VIETNAM BUSINESS NEWS JUNE 20

First flow of gas pumped out of Su Tu Trang oil field in phase 2A

VIETNAM BUSINESS NEWS JUNE 20

At the ceremony (Photo: VNA)


The Oil and Gas Group (PetroVietnam) on June 18 welcomed the first flow of gas from Su Tu Trang (White Lion) oil field in phase 2A.

Amid complicated developments of the COVID-19 pandemic, the ceremony was held online, marking the operation of the project 16 days ahead of schedule.

Addressing at the event, PetroVietnam's General Director Le Manh Hung said Block 15-1 is the flagship in oil and gas exploitation activities in Vietnam, bringing benefits to all involved parties, and contributing about 10.4 billion USD to the Vietnamese Government’s budget.

PetroVietnam highly valued efforts of Cuu Long Joint Operating Company (Cuu Long JOC) and its partners to completed the drillling of the oil-well on schedule, ensuring their commitments in the gas purchase and sale contract and field development plan, he said.

Cuu Long JOC's General Director Nguyen Van Que attributed the success of the project to concerted efforts of Cuu Long JOC and its partners, along with the maximum support from PetroVietnam, PetroVietnam Exploration Production Corporation (PVEP) and relevant ministries.

On behalf of foreign partners, President of Perenco Vietnam Gilles d'Argouges affirmed that this is an important achievement and a symbol of the successful cooperation between Vietnamese businesses and foreign partners.

The oil and gas exploration contract of Block 15-1 was signed on September 16, 1998 between PetroVietnam and the contracting parties, including PVEP, Perenco, KNOC , SK and Geopetrol. The project is operated by Cuu Long JOC.

The White Lion field is located in Block 15-1 of the Cuu Long Basin off the southern coast of Vietnam. It is considered as one of the areas with the highest potential for oil and gas reserves in the continental shelf of Vietnam.

The plan to develop the White Lion oil field in phase 2A was approved by the Prime Minister on December 6, 2019, with a total expected consolidated capital expenditure (CapEx) investment of nearly 138 million USD./.

HCM City requires over 42 billion USD for transport infrastructure upgrades

The HCM City People’s Committee has issued a plan to implement the city's transport infrastructure upgrade project in the 2021-2030 period, which will require investment of 970.6 trillion VND (42.3 billion USD).
About 399.7 trillion VND will be funded by the State budget and  the remaining nearly 571 trillion VND will come from other capital sources.
 
Under the plan, in the 2021-2030 period, the city will invest in over 650km of roads, 211km of railroads, 81 big bridges, 15 major intersections, and seven projects under the Smart Cities programme. It will also complete highways and national routes connecting the city with the Key Southern Economic Zone. 

During the 2021-2025 period, the city will prioritise key and urgent projects with total investment capital of over 553 trillion VND (24 billion USD), of which the State budget will provide 181 trillion VND and other capital sources 372 trillion VND.

The key and urgent projects for the 2021-2025 period include the HCM City-Moc Bai Highway, Ring Roads No 2 and 3, National Highways No 1, No 22, No 50, and No 13, several elevated roads, main intersections and bridges in high-density urban areas.

A number of key and urgent infrastructure works will be completed by the end of this year, mostly in Thu Duc city. 

The city has set a target of raising the ratio of traffic land to urban land to 12.76 percent in 2021, and the average density of roads out of the city’s land area reaching 2.26 km per sq km. 

The HCM City People’s Committee has requested that sectors and localities develop specific programmes, plans, and projects on infrastructure development as part of their annual and five-year socio-economic development plans in the periods from 2021-2025 and 2026-2030 to ensure the effective implementation of the transport infrastructure upgrade project./.

CAAV discusses establishment of VN's first cargo airline

The Civil Aviation Authority of Vietnam (CAAV) recently reported to the Ministry of Transport (MoT) on a project to establish the first cargo airline in Vietnam.

CAAV Deputy Director Vo Huy Cuong announced the agency had received an application to invest in the project from IPP Air Cargo Joint Stock Company.

Cuong added the MoT’s policy has clarified that establishing a new airline would be considered after the aviation market recovers from the COVID-19 pandemic's impacts, expected to be next year.

To have a basis for answering IPP Air Cargo, which hopes to get approval in the third quarter of 2021 and operate commercial flights in the second quarter of 2022, Cuong said: “The CAAV would consult with the MoT for more guidance on building and appraising the application for an air transport business license for IPP Air Cargo."

On April 21 last year, the International Air Transport Association (IATA) forecast market demand would decrease by 80 percent in the near future, threatening 25 million jobs in the aviation sector. In Vietnam, the MoT reported COVID-19 pandemic has greatly impacted the local aviation industry.

It was estimated that by the end of 2022, the total transportation market will reach 78 million passengers, equal to 74 percent of the reported forecast.

According to the most optimistic scenario, the indicators for the Vietnamese air transport market in 2022 would be only approximately equal to 2019 and the local airlines could only operate at a ratio of less than 50 percent compared to capacity.

The MoT said this was why it proposed the Government focus on restoring the domestic and international air transport market and not consider any new airlines until 2022.

On June 4, the Import-Export Pan Pacific Group (IPPG), chaired by Johnathan Hanh Nguyen, confirmed the IPP Air Cargo Joint Stock Company, a member of the group, would like to establish the first cargo airline at a total investment of 2.4 trillion VND (100 million USD).

A representative of the group said local logistics has not yet exploited its full potential, adding 30,000 logistics enterprises were operating in Vietnam and accounted for less than 20 percent of market share, with the rest held by about 30 foreign companies.

In the aviation sector, Vietnam has no carrier specialised in cargo and 88 percent of the market share is in the hands of international cargo airlines such as UPS, FedEx, DHL, Cathay Cargo and Airbridge Cargo.

In addition, the local logistics system is not yet developed and the cost of transporting goods is much higher than the world average, which leads to low competitiveness.

In the context of the deeply integrated economies, along with the tendency of supply chain shifting, logistics services are considered one of the fields with great potential in Vietnam.

The IPP Air Cargo Joint Stock Company hopes to transport about 115,000 tonnes of cargo, with a revenue of 71 million USD in its first year and is aiming to begin making a profit from the fourth year since the first flight is operated./.

Int’l expo on support industries slated for October

The Vietnam International Expo on Support Industries and Processing - Manufacturing (VIMEXPO 2021) is scheduled to take place from October 27-29 at the International Centre for Exhibition (ICE) in Hanoi.

The upcoming event, which will be the second held under the Support Industry Development Programme, will comprise nearly 300 booths.

Hosted by the Industry Agency under the Ministry of Industry and Trade, VIMEXPO 2021 offers a chance for supporting industry enterprises to share experience, seek new partners and suppliers and learn of new technologies. The three-day expo hopes to welcome 20,000 visitors.

The previous edition comprised 250 booths from 170 enterprises on a display area of 5,000sq.m.

The Government has issued a resolution on measures to promote the development of support industries, which sets a target of Vietnam producing highly-competitive support products that meet 45 percent of domestic production and consumption demand by 2025 and 70 percent by 2030./.

Cashless payments on the rise

Non-cash payments have become a new trend in Vietnam over recent times. When shopping or making other transactions, consumers can now use bank cards or mobile payment apps to enjoy preferential policies.  

As of late April, transactions via the internet had increased more than 31 percent in volume this year compared to the same period last year, by mobile phone over 123 percent in value, and by QR code over 181 percent in value.

As non-cash payments rise, cash withdrawals at ATMs have fallen sharply.

Non-cash payments are an trend around the world and Vietnam is no exception. In the context of COVID-19, non-cash payments provide convenience as well as safety, preventing the risk inexorable of customers becoming infected./.

Origin fraud may erode Vietnamese rice’s prestige: insiders

High prices of rice sold in the domestic market and for export in the recent past have fueled risks of origin fraud, influencing the prestige of Vietnamese rice in the global market, insiders have warned.

Export prices of Vietnamese rice have stayed high so far this year, helping the five-month export turnover fall down by only five percent despite an 11.3-percent drop in volume.

By mid-June, businesses imported 304,000 tonnes of rice from India via ports in Ho Chi Minh City. The volume included over 112,000 tonnes of 100-percent broken rice, 54,000 tonnes of unhusked rice and 12,000 tonnes of husked rice for animal feed production, and 126,000 tonnes of five-percent broken rice, according to the municipal Department of Customs.

The large import of the five-percent and completely broken rice from India is attributed to the fact that their prices only stand at some 400 USD and 280 USD per tonne, about 100 USD per tonne lower than prices of the Vietnamese counterparts.

Besides, under the ASEAN - India Trade in Goods Agreement, five-percent and 100 percent broken rice from India is entitled to an import tariff of zero percent. Given this, Indian rice imported into Vietnam boasts much more competitive prices than Vietnamese rice.

Notably, the surge in rice import from India has been accompanied by an increase in origin fraud.

The HCM City Department of Customs said it has detected several signs of fraud and violation by rice exporters and importers.

Phan Van Co, Marketing Director of the VRICE Co. Ltd, noted many enterprises have imported white rice from India to polish, mix it with the white rice of Vietnam, and then export the grain to foreign markets under the name of Vietnamese rice, which has seriously affected the prestige and brand of rice from the country.

As a consequence, some partners have suspended buying rice from Vietnam, he noted.

Some companies have also imported the grain from India and sold it as Vietnamese rice at higher prices in the domestic market, Co went on.

Pham Thai Binh, General Director of the Trung An Hi-Tech Farming JSC, attributed the high prices of and customers’ preference for Vietnamese rice in foreign markets to efforts by the whole system, from farmers to processing and exporting companies, and economic diplomacy by the Government, ministries, and sectors.

Therefore, only one batch of goods with origin fraud can have severe impact on the prestige and brand of its entire export sector, he noted, pointing out that due to importers’ suspicion over the origin of Vietnamese rice, export prices have declined fast recently, from 520 - 530 USD per tonne in the last winter - spring crop to 470 - 480 USD at present, while the number of export orders has also been decreasing.

If this problem lingers, domestic rice prices will continue the downward trend, causing losses to farmers, honest exporters, and the entire rice industry of Vietnam, Binh added.

Co recommended authorities adopt mechanisms for monitoring imported rice, strictly dealing with violators, and publicising the names of businesses committing fraud.

The HCM City Department of Customs said the customs force has stepped up collecting and analysing information about rice importers and exporters so as to detect fraud in a timely manner. It has also proposed the General Department of Vietnam Customs to ask the Ministry of Industry and Trade for more details about export rice of Vietnam and fraud warnings, and for additional regulations on rice export./.

Oil and gas companies recover strongly in Q1 from last year's losses

Surging international crude oil price on improving demand has helped many oil and gas companies record big profits in the first quarter of this year, after losing in 2020.

In the first quarter financial result, Vietnam National Petroleum Group (Petrolimex, PLX) posted a slight fall of 0.6 percent in net revenue to nearly 38.2 trillion VND (1.6 million USD). However, it was still profitable thanks to a cut in expenses in financial activities and others, and gains in other incomes.

Of which, the company's profit after tax was nearly 736.2 billion VND in the first quarter after reporting a loss of 2.3 trillion VND in the same period last year.

During the period, Petrolimex's domestic output rose 4.7 percent year-on-year to 2.27 million m3. Retail sales accounted for 55 - 60 percent of its total sales but contributed around 80 percent of its profit.

SSI Securities Corporation (SSI) said that the company's production growth will continue until the first half of the second quarter, boosted by the Government's restriction on illicit petrol, especially in the south.

Similarly, Binh Son Refining and Petrochemical Company Limited (BSR) witnessed its revenue reach 21 trillion VND in the first quarter with a profit of over 1.8 trillion VND, while it reported a loss of 2.33 trillion VND in the same period last year.

The main driving force for the recovery in profit was higher crude prices in the international market and crack spread of gasoline products.

Crack spread is the spread created in commodity markets by purchasing oil futures and offsetting the position by selling petrol and heating oil futures.

PetroVietnam Oil Corporation (PVOIL)'s profit after tax was 190.6 billion VND, after losing 537.7 billion VND in the same period last year.

Notably, Thu Duc Trading & Import Export JSC (TMC) even reported net profit of more than 4 billion VND, nine times higher than that of last year.

Another company witnessing profit rise sharply was Nam Song Hau Trading Investing Petroleum JSC (PSH). The company's revenue was up 10 percent over last year to more than 1.7 trillion VND, resulting in a profit of 44 billion VND, 2.1 times higher than that of the same period in 2020.

Even though there were still some companies recording declines in profit or even losses during the first quarter, in general, oil and gas companies' results were quite positive.

With positive oil demand outlook, the oil price is expected to continue to rally. Therefore, there is still more room for oil and gas firms to recover.

SSI forecasted that Brent crude price will trade at an average of 68 USD per barrel in 2021, up 62.6 percent year-on-year, and can even go up to 70 USD in 2022.

According to SSI, developed economies are gradually opening again as they have pushed the vaccination rollout. Businesses activities will also recover quickly when countries continue to ease measures to contain COVID-19.

Brent crude was traded at 74.23 USD per barrel on June 17, and on track to head toward 75 USD./. 

Digital distribution takes Vietnam’s coffee to the world

Taking advantage of the digital transformation and e-commerce platforms could be critical to help Vietnamese coffee brands reach global markets.

Trung Nguyen shook hands with the two e-commerce platforms Amazon and Alibaba to bring Vietnamese coffee products to the world. In January, Trung Nguyen Legend officially launched the Trung Nguyen Legend Brand Store on Amazon, marking an important step in the company’s journey to export coffee through cross-border e-commerce.

Nguyen Nguyen, the representative of Trung Nguyen, stressed that “Trung Nguyen wants to deliver its values to consumers in Vietnam and over the world through coffee. Therefore, we decided to bring the Trung Nguyen Coffee brand and products on Amazon to help us reach a large global customer base.”

He added, “This plays a crucial role in Trung Nguyen’s strategy to expand and scale-up business to meet global customer demands. Moreover, Amazon enables us to express our values, which cannot be achieved through traditional sales channels.”

Applying technological solutions in franchising has helped Trung Nguyen E-Coffee overcome the difficulties amid the pandemic and realise its ambitions to bring its brand to the world. Last October, the company also succeeded in opening the first store in Laos.

Sharing about this strategic move, the representative of Trung Nguyen Legend stated, “Although the results are very encouraging, there is still a long way ahead, but we are confident. Trung Nguyen believes that e-commerce channels will flourish even more.”

Phuc Sinh, which focuses on deeply processed coffee and pepper exports, is another example for e-commerce success. Each year, the corporation exports up to 25,000 tonnes of pepper, making up 15 per cent of Vietnam’s pepper export turnover and 8 per cent of the world’s market share.

The corporation’s products are present in more than 130 countries. Phuc Sinh owns a complete, modern, and self-contained infrastructure consisting of six factories across the country and a network of sales agents and partners in the supply chain, focusing on coffee and pepper under the KCoffee and KPepper brands. The corporation identifies digital transformation as a top priority in its business strategy to match the needs of customers.

In late 2019 when the pandemic broke out in Wuhan, the corporation forecast difficulties if they would maintain traditional sales. Immediately, it changed the business strategy and convinced international partners to buy larger volumes while simultaneously increasing sales on its mobile app KPhucSinh.

In the first four months of last year, the corporation reported an increase of 40 per cent in export value. From next year, Phuc Sinh aims to continue to expand and diversify its consumer goods with the help of technology to meet the demands of customers from all walks of life and supply cross-border e-commerce services.

City workers prepare for all eventualities

Ho Chi Minh City is placing top priority on zoning and tracing COVID-19 infections at industrial zones in order to prevent large-scale infections and disruptions to manufacturing.

During the past few weeks, Ho Chi Minh City has been continuously detecting infections at industrial zones (IZs) and export processing zones (EPZs). Most alarmingly, on June 9, the Ho Chi Minh City Center for Disease Control (HCDC) warned of an F1 case at Taiwanese footwear company PouYuen Vietnam Co., Ltd. in Binh Tan district, and the biggest employer in the city with some 65,000 workers.

After receiving the notice, Binh Tan district spared no time to localise the potential source of infection to ensure workers’ safety and stabilise production at the company. Subsequently, the worker did turn out to have contracted COVID-19.

According to HCDC, because the company has been closely following pandemic protocols, the F1 worker did not come into contact with those working on other lines. Around 140 employees who worked on the same line were sent to isolation. Samples were collected from more than 300 workers on the fifth floor where the F1 worker was stationed and were requested to stay in isolation until test results were out.

Le Thi Ngoc Dung, Vice chairwoman of Binh Tan People’s Committee said, “As the largest employer in the city, PouYuen Vietnam is a key focus so the team returns once every two weeks to check compliance and promptly prevent infections in the community.”

On June 11, three F0 cases were detected at Vietnam Samho Co., Ltd. where 10,000 employees are working. Promptly, along with the isolation of infected cases, 84 people working together at three factories with these cases were sampled and isolated. The district’s health centre was also taking samples for testing about 3,500 workers at this company. Two days before the PouYuen incident, a worker at Furukawa Automotive Parts Vietnam Inc., which employs more than 7,000 workers in Tan Thuan EPZ in Ho Chi Minh City, was also diagnosed with COVID-19.

Immediately, 150 workers in closest contact with the worker on the production line were traced, tested, and directed to stay at home. HCDC had previously detected a COVID-19-suspicious case among samples collected on June 2 at Nidec Tosok Akiba Vietnam Co., Ltd.

As in all other cases, the Ho Chi Minh City Export Processing and Industrial Zones Authority (HEPZA) quickly traced and handled cases of suspected and actual infection to keep the pandemic at bay and allow enterprises to maintain operations.

To ensure uninterrupted production at IZs and EPZs, the city has directed employers to continuously assess pandemic risks at their factories. Moreover, apart from compulsory preventive measures, it is organising emergency drills at IZs and EPZs to ensure readiness. Nguyen Thi Hong Lien, manager of the Division of

Labour Management of HEPZA, said that 98 per cent of the 1,348 enterprises under the authority have signed a commitment to ensure COVID-19 prevention and control, and more than 60 per cent have assessed infection risks at their facilities.

Furthermore, all enterprises are asked to submit basic information of their employees to help authorities localise and trace potential COVID-19 infections at these zones. At the same time, the management of IZs and EPZs have to attend weekly online meetings with HEPZA to receive updates on the COVID-19 situation in their areas.

Nguyen Van Nen, Secretary of Ho Chi Minh City Party Committee, said, “In general, the pandemic in the city is still under control and is showing signs of slowing down. However, due to the appearance of new strains, control has to be more drastic and stronger.”

On June 9, Ho Chi Minh City Department of Labour, Invalids and Social Affairs announced that it has proposed the city’s People’s Committee to roll out a support package for employees and employers affected by the pandemic. The package will be considered and a decision passed by the end of June.

The package is estimated to be worth more than VND1 trillion ($43.5 million), with the city budget contributing more than VND905 billion ($39.35 million), and the rest coming from the Vietnam Bank for Social Policies in Ho Chi Minh City for businesses that need loans to pay wages for their workers.

Likewise, according to Decision No.2606/QD-TLD of the Vietnam General Confederation of Labour, Ho Chi Minh City Federation of Labour is offering support for workers facing difficulties in the IZs and EPZs.

Specifically, F0 cases who are receiving treatment are supported with a maximum of VND3 million ($130), while F1 cases who must undergo medical isolation for 21 days at an isolation facility are supported with a maximum of VND1.5 million ($65).

Also, employees who have decided to undertake medical isolation at home as well as pregnant employees or those raising children under the age of 6, or employees who were forced to quit because their place of residence has been locked down, are supported with a maximum of VND500,000 ($22).

Global investors still enticed by education

Driven by a growing middle class and drastic changes due to social restrictions, the education sector remains a lucrative business for investors with robust mergers and acquisitions and private equity investments underway.

EQuest Education Group pulled new investment from global investment firm KKR on June 1. The deal is part of KKR’s plan to triple investment in Vietnam in the next decade to capitalise on the rising demand and expanding middle class.

The US buyout firm’s investments in Vietnamese assets crossed $1 billion last year after a KKR-led consortium bought a stake in Vinhomes JSC, the largest real estate developer in the country. Beside major investment in real estate assets, the group is now pinning its hope on the fast-growing education market.

Among them, edtech startups have been one of the hottest investment markets in Vietnam, wooing millions of venture funding this year. ELSA, a mobile app that helps non-native English speakers improve pronunciation and speaking skills, secured $15 million in a funding round co-led by Vietnam Investments Group and SIG. Meanwhile, another edtech startup, Edmicro, closed a pre-Series A+ round from Singapore-based venture capital firm BEENEXT, Qualgro, and Insignia Ventures Partners.

Que Vu, partner of law firm Rajah & Tann LCT lawyers, told VIR that Vietnam is on track with a steady increase in mergers and acquisitions (M&A) deals. In education, such deals have become a hot trend in recent years because Vietnam is a developing country with the highest GDP growth rate in Southeast Asia. This teamed with a population of around 100 million people provides ample opportunity in education.

 

“The younger generation is willing to spend on education opportunities for themselves and their children,” Vu said. “Along with more international schools being opened at all grades, more English language centres have opened to meet demand for English learning at a variety of different ages. Big cities like Hanoi and Ho Chi Minh City now have more than 450 English language centres and more than 50 schools delivering international learning programmes.”

In addition, Vu noted that changes to the legal framework of Vietnam also bring more opportunities for investors. Specifically, the Vietnamese government has committed to opening the market to the education sector for foreign investors and raising the Vietnamese student limit in international schools to 49.9 per cent, a significant increase from the previous 10-20 per cent limit.

The education sector has also been given much attention to by both domestic and foreign private investors. Some notable private equity investments in the education sector are Mekong Capital’s funding of Yola, TGP’s investing in VAS, Cognita’s cash injection in the International School of Ho Chi Minh City, and North Anglia’s takeover of BIS, as well as the latest deal between KKR and EQuest.

Nguyen Tri Hien, CEO of Green Universal Education Technology JSC, highlighted that Vietnam’s edtech market has lured around $45 million capital in 2020, and many overseas companies have aggressively introduced their education tech in Vietnam.

“The edtech market is estimated to reach a value of $4 billion by the end of this year,” he said, adding that there will be more deals and foreign startup arrivals in the market over the next two years.

At the end of April, English-learning startup Astrid from Sweden has made its official foray into Vietnam. The startup’s app has a cheerful and engaging interface and rewards users for progress and encourages them to keep playing and learning English.

Meanwhile, Singapore-based NPX Point Avenue, an edtech company focused on the fast-growing K-12 private international school market and the after-school training market, also closed a $12-million deal in a Series A funding round led by Hong Kong-based private equity firm Gaw Capital Partners. The funding will help the company to expand its presence in Vietnam.

The pandemic has pushed colleges, universities, and companies to operate remotely, which leads to an increased use of online learning and the rise of edtech startups. Experts predict that the future education model will likely be a combination of online and offline, known as blended learning, where online education acts complementary to the traditional brick and mortal model.

Besides edtech startups, experts agree that investment in kindergartens and K-12 schools will continue to flourish, including new establishments, M&A, and private equity transactions. This segment has enjoyed more attention than any other segment in recent years and has been on the radar of both strategic and financial investors.

If Vietnam’s higher education market can improve training quality up to international standards, Vietnamese students may consider studying in Vietnam, and the relatively high amount spent on education would likewise stay in the Vietnamese economy, according to Que Vu from Rajah & Tann LCT lawyers.

She said that Vietnamese legislation on higher education records certain amendments and supplements that would attract foreign investors in this sector. New provisions under the amended Law on Higher Education grant more autonomy to foreign-invested universities and a new model of foreign branch campus was recently introduced which is expected to receive guidance from the Ministry of Education and Training soon.

“I believe that higher education in Vietnam could be a promising business for foreign investors and interested parties have already signalled their intentions to get involved in the potentially burgeoning education sector,” she stated. 

Oil and gas companies recover strongly from last year's losses in Q1

Surging international crude oil price on improving demand has helped many oil and gas companies record big profits in the first quarter of this year, after losing in 2020.

In the first quarter financial result, Vietnam National Petroleum Group (Petrolimex, PLX) posted a slight fall of 0.6 per cent in net revenue to nearly VND38.2 trillion (US$1.6 million). However, it was still profitable thanks to a cut in expenses in financial activities and others, and gains in other incomes.

Of which, the company's profit after tax was nearly VND736.2 billion in the first quarter after reporting a loss of VND2.3 trillion in the same period last year.

During the period, Petrolimex's domestic output rose 4.7 per cent year-on-year to 2.27 million m3. Retail sales accounted for 55 - 60 per cent of its total sales but contributed around 80 per cent of its profit.

SSI Securities Corporation (SSI) said that the company's production growth will continue until the first half of the second quarter, boosted by the Government's restriction on illicit petrol, especially in the south.

Similarly, Binh Son Refining and Petrochemical Company Limited (BSR) witnessed its revenue reach VND21 trillion in the first quarter with a profit of over VND1.8 trillion, while it reported a loss of VND2.33 trillion in the same period last year.

The main driving force for the recovery in profit was higher crude prices in the international market and crack spread of gasoline products.

Crack spread is the spread created in commodity markets by purchasing oil futures and offsetting the position by selling petrol and heating oil futures.

PetroVietnam Oil Corporation (PVOIL)'s profit after tax was VND190.6 billion, after losing VND537.7 billion in the same period last year.

Notably, Thu Duc Trading & Import Export JSC (TMC) even reported net profit of more than VND4 billion, nine times higher than that of last year.

Another company witnessing profit rise sharply was Nam Song Hau Trading Investing Petroleum JSC (PSH). The company's revenue was up 10 per cent over last year to more than VND1.7 trillion, resulting in a profit of VND44 billion, 2.1 times higher than that of the same period in 2020.

Even though there were still some companies recording declines in profit or even losses during the first quarter, in general, oil and gas companies' results were quite positive.

With positive oil demand outlook, the oil price is expected to continue to rally. Therefore, there is still more room for oil and gas firms to recover.

SSI forecasted that Brent crude price will trade at an average of $68 per barrel in 2021, up 62.6 per cent year-on-year, and can even go up to $70 in 2022.

According to SSI, developed economies are gradually opening again as they have pushed the vaccination rollout. Businesses activities will also recover quickly when countries continue to ease measures to contain COVID-19.

Brent crude was yesterday traded at $74.23 per barrel, and on track to head toward $75. 

Vietnam targets 41 billion USD in agriculture export in 2021

The agriculture sector is set to earn 41 billion USD from export in 2021, according to Vu Ba Phu, head of the Vietnam Trade Promotion Agency under the Ministry of Industry and Trade (MoIT).

To this goal, developing processing is a key solution to raising product value, thus increasing export earnings, which is also in line with the Government’s goal of entering the top 15 countries with advanced agriculture, and top 10 with modern farm produce processing industry.

In fact, efforts to modernize and further promote technology application in post-harvest processing have resulted in an increase of between 5-7 percent in the agriculture sector’s annual added value, pushing the average export turnover up by 8-10 percent per year.

Nguyen Thanh Tuan, deputy director of the Department of Industry and Trade of the central province of Phu Yen said post-harvest processing is considered a key step in increasing the value of agricultural products and reducing losses, thus helping businesses to seek appropriate markets for their products.

The model of production and consumption chain in this field has also contributed to improving the value of agricultural products.

According to Nguyen Quoc Toan, director of the agricultural products processing and development department under the Ministry of Agriculture and Rural Development (MARD), localities nationwide have attracted over 70 investment projects worth over 59 trillion VND (over 2.54 billion USD) in processing agro-aquaculture-forestry products since 2017.

The country earned 22.58 billion USD from exporting agro-forestry-aquatic products in the first five months of 2021, up 30.1 percent year-on-year, the MARD reported.

Notably, the export value of key farm produce reached an estimated 7.78 billion USD in Jan-May, 13 percent higher than that of the same period last year.

Meanwhile, the export of forestry, livestock and aquatic products climbed to 7.06 billion USD, 166 million USD, and 3.24 billion USD, up 61.8 percent, 43.9 percent, 12 percent respectively.

Joining free trade agreements such as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), the EU-Vietnam Free Trade Agreement (EVFTA), the UK-Vietnam Free Trade Agreement (UKVFTA), and the Regional Comprehensive Economic Partnership (RCEP), has helped Vietnam’s farm produce make inroads into large markets, thus pushing its agricultural exports in the reviewed periods, especially aquatic products, vegetables and fruits, rice and tea.

The MARD and the MoIT have organised online conferences with localities to seek solutions to help localities in selling their farm produce amidst complicated developments of the COVID-19 outbreak.

Attention has been also paid to introducing products on prestigious e-commerce platforms such as Alibaba, Amazon, Sendo, Voso and Shopee./.

Bac Lieu to expand large-scale agricultural production

The Mekong Delta province of Bac Lieu plans to expand large-scale production and the use of advanced techniques to improve agricultural yield and quality and raise farmers' incomes from now to 2025.

The provincial People’s Committee targets production of 1.17 million tonnes of paddy, including 190,240 tonnes of organic paddy, a year by 2025.

It plans to expand large-scale rice fields to 100,000ha, or about half of the province’s total rice area. Farmers participating in large-scale rice fields will have contracts with rice companies that will ensure stable prices.

It also plans to produce 600,000 tonnes of seafood a year by 2025, with half of that being shrimp. About 20,500 tonnes of organic shrimp will be produced a year by 2025.

It targets breeding more pigs, buffalo, cows and goats, and 3.5 million poultry a year by 2025. The province, which is the delta’s largest salt producer, plans to produce 55,000 tonnes of salt a year by 2025, including 7,000 tonnes of high quality white salt.

It also targets having 103 new agricultural products certified under the country’s one commune – one product (OCOP) programme by 2025, taking the province total’s OCOP products to 171 products.

The second phase of its hi – tech agriculture zone for shrimp breeding is expected to be completed by 2025.

Pham Van Thieu, Chairman of the provincial People’s Committee, said that zoning projects would be cancelled if they are not feasible, and land used in ineffective projects or by investors with insufficient financial capacity would be taken back.

The province will mobilise capital from official development assistance (ODA), foreign direct investment (FDI) and other sources, and develop insurance systems to reduce risks in agricultural production. It will also encourage startup investors in agriculture and rural development.

It will help farmers to access technology and markets, and transfer advanced techniques to farmers who grow rice and breed aquatic species and animals.

The province, which is one of the delta’s largest shrimp producers, breeds shrimp under intensive, super - intensive, and rice - shrimp farming models, among others.

The rice - shrimp farming model is used mostly in Phuoc Long and Hong Dan districts and Gia Rai town. It offers farmers a high profit of 40 - 50 million VND (1,700 – 2,200 USD) per hectare a crop, according to the district’s Bureau of Agriculture and Rural Development.

Farmers have learned how to create shrimp ponds, manage the breeding environment, and use advanced breeding techniques.

The province has encouraged rice farmers to use new varieties like ST 24 and ST 25. These are two of the best rice varieties in the world and are highly resistant to saltwater intrusion, alum affection and disease.

Infrastructure investment

To reach its goals, the province plans to speed up investment in many infrastructure projects, including irrigation and climate-change adaptation.

Luu Hoang Ly, Director of the province’s Department of Agriculture and Rural Development, said: “The province will put into use major projects that cope with climate change.”

These include new river embankments in Bac Lieu city, erosion-prevention embankments in estuary and coastal areas in Ganh Hao town and Dong Hai district, and erosion-prevention embankments in Bac Lieu city’s Nha Mat sea.

A sluice system to prevent tides and flooding in Bac Lieu city and nearby areas will also be built.

The province will also create mud flats and plant mangrove trees to prevent erosion near the Nha Mat sea, and recover protective forests along the province’s coast.

It will build fishing ports that also serve as storm shelters for fishing boats. Other natural-disaster prevention projects will be launched, and investment priority will be given to upgrading and building river and sea embankments.

The province will also mobilise investment capital from ODA and public - private partnership (PPP) resources to develop logistics infrastructure, especially the Bac Lieu - Ha Tien expressway and the Ho Chi Minh Road section.

Bac Lieu is co-operating with the neighbouring provinces of Soc Trang, Hau Giang, Kien Giang and Ca Mau to build transport projects that will promote linkages in the delta. It is also speeding up the widening and upgrading of many roads in its commune and rural areas./.

Large Belgian robotics firm to set up factory in Vietnam

Vietnam has long been an attractive destination for foreign investors, especially tech and automation companies. Observing the trend, a world-leading Belgium-based start-up in robotics has been preparing to penetrate into the country.  

Engineers at Zorabots, a world-class unicorn start-up in robotics, are assembling robots that will later be sent to schools, hospitals, nursing homes, and airports around the world. All work is done in Belgium. But, in a few years’ time, it will be carried out in Vietnam, according to the company’s CEO.

Zorabots was founded by two tech enthusiasts, Fabrice Goffin and Tommy Deblieck, in 2011. The company now has branches in the US, Canada, Australia, and Africa, serving customers all over the world.

Zorabots is currently working with Vietnamese partners to enter the market as soon as possible.

In addition to Zorabots, there are many other large companies in the world arriving in Vietnam, reflecting the effectiveness of the country’s policies on investment attraction in recent times./.

WB warns of shrinking production amid COVID-19 outbreak

Vietnam needs to pay special attention to promoting development of industrial production and retail as both sectors may continue to be affected by COVID-19 outbreaks, according to the World Bank (WB).

The bank said in a recent report that the fourth outbreak of COVID-19 has led to the sharpest rise in the number of COVID-19 infections since the pandemic broke out in Vietnam early last year, forcing the government to implement tougher travel restriction measures, especially in main urban centres and several industrial parks.

According to the report, industrial production in May exhibited high resilience by expanding by 1.6 percent month-on-month, but retail sales dropped by 3.1 percent as they were affected by social distancing and closure of shops.

Vietnam’s external economic position slightly eroded in May due to respective declines of 6.7 percent and 20 percent in merchandise exports and foreign direct investment (FDI) commitments from the previous month.

Domestic prices increased by 0.3 percent against April, driven by higher global commodity prices while credit expanded at a slower pace due to weakening economic activities and slightly higher interbank interest rates.

The State budget registered a surplus of 86 trillion VND (3.7 billion USD) in the last five months, equivalent to 49.7 percent of the target set for the year, pushing the State revenue to rise by 15.2 percent year-on-year.

Total budget expenditure decreased by 3.7 percent year-on-year to 581.6 trillion VND, mainly due to the decrease of public investment disbursement (down 16.5 percent year-on-year).

The lack of materials for production causing high prices is one of the reasons behind the delay of public investment projects, WB experts said.

Exports may also be affected by production contraction in some industrial zones, they added.

The Vietnamese Government needs to consider adopting a more appropriate fiscal policy to support individuals and businesses affected by the COVID-19 crisis as well as to stimulate domestic demand if the ongoing outbreak is not contained quickly./.

Bac Giang compiles three scenarios for lychee consumption amid COVID-19

The northern province of Bac Giang, dubbed Vietnam’s “kingdom of lychee”, has devised three scenarios for the sales of its staple in the face of the COVID-19 pandemic.

The province has become a hotspot of COVID-19 outbreaks in recent times, with thousands of confirmed infections, mostly in its industrial parks. 

In the first scenario, if COVID-19 is repelled, sales of the fruit will become favourable as the total yield will be divided equally between both local and export markets.

If the pandemic lingers but its scope remains largely under control, 70 percent of the harvest, or 130,000 tonnes, will be set aside specifically for the domestic market. 

The lychees will be distributed to wholesale markets, major firms with distribution chains at supermarkets and shopping malls, processing companies, wet markets, traders, mobile points of sale, and online marketplaces.

Regarding exports, China is expected to hold the lion’s share in terms of volume, with 95 percent, or 47,500 tonnes, while the remaining 2,500 tonnes will be shipped to Japan, Australia, Europe, the US, Thailand, and Singapore.

Meanwhile, in the worst-case scenario, if the pandemic deals a major blow to all aspects of life, forcing all export activities to cease, the estimated total yield of 180,000 tonnes of lychees is to be primarily for domestic consumption. 

About 80,000 tonnes will be sent to wholesale markets, another 30,000 tonnes to processing and export firms, and 2,000 tonnes to be sold on e-commerce platforms. 

In Tan Yen district, which grows mainly early-ripening lychees, sales at wholesale markets would make up half of its entire output, while other channels like supermarkets, processing companies, and wet markets each would account for 15-20 percent. 

The harvest time for early-ripening lychees fell between May 20 and early June, while the main crop began at around June 10 and will last until July 20.

As of May 25, sales of early-ripening lychees had reached 3,176 tonnes, nearly half of which was domestically consumed, the Bac Giang Department of Industry and Trade has announced. The fruit sold for about 20,000-35,000 VND per kilo.

Meanwhile, over 1,600 tonnes were shipped to Vietnam’s northern neighbour via official trade channels.

According to the provincial Department of Agriculture and Rural Development, the province has around 28,100 ha of lychees this year with an estimated output of more than 180,000 tonnes, an increase of 15,000 tonnes compared to last year. This includes 45,000 tonnes of early-ripening lychee harvested on an estimated 6,050 ha along with 135,000 tonnes of lychee from the main crop on 22,050 ha.

Some 15,200 ha of lychee are cultivated under VietGAP standards, which is hoped to generate 125,000 tonnes, and 82 ha under GlobalGAP standards.

Of note, a combined 3,600 tonnes of the fruit are expected to be harvested in orchards designated for export to the US and Australia and the challenging Japan market.

As a staple of Bac Giang, “Thieu” lychee distinguishes itself from other varieties with its spherical shape, bright, thin, and red skin, thick, white, sweet, and juicy flesh, and small seed.

Organic “Thieu” lychees possess many advantages, such as being safe for customers, not harmful on the environment as they are free from residue of plant protection drugs, which help plants grow better and bear tastier, sweeter, and more fragrant fruit.

2020 was the first year the fruit was exported to Japan.

Prime Minister Pham Minh Chinh has asked ministries and agencies to tackle the difficulties facing Bac Giang in fighting COVID-19 in a spirit of not citing “lack of money, lack of human resources, and lack of policies and mechanisms”.

He previously tasked the Ministry of Industry and Trade with removing difficulties in the consumption of the province’s agricultural products, especially lychees./.

VIETNAM BUSINESS NEWS JUNE 20

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

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