VIETNAM BUSINESS NEWS MARCH 26
Anti-dumping investigations launched into imported welding material products
The Ministry of Industry and Trade (MoIT) has issued Decision No. 947/QD-BCT on launching an anti-dumping investigation into some types of welding material products originated from China, Thailand and Malaysi.
The materials subjected to the investigation belong to the following HS codes: 7217.10.10; 7217.30.19; 7217.90.10; 7229.20.00; 7229.90.20; 7229.90.99; 8311.10.10; 8311.10.90; 8311.30.91; 8311.30.99; 8311.90.00.
According to the law, after initiating the investigation, the ministry will send questionnaires to relevant parties to collect information so as to analyse and evaluate the situation. If necessary, based on preliminary investigation results, the ministry may apply temporary anti-dumping measures to prevent losses for domestic production.
Along with information verification, the ministry will organise public consultations so that relevant parties can discuss and provide information and have a voice in the issue before giving out final conclusion.
At the same time, the ministry recommends all organisations and individuals that are importing, exporting, distributing, trading and using the investigated products to register as related parties and provide necessary information for the ministry to protect their legitimate rights and interests.
Besides, the ministry may apply retroactive anti-dumping duty on products subjected to taxation within 90 days before the imposition of temporary anti-dumping duty.
Therefore, the ministry recommended that organisations and individuals in the process of signing contracts for importing, distributing, trading and using goods under investigation should pay attention to the possibility of being subject to temporary anti-dumping and retroactive anti-dumping taxes.
Vietnam ranks 96th on global sustainable tourism list
A Euromonitor International report ranked Vietnam as 96th of 99 countries for sustainable tourism.
The report analysed seven aspects of sustainable tourism, including environmental, social and economic sustainability, country risk, and sustainable tourism demand, transport and lodging.
Globally, Sweden was ranked the most sustainable destination for travel, followed by Finland and Austria. Rounding out the top five were Estonia and Norway.
The research firm predicted there would be growing awareness among consumers, businesses and governments to prioritize the planet alongside people and profit when global tourism resumes following travel restrictions amid the pandemic.
Some popular tourist destinations in Vietnam have been eyeing sustainable tourism development. For instance, Hoi An in central Vietnam is restricting the use of single-use plastic items and plastic bags as it looks to boost sustainable travel growth.
Vietnam becomes 10th largest supplier of wooden furniture to French market
With France moving to increase its wooden furniture imports, Vietnam has become the 10th largest supplier of this product to the fastidious market, according to data released by Eurostat, the statistical office of the European Union.
These statistics show that the European country imported 1.08 million tonnes of wooden furniture worth a total of US$3.75 billion last year, posting a decline of 6.8% in volume and 6.9% in value compared to figures recorded in 2019.
According to the Italian Centre for Industrial Studies, France represents an important part of the furniture sector both in Europe and globally, making up the second largest import market in Europe.
Most notably, France has always been a key Vietnamese trading partner within the EU, with the country making up the Southeast Asian nation’s fourth largest export market in the bloc.
Furthermore, the nation is the 10th largest supplier of wooden furniture to the French market, accounting for only 3.2% of the total import volume, a relatively low figure in comparison to import demand within the fastidious market.
Trade experts have therefore advised Vietnamese firms to seize upon the various opportunities brought about by the EU-Vietnam Free Trade Agreement (EVFTA) in order to boost their export of furniture products to the French market in an effective manner.
At present, China remains the largest supplier of living room and dining room furniture to France, followed by Poland, Italy, Belgium, Spain, Portugal, and Vietnam.
With the country being the fifth largest supplier of wood frame chairs to France, it is trailed by China, Italy, Romania, and Poland. However, the import volume and value of Vietnamese wooden framed chairs endured a downward trajectory last year.
HCM City helping RoK businesses to tackle difficulties
The People’s Committee of Ho Chi Minh City, in collaboration with the Consulate General of the Republic of Korea (RoK), for the first time organised a dialogue between city leaders and RoK enterprises on March 25 to help them deal with difficulties in investment and business.
Chairman of the municipal People’s Committee Nguyen Thanh Phong told the dialogue that since diplomatic ties were set up in 1992, Vietnam and the RoK have seen rapid development in bilateral relations, becoming strategic cooperative partners in 2009.
Economic cooperation has always been an important pillar in the bilateral relations, and the RoK has been a key economic partner of Vietnam for many years.
As of the end of 2020, the RoK had over 8,900 valid investment projects in Vietnam totalling 70.65 billion USD, ranking it first among 139 countries and territories investing in the country, in terms of both capital and project numbers.
Last year, the RoK was Vietnam’s third-largest trading partner, with two-way trade hitting 66 billion USD.
For HCM City, the RoK was the fifth-largest export market and third-largest import market, with turnover reaching 1.8 billion USD and 2.8 billion USD, respectively.
In the first two months of 2021, the city and the RoK saw two-way export and import value of 366 million USD and 701 million USD, up 30.3 percent and 47.3 percent year-on-year, respectively.
Addressing the dialogue via videoconference from Hanoi, RoK Ambassador to Vietnam Park Noh-wan said his country’s enterprises always pay attention to and hope to participate in large-scale infrastructure projects, such as the city’s smart city planning and the Long Thanh International Airport project.
Kim Heung Soo, President of the Korean Business Association in Vietnam, proposed simplifying and improving administrative procedures related to foreign investment.
Simplifying administrative procedures can help reduce time and costs for businesses, thus contributing to directly increasing business competitiveness, improving the city’s business and investment environment and attracting more foreign investment, Kim said.
Phong requested local departments and sectors collect ideas and recommendations from RoK for submission to higher levels for settlement./.
Binh Duong holds trade promotion event to attract Thai investors
Authorities in Binh Duong province, in collaboration with Becamex IDC - a leading developer of industrial, urban and transportation infrastructure in Vietnam - held an online conference on March 25 to promote Thai investment in the southern province.
Despite COVID-19, foreign capital poured into the province in the first three months of 2021 exceeded 400 million USD.
Boasting an attractive and open business climate, the accumulated number of FDI projects in Binh Duong as of the end of February neared 4,000 worth close to 38.8 billion USD. As such, the province ranked third nationwide in term of FDI attraction, just behind Ho Chi Minh City and Hanoi.
Thailand has so far injected over 647 million USD in 39 projects in Binh Duong, making it the 12th-largest of 65 countries and territories investing in the province. Thai investors have a preference for producing high-quality plastic products and industrial plastics, and for manufacturing and assembling civil electrical products.
Sanan Angubolkul, President of the Thailand-Vietnam Business Council and Vice Chairman of the Thai Chamber of Commerce, said Binh Duong’s dynamic growth has long been on the radar of the Thai business community.
Nguyen Thanh Truc, Vice Chairman of the provincial People’s Committee, highlighted that there is tremendous space for investment cooperation between Binh Duong and Thailand to grow, adding that local authorities always create favourable conditions for Thai investors./.
Khanh Hoa promotes cooperation with Indian businesses
The leader of the south-central province of Khanh Hoa called on Indian investors to explore its potential and strengths and the cooperation opportunities available in localities during an online conference to promote cooperation between the two sides on March 25.
Speaking at the event, which was part of activities to realise the Vietnam-India Joint Vision on peace, prosperity, and people, reached by the Prime Ministers of the two countries on December 21, 2020, Chairman of the Khanh Hoa People’s Committee Nguyen Tan Tuan said the province boasts abundant advantages in natural landscapes and resources.
Khanh Hoa lies on a strategic location and is a gateway to the East Sea, he added.
For his part, Indian Ambassador to Vietnam Pranay Verma noted that as of last year, India had 294 projects in Vietnam with total investment of 898 million USD, mostly in the fields of energy, natural resources exploration, agricultural product processing, and coffee, sugar, and tea production.
At the same time, Vietnamese businesses had also invested about 29 million USD in the sectors of pharmaceuticals, IT, chemicals, and construction materials in India.
He said these figures should move upwards, adding that the natural landscapes and cultural diversity in Khanh Hoa could appeal to Indian visitors.
Vietnamese Ambassador to India Pham Sanh Chau highlighted India’s strengths that Khanh Hoa businesses could explore further, including infrastructure building, solar energy, IT, water resources management and use, and heritage conservation.
The Indian side underlined the country’s fields of strength, such as aquatic processing, water resources management, and waste management.
Khanh Hoa businesses also introduced cooperation opportunities in local economic, trade, and investment, especially in manufacturing, electronics, construction materials, home appliances, supporting industries, and shipbuilding and repair and warehousing at the Ninh Thuy Industrial Park (IP), one of the large IPs in the Van Phong Economic Zone.
India’s tourism sector and tourism cooperation opportunities were also explored.
Vietnam textile industry combats pandemic with PPE switch: Forbes
A surge in demand for personal protective equipment (PPE) from the manufacturing sector in Vietnam due to COVID-19 pandemic, along with the orders that flowed in from around the world helped to buoy the country’s important garment-making industry with many manufacturers rejigging their facilities to produce PPE, said an article on the forbes.com website.
The article cited statistics from Vietnam’s Ministry of Industry and Trade showing that there are more than 6,000 garment factories and textile mills in the country, and the sector employed some 3 million workers in 2020.
The Vietnamese government had initially restricted the export of goods, such as face masks, to ensure there was an adequate domestic supply to help combat the virus. But once the restrictions were lifted in March of last year, Vietnam’s manufacturers exported almost 1.2 billion masks through to December 2020 to North America, Europe and around Asia, it noted.
The article mentioned as an example Vietnam Goods and Exports (VGE) which turned to making cloth face masks.
It quoted VGE founder Anh Tran as saying that he made the decision to switch in early 2020, and sees an ongoing demand for his product.
“Despite vaccines now rolling out, the [Centers for Disease Control] is still recommending people to wear masks because it is a slow rollout, and there are still many at-risk people you can affect or be affected by,” he said.
“If vaccines are effective, you will probably see a drop-off in the wearing of masks near the end of 2021, but from now until then, it is still a massive industry that just exploded overnight.”
“Vietnam has definitely become a shining star in the global PPE trade in 2020 because prior to that most PPE was manufactured in China or the United States,” he added.
Vietnam, ASEAN countries urged to adopt green manufacturing technologies: conference
Vietnam and ASEAN countries need to adopt green manufacturing technologies to make sustainable new products and services, heard a recent international conference in southern Binh Duong province.
Dr Michael Braun, coordinator of the Enhanced Regional EU-ASEAN Dialogue Instrument project, told the ‘Cooperating with Europe for Green Manufacturing Technologies’ conference that it is important to promote technological cooperation between the European and Southeast Asian blocs for mutual benefit.
ASEAN countries have emerged as important manufacturing hubs in global supply chains, he said.
“The growing demand for environmentally sound, resource- and energy-efficient products and manufacturing has created a hunger for new green manufacturing technologies.”
With its rich technology and research landscape, innovative enterprises and dedicated green growth strategies, Europe is a major source of such green technologies, he said.
“Green technologies are key to sustainable new products, services and manufacturing processes, and are essential for realising green growth.”
For ASEAN member states, green technologies will help make the best possible use of their natural and energy resources and protect the health and well-being of workers and consumers.
Hans Farnhammer, head of Cooperation for the European Union Delegation to Indonesia, Brunei, Darussalam and ASEAN, said: “Green production has become the core of sustainable development.”
Prof TAN, Reginald Beng Hee, of the National University of Singapore, said, “Binh Duong province is set to become the next destination for green technology transfer.”
Nguyen Viet Long, director of the province Department of Science and Technology, said comprehensive transport infrastructure and quality human resources play a major role in attracting foreign investors, especially from Europe, with green manufacturing technologies.
The Government needs to invest in improving infrastructure and offer incentives to promote the triple helix model of university–industry–government cooperation, he said.
Joanna Drake, deputy director of the European Commission’s Directorate-General for the Environment, said under the European Green Deal, the EU recognises that climate change and environmental degradation are an existential threat to Europe and the world.
To overcome the challenges, the EU needs a new growth strategy that would transform it into a modern, resource-efficient and competitive economy in which there are no net emissions of greenhouse gases by 2050, and economic growth is decoupled from resource use, she said.
The Deal aims to make the EU’s economy sustainable by turning climate and environmental challenges into opportunities, focusing on investments in green technologies, sustainable solutions and innovative businesses, she said.
It also lays out a path for a sustainable transition that is socially fair and ensures ‘no person or place is left behind’, she said.
The EU therefore supports ASEAN and its member states with initiatives related to climate-change resilience and adaptation, environmental protection, including protecting bio-diversity, and disaster preparedness and response, she added.
The two-day conference that began on March 22 was held as part of the 2021 EU Industry Week organised by the provincial People’s Committee and the European Commission./.
Expansion of sugarcane expected to balance sugar market
The government needs to apply customs duties policies that would help increase the purchase price of sugarcane.
The prompt imposition of anti-dumping and countervailing duties on sugar originating from Thailand has encouraged domestic farmers continue to expanding raw material areas. However, local experts suggested that strengthening the link between farmers and businesses is a long-term measure to ensure the sustainable development of the sugar industry.
Since the imposition took effect from this March, the retail price of sugar has increased from VND1,500 (US$0.06)-VND2,000 (US$0.08) per kg compared to the end of 2020. The purchase price of raw sugarcane from local growers also increased by VND50,000 (US$2.1) to VND100,000 (US$4.3) per ton.
The average buying price is currently at about VND950,000 (US$41.2)-VND1 million (US$43.3) per ton, Nguyen Cam Trang, Deputy Director of Import and Export Department under the Ministry of Industry and Trade (MoIT) told the seminar entitled “Opportunities and challenges for the sugar industry” held on March 23 in Hanoi.
Being of the same mind, Chu Thang Trung, Deputy Director of the MoIT’s Trade Remedies Authority of Vietnam, said that local manufacturers have increased the purchase price of sugarcane materials by 10%-13% compared to the previous crops.
“This helps farmers remove difficulties and encourages them to consider replanting sugarcane and expanding areas of cultivation,” he said.
Nguyen Van Loc, Acting General Secretary of the Vietnam Sugarcane and Sugar Association (VSSA) said that the domestic sugar industry has been badly damaged by massive import of sugar in the past, so the recovery process takes a long time.
“However, the government needs take on a policy on customs duties that would help increase the purchase price of sugarcane,” he said.
The Department of Agricultural Products Processing and Market Development under the Ministry of Agricultural and Rural Development forecast a shortage of raw sugarcane supply for factories in this year’s crop.
Currently, only 29 out of 40 sugar factories are still in operation. The total output of sugarcane in Vietnam is only around 5.3 million tons, equivalent to 530,000 tons of sugar.
Vietnam’s domestic sugar price remains the lowest in the region. Local experts said that in order to develop sustainably, it is still necessary to build a close linkages between businesses and farmers, developing quality and sustainable sugarcane material areas, and investing in technology to improve product quality.
Recently, the government has slapped temporary anti-dumping duty of 33.88% and countervailing duty of 44.88% on sugar originating from Thailand.
The decision comes after the MoIT last September initiated an anti-dumping and countervailing investigation on imported sugar from Thailand on the basis of the request of the VSSA and domestic sugar producers.
VIB eyes over 7.5 trillion VND in pre-tax profit in 2021
The Vietnam International Bank (VIB) targets posting a pre-tax profit of more than 7.5 trillion VND (324.18 million USD) in 2021, a year-on-year rise of 29 percent, the bank’s extraordinary shareholder’s meeting on March 24 heard.
Under its business plan, the bank aims to have more than 300 trillion VND in total assets, up 26 percent against 2020.
With strong financial capacity and a specific business strategy, the bank decided to increase its capital by paying dividends in bonus shares and issuing stocks. With this, its charter capital will increase from over 11 trillion VND to nearly 16 trillion VND, helping it optimise asset growth while ensuring business safety ratios in 2021.
It will continue to develop new financial measures to bring an excellent experiences to customers.
VIB’s total assets increased 33 percent last year to 245 trillion VND. As its pre-tax profit grew 42 percent to more than 5.8 trillion VND, the return on equity (ROE) ratio reached 30 percent, helping VIB retain its top position in the banking sector in terms of business efficiency in the context of bad debts falling under 1.5 percent.
VIB is a pioneer in applying Basel III standards in risk management, after becoming the first bank in Vietnam to complete the three pillars of Basel II.
VIB began trading its stock on the Ho Chi Minh Stock Exchange in November 2020. The stock is now fluctuating around 43,800 VND./.
Vinh Long expects to turn tourism into spearhead economic sector
The Mekong Delta province of Vinh Long has mobilised resources to promote tourism development, with the aim of turning tourism into a spearhead economic sector by 2030.
During a conference held on March 24 to review the implementation of a resolution on tourism development in Vinh Long in the 2015-2021 period, participants discussed the province’s potential and advantages for tourism development, as well as measures to fully tap those strengths.
Their discussions specially focused on how to stimulate tourism demand in the province amid complex developments of the COVID-19 pandemic.
Vice Secretary of the provincial Party Committee Bui Van Nghiem said the local authorities have mobilised all resources for tourism development, and encouraged travel businesses and local community to build and popularise Vinh Long’s image to visitors, gradually developing the sector into a key contributor to its economy.
The authorities have reviewed and issued support and incentive policies to encourage investment in the tourism sector, built infrastructure, adjusted the planning of tourist areas in order to call for more investment, and developed unique tourism products, promoted the application of technology and improved the quality of human resources serving tourism development.
The province will also continue to complete and effectively implement tourism development projects, and consider organising a tourism festival as an annual event to draw more holiday-makers.
Dialogues between the local authorities and businesses will be increased with the aim of removing difficulties facing travel companies.
Vinh Long welcomed over 6.1 million domestic and foreign visitors in the 2015-2019 period, earning nearly 1.7 trillion VND (over 73.6 million USD). The number of tourists and revenue averagely increased 11.6 percent and 25.7 percent per year.
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 percent of all investment and domestic projects for only 30 percent, 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 have 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 provincial 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./.
Vietnam targets 10 billion USD from fruit, vegetable exports by 2030
Vietnam expects to gain 8-10 billion USD from shipping fruits and vegetables abroad, with revenue of processed products accounting for at least 30 percent of the total by 2030.
Under a project to develop the fruit and vegetable process sector during 2021-2030 recently approved by the Prime Minister, Vietnam targets to attract investment in 50-60 fruit and vegetable processing establishments, and build several modern groups and enterprises who have good competitive capacity.
With a view to achieving the goals, Vietnam will invest heavily to improve processing ability, give priority to processing key fruits and vegetables which have high values, set up material zones, and develop markets for the products.
The project laid stress on the necessity to build processing and packaging facilities and storage warehouses and install suitable equipment to reduce post-harvest losses.
Besides, it is crucial to attract investment to ensure that all of the production facilities will be well equipped with necessary machines by 2030.
Along with encouraging businesses to invest in food irradiation centres at large-scale fruit and vegetable farming areas so that their products meet international standards, the country will promote intensive processing and diversify processed products.
Additionally, the country will establish specialised fruit and vegetable cultivating areas which are able to provide some 5-6 million tonnes of high-quality products for processing by 2030./.
Strong bonds with South Korean partners for deeper integration
Vietnam and South Korean businesses are expected to enjoy more investment opportunities soon and participate in the global supply chains thanks to new deals enabling them to implement investment promotion programmes.
The Vietnam Technology Advice and Solutions from Korea Centre (VITASK) will likely sign an MoU by the end of this month with departments of industry and trade, as well as industrial zones (IZs), to open up investment opportunities for businesses from the two parties.
The members of the supporting projects – Korea Electronics Technology Institute, Innovation Tech Lat, Korea Polytechnic University, and Innovative Technology Lat – will also sign similar deals with authorities and IZs in South Korea.
The agreements will help to reinforce the role of VITASK in investment promotion, along with the task of having a deep and thorough supporting programme.
According to Kyoung-Jin An, deputy director of VITASK, the cooperation will bring benefits for all sides. “We will introduce South Korean to invest in Vietnam, while simultaneously cooperating with departments and IZs to implement investment promotion programmes. Besides that, we will also connect Vietnamese businesses that want to penetrate the South
Korean market with local partners,” he said. “Regarding VITASK, the centre will be more convenient in approaching businesses, which have demand on supporting industries. In addition, it will help to improve the centre’s presence in both Vietnam and South Korea.”
After the first appraisal round of around 40 dossiers, VITASK selected 24 local suppliers to visit manufacturing facilities for the first time. The representatives of centres will visit these suppliers for a second time during the next months to select the final 16 eligible candidates.
“The scheme of this supporting programme was expected to be implemented in March, however, it will be delayed to May due to the impacts of the pandemic,” An explained. “According to the initial plan, we will select 12 candidates for the first phase. However, now the figure increases to 16 with the expectation of supporting more suppliers.”
VITASK currently cooperates with local authorities to work with the business community, which has the demand on technical support, but faces difficulties in approaching them.
“We hope to receive support from the government and relevant authorities to find suitable local suppliers, so that we can effectively implement the project,” An said.
Cooperating with South Korean ministries to establish the VITASK programme is a part of the Vietnamese government’s approach to help local suppliers improve their competitiveness.
The Vietnamese government has issued numerous regulations to promote development of local supporting industries, including Decree No.111/2015/ND-CP on incentive policies for businesses operating in supporting industries; Decision No.68/QD-TTg approving the Supporting Industry Development Programme from 2016 to 2025; the Law on Support for Small- and Medium-sized Enterprises; and Resolution No.115/NQ-CP dated August 2020 on solutions to promote supporting industry development.
The Ministry of Industry and Trade (MoIT) has also been working on an international cooperation project in terms of supporting industries, including the cooperation with Samsung to develop vendors, a scheme with South Korea’s Ministry of Trade, Industry and Energy to train technical engineers, and an additional World Bank project, among others.
Le Huyen Nga, deputy head of the Supporting Industry Division under the MoIT’s Agency for Industrial Development said, “Implementing synchronised solutions to support businesses in supporting industries will contribute to improving their competitiveness, improving the productivity and quality of their products, and leading towards smoother entry into global supply chains.”
Hanoi plans to begin construction of 43 industrial clusters in 2021
The capital city of Hanoi is planning to start construction of 43 industrial clusters in 2021, which were set up during the 2018-2020 period.
Accordingly, the municipal People’s Committee will begin construction of one industrial cluster in Quarter 1, 23 in Quarter 2, 13 in Quarter 3, and six in Quarter 4.
The city is striving to complete technical infrastructure for at least 20 industrial clusters, while attracting investment into 10-15 clusters.
All of the operating industrial clusters will have synchronous technical infrastructure, which will be managed in line with the current regulations. Furthermore, all of the newly-built industrial parks will have standardised sewage treatment stations.
Besides pushing technical infrastructure development, the city will create favourable conditions for investors to shorten investment procedures.
Hanoi has already developed mechanisms to support businesses who land investment in the industrial clusters, and issued regulations on service prices at the clusters.
Due attention will be paid to investment promotion, aiming to reach full occupancy at these industrial clusters. Competent authorities will work to improve its management over the clusters, and keep close watch on land use and illegal construction at the sites.
The city will tighten the examination of the establishment of new industrial clusters in accordance with existing regulations.
Hopes escalating for post-pandemic growth in M&A
Vietnam’s mergers and acquisitions, though rather muted in the beginning months of 2021, are expected to revive on the back of both vaccination programmes and legislative changes.
Vietnam has witnessed only a few merger and acquisition (M&A) deals since the beginning of 2021. Thailand’s SCG acquired 70 per cent stake in Duy Tan Plastics while Danish group BioMar scooped up a majority share in Viet-Uc.
Commenting on this trend, Masataka Sam Yoshida, head of the Cross-border Division of RECOF Corporation, said that this situation is just temporary, and a bright future is expected ahead. For instance, Japanese investors have become more cautious than ever after the latest wave of the pandemic in Japan.
Vietnam has been extremely successful in keeping the pandemic under control, but the strict travel restrictions make it difficult for Japanese companies to arrange short-term business travels, which are fundamental and crucial in considering and proceeding with M&A transactions. “Having said that, the rationale for the investment in Vietnam has not changed. Vietnam has much higher growth potential than Japan where the economy is too mature. We are aware that Japanese companies remain interested in Vietnam, even though they are not active at this moment,” he said.
According to RECOF’s M&A database, the number of outbound transactions from Japan decreased by 33 per cent to 557 transactions in 2020, while the same number in Vietnam declined by 30 per cent to 23. Vietnam ranked sixth as the destination country for Japan among all countries worldwide, and second only to Singapore in Southeast Asia.
Yoshida added, “COVID-19 has been the sole reason for the recent sluggish M&A transactions between Vietnam and Japan, so assuming the COVID-19 will be subdued with the start of vaccinations and the removal of travel restrictions, we are more than confident that the market will recover in the latter half of 2021.”
Meanwhile, Vo Ha Duyen, chairwoman of Vietnam International Law Firm, cited data by the Corporate Investment and Mergers & Acquisitions Center showing that the value of M&A deals in Vietnam in 2020 dropped by about a half from 2019. Various factors may have affected such activities, she said – the pandemic has had a significant impact on the global economy and also caused difficulties to dealmaking, while travel bans and lockdowns have hampered M&A due diligences and negotiation meetings.
According to Duyen, the ongoing changes to the laws of Vietnam have also contributed to some uncertainties. Under the new Law on Competition, a substantially higher percentage of M&A deals are subject to merger control filing requirements than under the old laws. Investors initially hoped that the introduction of the 30-day “preliminary review” track to the merger control filing procedure under the new law would help reduce procedural burdens.
Nonetheless, because sub-law regulatory guidance has not been issued, it seems that a majority of filing cases have not seen application of the 30-day preliminary review and have been subject to complex and uncertain evaluations which last for months.
In addition, local departments of planning and investment have had difficulties in applying the new Law on Investment as documents guiding the implementation of the law have not been issued. This could increase cases in which the licensing authorities have to seek opinions from other relevant authorities, which may contribute to delays in the M&A process.
“We hope that new decrees and circulars providing detailed and favourable regulatory guidance will be issued soon to support the competition and investment authorities in dealing efficiently with M&A transactions and to effectively reduce the time gap and uncertainties in the procedures, helping boost the recovery of M&A activities when the pandemic settles down,” Duyen said.
According to Vietnam M&A Forum Research Team, a number of mega deals are expected to be secured in 2021. Foreign investors from South Korea, Japan, Singapore, and Thailand will continue to dominate the market with the value of deals reaching up to $500 million. At present, Vietnam’s M&A market remains attractive to investors despite the impact of the global health crisis – in particular, in the second and third quarter of 2020 Vietnam witnessed more M&A deals after the country successfully contained the summer wave of infections.
That being said, Vietnam is hopeful about potential for post-pandemic M&A growth. Some experts have forecast that the main sectors that will contribute to the recovery of value in Vietnam are telecommunications, energy, infrastructure, pharmaceuticals, education, and e-commerce.
Yoshida from RECOF said that Japanese companies are concerned with stability of global supply chains. Vietnam is not only competitive as a location for manufacturing, but also it stands at the crossroads in terms of free trade agreements with major economic zones and so is well positioned.
“Additionally, more Japanese companies are paying attention to sustainability and technology innovations, and they are eagerly looking for opportunities to apply their expertise, such as in renewable energy, smart cities, AI, and more in Vietnam, where the people are open to new ideas,” he said. “As for the pandemic, we highly evaluate Vietnam’s success in keeping the pandemic under control, and this fact makes the country even more attractive for the Japanese investors.”
Garment sector set for full recovery in second half of next year
The local textile and garment sector is anticipated to bounce back during the third quarter of 2022, according to Le Tien Truong, chairman of the Vietnam National Textile and Garment Group (Vinatex).
Last year witnessed Vietnamese textile and garment exports grow by minus 10.5% due to the impact of the COVID-19 pandemic, just raking in US$35 billion, in contrast to regional peers who endured a decline of between 15% and 20%.
This is the first major setback the sector has suffered after 25 years of penetrating the global market says Truong, adding though the global market is showing signs of recovery, the number of orders and prices remain modest.
The executive reveals several local enterprises, including Vinatex, have received orders up until the end of April or even July and August for some commodities such as knitwear and other popular items.
The sector is poised to fully recover from the COVID-19 crisis in the third quarter of 2022 at the earliest possible time, says the CEO.
Truong speaks of disadvantages that the garment sector addresses during the COVID-19 pandemic time, noting garment firms are unlikely to fulfil signed contracts and more importantly the sector’s position in the global supply chain is also threatened.
Experiencing three coronavirus waves, the Vinatex representative therefore advises businesses to strictly take drastic COVID-19 prevention measures at work, with workers from epidemic hit areas being subject to a 21-day quarantine period.
During the course of the year ahead the domestic textile and garment sector is forecast to achieve an export turnover of approximately US$39 billion.
To meet the target, local firms will strive to expand into fresh markets while the implementation of various free trade agreements (FTAs) is anticipated to create a wealth of opportunities which will serve to boost exports.
The Vinatex leader also says as a means of taking full advantage of the tariff reduction and benefits from recently-signed FTAs, local firms are required to prove their origin of production, either in Vietnam or in intra-bloc countries. This is in line with the rule of yarn and fabric set out within both the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the EU-Vietnam Free Trade Agreement (EVFTA).
Experts consider how Vietnam can attract greater investment from global firms
Vietnam must stay active in inviting multinational corporations and renowned companies to invest locally, especially those from countries with advantages in terms of technology, capital, and management skills, including the United States, the EU, and Japan, according to insiders.
The past five years has seen the foreign-invested sector make significant contributions to Vietnamese socio-economic development.
Furthermore, the country has always represented an attractive investment destination for foreign investors due to Vietnamese FDI attraction increasing from US$24.1 billion in 2015 to US$38 billion in 2019, with the figure being recorded at US$28.53 billion in 2020 despite the impact of the novel coronavirus (COVID-19) pandemic.
Do Nhat Hoang, director of the Foreign Investment Agency under the Ministry of Planning and Investment, attributes investment inflows into the country to a number of recently-signed free trade agreements (FTAs). This includes the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), the EU-Vietnam Free Trade Agreement (EVFTA), and the Regional Comprehensive Economic Partnership (RCEP).
The enforcement of these various FTAs has created a wealth of opportunities for large foreign corporations, especially those in hi-tech fields, to invest domestically as they can maximise the benefits and incentives from these FTAs, Hoang adds.
Furthermore, he underscores the importance of attracting technology projects relating to AI, blochain, fintech, and training high-quality human resources that can meet the requirements for Vietnamese socio-economic development.
Nguyen Hoa Cuong, deputy director of the Central Institute for Economic Management (CIEM), emphasises the need to effectively invest in innovation for businesses whilst helping small firms gain access to funding sources from banks.
He therefore stressed that although the country can be considered vulnerable to the spread of the COVID-19 pandemic, the international community has highlighted Vietnamese containment efforts and determination to improve the local business environment and turn the country into an ideal destination for investors.
Nakajima Takeo, chief representative of Japan External Trade Organization (JETRO) in Hanoi, says while other countries are still struggling with the impact of the COVID-19 pandemic, the Vietnamese economy has rapidly recovered, with Vietnam becoming the first nation to enjoy the various advantages of the diversification of the global supply chains.
Moreover, with keen interest from foreign investors, including Japanese investors, the country should strive to improve the local business climate to attract more high-tech investors whilst fine-tuning the legal system and supporting firms to overcome the adverse impact of the COVID-19 epidemic, the JETRO representative states.
According to Nguyen Van Toan, vice chairman of the Vietnam Association of Foreign Investment Enterprises, it is essential to promote technology transfer and corporate governance for Vietnamese enterprises, while also being proactive in inviting multinational corporations and companies with popular brands to invest in the country.
Economic experts have therefore stated that it is necessary to complete the legal framework regarding anti-transfer pricing, revise regulations on tax management, whilst also increasing fines and penalties for acts of transfer pricing to ensure the strictness of law. This should be done alongside building and perfecting the database system and national information on FDI projects and enterprises.
Thousands of products qualified for OCOP standards
Thousands of products have been rated and qualified for the standards of the One Commune-One Product (OCOP) programme during the 2018-2020 period, said Deputy Prime Minister Trịnh Đình Dũng.
Addressing a national conference reviewing the OCOP programme in the 2018-2020 period in Hà Nội on Tuesday, Dũng said that all 63 provinces and cities across the country have rolled out the programme, in which 59 provinces and cities have verified and rated products.
The trade promotion for OCOP products has been also actively and effectively implemented by provinces, cities and agencies, he said.
A report from the Ministry of Agriculture and Rural Development (MARD) said that the OCOP programme has 4,469 products with three-star and above ratings in 59 provinces and cities, 1.86 times higher than the target set for 2018-2020.
Localities nationwide have so far organised 66 OCOP fairs.
Retail systems and trade centres have actively participated in consuming OCOP products.
The deputy prime minister emphasised that OCOP is a rural economic development programme, not only contributing to improving the incomes and the lives of people in rural areas, but also actively supporting agricultural restructuring and programmes on new-style rural area building.
The quality and design of the OCOP products improve day by day, bringing economic benefits to people, cooperatives, businesses and localities, he said.
However, the implementation of the programme still revealed several shortcomings, he added.
Several localities faced difficulties in defining their advantages and potential, and many only focused on existing products and did not pay attention to developing new products.
Trade promotion is still fragmented, not synchronous, and has not attracted consumers. Source of capital for OCOP development, the governance capacity of economic organisations and entities in OCOP are still limited.
The deputy prime minister requested ministries, sectors and localities to strengthen management over the implementation of the programme, guide the classification of products in localities, and supplement and complete a set of criteria assessing and rating OCOP products.
He also emphasised the need to absolutely avoid complaisance in assessing and recognising OCOP products, without paying attention to product quality, affecting the effectiveness of the programme.
For proposals and recommendations of ministries, sectors and localities, Deputy PM Dũng asked the MARD to consider thoroughly and continue working with them to build the OCOP programme for 2021-2025.
According to agriculture minister Nguyễn Xuân Cường, after three years of implementing the OCOP programme, business households, cooperatives, and small and medium-sized businesses have developed their production in the direction of professionalism.
The programme has promoted the potentials and strengths of localities in specialty products, production conditions as well as raw material areas with more than 145 OCOP products that have effectively exploited the local raw material areas, said agriculture deputy minister Trần Thanh Nam.
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./.
Thua Thien Hue strives to develop tourism in new normal
The central province of Thua Thien Hue has put in a great deal of effort to restore the local tourism industry as the world moves into a new normal in the post-COVID-19 period.
The province has therefore taken a range of solutions aimed at stimulating domestic tourism demand through diversifying its tourism products and services, creating entertainment spots at night, providing guests with exciting experiences at cultural heritage sites, and developing different types of tourism, including eco-tourism, beach holidays, and resort tourism.
In an effort to attract more guests to the ancient capital, travel firms are currently offering discounts of up to 50% on entrance fees to heritage sites between March 1 and August 31.
Furthermore, the province will also put on a wide range of festivals each month, including a traditional craft festival, the Lotus Festival, a food festival, the Hue Dragon Dance Festival, and the Hue Ao Dai Festival, in a bid to stimulate tourism.
Duong Thi Cong Ly, director of the Hue branch of the Hanoi Tourism Joint Stock Company, said the firm has paid close attention to the quality of its tourism products as it offers a fresh experience for visitors through unique products, including check-in tours around the Huong river and cycling tours which take guests throughout the city.
Tran Trong Kien, chairman of the National Tourism Advisory Council, emphasized the need to focus on digital transformation and development of the city’s brand so it is renowned for being green, clean, and safe.
Le Huu Minh, acting director of Thua Thien Hue Department of Tourism, said to turn Thua Thien Hue into a safe, friendly, and attractive destination, localities have been advised to strengthen connectivity by launching special tours, such as the Thua Thien Hue-Da Nang-Quang Nam tour which has proved popular in recent years.
Foreign brokerages rack up agreements
Several international banks, particularly from Taiwan, are boosting their financing offers to Vietnam’s brokerages, betting on the tremendous growth of the financial market.
Last week, a consortium of four Taiwanese banks – the Union Bank of Taiwan, Taichung Commercial Bank Co., Ltd.’s Labuan branch, Taishin International Bank, and Huanan Commercial Bank – rolled out a $30-million syndicated loan with a 12-month tenure for VietinBank Securities – the brokerage arm of state-owned VietinBank.
The negotiations began at the end of 2020 and were completed after three months, despite the ongoing pandemic restrictions. The syndicated loan facilities are expected to fund the brokerage’s future operations and business expansion plans in the fast-growing equity market of Vietnam.
Ho Thi Thu Hien, chairwoman of the board at VietinBank Securities said, “The access to foreign capital could give the company an upper hand in taking advantage of lower interest rates, compared to other foreign brokerages which are backed by their foreign parent banks.”
The expansion of foreign loan limits, Hien added, would continue to add fuel to VietinBank Securities’ synergy to provide best customer-centric and diverse services. This deal is slated to pave the way for the company to boost its activities related to international loan advisory and financing arrangements.
Last December, Vietnam’s largest brokerage Saigon Securities Incorporation (SSI) was ahead of the curve when it signed a mortgage loan agreement of $85 million with a group of nine foreign banks, also led by Taipei-headquartered Union Bank of Taiwan.
Earlier in 2019, SSI also entered into a syndicated loan of $55 million from a group of financial institutions led by SinoPac Bank and became the first securities company in the country to be granted such large-scale credit in the form of an unsecured loan.
An SSI representative told VIR that the expansion of foreign loans with high value and low cost of capital laid a firm foundation for the company to boost its competitiveness through the provision of more cheap capital, especially for margin loans to investors.
Although the representative did not disclose specific rates or loan costs, SSI has an ace up its sleeve due to preferential interest rates thanks to its good risk management capacity, large-scale assets, and extensive network nationwide.
Up to now, only a few of Vietnam’s top securities firms are able to obtain sizable unsecured loans from foreign banks. Specifically, SinoPac, one of the leading Taiwanese lenders, has continuously displayed its eagerness to latch onto Vietnam’s lucrative equity market by cooperating with local prominent brokerages.
Ho Chi Minh City Securities Company also inked an agreement to receive a $50 million unsecured loan from 10 foreign financial institutions, also led by SinoPac, in 2019.
On the same track, SinoPac arranged a $40 million unsecured syndicated loan, together with other foreign banks, to lend to Viet Capital Securities Company in May 2020.
Local securities companies are not the only beneficiaries of unsecured syndicated loans from international funds. Last year, the $500 million syndicated term loan of Techcombank was named the second-largest in Southeast Asia, and the largest ever in Vietnam.
The loan facility was arranged by United Overseas Bank as coordinator and facility agent, and ANZ, CTBC Bank, First Abu Dhabi Bank, and Taishin Bank as mandated lead arrangers, underwriters, and bookrunners.
HDBank has also entered a $71-million syndicated loan led by a consortium of eight Taiwanese banks and an Indian bank arranged by Mega International Commercial Bank.
Market experts believed access to relatively cheap financing sources is one of the pivotal elements to help securities companies grow and stay competitive, especially in comparison with other foreign-backed brokerages such as Mirae Asset Securities, KB Securities, and KIS.
Regarding abundant capital to support margin loans, some foreign banks operating in Vietnam such as Wooribank, CTBC, Indovinabank, and Shinhan Bank Vietnam have actively backed securities firms to bolster margin lending.
For instance, Wooribank provided more than VND2.81 trillion ($121 million) to major brokerages, including KIS, MBS, ACBS, while KBSV. Indovinabank has also issued loans to securities firms such as MBS, KBSV, and TCBS.
Mekong Delta drives attractiveness to foreign investors
Foreign investors from Thailand, South Korea, and Japan are eyeing investment opportunities in garment and textiles, construction, solar power, manufacturing, and retail in the Mekong Delta.
At a dialogue on investment in the Mekong Delta, Nicolas Le, regional expansion director of Central Group (Vietnam) stated the company is interested in expanding its investments to Chau Doc and Long Xuyen districts of An Giang province, where consumer demand is very high.
“Central Group is looking for newly-built trade centres from 4,000-20,000 hectares. In the next 1-2 years we hope to develop two centres and a series of convenience shops in An Giang province,” Le said.
The dialogue was held between An Giang People’s Committee and foreign investors on March 23 in Ho Chi Minh City by the Investment Promotion Centre-South Vietnam (IPCSV) under the Ministry of Planning and Investment.
JS Construction from Korea, meanwhile, is looking for a minimum of 1,000ha for agricultural planting. Kim Jong Seong, director of JS Construction said that this land site needs clean land and infrastructure, especially water for irrigation.
Thai investors, meanwhile, expressed interest in the development of the border gate economy and industrial parks.
Audsitti Sroithong, minister counsellor from Office of the Board of Investment, shared that in the establishment of the border gate economy, the most important factor was the infrastructure system which must facilitate logistics.
According to Tran Thi Hai Yen, director of the IPCS, the investment promotion activities so far have not been effective enough as each province was working alone.
Many provinces are offering similar incentives while they need a unique offering that suits their natural resources and geographical position, as well the investment directions of the central government.
“Although the investment demand in the Mekong Delta provinces is great, investment promotion activities have remained ineffective,” Yen said at another meeting held on the same day where regional promotion centres shared experiences and discussed solutions to improve investment promotion in the region.
Yen added that the IPCS has received many diplomatic delegations (both online and offline) as well as large corporations that are very interested in investing in the southern region, especially the Mekong Delta.
The unit has also been tasked by the Ministry of Planning and Investmentwith promoting cooperation with provinces, enhancing investment promotion, and preparing steps to welcome and support the shift of foreign direct investment (FDI) flows in the coming time.
Regarding regional investment promotion links, Nguyen Thi Huyen Ngoc, deputy head of IPCS Investment Promotion Department, said there is an overlap in investment promotion activities run by many agencies.
In addition, these agencies are uncoordinated, partly due to the weakness of local investment promotion agency in reporting, exchanging information and promoting activities.
That is why Ngoc claimed regional linkages are essential to be set up, to reduce costs, better harness resources, and promote common interests while creating a common brand and a unifying driving force in investment promotion.
It is known that the Ministry of Planning and Investment has just assigned IPCS to set up a national electronic portal and the official launching ceremony is scheduled to be held in April 2021.
This will be a platform for all local authorities of the 13 cities and provinces of the Mekong Delta where the foreign business community can share and request information on opportunities in this region.
The IPCS has also been working with the consulates general of many countries in Ho Chi Minh City which are sending articles covering information on investment opportunities and investment needs of foreign enterprises through the industry associations in their country in this portal.
The Mekong Delta accounts for 12 per cent of the country's area and 19 per cent of its population (about 17 million people). It is often referred to as the "rice bowl" of the country as it accounts for half of its total rice output and 95 per cent of its export rice output.
According to the World Bank, this region accounts for 20 per cent of the global rice trade.
Fishery production is also the region's strength, accounting for 65 per cent of Vietnam's production volume.
However, for many years, the Mekong Delta has been overlooked by foreign investors, receiving only 8 per cent of the total FDI capital pouring into the country each year on average.
This rate has increased significantly last year, when FDI in the Mekong Delta region reached $6.08 billion, accounting for 21.3 per cent of the total. Outstanding projects included the $4 billion liquefied natural gas (LNG) thermal power plant in Bac Lieu invested by Delta Offshore Energy (Singapore), the O Mon II thermal power plant project with the total investment of $1.3 billion from Marubeni (Japan) and Vietnam Investment Construction and Trading Joint Stock Corporation (Constrexim Holding), and especially the $3 billion LNG-to-power project invested by VinaCapital GS Energy, a joint venture between South Korean GS Energy and VinaCapital which received the investment certificate on March 21.
Source: VNA/VNS/VOV/VIR/SGT/Nhan Dan/Hanoitimes