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VIETNAM BUSINESS NEWS MAY 21

Vietnam’s GDP growth to expand by 7 pct in 2021: AMRO report

Vietnam’s GDP growth is expected to rebound to 7 percent in 2021, driven by a recovery in goods and service export, resilient domestic economy, and healthy investment inflows, according to the ASEAN 3 Macroeconomic Research Office (AMRO).

In its Annual Consultation Report on Vietnam published on May 19, which was produced based on AMRO’s virtual 2020 Annual Consultation Visit to Vietnam and data and information available up to February 11, 2021, the office said Vietnam’s manufacturing output continued to expand thanks to robust exports and positive spillover from global supply chain restructuring.

The economic recovery is expected to continue on the back of an increase in domestic consumption following the relaxation of mobility restrictions, and an acceleration in public investment disbursement, it noted.

The report said continued policy support of the Government remains essential to bolster national economic recovery.

Effective food supply chain management and stable fuel prices will help the Vietnamese government keep inflation below 4 percent in 2021, the report stressed.

Vietnam needs to step up its efforts to develop domestic supporting industries in order to strengthen its participation and increase its value-add in the global value chains.

The ASEAN 3 Macroeconomic Research Office (AMRO) is an international organisation established to contribute towards securing macroeconomic and financial stability of the ASEAN 3 region, comprising 10 ASEAN member nations, China, Hong Kong (China), Japan and the Republic of Korea.

The Annual Consultation Report was prepared in fulfillment of AMRO’s mandate. The organisation is committed to monitoring, analysing and reporting to its members on their macroeconomic status and financial soundness./.

Mazda recalls over 61,000 faulty vehicles

Mazda has recalled a total of 61,517 imported and domestically-assembled vehicles in Vietnam for repair and replacement of faulty fuel pumps.

They include 3,369 Mazda2 vehicles imported between June 4, 2018 and August 21, 2019; 36,285 Mazda2, Mazda3, CX-5, and Mazda6 vehicles assembled domestically during 2017-2018; and 21,863 Mazda6, CX-5, and CX-8 vehicles assembled in Vietnam between January 4 and December 30, 2019.

The recall will run until December 31, 2025 at all agents and service stations of the Truong Hai Auto Corporation (THACO) nationwide. Repairs will be completed free of charge.

The fault can cause engines to stall while driving, vibrate, or fail to start, Vietnam Register said.

No related accidents have been recorded to date but THACO has recommended that customers have their vehicles examined nonetheless.

Customers can contact hotlines for Mazda Vietnam’s technical services support, in the northern region on 0938 807 112 and the southern region on 0938 908 905, or the customer service centre on 1900 545591./.

Vietnam's April economic indicators good, says WB

The World Bank in Vietnam has recently announced its updated report on Vietnam Macro Monitoring, which states that most of the country's economic indicators in April were good.

Accordingly, Vietnam’s industrial production continued its growth momentum, increasing by over 1 percent against March, or more than 24 percent compared with the same period last year.

Meanwhile, revenue from retail sales in April began to expand after two consecutive months of decline. The consumer price index also recorded a slight increase, reflecting a recovery in household consumption.

In terms of exports, a double-digit growth was recorded in all major export items, with the fastest increase in the export revenue of machinery.

However, the bank warned that measures applied by the government to fight the latest developments of Covid-19 pandemic would affect domestic economic activities, especially tourism, transportation and retail./.

Tourism-related firms face bankruptcy due to pandemic

Many tourism-related firms that have borrowed from banks are facing foreclosure due to the latest outbreak of COVID-19 infections.

According to the firms, they are on the verge of closing their businesses because there are no customers due to the pandemic. With no revenue, they are afraid of losing their restaurants and hotels because they have taken out loans from banks and are now struggling to pay the debts.

Mauro Gasparotti, Director of Savills Hotels Asia Pacific, told Tien phong (Vanguard) newspaper that the accommodation service industry continued to be severely affected by the pandemic. Hotels and resorts all had received many requests to cancel or change the date of stay.

In addition, Mauro said, MICE (meetings, incentives, conventions and exhibitions) and event business segments of hotels in HCM City and Ha Noi have been also affected as conferences were forced to be postponed or cancelled by the local authority due to the pandemic.

This is really a blow to hotels as from April onwards, the market will be in the peak season for events and conferences. Most hotels have high expectations for this business segment to partially compensate for losses from room revenue, according to Mauro.

Savills' survey also noted that the business activities of resorts had suffered the same difficulties as more than 50 per cent of the number of bookings cancelled, mainly from groups of tourists and corporate customers.

A hotel firm in the central coastal city of Nha Trang has recently petitioned to the Prime Minister because the firm has to burden loans and is now no longer able to pay the debts so the firm’s owner fears foreclosure.

The company director said in 2017 they borrowed VND250 billion from a bank to build a hotel. The hotel was completed and put into operation from January 31, 2019. In January 2020, COVID-19 caused the tourism industry to fall into crisis. Currently, the pandemic is still complicated and the hotel business has remained pessimistic as foreign guests have not been allowed to be entered while domestic guests are very modest.

In April 2021, the firm had to pay both principal and interest of VND5.5 billion to banks and it now has no capital left. In early May, the firm was fined due to overdue debts. Now they have petitioned the Prime Minister to ask for support from the bank to extend the debt and restructure the repayment period of the loan principal and interest, the firm’s owner said.

According to accommodation firms, in 2020, banks restructured loans for some of them, but the extension of the debts was only between three and six months. Now the deadline is approaching and they still have no capital to repay the debts.

Hoang Van Vinh, chairman of the Khanh Hoa Tourism Association, said throughout this year, the tourism industry was heavily affected by the pandemic. The association forecast the difficulties will last at least until the end of this year.

According to the Vietnam Tourism Association, urgent solutions are needed to help companies maintain operations and recover soon.

The General Statistics Office reported that due to the impact of COVID-19, tourism revenue in the first quarter of this year was estimated at VND3.1 trillion, down 60.1 per cent over the same period last year, while the industry’s revenue in Q1 2020 also declined 24.8 per cent against Q1 2019. 

South Korean businesses prioritize Hanoi for office lease 

The Asian investors in Vietnam want to choose locations near their business community.

South Korean businesses prioritize Hanoi for setting up an office when deciding to invest in Vietnam.

Hanoi, with the vision to be Asia’s innovation hub by 2045, is an attractive destination for the South Korean business community.  

South Korea’s Samsung, the leader in terms of foreign investment capital in the north of Vietnam, set up its two largest manufacturing and technology development centers in the northern provinces of Bac Ninh and Thai Nguyen, the neighboring localities of Hanoi.  

According to real estate consultancy Savills Vietnam, office space by South Korean companies in Hanoi is 60% higher than in Ho Chi Minh City (HCMC). 

Meanwhile, the office space leased by Japanese companies targeting the manufacturing sector is roughly equal in both cities, showing that they see the potential and business scale in both Hanoi and HCMC. 

Most companies from the two Asian countries leasing premium office are operating in fields of tech, property, manufacturing, finance and insurance. 

The office supply in the city hasn’t met the huge demand of businesses, according to Hoang Nguyet Minh, Director of Commercial Leasing of Savills Hanoi. “However, they may look for Grade A offices in the West or the mid-town for a wide range of flexible options,” she told Hanoitimes.  

Hanoi market witnessed prime office segment expanding, from focusing on the central business district (CBD) Hoan Kiem area, to two non-CBD areas including the mid-town (accounting for 38% of total Grade A office supply) and the West (35%) over the past 10 years. 

Though the rent in two new areas is lower than the CBD, tenants enjoy certain benefits and the high-quality of the buildings. “This made lease price in two areas increase compared to the previous years,” she said.

By the end of quarter one (Q1), Vietnam’s office market recorded positive signals of recovery.  

Hanoi saw the launch of new prime office projects including Capital Place, jointly developed by CapitaLand Vietnam and Mitsubishi Estate Asia, Thaiholdings Tower invested by the Vietnamese Thaiholdings, and Leadvisors Tower developed by LeadvisorSanei Hospitality Holdings (a joint venture between the Vietnamese Leadvisors Capital Management and the Japanese Sanei Architecture Planning Co., Ltd). 

By 2023, the city will have more Grade A projects concentrating in Ba Dinh district (situated in mid-town area) and Cau Giay district in the West. The average rent is expected to increase up to US$35 - US$37 per square meter per month.

Foreign enterprises place trust, raise investment in Dong Nai

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The trust of investors in the local business climate and support from authorities for enterprises count among the factors that have helped southern Dong Nai province almost reach its foreign direct investment (FDI) target for the year.

The Swiss-funded Nestle Vietnam, based at the Bien Hoa 2 Industrial Park, has continually increased its charter capital since opening its first factory on-site in 1995.

Most recently, in April, it added 132 million USD to its investment in a coffee production project at the Amata Industrial Park in Dong Nai, bringing the total to over 400 million USD.

Carl Khoury, a manager at the company, said it has set up four factories in Vietnam, including three in Dong Nai, and it considers the province a key destination since it boasts industrial parks with complete infrastructure, borders Ho Chi Minh City, the country’s southern economic hub, and is served by highways and expressways favourable for goods transportation.

He noted that the company has developed continually over the last 25 years thanks in part to a sound investment climate and clear legal procedures that match international practice, both nationally and in Dong Nai.

Authorities have also swiftly dealt with any problems facing businesses, Khoury added.

In late March, the Soheung Vietnam Co. Ltd, with investment from the Republic of Korea, raised its capital by 30 million USD to 80 million USD to expand its factory at the Long Thanh Industrial Park in Dong Nai.

The company said the greatest challenge foreign businesses encounter when investing in a country is a lack of understanding about local practices and legal regulations.

However, it added, local agencies have helped it handle environmental and construction-related procedures, while taxation, business registration, and insurance services have been provided online, facilitating operations.

Dong Nai has attracted 66 FDI projects worth over 680 million USD since the beginning of this year, while its target for the year as a whole was around 700 million USD, according to the province’s Industrial Zones Authority.

It is currently home to nearly 1,400 FDI projects from 41 countries and territories with combined capital of 27 billion USD.

Chairman of the provincial People’s Committee Cao Tien Dung said FDI projects have contributed greatly to local socio-economic development, and Dong Nai views foreign investment as a main development resource.

The province pledges to provide the best possible conditions to investors, he noted, adding that it prioritises large-scale projects using advanced technology and skilled workers in supporting industries.

In the time ahead, it will also boost infrastructure development, build modern residential areas, and invest strongly in education and healthcare, as investors come to the province not only to seek profit but also to enjoy a good life, Dung said./.

Transport enterprises suffer heavy losses

Four COVID-19 outbreaks in a single year have pushed transport businesses deeper into losses.

With Vietnam seeing the fourth outbreak of COVID-19 this time, the country's entire railway network has been almost completely frozen. There are only two passenger trains and about 10 freight trains running each day, while there were 40 trains running between Hanoi and Ho Chi Minh City only before the pandemic outbreak.

Vietnam Railways Corporation (VNR) said that passenger volume has dropped 90 per cent. Specifically, on May 13, 2021, VNR obtained VND600 million ($26,090) from passenger trains and VND5 billion ($217,400) from freight trains, only half of their earnings before the pandemic (more than VND10 billion ~ $434,780). This forced the corporation to have about half of its workforce take alternative breaks. "The corporation has estimated to lose VND700 billion-1 trillion ($30.43-43.5 million) this year," Vu Anh Minh from VNR said.

In the aviation sector, Vietnam Airlines operated about 500 flights every day. Due to the pandemic, it has cut down its flights to 65, which were only half full at all times.

Noi Bai International Airport (Hanoi) said that passenger count has decreased sharply recently. On its most crowded day during the April 30 and May 1 holidays, the airport received 540 flights with 79,000 passengers. However, these figures have dropped to 90-200 flights and 9,000-15,000 passengers a day since the fourth outbreak. "The number of flights and passengers is forecast to further reduce in the time to come," a representative of Noi Bai International Airport said.

Luu Huy Ha, chairman of passenger transportation service company Hoang Ha JSC said that the car rental business has almost closed, while only 10-20 per cent of seats of inter-city buses are occupied. Before the pandemic, 200 buses were operated each day on the Thai Binh-Hanoi route, which has dropped to 20-30 now. The number of buses and taxis running has also reduced by 50 per cent.

In the first quarter of 2021, Hoang Ha JSC lost VND15 billion ($652,170), while it gained VND4 billion ($173,910) in profit in the same period of 2019, and lost VND66 billion ($2.87 million) altogether last year. "I am not sure how much longer we can take losses," said Ha.

Employees of these transport businesses have been working alternatively and their incomes were reduced to the minimum wage. Thereby, the representative of businesses and the Hanoi Taxi-Truck Association recommended the government to extend tax payment deadlines and temporarily exempt added value, exempt insurance premiums paid for employees whose contracts are terminated, and who work in rotation.

"We hope that the government could delay tax payments of 2020-2021 to 2022," Nguyen Cong Hung, chairman of the association said.

Franchising model the way ahead for burgeoning domestic coffee outlets

Franchising is being seen as the fastest way to help brands, including cafe chains, to increase coverage in Vietnam, with numerous chains reporting soaring numbers of outlets thanks to this model.

Within the franchise model, profits mostly come from franchised investors. The larger the chain, the more investors will be attracted to participate.

“Franchising helps businesses quickly reach a large number of sale points and optimise investment costs via streamlining the operating team and cost for decoration, furniture, lighting, uniforms, and other factors,” said James Duong Nguyen, general director of Dcorp R-Keeper Vietnam.

There are two popular franchise models in Vietnam – zero-dong and traditional.

Representatives of the two largest zero-dong franchise coffee chains in Vietnam are Milano and Napoli, with more than 1,000 points of sale per brand. The founders of these coffee chains do not collect brand copyright fees and no monthly maintenance fees from franchisers. Instead, their main revenues come from providing full-service coffee shop design solutions, including decoration, to partners.

For example, Napoli offers three franchise packages from $3,000-15,000 with an area of 50-100 square metres. These packages include a 5-year warranty, decorations, furniture, lighting, and uniforms, which are enough for a coffee shop to start operating.

The devices serving for decoration and construction of a coffee shop are manufactured by Napoli, thus, the cost is at least twice as cheap compared to franchisers doing it themselves, and construction time takes only 7-10 days.

Nguyen Duc Hung, founder of Napoli, reaffirmed that this model has been a source of life for Napoli for more than 20 years. “Opening a cafe usually costs a lot initially but the zero-dong franchise model helps to simplify these cost for investors,” he said.

Within the traditional franchise model, partners will have to pay much more to the founders of a chain.

According to statistics published by news publisher FnB Vietnam, as of late 2019, Highlands Coffee – one of the most successful names in the local coffee and franchising scene –charges a franchise fee much higher than the average competition, with stricter rules to comply with.

Notably, the initial franchise fee amounts to up to VND5 billion ($217,000). The monthly franchise fee makes up 7 per cent of the franchiser’s monthly profit, and the management fee is 5 per cent of the monthly profit.

At Viva Star Coffee, the franchise fee is VND160 million ($7,000) for a 5-year contract, while the monthly fee amounts to 5 per cent of the profit, with total expenditures to set up a shop estimated at around VND1.1 billion ($48,000).

A representative of Ong Bau coffee said it is upbeat about its adaptability to the pandemic. He told VIR that most of Ong Bau’s partners are those who own the premises or rent them to run another business. They incorporate Ong Bau’s franchise to make the most of their premises and increase their income. Therefore, these partners are not much affected by the current complications.

Preventing counterfeit during explosive e-commerce growth during pandemic

E-commerce is on a trend of strong growth thanks to changing purchasing behaviours during the COVID-19 health crisis, elevating risks for customers due to the boom of fake and counterfeit goods on e-commerce platforms.

As COVID-19 has kept consumers around the world at home, mitigated travel and forced out social distancing measures, nearly everything from groceries to beauty care and technology supplies is now purchased online. Thu Lan, an office staff of a local conglomerate, still goes to work every day during the pandemic, however, she has given up habits like going shopping every evening, going to the supermarket every weekend, and going to cafés and restaurants. She now uses e-commerce platforms and delivery apps to order everything.

“Instead of shopping, I order clothes, home appliances, and electronics for all my family on e-commerce platforms, as well as order all fresh food through the app or hotline of supermarkets and grocery stores, and receive food and coffee through delivery apps,” she said, adding that she has not gone out much, except commuting between her home and work to avoid the pandemic. “My purchase frequency on e-commerce platforms has increased 5-10-fold since the health crisis.”

Thu Lan is one among millions of people in Vietnam and over the world who are adopting new habits due to the pandemic. According to Mastercard’s latest Recovery Insights report, this amounted to an additional $900 billion being spent on retail online around the world in 2020. Put another way: in 2020, e-commerce made up roughly $1 out of every $5 spent on retail, up from about $1 out of every $7 spent in 2019.

“Even in times of worldwide shutdowns, globalisation has shown its resilience, fuelled by digitalisation and the power of global trade," says John Pearson, CEO of DHL Express. “These trends have led to an ever-growing number of consumers shifting their shopping activities online. The pandemic has accelerated this development like never before, with a sharp rise in businesses selling their goods in the global marketplace. E-commerce and global logistics thus provided the key to unlock local shutdowns, keep economies running, and mitigate the impact of COVID-19 for many of our customers.”

According to Mastercard’s latest Recovery Insights report, international e-commerce got a boost both in sales volume and the number of different countries where shoppers placed orders. With infinitely more choices at their fingertips, consumer spending on international e-commerce grew around 25-30 per cent on-year from March 2020 through February 2021. Consumers are increasing their e-commerce footprints, buying from up to 30 per cent more online retailers.

E-commerce is also predicted to see strong growth in the B2B (business to business) segment in the coming years. In the opinion of an expert from DHL Express, one of the leading global firms in the logistics industry, by 2025, 80 per cent of all B2B sales interactions between suppliers and professional buyers will take place in digital channels.

In 2019, before the pandemic, global sales on B2B e-commerce sites and marketplaces had already increased by 18.2 per cent to reach $12.2 trillion, outpacing the market size of the B2C sector. Through COVID-19 and the resulting acceleration of digitalisation, this global B2B e-commerce volume is estimated to reach $20.9 trillion by 2027.

In addition to the convenience it offers, e-commerce also carries risks for customers. Last week, Tuyet Mai, an accountant at BRG Retail ordered a lipstick from a world-famous brand for VND590,000 ($25.65) on Shopee. A few days later, she received the item, but it was not authentic. “It looks rough, not shiny, and came without a full box, labels, or a barcode. For this price, I was expecting an authentic lipstick,” said Mai.

In fact, fake goods have been a serious issue for e-commerce for a long time. In February, the 2020 Review of Notorious Markets for Counterfeiting and Piracy report of the United States Trade Representative Office (USTR) highlighted that Shopee is "tolerating counterfeiting",with right holders reporting very high levels of counterfeits being sold on all of Shopee’s platforms.

Shopee reportedly has no procedures for vetting third-party sellers and preventing infringers from re-registering on the platforms, and sellers of counterfeit goods seem to have their accounts frozen only after multiple escalating actions.

The General Department of Market Surveillance (GDMS) predicts the annual growth rate of Vietnam’s e-commerce in 2015-2025 at 43 per cent. Particularly in 2020, the revenue of the e-commerce segment was estimated to surpass $13 billion with an escalating number of violations.

Last year, the department checked more than 5,000 cases, settled about 4,500 violations, distributing fines of VND30 billion ($1.3 million) in total. The value of counterfeit goods and goods without a certificate of origin, violating intellectual property rights discovered in the first seven months of 2020 by the GDMS was VND40 billion ($1.74 million).

Tran Huu Linh, director general of the GDMS confirmed that the authority has been building a legal framework to address these issues, proposing more adequate penalties to replace Decree No.52/2013/ND-CP on e-commerce.

“The legal document will set up a new management method for e-commerce purchases. The growth of e-commerce is fast enough, especially during the pandemic, to receive the same treatment as traditional retail. The new decree will put e-commerce and traditional retail on the same footing,” said Linh. “Additionally, the responsibilities of e-commerce developers and businesses will also be tightened to mitigate issues as much as possible to ensure customers’ rights.”

Hanoi strives to lead country in e-commerce

Vietnam’s capital city of Hanoi will strive to take the lead in e-commerce nationwide, considering it an important task in economic growth this year, Acting Director of the municipal Department of Industry and Trade Tran Thi Phuong Lan has said.

Hanoi is now home to 330,000 enterprises, 95 percent of which are small and medium-sized enterprises (SMEs) and account for 25-30 percent of its exports.

In recent years, the capital has ranked second nationwide in the e-commerce index. Despite the impact of the COVID-19 pandemic, its e-commerce sector still grew 30 percent last year, with over 12,350 websites and apps contributing 8 percent to total retail sales.

To facilitate online trade, Hanoi has supported companies in technological application, cashless payments, and building websites for farm produce sale.

The department also worked with the Ministry of Industry and Trade to step up technology transfer and connect firms with e-commerce sites to boost exports.

In cooperation with other departments and agencies, it has accelerated the construction of logistics centres and warehouse networks.

Lan said the department will work to sell handicrafts from Hanoi on Amazon by providing training to local SMEs, holding seminars to help them understand procedures and regulations, and offering advice on refreshing product lines./.

Conference to seek ways for boosting farm produce export to Japan

The Vietnam Trade Promotion Agency (Vietrade) under the Ministry of Industry and Trade (MoIT) and the Vietnam Trade Office in Japan will jointly organise an online conference on June 2 to promote connections in a bid to increase the export of Vietnamese farm produce to Japan.

This is one of activities within the framework of a national trade promotion programme in 2021, which aims to support Vietnamese businesses to boost the export of agricultural products and food to foreign markets.

The event is expected to attract 60 local businesses operating in producing and exporting farm produce and food, along with Japanese firms.

Vietnam is ranked 17th in agro-forestry-aquaculture exports in the world, with turnover hitting 41.2 billion USD in 2020, accounting for 1.95 percent of the global total.

Recently, Minister of Agriculture and Rural Development Le Minh Hoan asked agencies within the ministry, local authorities and departments of agriculture and rural development of localities to focus on measures to seek new export markets for Vietnamese farm produce, saying that this is a decisive factor in the country’s agricultural economic development.

Relevant ministries, sectors, localities and business associations were urged to enhance negotiations to remove technical and trade barriers in key markets.

In the coming time, the country will continue to strengthen trade promotion activities, bolster the application of technology in agricultural development, and raise the quality of farm produce for export./.

Over 10 trillion VND of FDI poured in six wind power projects in Dak Lak

The authorities in the Central Highlands province of Dak Lak has granted in-principle investment approval to six foreign-funded wind power projects worth more than 10.08 trillion VND (436.5 million USD).

Of the projects, there are two wind power plants from the Singaporean-invested VNM company. The two boast a total capacity of 70 MW and cost over 2.21 trillion VND.

Accordingly, the 20 MW-Alpha VNM plant, valued at 650 billion VND, will be developed in three communes of Ea Sol, Dlie Yang and Ea Hiao on an area of nearly 6.5ha.

Meanwhile, the 50MW-Beta plant will cover 10.9ha in eight communes of Dat Hieu, An Binh, Doan Ket, Thong Nhat, Binh Tan, Cu Bao, Ea Ngai and Ea Tul with a cost of 1.56 trillion VND.

With attractive investment attraction policies and favourable natural conditions, Dak Lak has become a destination for many solar and wind power projects./.

Firms advised to be cautious when doing business with Indian partners

The Ministry of Industry and Trade has urged firms to be cautious when doing business with companies in India that were severely hit by the COVID-19 pandemic.

India is struggling with severe cases of COVID-19 and deaths are increasing every day. Many states have imposed lockdowns and social distancing to prevent the spread of the virus, which was negatively affecting the transportation of goods at ports, operations of banks as well as production and business of firms in India.

A number of major ports such as Mundra, Nhava Seva, Chennai and Kolkata halved their operations due to a severe shortage of workers. This situation made shipping lines hesitant to transport goods to India with a fear that they would return with empty containers or store containers at the ports incurring storage fees.

According to the ministry, many banks in India only operate two or three days a week with around 30-50 percent of employees, working hours were limited from 11am to 2pm. Banks with positive cases were forced to close for one to two weeks. Therefore, transactions at banks were very limited.

The ministry urged firms to be cautious when doing business with partners in India.

Firms should regularly keep contact to maintain the partnership and keep informed about the pandemic development as well as the India Government’s prevention measures.

Before signing commercial contracts, it was necessary to study regulations, measures and policies that each locality was applying, the ministry said, urging firms to choose to do business with reputable enterprises.

It was also important to anticipate difficulties that might arise and affect customs clearance and banking transactions in India, the ministry said, adding that firms should negotiate carefully all terms, including delivery, payment and dispute resolutions. Companies should also insure for all shipments.

Firms should contact with the ministry’s Asia-Africa Market Department for supports via telephone number 024.2220.5479 and email: hieudc@moit.gov.vn; or the Vietnam Trade Office in India via email in@moit.gov.vn.

The bilateral trade between Vietnam and India reached 3.3 billion USD in the first quarter of this year, representing a rise of more than 34 percent over the same period last year. The two-way trade was set to reach 12 billion USD this year./.

Plan for implementation of UKVFTA adopted

The Prime Minister has approved a plan for the implementation of the UK-Vietnam Free Trade Agreement (UKVFTA).

The plan aims to assign tasks and responsibilities to relevant agencies and organisations, and decide on direction measures and others to implement the deal fully and effectively.

To that end, the Government leader requested ministries, sectors and localities to step up the dissemination of information about the UKVFTA as well as the British market, build laws and institutions, enhance the competitiveness and develop human resources, and improve social welfare, environmental protection and sustainable development policies, along with carrying out regular and assigned tasks.

It is necessary to popularise information about the agreement and the British market to relevant persons, especially farmers, fishermen and workers via different means of communications to raise their awareness of the deal’s commitments as well as work that needs to be done towards effective enforcement.

The PM also asked ministries, sectors and localities to speed up the organisation of trade and investment promotion programmes in the UK, and continue perfecting necessary institutions to enforce the agreement, improving the competitiveness of industries and businesses, especially micro-, small- and medium-sized enterprises.

Attention should be paid to assisting Vietnamese enterprises in joining production networks, and value and supply chains which see the participation of British businesses to take advantage of the agreement, while encouraging British-invested companies to connect with domestic partners to form and develop supply chains.

The plan also aims to promote mutual recognition of assessment results of conformity with the UK, especially for Vietnam's key products exported to the country.

Firms advised to be cautious when doing business with Indian partners

The Ministry of Industry and Trade has urged firms to be cautious when doing business with companies in India that were severely hit by the COVID-19 pandemic.

India is struggling with severe cases of COVID-19 and deaths are increasing every day. Many states have imposed lockdowns and social distancing to prevent the spread of the virus, which was negatively affecting the transportation of goods at ports, operations of banks as well as production and business of firms in India.

A number of major ports such as Mundra, Nhava Seva, Chennai and Kolkata halved their operations due to a severe shortage of workers. This situation made shipping lines hesitant to transport goods to India with a fear that they would return with empty containers or store containers at the ports incurring storage fees.

According to the ministry, many banks in India only operate two or three days a week with around 30-50 percent of employees, working hours were limited from 11am to 2pm. Banks with positive cases were forced to close for one to two weeks. Therefore, transactions at banks were very limited.

The ministry urged firms to be cautious when doing business with partners in India.

Firms should regularly keep contact to maintain the partnership and keep informed about the pandemic development as well as the India Government’s prevention measures.

Before signing commercial contracts, it was necessary to study regulations, measures and policies that each locality was applying, the ministry said, urging firms to choose to do business with reputable enterprises.

It was also important to anticipate difficulties that might arise and affect customs clearance and banking transactions in India, the ministry said, adding that firms should negotiate carefully all terms, including delivery, payment and dispute resolutions. Companies should also insure for all shipments.

Firms should contact with the ministry’s Asia-Africa Market Department for supports via telephone number 024.2220.5479 and email: hieudc@moit.gov.vn; or the Vietnam Trade Office in India via email in@moit.gov.vn.

The bilateral trade between Vietnam and India reached 3.3 billion USD in the first quarter of this year, representing a rise of more than 34 percent over the same period last year. The two-way trade was set to reach 12 billion USD this year./.

Over 10 trillion VND of FDI poured in six wind power projects in Dak Lak

The authorities in the Central Highlands province of Dak Lak has granted in-principle investment approval to six foreign-funded wind power projects worth more than 10.08 trillion VND (436.5 million USD).

Of the projects, there are two wind power plants from the Singaporean-invested VNM company. The two boast a total capacity of 70 MW and cost over 2.21 trillion VND.

Accordingly, the 20 MW-Alpha VNM plant, valued at 650 billion VND, will be developed in three communes of Ea Sol, Dlie Yang and Ea Hiao on an area of nearly 6.5ha.

Meanwhile, the 50MW-Beta plant will cover 10.9ha in eight communes of Dat Hieu, An Binh, Doan Ket, Thong Nhat, Binh Tan, Cu Bao, Ea Ngai and Ea Tul with a cost of 1.56 trillion VND.

With attractive investment attraction policies and favourable natural conditions, Dak Lak has become a destination for many solar and wind power projects./.

Conference to seek ways for boosting farm produce export to Japan

The Vietnam Trade Promotion Agency (Vietrade) under the Ministry of Industry and Trade (MoIT) and the Vietnam Trade Office in Japan will jointly organise an online conference on June 2 to promote connections in a bid to increase the export of Vietnamese farm produce to Japan.

This is one of activities within the framework of a national trade promotion programme in 2021, which aims to support Vietnamese businesses to boost the export of agricultural products and food to foreign markets.

The event is expected to attract 60 local businesses operating in producing and exporting farm produce and food, along with Japanese firms.

Vietnam is ranked 17th in agro-forestry-aquaculture exports in the world, with turnover hitting 41.2 billion USD in 2020, accounting for 1.95 percent of the global total.

Recently, Minister of Agriculture and Rural Development Le Minh Hoan asked agencies within the ministry, local authorities and departments of agriculture and rural development of localities to focus on measures to seek new export markets for Vietnamese farm produce, saying that this is a decisive factor in the country’s agricultural economic development.

Relevant ministries, sectors, localities and business associations were urged to enhance negotiations to remove technical and trade barriers in key markets.

In the coming time, the country will continue to strengthen trade promotion activities, bolster the application of technology in agricultural development, and raise the quality of farm produce for export./.

Flexible state budget management for national sustainable finance: Minister 

The finance ministry would allocate VND3 trillion (US$130 million) from the state budget for the Covid-19 fight.

The Ministry of Finance (MoF) would manage the state budget in a flexible manner during the Covid-19 pandemic to ensure national sustainable finance.

Minister of Finance Ho Duc Phoc made the statement at a recent meeting discussing state budget management.

In the first four months of 2021, Vietnam’s budget revenue stood at VND543.4 trillion (US$23.6 billion), equivalent to 40.5% of the yearly estimate. Of the total, domestic revenue made up a lion’s share of VND456.3 trillion (US$19.8 billion), followed by customs revenue of VND74.5 trillion (US$3.23 billion), and crude oil revenue of VND12 trillion (US$521 million).

Meanwhile, budget expenditure during the period was estimated at VND463.7 trillion (US$20.1 billion), including capital expenditure of VND86 trillion (US$3.73 billion), regular spending of VND338.1 trillion (US$14.67 billion), and debt payment of VND38.8 trillion (US$1.68 billion).

Minister Phoc called for greater efforts in realizing priorities in the coming time, including the completion of a development strategy for the financial sector in the 2021-2030 period; development strategy for State Treasury and customs; and finalizing legal framework to lay the foundation for further economic development.

Regarding the General Department of Taxation, Phoc requested the agency to focus on budget collection and preventing transfer pricing, while drafting regulations on tax collection on digital platform and issuing e-invoices.

The General Department of Vietnam Customs is tasked with tightening management of customs clearance procedures to fight off smuggling and trade frauds.

A report from the MoF revealed an allocation of VND3 trillion (US$130 million) for the Covid-19 fight, including the provision of an addition of VND1.74 trillion (US$75.6 million) for purchasing vaccines and medical equipment to contain the pandemic.

“Amid serious Covid-19 condition, the MoF would ensure sufficient fund for the fight against the pandemic,” stated Phoc.

VinaCapital fund plans to divest from KDH

Vietnam Ventures Limited, a fund managed by VinaCapital has just registered to sell 7.7 million shares of Khang Dien House Trading and Investment JSC (KDH) between May 20 and June 18.

Once the deal is completed, Vietnam Ventures Limited will hold 20.5 million shares of KDH, equivalent to an ownership rate of 3.67 per cent and will no longer be a major shareholder of KDH.

The fund said the deal is being conducted to restructure the investment portfolio. This move comes amid KDH shares continuously hitting higher levels and are currently at the highest price territory in history.

Since the beginning of the year, funds managed by Dragon Capital have also continuously lowered the proportion of KDH shares in their portfolios.

Earlier this year, these funds held about 84.1 million KDH shares, equivalent to an ownership rate of 15.05 per cent, but now they only hold 55.21 million KDH shares, equivalent to the ownership rate of 9.88 per cent.

Under net selling pressure from foreign investors, KDH stocks were excluded from VN Diamond basket because they don't meet the criteria for foreign ownership limit ratio (FOL) as the indicator was lower than required (90 per cent).

However, KDH stocks are still trading at historic highs on the stock market. Since April, the shares have been on a bullish trend with a gain of up to 20 per cent. The average trading liquidity of KDH shares in April was over 5.3 million units per day.

KDH shares, listed on the Ho Chi Minh Stock Exchange (HoSE), closed Tuesday at VND36,000 per share. 

Becamex plans to raise $65 million via bonds

The board of directors of the Investment and Industrial Development Joint Stock Corporation (Becamex IDC) has approved the second corporate bond issuance plan this year.

The maximum total par value is VND1.5 trillion (US$65.2 million) and divided into three to five installments.

The bond term is expected to be from one to five years, with a par value of VND1 billion per bond, and is expected to be issued in the second or third quarter of this year.

The purpose of this bond fundraising includes increasing the operating capital scale of Becamex and restructuring the capital.

Previously, Becamex announced the issuance of two million private bonds for the first time on March 30 this year with a total issuance value of VND2 trillion. The bond has a maturity date of March 25, 2026.

Becamex recorded a total bond value of VND6.05 trillion by the end of the first quarter of this year.

Becamex achieved a revenue of approximately VND1.4 trillion in the first quarter of this year, up 14 per cent over the same period last year.

Its profit after tax grew by 40.9 per cent compared to the same period last year to VND468 billion.

Compared to the plan, Becamex has completed 15.7 per cent of the revenue target and 20.3 per cent of the target of profit after tax. 

Bac Giang calls for farm produce sale support amid Covid-19 outbreak

Authorities in the northern province of Bac Giang are seeking government support to help boost the sale of local farm produce amid the Covid-19 spread.

The province has sent a document signed by provincial people’s committee Chairman Le Anh Duong to Prime Minister Pham Minh Chinh about the issue.

According to Duong, up to nearly 80% of the population in Bac Giang live in rural areas. At present, local farmers are raising nearly one million pigs with a total pork productivity of 44,000 tonnes; around 10,000 tonnes of chickens; 1,100 hectares of vegetables, 28,000 hectares of lychee and other kinds of fruits, including oranges and longans. Among those, 180,000 tonnes of lychee have ripened. Meanwhile, some 20,000 tonnes of longans need to be harvested between July and the end of August.

However, the province has become the epicentre of the most recent Covid-19 wave, affecting the farm produce sales. Farm produce transportation from Bac Giang is facing difficulties.

The province has informed the prime minister of the situation and hopes the government leader can instruct localities nationwide to create favourable conditions for the transportation of Bac Giang’s farm produce.
The province has pledged that all local products transported to other areas are safe. All drivers and their assistants have tested negative for SARS-CoV-2.

The Bac Giang official asked the government to adopt measures to encourage companies and supermarket chains to buy Bac Giang farm produce.

Media agencies were also asked to help promote Bac Giang’s products, particularly those with Vietnamese Good Agricultural Practices (VietGAP) and Global GAP standards.

Over the past two weeks, Bac Giang has recorded hundreds of locally-transmitted Covid-19 cases with the majority from industrial parks. The province has closed four industrial parks since Tuesday.

Keeping inflation in the sweet spot

The government will attempt to successfully control inflation this year with demand potentially failing to fully recover, despite a rise in local consumption. 

According to the General Statistics Office (GSO), the Vietnamese government has so far succeeded in reining in inflation and this effort is expected to continue until the year’s end as domestic consumption remains feeble due to negative impacts of the global health crisis.

In the first four months of this year, the consumer price index (CPI) increased 0.89 per cent on-year, also the lowest rise in the first four months since 2016. Specifically, the first-four-month rate was 1.41 per cent in 2016, 4.8 per cent in 2017, 2.8 per cent in 2018, 2.71 per cent in 2019, and 4.9 per cent in 2020.

In the first four months of this year, though there has been a rise in prices of some items used to calculated CPI in Vietnam, such as foodstuffs (0.2 per cent on-year), catering services (2.07 per cent), gas (14.69 per cent), and petrol (2.49 per cent), such a price hike was small as compared to the same period last year, when COVID-19 began to attack the economy.

The period saw total retail and consumption service revenues hit nearly VND1.7 quadrillion ($73.9 billion), up 10 per cent over the same period last year when the rate declined 2.8 per cent on-year.

“Despite a rise in local consumption, it remains weak and has yet to fully recover, and this has failed to significantly increase the first-four-month CPI,” said a GSO expert. “There have also been some major causes behind such an on-year reduction.”

Since last year the government has been deploying support solutions for individuals and enterprises hit by COVID-19. For example, state-owned Electricity of Vietnam (EVN) has reduced power prices for its customers. The average electricity price in the first four months of 2021 fell 5.88 per cent on-year, leading to a 0.19 per cent reduction in CPI.

However, despite the move, EVN has reported that all of its activities increased on-year in the first quarter of 2021.The group’s total gross industrial output is estimated to be VND52.83 trillion ($2.3 billion), up 3.18 per cent on-year.

Commercial electricity totalled 50.79 million kilowatt hours, up 3.18 per cent. In which, electricity for agro-forestry-fishery accounts for 3.97 per cent of total electricity consumed, while the rate is 56.01 per cent for construction and industrial activities and 31.46 per cent for households – all up against the same period last year. Notably, EVN’s total revenue from power sales is estimated to be over VND94 trillion (over $4 billion), up 4.11 per cent on-year.

Another cause behind a reduction in first-four-month CPI in Vietnam is that state-owned Vietnam Railways Corporation, airlines, and travel firms have launched price discounts to stimulate travelling and tourism activities. For example, the ticket price for trains since early this year has decreased on average 7.4 per cent on-year, while the air ticket price has also dropped 17.4 per cent on-year, and full-package tours’ average price has also followed suit, at 3.32 per cent on-year.

The Asian Development Bank (ADB) has praised Vietnam’s efforts to control inflation, saying that in the first quarter of 2021 it slid to its lowest level since 2016 due to lower transport costs and subdued demand. “But rising international oil prices on the back of global economic recovery and increased domestic consumption are expected to edge inflation up to 3.8 per cent this year and 4 per cent in 2022,” read an ADB report on Vietnam’s economic outlook.

The International Monetary Fund (IMF) also forecast that the inflation for 2021 in Vietnam may be only 2.4 per cent.

“Inflation continued to be well contained at 3.23 per cent, below the authorities’ target of 4 per cent in 2020,” said an IMF report also on Vietnam’s economic prospects. “Authorities have set the targets for GDP growth of 6.5 per cent and inflation at around 4 per cent in 2021 in line with the goals set in the national Socioeconomic Development Strategy for 2021-2030.”

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

 

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