VIETNAM BUSINESS NEWS MAY 17
With Vietnam-US economic relations having grown steadily over time, the American business community is very optimistic and working very hard in Vietnam, according to Virginia B. Foote, President of the Board of the US International Centre.
The two countries have reached a new height of over 100 billion USD in two-way trade, Foote, who is also co-founder of the US-Vietnam Trade Council (USVTC) and President and CEO of Bay Global Strategies, told the Vietnam News Agency's reporters on the sidelines of Prime Minister Pham Minh Chinh’s meeting with US enterprises in New York on May 16.
She highlighted the entrepreneurial spirit in Vietnam as well as its great workforce, better infrastructure and significant location in Asia as advantages for American firms doing business in the country.
“Our companies very much appreciate the talents in Vietnam and working with the Vietnamese people,” she said.
Foote also outlined several challenges facing US investors which include burdensome administrative procedures in some areas, and supply chain and logistical difficulties which are not unique to Vietnam.
“We're hoping as we come out of COVID-19, these things will smooth out,” she stated.
Foote also hoped that US firms can get access to renewable energy which is increasingly important to their manufacturing in Vietnam.
The official later spoke highly of PM Chinh’s meeting with the US business community, saying he made several speeches which were all very interesting and insightful about Vietnam’s future. “I think he's heard a lot from various companies,” she noted.
She added that the US is hoping to have Vietnam join the Indo Pacific economic framework. “There's been discussion about that and how that might help build global standards and further deepen the relationship between the US and Vietnam.”
Foote was presented with a friendship order by the Vietnamese State in 2007 for her support for the signing of the bilateral trade agreement (BTA), the agreement on Vietnam’s WTO accession and the US Government’s application of Permanent Normal Trade Relations (PNTR) with Vietnam.
She served as Chair for the US Business Coalition for APEC and Chair of the US-Vietnam WTO Coalition in 2006. She was also Executive Vice President of the US-ASEAN Business Council from 2014 – 2017.
HCM City wishes to see more investment activities from Austrian firms: official
Ho Chi Minh City wants to see more investment promotion activities from Austrian enterprises to tap on the sides’ cooperation potential, said Vice Chairman of the municipal People’s Committee Vo Van Hoan while receiving a business delegation from Austria on May 16.
Taking into account Austrian firms’ opinions, the city official stated that their concerns are also what the city is working to address and their recommended solutions should soon be studied for real-life implementation.
Highlighting challenges facing the city in waste and wastewater treatment, Hoan hoped that Austrian enterprises with interest in the field to offer consultations and transfer technologies to the city, and invest in building treatment plans here.
He said the firms can also share their experience and directly participate in the city’s smart city development projects.
For his part, Austrian Ambassador to Vietnam Hans-Peter Glanzer, who led the delegation, said the delegation, the first from his country to Vietnam after two years of hiatus due to the COVID-19 pandemic, looks to seek collaboration chances with the city and southern localities in green infrastructure development.
The diplomat said as both nations are stepping up the use of clean and renewable energies, room remains tremendous for their businesses to work together in green energy, green technology, green transport, and waste water treatment.
RCEP to improve Vietnam’s access to large consumer markets: Standard Charter Bank
The Regional Comprehensive Economic Partnership (RCEP), which entered into force on January 1, 2022, is expected to boost Vietnam’s export and improve its access to large consumer markets, according Standard Chartered Bank.
In its latest Global Research Report titled “Vietnam–RCEP: Opportunities and challenges”, the bank said the membership in the pact further strengthens Vietnam’s trade position and should contribute to the post-pandemic recovery this year. Major export categories that are expected to benefit from the RCEP include information technology, textiles, footwear, agriculture, automobile and telecommunications.
The deal is expected to eliminate about 90 percent of tariffs on trade between the signatories within 20 years.
Over the longer term, the deal could form a basis for a new supply chain in the region, with Vietnam playing a key role. The country targets average export growth at 6-7 percent a year from 2021 – 2030.
“SMEs, which account for 98 percent of all enterprises in Vietnam and contribute 40 percent of GDP, are poised to benefit as the pact provides opportunities for them to move up the value chain,” the report said.
However, Vietnam is also likely to face more competition, both in export markets and domestically, as a result of the RCEP. For exports, the pact increases competition from other Southeast Asian countries, some of which are strong in similar product categories to Vietnam.
Over time, this could prompt Vietnam to move into high-tech manufacturing, said the report. The RCEP should facilitate this process, making it easier to source high-quality materials from other member countries and improving market access for higher-value-added goods.
More broadly, the RCEP is likely to accelerate China’s economic integration with the rest of the Asia–Pacific region; in contrast, the US is not an RCEP signatory. Vietnam will continue to benefit from its role as an alternative manufacturing hub as companies adopt a “China plus one” diversification strategy.
At the same time, however, China’s low-cost products will gain better access to Vietnam’s domestic market under the RCEP, posing potential challenges to domestic competitors, it added.
Standard Chartered Bank’s economists expect a strong current account (C/A) surplus and FDI flows to remain the key pillars of support for the Vietnamese currency over the long run. The RCEP is likely to further boost Vietnam’s exports, supporting the C/A balance, and help attract increased direct investment flows.
Vietnam Airlines joins SkyTeam's Sustainable Flight Challenge programme
The national flag carrier Vietnam Airlines has participated in "The Sustainable Flight Challenge" (TSFC) programme, launched by SkyTeam Airline Alliance, with the first flight from Hanoi to the Republic of Korea’s Seoul.
The programme aims to encourage ideas for aviation sustainable development, further reduce aviation’s impact on the environment and spur breakthrough ideas that can be shared across the industry.
It has drawn the participation of 16 airlines from many countries including the United States, France, Italy, the Netherlands, Spain, China and the Republic of Korea. Participating carriers will be judged across 14 categories by an international panel of judges with members who are experts from related fields. The winners will be honoured at an award ceremony to be held in June.
Participating airlines will organise long-haul flights of more than 5,000km, medium-range trips of between 1,500 to 5,000km and evaluate the efficiency of environmental protection on these flights.
Vietnam Airlines conducted a medium-range flight from Hanoi to Seoul on May 14. Passengers were welcomed with a cloth bag and a card conveying the message of environmental protection, all made from environmentally-friendly materials.
The carrier continued to operate a long-distance flight from Ho Chi Minh City to Melbourne (Australia) on the following day. It is one of the five airlines participating in this category.
As the national airline, Vietnam Airlines always strives to take the lead in meeting strict requirements on environmental protection.
The carrier's fleet has been continuously upgraded, including Airbus A350, Boeing 787 and A321neo with new generation engines, helping to reduce 50 percent of emissions, 16 percent of fuel and 75 percent of noise compared to those of old generation.
Since 2019, the airline has reduced more than 60 million plastic bags per year by stopping using plastic wraps for many kinds of things used during flights. It also plans to replace many plastic cutlery with those made from eco-friendly alternative materials.
Vietnam among leading exporters to Walmart
Vietnam ranks among the leading five countries which exports the most goods to the US retail giant Walmart, with major products including garments and textiles, household appliances, electronics, and ready-to-eat foods, said Paul Dyck, vice president of Global Government Affairs at Walmart.
The Walmart representative made the statement during a reception held with Vietnamese Minister of Industry and Trade Nguyen Hong Dien, who is accompanying Prime Minister Pham Minh Chinh in attendance at the ASEAN-US Special Summit.
He revealed that the group has focused its investment activities to create a retail distribution system that covers 24 countries worldwide, while simultaneously conducting trade exchange activities alongside more than 100 other countries.
The emergence of the COVID-19 pandemic, the complications of global geopolitics, and trade conflicts have all contributed to causing supply chain disruptions, which in turn has forced Walmart to diversify its supply chain, he noted.
As a result, the group wishes to receive support from the Ministry of Industry and Trade to ensure stable supply sources in the future, the Walmart representative added.
In response, Minister Dien highlighted Walmart’s strategy aimed at ensuring supply sources and thanked the group for choosing the country as a long-term partner.
The Vietnamese trade official went on to suggest that Walmart strengthen co-ordination with the Ministry of Industry and Trade to improve the overall business capacity and help them gain greater insights into the market demand. This can be done to provide more sources of raw materials for production and export activities, as well as expanding its list of goods moving forward.
Simultaneously, Minister Dien asked the retail group to develop a database system to provide firms with multi-dimensional information and enhance connectivity with US businesses in the fields of supporting industries, materials, and processing in order to develop a stable supply source of raw materials.
Furthermore, he also requested the group to capitalize on various Free Trade Agreements (FTAs) that the country has signed to bring Vietnamese goods into the group's retail system worldwide.
Dyck noted that moving forward, the retail giant will direct the representative office in Vietnam to ramp up co-operation with the Ministry of Industry and Trade as a way of increasing the import volume of goods of Vietnamese origin in its retail chain.
WB warns of heightened risks looming
While Viet Nam's economic recovery was gaining momentum, the Government must pay more attention to "inflation and heightened risks of weaker global demand and supply disruptions to economic prospects", said a World Bank report on the South East Asian economy for May.
Major disruptions to look out for include the uncertainty due to the ongoing Russia-Ukraine conflict and supply issues caused by lockdowns in China. The report said if higher inflation persists in the medium term, the economy should be allowed to adjust to higher prices with the authorities incentivising investments to increase productivity and aggregate supply. To mitigate risks to export performance, diversifying trade partners would be a prudent strategic consideration.
During the month of April, the country's industrial production index grew by 9.4 per cent, comparable to the pre-pandemic level. Manufacturing of apparel, footwear, electronics, electrical equipment, and metal products were the most dynamic sub-sectors, registering double-digit growth rates. Visits to restaurants, coffee shops, shopping malls and other retail and recreation establishments also returned to the pre-pandemic level as the declining number of new COVID-19 cases and deaths (Viet Nam recorded fewer than 5,000 new COVID-19 infections with fewer than 10 deaths daily in early May) boosted people’s confidence to resume economic and social activities.
Exports accelerated from 17.0 per cent in March to 25.2 per cent in April while import growth edged up from 14.6 per cent to 16.5 per cent year-on-year. Export performance was relatively broad-based across major products and markets. Imports grew more slowly than exports, largely reflecting the slowdown in imports from China caused by lockdowns to contain the recent surge in COVID-19 infections, according to the report.
Meanwhile, FDI commitment reached US$1.9 billion in April, 12.6 per cent lower than the same period last year. In light of current global conflicts and tightening financial conditions, heightened global uncertainty may have made investors more prudent.
The report said the price increases indicate both supply and demand side factors at play. On the supply side, there was some passthrough from global commodity prices and higher transport costs to domestic prices of both food and non-food products.
Four-month purchasing power rebound facilitates business recovery
Domestic purchasing power has rebounded after a strong decline caused by the COVID-19 pandemic. That rebound has facilitated businesses to step up production and seize new opportunities, experts have said.
The nation's total revenue from retail trade and services surpassed VND1.77 quadrillion (US$76.2 billion) in the first four months of 2022, up 6.5 per cent year-on-year, the latest report from the Ministry of Industry and Trade (MoIT) showed.
In April alone, the revenue also saw a positive yearly rise of 12 per cent to over VND455 trillion, according to the report.
These encouraging figures were attributable to abundant good supply and increasing purchasing power in the domestic market, the MoIT said, adding that goods retail sales saw a year-on-year hike of 7.6 per cent to over VND1.42 quadrillion in the four months. Of this, sales of food and foodstuff rose 13.2 per cent year-on-year and that of cultural and educational products increased 11.5 per cent.
In the four-month period, restaurant and accommodation revenues totalled nearly VND171 trillion, up 5.2 per cent, while tourism revenue stood at over VND4.3 trillion, up 10.5 per cent year-on-year as tourism activities gradually returned after the Government agreed to reopen inbound and outbound international flights from March 15.
During April 30 and May 1, many travel businesses experienced a sudden increase in the number of tourists, such as Saigontourist, which served between 30,000 and 50,000 visitors; Vietravel and Vietnam Travelmart which welcomed 4,000 visitors each. The number of customers booking tours with Fiditour increased 30-40 per cent over the same period last year, news site vnbusiness.vn reported.
Statistics from the Viet Nam Administration of Tourism said the tourism sector served nearly five million domestic visitors between April 30 and May 1, earning a revenue of about VND22 trillion.
According to analysts, the domestic market has been gradually recovering, regaining its growth momentum. However, these signals are just the start of a recovery road ahead.
Nguyen Dinh Cung, former director of the Central Institute for Economic Management, told vnbusiness.vn that during the COVID-19 pandemic, many consumers had to tighten their spending, leading to a sharp drop in consumption power. Until now, the pandemic had been gradually controlled, but the trend of tightening spending could be maintained because many people's jobs and income sources were still precarious.
According to Cung, people who could afford to travel were those with stable incomes and money to spare. But those who were workers and freelancers failed to have sufficient money to speed up their spending.
Thus, it was necessary for the State to draw up policies to support the stability of the labour market and stimulate purchasing power through tax reduction, Cung said.
Meanwhile, rising commodity prices would likely affect consumer spending.
Thao, who runs a grocery store Ha Noi's Bac Tu Liem District, said he was concerned about the price of many essential consumer goods gradually increasing as he imported these items for his shop.
Whenever customers wondered, Thao had to explain to them that the prices of many essential goods, from yoghurt and cheese to cooking oil and soap, had increased.
Vietnamese goods for Vietnamese people
Despite an encouraging increase in retail sales of food and foodstuffs, other products like garments and appliances, tools and household equipment decreased by 3.5 per cent and 4.6 per cent, respectively in the four-month period as the prolonged pandemic affected the income of many households, the MoIT said in its report.
Sharing with vnbusiness.vn, Pham Van Viet, general director of Viet Thang Jean Co (VitaJean), said that the market grew about 10 per cent in the period. However, this growth is still lower than the 15-20 per cent recorded in the pre-pandemic period.
Thus, VitaJean only launched a new product collection with a size equal to one-third of the collections before 2020. The debut of the new collection was based on the calculation of consumption and inventory, Viet said.
In spite of the firm's experience in conquering strict markets such as the EU and the US, they still encountered difficulties in bringing garment products to the Vietnamese people.
Amid the pandemic, many foreign fashion brands such as H&M and Zara were constantly expanding their distribution systems thanks to their strong financial capacities.
Meanwhile, Vietnamese garment enterprises found it difficult to seize untapped opportunities for garment and textile products in the local market due to disadvantages in raw materials and harsh competition from fake and poor quality products rampant in the market, Viet said, adding that some Vietnamese consumers still had a bias in favour of foreign brands. That is why VitaJean's domestic sales only accounted for a few per cent of its total revenue.
To deal with the issue, To Hoai Nam, deputy chairman and general secretary of the Viet Nam Association of Small and Medium Enterprises, emphasised the importance of promoting "Vietnamese people give priority to using Vietnamese goods" campaign to continue to inspire customers' patriotism and national pride.
Businesses and all classes of people should continue to respond to the campaign, thereby creating purchasing power for Vietnamese goods, Nam said.
Can Tho eyes logistics, hi-tech agriculture cooperation with RoK
Officials of the People’s Committee of Mekong Delta Can Tho city on May 16 had a working session with a delegation from the Korea - Asia Economic Cooperation Association (KOAECA) led by its chairman Lee Kim-kee, focusing on logistics and hi-tech agriculture cooperation in the time to come.
The two sides discussed orientations for cooperation in the fields of tourism, investment in logistics and seaport infrastructure, aviation, and hi-tech agriculture, especially logistics and agriculture-farm processing projects that Can Tho is going to implement in the coming time.
Chairman of the municipal People’s Committee Tran Viet Truong said the city is preparing to invest in many projects and it hopes to cooperate with KOAECA in developing logistics systems serving the consumption of farm produce of the Mekong Delta region.
Can Tho has planned to set up a logistics centre for linkage, production, processing and consumption of agricultural products in the region, which will cover an area of 3,300 ha, he said.
The draft project is being urgently completed to submit to the Prime Minister for approval in May, he revealed.
In addition, the Government has also approved an another grade-II logistics centre in Can Tho, which will cover 242 ha of land in Cai Cui port in Cai Rang district, Truong said, adding that the city is also building a plan of a 1,000-ha airport city.
Truong suggested KOAECA help connect Can Tho with Incheon city of the Republic of Korea (RoK), and encourage RoK firms to research, survey, and invest in the "airport city" project in Can Tho.
Can Tho also asks KOAECA to invite Korean businesses to invest in the Can Tho hi-tech industrial park, especially in digital transformation, to help Can Tho speed up its development, Truong said.
Can Tho boasts the Vietnam - RoK industrial technology incubator, which has been operated for five year, Truong said, expressing the hope that KOAECA will visit and support activities of the establishment in the time to come.
KOAECA chairman Lee Kim-kee said that his agency will cooperate closely with Can Tho in terms of agriculture, logistics and seaports, and aviation and tourism.
In agricultural cooperation, KOAECA will transfer technology and provide finance, while Can Tho only needs to issue permits, and provide land and labour, he said.
KOAECA will also provide finance for developing airports, highways, and seaports to effectively speed up infrastructure building, he added.
Can Tho is home to 14 investment projects from the RoK with a total registered capital of 261 million USD. The RoK ranked second among countries and territories investing in the Mekong Delta city, mainly in production and trade.
Vietnamese e-commerce likely to reach US$39 billion by 2025
Vietnam’s e-commerce market has recorded strong growth over the years and is likely to bring in US$39 billion in value by 2025, according to data released by the German market research firm Statista.
A global e-commerce report unveiled by Metric.vn, a data researcher, also indicates that Vietnam has become the second largest e-commerce market in Southeast Asia, behind only Indonesia, by taking advantage of consumers’ increasing demand during the recent COVID-19 period.
The e-commerce index 2022 report released by the Vietnam E-commerce Association (VECOM) points out that as of March, 44 out of 63 provinces and localities have built and operated e-commerce floors. Most notably, up to 75% of the platforms have used the country domain name .vn, while the remaining 25% have adopted international domain names instead.
Due to the geographical preference of search engines like Google and Bing, all websites using the domain name .vn enjoy advantages of search engine optimization (SEO). The move has brought about a higher search value when users have a domestic IP address.
Last year witnessed e-commerce services expand 20% to generate over US$16 billion in revenue despite the negative impact caused by the pandemic. The growth rate is projected to be much higher this year thanks to COVID-19 pandemic containment efforts.
Since the fourth outbreak of the pandemic in the first half of last year, Vietnam has added an additional eight million new digital consumers, more than half of whom do not come from major cities.
At present, 99% of Vietnamese digital consumers intend to continue making use of online services in the future which is expected to open up bright prospects for Vietnamese e-commerce growth.
Vietnam is a dynamic, attractive market: US executives
Leaders of US economic and financial groups such as Kohlberg Kravis Roberts (KKR), VISA, Citigroup, and Standard & Poor’s all hailed Vietnam’s development potential during separate meetings with visiting Vietnamese Prime Minister Pham Minh Chinh.
Prime Minister Pham Minh Chinh, who is in the US for a working trip from May 11-17, meets Joseph Bae, CEO of KKR -one of the largest private equity funds in the world .
Joseph Bae, CEO of KKR - one of the largest private equity funds in the world that has invested more than US$1 billion in Vietnam, said that the fund wishes to expand its investment in the fields of real estate, infrastructure, digital transformation, food, consumer goods, and technology, among others in Vietnam.
Vietnam is a very attractive market for investors thanks to its incentive policies, important geographical location, and young and dynamic workforce, and it is certainly the destination for many value-added services in the region and the world, said Bae.
The KKR CEO shared experiences in promoting investment in energy infrastructure, digital transformation, and health infrastructure, noting the development of these fields requires strong private public partnership cooperation as well as a transparent and clear legal framework.
He said he hopes that the comprehensive partnership between the United and Vietnam will facilitate such investment activities.
For his part, PM Pham Minh Chinh welcomed KKR’s investment expansion plan in Vietnam and said its investment areas are of Vietnam’s priority. He suggested that KKR provide policy advice, technical assistance, and human resource training. to make bilateral cooperation more effective and substantive.
In another meeting, an executive of VISA expressed his impression of Vietnam’s dynamic development, and at the same time congratulated Vietnam on hosting the 31st Southeast Asian Games (SEA Games), sending a very positive signal about its success in COVID-19 control.
He highly appreciated the government’s plan to develop its non-cash payment services, with the growth rate from 8% in 2020 to 28% this year, and hoped the government would achieve the cashless payment target set by 2027.
VISA wishes to work closely with the Government of Vietnam to support growth and innovation goals in the financial sector, said the VISA executive, adding the firm desires to support digital transformation for small businesses, or in smart cities, smart mobility projects in Vietnam.
PM Pham Minh Chinh highly valued the presence of VISA in the Vietnamese market over the past 20 years, and expected the firm to further expand investment, explore new products, strengthen cooperation with commercial banks, and engage more digital transformation of the banking & financial sector in Vietnam.
The Prime Minister briefed the executive on Vietnam’s approved project to develop non-cash payment services for 2021 - 2025 and asked VISA to share experiences and support this scheme.
During meetings with leaders of Citigroup and Standard & Poor’s, Chinh assured that the government is aggressively handling violations in the capital market to develop it in a safe, transparent, and efficient manner.
He requested S&P to assist Vietnam in credit rating for its businesses.
Meanwhile, Chinh discussed with Citigroup leaders the possibility of promoting cooperation in non-cash payments, capital market development, climate change response, and energy transition.
Conferences help beef up Vietnam – India trade, investment, tourism ties
The Vietnamese Embassy in India, in coordination with chambers of commerce and industry in West Bengal, has organised conferences to further promote trade, investment and tourism of India into Vietnam.
The conference at the Merchants' Chamber of Commerce & Industry (MCCI) in Kolkata – the capital of the West Bengal state - attracted representatives from 50 Indian businesses and many Vietnamese companies, while the event at the Chamber of Commerce in Calcutta saw the participation of 40 enterprises.
Addressing the events, Ambassador Pham Sanh Chau highlighted the close relationship in history, politics, culture and people-to-people exchange between Vietnam and India in general and between Vietnam and West Bengal in particular, noting that the bilateral relations are increasingly strengthened in the five pillars of politics, defence-security, economy, science and technology, and education - culture.
Two-way trade expanded to over US$13 billion in 2021 from US$200 million in 2000, turning India into the 8th biggest trade partner of Vietnam, approaching the US$15 billion target set by leaders of the two countries.
Regarding investment, as of March 20, India had 317 valid projects worth over US$1 billion in Vietnam, ranking 24th out of the 129 countries and territories investing in the Southeast Asian nation.
The investment ties between the two countries are likely to make new breakthroughs in the coming years, focusing on the sectors of seaports, energy, infrastructure, oil and gas, and IT.
There is a great potential for the two countries to promote tourism services as both have attractive scenic spots and historical and cultural sites for tourists, Ambassador Chau noted.
With the resumption of direct flights from Kolkata to Hanoi and Ho Chi Minh City and the increase in frequency of direct flights between the two countries, their tourism is expected to recover and grow strongly in the coming time, the Vietnamese diplomat said.
West Bengal and Vietnamese localities can promote cooperation in agriculture, tourism, chemicals, IT, real estate, solar energy, education, pharmaceuticals and health care, Ambassador Chau said.
Representatives from Indian firms said they are considering the possibility of cooperation with Vietnamese partners in some specific fields, and expanding the market for key products of West Bengal such as tea, pharmaceuticals, products made from jute fiber.
They suggested the embassy support and facilitate the organisation of an Indian business delegation to visit and explore cooperation opportunities in business, investment and tourism in Vietnam, and a business-to-business matching event in the coming time.
The West Bengal state is rich in natural resources with a thriving tea industry. It is also the leading rice and potato producer in India. The main industries of the state are information technology, leather, textiles, agriculture, metals, minerals and tourism. It boasts the over-100-year old Calcutta Stock Exchange (CSE) – the second largest in India.
Meanwhile, the Chamber of Commerce in Calcutta, founded in 1830, is the oldest trade and industry association in India, grouping businesses, tea, plastics, and information technology.