Domestic enterprises face numerous difficulties in terms of sugar consumption due to fierce competition caused by cheap imported sugar from Thailand, according to figures compiled by the Vietnam Sugarcane and Sugar Association (VSSA). 

By the end of the 2019 to 2020 crop the export of Thai sugar to the nation had reached more than 862,000 tonnes, 12.1% higher than the volume of domestically produced sugar.

In line with the nation’s commitments in ASEAN under the ASEAN Trade in Goods Agreement (ATIGA) related to the application of tariff quotas under the WTO, the country first abolished sugar import tariff quotas for ASEAN member states on January 1 of this year.

This resulted in the nation becoming Thailand's second largest sugar export market during the first half of the year, accounting for 16% of their overall national export volume, behind only Indonesia with 42%. This is in contrast to previous years when the Vietnamese market did not represent an important export market for the Thai sugar industry.

Recent years has seen Thai sugar become one of the main rivals of the local sugar industry, with the neighbouring nation ranking fourth in the world in terms of sugar production and second in relation to exports. Annually, the output of cheap smuggled sugar from Thailand to the country is estimated to make up more than 30% of domestic sugar demand, therefore negatively affecting domestic sugar prices.

According to VSSA, approximately one third of sugar factories based in the nation were forced to close during the 2019-2020 crop. The accumulated output in the this crop reached 7.39 million tonnes of sugarcane, representing a drop of 39.4%, along with over 769,160 tonnes of all kinds of cane sugar, a fall of 34.3%, marking the lowest level over the past 19 years due to unfavourable weather changes and competitive pressure from imported sugar and sweeteners.

Domestic sugar prices are heavily dependent on imported sugar from the Thai market. After the ATIGA Agreement comes into effect, domestic sugar enterprises must compete alongside Thai sugar, primarily through the consumer-retail segment, such as business-to-consumer trade, and small and medium sized food beverage processing enterprises. This is largely due to sugar imported from Thailand failing to meet the strict requirements of large-scale food and beverage producers such as Pepsi and Coca-Cola.

Furthermore, liquid sugar products extracted from corn, also known as chemical sugar, originating from the Republic of Korea and China with a 0% tax rate and no quota have consistently flooded the nation, therefore creating pressure competition for the domestic sugar industry. This type of sugar has a lower selling price of 10% to 15% compared to cane sugar, with its sweetness far higher than that of cane sugar.

Statistics of the General Department of Customs indicate that the volume of liquid sugar imported into the country in 2019 reached more than 190,000 tonnes, representing a positive growth rate of 26.7% compared to 2018, and up 31.7% over 2017.

At present, the export price of Thailand's white sugar FOB for the 2019-2020 crop year is at an average of 11 baht / kg.

Currently, Thailand's export prices are as low as production costs in order to compete in the global export market. This is the primary reason that makes it challenging for the local sugar industry to compete with Thai sugar, resulting in the shutdown of several domestic factories.

Finance ministry works with localities to boost WB-financed projects

Deputy Minister of Finance Tran Xuan Ha expected the World Bank (WB) to simplify administrative procedures to accelerate the implementation of projects financed by WB in Viet Nam.

The proposal was given at an online conference between representatives of ministries, sectors and localities and the WB on disbursement in 2020, which was chaired by the Deputy Minister Ha and Country Director of the World Bank in Viet Nam Carolyn Turk at the finance ministry’s head office in Ha Noi.

Ha said the finance ministry, other ministries and agencies are ready to work together to contribute to solving problems in project construction and discuss with partners to set up simplified and consistent regulations in loan agreements, pushing project implementation and disbursement.

Turk said the WB is making its best effort to remove difficulties and problems to boost the disbursement of WB-financed projects.

She also clarified contents of the project extension, allocation of resources to activities, process and procedures for procurement, bidding, bid evaluation and approval of bidding packages, site clearance, resettlement, designing and evaluation of feasibility study.

Turk said the WB will continue to hold more in-depth working sessions with specialised agencies to carefully discuss these contents and offer solutions to remove difficulties in disbursing loans of WB.

The WB is a major donor to Viet Nam. The bank’s total committed loan for 36 ongoing programmes and projects is nearly US$7.4 billion, of which 33 loans have been signed under agreements at the total value of almost $6.6 billion, and three newly-negotiated loans approved by the bank’s International Development Association but have not signed the agreement.

In this category, eight loans will end disbursement in 2020 and 10 loans will end in 2021.

At the conference, representatives of ministries and local agencies discussed difficulties in the implementation of WB projects, including the impacts of the pandemic and complex loan agreement mechanisms, in addition to the implementation of documents and procedures, site clearance and bidding processes, which are slow, leading to prolonged disbursement.

To speed up the disbursement of WB projects, Deputy Minister Ha asked ministries, branches and localities to work closely with the State Treasury to solve payment records within one working day but still ensuring tight control of spending.

Overseas Vietnamese businesses key to national socio-economic development

HCM City will continue to strengthen connections between overseas Vietnamese business groups and associations, especially those in the EU, and domestic enterprises in an effort to promote trade and investment, speakers said Tuesday at a meeting in the city.

Le Thanh Liem, vice chairman of the municipal People’s Committee, said that HCM City, with a population of more than 10 million and more than 350,000 enterprises, has great potential for investment.

Despite the Covid-19 pandemic, overseas remittances sent to HCM City reached US$4 billion in the first nine months of the year, up 2 per cent year-on-year. The number is expected to reach $5.5 billion by the end of the year, up 0.82 per cent year-on-year.

Viet Nam is the EU’s 17th largest trading partner and the second-largest in Southeast Asia, while the EU is one of Viet Nam’s major markets, he noted.

Two-way turnover reached nearly $56.5 billion last year, with Vietnamese exports to the trading bloc reaching $41.5 billion, he noted.

The European Union-Viet Nam Free Trade Agreement, which took effect on August 1, is expected to open new doors and create growth momentum for Viet Nam’s economy and exporters, he said.

In 2019, the city’s exports to the EU reached more than $5 billion (up 5.4 per cent year-on-year), according to Liem.

Great contribution

Ambassador Luong Thanh Nghi, vice chairman of the State Committee for Overseas Vietnamese (under Ministry of Foreign Affairs), said that more than 5.3 million Vietnamese were living in 130 countries and territories. The overseas Vietnamese business community includes at least 6,000 members connected to Viet Nam via technology and business fields.

He spoke highly of the significant contributions made by overseas Vietnamese businesses to the country’s socio-economic development, especially during the hard times of the pandemic.

“Overseas Vietnamese businesses are key to national socio-economic development,” he said. “Remittances to Viet Nam have reached about $170 billion from 1990 to now.”

Overseas Vietnamese have invested in 3,000 projects with total registered capital of more than $4 billion, creating many jobs, according to Nghi.

Some 500,000 - 600,000 overseas Vietnamese professionals are now working and studying in developed countries, which is huge resource for the country. Every year, there are about 500 overseas Vietnamese experts who return to Viet Nam for investment in many fields, he said.

According to Nghi, about one-fifth of the 5.3 million overseas Vietnamese living in Europe. But the market share of Vietnamese goods in the EU is still modest compared to the potential.

In recent years, many overseas Vietnamese have returned to Viet Nam to start businesses as they see great potential and good economic growth in the country.

“Many of them have been very successful in their careers in other countries and have now invested in businesses in Viet Nam,” Nghi said.

“In addition to financial contributions through remittance resources, many overseas Vietnamese experts have made important contributions to training a high-quality workforce, and transferring scientific technologies to Viet Nam.”

He encouraged young overseas Vietnamese who have re-settled in Viet Nam to build a network in the country to better exploit the potential of the overseas Vietnamese community for further socio-economic development.

Speaking at the event, Jean-Jacques Bouflet, vice President of the European Business Association in Vietnam (EuroCham), said to bring into full play the potential of EVFTA, Viet Nam enterprises should understand the EU market and business standards, and improve product quality, traceability and reliability.

The EU is a market with high standards, so businesses must improve to meet technology, governance and social responsibility requirements, he said.

At the meeting, three MoUs were signed between Viet Nam and South Korea. They included one between the Vietnam-Korea Businessmen and Investment Association (VKBIA) and MEGAZONE CLOUD Group; another between VKBIA and SHINHAN BANK; and one between VKBIA and MHGroup and Hoang Quan Group. 

Indo-Pacific forum connects firms

Senior government officials, industry executives and partners participated in the Indo-Pacific Business Forum (IPBF), which began on Wednesday in Ha Noi, to discuss policies and help connect business communities in the region.

The virtual event was co-organised by the Vietnam Chamber of Commerce and Industry (VCCI) and the American Chamber of Commerce in Ha Noi.

The first IPBF was held in Washington DC, the US in 2018. This is the first time Viet Nam hosted the event after the previous one took place in Thailand last year.

Billions in deals

At the forum, the PetroVietnam Gas Joint Stock Company (PV GAS) and the US-based AES Corporation signed a joint venture agreement for the development of the Son My LNG Import Terminal Project - a project with a total investment cost of US$1.4 billion.

This signing also marked the one-year anniversary of the historic agreement AES Corporation signed with the Vietnamese government to build the $1.8-billion Son My 2 combined cycle gas turbine (CCGT) power plant.

PV GAS General Director Duong Manh Son and Executive Vice President and Chief Operating Officer of the AES Corporation Bernerd Da Santos inked the deal.

The Son My LNG Import Terminal Project will help meet the demand for gas and power in the southern key economic region and the whole country in general, thereby ensuring national energy security, Son said.

The project, located in the south central province of Binh Thuan with total capacity of up to 450 TBtu, is to supply gas to newly built gas-fired power plants with an output of 4,500 MW, other existing gas-fired power plants, and industrial complexes. Together, the 2.2-gigawatt power plant and terminal will play a major role in shaping Viet Nam's energy future by diversifying the energy mix with imported LNG as well as meeting the country’s increasing demand for sustainable and affordable electricity.

Cooperation opportunities

Minister of industry and trade Tran Tuan Anh said the event is an opportunity for US businesses and investors, as well as those in the region, to come together to share ideas and foster cooperation and partnerships.

VCCI's chairman Vu Tien Loc said the Indo-Pacific business community plays an important role as the region's economy with a focus on security, economic development and management.

"In a fast-changing world and in light of the COVID-19 pandemic, technologies and digitalisation bring many opportunities for those who are able to take the lead," said Loc.

This year marks a quarter of a century since the normalisation of Viet Nam-US relations.

Charles Freeman, vice-president of the American Chamber of Commerce, said there have been remarkable changes in the business environment in the region, which has prompted businesses to make adjustments. Freeman also affirmed the importance of the region to the US' economic interests and that its commitment to the region remained unchanged.

During today's forum the United States Agency for International Development (USAID) Vietnam Mission announced the launch of the Vietnam Low Emission Energy Program II (V-LEEP II). The five-year, $36-million programme is to accelerate Viet Nam’s transition to a clean, secure, and market-driven energy system.

“As USAID V-LEEP comes to a close early next year, USAID/Vietnam remains committed to strengthening partnerships and developing innovative solutions for a clean, affordable energy future for Viet Nam, by continuing our support through V-LEEP II,” said Mission Director Yastishock.

USAID V-LEEP II will focus on improving government energy planning practices; increasing competition and private sector involvement in energy service provision; deployment of advanced, clean energy systems; and improving grid planning to incorporate clean energy transmission. It will also help Viet Nam attract qualified investors for advanced energy projects and advise private firms to develop high quality and bankable projects. 

Viettel Global posts record cash flow remittance in Q3

The cash flow remittance of Viettel Global – a member corporation of Viettel Group, to Viet Nam in the third quarter of the year reached a record level of US$86.5 million, up 56 per cent from the same period last year.

In 2020, Viettel’s overseas markets have faced many struggles amid the global economic slowdown due to the COVID-19 pandemic. However, in the first nine months of the year, all 10 overseas markets of Viettel have completed their revenue growth plans. Viettel Global’s service revenue reached 104 per cent of the plan, an 18.4 per cent year-on-year increase.

Digital transformation remained Viettel Global’s key strategy throughout the third quarter of 2020. Data subscription grew by 5.4 per cent year-on-year in the period. In which, seven out of its 10 markets maintain data consumption growth of more than 20 per cent, with the Mozambique market growing nearly 70 per cent.

“Viettel’s overseas markets have achieved good results thanks to their quick adaptation to market fluctuations due to the pandemic. The flourishing business results at all markets have made a significant contribution to the overall performance of Viettel Group this year,” said Viettel Group’s Deputy General Director Tao Duc Thang.

“Viettel has accelerated the application of digital transformation into overseas business such as online multi-channel sales and care. As a result, the companies have significantly reduced the impact of market volatility coming from anti-pandemic measures adopted by governments.”

Viettel Global hopes to have more 5 million subscribers worldwide in the last quarter of the year. It aims to enhance sale methods suitable for the pandemic situation at its overseas markets. In addition, it will continue to implement digital products and services, especially those relating to e-wallets. 

Numerous dairy firms enjoy profit growth in Q3

A number of dairy companies reported positive earning results in the third quarter of this year after restructuring their businesses.

Viet Nam's largest dairy producer Vinamilk expected that revenue and profit would increase 9 per cent and 16 per cent, respectively, to reach VND15.5 trillion (US$668.7 million) and VND3.1 trillion.

In the first nine months, Vinamilk estimated revenue and profit would total VND45.3 trillion and VND9 trillion, both up 7 per cent.

As the company targets to earn VND10.7 trillion in 2020, it has fulfilled 84 per cent of the target after nine months.

BIDV Securities Company even forecast that Vinamilk would achieve VND11.3 trillion this year, up 6.8 per cent. The estimated result is based on advertising cost cuts and financial revenue increases.

Moc Chau Dairy Cattle Breeding Joint Stock Company (Moc Chau Milk) reported revenue of VND775 billion in the third quarter this year, up 14 per cent year-on-year.

Gross profit margin reached 34.6 per cent, a sharp rise compared to those of 18-19 per cent in previous years but still less than Vinamilk's gross profit margin of over 45 per cent.

The company achieved VND102 billion in post-tax profit in Q3, up 113 per cent year-on-year. It attributed the hike in profit to its effective cost management, proper supporting policies to distributors and customers.

In the first nine months, Moc Chau’s revuenue reached VND2.1 trillion, up 10 per cent. Post-tax profit rose 69 per cent to touch VND209 billion, surpassing 33 per cent of the yearly target.

The company spent a large amount of VND370 billion in advertising activities, doubling that of the first nine months in 2019.

The International Dairy Products Joint Stock Co (IDP), one of Viet Nam’s home-grown dairy product firms, reported gross profit margin reaching 41.7 per cent in the third quarter, approximately that of Vinamilk although the company has a smaller scale compared to the dairy giant.

IDP’s post-tax profit in Q3 reached VND159 billion, 4.2 times higher than the last year and that of the first nine months was VND309 billion, 3.3 times higher than 2019.

As IDP suffered continuous losses in the 2016-2018 period, it still reported a total loss of VND270 billion in the first nine months. Net revenue totaled nearly VND2.8 trillion in the period.

The company has recently approved Blue Point to buy 90 per cent of the stakes without a public bid. Blue Point was established in 2015 and specialises in consumer goods manufacturing. The group previously expressed an ambition to set foot in the dairy and pharmaceutical sector to become one of Viet Nam’s largest consumer-retail groups.

IDP has also released information that Howard Holding PTE managed by VinaCapital sold a 28 per cent stake in IDP to decrease its ownership to 26 per cent. At present, this investment fund and relevant parties are holding 37 per cent stake.

Previously, in December 2014, VinaCapital Vietnam Opportunity Fund and Japan's Daiwa PI Partners invested approximately $45 million to take a 70 per cent stake in IDP.

Established in 2004, IDP has the main trademark of Ba Vi for its milk products, which includes fresh milk and yoghurt. It also has other products such as z'Dozi and Purina fresh milk.

Hanoimilk JSC (HNM) reported profit of VND847 million in Q3, 3.8 times higher than the previous year. Net revenue soared 90 per cent to reach VND58 billion. Gross profit margin was 26.8 per cent.

In nine months, net revenue rose 23 per cent to VND150 billion. But the company suffered a loss of VND28 billion in the period.

Established in 2001, Hanoimilk used to be a major player in the dairy industry in Viet Nam, thriving the most in 2006-07 period thanks to the IZZI milk brand. However, the melamine incident in 2008 and ineffective out-of-industry investments caused the business to suffer heavy losses, and were further outstripped by big rivals. The company has returned to be profitable in the last two years.

Experts from SSI Research stated that the domestic dairy products were less affected by COVID-19 than fast-moving consumer goods (FMCG) products.

However, milk demand of low-income consumers could still be affected and average selling prices will not increase in 2021, said SSI Research.

Although domestic brands are dominating the market, SSI Research forecasts competition from foreign brands will become stiffer as the EVFTA will remove tariffs on European dairy products in the coming years. 

Regional cooperation to develop supporting industries

The Sai Gon Hi-tech Park and industrial parks and economic zones in the southern provinces of Long An, Binh Duong, Dong Nai and Ba Ria-Vung Tau will work together to develop supporting industries under an agreement clinched on October 28.

This is part of the programme to develop supporting industries in Ho Chi Minh City during 2019-2025 under the municipal People’s Committee’s Decision No.2869/QD-UBND dated July 5, 2019.

The programme aims at shaping a network of small and medium-sized enterprises in supporting industries through enhancing connection between the Sai Gon Hi-tech Parks and supporting companies in neighbouring provinces.

Besides, the programme helps local supporting firms expand market as well as join global supply chain.

According to deputy head of the Sai Gon Hi-tech Park’s management board Le Bich Loan, the management boards of the processing zones, industrial parks and economic zones committed to sharing basic data to outline cooperation programmes, helping supporting firms participate in production chains of global corporations.

Vietnam will have 2,000 enterprises capable of directly supplying parts for multinational corporations in ten years.

Prime Minister Nguyen Xuan Phuc signed a resolution to promote the development of support industries.

The resolution sets out the target that Vietnamese enterprises will be able to produce highly competitive supporting industrial products, meeting 45 percent of the essential needs for domestic production and consumption, accounting for about 11 percent of industrial production value by 2025.

About 1,000 enterprises are expected to be capable of supplying directly to assembly enterprises and multinational corporations, of which domestic enterprises account for about 30 percent by 2025.

By 2030, supporting industrial products will meet 70 percent of the demand; accounting for about 14 percent of industrial production value.

About 2,000 enterprises will be capable of supplying directly to assemblers and multinational corporations in the territory of the country by 2030.

To accomplish the above objectives, the resolution offers groups of incentives including developing, improving and implementing effectively and synchronously specific mechanisms and policies to develop supporting industries and create favourable conditions.

The resolution also noted the implementation of preferential interest rate policies for supporting industry enterprises and processing and manufacturing industries.

Another solution is attracting investment effectively and promoting business links between Vietnamese and multinational enterprises, as well as domestic and foreign production and assembly companies; building concentrated supporting industrial parks; and developing material industries to increase autonomy in raw materials.

Resolution 115/NQ-CP also emphasised promoting the development of domestic and foreign markets.

It will also improve scientific and technological capacities to develop and create a breakthrough in technology infrastructure, technology transfer, and enhance capacity to absorb technology.

In addition, the resolution also emphasised developing human resources through national programmes and plans on skills improvements and links between training institutions and enterprises.

Finally, building and perfecting the statistical system to promote the connection between Vietnamese suppliers and multinational corporations; enhancing the effectiveness and efficiency of state management and policies on supporting industries; and improving the quality of statistics to ensure timely, complete and accurate information.

Many Vietnamese companies now confidently introduce their products to foreign firms, and not just simple products like screws, moulds and plastic packaging, but also high value-added products such as motor cores, electronic chips and circuit boards.

To promote the development of supporting industries, the Department of Industry and Trade is drafting an investment stimulus programme for 2021 – 25 for supporting industry enterprises to improve production technologies and equipment and make more products meeting global corporations’ requirements and entrench themselves in global supply chains.

Supporting industries are key to raising the value of the industrial production, and promoting them is vital to attracting more giant foreign investors to the city./.

Australia represents attractive investment market for Vietnamese enterprises

The past ten months has witnessed local firms invest in 13 new projects throughout Australia whilst increasing capital for two projects, with total newly registered and additional investment capital reaching US$101.8 million, accounting for 21.3% of the nation’s total outward investment capital.

In line with this statistics, Australia represents the leading destination in terms of overseas investments by Vietnamese enterprises since the beginning of this year.

If this trend continues until the end of the year, Australia will become the leading foreign investment market for local businesses for the second consecutive year.

This comes after last year witnessed domestic firms pour a figure of US$154.6 million into the Oceanic nation, making up 30.4% of total outward Vietnamese investment capital.

Of these figures, TH Group made an investment worth over US$80 million. In addition, last year saw TH Dairy Food Joint Stock Company register to invest in a project on natural cow grazing, livestock farms, cotton, sunflower, fresh corn growing, and farm tourism in Australia, reaching a total of US$46.5 million.

Furthermore, Da Lat Dairy Joint Stock Company, also owned by TH Group, registered to invest in a project relating to the natural grazing of cow herds. This was done with the aim of strengthening farm capacity and enjoying a more effective investment profit, therefore growing and processing mango juice and high-quality essential oil from sandalwood worth US$42 million in Australia.

According to details released by the Foreign Investment Agency, the total newly granted and adjusted Vietnamese investment capital abroad reached a sum of US$478.26 million, up 16.1% from the same period last year.

In total, 107 projects were granted certificates of investment registration, with overall registered capital at approximately US$314.5 million, up 0.8% over the corresponding period from last year. In addition, 28 projects adjusted capital investment to enjoy a total additional capital of US$163.8 million, marking an annual rise of 63.8.

October alone witnessed 11 projects granted new investment registration certificates with total outward investment capital of US$46.1 million, representing a slight increase of 0.4% on-year.

Throughout the reviewed period domestic enterprises have invested in 13 sectors abroad, with the processing and manufacturing industry leading the way with 10 new projects and seven capital adjustment ones, featuring total capital of US$228.1 million, accounting for 47.7% of total investment capital.

The finance-banking sector came in second with total investment capital of US$68.2 million, making up 14.3%, followed by the fields of professional activities, science and technology, and wholesale and retail.

Data put together by the Foreign Investment Agency indicates that 24 countries and territories welcomed investment from the nation during the first 10 months of the year, with Australia taking the top spot, trailed by Germany, Laos, and the United States.

French enterprises eye multiple local investment opportunities

With a stable economic political environment, a potential market, and extensive international integration, the nation has captured the attention of plenty of businesses and corporations from France, therefore opening up plenty of opportunities for broader investment co-operation to occur. 

Satellite, oil and gas, renewable energy, agriculture, air transport, and urban railway projects in the country make up the fields that draw the attention of major French groups such as Total, ADP, Ingenierie, EGIS, NAVAL Group, Societe General, and SNCF.

Most notably, members from these groups raised plenty of questions to representatives of Vietnamese management agencies during an online seminar held to promote French investment attraction during the post-novel coronavirus (COVID-19) period.

According to the Foreign Investment Agency under the Ministry of Planning and Investment, the European nation represents the nation’s 15th largest investor out of 138 countries and territories, in addition to being the second largest EU investor with total registered capital of US$3.62 billion across 605 projects.

Whilst foreign investors have an interest in the Vietnamese market, French financiers are particularly keen on investing in the country due to its stable political environment, high and consistent economic growth, and low production costs. This is coupled with an abundance of human resources, strong demographics among the local population, deep international integration, open policies, along with competitive incentives and strategic positions.

Deputy Minister of Planning and Investment Tran Quoc Phuong believes that mutual ties are at their best stage of development since the two sides signed the Joint Declaration on Strategic Partnership in 2013. Indeed, Vietnam is only the second ASEAN country after Singapore, and the first developing country in Asia, to have signed a Free Trade Agreement and an Investment Protection Agreement with the EU, the EVFTA and EVIPA, respectively, therefore creating further opportunities for investors from both countries to make inroads into each other's markets.

Through an analysis on investment co-operation opportunities, Francois Corbin, chairman of the Vietnam - France Business Council, and vice president of the French Business Confederation (MEDEF), noted the country’s great location in the centre of ASEAN, an area that will be the most promising region in the world in the next few years. Recent years has seen the nation take steps to open up, coupled with reform in order to achieve encouraging growth rates. These efforts have contributed to the country maintaining a positive growth rate this year, despite the considerable negative impact of COVID-19 on economic activities.

These internal characteristics therefore make the country a bright candidate for value chain transformation in Asia, Corbin noted.

Ready to welcome shifting FDI inflows

With regard to attracting investment moving forward, Deputy Minister Phuong said that the attraction and co-operation of foreign and domestic investment will be done in a proactive and selective manner, taking into account quality, efficiency, technology, and environmental protection as part of the main evaluation criteria.

“Vietnam's foreign investment co-operation strategy in the coming period will give priority to projects relating to advanced technology, new technology, high technology, clean technology, modern governance with high added value, and connecting global production and supply chains”, emphasised Deputy Minister Phuong.

As a means of preparing for shifting FDI inflows, Do Nhat Hoang, director of the Foreign Investment Agency under the Ministry of Planning and Investment, said that recent changes have seen the Government amend the Law on Enterprises and the Law on Investment in order to speed up simplifying procedures and creating an open corridor. This is done to create favourable conditions for foreign financers to come to the nation for the purpose of investment and business co-operation.

In order to prepare for the coming wave of foreign investment, the nation is reviewing land funds at industrial parks, training human resources, developing an action plan, promoting supporting industries, and connecting with major FDI projects.

According to Deputy Minister Phuong, thanks to effective measures against the COVID-19 pandemic, the Vietnamese government has avoided possible disruption hitting the local economy.

During the course of the first six months of the year, Vietnamese GDP growth stood at 1.81% on-year, which is forecast to expand to 4.1% for the whole year and later rebound to 6.7% in 2021, the Deputy Minister noted.

Deputy Minister Phuong expects the country to remain as front-runners in terms of attracting a new wave of investment thanks to the country’s stable socio-economic-political environment, coupled with the Government’s strong efforts to perfect the legal framework and ensure that foreign investors can enjoy more convenience.

Foreign arrivals to Vietnam up by 7.6% in October

The number of international visitors to the nation in October witnessed a rise of 7.6% from the previous month, with the number of foreign arrivals to the country during the opening ten months of the year falling by 73.8% on-year to over 3.8 million, according to statistics released by the General Statistics Office. 

This comes as the local tourism sector has gone to great lengths to implement stimulus packages in an effort to revive the domestic tourism industry following a severe downturn caused by the global impact of the novel coronavirus (COVID-19) epidemic.

With the stimulus scheme launched with the theme of “Vietnam - a safe and attractive destination”, local businesses have given priority to ensuring the safety of visitors, whilst also launching attractive tourism packages in terms of their prices and services.

Furthermore, the Vietnam National Tourism Administration (VNAT) has launched the "Safe Vietnam Travel " application with the aim of making it easier for guests to view how safe various destinations are before arrival, in addition to searching for information on restaurants and hotel services.

The VNAT and the General Department of Market Surveillance are expected to sign a regulation on October 30 regarding the speeding up of the use of digital technology in tourism activities. The primary goal of this will be to improve the efficiency of state management whilst ensuring the interests of visitors is maintained.

According to the VNAT, the National Conference on Tourism 2020 will be held in the ancient town of Hoi An in the central Quang Nam province in November in order to review the tourism industry’s recent developments, along with proposing solutions to help the tourism industry recover.

Stakeholders setting precedent over control of Coteccons’ board

The takeover of Vietnam’s largest construction corporation by foreign shareholders is leaving scars on those involved with stories of unwanted mergers, resignations, and accusations of unrealistic demands, reported Vietnam Investment Review.

Coteccons, Vietnam’s largest construction conglomerate, entered 2020 in a not-so-positive manner, with the firm reporting a 53-per-cent fall in after-tax profits in 2019. The group cited challenges in the landscape such as pressure from competitors, longer-than-expected projects, and inflating fixed costs squeezing its profit margins.

Chairman Nguyen Ba Duong officially resigned this month after nearly two decades of dedication, citing health concerns – but the move to replace him with the head of a foreign group that owns over 18 per cent in Coteccons has raised allegations of an unfriendly takeover.

From being strategic partners, the relations of Coteccons and Singapore-based Kustocem became confrontational after the latter twice called for extraordinary general meetings in October 2019 and this June to elect a new board of directors and order special audits of management practices. Kustocem even wanted Duong to step down as chairman, according to local media.

Last year Kusto Vietnam, which became one of the first foreign investors of the group in 2012, raised doubts on the rationale behind Coteccons’ merger with another construction firm, Ricons, saying the benefits were “unclear”.

“The proposed merger with Ricons would not bring additional technical or operational capabilities that our company does not already have. Using the company’s shares to pay for the transaction does not make sense until the financial performance of Coteccons improves and the share price reaches the level that it deserves,” noted Kusto.

On the other hand, Duong previously revealed that Coteccons had to turn down many large construction deals due to lack of consensus from the board.

Moreover, the former board at Coteccons has accused the Singaporean shareholders of a “hostile takeover” without the consent or cooperation of the board.

Nguyen Quoc Hiep, a member of the Board of Directors of Coteccons Group and also president of the Vietnam Association of Construction Contractors, recently decided to step down from his role after four years.

“Since I first joined Coteccons, I have been confused and concerned about the attitudes from other board members who represented Kusto. It’s been surprising to witness them questioning and making unrealistic demands of other members, including attempts to reduce the credibility of others,” Hiep explained.

Other members of the Coteccons board including Vu Duy Lam, Vu Kien Hoa Nhan, and Tran Quy Viet Tuan also resigned.

On June 30, Coteccons announced the resignations of Nguyen Sy Cong and Tran Quyet Thang, with representatives of Kusto Vietnam and The8th – another Singaporean investor with just over 10 per cent stake in the company – taking their seats. More recently, on October 5, the firm’s board elected Bolat Duisenov as the new chairman to replace Duong. Duisenov, a 39-year-old Kazakh national, is the founder and the general director of Kusto Vietnam.

“These actions come after many years of dialogue and unsuccessful attempts by Kusto and Coteccons’ board to resolve issues internally,” Kusto Vietnam explained in a statement. “Kusto has, in past years, raised questions on significant issues related to the conflict of interests, related party transactions, and the use of Coteccons’ resources, and demanded the board respect their duties to Coteccons and its shareholders.”

Former board member Hiep emphasised that Kusto’s way of handling business in recent months had put doubts in the minds of other key members who stood shoulder-to-shoulder with former chairman Duong over the past 17 years.

“Additionally, Coteccons will be an example cautioning other Vietnamese companies to guard control when raising capital in the future,” Hiep noted.

Tran Dang Manh, analyst at Bao Viet Securities told VIR, “Investors should no longer concern themselves with the company’s corporate governance and transfer pricing risk, given the consolidation of Kustocem’s influence over the company’s Board of Directors, operating activities, and growth strategies.”

He added that operations risk will now emerge. “The question now is whether Kustocem is able to secure new contracts and make Coteccons great again, given the company’s strong reputation and long-established relationship with top-tier real estate developers.”

“Vietnam’s real estate market is set to get firmer post pandemic, with investors looking for leading indicators from construction markets,” Manh said. “Vietnam’s construction activities are however envisaged to pick up respectably, providing sizable works for contractors, while easing competitive pressure in the overall market.”

Timber trade pressed to resolve exporting concerns

Five Vietnamese wood associations have met in Hanoi to examine the risks in the timber trade in the midst of a US investigation into the sources of Vietnam’s exported wood products.

Should the investigation result in trade remedies, the domestic industry may need to shift its exports to other markets.

Vu Hai Bang, general director of Woodland JSC, said the US investigations have led to a 25 per cent reduction in their orders, mostly because its partners are concerned about being taxed like China. Bang said his company may suffer “heavy losses” depending on how the US acts on investigation outcomes.

Several years after the United States and Vietnam normalised relations, US importers did not want to entirely depend on Chinese suppliers for wood products. From that time, American buyers started seeing Vietnam as a reliable furniture supplier.

Cindy Squires, executive director at the International Wood Products Association (IWPA) said in a statement on October 6, “Vietnam is an important trading partner for wood products and a significant growing market for US hardwoods.”

In the early 2000s, wood products and furniture imports from Vietnam a saw massive boom, increasing over 56 times to $902 million in 2006.

In the first eight months of 2020, the US was one of the top five export markets for Vietnamese wood and wood products, along with Japan, China, South Korea, and the EU. American customers are currently mainly interested in sofas and kitchen cabinets – two commodity groups rapidly increasing exports from Vietnam to this and other markets.

Vietnamese producers are being asked to be wary of risks in the timber trade, such as fraud. However, recent research from Forest Trends and several Vietnamese wood associations have been fairly positive for Vietnam when providing data on trade fraud committed by foreign manufacturers when exporting wooden products into the US.

Le Sy Giang, director of GH Consulting Company, which specialises in trade competition, said the current US investigation aims to analyse whether Vietnamese wood products are real and have their origin in Vietnam or not. If domestic companies provide proper paperwork and prove their case, Giang said, the investigations may not cause issues. However, should enterprises only assemble components imported from other markets, it will be impossible to convince the US Department of Commerce.

Giang explained that businesses should see this an opportunity, as the US investigation will contribute to improving local business practices. “If carried out and explained well, the US side will react completely positive. Afterwards, Vietnamese businesses would most likely be more competitive than their competitors in the US,” Giang said,

Giang, a former head of the Trade Remedies Authority of Vietnam under the Ministry of Industry and Trade, noted that it is important to consult attorneys from the US.

However, in the context of the pandemic, lawyers from the US and beyond will mostly be unable to travel to Vietnam to talk directly with businesses during the investigation, which is a significant disadvantage. Thus, it is crucial for domestic businesses to contact US law firms together with partners in Vietnam to find solutions on how to prove their cases.

The IWPA’s Squires reassured, “We will encourage active discussions between Vietnam and the United States so that a resolution to this matter can be achieved in quick fashion, in order to provide certainty for businesses.”

PM stresses need to push ODA disbursement

Prime Minister Nguyen Xuan Phuc on October 29 ordered competent ministries, sectors, and localities to take stronger actions to speed up the disbursement of official development assistance (ODA) and foreign loans for 2020, as disbursement remains at a critically-low level.

Chairing a video conference, the PM stressed the need to disburse the Government’s foreign borrowings as quickly as possible, as they are important resources for the country’s development.

Foreign loans have totalled some 60 trillion VND (2.59 billion USD) this year, nearly 40 trillion VND of which was allocated to localities, the Government leader said, adding that capital disbursed in the first 10 months of this year was just 30 percent of the total funds.

The snail’s pace of disbursement was sparked by slow site clearance, inadequate reciprocal funds, and poorly capable contractors, the PM pointed out.

He asked local leaders to adopt more drastic measures, work to clarify the roles and responsibility of investors, and enhance coordination with ministries and sectors.

Leaders must be responsible for performing their duties and must discipline any organisations or individuals hampering disbursement.

Meanwhile, ministries and sectors need to complete the legal framework and compile ODA plans for the next five years in a more effective manner.

The Ministry of Planning and Investment and the Ministry of Finance are entrusted with simplifying project approval and adjustment procedures, he said./.

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