Banks expect positive profit growth at year-end
Despite the pandemic, banks will still see a positive profit growth until the end of the year, said many bank experts.
Many research units have predicted that bank profits will continue to surge for the rest of the year after banks posted hefty profits over the past two quarters.
A recent report showed that many securities firms had revised up the prices of bank stocks.
The market research division of Viet Capital Securities Company (VCSC) has adjusted its consolidated net bank profit forecast in 2021 up 37.8% from the previous estimate of 20.5% in early 2021, according to a VCSC report.
VCSC attributed the upgrade to the strong demand for credit and a high net interest margin. In addition, management agencies will prepare to maintain the economic growth, while controlling inflation.
Echoing the view, Maybank Kim Eng Securities Company (MBKE) also forecast that banks would be granted higher credit growth limits.
Speaking at a recent online talkshow, Nguyen Hung, general director of TPBank, said that the impact of Covid-19 in July and August would affect the full-year profits of the bank.
However, Hung said that TPBank had yet to revise down its profit target.
Extending loan payment deadlines and restructuring customers’ debts will reduce the bank’s revenue, but it is not much, Hung said.
Bank profit is expected to fall in the third quarter of the year, but will rebound in the fourth quarter, he added.
MSB will also set aside a provision and lower the bad debt ratio to balance coefficients, said Nguyen Hoang Linh, general director of the bank.
VCSC said that the provision cost for the rest of the year was expected to decrease by 2.95% year-on-year and from the earlier forecast at 4.3%.
“Though the credit growth is forecast to expand in 2021, the provision cost of restructured loans will fall,” said VCSC.
Banks will control credit costs effectively and successfully when some key fields such as property, export-import and retail develop more healthily in 2021 than last year, according to VCSC.
BIDV Securities Company also said that the good control over asset quality could contribute to the profit growth of banks in the second half of the year.
The banking industry is moving toward positive changes compared with the credit cycle before, benefiting from lowered interest rates, said many analysts.
“We are still positive about the Vietnamese banking sector due to strong credit growth, increasing revenues from service fees, stable provisions, contributing to an expanding return on assets to 1,8%-2%,” according to the research unit of MBKE.
Hi-tech park businesses want workers to stay at home, say on-site accommodation unaffordable
The Sai Gon Hi-tech Park Business Association has sought city authorities’ permission for its workers to travel to work from home since organising accommodation on-site for them is difficult.
Since July 15 businesses at the park in District 9 have been providing accommodation to workers as mandated by the city, either in their premises or other lodging places nearby.
Besides the enormous cost, they are also facing problems such as vehicles transporting staff or meals getting stuck at checkpoints, delaying work and stressing workers.
Many skilled personnel needed by their employers are also stuck at home, and their availability again would help restore production.
According to the association, long term solutions are needed to reconcile the strict distancing requirements under Directive 16 with the financial and psychological burden on businesses and staff.
In the event, it has suggested a pilot initiative allowing key, experienced workers at two businesses who have received their first COVID-19 vaccine dose to commute to work from home between July 16 and 30.
They have to sign commitments to only travel to their home and workplace, and strictly follow pandemic regulations. Their movements will be monitored by an application or other methods.
Their workplace will be separated from the other workers’.
Their family members too will not be allowed to leave home during the duration of the trial, and will be tested at home for COVID.
The two businesses will transport them and frequently test them.
The pilot will continue even if some test positive as long as their number is less than 10 per cent of the total.
The plan has been submitted to the park management board and HCM City Business Association. Ho Thi Thu Uyen, head of SBA, hoped it would help the Government and businesses overcome the pandemic.
HCM City is the COVID epicentre of the country with almost 140,000 cases by Friday morning.
Many export orders await Vietnamese enterprises
According to the Trade Promotion Agency under the Ministry of Industry and Trade (MoIT), many orders from foreign enterprises have been sent to domestic exporters. However, the disruption of circulation, especially the circulation of goods at seaports, along with the reduction in production capacity of enterprises has caused many domestic enterprises to hesitate to receive orders.
According to the Trade Promotion Agency, recently, through many online trade promotion and connection activities, the agency has received many orders from foreign enterprises, with most orders from Europe, Japan, South Korea, the US, and Middle East countries. They need the supply in large quantities of agricultural products, seafood, food, and processed food.
Many enterprises in Osaka, Japan, which import and distribute agricultural products, raw materials for the production of spices and processed foods of all kinds, need to find Vietnamese partners to supply the apple jam product. These Japanese companies are looking for partners capable of producing high-quality goods that meet quality standards and production processes and ensure a stable supply of 100 - 120 tons of goods per year.
In the European market, right after the online consultation session on exporting agricultural and aquatic products to the Netherlands, which took place on August 9, the Trade Promotion Department has received many orders from enterprises from this market. Earlier, the Vietnam Trade Office in the United Kingdom also held an online seminar to introduce Vietnamese agricultural products and fruits in the UK market.
Mr. Kevin, a representative of Birmingham Market in the UK, affirmed that the market welcomes 5,000 visitors every day, consuming from tens to hundreds of tons of each type of agricultural products that are currently the key export products of Vietnam, such as banana, dragon fruit, mango, avocado, lychee, longan, jackfruit, passion fruit, and pineapple. Currently, the average annual export turnover of Vietnam's agricultural and aquatic products to the UK exceeds US$6 billion. Exports will be expanded further soon when the EU-Vietnam Free Trade Agreement (EVFTA) has been taking advantage of by domestic enterprises.
At the online consultation session to support enterprises to boost exports to the Dutch market in particular and Europe in general, Ms. Nguyen Thi Thu Thuy, Deputy Director of the Export Support Center under the Trade Promotion Agency, said that many Vietnamese agricultural, aquatic, and seafood processing enterprises have had long-term export experience to the European market, so technical barriers cannot cause them difficulties. Moreover, August 2021 marks the first anniversary of the signing of the EVFTA between Vietnam and the EU. On that basis, the two core factors for Vietnamese agricultural and aquatic products to take full advantage of the tax rate preference are ensuring the rules of origin and meeting the European quality standards. Domestic enterprises have made the most of these two factors to increase the competitive advantage of Vietnamese goods in this market.
Statistics of the first six months of this year of the MoIT show that, after the EVFTA took effect, the bilateral trade turnover of Vietnam and the EU reached $3.3 billion, up 28 percent over the same period, despite the outbreak of the Covid-19 pandemic. It not only helps domestic enterprises to gain footholds in the European market but also creates a solid foundation in production technology standards and product quality, enough for them to enter the fastidious export markets later.
Many domestic enterprises could not receive new orders due to congestion of goods circulation in some provinces, cities, and seaports. Especially, enterprises have had to reduce their production capacity by 50 percent or cease operations to ensure safety against the Covid-19 pandemic.
Many enterprises have proposed to the authorities to quickly deploy the conditional two-on-site production model in order not to miss business opportunities.
According to Ms. Ly Kim Chi, Chairwoman of the Food and Foodstuffs Association of HCMC, this model is especially suitable for the condition that the city has a large number of boarding houses for workers near the factories. Business owners will work with the owners of boarding houses to tighten safety on Covid-19 prevention and control, and at the same time, assign employees to control the movement of workers after work. Workers must commit to staying home after work. Enterprises will organize busses to transport workers from the factory to the place of residence. It will reduce cost pressure for businesses and make workers more comfortable.
Moreover, the trade of goods, especially at ports, is extremely important. According to the HCMC Union of Business Association, Tan Cang Cat Lai Port has applied many solutions to prevent overload, such as transporting goods to satellite ports, shortening procedures, and reducing service fees. However, these are short-term solutions, and it is essential to have more effective measures. For instance, the import and export procedures should be simplified to help goods jammed at the port move quickly.
Conference discusses cashless payment solutions for agro-fishery SMEs
A video conference has been held between the Vietnam E-commerce and Digital Economy Agency (IDEA)’s Centre of Information and Digital Technology (CID) and global payment technology company VISA to discuss cashless payment solutions for small and medium enterprises (SMEs).
Experts from three locations – Hanoi, Ho Chi Minh City and Singapore – gathered to chalk out directions for the development of non-cash payment platforms for Vietnamese SMEs, particularly businesses, cooperatives, and business households operating in agriculture and fisheries.
Specialists from VISA introduced a number of digital payment solutions and digital technologies to facilitate enterprises’ digital transformation and talked on how they plan to support SMEs in agriculture and fisheries.
Speaking at the event, CID Deputy Director Bui Huy Hoang said there have been changes in the perception of people and businesses about many aspects of digital transformation as a result of COVID-19.
Non-cash payment is evolving in parallel with online marketplaces, Hoang said, adding that he expects VISA will be able to provide suitable solutions for local agribusinesses and cooperatives in a programme called “Gian hang Viet truc tuyen quoc gia” (national online shop for Vietnamese products).
Cashless solutions are also expected to boost cross-border trade as the IDEA is cooperating with logistics service provider Viettel Post to export agricultural products via e-commerce platforms. The two sides plan to together develop solutions for the use of non-cash payment apps and build capacity in e-commerce skills for local businesses and cooperatives in the coming time./.
Policy leverages help promote real estate market
Despite difficulties from the COVID-19 pandemic, the real estate market has maintained stability thanks to support policies from the Government.
According to the Ministry of Construction, the Government and ministries, sectors have issued a number of legal documents regarding the implementation of real estate investment and construction projects, while banks have offered preferential policies to give financial support for investors and house-buyers in the field.
Notably, the Government issued Decree 54/2021/ND-CP on May 21, 2021 detailing regulations on environment impact assessment, which is applicable to organisations, individuals engaging in investment activities.
Vu The Hung from the Vietnam Environment Administration under the Ministry of Natural Resources and Environment, held that this is a necessary step in the process of issuing an investment licence for a project, removing difficulties facing investors and ensuring the coherence of regulations on investment and environment.
Meanwhile Decree 69/2021/ND-CP, which will become effective from September 1, is expected to deal with obstacles in the upgrading of old apartment buildings.
At the same time, the social housing development programme has received due attention from the Government, ministries and sectors.
Decree 49/2021/ND-CP, issued on April 1, 2021 to replace Decree 100/2015/ND-CP issued on October 20, 2015 on developing and managing social housing is hoped to remove difficulties in social housing expansion, meeting the people's demand of houses with stronger support from credit institutions.
Meanwhile, the State Bank of Vietnam has issued Decision 697/QD-NHNN defining the interest rate of 4.8 percent per year for loans for purchase and renting of low-cost houses as well as upgrading their houses.
Financial support has been offered to investors and house-buyers from banks with cut in interest rate.
Experts held that the decrees and decisions as well as guiding circulars of relevant ministries and sectors from early 2021 will help the real estate market thrive despite impacts of four waves of COVID-19 pandemic./.
Businesses should upgrade online strategy during the pandemic
Experiencing the effects of lockdowns, consumer buying behaviours have been changing at an unprecedented rate.
This change forced businesses to adapt if they wanted to maintain and increase revenue, said experts at a webinar on enhancing strategy on Thursday.
The webinar helped businesses reassess customer behaviour thereby upgrading their online business strategy during the COVID-19 pandemic.
Consumer buying behaviour is influenced by many factors and within seconds, a buyer's decision could change.
Research by Think With Google showed that 82 per cent of smartphone users consult their phones for information on products they want to buy. But, one in 10 of those end up buying a different product than they had planned.
As a payment solution provider and a business, Visa Viet Nam and Biti's are two examples that show the awareness and strategic adaptation of businesses in the face of changes in needs and habits, or behaviours, of customers.
With the mindset of putting customers as the focus of their business strategy, these two businesses have actively researched and found new business solutions.
Biti's made a bold change in its business strategy, which is to switch to trading agricultural products from last month.
This business said that this was a new direction to meet the most urgent needs of the people, and at the same time a solution to help businesses work.
Visa Viet Nam conducted a survey on the change in payment habits of users at the end of last year. The survey showed that when affected by the pandemic, 44 per cent of consumers made their first online transactions on social networks, while 82 per cent spent more online than in the previous year.
Statistics showed that more and more Vietnamese people know how to use online payments and most are spending more through online and card payments.
Through the webinar, brand owners who have been successful in e-commerce implementation helped businesses to learn how to connect with customers through the internet and electronic devices, understand consumers' online shopping behaviour to seize opportunities for e-commerce during the COVID-19 pandemic.
The workshop also helped businesses grasp solutions on e-commerce and digital transformation, helping businesses to gradually transform their operations from traditional methods to do business in the online environment, and attract customers through online tools.
Banks commit to cutting lending rates for pandemic-hit firms
Sixteen banks have pledged to reduce lending rates for enterprises affected by the Covid-19 pandemic this year with a total support value of VND20.3 trillion.
At a press briefing after the regular Cabinet meeting on August 11, Dao Minh Tu, Deputy Governor of the State Bank of Vietnam (SBV), said the pandemic had been raging in many localities and the Government had repeatedly sought action plans to eliminate the difficulties facing enterprises to reach the dual goals of fighting the pandemic and ensuring stable socioeconomic development.
Following the Government’s directives, the banking sector launched multiple solutions, such as rescheduling loan repayments and reducing lending rates, Lao Dong newspaper reported.
Most recently, 16 banks have committed to supporting the economy with the capital sourced from their profits. Four big State-owned banks--Vietcombank, VietinBank, Agribank and BIDV---have also committed a VND1-trillion package to reduce lending rates for enterprises and residents in localities facing difficulties caused by the pandemic and practicing social distancing under the prime minister’s Directive 16.
In addition, these banks have exempted all customers in HCMC and Binh Duong from banking fees.
SBV will ensure banks are living up to their commitments and will require them to regularly report the results of their support solutions, Tu added.
Since the Covid-19 pandemic broke out in Vietnam, the central bank has cut the operating interest rate by 1.5 to 2 percentage points and called on commercial banks to reduce their lending rates.
Tu said banks had cut lending rates with a total value of VND18.83 trillion since last year, benefitting multiple enterprises.
The central bank has also adopted social policies to contribute some VND7.5 trillion to the VND26-trillion support package for the disadvantaged during the pandemic.
Outdated framework impedes rail recovery
State-owned Vietnam Railways suffered severe losses during the last 18 months and now plans to cope by expanding international shipments of fruits and other agricultural products. However, various infrastructure issues need to be remedied beforehand to materialise feasibility.
Synchronous infrastructure planning for specialised goods is one area requiring improvement. Photo: Le Toan
When passenger trains of Vietnam Railways (VNR) had to cease their schedules in the first six months of 2021, VNR lost more than $17.4 million in revenues and ended with 80 per cent of the revenues in the same period in 2020 and just half of the first six months in 2019.
Vu Anh Minh, chairman of the VNR’s board, realised that the risk of capital loss was more than real, as accumulated losses in 2020 amounted to $56.5 million, while anticipated losses for 2021 currently stand at $40.9 million.
By trying to implement international routes, VNR is aiming to cut losses in the long term.
The first train with 23 40-foot containers by VNR’s Railway Transport and Trading JSC (Ratraco) departed on July 21 to Europe, opening up opportunities to transport agricultural products by rail from Vietnam to the “old continent”. Ratraco and its European partners will continue to organise eight such trips every month from Vietnam, with transit time for the entire journey estimated at 25-27 days.
Meanwhile, railways are already an optimal solution for exporting agricultural products to China, also representing a great opportunity for VNR to cut losses amid rising air and sea freight rates, as well as manual procedures and customs clearances at border gates.
Currently, the border gate between Vietnam and China in the northern province of Lang Son allows nine types of fruits to be exported to China. Nguyen Quang Tung, general director of TSY Co., Ltd., said that the Chinese side stipulates what fruit can be exported through a specific border gate.
TSY is an exporter of seafood and fruit to European and Chinese markets. For export by railway, goods go directly to Pingxiang Station in China for quarantine and import procedures. Meanwhile, transporting agricultural products by trucks takes twice as long and costs more.
Since last February, the refrigerated trains transporting dragon fruit are running directly from the Dong Dang border gate to Pingxiang, with a stable volume of goods regularly every week. Similarly, frozen fruits and other agricultural products can be exported by rail to China and from there to Central Asia and Europe.
While road transport has to deal with congestion at border gates, railways have a distinct advantage because they can clear customs very quickly as pandemic prevention and quarantine work for drivers and accompanying personnel is much simpler than on the road.
Ratraco’s cooperation with the General Department of Vietnam Customs allows the opening of more railway stations in Vinh, Dong Ha, and Dong Hoi in the central region to serve as international hubs for imports and exports via railway. It is likely that these connections will also attract fruit transports from Thailand that are transshipped by road through Laos to Vietnam, and then exported to China through the Dong Dang border gate.
Despite the advantages of international railways, the infrastructure remains the biggest weakness, limiting VNR’s cooperation plans to promote Vietnam’s agricultural exports. In 2020, VNR opened a route to transport agricultural products from the south-central province of Binh Thuan to China. However, while the amount of transported goods was high, their absolute value remained low.
The biggest difficulty for VNR is that most of its warehouses have been deteriorating, without any facility suitable to store and preserve fresh and high-value goods. The entire railway system has currently only four stations with cargo yards and equipment for handling and storing containers: Lao Cai, Dong Anh, Yen Vien, and Trang Bom.
Tran Thanh Hai, deputy director of the Foreign Trade Agency under the Ministry of Industry and Trade, spoke at many domestic and international conferences about the lack of synchronous infrastructure planning for the transportation of specialised goods such as agricultural products and, at the same time, the lack of connections between railways and river and seaports.
“Vietnam Railways has four international transport stations for agricultural products and all of them are in the northern region. Meanwhile, it is required to also have several of these stations in the central and southern regions to facilitate international trade by railways,” Hai said.
VNR built one more temporary warehouse with a capacity of 2,000 square metres at Song Than Station in the southern province of Binh Duong for standard bulk cargo handling, but Hai argued that this warehouse fails to meet the standards for the distribution of commercial goods.
VNR’s plan to stop its losses is also affected by the lack of synchronous connectivity with other modes of transport. Some important economic regions such as the Mekong River Delta and the Central Highlands do not yet have any railways.
Investment and development in the railway sector requires high synchronisation with infrastructure and facilities. The railway investment rate is high, but commercial advantages remain low compared to other types of investment, with long payback periods and an unattractive feasibility for financiers.
Positive outlook for pangasius exports to Brazilian market
Despites facing difficulties in entering the European Union and Chinese markets, Vietnamese pangasius exports to the Brazilian market by mid-July enjoyed an annual surge of 86.8% to US$35.5 million, according to industry insiders.
At present, Brazilian consumers are seeking to purchase nutritious, high-quality and healthy frozen seafood products such as pangasius as the world moves into the post-pandemic recovery period, and Vietnam is considered a potential supplier of this type of fish, said the Vietnam Association of Seafood Exporters and Producers (VASEP).
Approximately 20 Vietnamese businesses got involved in exporting frozen pangasius fillets to Brazil in the first half of the year, said VASEP adding demand for processed convenience products continues to rise in the South American country.
As several major cities in Brazil are bouncing back from the COVID-19 crisis, Vietnamese pangasius businesses have more chances to export their products to this market in the near future.
However, pangasius enterprises in the Mekong Delta region are facing numerous challenges due to the latest resurgence of the pandemic, according to experts.
They said almost all pangasius firms are currently struggling to iron out snags, including a rise in the price of input materials and high transportation costs of their products.
Meanwhile, Duong Nghia Quoc, chairman of the Vietnam Pangasius Association, suggested workers should be vaccinated against COVID-19 to maintain the workforce for production.
He also suggested that support should also be provided to local enterprises in terms of credit, tax exemptions, and reductions to enable them to overcome the challenging period as soon as possible.
Railway sector sees great opportunities amid COVID-19
The current COVID-19 crisis is creating opportunities for the railway sector thanks to its prominent advantages in international transport.
According to Tran The Hung, General Director of the Railway Transport and Trading Joint Stock Company (Ratraco), said that while a drop was seen in passenger transport, the transport of goods rose 20 percent in volume and 16 percent in revenue.
Regarding the efficiency of the Vietnam-Belgium direct railway route, which has been launched since July with three trips so far, Hung said that although specific effectiveness has yet to be evaluated, the Vietnamese railway sector’s engagement in logistics service supply chain has provided more options for exporters when maritime shipment faces surging costs and takes longer time.
Departing from Yen Vien Station in Hanoi, the train with 23 containers stops at Zhenzhou city of China’s Henan province and connect to the Asia-Europe train to reach its destination.
Due to limited railway infrastructure and container management, Ratraco has yet to be able to carry all 41 containers in a train to Europe, said Hung.
He added that the firm is working with partners to develop plans to operate one trip per week in a fixed schedule from Vietnam to Belgium. The firm expects to launch additional routes from Vietnam to Germany, Russia and Poland at the end of the third quarter.
The Ratraco leader held that in the long term, it is necessary to connect railways with seaports, thus optimising the efficiency of both transport types and reducing cost and environmental pollution./.
Quang Ninh: Disbursement of public investment increases 43 percent in seven months
The northern province of Quang Ninh disbursed more than 8.1 trillion VND (352.8 million USD) as of July 31, equivalent to 43.3 percent of the plan for the full year, according to the province’s Department of Planning and Investment (DPI).
It represented an increase of 5.5 percent compared to the same period last year.
With such a good disbursement, it is expected that many key projects of Quang Ninh province will be inaugurated on schedule. Specifically, three projects of the Van Don - Mong Cai highway, Ha Long - Cam Pha coastal road, and Cua Luc 1 bridge are expected to be inaugurated on January 1 next year at the latest.
The Ha Long - Cam Pha coastal road, which connects Ha Long and Cam Pha city, is part of the provincial transport development plan through 2020 with a vision to 2030.
The project has a total investment of over 1.36 trillion VND (59 million USD) sourced from the local budget. It is designed to have four lanes for vehicles with a maximum speed of 60km per hour.
Once the project's construction is completed, it is expected to attract domestic and foreign tourists to spiritual, resort and medical tourism sites in the province, especially popular destinations such as Ha Long Bay and Bai Tu Long Bay.
With an investment of over 2.1 trillion VND (89.26 million USD), the Cua Luc 1 Bridge and connecting roads will have a total length of over 4.2km.
The project is scheduled for completion in 2022 which is expected to ease the overload of Bai Chay Bridge and ensure smooth traffic between the north and south of Ha Long, even during the rainy season.
According to provincial Department of Planning and Investment, in the context of the COVID-19 outbreak, Quang Ninh has performed well in disbursing public investment capital thanks to its concentrated resources for investment, which has ensured expenditure tasks, especially for important projects.
There is no need to supplement additional capital for its key projects, but focussing on disbursement of capial that was planned at the beginning of the year. Investment procedures are being completed to ensure the progress of the projects, the department said.
The settlement of outstanding debts for basic construction is done step by step. However, there arose some factors that affected the province’s disbursement of public investment capital this year, it said.
The COVID-19 pandemic from the beginning of the year has slowed down the collection of land use fees and leasing water surface of localities.
As a result, it affected the balance of the capital already arranged for the projects as well as the progress of their implementation and disbursement.
For projects using capital from the new rural building programme, the capital was not allocated until April, thus, the disbursement would be made after June 30.
Quang Ninh province has the target of 100 percent of public investment as planned at the beginning of the year. By the end of the third quarter, the disbursement will reach at least 80 percent.
It is striving to achieve the gross regional domestic product of over 10 percent for the whole year and total state budget revenue will obtain 51 trillion VND (2.2 billion USD).
To achieve the above targets, the province will focus on accelerating the construction progress of key projects such as Van Don - Mong Cai expressway, Ha Long - Cam Pha coastal road, Cua Luc 1 bridge, Cua Luc 3 bridge, a road connecting Ha Long - Hai Phong highway and provincial road 338, said the Department of Planning and Investment.
It will also tighten financial discipline at all levels and attach responsibilities of heads of agencies, units, and localities to disbursement results, considering this an important basis for evaluation of officials.
Outstanding debt relating to basic construction will be strictly controlled. The project is implemented only when the capital source and balance of capital have been identified. Heads of localities have to take responsibility for any outstanding debts incurs, the department said./.
Vietnam's exports of phones, components continue to surge
Vietnam's exports of phones and components brought in 29.35 billion USD in the first seven months of 2021, a year-on-year rise of 11.9 percent, according to the Ministry of Industry and Trade.
They continued to be the top export products of Vietnam, accounting for 15.8 percent of the country’s total export revenue in the January-July period, followed by electronic products, computers, and components with an export value of 27.4 billion USD.
Leading export markets of Vietnam in the period included China, the US, members of the European Union and ASEAN, Japan and the Republic of Korea.
In the coming time, Vietnam will seek new potential export markets for the products in Africa, Latin America, Middle East and India, among others./.
Essential goods production hit by lack of workers, lack of transport
Many businesses in HCM City and southern provinces producing essential goods, including medical masks and personal protective equipment, face difficulty in sustaining their operations due to a lack of workers and transportation problems due to social distancing.
The HCM City Department of Industry and Trade said they face difficulties mainly because of regulations that only 30 per cent of workers are allowed on site and suspension of operations after workers were found to be infected with COVID-19.
Those that remain open have difficulty transporting both raw materials and finished products.
Earlier this week, the department called on relevant agencies to create favourable conditions for medical equipment firms to remain operational.
It urged export processing and industrial zones, Hi-Tech Park, Thu Duc City, and districts to mitigate difficulties and ensure smooth distribution of essential goods.
MoT sets target to disburse at least 60 per cent of public investment plan by September
The Ministry of Transport (MoT) has just issued Notice No.285/TB-BGTVT, ordering that at least 60 per cent of the public investment plan be disbursed (about $1.13 billion) by September.
The MoT has been allocated about VND43.401 trillion ($1.89 billion) of public investment capital in 2021. Of this, it plans to disburse VND3.076 trillion($133.7 million) in August.
Along with that, an additional around VND980 billion ($42.6 million) must be disbursed to compensate for delayed progress in July. The relevant units have to complete the disbursement of more than VND24.4 trillion ($1.1 billion) in the rest of the year. By September 2021, at least 60 per cent of the plan must be disbursed (around $1.13 billion).
According to fresh data, by the end of July, the MoT has disbursed 44.1 per cent of the assigned plan.
The disbursed capital mainly went to site clearance compensation, advance payment for contracts and capital recovery, as well as payment of outstanding debts. Meanwhile, the number of completing construction is still relatively low.
SHB temporarily locks foreign ownership ratio at 10 per cent
Saigon-Hanoi Commercial Joint Stock Bank (SHB) confirmed that it would temporarily lock its foreign ownership ratio at 10 per cent, and is now negotiating with several foreign investors.
As a result of locking its foreign ownership limit (FOL) from the previous 20 per cent, SHB could execute its plan of offering and issuing additional shares, which was approved by its board at the Annual General Meeting of Shareholders in April.
The rules of the State Securities Comission stipulate that the FOL cannot be locked for longer than six months. At the end of this time limit or in case the bank completes the issuance or offering to foreign investors at an earlier time, the bank will have to coordinate with the Vietnam Depositary Centre to adjust the ratio.
Previously, the bank approved paying stock dividends in 2019 and 2020 at the rate of 10 and 10.5 per cent, respectively.
If these plans are completed, the bank's charter capital will increase significantly to more than VND26.6trillion ($1.16 billion).
Do Quang Hien, chairman of the Board of Directors at SHB, revealed that there are a number of international financial groups, banks and investment funds expressing their interest to become strategic investors of SHB.
Furthermore, the bank’s shareholders also approved a plan to increase capital by VND5 trillion ($217.4 million) from the issuance of shares for foreign investors and foreign strategic investors.
Besides strengthening its foundation, SHB targets forging stronger connections with international stakeholders and tap into a more vibrant ecosystem.
Earlier this month, Nguyen Van Le, former general director of the bank, resigned after 21 years of working, citing poor health.
According to local media, SHB is currently in the final rounds of negotiations to choose a foreign partner from a line-up including high-profile names from the US, Singapore, and South Korea that are looking to collaborate with SHB and develop its retail and digital banking services. SHB is also selling its shares in two overseas subsidiaries, SHB Laos and SHB Cambodia.
The bank now aims to find a potential suitor to sell a part of its ownership in consumer finance company SHB Finance.
Given its solid growth foundation, SHB wants to partner up with foreign investors to diversify its sources and enhance its operation to be in line with international standards.
Currently, SHB is working with 2-3 partners to sell capital at SHB Finance, and the deal is almost completed. The bank will publicly announce the final results to its shareholders.
Incredible potential in reach for fintech
Fuelled by generous amounts of venture capital, Vietnam’s fintech landscape is flying high on Singaporean investors’ agenda, promising to offer more innovative customer value propositions than traditional banks.
Vietnamese payments provider VNLife – parent company of VNPAY – last week confirmed that it has secured $250 million from the investors General Atlantic and Dragoneer Investment Group.
Niraan De Silva, VNLife’s managing director, said that the fresh investment valued the company at well over $1 billion. He also said the proceeds will be used to strengthen its fintech business, as well as its online travel and retail software units. However, the company is still years away from an initial public offering, according to Nikkei Asia.
De Silva also noted that VNLife, in comparison to international peers such as Visa and Mastercard, is more profitable because of its focus on selling services to businesses.
The potential for cashless payments in Vietnam is vast, according to Visa’s Consumer Payment Attitudes Study 2021.
Besides VNLife, GIC also owns 2.55 per cent stake in state-owned Vietcombank – one of Vietnam’s largest lenders. The Singaporean sovereign wealth fund also accelerates the latest digital banking services and fintech trends in Vietnam through its Vietcombank investment.
Likewise, Vietnam’s major e-wallet company MoMo is allegedly reported raising additional capital from international private equity funds, particularly from Singaporean financiers.
The e-wallet successfully raised $100 million in January from a group of investors including Warburg Pincus, Goodwater Capital LLC, Kora Management, and others. MoMo is racing to expand its suite of services, branching out into areas like motorcycle insurance and consumer loans.
Elsewhere, last week’s latest draft decision on the national strategy for the development of the digital economy and society to 2025 has set a firm target on digital identity and cashless payments. By 2025, around 80 per cent of Vietnamese citizens will have an e-account with the non-cash payment rate reaching 50 per cent. Besides this, the rate of non-cash payments for electricity and water bills would be around 75 per cent, and 90 per cent of points of sale will adopt cashless payment options.
Given the rapid digitalisation observed in recent years and the government’s policies towards financial inclusivity – combined with the State Bank of Vietnam’s policies of strengthening banks’ balance sheets – the current situation provides a unique mix where Vietnamese banks can keep growing rapidly and increase profitability by introducing innovative financial products to reach out to traditionally cash-based sectors of the economy, according to Alexander Gold, CEO of Bankograph.
“About 70 per cent of Vietnam’s population are in need of financial services as they are unbanked or under banked, which creates excellent opportunities for Singaporean fintechs,” Gold said. “Bankograph is pioneering buy now pay later options as a platform for banking partners and will focus on launching these services with multiple banking partners in Vietnam in 2021.”
Scott Krivokopich, managing partner from 1982 Ventures, a Singapore-based venture capital firm focusing on early stage fintech in Southeast Asia, told VIR, “Vietnam is a core market for us. We have been able to execute strong investments, and our fintech expertise and networking in Vietnam have given us an advantage, while other investors have had to watch from the sidelines.”
1982 Ventures’ Vietnamese portfolio spans affordable mortgage and property financing options, consumer friendly payments, and a digital investment platform that aims to make investing more accessible to Vietnamese people.
“Now more than ever we are seeing higher quality Vietnamese deals. We expect our portfolio to have a significant allocation to this country, and the next set of Southeast Asian unicorns will come from the fintech space,” Krivokopich said.
“Fintech is complex and focus is key. The seed stage is the most attractive to invest in Southeast Asia from a risk-adjusted returns basis and presents the largest opportunity. Historically, the best performing Southeast Asian funds had been seed funds with less than $100 million in assets under management,” he explained.
The venture capital ecosystem has positively developed, and venture capital funds have already raised larger funds, focusing on series A and B investments.
“The fintech opportunity in Vietnam has an incredible potential,” Krivokopich believed. “The support and promotion of digital payments by the government is going to unlock additional opportunities to build more fintech businesses that not only help to address financial inclusion issues but also build a new layer of infrastructure to strengthen the finance system.”
“In short, we are watching all fintech segments but are very keen on the entire payment value chain, digital banking, and lending, as well as some other sectors,” he added.
SBA proposes allowing laborers to go home after work
After a while of adopting the stay-at-work mode, the Saigon Hi-tech Park Businesses Association (SBA) has proposed piloting a solution that allows laborers to travel to work and back home.
The proposal has been sent to the authority of the Saigon Hi-tech Park and the Hepza Business Association, the local media reported.
Ho Thi Thu Uyen, head of SBA, pointed out multiple shortcomings in the stay-at-work mode such as causing pressure on and raising costs for enterprises and leading to the lack of high-skilled workers.
Solutions should help reduce pressure on enterprises and facilitate laborers’ daily lives and help them feel comfortable.
Specifically, SBA proposed piloting the solution for 14 days, from August 16 to 30, at Intel Products Vietnam Co., Ltd and Datalogic Vietnam Co., Ltd.
The solution should be piloted on high-skilled laborers who hold important positions in production lines and have received one shot of the Covid-19 vaccine.
The two companies will make a list of eligible laborers and report the detailed plans to the authority of the Saigon Hi-tech Park before employing the solution. The pilot should not involve more than 300 workers. Enterprises should begin with small groups of 20-30 people but not exceed 100 people each.
The laborers must make commitments to travel only between their houses and factories and comply with anti-pandemic measures while staying at home. Those living with them must not leave their residences and must undergo Covid-19 tests once a week. Enterprises will pay for the testing costs.
In addition, the laborers joining the pilot scheme will install apps chosen by the authority of the Saigon Hi-tech Park so that their employers and the hi-tech park can control their travel.
Meanwhile, enterprises must commit to transporting laborers, conducting Covid-19 tests for them twice in the first five days and twice in the next week, arranging separate working spaces for them for the first two weeks and sending daily reports to the authority of the Saigon Hi-tech Park.
SBA also proposed maintaining the pilot even if Covid-19 cases are detected but the number of coronavirus-infected workers must be lower than 10% of the number of the laborers.
Uyen said since July 15, enterprises at the Saigon Hi-tech Park have applied the stay-at-work mode. However, the cost of the mode is high, affecting their budgets and operation plans.
Moreover, enterprises have faced multiple difficulties. For example, vehicles transporting workers and meals for them have been stopped at checkpoints, causing delays.
Boost economy with larger stimulus package
The economic damage caused by the fourth wave of the Covid-19 pandemic has been huge, so an economic stimulus package that is large in scale is needed to have an effective impact on the current economic situation.
However, greater attention must also be paid to the capacity of the budget, and not to burden the budget with undue risks.
The economic support packages during the pandemic of many countries around the world can be divided into two main groups, namely, direct support for aggregate demand through tax cuts, spending increase, and employment support programs; and financial support for businesses through loans and guarantee programs.
According to IMF statistics, the economic support package of developed countries such as Japan, Italy, the UK, and Germany will account for 30% to 40% of GDP in 2020, while some expenditure will continue to be implemented throughout 2021. Therefore, the size of economic support packages of developing countries will be much lower (Table 1).
This fourth wave of the Covid-19 pandemic has had a greater and more serious impact on the national economy in general and Ho Chi Minh City in particular, so the scale of support packages needs to be large enough to be effective. In other words, real money must be injected to restart the economy once again. In our opinion, this economic support package must be at 4% of GDP, which means 3% for additional expenses and 1% for loan and guarantee support, equivalent to VND 251,000 bn. This amount will be suitable to cover the scale of the Vietnamese economy.
With such a strong stimulus package, the credit support this time should focus on small and medium enterprises (SMEs), households, and individuals borrowing for daily consumption. These are the subjects who have been badly hurt by the Covid-19 pandemic, and their ability to withstand damage is many times lower than that of large enterprises. This is also the group that has difficulty in accessing ordinary banks and even more difficulty to access support packages.
To resolve this problem, the government needs to shift the creditor's risk to its side because when the uncertainty is high, banks will limit lending. Therefore, in order to open capital flow to these subjects, the government may need to accept this risk. The implementation of the state credit guarantee program here will play the same role as deposit guarantee and lender, as a last resort. This policy, in general, will help increase social welfare in risky situations that have been brought about due to the Covid-19 pandemic.
At the same time, it is necessary to quickly disburse public investment in the remaining months of 2021. By the end of the first six months of 2021, the disbursement rate for public investment was only 29.02% of the plan, so it is necessary to accelerate public investment in the remaining months of 2021 to support the economy. In case it is not possible to disburse according to schedule and plan, the Government can reallocate this public investment for economic relief activities.
Policies to support SMEs will focus on two types of support. Firstly, support liquidity, defer taxes, fees, contributions of SMEs; financial support; job maintenance and wage subsidies. Secondly, structural support is needed to help SMEs adapt to the changing business environment and build resilience. Specifically, the Government directed ministries and branches must quickly implement simplified procedures for exemption, reduction, and postponement of payment of taxes, fees, and contributions of operating enterprises in 2021. Supporting businesses must restart business activities right after the end of this fourth wave of the pandemic. The Government can support paying part wages directly to employees for businesses that are operating with a commitment not to reduce labor, especially those that use a lot of labor.
As support resources are limited, it is necessary to classify businesses that can operate continuously. For example, businesses that are directly affected but are able to continue operating should be prioritized for timely support by various proposals such as postponement of payment of social insurance, land rent, loan interest, and tax deferral. These enterprises can also provide additional credit guarantees through commercial banks.
The selection of enterprises in each industry to support should have a certain order of priority, based on two factors. First, recovery speed and second, a stable level of output of products. Businesses that recover quickly will help support the economy and from there have a spill over effect for other businesses to recover. Thus, policies should have a focus on groups of businesses, not spread out. Finally, and more importantly, it is necessary to create a favorable business environment to help businesses quickly recover from the pandemic.
In addition, it is necessary to develop a program to support businesses to cope with the pandemic. Empirical studies show that enterprises with experience in responding to natural disasters and epidemics will be able to recover labor and output faster than inexperienced enterprises. Therefore, the Government needs to develop programs to support businesses with information and knowledge in preparing to respond to natural disasters and epidemics to reduce risks. In addition, the Government should have policies to promote the role of the private sector in the prevention and response to future events such as the current Covid-19 pandemic.
Maritime Administration of Vung Tau asks load reduction for Cai Mep–Thi Vai Port
The Maritime Administration of Vung Tau City, on August 12, reported the review results and proposed solutions to cope with cargo congestion at Tan Cang Cat Lai Port in Ho Chi Minh City, which has also affected the whole Cai Mep - Thi Vai port cluster in the neighboring province of Ba Ria - Vung Tau.
According to the Maritime Administration of Vung Tau, currently, many factories in the Southeast region have stopped operations, so most of the imported containers of machinery and materials all stay at ports because enterprises do not need to pick them up to serve the production. Meanwhile, the imported containers and empty containers of shipping lines are continuously transferred back, causing warehouses at ports to be congested and overloaded.
Currently, the volume of goods is about 12,000 containers in the yard of Cai Mep - Thi Vai Port and about 35,000 containers in Tan Cang Cai Mep Port and Tan Cang Cai Mep International Port. If there is no specific solution, some ports will have to suspend operations because the number of containers exceeds the receipt and storage capacities.
The Maritime Administration of Vung Tau suggested that ports need to ask shipping lines to commit to releasing imported containers in a short time and have preferential policies if shipping lines fulfill their commitments and vice versa.
Besides, it requires synchronous coordination between agencies and departments, especially the customs sector, to create favorable conditions for container goods to move quickly to reduce congestion at ports in Ba Ria - Vung Tau Province.
VPBank's charter capital to reach 3.3 billion USD by 2022
By issuing stock dividends and private offering from equity and issuing stocks for foreign investors, Vietnam Prosperity Joint-Stock Commercial Bank (VPBank) is expected to raise its charter capital to 75 trillion VND (3.3 billion USD).
At an online meeting with analysts and individual investors on August 12, VPBank’s leader said that besides the recent plan to issue shares with a total rate of 80 percent, including 62.15 percent to pay dividends and 17.85 percent to be issued from equity, the bank plans to increase charter capital through sources like the sale of 49 percent of FE Credit's capital for nearly 1.4 billion USD and the private offering of 15 percent of capital for strategic foreign shareholders.
If these deals are completed, VPBank’s charter capital will increase to 75 trillion VND by 2022. This is even higher than that of State-owned banks such as Vietcombank, BIDV and VietinBank, making it the bank with the highest charter capital in the market.
VPBank is consulting shareholders in writing on the issuance of stock dividends and additional issuance from the development investment fund and the reserve fund for supplemental charter capital.
Accordingly, the bank is expected to issue a maximum of nearly two trillion new shares, equivalent to the total issuance value of 19.76 trillion VND to increase charter capital. Shareholders with 10,000 shares of VPBbank will receive a total of 8,000 new shares, including 6,215 shares from dividends and 1,785 shares from equity.
After the issuance, the bank's charter capital will increase to nearly 45.1 trillion VND. This is one of the three sources for the capital rise mentioned above.
Regarding business results, the bank’s leader said that its total revenue climbed 22.5 percent in the first six months of the year. Of which, net interest income reached 18 trillion VND, up 17 percent./.
Consumer rights protection programme approved
Prime Minister Pham Minh Chinh has approved a consumer rights protection programme for 2021 – 2025 that focuses on the development of a consultancy and support system for consumers.
The Ministry of Industry and Trade (MoIT) was assigned to be in charge of the programme.
According to Trinh Anh Tuan, Deputy Director of the MoIT's Vietnam Competition and Consumer Protection Authority (VCCA), it works toward building, upgrading, and connecting related consultancy systems; assisting consumers nationwide; and developing a data system on consumer rights protection.
The programme aims at ensuring that 90 percent of complains and petitions are received, advised and supported at State management agencies, social organisations and providers of services and goods involved. The expected rate of successfully tackled petitions is 80 percent.
Under the programme, at least 500 training courses in the nation and overseas for civil servants and workers in charge of consumer rights protection at organisations and businesses will be held.
At least 60 provinces and cities nationwide are set to establish their own consumer rights protection associations, while about 40 of them will develop networks of social organisations for consumer rights protection in districts.
Meanwhile, a nationwide conciliation system on consumer rights protection will be set up in accordance with the law.
Official data showed that, in 2020, the VCCA received more than 14,000 complaints and consultancy requests, mostly on real estate, insurance, and consumption.
A total of 89 percent of the petitions received via its hotline was supported due to a limited number of operators./.
Vinh Phuc province gives priority to supporting industry development
The northern province of Vinh Phuc is adopting a number of mechanisms and policies to attract investment in the development of supporting industries, considering it as an important step to build a sustainable industry.
Hoang Thi Thuy Lan, Secretary of the provincial Party Committee, said the province has set a target that its supporting industries will become a part of the supply chains with high value products in the production lines of large domestic and international corporations by 2025.
Besides incentives policies from the Government, the province has also been focusing on many solutions to promote the growth of supporting industries.
The provincial authorities have proactively created favourable conditions for businesses such as investing in modern and synchronous infrastructure in industrial parks and paying attention to administrative reforms.
Enterprises are facilitated to access capital and assisted in technology innovation and transfer as well as enhancing productivity and quality.
The province will cover costs of organising the assessment and certification of the capacity for enterprises engaged in supporting industries and support 70 percent of fees for holding seminars to promote domestic and foreign investment in the field as well as payment for organising trade fairs which aims to connect supporting industries.
It will subsidise 70 percent of training costs to improve the quality of human resources to meet the requirements of the industry.
According to the provincial Department of Industry and Trade, the province currently has nearly 240 enterprises operating in the field of supporting industries or related to the industry. Most of them belong to the mechanical industry, automobiles, motorcycles, garment and textiles, informatics, and building materials. This is considered as a foundation for industries to develop towards using advanced and highly competitive technologies and increasing the localisation rate of key industrial products.
Despite being affected by the COVID-19 pandemic, the industrial production index of Vinh Phuc in the first six months of this year still reached over 145.91 trillion VND (6 billion USD), an increase of more than 26 percent over the same period last year.
Most of the main products of the supporting industries have obtained high growth, in which, the production of automobiles rose by 49 percent and electronic components rose by 34 percent.
Supporting industries in Vinh Phuc have created jobs for tens of thousands of workers with stable incomes. The average salary for manual labourers in the industries is between 6 to 8 million VND per person per month while a technical or skilled worker earns up to 15 million VND per month.
Vietnam Precision Industry 1 Co. Ltd. in Khai Quang Industrial Park, Vinh Yen city, is an example. It is an enterprise with 100 percent investment capital from Taiwan (China), specialising in the production of components and spare parts for automobiles and motorcycles, medical equipment for domestic and export markets.
The company's revenue has increased steadily from 2.7 trillion VND in 2015 to nearly 4 trillion VND last year. It has generated stable jobs for 4,100 employees with an income of around 10 million VND per person per month.
Jahwa Vina Co., Ltd., a FDI enterprise in the Khai Quang Industrial Park, is reported to obtain revenue of over 1 trillion VND in the first months of this year despite the impact of the COVID-19 pandemic.
It creates jobs for more than 4,000 labourers with income between 6-8 million VND per person per month. The company is striving to complete the goal of producing about 300 tonnes of electronic components and 150 tonnes of information technology components a year.
Vinh Phuc province has set the goal of having more than 50 enterprises engaged in supporting industries that are eligible to become first-tier and second-tier suppliers for large economic groups and at least 10 enterprises in the industry that meet international standards and participating in the global supply chains by 2025.
Positive outlook ahead for local coffee exports to Morocco
There remains bright prospects moving forward for Vietnamese coffee exports to Morocco due to the North African country having a huge demand for coffee, especially unroasted coffee products, according to the Vietnamese Trade Office in Morocco.
This was unveiled during an online consultation session regardin the Moroccan market on August 12, an event which was jointly held by the Vietnam Trade Promotion Agency and Vietnamese Trade Office in Morocco.
Do Viet Phuong, head of the Vietnamese Trade Office in Morocco, stated that over the past decade two-way trade turnover between both sides has maintained its growth momentum.
Vietnam's key export items to Morocco includes rice, peppers, canned pineapples, phones and components, computers, coffee, seafood, spices, chemical products, garment and textiles, and footwear.
According to a report released by the Vietnamese Trade Office in Morocco, agricultural products make up 60% of total Vietnamese export turnover to the North African nation.
Domestic enterprises have therefore been advised to boost their exports to this market as a result of its political stability and notable social security in the region.
Furthermore, the country also enjoys a favourable geographical position, as it is close to Europe and located on the route which connects the Indian Ocean to both the Atlantic and Mediterranean.
These factors will serve to open up greater opportunities for Vietnamese agricultural products to gain entry into other markets throughout Africa, the Middle East, and Europe.
Moreover, the enforcement of the African Continental Free Trade Area (AfCFTA) agreement in January 1 has made Africa the largest free trade area, a move which will be a favourable factor for Vietnamese goods as they seek to penetrate the market moving forward.
Phuong also pointed out that Vietnamese goods are capable of reaching the mid- and high-end segments in the Moroccan market due to their consumers being highly appreciative of Vietnamese export commodities.
However, he also outlined a number of hurdles in exporting local agricultural products to the market, including fierce competition from China, Indonesia, and India, high import tariffs, and limited payment methods.
Australia increases imports of Vietnamese shrimp
Australia increased its imports of Vietnamese shrimp products during the first half of the year, while simultaneously decreasing its imports from Thailand and China, according to details released by the Vietnam Association of Seafood Exporters and Producers (VASEP).
The latest statistics compiled by the International Trade Center (ITC) indicate that Australia’s shrimp imports during the opening five months of the year surged by 40% to US$127 million compared to the same period from last year.
In line with this, Australian imports of Vietnamese shrimp throughout the reviewed period soared by 93% to reach US$79 million, while imports from the Thai and Chinese markets dropped by 4% and 31%, respectively.
Most notably, Vietnam, Thailand, China, Malaysia, and Brunei remain the five largest shrimp suppliers to the Australian market, of which the nation took the lead with its market share accounting for 62% of total imports, despite having a higher price compared to its regional peers.
Furthermore, Thailand and China ranked second and third with market shares reaching 16% and 10%, respectively.
The Oceania nation represents a potential shrimp export market in the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) bloc.
Over the past two years, the export value of Vietnamese shrimp being exported to the Australian market has witnessed robust growth.
Moreover, the second quarter of the year saw 81 Vietnamese enterprises participate in exporting shrimp to the demanding market, of which Minh Phu Seafood Corporation led the way as the largest exporter.
There were a diverse range of shrimp exports to the Australian market in the first half of the year, with white-leg shrimp and frozen black tiger shrimp making up the largest proportion.
Source: VNA/VNS/VOV/VIR/SGT/SGGP/Nhan Dan/Hanoitimes
VIETNAM BUSINESS NEWS AUGUST 14
Shares recover on large-cap stocks