Standard Chartered Bank forecasts Viet Nam’s 2020 growth at 3%
Manufacturing and services sectors are likely to recover and be the main growth driver in the second half of the year. — Photo vcci.com.vn
Standard Chartered Bank expects Viet Nam’s growth to slow to a multi-year low of 3 per cent this year on soft external demand, with external headwinds set to offset domestic outperformance.
The forecast was in the bank’s recently published research report for the third quarter.
“Growth is likely to rebound in the second half of the year (H2) driven by the strength of the domestic economy; global headwinds are likely to partially offset this. Viet Nam’s dependence on the global economy is the second-highest in ASEAN after Singapore; its trade-to-GDP ratio of 198 per cent is among Asia’s highest, driven by electronics exports. We expect 3 per cent growth in Viet Nam in 2020; further monetary and fiscal support in H2 could push growth closer to the Government’s target of 4-5 per cent,” said Chidu Narayanan, economist for Asia, Standard Chartered Bank.
According to the latest macro-economic report, manufacturing and services sectors are likely to recover and be the main growth driver in the second half of the year. The manufacturing sector growth is estimated at roughly 1.5 per cent in 2020, with its contribution to growth down 1.8 percentage points. The services sector’s contribution to growth is likely to fall to 0.5 percentage points from 2.8 percentage points in 2019.
Construction activity is expected to decline on subdued sentiment and declining foreign direct investment (FDI). However, public infrastructure investment is likely to be stronger than in the past 18 months, driven by Government stimulus. A slowdown in tourism and related activities is likely to weigh on consumption, which is projected to pick up in H2 following the reopening of the economy but to remain below 2019 levels.
Standard Chartered’s economists anticipate Viet Nam’s trade to pick up in H2 as global demand recovers, but a recovery to pre-COVID levels is unlikely. Demand from China should support a pick-up in both exports and imports near-term; however, subdued global demand is likely to impact trade growth. The bank expects trade balance to remain in surplus this year as lower imports offset soft exports.
The study forecasts FDI inflows to decline this year on heightened uncertainty and depressed investment sentiment globally, totalling US$13 billion. Government measures should support FDI inflows in H2. In addition, the sustained relocation of low-tech manufacturing to Viet Nam amid geopolitical tensions should partly offset subdued sentiment, supporting FDI inflows.
European firms more positive about Vietnam’s business climate
European businesses are more positive about Vietnam’s trade and investment environment in the first few months after COVID-19, the Business Climate Index (BCI) unveiled by the European Chamber of Commerce in Vietnam (EuroCham) on July 22 showed.
Accordingly, during the COVID-19 pandemic, when social distancing and travel restrictions brought normal business operations to a halt, the EuroCham BCI fell to its lowest-ever score of 27 percent in the first quarter of 2020.
However, after the Government implemented a world-leading public-health and economic response, Vietnam was able to return to business-as-usual much sooner than other countries, who continue to struggle with the impact of the virus.
As a result, the positive sentiment of European business leaders began to bounce back, recording a 7 percent jump between February and April to reach 34 percent.
The BCI also found that more than 25 percent of European enterprises had benefitted from the Government’s postponement of tax, while around one-in-five had benefitted from a reduction in rent and a suspension of social insurance contributions.
Despite these positive signs, however, challenges remain for European enterprises, according to the survey.
A large proportion, 88 percent of the interviewed businesses, felt negative effects as a result of the pandemic in the three months to April. Meanwhile, more than 50 percent said that a reduction in taxes such as corporate income tax, personal income tax and value added tax would help them emerge stronger from the crisis.
Chairman of EuroCham Nicolas Audier said: “This data is further evidence that Vietnam is one of the international success stories of the COVID-19 pandemic. It also shows that the Government’s effective and sure-footed handling has had a tangible impact on the confidence of European business leaders.”
The next challenge will be adapting to the “new normal” where COVID-19 is present in other countries but where global trade remains essential to domestic economic growth. This will require imaginative solutions to address issues such as the return of foreign experts on whom many international companies depend, he added.
Over 49 percent of enterprises expect business to improve in Q3
Nearly half of firms in a recent survey of the General Statistics Office on business trend of firms operating in processing and manufacturing, expect business situation to improve in the third quarter of 2020.
Meanwhile, 19.4 percent of the respondents said the situations will be more difficult and 31.5 percent said that production will be stable.
Non-State enterprises were the most optimistic with about 82.6 percent of them thinking that the production and business situations in Q3 will be better and more sustainable in comparison with the previous quarter.
The rate was over 79 percent in the State-owned sector and nearly 76 percent among foreign-invested firms.
Regarding factors that affect production of enterprises in the second quarter, 53.6 percent of businesses were of the view that high competitiveness of domestic commodities are the biggest factor affecting the operation of enterprises.
In term of production volume and sale in the third quarter, over 48 percent of firms predicted that their production scale will increase./
Binh Son Refining and Petrochemical faces revenue slump
Viet Nam’s largest refining and petrochemical firm, Binh Son Refining and Petrochemical JSC (BSR), reported total revenue of more than VND31.7 trillion (US$1.36 billion) in the first half of this year, down 38 per cent against last year.
The company suffered a loss of VND4.25 trillion in the first half of the year while it enjoyed a post-tax profit of VND704 billion in the same period in 2019.
In the second quarter alone, BSR reported revenue of more than VND13.7 trillion, down by more than a half compared to last year.
It suffered a loss of nearly VND1.9 trillion in the quarter.
BSR attributed the poor business results to the influences of the COVID-19 outbreak combined with falling oil prices.
The company has trimmed its total revenue and post-tax profit targets for 2020 by 21.5 per cent and 59 per cent year-on-year to VND80.7 trillion and VND1.18 trillion, respectively, if crude trades at $60 a barrel on average in the year.
The board will make an adjustment if there is any change in the movements of oil prices and the COVID-19 pandemic.
BSR has filed for listing on the Ha Noi Stock Exchange, the northern market regulator said on Tuesday.
The company plans to list more than 3.1 billion shares on the northern stock market, representing its charter capital of VND31 trillion.
BSR is traded on the Unlisted Public Company Market (UPCoM) with code BSR. If approved, BSR will become the largest listed firm by charter capital on the Ha Noi Stock Exchange (HNX).
BSR is also expected to develop a plan in which its parent National Oil and Gas Group (PetroVietnam or PVN) will cut its ownership in the firm from 92.12 per cent.
Thailand’s 2020 rice exports forecast to hit lowest in 20 years
The Thai Rice Exporters Association on July 22 predicted that the country’s 2020 rice exports will drop to 6.5 million tonnes, the lowest volume in two decades, owing to drought and a strong baht currency.
The association’s latest forecast for Thailand, the world’s second-largest rice exporter last year, is lower than its previous expectation of a seven-year low of 7.5 million tonnes for 2020.
It attributed that to a persistently strong baht compared to other currencies and drought cutting Thai rice output by 5 million tonnes this production season, making prices higher and uncompetitive.
“The new forecast of 6.5 million tonnes is the lowest volume in 20 years,” said Chookiat Ophaswongse, honorary president of the Thai Rice Exporters Association, adding the previous low was 6.15 million tonnes in 2000.
From January to June, Thailand exported 3.14 million tonnes of rice, about a third less than the same period last year, the association’s data showed, less than India’s 4.53 million tonnes and the 4.04 million tonnes shipped by Vietnam.
Meanwhile, lower global purchasing power has seen Thai white rice lose out to cheaper grades offered by Vietnam in key Asian markets like the Philippines.
China, once a Thai rice importer, has also beat Thailand in key African markets with cheaper prices.
Vietnam Airlines launches Dien Bien - Hai Phong flights
Vietnam Airlines on July 22 launched a new domestic route linking the northwestern province of Dien Bien and the northern port city of Hai Phong.
The national flag carrier is currently operating 59 domestic routes. The latest is its second commercial one to Dien Bien and its eighth to Hai Phong.
Four return flights will be conducted each week, on Monday, Wednesday, Friday, and Sunday.
Flights depart Hai Phong at 12:05pm and Dien Bien at 2:10pm.
Vice Chairman of the Dien Bien Provincial People’s Committee Le Thanh Do said the launch of the new route is significant in implementing the Party and State’s policies on prioritising the development of domestic tourism in the context of COVID-19, which is hitting all sectors hard, including aviation and tourism.
Cambodia, China conclude FTA talks: Ministry
Cambodia and China have wrapped up trade talks following a video conference between Cambodian Commerce Minister Pan Sorasak and his Chinese counterpart Zhong Shan on July 20, the Cambodian Commerce Ministry said in a press release.
Rasmei Kampuchea quoted the press release as saying that both sides spoke highly of the bilateral free trade agreement (FTA), which mirrors the long-standing and comprehensive partnership between the two countries.
The successful conclusion of negotiations over the FTA within a short timeframe reflects the commitments of the two countries’ leaders to building closer ties, the ministry said.
The FTA will provide various socio-economic benefits to the two peoples through trade liberalisation and the facilitation of investment and cooperation in a number of fields.
Both countries are completing all the necessary internal procedures for the FTA to be signed this year.
The two countries began to discuss the feasibility of a bilateral FTA in December 2019 and launched the first round of negotiations in January.
Japanese firm to invest in protective clothing factory in Vietnam
Japan will assist apparel maker Matsuoka Corp. in producing protective clothing in Vietnam to diversify supply chains and lessen its dependence on China amid the coronavirus crisis.
Matsuoka plans to invest 3 billion JPY (28 million USD) in An Nam Matsuoka Garment Co., its Vietnamese manufacturing unit, to start production of protective wear and other items in several months, local media has reported.
Matsuoka is one of 30 Japanese firms which were recently named recipients of official subsidies from the Ministry of Economy, Trade and Industry to promote Japan's drive to diversify supply chains and reduce its dependence on China.
The Japan External Trade Organization, which announced the list of subsidy recipients last week, said 15 of the 30 firms are connected with projects in Vietnam and six in Thailand.
Matsuoka, of Fukuyama, Hiroshima Prefecture, established its Vietnamese unit last November before the coronavirus outbreak as part of an ongoing campaign to produce apparel products mainly in Southeast Asian countries such as Indonesia, Myanmar and Bangladesh.
Vietnam, US to strengthen fishery law enforcement capacity
The Directorate of Fisheries at the Ministry of Agriculture and Rural Development and the Bureau of International Narcotics and Law Enforcement Affairs at the US Department of State signed a memorandum of understanding (MoU) on July 22 in Hanoi on strengthening fishery law enforcement capacity.
Cooperative activities include developing and implementing technical assistance cooperation programmes and projects for Vietnamese fisheries law enforcement agencies to prevent illegal, unreported, and unregulated (IUU) fishing and other crimes related to fisheries, and providing information on training, investigation techniques, and education in international law enforcement for law enforcement officials.
The two sides will coordinate to organise training courses and exchange expertise in the fields of investigation, supervision, and patrolling at sea, offer technical assistance on the operation of specialised equipment, implement professional exchange programmes on patrolling fishing vessels, and support the construction of training institutions.
The MoU is expected to further promote cooperation between Vietnam, the US, and international law enforcement agencies to ensure the sustainable maintenance of marine resources and the fight against IUU fishing.
Daniel J. Kritenbrink, US Ambassador to Vietnam, said the US is willing to share its experience and technical expertise with Vietnam and hopes to work with the country to develop fisheries sustainably and support the country’s fishermen against illegal threats at sea.
Tran Dinh Luan, General Director of the Directorate of Fisheries, said that since 2015 the US and the directorate have cooperated to increase fishery law enforcement capacity and management through technical training courses, study tours, experience exchanges, and other technical support activities.
He hoped the MoU would create a premise for upcoming bilateral cooperation.
Indonesia, UK to complete joint trade review this December
Indonesia and the United Kingdom (UK) agreed to complete the Joint Trade Review (JTR) this December to improve the economic relations between the two countries, an Indonesian official said on July 21.
This agreement came to light at a meeting between the two countries held virtually on July 20 – 21.
The meeting was a testament to the strong commitment of the two countries to improving trade and investment relations, said Iman Pambagyo, Director General for International Trade Negotiation at the Indonesian Ministry of Trade.
The pandemic and the uncertain global economic situation are increasingly pushing the two countries to strengthen cooperation to overcome the challenges while preparing for a closer long-term partnership, Pambagyo said in a statement.
Last year, the two governments signed the Terms of Reference of the JTR. The two countries, which are major economies and members of Group 20, have the opportunity to renew and develop the stronger economic ties.
The JTR is a collaboration between Indonesia and the UK to assess the current condition of their bilateral trade and investment relations, and look for possible opportunities to enhance bilateral cooperation for the future, the official remarked. This review will produce a joint report including recommendations for the two governments.
Pambagyo said the UK was ranked 22nd among Indonesia’ export destination countries, and 23rd among its importers. Last year’s two-way trade was valued at 2.4 billion USD, of which Indonesia’s exports to the UK stood at 1.4 billion USD.
Meanwhile, the UK’s investment into Indonesia totalled 87.6 million USD.
After the UK declared its exit from the EU, the country began conducting bilateral explorations with various countries, including Indonesia. In contrast, the largest economy in Southeast Asia intends to finalise various trade agreements to encourage exports and state revenue.
Various activities to be held for ASEAN businesses this year
The Vietnam Business Summit 2020, themed “Digitalised Vietnam: Adaptability Towards Sustainable Development”, is to take place on November 12, a press conference in Hanoi on July 22 heard.
The summit is among a series of events to be hosted by the Vietnam Chamber of Commerce and Industry (VCCI) as Chair of the ASEAN Business Advisory Council (ASEAN BAC) in 2020.
“This will be an opportunity for investors to study Vietnam’s economic outlook amid COVID-19 and determine the potential for cooperation in economic sectors that are strengths of Vietnam in the context of global economic uncertainties, such as logistics, agriculture, and IT services,” said VCCI Chairman Vu Tien Loc.
Following that summit will be the ASEAN Business and Investment Summit (ASEAN BIS 2020), slated for November 13 and 14 and the most-anticipated event for the ASEAN business community.
Themed “Digital ASEAN: Sustainability and Inclusiveness”, it is expected to see the attendance of senior leaders from ten ASEAN member countries as well as eight ASEAN dialogue partners.
ASEAN ABIS 2020 will focus on six topics, including ASEAN’s economic outlook, technologies and future jobs in ASEAN, innovative agriculture, green growth through good governance; logistics and smart cities; and innovative ASEAN and digital startups.
The VBS and ASEAN BIS 2020 will help enterprises seek cooperative opportunities and learn of new trends in order to adopt suitable development strategies, Loc said.
Moreover, the ASEAN Business Awards 2020 (ABA 2020) were launched in July and will honour ASEAN businesses that have made outstanding contributions to regional development.
Organisers will receive registrations and conduct assessments from August to October and then announce the winners in November.
ASEAN BAC Vietnam and VCCI will also coordinate with the Vietnam Posts and Telecommunications Group (VNPT) to implement the “ASEAN Network of Digital Startups - Digital STARS 2020” project, which aims to form a network of digital startups in ASEAN and therefore promote digitalisation, especially among micro, small and medium-sized enterprises - the driving force of the regional economy.
An Giang mobilises 806 billion VND to build rural bridges
The Mekong Delta province of An Giang has mobilised more than 806 billion VND (35 million USD) has been mobilised over the last few years to build 581 new rural bridges.
The figures were released at a recent meeting to review its five-year project on using private investment for the construction of rural bridges.
The province has numerous canals, ditches and rivers that have caused difficulties for transportation and local economic development, especially in rural areas.
Nguyen Phu Tan, Director of the provincial Department of Transport, said the project achieved 120.7 percent of the target, exceeding the plan of 100 bridges.
The project was estimated to cost 1.5 trillion VND (65.2 million USD), including 480 billion VND from the private sector and the remainder from the State Budget.
As a result, the total of 806 billion VND exceeded the targeted amount.
“The province gained success in the project thanks to the joint efforts of local government, residents and sponsors,” Tan said.
Local residents contributed 117,164 workdays and donated more than 1,500sq.m of land to build the bridges.
The province plans to build seven new bridges in Tinh Bien district, with a total cost of 11.5 billion VND.
Many bridges are expected to be built in Chau Doc city in the coming time.
Le Van Nung, Vice Chairman of the provincial People’s Committee, praised the contributions of organisations, businesses and sponsors that took part in social charity activities in the province, including building new rural bridges.
He called on them to continue supporting the project in the 2020-2025 period and asked local authorities to have a regular maintenance plan to ensure quality and long-term use of the bridges.
The committee awarded certificates of merit to 148 organisations, businesses and sponsors for their contributions to the implementation of rural bridges in the province in the 2016-2020 period.
RoK automakers expand presence in six ASEAN markets
Automakers in the Republic of Korea (RoK) saw their sales increase in six member nations of the Association of Southeast Asian Nations (ASEAN) over the past three years helped by strong demand in Vietnam, the Korea Automobile Manufacturers Association (KAMA) revealed on July 22.
They sold a combined 184,595 vehicles in Thailand, Indonesia, Malaysia, Singapore, Vietnam and the Philippines in 2019, accounting for 5.2 percent of the vehicle markets there.
The RoK automobile sales in the six markets rose from 168,834 units in 2018 and 133,937 in 2017, with their market share increasing from 4.7 percent in 2018 and 4 percent in 2017.
Seo Jin-won, a researcher at KAMA's trade and international cooperation division, said that in recent years, rising demand for vehicles of the RoK in Vietnam, in particular, boosted overall vehicle sales in the six ASEAN markets.
Indonesia inaugurates refuse-derived fuel facility
Indonesia recently inaugurated its first facility to produce refuse-derived fuel (RDF) in Cilacap, Central Java.
The facility was built at a cost of 90 billion IDR (6.29 million USD) by Indonesia’s Public Works and Housing Ministry (PUPR), the Environment and Forestry Ministry, the Danish International Development Agency, Central Java and Cilacap administrations and building materials manufacturer PT Solusi Bangun Indonesia.
The plant is able to produce 50 tonnes of RDF from 120 tonnes of waste every day and the fuel will be used as an alternative to coal to power cement plants.
Speaking at the inaugural ceremony, Indonesian Coordinating Maritime Affairs and Investment Minister Luhut B. Pandjaitan underlined that the RDF facility is also a pilot project for improving Indonesia’s waste management which had been a complicated problem.
He affirmed that the country needs a breakthrough in waste management to reduce cities or regencies’ dependence on final disposal sites, saying that has long been an issue both on the environment and social fronts.
Currently, the Indonesian government is mapping the potential and making technical rules to encourage the potential use of RDF as an alternative to waste management in various regions in the country.
The PUPR will team up with the ministry of energy and mineral resources and the PT Indonesia Power to carry out the programme.
The Indonesian government is targeting to operate 12 waste-based power plants which are expected to generate 234 megawatts of power by 2022.
The world’s fourth most populous country of more than 260 million people produces large amounts of waste and is the second largest contributor of plastic pollutants in Asia Pacific, according to a 2015 study.
Bac Giang earns 300 million USD from lychee this year
The northern province of Bac Giang pocketed some 6.9 trillion VND (300 million USD) from lychee and support services this year, up 600 billion VND against last year, according to local authorities.
It sold more than 164,000 tonnes of the luscious fruit from Luc Ngan, Luc Nam, Tan Yen, Yen The, Lang Giang, and Son Dong districts, raking in some 5.2 trillion VND, the provincial Department of Industry and Trade reported.
The average price of the fruit stood at 31,200 VND per kg, compared to 31,800 VND in 2019.
In the context of the COVID-19 outbreak, Bac Giang paid greater attention to promoting domestic lychee consumption, especially in the central and southern regions. As a result, up to 52.5 percent of its lychee output was consumed domestically.
As for export, apart from traditional markets such as China and the EU, Bac Giang’s lychee were also shipped to the demanding Japanese market for the first time, with export volumes reaching some 200 tonnes, helping to raise the value of the fruit.
According to Tran Quang Tan, Director of the department, the area of lychee grown under VietGap and GlobalGap standards increased from around 1,200ha in 2019 to 15,200ha this year.
The US has granted IRADS (Irradiation Reporting and Accountability Database) codes to 218ha while Japan has granted area codes to 19 areas with 103ha.
Notably, the province organised an online conference connecting 62 Vietnamese cities and provinces with four Chinese provinces, with 2,300 delegates in attendance, in order to seek ways to promote lychee consumption.
Vice Chairman of the provincial People’s Committee Lai Thanh Son said Bac Giang commits to supporting domestic and foreign lychee growers and traders in harvesting, processing, and consumption.
An e-commerce floor for Bac Giang lychee has been launched to diversify marketing and trade channels, as the ravaging pandemic made it virtually impossible for foreign traders to come directly to the locality to buy the fruit.
More than 130 customers purchased some 2,100 tonnes of lychee via the platform, at an average price of 64,700 VND per kg.
It was a surprise that more than 8 tonnes of lychee sold out after just eight hours of being available online via MoMo e-wallet, the Saigon Union of Trading Co-operatives (Saigon Co.op) said.
The sales were part of the post-pandemic “Supporting Vietnamese Farm Produce” programme run by Saigon Co.op, MoMo, and the Tuoi Tre (Youth) newspaper.
The online event offered MoMo users discounts and delivery services when buying lychee and ST Xuan Hong rice.
In the first three hours of the programme being opened, every customer ordered an average of 5 - 10 kg of lychee, and the figure then later escalated to 30 - 50 kg and even to a record 90 kg.
Over the last four years, the Ministry of Agriculture and Rural Development (MARD) has worked with Japan’s Ministry of Agriculture, Forestry and Fisheries (MAFF) to conduct testing and negotiations to pave the way for lychee exports.
MAFF finally agreed to import lychee from Vietnam last year.
Japanese experts went to Bac Giang’s Luc Ngan district early on and were satisfied with the lychee growing areas granted with export standard codes. They still had to directly supervise the process of harvesting, preserving, and packaging of lychee to be exported to Japan, however.
Exports must be packed and treated with methyl bromide fumigation at facilities approved by the Plant Protection Department and MAFF, with a minimum dosage of 32g per cu. m. for two hours, under the supervision of Vietnamese and Japanese plant quarantine officers.
Khánh Hòa embraces advanced technologies for marine aquaculture
The south - central province of Khánh Hòa will increase the use of advanced technologies in marine aquaculture in the next five years, according to its Department of Agriculture and Rural Development.
The department said it would encourage farmers to replace wood with new materials that are more resistant to winds and waves such as high-density polyethylene (HDPE) to make floating cages for breeding.
Farmers would also be encouraged to adopt advanced techniques for farming lobsters, seabass, grouper, cobia, and yellow pomfret, it added.
During a meeting with province authorities last week, Minister of Agriculture and Rural Development Nguyễn Xuân Cường said Khánh Hòa has strengths in the three main pillars of fisheries, namely offshore fishing, large – scale marine aquaculture and seafood processing.
But considering it has more than 300km of coast and numerous bays and lagoons, it has not fulfilled its potential, he said.
Besides, its use of traditional techniques for marine aquaculture threatens environmental pollution and the safety of workers, he warned.
It should therefore pursue development of smart agriculture which is a suitable solution for the province in the future, he said.
The province has three marine aquaculture models that use advanced techniques and new materials developed by Australis Aquaculture Việt Nam Limited, Research Institute for Aquaculture No 2 and its Agriculture Extension Centre.
The centre is breeding cobia in round-shaped HDPE floating cages based on Norwegian techniques.
The success of the models has helped expand the province’s marine economy and its marine aquaculture to an industrial scale, the department said.
It has also helped restructure fisheries towards increasing value-addition and sustainable development, it said.
The province has more than 54,000 lobster breeding cages with an annual output of more than 1,300 tonnes and 10,000 cages for fishes with an annual output of 4,000 tonnes.
Lobster is one of the province’s key products and is bred mostly in Vạn Ninh District, Ninh Hòa Town and Nha Trang and Cam Ranh cities.
Marine fishes are mostly bred in bays and lagoons.
Most farmers breeding them in floating cages not only use traditional methods and technologies but also operate on a small scale, which cause environmental pollution, according to the department.
AEON tells Vietnamese firms seeking to increase exports to Japan to up their game
Vietnamese exporters must make highly competitive products if they want them to be distributed in Japan through the network of AEON group, experts told a meeting in HCM City on Wednesday.
Speaking at the workshop, held to discuss exports to Japan organised by the HCM City Investment and Trade Promotion Centre (ITPC), Nguyen Huu Tin, its director, said though Viet Nam has been able to contain the outbreak of COVID-19, the global situation remains grim, causing a shortage of raw materials and severely affecting export activities.
“In the ‘new normal state’ Vietnamese businesses must apply advanced technologies, improve their production capacity and competitiveness, develop new supply chains, and seek new export markets.
“Japan is one of Viet Nam’s biggest trade partners, accounting for a large proportion of some of Viet Nam’s key exports such as garment-textiles and fisheries.”
Nishitohge Yasuo, general director of AEON Viet Nam, said the country’s exports through his company’s network were worth US$381 million last year, of which 75 per cent were garments.
The exports of food items and consumer goods remained low, he said.
Yuichiro Shiotani, general director of AEON Topvalu Viet Nam, said Japan is the world’s third biggest economy with highly demanding requirements of imports, especially food, garment-textiles, footwear, fisheries, agricultural, plastic and wood products.
These are many products that Viet Nam has advantages of, and AEON has prioritised their import from Viet Nam, particularly of apparel, food and household and healthcare products for distribution through its stores globally, he said.
It has provided technical support to improve the production capabilities of Vietnamese suppliers, helped them access Japanese customers and increased the purchase of Vietnamese goods to sell at its stores in Japan and elsewhere, he said.
Nguyen Thi Duy Xuan, director of AEON Viet Nam’s supplier management division, said to enter the supermarket system, suppliers need to meet stringent technical standards and requirements.
“The product must not have a low reputation for quality. They must have the required licences and certificates. Shipping conditions and product containers must conform to the requirements of each type of product. Products must meet Vietnamese requirements related to traceability and environmental protection. The use of plant protection drugs, antibiotics, veterinary drugs, and others in production must also comply with Vietnamese regulations.”
Shiotani said Vietnamese businesses need to enhance investment, expand scale, improve the quality of their products, and produce in the form of original equipment manufacturer (OEM), among others.
AEON has stringent conditions for export partners, he said. “For example, the production scale must be 10 times the quantity ordered and enterprises must have experience in producing [those] products.”
AEON also has a code of conduct for export partners, which involves basically complying with the laws of the country to which they export their products.
It has provisions related to child labour, forced labour, hygiene and safety, discipline, working time, wages and benefits, management responsibilities, and environmental protection.
AEON makes an assessment of prospective vendors’ factories before signing any agreement.
Tomoaki Fukui, senior director of AEON Topvalu product division, said the Japanese market has its own standards and so does AEON.
The Ministry of Industry and Trade and the Japanese company have signed a memorandum of understanding under which AEON is committed to increasing Viet Nam’s exports through its supply network to $500 million this year and $1 billion by 2025.
Rubber companies report lower earnings amid falling rubber prices
Rubber producers reported poor second-quarter business results due to decreasing rubber prices, eyeing industrial zone development.
Since the beginning of this year to mid-April, natural rubber prices have dropped sharply, then maintained at low price areas so far.
In the second quarter of 2020, the price of world natural rubber on the Tokyo Commodities Exchange fluctuated between 130-145 Japanese yen (US$1.31-1.35) per kilo. While in the same period of 2019, the product was traded at 175-240 Japanese yen per kilo.
The prices of natural rubber are much affected by the prices of artificial rubber, which is produced from petrochemical refining, thus its prices are closely mimicked with oil prices. When oil prices fall, artificial rubber is produced at lower prices and vice versa.
Oil prices have shown signs of recovery since its low peak in mid-April 2020, but due to weak demand, US crude West Texas Intermediate (WTI) and Brent Crude are only traded at around $40-$43 per barrel.
If the global economy continues to operate under current capacity as influenced by the COVID-19 pandemic, it will be difficult for oil demand to recover as previously.
Phuoc Hoa Rubber JSC (PHR) announced revenue of VND256.88 billion (US$11 million) in the first half of this year, post-tax profit of VND395 billion, down by 26.56 per cent and 250.63 per cent year-on-year, respectively.
Tay Ninh Rubber JSC (TRC) reported revenue of VND61.5 billion in Q2, post-tax profit of VND16.7 billion, up 1.3 per cent and down 43.36 per cent year-on-year, respectively.
In the first six months, the company earned total revenue of VND113.7 billion, post-tax profit of VND37 billion, down by 13.53 per cent and up by 10.81 per cent compared to the first six months of 2019.
In the first quarter, TRC recorded a surge in revenue from the liquidation of rubber trees, while in the second quarter there was no revenue from this activity.
Confronting falling rubber prices, companies are shifting from rubber plantations to develop industrial zones as they eye capturing opportunities from global value chains.
Phuoc Hoa Rubber Company has got the Prime Minister’s approval to convert its 345ha of rubber land in Tan Uyen District, Binh Duong Province, to develop the Nam Tan Uyen Industrial Zone’s expansion project.
At the annual shareholders’ meeting in 2019, Phuoc Hoa also announced its plan to transfer 691ha to Vietnam Singapore Industrial Park Company Ltd (VSIP) to develop VSIP No 3.
Dong Nai Rubber Corporation recently asked the provincial People’s Committee’s permission for the conversion of land use purpose of 18,000 out of 37,000ha of rubber land the company was currently managing.
Under the company’s proposal, 5,000ha of land would be used to develop industrial zones and clusters in Thong Nhat, Long Khanh, Cam My and Long Thanh districts. The rest would be used for developing high-tech agriculture and urban areas.
Vietnam Rubber Group (VRG), which manages around 400,000ha of rubber land, has invested in 12 companies which operate 16 industrial zones with a total area of more than 6,500ha.
According to BIDV Securities Company, the industrial property market would be spurred from next year by the approval of free trade agreements (FTAs), especially the European Union – Viet Nam FTA (EVFTA) – the trade deal with commitments about improving institutions and business climate to make Viet Nam more attractive to investors.
The COVID-19 pandemic was accelerating the transformation of global value chains, during which Viet Nam could emerge as a centre for investment inflow, the company said.
Digiworld reports highest ever quarterly sales
Digiworld Corporation reported record quarterly revenues of nearly VND2.6 trillion (US$112 million) in the second quarter, a 29 per cent year-on-year increase.
Profit after tax was up 36 per cent to VND48 billion ($2.1 million), it said.
First half revenues and profits increased 45 per cent and 55 per cent to VND4.9 trillion ($211 million) and VND93 billion ($4 million).
The company said laptop and tablets sales increased by 65 per cent during the second quarter to nearly VND1.1 trillion ($47.4 million).
It attributed this to the demand for equipment for learning and working online due to the COVID-19 outbreak.
Mobile phones sales rose 19 per cent to VND1.15 trillion ($49.5 million).
Office equipment and consumer goods sales were worth VND298 billion ($12.8 million) and VND59 billion ($2.5 million).
The company said performance indicators are at their best ever levels.
It said it is striving to achieve the year’s targets of VND10.2 trillion ($439 million) in revenues and VND202 billion ($8.7 million) in profit after tax, increases of 20 per cent and 25 per cent over last year’s figures.
Digiworld is the country’s leading market expansion services provider.
KIDO shrugs off pandemic problems to achieve 17 per cent profit growth in H1
Food producer KIDO Group has reported a 17.4 per cent rise in profit before tax to VND180 billion (US$7.7 million) for the first half.
Net revenues increased by 14.2 per cent to VND3.7 trillion ($159 million) due to strong growth in the cooking oil segment.
“Eighty one per cent of net revenues came from the cooking oil business, 18 per cent from the ice cream business and 1 per cent from other businesses,” the company reported.
“Faced with the impact of COVID-19 and fluctuations in raw material prices, the company took timely measures such as shifting the distribution system, reviewing and optimising the product portfolio and focusing on core and premium products.”
Studying the snacking trends among young people and realising the need to use products with high nutritional value, it has launched new products, it said.
As a result, ice cream sales fell by 12 per cent while revenues from cooking oil soared by 23.5 per cent year-on-year, it said.
“This year marks an important milestone in the company’s development: it is the year in which KIDO Group entered the snacking industry.”
The company expects the snack segment to make a substantial contribution to revenues this year.
Of its subsidiaries, KDF said its net revenues were VND674 billion ($27.8 million), down 12 per cent from the same period last year due to the impacts of COVID-19.
However, profits before tax were VND144 billion ($6.2 million), or 72 per cent of the full-year target.
Vocarimex’s revenues went up by 4 per cent to VND1.5 trillion ($66.7 million) and profits by 11.86 per cent to VND111 billion ($4.8 million).
The Tuong An Vegetabel Oil Company (TAC)’s revenues were up 28.12 per cent at VND2.2 trillion ($94.8 million).
Golden Hope Nha Be (KDNB), a new subsidiary, reported a 27 per cent increase in revenues to VND513 billion ($22.1 million), while profits were VND9.4 billion.
US launches anti-dumping probe into Vietnamese copper pipes
The US Department of Commerce (DOC) has officially began an anti-dumping investigation into copper pipes imported from Vietnam, with the alleged dumping margins of 111.82%.
The Trade Remedies Authority of Vietnam under the Ministry of Industry and Trade stated on July 22 that the period under investigation ranged from October 1, 2019, to March 31.
According to data revealed by the DOC, the country’s total export turnover for the product to the US last year reached US$146 million.
Following the launch of the probe, the DOC will move to finalise their decisions regarding respondent selection within 20 days of the investigation notice being published.
Once the selection is completed, the DOC will then send questionnaires to mandatory respondents and request them to reply within a 30-day period.
In line with US regulations, if relevant local firms fail to co-operate with the investigating agencies or do not submit complete responses in a timely manner, then the DOC will use all existing data in order to reach a conclusion on the matter.
As scheduled, the DOC will issue their preliminary conclusions regarding their anti-dumping investigation on December 17.
The launch of the probe comes after copper pipes became the fifth product to be sued by the US for trade remedies since the start of the year.