans in the final five months of 2021.

According to VNBA General Secretary Nguyen Quoc Hung, it is now very difficult to reduce interest rates, but banks need to share the difficulty with enterprises.

Techcombank Deputy General Director Pham Quang Thang said his bank has been active in debt restructuring and relief to ensure its customers have adequate cash flow during the difficult times.

Techcombank has been constantly reducing its lending rates since the pandemic began in 2020, to under 4.5% for priority areas and 6-7% for essential economic sectors.

He added that the rate cuts should be focused on essential enterprises and with a large labour force, and should not apply to profit-making property enterprises, exporters and car buyers.

For its part, Agribank plans to lower its lending rates by 0.5 percentage points on some loans and 2-2.5 percentage points on others.

On average the lending rates will be reduced by about 1 percentage point, said Nguyen Viet Manh, a member of Agribank’s board of directors.

At the meeting, banks agree that the rate cuts will target those affected by COVID-19 and appropriate reductions will be made depending on the borrowers.

Rate cuts will begin as soon as this month and continue until the end of 2021.

Pham Thanh Ha, Director of Monetary Policy at the State Bank of Vietnam, spoke highly of banks’ consensus but noted that banks still have to give priority to preventing bad debts due to the delayed impact of the pandemic on the banking system.

MPI proposes government to approve $1.75 billion Metro Line 3

The Ministry of Planning and Investment (MPI) has requested the prime minister’s approval to develop the Metro Line 3 project (Hanoi Railway Station-Hoang Mai Station) with the total investment capital of $1.75 billion.

The majority of the capital for Metro Line 3 will be mobilised from loans, including $940.8 million from the Asian Development Bank (ADB), $232.8 million from the French Development Agency (AFD), and $305.08 million from Germany's KfW Development Bank. The remaining $274.1 million will come from Hanoi’s budget.

Metro Line 3 will be 8.7km long, a little more than 8.13 km of which will run underground, with the rest being an open tunnel section leading to the depot area.

According to the project proposal, the metro line will include dual underground tunnels connecting Tran Hung Dao-Tran Thanh Tong-Kim Nguu-Tam Trinh, and a 10-hectare depot area located near Yen So pumping station.

The MPI requested the government to assign Hanoi People’s Committee to co-operate with the ADB, AFD, and KfW to conduct the pre-feasibility study for the project to serve as the basis for the implementation of the next steps.

Hanoi's public transport infrastructure development planning includes a total of eight lines. The first line would be the 13km Cat Linh-Hadong section running from downtown Dong Da district to Yen Nghia in Hadong district in the south-western part of the city.

The construction of the section began in October 2011 and was originally scheduled for completion in 2013. However, several hurdles, including loan disbursement issues with China, were only resolved in December 2017, stalling the process for years.

The second line running between Nhon and Hanoi Railway Station will have 10 trains imported from France. The entire metro line will 12.5km, 8.5km of which will be elevated and 4km will be underground. It will run through North Tu Liem, South Tu Liem, Cau Giay, Ba Dinh, Dong Da, and Hoan Kiem districts. At present, the construction is being implemented.

Quang Ninh discloses criteria for $2 billion LNG power project

Along with the criteria on financial potential and experience, investors looking to develop the $2 billion Quang Ninh liquefied natural gas (LNG) power project will have to comply with 10 other criteria.

Quang Ninh Department of Planning and Investment issued the selection criteria for the investor of the LNG project. Notably, the investor will need to have a minimum equity of no less than 15 per cent of the project’s total investment value ($300 million at the current valuation of the project). In case the investor is a joint venture, the joint venture’s equity must be equal to the total equity of the investors joining the consortium.

If any member of the consortium fails to comply, the joint venture will be assessed as not meeting the equity requirement. The leading investor in the consortium must have a minimum capital ownership ratio of at least 30 per cent and the remaining members must have a minimum equity ratio of 15 per cent each in the consortium.

There are several other strict requirements for investors. Notably, the investor must commit to not require guarantees on power purchase agreement (PPA) and to negotiate a PPA with Electricity of Vietnam.

Besides, the investors have to commit to putting the project into operation by the third quarter of 2027. In case they miss the deadline, the project will be revoked without compensation, except where the law prescribes it.

Quang Ninh asked interested investors to commit to not buy, sell, or transfer the project in any form until the plant is put into operation and receives its commercial operation certificate (COD). In case of violation, the project will be revoked without compensation.

Businesses are also required to establish a local business, show proof of fulfilled tax obligations, commit to complying with regulations on security and national defence, among others.

The investors are also required to apply advanced and modern technologyand comply with the project's technical requirements set by Vietnamese technical standards and regulations. In case the current Vietnamese standards are not available, they will have to apply the most widely applied international standards.

The deadline for investors to submit their project implementation registration document is July 29.

Investors proposes $4.59 billion Vung Ang III plant

The joint venture of Siemens Energy, KG Electric Power Corporation, and Power Engineering Consulting JSC 2 (PECC2) proposed to develop the $4.59 billion Vung Ang III Thermal Power Plant.

The thermal power plant is expected to be located in Vung Ang Economic Zone of the central province of Ha Tinh with a capacity of 3.2GW that will be expanded to 4.8GW. The facility will import 2.2 million tonnes of liquefied natural gas (LNG) per year. The construction is expected to be completed in 2026-2027.

According to Ha Tinh People’s Committee, in April, the investor held a working session with the provincial leaders and present the pre-feasibility report of the project.

In late June 2021, Ha Tinh People’s Committee submitted a proposal to the Ministry of Industry and Trade to switch the planning of Vung Ang III Power Centre from coal-fielded power to LNG and increase the capacity of the centre from 2.4GW to 4.8GW.

Vung Ang Power Centre combines several power plants. While Vung Ang I is already in operation with two turbines and a total capacity of 1.2GW, its neighbour Vung Ang II invested by Kepco will commission its first unit in 2024 and the second one in 2025. The 1.2GW Vung Ang II is expected to emit 6.6 million tonnes of greenhouse gases per year. Throughout its 30 years of operating life, it will produce a total of 200 million tonnes of greenhouse gases.

Government asks provinces to ensure sufficient materials for North-South Expressway

Amid a shortfall of materials, the government has asked relevant cities and provinces to take urgent action to ensure sufficient materials for the construction of the Eastern Cluster of the North-South Expressway project.

In Document No.179/TB-VPCP dated July 8, Deputy Prime Minister Le Van Thanh asked relevant provinces to check local mines and grant licenses for mining certain minerals to produce common building materials so as to provide enough materials for the project.

The construction of some sections of the Eastern Cluster of the North-South Expressway (2017-2020) is a key national key project. However, progress remains slower than expected, hampered by COVID-19, the rising price and limited supply of building materials, and the slow granting of mining licenses, among others.

Worse still, four sections of the project have not been kicked off yet, including the two public-private partnership sections of Nha Trang-Cam Lam and Cam Lan-Vinh Hao.

To ensure project progress as requested by the National Assembly and the government and thus enable the target of developing about 5,000km of expressways by 2030, including the completion of the Eastern Cluster of the North-South Expressway project by 2025, Thanh also asked cities and provinces to fast-track site clearance, build resettlement areas, and hand over cleared land to contractors by July 30. as committed earlier.

The Ministry of Transport has been asked to work with other ministries and relevant agencies to deal with problems facing localities, businesses, and contractors while studying alternative sources of materials and working with relevant units to ensure project progress. The ministry will also need to submit monthly reports to the deputy prime minister.

In addition, he asked the Ministry of Natural Resources and Environment to soon deal with problems related to mines and make an environmental impact assessment report while establishing inspection groups to strictly fine any violations and then report to the prime minister before August 15.

Meanwhile, the Ministry of Construction is asked to soon check and deal with proposals related to prices of building materials and steel prices, and issue timely guidance.

Billionaire Tran Ba Duong withdraws from Hung Vuong

Tran Ba Duong, chairman of THACO, sold his entire 11.26 million shares in Hung Vuong JSC (UPCoM: HVG), equalling 4.96 per cent of the group’s charter capital, after it proved unable to rescue the company.

Along with Tran Ba Duong, Tran Oanh Manufacturing and Trading Co., Ltd. also sold 8.6 million shares or 3.79 per cent in this group. At the time of the deal, Hung Vuong's shares were traded at VND2,300 (10 US cents).

In January 2020, Thadi Agriculture Farming Processing & Distribution JSC (Thadi) – a subsidiary of THACO – and other shareholders of THACO bought a 35 per cent stake of Hung Vuong with the intention of supporting Hung Vuont overcome its difficulties.

To this effect, the two parties established a joint venture that is 65 per cent owned by Thadi. The latter also assigned senior personnel to hold important positions at Hung Vuong, including vice chairman of the board of directors, financial director, and technical experts.

The joint venture invested VND2 trillion ($86.96 million) in breeding mother pigs in An Giang and Binh Dinh provinces while Thadi will invest in developing a pig farm (1.2 million pigs per year) meeting Development Food Security Activities (DFSA) standards.

Despite high ambitions at the beginning, Thadi's support had little effect. By Agugust 2020, Hung Vuong was forced to move from the Ho Chi Minh City Stock Exchange to the Unlisted Public Company Market. Since then, HVG shares dropped from VND5,400 to VND2,600 (23.47-11.30 US cents).

In the last two months of 2020, Thadi divested its entire holdings in Hung Vuong, leaving only THACO shareholders at the company.

In 2019, the corporation reported a loss of VND1.12 trillion ($48.7 million) and accumulated losses of VND1.74 trillion ($75.65 million). Its equity capital was about VND660 billion ($28.7 million) with total debts reaching VND7.1 trillion ($308.7 million). The corporation has delayed publishing audited financial statements for 2020.

Hung Vuong was established under the name of Hung Vuong Co., Ltd. in September 2003 as a processing plant of pangasius for exports. After 15 years in the industry, Hung Vuong JSC currently runs a production system from breeding, aquaculture, and processing to cold storage and exporting.

MARD proposes price stabilisation measures for animal feed to protect small farmers

Increasing animal feed prices and declining livestock and poultry selling prices will shut down small household farmers, leaving their market share to giants, unless regulatory intervention is made in time.

While animal feed is becoming more expensive, the price of live hogs has been decreasing sharply in recent months, pushing household farmers into deeper losses and narrowing their market share.

Last week, the price of live hogs was around VND60-65,000($2.60-2.82) per kilogramme in the north and VND54-62,000 ($2.35-2.70) in the south, decreasing by 40 per cent against the peak in May 2020 (VND105,000~$4.57 per kg), and by 20 per cent over April 2021 (VND77,000 - $3.35 per kg).

In a talk with media, Nguyen Van Thanh, director of livestock company Thanh Do Nghe An Co., Ltd. said that breeding costs are VND50,000 ($2.17) per kg at large-scale farms and is VND65,000 in small-scale farms that have to buy seeds.

“This means household farmers made no profit in the past few months and are starting to suffer losses on live hogs and chicken in recent weeks,” said Thanh.

A representative of Anova Feed said the lower the price of live hogs go, the heavier the losses of household farmers will be. “The smaller household farms are, the more losses they are suffering,” he said, explaining that all husbandry costs are rising, including labour costs, services, seeds, and animal feed.

According to the General Department of Vietnam Customs, in the first half of the year, a total of 10.8 million tonnes of animal feed materials were imported into Vietnam valued at $3.84 billion, a rise of 32.7 per cent in volume and 50.3 per cent in value against the previous year.

In addition to increased imports, the local selling price of animal feed has also been soaring since the end of 2020. In fact, the price of animal feed, a market which is dominated by foreign-invested firms like C.P. Vietnam, Cargill, Japfa, CJ, and De Heus, has been raised eight consecutive times since last November by VND300-500 (1.3-2.17 US cents) per kg each time.

Nguyen Kim Doan, vice chairman of the Dong Nai Animal Husbandry Association said that this is the first time ever that the price of animal feed rose each month for almost three quarters. “There is no signal that the increase would stop, which is making farmers worried enough to begin thinking about quitting the industry,” he said.

“In the future, there will be fewer small-scale farms, while husbandry companies that can manage the whole supply chain will expand their market share. This is also the general trend over the world,” he added.

Amid the sharp increase in animal feed prices, Duong Manh Hung, director of the General Statistics Office’s Agriculture, Forestry, and Fishery Statistics Department said that they are planning to propose price stabilisation measures for animal feed. Specifically, relevant authorities may review and adjust import taxes and value-added tax for animal feed and materials.

“Besides that, we should encourage local businesses to participate in animal feed production to reduce the domination and price control of foreign-invested firms,” emphasised Hung.

Nguyen Van Trong, deputy director general of the Ministry of Agriculture and Rural Development’s Department of Livestock Production said that the ministry had already proposed price stabilisation measures for animal feed in 2018.

He added that materials make up 80-85 per cent of total costs in animal feed production and animal feed accounts for 65-70 per cent of total breeding costs. The COVID-19 pandemic has interrupted the global supply chains and revealed weaknesses in material management in the husbandry.

“The Department of Livestock Production often encourages supply chains to manage and save costs. Additionally, the market needs some control and support from the state to stabilise prices,” said Trong. “We have not paid enough attention to developing domestic materials for animal feed production, which should be changed soon to avoid dependency on imported materials and foreign animal feed producers."

European firms remain confident in Việt Nam’s long-term prospects

Despite short-term challenges, European business leaders remain confident in Việt Nam’s long-term prospects.

The fourth wave of COVID-19 in Việt Nam has knocked the confidence of European business leaders, according to new data from the EuroCham Chamber of Commerce (EuroCham) Business Climate Index (BCI).

Before the fourth wave struck, the BCI had almost climbed back to pre-pandemic levels, reaching 73.9 in quarter one. However, this latest outbreak and the spread of new variants have seen the Index fall almost 30 points in quarter two to 45.8. This is a significant drop, though not as steep as during the first outbreak of the pandemic in 2020.

The fourth wave has also led to increased pessimism about the short-term outlook of Việt Nam’s business environment. Just one-fifth of EuroCham members (19 per cent) believe that the economy will stabilise and improve in the next quarter. That’s down from almost two-thirds (61 per cent) in quarter one.

However, business leaders remain confident about the future prospects of their own companies. More than half (56 per cent) anticipate an improved or neutral performance in quarter three. And eight-in-ten (80 per cent) plan to maintain or increase their headcount and investment.

The BCI also shows the urgent need for Việt Nam to roll out a mass vaccination programme. More than half of business leaders (58 per cent) predict that their companies would see a significant, negative impact if their staff could not be vaccinated in 2021. Meanwhile, almost half (44 per cent) have not been approached to prepare for vaccination.

EuroCham and its nine business associations asked their members if they would be willing to cover the cost of vaccinating their own staff. Of the 430 who responded – representing around one-third of the chamber’s total membership and around 95,000 staff – 399 said they would be prepared to do so. With full vaccination requiring two shots, this suggests that at least 190,000 doses will be needed just to vaccinate the direct staff of these companies alone. However, the true number of doses required could reach over half a million if all European enterprises and their staff were taken into account. Meanwhile, 259 of those who responded are also willing to cover the cost of vaccinating the families of their staff members. When these dependents are taken into account, the true number of doses required will be much higher.

EuroCham Chairman Alain Cany said: “The EuroCham BCI reaffirms the urgent need for Việt Nam to accelerate vaccinations. Local lockdowns, social distancing, and travel restrictions are not permanent solutions and will cause significant economic harm over the long-term, as our data shows.”

“There is no route out of this fourth wave without an ambitious and accelerated mass vaccination programme which will enable normal life to resume. European companies are prepared to cover the cost of protecting their own staff – this will help to speed up vaccination while also reducing the financial and administrative burden on the state. But we need access to sufficient supplies. EuroCham is using all the tools at our disposal to support Việt Nam in procuring enough doses, and we are confident that business confidence will rebound as soon as we can achieve mass vaccination.”

The BCI is a regular barometer of European business leaders and their views of the trade and investment environment. Each quarter, it tracks the performance of EuroCham’s member companies and their perceptions of the economic outlook in Việt Nam. The fieldwork and data collection for the BCI is conducted by YouGov Vietnam.

Thue Quist Thomasen, CEO of YouGov Vietnam, added: “Despite the short-term shock of this fourth wave, the data shows that Việt Nam’s long-term prospects remain positive. European business leaders are predicting maintaining or increasing their staff and investment plans – even in the midst of this current outbreak – which demonstrates a continued confidence in Việt Nam’s trade and investment environment.”

Businesses urged to devise strategy to cope with EU imposition of VAT

Local firms have been advised to develop a long-term strategy when exporting to the EU market due to value added tax (VAT) being officially applied for online B2C transactions of suppliers from third countries to its customers, according to the Vietnam Trade Office in Belgium and the EU.

The move will see goods originating from a third country subject to VAT, whilst they must also conduct customs declarations when being imported to the EU market as of July 1.

At present, EU members have established the Import One Stop Shop (IOSS) System aimed at conducting customs clearance for online transactions valued at EUR150 or less.

 

Nguyen Thi Minh Huyen, deputy director of the Department of E-commerce and Digital Economy, said the latest regulations will contribute to the development of e-commerce transactions and serve to create an equal competitive environment among various businesses both inside and outside of the EU.

However, amid growing e-commerce transactions, the new EU rule will affect both EU consumers and businesses who process B2C transactions via online platforms or from a third country outside of the EU.

Furthermore, with the EU's VAT calculation method, local firms are anticipated to face a number of hurdles when exporting their agricultural products or goods to the EU market moving forward.

Huyen noted that the new regulation is expected to lead to higher costs for e-commerce transactions, thereby leading to numerous difficulties for businesses.

The European-American Market Department has therefore advised local online sellers to apply for business registration in an EU member state in the event they wish to sell products to the EU, while simultaneously declaring transactions according to the IOSS website of each member state.

EU increases imports of wooden products from Vietnamese market

Vietnam's timber and wooden products to the EU market during the first half of the year surged by 36.4% to US$314 million compared to the same period last year and is projected to experience an upward trajectory ahead in the second half of the year, according to industry insiders.

Economists note that the economic rebound occurring in EU countries moving into the post-COVID-19 period will be one of the main factors that will serve to bolster the export of timber products moving forward.

Furthermore, the comprehensive and effective enforcement of the EU-Vietnam Free Trade Agreement (EVFTA) has helped local firms to receive a greater number of orders from foreign partners, especially from the US and the EU, said Bui Chinh Nghia, deputy general director of the Vietnam Administration of Forestry (VNFOREST).

The demand for repair and the completion of new houses typically increases sharply at the end of the year, thereby providing greater opportunities for wood exports to the EU market in order to meet growing demand.

Moreover, the EU’s import demand for wooden furniture featuring attractive designs at competitive prices is projected to enjoy vigorous growth in the future due to the demand for housing repairs increasing over the remaining months of the year.

Economists therefore project that there remains plenty of room for Vietnamese wood exports in the near future as the market share of Vietnamese wooden furniture in the demanding market still accounts for a low proportion.

Many experts believe that the local wood industry will be able to greatly benefit from the enforcement of the EVFTA due to substantial reduction in non-tariff barriers, origin traceability and reputation for Vietnamese wood brands.

The import of cutting-edge machinery and equipment through the EVFTA will also help to increase the productivity and competitiveness of the Vietnamese wood industry in the EU market.

Insiders anticipate that the export of timber and wood products will face numerous challenges amid ongoing complicated developments relating to the COVID-19 pandemic in the EU market, leading to high costs in terms of logistical services and imported raw materials, as well as a shortage of empty containers.

25 export commodities earning above US$1 billion each in first half

The first half of the year saw Vietnam record 25 commodities with export turnover of over US$1 billion each, making up 88.9% of the total, according to the Ministry of Industry and Trade.

Mobile phones and spare parts topped the list with US$25.1 billion, an annual rise of 14.2%, followed by electronic products, computers and components with US$23.7 billion, marking an increase of 22.1%.

Machinery, equipment and spare parts, along with garment-textile groups, stood at US$17 billion and US$15.2 billion in export revenue, respectively.

Furthermore, the export revenue of footwear hit US$10.4 billion, up 27.8%, while wood and wooden products reached US$8.1 billion, representing a rise of 61.1%.

Elsewhere, transport vehicles and spare parts were at US$5.4 billion in export revenue, a boost of 42.8% year on year.

Data from the Minitry of Industry and Trade show Vietnam’s total export value between January and June was estimated at US$157.63 billion, an increase of 28.4% from last year’s corresponding period.

The United States emerged as Vietnam’s biggest export market in the period with US$45.1 billion, marking an annual climb of 43.3%.

China came second with US$24.6 billion, up 25.1%, followed by the EU with US$19.3 billion, a rise of 17.4%.

Meanwhile, ASEAN posted an export turnover of US$13.8 billion, up 26.3%, the Republic of Korea with US$10.5 billion, up 15.2%, and Japan with US$9.9 billion, an increase of 6.9%.

Vietnam, Venezuela to step up economic and trade ties

Venezuela aspires to strengthen connectivity with Vietnamese businesses, especially in the fields of large-scale cow husbandry and farming, wood processing, and glass manufacturing for household utensils, according to Venezuelan business representatives.

The business representatives made the statement during a recent meeting with a Vietnamese delegation during their visit to Monagas state aimed at ramping up economic and trade ties between the two countries.

Monagas Governor Yelitza Santaella affirmed that both sides have developed a close friendship and ties across multiple aspects, such as politics, economy, culture, and social affairs, adding his hopes that Vietnam will implement strategic investment projects to fully tap into each other’s potential, especially in Monagas’s strong fields.

In response, Vietnamese Ambassador to Venezuela Le Viet Duyen pledged to strive to enhance cooperation in politics, diplomacy, culture, and trade between the two countries,

He revealed that Vietnam’s GDP has reached US$343 billion after 35 years of implementing the Doi Moi (Renewal) process, meaning the country is ranked among the world’s 40 largest economies and puts it fourth in Southeast Asia.

The Vietnamese diplomat went on to emphasise that as one of the major production hubs in both the Asia-Pacific region and the world, Vietnam is currently the second largest exporter of rice and coffee globally, and the world’s largest exporter of cashew nuts, peppers, and a range of other agricultural products.

According to the Ambassador, there remains plenty of room for greater cooperation between the two countries, as Vietnam is one of the world's leading manufacturing and exporting centres of high-tech products, smartphones, and electronic goods.

In addition, it is also one of the major furniture manufacturing centres in the world, a factor which is expected to create greater opportunities to promote the export of wooden products moving forward.

At the seminar, Ambassador Duyen and Governor Santaella voiced their support for the establishment of branches of the Venezuela-Vietnam Chamber of Commerce (CAVENVIET) and the Venezuela-Vietnam Friendship Association in Monagas state, in order to further enhance connectivity between people and businesses of the two countries.

For his part, Governor Santaella pledged to do his best to create favourable conditions for Vietnamese businesses to operate and invest in several potential fields in Monagas state. It is anticipated that there will be a specific focus on large-scale agricultural production such as dairy cows, beef cattle, and industrial crops, he said.

HCM City strives to increase vegetable, fruit supply

Businesses and authorities in HCM City are working to ensure supply and prices of vegetables and fruits remain steady despite a panicked populace buying them in bulk to stockpile following the closure of the city’s three wholesale markets and nearly two-thirds of traditional markets.

Supply of vegetables and fruits are now being affected by the closing of the city's wholesale markets and many traditional markets, where most of such products are sold and bought.

Demand began spiking before July 9 amid fears of the more intense lockdown under Directive 16 and people were rushing to stock up.

Some market traders began to jack up prices amidst the falling supply initially when the wholesale markets closed, but prices and supply began to stabilise after July 9.

Demand at supermarkets and food stores jumped again on Sunday, July 11, as people who had been unable to shop earlier made use of the weekend to buy in bulk and many other markets were closed, leading to some stores running out of stocks.

Đào Văn Đức, deputy director of the Phước An Co-operative group in HCM City’s Bình Chánh District, said his group was making an effort to keep supplying vegetables and fruits to the market through Co.opMart and Big C retail chains and at quarantine zones.

It also had to pay for COVID-19 testing fees for delivery staff, which were expensive, but it tried to keep vegetable prices steady, he said.

Bùi Tá Hoàng Vũ, director of the city Department of Industry and Trade, said vegetable prices at supermarkets were steady but there was a shortage.

Many large retailers had been increasing supply by up to five times to make up for the closure of many traditional markets, but they were still not enough, he said.

Noticing prices and demand for vegetables are rising, individuals and businesses are trying to help by buying vegetables from other provinces and selling them at below market prices.

Trịnh Thị Ngọc Hiện, head of Anfoods Joint Stock Company in Bến Tre Province, said her company was offering to supply non-leafy vegetables and fruits to seafood buyers at cost prices.

The city Department of Industry and Trade is seeking ways to increase the supply of vegetables and fruits.

Nguyễn Nguyên Phương, its deputy director, said districts were expected to work with closed markets on COVID-19 regulations so that they could reopen.

Many traders at the three wholesale markets are also selling their goods online.

Thủ Đức City has set up a transhipment station at the Thủ Đức Wholesale Market container parking lot yesterday (July 12) in an effort to increase supply of vegetables and fruits to the city.

A trial run was carried out on July 11, with six businesses receiving goods.

Shipments of produce from other provinces are transferred to smaller trucks to be transported to supermarkets and businesses’ staff kitchens around HCM City.

Up to 2,000 tonnes of vegetables and fruits will be distributed in this manner every night.

Strict measures are in place in the area, with only registered vehicles being allowed to enter and all personnel required to furnish negative COVID test results from within the last 72 hours.

Goods are to be unloaded and loaded quickly so that the container trucks from outside can leave at the earliest.

The Hóc Môn Wholesale Market is planning to set up a similar transhipment station soon.

HCM City has become the COVID epicentre of the country with more than 15,000 cases since the start of the fourth wave on April 27.

It has been under partial or total social distancing since May 31.

Phuc Long to open first-ever store in US this month

Phuc Long Coffee & Tea has announced it will launch its first store in the US this month, two months after its Vietnamese peer, TNI King Coffee opened its first coffee store in the American country.

Phuc Long is renowned for its signature coffee and tea drinks with bold flavor. Its US store will be located in Garden Grove, California, the brand said on its Facebook page.

Set up in the Central Highlands province of Lam Dong in 1968, Phuc Long expanded into the retail beverage business in 2012 from its three traditional stores in Ho Chi Minh City in the 1980s. Currently, the firm has 60 stores in HCM City and seven in other localities.

TNI King Coffee’s California store, meanwhile, is the second overseas store of the café chain which operates more than 50 outlets in Vietnam. It serves a full range of traditional Vietnamese coffee, such as filter coffee, iced coffee and iced milk coffee, with beans imported from Vietnam and around the world with the ingredients of TNI King Coffee's specialty roasted and ground products

Vietnamese beverage chains have been strategically seeking opportunities and preparing themselves to branch out overseas over the last decade in the face of increasingly stiff competition in the domestic market.

The US is deemed a promising market for the Vietnamese companies as it is home to more than 2.2 million Vietnamese-Americans./. 

Australia helps Vietnam develop hi-tech agriculture

A project to improve the knowledge and capacity of Vietnamese businesses in hi-tech agriculture will be soon carried out by Asialink Business of Melbourne University and Beanstalk AgTech of Australia.

The project is part of the Australia-Vietnam Enhanced Economic Engagement Grant Pilot Programme (AVEG) of the Australian Department of Foreign Affairs and Trade. It is expected to equip Vietnamese agricultural producers with practical information and understanding of newly-emerging consumer trends over the globe.

Asialink Business Manager Rob Law, who directly manages the project, emphasised that Australia’s agro-tech ecosystem has a long history and is in a good position to help Vietnamese businesses solve challenges, and support the implementation of the rapidly growing technological revolution in Vietnam.

He also said that through the project, Asialink will cooperate with Beanstalk to promote and realise the GRAFT Vietnam Challenge 2021, a first-of-its-kind landing pad programme for leading AgriTech entrepreneurs to scale up in Vietnam.

On July 1, Australia’s Minister for Trade, Tourism and Investment Dan Tehan announced the launch of the AVEG. Under this programme, the Australian Government is providing 2.5 million AUD (nearly 2 million USD) to 28 small-scale projects to create economic opportunities and deepen business cooperation.

The minister is expected to visit Vietnam in a next couple of days, as part of his two-week tour of Singapore, Vietnam, Japan, the Republic of Korea and the US to boost trade and investment with the five partners./.

Summer-autumn rice production estimated at 8.5 million tons in Mekong Delta

Currently, farmers in the Mekong Delta provinces have entered the peak harvest season of the summer-autumn rice crop. Statistics show that the whole region sowed more than 1.5 million hectares, down 9,000 hectares. Rice yield is estimated at 56.66 quintals per ha, an increase of 1.15 quintals per ha compared to the previous summer-autumn rice crop; total summer-autumn rice production in the Mekong Delta this year is estimated at more than 8.5 million tons, up 124,000 tons.

Many farmers reduced the rice-growing area in this summer-autumn rice crop to switch to vegetables, fruit trees, and aquaculture with higher economic efficiency. However, as the average rice yield increased by 1.14 quintals per ha, it still compensates for the deficiency of rice output due to the reduction in the growing area.

According to calculations by the Departments of Agriculture and Rural Development of Mekong Delta provinces, the production cost of the summer-autumn rice crop this year is about VND3,728 per kilogram, an increase of VND143 per kg compared to the last summer-autumn rice crop. The reason is that fertilizer prices increase by about 40-60 percent over the same period, and other input materials also climbed.

However, by reducing the cost of seeds and the amount of fertilizers and pesticides used, profits are still ensured for farmers. For instance, Tien Giang Province implemented well technical solutions that brought high economic efficiency, when the income reached VND42 million per ha, the production cost was about VND20 million per ha, and the profit reached VND22 million per ha, an increase of about VND5 million per ha compared to last summer-autumn rice crop.

Twenty-five exports listed in “one-billion-USD” club

Vietnam’s “one-billion USD” club, which comprises exports with turnover of more than 1 billion USD, saw the presence of 25 commodities in the first half of 2021, with their combined export earnings accounting for 88.9 percent of the country’s total.

According to the Ministry of Industry and Trade, Vietnam raked in 157.63 billion USD from exports in the reviewed period, a year-on-year surge of 28.4 percent.

Mobile phones and spare parts registered the biggest value of 25.1 billion USD, accounting for 15.9 percent of the total, and up 14.2 percent year-on-year.

They were followed by electronic products, computers and components with 23.7 billion USD; machinery, equipment and tools (17 billion USD); garment and textiles (15.2 billion USD); footwear (10.4 billion USD); and wood and wooden products (8.1 billion USD).

In the January-June period, the US was Vietnam’s biggest importer with 45.1 billion USD, up 43.3 percent from the same period last year.

It was followed by China (24.6 billion USD), the EU (19.3 billion USD), ASEAN (13.8 billion USD), the Republic of Korea (10.5 billion USD) and Japan (9.9 billion USD)./.

Reference exchange rate up 3 VND

The State Bank of Vietnam set the daily reference exchange rate at 23,204 VND per USD on July 14, up 3 VND from the previous day.

With the current trading band of +/- 3 percent, the ceiling rate applied to commercial bank during the day is 23,900 VND/USD and the floor rate 22,507 VND/USD.

The rates listed at major commercial banks saw decreases.

At 8:20 am, Vietcombank listed the buying rate at 22,880 VND/USD and the selling rate at 23,110 VND/USD, down 10 VND from July 13.

Vietinbank also cut both rates by 10 VND, listing the buying rate at 22,890 VND/USD and the selling rate at 23,110 VND/USD.

Meanwhile, BIDV kept both rates unchanged, listing the buying rate at 22,925 VND/USD and the selling rate at 23,125 VND/USD./.

Banks agree to cut lending rates to support hard-hit businesses

Most banks have agreed to cut the lending rate for enterprises hard hit by the COVID-19 pandemic from this month until the end of this year.

This consensus was reached during a meeting of 16 banks with the State Bank of Vietnam on July 12.

The COVID-19 pandemic is having a negative impact on Vietnam’s economy and has forced many enterprises to suspend production or close entirely.

“Techcombank agrees to reduce interest rates to support customers,” said Pham Quang Thang, deputy CEO of Techcombank.

Thang said, to date, the bank had spent more than 100 billion VND (4.3 million USD) on activities to support the community amid the pandemic under the direction of the Government and the banking industry.

Since last year, Techcombank had continuously cut lending rates for priority sectors to below 4.5 percent per annum, for essential economic sectors to about 6-7 percent per year. The bank would focus on supporting labour-intensive enterprises and those essential for the economy.

“As for real estate businesses and exporting businesses which earned big profits or individuals who borrow money to buy cars, they should not be the subject of interest rate support,” Thang said.

Nguyen Viet Manh, a member of Agribank’s board of members, said Agribank also agreed to cut interest rates to support businesses. The bank’s leaders would meet to discuss the reduction rate but the average lending rates would decrease by about 1 percent, some loans could enjoy a drop of 2-2.5 percent.

Meanwhile, deputy general director of Military Bank Pham Thi Trung Ha said the bank would support businesses directly affected by the pandemic, whose revenues declined steeply, such as companies in the fields of tourism, accommodation and services with an interest rate cut of 1 percent or higher.

"However, MB will base on its customer database to select businesses in more difficulty, thereby having an appropriate interest rate support policy," Ha said.

Some banks said they would consult shareholders as cutting interest rates would affect their profit plans this year.

A representative of BIDV said a cut of 1 percent in lending rates would decrease its profit by trillions of dong this year.

Meanwhile, LienVietPostBank’s representative said with the bank’s total outstanding loans of about 191 trillion VND (8.23 billion USD), if it reduced lending rates by 1 percent, its yearly profit would decrease by about 600 billion VND.

Nguyen Hong Quna, deputy general director of TPBank, said banks were ready to share difficulties with enterprises and accept lower profits.

At the meeting, banks also asked the central bank to lift the credit limit in the last months of this year so that they would have more room to support customers.

Nguyen Thanh Tung, deputy CEO of Vietcombank, said the bank had maintained low interest rates since the beginning of the year with the average short-term lending rate at around 6 percent per year and long-term rate 8 percent per year.

“At the beginning of the year, Vietcombank was assigned a credit target of 10 percent, but so far, credit has grown by 9 percent. Therefore, to continue to support customers, Vietcombank urgently needs to have higher credit 'room' in the last months of the year,” Tung said.

Loosening credit limits was also recommended by commercial banks such as SHB, TPBank and LienVietPostbank.

Pham Thanh Ha, director of the central bank’s Monetary Policy Department, highly appreciated the consensus of banks in reducing interest rates to support enterprises. However, he noted that banks should be flexible in reducing interest rates, depending on their health to have an appropriate reduction.

General Secretary of Vietnam Bankers Association Nguyen Quoc Hung also said banks still had to ensure the highest level of system safety due to the negative impacts of the global financial crisis. The pandemic's impact on the banking industry would have a time lag, so they needed to prepare solutions for themselves.

“Currently, the banking industry shares difficulties with businesses, but in the future, when bad debts increase due to the pandemic, who will share with the banking industry? Therefore, support must be in the spirit of ensuring system safety," Hung said.

He also proposed the State Bank consider assigning annual credit quotas, especially for the banks that have applied Basel II and Basel III which should be given priority in setting credit limits./.

Over 20 countries, territories to join conference promoting Hung Yen’s longan

The Ministry of Industry and Trade and the northern province of Hung Yen will organise a largest-ever international conference to promote longan and other local agricultural products on July 15.

The conference, to be held both online and in-person, will be connected with 15 sites at home and nearly 60 others in 21 countries and territories, according to the ministry’s Vietnam Trade Promotion Agency.

Director of the provincial Department of Industry and Trade Nguyen Van Tho said the event is expected to bring together nearly 1,000 delegates.

Within the framework of the conference, there will be a programme to put the products on sale on e-commerce platforms and a signing ceremony of cooperation documents, aiming to boost the consumption of the local products.

Longan, a local specialty, and other agricultural products will also be showcased on the sidelines of the conference.

Hung Yen is home to about 4,800 ha of longan, of which more than 1,300 ha have met VietGAP standards. The province expects to harvest around 50,000-55,000 tonnes of the fruit this year, 15-20 percent higher than last year’s output.

Besides, it has some 3,800 ha of citrus fruits, which yield about 40,000-45,000 tonnes./.

Source: VNA/VNS/VOV/VIR/SGT/Nhan Dan/Hanoitimes

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