VIETNAM BUSINESS NEWS AUGUST 29
Viet Nam’s overseas investment rises 74.1 pct
Vietnamese firms invested US$575 million abroad over the last eight months of 2021, a year-on-year increase of 74.1 percent, according to the Ministry of Planning and Investment.
The above figure includes US$150.1 million committed in 40 projects, equal to 68.7 percent of the capital volume of the same period last year. The rest was added to 13 existing projects, 3.8 times higher than that of the same period last year.
Science and technology took the lead among 13 sectors Vietnamese firms invested in with total newly-registered and additional capital valued at US$270.8 million, making up 47.1 percent.
Retail sales was the runner-up with US$150.9 million, accounting for 26.2 percent.
Among 20 nations and territories receiving investment capital from Viet Nam, the U.S. ranked first with US$302.8 million, making up 52.7 percent. It was followed by Cambodia, Laos and Canada with US$89.4 million, US$47.8 million and US$32.1 million, respectively.
As of August 20, the Southeast Asian nation poured US$21.8 billion in 1,428 overseas projects, mainly focusing on mining (36.3 percent) and agriculture-aquatic-forestry sector (15.3 percent).
Laos was the largest receiver for Viet Nam’s overseas investment ( making up 23.8 percent), followed by Cambodia (13.1 percent) and Russia (12.9 percent).
Vietnamese, Singaporean firms tap FTAs with EU, UK to expand cooperation
Participants at the event.
A webinar discussing ways for Vietnamese and Singaporean businesses can fully tap opportunities brought by free trade agreements (FTAs) with the European Union (EU) and the UK to expand their cooperation was jointly held by the Vietnam Embassy and the Vietnam Trade Office in Singapore on August 28.
The event saw the participation of leading experts on FTAs, representatives from more than 200 Vietnamese and Singaporean enterprises, and multinational companies in Singapore.
In his speech at the event, Vietnamese Ambassador Mai Phuoc Dung said Vietnam and Singapore are the two countries with the highest economic openness in Southeast Asia and also the only two ASEAN countries that have signed FTAs with the EU and the UK.
This proves that the two countries’ governments and businesses have the same goal of participating in economic links to diversify export markets, and participate more deeply in global value chains and product networks towards improving their competitiveness and promoting sustainable growth.
Since these FTAs took effect, both countries have witnessed strong growth in exports to the EU and UK markets.
Last year, exports of Vietnam and Singapore to the EU increased by about 18 percent and 12 percent, respectively. Vietnam also witnessed an impressive growth rate in exports to the UK recently.
One of many fields with great opportunities for cooperation between Vietnamese and Singaporean businesses is exporting agricultural products and processed foods to the EU and UK, the diplomat noted.
Vietnamese enterprises can double their export values to these markets by 2025 if they can exploit advantages and expand investment in deep processing and promote brands abroad. Meanwhile, processed food is still one of the top ten products having a high proportion in Singapore's export structure.
Singaporean agencies and businesses are seeking ways to promote export of processed foods by diversifying supply resources of raw agricultural products from Vietnam, he said
In addition, taking advantage of the principle of origin to coordinate in manufacturing original equipment, jointly exploiting brands and a network of import partners, developing logistics and e-commerce cooperation mechanisms for processed food sector to jointly make inroads into the EU and UK markets, are larger prospects that Vietnamese and Singaporean businesses can tap to expand their cooperation.
Participants at the event also focused their discussions on practices for applying the FTAs with the EU and UK to reduce import taxes./.
One-year implementation of EVFTA under review
A webinar aimed at reviewing the one-year implementation of the EU-Vietnam Free Trade Agreement (EVFTA) was jointly held on August 27 by the Vietnam Chamber of Commerce and Industry (VCCI) and the European Chamber of Commerce in Vietnam (EuroCham).
Participants pointed out difficulties in implementing the deal and proposed solutions aimed at maximising the benefits brought about by it.
Vu Tien Loc, chairman of the VCCI, said that after becoming effective in August, 2020, when the economies of both sides and the whole world were faced by difficulties caused by the COVID-19 pandemic, the agreement became one of the drivers for the businesses and economies of both sides.
He went on to underline the need to devise solutions from both State policies and strategies from businesses in order to handle risks both at present and in the future.
Alongside Vietnam, the EU has signed FTAs with three economies in Asia, including Japan, the Republic of Korea, and Singapore, although the nation has no direct competitors among these, Loc said.
The EVFTA has also made remarkable contributions to Vietnamese aquatic export achievements in recent times, with up to 50% of tariff lines being reduced to 0% before 2020, including tax rates for key exports.
However, the COVID-19 pandemic is currently strongly impacting raw material production, reducing the opportunity for the country to take advantage of preferential tax lines, he noted.
Moving into the remaining months of the year, the nation’s aquatic exports to the EU is predicted to be severely affected by the pandemic, possibly dropping by at least 9% over the same period last year to US$3.66 billion.
Vietnamese aquatic exports are also forecast to rake in US$8.6 billion this year, marking an annual increase of 2.7%.
Short-term fix may harm steel producers
Despite falling in the previous two months, steel prices remain high and are poised to peak towards the end of the year – but the Ministry of Finance’s suggested tax adjustments are being met with some resistance.
In the draft decree amending Decree No.57/2020/ND-CP, submitted to the government on July 13, the Ministry of Finance (MoF) suggested increasing the export tax for steel billets to 5 per cent while reducing preferential import tax for some construction-related steel products. These suggestions are made to stabilise the supply of billets for domestic production and limit exports, thereby also stabilising prices in the market.
However, analysts are concerned that the adjustment could lead to changes in the market, and have raised concerns about inflation. Steel makers are negatively affected by the pandemic – a time which seems unsuitable for sustainable development goals in the long term.
Imposing new tariffs on the steel sector could affect state budget revenues, an important factor that the MoF acknowledged in its presentation of the draft amendment.
Meanwhile, many public investment projects are dealing with the pandemic and rising steel prices. For instance, Trung Chinh TC Co., Ltd. was forced to change its financial plan for the phase-2 Vinh Tuy Bridge project in Hanoi because steel prices hiked by about 40 per cent to up to $830 per tonne. In its original plan for the bridge, the company estimated an average price of $480 per tonne.
Steel prices have seen a long bullish streak since the beginning of the year. Based in the northern province of Thai Nguyen, TISCO JSC, which holds about 10 per cent of the domestic steel market, is one of the few steel producers whose profits have increased thanks to partial autonomy in raw materials. Total revenues of TISCO in the first five months of 2021 increased by 35 per cent on-year.
As steel prices increased, many contractors have been pushed into losses. Vu Xuan Tuyen, director of Viet Thai JSC in Thai Nguyen, said that all of its six projects signed in 2020 are behind schedule, and two of these had to be suspended.
Data from the Vietnam Steel Association (VSA) showed that the picture began greying for the steel industry when the current COVID-19 wave started at the end of April.
In June, steel production decreased by more than 12 per cent compared to May. Consumption also declined across the country as many localities implemented social distancing. Compared to a month earlier, steel consumption in June decreased by more than 15 per cent, of which steel exports of all kinds decreased by almost 1.5 per cent.
The VSA’s view is the government must issue consistent policies to protect the domestic manufacturing industry. This also includes “no increase export tax on steel billets”, as stated in a document sent to the MoF at the end of July by the chairman of the VSA, Nghiem Xuan Da.
The association also recommends that policymakers should not reduce import taxes on finished steel products as protectionism is increasing worldwide, even in developed markets. In that context, the adjustment and reduction of import tax on domestic steel products will increase the amount of steel pouring in from outside, threatening production activities of domestic enterprises.
The MoF proposed to adjust taxes while pressures on Vietnam’s 4-per-cent inflation target still exist. According to the VSA, prices of steel products for construction have cooled down slightly after a series of consecutive increases. However, the rainy season sees the lowest demand, and since the end of the year commonly represents the peak season, these prices are expected to spike soon.
Vietnam ranks first in Southeast Asia in steel production and consumption, but most of the input materials have to be imported, including iron ore, scrap steel, graphite electrodes, and coal. The sudden increase in the price of steel materials in the global market, along with the prolonged delivery times due to the pandemic, became the main reason for the high prices of finished steel products.
According to the Ministry of Industry and Trade (MoIT), these prices are expected to remain high, directly affecting Vietnam’s market. In 2021, it is forecast to import a variety of materials for steel production, including about 18 million tonnes of iron ore for blast furnaces, about 6.5 million tonnes of scrap for electric furnaces, and tonnes of coking coal and graphite electrodes.
Ngo Tri Long, former director of the Price Market Research Institute of the MoF, said that the government has remained consistent in price management. The problem is that new tax policies for steel products need to be based on actual data to ensure a stable price management, market stabilisation, and inflation control.
“The MoF will coordinate with the MoIT to clarify the current supply and demand, and re-evaluate the business and export situation of steel manufacturers. Some manufacturers reported large profits due to their efficient operations and benefits from policies. However, fluctuations in global iron and steel prices will affect the Vietnamese market in 2021 and 2022,” Long elaborated.
The consumer price index (CPI) in July increased by 0.62 per cent. For the rest of the year, with an average growth rate of the first six months at 1.47 per cent, it seems feasible to control the average CPI for the whole year at about 4 per cent. However, there are still many potential risks to inflation, which could be influenced by global prices for raw materials and steel products.
Moreover, the General Administration of Taxation of China has made two adjustments to its tax policies for many imported and exported iron and steel products in early May and late July. Among the products for which export tax refunds had been ceased, there are some imported by Vietnam. The MoIT’s Asia-Africa Market Department confirmed that China decided to temporarily void the tax on some imported steel materials from May 1, and also increase export tax for some steel products.
Analysts are concerned that if steel prices remain at the current high level, there will be a significant impact on many businesses, while rendering it difficult to control inflation below 4 per cent.
“The risk of inflation is not too high, but the government should soon have a scenario to respond to the next stage. When control over the pandemic improves, the domestic economy will recover faster,” said Assoc. Prof. Dr. Dinh Trong Thinh from the Academy of Finance. “The government continues to maintain macroeconomic stability and control inflation, while ensuring a foundation for recovery and the sustainable development of the economy.”
Dak Lak Province seeks markets for thousands of tons of durians
The People's Committee of Krong Pak District in Dak Lak Province recently held a seminar to remove difficulties for durian trading businesses, cooperatives, and households.
Krong Pak District is the largest durian growing area in the Central Highlands province of Dak Lak, with more than 3,300 hectares. Of which, 2,400-2,500 hectares of durian are ready for harvest, with estimated output of 45,000 tons. Currently, it is the main harvest season of Dona and Ri6 durian varieties, but the consumption is only about 30-35 percent.
Ms. Ngo Thi Minh Trinh, Vice Chairwoman of the People's Committee of Krong Pak District, said that durian consumption faced difficulties because enterprises collecting durian are mostly located in the Mekong Delta and Ho Chi Minh City. Due to the complicated development of the pandemic, social distancing under Directive No.16 has been carrying out in many provinces, so these purchasing establishments cannot transport goods. With the current difficulties, peeling and freezing durian is absolutely necessary to store and preserve durian.
The People's Committee of Krong Pak District proposed the People's Committee of Dak Lak Province to facilitate durian purchasing establishments to access frozen storage in the province and neighboring provinces to preserve durian, and support to put durian products on e-commerce platforms and supermarkets to expand markets. The People's Committee of Krong Pak District also asked the Central Government to create conditions for Krong Pak durian products to be exported to China through official channels.
In related news, the southern province of Dong Nai Province has faced difficulties in consumption of fruits.
According to the Department of Agriculture and Rural Development of Dong Nai Province, due to the impact of the Covid-19 pandemic, many agricultural products, especially fresh fruits with an output of hundreds or even thousands of tons, are facing difficulties in consumption. It is estimated that the volume of fruits that farmers need support from the authorities is about 184 tons per day.
Amid the difficulties of farmers, the People's Committee of Dong Nai Province directed the Department of Industry and Trade to connect and support the consumption of some fruits for local farmers. According to statistics, the total growing area of fruit trees in Dong Nai Province reaches nearly 70,000 hectares. The output of the main harvest season from June to September includes 90,000 tons of rambutans, 28,000 tons of durians, 40,000 tons of pomelos, 20,000 tons of tangerines, and 7,000 tons of bananas. Meanwhile, the demand for consumption in the province is about 40-50 percent of the harvested output.
Samsung Vietnam helps local firms join global supply chain
Leaders of the northern province of Bac Ninh and Samsung Vietnam on August 26 made a trip to evaluate the results of the two enterprises including Hanpo Vina Joint Stock Company and Thinh Vuong Manufacturing and Trading Co Ltd participating in the "domestic business improvement consulting programme".
This project was implemented by Korean experts of Samsung over about 10 weeks after assessing the actual production capacity of enterprises in Bac Ninh province. The project’s goal is to improve productivity; management capacity and product supply capacity so that Vietnamese enterprises could join the supply chain of large global corporations like Samsung.
Hanpo Vina Joint Stock Company is a supplier of plastic injection products for Samsung's first-tier contractors. The company said that after the improvement process, the product defect rate (NG) decreased by 53 percent, the factory was redesigned to easily locate inventory and manage actual inventory more effectively and ensure the first-in-first-out rule. In addition, it has also built a production management system that compares actual output with the plan, thereby ensuring on-time delivery.
Thinh Vuong Manufacturing and Trading Co Ltd is the first-tier supplier of Samsung Display Vietnam’s factory providing plastic display tray products. After the improvement, its NG, the mould replacement time and the loss rate incurred during the production process was reduced by 20 and 30 percent respectively. In addition, the company has also built a system of on-time delivery, sufficient quantity, and a quality control system from the production stage.
The consulting programme helps companies easily upgrade into a "smart factory".
Chairman of the Bac Ninh Provincial People's Committee Nguyen Hương Giang said currently, as the COVID-19 pandemic situation is well controlled in the province, she hoped that more businesses would participate in the consulting programme.
Choi Joo Ho, General Director of Samsung Vietnam, said: “I highly appreciate the determination and efforts of businesses to overcome difficulties caused by the COVID-19 pandemic with the aim to successfully fulfil the improvement consulting programme at this time. I hope that the positive changes after this improvement programme will be followed by strengthening the underlying competitiveness of companies. In the meantime, I also expect that this project will spread to all of Vietnam, contributing to its economic development.”
Along with efforts to accompany the Vietnamese Government to improve the competitiveness of domestic suppliers in general across the country, up to now, Samsung has consulted 260 enterprises.
The number of Samsung’s local suppliers has been expanded from four enterprises in 2014 to 50 tier-1 and 191 tier-2 suppliers in 2020./.
HBRE cooperates with EVN Genco 3 to develop offshore wind farm in Ba Ria-Vung Tau
EVN and HBRE Group – the leading developer of onshore wind farms in Vietnam – have signed an agreement to develop an offshore wind farm in the southern coastal province of Ba Ria-Vung Tau. They are assisted by Sapura Energy Bhd., a global integrated offshore engineering and construction company.
The MoU between HBRE and Sapura Energy, as well as between HBRE and EVN, was signed as the foundation for other offshore wind farms in Vietnam.
Ho Ta Tin, chairman of HBRE said, "The presence of Electricity of Vietnam (EVN) in this project indicates its confidence in and commitment to the renewable energy sector, and we believe that the offshore construction experience of Sapura Energy will be most valuable."
HBRE currently has four onshore wind farm projects at various stages of development, while the project in Gia Lai will be its first offshore wind farm.
The HBRE Chu Prong Wind Power Farm (phase 1) with a capacity of 50MW in Gia Lai province is scheduled to be put into operation in October. The other two projects are a 120MW wind power project in Ky Anh district of Ha Tinh province and a 200MW wind power project in Phu Yen. Currently, these two projects are waiting for land clearance and other legal procedures.
The company started to look for investment opportunities in Vietnam's offshore market since 2016, with the first idea being a project in Binh Thuan province. However, at the time, the investment expenditures were too high, thus, the company gave up this project.
After that, HBRE issued plans to develop the Vung Tau offshore wind power plant project in Ba Ria-Vung Tau province, which is the first and largest offshore wind power plant in the province. The project has a total investment of over $1 billion, with a final capacity of 500MW.
In May 2019, Ba Ria-Vung Tau People’s Committee approved the project's construction.
At present, HBRE is waiting for the government’s approval to add the project in Vung Tau into the National Power Development Plan VIII.
Tuna exports to major markets drop due to COVID-19
Vietnamese tuna exports to a number of major markets have experienced a downward trajectory recently due to the increase in production and freight costs as a result of COVID-19 pandemic, according to industry insiders.
July alone saw the nation’s tuna export value increase by only 1.7% to approximately US$65 million compared to the same period from last year.
Nguyen Ha, a tuna market expert, revealed that Vietnamese tuna exports to the United States over the past three months have showed signs of slowing down.
This comes as the export value of tuna to the demanding market in July rose by only 6% on-year to US$28.6 million.
At present, freight rates from Asia to South America have increased, ranging from US$2,500 to US$12,000 per container, a factor which has significantly hindered Vietnamese competitiveness in the market place and is impacting affecting the country’s export shipments to this market.
Furthermore, tuna exports to the EU market in July recorded a drop of 21% compared to the same period last year. However, the export value of tuna to the fastidious market during the seven-month period enjoyed an annual surge of 20% to nearly US$87 million.
Currently, Vietnamese tuna exports to all three major markets in the EU, including Italy, Germany, and Spain have plunged by 34%, 40%, and 12%, respectively.
As the country’s the third largest export market, local tuna exports to nations in the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) increased by 6.5% to US$7.4 million.
However, the export value of tuna to this market also witnessed a downward trend each month.
Most notably, tuna exports in July to Canada showed signs of declining with a drop of 45%, while exports to Mexico and Japan continued to rise by 2% and 413%, respectively.
Moreover, tuna exports to other markets such as Egypt, the Philippines, and China continued to grow in July, although the export value was generally lower than the previous month.
According to Ha, the country’s total export value of tuna during the seven-month period reached US$420 million, marking a 20% against the same period last year,
Due to the resurgence of COVID-19 pandemic nationwide, tuna processing and exporting factories are currently facing a range of difficulties, such as rising production costs, a shortage of workers, and a lack of raw materials.
Some factories based in provinces such as Long An and Ho Chi Minh City have been forced to suspend their production activities, thereby affecting tuna exports over the coming months.
HCMC exempts, reduces taxes for 86,200 business households
The Tax Department of Ho Chi Minh City said that during the outbreak of the Covid-19 pandemic from May to now, business households and individuals have had to suspend operations following the social distancing policy of the city, tax agencies have coordinated with local authorities and management boards of commercial centers, markets, and local tax advisory councils to exempt and reduce taxes for business households and individuals affected by the pandemic.
Up to now, a total tax exemption and reduction of VND123 billion has been resolved for 86,197 households.
The Tax Department of HCMC issued guidance to support business households and individuals affected by the Covid-19 pandemic in dealing with business suspension and tax exemption and reduction.
Accordingly, when the State agency announces social distancing, the tax office will automatically consider tax exemption and reduction during that time, and business households and individuals do not need to send a notice of business suspension. For business households with verified data or based on the results of the assessment of revenue decrease and the time of revenue decrease determined by the tax advisory council of the ward or commune, the management board of the market or the commercial center, if the revenue is reduced by 50 percent upwards compared to the presumptive revenue, the tax authority will issue corresponding tax exemption or reduction.
Besides, to enjoy the support policy under Resolution No.68/2021/NQ-CP, business households must send a request for support to the People's Committee of the ward or commune, where the business is located for consideration. The deadline for application submission is January 31, 2022.
Aquatic product exports drop strongly in first half of August
Aquatic exports in the first half of August were strongly impacted by the COVID-19 pandemic, reaching only 263.8 million USD, down 41 percent compared to the second half of July and 30.1 percent from the same period in 2020.
However, thanks to the good growth in the first seven months of the year, total earnings from aquatic products this year to August 15 reached 5.2 billion USD, up 9.8 percent year-on-year, according to the Export-Import Department at the Ministry of Industry and Trade (MoIT).
In the first seven months of 2021, the aquatic export turnover rose by 13.27 percent year-on-year, hitting nearly 4.98 billion USD, accounting for 2.67 percent of the country’s total export value of goods.
Le Hang, Deputy Director of the VASEP.PRO centre at the Vietnam Association of Seafood Exporters and Producers, said that the application of social distancing measures from the second half of July in southern localities caused a marked slowdown in processing and production.
By now, the average production capacity of processors in the southern region has been reduced to only 40-50 percent compared to normal time. It is estimated to decrease to only 30-40 percent in the coming time.
The decline in production over the past month will certainly lead to a sharp decrease in export turnover in August compared to previous months and the same period last year, Hang said.
The export of tra fish has suffered the biggest loss because more than half of the processing factories, most of which in the southern region, have been shut down temporarily, she added./.
Raw material import necessity squeezes feed groups
While Vietnam is traditionally a strong producer and exporter of rice and other produce, animal feed producers largely depend on overseas imports of raw materials, leaving them vulnerable to price fluctuations and global incidents like climate change and the ongoing pandemic.
Sarah Gilleski, acting agriculture counsellor at the US Embassy in Vietnam, last week participated in a webinar to help the country find ways to replenish feed ingredients more efficiently. The demand for feed ingredients in Vietnam is increasing, pushing the livestock industry towards more challenges.
Gilleski is interested in the application of biotech crops, an innovative tool and approach to increase crop productivity, farmers’ income, and supplement feed supply to the Vietnamese market.
Vietnam’s soybean imports from the United States dropped by over 40 per cent in June. However, according to the General Department of Vietnam Customs (GDVC), the US was still the leading soybean import market in the first six months of 2021, accounting for over 58 per cent of the total volume and 57.5 per cent of the total turnover of soybeans and soy sauce of Vietnam. Over 93 per cent of soybeans imported to the country come from the US and Brazil.
Vietnam’s industrial animal feed industry has a growth rate of 13-15 per cent per year but it is very dependent on imported raw materials, at around 85 per cent. This dependence causes the prices of domestic animal feed to rise when the world market fluctuates.
Vietnam spends $5-7 billion each year importing animal feed. In the first seven months of 2021, the value of Vietnam’s animal feed imports was more than $2.9 billion on, according to the GDVC.
The sources for raw materials of animal feed are spread out across the globe. But as with many sectors, the pandemic made it more difficult to transport raw materials and animal feed by sea, while road and air traffic almost came to a standstill.
Meanwhile, domestic animal feed prices continue to increase due to strong fluctuations in raw material prices in the world. The prices of corn, soybeans, and fishmeal have continuously increased since last October, with an average increase of up to 35 per cent, according to the Department of Livestock Production under the Ministry of Agriculture and Rural Development.
“Vietnam will need as much as 30 million tonnes of feed ingredients per year for the next five years to ensure an average growth of 11-12 per cent per year,” said Nguyen Thanh Son, a representative from the Vietnam Poultry Association. He worries that the country’s agricultural sector can only provide a maximum of around five million tonnes of corn kernels, four million tonnes of bran, and four million tonnes of cassava for animal feed production.
Son found that Vietnam exports about six million tonnes of rice per year, but lacks a strategy to develop domestic feed ingredients methodically. “Our country also lacks synchronous solutions, such as applying biotechnology for feed ingredients with high yield and output to supplement the supply of raw materials for animal feed,” he said.
Experts said that the effects of climate change have caused a decrease of produce in most countries providing animal feed, and the impacts of the pandemic have increased transportation costs and even cut off some previous supply chains.
Tran Xuan Dinh, vice chairman of the Vietnam Seed Trade Association, said that the country’s maize production area has continuously decreased while the yield of traditional hybrid maize varieties has reached a critical point.
By 2020, the maize growing area had shrunk to 943,000 hectares and the domestic corn output was only 4.76 million tonnes, while the volume of imported corn reached a good 12 million tonnes, with a turnover of $2.39 billion.
“The expansion of transgenic maize varieties, with high yield and good tolerance, is one solution to increase the production of raw materials for domestic animal feed production,” suggested Dinh.
In Vietnam, genetically-modified maize covered about 92,000ha in 2019, accounting for 10.2 per cent of the total maize area. The country has also recognised 16 genetically modified maize varieties, of which eight are being cultivated by farmers.
According to the US Grains Council, the countries that are supplying feed sources like corn and soybean are also leading countries in cultivation and production of genetically-modified crops.
Vietnam to review 20 years of collective economic development
Vietnam has achieved positive results in innovating and improving the efficiency of the collective economic sector in the past two decades, with many new and effective cooperative models being implemented across the nation.
The significant results and experiences learnt are expected to be summarised at a national conference scheduled for December this year.
The Steering Committee on summarising 20 years of implementing the resolution of the 9th Party Central Committee’s 5th conference on continuing to innovate, develop and improve the efficiency of the collective economy (Resolution No. 13-NQ/TW) has urged the concerned units to conduct the review of the resolution’s implementation in an urgent and serious manner amid the complicated development of the COVID-19 epidemic.
Local authorities have been asked to boost the work at the district and provincial levels in a substantive manner in order to properly assess the local situations, draw lessons, and provide recommendations to the Central Steering Committee towards advising competent agencies to consider and issue a resolution on continuing to innovate, develop and improve the efficiency of the collective economy in the country’s new situation.
Previously, the Government issued a plan on summarising the 20 years of implementation of Resolution No. 13-NQ/TW, dated March 18, 2002, with the aim of evaluating the results of implementation and development of the collective economy after two decades of implementing the resolution with regards to the achieved results, limitations and lessons learned, thereby proposing orientations and solutions to improve the sector’s efficiency in meeting the requirements for the nation’s development while serving the improvement of institutions and developing a new draft resolution of the Central Party Committee on the collective economy.
Localities across the country are suggested to conduct reviews and hold summary conferences at the district level (within September 2021 at the latest) and provincial level (within October 2021 at the latest).
Before October 25, 2021, the Ministry of Agriculture and Rural Development shall preside over the organisation of a national conference on summarising the 20 years of implementation of Resolution No. 13-NQ/TW in the agricultural sector. The Vietnam Cooperative Alliance should chair a similar event for the non-agricultural sector.
In December 2021, the standing body of the Steering Committee (under the Ministry of Planning and Investment) will preside over and coordinate with the Government Office to host a national conference summarising the 20 years of implementation of the resolution.
Challenges of the livestock industry
The livestock industry has achieved some positive results in 2021 with increasing numbers of pigs, cows and poultry compared to the same period in 2020. However, the industry needs to implement several synchronous solutions to respond to challenges.
According to Acting Director of the Department of Livestock Production Duong Tat Thang, the first challenge for livestock farming is the unpredictable developments of diseases in livestock. African swine fever, foot-and-mouth disease, and lumpy skin disease on buffaloes and cows are still appearing in many localities. Some provinces and cities have even detected strains of avian influenza virus A/H5N8.
In Hanoi, avian influenza A/H5N8 was found in two farming households in Ba Vi District, resulting in the elimination of more than 2,500 chickens. These outbreaks have lasted less than 21 days and are being closely monitored.
The livestock farming is also facing impacts of climate change including prolonged heat and heavy rains, creating prime conditions for the outbreak of diseases.
In addition, the COVID-19 pandemic is progressing complicatedly, causing disruption to global supply chains and congestion to the distribution and circulation of goods, thus directly affecting the production and export of livestock products. Some products have failed to meet the set export targets, such as silk, honey, and bird's nests.
Our country's deep integration in the world through new-generation free trade agreements with the participation of partners with advanced livestock production will increase market pressure for Vietnamese livestock products.
The problem of environmental pollution and the continuous increase in the prices of raw materials and animal feed since November 2020 has also led to increases in production costs and reductions in the competitiveness of some livestock products.
If Vietnam cannot quickly develop its own raw materials and animal feed instead of importing them from other countries, it will be difficult for the domestic livestock farming to develop sustainably.
In addition, the livestock and poultry slaughtering system still reveals inadequacies in addition to shortcomings in food safety and hygiene. The State management agencies are still confused and passive in dealing with issues including biosafety breeding models suitable for each type of animal, the control of breed quality and breeding conditions, livestock industry management database, and others.
According to experts, to make the livestock industry adapt to a new stage of development, localities need to actively implement the Law on Livestock, the Strategy for livestock development towards modernisation, the industrialisation of large-scale farming, and the professionalisation of household farming.
It is also necessary to clearly define the characteristics and competitive advantages of each region in order to concentrate resources for production and increase the added value of livestock products.
The livestock product consumption system for the domestic market should be strengthened in the direction of forming linkage chains between production, processing, circulation and consumption.
Ministries, sectors, provinces and cities need to continue strictly implementing epidemic prevention and control measures under the direction of the Government and the Ministry of Agriculture and Rural Development in order to avoid the recurrence and spread of diseases among animals.
In parallel with epidemic prevention and control, localities should implement policies on loan interest rates and land to support livestock farmers to maintain production. It is advisable to encourage investment in livestock farming according to value chains while building large-scale livestock complexes with the application of technical advances.
It is significant to strengthen the capacity of breeding production establishments to have low-cost and disease-free breeds.
Authorised agencies must strictly handle the illegal import and export of breeding animals and livestock products and regularly inspect distribution channels and slaughtering of livestock products while reducing the dependence on imported raw materials and animal feed.
Deputy Minister of Agriculture and Rural Development Phung Duc Tien said that the livestock industry needs to continue to reform administrative procedures and cut business requirements to create more favourable conditions for people and businesses to invest in the livestock sector, especially the processing stage, to increase the value of livestock products.
Jump in Covid-19 cases to weigh on Vietnam’s economic recovery, says Fitch Ratings
An escalation in Covid-19 cases and deaths in July-August will undermine Vietnam’s previously strong recovery from the pandemic shock and may temporarily set back the positive rating momentum, said Fitch Ratings.
Fitch Ratings economists affirmed Vietnam’s rating at “BB” in April 2021 and revised the Outlook to Positive from Stable following the resilience of the country’s growth and public finances to the pandemic shock at that time.
The Vietnamese authorities had succeeded in keeping the number of Covid-19 cases low prior to the latest outbreak. The economy expanded by 5.6% year-on-year in the first half of 2021, accelerating from 2.2% in the first half of 2020.
However, over 95% of Vietnam’s cumulative Covid-19 cases occurred after June 30, 2021, forcing a large part of the country into a lockdown, which was endured only briefly in 2020.
Therefore, restrictions to curb the spread of the disease will weigh on activity in the third quarter of this year and could persist if the outbreak is not brought under control, according to Fitch Ratings.
“This poses significant risks to our current forecast that growth will average 6% in 2021. However, we still expect Vietnam’s gross domestic product (GDP) performance over 2020-2021 to be the strongest among Fitch-rated sovereigns in the ASEAN,” said economists.
They added that some lost growth momentum may be made up in subsequent quarters as output and social activity normalize, although the risk of further outbreaks will linger as Vietnam’s vaccination rates remain low.
Public finances will also be affected. Government officials have indicated plans for a relief package worth roughly US$5 billion (around 1.4% of GDP), focused on reducing taxes and fees for small and medium enterprises (SMEs).
“However, we expect Vietnam’s public debt/GDP ratio to remain well below the median for ‘BB’ sovereigns in 2021-2022,” said economists.
Exports have been an important support for Vietnam’s economy during the crisis. The tourism sector’s share of GDP fell to 3.5% in 2020 from 9.3% in 2019, and Fitch Ratings economists believe tourism earnings will remain at very depressed levels well into 2022 as a result of the pandemic.
However, goods exports have been strong, with merchandise exports rising by 26.2% year-on-year between January and July this year.
Economists cited anecdotal evidence as saying that some factories producing exports have been disrupted by the recent outbreak, but they expect the impact on output to be temporary.
One risk to exports appears to have been resolved in July when the United States announced a deal had been reached over Vietnam’s exchange-rate policies.
“We had expected the Biden administration to downplay currency tensions with trade partners in Asia, but argued that Vietnam was among the most exposed to macroeconomic risks if the US opted to escalate the matter,” said economists.
They said if the agreement results in the appreciation of the local currency, this could pave the way for faster growth in per capita GDP in U.S. dollar terms. “When we affirmed Vietnam’s rating in April, we said sustained high growth that reduces the GDP per capita gap vis-à-vis Vietnam’s peers while maintaining macroeconomic stability could lead to a sovereign rating upgrade.”
Nonetheless, it is not clear whether market forces will put upward pressure on the Vietnamese dong in the near term. Strong import growth in recent months has already reversed the record trade surplus in 2020; in the second quarter of 2021, Vietnam posted its largest quarterly goods trade deficit since 2011.
A loosening of the credit policy designed to cushion the impact of the pandemic may have been one of the factors supporting import growth. Financial system credit rose by 15.2% year-on-year in the first half of 2021, faster than the nominal GDP growth of 6.7%.
“We expect this trend to be sustained in 2H21 as the authorities guide banks toward lower lending rates and accept faster system credit growth,” said Fitch Ratings economists.
They said in April that a material reduction in risks posed to the sovereign balance sheet from weaknesses in the banking sector could be a trigger for a sovereign rating upgrade. However, the adverse effects of the recent Covid-19 outbreak could reduce the likelihood of this, at least in the near term.
Industrial property’s prospective drives growth of Hanoi’s serviced apartment
In Quarter 2, the supply of serviced apartments in the city increases by 20% against the same period of last year.
The recent increase in industrial development in the northern provinces of Bac Giang, Thai Nguyen, and Hai Duong promotes future supply in the belt areas of Hanoi, local insiders have said.
Localities surrounding the capital city such as Bac Giang possess all the converging factors to attract large foreign investors such as Foxconn and other supporting corporations to settle and expand their production scale in the province, thereby boosting the demand for industrial and urban land.
Matthew Powell, Director of Savills Hanoi said the next belt areas will be the locations of a series of new serviced apartment projects from big brands, including Fraser Suites’ project in belt area No.3, which runs through many districts from the south-eastern to the west-eastern part of Hanoi.
"This is a prominent trend for the serviced apartment segment of the city," he added.
Foreign experts working in industrial zones are the main source of demand in the serviced apartment market, according to the director of Savills Hanoi. The Covid-19 pandemic that broke out in industrial zones in the northern provinces of Bac Giang and Bac Ninh in May 2021 has negatively impacted the demand for the segment.
South Korean tenants surpassed those from Japan to make up the majority in districts of Hoan Kiem, Cau Giay and Nam Tu Liem, according to the property consultancy firm.
In Quarter 2, 2021, the supply of serviced apartments in Hanoi reached 5,500 units, a sharp increase of 20% against the same period of last year.
In particular, the launch of two Grade B projects in Ba Dinh and Dong Da districts, after a long wait, provided 136 apartment units. The share of Grade A properties has been stable over the past five years at 53%, mostly managed by Ascott and the newcomer Oakwood, a Savills Hanoi report noted.
Rental prices for serviced apartments in Hanoi in the second quarter (Q2) fell 8% to $24 per square meter per month. Cau Giay District has maintained the highest rental average rate, reaching $32 per square meter in the first six months of 2021. Dong Da District took second place after the Grade A Novotel Hanoi Thai Ha project went into operation.
The capital’s average occupancy rate of serviced apartments in Q2 stood at 69% with the suburban district of Gia Lam recording a significant increase, 32 percentage points quarter-on-quarter. It was partly thanks to the supply of Vinhomes Ocean Park S2.17 to meet the high demand of international students and South Korean experts working in the neighboring areas.
Do Thi Thu Hang, Senior Director of Advisory Services at Savills Hanoi said: "The serviced apartment market capacity has been stable in the past years, partly due to the number of foreign professionals permanently staying here."
Regarding future supply, an estimated 2,400 apartment units from 19 projects will be on sale, of which foreign management companies will hold 96% of the future units. Recently, CapitaLand has completed the $155 million deal to acquire the Somerset Metropolitan West Hanoi project with a scale of 364 apartment units.
Savills Hanoi forecast, in the coming time, the demand from foreign workers returning to Vietnam, mainly high-tech workers and highly experienced experts, will surge. Especially when Vietnam is piloting the plan to reduce the isolation period to seven days for incoming people who are fully vaccinated starting this July.
“The recovery of the serviced apartment market depends on the vaccination rollout progress as well as the shift in foreign direct investment (FDI) flows,” Hang said.
Despite many difficulties, positive macroeconomic results in the first months have helped boost the market's outlook.
According to the General Statistics Office, in the seven months of 2021, Hanoi ranked sixth in the country in terms of registered FDI capital with $827 million. Besides the capital, the northern port city of Haiphong, provinces of Quang Ninh, Bac Giang, and Bac Ninh were among the top 10, contributing 25% of total registered FDI capital.
Over VND2.5 trillion to be poured into industrial park in Long An
The Mekong Delta province of Long An will develop a new industrial park infrastructure project in Can Giuoc District at a total cost of over VND2.59 trillion.
Deputy Prime Minister Le Van Thanh has approved the development of infrastructure at the Nam Tan Tap industrial park covering over 244 hectares in Tan Lap Commune, the local media reported.
The project will operate within 50 years and be invested by the Saigontel Long An Company, which will contribute some VND440 billion to the total capital.
The Long An Economic Zone Management Board is responsible for giving the investor guidance on the process of the project and capital contribution. The investor will start work on the industrial park after the Ministry of Natural Resources and Environment approves the environmental impact assessment report for the project.
The provincial government will assume full responsibility for steps and procedures leasing the land use right to secondary investors.
The province is also in charge of offering solutions on the use of infrastructure at the industrial park for the infrastructure developer and secondary investors after the industrial park is put into operation.
The deputy prime minister told Long An Province to quickly take back land, pay compensation for affected families, handle site clearance issues and convert the land use purposes to implement the project.
Source: VNA/VNS/VOV/VIR/SGT/SGGP/Nhan Dan/Hanoitimes
Shares end week higher on large-caps