VIETNAM BUSINESS NEWS APRIL 9
CPTPP gives boost to Vietnamese exports
|Vietnamese wood processing firms have huge opportunities to ship their products to Canada under CPTPP.|
The Vietnam Chamber of Commerce and Industry (VCCI) on April 7 held a workshop to review the two-year outcomes of Vietnam’s implementation of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).
The trade pact was clinched in March 2018 by 11 countries, namely Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam. It came into effect Vietnam in January 2019.
Participant heard that Vietnam’s exports to all members of the trade deal have been on the rise, with an accumulated value amounting to 34.3 billion USD in 2019 and about 34 billion USD in 2020, when the COVID-19 took its toll in the world.
The value of shipments to the countries under the trade pact accounted for 12.02 percent of Vietnam’s total export value in 2018. The proportion rose to 13 percent in 2019 before returning back to 12.02 percent in 2020.
Footwear, garment-textile, wood and woodwork products recorded good growth over the reviewed years.
However, the rate of taking advantage from CPTPP-related preferential tariff treatment stayed at 1.67 percent in 2019, well below Vietnam’s average rate of 37.2 percent posted in the year./.
IMF forecasts 6.5% GDP for Vietnam this year
Vietnam’s GDP growth rate is forecast to rise by 6.5% this year, a figure which is higher than the global average of 6%, before climbing to 7.2% in 2022, according to data released in the latest World Economic Outlook report compiled by the International Monetary Fund (IMF).
This projection was made during the opening session of the 2021 Spring Meetings of the IMF and the World Bank group.
The country’s positive growth rate can largely be attributed to drastic measures implemented by the Government in terms of economics and health care.
The IMF recommended that macroeconomic policies be maintained throughout the year in an effort to ensure a sustainable and comprehensive recovery is achieved.
The international financial institution also forecast that the GDP of five countries in the ASEAN bloc, namely Indonesia, Thailand, the Philippines, Malaysia, and Vietnam, will expand by 4.9% in 2021 and 6.1% in 2022.
World economic growth is expected to reach 6% this year, higher than the 5.5% projection made in January.
The news comes as a number of major international financial institutions have made positive assessments on the future outlook of the Vietnamese economy.
The country’s economic growth rate is forecast to reach 7.1% and 6.6% this year by the United Oversea Bank and HSBC.
An article recently published by news publication borgenmagazine.com of the United States highlights Vietnam’s incredible economic growth since the implementation of a series of economic reforms in 1986 during the Communist Party of Vietnam’s (CPV) sixth national congress.
Despite these positives, the article states that the country’s transportation infrastructure remains woefully behind many other developed economies.
At present, Vietnam is at a crossroads in terms of its development and requires further investment in its transportation network in order to sustain and expand its growth, according to the piece.
The article concludes by outlining how the country has run into trouble financing the North-South Expressway, although the implementation of the Public-Private Partnership Law (PPP) is expected to fix this problem by making PPPs in infrastructure projects simpler and more attractive.
EVN’s power from renewable sources reaches nearly 7.8 billion kWh in Jan-Mar
The State-run utility Vietnam Electricity Group (EVN) mobilized approximately 7.8 billion kilowatt hours (kWh) of power from renewable energy in the first three months of the year, surging 181% against the 2020 figure. Of this, the amount of electricity from solar energy accounted for over 7.13 billion kWh, according to EVN’s recently-released report.
In the first quarter, the volume of electricity produced in the country and imported from overseas reached some 60 billion kWh, up 4.1% compared to the same period last year. Of the amount, EVN and its subsidiaries generated 29.22 billion kWh, or 49%, while non-EVN businesses were in charge of the remaining volume.
While the amount of power from renewable energy soared sharply, that generated from traditional sources saw a decline.
Among the traditional power sources, more electricity from hydropower plants was supplied to the national power grid, at nearly 14 billion kWh. The volume of electricity generated from coal-fired and gas-fired power plants contracted 12-21% year-on-year at 29.75 billion kWh and 7.44 billion kWh, respectively. Further, imported electricity also plunged 58% versus last year’s figure to 405 million kWh.
The soaring supplies of renewable power have prompted EVN to face a number of obstacles in mobilizing various sources of power. For instance, hydropower generators had to change their capacity flexibly to offset the changes in the volume of renewable power, thus leaving an impact on the power supply at the end of the dry season. Besides, if the capacity of power generators at coal- and gas-fired power plants is activated or changed numerous times, it could lead to possible incidents.
As the volume of electricity from renewable sources now accounts for an increasing proportion and the second quarter will be in the peak dry season, the local power sector will adopt measures to ensure the safe operations of the national power system and local power market, including cutting down on renewable power supplies, EVN said.
Competitive capacity key to gaining benefits from CPTPP and FTAs: experts
Poor competitive capacity will hinder businesses from gaining benefits from the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). This statement was made at a workshop held by the Vietnam Chamber of Commerce and Industry (VCCI) in Ha Noi on Tuesday.
The workshop aimed to evaluate issues in the implementation of this agreement and conduct recommendations for the Government and business.
Two years since the CPTPP came into effect, Viet Nam had seen strong growth in exports to some CPTPP member countries, but not all.
Speaking at the workshop, Vu Tien Loc, Chairman of VCCI, said that many businesses affirmed that their poor competitiveness was hindering them from gaining opportunities from the CPTPP and new agreements.
Five years ago, the obstacles remain the managerial skills of State agencies, such as a lack of information about commitments, delays, and inflexibility in implementing the CPTPP and other Free Trade Agreements (FTAs).
The impact of some technical factors also had negative effects on businesses, such as rules of origin, and unfavourable commitments of FTAs, according to Loc.
He attributed the major problem to the competitive capacity of businesses themselves.
According to a report compiled by VCCI, three quarters of businesses said they were planning to revive their business plans to take advantage of the CPTPP and FTAs.
The plans aim to consolidate and improve the competitiveness of businesses. The second step is to calculate how to take full use of opportunities from the CPTPP and FTAs. Finally, they have to set up plans in preparation for long-range opportunities.
However, in a VCCI survey of 8,600 local enterprises, up to 70 per cent of them had little knowledge of the CPTPP. And 25 per cent of the enterprises had some knowledge of the CPTPP.
This survey has also pointed out that 84 per cent of the enterprises lacked information about the commitments in the free trade agreement.
The survey shows that with complicated FTAs and CPTPP, it is necessary to provide more in-depth, detailed and useful information for businesses.
Phan Huu Minh, General Secretary of Thai Nguyen Business Association, said participating in the CPTPP, enterprises should strictly comply with general regulations, and study market information and rules of origin with a view to preparing their production plans and enhancing capacity.
Vu Tien Loc said that programmes and activities to support businesses should focus on enhancing the competitive capacity of local products, and trade promotion.
He added businesses needed to be more proactive in seeking opportunities, studying commitments under the CPTPP as well as improving competitiveness of their products. These factors were key to taking advantage of opportunities from global integration.
Nguyen Thu Trang, director of the VCCI’s centre for WTO and economic integration, said: “There is a lot of information about the CPTPP, and answers on the VCCI’s website. If businesses need information, we can share it freely, however, only a small number of businesses want to find out about it. They are ignoring the impacts of the CPTPP and FTAs."
Nguyen Cam Trang, an expert from the Ministry of Industry and Trade, said local businesses had tried to improve quality of agricultural produce. However, local businesses still faced difficulties due to their small-scale production.
Joining the CPTPP will help businesses improve and enhance exports, forcing them to raise product quality and competitive capacity.
To take advantage of the CPTPP, the Government needed to review relevant legal regulations and improve the business climate, as well as provide more information in terms of markets and business plans.
Fado becomes first ecommerce platform in Vietnam to stop trading H&M products
Ecommerce platform Fado.vn has stopped trading all H&M products starting today, April 7, for an indefinite period as the Swedish fashion retailer featured a map with the illegal nine-dash line on its website, said Dat Pham, CEO of Fado Vietnam JSC, making it the first ecommerce platform in the country to suspend the sale of H&M products.
“The Fado team includes Vietnamese citizens; thus, we refuse to cooperate with any brand that does not respect the sovereignty of Vietnam,” Dat stressed in a press release.
Three days ago, a Facebook group was formed to call for a boycott of H&M and the hashtag “TaychayHM” (BoycottHM) was the top trending topic on Twitter in Vietnam on April 3. Vietnamese public opinion asserted that Vietnam’s sovereign rights over the Hoang Sa (Paracel) and Truong Sa (Spratly) archipelagos are in line with international law and H&M showed no respect for and harmed the sovereignty of Vietnam for the sake of its own commercial benefit.
In Vietnam, H&M opened its first store in HCMC in September 2017 and the second one in Hanoi two months later. As of now, the Swedish shoes and clothing brand operates 12 stores in Vietnam, with five stores in Hanoi, four in HCMC and three others in Can Tho, Danang and Ha Long.
As for Fado, which was established in 2014, it remains among the top five ecommerce platforms in Vietnam, according to data of the Iprice Group. It functions as a cross-border ecommerce platform, enabling local traders and enterprises to connect with their overseas business partners through the platform more easily.
Robust growth trends projected for investment in healthcare
Vietnam’s healthcare and pharmacy chains are increasingly getting new funds to expand their operations in local market, thereby securing access and availability of medical supplies and drugs for locals. However, concerns over adequate human resources in the sector dampen the bright prospects and could cause supply issues.
Kim Dental, Vietnam’s largest private dental care platform, has recently raised $24 million in a series B round. The investment was led by ABC World Asia, a private equity fund dedicated to investing across Asia, seeded by Temasek. Proceeds from the round, which saw the participation from existing backer Aura Private Equity, will support Kim Dental in expanding the delivery of affordable and reliable oral health services across Vietnam.
Kim Dental owns and operates a fast-growing network of 19 dental clinics across four cities. The clinics provide dental check-ups and treatments as well as more advanced orthodontics, prosthodontics, oral surgery, and implants. Kim Dental employs 120 dentists and dental surgeons, as well as over 600 clinical and operational staff serving over 23,000 patients per month. Kim Dental also operates a dental laboratory to support its clinic network with in-house production of crowns, dentures, and bridges.
Huynh Minh Viet, CFO of Kim Dental said, “With this successful round, we’re now well-positioned to expand our delivery of international quality dental care to the fast-growing communities across the country, thus improving community access and helping to elevate the standards of oral healthcare in Vietnam, so that we achieve more positive overall healthcare outcomes in our country.”
Meanwhile, SK Group is said to be mulling over an investment in Vietnam’s largest pharmacy retail chain, Pharmacity, with an expected value of up to $90 million, according to Dealstreetasia.
Phamarcity is Vietnam’s largest pharmacy retailer with approximately 500 drugstores. The company has a plan to open its 1,000th store this year.
If the deal is concluded, it would make up SK Group’s second investment in Vietnam’s pharmacy and healthcare market. Last May, SK Investment III, a subsidiary of South Korea’s third-largest conglomerate SK Group, received 12.32 million shares of Imexpharm Corporation, equivalent to 24.9 per cent.
Michael Han, head of SK Group’s Representative Office in Vietnam told VIR, “There are dozens of industries and companies that we are trying to get to know better here, and healthcare happens to be one of them. It does not necessarily mean that an investment is imminent though.”
However, Han remains upbeat about Vietnam’s healthcare and pharmacy market. Historically, this sector’s growth has been backed by people’s growing concerns about the wellbeing of their family members, environmental factors, rising household income, and the high urbanisation rate – which leads to changes in lifestyles and a higher demand in personal healthcare.
“We believe that the robust growth will continue into the foreseeable future. We have seen a similar trend in South Korea over the last 20 years or so. In terms of market size, Vietnam is still at the emerging stage, with estimated total value of $7 billion in 2019, growing at a robust pace of 8 per cent from 2019-2024,” he said.
Meanwhile, a consortium led by Singapore’s state investor GIC Pte. Ltd. has agreed with Vietnam’s largest conglomerate Vingroup to buy a stake in its medical unit, Vinmec, for over $200 million. However, Vingroup will remain the controlling shareholder of the unit after the deal, Vingroup said in statement last December.
Other funds like Vinacapital and Mekong Capital have seen the prospects of the market and decided to cash in on local healthcare and pharmaceuticals. Last August, VinaCapital invested in Thu Cuc International General Hospital by purchasing a 30-per-cent stake for $26.7 million. In 2019, Mekong Capital also financed pharmacy chain Pharmacity out of its Mekong Enterprise Fund III.
Private equity investments in healthcare are on the rise. Nguyen Thi Vinh Ha, head of advisory at Grant Thornton Vietnam, cited the firm’s survey showing that healthcare is among the most attractive industries for investors, with its growth prospects coming from higher healthcare spending per capita.
“However, the shortage of qualified personnel and inadequate healthcare infrastructure results in a huge supply gap, and the increasing ageing speed of the Vietnamese population will further boost the healthcare demand,” Ha added.
Biotechnology contributes to higher productivity and increased incomes
The adoption of biotechnology in corn production in Việt Nam had resulted in higher productivity, increased income and environmental improvement, attendees heard at a workshop held in Hà Nội on Wednesday.
The workshop was organised by the Việt Nam Seed Trade Association (VSTA), Việt Nam Farmers’ Union (VFU) and the International Service for the Acquisition of Agri-biotech Applications (ISAAA).
Speaking at the workshop, Trần Xuân Định, Vice Chairman and General Secretary of the Việt Nam Seed Trade Association, said that many plant varieties created using biotechnology are present in Việt Nam, facilitating plant and livestock restructuring and increased incomes thanks to better productivity and reduced pesticide costs.
In Việt Nam, biotech crops were officially approved for commercial corn farming from 2014-2015.
Corn is also one of the main crops in Việt Nam’s agricultural production structure and the country is among the largest corn producers in the world.
“The introduction of biotech varieties with improved traits into production at that time was considered one of the key tools to further increase production yield and quality, add value, and bring more profit to corn farmers, thereby strengthening Việt Nam's capability in supplying raw materials to the domestic food and feed supply chain,” Định said.
A study conducted in 2019-2020 by VSTA and the United Kingdom’s PG Economics on the impact of biotech corn after five years of cultivation showed that biotech corn with insect resistance and herbicide tolerance traits delivered between 15.2 and 30 per higher yields compared to conventional hybrid corn varieties. Farmers’ incomes increased by VNĐ4.5-7.6 million (US$196-330) per hectare.
Biotech corn cultivation also resulted in a significant decrease in pesticide use, with an average reduction of 26 per cent for herbicides and 78 per cent for insecticides (average amounts applied per hectare), corresponding to a reduction in the associated environmental impact, as measured by the Environmental Impact Quotient (EIQ) indicator of 36 and 77 per cent, respectively.
However, Định said, the biotech corn adoption rate has not met expectations.
By 2019, the total acreage of biotech corn was about 92,000 hectares, accounting for approximately 10 per cent of the country's total corn acreage.
Despite the increasing demand for corn in the livestock industry, the domestic corn acreage showed a downward trend over the past five years, he said.
“Domestic corn production is in fierce competition with imported corn in terms of price and quality; farmers in many regions have changed to plant other crops when profits from corn cultivation were not high, especially when the domestic purchasing prices plummeted.”
Participants at the workshop exchanged information on the status of agricultural biotechnology adoption in the world as well as in Việt Nam. They discussed the socio-economic impacts of biotech corn after five years of being approved for farming in Việt Nam.
Analysing the effects of biotech crops on a global scale, Graham Brookes of PG Economics cited the data in the latest study released in 2020: “In 2018, the total extra income for farmers cultivating biotech crops was US$19 billion - for each extra US dollar invested in biotech crop seeds, farmers could make an extra profit of US$4.42."
In addition, had biotech crops not been grown in 2018, an additional 23 billion kilos of carbon dioxide would have been emitted into the atmosphere, which is the equivalent of adding 15.3 million cars to the roads.
According to Brookes, farmers, especially small-hold farmers in developing countries, are those who benefit the most from biotech crops, not only from increased crop yields (from 10 to 16.5 per cent, depending on crop type) and higher profits (approximately US$103 per ha on average) but also from the change in farming habits to become more environmentally friendly when the amount of pesticides could be reduced.
Định said that in accordance with the Agricultural Biotechnology Development Project to 2023, one of the goals to be achieved by Việt Nam by 2030 is to master a number of new generation biotechnologies, create industrial-scale products for application to production practice, and increase the number of biotechnology enterprises in the agriculture, forestry and fishery sector by at least 30 per cent compared to the 2021-2025 period.
It meant that agricultural biotechnology development and adoption is a general development orientation of the country and Việt Nam needs to catch up with the world trend in applying new generation plant varieties towards sustainable and modern agriculture development.
In order to promote the development of biotechnology in agriculture, it was necessary to have a transparent direction and policy, with key investments of the State for units and enterprises which are pioneers in the application of biotechnology in the sector, Định said.
Labor market recovers, demand for personnel increases
Since the beginning of the year, the local labor market has gradually recovered, with the number of jobs in March soaring by 40% against January, according to human resource service firm Adecco Vietnam.
The labor market also saw the number of job applications rise by 26% in March, Phap Luat Online reported.
The first quarter of the year saw high demand for personnel in multiple fields, including processing and manufacturing, energy, information technology, e-commerce, electronics, semiconductor design and construction.
Nguyen Thu Ha, director of Adecco Hanoi Office, attributed the recovery of the labor market to the Government’s efforts to bring Covid-19 under control and the firms’ enhanced business operations.
Meanwhile, Le Nguyen Ngoc Thanh, director of Adecco HCMC Office, said that the coronavirus pandemic had changed the behavior of job applicants. They seem to be more hesitant to job-hop and are focusing more on financial stability, according to Thanh.
A recruitment expert at Adecco said that the recruitment demand had expanded in some fields such as analog integrated circuit design, digital design, design for testing, quality management, sales and marketing management and technical management.
In the coming months, positive effects from free trade pacts, coupled with the production and investment shift from China, will bring many advantages to Vietnam’s economy, thus creating more jobs and a rising demand for personnel.
General director of Adecco Vietnam Andree Mangels said that the labor market, driven by the recovery of the economy and digitalization trend, would see a high demand for highly-qualified workers in 2021.
Viet Nam to apply temporary anti-dumping measures on Malaysian steel products
Viet Nam will apply temporary anti-dumping measures on some H-shaped steel products originating from Malaysia.
The Trade Remedies Authority of Viet Nam said the Ministry of Industry and Trade recently issued Decision No.1162/QD-BCT to apply temporary anti-dumping measures on some H-shaped steel products from Malaysia.
The temporary anti-dumping tax rate applied to Malaysian exporters is 10.2 per cent.
The Trade Remedies Authority of Viet Nam launched the investigation in August last year based on the appraisal results of the petition requesting anti-dumping measures from representatives of the domestic manufacturing industry filed in July last year.
After eight months of preliminary investigation, the results showed the import volume of H-shaped steel from Malaysia increased sharply during the investigation period, causing considerable damage to the domestic H-shaped steel manufacturing industry.
The dumping put considerable pressure on the domestic manufacturing industry, reflected in criteria such as production output, sales volume, revenue, profit, market share, and inventories which fluctuated heavily during the investigation period. These indicators all show a clear downward trend.
To make a final conclusion about the case, the Ministry of Industry and Trade will continue working with related parties to identify products with special factors that need to be excluded and exempt, and at the same time, assess the impact of the cases on stakeholders, including end consumers.
The case is expected to conclude in the second quarter of this year.
Banks make huge profits in Q1
Many commercial banks in Vietnam have reported a surge in pre-tax profit in the first quarter of 2021, as the economy is recovering and credit growth is positive.
At the 2021 annual shareholder meeting of Asia Commercial Bank (ACB) on April 6, Do Minh Toan, general director of the bank, said that it achieved a pre-tax profit of an estimated VND3.1 trillion in the first quarter of the year, surging 61% year-on-year and meeting 29.2% of its full-year target.
In 2021, ACB has set targets of raising capital mobilization by 9% and credit by 9.5% and earning pre-tax profit of over VND10.6 trillion, Nguoi Lao Dong Online reported.
At its meeting, ACB shareholders approved a plan to allocate profits, including spending some VND5.4 trillion on dividend payments with shares.
On the same day, Military Commercial Joint Stock Bank (MB) said that the bank recorded VND4.6 trillion in consolidated profit between January and March, up 50% year-on-year.
One of the factors driving up its revenue was digital banking. In the year to March 31, current account savings accounts deposits rose by 1.5-fold against the growth seen at the end of last year.
This year, MB booked a pre-tax profit of over VND14.6 trillion, up some 20%-30% from the 2020 figure.
Other major banks such as the Bank for Foreign Trade of Vietnam (Vietcombank) and the Vietnam Bank for Industry and Trade (VietinBank) also posted hefty profits in the first quarter of the year.
Vietcombank reaped a pre-tax profit of some VND7 trillion during the three-month period, meeting 28% of its full-year target, while VietinBank’s before-tax profit was an estimated VND7-8 trillion.
Lower-than-expected growth needs more room for private firms
With the economy growing 4.48% in the first quarter of 2021, the expected rate in economic growth of 6.5% for the whole year may be far from reach if more efforts to create a level playing field for private enterprises fail to be made, especially in the context of COVID-19 showing no signals of stoppage across the globe.
Since early this year, thanks to the Vietnamese government’s efforts to enact policies to facilitate business and production activities, and to gradually implement an anti-COVID-19 inoculation drive, the country’s economic growth has bounced back to 4.48%, higher than the 3.8% rise in the first quarter of last year.
The year-on-year growth rate was for the agro-forestry-fishery sector, 6.3% for the construction and industrial sector, and 3.34% for the service sector.
Although lower than the target of 5.12% set in the government’s Resolution No.01/NQ-CP on key tasks for implementation of the socioeconomic development plan and state budget estimates for 2021, a 4.48% growth rate remains a positive sign especially amidst COVID-19 raging the global market. The key momentum for such growth has largely been the manufacturing and processing sector which create 80% Vietnam’s industrial growth – the key growth pillar of the economy.
According to state-run Vietnam Oil and Gas Group (PetroVietnam), its total revenue in the first quarter of 2021 is estimated to be more than VND113 trillion (US$4.91 billion), a 6% decrease year-on-year. Nevertheless, PetroVietnam’s revenue from industrial activities climbed 2%, and that from the service activities fell 21% year-on-year.
Several of PetroVietnam’s products saw a year-on-year ascension in consumption in the first three months, such as fertiliser (7%), liquefied petroleum gas or LPG (29%), Condensate (12%), and assorted petrol (5%).
Though there has been a reduction of US$446.5 million or 18% in export turnover, the group’s total import turnover in the period reached US$198.9 million, representing a year-on-year increase of 17% – in which LNG imports ascended by 296,700 tonnes, up 6%.
With external demand going down because of negative impacts of the COVID-19 pandemic, these figures from PetroVietnam have demonstrated that the group’s industrial activities are gradually recovering.
The situation can be seen clearer at state-owned Vietnam Electricity (EVN), which has also reported that all the group’s activities have been going up year-on-year during the first three months of this year.
Specifically, EVN’s total gross industrial output is estimated to be around VND52.83 trillion (US$2.3 billion), up 3.18% against the same period last year. The produced and purchased electricity volume is about 55.45 million kilowatt hours, a 1.16% increase year-on-year. EVN’s commercial electricity totalled 50.79 million kWh, up 3.18%. In which, electricity for agro-forestry-fishery accounted for 3.97% of total electricity consumed, while the rate was 56.01% for construction and industrial activities, 31.46% for households – all was up against in the same period last year.
Notably, this group’s total revenue from power sales is estimated to stand at more than VND94 trillion (over US$4 billion), a 4.11% climb over the corresponding period of 2020.
In Vietnam, petrol and electricity are vital inputs for production activities, especially manufacturing and processing activities.
According to the General Statistics Office (GSO), in the first quarter of this year, despite massive difficulties and challenges, the Vietnamese economy’s production and distribution of electricity went up by 4.5% year-on-year. What’s more, the manufacturing and processing industry increased 9.45% year-on-year, higher than the year-on-year ascension of 7.12% in the corresponding period of 2020.
“All of these figures have demonstrated the fact that the economy has been strongly recovering with the gradual popularity of anti-COVID-19 vaccination,” said Mai Tien Dung, Minister, Chairman of the Government Office at last week’s cabinet meeting, also the last one in the 2016-2020 tenure of the government. “The confidence of businesses has continued going up, with them gradually resuming their normal performances.”
As of March 23, total registered foreign investment reached US$10.13 billion, a year-on-year rise of 18.5%. Total disbursement in the first three months of 2020 is estimated at US$4.1 billion, up 6.5% over the same period last year.
Dung cited former Prime Minister Nguyen Xuan Phuc stated at the meeting, “Vietnam has become a safe destination for investment. Many international organisations have praised the economy’s big potential and outlook for this year, including HSBC (7%), International Monetary Fund (6.5%), International Finance Corporation (6.5% in the 2021-2026 period), and Moody’s (changed Vietnam’s economic outlook from negative to positive).”
Making bigger room for private firms
According to experts, because the growth in the first quarter remains lower than expectation, one of the sturdy solutions now is to make bigger room for private enterprises to conduct production and business activities in the country, amid a rise in foreign investment shift to Vietnam.
Under the resolution of the recent 13th National Party Congress, the Party has specified a number of strategic breakthroughs for the country to drive forwards with higher economic growth.
One of the first strategic breakthrough will be “creating a good system of laws, mechanisms, and policies, while establishing a favourable, healthy, and fair investment and business climate for all economic sectors, with the promotion of innovation and the mobilisation, management, and effective use of all resources for development - especially land, finance, and public-private partnership.”
This breakthrough would mean the Vietnamese private sector will have opportunities to perform in a more transparent and equal investment and business climate.
“All obstructions and prejudice must be removed, while all favourable conditions must be created for the private sector to develop. The sector must be supported in innovation, technological modernisation, human resources development, and labour productivity improvement,” this report read. “Major economic groups with strength and regional and international competitiveness are encouraged for development. Efforts are to be made to see at least two million operational enterprises which can create 60-65% of GDP.”
In Vietnam, the private sector creates up to 40% of GDP, more than 50% of economic growth, 30% of the state budget revenue, and 85% of the labour force.
Vietnam currently has nearly 800,000 operational businesses, about 98 per cent of which are of small or medium size. According to the General Statistics Office (GSO), in 2020, there were nearly 135,000 newly established firms, with total registered capital of more than VND2.23 quadrillion (US$97 billion), employing more than a million labourers. This was down 2.3% in the number of registered businesses, but up 29.25% in registered capital.
The country also has some big private enterprises such as Mobile World Co. Ltd, Truong Hai Auto Corporation, VietJet Air, Vingroup, Masan Consumer, Minh Phu Seafood Corporation, TH Group, and Him Lam Corporation, among others.
The entrepreneurial spirit has spread widely in society and the robust development of the private economy in some industries such as construction, processing, manufacturing, automobile, air transport, and finance and banking has shaped powerful and potential national brands for Vietnam.
Nguyen Minh Cuong, principal country economist from the ADB, once told Nhan Dan Online that removing obstructions for the private sector will enable it to grow further and facilitate Vietnam to well accomplish the Socio-Economic Development Strategy for the 2021-2030 period.
He said that despite of recent improvement of regulatory framework, the main problem is still policy enforcement, notably in taxes, market access, and access to land. High corporate tax income discourages small- and medium-sized enterprises to scale up their production. Procedures to file taxes also remain burdensome.
According to his calculation, an enterprise must file 14 payments a year, taking 498 hours and amounting to 38.1% of total profits. Payment of value-added tax is onerous, taking around 219 hours, or 44% of the total time required to file tax.
Additional four industrial parks established in Binh Phuoc
The People’s Committee in the Southern Province of Binh Phuoc yesterday said that additional four industrial parks will be established in the province in the period of 2020-2030.
Four new industrial parks include 438-hectare Ledana facility, 300-hectare V.com park and 348-hectare Hoa Lu in the Hoa Lu border-gate economic zone in Loc Ninh border district and 6,317-hectare Dong Phu park in Dong Phuc District.
Additionally, the province authority will expand three industrial parks 577.63-hectare Minh Hung III in Chon Thanh District, 317-hectare Bac Dong Phu and 480-hectare Nam Dong Phu in Dong Phu District. Industrial parks are eligible for enjoying exemption of enterprise income tax, import duty for machinery.
The local administrations will support companies in the industrial parks by building connection paths to main roads, waste treatment and the supply of water and power.
Currently, 11 industrial parks are located in Binh Phuoc Province attracting 334 secondary projects including 232 foreign-invested projects and 102 locally-invested projects. Some 171 enterprises have been operating creating 66,200 jobs for local laborers.
New stock trading accounts hit record high in March
Securities companies registered 113,875 new domestic trading accounts during March, breaking the record set in January of 86,107, according to the Vietnam Securities Depository (VSD).
As of the end of March, there were more than 3 million trading accounts in the stock market, including over 2.98 million opened by individual investors and 11,630 by organisational players.
The stock market saw nearly 258,000 new trading accounts opened in the first quarter, accounting for 65 percent of the figure recorded in 2020 as a whole.
SSI Securities Corporation said Vietnam’s stock market experienced a special quarter, reaching the 1,200-point threshold three times.
The market suffered its sharpest decline in history on January 28 as a result of panic selling after new community transmissions of the coronavirus were reported. The benchmark VN-Index on the Ho Chi Minh Stock Exchange (HoSE) fell 73.23 points, or 6.67 percent, to close at 1,023.94 points. It quickly recovered to 1,191.44 points by the end of the March 31 trading session, increasing 7.93 percent from the beginning of the year./.
PetroVietnam’s Q1 State budget contributions surpass plan by 18 percent
The Vietnam Oil and Gas Group (PetroVietnam) contributed more than 19.02 trillion VND (823.7 million USD) to the State budget in the first three months of 2021, a 3 percent increase against the same period last year and 18 percent higher than its quarterly plan.
Seventeen of its 22 subsidiaries posted profits, 12 of which recorded growth thanks to efforts to promote cost savings totalling over 2.83 trillion VND.
Uncertainties remain for the remaining months of the year, PetroVietnam Chairman Hoang Quoc Vuong said, with a high risk of geopolitical issues and trade tensions and the unpredictable developments of the COVID-19 pandemic.
He urged all subsidiaries to keep a close watch on the global oil price and production and continue restructuring, cutting costs, and improving operational efficiency.
In the first two months of the year, the State-owned group exploited 3.07 million tonnes of oil equivalent and produced 2.9 billion kWh of electricity, 272,700 tonnes of nitrogenous fertiliser, and 1.1 million tonnes of oil and petrol.
Its turnover stood at 94.5 trillion VND (nearly 4.1 billion USD) while budget contributions were estimated at 11.44 trillion VND, surpassing the targets by 1 percent and 9 percent, respectively.
Mini Thailand Week underway in Hai Phong
A trade fair for Thai products called Mini Thailand Week 2021 was launched at the Hai Phong International Exhibition Centre in the northern city of Hai Phong on April 8, with 60 booths.
The booths belong to 35 importers of Thai products to Vietnam and showcase a wide range of products, from food to fashion, beauty, and personal care.
The fair will also feature traditional Thai dance performances, demonstrations of cooking Thai dishes, Do-It-Yourself (D.I.Y) activities, and games.
It provides a good opportunity for investors and enterprises in the city to exchange experience, expand partnerships, and boost two-way trade between the two countries, said Vice Chairman of the municipal People’s Committee Nguyen Duc Tho.
Thailand is currently Vietnam’s largest trade partner in ASEAN while Vietnam is Thailand’s third-largest. Bilateral trade last year totalled nearly 16 billion USD, accounting for 30 percent of Vietnam’s trade with ASEAN member states.
Economic activities in Vietnam have returned to normalcy thanks to the Government’s success in containing COVID-19, according to Morakot Janemathukorn from the Embassy of Thailand. The embassy has cooperated with the local Government and enterprises to organise many events to foster cooperation in various areas, and the fair aims to bolster ties, she added.
Mini Thailand Week 2021 will run through April 11.
First VinGroup smart e-buses hit the streets
The Vinbus Ecology Transport Services Limited Liability Company (VinBus), a member of Vietnam’s largest conglomerate VinGroup, launched the first smart e-bus service in the country on April 8.
The buses will run in the Vinhomes Ocean Park urban area in Gia Lam district, Hanoi, while awaiting the completion of procedures to connect with the city's public transport network, according to Vinbus Deputy Director General Nguyen Van Thanh.
Vinbus is an electric bus model manufactured and assembled by VinFast at its Automobile Production Complex in Hai Phong city.
Each bus is equipped with an automated system able to control driving behaviour and give warnings about unsafe situations, an on-board public address system, free wifi, USB charging ports, and security cameras, among others.
With a battery capacity of 281 kWh, the bus can travel between 220 and 260 kilometres on a single charge. It can fully recharge in just two hours at VinBus’s 150 kW charging station network.
VinBus is scheduled to provide public transport services in five major cities in Vietnam: Hanoi, Hai Phong, Da Nang, Ho Chi Minh City, and Can Tho.
The company operates under a non-profit model, aiming to develop a modern public transportation network that reduces air and noise pollution in Vietnam’s major cities.
Kien Giang making every effort to fight IUU fishing
The Mekong Delta province of Kien Giang has completed 98.6 percent of its plan to equip fishing vessels with cruise control devices as part of measures to fight illegal, unreported and unregulated (IUU) fishing.
According to the provincial steering committee for IUU fishing prevention, local authorities will continue to introduce synchronous measures to fight such activities towards an early removal of the “yellow card” warning issued by the European Commission (EC) to Vietnam’s fisheries sector.
Authorised agencies have stepped up communications work so that ship-owners, fishermen, organisations, and individuals closely observe relevant regulations.
Local authorities have strictly handled cases of illegally exploiting marine products in foreign waters.
Provincial police have been tasked with monitoring, investigating, and verifying cases in which local individuals or organisations linked with those in foreign countries to arrange for fishing vessels or fishermen to exploit marine products in foreign waters, or to return arrested fishermen to Vietnam by unofficial means in order to avoid fines imposed under Vietnamese law.
Meanwhile, the provincial Border Guard Command is responsible for investigating, verifying, and handling fishing vessels that violate foreign waters, especially those detected by the navy and coast guard.
Nguyen Van Dung, Director of the provincial Department of Agriculture and Rural Development and also deputy head of the provincial steering committee for IUU fishing prevention, said local authorities have paid attention to inspecting and controlling the implementation of measures to prevent IUU fishing by vessels in international waters.
The province’s fisheries sub-department will work to complete the installation of cruise control devices on all vessels.
In the first quarter, local authorities fined five fishing vessel owners for removing or not operating cruise control devices. The locality strictly complied with EC recommendations on IUU and fined vessels violating regulations.
Vietnam, Argentina look towards balanced trade
The Ministry of Industry and Trade (MoIT) is ready to work with Argentine Ambassador to Vietnam Luis Pablo Maria Beltramino to boost economic, trade, and investment ties between the two nations, Deputy Minister Do Thang Hai has said.
During a working session with the ambassador who has just started his tenure in Vietnam, Hai expressed his delight at the stable growth in two-way trade over recent years, which reached 3.95 billion USD last year, up 4.3 percent compared to 2019 despite COVID-19.
As Argentina is now Vietnam’s third-largest trade partner in Latin America, behind Brazil and Mexico, he hoped that the ambassador and the Argentine embassy will continue working to facilitate trade exchange between the two countries’ business communities, towards gradually achieving a more balanced trade landscape.
The ambassador, for his part, expressed a belief that with improving business climates in both nations, businesses will be well-positioned to prosper.
He pledged to do his best to tackle problems in two-way trade as well as facilitate multi-sector exchanges between the two countries.
Both sides also agreed to hold the seventh meeting of the Inter-Governmental Committee on Economic, Trade and Scientific-Technological Cooperation this year.
Figures show that Vietnam’s exports to the Latin American country hit 567 million USD last year, up 2.34 percent, while imports rose 4.64 percent to 3.38 billion USD.
Vietnam’s exports were mostly mobile phones and spare parts, computers, electronics and accessories, footwear, machinery, equipment and other supporting tools, apparel, and footwear materials. The country imported animal feed, corn, cotton, soya, and vegetable oils from Argentina.
According to MoIT, two-way trade hit 440 million USD this year as of late February, down 3.22 percent year-on-year. Of this, 174 million USD was Vietnam’s exports to Argentina, up 164.52 percent year-on-year, while imports were down 31.61 percent.
Hanoi’s property market predicted to rebound strongly
Strong construction activities in many different types of property and areas in Hanoi signal the strong recovery of the capital’s real estate market from this year onwards, according to CBRE Hanoi Branch Director Nguyen Hoai An.
At a recent press conference looking back on the Hanoi market in the first quarter, An noted that not only residential real estate but also commercial real estate will welcome many new projects with the participation of foreign investors and domestic developers from the southern region.
A CBRE Vietnam survey showed that approximately 4,400 apartments were launched in Hanoi in Q1, down 39 percent quarter-on-quarter due to the hiatus caused by the Lunar New Year (Tet) holiday and the resurgence of COVID-19, but still up 270 percent year-on-year.
This indicates a strong recovery in the local property market compared to Q1 of 2020, when COVID-19 first broke out in Vietnam.
Do Van Anh, manager of the research and consulting division at CBRE Vietnam, said most of the new apartment supply in Q1 came from 14 projects already opened for sale, while only three projects were newly launched.
She said apartments in the mid-end segment were still the most popular in the market, accounting for up to 80 percent of total new supply in Q1. The eastern and western areas of the city were home to most new projects, with 77 percent of new supply.
The positive market sentiment in recent times has also helped bridge the gap between the number of newly-launched apartments and those already sold.
A total of 4,200 apartments were sold in Q1. In the mid-end segment, the number of sold apartments was higher than newly-launched apartments.
Anh forecast that new supply and sales in Hanoi this year will be around 24,000-26,000 apartments. Many residential real estate projects will be launched for sale in different parts of the city, both inner and outlying districts, in coming quarters, helping the market become more vibrant.
Growth indicators to ensure an optimistic scenario
Striving to achieve a GDP growth rate of 6.5 per cent by the end of 2021 is both a goal and a pressure for Vietnam, the outcome of which strongly depends on a further recovery of domestic purchasing power and international trade and travel.
Deputy Minister of Planning and Investment Tran Quoc Phuong said, “The growth rate of the first quarter at 4.48 per cent was low, from the point of view of the ministry.” However, there is still need for an objective view for this growth, because the 5.2 per cent growth scenario for the first quarter is placed in a state of a “new normal”, but the recent outbreak in the northern province of Hai Duong and some others has pulled economic growth down again down.
“GDP in the following quarters must be increased to reach the National Assembly’s 6.5-per-cent target for 2021,” argued Phuong, who has added that “to outbalance the Q1 growth, in the remaining quarters, there must be a quarter of over 7 per cent.”
Nevertheless, the outcome of the economic growth figures remains unpredictable as COVID-19 could hit again anytime as the latest cases show. Nguyen Thu Oanh, director of the Price Statistics Department under the General Statistics Office, noticed that although the average consumer price index (CPI) in Q1 increased by only 0.29 per cent on-year – the lowest first-quarter increase in the past 20 years – keeping the inflation below 4 per cent this year will not be easy.
Global crude oil prices have been increasing sharply after the United States and other countries in the region launched economic stimulus packages. According to calculations, if the average crude oil price is about $60 per barrel, the CPI in 2021 will increase by 0.9 per cent.
As long as COVID-19 remains a topic, industrial production activities cannot recover as quickly as before, and other sectors like accommodation, catering, transportation, and tourism services are continuing to be affected as well.
However, the economic picture in the first three months also showed many bright spots. Retail sales of consumer goods and services increased by 5.1 per cent in Q1 over the same period last year, showing that consumer demand has increased again. Import-export activities also strongly recovered, and trade balance generated an export surplus of $2.03 billion.
Besides this, the number of newly-registered enterprises in Q1 decreased by 1.4 per cent compared to the same period last year, but the total registered capital increased by 27.5 per cent due to the increase in the number of enterprises with registered capital of over VND100 billion ($4.35 million) and a decrease in those enterprises with than VND10 billion (435,000). These factors will be the impetus for the next quarter to accelerate Vietnam’s economic growth, especially when vaccines are further distributed.
According to Dr. Nguyen Xuan Thanh, a member of the Prime Minister’s Economic Advisory Group, the good news in the first quarter is that all major economies are on their way to recover. Given this optimistic scenario, Thanh sees that while major markets rely on vaccinations to reboot their economies, they also still operate under monetary and fiscal policies towards loosening interest rates, in combination with expanded stimulus packages. In Vietnam, the economy can also follow an optimistic scenario with five basic growth drivers.
First is macro stability, according to Thanh. The expectation of reaching a GDP growth of 6.5 per cent is based on a weak inflationary pressure, so that the government can operate both monetary and fiscal policies in the direction of supporting growth.
Secondly, private investments need to recover, combined with further public investments in infrastructure. Maintaining a low interest rate level and further reducing lending interest rates will be the driving force for businesses’ investments.
Third is the resumption of foreign direct investment (FDI) flows to take place after the pandemic. The trend of supply chain shifts will maintain an attractive position for FDI inflows for Vietnam, but will also create challenges for the monetary and exchange rate regulators to ensure that the country’s economy can still absorb these inputs.
Next involves restoring the purchasing power in the domestic market, Thanh explained. One of the biggest concerns of businesses is that they cannot prosper if the purchasing power of the domestic market remains weak.
The digital transformation has been a huge driver and has led to new types of shopping. Monetary and fiscal policy must also be in a state of supportive growth to restore purchasing power in the domestic market.
Labour market data last year showed that after falling by 2.4 million people in Q2 over the previous quarter, the market recovered with an increase by 1.5 million in the third quarter and 600,000 more in Q4. This is the basis for the recovery of purchasing power in the domestic market this year.
Singaporean investor to operate large ecotourism project in Vietnam
Singapore’s Pegasus Investment and Consultancy JSC and Banyan Tree Holdings Limited on April 7 signed an agreement in which the former will operate Dhawa Quy Nhon Vietnam, an eco-resort in the central province of Binh Dinh, upon its completion.
The project, which was expected to be completed in 2023, is part of the Pegasus Education Tourism Development area, Tuoi Tre Online newspaper reported.
With an estimated investment of 100 million Singaporean dollars (US$74.6 million), Dhawa Quy Nhon Vietnam is the second phase of Pegasus Education Tourism Development. Its first phase kicked off with the opening of Outward Bound Vietnam in 2016, while eco-residences will be developed in the third phase.
Pegasus Chairman Ricky Tan said, “Pegasus Education Tourism Development entrenches our long-term commitment and investments in Vietnam. As a Singapore enterprise, our latest investment signals our strong confidence in Vietnam's economic development and growth prospects.”
Pegasus will provide services at the resort, which is Banyan Tree’s second Dhawa resort signed in Vietnam.
Both Pegasus and Banyan Tree have been confident about Vietnam’s economic recovery, Covid-19 control and growth prospects, while Covid-19 vaccination programs are being accelerated.
Ho Kwon Ping, executive chairman of Banyan Tree, said the strategic partnership highlights the like-minded collaboration and entrepreneurship of two homegrown brands with strong overseas footprints.
Source: VNA/VNS/VOV/VIR/SGT/Nhan Dan/Hanoitimes