VIETNAM BUSINESS NEWS OCTOBER 22

Economic recovery may require non-traditional solutions

In the context of an unfeasible zero COVID-19 strategy, living with the virus is considered to be the long-term future, meaning there must be a recovery scheme with higher, stronger, and even non-traditional solutions to bring the national economy out of the current tough situation.

The fourth outbreak of the COVID-19 pandemic has adversely affected production and business activities of most local businesses.

According to the PROFIT500 Ranking - Top 500, a list of the most profitable enterprises in the country this year as announced by Vietnam Assessment Report Joint Stock Company (Vietnam Report), profits of local enterprises in the third quarter of are forecast to endure a sharp fall due. This is largely due to widespread social distancing measures caused by the lasting and challenging impact of the fourth wave of the pandemic that has disrupted recovery momentum.

Growth prospects of many sectors moving forward face great challenges when at least 70% of manufacturing factories based in the southern region have been forced to halt operations during the lockdown period. For operational factories, they must follow the "3 on-site" model, production, isolation, and on-site accommodation, and test for COVID-19 every three days, thereby resulting in high operating costs and forcing many sites to reduce capacity by up to 50%.

Talking to the media, Nguyen Minh Thao, head of the Business Environment and Competitiveness Research Department under the Central Institute for Economic Management (CIEM), stated that the resilience of the business community is becoming increasingly exhausted, especially for small and medium enterprises.

Local firms therefore face plenty of difficulties, especially relating to the disruption of the supply chain, both input and output supply, along with strong countermeasures which have driven them in an exhausted state, she added.

Sharing this viewpoint, Pham Thi Ngoc Thuy, director of the Office of the Private Economic Development Research Board (Board IV), stated that financial health represents the most difficult thing for domestic businesses at present.

“Fiscal and monetary policies are the "lifesavers" of enterprise, however, there is still a certain gap between the expectation and the actual implementation of these policies. Finance and money are like the blood of businesses, all support, despite being very valuable, is not enough to be able to revive it due to limited resources," said Thuy.

According to a number of economic experts, amid the unfeasible zero COVID-19 strategy, living with the pandemic must be considered the best long-term plan, meaning businesses must continue to adapt themselves to the latest context.

In order to ensure smooth production, the internal organisational process of firms, especially human resource-related activities, must undergo changes aimed at ensuring improvement to meet new requirements.

According to Thao the pandemic has recorded a number of unpredictable developments, without precedent, thereby leading to confusion in management at various levels. Upon facing up to the current difficulties of enterprises, the Government must show a unified direction on a number of principles and solutions.

First of all, all goods, except prohibited goods which have been specified in specialised laws, must be circulated. Only when goods are circulated can this help enterprises to maintain production. In addition, the Government should issue unified guidelines relating to disease control plans and travel plans for people between localities, with easy-to-understand and easy-to-implement criteria.

“Empowerment should be given to businesses in choosing an appropriate operating model and production organization as well as in pandemic prevention. Business activities should not be stopped if the infection level is in a narrow range of a separate line/workshop. Notable businesses can stay active in conducting COVID-19 testing as because many of them have on-site medical facilities capable of doing this. Accordingly, they will be responsible for their own results," Thao suggested.

Dr. Nguyen Dinh Cung, an economic expert, underlined the necessity of continuing to re-organise production activities, social life, and state management in a bid to ensure the safe and flexible adaptation to the pandemic. Indeed, livelihoods and lives can be viewed as two sides of the same coin as they both complement each other.

Moreover, it can be considered necessary to quickly recover and firmly consolidate the growth drivers of the national economy because many of them have been weakened. Additionally, resources must be utilised for the right purposes, right objects, and in an effective manner, he said.

“Solution needs to be specific, feasible and immediately and swiftly implemented within the set time limit. In a special context, non-traditional solutions can be considered," Dr. Cung stated.

He stressed the necessity of quickly developing a recovery programme and accelerating growth over the coming years, with a particular focus on assessing the internal context frankly to warn about an uncertain outlook in the future.

“Compared to the 1999 and 2011 period, our policies are much better. At this time, we must spend heavily to support people, businesses and the whole economy. Regarding monetary policy, in addition to interest rate lowering policies, we can open the money supply, increase credit and provide special credit packages," Dr. Cung recommended.

Reference exchange rate down 3 VND

The State Bank of Vietnam set the daily reference exchange rate at 23,142 VND/USD on October 22, down 3 VND from the previous day.

With the current trading band of +/-3 percent, the ceiling rate applicable to commercial banks during the day is 23,836 VND/USD and the floor rate 22,447 VND/USD.

The opening-hour rates at commercial banks saw little changes.

At 8:25am, Vietcombank listed the buying rate at 22,625 VND/USD and the selling rate 22,855 VND/USD, unchanged from October 21.

Vietinbank also kept both rates unchanged at 22,630 VND/USD (buying) and 22,850 VND/USD (selling).

BIDV reduced both rates by 5 VND to 22,650 VND/USD(buying) and 22,850 VND/USD (selling)./.

Vietnamese rice exporters see great opportunities

The loosening of social distancing measures and increasing global demand have opened up great opportunities for Vietnamese rice exporters, according to experts.

Statistics from the General Department of Vietnam Customs showed that Vietnam enjoyed growth in rice exports in three consecutive months, with month-on-month rises of 19 percent in volume and 20.5 percent in value recorded in September.

Compared to the same period last year, rice exports in September rose 54.5 percent in volume to 593,624 tonnes with value of 293.15 million USD.

In the January-September period, Vietnam shipped abroad 4.57 million tonnes of rice, earning 2.42 billion USD, down 8.3 percent in volume and 1.2 percent in value. However, the price of Vietnamese rice rose 7.8 percent in the period.

Experts attributed the drops to impacts of COVID-19 to the harvesting and transport of rice in the Mekong Delta region – a major rice bowl of Vietnam. However, they predicted that rice sector will recover fast when the pandemic is controlled.

According to the Vietnam Food Association (VFA), Vietnam is anticipating a great chance to increase exports when a fall is forecast in other rice supply sources such as India and Thailand while the global demand is rising.

Securities firm Mirae Asset Vietnam held that the EU-Vietnam Free Trade Agreement (EVFTA), which has become effective since August 2020, is helping to boost Vietnamese rice exports to the European market.

At the same time, the US Department of Agriculture predicted that global rice consumption in the 2021-2022 crop will rise 1.8 percent year on year, which is coupled with a rise in rice prices.

Thanks to higher prices, Vietnamese rice exporters are expected to enjoy good growth in profits./.

Cashless payments flourish in first nine months of 2021

Cashless payments continued to grow fast in the first nine months of 2021 to top 36.28 quadrillion VND (1.6 billion USD), according to a recent report by the Government.

During the period, 435.25 million transactions worth 22.78 quadrillion VND were made via the internet, up 54.1 percent in volume and 30.7 percent in value. More than 1.19 billion others worth over 13.5 quadrillion VND were conducted via mobile phone, surging 74.98 percent in volume and 93.69 percent in value.

The Government said cashless payments for public services have improved considerably in terms of both quantity and quality.

Businesses nationwide have made more than 90 percent of their tax payments via bank transfer. A large number of people have also used this method to pay power bills and medical examination and treatment fees or receive pensions and allowances.

However, payment frauds have also become increasingly complicated across the country, the report pointed out.

Speaking at a discussion last week, Dao Minh Tuan, head of the card division of the Vietnam Banks Association, said though credit institutions have continually updated security technology, payment scams remains sophisticated.

Representatives of banks held that coordination among relevant parties is needed to ensure payment security and safety./.

Dong Nai attracts 1.1 billion USD in FDI capital so far this year

Dong Nai attracts 1.1 billion USD in FDI capital so far this year hinh anh 1

Dong Nai has attracted 1.1 billion USD to nearly 140 foreign direct investment (FDI) projects since the start of this year, according to the Industrial Zones Authority of this southern province (DIZA).

Of the sum, more than 736 million USD was channeled into 93 existing projects while the rest into new ones.

The FDI capital attracted so far this year has exceeded this industrial hub’s target of 700 million USD for 2021.

Most of the projects operate in supporting and electronics industries, apply modern technology, and do not cause environmental pollution, matching the local policy of selective FDI attraction.

Le Van Danh, deputy head of the DIZA, said despite the COVID-19, foreign investors have still raised capital, expanded operations, and invested in many new projects in Dong Nai, which shows their belief that the pandemic will be put under control and the economy of Vietnam and Dong Nai will develop in the time ahead.

The province will welcome more FDI projects in the coming time as many investors are liaising with the DIZA to express their intention to open new projects, he added.

Dong Nai is currently home to nearly 1,500 valid FDI projects worth 32 billion USD in total by investors from 45 countries and territories. The largest investors are the Republic of Korea, Taiwan (China), and Japan./.

Travel firms in Binh Thuan permitted to reopen from October 24

Travel companies in the southern central province of Binh Thuan has been permitted to welcome tourists from October 24.

The provincial People’s Committee on October 20 issued a document on the organisation of tourism activities while continuing COVID-19 prevention and control measures.

Apart from giving the green light to travel firms, it also allowed the Department of Culture, Sports and Tourism to hold the first programme welcoming tourists back to Binh Thuan in the “new normal” period and convene a meeting with the province’s tourism association.

The People’s Committee assigned the department to work with the Department of Health, relevant departments and sectors, and the administrations of localities to assess COVID-19 safety levels and announce the eligible tourism companies. The tourism department was also told to ensure that accommodation facilities, travel businesses, and tourist attractions comply with anti-pandemic rules.

Also on October 20, the department issued temporary instructions on measures for safely and flexibly adapting to and effectively controlling COVID-19, depending on pandemic levels in different zones in Binh Thuan.

Binh Thuan is famous for many tourist attractions, from beautiful beaches and vast sand dunes to ancient Cham towers. Notably, Mui Ne, a national tourism site, has become a renowned destination and been called the “resort capital” of Vietnam.

Gold prices rise to hit one-year peak

Local gold prices continued to climb on October 21, even passing historical highs seen over the past one year to reach more than VND58 million per tael.

During the course of the morning trading session, buying and selling prices for gold bars quoted by Saigon Jewelry Company Limited (SJC) stood at VND57.65 million and VND58.37 million per tael, respectively, thereby rising by VND300,000 per tael compared to the prices seen on October 20.

Phu Quy Group therefore listed each tael of SJC gold at between VND57.45 million and VND58.05 million for buying and selling, adding an additional VND100,000 from the prices recorded on the previous day.

Elsewhere, Doji Group gold priced at between VND57.4 million and VND58.2 million per tael for buying and selling, thereby marking increases of between VND200,000 and VND300,000 per tael in terms of buying and selling compared to the trading session from the prior day.

In terms of the global market, gold prices reached US$1,786.3 an ounce on October 21.

In relation to the local forex market, the State Bank of Vietnam adjusted the exchange rate of major foreign currencies, in which US$1 could be exchanged for VND23,145.

Ba Ria-Vung Tau pilots tourism reopening

The southern province of Ba Ria-Vung Tau has welcomed its first tourists after months of closure due to COVID-19, offering a ray of hope for a tourism sector ravaged by the pandemic.

The Minera Binh Chau Hot Springs has officially reopened to guests after closing its doors for more than four months, viewing this as an initial step to study the market and determine what prospects may await.

Though The Grand Ho Tram Resort & Casino in Phuoc Thuan commune, Xuyen Moc district, welcomed just eight visitors, its managers and staff were a lot more cheerful as their business and lives are poised to return to some semblance of normal.

In a bid to gradually recover and adapt to the pandemic, the provincial Department of Tourism developed a set of criteria on COVID-19 prevention and control for accommodation facilities, travel companies, tourist sites, and service providers. The criteria emphasise that both visitors and tourism staff need to have green vaccination cards.

Four resorts were allowed to welcome guests on the first day of reopening. Two were unable to do so, however, as their staff failed to meet the criteria, while local airlines declined to carry passengers under 18 years of age who remain unvaccinated./.

Vietnam’s economy on course to record positive growth

While Vietnam is not out of the woods yet, it has enough pull factors to encourage investors to continue their business operations and even move their manufacturing operations to the country, according to Vietnam Briefing.

Economic activities gradually resuming

The news site noted that Vietnam has announced a phased plan to reopen the economy ensuring pandemic prevention in line with health authorities.

It reported that approximately two-thirds of industries in Ho Chi Minh City have reopened. The number of businesses in export processing zones and industrial parks in Ho Chi Minh City resuming operations has reached approximately 66 percent while at HCM City’s Saigon Hi-Tech park the rate is 74 percent.

Intel and Samsung are targeting to resume full operations of their factories in HCM City by the end of November, which may ease some disruption to supply chains.

Domestic flights are gradually resuming along with interprovincial road and rail travel though passengers have to be fully vaccinated to travel. Several localities have also reopened tourist sites in a bid to attract domestic tourists.

The government is also developing a roadmap to fully open up to international visitors by June 2022. The plan will be implemented in phases with a pilot programme for fully vaccinated international tourists to Phu Quoc island in November 2021. This is expected to be followed by Nha Trang, Ha Long, Hoi An, and Da Lat in December.

The government has issued a resolution on pandemic control giving guidance on four levels of transmission risk – low, moderate, high, and extremely high. The criteria based in the resolution are expected to be rolled out throughout the country which should make it easier for businesses to resume operations.

Apart from this, the government has introduced several measures to help businesses and individuals recover from COVID-19. These include land rent cuts, deferring tax and land payments, one-time payments for employees, and easing of some restrictions on foreign workers.

According to the news site, Vietnam’s market fundamentals remain strong and its economy appears resilient to overcome the recent disruption to production due to the pandemic. There are already signs that things are improving.

From October until the end of this year, 35 million doses of the COVID-19 vaccine are expected to be distributed throughout the country. While Vietnam had a slow start in vaccinating its population, as per Nikkei’s COVID-19 Recovery Index, Vietnam was among the top 10 percent of countries administering the most vaccine doses daily per capita.

In addition, Vietnam is also developing its own homegrown COVID-19 vaccines, which should be ready for use sometime next year. This would reduce Vietnam’s need to depend on foreign vaccines ensuring enough supply for the local population and also possibly export to other markets.

Recovery prospects

The Economist Intelligence Unit (EIU) of The Economist said the Vietnamese economy will recover swiftly in 2022, following the lifting of most coronavirus-related restrictions from late 2021.

Export-oriented manufacturing will continue to be the most important engine of economic growth.

Recent announcements made by foreign investors on additional investment to expand production in Vietnam reflect their trust in Vietnam’s prospects for economic recovery, reported the Dau tu (Investment Review) newspaper.

The Swiss company Nestle said it is pouring an additional over 130 million USD, raising its total investment in Vietnam to 730 million USD to carry out a number of its projects in the next two years.

Alongside Nestle, other foreign firms have committed to maintaining operations in Vietnam despite the fourth wave of COVID-19 outbreaks that have forced various localities to apply stringent preventive measures.

Tetra Pak of Sweden has confirmed that it will pump 5 million EUR (5.86 million USD) to expand its existing 120-million-EUR plant in Binh Duong southern province.

The investment demonstrates the company’s trust in Vietnam’s strong economic recovery after the pandemic, according to Managing Director and President at Tetra Pak Vietnam Eliseo Barcas.

In particular, the LG Display project in Hai Phong northern port city has received additional investment twice this year, with 750 million USD in February and 1.4 billion USD in August.

Earlier this month, authorities in the northern province of Quang Ninh presented an investment registration certificate to a 365.6 million USD project of Jinko Solar Vietnam Co. Ltd., an affiliate of the Jinko Solar Holding Co. Ltd. The firm channeled nearly 500 million USD into a project in the province in March.

Despite current challenges triggered by the pandemic, Japanese firms in Vietnam are working to adapt and improve their production system in the new situation, said Chief Representative of the Japan External Trade Organisation (JETRO) in Hanoi Nakajima Takeo.

For his part, Alain Cany, Chairman of the European Chamber of Commerce (EuroCham) in Vietnam, said the European business community is determined to stand side by side with the Vietnamese Government in this tough time and believes that the Government will successfully bring COVID-19 under control like it did before.

As they have showed their determination to maintain operations in Vietnam, most foreign investors hope that the Government will promptly devise a clear plan for reopening and economic recovery, or else current investment plans will be delayed and newcomers cannot enter the country to study investment possibilities.

Despite COVID-19 impacts, foreign direct investment (FDI) inflows into Vietnam during the first nine months of this year rose 4.4 percent year on year to 22.15 billion USD, reported the Foreign Investment Agency under the Ministry of Planning and Investment.

The total imports-exports value of the FDI sector in the first eight months of the year also surged 31.2 percent to 297.43 billion USD, with exports accounting for 156.64 billion USD./.

Good prospects for wood sector’s recovery: experts

Despite a sharp fall in exports in August and September due to impacts of COVID-19, the wood sector still has chances to complete its export target for the whole year provided that it can quickly resume production, according to experts.

Speaking at a conference on the strategy for recovering the supply chain for Vietnam's furniture sector, Minister of Agriculture and Rural Development Le Minh Hoan noted that in the first eight months of 2021, export revenue of timber and wood products surged 41.4 percent year on year to 10.4 billion USD. Exports of furniture alone hit 7.98 billion USD, he added.

The official said that despite the modest figure in exports of the sector in September due to COVID-19, the efforts and results that the sector has shown are encouraging.

Bui Thi Thanh An, Vice Director of the Trade Promotion Agency under the Ministry of Industry and Trade, cited statistics from the ministry which showed that in the first half of this year, the sector earned 10 billion USD from the export of both interior and exterior furniture and handicraft products, representing a 70 percent rise year on year.

In the recent two years, since COVID-19 broke out, Vietnamese furniture enterprises have shown strong resilience, while trade associations have provided them effective support and orientations.

Mary Tarnowka, Executive Director of the America Chamber of Commerce in Vietnam (AmCham) said that about 60 percent of wood processing facilities in Vietnam are partners of US firms.

Many US retailers have been affected when many Vietnamese exporters have to stop production during the social distancing period in Vietnam, but the US’s demands for Vietnamese furniture is rising, she noted, adding that US retailers are still confident in Vietnamese wood sector’s supply capacity.

Alain Cany, EuroCham Chairman said that European firms are not likely to switch their orders from Vietnam to China or other countries.

Many experts held that furniture retailers, especially those in the US will maintain partnership with Vietnam, especially in the context that major furniture supply sources are still struggling.

Do Xuan Lap, President of the Association of Vietnam Timber and Forest Product (VIFOREST) said that businesses in the sector are working hard for fast recovery.

Many firms pointed out that two major problems that Vietnamese furniture enterprises are facing are materials and labour shortages. They stressed the need for the reopening of the market to deal with the issues.

Lap affirmed that despite difficulties due to COVID-19 pandemic, great opportunities are opening up for Vietnamese furniture enterprises./.

Fruit prices from Mekong Delta rise

Jackfruits, longans and limes from Mekong Delta provinces now can fetch prices two to four times higher compared to months ago when travel restrictions between places were enforced.

Limes are now selling at VND7,000 to 8,000 per kilo at the garden, while the lowest price was only VND2,000 per kilo earlier when sales were slow.

Pham Minh Cuong, director of the Lime Consumption and Production Cooperative in Cao Lanh, Dong Thap Province, said that smooth transport has made it easier for trading, and major markets such as HCM City have attracted more goods than before.

Produce from 70 hectares of land from cooperative’s members are being offered for sale. Currently, about 500 to 700 kilos of limes are being transported to Southeastern provinces daily.

Gardeners usually harvest limes from February to April. After that, lime flowers naturally, so the price is also lower.

On average, about two to four tonnes of limes are produced from 1,000m2 of land, generating a profit of about VND40 million if the average selling price is about VND20,000 per kilo.

As the total area of limes in Dong Thap Province is more than 1,900 hectares, the average output is about 24,000 tonnes.

Another type of agricultural product with an increase in price is Thailand jackfruit, selling at up to VND30,000 per kilo for type 1 jackfruit, and VND19,000 for type 2.

The price is four times higher compared to four months ago.

Nguyen Van Phat, who has one hectare of Thailand jackfruit in Thap Muoi District in Dong Thap Province, was able to earn VND15 million after two rounds of selling.

“It is easier to sell as the price has increased," he said.

Similarly, Edor longans purchased at the garden have doubled in price, ranging from VND12,000 to 14,000 per kilo.

Nguyen Van Thuan from Chau Thanh District said that gardeners had been able to make a profit at these prices.

“In about a month, many longan gardens in Chau Thanh will be in the harvest season. Gardeners hope to earn enough to cover for losses during the social distancing period,” he added.

Dong Thap Province has about 5,500 hectares of longan gardens, with an output of about 53,000 tonnes. 

Profit down in Q3, likely to pick up in Q4: banks

Commercial banks have recorded lower profit during the third quarter of the year with the underlying cause being the fourth outbreak of the novel coronavirus, which resulted in lockdowns in major cities and provinces across the country, said the latest report by the State Bank of Viet Nam (SBV).

In a recent survey conducted by the SBV, 54 per cent of commercial banks and financial institutes have said they expected business to pick up in the last quarter of the year.

SSI Securities Corporation (SSI)'s forecast shows profit during the third quarter of the year for Viet Nam International Commercial Joint Stock Bank (VIB) may experience a nosedive due to the bank's restructuring efforts to support borrowers, despite a positive 11 per cent credit growth since the beginning of the year.

In addition, income generated from bancassurance, which typically accounts for around 20 per cent of the bank's profit, has been hit hard during the lockdown period.

As a result, the bank's forecast for the quarter was VND1.3-1.4 trillion (US$57.5 million) in pre-tax profit, a 16 per cent decrease from the same period last year.

Some commercial banks have not released their business performance for the quarter, while market analysts said most banks would produce weaker numbers compared to the first two quarters of 2021. Contributing factors to lower profit included interest cuts, lower demand and a decrease in asset quality. As demand has shown signs of recovery and the virus outbreak has been put under control, the situation is likely to improve from now until the end of the year.

Bright side

 

Viet Nam Technological and Commercial Joint-stock Bank (Techcombank)'s profit is forecast at VND5.2 trillion, a 35.7 per cent increase year-on-year with a 16 per cent credit growth since the beginning of the year, according to SSI.

SSI also forecast an increase in profit for Military Commercial Joint Stock Bank (MB) and Viet Nam Prosperity Joint‑Stock Commercial Bank (VPBank).

Tien Phong Commercial Joint Stock Bank (TPBank) said its credit growth for the first nine months of 2021 was 15 per cent with a bad debt ratio at just 1.02 per cent, significantly lower compared to last year's figure at 1.43 per cent.

The bank said it was at over 75 per cent of its yearly profit target, which the bank has stated previously to be around VND5.5 trillion for 2021.

"Our performance was testament to TPBank's ability to adapt and adopt new adjustments to sustain business growth," said TPBank director-general Nguyen Hung.

Bad debt

Profit, however, should not be the only measure used to reflect financial institutes' performance, said Viet Nam Bank Association general-secretary Nguyen Quoc Hung.

Hung said prior to the outbreak, there was a great effort by financial institutes to reduce their bad debt ratio. There has been some progress made, especially since the introduction of Government Decree 42 – a decree that facilitates the sale of collaterals and the recovery of capital. However, the fourth outbreak and the widespread lockdown has put a large number of businesses at risk.

"We are to see an increase in bad debt ratio in the banking sector in the near future. As banks need to divert their resources to address such problems their profit is likely to take a hit," he said.

SBV deputy governor Dao Minh Tu said financial institutes must continue to support the business community and the public.

"In order to sustain interest cuts, banks must find a way to reduce expenses in other areas," Tu said.

Since the beginning of 2020, the SBV has cut interest rates three times in an effort to help businesses gain access to more affordable financing and get back on their feet. As a result, the average interest rate among the country's banks has declined by 1.55 per cent compared to pre-pandemic levels.

According to the SBV, the banks have slashed VND26 trillion in interest rates from January 2020 until the end of August 2021.

Commercial banks have slashed more than VND8.8 trillion ($386 million) in interest rates from July 15 to August 31 in support of businesses that have been severely affected by the novel coronavirus. 

Draft circular to prevent banks from hiding bad debts

The State Bank of Vietnam (SBV) expects new draft regulations on debt purchase and sale of credit institutions will prevent the institutions from hiding bad debts.

The regulations are drafted in a new circular, which will revise Circular No. 09/2015 on debt purchase and sale of credit institutions. The draft circular is to be made public for comments.

Besides preventing institutions from hiding bad debts, the SBV believes the revision of Circular No. 09/2015 is necessary as credit institutions reported they faced some difficulties in implementing debt trading according to Circular No. 09/2015 due to a lack of specific guidelines to handle financial issues, debt valuation and exchange rate differences in case the debt purchaser is a credit institution.

According to SBV, it recently saw debt buyers of some credit institutions were not credit institutions themselves, and the buyers were allowed to make late payments for the debt purchase. It is concerned the trading may lead to issues granting credit for debts at credit institutions. The SBV, therefore, said it is necessary to amend Circular No. 09/2015 to prevent credit institutions from cross lending to hide bad debts.

Specifically, under the revised draft, a credit institution will not be allowed to grant credit to customers to buy their own debts at the institution or other credit institutions.

“The regulation aims to ensure that debt purchases are transparent and prevent the possibility that credit institutions can use loopholes in debt trading to hide bad debts,” the SBV noted.

Besides, according to the draft, for debts that haven’t completed trading despite having signed debt purchase and sale contracts, credit institutions will still have to manage the classification and make provisions for the debts according to the current legal regulations.

According to the SBV, though the banking industry has actively taken measures to handle bad debts worth VND78.86 trillion in the first half of this year through debt sales and provisions, as well as limiting newly arising bad debts, the debts have been on a rising trend due to the impact of the COVID-19 pandemic. By the end of June 2021, the bad debt ratio was 1.73 per cent against 1.69 per cent at the end of 2020.

According to the SBV’s statistics, banks restructured loans worth about VND350 trillion for COVID-19-affected borrowers. Industry insiders estimated if half of the loans became bad loans, the bad debt ratio of the banking system would increase to more than 3 per cent by the end of this year.

The SBV said the process of restructuring the system of credit institutions and handling the bad debt is being accelerated. 

Nine-month exports to Netherlands increase by 10.9%

Vietnamese exports to the Netherlands during the opening nine months of the year surged by 10.9% to reach US$5.58 billion compared to the same period from last year, according to the General Department of Vietnam Customs.

The Netherlands is widely considered to be a gateway to the EU market and is the leading transshipment of goods in Europe and the wider world, especially with regard to fruit and vegetables.

Most notably, the enforcement of the EU-Vietnam Free Trade Agreement (EVFTA) is anticipated to create fresh opportunities for both Vietnamese and Dutch businesses to enhance future co-operation.

Statistics compiled by the General Department of Vietnam Customs indicate that the computers, electronic products and component group took the lead in terms of export turnover to the Dutch market during the nine-month period with US$1.24 billion, thereby representing a rise of 3.4%, and accounting for 22.3% of total export turnover.

Furthermore, the machinery, equipment, tools and spare part group ranked second with turnover of US$931.2 million throughout the reviewed period, posting a year-on-year rise of 64.3% and accounting for 16.6% of total export revenue.

Other export items recording an increase in terms of export turnover during the reviewed period include toys and sports equipment, which rose by 49%, cameras, camcorders and components, up 34.8%, rubber, with an increase of 82.9%, and rice, up 42.8%.

Cashless payments enjoy growth over nine-month period

The initial nine months of the year witnessed cashless payments continue to enjoy fast growth to top VND36.28 quadrillion, equivalent of US$1.6 billion, according to a recent report compiled by the Government.

During the reviewed period, a total of 435.25 million transactions worth VND22.78 quadrillion were made via the Internet, an increase of 54.1% in volume and 30.7% in value. Over 1.19 billion others worth over VND13.5 quadrillion were conducted via mobile phone, thereby representing increases of 74.98% in volume and 93.69% in value.

The Government stated that cashless payments for public services have improved considerably in terms of both quantity and quality this year.

As a result of these improvements, businesses nationwide have made over 90% of their tax payments via bank transfer. In addition, a large number of people have also used this method to pay their power bills, medical examinations, and treatment fees, or receive pensions and allowances.

Despite this, payment fraud has also become increasingly complicated across the country, the report pointed out.

Upon addressing a recent discussion, Dao Minh Tuan, head of the card division of the Vietnam Banks Association, stated that though credit institutions have continually updated security technology, payment scams continue to remain sophisticated.

According to representatives of the bank, there should be closer co-ordination among relevant parties in a bid to ensure payment security and safety.

US health behemoths cater to fresh demand

US giants like General Electric, GSK, Merck, and Johnson & Johnson are eyeing new projects in Vietnam’s health sector to tap into local growing healthcare spending, signaling heated competition ahead in the lucrative market.

Member companies of the US-ASEAN Business Council at a meeting with Deputy Minister of Health Truong Quoc Cuong on October 12 proposed seven new projects in the healthcare sector.

Tech company 3M is to cooperate with departments under the Ministry of Health (MoH) to update local guidance on bacterial contamination control, wound care, and practices in surgery rooms, expected to support the MoH in implementation and improvement of new guidances.

Meanwhile, Amazon Web Services proposed building and organising educational workshops to help health staff and policymakers of the MoH improve their knowledge about cloud computing services.

Crowell & Morning International discussed a venture on regulations of medical devices through a public-private partnership between the US Agency for International Development, the American National Standards Institute, and the Advanced Medical Technology Association.

The group also proposed accelerating the implementation of cancer control programmes in APEC economies via innovations and partnerships. The project includes a series of discussions about cancer prevention; early detection; equitable access to services and treatment methods; and implementation, administration, and assessment of cancer control programmes.

Seeing the local potential, Edwards Lifesciences proposed using a health technology assessment for cost-effectiveness of transcatheter aortic valve implantation compared with surgical aortic valve replacement; while Johnson & Johnson is looking to improve the skills and capacity of health professionals in the implementation of drug addiction schemes in Vietnam.

Meanwhile, SAP is to organise workshops to improve capacity and exchange of knowledge about how the government and medical service suppliers can tap into technology to enable patients to experience improved services.

Deputy Minister Cuong welcomed the support of member companies of the council. He said, “The MoH will assign relevant departments and agencies to continue the implementation of the projects and programmes. The Vietnamese government and the MoH will create favourable conditions for businesses to carry out these activities.”

In 2015 the MoH and the US-ASEAN Business Council signed an MoU formalising a partnership to strengthen healthcare in Vietnam. It paved the way for stronger cooperation between the US business community and the government of Vietnam and is wide in scope, covering capacity building of healthcare facilities, communications, organisational management, the insurance system, pharmaceuticals and medical devices, nutrition improvement, food safety, and cosmetics.

This cooperation was ramped up further last year in the wake of the ongoing pandemic. Two projects were completed in 2020 among others, including one nutrition-focused quality improvement programme set up in hospitals in Vietnam by Abbott Laboratories, and a hospital management scheme initiated by Johnson & Johnson (J&J).

Members of the council’s Health & Life Sciences Committee led by GE, Jhpiego, GSK, Merck, and J&J span industries ranging from medical devices and diagnostics, pharmaceuticals, and consumer health to IT systems, nutrition, and logistics.

Vietnam, which faces mounting challenges over non-communicable diseases and rises in healthcare demand, is attractive to not only US investors, but also other multinational corporations. Novartis, AstraZeneca, GSK, and Roche among others, have been deploying similar programmes.

Novartis is active in the innovative life sciences sector. For instance, “Hope In Sight” is one of its diverse ongoing commitments to raise the community’s awareness of eye health. Novartis Vietnam has been collaborating with Ho Chi Minh City University Medical Centre to implement an online medical training programme for nursing staff on heart failure management since May, and has worked with several provinces in Vietnam to kick off a project to strengthen primary healthcare.

Likewise, Roche Vietnam is teaming up with the Vietnam Medical Association and hospitals to carry out programmes on improving access to innovative therapies for breast cancer patients.

Haiphong’s industrial real estate remains attractive destination to investors

Haiphong has been constantly in the spotlight as an attractive northern destination for domestic and foreign investors alike. Its flourishing construction scene for high-quality industrial parks and economic zones only adds to its appeal and promises to boost it even higher up on investors' agendas.

Domestic industrial real estate developers need to improve offerings to attract capital. Photo: Nam Dinh Vu IP
Data from Savills Vietnam in 2020 shows that the occupancy rate of industrial parks (IPs) in Haiphong has hit 73 per cent with rental prices reaching $96 per square metre per lease cycle, up 3.2 per cent compared to 2019. This is higher than Bac Ninh ($95), Hung Yen ($83), and Hai Duong ($76).

Although rents are rising, investment has been constantly pouring into the city. Discussing this, director of Savills Hanoi Matthew Powell said: “The market excitement, the sudden demand increase for industrial land can be explained by better development of infrastructure and accessibility to new locations, roads, piers, and airports.”

Sharing a similar opinion, general sales, marketing director of DEEP C Industrial Zones Koen Soenens said when foreign partners invest abroad, they look for a suitable, safe, and long-term location because of the large capital requirement to move a factory.

Therefore, many high-quality IPs in Haiphong such as DEEP C, Trang Due, Nam Dinh Vu, Nam Cau Kien could still welcome new projects, even amind the COVID-19 pandemic.

Haiphong currently draws large investment in transport infrastructure, creating a complete logistics chain to become part of the global logistics chain with Cat Bi International Airport and Lach Huyen International Deepwater Port. This is increasing the city's appeal to foreign investors. For example, LG Group has increased its capital by $750 million in February and an additional $1.4 billion at the end of August.

“LG Group will expand its scale further when Trang Due IP deploys its third phase,” said Dang Thanh Tam, chairman of the Board of Directors of Kinh Bac City Development JSC (KBC).

According to Haiphong EZ Management Board, enterprises have forecast that foreign direct investment (FDI) attraction into Haiphong’s industrial zones may reach about $5 billion in 2021. Of this, Sao Do Group registered to attract $1 billion in Nam Dinh Vu IP; VSIP Haiphong Co., Ltd. registered to attract $1-1.5 billion ($500 million in industry, $1 billion in real estate) in VSIP Haiphong; and Saigon-Haiphong IP JSC registered to attract $1 billion in Trang Due IP (exceeding its target).

Preparing for the new wave of capital flows, Haiphong is developing 15 more IPs with an area of 6,200 hectares.

The average rental price of industrial real estate in Haiphong has reached $96 per sq.m per lease cycle, which is relatively high in the northern market. However, "you get what you pay for" – the high rents reflect higher handover standards. Currently, Haiphong’s IPs with high rents are backed with convenient logistics locations, good infrastructure, and many synchronous utilities to serve investors.

According to chairman of the Board of Directors of Shinec JSC, Pham Hong Diep, the rental price of Haiphong’s industrial real estate is only higher compared to previous years, it is fully commensurate with the infrastructure investment rate otherwise. Currently, investments in IP infrastructure is rising due to increased input costsand the rising popularity of the ecological industrial park model.

According to Nguyen Thanh Phuong, general director of Sao Do Group, this trend reflects the demand and supply in the market. However, infrastructure investors must also create and package products with commensurate quality, especially focusing on developing a new model of industrial real estate. Haiphong's IPs need to leverage the city's seaport and link product development with logistics to increase their appeal to investors.

According to Haiphong Economic Zone Management Board, Haiphong IPs and EZs contribute about 80 per cent of the export turnover and 70 per cent of the industrial production value of the whole city. Haiphong has attracted 570 investment projects, including more than 400 foreign-invested projects in IPs and EZs, creating jobs for about 160,000 workers (including 4,500 experts, managers, and foreign labourers).

Regarding the development orientation of Haiphong IPs and EZs, Chairman of Haiphong People's Committee Nguyen Van Tung affirmed, Haiphong has been driving the development of sustainable IPs, especially eco-IPs, enhancing its competitive advantages in attracting investment and developing a sustainable environment.

Since Vietnam has yet to deploy its first eco-IP, Haiphong has been actively communicating with its sister city in Japan to implement a green IP development programme. The city also immediately applied to join the programme launched by the Ministry of Planning and Investment (MPI) and the United Nations Industrial Development Organization (UNIDO) to be among the first to benefit from it. As a result, DEEP C was approved by the MPI as one of the pilot IPs to transform itself into a global eco-IP.

Currently, there are two IPs being developed into eco-IPs in Haiphong, DEEP C (540ha) and Nam Cau Kien (nearly 270ha). Thus, eco-IP's will account for more than 16.5 per cent of the total area of nearly 5,000ha in 12 IPs in Haiphong.

Head of the Sustainable Development Department of DEEP C, Melissa Slabbaert, said that enterprises in DEEP C Haiphong can benefit from and resonate with sustainability values in fields like chemicals, firefighting, Internet of Things (used to measure the amount of electricity used), rooftop solar energy production, and road construction from plastic waste. DEEP C will continue promoting renewable energy production from solar energy and wind energy. By 2025, DEEP C expects to supply 50 per cent of electricity demand in its IPs from renewable energy.

According to the programme from now to 2025, Haiphong will develop 15 more IPs, attracting an additional $12-15 billion. Following such ambitious targets, the development of eco-IPs will be one of the key points to ramp up Haiphong’s appeal to investors.

Local retailers fortify market share at home

As Hanoians were able to go out on the streets to get breakfast, a coffee, and enjoy the chilly early autumn air last week, the city’s retail market showed signs of improvement after a period of low growth in which the total retail sales of consumer goods and services in the first nine months of the year fell by 7.1 per cent over the same period in 2020.

Domestic investors hold onto the upper hand in retail market shares in Vietnam. Last month Emart, one of the largest retailers from South Korea, completed the transfer of capital and assets to Thiso JSC as agreed to in May, as the former had been unable to open a new location over the last five years in Vietnam.

According to the plan, Thiso Retail, a subsidiary of automobile maker Thaco, will open three more Emart hypermarkets in 2022 at Sala Urban Area in Ho Chi Minh City’s Go Vap district, and in Go Dau town of the south-western province of Tay Ninh. The company also plans to establish another 11 points of sale across the country by 2025.

Competition in the Vietnamese retail market is increasingly fierce and the last five years have seen a mass withdrawal of foreign supermarket groups, with German Metro Group, French Casino Group, and Auchan retreating.

Matthew Powell, director of Savills Hanoi, believed that foreign investors often face two big challenges when pouring capital into the retail segment in Vietnam. Firstly, traditional retail still plays a dominant role. “Grocery stores and markets account for 74 per cent of the retail market, increasing by around 1 per cent every year. Meanwhile, modern retail only accounts for 26 per cent, with an increase of 12 per cent a year.”

Secondly, Powell stated that the market would be almost completely in the hands of domestic enterprises, who successfully seize M&A opportunities to increase their scale and market share.

The year-end shopping season could be an opportunity for the retail industry to regain its balance. In 2020, the market reached a size of $11.8 billion, growing by 18 per cent and prompting global investors to pour more funds into the market.

According to McKinsey, Vietnam’s modern retail sector is expected to grow rapidly in the next five years, especially with e-commerce, with an average annual growth rate of 25.8 per cent up until 2023, more than double that of any other country in the region.

Following this trend, domestic investors’ strategies to gain a larger share of the market may be hindered by foreign interference. Central Retail Corporation (CRC) in March announced an additional investment of $1.1 billion.

Philippe Broianigo, CEO of CRC said, “Our 5-year plan will focus on a multi-category, multi-format operation to increase our exposure across urban and rural areas. We aim to establish an intensive food brand portfolio, enhance customer experience, and develop our non-food category as well as the omnichannel platform.”

Last year, CRC opened four GO! hypermarkets in Vietnam, intending to further expand these markets in the provinces of Thai Nguyen, Ba Ria, Thai Binh, and Lao Cai.

Improving their competitiveness remains a long-term problem of domestic investors in their endeavour to defend market shares in retail.

Data from the Domestic Market Department under the Ministry of Industry and Trade showed that most foreign-invested enterprises participating in Vietnam are mainly in the modern retail segment, accounting for about 25-30 per cent. However, nearly half of the market was made up of street shops at the end of last year, according to German market research firm Statista, with supermarkets, hypermarkets, and mini stores all occupying slightly lower shares (7-9 per cent) than traditional wet markets (9 per cent), while online sales and other channels made up around 4 per cent each.

Dr. Dinh Thi My Loan, chairman of the Vietnam Retail Association, pointed out that what leads to weak competitiveness of domestic investors is small-scale weak capital and poor management.

“On the other hand, foreign investors have strengths in capital, business technology, corporate governance, and global distribution chains. They have a methodical investment plan in many forms that quickly dominates markets,” Loan said.

Data from the Foreign Investment Department in the first nine months of 2021 shows that, in terms of the number of new projects, the wholesale and retail industry accounts for 28.2 per cent of the total number of projects.

Industrial zone sub-areas attracting attention of buyers

Amid a slowly but steadily materialising recovery from social restrictions, real estate prices in the vicinity of Vietnam’s industrial zones are beginning to climb, heavily pushed by low supply.

Nguyen Van Dinh, vice chairman of the Vietnam Real Estate Brokers Association, said that although the third quarter was overshadowed by the pandemic, most industrial zones (IZ) were able to maintain normal production activities, except for a handful of provinces. “However, the pandemic significantly affected the rental business around IZs,” said Dinh.

Tran Huu Giap, CEO of Gia Dia Real Estate JSC, explained that inland projects in Bim Son district of the central province of Thanh Hoa are receiving great interest, despite the slow reopening.

“The supply of newly-built projects around IZs is currently limited, and the few small- and medium-sized projects are not fulfilling demand. Therefore, any new project immediately attracts attention,” Giap said.

A recent report by JLL stated that the industrial land market in the south of Vietnam had no new supply and remained at around 25,220 hectares in Q3.

Similarly, only one ready-built factory project was launched on the market during Q1/2021, with the total land supply reaching 3.3 million square metres. Meanwhile, occupancy rates were maintained at 85 and 87 per cent for IZs and ready-built factories respectively, as there were no notable transactions in both areas.

Due to the limited supply of new land and properties, land prices in areas surrounding IZs have been skyrocketing. Near Binh Duong city’s VSIP 2, land prices soared to around $950 per sq.m, with some locations even reaching as high as $1,740 per sq.m.

In contrast to the south, the industrial real estate market in the north remained more active, with new supply in both IZs and ready-built factories.

Pho Noi A Industrial Park in the northern province of Hung Yen saw an expansion of 93ha funded by Hoa Phat Group in Q3. Meanwhile, the northern province of Bac Ninh’s Yen Phong 2C Industrial Park by Viglacera has completed procedures like site clearances and new constructions, bringing the total available area for currently leasable industrial land in the north to about 9,900ha.

Following the new supply, the occupancy rates of IZs in Haiphong, Hung Yen, Hanoi, Bac Ninh, and Hai Duong temporarily decreased slightly to 72 per cent, lower than in previous quarters.

Nevertheless, Bac Ninh’s land prices around VSIP increased sharply to more than $1,000 per sq.m, nearly double the price of two years ago. In neighbouring Bac Giang, land prices near IZs like Van Trung, Dinh Tram, Song Khu, and Quang Chau communes also increased by up to 70 per cent compared to the end of 2020, reaching peaks of around $1,740 sper sq.m.

According to Le Dinh Chung, deputy CEO of Hai Phat Land, after the pandemic is under control, Bac Ninh and Bac Giang will likely be the two provinces with the most positive signs of recovery. “Real estate businesses are watching the market and even participating in new transactions through online channels,” said Chung.

Although heavily affected by the pandemic, the supply and absorption rate in the residential market of the southwest region decreased sharply, to only about 25 per cent, but according to Duong Quoc Thuy, chairman of the Can Tho Real Estate Association, real estate projects around IZs are still hot. “The market still absorbed popular products with clean legal status in the VND1 billion ($43,500) bracket located at industrial hubs and benefiting from public investment projects,” Thuy said.

By the end of May, 394 IZs have been established with a total natural land area of about 121,900ha. 286 of these are in operation with a total natural land area of about 86,000ha.

Live-pig prices plunge to 4-year lows

Live-pig prices have fallen to VND30,000-40,000 per kilogram, the lowest in four years.

On October 18, live-pig prices in the northern region were the lowest in the country, at VND30,000-35,000 per kilogram, or even below VND30,000 per kilogram in some areas.

Live-pig prices in the central region and the Central Highlands were VND43,000-49,000 per kilogram, the highest in the country.

Prices of live pigs in the southern region were VND38,000-40,000 per kilogram.

Dang Duc Binh, a pig farmer in Chau Duc District, Ba Ria-Vung Tau Province, said live-pig prices have fallen by nearly 50% since the beginning of this year.

However, the prices of animal feed have soared 30-40% from last year, causing huge losses for farmers. Binh said he suffered a loss of VND1.2-1.5 million per pig.

Ngo Van Hoa, a pig farmer in Lap Thach District, Vinh Phuc Province, said he sold his pig herd at VND28,000 per kilogram, while the cost to raise a pig amounted to over VND5 million.

“Over the past several years, live-pig prices have never dropped as sharply as this time. I suffered a loss of more than VND1 million per pig,” he said.

Some experts worry that the falling live-pig prices would negatively affect the supply of pigs during the year-end season and the Lunar New Year holiday.

Nguyen Van Trong, deputy director of the Department of Livestock Production, said Vietnam expects to produce 6.2 million tons of meat, 1.2 million tons of milk and 16 billion eggs this year.

As of late September, the country had produced 4.7 million tons of meat, 900,000 tons of milk and 12 billion eggs.

The Covid-19 pandemic has affected the transport of goods and income of the people, especially in major cities such as HCMC and Hanoi.

Trong said the falling demand for pork and lower live pig prices would force farmers to halt their production.

He suggested that ministries and localities effectively implement the prime minister’s Directive No. 26 on support for the livestock sector to ensure the sufficient supply of meat for the year-end season and the Lunar New Year holiday.

Live-pig prices have edged down over the past few months due to the expansion of pig herds and the increase in pork imports.

Vietjet re-opens all routes, offering discounted tickets

Vietjet resumed operations of all routes connecting HCM City and Hà Nội, Đà Nẵng and other localities across the country from Thursday, meeting people’s demand for safe and fast travel.

Routes connecting HCM City, Hà Nội and Đà Nẵng will operate two return flights per day. Until November 30, 2021, Vietjet’s flight network will have 48 routes transporting passengers across the country.

Vietjet is providing thousands of Eco tickets priced at zero đồng (excluding taxes and fees) for customers, especially  workers coming back to HCM City and southern provinces to stabilise production, return to normal life and contribute to economic recovery and development, the airline said in a statement. 

The carrier also offers free COVID-19 quick tests for all passengers departing from HCM City and for passengers departing from Hà Nội from Friday.

In order to fully meet regulations on prevention and control pandemic in the new normal period, passengers are suggested to make medical declarations, manage the test certificates and look for the free COVID-19 testing addresses on www.vietjetair.com and showing the QR Code at the airport.

Workshop seeks ways to promote digital economy in APEC members

The Vietnamese Ministry of Industry and Trade has coordinated with the APEC Secretariat to organise a workshop on building APEC capacity in promoting the digital economy, which opened on October 21 via videoconference.

The two-day event is a chance for APEC member econommies to share experience in developing the digital economy and digital government in different aspects such as laws, policies, technology and infrastructure, institutions, and impacts on social strata.

Opening the seminar, Dang Hoang Hai, Director of the Department of E-commerce and Digital Economy under the Ministry of Industry and Trade, said that the digital economy is playing an important role in promoting innovations as well as the competitiveness and growth of the economy. It has not only posed positive imapcts on the transformation of traditional business models and networks but also sped up the transfer of knowledge and transition of management and governance of the international market, he said.

Hai held that the digital economy has brought about great opportunities through the improvement of capacity and innovation, thus narrowing the development gaps and encouraging growth, especially in developing or underdeveloped economies.

The official cited a report by the Vietnam Economic Policy Research Institute which showed that Vietnam has seen limitations in awareness of the digital economy as well as high quality human resources in information technology.

According to the report, about 85 percent of Vietnamese businesses are standing outside the digital economy, and only 13 percent have justed started engaging in it, he said.

Hai noted that the uneven development among APEC member econommies may affect the growth of each economy and the common prosperity of the region as a whole.

Meanwhike, amid the impacts of the COVID-19 pandemic, the digital economy has increased the resilience and recovery capability of the region and the world thanks to strong connectivity and the capacity to fix disruptions in supply chains due to social distancing measures, he said.

The offficial also underlined the need for APEC economies to adapt to and make full use of the digital economy to return to the "new normal" and boost sustainable and fair development.

Participants are expected to make recommendations for APEC to design activities and initiatives in the future to improve its members' capacity in building their own digital economy./.

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

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