Gasoline prices increased in October, causing concern for enterprises as they attempt to resume operations.

Vietnamese authorities are sticking to their target of moving towards a digitally-led economy by increasing cashless payments for public services, in which the non-cash payment value would be 25 times higher than GDP.

The government last week officially approved Decision No.1813/QD-TTg regarding the development of non-cash payments in Vietnam towards 2025.

The overall objective of the legislation is to proactively promote non-cash payment in Vietnam, where there is consensus that there is room for improvement in the e-payment and fintech industry in Vietnam.

Through the decision, the government has proposed many solutions including completing the legal corridor as well as mechanisms and other policies to develop non-cash payments over the next few years.

Specifically, the government has assigned the State Bank of Vietnam (SBV) to coordinate with the Ministry of Justice and other relevant ministries to review and propose amendments and supplements to a number of payment-related provisions in the current legal framework, such as the laws on the SBV, credit institutions, and anti-money laundering, among others.

“We are completing a controlled trial mechanism, or sandbox, for fintech in the banking sector to create a fair legal framework for tech-savvy players,” the SBV noted. “Fintech will be the next big game-changer in the banking and finance industry.”

At the same time, the government is researching and proposing mechanisms and policies on a national digital currency, or central bank digital currency (CBDC), which has been in the works for several months already.

According to PwC Vietnam, CBDC-related projects are gaining traction. Globally, more than 60 central banks have headed towards a similar national digital currency since 2014. In Asia, Cambodia, Thailand, China, South Korea, and Japan are among the countries that have joined the race and progress will continue to accelerate with some projects gaining momentum in both retail and wholesale fronts.

With over 88 per cent of CBDC projects at the pilot or production phase, PwC said, it is not surprising that blockchain is the technology of choice as the benefits cited include security, transparency, and programmability.

Vo Tan Long, chief digital officer at PwC Vietnam, said, “Across Asia, these CBDC success stories, as well as the development of virtual banking licences, serve as stepping stones to advancing financial inclusion. When CBDC becomes a reality in Vietnam will depend on the legal framework and policies that support the issuance and the distribution of regulated digital currency and address security risk concerns. This is a clear call for regulators and financial institutions to come together for a harmonised approach.”

While Vietnamese law does not recognise cryptocurrencies as a legal means of payment, Long said it is timely that there are various government initiatives underway to explore the inevitable trend of digital money. “The current efforts show the government’s openness towards establishing a new type of currency despite previous reservations. Although there is no official timeline for a virtual money pilot programme, it is interesting to see how our local policymakers will take this initiative forward,” Long emphasised.

In particular, the government intends to roll out mobile money as the most efficient means for electronic payments to reach the whole population, even remote or rural areas where the majority of the population is unbanked.

Minister of Information and Communications Nguyen Manh Hung said that procedures are being completed so that a pilot licence for mobile money will be issued soon. “We believe the new mechanism will create a significant push to support digital transformation on a national scale,” he said.

Specific digital economy goals by end of 2025- Non-cash payment value is 25-fold higher than GDP;

- Non-cash payment in e-commerce reaches 50 per cent;

- 80 per cent of people aged 15 and over boast transaction accounts at banks or other authorised financial organisations; and

- Increasing people’s access to payment services; increasing the number of points accepting cashless payments to over 450,000 points.

Objectives in non-cash payment means and services:

- The average growth rate in the number and value of non-cash payment transactions is 20-25 per cent annually;

- The average growth rate in the number of transactions via the mobile phone channel reaches 50-80 per cent annually and the transaction value reaches 80-100 per cent annually;

- The average growth rate of the number and value of transactions via internet channels is 35-40 per cent annually; and

- The rate of individuals and organisations using non-cash payment through electronic payment channels reaches 40 per cent.

Objectives in non-cash payment for public services:

- Around 90-100 per cent of educational institutions in urban areas accept payment of tuition fees by non-cash payment methods;

- Around 90-100 per cent of universities and colleges in urban areas deploy online tuition payment on the National Public Service portal;

- 60 per cent of medical examination and treatment establishments in urban areas accept non-cash payment methods for medical services; and

- 60 per cent of people receiving pensions, social insurance benefits, and unemployment benefits are paid through non-cash payment methods.

HCMC's Northwest Urban Area waits for more investment to wake up

The Northwest Urban Area can be called the remaining golden land with a large area of Ho Chi Minh City. With its special geographical location and geology, when being properly invested, this place will one day become one of the key dynamic development areas of the city.

Chau Nguyen has more than 2 hectares of land in Tan Thong Hoi Commune in Cu Chi District in the planning of the Northwest Urban Area. Because of the planning, for nearly ten years, he could only grow orchids and raise fish. This job is not suitable for him, so the profit is not high. Meanwhile, if he sells his land, the land price is not high because it is in the planning of the Northwest Urban Area.

Chau Nguyen is one of the thousands of households that have been entangled in the pending planning of the Northwest Urban Area, which has lasted for more than a decade. According to Decision No.24/QD-TTg dated January 6, 2010, of the Prime Minister approving the general planning of HCMC, the Northwest Urban Area will be a secondary direction, including five communes and a town, with an area of 6,000 hectares. According to initial statistics, the entire planned area had about 6,000 households that must be cleared completely. By 2016, city leaders adjusted the planning in the direction of stabilizing the existing residential areas.

In April this year, reporting to the People's Committee of HCMC, Mr. Phan Ngoc Phuc, Deputy Director of the Department of Planning and Architecture, said that 11 projects of the 1/2000-scale zoning plan were approved, but no investors were available. After that, following the direction of the City Party Committee and the municipal People's Committee on reviewing the unfeasible planning, the Department of Planning and Architecture reviewed and reported to the city. The adjustment of the planning was approved by the municipal People's Committee to adjust the task of the 1/5000-scale zoning plan in February 2020. At present, the adjustment project is in the process of preparation and appraisal. The department has been coordinating with the Northwest Urban Area Management Board, the People's Committee of Cu Chi District, and relevant units to remove difficulties and obstacles to complete quickly the project planning to submit to the People's Committee of HCMC for consideration.

From the investment perspective, the Northwest Urban Area used to attract many investors. Fourteen years ago, the appearance of Malaysian Berjaya Group, with a popular investment combo in HCMC, impressed domestic investors. The group introduced projects to build a Financial Center in District 10 and a 900-ha University Town in Hoc Mon District, with a total investment of US$3.5 billion. Besides, this place also received the attention of large domestic and foreign corporations. Unfortunately, the global economic crisis occurred in 2008, due to difficulties, all investors withdrew.

Recently, a comprehensive review and evaluation report of more than ten years of implementing the general planning of HCMC by the Institute of Planning and Construction of HCMC shows that the funding for the construction of the Northwest Urban Area has been extremely slow; the infrastructure system has not been developed synchronously; traffic connection with the city center relies only on the National Highway 22, so it is difficult to call for investment. The Northern center of the Northwest Urban Area (about 500ha) and the sub-center in Hoc Mon District (50ha) are mostly located in the existing residential area and have not had any investors. The completed urban and residential area planning projects are extremely sluggish or have not been implemented, such as Tan Thoi Nhi Urban Residential Area, Tan Hiep Urban Residential Area, University Town, and Saigon Safari Park.

Generally, the process of urbanization here is taking place as an oil spill. Residential areas were formed fragmentally and uncontrollably and lacked infrastructures.

According to the assessment of economic and urban experts, the biggest barrier that the development of the Northwest Urban Area faces is traffic. The Institute of Planning and Construction of HCMC affirmed that the Northern development corridor depends entirely on the North-South arterial road, the National Highway 22. However, the National Highway 22 is overloaded and lacks investment resources to connect with surrounding development directions, such as Binh Duong and Tay Ninh provinces. The An Suong - Moc Bai route, also known as the parallel route to the National Highway 22 to share the traffic pressure, has not started construction yet.

From the perspective of planning, according to Mr. Hoang Minh Tri, former Director of the Institute of Construction Planning and Construction of HCMC, at present, the Northwest Urban Area has been placed in a completely new context, which is extremely convenient for investment attraction. Firstly, the HCMC - Moc Bai Expressway will be invested and completed soon and become the main driving force for the development of the Northwest Urban Area in particular and the region in general, such as Binh Duong and Tay Ninh provinces, and connect to Cambodia. Secondly, the Ben Thanh - Tham Luong metro line No.2 has basically completed the construction site clearance and is being accelerated the implementation process. At the same time, the connection plan from Tham Luong to Cu Chi has also been clearly determined to include in the implementation plan. This metro line is expected to connect to the expressway to Tay Ninh Province. Thus, these routes are expected to relieve the traffic tension in the inner city, the section from Tan Son Nhat Airport to the Northern districts and neighboring provinces. Thanks to that, the circulation of labor and goods between regions will be easier. Especially, with the increasingly severe climate change, HCMC urban development needs to have a concise overview of this area, including high geological base and hard soil, which will not be affected by floods and high tides.

According to Architect Khuong Van Muoi, HCMC Architects Association, although a heavily-invested infrastructure system, good geology, and convenient location for regional and international linkages are important, it is still not enough. The call for investment must be made by the government. It will be the decisive factor to ensure the success of investment attraction for the Northwest Urban Area. When the government introduces the project and organizes conferences and seminars to call for domestic and foreign investment, investors can clearly see the importance of the project in the future. At the same time, it is also a message to assure investors of the determination of the government in the construction of the Northwest Urban Area. It has been proven by the new urban areas of Phu My Hung and Thu Thiem. The government invests in infrastructures, such as roads, bridges, and underground tunnels, and carries out site clearance, and investors only do their part.

Agri-exporters buckle up for unpredictable season

In addition to sky-high prices for shipping containers that have been plaguing Vietnamese exporters throughout the year, understaffed ports and customs offices are now causing congestion, leaving a bleak outline for the upcoming peak season.

“Goods exported to the US are now stuck at ports for another three weeks, in addition to the transport of more than three weeks,” said Nguyen Dinh Tung, director of Vina T&T. “Because of the pandemic, only half of the customs personnel of most countries are operating.”

T&T, which accounts for about half of Vietnam’s fresh fruit exports to the US, is under pressure as their goods are stuck at ports, which adversely affects the quality of agricultural products. Tung said container freight to US ports is seven times more costly than in the same period last year.

In October, many shipping lines had cut back trips to Vietnam, pushing up the rate of cancellation of orders to Europe and the US. Intimex JSC, one of the five largest rice exporters in Vietnam, has booked many shipping lines that have continuously been cancelled. Many other rice exporters are in the same situation. Some businesses do not dare to sign contracts with foreign partners for fear of not being able to deliver their goods.

Cancellations and a lack of empty containers also affect the imports and exports of seafood. Nguyen Hoai Nam, deputy general secretary of the Vietnam Association of Seafood Exporters and Producers (VASEP), said that businesses have to “pay extra storage costs for congested shipments at seaports.”

The fact many shipments cost up to $20,000 per container has pushed product prices to a higher level.

For a year, VASEP has received notices from a number of container shipping lines about increasing surcharges for containers from Vietnam to export markets, including to Asia.

In addition to increased surcharges, some shipping lines also announced an increase in the peak season surcharge of about $150-450 per container.

Vietnam, like many other countries, is adjusting its value chains to suit the situation. Dr. Dang Kim Son, former director of the Institute of Policy and Strategy for Agriculture and Rural Development, said that all countries avoid depending on one market or source for raw materials.

Most countries are expanding their domestic markets, even those with very deep value chains like China seek to strengthen their own markets. At the same time, they are also more proactive in providing local materials for themselves, thus increasing self-sufficiency. Except for special items, most countries also seek to diversify certain value chains, which according to Son should be a lesson for Vietnam.

However, container freight rates have increased – also because of the congestion at ports – since the beginning of 2021, causing a huge imbalance between demand and transport capacity.

Cancellations of bookings have also increased despite the recommendations of the Vietnam Maritime Administration to shipping lines about freight rates, commitments to schedules, and guaranteed seats on ships and containers.

According to statistics from the Vietnam Logistics Association, from last June to this August, the average sea freight rate increased by about 3.5 times, specifically the Asian freight rate increased 3-4 times, African routes increased 3-4 times, and European routes rose by 5-6 times in costs.

Christmas and Lunar New Year are now further boosting shipping demand, and freight rates are likely to further increase in the fourth quarter. According to statistics from the port authority of Ho Chi Minh City, in the first nine months of 2021, the total cargo volume through the port was estimated at more than 127 million tonnes, an increase of more than 5 per cent compared to the same period in 2020.

At the end of the year, the volume of goods flowing to seaports is expected to rise as the economy gradually recovers. Nguyen Phuong Nam, deputy general director of Saigon Newport Corporation, warned that cargo congestion will recur when the pandemic is fully controlled and tens of thousands of businesses will return to production to make up for lost time. “The fundamental solution is to create the most favourable conditions for businesses to quickly bring goods out of the ports and prepare regulatory mechanisms in case goods are stuck,” Nam said.

Vietnamese shippers hope freight rates and container rentals will ease after CMA-CGM, a French shipping company, announced its commitment in September to not further increase container charges with Vietnam until February. The pricing policy is applied to all service routes, customers, and without long-term contracts.

However, price hikes following market trends are expected to last for several more months, CMA-CGM forecasts. The company said it will find an appropriate price adjustment policy to ensure the interests of its customers. In the first six months of 2021, CMA-CGM invested in 360,000 new containers to solve the shortage. With the service route from Vietnam to the US, the firm has upgraded its capacity to 15,000TEU.

Vietnamese coffee and pepper increasingly popular in Australian market

Vietnamese coffee and pepper are becoming more popular globally, and especially in the Australian market.

Nguyen Phu Hoa, Deputy Consul General and Head of the Viet Nam Trade Commission in Australia, said that the country was not a large coffee producer, but was a large coffee market.

It is expected that Australia would consume an average of 2 kilos of coffee per person per year this year. This consumption level is lower compared to European countries, but still in the top 30 coffee consuming countries in the world.

Australians are also very strict in their choice of food and drink, their common preference is to drink European-flavoured coffee, so they import a lot of processed coffee from Europe.

However, young people in Australia have been keen to try new products in recent years, so coffee infused with other flavours has also begun to be consumed strongly in Australia.

Vietnamese coffee exports to Australia have increased sharply in the last two months, up 41 per cent in September compared to August.

The Australian Trade Commission also forecast that the demand for coffee and the improvement of supply from Viet Nam would rise from now until the end of the year, therefore, the consumption of coffee in this market would also grow.

Similar to coffee, Australia is not a pepper producer. The country is a large pepper import market annually with a growth rate of about 2.5 per cent per year.

Australia imports pepper from many countries around the world, mainly from Viet Nam, India, China, Italy, and Indonesia.

Viet Nam has become the largest pepper exporter to Australia with a proportion of 50-60 per cent. Notably, Vietnamese pepper has an increasingly large position in this market.

Vietnamese pepper export turnover to Australia reached 2,630 tonnes last year, up 30.47 per cent over the same period last year.

Pepper imports from Viet Nam to Australia also grew very strongly in the first seven months of the year.

Hoa forecast that pepper importers from Viet Nam to this market would continue to be promoted from now until the end of the year.

Especially, in the current trend, the import of agricultural products as well as goods from Viet Nam to Australia continues to increase.

The level of trust and prestige of Vietnamese goods in Australia was rising, this was a great opportunity for Viet Nam to boost coffee and pepper exports to this market, said Hoa.

In order to promote coffee and pepper exports to the Australian market, besides trade promotion activities in the form of online trade connection, promotion through consumer experience is also promoted by the agencies and recommended by experts.

Along with promoting products at fairs, Hoa said the trade commission was currently working with a number of large distribution systems, stores, and especially young people in Western Australia.

The trade commission hoped that they could co-ordinate to establish a Vietnamese coffee experience centre in the Western Australia region. With that, promotion will spread.

In addition, the promotion of coffee and pepper will be done through the Vietnamese business community in Australia so that coffee and pepper could enter the restaurant system of Vietnamese businesses in Australia. Besides, it is possible to promote the goods at community sports tournaments.

Although the market is considered to be very large, Australia is a very demanding market.

According to experts, with the impressive growth in the volume of goods and agricultural products exported to the Australian market, the country is becoming a potential market for Vietnamese businesses.

However, in order to expand export opportunities to the largest market in Oceania, businesses needed to grasp customer tastes, improve quality and build a solid brand name for products and goods, recommended experts.

Ha Noi selects 213 favourite Vietnamese goods this year

About 213 products and services of 150 businesses have been chosen among the favourite Vietnamese products in 2021 by customers, according to a recent vote.

The Ha Noi Steering Committee for the Campaign on Vietnamese people give priority to using Vietnamese goods announced the result of this programme at a press conference held in Ha Noi on Tuesday.

Those Vietnamese goods and services include electronics and technology; home appliances; industrial, agriculture, forestry and fishery products; and products in the "One Commune One Product" (OCCP) programme.

“The results of the programme in 2021 will be the driving force for local businesses to develop Vietnamese products. This result will also encourage businesses to continue to renew production,” said Nguyen Lan Huong, Chairwoman of the Viet Nam Fatherland Front Committee in Ha Noi.

According to Huong, despite the great impact of the COVID-19 pandemic, the online voting programme has still been strictly and transparently implemented, contributing to the recovery of economic development. With this programme organised by the Ha Noi Industry and Trade Department, the city continues to find Ha Noi's key product brands.

“The programme has attracted more participation and that means the programme has brought benefits to the businesses," Huong said.

The number of enterprises registering to participate in the programme increased by 6.5 per cent, and the number of products and services also surged by 43.4 per cent compared to 2020.

The organisation has also promoted the programme as well as products and services of the enterprises by opening an online exhibition together with the programme of voting for favourite Vietnamese products and services.

However, Nguyen Anh Tuan, standing vice chairman of the Viet Nam Fatherland Front in Ha Noi, said the number of participants is still not high. There is also no survey on the business results in the following years after voting for the selected products.

The favourite Vietnamese goods in 2021 will be honoured at a ceremony held on November 10 on Trinh Cong Son Street, Tay Ho District, Ha Noi along with the opening ceremony of the Ha Noi Trade Promotion Programme 2021. 

Humble disbursement can turn the corner

Boosting public investment and further supporting struggling enterprises to recover will be key momentum for achieving higher economic growth moving into next year.

National Assembly (NA) Chairman Vuong Dinh Hue told the legislature last week that the economy may grow 2.5-3 per cent this year, lower than the target of 6 per cent earlier set by the NA one year ago.

It is also expected that the rate for 2022 will be 6-6.5 per cent if the health crisis is brought under control nationwide, especially in key economic hubs of the country.

The General Statistics Office (GSO) has released two scenarios for 2021 economic growth, based on the 9-month economic growth of only 1.42 per cent.

Under the first scenario, Q4 growth must reach 5.3 per cent if the whole-year growth is 2.5 per cent. Under the second scenario, it must increase 7.1 per cent if the entire-year growth is 3 per cent.

“In this socioeconomic situation, I believe that the first scenario is more feasible,” said Nguyen Trung Hieu, director of the GSO’s National Account Department. “The government has eased social distancing, making it favourable for domestic production to recover.”

The NA was told by Prime Minister Pham Minh Chinh that to reach economic growth goals for Q4 and 2022, numerous solutions are to be used, including two crucial ones on supporting enterprises and accelerating public investment, in addition to focusing on curbing the pandemic with the quickening of vaccination.

These two solutions are part of the government’s hallmark programme on economic recovery and development, which is under discussion now and will be enacted in November.

The fourth session of the 13th Party Central Committee which concluded on October 7 determined that one of the key solutions for boosting economic growth in the remaining months of 2021 is to “drastically boost the disbursement of public investment.”

Last week, the Government Office urged ministers, heads of ministerial-level agencies, and chairpersons of cities and provinces to accelerate disbursement of public investment for 2021, which remains humble so far.

The government’s statistics showed that by late October, disbursement of public investment is estimated to reach 55.8 per cent of the yearly plan assigned by the prime minister, lower than that of 67.2 per cent in the same period last year.

“Thus accelerating public investment disbursement must be one of the most important tasks in the remaining months of this year,” said Deputy Prime Minister Le Minh Khai. “All obstructions must be removed immediately. Boosted disbursement must be in line with ensuring works’ quality. Heads of units must be responsible for their units’ disbursement results.”

According to the Ministry of Planning and Investment, slow disbursement is ascribed to a series of reasons, such as social distancing due to COVID-19; slow allocation of public investment among ministries, central agencies, and localities for 2021; failure in imposing punishments on units failing to boost investment; and slowness in site clearance and resettlement.

For instance, the Long Thanh International Airport project in the southern province of Dong Nai is one of the most important transport projects for local and regional socioeconomic development, promoting tourism, and facilitating trade activities. However, the bigger the project is, the more difficulties developers are facing.

This project’s site clearance project requires $993.7 million, but accumulated disbursement since 2018 has only reached $465 million. The airport project’s total investment capital is estimated to be $16.06 billion, including $5.45 billion for the first phase running to 2025.

According to NA Chairman Hue, in addition to public investment, the legislature and the government will increase policy and financial support for struggling enterprises and individuals as part of efforts to recover economic growth.

For example, there will be a reduction of 30 per cent of corporate income tax in 2021 for businesses with total revenue in 2021 of not exceeding $8.7 million, and this sum is down from that in 2020.

In addition, there will also be an exemption of personal income tax, VAT, and other taxes arising from business and production activities in the third and fourth quarters of 2021 for all business households and individuals in all sectors and geographical areas, with all forms and methods of tax declaration and payment.

According to a government report, the total value of all fiscal solutions that have and will be enacted by the NA Standing Committee and the government in 2021 will be about $6.08 billion.

“Some supply chains have been disrupted and enterprises have had to stop operations or go bankrupt, especially those in commerce, services, and industry in Ho Chi Minh City and key economic hubs,” Hue stated.

According to the GSO, up to 94 per cent of businesses nationwide are bogged down in difficulties. In 19 southern provinces and cities which create 44.4 per cent of national GDP, up to 98 per cent of businesses are suffering from heavy losses. In the south-eastern and Mekong Delta regions, enterprises are now operating at only 5-10 per cent of capacity.

HCM City's businesses in need of capital injection soon

Firms are in desperate need of capital to resume operations, said business leaders and experts.

As the end of the year approaches, businesses have been ramping up efforts to get back into the game, especially to meet greater demand for goods and services in the upcoming holidays.

HCM City's food producers must secure a large amount of capital soon so they can stockpile raw materials and plan their production in anticipation of Christmas and traditional Tet holidays, said Ly Kim Chi, president of the HCM City Food and Foodstuff Association.

A capital injection is especially vital at this point because most businesses have run out of what little emergency funds they had during the lockdown as it was costly to keep production running using the three-on-site method, which required businesses to provide workers with accommodation, food and COVID-19 tests.

Do Phuoc Tong, president of the HCM City Mechanical and Electrical Enterprise Association, said securing bank loans would likely prove to be a challenge for most small-to-medium-sized enterprises as they lack assets to put up as collateral.

Businesses had asked commercial banks to relax regulations to support businesses during the pandemic.

"The majority of mechanical and electrical firms are those who have developed slowly over time from small businesses and as such, they often have a solid foundation and strong expertise. While said firms rarely go under, commercial banks aren't particularly interested because of their low-profit margin," said Tong.

Nguyen Quoc Anh, president of the HCM City Rubber and Plastic Association, said the association members had been struggling to cope with higher input prices, as much as a 20 per cent increase, since the beginning of the year. There has been a shortage of raw materials as the global economy was recovering, which will likely drive prices up even further. To make matters worse, other costs including COVID-19 prevention and logistics have also been climbing.

Meanwhile, demand had not fully recovered and sales had been slow, which severely affected cash flow. The grim situation was expected to last at least until the end of the year.

"As of now, most of our members have run dry on cash to meet their financial duties. We have asked commercial banks to consider granting credit extensions and debt restructuring, especially in support of domestic businesses," said Anh.

There is still room to give additional credit to businesses in HCM City, according to Nguyen Hoang Minh, deputy director of the State Bank of Vietnam's (SBV) HCM City branch.

Minh said since the beginning of the year, credit growth in the country's largest economic hub was recorded at 6.41 per cent. By the central bank's projection, credit growth for the whole year would likely hit 12 per cent, giving banks a lot of room to manoeuvre during the last quarter of the year.

Commercial banks said they were to cut interest by 1 per cent along with waiving banking fees, a move that has been well received by the business community. By SBV's estimation, 400,000 businesses were to benefit from this support package.

"We have demanded banks to give all the support they can to help with economic recovery and to support businesses. The SBV will stay committed to seeing banks fulfilling their pledges and those who failed in doing so will face sanctions," said Minh.

Another of SBV's priorities in the months to come is to help connect businesses and banks. So far, a number of commercial banks have pledged to support businesses with VND70 trillion (US$3.07 billion) in low-interest loans during the last quarter of the year.

Regarding some businesses' inability to provide collateral, Minh said the SBV had been working on a number of alternative methods to allow both businesses and banks to overcome current regulatory hurdles.

Seaport companies expect high profit in Q3 from rising freight rates

Rising freight rates have helped logistics companies, of which, seaport services have benefited significantly.

On October 14, Hai An Transport and Stevedoring (HAH) announced a new tariff schedule, to be applied from the beginning of November, with a sharp increase in price.

For example, the rate for transporting a 20-foot container from Cai Mep to Da Nang is VND8 million (US$351.99) per container, double the rate of January 1.

For the Hai Phong to HCM City route, the rate for a 20-foot container surged by 17.6 per cent, while for 40-foot containers it jumped 20 per cent. Meanwhile, from HCM City to Hai Phong, the rate for a 40-foot container has climbed from VND5.6 million at the beginning of the year to VND10 million in November.

In only half a month, the company has adjusted the rates up to two times. Previously, on September 28, Hai An announced the freight rate schedule for the third quarter with an average increase of 46 per cent, applied from October 13.

This reflects the strong demand for containers in the fourth quarter as production and business activities gradually recovered and trade resumed. The rise in freight rates took place on a large scale, especially on the South - North route, with each route increasing by 70 - 160 per cent in price compared to the beginning of the year.

Domestic container supply is scarce due to a lack of ships, and many domestic container vessels have been leased to the international market this year.

The increase in rates will help Hai An offset the sharp rise in fuel costs in recent years, and at the same time improve its profit margin.

Hai An has added two ships and built two new ships since September. From the fourth quarter of 2021, the number of chartered ships will rise from two to three, while the number of self-operated vessels will decrease from six to five, helping the company to reduce risks related to the volatility of fuel prices.

The change in fleet structure also improves profit margins as leasing ships is more efficient.

On the other hand, the volume of goods passing through Gemadept port of Gemadept Corporation (GMD) fell in the third quarter due to the impact of the COVID-19 pandemic and social distancing orders applied in the southern provinces. However, Gemadept’s ports are running at full capacity in the fourth quarter.

Meanwhile, Cai Mep reported positive growth in the third quarter and the volume of goods through Gemalink port increased as planned. Hai Phong Port also provides new services, helping to offset the decrease in some ports in the south.

Positive business results

Sea freight rates and service fees at ports have ticked higher in recent years, helping shipping businesses and seaport enterprises record impressive profits in the first nine months of the year.

Hai An has not yet released its third-quarter business results, but a report from SSI Securities Corporation (SSI) estimated that the company’s profit will reach VND80 billion during the period, up 250 per cent over the same period last year.

With profit of more than VND173 billion in the first half of the year, it is estimated that its profit will reach VND253 billion in the first nine months of 2021.

The company's fourth quarter profit is expected to extend strong growth thanks to the increase in freight rates applied from October and new lease contracts with higher charter rates.

SSI forecasted that Hai An will achieve a profit of VND330 billion in 2021, up 139 per cent over last year.

Gemadept is also expected to achieve profit growth of 46 per cent this year. Gemadept has its own factors to attract investors.

Gemalink deep-water port has been granted an official operation license with the capacity to simultaneously receive two mother ships with tonnage of up to 200,000 DWT. The port meets the mooring needs of major shipping lines and the trend of shifting goods to Cai Mep port. Therefore, the company still has more room to grow in the future.

In 2021, Gemadept sets a target of consolidated revenue of VND2.8 trillion, with profit before tax of VND700 billion, up 7 per cent and 37 per cent, respectively, compared to last year.

Analysts from SSI said that Gemadept will benefit from the economic recovery in the fourth quarter, forecasting whole year profit before tax of VND762 billion, up 49 per cent. Gemadept is in the group of shipping enterprises benefiting from higher demand in the shipping market.

Located in a pandemic hotspot, Dong Nai Port (PDN) has just experienced a decrease in quarterly results. Of which, its net revenue fell 3.9 per cent to VND210.1 billion in the third quarter, while profit after tax dropped 21.9 per cent over the same period last year to VND38 billion.

Dong Nai Port said that as many localities implemented social distancing, businesses in pandemic-affected areas had to operate the 'three-on-site' model, resulting in reduced capacity and causing a sharp fall in the volume of containers arriving at the port.

However, with the shortage of empty containers, some customers switched to bulk ships, increasing market demand for general cargo. In addition, given that traditional customers stabilised, the general cargo industry increased by 6.48 per cent.

In the first nine months, the company’s net revenue reached VND678.4 billion, up 21 per cent year-on-year, with profit after tax up 11.2 per cent to VND129.7 billion.

As the pandemic is gradually brought under control, businesses are gradually restoring production, Dong Nai Port expects to have a more promising fourth quarter in terms of business.

On the stock market, both companies are listed on the Ho Chi Minh Stock Exchange (HoSE).

Although there was a correction in the past week after strong rallies, HAH shares were traded at VND70,500 per share in Wednesday's trade, up 14 per cent compared to last month.

PDN shares were traded at VND99,700 per share yesterday morning, up 5.6 per cent over last month. Similarly, GMD shares rose 4.3 per cent to VND51,100 per share.

Unitek provides global sustainable solutions for renewable energy projects in Vietnam

As one of the world's three regions with the most thunderstorms and lightning, Vietnam’s solar and wind power investors and developers should be careful when choosing solutions and suppliers for their direct and transmitted lightning protection systems.

Data from Electricity of Vietnam (EVN) reported that among 106 power plants with a total capacity of 5655.5MW registering for commercial operation (COD) testing, 28 power plants with a total capacity of 1,247.4MW have received COD acceptance. In addition, hundreds of solar power plants with a minimum capacity of 40MW have been energised. By the end of 2021, the total capacity of renewable energy sources expected to operate is 21,951MW, comprising 8,972MW of farm solar power, 7,630MW of rooftop solar power, and 5,349MW of wind power.

According to Le Van Tai, project manager of Unitek Trading Co., Ltd., an authorised distributor in Vietnam for the world's leading measurement and calibration companies such as Fluke, TRTest, Rotronic, Qualitrol, or Amprobe, the operation of substations or transmission lines in power plants always requires the highest attention and accuracy and harbour a lot risks and dangers.

Each power plant owns a transformer station and transmission line of 110kV, 220kV, or 500kV contingent upon the project's actual capacity. The stability in operation along with the life cycle of transformers and electrical equipment depends on the insulation system's endurance when subjected to high electric fields of up to 500kV. During operation, the insulation system will deteriorate owing to various environmental influences.

Tai indicated that projects’ issues commonly arise from unstandardised or degraded grounding systems, heat generation on solar panels or DC Combinerbox connection cabinets. For substations, problems may include insulation degradation due to partial discharge (PD) that is not identified and addressed in a timely manner. Hence, periodical tests should be conducted in order to avoid potential risks.

Vietnam is one of the world's three regions with the most thunderstorms and lightning. Therefore, direct and transmitted lightning protection of solar and wind power systems is essential. Tai said that projects will frequently have a direct and transmitted lightning protection system.

However, during operation, the lightning protection grounding system will degrade and no longer match the standards previously committed by the engineering, procurement, and construction (EPC) contractor to the investor, which is 4 ohms as specified in the regulation on grounding resistance in TCVN 4756:1898.

Lightning is another source of damage to the solar panel sides, apart from common factors such as dirt, cell button cracks, bypass diode failure, and more. According to Tai, the quickest method to determine the health of solar batteries is thermal imaging. The damaged parts that generate heat are visualised on thermal images, supporting technicians in promptly detecting and addressing the problem.

Another factor that needs to be controlled strictly to ensure the safe and stable operation of substations is partial discharge (PD). Nguyen Phuc Hung, co-founder of the Reliability Centered Maintenance Institute (RCMI) in Thu Duc district explained that surface PD produces sound waves with a frequency range mostly between 20kHz and 110kHz. The main components requiring PD testing include insulation systems, transmission lines, equipment switches, insulators, medium voltage cable terminals, cabinets, and transformers. Traditional methods of testing PD are heavily dependent on the technician's skills and experience.

However, Hung shared that at present his RCMI has substituted the Fluke ii910 Acoustic Imager in teaching and service packages for traditional ultrasonic testing equipment. "I highly appreciate Fluke ii910 due to its secure, rapid, and simple method for detecting and locating PD. By implementing SoundSight and SoundMap technologies, the equipment converts the sound of the discharge into a visual image on the meter display. The frequency range of 2-100 kHz and the filter enables us to easily extract environmental noise, thereby timely identifying the locations where PD occurs," Hung said.

Safe distancing is also a concern when testing in a high voltage environment. The Fluke ii910 can detect PDs and corona phenomena at a distance of 120 meters.

Hung believed this is an ideal instrument for high-voltage electrical technicians, electrical test engineers, and grid maintenance teams tasked with the continual testing and maintenance of power distribution as well as high-pressure industrial equipment. 

Foreign investors eager to get back to Viet Nam: VinaCapital chief

Foreign investors are eager to get back to Viet Nam, which they still consider one of the most “exciting” markets in the world, Don Lam, co-founder and CEO of VinaCapital, has said.

Speaking at his company’s 2021 Investor Conference held online recently, he said: “Here in Viet Nam, we are emerging from a long battle against an outbreak in HCM City and the surrounding region.

“In just a few months the country has quickly ramped up vaccinations in HCM City and Ha Noi, as well as in key manufacturing regions, and the pace of vaccination will continue to be high in other cities and towns for the remainder of the year.

“We all know vaccines are key to fully reopening the economy and we are firmly on that path forward. One thing is crystal clear: foreign investors are eager to get back to Viet Nam and continue investing in what they still consider to be one of the most exciting markets in the world.”

Le Hai Tra, CEO of the Ho Chi Minh Stock Exchange, provided an update on the stock market’s enormous growth in the past 18 months as well as a preview of some developments in the pipeline.

“When we talk to companies and investors and look at the reaction of the market, it is clear that the confidence is there for a quick turnaround of the economy.

“The regulators are also considering a pipeline of new products that will be available once the new technology platform is in place.”

Andy Ho, chief investment officer of VinaCapital, said: “Viet Nam’s economy and its businesses have grown dramatically over the past 15 years. The size of the opportunities for us to invest in, as a result, has increased significantly too.

“The maturity of Vietnamese companies’ management teams has also been improving, with many managers increasingly aware of ESG (environmental, social, and governance) values. Technology adoption has also made a big impact on businesses and how they have developed over the years.”

Lam said: “The pandemic and extended restrictions have presented enormous challenges for many companies in Viet Nam and around the world.”

The conference featured four 60-minute sessions over a two-week period on topics including Viet Nam economic update and review and the performances of VinaCapital’s closed and open-ended funds and other investment platforms.

Nearly 200 people from around the world took part. 

15 top local, foreign start-ups enter final round of annual contest

Ten Vietnamese and five foreign start-ups will compete in the final round of the 2021 Start-up Wheel contest to be held virtually on November 5.

According to the Business Start-up Support Centre (BSSC), they were chosen from the top 60 Vietnam Track and top 50 International Track in the semi-final held on October 22.

According to the jury, the selection was a “truly difficult” decision since the former are mostly in distribution and retail, education, agriculture, and manufacturing, all directly affected by the pandemic, but demonstrated their entrepreneurial spirit, flexibility and inner strength despite that.

The top 50 International Track entries were from 23 countries and in trending sectors such as healthcare, fintech, transportation, foodtech, and agritech, but also had innovative business models and prepared well for expansion into the Southeast Asian market, with Viet Nam being the first, it added.

In the final round, the start-ups will pitch their business models to the judges and match wits in a Q&A.

There are separate juries for the two, each consisting of seven people with 10-20 years of experience in the start-up and innovation eco-system in Viet Nam and the region.

Organised by the BSSC and the HCM City Young Businesspeople Association, Start-up Wheel is one of the most important start-up events in Viet Nam.

It attracted 133 start-ups in 24 countries this year.

No increase in securities stocks despite profits

Despite reporting huge profits in the third quarter of the year, stocks of securities companies still went downhill.

The surprise expressed by investors was completely understandable because earlier securities companies were racing to announce the third quarter results and nine months of 2021 business results were evaluated as the most effective so far. Statistics from HoSE show that up until now, at least 14 securities companies have announced their financial statements for the third quarter with impressive results.

For example, revenue and profit after tax of Saigon Securities Company (SSI) reached VND 1,846.3 bn and VND 667 bn, respectively. This was an increase by nearly two times compared to the same period in 2020. For accumulated nine months of 2021, SSI recorded total revenue of VND 5,091.1 bn, up 53.3%, and profit before tax reached VND 2,062.6 bn, up 91.8%, over the same period in 2020. With this result, SSI has exceeded 12% of the profit plan for the whole year in only nine months.

Similarly, Ho Chi Minh City Securities Company (HCM) announced third-quarter business results with revenue of VND 906 bn, up 128%, and pre-tax profit of VND 397 bn, up 127%. In nine months, HCM recorded net revenue of VND 2,411 bn, up 124%. HCM also completed 90% of the year plan. Its pre-tax profit was more than VND 397 bn, up by 135% and completed 96% of the whole plan. According to statistics, nine month earnings per share (EPS) reached VND 3,027. Return on total assets (ROA) and return on the share (ROE) were 5.9% and 19.3%, respectively.

Previously, Viet Rong Securities (VDS) announced business results for the third quarter and nine months of 2021 with a growth rate of over three digits. Specifically, VDS recorded VND 227 bn in revenue, up 153%, and accumulated nine months reached VND 761 bn, up 193%. VDS also completed 144% of the whole year plan. Third-quarter profit after tax reached VND 73 bn, up 98%, and accumulated nine months reached VND 320 bn, up 539%, and completed 222% of the 2021 plan. This continues to be the highest profit achieved by VDS since it established. This was due to the huge profit of VDS in the third quarter of VND 698, and accumulated in the last four quarters at VND 4,163.

Notably, the list of securities companies reporting profits in the third quarter also saw the presence of securities companies struggling in difficulties. Many securities companies are managing to handle losses of previous years, such as DongA Securities Company (DAS), Saigon Thuong Tin Securities Company (SBS), and APG Securities Company (APG).

It can be said that the impressive business results of the group of securities companies are not difficult to explain, especially in the context that everything is supporting securities companies. The first is that the transaction value of the market has increased many times over the same period last year. Specifically, the average daily transaction value in the third quarter reached US$1.1 bn, up 316 percent.

This is the quarter that recorded the highest number of new account openings with 337,000 accounts. The second factor is that margin lending continues to grow, as securities companies simultaneously increase capital to take advantage of this attractive source of income. In this context, analysts recommend investors disburse into this group of stocks to wait for the third quarter business results.

Everything is in favor of securities stocks, but in fact, these stocks continuously go down to the surprise of investors. Many stocks even fell sharply, even though the closing date of the list to receive the right to buy bonus shares was near, as in the case of HCM. This stock code was continuously sold by investors and reduced in price until close to the ex-right date to buy additional shares, at VND 14,000 per share.

This offer price was much lower than the market price before the ex-rights date of more than VND 50,000 per share, but investors still sold out. The selling pressure before the closing date of the list of shares entitled to receive shares also occurred with many other securities companies, including SSI. This stock code was pushed from the mark of VND 63,000 per share to only VND 60,000 before the ex-rights date.

For stock companies that have no share bonus activities during this period, the decline is even greater. According to statistics, stocks of the securities sector suffered an average price drop of 15% to 30% during the fall in October. Although this group of industries rebounded in the session of 27 October when the VN-Index established a historic milestone, many investors still suffered losses.

Commenting on the recent price drop of the securities group, a senior investor in the stock market, said that the group of securities stocks adjusted after rising too hot, and many stocks increased two to three times compared to the beginning of 2021. With the rising wave, in addition to the expectation of business results, which is clearly shown in the third quarter financial statements, the bullish wave also comes from a greater expectation in the future when the T0 transaction was implemented in 2020.

However, not all securities companies benefit from T0 transactions. In fact, only large securities companies, occupying a large brokerage market share, are the main beneficiaries of T0 transactions. With small securities companies, competitive pressure will be fiercer in the context that more and more securities companies with foreign capital enter the market.

In particular, the appearance of foreign securities companies also puts pressure on domestic giants. According to a leader of a domestic securities company, international experience helps foreign securities companies have the conditions and capacity to access new products faster, along with financial potential being a factor that helps foreign securities companies to be stronger and more daring in transforming into low-cost and attractive products and services to attract customers.

According to another leader of a securities company with investment capital from South Korea, investors are expecting too much from this industry group, and many people even expect this growth to last. Investors are optimistic about the long-term prospects of Vietnam's capital market, and that's why they are here.

Although the market will not go up forever because the securities industry is a highly capital intensive business, it is trading at an average P/B of 3.6x, and ROE throughout the cycle is 11% to 15%. This is the reason investors can find better opportunities in other more attractive sectors.

Beer behemoths feel the brunt of curfews and lockdowns in major consumer markets

Giant beermakers have had to endure a bitter taste financially in the third quarter, but all expect to recover their profits next quarter when the pandemic is under control.

SABECO last week revealed that its post-tax profits plunged 68 per cent on-year in the third quarter to $20.7 million, in which profits for the first nine months in total fell 25.7 per cent to $110 million as sales dropped by 13.6 per cent to $755.2 million.

“The tough pandemic in the summer with lockdowns and strict social distancing measures imposed in Vietnam, as well as extended curfew in Ho Chi Minh City and the southern provinces, affected the group’s business performance during the third quarter. As a result, the group reported lower profit achievements compared to the same time last year,” explained a SABECO statement.

Nevertheless, administrative expenses have been better controlled, at nearly $18.56 million over the nine months, lower than the same period last year by more than $5.87 million. Employee costs continue to be the largest expense in corporate governance.

Vietnam’s biggest brewer has set a target revenue of $1.33 billion and net profits of $208 million for 2021, 20 and 7 per cent increases on-year, respectively.

Its newest product, Saigon Chill, is regarded as one of SABECO’s best weapons to recover its sales, along with restricting spending to essentials while constantly looking for new high-performance opportunities in the market.

This year SABECO’s ambition was to continue moves to take over the premium beer segment by targeting enlightened, optimistic, and sociable Vietnamese consumers in the context of a rising number of consumers paying more attention to products with better quality and taste, and increased willingness to pay higher prices.

According to Vietcombank Securities, SABECO will face increasing competition and advertising costs, which will continue to increase if the firm wants to improve its market share in the segment.

Meanwhile, Heineken N.V is in a similar situation in Vietnam, one of the world’s largest and fastest-growing beer markets.

“Beer volume in Asia-Pacific declined organically by 37.4 per cent, reflecting the impact of lockdowns and restrictions to contain COVID-19 in Vietnam, Cambodia, Indonesia, and Malaysia. In Vietnam, beer volume declined by more than half following a strict lockdown, with the most stringent measures in our strongholds in major cities and in the south,” a Heineken N.V press release said.

Not all of the region was affected by the pandemic, the statement added – beer volume even recovered ahead of 2019 in some markets within Asia-Pacific, such as in Singapore, South Korea, and Laos.

Elsewhere, Carlsberg Group noted in its global report that the beer markets in Laos, Vietnam, Malaysia, and Singapore had declined for them due to restrictions and lockdowns, although it has not yet revealed sales figures for the period.

According to Vietnam’s Ministry of Industry and Trade, the index of industrial production of the beverage industry in September 2021 sharply decreased by 34.3 per cent on-year. In general, in the first nine months of 2021, the sector decreased slightly by 4.2 per cent over the same period last year.

Clock ticking for resurgence of BOT power projects

A series of build-operate-transfer power projects are lagging behind set schedules, bringing more challenges for the upcoming national master plan to meet power supply issues.

One build-operate-transfer (BOT) power developer told VIR last week that their project has been delayed for more than one year due to staffing shortages and difficulties acquiring project financing as a result of the coronavirus.

“Our project hasn’t started construction yet,” the developer said. “The longer the project is delayed, the more difficult it will become, since the lenders have begun to limit or phase out financial support despite our commitment to using cutting-edge technology.”

Meanwhile, the $2.6 billion BOT Van Phong 1 project can start power generation six months earlier than planned, but investors have since raised concerns over transmission plans, affecting the schedule to become commercial in 2023.

Over the past few decades, there has been a craving for more public-private partnerships in the development of large-scale energy and infrastructure ventures across Vietnam. However, the BOT power sector has moved slowly, with long preparation times (see chart).

Liming Qiao, Asia director of the Global Wind Energy Council, told VIR, “There are projects being carried forward to the Power Development Plan VIII (PDP8) from the revised PDP7, which is because of different challenges facing coal projects. In the past few months, we only see increasing difficulties for coal financing from both public and private financial institutions, rather than any chance of this being alleviated. Thus, the same challenges remain.”

On the contrary, Qiao said, the situation may become even worse, with net zero targets becoming a new consensus in Asia, likely leading to even more delay for some projects attached to PDP8.

In the context of the current global energy crisis, the government is to review power projects under construction for operation before 2025, offer solutions to ensure progress, and proactively remove obstacles in construction investment and operation of power sources.

The Ministry of Industry and Trade (MoIT) admitted at the National Assembly last year that the negotiation of BOT contracts and investment certificate issuance takes time due to the complex involvement of many related ministries. Obstacles have been mainly incentive policies, foreign exchange, and early termination of contracts, among others. It also usually takes a long time for other state management authorities to review and provide comments, and the MoIT is not able to take control of contract negotiation and signing. BOT plants such as Vung Ang 2, Vinh Tan 3, and Long Phu 2 are facing such problems.

In order to push projects on time, the MoIT has suggested that BOT and independent plant developers that miss construction deadlines would face fines, even up to $200,000 for every 60 days behind schedule, but the proposal has not materialised.

In the most recent PDP8 draft, the ministry confirmed that it would not allow any new coal-fired projects and would instead replace them with more environmentally-friendly liquefied natural gas (LNG) sources.

Under the draft, the total installed capacity of the whole power system will come to around 130,000-143,800MW by 2030. Hydropower would account for 17.7-19.5 per cent of the total installed capacity, while coal-fired thermal power will make up 28-31 per cent; oil and gas-fired thermal power (LNG included) at 21-22 per cent; renewable energy at 24-26 per cent; and imports would account for about 3-4 per cent.

Integrated factory spaces on the up

Integrated projects that combine factory spaces with residential areas, as well as a strong shift towards the outskirts of major cities, are shaping the industrial property landscape, with some developers eager to leave their mark.

In October, Vietnam Urban and Industrial Zone Development Investment Corporation (IDICO), a well-known local player in industrial property, revealed its plan to invest in its first integrated project, Vinh Quang, in a 495-hectare land plot in the northern port city of Haiphong.

Founded in 2000, IDICO currently has 12 projects in industrial zones (IZ), power, transport infrastructure, housing, and urban development.

At a shareholder meeting on October 12, IDICO CEO Dang Chinh Trung said that the company is currently developing a total of 1.500ha of land. In the next five years, IDICO will develop another 1,400ha in new IZs in Thai Binh, Tien Giang, and Haiphong.

“We are not only focusing on IZs but also urban development to achieve sustainable development for our project sites,” Trung said.

In the southern province of Long An, TIZCO JSC and Vietnam Innovation Parks Group in September announced that they had finished land clearance and compensation for Viet Phat Industrial Park (IP). With a total area of more than 1,800ha, this park is one of the country’s largest and combines industrial property and urban development, with the latter amounting to 625ha.

In August, Korea Land & Housing Corporation (KLH) held a webinar with Hai Duong People’s Committee to propose investing in the Dai Hung complex, which includes industrial, residential, and commercial functions on 304ha.

“We confirm that the Dai Hung complex is appropriated for our province’s green development and digitalisation orientation, said Pham Xuan Thang, Secretary of Hai Duong Party Committee “We will focus our efforts to support the investors in implementation.”

KLH is one of the leading groups in South Korea, significantly invested in housing, smart cities, and industrial complexes.

Pham Hong Diep, chairman cum CEO of Shinec JSC, a developer focusing on building green IZs combined with urban areas, said that the trend of developing synchronous and modern IPs with science and technology and urban development would multiply.

However, according to Diep, time, money, and procedures remain a barrier. “We need to integrate all related laws on investment, land, housing, and construction as well as decrees and circulars to attract more investment into industrial property,” Diep said.

The most crucial factor for developing an IZ with urban areas, according to Diep, was the connection and support between these two functions. Moreover, combining those two would require a large area of land. “Long-lasting land clearance and compensation, in addition to other legal procedures, are the main challenges for developers and need a long time to solve,” said Diep.

Shinec JSC is now developing Nam Cau Kien IP located in Thuy Nguyen district of Haiphong, one of the first eco-IPs with a standardised management system towards protecting the environment.

Besides this, Shinec is expanding and replicating the eco-industrial parks and clusters in other provinces such as Thai Binh, Hai Duong, Quang Nam, Gia Lai, and Thai Nguyen, with the total land fund amounting to 2,000ha in 2022.

In its draft decree to replace Decree No.82/2018/ND-CP on industrial and economic zones, the Ministry of Planning and Investment added articles to encourage developers to build industrial property in combination with urban development areas.

Potential tenants may find a home in the suburban areas or second-tier cities and provinces close to Hanoi and Ho Chi Minh City, where there is still much room for growth.

According to a report released on October 14 by CBRE Vietnam, this trend is caused by the much lower rent in suburban and neighbouring provinces and the shrinking vacant space in the cities.

Rents in Hanoi and Ho Chi Minh City are much higher than those in neighbouring provinces. In Ho Chi Minh City, the current rent is $180-300 per square metre per term. In Hanoi, this figure is $175-260 per sq.m. Meanwhile, rents in second-tier provinces are almost half of this, and even lower in the northern provinces of Hung Yen and Hai Duong.

Regardless of the high rents, the inner-city IZs of Hanoi and Ho Chi Minh City are almost entirely occupied.

As a result, neighbouring provinces are improving their connection with major cities due to a range of newly built infrastructure systems, such as Trung Luong-My Thuan Expressway, Dau Giay-Phan Thiet Expressway in the south, or Van Don-Mong Cai and Ninh Binh-Haiphong expressways in the north.

In the southern region, Long An, Binh Duong, and Dong Nai are hotspots for industrial property since they have an excellent connection to Ho Chi Minh City and the port system nearby.

According to JLL Vietnam, in the first three quarters of this year, due to the heavy impacts of the pandemic, the industrial real estate market in the south stayed silent, with no new IZs launched.

Southern IZs have a total leasable land area of more than 25,220 hectares as of the third quarter.

The northern provinces, meanwhile, are vibrant with new supplies in industrial land. In the northern province of Bac Ninh, Viglacera’s Yen Phong 2C IZ has completed site clearance and built the premises for 70 per cent of the planned area, bringing the total area of industrial land for lease in the north to about 9,900ha.

Apart from this, the market began to recognise the trend of high-rise factories, with a new 7-storey factory with a total floor area of 15,000sq.m just starting construction in the high-tech land of VSIP Bac Ninh.

The ready-built factory market received new supply in Nam Dinh Vu IP, Haiphong, helping to bring the total supply of this segment to 2.1 million sq.m of floor space.

Business facilities asked to set up Covid-19 healthcare teams

Under the HCMC health authority’s temporary guidance on the Covid-19 epidemic prevention and control plan at business establishments and industrial parks, these establishments must set up Covid-19 healthcare teams.

The Ho Chi Minh City Department of Health yesterday said that new guidance aims to create good conditions for the operation of business establishments and industrial parks ensuring dual goals including socio-economic development and the implementation of Covid-19 prevention and control measures.

The Covid teams in business establishments are responsible for keeping an eye on laborers’ health conditions and monitoring employees to ensure compliance with the policy. Moreover, the health care teams in companies will carry out tests to detect those who are positive for SARS-CoV-2 as soon as possible.

Fully vaccinated employees and recovered people need not undergo testing. Only workers from areas with level 4 of Covid-19 must be tested.

The health team should contact the district health center where enterprises operate to manage and transfer Covid-19 infected workers’ information to the district health center where these workers are residing to receive treatment packages.

The health care teams in enterprises without centralized isolation facilities should add information of workers with Covid-19 in the application "Management system of Covid-19 patients and quarantined people" while their counterparts in business establishments with centralized isolation facilities will fill the information of infected workers in the application "Management System for Covid-19 patients and quarantine".

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

VIETNAM BUSINESS NEWS NOVEMBER 5

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