VIETNAM BUSINESS NEWS AUGUST 16
Remittance to Ho Chi Minh City, Viet Nam' economic locomotive, reached US$3.16 billion in the first six months of 2022, representing a year-on-year decrease of 13%, according to the State Bank of Viet Nam’s branch in the Southern metropolis.
The decline reflects economic difficulties of Vietnamese people living overseas.
Foreign remittances account for around 12 percent of the city's GRDP, becoming an important resource for socio-economic development in not only the city but also the country as a whole.
Last year, remittances to the city set new record high of US$ 7.1 billion, accounting for more than half of the national volume.
Viet Nam was the eighth largest remittance recipient globally and the third biggest in Asia-Pacific last year, according to the World Bank and the Global Knowledge Partnership on Migration and Development (KNOMAD).
Remittance to Viet Nam is projected to grow around 2.6 percent this year thanks to the removal of lockdowns and easing of COVID-19 restrictions in many countries.
Local gold prices record decline
Gold prices in the Vietnamese market endured a drop on August 16 as they hovered at around VND66 million per tael, following the declining trend occurring in global markets.
This comes as at 8:32 a.m. on August 16 prices of SJC gold at the Saigon Gold and Jewelry Company were being traded at VND65.9 million per tael for the buying rate and VND66.9 million per tael for the selling rate, representing a decline of VND200,000 per tael compared to the rate previously recorded one day earlier.
Simultaneously, DOJI Group also moved to reduce their buying price to VND66.05 million per tael and their selling price to VND67.05 million per tael, thereby marking a decline of VND100,000 and VND50,000 per tael from transactions on August 15.
Elsewhere, Phu Quy Group listed each tael of SJC gold at VND65.9 million for buying and VND66.9 million for selling, a decline of VND100,000 per tael.
In terms of the global market, gold prices decreased slightly by US$20.4 per ounce to reach US$1,779.6 per ounce in the early morning.
Currently, global gold converted into VND is priced at roughly VND50.5 million per tael, approximately VND16.4 million per tael lower than the domestic transaction price.
Seafood producers eye record profit yet face mounting challenges
Many seafood producers posted record profits in the second quarter of this year thanks to the favourable export market. However, mounting hardships linger in the remainder of the year.
Vinh Hoan Corporation (VHC), one of the top producers and exporters of basa fish in the country, raked in more than $34.2 million in the second quarter of this year, triple compared to one year ago, setting a record since the company came on the bourse in the fourth quarter of 2007. This means VHC has fulfilled nearly 84 per cent of the year's profit plan just after six months.
Similarly, Sao Ta Food JSC also eyed a record quarterly profit since going on the bourse in the fourth quarter of 2006. Along with this, the company counted more than $5.13 million in post-tax profit in Q2, showing a 30 per cent jump on-year.
IDI Development and Investment Corporation reaped nearly $100 million in Q2, up 8.5-fold on-year, reaching its highest profit level since its first disclosure of information to the public in the first quarter of 2010.
Nam Viet JSC saw its post-tax profit soaring 10-fold to exceed $104.3 million in Q2, setting a record since the first quarter of 2019.
Minh Phu Seafood Corporation deemed Vietnam’s largest shrimp exporter, earned more than $8.52 million in post-tax profit during the period, up 2.5-fold on-year based on the parent company’s separate financial report.
The producers have attributed their accelerated profits to high export prices and favourable export business.
According to VASEP, rising production costs increased the prices of many seafood items, thus lowering the products’ competitiveness.
About a 20 per cent hike in aquafeed price post-pandemic has significantly pushed up the production cost as the aquafeed price for basa fish and shrimp accounts for about 65-70 per cent of the production cost.
80 firms register for Agritechnica Asia Live
A total of 80 domestic and foreign firms have registered to take part in the upcoming 2022 Agritechnica Asia Live, scheduled to take place in the Mekong Delta city of Can Tho on August 24-26.
It is annually held in Asian nations, aiming to foster sustainable mechanisation by demonstrating the use of up-to-date technologies in the local cropping systems.
This is also the first time an Agritechnica Asia Live takes place in Vietnam, with the number of participants estimated to reach about 4,000.
Trade fair looks to expand “One Commune One Product” markets
A trade fair is taking place in the northeastern province of Bac Kan from August 10-16, selling a variety of “One Commune One Product” (OCOP) from different localities across the country. The event looks to broaden the markets for local farm produce.
Many high-quality products are being sold at the event. Through this trade fair, Na Rì cooperative in Bac Kan province hopes to reach more customers in Hanoi capital.
This trade fair helps broaden the markets for farm produce with small and large-scale production.
Nine agro export items surpass 1-billion-USD mark
Nine agricultural products have recorded an export turnover of over 1 billion USD since the beginning of this year, heard a seminar on July 26.
They comprised coffee, rubber, cashew nuts, vegetables and fruit, rice, tra fish (pangasius), shrimp, wood products and materials in service of production, according to the Customs Control and Supervision Department under the General Department of Customs.
Vietnam has earned 201 billion USD from exports so far this year, up 17.3% year-on-year, of which nearly 28 billion USD came from agriculture, a rise of 13.9%.
Vietnam - promising market for investment: Thai firm
Vietnam and India are the most promising markets for long-term investment as the two countries have responded well to global challenges and uncertainties thanks to their fast-growing economies, according to Krungthai Asset Management (KTAM) Public Company Limited of Thailand.
CEO of KTAM Chavinda Hanratanakool said although the global economy remains volatile as a result of the tense political situation, there were signs that inflation had begun to slow down after several central banks took steps to ease inflationary pressures.
KTAM has started to see signs of economic recovery in countries with high-growth potential, including Vietnam and India, which have become increasingly attractive for investment, she noted.
Vietnam has been an attractive investment destination due to its high economic growth and comparatively low inflation, the official said, adding that such conditions present a new investment opportunity.
According Chavinda, for Vietnam, the KTAM Vietnam Equity Fund (KT-VIETNAM-A) is an active investment aimed at generating superior market returns. Through equity investment, the fund focuses on stocks that benefit from economic growth and listed companies on both domestic and foreign markets.
Investors who are looking to invest with tax benefits can opt for the KTAM Vietnam Equity Fund (Saving Type), also known as KT-VIETNAM-SSF, she said.
Hung Yen’s industrial parks attract nearly 323 million USD
The Management Board of Industrial Parks in the northern province of Hung Yen has so far this year recorded about 322.9 million USD worth of new capital and that added to existing projects.
There were a total of 15 new projects and 23 existing ones with added capital. In July alone, the figures were four and two, respectively, with their total value topping 49.6 million USD. The board said it has regularly supported investors in running their projects and business operations.
To date, Hung Yen’s industrial parks house 434 operating projects, including 246 foreign-funded ones. Businesses in these parks are hiring some 76,000 employees.
Moc Bai border economic zone needs more investment to reach potential: experts
Tay Ninh Province needs to focus more on developing the Moc Bai border economic zone’s infrastructure and investment to help it reach its economic potential, experts have said.
During a recent conference in Tay Ninh, Nguyen Manh Hung, deputy party secretary of the province, said that Tay Ninh plays a key role in connecting southern provinces to Cambodia, the Greater Mekong Sub-region, and other ASEAN countries, which lends strategic importance to its Moc Bai border gate.
Nguyen Thanh Tam, party secretary of Tay Ninh Province, said that the over 21,000 hectares Moc Bai border economic zone is one of the first of its kind in Viet Nam, and the central government pays a great deal of attention to it.
Nguyen Xuan Thang, chairman of the Central Theory Council, said, “Moc Bai has great potential to become the intersection of the Southern economic corridor.”
However, development on the area has been slow, and its ability to attract businesses is still limited.
After over 20 years, Moc Bai border economic zone has only received VND1 trillion (US$42.7 million) worth of investment, which is not enough to develop it, even though the province’s fiscal space is high, he said.
Vo Thanh Thong, Deputy Minister of Planning and Investment, said that Tay Ninh needs to utilise the area’s existing natural and labour advantages to build policies to attract investment.
The province should focus on favourable tax policies for businesses, administrative procedures reform, and co-operation with relevant authorities and neighbouring Cambodia.
Synchronised development of infrastructure for business production, export and import, and locals’ lives is also important, especially Moc Bai’s traffic infrastructure, he said.
Nguyen Xuan Thang said that the completion of the under-construction HCM City – Moc Bai Expressway will also play a big role in the zone’s development, as it can shorten travel distance to HCM City’s Tan Son Nhat Airport.
Vietnamese enterprises limited in global supply chain
Vietnamese enterprises currently have limited participation in the global supply chain, and are not deeply involved in the value chain of multinational corporations in Viet Nam.
Pham Tuan Anh, deputy director of the Industry Agency said that Viet Nam currently had about 5,000 processing and manufacturing enterprises engaged in providing spare parts for the automotive and mechanical industries.
In which 70 per cent of enterprises supply domestic manufacturers, 8 per cent supply exporters and 17 per cent are involved in providing both. Only about 30 per cent of supporting industry enterprises have joined the global supply chain and value chain. This linkage is loose for many reasons, the main one being the limited internal resources of the industry, said Anh.
Do Thi Thuy Huong, Vice President of the Viet Nam Association for Supporting Industries, said that the specificity of the industry required capital and technology, which were two weaknesses of Vietnamese enterprises.
Besides, the linkage between enterprises in Viet Nam is still limited and can be said to be weak. They have not fully been aware of the great benefits of linking into the domestic business community or between domestic and foreign enterprises.
Credit institutions to provide customer information to tax authorities
The State Bank of Viet Nam (SBV) has issued an official letter to credit institutions and foreign bank branches on information provision and coordination with tax administration agencies.
SBV proposes credit institutions follow Government decrees on keeping secret and providing customer information of credit institutions, foreign bank branches and circulars and guiding documents of the Ministry of Finance on providing information and coordinating with tax administration agencies.
Tax authorities are responsible for information confidentiality and are fully responsible for information safety.
A General Department of Taxation official letter from this year requires and guides commercial banks and foreign bank branches to provide information on taxpayers' payment accounts.
S.Korea becomes Vietnam’s largest tourism source market
Over 196,000 tourists from South Korea visited Vietnam in the first seven months of the year, making the former the latter’s biggest tourism source market during the period.
The high return of South Korean travelers to Vietnam was attributed to the resumption of air services between the two countries.
Besides, local airlines raised the number of flights from Seoul in South Korea to Hanoi, HCMC and Danang to entice South Korean visitors back to Vietnam.
Between January and July, as many as 954,600 international tourists traveled to Vietnam, down 90.3% against the same period in 2019.
In addition to South Korea, other major source markets were the United States and Asian nations.
Before the pandemic, China was always the country’s largest source market, followed by South Korea. However, China has yet to allow its residents to travel abroad due to fears of the Covid spread, so South Korea overtook the former to top the list of Vietnam’s major source markets during the seven-month period of this year.
Cuu Long JOC oil production likely to hit 400 million barrels this year
Oil exploitation in Block 15.1 by Cuu Long Joint Operating Company (Cuu Long JOC) is likely to reach a new milestone of 400 million barrels in December, the firm has announced.
Cuu Long JOC - comprising PetroVietnam, ConocoPhillips, KNOC, SK Corporation, and Geopetrol - is the second-biggest oil producer in Vietnam that was established in 1998.
According to Cuu Long JOC Director Nguyen Van Que, as of 2011, the firm had paid 11.9 billion USD to the State budget, and posted a revenue of 27.3 billion USD.
In the first seven months of this year, the company installed underground pumps and successfully drilled two more wells. Therefore, the firm expects to pay 864 million USD to the State budget this year, he said.
According to Que, Cuu Long JOC's investment in oil and gas exploration and production from 2003 to the end of 2022 will reach about 7.75 billion USD.
Fruit, vegetable exports sustain growth for second month in a row
Vietnam’s fruit and vegetable exports in July recorded growth for the second consecutive month, increasing 0.3% to US$260 million over June thanks to positive signs recorded in China, the country’s largest export market.
These promising results can largely be attributed to the recent convenient customs clearances for fruit and vegetable exports via border gates, after China has granted a license for the import of several Vietnamese fruit and vegetable products via official channels.
The Chinese side has agreed to pilot the import of Vietnamese passion fruit through border gates in Guangxi province as of July 1, while the General Administration of Customs of China (GACC) has recently signed a protocol relating to phytosanitary requirements for durian exports from Vietnam as of July 11.
However, experts point out that the sector’s growth momentum is not anticipated to make any breakthroughs this year due to China’s ‘Zero-COVID’ policy, the Russia-Ukraine conflict, and high inflation impacting countries globally.
In addition, relevant food safety and hygiene issues remain a barrier to Vietnamese fruit and vegetable exports to foreign markets.
Statistics compiled by the General Department of Vietnam Customs reveal that fruit and vegetable exports to the Americas surged by 21.9% to US$162.1 million, while exports to Europe declined slightly 6.9% to US$144.4 million compared to the same period from last year.
Overall, the country’s total export value of fruit and vegetables throughout the seven-month period dropped by 17.1% to US$1.7 billion compared to last year’s corresponding period.
Digital transformation in banking providing users with more convenience
The meaningful switch in transaction habits of the Vietnamese to cashless payment after the Covid-19 outbreak last year has greatly contributed to digital transformation in the banking sector.
About 95 percent of commercial banks in Vietnam has been implementing their own digital transformation strategies and plans. Many banking activities like opening a savings account, depositing money into a savings account, opening a spending account, registering for a bank card or e-wallet, transferring money between bank accounts.
Several banks are developing their digital version or their own banking ecosystem to satisfy diverse demands of their clients.
Deputy Governor of the State Bank of Vietnam Pham Tien Dung informed that the digital platform of all banks in Vietnam has significantly developed, especially the e-payment function. Many banks now have more than 90 percent of their clients carry out transactions online, far exceeding the set target of 70 percent in 2025.
Statistics from the State Bank of Vietnam reveal that in the first 6 months of 2022, transactions with cashless payment increased by 77 percent in quantity and 30 percent in value compared to this time last year. The rises of transaction quantity and value under the form of Internet were 63.2 percent and 32.3 percent; of smart phones 98.3 percent and 84.3 percent; of QR code 86 percent and 127 percent.
68 percent of Vietnamese adults now have their own bank accounts. 5.5 million new bank accounts and 8.9 million bank cards were opened via the eKYC method. 1.77 million new Mobile Money account were opened, 67 percent of which comes from the countryside and remote areas.
COVID quarantine for imported processed seafood to be removed
COVID-related quarantine requirements for frozen processed seafood products imported for the purpose of reprocessing for export will be removed as from September 11 under a recently issued circular by the Ministry of Agriculture and Rural Development.
The ministry said it would foster exports of agricultural products by reducing the number of product categories subject to quarantine and using technology to speed up the customs process.
The Vietnam Association of Seafood Exporters and Producers (VASEP) had petitioned the Government to amend the quarantine regulations saying they were causing the seafood industry “big problems.”
Products processed from animals, animal products and those containing aquatic creatures, frozen, dried, cooked, or meant for instant use, continue to be quarantined, and this means the size and number of shipments subject to quarantine are huge, it said.
The maintenance and expansion of the list of "processed goods" that are subject to quarantine are an excessive and unnecessary measure, it said.
VASEP also wants quarantining to be removed for processed seafood products imported for domestic consumption that are assessed as not posing a risk of spreading aquatic diseases.
Cashew exports to face challenges caused by high inflation
Cashew nut exports are set to face a number of difficulties moving into the third quarter of the year due to high inflation hitting several major global economies, according to details given by the Ministry of Industry and Trade (MoIT).
Statistics compiled by the MoIT indicate that the country exported 145,000 tonnes of cashew worth US$879.8 million in the second quarter of the year, representing a rise of 37.5% in volume and 40.1% in value compared to the previous quarter.
Throughout the first half of the year, the nation exported 249,360 tonnes of cashew nuts worth US$1.5 billion, representing a decline of 9.1% in volume and 9.2% in value against the same period from last year.
Furthermore, cashew nut exports during the initial seven months of the year reached US$1.76 billion, a fall of 10.5% in volume and 12.1% in value on-year.
High freight costs have also led to the price of imported cashew nuts to pushed up from 15% to 20% against the same period from last year. Moving forward, cashew nut exports are forecast to endure a downward trajectory over the following months, possibly lasting until the end of the year.
Huge transport investment expected to vitalise central regions
More than $4.34 billion are to be put into expanding the national highway network from 2021 to 2025, which is expected to create a turnaround to transport infrastructure development in the central regions.
In mid-July, the MoT greenlit 12 component projects belonging to the North-South Highway’s eastern part in the 2021-2025 period and assigned relevant project management units to act as the developers.
According to Deputy Minister of Transport Nguyen Duy Lam, the MoT has required these to scale up preparations to be able to complete procedures on selecting consultants in July to ensure project kick-off late this year.
During 2021-2025, 10 out of 12 component projects of the North-South Highway’s eastern part will be taking place in the central region with a total length reaching 620km.
If taking into account the 565km belonging to the North-South Highway’s eastern part in the 2017-2020 period which is being implemented by the MoT, the total passage of the North-South Highway in the central region will reach 1,200km.
During 2021-2025, 10 out of 12 component projects of the North-South Highway’s eastern part will be taking place in the central region with a total length reaching 620km.
Manufacturing output continues to rise amidst signs of slowing growth
The Vietnamese manufacturing sector remained in growth territory at the start of the third quarter of the year, but there were some signs of demand softening.
The S&P Global Vietnam Manufacturing Purchasing Managers' Index remained above the 50.0 point no-change mark for the tenth successive month in July, signalling a further strengthening of business conditions. That said, at 51.2 points – down from 54.0 points in June – the index signalled a less significant improvement.
New orders increased for the tenth month running, but the rate of expansion eased to its weakest point since April. Meanwhile, new export business rose solidly and at a faster pace than total new orders.
The continued growth of new orders encouraged manufacturers to keep expanding production in July. Output rose for the fourth successive month. However, the rate of expansion was only marginal and the softest in the current growth sequence amidst signs of lower demand, shipping difficulties, and pricing pressure.
There were signs, however, of price and supply pressures easing at the start of the third quarter.
In terms of prices, the rate of input cost inflation slowed sharply and was the weakest since October 2020 as the prices of some inputs fell on global markets. The latest rise was still above the series average due to higher costs for oil, gas, and freight.
Similarly, output prices continued to rise, but the rate of inflation slowed and was only modest.
Hanoi connects commercial banks with local businesses
More than 100 businesses and 43 investors of industrial clusters and nearly 20 commercial banks participated in a conference on August 15 to connect local firms of Hanoi with commercial banks and the Hanoi Development Investment Fund (HANIF).
In order to promptly launch infrastructure projects in industrial parks and clusters in the city, the Hanoi Department of Industry and Trade suggested that businesses should coordinate closely with credit institutions to access capital sources to serve their production and business activities.
According to the department, in the first seven months of this year, total retail revenue of goods and services rose about 22% year on year. Meanwhile, the index of industrial production (IIP) of the city increased 7.2% over the same period last year, and the export revenue was estimated at 9.84 billion USD, up 17.2% year on year. In the January-July period, the consumer price index (CPI) of the city increased 3.38% year on year.
According to the Hanoi Industrial and Export Processing Zones Authority (HIZA), the capital city is now home to 10 operating IPs, covering a total area of over 1,347 ha. Nine of them have an occupancy rate of nearly 100%.
Despite complicated developments of the COVID-19 pandemic, the city's IPs and EPZs lured nearly 40.7 million USD invested in seven new projects and an additional 198 million USD poured into 23 existing projects in 2021.
Industrial parks in Hanoi had attracted 303 foreign direct investment projects worth nearly 6.1 billion USD and 399 domestic projects with total registered capital of almost 18 trillion VND (788 million USD) by the beginning of December last year.