VIETNAM BUSINESS NEWS JUNE 22
Danang Hi-Tech Park and Industrial Zones Management Authority released a decision on June 20 giving the nod to an investment proposal of US investor Vector Fabrication Inc which wants to land a project valued at around $59.4 million in the park.
The project engages in manufacturing printed circuit boards and micro electro mechanical systems with a high level of automation and specialisation and covers 40,000sq.m of space.
It is slated to kick off construction within 2022, with the first phase coming on stream by 2025.
In mid-June, Danang Department of Planning and Investment announced the city's foreign investment attraction situation.
Accordingly, in the first five months this year, the central city allured 11 foreign investment projects valued at $6.06 million, and nine projects asked for capital addition at $1.26 million.
As of May 15, the city was home to 920 valid projects with a total capital value reaching $3.87 billion.
Last year, Danang courted more than $237 million in the total foreign fund volume, in which more than $150 million came from 42 newly-licensed projects, while 22 existing projects asked for supplemental capital surpassing $75.2 million.
Danang Hi-Tech Park allured five new projects valued at $145.4 million, while the remaining 37 projects valued at $4.78 million were in areas outside high-tech parks and industrial zones.
HCM City posts economic growth of 3.82 percent in H1
Ho Chi Minh City recorded growth of 3.82 percent in gross regional domestic product (GRDP) in the first half of 2022, according to its Statistics Office.
Product tax collection increased 2.03 percent, trade and services 4.83 percent, agriculture - forestry - fisheries 1.77 percent, and industry - construction 2.23 percent.
Notably, trade and services generated nearly 99.66 trillion VND (4.3 billion USD) in revenue in June and almost 556.49 trillion VND in the first six months, respectively rising 41.1 percent and 6.2 percent from a year earlier.
Such positive growth indicated that sectors are recovering well, especially trade and services, the Statistics Office said.
Meanwhile, the southern economic hub has welcomed nearly 216,000 international arrivals since the beginning of June, doubling the figure in the same period last year. The six-month number also surged 100 percent year on year to approximate 478,000, equivalent to 13.7 percent of this year’s target, the municipal Tourism Department reported.
More than 2 million domestic tourists have also come to HCM City this month, raising the H1 figure to over 11 million, up 43.1 percent year on year and equivalent to 61.6 percent of the target for 2022. HCM City earned 49.68 trillion VND in tourism revenue in H1, rising 29.9 percent and equivalent to 73.5 percent of the target.
Vietnam Airlines returns to Terminal T4 at London Heathrow Airport
The national flag carrier Vietnam Airlines reopened flights to Terminal 4 at London Heathrow Airport (LHR) on June 22.
Nearly 270 passengers on flight VN56 departing from London to Hanoi received support and guidance from Vietnam Airlines staff for boarding procedures at Terminal 4.
Following the gradual recovery of the global aviation industry, Vietnam Airlines is fully prepared to meet the growing demand from international markets which will substantially contribute to the country's post pandemic economy growth, the firm said.
Starting from July 5, Vietnam Airlines will operate three flights per week on the London-Hanoi route every Tuesday, Wednesday and Saturday.
From August 11 to October 29, the airline will operate flights from London to Hanoi every Tuesday and Thursday and services from London to Ho Chi Minh City will resume on Saturdays, while flights from Ho Chi Minh City to London will operate every Friday.
Vietjet launches four routes linking top destinations of Vietnam and India
Vietjet has officially launched four more services linking top destinations of Vietnam and India including Ho Chi Minh City/Hanoi – Mumbai and Phu Quoc – New Delhi/Mumbai.
The new routes’ launch ceremony was held in Mumbai during the visit of Ho Chi Minh City’s leaders to Mumbai as Vietnam and India mark their 50th anniversary of diplomatic relations. The ceremony witnessed the presence of Phan Thi Thang, Vice Chairwoman of People’s Committee of Ho Chi Minh City, representatives of Consulate General of Vietnam in Mumbai and Vietjet’s leaders.
The Phu Quoc – Mumbai route will operate four weekly flights on every Tuesday, Thursday, Saturday and Sunday, starting from September 8, 2022. The services between Phu Quoc and New Delhi will commence on September 9, 2022 with three weekly flights on Wednesday, Friday and Sunday. The Ho Chi Minh City/Hanoi – Mumbai routes started operation in early June, 2022.
The two countries’ two first direct services connecting Ho Chi Minh City/Hanoi and New Delhi resumed operation in April, 2022 with the frequency of three to four flights per week for each one. Passengers can book these routes’ air tickets now with fares starting as low as 18 USD for one way, excluding taxes and fees.
OUB maintains Vietnam’s GDP growth forecast at 6.5 percent
The Singapore-based United Overseas Bank (UOB) has maintained its forecast for Vietnam’s GDP growth at 6.5 percent and core inflation rate at 3.7 percent of core inflation rate in 2022, but predicted that inflation may reach 5 percent in 2023 due to multiple risks and challenges.
In a recent report, the UOB noted that Vietnam continued its development trend in the second quarter of 2022. In the first six months of this year, the production sector recorded a 9.24 percent rise year-on-year.
Based on its latest data and analysis of upcoming challenges, the report maintained its prediction for Vietnam’s GDP growth this year at 6.5 percent, and 7.6 percent in the third quarter of 2022.
However, UOB experts held that a number of outside risks are challenging the country’s economic growth, including the Russia-Ukraine conflict.
The report said that inflation in Vietnam rose to 2.86 percent in May, which was still lower than the target of 4 percent given by the State Bank of Vietnam. In particular, transport costs increased at a double-digit rate over the past 14 months.
In the report, UOB also forecast the current refinance rate at 4 percent and the rediscount rate of 2.5 percent to remain at these record lows until at least the end of 2022.
Seafood enterprises await growth opportunities
The COVID-19 pandemic, logistic disruptions due to Russia-Ukraine conflict and compliance with regulations on illegal, unreported and unregulated fishing (IUU) are challenges facing the seafood industry.
However, analysts expected that the negative impacts are only temporary and opportunities for seafood processing and exporting enterprises are huge.
KIS Securities Corporation (Vietnam) said that stable global seafood demand provides growth momentum for Vietnamese seafood processing and exporting enterprises.
According to the Food and Agriculture Organisation of the United Nations (FAO), the global fish supply will increase by 32 percent in 2011-2030 to 204 million tonnes, equivalent to a compound annual growth rate (CAGR) of 2.3 percent.
By 2030, fish catches will be limited, and will be replaced by farmed fish instead, the organisation added. Thereby, it is forecast that aquaculture output will reach 109 million tonnes, up 32 percent compared to 2018, when the catches will be 95 million tonnes, equivalent to that of 2018.
Key products boosting the growth rate are tilapia, carp, tra and shrimp.
The World Bank said that with global population and global GDP up by 20.2 percent and 17.4 percent, respectively, in 2010-2030, average fish consumption is likely to climb. Annual fish consumption per capita is expected to rise from 17.2kg to 18.2kg during the period.
Realising the growth potential of seafood consumption, the Government wishes to maintain its leading position in the strategic development plan until 2030.
Accordingly, Vietnamese seafood output is expected to reach 9.8 million tonnes, including 7 million tonnes of aquaculture production and 2.8 million tonnes of catches. The growth target of 14 billion USD by 2030 is much higher than that of 2021, which was 8.9 billion USD.
Shrimp exports surge during five-month period
Vietnam raked in US$1.9 billion from shrimp exports during the opening five months of the year, representing an annual rise of 41%, according to the Vietnam Association of Seafood Exporters and Producers (VASEP).
After witnessing a growth rate ranging between 25% and 61% from January to April, 2022 the country’s shrimp exports to the United States in May fell by only 2.8% compared to the same period from last year.
Overall, the initial five months of the year saw Vietnam fetch US$390 million from shrimp exports to the US, up 21% year on year.
According to industry experts, se shrimp exports are anticipated to bounce back this September as demand for shrimp in the US recovers strongly ahead of national holidays such as Thanksgiving and the festive season at the end of the year.
With regard to the Chinese market, Vietnamese shrimp exports have since March recorded three-digit growth, with exports in May alone skyrocketing by 126% to reach US$88 million, bringing five-month exports to the market to US$275 million, a year-on-year rise of 101%.
Vietnam strives to boost energy transition
To develop a green and sustainable economy and adapt to climate change, Vietnam has been stepping up energy transition by capitalising on internal strength and enhancing cooperation with development partners.
Hoang Tien Dung, Director of the Electricity and Renewable Energy Authority at the Ministry of Industry and Trade, said as Vietnam is a dynamic economy with fast growth for many consecutive years, demand for energy, especially electricity, has been on the rise.
With its own efforts and assistance from partners, the country is gradually reducing power sources using fossil fuel and promoting new, clean, and renewable energy, he said, noting that this is also an inevitable trend that helps guarantee a sustainable economy.
Sean M. Lawlor, an energy expert from the US Embassy, said as a long-term partner of Vietnam, the US is recommending Vietnam to take creative policy measures to attract foreign investment and step up energy transition so as to help implement the commitments Prime Minister Pham Minh Chinh made at the 26th UN Climate Change Conference of the Parties (COP26).
Narendra Asnani, director for services at GE Gas Power in Asia, said lower-carbon energy sources like gas and such solutions as hydrogen and carbon capture technologies can help Vietnam achieve carbon neutrality.
With its long-term presence in Vietnam and the commitment to help boost local economic growth through the application of the newest energy efficient technologies, GE is providing suitable solutions and global experience for Vietnam to meet current demand and sustain growth, he added.
Coal-fired power is making up one-third of Vietnam’s total output. The country looks to reduce the proportion of this type of electricity to about 9.5% and raise renewable energy to 32% by 2045. It is also encouraging low-carbon power sources to cut down emissions and support renewable energy.
US to decide on tax evasion investigation into VN steel pipe imports in July
The US Department of Commerce has extended the time to consider requests for investigation of trade remedy tax evasion with respect to some steel pipe products imported from Vietnam for another 15 days.
The products under investigation are square (rectangular) steel pipes and welded round carbon steel pipes coded HS 7306.61 and 7306.30, according to the Trade Remedies Administration under the Ministry of Industry and Trade of Vietnam.
In their lawsuit, larges steel pipe manufacturers in the US accused Vietnam of importing hot rolled steel (HRS), the main raw material for producing steel pipes from China, Taiwan (China, the Republic of Korea and India, and then simply processing it into steel pipes and exporting to the US in order to evade the respective trade remedy tax that the US is applying to those countries.
The deadline for the DOC to decide whether to initiate an investigation into this case will be extended to July 1, 2022.
Tuna export to Canada soars
Vietnam’s tuna industry has bounced back strongly post-pandemic as export soared 72% year-on-year to US$259 million in the first quarter of 2022, the highest in five years, according to the Vietnam Association of Seafood Exporters and Producers (VASEP).
The figure is 1.6 times that the same period of 2019, before the pandemic struck.
Shipments to the markets of Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) members rose by 49% in March. The three-month figure surged 40% to US$30.4 million.
Canada was an emerging buyer, importing some US$14 million worth of tuna from Vietnam from January – March, up 70% from a year earlier and doubling that of 2019. Canada accounted for nearly 5% of Vietnam’s total tuna export, making it the second largest importer of the Southeast Asian country, only after the US, and the biggest among the CPTPP markets.
Vietnam was Canada’s second largest supplier, after Thailand, that made up some 12% of Canada’s total import. Vietnam also made itself known as the biggest provider of frozen tuna to Canada.
Given that both countries are signatories to the CPTPP, there is still plenty of room for Vietnam’s tuna products to expand its presence in Canada largely thanks to preferential duties under the trade deal, the VASEP anticipated. Export to Canada will be likely to be on a further rise in the coming time, it said.
VN textile, apparel businesses need to focus on sustainability: conference
Textile and apparel businesses in Viet Nam need to pay more attention to sustainability with regard to cotton sourcing, reducing environmental impacts and adhering to global labour conventions, a conference heard in HCM City on Tuesday.
Tran Nhu Tung, deputy chairman of the Viet Nam Textile and Apparel Association, said the textile and apparel industry accounts for a sizeable portion of the country’s electricity consumption, and so if it saves power or uses power more efficiently, it would be good for the environment.
Viet Nam is committed to achieving zero emissions by 2050, and many local companies to reducing their environmental footprints, he said.
Businesses need to pay attention to their cotton sources, which have to be environmentally friendly and not involve forced labour, he said.
Vu Duc Giang, chairman of the association, said sustainable textile and apparel products need to ensure sustainability across all stages of production such as raw material farms, manufacturing lines and dyeing processes.
Technologies have to be environmentally friendly, and businesses have to abide by global conventions on labour, he said.
Many Vietnamese businesses are unable to export their goods to the US since they do not fulfil origin traceability requirements, he said.
Businesses need to pay close attention to global political relations, and quickly adapt to global changes.
Vo Manh Hung of the US Cotton Council International in Viet Nam said: “Businesses, especially exporters to the US, should partake in sustainable cotton programmes, as they help certify businesses using material sources that are transparent and sustainable.”
Tran Nhu Tung’s Thanh Cong Textile Garment Investment Trading JSC has been installing solar panels and taking part in the US Cotton Trust Protocol, which helps prove that his company uses sustainable cotton sources.
The US accounts for around 42 per cent of Viet Nam’s textile and apparel exports, and Viet Nam is one of the US’s biggest buyers of raw cotton.
Exports of textile and apparel this year has been worth around US$22 billion, a 23 per cent increase from last year.
Mozambique could be gateway for Vietnamese firms to access southern Africa
Mozambique could act as a gateway for Vietnamese businesses to penetrate member countries of the Southern African Development Community (SADC), President of the Mozambican Assembly Esperanca Laurinda Francisco Nhiuane Bias said at a meeting with representatives of the Vietnamese business community in Ha Noi on Tuesday.
She stressed the African nation had established a portal providing information for both private and state-owned firms to support investors.
She suggested that Vietnamese and Mozambican businesses maximise the benefits offered by cooperation agreements reached by the two countries, and expressed her hope that after the meeting, more Vietnamese firms would come to operate in Mozambique.
VCCI’s Chairman Pham Tan Cong emphasised that apart from political ties, bilateral economic and trade relations had seen positive signs recently.
During the 2020-2021 period when COVID-19 was still rampant, two-way trade exceeded US$150 million, he said.
Pointing out optimal cooperation potential between the two countries, Cong suggested that Vietnamese firms consider investment opportunities in Mozambique, particularly in agriculture, heavy industry, infrastructure, finance, health care, and information technology and telecommunications (ICT).
Along with traditional goods like rice, cable lines, fertilizers, garment textiles, steel, cashew nuts and wood, among others, Vietnamese and Mozambican enterprises should expand the list of goods that could be exchanged such as farm produce, construction materials and medical equipment of Viet Nam, and some agricultural products and minerals of Mozambique, he said.
Vietnamese enterprises stay firm in face of economic turmoil in Russia
While a series of sanctions caused the Russian market to wobble at times, Vietnamese textile and garment enterprises have stood firm and continued to earn profits.
All sewing lines are operating steadily, and employees are working enthusiastically at the garment factory of Phan Manh Hung’s Ruviteks company in Moscow Province.
Hung said: “Before the COVID-19 pandemic, my garment factory had more than 100 workers, but now there are about 40 workers. However, production activities are still stable, and workers' income is guaranteed.”
The leader added the company continuously contributed to charity, from making masks to provide to the Russian people during the outbreak of the COVID-19 pandemic in early 2020 to building a house of gratitude in Ben Tre in Viet Nam to support children and helping people in the Donbas region to evacuate to Russia.
Hung said the secret for enterprises to overcome recent difficulties was stabilising production, attaching workers' interests to the enterprise, and providing stable goods to the market. Due to the steady number of customers and product output, Ruviteks was proactive in purchasing raw materials.
Though raw materials for the garment industry in Russia were mostly imported and greatly affected by the current situation, by actively building a 1-year or 18-month production plan before the conflict broke out, the Hung garment factory had stabilised the source of input materials for a long time.
As the garment industry depended on workers, businesses always needed to ensure a minimum income for employees to keep the workers. His company's minimum income was about VND15 million or $700 excluding all expenses, said Hung, adding he always supported employees, especially from 2014 to May 2020, so they could "work with peace of mind."
Also in Moscow Province, at the Sarlanter garment factory of Do Van Tieu there are about 50 workers with a stable income.
Phung Duc Long, who has worked at Sarlanter for nine years, said: “The income here is quite steady. "The salary is about US$1,600 for two months. The company pays the salary every two months and will send it back to Viet Nam. Everyone here lives in solidarity. We treat each other like brothers and sisters in a family."
Owner of the Sarlenter garment company Do Van Tieu revealed that his business had learned from other countries. For example, in Japan "people treat workers in such a way that the factory can be considered home."
Amid the ups and downs in the market in Russia, a close relationship between employers and employees helped Vietnamese garment factories in a hard time.
VN medicinal herbs have potential to expand in Japan
There is a large potential to increase the export of medicinal herbs to Japan while several Japanese pharmaceutical companies are eyeing up herbs from Viet Nam, according to the Viet Nam Trade Office in Japan.
The trade office pointed out that Japan imported several medicinal herbs from Viet Nam, such as hemp, black garlic, black pepper, anise, cinnamon, ginger, turmeric and sesame seed, citing statistics from Japanese customs that Viet Nam exported medicinal herbs worth about US$8.6 million to Japan in 2021.
However, Viet Nam held a modest market share of medicinal herbs in Japan, just around 1.1 per cent of Japan's total medicinal herb imports.
This provided significant opportunities for Viet Nam to expand the export of medicinal herbs to Japan - the second-largest importer of medicinal herbs in the worth.
Viet Nam’s Trade Counselor in Japan, Ta Duc Minh, told Viet Nam News Agency that Viet Nam has an abundant supply of medicinal herbs with more than 5,100 species of plants with medicinal use. However, Viet Nam’s export of medicinal herbs remained modest compared to its potential. The good news was that some Japanese pharmaceutical companies are interested in buying medicinal herbs from Viet Nam, Minh said.
Nguyen Van Giap, director of Hasu No Hana Joint Stock Company which was the distributor of some Japanese pharmaceutical companies such as JPS Pharmaceutical and Nikko Pharmaceutical in Viet Nam, said that Japan’s demand for importing raw medicinal materials was very high. At the same time, the potential supply from Viet Nam was abundant. Giap said that his company was finding ways to promote exporting Vietnamese raw medicinal materials to Japan.
According to Minh, China held a dominant market share of medicinal herbs in Japan. However, this did not mean there was no room for Viet Nam to expand the export of medicinal herbs to the market.
As Japan has strict requirements for medicinal herbs, Vietnamese producers and exporters need to pay attention to all production stages to ensure quality, from plantation area planning to processing and preservation, according to the director.
The problem is that the plantation of medicinal plants remained scattered. The development programme for the pharmaceutical industry and domestically produced herbal ingredients until 2030 set the goal of building eight areas for sustainable exploitation of natural medicinal herbs and two to five large-scale plantation areas.
VN localities seek ways to boost clean agriculture
Recognition that there’s a growing market for safe agricultural produce is pushing several localities to pursue ways and means to advance clean agriculture.
Doan Ngoc Co, deputy director of the Gia Lai Department of Agriculture and Rural Development, said that the Central Highlands province will focus on expanding the area of banana and passion fruit cultivation under GlobalGAP standards.
He said the area of passion fruit and banana in the province will increase to about 20,000ha and 9,000ha, respectively, by 2025. This will bring the total area of fruit trees meeting GlobalGAP standards from 21,500ha at present to 55,000ha in 2025 and 100,000ha in 2030.
The province plans that passion fruit, banana, avocado and durian become its main agriculture export produce. So far, banana has proved particularly lucrative with profits of VND350-400 million (US$15,200-17,400) per hectare, helping farmers stabilise their livelihoods, Co said.
Next the province will develop a process to promote organic farming and economical irrigation to grow fruit trees in a sustainable way, he added.
Soc Trang, meanwhile, has expanded organic farming, finding that it helps reduce production costs, is sustainable and the produce has steady demand. The province has 15,400ha devoted to organic farming, including 5,000ha of rice, 2,500ha of vegetables and 7,900ha of fruits.
With a coastline of 72km and farming areas accounting for 84.7 per cent of the land surface, the province enjoys clear advantages in developing agriculture. Under a restructuring plan, it has “suitably arranged crop cultivation” and introduced advanced cultivation techniques to increase value of its produce.
Massive counterfeit gasoline ring busted in Ba Ria - Vung Tau, company director arrested
Police on Monday arrested the director of a company in the southern province of Ba Ria - Vung Tau for being involved in a massive fake gasoline ring in the province.
A native of Ben Tre Province, Vo Hoai Phuong, 38, director of Gia Khiem Transport Company, was apprehended last Saturday for producing and selling fake gasoline, according to the provincial Department of Public Security.
According to initial information from the police, the police last Saturday caught the company’s staff, Tran Van Hieu and Nguyen Phuc Hoang, pumping chemicals from a tanker truck into the gasoline tank of the company’s Gia Khiem Vung Tau petroleum retail store in Hac Dich Ward in Phu My Town.
According to the police, Phuong had directed the tanker truck driver to transport more than 10 tonnes of chemicals used to make fake A95 fuel from a company in HCM City’s District 5 to the petroleum retail store. The fake fuel would later be transported and distributed to filling stations.
Police also managed to stop another tanker truck containing 20,000 litres of the fake gasoline pumped from the gas tank at the store and was about to be sold.
On the same evening of Monday, the police raided Phuong’s house in HCM City and confiscated a large amount of chemicals used to make fake fuel and relevant documents.
According to the police, the suspects buy chemicals in bulk and then mix them with solvents with only a small amount of real A95 gasoline to make the fake fuel to sell to customers. The case is under further investigation.