VIETNAM BUSINESS NEWS MAY 11

Vietnam would continue to be world’s second largest rice exporter: US department

VIETNAM BUSINESS NEWS MAY 11

The US Department of Agriculture (USDA) has forecast that Vietnam would maintain its position as the world’s second biggest rice exporter this year.

According to the department, Vietnam will export 6.4 million tonnes of rice in 2011, an increase of 233,000 tonnes compared the volume recorded in the previous year.

It is likely that India will remain the largest rice exporter in the world, with 15.5 million tonnes rice shipped abroad this year. Thailand will rank third with an estimated export volume of 6.1 million tonnes.

Last year, Vietnam shipped abroad 6.15 million tonnes of rice worth 3.07 billion USD, down 3.5 percent in volume but up 9.3 percent in value year-on-year.

Statistics show that in the first four months of this year, the country exported 1.89 million tonnes of rice, down 10.8 percent in volume but up 1.2 percent in value over the same period last year.

The Vietnam Food Association said Vietnam’s rice export structure has shifted towards quality types with higher prices and added values./.

Market reverses course, VN-Index up nearly 18 points

Viet Nam’s stock market opened a new week on a positive note as strong demand for some pillar stocks pushed up sentiment.  The market benchmark VN-Index finished higher on Monday, up 17.77 points, or 1.43 per cent, to 1,259.58 points. The index lost 0.7 per cent last Friday.

The market breadth turned positive as 214 stocks rose while 207 stocks decreased and 43 stayed unchanged.

During the session, domestic investors poured over VND23.13 trillion into the southern market, equivalent to a trading volume of 773 million shares.

The move was contrary to experts’ expectation as they forecast that the market will continue to fall this week.

“This week, the market is expected to witness corrections from the beginning of the week, and is likely to bounce back in last sessions of the week,” Bao Viet Securities said in a daily report to investors.

Similarly, analysts from Saigon-Hanoi Securities JSC (SHS) said that the market might fall to lower levels this week to find a bottom-fishing force.

The main reason for Monday’s recovery was gains in large-cap stocks, especially in material and banking sectors.

The VN30-Index posted an increase of 29.93 points, or 2.23 per cent, to 1,370.66 points. 23 of 30 biggest stocks in the VN30 basket climbed on Monday, while only seven stocks dropped.

Material stocks dominated the market’s rally with Vietnam Dairy Products JSC (Vinamilk, VNM) and Masan Group (MSN) all posting a maximum daily gain of 7 per cent. Another material stock reporting great performance was Hoa Phat Group (HPG), up 3.62 per cent.

Bank stocks also had a positive influence on the stock market with many registering gains of more than 1 per cent like Vietcombank (VCB), Techcombank (TCB), Vietinbank (CTG), VPBank (VPB) and MBBank (MBB).

On the other hand, losses in No Va Land Investment Group Corporation (NVL) limited the market’s rally. The company shares edged 5.38 per cent lower in Monday’s trade.

On the Ha Noi Stock Exchange (HNX), the HNX-Index also closed higher, up 0.15 per cent to 280.27 points on large-cap stocks. The HNX30-Index, tracking 30 biggest stocks in market capitalisation on HNX, jumped 0.36 per cent to 418.48 points. The HNX-Index lost 0.44 per cent last Friday.

In Monday’s trade, nearly 116 million shares were traded on the northern bourse, worth nearly VND2.3 trillion.

Meanwhile, foreign investors returned to the market as they net bought a total value of VND94.38 billion on both the exchanges.

Of which, they net bought a value of VND89.82 billion on HoSE and a value of VND4.56 billion on HNX. In the morning session, they net sold a value of VND715.84 million on HNX. 

Market continues to rally on large-cap stocks

Shares rose on Tuesday as stocks in banking and material sectors supported the market.

The VN-Index on the Ho Chi Minh Stock Exchange (HoSE) rose 0.45 per cent to 1,265.31 points. The market breadth was positive as 261 stocks climbed while 159 stocks declined.

However, the market's liquidity was lower than yesterday with over 442.5 million shares being traded on the southern bourse, worth nearly VND12.83 trillion.

The market's rally was boosted by gains in large-cap stocks. The VN30-Index posted an increase of 0.18 per cent this morning to 1,373.19 points.

Of the 30 biggest stocks in HoSE, 16 stocks rose while 13 slid.

Bank and material stocks were still the driving forces for the market's trend.

Of the top five stocks influencing the market, three stocks were from the banking sector including JSC Bank For Investment and Development of Vietnam (BID), Vietnam International Commercial Joint Stock Bank (VIB) and Vietcombank (VCB), and two stocks from the material sector including Vietnam Rubber Group (GVR) and Masan Group (MSN).

But the gain was capped by losses in the real estate and construction sector. Vingroup JSC (VIC) witnessed the biggest lose in market capitalisation, down 0.83 per cent.

On the Ha Noi Stock Exchange (HNX), the HNX-Index also inched higher in the morning session, up 0.41 per cent to 281.43 points. The HNX30-Index increased by 0.7 per cent to 421.39 points.

Ministry develops measures to distribute agro products amid pandemic

The Ministry of Agriculture and Rural Development is working to promote the distribution of farm products amid the fourth outbreak of COVID-19 in Vietnam as well as establish a resilient agriculture sector.

The ministry’s Department of Agro Processing and Market Development Authority said the circulation of agricultural products remained stable in recent days amid the fourth wave of the virus in the country.

According to the Dong Dang Border Economic Zone’s management board in northern Lang Son province, there was some congestion of containers carrying agricultural products to China at Huu Nghi Border Gate after the Reunification Day (April 30) and International Labour Day (May 1) holidays. However, the congestion was tackled in good time and customs clearance had returned to normal. There was no significant congestion at other border gates like Mong Cai.

Deputy Minister of Agriculture and Rural Development Phung Duc Tien said the ministry had called for virus prevention measures to be tightened, especially at agricultural product processing plants to prevent any disruptions to supply chains.

Tien said the COVID-19 pandemic was opening significant opportunities for Vietnam to expand exports of agro products, given the severe shortage of supply in the global market as well as disruptions occurring to global supply chains.

It was essential for Vietnam to contain the virus, promote bio-safety in agricultural production, expand production to increase output and productivity as well as maintain stable supply chains, Tien said.

For products the world market has a high demand for, such as shrimp, the ministry asked for production to be increased but at the same time quality to be ensured to catch the opportunity to expand exports.

He said with an ecosystem of 13,500 enterprises, 17,000 co-operatives, 34,400 farms and 13.8 million farmer households, the agriculture sector achieved significant results in the first four months of this year. Exports increased by 24.2 percent to reach 32.07 billion USD. The sector ran a trade surplus of 2.2 billion USD in the period.

Still, there were difficulties and challenges, especially with the COVID-19 pandemic still complex, he said.

The Ministry of Agriculture and Rural Development would continue to cooperate with other ministries and localities to implement measures with the focus on promoting production and distribution while ensuring virus prevention.

A close watch would be kept on market developments to prevent any problems with the circulation of agricultural products as well as timely updating farmers and producers on market demand for them to be active in production plans.

Processing must also be enhanced to increase added value for agro products, the ministry said. Any trade fraud or price squeezing would be strictly handled.

In the previous virus outbreak which severely hit the northern province of Hai Duong, farmers faced a lot of difficulties in selling their products in the harvest season. Prices of many types of vegetables and fruits dropped sharply./.

Cross-border e-commerce: Game changer to help local traders boost exports

With borders closed and travel restricted since early 2020, cross-border e-commerce has proved itself as a game changer, setting the scene for Vietnamese traders to climb up the global supply chain and reducing risk of disruption caused by an unprecedented crisis like COVID-19.

Vietnam is among countries with the world’s fastest growing e-commerce, said Lai Viet Anh, deputy director of the Vietnam e-Commerce and Digital Economy Agency (IDEA). Last year, local e-commerce revenue grew 18 percent to reach 11.8 billion USD, accounting for 5.5 percent of total retail sales of consumer goods and services nationwide.

Given that global B2C e-commerce turnover is expected to hit over 2.88 trillion USD in 2023, cross-border e-commerce will be a very effective channel for enterprises to expand markets, she said.

The COVID-19 pandemic has been having adverse impacts on traditional in-person trade, said Tran Quoc Toan, Director of Co Do Co., Ltd., a producer of Vietnamese handicrafts which has exported its products to 50 countries and territories. His company has been displaying products on the world’s largest online marketplace Amazon in a hope of reaching more foreign customers.

Using Amazon, Co Do expects to sell its handicraft products directly to end users, Toan said.

Another handicraft manufacturer, Vinescraft Co., Ltd., used to access overseas markets via a network of importers, distribution centres, shops and sellers. The Hanoi-based company started selling products on Amazon five years ago, said Director Tran Duc Chung, adding that it took him two years to explore American taste and learn how to make use of the e-commerce website.

Vinescraft now receives around 300 – 500 orders, worth 19 – 40 USD each, every day, Chung said.

Any digital platform has its own pros and cons, so the most important thing is to find the compatibility between a producer and the cross-border online marketplace it uses in order to boost sales, he shared. Firms must also quickly adapt to changes in customers’ needs and the website’s policies to be able to succeed, he added.

According to data from Amazon Global Selling Vietnam, total sales of Vietnamese sellers on Amazon exceeded 1 million USD mark in 2020, tripling 2019’s figure.

Vietnamese enterprises should further accelerate digital transformation, look towards sustainable development and diversify distribution channels, Gijae Seong, Vietnam Country Manager for Amazon Global Selling, said. They also need to be adaptive to consumers’ changing needs and optimize products and services based on customers’ reviews.

The pandemic has created tremendous pressure for change and new ways of doing business for firms, even small ones, Anh said, emphasizing the need for support from major e-commerce platforms that operate on a global scale.

Director of the Hanoi Department of Industry and Trade Tran Phuong Lan said the capital city plans to organize an exclusive event on trading on Amazon for local handicraft products and craft villages in the coming time, as part of an effort to stimulate cross-border e-commerce.

The department will also hold a number of seminars and training courses for small- and medium-enterprises in the city regarding how to register and sell products on online marketplaces, she revealed./.

CAAV proposes scrapping general aviation business licence of Globaltrans Air

The Civil Aviation Authority of Vietnam (CAAV) has proposed the Ministry of Transport scrap the general aviation business licence of Globaltrans Air JSC.

A representative of the CAAV said the ministry renewed the business licence to Globaltrans Air to operate as a general aviation service provider in 2018. However, by the end of April 2021, the company had not received the air operator’s certificate (AOC).

The competent authority has informed Globaltrans Air about the cancellation of the licence in line with regulations, but it yet to receive any response from the company.

The Transport Ministry granted a general aviation business licence to Globaltrans Air in April 2015. However, the Government’s Decree No. 89/2019/ND-CP dated November 15, 2019 stipulates that a general aviation business licence would be cancelled if the provider does not receive the AOC in 36 months after the licence is granted.

The company was established in July 2014 in Ho Chi Minh City with charter capital of 100 billion VND (4.4 million USD).

According to CAAV, Vietnam currently has four businesses operating in the general aviation industry and meeting requirements of the licence, comprising Vietstar Airlines, Green Planet Airways JSC, Vietnam Helicopter Corporation and Hai Au Aviation JSC.

General aviation is defined as civil aviation operations other than traditional scheduled air services. It covers a large number of aviation activities, for both commercial and non-commercial purposes, including flying clubs, rescue, leisure and agricultural aviation./.

Thai newspaper delves into Vietnam’s tourism recovery efforts

The Bangkok Post on May 10 published an article titled “Vietnam reimagines tourism” discussing the Vietnamese tourism sector’s efforts to respond to COVID-19 impact.

The author, Pattama Kuentak, described Vietnam as rich in history, vibrant in culture and cuisine, with striking landscapes from mountains in the North to beaches along the coast. The nation has become one of the favourite destinations in Southeast Asia.

According to the article, prior to the pandemic, in 2019, the country welcomed a record 18 million foreign visitors and generated total revenue of 32.8 billion USD from both domestic and international tourists.

However, tourism in Vietnam was put on pause in March last year when COVID-19 emerged. The government moved quickly to close borders and ban international flights. Its decisive responses have paid off, as the country so far has recorded only 35 deaths from just over 3,000 coronavirus cases, and its economy shows the most promising signs in the region.

The article cited recent figures from the General Statistics Office of Vietnam, which showed that revenue from tourism in the first quarter of this year totaled 1.34 million USD, down 60.1 percent year-on-year. The number of tourists from travel agencies was 3.7 million, down 80.1 percent, while international arrivals decreased 78.7 percent.

The sharp decline in the numbers of both domestic and international travellers has sent ripple effects through the accommodation, food and beverage service sectors, causing a significant loss in revenue to 258 million USD, down by 43.2 percent.

The majority of international tourists in Vietnam come from Asian economies including Japan, China, the Republic of Korea and Taiwan (China), accounting for around 80 percent of foreign tourism spending, according to a recent McKinsey and Company report entitled "Reimagining tourism: How Vietnam can accelerate travel recovery".

The report suggested that with a strong zero-case-first approach to COVID-19, a resilient local market as well as proactive tourism campaigns from the government, the sector should be able to recover to pre-crisis levels in 2024./.

Aviation sector steps up pandemic prevention efforts

The Civil Aviation Authority of Vietnam has issued an urgent dispatch asking its units to seriously follow COVID-19 prevention and control measures.

The agency requested the implementation of the Ministry of Health’s message: face masks, disinfectant, distancing, no gatherings, and health declarations.

Frequent monitoring of pandemic prevention measures at airports, strict punishment of violations, and the quarantining of flight crews under regulations were also ordered.

Airlines were recommended to refuse transporting people with no health declarations and not following safety regulations./.

VIETNAM BUSINESS NEWS MAY 11

Foreign investors laud Vietnam’s infrastructure development plan: Barron’s

The US-based newswire barrons.com has published an article analysing positive impacts on Vietnam’s financial market of an infrastructure development plan issued at the 13th National Congress of Communist Party of Vietnam.

The article said the leaders of the Communist Party of Vietnam (CPV) earmarking 119 billion USD for infrastructure and committing to increasing the private sector’s contribution to the gross domestic product from 42 percent to 55 percent by 2025 have attracted foreign investors and resulted in upbeat signals in the finnancial market.

It cited an example of the VanEck Vectors Vietnam exchange-traded fund, saying it is up 9 percent since the Congress wrapped on February 2. In addition, Dragon’s United Kingdom–listed Vietnam Enterprise Investments fund has gained 17 percent this year.

Pouring cash into improvements should enable the government to achieve its 6.5 percent to 7 percent annual growth targets while boosting profits for appropriately positioned companies, said Bill Stoops, chief investment officer at Dragon Capital in Ho Chi Minh City, as quoted by the article.

On the country’s property potential, Nick Niziolek, head of global strategies at Calamos Investments, was quoted as saying that “New household formation in Vietnam is running at 80,000 to 90,000 a year, and supply at 60,000 to 70,000.” “That’s an exciting long-term opportunity,” he added.

Regarding commercial and digital infrastructure, it quoted Sean Fieler, chief investment officer at Equinox Partners as saying that “Vietnamese engineers cost less than in India, and thousands of them are learning Japanese.” According to him, FPT Vietnam, a diversified IT provider with a burgeoning outsourcing business in Japan, saw its shares jumping by a third this year and can run further.

With all the country’s positives, US investors might have reason to edge back into Vietnam anyway, the article concluded./.

Vietnam needs to invest in processing, packaging of agricultural products: experts

Fruit and vegetable exporters should improve their processing technologies, especially in the post-harvest and packaging stages, to preserve their products longer and enhance their value, experts said.

Statistics from the Ministry of Agriculture and Rural Development show that the value of fruit and vegetable exports in the first quarter were worth 950 million USD, a 6.1 percent rise year-on-year.

Due to the impact of COVID-19, last year exports fell marginally to 3.26 billion USD.

According to Dang Phuc Nguyen, general secretary of the Vietnam Vegetables Association, new-generation free trade agreements (FTAs) such as the EU-Vietnam Free Trade Agreement (EVFTA), the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and Regional Comprehensive Economic Partnership (RCEP) are helping Vietnamese businesses increase fruit and vegetable exports this year.

The UK – Vietnam Free Trade Agreement (UKFTA), which came into force late last year made more than 94 percent of vegetables and fruits be exported tax-free, he said.

Many key products such as litchi, longan, rambutan, dragon fruit, and pineapple would benefit since tropical fruits originating from competing countries such as Brazil, Thailand and Malaysia do not have FTAs with the UK, he said.

Experts said to take advantage of opportunities and boost exports, businesses would need to improve the quality of their fruit and vegetable products to meet the standards required by importing markets.

Nguyen Quoc Toan, Director General of the General Department for Agricultural Products Processing and Market Development, said post-harvest losses accounted for 10 percent of rice output, 10-20 percent of root and tuber crops and 10-30 percent of fruits and vegetables.

In the Mekong Delta, Vietnam’s rice bowl, post-harvest losses were worth more than 3 trillion VND (132 million USD) a year, he said.

The country’s preservation methods were basic and outdated, its transport, storage and cold storage were of poor quality, and there were very few deeply processed products, he said.

Packaging farm products also plays a very important role in preserving them after harvest, but Vietnamese businesses do not pay attention to that, according to experts.

Some 70 percent of fruit and vegetable exports is to neighbouring China, mostly in fresh and unprocessed forms.

Little goes to the Republic of Korea, Japan, the US, or the EU because of storage and post-harvest processing limitations./.

Five local firms to export lychees to Japan

Five enterprises in Bac Giang province, which is noted for lychee growing, are joining hands to help purchase and export the fruit to Japan, according to the provincial Department of Agriculture and Rural Development.

The enterprises include Chanh Thu Fruit Import and Export Co., Ltd, Ameii Vietnam Joint Stock Company, Rong Do production, trade and service Co, Ltd, the Global Food Import- Export Joint Stock Company, and Bamboo Company.

Local firms have already surveyed lychee growing areas and have subsequently prepared negotiation conditions in order to sign contracts and purchase the fruit from farmers.

Among the selected enterprises, Chanh Thu is anticipated to become the first to ship batches of lychees to Japan in the coming days. So far the firm has made preparations relating to the preliminary processing and packaging stages for the batches.

Currently, Bac Giang is home to over 200 hectares of lychee growing areas, with cultivation codes granted for exports to markets such as the United States, the European Union, and China.

The Japanese Ministry of Agriculture, Forestry and Fisheries in March granted geographical indication protection for lychees grown in Bac Giang’s Luc Ngan district. This marks the first Vietnamese product to be granted a geographical indication certification by Japan, paving the way for the fruit to enter this demanding market.

Previously, Bac Giang had successfully protected its trademark for Luc Ngan lychees in other markets, including China, the Republic of Korea, Singapore, Australia, Laos, and Cambodia.

 

Challenges lie ahead to improve local business climate

Despite undergoing a number of administrative procedures to ensure that investment conditions become more transparent, Vietnam is facing several significant challenges regarding business climate improvements in the future, according to insiders.

The Vietnam Chamber of Commerce and Industry (VCCI) recently released a report, outlining how the domestic business environment has significantly improved in recent times and how the country’s competitive capacity has also been enhanced over the past five years.

Most notably, up to 60% of administrative procedures have been simplified, thereby creating favourable conditions in which the local business community can benefit from.

Australian Deputy Ambassador to Vietnam Andrew Barnes noted that the Vietnamese private sector has witnessed an impressive performance over the past five years, especially last year despite the negative impact caused by COVID-19 outbreaks.  

The Australian diplomat added that domestic small and medium-sized enterprises (SMEs) continue to represent the driving force behind national economic growth, with the private sector making greater contributions to the economy in comparison to other developing countries.

He therefore emphasised that a competent public policy has become a key factor in boosting the local business environment.

A prime example for this can be seen in both the 2020 Enterprise Law and the 2017 Law on Support for Small- and Medium-Sized Enterprises which have helped the private sector significantly contribute to the country’s sound economic performance, said the Australian diplomat.

Vu Tien Loc, chairman of the VCCI, analysed that the Vietnamese business environment has revealed a number of inadequacies though administrative procedures and investment conditions became increasingly transparent.

Local firms have encountered issues in gaining access to the State’s plans and reports, which typically provide them with general information, elaborated Loc, noting that there remains inequality among private enterprises, state-owned enterprises, and foreign-invested enterprises.

The VCCI leader went on to reveal that Vietnam has cut down on a number of conditions relating to market entry across several industries, which are expected to create the optimal conditions possible for SMEs to enter the market.

However, in several fields that require large investment and prolonged capital recovery, the risk of policy changes remains worrying and will hinder many large enterprises in their investments, he stressed.

Vietnamese firms’ overseas investment surges in first four months
 
Vietnamese firms invested US$545.9 million in overseas projects in the first four months of 2021, a year-on-year rise of 7.9-fold, according to the Ministry of Planning and Investment.

There were 18 new projects receiving investment certificates with total registered capital worth $142.8 million, up 2.7-fold against the same period last year.

In addition, $403.2 million was pumped into nine existing projects, surging 25.5-fold.

A major part of the capital outflow - $270.8 million - was poured into science-technology projects, accounting for 19.6 per cent of the total figure. Wholesale and retail followed with $147.8 million.

The US was the top destination for Vietnamese capital in the period with $302.3 million, holding a lion’s share of 55.4 per cent.

Cambodia came second with $89.1 million, followed by France, Canada, Germany and the Netherlands.

As of April 20, Viet Nam had 1,417 valid overseas projects totaling $21.8 billion, mainly in the sectors of mining (36 per cent of total capital) and agro-forestry-fisheries.

Local garment industry looking towards sustainable development

The Vietnam Textile and Apparel Association (VITAS) is committed to promoting the sector’s sustainable development with the aim of raising the living standards of its employees under the UN’s Sustainable Development Goals (SDGs).

It has been estimated that the global fashion industry consumed 79 billion cubic metres of water, emitted 1,715 million tonnes of CO2, and generated 92 million tonnes of waste in 2015 alone. The figures are forecast to grow by at least 50 per cent by 2030.

To achieve sustainable development and be able to compete in the fashion industry’s global supply chain, Viet Nam should not rely on cheap labour but on quality, technology, productivity, delivery time, and transparency, said VITAS President Vu Duc Giang. It also needs to minimise the consumption of energy and resources and invest in advanced technology to meet international standards on work and the environment, he added.

Dr Do Quynh Chi, Director of the Research Centre for Employment Relations (ERC), said Vietnamese manufacturers must boost production values to have the necessary resources to invest in complying with international labour and environmental standards and build a long-term and direct relationship with fashion brands.

A recent survey by the ERC shows that if local producers remain outsourcing sub-contractors who have profit margins squeezed by buyers in most cases, there is no other way for them to secure the resources needed for investing in sustainable development. They could even “fall out” of the global supply chain.

Manufacturers must view employees as their greatest resource, Giang said. They must establish links with peer producers to not only bring their strengths into full play but also to take advantage of the strengths of others, he noted.

He went on to cite the fact that at the outset of the COVID-19 pandemic last year, a number of Vietnamese producers succeeded in delivering orders for billions of face masks to buyers in the US and France within a month, due to their level of cooperation.

According to a report from the ERC, up to 50 per cent of fashion brands only purchase from major factories with 1,000 workers or more, as they assume that smaller suppliers will be unable to meet quality standards and fulfil their corporate responsibility requirements.

If there are no doors left open for small and medium-sized enterprises (SMEs), they will easily fall into the supply chains of discounters, which can lead to the entire domestic garment industry joining a “race to the bottom”, Chi said.

She stressed the need to design support policies for SMEs in terms of technology and management, allowing them to engage in sustainable development standards and climb up sustainable global supply chains.

Bac Ninh calls for investment

The northern province of Bac Ninh is seeking investment for 47 projects during the 2021-25 period, according to the provincial People's Committee.

The prioritised projects are in a wide range of sectors such as hi-tech industries, trade, agriculture, urban infrastructure and industrial zone development, health care, education and training.

The projects include a US$20 million electronics manufacturing plant; a $20 million agricultural processing factory; a logistics and port complex, worth $40 million; a 97ha agricultural complex which also comprises a large wholesale market valued at $85 million and construction of the 54ha Cao Duc Van Ninh industrial cluster worth $26 million.

To attract both foreign and domestic investors, Bac Ninh focused on improving business climate prioritising projects which use less land, less labour; have high investment rate, strong budget collection and high technology.

The province licensed 38 new foreign-invested projects worth $260 million over the past four months, according to the provincial news portal.

The province also allowed 26 existing projects to increase their capital by $38 billion.

As of April 20, it was home to 1,658 foreign-invested projects with a combined investment capital of more than $20 billion.

Together with general preferential mechanisms and policies of the State, the province also proposed some initiatives to encourage investment in industrial zones and boost on-the-spot investment promotion through creating images from big foreign businesses, such as Samsung, Canon and Foxcon.

Surrounded by major economic centres such as Ha Noi and Hai Phong, it has managed to establish itself as one of the major FDI destinations. 

Textile stocks slump despite profit rises

Despite a positive recovery in the first quarter of this year, textile company stocks continued to decrease.

Even though positive earnings and good export results were recorded, major stocks in the textile and garment industry lost ground.

Shares of Thanh Cong Textile Garment Investment Trading Joint Stock Company (TCM) dropped 12 per cent compared to the beginning of April, trading at around VND117,000 (US$5.11) per unit.

Shares of TNG Investment and Trading Joint Stock Company have also slumped 13 per cent compared to the beginning of April, trading at VND20,600 per share. Vietnam National Textile & Garment Group (VGT) are being traded at VND14,800 per unit, down 17 per cent compared to the beginning of April.

The recovery of textile and garment enterprises had been forecasted by many experts and analysts due to positive growth factors such as the recovery of production chains, and traditional orders returning after the pandemic.

Some enterprises with available raw materials have partly converted their production capacity into making masks and protective clothing, diversifying their output products.

Post-pandemic, Viet Nam’s textile and garment industry is expected to benefit from the strong demand from main export markets such as the EU, US, Japan and South Korea.

Export value also benefitted from free trade agreements such as the Viet Nam-EU Free Trade Agreement (EVFTA), Regional Comprehensive Economic Partnership (RCEP) and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).

Investment from China is also predicted.

According the Ministry of Industry and Trade, export turnover in the first quarter of 2021 increased slightly by 1.1 per cent over the same period last year, estimated at $7.2 billion. Items such as knitwear and popular goods with large consumption recorded new orders.

Many businesses reported profits in the first quarter. VGT reported after-tax profit of VND200.4 billion, an increase of 28.5 per cent compared to the first quarter of 2020.

TCM post-tax profit was VND154.5 billion, up by 36 per cent year-on-year. Song Hong Garment Joint Stock Company (MSH) announced after-tax profits of VND92.1 billion, an increase of 44 per cent compared to the first quarter of 2020.

However, textile enterprises are still facing difficulties and challenges over material prices including rising costs in cotton and yarn.

According to the Viet Nam Cotton and Spinning Association (VCOSA), in the first two months of 2021, the price of raw cotton imported to Viet Nam increased by 0.87 per cent over the same period last year, at an average of $1,625 per ton. The highest import price was recorded from Australia at $1,917 per tonne.

“From December 2020 to February 2021, the sharp increase in yarn prices caused many difficulties for textile enterprises,” said Le Tien Truong, Chairman of the Board of Directors of Viet Nam National Textile and Garment Group (Vinatex).

“At present, fabric prices have not increased significantly while the yarn price has increased by 25 per cent.

“The reason for the high increase in yarn prices is that the last cotton crop in the world produced low yields, and worldwide cotton inventories have also decreased. It is expected that the amount of cotton consumed this year globally will exceed the amount of cotton that can be harvested.”

TNG recorded net revenue of nearly VND911 billion, an increase of 18 per cent over the same period.

During the period, selling expenses were reduced by nearly half, and administrative costs were also lower than the same period last year, but due to a large decrease in gross profit, TNG only saw a post-tax profit of VND22 billion, down 34 per cent compared to the first quarter of 2020.

As for new orders in the first quarter, although the quantity of products is higher, the price is between five and 10 per cent lower due to COVID-19. Meanwhile, input costs and payables to employees did not decrease, leading to an increase in the cost of a product, TNG said.

Raw cashew nut imports rocket in first four months

Vietnam imported nearly 1.2 million tonnes of raw cashew nuts worth 1.9 billion USD in the first four months of this year, increases of 300 percent and 323.5 percent year-on-year, according to the General Statistics Office.

The volume neared the total posted in 2020, of 1.45 million tonnes, and at the current rate this year’s imports could exceed the 1.8 million tonnes planned by the Vietnam Cashew Association (VINACAS).

VINACAS attributed the surge in raw cashew imports over recent months to the fact that exports have maintained stable growth while domestic supply has been lacking.

Abnormal weather conditions also resulted in the harvest being one month later than usual. Heavy rains during the harvest season in cashew farming centres like the southern provinces of Binh Phuoc and Dong Nai also hampered the drying process, thus affecting quality, the association added.

Businesses said they have faced a shortage of raw materials in recent years and to ensure supply for export processing have had to increase imports even though import prices are rising.

Cambodia is currently the largest supplier of raw cashews to Vietnam, making up 60 percent of the total. Imports from African countries such as Tanzania, the Ivory Coast, Ghana, and Nigeria have also risen sharply over recent months.

While import prices of raw cashews hailing from most foreign suppliers went down during the first four months, the price of unprocessed nuts from Cambodia soared 26.2 percent year-on-year.

As Cambodia’s raw cashews accounts for the majority of the volume imported into Vietnam, the average import price reached 1,580 USD per tonne in the four-month period, up 5.8 percent year-on-year.

Explaining the rising import volume from Cambodia, one processing company in Binh Phuoc said the transportation of cashews harvested in the previous crop has encountered certain difficulties since late 2020, including a shortage of cargo containers and higher sea freight costs. Meanwhile, Cambodia has finished harvesting its new crop and its cashews can be easily delivered to Vietnam by road.

Also, the company noted, as African countries have only recently completed their harvest and their exporters are still preparing their packaging and making customs declarations, cashews from the continent won’t arrive until the latter half of May.

According to the African Cashew Alliance, global cashew demand will continue growing strongly in 2021, especially in Europe and the US, which recorded growth rates of 17 percent and 8 percent, respectively, in cashew consumption last year despite COVID-19.

In the first four months of 2021, Vietnam earned 894 million USD from shipping 152,000 tonnes of cashew nuts abroad, down 7.4 percent in value but up 8.6 percent in volume year-on-year.

The country remains the world’s leading cashew exporter, but falling export prices are likely to lower profit margins, VINACAS predicted./.

Fruit and vegetable exports soar during four-month period

Vietnam raked in a sum of US$1.35 billion from exporting fruit and vegetables during the past four months of the year, thereby representing an increase of 9.5% compared to the same period from last year, according to details given by the Agro Processing and Market Development Authority.

April alone saw the country earn US$380 million from fruit and vegetable exports to raise the total export value throughout the reviewed period to US$1.35 billion.

China remained as the leading importer of Vietnamese fruit and vegetables during the first quarter of the year, making up 64.7% of the overall market share as exports to the northern neighbour reached US$610.8 million, an increase of 16.2% compared to the same period from last year.

Furthermore, strong export growth was also recorded in the Ukrainian market, representing a 6.97-fold increase, while exports to Saudi Arabia endured the largest drop in terms of value with a fall of 62.0%.

Furthermore, all types of Vietnamese fruit and vegetables during the first quarter experienced an upward trajectory as exports of dragon fruit, mangoes, bananas, coconuts, jackfruit, lemons, and watermelons enjoyed respective increases of 3.2%, 30.6%, 35.2%, 13.0%, 63.8%, 0.8%, and 28.1%.

Moreover, the import value of fruit and vegetables in April reached US$100 million to bring the total import value during the four-month period to US$451.1 million, a rise of 19.4% against the corresponding period from last year.

Throughout the first quarter, China, the United States, and Myanmar represented the three largest suppliers of fruit and vegetables to the nation, with the import value from China, the US, and Myanmar rising by 59.6%, 5.9%, and 35.1%, respectively.

Despite there being some positive signs in terms of Vietnamese fruit and vegetable exports to Taiwan (China) in the reviewed period, the export proportion ultimately remained low.

Experts from the Agro Processing and Market Development Authority (Agrotrade) forecast that the nation’s fruit and vegetable exports to the Taiwanese market will continue to grow moving forward due to seasonal factors.

Indeed, the domestic fruit and vegetable industry must pay close attention to the export of fruits and seeds to this market if they are to enjoy competitive advantages and increase the export value for these products, according to Agrotrade. 

More flexible quarantine rules desired by business community

With Vietnam tightening quarantine rules for foreign arrivals amid the backdrop of increased coronavirus cases in the community, the shortage of foreign employees will continue to linger.

Last week, the Ministry of Health announced that Vietnam will extend its quarantine measures from 14 to 21 days for both foreign arrivals and those who come into contact with COVID-19 patients. The move was made following the resurgence of coronavirus cases of several individuals who had completed the 14-day quarantine and tested negative two or even three times.

Le Bich Loan, deputy director of Saigon Hi-tech Park Management Authority, said that the government has made the right decision to keep the wider community safe during the global health crisis. However, she worries that businesses will face more difficulties due to a lack of foreign experts being able to enter the country.

“Companies have to find alternative local sources for foreign employees or communicate with overseas experts through online meetings to address operation issues. However, they still need some key non-Vietnamese experts to work on-site who have experience to deploy high technology and provide training to locals,” Loan explained.

She believes the extension to 21 days will be too time-consuming and costly for companies as they now have to wait for foreign experts finishing the mandatory quarantine. “If possible, the government can consider classifying the groups of foreign arrivals to Vietnam. Foreign experts who have vaccine passports should be facilitated to enter the country,” she said.

According to the Ministry of Labour, Invalids, and Social Affairs, there are nearly 8,500 highly-skilled foreign workers on a priority list to enter Vietnam. They involve some 2,000 employees of key national projects that use new technologies.

Vietnam’s early action, targeted testing, extensive contact tracing, effective government communication, and widespread public compliance has helped to mitigate the damage from the virus since it emerged at the tail-end of 2019.

Commenting on the government’s efforts, Adam Sitkoff, executive director of the American Chamber of Commerce in Hanoi said, “It is important to recognise that in-bound travel brings in foreign experts and businesspeople necessary to facilitate new investment, efficient operations, key infrastructure, education of Vietnamese children, and more. We also must recognise the hardships that the travel, tourism, transportation, and hospitality sectors have sustained during the pandemic period.”

Locking people inside a room for many weeks might seem like a good idea today, Sitkoff added, but Vietnamese policymakers will need to think seriously about a safe and simple system of documentation that will facilitate international arrivals here. “To stay competitive and grow the economy, creative thinking and leadership are both required,” Sitkoff concluded.

Formidable rules vex foreign employers

The business community and non-Vietnamese employees have expressed dismay over changes in requirements to qualify as a foreign expert worker under Decree No.152/2020/ND-CP, which took effect from February 15 and regulates the recruitment and management of overseas workers coming to work in Vietnam.

According to Clause 3, Article 3 of Decree 152, a foreigner entering Vietnam for work shall be considered an expert in one of the two standards. Specifically, he or she is required to have a university degree or higher, and at least three years’ work experience in his/her field corresponding to the role that he/she will be appointed to in Vietnam. Otherwise, he or she is required to have at least five years’ work experience and a practicing certificate corresponding to the role in Vietnam. Special cases shall be approved by the Prime Minister, following recommendations from the Ministry of Labour, Invalids, and Social Affairs.

Compared to Decree No. 11/2016/ND-CP issued in 2016, requirements related to the qualifications essentially remain the same, but Decree 11 only required foreign experts to have a certificate from any overseas agency, organisation, or enterprise confirming their expertise, and did not specify the prerequisite length of work experience.

Partner at Baker McKenzie Thuy Hang Nguyen said that the changes in the new decree have created difficulties for foreigners working in Vietnam who either need to renew their current work permits or apply for new ones, as well as those who plan to enter Vietnam to work at a future date.

Hang noted that before Decree 152, some local departments of Labour, Invalids and Social Affairs (DoLISA) used to accept a bachelor’s degree with any major, which did not have to match the foreigner’s job position in Vietnam, as qualified evidence for work permit applications as “experts”.

But recently, some local departments such as Ho Chi Minh City DoLISA have strictly requested a major stated in the bachelor’s degree or equivalent to be directly relevant to or exactly match the foreigner’s job position in Vietnam – otherwise, the work permit application will be rejected.

Facing changes mainly related to high-level personnel, foreign business associations in Vietnam and many businesses are worried that the rigidity of the new regulations could disrupt business operations, as not all experts have university degrees in their majors associated with their positions in Vietnam.

At a dialogue of Ho Chi Minh City DoLISA with businesses, a representative of the American Chamer of Commerce Vietnam said, “The decree requires that executives must hold degrees corresponding to their positions, but it is hard to show a specialised degree for a certain job as there are numerous interconnections in professions.”

Speaking at the meeting, a representative of the Canadian Chamber of Commerce in Vietnam (CanCham) said that in addition to a degree, using overseas working experience rather than work experience in Vietnam has caused multiple difficulties for businesses. “In the Fourth Industrial Revolution, not all experienced foreign workers have degrees or diplomas that are suitable to jobs in Vietnam,” said the CanCham representative.

Human resources representatives at some foreign companies said that they have been facing obstacles in completing procedures to apply for new work permits for non-Vietnamese executives. These companies do not know how to apply for new work permits for their experts because the workers do not have university degrees or practicing certificates, even though they may have high professional qualifications in the job.

A representative of one Japanese firm said that some foreign staff holding key positions at the firm had worked in Vietnam for 30 years, but current permits are due to expire at a time when the firm does not know how to handle such cases, as it can be hard to prove the staff’s work experience in foreign countries.

“Even in Vietnam, it is very normal to graduate from one major and work in another. Such regulations are quite rigid, and there should be room for more flexibility,” said Techbase Vietnam, a Japanese-backed internet company that has been present in this country for over five years.

Some business associations have requested flexibility in accepting university degrees and vocational qualifications that are not suitable for job positions, and accepting experience gained in Vietnam to be applied for work permits. This issue is being deemed even more important in the context that the ongoing pandemic is causing difficulties for people to live and work in new countries, or they could be stuck outside their home country and must work to make ends meet elsewhere.

Tran Le Thanh Truc, head of Employment and Work Safety under Ho Chi Minh City DoLISA, said that the country is always looking to attract foreign experts with high qualifications in the field in which they are recognised as vital.

“There is flexibility of professional qualifications in each specific case. Although we cannot immediately issue work permits if the qualifications are not appropriate, there will be a written response to request further explanation of the reasons for consideration,” Truc said.

However, despite receiving many petitions from foreign employers, Ho Chi Minh City DoLISA is still required to comply with the provisions of Decree 152 until there is a new document or circular guiding simplification of procedures.

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

VIETNAM BUSINESS NEWS MAY 10

VIETNAM BUSINESS NEWS MAY 10

Businesses advised to stay vigilant to maintain export growth

 
 

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