VIETNAM BUSINESS NEWS AUGUST 14
The Vietnam Association of Foreign Invested Enterprises (VAFIE) has begun working on the annual 2022 foreign direct investment (FDI) report.
VAFIE Chairman Nguyen Mai said the first report in 2021 was highly evaluated, and now VAFIE is compiling the 2022 version, which will focus on green growth and economic structure.
This year’s report is set to consist of three chapters: the global and ASEAN situation, foreign investment in Vietnam, and orientations and solutions.
The annual report aims to provide an objective and scientific assessment of foreign investment in Vietnam and the country’s overseas investment, in comparison with annual, medium-term, and long-term orientations and targets. This gives an all-round view of the FDI sector’s role and impact on Vietnam’s economy and society.
Mai noted it is a source of reference for the National Assembly, the Government, the Ministry of Planning and Investment, and other ministries and sectors. It is also made use of by administrations of provinces and cities, management boards of industrial parks and economic zones, business associations, as well as FDI and domestic firms when they make and carry out policies.
The report is also useful for university lecturers and students, research institutes, and international organisations which are interested in Vietnam’s development, he added.
Food and beverage sector bounces back
Many food and beverage (F&B) enterprises are witnessing a busy period in their business activities, with growth rates even better than the pre-pandemic period.
Specifically, in the first half of 2022, the business growth of the beverage and food processing industry soared 7% and 6%, respectively. In 2019, the annual business growth rate of the industry just stood at 4.3%.
Some foreign survey organizations and companies said that Vietnam’s F&B market had been bouncing back again with great potential for the future.
A survey conducted by Vietnam Report showed it was not until the first quarter of 2022 that F&B businesses recovered completely and regained growing speed after two years of grappling with Covid-19.
Moreover, VNDirect Securities Company believed that the F&B industry would resume a higher growth rate from 2022, hopefully rising to 10-12% over the same period, with the key motivation of sit-down catering services reopening and domestic consumption recovering.
Another market survey company, Mordor Intelligence Inc, forecast that Vietnam’s F&B industry would achieve a compound annual growth rate of up to 8.65% in the 2021-2026 period.
Lai Chau wants to build airport
The northern mountainous province of Lai Chau is seeking Prime Minister Pham Minh Chinh’s approval for the construction of an airport through a public-private partnership (PPP).
According to the provincial people’s committee, Lai Chau Airport is listed in the government’s national aviation development plan issued in 2018.
Under Lai Chau’s proposal, Lai Chau Airport would have an annual capacity of 500,000 passengers and be used for both civil and military purposes by 2030.
The airport would cover 167 hectares in Tan Uyen Town and cost VND8 trillion (USD344.82 million).
Lai Chau People’s Committee said that several investors had expressed their interest in the project.
At present, Dien Bien Airport is the only one in the northwestern region of Vietnam. Under the Ministry of Transport’s planning proposal, by 2030, the region would have three more airports at Lai Chau, Sapa in Lao Cai and Na San in Son La.
Car crashes into Hanoi petrol station, injuring at least eight
A car has hit a petrol station in Hanoi, leaving at least eight people injured.
The incident occurred at around 9:50 pm on Friday at a petrol station at 31 Lang Street, Hanoi. At that time, the petrol station was quite crowded.
According to some witnesses, the car ran at very high speed, only stopping when it hit a petrol pump.
Three ambulances were sent to the scene.
The police quickly arrived at the site to assist in taking the injured to hospital.
The driver, 35, from Hanoi’s Thanh Oai District was registered 0.9mg/l for blood alcohol when tested. He admitted that he had drunk alcohol at a restaurant earlier.
More derivative products needed: experts
Even though the Vietnamese derivatives market has been operating for five years, it has few products. Therefore, it is necessary to create new products to increase the market’s appeal, said experts.
With the feature of being able to settle on actual trade date (T+0), allowing short sell and high leverage, products on the derivatives market will attract a large number of investors, especially when the stock market fluctuates negatively, according to Trinh Hoai Giang, general director of the Ho Chi Minh City Securities Corporation. This is because it creates great profit opportunities and helps investors hedge the risk of the common stocks.
While the margin ratio of the derivatives market is still high compared to global markets, the market size and product scale are still limited, meaning big investors are not interested in participating. The majority participating in the derivatives market are still retail investors.
Therefore, in order to attract institutional investors, it requires improvements to the operating mechanism to have more similarities with international practices, and to create favourable conditions for foreign investors to access and attend.
In addition, the market needs to diversify its products. In developed markets, the number of stocks in indices is usually several hundred, for example, the S&P 500, Nikkei 225, and KOSPI 200. Thereby, it is possible to research more derivative products on stock indices such as VNX50 or VNX100, than on large-cap stocks.
While these products are not available, the market should have more bond futures products with different maturities which also help investors have more choices.
Vietnam, Laos enjoy 24.2% rise in two-way trade in 7 months
Trade between Vietnam and Laos rose 24.2% in the first seven months of this year to nearly 949 million USD, with Vietnam's export value of nearly 586 million USD, reported the Vietnam Trade Office in Laos.
The office said that the major products Vietnam shipped to Laos included petrol, vegetables, fertilizers, clinker and cement, electric wires and cables, paper and paper products, ceramics, and garment products.
Meanwhile, Vietnam mostly imported from Laos fertilizers, rubber, wood and furniture, ore and other minerals.
In July alone, two-way trade hit 125 million USD, a surge of 54.1% year on year, including Vietnam’s export revenue of nearly 53.2 million USD, up 33.9%. This was the third consecutive month that Vietnam enjoyed an increase in exports to Laos, helping reduce the fall in the turnover to minus 1.6% from minus 6% in the first half of this year.
In August, Vietnam expects continuous rise in exports to Laos thanks to the stable conditions of the Lao economy, the reduction in petrol prices in the world and the rising number of Vietnamese investors in Laos.
Vietnam targets launch of modern digital finance platform by 2025
Minister of Finance Ho Duc Phoc has signed a decision promulgating the Ministry of Finance's digital transformation plan to 2025, with vision to 2030.
The goal is to establish a national modern, sustainable and integrated digital financial platform, contributing to strengthening the growth and resilience of the economy, and ensuring macroeconomic stability and financial security.
The ministry will proactively apply technological achievements from the 4th Industrial Revolution and follow the results of e-Government development towards gradually implementing the digital transformation of the financial sector, providing digital financial services, and actively participating in the development of a digital government, economy and society.
Indicators of e-finance development are hoped to be completed in 2022.
The ministry will strive to set up a modern, public and transparent digital financial platform by 2025 based on big data and open financial data. By 2030, a rich and modern digital financial ecosystem will be formed in all fields, ensuring the effectiveness and safety of information.
Vietnam targets seven marine economic clusters by 2030
Vietnam set to take shape seven maritime economic clusters by 2030, aiming to turn Vietnam into a strong marine country, and promote sustainable development in relevant regions, sectors and fields.
The information was stated in Decision 892/QD-TTg dated July 26, 2022 by the Prime Minister to approve a project on the development of marine economic clusters associated with building strong sea-based economic centres by 2030.
The project aims to build seven marine economic clusters in the next 10 years in advantageous coastal areas and develop three to four leading maritime economic centres in the Southeast Asian region.
The clusters will prioritise services, products with added value; attract large-scale enterprises and high-tech projects to contribute to green growth; and protect the marine ecological environment as well as the marine economy.
HCM City office market recovers
Ho Chi Minh City’s office market witnessed its first positive signs in the first half of this year since being affected by the COVID-19 pandemic for the previous two years, experts said.
A report from CBRE said that for leasing, relocation accounted for more than 50% of total transactions, and the remaining transactions were for expansion, renewal and new letting, at about 27%, 12% and 10%, respectively.
There were no more contractions as there were in 2020 and 2021, the company said.
In the first half, the company said, there was one new Grade B office building, CMC Creative Space in District 7. The total net leasable office supply in HCMC was roughly 1.5 million sq.m.
The average vacancy rate of Grade A decreased by 1.6 percentage point quarter-on-quarter and 2.1 percentage point year-on-year to 10.1%, mainly due to major absorption in District 7. Meanwhile, the average vacancy rate of Grade B remained at 9.7%, almost the same as last year.
Information technology (IT) and service industries accounted for more than 50% of total transacted areas. IT firms with growing business and investment continue to expand their leasing and quickly finalize their decisions within three to six months.
With the recovery of manufacturing after the pandemic, sourcing companies are coming back to Vietnam and actively seeking office space, making up a rising percentage of new leases. All these brands are from the US, including outdoor and sports equipment, CBRE said.
Cushman and Wakefield confirmed that despite many changes in behaviour and habits of office users in the past two years, Vietnam’s office market including HCM City in the first half of 2022 showed recovery and growth.
Qualified banks expect higher credit growth quota in next few months
Some qualified commercial banks are forecast to get higher credit growth quotas from the State Bank of Vietnam (SBV) in the next few months.
According to the Bao Viet Securities Company (BVSC), the SBV is expected to announce a credit expansion for commercial banks at the end of Q3 2022 or at the beginning of Q4 2022 as most banks have so far used up most of their assigned credit quota.
However, as the SBV has so far decided to keep the credit growth target unchanged at 14% in 2022, the selection of banks to get a higher credit growth quota in the remaining months of this year will be tightened.
According to the SBV’s rules, the granting of credit growth quota will be based on the asset quality and operation scale of each bank according to Circular 52/2018/TT-NHNN. Specifically, the SBV will rank banks according to six criteria, including capital, asset quality, governance, business performance results, liquidity and sensitivity to market risks.
The SBV will also consider a number of other criteria related to the banks’ implementation in meeting policies and orientations of the Government and the SBV, such as reducing lending interest rates to support firms and people, focusing loans on business and production, and participating in supporting the handling of weak banks.
According to the criteria, MB, Vietcombank, VietinBank, BIDV and Agribank are forecast to get higher credit expansion than others in the next quota allocation as the banks were the strongest supporters of the economy during the COVID-19 pandemic.
Banks raise interest rates to attract depositors
From the beginning of August 2022, many more banks including commercial banks with state capital have raised the interest rate offered on savings accounts to attract extra cash.
Noticeably, quite a few commercial banks are starting to join the deposit interest rate hike race along with small and medium-sized banks, they adjusted a deposit interest rate of more than 7 percent for a 12-month term.
Specifically, customers who deposit money at CBBank for 12 months are enjoying a rate of 7.45 percent per year and 7.5 percent for online savings customers from August 6 meanwhile depositors at Sai Gon Commercial Bank (SCB) are enjoying a yearly interest rate of 7.3 percent -7.6 percent for a 12-month term on both over-the-counter and online channels.
Many other banks such as VPBank, KienlongBank, LienVietpostBank, NamABank, and Techcombank also have applied deposit interest rates of over 7 percent with terms of 12 months or more.
Commercial banks have not only adjusted interest rates for long-term deposits but also for short-term under 12 months, even 1-3 months to increase interest rates from 0.2 to 0.5 percentage points.
Currently, many banks are applying interest rates of approximately 4 percent for deposit periods from 1-3 months. Furthermore, commercial banks such as Vietcombank, BIDV, and Agribank also increased 0.1-0.2 percentage points of deposit interest rates in most terms.
Value of private bond issuance down 10.9 percent in first seven months
The Ministry of Finance yesterday said that in the first seven months of 2022, businesses issued individual bonds worth VND262,250 billion, down 10.9 percent compared to the same period in 2021, of which 52.3 percent of the issuance volume has collaterals.
The average issuance interest rate is 8.12 percent a year, up 0.22 percent compared to the average in 2021. The average issuance term is 3.64 years, up 0.13 percent.
Regarding the issuance structure, the commercial banks issuing bonds accounted for 33.6 percent of the total issuance volume.
Additionally, real estate and construction enterprises issued 33.58 percent and 9.41 percent respectively meanwhile trade and service enterprises reached 4.1 percent and manufacturing enterprises reached 8.7 percent.
HCMC strengthens inspection of alcoholic beverages businesses
The Interdisciplinary Steering Committee on Food Safety of HCMC has delegated the Food Safety Management Board to coordinate with Thu Duc City and districts to inspect businesses producing and selling alcoholic drinks from August 15 to the end of this year.
The facilities include importers, manufacturers, home producers of alcoholic beverages, and businesses selling and serving alcoholic drinks that customers have complained about on news agencies and social media platforms.
The Food Safety Management Board has also asked Thu Duc City and districts to strengthen inspection of businesses producing and selling alcoholic drinks, propagate the prevention and control of harmful effects of alcoholic beverages as well as strictly impose fines for violating food safety.
Top 50 corporate sustainability awards
The seminar was followed by the Top 50 corporate sustainability awards ceremony that honoured 50 foreign invested, listed and non-listed enterprises that have contributed to sustainable development, environmental friendliness and social justice.
The awards also aim to contribute to promoting the trend of sustainable development spreading among the business community and Vietnamese society, raise awareness, and demonstrate how sustainable business benefits companies, the environment, and society.
Akzo Nobel Vietnam, Cargill Vietnam, GE Vietnam, Manulife Vietnam, Nestle Vietnam, Unilever Vietnam, Masan, Nam Long, Novaland, PNJ, Sacombank, the Pan Group, Vinamilk and Hung Thinh Land were among the winners.
The awards were assessed based on criteria such as stable growth (company size, average growth and its position in the market), sustainable corporate culture, corporate governance, environmental protection and the social responsibility of companies.
Thu Thiem land auction results proposed to be canceled
The Department of Natural Resources and Environment of Ho Chi Minh City has recently sent a report to the municipal People's Committee on the cancellation of the auction winning results and the handling of the amount of money coerced from the bank accounts of the auction winners of four land lots in the Thu Thiem new urban area.
Accordingly, at the end of 2021, the People's Committee of HCMC issued a decision to recognize the auction-winning results for the Dream Republic Joint Stock Company (lot No.3-5), Sheen Mega Joint Stock Company (lot No.3-8), Binh Minh Investment and Trade Company Limited (lot No.3-9), and Viet Star Real Estate Investment Company Limited (lot No.3-12).
The Tax Department of HCMC also issued notices of land-use fees and registration fees for four companies to pay to the State budget. Binh Minh Investment and Trading Company Limited paid VND145.7 billion, and Viet Star Real Estate Investment Company Limited paid VND588.5 billion, or a 20 percent deposit. However, after that, they sent written requests to stop and terminate the purchase contract of the auctioned land.
Vietnam, Poland want to step up food trade
The Vietnam Chamber of Industry and Trade (VCCI) in Ho Chi Minh City partnered with the Embassy of Poland in Vietnam to host a networking event in food and beverage to boost trade between the two countries.
Maciej Duszynski, Chargé d'Affaires a.i of the Polish Embassy, highlighted the growing trade and investment cooperation between the EU and Vietnam, saying the EU has remained Vietnam’s second largest importer and Vietnam is now the EU’s major trade partner.
Thanks to that, the long-standing Vietnam-Poland relations have grown constantly in all areas, including the trade of agricultural products and food, he said, taking note of discussions on this issue held by leaders of ministries and agencies from the two sides.
The Government of Poland is paying great attention to expanding export portfolios to Vietnam, with final steps being undertaken for the shipment of beef products and blueberries to the Southeast Asian country.
Piotr Harasimowicz, Chief Representative Officer of the Polish Investment and Trade Agency in Ho Chi Minh City, said Vietnam has a favourable location in an Asian vibrant market region, and developed infrastructure for trade expansion.
Vietnam is also an important buyer of Poland’s agricultural products and food, he said, citing the fact that last year, Poland exported more than 143 million EUR worth of the products to Vietnam. Poland’s commodity shipments to Vietnam surged 21.5% while Vietnam’s imports from Poland rose by 26% year-on-year in the period from August 2020 to May 2021.
He affirmed that his agency will actively support Polish exporters to connect with Vietnamese enterprises and provide foreign investors with information on conditions and rules for doing business in Poland.
Plastic firms report profit rises in Q2
Many plastic enterprises reported increased gross profit in the second quarter of this year thanks to lower raw material prices.
Bình Minh Plastics Company (BMP)’s revenue reached VNĐ1.56 trillion (US$66.7 million) in Q2, up 7 per cent year-on-year. The company's profit after tax was 3.5 times higher than in the second quarter of 2021, mainly thanks to the significant improvement in gross profit margin from 12.9 per cent to 25.1 per cent. The business attributed the increase in profit to the decrease in the price of plastic raw materials and unchanged selling prices.
Tiền Phong Plastic JSC (NTP) also recorded positive business results in Q2. Specifically, revenue increased 38 per cent to VNĐ1.72 trillion ($73.6 million). Gross profit doubled to VNĐ504 billion. Profit margin was 29.3 per cent, up sharply from 19.9 per cent in the second quarter of 2021. However, financial expenses and selling expenses both increased sharply, especially selling expenses quadrupled to VNĐ232 billion, causing net profit to rise by 26 per cent to VNĐ177 billion.
Việt Nam Plastic Corporation (VNP) reported second-quarter gross profit margin increased from 0.45 per cent to 3.6 per cent, gross profit reached VNĐ2.4 billion, many times higher than VNĐ316 million in the same period last year. However, the profit from joint ventures and associates decreased sharply from VNĐ34 billion to VNĐ11.5 billion, causing the company's net profit to decrease by 46 per cent compared to the same period last year to VNĐ16.4 billion.
Đông Á Plastic Joint Stock Company (DAG) announced second quarter revenue increased by 8 per cent to VNĐ633 billion, net profit was VNĐ5 billion, many times higher than VNĐ393 billion in the same period last year. Gross profit margin increased from 4.4 per cent to 5 per cent.
According to Bloomberg data, the price of PVC resin, the main material for making plastic pipes and wires, has gradually cooled down after peaking at $1,850 per tonne at the end of October 2021. By the end of June, the price fell to $1,000 per tonne, down 46 per cent from the peak and to the price range in September 2020, 23 per cent lower than the same period last year.
An Phát Holdings (APH) has two main business segments, plastic products and plastic resin trading. Therefore, the decrease in the price of plastic resins in the second quarter helped improve the profit margin of packaging, engineering plastics and construction plastics, but the plastic resin trading segment decreased.