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VIETNAM BUSINESS NEWS JUNE 29

Newly-established businesses in H1 exceed 70,000
Newly-established businesses in H1 exceed 70,000 hinh anh 1
There were 76,233 newly-registered enterprises in the first six months of this year, an increase of 13.6% compared to the same period last year.

This is the first time that the number of newly-established enterprises in the first six months has exceeded 70,000.

Data from the Business Registration Management Agency under the Ministry of Planning and Investment showed that 116,900 enterprises were entering or re-entering the market in the first half of 2022.

In terms of capital, although it declined by 6.4% over the same period last year, with a value of 882.1 trillion VND (37.92 billion USD), it was still 1.2 times higher than the average for 2017-2021.

The capital city of Hanoi and the southern largest economic hub of Ho Chi Minh City continued to record a significant increase in newly-established enterprises.

Accordingly, Hanoi has 14,628 newly-established enterprises, up 9.8% yearly.

HCM City has 22,469 newly established businesses, a year-on-year increase of 11.5%.

Meanwhile, the number of enterprises returning to operation in the first six months of this year was 40,667, an increase of 55.6% over the same period last year and 1.9 times higher than the average in 2017-2021.

In the opposite direction, 83,570 businesses withdrew from the market in the first six months of this year, a year-on-year growth of 19%.

Enterprises withdrawing from the market are mainly temporarily suspending their businesses, with 50,909 enterprises, accounting for 60.9%.

Enterprises temporarily suspending business were mainly in the fields of wholesale, retail, car and motorbike repairing (18,417 enterprises, accounting for 36.2%), construction (7,206 enterprises, 14.2%) and processing and manufacturing industry (5,948 enterprises, 11.7%).

Vietnam sees sharp increase in foreign arrivals over six-month period

The number of foreign visitors arriving in the nation reached roughly 602,000 during the initial six months of the year, a figure 6.8 times higher compared to the same period from last year. 
      
According to details provided by the General Statistics Office (GSO), the country received 236,700 foreign arrivals in June, an increase of 36.8% compared to the previous month and 32.9 times higher than the same period from last year.

Of the figure, the number of visitors travelling by air was 523,900,  accounting for 87% of total international arrivals to the country. In addition, arrivals by road reached 78,000, whilst those by sea made up 124,000. Asian tourists remained the country’s primary market with 392,100 arrivals.

Previously, according to the latest report compiled by the World Economic Forum, the nation’s tourism industry development capacity index was among the three countries with the highest increase in the world.

The WEF’s report outlined that the country boasted the world’s highest score increase with a rise of 4.7% in terms of ranking and an increase of eight places compared to 2019, climbing from 60th position to 52nd.

Better policies needed to develop ocean economy

Appropriate policies and regulations are needed to help fully exploit the untapped potential in developing the maritime economy, which plays an essential role in the socio-economic development of Việt Nam, according to insiders.

According to Dr Tạ Đình Thi, Vice Chairman of the National Assembly's Committee on Science, Technology and Environment and former Director of the Việt Nam Administration of Seas and Islands (VASI), Việt Nam's marine economic development is still unsustainable and not well linked with social development and environmental protection.

Serious pollution and environmental incidents have been reported in some waters and coastal areas, while plastic waste pollution has become an urgent problem, he said, adding that country is also facing an imbalanced maritime ecosystem, degrading biodiversity, and excessive exploitation of marine resources.

Việt Nam's marine science and technology resources remain limited, while businesses face difficulties accessing new production technologies due to high costs.

These factors limit the exploration and exploitation of marine resources.

Based on the need for sustainable development of the national marine economy, Việt Nam issued Resolution No. 36-NQ/TW in 2018, on a strategy for the sustainable development of the marine economy to 2030.

Assoc. Prof. Nguyễn Chu Hồi, Vice President of the Việt Nam Fisheries Society, said the development of the sea economy required continued institutional reforms such as building a marine economic development plan to determine the long-term direction for exploiting marine resources, protecting the marine environment, and ensuring sustainable development of the maritime sector.

Ocean development is important for the socio-economic development of the country. To achieve higher goals such as the country's commitment to becoming a carbon-neutral nation by 2050, Việt Nam needs to use the opportunities to sustainably develop the marine economy and protect marine resources for future development. 

Vietnam eyes stronger development of Halal industry

A conference on promoting international cooperation for developing Vietnam's Halal industry was held by the Ministry of Foreign Affairs in collaboration with the Ministry of Agriculture and Rural Development (MARD) on June 28 in Hanoi in both in-person and online forms. 

Deputy Foreign Minister Pham Quang Hieu said Vietnam boasts great potential and advantages for developing the Hall industry, and affirmed that the Vietnamese government has paid special attention to supporting local businesses to join the global Halal market.

Deputy Minister of MARD Le Quoc Doanh said many Vietnamese agricultural products have met food hygiene and safety standards and Halal certification requirements, and are favored by Muslims.

According to representatives from some localities and businesses, Vietnamese businesses have met difficulties in producing and exporting Halal products due to a lack of information about the market and Halal standards, and high cost for production lines.

Vietnam has yet to have its own trade promotion mechanism for Halal products, and it is also facing stiff competition from many countries with similar export structures, they stressed.

Internationals attendees and experts, and representatives from businesses pointed out problems that Vietnam is meeting in the process of developing the Halal market; and shared experience and strategies for developing the sector.

They recommended that Vietnam should make the most of international cooperation and resources, especially with Muslim and ASEAN countries, to support the development of Halal products and services, thus participating more deeply in the global Halal market.

Vietnam should have policies to attract foreign investment in building Halal production facilities meeting international standards; and help connect Vietnamese businesses with prestigious Halal certification organisations and partners around the world, they said.

Explosive e-commerce growth drives demand for logistics

The rapid growth in e-commerce is driving an unprecedented increase in demand for logistics services, including express delivery services, according to industry insiders.

In its E-commerce White Book 2021, the Vietnam E-Commerce and Digital Economy Agency said Vietnam has the highest number of people shopping on e-commerce platforms in the Southeast Asia region at some 49.3 million. In the last two years, the country has seen both consumers and firms moving online, it said.

Nguyen Ngoc Dung, president of the Vietnam E-commerce Association, said there has been a boom in e-commerce since the pandemic began. More than 70% of the population have access to the internet and nearly 50% shop online. The online shopping boom has offered opportunities as well as challenges to the logistics industry, which has to meet the surging demand for order fulfilment and last-mile delivery, he said.

Delivery speed is a major factor affecting customer satisfaction and retention in the fiercely competitive online market, and so online shops that provide quality products and fast delivery gain an advantage.

There is also increased demand for transportation of specific or imported goods, especially cross-border express delivery, according to logistics firms.

New consumer trends and the e-commerce boom require express delivery, shipping and forwarding firms to make adjustments to their business models and strategies, they said. Many have launched specialised services to meet the demands of various groups of customers and embraced digital transformation to improve service quality and increase customer satisfaction.

Delivery companies said the traffic infrastructure does not guarantee the desired traffic speed, with the frequent congestion in both cities and on inter-provincial roads making it difficult for them. This has no immediate solution and so firms seek ways to optimise order processing time, they said.

Most online sellers require a last-mile delivery solution, and this has stimulated growth, especially for express delivery services, they said.

In the last few years, delivery firms have actively linked up with third parties to offer integrated service packages and solutions to optimise sellers’ operations and better meet customers’ demand.

Visitors to Phu Quoc surge in June

The number of visitors to the resort island of Phu Quoc, the southern province of Kien Giang, surged strongly in June, with around 140 flights and over 40 ferries and boats carrying tens of thousands of tourists to and from the island each day.  

Phu Quoc has more than 700 accommodation facilities with over 24,000 rooms, but with the large number of travellers, many are filled to capacity.

Phu Quoc authorities said the island received an estimated 1.4 million visitors in the first six months of this year, including 46,200 foreigners. Revenues from tourism shot up 46 percent year on year to top 2.84 trillion VND (122 million USD).

The island is home to 284 investment projects in tourism development, covering 9,619 hectares of land, with total investment capital of nearly 352.2 trillion VND. Of the projects, 44 have been put into operation, with many meeting international standards.

Five-month rubber exports to Turkey expand by 11% in volume

The opening five months of the year saw Vietnamese rubber exports to Turkey reach 13.72 thousand tonnes, worth US$25.53 million, an annual rise of 11% in volume and 8.1% in value, according to the General Department of Customs.

With regard to the structure of export products, during the reviewed period the country primarily exported natural rubber to the Turkish market. Of the figure SVR10 category rubber was the main item exported to Turkey, accounting for 25.3% of the total rubber volume exported to this market during the first five months of the year.

This was followed by RSS3 type, accounting for 24.4%, with the third being Latex, making up 22.4% of total rubber exports to this market during the five-month period.

During the first three months of the year, the country made up the 11th largest rubber supplier to Turkey with 8.42 thousand tonnes worth US$18.4 million, up 9.9% in volume and 22.3 in volume on-year.

Of the figure, the nation was the fourth largest supplier of natural rubber to Turkey with 8.42 thousand tonnes, valued at US$18.4 million, a rise of 9.9% in volume and 22.3% in volume over last year’s same period.

Furthermore, the country’s natural rubber market share in terms of total Turkish imports accounted for 11.3%, higher than the 10.9% seen during the reviewed period from last year. Throughout the reviewed period, Turkey imported 116.06 thousand tonnes of synthetic rubber (HS code 4002), worth US$267.73 million.

Feed prices to increase in July
     
Livestock feed prices have increased five consecutive times since early 2022 and the six is to come in July.

Koji Inoue, general director of the Kyodo Sojitz Animal Feed LTD has informed his agents about imminent price adjustments.

Specifically, the company planned to raise prices of its feed for piglets by VND400 per kilo and feed for other livestock by VND300 per kilo from July 1. It underscored volatile input costs as the main reason behind the decision.

CJ Vina Agri LTD followed suit with identical adjustments. CJ Vina Agri said it had to raise feed prices to offset higher input costs since input materials have been fluctuating widely price-wise.

Other feed producers also got in on the act by adjusting up their product prices by around VND300-400 per kilo.

The impending price raises are believed to drive livestock raisers further into hardship as pork has not seen mounting prices recently. 

Foreign investment through M&A surges in H1

Although newly-registered foreign investment has yet to recover after the fourth wave of the Covid pandemic, foreign investment pledged to Vietnam in the year to date through capital contributions and stake acquisitions has reached US$2.27 billion, soaring 41.4% year-on-year, according to the Foreign Investment Agency under the Ministry of Investment and Planning.

In the first six months of the year, foreign investors have conducted more than 1,700 transactions to contribute funds to and acquire shares in local firms, Thanh Nien Online newspaper reported.

In total, foreign investors pledged to pour over US$14.03 billion into Vietnam, equal to 91.1% of the figure in the same period last year.

During the period, 752 new projects obtained investment certificates, with total registered capital of over US$4.94 billion, down 48.2% over the year-ago period.

In addition, 487 operational foreign-invested projects won approval to inject an additional US$6.82 billion, up 65.6%.

According to the Foreign Investment Agency, the additional foreign investment in March and May fell but soared during the first half of the year, by 90% to 4.7 times.

This showed that foreign investors still had confidence in Vietnam.

Tan Thuan EPZ proposed to be converted into hi-tech park

The government of District 7 in HCMC has proposed converting the 300-hectare Tan Thuan Export Processing Zone into a hi-tech park with housing and commercial services.

At a seminar on strategy to develop District 7 by 2030 with a vision to 2045 on June 28, District 7 vice chairman Le Van Thanh said the export processing zone was established more than 30 years ago. It was the first export processing zone in Vietnam and the premise for other industrial and export processing zones in HCMC and Vietnam as a whole, the local media reported.

Nearly 70% of enterprises in Tan Thuan operate in the traditional outsourcing and manufacturing sectors. At present, 195 hectares of land in the export processing zone is home to factories and warehouses.

Thanh said the zone is no longer appropriate to District 7’s development plan, contributes little to the district’s budget, and causes environmental pollution.

After being converted into a hi-tech park, the zone will connect with the Thu Thiem New Urban Area where a new financial center is planned to be developed.

Associate Professor Dr Truong Thi Hien, chairwoman of the Intellectual Women’s Association of HCMC, said District 7 might review and weigh stopping the development of industries in the district. At first, new factories should not be developed there, while manufacturing units should be relocated to suburban areas or adjacent localities.

A roadmap to gradually convert manufacturing and assembly sectors in the Tan Thuan Export Processing Zone into hi-tech and automated ones is needed. For the long term, the zone should be converted into a place for researching and piloting automation, AI and software production sectors.

The solution will help ease the increase of workers and reduce containers entering into and from District 7, thus decreasing makeshift homes, traffic congestion and environmental pollution, Hien added.

Sharing the view, Nguyen Van Dua, former deputy secretary of the HCMC Party Committee, said the Tan Thuan Export Processing Zone should be developed into an area for high-quality education, healthcare, culture and commercial services, offices and hotels.

HoREA suggests continuing lending to borrowers with secured assets

The HCMC Real Estate Association (HoREA) has written to the prime minister and the State Bank of Vietnam proposing continued lending to clients with secured assets.

Give its feedback on the draft of an amended circular, HoREA suggested giving loans to customers who intend to open savings accounts to show proof of financial capacity to study and travel abroad or attend auctions if they have assets for collateral.

Loans should be offered to customers with assets to make capital contributions and investments. The loans will help them contribute capital to establish new companies or cooperate with partners to invest or acquire stakes.

However, HoREA proposed not giving loans to those buying gold or settling debt.

HoREA said stricter lending requirements should apply to sectors that are not prioritized to access credit.

Furthermore, the association agreed with the supplementation of a regulation stipulating that credit institutions must not give loans used as deposits for future transactions. The regulation will not affect real estate firms whose projects are eligible for capital mobilization.

Domestic tours costlier than outbound tours

Due to rising airfares, domestic tours are more expensive than outbound tours, according to the Vietnam Tourism Association.

At a conference to discuss solutions to remove difficulties in production and business in the second half of the year on June 27, Minister of Planning and Investment Nguyen Chi Dung said the situation was irrational.

Domestic tours currently cost more than tours to other countries, such as Thailand, Dung added, voicing his concern over Vietnamese tourists’ choice to travel abroad instead of domestic destinations.

As airfares have surged, the proposal of raising the airfare cap by the local airlines and the Civil Aviation Authority of Vietnam would lead to airfares further soaring.

Vu The Binh, chairman of the Vietnam Tourism Association, said that the rising airfares induced by the surging fuel prices had driven up domestic tour prices although travel and lodging firms had launched multiple promotions.

Besides the fuel price pressure, Binh said sectors and units related to the tourism sector, such as aviation, travel and lodging, had yet to connect. As a result, domestic tourism service prices are not as competitive as in other countries.

He was worried that Vietnam’s tourism might lag behind other countries. Four- and five-star hotels and travel companies should lower the prices of their services, which may reduce the quality of services in the long term.

In addition, domestic tours have contributed 30% to local tourism revenue. The rising number of tourists will exert pressure on the quality of service.

Programs to reduce service prices cannot be applied too often as they may affect the quality of Vietnam’s tourism services, Binh said.

To solve the problem, he proposed airfares be set at levels that can support the local tourism market to recover. Authorities should come up with policies to attract foreign tourists to Vietnam, he said.

Regarding fuel costs, Bui Doan Ne, vice chairman and general secretary of the Vietnam Aviation Business Association, said enterprises are expecting a quick reduction of the environmental protection tax on fuels.

Vietnamese airlines’ airfares remain competitive with those of other countries. However, tourism develops fast, so the aviation sector needs support to recover. Support policies should be maintained until mid- or end-2023, Ne suggested.

The aviation sector can recover by 2024 if strong support policies are worked out quickly, Ne added.

He also expressed concern over the competitiveness of local air carriers compared with foreign rivals if the fuel prices increase further. Domestic airlines should increase night flights to improve their competitiveness.

USAID supports Vietnamese businesses to reduce greenhouse gas emission

The United States Agency for International Development (UASID) yesterday cooperated with the Enterprise Development Agency (under the Planning and Investment Ministry) to hold a training workshop in Ho Chi Minh City on ‘Overview of Greenhouse Gas (GHG) Reduction Requirements and Carbon Mechanisms: Identifying Challenges and Initial Solutions for Businesses’.

This training session belongs to the project ‘Improving Vietnam’s Private Sector Competitiveness’ (UASID IPSC), sponsored by UASID.

The project, with a budget of US$36 million from 2021-2025, has four parts of building business management capacity and strategies for small and growing businesses (SGB); improving productivity and trading performance via promoting innovation and implementation of technologies; refining business environment to create favorable conditions for enterprises and overall economic growth; strengthening business-to-business and interdisciplinary linkages.

The project aims at providing technical and financial assistance to 5,000 SGBs in order to improve their business performance; supporting 240 SGBs to successfully enter regional and international markets; offering overall or specific support packages to 60 pioneer businesses to create products with added value and Vietnamese intelligence – ‘Made by Vietnam’ product brand.

Vietnam-Japan online trade exchange to accelerate local supporting industry

An online trade exchange on the supporting industry is set to be held from July 5 to July 6 in order to help local businesses seek partners, grasp new market trends, and stay updated on the latest cutting-edge technologies.   

The purpose of the online event is to aid firms operating in the Vietnamese supporting industry to enhance connectivity and seek export opportunities with potential partners in Japan.

Over the years, enterprises in the Vietnamese supporting industry have grown in both quantity and quality, as well as getting more involved in the global production chain.

Furthermore, the number of firms operating in the supporting industry now accounts for approximately 4.5% of the total number of businesses in the processing and manufacturing sector, thereby contributing nearly 11% of the total revenue of the entire processing and manufacturing industry. Despite these strong figures, the productivity of supporting industry enterprises in many localities remains low due to a shortage of highly-qualified human resources and a general lack of information from providers of raw materials.

Recent years has seen Vietrade continuously organise programmes aimed at helping Vietnamese supporting industries to intensify trade exchanges with Japanese enterprises.

The Ministry of Industry and Trade has also set up three technical centres in support of industrial development in three key economic zones in the North, Central, and South, with the overall goal of helping industrial production enterprises improve productivity and get more involved in the global supply chain., thereby creating added-value products. 

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

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