Textile FDI down but poised for strong growth: experts
The first eight months of 2020 have seen few foreign direct investment (FDI) projects in Vietnam's textile industry, a far less lively picture compared to the same period last year, the department of foreign investment under the Ministry of Planning and Investment has reported.
Total FDI registered since the beginning of the year was 19.54 billion USD, just 86.3 percent of the same period last year, the department said.
Le Tien Truong, CEO of Vinatex, one of the largest textile companies in Vietnam, said FDI inflow was unlikely to pick up in the near future.
"It's not realistic to expect large FDI projects to take place right now, especially textile projects, as major markets including the US and the EU are struggling to recover. Investors are much less eager to start large projects while market demand stays low," said Truong.
Industry experts, however, were optimistic about the prospect of Vietnam as an investment destination once the pandemic is controlled.
Vu Duc Giang, chairman of the Vietnam Textile and Apparel Association, said the country was among a number of strong candidates to take over FDI investment in textile as traditionally large producers such as China, Japan, the Republic of Korea and Taiwan have seen reduced output in recent years.
"We are likely to see FDI investment picking up once vaccines are made available and demand starts to recover," Giang said, "In other words, investors must have reasons to feel assured about their investments to pull the trigger."
As a member of numerous trade deals including the EU-Vietnam Free Trade Agreement (EVFTA) and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), Vietnam remains an attractive destination for investors who are looking to take advantages of free trade, according to experts.
In addition, the country's successful effort in fighting off the novel coronavirus may encourage investment. Having more FDI projects also means faster and stronger localisation of textile productions as the country must stay on course with product origin commitments.
Textiles are one of the country's strongest export industries, of which FDI projects play a large part, with total revenue of 39 billion USD recorded last year./.
Vietnam, Malaysia agree to boost trade after COVID-19
The Vietnam Trade Office in Malaysia and the Vietnam Malaysia Business Association (VMBIZ) on September 23 signed a memorandum of understanding (MOU) on enhancing cooperation to boost trade and investment between the two countries’ businesses.
Speaking at the signing ceremony, Vietnamese Commercial Counsellor in Malaysia Pham Quoc Anh said trade between the two countries slumped by 15 percent annually in the first eight months of this year due to the COVID-19 pandemic.
Via the MoU, the Office hopes to help VMBIZ improve its capacity and expand ties with Vietnamese and Malaysian business associations and entrepreneurs, he said.
VMBIZ Chairman Ngo Sy Tuyen wished that the Office would provide VMBIZ with information about demand for exports-imports of the two nations’ firms. VMBIZ pledges to help the Office carry out trade promotion activities, seek partners, and develop markets.
Vietnamese Ambassador to Malaysia Le Quy Quynh, for his part, suggested that both sides should soon establish specialised units to coordinate common activities, including bringing Vietnamese goods to Malaysia and sharing experience with Malaysian associations and businesses.
Following the signing ceremony, a number of Vietnamese and Malaysian firms also met together to seek cooperation opportunities./.
Vietnam remains a magnet for Singaporean investors
Vietnam’s growing stature in the region and the world and its impressive containment of COVID-19 have continued to consolidate its status as an attractive destination for Singaporean investors.
Singapore is currently Vietnam’s third-largest foreign investor, with a total registered capital of more than 55 billion USD.
It led all investors in the first eight months of this year, pouring 6.54 billion USD into Vietnam, or 33.5 percent of the total FDI during the period, the Cong Thuong (Industry & Trade) newspaper reported.
Among the Singaporean firms, Sembcorp Development has long been present in Vietnam and worked with Becamex IDC Vietnam to set up the Vietnam-Singapore Industrial Park (VSIP) joint venture.
Nine VSIP projects have been developed nationwide to date, on a total area of more than 8,600 ha, supplying clean ground for nearly 900 businesses with combined investment capital of more than 15 billion USD.
Meanwhile, Ascendas teamed up with Vietnam’s Protrade company to develop and manage the Protrade International Tech Park in southern Binh Duong province, along with the OneHub Saigon commercial complex in HCM City.
Apart from investment, bilateral trade also surged in recent years to some 21 billion USD in 2019. Notably, export structures are complementary, which is an optimal condition for agricultural, aquatic, and food products of Vietnam to expand their market shares in the city state.
Douglas Foo, President of the Singapore Manufacturing Federation and Vice Chairman of the Singapore Business Federation, said that as both countries have joined the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and are members of ASEAN, their enterprises will have many more opportunities to capitalise on advantages and bolster investment and business activities.
According to the Cong Thuong newspaper, Vietnam’s increasingly important role in the regional and world economies as well as its impressive achievements in controlling COVID-19 have cemented its reputation as a safe country and attractive investment destination for Singaporean companies.
Vietnam has also been making thorough preparations for welcoming FDI inflows by boosting ties between businesses and universities, colleges, and vocational training centres to develop human resources, building a more favourable legal framework, and developing supporting industries, which are all critical to continuing to attract foreign investors, including those from Singapore, the newspaper said./.
Malaysia’s construction industry suffers record decline
The COVID-19 pandemic continues to leave a lasting impact on the construction industry in Malaysia, which suffered big losses during the initial phase of the Movement Control Order (MCO), the New Straits Times reported.
The newspaper quoted Senior Works Minister Datuk Seri Fadillah Yusof as saying on September 22 that the sector sustained 18.5 billion ringgit (4.5 billion USD) in losses between March 18 and April 28 when the country imposed MCO to prevent the spread of the novel coronavirus.
The enforcement of MCO has caused financial issues, project delivery and labour constraints for the sector, Fadillah said.
Inspections by the Construction Industry Development Board on 7,590 construction sites across Malaysia from April 20 to September 20, meanwhile, found that 149 sites still had not resumed operations, he noted. Of the 149, 45 were still closed as they were still facing financial issues.
The lack of funding and high overhead costs also contributed towards the decline of the construction sector, he added.
Minister in the Prime Minister's Department (Economic Affairs) Mustapa Mohamed said the construction sector is forecast to record the biggest decline this year at 44.5 percent. Usually, claims will be given within one to two months, but since the pandemic, it will take up to three to six months, he explained.
Mustapa said he proposed the formation of a high-level committee, which would meet bimonthly to address issues faced by construction firms and jolt Malaysia's construction sector.
The committee would act as a platform for industry players to raise issues, including those involving red tape, and the differing rules between states and local governments, among others, he added./.
Bac Ninh industrial parks draw in foreign capital despite COVID-19
Despite COVID-19 affecting global production and supply chains, the northern province of Bac Ninh has maintained significant growth in FDI flows into its industrial parks (IPs).
The province is home to 16 industrial parks, which received 265.73 million USD in FDI in July, compared to just 66.65 million USD in June.
After 22 years, the number of FDI projects in Bac Ninh’s IPs has so far reached 1,074, capitalised at 20.08 billion USD.
The IPs have accounted for a lion’s share of the FDI flow into the province.
To remain attractive to both foreign and domestic investors, the province has focused on improving its business climate, giving priority to projects that use less land and less labour, use more high technology, and make more budget contributions, the Vietnam Government Portal reported.
Together with general preferential mechanisms and policies from the State, the province has also proposed certain initiatives to encourage investment in IPs and boost on-the-spot investment promotion through images of large FDI businesses, such as Samsung, Canon, and Foxconn.
To welcome a shift in international investment, the Bac Ninh Industrial Zones Authority has worked with competent agencies to complete a project adjusting the IP development plan by 2020, with a vision towards 2035. Investment promotion activities and the implementation of a policy on supporting COVID-19-affected enterprises have also been prioritised.
In the Northern Key Economic Zone, Bac Ninh has grown from an agricultural province to a major industrial centre over the last 20 years, posting the second-highest per capita income and one of the highest economic growth rates in the country.
Surrounded by economic centres such as Hanoi and Hai Phong, it has managed to establish itself as one of Vietnam’s major FDI destinations./.
Cambodia: new solar power plant put into operation
A 30MW solar power station located in Krakor district, Pursat province of Cambodia, has been connected to the country’s national grid as it enters its testing and commissioning phase.
The project is part of the government’s plan to boost the Kingdom’s clean-energy portfolio to 450MW by the end of 2022.
KeoRottanak, director-general of State-run electricity supplier Electricite du Cambodge (EdC), was quoted by local media as saying on September 22 that the plant had been commissioned by the EdC to be connected to the national grid in SnaAnsa commune.
Victor Jona, director-general of the Ministry of Mines and Energy’s General Department of Energy told the Phnom Penh Post that the project entered its testing and commissioning phase just after construction was completed in mid-September.
He added that with the efforts of the relevant authorities, he expects more new solar power plants to be put into operation in the future, mainly in provinces such as Kampong Chhnang, Pursat, Battambang and BanteayMeanchey.
The project will be equipped with Cheetah-brand photovoltaic panels provided by Shanghai-based New York Stock Exchange-listed Jinkosolar Holding Co Ltd.JinkoSolaris the world’s largest producer of solar panels.
According to the Ministry of Mines and Energy, from 2006 to the end of last year, investment in the electricity sector was worth a total of 6.1 billion USD, reflecting an increasing demand of the energy sector in recent years.
Demand for electricity is growing at an average of 16-18 percent annually, except from 2018 to last year, which saw a 25 percent growth, it said.
The Kingdom can generate about 70-80 percent of total electricity consumption, with the remainder met by imports from neighbouring countries, it added./.
GWEC calls on Vietnam to extend wind energy tariff
The Global Wind Energy Council (GWEC) said it has called on the Government of Vietnam to urgently extend the wind energy Feed-in-Tariff (FiT) scheme.
According to the council, Vietnam’s wind industry is already facing a slowing of investment in 2020 because of uncertainty around the investment framework, and further delays to the FiT extension will hinder supply chain development and cost reduction in the emerging wind market, and ultimately undermine Vietnam’s goal of affordable, reliable and clean electricity.
Vietnam is the fastest-growing wind market in the region, with 500 MW of onshore and offshore capacity currently installed and at least 4 GW forecast to be commissioned by 2025.
However, investor interest in wind project development in Vietnam has slowed significantly in 2020, as onshore wind projects typically require 2 years for development but the current FiT only applies to projects completed by November 2021.
Without clarity on the FiT scheme from 2022 onward, investors are facing too much uncertainty to commit to new wind projects, jeopardising the future pipeline and leading to job cuts in the sector.
“Vietnam has been widely recognised for quickly becoming a regional leader of clean energy in South East Asia and attracting investment commitments from a number of worldclass companies in the sector,” says Ben Backwell, GWEC’s CEO. “The government must now avoid slowing down badly needed investment in wind energy by extending the FiT scheme, thereby ensuring that long-term investments can materialise to create tens of thousands of skilled jobs and provide clean, competitive power for Vietnam’s economy.”
In June this year, the Prime Minister approved an additional 7 GW of new wind projects to be added to Vietnam’s master plan for the power sector (PDP 7). However, the reality is that the vast majority of the 7 GW may not materialize, due to lack of certainty on the FiT extension.
“Vietnam is on the cusp of achieving economies of scale and cost reduction in the wind industry, and this momentum must be maintained if it is to avoid a boom-bust cycle of development,” says Mark Hutchinson, Chair of GWEC’s South East Asia Taskforce. “Due to project timescales, a delayed FiT extension risks a “bust” period for the wind sector, wherein very few projects will be connected to the grid from 2022-2023. In the long run, this will jeopardise the cost reduction made possible by consistent, large-scale supply chain development, and ultimately result in less renewable energy at higher prices for Vietnam.”
At least 1.65 GW of wind projects is forecast to be installed before the current FiT expires in November 2021. Wind energy, as a clean, indigenous energy source, plays an important role in bolstering Vietnam’s energy security and meeting its soaring electricity demand.
Moreover, the growing renewables sector could generate billions of dollars in investment capital and hundreds of thousands of jobs in the long term.
The Government of Vietnam is currently considering the FiT extension and the introduction of a new FiT scheme. The situation for the wind sector has now become critical, as the slowdown in investor interest in 2020 has been compounded by disruptions from the COVID-19 pandemic.
To date, Vietnam’s wind market has benefited from increasingly strong flows of foreign and domestic capital. The 4 GW due to be installed by 2025 could generate up to 65,000 jobs and about 4 billion USD in investment.
To realise this potential, the Government of Vietnam must act now to extend the wind energy FiT scheme and avoid a prolonged slowdown of clean energy investment and installation in the years ahead, the council said.
GWEC is a member-based organisation that represents the entire wind sector. The members of GWEC represent over 1,500 companies, organisations and institutions in more than 80 countries, including manufacturers, developers, component suppliers, research institutes, national and regional wind and renewables associations, electricity providers, finance and insurance companies./.
Hanoi agriculture forecast to grow at least 3 per cent in 2021
Hà Nội’s agriculture sector is projected to grow at least 3 per cent in 2021 under a recently-issued plan on agriculture and rural development.
The city also aims to have all communes and three more districts recognised as new-style rural areas, and 20 communes recognised as advanced new-style rural areas.
The average income of local farmers is hoped to increase to VNĐ58 million (US$2,500) compared to VNĐ46 million in 2018, and the rate of labourers in rural areas with stable jobs maintains at above the current rate of 95 per cent, according to the plan.
To that end, the municipal Department of Agriculture and Rural Development will advise the city administration on policies and solutions and build concentrated and large-scale farming models, aiming to attract investors to the sector.
The department will promote the application of science and technology, as well as restructuring, to build a modern and comprehensive agricultural sector.
The local agricultural sector will work to promote production linkages, optimise brand names and trademarks and expand high-tech and organic agriculture to churn out safe products with clear origin.
Hà Nội’s agriculture sector is facing a host of difficulties from the COVID-19 pandemic, which requires it to continue with restructuring and switch to new crops to ensure growth.
Director of the municipal Department of Agriculture and Rural Development Chu Phú said the agriculture sector in the capital targets 89,500ha of rice, 1.8 million pigs and 38 million poultry heads this year, and is expected to grow 6.26 per cent.
Secretary of the Hà Nội Party Committee Vương Đình Huệ asked that pig breeding be stepped up to curb the rise of the consumer price index and that more fruits and vegetables be grown.
He suggested using industrial and non-cultivation land to meet food demand, issuing mechanisms and policies to use existing agriculture land effectively, and attracting unemployed people from rural to urban areas.
Huệ asked the Steering Committee on Programme No 02-CTr/TU from the municipal Party Committee on the development of agriculture, new-style rural areas and improving farmers’ lives during 2016-20 to increase resources for public investment, contributing to economic growth and improving workers’ incomes.
The city’s Farmers’ Union has been assigned to guide farmers on production, connect them with scientists, businesses, and banks, and form new-style co-operatives.
The Hà Nội Department of Agriculture and Rural Development has issued a list of 11 projects that need investment for between now and 2025.
They include high-tech agriculture projects in rural An Thượng and Song Phương communes of Hoài Đức District, and Hiền Ninh, Thanh Xuân and Tân Dân communes of Sóc Sơn District.
Several concentrated livestock slaughtering projects are also open for investment such as those in Quang Lãng and Tri Thuỷ communes of Phú Xuyên District, Đồng Thái Commune of Ba Vì District, Trạch Mỹ Lộc Commune of Phúc Thọ District, and Minh Phú Commune of Sóc Sơn District.
The city is striving to have 10 districts recognised as new-style rural areas in 2020, according to a local official.
Hà Nội has six new-style rural districts, namely Đan Phượng, Đông Anh, Thanh Trì, Hoài Đức, Quốc Oai, and Gia Lâm.
To achieve the target, Vice Secretary of the municipal Party Committee Ngô Thị Thanh Hằng requested the municipal Department of Agriculture and Rural Development speed up the disbursement of a VNĐ700 billion (more than $30 million) aid package for districts and communes to develop agriculture, build new-style rural areas, and improve local living standards.
According to the director of the department Chu Phú Mỹ, the city’s agricultural growth declined by 1.17 per cent year-on-year in the first quarter of 2020 due to African swine fever and the COVID-19 pandemic.
The national target programme on building new-style rural areas was initiated by the Government in 2010. The list of criteria includes the development of infrastructure, the improvement of production capacity, environmental protection, and the promotion of cultural values.
Central city green-lights ready-built factory project
An investment licence for ready-built factories-for-rent project has been granted to Sai Gon Telecommunications Technology JSC – a member of the Sai Gon Invest Group – with a construction area of 15ha at the Da Nang Hi-Tech Park.
The park's management board said the project will have total investment of VND600 billion (US$26 million) to build factories from 5,000sq.m to 20,000sq.m and infrastructure facilities.
It’s the second such investment made at the park after Long Hau Corporation poured $46.4 million into boosting logistics services for hi-tech investors.
Sai Gon Invest Group said it had projects in 30 industrial zones nationwide, and the new project in Da Nang would offer more favourable conditions to lure investment from domestic and foreign companies in the coming years.
According to the board, one foreign direct investment project worth $60 million and 12 domestic projects valued at VND1.25 trillion ($54.35 million) had been licensed at the park and IZs in the first nine months this year.
To date, the city’s IZs and Hi-Tech Park have attracted 490 projects including 128 FDI projects with a total of $1.6 billion, and $1.1 billion from 362 domestic investors.
The 1,100ha Da Nang Hi-Tech Park in Hoa Vang District, 20km west of the city, was designed as a ‘green’ hi-tech hub for the development of the northwest region. It alone drew 22 projects worth $400 million from FDI and VND6.3 trillion ($274 million) from domestic sources.
In March, the Universal Alloy Corporation (UAC) from the US launched the first stage of the Da Nang-based Sunshine Aerospace components manufacturing plant.
UAC said it planned to manufacture over 4,000 different aerospace parts at the Da Nang-based plant to supply Boeing, Airbus, Embraer and Bombardier, and would export these parts to North America, Europe and Asia.
It’s also the first aerospace parts project of the UAC in Viet Nam and Asia, with total investment of $170 million.
Other FDI enterprises – Tokyo Keiki Precision Technology Inc and Niwa Foundry from Japan; Dentium company from South Korea – have already operated factories at the park to meet export and domestic market.
Da Nang has been calling for investment from Silicon Valley and the US in healthcare, hi-tech industries, Artificial Intelligence, education, real estate and automation at the Da Nang Hi-tech Park and IZs. —
Viet Nam exports 850 million masks
Vietnamese businesses exported nearly 850 million medical masks in the first eight months of this year.
The General Department of Viet Nam Customs reported more than 70 enterprises exported 135 million medical masks in August alone.
The masks were mainly fabric, fine dust masks, cotton and medical masks.
The largest importers were Japan, South Korea, Germany and the US. In addition, masks were also exported to Hong Kong, Singapore, Poland, Australia, China, Laos and South Africa.
Masks have been a highlight of Vietnamese exports during the pandemic.
Textile and garment enterprises have also quickly adapted machinery and raw materials to make anti-bacterial fabric masks, medical masks and protective goods to fill the gaps when processing orders were delayed.
As the COVID-19 pandemic continues to rage in many countries, the demand for masks is still increasing.
Regarding the quality of export masks, the Ministry of Industry and Trade has warned exporters to learn carefully about the function of consulting and testing, especially when businesses want to issue certificates for export to the EU and US markets.
Large travel firms may get zero-interest loans
The HCMC Department of Tourism has proposed adding large-scale travel firms affected by Covid-19 to the list of firms being offered zero-interest loans to pay the salaries of their employees.
In its recent report on the Covid-19 prevention and control situation, apart from agreeing with a draft report prepared by the HCMC Department of Planning and Investment on credit support policies for firms affected by the coronavirus pandemic, the municipal department proposed supporting tour operators with over 200 workers in taking out loans with a 0% interest rate.
Due to the impact of the health crisis, 90%-95% of a total of 1,000 firms active in the travel industry in the city have suspended their operations, while their employees have been on unpaid leave for the past few months. Many travel firms with over 200 employees, which are struggling to maintain their operations are also facing financial difficulties, Tuoi Tre Online reported.
Regarding solutions to boost tourism in the city, the municipal Department of Tourism proposed offering free entry at four tourist sites—the HCMC War Remnants Museum, the Vietnam History Museum, the HCMC Museum and the Cu Chi Tunnels—and offering financial support to these sites to pay salaries.
Moreover, the municipal Department of Tourism proposed that the HCMC Department of Planning and Investment work with other relevant agencies to consult the HCMC government over reducing water bills for lodging and dining facilities that serve tourists, Nguoi Lao Dong Online reported.
Transport firm presents three plans to build Can Tho-Ca Mau Expy
Transport consulting firm Transport Engineering and Design Inc. South, or Tedi South, presented three investment plans to develop the Can Tho-Ca Mau Expressway project at a meeting held on September 21 in the Mekong Delta city of Can Tho.
In the first plan, the consultant will make use of the entire road section from Quan Lo to Phung Hiep with a total length of 141 kilometers to build the expressway. The upside of the first plan is that the total funding at VND46.2 trillion remains the lowest among the three plans, as only 750 hectares of land needs to be cleared.
Under the second plan, the expressway will run parallel to the Quan Lo-Phung Hiep route, with a total length of 138 kilometers. It requires VND61 trillion in investment and 900 hectares of land to be cleared.
In the third plan, the expressway will be built on the left side of the Quan Lo-Phung Hiep route and be 125 kilometers long, with some VND57 trillion required and around 800 hectares of land needed.
Speaking at the meeting, leaders of Ca Mau, Bac Lieu and Soc Trang provinces, through which the expressway will pass, suggested the Transport Ministry choose the second plan as the expressway under this plan will connect properly with the urban areas and economic hubs of these localities.
If the expressway is built following the third plan, it will remain too far away from the centers of Soc Trang and Bac Lieu. Meanwhile. Hau Giang chose the third plan as it wants to retain the existing Quan Lo-Phung Hiep road section and build a separate expressway. Can Tho also endorsed the third one as the road will have the shortest length.
Deputy Minister of Transport Nguyen Nhat said that the ministry will submit a report on the project’s investment plan to the prime minister this month, so the National Assembly can consider adding the project to the 2021-2025 mid-term public investment plan.
Vietnam wants to develop automotive industry
The Government will issue numerous solutions to encourage the development of the automotive industry to meet the demand for domestic consumption and exports, said Deputy Prime Minister Trinh Dinh Dung.
Speaking at the groundbreaking ceremony for the Thanh Cong Viet Hung auto supporting industries complex in Quang Ninh Province on September 22, the official stressed the need to transform into an intellectual and digital economy, instead of relying on an underdeveloped industry with simple outsourcing and assembly.
Besides, enterprises should raise the localization ratio of their products and integrate deeply into the global value chain, he said.
At present, many Vietnamese people want to own a car and more people can afford to buy the product. However, the local auto industry is still registering a low ratio of localization, Dung was cited by the government website as saying.
The Government has set a target to build Vietnamese auto brands that can meet customer demands in terms of design and quality. Vietnamese enterprises should participate in the value chain of the auto sector, raise the localization ratio and penetrate into the global auto industry.
Vietnam attaches great importance and has been creating favorable conditions to encourage the growth of the local auto industry. In recent times, the Government has replaced infeasible targets with more suitable approaches and has encouraged large manufacturers to conduct the assembling process in the country via attractive policies.
Besides this, the Government has assisted local firms in studying and developing cars made in Vietnam with a high localization ratio and investing in technology innovation to assemble more cars, including those from leading international brands.
As the country has yet to make 100% of the value of a car, the Government has launched many policies to speed up supporting industries in general, and those for the auto sector in particular, thus creating more jobs and raising employee incomes.
However, the local supporting industries still have many shortcomings. The biggest challenge is the lack of participation among economic drivers, which are leading firms active in the auto sector.
Therefore, the leader praised the cooperation between the Quang Ninh Province government and the Thanh Cong Group in developing the complex, which covers 340 hectares at a strategically convenient location in Halong City.
This proves the vision and determination of local authorities and businesses in the implementation of the Government’s supporting industries development scheme. The complex will meet the demands of the Thanh Cong Group and help local auto supporting industries enterprises tap regional and international markets, Dung noted.
To help the project move on as scheduled, Dung suggested local authorities improve the business environment and mechanism, prepare high-quality manpower and infrastructure, while reporting problems during the construction process to the Government.
Coronavirus costs Danang tourism at least VND26 trillion
By the end of this year, the central beach city of Danang will be able to receive just 2.7 million visitors, down 68.6% against 2019, while the total revenue from the Danang tourism industry is estimated at more than VND10 trillion, down 65.1%.
Moreover, the municipal tourism industry will face a loss of VND26 trillion, according to the Tuoi Tre news site, which quoted the Danang City Department of Tourism.
The total number of employees in Danang who have lost jobs since the beginning of August is more than 31,000. Some 250 hotels and apartment buildings have also been put up for sale.
To help ease the situation, the Danang Tourism Association (DATA) made a number of recommendations to the city and the Government, including a 50% VAT (value-added tax) and 100% corporate income tax reduction at least until the end of 2020. It has also suggested discounting electricity and water prices for tourism businesses by the end of this year.
DATA urged the Government to adjust conditions to be able to better access the Government’s relief aid packages; meanwhile, the Vietnam National Administration of Tourism should reduce the deposits made by travel businesses, at least until the end of 2021, it said.
Thu Thiem 2 Bridge project at risk of suspension
Work on the Thu Thiem 2 Bridge project connecting District 1 and Thu Thiem Peninsula in District 2 in HCMC may be suspended as the project’s investor has had difficulty with financial arrangement.
Dai Quang Minh Real Estate Investment Company is developing the project under the build-transfer (BT) format. Work on the six-lane bridge started in 2015 and was slated for completion in 2018, with a total investment of VND3.8 trillion. However, the 1.4-kilometer-long bridge has faced multiple obstacles and was rescheduled for completion in September 2021.
The investor said in its report that lenders had refused to disburse capital for its BT projects including Thu Thiem 2 Bridge, as the city had made slow payments to the investor. As a result, the investor may have to suspend the construction of the bridge if the financial issue was not addressed.
From now until the end of the year, the investor planned to disburse over VND1.1 trillion to contractors for the bridge to be opened to traffic.
The investor had written to the municipal government and relevant departments proposing the city consider making payments for it through the issuance of land use right certificates for BT projects, so the construction work can continue. However, the proposal is yet to be considered.
Up to now, Dai Quang Minh has paid some VND2.15 trillion as part of investment for the bridge. Of this amount, the investor submitted VND800 billion to the State budget in April 2014 and spent VND1.35 trillion to construct the bridge.
Besides this, to pay off debts and other costs to develop the BT projects, Dai Quang Minh had to borrow some VND7.5 trillion from its parent company, THACO, including VND2.15 trillion for Thu Thiem 2 Bridge. However, the impact of the coronavirus pandemic prevented the investor from taking out further loans from THACO.
A representative of Dai Quang Minh said the investor also proposed that the city resolve the problems this month. In addition, the investor will try to find a way to cope with the difficulties and complete the bridge project as planned.
As for the city, Ha Phuoc Thang, chief of the HCMC People's Committee Office, announced on September 21 that the city’s government planned to convene a meeting on September 25 to discuss solutions to remove obstacles facing infrastructure projects, including Thu Thiem 2 Bridge.
Taiwan's tech firm to invest US$1 billion in Vietnam
Taiwanese electronics manufacturing company Pegatron, a partner of world’s major tech firms such as Microsoft, Apple and Sony, is planning to invest US$1 billion to build three hi-tech products plants at the Nam Dinh Vu Industrial Park in the northern city of Haiphong.
The first plant called Pegatron Vietnam 1 would have total investment capital of US$19 million. Pegatron Corporation obtained an investment license for the project from the Management Board of the Haiphong Economic Zone on March 17.
The company is seeking an investment license for the second project worth US$481 million. It would produce electronic devices, computers, communications equipment, electronic components and circuit boards for tech giants including Microsoft, Sony and Apple.
The third project worth US$500 million will be developed in the 2026-2027 period.
Moreover, Pegatron has also planned to move its research and development center from China to Vietnam once the third project is ready.
The three projects are expected to create 22,500 jobs and contribute some VND100 billion (US$4.3 million) to the State budget annually.
Besides Pegatron Corporation, the Ministry of Planning and Investment is collaborating with the investor of the Nam Dinh Vu industrial park to persuade Universal Global Technology Group, a member of leading provider of independent semiconductor manufacturing services ASE Technology Holding, to develop an electronic board manufacturing and assembly plant, according to Tuoi Tre newspaper.
Products from this US$400 million project would be supplied to Sony and Lenovo for the production of smart watches, smartphones and headphones.
The ministry said these hi-tech projects would lay the foundation for Vietnam to attract more investors that are suppliers to the world’s tech giants, helping Haiphong progress into an electronic production hub.
Richard Shi, head of the Taipei Economic and Cultural Office in Hanoi, said at a meeting with representatives of the Ministry of Planning and Investment in late August that a second wave of investment from Taiwanese investors to Vietnam was expected, following the first one in the 1990s.
Int’l tour firms plan to take tourists back to Vietnam early next year
Many foreign tour operators have revealed their plans to bring tourists back to Vietnam starting early next year and are awaiting the country’s decision on reopening its doors to international tourists to finalize their plans, said Nguyen Ngoc Toan, director of Images Travel Company.
Toan added that his firm’s business partners did not cancel tours en masse but are doing so at a gradual pace based on the Vietnamese Government’s decision to resume international tourism.
Last Thursday, Images Travel received a request from TUI, Europe’s major travel firm, to cancel tours scheduled to depart from the beginning of 2021. This is the first tour cancellation request for the new year. If the coronavirus pandemic continues to worsen, TUI would cancel tours set for February and then for the other months.
Normally, by this time, his firm would have booked hotel and travel boat services for next June, but at present, there have been no bookings as it remains unknown when the country resumes international tourism, Toan said.
Similarly, some tour operators in HCMC said their partners have been postponing tours as they wait for the tourism market to reopen to the international segment.
According to Transtravel Company, its French partners have made no changes to some tours booked for November, as they wait for Vietnam to lift travel restrictions. Further, in October, TransTravel will survey community tourism products from Hanoi to Vinh in Nghe An Province and Dong Hoi in Quang Binh Province aimed at designing tours for 2021.
Two tour groups had purchased community tours and are set to begin their trips next year, a Transtravel representative said.
As for cruise tourism, Phan Xuan Anh, chairman of Viet Excursions Company, said his firm’s customers have steadily canceled tours for the rest of this year, but tours booked for early 2021 remained unchanged.
A Vietnam National Administration of Tourism (VNAT) representative told the Saigon Times that VNAT is working on a plan to reopen international tourism but has to wait for the situation with regard to commercial flights transporting foreign experts and investors to Vietnam to decide on the plan ahead.
If the operations of these commercial flights see positive results, the international tourism segment is expected to resume by the end of the year, he added.
Vietnam impervious to potential US cotton ban
Plans by the United States to ban Chinese cotton is unlikely to affect Vietnam’s garment and textile industry as a large portion of the materials the Southeast Asian nation imports come from the US.
The Asian apparel industry breathed a sigh of relief after the US last week decided to temporarily shelve a wholesale ban on products containing cotton from China’s Xinjiang province. However, the US Customs and Border Protection (CBP) agency imposed restrictions through five separate Withhold Release Orders covering cotton, computer parts, and hair products made by a group of Xinjiang entities.
The move by the US government on import restrictions from China’s autonomous Xinjiang Uygur region were made due to concerns over the alleged widespread use of forced labour.
“The move is sensitive so we have yet to make any official comment,” Vo Manh Hung, head representative of the Cotton Council International (CCI) told VIR. “Each year China is the world’s largest or second-largest producer of cotton, alongside India. Local cotton output can’t catch up with the rising demand for raw materials for the fibre industry.”
Meanwhile, Vietnam has been increasingly sourcing cotton from the US over the last few years. In light of the growing fibre industry, many local and foreign companies have ramped up investment in the sector, including Chinese companies using US cotton for production. In addition, Vietnamese fibre manufacturers are increasingly looking for high-quality cotton that can retain its colour after dyeing. US cotton can meet this requirement, according to Hung.
According to data by the General Department of Vietnam Customs (GDVC), Vietnam imported about 900,000 tonnes of cotton from the US in 2019, accounting for 61 per cent of its total imported cotton.
“It is predicted the demand of importing cotton from the US to Vietnam will increase in the upcoming years as foreign companies, especially those from China, boost investment in yarn-dyed fields,” Hung said.
Meanwhile, Vu Duc Giang, chairman of the Vietnam Textile and Apparel Association (VITAS) told VIR that a potential import ban on all cotton from China’s Xinjiang would have very little impact on Vietnam’s textile and garment industry. Only some Chinese fibre manufacturers in Dong Nai and Quang Ninh provinces will be affected if they source cotton from the region. At present, China is the largest consumption market of Vietnam’s fibres, accounting for 45 per cent of Vietnam’s total fibre exports.
Giang believed that the growing consumption of US cotton in Vietnam will help improve the stability of fibre quality, thereby contributing to the development of Vietnam’s industry and boosting textile and garment exports to the US.
“We have proposed the government to encourage foreign-invested projects in the field of high-quality fibre production, weaving, and dyeing rather than sewing. We also warn companies to pay attention to any US ban on fibre and textiles to choose suitable material sources,” he said.
Cotton from Africa is becoming an important source for Vietnam’s fibre production too, in addition to the supplies from the US and India. In 2019, Vietnam imported cotton from 17 African countries. In 2019, Vietnam’s total import of cotton from the continent reached $203.5 million, down 19 per cent compared to 2018, according to statistics from the GDVC.
Data from the Vietnam Trade Office in Algeria shows that African cotton has a competitive price and quality, which matches Vietnam’s requirements for fibre production. Most African cotton is harvested by hand with relatively low fibre and good maturity ratio. However, due to small output, the classification process of African cotton is not as sophisticated as that from the US or other regions.
In particular, African cotton has a higher impurity ratio and sugar content than other types of cotton, which impacts production and quality.
However, the pandemic has led to a decline in global raw material price and supply. The situation has worsened due to shrinking industrial production in the US, China, and the EU. In fact, international cotton prices are at their lowest level for 11 years.
The textile industry continues to slow down, especially in Asia. Cotton prices have been hit hard by low oil prices, making the synthetic fibres more competitive than natural fibres.
According to estimates from the International Cotton Advisory Committee, since the beginning of the year, global cotton prices have fallen by about 18 per cent due to the impact of the pandemic and the closure of textile factories.
The global health crisis is also negatively affecting prices of the product imported into Vietnam. In the last week of August, the prices of imported cotton from the US declined by 0.65 per cent, Macau down 2.02 per cent; and Hong Kong fell 3.77 per cent. However, the price of cotton imported from the Indian market increased by 11.65 per cent, according to the Vietnam Industry and Trade Information Centre under the Ministry of Industry and Trade.
Vietnam has been a darling for US cotton producers. Data by the CCI shows that the US is home to 18,500 farms and over 550 grinding mills. US cotton is produced and tested under strict procedures, meeting the requirements of Vietnam’s textile industry in terms of quality and environment.
According to the CCI, around 28 Vietnamese textile and weaving factories are trusted partners of US cotton suppliers with a total registered cotton volume of about 400,000 tonnes per year. In particular, after just three years of cooperation, domestic fashion brands such as Canifa, John Henry, Ninomaxx, Onoff, and Sunfly have chosen US cotton suppliers as their partners, with 1.7 million products registered with Cotton USA labels last year.
Mooncake dealers in Vietnam offer discounts on COVID-caused bleak sales
To encourage consumers to buy their products, Vietnamese well-known mooncake makers have offered discounts.
Almost a week to go to the 2020 Mid-Autumn Festival, Vietnam’s mooncake market has not heated up, thus, mooncake dealers are offering discounts to stimulate consumption, Kinh Te & Do Thi reported.
As one of the biggest festives in Vietnam, this time of the year is usually a busy season of moon-cake business. However, unlike previous years, sales of mooncake are stagnant.
To encourage consumers to buy their products, well-known mooncake makers, including Huu Nghi, Hanoi, Kinh Do, have offered 10-15% discounts over the normal prices.
Supermarkets are also implementing promotions and discounts. The Vinmart supermarket chain is running the promotional program "Happy Mid-Autumn Festival with Vinmart" and reducing its prices from VND30,000-50,000 (US$1.29-2.14) on all Vinmart-brank mooncakes.
A representative of Dong Khanh mooncake shop on Nguyen Thai Hoc street said that the brand is offering a discount program of up to 50% for large purchases.
E-commerce channels such as Hotdeal.vn, Tiki, Sendo, Lazada are flooded with ads for moon cakes branded Kinh Do, Dong Khanh, Huu Nghi, Hanoi, Thu Huong with discounts from 10-30%.
Explaining why moon cake prices are falling, although the Mid-Autumn Festival is approaching, all traders pointed to one culprit: the COVID-19 pandemic. People's incomes have declined, so they only buy essentials and refrain from buying non-essential foods like mooncakes.
Thuy Ta JSC Director Hoang Minh Tho said companies present mooncakes to employees every year at the mid-autumn festival, but this year, things are not going well for many companies, so they cut the expense on mooncake.
“Last year, a company could order more than 200 boxes of mooncakes, but this year they have ordered a dozen to give to their customers and business partners. The number of customers has decreased while mooncakes are perishable, so traders have to cut prices to incentivize consumption," said Tho.
Tra fish exports to UK market enjoy surge
Vietnamese tra fish (pangasius) exports to the UK have soared by approximately 24% to US$46.75 million during the first eight months of the year, despite enduring a decline in exports to almost all markets as a result of the novel coronavirus (COVID-19) epidemic, according to the Vietnam Association of Seafood Exporters and Producers.
The reviewed period witnessed Vietnamese pangasius exports decline by roughly 30% on-year to US$913.4 million due to the negative impact of COVID-19, with the UK market proving to be an exception to this trend.
Most notably, the export price of frozen pangasius fillets to the UK market enjoyed a boost with the average price ranging from US$3.6 and US$3.65 per kilo, whilst the total export value of tra fish to this market increased by 56.3% in August alone.
Despite positive growth to the UK market, tra fish exports to a number of other major markets endured negative growth, with exports to China, the leading consumer of Vietnamese tra fish plummeting by 24% on-year to US$295.8 million.
There were a rising number of enterprises getting involved in exporting tra fish to the Chinese market, with the export value to this market making up a large proportion compared to other major markets such as the United States, ASEAN, and the EU.
Tra fish exports to the US, the country’s second largest export market, witnessed an annual decline of 17.8% to US$154.5 million, with exports to the market rebounding in July and August, a trend which is expected to create a positive outlook for firms ahead in the remainder of the year.
Elsewhere, pangasius exports to ASEAN suffered a fall of 30.3% to US$ 91.3 million, with exports to two major markets, including Thailand and Malaysia, down by 28.6% and 26%, respectively.
It is anticipated that tra fish exports to this market will dip by 20% during the course of this year due to COVID-19 disrupting export activities.