Pham Hong Quat, head of the National Agency for Technology Entrepreneurship and Commercialisation Development, said the startups opted for technological solutions in calling for investment due to the pandemic. 

Domestic demand helps Vietnamese startups pilot their digital transformation products and come up with solutions which are expected to go global, he added.

As there is a need for those who are capable of turning technologies into business models in a bid to resolve specific issues of the market, startups and consultants are believed to play an important role. Support from major businesses will also enable Vietnamese startups to compete with their peers in regional countries.

This year, Vietnamese startups are projected to ride the wave of momentum in 2021. Once they recognise global solutions and trends in the post-pandemic period, they will be able to cope with and make breakthroughs, Quat said.

To facilitate the rapid development of the startup community, Quat underlined the need for coaches and consultants, adding that more policies are required to support startups that address global solutions.

Tech experts said that orientation for Vietnamese startups to resolve global issues is a focus of the national economic development facilitation at large and innovation in particular.

Startups are advised to collaborate with each other and join hands with major corporations, coaches and consultants so as to go global and obtain better achievements this year.

Anti-dumping investigation into cane sugar extended

The Vietnamese Ministry of Industry and Trade has decided to extend its investigation and application of measures against trade remedy circumvention on certain cane sugar products from some Southeast Asian countries.

Previously, the ministry on September 21, 2021 issued Decision No. 2171/QD-BCT on the issue on some cane sugar products originating from Cambodia, Indonesia, Laos, Malaysia and Myanmar.

The deadline for the investigation of the case will be May 21.

According to customs data, the amount of cane sugar imported into Vietnam from the five above-said countries from October 2020 to June 2021 rose sharply to 527,200 tonnes compared to 107,600 tonnes imported in the previous nine-month period.

Recognising the situation, the ministry has supported the Vietnam Cane Sugar Association and the domestic cane sugar industry in collecting information, data and preparing files requesting an investigation in this regard, in order to protect the rights and legitimate interests of domestic companies in the field.

Jollibee opens 150th store in Vietnam

Jollibee, one of fast food restaurant chains in Vietnam, has marked a new business journey with a commitment to speading endless culinary joy through launching its 150th store in Vietnam.

The new store was officially opened on March 19 at No. 254 Dong Da street, Thuan Phuoc ward, Hai Chau district, Da Nang city. It is also the seventh Jollibee store in the central city.

Jollibee is a world well-known famous brand for its product Chickenjoy with more than 1,500 stores operating in over 17 countries and territories around the world. It is a Filipino multinational chain of fast food restaurants owned by the Jollibee Foods Corporation (JFC).

The launch of the 150th store is a memorable milestone, and it is also an important step for the journey to become the leading Quick Serving Restaurant (QSR) chain in Vietnam by 2025.

Vietnam enjoys US$4.8bln in trade surplus with UK

Two-way trade between Vietnam and the United Kingdom rose 17% year on year last year to US$6.6 billion, of which Vietnam produced US$4,8 billion in trade surplus.

The impressive growth in bilateral trade was largely attributed to the enforcement of the UK-Vietnam free trade agreement (UKVFTA) in early 2021, experts agreed at a recent workshop reviewing a year of implementing the trade deal.

The UK is a large lucrative market with an import demand of over US$700 billion of goods per year. However, Vietnamese goods only account for less than 1% of the UK’s total imports.

There is ample room for Vietnamese businesses to exploit the UK market if they change and adapt to modern farming techniques and make good use of opportunities, said Dinh Cao Khue, Vice Chairman of the Vietnam Fruit and Vegetables Association.

More than 94% of the total of 547 tax lines for fruits and vegetables have enjoyed a tax rate of 0% since the UKVFTA came into force. Many of Vietnam’s tropical fruits such as dragon fruit, litchi, longan, mango, and passion fruit can compete well with similar products imported from South America or countries that do not have an FTA with the UK.

Quality is the No1 requirement if businesses want to ship the products in large quantity to this market, Khue

Country’s largest cashew growing province faces poor harvests, low prices

Farmers in the south-eastern province of Bình Phước have begun to harvest cashew but are facing poor yields and low prices.

The country’s largest cashew growing province had off-season rains when the cashew trees were blooming or just beginning to fruit, damaging them.

The nuts are now bought for VNĐ26,000 – 27,000 (US$1.1 – 1.2) a kilogramme, down VNĐ3,000 – 4,000 from a year ago.

Net-zero carbon emissions to create sustainable production, consumption in Viet Nam

At the 2021 United Nations Climate Change Conference (COP26), Prime Minister Pham Minh Chinh said that Viet Nam committed to reducing greenhouse gas emissions to achieve net-zero carbon emissions by 2050.

According to Nguyen The Chinh, director of the Environmental Economic Policy Institute, the commitment will be an important turning point for the country’s restructuring to gain a low carbon and green economy, which will also help the country achieve rapid and sustainable development as per the Party’s policies.

According to NIKE Inc’s chief sustainability officer Noel Kinder, by 2030, NIKE’s commitment is to reduce greenhouse gas emissions by 65 per cent in its owned or operated spaces, and by 30 per cent across its extended supply chain.

Footwear in Viet Nam could be produced by using clean energy, he suggested, adding the construction of a greener electricity system will also contribute to creating many quality jobs.

Manufacturers in Viet Nam are also applying greener criteria such as low-carbon materials, decarbonisation of supply chains and 100 per cent use of renewable energy in their production process.

The Ministry of Planning and Investment is currently drafting a national green growth action plan for the 2021-30 period, with a vision to 2050, to submit to the Government. The plan, which will be a premise for the net-zero carbon emission roadmap, provides orientations for building and implementing a circular economy model in industrial parks and craft villages.

The ministry expects the plan would open up opportunities for the development of green industries such as environmental consulting; environmental pollution control; waste management, recycling and reuse; and low-carbon goods and services.

Japfa Vietnam inaugurates new fattening swine farm in southern region

On March 14, Japfa Comfeed Vietnam Co., Ltd inaugurated a 48,000-head swine farm in Phu Rieng district in the southern province of Binh Phuoc.

The farm has an area of 40 hectares with a total investment of around $17.4 million to provide a safe and sustainable pork supply. With a scale of 24 barns and 48,000 heads capacity, Phu Rieng farm will supply more than 100,000 pigs, equivalent to more than 11,000 tonnes per year.

As one of the three strategic markets of the Japfa Group in Asia, Vietnam has been a priority in the group’s global expansion.

Supply challenges mount for pharmaceutical groups

The appropriate pharmaceutical ingredient inventory strategy helped Imexpharm (IMP), Vietnam’s fourth-biggest publicly traded drugmaker, to keep stable production and profit margin in 2021. While pharmaceutical ingredient factories in the world have resumed operations, the challenge is rising for IMP and other local top drugmakers in the Southeast Asian nation partly because fuel prices are growing day-by-day due to the Russia-Ukraine conflict.

Petrol has hit a record high in many countries because of the Russia-Ukraine situation. In Vietnam, it set an all-time record high when, on March 11, each litre of E5 RON costs VND28,985 ($1.26), while RON 95 hits VND29,824 ($1.23) per litre. In addition, according to experts, this year the price of raw ingredients is forecast to keep rising due to continuing pandemic impacts, thus affecting the global supply chain.

The country’s three largest publicly-traded drugmakers – DHG, Traphaco, and Domesco – are not an exception. DHG is predicted to face a lack of pharmaceutical ingredients this year and a source from the company said that logistics issues are also hindering transportation to Vietnam.

The drugmakers are focusing on diversifying their portfolio of products to gain competitiveness in tenders, thus ensuring sufficient pharmaceutical ingredients.

In 2021, Vietnam’s pharma firms faced interruption in the global supply chain, thus increasing ingredient costs. Despite the challenges, the top pharma firms performed better in 2021 thanks to changes in their business strategies, and set higher targets for 2022.

According to a Vietnam Report survey, 62.5 per cent of experts and businesses said that the industry’s growth in 2022 will be better than in 2021 and 12.5 per cent believe in its strong growth, while only 6.25 per cent said it will be worse. 

Pharma firms reveal stellar 2021 business

International pharma giants Novartis, Sanofi, Pfizer, and MSD had solid business performances during 2021, with a bumper year forecast for the whole of this year driven by vaccines and treatment pills.

Swiss healthcare company Novartis said that net sales were $51.6 billion for 2021, while operating income rose to $11.7 billion, mainly driven by higher sales and lower legal expenses and partly offset by increased marketing and sales, research and development (R&D) investments, and higher amortisation.

Novartis is focused on delivering on its pipeline and key technology platforms, which include over 20 potential assets with significant sales, to be approved by 2026.

The company has made remarkable progress in Vietnam in global clinical trials for 10 years with more than 50 studies and 1,000 local patients in various therapeutic areas. It also recently signed an MoU with the Ministry of Health to help Vietnam access its pandemic response portfolio at zero profit.

Similarly, French group Sanofi reported strong 2021 sales and business earnings per share (EPS) growth enabling increased investment in R&D. In particular, its full-year 2021 delivered 7.1 per cent sales growth to €37.76 billion ($41.2 billion).

Medical collaboration with Cho Ray Hospital

A collaboration between Cho Ray Hospital Oncology Center and a well-regarded international counterpart is set to help improve the quality of medical treatments, with Bayer Vietnam honoured to help facilitate this project.

Cho Ray Hospital Oncology Center in Ho Chi Minh City and Kaohsiung Chang Gung Memorial Hospital in Taiwan – medical institutions with similarly high levels of expertise – have announced the signing of a collaboration pact. The partnership aims to improve professional growth and enhance the quality of medical examinations and treatments in their respective public healthcare systems.

With years of experience in the field of oncology and a wide professional network among countries in the Asia-Pacific region, Bayer is proud to announce its role as a bridge connecting these two hospitals and is planning to organise multiple activities to support the alliance.

The signing ceremony took place at Cho Ray Hospital Oncology Center in Ho Chi Minh City at the end of February with the attendance of Dr. Lam Viet Trung, vice director of Cho Ray Hospital Oncology Center.

Following the ceremony, the two hospitals held a webinar hosted by Dr. Le Tuan Anh, director of Cho Ray Hospital Oncology Center, and Dr. Sheng-nan Lu, vice director of Chang Gung Memorial Hospital. Leading experts from both sides shared their latest methods and highlighted how proper treatment which, given at the right time, can greatly improve the outlook for patients.

Fresh woes for airlines in fuel costs

While hoping to rejoice over the imminent resumption of international flights, Vietnamese air carriers are being simultaneously hit with rising fuel prices due to the Russia-Ukraine crisis, and are urging local authorities to look into a financial bailout for them.

The Ministry of Finance (MoF) on March 10 finalised a draft resolution on decreasing the environmental protection tax for fuel after consulting with the Ministry of Industry and Trade and other ministries and agencies to partly ease difficulties for people and businesses.

Under the draft resolution to be submitted to the National Assembly’s Standing Committee for approval, the environmental protection tax for petrol is expected to be reduced by VND2,000 (9 US cents) per litre, while the reduction for diesel and lubricant will be VND1,000 (4 US cents) per litre; and VND700 (3 US cents) a litre for kerosene. The MoF also proposed the reduction to take effect from April 1 until the end of the year.

In the aviation sector, the cost structure includes fuel, mandatory maintenance of the fleet, labour, depreciation, and other services, of which fuel makes up 42-45 per cent. Meanwhile, most domestic airlines do not use any oil price defence tools like derivative contracts. Therefore, they would heavily suffer if fuel prices jumped higher than expected. Also, carriers cannot simply increase the rates for air tickets at this time because of fears of losing passengers.

Domestic air carriers experienced great hardship in 2021 as they suffered huge losses. According to statistics, the total number of passengers accommodated by local airports reached 30 million last year, equal to 40 per cent of that before the occurrence of the global health crisis. During the year, international commercial flights in and out of Vietnam were completely restricted.

Petrol prices pressure inflation

Inflationary pressure in Vietnam is increasing as local petrol production falls below expectations which, in turn, is affecting the consumer price index and putting pressure on macroeconomic stability.

According to the General Statistics Office, the consumer price index (CPI) in February increased by 1 per cent compared to January, and 1.42 per cent over the corresponding period in 2021. Core inflation in February also increased 0.49 per cent compared to January, up 0.68 per cent over the same period in 2021. In February, petrol prices increased by 47.07 per cent.

At the end of last year when preparing the economic recovery plan for 2022, the Ministry of Industry and Trade (MoIT) considered that the domestic petrol supply would meet about 70-80 per cent of the demand, leaving only 20 per cent to be imported, which was hoped to stabilise the macroeconomy, keeping inflation at 4 per cent by the end of the year.

However, the sharp drop in domestic supply ruined all plans. Vietnam’s local supply mainly comes from two refineries – Nghi Son, accounting for 35-40 per cent of the market, and Binh Son, making up about 35 per cent.

Rising prices of plastic materials put a burden on businesses

The price of plastic resin has increased sharply following the price of oil, putting pressure on plastic enterprises.

According to data from the global financial portal Investing, the price of polyethylene (PE) resin has increased by 10.4 per cent in the past three months, from December 9, 2021 to March 8, 2022. Similarly, the price of polypropylene (PP) resin has increased by more than 10 per cent.

Plastic resins are made from petrol products, typically PP and PE. Therefore, fluctuations in oil prices have directly affected the price of plastic resins.

Plastic resins account for about 60-70 per cent of the cost structure of plastic manufacturing enterprises, thus the current high prices of plastic resins lead to the increases in input costs of plastic enterprises.

In 2021, the price of input materials increased sharply by 1.6 times, making a record hike in history, which greatly affected the performance of the businesses in the industry.

Quang Binh plans investment promotion programme on March 25

Quang Binh People’s Committee will organise an investment promotion conference in Ho Chi Minh City on March 25 with the theme of adaptation and development.

The province is calling for investment in 62 projects. The list, which was approved by Quang Binh People’s Committee last week, focuses on agriculture, industry, energy, and trade, along with infrastructure development and tourism.

Among these projects are a $4 billion gas-fired power plant with a capacity of 3,000MW, the third phase of the Le Thuy 3 wind power plant worth $155 million, an $86 million vehicle assembly and production plant with an annual capacity of 50,000 units, the development of the $172 million Bang Industrial Zone, and the construction of the $33 million Hon La Non-Tariff Zone.

Revamping preservation technologies for Vietnamese fruit exports to EU market

On March 17, the inauguration of the smart cold cabin demo was held in Tra Vinh province, extending the prospects for Vietnam's agricultural exports to the EU market.

The project aims at establishing a logistic system in the Mekong Delta for the preservation and preliminary processing of fruit and vegetables prior to delivery to the Cai Mep-Thi Vai port complex and export to the European market.

After more than two years of active deployment, the project has been put into operation despite enormous hurdles.

During the first six months of the demonstration, the project will receive fruits from four farming collectives and an entrepreneur selected by the provincial authority and preserve products prior to being collected by cold trucks and transported to other locations.

Crucial La Gan wind venture opens Binh Thuan head office

The head office of La Gan Wind Power Development Corporation was officially opened in the south-central province of Binh Thuan last week, showing a commitment to the Vietnamese market.

The new office will play the role of the main headquarters for the La Gan offshore wind venture. It will mainly operate as the company’s administrative workplace and will be used to welcome representatives of local authorities, as well as other stakeholders interested in the project.

The La Gan offshore wind project in Binh Thuan is one of the first large-scale offshore wind farm ventures in the country, and is being developed by Copenhagen Infrastructure Partners and managed by offshore wind experts COP. The project is expected to power more than seven million households per year and help the country avoid the use of 130 million tonnes of CO2 emissions over its lifetime.

Resort and second-home segments move with times

With the flexibility to adjust business strategies and product types of investors, as well as the expectation that tourism will recover, resort and second home real estate promises to come back stronger.

According to DKRA Vietnam, the market could recover in most segments like townhouses and villas, second homes, and resort real estate. However, the latter only recorded a limited supply in the central provinces of Danang, Quang Nam, and Thua Thien-Hue.

The supply of resort villas last year was at more than 170 units, and only 24 per cent were purchased. Condotels, meanwhile, did not record any new projects for sale.

DKRA Vietnam forecasts that the new supply in 2022 may increase. In which, Danang could be the market that continues to lead in most areas, while Thua Thien-Hue continues to have a limited supply.

Both developers and investors are looking towards the second home segment of the central provinces. Converging many similar conditions in terms of geography, tourism potential, transport infrastructure, and socioeconomic factors, Thua Thien-Hue, Danang, and Quang Nam can combine values and create new development dynamics for the whole region.

Second-tier cities latch onto attention

Currently, real estate prices in big cities are anchored at a high level, so the profitability from this location is lower, causing investors to find opportunities in surrounding areas such as Hung Yen, Bac Ninh, Quang Ninh, and Haiphong in the north, and the southern localities of Dong Nai, Long An, Binh Duong, and Binh Phuoc.

Currently seven southern provinces that are receiving the most attention from buyers are Binh Duong, Dong Nai, Ba Ria-Vung Tau, Long An, Binh Phuoc, Can Tho and Kien Giang, according to DKRA Vietnam.

In which, Binh Duong is the locality that has received much search thanks to the development of the wave of industrial zones which causes high demand and absorption.

Real estate in Can Tho city has also continuously increased in price. In the past two years, house prices in the inner city have increased by 150-200 per cent. In the central areas of Can Tho, the price of land is up to VND70-90 million ($3,000 to $3,900) per square metre.

In Long An province, four districts with the real estate market receiving the most interest from investors are Can Giuoc, Ben Luc, Duc Hoa, and Can Duoc. In particular, the price of land in the central core area of Can Duoc can be up to VND55-60 million ($2,400 to $2,600) per sq.m, 30 per cent over the past two years.

Lenders tinker with FOL caps to enhance prospects

A number of local institutions are attempting to broaden their worldwide reach by creating further room for international financiers.

After increasing its ownership percentage in Sacombank to more than 5 per cent last week, Dragon Capital has emerged as the bank’s most substantial stakeholder.

Dragon Capital purchased an additional 1.25 million shares of Sacombank via affiliate Vietnam Enterprise Investments Ltd., raising the total number of the bank’s stocks from 93.9 million to more than 95.2 million.

In terms of Sacombank holdings among Dragon Capital’s member funds, Norges Bank boasts the largest ratio with roughly 18 million shares. Amersham Industries Ltd. and Vietnam Enterprise Investments come in second and third, respectively.

Dragon Capital has also become a key shareholder of military-run lender MB after four member funds purchased a total of 916,800 shares of the Hanoi-headquartered bank.

Last week, VPBank also raised its FOL from 15 to 17.5 per cent, setting the path for the arrival of a foreign strategic partner – rumoured to be Sumitomo Mitsui Banking Corporation (SMBC) – in the coming months.

When SMCB deliberately offloaded its stakes in Eximbank in February, this allegation was further reinforced. Following the acquisition of 49 per cent of FE Credit’s stock by SMBC last year, the bank is envisaged as becoming the largest strategic stakeholder, owning 15 per cent of VPBank’s ownership.

VIB, in the same vein, has capped its FOL ratio at 20.5 per cent, while OCB is also proactively seeking another foreign suitor after its landmark deal with Japan’s Aozora Bank in 2020.

MB, meanwhile, is currently speculated to be a prospective suitor of “zero-VND” Ocean Bank, one of three Vietnamese troubled lenders that, together with GPBank and CBank, are subject to special supervision of the State Bank of Vietnam.

OceanBank’s financial statements, on the other hand, are segregated and not consolidated with those of MB, as required by rules. In the long run, the advantages of this agreement could outweigh the downsides that MB will have to bear, SSI Research assessed.

Earlier this year, Vietcombank emphasised that a concrete plan should be in place for removing the bank’s FOL constraint, which is projected to lift to 35 per cent in the near future. Vietcombank’s biggest foreign stakeholder is Mizuho Bank of Japan, followed by Singapore’s sovereign wealth fund, GIC Pte., Ltd.

Do Hong Van, data analytics head of Financial Information Services for data provider FiinGroup, stated that banks’ profit growth is likely to outpace that of non-financial enterprises, which is in stark contrast to 2021 when the profit growth of the banking sector was substantially lower than the overall expansion of the market.

Fifteen of the 27 banks that are publicly traded on the stock market possess foreign ownership of more than 15 per cent. Of those, banks on the verge of reaching their foreign limit ratio include ACB, ABBank, VietinBank, MB, MSB, OCB, Techcombank, TPBank, and Vietcombank.

Digital-led initiatives lift up life insurers in Vietnam

Vietnam’s life insurance landscape is being offered upbeat projections, with digital competencies being the driving force.

The Ministry of Finance (MoF) anticipates that Vietnam’s total insurance premium revenues in 2022 will reach around $111.1 million, up 18.04 per cent on-year.

Saigon Securities Incorporation (SSI) predicted that e-insurance certificates could eventually become permissible for additional insurance products, such as health insurance and property damage insurance, thus boosting sales through online channels.

Data from the Department of the Insurance Supervisory Authority under the MoF suggested that as of the end of last year, there are 19 life insurance companies operating in Vietnam’s market, including the newly-minted Shinhan Life from South Korea.

In 2021, Bao Viet Life maintained its lead in terms of the total premium revenue and the largest market share in the life insurance sector, holding 19.15 per cent. Manulife, Prudential, Dai-ichi Life, and AIA were also in the top five.

MB Ageas Life, Chubb Life, Generali, FWD, and Hanwha Life also tried to expand presence last year. Other life insurers such as AVIVA, Sun Life, BIDV MetLife, and Mirae Asset Prevoir made up a more moderate proportion.

The overall new insurance premium income for the whole market in 2021 is estimated at $2.15 billion, up 18.5 per cent on-year, cited the MoF. In terms of first-year premiums revenue, Manulife led the board, bagging just over $500 million and exceeding its counterparts. This is Manulife’s third consecutive year dominating the first-year premiums sector.

Meanwhile, life insurers are also ramping up their digital capabilities to capture the younger demographics’ attention.

Source: VNA/VOV/VNS/VIR/SGT

VIETNAM BUSINESS NEWS MARCH 19

Third Vietnam-Singapore IP breaks ground in Binh Duong