VIETNAM BUSINESS NEWS OCTOBER 1
Vietnam’s industrial real estate in Vietnam has the potential to grow as demand continues to rise due to a shift in supply chain to the country, according to Savills Vietnam.
As many as 406 industrial parks (IPs) have been set up nationwide so far, but this figure still needs to be improved to meet the demand, the real estate company said.
Data from Savills Vietnam shows that the occupancy rate in IPs now stands at 70.9%, equivalent to the rate recorded at the end of 2020.
Pham Huu Thang, former Director of the Foreign Investment Agency at the Ministry of Planning and Investment, said most industrial land has been zoned for production while logistics and support facilities need more space to develop.
Therefore, new IPs are expected to have more detailed planning and provide more space for logistics, commercial and service functions, data centres. The Government is also striving to improve the process for handling investment procedures to facilitate the development of new IP projects, he added.
John Campbell, head of industrial services at Savills Vietnam, said many IPs in industrialised economies are switching to a more environmentally friendly model, so IPs in Vietnam will also develop in this direction sooner or later.
Taking Deep C in Hai Phong as an example, he noted it is one of the first IPs in Vietnam to adopt the model to attract foreign manufacturers.
The specialist also highlighted that no other countries in Southeast Asia have joined as many free trade agreements as Vietnam, which also helps enhance global producers’ trust in the country. Another advantage is a young and dynamic workforce and a growing middle class in the country.
In terms of IPs’ value growth potential, Campbell held that compared to other markets in Asia and Southeast Asia, profit and output in Vietnam proves attractive to foreign investors.
However, he also pointed out certain challenges to IP development, including surging land prices and compensation costs, a shortage of skilled workers, and infrastructure that has yet to meet demand.
Campbell recommended the Government set up proper orientations to ensure the quantity and quality of workers, with the need to improve transport infrastructure, especially in the southern region.
HCM City to host Processing & Packaging, Vietwater exhibitions
The 15th Vietnam International Processing & Packaging Exhibition and Conference and the 13rd Vietnam International Water Supply, Sanitation, Water Resources and Purification will be held simultaneously on November 9-11 at the Saigon Exhibition and Convention Centre in Ho Chi Minh City.
The former, ProPak Vietnam, will showcase packaging and processing equipment, materials and technologies for the beverage and pharmaceutical industries, cold supply chains, logistics, and warehousing.
It has attracted more than 500 exhibitors, more than 80% from 30-odd developed countries like Germany, the Republic of Korea, Singapore, China, and Italy.
It will help suppliers connect with buyers in Vietnam and neighbouring countries.
Vietwater will provide opportunities to network with potential business partners and learn about solutions for water supply, drainage and wastewater treatment.
It will showcase products, technologies and solutions for water management, urban and industrial wastewater treatment and irrigation and drainage, accessories for pumps, valves and pipes, and technologies for sludge treatment, desalination, and energy efficiency.
The expo has attracted more than 250 exhibitors from countries like Austria, Belgium, the Republic of Korea, the US, Hungary, Malaysia, Japan, France, Singapore, Thailand, China, Australia, the UK, and Italy.
It will feature a number of conferences, including the Vietnam International Water Conference with the theme ‘Smart water governance for sustainable development and climate resilience’.
Meeting SPS key to sustainable agricultural exports to EU
Meeting the EU's Sanitary and Phytosanitary Standards (SPS) remains a challenge for Vietnamese food exporters as the country seeks greater integration in the global food supply, said industry experts and policymakers.
Often considered non-tariff barriers, SPS has been viewed as a major hurdle for Vietnamese exporters to overcome even after the EU-Vietnam Free Trade Agreement (EVFTA) went into full effect in August 2020.
According to experts, finding ways to meet the bloc's SPS was key to sustainable trade of agricultural products with the EU, a major market for Vietnamese producers.
Two years since the EVFTA went into effect, there has been significant improvement between Việt Nam and the EU, especially in the agriculture sectors, with the former's exports to the EU reaching over 3.2 billion USD, an 11% increase compared to the same period last year.
Trinh Ba Cuong, secretary-general of the Food and Foodstuff Association of HCM City (FFA) said SPS for developed markets such as the EU remained a challenge for Vietnamese businesses, in particular for those in seafood and food processing.
There have been instances in which Vietnamese products were found to contain over-the-limit chemical exposure with some products given warnings and forced to be recalled.
In order to steer clear of trouble, he advised Vietnamese exporters to carefully study the SPS and their targeted markets. He said once they are able to meet the EU's standards, Vietnamese products will likely be accepted everywhere else.
Le Thanh Hoa, a director from the Vietnam SPS Office, urged businesses to invest in dedicated production centres, additional management and technical training with a focus on limiting chemical exposures and contamination.
In addition, businesses must strictly follow the EU's regulations on product labelling, said Cao Xuan Quan, from the Ministry of Science and Technology. He said it's mandatory to list all the required information such as ingredients, allergic agents and product origins.
Top 10 prestigious retailers in 2022 announced
The Vietnam Report JSC on September 30 announced the list of the top 10 prestigious retailers in 2022.
The winners in fast consumption and supermarkets included Central Retail Vietnam, Wincommerce, Saigon Coop, MM Mega Market, Aeon Vietnam, SATRA, Lotte Vietnam, SASCO, Hapro and IPP Group.
The rankings are based on the latest financial reports, media reputation, and survey results.
Vu Dang Vinh, General Director of Vietnam Report, said the retail market has become vibrant again following the pandemic.
In the first nine months of this year, total retail of goods and consumption services surpassed 4.1 trillion VND (178.2 million USD), up 21% annually, and catching up pre-pandemic level.
Up to 91.7% of businesses surveyed by Vietnam Report said the outlook for the retail industry for the remainder of this year is better than last year./.
Ha Nam commits support for foreign firms
Authorities in the northern province of Ha Nam have committed support for foreign firms.
They made the pledge during talks with 350 foreign businesses on September 30.
Speaking at the event, Chairman of the provincial People’s Committee Truong Quoc Huy hailed their contributions to local socio-economic development, saying that since the beginning of this year, Ha Nam has drawn 11 foreign and 31 domestic projects, bringing the total to 1,100, including 351 foreign enterprises.
Foreign firms’ industrial production value was estimated at over 85.5 trillion VND, or 70% in the province. Their exports accounted for 85% of the combined 3.48 billion USD and revenue to the State budget at about 3.7 trillion VND, or 50.6% of the total. They also generate jobs for over 79,100 workers.
Secretary of the provincial Party Committee Le Thi Thuy asked foreign companies to support and deliver on their commitments to the province, including ensuring progress and efficiency of projects in tandem with environmental protection; accelerateing transfer of technology and managerial experience to domestic partners; promoting manufacturing-processing, and supporting industry, improving workers’ incomes.
The province will continue pooling resources to build socio-economic infrastructure in a modern and synchronous manner, especially at industrial zones, urban and social housing areas for workers in industrial zones and complexes, while promoting vocational training for workers to meet domestic demand, she said./.
Cotton Day Vietnam 2022 to return to HCM City
Cotton Day Vietnam 2022, themed “Partner for Prosperity”, will return to Ho Chi Minh City on October 4 to provide networking opportunities for domestic and foreign firms in the garment supply chain.
The Vietnam Textile & Apparel Association (VITAS) and Cotton USA held a press conference on September 30 to announce the event, saying that it will also bring solutions to sustainable development and origin tracing for Vietnamese apparel firms.
Fashion products using US cotton from domestic fashion brands like John Henry, Routine, Modern Humans will also be launched.
Leading experts from Cotton USA and US apparel companies are due to provide insightful information about the global and US cotton market.
VITAS Chairman Vu Duc Giang said new opportunities and challenges in early 2022 have forced businesses to adopt new technology in their quest to conquer the global market. In particular, origin tracing technology has also prompted them to make changes to strengthen consumer trust in Vietnamese products./.
Agricultural sector urged to enhance use of by-products
A large quantity of agricultural by-products is produced every year, but a majority of it is treated as waste and dumped or burned.
If exploited well the by-products would not only bring about huge economic efficiency, but also contribute to environmental protection, an international workshop heard in HCM City on September 28.
Nguyen Thi Thanh Thuy, Director of the Department of Science, Technology and Environment, speaking at the ‘Agricultural by-products – renewable resources’ workshop, said agriculture plays a significant role in the country’s economy, and was a pillar of the economy during the COVID-19 pandemic.
But agriculture also generates a large volume of by-products, which, if not properly managed, would cause pollution and be a waste of organic resources, she said.
In 2020 they amounted to more than 156.8 million tonnes, including 88.9 million tonnes from harvests and processing of crops, 61.4 million tons of cattle and poultry manure, 5.5 million tonnes from forestry, and one million tonnes from fisheries, she said.
Nguyen Huu Ninh, deputy director of the Department of Science, Technology and Environment, said only 52% of crop by-products are collected and used.
Rice straw is used as forage for cattle, filler for livestock breeding houses and biological bed for livestock, growing mushroom and others, but almost half is burnt, causing pollution, he said.
Referring to livestock by-products, he said only 23% is used to produce organic fertilisers, while the rest goes waste.
The country earned 275 million USD from processing fisheries by-products in 2020, but if the nearly one million tonnes are fully exploited using technology, the value would rise to 4-5 billion USD.”
Assoc Prof Dr Bui Ba Bong, a former deputy agriculture minister, said to promote the use of by-products the Government needs to change policies to dovetail with the circular value chain.
Ninh too said the Government needs to tweak mechanisms and policies to encourage businesses to participate in the processing of agricultural by-products.
Besides having policies to encourage circular agricultural production, the country also needs to improve research and the use of technology in processing by-products, he said.
Besides, it is necessary to promote communication about by-products, green growth in agriculture and smart agriculture in response to climate change, he added.
Jesus Lavina, deputy head of Cooperation for the EU Delegation to Vietnam, said: "Whereas agriculture is a major contributor to greenhouse gas emissions it also brings significant opportunities to combat climate change, through, for instance, carbon sequestration in healthy soils and providing alternative renewable sources like biogas, agricultural by-products or waste to energy approaches.”
Multi-million dollar garment factory opens in An Giang
The Mekong Delta province of An Giang opened a garment factory on September 30 with Dutch investment of 253 billion VND (10.6 million USD).
Construction on the Spectre An Giang Garment Technologies Factory began in late 2021 on an area of 38,000sq.m. The factory can produce 2 million products a year, and create jobs for more than 1,200 workers.
Danish Ambassador to Vietnam Nicolai Prytz said that Spectre started its production in Vietnam more than 10 years ago with joint ventures in Thai Binh province, followed by Nam Dinh and An Giang.
He said that after many years operating in Vietnam, the company believes and considers the country a promising market.
Vietnam’s political stability and impressive socio-economic growth have made it easy for Spectre to expand its investment in the country, he said, believing that the factory can contribute to improving the lives of local people as well as the province’s socio-economic development.
Chairman of the provincial People’s Committee Nguyen Thanh Binh said that An Giang pledges to accompany and create the most favourable conditions for investors to run effective production and business in the locality.
HCM City’s CPI up 0.3% in September
Ho Chi Minh City’s Consumer Price Index (CPI) rose by 0.3% in September, with six out of the 11 groups of goods and services witnessing an increase in prices, the municipal Statistics Office reported on September 30.
Prices of food and catering services increased by 0.23% during the month, with food and processed food going up 0.04% and 0.48%, respectively.
Those of foodstuff picked up 0.08%, with poultry rising 0.47%; cooking oil, 0.38%; and fresh seafood, 0,59%. The prices of eating-out service; and those of housing, water supply, electricity, fuel and construction materials respectively picked up 0.47%, and 0.66%.
Prices of textiles, hats and footwear decreased 0.11%, with fabric increasing 0.22%; and hats, 0.36%. Prices of transport services declined 2,12%, mainly thanks to a 5.19% drop in fuel.
B2B event helps Vietnamese, Korean firms boost partnership
A business delegation from Gwangju - the sixth-largest metropolis of the Republic of Korea (RoK), joined a business-to-business (B2B) trade event with Vietnamese enterprises held by the Korea Trade and Investment Promotion Agency (KOTRA Hanoi) from September 26 – 30.
According to KOTRA Hanoi, RoK producers introduced their products of strength, including cosmetics, food, and medical supplies, during the event.
Head of KOTRA Hanoi’s office Tran Thi Hai Yen said as of mid-September, KOTRA had carried out 58 online events connecting 850 RoK businesses with nearly 900 Vietnamese importers.
The agency will continue to organise more events of this kind in 2022, aiming to connect 1,300 Korean enterprises and over 1,200 Vietnamese partners, helping lift the two-way trade between Vietnam and the RoK to 100 billion USD in the year.
Lee Dahye from Unique Medicare Co., Ltd said such event offers a good chance for Korean firms, especially those that have never exported to foreign countries, to explore information about foreign partners.
Online trade promotion events have been thoroughly applied by KOTRA Hanoi to strengthen trade connection between the RoK and Vietnam.
This year’s GDP growth can surpass target: GSO
Vietnam’s gross domestic product (GDP) growth in 2022 can reach up to 8%, surpassing the target of 6.5%, according to Director General of the General Statistics Office (GSO) Nguyen Thi Huong.
The GSO held that pressure on the growth from now to the year’s end is not too heavy as Vietnam has been maintaining some bases and room over the past nine months.
Besides, the economic recovery package will be implemented strongly in the fourth quarter while the agricultural, service, and processing - manufacturing sectors still have much room to grow in the last three months.
Pointing out certain adverse factors, the GSO said unpredictable global economic impacts, the world’s complex geopolitical situation, natural disasters, and inflation may adversely affect Vietnam’s export. Growing fuel prices and changes in international exchange rates are predicted to cause pressure on enterprises’ production inputs.
In particular, the openness of the country’s economy is relatively large, so fluctuations in the global economy will either directly or indirectly affect businesses’ production activities and people’s life, according to the GSO.
With flexible moves by the Government, ministries, sectors, and localities, along with people and businesses’ consensus, the Vietnamese economy will continue to be consolidated to sustain production and export.
Given this, a GDP growth rate of 7.5 - 8% in 2022 is completely achievable, Huong said.
Vietnam posted year-on-year growth of 8.83% in the first nine months of 2022, the highest nine-month level during 2011 - 2022. The economy expanded by 13.67% in the third quarter compared to the same period last year.
Bac Giang to build criteria to select investment
The People’s Council of the northern province of Bac Giang has asked the provincial People’s Committee to study and build a set of criteria to select investment projects, based on the outcomes of the council’s inspection of law enforcement in attracting investment into local industrial parks (IPs) and industrial clusters during 2018-2022.
The building of criteria for investment selection is one of solutions to address outstanding problems and shortcoming in investment attraction, improve the quality and efficiency of investment attraction for local IPs and clusters.
The provincial People’s Council’s inspection showed IPs and industrial clusters in Bac Giang have contributed importantly to local industrial production value, exports and Sate budget collection. They also helped create many jobs for local labourers, formed new industries and services and stimulated economic development and urbanization in rural areas.
However, problems remain in attracting investment in local IPs and industrial clusters. The planning of some industrial clusters has poor quality, infrastructure of a number of IPs, particularly those formed before 2018 such as Dinh Tram and Song Khe - Noi Hoang IPs, is poor.
In many IPs, infrastructure construction is slow with investors mostly prioritizing industrial work and neglecting greenery or parking space. Most investors have not paid sufficient attention to workers’ housing and cultural and sport facilities serving workers.
The technical infrastructure outside the boundary of some IPs, especially transport infrastructure receives little attention, thus limiting connectivity in the area. Local authorities have also failed to pay due attention to helping IP infrastructure investors handle difficulties and problems arising in ground clearance.
In addition, local IPs have mostly attracted projects in electronic parts sub-contracting, assembling, manufacturing engineering, and solar energy with medium tech. Bac Giang has not been able to attract large-scale foreign-invested projects with ripple effect, multi-national groups, projects with high added value that can contribute remarkably to the local budget and socio-economic development.
Given those problems, the provincial People’s Council has proposed many solutions that the provincial People’s Committee, departments and agencies, and administrations of localities in the province should undertake in the time ahead to address the problems and shortcoming in investment attraction, improve the quality and efficiency of investment attraction for local IPs and clusters.
The provincial People’s Committee is urged to strengthen its direction in ground clearance, particularly paying compensation, in order to accelerate the pace of IPs and industrial clusters. The committee should monitor and push infrastructure investors to improve infrastructure inside IPs and industrial clusters, particularly public facilities, greenery space and environmental protection.
The committee should determine the province’s key industries, and build a set of criteria to select investment projects, with priority given to industries and projects using modern and environmentally-friendly technology.
The Department of Planning and Investment must improve the quality of project assessment for projects in industrial clusters, and intensify inspections of licensed projects with a view to timely removing difficulties for investors and detecting any violations of laws and regulations. Projects with delayed progress or violations of regulations on land, the environment and construction must be promptly handled.
Digital economy to make up 25% of HCM City’s GRDP by 2025
Attention will be paid to raising public awareness of digital transformation; organising the implementation of digital transformation tasks and building digital government; and integrating and effectively exploiting data to serve the fight against COVID-19 pandemic, socio-economic recovery and development, and modern-oriented governance.
Specific action programmes will be mapped out and implemented, while the application of information technology will be accelerated across fields in association with ensuring information security and safety in building digital government, economy and society.
Resources will be prioritised in digital transformation in Thu Duc city, contributing to forming a highly-interactive innovation city in the East of the southern hub.
Roadmap to develop green ports in Vietnam
A roadmap for a green port system in Vietnam is being put forward to reduce impacts on the environment as well as greenhouse gas (GHG) emissions and promote energy efficiency.
The Vietnam Maritime Administration (VMA) cited statistics from the International Maritime Organisation (IMO) showing that GHG emissions of the maritime shipping industry increased nearly 9.6% between 2012 and 2018 (from 977 million tonnes to 1,076 million tonnes). CO2 emissions alone climbed from 962 million to 1,056 million tonnes.
It is forecast that until 2050, GHG emissions in the ndustry will increase 50% over 2018.
According to information released at the International Transport Forum 2020, emissions from maritime shipping activities cost an additional 12 billion EUR a year in the 50 largest ports in the world. Approximately 230 million people have been directly exposed to emissions at 100 seaports around the world in terms of shipping emissions.
Acting Director of the VMA Nguyen Dinh Viet said that on the foundation of the Transport Ministry’s approval, the administration has issued a plan to develop green ports in Vietnam.
Under the roadmap, a set of criteria for green ports has been set. From 2023, the green port model will be applied at some domestic ports.
In the 2023-2025 period, relevant regulations will be adjusted and supplemented to suit the criteria, Viet said, adding that national technical standards and criteria for “green ports” will be built and issued within 2025-2030.
Tran Thi Tu Anh, deputy head of the Science, Technology and Environment Office under the VMA, said that green ports in Vietnam will be constructed according to six main criteria - green port perception; resources usage; environmental quality management; energy use; information technology application; and emission reduction and response to climate change and rising sea levels.
Trade and legal disputes part of game with UKVFTA
Vietnamese businesses must stay vigilant and do their homework to avoid trade and legal disputes in exporting to the UK to take full advantage of the UK-Vietnam Free Trade Agreement (UKVFTA), which officially went into effect last May, said industry experts and policymakers.
The agreement was intended to provide both sides with the same trade benefits under the previously signed EU–Vietnam Free Trade Agreement (EVFTA ) as the UK has left the EU.
UKVFTA aims to go even further than the EVFTA to boost trade between Vietnam and the UK with 65% of all tariffs having been removed so far. In the next six years, the agreement is to remove up to 99.2% of all tariffs on Vietnamese exports, with the Southeast Asian country to remove 48.5% of all tariffs on UK products in return.
Early signs have shown a positive effect on bilateral trade with Vietnamese exports experiencing a 16.4% boost at 5.76 billion USD compared to figures recorded in the same period before the agreement went into effect. Vietnamese agricultural products, in particular, have seen the strongest gain with a 16% increase compared to the previous year, reaching over 230 million USD.
The trade agreement has provided Vietnamese products with a competitive edge in the UK market over competitors who have yet to sign a trade agreement with the kingdom. Key Vietnamese exports to the UK included seafood, agricultural products, textile, footwear, wood furniture and handicraft.
Untapped opportunities for Vietnamese pepper exports to UK
There are great business opportunities for Vietnamese pepper exporters in the United Kingdom - a lucrative market with high demand for pepper imports.
According to industry experts, local pepper exporters can also take advantage of the UK's supply shortages to increase exports of its key items such as pepper to the country as the impact of the COVID-19 pandemic, Brexit and the international sanctions against Russia have resulted in a supply instability and scarcity in the UK.
Currently, the UK is the second-largest importer and consumer of pepper in Europe after Germany and Vietnam's pepper exports to the UK market have surged positively in recent years.
In 2020, Vietnam shipped 5,621 tonnes of pepper to the UK, raking in 48 million USD of the total 14,000 tonnes and 121 million USD that the UK imported.
Later in 2021, the Southeast Asian pepper exports to the UK saw a significant year-on-year increase of 49%. In the first four months of 2022, pepper remained one of Vietnam's major farm produce exported to the UK besides coffee and cashew nuts.
According to the Vietnam Trade Office in the UK, pepper is among Vietnamese agricultural products that have gained a foothold in the UK and have been selling well in big supermarkets.
It said Vietnamese farm produce such as pepper has an edge in the UK over similar products from countries which have not yet signed a free trade agreement (FTA) with the UK as the UK-Vietnam FTA has completely eliminated tariffs for pepper imported from Vietnam.
Local firms, however, can only avail of these competitive advantages if they can reach UK quality standards and match customer tastes, it said.
Trade experts say Vietnam has the potential to become a major supplier of farm produce to the UK especially after the UKVFTA came into effect. But it is important to learn about import demand, standards and requirements for exporting to the market.
Statistics from the Vietnam Pepper Association (VPA) revealed that Vietnam last month shipped 16,500 tonnes of pepper abroad for 66 million USD.
The latest addition has brought the quality of pepper export in the first eight months of this year to 162,000 tonnes, valued at 739 million USD. During the period, pepper exports plunged 19% in volume but were up 11% in value year-on-year.
The VPA said the structure of export pepper products had seen a significant change. Local enterprises had reduced exports of raw pepper while increasing pre-processed or processed products.
Vietnamese pepper products have continued a leading position in the global pepper industry with the export volume accounting for 60% of global consumer demand.
In order to accelerate pepper exports, the VPA proposed overseas Vietnamese trade offices continue supporting the pepper industry in trade promotion, import and export development with foreign markets. Assistance from the offices in checking information of trade partners and banks at imported markets should be also included.
The association added that it had developed an international communication project to develop a sustainable market for Vietnam's pepper and spice industry in the US, EU and the Middle East for the 2022-2025 period.
In the next three years, the pepper and spice processing industry of Vietnam will be introduced in specialised magazines in the target markets while the industry’s image will be advertised on digital media channels and international social networks.
Garment-textile sector must go green to boost exports to EU: experts
Experts have advised Vietnamese textile-garment and leather-footwear firms to improve the sustainability of their production for export to the European Union (EU) after the European Commission (EC) proposed the goods must comply with ecological design criteria.
Earlier this year, the EC proposed a new strategy to make textiles more durable, repairable, reusable and recyclable, to tackle fast fashion, textile waste and the destruction of unsold textiles, and ensure their production takes place in full respect of social rights.
Europe is a traditional and key market for Vietnam’s textile and footwear industries, especially with the EU-Vietnam Free Trade Agreement (EVFTA).
Phan Thi Thanh Xuan, Vice Chairwoman and Secretary General of the Vietnam Leather Footwear and Handbag Association (LEFASO), said to meet the EU market’s requirements, local businesses must improve the quality of their human resources and production facilities, and employ clean energy and green technology.
Xuan noted the leather and footwear industry has so far made good use of the EVFTA. Turnover from shipments to the EU now makes up 30% of Vietnam's total export value, an increase from the previous proportion of 25-28%.
Regarding exports to the bloc, in addition to ensuring product origin and the use of recycled materials, meeting labour and environmental standards is essential, she said.
Echoing the view, Vu Duc Giang, Chairman of the Vietnam Textile and Apparel Association (VITAS), said an important solution is to invest in technology because it will help solve the labour deficit and environmental problems. According to Giang, the number of textile enterprises using clean energy has increased to 60-65%, either via buying electricity or investing in installing solar energy projects.