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VIETNAM BUSINESS NEWS SEPTEMBER 24

Untapped opportunities for Vietnamese pepper exports to UK
Untapped opportunities for Vietnamese pepper exports to UK hinh anh 1
There are great business opportunities for Vietnamese pepper exporters in the United Kingdom - a lucrative market with high demand for pepper imports. 

According to industry experts, local pepper exporters can also take advantage of the UK's supply shortages to increase exports of its key items such as pepper to the country as the impact of the COVID-19 pandemic, Brexit and the international sanctions against Russia have resulted in a supply instability and scarcity in the UK. 

Currently, the UK is the second-largest importer and consumer of pepper in Europe after Germany and Vietnam's pepper exports to the UK market have surged positively in recent years. 

In 2020, Vietnam shipped 5,621 tonnes of pepper to the UK, raking in 48 million USD of the total 14,000 tonnes and 121 million USD that the UK imported. 

Later in 2021, the Southeast Asian pepper exports to the UK saw a significant year-on-year increase of 49%. In the first four months of 2022, pepper remained one of Vietnam's major farm produce exported to the UK besides coffee and cashew nuts. 

According to the Vietnam Trade Office in the UK, pepper is among Vietnamese agricultural products that have gained a foothold in the UK and have been selling well in big supermarkets.

It said Vietnamese farm produce such as pepper has an edge in the UK over similar products from countries which have not yet signed a free trade agreement (FTA) with the UK as the UK-Vietnam FTA has completely eliminated tariffs for pepper imported from Vietnam. 

Local firms, however, can only avail of these competitive advantages if they can reach UK quality standards and match customer tastes, it said.
Trade experts say Vietnam has the potential to become a major supplier of farm produce to the UK especially after the UKVFTA came into effect. But it is important to learn about import demand, standards and requirements for exporting to the market.

Nguyen Manh Dat, Deputy Director of the Institute of Food Industry under the Ministry of Industry and Trade, said Vietnamese exporters should do thorough market research to ensure their products are of high quality and competitive in the market.

They must also ensure transparency for their products by developing websites and providing information about products, production lines, output, and trading partners, Dat said during a workshop on the UK market held recently in Hanoi.

Statistics from the Vietnam Pepper Association (VPA) revealed that Vietnam last month shipped 16,500 tonnes of pepper abroad for 66 million USD.

The latest addition has brought the quality of pepper export in the first eight months of this year to 162,000 tonnes, valued at 739 million USD. During the period, pepper exports plunged 19% in volume but were up 11% in value year-on-year.

The VPA said the structure of export pepper products had seen a significant change. Local enterprises had reduced exports of raw pepper while increasing pre-processed or processed products.

Vietnamese pepper products have continued a leading position in the global pepper industry with the export volume accounting for 60% of global consumer demand.

Transportation charges continue falling

The Ministry of Finance (MOF) has proposed cutting some transportation fees by 50% in a draft circular detailing the collection rates of fees and charges in the transportation sector.

The proposed collection rates which apply to the tonnage fees and maritime safety assurance charge, charge for entering or leaving seaports for inland maritime activities, will be 80% of the current rates as provided in Circular 261/2016/TT-BTC.

Charges for the use of railway infrastructure are proposed to enjoy a 50% reduction, based on the revenue of railway business operations.

For the charge for entering or leaving seaports for inland maritime activities and waterway reporting fees, the MOF proposed a new collection rate at 50% of the current rates. The new rate shall be effective as of the date of issuance of the circular till the end of December 31, 2022.

As of January 1, 2023, the collection rates of the above fees and charges shall be applied in compliance with Circular 261/2016/TT-BTC and Circular 295/2016/TT-BTC.

In the last eight months, the MOF has proposed reducing 35 types of fees and charges. Some 37 fees and charges have been cut until the end of June 2022 and others will continue to be reduced to support residents and enterprises in easing hardships after the pandemic, totaling up to VND900 billion.

Though the continuous reduction of fees and charges has affected the State budget, the MOF will manage to roll out fiscal supporting packages from now until the end of 2022 to help socio-economic development recover under the guidance of the Government.

Industrial real estate likely to pick up in remaining months

The industrial real estate sector will likely continue to pick up in the remaining months of the year thanks to the ongoing global supply chain disruption and diversification, and the trade deals that Vietnam has signed, experts said.

Energy price uncertainty due to geopolitical issues and concerns on economic growth, China’s persistence in pursuing a zero COVID-19 policy coupled with a global trade slowdown have been fueling the disruption and diversification, they added.

In Vietnam, industrial real estate leasing has seen a hike in demand and rental prices, especially for logistics and warehousing.

According to CBRE Vietnam, a commercial real estate services and investment firm, in the third quarter, its industrial leasing enquiries are improving in both quantity and sizes. Land acquisition enjoyed 10% year-on-year growth so far this year and 7% growth for ready-built factories/warehouses.

The average size required by tenants of all CBRE’s enquiries was 9.4 ha in the first half of 2022 compared to 9.2 ha last year for land and 6,700 sq.m in the first half compared with 6,100 sq.m in 2021 for ready-built factories/warehouses.

Vietnam continues to be an appealing destination for industrial real estate investors, according to global real estate services firm Cushman and Wakefield.

It attributed this to the country’s stable growth rate, an export-oriented economy, a rise in free trade agreements, a young labour force, investment incentives and strategic location.

With favourable government incentives, competitive labour costs, a stable political environment, a positive economic outlook and free trade agreements, the Southeast Asian country has become popular for foreign investors moving out of China.

To seize this opportunity, the north-eastern province of Quang Ninh has emerged as a vibrant industrial property market as the province is transforming its rural tourism-based economy and industrialising to attract foreign investment.

Survey overlap potential irks wind power developers

Due to several legal pitfalls, conflicts may occur among wind power investors, both onshore and off, as they take part in surveying activities for their potential projects.

The northern province of Lang Son attracted both foreign and local investors showing interest in building wind power projects. Most said Lang Son would be the most suitable area in the northern provinces, especially in districts like Loc Binh, Dinh Lap, Van Lang, and Binh Gia.

GE proposed Lang Son People's Committee to allow the survey of two wind power projects with a total capacity of up to 418MW and approval to build two wind measuring towers in Chi Lang district for the 165MW Chi Lang project, as stated in a local authorities’ document in May.

According to the document, duplicate surveys could cause legal consequences among investors. “As far as we know, other provinces in the country do not allow duplicate research between projects,” the document noted.

The document came as TRE JSC intended to carry out a wind measurement survey for which GE was already surveying.

Lang Son wants to become a hub for wind energy in the northern region. A report by the Institute of Energy on the overall wind power development in Lang Son mentioned that it is necessary to have a clear policy on prioritising land use as there is a conflict between the purposes of resource exploitation and other activities such as agriculture, forestry, and tourism. However, the report did not discuss the conflict between investors.

Lang Son plans to launch 27 wind power projects during 2030 with a total capacity of 3.57GW. Some highlighted ones are the Dinh Lap 1 wind power plant with a capacity of 100MW, the Dinh Lap 4 wind facility with a capacity of 126MW, and the Dinh Lap 2C plant with a capacity of 350MW.

After 2030, eight of these projects would then be tendered with a total capacity of about 1.12GW, including some notable plants such as T&T OCG Loc Binh with a capacity of 200MW and Loc Binh 2 with a capacity of 150MW.

It is not only the onshore wind segment that faces planning and survey issues. The National Steering Committee for Electricity Development has admitted that wind, solar, and gas power sources face great difficulties despite past advances, as planning has not been effectively managed. The investment licencing period is prolonged and, to date, there is no marine spatial plan for offshore wind power.

According to the Ministry of Natural Resources and Environment, the demand for wind measurement, geological, and topographic surveys at sea among organisations and individuals is high. And Tran Quoc Dien, deputy general director of Power Engineering Consulting JSC 3, said at a recent wind conference that renewable energy development is hotter than ever.

He suggested that to avoid conflicts, local authorities should assign investors to survey within a certain time. “After that time, if investors do not follow their commitments, other investors would be welcome,” Dien noted.

To attract capital in Vietnam’s offshore wind power, it is necessary to develop a strict and transparent legal framework to provide clearer guidance to assist investors, Dien added. “Along with that, it is necessary to develop a domestic supply chain to support the sector, strengthen the grid reinforcement, and finish the Power Development Plan VIII.”

Biomass boost to fuel power evolution

Although the Vietnamese government has introduced policies to promote the development of biomass power, results so far remain modest, leaving insiders to ponder what is hindering the development of this type of energy.

An MoU on cooperation in research and development of biomass power generation and fuel production in Vietnam was signed last week between Japan Electric Development Co., Ltd. and Vietnam Forestry Corporation. It mainly attracts the interest of foreign energy developers, especially from Japan.

Cooperating with the largest state-owned forestry company in Vietnam which manages about 43,000 hectares of forest, the Japanese company aims to expand its biomass electricity business in Vietnam. At the same time, it participates in the biomass-based fuel supply chain, thereby accumulating knowledge and experience in the sustainable use of this fuel source.

In Vietnam, a long-term investment plan is also being implemented by Japan’s Erex Group. The group’s president Honna Hitoshi visited Vietnam in March, working with several stakeholders on the plan to develop around 1,500MW of biomass power by 2035.

Nearly 20 projects could be implemented following Erex’s survey over 16 cities and provinces in the country, and the development of biomass plants to generate electricity.

According to calculations by the Vietnam Energy Institute, the country’s biomass raw materials are abundant, estimated to reach about 118 million tonnes per year. However, the current exploitation of biomass energy remains very low, accounting for only 0.94 per cent of installed capacity up and down the country.

Nguyen Anh Tuan, former director of the Department of Electricity and Renewable Energy under the Ministry of Industry and Trade (MoIT), said that Vietnam has 10 biomass power plants but most of them are only for internal usage, and have not been sold to the national grid.

According to Tuan, the development of biomass electricity in Vietnam is difficult for many reasons. The first is the unstable and unsustainable supply of fuel, as the prices of raw materials often change according to the season.

The next biggest obstacle would be the large initial investment. “Currently, the state has not planned areas for the development of biomass power projects. Meanwhile, enterprises in Vietnam still lack experience in its development, and there’s a lack in engineers and skilled workers to build and operate biomass power projects,” Tuan explained.

Vietnam advocates for diversifying supply sources, focusing on renewable energy, but biomass electricity is still on the sidelines of power development. In 2021, the installed capacity of biomass power plants was still at 325MW, accounting for merely 0.42 per cent of the total capacity while the electricity output reaches 321 million kWh, accounting for 0.13 per cent of the whole system’s output.

Meanwhile, the capacity of wind and solar power reached nearly 20,700MW, accounting for nearly 30 per cent of the total installed capacity, according to the 2021 National Power System Operation Review Report from Electricity of Vietnam.

The demand for electricity in Vietnam has increased in recent years and skyrocketed by nearly 400 per cent during between 1998 and 2008. According to the MoIT, the energy demand in Vietnam is now growing at twice the rate of GDP growth, while in developed countries this rate is closer to the same proportion.

The MoIT calculates that by 2035, the total potential of all types of biomass is more than 9,600MW, coming from about 370MW of rice husks, 3,360MW of forestry by-products, 470MW of bagasse, 1,300MW of rice straw, and 1,370MW of biogas.

BT contract for HCMC’s infrastructure project canceled

HCMC has decided to suspend the build-transfer (BT) contract for the Binh Tien road and bridge project over legal concerns.

The HCMC chairman, Phan Van Mai, made this decision on September 12, following the HCMC Department of Planning and Investment’s proposal.

The Department of Transport and the relevant agencies were tasked with studying and suggesting another investment format for the project.

The Binh Tien road and bridge project will be 3.2 kilometers long, with the bridge having a total length of over 900 meters. The project will link the Binh Tien-Pham Van Chi intersection in District 6, Vo Van Kiet Avenue, the Tau Hu and Doi canals in District 8 and Nguyen Van Linh Street in Binh Chanh District.

The prime minister authorized HCMC to choose an investor to develop the project under the BT format 12 years ago. The city then approved the investment of the project at VND2.4 trillion, but work on the project had yet to begin due to financial woes linked to site clearance and land issues.

In 2016, the city proposed the prime minister divide the project into two components. Of them, one 1.4-kilometer section will run from Pham Van Chi Street to Ta Quang Buu Street and require VND1,853 billion. The other one, which will be 1.8 kilometers long, will link Ta Quang Buu with Nguyen Van Linh, with total estimated capital of VND750 million.

However, in early 2018, after the central Government ordered the suspension of BT projects, HCMC decided to halt their execution.

Vietnam importers advised to re-negotiate with India over rice purchases

Vietnam’s Trade Office in India has urged Vietnamese rice importers to contact their Indian sellers to check the status of delivery and re-negotiate with their partners over rice purchases, as India has imposed restrictions on rice exports.

The Trade Office said on September 8 that India had banned exports of broken rice and imposed a 20% duty on the export of some types of rice. The ban took effect on September 9.

However, some shipments will still be exported until September 15 if they meet one of the following conditions: rice had been loaded on ships before the ban, an invoice had been issued and a rice-carrying ship has arrived in India, or rice had been referenced to the customs for checks and export registration.

In 2021, Vietnam imported 433,000 tons of rice from India.

India’s restrictions on rice exports have sent the Asian rice price up 5%. The rice price is expected to continue to rise, the local media reported.

Deputy Minister promises to correct mechanism in cross-border services

In his acceptance speech at the beginning of the week, Deputy Minister of Information and Communications Nguyen Thanh Lam pledged to contribute to the correction of existing mechanisms, policies, and laws to remove difficulties, create more resources, and create more breakthroughs for management and fairness between value-added services on cross-border internet platforms. 

First of all, this is an important task of the Ministry of Information and Communications as well as current authorities. Because cross-border services are considered the foundation for the development of the digital economy and digital society in which Vietnam is oriented towards.

The Internet television service (OTT TV) will serve as an example. According to data from the Ministry of Information and Communications, Vietnam has about 16.8 million television subscribers. The country collected a revenue of over VND9,000 billion (US$379,424,713) in 2021. Currently, 50 businesses have licenses to provide radio services and pay TV services. The number of domestic television channels is 196 and 70 foreign television channels are licensed for editing.

By the end of the second quarter of 2022, the paid TV market had revenue growth of approximately 9.5 percent over the same period in 2021. The management agency also said that revenue from cross-border OTT TV services world growth is approximately 300 percent over the same period in 2021.

Meanwhile, the pay TV services via the over-the-top platform (OTT TV) entering Vietnam have not yet come under strict management and the number of subscribers is continuously increasing. 
According to the data of the Ministry of Information and Communications, in 2021, about 1 million subscribers were paying TV subscribers via the Internet of cross-border platforms such as Netflix, Apple TV, and WeTV with estimated revenue of nearly VND1,000 billion. Amongst them, Netflix has seen the fastest growth rate.

In May 2022, the Vietnam Pay Television Association (VNPayTV) continued to recommend tightened management for cross-border OTT services. Accordingly, cross-border services need to carry out registration procedures for operating licenses and censorship according to regulations. Moreover, their content must be pre-censored before being broadcast or put on the Internet to ensure synchronous state management of television and movie content like domestic OTT service providers.

Cross-border services also need to declare revenue generated in Vietnam. Furthermore, authorities should apply technical measures and tough sanctions which can control these services’ compliance with content moderation regulations. At the same time, cross-border OTT services must be under special control.

Commercial vehicles must share data to fight against smuggling

The Public Security Ministry has announced that Decree No.47, amending and supplementing a number of articles in Decree No.10 on January 17, 2020 by the Government about business conditions of commercial automobiles, comes into effect on September 1.

Accordingly, Decree No.47 adds regulations on information obtained from vehicle tracking devices installed on commercial automobiles. This information is used in the management of transport activities and daily operations of transportation businesses by the State.

These important information pieces are connected and shared among the Traffic Police General Department (under the Public Security Ministry), the General Department of Taxation and the General Department of Vietnam Customs (under the Finance Ministry) in order to perform the State management of traffic order and safety; public security; tax; and smuggling prevention.

Retail investors to return to stock market soon: analysts
     
Retail investors have been pulling money out of the stock market so far this year, but will return soon, according to analysts.

Do Hong Van, head of the data analyst team, financial information division, Fiin Group, an integrated service provider of financial data, business information, industry research, credit rating reports and other data-driven analytics services, said, "Compared with other asset classes such as gold and real estate, stocks remain an attractive option.

According to data from securities companies, around VND70 trillion (US$2.96 billion) was in investors’ accounts at the end of the second quarter.

Van said investments by retail investors increased sharply last year and this cash flow supported the market.

But since December 2021 they had tended to be cautious and reduced their investments, she said.

Among the main reasons for the recent poor sentiment among retail investors are that they are not seeing any “promising story” in the near future and the Government’s regulatory crackdown on certain companies to improve the market’s transparency has resulted in sharp price volatility, according to Van.

But they are expected to return to the market this quarter and next.

According to attendees at the conference, sectors such as industrial real estate, electricity, animal husbandry, pharmaceuticals, dairy, and banking have positive growth prospects this year.

The power sector is expected to grow by 5.1 per cent in 2022 as consumption by the manufacturing sector increases after the COVID-19 pandemic.

Besides, the La Nina weather phenomenon is expected to last until early 2023, helping increase water storage in hydropower reservoirs, and the sector’s average full market price (FMP) in July and August was nearly 50 per cent higher than a year earlier.

Speaking about the industrial real estate sector, Nguyen Binh Thanh Giao, deputy head of the analysis department at ACB Securities, said though the stock prices of industrial real estate enterprises had experienced remarkable growth vis-a-vis the VN-Index in the three years since the CPTPP was signed, there would be still much room for them to rise thanks to the high profit margin and return on investment.

The sector was expected to grow by 49.7 per cent this year, she said.

Industrial real estate businesses often have higher profit margins than those in the housing segment, which is facing many challenges.

They pay cash dividends regularly based on their high profit margins and ROE and bright development prospects, but their stocks’ liquidity is often low because their managements are usually tight-lipped and so do not attract investors’ attention.

Thai Binh eyes large-scale automobile plant next year
     
An automobile manufacturing and assembling factory, expected to cost VND11.8 trillion (US$800 million), will be built in Thai Binh Province's Tien Hai Industrial Zone next year.

Financed by the Ha Noi-based Geleximco Group, the factory will be divided into two stages with the first one, valued at VND7 trillion, to begin in the first quarter of 2023.

The factory's first phase is expected to be operational in the third quarter of 2024, recruiting about 1,200 workers. For the second phase which is slated for operation by 2030, the plant will create jobs for 2,500-3,000 local people.

According to Geleximco, the factory uses advanced European technology to ensure the creation of high-quality and eco-friendly products.

The facility will aim to produce environmentally friendly automobiles such as electric cars and fuel cell vehicles as well as auto parts and accessories to supply to automobile manufacturers and assemblers.

Late last week, Geleximco Group signed an agreement with Viglacera Corporation to lease a 50ha land plot at Tien Hai Industrial Zone to prepare for the factory's construction.

In his speech, chairman of the provincial People’s Committee Nguyen Khac Than suggested that Geleximco finish its proposal and submit it to the provincial administration for approval.

The group should select competent partners to implement the project and make sure that the operation of the factory is safe and environmentally friendly, the chairman said.

He also asked relevant sectors to create the most favourable conditions for the investor to implement the project as scheduled.

EDPR Sunseap completes acquisition of two solar PV projects in VN
     
EDPR Sunseap has completed a US$284 million deal with Xuan Thien Group, paving the way for its expansion in Viet Nam, the company announced on Monday.

The latest acquisition is the largest utility-scale solar investment for the company which is the Asia Pacific hub for the world’s fourth largest renewable energy firm - EDP Renewables.

The deal is the first step in establishing a long-term relationship between Xuan Thien Group and EDPR Sunseap to jointly explore opportunities in the region, according to EDPR Sunseap.

With this transaction, EDPR Sunseap doubles its operational capacity in Viet Nam, strengthening its presence in the APAC region. This reinforces the integration of Sunseap into EDPR in February 2022. This is part of its vision to lead the energy transition in Singapore and the rest of the region, with the aim of managing beyond 2 gigawatts (GW) of installed capacity by 2025.

Xuan Thien Group is one of the main renewable energy developers in Viet Nam and its two solar PV projects total 255 MWp under a 20-year Power Purchasing Agreement priced at $93.5/MWh.

Meanwhile, EDPR Sunseap APAC is a solar energy system developer, owner, and operator in Singapore, with a pipeline of close to 10 GWac of solar energy projects across Asia. Its solar energy systems are projected to be installed on more than 3,000 buildings in the Asia Pacific region, including public housing estates, as well as commercial and industrial buildings. 

Source: VNA/SGT/VNS/VOV/Dtinews/SGGP/VGP/Hanoitimes

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