The low sale volume was due to difficult economic conditions that forced customers to tighten spending.

Despite various sales promotion programs from car dealerships, the domestic car market remains quiet ahead of the Tet festival.

To boost car sales, car dealerships have been offering sales promotion programs that go up to thousands of US dollars per car, or car accessories upon purchase.

For example, customers buying Hyundai Santa Fe would be subject to a discount of VND50-VND60 million (US$2,200-US$2,600), and VND12 million (US$522) for Hyundai Elantra.

Suzuki is also offering discounts for most of its car models in range of VND25-42 million (US$1,100-US$1,800), including Ertiga, Ciaz, XL7 and Swift.

Vice General Director of Nissan Tay Ho Nguyen Tri Bay said Nissan is lowering prices for pickup truck Navara by VND36 million (US$1,600) and extend its insurance period to five years, while the SUV X-Trail is subject to a discount of VND124-152 million (US$5,400-US$6,600), depending on certain models.

Mitsubishi is offering a competitive pricing policy with a discount of VND55-VND65 million (US$2,400-US$2,800) for Outlander, not to mention car accessories; Pajero Sport buyers would receive gifts worth up to VND55 million (US$2,400). Buyers of US automaker’s latest model of Ford Everest 2021 are subject to  a promotion sales program with a financial support of up to VND75 million (US$3,200) in registration fee.

While discount programs are being offered, the number of car sales have plunged by 50% month-on-month in January, with many pointing to the expiration of the government’s supporting policy by shaving 50% off the registration fee for domestically-produced cars at late 2020.

Director of Toyota Thang Long Pham Quoc Hien said the low sale volume was due to difficult economic conditions that are forcing customers to tighten spending.

“Many customers are also waiting for new car models that are scheduled to launch in the second half of 2021,” he said.

For many car experts, the situation has been expected, given the COVID-19 situation remains serious around the globe.

“The year of 2021 is set to be another difficult one for Vietnam’s car market,” said Head of the Policy Department under Vietnam Automobile Manufacturers Association (VAMA) Nguyen Trung Hieu.

HCM City attracts additional investments into industrial parks

Vietnam is projected to strive to attract foreign investment throughout 2021 , with a specific focus on Ho Chi Minh City, according to insiders.

According to the HCM City Export Processing and Industrial Zones Authority (Hepza), industrial parks based in the southern city lured more than US$760 million worth of investment during 2020, a 17% increase from 2019’s figure.

Of the total, the overall domestic investment capital reached over VND9.000 billion, a rise of 57%, while total foreign investment capital (FDI) endured a decline of 7.26% to roughly US$370 million in comparison to 2019 as a result of the adverse impact of the COVID-19 epidemic.

Hua Quoc Hung, head of the Hepza’s Management Board, projected that there are plenty of positive signs ahead this year for foreign investment attraction due to the country’s COVID-19 containment and its improved investment climate.

Hung therefore underlined the need to speed up administrative reforms and put a greater focus on economic sectors that feature a high level of technology and added value, while simultaneously accelerating the pace of growth within the digital economy.

Le Bich Loan, deputy head of the Ho Chi Minh City Hi-Tech Park, stressed the importance of enhancing the capacity of local firms to have a deeper participation in supply chains, as well as attracting investment from FDI enterprises in order to increase on-spot export possibilities for domestic enterprises, thereby reducing the risk of facing disruption in global supply chains due to the COVID-19 epidemic.

Jeff Nessom, vice president of Engineering, Techtronic Industries (TTI), said that the company is in the process of moving its factory from North America to Asia, and Vietnam is one of the destinations. The company has so far spent US$650 million investing in building a manufacturing plant, along with a product research and development centre, in the Ho Chi Minh City Hi-Rech Park.

The HCM City – based manufacturing plant’s export revenue recorded an increase from US$300 million at the end of 2019 to US$1.5 billion by the end of 2020, and the figure is expected to reach US$6 billion by 2025.

Synchronous solutions required to reach GDP growth target of 7.5% in 2021

Vietnam's GDP growth for this year is likely to reach between 7% and 7.5% providing that synchronous solutions, ranging from competent pandemic prevention and control to stable economic recovery and growth stimulation measures, according to both domestic and foreign organizations and experts.

Increasing investment in national targeted programs will have a great impact on economic growth.
Last year’s GDP growth of 2.91% can be viewed as an important base from which to create momentum for economic growth in the year ahead. Economic expert Dr. Nguyen Dinh Cung said that amid the current context, the nation must pay special attention to “recovery" and "stimulus" solutions in order to allow the national economy to grow in a rapid and sustainable manner.

With regard to economic recovery measures, 97% of the economy is made up of small and medium sized enterprises (SMEs) and millions of individual business households. Indeed, all of them have recently experienced a challenging period due to the impact of the novel coronavirus (COVID-19) pandemic, therefore they still require support from the Government.

Dr. Cung recommends that, instead of using the "money package" to directly support local firms, the Government should approve tax and credit incentives for them, especially for those that invest in industries or new business models that follow Industry 4.0 trends and operate in the new normal.

“All the incentive policies need to be implemented immediately to reach businesses in time, which serve as a driving force behind strong growth in the coming time,” he emphasises.

Along with the recovery, Dr. Cung affirms that the Government also needs to launch immediate solutions in an effort to "stimulate" a fast-growing economy as a premise for growth during the 2021 to 2025 period, as well as sustainable growth for the entire economy in the long term. In line with this, State resources should be mobilised in order to effectively disburse public investment projects that result in immediate effects on both growth and growth stimulation.

“Currently the demand for and opportunities for public investment are too great and should focus on large-scale infrastructure projects. Now, scarce capital should be concentrated on those projects to increase the production capacity of the economy,” Dr. Cung outlined.

Concurring with this point of view, economist Dr. Luong Van Khoi emphasises that infrastructure projects associated with social security, such as investments in rural, mountainous, and island areas will help to reduce environmental harm. In addition, it will allow for greater climate change adaptation in the Mekong Delta in order to have a major impact coupled with sustainable growth.

“Increasing investment in national targeted programmes will have a huge impact. Firstly, it creates a very good infrastructure for remote areas to increase the exchange of goods. Secondly, people have financial resources and income, thereby stimulating consumption of domestic goods. This will help to boost domestic production as well as spur economic growth," Dr. Khoi stated.

According to Dr. Vo Tri Thanh, economic growth stimulus packages in the context of Industry 4.0 and the digital economy must also be closely linked with new development trends globally. In addition, there should be policies implemented to continue to support businesses and employees to overcome various difficulties.

Experts affirm that, along with the stimulus packages for economic recovery and growth through "money" resources, it remains necessary to promote the application of e-Government, whilst facilitating and reducing direct contact between public authorities, enterprises, and people.

There must also be two main points to be attached to, namely, developing e-commerce, whilst increasing digital transformation in terms of business operations, with a specific focus on the stronger development of new business models based on platform connections.

Vietnam enjoys US$1.3 bln trade surplus in January

Despite the impact of the COVID-19 pandemic, Vietnam has obtained a trade surplus of US$1.3 billion in January, according to the Ministry of Industry and Trade.

Leather shoes are among key hard currency earners of Vietnam in January 2021.
The total import-export value for January hit US$54.1 billion, representing an increase of 45.7% compared to the same period of 2020, the ministry said.

Of the total, exports brought back US$27.7 billion, up 50.5%, while imports rose 41% to US$26.4 billion.

Six groups of commodities attaining an export turnover of over US$1 billion each include mobile phones and components (US$5.8 billion); electronics, computers and components (US$4 billion); machinery, equipment, tools and spare parts (US$3.2 billion).

They are followed by textiles and garments (US$2.6 billion); shoes (US$1.8 billion), and wood and wood products (US$1.3 billion).

The United States is Vietnam’s largest export market in the first month of the year with a turnover of US$7.5 billion, an increase of 57.4% over the same period last year. Comes next China with US$5.8 billion, the European Union US$2.8 billion and the ASEAN market US$2.3 billion.

China remains Vietnam’s largest import market with a turnover of US$9.6 billion, up 72.7% over the same period last year. It is followed by the Republic of Korea (US$5.1 billion), and the ASEAN market (US$3.4 billion).

Scholar suggests measures for Vietnam’s sustainable economic growth

Prof. Tran Van Tho, a former lecturer at Japan’s Waseda University suggested several measures for Vietnam to achieve sustainable economic development in the next period in an interview recently granted to a Vietnam News Agency reporter in Tokyo.

Tho, who is also a member of the Prime Minister’s economic advisory group, said the past five years could be said to be the best period during Vietnam’s 35-year Doi Moi (renewal) cause.

He cited an average growth of nearly 7 percent each year, along with stable macro-economic indicators such as inflation, public debt and unemployment rate.

Last year alone, Vietnam still posted a positive growth while others reported negative economic expansion amid the COVID-19 pandemic.

According to the scholar, Vietnam’s most impressive achievement was in external economy with rapid export growth. The country has become the second largest exporter in ASEAN, leading to improved trade balance.

Regarding the 13th National Party Congress, Tho stressed that as Vietnam is going to enter a new development period with major changes in growth quality, social resources should be further tapped to meet development requirements.

In the face of great opportunities and challenges ahead, he said Vietnam’s new leadership should catch up with the new national and global developments, and take sound policies, especially in attracting and using talents.

About sustainable economic growth goals for the next five years, Tho described restructuring and related policies as the most important, especially labour and business restructuring.

In labour, with 35 percent of the labour force still working in agriculture with low productivity, he proposed channeling labour from agriculture to industry and services through stepping up industrialization.

As for the structure of businesses, SMEs and households businesses still account for a large proportion in the economy, so there should be policies to improve capital and land market, and actively help small and medium-sized enterprises to grow in size.

The scholar also pointed to the instable structure of foreign trade. He suggested in the next five years, Vietnam should hasten industrialisation to ease its reliance on imports from China and the Republic of Korea, and diversify export markets.

He said Vietnam needs a wiser strategy in attracting foreign investment and technology. According to him, domestic enterprises should be stronger so as to be able to become partners of foreign firms, especially those working in high technology.

Lao Cai aims to welcome 5 mln visitors this year

The northern province of Lao Cai, home to the popular holiday town of Sa Pa, has set a target of welcoming 5 million visitors this year and earning more than 696 million USD in tourism revenue.

To realise the target, it will bolster digital transformation in the sector and restructure the market and tourism products in keeping with conserving the local cultural identity.

The province will exert efforts to attract more domestic holidaymakers.

Sa Pa has long been among the country’s leading destinations. Of note, young people accounted for more than 70 percent of tourist arrivals to the town in 2020.

Lao Cai also aims to devise 130 new tourism products to meet demand from tourists and encourage them to return in the future.

Lao Cai’s tourism sector bore the brunt of the ill-effects of the pandemic and welcomed just 2.2 million visitors last year, down by more than half against 2019./.

Vietjet reports profit in 2020 despite COVID-19 impact

Vietjet Aviation Joint Stock Company (HOSE: VJC) has released its financial statements reporting 4,430 billion VND (approx. 192 million USD) of consolidated revenue in the fourth quarter of 2020 and a total of 18,210 billion VND (approx. 790 million USD) of consolidated revenue in 2020.

After-tax profit of Vietjet’s parent company was 274 billion VND in Q4/2020 while its consolidated after-tax profit reached 995 billion VND. In 2020, Vietjet recorded a consolidated after-tax profit of 70 billion VND, making it one of the few airlines in the world having no workforce reduction and turning a profit.

According to the statement, ancillary revenue accounted for nearly 50 percent of the airline’s total revenue, showcasing Vietjet’s efforts to promote ancillary services to offset decreasing air travel revenue.

Vietjet’s total assets reached 47,036 billion VND while its owner equity was at 17,326 billion VND including treasury shares. Its debt-to-equity ratio stayed at as low as 0.66 while the liquidity ratio remained at 1.2, which is considered a good performance given the current situation of the aviation industry.

Corporate bond market forecast to be robust this year

The corporate bond market in Vietnam is expected to be robust this year as the Government has issued regulations to untie the market but still aimed to ensure transparency and healthy market development.

According to Nguyen Hoang Duong, Deputy Director of the Department of Banking and Financial Institutions under the Ministry of Finance, the corporate bond market had become an increasingly important channel for enterprises to raise capital in recent years, which helped reduce pressure on banking credit.

However, not every enterprise was in a safe enough situation for bond issuance, Duong said, adding that there were many of small scale, especially those operating in real estate development, but issue corporate bonds much higher than their equity, posing risks to the market if these enterprises fell into difficulty and failed to pay debts.

“If investors do not evaluate risks and invest in corporate bonds just because they're lured by high interest rates, it will be very risky,” Duong said.

A recent market report of the VNDirect Securities Company showed that the total corporate bonds issued in 2020 were worth nearly VND437.7 trillion (US$18.87 billion), an increase of 38.8% against the previous year.

Due to the rapid growth of the corporate bond market, measures to minimise risks to the market were applied. The Government’s Decree No 81/2020/ND-CP which took effect from September 1 tightened private placement, including caps on the outstanding corporate bonds (not exceeding five times the equity).

According to Duong, the corporate bond market lost momentum in recent months due to tightened regulations.

In that context, Decree No 153/2020/ND-CP dated December 31 which took effect from the beginning of this year and replaced Decree No 81 untied the market to support transparent enterprises in raising capital through bond issuance.

Under Decree No 153, an enterprise could issue bonds if it was a joint stock or limited liability company, paid due debts on time and adequately for three consecutive years, met financial safety ratios, ensured operation safety, had approved bond issuance plan and audited financial report.

Experts expected this would create conditions for the corporate bond market to be robust against in 2021.

Expert Truong Thanh Duc said that tightening regulations on corporate bond issuance was not necessary because this might force small enterprises to turn to unofficial channels to raise capital, even black credit.

It would be better to have a property management mechanism to ensure transparency and fairness in accessing investment opportunities for investors.

For the long term, improving the credit rating service for enterprises was critical as credit rating became mandatory for enterprises in bond issuance, he said.

According to Asian Development Bank (ADB), reforms that drove demand for credit ratings would support the development of the corporate bond market.

The ADB pointed out that after years of sluggish growth, Vietnam’s corporate bond market had blossomed. Issuances grew at a compound annual growth rate of 40% between 2012 and 2019, and outstanding issuances amounted to around 11.5% of Vietnam’s GDP – the fourth-highest in ASEAN, and further gains were likely.

“A credible local rating agency is a key missing ingredient in Vietnam’s otherwise flourishing corporate bond market. Partnerships with global rating agencies would unlock the market’s potential, but these agencies want certainty that the demand for ratings is real,” ADB wrote.

Coffee sector to boost exports on EVFTA incentives

Moving ahead into the coming months there is a positive outlook for Vietnamese coffee exports due to global coffee stocks in port warehouses falling to their lowest level in many years, according to data released by the Ministry of Agriculture and Rural Development (MARD).

Statistics compiled by the General Department of Vietnam Customs indicate that Vietnam exported 1.57 million tonnes of coffee worth US$2.74 billion last year, representing a decrease of 5.6% in volume and 4.2% in value, while the average export price saw a slight increase of 1.4% to US$1,751.2 per tonne compared to 2019.

Germany remains the largest consumer of Vietnamese coffee, importing 223,581 tonnes worth US$350.41 million, marking a decline of over 4% in both volume and turnover. Meanwhile, the average export price in the market stood at US$1,567 per tonne, a rise of 0.4%.

The Southeast Asian market ranked second in terms of turnover with US$328.36 million, a drop of 8.6% in turnover, followed by the United States’ market with US$254.89 million.

The MARD anticipates that there are positive signs moving forward for coffee exports as Vietnam’s coffee export markets suffered huge losses due to the COVID-19 pandemic leading to an increase in domestic demand for coffee.

Despite this forecast, the rebound of coffee prices will largely be dependent on the tourism industry’s recovery level in the post-COVID-19 landscape.

Moreover, local businesses have been advised to make full use of opportunities brought about by the EU-Vietnam Free Trade Agreement (EVFTA) in order to boost exports in the near future.

MARD Deputy Minister Le Quoc Doanh said the enforcement of the EVFTA has seen the EU remove all taxes on unroasted or roasted coffee products from 7% to 0%, while tariffs on processed coffee types are set to be slashed from 9% to 0%.

Simultaneously, coffee makes up one of 39 of the country’s geographical indications that have been protected by the EU following the implementation of the EVFTA, an agreement which has created a huge competitive advantage for the local coffee industry in comparison with other competitors in the EU market.

Foreign companies boost investment in Vietnam

Foreign enterprises poured a considerable amount of capital into manufacturing and processing projects in the first half of January, according to the head of the investment office at the Ho Chi Minh City Export Processing and Industrial Zones Authority (Hepza), Tran Viet Ha.

Notable among them was a US$34 million project sprawling over 7ha at the Le Minh Xuan Industrial Park, operating in services and logistics.

During the first days of 2021, authorities in southern Dong Nai province presented investment licences to three foreign-invested enterprises working in support industries, two of which are long-time South Korean suppliers to Samsung.

Canadian Consul General in HCM City Behzad Babakhani told the Dau Tu (Investment) newspaper that when the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) was signed in 2019, two-way trade between Canada and Vietnam hit a record US$6.15 billion that year.

Babakhani said Canadian exporters benefit from farm produce, fish, aquatic, and forestry product exports, while Vietnamese exporters see opportunities in manufacturing and processing, such as electronics, leather and footwear, apparel, wooden furniture, farm produce, and aquatic products.

Vietnamese manufacturers have the chance, he said, to access Canada’s expertise in the fields of genetics, biotechnology, the environment, green technology, and sustainability, which could propel its agriculture sector restructuring.

He said that many Canadian companies are pursuing trade opportunities in Vietnam in the fields of clean technology, information and communications technology, aerospace, infrastructure, healthcare products, wooden furniture, and financial services.

Vietnam is an important partner of Canada, which is pursuing diversified trade to the Asia-Pacific region, he said.

Vice Chairwoman of the Australian Chamber of Commerce in Vietnam, Chau Ta, said Australian capital flows to Vietnam will increase strongly now the Regional Comprehensive Economic Partnership (RCEP) has been signed, given that the agreement will create an attractive investment environment in Vietnam and focus on job creation, local renovation, and integration into the global supply chain.

Australian companies are likely to increase investment in fields where Vietnam holds a competitive edge, and tap its trade ecosystem, such as the export of raw materials, manufacturing, and services.

She suggested they invest in fields that saw strong development in Vietnam after the pandemic, such as information technology, healthcare, and e-commerce.

HCM City targets domestic market for tourism recovery

The Ho Chi Minh City tourism sector this year plans to focus on digitalisation of the industry and promotion of domestic tourism amid a downturn in tourism because of the COVID-19 pandemic.

The department is stepping up digitalisation in tourism to propel the travel experience, said Bui Thi Ngoc Hieu, Deputy Director of the city's Tourism Department.

The sector will continue its efforts to boost domestic tourism as the main factor driving the recovery of the tourism industry, Hieu said at a conference on tourism development held in HCM City this week.

The tourism communication and stimulus campaign, ‘Hello Ho Chi Minh City,’ has been implemented to promote the city as a safe, vibrant and friendly destination.

Tourism cooperation and linkages between HCM City and the Northeast, Northwest and the Central regions will also serve to boost domestic travel, she said.

The city aims to receive 33.5 million domestic visitors this year if COVID-19 remains under control in the country.

The department has developed three scenarios for international tourism arrivals depending on the duration of the COVID-19 crisis.

In the first scenario, the city would receive 8.6 million international tourist arrivals this year if the pandemic is under control globally and Vietnam reopens all international flight routes in the beginning of the year.

In the second scenario, if Vietnam opens some international flights to “safe” countries in the beginning of the year, international tourist arrivals to the city would reach 6 million.

In the third scenario, international tourist arrivals to the city would be zero if international travel restrictions are in place throughout the year due to the ongoing pandemic.

Last year, the number of international tourist arrivals to HCM City was 1.3 million, down 85% year-on-year, while the number of domestic travellers to the city was 15.8 million, a decrease of 51% year-on-year.

Total tourism revenue was estimated at VND84.5 trillion (US$3.66 billion), down 39.6% compared to 2019.

Vietnam – Hungary trade hits record of US$1 billion

Bilateral trade between Vietnam and Hungary hit a historic record of more than US$1 billion in 2020, reflecting the enhanced relationship between the two countries in recent years.

According to the Vietnamese Embassy in Hungary, it was the first time in history two-way trade reached US$1.297 billion, a rise of 73.88% over 2019.

Of the figure, Vietnam’s exports to Hungary were worth US$925 million, an increase of 126.69%.

The historic record trade demonstrated that the relationship between the two countries was growing stronger than ever, especially since the two countries upgraded relations to a comprehensive partnership in 2018.

The official visit of Hungarian Minister of Foreign Affairs and Trade Peter Szijjártó to Vietnam in August on the occasion of the 70th anniversary of the two countries’ diplomatic ties reflected that Hungary attached much importance to the relationship with Vietnam.

Hungary was also among the first countries in the European Union (EU) to approve the EU – Vietnam Free Trade Agreement (EVFTA) and EU – Vietnam Investment Protection Agreement (EVIPA) to create a long-term and stable framework to further economic, trade and investment co-operation between Vietnam and the bloc.

In recent years, Vietnam mainly exported computers, electronic products and components, machinery and equipment, phones and components and garment products to Hungary. Hungary’s major export products to Vietnam included animal feed and raw material, machinery and equipment and pharmaceutical products.

In 2018, the two-way trade between Vietnam and Hungary topped US$645 million.

Retail sales, consumer service revenue up ahead of Tet

Total retail sales of goods and revenue from consumer services in January are estimated at VND479.9 trillion (nearly US$20.77 billion), up 3.7% month-on-month and 6.4% year-on-year, according to the General Statistics Office (GSO).

Goods retail sales totalled VND378.9 trillion, accounting for 79% of the total and up 4.1% month-on-month and 8.7% year-on-year.

Revenue from accommodation and food service stood at around VND48.7 trillion, representing 10.1% of the total. It increased 2.7% against December but was down 4.1% against January 2020.

Tourism revenue was around VND1.6 trillion, or 0.3% of the total, up 0.7% compared to December but down 62.2% year-on-year.

Earnings from other services were estimated at VND50.7 trillion, accounting for 10.6% of the total and up 1.1% month-on-month and 7.3% year-on-year.

The GSO said retail sales and consumer services have become more vibrant as the Lunar New Year (Tet) holiday nears.

Most enterprises, shopping centres, supermarkets, and business establishments have readied an abundant supply of goods and offered various promotional programmes to stimulate consumption ahead of the lunar new year, the office noted.

German newspaper spotlights Vietnam’s potential for foreign investment

Boerse-online.de – a German securities news site, on January 30 ran an article highlighting the great potential of the Vietnamese market for foreign investment, saying that it is the time for investors to look to the Southeast Asian market.

The article emphasiSed that Vietnam's economy is growing strongly, while domestic and foreign investors are participating more strongly in this Southeast Asian market.

Despite the COVID-19 pandemic, the thrust for Vietnam's stock market has yet been interrupted, it said.

According to the article, in 2020, Vietnam responded quickly and consistently to the pandemic, improving the trust of domestic investors.

As a result, economic losses caused by COVID-19 in Vietnam is less severe than in other countries, it stressed.

The World Bank (WB) forecasts that Vietnam's economy will grow by 6.8% in 2021, while the Vietnamese Government aims to achieve an average annual growth at 6% in subsequent years.

HCM City told to stabilise prices of festive goods amid COVID-19 threat

Businesses throughout Ho Chi Minh City have made efforts to prepare a source of goods with a total value of more than VND19.000 billion in order to cater for the rising demand of consumers in the lead up to the upcoming Lunar New Year (Tet), according to the HCM City Department of Industry and Trade.

The department also revealed that the quantity of goods for Tet has increased by between 12% and 21% compared to last year’s figures.

A representative of Bach Hoa Xanh supermarket system in Cu Chi district of Hoc Mon said that the number of costumers shopping at the end of the year has significantly risen, with purchasing power climbing by between 30% and 50% compared to normal days.

Supermarkets such as Co-op Mart, Satra, and VinMart have also recorded a sharp increase in their respective purchasing powers.

As a means of avoiding an escalation of prices in Tet goods, several local firms have also increased the supply source of products, even rising by up to 150% to 200% in comparison to the months prior to Tet.

Nguyen Quoc Hoang, general director of Bibica Joint Stock Company, stated that despite facing economic difficulties, the firm has initiated plans to supply 3,000 tonnes of products to the market without increasing prices in an effort to meet the demands of consumers around Tet.

A representative from Co-op Mart supermarket chain revealed that the firm will spend VND5.000 billion this year on a price stabilisation scheme in nine major categories, including rice, sugar, cooking oil, pork, and meat. poultry, poultry eggs, processed foods, fruits and vegetables, and seafood.

The supermarket has strived to increase the number of mobile vending vehicles in an effort to support residents and workers in suburban districts such as Can Gio, Cu Chi, Hoc Mon, and industrial zones.

Singaporean and Australia media shine spotlight on Vietnamese economic opportunities

Singapore-based Straits Times ran an article on January 28 describing 2021 as a year of opportunity for Vietnam, while the Australian Financial Review (AFR) described the nation as being an essential cog in global supply chains.

According to the Straits Time, the ongoing 13th National Congress of the Communist Party of Vietnam will decide on new leaders and chart the country’s future path, with a strong tailwind gained from its recent successes.

The article states that in in Party General Secretary Nguyen Phu Trong’s opening speech to the congress on January 26, he hailed the country's economic development and containment of the novel coronavirus (COVID-19) pandemic as twin major achievements. As such, the rising star of Southeast Asia has earned bragging rights, the news outlet noted.

This year can be viewed as the nation’s breakout moment following its competent handling of the COVID-19 pandemic and being one of the most successful economies in the region. It can therefore steal a march on others, as it ramps up production amid factories in the region remaining shut, while demand for tech, medical, and other products surge.

The new leaders the CPV selects and the new course of action will ultimately determine how well the national economy does and what role the country can carve for itself in the region, according to the Straits Times.

Furthermore, the publication believes that domestic challenges and external uncertainties could thwart Vietnamese ambition to become an upper-middle-income country by 2025 and an industrialised economy by 2030.

The article cites General Secretary Trong as admitting that shortcomings remain, including an economy that is not yet highly resilient. While the nation has privatised many state-owned firms, which make up nearly a third of economic output, they are typically low in efficiency and account for many bad loans. Indeed, the domestic economy remains dominated by low-end assembly work as opposed to high-end manufacturing, whilst the outdated higher-education system also cannot produce a sufficient amount of highly-skilled workers.

In its article on the Congress, the AFR outlines how domestic tourism and everyday life are largely back to normal.

It notes that Vietnamese leaders are focused on attracting additional foreign investment as the country has become an essential cog in global supply chains.

Low labour costs coupled with negligible barriers to entry initially attracted multinationals such as Unilever and Pepsico in the 1990s and early 2000s and they continue to remain factors in drawing firms to the nation. More recently, electronic giants such as Apple-supplier Foxconn have become keen on opening manufacturing establishments locally.

The AFR also quotes Francis Wong, senior adviser to the Australia-Vietnam Business Council, as saying that one of the keys to successful Vietnamese economic policies is stable and predictable succession in the Government driving the push towards an open economy. This has served to create confidence for investors both locally and internationally.

Vietnam’s January exports up 50.5% year-on-year

Vietnam’s goods exports were valued at US$27.7 billion, up 0.2% from the previous month and 50.5% from the same period last year, according to the latest data unveiled by the General Statistics Office of Vietnam (GSO).

The GSO largely attributed the sharp year-on-year increase to multinational electronics producer Samsung of the Republic of Korea (RoK) stepping up production and export of its new Galaxy S21 series.

In January, six items enjoyed export revenues exceeding the US$1 billion benchmark, accounting for 67.3% of the total exports.

Best performers included the heavy industry and mining sector which earned US$15.6 billion in export revenue, up 71.6% year-on-year; and the light industry and handicrafts earning US$9.7 billion from export, up 32.3%.

Agriculture and forestry exported US$1.8 billion worth of products this month, up 21.4% year-on-year; while fisheries earned US$600 million, up 19.6%.

The US remained the largest importer of Vietnamese products in January, with a total of US$7.5 billion worth of shipments, up 57.4% from a year earlier.

It was followed by China (US$5.8 billion, up 111.6%), the EU (US$2.8 billion, 14.8%), ASEAN (US$2.3 billion, 31.9%), and Japan (US$1.9 billion, 22.7%).

Vietnam’s imports, meanwhile, stood at US$26.4 billion in January, representing a fall of 5.4% compared to December but a growth of 41% from the same period last year. Four items reported import turnover of more than US$1 billion, making up 50.6% of the total imports.

China remained Vietnam’s biggest supplier of products, with turnover of US$9.6 billion, 72.7% higher than the figure a year earlier.

It was followed by the RoK (US$5.1 billion, up 29.3%), ASEAN (US$3.4 billion, 63.3%), Japan (US$2 billion, 52.9%), and the EU (US$1.3 billion, 23.3%).

Vietnam enjoyed a trade surplus of US$1.3 billion this month, with the domestic economic sector recording a trade deficit of US$1.8 billion while the FDI sector (including crude oil) boasting a trade surplus of US$3.1 billion.

The GSO also announced that total retail sales of goods and services in January rose by 3.7% month-on-month and 6.4% year-on-year to VND479.9 trillion.

The number of foreign tourist arrivals totalled over 17,700, up 9% month-on-month and down 99.1% year-on-year.

Industrial sector enjoys highest growth rate in 2011 to 2020 period

The global competitiveness of Vietnamese industry has risen 16 places in a decade, from 58th in 2009 to 42nd in 2019, becoming the country to enjoy the fastest growth rate throughout ASEAN, according to the UN Industrial Development Organization (UNIDO) Competitive Industrial Performance Report 2020.

Minister of Industry and Trade Tran Tuan Anh presented these figures in a report during a working session held on January 29 in Hanoi as part of the ongoing 13th National Party Congress.

The nation has risen to join a group of countries whose local industry in terms of global competitiveness is at a medium-high level.

In doing so, the country has moved to fifth position in the region, only 0.0015 points behind the Philippines, and closer to the group of four countries in ASEAN which have the strongest level of competitiveness.

During the 10-year strategic period from 2011 to 2020, the local industrial sector recorded the highest growth rate in terms of national economic sectors, contributing approximately 30% to GDP, thereby becoming the key Vietnamese export sector. This has served to bring the nation from 50th position in 2010 to 22nd in 2019, making it among the world's largest exporters.

At present, the country has established a number of key industries for its national economy, including oil and gas exploitation and processing, electronics, telecommunications, information technology, metallurgy, iron and steel, cement and construction materials, along with garments. This is in addition to leather and footwear, mechanical engineering and manufacturing, and automobile motor and production, all of which creates an important foundation for long-term growth, as well as promoting the national modernisation and industrialisation process.

Furthermore, the process of industrial restructuring associated with renovating the growth model and improving labour productivity has increasingly focused on the core of industrialisation, with the industrial structure recording positive changes. Indeed, the proportion of the mining industry group in GDP has continuously decreased from 9.1% in 2010 to approximately 8.1% in 2016, standing at only 5.55% in 2020.

Moreover, the processing and manufacturing industry has become the main growth driver of the industrial sector, enjoying economic growth of 5.82% last year.

Greater attention was also given to the support industry, with a specific focus on strengthening links with other key manufacturing sectors such as garments and textiles, footwear, electronics, and the agricultural product processing industry.

Notably, supporting industry ecosystems have also taken shape, while there has been an increase in terms of the localisation rate. The proportion of high and medium technology products in the nation has also increased significantly, creating a basis to form a number of large-scale, capable private industrial groups that are able to compete within the international market.

The proportion of processed export products as part of the total export value enjoyed a surge of 65% in 2016 to 85% in 2020, while the proportion of high-tech product export value increased from 44.3% in 2016 to 49.8% in 2020.

Along with investment attraction activities featuring the involvement of major economic groups and leading multinational companies in the nation, domestic enterprises have made great strides to develop large economic groups, including Viettel, Vingroup, Truong Hai, Thanh Cong, and Hoa Phat. Indeed, these firms operate in the fields of basic industry, materials, and mechanical engineering, thereby creating a foundation for the support industry and helping the nation to ramp up engagement in the global value chain.

Japanese firms plan expansion in Vietnam this year: Navigos Search

Despite being heavily affected by the COVID-19 pandemic, Japanese manufacturers in Vietnam have officially returned to production and recruitment since the fourth quarter of last year, according to a report released by recruitment services provider Navigos Search earlier this week.

“There have been a number of electrical/electronic enterprises increasing their production to meet the market demand, and some in the furniture industry have doubled their yield compared to before the pandemic,” Navigos Search said in its Report on Middle and Senior Recruitment Demands in Vietnam Market in Q4/2020 and Outlook for 2021.

According to Navigos Search’s analysis, Japanese manufacturers in the electronic and automotive spare parts plan to expand in 2021.

In addition, many manufacturing enterprises from Europe, the US, China, and Japan are exploring the market to invest in factory construction and develop production and business activities in Vietnam, the southern market in particular.

Due to the land shortage in Ho Chi Minh City, it is expected that they will grow in new industrial zones in the southern provinces of Binh Duong, Long An, Dong Nai, and Can Tho city, it said.

In a conference between Japanese firms and the Vietnamese government last month, Japanese Ambassador to Vietnam Yamada Takio said 37 out of 82 Japanese firms receiving governmental subsidies to shift factories to Southeast Asian markets have opted for Vietnam.

Navigos Search added that there are also significant changes in recruitment demands in Japanese companies. For candidates who can speak Japanese only, both job opportunities and the salaries considerably drop in these companies.

As a result, English and Japanese are almost a prerequisite factor in recruitment in addition to the required professional requirements.

Exporters urged to improve quality, follow rules of origin under UKVFTA

Vietnamese firms must improve product quality, strictly follow the rules of origin and ensure food safety to export goods to the UK under the recently signed UK-Vietnam Free Trade Agreement, speakers said at a seminar in Ho Chi Minh City on January 28.

Pham Binh An, Director of the HCM City International Integration Support Centre, said that under the UKVFTA, Vietnam would greatly benefit when exporting to the UK due to commitments to market opening and quotas for some of the country’s most competitive exports like agricultural and aquatic products.

Amid the COVID-19 outbreak, the UK’s demand for agricultural products, food, electronic products, personal protective equipment, and laboratory equipment has been increasing, and the trade deal will offer Vietnam the opportunity to export such products.

The UK market, however, is highly demanding about standards and quality requirements on imported products, forcing Vietnam to improve product quality and ensure consistency of products to conquer the choosy market.

The trade deal will also cause competitive pressure on the domestic economy, especially in sectors and industries in which the UK has strength such as financial services, pharmaceuticals and chemical industries.

Vu Viet Thanh, Director of the Europe and North America Market Department under the Ministry of Industry and Trade (MoIT), said that Vietnam exports phones and components, garments, footwear, fishery, wood and wooden products, computers and parts, cashews, coffee and pepper to the UK. It imports machinery, equipment, pharmaceuticals, steel and chemicals from the UK. 

Trinh Thi Thu Hien, head of the Product Origin of the MoIT’s Agency of Foreign Trade, urged Vietnamese exporters to enhance competitiveness of products, improve production and business capacity, and apply science-technology to increase value of their products. 

They must also enhance supervision over the use of antibiotics in processing, and ensure food safety to meet requirements of the importers.

In addition, Vietnam must adhere to the Rules of Origin (RO) when exporting to the UK, especially because traceability regulations in the country have become increasingly strict.

Recently, the first 60 tonnes of jasmine rice were shipped to the UK under the UKVFTA.

Nguyen Son Tra, head of the WTO and trade negotiation division at the Ministry of Industry and Trade’s multilateral trade policy department, said the trade pact took effect on December 31, 2020.

It was negotiated based on commitments made under the EU-Vietnam Free Trade Agreement (EVFTA) with necessary adjustments to ensure it conforms with the Vietnam-UK bilateral trade framework.

Under the UKVFTA, the UK has eliminated 65% of tariffs and will increase it to 99% within seven years. Vietnam has removed 48.5% of tariffs, and this will rise to 92% or 98% after six years. 

As the trade deal inherits the EVFTA, it is set to create a comprehensive, long-term and stable economic and trade co-operation framework between the two countries, according to Tra.

The UK is the third largest trade partner of Vietnam in Europe.

According to the Vietnamese General Department of Customs, bilateral trade reached US$6.6 billion in 2019, in which Vietnam’s exports to the UK accounted for nearly 88 %.

The two countries saw an average annual growth of 12.1% in import-export revenue during the 2011-2019 period, higher than Vietnam’s average level of 10%.

Programme rolled out to back SMEs’ digital transformation

The Ministry of Information and Communications (MIC) officially rolled out a programme supporting the digital transformation of small- and medium-sized enterprises (SMEs), called SMEdx, in Hanoi on January 29.

It is part of a series of projects to support SMEs in digital transformation via “Make in Vietnam” platforms, carried out by MIC in partnership with the Ministry of Planning and Investment, the Vietnam Chamber of Commerce and Industry (VCCI), and the Vietnam Association of Small and Medium Enterprises (Vinasme) this year.

Addressing the launch ceremony, Deputy Minister of Information and Communications Nguyen Huy Dung noted that the SMEdx programme provides an opportunity for the SME community to explore and experience different digital platforms in order to select one that best fits their needs.

The programme will also seek new digital transformation solutions for SMEs by sector in the future, he added.

Vietnam is home to about 800,000 enterprises, 98% of which are SMEs. The COVID-19 crisis has taken a toll on more than 90% of SMEs, with their total revenue plunging over 50% last year. About 24% suspended operations and the number of new SMEs was down 15%.

Some 47% of surveyed SMEs said they believe digital transformation will be vital for their success.

Enterprises can visit https://smedx.vn to learn more about digital transformation and suitable ways to approach digital transformation and to explore digital platforms that fit their needs. Consultation and support are also available.

Source: VNA/VNN/VNS/SGGP/VOV/NDO/Dtinews/SGT/VIR