Vietnamese businesses have opportunities for Halal food exports. Food production following Halal principles is emerging as one of the most important challenges and holds a leading position in the global business.

On average, Tonasia & Beverage Food Company exports 4 tons of dry vermicelli following Halal principles to the European, Middle East, and ASEAN markets every day. Tonasia & Beverage Food Company is one of the Vietnamese businesses that are promoting investment in the Halal market, which is anticipated to rise at a considerable rate during the forecast period.

CEO of Tonasia & Beverage Food Company Dinh Phuc said that to enter the international halal food market –– a growing global trade currently - the company has invested in two factories to process rice into vermicelli in Long An and Dong Thap provinces in the Mekong Delta region.

In order to sustainably enter this difficult market, the company must have organic certification to help it access niche markets sustainably that demand natural and organic products. Several organic certification bodies in Vietnam include Control Union Vietnam. Moreover, the company must standardize input raw materials according to both organic standards and Halal certification standards.

Similarly, after more than 5 years of exploiting the trillion-dollar Halal food market, General Director of Tan Quang Minh Production and Trading Company Nguyen Duc Hien said that five products of the company including confectionery, food and beverages, dairy products, bread and organic foods are being sold in the market.

Moreover, the company must conduct awareness training on Halal standards for all production line workers, establish a control team, and establish production policies. Not only that, the company must clearly understand Muslim culture to design appropriate product packaging including consumers' religious sensibilities, no sensitive images. Packages must be in Arabic language. Marketing activities must follow Islamic laws, principles and guidelines. This includes strategic marketing decisions, planning, communications, delivering products or services to customers,

The General Department of Vietnam Customs’ Statistics shows that up to now, Vietnamese businesses have been quite actively exploiting the Halal market. Vietnam's total import-export turnover to Muslim countries in the ASEAN region from the beginning of the year until now has reached over US$26.37 billion.

Consul General of Indonesia in Ho Chi Minh City Agustaviano Sofjan affirmed that if calculating the total Southeast Asia - South Asia - South Pacific region, the size of the Halal market is about 860 million people. The global halal market is worth about US$470 billion and Southeast Asia alone is $230 billion.

The Food and Agriculture Organization of the United Nations (FAO) announced spending on Halal food by the Muslim community will reach $1,900 billion in 2024 and $15,000 billion in 2050. Thus, in the context of the world economy with many changes in the world today, diversifying export markets and opening new markets still have a lot of room, which is considered the golden key to boosting exports and contributing positively to the country's economic development.

Deputy Director of the Ho Chi Minh City Investment and Trade Promotion Center (ITPC) Cao Thi Phi Van said that Vietnam is a country with great strengths in exporting agricultural and aquatic products in the world and with a geographical location close to consumer markets for Halal products; however, it has not entered in the global Halal market well. Therefore, the Government has approved the project ‘Strengthening international cooperation to build and develop Vietnam's Halal industry until 2030’.

Based on the government’s project, the Ministry of Science and Technology has coordinated with the Ministry of Industry and Trade and relevant ministries to set standards and develop a project of a National Halal Certification Center for signing mutual recognition conventions between countries’ national technical standards paving the way for domestic businesses to expand the Halal market.

Ho Chi Minh City is a place where more than 60 percent of the country's food production enterprises are concentrated, the municipal People's Committee has identified expansion of exploiting the Halal market as a new growth strategy for the export industry.

Vice Chairman of the Ho Chi Minh City People's Committee Vo Van Hoan said that since the beginning of the year, the city has implemented programs with an orientation toward the development of the Halal industry associated with production, green consumption and sustainable export, especially in the food sector - one of the city's four key industries.

In addition, the city is accelerating the development of supporting and logistics industries such as logistics, warehousing, and building more service complexes that meet Halal standards to serve the Muslim population. Thus, the roadmap to support businesses in exploiting the Halal market is available. What businesses need to do is they should proactively convert and focus on production to exploit the trillion-dollar Halal food market effectively.

In addition to agricultural products and food, the Halal market currently has huge consumer demand for herbal, cosmetic, and pharmaceutical product groups, which is an advantage of Vietnam as the country has up to 5,000 types of rare medicinal herbs.

Bitter taste of cane leaves processing factories closed

Now, roughly 8,000 hectares of sugarcane-growing areas are left in the Mekong Delta and three factories are on the verge of closing due to lack of raw materials for production.

In 2012, the sugarcane growing area in the Mekong Delta reached 52,000 hectares, while more than a dozen factories had been operated and they had competed to buy raw materials. However, roughly 8,000 hectares of sugarcane-growing areas are left in the Mekong Delta now and three factories are on the verge of closing due to lack of raw materials for production.

The culprits of the problem are the lack of connection between farmers and factories, and the failure to prevent smuggled sugar into the country.

The Mekong Delta provinces of Long An, Kien Giang, and Ca Mau were once baskets of sugarcane growing areas, but now all sugar factories in the provinces have closed, and no sugarcane growing area has been seen. 10 years ago, sugarcane was the main crop in Ben Luc District and some communes in Thu Thua District in Long An Province with a total area of up to 11,000 hectares.

Farmers in the province converted most of the sugarcane land area to growing lemons, dragon fruits, and guavas. Without raw materials for production, the Hiep Hoa Sugar Factory in Long An Province has operated moderately for many years; therefore, it has no money to pay wages to workers, leading to complaints and debts. This factory is officially closed so far.

Five years ago, Cu Lao Dung District of Soc Trang Province had nearly 10,000 hectares of sugarcane growing area, now it is less than 3,000 hectares. Similarly, in Tra Cu District of Tra Vinh Province, the low prices of sugarcane have been forcing farmers to shrink their 4,000 hectares of growing sugarcane in 2015 to about 1,100 hectares now. Many farmers in the Mekong Delta pointed out farmers decided to experiment with new crops and fruits due to unstable sugarcane prices.

Farmer Thach Det in Luu Cu 1 hamlet in Luu Nghiep Anh Commune of Tra Vinh Province said that his family generations had been growing the cane but he decided to shift from traditional sugarcane 10,000 square meters of land to grow rice from 2015 to the present because because he has suffered big loss after many years of continuously growing sugarcane.

A large sugarcane-growing area for raw materials in recent years with nearly 7,000 hectares in Phung Hiep District in Hau Giang Province has shrunken by nearly 2/3. Most farmers in this locality grow sugarcane to sell to traders who buy and resell to beverage mills or sugar mills. Farmers have no longer put their expectations on local sugar factories.

Farmer Hai Cuong in Cay Duong town, Phung Hiep District, revealed that he sells his effort or money on harvesting. Furthermore, farmers can choose to sell to traders who offer the highest prices because many traders have been willing to offer high prices; hence, farmers are no longer forced to sell at low prices.

Faced with this situation, the Board of Directors of Phung Hiep Sugar Factory - the largest sugar factory in the Mekong Delta with a crushing capacity of 2,500 tons of sugarcane a day had to issue a notice to stop operations in the 2023-2024 crop year on October 23. The board moaned that if the factory stops operating in the 2023-2024 crop year, it will suffer a loss of VND26.5 billion (US$1,086,308) for costs of factory depreciation, handling of laid-off personnel, maintenance, and security. However, this loss is only 1/3 if it continued operating, said a representative of the Board of Directors of Phung Hiep Sugar Factory.

According to Director of the Department of Agriculture and Rural Development of Soc Trang Province Huynh Ngoc Nha acknowledged that there are many reasons why the area of raw sugarcane in the province is shrinking, but the main reason is that there has been lack of connection between farmers and sugar companies in production and product consumption. Realizing this inadequacy in the cane industry, the agricultural sector and authorities at all levels in Soc Trang Province are acting as a bridge to link farmers and sugar companies into the production chain.

In the upcoming time, the locality will organize more meetings between businesses, companies, sugar factories and sugarcane farmers to better understand their partners' activities from which they can come to an agreement and sign contracts for the production and consumption of products to curb distress sales.

At the same time, the government and agricultural sector will also listen to opinions from farmers and representatives from sugar companies at these meetings; thereby, authorities can promptly support and remove difficulties in the production chain.

According to Mr. Huynh Van Thao, Head of the Department of Agriculture and Rural Development of Tra Cu District, in the 2022-2023 sugarcane crop year, farmers will have a profit of VND30 million - VND40 million per ha. However, this is only the second profitable crop of sugarcane production after five consecutive years of heavy losses. Because farmers have not used machines for production and harvesting synchronously but human labor; as a result, production costs increase.

To expand the sugarcane growing area for raw materials in the area, in the coming time, the locality will take heed of the transportation system for production as well as establish cooperatives, and organize production teams to reduce sugarcane production costs with the aim of increasing the income of sugarcane growers.

Int’l processing, packaging exhibition opens

Innovative machinery, equipment and technologies that help processing and packaging enterprises upgrade their production chain, enlarge their scales and adhere to sustainable standards are being introduced at the 16th International Processing and Packaging Exhibition for Vietnam (ProPak Vietnam 2023), which opened in Ho Chi Minh City on November 8.

The event brings together more than 400 exhibitors from 30 countries and territories, including the US, the UK, France, Italy, Japan, and Singapore. It has also lured the participation of prestigious brands such as Kyouwa, Transicom, Fuji Seal, FPT and MT Food.

General Director of Informa Markets Vietnam BT Tee said that Vietnam’s food and beverage processing and packaging have enjoyed strong growth on the back of e-commerce, delivery apps, and the free trade agreements that the country has engaged in.

However, it has posed a great challenge for the country such as an increasing amount of waste generated by the fast-moving consumer goods (FMCG) industry, he said, adding the ProPak Vietnam is organised annually to introduce equipment and technologies that can optimise processing and packaging process and meet the needs of sustainable development.

Along with an exhibition area of more than 10,000 square metres, ProPak Vietnam 2023 also features a series of international conferences revolving around topics within the processing and packaging sector. They encompass cutting-edge packaging technologies, recent regulations concerning manufacturers' extended responsibilities under Vietnam's Environmental Protection Law, and other solutions to enhance production efficiency and minimise negative environmental impact.

The exhibition will run until November 10.

UK newspaper highlights Vietnam’s growth potential

Vietnam is now a thriving regional hub with ample scope for further rapid development, assessed an article recently published on the UK news site of financial analysis moneyweek.com.

According to the author, Vietnam’s smartphone dominance is in large part due to huge investments by the Republic of Korea (RoK)’s giant Samsung. The country is intent on pivoting from “labor-intensive” textiles and electrical assembly work into more profitable sectors, such as semiconductors. Foreign capital is keen to help, given the growing pressure to diversify supply chains.

“Vietnam’s booming economy has remained below the radar for most foreign investors for a simple reason: it is still not classified as an emerging market by MSCI,” noted the article. An upgrade to emerging market (EM) status would prompt large inflows from funds that track the benchmark EM index, delivering a boost to local stocks of an estimated 5 billion USD – 8 billion USD.

Vietnamese stocks are the single largest component of the frontier-markets sector, and foreign investors have spent recent years betting that an upgrade for such a dynamic emerging economy was only a matter of time, it said.

Meanwhile, Vietnam has faced milder inflation than many Western economies of late, enabling the central bank to cut interest rates four times this year.

“For investors, the volatile nature of the local stock market means that Vietnam isn’t yet one to put at the centre of a portfolio, but it still merits a nibble,” said the author, adding that even as a frontier market, the Southeast Asian nation is a compelling play.

Petrovietnam’s restructuring scheme approved

Deputy Prime Minister Le Minh Khai has recently signed a decision approving the restructuring scheme of the Vietnam Oil and Gas Group (Petrovietnam) until the end of 2025.

The goal of the scheme is to build and develop Petrovietnam into a leading energy conglomerate in the country and the region, in line with new development trends, the fourth Industrial Revolution, green transition, digital transformation and new energy transition.

The group will play a pivotal role in ensuring national energy security and fulfilling its functions, tasks, and responsibilities as stipulated by the Petroleum Law and its organisational and operational regulations. It will possess modern technologies, management expertise, and high specialisation that are suitable for Vietnam's conditions, thus ensuring energy and food security, and protecting national sovereignty at sea.

Petrovietnam and its subsidiary companies, especially those operating in the core areas, will be consolidated in order to create a value-added chain in the petroleum industry.

It will be restructured under the economic conglomerate model, including the parent company Petrovietnam and its subsidiary companies, in line with development goals, strategies and sectoral master plan approved by the Politburo and the Prime Minister.

The group will continue with restructuring efforts, focusing on maintaining core areas and primary business sectors, divesting all capital from areas and enterprises that are not part of the core business, carrying out financial restructuring from self-generated and additional resources.

It is expected to continue maintaining its firm position as Vietnam's leading supplier of various gas sources; promote oil refining, deep processing of gas products and high-quality petroleum services; develop renewable energy, clean and new energy sources such as offshore wind power, marine energy, H2, NH3, in line with the approved directions by competent authorities and orientations to energy transition and environmental protection.

Any issues or obstacles related to projects, works or businesses will be actively resolved in line with market principles, legal regulations and approvals from the relevant authorities.

It will strive to have its total revenue grow by 3-6.5% annually on average, increase its revenue to the State budget by around 10%, and join the construction of renewable energy power plants, contributing to the development of the renewable energy industry.

According to the scheme, Petrovietnam will continue to operate as a single-member limited liability company wholly owned by the State, in accordance with Decision No. 1479/QD-TTg dated November 29, 2022, issued by the Prime Minister.

The subsidiary units will remain as follows: PVCollege (Petrovietnam College) will be maintained, and its operational efficiency will be enhanced. The Vietnam Petroleum Institute (VPI) will also be retained and improved for better performance. The organisational mechanisms will be studied and refined to align with regulations. A feasible plan will be developed for the transfer/restructuring of Petrovietnam University (PVU) at an appropriate time. The Petrovietnam branch - Southwest pipeline operating company will be dissolved, in accordance with orientations to the capital contribution in Block B - O Mon.

By the end of 2025, most of the member enterprises will be joint-stock companies, with streamlined organisational structures, strong financial capacity, efficient operations, and modern technological and production capabilities that are on par with countries in the region.

The member enterprises with a large scale, efficient operations and competitiveness in the region and the world in Petrovietnam's core business areas will also be consolidated and developed.

Vietnam seeks to become player in aerospace supply chains

The Hanoi Supporting Industry Association (HANSIBA) in collaboration with relevant units held a press conference and business exchange on requirements for quality management system in the aviation sector, in the capital city on November 7.

This event aimed to promote partnerships in the production and supply of products and services of HANSIBA's member businesses with multinational and FDI firms from developed economies such as the US, Europe, Japan, and the Republic of Korea.

First Secretary of the Japanese Embassy in Vietnam Matsumoto Izumi said Japan’s ONAGA Co. Ltd has opened a factory in Vietnam to manufacture components for aircraft manufacturer Boeing. Its goal is to connect enterprises from the US, Japan and Vietnam together.

General Director of the Vietnam-Japan support industry development and investment consulting company Ishida Takayuki said Boeing has committed to assisting Vietnamese firms in joining its supply chain for accessories, and expects to hold workshops to facilitate their involvement in supplying aerospace components.

A representative from ONAGA said a AS9100 Aerospace Quality Management System certificate is crucial for Vietnamese companies considering entry into the aerospace industry. With this certificate, both domestic and foreign firms could fully join the global aerospace supply chains of multinationals in this industry.

HANSIBA Chairman Nguyen Hoang suggested ONAGA Vietnam and the Vietnam-Japan support industry development and investment consulting company assist the Vietnamese firms in completing the necessary procedures to obtain the certificate.

He also proposed that Japan help the Vietnamese businesses build aviation-standard production processes, train a contingent of skilled technical engineers and workers, and jointly select products to be manufactured, among others.

Forging a clean future: a must for steel industry to expand exports to the UK

Việt Nam needs to develop a roadmap towards decarbonisation for the iron and steel industry to enhance competitiveness and capture opportunities from the UK – Việt Nam Free Trade Agreement (UKVFTA) to expand export to this market in the context of the UK seeking to address carbon leakage risk.

Early this year, the UK Government launched a consultation on addressing carbon leakage risk to support decarbonisation through a range of proposed policy measures including a carbon border adjustment mechanism (CBAM), mandatory product standards (MPS) on embodied emissions, and others designed to boost demand for low carbon products and emissions reporting.

According to accounting and auditing services firm KPMG, the proposed UK CBAM would apply a carbon price to UK imports with high embodied emissions and was expected to apply to highly carbon-intensive sectors such as cement, chemicals, iron and steel, paper and pulp, glass, refining and fertiliser.

The EU CBAM entered into application in its transitional phase on October 1 and would extend through 2025. This climate measure will officially take effect in 2026 and be fully operational in 2034.

In the transitional phase, traders will only have to report on the emissions embedded in their imports subject to the mechanism without paying any financial adjustment.

However, starting from 2026, some reports suggest that the EU CBAM would translate into 20-35 per cent tax on imports into the EU starting from 2026.

The iron and steel industry is one among six sectors covered by the EU CBAM in its first phase, besides cement, aluminium, fertilisers, electricity and hydrogen.

The UK Government’s consultation covered the iron and steel industry.

Steel is one of the most widely used materials in the world and its production accounted for around 7-8 per cent of global emissions, making steel one among the top three industries with the highest levels of emissions besides chemicals and cement.

An estimation by the World Trade Organisation showed that the global steel export value could decrease by around 4 per cent under the impact of CBAM.

Việt Nam Steel Association initially estimated that CBAM would reduce the annual gross domestic product (GDP) of Việt Nam by about US$100 million on average, not significant compared to the economy scale of $400 billion.

However, similar mechanisms were brewing in many countries such as the UK, the US, Australia and Canada, which would have long-term impact on the entire economy, the associations said.

CBAM presented challenges, but also a push to the steel industry towards greening its production to enhance competitiveness and expand exports.

Although timelines for the implementation of the UK CBAM are still to be determined, the transitional phase of the EU CBAM would give time for Vietnamese steel makers to prepare.

According to Việt Nam Steel Association, the steel industry still had a high emission level, the equivalent of around 3.5 billion tonnes of carbon each year, accounting for about 7-9 per cent of the country’s total emissions and 45 per cent that of industrial production.

An estimation by Energy Conservation Research and Development Centre (Enerteam) showed the average emission level of Việt Nam’s steel industry is 2.51 tonnes of CO2 per tonne of raw steel, compared to the world average of 1.85 tonnes.

Đỗ Nam Bình from the Ministry of Industry and Trade’s Việt Nam Industry Agency said that many steel factories in Việt Nam had outdated technology and were of small scale with capacity of less than 500,000 tonnes per year that consumed a lot of energy and caused pollution.

Decarbonisation became vital for the steel industry to enhance competitiveness, Bình said.

According to the Việt Nam Steel Association, developed economies were stepping up the green development roadmap which was posing challenges to Việt Nam’s steel export. Việt Nam also committed to be carbon neutral by 2050.

Admitting that Việt Nam’s steel production was behind the world in terms of technology, going green was a long road which would require financial resources, preparations and a roadmap for decarbonisation, the association said.

According to Nguyễn Cảnh Cường, Vietnamese Trade Counsellor to the UK, CBAM would not have significant impact on trade in the transitional phase which would run until January 1, 2026.

However, the transitional phase of the EU CBAM is time for carbon-intensive industries, including steel, to implement green transition and decarbonisation to enhance competitiveness in the long run, he said, pointing out that the taxes translated from CBAM from 2026 would undermine Việt Nam’s competitiveness from low energy prices and environmental protection costs.

He said the effectiveness of FTAs would decline on the export of carbon-intensive industries, urging steelmakers to speed up energy transition and apply decarbonisation technology in production to be able to take the opportunities from trade deals.

The UKVFTA enlarged the way for Việt Nam to expand the export of steel and iron products to the UK through trade liberalisation.

Steel and iron were among products registering the fastest growing exports to the UK since the trade deal came into effect on May 1, 2021. The Ministry of Industry and Trade showed that Việt Nam’s steel and iron exports to the UK increased by 1,269 per cent in 2021.

To further capitalise on the opportunities from the UKVFTA, quick decarbonisation of the operation of the steel industry was a must.

Việt Nam takes initial steps to develop a decarbonisation roadmap for the steel industry.

Accordingly, the 2021-25 period would focus on optimising the process, energy, raw material and technology to reduce 10-30 per cent of emissions. The 2025-30 period would use low-carbon materials and increase the use of H2 in steel production in line with the global trend.

Việt Nam’s plan of developing the carbon credit market was also expected to accelerate the green transition of the steel industry and other carbon-intensive industries, contributing to the goal of achieving net zero by 2025

In the short and medium terms, CBAM created significant challenges to the export of steel and iron products, according to Phạm Quang Anh, director of the Mercantile Exchange of Việt Nam's Information Centre. However, in the long term, greening production would be the opportunity for Việt Nam to improve product quality to meet international standards and sustainable development requirements, he said. 

Exports of transport vehicles and spare parts hit over US$11 billion

Vietnam's exports of transport vehicles and spare parts surged by 18% to reach US$11.579 billion during the 10-month period, according to details given by the Ministry of Industry and Trade.

This has made the product group rank among the top 10 products with an export turnover exceeding US$11 billion for the first time.
  
Industry insiders point out that the product group is anticipated to exceed a turnover of US$13 billion if it maintains double-digit growth momentum moving forward.

Amid the decline in consumption output of the entire automobile industry, the positive export growth of auto parts and components has proved that the country has secured its position as part of the global automobile production chain.

In fact, the country has seen a number of investors to inject capital into a series of auto supporting industry projects worth trillions of VND in Vietnam recently.

For example, Waffer's project of Taiwan (China) is capitalised at VND1,250 billion and will come into operation in November in the northern Hai Duong province with the factory expected to export auto parts cast from plastic and aluminum alloys from 2024.

China remains Vietnam's largest pepper export market

Vietnam exported 57,723 tonnes of pepper worth US$750.8 million to China during the ten-month period, accounting for 25.8% of the overall market share and representing an increase of 265.3% against the same period from last year, according to the Vietnam Pepper Association.

This figure represents a rise of 14.6% in volume but a decline of 11.7% in value with the average export price of black pepper and white pepper dropping by 17.6% and 15.6% to US$3,553 per tonne and US$5,082 per tonne, respectively.

The United States was the country's second largest pepper export market with 42,600 tonnes,  accounting for 19.1% of the overall market share and representing an annual decrease of 6.3%.

Pepper exports to the European region accounted for 19.0% of the export proportion, decreasing by 4.8% on-year, while exports to the Indian and the UAE markets also declined by 8.5% and 29.8% on-year, respectively.

Most notably, exports to Turkey and France recorded a sharp increase of 69.7% and 31.1% with 3,900 tonnes and 3,097 tonnes, respectively.

Meanwhile, pepper exports to the African market increased by 9.9%, of which exports to Egypt, South Africa, and Senegal rose by 30.1%, 10.5%, and 35.6%, respectively.

According to information provided by the Import-Export Department under the Ministry of Industry and Trade, pepper exports are forecast to remain at a low level moving forward due to domestic supply sources no longer being abundant and the consumption demand in the US and EU markets having not yet recovered.

Over the long term, it is anticipated that there will be a shortage of Vietnamese pepper supply source due to fierce competition from other crops such as durian and passion fruit, said Hoang Thi Lien, president of the Vietnam Pepper Association.

Lien pointed out that global uncertainties such as such as economic recession, the ongoing Russia-Ukraine conflict, and the Israel-Palestine conflict are likely to impact the global market moving forward.

Vietnam is dependent on its export markets, meaning the country has witnessed a decline in various commodity industries, including the pepper and spice groups, she added.

In addition, the purchasing power of major markets such as the US and EU, which are key markets of the nation, are not likely to recover in the short term. 

Exchange rate pressure to soften by year end

Experts are confident the VND-dollar exchange rate will soon soften, leveraging a raft of factors.

Last weekend, the selling price of the US dollar fetched VND24,500 per dollar at major state lender Vietcombank, up nearly 4.4 per cent compared to the outset of this year. Similarly, the central exchange rate gained more than 2 per cent correspondingly.

Senior economist Le Xuan Nghia in a talk with VIR early this month, said that the higher exchange rate in the domestic market would be proportional to that in the global market.

In the year to date, the greenback rose about 4 per cent in value globally.

Nghia noted that the US dollar remained strong as the US economy has rebounded positively thanks to robust growth of its weapons, as well as liquefied and petrochemical industries.

Many experts have the same mindset, assuming that albeit the Federal Reserve (Fed) doesn't raise the base rate in its November policy meeting, the Fed’s interest rate is at its peak in 22 years and the ‘expensive money era’ could prolong for some time now.

Phan Dung Khanh, head of Investment Advisory at Maybank Investment Bank believe the US dollar gaining in value came as the Fed could maintain its tightened monetary policy for longer.

“The Fed’s interest rate might be softened to 2.9 per cent in the next three years, meaning the US interest rate would be kept higher than the neutral interest rate at 2.5 per cent. In other words, the expensive money era could linger for at least three years more,” said Khanh.

Augmenting the US dollar in the global market and increasing speculation of the greenback in the domestic market due to the gap between VND and US dollar in the first half of this year, has underpinned a sharp rise in the VND-US dollar exchange rate.

In the past month, the central bank (SBV) has continually issued a huge volume surpassing $4.6 billion of 28-days treasury bonds to withdraw cash from the banking system, helping to narrow the gap in the interest rate between VND and US dollar-denominated deposits.

Khanh from Maybank remarked that this positive move had contributed to pushing up the interbank interest rate as well as stabilising the forex market.

Economist Le Xuan Nghia said, “SVB’s intervention by T-bond issuance is a smart move. Currently, forex supply is abundant. Moreover, the Fed is expected to begin reducing their interest rate from 2024. This will put a brake on dollar price and soother the exchange rate pressure in the forthcoming time.”

Nguyen Huu Huan, head of the Faculty of Finance at University of Economics Ho Chi Minh City, said that it was necessary for Vietnam to accept the exchange rate to lose 3-5 per cent in value to uphold exports.

The exchange rate might quickly be softened when the peak time for dollar demand has passed. In his view, there are a raft of factors underpinning exchange rate stability.

First, the trade balance in the first 10 months of this year saw a $24.61 billion trade surplus, compared to just $9.56 billion in the same period last year.

Second, disbursed foreign direct investment capital volume during the period reached an estimated $18 billion, up 2.4 per cent on-year, a record in the past five years.

In addition, inward remittance volume saw a stable growth.

Analysts at ACB Securities assume that although there is a risk to the exchange rate, the SBV has sufficient tools to maintain exchange rate and interest rate stability.

In their view, the SBV has two vehicles in the short-term: issuing T-bonds to withdraw cash or considering 3- to 6-month term dollar sell-offs for market intervention, in which, the latter is the final-case option.

From the SBV side, Deputy Governor Dao Minh Tu said that the dollar movement was proportional to that in the global market and the supply-demand situation.

“Businesses can put their mind at ease as the central bank shall act to phase out the dollar speculation mindset. The fruitful foreign reserves, growth of foreign direct investment flow and positive movements with other foreign currencies are the fundaments for a stable exchange rate,” Tu said.

Vietnam targets market upgrade to boost global investment profile

Vietnam's government and financial regulators are actively pursuing reforms to meet international settlement standards, aiming for an upgrade from a frontier to an emerging market to attract significant global investment and strengthen the nation's credit standing.
 
At the November 6 parliamentary question session, delegate Tran Van Tuan from Bac Giang province delegation announced the government's target to elevate Vietnam's international standing and facilitate the country's sovereign credit rating to investment grade by 2030.

Tuan inquired of Minister of Finance Ho Duc Phoc on the current assessment by international organisations of Vietnam's sovereign credit rating.

"What are the strengths in our national credit coefficient, and what measures does the government have in place to improve our rating to an investment-grade level, thereby supporting and enhancing our capital mobilisation capabilities?" he asked.

In response, Finance Minister Phoc said that Vietnam's creditworthiness was highly regarded globally.

"While some nations have faced downgrades, Vietnam's rating has been elevated to a 'positive and stable' outlook, or BB+. This fosters confidence among financial funds and investors to inject capital into our economy, propelling development," Phoc said.

Phoc added that recent meetings in the United States with organisations such as S&P and Moody's reflected their regard for Vietnam's financial market.

These institutions trust in the dynamism and developmental potential of Vietnam, despite raising concerns about issues such as the handling of high credit debt, overdue bond debts, public investment disbursements, and real estate market regulation.

"They are satisfied and trustful of the solutions Vietnam has put forward," he said.

The Ministry of Finance, in conjunction with agencies such as the Securities Commission and the Ministry of Planning and Investment, is implementing measures to upgrade the Vietnamese stock market's classification.

Currently, market classification organisations FTSE Russell and MSCI categorise Vietnam as a frontier market.

This status acts as a barrier to investment organisations and funds considering capital influx into listed companies. Recently, representatives from FTSE Russell engaged with the State Securities Commission to discuss policy and market updates, outlining detailed solutions to address obstacles in Vietnam's market upgrade criteria.

Le Thi Le Hang, director of Strategy at SSI Securities, who is actively involved in the planning process, said to Reuters, "Meetings with FTSE Russell have been very constructive and could lead to Vietnam's stock market being upgraded from a frontier to an emerging market by September 2025."

Previously, in FTSE Russell's late September 2023 update, the Vietnamese stock market continued to be in the watchlist for an upgrade to an emerging market, meaning it remains within the Frontier Market category.

Upbeat pricing performance boosts business profits in Q3

The positive movement of merchandise price has resulted in marked improvement in the business performance of industry major players.

The third quarter (Q3) of this year is the second consecutive one that Vinamilk eyed a positive growth of its profits which had never been seen from 2021 until present.

Along with this, in Q3 the company counted $128.5 million in pre-tax profit, a 7.55 per cent jump on-year compared to 5.9 per cent hike in the previous quarter.

The company’s revenue hit $661.6 million in Q3, surging compared to the two previous quarters, but still lower compared to one year ago, primarily due to diminishing local purchasing power.

The prime cause instrumental to continued profit growth in this quarter was the company’s profit margin having resumed to 41.9 per cent, the highest level the company has secured post-pandemic.

Similarly, two leading players in the plastic sector, Binh Minh Plastic (BMP) and Tien Phong Plastic (NTP), continue to eye strong rebound in their profit in Q3 compared to low comparative level in the same period last year.

During the period, BMP saw 37.6 per cent drop in its sale revenue, yet the cost of goods sold also shed more than half compared to one year ago.

Consequently, the accrued profit over revenue ratio swelled from 28 per cent in Q3 of 2022 to 43 per cent in Q3 of 2023, helping the company to rake in $8.8 million in pre-tax profit in Q3 alone, up 19 per cent on-year.

This, plus the positive performance in the first half of this year, has contributed to BMP’s achieving 75 per cent jump in its pre-tax profit in the first nine months of this year, despite its revenue saw nearly 16 per cent retreat.

Meanwhile, NPT saw its profit margin resumed to 30 per cent in Q3 of this year, compared to 20 per cent level in the same period last year.

Its pre-tax profit then soared 77 per cent to reach $6.24 million, equal about 37.5 per cent of its total profit volume in the first nine months of this year.

Steelmaker Hoa Phat Steel also reported rosy Q3 business results with 38 per cent jump in its pre-tax profit compared to the previous quarter to approximate $84.4 million, meanwhile in the same period last year, the company incurred $75.3 million losses.

Analysts at SSI Research have attributed profit growth at Hoa Phat Steel to improved consumption, dwindling input cost and better management of inventory.

The company’s profit margin has reached 12.6 per cent in Q3 of this year, compared to 10.8 per cent in Q2, and as low as 2.9 per cent in Q3 of 2022.

Over 20 per cent drop in the coke price and 11.3 per cent hike in consumption in Q3 compared to Q2 have left good impacts on the company’s core business lines.

Domestic tourist numbers beat pre-pandemic levels

The number of Vietnamese travelling within the country in the first 10 months of this year reached 98.7 million, surpassing the figure in all of 2019, a year before Covid-19 broke out in Vietnam.
In 2019, 85 million Vietnamese took domestic tours.

Vu The Binh, chairman of the Vietnam Tourism Association, said the tourism sector has shown signs of improvement since the Government eased Covid-19 pandemic restrictions two years ago and re-opened tourism services one year and a half ago.

The number of local visitors during the January-October period increased by 10% to 98.7 million compared to the same period last year. This figure represents 97% of the full-year target of 102 million.

Despite the rise in domestic tourists compared to the pre-pandemic year, travel companies have reported revenue falls as economic uncertainties have affected travel plans.

Local tourists are more inclined to take shorter trips at lower costs, especially discount tours.

VND120-trillion housing credit package faces slow disbursement

The VND120-trillion credit package for social housing development is facing sluggish disbursement, with just VND105 billion disbursed to date.

The slow progress can be attributed to several factors, including unprepared localities, regulatory misalignment with practical needs, and limited social housing supply. During the 15th National Assembly session on November 6, NA deputies expressed concerns about the lower-than-expected outcome of the package.

The State Bank of Vietnam (SBV) governor, Nguyen Thi Hong, explained that the goal of the package is to construct one million social homes within a decade, following the guidelines set by the Ministry of Construction. The package relies on financial resources from banks and offers favorable interest rates through participating banks.

The SBV has issued guidelines for banks and encouraged local authorities to announce eligible projects.

Hong acknowledged that some disbursement challenges stem from a restricted supply of social housing, stringent requirements for borrowers, and the long-term nature of the package. She urged local authorities to expedite project announcements and increase public awareness of the package.

UK launches int’l fund supporting science cooperation

The United Kingdom (UK) has unveiled an official development assistance (ODA) program as part of the International Science Partnerships Fund (ISPF), one of the largest science and technology collaboration initiatives between the UK and international partners. Part of the fund will be set aside for cooperation projects with Vietnam.

This program was publicly declared during a meeting last week between UK Science Minister George Freeman and ASEAN Secretary-General Kao Kim Hourn in London.

Over the next two years, the ISPF will allocate 337 million British pounds to address global challenges, including pandemics, climate change impacts, and the advancement of cutting-edge technologies.

Iain Frew, the British Ambassador to Vietnam, said the UK’s goal with the ISPF is to facilitate cooperation between exceptional research groups and universities in the UK and Vietnam, enabling projects that can fully materialize through international cooperation.

Through the Newton Fund Vietnam, the two nations have jointly invested nearly 20 million British pounds in supporting 240 grants that benefit 62 UK and 92 Vietnamese universities and research institutes.

Widened Prenn pass to Dalat set to reopen by year-end

Prenn Pass, a key route leading to Dalat City, will be reopened to traffic on December 28 of this year after months of closure for upgrade and expansion.
According to a representative of Deo Ca Traffic Infrastructure Investment JSC, the pass widening project is now 70% complete.

The Central Highlands province of Lam Dong began work on the VND552-billion project in February to widen the 7.4-kilometer Prenn Pass to 15.5 meters, doubling its previous width, with four lanes.

The People’s Committee of Lam Dong Province expects that the Prenn Pass widening will alleviate traffic congestion leading to Dalat City and play a pivotal role in stepping up development in Dalat and the province as a whole.

Moreover, it will establish a transportation corridor connecting various areas and linking Lien Khuong Airport with multiple routes in the central Dalat region.

Intel’s factory still operates in Vietnam normally: SHTP Head

Head of the board of management of Saigon Hi-tech Park (SHTP) Nguyen Anh Thi said that Intel’s factory still operates in Vietnam normally.

Following international news that the Intel Corporation shelves planned chip operation expansion in Ho Chi Minh City High-Tech Park (SHTP), Mr. Thi said that he has just received information from international media.

He said that the US multinational technology corporation Intel's chip assembly and testing factory - Intel Products Vietnam (IPV) is currently still producing normally at SHTP. As of the evening of November 7, Intel Vietnam has not had official information about changing the expansion plan of the factory with the SHTP Management Board.

So far, Intel has disbursed nearly US$2 billion of investment into the SHTP-located factory that plays an important role in Intel's global packaging system, said Mr. Nguyen Anh Thi.

In June 2023, during a media event in Ho Chi Minh City, Intel Corporation announced that it had invested a total of $1.5 billion of investment in the factory at SHTP, creating about 6,500 jobs in the high-tech field including about 2,400 official employees under Intel, and contributed $76.3 billion in export value from 2010 to present.

In the first quarter of 2023, the American chip giant accounted for 50 percent of SHTP's total export turnover, 15 percent of the country's electronic product and component export turnover and about 18 percent of Ho Chi Minh City's total export turnover.

Intel Corporation opened IPV at SHTP on October 29, 2010. Since then, IPV has shipped more than 3.5 billion product units, producing the latest 13th generation Intel Core™ processors and is ready to participate in the Meteor Lake processor production process from the end of 2023.

Meanwhile, according to various information sources, Intel Corporation has recently announced large investments in many other countries around the world, most recently on June 16, 2023. Intel also announced that it has selected an area near Wrocław, Poland, as the site of a new cutting-edge semiconductor assembly and test facility with an investment of up to US$4.6 billion in the facility.

Signs of real estate market recovery seen in HCMC

According to the Ho Chi Minh City People's Committee’s announcement of information on housing and real estate market for the third quarter of 2023, the real estate market in the southern largest city continues to develop, showing signs of slight recovery compared to the first half of 2023 and in 2022.

Real estate business activities saw negative growth (-8 .71 percent) in the first 9 months of 2023 against the same period of 2022 while revenue of real estate businesses in the first 9 months of 2023 decreased (-4.7 percent) over the same period.

With the city's efforts in disbursement of public investment capital up 100.4 percent compared to the same period in the same 9 months of 2022, it has promoted the construction industry to recover in the first 9 months of the year. Previously, the first 6 months of 2023 had negative growth (-8.45 percent).

According to the Ho Chi Minh City People's Committee, the above recovery in the real estate market is because the country’s entire state machinery in general and the city’s government in particular have taken steps to remove the legal problems of each project. Moreover, departments and relevant agencies have worked together to find solutions for various difficulties of realty projects.

In addition, the State Bank’s move to loosen monetary policy and commercial banks’ lending interest rate reduction have helped to clear capital stagnation for real estate businesses.

Ministries to remove land policies for agricultural tourism development

The development of tourism agriculture is a policy to promote OCOP (One Commune, One Product) and on-farm products, Deputy Minister of Agriculture and Rural Development Tran Thanh Nam stated in a media interview with the Sai Gon Giai Phong Newspaper.

The development of agricultural tourism is one of the solutions and key missions of the National Target Program on building new-style rural areas with the goal of turning agricultural production into agricultural economic development, the Deputy Minister emphasized.

The Ministry of Agriculture and Rural Development determined that the policy of developing agricultural and rural tourism will be associated with the consumption of OCOP products on the basis of multi-value integration to consume typical products of localities, businesses and cooperatives, and the tourism community across the country.

The Ministry has implemented programs promoting and supporting the development of agricultural and rural tourism products based on the advantages of agricultural production, cultural and ecological characteristics of localities, and positioning the rural tourism destination brands, he noted.

Currently, the Ministry of Agriculture and Rural Development is building a pilot plan for developing rural tourism in accordance with the types of community tourism, agricultural tourism, eco-tourism, tourism associated with nature and wildlife conservation, craft village tourism, smart tourism village, and net-zero emission tourism.

The country currently has more than OCOP products and has seen the establishment of a number of OCOP centers. OCOP products not only help increase agricultural value but also diversify local tourism products. Each product has unique characteristics of its locality and region to attract visitors. Provinces and cities in the country need to continuously develop their key products.

The Ministry of Agriculture and Rural Development has assigned the Central New Rural Coordination Office to establish a training center for OCOP products and rural tourism development.

Deputy Minister of Agriculture and Rural Development Tran Thanh Nam said that in terms of policies for tourism development, the country has encouraged the development of agricultural tourism. However, according to the current regulations, accommodation facilities, rest stops, and roads are not allowed to be built on agricultural land, especially the areas planned for agriculture.

Additionally, agricultural tourism is often related to farm development while Vietnamese land law has only regulations on the farm economy. Agricultural tourism has not been officially identified yet. Therefore, policies in the land law need to be amended to develop agricultural tourism.

The purposes of agricultural and rural tourism development are multi-value integration and exploitation of tourism advantages to develop agriculture, agricultural product consumption and increase the value of agricultural products.

When many countries have been fighting the effects of climate change, rice plays a huge role in ensuring food security. Hence, Vietnam needs to protect agricultural land, he stressed.

The Ministry of Agriculture and Rural Development will coordinate with the Ministry of Natural Resources and Environment to review policies related to farmland and cooperative agricultural land and build a decree on the farm economy, including farmland, and regulations on a certain rate of agricultural land to ensure production.

The Ministry of Agriculture and Rural Development will also cooperate with relevant ministries and departments to complete mechanisms, policies, and resources to create favorable conditions for agricultural and rural tourism development.

Vietnam impresses visitors at Defence & Security show

Vietnam's display at the Defence & Security 2023 Show in Bangkok on November 6-9 has attracted attention from international visitors and potential partners.

This is the first time Vietnam has participated in the event, which is a prestigious military exhibition not only in Southeast Asia but also the world.

This year's show attracts some 500 prominent military manufacturers from 50 countries, including renowned companies such as Thales Group from France, Saab Group from Sweden, Diehl Group from Germany, ASELSAN Group from Turkey, and Embraer Aerospace Corporation from Brazil.

Viettel High Technology Industries Corporation has brought to the event over 60 products in communications, electronic warfare, simulation models, optoelectronics, radar, command and control, unmanned aerial vehicles (UAVs), and 5G private network.

On the opening day, over 50 international delegations, including governmental representatives from countries such as the Philippines, Malaysia, Laos, Cambodia and India visited the Vietnamese booth.

Particularly, Viettel secured a deal with PT. Bandara Praniagatama from Indonesia on the distribution of its cockpit simulator and pilot training system in the Indonesian market.

Accordingly, PT. Bandara Praniagatama will become the sole distributor of the product in Indonesia for a period of two years. In the meantime, PT. Bandara Praniagatama is also authorised to distribute the product in other markets where they are providing services.

Director General of Viettel High Technology Industries Corporation Nguyen Vu Ha said the deal helps Viettel’s products break into other regional markets, including Laos, Cambodia and Thailand.

VietFood & Beverage – ProPack Vietnam 2023 kicks off in Hanoi

The 8th VietFood, Beverage and Professional Packing Machines (VietFood & Beverage – ProPack Vietnam 2023) opened in Hanoi on November 8.

Covering 5,000 sq.m, the exhibition features 300 booths by 250 businesses from 10 countries and territories such as India, Canada, Taiwan (China), the Republic of Korea (RoK), Norway, Japan, China and Vietnam.

The expo, which will last until November 11, has gathered prestigious firms in the domestic food industry, along with typical products of the Republic of Korea such as rice cakes, seaweed, dried persimmon, red ginseng and products made from ginseng, dried and frozen seafood.

Speaking at the opening, Bui Trung Nghia, Vice President of the Vietnam Chamber of Commerce and Industry, said Vietnam's food and beverage market has recorded strong growth in recent years, adding that this is one of the industries that were evaluated by domestic and international businesses as having many bright prospects in terms of market size and growth rate in the near future.

According to Statista, the food market in Vietnam is projected to grow by 9% this year, reaching 96.47 billion USD with average growth rate of about 8.22% in 2023-2027.

The exhibition will offer chances for enterprises and visitors to catch up on new trends of products and technologies in the food and beverage industry, Nghia said.

He went on to say that it is also hoped to help businesses to connect and build cooperative relations with domestic and international manufacturers and distributors, contributing to expanding their production and supply chains on a global scale.

Seminars and business matching events will be held within the framework of the expo, aiming to enhance knowledge of standards, production processes and challenges in the management and development of production and supply chain.

Bac Ninh hosts Vietnam industrial and manufacturing fair

The Vietnam Industrial and Manufacturing Fair (VIMF) 2023 opened on November 8 at the Kinh Bac Cultural Centre in the northern province of Bac Ninh.

This is the fourth time the VIMF has been held together with the Vietnam Industrial Automation Fiesta (VIAF 2023) and Vietnam Material Handling Fiesta (VMAT 2023).

Taking place from November 8-10, the VIMF features over 400 booths showcasing products from Vietnam and other countries and territories including Singapore, Japan, the Republic of Korea, India, China, Taiwan, Thailand, Malaysia, the US, and Germany.

Exhibitors introduce a variety of products such as industrial machinery and equipment, mechanical processing, automation, 3D printing and design technology, 4.0 technology application solutions, IoT, smart manufacturing, AI, and industrial robots.

Within the framework of the VIMF, there are trade and investment promotion activities, seminars, and technology demonstrations.

Addressing the event, Dao Quang Khai, Vice Chairman of the Bac Ninh provincial People's Committee, affirmed that the locality always plays a role as the industrial and production hub of the country, attracting the attention of FDI enterprises.

He also expressed his hope that the function will contribute to bringing successful transactions and cooperation contracts to the province, as well as participating countries.

Cao Tan Luc, head of the exhibition organisation committee, also shared that the series of exhibitions aims to promote international integration, strengthen trade cooperation relationships, and help enterprises find suitable business partners and suppliers.

He also assessed that the events will bring advanced products and technologies to the nation in general, and Bac Ninh province and surrounding areas in particular. These efforts will contribute to sharpening competitiveness whilst meeting the increasing demand for production and trade exchange towards the sustainability of the economy.

Source: VNA/SGT/VNS/VOV/Dtinews/SGGP/VGP/Hanoitimews