Vietnam Airlines has become the first foreign carrier to resume flights to Busan since the Republic of Korea  (RoK) restricted flights due to the COVID-19 pandemic.

Flight VN426 departed from Hanoi with 148 passengers on board, and another run by the national flag carrier returned from Busan with 175 passengers.

The airline is operating three flights per week on the route every Monday, Tuesday and Friday.

As from July, it will also reopen the Ho Chi Minh City-Busan route with four flights per week, and plans to launch flights connecting Hanoi, HCM City, Da Nang and Nha Trang with Seoul. Wide-body Boeing 787 aircraft will be used on the routes.

Interest rate support package has little effect on stock market

As securities and real estate sectors are not on the list to receive support, the 2 percent interest rate support package's positive effects on the stock market are not strong. 

The Government officially issued a decree on interest rate support in loans of enterprises, co-operatives and business households on May 20. 

The application period is in 2020 and 2023, or the package can end sooner when the total loans with interest rate support reach around 40 trillion VND (1.7 billion USD).

After the market benchmark VN-Index plunged up to 24 percent from its peak in nearly two months, from 1,524 points to 1,150 points, the 2 percent interest rate support package's announcement is a lifesaver for the market on expectations of the return of cheap cash flows. 

In fact, the index had witnessed outstanding recoveries for two weeks with gains of nearly 150 points. There are rising expectations about the cheap cash flows created from the package worth 40 trillion VND, equivalent to a preferential credit of up to 1 quadrillion VND. 

However, experts said that this package only has indirect effects on the stock market. Therefore, investors shouldn't put high hope on a strong performance of the market following the package issuance. 

On the positive side, Agribank Securities Corporation (Agriseco) said that this support package is expected to create a boost for enterprises to accelerate their recovery speed, contributing to the whole economic growth to reach the Government's target of 6-6.5 percent. But if companies spend the Government-supported capital for the wrong purpose, it can lead to unwanted results for the economy.

Right after the supporting announcement, many were concerned that the interest rate package will cause the stock market to experience what had happened in 2009. 

Experts from Agriseco said that, 13 years ago, Vietnam also carried out an interest rate support package from the State Bank of Vietnam (SBV) and applied for short, medium and long-term loans. The policy was a part of the fiscal and monetary policies aimed to stimulate the economy that was affected by the global crisis. 

The interest rate of the package was 4 percent a year in 2009 and was declined to 2 percent a year in 2010 for medium- and long-term loans. 

After the package was applied, from 2009 to 2011, there were speculative cash flows flocking into asset markets like gold, foreign currencies and real estate, which raised pressure on inflation since 2010. The consumer price index (CPI) soared 9.19 and 18.58 percent year-on-year in 2010 and 2011, respectively. 

On the stock market, the VN-Index posted an impressive gain from 230 points to nearly 500 points, equal to an increase of over 100 percent in 2009, with the first appearance of the speculative cash flow on the stock market when the interest rate for production and business activities gradually decreased. 

However, the market was on a bearish trend for the next two years. In 2011 only, the VN-Index and HNX-Index dropped over 25 percent and nearly 50 percent compared to the beginning of the year, respectively, with average liquidity down up to 60 percent. 

At the moment, Agriseco expected that the interest rate support package will have positive effects but not too strong on the stock market as the market's size is now much bigger than that of 2009. Specifically, the market capitalisation at the end of 2009 was 620 trillion VND, accounting for 45 percent of GDP, while the value at the end of 2021 reached nearly 5.8 quadrillion VND, hitting nearly 93 percent of GDP. 

According to the securities firm, there are two subjects benefiting from the policy, which are banks and businesses operating in supported sectors.

Business sectors in the support list include aviation, tourism, agriculture, marine product and manufacturing industries. Leading companies of these industries are more likely to meet the standards of the package because their resistance is better than the rest while facing the pandemic.

MoIT to authenticate e-contracts from June

The Ministry of Industry and Trade (MoIT) has created the necessary legal framework for the authentication of electronic contracts in Vietnam and is ready to grant operating licences to authenticators from June.

Dang Hoang Hai, Director of the Vietnam E-Commerce and Digital Economy Agency, believes that online authentication will bring great benefits to the business sector, notably in terms of costs.

Traditional contracts involve paper, printing costs and transfer costs. Meanwhile, electronic contracts will exempt contracting parties from incurring those costs, saving them about 30,000-80,000 VND (1.3-3.5 USD) for each contract.

In contrast to traditional contracts, which cannot be ratified in the absence of signers, electronic contracts can be signed anytime and anywhere, adding flexibility to the contract-making process and saving time.  

“Third parties, including banks and the authorities, can rely on the authenticated electronic versions of a contract to verify its origin versions, cutting time of the verification process and curbing forged documents,” Hai added.

Apart from the legal framework, the MoIT has also developed a national system for electronic contracts, tasked with providing authenticated contract data to third parties and bringing together licensed authenticators and service providers.

The system is expected to lay the foundations for an electronic contract market and connect individuals and firms to a governmental platform that helps promote e-commerce transactions and legal conformity.

According to the MoIT, e-commerce has been growing steadily in recent years in Vietnam with an annual growth of 16-17 percent.

On March 15, the National Committee on Digital Transformation issued Decision No.17, aiming to raise the proportion of firms using e-contracts to half of the business sector in 2022.

Vietjet launches direct flights between Hanoi/HCM City and Mumbai

Vietjet on June 4 officially inaugurated two direct routes connecting Ho Chi Minh City and Hanoi of Vietnam with Mumbai – the financial and economic centre and the biggest city of India.

The inauguration ceremony of the two routes connecting Hanoi and Ho Chi Minh City with Mumbai was held at Chhatrapati Shivaji Maharaj International Airport in Mumbai, India, with the participation of representatives of the Consulate General of Vietnam in Mumbai, the airport, and Vietjet and passengers.

Jubilantly welcoming the first flights to Mumbai, Vietjet opens sales on 19,999 promotional tickets from only 0 VND (excluding taxes and fees) for all routes from and to India on three golden days - June 7, 8, 9  2022, with the flight period from July 1 to December 31, 2022 (excluding national holidays and Tet). Promotional tickets are available for sale from 12:00 on June 7 to the end of June 9, 2022 (GMT 7) on Vietjets’ official channels.

Legally produced wood to boost furniture exports to US: VIFORES

Vietnam must promote the trade of legally produced wood and avoid illegal sources to secure a firm foothold in the US furniture market, according to Chairman of the Vietnam Timber & Forest Products Association (VIFORES) Do Xuan Lap.

The ongoing trade war with China has forced the US to seek suppliers of wooden furniture and other wood products from Vietnam and elsewhere, Lap said, adding that the majority of Vietnam’s exports to the US are high value-added timber products.

The US is among Vietnam’s five largest buyers, besides Japan, China, the EU and the Republic of Korea, that last year together imported 14.27 billion USD worth of wood products from Vietnam, or 90.4 percent of the total, he noted.

Over the past three years, the US market has accounted for more than 60 percent of Vietnam’s woodwork shipments, with cabinets and sofas being the most sought-after items, the VIFORES leader revealed.

About 68 percent of woodwork orders received by Vietnamese producers from overseas have come from the US so far this year, he added.

To boost woodwork exports to the US, Lap said Vietnam’s timber industry must sustainably develop legally produced wood and say no to high-risk suppliers.

It is also important to avoid any association with origin fraud, he said.

Vietnamese woodworks have been inspected by US authorities on the above matters, he emphasised, particularly referring to the fact that in late 2020, the Office of the US Trade Representative launched investigations into Vietnam’s alleged imports of wood illegally harvested in Cambodia, Cameroon and Congo.

Data showed that despite COVID-19, Vietnam exported 15.96 billion USD worth of wood and forestry products in 2021, up 20.7 percent from the previous year.

The country is currently home to 5,580 wood and forestry product producers, including 767 FDI enterprises. Most of the timber producers in Vietnam (42 percent) are located in the Southeast region, mainly Ho Chi Minh City and the provinces of Dong Nai, Binh Duong and Binh Phuoc.

Green industrial ecosystem to become dominant trend

Investors in Vietnam have paid more attention to developing green and clean industrial parks, focusing their investment on wastewater treatment systems, planting more trees and attracting clean production enterprises.

Vietnam-Singapore Industrial Park (VSIP III) in southern Binh Duong province is a typical example. It is designed for sustainable development by integrating smart technology in energy and water usage, as well as wastewater and traffic management and security.

Many industrial developers are also embarking on the race to form a new industrial environment that pays attention to clean and renewable energy, as well as a circular economy to ensure sustainable development.

After the success of Amata Industrial Park in Dong Nai province’s Bien Hoa city, Thai industrial park developer Amata has begun construction of Song Khoai Industrial Park in Quang Yen township, Quang Ninh province. The 710-ha park is scheduled to complete in 2026 with a total investment of 3.5 trillion VND (150 million USD).

The Thai investor also involved in Long Thanh Hi-tech Industrial Park, another 410ha project in Dong Nai province.

Industrial real estate has undergone a transition from the traditional industrial park toward a green and sustainable industrial ecosystem. The core issues remain, which are occupational health and safety, environmental friendliness, and social security.

It is believed that Danish Lego Group chose VSIP III because it could meet their green requirements. Preben Elnef, Vice President of the Lego Group said they are trying to make the project sustainable by using renewable energy such as solar roofs and solar fields to secure a carbon neutral factory.

The investor of VSIP III confirmed that there will be a 50-ha solar farm on their grounds to provide electricity for customers including Lego. Kelvin Teo, Co-chairman of VSIP Group said, the park marks a milestone in the sustainable development strategy and will become a green working environment in Vietnam.

Under the impacts of climate change, the environment is heavily polluted and natural resources are gradually being exhausted. The wave of green consumption has become popular and environmental-friendly production will be an inevitable trend in the green growth strategy.

Leading real estate corporation Gaw NP Capital (GNP) recently signed a Memorandum of Understanding with United Overseas Bank Vietnam on a financial support agreement for GNP Yen Binh 2 Project in Thai Nguyen province and GNP Nam Dinh Vu Project in Hai Phong city to develop green and high-tech industrial parks in Vietnam.

GNP also signed a memorandum of understanding with REE Group to promote clean energy development through its commitment to install up to 90-ha of rooftop solar power sources on GNP's projects across the country.

National programme pushes for innovation among enterprises

The Ministry of Science and Technology (MoST) has been accelerating support for Vietnamese companies to promote technology transfer and develop new technologies for the creation of higher-quality and value-added products under the national technology innovation programme by 2030, according to an official.

Approved by the government in January last year, the national programme will provide further assistance for businesses – the driver of the economy and innovation, said Ta Viet Dung, Deputy Director of the MoST’s State Agency for Technology Innovation.

It focuses on product innovation, from developing new products to innovating technology-based production and management processes; technology innovation; and adoption of new market approach and development methods.

It also encourages technology transfer for the development of rural, mountainous and disadvantaged areas, and enhances training of workforces in these areas.

Vietnam Airlines opens Nha Trang – Singapore route

A Vietnam Airlines flight carrying 160 passengers aboard on June 6 landed in the central coastal province of Khanh Hoa’s Nha Trang city from Singapore, marking the opening of the air route.

With this route, Vietnam Airlines has become the first carrier in Vietnam linking the two destinations.   

The airline schedules two flights per week, with those from Nha Trang departing on Tuesday and Sunday and from Singapore on Friday and Sunday.

This is the fifth route of the airline connecting the Southeast Asian country with Vietnam’s major cities. Earlier on June 1, it has launched routes linking the central coastal city of Da Nang and the Mekong Delta province of Kien Giang’s Phu Quoc island to Singapore.

On July 1, Vietnam Airlines will begin operating flights between Nha Trang and the Republic of Korea’s Seoul with one trip per day.

Vietjet Air reopens route to Thailand’s Phuket

Budget carrier Vietjet Air on June 3 welcomed passengers back on its journey between Ho Chi Minh City of Vietnam and Phuket, a popular tourist destination of Thailand.

The airline, the first in Vietnam to resume flights between the two localities, will operate four round trips on Mondays, Wednesdays, Fridays and Sundays, each lasting two hours.

Vietjet earlier resumed flights from HCM City, Hanoi and Da Nang to the Thai capital city of Bangkok. The airline now has the biggest number of routes between Vietnam and Thailand.

Retail sales of goods, services up in May

Vietnam saw strong growth in its revenue from retail sales of goods and services in May 2022 due to an increase in tourism demand after the pandemic is basically under control and the 31st SEA Games was successfully held in the country in mid-May.

According to the General Statistics Office (GSO), the nation's total revenue from retail sales of goods and services surpassed 477 trillion VND (20.7 billion USD) in May, up 4.2 percent on the month and 22.6 percent on the year. The growth on year reached a higher rate in the years before the pandemic.

According to GSO, the total revenue from retail sales of goods and services surpassed 2.25 quadrillion VND in the first five months of 2022, up 9.7 percent year-on-year. 

The revenue from retail sales of consumer goods increased by 9.8 percent over the year, with revenue surging by 13.1 percent for food, 12.8 percent for cultural and educational products, and 3.1 percent for transport.

Meanwhile, the revenue from accommodation and catering services in the first five months rose by 15.7 percent. The high demand of domestic tourists and the SEA Games 31 helped revenue in May increase by 69.3 percent over the same period last year. 

Localities having growth in the revenue from accommodation and catering services were Can Tho (39.7 percent), Hanoi (34.2 percent), Dong Nai (22.6 percent), Quang Ninh (17.3 percent), Hai Phong (10.5 percent), Binh Duong (11.4 percent) and Da Nang (11.2 percent).

Banks diversify income sources to reduce dependence on credit

Banks have been promoting a target of diversifying income sources to reduce dependence on credit.  

The financial statements in Q1 2022 of many banks published recently showed that besides the rapid growth of credit, revenue from services contributed significantly to the banks’ positive business results in the period.

Typically, in Q1 2022, the Commercial Joint Stock Bank for Foreign Trade of Vietnam (Vietcombank) gained 2.58 trillion VND of net profit from services and 1.52 trillion VND of net profit from foreign exchange trading.

For Vietnam Technological and Commercial Joint Stock Bank (Techcombank) and Saigon Thuong Tin Commercial Joint Stock Bank (Sacombank), the service revenue in Q1 2022 reached 1.79 trillion VND and 1.53 trillion VND, up 35 percent and 83 percent compared to the same period of last year, respectively.

Many other private joint-stock banks such as Vietnam Prosperity Commercial Joint Stock Bank (VPBank), HCM City Development Commercial Joint Stock Bank (HDBank), Military Commercial Joint Stock Bank (MB), Asia Commercial Joint Stock Bank (ACB), Vietnam International Commercial Joint Stock Bank (VIB), Maritime Commercial Joint Stock Bank (MSB) and Saigon Hanoi Commercial Joint Stock Bank (SHB) also recorded many positive results from service activities in Q1 2022.

MB, for example, saw an increase of 4.8 percent to nearly 1.12 trillion VND in the profit from services thanks to a large contribution from bancassurance channel. The bank’s profit from foreign exchange trading grew by 98 percent to 467 billion VND.

Meanwhile, MSB also achieved more than 335 billion VND of net profit from service activities in Q1 2022, up nearly 175 percent over the same period of 2021, mainly thanks to the segments of credit cards, insurance services and payment activities.

For VIB, the non-interest income was 650 billion VND, contributing 16 percent to the bank’s total operating income.

Among the service activities of banks, bancassurance channels accounted for a fairly large proportion in Q1 2022 and contributed considerably to the service revenue structure of many banks. The income is expected to further increase next time.

Vice-chairman of Lien Viet Post Commercial Joint Stock Bank (LienVietPostBank) Pham Doan Son said the bank is negotiating with its partners about bancassurance as the insurance contract between the bank and Dai-ichi Life expires in May 2022.

Banking expert Nguyen Tri Hieu said that diversifying revenue sources is one of the targets that many banks have focused on for the past few years, especially in the past two years when the traditional source of revenue from credit activities has slowed and posed higher risks due to the pandemic.

“Increasing revenue from services has helped banks operate more healthily and sustainable, and minimise risks. The change will also contribute to gradually realising targets set out in the development strategy of the banking industry,” Hieu said.

Much room for Vietnam’s coffee export to Japan

Vietnam is believed to have much room for exporting coffee to Japan, whose hot coffee market is forecast to grow 4.2 percent during 2020 - 2025.

In April, Vietnam shipped 10,540 tonnes of coffee worth 25.9 million USD to Japan, up 39.8 percent in volume and 61.8 percent in value from a year earlier.

The four-month figures reached 45,140 tonnes and 110.13 million USD, respectively rising 13.4 percent and 45.4 percent, according to the General Department of Vietnam Customs.

Coffee export prices stood at 2,440 USD per tonne on average in the first four months, representing a year-on-year increase of 28.2 percent.

Notably, a surge was recorded in the sale of processed coffee to Japan, by 63.6 percent in the first quarter to 16.3 million USD. The product accounted for 19.38 percent of the total coffee shipments to this Northeast Asian country during the period, compared to 16.93 percent in Q1 last year.

GlobalData, a London-based data analytics company, predicted Japan’s hot coffee market will expand by 4.2 percent during 2020 - 2025.

With a population of over 126 million, Japan has high demand for imported agricultural products, including coffee.

In addition, tariff cut commitments in the free trade deals to which both countries are parties like the Vietnam - Japan Economic Partnership Agreement (VJEPA), the ASEAN - Japan Comprehensive Economic Partnership (AJCEP), the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), and the Regional Comprehensive Economic Partnership (RCEP) are also expected to open up big chances for Vietnam’s products, including coffee.

However, Vietnamese coffee has made up just a modest part of Japan’s total imports.

Kien Giang posts 7-percent increase in five-month export revenue

The southern province of Kien Giang posted a 7-percent increase year-on-year in export revenue for the first five months of this year.

According to the province’s Department of Industry and Trade, the province earned over 326 million USD in the five-month period from exports. Of the figure, rice brought home 104.4 million USD, seafood 104.8 million USD, leather and footwear 62.9 million USD, fruit and vegetables 4.37 million USD, and other products 49.45 million USD.

For-export processing enterprises in the province said they have faced numerous difficulties since the beginning of the year due to the impact of the COVID-19 pandemic, including a shortage of materials and labour, rising transport and production costs, and technical barriers in export markets.  

Deputy Director of the Department of Industry and Trade Lam Huynh Nhan said the department has closely followed the situation of local exporters and timely made recommendations to the provincial People’s Committee on measures to help them cope with difficulties. On their part, local enterprises have also made great efforts to restore activities.

As a result, Kien Giang’s export revenue still increased compared to the same period last year.

The provincial administration will continue to boost trade promotion to seek more markets and partners for local exports, bolster cross-border trade at local international border gates and popularise free trade agreements to which Vietnam is a member among local exporters.

RoK resumes exhibitions, fairs in Vietnam after nearly three years

The Republic of Korea (RoK)’s International Trade Association (KITA) and the Seoul-based Convention and Exhibition Centre (COEX) have said they will resume overseas exhibitions after an almost-three-year hiatus caused by the COVID-19 pandemic.

Those activities started with the Vietnam International Premium Products Fair (VIPREMIUM) and the 10th Vietnam International Maternity - Baby & Kids Fair (Vietbaby Fair), both opened in Ho Chi Minh City on June 2.

About 150 leading companies in beauty, health, food, and household products are taking part in VIPREMIUM 2022. Meanwhile, Vietbaby Fair sees the participation of over 100 businesses from nine countries and territories that make products for newborn babies and toddlers.

Due to the pandemic, overseas fairs held by COEX and KITA took place both in person and via videoconference in 2020 but completely online in 2021.

COEX and KITA are planning the Korea Smart Electric & Energy Fair (KOSEP) in July, the Vietbaby Fair in Hanoi in September, a franchise and retail show along with Coffee Expo Vietnam in November, and many other activities, they said.

Kim Hyun-cheol, head of the global cooperation division at KITA, noted though the Vietnamese economy faced certain stagnation in 2021 due to COVID-19, it is still attractive to Korean exporters thanks to low labour cost, simplified administrative procedures, its participation in many free trade deals, and diverse supply chains.

They plan to make use of these events as stepping stones for Korean small- and medium-sized enterprises to enter the Vietnamese market, he added.

Former Google director becomes managing director Microsoft Vietnam

Nguyen Quynh Tram, former head of Google operations in Vietnam, Cambodia and Thailand, has been appointed as managing director of Microsoft Vietnam.

Tram will focus on helping businesses apply cloud technology and build resilience after the COVID-19 pandemic, contributing to fostering innovation.

Through products of Microsoft Vietnam, Tram will also be responsible for promoting digital transformation in all industries in the country.

Tram said she is happy to join Microsoft - the first giant technology company that has placed its trust in Vietnam over the past more than 20 years ago. She expressed the joy to support customers, partners and people in the digital transformation that Vietnam is looking forwards to.

According to Microsoft, Tram has more than 20 years of experience in managing markets in Asia and Europe. She has held senior leadership positions in the fields of technology, telecommunications and media.

She used to be vice general director and CEO of FOX Networks Group, and held leadership positions at Vietnamobile, VSTV – the joint-venture between the national broadcaster Vietnam Television VTV and the French Pay TV group Canal Plus, fellow researcher and author of projects of the United Nations Development Programme (UNDP).

Tram has an MBA fromthe École Supérieure des Sciences Economiques et Commerciale (ESSEC Business School). She also graduated from Erasmus School of Economics of Erasmus University Rotterdam.

EVFTA boosts trade activities between European and Da Nang partners

The EU-Vietnam Free Trade Agreement (EVFTA) has added fresh impetus to the acceleration of trade and export activities between partners based in Europe and the central city of Danang, according to insiders.

This information was released during a meeting held on June 3 between the European Chamber of Commerce in Vietnam (EuroCham) and Vietnamese central provinces.

Upon addressing the seminar, Ho Ky Minh, vice chairman of the Da Nang People's Committee, emphasized that Europe has been one of the city’s important trading partner and third largest export market, duly accounting for nearly 90% of the central city’s total import and export turnover.

By the end of the second quarter of the year, European investors have injected roughly US$480 million in 140  projects in Da Nang.

Phan Quy Phuong, vice chairman of Thua Thien Hue province’s People's Committee, expressed his hope that European firms will pay greater attention to green projects towards sustainable development in the locality.

For his part, Ho Quang Buu, vice chairman of the Quang Nam provincial People's Committee, revealed that European businesses have invested in 38 projects with a total investment capital of US$395 million in Quang Nam province, adding that the majority of European investors have carried out green projects with a particular focus on environmental protection within the locality.

Delphine Rousselet, director of EuroCham in Vietnam, stressed that EuroCham will accompany the goals set by Da Nang, Quang Nam, and Thua Thien Hue, all of which are considered key localities in the East-West economic corridor.

According to details given by the EuroCham representative, many European businesses remain keen on the policy of developing green economy and circular economy.

She also underscored the importance of the harmonious development of economics, culture, and society to achieve green development and environmental protection in these central localities.

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