|Hydrogen fuel cell maker Plug Power will expand its operation in Vietnam, South Korea, and China through a joint venture with SK Group|
US-based Plug Power is planning to co-operate with South Korean behemoth SK Group through a joint venture to expand to these countries.
According to Nikkei Asia , the two sides will set up a factory in South Korea by 2023 to produce fuel cells and electrolysers that extract “green hydrogen” from water using renewable energy.
Such products would be used “especially in South Korea, but we also believe, based on SK Group’s partnerships, in China and Vietnam”, said Andrew Marsh, president and CEO of Plug Power.
Marsh also noted that Asia would be an important part of their target of achieving revenue of $1.7 billion by 2024, from $337 million in gross billings in 2020, wrote Nikkei.
In February, SK Group has invested $1.6 billion in Plug Power.
The partnership is part of a long-term, multi-billion dollar plan by SK Group to help lead the global transition to a hydrogen economy and make meaningful progress toward a more sustainable energy system.
Recognising the importance of hydrogen as a clean alternative to traditional energy sources, SK Group has heightened its focus on building the infrastructure and developing the technology to make hydrogen energy a reality for global markets.
SK Holdings, the holding company of SK Group, has established a Hydrogen Business Development Center taking the lead of the group’s long-term hydrogen project that is comprised of members from SK’s energy companies.
SK Group expects its investments in hydrogen to create $2.7 billion of net asset value by 2025.
On the other hand, last month, SK Group confirmed its purchase of 16.26 per cent stake in VinCommerce, one of Masan’s subsidiaries, for a cash consideration of $410 million. The transaction accordingly values VinCommerce at $2.5 billion.
Plug Power is now accelerating its environmentally-friendly investment, following an increasing trend in this green initiatives as more companies globally are looking at the gas as a clean power source. Its aim is to supply only green hydrogen by 2025. In the next four or five years, Asia could be one-third of Plug Power’s business.
By Luu Huong
|Startups are raising far more funds than in previous years. Photo: BBVA|
The first-quarter report of South Korean venture fund Nextrans showed that investment in startups jumped by 34 per cent on-year to $100 million, with foreign investors being dominant.
However, the number of deals fell 20 per cent to 16. This decrease is quite small compared to the 20 deals in 2020 and 30 deals in 2019. Despite the reduction, the total deal value has increased remarkably by 34 per cent on-year, excluding unannounced deals.
Foreign investors outperformed their local counterparts with nine deals, the report said. The total investment by local actors was under $10 million, while it was $100 million for foreign investors.
Seed funding and Series A investment, the first two stages, remained dominant, accounting for 70 per cent of deals, much higher than in 2020 and 2019.
Fintech once again led with four of the 16 deals, followed by logistics, hospitality, real estate, education, and healthcare.
Vietnam is expected to grow at the fastest rate in Southeast Asia in terms of digital financial services revenue in the next five years, reaching $3.8 billion by 2025, the report said.
The most notable deals in the first quarter were an investment of $2.6 million from a group of investors led by Singaporean venture capital firm Jungle Ventures in electric motorbike brand Dat Bike, and a $1 million investment by investment fund AppWorks in healthcare service booking platform Docosan.
There are around 180 venture funds in Vietnam, including VSV Capital – Vietnam Silicon Valley, Mekong Capital, 500 Startups Vietnam, Vietnam Investment Group, IDG Ventures Vietnam, and Nextrans while others from South Korea and Japan are also looking for opportunities to invest.
By Nguyen Huong
The World Bank stated in its April bulletin that the Vietnamese government has continued to manage the COVID-19 health crisis well. As of May 5, the total number of confirmed COVID-19 cases has reached 2,996 cases with only 35 deaths. At the same time, Vietnam had received over 900,000 COVID-19 vaccine doses. The country expects to obtain 60 million doses of COVID-19 vaccines through the COVAX Facility and AstraZeneca in 2021.
“Vietnam is recovering from its COVID-19 shock, but this recovery has been uneven
Surging production and trade
According to the General Statistics Office (GSO), in April, Vietnam’s index for industrial production (IIP) increased 24.1% year-on-year “thanks to the effective control of COVID-19 and of free trade agreements helping stimulate local production,” in which the manufacturing and processing sectors created 80% of industrial growth, ascending 29.1% year-on-year.
The most dynamic sub-sectors include beverages as businesses are ramping up production to serve domestic demand in the summer. The manufacturing of metals, electronic components, electrical equipment, machinery, and motor vehicles also grew thanks to strong external demand. The Purchasing Managers’ Index (PMI) index rose from 51.3 in February to 51.6 in March, confirming the continued expansion of manufacturing.
In the first four months of 2021, the IIP climbed 10% year-on-year, in which the manufacturing and processing sector expanded 12.7% year-on-year – higher than the 9.7% year-on-year rise during the same period last year.
“After last year’s slowdown, industrial production is projected to gain momentum on the back of returning demand from key international partners. Despite the ongoing COVID-19 pandemic, the underlying strength of Vietnam’s industrial sector remains intact: Vietnam is an attractive low-cost base for manufacturing firms, including those looking to relocate from China due to US-China trade tensions,” said Spain-based FocusEconomics, which provides in-depth economic analysis globally, in its May report sent to Nhandan Online. “That said, a sluggish rollout of the vaccine, coupled with an uncertain development of the pandemic, pose a risk to the positive outlook.”
Spain-based FocusEconomics, which provides in-depth economic analysis globally, estimates that Vietnam’s industrial output will grow 9.2% in 2021, down 0.2 percentage points from last month’s forecast. For 2022, FocusEconomics Consensus Forecast panelists expect industrial production to expand by 8.4%.
Also according to the GSO, one of the clearest pieces of evidence for Vietnam’s surging industrial production is the soar in exports and imports in the first four months of 2021.
Figures showed that in the first four months, the economy’s total export-import turnover is estimated to hit US$206.51 billion, including US$103.9 billion from exports – up 28.3% year-on-year, and US$102.61 billion from imports – up 30.8% year-on-year.
Notably, in terms of imports, turnover of production materials is estimated to be US$96.31 billion, up 31.4% year-on-year, accounting for 93.9% of the economy’s total import turnover. The import turnover of consumer goods is estimated to be US$6.3 billion, up 22.5% year-on-year and making up 6.1% of the country’s total import turnover.
In terms of products, the most important contributors to the build-up of merchandise trade were computers, electronics, and machinery, which accounted for about one-third of total trade value. Their export and import grew last month by 45% and 26%, respectively, exemplifying the heavy reliance of Vietnam’s exports on foreign inputs.
Exports of textiles, garments, and footwear also rebounded, growing by 15.5% year-on-year and 19.2% year-on-year respectively, while those of mobile phones fell by 19.1% year-on-year.
The strong export growth was mainly driven by more resilient foreign-owned exporters. Their exports increased by 32.1% on-year, compared to a fall of 10.8% year-on-year in local firms’ exports. In terms of trading partners, the booming exports reflected strong demand from the US and China, as well as a rebound in demand from the EU market.
The higher level of imports is related to the growing procurements of goods from China, ASEAN, and the Republic of Korea.
Expecting higher economic growth
FocusEconomics wrote in its May report, sent to Nhandan Online, that looking ahead, economic recovery should gather pace later in 2021, with the second quarter’s results projected to be significantly higher than in the first quarter of the year. However, the still-high infection rates in Europe and the US and the associated limitations on international travel cloud the positive outlook somewhat.
Regarding the outlook, Dhiraj Nim and Khoon Goh, economists at ANZ, commented, “Vietnam’s first-quarter GDP print may have partly dampened the optimism regarding
FocusEconomics Consensus Forecast panelists expect Vietnam’s GDP to expand 7.1% in 2021, and 6.8% in 2022.
Meanwhile, according to the International Monetary Fund (IMF), a robust recovery is expected in 2021 despite some economic scarring.
“Growth is projected to strengthen to 6.5% as normalisation of economic activity continues, businesses recover, and private consumption and business investment rebound,” said a fresh IMF report on Vietnam’s economy. “Manufacturing and retail sales are expected to lead the recovery, while travel and hospitality services will remain subdued. Net exports will continue to contribute positively to growth as external demand picks up.”
The IMF suggested that priority should be given to improving the business environment and ensuring a level playing field. Reforms geared towards simplifying and reducing the regulatory burdens faced by domestic private firms, improving access to land and financial resources, particularly for small- and medium-sized enterprises, and reducing corruption could spur firm profitability, investment, and growth.
In addition, easing entry and exit costs for formal firms would allow for higher formalisation of new and young firms, reduce informality, and allow for a faster
According to the GSO, in the first four months of 2021, the economy saw nearly 44,200 newly-established enterprises with a total registered capital of VND627.7 trillion (US$27.3 billion), employing 340,300 labourers – up 17.5% in the number of enterprises, 41% in capital, and 7.8% in the number of labourers as compared to those in the same period of last year.
In particular, the average registered capital of each newly-established business in the first four months of the year was VND14.3 billion (US$617,400), up 20% on-year. If an additional VND792.9 trillion (US$34.47 billion) registered by 14,900 operational enterprises is included, the total registered capital inserted into the economy in the period is VND1.42 quadrillion (US$61.74 billion).
Furthermore, the first four months also saw 19,300 enterprises resume operations, up 8% year-on-year.
The call has been made on the eve of the upcoming G7 Leaders’ Summit 2021, which aims to discuss post-pandemic recovery plans.
The G7 Foreign Ministers’ Meeting recently opened in London, marking their first face-to-face meeting in two years. The event also featured the participation of guests representing India, the Republic of Korea, South Africa and Brunei, the incumbent chair of the Association of Southeast Asian Nations (ASEAN). The meeting allowed diplomats the chance to discuss cooperation in containing COVID-19 and promoting post-pandemic economic recovery, which is also the major topic of the G7 Leaders’ Meeting, to be presided over by the United Kingdom from June 11 to 13.
The discussion of the G7 ministers took place in the context that the pandemic is still evolving complicatedly with a rapidly growing number of cases in many places, while the vaccination coverage rate varies among countries and regions. According to WHO data, the number of COVID-19 cases globally in the past fortnight has been higher than the figure recorded in the first six months since the outbreak of the pandemic. The new and more complicated wave of the disease currently raging in India and some other countries has driven growing concerns. Many G7 countries are not beyond the spiral of struggling with the new “fever” of the pandemic.
During a press conference on the same day of the opening of the G7 Foreign Ministers’ Meeting, WHO Director-General Tedros Adhanom Ghebreyesus warned that the crisis caused by COVID-19 could not be soon terminated without more drastic actions from G7 nations. According to the WHO, members of the “rich countries club” are capable of funding the production and supply of COVID-19 vaccines, as well as testing and treatment. These are essential and effective tools in the fight against the pandemic. The G7 countries lead the world both politically and economically, with many members involved in producing most types of vaccines. Therefore, the G7’s leading role and efforts to fulfil its responsibility to the international community are of great importance in the current COVID-19 battle.
At the press conference, the UN Special Envoy for Global Education and former UK Prime Minister Gordon Brown emphasised that the world currently sees deep division between the rich and the poor, as well as between the developed and developing countries, in accessing COVID-19 vaccines. Worryingly, there is a big gap between the vaccinated and the unvaccinated people at high risk of death. According to the UN special envoy, failure or delay in G7’s action will lead to a more serious global divide, and the international community will possibly fall into the situation of selecting “who lives and who dies” if the immunisation campaign is not promptly expanded to all countries.
International social media statistics showed that only 2.9% of the 1.2 billion doses of COVID-19 vaccine administered globally are in low-income countries. Meanwhile, the WHO-operated COVAX mechanism cannot purchase enough vaccines to supply poor countries, partly because rich nations have pre-ordered the vaccines from manufacturers. The WHO stated that COVAX has just handed over more than 49 million doses to countries belonging to the group of 92 poor and developing economies participating in this mechanism. The Access to COVID-19 Tools (ACT) Accelerator also lacks US$19 billion to fund activities in 2021 and needs an additional US$40 billion for 2022, aiming to vaccinate most of the adults in the world. According to the UN, the G7 countries are fully capable of financing up to 70% of the total costs mentioned above, and the group of rich countries sharing responsibility could create a turning point in the effort to bring vaccines to people around the globe. The WHO also said that G7 can help remove barriers to speed up vaccine production, through halting the application of intellectual property regulations, facilitating the expansion of vaccine production, and increasing the vaccine manufacturing capacity.
The G7 countries have pledged to support the WHO’s core role and have provided US$7.5 billion to aid WHO programmes, while coordinating with the G20 in the effort to reschedule debt for poor nations. The G7 is expected to continue to show responsibility to the international community and take more drastic action to promote equitable access to COVID-19 vaccine globally.
*Vo Tri Thanh
Viet Nam has delivered its economic data in the first quarter. The overall picture is still optimistic with the gross domestic product (GDP) expanding nearly 4.5 per cent – among the best performers in the world. However, is this result good enough for the Southeast Asian country to securely triumph over its target set for the whole year?
The first quarter growth, though in the same range as the last quarter of 2020 which also stood at 4.48 per cent, was up from the 3.68 per cent recorded in the first quarter of last year.
The renewed outbreak of COVID-19 in some parts of the country, including the capital city of Ha Noi, adversely affected the first-quarter’s performance which fell below the Government’s expectation of 5.12 per cent and was lower than the 5.7 per cent expected by Bloomberg’s economists.
Despite that, Viet Nam has been widely praised for its economic achievements given all the uncertainty about the prolonged pandemic and uneven recovery globally. Viet Nam is still set to outperform most of the region.
Key indicators in the first three months have partly reflected Viet Nam’s good recovery.
Exports remained the country’s key economic growth driver with a value of US$77.4 billion during January-March, a rise of 22 per cent year-on-year. Viet Nam ran a trade surplus of more than $2 billion in the first quarter.
Pledged foreign direct investment (FDI) surged by 18.5 per cent year-on-year to $10.3 billion while disbursed FDI increased by 6.5 per cent to $4.1 billion.
Industrial production was expected to expand 6.5 per cent during the period, especially the main drivermanufacturing – electronic equipment, phones and accessories – climbing 9.5 per cent. The number of new businesses fell by 1.4 per cent and their total registered capital rose by 27.5 per cent.
Other sectors including agro-forestry-fishery, services sector, disbursement of public investment and State revenue improved significantly. Meanwhile, inflation was kept at a low level, rising by just 0.29 per cent in the first three months.
Both domestic and worldwide economists have maintained a positive forecast for Viet Nam’s economy since the end of last year. Many international organisations delivered a GDP forecast of around 7 per cent for Viet Nam in 2021. Meanwhile, Vietnamese Government has set the yearly growth target of 6.5 per cent, higher than the official target of 6 per cent set by the Parliament.
This optimism is based on Viet Nam’s performance in 2020 with impressive accomplishments in implementing the dual goals of combating the pandemic and maintaining economic growth. Viet Nam was among very few countries with positive growth in 2020. Adverse impacts on the economy and society were also minimised during the pandemic.
The year 2020 was seen a turbulent year when every country had to brave unprecedented challenges arising from COVID-19 to save people’s lives and diminish the impact on the economy. This year, economists have agreed the world is on track to recover, with strong growth in major economies which plummeted last year due to the disease and restriction measures.
In its March report, Fitch ratings expect global GDP to expand by 6.1 per cent, revised up from 5.3 per cent in its December forecast thanks to robust fiscal support in major economies. GDP outturns are projected at 6.2 per cent in the United States, 8.4 per cent in China and 4.7 per cent in the eurozone.
However, the recovery is also perceived with a conservative stance as it depends largely on the readiness and effectiveness of vaccines, as well as countries’ resilience to financial and inflation risks. The recovery in the current context is also associated with sustainable and green development, restructuring the economy and promoting innovation and digital transformation.
In Viet Nam, a period of three months is not long enough to fully reflect the challenges facing the country. Viet Nam has been doing very well in controlling the pandemic but the risk of fresh outbreaks is still high which could be seen in the resurgence of the virus in some northern provinces early this year. Besides, the vaccination process cannot be fast and as the Government has said, the prevalence of vaccination must wait until next year.
Strong recovery in some key sectors such as tourism and aviation is still a challenge as it depends heavily on the disease control in both home and foreign markets.
Although inflation in the first quarter was low at 0.29 per cent – the lowest for Q1 within 20 years, there is still inflation risk when oil prices climbed by more than 30 per cent compared to the end of last year and commodity prices are on the rise in global markets. Such a possibility may put pressure on monetary policy which must both support economic recovery (through low interest rates) and ensure macroeconomic stability, especially volatility in the stock market and real estate market.
In this context, consumption growth somewhat slowed and uncertainty in the global supply chain are also unrevealed problems in the long term. (The Suez Canal shutdown exposes another weak link in the global supply chain.)
The resurgence of the virus in some provinces early this year weighed on national Q1 GDP growth (below the Government’s expected rate of 5.12 per cent). Thus, to reach the year-end target of 6.5 per cent, GDP in the next quarters must increase by more than 7 per cent on average, which is a big challenge.
After the Q1 economic data, some international organisations have revised down their forecast for Viet Nam’s growth. The United Oversea Bank (UOB) lowered Viet Nam’s GDP growth to 6.7 per cent in 2021 from 7.1 per cent. Meanwhile, economists at Singapore’s Maybank Kim Eng revised Viet Nam’s economic growth from 6.8 per cent to 6.5 per cent.
However, most forecasts agreed with the latest virus wave being quashed and most restrictions now being lifted, Viet Nam’s economy should bounce back strongly over the coming quarters.
The new Government will take office this month and the transition will result in a certain delay in implementing policies. Hopefully, the new Government will quickly start working and take more drastic measures to improve the investment and business environment, push reform and economic restructuring, promote innovation and speed up disbursement of public investment. Public investment still plays important role in boosting growth amid the pandemic and has large room for development.
If Viet Nam can take advantage of the global economy’s recovery momentum and existing free trade agreements with other countries, the GDP target of 6.5 per cent is feasible.
*Vo Tri Thanh is a senior economist at the Central Institute for Economic Management (CIEM) and a member of the National Financial and Monetary Policy Advisory Council. The holder of a doctorate in economics from the Australian National University, Thanh mainly undertakes research and provides consultation on issues related to macroeconomic policies, trade liberalisation and international economic integration. Other areas of interest include institutional reforms and financial systems.