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VIETNAM BUSINESS NEWS MARCH 25

Tra export companies suffer low profits in mainland China, Hong Kong

Exports of tra fish (pangasius) to China and Hong Kong in the first half of February this year suffered a sharp plunge, according to a report released by the Vietnam Association of Seafood Exporters and Producers (VASEP).

The turnover of Vietnamese tra fish exported to China hit 13.55 million USD, down 38.6 percent over the same period last year.

The figure accounted for 8.5 percent of Vietnam’s total outbound sales of the fish during the period. The export value to Hong Kong also fell by 40.5 percent.

VASEP’s market analysts attributed the unexpected decline to many difficulties, including the COVID-19 pandemic and measures used to slow the spread of the virus.

Early last year, seafood processing factories in China were impacted by the pandemic, which caused interruptions in trade, affecting the export volume of tra fish to this market.

Early in the third quarter last year, trade between Vietnam and China increased again ahead of China's National Day in October. In October last year, the price of frozen tra fish fillets exported to China suddenly surged to 2.52 USD per kg.

However, China then stepped up efforts at border gates to contain the spread of the coronavirus through imported frozen products, affecting Vietnam’s tra fish exports.

According to VASEP, since December last year, Guangxi Province which borders four provinces of Vietnam including Quang Ninh, Lang Son, Cao Bang, and Ha Giang has conducted surveillance, disinfection and origin traceability measures to strengthen control of all consignments of frozen seafood imports.

Frozen seafood shipments from Vietnam, including tra fish fillets, need a certificate of food testing, certificate of quarantine, certificate of disinfection and certificate origin traceability and a negative COVID-19 test.

Frozen seafood goods imported to Guangxi via border gates and seaports must be sent to local centralised monitoring warehouses for a nucleic acid test, sterilisation and origin traceability control.

These extra requirement shave slowed exports.

Vietnam exports a diverse range of tra fish products to China including frozen fillets, frozen tra fish stomach, fried/dried fish bladder, frozen whole tra fish and frozen tra fish belly, among others.

Last year, 145 seafood companies exported tra fish to the Chinese market and 40 others shipped their tra fish to Hong Kong./.

Vietnam looks to boost economic, trade ties with Russian localities

Vietnam attaches great importance to economic, trade and investment cooperation with Russian localities, Vietnamese Ambassador to Russia Ngo Duc Manh has said.

The Vietnamese diplomat made the statement during his meetings with governors of the southwestern Kursk and Bryansk regions of Russia on the occasion of his visits to these localities on March 23-24, as part of activities to further strengthen cooperation between Vietnam and Russia in general and their localities in particular.

Manh and Governor of the Kursk region Roman Starovoit, in their meeting, expressed their joy at the increasing development of Vietnam-Russia comprehensive strategic partnership, especially in recent times.

Starovoit called on Vietnamese businesses to increase their investment in promising sectors such as agriculture and tourism.

In 2020, trade turnover between Kursk and Vietnam hit 30 million USD, he said.

Meanwhile, Governor of the Bryansk region Alexander Bogomaz briefed Manh on the locality’s socio-economic development, noting that the Russian locality still maintained positive growth despite impacts of the COVID-19 pandemic.

He thanked the Vietnamese diplomat and relevant agencies for their efforts to promote cooperation between businesses of the two countries, especially in agriculture.

For his part, Manh said he is pleased with the Kursk region’s cooperation agreement with its sister Ninh Thuan province of Vietnam.

He thanked the two local governments for supporting the Vietnamese community to lead a stable life in Russia, thus contributing to the development of the Russian localities and their homeland.

Despite the COVID-19 pandemic, trade value between Vietnam and Russia still increased 8 percent to 5 billion USD. Notably, in the first two months of this year, it surged by over 30 percent, hitting nearly 800 million USD. Vietnam is the largest market of Russia’s meat products, accounting for nearly 45 percent of its total meat exports.

On the occasion, Ambassador Manh and his entourage visited food processing establishments, livestock and poultry production complexes of Miratorg Group in Kursk and Bryansk./.

Quang Ninh to spend some VND9.5 trillion on new strategic road

The northern province of Quang Ninh will spend some VND9.5 trillion building a new riverside road to connect Quang Yen Town with Dong Trieu Town and improve its connectivity with other provinces and cities. 

The strategic road is expected to boost the growth of western Quang Ninh Province, Lao Dong Online reported.

At a meeting on March 24, the Quang Ninh People’s Council approved a plan to invest in a riverside road linking the Halong-Haiphong expressway and Dong Trieu Town. The road will be 41.2 kilometers long and have 10 lanes.

The road project, whose investment will be sourced from the province’s budget, will be carried out from 2021 to 2022.

Once in place, the road will motivate foreign investment in the Quang Yen and Dong Trieu towns, contributing to connecting major industrial zones such as Amata and Dam Nha Mac in the province and fostering the development of the northern economic triangle of Hanoi, Haiphong and Quang Ninh.

The road is also expected to help optimize the potential of some infrastructure projects associated with traffic and tourism.

Airlines adding flights for Reunification Day - May Day holiday

Domestic airlines announced on March 24 that they will increase the number of flights to meet travel demand during the Reunification Day (April 30) and May Day (May 1) holiday.

The Vietnam Airlines Group, comprising Vietnam Airlines, Pacific Airlines, and Vasco, said it will add nearly 500,000 seats, equivalent to about 2,600 flights.
National flag carrier Vietnam Airlines and Vasco will operate nearly 2,100 flights with 403,000 seats during the holiday.

Flights have been added on routes to popular tourist destinations such as Hanoi, Ho Chi Minh City, Da Nang, Quy Nhon, Da Lat, and Phu Quoc Island, with diverse schedules.

New carrier Bamboo Airways has made the best use of its fleet since late March, and plans to increase flights to tourist attractions by 12-15 percent.

Airline representatives said they will continue with COVID-19 prevention and control measures in the time ahead.

Earlier, the Vietnam Airlines Group said it will expand flight numbers on nearly 30 domestic routes starting from March 28.

It will add 280-400 flights each week, equivalent to 56,000-80,000 seats, to its domestic flight network.

The adjusted schedule is to assist localities nationwide in recovering from the COVID-19 pandemic.

Experts: RCEP offers easier rules of origin for Vietnam’s exports

The Regional Comprehensive Economic Partnership (RCEP) could bring substantial benefits to Vietnam’s exports thanks to easier rules of origin compared to other free trade agreements, mostly apparel, farm produce, and aquatic products, experts have said.

During a conference held in HCM City on March 24 to popularise the RCEP, deputy head of the HCM City Export Processing and Industrial Zones Authority (Hepza) Dao Xuan Duc said that amid the COVID-19 pandemic and the emergence of protectionism, the RCEP signed between ASEAN and Japan, New Zealand, Australia, China and the Republic of Korea on November 15, 2020 is considered a new driving force for international trade.

With commitments to opening markets to goods, services, and investment, simplifying customs procedures, and establishing rules of origin to facilitate trade and reduce trade barriers, the deal is expected to create the world’s largest trade area and promote the development of value chains in the region and the world, thereby propelling the economic growth of ASEAN member states, including Vietnam and partners.

Tran Ngoc Binh, chief of the HCM City Office of Export-Import Management under the Ministry of Industry and Trade’s Department of Export and Import, said that with the RCEP, Vietnam could enjoy tax incentives when exporting to Japan after importing cloth from anywhere, then cutting and sewing to make products.

Similar to aquatic products, Vietnam could import breeding varieties from other countries, raise them domestically, and then export them to enjoy preferential tariffs.

Nguyen Anh Duong from the Central Institute of Economic Management said that with signing of the RCEP shows that member states look toward the commitment to further liberalising trade in goods and services and investment, towards fairer development.

RCEP member countries will have about 150 million high-income earners within the next three years, he said, who will shape new consumption trends, focusing on smart technological devices and high-quality products.

He also mentioned challenges such as rising trade deficits. In the past, Vietnam only ran a deficit with China and ASEAN, but has recently done so with Australia, New Zealand, and Japan, resulting in the risk of facing trade defence lawsuits if imported materials for production and export are not brought under control.

Experts suggested Vietnamese firms devise their own plans to improve export capabilities, meet technical requirements, and regularly update trends regarding non-tariff measures to optimise benefits brought about by FTAs.

HoSE listed stocks start trading on HNX from March 29

The Ha Noi Stock Exchange (HNX) just announced a trading schedule of four companies transferring from the Ho Chi Minh Stock Exchange (HoSE).

According to the announcement published on HNX's official website, shares of Bibica Corporation (BBC) and Southern Seed Corporation (SSC) will start trading on HNX on March 29.

Meanwhile, the first trading day on the exchange for Ben Tre Aquaproduct Import And Export JSC (ABT)'s and Viet Nam Fumigation JSC (VFG)'s shares is April 1.

Under early guidance from the State Securities Commission of Viet Nam, transactions of shares, which are transferred to HNX from HoSE, only have to suspend for at least 3 working days and they will be traded on HNX on the fourth day since the last trading day on HoSE.

HoSE, HNX and Vietnam Securities Depository (VSD) have discussed and achieved a consensus on the transfer process to coordinate the share moves.

Accordingly, after receiving shares transferring registration documents from enterprises, HoSE will release the last trading day of the shares on HoSE, which is expected to take five working days from when the announcement is issued.

Then HNX will publish the first trading day on HNX, which is expected in the fourth day since the last trading day on HoSE, as well as receive profiles of transferred shares to monitor transactions and disclose information.

Based on the above content, VSD transfers data from HoSE to HNX and sets up a system for trading on HNX. Listed companies don't need to submit registration documents for transferring to VSD. 

Quang Ninh to spend nearly 2.53 billion USD on infrastructure development

The northern province of Quang Ninh will set aside 58.7 trillion VND (2.53 billion USD) to develop modern and synchronous infrastructure during 2021-2025 to lure more investment, heard a meeting of the provincial People’s Council held on March 24.

Priority will be given to investment in strategic infrastructure such as transport, IT and telecommunications, as well as infrastructure in industrial parks, seaports, and port services.

As much as 11.7 trillion VND will be allocated in 2021 alone.

Along with focusing on completing infrastructure at key seaports such as Con Ong - Hon Net, Hai Ha, Van Ninh and Nam Tien Phong, the province has outlined planning schemes to build international-standard marinas at Cua Luc Bay, while mobilising resources to complete construction of Van Don – Mong Cai highway and Ha Long – Cam Pha coastal road, Cua Luc 1 and 3 bridges in 2021, as well as road and bridge to Hon Net – Con Ong port in 2022.

Regarding infrastructure development at economic and industrial parks, Quang Ninh province will arrange capital to build essential works to attract investment in processing projects, high-tech manufacturing, clean industry, smart industry, high-end sea tourism, and international standard service complex.

During 2016-2021, the province disbursed more than 49 trillion VND in public capital. Total social investment in the period was estimated at nearly 345 trillion VND, or 1.6 times higher than the figure recorded during 2011-2015.

Vietnam looks to boost economic, trade ties with Russian localities

Vietnam attaches great importance to economic, trade and investment cooperation with Russian localities, Vietnamese Ambassador to Russia Ngo Duc Manh has said.

The Vietnamese diplomat made the statement during his meetings with governors of the southwestern Kursk and Bryansk regions of Russia on the occasion of his visits to these localities on March 23-24, as part of activities to further strengthen cooperation between Vietnam and Russia in general and their localities in particular.

Manh and Governor of the Kursk region Roman Starovoit, in their meeting, expressed their joy at the increasing development of Vietnam-Russia comprehensive strategic partnership, especially in recent times.

Starovoit called on Vietnamese businesses to increase their investment in promising sectors such as agriculture and tourism.

In 2020, trade turnover between Kursk and Vietnam hit 30 million USD, he said.

Meanwhile, Governor of the Bryansk region Alexander Bogomaz briefed Manh on the locality’s socio-economic development, noting that the Russian locality still maintained positive growth despite impacts of the COVID-19 pandemic.

He thanked the Vietnamese diplomat and relevant agencies for their efforts to promote cooperation between businesses of the two countries, especially in agriculture.

For his part, Manh said he is pleased with the Kursk region’s cooperation agreement with its sister Ninh Thuan province of Vietnam.

He thanked the two local governments for supporting the Vietnamese community to lead a stable life in Russia, thus contributing to the development of the Russian localities and their homeland.

Despite the COVID-19 pandemic, trade value between Vietnam and Russia still increased 8 percent to 5 billion USD. Notably, in the first two months of this year, it surged by over 30 percent, hitting nearly 800 million USD. Vietnam is the largest market of Russia’s meat products, accounting for nearly 45 percent of its total meat exports.

On the occasion, Ambassador Manh and his entourage visited food processing establishments, livestock and poultry production complexes of Miratorg Group in Kursk and Bryansk.

HCM City hopes to become Southeast Asia start-up hub

HCM City has approved plans to develop 1,000 start-ups as part of its efforts to become a leading start-up hub in Southeast Asia over the next five years.

The plan envisages enabling 3,000 businesses to improve their innovation capacity and help 100 access venture capital by 2025.

To achieve the targets, the city will develop infrastructure and an eco-system that would enable start-ups to improve productivity and competitiveness and develop higher-quality products in order to go regional and, later, global.

In 2016 - 20 it assisted 650-700 businesses annually with improving their innovation capacity.

Last year, Viet Nam jumped 13 positions to rank 59th out of 100 economies with the best start-up ecosystems in the world, according to a ranking by StartupBlink, a global start-up ecosystem map and research centre.

According to Robert Tran, CEO of consulting firm RBNC for North America and Asia Pacific, Viet Nam has great potential to become a start-up hub in Southeast Asia due to a number of “good entrepreneurship ideas” that could be expanded regionally and even globally.

Viet Nam also has a population large enough for start-ups to experiment locally first before reaching out to the world.

But the success rate of start-ups remains low (at roughly 3 per cent) since many fail to clearly identify their long-term business goals.

He said the Government should put in place a comprehensive legal framework to ensure protection for investors and assistance and support for start-ups.

In 2016 the Government approved a plan to build a start-up eco-system for innovative and sustainable development of entrepreneurship by 2025.

In February this year it decided to build a network of innovation centres in Ha Noi, Da Nang and HCM City to support research and development by start-ups.

It wants to make the national start-up eco-system the 15th best in the Asia-Pacific in the near future.

According to Do Ventures, a HCM City-based venture capital firm, in the first half of last year the country accounted for 16 per cent of the total investment in tech start-ups in Southeast Asia to rank third behind only Singapore (37 per cent) and Indonesia (30 per cent).

HCM City accounts for more than 50 per cent of the country’s start-ups.

Located in the heart of Southeast Asia and Viet Nam’s most economically dynamic city, HCM City has also been chosen by expats as a base to build start-ups.

It is also an attractive destination for foreign entrepreneurs, experts have said.

It has a well developed infrastructure for online business, its online payment system works efficiently and its internet is reliable.

It has a high concentration of talented young people, who are ambitious, well educated, open-minded, and comfortable with trying new ideas and sharing experiences.

The city has a population of some 13 million, more than half under 35 years of age. Many young people are influenced by western culture and appreciate international brands with good quality.

The city contributes 20 per cent to national GDP.

It is home to more than 3,000 foreign representative offices from 60 countries and territories. 

Retail market shows strong growth in Vietnam

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The prevention policy in Vietnam for the Covid-19 pandemic has been highly effective, and as a result of it, there has been very positive economic growth. Despite the global economic slump caused by the pandemic, Vietnam's retail market jumped in size. Vietnam can boast of being one of the sixteen most successful emerging economies in the world in 2020. The reason behind this was that many well known international retail brands decided to invest in Vietnam. 

In 2016, the Vietnamese retail market welcomed the entry of ‘Zara’, the famous Spanish fashion brand. The experience of buying well known fashion brands in home country, which earlier were available only for those who traveled abroad, is truly a luxury. This explains the excitement of Vietnamese people in general and fashion followers in particular, when hundreds of people waited in line for the Zara store to open. Just five years later, shopping options in Vietnam have become even more exciting.

Popular brands around the world such as Zara, H&M, Uniqlo, and Decathlon are drawing crowds in malls across the country. Uniqlo stores on Dong Khoi street in Ho Chi Minh City and on Pham Ngoc Thach street in Hanoi are among top four largest Uniqlo stores in Southeast Asia. Seeing great opportunities in Vietnam, leading Japanese international brands Matsumoto Kiyoshi, MUJI, Haidilao, Uniqlo, and Fila have expanded their network, choosing to open large stores in prominent locations in busy downtown districts of Vietnam’s two biggest cities.

In 2020, when the entire world was reeling under the disastrous effects of the Covid-19 pandemic, Vietnam was able to reach a GDP increase of 2.91 percent , one of the highest in the world. Vietnam is also the only country in ASEAN to have shown positive growth in 2020. The Asian Development Bank (ADB) forecast that Vietnam's economy will quickly recover to 6.3 percent by 2021. In the effort towards a strong economic recovery, retail is being seen as a bright spot. According to the General Statistics Office, the size of this market increased by about US$11 bn in 2020. Experts forecast that if the growth rate continues to be as high as previous years, then in just two years, Vietnam's retail market can reach US$200 bn.

Therefore, the resurgence of the Covid-19 pandemic in February 2021 did not significantly affect the growth forecast for 2021. According to trade economists, Vietnam's retail market is forecast to have a strong rebound with 11 percent revenue growth in 2021, outperforming any other Southeast Asian country. Vietnam is also the 6th ranking market in the group of 30 countries with attractive investments in the global retail sector in recent years. The more optimistic signals will become clearer when the disease situation has been brought under control, and Vietnam has imported the vaccine for general population use. While many other countries are still looking for a thaw in their economies, Vietnam has shown and proven its resilience.

The consumer trend among the Vietnamese people has also changed in a positive direction. According to an Ipsos report on consumer behavior, 55 percent of Vietnamese still believe that the domestic economy will get better in the next six month period. This figure in other countries in the region, including Indonesia, Malaysia, Philippines, Singapore, and Thailand, is only 45 percent . Many experts forecast that Vietnam will attract investment flow of big international brands in 2021, especially in the retail segment.

Deputy PM urges fast implementation of Long Thanh Airport’s component projects

Deputy Prime Minister Trinh Dinh Dung has urged the People’s Committee of the southern province of Dong Nai to quickly carry out forth projects on land acquisition, compensation, site clearance, and development of resettlement zones for construction of Long Thanh International Airport.

Dung said the work must be carried out under the province’s authority, and in accordance with the existing laws.

Dong Nai should join hands with the Ministry of Transport, the Airports Corporation of Vietnam and competent agencies to implement component projects to ensure efficiency and progress of Long Anh Airport construction.

Construction of the first detail of Long Thanh International Airport starts on January 5.

The airport will be built in three phases over three decades, and is expected to become the country’s largest airport.

In the first phase, one runway with a length of 4,000m, taxiways, an apron, and a passenger terminal with other auxiliary works sprawling 373,000 sq.m will be built to serve 25 million passengers and 1.2 million tonnes of cargo each year.

The airport is designed to have four runways, four passenger terminals, and other auxiliary facilities to ensure a capacity of 100 million passengers and 5 million tonnes of cargo a year by 2040.

Covering a total area of more than 5,580ha, the airport will straddle six communes in Long Thanh district. It is expected to cost 336.63 trillion VND (14.5 billion USD), with the first phase needing over 109 trillion VND.

Around 4,800 households and 26 organisations are expected to be relocated to make way for it.

Located 40km to the east of Ho Chi Minh City, Long Thanh airport is expected to relieve overloading at Tan Son Nhat international airport in the southern metropolis, now the country’s largest airport./.

HCMC eyes development of shopping tourism

Travel businesses in HCMC have planned to kick-start the international tourism after the pandemic has been successfully controlled. The city’s tourism industry also has a sustainable development strategy to promote its strong point of shopping tourism and turn the southern economic hub into one of the most favorite shopping destinations in the Southeast Asia, said Director of the Department of Tourism of HCMC, Nguyen Thi Anh Hoa. 

Shopping tourism will attract visitors coming to the city as well as help tourist enterprises bring travelers to HCMC, she added.

The city has the potential to become a MICE (Meetings, Incentives, Conventions and Exhibitions) tourism center in the region. The local government will concentrate to the development of waterway- health – culture- leisure tourism.

In order to launch an attractive tourist products, the departments of Industry and Trade, and Tourism along with the Tax Department should closely cooperate to offer fashion products at promotional prices which couldn't have competed with others of ASEAN member nations over the past years, a director of a travel agent said.

The two departments have strongly strengthened a comprehensive cooperation to provide shopping tours and speeded up promotional programs at markets and shopping centers in 2021 and plan to open more duty-free stores, said Director of Industry and Trade, Bui Ta Hoang Vu.

Mr. Johnathan Hanh Nguyen, president of Imex Pan Pacific Group (IPPG) said that consumers will have a chance to buy luxury fashion items at reasonable prices in coming time. Before the EVFT (EU-Vietnam Free Trade Agreement) took effect, tariffs on imported fashion products from Europe were 30 percent, excluding VAT. This is not attracting shoppers to city.

Shopping tourism has been developed sharply in South Korea, Dubai, Spain, Thailand, Taiwan and Hong Kong (China). Tourist shoppers spend a lot on their purchases. The tourism industry of Vietnam and HCMC particularly should focus on this type of tourism, contributing to the promotion of country’s destinations and creating jobs for local people.

Online trade fairs and exhibitions boom amid COVID-19

The COVID-19 pandemic has impacted trade fairs and exhibitions of businesses in Viet Nam, forcing many to postpone their events.

But Vietnam Expo 2020, the oldest and most prestigious trade promotional event in Viet Nam, did go ahead, thanks to a combination of regular and online booths.

Nguyen Thu Hong Deputy General Director of Vinexad (Vietnam National Trade Fair and Advertising Company) said online business platforms helped to improve trade opportunities amid ongoing social distancing measures and border restrictions.

In special pavilions, visitors could view products and complete transactions via apps, with constant support from interpreters. Meetings were also pre-scheduled to take place during the course of the exhibition.

“From the end of last year, my company developed exhibitions by combining regular and online booths. The online business meetings were also scheduled via Zoom during the course of the exhibitions,” Hong said.

The annual trade fair in 2019 attracted 600 pavilions from 15 cities and provinces in Viet Nam and 23 territories and countries and welcomed 21,000 business people.

The Vietnam Expo 2021 will take place in Ha Noi from April 14-17.

Hosted by the Ministry of Industry and Trade, the annual event aims to boost exports, develop the domestic market, and expand and diversify trade promotion activities during global economic integration. During the fair, exhibitors involved in digital transformation are encouraged to join a priority area. Seminars on digital transformation are also on the agenda.

Bui Thi Thanh An, Deputy Director of the Vietnam Trade Promotion Agency under the Ministry of Industry and Trade said due to the influence of the COVID-19 pandemic, many planned trade fairs and exhibitions were postponed so the agency had to conduct online business platforms.

For the Chinese market, the agency conducted about eight to 10 events, using the method of "cloud exhibition" and "no direct contact" last year.

As it was impossible to organise trade fairs and exhibitions as usual, many initiatives were made to promote online trade. This move was welcomed and received positive support from businesses, An added.

Tina Phan, Indochina Director at Hong Kong Trade Development Council said because it was impossible to bring Vietnamese businesses to Hong Kong to find trade partners amid COVID-19, she would help Hong Kong businesses to connect with Vietnamese companies via online platforms.

Park Ki Young, Deputy Minister of Trade, Industry and Energy of the Republic of Korea said Viet Nam was an important partner and he hoped Vietnamese companies would become a major link in the supply chain of South Korean enterprises, especially in the fields of automobile production, electronics, footwear, and textiles.

By the end of this year, the applications for digital transformation by manufacturers and service companies will further encourage local businesses to participate. Businesses applying digital transformation will have the same starting point including transforming their thinking and perception. 

Ba Ria – Vung Tau industrial parks await FDI post-pandemic

Industrial parks in the southern coastal province of Ba Ria – Vung Tau are making preparations to attract foreign investments that are expected to surge after the COVID-19 pandemic passes.

The 500ha Dat Do 1 Industrial Park in Dat Do District wants FDI to account for 70 per cent of all investment and domestic projects for only 30 per cent, with priority given to supporting industries and hi-tech projects.

This year it attracted six local investors but no foreign investment.

Due to the ongoing COVID-19 pandemic, foreign investment had been severely impacted, Nguyen Khac Thanh, general director of Tin Nghia - Phuong Dong Industrial Park JSC, the developer of Dat Do 1 Industrial Park, said.

Many foreign investors hadve rented land in the park but delayed their projects since it was impossible for them to enter the country due to the travel restrictions and border closure, he said.

But his company had maintained contact with global customers and resorted to online marketing to introduce the opportunities and the procedures they have to complete to invest in the park, he said.

As a result, it managed to sign memorandums of understanding and took deposits for leases from 11 foreign investors, he revealed.

The park had helped foreign investors with investment procedures as part of efforts to attract them, he added.

The 999ha Phu My 3 Specialized Industrial Park in the province’s Phu My Town has not attracted a single foreign project for more than a year due to the pandemic.

It has signed lease agreements with 10 foreign customers thanks to webinars and online marketing.

Nguyen Anh Triet, head of the Ba Ria – Vung Tau Province Industrial Park Authority, said there were incentives for industrial parks to attract investment, and administrative and land clearance procedures were being streamlined to develop industrial infrastructure.

Nearly 50 potential investors had signed MoUs and registered to lease more than 1,000 hectares of industrial land, he said.

The province planned to build eight industrial zones with more than 8,000ha by 2030 to meet the huge demand, he added. 

Ministry promotes building of natural agriculture

As the demand for safe food is on the increase, many models of natural and organic agriculture have been established to meet the market. However, this type of product is more expensive than conventional products, so it is still difficult for many people to afford them. 

According to the Vietnam Organic Agriculture Association, the development rate of organic farming is increasing. In 2017, the country had about 76,000 hectares of organic agriculture, by 2020, this figure increased by more than 415,000 hectares. However, organic and natural products have extremely high-cost prices, unattractive appearance, and poor color, but the nutrition and quality are higher in return.

Ms. Tran Thi Tuyen, who grows orange following natural agriculture in Nghe An Province for more than two years, said that when she first started growing orange, many local farmers assessed that her orange trees would not develop. Because all other farmers fertilize, mow grass, and spray pesticides on their orange groves whereas none of those is applied on hers. She shared that the grass layer is the habitat for insects, and natural enemies create a natural balance without harming the orange trees. Besides, the fallen oranges do not need to be removed, but to leave them decomposing themselves and becoming nutrients for orange trees. Although the productivity is not high compared to other orange groves, in return, it helps her reduce the cost of pesticides.

With an extremely large growing area of organic coffee, Mr. Thai Nhu Hiep, Director of Vinh Hiep Co., Ltd., acknowledged that organic products are an inevitable trend for sustainable agricultural development. In Vietnam, organic and natural agriculture still encounters many limitations. On the one hand, farmers do not have techniques for large-scale production. On the other hand, the number of fertilizers and bio-products for organic farming remains small and at a high cost. Similarly, Mr. Le Van Toan, Manager of tropical vegetable production at Organica Farm in District 2 in Ho Chi Minh City, said that the organic production model is mainly small, weak chain linking, and high costs so it is unable to be expanded. To reduce costs, farmers need to adopt sustainable farming and ranching models to make use of by-products.

In fact, many stores advertise their products as organic to sell them at high prices, but their quality is still in doubt. Mr. Nguyen Dinh Tung, Director of Vina T&T Group Company, said that many shops sell organic food with various international organic certifications, making it difficult for authorities to supervise. Therefore, the Ministry of Agriculture and Rural Development (MARD) needs to develop Vietnamese organic certification with the same standards as foreign ones so that people can participate in production and export. At the same time, there should be measures to manage stores selling self-proclaimed organic products.

According to the MARD, the global consumption market of organic products has grown steadily, with an estimated scale of more than US$80 billion per year. Consumers in developed countries, such as the US, Japan, and the EU, are now very fond of organic products not only because of their superiority in health protection but also because of their contribution to the protection of the ecological environment and minimization of impacts of climate change. Therefore, the export potential for organic agricultural products remains tremendous. In recent years, the biotechnology industry has developed strongly and widely applied to meet the requirements of organic agriculture. Mr. Tran Thanh Nam, Deputy Minister of Agriculture and Rural Development, shared that Vietnam has a plentiful workforce. Practical experience and creativity in agricultural production are great advantages for developing organic agriculture, which is labor-intensive. For organic agriculture to develop sustainably, the agricultural sector needs to choose suitable growing areas and prioritize the development of local specialties.

In fact, there are still many natural agriculture models that do not have organic certification, making consumption difficult. Along with that, many stores also mix substandard products with organic products. There are even cases in which they have already got organic certifications, but later on, the production does not meet the standards. Mr. Ha Phuc Mich, Chairman of the Vietnam Organic Agriculture Association, said that the MARD has built a project to develop organic agriculture and an action plan. The area of organic agriculture is growing without substance and is difficult to control. Human resource training for many years has not had the policy of accessing organic agricultural materials from all levels. Therefore, the ministry is actively implementing the organic agriculture development project for the 2020-2030 period, with the goal that the area of organic agriculture will reach 1.5-2 percent of the total agricultural area by 2025, and 2.5-3 percent by 2030.

According to agricultural experts, for organic agriculture to be sustainable, farmers must be trained. The State should strengthen the introduction and construction of distribution networks, and promote trade, and at the same time support units to assess the organic product samples. Moreover, to produce large-scale organic agriculture, it is essential to have professional and qualified supply services for organic farming materials, such as fertilizers, animal feed, herbal pesticides, and bio-products.

Packaged foods forecast to grow slowly in Vietnam 

Fast-moving consumer goods (FMCG) categories meeting the needs of Vietnamese consumers will be the potential to continue growing in the coming time.

As Vietnamese consumers in urban areas have begun increasing the out-of-home demand again thanks to the country’s successful Covid-19 control, growth of the food sector is expected to slow down in the short term this year, local insiders have said. 

According to Kantar's Worldpanel data, after a period of social gap, the growth of the in-home packaged food sector has slowed down compared to the peak of the social distancing period last year.

“The growth this year is unlikely to repeat the sudden increase of last year again. Each category will have different forecasts,” Nguyen Thi Nhu Ngoc, Marketing Manager of Worldpanel Division, Kantar Vietnam, said.

In urban areas including Hanoi, the beach city Da Nang, the southern city of Can Tho and Ho Chi Minh City, Vietnamese consumers might delay their purchases as a result of stockpiling or return to purchasing level of pre-Covid-19 period for instant noodles, cakes and canned foods.

Ngoc told Hanoitimes that sales of cooking aids or snacking products are more likely to normalize consumption due to the drop of in-home consumption occasions as outdoor activities got back to normal. “Among the items, the categories meeting the needs of consumers such as convenience, health benefits, relaxation/entertainment, will still be the potential ones to continue growing in the coming time,” she said. 

FMCG last year showed a stronger growth, mainly driven by the impact of Covid-19.

“FMCG for in-home consumption marked a remarkable year, hitting a robust growth in 2020 amid the pandemic, driven by the increase in volume consumption,” said Fabrice Carrasco, Managing Director for Vietnam & the Philippines, and Asia Strategic Projects Director of Kantar Worldpanel.

“Packaged foods are the most successful sector and is the main driver of the abnormal spike in the FMCG market throughout the year of stay-at-home economy,” he said.

During the Covid-19 period, one third of Vietnamese online consumers switched from traditional are new to online shopping in the FMCG industry, mainly contributing to the growth of the online channel in the whole year of 2020, according to Kantar’s research.

The online channel achieved an increase of 76% in terms of online transactions in 2020, mainly came from new buyers that led in terms of the number of transactions in urban areas in Asia, outstripping the growth of South Korea and China.

Vietnamese online shoppers’ shopping carts are also expanding to more diversification from just beauty products, mom and baby products to items in the food & beverage (F&B) category (excluding fresh foods, or fast foods) which is however still small in terms of share in online basket.

“Among the items, the categories meeting the needs of consumers such as convenience, health benefits, relaxation/entertainment, will still be the potential ones to continue growing in the coming time,” she said.

Ngoc from Kantar Vietnam added: “As traditional channels are still dominant in Vietnam retail market and are the most popular shopping places for Vietnamese consumers, these shops managed to sustain a growth of 6% in 2020.”

Vietnam equity market is fast becoming investable: HSBC

From two large-cap stocks with a market cap of more than US$5 billion in 2015 in the Vietnam market as a whole, there are now 11.

For many years, there was a common perception that Vietnam is a good investment story that is not investable – the market is too small, there are too few stocks, and it is illiquid. But for many others, this perception is plainly wrong, according to HSBC’s report.

From two large-cap stocks with a market cap of more than US$5 billion in 2015 in the Vietnam market as a whole, there are now 11. Average daily trading value in 2020 was US$430 million, a record high, and more recently  has come close to hitting US$1 billion. 

To put that into regional context, the Philippines has 13 stocks with a market cap above US$5 billion and trades US$228 million a day, Thailand trades US$3 billion, and Indonesia US$1.5 billion (all based on the 20-day average).

“In short, Vietnam is now an investable market,” noted the report.

According to HSBC, a quick look at the VN30 index, which comprises 30 large-cap and liquid stocks and is affiliated with the S&P Dow Jones, confirms that foreign investors have enough investable stocks to choose from.

Among the 30 stocks in the VN30 index, only six have reached their foreign ownership limits, nine have market caps above US$5 billion and 15 between US$1-5 billion, and 10 with more than US$10 million trading a day. 

On top of this, Vietnam’s equity market has outperformed all the major regional indices since 2015. But, despite this, flows into Vietnam have been muted, “especially if you take out sales of stakes of some large companies in 2017-18 as part of the SOE reform process,” said HSBC.

Foreign investors have a history of caution regarding Vietnam. In the aftermath of the economic boom and bust cycle of 2007-09, the local index was range bound, stuck between 400 and 600 until 2015.

But then a series of reforms was put in place by the government in 2011-13 to address structural issues with SOEs and the banking sector and started to show results from 2015.

Economic growth started to pick up. But memories of overheating in 2008-09 had not faded, and investors were skeptical. Many were quick to dismiss this growth as unsustainable. But this has not proved to be the case, stated the report.

Regarding concern from investors that it is difficult to buy stocks in Vietnam because of foreign ownership limits (FOLs), the report argued if foreign investors had bought market leaders which are not at their FOL, history shows that they would have still done well. 

“We think buying market leaders – the largest listed stock in that sector – can provide investors with sufficient exposure to the Vietnam growth story and generate returns in the process,” it noted.

On the basis of equal weight, market leaders have risen 237% since 2015, outperforming the index by 136%. Liquidity remains an issue with smaller firms, while large companies also have better corporate governance and disclosure requirements.

“Some of the stocks which are at their FOL and therefore attract a premium have a strong earnings growth track record and still trade at cheaper valuations than their peers in Asia. So, adjusted for valuations, the foreign premium doesn’t look excessive,” it noted.

Policy reforms to increase market depth and breadth

The government has passed new laws on securities, enterprises and investment, which came into effect on January 1, 2021, that would reduce some restrictions on foreign investors.

The goal is to reduce the number of conditions for business and investments, simplify procedures and increase market transparency to international standards. The securities law raised the issue of non-voting depository receipts (NVDRs) and more details will be provided in due course.

According to the investment law, a market access restriction list will be provided through a decree. All sectors not included will be fully open to foreign investors. Meanwhile, covered warrants and the new diamond index for companies which are already at their foreign ownership limits should also help foreign investors.

For a market to be upgraded to EM status it must meet various quantitative and qualitative criteria. Vietnam meets the quantitative criteria, such as the presence of large stocks, trading volumes, and the size of the market.

The reason why Vietnam has still been classified as a frontier market is qualitative. Some of the key issues include the presence of foreign ownership limits, a lack of some disclosures in English, the lack of an offshore currency market and limitations in onshore currency markets, mandatory registration of accounts, prefunding of trades and restrictions on off market transfers.

With new securities, investment and enterprise laws being passed, some of these issues should be addressed, albeit gradually.

Vietnam remains one of the best investment stories in the region. The country is no longer just an outsourcing supply chain success story with a fortunate geographical location. It is assembling a home-grown economic growth engine that is making Vietnam an even more attractive destination in its own right.

An export dependent economy which in theory should have suffered from external risks such as US-China trade tensions and the pandemic, in fact has grown stronger.

Bangladeshi media ponder advantages of Vietnamese garment sector

Bangladeshi newspaper The Daily Star recently run an article highlighting the various advantages of the Vietnamese garment-textile sector, including its low lead time, quality fabric, and upmarket focus.

The article provides an example from the EU which was cited by the Bangladeshi Centre for Policy Dialogue (CPD) as part of research last month. They state that for every 100 kilogrammes of t-shirts produced, Vietnam was able to rake in US$2,157.9 last year, in contrast to the figure of US$1,091.5 recorded by Bangladesh.

Furthermore, 2019 saw the rates at US$2,099.7 and US$1,097.5, respectively.

As an explanation for these figures, Khondaker Golam Moazzem, research director for the CPD, said the quality of Vietnamese fabrics is substantially better than those from Bangladesh, whilst a section of its people also have a taste for high-end products.

The use of a high-quality fabric guarantees Vietnamese manufacturers better prices from buyers, he explained, adding that the nation also enjoys a higher number of upscale product brands and retailers.

This results in a better image for the country, in addition to a higher ranking in terms of the ease of doing business index compiled by the World Bank, and an inclination towards compliance with regard to human rights and environmental protection practices, he said.

AK Azad, managing director of Ha-Meem Group, one of the leading local garment exporters in Bangladesh, said that Vietnam is able to make intelligent use of its highly-available, top-quality raw materials, whilst also having a low lead time. The nation also ships garments to the EU in 30 days, a process which typically takes far longer for other countries, including Bangladesh.

According to KM Rezaul Hasanat, chairman and chief executive officer of Viyellatex Group, another leading local garment exporter, the country is strong in manufacturing outerwear for people who live in cold climates. This includes exporting high-quality blazers and woven formal shirts and trousers to the EU and United States.

Moreover, the nation also produces a lot of sportswear, with their prices being very high. Indeed, the majority of all globally renowned sports garment brands and retailers source their products from Vietnam.

Bangladesh is a leading global garment producer and can be considered to be a regional rival of the nation in terms of garment production. 

Vietnamese companies boost exports through global e-commerce platforms

More Vietnamese firms have successfully sealed export orders in recent times with the support of e-commerce platforms like Alibaba.com and Amazon.

Since 2019, the Ministry of Industry and Trade (MoIT) has joined hands with major e-commerce businesses to help Vietnamese companies bolster online exports.

More than 1,000 companies have registered to attend training courses in the field while over 300 others received consultations.

Businesses in farm produce, fisheries, wood, and processed food are set to join the fray in the time to come.

Deputy Minister of Industry and Trade Do Thang Hai said Vietnam’s e-commerce sector posted an increase of 18 percent last year to 11.8 billion USD, despite COVID-19. The country was the sole market in Southeast Asia to record double-digit growth in the field, he added.

The digital economy has been viewed as a pillar of growth, and switching to digital platforms to boost exports has become mandatory, Hai stressed.

Exports via e-commerce platforms offer huge opportunities for companies, especially micro-, small- and medium-sized enterprises. After a year of selling goods on Amazon, the export revenue of many Vietnamese companies reached 1 million USD.

Gijae Seong, Manager of Amazon Global Selling Vietnam, said that an increasing number of Vietnamese products are put up for sale on the platform, particularly household appliances, fashion accessories, and kitchen utensils, among others. They are favoured by foreign consumers thanks to their good quality and competitive prices.

Face masks, gloves, and protective clothing also count among the important products of which Amazon is working with Vietnamese manufacturers to bolster export this year, he added.

Meanwhile, General Manager of Alibaba.com, Zhang Kuo, said the platform has built partnerships with associations, business partners, and banks to help Vietnamese small and medium-sized enterprises (SMEs) improve their digital capacity, operations, customer management, and order completion.

He voiced a hope that, by 2024, more than 10,000 Vietnamese suppliers will be offering their products on Alibaba.com./.

Tourism bounces back as pandemic brought under control 

With COVID-19 being largely brought under control, many travel agencies have introduced new and attractive products that meet requirements for safe tourism. The market has shown many signs of recovery as demand among customers rises sharply, especially with major holidays approaching.
 
With safety the top priority, Mr Huynh Chi Dung from Hanoi decided to book a holiday to Da Nang for his family at the end of March.

According to tourism companies, 70 percent of customers have booked tour packages, while others have selected combo packages that include air tickets and hotels.

Popular destinations include the northwest, Central Highlands, south central and southern regions.

Most tourism companies and hotels are expecting to welcome a large number of tourists during the upcoming Reunification Day (April 30) and Labour Day (May 1) holidays. Tourists, however, are still required to wear face masks, have their temperature checked, and declare their travel history.

In particular, exclusive adventure tours to Quang Binh province’s Son Doong Cave, the largest in the world, have been fully booked for all of the year ahead./.

New appliance brands enter Vietnam

More and more new appliance brands from many countries have been entering Vietnam over the last few years.

Hafele, Beko and Galanz are among the brands consumers have only gotten to know in the last couple of years.

They sell a wide range of products such as ovens, rice cookers and refrigerators at prices that are 20-30 percent lower than their established competitors’.

Hoang Minh Kiet, a business executive at electronic appliances distributor Tan Minh Phat company, explained that the new brands are willing to take a loss in the beginning.

Turkey’s Beko, which not many consumers are familiar with, has recently introduced several product lines like refrigerators, washing machines and microwave ovens.

Phung Dinh Luc, technical director of Japanese brand Sharp, said the technology for manufacturing TVs has become commonplace and so there are many brands in the market.

Foreign brands are also shipping components to Vietnam for assembly, and so there are many relatively cheap appliances available now, he said.

Various brands have been reaping success, and though currently there is a lull in the purchase of household appliances, many are confident about their products, he said.

Vu Duong Ngoc Duy, general director of Viettronics Tan Binh JSC, said his company is working with Japanese electronic brand Sansui to make TVs in Vietnam and sell at a competitive price.

Though the market is now struggling due to COVID-19, it is expected to recover soon, and consumption of appliances would recover, he said.

While many consumers are used to Japanese and Korean brands and tend to be wary of unfamiliar brands, low-priced appliances are often well received in rural areas.

Retail chains have identified rural areas as a lucrative market with non-demanding customers who do not yet own many electronic appliances whereas large cities have little room for new brands./.

HCM City, firms make efforts to prop up floundering consumer product sales

Demand for consumer goods in 2021 will not be higher than last year, with sales so far this year already 15-20 per cent year-on-year decrease, according to businesses.

Tet (Lunar New Year) sales last month only reached 70-80 per cent of their target, some major enterprises said.

Truong Chi Thien, director of Vinh Thanh Dat JSC, said his company still has a large inventory of poultry eggs it had hoped to sell during Tet.

So after Tet it had to look for other solutions such as processing them into other products and offering promotions like ‘buy 1 get 1’ to liquidate the stocks, he told Sai Gon Giai Phong newspaper.

During Tet Vissan’s revenues were lower than expected, but for the first time in many years sales of many essential goods fell significantly after the festival.

Phan Van Dung, deputy general director of the company, said though the Government has controlled the COVID-19 outbreak well, it has had a negative impact on consumer sentiment, causing demand to decline after Tet.

Assessing purchasing power in 2021, many enterprises expressed apprehension that this year would be more challenging than last.

It is likely that from now through the end of the third quarter demand would decrease by 15-20 per cent.

By the fourth quarter, if more people are vaccinated and international trade and tourism resume, then demand could pick up.

Nguyen Anh Dung, executive director for retail intelligence, Nielsen Vietnam, said the retail landscape has experienced drastic changes, especially the profile of consumers.

Customers would consider carefully before buying a product, and products that ensure food hygiene and safety, have a brand name and reputation, and, especially, have reasonable prices, would continue to do well, he said.

A Nielsen Vietnam survey found that consumers with a monthly income of less than VND6 million (US$259) have been forced to reduce spending due to the impacts of the pandemic.

Those with incomes of VND8-20 million have shifted from high-end to more affordable products, mainly food and beverages.

The high-income group has been spending more on consumer goods since it spends less on tourism due to the pandemic.

This year will also be the first in which HCM City will organise two focused promotional campaigns to attract domestic and foreign tourists to visit and shop in the city.

The departments of industry and trade and tourism are collaborating to set up shopping tours, enhance promotional programmes to stimulate demand at supermarkets and trade centres and help businesses open duty-free counters to serve tourists to gradually make the city a shopping destination in the country and wider region.

The trade department has also worked with business groups to mitigate difficulties faced by their members, and continues to help them get preferential loans through a programme that connects businesses with banks and the city’s investment stimulus programme. 

Vietnam sells 50,000 tons of rice to Bangladesh

On the sidelines of a conference to review the 2020-2021 winter-spring season and discuss production plans for the 2021 summer-autumn and autumn-winter seasons held in Can Tho City on March 24, it was announced that the Vietnam Southern Food Corporation has signed a contract to sell 50,000 tons of rice to Bangladesh at a cost, insurance and freight price of US$605 per ton.

The free-on-board price was over US$520 per ton.

The volume will be shared for some members of the Vietnam Food Administration and the rice will be shipped to Bangladesh next month.

The Vietnam News Agency had earlier cited AHM Mustafa Kamal, Finance Minister of Bangladesh, as saying that the country had approved a proposal to import 350,000 tons of rice from India, Thailand and Vietnam.

Pham Thai Binh, director of Trung An Hi-Tech Farming JSC in Can Tho City, said the rice export in early 2021 was relatively convenient. Since early this year, Vietnam has secured large orders at high prices.

Trung An has signed contracts to sell 5% of broken rice at US$540-560 per ton, Binh added.

The Philippines, Vietnam’s largest rice importer, expects Vietnam to reduce its rice prices. However, Vietnam cannot sell rice at less than US$530 per ton, Binh noted.

Vietnam-Canada trade revenue hits record high at US$8.9 billion in 2020

Bilateral trade revenue between Vietnam and Canada reached a record high of US$8.9 billion in 2020after two years of implementation of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).

The figure increased by 12% over 2019 and by 37% compared to 2018, when CPTPP began to take effect.

The number was announced at a conference entitled “Review two years after the CPTPP Implementation –Towards a post COVID-19 sustainable future” which was jointly held by the Canadian Embassy in Hanoi and the Vietnam Chamber of Commerce and Industry (VCCI) on March 23.

“The CPTPP has improved accessibility to trade and services between Canada and Vietnam, strengthened the set of common rules, reduced costs on trade, and made investment activities more predictable. This helps to improve competitive advantage of products in two markets, Canada and Vietnam,” said Canadian Ambassador to Vietnam Deborah Paul.

She emphasised that the CPTPP has established duty-free access to trade in goods between Canada and Vietnam while making high-quality Canadian products more affordable to consumers in Vietnam.

“Vietnam has been Canada's largest trading partner among ASEAN countries since 2015. Besides, Vietnam was the second largest destination in ASEAN for agricultural and seafood exports from Canada in 2020", said the Ambassador.

Canada’s top agricultural products exported to Vietnam include grains, oilseeds, fish and crustaceans, fruits, beef, pork, and dairy products. Meanwhile, Vietnam's main products exported to Canada include textiles, footwear, electronic products and components, seafood, and wooden products.

VCCI Chairman Vu Tien Loc said that imports and exports between Vietnam and Canada achieved a high growth rate of nearly 30% in 2019, nearly four times higher than the average bilateral trade growth ratebetween Vietnam and other CPTPP partners.

Due to the COVID-19 pandemic in 2020, the trade growth rate between the two sides slowed down but is still nearly double the average export growth rate of Vietnam.

“This result is thanks to the great efforts of the Government and enterprises of both sides in establishing mechanisms, exploring markets and promoting business cooperation between the two sides over the past two years,” said Vu Tien Loc noted.

AmCham suggests revisions to Law on Tax Administration 

All foreign enterprises, who operate and earn revenue in Vietnam, must comply with tax obligations in the country, local taxation authority said.

The Vietnamese taxation authority met with the American Chamber of Commerce in Vietnam (AmCham) on March 23 for clarifying regulations related to the draft circular on Law on Tax Administration to ensure efficient regulatory work as well as creating favorable conditions for businesses and taxpayers. 

At the meeting, AmCham argued that, in Article 3, definitions of “e-commerce activities” and “digital-based business” are overly broad and seem to include every business transaction with a Vietnamese customer conducted through the internet.  

“We recommend a narrower definition to cover specific business activities such as: excluding business-to-business activities since they are already subject to existing Foreign Contractor Tax (FCT) rules, and/or including de minimise thresholds to exclude activities/business with minimal transactions in Vietnam,” he said.

Article 3 should provide clear and detailed definitions to allow taxpayers and withholding agents to determine which transactions are in-scope and to minimize confusion and relieve foreign suppliers of administrative and compliance burdens for limited transactions in Vietnam, according to AmCham. 

AmCham representative also requested Vietnam’s tax authority to confirm that it is not mandatory for overseas supplier to make tax registration in Vietnam. The Vietnamese government needs to clarify the legislative hierarchy between Vietnam’s existing Foreign Contractor Tax (FCT) rules and the draft circular, he said. 

In situations where foreign suppliers are protected under tax treaties, they should not be required to register for corporate income tax (CIT). Moreover, as foreign suppliers are protected under tax treaties, they also should not be required to advance the payment of CIT. 

The government should create a mechanism to let Vietnamese business-to-business customers and financial institutions agents know whether a foreign supplier is eligible  for tax treaty protection and/or apply for tax treaty protection to prevent over-withholding of CIT. 

Given this scenario, Vietnam should create separate procedures of registration, filings, and forms for value-added tax (VAT) and CIT so that overseas suppliers can decide whether to register or not, and whether to register for VAT and/or CIT, according to AmCham. 

 Luu Duc Huy, Director of Tax Policy under the General Department of Taxation said the Vietnamese tax authority will consider AmCham's feedback. However, he affirmed that foreign enterprises, who operate and earn revenue in Vietnam, must comply with tax obligations in Vietnam. 

A number of foreign e-commerce providers and technology firms working in Vietnam like Facebook, Amazon, YouTube, Netflix (the US), iflix (Malaysia), WeTV, iQiYi, Alibaba (China) earn billions of dollars in Vietnam and yet  pay no taxes. 

The meeting between Vietnam’s tax authority and AmCham was held following a request submitted by the US Chamber of Commerce, Computer & Communications Industry Association, Information Technology Industry Council and Asia Internet Coalition to Minister of Finance Dinh Tien Dung on Chapter 9 of the above-mentioned circular.

Source: VNA/VNS/VOV/VIR/SGT/Nhan Dan/Hanoitimes 

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