Vietnam has set a target of becoming an industrialised country with highly competitive industries, and among the world's top 15 exporters by the end of 2030.

According to a report by the Ministry of Industry and Trade (MoIT), the country's immediate target is to develop 20 products with strong international brands, to strengthen its position in the global supply chain, to bring its supporting industry's capacity to meet 70 percent of domestic demand and localisation of production to 45 percent.

The country's supporting industry, which remained underdeveloped and overly reliant on imports, has been identified as a major weakness for Vietnam, especially in key industries such as electronics, textile, leather and footwear, manufacturing and automobile.

The effect has been made painfully clear since the pandemic as Vietnam's top suppliers of parts, including Chia, the Republic of Korea and Japan, were hit hard by COVID-19, causing severe disruptions to production in Vietnam.

In order to address the issue, the MoIT has proposed a restructuring plan for Vietnam's industries with a focus on the development of supporting industries. According to the ministry, significant progress had been made in the 2011-20 period with industrial production accounting for around 27.45 percent of the country's total GDP annually.

Foreign investors interested in Vietnam's future workforce

Vietnam's assessment of future employment trends and how Vietnam is preparing for its workforce to respond to such trends are issues attracting attention from foreign businesses at the ongoing Singapore Apex Business Summit (SABS) 2022.

Vietnamese Ambassador to Singapore Mai Phuoc Dung said Vietnam has become an attractive destination for foreign investors, and multi-sectoral corporations in the country are also growing stronger, so the demand for highly skilled and trained workers in Vietnam is increasing day by day.

Regarding future employment trends, Vietnam has a great demand for skilled technicians or middle- and high-level managers in industries, namely electronics and semiconductors, information technology, banking, finance, energy and marine economy, Dung said.

For Vietnam’s preparations, the diplomat said foreign companies highly valued Vietnamese workforce for their working ability and quickness in learning new skills.

However, the ambassador noted that Vietnam also faces challenges to have a large enough skilled workforce to meet the high demand for its economic development in the future. The ratio of skilled workers in Vietnam only accounts for 26.1 percent of the labor force, he added.

Therefore, Vietnam's socio-economic development plan in the next five years has emphasised the importance of building high-quality human resources, considering it one of Vietnam's top priorities for development in the coming time.

RoK calls for Vietnam’s support in joining CPTPP

Minister for Trade of the Republic of Korea (RoK)’s Ministry of Trade, Industry and Energy Yeo Han-koo has suggested Vietnam support the RoK in joining the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).

During his online meeting with Vietnamese Deputy Minister of Industry and Trade Tran Quoc Khanh on March 23, Yeo said since late 2021, the RoK has conducted internal discussions and prepared procedures to join the CPTPP.

He also highly valued the close economic ties between Vietnam and the RoK, saying their trade link reached its peak last year.

Welcoming the RoK’s application for the CPTPP membership, Khanh expressed his hope that Vietnam and the RoK will continue their cooperation in relevant areas.

The two sides also compared notes on the Indo-Pacific Economic Framework (IPEF) which the US is stepping up in an effort to enhance comprehensive economic cooperation in the Indo-Pacific region.

HCM City needs to improve business climate: experts

The southern metropolis Ho Chi Minh City needs to develop policy mechanisms and legal frameworks and improve its business climate, infrastructure and human resources to recover the economy, experts say.

Speaking at a conference on March 22, Johnathan Hanh Nguyen, chairman of Imex Pan Pacific Co. Ltd., said: “To attract strategic investors, the city needs to have breakthrough incentives and internationally competitive policies.”

Johnathan Hanh Nguyen, an overseas Vietnamese businessman, said the city needed to improve its competitiveness to ensure a favourable business environment for enterprises, encouraging start-ups and innovation.

It needs to invest in significant projects such as building an international financial centre, high-end duty-free shops and shopping malls in the city centre. He recommended the city develop AI education programmes and build a logistics warehouse in Thu Duc city.

Nguyen Thi Phuong Thao, CEO of Vietjet Air and general director of Sovico Holdings, said the city should become an international tourist destination to receive 15 million visitors this year, including 3.5-4 million international tourists.

In addition, it should develop the stock market to compete with major markets globally, she added. “It also needs to accelerate digital transformation to build a digital economy,” she said.

Nguyen Thanh Binh, general director of Gemadept Group, said it was paramount for the city to invest in infrastructure, especially at seaports. It should also develop a distribution centre of high-quality consumer goods worldwide based on a modern retail system.

Park Hyun Bae, general director of KCTC Vietnam, recommended the city expand cargo ports, including Cat Lai port (in Thu Duc) and Hiep Phuoc port in Nha Be district, and improve warehouse, port and logistics services.

Boris Cohen, general director of MSC, a global container shipping company, said it was vital to improve the seaport infrastructure to develop an international cargo service hub in Vietnam. “The city should plan to build a new transhipment port in Can Gio district by 2030,” he said.

Other conference participants said the city was lagging behind other major cities in the region regarding living quality, competitiveness and urban planning. Its infrastructure is ageing while its human resources have failed to meet development needs, and many of its major infrastructure works are progressing too slowly. Other city issues include traffic congestion, air pollution, flooding and robberies and burglaries.

Sun Air becomes Gulfstream’s international sales representative in Vietnam

Luxury airline Sun Air has become Gulfstream Aerospace’s international sales representative in the Vietnamese market following the signing of an agreement between the Vietnamese carrier and the US aircraft manufacturer in Hanoi on March 23.

Under the deal, Sun Air will support Gulfstream in developing the market in Vietnam and introduce the American aircraft company's jets to potential customers.

The first luxury airline in Vietnam will also provide airplane management and private jet charter services using Gulfstream's business jets with transcontinental range, cutting-edge technology and world-class cabin space.

Travel operators expect a bonanza in coming four-day holiday

Along with airfares, room prices in tourist destinations are forecast to surge considerably as holidaymakers are hurriedly booking tours for the coming national holiday on April 30 & May 1.

A survey conducted by VTC News revealed that several hotels and resorts in Hanoi, Ho Chi Minh City, Da Nang, Ha Long, Tam Dao, Sa Pa, Nha Trang City, and Quy Nhon have been fully booked during the coming four-day break, starting April 30.

Currently hotels and lodging houses are keeping room rates unchanged and offering promotions to attract guests. Pham Viet Cuong, manager of Dana City Hotel in Da Nang, said he is now offering room rates at VND200,000 to VND500,000 less than the pre-pandemic rates.

However, Dana City and other hotels anticipate that after April 20 room prices will rise by between 30% and 50%, or even climb as high as 70% in some places in the event of a booking boom.

At present, the majority of people across the country have been fully vaccinated against the SARS-CoV-2 virus. Localities have gradually opened their doors to welcome the return of both domestic and international tourists.

Fruit and vegetable exports to the US, Europe surge

Vietnam is boosting fruit and vegetable export to the US and Europe after facing difficulties with the Chinese market.

Nguyen Thanh Binh, chairman of the Vietnam Fruit and Vegetable Association, said that China had been the biggest importer of Vietnamese fruits and vegetables for many years.

However, Vietnam’s fruit and vegetable export value to China dropped by 19 percent on-year to USD260 million in the first two months of this year. In contrast, the export value of fruit and vegetables to the US grew by 70 percent to USD25 million. While Japan imported fruit and vegetables valued at USD23 million, up 12 percent on-year.

Minister of Agriculture and Rural Development Le Minh Hoan said the EU was the biggest importer of fruit and vegetables in the world. However, Vietnamese products accounted for just around 1 percent of the EU's total import value of fruits and vegetables.

The US has licensed the import of Vietnamese grapefruit. The US plans to import more Vietnamese coconuts and star apples in the coming time.

Material prices strike domestic feed groups

Supply shortages, with global uncertainties including the Russia-Ukraine clash escalating, are driving Vietnam’s animal feed production sector into bigger difficulties as a large part of raw materials are sourced from these two markets.

Almost all the animal feed producers in Vietnam, including CJ Vina Agri, Cargill, and Japfa Comfeed Vietnam, have had to adjust the selling prices of feed products to offset the increasing momentum of imported materials.

Statistics published by the Department of Livestock Production (LPD) under the Ministry of Agriculture and Rural Development (MARD) showed that in the first two months of this year, imported soybean prices increased by 21 per cent, raw corn 9 per cent, soybean oil 22 per cent, and fish paste 11 per cent. Feed producers have adjusted the selling price 10 times since the end of 2020.

Duong Tat Thang, director of the LPD, said that one of the reasons impacting the materials for feed production is the big hikes in prices of animal feed materials in the global markets currently affected by the conflict between Russia and Ukraine, which lead the world in the export of wheat and corn. These two countries currently make up 29 per cent of exported wheat and 19 per cent of exported corn worldwide.

The General Statistics Office (GSO) said that the total of Vietnam’s wheat and corn turnover imported from Russia and Ukraine are 20 and 3 per cent, respectively.

Cashew container confusion points to payment issues

In the midst of supply chain headwinds, a suspected scam related to 100 containers of cashew nuts exported from Vietnam to Italy is prompting more businesses to buy via the freight on board model and sell via cost, insurance, and freight agreements.

Bach Khanh Nhut, vice chairman of the Vietnam Cashew Association (Vinacas), said that businesses have lost control of 36 containers worth about $7 million due to a loss of original documents. Up to now, the investigation into the suspected cashew nut export scam has not been concluded.

Several Vietnamese cashew processing and exporting enterprises have signed contracts with some customers to import Italian cashews through the brokerage company Kim Hanh Viet. The consignments had been packed into 100 containers which were being shipped to the ports of Genoa and La Spezia by international shipping lines Cosco, Yangming, Hmm, and One.

Vietnamese banks said they had shipped all original documents of the shipment of 36 containers via international courier services. However, banks in Italy responded that they only received copies of the documents.

Vinacas has sent an express document to the Vietnamese Embassy and the Vietnam Trade Office in Italy to request support. Vinacas has also worked with five Vietnamese banks, related businesses, and shipping lines. However, most of them said that it was impossible to find the original documents of the shipment.

It is thought that it is an urgent situation because all original documents are in the hands of the buyers. Shipping lines will be forced to deliver the goods to the holders of the original document according to international practice.

Meanwhile, Italian police released a written response about the blockade of three containers on March 8 and another two on March 11 to wait for the case to be resolved. However, the number of blocked containers is very small compared to the 36 containers being at risk of loss.

Vietnamese cashew exporters have negotiated disadvantageous payment terms with first-time purchasers who do not fully comprehend customer needs. The nature of payment methods like Documents against Payment, Cash against Documents, and Letter of Credit (L/C) are settled with banks. All these methods require payment for a set of documents prior to obtaining the goods.

Therefore, they are considered quite secure in terms of paperwork. However, if the buyer has a fraudulent intention to appropriate documents, there are some risks.

Concerned about a payment scam in the African market, the Vietnam trade offices in Algeria, Gambia, Mali, Niger, and Senegal issued a warning for Vietnamese businesses to not use the L/C payment method with African importers in April 2020.

In addition, they were advised never to use Document Acceptance as a payment method. Due to financial restrictions at that time, African importers frequently offered to buy products on a deferred payment basis under cost, insurance, and freight agreements. They did not open L/C accounts due to expensive fees.

L/C is the least risky payment method but it is not the most popular one in the agricultural trade. L/C agreements only account for about 5 per cent of transactions.

Although L/C is the most secure payment method for the sellers, it is the most disadvantageous for the buyers. To guarantee payments, banks often require buyers to deposit a certain amount, even all of the value of the contract.

In commercial transactions, both parties want to close the deal quickly. The question is which side is in the bargaining position. When buyers have a bargaining advantage over sellers, they will offer a payment method that is convenient for them, or vice versa.

The European economy is still recovering from a series of supply chain headwinds over the past two years. The commodity demand gradually recovers, opening up the opportunity for Vietnam to increase cashew exports to Europe by 15 per cent to over 155,000 tonnes in 2022. Cashew exports reached a record of $3.64 billion in 2021.

Ta Quang Huyen, chairman of Hoang Son 1 JSC in the southern province of Binh Phuoc, one of Vietnam’s leading cashew nut exporters, said that exporters can reacquire their exported containers which have yet to leave the ports if they use a different approach.

“After receiving the buyers’ deposits, sellers will make a contract. The deposit amount ranges from 20-30 per cent of the order value. This will ensure that the buyers pay the rest when receiving the goods. If the importers do not make the deposit, the transaction is cancelled,” Huyen said.

He added that exporters should actively win the right to charter ships. Paying the charter will enable businesses to be more proactive in understanding schedules and deal more easily with shipping lines in the event of a mishap.

This strategy is akin to selling via carriage and insurance paid to contracts rather than freight on board, which is the current bottleneck in Vietnam’s exports.

“For many years, Vietnamese exporters have been accustomed to transferring all charter rights to their partners. They only receive products at the port for import or delivering goods to the port for export. It is time for a change,” Huyen emphasised.

Last week, the Government Office issued Official Dispatch No.1583/CD-VPCP conveying the direction of Prime Minister Pham Minh Chinh on exporting cashews to the European market. The PM assigned the ministers of industry and trade; agriculture and rural development; public security; and transport, as well as the governor of the State Bank of Vietnam, to urgently coordinate with the Vietnam Cashew Association and relevant agencies to inspect and clarify the cause.

The regulatory bodies have to take measures to handle and support businesses to ensure the legitimate interests of people and businesses in accordance with the provisions of domestic and international laws. The regulatory bodies are required to report to the prime minister any difficulties beyond authority.

Vietnam’s online B2B marketplace relaunched as Halana

EI Industrial, the first industry-focused business-to-business (B2B) e-commerce marketplace in Vietnam relaunched as Halana. Launched in 2019, Halana empowers suppliers and businesses to streamline manual processes with its SaaS solutions, end-to-end e-procurement, and warehouse management system.

Vietnamese businesses suffer from manual and inefficient procurement processes resulting in wasted time and higher costs for purchasers. Additionally, purchases are made more difficult with the lack of price transparency. As a result, an order can take over two weeks to complete.

With Halana, purchasers can quickly source from multiple suppliers and identify the best deals available. The platform is free to use for all suppliers, empowering them to digitalise and maximise their reach to customers across Vietnam.

Focused on its core mission of accelerating digital procurement across the supply chain industry, Halana’s vision aligns with the National Digital Transformation Programme which aims to incentivise businesses to prioritise digitalisation in Vietnam.

Indorama Netherlands to acquire Ngoc Nghia Plastics

Indorama Netherlands B.V. (IVL) announced plans to buy Ngoc Nghia Plastics JSC, a leading enterprise in the plastic packaging industry.

Expanding its packaging business into Vietnam will strengthen the market position of Indorama Netherlands in Asia-Pacific, further extending the list of deals between Thai producers and Vietnamese partners.

Indorama Netherlands has offered to buy all 81 million shares at Ngoc Nghia at VND26,219 ($1.14) apiece, totalling $91 million for the deal.

As a leading PET manufacturer, Ngoc Nghia has four sites in the country. It has a total production capacity of approximately 5.5 billion units of PET preforms, bottles, and closures, equivalent to a conversion of 76,000 tonnes per annum.

Once the deal is completed, it will extend the list of acquisitions of Vietnamese plastics producers by Thai companies.

In July, SCG Packaging Plc. completed the purchase of a 70 per cent stake in Duy Tan Plastics, the country's largest manufacturer of rigid plastic packaging products.

SCG also owns stakes in many other plastics companies including Binh Minh Plastics JSC, Prime Group, Viet Thai Plastchem JSC Ltd., TPC Vina Plastic and Chemical Corporation Ltd., and Minh Thai Plastic Material Co., Ltd.

Expansion of Tri An hydropower plant requires VND3.9 trillion

Work on the Tri An hydropower plant expansion project in Dong Nai Province is set to start in the second quarter of 2023, with a total investment of VND3.9 trillion.

The project, which will have two generators with a combined capacity of 200 megawatts (MW), will be completed in 2026, a representative of the Vietnam Electricity Group, which is the investor of the project, said at a recent working session with the Dong Nai government. The working session was aimed at discussing the construction of the second phase of the hydropower plant.

The Tri An hydropower plant expansion project is expected to generate 131 million kWh of electricity annually.

Built on the Dong Nai river in Vinh Cuu District in 1984, the Tri An hydropower plant has four generators and turns out some 1.7 billion kWh of electricity each year.

After the expansion project is completed, with a capacity of 400 MW, the Tri An hydropower plant will become the second-largest-of-its-kind in Vietnam, after the Hoa Binh hydropower plant. The Dong Nai-based plant is currently ranked sixth in the country.

BW announces landmark transaction, marking its first entry into Long An province

BW Industrial Development JSC on March 24 announced its acquisition of nearly 21 hectares of land in Vinh Loc 2 Industrial Park and more than 22ha in Xuyen A Industrial Park.

The transaction marks BW’s first entry into Long An province, strengthening its presence in the greater Ho Chi Minh City area.

Xuyen A Industrial Park is located less than 10km from Tan Phu Trung, where BW has operates an e-commerce hub

Ideally situated 30 minutes from the Tan Son Nhat airport and 90 minutes from the Cat Lai Port, the site will create synergies and value across BW’s platform, amid the increasingly limited land supply in Tan Phu Trung.

The project, which will include a 220,000sq.m logistics facility, is scheduled for completion in the fourth quarter of 2023.

Given the high purchasing power in Ho Chi Minh City, Long An is an attractive location, especially for agricultural, seafood, retail, and e-commerce companies looking to serve the local market.

S.Korean firm invests in footwear factory project in Daklak

The Central Highlands province of Daklak has approved a project to develop a footwear factory in the province by South Korea’s Taekwang Group with an investment of some US$22 million.

A representative of the Daklak Branch of Taekwang Vina JSC, under the Taekwang Group, said the factory would recruit around 7,000 laborers in the first phase and 15,000 in the second phase, making it the most labor-intensive project in Daklak Province, Thanh Nien Online newspaper reported.

Procedures for the project, which will be developed in the Hoa Phu Industrial Park in Buon Ma Thuot City, have been completed. Taekwang is building the factory and installing the equipment.

Louis Holdings fined for buying more TGG shares than registered

Louis Holdings has been fined over VND161.2 million as it acquired nearly 4.7 million TGG shares of Louis Capital JSC while it had earlier registered to buy only 3.6 million shares. Besides the fine, the company was suspended from making stock transactions for two months.

On November 11 last year, Louis Holdings registered to acquire 3.6 million TGG shares. The transaction was planned to be conducted from November 17 to December 15 last year.

However, it bought nearly 4.7 million shares from November 17 to 30, 2021, exceeding the registered volume by nearly 1.1 million shares, valued at some VND10.7 billion.

In January this year, Louis Capital was also fined VND232.5 million for violating the regulations on information disclosure; and failing to ensure the numbers of non-executive and independent members in the company’s board in line with the law and appoint a person to govern the company.

Vietnam Gov’t kicks off interest subsidy policy for 2022-2023

The Vietnamese Government would start providing an interest subsidy of 2% per annum on commercial loans for businesses, cooperatives, and households for the 2022-2023 period.

The support, estimated at a maximum of VND40 trillion (US$1.76 billion), was revealed in the recently issued decision No.422 of the State Bank of Vietnam (SBV) and remains part of the Government’s socio-economic recovery program worth VND350 trillion ($15.4 billion) to aid the economy.

One of the key objectives of the decision is for the SBV to manage the monetary and credit policies flexibly, stabilize macro-economic conditions and contain inflation.

In addition, the SBV also informed that it will allow commercial banks in which the state is holding over 50% stake to raise registered capital while stepping up efforts to ensure the financial security of credit institutions and resolve bad debts.

The SBV calls for banks to further streamline operational expenses and cut lending rates by 0.5-1 percentage points, as well as rescheduling debt payment and waiving/freezing lending rates for those affected by the pandemic.

In early 2022, the National Assembly issued Resolution No.43/2022/QH15 on monetary and fiscal support programs worth a combined total of VND350 trillion (US$15.4 billion) to aid economic recovery and adaptation to a new normal.

These include a fiscal support package of VND291 trillion ($12.8 billion) and a monetary one of VND46 trillion ($2 billion).

Russian petrochemical firm SIBUR strengthens presence in Vietnam market

SIBUR, the largest integrated petrochemicals company in Russia and one of the fastest-growing companies in the global petrochemicals industry, announces its decision to strengthen its presence in the Vietnamese market.

The move is part of the company’s long-term strategy to expand in the dynamic Southeast Asian market.

SIBUR plans to build a warehouse network in Vietnam in the second half of 2022 to support rising volumes of polyolefin supplies to the country. The company sold more than 50,000 metric tons of polyolefin products in Vietnam in 2021 and aims to increase sales in the country by 30% in 2022.

Polyolefins, such as polyethylene and polypropylene, serve as feedstock for the production of versatile plastics.

How Vietnam F&B cope with geopolitical tensions?

Vietnam’s seafood and rice are expected to be in hot demand to replace the disrupted supplies of key commodities as a result of the ongoing Russia-Ukraine conflict, according to Mirae Asset Vietnam (MASVN).

The securities company’s report suggested Vietnam’s revenue from retail services and goods last year was heavily affected by the third and fourth wave of the Covid-19 pandemic, which resulted in an expansion rate of only 0.2% – the lowest for the past 12 years.

In addition, the value from hospitality and catering services also suffered a sharp decline of 19.3% year-on-year, due to mobility restrictions to curb Covid-19 infections.

“It is safe to say 2021 was the most difficult year for Vietnam’s food and beverage (F&B) sector since the 1986 reform,” MASVN suggested.

According to the report, economic recovery in the post-pandemic period, the Russia-Ukraine conflict, and inflation would remain three major factors to impact Vietnam’s F&B in 2022.

In this regard, while the recovery would have positive impacts on the majority of businesses, inflation and rising prices of input materials, however, are putting huge pressure on their operations.

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

VIETNAM BUSINESS NEWS MARCH 23

FLC inks Vientiane-Vung Ang railway project