Over a week ago, Dubai and Singapore-headquartered TVM Capital Healthcare announced the closing of a significant equity investment in Vietnamese eye care business Alina Vision, which currently operates two hospitals in Vietnam.

Alina Vision was established by international development organisation The Fred Hollows Foundation in 2018. Over the past five years, Alina Vision has received financial backing, eye surgery training, and clinical support from the Fred Hollows Foundation and Japan’s Rohto Pharmaceutical.

TVM Capital Healthcare is an emerging markets-focused healthcare private equity firm with a focus on specialised and tech-enabled healthcare services, digital health solutions and platforms, as well as manufacturing companies in pharmaceuticals, medical devices, and diagnostics.

As an industry specialist growth capital investor, TVM Capital Healthcare not only provides Alina Vision the equity investment but also access to operational, clinical, training, and management resources. This will help Alina Vision to accelerate the growth plans while improving quality of care.

Hoda Abou-Jamra, managing director of TVM Capital Healthcare in Southeast Asia, commented, “This deal marks the most substantial investment by TVM Capital Healthcare in the region to date. This investment is testament to our impact investment strategy, which is to design, build, and scale promising healthcare solutions that address patients’ needs and fill market gaps, ultimately contributing to equal access to quality healthcare.”

In December, Singapore-based Sweef Capital also made an investment in USM Healthcare, a Vietnamese manufacturer of critical cardiovascular products. The deal follows Sweef’s first investment in Vietnamese education technology company TEKY in May 2023.

Sweef Capital focuses on investing equity and quasi-equity capital in growth-stage companies, primarily in Vietnam, Indonesia and the Philippines. Sweef’s investment in USM was a pivotal step advancing the cause of accessible and affordable healthcare in Vietnam, it said.

Also last month, Singaporean healthcare entity Thomson Medical Group announced the completion of the FV Hospital deal, marking Vietnam’s largest transaction to date and ranking among the top-tier healthcare acquisitions in Southeast Asia in 2023. This pivotal step will further propel Thomson’s regional ambitions, expanding its network’s scale and enhancing our value proposition.

“Vietnam’s healthcare sector has emerged as a beacon of resilience, attracting strong interest from global and regional investors,” said Huong Trinh, partner at BDA Partners. “In times of economic downturn, the healthcare sector is a resilient stronghold. Healthcare services are a fundamental necessity, unaffected by fluctuations in the broader economy. Regardless of economic challenges, people continue to require medical care and services, making the healthcare sector a pillar of stability for investors.”

Vietnam’s demographic shift is also fuelling the demand for higher-quality healthcare services, making it a fertile ground for investment, Trinh stressed.

According to KPMG in Vietnam, the enthusiasm in the nation’s healthcare market is not one-sided. In fact, investors’ interest and enthusiasm to invest are welcomed by sellers and their intention to transact on the other side.

Specifically, in addition to ongoing deals, some owners or investors of certain primary care clinics and speciality hospitals are also said to be in the market looking to do deals. Their motivations vary from case to case, and while some are in the market raising new capital to accelerate their growth plan, some others look to exit completely or carve out certain individual assets in their portfolio, the KPMG representative added.

Forum focuses on collective economy

On February 2, 2024, the Forum on Collective Economy and Cooperatives with the theme "Completing the State's supporting policies according to Resolution No.20-NQ/TW - A motivation to promote collective economy and cooperatives in the new period" took place under the chairing of Prime Minister Pham Minh Chinh.

Deputy Minister of Planning and Investment Do Thanh Trung said that one of the core tasks of Resolution 20 was to amend the 2012 Law on Cooperatives with specific policy groups to improve policies of encouraging and supporting collective economic development. These have been specified in the Cooperative Law (amended) that was passed by the National Assembly (in 2023).

"Some outstanding new points of the Law include eliminating regulations that hinder market entry, expand the market, and improve the mobilisation of capital as a motivation for cooperatives development; completing and improving the efficiency of cooperative management and administration; expanding types of collective economy and improving regulations; and improving the effectiveness and efficiency of state management in collective economy," Trung said.

Chairman of the Vietnam Cooperative Alliance Cao Xuan Thu Van said that in 2021-2023, over 71 per cent of newly established cooperatives had young founders (aged 27-40), who were enthusiastic with skills in entrepreneurship, technologies and resources such as human resources, capital, and credit.

"Some new services and commerce models that meet the capabilities and strengths of members to suit market needs have been developed to contribute to local socioeconomic development," Van said.

Minister of Agriculture and Rural Development Le Minh Hoan said that they were implementing a pilot project on building standard agricultural and forestry raw material areas for domestic consumption and export in 2022-2025 across 14 provinces.

"In 2022, in 13 provinces with raw material areas, localities have supported the establishment of 70 new agricultural cooperatives and 1 union of cooperatives, raising the total number of agricultural cooperatives in raw material areas in 13 provinces to 320 cooperatives," Hoan said.

"The Ministry of Agriculture and Rural Development is currently developing a project on 1 million ha of high-quality rice in the Mekong River Delta that will support 937 cooperatives participating in the rice chain in the region."

Shawn Steil, Canadian Ambassador to Vietnam said that cooperatives were an important vehicle for mobilising entrepreneurship and ensuring on one is left behind.

"Cooperatives generate jobs and growth. For example, in 2021, there were more than 5,600 active non-financial cooperatives in Canada. They held $47.3 billion in total assets, employed 100,755 people and paid $2.7 billion in salaries and wages," he said.

The ambassador pointed out some witnessed challenges to the cooperative sector globally and in Vietnam related to access to capital; building and maintaining good infrastructure (whether it is processing, storage or distribution); scaling up to remain competitive and sustainable; and keeping the membership truly engaged.

"Legal recognition of the socioeconomic value of cooperatives is crucial. It is really well accomplished in Vietnam with the issuance of Resolution 20 and revision of the 2023 Law on Cooperative," he said.

He also suggested lower corporate income tax rates for cooperatives, and mandatory contributions to a social fund or cooperative federations to provide services and capital to cooperatives to enable their success and increase their impact.

Deirdre Ni Fhalluin, Irish Ambassador to Vietnam, recognised the importances of cooperatives and the need to provide a modern legal framework to help the cooperative sector grow.

"At the end of 2022, the Irish government agreed to commence drafting a new cooperative societies bill to modernise existing provisions for this sector. This bill - when finalised - aims to introduce modern corporate governance, financial reporting and compliance requirements, thereby making cooperatives more attractive to investors," she said.

Prime Minister Pham Minh Chinh said that Vietnam's collective economic sector had not yet developed as expected and required.

"The growth rate of this sector is only half the overall growth rate of the economy. The proportion of the collective economy sector and cooperatives in the country's GDP is decreasing on-year, (from 8.06 to 3.62 per cent in 2001-2020," the PM warned.

He said that the collective economy and cooperatives must change drastically in both thinking and action with the application of modern sci-tech, green transformation, digital transformation, circular economy, knowledge economy, and sharing economy.

All quantity and quality of members and workforce; the efficiency of capital use, labour productivity, linkage in value chains, supply chains, and production chains should be improved.

Therefore, the PM requested the Ministry of Planning and Investment to complete the master plan on collective economy development in 2026-2030.

The State Bank of Vietnam will have to research and improve regulations on internal lending in cooperatives and cooperative unions to support employees and cooperative members in eliminating 'black' credit in agricultural areas.

Digital forays headline 2024 retail sector

Vietnam’s retail sector is poised for a diverse recovery in 2024, driven by shifts towards essential goods, health products, and digital transformation.

Samsung’s Galaxy S24 smartphone was launched in mid-January, a month earlier than planned. The release from the tech giant is seen as an early test for domestic consumer demand, particularly significant given the struggles faced by the retail sector in 2023, especially in non-essential consumer goods.

Last year witnessed fierce price wars and inventory clearances among electronics and appliance retailers. The delay in iPhone 14 deliveries by a full quarter led to widespread order cancellations, while Apple launched a new product only in late Q3.

According to the latest SSI report, inventory reduction efforts were a key factor behind the shrinking profit margins for numerous retail businesses last year.

“Beyond competitive pressures, consumer demand for these products in 2023 was significantly affected by stringent debt recovery operations by financial companies, coupled with high default rates due to rising unemployment. Debt recovery investigations were most intense in the first half of 2023 and decreased towards the end of the year,” the report noted.

SSI Securities also forecast a slow recovery in non-essential consumer spending, despite macroeconomic factors like lower interest rates and recovering exports. Consumer finance companies may remain cautious in extending new credit, given the slow recovery in labour-intensive sectors. However, the easing of the price war offers a silver lining.

“Though profit margins may not return to 2022 levels, there is an opportunity for recovery as businesses continue to maintain competitive pricing strategies,” the brokerage said.

Meanwhile, essential product chains like MWG’s Bach Hoa Xanh and FPT Retail’s Long Chau pharmacy chain are expected to see more an optimistic recovery.

According to MB Securities (MBS), the Vietnam’s retail pharmaceutical sector is poised for substantial growth, largely due to an absence of a dominant market leader.

“This gap presents a significant opportunity for new entrants and existing players to increase their market share,” MBS said. “The demographic shift towards an ageing population, coupled with a heightened focus on health, is driving demand in the sector.”

Furthermore, Vietnam’s ranking among the top 30 nations for high average PM2.5 levels has intensified public concern over environmental health issues, fuelling the need for health supplements and functional foods, MBS added.

Highlighting the sector’s appeal to foreign investors, the recent acquisition of Trung Son Pharma by South Korea’s Dongwha Pharma Group for around $30 million, accounting for a 51 per cent stake, underscores the trend.

“This deal not only illustrates the ongoing interest from international investors but also signals the untapped potential of the Vietnamese market,” MBS said. “Competition is fierce, particularly between top chains Pharmacity and Long Chau, suggesting a robust and evolving marketplace.”

On the flip side, 2023 was a challenging year for the retail sector. Leading retailers like FPT Retail and MWG faced significant profit slumps, with FPT recording a historic net loss of $9.07 million in the second quarter of 2023, and MWG’s net profit plummeting by nearly 98 per cent to $3.29 million.

For 2024, MBS predicts retail profits on the Vietnamese stock exchange to potentially double compared to 2023, outperforming the broader market’s average profit growth forecast of 16.8 per cent. Echoing the sentiment, SSI Securities anticipates a 118 per cent profit increase for retail businesses this year.

However, the growth is expected to be uneven across the sector, as digital transformation continues to redefine the retail landscape. MWG plans to leverage customer data from its loyalty app to enhance sales strategies, indicating a shift towards more data-driven retail approaches.

The retail sector’s foray into telecommunications is also noteworthy. FPT Retail’s recent launch of a competitive telecommunications package and Masan Group’s acquisition of Mobicast, operating mobile virtual network operator Wintel, signal a strategic expansion beyond traditional retail boundaries.

In essential goods, Masan’s WinMart and FPT Retail’s Long Chau chains expanded significantly in 2023, positioning themselves well for the expected upswing in consumer spending on necessities.

MWG, on the other hand, faced a year of restructuring with no new store openings in its grocery segment. However, the firm is now raising capital through a private equity offering to potential investors, aiming to fund new stores and logistics upgrades.

“The goal is to break even in the first half of 2024 and then drive expansion,” a MWG spokesperson said.

Vietnam’s retail market is projected to grow from $276.4 billion in 2024 to $488 billion by 2029 at a 12.05 per cent compound annual growth rate.

Recent recovery, although slower than the previous year’s 12.7 per cent growth, was boosted by promotional strategies to stimulate domestic consumption. The market is driven by urbanisation and changing consumer trends, especially among young city dwellers, leading to a surge in modern retail formats like department stores and e-commerce.

The private consumption rate is also high, more than 67 per cent of the GDP. This is the second highest in the region, behind the Philippines at 73.8 per cent and ahead of Malaysia and Indonesia at 57 per cent and 57.3 per cent, respectively.

Latest wave of layoffs make dent in e-commerce sector

Large-scale lay-offs in e-commerce could be just the beginning of struggles for the tech industry, which may continue throughout the year.

Hundreds of employees working at Amazon and Lazada have lost their jobs only two weeks into the new year.

On January 10, Amazon announced plans to cut several hundred employees in its Prime Video and MGM Studios. At the same time, Amazon’s livestream platform Twitch also announced plans to lay off 35 per cent of its employees, equivalent to 500 people. About 100 Audible employees will also be forced to leave in the near future.

A week earlier, Lazada also began its latest round of lay-offs across Southeast Asia, with the number of affected employees likely reaching hundreds.

Lazada currently operates in Singapore, Indonesia, Malaysia, the Philippines, Thailand, and Vietnam.

According to TechinAsia, about 30 per cent of Lazada’s workforce will be affected, including senior managers in Singapore and Malaysia. Customer care, marketing, and commercial departments suffer the most. The move took place right after Lazada received an additional $634 million in capital from parent company Alibaba, bringing the total amount of money the Chinese corporation invested in this platform in 2023 to more than $1.8 billion.

In Vietnam, although there has not been an official response to the extent of the impact of the lay-offs, and Lazada declared that operations in Vietnam were still taking place normally. Information that Lazada Mall will temporarily suspend operations as previously reported by many media is inaccurate, the company said.

While the question of a large-scale restructuring is starting to arise in the e-commerce business sector, there is still no clear answer on whether there will be lay-offs in Vietnam. Representatives of the Alibaba Vietnam and Amazon Vietnam did not to respond to VIR’s inquiries, citing compliance with the group’s regulations.

E-commerce is one of the bright spots of Vietnam’s digital economy with a growth rate of 16-30 per cent per year and is among the top 10 most dynamic markets in the world. The scale of Vietnam’s e-commerce market reached $20.5 billion last year and is expected to continue in the next two years.

Tran Phuoc Tri, country manager of NodeFlair Vietnam, a career transparency platform, assessed that the technology industry labour market in Vietnam will be affected by the wave of global lay-offs, but not significantly.

He said that the need for human resources for positions related to AI, business analysis, and data analysis was increasing.

“Some Vietnamese companies that previously downsized are also planning to expand again in early 2024, while some foreign startups that want to enter Vietnam are also in need of employees,” Tri said. “However, it will not be until the second half of 2024 that the market will truly explode and expect to return to a period of strong growth like 2022.”

The wave of cost and personnel savings that began in 2023 is still continuing, showing that the technology industry has not yet been able to overcome its difficulties.

A number of major technology companies around the world also issued similar announcements to Lazada. Google announced that it would release hundreds of employees in the assistant and hardware departments. The technology company behind the foreign language learning application Duolingo, with more than 500 million users, also decided to release 10 per cent of seasonal workers to replace them with AI.

According to the tracking website Layoffs.fyi, 58 technology companies globally have already laid off about 7,800 employees this year. Last year there were over 262,000 lay-offs in the technology industry and the number for 2022 was about 165,000, according to the website’s calculations.

Enterprises make efforts to ensure Tet employee bonus

Companies have found headroom to offer workers bonuses for the Lunar New Year break – even those with falling order numbers and bleak business results.

Dinh Sy Phuc, trade union chairman of Taekwang Vina – a South Korean textile firm located in the southern province of Dong Nai – told VIR that the company’s union is preparing Lunar New Year gifts for workers along with a bonus.

“This year, the company spent $20.3 million on the Lunar New Year bonus with the highest level being 150 per cent of the month’s salary, which is calculated based on the basic salary in collaboration with heavy, hazardous, and dangerous allowance,” Phuc said.

According to him, although the bonus level remains the same, it is calculated based on the new salary of 2024. The company will increase basic salary by VND100,000 ($4.20) and allowances by VND50,000 ($2.10) for employees. In addition, employees whose salaries are due for a rise will receive an increase of 3 per cent. Thus, the actual amount of money received by workers will be higher than last year’s Lunar New Year.

“It is an effort of the boards of directors in the context of falling orders and difficulties surrounding the leather and footwear industry. However, we are aware that ensuring the bonus and allowance in the difficult period is a necessary task to retain people in the context of the competition in recruiting,” Phuc explained.

“If we do not ensure their livelihoods for them, they may leave the company to work for companies elsewhere, or return to their hometowns,” he added.

Along with the bonus, the company has also prepared vehicles or two-way tickets to ensure workers get home to enjoy the Lunar New Year holiday.

Another company in garment and textiles, South Korea’s Changshin Vietnam Co., Ltd., announced its total package for Lunar New Year bonus at $27.4 million. The number was made final after seven rounds of negotiations with the board of directors and the trade union.

This move illustrates the company’s efforts to get through the economic storm as many other footwear companies in Vietnam have shut down or cut staff. The company boasts the largest number of workers in Dong Nai with 37,000, but it saw orders plunge 20 per cent in 2023 due to weak global demand, and company leaders want to retain workers by raising their wages.

In addition, employees will receive an additional allowance of 5-8 per cent of basic salary, depending on position. For new employees joining the company this year, the company commits a bonus of $21. Compared to last year, this year’s bonuses have increased $12.50 per worker, depending on seniority.

The Nike footwear supplier will also raise the monthly salary for all workers by $6.20, which is set to cost the company over $240,000 extra each month.

“We hope that our efforts to ensure the bonus and increase salary will encourage workers so that they remain loyal and dedicate themselves to the company so that it can overcome this difficult period,” said Dang Tuan Tu, trade union chairman of Changshin.

Nguyen Xuan Duong, vice chairman of the Vietnam Textile and Apparel Association added, “Lunar New Year bonuses of southern businesses will not be the same every year, while northern businesses have mostly responded that they will try to keep the bonus level the same as last year.”

According to a survey by the Hanoi Small and Medium Enterprises Association, this year’s bonus levels will depend on different industries and markets, and the actual levels of employees are also different.

Mac Quoc Anh, vice president and general secretary of the association, shared, “Some businesses have given an additional 10 per cent bonus to employees working in sales, marketing, administration, and accounting departments. Meanwhile, unskilled workers or high-quality workers who can work with modern machinery and equipment are also rewarded with an additional 5-10 per cent of their salary.”

According to information from the Hanoi Labour Confederation, the average salary of workers in 2023 was equal to 2022. However, the average Lunar New Year bonus for employees in all types of businesses decreased from 1.41 per cent to 2.44 per cent compared to 2023.

In Ho Chi Minh City, the average Lunar New Year bonus is kept at the same level as last year, an average of $519 per person, according to a report by the City’s Labour, Invalids and Social Affairs sector.

The Ministry of Labour, Invalids and Social Affairs (MoLISA) has announced its 2024 Lunar New Year bonus: accordingly, the average bonus is almost $290 per worker, equivalent to last year.

According to Trinh Thanh Dinh, chairman of the union of Tan De Sporting Goods Manufacturing JSC, despite ending a troubled business year with the number of orders falling about 15 per cent and overtime dipping from up to 250 hours per year to around 180 hours, the company has tried to maintain welfare policies and ensure continuous employment.

“We consider employees to be our most valuable asset, and all policies aim to benefit and protect their rights,” he said. “Thus, workers will trust and be willing to accompany the business to maintain operations, even in difficult times.”

Tan De currently has up to 10 factories in Thai Binh province, with a total workforce of about 18,000. Since the beginning of the year, the company has spent more than $1.35 million on Lunar New Year gifts for employees.

The Department of Industrial Relations and Wage, a unit of MoLISA, will imminently produce a general report on the salary and bonus situation as well as salary debt and social insurance debt when localities fully report.

The report will describe the overall picture of salaries and bonuses for localities with large workforces such as Hanoi, Ho Chi Minh City, Dong Nai, Bac Ninh, and Bac Giang.

Smuggling continues to harm livestock gain

The livestock industry is struggling to cope with the increase in smuggled pig operations.

In the lead up to Lunar New Year, both demand and prices are rising, and so is the volume of smuggled pigs, according to Nguyen Tri Cong, chairman of the Dong Nai Livestock Association in the southern province of Dong Nai.

“We have sent an express document to the prime minister on preventing, detecting, and strictly handling cases of illegal trading and transportation of pigs across the border into Vietnam because this is a problem,” Cong said. “It is no longer limited to one province, but is a nationwide and very urgent problem. The association knows what has to be done, so it made recommendations to protect livestock farmers in Dong Nai and in the rest of the country.”

During the two first weeks of January, as many as 7,000 pigs on average are smuggled into Vietnam every night from Cambodia through a number of border gates. He said that the number of smuggled pigs accounts for about 30 per cent of domestic livestock output sold every day.

In the north-central region, informally imported pigs from China and Thailand through Quang Binh and Quang Tri border gates cost around $2.20 per kg. In the southern region, thousands of Thai pigs per day are seemingly smuggled through the Long An border gate at a price of about $2.10 per kg.

Le Thanh Phuong, from a foreign-invested livestock enterprise in the southern province of Binh Duong, explained that livestock farms in Cambodia have developed strongly in recent years, and the cost of live pig breeding is only about $1.50 per kg.

“In China, pig breeding is a profitable job, so numerous farms have been built over the last three years. The selling price is nearly $2 per kg of live hogs in China and in Thailand, and $2.20 in Laos. The selling price differences are significant enough that traders can earn a good profit margin by transporting live pigs across the border,” Phuong said.

In 2023, most livestock enterprises suffered losses because of reduced purchasing power, while animal feed prices have not dipped. Even in times of normal and peaceful farming, the current selling price of live pigs is only equal to the production cost, Phuong added.

Cong from the Dong Nai Livestock Association highlighted that if smuggled pigs are not controlled, there will be a risk of disease spreading. “In addition, smuggled pigs are difficult to control in terms of quality, which will affect consumers. In the future, competition from smuggled pigs will seriously affect the total pig herd, causing a shortage of domestic supply,” Cong emphasised.

During recent years, the domestic livestock industry has been under a lot of pressure from epidemics. Production below cost has forced losses, and many farms and livestock households had to reduce herds or stop production.

“The problem now is the price. For a long time, farmers had to sell pigs below production costs. Specifically, the cost of raising pigs has historically been about $2.30 per kg, but for a long time, it has only fluctuated at $2-2.10 per kg of live pigs. Thus, by raising a pig, farmers are facing a loss of $23-30 for each one,” Cong said.

“In the current situation, continuous production below cost and low purchasing power combined with smuggled pigs will drag down the livestock industry very quickly,” he insisted.

Deputy Minister of Agriculture and Rural Development Phung Duc Tien said that domestic pig prices are higher than in some surrounding countries.

“The ministry has received feedback from numerous businesses and directed the Ministry of Agriculture and Rural Development’s (MARD) Department of Animal Health to carry out inspections in some localities. We have also found two facilities collecting a large number of pigs in the border area of Long An province,” Tien said.

“However, due to a poor professional force and facilities like these carrying out various tricks, the veterinary agency could not inspect the transport of pigs inland. Authorities have asked Long An province to seriously investigate smuggled pig transportation and trade,” he added.

According to the MARD’s Department of Livestock Production, in December 2023, the import value of official livestock products reached $330 million, raising the total import value of such products for the whole of 2023 to $3.53 billion.

Businesses remain cautious about recruitment

Businesses remain cautious about recruitment for 2024 with more than a third of firms maintaining their workforce size, according to a survey from Adecco Vietnam released on January 25.
 
Last year's global economic unrest led to a decrease in employment demand worldwide that was coupled with a marked rise in production and business costs. Vietnam witnessed a significant impact due to the downturn experienced in two major sectors, the real estate market and corporate bonds. The challenges these sectors face have led to reduced capital absorption by businesses and an escalating trend in bad debts, among other difficulties.

Within the first 10 months of 2023, the country had witnessed the establishment and return to operation of more than 183,500 new businesses, marking an almost 3 per cent increase on-year. However, the number of businesses withdrawing from the market was over 146,500, seeing a rise of 20 per cent.

Despite the challenges, Vietnam’s economy is on a positive trajectory, supported by a series of measures from the government. According to the assessment from the Ministry of Planning and Investment, all three drivers - investment, exports, and consumption - show promising growth potential in the year ahead. Exports in particular are gradually gaining momentum since the end of last year. Retail and consumption are approaching double-digit growth, and the investment sector shows favourable opportunities in state and private investment, as well as from overseas, especially in emerging areas like renewable energy and semiconductors.

Adecco Vietnam’s survey reveals caution, however, with 74 per cent of businesses expecting limited-to-modest growth in 2024. In addition to the 37 per cent that plan to maintain their workforce size, a further 35 per cent intend to increase headcount by less than 25 per cent. Businesses in retail, education, and IT have plans to increase recruitment more significantly.

Nevertheless, 18 per cent of firms surveyed plan to cut down their workforce, an 8 per cent increase compared to the start of 2023, primarily in manufacturing and real estate.

The top priority for recruiters is candidates with change management and leadership skills, as chosen by 47 per cent of surveyed employers, with technological and digital skills also highly valued.

From the perspective of employees, the unpredictable job market has increased caution in searching for new opportunities. According to the survey, 29 per cent have no intention of changing jobs, while 36 per cent are open to new opportunities but not actively seeking new employment in the next 12 months.

Compared to last year's survey, where salary was chosen as the most important factor by a significant margin, it was opportunities for development, along with welfare benefits, listed as most prized by employees.

While analysing the top factors contributing to the movement of talent across the Asia-Pacific region, compensation and benefits also emerged as the most significant factor, with 67 per cent choosing it as their primary consideration when switching roles. In comparison to other countries within the region, Vietnam, at 57 per cent, lags more expensive locations, such as Hong Kong (88 per cent), Singapore (82 per cent), and South Korea (78 per cent).

Consequently, salary expectations across Asia-Pacific are high. In reality, Vietnam leads with 23 per cent of respondents, followed by India at 21 per cent, receiving a salary increase of over 20 per cent in their current roles. In contrast, when changing employers, a significant 46 per cent in Vietnam and 91 per cent in India expect a base salary increase of over 20 per cent.

Given such high salary expectations, organisations need to relook their pay strategies for 2024. Aligning employee salaries with market demands will be crucial to enticing and retaining top talent.

Seafood sector faces bleak prospects in 2024

On January 22, Vinh Hoan Corporation (VHC), a major tra fish exporter, released its fourth-quarter (Q4) 2023 financial statement with consolidated revenue and post-tax profit of $101.2 million and $2.79 million, down 3 per cent in revenue and a huge 66.5 per cent in post-tax profit on-year.

This profit level was compared to last year’s fourth quarter, the period when exporters were hit by spiralling inflation in the US and EU markets, both of which are key for Vietnamese exports.

Q4’s profit at VHC was also much lower compared to the first three quarters, causing the company’s consolidated post-tax profit for the whole of 2023 to sink by 53 per cent on-year to just $40.06 million, equivalent to 89.7 per cent of its full-year target.

VHC has attributed its Q4’s shrinking profits to falling export prices and diminishing volumes.

Another southern seafood export major, Nam Viet JSC, witnessed more negative Q4 business results. Its revenue was down by nearly 3 per cent on-year to $46.8 million, leading to nearly $22,000 in losses. The company counted $4.5 million in profit in the same period last year.

After the hardships in 2023, analysts are cautious over the seafood sector's 2024 prospects.

For the whole year, Nam Viet saw its revenue down 9.3 per cent to $187.2 million, and pre-tax profit fell by over 90 per cent on-year to just $2.85 million.

With such results, the company only met 22.5 per cent of its full-year pre-tax profit target.

Although its Q4 2023’s financial statement has not been made public yet, Sao Ta Food JSC's (FMC) preliminary summing-up report for 2023 reflects the company’s downbeat performance last year.

Accordingly, its sales revenue declined by 11 per cent on-year to $200.6 million, and its estimated profit came to $12.65 million, down by nearly 10 per cent.

Last year, FMC’s sale volume of shrimp and finished agricultural produce totalled just over 17,400 tonnes and 1,366 tonnes, down 4 per cent and 24 per cent, respectively.

In late October, FMC revised its 2023 business targets, setting its revenue and pre-tax profit goals at $205.4 million and $12.6 million – each down by 25 per cent.

Mekong Fisheries JSC (AAM) also witnessed a gloomy year in 2023.

In Q4, the company counted $1.6 million in net revenue, down 9.5 per cent on-year, and its post-tax profit contracted by $16,000.

For the whole of 2023, the company secured $5.76 million in net revenue, down 35 per cent on-year, and nearly $30,000 in post-tax profit, marking a significant fall of 96 per cent.

As a result, AAM only fulfilled 75 per cent of its full-year revenue and 8 per cent of its profit target.

According to the Vietnam Association of Seafood Exporters and Producers, the nation counted $9 billion in seafood exports last year, down 18 per cent on-year and equivalent to a drop of $2 billion.

The export value sank across Vietnam’s major export items such as shrimp, tra, and tuna.

After the hardships in 2023, analysts are cautious over the seafood sector's 2024 prospects.

Tran Nhat Trung, analyst at ACB Securities JSC, stated that this year continues to present difficulties in the seafood sector, yet profits might rise slightly.

"We forecast that the demand for seafood imports will not climb significantly in 2024. Following the price movements in late 2023 and early 2024, the price of tra fish in Vietnam’s major export markets is likely to remain unchanged or slightly reduced," he said.

"In addition, with weaker growth prospects in 2024, consumption could be affected. Generally, we believe that the profit picture for seafood exporters in 2024 might be brighter than in 2023, but it is not looking like a breakthrough year for the sector," concluded Trung.

Manufacturing production rises for first time in five months

Manufacturers in Vietnam recorded a return to growth at the start of 2024 as tentative signs of improving demand fed through to renewed increases in new orders and output.
 
The S&P Global Vietnam Manufacturing Purchasing Managers' Index moved back above the 50 point no-change mark at the start of the year, rising to 50.3 points from 48.9 points in December. The reading pointed to a first improvement in the health of the manufacturing sector for five months, but one that was only marginal nonetheless.

The overall improvement in business conditions was centred on renewed expansions in new orders and production. The rise in total new business was the first in three months amid signs of demand recovering in both domestic and export markets. New export orders also expanded for the first time since last October.

In turn, firms increased their production volumes, thereby ending a four-month sequence of decline. The rise was slight, but the most marked since September 2022. The overall expansion in output was centred on intermediate goods producers.

The slight nature of the increases in output and new orders meant that firms kept their staffing levels and purchasing activity broadly unchanged at the start of 2024.

The combination of this broadly stable picture regarding operating capacity and a renewed rise in new orders meant that backlogs of work built up for the second month running during January. Although slight, the rate of accumulation was the most pronounced since March 2022.

Some firms opted to satisfy orders by distributing finished goods to customers. As a result, post-production inventories decreased following no change at the end of 2023.

Stocks of purchases also decreased amid a combination of rising production requirements and broadly unchanged purchasing activity. The reduction in pre-production inventories was solid and the steepest since June last year.

Andrew Harker, economics director at S&P Global Market Intelligence said, “It was an encouraging start to 2024 for the Vietnamese manufacturing sector, with some welcome improvements in new orders and production. The respective increases were only marginal, however, and not sufficient to entice firms to take on additional staff or expand purchasing. The lack of an expansion to operating capacity meant that backlogs of work continued to build."

According to S&P Global, confidence in the year ahead outlook for production dropped to a seven-month low and was below the series average as some firms expressed worries about economic conditions. Manufacturers remained optimistic overall, however, amid hopes of improvements in demand and customer numbers, plus the planned launch of new products.

Hanoi attracts almost 870 million USD in FDI last month

An estimated 866.8 million USD in foreign direct investment (FDI) was channelled into Hanoi in January, the municipal Statistics Office reported.

That comprises 859.4 million USD registered for 10 new projects, 5.1 million USD added to six existing ones, and 2.3 million USD spent on seven transactions to contribute capital to or buy shares of local businesses.

During the month, 2,529 new companies with combined capital of 35.4 trillion VND (1.4 billion USD) were established in Hanoi, respectively rising 54 per cent and 2.4-fold year on year. As many as 3,660 firms resumed operations, up 50 per cent.

While 12,300 businesses registered suspension of operations, 457 others were dissolved, increasing 56 per cent and 52 per cent, respectively, data shows.

The office said consumption demand has continued growing compared to the final months of 2023 as the Lunar New Year (Tet) festival is nearing. Retail sales of goods and consumer service revenue totalled 68.8 trillion VND in January, up 3.2 per cent month on month and 9.3 per cent year on year.

Nguyen Manh Quyen, Vice Chairman of the Hanoi People’s Committee, said that this year, the city will push forward with administrative reforms to create favourable procedures to attract domestic and foreign investors.

It will organise more trade promotion events both in Vietnam and abroad to seek potential investors. More high-quality agricultural products and items under the “One Commune, One Product” (OCOP) programmes, and those of craft villages will also be developed to serve domestic consumers and tourists, he added.

Ho Chi Minh City takes a green path

Ho Chi Minh City is choosing green growth as its future development strategy, seeking funding for almost 30 priority projects to help achieve economic prosperity and environmental sustainability.
 
Roads and bridges are being worked on that can contribute towards a greener development strategy, photo Le Toan
The city wishes to promote innovation initiatives and multinational cooperation, calling for private investment to gradually transition to a greener and more sustainable economy, it was announced at a green investment promotion conference organised in coordination with the World Bank last week.

Ho Chi Minh City People’s Committee has issued a list of 28 projects seeking investment to promote green growth. Of those, three high-tech manufacturing projects in electronics and semiconductors require more than $178 million. The city is also calling for funding for a data centre project worth over $300 million.

The metropolis also seeks investment for research and development projects in electronics and semiconductors of about $8.7 million, and supporting industrial production projects with high technology of $14.3 million.

Investment is also wanted for a number of projects in Thu Thiem New Urban Area such as a financial, commercial, and residential area costing $500 million; an exhibition, hotel, and trade complex worth $70 million, and a central square and riverbank park with capital of $220 million.

In addition, there are projects to upgrade and expand major routes such as National Highway 13, National Highway 22, Thu Thiem 4 Bridge, Can Gio Bridge, and Ho Chi Minh City-Moc Bai Expressway.

Ho Chi Minh City is also looking for cash for five projects in wastewater treatment, environmental improvement, and urban embellishment.

The latest research results published by the Institute of Environment and Natural Resources under the Ho Chi Minh City National University have showed that the city releases average annual total greenhouse gas emissions of around 60 million tonnes of CO2, mainly from industrial production, traffic, and living activities. At the same time, the city is also facing the negative effects of climate change, environmental pollution, resource shortages and economic crisis.

At the conference, Chairman of Ho Chi Minh City People’s Committee Phan Van Mai, said, “Along with the general trend around the world, Ho Chi Minh City chooses to give top priority to green growth as its future development strategy to achieve economic prosperity and environmental sustainability. We are moving towards a green and carbon-neutral economy, contributing to the goal of limiting global temperature rises.”

He also added that the city had set a target of reducing emissions by 10 per cent by 2030.

Carolyn Turk, World Bank country director for Vietnam, East Asia, and the Pacific, said the goal could only be achieved through the correct strategies.

“The city needs to motivate the private sector to participate in the green transition process. In many other countries, tax incentives are applied to green businesses, but this can be difficult in some countries, especially developing countries,” Turk said.

“Therefore, the World Bank will accompany Ho Chi Minh City in implementing the economic development strategy to reduce emissions and commit to supporting the city in accessing financial resources and attracting foreign resources to reduce carbon emissions.”

Ho Chi Minh City and the World Bank created a joint working group two years ago and have had some results, such as a $650 million investment package for a 10-year programme, an investment scheme to upgrade public assets, and an integrated flood management scheme.

The World Bank is committed to supporting Ho Chi Minh City in accessing financial resources and attracting foreign resources to reduce carbon emissions. According to Turk, the carbon credit market is a good resource, and she hopes that Ho Chi Minh City can sell credits on the voluntary carbon market.

“Innovations are easy to implement, but the costs are high. If Ho Chi Minh City does it and sells them itself, the transaction costs are high. Therefore, the World Bank wants to help it synthesise all carbon credits, creating a large enough volume for international transactions,” Turk explained.

She added that, due to the small scale, the private sector was having difficulty in accessing the world’s voluntary carbon credit market.

The World Bank has appointed Ho Chi Minh City State Financial Investment Company to be the leading unit to coordinate carbon credits in the city.

Flooding alone causes economic damage to the city that can reach up to $250 million per year, a figure that is likely to continuously increase every year.

Source: VNA/SGT/VNS/VOV/Dtinews/SGGP/VGP/Hanoitimes