HCM City aiding pandemic-hit businesses
Authorities in HCM City have launched aid packages to help local businesses, especially small- and medium- sized enterprises (SMEs), maintain their operations.
The municipal People’s Committee has called on companies to register for tax payment extensions and tax adjustments for household businesses that have already suspended operations.
It is also reviewing and assessing the impact of COVID-19 on tourism businesses to put forward suitable solutions, and will devise recovery scenarios once the pandemic is brought under control.
Local authorities have called for assistance from major businesses for SMEs and introduced measures to promote digital transformation, the digital economy, online public services, cashless payments, and e-commerce. They also pledged to create favourable conditions for companies to access capital.
As of the end of June, the HCM City Tax Department had handled 684 value-added tax procedures for businesses and provided refunds of over 4.5 trillion VND (193.94 million USD).
An estimated 2,000 companies in the city with 136,730 employees have ceased operations, and close to 2,450 others filed documents seeking aid. Around 255,900 local companies and 43,780 individuals have been given tax and land lease payment extensions.
Meanwhile, commercial banks had helped some 230,000 customers with loans totalling 384.61 trillion VND as of early July.
The HCM City Power Corporation (EVN HCMC), meanwhile, has provided customers with support of about 1.7 billion VND in the last three months.
Barriers to public investment disbursement must be removed: Minister
Minister of Planning and Investment Nguyen Chi Dung (Photo: VNA)
Relevant agencies need to take drastic and concerted actions and quickly remove barriers and difficulties to speed up the disbursement of public investment, Minister of Planning and Investment Nguyen Chi Dung has said.
Speaking at an online conference held by the Government on August 21 in Hanoi, the minister said that recovering and promoting economic growth amid the COVID-19 pandemic is a crucial political task for 2020, in which accelerating the disbursement of public investment is key.
He called on ministries, agencies, and authorities in localities to focus on clearly identifying any shortcomings in directing, conducting, and managing public investment projects in order to promptly address any problems, especially those relating to investment procedures and site clearance.
The ministry has proposed the Ministry of Finance accelerate the application of information technology in managing expenditure and processing capital withdrawal applications at its offices and at the State Treasury, in ODA disbursement, and in concessional loans from foreign donors.
Reports from the Ministry of Finance show that cumulative disbursement of public investment reached over 193 trillion VND in the first seven months of this year, equivalent to 40.98 percent of the plan, excluding capital left over from previous years.
The total is estimated to hit 221.7 trillion VND (9.5 billion USD) by August 31, or 47 percent of the plan.
Five ministries and central agencies and 19 localities have reported disbursement rates of more than 60 percent.
But 29 ministries and central agencies and six localities have posted rates of less than 35 percent.
The minister attributed the slow disbursement of ODA capital partly to the impact of COVID-19, saying that most activities linked to foreign factors, from importing machinery and equipment to engaging foreign experts, workers, contractors, consultants, and supervisors, and project funding have been delayed.
Carriers concoct strategies for uncertainties down the road
With recovery uncertain for the remainder of 2020, a number of local airlines are making a genuine effort to fight against the pandemic and look for financial solutions in order to maintain operations.
Nearly a dozen routes of all domestic airports arriving in the central city of Danang, including 200 round-trips every day, have been halted since a new coronavirus outbreak on July 28, as well as leading to the remarkable decline of the number of flights to other locations.
Budget carrier Vietjet has deployed a variety of solutions such as focusing on cargo transportation and ancillary services. Vietjet is the first such airline to be approved to carry cargo on cabin since April. “The debt ratio is among the lowest range in the world’s aviation industry, so Vietjet continues to implement a long-term loan plan to overcome the crisis,” a representative said.
To stay afloat, Bamboo Airways has also carried out solutions to offset losses caused by the halt of all international routes and the sharp decrease of domestic flights. The airline is focusing on cargo transportation for both humane and trade goals, rental flights, and carrying foreigners and cargo to Europe as well as releasing some new services. This is in addition to reducing the flight network, cabin crews, and other employees.
However, in opposition to the worry of other players, Bamboo Airways CEO Trinh Van Quyet still believed in the performance of the airline despite the pandemic. “We are still going forward with the expansion of the aircraft fleet number to 50 aircraft as the goal set since last year, if the demand for transport recovers well and the market changes positively.”
Aviation is said to be the most financially damaged sector hit by the pandemic. By the end of the second quarter, Vietjet recorded a slump of 54 per cent on-year in air transport revenues, and losses of VND1.12 trillion ($48.8 million). For the first six months of 2020, the airline’s loss in air transportation business stands at VND2.1 trillion ($91.8 million).
Meanwhile, Airports Corporation of Vietnam recorded a post-tax losses of over VND365 billion ($16 million) from April to June as its revenues plunged 76.6 per cent from the same period last year to over VND1.046 trillion ($45.5 million).
Meanwhile, Bamboo Airways reported over VND1.5 trillion ($65.2 million) in losses for the first quarter, and all its domestic flight routes are halted until late October at least.
Following a proposal by airlines and authorities, the Vietnamese government is considering an aviation bailout, including providing exemptions from taxes, fees, and environmental taxes for flight fuel, along with providing financial packages and extending debt repayment terms.
However, economist Pham Chi Lan emphasised the need to make this support equitable and transparent. She said all airlines have contributed to the state budget and socioeconomic development, so they should receive equal support based on factors like market share, contribution, and the amount of losses. “We should carefully calculate the losses of each airline and compare it to their revenue and profit to propose a proportional support instead of simply offsetting the bad performance of airlines,” said Lan.
Low-cost capital source drops sharply in many banks
Many banks no longer benefit from demand deposits as the low-cost capital source has declined sharply due to the impacts of the COVID-19 pandemic.
For banks, attracting a high proportion of demand deposits is important, because it creates a cheap source of capital. Normally, the interest rates of demand deposits are much lower than term deposits, being only around 0.2 percent per annum.
At Kien Long Commercial Joint Stock Bank (Kienlongbank), though the bank’s customer deposits still grew by up to 10.4 percent in the first quarter of this year, the amount of demand deposits significantly dropped by nearly 31 percent to just more than 1 trillion VND (42.9 million USD), Bizlive.vn reported.
The bank’s current account savings account (CASA) fell sharply from 4.62 percent at the beginning of the year to 2.88 percent by the end of June, being in the group of banks with the lowest CASA among the surveyed banks.
Similarly, the demand deposits at Bac A Commercial Joint Stock Bank (BacABank) decreased by 27.4 percent in the first two quarters of the year, causing its CASA to plummet to a very low level of just 1.21 percent.
Some other banks also recorded sharp fall of demand deposits, including Saigon Hanoi Commercial Joint Stock Bank (SHB, down by 21 percent), Export Import Commercial Joint Stock Bank (Eximbank, down by 18.4 percent) and Southeast Asia Commercial Joint Stock Bank (SeABank, down by 14.8 percent).
In particular, SHB is one of the banks that recorded a sharp decline in CASA in the period, down from 9.38 percent at the beginning of the year to only 6.95 percent by the end of June.
At Lien Viet Post Commercial Joint Stock Bank (LienVietPostBank), the CASA also decreased 2.28 percent to 12.27 percent, while SeABank saw a decline of 3.71 percent to 8.73 percent.
Even the three banks which have strong CASA including Military Commercial Joint Stock Bank (MBB), Vietnam Technological and Commercial Joint Stock Bank (Techcombank) and Commercial Joint Stock Bank for Foreign Trade of Vietnam (Vietcombank) also recorded a decline in CASA.
Despite leading the surveyed group with CASA of 35.61 percent, MBB’s experienced a slight CASA decline from 38.38 percent at the beginning of the year. Similarly, Vietcombank and Techcombank respectively recorded CASA falls of 1.98 percent and 0.05 percent.
The decline in banks’ demand deposits has been recorded as Vietnam’s economy has been negatively affected by the COVID-19 pandemic, including a social distancing period.
Statistics of the State Bank of Vietnam also showed the amount of deposits on payment accounts of the banking system experienced a sharp decline.
According to experts, the high CASA ratio will create a premise for the bank to improve its net interest margin (NIM) while keeping the lending rates at competitive levels in the market.
That is also the reason why in the past few years, the Vietnamese commercial banking system has witnessed an increasingly fierce race to increase CASA, with banks introducing many policies to attract demand depositors, such as exemption of transaction, money transfer and withdrawal fees.
Ministry to build traceability system for products of industry and trade sector
The Ministry of Industry and Trade will build an origin tracing system to create a database on goods managed by the ministry to meet customers’ increasing demand on tracing origin of goods.
This system will also connect with the national goods tracing system, according to the ministry.
In addition, to contribute to the development of a sustainable value chain and to improve the quality of products, the ministry has issued Decision 1978/QD-BCT on a project implementing, applying and managing the tracing system of goods until 2025.
According to the decision, the ministry will complete the system of legal documents on tracing products in the industry and trade sector and propose a list of products that must ensure traceability.
The ministry will study the application of new technologies for traceability and support businesses in implementing traceability. It will also have an information programme on tracing origin of goods for enterprises.
Due to increasing demand for the traceability of goods, localities and enterprises from production to distribution are implementing the management of product traceability.
HCM City has issued and implemented a project on management, identification and traceability of fresh vegetables, pork, poultry, and eggs.
Meanwhile, Soc Trang Province has stamps of traceability for products such as rice, fish sauce, custard apple tea and dried buffalo meat, the Nguoi lao dong (Worker) newspaper reported.
Nguyen Van Tham, director of Hau Giang Department of Industry and Trade, said that Hau Giang Province focuses on implementing origin traceability for some key products such as Nam Roi pomelo, saffron orange, sugar orange, mango, pineapple, seedless lemon, fish, custard apple and sugarcane.
Tham said this will help farmers have sustainable production and consumers to know about the origin of products, creating favourable conditions for product consumption, especially in fastidious markets.
Retailer Saigon Co.op has also been managing traceability of products by applying new technical standards for fresh food products at its supermarkets, hypermarkets and shops. This is a part of activities improving the quality control for input goods in the Saigon Co.op retail system.
Cash injections for private hospitals
With rapid urbanisation and an ageing population in Vietnam, investors are pouring more funds into the country to develop private hospital chains and satisfy the rising demand for high-quality healthcare.
Last week, VinaCapital announced that its flagship fund, the Vietnam Opportunity Fund (VOF), had invested in Thu Cuc International General Hospital (TCI) in Hanoi. VinaCapital led a consortium to invest $26.7 million to obtain a significant minority stake along with a board seat at the healthcare provider.
TCI was established in 2011 in one of most populous and rapidly-developing areas of Hanoi by Nguyen Thu Cuc, who in 1996 became the first woman to launch and operate a private healthcare company in northern Vietnam. By working with some of the country’s most experienced doctors, Cuc quickly established TCI as a trusted destination for high-quality services at affordable prices in the fields of obstetrics, gynaecology, and oncology, while also offering comprehensive health checks.
Andy Ho, chief investment officer at VinaCapital said, “TCI is widely recognised as one of the top private hospitals in Hanoi – a position it reached in a relatively short amount of time. That speaks to the vision and focus of the founder, the dedicated and professional medical staff, and the high-quality care they provide.”
As Vietnam’s middle class continues to expand, consumers are seeking greater access to private medical services, thereby relieving the burden on the public health sector. As one of the first investors in the private healthcare industry in Vietnam dating back to its investment in Hoan My in 2009, VOF has long recognised the enormous growth potential of this industry.
“TCI joins our existing healthcare portfolio of Thai Hoa in the Mekong Delta region, and Tam Tri Medical Corporation, which has hospitals in southern and central Vietnam. This investment in TCI will raise the VOF portfolio’s exposure to the healthcare and pharmaceutical sectors to 8 per cent of net asset value and will position VOF as the leading private equity investor in private hospitals and clinics in Vietnam,” Ho added.
Similarly, Hoang Quan Group Co., Ltd. under Hoang Quan Group has recently inked a deal with Medika Investment Vietnam to develop international hospital chains in the country. In the first phase, the two plan to develop 12 international-standard hospitals with 2,500 beds as well as polyclinics with total investment capital of VND6 trillion ($260 million).
Hoang Quan Group is specialising in real estate development with several social housing projects in Vietnam. This time, the company decided to venture into the new field of hospital development to tap into the market’s growth potential.
The group owns a large reserve of land across many localities and will thus be responsible for legal land procedures and project development. Meanwhile, Medika has extensive experience in building and operating hospitals. The company will be in charge of building and managing the system of hospitals. Both groups aim to complete the development of the 12 hospitals and polyclinics in the next five years.
Back in February, British Real Capital London launched the $156 million Hong Anh Medical Campus project in Ho Chi Minh City.The facility is a state-of-the-art healthcare system incorporating a 462-bed hospital, a medical training centre, a network of general practice clinics and pharmacies, and senior residencies and nursing homes, adding much needed facilities and services to Vietnam’s healthcare system. The project is divided into four stages, with the final phase expected to be completed by 2030.
Generally, fresh funds are injected into Vietnam’s private healthcare sector. The Private Equity in Vietnam 2019 report by Grant Thornton shows that healthcare and pharmaceuticals ranked fourth in terms of industry attractiveness for investors, which was voted by 29.2 per cent of participants as “most attractive”.
Eng Aik Meng, chairman of the Singapore-Vietnam Cancer Centre in Ho Chi Minh City is also upbeat about the outlook of Vietnam’s private healthcare sector and forecast much room for private healthcare providers to operate in the country.
“Vietnam’s population is ageing quickly, with more than 10 per cent of the population at or above the age of 60 in 2017 – and in 15–20 years, the elderly will account for one third of the total population. Moreover, the rapid urbanisation is stimulating demand for quality healthcare within the country, and overcrowding in government hospitals is expected to intensify, resulting in long wait times and a shortage of beds,” he said, noting that all the factors will drive the investment wave into Vietnam’s private healthcare sector in the future.
Thailand to allow long-stay tourists in Phuket
Thailand will allow foreign tourists to visit for longer stays in Phuket tourist island from October, a senior official of the country said on August 21, as the government tries to revive a key economic sector that has been devasted by the coronavirus pandemic.
Tourists will have to stay for at least 30 days, with the first 14 days in quarantine in a limited vicinity of their hotel, before they can visit other areas, Tourism Authority of Thailand governor Yuthasak Supasorn said.
Visitors will have to take two coronavirus tests during quarantine before they are able to travel to the rest of the island, Minister of Tourism and Sports Phiphat Ratchakitprakarn said on August 20. They will have to take an additional test and remain within the province for another week before they can travel to other parts of the country.
Thailand has gone through nearly three months without a confirmed case of a local COVID-19 transmission. It has recorded over 3,300 cases.
The Thai government’s coronavirus taskforce on August 21 extended a state of emergency for another month until the end of September to control the outbreak.
The tourism-reliant economy has been battered by the collapse of global travel as infections spread.
Southeast Asia's second-largest economy shrank 12.2 percent in the second quarter from a year earlier, the worst contraction since the 1998 Asian crisis due to the pandemic impact.
The country expects to receive 8 million foreign tourists this year. By comparison, it had a record 39.8 million tourists in 2019.
ADB approves 300 mln USD loan to boost access to financial services in Philippines
The Asian Development Bank (ADB) on August 21 said it has approved a 300 million U.S. dollars policy-based loan to support the Philippine government's efforts to implement reforms to expand poor Filipinos' access to financial services.
According to the Manila-based bank, the ADB's loan is supporting reforms to help the Philippine government reach targets linked to the national strategy for financial inclusion.
It said these measures will strengthen the institutional and policy environment for financial inclusion, improve financial infrastructure, and increase the capacity and reach of service providers, especially rural banks and non-bank financial institutions.
Citing the 2017 Global Findex Survey, the ADB said the Philippines ranked among the lowest in Southeast Asia on almost all financial inclusion indicators. "Only 34 percent of Filipino adults have an account at a formal financial institution, compared with 49 percent in Indonesia, 82 percent in Thailand, and 85 percent in Malaysia," it said.
The ADB said the Philippines can expand financial access to poor Filipinos through credit, savings, insurance, pensions, and remittances.
Singapore continues loosening travel restriction
Lawernce Wong, co-chair of the Singaporean inter-ministry committee against COVID-19, on August 21 said the country will allow the general travel by its people to Brunei and New Zealand, starting from September 1.
Besides, the country will also allow the entry of visitors from Brunei and New Zealand.
Travelers entering Singapore and who have remained in either Brunei or New Zealand in the last consecutive 14 days prior to their entry will not be required to serve a Stay-Home Notice (SHN). Instead, they will undergo a COVID-19 test upon arrival at the airport and only be allowed to go about their activities in Singapore after receiving a negative test result.
Meanwhile, for travelers from some low risk countries and regions including Australia (except Victoria state), Macau (China), china, Taiwan (China), Vietnam and Malaysia, Singapore will shorten the SHN duration from the current 14 days to seven days, and allow travelers to serve the SHN at their place of residence.
Vietnamese, Japanese consumer goods companies to be brought together
An event linking producers and traders of high-quality Japanese household commodities and consumer goods with Vietnamese partners, called GOOD GOODS Japan, will take place in Hanoi from August 24 to October 30.
Held at the Japan External Trade Organisation (JETRO) Hanoi Office on Phan Chu Trinh Street in the capital’s Hoan Kiem district, the event is expected to attract 46 Japanese companies showcasing their products and linking with Vietnamese partners through virtual negotiations.
Abe Tonofumi, Project Director at JETRO Hanoi, said GOOD GOODS Japan has been held by the organisation since 2014 with the aim of helping Japanese small- and medium-sized enterprises popularise their products to the Vietnamese market.
Vietnamese buyers will be offered a chance to test exhibited products and hold online negotiations with Japanese suppliers if interested.
ASEAN-China digital trade centre to boost cooperation
The Association of Southeast Asian Nations (ASEAN) and China's Guangxi Zhuang Autonomous Region have rolled out a plan to build a China-ASEAN Digital Trade Centre for boosting regional digital economic cooperation.
Headquartered in Nanning, capital of Guangxi, the centre is designated as a digital economy development park with office buildings, digital creative industries, platform operations, big data, the internet of things, among other facilities.
The project is also important for the construction of the ASEAN-China information harbour.
The Guangxi government said that the centre will be built in two phases. By the end of 2021, 5 billion CNY (about 724 million USD) will be invested in the centre, allowing it to accommodate 4,000 enterprises, with at least five warehouses and exhibition centres built in ASEAN countries.
Between 2022 and 2025, another 20 billion CNY will be invested, allowing the centre to accommodate more than 10,000 digital-trade market entities, 10 of which will each have a turnover of more than 1 billion CNY, while another 100 will have a turnover of more than 100 million CNY each.
Li Changguan, chairman of the Guangxi committee of China Council for the Promotion of International Trade, said that China and ASEAN countries are highly complementary in the field of digital economy and have great potential for cooperation.
The establishment of the center can better serve economic and trade cooperation between the two sides in the future, he said.
RoK increases import of Vietnam’s shrimps
The Republic of Korea (RoK) is importing more shrimps from Vietnam, and has become the fifth biggest importer of Vietnam’s shrimps with 10.7 percent of market share.
Despite the impact of the COVID-19 pandemic, Vietnam’s export of shrimps to the RoK had reached 179 million USD as of July 15, a year-on-year rise of 5.8 percent.
Dried shrimp and processed giant tiger prawn reported the highest growth rates, with 194 percent and 62 percent, respectively.
Vietnam’s shrimp is exempted from import tariffs to the RoK with a quota of 15,000 tonnes a year. However, at present, Vietnam is shipping just 2,500 tonnes of shrimps to the Eastern Asian country.
Domestic exporters are advised to raise their awareness of the Vietnam-RoK Free Trade Agreement to take advantage of its incentives.
Organic farming helps small businesses grow
As demand for healthy food grows, one farmer in the Phú Yên Province has decided to go organic.
The switch has not only helped him to reap the rewards, but also greatly benefitted other farmers in his region.
Trần Ngọc Phú, 47, left his home town in Hương Điền District, Thừa Thiên-Huế Province in central Việt Nam more than 30 years ago.
He decided to better his prospects by moving to Ea Bar Commune, a mountainous area of Phú Yên on Việt Nam's south-central coast.
Once he arrived he began working on rubber plantation, and continued to do so until 2017 when the company dissolved.
Faced with a tough decision of what to do next, Phú decided to start his own business.
“It was a really a difficult time for me as I did not know where to start,” he said.
“After a lot of research on the internet, I found that people paid more and more attention to what they were eating and they were willing to pay more for clean and healthy products.”
That was Phú’s eureka moment but he wanted to be sure he had the sufficient knowledge to make his business a success.
He travelled to Hà Nội to study at the Việt Nam Agriculture Institute and also visited organic farms in Bình Phước and Đắk Lắk to gather as much information as he could.
Knowledge collected, Phú began his enterprise, growing durian, sacha inchi and passion fruit on his four-hectare orchard without using any herbicides.
He used natural products such as fermented fish and fruit peel to protect his trees and animal waste and coffee pods to make fertiliser.
It wasn’t always plain sailing, and Phú made many mistakes along the way.
He added: “With little experience and understanding when first applying organic farming, I failed many times, then I tried again and again.”
Creating suitable organic fertiliser made from fermented small fish, fruit peels and probiotics was one such headache and he had to study the characteristics of soil and trees.
Over and over he had to try and find the right combinations, and some fellow farmers questioned the direction he was heading.
“Organic farming was very strange to many farmers in my locality at that time. They were sceptical about my farming method and did not think that I would succeed,” Phú said.
But they soon changed their ways of thinking when they realised Phú was turning a healthy profit.
In 2018, Phú earned VNĐ20 million from 100 passion fruit trees and VĐ150 million from growing sacha inchi and rubber together.
What impressed them more is that Phú’s three-year-old durian garden was disease free and producing healthy fruit.
According to Phú, there are three main factors that make organic farming models successful.
First, as no chemical is used in the model, products’ prices are higher than other products but consumers will still accept and buy the products.
Second, growing short-term fruit trees like sacha inchi or passion fruit and long-term fruit trees like durian is a strategy that uses short-term investment as stepping-stones towards achieving a long-term goals.
Third, Phú sent his sacha inchi seed for testing indicators of omega, calcium, protein. Testing results proved the quality of the products plus no pesticide residue.
This whole process was recorded and traceable so customers can check the products’ origins easily.
With his accumulated experiences and knowledge on organic farming, Phú shared it with other farmers.
Trần Đình Mậu, another farmer in Ea Bar Commune said that last year, Phú helped him with his two-hectare area macadamia nut farm.
“My customers like the organically-grown macadamia more than the ones grown using conventional methods,” Mậu said, adding that now, he used organic fertilisers to all his crops.
Nguyễn Văn Khúc, secretary of the commune’s party committee said, adding that the organic farming models generated high economic benefits and organic products were welcomed in market.
In August last year, Phú established Ea Bar Emi Farm Co-operatives, attracting nine members. They apply organic farming in more than 50 ha of orchards and herbs.
They hope to develop a zone specialising in organic fruits in the mountainous area of Phú Yên Commune.
However, Phú admitted that besides financial issues, they faced another difficulty in management.
“We farmers are used to doing farming work, now, we have tried to run business, managing a co-operative is not easy for us,” Phú said.
Phạm Trọng Yêm, deputy head of Phú Yên Province’s Co-operatives Alliance said that Phú’s co-operative should join the alliance so that it would receive more supports in technology, trade promotion, branding, human resource training as well as loans.
MoIT receives anti-dumping documents on cold rolled stainless steel
The Trade Remedies Authority of Viet Nam under the Ministry of Industry and Trade has just issued a notice of receipt of a request to review anti-dumping measures for some cold-rolled stainless steel products originating from China, Indonesia, Malaysia, and Taiwan imported into Viet Nam.
Previously, the Ministry of Industry and Trade issued Decision 3162/QD-BCT on October 21 last year on the results of final review of the application of anti-dumping measures for some steel products originating from China, Indonesia, Malaysia, Taiwan, imported into Viet Nam and decided to continue applying anti-dumping measures for these products.
After the review time expires, based on the investigation conclusions, the Trade Remedies Authority of Viet Nam will propose the Minister of Industry and Trade to continue applying anti-dumping measures in accordance with current regulations and adjust the anti-dumping measures or terminate the application of the measures.
The implementation of procedures related to the review process will not interfere with the application of the existing anti-dumping measures.
The application must be completed and submitted directly to the investigation agency before 5pm on October 21 (Ha Noi time) at the Trade Remedies Authority of Viet Nam at 25 Ngo Quyen, Hoan Kiem District, Ha Noi.
Vietnam racks up trade surplus of US$10 billion by mid-August
Vietnam recorded a trade surplus exceeding US$10 billion by mid-August as exports continued to bounce back during the first half of August, according to the latest statistics compiled by the General Department of Vietnam Customs.
The country raked in US$12.7 billion from exports while spending US$10.8 billion on imports in the first half of August.
Overall, it grossed US$160.2 billion from exports since the beginning of the year to August 15, representing an annual increase of approximately 1.8%, equivalent to nearly US$3 billion, while imports fell to US$150.2 billion, roughly US$4 billion less than the corresponding figure last year.
Worthy of note is that phones and accessories brought back US$2.58 billion, topping the list of commodities that have obtained a high export value. They were followed by computers, electronics and components (US$1.9 billion), c(US$1.36 billion), and machinery, equipment, and spare parts (US$1.11 billion).
Due to the resurgence of the novel coronavirus epidemic, the nation’s export activities in the remaining months of the year are projected to face an array of challenges.
Despite this, the implementation of the EU-Vietnam Free Trade Agreement on August 1 is poised to create opportunities for businesses, according to the Ministry of Industry and Trade.
With strong commitments to opening the market and abolishing import duties of up to 100% on tariff lines, there are bright prospects ahead for Vietnamese exports to the EU market, especially for key products of garments, footwear, agro-forestry and fisheries.
Car dealers offer huge discounts in time of hardship
Car dealers are offering huge incentives for customers to promote sales as the economic impacts from the pandemic persist and the lunar month of July is around the corner.
The lunar month of July, which began on Wednesday, is traditionally considered taboo by most Vietnamese for activities concerning large sums of money such as purchasing real estate and cars.
As demands shrink, caused by both psychological fear and difficult economic situations, automobile brands are left with little choice other than providing discounts to help push up sales and maintain market share.
VinFast is offering a direct discount of VND80-120 million by 30 September for every purchase of Lux A2.0 or Lux SA2.0, applied for clients who have previously purchased the Fadil and Lux models.
Ford Viet Nam is cutting VND160-220 million off its 2019 Everest 2.0L AT 4WD version, while buyers of Everest versions receive price cuts of around VND60-85 million. Other Ford models are being discounted ranging from VND25-80 million per unit with reductions in registration fee or guarantee packages.
Truong Hai Automobile Group (Thaco)’s Kia Cerato, Soluto and Sedona are being discounted by up to VND60 million. Some Mazda models are also on sale by up to VND40 million.
TC Motor retailers are offering a VND10-50 million reduction for Hyundai Kona, Tucson and SantaFe. Nissan Viet Nam is also cutting VND20-40 million for its Sunny, X-trail and Navara models.
Toyota Viet Nam retains its promotional programme for purchases of selected Fortuner models by the end of August. Consumers buying the two versions of 2.4 MT 4x2 and version 2.4 AT 4x2 will receive a gift of VND55 million in value.
High-end automobiles are no exceptions. Dealers are putting Honda CR-V 2020, MG HS and ZS, Suzuki Ertiga (Sport) on sale with a reduction of VND10-30 million in price. Buyers of high-end imported cars such as Jaguar and Land Rover are also receiving one-three years of hull insurance.
Firms have high hopes for a revival of car prices as the lunar month of July passes and the COVID-19 pandemic eases off, yet economic uncertainty has caused demands to plunge as consumers narrow down consumption.
Viet Nam Automobile Manufacturers’ Association (VAMA) estimated the car demands this year will drop 28 per cent year-on-year and firms continue to decrease prices of many models.
The latter end of the year is usually the time for brands to introduce new models, which means more pressure on the selling side. Many companies have to suffer losses, especially for cars manufactured in the beginning of 2020 and earlier since they will only devalue as 2021 comes.
Economic expert Ngo Tri Long told local media that if the COVID-19 pandemic persists, demand for cars will continue to face hardship as it is not an essential good. “Factories and retailers in Quang Nam and Da Nang are seriously affected."
Car prices may pick up slightly as the lunar month of July is over. The Government support for the automobile industry is also expected to extend to 2021, yet the overall price trend is likely to remain on the low side.
VAMA estimated a negative growth of 15 per cent for the Vietnamese automobile industry in 2020. Sales plummeting to the lowest level in 10 years is also predictable if the pandemic remains uncontrolled.
The automobile industry contributes 3 per cent to GDP every year on average, equivalent to US$7 billion in 2019. As car sales crash, the economy is taking a hit as firms will restrict production and cut down on staff, according to VAMA.
Vietnam Airlines clings on to hope of government support
Amid its poorest performance in development history, national flag carrier Vietnam Airlines is undergoing a strong restructuring effort while urging the government to offer special support to shelter from the global health crisis.
Taking office as newly-elected chairman of Vietnam Airlines in a historically difficult period, Dang Ngoc Hoa’s face has been full of anxiety because of the increasing responsibility in helping the country’s leading wings recover from a tough year.
“The first thing that I did as the new chairman was to encourage our staff to move ahead. We already have different scenarios for future developments of the pandemic,” Hoa said. “Necessary measures and solutions have been taken, including cost-saving, restructuring the aircraft fleet, and more.”
However, the national flag carrier believed it cannot recover without strong support from the government. Vietnam Airlines, at the general shareholder meeting on August 10, officially sought future solutions, with financial support of VND12 trillion ($521.7 million) being a focus.
The group proposes the state, which holds a controlling stake of 86 per cent, to issue special supporting policies. The airline has so far submitted 15 documents to authorised agencies in this regard.
“The government has asked the Commission for the Management of State Capital at Enterprises (CMSEC) to work with Vietnam Airlines on the completion and submission of necessary procedures to the highest Vietnamese authorities (the National Assembly/Politburo) in order to decide the supporting policies, with the additional loan of VND4 trillion ($173.9 million) from the state and an increase of equity by VND8 trillion ($347.8 million) being the key solution,” Pham Ngoc Minh, former chairman of Vietnam Airlines, said.
Industry insiders said that the aviation sector is in urgent need of special supporting policies to soon deal with the difficulties. Senior economist Tran Dinh Thien said that legal barriers that could delay the issuance of the policies could make the situation more serious. “In some cases, the policies were issued when businesses were exhausted, or lost the opportunities to recover.”
Nguyen Hong Hien, representative from the CMSEC noted that shareholders, especially strategic stakeholders and state agencies, should urgently work together to help the airline overcome the crisis, keep growing, and increase investment value for shareholders.
The time that the government will take in making moves will be decisive for Vietnam Airlines. Without the government support, Vietnam Airlines may not be able to hold out for long, depending on the time to control of the pandemic both at home and abroad. Meanwhile, the International Air Transport Association (IATA) forecast that the international aviation market is not likely to bounce back until 2024, meaning severe difficulties ahead for airlines.
Vietnam Airlines plays an important role in the domestic aviation sector, which greatly contributes to the country’s GDP. The group, which includes Vietnam Airlines, Pacific Airlines, and VASCO, holds a total domestic market share of 50 per cent.
The air transport industry, including airlines and its supply chain, is estimated to support $2.6 billion of GDP in Vietnam, while spending by foreign tourists supports a further $9.9 billion of the country’s GDP, totalling $12.5 billion.
Looking ahead, air transport in Vietnam is forecast to grow by 178 per cent in the next 20 years under the “current trends” scenario. This would result in an additional 82.2 million passenger departures by 2038. If met, this increased demand would support approximately $35 billion of GDP and around 2.4 million jobs.
In spite of the importance, Vietnam Airlines is still waiting for the long-awaited support while regional giants have received some funds. In particular, Vietnam Airlines’ Japanese strategic partner ANA attained funding of $10 billion, Singapore Airlines was offered support of $13 billion, Malaysia Airways received a loan of $1.2 billion, and Thai Airways was given $1.8 billion in support.
The Hanoi-based carrier has taken a number of measures to keep its footing. In the short-term the giant is focused on cargo transport, chartered flights, and cutting costs. In the long term, it plans to restructure its aircraft fleet.
“We have negotiated to delay new aircraft purchases and rent deals and even cancelled unnecessary ones. We will sell the long-used aircraft and divest investment from subsidiaries, joint ventures, and associated companies,” said Duong Tri Thanh, CEO of Vietnam Airlines.
The national flag carrier has suffered its largest-ever loss. In the first six months of 2020, it made revenues of VND24.8 trillion ($1.07 billion), down 50 per cent on-year, and incurred after-tax losses of VND6.64 trillion ($288.7 million).
To maintain operations, the airline increased long-term loans from VND5 trillion ($217.4 million) to VND9 trillion ($391.3 million) while negotiating with lenders to extend the payment period.
Worse still, the new recent COVID-19 infection cases have crushed hopes of a possible recovery for the domestic market this summer. In July, when the country reported no new cases, Vietnam Airlines conducted 500 domestic flights daily, up 40 per cent on-year. However, since late July ,the number fell to 109 flights a day, a similar fall to that in May.
In the wake of the adversity, Vietnam Airlines expects to make consolidated revenues of VND40.58 trillion ($1.76 billion) in 2020, down 60 per cent on-year, and after-tax losses of VND15.17 trillion ($659.56 million), with a plan to announce no dividend payouts in 2019.
Investment in Southeast Asian tech startups down 13 per cent in first half
Southeast Asian tech startups raised less money in the first half of 2020 due to the impact of the coronavirus pandemic but the decline is less than in other parts of the world.
According to the latest report by Singapore-based venture capital firm Cento Ventures, Southeast Asian tech startups raised $5.6 billion of investments in the first half of 2020, down 13 per cent from the year earlier. This is less steep than the 16 per cent drop in India and the 21 per cent decline in the EU. Meanwhile, North America witnessed an 8 per cent decline in the given period.
The COVID-19 pandemic has dragged down deal activity globally but investors continued to fund growth-stage startups in areas that benefit from online activity. In Southeast Asia, investments of $10-50 million, typically known as Series B and C financing, totalled a record of $.2 billion in the first half, up 25 per cent from a year ago.
"All things considered, Southeast Asia held up surprisingly well," Dmitry Levit, a partner at Cento Ventures, said in an interview with Bloomberg.
He noted that growth in $10-150 million deals and the proliferation of $100 million companies seem to be the two powerful developments in the region in recent years.
Southeast Asian ride-hailing giant Gojek wrapped up a $1.2 billion investment in March. In May, Singapore's Ninja Van raised $279 million from backers including France's GeoPOst SA, scoring one of Southeast Asia's largest startup investments since the pandemic. Meanwhile, Vietnamese e-commerce platform Tiki wrapped up a $130 million investment from private equity fund Northstar Group, making the e-commerce operator one of the top five funded startups in Southeast Asia in the period.
Thai Nguyen props up private sector development
By virtue of abounding potential and natural resources, holding a pivotal role among northern mountainous provinces, and receiving active support from the local government, scores of businesses in the northern province of Thai Nguyen have established firm footholds with ever-increasing contributions to push up local economic growth and job creation.
According to Vu Hong Bac, Chairman of Thai Nguyen People’s Committee, for the private sector to grow into a motivating force with major contributions to propel local socioeconomic development, local authorised agencies at all levels need to step up support, encourage small businesses and local trading households to join the market, promote equal access to diverse land and capital resources, and develop an innovative startup ecosystem. Simultaneously, efforts must gear towards fostering dialogues and reacting to their proposals.
In addition, local business associations need to function as an effective link between the business community and the local government, while companies must tighten cooperation such as in product consumption for sustainable development.
Thai Nguyen’s provincial governance and public administration performance index was constantly kept at high levels in recent years. Last year, the provincial competitiveness index ranked 12th, moving up six notches compared to the previous year. Significantly, the time to receive business registration and business setup certificates has been shed to just two working days.
Local transport infrastructure has seen marked improvements and abundant human resources, providing the fulcrum to spur the private sector’s development. Since 2015, about 350 new business setups have been registered in the province annually.
In the first half this year despite the pandemic, Thai Nguyen still saw 314 businesses established, with the total registered capital approximating VND2 trillion ($86.9 million), surpassing 5 per cent on-year.
The province’s recent statistics show that the total investment value in Thai Nguyen amounted to VND238 trillion ($10.3 billion) during 2015-2020, in which VND97 trillion ($4.21 billion, equal 41 per cent) came from the private sector.
This has contributed a great deal to the province’s achieving an average growth rate surpassing 11 per cent per year in the past five years, and budget payment from the private sector jumping 2.1 fold during the period. Per capita income averaged VND83 million (over $3,600). last year, and each year the private sector creates more than 21,000 jobs.
One of eminent growth modes among private companies in Thai Nguyen is An Khanh Thermal Power JSC, investor of the 120MW An Khanh thermal power plant, commenced operations in 2015 with the total registered capital of VND4.7 trillion ($204 million). Each year since, the plant has contributed nearly one billion kilowatt hour to the national power grid, raking in revenue of tens of millions of US dollars and providing jobs for about 500 workers.
According to Nguyen Van Thang, chairman of An Khanh Thermal Power JSC, Vietnam faced a critical shortage of power during 2010-2015, with active support from relevant ministries, branches, and particularly from Thai Nguyen’s authorities, the plant was able to come on stream in a timely manner, helping to ensure national energy security.
In another case, through availing local bountiful advantages, the billion-dollar Nui Phao Mining Co., Ltd. came into existence to exploit Nui Phao mine, one of the world’s largest tungsten deposits based in Thai Nguyen, with mining reserves touching 66 million tonnes of ore.
Nui Phao has been participating in a global value chain and manufacturing network via producing high-tech items serving the aerospace, auto, and computing industries. Every year, Nui Phao fetches an annual revenue of about VND6 trillion ($260 million) and budget contribution reaching VND1.2 trillion ($52.1 million).
With active support from relevant management agencies in Thai Nguyen, six specialised companies working on packaging production, logistics, and transportation serving Nui Phao were set up and managed stable operations. They have created jobs for nearly 200 local workers.
Meanwhile, from humble beginnings TNG Investment and Trading JSC has grown into the largest apparel maker in the province with more than 16,000 employees. In the words of TNG chairman Nguyen Van Thoi, the company has encountered numerous difficulties due to supply chain disruptions in the wake of the dragging COVID-19 pandemic. Cancelled export orders had caused headaches to company executives in finding jobs for the workers.
“Leveraging support from Thai Nguyen’s management, the company has been quickly participating in exporting face masks and protective clothing, helping to ensure stable work and income for the labourers despite pandemic implications,” Thoi said.
As one of major apparel hubs in Vietnam, Thai Nguyen also quickly sought government approval to export face masks and protective clothing for pandemic prevention after the local demands for the projects were met, helping local companies to maintain business continuity and employment of local workers.
In addition, according to Chairman Bac, to alleviate burdens on businesses hit by COVID-19, Thai Nguyen’s authorities have instructed tax and social insurance agencies to postpone and extend implementation of financial obligations; and also asked banks to engage in debt restructuring and soften the interest rate to support business development.