VIETNAM BUSINESS NEWS JULY 21

Vietnam, EU review bilateral trade deal implementation

Minister of Industry and Trade Nguyen Hong Dien and European Commission Vice-President and EU trade commissioner Valdis Dombrovskis have co-chaired the first meeting of the EU-Vietnam Free Trade Agreement (EVFTA)'s Trade Committee.

The meeting, held in online format, aimed to review the implementation of the deal and discuss issues related to trade and investment in both bilateral and multilateral frameworks.

Participants adopted Decision No. 01 of the committee on its operation mechanism, which comprises regulations on its function, membership, secretariat, decision-making procedure, and information transparency.

Both sides agreed to coordinate closely to speed up the implementation of the deal and cope with matters that may pose negative impacts on the operation of businesses of both sides, thus maintaining and developing the supply chain amid COVID-19 pandemic.

At the meeting, the two sides also mentioned a number of multilateral issues such as the reform of the World Trade Organisation (WTO) and the preparation for the 12th WTO Ministerial Conference, which is scheduled to take place from November 30 to December 1 in Switzerland.

The Vietnamese side highly valued and supported the EU’s efforts over the years in ensuring that the WTO operates in line with new reality in international trade and investment as well as interests of member countries, especially under-developed and developing ones, said Minister Dien.

The EVFTA became effective on August 1, 2020. After nearly one year of implementation, the two sides have enjoyed positive growth in bilateral trade. Their import-export value hit 27.67 billion USD in the first six months of 2021, up 18.4 percent over the same period last year./.

 Pandemic highlights the need for developing part-supply industries to cope with disruptions

Production at Son Nam Textile and Garment Joint Stock Company in Nam Dinh Province. The COVID-19 pandemic which causes disruptions in global supply chains is urging policies to push the development of the supplying industries. 

The COVID-19 pandemic is highlighting the urgent need for promoting the development of part-supply industries to enable enterprises to be more resilient to shocks or disruptions to global supply chains.

Viet Nam’s part-supply industries remained weak in terms of technology, management capacity and linkages with foreign-direct-investment (FDI) companies, which became evident when the COVID-19 pandemic caused disruptions to global supply chains.

The recent virus outbreaks at industrial parks pushed many enterprises into difficulty with a severe shortage of components and materials for production.

Automobile manufacturer Huyndai Thanh Cong said that the company was facing a chip shortage and planned to reduce 20 per cent of their production capacity. They said that risks of further cuts in production existed if the chip crunch did not ease.

Nguyen Van Ket, director of mechanics company SKD Viet Nam, said that his company was also affected by the shortage of chips which depends on imported sources.

The shortage of components and materials for production has become more severe during the outbreak of the COVID-19 pandemic in a number of countries which makes transportation of goods more difficult.

According to Truong Thi Chi Binh, Deputy President of the Viet Nam Association for Supporting Industries, although production was maintained during the pandemic, nearly 50 per cent of the association's member enterprises saw drops in revenue.

Viet Nam’s supporting enterprises remained of weak capacity compared with other countries in the region such as Thailand, Indonesia, Malaysia and India, which made Vietnamese enterprises more vulnerable to global shocks and disruptions to value chains.

A report from the Ministry of Industry and Trade showed that for the garment and textile industry, as an example, the local procurement rate was just 40-45 per cent and the industry has to depend on imported fabric. The industry mainly did outsourcing contracts with a low added value.

For the automobile production industry, the local procurement rate was far below what was expected.

The local procurement rate for the electronics and telecommunications industry was only around 15 per cent and just five per cent for hi-tech industries.

Dao Phan Long, President of the Viet Nam Association of Mechanical Industry, said Viet Nam lacked spearhead products which could compete with imported ones. In addition, Viet Nam remained largely dependent on imports of raw materials for production, which would also undermine its productivity and competitiveness.

More than ever, enterprises need further support from the Government to recover production and promote the development of the part-supply industry, Binh said.

She said that policies should be developed to encourage the consumption of domestically-produced products and expand exports.

A law supporting industries is important to attract investment and promote the development of these industries.

According to the Industry Agency under the Ministry of Industry and Trade, the ministry will study and develop policies to attract investment and enhance linkages to promote technology transfers between FDI and domestic enterprises. This would contribute to support the development of the part-supply industries.

The ministry’s database of the manufacturing and processing industry included more than 3,600 potential enterprises operating in mechanical, automotive, electronics, footwear, and garment and textile industries.

Viet Nam set the target of having at least 1,000 enterprises that were capable of being direct suppliers to multinational companies.

Vietnamese, Japanese firms promote technological cooperation

A programme to promote connections for technology supply and demand between Vietnamese and Japanese businesses was held virtually on July 20.

The event was hosted by the Science Technology Development and Innovation Centre (ISC) under the Department of Science and Technology of the northern port city of Hai Phong.

Director of the Department of Science and Technology Tran Quang Tuan said the agency has directed the ISC to organise events to promote technology supply and demand connection with foreign partners, especially those from Japan.

This move aims to update new technological trends, promote technology transfer and development from abroad to Hai Phong city, he said.

The events have offered venues for foreign businesses to set up partnerships with Vietnamese companies, helping local enterprises join in the global value chains, Tuan stressed.

From Japan, Takiguchi, Director of the Organization for Small & Medium Enterprises and Regional Innovation (SMRJ) of Japan, said that SMRJ has provided support for 3.58 million small- and medium-sized enterprises in the country.

In recent years, SMRJ has supported Japanese companies to expand their business activities abroad, including Vietnam, through online conferences and e-commerce trading floors, he noted, adding that over 20,000 Japanese enterprises and more than 2,000 Vietnamese firms are using this forms to connect to each other.

According to ISC, the event saw the participation of 12 enterprises from industrial and technological centres of Japan such as Tokyo, Osaka, Hiroshima and Nagoya. They introduced different technologies, including technologies and equipment for mechanical processing, automation technology, technologies for agricultural production and farm produce processing, among others.

After the event, the organizer will assist businesses of the two sides to negotiate and sign contracts.

ISC said a similar event is scheduled to be held in September this year to connect businesses of Vietnam and the Netherlands.

So far, ISC has organised hundreds of events to connect Vietnamese enterprises with technology supply and transfer partners in many countries with developed science and technology such as Japan and the Republic of Korea, the Netherlands, and Russia./.

Peru’s ratification of CPTPP expected to boost trade with Vietnam

Peru’s official ratification of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) is expected to help boost trade between Vietnam and the South American nation.

With the ratification, Vietnamese goods will have more chances to penetrate the Peruvian market in the time ahead.

According to the Vietnamese Ministry of Industry and Trade, Peru has joined most of international and regional institutions such as the WTO, the Asia-Pacific Economic Cooperation (APEC), the Pacific Alliance (PA) and the Southern Common Market (MERCOSUR), and signed 27 free trade agreements with 55 countries.

Trade between Vietnam and Peru increased from 284.96 million USD in 2014 to 422.73 million USD in 2019.

Last year, the value stood at only 391.17 million USD due to the impact of the COVID-19 pandemic. However, the bilateral trade grew strongly in the first half of this year to reach 278.27 million USD, up 78.7 percent year-on-year.

Notably, Vietnam’s exports to Peru hit 242.49 million USD, representing a rise of 103.6 percent.

Vietnam’s major exports to Peru include phones and electronic components, computers and electronics, footwear, clinker and cement, garments-textiles and aquatic products. Meanwhile, Peru ships fish powder, antimony and minerals to the Southeast Asian nation.

Peru has been viewed as a potential market that matches Vietnamese firms’ capacity and scale as up to 75 percent of Peruvian export and import companies are small and medium-sized ones.

Peru commits to removing up to 81 percent of tax lines right after the CPTPP comes into force, and 99.4 percent of tax lines in the 17th year after the deal takes effect.

Notably, exterior wood and agricultural products like cashew nut, tea, pepper, fruit and vegetables, and certain coffee products will enjoy a zero percent tariff after the deal comes into force, while garments-textiles and footwear are subject to the zero percent tariff in the 16th year.

The ministry suggested local firms optimise opportunities presented by the CPTPP to step up exports to Peru, improve their competitiveness and put forth sustainable export strategies.

The Peruvian Congress has recently ratified the CPTPP, which was signed in March 2018, becoming the eighth member country to ratify the deal. It will officially take effect in Peru 60 days after the country completes the registration of the ratification with New Zealand, the depository for the TPP. /. 

Quang Ninh targets safe, attractive tourism destination

The northern province of Quang Ninh, home to UNESCO-recognised Ha Long Bay, is working hard to develop safe tourism products as the local tourism sector has been hit hard by the COVID-19 pandemic.

After containing the fourth wave of COVID-19 outbreaks, the locality has allowed travel facilities to restore their operation in line with pandemic prevention and control regulations.

Promotion tourism programmes have been launched at Ha Long Bay, the provincial museum and the Yen Tu relic and scenic complex, targeting local holiday-makers.

Local travel firms have joined hands to build chains of products and services to cut expenditures amidst difficulties caused by the pandemic, while stepping up the communication work.

The provincial tourism association has also proposed the provincial People’s Committee welcoming visitors with COVID-19 passes from other localities.

The tourism promotion agency under the provincial Department of Tourism has coordinated with the Heritage Travel Centre to draw up 25 tours in Quang Ninh, including border, maritime, ecological, community-based and spiritual tourism, all offering coronavirus testing services.

Chairwoman of the tourism association Nguyen Thi Bao said her association has proposed vaccinating tourism workers as soon as possible, saying with the full suite of services, Quang Ninh would serve not only domestic tourists but also foreigners in the new situation.

According to the local tourism department, in the first six months of this year, Quang Ninh attracted 2.5 million visitors, equivalent to 60 percent of the number recorded in the same period last year, earning 5.2 trillion VND (225.86 million USD) from the sector.

The province is striving to administer COVID-19 vaccines to 70-80 percent of local residents by April 2022 in order to reach herd immunity against.

According to head of the provincial Health Department Nguyen Trong Dien, to this end, the locality is speeding up COVID-19 vaccination campaign.

Recently, the province has administered tens of thousands of Sinopharm COVID-19 vaccine doses to workers in Chinese-invested firms in Quang Ninh and border residents, he said.

According to the provincial industrial parks management board, over 70 percent of workers in local IPs have been vaccinated against COVID-19 so far.

Within more than a week as of July 18, over 21,700 workers in IPs received the first shots.

Quang Ninh is now home to five IPs with around 30,500 workers.

In the fifth vaccination roll-out, the province gave priority to workers in Hai Ha Seaport IP in Hai Ha district, Hai Yen IP in Mong Cai city, Dong Mai IP in Quang Yen town and Viet Hung IP in Ha Long city.

So far, Quang Ninh has received about 260,000 COVID-19 vaccine doses of different kinds, with 60,000 doses administered. The province expects to inject the rest in July and August while waiting for more vaccine delivery.

The province hopes to become one of the first localities in Vietnam to reach herd immunity. It is planning to build a vaccination database and start the use of vaccine passport. The locality has also allocated personnel to deliver COVID-19 vaccines to locals in ethnic minority-inhabited, mountainous, islands and hard-to-reach areas.

By 2030, the province is set to welcome 3 million domestic visitors and 1.8 million foreigners, with revenue reaching 12.1 trillion VND.

Community-based tourism is expected to generate 4,200 jobs by 2025 and 9,500 by 2030.

Quang Ninh is endowed with natural advantages for sea and island tourism. It has a coastline of more than 250 kilometres and more than 2,000 islands and islets which account for two-thirds of the total number in Vietnam.

It is home to popular destinations such as Ha Long Bay, Bai Tu Long, Ha Long Bay National Park and some islands.

In particular, Ha Long Bay literally “descending dragon” bay, was twice recognised as a World Natural Heritage site by UNESCO in 1994 and 2000. The bay spans 1,553 square kilometres and includes 1,969 islands of various sizes. It features thousands of limestone karsts and islets in various shapes and sizes. The limestone in the bay has gone through 500 million years of formation in different conditions and environments. The geo-diversity of the environment has created biodiversity, including a tropical evergreen biosystem, oceanic and sea biosystem./. 

Vietnam sees decline in CBU vehicle imports in June

About 335 million USD was spent on importing 15,316 completely built-up (CBU) vehicles in June, down 10.2 percent and 1.8 percent, respectively, against the previous month, according to the General Department of Customs.

Most of the imported vehicles were shipped from Thailand, Indonesia and China.

CBU vehicles of nine seats or less accounted for 67.6 percent of the total imports, or 10,347 units, worth 189 million USD. There were 3,768 imported trucks, worth 88 million USD.

In the first half of this year, Vietnam imported 81,107 CBU units, doubling the same period last year’s figure. It included 54,041 cars of nine seats or smaller, up 77 percent; and 19,127 trucks, up 148 percent.

Members of the Vietnam Automobile Manufacturers’ Association (VAMA) also saw a drop in car sales last month, with 23,587 vehicles delivered to customers, down 8 percent month-on-month.

The numbers of domestically-assembled vehicles and imported completely-built-up units sold in the month stood at 13,365 and 10,222, respectively, down 3 percent and 13 percent.

Toyota topped the list of best-selling brands with 5,127 vehicles, followed by Kia (3,290), Mazda (1,862), Honda (1,550) and Ford (1,284).

VAMA members’ sales totalled 150,481 units in the first half of this year, up 40 percent year on year, with passenger cars up 37 percent year-on-year, commercial vehicles up 48 percent, and special-purpose vehicles up 68 percent.

Apart from VAMA members, other brands were also present in Vietnam’s auto market, such as Audi, Jaguar Land Rover, Mercedes-Benz, Nissan Subaru, Volkswagen and Volvo, but they have not posted their business results./. 

Pandemic highlights need for developing part-supply industries

The COVID-19 pandemic is highlighting the urgent need for promoting the development of part-supply industries to enable enterprises to be more resilient to shocks or disruptions to global supply chains.

Vietnam’s part-supply industries remained weak in terms of technology, management capacity and linkages with foreign-direct-investment (FDI) companies, which became evident when the COVID-19 pandemic caused disruptions to global supply chains.

The recent virus outbreaks at industrial parks pushed many enterprises into difficulty with a severe shortage of components and materials for production.

 

Automobile manufacturer Huyndai Thanh Cong said that the company was facing a chip shortage and planned to reduce 20 percent of their production capacity. They said that risks of further cuts in production existed if the chip crunch did not ease.

Nguyen Van Ket, director of mechanics company SKD Vietnam, said that his company was also affected by the shortage of chips which depends on imported sources.

The shortage of components and materials for production has become more severe during the outbreak of the COVID-19 pandemic in a number of countries which makes transportation of goods more difficult.

According to Truong Thi Chi Binh, Deputy President of the Vietnam Association for Supporting Industries, although production was maintained during the pandemic, nearly 50 percent of the association's member enterprises saw drops in revenue.

Vietnam’s supporting enterprises remained of weak capacity compared with other countries in the region such as Thailand, Indonesia, Malaysia and India, which made Vietnamese enterprises more vulnerable to global shocks and disruptions to value chains.

A report from the Ministry of Industry and Trade showed that for the garment and textile industry, as an example, the local procurement rate was just 40-45 percent and the industry has to depend on imported fabric. The industry mainly did outsourcing contracts with a low added value.

For the automobile production industry, the local procurement rate was far below what was expected.

The local procurement rate for the electronics and telecommunications industry was only around 15 percent and just five percent for hi-tech industries.

Dao Phan Long, President of the Vietnam Association of Mechanical Industry, said Vietnam lacked spearhead products which could compete with imported ones. In addition, the country remained largely dependent on imports of raw materials for production, which would also undermine its productivity and competitiveness.

More than ever, enterprises need further support from the Government to recover production and promote the development of the part-supply industry, Binh said.

She said that policies should be developed to encourage the consumption of domestically-produced products and expand exports.

A law supporting industries is important to attract investment and promote the development of these industries.

According to the Industry Agency under the Ministry of Industry and Trade, the ministry will study and develop policies to attract investment and enhance linkages to promote technology transfers between FDI and domestic enterprises. This would contribute to support the development of the part-supply industries.

The ministry’s database of the manufacturing and processing industry included more than 3,600 potential enterprises operating in mechanical, automotive, electronics, footwear, and garment and textile industries.

Vietnam set the target of having at least 1,000 enterprises that are capable of being direct suppliers to multinational companies./. 

Businesses book hotel rooms for employees

Businesses have rushed to find places for their employees to stay, following the “One road, two locations” programme from authorities.

A representative of a four-star hotel in District 1 said that 60 out of 65 rooms at the hotel are currently occupied for at least the next two weeks by employees of a manufacturing enterprise who must stay together to ensure the requirement of “isolation and production”.

In addition to three and four-star hotels, many five-star hotels have been rented by firms for hundreds of employees to stay for at least the next two weeks.

A night at a three to four-star hotel costs from VNĐ800,000 to VND1.2 million and a five-star hotel from VNĐ1.8 to over VNĐ 2 million per night. The price range is negotiable, depending on hotel policies and businesses' budgets.

At Đông Nam Industrial Park in Củ Chi District, manufacturing enterprises have rented hotels with a large number of rooms for workers to maintain production.

All single and double rooms in the Mộng Thuý hotel system were booked by Sheico Việt Nam Company for their workers to stay from July 14.

Workers are transported back and forth between the hotel and factory by the company’s shuttle bus every day.

In Tân Thuận Processing Zone in District 7, many companies have also sent their workers to nearby hotels to stay.

The HCM City Department of Tourism requires the hotels to submit information about all guests for easy tracking. 

Sizeable wholesale market greenlit for investment study in Danang

The central city of Danang has approved the VND800 billion ($34.8 million) Hoa Phuoc wholesale market project to look for an appropriate investment scheme.

A recent meeting of top leaders in Danang have agreed to the proposal of the local Department of Planning and Investment (DPI) on allowing privately-held company Proton Co., Ltd. – a member of World Union of Wholesale Market that covers a network of more than 3,000 active wholesale markets in 46 countries – to study the planning and invest in the Hoa Phuoc wholesale market project in Hoa Vang district.

Hoa Phuoc wholesale market would help distribute agricultural products and food from the central and Central Highlands regions to Danang's residents.

Initially approved in 2016, the Hoa Phuoc wholesale market project has a total land area of ​​309,299 square metres with a total investment of more than VND817 billion ($35.5 million).

Approved to run under the private-public partnership (PPP) form in 2019, the project was halted by Danang People's Council due to a clash with the Law on PPP Investment that came into effect on January 1 this year.

The new law stipulates that commercial infrastructure projects cannot be constructed under the PPP format, prompting the province to study an appropriate alternative investment form for the Hoa Phuoc wholesale market.

The Hoa Phuoc wholesale market is a key project to alleviate overload at the Hoa Cuong wholesale market and traffic jams in the inner city area. It would also help distribute agricultural products and food from the central and Central Highlands regions to Danang's residents. 

Sentiment remains weak, VN-Index loses another 13 points

The stock market inched down on Tuesday morning as it was still pressured by profit-taking activities.

On the Ho Chi Minh Stock Exchange (HoSE), the benchmark VN-Index fell 13.38 points, or 1.08 per cent, to 1,230.13 points. The market's breadth stayed negative with 230 stocks declining while 129 stocks climbed.

The liquidity was lower than yesterday as only VND9.24 trillion (US$401.7 million) was poured into the southern bourse, equivalent to a trading volume of nearly 291.6 million shares.

The VN30-Index, tracking 30 biggest stocks on HoSE, dropped 0.83 per cent to 1,362.7 points. Of which 23 stocks in the VN30 basket fell while six stocks increased and one stayed unchanged.

The HNX-Index on the Ha Noi Stock Exchange (HNX) also posted a loss of 0.2 per cent to 291.49 points.

Strong selling force was still the main cause for the bear market. Real estate and bank stocks still led the market's trend with Vingroup JSC (VIC) posting the biggest losses, down 2.43 per cent, followed by Vietcombank (VCB), down 2.16 per cent.

Other stocks with big losses were Vincom Retail JSC (VRE), PetroVietnam Gas JSC (PVGas, GAS) and Vietnam International Commercial Joint Stock Bank (VIB). These stocks all inched down more than 1.7 per cent.

However, the market pared some losses on gains in some large-cap stocks. Of which, Hoa Phat Group (HPG) was the biggest gainer this morning, up 1.24 per cent. 

ICAEW teams up with Vietnam’s Ministry of Finance to deepen accounting and auditing expertise

The Institute of Chartered Accountants in England and Wales (ICAEW) has recently signed an MoU with the Accounting and Auditing Supervisory Department under Vietnam’s Ministry of Finance to jointly build a long-term and tight partnership for the common goal of increasing the quality of human resources and accelerating the development of Vietnam’s accounting and auditing aspects to come on par with international economic integration requirements.

The signing ceremony was held in Hanoi in the presence of Deputy Minister of Finance Ta Anh Tuan, British Ambassador to Vietnam Gareth Ward, chairman of the British Chamber of Commerce Vietnam Christopher Jeffery, and leaders of the Vietnam Association of Accountants and Auditors (VAA) and the Vietnam Association of Certified Public Accountants (VACPA).

One of the most important co-operation contents in the MoU is that both parties will consider the possibility of mapping out a training programme for the certification of International Financial Reporting Standards (IFRS) in Vietnam.

In addition, the two parties will periodically organise seminars and conferences to exchange accounting and auditing knowledge; jointly implement research projects; share experiences, technical resources, and the best practices in accounting and auditing.

At the signing ceremony, Deputy Minister of Finance Ta Anh Tuan said that one of the key targets of the Ministry of Finance (MoF) is to study the application of international financial statement standards for enterprises in Vietnam, with a view to improving the credibility and comparability of financial companies and the accountability of businesses, creating an attractive investment environment and facilitating Vietnam’s economic integration into the region and the world.

“I believe that the signing of the MoU between the Department of Accounting and Auditing Regulations and the ICAEW will help strengthen bilateral co-operation and create favourable conditions for the sharing of expertise and experience. The Ministry of Finance and I personally hope that the co-operation between Vietnam’s Ministry of Finance in general and the Department of Accounting and Auditing Regulations in particular, and the ICAEW will ever be tighter and better, benefiting both parties and contributing to deepening the relations between Vietnam and the UK,” added Tuan.

Speaking at the ceremony, British Ambassador to Vietnam Gareth Ward said: “Recently, Vietnam and the UK signed a bilateral free trade agreement, reflecting a strategic movement in economic partnership and integration. World-class and internationally recognised skills and qualifications play an important role for both sides to succeed in that international integration.”

The ICAEW is the first and only international organisation in Vietnam to receive funding from the British government via the British Embassy in Vietnam to implement the project to support the application of the IFRS in Vietnam in 2016 and 2017.

As a country at the forefront of the financial sector, the UK is committed to working with Vietnam to further develop the financial and professional services sector, especially to foster the roadmap of applying IFRS in Vietnam.

Prior to the signing of the MoU today, the MoF and the ICAEW had almost 10 years of cooperation through occupational development activities in Vietnam with the Department of Accounting and Auditing Regulations, and the two associations under the Ministry of Finance – the VAA and the VACPA.

Over the past years,the ICAEW has coordinated with the Department of Accounting and Auditing Regulations in organising many seminars on hot topics in Vietnam, with the participation of international experts from Britain, including the seminar on “Complying with new international auditing standards – a challenge to auditors”; the seminar on “International financial statement standards – challenges and experience”; the roundtable on “The roadmap for formulating public accounting standards – international experience”; the roundtable on “International public accounting standards – government reports”, among others.

The ICAEW is the first and only international organisation in Vietnam to receive funding from the British government via the British Embassy in Vietnam to implement the project to support the application of the IFRS in Vietnam in 2016 and 2017.

The ICAEW closely collaborated with the Department of Accounting and Auditing Regulations in carrying out and completing the project, which was assessed as the best project implemented in Vietnam in 2016 and 2017 with funding from the British government.

Specifically, the ICAEW petitioned the MoF for the roadmap on building and applying the IFRS based on the study conducted by the ICAEW in Europe after the IFRS had been adopted by the European Union’s member countries for 10 years.

The petition was accepted by the MoF in October 2016.The ICAEW then organised a five-day training course on the IFRS at the MoF headquarters in Hanoi, and a similar training course at the office of the Ho Chi Minh City Stock Exchange in October 2016, with senior experts from the US, who are members of the ICAEW.

The courses helped train some 130 specialists and teachers working in the finance-accounting aspect in Vietnam in line with the IFRS certification of the ICAEW. Also as part of the project, the ICAEW granted 200 accounts for learning the IFRS certification online to cadres, specialists, teachers, and those working in the finance-accounting field.

Govt assigns Hanoi to take charge of Belt Road No. 4 project

The Government has agreed to allow the Hanoi government to take charge of the execution of the elevated Belt Road No. 4 project, which requires an estimated investment of VND105-135 trillion.

At a meeting on the execution of some road projects in the 2021-2025 period, Deputy Prime Minister Le Van Thanh said the assignment of the project to the Hanoi government had been supported by the governments of Hung Yen, Bac Ninh, Bac Giang and Vinh Phuc. The Hanoi government must work with the Ministry of Transport to complete dossiers for the project and report the results to the prime minister, Tien Phong newspaper reported.

In May, Hanoi City and Hung Yen, Bac Ninh, Bac Giang and Vinh Phuc provinces have sent the prime minister a proposal to build the belt road. They agreed that Hanoi City will take the leading role in implementing the project.

According to the five localities’ proposal, the Belt Road No. 4 project will start at an intersection with the Noi Bai-Lao Cai Expressway in Thanh Xuan Commune of Hanoi’s Soc Son District and end at an intersection with the Noi Bai-Halong Expressway in Cam Son Commune of Soc Son District.

The belt road will be 98 kilometers long--- 54 kilometers in Hanoi, 23 kilometers in Hung Yen and 21 kilometers in Bac Ninh.

To mobilize capital for the project, the Hanoi government will execute the project under the public-private-partnership model with a build-operate-transfer contract. 

HCMC temporarily shuts down toll stations amid coronavirus outbreak

The HCMC Government has ordered the temporary operation halt of toll stations citywide, starting at 12 p.m on July 20 in response to Covid-19 prevention and control activities, said Vice chairman of the municipal People’s Committee Le Hoa Binh on the day.

The BOT (build-operate-transfer) toll stations including An Suong-An Lac, Phu My, ones on the Hanoi National Highway and Nguyen Van Linh Street would be temporarily shut down from now until the social distancing measures are lifted.

The HCMC People’s Committee has proposed investors and businesses of the toll stations to provide temporary financial assistance to workers unemployed; and asked credit organizations to cut interest rates to support these businesses amidst Covid-19 outbreak.

The Department of Transport must work with investors and enterprises associated with the toll collection at stations to record the temporary operation halt in accordance with the regulations.

Investors turn to ETFs to limit risks

Exchange Traded Fund (ETF) is a fund that simulates the movement of an index or a specific industry group such as real estate, commodities, or oil. Most ETFs adopt a passive investment strategy and simulate market capitalization indexes. However, the recent drastic plunge caused many investors, especially F0’s, to turn to ETFs to limit risks.

An analysis report on domestic ETFs has just been published by the Ho Chi Minh City Securities Company (HSC), showing that the total value of assets under management of domestic ETFs has increased by 64%, to US$ 1 bn, while foreign ETFs only increased 12%, to $ 1.4 bn. Specifically, the first domestic fund, ETF E1VFVN30, has started to grow impressively after two years since its listing in 2014. At its peak, the fund size was $389 mn, equivalent to VND 9,053 bn, 42 times more than its initial size.

Currently, the fund assets are at $372 mn. Meanwhile, the VFMVN Diamond ETF and SSIAM VNFIN Lead ETF have been listed since 2020 and have attracted much attention. Total assets under management are currently $522 mn and $87.5 mn, up 99 times and 47 times, respectively. The performance results at the beginning of the year of these two domestic ETFs were higher than the general market, about 33.1% and 44.7%, respectively.

VinaCapital, one of the largest investment and asset management groups in Vietnam, with a scale of upto $3.3 bn, also just announced impressive performance numbers with foreign investment funds. Notably, VinaCapital VN100 ETF, established in 2020, achieved profit growth of upto 38.5%. This ETF certificate currently holds a portfolio simulated by the VN100 reference index, including 100 leading stocks listed on HoSE under the code FUEVN100. According to VinaCapital, more than 80% of the fund's total assets are invested in industries such as finance, real estate, consumer staples, and materials.

At the top of the portfolio are stocks such as Hoa Phat( HPG), Vingroup (VIC), Techcombank (TCB), VPBank (VPB), and Vinhomes (VHM). These are companies that benefit from the growth of the domestic economy and the increasing income level of a new generation of Vietnamese people.

Mr. Binh, an investor in Ho Chi Minh City, and a group of his friends, have just decided to sell all the shares purchased by the bank since middle of June, to invest in a series of ETF certificates listed on HoSE. According to Mr. Binh, the stock market is being negatively affected by the Covid-19 pandemic and it is not known when it will be controlled, especially when several businesses in Ho Chi Minh City have had to temporarily suspend all operations to avoid the spread of the pandemic. Under such stagnant conditions, the risk of bad debts will certainly arise and will definitely have a negative impact on the profit of all banks.

In addition to the above factors, the reason for Mr. Binh and many investors like him to switch to ETF certificates is because the level of risk is not too great compared to the stock market. In the current context, this is an investment channel to avoid sudden storms, such as in the stock market which is constantly facing too many erratic fluctuations. According to HSC, ETFs are often a cheaper and more efficient alternative to other mutual funds, especially during periods of high volatility. Therefore, it is not surprising that Vietnam has caught on with the global trend currently in high demand for ETF products.

According to Mr. Brook Taylor, the General Director of VinaCapital, Vietnam is among those rare countries in the world that showed a positive GDP growth in 2020, up by 2.9%, and continues to grow well in the first half of 2021 by 5.6%, which is helping in creating a growing confidence in both domestic and foreign investors. Vietnam's stock market has reached the top and now recognized as the best growth market in Asia with an increase of 15% in 2020 and 27.6% in the first six months of 2021.

However, despite a record outstanding growth, individual investors, especially F0 investors with less information and experience than professional investors, will face many risks when the market fluctuates as erratically as it did in recent trading sessions. Therefore, investors should diversify their portfolio into many different assets, and not put all its eggs in one basket.

According to analysts, investing in open-ended funds and ETFs managed by professional and reputable fund management companies will help individual investors have a diversified portfolio with less risk. In fact, in the plunging sessions at the stock market, the ETF group only decreased slightly, even going against the general trend. However, according to investors, the number of listed fund certificates are still quite modest compared to the size of the market.

Specifically, as of 30 June, the entire HoSE had 488 securities traded, which included 385 stocks, 2 closed fund certificates, 7 ETF certificates, 65 covered warrants, and 29 bond codes. Out of the 7 ETFs currently listed on HoSE, 3 ETFs are using the VN30 index as a base, 2 ETFs are using the VN100 and VNX50 indices as a base, and 2 ETFs are using the VNDiamond and VNFIN indices as a base.

One factor that investors need to distinguish when investing in ETFs is that these funds do not evenly distribute shares in the index as investors often believe. Instead, they will rely on many different factors to be able to allocate their portfolio proportions.

In theory, ETFs should follow an index, but still try to outperform by increasing the weight of stocks that are being considered to be developed in the near future, minimizing the weight of stocks that are considered under-developed. Each fund must have its own list of priority criteria for selecting stocks. There are funds that will prioritize company specific micro-indexes such as growth rate, leadership, or funds that will prioritize macros such as industry cycles, or growth rates of industries in the near future.

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

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