Vietnamnet global

23/11/2020 11:11 (GMT+07:00)

VIETNAM BUSINESS NEWS HEADLINES NOVEMBER 23

Businesses in support industries growing in quantity, quality

Vietnamese businesses operating in support industries have been developing in both quantity and quality in recent years, with improved production capacity and increasing engagement in global production chains.

In a recent report submitted to the National Assembly Standing Committee and legislators, the Government cited statistics showing that companies in support industries account for nearly 4.5 percent of all manufacturing and processing businesses and have created more than 600,000 jobs, equivalent to 8 percent of the workforce in the manufacturing and processing sector. Their net revenue now tops 900 trillion VND (38.9 billion USD), or about 11 percent of the sector’s total.

Some Vietnamese enterprises boast relatively good capacity in producing moulds, bicycle and motorbike components, electrical cables, plastic and rubber components, and tyres, meeting domestic demand and the requirements of foreign importers.

The report noted that support industries play a decisive role in restructuring the economy, improving workplace productivity and skills, and promoting the competitiveness and quality of Vietnamese goods and the economy.

Given this, the Ministry of Industry and Trade has provided advice to the Government and the Prime Minister and issued drastic directions to boost the role and stature of support industries, in line with Politburo Resolution No 23-NQ/TW, dated March 22, 2018, on orientations for building the national industrial development policy to 2030 and vision to 2045.

The ministry is also working to set up three technical centres for supporting industrial development in the northern, central, and southern key economic regions.

These centres will help industrial producers and enterprises in support industries carry out innovation, transfer technology, improve productivity and quality, increase added value in their products, and take part in global supply chains, according to the report.

However, the Government also pointed out that among the 1,800 or so manufacturers of spare parts and components nationwide, only 300 have joined the production networks of multinational corporations.

Production management capacity and technology at most Vietnamese firms in support industries also remains limited, it said, adding that domestic firms have met just 10 percent of domestic demand for products made by support industries.

There is still a “very large” gap between the needs of multinational corporations and the capacity of domestic businesses, the Government acknowledged.

It said that in order to develop local support industries, it is necessary to overhaul existing mechanisms and introduce more modern versions that better reflect Vietnam’s global integration commitments and create the conditions necessary for enterprises in support industries to grow.

New investment management and attraction policies should also be introduced to ensure that foreign-invested enterprises are connected with and transfer technology to domestic companies, the report suggested.

In addition, there is a need for the continuation of efforts to develop “downstream” industries that turn out or assemble products, for sectors such as energy, precision mechanics, and mechanical engineering.

To do so, the Government must adopt appropriate policies to protect the domestic market and create a healthy business environment to facilitate the manufacturing of industrial products, according to the report.

It added that support policies should focus on certain enterprises in key “downstream” industries, such as automobiles, electrical and electronic appliances, textiles and garments, and footwear, to help them become comparable to the regional competitors so they can fuel the growth of businesses in local support industries.

Flexible and appropriate tariff policies on imported components and spare parts also need to be adopted, to help enterprises cut down on production costs and improve product competitiveness.

“Downstream” industries are important to the development of support industries and in attracting multinational corporations to large-scale projects in Vietnam, the Government noted./.

Trade between Vietnam and RCEP nations reaches US$240 billion

Two-way trade turnover between the country and 14 nations involved in the Regional Comprehensive Economic Partnership (RCEP) agreement hit US$240 billion during the opening 10 months of this year, accounting for 54.6% of total Vietnamese import-export turnover.

According to statistics released by the General Department of Vietnam Customs, China represents the largest market among the 14 RCEP countries that the nation has established trade ties with. Indeed, turnover between the two sides reached US$103.5 billion during the first 10 months of the year.

Of the figure, the value of Vietnamese export commodities stood at US$37.9 billion, while the nation’s imports came to US$65.6 billion.

Furthermore, two-way trade turnover with the RoK hit US$53.5 billion, including US$16 billion from Vietnamese exports and US$37.5 billion from its imports.

Indeed, import and export trade turnover was recorded at more than US$32 billion with Japan, ASEAN at US$43.4 billion, Australia at US$6.77 billion and New Zealand at US$870 million.

This comes following the RCEP being signed on November 14 by leaders of 15 countries from the Asia-Pacific region that make up 29% of global GDP. The pact was signed online by leaders of 10 ASEAN member states, along with Australia, China, Japan, New Zealand, and the Republic of Korea (RoK) as part of the 37th ASEAN Summit, chaired by the nation in Hanoi.

The purpose of the RCEP is to help establish long-term stable export markets for ASEAN members in the context of risky and uncertain global supply chains. In addition, it will also create a legally binding regional framework suitable for trade policy, investment, intellectual property, e-commerce, and dispute resolution, among other things. Overall, the international partnership aims to create a fair trading environment throughout the region.

Quang Ninh redoubling efforts to maintain double-digit GRDP growth

The northern province of Quang Ninh is intensifying efforts to meet its socio-economic targets and keep its gross regional domestic product (GRDP) growth in the double digits this year.

It posted GRDP growth of 6.5 percent in the first nine months despite the economic fallout from COVID-19. But the figure is still down some 3.5 percent compared to the plan and is 5 percent lower than in the same period last year.

To achieve double-digit growth this year and create momentum for the first year of implementing the resolution from the province’s 15th Party Congress and also economic recovery plans in 2021, Quang Ninh must post year-on-year GRDP growth of 19 percent - the highest ever - during the final quarter of 2020.

It will be a challenging task for the coastal province, which depends significantly on tourism but has experienced a sharp decline in foreign tourist arrivals.

Keeping in mind Decision No 01-KL/TU from the provincial Party Committee on key tasks for the fourth quarter of this year, the provincial People’s Committee issued a plan on October 14 directing the implementation of a number of measures to revive and develop production and business, ensure social welfare, and reach the province’s GRDP goals for the remaining months and for 2020 as a whole.

The plan asks every governmental department and agency and senior officials to review socio-economic indicators with room for growth and mobilise resources to boost development in each sector.

It recommended that the agriculture, forestry, and fisheries sector comprehensively develop horticulture and animal husbandry, create supply chains, seek markets for fisheries products with high inventories, and organise additional trade fairs and promotional events for local agricultural products.

Meanwhile, the tourism sector has been urged to take drastic measures to stimulate travel demand and reach the target of welcoming 3 million arrivals from October to December.

The sector was also asked to assist in customs clearance, help enterprises tackle difficulties, beef up foreign trade, and hold more festivals and cultural and sporting events. A campaign encouraging local people to prioritise goods and services from the province will also be launched.

With industry and construction seen as the key sector driving GRDP growth, Quang Ninh plans to focus efforts on removing barriers facing the coal and mining sub-sectors and providing all possible conditions for the development of manufacturing and processing, such as the production of wheat flour, vegetable oil, textiles and garments, electronics, and mechanics. It will also utilise the upcoming dry season to fast-track construction projects and kick-start investment plans.

The northern province will also continue improving its business climate, smooth the way for the development of the private sector, and support enterprises, while maintaining its high rankings in the Provincial Competitiveness Index (PCI), the Public Administration Reform (PAR) Index, and the Satisfaction Index of Public Administrative Services (SIPAS), while climbing up the Provincial Governance and Public Administration Performance Index (PAPI).

The province aims to collect more than 48 trillion VND (2.06 billion USD) in State budget revenue this year.

Quang Ninh is viewed as a strategically important locality in northern Vietnam that forms part of the northern economic growth triangle of Hanoi - Hai Phong - Quang Ninh.

It has posted high and sustainable growth over the last five years, with average annual growth standing at 10.7 percent.

It topped the PCI for the third year in a row in 2019 and led the country in the PAR Index for three consecutive years, in 2017, 2018, and 2019. The province has also been among the best performers in the SIPAS for many years and reached the top in 2019.

Quang Ninh has also made great strides forward in improving governance and public administration capacity, moving from 62nd place in 2016 to third last year in the PAPI.

Vietnamese consumers increasingly embrace sustainability

Sustainability has been a growing topic of interest to Vietnamese consumers in recent years though awareness levels remain well below the global average.

According to Kantar’s latest study on the environment done on a global scale, environmental issues such as plastic waste, water pollution and air pollution are among the top five concerns of Vietnamese in addition to food safety.

Facing increasing climate changes along with escalating levels of pollution, especially in the two key cities of Hanoi and HCM City, there is an increasing environment consciousness among a group of Vietnamese consumers who are willing to take action to improve the situation such as reducing plastic waste, recycling and opting for healthier and sustainable lifestyles.

But such people only account for 35 percent whereas the global rate is 59 percent, Vo Thi Kim Nhu, senior account manager, Worldpanel Division in Vietnam, told a recent webinar.

Moreover, nearly 80 percent of Vietnamese shoppers do not bring their own bags, resulting in the increasing use of plastic bags, the study found.

Nhu also listed the reasons that prevent Vietnamese from living ‘green’ as knowledge barrier since authorities and enterprises do not propagate environmental protection, a belief the situation is not too bad, which requires an emphasis on the alarming state, and the fact that sustainable and environment-friendly products are hard to find and are expensive.

In fact, one of the activities that has been promoted and encouraged by the authorities and enterprises in Vietnam recently is recycling.

But Vietnamese consumers remain very vague about which products can be reused, recycled and replaced, where these products can be collected, how products are recycled, and what will happen to them after recycling, Nhu said.

Furthermore, a quarter of the study respondents said recycling is inconvenient.
Vietnamese consumers want manufacturers and authorities to take the lead in reducing environmental impacts and do not expect retailers to take action in limiting environmental damage.

In the past few years the Government has been undertaking environmental protection projects with the aid of local and foreign businesses, organisations and individuals.

For instance, nine leading companies in the fast moving consumer goods and packaging sectors formed the Vietnam Packaging Recycling Alliance (PRO Vietnam). They include TH Group, Coca-Cola, Friesland Campina, La Vie, Nestle, Nutifood, Suntory PepsiCo, Tetra Pak, and Universal Robina Corporation.

The establishment of this alliance promises many practical green initiatives and actions.
Besides, many initiatives have been taken by businesses such as using paper and recycled plastic straws and packaging in coffee and tea shops and supermarkets and food to non-food brands.

However, surprisingly, only 5 percent of participants could name manufacturers or brands that are taking environment-friendly initiatives.

“To foster more revolutionary changes towards a shared sustainable development, perhaps we need to consider conveying more green messages along with activities to inspire various consumer groups,” Nhu said.

Kantar's Worldpanel data also found that a majority of the aware consumer group stopped buying certain products and services because of their impact on the environment or society.

This implies the importance of this group of consumers. By involving and engaging with them brands will have opportunity to achieve a sustainable development in the future.

Doan Quoc Tuan, senior marketing executive at Tetra Pak, said: “Sustainability is no longer just a nice thing to do or trend. It is a licence to do business in the long term.”

Vietnam’s largest brewery firm to pay cash dividend

Sai Gon Beer-Alcohol-Beverage Corporation (Sabeco) will pay its first cash dividend for the 2020 financial year on December 18.

The dividend rate is set at 20 percent, meaning shareholders will receive 2,000 VND (0.086 USD) per share.

The total dividend rate Sabeco set for 2020 is 35 percent. The list of beneficiary shareholders will be finalised on December 1.

With nearly 641.3 million shares, the value of the upcoming dividend is about 1.28 trillion VND (nearly 55 million USD).

The two biggest shareholders – the State Capital Investment Corporation (SCIC) and Vietnam Beverage Co Ltd – will receive 461 billion VND and 687 billion VND, respectively.

SCIC recently received Sabeco shares from the Ministry of Industry and Trade, now owning 36 percent of the company.

Vietnam Beverage Co Ltd became the major shareholder at Sabeco in late 2017, possessing a 53.59 percent stake.

Sabeco has been hit by a stricter policy to prevent drunk driving and the COVID-19 pandemic.

In the third quarter of the year, Sabeco posted a 17 percent annual decline in net revenue, which fell to 8.05 trillion VND. But net profit was almost unchanged at 1.47 trillion VND.

In January-September, total revenue dropped 29 percent year-on-year to more than 20 trillion VND and net profit was down a fifth year-on-year to 3.4 trillion VND.

Seminar talks risk management of foreign loans, government guarantees

The Ministry of Finance (MoF) held a seminar with the International Monetary Fund (IMF) on November 19 to discuss risk management of re-lending foreign loans and government guarantees.

The event was part of the ministry’s mid-term integrated debt management reform framework, with public debt and credit risk management being one of the five main pillars playing an important role.

Since the Vietnamese National Assembly adopted the Law on Public Debt Management 2017, the country's legal documents on public debt management have been basically completed.

Director of the MoF’s Debt Management and External Finance Truong Hung Long said Vietnam has consistently followed the goal of fiscal strengthening with public debt safety criteria under control, contributing to offsetting fiscal policy to effectively cope with macro shocks like Vietnam has been facing this year.

In the near future, Vietnam is expected to face rising macro-economic risks such as stalled economic growth, higher interest rates and rising costs due to population aging.

Meanwhile, the ministry and foreign sponsors gradually adjusted development cooperation policies with Vietnam by shifting from the supply of official development assistance (ODA) to loans with less preferential rates.

As the country will continue limiting the supply of government guarantees for new loans, the ministry suggested restructuring debts reasonably.

Long stressed that enhancing capacity of debt management officers, especially in grasping credit risk measures and applying quantitative model to offer advice in the field is the top priority towards sustainably ensuring debts for the mid and long-terms.

Businesses get access to non-interest loan package

Forty businesses have received money from the Government’s non-interest loan package of 62 trillion VND (2.7 billion USD) to pay salaries to nearly 1,200 employees who have stopped working due to the serious impacts caused by the COVID-19 pandemic.

The firms have received more than 6 billion VND in total from the Vietnam Bank for Social Policies, making them the first businesses to avail of the package.

The bank was assigned to disburse the Government’s loan package for employers to pay salaries for workers in May, however, it had failed to do so due to the strict conditions.

To help businesses access the loans, the bank recently simplified conditions to make employers eligible for a loan when their employees, who hold social insurance cards, must stop work for at least one consecutive month from April 1, 2020, to December 31, 2020.

The businesses’ revenue in the first quarter of this year decreased by 20 percent compared with the fourth quarter of the last year.

The loan term is negotiated by the bank and employers, with a maximum of 12 months. The overdue debt interest rate is 12 percent per year.

Customers are not required to provide loan guarantees.

Nationwide branches of the Vietnam Bank for Social Policies have been working with customers to complete procedures for disbursement. The disbursement will be carried out on January 31, 2021.

The 62 trillion VND package is the first of its kind the Government has offered to support people affected by the COVID-19 pandemic.

The Ministry of Labour Invalids and Social Affairs (MoLISA) recently proposed the Government provide a second package of 18.6 trillion VND to help businesses develop production and business, and employees to borrow preferential loans to restore and maintain jobs.

Beneficiaries include small- and medium-sized enterprises, cooperatives and business households, with priority given to small and micro enterprises (less than 10 employees), cooperatives, household businesses and workers in rural areas.

The estimated loan amount for production and business establishments is 2 billion VND, and 100 million VND for workers, with zero interest rate for 12 months.

The third-quarter macroeconomic report of the Institute for Economic Research and Policy (VEPR) showed the policy of directly supporting employees had not shown effectiveness in practice. As of mid-August, only more than 16 million people from different groups of workers received support from the first package, with 17 trillion VND disbursed, accounting for 19 percent of people in need./.

Binh Duong looks to attract more investment from RoK

A workshop on promoting investment from the Republic of Korea (RoK) in the southern province of Binh Duong was held in the form of an online conference on November 20.

The workshop was jointly held by the provincial People’s Committee, the Becamex IDC Company, the Korea International Trade Association (KITA), and the business support centre in the RoK’s Gyoenggi-do region.

The RoK is the third-largest foreign investor in Binh Duong after Japan and China, with 756 projects and nearly 3.2 billion USD in capital, accounting for nearly 5 percent of all investment from the country in Vietnam.

In remarks delivered at the workshop, Nguyen Thanh Trung, deputy head of the Management Board of Industrial Parks in Binh Duong, gave detailed instructions on procedures and land lease extensions.

He affirmed that Binh Duong always creates favourable conditions for foreign investors and stressed that administrative procedures are handled promptly by local authorities.

RoK investors made proposals to the provincial People’s Committee relating to the extension of land lease terms as well as support from local authorities in this regard, especially in the context of COVID-19.

Vice Chairman of the provincial People’s Committee Nguyen Thanh Truc said the locality will pay due regard to improving the investment environment and local competitiveness and promoting support for investors in the locality in general and the RoK’s business community in particular.

He affirmed that local authorities will also focus on reforming administrative procedures to ensure publicity, transparency, and simplicity, thus facilitating the operations of investors.

Attention will be also paid to developing high-quality services and infrastructure networks in transport, water supply, electricity, and environmental treatment, and expanding industrial parks and training human resources to meet the requirements of enterprises and the needs of industrial and urban development in the locality, he added.

In 2020, despite the difficulties posed by the COVID-19 pandemic, Binh Duong maintained its stable economic growth, with gross regional domestic product (GRDP) estimated to increase 6.78 percent and annual per capita GRDP to stand at 150 million VND (6,500 USD).

In the first ten months of 2020, more than 1.7 million USD in foreign investment was poured into the province. It has attracted 3,913 foreign-invested projects in total, with registered capital hitting 35.3 billion USD.

It is one of the three leading localities nationwide in attracting FDI, after HCM City and Hanoi./.

Banks play crucial role in fostering exports to EU: Workshop

Connectivity between banks, businesses, and farmers in value chains is essential for Vietnamese goods to enter the EU market, a workshop in Hanoi on November 20 heard.

The EU-Vietnam Free Trade Agreement (EVFTA), which came into force on August 1, has been described as an “expressway” leading Vietnamese goods, especially agricultural and aquatic products, which are among the country’s strongest, to the EU.

However, the EU’s strict requirements could be an issue for businesses or farmers seeking to enter the market on their own.

Nguyen Dinh Tung, Chairman and General Director of Vina T&T Group, said that, in value chains, apart from connectivity between farmers and businesses, capital sources also form a very important link.

Farmers need capital to make investments but accessing loans is problematic. The engagement of banks in these chains would therefore facilitate farmers’ access to capital, he noted.

Deputy Governor of the State Bank of Vietnam (SBV) Dao Minh Tu said that as of October 30, credit granted for agriculture and rural area-related activities had increased 6.5 percent against the end of 2019. It now stands at about 2.16 quadrillion VND (93.3 billion USD), including 27 trillion VND for hi-tech agriculture and 5 trillion VND for enterprises involved in value chains.

Ha Thu Giang, Deputy Director of the SBV’s Department of Credit Policies for Economic Sectors, said developing connectivity in agriculture is viewed as an inexorable trend and one of the key solutions to improving the effectiveness of agricultural production.

The central bank has adopted many policies to channel capital into the sector, she noted, adding that more than 80 credit organisations and 1,181 people’s credit funds have granted loans for agriculture and rural areas nationwide.

This type of credit grew 19.83 percent between 2016 and 2019; higher than the overall growth rate of 16.02 percent, Giang said.

She also acknowledged certain challenges, such as farmers violating contracts, the modest number of hi-tech agricultural zones, and the lack of effective models.

Of a similar mind, Can Van Luc, Chief Economist at the Bank for Investment and Development of Vietnam (BIDV), pointed out that policies on hi-tech application in agriculture haven’t been conducted consistently, cooperation between farmers, the State, banks, scientists, businesses, and cooperatives/associations remains unsustainable, and some companies haven’t seriously realised their commitments to buy products from farmers.

He recommended that the Party issue a new resolution on agriculture, farmers, and rural areas, and that the Government direct ministries and sectors to perfect market and price forecasting systems to help farmers and businesses develop suitable orientations.

Meanwhile, Luc added, credit institutions should reform procedures to enhance farmers’ access to capital./.

Hanoi shines in creating regional tourism links

By engaging in tourism programmes with localities nationwide, Hanoi has forged regional links that have helped it drive up visitor numbers and tourism revenue, according to Deputy Director of the municipal Department of Tourism Tran Trung Hieu.

Hieu made the comments at a conference on tourism cooperation development between Hanoi and other cities and provinces on November 19 .

The Hanoi Department of Tourism signed nine cooperation programmes with counterpart agencies in 40 cities and provinces nationwide between 2016 and 2020. It also joined the organisation of cultural and tourism promotions in the capital for localities such as Quang Binh, Tay Ninh, Tuyen Quang, Son La, and Ninh Thuan provinces.

The department also signed a deal with CNN over the screening of tourism products and routes in association with those of other Vietnamese provinces.

As part of the overall effort, a large number of programmes have been held to help connect organisations, experts, travel companies, and local authorities in search of solutions for building tours that are compatible with different tourist markets.

Familiarisation trips, or FAM for short, have also taken place, while assistance has been given to travel agencies to build prominent products in Hanoi and overseas. FAM are trips designed for travel advisors to learn about a destination, a partner travel company, or an airline, or sometimes all of the above.

A series of products have come into being, for example those on the Hanoi - Lao Cai - Hai Phong - Quang Ninh and Hanoi - Mekong Delta routes. In June alone, the department and the UNESCO Hanoi Travel Club signed agreements with local authorities in provinces such as Ninh Binh, Nghe An, Thanh Hoa, Ha Tinh, and Lai Chau to promote tourism. Field trips have also been launched to northwestern provinces and cities neighbouring Hanoi, with the participation of media and travel agents.

Hoang Ngan Hoan, Director of the Department of Culture, Sports, and Tourism in the northern mountainous province of Son La, said the provincial tourism sector has been supported by the capital’s tourism department in joining international travel fairs and organising Son La tourism days in Hanoi.

Such cooperation has helped Son La’s charms reach citizens in the capital and those in the northern region.

Participants also said that tourism connectivity primarily focused on promotional activities, with proper priority yet to be given to product and human resources development.

Hieu suggested strengthening the tripartite cooperation between administrators, tourism service providers, and managers of tourism destinations, as well as cooperation in attending fairs and training human resources, among others.

Hanoi is home to a number of popular sites such as Hoan Kiem Lake, Ngoc Son Temple, Van Mieu - Quoc Tu Giam (Temple of Literature), Thang Long Imperial Citadel, and the Old Quarter.

After being hit by COVID-19 earlier this year, the capital, considered an emerging tourism hub, is stepping up recovery programmes while restructuring its tourism products and markets towards the goal of posting a 45 percent year-on-year increase in domestic visitors in 2020, to more than 11 million.

The municipal Department of Tourism said the successful containment of COVID-19 has provided an opportunity for the sector to revive and thrive and industry insiders now look forward to improved business performance.

The department has worked with the Hanoi Tourism Association, travel clubs, airlines, hotels, and destinations to discuss tourism development solutions in the new context. It has asked tourism service providers and places of interest to diversify products, introduce demand stimulus policies, and re-organise activities to improve efficiency.

The capital welcomed 7.27 million visitors in the January-October period, down 68.9 percent against the same period last year, mainly due to the COVID-19 pandemic, according to the department.

Some 29 million visitors came to Hanoi in 2019, including more than 7 million foreigners./.