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VIETNAM BUSINESS NEWS MAY 19

US agrees to import Vietnamese pomelos

The Ministry of Agriculture and Rural Development (MARD) has just received a notice from the US authorities saying they have completed the appraisal of procedures of importing Vietnamese pomelos.

The US is putting the finishing touches to the opening of its market for Vietnamese pomelos.

During a recent meeting with Vietnamese Minister of Agriculture and Rural Development Le Minh Hoan, US Under Secretary of Agriculture Jason Hafemeister said the US was putting the finishing touches to the opening of its market for Vietnamese pomelos. He went on to say the US has been collecting public comments since February 2022 and is currently gathering them for early announcement.

Minister Hoan, who accompanied Prime Minister Pham Minh Chinh on his May 11-17 working visit to the US, told his host that Vietnam considers the US a leading partner in agriculture.

Vietnam is now transforming towards green agriculture, and it has engaged in many initiatives with the US, other countries and international organizations in this regard, Hoan stressed.

Pomelo is Vietnam’s seventh fruit eligible to enter the US after mango, longan, lychee, dragon fruit, rambutan and star apple.

According to the Vietnam Trade Office in the US, the US is a potential market for Vietnamese fruits when it has more than 330 million consumers with high per capita income and the culinary trend is increasingly focused on vegetables and fruits.

The US was the largest consumer of Vietnamese farm products in the past four months, with its import turnover reaching US$4.9 billion, up 27.3% year on year. The import of Vietnamese vegetables and fruits continued to increase significantly over the same period.

Six more pangasius processing factories eligible to export to US

The Food Safety and Inspection Services (FSIS) under the United States Department of Agriculture has recognised six more Vietnamese pangasius processing factories that are eligible to export products to the US, raising the number of establishments to 19, according to the Ministry of Agriculture and Rural Development’s National Agro-Forestry-Fisheries Quality Assurance Department (NAFIQAD).

It is expected to boost the export of Vietnamese pangasius to the US market in the near future.

The six facilities are the Hop Nhat Seafood Corporation, Atlantic Seafood Freezing factory, Basa Mekong factory, High grade pangasius product exporting & Processing Factory, Co May 2 seafood processing export factory and CK Frozen Food Vietnam Co. Ltd.

Vietnam Blockchain Summit 2022 to take place in July

The Vietnam Blockchain Summit 2022 will take place at the National Conference Centre of Vietnam in Hanoi on July 21-22.

The event will bring together more than 2,500 delegates from management units, enterprises, investment funds, domestic and international organisations and individuals.

The summit is an annual event on a national and international scale. Being organised for the first time by VINASA and Vietnam Blockchain Association, the programme is oriented to become a prestigious annual destination, in the chain of events of the blockchain world.

Kien Giang calls for investments in 55 projects to mitigate natural disasters

The southern province of Kien Giang is calling for investment in 55 projects meant to cope with climate change and prevent natural disasters and coastal and riverine erosion.

The newly approved projects include 14 in transportation, 15 in agriculture and irrigation, 20 in water supply, two in water drainage, three in wastewater treatment, and one in solid waste treatment.

One of the transport projects will build a 3.1km road along the western coast of Phu Quoc island at a cost of 2.2 trillion VND (86 million USD).

Another is an erosion-prevention embankment along Vinh Thuan Yen beach in Ha Tien city.

The 6.3km dyke will cost 640 billion VND (27 million USD) and help cope with climate change and seawater rise, beautify the city’s urban area and foster tourism.

Kien Giang has mobilised investment from various sources in recent years for projects to cope with climate change and natural disasters, and they have proven effective, helping improve people’s livelihoods and fostering socio-economic development, according to its People’s Committee.

It has built 37 irrigation sluices in the western sea dyke, and they are functioning effectively.

Another 18 sluices and freshwater reservoirs are being built on Phu Quoc and islands in Kien Hai district, and various saltwater prevention projects along the coast in Rach Gia city and Chau Thanh and Kien Luong districts.

The province has asked the Government for funding for three urgent projects required for coping with climate change and preventing saltwater intrusion in rivers.

To cost a total of 2.85 trillion VND (122 million USD), they include a saltwater prevention project in the western sea in Kien Luong and Chau Thanh districts, construction of 16 sluices in An Bien and An Minh districts, and building and upgrading water supply works in rural areas.

Garment exports to major markets rise considerably

Vietnam’s garment exports to major markets such as the United States, the European Union and the Republic of Korea soared considerably in the first four months of the year thanks to high demand fueled by the global economic recovery and incentives from free trade agreements.

The General Department of Vietnam Customs reported that Vietnam’s garment exports to the United States rose 26.8% over four months to approximately US$6 billion, accounting for 59% of the country’s total export value.

Most notably, garment exports to the EU market throughout the reviewed period also surged by 34.6% year on year to nearly US$1.3 billion

Strong export growth was also recorded in the Republic of Korea, with turnover reaching US$1 billion, up 8.7%, while exports to the Japanese market endured a downward trend of 2% to US$1.05 billion compared to the same period last year.

Experts forecast that there is a positive outlook ahead for garment and textile exports to the US and EU markets that are continuing to place large export orders.

Furthermore, foreign importers tend to work directly with production units as opposed to intermediaries as part of efforts to reduce costs.

Simultaneously, customers are increasingly concerned that China's "Zero COVID" policy will negatively impact the supply sources and disrupt supply chains. Therefore, there is an increasing trend to shift orders to neighbouring countries, and Vietnam is expected to benefit from the shifting.

Vietnam should shift economic growth model for further development: WB report

For Vietnam to realise its aspiration for reaching high income status by 2045, the country will need to shift its economic growth model and sharply improve the government’s capacity to coordinate and implement economic policy reforms and public investments, a World Bank Group report says.

The World Bank Group’s Systematic Country Diagnostic Update, entitled "How Will Vietnam Blossom? Reforming Institutions for Effective Implementation”, emphasises that Vietnam's traditional growth model faces major challenges from the COVID-19 pandemic, slowing globalisation, and the country’s increasing vulnerability to external shocks, especially climate risks.

After identifying a series of policy responses and reform priorities, many of which are not new, the report argues that adapting institutions will be the key to success.

Vietnam’s GDP per capita has increased five fold over the past three decades, while its institutions have not adapted at the same speed since the Doi Moi (Renewal) of the late 1980s,” said World Bank Country Director for Vietnam Carolyn Turk. 

Vietnam has implemented its development priorities unevenly over the past 35 years. It has exceeded expectations in trade openness and social inclusion but lagged considerably in promoting green growth and upgrading national core infrastructure. Such variability is explained by its institutions that have not been always well prepared to address increasingly complex, often cross-cutting development priorities, or to facilitate the transition to a higher-income society. Adapting and modernising existing institutions is a key priority of the socio-economic development strategy adopted by the Party Congress in February 2021.

Improving Vietnam’s implementation performance will require five institutional reforms, the report says. Vietnam will need to create a solid institutional anchor that will transform development priorities into concrete actions; streamline administrative processes to increase the effectiveness of government at all levels; use market-based instruments to motivate public and private stakeholders; enforce rules and regulations to enhance motivation, trust, and fairness; and engage in participatory processes to secure greater transparency and accountability.

Vietnam has already transformed itself from one of the most closed economies in the world to one of the most open economies during the 1990s and 2000s. But the road from lower middle income to high income will be far more challenging. By adopting these institutional reforms more systematically, Vietnam will underpin its vision for economic development, strengthen its capacity to implement national strategies, and boost its motivation to produce results in several key areas – green growth, digital transformation, financial inclusion, social protection and infrastructure upgrading – that will help it achieve its development goals.

VietJet Air resumes Cam Ranh – Incheon air route

Cam Ranh International Terminal Company announced on May 19 that budget airline Vietjet Air of Vietnam will re-operate an air route connecting Cam Ranh airport (Khanh Hoa) and Incheon airport (Republic of Korea).

According to the plan, VietJet Air will run two flights a week, every Wednesday and Friday, on the air route, starting on May 20.

Cam Ranh airport is scheduled to receive plane coded VJ837 carrying approximately 160 passengers on board from Incheon at 13:15 on May 20, kick-starting the resumption of the route.

Meanwhile, a Cam Ranh – Incheon plan is scheduled to take off at 02:55 on May 20, carrying 33 passengers on board.

Da Nang hosts Vietbuild 2022

The International Vietbuild Exhibition 2022 is underway in the central city of Da Nang with the participation of more than 200 domestic and overseas businesses.

The exhibition showcases a wide range of products in construction, building materials, exterior-interior decoration, solar energy machines, and smart home technologies in 1,000 booths.

In his speech at the exhibition's opening ceremony on Wednesday, Deputy Minister of Construction Nguyen Van Sinh praised the event's contribution to supporting the implementation of State guidelines and policies on construction and real estate, trade promotion, technology transfer, brand development and investment co-operation.

It would also help connect supply and demand, especially in the context of the country's economic recovery after the COVID-19 pandemic, Sinh said.

Meanwhile, organisers said the event would be a good chance for local enterprises to meet and exchange different experiences, seek greater investment opportunities, and introduce their latest products and technologies.

They added it would also help affirm the abilities of participating enterprises to provide all kinds of materials and services, thereby meeting the needs of construction and development within the Vietnamese market.

Seminars, trade exchanges between businesses, and the introduction of new products will also be held on the sidelines of the event which runs until Saturday.

Forum held on digital transformation for sustainable tourism
     
The tourism sector must apply digital transformation to secure sustainable development, according to dozens of participants at a forum on the topic held in Ha Noi on May 18.

Titled "Green Light for Tourism to Take Off Part 2: Digital Transformation: Diving Force for Sustainable Development", the forum gathered dozens of experts from State management agencies, tourism authorities, localities, and IT.

Hoang Quang Phong, deputy chairman of the Vietnam Chamber of Commerce Industry, said at the end of 2018, the Prime Minister issued Decision No 1671/QD-TTg approving the “Master plan on applying informatics technology in the tourism field for 2018-2020, with orientation to 2025.”

“Informatics technology has been applied in various tourism companies, especially hotels, resorts and big travel agencies,” Phong said.

However, he said there had been no uniform application in the whole sector.

Phong noted that the pandemic had seen the biggest ever purge in the field.

“Digital transformation has been proved to be crucial to all the fields if they want to move forward in the Fourth Industry Revolution,” he said.

"The pandemic has pushed all tourism companies and localities to choose: digital transformation or die.”

Digital transformation has helped tourism enterprises flexibly react to the changes in the market, he said. Based on available data, tourism workers could still communicate with customers to understand their psychology, behaviours and demands to introduce suitable products.

Phong said not only enterprises but also locations needed to go through digital transformation to bring convenient and safe experiences to customers, like remote guide systems, QR codes introducing displayed objects, and automatic facilities to help customers send comments on service quality to managing boards.

“We can see that the tourism sector has been active in digital transformation and the Fourth Industry Revolution, aiming to form a smart tourism ecology linking participants from tourists, service providers to State management agencies, he said.

Nguyen Le Phuc, deputy general director of the Vietnam National Administration of Tourism (VNAT), shared the same idea that digital transformation will bring an opportunity for the tourism sector to develop more sustainably.

Phuc said in the past few months, the VNAT has concentrated on establishing a smart tourism ecology to create a “common playground” for localities and enterprises.

The VNAT has built a data system for Vietnamese tourism; established information connections among management agencies, localities and enterprises; applied technology to ensure safe tourism; pushed up the use of apps among management agencies, enterprises and tourists like the apps including “Safe Viet Nam Tourism,” “Viet Nam Travel Guide,” and “COVID-19 Registration & Safety Judgement;” and supported localities and destinations to embrace digital transformation, such as Ha Giang Province and Thanh Hoa Province in 2021.

Nguyen Quyet Tam, director of Vietso, also the founder of TravelMasters, held that to build the foundation for digital transformation, first and foremost, the tourism sector should have a common technical criteria system so that different platforms can share data.

“Data built at localities and enterprises are not following any same standard,” he said.

Do Hong Xoan, chairperson of the Viet Nam Hotels Association, said three-quarters of tourism enterprises are small and medium-sized and need more support in the process.

“Small and medium-sized enterprises have been bogged down with various difficulties as digital transformation should be uniformed across State policies, ministry decisions, VNAT policies, association policies, and locality policies,” she said.

“They need more help from agencies to apply the digital transformation,” she said.

The Selection for National Distinguished Tourism Service Providers 2022 was launched at the same forum to praise enterprises making considerable contributions to tourism market development. All tourists and enterprises throughout the country can cast their votes.

Livestock companies profit hit by rising animal feed prices
     
Higher animal feed prices have eroded livestock companies’ profits in the first quarter of 2022.

VNDirect Securities Corporation said that the Russia-Ukraine conflict had a negative impact on the animal feed industry as supplies of raw materials for animal feed production like corn, soybeans and wheat, are disrupted, causing prices to rise sharply.

The two countries are respectively the world's leading and third largest wheat exporter, accounting for one-third of the total trade of this commodity. Besides, Ukraine is the second largest corn exporter, accounting for 22 per cent of the world turnover.

As of early April, the price of imported corn at Cai Lan port, Quang Ninh Province, reached VND9,200-9,500 per kg (US$0.4-0.41 per kg), an increase of 20-25 per cent compared to the end of 2021 and up 50 per cent over the same period last year.

The average price of imported soybeans in the first quarter was $637.6 a tonne, up 18 per cent year-on-year, while the price of imported wheat also increased by 36 per cent to an average of $363.3 a tonne.

Under higher feed prices pressure, live hog prices also posted an increase, but not significantly. The domestic live pig market in March fluctuated around VND52,000-57,000 a kg, up 11-14 per cent compared to the beginning of the year, while the farm-gate price of chicken declined by 11 per cent. However, compared to the same period last year, live pork prices fell by 23-27 per cent, while chicken prices climbed by 19 per cent.

Due to the pressure, many livestock enterprises reported a sharp decrease in profits or even losses. Dabaco Group (HoSE: DBC) announced that its first quarter net revenue increased slightly by 13.3 per cent on-year to VND2.8 trillion. But the sharp rise in cost of goods sold caused its gross profit to dip by 60 per cent to VND254 billion. With other expenses did not fluctuate much, profit after tax was only VND8.6 billion, equal to 2.3 per cent of the same period last year. This is Dabaco's lowest profit since the second quarter of 2019.

The company said that the complicated developments of the Russia-Ukraine conflict had affected the supply chain of input materials such as corn, wheat and soybeans, causing a serious shortage. The disruption of the supply chain and obstacles due to the pandemic caused the cost of animal feed to inch higher, while the price of livestock products did not increase.

Similarly, Hoa Phat Group (HoSE: HPG)’s agricultural segment also reported poor performance in the first quarter of this year. Of which, revenue from agricultural businesses fell 27 per cent over last year to VND1.6 trillion. It lost nearly VND56 billion, while in the first quarter of 2021, the agricultural segment brought in profit of VND392 billion.

As Masan MEATLife Corporation (UPCoM: MML) separated its animal feed segment, the company’s net revenue in the first quarter dropped sharply to VND931 billion from VND4.7 trillion last year. However, the parent company's profit after tax doubled to VND274 billion thanks to financial activities.

A report of the Ministry of Agriculture and Rural Development said that live hog prices in regions across the country in April tended to increase again due to the reopening of restaurants, schools and factories, boosting consumption, while the supply decreased and prices of animal feed climbed. Chicken and egg prices also edged higher as consumer demand gradually recovered. 

Institutional reforms key to reaching high-income status
     
Viet Nam must seek to adapt its economic growth model while drastically improving the Government's capacity to coordinate and implement economic policy reforms and public investments to realise its objective of reaching high-income status by 2045, said a recent World Bank (WB) report.

The report emphasises the major challenges faced by Viet Nam's traditional growth model during the COVID-19 pandemic, slowing globalisation and the Southeast Asian economy's increasing vulnerability to external shocks, especially climate risks.

The key to addressing said issues, according to WB, is for the country's institutions to adapt and improve.

“Viet Nam's GDP per capita has increased fivefold over the past three decades, while its institutions have not adapted at the same speed since the Doi Moi (Renewal) course of the late 1980s,” said World Bank Country Director for Viet Nam Carolyn Turk. “A series of institutional reforms can help the country avoid the middle-income trap by increasing its efficiency to respond to new and complex global and domestic challenges.”

Reforming, modernising SoEs a key objective: minister
     
Reforming and modernising State-owned-Enterprises (SoEs) remains a key objective and high priority of the Government, as it continues to roll out policies to address their shortcomings and limitations, said finance minister Ho Duc Phoc at a conference discussing Viet Nam’s SoEs equitisation and management of State capital on Tuesday.

Phoc said governmental agencies have been working around the clock with SoE’s leaders and managers to seek out optimal solutions in restructuring and improving the enterprises for the long run.

The minister, however, said many SoEs-related projects have fallen behind schedule. For example, the amount of State capital recovered from equitisation in 2021 was a measly VND2 trillion, or just 5 per cent of the VND40 trillion target set by the National Assembly (NA).

A key issue, according to the Ministry of Finance (MoF), was how SoEs’ assets are calculated. Phoc said SoEs are often undervalued. Once properly audited, the SoEs value would increase by 280 per cent on average. This indicated major risks of losing State capital, especially on lands and properties.

“The main issue here is a significant discrepancy between their estimated value and market value. Even if the gap was not significant now, it will have changed in the next 10-20 years,” said the minister.

“Another issue is how to correct the estimates after the intended purposes for said properties were changed,” he said.

He called for greater responsibility and accountability by SoEs’ leaders, who should play a more active role in restructuring and modernising the enterprises.

Other challenges included how to produce an estimate for traditional trademarks and brands, said Le Thanh Tuan from the State Capital Investment Corporation (SCIC). He said in many cases it’s difficult to collect sufficient data to determine brand values, especially with smaller SoEs with limited recognition and market share.

Another difficulty experienced by SCIC, according to Tuan, was the lack of cooperation from SoEs’ management and leadership. This has been particularly severe in enterprises in which SCIC held fewer shares.

Pham Van Duc, deputy head of the corporate finance department under the MoF, said SoEs must be given more autonomy as well as tighter inspection and supervision to improve their transparency.

Duc said during the 2016-20 period, only 39/128 SoEs started the equitisation process. He said a major hurdle was the SoEs’ lack of active participation in the process’s preparation and implementation.

He advised the Government to impose higher management standards and to employ modern technologies to help improve SoEs’ competitive capacity and the preservation of capital.

Meanwhile, priority should be given to investment in key industries and remote regions by SoEs as they were often neglected by the private sector. In addition, greater effort was required to cut losses in cases of SoEs' poor financial performance.

More low-income housing projects to be carried out

Low-income housing projects will be prioritised in major cities, particularly Hanoi and HCM City.

Real estate giant Vinhomes has announced plans to build 500,000 social housing apartments priced below VND1 billion across the country over the next five year. In August this year, the firm will start its first project.

Housing and Urban Development Corporation has recently started work on a social housing project in the northern province of Hanoi to offer 564 apartments priced at just VND380 million (USD16,521) each.

Thanh Hoa provincial authorities have approved a low-income housing project in Thanh Hoa City which will provide up to 2,400 apartments.

Meanwhile, Ninh Binh Province has agreed on a project to build 2,153 apartments at Gian Khau Industrial Park and neighbouring areas.

Four low-income housing projects in the country were completed in the first quarter of this year according to the Ministry of Construction. During the period, only three projects of the same kind were licensed with a total number of 1,200 apartments in Lang Son, Phu Tho and Quang Ninh projects. In contrast, up to 39 commercial housing projects providing 18,700 apartments in total were licensed.

By the end of 2021, 266 low-income housing projects in Vietnam were finished with 142,000 apartments in total, slower than the target of the national housing development plan by 2020 and a vision until 2030.

Until now, only 116 of 214 housing projects have been completed, while the remaining 98 are behind schedule. As a consequence 575 industrial parks nationwide are facing a serious shortage of housing.

Vietnam will need VND220 trillion to build 294,600 low-income apartments during the 2021-2025 period.

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

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