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VIETNAM BUSINESS NEWS AUGUST 22

Vietnam's electronics industry appeals to foreign investors: entrepreneur.com

 

Vietnam's electronics industry appeals to foreign investors: entrepreneur.com hinh anh 1

 

Vietnam’s electronics industry is still growing despite the impact of the COVID-19 pandemic, said an article published on newswire entrepreneur.com on August 19.

The article noted in recent years, the country has implemented some trade agreements with other countries and flexible policies to attract foreign investors and this would open opportunities for entrepreneurs as the industry plays an important role in Vietnam’s economy.

It was estimated Vietnam is one of the key electronics exporters ranking 12th place in the world, the author wrote, adding that there has been a steady increase in the nation’s exports with an average of 12 billion USD per year. The import of electronic products has nearly doubled between 2015 and 2019. Vietnam’s electronics industry is diverse.

The article also mentioned advantages the market offers investors. It said the Regional Comprehensive Economic Partnership will help lower tariffs on trade.

In addition, Vietnam has signed a free trade agreement with the EU, which will gradually reduce most tariffs, regulatory barriers, and red tape which should create opportunities for both sides to do business. The Vietnamese government will provide incentive scheme implementing a 30 percent corporate income tax (CIT) cut for certain business and companies working in the high-tech sector as well as in high-tech and specific industrial zones, and underdeveloped socio-economic regions.

According to the article, a new wave of the COVID-19 pandemic in Vietnam has resulted in lockdowns, restrictions and disruption to supply chains, and businesses shutdown. Despite such negative impact, plenty of foreign investors have chosen Vietnam as a top destination to set up their electronics production bases.

HCM City firms forced to close down due to lack of workers

Many firms in HCM City – the country's largest economic hub – have been forced to shutter operations due to a lack of workers, local media have reported.

According to the Vietnam Textile and Apparel Association (VITAS), the country's textile manufacturing supply chain was only working at 10-15 per cent capacity.

"Thousands of workers have fled the city because of the virus outbreak. Firms will have an enormous problem finding workers to resume their operations once the virus is under control. We anticipate at least 40 per cent of our members will experience a shortage of workers in the near future," said Vu Duc Giang, chairman of VITAS.

The situation is particularly dire in labour-intensive sectors, including footwear and wood processing.

"Even before the pandemic, our members were already having difficulty finding workers. The virus has made it even worse," said Nguyen Chanh Phuong, general secretary of the Handicraft and Wood Industry Association of Ho Chi Minh City.

Wood processing firms have reported a record-breaking number of contracts signed as demand for Vietnamese wood products has soared. Some firms said they would need to operate at full capacity until the end of the first quarter next year to meet demand.

The association said many among some 600 of its members, mostly located in Binh Duong, Dong Nai and Tay Ninh, were badly affected by the virus outbreak in HCM City. Many said they had lost up to 40 per cent of their workers since the virus outbreak.

To make matters worse, many among them were producing essential goods for people in parts of the city that had been put under strict social distancing.

"We simply do not have the manpower required to meet rising demand," said Nguyen Thi Xuan Mai, director of Wepar Environmental Technology - a supplier of potable water and water filter solutions located in Tan Phu District.

"Many of our workers have been stuck in quarantined areas. Many have quit out of fear of being infected at work," she said.

Firms have taken measures to hold on to their workers. Mai said her firm still kept workers who were furloughed on payroll, even if it could only manage to pay a part of their wage.

Female workers with newborns and babies were given small grants. In addition, all workers were made to put on PPE suits at work and had been registered in the local government vaccine priority list.

A Chau - ABC Bakery Co., has moved workers to neighbourhoods near their factories. The condiment maker has also set up living quarters and hired cooks to take care of their meals.

"We must do what we can so workers want to stay with us. Of course, such services cost us extra but it's important to make sure our labour force remains intact for future plans," said Kao Sieu Luc, the firm's director-general.

Some firms even agreed to pay their workers' wages in advance to keep them in the city.

"It's tough for us now but we still can manage. Holding on to our skilled workers is most important to us. Once the virus is under control we can resume production right away. From our perspective, it's way cheaper to spend to support our workers now than to hire and train new workers later," said Ngo Minh Hong, owner of a food processing business in Nha Be District.

"From now until the end of the year, firms in the city will need to fill 150,000 jobs. Sectors whose demand have not yet been severely reduced during the pandemic, including commerce, IT, medicine, textile and footwear, will likely experience a strong bounce back and therefore must recruit additional workers," said a report by the HCM City's Center of Forecasting Manpower Needs and Labour. 

Vietnam, Argentina eye stronger bilateral trade

Vietnam and Argentina have sought ways to raise their bilateral trade and diversify exports to gradually balance the trade during the seventh meeting of the Inter-Governmental Committee on Economic-Trade and Scientific-Technological Cooperation held virtually on August 20.

They reviewed outcomes reached since the sixth meeting in Buenos Aires in October 2018, and outlined tasks to boost bilateral cooperation in economy, trade, science and technology in the time ahead.

Argentina is Vietnam’s third biggest trade partner in Latin America and the fifth in America.

Despite impacts of COVID-19 in 2020, the two-way trade revenue still reached 3.95 billion USD, up 4.3 percent from the previous year. In the first half of 2021, the value exceeded 2 billion USD, up 21.76 percent year-on-year.

The two sides agreed to step up trade promotion and continue exchanges to open doors for agricultural products in each country.

They also looked into cooperation in other fields such as forensic anthropology, science and technology, and consented to forge collaboration in construction, job training, culture, sports and tourism./.

Hiring intentions remain positive in H2

Employers in various sectors in Vietnam are expecting hiring to recover in the second half of this year despite the ongoing impact of the Covid-19 pandemic, according to the latest survey of the ManpowerGroup Vietnam Research Team and the National Employment Services Center under the Ministry of Labor, Invalids and Social Affairs.

The Vietnam Employment Outlook survey, conducted on 152 employers in 17 sectors, showed that nearly 64% of the respondents were affected by the pandemic from mild to severe levels, while over 36% remained unaffected.

According to the General Statistics Office, Vietnam achieved a 5.64% GDP growth in the first half of 2021, higher than the 1.82% in the same period last year. Of which, the manufacturing and processing sector is among the key drivers of the economy, contributing 2.9% to the economic growth rate.

Although the overall economic outlook looks positive, employers seem less confident of recruiting in the second half. More than 80% of the surveyed enterprises plan to increase or maintain the current headcounts as compared with 93% of the equivalent index in the first two quarters. About one fifth of the respondents announced plans to trim hiring activities.

Nguyen Thu Trang, country head of Permanent Recruitment and Executive Search Services at ManpowerGroup Vietnam, shared that there has been an increase in permanent recruitment and executive search, especially in IT, electronics, energy and high technology. Given that the labor market is facing a scarcity of skills, senior IT and business transformation roles are particularly hard to fill.

Moreover, under the global impact of the pandemic and technological revolution, the job market is seeing a demand for positions that require digital skills, such as those in the finance and banking sector.

Despite the impact of the pandemic, employment activities are on the road to recovery. Up to 40% of employers expect their hiring plans to increase in the next three months, followed by over 24% foreseeing the same in the next six months. The strongest recruitment plans were reported in manufacturing and processing, wholesale, retail and trading, information and communications technology, education and training, construction and professional consulting services.

Le Thi Kim, head of Staffing and Outsourcing Services in the north at ManpowerGroup Vietnam, said since the beginning of the pandemic, the domestic labor market has been witnessing an increase in the relocation of factories from overseas to Vietnam. This means that more job opportunities are being created for the local workforce.

To keep employees safe while maintaining business activities, the surveyed employers also revealed their plans to apply multiple working options in the next three to six months. A quarter of the enterprises want to retain an absolute workplace-based model, over 41% plan to implement the hybrid work mode and nearly 22% are choosing flexible shift patterns. Just about 9% of the employers are aiming to arrange for their employees to work from home full-time.

Enhancing capacity of energy management, audit in Vietnam

The Technical Assistance for the Implementation of the EU-Vietnam Energy Facility (in short EU-Vietnam Energy Facility or EVEF) project in collaboration with the Department of Energy Efficiency and Sustainable Development under the Ministry of Industry and Trade (MoIT) on August 20 held an online consultation workshop on proposals to improve training programme and certification for energy managers and auditors towards lifelong learning.

Hanoi – The Technical Assistance for the Implementation of the EU-Vietnam Energy Facility (in short EU-Vietnam Energy Facility or EVEF) project in collaboration with the Department of Energy Efficiency and Sustainable Development under the Ministry of Industry and Trade (MoIT) on August 20 held an online consultation workshop on proposals to improve training programme and certification for energy managers and auditors towards lifelong learning.

Markus Bissel, head of Component Energy Efficiency under the Renewable Energy and Energy Efficiency (4E) Project, GIZ Vietnam, said it is necessary to research and build a training and certification model in the orientation of "lifelong learning" to enhance the quality of energy management and audit. It would help trainees to continuously update their knowledge to improve energy audit and management capacity, he said.

According to Dang Hai Dung from the Department of Energy Efficiency and Sustainable Development, energy management and audit will help businesses and the State be more proactive in energy efficiency planning.

The implementation of “lifelong learning” model is essential, he said, adding that it would continue to support energy managers to access new technologies and regulations related to energy after the initial certification.

Energy efficiency activities in Vietnam mainly focus on the industrial sector with 3,006 key energy consuming facilities in 2019, in which, 2,441 establishments are in the field of industrial production.

Nguyen Dang Minh, a representative of Vietnam Technology Solutions Company, said that the regulations related to the granting of certificates for energy managers have been specified clearly and fully.

However, the inconsistent training content between establishments authorised to providing certificates resulted in the uneven quality of learners, he said. Minh suggested the MoIT issue new updated training process along with guidance to enable training providers implement the process in a uniform manner.

The EVEF is a joint technical cooperation project funded by the EU and the German Federal Ministry for Economic Cooperation and Development (BMZ) and is implemented by Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH in close cooperation with the MoIT.

The project aims to contribute to the enhancing of governance of the energy sector to facilitate the shift to a more sustainable energy development path in Vietnam.

Vietnam’s exports to UAE surge over 40% in Jan-Jul

Vietnam exported goods worth US$2.8 billion to the United Arab Emirates (UAE) from January to July 2021, surging 40.8% compared with the same period last year.

On the other hand, the country spent US$286 million on imports from the UAE, increasing 13.3% year-on-year. This led to a trade surplus of US$2.514 billion with the UAE in the seven-month period.

Data of the General Department of Vietnam Customs showed that two-way trade between Vietnam and the UAE reached nearly US$3.1 billion between January and July, soaring 37.8% year-on-year.

According to the Vietnam Trade Office in the UAE, Vietnam has always enjoyed a trade surplus with the UAE.

The UAE is among the country’s 10 biggest export markets in the world and the biggest one in the Middle East and Africa.

Vietnam’s leading export commodity to the UAE in January-July was phones and phone parts with US$1.85 billion, surging 48.1% compared with the same period last year.

Other key commodities for export included computers and components, electronic products, machinery, equipment and accessories.

Commodities that achieved the strongest growth were cashew nuts with US$23 million, surging 200% and peppercorns with nearly US$40 million, growing 185% year-on-year.

On the other hand, Vietnam imported plastic materials worth US$123.6 million from the UAE, soaring 48.8% year-on-year, liquefied petroleum gas worth US$57 million, common metals worth US$19.2 million, animal feed worth US$13.8 million and petroleum products worth US$15.5 million.

Given the year-end peak season and the recovery of global trade, the Vietnam Trade Office in the UAE expected that Vietnam’s exports to the UAE will continue growing and reach US$5 billion this year.

Mekong Delta Region enjoys 22.04% rise in export turnover

Export turnover in the Mekong Delta region increased by 22.04% in the first six months of the year.

Statistics from the Vietnam Chamber of Commerce and Industry, Can Tho Branch, showed that the Mekong Deta's import-export turnover reached USD16.78bn, an increase of 28.17% compared to the same period last year. Export revenue was USD10.37bn, increased by 22.04% and the import turnover was USD6.4bn, increased by 39.55% on last year.

Long An and Tien Giang provinces have the highest export turnover. Long An gained USD3.4bn, an increase of 22.53% on last year and Tien Giang reached USD1.89bn in export turnover, an increase of 30.07%. Only Tra Vinh experienced an import surplus.

There are 1,814 active FDI projects in the Mekong Delta region with a total investment cost of USD33.3bn. It accounted for 5.37% of the country's FDI projects and 8.37% of the country's FDI investment.

Long An Province led the list with 1,256 projects and USD12bn investment cost. Tien Giang was in second place with 129 projects and USD2.7bn investment cost.

5,128 new firms were set up in the first six months of 2021, an increase of 12.28% compared to last year. The total registered capital was VND70.6bn (USD3m). However, the number of employed people decreased by 22.38% to 44,810.

According to the Vietnam Chamber of Commerce and Industry, Can Tho Branch, the outlook of the Mekong Delta Region was bright despite the ongoing Covid-19 outbreak.

Textile industry faces challenges in meeting export target

The textile and garment industry is forecast to face difficulties in realising its export turnover target of 39 billion USD this year due to unprecedented severe impacts caused by the COVID-19 pandemic.

Hong Sheng Wen, Deputy General Director of Kwang Viet Garment Co., Ltd in the Mekong Delta province of Tien Giang, said that from July 15, 2021, the enterprise's production activities had to be suspended dueto the effects of the health crisis.

According to a report of the Vietnam National Textile and Garment Group (Vinatex), since June 2021, when the pandemic broke out in southern localities, production and business activities of garment firms have been facing numerous difficulties.

In just one month, over 40,000 workers, mainly in the southern region, were laid off.|

Besides the burden of responsibilities for their employees, textile enterprises have also faced risks related to economic contracts with their customers.

In the first 6 months of 2021, the textile and garment export value hit 15.2 billion USD, up 15 percent year-on-year. This is a good result in the context of COVID-19.

However, Chairman of Vinatex Le Tien Truong said the achievements in the first half could completely be lost if creative solutions in production and business are not implemented drastically.

He added that production disruptions can seriously affect supply chains and the lives of workers.

Secretary General of the Vietnam Textile and Apparel Association (VITAS) Hoang Ngoc Anh said the textile industry will face many challenges in the remaining months of 2021.

The social distancing order will negatively affect business results of textile companies, she said, adding that the rate of factories suspending operations has reached 35 percent, she noted.

VITAS said the export turnover of the sector is predicted to reach 32-33 billion USD this year, equivalent to 84 percent the plan set, if the pandemic is under control in late August.

Textile enterprises are currently receiving many orders from US and the European Union, it added./.

Consumer finance in major tie-up tendency

The pandemic-triggered turbulence continues to gnaw at the consumer finance industry in Vietnam, but some players are exploring potential new approaches to the challenges, particularly from some international investors.

FE Credit – the largest consumer finance company in Vietnam, accounting for more than 50 per cent of market share – has reported declining profit since last year.

In the first half of 2021, the company’s pre-tax profit was only $52.2 million, equivalent to nearly 50 per cent of the same period last year. FE Credit only contributes 12 per cent to VPBank’s consolidated profits, while this ratio before the pandemic was between 40-50 per cent.

Securities group VNDIRECT believes the pandemic has taken a toll on the consumer finance industry. FE Credit’s non-performing loans (NPL) spiked 9.1 per cent at end of H1, from 7.7 per cent at the end of the first quarter and 6.2 per cent at end of 2020. However, the mega deal of $1.4 billion for 49 per cent stake in FE Credit between VPBank and Japanese lender SMFG would create more business synergies for VPBank to leverage other banking services.

“VPBank is in the process of finalising the paperwork to recognise this profit, which is expected in the second half of 2021,” VNDIRECT confirmed to VIR. “FE Credit will focus mainly on familiar customers, and try to expand to other potential customers such as doctors and teachers. In addition, SMFG will help FE credit to increase its influence in the Vietnamese market.”

Meanwhile, HDSaison – the consumer finance arm of HDBank and Japan’s Credit Saison – recorded a 5.5 per cent increase in its pre-tax profit in H1/2021. The lender’s cost-to-total income ratio continues to improve strongly, currently only 46.7 per cent, lower than last year’s figures. Its NPL ratio at the end of June remained the same as at the beginning of the year.

Currently, FE Credit is the company with the largest market share, followed by Home Credit, HD Saison, and MCredit. Home Credit is the only wholly foreign-owned entity.

While FE Credit and HD Saison are experiencing a dwindling path in the last two years, MCredit, a company under the ownership of MB and Shinsei Bank of Japan, has witnessed a remarkable expansion. It reported pre-tax profits of $15.04 million for the first half of the year, up 188 per cent over the same period last year.

MCredit targets low-, middle-income, and underbanked customers, without collateral. Despite its late arrival, MCredit entered the top four consumer finance companies in Vietnam, although its charter capital was only the tenth-highest.

Brokerage ACB Securities (ACBS) cautioned that the rapid growth can also trigger bad debt risks to MCredit. In 2021, ACBS expects bad debt to decrease due to the firm’s stricter policy since last year, and because it no longer focuses on aggressive market growth as in the previous periods.

Elsewhere, privately-held lender SHB last week revealed it is working with 2-3 partners to sell capital at SHB Finance – the bank’s consumer finance subsidiary, with the deal almost completed.

Besides this, SHB is also selling its shares in two overseas subsidiaries, SHB Laos and SHB Cambodia. SHB wants to partner up with foreign investors to diversify its sources and enhance its operation to be in line with international standards.

“SHB, as the parent company, will selectively choose the healthiest partners, those with a strong financial background,” said Do Quang Hien, chairman of SHB.

Meanwhile, Nguyen Hoang Linh, MSB CEO, said that the bank is negotiating to divest all stakes in its consumer finance arm FCCOM, with the final arrangement slated to be completed in 2022.

MSB’s initial plan was to find a foreign investor to receive 50 per cent of the bank’s ownership in FCCOM. However, the bank now plans to divest all stakes in the consumer finance company.

In April, South Korean credit card company Huyndai Card failed to acquire a 50-per-cent stake in FCCOM in a deal that would have been worth roughly $42 million.

Meanwhile, other fintech players also picked up on the consumer finance industry. E-wallet player MoMo is striving to expand its suite of services, which will help to branch out into areas like motorcycle insurance and consumer loans. In addition, it has acquired a software company that aims to speed up product development, Nikkei Asia reported.

Tuong Nguyen, executive vice chairman and co-CEO at MoMo, emphasised that the diverse portfolio of services has helped to drive revenues to the firm.

Son La exports 10 tonnes of red-flesh dragon fruit to Russia

The northern mountainous province of Son La held a ceremony in Thuan Chau district on August 20 to export 10 tonnes of red-flesh dragon fruit to Russia.

Thuan Chau is one of the localities in Son La province paying attention to developing high-quality fruit trees. Over the past years, the district has developed 3,600 hectares of fruit trees of all kinds, of which 50 hectares are covered with red-flesh dragon fruit. A total of 40 hectares of dragon fruit are being harvested with total output in 2021 estimated at 440 tonnes.

Thuan Chau district plans to expand the area of red-flesh dragon fruit to 150-200 hectares during 2021-2025.

Nguyen Xuan Hoang, Vice Chairman of the district People's Committee, said that in order to synchronously implement solutions to ensure production, processing and sale of agricultural products in adaptation to the market affected by the COVID-19 pandemic, the locality has searched for and connected with partners in Vietnam and abroad.

The district has also created favourable conditions for businesses and cooperatives to meet, learn and sign sale contracts with businesses and distributors.

The export of red-flesh dragon fruit to Russia will contribute to improving value, stabilising sale and helping farmers feel secure in production, thus creating momentum to promote socio-economic development of Son La province in general and Thuan Chau district in particular, he added./.

Russian consumers taste Vietnamese red flesh dragon fruit

A total of 10 tonnes of red flesh dragon fruit were shipped to the Russian market on August 20, according to the Thuan Chau district People's Committee in the northern province of Son La.

The red flesh dragon fruit originates from Thuan Chau La district and has recently proved popular among Russian consumers thanks to its high quality and sweet taste.

Over the past two years local producers of the tropical fruit have been able to affirm  product quality in the demanding market through the application of advanced science and technology in agricultural production.

These moves have contributed to significantly improving product value and stabilising output, helping local farmers to maintain production especially in the context of complicated developments of the COVID-19 pandemic.

A local farmer in Thuan Chau district revealed that his family has earned a stable income since cultivating dragon fruit, as the fruit has great potential for export and domestic consumption in comparison to tea products.

Circular offers strict level for bank risks

Despite the government coming to the aid of banks and vulnerable businesses in the past year, the latest COVID-19 wave has rendered some debt restructuring and payment scheduling by the country’s central bank less effective than expected.

The State Bank of Vietnam (SBV) officially issued Circular No.11/2021/TT-NHNN on July 30, replacing a previous circular from 2013 on asset classifications, risk provisioning, and utilisation of provisioning by credit institutions and foreign bank branches – a move reflecting the central bank’s concerted efforts on handling soured loans.

At the same time, the SBV is also working with relevant parties to develop a comprehensive set of legal instruments to handle bad debts of credit institutions and foreign bank branches. Besides this, amendments to the previous legal framework on debt structure are also being seriously considered.

In the fresh Circular 11, the SBV added a new scope of regulations to require banks to classify and provision and risk of assets arising from activities such as buying and selling debt, government bonds, and selling valuable papers, as well as promissory notes, bills, and certificates of deposit and bonds issued by other credit institutions in Vietnam.

At the same time, the new circular also stipulates that all credit institutions are applicable, including commercial banks and non-banking credit institutions, except those under special control, such as Dong A Bank or GPBank.

“The frequency of debt classification and provisioning is increased, from a quarterly to a monthly basis, which allows the bank to deal with credit deterioration more aggressively and swiftly,” said Nguyen Quoc Hung, general secretary of the Vietnam Banking Association (VBA).

Hoang Viet Phuong, head of Research at SSI, however believed the fresh move would not bring about a significant change in bank risk management.

“Publicly-listed banks under our coverage, such as Techcombank and Vietcombank, have already classified outstanding loans and provisioning on a monthly basis,” Phuong told VIR. “However, from a general perspective, Circular 11 now acts as a document to ensure that the whole industry applies the same standards, with a stricter foundation for debt classification.”

In April, the SBV promulgated Circular No.03/2021/TT-NHNN, announcing additional conditions for debt restructuring and extending the roadmap for restructuring debts provisions until 2023. Specifically, the SBV enables credit institutions to reschedule debt repayment terms for incurring repayment obligations from January 23 to the end of this year.

After a few months of application, Hung of the VBA admitted that Circular 03 has not yet provided permission for credit institutions to freeze debts without interests for restructuring, and the debt freezing mechanism without charging additional interests is only applicable for agricultural and rural development loans.

Elsewhere, the SBV has lifted credit growth limits in 2021 for some banks with an increase of 2-6 per cent.

Phuong of SSI expected the SBV to extend the credit limits at the end of this quarter or the beginning of the next. The increased credit growth limit will create favourable conditions for commercial banks to reduce lending interest rates.

“Given the complicated developments of the pandemic in this country, we do not exclude the scenario that the SBV will loosen monetary policy more by reducing interest rates or the required reserve ratio, in the case that inflation is still under control. This is also a trend that global central banks are picking up, particularly under the adverse impact of the Delta variant,” she noted.

Besides new legal conditions, the upcoming bad debt exchange platform from Vietnam Asset Management Company (VAMC) is being viewed as a promising legal intermediary which can effectively deal with bad debts.

Doan Van Thang, general director of VAMC, acknowledged this platform will connect buyers and sellers professionally, with the joint efforts from 23 credit institutions in the country. In 2017, the National Assembly passed Resolution No.42/2017/QH14 on the pilot settlement of bad debts of credit institutions, applicable to debt arisen and considered as soured before August 15, 2017.

It is only a pilot with short validity period of five years, thus the legal corridor does not apply to handling all bad debts in the long term. With the end of the pilot set for next year, VAMC’s debt exchange is part of its plan to restructure and improve capacity towards 2022.

“However, during the implementation process, VAMC found that there were still obstacles in law enforcement related to debt settlement activities such as seizing collateral, applying simplified procedures to resolving disputes related to collateral at courts, and tax policies that have not actively supported the process of handling collateral for bad debt recovery,” Thang said.

Vietcombank Securities explained, “If the coronavirus pandemic is not controlled soon, the entire banking industry will face the risk of bad debt in the next period, which will affect profits in the years afterwards.”

UAE increases imports from Vietnamese market

The United Arab Emirates (UAE) imported goods worth a total of US$2.8 billion from Vietnam during the opening seven months of the year, representing an annual rise of 40.8%, reports the General Department of Vietnam Customs.

Mobile phones and components record the highest export turnover among key export items to the UAE market
Two-way trade turnover between the two countries surged by approximately 37.8% year on year to reach nearly US$3.1 billion throughout the reviewed period.

Of the total, Vietnamese exports soared by 40.8% to reach US$2.8 billion, while its imports also saw an increase of 13.3% to over US$286 million.

Currently, the UAE represents one of Vietnam’s 10 largest export markets and its biggest trading partner in the Middle East and Africa, according to the Vietnamese Trade Office in the UAE.

Most notably, mobile phones and components witnessed the highest export turnover of US$1.85 billion, marking an annual rise of 48.1%, followed by computers, electronic products and components with US$246.4 million, up 17.4%, and machinery, equipment, tools and spare parts with US$148.1 million, up 43.1%.

Elsewhere, strong export growth was also recorded in agricultural products, including cashew nuts with approximately US$23 million, representing an increase of 200%, and pepper with nearly US$40 million, up 185%.

Despite recording strong growth in several sectors, a number of export items experienced a downward trajectory, including bags, wallets, suitcases, hats, umbrellas, tea, rice, and paper.

Major Vietnamese imports from the UAE include plastics, petroleum products, liquefied petroleum gas, metals, animal feed, and raw materials.

With continued growth momentum moving forward, their two-way trade turnover is anticipated to reach US$5 billion by the end of the year.

Enhancing capacity of energy management, audit in Vietnam

The Technical Assistance for the Implementation of the EU-Vietnam Energy Facility (in short EU-Vietnam Energy Facility or EVEF) project in collaboration with the Department of Energy Efficiency and Sustainable Development under the Ministry of Industry and Trade (MoIT) on August 20 held an online consultation workshop on proposals to improve training programme and certification for energy managers and auditors towards lifelong learning. 

Markus Bissel, head of Component Energy Efficiency under the Renewable Energy and Energy Efficiency (4E) Project, GIZ Vietnam, said it is necessary to research and build a training and certification model in the orientation of "lifelong learning" to enhance the quality of energy management and audit. It would help trainees to continuously update their knowledge to improve energy audit and management capacity, he said.

According to Dang Hai Dung from the Department of Energy Efficiency and Sustainable Development, energy management and audit will help businesses and the State be more proactive in energy efficiency planning.

The implementation of “lifelong learning” model is essential, he said, adding that it would continue to support energy managers to access new technologies and regulations related to energy after the initial certification.

Energy efficiency activities in Vietnam mainly focus on the industrial sector with 3,006 key energy consuming facilities in 2019, in which, 2,441 establishments are in the field of industrial production.

Nguyen Dang Minh, a representative of Vietnam Technology Solutions Company, said that the regulations related to the granting of certificates for energy managers have been specified clearly and fully. 

However,  the inconsistent training content between establishments authorised to providing certificates resulted in the uneven quality of learners, he said. Minh suggested the MoIT issue new updated training process along with guidance to enable training providers implement the process in a uniform manner. 

The EVEF is a joint technical cooperation project funded by the EU and the German Federal Ministry for Economic Cooperation and Development (BMZ) and is implemented by Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH in close cooperation with the MoIT. 

The project aims to contribute to the enhancing of governance of the energy sector to facilitate the shift to a more sustainable energy development path in Vietnam.

Vietnam exports over 290 million medical masks abroad

Vietnamese enterprises shipped more than 290 million medical masks of various types worldwide during the opening seven months of the year, according to the General Department of Vietnam Customs.

July alone witnessed 18 major local firms export 12.53 million pieces, representing a sharp decline of 37.5% compared to June’s figure.

Garment makers say the export of medical masks has began to endure a downward trajectory since May as the outbreak is showing signs of waning in many countries globally.

Customs data show Vietnam exported 64.7 million pieces in January, 48.08 million in February, 60.72 million in March, 62.45 million in April, 21.45 million in May and 20.7 million in June.

If the COVID-19 outbreak is brought under control, the export figure for August is likely to fall further.

Minister: slow public capital disbursement could cause loss of economic opportunities

Minister of Planning and Investment Nguyen Chi Dung has said low disbursement of public investment capital amid the COVID-19 pandemic could waste resources and result in the loss of opportunities to create a driving force for economic development.

As of late July, ministries, centrally-run agencies and localities had allocated over 398.6 billion VND for qualified projects, while more than 62.6 trillion VND have yet to be allocated, or 13.6 percent of the plan assigned by the PM.

As of July 31, public investment capital disbursement reached 36.71 percent of the yearly plan, or 3.96 percentage points lower than the rate recorded in the same period last year. The rate of disbursement of official development assistance (ODA) and preferential loans of foreign sponsors was just 7.52 percent.

Deputy Minister of Planning and Investment Tran Quoc Phuong said one of the reasons for the slow disbursement was the late allocation of State capital in ministries, agencies and localities this year, especially to national target programmes.

At the same time, there is a lack of punishment mechanism for units that lag behind in allocating State budget. Besides, the delay in dealing with obstacles in site clearance and resettlement in several projects also hinders the pace of disbursement.

Some ministries, agencies and localities, especially those not under social distancing order, showed a lack of political determination in the work.

PM Pham Minh Chinh on August 16 issued dispatch No.1082/CD-TTg dated August 16 on accelerating the disbursement of public investment capital.

Accordingly, he asked ministries, agencies and localities to step up disbursement in combination with ensuring the quality of works and the efficiency of capital use. He ordered strengthening discipline in disbursement and upholding the role and responsibility of leaders in the effort.

The PM also required strict punishments for investors, project management boards, individuals and organisations that intentionally cause difficulties and delay in disbursement.

Minister of Planning and Investment Nguyen Chi Dung also urged ministries, centrally-run agencies and localities to adopt measures to promote economic growth and public capital disbursement in the remaining months of 2021 and early 2022 in accordance with the Government’s Resolution No.63/NQ-CP.

The Government also requested the immediate establishment of a special working team in each ministry, agency and locality led by the top official to accelerate the work in each ministry, agency and locality./.

Vietnam tops global crypto adoption index

Vietnam ranked first in the global cryptocurrency adoption index, according to the 2021 Global Crypto Adoption Index compiled by blockchain data platform Chainalysis.

The list sees Vietnam in first place with one point, followed by India and Pakistan with 0.37 and 0.36 points, respectively.

2021 is the second year that the blockchain data firm has released its Global Crypto Adoption Index. Chainalysis ranks 154 countries according to three metrics, including peer-to-peer exchange trading volume, on-chain retail value transferred, and on-chain cryptocurrency value received.

Chainalysis data show global crypto adoption has risen by over 2,300% since 2019, rising by over 881% since the second quarter of 2020.

“Several countries in emerging markets, including Kenya, Nigeria, Vietnam, and Venezuela rank high on our index in large part because they have huge transaction volumes on peer-to-peer (P2P) platforms when adjusted for PPP per capita and internet-using population,” says the blockchain data platform.

The report also notes that many residents of these countries have turned to cryptocurrency in order to preserve their savings amid ongoing currency devaluation, as well as sending and receiving remittances and carrying out business transactions.

Elsewhere in the rankings, the United States dropped to eighth position from sixth place, while China fell from fourth to 13th.

Firms face difficulties due to rigid regulations amid COVID-19: Experts

While Vietnamese enterprises have made many changes to adapt to difficulties caused by the COVID-19 pandemic, the rigid application of pandemic prevention and control measures might drive away foreign investment from Vietnam, experts have warned.

According to To Hoai Nam, Vice President and General Secretary of the Vietnam Association of Small and Medium Enterprises (VINASME), many businesses have organised rotational shifts for employees to minimise absence and leave no one behind. They applied cost-saving measures by adjusting personnel towards concentration and giving priority to positions generating direct revenues and created conditions for some positions to work from home at the same time.

In addition, businesses reviewed spending plans by cutting or adjusting investment programmes which are not urgent or are no longer suitable for conditions amid the pandemic and after it is over to adapt to changes in consumers' behaviour.

Enterprises also actively negotiated to reduce office rent and production and business rates; adjusted internal regulations to ensure the safety of labour positions while also ensuring the maintenance of operations, he said.

However, the implementation of the “three on-site” model which was applied successfully in the northern province of Bac Ninh and Bac Giang, has created problems for many enterprises. Some businesses have had to suspend operations as they couldn’t meet the model’s requirements.

The "three on-site" model, which involves eating, sleeping, and working without leaving factories, aims to keep production going while ensuring COVID-19 control and prevention measures are ensured.

Foreign direct investment (FDI) enterprises in Vietnam are facing similar problems like domestic businesses.

Nguyen Hai Minh, Vice Chairman of the European Chamber of Commerce in Vietnam (EuroCham) said the inconsistence in applying pandemic prevention and control rules of provinces are causing difficulties for businesses in general and EuroCham member enterprises in particular.

He suggested the government devise common solutions and strategies for enterprises to live with pandemic because they do not know when the COVID-19 crisis is over.

An expert who wanted to stay anonymous said bottlenecks for FDI businesses should be removed such as the quarantine-free entry for foreign experts with vaccine passports who visit Vietnam for a short time. Priority should be given to vaccinating workers at FDI enterprises.

If the interruption of the supply chain of intermediate products lasts for a long time, it will lead to the suspended manufacturing of finished products, causing difficulties for businesses, the expert said, adding that there is a risk of shifting foreign investment from Vietnam to other countries once the bottlenecks aren’t settled soon.

Many countries around the world have rolled relief packages to support COVID-19-hit businesses but they don’t impose rigid regulations relating to businesses operations.

For instance, the Republic of Korea’s government did not only provide loans for vulnerable small businesses but also exempted taxes for them.

Large automobile manufacturers like Ford, GM and Volkswagen don’t choose to maintain full operations but reduce the scale of production. They only maintain the operations of the necessary departments in case the pandemic develops complicatedly.

In general, countries respect the right of businesses to operate or postpone operations on the ground of providing maximum assistance for them in terms of finance./.

KOTRA Hanoi to host online trade exchange in September

The Korea Trade-Investment Promotion Agency in Hanoi (KOTRA Hanoi) plans to organise an online trade exchange from September 27 to October 1 in an effort to connect Vietnamese businesses with firms from Incheon in the Republic of Korea (RoK).

The five-day event is anticipated to attract several major industrial manufacturers from Incheon who operate across multiple fields such as industry, cosmetics, and food.

A representative of KOTRA Hanoi stated that all interested companies will be able to contact the KOTRA Hanoi office to gain support and arrange direct trading sessions with businesses from the RoK.

Over the past two decades, KOTRA Hanoi has served as a bridge in which Vietnamese businesses can come together with those from the RoK to strengthen trade exchange activities.

Last year saw KOTRA Hanoi conduct over 50 online trade events for over 1,200 RoK suppliers, along with approximately 1,000 Vietnamese buyers as over 1,800 transactions were efficiently implemented.

During the first half of the year, a total of 18 delegations representing RoK businesses have been linked via online trade exchanges.

Roughly 300 RoK enterprises have also sought further business opportunities with Vietnamese enterprises through conducting market surveys.

Incheon is located in the centre of the RoK and serves as an important trading port that connects the East Asian country with the rest of the world.

Aquatic product exports likely to earn 9 billion USD in 2021: Experts

Vietnam’s aquatic product exports are likely to rake in 9 billion USD this year thanks to the implementation of new generation free trade agreements, according to experts.

Despite complicated developments of the COVID-19 pandemic, the country earned 4.88 billion USD from aquatic product exports in the first seven months of 2021, representing a year-on-year rise of 11 percent.

The increase was attributable to efforts by firms against the backdrop of COVID-19 which triggers labour shortages and difficulties in material purchase, as well as social distancing measures in 19 southern localities in a bid to curb the spread of the pandemic.

Of note, exports of tra (pangasius) fish reached 458,700 tonnes in the January-July period, raking in 931 million USD, up 13.54 percent in volume and 17.94 percent in value compared to the same period last year.

As of the end of July, revenues from aquatic product export to the US surpassed 1.14 billion USD, making up 22.9 percent of Vietnam total earnings and seeing a year-on-year expansion of 36 percent.

In addition, tuna shipments to the US grew by 1.5-fold in recent months against the same period last year. At present, the market is holding a lion’s share of 43 percent of Vietnam’s tuna exports.

Aquatic exports to other markets including Mexico, Brazil, the UK, Thailand and the Netherlands also enjoyed significant growth.
Exports to Africa reported a year-on-year surge of 32 percent in volume and 16.7 percent in value in the first seven months.

The target of 9 billion USD in export revenues is reachable this year if COVID-19 is promptly brought under control and the logistics system resumes normal operations, according to the Vietnam Association of Seafood Producers and Exporters (VASEP).

The Directorate of Fisheries advised firms to maintain shipments to traditional markets for sustainable growth, noting that from the start of 2022, China will apply new policies on the imports of Vietnam’s agro-forestry-aquatic products.

China is currently the largest market of Vietnam’s aquatic products, accounting for 26 percent.

Shrimp exports also see a bright prospect as Vietnam’s major trade partners like the US, Japan, the Republic of Korea and Germany have bolstered imports of the products./.

Source: VNA/VNS/VOV/VIR/SGT/SGGP/Nhan Dan/Hanoitimes 

 

VIETNAM BUSINESS NEWS AUGUST 21

VIETNAM BUSINESS NEWS AUGUST 21

COVID-19 pandemic pushes business online

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