On the back of the newly-signed Comprehensive Strategic Partnership between Việt Nam and the US, American exporters are setting their sights on delivering a wider range of agricultural products to Vietnamese consumers.

Marc Knapper, the US Ambassador to Việt Nam, said bilateral trade was growing steadily over the past decade, reaching US$130 billion in 2022, of which $10 billion went to agriculture.

Following the elevation of the relationship to Comprehensive Strategic Partnership, there's no doubt that bilateral trade, particularly in the agricultural sector, would continue to thrive.

In other words, a wider range of American agricultural products would make their way into Việt Nam in the short term and so would Vietnamese products into the US.

Francis Lee, a representative of the Washington Apple Commission, said American apples were in high demand in Việt Nam with about 2 million baskets being consumed annually. Other products such as grapes and cherries were also gaining popularity among Vietnamese consumers.

He expected that the upgraded relationship would facilitate the entry of more American fruits into Việt Nam in the years to come. He said Việt Nam and the US could consider reducing import tariffs to make each country's fruits more competitive in the other country.

Currently, American apples and grapes are subject to import tariffs of approximately 8 per cent, while other fruits ranging from 10 to 15 per cent. If the tariffs are reduced or cut down to 0 per cent, it would be a significant opportunity for American fruits to enter the Vietnamese market.

Vũ Ngân Giang, a representative of the US Grains Council, said the US remained the largest producer and exporter of sorghum in the world, producing over 11.5 million tonnes and exporting 7.4 million tonnes in 2021.

Vietnamese consumers purchase sorghum mostly in the form of mixed ingredients. There is no data about sorghum import as a single ingredient, but what is known is that sorghum products were gaining favour in the country.

"Sorghum is what Vietnamese consumers need for their healthy eating pattern," said Giang.

Lê Văn Anh Tú, a representative of the US Meat Export Federation, said Vietnamese consumers had a great appetite for American tri-tip beef. However, current import tariffs of between 14 to 20 per cent have made the product less affordable to them.

He hoped that the upgraded relationship would pave the way for some tariff cuts on agricultural products in the future, making American beef more competitive when entering the country.

In the fruit sector, seven types of fruits from the US have been permitted to be exported to Việt Nam. Peach is expected to make the eighth on the horizon. 

Mekong Delta beckons real estate investors

The Cửu Long (Mekong) Delta, known as Việt Nam’s “rice bowl”, is emerging as a promising destination for real estate investment due to its improving connectivity and transportation infrastructure and growing tourism, according to industry insiders and experts.

Lê Bảo Long, strategy director at Batdongsan.com.vn, said the improving transportation creates opportunities for housing developers.

An estimated VNĐ20 trillion (US$818.64 million) is set to be invested in the region in the construction of new expressways and bridges, he said.

There will be 760km of expressways by 2030, and 1,180km by 2050.

Lê Quyết Tiến, director of the Construction Investment Management Department under the Ministry of Transport, said key infrastructure projects such as the Rạch Miễu 2, Mỹ Thuận 2, Đình Khao, and Đại Ngãi bridges would be completed over the next few years.

The region already has expressways like Bến Lức-Trung Lương, Trung Lương-Mỹ Thuận, Cao Lãnh-Lộ Tẻ, and Lộ Tẻ-Rạch Sỏi.

These not only improve transportation but also stimulate the real estate market, he said.

The impending completion of projects like the Mỹ Thuận-Cần Thơ Expressway, Mỹ Thuận 2 Bridge, Cà Mau bypass, upgrades to the Hậu River (phase 2) and Chợ Gạo Canal (phase 2) will improve infrastructure.

The Chợ Gạo Canal will allow large vessels to sail easily.

Đặng Hùng Võ, former deputy minister of Natural Resources and Environment, said key factors that make the property market in the region attractive are the favourable natural conditions and climate.

It could thus potentially attract people from all over the country and foreigners to come and live and work there, he said.

Real estate projects connected to the agricultural eco-system and sustainable and smart tourism would be highly attractive to investors, he added.

The region holds great potential for agricultural and seafood exports.

It also attracts a lot of FDI in industries such as clean energy and logistics.

The recent approval of the regional plan for 2021-30 by the Government shows its commitment to developing the region.

Under the plan, trade connections within and beyond the region will be enhanced, which presents opportunities for investors to develop real estate projects.

Dương Quốc Thủy, chairman of the Cần Thơ City Real Estate Association, said abundant land at low prices and a large and affordable labour force make the region an attractive destination for property investors.

“The market is still relatively new and less volatile, reducing the risk of speculation and price manipulation.” 

Central bank keeps close eye on forex market movements

The State Bank of Vietnam is monitoring and taking action to moderate exchange rate movements in the face of weakening regional currencies.

On September 27, the State Bank of Vietnam (SBV) withdrew VND20 trillion ($844 million) from the system, though continued to offer 28-day treasury bills, meaning that this amount will be pumped back in on October 25.

This is the fifth consecutive session of 28-day bill issuance, with a total approximating VND70 trillion ($2.95 billion) offered for sale through interest rate auctions.

In fact, during the period from February to March this year, the SBV continuously withdrew money through bill issuances.

In February alone, net withdrawals over two weeks touched $5.9 billion, and the SBV injected money again at the end of the period.

Last year, the SBV also withdrew $2.95 billion in one week. Therefore, the recent bill issuance did not cause much surprise for market observers.

Tran Thi Khanh Hien, head of research at MB Securities, stated that the central bank is carefully striving to maintain the natural evolution of exchange rates as other regional currencies have weakened significantly against the US dollar.

SBV’s recent bill issuance move can be seen as a way to adjust short-term liquidity in the system, which is a common occurrence for central banks.

SBV’s recent bill issuance is aiming to keep the VND at a competitive level to stimulate exports. The move comes as the Chinese renminbi has decreased by 6 per cent, the Thai baht by 5.3 per cent, and the Malaysian ringgit by 6.5 per cent.

“SBV’s continuous net withdrawal is just a temporary solution to push up interbank interest rates and limit trading activities to avail of interest rate differences. However, interbank interest rates have not increased significantly after recent sessions, so I think the withdrawals may continue for the next few days,” said Hien.

Echoing this mindset, a senior leader at Maybank said that the low interest rate showcases the current banking system’s ample liquidity.

“The SBV is carefully calculating the amount of money to withdraw through T-bills, ensuring that the dosage is sufficient to achieve the goal of increasing interest rates in the interbank market. This will soften pressure on the exchange rate without causing liquidity disruptions for the entire economy, ensuring lending interest rates continue their downward trend,” said the expert.

Analysts at a major Hanoi-based securities firm maintained that SBV’s recent bill issuance move can be seen as a way to adjust short-term liquidity in the system, which is a common occurrence for central banks. This does not mean the SBV has reversed its monetary policy stance.

As Vietnam’s GDP growth has not made a breakthrough in the current period, and inflation is still well below the government's target, experts do not anticipate the SBV reversing its monetary policy stance, leaning more towards the scenario where it cautiously maintains the current monetary policy easing.

In respect to forex market movements, Nguyen Ba Hung, chief economist at the Asian Development Bank, said that it is important to look at both the policy and market angles when it comes to the exchange rate story.

Hung believes that in terms of policy, the SBV has been acting flexibly by expanding its margins. The market fluctuations have been kept under control, meaning there are no major problems.

“The recent fluctuations in the forex market are related to the SBV’s recent bill issuance, and they will stabilise afterwards. The exchange rate policy is not a big problem at this time, especially as foreign currency reserves have been increasing,” Hung said.

Knots untangling for top projects in Vietnam’s key cities

Ho Chi Minh City and Hanoi are nearing a total of 500 positive outcomes for issues around delayed real estate projects, although the latter is performing more efficiently in this regard than the former.

A report from the Ministry of Construction (MoC) on the results of implementing Resolution No.33/NQ-CP and proposing solutions to remove complexities for the real estate market last month noted that the ministry continues to actively work with related bodies and localities to solve obstacles in delayed projects.

During the last two years, Hanoi has resolved issues for more than 420 projects, equivalent to less than 60 per cent of those with documented problems. In that time, Ho Chi Minh City has resolved 67 projects, equivalent to 37 per cent, according to the report.

The remaining localities are continuing to resolve business problems, while projects being dismantled will contribute to ensuring supply and promoting the market, it added.

According to a report from the MoC on the first eight months of the year, a working group under the ministry has received an additional 112 documents reporting problems and recommendations from localities, businesses, associations, and individuals related to over 170 other real estate projects.

These updated projects will be added to the list of those waiting for issues to be ironed out.

Le Hoang Chau, chairman of the Ho Chi Minh City Real Estate Association, said that the efforts of MoC and related bodies have initially achieved positive results, contributing to increasing confidence in the real estate market.

“The city is aiming to group projects with the same issues to speed up resolution. This is the city’s strong commitment to completely handling legal backlogs, opening up the supply of legally complete housing and promoting market development,” Chau said.

In a notable development, according to Ho Chi Minh City Department of Natural Resources and Environment, two projects from Hung Thinh Group have had bottlenecks related to investment procedures removed. The ventures are Moonlight Avenue in Thu Duc city, and Moonlight Centre Point in Binh Tan district.

In addition, four other ventures also found solutions related to issuing ownership to customers and residents. Accordingly, it is expected that by the end of 2023, more than 2,000 apartments at Moonlight Park View, Moonlight Boulevard, 9 View Apartment, and 8X Dam Sen will hand over ownership certifications.

In addition to difficulties in legal procedures, meeting fire prevention conditions is one of the major problems slowing down the progress of many real estate projects.

With that, the MoC said that it is coordinating with relevant ministries and sectors to systematically review and advise the government to amend provisions of the related regulations and standards for improving the conditions of more than 38,000 existing projects, which occupy more than 3 per cent of total constructions currently underway.

If stopped, these projects will affect jobs and the supply of goods and services, the ministry said.

Hopes rise for light in real estate fortunes

Real estate observers are predicting that difficulties in the market will ease in the last months of the year thanks to proactive interventions from the government, interest rates gradually decreasing, and reduced pressure on corporate bonds.

At an event held in the southern province of Ba Ria-Vung Tau on September 11, Minister of Construction Nguyen Thanh Nghi insisted that the real estate market would gradually warm up in the last months of this year and resume development again in 2024.

“Moves to resolve problems for real estate projects are beginning to have positive results and hundreds of delayed projects have been resolved to ensure supply and promote the market,” Nghi said.

According to Barry Weisblatt, director of Analysis of VNDirect Securities, although liquidity risks in the real estate market remain high, the most difficult period has passed. Liquidity coefficients slightly improved in Q2 and Q3.

“In comparison with 2011-2013 when the real estate market was in a downturn, current real estate businesses have much better financial health with the lower leverage ratio. The quick payment ratio of businesses in the current period is also healthier and the ability to pay interest is better,” Weisblatt said.

In recent months, with the participation and support of the government and management agencies, many businesses have proactively bought back corporate bonds worth VND12.5 trillion ($523 million) ahead of maturity, helping the bond value to mature and easing the status of real estate businesses that are having difficulty with cash flow.

The pressure on interest costs of real estate development businesses has also been somewhat cooled by loosening monetary policy.

However, according to Weisblatt, the actual average lending interest rate for the real estate sector is still high at 13-14 per cent a year. “I expect that the real estate market will gradually heat up again when home loan interest rates decrease to 10-11 per cent,” he added.

The liquidity of real estate businesses is still a worrying issue as many businesses are still slow to pay interest and principals on bonds due to difficulties in refinancing channels, along with a sharp decline in sales due to market psychology.

Meanwhile, the Law on Land is being implemented on schedule and is set to take effect in the second half of 2024, marking a major turning point for the real estate sector when bottlenecks are resolved in approving new residential projects, helping the housing supply gradually recover towards 2025.

In addition, the socioeconomic situation has changed positively in recent months. The State Bank of Vietnam has reduced operating interest rates four times, with a total reduction of 0.5-2 per cent per year. Market interest rates are decreasing, bringing real estate businesses easier access to capital, so people may gradually turn their interest to real estate investment channels.

Over the past few months, a number of projects across the country have made preparations for offerings and sales, and trading centres are also preparing to operate again after many months of closure.

For example, transaction centre OneHousing has been continuously holding recruitment events to expand its professional brokerage staff. This company estimates to increase its brokerage force to reach 1,000 sales by the end of 2023. Its target is to reach up to 10,000 sales nationwide in 2024.

Meanwhile, many developers have also confidently planned or launched sales, and at the same time, implemented a series of stimulus programmes such as increasing discounts, extending payment schedules, and supporting interest rates for home buyers.

For example, Masteri Waterfront, Zenpark, and The Zurich have applied a zero interest rate support policy for 2-8 years to support customers’ financial situation. Ecopark offers a 10 per cent discount for customers who buy at Eco Village Saigon River when paying for 95 per cent of the house value, or supporting bank loan interest rates and principal debt grace for 30 months.

In addition, the market has also recognised aggressiveness in implementing the sales policies of many investors.

A OneMount survey notes that in the second quarter of 2023, about 30 per cent of projects increased incentive policies with the value of gifts equivalent to 7.7 per cent of the selling price. After applying this sales policy, the consumption of these projects increased by 67 per cent compared to the previous quarter.

New open supply in the second quarter also increased by over 150 per cent, while consumption was about 15 per cent higher compared to the previous quarter, the survey indicated.

More options looked at for energy-efficiency goals

Vietnam is improving energy efficiency for electrical equipment in a bid to reduce shortage pressure and fulfill its emissions reduction commitments.

Two weeks ago, the government held a forum to help make the first steps to shape the market of high-efficiency energy-consuming equipment by 2030. The move is made amid the rising pressure to alleviate power outages and achieve the net-zero goal by 2050.

The event, on developing the high-efficiency energy-consuming market from policy to implementation, was organised by the Office of the Steering Committee for Energy Efficiency under the Ministry of Industry and Trade (MoIT).

One measure discussed was promoting the use of high-efficiency energy-consuming equipment and gradually eliminating outdated technological products. Meanwhile, low-efficiency energy-consuming equipment such as storage water heaters and infrared hobs is prohibited to import, produce, and sell in Vietnam, according to a decision made in May.

Dang Hai Dung, deputy chief of the Office of Sustainable Production and Consumption under the MoIT said, “The ministry has oriented a synchronous implementation of technical standards and technology. Following this direction, energy efficiency and technology standards need to be revised, updated, and improved in line with the level of technological development locally, thereby keeping up with regional and world standards.”

The government wants to achieve 8-10 per cent energy savings of total national energy consumption by 2030.

According to the MoIT, one of the key tasks set by the government is an energy efficiency conversion programme of vehicles and energy-using equipment. The goal is that by 2030, Vietnam will save cumulative consumption of about VND10 trillion ($480 million), equivalent to reducing 34 million tonnes of carbon emissions. This means saving about 6,000GWh/year, equivalent to two 500MW coal-fired power plants.

“Commitments to reduce emissions are having an impact on industrial enterprises, including foreign-led ones,” commented Ma Khai Hien, vice director of the Energy Conservation Research and Development Center.

“Currently, energy demand and consumption in Vietnam’s industrial sector accounts for 54 per cent of total national energy consumption, with an increasing trend continuing until 2030. Businesses can use greenhouse gas inventory measures and energy efficiency conversions to save energy and reduce emissions. Only then can they meet the suitable requirements for global trade,” Hien said.

He further suggested that Vietnamese companies can seek financial support from international financial organisations and green finance funds in the global market.

Vietnam has been implementing energy saving solutions for more than 10 years. Nguyen Thi Lam Giang, former deputy director in charge of the MoIT’s Department of Energy Saving and Sustainable Development said that most of the tactics have been management solutions or actions that do not require investment, or require low investment levels.

“Given that industrial firms lack financial resources, it is hard to implement solutions requiring large investments and technology conversion to save energy. It is not easy for firms to access loans from the commercial banking sector because these projects are often evaluated as high risk,” Giang said.

It is hoped that MoIT support will partly promote investment in Vietnam’s energy efficiency market. Do Thanh Thang, power and grid sales director of Schneider Electric Vietnam, said, “Enterprises need clear policies and roadmaps for developing the high-efficiency energy market. To meet market demand, businesses need to continuously innovate and introduce new energy-saving products at a reasonable price while optimising the production process to save energy.”

Detailed implementation will direct success of PDP8

Emphasis is being made that the implementation of the nation’s power plan for the decade and beyond will not be successful without a detailed plan and clear investor selection process.

The latest draft plan for implementation of Power Development Plan VIII (PDP8), submitted by the Ministry of Industry and Trade (MoIT) on August 31, pointed out the vast challenges remaining despite the approval of the plan in May.

“For solar power projects that have been approved and assigned to an investor, the specific progress will be considered in the implementation plan PDP8. However, this request cannot yet be carried out according to the MoIT’s Institute of Energy,” noted the latest draft plan.

The Institute of Energy, the unit responsible for developing plans to implement PDP8, explained that there are currently 23 solar power projects approved and assigned to investors with a total capacity of about 2,360MW. This is a much higher capacity than the 1,500MW limit currently set in the PDP8.

Meanwhile, the MoIT reported that there are more than 2,000 proposed wind, solar, and small hydropower projects. Among them, there are many whose connection plan to the power grid is unknown.

“The registration demand of localities for renewable electricity is also considerable compared to the amount of optimal calculated capacity in the PDP8, while the ranking of these projects in terms of legal status, land use, electricity prices, and socioeconomic efficiency are not yet available,” noted the latest draft.

The MoIT has now proposed that the selection of solar, wind, and small hydropower projects will be the responsibility of the locality, which is a new direction compared to a draft submitted in July.

“However, the fact that the locality has the right to choose an investor to develop projects will not guarantee that those investors will sign a power purchase contract to mobilise capital and actually build on the ground in time or not,” said an expert in negotiating such contracts.

Thanh Pham, country manager at Wartsila Corporation said, “It is very critical to have a detailed implementation plan with clear information on project capacity, location, and timeline together with required market mechanisms. Without these, projects planned in PDP8 cannot move ahead and the power system will face a lack of capacity, leading to potential power shortages.”

The MoIT admitted that the legal corridor for offshore wind power development is still unclear due to the lack of a national marine spatial plan, with no basis to determine the scope of marine management; thus, offshore wind power projects will be distributed regionally. Localities will decide on specific sizes and locations based on factors such as electricity production costs, capacity to release grid capacity, and transmission costs.

The PDP8 does not regulate the capacity of specific solar and wind power plant projects but only regulates the total capacity for each region. It sets out the country’s electricity roadmap for the period through to 2030, with a vision towards 2045. Under that, by 2030, renewable energy capacity is expected to reach 40GW or 40 per cent of the national power capacity.

There will be no limit on the capacity of behind-the-grid solar power projects, and no new coal-fired projects will be approved.

Coal supply moves shoring up generation of power

As Vietnam faces the prospect of a coal shortage and the challenges of securing supply, more actions are needed to ensure a long-term coal supply for power generation.

On September 13, Vietnam Electricity (EVN), Vietnam National Coal and Mineral Industries Group (Vinacomin), and Northeast Corporation signed a cooperation agreement for coal to supply electricity.

Under the agreement, Vinacomin and Northeast Corporation will supply 56.48 million tonnes of coal to EVN’s coal-fired power plants.

“We are working with Vinacomin and Northeast Corporation to secure a sufficient coal supply for our coal-fired power plants using anthracite coal from January 2024,” said EVN president Tran Dinh Nhan. “We have completed the plan to provide additional coal to coal-fired power plants in operation to ensure future demand.”

In 2023, Vinacomin has signed coal purchasing contracts for 22 thermal power plants with an output of 38.52 million tonnes of coal. From now to the end of the decade, EVN’s coal-fired power plants will generate about 40-42 billion kWh per year, which equals about 28 million tonnes of coal and surpasses the coal supply capacity in the long-term contract, Nhan explained.

EVN, Vinacomin, and Northeast Corporation are participating in discussions about the long-term coal supply to ensure sufficient fuel for factories from 2024 to the end of the operating period, which is expected in 2035.

According to EVN, there are many challenges in supplying coal for power generation in 2023 due to shrinking coal production. The coal demand for thermal power plants is growing, given the improvement in industrial production.

In August, the index of industrial production was estimated to rise by 2.9 per cent over the previous month and 2.6 per cent over the same period last year, the General Statistics Office reported.

In Vietnam, coal is still an important source of fuel to generate electricity. “Vinacomin must import about 17 million tonnes of coal to ensure the supply of 46.48 million tonnes of coal in 2024,” said Ngo Hoang Ngan, chairman of the Board of Directors at Vinacomin.

He added that there was mounting pressure to supply sufficient coal to power households from both production and import sources.

“The company’s coal production capacity is hindered by hassles such as licence applications, licence extensions, and limits on the capacity of coal and mineral mining licences due to unsynchronised planning and policy,” Ngan said. “Secondly, imported coal prices remain high after a record increase in 2022. In the first seven months of 2023, Vinacomin imported 5.7 million tonnes of coal, up 78 per cent over the same period in 2022.”

According to a report on the Power Development Plan VIII by the Institute of Energy, the price of imported coal depends on fluctuations in the world energy market. Coal prices are predicted to reach $140 per tonne by 2025. In 2022, the average price of imported coal was about $218 per tonne, according to the General Department of Vietnam Customs.

Nguyen Van Vy, vice president of the Vietnam Energy Association, said, “Vietnam should seek measures to import coal early and increase domestic coal production to meet the power generation demand in the dry season next year.”

Vinacomin forecasts that coal demand for power generation will rebound in November after the decline of the rainy season.

There are wide and unpredictable fluctuations in the world coal market, which contains many risks. “By diversifying its long-term coal supply from several countries, Vietnam will reduce its dependence on certain markets,” Vy said.

At this time, the coal demand in the global market has eased compared to last year. However, coal prices remain high and it is hard to find a coal supply. In the first seven months of 2023, the average price of imported coal reached $147 per tonne, lower than $255 per tonne in the same period of 2022.

Vy added that the government could consider building a national coal reserve system and encouraging domestic enterprises to acquire coal mines abroad.

Commercial coal production is predicted to reach around 57.88 million tonnes in 2023. Among them, domestically produced commercial and imported coal represent 44.68 million and 13.2 million tonnes, respectively, according to the Department of Petroleum and Coal under the Ministry of Industry and Trade.

It is forecast that the volume of imported coal will fluctuate at around 70-75 million tonnes per year, according to the report on approval of Vinacomin’s production, business, and investment plan for 2021-2025.

According to the Power Development Plan VIII, the proportion of coal thermal power in the energy mix will decrease from nearly 29 per cent in 2020 to 20.5 per cent in 2030. Electricity produced from coal power sources will decrease rapidly, from 46.5 per cent in 2020 to 34.8 per cent by 2030. No new coal-fired power plants will be approved after 2030.

Localities set sights on foreign-invested project windfalls

Leaders of various cities and provinces are putting all hands on deck for the goal of luring in large-scale investors in high-tech and green industries.

The northeastern province of Quang Ninh has decided to establish a task force whose ultimate job is to lure in large-scale foreign-invested enterprises as soon as 2025.

Vice Chairman of Quang Ninh People’s Committee Bui Van Khang, who was appointed the head of the task force, immediately organised a meeting to assign work to members.

“To build a detailed and specific project to pull in foreign investors, departments and relevant authorities need to determine the specific sectors and the portfolio of schemes calling for funding. In addition, the task force will combine detailed targets about capital volume for each specific schedule, attached with specific solutions,” Khang said.

The province will also organise investment promotion events in developed countries to approach groups that own source technology or lead supply chains, Khang added.

The task force is assigned to compile specific and detailed criteria to lure investors and submit to the committee before the end of the year.

To enhance competitiveness in attracting such capital, Quang Ninh has collaborated with other localities such as Haiphong, Hai Duong, and Hung Yen to build economic links based on promoting the potential and advantages of each locality, increasing the growth rate, and forming a growth pole in the Red River Delta.

When united, the four localities could boast the conditions to form a dynamic economic development area that includes a large international seaport in Haiphong, land and sea border gates with the China in Quang Ninh, an international airport, and abundant human resources.

This is one of a series of programmes to realise the Eastern Expressway Economic Connection Cooperation Agreement that was signed in July 2022 by the Vietnam Chamber of Commerce and Industry and the four localities.

Elsewhere, Hanoi, Nam Dinh, and Bac Giang are also focused on attracting high-tech projects with large amounts of capital, in tandem with Haiphong.

Vice Chairman of Bac Giang People’s Committee Phan The Tuan said, “The province spends priority selecting large projects with the direction of sustainable development with zero pollution and high technology. It will also focus on developing the eco-industrial system to engage funding methodically.”

With that direction, Bac Giang is gaining momentum. Last week, South Korea’s Hana Micron Vina Co., Ltd. inaugurated a semiconductor plant in the northern province. The new venture, located in Van Trung Industrial Park, is the second Bac Giang-based factory from Hana Micron Vina, which manufactures integrated circuit boards used for mobile phones and other smart electronic products.

The first factory came into operation in 2022. With the second factory, Hana Micron Vina’s total investment in Bac Giang has reached nearly $600 million.

Chairman Choi Chang Ho said Hana Micron Vina plans to increase its total fundingt to over $1 billion by 2025, generating annual revenues of $800 million and creating 4,000 jobs for Vietnamese workers.

Meanwhile, Ho Chi Minh City wants to entice 50 high-tech projects worth $3 billion by 2025, according to the city’s Department of Planning and Investment.

To realise this, the city crafted a plan for this decade in which the city expects strategic investors to pour an average of VND30 trillion ($1.26 billion) into manufacturing initiatives and at least VND3 trillion ($126 million) in research and development (R&D) centres.

Tran Viet Ha, deputy head of Ho Chi Minh City Export Processing and Industrial Zones Management Authority, said the city wants to see more ventures in the digital economy, electrical tech, semiconductors, and high-tech agriculture, among others.

“The city is also expanding available land for larger groups. At present, more than 10 industrial real estate developers, such as LOGOS and Techtronic Industries, are interested in developing industrial parks in the city,” Ha said.

In June, the National Assembly approved pilot implementation of specific policies for the development of the city, which took effect in August. According to the plan, companies can make a 150 per cent additional deduction for expenses related to R&D. Regarding criteria, the city’s portfolio of industries and professions to pull in strategic investors in innovation facilities and R&D centres, as well as in tech transfer in IT, biotechnology, automation, new material tech, and clean energy, is valued at around VND3 trillion ($126.5 million).

In addition, priority projects include investment in the semiconductor integrated circuit industry, design technology, component manufacturing, integrated electronic circuits, flexible electronics, chips, battery technology, and more with capital of VND30 trillion ($1.26 billion) upwards.

Logistics groups go green to add to net-zero goals

Logistics enterprises are gradually participating in supporting the green production and circulation of goods in the country, as well as exporting and importing with more sustainable criteria.

DHL Express on September 19 onboarded Asia Commercial Joint Stock Bank (ACB) to its GoGreen Plus service to reduce carbon emissions for its time-definite international shipments through the use of sustainable aviation fuel (SAF).

By investing in GoGreen Plus, it is estimated that ACB will be able to reduce 14 tonnes worth of total CO2 emissions within a 12-month period.

The entire process is verified annually by an independent third-party agency. In addition, a complementary carbon footprint report will be updated monthly, detailing ACB’s overall emissions with DHL Express.

Bernardo Bautista, general director and country manager for DHL Express Vietnam, said that the company believed that corporate social responsibility and business success go hand-in-hand.

“Global sustainability and environmental protection are important for all of us, including our customers. With SAF as our key lever to effectively reduce carbon emissions, DHL Express is proud to be the first global express courier to enable our customers to do so,” Bautista said.

DHL Group is committed to achieving net-zero emissions by 2050 and is investing €7 billion ($7.45 billion) in carbon emissions reduction initiatives before 2030.

With approximately 90 per cent of its carbon footprint derived from the air network, viable and sustainable air transport solutions are important for creating cleaner and greener logistics operations.

Also on September 19, Frasers Property Vietnam (FPV) and GELEX Group jointly broke ground for the Industrial Centre YP2C in the northern province of Bac Ninh, which is expected to be completed in 2024.

The centre will be designed to meet LEED certification standards with strong sustainability and technology features aimed to support workplace productivity as well as the health and wellbeing of occupiers. These include the use of construction materials in the project which prioritise natural light, promoting energy efficiency, and the enhancement of building life-cycle impact reduction.

FPV takes a long-term view for its projects and has committed to green-certify its owned and asset-managed properties as part of its sustainability goals. Its Eco Logistics Centre, a ready-built warehouse development, recently obtained LEED certification, while Binh Duong Industrial Park, the company’s first industrial development in Vietnam, is also on track to receive certification.

Meanwhile, Tan Cang-Cat Lai in Ho Chi Minh City is the first port in Vietnam to be classified as green by the APEC Port Service Network Council. In order to reduce pollution and traffic congestion, 80 per cent of freight transport between the Cai Mep-Thi Vai seaport complex and the surrounding area with Saigon Newport is currently carried out by barges instead of trucks.

According to a report by the Vietnam Association of Logistics Services Enterprises, the industry has seen significant growth over the past 10 years, with an average annual growth rate of 14-16 per cent. The scale of the entire industry has reached $40-42 billion per cent per year.

Vietnam among the world's principal instant noodle consumers

Vietnam has been the third-largest instant noodle consumer globally for the past three years, according to the World Instant Noodle Association (WINA).

Data from WINA estimates that in 2022, China’s national noodle demand amounted to nearly 45 billion servings, followed by Indonesia at 14.2 billion, and Vietnam with 8.48 billion. This means each Vietnamese person consumed an average of 85 packs a year, ranking first globally.

The report indicates that the instant-noodle demand among Vietnamese decreased slightly between 2021 and 2022, with the figures down by nearly 1 per cent. However, the 8.6 billion packs sold in 2021 marked an increase of more than 20 per cent compared to 2020.

Vietnam is home to about 50 instant noodle producers, offering a diverse range of options and price points. Dominated by four major instant noodle makers, namely Acecook Vietnam, Masan Consumer, Uniben, and Asia Foods, the competition in Vietnam's instant noodle market is becoming fiercer.

In 2022, Acecook generated revenues of over $590 million. Annually, it provides the market with more than three billion instant food products each year, making it the largest instant noodle manufacturer in the nation.

Meanwhile, Masan reported that its convenience foods, including instant noodles, recorded a 7.8 per cent on-year growth rate in the first half of 2023. In the second quarter, this category reported growth of 24.6 per cent on-year.

Last year, food prices in many countries, including Vietnam, skyrocketed due to inflation, pushing consumers to switch to instant noodles as an affordable option.

According to WINA, Tom Chua Cay flavour (a mixture of shrimp and acidic flavours) is the most popular in Vietnam, and Vietnamese people prefer noodles with elasticity. They also add onions, lemons, and peppers to cooked instant noodles. In addition to flour noodles, many products use rice noodles, which is unique to the Vietnamese market.

Balance sought over port fee privileges

Small-scale seaports up and down Vietnam may miss out on the benefits of a price hike in container handling services.
 
The Vietnam Maritime Administration (Vinamarine), under the Ministry of Transport, has proposed an increase of 10-20 per cent in container handling fees at seaports. The draft circular aims to replace Circular No.54/2018/TT-BGTVT on the charge bracket for pilotage, wharf, dock, and mooring buoy utilisation, container handling, and towage services at Vietnamese seaports.

Vinamarine has sought feedback since the beginning of September. “It is suitable and essential to adjust the container handling fees by 10-20 per cent to ensure reinvestment capital for ports and upgrade service quality,” it noted.

Vinamarine’s statistics indicated that the loading and unloading fees at deep-water seaports in Vietnam are equal to 59 per cent of those in ASEAN and surrounding countries, and 85 per cent of those at the Phnom Penh port in Cambodia, an inland port with a lower investment value.

According to Vinamarine, the service quality of Vietnam’s deepwater seaports is on par with that of regional peers. If the fees were raised too high, it would spur wide fluctuations in prices, affecting shippers’ expenses and import-export activities.

“Despite a 10 per cent increase after adjustment, service fees in these two areas are still 30-35 per cent lower than the average price in the region. Therefore, Vietnamese ports will not lose competitiveness compared to elsewhere,” it added.

However, many companies are concerned that this proposal will be applied to most seaports. Container handling fees will experience an increase from the previous fees, which were put in place in 2019. Some deepwater seaports that have a capacity to accommodate container ships of 160,000DWT are also subject to the increase of 10 per cent. As a result, the actual floor prices for container handling services will climb 20 per cent.

An SSI Research report pointed out that small-scale ports such as Hai An Transport and Stevedoring JSC will not benefit from this policy given that most of its throughput is local goods. In addition, ports in the northern city of Haiphong are listing container handling services at prices higher than the floor price of the revised draft. Therefore, the impact of this policy may not be obvious on the financial performance of the ports in Haiphong.

If the circular is approved and applied in 2024, SSI Research believes that the proposed new floor price could have a positive impact in the short term for some ports and “not positive” for some other ports, depending on their operating capacity. In the long term, the industry’s freight prices will depend on the balance of supply and demand.

Therefore, freight rates will increase and decrease accordingly in good and bad years for shipping lines. Currently, many shipping lines record losses for freight rates, so ports will have more difficulty negotiating contract prices with customers compared to 2021-2022.

Meanwhile, Phan Thong, general secretary of the Vietnam Shippers’ Council, said there is no guarantee that port management companies will stop at this increase.

“In the future, they are likely to raise fees to ensure profit margins,” Thong said. “It is appropriate to raise the floor prices for container handling services in the current context. However, state management agencies need to monitor the fee increase to avoid a logistics cost hike and affecting export-import activities.”

The council has yet to calculate the impact of the fee increase on shippers if the new policy is approved.

According to the latest report by SSI Research, the total container throughput in Vietnam’s international ports in the first seven months of 2023 reached 9.1 million TEUs, down 8 per cent on-year.

There are differences between regions. In the north, the total container throughput experienced a slight decrease of 5.7 per cent to 3.4 million TEUs, thanks to less negative activities in the Chinese and intra-Asian markets.

The Cai Mep-Thi Vai seaport complex in the south recorded a 14 per cent decrease in throughput in the first seven months of 2023, likely as it has more activity with the US and European markets.

Analysts at SSI Research said there may be inconsistency between the policies and the market in practice. “Raising floor prices will lead to an increase of 6-7 per cent at conventional transshipment ports and more than 10 per cent at deepwater seaports. It will increase the profit margin and net profit of these ports,” they said.

At the same time, this policy will benefit most listed port operators, such as Gemadept, Vietnam Container, Dinh Vu Port, Haiphong Port, and other unlisted port companies, such as Saigon Newport and VIMC, they added.

Pham Quoc Long, chairman of the Association of Agents, Brokers, and Maritime Services, said, “A roadmap to adjust container loading and unloading floor prices is necessary. Initially, it is suitable to increase container handling fees by 10 per cent in large port areas and deepwater seaports so that they can make adjustments.”

More time is still needed for the Ministry of Transport to consider and decide on promulgation, Long added. “However, this draft circular can be seen as a positive signal for seaports. Vietnam boasts a competitive advantage when the country’s seaports can accommodate large tonnage container ships.”

Cuban firms given insight into Vietnamese market

Representatives from around 130 State and private enterprises operating in various fields in Cuba have attended a trade forum held by Vietnam’s Thai Binh Corporation in Havana.

Addressing the forum, President of the Cuban Chamber of Commerce (CCC) Antonio Carricarte affirmed that the event offered a chance to share experience and explore economic cooperation opportunities between the two countries.

It took place in the context that Cuba is focusing on expanding micro-, small- and medium-sized enterprises, and has licensed more than 9,000 of these “new-style economic units”, he said, adding Vietnam's experience in developing the private economic sector at this time are very valuable and consistent with Cuba's development model.

Tran Ngoc Thuan, Chairman of the Board of Directors and General Director of the corporation, which has invested in Cuba for 25 years, reaffirmed its commitment to the Caribbean nation’s sustainable development by maintaining cooperation with its Government, organisations and businesses, and implementing more projects there.

Representatives from the CCC and the Vietnamese side also answered Cuban companies’ questions on numerous issues such as supplying construction materials, food - agriculture, commodities and raw materials for production, and marketing strategies.

Vietnam is currently Cuba's second largest Asian trade partner and the region's largest investor in the Caribbean nation.

Petrol prices forecast to fall 9% on Oct.11

The Vietnam Petroleum Institute (VPI) forecast that the retail petrol prices could fall 9% to less than 23,000 VND (0.94 USD) per litre on October 11 if the Ministries of Finance-Industry and Trade keep the gasoline price stabilisation fund unchanged.

According to the institute’s prediction, which was based on Machine Learning that deploys Artificial Neural Network (ANN) and Supervised Learning models, E5 RON 92 and RON 95 will cost 21,280 VND per litre and 22,465 VND per litre, respectively, down 2,220-2,375 VND.

Meanwhile, the retail price of oil may fall over 6%, with that of diesel dropped 1,433 VND to 22,157 VND per litre, kerosene 1,810 VND to 22,000 VND per litre, and mazut 1,161 VND to 16,289 VND per litre.

Machine Learning predicted that the management agencies may not extract money from petrol sales for or use the price stabilisation fund.

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