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Textile and garment exports totaled 3.4 billion USD in August, up 5.5% month on month, marking the fourth consecutive month the turnover has increased compared to the previous month.
Customs data showed that in the Jan – August period, the country's textile export turnover reached only 22.5 billion USD, down 3.8 billion USD or 14.4% year-on-year.
The export values to the US, the European Union (EU), and the Republic of Korea (RoK) - the key importers of Vietnam, recorded decreases of 22.4%, 11.9%, and 3% in the period, reaching only 10 billion USD, 2.66 billion USD and 2.08 billion USD, respectively.
According to Director of the Vietnam Chamber of Commerce and Industry (VCCI)'s Branch in Ho Chi Minh City Tran Ngoc Liem, textile exports to the US have witnessed remarkable recovery in recent months.
The recent visit to Vietnam by US President Joe Biden, and the upgrade of bilateral relations to a comprehensive strategic partnership between the two countries offer good opportunities for Vietnam’s exports in general and its textile and garment exports in particular, he said.
Statistics from international organisations and market survey organisations showed that the US’s stockpile has decreased sharply, so US companies are likely to import commodities from many countries, including Vietnam.
The Latin American market is also seen as a potential market for Vietnamese strong exports such as textiles, footwear, processed farm produce, consumer goods, and electronics.
According to Vo Hong Anh, Deputy Director of the European-American Market Department under the Ministry of Industry and Trade (MoIT), there is ample room for Vietnam’s textile and footwear industries to penetrate deeply into Peru, Chile and Mexico.
Wood sector regaining footing as orders turn around
Many wood businesses have received orders for the remaining months of this year after the protracted logjam, sending rosy signs to the domestic timber industry.
The Agency of Foreign Trade under the Ministry of Industry and Trade (MoIT) reported that the export value of wood and wood products reached about 1.2 billion USD last month, down 7% from August, but up 6.7% against the same period last year.
The agency raised a bullish outlook for the sector in the last months based on the positive developments of the housing market, and the increasing demand for interior design for the new year.
Vice Chairman of the Handicraft and Wood Industry Association of Ho Chi Minh City (HAWA) Nguyen Chanh Phuong said the industry has seen signs of improvements since May, and forecast that the revenue will hit about 14-14.5 billion USD in the year.
D’Furni JSC said order books are full until the first quarter of 2024, adding its branches in North America have worked to maintain orders from traditional customers while expanding cooperation through big projects.
Tran Hoai Huu, Director of Gia Nhien Co., Ltd., said after a period of freeze, export orders have turned around, many of them from Poland, the Netherlands, Germany, Croatia and Italy, among others.
However, high input costs have remained a headache for many businesses, leading to no significant improvements in revenue. Besides, the ongoing conflicts with no signs of cooling down have also impacted the recovery of the industry.
Hanoi to host Vietnam int’l electronics & smart appliances expo
The Vietnam International Electronics & Smart Appliances Expo 2023 (IEAE Hanoi) will take place in the International Centre for Exhibition (ICE) in Hanoi from November 2 – 4.
Jointly organised by the Vietnam National Trade Fair & Advertising Company (Vinexad), and Chaoyu Expo of China, the event aims to boost partnerships between Vietnamese businesses and foreign firms, and the development of a high-quality electronic consumer market in the country.
According to Vinexad, covering a display area of 10,000sq.m, this is one of the large-scale specialised exhibitions in Vietnam, which will feature tens of thousands of electrical and household electronic appliances, smart devices, computers, phones, accessories and game equipment, and electronic components and other products from over 200 businesses and producers.
IEAE Hanoi is a "technology fest" for the Vietnamese electronics market in particular as well as the Southeast Asian market in general, Vinexad said.
Notably, IEAE Hanoi encourages the consumption of high-quality electronic and entertainment products, while committing to building an efficient and professional "one-stop shopping" platform, providing a smart exhibition experience for buyers in Hanoi and across Vietnam.
In the framework of the event, forums and seminars will be organised, focusing on the development of the electronic industry, household electrics, and smart devices as well as solutions to promoting innovation and development of these sectors.
Soft global demand hits trade value
Vietnam’s weaker manufacturing performance has depressed imports of production inputs, with meagre global demand continuing to affect the country’s trade prospects.
According to the General Statistics Office (GSO), in the first nine months of this year, the Vietnamese economy’s total import turnover hit nearly $238 billion, down 13.8 per cent as compared to the same period last year. In which, $85.12 billion was from Vietnamese enterprises, down 11.8 per cent, and $152.87 billion came from foreign businesses, down 14.9 per cent.
Production inputs are estimated to reach $223.08 billion in the first nine months of this year, accounting for 93.7 per cent of total imports but dropped significantly by 14 per cent from $259.16 billion in the corresponding period last year.
It is calculated that as much as 70 per cent of Vietnam’s needed material inputs for domestic production must be imported currently, and the remaining 30 per cent are locally produced because the country’s supporting industries remained weak.
For example, so far this year, imports of assorted machinery and equipment have been worth around $101.5 billion; imports of materials came in at $107.7 billion; and imports of consumption-oriented products stood at $14.9 billion.
“Stagnant manufacturing has resulted in a significant reduction of imports of production inputs,” said the Asian Development Bank (ADB).
In the first nine months of the year, the added value of the industrial sector increased 1.65 per cent on-year, in which that of the manufacturing and processing sector expanded 1.98 per cent.
“Greater efforts must be made to soon revitalise industrial production, including the manufacturing and processing sector,” Prime Minister Pham Minh Chinh noted at a government meeting with ministries and localities on the issue in Hanoi. “Exports have also witnessed a 9-month decline, so more solutions must be applied to boost exports.”
According to the GSO, Vietnam’s nine-month total export turnover is estimated to reach $259.67 billion, down 8.2 per cent on-year. In September, the figure sits at an estimated $31.41 billion, down 4.1 per cent against August.
“Slow recovery in the global economy pulled down exports and imports. High interest rates in the US and Europe slowed down the recovery and reduced demand from major trade partners,” the ADB commented.
The declining demand was much more substantial in Vietnam’s key markets (see box). Export receipts in the period were down in many key items.
Specifically, shipments of mobile phones, computers, and electronic products, accounting for almost one-third of total exports, decreased by 15 per cent. Meanwhile, export of machinery and equipment, accounting for 12 per cent of total exports, fell by over 10 per cent.
According to the Ministry of Industry and Trade (MoIT), weak external demand, including from a subdued recovery in China, has hampered export-led manufacturing. The industrial production index narrowing down in the first nine months of 2023 has also resulted in increased closures of businesses.
On average, 15,000 firms closed monthly, and hundreds of thousands of workers were laid off. The growth of industry and construction in aggregate dropped to 2.41 per cent in the first nine months of 2023. Industry is forecast to grow at 7 per cent in 2023, and construction could pick up if major infrastructure projects can be implemented as planned, said the MoIT.
As imports declined faster than exports, the trade surplus widened, reaching $21.68 billion in the first nine months of this year – up far from only $6.9 billion in the corresponding period last year. Vietnamese firms have suffered from a trade deficit of $16.26 billion, and foreign businesses enjoyed a trade surplus of $37.94 billion, including crude oil exports.
“Weak global demand will dampen trade prospects for the rest of 2023 and 2024,” said the ADB. “Import and export growth are expected to return to a modest rate of 5 per cent this year and next year with the revival of external demand. Robust trade activity will help to maintain the current account balance in surplus this year, estimated at 3 per cent of GDP. As manufacturing activity is restored, pushing up imports for production inputs, the current account balance is projected to narrow to 2 per cent of GDP in 2024.”
Under a GSO Q3 survey on 50,000 manufacturing and processing businesses’ performance, more than 30 per cent of respondents said their performance in Q3 was better than in Q2.
Local manufacturers display concern over high capital costs
Local manufacturers are finding it more difficult to restore their profits this year following a 9-month low industrial growth.
In the third quarter, the growth rate of added value in Vietnam’s industry is projected to have reached 4.57 per cent, compared to over 11 per cent in the same period last year, according to the General Statistics Office (GSO).
In the first nine months of the year, the added value of the industrial sector increased 1.65 per cent on-year.
Phi Thi Huong Nga, director of the GSO’s Department of Industrial Statistics and Construction, stated that the industrial sector’s value-added industrial growth rate has increased every month since May, with every rise being greater than the previous one.
“Industrial manufacturing throughout the remaining months of this year keeps on growing but has not yet returned to high growth momentum,” Nga explained.
She stated the results of a GSO Q3 survey on 50,000 manufacturing and processing businesses’ performance, which revealed that about 37.5 per cent of the surveyed firms said their performance was stable. For the latter months of the year, around 40 per cent of respondents believe that their situation will improve, while 37 per cent hold that their situation will be kept stable. Some 23.7 per cent of businesses anticipate more difficulties.
“The fact that less than one-quarter of businesses foresee a worsening situation demonstrates that business sentiment is extremely upbeat,” Nga said.
Vietnam’s index of industrial production for the third quarter rose by 12.12 per cent over the same period last year, but industrial enterprise profits remained unchanged.
While some of the data indicates a recovery in the industrial sector, enterprise production and business activities are still weak, and many require capital to invest and produce.
In the first half of the year, THACO Group reported a profit after tax of $44 million, which is less than a quarter of the same period in 2022, bringing profits down nearly five times to 2.1 per cent. The information was disclosed by THACO in a quarterly financial report sent to the Hanoi Stock Exchange at the end of September.
Due to low market demand, THACO’s primary operation – the sale of automobiles – is declining. According to the Vietnam Automobile Manufacturers Association, THACO sold about 58,000 vehicles in the first eight months of 2023, a decrease of 40 per cent compared to the same period in 2022. Thus, after eight months, the group has only achieved under half of its sales target of over 120,000 vehicles, which is equivalent to nearly $3.8 billion.
The steel industry, meanwhile, is in a recession, with Hoa Phat Group’s business plan being less precise. According to amended business results published in July, the group’s net profit at the conclusion of the first half of this year was only $75 million, down 85 per cent on-year.
Hoa Phat anticipates a profit after tax of $327 million in 2023, a decline of over 5 per cent compared to its profit in 2022.
Hoa Phat is rapidly transitioning to high-quality steel production, making substantial investments to produce manufactured steel for the shipbuilding, automotive, and fastener industries, which serve domestic and international markets.
At a meeting in the second quarter of 2023, Tran Dinh Long, chairman of Hoa Phat, stated that it needs a substantial amount of capital to focus on the Hoa Phat Dung Quat 2 iron and steel production complex.
Australia’s ore and coal mines have been temporarily suspended to concentrate on the $3 billion Dung Quat 2 project. Long believes that when the complex begins operations in 2024 or early 2025, Hoa Phat’s revenue will rise by $3.3-4.1 billion.
Plenty of small industrial manufacturing enterprises will also face a capital shortage in 2024 in order to maintain production and business activities, prepare materials for new orders, and maintain employment for their employees.
Tran Quoc Toan, director of Danang Technical Equipment Co., Ltd., a manufacturer of ship equipment, stated that interest rates remain elevated at 11-12 per cent, driving up capital costs, impacting product prices, and lowering business profits.
“Due to high capital costs, our plan to expand into the Cambodian market had to be put on hold. Due to high costs and the market’s current pessimism, we cannot predict when to continue with this plan,” said Toan.
Coal-fired to gas-fired power generation helps ensure energy security
The successful conversion of coal power projects to liquefied natural gas (LNG) is necessary to ensure energy security and help Vietnam achieve its goal of net-zero emissions by 2050, said industry experts and insiders.
According to the Ministry of Industry and Trade (MoIT), several coal-fired power projects are awaiting approval to transition into projects utilising LNG. Several provinces, including Thanh Hoa, Nghe An and Quang Tri, have voiced their opposition to additional coal-fired plants in favour of gas-fired plants.
As the country's hydropower reaches its maximum capacity and soaring demand for electricity in the coming decades, the development of gas-fired power electricity plants will play a vital role in ensuring electricity supply for the economy, as well as realising the gradual transition to cleaner energy in Vietnam.
According to a recent report by the MoIT, there are currently five coal-fired power projects facing delays and difficulties in securing capital: Vinh Tan III Thermal Power Plant (1,980 MW), Song Hau II Thermal Power Plant (2,120 MW), Quang Tri Thermal Power Plant (1,320 MW), Cong Thanh Thermal Power Plant (600 MW), and Nam Dinh I Thermal Power Plant (1,200 MW).
The investor of the Quang Tri Thermal Power Plant project, Thailand International Power Company (EGATi), has officially announced the suspension of the project. Regarding the Cong Thanh Thermal Power Plant project, located in Thanh Hoa province, its investors - Cong Thanh Group and the province are seeking approval to convert it into an LNG power project.
A British Petroleum (BP) representative said the group has been in discussion with the Cong Thanh Group on the possibility of collaboration on an LNG power plant, along with two other international partners.
"The proposed project with Cong Thanh aligns with BP's sustainable goals, including providing cleaner energy for the economy and supporting the communities where we operate," said the representative.
According to Dau Tu (Investment) Newspaper's exclusive source, General Electric (GE) is currently engaging in technical discussions on the project and is ready to participate if cooperation opportunities arise.
Meanwhile, according to industry insiders, the conversion of the Cong Thanh Thermal Power Plant into an LNG project, if approved, could become a model for other projects, which have been experiencing delays.
Regarding the issue, Lam Nguyen Phuong Thao, a lawyer at Russin&Vecchi Vietnam Company, believed that if approved, this could become a model for other delayed projects.
Thao said the conversion would create hundreds of jobs in construction, engineering and infrastructure while reducing the country's dependence on imported coal.
On the other hand, upfront costs, including LNG infrastructure and a stable supply source, must be readily available. The pros, however, will likely outweigh the cons.
"This is a necessary step in Vietnam's transition to a cleaner and more sustainable energy future," she said.
In a recent exchange with the press, Minister of Industry and Trade Nguyen Hong Dien said the development of LNG power projects is for ensuring electricity supply for economic and social development in the 2021-2030 period and beyond.
He said the ministry has been in close contact with investors and local authorities to discuss matters related to the impact on electricity prices, the capacity of project investors, and the technical conditions for project conversion.
John Rockhold, Head of the Electricity and Energy Working Group of the Vietnam Business Forum, said the conversion of coal-fired projects into gas-fired ones is a crucial step in the development of power sources in Vietnam.
The reason is that LNG has up to 50% lower carbon emissions compared to coal, and credit institutions are tightening funding for coal projects to meet international commitments on emission reduction. He emphasises the importance of infrastructure, deep-water ports, electricity prices, and, especially, government guidance in ensuring successful conversions.
Dr Ngo Duc Lam, former deputy director of the Energy Institute under the MoIT, said that accelerating the conversion of coal projects, especially those with existing infrastructure, will help address demand for the country's power-hungry northern regions.
National standards help to raise competitiveness of Vietnamese goods, services
The promotion of national standards and technical regulations has significantly contributed to improving the quality and competitiveness of products, goods and services, an official has said.
Dr. Nguyen Hoang Linh, Deputy Director of the Directorate for Standards, Metrology and Quality under the Ministry of Science and Technology (MoST), said Vietnam has promulgated more than 13,000 national standards so far, with the first issued in 1962, making the country take the lead in the Association of Southeast Asian Nations (ASEAN) in this regard.
The standards have harmonised approximately 60% with international and regional systems, which has helped to spur national economic growth over the past decade, he emphasised.
According to the official, priorities have been given to building national standards in such key and strategic fields as organic agriculture, smart urban areas, smart manufacturing, high-tech agriculture, renewable energy, information security, climate change response, water resources management, waste treatment, food safety and mechanical engineering over the past time, mainly based on regional and international standards.
This has motivated domestic enterprises to keep themselves updated with science-technology, and new global trends in order to access and meet requirements of the market, Linh said.
Meanwhile, the more than 800 national technical regulations have served as an important tool for state management to prevent low-quality products, goods and services, thus protecting the interests of the nation, businesses and consumers, Linh continued.
As an official member of the International Organisation for Standardisation (ISO), the International Telecommunication Union (ITU), and the Codex Alimentarius Commission (CODEX) and an associate member of the International Electrotechnical Commission (IEC), Vietnam has the right and responsibility to actively participate in building international standards so that its products and goods can further reach out to the global market, he said.
Linh suggested Vietnam step up the development and application of national and international standards to create a foundation for production and business in the country, and protect legitimate interests of businesses and consumers.
The MoST is coordinating with other ministries and agencies to set out a standardisation strategy by 2030, which will be submitted to the Prime Minister for approval.
The strategy aims to make standardisation a technical measure and a tool to contribute to socio-economic development, create a concerted legal framework and policy system to effectively deploy standardisation activities, promote research studies, and advance Vietnam’s position in relevant organisations and forums in the region and the world as well.
Vietnam is striving to join the ISO Council and become a full member of the IEC by 2025.
Each year on October 14, the members of the IEC, ISO and ITU celebrate World Standards Day, which is a means of paying tribute to the collaborative efforts of thousands of experts worldwide who develop the voluntary technical agreements that are published as International Standards.
Petrovietnam leads SoEs in money recovered from overseas investment
The Vietnam Oil and Gas Group (Petrovietnam) recovered 2.9 billion USD from overseas investments last year, topping State-owned enterprises (SoEs) in this regard, reported the Ministry of Finance (MoF).
Petrovietnam said that on behalf of the Government, Minister of Finance Ho Duc Phoc recently submitted a report on the investment, management, and use of State capital at enterprises to the National Assembly.
Accounting for 71.09% of the total capital recovered from overseas investments by SoEs in 2022, the sum of Petrovietnam consisted of over 1.1 billion USD in profit, 549.12 million USD in principal and interest from loans given to shareholders, and more than 1.17 billion USD from other sources, according to the report.
With 1.1 billion USD in profit transferred to the country, Petrovietnam also made up the majority of the 1.9 billion USD profit that SoEs earned from investment projects abroad.
The report noted that many of the overseas projects saw revenue increases, but their profit still declined due to inefficient use of capital.
The oil and gas exploration and exploitation project of Petrovietnam in Russia’s Nenetsky autonomous region was among the few with good efficiency, revenue, and capital recovery. The project is carried out by Rusvietpetro, a joint venture set up in 2008 of Petrovietnam and Russia’s Zarubezhneft. Rusvietpetro is assessed as one of the most profitable joint ventures of Petrovietnam abroad.
According to the Government’s report, 30 SoEs and businesses funded with State capital of Vietnam had invested over 6.6 billion USD abroad as of December 31, 2022. Petrovietnam also ranked first with total investments of 4 billion USD, equivalent to 60.8%.
AI transforming banking, financial sectors
The banking and financial sectors are in a transformative period with the rapid adoption of artificial intelligence (AI), but its widespread implementation currently faces several challenges.
Diverse AI applications have already made a mark on the sector, said Dr. Võ Thị Hồng Diễm, lecturer in blockchain enabled business, the Business School, RMIT University.
Intelligent chatbots and virtual assistants are at the forefront, equipped to understand and resolve customer queries, provide tailored financial services, automate tasks, identify fraudulent activities, assess creditworthiness, and deliver automated customer support solutions, she said.
AI's integration into the financial sector has witnessed remarkable growth. A survey by the World Economic Forum in 2020 revealed that 85 per cent of financial organisations were incorporating AI technologies into their operations at the time, while 77 per cent of senior executives anticipated AI to hold high or very high business importance in the subsequent two years.
Diễm said that following the global trend, prominent banks in Việt Nam have invested in researching and implementing AI technologies in their operations.
For instance, TPBank has integrated face recognition technology into its LiveBank automatic banking channel, bolstering security and convenience for customers. VietinBank utilises kiosks with FaceID recognition to identify customers and forward their requests to advisors, as well as serve as valuable assistants.
Other banks such as VietABank, Nam Á Bank, VPBank, Techcombank, VIB, and ACB have embraced AI across various functions, including chatbots for customer support and engagement, asset management, security, fraud prevention, and analysis of peak season ATM withdrawals.
“The incorporation of AI technology in the banking sector not only optimises operational costs but also enhances customer support and enables efficient process automation. AI has proven highly advantageous for revolutionising data management, customer behaviour understanding, and fostering robust customer relationships,” she said.
However, most banks in Việt Nam employ traditional rule-based AI, which excels in handling routine enquiries and assisting with simple financial transactions. This type of AI can only automate tasks that have been programmed into it, and its training is usually tailored for specific stationary tasks, making it less adaptable to new situations or tasks.
In contrast, generative AI possesses the ability to be trained on a wide range of data and can adapt to various situations and changes.
Generative AI stands as a next-generation technology that takes automation to a higher level by empowering computers to generate fresh content and ideas, moving beyond mere data processing and analysis. But its application in the banking sector in Việt Nam remains limited, she said.
She pointed out several challenges that impede its widespread implementation.
First, Việt Nam lacks a solid AI development ecosystem and appropriate support policies, placing it at an early stage compared to some other Asian countries.
Additionally, the high cost of AI and advanced machine learning and the scarcity of skilled labour hinder progress in the field. Currently, the supply of AI personnel in Việt Nam only meets 10 per cent of the domestic market's recruitment demand.
“Moreover, generative AI's reliance on substantial amounts of high-quality data poses a significant obstacle, as data completeness, consistency, and accuracy impact model reliability and transparency. Strict data privacy and security regulations limit the data volume used for training generative AI models, making them susceptible to cyber-attacks and limiting their full potential. Inaccuracies or biases in training data can be amplified by generative AI models, leading to suboptimal outcomes,” she said.
Layered infrastructure poses another challenge for generative AI, since generative AI heavily relies on databases. However, bank data and confidential information are often subject to limited access, making it impossible for AI to perform payment tasks related to customer information and confidential information.
“For greater AI integration in the future, the development of large and high-quality data becomes essential in the banking industry,” she said.
To facilitate complex tasks related to customer information, security, and seamless financial transactions, it is imperative to continue researching and developing unified AI infrastructure solutions.
“Furthermore, Việt Nam's AI development ecosystem and supportive policies still need substantial growth to catch up with other countries in Asia. Strategic investments in technology infrastructure, resources, and talent, including data scientists and machine learning experts, are critical for banks to retain competitiveness and stay prepared for emerging trends,” she added.
Liquidity of banking system forecast to be abundant in Q4 2023
Credit institutions expect liquidity of the banking system will be abundant in the fourth quarter of 2023, and deposit and lending interest rates will continue to decrease.
The forecast was based on a survey of business trends among credit institutions in the fourth quarter of 2023 released recently by the State Bank of Vietnam’s Department of Forecasting and Statistics.
According to credit institutions, the liquidity of the banking system in the third quarter of 2023 continued to maintain a good and improved status compared to the second quarter of 2023. Credit institutions predict that the liquidity situation will continue to be abundant in the fourth quarter of 2023 and for the whole year 2023 compared to 2022.
Credit institutions also expect the average deposit and lending interest rates in the banking system to continue to decrease by 0.26-0.35 percentage points in the fourth quarter of 2023.
As expected in the June 2023 survey, at this survey period, credit institutions said they continued to adjust and reduce the average price of their products and services. In general, compared to 2022, the average price of products and services in 2023 is forecast to decrease significantly, but may increase slightly in 2024 because service fees are expected to slightly increase while marginal interest rates are expected to continually decline.
The survey also showed capital mobilisation across the entire banking system is expected to increase by an average of 3.2 per cent in the fourth quarter of 2023 and increase by 8.7 per cent in the whole year, adjusted down compared to the 10.6 per cent expectation recorded in the previous survey. Outstanding loans of the banking system are expected to increase by 4.6 per cent in the fourth quarter of 2023 and increase by 12.3 per cent in 2023, adjusted down by 0.2 percentage points compared to the 12.5 per cent forecast in the previous survey.
According to the survey, credit institutions predict that customer demand for banking services may further improve in the fourth quarter of 2023 due to expectations of a more positive economic situation, and a gradual rebound of manufacturing and export sectors, in which loan demand is expected to improve more than deposit and payment demand.
For the whole of 2023, customer demand for banking services is forecast to increase at a slower rate compared to 2022.
Việt Nam employers target “above market” benefit strategies to win talent war
Three in five employers in Việt Nam see competition for talent as the number one business issue influencing their strategy for employee benefits in 2023.
Despite rising costs, an increasing number of employers are targeting an “above market” benefits position to attract top talent. That is according to the 2023 Benefits Trends Survey by WTW, a leading global advisory, broking and solutions company.
The survey found that competition for talent (60 per cent) is the most important factor influencing organisations’ benefits strategies in Việt Nam. Rising costs (51 per cent) continue to be one of the major concerns of the employers in 2023, a sign that employers are increasingly under pressure to balance their budgets and evolve benefits strategies. Economic weakness (42 per cent) factor which was not one of the top external influences driving benefits strategy in 2021, now takes priority at third place. Organisation restructuring factor has dropped to fourth in priority in 2023 compared to third in priority in 2021.
The ambition to improve benefits continue to compete with the increasing pressure to manage costs and optimise the value of benefits programmes. Nearly two third of employers cited that persistence of higher inflation (63 per cent), and a weakening economy and business environment (68 per cent) would have a significant impact on their benefits budgets in the next two years.
Bùi Thị Hoàng Yến, Director of Health & Benefits, WTW Vietnam, said: “The current state of the economy is putting employers in Việt Nam in a precarious position, balancing between winning the competition for talent and contending with the rising cost of services, all while budgets remain tight.
"Despite the challenges, employers recognised the urgency in delivering more efficient benefits programmes and remained committed to improving their portfolios. The key now will be to develop a truly equitable approach that not only tailors to the individual needs of the workforce, but also ensures that the value of their investments are optimised to become more cost-effective.”
The results of the Việt Nam survey mirror the views of employers from the wider Asia Pacific (APAC) region, which also identified competition for talent, rising costs, flexible work arrangements and the focus on inclusion and diversity as the top four business issues influencing their organisations’ strategies for benefits.
Looking ahead, employers in Việt Nam recognise the importance of achieving “above market” positions for their benefits portfolios over the next two years. While only 19 per cent of employers describe their current financial wellbeing/short-term finances benefits as “above market” relative to their main competitors, 49 per cent desire to reach this position in the next two years. Other top three benefits include career, training and development, flexible work arrangements, and health benefits.
Yến added: “Our survey shows that employers are rethinking their benefits strategies to achieve ‘above market’ positions and adapt to employees’ fast-evolving preferences in the near future. This will be a critical step in bridging the gaps of their existing programmes and more importantly, help to effectively manage business priorities such as rising cost and the competition for talent."
The survey was conducted between March and April this year with responses from a total of 5,233 employers across 95 markets globally, representing 22.9 million employees. Among which, 1,746 employers are based in Asia Pacific, representing 4.9 million employees. In Việt Nam, 219 employers took part in the survey, representing 0.2 million employees.
HCM City begins to stock consumer goods early for Tết
Many businesses have begun to produce goods and stock up for Tết (Lunar New Year) as usual a few months before the country’s biggest festival comes around.
Nguyễn Đăng Phú, deputy general director of Vissan JSC, which processes and sells fresh and frozen meat and processed foods, said the company has earmarked VNĐ700 billion (US$28.7 million) to stock about 2,000 tonnes of fresh foods, mainly pork, and 4,200 tonnes of processed foods, around the same as last year.
Phan Quốc Hoàng, director of Đà Lạt-based Thảo Nguyên Xanh Company, which sells vegetables, fruits and food specialties, said his company would increase the supply of agricultural produce to supermarkets and stores in HCM City by 20-30 per cent.
Large retailers are preparing an assortment of items commonly consumed during Tết to ensure sufficient supply.
Nguyễn Ngọc Thắng, Saigon Co.op’s marketing director and director of Co.opmart’s operations division, said Saigon Co.op has been working with producers and suppliers since mid-2023 to ensure supply of goods is 30 per cent higher than last year and 50 per cent more than on normal days.
Other supermarket systems such as Go!, BigC, Tops Market (under Central Retail Vietnam), MM Mega Market, and Satra are also busy preparing for the year-end shopping season.
Nguyễn Thị Bích Vân, head of communications at Central Retail, said supermarkets started to prepare for Tết a few months ago, mainly focusing on agricultural and essential consumer goods from across the country.
Some suppliers have asked to increase prices, she said.
Small traders at three agricultural and food wholesale markets, Bình Điền, Thủ Đức and Hóc Môn, started preparing for Tết a few months ago.
They have carefully selected goods sources, with some of them even hiring agricultural engineers to manage and supervise the entire process of growing fruits and vegetables.
Goods entering the market continue to be screened through a quick testing process.
Nguyễn Nguyên Phương, deputy director of the city Department of Industry and Trade, said programmes have been organised regularly to enhance co-operation with other provinces and cities to bring safe products for city consumers.
The city has made plans for Tết 2024 and its market stabilisation programme since the beginning of 2023, and so consumers do not have to worry about sudden price increases, he assured.
Many businesses said demand would not rise too steeply during New Year and Tết holidays.
With the economic situation forecast to remain difficult, consumers would continue to tighten their purse strings, they added.
Việt Nam needs to promote pepper brand in CPTPP market
The CPTPP agreement opens doors for Việt Nam's pepper, so the sector needs to focus on branding to expand market shares in this bloc, according to the Việt Nam Pepper and Spice Association (VPSA).
Hoàng Thị Liên, VPSA chairwoman, said that Vietnamese pepper is now one of the key export products to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) market.
However, the quantity of pepper exported from Việt Nam to some countries in this bloc is still low, such as Australia, Japan, and New Zealand. These markets have high consumer demand for pepper and also have very strict requirements for imports.
Canada imports pepper directly from Việt Nam, but in modest quantities.
Meanwhile, Vietnamese pepper has advantages in Australia and New Zealand.
Therefore, Việt Nam's pepper industry is striving to build a brand for pepper products to enter the world market, including the CPTPP market, according to Liên.
To build the brand, exporters and processors need to work directly with farmers in raw material growing areas, so they can manage production from the first step and ensure requirements on quality are met. Quality, sustainability, and traceability are necessary conditions, Liên said.
Customers are often willing to become long-term partners with Việt Nam's pepper and spice suppliers if they see that producers, processors, and exporters have formed a linkage. This makes the supply chain sustainable, she said.
Now, a common trend among buyers worldwide is to trace goods from the beginning of the production stage, especially large traders.
Sustainability and branding will have to be associated with proactive sourcing of goods. Thus, businesses must cooperate with farmers who will be sustainable partners in the supply chain of export commodities, including pepper.
In addition, raw pepper accounts for 80 per cent of the pepper exports at present. So, the association is also encouraging member companies, especially businesses with the capability to invest in technology, to promote deep processing, Liên said.
However, the industry needs to have a market for products with deep processing, because deeply processed goods often meet the demands of specific buyers, not the demand of the entire market.
Developed markets such as the EU, Australia, Japan, New Zealand, and the United States have almost the same market requirements. There are only a few minor differences. So, when pepper enters these markets, it means this commodity is also entering the high-end market, Liên said.
According to the General Statistics Office, Việt Nam's pepper exports in September were estimated at 19,000 tonnes, down 5.6 per cent compared to August, but up 37.6 per cent over the same period last year.
Turnover from exported pepper reached US$70 million, down 7.6 per cent compared to August, but up 22.7 per cent over the same period last year.
In the first nine months of 2023, Việt Nam's pepper exports reached 207,000 tonnes, an increase of 18.7 per cent over the same period in 2022. However, the total turnover reached $685 million, down 11.1 per cent.
China was Việt Nam's largest pepper export market in the first eight months of this year, with a volume of 53,792 tonnes, a year-on-year increase of 5.5 times; followed by the US with 33,589 tonnes, a year-on-year reduction of 10.6 per cent.
UKVFTA: pushing the timber industry towards sustainability
The UK – Việt Nam Free Trade Agreement (UKVFTA) was providing a significant push moving the timber industry towards sustainability – a vital factor for the industry to be able to take advantage of opportunities from the trade deal to expand exports to this selective market.
Ngô Sỹ Hoài, Deputy Chairman cum General Secretary of the Việt Nam Timber and Forest Products Association (VIFORES), said the UKVFTA which took effect in May 2021 helped Việt Nam maintain and increase exports to the UK, despite Brexit in January 2020.
The UK was an important export market of Việt Nam’s wooden products in Europe, accounting for around 30-40 per cent of Việt Nam’s export value to the EU.
VIFORES’ statistics showed that Việt Nam’s exports of timber and wooden products to the UK rose by more than 18 per cent to reach US$256 million in 2021. Notably, around 92 per cent of wooden products exported to the UK were valuable woodwork and furniture.
However, Việt Nam’s exports to the UK saw a drop of 8.5 per cent to $232.96 million in 2022 due to falling consumption demand in the UK, an impact of the economic slowdown and high inflationary pressure. The drop continues this year and British consumers tightened spending.
Statistics of the International Trade Centre showed the UK’s import of wood products fell by 27.3 per cent to $2.1 billion in January-June. The UK’s import of wooden products from Việt Nam accounted for 5.7 per cent of the total import value in the first half of this year.
Hoài forecast that Việt Nam would earn around $230 million from exporting wood and forest products to the UK this year, or around 1,4 per cent of Việt Nam’s total timber and wood products, citing statistics that the export value in January-September was estimated at $170 million.
According to the Import-Export Department under the Ministry of Industry and Trade, the presence of Việt Nam’s wood products in the UK remained modest.
In 2018-2022, the UK imported on average $4.3 billion worth of wooden products each year, of which Việt Nam accounted for around 8 per cent.
There was still significant space to increase the market share of Việt Nam’s wooden products in the UK as the UKVFTA, coupled with the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP) with the UK becoming a new member, was paving the way for these products with preferential tariffs, the department said.
Hoài said that under the UKVFTA, the tariffs would be lifted for wooden products in five years, offering a competitive advantage for Việt Nam.
Success in the UK, a highly demanding market with a long-standing and developed wood processing industry, would create an accelerator for Việt Nam to expand to other markets, Hoài said.
“To increase exports to the UK, Vietnamese enterprises have to attach special attention to going sustainable with the focus on ensuring timber legality,” he stressed, adding that the UK, both when it was a member of the EU and after Brexit, always raised the flag for combating climate change and promoting green growth.
Hoài pointed out that the UK Government had set a series of strict environmental requirements such as greenhouse gas emissions, green production, green trade, green economy, legal timber exploitation, sustainable forest management and biodiversity conservation, urging the wood industry of Việt Nam to make a dramatic transition towards sustainability.
Hoài proposed the Government consider negotiating and signing with the UK an agreement similar to the Voluntary Partnership Agreement on Forest Law Enforcement, Governance and Trade with the EU (VPA/FLEGT). After the Brexit, the VPA/FLEGT was no longer applicable with the UK.
A similar agreement with the UK would encourage Vietnamese wood businesses to increase investments, Hoài said, adding that Indonesia already signed the agreement with the UK.
According to Trần Sĩ Chương, a member of London-based strategy consulting firm 3Horizons, the resonance of the recent global negative fluctuations caused the world to operate in a completely new way with new rules emerging, forcing players to promptly make changes to adapt.
For the wood industry, the new rule was the increasing requirement for sustainability. “Sustainability is no longer voluntary but becoming mandatory for market participation and expansion,” he said. “Green transition is the way to improve competitiveness.”
According to Hoài, the wood industry of Việt Nam must focus on building brands based on the development of transparent and sustainable value chains.
Tariff liberalization was not the only advantage provided by the UKVFTA, he said, adding that a more comprehensive advantage was the ability of businesses to connect with foreign-invested enterprises, especially those from the UK, to establish supply chains.
Hoài pointed out that currently Việt Nam mainly produced to fulfil outsourcing contracts and did not pay adequate attention to designing and promoting brands, thus, the added value remained modest.
The focus must be on improving product quality and design based on the market demand and tastes to increase added value, Hoài said.
It was vital for the industry to enhance trade promotion and brand development, Hoài said, adding that enterprises should also be well aware of intellectual property protection in foreign markets, including the UK, to avoid risks.
A publication about the impact of UKVFTA on sustainable development of Việt Nam’s wood industry on the website of the Centre for International Forestry Research (CIFOR) pointed out that the UKVFTA was creating huge opportunities for the Vietnamese wood processing industry to grow sustainably.
To help Vietnamese enterprises realise the advantages from the UKVFTA, the Vietnamese Government should develop policies to encourage investment in renovating technologies in line with global demand, developing brand building strategy to the UK market and providing clear instructions to implement the trade deal.
Improving enforcement of other policies such as VPA/FLEGT, promoting the expansion of certified forest and sustainable forest development would further facilitate the implementation of UKVFTA.
Source: VNA/SGT/VNS/VOV/Dtinews/SGGP/VGP/Hanoitimes
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