VIETNAM BUSINESS NEWS MARCH 10
High-tech farming thriving in southern region
The southern region is Vietnam’s largest industrial production region and also a key agricultural region, with modern, large-scale development in animal husbandry and cultivation. One of the factors behind the local agricultural sector prospering over recent years despite market pressure and climate change is that localities applied high technology in production early on.
The durian gardens of the Xuân Định Durian Cooperative in Xuân Lộc district, Dong Nai province, are watered with an automated irrigation system that saves water and labour. Despite the sizeable investment, the system brings long-term economic benefits to farmers.
The high-tech agricultural cooperative is no longer a new model in Dong Nai. Not only leading in farming, Dong Nai is also “the capital of animal husbandry” in the country and also gradually moving towards industrial scale, applying high technology. Nineteen percent of the province’s pork production and 27 percent of its chicken output meet VietGAP standards and are warmly welcomed in the marketplace.
More advanced and larger-scale high-tech production models have also emerged in the region. A series of groups, agricultural clusters, and high-tech agricultural zones have been established, leveraging the region’s industrial strengths to promote agricultural production.
This oil pressing plant in Binh Duong province is applying advanced physical refining technology with high quality and productivity, using soybeans from local farmers.
Economic efficiency, stable output, and market recognition are among the benefits high-tech agriculture brings to producers, from farmers to businesses.
Applying science and technology in agriculture, producing clean, high-quality agricultural products, and increasing economic value are inexorable trends that help agricultural production in the southern region develop rapidly. Flourishing agriculture complements the region’s industrial production, promoting the development of both key economic sectors./.
Shares end lower as congestion and foreign net selling worry investors
Vietnamese stocks ended lower in a choppy session on Tuesday as profit-taking erased earlier gains and the ongoing technical congestion as well as foreign net selling dampened investors' sentiment.
Vietnamese stocks ended lower in a choppy session on Tuesday as profit-taking erased earlier gains and the ongoing technical congestion as well as foreign net selling dampened investors' sentiment.
The benchmark VN-Index on the Ho Chi Minh Stock Exchange was down 0.54 per cent to close at 1,161.97 points.
It had lost 0.04 per cent to close at 1,168.27 points on Monday.
More than 641.4 million shares were traded on the southern bourse, worth VND15.1 trillion (US$657.3 million).
Market breadth was negative with 266 gaining stocks and 187 losers.
“The VN-Index was in downtrend for most of the trading time. Foreign investors were still net sellers on both HoSE and HNX. Market breadth turned negative but the liquidity was not much different from the previous session,” said BIDV Securities Co.
“According to our assessment, VN-Index is likely to struggle in the 1,150-1,170 zone in the next few sessions,” the company said.
Foreign investors net sold VND1.14 trillion on HOSE, including dairy firm Vinamilk (VNM) (VND273.1 billion), PVPower (POW) (VND181.8 billion) and Hoa Sen Group (HSG) (VND102.9 billion). They were net sellers on the HNX with a value of VND15.42 billion.
Trading activities on Tuesday were continuously interrupted due to system overloads, which troubled traders and weighed down their sentiment.
The large-cap tracker VN30-Index lost 0.60 per cent to stay at 1,163 points.
Twenty-two of the 30 large-cap stocks in the VN30 basket decreased while seven climbed.
In the VN-30 basket, two energy stocks PVPower (POW) and Viet Nam National Petroleum Group (PLX) suffered the most with both down more than 3 per cent, followed by Mobile World Group (MWG), losing 2.1 per cent, Vietinbank (CTG), dropping 1.9 per cent, Vinamilk (VNM), losing 1.7 per cent and Vingroup (VIC), declining 1.6 per cent.
On the other side, Phat Dat Real Estate Development JSC (PDR), Hoang Huy Investment Financial Services JSC (TCH), Thanh Thanh Cong – Bien Hoa Joint Stock Company (SBT) and VPbank (VPB) were the gainers with over 1 per cent increases.
Banking group suffered during trading with Military Bank (MBB), Sai Gon-Ha Noi Bank (SHB), Tien Phong Bank (TPB), Eximbank (EIB), Vibank (VIB), Sacombank (STB) all losing, while the two biggest decliners were Bank for Investment and Development (BID) and Vietinbank (CTG) dropping nearly 2 per cent.
On the Ha Noi Stock Exchange, the HNX-Index rallied 0.54 per cent to end Tuesday at 264.83 points.
The index had rallied 1.39 per cent to end Monday at 263.42 points.
Nearly 150.6 million shares were traded on the northern market, worth VND2.1 trillion.
HNX tests new board for HoSE's stocks
The Ha Noi Stock Exchange (HNX) is testing a new power board on its system to address the frequent overload issues on the Ho Chi Minh Stock Exchange (HoSE).
HNX just informed its member securities firms about the trial of creating a new power board for HoSE’s stocks.
This is one of many solutions considered by government agencies to solve overload problems that have occurred more often recently, affecting investors’ sentiment.
The new power board will follow all of HoSE regulations including session structure, amplitude, order type, price step, or trading lot. The connection, placing order, receiving results and payment will be navigated from securities firms to HNX system.
HNX also drafted specification documents on processes and technology to send to member securities companies to cooperate in researching and testing. If any securities firm has finished modifying the system, it can register to test the transaction connection with the HNX.
The move came a week after HNX collected opinions from securities firms regarding time for upgrading software systems.
On March 3, the State Securities Commission (SSC) of Viet Nam sent documents to HoSE, HNX and Viet Nam Securities Depository (VSD) on the transfer of listed shares from HoSE to HNX. SSC requested HNX to promptly receive and process listed companies on HoSE, without reviewing their records under the new listing process.
The transaction structure, transaction supervision, listing management, reporting and information disclosure regulations of transfer stocks will be the same as those listed on the HNX. HOSE and HNX coordinate in supervising transactions for these stocks to ensure continuity in supervision.
Other solutions such as rising minimum trading lots to 1,000 units are being considered. HoSE is also consulting with market participants and investors on not allowing adjusting or cancelling orders to find the best solution for the congestion on the southern exchange.
Last week, the VN-Index rose slightly 0.02 per cent. The index failed to test the psychological resistance level of 1,200 points again as selling pressure persisted and the frequent overload of orders during trading hours on HoSE affected transactions, making investors' sentiment turn negative.
Oil and gas shares fluctuate strongly on oil price
Oil and gas shares finished lower on Tuesday, reversing course after surging in the previous session as the oil price climbed above US$70 per barrel for the first time since the COVID-19 pandemic started.
The attacks on oil facilities Saudi Arabia, including a Saudi Aramco facility at Ras Tanura - a crucial port for petroleum exports, lifted Brent to its highest since January 8, 2020.
The news supported oil and gas stocks in global markets, including Viet Nam.
Despite the benchmark VN-Index on the Ho Chi Minh Stock Exchange (HoSE) declining by 0.04 per cent on Monday, gas and oil stocks posted outstanding performance.
PetroVietnam Power Corporation (POW) closed Monday with a gain of 5.2 per cent, PetroVietnam Gas JSC (GAS) was up 2.7 per cent, PetroVietnam Drilling & Well Services Corporation (PVD) was up 1.8 per cent.
On the Ha Noi Stock Exchange (HNX), PetroVietNam Chemical And Services JSC (PVC) also climbed 9.62 per cent. Binh Son Refining and Petrochemical Company Limited (BSR), traded on UpCOM, also increased 3.14 per cent.
However, the rally ended on Tuesday as the oil price retreated from $70/barrel after Riyadh said there was no damage to the largest oil facility in the world.
POW edged lower in Tuesday's trade, down 3.89 per cent, GAS lost 1.37 per cent. Other stocks including PVD and BSR were down 4.67 - 6.02 per cent.
The VN-index continued downward trend on Tuesday, down 0.54 per cent to finish the trading day at 1,161.97 points.
Pakistan initiates anti-dumping investigation into Vietnam’s cold rolled steel
Pakistan’s National Tariff Commission has initiated an anti-dumping investigation into cold rolled coils and sheets originating in or exported from certain countries, including Vietnam.
In a notice issued on February 25, the commission said investigated products are classified under Pakistan Customs Tariff (PCT) heading numbers 7209.1510, 7209.1590, 7209.1610, 7209.1690. 7209.1710, 7209.1790, 7209.1810, 7209.1891, 7209.1899, 7209.2510, 7209.2590, 7209.2610, 7209.2690, 7209.2710, 7209.2790, 7209.2810 and 7209.2890.
The period under investigation is from October 1, 2019 to September 30, 2020.
China Steel & Nippon Steel Vietnam JSC is subject to the investigation.
Interested parties are requested to identify themselves to the Secretary, National Tariff Commission, State Life Building No.5, Blue Area, Islamabad; Tel: 9251 920 2839; or Fax: 9251 922 1205, no later than 10 days after the publication of the notice.
All interested parties are invited to make their views/comments known to the commission, and to submit information and documents (if any) no later than 45 days from the date of the publication of the notice.
All data and information in this regard should be sent to the Director General (Investigation-II), National Tariff Commission, Statelife Building No.5, Blue Area, Islamabad; Tel: 9251 921 8961; Fax: 9251 922 1205; or Email: Khizar.email@example.com.
The Trade Remedies Authority of Vietnam at the Ministry of Industry and Trade recommended production associations and businesses promptly identify themselves to the investigation agency and cooperate in the investigation in order to enjoy exclusive tariffs.
They should regularly exchange information with Pakistani importers as well as the Authority, to receive timely support.
The imposition of high anti-dumping duties would reduce Vietnam’s competitiveness and make the country lose part or all of the Pakistani market, it warned./.
Vietnamese food, farm produce displayed at international exhibition in Japan
Nearly 20 Vietnamese businesses are showcasing products at the 46th International Food and Beverage Exhibition (Foodex Japan 2021), which kicked off in the Japanese prefecture of Chiba on March 9.
Vietnamese Trade Counsellor in Japan Ta Duc Minh said that due to the impact of COVID-19, Vietnamese businesses can still not travel to Japan, and so they sent products to the exhibition with the aim of introducing them to Japanese consumers and importers and boosting the export turnover of Vietnamese farm produce and food in Japan.
Assessing Vietnamese products, Jorge Imai, President of Imai Limited, which imports foreign food and beverages, said they are quite suitable for Japanese people and are of good quality.
He suggested Vietnamese businesses pay more attention to food safety regulations to meet Japanese requirements.
This year’s exhibition is scheduled to last until March 12.
Held for the first time in 1976, Foodex is the largest and most important networking event for Japan’s food and beverage sector to increase trade with overseas markets.
The 2019 exhibition attracted over 3,300 enterprises from 94 countries and territories, welcoming some 80,500 visitors./.
HCM City aims to support 1,000 innovative start-ups in next five years
The Ho Chi Minh City People’s Committee has introduced a project facilitating the development of its innovative start-up ecosystem during the 2021-2025 period, with a target of supporting 1,000 start-ups.
Its efforts are hoped to put HCM City’s innovative start-up ecosystem on par with the region, gradually becoming a cornerstone of activities and helping businesses improve productivity and sharpen their competitive edge.
It also aims to develop a spearhead product of the southern hub, raising the rate of total factor productivity to 45-50 percent of its gross regional domestic product (GRDP).
The project is expected to improve the capacity of 3,000 start-ups, assist 1,000 projects, and help 100 start-ups access venture capital by 2025.
The municipal People’s Committee has devised seven major tasks to meet such goals, including infrastructure development, the introduction of services serving the start-up ecosystem, support for small- and medium-sized enterprises (SMEs), and international cooperation, among others.
Capitalising on HCM City’s development potential, particularly of its innovative start-up ecosystem, will provide impetus for the socio-economic development of the southern region, the Mekong Delta, and Vietnam as a whole.
In recent times, the city has rolled out incentives to spark and improve innovative start-up ideas. An average of 700 received aid to improve their capacity between 2016 and 2020, while close to 10 start-up contests are held annually./.
HoSE joins stock exchanges worldwide in promoting gender equality
The Ho Chi Minh Stock Exchange (HoSE) on March 9 joined stock exchanges around the world in a global initiative called “Ring the Bell for Gender Equality” - a partnership that highlights the economic imperative of empowering women in the workplace, marketplace, and community.
This is the second time HoSE has participated in the campaign.
The campaign emphasises the importance of the business community in promoting gender equality, towards achieving sustainable development goals and raising public awareness about the implementation of the Women’s Empowerment Principles (WEPs).
This year’s event was organised online by the WeEmpower Asia programme of the United Nations Entity for Gender Equality and the Empowerment of Women (UN Women) in cooperation with the Vietnam Women Entrepreneurs Council (VWEC) under the Vietnam Chamber of Commerce and Industry (VCCI), HoSE, the EU Delegation to Vietnam, and the International Finance Corporation (IFC).
According to Nguyen Thi Tuyet Minh, Chairwoman of the VWEC, the event is a joint effort by the council, UN Women, the EU Delegation to Vietnam, and the IFC in promoting gender equality in the country.
Elisa Fernandez Saenz, Chief Representative of UN Women, said companies that do well in gender equality and empowering women in the workplace, marketplace, and community will improve their competitiveness and develop sustainably, because gender equality brings in good business results and is a smart economic solution.
Stock exchanges, listed companies, and investors play an important role in promoting gender equality and empowering women in capital markets, contributing to building a prosperous economy and society, she added.
According to reports on the financial situation of companies listed on HoSE, up to 80 percent of those with female leaders posted stable business operations despite COVID-19, Nguyen Thi Viet Ha, a member of the Board of Directors at HoSE, said.
This shows that female leaders are asserting themselves in overcoming the difficulties and challenges facing businesses amid the pandemic, she added./.
Kien Giang keen to become sea-based economic powerhouse by 2025
Boasting 200 km of coastline and 143 islands, the Mekong Delta province of Kien Giang is striving to branch out its maritime sector and become a sea-based economic powerhouse by 2025.
The move aims to contribute to realising the “Strategy for Sustainable Development of Vietnam’s Marine Economy by 2030 with a Vision to 2045”.
Major investments have been made in several spearhead industries, such as seafood, tourism-marine services, energy, and maritime industry, among others, helping the province rank second among the 13 Mekong Delta localities in terms of maritime economic development in 2020.
The sea-based economy accounted for nearly 80 percent of the local gross regional domestic product during the year.
Kien Giang is working to secure a total seafood catch and aquaculture output of 800,000 tonnes by 2025.
The province will sharpen its focus on tourism infrastructure at key attractions, including Phu Quoc Island, which is to become a world-class marine eco-tourism services hub./.
Vietnamese textile industry sees huge export opportunities in yarn, sportswear
The textile and apparel industry, which managed to survive three waves of COVID-19 thanks to its decision to produce face masks and personal protective equipment, will focus on sportswear and yarn, according to the Viet Nam National Textile and Garment Group.
Le Tien Truong, its general director, said demand for face masks and personal protective equipment will shrink rapidly.
Armed with their experience of coping with the pandemic, many textile and footwear enterprises are quietly confident of altering plans when required and finding new markets to cope with new situation after COVID-19 is under control.
Sportswear has arguably been the most successful segment during the pandemic as awareness of physical exercise rose.
According to Euromonitor International, in 2020 the demand for sportswear world-wide decreased only about 8 per cent, the lowest in an industry which saw an overall decline of 16 per cent.
The compounded annual growth rate for the sportswear market in the last five years was 6.5 per cent, 1.5 times the industry average, and it is expected to be worth US$479 billion globally by 2025.
The Thanh Cong Textile Garment Investment Trading JSC is considered one of the most successful businesses in 2020 thanks to seizing opportunities to export COVID-19 related apparel products such as fabric masks and PPE.
But Tran Nhu Tung, its deputy general director, said the demand for cloth masks and protective gear is returning to pre-COVID levels with the advent of vaccines. This year his company has stopped taking orders for medical protective gear and antibacterial masks.
It is focusing on traditional products such as T-shirts and sportswear, demand for which would continue to increase, and there are already enough orders for sportswear for the first 6 months of the year, he said.
According to the Viet Nam Textile and Apparel Association, many businesses now have orders for until the end of April, mainly for sportswear.
Dang Trieu Hoa, general director of the The Ky Yarn Joint Stock Company, said his company plans to focus on yarns with high quality and competitive prices.
The EU-Viet Nam Free Trade Agreement (EVFTA) that took effect on August 1 last year has reduced tariffs on Viet Nam's garment exports by more than 70 percentage points.
The footwear and textile sectors also benefit significantly from tariff cuts, according to Bao Viet Securities Joint Stock Company.
With most other countries that export textile and garment to the EU not having a trade deal with the bloc, the EVFTA has opened up a great opportunity for Viet Nam’s footwear, textile and garment exports if companies meet origin requirements, it added.
Amazon Web Services to help set up VN’s 1st digital-only bank
Vietnam Maritime Commercial Joint Stock Bank has chosen Amazon Web Services, Inc, a subsidiary of the internet giant, as its cloud provider for TNEX, the first digital-only bank in Viet Nam.
TNEX was developed by MSB in 10 months as a radically new mobile platform that brings all digital banking and lifestyle services under one umbrella through a super app.
It is designed with customer experience and data science at the centre of its products, services and features, and focused on addressing unmet customer needs by offering free, innovative and simple everyday banking products to the approximately 60 million Vietnamese who have no or limited access to banking and financial services.
TNEX offers its customers advanced digital banking services, supports their lifestyle needs such as food, education, travel, entertainment, health, fashion, and messaging and chat, and provides access to a digital eco-system populated by its merchant partners.
Consumers can directly buy products and services from the merchant marketplace with the TNEX app and pay digitally using QR codes.
By tapping the scalability of AWS cloud, MSB can monitor and ensure compliance.
Leveraging AWS’s broad and deep portfolio of cloud services including analytics, machine learning, and containers enables TNEX to develop better ways to serve customers by innovating and deploying new products faster and drive operational efficiencies.
Bryan Carroll, chief executive officer of the digital bank, said: “TNEX provides our customers with an entirely new banking experience that supports their daily spending and lifestyle needs. Through the development of our platform on AWS, we gained the speed and agility needed to build a full-service merchant marketplace in six months and an SME and consumer digital bank in only 10 months.
“By using AWS, we accelerated the delivery of the innovative financial services that our customers have been asking for and the tools and services that our merchants require to grow their business.”
A key segment for TNEX is Generation Z, the demographic that succeeded millennials. By 2025 Vietnam’s Generation Z of digital-first consumers with significant spending power is expected to comprise 25 per cent of the country’s labour force.
Mobile devices and components lead Vietnamese exports
The latest data published by the General Statistics Office (GSO) showed that as one of the nine export articles with an export turnover of more than $1 billion, which made up 73.8 per cent of the total export turnover during the first two months, mobile devices and components made up the largest portion.
In particular, the export value of mobile devices and components hit $9.3 billion, or 19.2 per cent of the turnover, up 22.8 per cent on-year. Contributing to this was the 21.2 per cent increase on-year in the electronics and computer manufacturing index.
Of this, media equipment production (including mobile devices and components) soared 22.9 per cent on-year. Specifically, the output of mobile devices reached 35 million, up 1.2 per cent on-year. The revenue from mobile component production hit VND95.4 trillion($4.15 billion), up 55.7 per cent on-year.
The EU, the US, and China remained the largest export markets for Vietnamese articles with nearly $2.5 billion of turnover from China, up 103.9 per cent on-year.
The portion of mobile devices and components in exports has constantly expanded over the years, from 3.2 per cent in 2010 to the current 20 per cent.
According to the GSO, the recent US-China tensions will facilitate local mobile and electronic production as plenty of overseas tech giants have landed in Vietnam.
Equity investment in Vietnam reaches new peak
Equity investments in Vietnam have reached a new high in the number of transactions amid retreating cash flows on regional and global scale due to the impacts of the ongoing pandemic.
Vietnam reports most impressive growth in financial services regionally, particularly in the banking sector
Global equity investment shed 13.1 per cent in the total number of transactions and plunged 33.8 per cent in total transaction value in the first half last year, compared to the corresponding period in 2019.
Within the ASEAN-5 and Vietnam, equity transactions were slowing down last year compared to a robust 2019. The number of transactions dropped from 230 cases in the second half of 2019 to 200 cases in the first six months of 2020, meanwhile, the transaction value was curtailed by more than half, from $9.15 billion to just $4.3 billion.
Amid chaos and uncertainties due to the coronavirus pandemic, Vietnam’s equity investment market has set a record with 59 transactions valued at $1.14 billion, a slight increase compared to 2019.
Technology has maintained its growth momentum setting a five-year record in the number of transactions. Investments have channelled into fresh tech startups which provide breakthrough solutions in retail and services, such as booking and placement of online healthcare consultation, e-commerce, and provision of recruitment and human resource platforms, among others.
The scale of transactions was, however, modest as most of the ventures targeted Vietnam’s fledging tech startups.
A series of sectors have been showing bright investment prospects in the beginning of 2021, including logistics, education, healthcare, technology, and renewable energies.
Companies in retail and services related to breakthrough solutions were also high on the investors’ radar. For instance, the leading US equity fund Warburg Pincus poured $100 million into MoMo’s e-wallet which had 20 million users in 2019, and $130 million came from Singapore-headquartered private equity firm Northstar Group directly into Tiki’s pockets – one of Vietnam’s three leading e-commerce platforms in 2020.
Vingroup, Vietnam’s top private conglomerate, continues to hit records in the transaction value through GIC’s $500 million investment into Vincommerce (retail) in 2019, and $650 million investment from KKR and Temasek into Vinhomes (real estate) in 2020.
Cash flows into the healthcare sector are increasingly becoming a trend. Vietnam’s two leading investment funds, Mekong Capital and VinaCapital, have jumped on the bandwagon through a $31.8-million injection into Pharmacity’s drugstore chain and a $26.7-million deal with Thu Cuc Hospitals.
A series of sectors have been showing bright investment prospects in the beginning of 2021, including logistics, education, healthcare, technology, and renewable energies.
The market size of the logistics sector is expected to reach $113 billion in 2022, corresponding to a compound annual growth rate (CAGR) of 16.6 per cent. The growth is supported by new-generation free trade agreements, flourishing e-commerce, and the fact that global tech titans like Apple, LG, and Panasonic have resorted to Vietnam to diversify their supply chains and distribution networks in a bid to mitigate impacts from US-China trade war and the global health crisis.
Meanwhile, the education sector continues to attract investors who are leveraging Vietnam’s growing middle-class and an upsurge in education spending. The policies encouraging investment into projects that are wholly owned by foreign and private investors have also contributed to growth in the sector.
The healthcare sector may allure investors due to a raft of factors, such as the quickly ageing Vietnamese population.
The number of people aged above 65 has been rising quickly at a pace of 8 per cent in 2019 to reach 16 per cent by 2040. Similarly, per capita average healthcare spending rose from $194 in 2019 to $309 in 2024, alongside a shortfall in quality human resource and healthcare infrastructure, leading to supply deficiencies.
In recent years, the tech field was glittering in the eyes of risk-avid and equity investors with CAGR reaching 26.1 per cent during 2015-2019. This field is beneficial from a number of factors like tax incentives, government credit support, and low-cost and quality workforce.
As for renewable energy, with total installed capacity reaching 54,880MW in 2019 Vietnam ranked second in ASEAN in power system’s total installed capacity. A priority field, the government has set forth the targets of renewable energy accounting for 6.5 per cent, 6.9 per cent, and 10.7 per cent by 2020, 2025, and 2030 respectively.
To reach these goals, the renewable energy field would need $10.8 billion in investment capital annually until 2030. Renewable energies are bestowed numerous incentives like preferential tariffs and whole foreign ownership at energy firms.
The quick increase in the number of renewable energy projects has also entailed challenges as power capacity has been cut due to supply exceeding demand in some areas and system overload as current infrastructure is unable to absorb power output from new projects.
Build up terminals 5 and 6 of Haiphong's Lach Huyen Port
Deputy Prime Minister Trinh Dinh Dung has signed Decision No.299/QD-TTg, approving the investment policy of the construction project of terminals 5 and 6 of Haiphong’s Lach Huyen Port.
Investment capital for the project is VND6.425 trillion ($279.35 million), 15 per cent of which will be equity while the remaining 85 per cent will come from loans and other sources.
The project will be separated into two phases, with the first one (VND6.073 trillion [$264 million]) lasting from 2020 to 2025, and the VND352.23 billion ($15.3 million) second one from 2030 until after 2030.
Terminals 5 and 6 will be 375m long each and be able to receive vessels of 100,000DWT. It is being invested by HATECO Group JSC and will operate for 70 years.
The construction of phase 1 is expected to take four years from the approval of the decision on investment policy, while phase 2 is expected to be built within one year.
The two terminals are going to facilitate goods export and import from the north directly to the European and American markets. Additionally, it also contributes to the development of Dinh Vu-Cat Hai Economic Zone, promoting the socioeconomic development of Hai Phong city and the northern area.
Hai Phong City People's Committee is in charge of checking and supervising HATECO Group and the project's implementation process.
Additionally, the committee coordinates with the Ministry of Natural Resources and Environment to direct and guide HATECO Group in assessing the environmental impacts of the project.
Overseas packaging groups expand towards Vietnam
Amid the ever-growing trend of eco-friendly packaging materials and waste reduction, foreign investors are looking into Vietnam’s packaging industry to further expand their operations and boost business in the region via mergers and acquisitions.
Thailand’s Siam Cement Group PLC (SCG) last month made a big splash in the market by entering into a 70-per-cent share purchase agreement with Duy Tan Plastics JSC. The former’s subsidiary SCG Packaging (SCGP) is to work with its Vietnamese partners under a 10-billion-baht ($332 million) investment to expand its packaging solution business in Vietnam, where demand for such products is growing.
The investment is part of a 20-billion-baht ($664 million) budget for business expansion and merger and acquisition (M&A) plans. SCGP chief executive Wichan Jitpukdee told The Bangkok Post that the company has been expanding its operations in Vietnam and generated a revenue growth of more than 10 per cent annually.
Last year, SCGP announced the closing of its consolidation with Sovi Packaging JSC in the southern province of Dong Nai’s Bien Hoa city, a company specialising in corrugated boxes and offset laminated packaging. In 2015, SCGP expanded its flexible packaging business by acquiring an 80 per cent stake in Tin Thanh Packing JSC, one of the top five manufacturers of such wares in Vietnam.
SCGP also invested in its packaging paper production base at Vina Kraft Paper Co., Ltd. to meet the rapid demand in the country. The enterprise has holdings in a clutch of other domestic producers including Alcamax Packaging, Packamex Packaging, AP Packaging, and New Asia Industries.
Besides this, global investors like SCGP are also shifting their focus to the market, thus driving their sustainability agenda forward. The company has been implementing its environmental social governance strategy in the past few years, thereby focusing on corporate social responsibility towards the environment and society.
SCGP is also a pioneer in green manufacturing, with various innovations ranging from paper to flexible packaging. With the latest expansion in Vietnam, SCGP is looking forward to partnering with local players to grow its market share in Vietnam sustainably.
“Through all our recent expansion projects, we are expecting to increase sales to an additional 8.5 billion baht ($282.38 million) per year,” Wichan said.
Ong Tiong Hooi, transaction services partner of PwC Vietnam cited the Bank of Thailand’s 2019 data that shows that about 30 per cent of Thai investments in the manufacturing sector have been within the ASEAN region, including Vietnam.
“This is mainly due to active expansion strategies from corporate investors with surplus cash that needs to be deployed,” said Hooi, “as these look into areas and sectors that complement both their growth plans and overall value chain.”
“As Vietnam takes the position of a favoured manufacturing hub, I am not surprised that selected corporate clients have been snapping up packaging companies over the past few years to cater to their manufacturing capabilities as well as provide ancillary services to other companies within Vietnam,” he added.
Samuel Son-Tung Vu, partner at law firm Bae, Kim & Lee LLC, noted that SCG’s acquisition of packaging companies could be a restructuring and consolidation of market players, and may be aimed at meeting the growing demand of major consumer product and retail players such as Metro, Big C, Masan Consumer, and SABECO.
Furthermore, SCG’s acquisition could also result from the goal to consume materials provided by its upstream project, the Long Son petrochemical complex in the southern province of Ba Ria-Vung Tau, which is the company’s largest project in Vietnam.
In addition to Thai investors, the packaging industry has drawn attention of other foreign investors. Last year, the International Finance Corporation (IFC) announced a $20-million debt investment in An Phat Holdings to fund its first compostable material manufacturing plant in the northern province of Hai Duong.
The plant with a capacity of 20,000 tonnes per year will be built in about 18 months and completed by the end of 2022. An Phat targets that, by 2023, compostable products will contribute 40-50 per cent to the group’s packaging revenue.
South Korea’s Dongwon Systems also completed the takeover of Tan Tien Packaging (TTP) for $97.08 million, and fully acquired Minh Viet Packaging (MVP) for $21 million. Dongwon Systems is now leveraging the cost competitiveness of TTP and MVP to further expand into the Vietnamese and regional market.
Likewise, Japanese investors are also keen on the local packaging market. In 2018, Sojitz Pla-Net Corporation entered into the packaging material business in Vietnam through equity participation in Rang Dong Long An Plastic JSC (RLP), a subsidiary of major Vietnamese plastics manufacturer Rang Dong Plastic JSC. Previously, Sojitz Pla-Net spent around $4-5 million to scoop up a 20 per cent stake in RLP.
In 2017, Sekisui Chemical acquired 15 per cent of outstanding shares of Tien Phong Plastic JSC, a plastic pipe manufacturer in the northern city of Haiphong. Another Japanese investor, Oji Holdings Corporation, also bought major shares at United Packaging in 2013. Meanwhile, Japan’s Meiwa Pax took over 93 per cent of Saigon Trading and Packaging (Sapaco) for $16.5 million in 2014.
Ho Duc Lam, chairman of the Vietnam Plastics Association, said that Vietnam’s plastic and packaging industry has been in the spotlight of investors from Thailand, South Korea, and Japan in the past few years. These East Asian investors prefer striking up deals with local partners as a shortcut to penetrate the market.
“In addition, more European and American investors have strengthened their presence in the domestic market. Unlike Eastern investors, Western companies prefer to develop their own facilities in Vietnam rather than acquiring local assets,” Lam added.
Despite the vibrant M&A activities, Vu from Bae, Kim & Lee pointed out some challenges for investors in the packaging industry. Firstly, their products are mainly based on polymers, such as plastic bags, packaging, and bottles, which are largely import dependent.
“Secondly, the treatment of wastes from the production of such products is also a hot topic and raises concerns about environmental protection,” he explained. “Under the Law on Investment, projects that adversely affect the environment will not be considered for extension of operation. Accordingly, local authorities are considering environmental issues when appraising M&A applications of foreign investors, which can be a hindrance.”
Last but not least, to his knowledge, profit margins of packaging companies are often low which makes profit-seeking investors less interested in this sector.
Despite the take up by foreign investors, local packaging businesses can still focus on some key trends to recover and drive their growth during the pandemic-stricken era. Vu believes that the future of the packaging industry lies in biodegradable and eco-friendly products which have great room for growth in Vietnam.
Some Vietnamese companies have made certain achievements in the development and sales of biodegradable packaging products, for example An Phat Bioplastics JSC.
“If local companies can keep up the pace with this global trend, there will be opportunities for them to rise, grow, and find their position in the market, not just domestically but also regionally and even globally,” Vu said.
Bold new approach for digital banking
The State Bank of Vietnam (SBV) in late 2020 issued Circular No.16/2020/TT-NHNN amending Circular No.23/2014/TT-NHNN guiding the opening and use of payment accounts at payment service providers, which is one of the prominent legal documents issued to promote the transformation and development of cashless payments.
In addition to a number of notable changes relating to opening bank accounts, long-awaited reform via Circular 16 is the detailed regulation on opening individual payment accounts at credit institutions by electronic know-your-customer (eKYC). This is the first legal instrument that provides detailed guidance on its implementation.
The system is used to verify customer’s identity against the declared information in compliance with applicable laws and regulations, with support from video call and AI technologies such as face-matching for photos on ID card, or optical character recognition to read and extract information, instantly comparing personal information with a centralised database of user identity. Thus, bank account opening and customer onboarding become much easier, as customers do not need to go to a branch to open a bank account.
In the past, under Decree No.116/2013/ND-CP guiding the Law on Anti-money Laundering and the aforementioned Circular 23, the first meeting between the bank and client must be face-to-face if the latter wishes to open a bank account. However, reflecting the development of 4.0 technology, in November 2019 the government issued Decree No.87/2019/ND-CP detailing the implementation of a number of articles of the Law on Anti-money Laundering, of which Article 8.2 stated that the bank can “decide whether to meet the client in person when the relationship is first established”.
These developments are now mirrored in Circular 16, thereby allowing commercial banks to decide whether to meet clients in person when the latter wishes to open a bank account, and to decide which methods, forms and technologies it wishes to use to identify and verify a client.
However, the SBV also requires banks to adopt necessary technologies and procedures for risk management, and adequately store and manage information/data used for identifying clients. Regarding transaction limits, except for some cases where banks are allowed to apply a higher transaction limit, transactions made from an electronically opened account must not exceed VND100 million ($4,350) per month per customer in aggregate.
In addition to important regulations on eKYC, Circular 16 also provides for a number of notable changes relating to the opening of bank accounts.
Firstly, Circular 16 clarifies that a legal entity can represent a person to open a checking account. In such cases, documents that can be used to identify such legal entities must be included in the application to open a checking account.
Secondly, a bank or foreign bank branch is allowed to stipulate the components of the application dossier and prescribe the application form for opening a shared checking account. The bank or foreign bank branch is also entitled to agree with its client on whether or not foreign language documents included in the application must be translated into Vietnamese. This is a completely new addition to Circular 23.
Lastly, Circular 16 supplements regulation on the use of standard form contracts on opening and use of checking accounts. Accordingly, if the bank or foreign bank branch in question uses a standard form contract for the opening and use of checking accounts, it must make the standard form contract publicly available on its website, mobile banking app (if any), and its lawful transaction locations.
In light of the above, international and domestic banks in Vietnam are gearing up to boost their eKYC process to provide customers with a seamless on-board experience and reduce paper-based procedures. Indeed, a number of commercial banks such as HDBank, TPBank, VPBank, and Sacombank have applied eKYC to open accounts for customers.
Digital banking and non-cash payment are some of the goals that the laws of Vietnam are aiming for in the near future. In the first six months of 2020, non-cash payments increased by 180 per cent. This trend necessitates the completion of a sound legal framework. In this context, Circular 16 with the regulation on eKYC could be considered an important premise for development of digital payment and banking in Vietnam.
Slated to take effect on March 5, Circular 16 is expected to provide a legal platform for this, as well as paving the way for more foreign credit institutions, banks, and tech companies on eKYC to enter and develop the Vietnamese market.
Vietnam seeks to welcome international tourists back
Many local tourist sites are preparing plans to welcome international tourists back as Covid-19 vaccinations are being ramped up worldwide.
Nguyen Huu Tho, chairman of the Vietnam Tourism Association, told the Saigon Times on March 5 that some tourist destinations near Vietnam had reconnected with foreign tourism markets.
If Vietnam is not prepared, it would lag behind other regional countries with the same source markets.
Many entrepreneurs agreed that the later the country opens its borders to foreign tourists, the more it will lose when it comes to competing with regional rivals to attract international tourists.
Vietnam will have a greater edge if it opens its market before Thailand does, but this may be hard due to the short preparation period, said Pham Ha, CEO of Lux Group.
He expected the Government would reopen its borders to international travelers in the third quarter of this year so that local travel firms can bring in tourists in the last quarter. The country’s success in the fight against the pandemic and its plan to vaccinate locals against Covid-19 will make the country safe for foreigners.
However, tourism management agencies and travel companies have to prepare to reconnect with source markets, including issuing tourism safety protocols, resuming visa-waiver policies, launching promotion programs and developing new products and services suitable to each market.
In positive news for the resumption of the international tourism segment, Deputy Prime Minister Vu Duc Dam is allowing people who have receive Covid-19 vaccine in other countries to enter Vietnam without being quarantined.
Nguyen Thi Thanh Huong, deputy head of the Vietnam National Administration of Tourism, said the administration and the Vietnam Tourism Association are working on a plan to allow international tourists to get back. However, a specific plan has yet to be worked out, but the resumption would be weighed carefully, with safety being the top priority.
In the initial stage, tourists from big source markets and those of all-in tours to isolated resorts may be welcomed first.
According to Tho, Vietnam should open its market for countries in the Asia-Pacific region as tourists from these markets had earlier accounted for three fourths of the country’s total foreign visitors. They can also easily access the country by air and many countries in the region have brought the pandemic under control.
During the pandemic, Vietnam conducted several online promotion programs to retain customers and build their confidence in the country’s ability to combat Covid-19.
In the coming periods, local tourist sites should continue informing customers of the local measures being taken to fight the pandemic and develop products appropriate to the new tourism trends during and after the pandemic.
Vietnam GDP growth projected to strengthen to 6.5% in 2021: IMF
The upward trend in economic growth would continue to 2022 as the country’s economic growth may reach 7.2%.
Vietnam’s GDP growth is projected to strengthen to 6.5% as normalization of economic activity continues, businesses recover, and private consumption and business investment rebound.
The assessment was given by the International Monetary Fund (IMF) in its 2020 Article IV Consultation report with Vietnam, expecting the upward trend in economic growth would continue to 2022 as the country’s economic growth may reach 7.2%.
“Manufacturing and retail sales are expected to lead the recovery, while the travel and hospitality services will remain subdued,” noted the report, but saying net exports will continue making positive contribution to growth as external demand picks up.
Looking back in 2020, Vietnam began the year following a prolonged period of high growth. The last three decades of market-oriented reform supported a structural transformation from agriculture to a modern economy based on FDI-led manufacturing, lifting Vietnam from one of the poorest countries in the world to lower middle-income status.
According to the report, in recent years, growth averaged 7%, and the emphasis on “leaving no one behind” boosted living standards, contributing to notable progress towards the Sustainable Development Goals.
Economic activity remained strong with stable inflation in 2019, as the rate of new business creation reached a six-year high. Fiscal consolidation efforts helped contain public and publicly guaranteed debt to 43% of GDP, well below the 65% statutory limit.
Despite moderating trade flows on account of US-China trade tensions, the current account surplus rose to 3.8% of GDP as a result of sharply slowing imports of raw materials and intermediate goods, record tourist arrivals, and large remittance flows. Vietnam’s external position in 2019 was assessed to be substantially stronger than warranted by fundamentals due to structural features.
Following the onset of the Covid-19 crisis, decisive measures were taken to limit the health and economic fallout. Early and concerted efforts helped ease lockdown restrictions and contain the associated policy support package relative to other countries.
Fiscal policy focused on temporary support to firms and vulnerable households, while monetary policy was eased to maintain abundant liquidity in the banking system. Real GDP growth in 2020 was 2.9%, among the highest in the world, noted the report.
Despite some economic scarring, a strong recovery is expected in 2021 as normalization of domestic and foreign activity continues, stated the IMF Executive Board. Fiscal and monetary policies are expected to remain supportive, although to a lesser extent than in 2020, and inflation is projected to remain close to the government’s target at 4%.
The directors, meanwhile, stressed the need for measures to limit permanent scarring and promote sustained, inclusive, and greener growth.
They underscored the need for fiscal measures geared towards protecting workers and vulnerable households, including through improved budgetary execution and enhanced targeting.
“Once the recovery is firmly underway, gradual fiscal adjustment should center on revenue mobilization to help create space for priority social and infrastructure spending and support greener and more inclusive growth,” stated the directors.
They also noted the need for continued efforts to upgrade fiscal policy frameworks to safeguard fiscal sustainability.
The Directors recommended maintaining an accommodative monetary policy stance, while remaining mindful of underlying banking sector vulnerabilities. They emphasized that corporate support for viable firms should be gradually phased out and regulatory forbearance normalized.
Noting the view that Vietnam’s external position was substantially stronger than warranted by fundamentals and desirable policies, the Directors called for steadfast reform efforts to remove the remaining barriers to private investment and enhance social safety nets.
They stressed the importance of structural reforms to improve the business environment, enhance productivity, and boost post-pandemic potential growth. They concurred that priority should be given to reducing labor skill-mismatches, promoting digital transformation, and ensuring a level playing field, particularly for SMEs. The Directors welcomed continued efforts to improve economic institutions and strengthen governance.
State Audit Office of Vietnam successfully fulfills role as ASOSAI Chair
The State Audit Office of Vietnam (SAV), as Chair of the Asian Organisation of Supreme Audit Institutions (ASOSAI) in the 2018-2021 term, has carried out a lot of important and effective audit activities which have gained praise from regional and international audit agencies.
Talking to the Vietnam News Agency (VNA), Auditor General Ho Duc Phoc highlighted the efforts made by the SAV as the ASOSAI Chair to lead the 14th ASOSAI Assembly to adopt the Hanoi Declaration with a meaningful message of “Environmental Audit for Sustainable Development” in 2018.
Right after the declaration was approved, the SAV actively worked with the National Audit Office of China – the ASOSAI Secretary General – to build the organisation’s Plan of Action for the 2018-2021 tenure, with five main tasks: Auditing newly-emerging issues, response to climate change and environmental pollution challenges in the regional and global scales, the fourth Industrial Revolution and digital transformation, the role of Supreme Audit Institutions (SAIs) in successfully implementing national targets and programmes, and increasing knowledge sharing and improving the audit capacity of SAIs.
Being aware of the risk of losing water sources security, sea level rise and saltwater intrusion which are seriously affecting the Mekong River in general and Vietnam’s Mekong Delta in particular, the SAV chaired cooperative environmental audit on water management in the Mekong River Basin in combination with the implementation of Sustainable Development Goals (SDGs).
With its high determination, the SAV has received consensus and engagement of the SAIs of Thailand and Myanmar, as well as technical assistance from prestigious international experts, the World Bank, and the SAIs of Indonesia and Malaysia.
On December 22, 2020, thư SAIs of Vietnam, Thailand, and Myanmar signed a statement of commitments and terms of reference for the cooperative audit, agreeing on an action plan for its organisation.
Accordingly, they pledged to focus on identifying the responsibilities of related countries in the implementation of the SGDs, and assess their contributions to commitments on water sources management, use, and protection in the Mekong River basin.
In addition, the SAV initiated and produced a documentary film “ASOSAI for sustainable development”, which will be screened at the 15th ASOSAI Assembly in Thailand this year. The film, which has received enthusiastic support from members of the ASOSAI’s Governing Board, aims to popularise and acknowledge ASOSAI’s contributions to promoting and realising sustainable development goals under the Hanoi Declaration.
Along with the ASOSAI, the SAV has actively and responsibly participated in activities of the International Organisation of Supreme Audit Institutions (INTOSAI) as a representative of its Regional Working Group.
To become a model regional working group and boost inter-regional cooperation, the SAV has represented ASOSAI to attend the 11th Assembly of the Caribbean Organization of Supreme Audit Institutions (CAROSAI) and the 23rd INTOSAI Assembly in Russia.
In 2020, amidst the COVID-19 pandemic, many international cooperation activities were postponed and cancelled. The SAV actively adjusted activities and organized them in the online format. Of note, it successfully hosted the 55th meeting of the ASOSAI Governing Board via videoconference, which was appreciated by member SAIs.
The ASOSAI, founded in 1979, pursues a common mission like other working groups of the INTOSAI, that is “Professional supreme audit institutions promote good State governance” and with the core values of “Professionalism, Cooperation, Equality, Creativity”.
The ASOSAI’s goal is to promote mutual understanding and cooperation among member SAIs through the exchange of ideas and experience in public auditing, creating favourable conditions for the training of State auditors to improve working quality and efficiency.
The SAV became a member of ASOSAI in 1997. In the first period of the membership, the SAV mainly sent auditors to attend training courses and workshops sponsored by ASOSAI to enhance professional capacity. Since 2010, the SAV has undertaken a more active role in professional activities of ASOSAI./.
Source: VNA/VNS/VOV/VIR/SGT/Nhan Dan/Hanoitimes