VIETNAM BUSINESS NEWS MARCH 19
Animal feed imports soar in first two months
In the first two months of this year, the total import turnover for animal feed and materials reached $650 million, signifying an increase of 26.2 per cent on-year, according to statistics published by the Ministry of Industry and Trade.
While Vietnam's agricultural production and livestock sectors have been growing from strength to strength, it has been largely ignoring securing local material sources to produce animal feed. Thus, about 70-80 per cent of materials are imported from overseas. The import turnover of these goods ranked first among the import goods in the agricultural sector.
The reasons for this are the lack of supply sources and the higher price of domestic materials compared to import goods.
In 2020, Vietnam’s total import turnover of these goods was $3.84 billion, up 3.75 per cent on-year, while export turnover was only $800 million.
The two main import markets of Vietnam are Brazil and Argentina with sweet corn ($584 million)in 2020 and animal feed ($391 million).
The lack of proactivity in meeting the demand for these materials opens the industry up to potential price fluctuations.
In general, animal feed makes up 70 per cent of the production cost of livestock, thus an increase in material prices will push the price of domestic livestock products over imported products.
Statistics published by the Ministry of Agriculture and Rural Development showed that Vietnam currently has 265 animal feed manufacturing factories, 85 of which are invested by foreign enterprises.
PM hosts Vietnam-ASEAN Economic Cooperation Development Association delegation
Representatives from the Vietnam-ASEAN Economic Cooperation Development Association (VASEAN) have asked for stronger support from the Government and Prime Minister Nguyen Xuan Phuc for the business community to overcome difficulties brought about by COVID-19 pandemic and recover and expand production, during a meeting with the PM in Hanoi on March 18.
They lauded the Government’s efforts in controlling COVID-19, which has helped maintain production and business activities, while showing hope for more favourable conditions in terms of mechanism and policies related to land use and credit, as well as smoother business and investment environment.
Formed in 2008 under the initial name of Vietnam-Laos-Cambodia Economic Cooperation Development Association, the VASEAN groups Vietnamese businesses, scientists, individuals and organisations operating in areas related to economic, investment, trade and tourism cooperation between Vietnam and ASEAN member countries as well as other partners including Japan, China, the RoK and India.
Over the years, the association has helped its members explore ASEAN market, while contributing opinions to the State’s policy-making.
Speaking at the meeting, PM Phuc said that Vietnam has managed to overcome difficulties in all fields, especially those brought by COVID-19 pandemic and natural disasters, thus successfully implementing the twin target, posting high growth and integrating deeply into the world.
He noted that Vietnam has signed the Regional Comprehensive Economic Partnership (RCEP), opening up a massive space for cooperation. Meanwhile, the country has ensured stable macroeconomic situation and the people’s living conditions, he said, adding that the country’s higher position, stable socio-economic situation and people’s solidarity are good conditions for businesses.
Lauding the achievements of the business community, he underscored that the Party and State have given optimal conditions for people and enterprises to develop, while protecting their legitimate rights.
The PM stressed the significance of promoting ties with ASEAN countries, especially in economy, asserting that this greatly depends on the dynamism of businesses. Last year, Vietnam successfully hosted the ASEAN Summit, he said, adding that cooperation chances with the association remain abundant.
He suggested that Vietnamese businesses carefully explore these markets to design sustainable business strategy.
He affirmed that the Government will work to further improve the investment environment, and asked the business community to contribute recommendations on relevant mechanism and policies.
The PM also showed his hope that VASEAN members will help connect Vietnam and partners in ASEAN region and the rest of the world./.
Adjusted planning of Mong Cai Border Gate Economic Zone approved
The Mong Cai Border Gate Economic Zone in the northeastern province of Quang Ninh is set to become a key border gate economic zone of Vietnam under a recently amended overall planning scheme on its development until 2040.
According to the planning scheme, with revisions approved by the Prime Minister on March 16, the zone covers 17 communes and wards of Mong Cai city and Quang Ha town, along with Quang Minh, Quang Thanh, Cai Chien, and Quang Phong communes of Hai Ha district.
It will be built into a national key border gate economic zone as well as an important economic development centre of the northern region, the northern coastal economic belt, and the Kunming (China) – Hanoi – Hai Phong – Mong Cai – Fangcheng (China) economic corridor.
The planning scheme looks to turn this zone into a centre of cross-border trade, industry, seaport, logistics, and general services of Quang Ninh province and the northern key economic region; a national tourism site; a modern and sustainable coastal city; and a zone holding special importance in terms of national defence and security.
By 2030, the Mong Cai Border Gate Economic Zone is expected to have a population of about 310,000 – 320,000 and attract 5 – 6 million tourist arrivals annually. The respective figures are set to reach 460,000 – 470,000 and 8 – 9 million by 2040./.
HCM City to focus on reviving tourism sector
One of HCM City's top priorities in 2021 will be support for the hard-hit tourism sector, according to Deputy Chairwoman of the city People’s Committee Phan Thị Thắng.
At a recent meeting with the Department of Tourism and travel agencies, Thắng said the sector should develop new signature tourism products this year.
Nguyễn Ánh Hoa, director of the Department of Tourism, said that tourism promotions are encouraging local residents to buy tours at prestigious service providers to avoid low-quality products.
She pointed out that the health of local tourism businesses in the first three months of the year was "very weak".
Hoa proposed that the Government continue tax payment extensions and tax reductions for value-added tax and corporate income tax. It also said that businesses should try to access preferential loans and restructure their repayment periods.
About 90 per cent of small and medium-sized tourism businesses and inbound travel agencies in the city have temporarily stopped operation because of the impact of the COVID-19 pandemic, the department said.
Only 40-50 per cent of local tour guides and 10 per cent of foreign tour guides now have jobs. All of them are official staff of the remaining travel agencies, while freelance tour guides have switched to other jobs.
Lại Minh Duy, vice chairman of the HCM City Tourism Association, said he was worried about the small number of tourism agencies in the city.
“Tourists from the central and northern regions have paid a lot of attention to new destinations. So the city should promote attractive destinations in city districts, especially in Thủ Đức City and Cần Giờ District," he said.
Duy added that the Department of Tourism should also work with the Department of Industry and Trade to launch more shopping promotions linked to destinations.
Nguyễn Đông Hòa, deputy general director of Saigontourist, said the company has conducted a field trip to Thiềng Liềng Island in Cần Giờ District, a new potential tourism site, but has faced difficulties in developing new products.
He asked for financial support from the city while the company waits for Government support.
Thắng said that the city had conducted many field trips to local heritage sites, but noted that they were not set up to serve tourists.
“It’s necessary to do research and develop signature products as a way to help businesses lure more tourists,” she said.
Thắng asked the department to arrange tourism and cultural events during a safe period. “If the tourism sector organises activities well, other fields will be better as well.”
The total number of international visitors to the city in 2020 was 1.3 million, down 84.8 per cent year on year, while the number of domestic travelers was 15.8 million, a decrease of 48.45 per cent year on year.
Total tourism revenue was estimated at VNĐ84.5 trillion (US$3.66 billion), down 39.66 per cent compared to 2019.
The city targets having 33 million tourists this year.
Covid-19 wipes out nearly VND1 trillion in Halong Bay’s entrance fee revenue
Due to the impact of the Covid-19 pandemic, the revenue earned from entrance fees to visit Halong Bay in Quang Ninh Province in 2020 plunged nearly VND1 trillion against that of 2019 to reach only some VND230 billion.
The bay is suffering from the worst revenue on record in the past 20 years, as it saw its revenue reaching a mere VND1.8 billion since the beginning of the year to date, reported Thanh Nien newspaper.
Though the pandemic remains complicated, the management board of the bay has been tasked with earning VND600 billion in revenue from entrance fees this year, said Pham Dinh Huynh, deputy head of the management board.
After Quang Ninh allowed tourism activities to resume from March 2, several days later, Halong Bay still failed to welcome tourists as locals were worried about the coronavirus. On March 8, visitors were offered free entry to the bay and it was also the busiest day so far when it served nearly 100 guests, he said.
Meanwhile, this world heritage site would see up to VND6 billion in daily revenue from entrance fees on peak days before Covid-19, with around 30,000 visitors per day.
To attract more tourists to Halong Bay and other tourist hotspots in Quang Ninh when the coronavirus outbreak in this northern province has been brought under control, the province has introduced many tourism stimulus programs, targetting visitors from the Central, Central Highlands and Southern regions.
VNR plans new railway stations to increase connectivity
State-owned railway giant Vietnam Railways is planning to build new railway stations, warehouses, and logistics areas to increase connectivity with industrial parks and other means of transport.
The Nghe An provincial People’s Committee last week worked with the working group of Vietnam Railways (VNR) led by chairman Vu Anh Minh to discover possibilities of increasing connectivity of railways with key production areas, import-export areas, and other means of transport.
The North-South railway network runs through 52 wards in Hoang Mai, Quynh Luu, Dien Chau, Nghi Loc, Hung Nguyen, and Vinh city of Nghe An with a total length of 95.5km long.
At present, the rail has 1m gauge which means its capacity is limited, while the stations and the tracks were built decades ago. Worse still, railway stations do not have a goods yard or big warehouses to meet the growing demand for transportation, unloading and loading, and storage.
Specifically, in Vinh city, there are no railway stations featuring large enough goods yards for container loading and unloading. Meanwhile, based on statistics from Nghe An province, in 2020, 99,654 tonnes of cargo and 116,994 passengers were transported via railway in the province, with revenue of VND48.171 billion($2.1 million), equal to 51.1 per cent of the figure from 2019.
In order to improve the situation, VNR and Nghe An authorities studied the areas where goods yards, warehouses, and logistics areas could be constructed so as to increase connectivity with local industrial parks and economic hubs, as well as with other transport infrastructure like roads and ports.
The two sides made fact-finding trips to Sy, My Ly, and Vinh railway stations, as well as Nam Cam Industrial Park. They also visited the areas that were put forth to build Do Dao and Nghi Long railway stations under the project on upgrading the Hanoi-Vinh railway line.
After the meeting, VNR will work with Nghe An People’s Committee on completing the procedures related to the scheme on the management and operation of state-funded railway infrastructure before submitting it to the prime minister for approval.
SMEs supported in accelerating digital transformation
The Digital Transformation Alliance for Small- and Medium-sized Enterprises (DTS) and the MCV Group signed a cooperation agreement on March 16 on supporting small- and medium-sized enterprises (SMEs) to promote digital transformation.
A digital transformation department to support SMEs in the fields of communications and TV has now been established.
DTS and the MCV Group also signed a strategic cooperation agreement with the Vietnam E-commerce Association (VECOM) to begin a chain of activities this year.
The first cooperation programme will be a reality TV show to promote online business and e-commerce, which will be consulted on by DTS and VECOM and produced by the MCV Group. It is scheduled to debut at the end of the second quarter.
Chairman of the MCV Group Pham Tu Liem said cooperation to support digital transformation in SMEs is an important step for all parties in their upcoming operational strategies.
Based on building a sustainable relationship, the three sides will jointly coordinate to promote the development of a diverse range of solutions in the field of complete digital transformation for the TV industry and SMEs in Vietnam, he said.
According to DTS Chairman Leon Truong, the internet and social networks are thriving and TV digitalisation is key for businesses operating in the field.
DTS therefore wants to promote its strengths as a collector of digital transformation ecosystems to support Vietnamese businesses, helping them improve their competitiveness in domestic and international markets.
VECOM Vice Chairman Nguyen Ngoc Dung said the cooperation between VECOM, DTS, and MCV will complement each other’s strengths.
DTS will provide technology platforms, VECOM will provide supply chains and online-offline support ecosystems, while the MCV Group, with its digital TV, will create visual images, thus improving consumer confidence in products and promoting purchasing decisions, he added./.
Covid-19 leaves business suffering at HCMC's busiest backpacker street
Bui Vien walking street, the most popular hub of entertainment for foreign backpackers in District 1 HCMC, is still largely deserted despite the pandemic being relatively contained within the region, leaving local business owners and small traders on the verge of bankruptcy.
Bui Vien walking street, or “Westerner street” as the locals call it, at its best used to see some 2,000-5,000 visitors each night. Now there are at most 7 people on the side of the street on a regular weekend.
Having mostly provided services to foreign visitors, restaurant and hotel owners at Bui Vien were left hanging by a thread as the epidemic limited travel across the world.
Talking to Vo Quoc Thanh, the owner of 3 bars and restaurants in the area, SGGP reporters learned that many establishments like his tried to switch professions, offering breakfast and lunch and other street food that might be more appealing to regular folks.
“It’s not been really effective though; this area has been associated with foreigners and tourists that are willing to spend, so people assume our current prices are also inflated”, Thanh remarked.
Phuong, the owner of a nearby pub, lamented: “Before 2020 we usually had to take up one-third of the street just to set up tables, and still there were not enough seats. Now all of our stuff is stacked in a corner collecting dust”.
Of the establishments to go out of business, the most surprising one according to the locals is Cong Coffee, a regular on must-visit lists across domestic social media which have also succumbed to profit loss as Covid-19 raged on.
On the other hand, most business owners at Bui Vien said they had to shut down mostly because of high rent. Monthly rents could reach US$5,000 per unit, and though there are landlords who lowered the fee by 20% to 50% a month, not everyone can afford to keep their place open.
Not only the street-facing buildings, establishments across 600 meters of small alleys along Bui Vien street itself were major contributors to the area’s economics and have also taken a tumble. They offer everything from affordable street food and performance to body massage and homestay experiences.
Ha, who sells grilled ribs and chicken at the entrance to one of the alleys, told of the days she earned around VND 1.5-1.7 million every night (US$65-$73.6), enough to feed herself and her 4 children. “Now I make at most VND300,000 ($12.9) on an extremely good day”, she sighed.
There are 40 out of the 90 restaurants at Bui Vien currently out of commission due to mandatory lockdowns aimed at non-essential services, of which 10 have posted leasing ads at the time of this article. According to District 1 People’s Committee, of the 20 newly established businesses in the area, 8 shut down within the same year.
Vietnam trade ministry to select outstanding exporters in 2020
The move is aimed at creating favorable conditions for foreign traders to form partnership with their Vietnamese peers.
Given the significant contribution of Vietnamese exporters to a successful year of Vietnam trade in 2020, the Ministry of Industry and Trade (MoIT) along with the Vietnam Chamber of Commerce and Industry (VCCI) and other business associations have launched the annual selection process for “Credible exporters in 2020”.
The move is aimed at creating favorable conditions for foreign traders to form partnership with their Vietnamese peers.
The list of candidates for the title of Credible exporters in 2020 should be submitted to the MoIT for evaluation on April 20, 2021 at the latest.
Applicants having issue with tax authorities or violate environmental laws are not eligible for the selection.
Enterprises violating local laws and regulations, currently operating at a loss, in the dissolution process, or receiving warning from import countries would be excluded from the list of “Credible exporters” and ruled out for next year’s selection process.
Despite severe economic consequences from the Covid-19 pandemic, Vietnam continued to post positive trading performance in 2020 with a trade turnover of over US$500 billion for a second consecutive year. Of the figure, Vietnam exports rose by 6.5% year-on-year to US$281.5 billion, and was among economies with the highest export growth during the pandemic.
Vietnam granted permission to export edible insects to EU
Vietnam has become the fifth country in the world to be given permission by competent authorities of the EU to export insect-based food to the lucrative but demanding market, according to information released by the Ministry of Industry and Trade.
The Vietnamese Trade Office in the EU, Belgium, and Luxembourg, said that following a long period during which many documents were submitted to the Directorate-General for Health and Food Safety (DG SANTE), the country now meets the EU market access requirements and is allowed to export edible insects to the bloc.
The EU decision took effect on February 15, 2021.
Alongside Vietnam, Canada, Switzerland, the Republic of Korea, and Thailand have been approved by the EU to ship their similar products to the bloc.
Many nutritionists have stated their belief that insects will become the food reserve of the future, adding that the EU giving approval to Vietnam will create a breakthrough within the European food industry.
Agriculture, aquaculture businesses focus on growing their own raw materials
More and more agriculture and aquaculture businesses are setting up their own farms rather than rely on imports for raw materials.
TH Group has for instance been building a hi-tech dairy cow farm and milk processing plant in An Giang Province since the end of February. When completed, it will be the largest closed-loop dairy cow farming project in the Mekong delta with around 10,000 cows.
Other dairy companies too have been investing in farms, boosting raw milk production by 12.9 per cent last year to 1.1 million tonnes.
TH is also developing a hi-tech co-operative model to work with dairy farming households in An Giang.
Fruit processing businesses are working with farmers to ensure regular supply and satisfy foreign markets' requirements with respect to origin. Farmers have their fruits bought at high prices. Vina T&T, for instance, is buying star apples at VND40,000 (US$1.73) per kilogramme, doubling the market price.
Trung An Hi-tech Agriculture JSC is working with farmers in Kien Giang and Can Tho to grow 1,400 hectares of organic rice, guaranteeing them much higher prices than the market.
Pham Thai Binh, general director of the company, told Nguoi Lao Dong (Labourers) newspaper that the most important factor for successful co-operation is guaranteeing farmers’ incomes.
Pham Ngoc Hoang, general director of Hoang Ha Commerce and Production Company Ltd, said small farming households account for a large part of Viet Nam’s agriculture, but export markets demand consistent quality and absence of chemical residues.
Businesses need to work with farmers to buy raw materials, but there should be policies to ensure certain crops are not overly farmed, which will keep output under control and ensure businesses collaborate with farmers, he added.
The first two months of 2021 saw exports of agriculture, forestry and aquaculture products rise by 16.6 per cent year-on-year to US$6.17 billion.
Exports of agriculture, forestry and aquaculture last year were worth $41.2 billion, partly due to the development of specialised farming areas that allow large-scale production and traceability of origin.
HCM City industry-trade department to focus on revival of businesses in 2021
Helping businesses revive production and trading is one of the important tasks that HCM City’s industry and trade authorities will focus on in 2021.
According to the city Department of Industry and Trade, the city’s index of industrial production (IIP) grew by 6 per cent in the first two months of the year, despite a fall of 24.6 per cent in February as business establishments closed for the Lunar New Year.
The recovery in industrial production, retail sales and import-export activities has been due to the Government’s effective control of the Covid-19 pandemic and programmes to revive the economy, said Bui Ta Hoang Vu, the department’s director.
The department has also implemented programmes to support enterprises, stimulate consumption, connect producers and distributors, stabilise the market, and ensure consumer demand is fully met, he said.
To ensure the revival continues, the department will organise more trade promotion programmes, make efforts to connect suppliers and distributors of goods and enhance supply chain linkages in supporting industries.
It will continue a programme that connects businesses with banks and enables them to get preferential loans.
It will recommend measures to support firms involved in the city’s key industrial products in 2021-25 and those whose products have won the HCM City Gold Brand Awards.
Implementing the annual market stabilisation programme and trade promotions to help businesses expand their share of the domestic market is also in the department’s plans this year, as is working closely with business groups to promptly mitigate difficulties faced by their members.
This month the department organised a meeting between businesses and the city administration to discuss the former’s problems and solutions.
It is implementing a programme to promote rapid growth of the city’s key economic sectors that have high added-value, supporting industries and four key industrial sectors in 2021-25.
The programme also seeks to help develop the city into the country and region’s main shopping hub, and improve its services infrastructure to ensure it retains its position as the main centre for port operations, logistics and export services in the south.
It has urged the People's Committee to help expand a centre for displaying the city’s major supporting industrial products so that small and medium-sized enterprises can introduce their products and production capacity to local and foreign partners.
It said the expansion of the centre would facilitate regular interaction between sellers and buyers of supporting industry products, making it easier for foreign investors to access the Vietnamese supply chain, helping promote the country’s supporting industries.
It also urged the People’s Committee to seek approval from the People's Council and pass regulations on loan interest support for the investment stimulus programme.
Businesses are very keen to participate in the city's investment stimulus programme, especially those in the supporting sectors, according to the department.
Tourism reform possible for Danang
The bartering away of hotels and tourism residences in the central city of Danang is still lingering, triggering the need for tourism residences to optimise efficiency.
Danang’s tourism boomed from 2017 but the pandemic has inevitably created debate about the next steps
Le Thi Thuy Tien, a real estate broker in Danang told the VIR that she has been constantly receiving orders from business partners to sell small- and medium-sized hotels.
“Since mid-2020, I have received many orders for hotels and condotels but there have not been any transactions finalised yet. Currently, investors show an appetite for land plots and apartments, but are not so keen on hotel investments,” Tien said.
Tran Thien Thanh, the owner of a small hotel in the city’s Son Tra district, shared that in 2017 he and his sister splashed out nearly VND90 billion ($3.9 million) into building the 50-room facility.
Booming tourism growth at that time had led to an investment fever resulting in the building of many tourism residences in the city. During 2017-2019, the city’s room occupancy often surpassed 90 per cent at peak times and exceeded 50 per cent during off-peak periods. The tourism sector’s revenue during the period could not only ensure stable hotel operations but also sufficiently cover bank interest and more.
Since the emergence of COVID-19, due to a sharp plunge in the number of visitors as well as revenue streams, Thanh is seeking a business partner to transfer his hotel.
“Previously, each day we received 20-25 visitors on average. From last year up to now, our hotel only has a few customers, so that we had to temporarily close the hotel and save costs. But the pressure to pay back loans is huge,” said Thanh, adding that long-term closures might result in a quick depreciation of the material base, making it even harder to find a buyer.
A new wave of selling out hotels and tourism accommodations commenced from mid-June in Danang when the health crisis broke out again in the country. On-sale residences were mostly hotels below the 3-star grade, concentrated along coastal ring roads like Ha Bong, Duong Dinh Nghe, Phan Ton, and An Thuong which were built during the 2017-2018 tourism boom in Danang.
According to Le Dung, business director at the privately-held Thien Thai Hotel and Tourism JSC, most hotels on sale were built amid the coastal real estate boom, resulting in inflated costs.
“The initial cost of hotels below the 3-star rating built during 2017-2018 was very high due to inflated land values at that time. Lost business efficiency due to the current health crisis has exacerbated investor difficulties,” said Dung.
Meanwhile, Nguyen Duc Quynh, deputy general director at Bac My An Resort JSC assumed that the pandemic, on one hand, has cast adverse impacts on market development. On the other hand, it brings the opportunity to restructure the scale of tourism residences, making them more professional and diversified.
Echoing this mindset, Cao Tri Dung, chairman of the Danang Tourism Association, said that now is the perfect time to screen and restructure the segment of tourism residences.
Dung recommends the owners of tourism accommodations to change the function of residences or transfer their property to new owners with financial wealth who have a specific customer base to diversify customer groups, as well as improve service quality and corporate governance.
“The government is striving to carry out vaccinations for all people in the forthcoming time. This is a good sign for the local tourism industry as a rebound of travel demand would facilitate hotel business revival,” Dung said.
According to a recent report by Danang People’s Committee, more than 250,000 visitor arrivals used tourism residences in the city in January 2021, down 65.6 per cent on-year.
Electronics fuelled Vietnam’s expanding exports
Over the past few years, deep international integration has enabled Vietnam to expand its exports, with electronics taking the lead in the structure of export goods, especially amid the health crisis.
A few days ago, general director of Samsung Vietnam Choi Joo Ho visited the north-central province of Thanh Hoa to hunt for investment opportunities for the group, which is turning Vietnam into its largest mobile phone manufacturing base in the globe.
Ho highly values the province’s geographical and traffic conditions in addition to an improved business climate. He said that Samsung will help Thanh Hoa attract further investment.
In last December, Ho also worked with authorities of the northeastern province of Quang Ninh towards the same purpose.
At present, Samsung is pouring its investments in the northern provinces of Bac Ninh and Thai Nguyen, and Ho Chi Minh City, with total investment capital of over US$17.5 billion, employing more than 160,000 local workers. The group is also now constructing a US$230 million research and development centre in Hanoi.
Ho also visited the Dong Mai Industrial Park in Quang Ninh, which covers 168 hectares and currently boasts 18 investment projects registered at more than US$350 million.
It is expected that if Samsung expands investments in Vietnam, it will continue to increase its exports to foreign markets, further contributing to Vietnam’s export picture.
Last year, the total export turnover of Samsung Vietnam hit about $57 billion – or 20.2 per cent of Vietnam’s total export turnover. This was an important milestone for the company as one of its most important branches, Samsung Electronics, aims to become the largest chip manufacturer in the industry, targeting a value of around $400 billion in the global market.
Samsung Electronics, one of the largest conglomerates of South Korea, along with many other economic groups, has been raising its investment in Vietnam for many years, driven mostly by low taxes, cheap labour, and good land incentives.
With the contributions of Samsung, Vietnam’s export picture is now being dominated by foreign-invested enterprises (FIEs) which accounts for 69 per cent of the country’s total export turnover, according to the Ministry of Industry and Trade.
This has contributed to bringing Vietnam into the group of the few countries still achieving positive economic growth during the first year of the pandemic, as well as maintaining a trade surplus of nearly US$1.29 billion in the first two months of 2021.
Implementing the proactive policy about international economic integration of the Party and the state, Vietnam has expanded and deepened its relations with many nations step-by-step. It has also actively and responsibly partaken in international forums and organisations.
Notably, in recent years Vietnam has boosted the negotiations and inking of some free trade agreements (FTAs). To date, the country has joined 17 FTAs including seven inked as a member of ASEAN (CEPT/AFTA – which is the existing ASEAN Trade in Goods Agreement, and FTAs between ASEAN with China, South Korea, Japan, India, Australia and New Zealand, and Hong Kong); eight FTAs signed bilaterally with Chile, Japan, the Republic of Korea, the UK, and the Eurasian Economic Union (Armenia, Belarus, Kazakhstan, Russia, and Kyrgyzstan); the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), the EU-Vietnam FTA (EVFTA), and the Regional Comprehensive Economic Partnership (RCEP); and two FTAs currently under negotiations including the FTA with the European Free Trade Association (EFTA), and the Vietnam-Israel FTA.
These trade deals have and will greatly benefit Vietnam’s economy in general and exports in particular. For example, The EVFTA has a scale accounting for 30% of global GDP, while the RCEP is similar with 2.2 billion consumers, taking up more than 30% of global GDP.
Only accumulating these two regions, Vietnam has penetrated the economic sector with GDP accounting for 60% of global GDP with extensive and continuous tariff reductions with commitments to open markets for Vietnamese products, services and goods in the direction of transparency, openness and convenience with open commitments in all areas. Not to mention, the signing of FTAs also contains reforms of the economy.
According to updated figures from the Ministry of Planning and Investment (MPI) recently reported to the government, since 2011, Vietnam’s export turnover soared from US$93.6 billion in 2011 to US$263.5 billion in 2019.
Last year, despite massive difficulties caused by COVID-19 in the whole global market, the figure hit US$282.65 billion, in which Vietnamese firms earned US$78.2 billion – accounting for 27.8% of the economy’s total export turnover, with foreign-invested enterprises having raked in US$204.45 billion including crude oil exports – taking up 72.2% of the country’s total export value.
“Vietnam has been boosting its international economic integration in all levels, and gradually participating in the global production network and supply chains,” said an MPI report. “A rapid rise in export turnover has become an important driving force for the country’s economic growth over the past many years.”
In the entire 2011-2020 period, the export turnover has increased by 3.01 times, helping improve Vietnam’s export rank in the world’s export-import map. Specifically, the rank was 50th in 2007 before climbing to 27th in 2017.
According to experts, Vietnam’s exports have shifted from relying on crude oil to focusing on electronics. However, the fact that this sector lies mainly in the hands of FIEs has a large impact on the country’s export growth.
While in 2010, exports of phones and spare parts thereof only accounted for 3.2% of the total export turnover, by 2020, this sector ranked first among six commodity groups with a turnover of more than US$10 billion. The export value of this group in the first two months of this year was already estimated at around US$9.3 billion, accounting for 19.2% of the total export value, representing a 22.8% rise compared to the corresponding period of last year.
Meanwhile, Vietnam’s import turnover soared from US$105.8 billion in 2011 to US$253.5 billion in 2019 and US$262.7 billion in 2020, focusing on the commodities in service of production and exports, as well as investment projects in the sectors of energy and electronics. The MPI said that imports of this group of commodities always account for more than 90% of Vietnam’s total import turnover.
For example, in order to earn such a big export turnover of $57 billion last year, Samsung also spent dozens of billions of US dollars importing materials and equipment into Vietnam for its production.
These achievements have created an improvement in the trade balance, from a deficit of US$9.8 billion in 2011 to a big surplus of US$9.94 billion in 2019 and US$19.95 billion last year.
“Such a big trade surplus has enabled Vietnam to have a bigger foreign exchange reserve, facilitating the State Bank of Vietnam to perform it activities to stabilise the market, and making an important contribution to maintaining the stability of the economy’s macro-economic indexes,” the MPI report said.
In the first two months of this year, with many developed countries still struggling with the pandemic, Vietnam has maintained a trade surplus of close to US$1.29 billion, in which Vietnamese businesses suffered from a trade deficit of US$4.14 billion and FIEs earned a trade surplus of US$5.43 billion including crude oil exports.
Vietnam looks forward dynamic and effective collective economy
The Prime Minister has recently approved the Collective and Cooperative Economy Development Strategy for the 2021-2030 period with the aim of promoting a dynamic, efficient and sustainable collective economy.
Under the strategy, the collective economy is expected to become an important component of the national economy with various cooperation models to improve the income and quality of life of its members.
Vietnam strives to have approximately 140,000 cooperative groups with 2 million members, 45,000 cooperatives with 8 million members, and 340 cooperative unions with 1,700 member cooperatives by 2030.
Of which, 60-70% of the cooperatives are anticipated to operate effectively.
Vietnam will also promote the application of high technology in agriculture and try to have over 5,000 cooperatives and 500 cooperative groups applying high technology in the production and consumption of agricultural products.
About 50% of cooperatives are expected to link with businesses through value chains.
The Strategy also encourages the development of collective economy in all industries and areas with the association with main products of localities and One Commune One Product (OCOP) goods.
Expectations from “Dialogue 2045”
“Dialogue 2045” was officially initiated with the first conference chaired by Prime Minister Nguyen Xuan Phuc at the Thong Nhat Conference Hall in Ho Chi Minh City on March 6. The event will be held annually for Party and State leaders to listen to the opinions of entrepreneurs and intellectuals regardingbuilding Vietnam into a developed and high-income country by 2045.
This year's dialogue discussed major issues in the country, including people and technology, digital transformation, institutional reform, facilitation of production and business, human resource development, environmental protection, cultural preservation, and others.
The discussions covered new issues arising from the Fourth Industrial Revolution such as technology and digital transformation. The remaining issues were not new, but need to be handled in accordance with the new position of Vietnam, a country with a growing scale and enhanced role in the global arena.
Currently, the scale of Vietnam's economy is about US$343 billion, ranking it in the top of 40 largest economies in the world and fourth in ASEAN while per capita income is just over US$3,500.
To become a developed and high-income country by 2045, Vietnam must continuously maintain high growth over the next 20 years with per capita income soon exceeding US$12,000 per year.
This is a challenging target because as income gets higher, it will be more difficult to attain additional growth. However, Vietnam has the resources and the basis to turn its aspirations into reality.
It is important that the business community, the pillar of the country, must be oriented for development at new heights while not merely seeking profit but creatingnew values for society towards the sustainable development and common prosperity of the country. Enterprises and entrepreneurs must truly become a national resource.
Today, enterprises and business people have a special position, making significant contributions to national economic development.
The nation has more than 800,000 active enterprises. Ofthese, the private sector contributes about 42% of GDP and creates more than 50% of jobs in society.
Private enterprises not only invest in labour-intensiveindustries but they have also competed vigorously on the international market in industries that require large investment and resources such as software, aviation, and tourism. Vietnam also has business people listed in the world’s top dollar billionaires.
To realise the nation's aspirations, it is necessary to further promote the role of the private economy, making it truly become a powerful driving force for development.
At the same time, it is necessary to adjust mechanisms and policies to improve production and business efficiency and promote large resources that State enterprises are holding. Only when enterprises are strong, will the nation become prosperous.
A quarter of a century is long enough for Vietnam to create tremendous growth and the miracle of becoming a developed country on the occasion of the100th anniversary of the National Day and “Dialogue 2045” is an important forum aimed at contributing to that miracle.
Vietnam posts US$1.64 billion in trade surplus in Jan-Feb
Vietnam reported a trade surplus of US$1.64 billion between January and February, according to the General Department of Vietnam Customs.
The country’s exports amounted to US$48.74 billion, while it spent US$47.1 billion on importing goods in the first two months of the year, the local media reported.
From February 16 to 28, Vietnam shipped goods worth some US$10.2 billion, up 2.9% against the first half of the month. The country’s key export products comprised phones and phone parts, steel, computers and electronic items.
In the second half of February, the country’s imports totaled US$11.4 billion, up 23% from the first half of the month. The import of machines, equipment and tools rose by 22.9%, while the purchase of plastic materials soared by 61.7% against the figure seen in the first half of February.
In the January-February period, the country’s total import and export revenue grew by 24% year-on-year at US$95.85 billion. The foreign direct investment (FDI) sector remained the key player.
FDI enterprises shipped products worth US$37 billion, representing 75.9% of the country’s total export revenue. Meanwhile, they imported US$31.5 billion, accounting for some 67% of Vietnam’s total import turnover.
Binh Duong attracts nearly US$400 million in FDI in January-February
Despite the impact of the Covid-19 pandemic, Binh Duong Province still ranked among the top localities in the country in terms of foreign direct investment (FDI) attraction in the first two months of the year, as it saw nearly US$400 million in FDI, reaching 28% of its yearly target, according to the provincial government.
The southern province attracted 15 newly registered FDI projects with a total capital of US$257 million, six projects with their capital revised up by US$15 million and 26 projects with capital contributions worth over US$124 million, reported Bnews.
Up to now, foreign investors have invested in 17 sectors, with the majority of capital being injected into the manufacturing and processing industries, said Mai Ba Truoc, director of the provincial Department of Planning and Investment.
Although the pandemic has upended all aspects of socio-economic life, the provincial authorities have actively held online investment promotion events, enabling businesses to boost investment cooperation, Truoc added.
Also, through these events, the department collected feedback and suggestions from businesses, reviewed the land bank in the province and mapped out plans to attract investors for major projects as well as supported investors in facilitating investment procedures. Local competent agencies also made efforts to remove the obstacles facing investors.
To date, Binh Duong has attracted more than 3,900 FDI projects with total pledged capital of US$35.8 billion from 65 countries and territories. Of the total amount of capital, Japan took the lead with over US$5.7 billion in investment, accounting for 16%.
Vietnam’s exports of fishery products expected to soar by US$7 bn next decade
The local fishery sector is set to earn an additional US$7 billion in export revenue by 2030 compared to the figure of US$8.6 billion recorded in 2020, according to the sector’s strategic development plan until 2030 with a vision toward 2045.
Under the plan, which has just been approved by Prime Minister Nguyen Xuan Phuc, the country’s total output of fishery products is expected to reach 9.8 million tons during the period, including seven million tons of farming output and 2.8 million tons of fishing output.
Besides this, the sector is looking to offer jobs to over 3.5 million people as of 2030, with the average income of employees in fishery enterprises being on par with that of others nationwide.
Also, the fishery sector will be developed into one of the most important economic sectors in the country and in a sustainable and climate-resilient manner. Further, the sector is positioned to become a modern commercial economic sector and a fishery product deep processing center.
The Government also launched a program prioritizing the implementation of the plan. Specifically, during the 2021-2030 period, the infrastructure and logistics system for the sector will be upgraded.
At the same time, multiple national programs will be rolled out to preserve, protect and renew fishery resources, with an aim to restore fisheries with economic and research values.
Banks about to raise deposit interest rates
From the beginning of March this year, many commercial banks have started to raise their deposit interest rates, generally at 0.1-0.2 percentage points per annum. Of which, there are terms with an increase of up to 0.8 percentage points per annum.
Particularly, Techcombank increased by 0.2-0.5 percentage points of the interest rate at all terms from one to eight months. The interest rate of the 36-month term also soared sharply from 4.8 percent per annum to 5.2 percent per annum.
Similarly, the deposit interest rate of ACB for the two-month term inched up by 0.1 percentage point per annum. VPBank also uplifted the deposit interest rates for terms from two to five months by 0.2 percentage points for customers with savings from over VND300 million to below VND10 billion.
The deposit interest rates for savings from VND3 billion to below VND10 billion increased by 0.15 percent per annum for the two-month term and 0.1 percent per annum for the three to five-month terms. With the deposits of VND50 billion or more, the interest rates for the two to five-month terms also surged by 0.05-0.2 percent per annum, depending on each term.
However, the market record showed that this wave of the interest-rate hike has not spread widely because many lenders said that in the first few months of the year, credit demand is usually not high, and liquidity is still quite abundant, so many banks have not embarked in the race to increase interest rates to attract capital yet.
However, experts assessed that in the coming time, other commercial banks would also increase deposit interest rates to keep customers under the pressure of increasing interest rates of the market.
Along with that, in the context that the Covid-19 pandemic is under control, and the consumer price index in February rose sharply, the deposit interest rate will likely climb again shortly.
Prices of black pepper suddenly climb
In the past few weeks, the price of black pepper in the Southeast provinces had suddenly increased continuously and hit a record high.
Mr. Truong Dinh Ba, Chairman of the Farmers’ Association of Lam San Commune in Cam My District of Dong Nai Province, said that the current price of black pepper purchased by traders at the plantation ranges from VND70,000 to VND71,000 per kilogram, up nearly VND20,000 per kilogram compared to that at the beginning of the harvest season more than one month ago and VND34,000 per kilogram compared to the same period last year.
Dong Nai Province currently has a relatively large growing area of black pepper with 12,000 hectares. This province has determined that in the coming time it would support black pepper growers to build chains from clean production to consumption under the VietGAP standards for export.
Meanwhile, in Ba Ria-Vung Tau Province, the price of black pepper surged to VND73,500 per kilogram. It is the locality with the highest black pepper price in the country. The price of black pepper climbed by VND20,000 per kilogram in comparison with a month ago and VND35,500 per kilogram year-on-year.
In Binh Phuoc Province, the price of black pepper was at VND72,500 per kilogram, up VND20,000 per kilogram over the previous month, and VND35,500 per kilogram over the same period last year.
The price of this agricultural product rose strongly because the supply of black pepper dropped sharply. After three consecutive years of selling prices below production cost, farmers simultaneously chopped down pepper plants, reducing the growing area of black pepper. In addition, this year, unusual weather caused crop failure, reducing yield. It is forecasted that with the current market situation, in the coming time, black pepper prices will possibly continue to rise.
IMF: VN Successfully Navigating The Pandemic
The pandemic hit Viet Nam’s economy hard, but the nation has taken decisive steps to limit both the health and economic fallout, according to the International Monetary Fund (IMF)’s latest annual assessment of Viet Nam’s economy.
Swift introduction of containment measures, combined with aggressive contact tracing, targeted testing, and isolation of suspected COVID-19 cases, helped keep recorded infections and death rates notably low on a per capita basis, the IMF highlighted.
Viet Nam entered the pandemic with solid economic fundamentals and policy buffers, although some structural challenges remain to be addressed, the IMF’s annual assessment referred, adding that he country made considerable progress in consolidating public finances prior to COVID-19. The build-up of these fiscal, external, and financial buffers prior to the pandemic made Viet Nam more resilient to the shock.
The IMF suggested macroeconomic policies need to remain supportive in 2021 to ensure a resilient and inclusive recovery and policies should aim at reducing labor informality by improving labor skills and lowering hiring/firing costs for formal workers, and encouraging firm formalization.
A sustained recovery also hinges on safeguarding financial stability, the annual assessment stressed, adding that continued strong supervision, together with timely efforts to address problem loans and strengthen regulatory and supervisory frameworks, will help address financial system risks.
More decisive reforms are needed to make the most of Viet Nam’s considerable growth potential, the IMF recommended.
Meanwhile, priority should be given to improving the business environment and ensuring a level playing field for small and medium-sized enterprises, with reforms geared towards reducing regulatory burden faced by firms, improving their access to resources, enhancing governance and access to technology and innovation, and reducing skills mismatches.
Listed firms allowed to change their exchange
The new agreement will help cut short processing time for listed firms and prevent disruption to trading activities.
Hanoi Stock Exchange (HNX), Vietnam Securities Depository (VSD) and the Ho Chi Minh City Stock Exchange (HOSE) have agreed on procedures to change market from HOSE To HNX.
The move was revealed during an online meeting held on March 16 among the three stock exchange authorities in a bid to ease the overload issue on the HOSE.
Under the plan, all parties would set up a single procedure to process information, transfer data and optimize system operation, aiming to cut short of processing time and preventing any disruption to stocks transaction activities on the stock market.
On the same day, the HNX informed of receiving requests from public firms to leave HOSE, including Vietnam National Seed Group (HOSE: NSC), Bibica Corporation (HOSE: BBC) and Southern Seed Corporation (HOSE: SSC).
These three are the first to change their listings to the HNX under the instruction of the State Securities Commission of Vietnam (SSC) and the country’s stock market watchdog, which aims to address the issue of surging orders on HOSE that forced the stock exchange to halt market trading.
The overload occurred multiple times on HOSE whenever liquidity in a trading session hit around VND14-17 trillion (US$608-738 million).
An option to move to the HNX would not apply for stocks under the VN30 Index, comprised of the 30 largest stocks on the HOSE.
Source: VNA/VNS/VOV/VIR/SGT/Nhan Dan/Hanoitimes