VIETNAM BUSINESS NEWS MAY 16
Big customers could buy electricity directly from the generators in a pilot programme to develop a mechanism for a direct power purchase agreement (DPPA).
This was a highlight in a recent draft Prime Minister’s decision about the direct power purchase mechanism between renewable energy generators and big customers, which was raised for public comment.
Under the draft, the total capacity of power plants to join in the pilot programme would be less than 1,000MW.
The e-portal for registration would be opened for 30 working days to receive application files.
After that, the Ministry of Industry and Trade would announce the pilot mechanism within 15 working days and the list of generators and customers to join the pilot programme within 30 working days.
Power generators and customers could negotiate and sign contracts, including the completion of renewable energy plants’ construction and commercial operation.
The pilot direct power purchase would be implemented within one year from the time when power plants were put into commercial operation.
From the pilot implementation results, the Ministry of Industry and Trade would evaluate the market; and technical, financial and legal aspects; and complete the DPPA mechanism.
Vietnam International Premium Products Fair attracts over 250 exhibitors
The Vietnam International Premium Products Fair will be held again in Ho Chi Minh City after being delayed due to the COVID-19 pandemic.
VIPREMIUM 2022 returns from June 2 to 5 with a mission of connecting domestic and foreign businesses in the beauty - fashion, premium food and beverages, gift and houseware, smart devices, healthy and eco-friendly items, stationery, and office items industries, according to the organisers.
To be held at the Saigon Exhibition and Convention Centre, the fair will have 350 booths set up by 250 companies, and is expected to welcome 10,000 buyers and visitors.
Among its highlights will be the Korea Sourcing Fair with brands from across Korea and premium consumer products.
Seminars will be hosted on the sidelines by experts on various industries to provide updates on consumer trends in Vietnam and around the world and bringing goods into supply chains.
Five expressways to use non-stop automatic toll collection by September
The State-owned Vietnam Expressway Corporation (VEC) will implement automatic non-stop toll collection (ETC) on all five expressways under its management across the country by the third quarter this year.
VEC has just reported to the Ministry of Transport on the ETC system for the expressways under its management.
Accordingly, VEC had completed the investment, installation and operation of the ETC system on the Cau Gie - Ninh Binh Expressway from June 2020 for 15 lanes.
The system is currently operating effectively, with the service rate accounting for 51 percent of the whole line's revenue.
The remaining expressways include Noi Bai - Lao Cai, HCM City - Long Thanh - Dau Giay, Ben Luc - Long Thanh, Da Nang - Quang Ngai and some other sections of Cau Gie -Ninh Binh.
VEC approved and issued bidding documents for selecting ETC service providers from May this year.
It was expected that the VEC would close the bid on May 25 and complete the contractor selection on June 30.
PM attends opening ceremony of FPT Software's second office in New York
Prime Minister Pham Minh Chinh attended the opening ceremony of an office of FPT Software, a subsidiary of the FPT Group, in New York city on May 15, as part of his working visit to the US and the UN.
This is FPT Software’s second office in New York, 10th in the US, and 58th in world. The company is providing technological and digital transformation services for tens of businesses in the Fortune 500 list in the North American country.
Dang Tran Phuong, Director of FPT America, said FPT Software is the second Vietnamese company to open an office in New York - the world’s largest economic, financial, and technological hub. It hopes that in the next three years, its office in New York will contribute to 20 percent of its total revenue in the US.
Addressing the ceremony, PM Chinh said the office opening is a step to help Vietnam carry out digital transformation and form a digital economy, thereby helping improve the country's human resources quality and show its technological capabilities, wisdom, and competitiveness in the world, especially in the US, where science and technology is developed.
He expressed his hope that FPT will continue growing in the US and the world at large so as to help introduce Vietnam’s images and promote the two countries’ comprehensive partnership in a substantive and effective manner.
South America viewed as potential market for Vietnamese apparel
Despite trade activities between the nation and South American nations seeing growth in recent times, it remains far from fulfilling its full potential, especially for the textile and garment sector, according to industry insiders.
South America is viewed as a highly lucrative fashion market that boasts a population of more than 437 million people and a relatively high per capita income. However, there are still few businesses and consumers in South America who are fully aware of Vietnamese fashion products.
Furthermore, the Vietnamese textile and garment industry is in the process of developing rapidly and is able to meet many large orders with high requirements from different markets. Currently, the nation’s textile and garment exports to Brazil stands at between US$150 million and US$200 million per year, whilst those to Chile are between US$70 million and US$90 million per year and to Peru the figure is around US$30 million to US$40 million per year.
Meanwhile, local textile and garment imports, mainly cotton from Brazil, are approximately US$300 million to US$500 million.
According to Le Hoang Tai, deputy director of the Trade Promotion Department under the Ministry of Industry and Trade, said the volume and value of Vietnamese textile and garment exports to the South American market remain limited.
Sharing this point of view, Truong Van Cam, vice chairman and general secretary of the Vietnam Textile and Apparel Association (VITAS), assessed that the understanding of Vietnamese firms about national culture, consumers, customs, and habits of South American countries is limited and vice versa. In addition, many South American countries are large textile and garment producing countries, meaning that they are both co-operative and competitive with Vietnamese textile and garment companies.
Following the COVID-19 pandemic, there is a need to diversify the supply of raw materials and import-export markets, whilst the need to reshape the supply chains of enterprises in both Vietnam and South American countries remains very high.
Currently, the two sides are in the process of working to form a supply chain between local textile enterprises and those South American countries. This will prioritise co-operation in areas such as raw materials, weaving, and fabric dyeing, with the application of criteria for sustainable development being to ensure consistent working conditions and labour standards.
It can be seen as necessary to quickly start the negotiation of a free trade agreement between the South American Common Market known as MERCOSUR and Vietnam to allow local textile enterprises and South American nations to co-operate to boost development for mutual benefits.
Canada becomes second largest consumer of Vietnamese tra fish within CPTPP
Canada has risen to become the second largest importer of Vietnamese tra fish (pangasius) within the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), according to the Vietnam Association of Seafood Exporters and Producers (VASEP).
As of mid-April, the total export value of pangasius to the demanding market had surged by 69.4% to reach US$17.2 million against the same period from last year.
The VASEP said Canada represented a seafood market with stable growth in North America, adding that through the recent positive results, frozen pangasius exports to the market during the first half of this year are anticipated to achieve even stronger growth moving forward.
At present, Canada makes up a regular export market for more than 30 Vietnamese pangasius enterprises, of which three local enterprises, namely Vinh Hoan Joint Stock Company, NTFS Seafood Joint Stock Company, and Truong Giang Seafood Joint Stock Company, have posted the largest export value to the market in the first quarter of the year.
Cashew sector works to retain leading position in EU market
Local businesses have been advised to diversify their cashew products as part of efforts aimed at increasing exports to the EU and retaining its leading position in the demanding market moving forward, according to insiders.
At present, the dominant position of local cashew nuts in the bloc is being threatened due to a change in the supply chain, as well as the participation of a number of regional countries such as India and Cambodia, said Vu Anh Son, representative of the Vietnam Trade Office in France.
Most notably, the market share of Vietnamese cashew in France in the 2019 to 2020 period has shrunk from 61% to 46%.
Dang Hoang Giang, general secretary of the Vietnam Cashew Association (Vinacas), advised local firms to gain greater insights into customer tastes and other types of products sold at convenience stores in the EU to increase their market share.
Furthermore, Vietnamese enterprises have also been urged to stay updated on the latest changes in the standards of food safety and quality of imported products in the EU market, as well as strictly complying with regulations on the maximum allowed level of pesticide residue on imported goods, packaging, and labels.
Although Vietnamese cashew is the dominant nut in the bloc, they are only in a raw form with few processed products in line with the tastes of EU customers.
Authority targets tax evasion by high earners
The tax authority is to clamp down on tax evasion by Vietnamese nationalities who generate income on international e-commerce and social media platforms, according to the head of the General Department of Taxation Cao Anh Tuan.
Tuan said, for the time being, his department strongly advises and encourages taxpayers to come forward and seek instructions from tax authorities on how to fulfil their duties.
According to the department, collection from high-income individuals, who mostly operate in the fields of marketing, IT, service industries, digital commerce and social media, was nearly VND500 billion during the first ten months of 2021.
Notably, the department has collected up to VND23.4 billion (US$1 million) in late penalties from one individual who reported earnings of VND330 billion in 2020, along with several others whose incomes were reported to be north of half a million dollars in 2021.
Tuan has demanded his subordinates start gathering information to build a database of high-income individuals, who will soon be contacted by the country's tax authority about their financial and potential legal obligations.
Ha Noi's tax authority said it has a list of more than 460 individuals with exceptionally high income generated from operations on international e-commerce and social media platforms. The department said it will soon add more than 500 other individuals to the list, who will be given notice.
HCM City said it has contacted a number of Google, Facebook and YouTube users who have not declared income or failed to meet tax duties.
The country's tax authority said many among the list will likely face not just a collection of unpaid income tax for the previous years but heavy financial penalties for attempts at tax evasion.
A YouTuber who goes by the name of Thai Chuoi TV was made to pay income tax and fines in the amount of VND810 million for failing to declare income in the last four years.
Market likely to expand bearish trend: analysts
Markets experienced the worst performance since March 2020 last week due to strong selling pressure. Experts said that with the current conditions, downside risk is still dominating the market.
Last week, the VN-Index on the Ho Chi Minh Stock Exchange (HoSE) breached the 1,200-point level after ending the last trade at 1,182.77 points. It lost nearly 120 points just in the last two sessions.
The HNX-Index on the Ha Noi Stock Exchange (HNX) also finished the week at a lower level of 302.39 points.
The market dipped for three out of five sessions.
For the week, the VN-Index dropped by more than 11 per cent, while the northern benchmark HNX-Index declined 12 per cent.
On the southern bourse, trading value increased by 79.9 per cent compared to the previous week to VND84.2 trillion (US$3.6 billion), equivalent to a rise of 92.9 per cent in trading volume to 3.1 billion shares.
The trading value on the HNX also climbed by 70.7 per cent to nearly VND8.3 trillion, with the trading volume up 93 per cent to 406 million shares.
The strong gains were mostly due to the number of trading days as the market was closed for two days in the previous week.
Meanwhile, foreign investors posted a positive week after net buying nearly VND1.69 trillion, of which they bought the most from VFMVN DIAMOND fund with a value of VND646 billion.
Analysts from Saigon - Hanoi Securities JSC (SHS) said that after more than 10 years, the market again witnessed a long losing streak of six weekly falls.
With the bearish trend, the market benchmark VN-Index has evaporated more than 22 per cent in market capitalisation, while the VN30-Index which tracks the 30 biggest stocks on HoSE, also dropped more than 21 per cent in the past six weeks.
After falling for six consecutive weeks, the market's valuation has returned to a very attractive level with the price to earning (P/E) ratio of the VN-Index about 13x and the VN30-Index’s P/E ratio of over 12, which are lower than the average of the last five years.
If based on the forward P/E ratio for 2022, the valuation will become even more attractive. Therefore, this can be considered an opportunity for long-term investors.
Besides, on the technical front, the VN-Index seems to get closer to the target of the theoretical correction of 1,200 points.
However, if the situation becomes more negative, the benchmark can still slip to deeper support levels, with the closest level of 1,100 points.
SHS forecasts that this week, buyers and sellers will become more balanced as the market has dropped to the target area of the correction wave and also does not rule out the possibility that the market will have a recovery week after a long losing streak.
With a combination of market valuation and technical perspective, SHS believes that the area of 1,000-1,200 points, corresponding to the VN-Index’s P/E ratio of 11-13x, will be an attractive zone to disburse capital for the long-term investments.
VCSC signs $100m syndicated loan facility
Viet Capital Securities Joint Stock Company has signed a syndicated loan facility for US$100 million arranged by Taiwan’s Mega International Commercial Bank (Megabank) through its offshore banking branch.
It said it would carry short-term interest rates based on the international money market.
VCSC raised funds in a similar manner twice before in May 2020 and November 2021.
The company said the positive response from the market was a testament to its credit standing among investors, and was expected to pave the way for more offshore syndicated transactions in future.
Foreign loans at competitive costs would give it more resources to promote its business, including margin lending at competitive cost, it added.
Vietnamese goods displayed in over 200 countries and territories
Vietnamese commodities have been displayed in more than 200 countries and territories around the world. Fifty countries and territories are identified as the main export markets for Vietnamese goods.
Representative of Villalobos Modas Company (Brazil) Sergio Arevalo said that South America in general and especially Brazil, in particular, is a potential market for exporting textiles, footwear, and handbags from Vietnam.
For instance, Brazil - the largest consumer market with a population of up to 200 million people, on average, each year imports more than US$236 billion value of goods and 30 percent of which comes from Asia including Vietnam.
According to the statistics of the General Department of Vietnam Customs, three groups of most exports to the Brazilian market since the beginning of the year include footwear of all kinds with $33.18 million, textiles reaching $12.73 million, and bags, wallets, suitcases, hats, umbrellas achieving $3.33 million.
Unlike Brazil and South America in general, the Indian market is considered to be a very potential one for tea and coffee exporters. Mr. Bui Trung Thuong, Counselor of the Vietnam Trade Office in India, said that for the first time, in 2021, the bilateral trade between Vietnam and India exceeded $13 billion, an increase of 36.5 percent compared to 2020.
Particularly from the beginning of 2022 until now, Vietnam's export turnover to India increased by 12.6 percent over the same period last year. Tea and coffee, especially instant coffee products, are popular products in this market with a population of 1.4 billion.
Currently, the purchase of these two products from Vietnam is being sought by many Indian businesses. Only from the beginning of the year until now, hundreds of Indian enterprises through the Ministry of Industry and Trade’s promotion programs have come to Vietnam to find out market information to buy a product for processing, domestic consumption, and export.
According to the China Coffee Association, coffee consumption in the country is growing at an average annual rate of 15 percent. Currently, 60 Chinese enterprises came to Vietnam to look for coffee export partners in May.
As for traditional export markets like Europe, seafood will be the dominant product. Nguyen Thi Thu Thuy, Deputy Director of the Export Support Center under the Ministry of Industry and Trade, said that since the Vietnam - EU Free Trade Agreement (EVFTA) officially have taken effect from August 2020, about 220 tax lines for aquatic products are existing with a base tax rate of zero percent to 22 percent. The remaining tax lines will be reduced to zero according to the 3-7 year road map. As a result, Vietnamese seafood increases its price competitiveness compared to similar products in other countries.
Currently, the five largest seafood export markets of Vietnam in the EU include the Netherlands, Germany, Belgium, Italy, and France accounting for 72 percent. Exports of all major products to the EU grew in double digits. Notably, the export of shellfish to the EU market increased sharply by 37 percent, reaching $87 million. Most surprisingly, clam products have become the fourth largest export value seafood to the EU market.
Vietnam's cashew, textile, and wood industries have gradually moved up to the top position in the world's exports. In particular, in some markets, Vietnam's exports have surpassed China - which is considered a country with great resources, and is difficult to compete in terms of quantity of orders as well as product prices.
Explaining this issue, the Textile and Garment Association said that the US has put Vietnam at the top of the textile and garment exporting countries to this market because Vietnamese enterprises have taken the initiative to transform production very early. Five years ago, right after the world fashion market moved towards the greening trend, Vietnamese textile and garment enterprises transformed their entire production technology.
Specifically, Vietnamese enterprises have prioritized importing or producing environmentally friendly fabrics. Next, their entire production line has been improved because they poured more money into technology in the effort to reduce the use of fossil energy, the amount of waste generated must also be treated and recycled.
On that basis, the association quickly shook hands with environmental organizations and global environmental protection funds to seek financial support to transition to green production. And as a result, since then, garment exporters that are members of the association have confidently maintained and expanded their market share to the US as well as many other countries.
Similarly, the Wood Processing Association said that at the time when export markets only received wood products processed from planted forests, many domestic enterprises couldn’t continue export to other countries because they did not meet barriers. However, businesses have joined hands with farms, cooperatives, and farmer households to increase the area of planted forests very quickly. Subsequently, after only five years, Vietnam has risen to the top of exporting countries of wood and wood products to the United States and Europe.
Regarding the exports of honey products, only two years after entering the export market, this Vietnamese honey has taken the first position in the world. In the US and European markets, it is very difficult for any domestic honey product to compete. However, when Vietnam's honey products were taxed more than 400 percent by the US, the market was almost completely closed.
Traditional fish sauce craft village facing risks of production stoppage
For the past few months, production facilities in the traditional fish sauce craft village of Phan Thiet in Phan Thiet City in the South-Central Province of Binh Thuan, one of Vietnam's oldest and most famous fish-sauce making villages, have been getting fidgety because the supply of anchovies for production is in serious shortage.
Currently, dozens of fish sauce production facilities are having hundreds of empty fish salt containers, the traditional fish sauce craft village has been facing risks of production stoppage, and the supply of traditional fish sauce products is in danger of being disrupted in the area.
In the context that the consumption of traditional fish sauce is increasing strongly when the country’s economy in general and tourism, in particular, recover after the pandemic, the shortage of fish for fish sauce production is alarming as scores of fish sauce production establishments in Phan Thiet city have been awaiting fish supply.
From the beginning of the year until now, about 40 percent of the fish sauce containers at Ba Hai traditional fish sauce factory in Phu Hai Ward in Phan Thiet City has been empty because there is no source of anchovies for the production of fish sauce, a staple found on tables up and down the country.
Owner of Ba Hai fish sauce factory Nguyen Huu Dung moaned that staff in the establishment have traveled many places looking for fish, but their efforts have been unrewarded as fishermen refused to go to sea. At present, any salt container that withdraws all the fish sauce has to leave it empty, seriously affecting the facility’s production.
Similarly, for nearly a year now, due to the disruption of anchovies supply, Ngoc Dinh traditional fish sauce establishment in Ham Tien Ward in Phan Thiet City has had to empty nearly 200 salt containers out of a total of about 400 salt containers.
Mr. Huynh Duc Ngoc, the owner of the establishment, said that Phan Thiet's traditional fish sauce is made entirely of anchovies. However, from August 2021 until now, the facility has not been able to purchase the special fish, so the facility can only supply the market until the end of this year.
According to the traditional fish sauce establishments in Phan Thiet, every year, the establishments often expect the fish season and the codfish crop to purchase raw materials for production. However, this year, both crops are in short supply of anchovies.
Chairman of Phan Thiet Fish Sauce Association Truong Quang Hien, said that up to now, the association has about 44 production facilities that sell about 20 million liters of fish sauce in the market each year. However, the shortage of anchovies is seriously affecting this famous fish-sauce-making village with a history of more than 100 years.
Mr. Truong Quang Hien pointed out the main reason for the shortage of anchovy supply in the past several months is due to the increase in prices of petrol, and labor which makes fishermen afraid to go to the sea to catch.
On the other hand, unfavorable weather also makes anchovies less likely to appear, and the fishing productivity is not high. Currently, establishments only have to wait for the upcoming July anchovy crop to hope to be able to fill the salt roofs in time to supply the market next year.
Vietnam is now home to 1,500 fish sauce manufacturers; among which 35 specialize in making fish sauce for export.
App-based cab booking service asked to protect passengers’ personal data
The Ministry of Transport asked provinces and cities, app-based cab booking service and drivers to comply with cybersecurity regulations to protect against unauthorized access to or use of customer records or information that could result in substantial harm or inconvenience to any customer.
Localities must be responsible for monitoring and strictly handling violations in accordance with the laws, said the ministry.
Many passengers have recently made complaints about their records and information that have been shared in public forums on social platforms by drivers after a conflict between the two sides happened in the process of using the app-based vehicle services, causing embarrassment.
Customers’ names, addresses, phone numbers and private information have been leaked when they use app-based taxi services.
Vietnam-Laos trade ties growing sustainably
Since the establishment of their bilateral diplomatic ties in 1962, Vietnam and Laos have promoted cooperation across spheres, with their trade exchange posting substantial growth, benefiting both countries.
During the 2016-2020 period, the two-way trade saw stable expansion and reached the target of over 1 billion USD, but then suffered from the impact of the COVID-19 pandemic and natural disasters.
The Asia-Pacific Market Department at the Vietnamese Ministry of Industry and Trade (MoIT) said that the bilateral trade exceeded 1 billion USD in 2020, down 11.5 percent year-on-year, of which Vietnam’s exports were worth 571.7 million USD, down 18.5 percent.
However, the bilateral trade bounced back since early 2021, surging 33.3 percent to 1.37 billion USD for the year, with Vietnam’s export revenue reaching 594.7 million USD, a rise of 4 percent from 2020, and its import hitting 778.2 million USD, up 69.8 percent.
The results are attributable to the political resolve by Vietnamese and Lao leaders and the drastic management of competent agencies to remove obstacles facing businesses of the two countries and create optimal conditions for them to quickly adapt to the new situation.
In the first four months of this year, the two-way trade was valued at 558.2 million USD, representing a year-on-year increase of 20.2 percent, of which Vietnam’s export was 192.2 million USD, down 11.8 percent.
Vietnam mainly shipped iron and steel, means of transport and accessories, machinery, equipment, tools, fertilizers, plastic products and vegetables to Laos.