Amid the logistics industry’s development and the Fourth Industrial Revolution, new logistics services have increased and required more quality and creative human resources, heard a forum held both in person and virtually on October 15.

Vo Tan Thanh, Director of the Ho Chi Minh City branch of the Vietnam Chamber of Commerce and Industry (VCCI), said developing human resources is one of the five focal tasks during the country’s socio-economic process in the time ahead. Improving logistics services and developing infrastructure are also considered important factors for enhancing the economy’s competitiveness, especially as the COVID-19 pandemic and Industry 4.0 have generated new challenges, affected Vietnam’s economic development, and changed the business environment around the globe.

Truong Anh Dung, General Director of the Directorate of Vocational Education and Training under the Ministry of Labour, Invalids and Social Affairs, said the Prime Minister recently approved a pilot programme on training and re-training to improve human resources’ skills to meet requirements of Industry 4.0.

This programme aims to improve workers’ knowledge and skills so that they can master and effectively apply technological advances of Industry 4.0 and meet enterprises’ human resources demand, and helps improve labour productivity and national competitiveness.

At the forum, participants discussed issues relevant to education, training, and improvement of the quality of human resources, including in the logistics industry. They also shared initiatives, new mindsets, and forecasts about logistics manpower.

Assoc. Prof. and Dr Thai Van Vinh from the Australia-based RMIT University pointed out that logistics and manufacturing businesses in Vietnam always face a serious shortage of manpower for logistics job positions.

He held that amid the development of the logistics industry and Industry 4.0, new logistics services have increased, requiring more quality and creative human resources.

State agencies, schools, and enterprises need to join hands to anticipate trends, opportunities and challenges; and to work out solutions so as to improve the quality of logistics manpower as well as general human resources in Vietnam, he added.

The forum was part of the Vietnam - Australia cooperation in promoting the quality of vocational education, with a trial enterprise-led training model carried out in the logistics sector since 2017, under the Vietnam - Australia Partnership for Human Resource Development (Aus4Skills) programme./.

MoIT should give more support to businesses in expanding markets: VCCI

The Ministry of Industry and Trade (MoIT) needs to give more support to enterprises in establishing stable and reliable distribution channels for expanding trade promotion activities and consumption markets, especially for agricultural products.

This is one of the recommendations from the Viet Nam Chamber of Commerce and Industry (VCCI) to complete a draft Government resolution on support for and development of business in the 2021-25 period, compiled by the Ministry of Planning and Investment.

MoIT should also organise national brand promotion campaigns and national trade promotion programmes with support from Viet Nam’s trade offices and trade promotion centres aboard.

Based on those, the ministry would establish channels on market information, connection and support for enterprises in doing business and taking advantage of opportunities from free trade agreements, thereby ​​promoting export market expansion.

This ministry needs to review the legal framework for the development of domestic trade on online platforms, limiting commercial fraud, and building sanctions to promote the development of domestic commerce and e-commerce.

At the same time, MoIT should have support for building electronic trading floors to enhance the consumption of domestic products and expand export markets, said VCCI.

The chamber has also proposed tasks for the Ministry of Agriculture and Rural Development (MARD), including coordination with the MoIT in expanding domestic and international markets for Vietnamese agricultural products; and increased negotiations with potential markets for such products.

MARD needs to set up more facilities and centres of testing products according to technical standards, such as sanitary and phytosanitary (SPS), and technical barriers to trade (TBT) for exported agricultural and aquatic products and handling issues relating to those standards. That would reduce costs for those activities.

According to VCCI, tasks relating to stimulating demand and expanding markets should be implemented with regular and efficient coordination of the business community via VCCI and other associations.

The chamber has suggested that the drafts should stipulate more coordination with ministries, sectors and localities for VCCI and commodity associations in implementing trade promotion programmes and promoting domestic consumption.

VCCI and the associations also have support for the businesses in joining the programme "Vietnamese people give priority to using Vietnamese goods" and programmes on stabilising prices and trade promotion.

At the same time, they need to actively participate in important bilateral and multilateral agreements in the region and the world, and to carry out trade and investment promotion activities. Those activities would improve Viet Nam’s integration and attract more foreign investment to the country.

They would implement programmes on providing information and training for enterprises in the process of carrying out preferential commitments in free trade agreements.

In addition, they would support businesses to effectively cope with arising international trade barriers, especially trade remedy lawsuits in export markets. They would have recommendations relating to the negotiation of free trade agreements.

Regarding solutions in building supply chains of major Vietnamese commodities, VCCI has also suggested building a large commodity trading floor with futures contracts, helping farmers and producers minimise price risks.

In addition, to improve the business and investment environment, VCCI has proposed adding dialogues with ministries and sectors into the draft to remove difficulties and obstacles relating to mechanisms and policies.

Along with that, the Government working group should closely coordinate with VCCI and commodity associations to assist businesses in recovering production and business after the COVID-19 pandemic, seeking new investment opportunities in Viet Nam.

Ministries and sectors should be responsible for sharing information on policies and regulations related to domestic and foreign enterprises with the business community via VCCI and commodity associations. 

Quang Binh welcomes first tourists from outside after pandemic-caused hiatus

The central province of Quang Binh on October 15 welcomed the first tourists from another locality after a long hiatus triggered by the latest COVID-19 wave.

The six tourists, arriving by air from Ho Chi Minh City, are visiting Quang Binh in a package tour permitted by the provincial People’s Committee. They will experience services at Chay Lap Farmstay, explore the Tu Lan cave system, and wrap up their trip on October 17.

This is one of the package tours offered by the Oxalis Adventure company and attracting much interest from travellers from HCM City, Hanoi, and many other localities.

Nguyen Ngoc Quy, Director of the provincial Tourism Department, said Quang Binh has been ready to welcome travellers back, describing the welcoming of this tourist group as an important event marking the resumption and gradual recovery of the local tourism industry.

The tourist reception process complied with regulations of the Health Ministry and the Government. Accordingly, visitors must have been fully vaccinated against COVID-19 and undergone rapid testing before their flight’s departure and after arrival, the official added.

Quang Binh is now opened to travellers from COVID-19-free zones (green zones) and those applying the Prime Minister’s Directive 15/CT-TTg on pandemic prevention and control (yellow zones). Those from “yellow zones” can only take part in “sandbox” package tours or certain services on small scale to ensure safety.

Travel companies and those operating tourist attractions can serve a maximum of 20 visitors per group, and groups must keep distance from one another during their stay in the province.

The tours offered to travellers must also be licensed by the provincial People’s Committee.

Quang Binh is dubbed the "Kingdom of caves" with hundreds of caves of various sizes as well as incredible mountain scenery and sprawling beaches.

It is home to Son Doong Cave, accredited as the world’s largest and most beautiful natural cave by the World Records Union and the World Records Association, as well as the UNESCO-recognised world heritage site Phong Nha - Ke Bang National Park./.

Over 80% of industrial firms resume operations in Dong Nai

Nearly 1,400 firms, or over 80 per cent of those operating in 31 industrial parks in the southern province of Dong Nai, have resumed operations, according to the provincial Industrial Zones Authority.

Due to COVID-19, many businesses had to scale down or suspended production. However, since the end of September, nearly 1,400 firms have resumed operations, drawing more than 334,000 workers back to work or 54 per cent of the total number of labourers at the local industrial parks.

The authority said the province prioritised vaccinating workers and issued many documents to help enterprises ease difficulties and recover production. It is forecast that in the fourth quarter of this year, firms in Dong Nai will stabilise their production and obtain more export orders.

Le Van Danh, deputy head of the authority, said thanks to the local effective implementation of social security, the majority of migrant workers had stayed in the province.

Most enterprises in the industrial zones had solid financial capacity, therefore, the production recovery would take place quickly and smoothly, he added. 

Hopes high for year-end rally to reverse shaky trade balance

In spite of massive woes, Vietnam’s goods import-export landscape is gaining momentum thanks to bit-by-bit recovery in domestic production and gradual reopening of many foreign markets.

Nguyen Hai Hoang, vice director of electronics manufacturer Duc Hoang Electronics JSC in the southern province of Binh Duong, recently had online meetings with three partners from Malaysia and China to negotiate new export orders. His firm will provide them with electronics items at a total value of nearly $10 million for the fourth quarter and about $5 million for the first three months of 2022.

“We earned export turnover of $11 million in the first nine months of 2021, up from $10 billion in the corresponding period last year. If our partners hadn’t reduced production, we could have earned about $15 million in the first nine months of this year,” Hoang said.

The firm has also imported electronic items for its production. The import turnover in the same period rose 5 per cent on-year. “It is expected that if COVID-19 is well controlled in the foreign markets in the rest of 2021, our company’s export and import turnover will climb about 6 per cent this year,” Hoang said.

Duc Hoang Electronics has contributed to a rise in Binh Duong’s electronics export turnover of 32.6 per cent on-year, at over $1 billion in the first nine months, and also contributed to an expansion in the Vietnamese electronics industry’s nine-month export turnover of $36.4 billion, up 13.1 per cent on-year.

Vietnam also earned $41.33 billion from exporting mobile phones and their spare parts in this period, up 12.4 per cent on-year. South Korea’s Samsung holds more than 90 per cent of Vietnam’s total export turnover from electronics and mobile phones.

As for garments and textiles, over the past few weeks producer No.26 JSC, based in Hanoi, has boosted recruitment of new employees who will work for the company’s new facilities in the city, with high allowances and bonuses in addition to salaries.

“We need many new workers as we are expanding exports to a number of new markets in Europe, ASEAN, and Japan, besides our traditional markets of South Korea and the US,” explained company representative Nguyen Viet Thang, adding the nine-month export and import turnover hit about 5 per cent on-year.

The company’s exports and imports were boosted during January and June in particular. However, since July exports have slowed down due to the pandemic. “However, we expect that with the new orders we will be able to increase exports thanks to the new markets gradually reopening their doors to import activities.”

The Ministry of Industry and Trade (MoIT) said in the first nine months of 2021, Vietnam’s garment and textile export turnover hit $23.46 billion, up 5.8 per cent on-year.

The MoIT reported that while many items in the period witnessed a cut in export turnover, garments and textiles as well as electronics are among key export items with an on-year rise in export turnover, such as assorted steel ($8.23 billion, up 125.4 per cent), machinery and equipment ($26.25 billion, 44.5 per cent), wood and wooden products ($11.14 billion, 30.9 per cent), footwear ($13.33 billion, 9.8 per cent), transportation means and equipment ($7.86 billion, 23.1 per cent), plastics ($3.57 billion, 37.4 per cent), and chemicals ($1.66 billion, 32.5 per cent).

In the first nine months, Vietnam’s total export turnover reached $240.52 billion, up 18.8 per cent over the same period last year – in which local exporters fetched $62.72 billion, up 8.5 per cent and foreign firms raked in $188.8 billion (including crude oil exports), up 22.8 per cent.

Meanwhile, total import turnover hit $242.65 billion, up 30.5 per cent on-year - in which local importers spent $83.72 billion, up 25 per cent and foreign firms forked out $158.93 billion, up 33.6 per cent. Thirty-six items had an import turnover of over $1 billion, holding over 90 per cent of the economy’s total import value.

In the same period, Vietnam saw a trade deficit of $2.13 billion, with domestic firms suffering from a trade deficit of $21 billion and foreign businesses enjoying a trade surplus of $18.87 billion.

However, according to the MoIT, the majority of the imported products are used for domestic production, and only $14.77 billion (or 6 per cent of the total import value) worth of imported goods needs to be controlled.

Tran Thanh Hai, vice director of the MoIT’s Foreign Trade Agency, was optimistic about the nine-month trade picture which contributed greatly to the GDP growth of 1.42 per cent, especially amid the health crisis.

“This is a big effort of all sectors, localities, and enterprises,” Hai said. “Vietnam’s export activities are enjoying advantages from free trade agreements and global markets’ growing demands for goods in the remaining months of the year.”

“In the fourth quarter, if COVID-19 is well controlled, the southern region will strongly recover, boost exports, and regain growth momentum. It is strongly believed that by late 2021, the country will see a trade balance, and if more favourable conditions come, there may be a trade surplus,” he said.

The MoIT forecasted that Vietnam’s total export turnover will be around $313 billion this year, up 10.7 per cent on-year. This will help the economy grow at about 3-3.5 per cent this year.

Under a General Statistics Office survey conducted in the third quarter, covering around 5,700 manufacturing and processing firms and nearly 6,200 construction businesses, 77.6 per cent of respondents believed their new export orders in the fourth quarter will “increase or be unchanged” as compared to the third quarter. Only 22.4 per cent of the surveyed firms predicted that their new orders will be reduced in the fourth quarter.

Standard Chartered revised down its GDP growth forecast for Vietnam in 2021 to 2.7 per cent from 4.7 per cent, reflecting the unexpected third-quarter contraction of 6.17 per cent on-year. The bank expects recovery to accelerate in 2022 and maintains its growth forecast for next year at 7 per cent.

“While we expect growth to start recovering in Q4, this hinges on progress towards reopening businesses. We expect post-pandemic acceleration but turn more cautious pending clearer signs of recovery. Vietnam’s pandemic management is crucial to the near-term outlook,” said Tim Leelahaphan, economist for Thailand and Vietnam at Standard Chartered.

Vietcombank completes 98 percent of yearly credit plan

By the end of the third quarter, the credit of the Foreign Trade Joint-stock Bank (Vietcombank) was 923,385 billion VND (40.550 million USD), an increase of 11.5 percent over the whole of 2020 and representing 98 percent of this year’s plan, according to the lender.

Since 2020, the bank has conducted 9 interest rate reduction to help people and firms adversely affected by the COVID-19 pandemic. This year alone, its reduction of interest for customers will amount to 7.1 trillion VND.

Besides, Vietcombank is also realising its commitments for support to social welfare work and the pandemic fight with about 350 billion VND.

In the last months of this year and toward next year, the bank will continue to focus on renovating the intensive growth model, shifting its operation structure, thus ensuring sustainable growth with a high efficiency and productivity to serve the economic recovery.

It also commits itself to maintaining a reasonable interest rate to continue supporting firms in adapting themselves to the new context, and to providing social welfare to those directly affected by the pandemic./.

Waves of variance in seaport growth

Despite aspects of strong growth, a mixed picture remains dominant in Vietnam’s seaports so far this year, with prospects uncertain amid sluggish global economic recovery.

At last week’s meeting to review the nine-month performance of the sector, shipping giant Vietnam Maritime Corporation (VIMC) highlighted the two-digit growth of its ports across the country.

Total volume of goods and commodities via seaports in Vietnam hit over 535.7 million tonnes between January and the end of September, up 3 per cent on-year. Of that, container throughput enjoyed double-digit growth of 15 per cent to nearly 18.6 million TEU, with over six million TEU exported (up 13 per cent) and over 6.1 million imported, up 18 per cent.

Seaports have been performing well despite social distancing, including those of VIMC, which enabled the group to enjoy an on-year rise of 16.8 per cent in volume and a 30.5 per cent increase in revenues during the period.

VIMC now has 35 member companies, managing over 13,000 metres of piers and accounting for nearly 30 per cent of the country’s total. These piers are capable of handling over 100 million tonnes of cargo, making up over 20 per cent of the country’s total.

For instance, the SSIT and SP-PSA ports experienced a strong growth in the volume of commodities during the nine-month span. Both are located in the Cai Mep-Thi Vai area of the southern province of Ba Ria-Vung Tau.

SSIT port, a joint venture between VIMC and SSA Marine, accommodated over 10 million tonnes of goods, equal to over 545 per cent compared to the same period last year, while its container throughput rose 44.1 per cent. Likewise, SP-PSA, a joint venture between VIMC and Singapore-based PSA, witnessed an on-year increase of over 22 per cent in volume and 17.42 per cent in revenues.

A representative of VIMC told VIR, “It is an impressive result amid social distancing. No seaports of ours stopped operations in this situation.”

However, not all seaports performed well, including some of the commonly most-profitable ones like Cai Mep International Terminal (CMIT) and other joint venture seaports like Cai Lan International Container Terminal (CICT).

According to VIMC statistics, CMIT has Denmark’s APM Terminals as a foreign stakeholder and saw its volume rise by 16.3 per cent on-month in September. The port handled over 18 million tonnes of goods in the nine-month period, including 1.2 million TEU in container throughput, equal to more than 96 per cent compared to the same period last year.

Nguyen Xuan Ky, general director of CMIT, told VIR, “Since late July, the stay-at-work policies have been affecting not only seaports but also companies that manufacture key items for export because their operations require a lot of workers. The reduced production capacity of factories in Ho Chi Minh City, Dong Nai, and Binh Duong – the southern economic hubs – resulted in a fall in commodities and goods for export via seaports.”

CICT, located in the northeastern province of Quang Ninh, accommodated more than 3.18 million tonnes of commodities and 12,000 TEU of container throughput, down 12.7 per cent, and nearly 69 per cent on-year, respectively.

September was not a rosy month for many others. Big seaports at Haiphong, Danang, and Quy Nhon saw a fall in profits during the month, together with Transvina, VIMC Dinh Vu, and VIMC Hau Giang.

Seaports in which VIMC holds a controlling stake have started to see an on-month reduction in goods and commodities since June, with on-month decreases ranging from 3 to 7.9 per cent.

According to VIMC, there remain some challenges ahead. “We see recovery in October compared to previous months, but the progress is still slow,” Ky noted.

The Organisation for Economic Co-operation and Development anticipates global economic growth of 5.7 per cent in 2021, down 0.1 per cent from initial forecasts; and 4.5 per cent in 2022. But recovery remains uneven, with countries emerging from the crisis at varying paces.

Ba Ria-Vung Tau firms move to adapt to new normal

 

Despite being battered by the COVID-19 pandemic, enterprises in the southern province of Ba Ria-Vung Tau have done their utmost to protect and maintain production activities.

With a flexible response, the province’s industrial production enjoyed sound growth in the first nine months of the year. Nearly 450 local enterprises applied the “three on-site” model, where employees work, eat, and sleep on-site, to keep production going while ensuring the safety of more than 50,000 workers.

Chien Chung Chih, Administration Manager of San Fang Chemical Industry Co., Ltd., said: "We applied the “three on-site” model for 750 workers, or 60 percent of our workforce. They lived in a 70-room dormitory, each from 20-40 square metres. The company was in charge of transporting them from their living quarters to the worksite every day. They were directed to strictly follow the “5K message” while at the dormitory and the workplace."

"We recommended to local authorities that workers be given vaccinations at the earliest possible time," he said.

 "We have calculated that the “three on-site” model will cost us billions of VND. But we accept this to ensure production and worker safety," said Le Van Tinh, Director of Pacific Lighting Equipment Production & Trading JSC.

The two-month social distancing order under Directive No. 16 affected enterprises in Ba Ria-Vung Tau province, with employee numbers falling, logistics services disrupted, charges incurred in COVID-19 testing and pandemic prevention work, and a surge in wages and business costs.

Eighty companies with 16,500 workers had to suspend operations.

After several discussions with local companies, Ba Ria-Vung Tau introduced a number of policies to support the restoration of production and boost socio-economic development.

According to Nguyen Cong Vinh, Vice Chairman of the Ba Ria-Vung Tau Provincial People’s Committee, said: "We have provided local companies with tax and credit support policies. Favourable conditions have also been created for enterprises to gain access to support under the Government’s Resolution No. 68." 

Together with pushing up the vaccination drive, the provincial People’s Committee also established a working group in charge of hearing from local companies about challenges and solutions to removing bottlenecks. This aimed to accelerate the recovery of local production and adapt to the development of the pandemic./.

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.”

Vietnamese shrimp remains competitive in Germany due to price advantage

Local shrimp enjoys a competitive advantage over other rivals such as Greenland, Bangladesh, India, and Ecuador in the German market thanks to its lower price amid challenges caused by the COVID-19 pandemic, according to statistics released by the General Department of Vietnam Customs.

Germany represents the largest import market for Vietnamese shrimp in the EU, thereby accounting for 26% of the total value of local shrimp exports to the EU.

The nation’s shrimp exports to Germany during the opening seven months of the year saw an increase of 40% to US$83.6 million.

However, shrimp exports in August and the first half of September to the demanding market endured a decline due to social distancing measures serving to disrupt production activities.

Thanks to robust growth seen over the previous months, shrimp exports to the Central European country by mid-September enjoyed an increase of 24.5% to US$97.2 million.

Kim Thu, an expert of the Vietnam Association of Seafood Exporters and Producers (VASEP), revealed that Vietnamese shrimp exports to Germany have sufficiently taken full advantage of the EU-Vietnam Trade Agreement (EVFTA), largely due to the tax reduction placed on several products coded HS03061792, HS 03061799, HS 16052110, HS 16052190, and HS 16052900.

Amid the ongoing complex nature of the COVID-19 pandemic, Germany has moved to increase its import demand for convenient, instant, and easy-to-cook products both at home and canned products, with certified sustainable shrimp products consistently being favoured by German consumers.

These factors represent advantages for Vietnamese shrimp enterprises as they strive to increase exports to the fastidious market moving forward.

Pig prices sharply fall

Pig prices in Vietnam have dropped considerably to record lows, mainly due to the Covid-19 pandemic.

In the first nine months of this year, pig prices in the northern region decreased to VND35-40,000 per kilo from VND100,000 per kilo in 2019. In reality, farmers have had to spend VND60,000 per kilo of pig to raise them  

Bac Ninh Province saw the sharpest fall in pig prices at VND35,000 per kilo.

Pig prices in the central and Central Highlands region were VND38000-45,000 per kilo.

Meanwhile, animal feed prices are on the rise, causing more losses for big breeders.

Experts forecasted that pig prices would drop to VND25,000 per kilo in the coming time due to oversupply. At present, roughly eight million pigs are old enough to be sold for meat, accounting for around 30 percent of the country’s pig number.

Vietnam’s import of different kinds of meat has been on the rise. In the first eight months of this year, the country imported 257,000 tonnes of meat worth USD508 million, up 62 percent and 84 percent on-year.

Le Van Quyet, Chairman of the Southeast Breeding Association, proposed that frozen meat product imports should be suspended to protect domestic producers.

Rubber firms eyeing buoyant performance thanks to favourable export

Soaring rubber prices have cast a strong impact on the rubber sector’s profitability in the year to date, helping many rubber firms to post upbeat business results.

The latest figures from the Ministry of Industry and Trade’s Export-Import Agency show that Vietnam exported 195,000 tonnes of rubber, generating $321 million in total export value in September, up 2.8 per cent in volume and 3.1 per cent in value compared to August. Compared to September 2020, these figures shed 5.1 per cent in volume but showing a 21.2 per cent hike in value.

With September export price averaging $1,646 per tonne, 0.3 per cent more than in August and 22.7 per cent higher than in the year prior, Vietnam counted an estimated $2.17 billion in value from exporting 1.3 million tonnes of rubber in the first nine months of 2021, up 17.1 per cent in volume and 52.7 per cent in value compared to the same period in 2020.

The favourable market situation has been instrumental for many rubber firms to post upbeat business results in the year to date.

The demand for natural rubber in 2021 is expected to hike 9.3 per cent worldwide to 14.1 million tonnes compared to 2020, attributable to higher demand from China, India, Thailand, and Vietnam during the year.

Accordingly, Hoa Binh Rubber JSC raked in VND126 billion ($5.48 million) in total revenue and VND2.8 billion ($121,740) in pre-tax profit, equal to 72 and 282 per cent of full-year plan in the first nine months this year.

Meanwhile, Phuoc Hoa Rubber JSC counted VND281.5 billion ($12.24 million) in net revenue from sales and services in the third quarter this year, up 22.7 per cent on-year; and posted VND38 billion ($1.65 million) in accrued profit during the period, up 192 per cent on-year.

Generally, the company reaped VND119 billion ($5.17 million) in net profit from business activities in the first three quarters, a 3.5-fold increase on-year.

According to its third-quarter financial report, Ba Ria Rubber JSC earned nearly VND34 billion ($1.5 million) in after-tax profit during the period, 3.1 times the figure the company posted in the corresponding period in 2020.

In the first three quarters, the company witnessed a 21 per cent hike to reach VND243 billion ($10.57 million) in net revenue and 187 per cent jump in after-tax profit to surpass VND68 billion ($2.96 million).

Earlier, in the first half, state-owned Vietnam Rubber Group saw a sharp growth in profit, hitting VND2.282 trillion ($99.2 million) compared to just VND841 billion ($36.57 million) in the same period of 2020. That was because its member units had maintained stable production in the new normal, paired with high and stable rubber latex prices.

According to the latest report of the Association of Natural Ruber Producing Countries (ANRPC), the demand for natural rubber in 2021 is expected to hike 9.3 per cent worldwide to 14.1 million tonnes compared to 2020, attributable to higher demand from China, India, Thailand, and Vietnam during the year.

The global natural rubber output is expected to reach 13.86 million tonnes in 2021, up 2 per cent on-year, based on preliminary estimations by ANRPC member countries.

Social restrictions spur gaming popularity

Vietnam’s gaming industry has been gaining further traction, with both PC and mobile games rising in prevalence.

The pandemic has reignited Vietnam’s already growing online gaming industry, especially among young professionals. As a result, the gaming industry has seen a year of success, hitting revenues of almost $530 million in 2020, double those of 2015, according to the Vietnam National Innovation Centre under the Ministry of Planning and Investment.

According to Sensor Tower, a provider of market intelligence and analytics for the mobile app economy, the global mobile gaming sector’s on-year revenue growth increased from 15 to nearly 40 per cent in May, and while the rate has decreased a bit since that peak, it remains to hover between 25 and 35 per cent.

Linda Huynh, head of strategy and operations at Video game publisher Amanotes said that the pandemic has bolstered the digital economy across the world. Mobile gaming in particular has seen an unprecedented surge in revenues and downloads.

“As such, there has been a great opportunity for established and new players in the mobile gaming industry to seize part of that market, including Vietnamese game studios and publishers,” Huynh stated.

There has been a rise of Vietnamese indie game studios in the global charts. Companies like Amanotes, who target global markets, have managed to reap the full benefits of the market growth. This has encouraged other talented Vietnamese game studios to follow this strategy, with multiple games made in Vietnam making their way into the US top charts.

“We are excited and confident that this trend will continue,” Huynh said. “Realising this opportunity, Amanotes is aggressively strengthening its partnerships with local and regional studios and music partners. Recently, we successfully sealed a strategic investment with our partner to establish a game studio.”

Another key trend in Vietnam is the fast development of a play-to-earn ecosystems centred around cryptocurrency and non-fungible tokens, following the success of the game Axie Infinity. The game’s creator and its players have generated $2.05 billion in sales to date for Axie Infinity, according to measurement firm DappRadar. While the area is still at its early stages, there has been a big potential and passion from the game and tech community in Vietnam.

Dino Strkljevic, client lead for Asia-Pacific and Japan at Intel Corporation, said that mobile gaming is gaining popularity across the world, and Southeast Asia is ahead of the curve. This can be attributed to factors such as portability, high smartphone penetration, free-to-play apps, and high-speed internet access. Vietnam has a smartphone penetration of more than 50 per cent and widespread, affordable 4G wireless connections. “Intel also has a role to play when it comes to cloud gaming infrastructure and cloud processing that many mobile games rely on. From an ecosystem perspective, we are enabling gaming from all angles and providing the best hardware available as well as software optimisations to power gaming, streaming, and megatasking across a multitude of devices,” said Strkljevic.

Beside smartphones, PC gaming continues to hold a definitive place in local culture. A recent survey by Vero and Decision Lab shows that 44.9 per cent of esports players in Vietnam play on PC, edging out mobile as the most popular platform.

According to the 2021 Mobile Application Report by Appota - the developer of creative platforms for the digital entertainment industry, people in Vietnam have been spending more time engaging with esports content during social distancing. The average gamer now spends nearly three hours a day playing games and over two hours watching livestreams or esports tournaments.

Trang Vu, CEO of Gamota, a mobile game publisher, said that the two most popular game genres today are esports and role-playing games.

“Simply put, if there is one factor that has the biggest impact on the gaming industry now, it’s the focus on drawing people closer to each other in the virtual world,” Vu said.

Because of the high user demand, game developers and other stakeholders have quickly taken new moves to take advantage of the opportunities. The most obvious signal is that the number of games released is increasing steadily. “This rise reflects the efforts of many domestic enterprises to continuously adapt to the day-to-day changes of the market,” Vu said.

As claimed by Strkljevic, in conjunction with the rapid growth of the gaming industry, Vietnam is also witnessing a significant increase in content creators and dedicated gaming communities that are playing a critical role in transforming gaming from a subculture to a mainstream cultural force. To support the local gaming scene, Intel hosted the Intel Gamer Days in Vietnam from August 27 to September 30, where it collaborated with brands such as Dell, Gigabyte, Kingston, Lenovo, and the Republic of Gamers to offer deals on hardware, peripherals, and games.

EU-Vietnam bilateral rises $480 million in first year of EVFTA

As of the end of September, EU corporations have invested about $22 billion in Vietnam, half a billion dollar more than a year ago, despite the pandemic.

A recent government report sent to the National Assembly highlighted that trade turnover and foreign direct investment (FDI) from European Union (EU) countries have soared since the EU-Vietnam Free Trade Agreement (EVFTA) came into effect on August 1, 2020.

Accordingly, as of the end of September, there were 2,242 projects from all but one EU countries in Vietnam, an increase of 164 projects on-year. Total registered capital was $22.24 billion, a rise of $483 million on-year.

The Netherlands ranked first with 382 projects and a total investment of $10.4 billion (accounting for 46.5 per cent of total EU investment in Vietnam). France ranked second with $3.62 billion, followed by Germany ($2.25 billion).

Some big EU corporations highlighted by the report for their success are Shell Group (Netherlands), Total Elf Fina (France and Belgium), Daimler Chrysler (Germany), as well as Siemens and Alcatel Comvik (Sweden).

The government said that EU investment focuses on industries like high-tech, and services (post and telecommunications, finance, office leasing, retail), green energy, supporting industry, food processing, high-tech agriculture, and pharmaceuticals. FDI from the EU is anticipated to increase remarkably with high-quality capital.

To welcome investment from the EU, numerous localities have been preparing clean land banks in and around industrial zones while developing infrastructure and human resources (especially high-quality human resources). They are perfecting and carrying out mechanisms and policies to mobilise FDI, simplify administrative procedures, and remove obstacles in business and investment.

Some improvements have also been reported in Vietnam-EU trade turnover since the implementation of the EVFTA, despite the pandemic. The total two-way trade turnover has reached $54.6 billion over the one year it came into effect, up 12 per cent on-year, including $38.5 billion of exports from Vietnam to the EU and $16.2 billion from the EU to Vietnam.

Particularly, in the first seven months of 2021, two-way trade turnover was $32.4 billion, up about 18 per cent on-year, including $22.81 billion in export value from Vietnam, an increase of 17 per cent on-year. The main export items of Vietnam to the EU included phones and components, computers, electronic products and components, footwear, textiles, garments, machinery, equipment and appliances, spare parts, as well as iron and steel products.

Meanwhile, import turnover from the EU reached $9.6 billion in the period, up nearly 19 per cent on-year. Major import items included computers and products, electronic products, machinery and equipment, tools, spare parts, pharmaceuticals, and chemical products. Some imported items reported high growth rates such as chemical products (33.6 per cent), food livestock and raw materials (62 per cent), materials of textile, apparel, leather, shoes (41 per cent), vehicles and spare parts (44 per cent), wood and wood products (27 per cent).

The government said that exports in some important categories like textile, coffee, iron and steel products were not as high as expected, and local corporations are struggling to approach the EU as they are unable to meet the requirements of the high-standard market while the protectionism and application of trade remedies and non-tariff barriers in the EU are rising. At the same time, numerous local businesses remain indifferent, not learning about the EVFTA.

The EVFTA was signed on June 30, 2019, and took effect on August 1, 2020.

M&A, the way for local players to grow after COVID-19

Vietnam is witnessing big changes in its mergers and acquisitions (M&A) landscape, with domestic firms rising to secure firm niches in the market.

M&A has been a favoured channel for foreign investors to penetrate the Vietnamese market. But in the new normal, it has become a means for domestic enterprises to fast-track their growth.

More favourable institutional reforms and policies are required for local businesses to grow into conglomerates and dive into the global market. M&A is an open playing field where they can realise these ambitions.

In the past, M&A deals were mainly featuring foreign investors on the buyers' side while domestic companies primarily acted as the sellers or the 'prey'. Things are different now. A string of Vietnamese enterprises has turned the tables to become the 'hunter' pursuing an aggressive M&A strategy to go regional and global.

Masan Group was one of the first to stir up the retail market through M&A, THACO has boosted investment in agriculture through acquisitions, while Vinamilk has picked the channel to go global. Meanwhile, Vingroup is refocusing on its industrial ecosystem by acquiring research and development capabilities across the globe. At the same time, NovaGroup has been reinforcing its multi-disciplinary ecosystem under its sustainable development strategy.

At the online seminar on M&A held by VIR yesterday, Phan Duc Hieu, standing member of the National Assembly Economic Committee said that the resurgence of local forces is lead by Vietnam's flagship corporations. Local players are on a drive to improve their competitiveness in both the domestic and foreign markets. A number of Vietnamese corporations have been actively conducting M&A transactions overseas – and "are very wise to do so."

The upsurge of Vietnamese businesses has brought the market to an inflection point, he added. The ratio of Vietnamese companies acting as buyers in M&A deals has jumped from 11.8 per cent in value in 2018 to over 30 per cent in 2019-2020. The most prominent M&A deals between 2019 and 2020 all bore the marks of Vietnam's leading private companies as overseas transactions were held up by COVID-19 complications.

Pham Van Thinh, CEO of Deloitte Vietnam said that local companies have long been preparing to step up their M&A game. "They have even hired professional teams to support their strategy, which has generated great values for them. Efforts have been made to mobilise capital and identify suitable investment targets," urged Thinh.

The increasing role of domestic companies as both buyers and sellers in the M&A market has made significant contributions to the rise of the country's leading corporations, enabling them to go further and play a larger role in the M&A game.

The resurgence and "maturity" of domestic groups are felt through their market and their approach and conduct throughout M&A activities. More proactive participation has helped local corporations to shape and even transform many economic sectors.

Meanwhile, Nguyen Thai Phien, deputy CEO of NovaGroup, shared that the company pursues an M&A strategy to find potential businesses and well-developed platforms, which could help the group to expand its revenue, profit, and market share, thus perfecting the NovaGroup ecosystem for customers' benefit.

"We are seeking cooperation opportunities with those capable of joining our culture and ecosystem, sharing the same foundation and core values, and capable of contributing to our sustainable development goals," he explained.

Meanwhile, the ambition of Masan Group is to represent Vietnam in the overseas M&A market. "We have had hundreds of brands carry out an array of M&A transactions in Vietnam, as well as in Europe and other foreign markets. We conduct M&A deals with both upstream and downstream companies, which has helped reinforce our structure and boost digital transformation, which is also expected to underpin exponential growth," Danny Le, CEO of Masan Group said.

Companies can leverage M&A to swiftly ramp up their presence in new markets or industries, while enlarging their market share and penetrate deeper into value chains. A proper M&A strategy can act as a vital tool for businesses to overcome challenges and grow robustly in the current context and the coming years.

"Certainly, M&A activities in the pandemic will create a foundation for the Vietnamese economy to have more powerful economic groups building a value chain for a breakthrough," VIR's editor-in-chief Le Trong Minh said.

M&A amid the pandemic – Growing the value chain

After the interruption by the health crisis, businesses are reaching for mergers and acquisitions (M&A) to resume and enlarge their value chains.

VIR organised a virtual seminar on M&A activities during and after the COVID-19 pandemic
The M&A amid the pandemic – Growing the value chain virtual seminar was held by Vietnam Investment Review and NovaGroup this morning (October 15) from two locations in Hanoi and Ho Chi Minh City.

It has been two years since the world has been feeling the press of the COVID-19 pandemic. The global economic slowdown has shaken even the largest economies and the most powerful corporations in the world. As a country that is deeply integrated into the global economy, Vietnam also faces many challenges, affecting all aspects of social and economic life.

However, businesses are gradually adaption to the new normal of generating growth while combating the pandemic. Many businesses which have already built solid ecosystems have found their way with development opportunities, even breakthrough achievements. Once again, the pandemic has proven that enterprises must go together if they want to go far. M&A, in this case, is the most effective solution to find reliable companions.

In his opening remarks, Le Trong Minh, VIR's editor-in-chief highlighted the opportunities emerging amid the challenges. With each M&A deal, the parties will benefit and reach toward their goals while growing stronger and larger.

"While we cannot tell for sure when the pandemic will end or how many crises and pandemics will come after it, all businesses are looking for a way to develop," he said, adding that finding the silver lining is the true test of the intelligence and strength of enterprises. "The enterprises that can find a way will dominate."

He said that over the last two years, big corporations in Vietnam were not only leading the fight against the pandemic but were also the most dynamic in restructuring, expanding their ecosystems, and creating value chains through M&A.

NovaGroup is an outstanding example that was highlighted during today's seminar. "NovaGroup did not seem to stop for a second in enlarging itself, but each M&A deal was a result of careful consideration and foresight," said Minh.

So far, M&A has been a favoured channel for foreign investors to penetrate the Vietnamese market. But now, under the new normal, it has also become a means for domestic businesses to rapidly boost their growth. At the same time, more favourable institutional reforms and policies are required for local firms to grow into conglomerates by seizing opportunities and diving into the global market. M&A is an open playing field to realise these ambitions.

In the past, M&A deals were mainly featuring foreign investors on the buyers' side while domestic companies primarily acted as the sellers or the "prey". Things are different now. A string of Vietnamese enterprises has turned the tables to become the "hunter", pursuing ambitions to go regional and global.

Phan Duc Hieu, standing member of the National Assembly Economic Committee said: "The resurgence of local forces is powered by outstanding corporations. Local firms are on a drive to improve their competitiveness in both the domestic and foreign markets. A number of Vietnamese corporations have been actively conducting M&A transactions overseas – and are very wise to do so."

Experts said that Vietnamese companies have long been preparing to step up their M&A game. They have even hired professional teams to support their strategy, which has generated great values for them. Efforts have been made to mobilise capital and identify suitable investment targets.

Tran Dinh Thien, former director of the Vietnam Economics Institute said that M&A is one of the best ways for domestic businesses to restructure operations and grow stronger. "This is a golden opportunity for enterprises after the chaos of the crisis. However, they should carefully consider potential partners and how they can utilise their respective advantages for the benefit of all stakeholders," said Thien.

With the theme of "M&A amid the pandemic - Growing the value chain", the seminar provided views from leading deal makers and experts on "friendly" and effective M&A to create win-win deals and grow value chains. The seminar included two sessions named Turning risks into opportunities - An opening for Vietnamese businesses, and NovaGroup: M&A - Synergy for development.

Participants discussed opportunities for businesses to restructure, expand their ecosystems, build value chains, as well as the strategy and directions of NovaGroup after the pandemic and sustainable synergies.

 

IZ groups clamour for accommodation

Foreign manufacturers in Vietnam are still waiting for land site support from local authorities in order to build accommodation for their employees so that production can be maintained.

Taiwanese group Weitai Halong Garment Textile Co., Ltd. is recruiting 700 labourers for its second factory in Viet Hung Industrial Zone (IZ) in the northern province of Quang Ninh, with the hi-end sporting cap and hat manufacturing factory expected to start operations next month.

SuperCap Group – the parent company of Weitai Halong – also has plans to take a lighting equipment manufacturing factory in Viet Hung IZ into operation in mid-2022, and recruit 1,700 workers here. But the company is concerned over the ability to recruit such high numbers as it cooperates with local authorities and training facilities in the province to set up a functional system for new employees.

Vu Quang Truc, deputy director of Quang Ninh Department of Labour, Invalids and Social Affairs, said that arranging accommodation is one of the most difficult aspects of labour recruitment to solve.

“Almost all workers live in rented rooms with poor living standards. Besides that, companies have to spend large amounts hiring shuttle buses for transporting employees. Numerous employers have asked the province to hand over land funds for building housing areas for workers,” Truc said. “The province agrees with them and we are cooperating with relevant authorities to arrange such a land fund for them,” Truc said.

In reality, many manufacturers have benefited from being proactive in building housing areas and other infrastructure for their employees. Lee & Man Paper Vietnam, a fully foreign-owned paper manufacturer in the Mekong Delta province of Hau Giang, invested VND380 billion ($16.52 million) in a housing area with four buildings and over 400 apartments, suitable for 1,500 employees. A company’s representative told VIR, “In the housing area there are other utilities such as a cafeteria, training room, football field, gym, and table tennis and billiards areas. This helps create an ideal living and working environment for employees.”

The representative added that the company has maintained a stay-at-work model at full capacity, and has reported zero COVID-19 infections.

However, not all businesses have been so lucky or proactive. The pandemic has exacerbated these issues, with many struggling to take care of both food and accommodation for thousands of workers under stay-at-work production models. Many businesses as a result simply had to stop production entirely or severely reduce capacity because they could not meet the model’s conditions.

Meanwhile, other businesses have been forced to hire out hotels for employees at great expense in order to avoid operational disruption.

Local authorities cannot also hand over land funds to all and sundry. In the southern province of Dong Nai, the demand for housing for workers is large and enterprises are willing to invest money to build accommodation, but land is often not available.

Taekwang Vina JSC, based in Dong Nai, makes shoes for export and assembles products for brands like Nike with capacity of approximately 40,000 employees. Dinh Sy Phuc, chairman of the company’s Trade Union, told VIR that the company had the idea to build dorms near the factory many years ago. At the time, the company worked with local authorities to arrange a land fund for the housing project, but failed to come to an agreement.

“The company entered Vietnam more than 20 years ago but before 2005, IZs were not planned to have infrastructure for housing, schools or medical facilities to support employees,” Phuc said.

According to statistics from the Ministry of Planning and Investment, by the end of May this year the country boasted nearly 400 IZs and thousands of industrial clusters, attracting millions of workers. However, the whole country has only 214 official social housing projects for workers, at a scale of about 600 hectares.

Of those, only 116 projects have been completed, or around 250ha. In IZs, housing areas are currently only enough to accommodate around 330,000 people, meeting about 40 per cent of the 2020 target of housing workers in IZs, according to the Ministry of Construction.

Le Hoang Chau, chairman of the Ho Chi Minh City Real Estate Association said, “Many workers are migrants from poor localities, and if there is no stable accommodation they will have to leave their place of work to return to their hometowns when there are incidents. The pandemic illustrated the disadvantages of lack of accommodation for employees, making it hard for enterprises to maintain a stay-at-work model, leading to disruption of operations.”

Remittances steady as lenders apply fresh transfer services

Remittance flows from Vietnamese expatriates working abroad are predicted to remain resilient throughout the rest of the year, with the country’s central bank keeping its policy steady for now.

Remittances steady as lenders apply fresh transfer services. Illustration photo: freepik.com
According to the World Bank, remittances inflow to Vietnam in 2021 as a whole will remain persistent compared to 2020 despite the ongoing pandemic.

Last year, the number of overseas remittances to Vietnam in 2020 was $17.2 billion, making Vietnam one of the top 10 beneficiaries among low and middle-income countries.

Nguyen Hoang Minh, deputy director of the State Bank of Vietnam Branch in Ho Chi Minh City, said in the first seven months of this year, remittances pouring into the city reached $3.7 billion, up more than 19 per cent over the same period last year.

“Specifically, remittances mainly focused on production and business. This not only contributes to supporting the city’s economic development but also helps stabilise the foreign currency reserves across the country in general,” Minh said. “Undoubtedly, remittance inflow plays a crucial lifeline to the vulnerable.”

Remittances to the city are expected to at least double over the second half of the year and possibly surpass the contribution rate of more than one-third of the country’s total remittances in the year.

Back in May, the World Bank upgraded its forecast for remittances to low- and middle-income countries for 2021, predicting flows of $553 billion over the course of the year, reflecting a growth rate of 2.6 per cent. The strong flow of remittances underscores their importance to many emerging market economies.

Le Hoang Chau, chairman of the Ho Chi Minh City Real Estate Association, stated the high inflows of cash that have caused real estate prices to reach record highs also includes remittances.

Agribank’s Remittance and Payment Service Centre also expects remittance inflows to Vietnam to remain stable. A large share of Agribank customers are workers who are now abroad in markets including Japan, South Korea, Taiwan, and the US.

The World Bank said that with remittances expected to increase by another 2.2 per cent to $565 billion in 2022, there are concerted efforts underway to reduce transfer costs.

A handful of banking and payment services have jumped onto the remittance transferring bandwagon. Last week, Visa partnered up with Sacombank to deploy an inbound remittance transfer service through Visa Direct. Vietnamese people who are also Sacombank Visa debit cardholders can use the service to transfer money to any other Visa card issued in 44 countries and territories. It is applicable to the nine most-traded foreign currencies worldwide.

Sacombank is the first local lender to implement this form of money transfer in the Vietnamese market based on Visa’s secure technical platform, and meets the criteria of a fast and convenient service.

The government is now gradually reopening the economy, so domestic brokerage SSI expects the trade balance to improve at the end of the year and remittance flows usually increase sharply as Lunar New Year approaches. Supply and demand of foreign currency in the market will be relatively balanced and help the USD/VND exchange rate maintain a stable state, SSI explained.

On the other hand, despite the disappointing performance in Q3 2021 and with chances of a recovery in Q4 2021, the State Bank of Vietnam (SBV) is likely to keep its policy steady and leave the refinancing rate at 4 per cent and rediscounting rate at 2.5 per cent, both record lows.

According to UOB Vietnam, one key consideration for the SBV is the US Federal Reserve’s policy change ahead, which could have implications on emerging markets like Vietnam as capital flows react to the policy shift.

“While we see low risks of disruptive or disorderly capital outflows from emerging markets, this is likely to be one key area that central banks watch carefully,” UOB Vietnam noted last week. “Our scenario is for the Fed to begin the tapering of its bond purchases before end-2021 and complete the process by mid-2022, thereafter interest rate hike to start by end-2022.”

For the VND, the unit strengthened modestly against the USD in Q3. This came as Vietnam reached an agreement with the US Treasury in July to refrain from deliberately weakening the VND to gain an export advantage.

The outlier strength of the VND also comes in a period where most of its Asian peers are retreating against the USD as the Fed’s upcoming normalisation plans spurred a recovery in the USD.

More importantly, UOB Vietnam said, a strong VND is also increasingly at odds with the uncertain and weak economic outlook inflicted by the virus outbreak. It predicted strong support at 22,700 in the USD/VND rate, where further sustained gains of the VND are unlikely. Overall, the bank reiterates an upward trajectory in the USD/VND and updated its forecasts to VND22,900 in Q4 of 2021, rising up to VND23,200 by the third quarter of 2022.

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.

Viet Nam likely to achieve rice export target this year

 Viet Nam is expected to achieve its rice export target of 6.3 million tonnes worth US$3.2 billion this year due to high global demand and an increase in export prices.

Statistics from the General Department of Vietnam Customs showed the country exported 593,600 tonnes of rice in September, worth over $293.1 million, increasing by 19 per cent in volume and 20.5 per cent in value compared to last year’s figures.

Viet Nam shipped abroad 4.57 million tonnes of rice worth over $2.41 billion during the nine-month period, a drop of 8.3 per cent in volume and 1.2 per cent in value year-on-year.

“The rice export has resumed since September despite the fact that social distancing is still being applied in many southern provinces and cities,” said Nguyen Quoc Toan, General Director of the Agro Processing and Market Development Authority under the Ministry of Agriculture and Rural Development.

Nguyen Thanh Phong, Director of Van Loi Company, attributed the increase in the Vietnamese rice export prices to the fact that the Government has boosted its purchase for national reserves, along with the rising demand in the global market since the beginning of September.

Other insiders also expressed their optimism as foreign importers allow the resumption of rice trading once the COVID-19 pandemic is put under control.

Some major rice exporters are predicted to increase their rice exports in the last months of this year and the first half of 2022, they said.

The export prices of Viet Nam’s 5-per cent broken rice soared to the highest level over the past three months, according to the Viet Nam Food Association.

The country’s five-per cent broken rice is currently sold at between $433 and $437 per tonne, surpassing that of other competitors such as Thailand, India and Pakistan.

Specifically, the prices of Vietnamese rice were $49, $68 and $55 higher than that of Thailand, India and Pakistan, respectively.

In mid-August, the export price of Viet Nam’s 5-per cent broken rice was offered at $393-307, $8 lower than the Thai product. 

Source: VNA/VNS/VOV/VIR/SGT/SGGP/Nhan Dan