VIETNAM BUSINESS NEWS OCTOBER 14
Ministry of Transport agrees to resume two more domestic air routes
The Ministry of Transport has decided to restart flights on two domestic routes, Ho Chi Minh City-Ca Mau, and Hanoi-Dien Bien, during the pilot period which last until October 20.
On October 8, the ministry approved the pilot reopening of several domestic air routes starting October 10.
From October 10-20, there will be 38 flights, including 13 flights from HCM City to Binh Dinh, Da Nang, Hue, Khanh Hoa, Nghe An, Phu Yen, Quang Binh, Quang Nam, Thanh Hoa, Hai Phong, Phu Quoc, and Gia Lai, Rach Gia with one return flight a day.
From Hanoi, there will be one return flight to HCM City and Da Nang every day. The Hanoi-Can Tho route will be flexibly exploited at the request of competent agencies.
There will be a return flight on each of Da Nang-Can Tho, Da Nang-Dak Lak, Hanoi-Can Tho and Thanh Hoa-Lam Dong routes a day.
Passengers must be fully vaccinated with the last dose administered at least two weeks before the flight; or if they are COVID-19 patients who have recovered within six months before departure.
All passengers are also required to take COVID-19 tests 72 hours before their flights with negative results.
During the pilot implementation, the MoT will make a preliminary assessment and coordinate with localities for further adjustments./.
Vietnam completes anti-dumping probe into corn syrup from China, RoK
The Ministry of Industry and Trade (MoIT) has completed an anti-dumping investigation into high-fructose corn syrup (HFCS) imported from China and the Republic of Korea, according to the MoIT’s Trade Remedies Authority of Vietnam (TRAV).
The investigation was launched in June last year following a petition from a number of domestic HFCS producers filed with the ministry in May proposing anti-dumping measures imposed on the HFCS originated from the two countries.
During the probe, the MoIT has collected information and views of point from concerned parties, while carefully evaluating the impacts of the imported HFCS on the local industry and dumping margins of the Chinese and Korean producers in accordance to regulations of the World Trade Organisation (WTO), the Law on Foreign Trade Management and relevant legal documents.
The ministry determined that the HFCS originated from China and the RoK are being dumped in Vietnam and the domestic industry has been suffering significant losses. However, there is no obvious causal relations between the dumping acts by the Chinese and Korean exporters and the damage of the domestic industry.
Basing oneself on Vietnam's legal regulations on trade defence and the WTO's anti-dumping agreement, as well as opinions from relevant parties, including domestic producers, the MoIT decided to terminate the investigation.
The MoIT said it will coordinate with stakeholders to continue keeping a watch on the imports of HFCS into Vietnam, so as to come up with proper measures to protect the legitimate rights of Vietnamese producers and consumers./.
Vietnamese export rice price rises sharply again
Vietnam’s export rice prices have increased sharply once again to surpass those from regional peers such as Thailand, India, and Pakistan, according to the Vietnam Food Association (VFA).
The country’s 5% broken rice is currently on sale at between US$433 and US$437 per tonne, marking an increase of US$40 per tonne from the export price seen in the middle of August.
Furthermore, Thailand's 5% broken rice is currently at between US$384 and US$388 per tonne, a drop of US$21 per tonne compared to mid-August. Elsewhere, Indian rice remains at between US$368 and US$372 per tonne and Pakistani rice at between US$378 and US$382 per tonne, a rise of US$25 per tonne.
In the segment of 25% broken rice, Vietnamese rice export price also stands at far higher than that of its competitors, with the price hovering at US$403 per tonne on October 11, while Thai rice was traded at US$373 per ton, and both Indian and Pakistani rice were sold at US$338 per tonne.
According to a representative of a rice business based in the Mekong Delta region, this increase in the Vietnamese rice export price can largely attributed to the fact that the Government has increased its purchase of national reserves, coupled with the rising demanding in the global market since the beginning of September.
According to figures given by General Department of Vietnam Customs, Vietnamese rice exports in September reached over 593,600 tonnes of rice worth over US$293.1 million, an increase of 19% in volume and 20.5% in value.
The country also exported 4.57 million tonnes of rice worth over US$2.41 billion during the nine-month period, a drop of 8.3% in volume and 1.2% in value against the same period from last year.
FDI flow on right path
Despite being hurt by the pandemic, Vietnam is still one of the few regional silver linings when it comes to maintaining the confidence of overseas investors.
Genetica is cooperating with the National Innovation Centre to build a genetic decoding hub for Southeast Asia
With the support of the Ministry of Planning and Investment (MPI), gene sequencing tech group Genetica is to cooperate with the Vietnam National Innovation Centre (NIC) to build a genetic decoding centre for Southeast Asia, located at the NIC in Hanoi.
The costs were not unveiled, but both sides expect the centre to be up and running before the end of 2021.
As announced at a ceremony last week, the Genetica centre at the NIC building will be designed along with the same standards as its US-based lab, with the most rigorous set of standards for genetic testing in the world. Accordingly, Vietnam will be one of very few Southeast Asian countries running CAP and CLIA-standard genetic testing laboratories in order to create new discoveries regarding genetic diseases, developing gene therapy regimens, and researching new medicines based on Asian and Vietnamese genomes. It will also focus on targeted healthcare, personalised medicine, and precision medicine.
Originating from San Francisco, Genetica’s plans in recent years have tilted towards Vietnam. In 2018, it looked set to expand to the Southeast Asian market via Singapore as its key destination. However, those plans changed totally after Vietnamese-born founder Cao Anh Tuan met with MPI Nguyen Chi Dung in the United States that year.
Tuan is one of an estimated 100 Vietnamese overseas scientists worldwide who were invited to return to Vietnam to participate in the launching ceremony of the Vietnam Innovation Network three years ago, to enable the country to keep pace with the Industry 4.0 era. The experience as well as the support of leaders touched Tuan and helped steer his plans towards Vietnam.
Davipharm – one of the leading domestic manufacturers of high-quality generic drugs and a member of Adamed Group – moved a step closer last week to realising its goals in Vietnam by announcing its certification of EU-GMP quality standards. The EU-GMP certification is the most important milestone in the company’s strategy of raising standards of drug production.
CEO Michal Wieczorek said, “With $50 million investment, of which over $10 million has been spent upgrading our plant in the southern province of Binh Duong and the improvement of quality processes, we have committed to contributing to the local economy not only by paying taxes and creating jobs, but also by providing high-quality medicines at affordable prices to local patients, thus supporting the Ministry of Health (MoH) to optimise the spending on drugs.”
He added that with further expansion of the business by developing exports and backing the improvement of Vietnam’s trade balance, Davipharm hopes to be emblematic of future foreign investment in Vietnam.
“Despite the pandemic challenges, we managed to pass the virtual EU-GMP audit. I believe that EU-GMP qualified factories are the key growth drivers in Vietnam, and the only way to develop the local company. With this certification, we are ready to achieve our other ambitious goals,” he added.
There are also some challenges posed by the government administration to pharma businesses. Namely, a significant number of marketing authorisations (MAs) is going through the renewal procedure as required by laws. However, besides the regulatory delays, there are some administrative requirements impossible to meet, especially during the pandemic period.
Wieczorek has appealed to the government to enable the extension of the MAs, and to the MoH to streamline and simplify the drug registration procedures. “If the government creates an attractive and welcoming investment environment for the pharmaceutical industry, I’m convinced that many more companies will follow in our footsteps. But we need incentives, not obstacles,” summarised Wieczorek.
Also last week, Japan’s Fujikin Inc. held a groundbreaking ceremony for a research and development (R&D) centre in Danang Hi-Tech Park. With an investment capital sum of $35 million, this is the first R&D centre developed by Fujikin in Vietnam.
The project’s purpose is to speed up scientific R&D in fields such as robotics, drones, nanotechnology, hydrogen energy equipment, water purification, wireless power transmission, and novel material development.
Following the inauguration, Fujikin plans to bring the R&D centre into operation and begin manufacturing in the second quarter of 2022, marking the company’s 20th year in the country. To provide enough high-quality staff for the project, the company has negotiated a human resources training agreement with the Danang College for Science and Technology.
Earlier in October, Nestlé Vietnam announced an extra $132 million investment in its Nestlé Tri An factory in the southern province of Dong Nai to increase its processing capacity of high-quality coffee lines. This investment has brought the total foreign investment value of Nestlé Vietnam to nearly $730 million.
According to the Ministry of Planning and Investment, Vietnam wooed $22.15 billion in the registered foreign direct investment in the first nine months of 2021, up 4.4 per cent on-year.
Securities companies rush to promote margin lending
The recent flourish of the stock market is pushing demand for margin loans, thus securities companies are preparing capital increases to meet the borrowing demand of investors.
Although the number of margin loans peaked in June, experts from MB Securities Joint Stock Company (MBS) forecast that securities companies will promote margin lending due to improved liquidity and an increased number of fresh investors.
Securities firms are seeking ways to extend credit in the form of corporate bonds and margin lending, with more flexible benefits than bank credit.
According to FiinGroup Joint Stock Company, margin loan value reached over VND126.3 trillion (US$5.6 billion) at the end of the second quarter of this year, but accounting for only a small part of the current market liquidity.
However, the gradual increase in margin since the second quarter of 2020 shows the expectation of securities companies towards the market.
According to FiinGroup's estimates, the total capital securities companies expect to increase is VND18.8 trillion in 2021. Since the beginning of this year, they have mobilised nearly VND12 trillion. This will allow securities companies to promote margin lending activities, thus increase profits.
Thanh Cong Securities Joint Stock Company (TCI) recently announced a plan to pay dividends in shares at the rate of 4 per cent, and at the same time offered shares to existing shareholders at the rate of 100 per cent, in order to raise charter capital to over VND1 trillion.
Margin lending is increasingly contributing to the revenue of securities businesses. TCI estimates that revenue and profit before tax in the first nine months of 2021 will be about VND240 billion and more than VND175 billion, respectively, exceeding the plan set at the beginning of the year by 129 per cent and 175 per cent, respectively.
As for SSI Securities Joint Stock Company, the margin loans as of September 30 reached VND18.1 trillion, an increase of VND2.6 trillion compared to the previous quarter, becoming the brokerage with the largest loan balance in the market.
As of June 30, SSI lent nearly VND16.2 trillion, of which VND15.5 trillion was for margin lending. Revenue from the 9-month margin lending segment in 2021 has increased more than 4 times.
According to MB Securities Co, in order to compete with rivals and attract customers, many securities companies have reduced lending interests and transaction fees.
In 2019, interest rates for margin lending usually fluctuated between 12-14 per cent per year, but fell to below 12 per cent in 2020 and fluctuated around 10-12 per cent in 2021. At present, most securities are applying low transaction fees, around 0.2 per cent, even some securities companies apply zero-fee such as Pinetree Securities Joint Stock Company, AIS Securities Joint Stock Company or VPS Securities Joint Stock Company.
Trade surplus reaches US$360 million in September
Vietnam recorded a trade surplus of US$360 million in September, according to the latest statistics compiled by the General Department of Customs.
Last month saw the country earn more than US$27 billion from exports, marking a drop of 0.7% on-month. Meanwhile, import value reached US$26.67 billion, down by 2.5% compared to the same period from the previous month.
Over the course of the opening nine months of the year, total Vietnamese export-import turnover reached US$484 billion, with a deficit standing at over US$2.5 billion.
The export figure from the review period showed an annual increase of 18.8% to reach an estimated US$240.6 billion. Meanwhile, import value picked up by 30.8% on-year to reach US$243.2 billion.
Furthermore, commodity exports have shown signs of slowing down since August. However, in September the growth of total export turnover in this period stood at much lower. During the reviewed period, exports still witnessed a sharp increase, being a major contributor to GDP growth in the three quarters of the year.
Vietnamese exports enjoy favourable conditions thanks to opportunities from free trade agreements coupled with growing market demand during the end of the year, especially for key products.
FTA helps promote Vietnam – EU trade, investment ties: Gov’t report
Trade exchange and investment between Vietnam and the European Union (EU) has achieved positive outcomes since the enforcement of the EU-Vietnam Free Trade Agreement (EVFTA) in August 2020, despite COVID-19 challenges, according to a Government to be submitted to the Natiional Assembly.
The total import-export turnover between the two sides witnessed a surge of 11.9% to reach US$54.6 billion against the same period from last year.
In detail, Vietnam’s exports to the EU rose 11.3% year on year to US$38.5 billion, while its imports from the EU bloc also increased 12.4% year on year to US$16.2 billion.
The opening seven months of 2021 alone saw their two-way trade expanded 18% to US$32.4 billion, including US$22.8 billion worth of Vietnamese exports, up 17% year on year, and US$9.6 billion worth of its imports, up 18.9%.
As of September, the EU had 2,242 valid projects valued at US$22.24 billion in Vietnam, thereby accounting for 6.57% of project numbers and 5.58% of total investment capital by countries and territories in the Vietnamese market.
Most notably, a number of large EU corporations are operating effectively in the country, including Shell Group of the Netherlands, Total Elf Fina of France and Belgium, Daimler Chrysler of Germany, in addition to Siemens and Alcatel Comvik of Sweden.
Typically, their investment projects focus on high-tech and service industries, clean energy, supporting industries, food processing, high-tech agriculture, and pharmacy.
In the medium and long term, FDI inflows from the EU into the country are projected to increase significantly with several high-quality projects, according to the Government report.
However, the issuance rate of certificate of origin (C/O) for a number of key Vietnamese export products, such as textiles, coffee, iron and steel to EU member states remains relatively modest.
For instance, the C/O issuance rate for textile products in the first seven months of this year stood at approximately 15.7%, while the rate for both coffee and iron items was at 9%.
At present, only 38 out of 63 provinces and cities nationwide conduct import-export activities with EU member states.
Reference exchange rate down 4 VND
The State Bank of Vietnam set the daily reference exchange rate at 23,177 VND/USD on October 14, down 4 VND from the previous day.
With the current trading band of +/- 3 percent, the ceiling rate applicable to commercial banks during the day is 23,871 VND/USD and the ceiling rate 22,482 VND/USD.
The opening-hour rate at commercial banks saw increases.
At 8:30 am, Vietcombank listed the buying rate at 22,600 VND/USD, unchanged from October 13, and the selling rate at 22,860 VND/USD, up 10 VND.
Meanwhile, BIDV raised both rates by 5 VND, listing at 22,660 VND/USD (buying) and 22,860 VND/USD (selling)./.
Quang Ninh to hold 50 tourism stimulus events by year’s end
Quang Ninh province plans to organise 50 events and activities to stimulate travel demand and promote tourism between now and the end of this year.
According to the provincial Tourism Department, Quang Ninh province has built a plan on tourism recovery and tourist attraction for the fourth quarter.
It has also completed a provisional set of criteria for COVID-19 safety evaluation for tourism based on which a safe travel model will be devised to minimise pandemic-related risks to locals and visitors.
Quang Ninh identified safety and risk control as the prerequisite for the local administration, travel businesses, and residents to succeed in implementing the tourism recovery plan because only when safety is ensured can tourism activities be resumed.
Quang Ninh is striving to attract 1.9 - 2 million travellers in the fourth quarter of this year.
The province is endowed with natural advantages for sea and island tourism. It has a coastline of more than 250 kilometres and more than 2,000 islands and islets which account for two-thirds of the total number in Vietnam.
It is home to popular destinations such as Ha Long Bay, Bai Tu Long Bay, Ha Long Bay National Park and some islands.
In particular, Ha Long Bay was recognised twice as a World Natural Heritage site by UNESCO, in 1994 and 2000./.
SBV says no to more rate cuts this year
The State Bank of Vietnam (SBV) will keep the current deposit interest rates and lending rates unchanged until the end of this year to ensure the banking system’s liquidity and benefits for depositors.
Dao Minh Tu (standing), Deputy Governor of the State Bank of Vietnam, speaks at a recent press briefing.
SBV is not planning further rate cuts as of now. The central bank will maintain the current lending rate and monitor and evaluate the developments of the COVID-19 pandemic to take appropriate management measures, Dao Minh Tu, Deputy Governor of SBV, said at a recent press briefing on the banking sector’s performance in the third quarter of the year.
Earlier, SBV had implemented three rate cuts with a total reduction of 1.5-2 percentage points per annum for regulatory interest rates, 0.6-1 point per year for term deposits of less than six months and 1.5 points annually for short-term deposits in priority sectors. As a result, the lending rates were adjusted downward by around 1 percentage point last year and some 0.55 points in the first half of 2021.
Lending rates have fallen around 0.7 points and deposit rates have declined 0.4 points in the year to date.
Credit institutions have offered loans with lower interest rates compared to that of the pre-COVID-19 period, with accumulated loans exceeding VND5.2 quadrillion for 800,000 borrowers from January 23 last year to this September. They had also offered rate cuts and exemptions to some 1.7 million customers affected by the pandemic with a total outstanding loan balance of nearly VND2.5 quadrillion.
Regarding credit, the deputy governor said the banking system’s credit rose 7.42% between the end of last year to October 7 this year, which was 1.94 points higher than the same period in 2020. The total M2 payment instrument inched up 5.65% against the end of 2020 and expanded 11.56% compared to the same period last year.
Tu said the results were positive given the fact that many provinces and cities, including the two major cities of Hanoi and HCMC, enforced the stay-at-home mandate for several months under the prime minister’s Directive 16.
As for proposals to relax lending conditions, the SBV official said reducing the loan quality and conditions would not ensure the safety of the banking system. He said the central bank will create favorable conditions to expand credit if necessary but will not ease lending conditions.
Failing to overcome 1,400 threshold, VN-Index puts an end to 7-day rising streak
Failing to overcome the psychological threshold of 1,400 points on Wednesday, the VN-Index dropped slightly, putting an end to its seven-day rising streak.
On the Ho Chi Minh Stock Exchange, the VN-Index edged down 0.21 per cent to close at 1,391.91 points. The southern market’s index had climbed more than 4.4 per cent in the past seven sessions.
By contrast, the HNX-Index on the Ha Noi Stock Exchange extended its rally to eight sessions in a row, rising 0.97 per cent to end at 379.34 points. It has climbed by more than 6.2 per cent since early this month.
Liquidity on the stock market reached VND19.4 trillion (US$843.5 million), down 21.6 per cent from the previous session, of which the trading value on the HCM City’s exchange declined 13.6 per cent to VND17.5 trillion.
Foreign traders continued to offload shares with a net sell value of more than VND500 billion on the southern market.
Vinhomes (VHM) and Masan Group (MSN) were the two stocks pulling the VN-Index most. MSN dropped 1.7 per cent and VHM fell 1.1 per cent.
Other big losers included Techcombank (TCB), down 1.1 per cent; PV Gas (GAS) and lender BIDV (BID) each down 0.9 per cent; Petrolimex (PLX) down 2.2 per cent; Bao Viet Holdings (BVH) down 3.1 per cent; and brewer Sabeco (SAB) down 1.2 per cent.
The VN-Index could fall steeper without the cushion of Vingroup (VIC) which was up 0.2 per cent; Mobile World Investment (MWG) up 1.4 per cent; and FPT Corp (FPT), up 0.4 per cent.
According to BIDV Securities Co, the phenomenon of domestic and foreign cash flow weakening when the market reaches a large resistance level may make VN-Index continue to move around the range of 1,380-1,400 in the next trading sessions.
However, analysts at Viet Dragon Securities Co reckoned the market’s positive trend will not likely change and investors still hold stocks that are on a good trend, as well as make new disbursement options if there are optimistic signals from stocks in the watchlist
“The VN-Index struggled between the cash inflow and the profit-taking pressure. This struggle is a natural result after a rally,” they said in a note.
“Overall, the VN-Index is still in a positive trend in the short term,” they said, suggesting investors take advantage of the situation to restructure the portfolio and look for new opportunities in stocks that have a positive accumulation.
EVFTA helps buffer economic downturn impact: The Business Times
Given the COVID-19 epidemic, the EU-Vietnam Free Trade Agreement (EVFTA), which entered into force in August 2020, has helped to boost two-way trade and buffer the impact of the economic downturn, according to an article posted on October 13 by The Business Times of Singapore.
The article quoted the European Chamber of Commerce in Vietnam as saying that trade between Vietnam and the EU amounted to 27 billion USD from January to June this year, an increase of 18 percent annually and a remarkable achievement in the midst of a global pandemic.
Last month, the Asian Development Bank (ADB) wrote in a report that it expects Vietnam's economy to expand 3.8 percent in 2021. Notably, this was a sizable downgrade from April's estimate of a 6.7 percent growth. This, however, still places Vietnam above the regional average of 3.1 percent.
According to the article, the EVFTA, the second one that the EU has concluded with an ASEAN country after Singapore, is not the only major free trade deal that is driving Vietnam's growth. In the last few years, a string of FTAs have come into force in Vietnam, including the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the Regional Comprehensive Economic Partnership (RCEP). Officials in Vietnam said this is part of the country's long-term drive to build a modern and market-oriented economy, and signs show that this strategy is bearing fruit.
The author continued citing a World Bank report, titled Vietnam: Deepening International Integration and Implementing the EVFTA, as saying "In the case of Vietnam, the benefits have been clear in terms of high and consistent economic growth and a large reduction in poverty levels".
The article concluded that as the coronavirus pandemic subsides and international borders gradually reopen, Vietnam is eyeing an even greater wave of trade with the 27-member EU bloc. The ADB's outlook for Vietnam's economy in 2022 sees it returning close to its pre-COVID growth levels at 6.5 percent./.
Vietnam persists with pandemic countermeasures, maintains macro-economy: PM
Prime Minister Pham Minh Chinh on October 13 chaired a webinar discussing measures to boost post-pandemic economic recovery, flexibly adapt to the COVID-19 pandemic, overcome economic disruption and strengthen locality-to-locality connectivity.
Co-hosted by the Party Central Committee's Theoretical Council and the Ho Chi Minh National Academy of Politics, the event was connected between Hanoi and the Party Committees of 63 cities and provinces nationwide.
Participants said that over the past year, Vietnam has well controlled the pandemic and maintained socio-economic development.
However, the pandemic remains complicated and unpredictable and Vietnam is facing a wide range of heavy consequences in all aspects of the socio-economic life, they said.
Leaders of localities and businesses shared effective anti-pandemic models as well as experiences in removing difficulties to overcome economic disruptions, towards achieving the dual goal in “new normal”.
Foreign experts and representatives of international organisations in Vietnam expressed their optimism about Vietnam’s development prospects.
They agreed with and put forth initiatives to boost economic recovery and flexibly and safely adapt to the COVID-19 pandemic, saying that policies need to be built and performed consistently from the central to local levels.
In his conclusion, PM Chinh asked agencies to collect feedback at the event to serve the building of policies and implementation of measures, towards flexibly and safely adapting to the pandemic.
He stressed that nobody is safe when others are still contracting COVID-19 and no country is safe when other nations in the region and the world are still fighting the pandemic.
As the pandemic will prolong in the country and the region, he asked for continuing with prevention and control measures, maintaining macro-economic stability, increasing supply to recover the labour market, and seeking ways to reduce input costs.
The PM said the Government will continue directing agencies and localities to ensure social welfare for residents, maintain social safety and order, tackle difficulties faced by enterprises, develop production and trade in the spirit of “harmony of interests and sharing of risks”, contributing to the nation's socio-economic development./.
Vietnam, US seek to beef up business, trade cooperation
Minister of Public Security Gen. To Lam held an online meeting with a high-ranking delegation of the US-ASEAN Business Council (USABC).
Lam said amid the COVID-19 pandemic, the online meeting showed the US private economic sector’s good will and commitment to maintain and further promote Vietnam-US bilateral ties in the mutually-beneficial spirit and realising Vietnam’s priority goals, including digital transformation and sustainable development.
He hailed the US as one of the leading trade partners and importers of Vietnam thanks to the two governments’ strategic visions as well as active and effective participation of their private enterprises and organisations, including the USABC.
The Vietnamese minister added that difficulties faced by US businesses and foreign production partners in Vietnam due to the pandemic are only short-term and temporary.
He hoped that the US business community would accompany Vietnam in the spirit of “harmony of interests”, promptly seize opportunities and seek proper ways to maintain and develop business and production in the new situation.
Ambassador Michael Michalak, Senior Vice President and Regional Managing Director of the USABC, spoke highly of development strides in the US-Vietnam cooperative relations in the recent past.
He expressed his wish that the Vietnamese Government and the Ministry of Public Security in particular would continue offering favourable conditions for US enterprises to do stable, long-term business in the country.
At the event, both sides discussed issues of shared concern such as the Law on Cyber Security, the decree on personal data protection and intellectual property in a constructive and open manner./.
EDF Renewables invests in solar power in Vietnam
French renewable energy producer EDF Renewables has made a significant investment in SkyX Energy, which is a subsidiary of VinaCapital Group and the owner of rooftop solar power plant SkyX Solar.
Assisted by the new partnership, SkyX Solar is expected to invest at least 100 million USD in developing 200 more MWp of solar rooftop electricity within the next two to three years, serving industrial and commercial customers.
Samresh Kumar, Executive Chairman and CEO of SkyX Solar, said the company currently has about 100MWp of rooftop solar power under development and operation.
The firm plans to cooperate with industrial parks in Vietnam to exploit hundreds of MW of rooftop solar power in the coming time, he said, adding that EDF Renewables’ experience and resources are hoped to boost SkyX Solar’s expansion quickly.
Yalim Ozilhan, Southeast Asia Regional Director of EDF Renewables, said that renewable energy sees great potential for development in Vietnam. With the strength of rooftop solar power solutions globally, EDF is very interested and wishes to invest in expanding its scope of operations in the market, he added.
In early 2021, the French group sealed a cooperation deal to invest in two wind power plants in the Central Highlands provinces of Dak Lak./.
FDI inflow into Vietnam still on upturn trend
Despite impacts of the COVID-19 pandemic, the inflow of foreign direct investment into Vietnam still rose 4.4 percent year on year in the first nine months of this year to 22.15 billion USD.
An upturn was recorded in both value of investment to new projects as well as additional capital to existing ones.
Specifically, 12.5 billion USD was poured into more than 2,200 newly-licensed projects, up 20.6 percent over the same period last year, while 6.4 billion USD was added into underway projects, a rise of over 25 percent.
Particularly, Vietnam saw many large-scale FDI projects in the January-September period.
Experts say the result manifested the attractiveness of the Vietnamese market and foreign investors’ confidence in Vietnam’s capacity in controlling the pandemic and its economic recovery as well as the effectiveness of measures taken by the Government to accompany and support businesses./.
Hanoi accompanies with investors
Hanoi, over the years, has been one of the leading localities in foreign direct investment (FDI) attraction thanks to the city’s efforts to accompany with and support investors.
Statistics from the Hanoi Statistics Office, in September, the capital city granted licences to three FDI projects worth 5.3 million USD, pushing the total FDI value in the city in the first nine months to 927 million USD, including 162.6 million USD on 246 new projects and 492.4 million USD added to 93 underway ones.
According to the municipal Department of Planning and Investment, COVID-19 has posed adverse impacts on foreign investment in Hanoi, causing a drop in the number of capital.
Meanwhile, difficulties have been seen in the transport of goods from other countries to Vietnam, while many businesses in industrial parks and clusters have faced obstacles in carrying labourers from their residence to workplace or applying the “three-on-site” and “one route – two destinations” models to maintain their operations.
At the same time, FDI firms have suffered impacts from immigration policies on foreign experts, the department noted.
Since the beginning of the year, Hanoi has seen the suspension of operation of about 200 FDI companies, mostly small and medium ones.
However, many large forms have still shown effective operations, while many foreign investors have increased investment in projects in the city.
As part of efforts to deal with difficulties facing investors and creating best investment environment for FDI businesses, along with preferential policies from the Government, Hanoi has rolled out various measures to help them overcome the pandemic.
Besides solutions to ensure safety against the pandemic, the department has given advice to the city People’s Committee on a number of solutions to assist FDI firms, including creating favourable conditions for them in administrative procedures so that they can focus on designing their production plans.
Alongside, the city has directed relevant sectors to take measures to deal with businesses’ difficulties in processing the procedure to receive foreign experts, COVID-19 vaccination and testing, tax, and goods transport.
In the remaining months of the year, the city will concentrate on promoting economic recovery and development as well as supporting local firms.
The municipal People’s Committee has asked sectors and localities to immediately built their own recovery and development plans right from October, while designing criteria of safe adaption to the pandemic and proposing mechanisms and measures to assist businesses.
Administrative procedures must be simplified to save cost, while online public services should be expanded to level three and four, thus giving maximum support to enterprises, asked the committee.
The committee assigned the Department of Planning and Investment to submit proposal on the organisation of a dialogue with local firms to seek ways to deal with difficulties facing them, especially those caused by COVID-19 pandemic.
Meanwhile, the city plans to form four working groups to deal with difficulties facing businesses in different areas, while speeding up the disbursement of investment in capital construction.
In order to attract more foreign investment and give best conditions for FDI firms to operate in Vietnam and Hanoi in particular, Do Anh Tuan, Director of the Hanoi Department of Planning and Investment said that together with cutting the number of administrative procedures and fostering coordination in the field, the city will strengthen on-site investment promotion activities and assist investors in all stages from business registering to project implementing and settling arising problems.
Hanoi will increase incentives for investors in prioritised sectors, including technology and supporting industry.
Experts held that COVID-19 has posed impacts to Vietnam and Hanoi in particular, but it also created opportunities in foreign investment.
Solutions given by the Government, ministries and sectors and the city have shown efficiency in encouraging economic recovery in the city, they said./.
Changes to break e-commerce stride
Operators in e-commerce are at odds over the impact of a new governmental decree, which could render the booming e-commerce market more challenging for local and foreign participants alike.
The government has enacted Decree No.85/2021/ND-CP ousting Decree No.52/2013/ND-CP dated 2013 on e-commerce. The former stipulated that e-commerce is a conditional business for foreign investors in Vietnam. Decree 85 amends and supplements some significant regulations on e-commerce activities, which may affect not only foreign investors but also domestic ones. The decree will take effect on January 1, 2022.
According to Samuel Son-Tung Vu, partner at law firm Bae, Kim & Lee Vietnam, Decree 85 creates additional barriers for foreign investors in the e-commerce market. Those who wish to control one or more of the leading e-commerce enterprises may face difficulties when applying or amending the respective licence.
Thus, such applications shall not only be reviewed by the Ministry of Industry and Trade (MoIT) but shall also be appraised by the Ministry of Public Security (MoPS). Furthermore, Decree 85 is silent on the duration for the MoPS to provide their appraisal opinion, thus issuance of e-commerce licences for foreign-invested enterprises could be more time-consuming and difficult.
Vu added that the new decree will likely hinder foreign investment activities in Vietnam, especially for those planning to takeover one of the major e-commerce platforms.
In addition to these obstacles, overseas enterprises may also face higher costs due to the requirements to amend and upgrade their respective internal system, regulations (for example, regulations on operation of e-commerce trading floors), employee conduct training, and more.
“Considering the size and the number of processed transactions of major e-commerce platforms, it can be a real challenge to ensure compliance with new regulations in such short amount of time,” Vu stressed.
In one example, Decree 85 requires e-commerce platform providers in Vietnam to verify the identity of foreign traders and organisations selling goods on the platform. Previously, Decree52 only requested foreign sellers to provide such information to e-commerce platforms but the latter was not obliged to verify this. With a large number of foreign traders, it can be challenging for e-commerce platforms to meet the deadline.
However, Filippo Bortoletti, senior manager of International Business Advisory at Dezan Shira & Associates, told VIR that implementation of Decree 85 will not hinder the majority of foreign investment into Vietnam’s e-commerce. “Decree 85 has been under discussion for several years and the main goal of the new prescriptions is to revise the local legal framework related to e-commerce to regulate on-demand TV services and the cross-border provision of such services like Netflix or Spotify.”
Thus, foreign businesses cannot provide cross-border e-commerce services in Vietnam without registering their activities and establishing a representative office or appoint an authorised representative in Vietnam.
“Another goal of Decree 85 is to protect local e-commerce players from new entrants,” Bortoletti said. “Foreign players must comply with market access provisions according to Decree 85, which means that those controlling one or more enterprises in a group of five leading enterprises in Vietnam’s e-commerce shall undergo an appraisal regarding national security matter. This surely brings uncertainty over market entry for big e-commerce players.”
According to a study conducted by Malaysia’s e-commerce company iPrice Group and US-based digital intelligence provider SimilarWeb, the e-commerce game is dominated by foreign e-commerce businesses like Shopee and Lazada, followed by Tiki and Sendo. These players already have local establishments to support their business. In this case, they need to comply with the new obligations on e-commerce trading.
“However, as such provisions are extended to all actors in the market, I think that new regulations are not providing a clear advantage to local players,” Bortoletti added. “Decree 85 is filling a gap in the local legal framework related to cross-border provision of e-commerce services. Now those companies will have to register their e-commerce activities in Vietnam and establish a representative office.”
According to Facebook and Bain & Company’s annual Southeast Asia report, Vietnam’s e-commerce sector is expected to reach $12 billion in 2021. The market ranks second in size in the region after Indonesia, and is estimated to grow 4.5 times to reach $56 billion by 2026.
“For domestic players, with the new barriers on e-commerce license, they may avoid hostile takeovers by foreign investors,” Samuel Son-Tung Vu said.
“In terms of e-commerce in general, new regulations have set forth a clear legal basis on obligations of platforms to ensure a safe market for both sellers and buyers, especially amid an increasing number of cross-border transactions conducted via e-commerce,” he added. “Some newly-added requirements may certainly provide additional protection to consumers and hold e-commerce platforms responsible to supervise foreign traders.”
Gov’t urges action to simplify business regulations
Following instructions of the prime minister, the Government Office has urged ministers, leaders of ministerial-level agencies and the Vietnam Social Security to complete plans to simplify business regulations and submit them to the prime minister for approval.
Under the Government’s Resolutions 68 and 75 and the prime minister’s Directive 23, ministries and State agencies must closely collaborate with the Government Office to review all regulations related to business activities, calculate law compliance costs, update data and map out a plan to streamline business regulations.
To date, only three ministerial-level agencies have submitted their plans to the prime minister, including the ministries of Health and Transport, and the State Bank of Vietnam, with the plan by the Ministry of Health having obtained approval, the Government’s news site reported.
Besides, the Government Office asked the ministries and ministerial-level agencies, which have yet to formulate a plan, to direct their lower-level units to issue guidelines over the implementation of the plans after the prime minister approves them.
Vietnam Entrepreneurs’ Day: businesses resolute to overcome difficulties
Experiencing the ups and downs of history, recent times has given entrepreneurs and businesses a chance to demonstrate their pioneering role in all fronts, as well as serving an important driving force behind the development of the national economy.
For the first time in Vietnamese history, on September 20, 2004, then Prime Minister Phan Van Khai signed a decision in which to observe October 13 as Vietnam Entrepreneurs’ Day.
In 1945, immediately after the Democratic Republic of Vietnam was established, the business circle actively supported the "Golden Week". This was backed by not only rich merchants, but almost every family of small businesses, whether small or large, also supported the establishment of the "Independence Fund".
That spirit has become more evident over the past two years when the COVID-19 pandemic hit like a terrible and unprecedented hurricane that swept around the globe. For local businesses and entrepreneurs, the damaging impact of the pandemic has caused many firms to face plenty of difficulties, challenges, and exhaustion.
In this difficult context, many enterprises based in Ho Chi Minh City, Dong Nai, and Binh Duong provinces, although facing many difficulties due to the impact of the pandemic, still strive to fulfil their social community responsibilities. This is done in the spirit of reinforcing mutual solidarity and uniting to share with local administrations to contain the pandemic.
As a result, thousands of billions of VND have been donated by businesses to the COVID-19 Vaccine Fund, along with the construction of field hospitals and medical isolation facilities. Furthermore when the pandemic is at its most stressful time, there remains many resilient businesses and entrepreneurs which have managed to stand firm and creatively adapt themselves to the pandemic situation.
The management board of Truong Sinh Group, a multi-sectoral development corporation, has meticulously outlined various scenarios, plans, and solutions aimed at coping with the impact of the pandemic, while strictly implementing safety measures in a range of production activities, promoting the digital transformation process, and applying online sales to consume more goods.
Le Thanh Thien, general director of Truong Sinh Group, revealed that the firm has shared its difficulties with its partners in order to ensure that their supply chain is not disrupted amid the ongoing disruption caused by the pandemic, with the enterprise still fully able to perform its social responsibilities.
“The group has made drastic changes in technology, digital transformation to adapt to the reality, while finding proper solutions to both domestic business and foreign export partners, and suspending production of non-essential items.
During the strong outbreaks in Ho Chi Minh City and its neighbour Binh Duong, the Group's medical research products were given to F0 patients for home treatment, with those with mild symptoms easing the disease. After this pandemic wave, the Group will promote research on Vietnamese medicine and pharmaceuticals in order to launch a range of new products for COVID-19 treatment within the community," Thien said.
According to Chu Tien Dung, chairman of the Ho Chi Minh City Business Association, difficulties are also a test to create resilience for the domestic business community. Being in the centre of the epidemic in the southern city, enterprises have always "co-communicated with suffering" to overcome the pandemic.
Hundreds of online discussions have also been held between associations, members, and businesses, regardless of day or night, in order to come up with the most optimal solutions, reasonable production models, as well as effective pandemic prevention measures to continue maintaining production activities.
Amid the current context of the nation moving into the new normal, although there will still be many difficulties and challenges ahead in the process of recovering post-pandemic production, many firms have concluded that only innovation and restructuring in management can enable them to continue to exist. This is particularly true due to the many uncertain factors caused by the ongoing COVID-19 pandemic.
Economic experts have stated their belief that the COVID-19 pandemic will have a long-term impact on the way the national economy operates, on national governance, social governance, and corporate governance.
The economic recovery process has been prolonged, while many countries have issued new legal regulations and long-term special policies which aim to help businesses resume operations.
Domestically, the restoration of production will represent a thorny problem with the risk of many firms closing, jobs not being restored, and social security being seriously impacted.
According to Pham Tan Cong, chairman of the Vietnam Chamber of Commerce and Industry (VCCI), there should have been a new policy system put in place with the "new normal" for businesses in order to secure a better positions in the global value chain.
Therefore, it remains necessary to view COVID-19 as a driving force which can make a breakthrough in building and fine-tuning institutions, the legal system, along with regulations and policies to suit the conditions of the "new normal". This should be done in order to create preferable opportunities for enterprises to quickly restore production activities and economic growth as a means of boosting the nation to a higher position in the global value chain.
"With the pride of Vietnam Entrepreneurs Day, with the spirit of solidarity, determination, creativity, along with the leadership and wise direction of leaders of competent agencies, the Vietnamese business community believe that they would be able to overcome all difficulties and challenges, maintain stability and develop production and business, thereby making a worthy contribution to the country's victory in the fight against the COVID-19 pandemic, as well as the successful implementation of socio-economic development goals set out by Resolution adopted at the 13th Party Congress,” the VCCI leader said.
There is no denying that many local businesses, including the likes of BIDV, Viettel, VinGroup, Truong Hai, FPT, and Vinamilk have made great strides to gradually keep abreast with their peers, both regionally and globally.
The nation also had six entrepreneurs listed among the world’s billionaires in 2021 as selected by Forbes magazine. With an export turnover of US$281 billion in 2020 and a total import and export turnover of US$544 billion, the country has risen to 22nd and 26th place in the world in terms of export scale and international trade.
This clearly demonstrates the role of the business community in the cause of national construction and economic development.
Air and rail tickets sell well after services resume
Both air and railway tickets have been sold very well after fights and railway services resumed following a long halt due to Covid-19.
According to Phan Quoc Anh, deputy director of the Vietnam Railways Corporation, tickets for the SE7/8 train services on the Hanoi-HCM City route have mostly sold out despite only going on sale at 8 am on Monday. The firm has had to arrange train services SE5/6 to meet demand.
Many people have wanted to buy tickets for October 14-20.
“Passengers have to ensure a safe distance on trains, so only around 300 tickets are allowed to be sold. However, travel demand is quite high so we’ve decided to add the SE5/6 services on the Hanoi-HCM City route,” Quoc Anh said.
Railway companies have been told to co-operate with localities where trains call to ensure Covid-19 prevention regulations.
In Ho Chi Minh City, up to 240 tickets for the SE7/S8 train services scheduled to depart Saigon Station for Hanoi on Wednesday and on Friday were sold within just an hour on Tuesday morning. The tickets were bought at stations and online.
Pham Thi Anh Dao, head of Hanoi Railway Station said that many passengers had come to Hanoi Station to buy tickets, mostly to central and southern localities such as Nha Trang and HCM City.
Hanoi Station has arranged quarantine rooms for passengers and staff with Covid-19-like symptoms. The station has also prepared an area for quick Covid-19 testing.
The same situation has also been reported for airfares. Tickets for flights from Hanoi to HCM City on October 11-13 were sold out quickly despite quite high prices.
The occupancy rate of Vietnam Airlines flights has reached around 90%.
Dinh Viet Thang, head of the Civil Aviation Authority of Vietnam (CAAV), said only a small number of flights have been resumed. Social distancing and low availability have pushed fares higher.
CAAV also suggested lifting the distancing regulations on flights to help passengers to enjoy cheaper tickets as they have to pay for their Covid-19 test.
Timber deal clearing path for US trade
The announcement that the United States has decided not to take any trade action on Vietnamese timber following a 12-month investigation is helping to clear the path for increased trading activity between the two.
US Trade Representative Katherine Tai announced on October 1 that an agreement had been reached with Vietnam addressing the former’s concerns regarding the Timber Section 301 investigation, which relates to environmental matters.
The agreement is meant to secure Vietnam’s commitment to “keep illegally harvested or traded timber out of the supply chain and protect the environment and natural resources,” as stated by the Office of the US Trade Representative (USTR).
“Ambassador Tai determined that the agreement provides a satisfactory resolution of the matter subject to investigation and that no trade action is warranted at this time,” noted the USTR.
The agreement that both countries signed ended a year of anxiety for Vietnamese furniture exporters and recognises the partnership between Vietnamese manufacturers and American buyers.
Vietnam had been tasked with solving issues related to illegally sourced or traded timber, including improving the legal framework, removing confiscated timber, verifying legality of domestically harvested timber, and working with high-risk countries to improve border checks and law enforcement cooperation.
“I commend Vietnam for its commitment to address our concerns,” said Tai. “With this agreement, Vietnam will provide a model, both for the Indo-Pacific and globally, for comprehensive enforcement against illegal timber.”
President Joe Biden is helping Vietnam by gradually removing investigations of the previous administration related to alleged violations of trade regulations.
Last October, the USTR launched an investigation under Section 301 of the US Trade Act of 1974 to investigate Vietnam’s use of allegedly illegally harvested or traded timber. This agreement – along with that between the US Treasury Department and the State Bank of Vietnam in July to settle accusations of currency manipulation – ensures that the door for exports to the US is opened again.
Vietnam’s wood processing industry still relies on exports to the US market for efficiency because this market represents the largest and fastest growing. Despite the impacts of the pandemic, Vietnam’s timber exports in the first eight months of 2021 reached $6.4 billion, up 58.8 per cent over the same period in 2020. Last year, total exports of timber and products thereof to the US reached $7.4 billion, accounting for 57 per cent of the total export in the sector.
“The signing of the agreement marks the beginning of an era of tighter control within the import-export supply chain more closely, including the domestic market, which up to now was rather loose,” said Dr. To Xuan Phuc from non-profit organisation Forest Trend.
Though the USTR does not impose sanctions on Vietnamese timber items exported to the US, Vietnam’s government has to commit to several new conditions, some of which are relatively strict, Phuc said.
Tran Le Huy, general secretary of the Binh Dinh Forest Products Association explained, “Vietnam is trying to improve the legal framework, inspect, and supervise the import of input materials more closely to ensure a transparent production system.”
Vietnam’s legal system for the sector encompasses Decree No.102/2020-ND-CP, stipulating the legal timber guarantee system as well as several other commitments that Vietnamese manufacturers have to strictly comply with.
Huy, who has been observing forest-related policy development for more than two decades, said, “I have never seen such a large number of timber investigations before. Thus, we are required to reduce risks in the import of wood materials, and this needs to be done with both policy adjustments and practical activities.”
On average, Vietnam annually imports 2-2.5 million cubic metres of round timber from Africa, South America, Laos, Cambodia, and Papua New Guinea, equivalent to 40-50 per cent of the total volume of imported logs and sawn timber.
Lenders energise foreign-owned power projects
A handful of local and foreign banks are leveraging their insights and optimising financial resources to promote energy and power transition in Vietnam, thus contributing to the country’s sustainable national energy policy.
Vietnamese lenders Techcombank and MB last week inked an agreement to facilitate a $1.4 billion syndicated loan package for Nhon Trach 3 and Nhon Trach 4 gas power plants projects, backed by Vietnam’s second-largest electricity producer, PetroVietnam Power Corporation (PV Power). The projects are the first liquefied natural gas (LNG) ventures in which PV Power has arranged capital without guarantees from the Vietnamese government. As a result, Techcombank and MB become the mandated lead arranger of a consortium that supports bidding procedures, offshore loans, export credit agencies, and asset management.
Nhon Trach 3 and Nhon Trach 4 power plants based in the southern province of based in Dong Nai are the first and largest LNG projects in Vietnam with a combined capacity of 1,300-1,760MW, and are slated to be the electric load centres for the south of the country.
“PV Power expects the vast expertise of Techcombank and MB to smooth the path for it to be proactive in credit sources, as well as reduce the state budget burden on the national energy development path,” said Nguyen Duy Giang, deputy general director of PV Power.
MB board member Pham Nhu Anh told VIR, “Clean and sustainable energy has always been a strategic focus for us. With this collaboration, we will make great strides to bring best-of-its-kind financial services to contribute to the country’s energy development.”
Anh noted that MB has spent roughly $3 billion on key projects on wind power and solar power with Nhon Trach 3 and Nhon Trach 4 being the first major chemical gas project that MB has been involved in.
In 2020, Citibank and INGbank signed a letter of authorisation to provide financial assistance to the project. French financial services multinational Societe Generale also expressed its keen interest in lending for the two projects.
Elsewhere, HSBC Vietnam last week confirmed it would provide short-term green trade finance in renewable energy construction for Power Construction JSC No.1 (PCC1), a leading Vietnamese engineering, procurement, and construction company.
This is the first sustainable finance service that HSBC has offered to a local corporate in the wind sector, and the third for Vietnamese businesses in renewable energy in general, after two green facilities were provided to REE for its rooftop solar project last year.
Stephanie Betant, head of Wholesale Banking at HSBC Vietnam, said, “This first for renewable energy means we are particularly excited to provide green financing to PCC1 for wind power, a Vietnamese leader and a promising source of energy for Vietnam’s growing needs.”
Betant explained that the transaction reflects the efforts of HSBC Vietnam in supporting the government’s Resolution No.55/2020 on Vietnam’s energy development strategy for the decade, with a vision towards 2045, to prioritise clean energy.
The huge potential of Vietnam’s renewable energy, and wind energy in particular, continues to be acknowledged by foreign-owned financial institutions.
Last month, Proparco, a development finance group partly owned by the French Development Agency, granted a $50 million loan package to HDBank to support the lender’s portfolio of climate-friendly projects.
“Proparco has prioritised supporting private actors committed to the fight against climate change. We are delighted to initiate the partnership, which will contribute to the energy transition in Vietnam,” said Raphael de Guerre, head of Proparco’s office for North and Southeast Asia.
Strategies sought by insurers after mixed bag in growth
Foreign corporations are gaining their momentum in Vietnam’s insurance market, with long-term commitments being paid off – however, the non-life insurance growth rate reached a decade-long record low.
Data compiled by BIDV Securities Company (BSC) showed that foreign companies are prevailing in the Vietnamese life insurance market, even though the pandemic is out of their control.
Bao Viet Life, the only Vietnamese insurer on the list, still holds the largest market share, with 20.8 per cent. However, other foreign enterprises such as Manulife, Prudential, Dai-ichi Life, and AIA have accelerated their initiatives and international expertise to improve operational efficiency and gain customer appetite.
The five largest companies accounted for 78.7 per cent of the whole life insurance market share, with foreign insurers enhancing their position, while a number of major Vietnamese insurers have diminished.
In the past five years, BaoViet Life’s market share has decreased by 6 per cent. On the contrary, Canadian insurer Manulife has increased their segment from 6.9 to 19 per cent. AIA rose from 1.5 to 10.8 per cent, while Dai-ichi Life from 1.6 to 12.1 per cent.
Other insurance companies have also ramped up their presence in the past few years, such as FWD, MB Ageas, and Sun Life. UK-backed Prudential also now boasts 16 per cent of the life insurance business segment.
“The vibrant domestic stock market has bolstered the financial investment activities of insurance companies. However, low interest rates reduce financial income of deposit-focused insurance companies,” BSC commented.
“Most insurers have set low or even negative growth targets in 2021 due to the low interest rate environment as a result of loose monetary policy.”
Notwithstanding, BSC added, the forthcoming amended Law on Insurance Business is expected to lift the foreign ownership cap, which would lay the concrete foundation for foreign investors to penetrate the domestic market.
Elsewhere, the ongoing pandemic and its resulting economic crisis are hitting the non-life insurance industry hard.
In this sector there are six leading insurers, accounting for about 60 per cent of the market share. However, in the past three years, Bao Viet has gradually lost its market share, from over 20 per cent in 2018 to 15 per cent by the end of June 2021, which is equivalent to PVI. Some other insurers have raised their rankings, such as MIC, surpassing Pjico.
According to preliminary data from the Insurance Association of Vietnam, in the first eight months of this year, non-life insurance revenues were estimated at VND37.28 trillion ($1.62 billion), up 3.61 per cent. However, this figure is the lowest growth rate in nearly 10 years.
Meanwhile, compensation reached VND11.74 trillion ($510 million) with the rate at 31.5 per cent, not including compensation provision.
In which, motor vehicle insurance revenues reached VND10.28 trillion ($445 million), accounting for 27.6 per cent of total market revenue, down 7.7 per cent over the same period; with a compensation rate of 48 per cent.
Health insurance revenues hit VND11.05 trillion ($480.7 million) and occupied 29.7 per cent, up 3.39 per cent on-year, with a claim rate of 29.6 per cent, not including compensation provision.
Property damage liability insurance revenue stood at VND5.4 trillion ($234.7 million), accounting for 14.5 per cent, up 10.26 per cent. Fire and explosion insurance revenues sat at VND4.9 trillion ($212.4 million), occupying 13.1 per cent, up 10.4 per cent; cargo insurance revenues hit VND1.8 trillion ($79.1 million), making up 4.9 per cent and up nearly 23 per cent; and hull insurance and shipowner’s civil liability attained over VND1.6 trillion ($71.5 million), accounting for 4.4 per cent and up 18 per cent.
Other insurance services include liability insurance at VND899 billion ($39.1 million), up 24 per cent; aviation insurance at VND544 billion ($23.7 million), up 26 per cent; credit and financial risk insurance touched VND540 billion ($23.5 million), down nearly 7 per cent; and business damage insurance hit VND157 billion ($6.8 million), down 2 per cent over the same period.
Thus, the revenue growth of the non-life insurance market in the first eight months of 2021 was roughly equivalent to 50 per cent of last year’s period.
“This segment is forecasted to encounter a bumpy road as the automobile industry is stuck in the mud due to the economic downturn. Under pandemic pressure, customers tend to cancel insurance policies or fail to renew them,” BVSC said.
Source: VNA/VNS/VOV/VIR/SGT/SGGP/Nhan Dan
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