VIETNAM'S BUSINESS NEWS HEADLINES AUGUST 9

Provisions now in place via EVFTA for Vietnamese labour advances

VIETNAM'S BUSINESS NEWS HEADLINES AUGUST 9


Although the EU-Vietnam Free Trade Agreement may greatly benefit businesses from both sides, they must first abide by labour and social standards set out in the deal to reap the various advantages. 

The new agreement (EVFTA) includes commitments to implement the International Labour Organization’s (ILO) core standards as well as the UN conventions relating to, for example, the fight against climate change and the protection of biodiversity.

Phan Thi Thanh Xuan, deputy chairwoman and general secretary of the Vietnam Leather and Footwear Association said, “This is an important agreement to Vietnam’s export industry. For the leather and footwear industry, it is necessary to focus on labour and environmental criteria, such as improving capacities to meet and take advantage of the opportunities provided by the EVFTA.”

Xuan also warned that businesses could lose orders from the EU if they do not ensure their labourers’ rights.

“Sustainable development and the circular economy are now a trend. Many importers require each pair of exported shoes to be accompanied by a certificate, which must clearly state how the shoes can be recycled after use,” Xuan said. “Importers also require businesses to demonstrate their environmental, employment, and labour regimes, as well as how they handle carbon emissions. If businesses do not meet these requirements, they will not be able to participate in the global value chain.”

In the EVFTA, provisions related to social and environmental development can be found in Chapter 13, on trade and sustainable development. The provision on multilateral labour standards and agreements is of particular interest as it stresses the commitment of both parties to the fundamental rights at work, in accordance with obligations stemming from their participation in the ILO.

Four rights are pinpointed – the freedom of association and the effective recognition of the right to collective bargaining; the elimination of all forms of forced or compulsory labour; the effective abolition of child labour; and the elimination of discrimination with respect to employment and occupation.

In addition, Chapter 13 also provides for the obligation of both parties to make sustained efforts towards ratifying the fundamental ILO conventions, which cover the four aforementioned rights as well. This issue is to be monitored closely considering that only some of them are currently in force in Vietnam, according to the European Papers Jean Monnet Network.

However, the country has already made progress on some of these commitments as Vietnam ratified the ILO Convention 98 on collective bargaining and adopted the revised Labour Code in November 2019. The nation also confirmed a timeline for the ratification of the remaining two fundamental ILO conventions on freedom of association and on forced labour.

Hoa Sen move hinders Ca Na progress

Hoa Sen Group is looking to transfer its involvement in the $10 billion Ca Na steel complex project in the south-central province of Ninh Thuan, posing new questions as to who could take over the troublesome venture.

The group wants to sell two of the six companies involved with the steel complex venture, citing a now-incompatible plan and new wishes to focus on other fields such as plastic and corrugated iron. The remaining businesses would be dissolved.

In 2016, the group established the subsidiaries with the total investment capital of VND250 billion ($11.23 million) to support implementation of the Ca Na project. At that time, thanks to a favourable steel sheet market and production capacity, Hoa Sen recorded revenues of VND18 trillion ($782.6 million), while profits eventually tripled to reach VND1.5 trillion ($65.2 million), making it the number one group in galvanised steel market share.

The company’s shares also doubled, leading to chairman Le Phuoc Vu entering the list of top 15 richest people in Vietnam. With great successes, Hoa Sen considered expanding production to continue its ambition to dominate the Vietnamese steel sheet market and compete with rival Hoa Phat Group.

The complex was planned to help Hoa Sen overtake Hoa Phat as the largest Vietnamese steel producer, following only Taiwanese Hung Nghiep Formosa Ha Tinh Steel Co., Ltd., which has an annual capacity of 7.5 million of tonnes in its first phase.

The Ca Na complex is set to be carried out towards 2031 in multiple stages and will have final capacity of 16 million tonnes a year, including long steel and flat steel.

The project was initially licensed in 2008 with investment of Malaysia’s Lion Group and Vietnam’s notorious Vinashin which is now Shipbuilding Industry Corporation, with the scheme becoming the biggest foreign-invested project ever licensed in the country at the time. The project started construction that year – however, due to financial difficulties the progress was slow and Lion Group withdrew, leading to long delays.

Consequently, in 2011 Ninh Thuan authorities revoked the project’s investment certificate before Hoa Sen took over.

According to mergers and acquisitions analysts, even before the current pandemic situation, along with the long and complicated trade war between major economies, Vietnam’s steel market was becoming heavily affected, causing damage to export and import activities. The domestic demand decreased in the context of real estate projects having difficulty.

“In the context of the real estate segment gradually peaking due to oversupply, along with credit tightening policies and the continuing pandemic, investing in a steel project will not be feasible,” one industry insider remarked, adding that it was also not easy to find international investors to acquire projects in the first place.

Meanwhile, the Ca Na initiative itself has previously faced mixed opinions concerning environmental issues due to heightened possibility of a disaster similar to the one caused by Hung Nghiep Formosa Ha Tinh some years ago. Thus there have been calls for clarification on planning issues, environmental plans, monitoring responsibilities, and other areas of transparency.

In 2017, the prime minister requested the suspension of the Ca Na project in order to “clarify some issues related to the environment and technology.” He said that there would not be a trade-off between the project and the environment.

Shareholders are expecting that the upcoming extraordinary general meeting this month will answer questions on who could take over the project and the additional plans for Hoa Sen in the coming time.

Philippines-based Ayala Corporation boosts investment in local energy market

The Philippines-based Ayala Corporation has set eyes on the Vietnamese energy market after its plans in Australia have been thwarted when Infigen Energy refused its take-over offer.

The central province of Quang Binh's People’s Committee has lately informed that the VND8.9 trillion ($387 million) B&T wind energy complex now officially belongs to AMI AC Renewables – a joint venture between Philippines-based AC Energy and local AC Renewables, the former being a member of the Philippines-based multisector company Ayala Corporation.

The energy complex will be built on a 2,244-hectare land, including 156ha of indigo tree forests in the two districts of Quang Ninh and Le Thuy. The project will consist of two parts, the 100.8MW B&T 1 which is estimated to put into operation in December 2020 and the 151.2MW B&T 2 which will be launched in next June.

Aiming to assure the project timeline, the provincial People’s Committee on March 11 issued Document No.346/UBND-KT on accelerating the implementation of the B&T project to finish before October 2020.

The act took place as Ayala failed to obtain Australian company Infigen Energy in the middle of July. Newswire Reuters stated that the Filipino conglomerate gave up on acquiring Infigen after a month-long bidding war. The withdrawal came right after its rival Spanish power generation company Iberdrola announced that its offer for Infigen was now unconditional. Infigen has asked its shareholders to reject the Ayala bid.

In late June, Ayala offered a whopping $542 million for the deal, showing its ambitions in Australia. Previously, the company stated that the investment in Infigen was a part of its blueprint in the Asia-Pacific, focusing on the four markets of the Philippines, Vietnam, Australia, and India.

Thus, the reason behind Ayala's boosting of investment in Vietnamese energy projects is likely the setback it experienced in Australia with Infigen.

AC Energy is a member of Ayala Corp. According to its website, as of 2018, AC Energy held investments in plenty of wind and solar energy projects in Vietnam, with the capacity of 500MW. AC Energy and other members of Ayala Corporation now hold stakes in several local firms, including CII, SII, BOO Thu Duc Water, and BIM Energy.

B&T Wind Energy JSC was established in August 2017 with the charter capital of VND10 billion ($434,780) and three main shareholders, including Bolat Duisenov (51 per cent), Nguyen Nam Thang (44 per cent), and general director Duong Dinh Tich (5 per cent).

As of the end of 2017, Bolat Duisenov withdrew his entire capital from B&T. At the same time, Thang and Tich also reduced their ownership rates to 0.01 per cent each.

Moreover, the legal representative of the company is currently Roman Miguel De Jesus, head of Commercial Operations at AC Energy, showing the Filipino investor's long-time ambition at B&T.

Support a prerequisite for Vietnamese groups to make major mark in Singapore

International integration has been developing remarkably, in Vietnam and Singapore in particular. As two countries in the ASEAN, the international relationship among them has become closer so as to assist each other for mutual development.

As a result, the two countries have opened their door for more funding from domestic enterprises and become promising investment destinations. However, apart from advantages of this, the enterprises of one country investing in the other also face difficulties because of legal and culture differences among countries. Therefore, solutions need to be recommended to deal with these problems.

Singapore has a huge investment in Vietnam and has one of the highest foreign direct investment (FDI) inflows into Vietnam. Specifically, in 2017, Vietnam attracted strong FDI from Singapore, ranked third behind South Korea and Japan in the primary sectors of infrastructure, consumption and processing, agriculture, and food.

In the first seven months of 2020, there were 104 countries and territories investing in Vietnam, and Singapore has risen to become the largest investor in Vietnam with the total investment capital of $4.57 billion (accounted for 53.1 per cent of the total investment capital into Vietnam), compared to the second place South Korea with $984 million.

This shows that Singapore is highly focusing on investment to develop industries and fields in Vietnam. Moreover, Singaporean companies have quickly integrated into the business community in Vietnam and are strictly complying with the law, since they have a good management team and market research, as well as risk warning teams.

The companies’ projects also showed their effectiveness of investment when they have contributed to the development of science and technology because they also bring many new technologies, as well as contributed to economic development and created many jobs for Vietnamese workers.

One of the special projects is the development of Vietnam-Singapore Industrial Parks (VSIP) in Vietnam. These have paved the way for many Singaporean enterprises to invest into Vietnam and created jobs for more than 250,000 workers.

Besides that, in real estate, CapitaLand and Keppel Land are typical examples of successful investments with green urban and high-rise buildings projects.

Furthermore, since participating in new-generation free trade agreements, Singapore also considers Vietnam as a bridge for enterprises to invest in these markets. Since joining, many laws have been amended to meet the international needs in Vietnam such as laws on enterprises, investment, and land, creating a transparent environment and more investment directions for Singaporean enterprises.

It can be seen that mergers and acquisitions (M&A), processing, and real estate are the areas where Singapore focuses on investment.

For Vietnam, outward investment has been on an upward trend in recent years, but the majority of capital mostly concentrates in Laos and Cambodia in the ASEAN. Vietnam has a close relationship with Singapore and increasingly investing in this country. Significant examples are FPT Group investing in IT, and Petrolimex pouring money into oil and gas. They are typical companies that have successfully invested in Singapore but are still small- and medium-sized, which shows that Vietnam has not had much capital to invest in Singapore.

There is a huge difference between the investment of Singapore into Vietnam and vice versa. This is because Singapore has a dynamic and transparent business environment; therefore, Vietnamese enterprises have to compete fairly with others.

However, because Vietnamese enterprises do not have an abundant finance and high-tech system – while Singapore businesses boast abundant capital, high-tech development, and a logistics system – Vietnamese enterprises do not have many opportunities to compete with the enterprises of Singapore or even with enterprises from other countries.

In addition, Vietnamese groups prefer using Singapore as a hub for receiving investment from international companies into their projects in Vietnam.

For example, in fund raising, in order to receive investment from foreign investors, Vietnamese enterprises are required to open a company in Singapore where they put all fund and finance there.

Then, the new Singaporean company shall invest again into the Vietnamese enterprises.

Not only that, there is a clear difference in business cultures and laws between Vietnam and Singapore. Hence, this can make it hard for Vietnamese enterprises to adapt, which may lead to unwanted conflicts and affect project implementation.

Therefore, if Vietnamese enterprises want to invest to Singapore, they still need a lot of supportive and prompting policies from government to expand business investment aboard. In addition, they need to improve their financial and managerial capacity, as well as understand deeply about the culture and law system of Singapore to enhance adaptability when investing in the country.

Along with the good political relations and the expansion in economic, trade, and other fields, the diplomatic relationship between Vietnam and Singapore is constantly developing.

With the efforts of the two sides, the strategic relationship between two will achieve good results, complementing each other for further development.

Everpia JSC joins forces with Hyojung Soft Tech JSC to enrol fintech

Everpia JSC, known for its matress brands Everon and Kingkoil, has invested in Hyojung Soft Tech JSC in a move to boost its growth and turn it into a leading company in one of the most promising industries in Vietnam. 

The signing ceremony of the strategic partnership between Everpia JSC and Hyojung Soft Tech JSC
Hyojung Soft Tech is a fast-growing financial technology and banking services company driving innovation in POS system and payment services. It provides a total POS solution to retail stores with advanced Korean technology.

Hyojung is well-known for its services spanning from POS (Payment), PCPOS, PROGRAM, and SI (System Integration). Currently operating in more than 500 stores throughout Vietnam, Hyojung helps merchants in analysing customer behaviour and provides deep assistance and advice based on big data from POS system and payment services.

Lee Jae Eun, CEO of Everpia JSC said that, “This investment marks our first strategic partnership with a tech-based firm. As digitalisation takes place in various aspects for Vietnamese consumers, our partnership with Hyojung at its early stage will help us understand Vietnamese consumers on a deeper level.”

“We also hope to assist the Vietnamese government in its plan to reduce cash usage in payment methods to under 10 per cent by 2030,” he noted.

Park Jung Gyu, CEO of Hyojung Soft Tech said: “We are delighted to establish a strategic partnership with Everpia. Our technology will foster the digital transformation of Everpia’s wide network of 600 franchise stores and showrooms throughout Vietnam.”

All Everon stores will be equipped with advanced fintech technologies ranging from financial services, POS, and card bank services (zeropay, giftcon, and virtual account services) to customer management services.

Furthermore, big data analysis from all transactions occurring at Everon stores will help Everpia to effectively curate its product portfolio and efficiently manage its production and distribution system. From 2021, Hyojung Soft Tech and Everpia will develop and distribute an integrated payment platform that suits companies with nationwide retail network systems in Vietnam.

Matsuoka Corporation highlights Vietnam's appeal to Japanese PPE manufacturers

Vietnam is in the crosshairs at dozens of Japanese businesses led by Matsuoka Corporation who are looking to invest hundreds of millions of dollars to produce medical gear and personal protective equipment (PPE) in Vietnam. 

Vietnam is fast emerging as an international production hub for medical gear and PPE
COVID-19 has been the doom of many a production sector. However, some have been put into a favourable position and have been rising to prominence to attract great flows of foreign investment. One of these sectors is medical mask and PPE production, an area where Vietnam is now recognised as a reputable supplier.

Matsuoka Corporation, one of 30 companies that have just received support from the Japanese government to leave China, has decided to move operations to Vietnam.

According to NNA Business News, a representative of Matsuoka Corporation said that the corporation will pour around $28 million into An Nam Matsuoka Garment Co., Ltd., a Vietnamese subsidiary, to set up a new facility to produce protective wear and other items in the coming months.

Matsuoka Corporation established the subsidiary in last November, before the COVID-19 outbreak, as part of the corporation's plan to diversify production locations in Southeast Asia (supplementing existing production in Indonesia, Myanmar, Bangladesh). The new factory of An Nam Matsuoka Garment is based in VSIP Nghe An and is the fourth facility of Matsuoka Corporation in Vietnam, after the ones in Phu Tho, Bac Giang, and Binh Duong provinces.

In the 2018 fiscal year (ending in March 2019), the corporation's revenues from Chinese factories made up 60 per cent of its total overseas income, while Bangladesh and Vietnam contributed 25 and 10 per cent, respectively.

At the end of 2019, company spokesperson Michihiro Fukagawa said that the upcoming factory in Vietnam is expected to decrease the revenue contribution from China to 50 per cent by March 2021. He also highlighted that Vietnam is a major location for garment production for export to Japan and China.

Recently, JETRO announced the list of Japanese businesses which will receive aid to leave China. Most of those specialising in producing protective gear and health products like Able Yamauchi, Showa International, Techno Global, Hashimoto, Nikkiso, and Matsuoka Corporation are choosing Vietnam as their new destination.

According to the General Department of Vietnam Customs, as of June 2020, Vietnam exported 557 million medical masks to the US, the EU, Japan, and South Korea. Catching up with the new trends and the increasing demand of domestic and overseas markets, a lot of local businesses have been purchasing modern machines to make high-quality products, matching the requirements of the US and the EU, and offset a part of their losses from the global health crisis.

Along with its initial success in preventing and controlling the novel coronavirus, Vietnam is emerging as a reputable source of medical equipment, drawing in foreign investors to produce PPE and medical gear.

Moody’s confirmed stable rating for FE Credit in latest review assessment

Moody’s Investors Service has recently confirmed the long-term ratings of FE Credit at B1, after putting it up for review due to the impacts of COVID-19. 

This reinitiated stable outlook concludes Moody’s review for downgrade initiated on April 7, 2020 which also took in the assessment of two other finance companies, namely Home Credit Vietnam Finance (HCV) and SHB Finance and two banks – VP Bank (the parent company of FE Credit) and SHB.

Moody's rational for keeping the stable outlook for FE Credit includes the agency's expectation that FE Credit will remain able to mitigate the solvency and liquidity risks caused by the coronavirus thanks to three factors.

Moody’s concluded that the FE Credit’s funding and liquidity positions were stable during the review period supported by ample international and domestic liquidity.
First is the early reopening of the Vietnamese economy due to the successful control of the outbreak. Second is the stabilising financing conditions supported by ample liquidity following supportive domestic and global measures and third is the company’s ability to manage credit and liquidity risks amid disruptions from the coronavirus outbreak.

Moody’s concluded that FE Credit’s funding and liquidity positions were stable during the review period, supported by ample international and domestic liquidity. This helped the company to roll over their existing funding and access new funding.

The credit rating service also noted that the company has diversified its funding sources and reduced their funding costs during the period. However, a note of caution was also issued regarding the reliance on wholesale funding and limited balance sheet liquidity, which remains a weakness for credit profiles.

Overall, the short duration of the economic disruptions in Vietnam has helped the company to manage delinquencies and collections within the historical range. While Moody’s has observed early signs of stress in delinquencies and collections, especially in April due to social distancing measures, collections recovered and delinquencies dropped in the rest of the second quarter of 2020.

FE Credit has shown prudent risk management, such as tightening underwriting criteria against the backdrop of slowing economic growth.

Samsung seeks shift to Vietnam

South Korean tech giant Samsung will end its personal computer (PC) production in China as it looks to shift the production to Vietnam to cut costs and remain competitive in the PC business.

Samsung Electronics is planning to shut down its plant in China’s Suzhou City this month. A part of the facility is set to be turned into a product research and development center, according to Nikkei Asian Review.

A representative of Samsung Electronics said that the firm would shift its PC production line to its operational plant in Vietnam after the shutdown.

The South Korean tech giant had earlier run three smartphone production factories in China. However, it ended all of its smartphone production activities there in late 2019 and shifted the production lines to its other branches, including Vietnam.

Visa sees contactless payments grow 500% in first half in Vietnam

Visa, the world’s leader in digital payments, on August 3 announced that its contactless transactions in Vietnam grew more than 500% year on year in the first six months of 2020, with the total value of transactions increasing more than 600%.

Contactless payments, where consumers simply tap their card or phone against the POS terminal to pay, have become more popular as consumers and merchants look for a fast, convenient and safe way to pay.

These benefits are more apparent than ever as the Covid-19 pandemic has created unprecedented challenges and merchants are looking for ways to serve their customers safely.

Findings from the recent Visa Consumer Payment Attitudes study showed that 37% of Vietnamese consumers are now using contactless card payments, while 42% are currently using mobile contactless payments. Of those that use contactless card payments, 85% shared that they use them often—at least once a week.

With contactless payments, consumers can tap to pay at checkout counters anywhere they see the contactless symbol without handing their cards to the cashier staff.

Contactless payments are secured with dynamic EMV® Chip technology. The cards have a tiny antenna, which can be read by POS terminals when they are 4cm away or less from the terminal.

During the payment process, the card never needs to leave the cardholder’s hand, and POS terminals can typically read a contactless card or device in less than half a second. Shoppers can even pay with their mobile phones, using PINs, passwords or biometrics for extra security.

“At Visa, we’re incredibly excited to be working with our partners in Vietnam to help bring this new payment technology to more consumers and businesses across the country,” said Dang Tuyet Dung, Visa country manager for Vietnam and Laos.

Deo Ca Group keen to invest in expy project

Deo Ca Group has expressed interest in investing in the An Huu-Cao Lanh expressway project linking Tien Giang and Dong Thap provinces in the Mekong Delta under the public-private partnership (PPP) model.

 

Tran Tri Quang, director of the Dong Thap Department of Transport, told The Saigon Times on August 5 that even though Deo Ca Group had proposed developing the project under the PPP format, the project is under the authority of the Ministry of Transport, so the department could only receive the proposal and report it to the provincial government.

Quang noted that the projected expressway is set to run parallel to the existing National Highway 30.

Earlier, at a working session between the Dong Thap government and a delegation from the National Assembly, Nguyen Van Duong, chairman of the provincial government, said that if the project was funded by the State, it would require a total investment of VND5.38 trillion.

However, if the project is developed under the PPP format with a build-operate-transfer contract, over VND5.6 trillion would be needed due to bank loan interest payments.

Project Management Board No. 7 is currently studying both investment formats and will report their conclusions to the Ministry of Transport, according to the Dong Thap chairman.

Duong, however, said that under the PPP format, the project is likely to take longer to be completed due to cumbersome legal procedures. Moreover, private investors will contribute a mere 29.4% to the total amount of VND5.6 trillion since they are allowed to operate the project for no longer than 18 years. As such, the investment efficiency will not be high.

Accordingly, the provincial government proposed that central State agencies approve the public investment format for the An Huu-Cao Lanh expressway project.

Dong Thap and Tien Giang provinces will extract some VND2.1 trillion from their budgets to pour into the project, which is set to run through the two Mekong Delta localities, while the remaining VND3.2 trillion, or 60% of the total cost, will come from the central State budget.

Addressing the working session, NA Chairwoman Nguyen Thi Kim Ngan said that members of the NA Standing Committee supported the province’s proposal.

Once in place, the 30-kilometer expressway project will play a key role as it will connect the Mekong Delta localities with the HCMC-Can Tho Expressway and Cambodia, stated Le Minh Hoan, provincial Party chief of Dong Thap.

Business conditions deteriorate in July after a rebound in June

After returning to growth in June, the Vietnamese manufacturing sector took a step back in July, seeing declines in output and new orders as the Covid-19 pandemic continued to impact business conditions, according to a report released by IHS Markit on August 3.

Employment decreased again, while purchasing activity reduced. The rate of input cost inflation remained muted, while competitive pressures led to firms lowering their output prices, the London-based global information provider stated in the report.

The Vietnam Manufacturing Purchasing Managers’ Index dipped back below the 50 no-change mark in July, posting 47.6 from 51.1 in June. Business conditions also deteriorated in five of the past six months.

The July data showed a modest reduction in manufacturing output, after a return to growth had been registered in the previous month. However, the fall was much softer than that seen during the worst of the recent downturn.

Respondents said the pandemic continued to impact operations, with new orders reportedly lower. Both the intermediate and investment goods sectors recorded falls in output, while the production of consumer goods increased.

In line with the picture for output, new orders fell following a rise in June. Total new business was undermined by a sharp contraction in new export orders, linked to restrictions on travel and falling demand in export markets due to Covid-19.

With new orders taking a step back, firms were able to deplete their backlogs of work again in July. Outstanding business decreased for the sixth month running, and to a greater extent than during the prior survey period.

The lack of work reportedly led to a further reduction in employment, with some workers reportedly deciding to leave in search of opportunities elsewhere. Employment fell at a solid pace.

Apart from seeing staffing levels decrease, manufacturers scaled back their purchasing activity, stocks of inputs and finished goods inventories at the start of the third quarter. In all cases, falls in July followed rises in June and were linked to a reduction in new orders.

Suppliers’ delivery times lengthened for the eighth time in as many months. Difficulties receiving items from suppliers in China and issues with sea transportation were reportedly behind the latest instance of lead time lengthening.

The scarcity of raw materials contributed to a second successive monthly increase in input costs during July. That said, the rate of inflation remained muted.

Meanwhile, output prices were reduced for the sixth month running. The latest fall was modest, but sharper than that seen in June.

Despite a drop in output in July, firms remained confident in the 12-month outlook for production. Sentiments were down only slightly from that seen in the previous month. According to respondents, expected improvements in market demand and new orders were behind the positive outlook for output.

Philippines suffers reduction in June manufacturing production

The Philippines’ manufacturing production slumped in June due to negative impact of the COVID-19 pandemic, according to the country’s Statistics Authority (PSA).

Based on the preliminary results of the Monthly Integrated Survey of Selected Industries (MISSI), the PSA said the year-on-year value of production index (VaPI) and the volume of production index (VoPI) declined 22.5 percent and 19.3 percent in June 2020, respectively.

According to the authority, the VaPI for the manufacturing sector contracted at a slower rate of 22.5 percent in June compared to the 31.2 percent decrease in May 2020.VaPI dropped for the fourth month in a row this June 2020.

Prior to the rebound, the PSA said VaPI had negative growth for 17 consecutive months for petroleum products, and seven months of negative growth for wood and wood products.

The PSA also said that the VoPI in June 2020 likewise shrank by 19.3 percent year-on-year but the decline was slower compared to the previous month's drop of 28.5 percent.

MISSI is a monthly report that monitors the production, net sales, inventories, and capacity utilisation of selected manufacturing establishments to provide flash indicators on the performance of the manufacturing sector.

Cashew nut exports up 1 percent in H1

Despite the difficulties posed by the COVID-19 pandemic, Vietnam’s cashew exports in the first half of the year increased by 16 percent in volume year-on-year and 1 percent in value to 232,000 tonnes and nearly 1.53 billion USD, according to the Vietnam Cashew Association (VINACAS).

The US, EU and China had been the biggest markets.

Exports to the US increased by nearly 10 percent in terms of value and accounted for 32 percent of the total.

Exports to China fell by nearly 44 percent and accounted for 8 percent.

Average prices were 14 percent down.

According to experts, due to falling prices, some customers sought to renegotiate them and also demanded more in terms of quality and traceability.

This year too domestic prices were higher than export prices at some certain times, causing difficulties for businesses, they said.

Exports remained good in the first half, but the rest of the year is a big question since cashew is not an essential or irreplaceable product and no one knows how the pandemic situation would pan out, they added.

The association said: “The cashew industry targets exports of 450,000 tonnes this year for 3.2 billion USD. VINACAS always hopes to exceed export targets.”

Vietnam imported 635,000 tonnes of raw cashew for processing in the first half, a year-on-year decrease of 12 percent mainly due to a delay in transporting it from West Africa countries to Vietnam because of the pandemic and lower demand.

VINACAS continues to pursue a policy of reducing quantity and increasing quality in imports of raw nuts and exports of processed products.

According to figures the International Nut and Fried Fruit Council and the Global Cashew Council announced at an online conference in June, global output in the 2020-21 crop is estimated to reach 3.72 million tonnes, 21,000 tonnes down from the previous one.

Bamboo Airways leads in seven-month on-time performance

Bamboo Airways led local airlines in punctuality in the last seven months, according to a recent report released by the Civil Aviation Administration of Vietnam (CAAV).

The report on the flight on time performance (OTP) as well as delayed and cancelled flights across Vietnam in the reviewed period showed that Bamboo Airways has a punctuality rate of 95.4 percent.

Specifically, Bamboo Airways operated 16,501 flights, including 15,739 on-time.

It was followed by national flag carrier Vietnam Airlines, and Vietjet Air with respective average OTP rates at 90.4 percent and 86.2 percent.

Jetstar Pacific was at the bottom of the list with an average OTP rate of 85 percent.

According to the CAAV, 59.8 percent of the delayed and cancelled flights was due to late returns of aircraft, 26.8 percent was from the airlines and 7.3 percent was due to equipment and services at the port.

T&T Group purchases Ivory Coast’s entire stock of raw cashew nuts

Vietnam’s multi-sector T&T Group has purchased the Ivory Coast’s entire stock of raw cashew nuts, or 150,000 tonnes, under a contract signed with the African country late last month.

The major deal comes after the group’s world-record purchase of 176,000 tonnes of raw cashew nuts from Tanzania last year.

A portion of the imported nuts will be processed by the T&T Group for export, while the remainder will be distributed to other domestic producers.

The purchase is expected to help stabilise prices and fuel the growth of cashew nut processing in Vietnam.

Cooperation with the T&T Group brings opportunities and timely support to cashew nut exporters in the Ivory Coast, according to Adama Coulibaly, Director General of the Ivory Coast Cashew & Cotton Council.

Tanzania and the Ivory Coast are now Vietnam’s main suppliers of raw cashew nuts.

The T&T Group has been the country’s biggest trader of cashew nuts, importing raw products and re-exporting processed products. It traded more than 260,000 tonnes with foreign partners last year, accounting for roughly 13 percent of Vietnam’s total.

In the first seven months of this year it imported and exported close to 337,000 tonnes, or more than 40 percent of the volume nationally.

It plans to import an additional 120,000 to 150,000 tonnes of raw cashew nuts by the end of this year.

The group is committed to building a processing facility in the Ivory Coast, with a designed capacity of up to 50,000 tonnes of raw cashew nuts per year.

Vinatex’s revenue nosedives 36 percent in Q2

The COVID-19 pandemic dragged down the revenue of the Vietnam National Textile and Garment Group (Vinatex) by 36 percent year-on-year in the second quarter, to just over 3.08 trillion VND (133 million USD).

Profit stood at 280 billion VND, down 36 percent against the same period last year, according to Vinatex Director General Le Tien Truong.

The State-owned group earned more than 7.04 trillion VND in revenue in the first half and posted 276 billion VND in profit, year-on-year falls of 24.5 percent and 20.7 percent, respectively.

Most of Vinatex’s subsidiaries have also seen revenue and profit plummet, Truong said, adding that the pandemic has slashed the stock price of two of its member companies - the Viet Tien Garment JSC and the Phu Bai Spinning Mill JSC - by half and one quarter, respectively.

The worst is yet to come, he went on, with the third and fourth quarters of the year likely to present the greatest challenges to the textile and garment industry.

The company has not had any orders for three months and there has been a fall in the number of orders for masks, with prices sinking to a level that is just enough to cover costs, he said.

Production of masks and personal protective equipment rescued many domestic manufacturers in the second quarter of the year, he noted, but now prices are going down as a result of global oversupply.

Annual cashew nut export goal lowered to 3.2 billion USD

The Vietnam Cashew Association (Vinacas) has decided to lower the cashew nut export target to 3.2 billion USD this year, down from the 4 billion USD set in late 2019, given the impact of COVID-19.

Exports reached 232,000 tonnes in the first half, up more than 16 percent year-on-year, while value rose just 1 percent to 1.53 billion USD, as export prices slumped by nearly 14 percent.

Demand in China fell nearly 30 percent in volume and while value was down 44 percent. The US and European markets, however, still performed well.

Vinacas Chairman Pham Van Cong said export inventories remain high while trade disputes are on the rise due to falling prices.

According to the association, it is difficult to accurately forecast demand for cashew nuts between now and year’s end. Consumption at accommodation facilities and restaurants has fallen strongly due to the introduction of social distancing measures.

The importation of raw cashew nut materials was also hit by COVID-19, with importers not only facing a delay in delivery but also receiving lower-quality products compared to previous crops.

Vinacas has proposed companies import and export better quality cashew nuts to overcome the ongoing difficulties.

CPTPP countries discuss post-pandemic recovery plan

Economic and trade ministers of signatories to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) met online on August 5 to discuss how best to intensify cooperation and prepare a plan of action to boost post-pandemic economic recovery.

The third meeting of the CPTPP Commission was held via video conference under the chair of Mexico’s Economy Secretary Graciela Márquez Colín and reported on issues relating to the implementation of the agreement.

The ministers issued a joint statement supporting trade liberalisation as a driving force for economic growth, especially in face of the COVID-19 pandemic. The statement also highlights the importance of maintaining a strong, rules-based multilateral trading system so as to ensure sustainable development.

Participants also agreed on the establishment of an office in charge of developing the digital economy, while calling on Brunei, Malaysia, Peru, and Chile to soon ratify the agreement so it may be implemented fully.

The CPTPP comprises Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, and Vietnam. Together they have a combined economy of 13.5 trillion USD.

Singapore signs digital economy pact with Australia

Singapore and Australia have signed a digital economy agreement that will open up economic opportunities for both countries during a virtual ceremony on August 6.

The deal was inked by Singapore’s Trade and Industry Minister Chan Chun Sing and Australia's Minister for Trade, Tourism and Investment Simon Birmingham.

The Singapore-Australia Digital Economy Agreement (Sadea) will facilitate digitalisation of trade processes and make it easier and more cost-effective for Singapore companies to engage in cross-border business activities with Australia.

The agreement builds on Singapore and Australia's strong bilateral trade and investment flows to enhance economic opportunities in the digital realm, said a joint statement issued by Singapore’s Ministry of Trade and Industry, Ministry of Communications and Information, and Infocomm Media Development Authority.

Singapore, along with Australia and Japan, is a co-convener of the Joint Statement Initiative on E-Commerce at the World Trade Organisation (WTO).

The Sadea will enable trusted cross-border data flows without unnecessary and costly requirements such as data localisation. It will also protect consumers' privacy and businesses' proprietary information.

It is the second digital economy pact that Singapore has signed, following the Digital Economy Partnership Agreement with Chile and New Zealand in June.

Singapore has also launched negotiations on a digital partnership agreement with the Republic of Korea.

Digital banking platform Timo gets new partner

After five years of development, Timo, the first digital banking platform in Vietnam, has decided to join forces with a new banking partner - VietCapitalBank - to deliver more rapid innovation and a better experience for customers.

The new app is called Timo Plus, an improved version of Timo that will continue to be the leading digital banking platform in the country when it launches in September, Timo said in its press release.

With an intuitive and user-friendly interface of Timo Plus, users can conveniently send and receive payments, manage savings and investments, borrow money, and create financial plans.

The transition is expected to be completed on September 8, 2020. After this date, Timo customers will no longer have use of the current app.

 
 

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