Tens of thousands of enterprises shut down due to Covid-19
Since the Covid-19 pandemic broke out early this year, lots of businesses in Vietnam have been dissolved or have suspended operations, while many people have been left without jobs.
Data of the Business Registration Management Department under the Ministry of Planning and Investment showed that some 63,500 companies withdrew from the market between January and July, increasing by 10.9% compared with the same period last year. This means some 9,000 businesses suspended operations monthly between January and July.
Meanwhile, some 75,000 enterprises were established in the country from January to July, the lowest number over the past five years.
According to the Department of Employment under the Ministry of Labor, Invalids and Social Affairs, 30.8 million people aged 15 or older were severely affected by the pandemic in the first half of this year.
Of them, 17.6 million people saw their incomes decline, while 7.8 million people lost their jobs or were temporarily suspended from work. The hardest hit sectors included manufacturing and processing as well as retail, transport, logistics, hospitality and catering services.
In HCMC, over 23,150 enterprises were established but nearly 21,230 others shut down as of July 31, according to the city’s Tax Department.
Le Minh Tan, director of the HCMC Department of Labor, Invalids and Social Affairs, forecast that some 120,000 additional people from roughly 4,000 enterprises in the city are likely to be laid off until September.
Some 54,000 workers from nearly 2,000 enterprises in the city lost their jobs in June and July, while the figure was 327,000 from March to May.
Pham Van Tai, vice chairman of the Labor Union of Go Vap District, said Hue Phong Company in the district has planned to suspend some 1,600 employees from work on August 30. It had earlier fired some 2,500 workers.
Many other businesses in the tourism, hospitality, transport, construction, clothing and footwear sectors are also struggling with the same situation.
Speaking at a meeting on August 17, HCMC Chairman Nguyen Thanh Phong said the city is facing many challenges to meet its economic targets.
The city’s leader assigned the Department of Planning and Investment and the Department of Labor, Invalids and Social Affairs to propose another rescue package for businesses affected by Covid-19 in the city in addition to the Government’s VND62-trillion relief package.
Local auto firms likely to enjoy excise tax payment extensions
Employees at work at the Huyndai Thanh Cong Vietnam Auto Plant. Local auto firms are likely to enjoy excise tax payment extensions – PHOTO: VNA
The Ministry of Finance has submitted a draft decree to the Government, which will benefit local auto manufacturers and assemblers as their payment deadlines of excise tax from March to October may be extended to up to December 20.
The extension is expected to eliminate the financial difficulties these firms are facing amid the coronavirus pandemic.
Under the draft decree, the payment deadline of the March excise tax is extended to September 20, while the April and May deadlines are extended to October 20 and November 20, respectively, VietnamPlus news site reported.
The excise tax payment deadlines for the remaining five months will be extended to December 20.
To be entitled to the extension, local auto firms will have to submit online or written applications to tax agencies at the time of making excise tax declarations in line with the prevailing regulations.
If tax agencies discover taxpayers who are not subject to the incentive during or after the extension period enjoying the extension, they will have to fully pay their excise taxes and delayed amounts.
The extension for excise tax payments for March to October will cut the State budget collection down by VND2.2 trillion each month, according to the ministry.
However, the State budget collection in 2020 will not reduce as the auto firms will have to make their excise tax payments prior to December 20.
The Covid-19 pandemic has taken a heavy toll on the automobile manufacturing and assembling sector. To promptly remove the obstacles facing these auto firms and boost auto production, the Government has issued Resolution 84, which allows local auto firms to enjoy excise tax payment extensions.
HCMC revises down investment for BRT project
The HCMC authorities have suggested the Government reduce the investment for the city’s bus rapid transit (BRT) project by over US$12 million to US$143.68 million.
As part of the initial plan, which was approved by the prime minister in 2013, the project requires an investment of US$155.86 million, which would be sourced mostly from official development assistance provided by the World Bank.
The reason for the investment reduction is that the reciprocal capital from the city’s budget for the project has been raised from US$13.6 million to US$20.6 million. Besides this, the loan for the project will come from the World Bank’s International Development Association instead of the International Bank for Reconstruction and Development, helping cut the loan interest during the construction time.
The city also proposed extending the project’s completion time by three years to 2023.
The BRT line, which will run along Vo Van Kiet and Mai Chi Tho boulevards, is expected to restrict the use of private vehicles, mostly motorcycles, thus reducing traffic congestion in the city. Once in place, the BRT line could serve 10,000 passengers a day in the first year and 20,000 in the following five to 10 years.
The severe traffic congestion has caused losses of some US$1.5 billion per year for the city and hindered its socioeconomic development. In addition, traffic jams have resulted in serious environmental pollution, as 70% of the city’s pollution is caused by exhaust emissions from vehicles.
Fish sauce factories yet to relocate in Nha Trang
Authorities in Nha Trang City are still struggling to relocate fish sauce factories which are causing pollution.
Travellers can easily smell the fish sauce when they go along Nguyen Tat Thanh, Nguyen Duc Canh and Le Hong Phong streets as one of the fish sauce factories, Nha Trang 584 Fisheries Company, is located nearby. Nha Trang City has dozens of fish sauce manufacturing facilities among residential areas, mostly in Phuoc Long and Vinh Truong wards.
Many people have complained about the smell and pollution caused by those facilities. The facilities owners also expressed the desire to move out of residential areas. But after 10 years, the local authorities have struggled to find suitable locations.
In July 2019, the Department of Natural Resources and Environment submitted an official document proposing to relocate the facilities out of the city centre. The proposed location is a 25ha-land in Dien Tho Commune. The provincial people's committee recently held a meeting to discuss the problem and gather opinions about the proposed relocation.
The Department of Natural Resources and Environment has also proposed to relocate the fish sauce factories to Ninh Ich Industrial Cluster owned by Khanh Viet Company. However, they couldn't reach an agreement with Ninh Hoa and Ninh Ich communal authorities over environmental problems.
According to the communal authorities, the industrial cluster is located higher than the residential areas and the factories would have a negative impact on 350 ha of fish farms. The areas already have to face water shortages during the dry season.
Nguyen Tan Tuan, chairman of Khanh Hoa People's Committee, concluded that the Ninh Ich Industrial Cluster was unsuitable due to a lack of land for small-sized factories, water shortages and underdeveloped traffic system.
The Department of Natural Resources and Environment was asked to work with related agencies, Nha Trang Fish Sauce Association and district and communal authorities to survey new locations. The new location must meet requirements about infrastructure, distance from residential areas and traffic system. The research result must be submitted by September 30.
PM approves using S. Korea's ODA loans for My An-Cao Lanh road project
The Ministry of Planning and Investment’s proposal to tap South Korea’s official development assistance loans to fund the My An-Cao Lanh road section in Dong Thap Province has been approved by Prime Minister Nguyen Xuan Phuc.
The Government leader asked the ministry to inform the Export-Import Bank of Korea (Keximbank) of the proposal to prepare for further steps.
The Transport Ministry was asked to collect feedback from the relevant agencies and coordinate with the Planning-Investment Ministry to discuss it with the sponsor. It was also told to team up with the authorities of Long An and Dong Thap provinces and relevant agencies to conduct a pre-feasibility study and submit it to the prime minister.
Earlier, the Transport Ministry had proposed to the Cabinet leader a plan to take out loans worth US$166.47 million from the Economic Development Cooperation Fund (EDCF) under Keximbank. The annual interest rate for the loans is 1.5%, with a maturity period of 40 years including a grace period of 10 years.
The 26.16-kilometer-long road section will connect Vam Cong Bridge with Cao Lanh Bridge. The four-lane road requires a total investment of over VND4.5 trillion, including ODA loans worth some VND3.8 trillion provided by EDCF and the rest funded by the State budget.
The implementation of the project is scheduled for four years, from 2021 to 2024, after a loan agreement takes affect.
Once completed, the My An-Cao Lanh section is expected to reduce the distance and time needed to travel from the southeastern and Central Highlands localities to the Mekong Delta.
CMC proposes VND12,000-billion technology project in Danang
CMC Corporation, an HCMC-based technology company, is seeking to invest in a technology complex—CMC Creative Space—with a total capital of VND12,000 billion (US$517 million).
CMC Creative Space will have functional departments such as R&D, software production, information technology, Internet transit, data center and apartments for experts, staff and related services with complete amenities.
The project will be developed in two phases, providing jobs for some 2,000 workers in the first phase and 10,000 workers in the second phase, aimed at turning Danang into an international gateway of big data and digitalization. This is part of the company’s strategy to turn Vietnam into the Digital Hub of the Asia-Pacific region.
The information was unveiled at an online meeting held on August 18 with the participation of leaders from the Danang City People’s Committee and CMC.
There are currently three Digital Hubs in the region, including Hong Kong, Singapore and Japan. Vietnam is expected to become the next regional Digital Hub.
To turn this into a reality, CMC is promoting many projects such as building a large-scale neutral Data Center at the Tan Thuan Export Processing Zone and Industrial Park and the Saigon High Tech Park (both in HCMC).
In addition, CMC has invested in building the Cross Vietnam Cable System (CVCS), with a total length of more than 2,500 kilometers, stretching 19 provinces nationwide. The CVCS system has a total investment capital of over VND500 billion, becoming the only Vietnamese cable line directly connected to the Southeast Asia mainland cable network - A Grid.
Danang's leaders have agreed to allow CMC to invest in the project, requiring the business to complete the related procedures and submit the project proposal soon.
The Department of Construction, the Department of Natural Resources and Environment and others are searching for suitable sites for the project.
Speaking with the Saigon Times on August 19, Pham Truong Son, Head of Danang Hi-Tech Park and Industrial Zones Authority, stated, “The investor is looking for land outside the industrial park and high-tech park. This is a pity because at present, the Danang High-Tech Park is zoning some areas for technology development.”
HCMC to put over 5,000 resettlement homes up for auction
The HCMC government has approved a plan to auction an additional 108 unused resettlement apartments and some 5,050 apartment homes and 42 land lots previously set for auction to recoup the State capital.
Most of the resettlement homes are located in District 2’s Binh Khanh Ward, while Thanh My Loi Ward will see one land lot and 34 apartments be put up for sale.
Some 41 other apartments in District 6, including four at an apartment building on Pham Van Khoe Street, 18 at an apartment block on Tan Hoa Dong Street, 10 other apartments at Binh Phu apartment complex and the remaining nine apartments on Hung Vuong Street, will also be readied for auction.
District 12, Binh Thanh, Binh Tan, Tan Phu, Hoc Mon and Binh Chanh districts will also participate in the auction.
Apart from this, the city will auction 17 land lots in District 8, one land lot at Cau Xay resettlement area and 50 apartments in District 9 and 28 apartments at Phu Tho apartment building in District 11.
The municipal government also assigned the Department of Justice with providing the Property Auction Service Center with guidance on organizing the auction in line with the municipal government’s directive. The auction must comply with prevailing regulations, Tien Phong Online reported.
Earlier, the municipal Department of Construction had written to the HCMC government, proposing putting the 5,200 apartments and 42 land lots up for auction.
Australian enterprise to invest US$350 million in Vietnamese logistics sector
On August 19, Sydney-based logistics developer Logos announced its entry into Vietnam through the Logos Vietnam Logistics Venture, along with a global investor, to establish an initial portfolio of approximately US$350 million, aimed at developing modern and high-quality logistics facilities across the key markets of HCMC, Hanoi and Danang.
Trent Iliffe, Logos managing director and co-CEO, stated that the group’s expansion to Vietnam is an important step in its regional growth strategy driven by customers’ needs.
Earlier this year, Logos appointed Glenn Hughes, former director of Capital Project and Infrastructure at PwC Vietnam, to lead the group’s in-country strategy.
Logos has identified an attractive pipeline of development sites for this venture and will be progressing with strategic acquisitions over the next few months.
The Australian firm plans to deliver a steady pipeline of speculative and built-to-suit logistics facilities for its customers in key logistics locations, preparing for occupation over the next 12 to 18 months.
Gov’t gives green light for establishment of Ha Tien economic zone
Deputy Prime Minister Trinh Dinh Dung has signed a decision, which will take effect from October 1, allowing establishing the Ha Tien Border Gate Economic Zone, Mai Quoc Thang, vice chairman of Kien Giang Province’s Ha Tien City, announced on August 19.
As approved by Prime Minister Nguyen Xuan Phuc, the Ha Tien Border Gate Economic Zone will cover an area of 1,600 hectares and comprise five wards, including Phao Dai, Dong Ho, To Chau, Binh San and My Duc.
The new economic zone will be bounded by Cambodia’s Kampot Province to the north, Thuan Yen Commune to the south, Giang Thanh District to the east and southeast and Rach Gia City to the west and southwest, Nguoi Lao Dong Online reported.
It is expected to accommodate a duty-free, international border gate, tourism, administration and residential areas and an industrial park, among other functional areas.
The Ha Tien Border Gate Economic Zone will be operated in line with the Investment Law, the Business Law, the Government’s Decree 82 on the management of industrial and economic zones and other relevant regulations.
HCMC to begin work on VND400-billion bridge next month
HCMC will break ground on the VND404-billion Hang Ngoai Bridge overpassing the railway—expected to ease traffic congestion from Nguyen Thai Son to Pham Van Dong Street in Go Vap District—in September and target its completion in 11 months.
According to a representative of the HCMC Management Board of Investment and Construction of Traffic Projects, the four-lane project will be 650 meters long, including 25 meters of the bridge surface and 625 meters of roads leading to the bridge.
The bridge will be widened to 22.5 meters and auxiliary works such as a drainage system and a lighting system will be installed and trees will be planted along it.
The city will build a temporary iron bridge for vehicles to travel on. It will then begin work on the first section of the bridge to serve vehicles first, develop the second section and finally dismantle the iron bridge.
The Hang Ngoai Bridge project was approved in October 2017, aimed at replacing the old bridge, which has been aging and is narrower than the roads linking to it.
Hanoi to host 20th International Agricultural Trade Fair in December
The 20th International Agricultural Trade Fair (AgroViet 2020) is scheduled to take place in Hanoi capital from Dec. 3 to 6 in the hope that the COVID-19 epidemic will likely be put under control nationwide.
Information about the event was unveiled by Dao Van Ho, Director of the Trade Promotion Centre of Agriculture under the Ministry of Agriculture and Rural Development (MARD).
At present, over 100 firms from different localities across the country have registered to participate in the trade fair, a prestigious annual international expo that is organised by the MARD.
The event aims to provide a perfect venue for both domestic and foreign businesses to introduce their new products, establish partnerships, expand international cooperation, and serve as a bridge between both local firms and consumers, therefore creating opportunities for enterprises to fully tap into the domestic market.
The expo will also help to elevate the status of the agriculture sector, allowing for the introduction of high quality agro-forestry-fishery products, along with state-of-the-art technologies in agricultural production.
AgroViet 2019 drew the participation of approximately 200 businesses that were given a platform to showcase their food processing machinery, agricultural machinery, veterinary medicine, and safe agro-forestry-fishery products across 250 booths.
Rice exports enjoy robust growth despite COVID-19 threat
While many of Vietnamese agricultural exports have faced COVID-19 challenges, rice exports during the opening seven months of the year increased by 10.9% in value, with the price of 5% broken rice now the highest globally.
According to figures released by the Agro-Processing and Market Development Authority (Agrotrade), Vietnam exported approximately 3.9 million tonnes of rice throughout the seven-month period, grossing US$1.9 billion and representing an annual rise of 10.9% in value.
This marks a positive sign in the context of the export turnover of many key Vietnamese agricultural products declining.
Nguyen Quoc Toan, Agrotrade director, told Hanoi Moi (New Hanoi) daily that local rice represents a bright spot for the export growth of the country’s key agricultural items during the reviewed period as it has constantly maintained robust growth in value.
Pham Thai Binh, general director of Trung An High-Tech Farming Joint Stock Company in Can Tho, said the price of this year’s rice exports rose by 20% to 30% from the previous year, with the current export price of fragrant rice being traded at between US$700 and US$900 per tonne. In addition to high-quality rice, other local types of rice have witnessed good prices.
Prof. Vo Tong Xuan, a leading rice expert, attributed the sharp increase in the price of export rice to the global rising demand for rice as concerns grow over the COVID-19 pandemic.
Do Hao Nam, vice president of the Vietnam Food Association, revealed that domestic 5% broken rice has recorded the highest export price in the global market, representing an increase of 10.9% in value despite a decline of 1.4% in quantity.
Insiders believe that the implementation of the EU-Vietnam Free Trade Agreement (EVFTA) in August has presented a wealth of opportunities for local rice businesses to ship their products to the EU market in the near future.
Aside from enjoying preferential tariffs from the EVFTA, Vietnamese rice has a higher value within the EU market, with the export price across several countries such as Germany, France, and Switzerland reaching up to US$1,500 per tonnes.
Moreover, there are also bright prospects ahead for rice export growth, as several traders that operate within the EU are projected to purchase Vietnamese rice to market it in the EU before selling it on to importers in the Middle East and Africa.
However, Prof. Xuan pointed out that the trade deal also poses numerous challenges for Vietnamese rice as the EU market sets forth stringent requirements in terms of origin and food safety, emphasizing that quality remains the key factor in penetrating this demanding market.
Moving forward, experts advised firms to focus on developing brands for Vietnamese rice, especially high-yield rice varieties such as ST25, alongside building high-quality rice cultivation areas suitable for export in line with safe production processes.
To develop concentrated rice growing areas for export and support businesses in promoting the high-quality rice segment for high-end markets, Agrograde director Toan outlined how the agency has designed trade promotion schemes aimed at developing brands for local rice within the global market.
Indeed, Agrograde has outlined plans to disseminate policies and requirements from major markets in an effort to help enterprises finalise legal documents to seize upon opportunities brought about by the EVFTA. Businesses and farmers must change their thinking in rice cultivation and exports while strengthening connectivity for the purpose of sustainable development.
At present, Vietnam’s rice industry appears to be on the right track with a focus on exporting high quality rice varieties, reducing volumes, and enhancing the added value of the product in the world market, all of which have contributed to ensuring national food security and accelerating economic growth.
Tra fish exports to ASEAN endure sharp fall due to COVID-19
Vietnam's Tra fish (Pangasius) exports to the ASEAN market were valued at US$73.1 million by mid-July, a drop of 32.4% in comparison to the same period last year, according to the Vietnam Association of Seafood Exporters and Producers (VASEP).
Among the three major markets within ASEAN, Tra fish exports to Thailand witnessed the steepest drop with 33.2%, followed by Malaysia with a 31.3% decline, and Singapore with a slight fall of 3.3%.
The VASEP therefore attributed these reductions to the novel coronavirus pandemic (COVID-19) during the second quarter which has taken a severe toll on economies globally, including those throughout the Southeast Asian region, such as Malaysia, Indonesia, the Philippines, and Singapore.
During the second quarter approximately 50 local enterprises exported Tra fish to the ASEAN market, of which 80% of all firms exported products to Singapore.
Most notably, some of the outstanding export products of Vietnamese businesses include frozen pangasius fillets, dried pangasius bubbles, frozen tempura pangasius fillets, and frozen pangasius cubes.
New circular unsettles pharmaceutical giants
Possible cuts in drug prices are worrying international pharmaceutical giants as Vietnam’s new tendering rules are set to take effect from October.
The Ministry of Health’s (MoH) Drug Administration of Vietnam (DAV) on August 10 issued Circular No.15/2020/TT-BYT on the list of drugs for procurement through bidding, the list of drugs for concentrated procurement, and the list of drugs for procurement through price negotiation, with some changes aiming to lower prices of brand-name drugs.
An official at the DAV said that with the new rules, most branded drugs will be added to the third list for procurement through price negotiation.
“In the past, just eight brand-name drugs were on the list, but now the number will increase to 700,” he told VIR.
Under Circular 15, pharmaceuticals subject to price negotiation include brand-name drugs announced by the MoH, and wholly produced in a country considered a stringent regulatory authority (SRA).
They must have at least two registration certificates of marketing authorisation of generic Group 1 drugs.
As per the new rules, there are two schemes for procurement of branded items: price negotiation, and open bidding in Group 1 of generic pharmaceuticals under Circular No.15/2019/TT-BYT dated July 2019 regulating drug tenders at public healthcare facilities.
Specifically, brand-name pharmaceuticals with many generic drugs in replacement in Group 1 failing in procurement via price negotiation will be included in tender of that group.
The new issuance amending some regulations on tenders in Circular 15 of 2019 is in line with the government’s direction to increase local access to quality medicines and to reduce prices, focusing on brand-name drugs.
Previously in Circular 15, branded drugs or equivalents were named in the specific tender. In-patient and off-patient pharmaceuticals (OPPs) are not classified as different by the MoH and are still included in tenders for brand-name drugs or equivalent drugs with costs 10-20 times higher than generic products.
Meanwhile, tenders of generic drugs are divided into five groups, with Group 1 including drugs manufactured entirely by a manufacturing line satisfying EU-GMP requirements or equivalent requirements in a country that is considered an SRA.
Taking effect from October 6 and replacing Circular No.09/2016/TT-BYT from 2016, the new rule is not good news for multinational corporations (MNCs) and members of the European Chamber of Commerce in Vietnam’s Pharma Group such as Novartis, AstraZeneca, and GSK advocate price negotiation.
With the new issuance, they may have to reduce prices to compete with other generic Group 1 drugs, meaning that their future profits may be reduced.
Industry insiders said that the big blow may hit MNCs which focus on OPPs, with many generic drugs in replacement in Group 1. They are mostly from Eastern Europe and Asia.
According to statistics from the DAV, brand-name drugs make up an average of 26 per cent of total health insurance spending. The rate is 47 per cent at central hospitals and 26 per cent at provincial ones.
MNCs often rake in big profits because their brand-name pharmaceuticals go to the hospital system or the ethical drugs channel (ETC), the most profitable segment.
At present, the ETC is the main distribution channel in the local pharma market, accounting for around 70 per cent, while the remainder of the market comprises of over-the-counter or non-description drugs. Foreign players hold the majority of the ETC market due to ownership of brand-name drugs, which operate in a monopolistic manner and usually sell at high prices.
Vietnam needs concrete measures to boost cashew exports
The volume of Vietnam’s cashew nut exports in 2020 so far has risen by 10.4% to 265,000 tonnes but revenue has dropped 4% to US$1.72 billion, according to the Ministry of Agriculture and Rural Development.
Exporters have attributed such a paradox to their customers’ greater attention to quality and requirements on origin while some customers have asked for price reductions due to the impact of the coronavirus pandemic.
As a result of such difficulties, the Vietnam Cashew Association decided to revise its export revenue target for 2020 to US$3.2 billion from the US$4 billion set in late 2019.
It is forecast that Vietnam’s cashew nut exports in the third quarter will fall sharply before rebounding in the final three months of 2020 when markets such as the United States, India, the EU and China will increase their imports for the year-end festivities. As such, the cashew sector needs to take concrete and appropriate measures.
Domestic processing companies should heed the advice of the authorities by delivering quality products to their customers in order to protect the brand and enhance the value of exports. Transparency is needed from production to processing and storage to meet the strict requirements of demanding markets.
At the same time, enterprises and local authorities should work with farmers to develop cashew growing regions with high yields, good quality and traceability for exports while the processing technology should be renovated to enhance quality and diversify products.
As the coronavirus pandemic will continue to affect exports, Vietnamese exporters need to change the form of trade promotion from in-person to virtual meetings so that they can maintain current markets and develop new ones, helping exports activities recover when the pandemic is contained.
Besides promoting exports, it is also necessary to bolster domestic consumption which has yet to be given adequate attention. Boosting domestic consumption can help farmers sell their products and relieve the pressure when exports are faced with difficulties. In order to realise such goals, government agencies need to introduce measures to stimulate domestic consumption and expand the distribution network.
Japanese enterprises seek distribution partners in Viet Nam
Japanese businesses that sell homecare, beauty and health care products will join a programme in Ha Noi to seek Vietnamese distributors in the local market.
Due to the impact of the pandemic, the framework of the Good Goods Japan 2020 programme held by the Japan External Trade Organisation (JETRO) from August 24 to October 30 will be held online with 46 Japanese enterprises.
JETRO Project Director Hanoi Abe Tomofumi said Vietnamese distributors, importers and wholesalers and retailers will have online negotiations with Japanese consumer goods manufacturers after checking products in Ha Noi.
“There are many Japanese distribution channels in Viet Nam via local retail system," he said.
He said Good Goods Japan 2020 was the programme's seventh year in Viet Nam, showing the strong interest of Japanese businesses in the market.
He also said as Japanese manufacturers saw the strong development of the local retail market in recent years with increasing demand for high-quality products from Japan, adding that half of the enterprises were new to the market.
JETRO’s survey showed that among Japanese products, Vietnamese consumers were most interested in kitchen utensils, health and beauty products, sanitary products and detergent.
According to the General Statistics Office, Vietnam's retail goods market has grown rapidly in the past 10 years, with retail sales of goods nationwide exceeded VND3.7 trillion (US$159.3 million) last year, three times higher than the figure in 2009.
Despite the pandemic, shareholders set to rake it in
Despite the difficulties inflicted by the COVID-19 pandemic, several companies plan to pay dividends at surprisingly high rates.
Sabeco Song Tien Trading & Service JSC (SST) has recently announced it will pay a 2019 dividend in cash at an astonishing rate of 347.6 per cent, meaning every shareholder will receive VND34,760 (US$1.5) for each share they have.
The payout date is scheduled for September 15.
With 4 million shares outstanding, the company plans to spend about VND139 billion to pay the dividend. Previously, in 2018, the company paid cash dividends at a huge rate of 207 per cent.
SST was established in 2006 and the company mainly produces and trades beer, wine and soft drinks.
The company has not announced its financial statements for the quarters of 2020. In 2019, its beer output reached 269 million litres. Net revenue hit VND5.08 trillion and post-tax profit was VND147 billion, up by 21 per cent and 61 per cent, respectively, compared to 2018. Earnings per share in 2019 stayed significantly high at VND34,937.
At the 2020 annual general meeting of shareholders, SST announced a plan to pay a 2020 dividend at a rate of 194.6 per cent. It forecast a post-tax profit decrease of 42 per cent to VND85 billion.
Another brewer Saigon Beer Western JSC (WSB) has also announced it will pay a 2019 dividend at a relatively high rate of 50 per cent instead of the initially planned rate of 40 per cent.
Due to the severe impacts of the COVID-19 pandemic and strict new penalties for drink drivers, most brewers have suffered sharp drops in sales consumption.
Beer firms saw consumption fall by 40-50 per cent in the first two months of this year, while restaurants and catering services lost 70-80 per cent of customers compared to the same period in 2019, according to the Viet Nam Beer Alcohol Beverage Association (VBA).
The VBA said Decree 100, which took effect on January 1, slapped heavy sanctions on inebriated drivers, leading to plunging sales of booze.
The industry has suffered again since the beginning of 2020 as the spread of COVID-19 forces companies to announce layoffs and stores selling non-essential products are requested to shutter.
But according to the brewers, the capital for dividend payment was sourced from their undistributed profit earnings in 2019.
West Coach Station Joint Stock Company (WCS) also surprised shareholders after announcing a plan to spend VND129 billion to pay 2019 dividend at a rate of 516 per cent.
Every shareholder will receive VND51,600 for each share they have.
In 2018, the company paid a dividend at a high rate of 400 per cent, meaning each shareholder received VND40,000 for every share they owned.
The company, listed on the Ha Noi Stock Exchange, earned VND157 billion in revenue and VND86 billion in pre-tax profit in 2019.
It forecast revenue and post-tax profit down 17 per cent and 22 per cent this year, respectively, compared to the previous year, reaching VND130 billion and VND54 billion.
WCS leaders said the COVID-19 pandemic had caused a sharp drop in their earnings in the first few months of the year as many transport firms were forced to stop working because of social distancing orders.
As the pandemic is being contained effectively, transportation activities are resuming but demand had not yet come back to normal.
WCS closed Friday at VND194,000 per share.
Cuu Long Fish Joint Stock Company (ACL) has recently announced it will pay the 2019 dividend in stock at a rate of 135 per cent.
ACL reported VND1.4 trillion in net revenue in 2019, down 16 per cent year-on-year. Post-tax profit touched VND141.7 billion, down 38.5 per cent year-on-year.
Clever Group Corporation (ADG) last month announced a plan to issue 3.44 million shares to pay the 2019 dividend at a rate of 41.6 per cent. It also plans to issue 6.09 million bonus shares.
Viet Nam National Trade Fair & Advertising Company (VINEXAD) has also paid a 2019 dividend at a rate of 70 per cent in cash. Vinaxad has charter capital of more than VND12.2 billion.
Vietnam Railways reports growth in cargo trains during COVID-19
Despite the negative impacts of COVID-19 on passenger trains, Vietnam’s railway sector saw important growth in cargo trains.
Vietnam has managed to increase cargo trains to offset restricted passenger transport due to COVID-19
In August, Yen Vien and Dong Anh railway stations welcomed cargo trains one after the other, with the majority being international containers.
Nguyen Hoang Thanh, deputy director of Railway Transport and Trade JSC (Ratraco), said that cargo is gathered at the stations and then transported to China, then to Central Asian nations, and then Europe.
Up till now, Ratraco has been conveying cargo by train to countries like Mongolia, Kazakhstan, Uzbekistan, Rusia, Tajikistan, Poland, the UK, Germany, and more. Goods include electronics, textile and garment, footwear, cosmetics, frozen food, and fruit.
In the first six months of 2020, Ratraco operated two to three pairs of trains a week, with 26-30 containers each. The total number of containers for export was 851, with 840 for imports.
Le Quang Dan, head of the Marketing Division of Hanoi Railway Transport JSC (Haraco), said that its revenue from cargo transport rose 12 per cent on-year in the first half of 2020, with cargo transport on international routes counting for the majority.
According to Nguyen Chinh Nam, director of the Planning and Business Department at state-owned railway giant Vietnam Railways (VNR), amid the difficulties in passenger trains, the railway industry strengthened cargo trains, including two-way international transport.
Railway transport firms have diversified their products and services for international transport to attract customers. They include self-power generation frozen container trains to convey frozen products, and fruit for import-export.
In the first half, despite socioeconomic difficulties due to the pandemic and a fall in domestic transport demands, import-export activities by train reached 421,000 tonnes, up 10 per cent on-year.
In 2019, Vietnam ran 111 container trains via the Dong Dang-Pingxiang border gate, 60 of which were on the Vietnam-China route with the volume of 1,688 TEU, and 51 others on the China-Vietnam route with 1,300 TEU.
Han Nhu Quynh, director of the International Cooperation and Sci-tech Department at VNR, said that VNR is an official member of the Organisation for Cooperation of Railways (OSJD) since 1956. The OSJD now has 28 member countries with more than 276,000km of railways in total and transportation capacity of five billion tonnes of cargo and 3.5 billion passengers.
This is a big advantage for Vietnamese railways to cooperate with the railways of other countries, thus boosting international trains.
Thanh of Ratraco noted that the railway route from Vietnam to Russia, Central Asian nations, and Europe with transit in China and Kazakhstan is often referred to as the “Silk Road”. In addition, other potential railway routes include the direct route to China-Russia-Europe, and the China-Mongolia-Russia-Europe.
“The advantage of trains is they can transport huge volumes safely, and transport time of 18-20 days compared to the 40-45 days by sea,” said Thanh, adding that, “We are working to replace by-transit cargo trains with trains from Thailand and Laos to China, and then from China to Cambodia and vice versa. We are also working to transport Less than Container Load (LCL) from Russia to Vietnam, with the first train to run in late September, making it the first shipment by Vietnam railways.”
Firms urged to promote digital transformation to expand exports
Firms should speed up the digital transformation process as an effective solution to expand exports in the context of rising cross-border e-commerce, according to the Ministry of Industry and Trade.
Dang Hoang Hai, Director of the ministry’s Viet Nam e-Commerce and Digital Economy Agency, said to Vietnam News Agency that together with opportunities from the new-generation free trade agreements, the trend of shifting from traditional business models to digital-based is becoming common.
Digital transformation was considered an effective solution for firms to penetrate and expand their export markets, Hai said, adding that digital transformation would help firms set up a more flexible and more efficient export model.
A number of Vietnamese firms were now implementing business-to-business and business-to-consumer e-commerce business models, he added. On a global scale, cross-border e-commerce was developing rapidly and becoming a highlighted trend of trade in recent years.
It was forecast that global online exports could touch US$1 trillion this year, especially amid the COVID-19 pandemic.
Hai said firms should pay attention to three factors, namely developing digital platforms, digital databases and mobile websites in the digital transformation process to boost exports.
Hai said that the Ministry of Industry and Trade was implementing a number of measures to support import and export activities, especially through e-commerce.
Under the national e-commerce development master plan in 2021-25 and the national digital transformation programme to 2025, Viet Nam identified digital transformation as a vital process to speed up the modernisation of the distribution system, increase enterprises’ competitiveness, develop the domestic market and increase exports.
Hai said the ministry was increasing the application of information technology in conducting administrative procedures to facilitate exports, such as the eCoSys system which allows online submission of certificates of origin.
According to the Multilateral Trade Policy Department, trade promotion activities were now moving online, especially amid the COVID-19 pandemic, which also helped save significant sums for businesses compared to traditional trade promotion.
Hai, however, noted that the digital transformation of Vietnamese firms was taking place too slowly.
Vu Thi Hong Nhung, deputy director of VietRap Investment Joint Stock Company, said although firms would develop more rapidly with digital transformation, most remained not ready due to challenges related to resources.
As the digital economy was gradually becoming the main road of economic development, it was vital for firms to renovate their ways of running business through the application of technologies to increase competitiveness, especially for small and medium sized enterprises.
Viet Nam targeted to develop about 50,000 technology companies nationwide to accelerate digital transformation.