VIETNAM BUSINESS NEWS MAY 30
European enterprises urge Covid-19 vaccination drive in Vietnam
European business leaders have urged the Government to go further and faster in the Covid-19 vaccination drive, proposing harnessing the power of private enterprises and allowing companies to vaccinate their own staff using their own funds.
Four in five business leaders, or 79% of European companies, agreed that businesses should be able to inoculate their workforce. This would reduce the burden on the State budget, while helping to accelerate the Government’s vaccination drive, according to the European Chamber of Commerce in Vietnam (EuroCham).
Chairman of EuroCham Alain Cany said, “Vietnam has been one of the world’s leaders in preventing the spread of Covid-19. Swift border closures, strict quarantine measures and targeted local lockdowns have kept infections low and enabled domestic business activities to resume.”
“However, this is not a permanent solution and it cannot continue for much longer without damaging economic growth,” Cany said, adding that while Vietnam’s borders are closed, other countries are rolling out vaccinations and re-opening their doors to the world.
As such, there is now a real risk that Vietnam could fall behind unless it implements its own mass vaccination program at scale and pace.
Cany also said the private sector, including foreign enterprises, could help speed up Vietnam’s vaccination efforts.
“Our companies can provide the world-leading equipment and international expertise needed for a successful mass vaccination program. Therefore, Vietnam’s roadmap to recovery should harness the contribution of European business. But the planning needs to begin now so we can hit the ground running as soon as vaccines are available,” he said.
Dr. Guido Hildner, German Ambassador to Vietnam, said, “The vaccination progress in Germany is decisive for economic recovery. For this reason, we encourage and support our partners such as Vietnam to do whatever possible to further speed up their vaccination programs.”
EuroCham members also encouraged the Government to ease quarantine regulations for investors and experts who have been vaccinated in their home countries. Over two-thirds of business leaders reported that their companies have faced obstacles from the current restrictions.
Meanwhile, 79% said that the three-week quarantine would lead to fewer specialists coming to Vietnam. This could hit foreign investment and hurt the business operations of companies who depend on these essential technicians.
More than four in five EuroCham members, or 81%, believe that the Government should now reduce the quarantine regulations for vaccinated foreign experts and their families to one week at the most and simplify the procedure to address this issue.
Online food orders rise 10-30% amid dine-in restrictions
The number of food orders placed via online channels in HCMC has risen 10-30% over the past week after the city restricted dine-in services to curb the spread of Covid-19.
Employees of some coffee shops and food stalls in the city said the number of customers choosing takeaways or placing an order via food delivery apps has risen significantly in recent days.
Many food stalls and restaurants have registered to become partners of food delivery apps such as Grabfood, Baemin, Gofood and Now to offer food delivery services to their customers.
“Food stalls have been asked to stop dine-in services, leading to an upsurge in food orders placed online. Sometimes we have to wait 45 minutes to one hour to get the food for our customers,” Toan, a food delivery man in District 6, shared.
Pham Le Tuan Kiet, business development manager of Gojek’s GoFood service, said, “Although a number of restaurants that are located in affected areas have been closed, the number of orders placed via the app has increased month-on-month.”
According to Kiet, GoFood has kept a close eye on the situation to temporarily hide restaurants in pandemic-hit areas on the app and cooperated with relevant agencies to inform the partner drivers, restaurants and customers if they are in affected areas.
A representative of Baemin said the company has encouraged partner drivers to restrict direct contact while receiving or delivering food and drinks. Baemin has also helped partner drivers in Danang City to undertake Covid-19 tests.
The revenue of the online food delivery segment in Vietnam is projected to reach US$377 million in 2021. It is expected to achieve an annual growth rate of 14% between 2021 and 2024, resulting in a projected market volume of US$557 million by then.
The average revenue per user in the online food delivery segment is projected to amount to over US$33 in 2021. The number of users is expected to reach 15.5 million by 2024.
20 OCOP products to get five-star rating
The National OCOP Council will propose the authorities recognise 20 items as five-star “One Commune, One Product” (OCOP) products.
The products were selected from 43 entries submitted to the Ministry of Agriculture and Rural Development (MARD) by 12 cities and provinces, heard a meeting on Wednesday.
Among them include green tea and red tea products made by Phin Ho tea processing cooperative in Hoang Su Phi district of Ha Giang province; Le Gia shrimp paste made by Le Gia Food and Trading Service Co in Thanh Hoa Province and Bich Thao powdered coffee of Bich Thao Coffee Cooperative in Son La Province.
Earlier, the National OCOP Council established councils from the Ministries of Agriculture and Rural Development, Industry and Trade, and Health, that are in charge of assessing products under the OCOP programme.
MARD Deputy Minister Tran Thanh Nam said the recognition not only affirms the quality and brand of products at the national level but also opens up opportunities for them to gain a foothold at home and access foreign markets.
The OCOP programme has facilitated the development of products and contributed to creating jobs and raising income of rural residents, he added.
Vietnamese wood furniture exports to US remain on rapid growth path
Viet Nam’s furniture exports to the US have risen sharply in recent times, but to sustain the growth firms need to focus on complying with regulations in that market, including sustainable development norms, experts have said.
Despites the COVID-19 pandemic, Viet Nam has become the world’s second largest furniture exporter (behind only China) from fifth, and overtaken China to become the largest exporter to the US.
In 2020, despite the disruptions to trade, Viet Nam exported US$7.4 billion worth of furniture to the US, an increase of 31 per cent from 2019. China’s exports were worth $7.33 billion, down 25 per cent.
The shift has happened over the past two and a half years with the US imposing tariffs as high as 25 per cent on almost all furniture categories from China, US magazine Furniture Today said.
At a recent webinar with Vietnamese businesses, representatives of US furniture distributors said since Chinese furniture tariffs are too high, they are looking for new suppliers and Viet Nam is the most suitable.
Many distributors source all of their wooden furniture from Viet Nam, including for the bedroom, dining room, office, and home, they said.
Viet Nam’s furniture sales to the US have increased rapidly in recent times, and if there had been no shipping constraints due to COVID-19, Viet Nam’s exports would be even higher, they added.
Tran Lam Son, deputy general director of Thien Minh Production-Trading and Export and Import Co., Ltd., said, “Three years ago, when international buyers visited furniture producing countries in Asia, they chose to visit China first and then Viet Nam.
“But now they do opposite and come to Viet Nam first.”
He explained that it is because Vietnamese firms have made great strides in terms of design and sales methods by actively marketing their products.
According to the Handicraft and Wood Industry Association of HCM City, the US is Viet Nam’s largest market, accounting for more than 50 per cent of the industry’s exports.
But Viet Nam only accounted for a modest $7 billion of $115 billion US market last year, and so opportunities to export remain huge, it said.
Nguyen Hoai Bao, a member of HAWA’s executive board, said the US has among the strictest standards in terms of origin traceability and legality of wood products, which forces Vietnamese businesses on their toes to avoid risks and tap the market.
Le Xuan Quan, chairman of the Handicrafts and Wood Industry Association of Dong Nai Province, said wood industry business groups need to enhance their members’ awareness of international regulations and standards.
The Government must have more efficient mechanisms to control raw materials and investment to avoid trade fraud and tax evasion, he warned.
Julie Hundersmarck, a specialist in the US Forest Service, emphasised despite the fierce global competition, US importers prefer to do business with suppliers from Asia.
The US Forest Service has initiated plans to help Viet Nam control the origins and ensure legality of its wood products to ensure sustainable development, she added.
US commerce department gives good news to Vietnamese tyre makers
The US Department of Commerce (DOC) has issued a positive conclusion for Viet Nam in the anti-dumping and countervailing duty probes into imported automobile tyres.
On May 24, the DOC issued its final conclusion on the anti-dumping and countervailing duty investigations into automobile tyres imported from the Republic of Korea, Taiwan (China), Thailand, and Viet Nam.
For the anti-dumping duty content, the DOC maintained its decisions from the preliminary conclusion. This means most of the businesses that account for 95.5 per cent of Viet Nam’s total car tyre exports to the US are considered not to be dumping their products so won't face anti-dumping duties, while a tax rate of 22.3 per cent is imposed on the rest.
For the countervailing duty content, the tax rates on the Vietnamese enterprises are set at between 6.23 per cent and 7.89 per cent, down from the 6.23 per cent – 10.08 per cent determined in the preliminary conclusion.
Given this, the anti-dumping and countervailing duties that the companies making up 95.5 per cent of tyre exports to US are between 6.23 per cent and 7.89 per cent, the lowest among those subject to the investigation.
This is a positive result for Viet Nam’s tyre producers and exporters to the US – the largest market of Vietnamese tyres. It also benefits the rubber industry since about 80 per cent of natural rubber harvested in Viet Nam is used for tyre manufacturing.
The Ministry of Industry and Trade (MoIT) said it has been working closely with relevant parties to secure objective and positive results for Vietnamese producers and exporters.
The ministry noted it has discussed with agencies of the US via different dialogue channels to prove Viet Nam did not dump or subsidise automobile tyres or devalue its currency to create an export advantage.
It will continue working with the State Bank of Viet Nam and ministries and sectors to work with the US about this country’s conclusion regarding currency devaluation, the ministry added.
Vietnamese agricultural products favoured in China
Vietnamese agricultural products have won favour among Chinese consumers in recent years due to their quality as well as the improvement in businesses’ supply capacity, a trade promotion official has said.
Deputy head of the Trade Promotion Agency under the Ministry of Industry and Trade Le Hoang Tai said at an online conference held on Wednesday that China is the second-largest export market of Viet Nam, with export turnover in the first four months of this year topping US$16.8 billion, up 32.4 per cent year-on-year.
The nation is also the largest source of imports for Viet Nam, he said, pointing out purchases from China surged 47.8 per cent in the reviewed period amid the pandemic.
Vegetables, coffee, rice, cassava and products made of cassava, and seafood always make up the lion's share of Vietnamese shipments to China, he added.
The Ministry of Industry and Trade has carried out a wide range of uniform measures to boost exports to China, including food quarantine, origin tracing, brand development and issuance of the certificate of eligibility, Tai added.
BIDV signs green credit agreement with French Development Agency
The Bank for Investment and Development of Viet Nam (BIDV) announced on Thursday that it has signed an agreement on the SUNREF green credit line with the French Development Agency (AFD) to finance businesses investing in environmental protection, climate change response, and green growth.
The AFD will provide a long-term loan of US$100 million to BIDV and technical assistance worth 300,000 euros ($366,000) to the bank and its customers.
BIDV General Director Le Ngoc Lam said the agreement would help create new opportunities in relations between BIDV and AFD in many fields, especially green credit.
He said using comprehensive international standards on green credit had helped BIDV improve its operations and strictly control credit risks.
AFD Director in Viet Nam Fabrice Richy said the loan is the first SUNREF credit quota it has implemented in Viet Nam in the form of a concessional loan without a government guarantee.
SUNREF is a green finance label deployed by AFD with nearly 70 partner banks in 30 countries and territories.
AFD hopes that, through BIDV, it can continue to grant preferential loans and non-refundable aid to Vietnamese businesses, contributing to promoting green growth and climate change adaptation in the country, Richy said.
The agency previously entrusted BIDV to implement a number of projects, such as the northern power transmission project worth 40 million euros and a project on housing development for people in floodplains in the Mekong Delta worth 25 million euros.
AFD is a non-profit international financial institution operating for the French government by providing loans and non-refundable aid to organisations and State-owned enterprises, with the main target reducing emissions and coping with climate change.
It has so far financed more than 90 projects in Viet Nam with total funding of nearly 2.3 billion euros, in the fields of infrastructure, transport, energy, and agriculture.
Interbank rates forecast to inch down at end-Q2 2021
After significant increases in the past few weeks, interbank interest rates are forecast to stabilise again in the second half of May and then decrease slightly at the end of the second quarter of 2021.
From mid-April to the first half of May, interbank interest rates increased sharply, of which the rate for short-term dong loans jumped to more than 1 per cent per year, three times higher than that at the beginning of the year.
The size of loans among banks also increased dramatically. On average, in the first week of May, banks lent each other more than VND147 trillion each day, an increase of nearly VND15 trillion or 14 per cent per day compared to the previous week. Even compared with the same period last year, the average value per session doubled.
KB Securities Vietnam (KBSV) attributed the sharp increase in interbank interest rates to the widened gap between loans and deposits in the first four months of this year. Higher demand for loans created short-term pressure on the banking system’s liquidity in early May, KBSV explained.
However, KBSV’s experts said that the latest outbreak of the COVID-19 pandemic in Viet Nam would affect credit demand, causing it to decline. Therefore, interbank interest rates would gradually stabilise again.
Similarly, Viet Dragon Securities Company (VDSC) said although the liquidity of the banking system is less abundant than at the beginning of the year, it is still much better than before the pandemic. Therefore, the high interest rates are not worrisome at this time.
In recent transaction sessions, interbank interest rates have decreased slightly. Specifically, on May 18, the average interbank interest rate offered for dong loans decreased by 0.05 percentage points for the overnight term. On average, short-term interest rates are around 1.2 per cent for overnight loans, 1.31 per cent for one-week loans, 1.43 per cent for two-week loans and 1.49 per cent for one-month loans.
Besides the latest outbreak of the pandemic that makes it difficult for credit to increase, KBSV forecast new cash flow from the foreign currency trading channel would increase again from the end of June to the beginning of July. The flow would provide substantial liquidity to the banking system, it said.
These moves would cause interbank interest rates to cool down again in the second half of Q2 2021, KBSV said.
According to the Vietnam Interbank Market Research Association (VIRA), most of its members in May expected the one-week interbank interest rate would remain stable at 0.83 per cent per year on average in the next three months while some forecast the rate to drop to around 0.4 per cent.
Loc Troi eyes 88.5% revenue growth in 2021
Loc Troi Group Joint Stock Company (UPCoM: LTG) targets revenues and pre-tax profits of VND14.155 trillion (US$614.39 million) and VND507 billion ($22 million) this year, 88.5 per cent and 12 per cent up from last year.
Despite the challenges brought by the COVID-19 pandemic, its profits increased by 10 per cent last year to VND368 billion ($15.95 million).
It is embracing digital transformation in all its business activities and adopting international financial reporting standards with strict requirements to ensure transparency.
Last year Loc Troi achieved a perfect 100 in the Sustainable Rice Platform (SRP) standard.
It owns a large drone fleet that helps farmers reduce human effort, pesticides and water for irrigation, increases crop efficiency and the safety of agricultural products and enables environmental protection.
Nguyen Thanh Binh, chairman of the An Giang Province People's Committee, hailed the company’s initiatives to ensure sustainable development, saying that by ensuring rice cultivation following SRP 100 for two years on nearly 100 hectares, Loc Troi has enabled An Giang to become one of the places anywhere in the world dedicated to sustainable rice production.
Loc Troi held its annual general meeting online on May 23 where shareholders approved its accounts for 2020, targets for this year, profit distribution plans, and other important proposals, including establishment of two risk reserve funds of VND360 billion ($15.58 million) each for farmers and its employees to be drawn from its profits.
Loc Troi will become the first agricultural company in the world to set up its own fund to support farmers during the process of implementing a comprehensive agricultural production chain.
The other fund will ensure all its employees have a steady income even in the worst situation.
The meeting also approved a dividend of 15 per cent in cash for 2020, increasing 5 percentage points a year for the next two to reach 30 per cent in 2023.
Shareholders approved the allocation of shares under an employee stock ownership plan at a par value of VND10,000 to employees who have made outstanding contributions.
Bac Giang lychees to be shipped to US market
Following the first consignment of Vietnamese lychees arriving in Japan, a total of five tonnes of fresh lychees originating from the northern province of Bac Giang are being exported to the United States.
Hanoi-based New Age Technologies Vietnam Joint Stock Company on May 28 purchased lychees from Tan Yen district, which has a large area under lychee cultivation in Bac Giang.
The fruit will then be classified and processed through various phases to meeting food hygiene and safety requirements before being packaged for export.
Bac Giang is renowned for a large lychee growing area meeting VietGAP and GlobalGAP standards. The area has grown to reach 218 hectares in size and has an estimated output of 1,800 tonnes.
Besides local consumption, the province has in recent years planned to export its tropical fruit to a number overseas markets, including the US and Australia.
Recently Tan Yen district successfully exported 20 tonnes of lychees to Japan.
Seafood exports to US market soar over four-month period
Vietnam’s seafood exports to the United States during the opening four months of the year enjoyed an annual surge of 28% to US$483 million, according to the Vietnam Association of Seafood Producers and Exporters (VASEP).
VASEP data shows seafood exports to the demanding market in April alone skyrocketed by 64% to US$149 million. The export value of shrimp, pangasius, tuna, squid, and octopus climbed by 47%, 136%, 56%, and 83%, respectively.
According to industry experts, local seafood exports to the US in May and June are anticipated to witness a sharp increase following the full reopening of the market from May 20.
During the reviewed period, Vietnamese shrimp exports to the US surged by 25% to US$198 million, making up 21% of the country’s total exports.
Vietnam also raked in US$102 million from exporting pangasius, representing an annual rise of 37%, whilst simultaneously making up 21% of total pangasius exports.
The US accounted for approximately 42% of Vietnam’s total tuna exports with US$94.5 million throughout the reviewed period, an increase of 15% on-year.
It currently represents the leading consumer of Vietnamese shrimp, pangasius, tuna, and crab.
Throughout the past four months, roughly 220 local seafood enterprises were involved in exporting aquatic products to the US, of which 67 companies earned revenue of US$1 million or more each.
With the US moving to reopen its door and recording a recovery in recent times, it is projected to become a crucial export market for Vietnam, India, Ecuador, Indonesia, Thailand and others in the second half of the year, according to economists.
More Vietnamese goods sourced by US groups
More American buyers are seeking out made-in-Vietnam goods in a bid to diversify their supply chains, making Vietnam an emerging alternative source destination in the region that could further profit from the bilateral trade relationship.
A recent survey by compliance solutions provider QIMA pointed out that 43 per cent of US-based respondents cited Vietnam among their top three purchase locations as of early 2021, twice the percentage observed in 2019. Around 38 per cent of them also named Vietnam among the markets from where they plan to buy more during this year.
The report said that the appetite for sourcing from Vietnam is far from satisfied and is poised to redefine the supply chain landscape in 2021. The country has been a traditional first choice for buyers diversifying away from China, seeing its popularity among Western buyers grow by leaps and bounds over the past few years – a trend that has remained in 2021.
Vietnam witnessed 16 per cent on-year expansion in demand for inspections and audits from American and European brands in the first quarter of 2021, representing a third consecutive quarter of growth that had initially begun as a post-lockdown rebound in mid-2020. Growth is more than just a return to pre-pandemic levels, as inspection demand has, on average, doubled compared to the same period of 2019.
Vince Tran, senior manager at Walmart in Vietnam, said at a conference last December that the US retail giant is planning to expand the procurement of Vietnamese goods at its supermarket chains. Some potential products include footwear, handbags, apparel, wooden goods, food, agriproducts, and handicrafts. So far, Walmart has made inquiries about thousands of types of Vietnamese goods and purchased hundreds of them.
Meanwhile, according to Ken D. Duong, director of TDL International Law Firm, US buyers are increasingly sourcing products from alternative markets like Vietnam, presenting opportunities for local suppliers to get major orders. Also, Vietnamese Americans are actively seeking local suppliers to export Vietnamese goods to the United States.
Commenting on these growing activities, Adam Sitkoff, executive director of the American Chamber of Commerce in Hanoi (AmCham), told VIR that there are many US importers and retailers that rely on products made in Vietnam. This spans a wide range of goods – everything from clothes and shoes, to backpacks, seafood, and consumer electronics.
The US is already Vietnam’s largest export markets, and the latter receives billions of US dollars of foreign investment from US companies each year – much of it to build integrated supply chains that benefit American consumers.
“Recent growth in Vietnamese exports is partially due to the strong economic recovery and consumer spending in the US,” Sitkoff said. “However, most of the export growth to the US appears to be driven primarily by the relocation and reassessment of supply chain sourcing from China to Vietnam.”
Data from the Vietnamese General Statistics Office (GSO) showed that the US continues to be Vietnam’s largest export market with the total turnover of $30.3 billion in the first four months of 2021, up 50.1 per cent on-year. Many items with a turnover of $1 billion or more include furniture, textiles, footwear, computers, electronic components, and so on. It is forecast that by the end of this year, the US will remain one of the largest export markets for Vietnam.
As reported by The Wall Street Journal, the American share of Vietnam’s overseas sales has risen considerably based on Vietnamese export data and US data for imports. In the 12 months through January, US imports from Vietnam were equivalent to about 29 per cent of the Asian country’s total exports, far higher than the roughly 20 per cent average before 2019.
Stephen Olson, a research fellow at the Hinrich Foundation, told VIR that the punitive tariffs placed on China by the US created a financial incentive for American buyers to source products from Vietnam which they might have previously sourced from China. However, the tariffs only accelerated a trend that was already underway. “As wages and other costs in China have been increasing in recent years, Vietnam has become an increasingly competitive source for many manufactured products,” Olsen said.
In line with this trend, he noted that Vietnam will benefit from increased employment and production, but there are also some challenges that will have to be successfully managed. Greater manufacturing activity will have to be conducted in a way that is sustainable from both an environmental and social point of view. If not, the benefits will be offset over the longer term.
AmCham’s Sitkoff added whether Vietnam can take advantage of the opportunity to sell more to the US depends on how well the government does at creating a favourable business climate here. It is critical that US companies and investors here encounter an equal, level, and predictable playing field, Sitkoff explained. Reducing unnecessary administrative procedures, crafting clear and fair policies – especially with respect to customs and tax inspections – and making good decisions on key infrastructure investments will help attract more trade and investment from US corporations.
Singapore tops list of foreign investors over five-month period
Foreign investors have pumped approximately US$14 billion into the nation during the opening five months of the year, marking an annual rise of 0.8%, with Singapore taking the lead after making a total investment of US$5.26 billion.
According to data released by the Ministry of Planning and Investment, between the beginning of the year and May 20, the disbursement of foreign direct investment (FDI) projects have increased by 6.7% to US$7.15 billion compared to the same period from last year.
The country was home to 33,615 valid FDI projects and had recorded a total registered capital of US$396.86 billion by May 20.
In relation to the figure, a total of 613 new projects were licensed, with various schemes in Hanoi making up roughly US$8.83 billion, an increase of 18.6% compared to the same period from last year.
Furthermore, 342 operating projects were registered to have raised investment capital by US$3.86 billion, while foreign businesses also invested a sum of US$1.31 billion throughout the reviewed period through capital contribution and share purchases.
Foreign financiers invested in 18 local industries during the course of the five-month period, of which the processing and manufacturing sector topped the list with US$6.14 billion, followed by power production and distribution, real estate business, along with the wholesale and retail sectors.
Singapore topped the list among the 70 countries and territories currently investing in the nation with US$5.26 billion, accounting for nearly 37.6% of total investment capital, followed by Japan with US$2.59 billion, and the Republic of Korea with US$1.83 billion.
Most notably, the Mekong Delta province of Long An topped the list of 56 provinces nationwide in terms of luring FDI inflows with a total registered investment capital of US$3.35 billion, making up 23.9% of total capital, followed by Ho Chi Minh City with US$1.34 billion, Can Tho with US$1.32 billion, along with Binh Duong, Hai Phong, and Bac Giang.
Ho Chi Minh City industrial production to maintain recovery momentum
The efforts of the government and businesses to fight against the COVID-19 pandemic and maintain production is expected to keep industrial production in Ho Chi Minh City on the rise.
The index of industrial production (IIP) of May is expected to rise by 1.6 per cent compared to last month.
According to data from Ho Chi Minh City Department of Industry and Trade, industrial production in the city maintained its recovery momentum as the Index of Industrial Production (IIP) of May is expected to rise 1.6 and 5 per cent compared to last month and the same period last year.
In May, the cumulative IIP of the country is estimated to increase by 7.4 per cent on-year. This positive result is likely due to the efforts of businesses to fighting against COVID-19 and maintain production, helping the city recover its economy and industrial production.
Accordingly, the electronics manufacturing, mechanical, pharmaceutical-rubber-plastic, and food and beverage processing industries are the four key industries leading the growth.
The average growth rate of these industries in the first five months was estimated at 8.15 per cent on-year, 1.11 percentage points higher than the overall growth rate of all industries in the country.
Specifically, the electronics manufacturing industry is estimated to have increased 22.8 per cent. The Department of Industry and Trade stated this is considered good growth as products are diversified based on domestic and foreign demand.
On the other hand, the IIP of the mechanical industry is estimated to have risen by 12.59 per cent. As Vietnam has signed a number of free trade agreements and supply chains are shifting from many countries to Vietnam, domestic mechanical businesses are looking at bright prospects to enhance their manufacturing operations.
However, raw material and goods imports for foreign-invested enterprises have been disrupted at high-tech industrial parks by COVID-19, resulting in them turning to domestic suppliers. According to the Department of Industry and Trade, this is a good opportunity for supporting industry businesses to dive deeper into the global supply chains and increase their competitiveness.
Thirdly, the pharmaceutical-rubber-plastic industry witnessed an estimated increase of 2.14 per cent. While lower than last year, large companies in the plastic industry producing packaging, household plastics, and industrial plastics still maintained growth.
Last but not least, the food processing industry and the food and beverage industry recorded an estimated stable 3.89 per cent growth. The IIP index saw high increases in the beverage industry with 3 per cent, and 4.4. per cent in the food processing industry.
Authorities cracking down on agricultural pretenders
Farms neglecting agricultural production after installing rooftop solar power projects are being warned by local authorities to resume production soon in line with their project’s licences or face sanctions.
Gia Lai Department of Industry and Trade (DoIT) has reviewed and reported that 173 of 441 solar power projects in the Central Highlands province have violated rooftop solar power regulations but still enjoyed the incentivised feed-in tariff (FiT).
Pham Van Binh, director general of the DoIT, said that these projects have not developed any building or agricultural production under the panels, wasting the true potential of some land plots.
The offending solar projects have been set up in the guise of agricultural farms and “bypassing” procedures by applying in-principle approval at commune level and requesting for changing land-use purpose at district level. However, after these procedures for businesses were approved, post-checking has yet to be carried out frequently.
Regarding handling of the violations, Binh said that the DoIT asked businesses to complete changing land-use purposes as well as develop agricultural farms in accordance with the registered documents until the end of June. The department will report to Gia Lai People’s Committee to receive direction and guidance of the penalties for these violations.
“The local authorities will further tighten the management of such farms and land. The leaders of the province will later conclude the responsibilities of the DoIT, district-level authorities, and sanctions for businesses,” Binh said.
This drastic move may place some pressure on developers such as Solar Tay Nguyen, Phu Manh Company, Thai Duong Gia Lai Agricultural Investment, and more. Solar Tay Nguyen’s agricultural activities involve chicken farms over hectares of land, Phu Manh produces mushrooms, and Thai Duong plants trees.
“The coverage of these agricultural projects makes up only 10-20 per cent of total area of the projects and generates tiny revenues – so they do not meet the requirement of solar power projects on agricultural land,” explained a DoIT representative.
In many districts across Gia Lai, solar farms without any planting or agricultural production under the panels is a common description of solar power projects which applied the FiT of rooftop solar power as per Decision No.13/2020/QD-TTg released in April 2020 on the mechanism of encouraging development of solar power in Vietnam.
Ho Minh Hau, head of the Infrastructural Economy Division at Chu Se People’s Committee, said that most solar power projects on agricultural farms in the district have yet to do planting or husbandry. “Agricultural production is mentioned on paper only, and in fact some projects are ‘disguised’ by some chickens, vegetables, and mushrooms, most of them gaining from solar power only and leaving the actual land useless,” said Hau.
Despite connecting to the national grid for a long time and enjoying a good FiT which was applied under Decision 13 a year ago, most of the solar power farms in Kte village of Chu Se district’s Hbong commune are filled only with weeds, in just one example. Many dozens of metal pillars are planted alongside to prop up corrugated iron roofs and the hundreds of solar panels above.
According to Decision 13, the FiT for solar power projects on agricultural farms is VND1,943 (0.08 US cents) per kWh, higher than other renewable power projects. However, Document No.7088/BCT-DL from the Ministry of Industry and Trade (MoIT) dated September 2020 on guiding investment into rooftop solar power stipulated that the solar panels of these projects should lay on a building or roof (in accordance with the Law on Construction 2014), which is operating in proper function and purpose.
However, in order to gain more profits, numerous businesses have tried to circumvent the law. “They feed some chickens only and tell the local authorities that animals have just died because of disease, or they have sold them. They don’t want to invest into husbandry or cultivation because the land and conditions here are quite difficult to do so, so the investment and risks will be high,” said Hau.
According to a recent report from the DoIT sent to Gia Lai People’s Committee, there are nearly 3,250 solar power projects in the province with a total installation capacity of 603.8MWp. The inspection team of the department has already checked 440 projects. Of these, 10 are on the rooftops of warehouses and factories and 430 on the roof of farms.
Over 250 of the 430 projects have been developing and operating agricultural farms under solar panels, although around 170 projects have yet to carry out any agricultural work.
Binh from the DoIT said, “As of July 15, if the investor of rooftop solar power projects do not fix the troubles related to lines and substations, as well as fire prevention and fighting, their contracts of purchasing power with Gia Lai Electricity Company will be halted, and specific sanctions will be applied.”
Explaining to the inspection team, some businesses have said that with the deadline to connect to the national grid to enjoy high prices as laid out in Decision 13 being December 31, 2020, agri-projects were forced to install rooftop solar panels first and develop the more traditional aspects of the farm later.
Thanks to policies promoting solar power development, within a single year the power load of Gia Lai has increased by 600MWp. Of this, numerous projects combined between solar farm and agricultural farm were registered to enjoy the FiT.
Gia Lai is one among numerous provinces hosting rooftop solar power projects that may be causing violations. Dak Lak, Bac Lieu, Binh Thuan, and Dak Nong provinces are also booming with rooftop solar power ventures, with ‘agricultural projects’ being listed on documents only but with no real agricultural operations in sight.
“The trouble in Gia Lai is also a common concern in rooftop solar power across the country, so details should be submitted to higher management levels like the MoIT to ask for new policies or sanctions for all,” Binh said.
Tay Ninh to start work on three roads this year
The southern province of Tay Ninh will this year begin work on three road projects, which require an estimated VND4.5 trillion, to better connect with neighboring HCMC, Binh Duong Province and Binh Phuoc Province.
Specifically, the 48-kilometer N8 - 787B - 789 road project, which was designed to have four lanes, will stretch from Trang Bang Town to Duong Minh Chau District of Tay Ninh Province. The project, expected to be executed in the 2021-2025 period, needs an estimated VND3.4 trillion, local media reported.
The project will help improve the road network linking Long An, Tay Ninh, HCMC and Binh Duong and connect the Thanh Thanh Cong Industrial Park in Tay Ninh, Linh Trung III Export Processing Zone in HCMC and a logistics center, an inland container depot and ports in Hung Thuan Commune of Tay Ninh’s Trang Bang Town.
The second project is the 16-kilometer four-lane DT 794 road running from the Ka Tum Intersection in Tay Ninh to the Saigon River in HCMC and passing through Binh Duong and Binh Phuoc. The project costs nearly VND500 and is expected to be completed in 2024.
Tay Ninh will also upgrade and expand the DT 795 road passing through Tan Bien and Tan Chau districts. The 36-kilometer road requires an investment of some VND564 billion and is expected to be completed by 2024.
At present, only National Highway 22 connects Tay Ninh and HCMC but it has deteriorated and is overloaded. During peak hours, traffic congestion often occurs on a section from Cu Chi District to the An Suong Intersection in HCMC and some other sections passing through the Trang Bang Industrial Park.
Tay Ninh and HCMC authorities have coordinated to complete procedures to start work early on the HCMC-Moc Bai Expressway, which is over 53 kilometers. In the first phase, the expressway will have four lanes, cost VND15.9 trillion and is expected to be completed by 2025.
Tay Ninh Chairman Nguyen Thanh Ngoc said once the projects are completed, they would help connect the province with other localities in the southern key economic zone, meet the travel and cargo transport demands, boost socioeconomic development and attract more investment.
Among the three projects, the N8 - 787B – 789 route will use the State budget and the province’s budget, while the investment for the two others will be sourced from the local budget.
ST24 rice nominated for five-star OCOP product recognition
The National OCOP Council has recently selected ST24 rice as a qualified product to submit to the Prime Minister for the recognition of the five-star “One Commune, One Product” (OCOP) product.
Accordingly, ST24 fragrant rice of Ho Quang Tri Private Company in Soc Trang Province has just been chosen by the National Council for classification and evaluation of OCOP products to be a nominee on the list of products submitted to the PM for the recognition of five-star OCOP products.
In 2017, ST24 rice entered the top three Best Rice in the World's Best Rice contest held in Macau. In April 2021, ST24 rice was also certified to meet the organic standards of the US and Europe.
The total number of products proposed to be recognized as five-star OCOP products this time is 20 products from 11 provinces and cities across the country. Of the nominees, the Mekong Delta region has three products, which are all rice products, including Thien Vuong specialty fragrant rice, Tien Nu rice from An Giang Province, and ST24 fragrant rice from Soc Trang Province.
Being recognized as a five-star OCOP product will create motivation to develop local specialties and attract more investment. Besides, the product will have the opportunity to enter the supermarket network, advertise to consumers nationwide, and head to building the national OCOP product brand.
In related news, according to US-based The Rice Trader (TRT), Ho Quang Tri Private Company is the first Vietnamese enterprise that TRT officially allowed to use the exclusive logo of the “World’s Best Rice” award of TRT in promoting and trading of ST25 rice product after completing the necessary agreements.
Previously, in 2019, TRT recognized the success of Vietnam's ST25 rice in front of more than 600 representatives of the international rice industry, including speakers, sponsors, and delegates, at the largest event of the global rice industry and trade.
This event is truly an international recognition of the prestige of the national rice industry that Vietnam has earned through years of hard work in developing rice varieties and quality. Vietnam also ranked second in the contest held in 2020.
At the same time, TRT released a press release about the fact that many Vietnamese rice enterprises use the logo of the "World's Best Rice" award on their packages without recognition. This might cause Vietnam to lose the right to participate in this contest.
TRT officially warns many other Vietnamese enterprises about respect when using the copyrighted "World's Best Rice" logo on rice packages being traded in the market.
This is an illegal use of the intellectual property rights and regulations of the logo of the "World's Best Rice" award. Without a proper resolution, TRT will reveal the names of infringers.
Moreover, TRT is seriously considering taking away the rights of Vietnam to participate in this contest in the upcoming years.
State intervention helps cool down land prices in Hanoi
A land fever only benefits a few people, and the latecomer will be losers when the market turns sideway or even freezes, stated an economist.
Amid surging land prices in Hanoi following the announcement of the Red river zoning plan, timely intervention from local authorities has ensured prices cool down.
Since last year, Hanoi has kicked start the zoning plan process of the spacious riparian areas of the Red River as land resources in the city have fast become scarce amid rapid economic development, with the announcement of the plan set to take place in June.
Despite the lack of information on the zoning plan, since early March, people had rushed to buy lands at districts believed to be included in the plan and heated up land prices in the local property market.
Late March, the Standing Committee of the municipal Party Committee issued Announcement No.180-TB/TU urging local districts and wards to step up supervision activities in land management to prevent cases of taking advantage of legal loophole for gaining unfair gains from land speculation.
The Hanoi People’s Committee on April 22 instructed the Departments of Planning and Investment and of Architecture to work with related agencies in reviewing the abnormality in rising land prices, while ensuring transparency in information regarding land plan to avoid the spread of false rumors on land projects in the city.
Drastic moves from Hanoi’s authorities immediately led to a sharp decline in land prices in the city. At An Khanh ward, Hoai Duc district, land plots in March were around VND70 million (US$3,000) per square meter, but have been lowered to VND62-65 million (US$2,700-2,800) due to the lack of demand.
Prices of property in Nam An Khanh residential area, previously skyrocketing to VND65 million (US$2,800) from VND35 million (US$1,500) per square meter after Tet holiday, have also gone down to VND55-60 million (US$2,380-2,600).
Similarly, prices also went down in Thach That and Dong Anh districts by 5-10 million (US$216-432) per square meter.
General Secretary of the Vietnam National Real Estate Association (VNREA) Nguyen Van Dinh lauded the authorities’ timing intervention to stabilize the property market.
“Tightening credit into the real estate market and strict management of changes in land use purpose were key factors to prevent land speculation,” Dinh told Hanoitimes.
Many provinces/cities, including Hanoi, have also held district and ward leaders accountable in the event of a sharp rise in land prices.
Deputy Director-General of the General Department of Land Management under the Ministry of Natural Resources and Environment Mai Van Phan attributed the surge in land prices in certain localities to the lack of transparency of projects.
“Land brokers are exploiting the miscommunication between the authorities and the land buyers to heat up the market,” Phan explained to Hanoitimes, saying this is a lesson for real estate management.
“In the coming time, the General Department of Land Management would review the land management process at 26 provinces/cities,” he added.
Sharing the view, Lawyer Hoang Van Doan from the Hoang Hung Law Firm said state agencies are expected to better supervise the process of land planning, as leakage of information prior to official announcement would cause land prices to surge.
“A heating up property market only benefits a few people, and latecomers will be losers when the market turns sideways or even freezes,” economist Vu Dinh Anh warned.
“This would be much worse if they are using financial leverage to buy lands, especially as interest rates may go up due to high inflationary pressure,” Anh said.
Former Deputy Minister of the Ministry of Natural Resources and Environment Dang Hung Vo noted a real estate bubble is likely as demand is currently much higher than supply.
“This means in the next few years, the high demand will continue to push land prices up,” Vo said.
“While the bubble will eventually burst, the current state of the housing market will make it harder for those that want to buy a house to live. A more serious issue is that the current price is higher than it should be and disrupt the market balance,” he noted.
Hanoi's economic growth on the rise
Positive economic results are thanks to the city’s strong pushes amid the Covid-19 pandemic.
Hanoi continues to show positive economic performance in May as the city remains steadfast on pursuing the twin targets of both containing the pandemic and boosting economic growth.
In May, Hanoi’s index of industrial production rose by 1.8% against last month and 5.1% year-on-year, leading to an overall growth of nearly 10% year-on-year in the five-month period.
The manufacturing and processing sector, accounting for 96% of total production value in the industry sector, increased by 9.7% year-on-year, Ngoc Anh noted.
Director of the municipal Planning and Investment Department Do Anh Tuan said such results were thanks to the city’s strong push for ensuring smooth operation of economic activities despite the Covid-19 pandemic.
Tuan informed the city’s export turnover stayed around the same level of April at US$1.25 billion, expanding 2.5% against last May, while imports rose by 4.7% month-on-month and a whopping of 26.2% year-on-year in the January-May period.
The city’s mayor also pointed out other positive economic indicators, including total revenue from retail sales and services of VND243.8 trillion (US$10.53 billion) in Jan-May, up 11.2% year-on-year; foreign direct investment (FDI) attraction of over US$591 million; and budget revenue of VND110.6 trillion (US$4.78 billion), up 6.5% year-on-year.
In May, the city’s consumer price index (CPI), a gauge of inflation, rose by 1.8% against April and 0.43% year-on-year.
The CPI, however, declined by 0.5% in the first five months compared to the same period of last year and stayed under control, Tuan added.
This year, Hanoi sets a growth target of 7.5% from the estimated 3.94% in 2020.
Source: VNA/VNS/VOV/VIR/SGT/Nhan Dan/Hanoitimes
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