Yearly economic growth

AEON Group has announced Mr. Furusawa Yasuyuki as new General Director of AEON Vietnam as part of the group’s Organisation Reform Strategy in fiscal year 2021.

Furusawa Yasuyuki joined Jusco (now known as AEON Group) in 1995, having over 26 years of experience in the retail industry in Asia. From 2014 – 2017, he held the position of president of Beijing AEON Co., Ltd in China. Before being appointed as General Director of AEON Vietnam Co., Ltd, Mr. Furusawa Yasuyuki was the president of My Basket Co., Ltd., a business entity of AEON Group Japan.

“In the future, I, together with the entire AEON Vietnam, will continue to make every effort to develop new models of retail business in pursuit of AEON Vietnam’s missions: to enrich Vietnamese people’s lifestyle, to contribute to the local community and economic growth of Viet Nam,” said Furusawa Yasuyuki.

Established officially in 2011, AEON Vietnam is operating in five retail business segments in Viet Nam, including Shopping Malls, General Merchandise Stores and Supermarket, Specialty Store, Supermarkets and E-Commerce.

Since the opening of the first shopping mall AEON – Tan Phu Celadon in 2014 till June 2021, AEON Vietnam has expanded its business footprints in six provinces and cities nationwide, with three Shopping Malls, three General Merchandise Stores & Supermarkets, 29 Specialty stores, two Supermarkets, AEONEshop e-commerce site and AEON Regional Distribution Centre in HCM City. — VNS

An online portal has been launched to help farmers in pandemic-hit Bac Giang province sell their lychees.

“Thank God, it’s so effective,” vice director of Bac Giang Enterprise Consulting and Assistance Centre (BECA) Duong Thanh Son said about the portal launched by the centre. Bac Giang has been hit hardest by COVID-19 during its fourth wave in Vietnam, causing difficulties for local farmers.

The portal www.hotrotieuthuvaithieubacgiang.com was launched about three weeks ago and a Facebook page hotrotieuthuvaithieubacgiang was created just a few days later when Bac Giang started entering the lychee harvest season.

Consumers can register to buy a large volume of lychees – a minimum of a tonne – after inputting basic information like name, e-mail, phone number, address and amount of lychee.

Son, who specialises in information technology and communication, said that the portal looked simple but behind it were automatic customer management and customer care programmes that help with online sales.

The portal and the Facebook page have reached hundreds of thousands of users, Son said, adding that he has received positive feedback on social media.

“We connect Bac Giang lychee farmers and co-operatives with buyers. We pledge that our consumers can buy high-quality lychee at very good prices,” Son said.

“If we had thought of the portal earlier and prepared for it about three months ago when lychee was still green, we could have reached more consumers,” Son said.

He said the idea for the portal came up when Bac Giang farmers entered lychee harvest time but the province was struggling to fight the COVID-19 pandemic.

This year, the province has about 28,100 ha of lychee with an estimated production of 180,000 tonnes. The COVID-19 outbreaks caused difficulties for harvesting, transporting, selling and exporting the fruit.

Together with the Government, provincial authorities, organisations and individuals, BECA helped farmers in lychee consumption. All BECA staff, mostly IT and media personnel, have helped with online sales.

On the first day of launching the portal, Son said they received hundreds of messages asking to buy lychees. Orders for small amounts, for example a few kilos, were transferred to local retailers while BECA would concentrate on large orders, especially those from enterprises, which as Son said, had financial ability and willingness to buy large amounts.

Within the first week, BECA helped to sell nearly 140 tonnes of lychee.

“We have a goal to help farmers sell 1,000-1,800 tonnes of lychee. It’s a big goal, so we need help from associations, enterprises and businesses,” Son said.

Son is also looking for other potential consumers – community groups. He said, for example, the Duong community – sharing the family name Duong in Vietnam – was very large. Son received an order of 17 tonnes from the Duong community in HCM City, and they were set to order two more containers. The Duong communities in Binh Thuan and Binh Duong ordered two containers each.

Dinh Thi Anh from the northern province of Nam Dinh said that on seeing news about COVID-19 hotspots in Bac Giang province, she wanted to do something for people there, especially farmers who faced difficulties in selling lychee.

She said that she was very happy to find a reliable source that supplies Bac Giang lychees and she asked her friends to add their orders on hotrotieuthuvaithieubacgiang.com and then sell the fruit to people in Nam Dinh city.

All the funds raised would be donated to the national COVID-19 vaccine fund, Anh said.

Anh and dozens of volunteers on June 7 received the first shipment of lychee from Bac Giang and by the afternoon of the same day, they sold nearly a tonne of lychee at two stalls located at 757 Vu Huu Loi and 440 Tran Hung Dao in Nam Dinh city.

“We unloaded the lychees, weighed and divided them into bags of 2kg, received orders and then delivered them to consumers or sold them at the stalls,” Anh said, adding that people not only bought lychee but also donated to the fund.

“We will be with Bac Giang! We can not do big things, so we offer a little help,” Anh said.

Son said that he deeply understood the hardships that local farmers faced as well as the importance of lychee fruit – a source of pride for people in Bac Giang.

They are more proud of the fruit, as now, lychee is grown with VietGAP and GlobalGAP standards. The farming products are not only tasty but also safe. For years, Bac Giang lychee has been exported to 30 countries all over the world including demanding markets like the US, EU and Japan. In the domestic market, the fruit is sold in major supermarket chains.

Son said that since the beginning of harvest time, despite the COVID-19 pandemic, Bac Giang lychee could reach consumers both in and outside of the country.

Bac Giang authorities were determined to minimise the impact of the COVID-19 pandemic on lychee harvesting and consumption.

Particularly, the authorities set up COVID-19-free lychee growing areas, meaning that in lychee growing areas, all people suspected to have close contact with confirmed COVID-19 cases are taken to concentrated quarantine areas and none of such areas are located in lychee growing areas.

Checkpoints have been set up to strictly control and monitor people and vehicles entering the lychee growing areas. All drivers, workers and traders arriving in lychee growing areas must take quick COVID-19 tests.

All vehicles carrying lychee must be disinfected.

Tran Quang Tan, director of the province’s Trade and Industry Department, said that lychee farmers would feel hurt if they hear their fruit needed rescuing.

The province’s authorities called for support, not rescue. To some extent, when it comes to “farming product rescue campaigns”, people tend to think about abundant, cheap, low-quality products.

“Bac Giang lychee does not need rescuing,” Son said, adding that despite the COVID-19 pandemic, since the beginning of harvest time, the lychee consumption was still going on.

“Difficulties? Yes, we face a lot of difficulties due to the COVID-19 pandemic and we need your support to overcome them. Bac Giang will overcome all such difficulties,” Son said.

“Bac Giang people are now proud to offer tasty lychee at reasonable prices. As the consumption goes smoothly, both farmers and consumers are happy for the benefits they get,” Son said.

The lychee harvest time in Bac Giang province will last about one and a half months. The province reported more than 70,000 tonnes were sold, meaning that more than 100,000 tonnes of Bac Giang lychee still needs to be sold. This year, lychee prices are similar to those of last year, ranging from 13,000 VND to 30,000 VND per kilo ($0.5-1.3)./.

VN-Index heading toward 1,400 points this week on bullish sentiment: analysts

The VN-Index on the Ho Chi Minh Stock Exchange (HoSE) closed last week at 1,351.74 points, recovering on the back of large-cap stocks. But for the week, the index still lost 0.5 per cent.

On the Ha Noi Stock Exchange (HNX), the HNX-Index rose 1.72 per cent last Friday to 316.69 points. The index, however, slightly declined by 0.6 per cent for the week.

After plummeting due to strong profit-taking activities earlier last week, the market rebounded later in the week as risk appetite increased.

The market also received support from the improvement of the overload order problems and the comeback of foreign investors after net selling for eight consecutive sessions.

Analysts from MB Securities Corporation (MBS) said that the market was showing investors’ optimism. The positive sentiment would continue throughout this week, helping the market in the race to the 1,400 point-level.

On the technical front, MBS thought that the strong recovery of the market in late sessions last week ended the correction period around 1,300 points, creating momentum for the market to enter a new rising wave.

“With the current strong rally, we think the market can head to the target of 1,400 points in the coming sessions,” MBS said.

SSI Securities Corporation (SSI) also expressed optimism. “The VN-Index followed a positive scenario once there was confirmation about the recoveries of large-cap stocks, as well as the even spread of cash inflows,” SSI said.

“Therefore, there is the possibility that the VN-Index will continue to reach higher in the near future and head toward the target zone of 1,400 points.”

According to BOS Securities Corporation (BOS), technically, the market benchmark breached the resistance level of 1,350 points on strong demand, along with weaker selling pressure. This made some technical indicators reverse and showed positive signs in the short term.

However, cash flow warned about the possibility of weaker demand in some coming sessions. The VN-Index is likely to maintain its rally and head back to its previous peak of 1,370 points this week.

“Nevertheless, selling pressure is expected to increase during rallies, making the market face some more fluctuations,” BOS added.

Meanwhile, Saigon – Hanoi Securities JSC (SHS) said that the market corrected after five straight weekly gains, but last week’s market liquidity remained at a high level with an average of nearly VND31.3 trillion (US$1.36 billion) per session on both bourses, which showed relatively strong selling pressure.

SHS forecast that the market might see some corrections when selling pressure rises at the current level.

As the market corrected last week, most pillar stocks edged down. Of which, gas and oil stocks fell the most in market capitalisation, down 5.7 per cent. PetroViet Nam Coating JSC (PVCoating, PVB), PetroVietnam Oil Corporation (OIL), PetroVietnam Drilling & Well Services Corporation (PVD), Binh Son Refining and Petrochemical Company Limited (BSR) and PetroVietnam Technical Services Corporation (PVS) all posted losses of more than 5 per cent in market cap.

They were followed by utilities and banking sectors, down 4.3 per cent and 3.8 per cent, respectively.

Foreign investors were still net sellers last week as they net sold a value of VND730 billion (US$32 million). But this amount was lower than that of the week before, which was nearly VND6.2 trillion (US$267.8 million).

Finance ministry inspectorate to check out ailing HCM City stock exchange

The Ministry of Finance’s Chief Inspector has signed a decision to inspect the Ho Chi Minh Stock Exchange (HoSE) after its failure to resolve the chronic overload of its trading system.

The decision follows an order from Minister of Finance Ho Duc Phoc for an immediate inspection.

The inspection delegation will work out a work plan depending on the COVID-19 situation in the city.

Nguyen Hoang Hai, deputy chairman of the Viet Nam Association of Financial Investors, told Tuoi Tre (Youth) online, that the overload left investors unable to trade securities.

The problem began last year and has steadily worsened, weakening investors’ trust and causing them losses, he added.

According to evn.express.net, the system has been unstable for months, with orders simply frozen or executed very slowly, and stock prices are not displayed, forcing investors to take needless risks.

The worst happened on June 1, when there were excessive volumes and trading value topped VND21.7 trillion ($935.3 million) in just the morning session. The system sounded a warning, and HoSE was forced to suspend trading in the afternoon to prevent possible problems.

From June 2, it refused to allow traders to cancel or modify orders to prevent the system from overloading.

Leading brokerages have to date reallowed the use of the features though some are still enforcing limits during peak trading hours.

Businesses in Ho Chi Minh City wallowing in lack of capital and high production costs

Due to the impact of the COVID-19 pandemic, most businesses in Ho Chi Minh City face a shortage of capital while production costs are increasing.

Regarding business activities, since the beginning of the year, 1,365 businesses have reported difficulties due to the pandemic, more than 42,500 workers lost their jobs or stopped working, 410 businesses needed loans to pay wages to workers, and 2,274 enterprises completed dissolution procedures.

The chairman expects the business community and people in the area to join the government to overcome this difficulty. He stated that, currently, Ho Chi Minh City has to spend about VND7 billion ($304,350) a day on testing. The city’s goal is to vaccinate its entire population.

“It is very difficult to access vaccines now because supply still cannot meet the demand,” Nguyen Van Nen, Secretary of Ho Chi Minh City Committee said and urged people who know of guaranteed vaccine supply to contact the city.

Meanwhile, Le Thi Huynh Mai, director of Ho Chi Minh City Department of Planning and Investment, said that in the first five months, more than 6,400 businesses resumed operations.

However, the business community is facing difficulties, with the number of enterprises registering for dissolution increasing by 5 per cent over the same period last year (2,458 enterprises) and the number of enterprises temporarily suspending operation increasing nearly 24 per cent with more than 9,800 enterprises.

There are five common difficulties that businesses are facing, including a decrease in the labour force involved in production, incurring expenses for the prevention of COVID-19, employees having their work hours cut or forced to quit, disruptions in access to customers and supply chains, and lack of raw materials for production.

Chu Tien Dung, head of the Ho Chi Minh City Union of Business Associations (HUBA), expressed concerns, saying that more businesses withdrew from the market in the first two quarters than those entering.

A quick online survey of over 100 businesses by HUBA showed that over 84 per cent of small- and medium-sized enterprises have been facing difficulties since the fourth outbreak of COVID-19. Accordingly, 40 per cent of respondents claimed to have had difficulties from a lack of capital, 80 per cent from market disruptions, 52 per cent from downsizing employment, 14 from interruptions to raw material supply chains, and more than 50 per cent suffered from social distancing measures.

Although some enterprises in key industries have quickly reconnected the source of raw materials and re-adjusted their operations, they are facing the biggest pressure from the lack of capital and the rising price of raw materials, raising manufacturing costs and reducing competitiveness.

Many businesses want to restructure, apply new technologies, or digitally transform to promote online shopping, but lack capital for it.

“The first support packages for businesses and employees were timely but the implementation has not had a clear impact on businesses. Some policies such as tax exemption, social insurance reduction have helped businesses reduce difficulties in terms of liquidity and cash flow, but the application time is short and the number of these packages is not large, so it cannot help businesses overcome their difficulties,” said Dung.

Textile and garment companies struggle in fourth Covid-19 wave

Most textile and garment companies in the country have received large orders for the second half of the year but the fourth Covid-19 wave is threatening to hinder production.

According to the Ministry of Industry and Trade, textile and garment orders increased significantly after the Covid-19 pandemic was brought under control in the United States, the European Union and Japan, some of Vietnam’s main importers of textile and garment products.

The manufacturing index of the textile and garment sector in May 2021 rose 2.2% from the previous month and 10% compared with the same period last year. From January to May, the index grew 8.1% year-on-year.

The country exported over US$12 billion of textile and garment products in the first five months of the year, increasing 15% year-on-year.

However, textile and garment companies are struggling with disruptions caused by the ongoing fourth Covid-19 wave, which began on April 27.

Vu Duc Giang, chairman of the Vietnam Textile and Apparel Association, said at least 45 textile and garment companies had to suspend their operations over the past two weeks. They are facing a number of problems including rising costs, salary payments to maintain the staff and compensation for customers in case of late shipments.

“If a textile and garment company has to shut down for 14-21 days, its production plan for the entire year may be ruined,” he said.

Le Tien Truong, chairman of the Vietnam National Textile and Garment Group (Vinatex), said even if textile and garment companies remain operational, they may not be able to maintain their workforce as workers staying in areas under lockdown or social distancing are not allowed to travel to the workplace. This can cause a loss of billions of dollars and affect the reputation of the Vietnamese textile and garment sector.

Nguyen Xuan Duong, chairman of the board of Hung Yen Garment Corporation, said the Government should accelerate Covid-19 vaccination for workers of industrial parks and export processing zones, especially in current hotspots such as Bac Ninh, Bac Giang, HCMC and Hanoi. These hotspots are also home to many industrial parks and export processing zones.

Enterprises under Vinatex said they are willing to use their own money to vaccinate their workers against Covid-19. The cost is estimated at VND100-200 billion.

“We hope the Covid-19 vaccination will be prioritized for workers in the textile and garment sector so that we can stabilize our production in the coming time,” Duong said.

Local firms boost processed mango exports to U.S.

Due to difficulties in exporting Vietnam’s fresh mangoes, many firms have invested in processing to boost the consumption of processed mangoes in foreign markets, mainly the United States.

In the first three months of the year, Vietnam was the United States’ 13th largest mango supplier, according to the Import-Export Department under the Ministry of Industry and Trade.

During the three-month period, the U.S. increased its import of dried mangoes and mango juice from Vietnam. Vietnam shipped 97 tons of mango juice worth US$102,600 to the American market, skyrocketing by 340% in volume and 160.5% in value year-on-year. The country’s export of dried mangoes to the United States reached 68 tons worth US$83,000.

Despite the modest volume, fostering the export of processed products is a growth trend for Vietnamese mango, said many firms.

Nguyen Dinh Tung, general director of Vina T&T Group, told the Saigon Times that the export of fresh fruits, including mango, had faced multiple difficulties due to high transport costs and the prolonged transportation time, while fresh fruits also have a short shelf life. Besides, many countries have erected technical barriers to fresh fruits to protect local products and customers, he said.

Taking the U.S. market as an example, he said that in the past, it took 20-23 days to ship goods by sea from Vietnam to the market, but now, the transport time is 30-35 days. Meanwhile, Vietnam’s preservation technology keeps mangoes fresh for a mere 30 days.

“Sometimes, the fresh mangoes arrived in the U.S. market, but reached the expiration date and were not sold to customers,” Tung said.

Dang Phuc Nguyen, general secretary of the Vietnam Fruit and Vegetables Association, said that since 2020, when the Covid-19 pandemic emerged, many fruit exporters have sought ways to adapt to the new market situation.

Due to high transport costs and the shortage of containers, many firms which specialize in exporting fresh products have shifted to processed products for shipments.

“Processed mangoes have a longer shelf life than fresh ones and do not face severe competition from the products of other countries,” Nguyen said.

Statistics indicated that in 2020, Vietnam shipped some US$800 million worth of processed vegetables and fruits to the United States, accounting for 25% of the total value of veggie and fruit exports, while the proportion was 10%-15% in 2019.

In addition, Europe and other countries are raising their consumption of Vietnam’s processed fruit, mainly dried mangoes and mango juice, urging many local exporters to upgrade and improve their machines and technology and expand production to ramp up the capacity of processing fruits and meet demands.

“This year, Vietnam’s export of processed fruits, including mangoes, is expected to soar by 30% against last year,” said Nguyen.

Vietnam shipped an estimated US$400 million of vegetables and fruits to foreign countries in May, up 48.3% year-on-year, sending the country’s export value of these products in the first five months of the year to US$1.77 billion, up 18% year-on-year.

In 2020, Vietnam exported 2,100 tons of mangoes worth US$4.6 million to America, up 66% in volume and 70% in value against 2019, while the latter bought 1,150 tons of frozen mangoes from Vietnam, up 38% from the 2019 figure.

Unsecured debts require regulation

Unsecured loan sales may see growth accelerated in response to a Vietnamese government ban on debt collection services – however, experts believed a clearer legal framework and firmer rules would help spur a more substantial unsecured debts market.

The package of nine debts includes small loans, valued from VND1.68 million ($73) to VND17.58 million ($770). The consumer loans are unsecured and the starting selling prices are equal to their book value. The total value of nine debts is around VND75.5 million ($3,300).

The bank will select the buyer with the highest bid that is at least equal to the starting price of each debt. The starting price does not include any costs regarding to fee for ownership transfer and other costs, if any, when purchasing the debt.

These costs shall be solely borne by the auction winner. The down payment is also equal to the starting price of the debt.

“Loan sales are not a new phenomenon. Collateral-backed loans are quite common as a part of banks’ asset and liability management,” said Truong Thanh Duc, director of ANVI Law Firm. “They often sell loan packages with collateral such as real estate, machinery, equipment, factories, and cars, among others, while unsecured consumer loans sales are among the first of its kind for a commercial bank.”

A representative of VietinBank said that selling consumer loans is one of the bank’s normal operations, according to regulations, to handle and recover debts.

“Perhaps this is the first time that a commercial bank has offered unsecured loans sales to the public, so it attracts a tonne of attention. We will continue follow our precedent cases on debt sales. At the first stage, we set the initial price equal to book value. If these debts cannot be sold, we would lower the price later on,” the representative said.

Duc of ANVI said that it is not just “a walk in the park” to sell consumer loans at a book value, coupled with interest and late payment penalty interest. Banks can only sell loans at a price equal to 50-70 per cent of their book value even for collateral-backed ones.

The question of whether or not VietinBank could successfully execute their sales still remains unanswered, but it could set a precedent for other lenders to follow suit.

Financial expert Huynh Trung Minh noted that in other countries, trading unsecured debts is familiar to financial institutions and debt buyers, and consumer debts are important for buyers to expand their customers’ database and information.

According to Vietnam’s revised Law on Investment, debt-collecting businesses are now banned in Vietnam as part of local government action to protect customers’ rights.

However, this is considered a strict approach to consumer finance companies, since the majority of their customers are underbanked or unbanked.

Currently, there are nearly 20 consumer finance companies operating in the country. In the last 10 years, FE Credit has emerged as the top player, accounting for around 52 per cent of market share, far ahead of the rivals Home Credit (17 per cent) and HD Saison (11 per cent).

Masataka “Sam” Yoshida, head of the Cross-border Division of RECOF Corporation and CEO of RECOF Vietnam said, “Putting a stop to the operation of debt collectors poses challenges to lenders or creditors where their collection performance will be affected. Consumer finance companies need to make changes to meet these evolving regulatory requirements. This will be inconvenient, time-consuming, and expensive at first but creates an opportunity for the consumer finance companies to rethink their collections strategies and operations.”

On the other hand, Duc of ANVI shared his concern that it would be tough to take advantage of unsecured debts. Therefore, he hypothesised that the sale of the debts is just another approach to dodge the debt collection service ban. Duc also stated most debt collectors, after the Law on Investment took effect, have not dissolved, but instead converted their business to debt trading/buying to be legally in line with the current law.

If banks can sell their unsecured loans, it is likely that they will transfer their debts to ensure operational efficiency. Furthermore, driving forces behind loan sales may stem from a better cashflow statement and financial information to the public.

“We might also see an increasing trend of selling or trading the debts from those who are not strong enough in debt collection. Debt sales can be an effective tool for certain accounts, especially those with low expected recoveries. However, it might be better implemented if policies and procedures for debt sales could have clearer guidance from the government,” Yoshida of RECOF added.

Investors pointing to upbeat momentum

Vietnam’s generally effective control of the health crisis and improvement of the investment and business climate have further strengthened the confidence of investors in the country.

Over the next few weeks, the province will hold an online investment promotion conference to attract more Japanese funding. The event is expected to be joined by 40-50 Japanese companies, mostly operating in manufacturing and processing.

Currently, the province is instructing 10 foreign investors to complete dossiers, which are expected to be licensed this year with the total registered capital of $576 million, including some big projects involving liquefied natural gas warehousing ($200 million), refrigerator equipment ($90 million), and environmental protection ($160 million).

According to the Ministry of Planning and Investment (MPI), Quang Ninh is a typical example among many localities as good destinations for FDI in Vietnam, where the business and investment climate is significantly improving.

Despite causing grave consequences worldwide, COVID-19 has as yet been unable to prevent FDI inflows to Vietnam for the long term, and rising manufacturing, with both being major drivers of Vietnam’s economic growth this year and beyond.

For 2021 up to May 20, the total of newly-registered, added capital, and capital contributions as well as share purchases hit $14 billion, up 0.8 per cent on-year. Notably, the newly-registered capital hit $8.83 billion, up 18.6 per cent on-year, and the added capital reached $3.86 billion, up 11.7 per cent on-year.

FDI disbursement hit $7.15 billion, up 6.7 per cent on-year, thanks to production and business recovery.

The MPI said many major foreign-invested enterprises (FIEs) are expanding in Vietnam, which is again restricting COVID-19 to only a handful of already locked-down areas.

For example, CEVA Logistics (Vietnam) under global logistics and supply chain company CEVA Logistics is now boosting recruitment of more employees for many positions. Under the business plan of CEVA Logistics Vietnam, the firm is expanding its network to ship goods to the US, which was Vietnam’s largest export market, with total turnover of $ 37.6 billion in the first five months of 2021, up 49.8 per cent on-year.

“In Vietnam, the company’s total revenue in the first quarter from freight shipping increased about 30 per cent on-year,” Nguyen Thanh Van, head of Contract Logistics at CEVA Vietnam, told VIR. “It is expected that the rate will be about 20-35 per cent for the entire year.”

According to the General Statistics Office, businesses such as CEVA have contributed greatly to the country’s goods transportation which hit 739 million tonnes in the first five months of 2021, up 10.5 per cent as compared to the same period last year, when the rate declined 8 per cent on-year. Also in the first five months, Vietnam’s total export-import turnover is estimated to hit $262.2 billion, including $130.94 billion from exports – up 30.7 per cent on-year, and $131.3 billion from imports – up 36.4 per cent on-year.

A World Business Outlook Survey conducted released two weeks ago by the German Chambers of Commerce Abroad said that German businesses are showing optimism about Vietnam’s economy.

“Vietnam is still one of the countries with the fastest economic growth in Southeast Asia,” said the report. “German business leaders in Vietnam maintain a positive view with the economic expectation as well as with their situation in Vietnam and they look forward to a recovered year of 2021 and 2022.”

According to the General Statistics Office (GSO), in the first five months of this year, the economy’s index for industrial production (IIP) climbed 9.9 per cent as compared to that of only 1 per cent in the same period last year. Notably the manufacturing and processing sector, which creates 80 per cent of the nation’s industrial growth, ascended 12.6 per cent in comparision with that of merely 2.2 per cent in the corresponding period of 2020.

The IIP in May expanded 11.6 per cent over the same period last year, when the IIP declined 3.1 per cent on-year.

The GSO also reported that, in the first five months of 2021, the economy witnessed 55,800 enterprises newly established, registered at VND778.3 trillion ($33.84 billion) and employing 412,400 new labourers, up 15.4 per cent in the number of enterprises and 39.5 per cent in registered capital.

If another VND975.1 trillion ($42.4 billion) registered by 19,100 operational enteprises was included, the total capital supplemented into the economy in the period was VND1.753 quadrillion ($76.2 billion), up 27.5 per cent on-year. Moreover, 22,600 businesses resumed their operations, up 3.9 per cent on-year. Source: General Statistics Office

Virus-hit provinces seek continuation of production

The people of the two northern provinces of Bac Giang and Bac Ninh are demonstrating their mettle in the fight against recent coronavirus outbreaks, retaining production to protect supply chains as much as possible.

Amishh Rajnikant Jaitha, CEO of Spica Elastic Vietnam Co., Ltd. in Bac Ninh’s Que Vo IZ, said that the interruption recently has caused a lot of challenges to its 45 partners, especially some key ones that have 8,000-12,000 workers. “My company is operating four factories and four offices in separate places. We have asked office staff to work from home, and office areas will be accommodation for other workers. We have bought a lot of beds, and built some more bathrooms for them to live,” Jaitha said.

Dang Thi Kien Chung, head of Planning for ITM Semiconductor Vietnam in Vietnam-Singapore Industrial Park (VSIP) said, “That is the best solution to keep employees safe and resume factory operations. Safety is the goal that all of us should pay attention to, in order to confirm our responsibilities to society.”

A representative of Wisol Hanoi, also in VSIP said, “Instead of buying beds, we provided individual tents to make some privacy for workers. At living areas there are services such as wi-fi, air conditioners and purifier, clothes extractor, and the toilets have become bathrooms. They are also fed meals each day,” she said.

Bui Hoang Mai, director of the Bac Ninh Industrial Zones Management Authority said over 500 businesses resumed last week after careful preparation. “The board has established 40 delegations to check and guide factories and facilities to ensure safety. If enterprises are stuck or face some difficulties, they can report to us or the provincial government to ask for some help and resume operations as soon as possible.”

As of June 3, there were 951 positive COVID-19 cases in Bac Ninh, including almost 250 cases at businesses. Over 35,700 vaccines were administered for local people, and 90,000 workers in IZs are expected to be vaccinated this week.

In a meeting last week with Deputy Prime Minister Le Van Thanh, Chairwoman of Bac Ninh People’s Committee Nguyen Huong Giang proposed the government to provide an additional 500,000 antigen rapid tests, and support businesses hit by the pandemic with policies such as tax exemption or extension. She also proposed the state budget to provide around $21.7 million to the province to promptly prevent the pandemic from damaging the area further.

Before resuming operations, businesses have to meet all regulations on preventing and fighting against COVID-19 like negative tests and safe distancing in the factories; as well as setting up accommodation areas for employees. Bac Ninh and Bac Giang authorities continue to closely work with the delegations of the Ministry of Health to manage the pandemic before allowing businesses back into operation.

As of the end of June 4, there were 2,819 cases in Bac Giang positive with COVID-19, including about 380 cases in Van Trung IZ and 1,700 cases in Quang Chau IZ.

Cooperation plans still on hold amid railway system revamp

While state-owned giant Vietnam Railways’ new restructuring plan is expected to leverage private investment in the ailing railway industry, the track to prosperity remains steep.

Vu Anh Minh, chairman of VNR – the operator of the country’s railway network – told VIR, “We will keep the merger of Haraco and Saratrans, the two largest train operators in Vietnam, under VNR and then proceed with the establishment. The submission of the separation to the prime minister for approval is expected within June.”

VNR expected that it will be able to attract private investment for its development plans when the separation is approved. Thus, in the establishment of a cargo transport company, stakes are being planned to sell for potential investors.

The separation also includes investment in construction of warehouses and inland container depots (ICDs); upgrading and development of railway stations into trade centres and offices for lease in line with the Law on Railways 2017; and upgrading of railway routes connecting with China to develop international railway transportation.

“When the separation and restructuring plan is approved, the new changes will enable the company’s partnership with private firms in hundreds of stations and ICDs to more effectively tap into their available potential, thus enabling us to move faster,” Minh noted.

Industry insiders, however, said that it is impossible that there will be any significant foreign interest in railways, although transport is one of the six sectors covered in the Law on Public-Private Partnership Investment, which took effect from January.

Railways have proven difficult for the public-private partnership (PPP) model in many countries worldwide, with Vietnam being not an exception. More opportunities might come for domestic private firms instead. To enable this, the master scheme in line with implementation of Decree No.46/2018/ND-CP governing the management and use of railway infrastructure assets, should be approved, with VNR’s proposal to hand over 297 railway stations, warehouses, and ICDs to the giant to own, use, and develop with assets to be recorded as state capital contribution to the operator to be included.

However, the master scheme remains at odds with the VNR proposal, and so no final conclusion has yet been made. Legal barriers have so far hindered VNR from making the next steps with its cooperation plans with its partners, and many of its projects as well as investors have been suffering as a result.

In 2017, VNR signed a cooperation agreement with Saigon Newport Corporation to develop ICDs and warehouses at Song Than, Dieu Tri, Yen Vien, Dong Anh, and Dong Dang stations, with the plan to develop more in the future to meet demands. However, the projects have not yet been carried out.

Similarly, Lotte E&C’s proposal to invest in the second phase of the upgrading of the Yen Vien-Lao Cai railway route has been on paper for years, while Japanese auto giant Toyota is seeking to build a railway route connecting its factory in the northern province of Vinh Phuc to the main North-South network, using the Danang railway station as a transhipment hub to other provinces in the central region.

Furthermore, Southern Airports Services JSC has sought a partnership with VNR in upgrading the Saigon Railway Station building. Many other initiatives remain stuck because of Decree 46.

In 2017 when the restructuring plan of VNR was first submitted to authorised agencies, the giant planned for the restructuring by 2020, but inevitable disagreements and legal issues have dragged the proposals into the 2021-2025 period instead.

The separation of the railway network is important at this time as the new restructuring plan is still waiting for completion of a new order that replaces 2017’s Decision No.707/QD-TTg on approving the restructuring of state-owned enterprises. At present, the draft master plan on restructuring of such enterprises for 2021-2025 is still being completed by the Ministry of Finance.

In the last 10 years, the railway sector has failed to mobilise resources for its development plans. State funding for railways, despite an increase, was just $174-196 million annually over the period, which has been mostly used for maintenance works and social security, and not for development plans.

IFC promotes Vietnam’s PPE production capacity for COVID-19 fight

As the significant shortage of personal protective equipment (PPE) in many countries has impacted the containment of the COVID-19 pandemic over the past 18 months, IFC is supporting PPE manufacturers in developing nations including Vietnam to supply reliable and quality PPE products to protect frontline health workers and reduce community transmission.

Given the unprecedented pandemic, the global demand for high-quality PPE products – face masks, medical gloves, safety glasses and shoes, respirators, coveralls, vests, and full bodysuits – increased three to four times between 2019 and 2020, according to a recent study funded by the United Kingdom Foreign, Commonwealth & Development Office (FCDO).

In Vietnam, PPE manufacturing capacity surged with a 6-fold jump in production in 2020 and the country has emerged as one of the new PPE suppliers globally. This ramped-up supply was initially driven by textile manufacturers shifting production in response to the health emergency and to mitigate losses caused by cancelled orders for garments.

“Some textile manufacturers who started producing PPE products as an immediate response to the pandemic, are now considering the medium- to longer-term business opportunity in this area,” said Vu Duc Giang, chairman of the Vietnam Textile and Apparel Association (VITAS). “However, local manufacturers have struggled with insufficient input materials, technical skills, and sector knowledge, and disparity between local and international standards to access the global market.”

In response, as part of the global PPE advisory programme supported by the UK government, the IFC is working with local garment manufacturers through the VITAS and national labs through the Directorate for Standards, Metrology and Quality of Vietnam (STAMEQ). The aim is to improve PPE producers’ operations and reduce costs by removing unnecessary burdens related to PPE standards and conformity assessments.

A kick-off webinar – PPE Supply and Demand Perspectives – was organised today in Hanoi in collaboration with VITAS. This is the first of a series to boost PPE-related industry knowledge, with a focus on technical requirements and standards for PPE products in different markets.

“The COVID-19 pandemic has tested the resilience of supply chains to the limit, especially on medical supplies including PPE. The UK believes that the diversification of PPE manufacturing will make the global supply chain more adaptable and prevent future disruption,” said Gareth Ward, British Ambassador to Vietnam. “I am very pleased that Vietnam has been chosen as a priority country for this UK government-funded programme. Vietnamese companies have a lot of potential to succeed globally with a skilled labour force.”

Over the next 18 months, the project will also support select manufacturers to scale quality PPE production, access reliable supply of materials and equipment, and achieve PPE international standards and certification to expand exports.

“Access to cost-effective and quality PPE products is vital to national COVID-19 responses, helping contain and manage the spread of the coronavirus,” said Kyle Kelhofer, country manager for Vietnam, Cambodia and Lao PDR. “Promoting the production of PPE products in compliance with international standards not only helps increase Vietnam’s resilience to the pandemic but also presents a business case as the PPE global supply chain is diversifying with opportunities for new manufacturers from emerging markets including Vietnam.”

In January 2021, the IFC and the UK government launched a global PPE advisory programme to increase the supply of COVID-related PPE products to developing countries – as part of the IFC’s COVID-19 response and under the IFC’s Global Health Platform. The IFC’s platform was launched in July 2020 and includes up to $4 billion financing to increase access to critical healthcare services and products to fight the pandemic in the developing world.

Foreign investors from South Korea continue ramping up investment in Dong Nai

Investors from South Korea are looking to increase investment in Dong Nai in the midst of the global health crisis.

South Korean Consul General in Ho Chi Minh City Kang Myong-il said that many South Korean companies wanted to expand investment in the province. However, their projects have been suspended due to travel restrictions caused by the COVID-19 pandemic.

Once the pandemic is controlled and trade flows between two countries return to normal, a new wave of South Korean investment is expected to flow into Dong Nai. South Korean investors highly appreciated Dong Nai’s potential in the field of industrial production, technical infrastructure, and real estate sector.

Some South Korean investors have made big investment in the province including Changshin’s $100 million footwear factory in Tan Phu Industrial Zone (IZ), Hansol Technics’s $100 million electronic component factory in Ho Nai IZ and Intops’ $30 million electronic equipment factory in Amata.

The representative of Hansol Technics said that the company decided to develop its factory in Dong Nai due to the province’s developed IZs and convenient traffic. The company specialises in manufacturing electronic components so the investment in Dong Nai will facilitate it to source input products from other partners.

Park Hyun Bae, chairman of the Korean Business Association in Dong Nai is upbeat about the potential of Dong Nai to lure foreign direct investment (FDI) capital in the industrial, energy, service, trade, and supporting industries. Despite the pandemic, many Korean businesses have requested information about Dong Nai. They hope that when the COVID-19 pandemic is contained, it will be easier for them to travel to the province to register new investment. Indeed, South Korean investors are looking to rent big ​​land sites in Dong Nai to carry out large projects to produce electronic components, fabrics for the textile, footwear, as well as machinery and equipment.

As of present, South Korea is the second-largest import market of Dong Nai, following China. The province mainly buys materials to produce textile, apparel, footwear, computers, electronic components, equipment, tools, and spare parts. On average, local companies spend $200 million importing materials from South Korea.

Obstacles hindering O Mon III venture

The O Mon III thermal power plant in the Mekong Delta city of Can Tho is facing lingering issues related to investment policy and responsibility, leading to the protracted delay in part of the gas project.

After the Law on Public Investment took effect in 2020, the Ministry of Planning and Investment (MPI) proposed to the prime minister to apply the provisions of the law to appraise and decide on the investment policy for the O Mon III. Meanwhile, the ministry proposed amendment and supplement of Decision No.1015/QD-TTg dated August 2019 on the establishment of a state appraisal council to appraise the project’s feasibility study. However, some obstacles have emerged during the implementation of investment policies, especially the authority to approve investment policies.

The Ministry of Industry and Trade (MoIT), the MPI, the National Steering Committee for Power Development, and the Commission for the Management of State Capital at Enterprises (CMSC) have submitted many reports to the government to tackle difficulties in the investment procedures for the project.

Last December the government submitted a report to the National Assembly Standing Committee on this issue. According to its conclusion, the use of official development assistance (ODA) loans for enterprises to borrow 100 per cent for the O Mon III is not within the scope of the Law on Public Investment as well as under the prime minister’s authority to approve investment policies. It has been nearly two years since EVN submitted the project to the CMSC to request for investment policy. However, the authority to approve the investment policy for this project has not been determined.

The O Mon III was approved by the government to be on the list of ODA projects funded by the Japanese government in 2012. EVN was the investor of the project and signed the ODA loan contract with the Japan International Cooperation Agency (JICA). In 2013, Vietnam and Japan signed a commitment note to grant the first loan worth $254 billion for the O Mon III. The JICA loan agreement would be signed by the parties following the result of negotiation and signing of a gas purchase and sale contract.

Foreign investors have often raised their voices about the obstacles hindering the Block B gas project. In 2015, US oil giant Chevron decided to withdraw from the project by transferring stakes to PetroVietnam.

In July 2020, Japan’s Mitsui Oil Exploration Co., Ltd. (MOECO) and Thailand’s PTT Exploration and Production Public Co., Ltd. (PTTEP) also submitted letters to the prime minister about their concerns for the slow approval of the onshore power project, which has caused tremendous challenges for the Block B gas project chain and delayed the final investment decision (FID). Thus, the target of the first gas flow by the end of 2023 will be missed.

Two months later the foreign investors sent another letter to the prime minister noting that the first gas for the project is expected in September 2024 at the earliest. Due to the delayed approval of investment policy, the investors could not make the FID in 2020 while the first gas flow by the end of 2023 became infeasible.

EVN said the delayed approval of the investment policy is due to the inability to identify the agency responsible for this project, which slows down the progress and efficiency of the project chain. Meanwhile, the wellhead gas price has been calculated since 2016 with the price slippage of 2.5 per cent per year and the transportation price slippage of 2 per cent a year, which has raised investment and electric production costs.

Commenting on the conditions for borrowing ODA loans from JICA, EVN said that the plan has better economic efficiency than the commercial loan plan. In addition, the Japanese government has confirmed to continue to provide ODA loans for the O Mon III. However, to make efficient use of the loans, it needs to establish the authority to approve investment policy for the project. Up to now, the project is still waiting for the amended decree to be approved for implementation.

To issue the amended decree, it is necessary to get feedback from relevant ministries and sectors. It will take a great deal of time, even though FID needs to be made this October.

EVN has formulated a plan to use domestic and foreign commercial loans to remove bottlenecks at the O Mon III. With this plan, the power generation progress of the project will take place in the third quarter of 2026, 18 months earlier than the plan of using the ODA loan. However, the biggest obstacle for the new plan is the increase in the total investment, mainly due to the loan interest.

On May 7, the Government Office issued a document announcing the opinion of Deputy Prime Minister Pham Binh Minh, assigning the CMSC to cooperate with the MoIT and relevant agencies to handle EVN’s proposal and report it to the prime minister soon.

In 2018, when calculating the O Mon III and IV projects using gas fuel, EVN proposed the electricity selling price of VND2,355 (10 US cents) per kWh and a maximum of about VND2,840 (12 US cents) per kWh to ensure efficient financing of these projects.

The Block B gas pipelines are being implemented by Phu Quoc Petroleum Operating Company (PQPOC) and South West Pipeline Operating Company (SWPOC), along with PTTEP and MOECO. The approval of O Mon III is the premise to finish commercial negotiations and select the engineering, procurement, and construction (EPC) contractor.

The bidding packages will expire in bid validity in October, and investors expect the investment policy to be issued by August to open commercial bidding packages. If delays continue, PQPOC could have to extend the EPC bidding validity for the fifth time for contractors. In the worst scenario, PQPOC would have to reorganise the international bidding, which would likely delay the whole project for more than a year.

Inflation reined in as materials prices rise through year

Despite a big rise in the prices of construction materials and fuel, a 5-year low in the consumer price index caused by weak demand in the first five months of 2021 is signalling a successful control of inflation.

“Weak demand at home and in the global market are generally there. In the first five months, prices have increased, but not too strongly. COVID-19 has led to tightened spending,” Anh said.

According to the General Statistics Office (GSO), in the first five months of 2021, the average 5-month consumer price index expanded 1.29 per cent on-year, the lowest ascension in the period since 2016 (see chart).

Vietnam is using prices of 11 groups of items to measure the inflation rate in the country. In the period, the average price of the groups rose by about over 1 per cent on-year. Notably in the group of housing and materials, in which the average price rose 4.42 per cent on-year, the steel price has augmented strongly.

The Vietnam Steel Association was cited by the Ministry of Planning and Investment’s Department of Industrial Economy as reporting that due to a rise in input material prices in the global market, the domestic price of steel products has also climbed strongly. In May the average steel billet price hovered at VND14,000 (60 US cents) per kg, up 30 per cent against that in early last December.

The price of construction steel in Vietnam in early May increased in parallel with the rise in steel material price. For example, the price of iron ores on May 5 was around $190 per tonne at China’s Tianjin Port, up by about $50 per tonne or up 25-39 per cent as compared to that in early December. This has caused a big rise in the price of the domestic steel market in the first quarter and the beginning of the second quarter.

“The price of materials is likely to highly increase,” said department director Le Tuan Anh.

In the same vein, the price of oil globally has also increased. By late last week, oil prices rose by more than 3 per cent on renewed optimism about global demand as global vaccinations continue.

Goldman Sachs is expecting the price of global crude oil to rise to $80 per barrel by the end of the year. “The case for higher oil prices therefore remains intact given the large vaccine-driven increase in demand in the face of inelastic supply,” Goldman analysts said.

So far this year, the number of enterprises halting operations was 59,800, up 23 per cent on-year. On average, each month has seen nearly 12,000 enterprises withdraw. This has also reduced demand for goods in the market.

Global analysts FocusEconomics told VIR in a statement that price pressures in Vietnam this year are expected to ease slightly compared to 2020 amid a projected appreciation of the VND, with panelists seeing inflation average well below the government’s estimate of 4 per cent.

“FocusEconomics Consensus Forecast panelists expect inflation to average 2.9 per cent in 2021. For 2022, the panel projects inflation to average 3.6 per cent,” read the FocusEconomics statement.

Vietnam to shortern quarantine period for fully-vaccinated people

Vietnam is mulling to reduce the quarantine period for vaccinated foreign experts and Vietnamese people stranded overseas to seven days.

Specifcailly, the MoH is urgently completing the process of receiving experts and Vietnamese people to Vietnam. The ministry is developing a closed management process from the time of immigration registration to concentrated quarantine and medical monitoring at home.

It is expected that people entering Vietnam will be classified into different groups. Vaccinated people are subject to various coronavirus tests to confirm the effectiveness of vaccination. The main reason is that at present vaccines are 70-90 per cent effective. If they test negative, the quarantine period will be shortened to seven days.

The committee expected that the COVID-19 pandemic will be contained by June but there are still some sporadic cases in the community. It will not be easy to achieve herd immunity soon given vaccination efforts in Vietnam and many countries around the world. Therefore, the forces should always be alert to prevent and fight the epidemic.

Relaxing quarantine rules for fully vaccinated business people and foreign experts will help ensure the investment and trade flow between Vietnam and the world.

According to the Ministry of Labour, Invalids, and Social Affairs, there are nearly 8,500 highly-skilled foreign workers on a priority list to enter Vietnam. They involve some 2,000 employees of key national projects that use new technologies.

Live streaming in Vietnam growing more popular for agricultural business

Farmers across the country have picked up live-streaming to boost sales amidst the COVID-19 pandemic.

“With live streaming, millions of customers can keep track of how we harvest lychee,” said a farmer. “We received many orders after each live stream.”

Regarding the activities, Nguyen Dac Viet Dung, chairman of Sendo said, “As the pandemic is growing more serious, we hope to aid farmers to efficiently approach new technologies such as live streaming to form a firmer foundation for the agricultural sector.”

A representative of Shopee also said that the Shopee Farm programme is expected to help farmers to shift to online business models to take advantage of e-commerce like other vendors selling clothes and cosmetics.

Indeed, live streaming for agriculture is an inevitable trend in Vietnam, said Nguyen Hoa Binh, chairman of Nextech Group which operates live streaming skill training institution NextOn.

“Before Vietnam, China was very successful in adopting the live streaming model for agricultural businesses,” said Binh. “Many trends in China also take root in Vietnam and the rest of Southeast Asia in 2-3 three years.”

A prime example for the success of agriculture in e-commerce is Hubei, a Chinese province, where farmers began to sell their produce online with live streaming to overcome the health crisis. As a result, over the first quarter of 2020, revenue from online sales in the province saw an on-year growth of 184 per cent with hundreds of millions of RMBs.

In the 1.4-billion population market of China, live streaming is a core part of online sales and has become a skill most retailers in the country demand from their staff members.

In particular, in last May, the country’s Ministry of Labour and Social Security listed retail live streaming as one of the top 10 new sectors generated by Industry 4.0.

As of the end of 2020, China had about 600 million people purchasing goods after watching live streams, and 250 million vendors (16 per cent of the country’s population) have adopted the business.

As the pandemic grew more serious last year, live streaming has became a lifebuoy for all corners of Chinese society. Leaders of local authorities, billionaire Jack Ma, small- and medium-sized enterprises, and even farmers use live-streaming services.

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

The country’s economic growth in the second quarter of the year is expected to be lower than expected. However, the economy will also continue recovering strongly, with processing and manufacturing, and the service sector serving as key drivers of growth.

At a recent government cabinet meeting, the Ministry of Planning and Investment said that based on positive performance of the economy in the first five months of 2021, it is projected the nation’s economic growth rate will be about 5.8%. This will be lower than the target of 7.11% set in Government Resolution No.01/NQ-CP, released on January 1, on the key tasks for the implementation of the socioeconomic development plan and state budget estimates for 2021 (see box).

The driving force of Vietnam’s economic growth this year will be the industrial-construction sector and the service sector, especially processing and manufacturing, the MPI said.

According to the General Statistics Office (GSO), in May, the resurgence of the COVID-19 pandemic has caused disruptions in supply chains and trade, as well as transport activities in a number of localities who are home to big industrial production like Bac Giang, Bac Ninh, and Ho Chi Minh City.

However, in the first five months, trade and transport activities still increased as compared to the same period last year.

Specifically, the total retail and service consumption revenue of the entire economy expanded 7.6% to more than VND2 quadrillion US$86.96 billion, and total import turnover of goods went up by 33.5%, while passenger transportation rose 4.2%, and goods transportation climbed 10.5%.

Global analysts FocusEconomics (based in Spain) said that Vietnam’s economy recorded solid growth in the first quarter of 2021. GDP growth clocked in at 4.5% year-on-year in the first three months of this year, matching the growth rate from the last quarter of 2020.

As such, while the first quarter’s readings marked the joint-strongest expansion since the fourth quarter of 2019 and are likely to be well above those of other key ASEAN economies, it nevertheless undershot market analysts’ expectations of a near-6% growth rate.

“Looking at subsectors, growth in the industrial sector rose to 6.3% in the first quarter of the year (the fourth quarter of 2020: +5.6% year-on-year), with the manufacturing subsector continuing to play a driving force in overall economic activity,” FocusEconomics analysts said. “On the other hand, growth in the services sector slowed to 3.3% year-on-year in the first three months of 2021 (Q4: +4.3% year-on-year) and agricultural production growth ebbed to 3.2% (the last quarter of 2020: +4.7% yoy). Looking ahead, the economic recovery should gather pace later in 2021, with the second quarter’s outturn projected to be significantly higher than in the first quarter of the year.”

The GSO also said that Vietnam’s production activities strongly bounced back in general in the first five months. Specifically, the economy’s index for industrial production (IIP) expanded by nearly 10% as compared to 1% in the corresponding period last year.

Notably the manufacturing and processing industry increased 12.6% in comparison with only 2.2% in the corresponding period in 2020.

The IIP in May climbed 11.6% as compared to the corresponding period in 2020, when it decreased 3.1%.

Also according to the GSO, in the first five months of 2021, as many as 55,800 businesses were newly established, with total registered capital of VND778.3 trillion (US$33.84 billion), employing 412,400 new labourers, up 15.4% in the number of enterprises and 39.5% in registered capital.

If another VND975.1 trillion (US$42.4 billion) registered by 19,100 operational enterprises is included, total capital inserted into the economy in the period was VND1.753 quadrillion (US$76.2 billion), up 27.5% year-on-year. Furthermore, 22,600 businesses also resumed operations, up 3.9% year-on-year.

According to FocusEconomics, the economy is forecast to expand rapidly this year, with growth set to outstrip regional peers, strengthening domestic and foreign demand dynamics. However, further outbreaks of the virus and a relatively slow vaccine rollout are causes for concern, while the sti?ed state of the tourism sector poses an additional risk.

“Our panellists expect GDP to expand 7.1% in 2021, and 6.8% in 2022,” said FocusEconomics analysts.

The network of the German Chambers of Commerce Abroad (AHKs) said that German businesses are showing optimism about Vietnam’s economy in the medium term and look forward to a recovery year heading towards 2022.

Despite the pandemic, Vietnam is becoming a strategic investment destination in the process of restructuring the global and regional supply chain, a potential domestic market to attract international corporations, according to a AHK World Business Outlook Survey conducted in spring 2021 and released two weeks ago.

“Vietnam is still one of the countries with the fastest economic growth in Southeast Asia. Foreign-invested enterprises, especially German businesses, are also showing optimism about Vietnam’s economy in the medium and long term,” said the survey. “German business leaders in Vietnam maintain a positive view with the economic expectation as well as with their situation in Vietnam and they look forward to a recovered year of 2021 and 2022.”

Under the survey, 55% rate their current business situation in Vietnam as good, and 11% as poor, while in 2020 only 36% had a positive view of their situation in Vietnam. Negative ratings fell from 23 to 11%.

Furthermore, 47% of German companies in Vietnam intend to expand their activities in the country – up from 22.7% in spring last year, and 50% assume an increase in employment in 2021/2022 – up from 27.3% in the spring of 2020. About 65.8 and 73.7% expected the country’s economic and business situation will get better this year.

In the same vein, according to new data from the European Chamber of Commerce in Vietnam, when asked about the prospects of Vietnam’s business environment in the April-June period, 67% of its members predicted either ‘excellent’ or ‘good’, up 12% on-quarter.

Meanwhile, business leaders are also more optimistic about their own companies. More than two-thirds (68%) forecast that their orders and revenue will ‘maintain or increase’ during April-June, up 25% from the fourth quarter of 2020.

In 2020, Vietnam surprised the world with its impressive control of COVID-19 and its inspiring economic growth rate of 2.91% in 2020, an average annual rate of 6.8% in the 2016-2019 period, making the country one of the world’s top 10 nations in terms of growth, and also one of the 16 most successful emerging economies in the globe in 2020.

Last year, the economy’s GDP was estimated at about US$268.4 billion, up US$11.4 billion against 2019, fourth in Southeast Asia, with total export-import turnover of US$543.9 billion, up 5.2% year-on-year – a record trade surplus of US$19.1 billion, notably in the context of strong decline in global trade.

Vietnam a bright spot for foreign investors: experts

Vietnam has been chosen among leading destinations in Southeast Asia by Japanese investors, Nakajima Takeo, Chief Representative of the Japan External Trade Organisation (JETRO) in Hanoi, has said.

Vice Chairman of the European Chamber of Commerce in Vietnam (EuroCham) Torben Minko said that European firms are confident about Vietnam’s efforts in COVID-19 prevention and control, as industrial parks maintain operations, the number of laid-off workers is kept to a minimum and the supply chain is maintained.

A recent survey by EuroCham revealed that the Business Climate Index (BCI) hit 73.9 points in the first quarter of this year, the highest level since the Q3 2019, before the pandemic broke out.

When asked about the prospects of Vietnam’s business environment in the next quarter, 67% predicted either “excellent” or “good” – a 12% increase compared to the previous one.

EuroCham Chairman Alain Cany said that while COVID-19 wreaks havoc in countries around the world, Vietnam can be certain that companies can operate their business without interruptions.

For her part, Michele Wee, Chief Executive Officer at Standard Chartered Bank Vietnam, said that FDI influx to Vietnam will be maintained in the medium term.

The country posted a GDP growth rate of 2.91% in 2020, being among economies with the highest economic expansion in the year.

Foreign investors pumped nearly US$14 billion into the country as of May 20, a year-on-year increase of 0.8 percent, according to the Ministry of Planning and Investment.

Disbursed FDI in Vietnam hit US$7.15 billion in the first five months, an increase of 6.7% compared to the same period last year.

Global credit rating agencies of Moody’s, S&P and Fitch recently revised Vietnam’s outlook to “positive”.

Hanoi’s tourism prepares recovery plan after COVID-19

Although the COVID-19 pandemic has seen continuous complicated developments and caused negative impacts on tourist activities in Hanoi, the capital city’s hospitality sector has prepared a recovery plan for as soon as the pandemic is under control.

Accordingly, in the second half of this year, the city’s Tourism Department has asked tourism businesses, organisations and agencies in the city to strictly observe COVID-19 prevention and control.

The Department will continue to advance the application of information technology in managing tourist activities and the supervision of travel agencies and tour operators who meet COVID-19 safety standards based on the Ministry of Culture, Sports and Tourism’s set of evaluation indicators.

In addition, the department will take action to improve the quality of tourist products, increase the attractiveness of destinations, develop tours promoting the value of heritages, relic sites and craft villages in the city.

The department will also coordinate with the city’s authorities in planning festivals and cultural events when the COVID-19 pandemic is brought under control.

In the first five months of this year, the city received 2.89 million domestic visitors, down 6.7% over the same period in 2020, and earned VND 8.1 trillion in tourism revenue, down 50.7% due to the impact of COVID-19. In May alone, domestic holiday-makers coming to the capital numbered 115,000, a steep decrease of 55.3% year-on-year.

Vietnam’s protective equipment production rises six-fold

Vietnam’s production of personal protective equipment (PPE) rose six-fold last year, according to the World Bank’s International Finance Corporation (IFC).

The IFC said on June 9 that it is helping developing countries, including Vietnam, with PPE production, with an aim to provide front-line medical staff with quality and trustworthy products and curb COVID-19 spread.

Vietnam is emerging as one of the new PPE suppliers in the global market as a number of garment companies have shifted to producing PPE to cope with medical emergency status and mitigate losses caused by their cancelled orders, it said.

The corporation added that the global demand for PPE such as medical masks, gloves, glasses, protective shoes, protective suits and respirators soared 3-4 fold during 2019-2020, which is expected to keep rising by 6-9 percent annually till at least 2025./.

Conference links Vietnamese, Japanese firms in supporting industries

Twenty-one Vietnamese enterprises in supporting industries and 48 Japanese businesses took part in an online conference on June 10, where they exchanged information and sought partners.

Vu Ba Phu, Director of the Vietnam Trade Promotion Agency (Vietrade) at the Ministry of Industry and Trade, briefed the conference on Vietnam’s foreign trade activities, with export revenue in the first five months of this year estimated at 130.94 billion USD, up 30.7 percent year-on-year.

The export value of phones and spare parts increased 19.6 percent; computers, electronics and components 26 percent; and machinery, equipment, tools, and spare parts 74.8 percent, he continued.

Vietnamese enterprises in supporting industries are growing in terms of both number and quality, and integrating intensively into global production chains, Phu said.

They account for nearly 4.5 percent of enterprises operating in the processing and manufacturing sector, generate jobs for more than 600,000 workers, or nearly 8 percent of the workforce in the processing and manufacturing sector, and contribute 11 percent of total revenue in the sector.

In his remarks, Masataka Fujita, Secretary General of the ASEAN-Japan Centre (AJC), pledged that it will make greater efforts in promoting trade between Vietnam and Japan in the future.

Akutsu Michio, an expert from the Association of International Business Advisors, meanwhile, pointed out the challenges to Vietnamese supporting enterprises such as low productivity and a shortage of trained workers.

He suggested enterprises improve their production capacity and product quality and take measures to attract high-quality workers, saying that apart from providing products for Japanese enterprises in Vietnam, domestic businesses should also seek partners abroad.

To facilitate the supporting industries, the Vietnamese Ministry of Industry and Trade launched a database in June 2020 that provides information on more than 3,600 domestic firms operating in mechanics, auto, electronics, and garment-textiles./.

Binh Dinh proposes withdrawing two local ports from planning

The People’s Committee of the south central province of Binh Dinh has proposed the Ministry of Transport and the Vietnam Maritime Administration withdraw two local ports from master planning for seaport development in 2021-2030.

De Gi and Tam Quan ports were proposed to be removed from the planning and instead developed into fishing ports while the lagoon areas would be developed into storm shelters for fishing vessels.

The provincial People’s Committee said for many years, De Gi and Tam Quang estuaries have had low levels of water and narrow channels only suitable for fishing vessels. Currently, no cargo is transported via these ports.

Removing these two ports out of the planning would not cause any problems as no investment projects were being carried out at the ports, the People’s Committee said.

Dang Dinh Dao, former Director of the Institute for Economics and Development Studies, said the proposal had set an example for other localities in making planning in the context that every coastal locality wanted seaports without paying adequate attention to the natural, social, economic or environmental conditions.

A lot of planning had proven to be unrealistic, Dao said, adding that it would be a big problem if every locality had an international seaport and did not pay attention to regional links or master planning.

He said Vietnam had more than 20 international seaports but none of them had received the investment to reach international standards.

He pointed out that there were a number of lessons. The planning of the wholesale market was an example. Many wholesale markets within planning were built but had not been put into operation due to problems attracting sellers and buyers.

Planning must be innovated, not only for seaports but also for other infrastructure developments, he said.

“It’s time localities closely work with central agencies to develop realistic planning which ensures consistency with other socio-economic planning,” he said.

Vietnam is developing new master planning for seaports in 2021-2030 with a vision to 2050 to promote economic development.

There are 286 ports across the country with a total wharf length of 96km, more than 4.5 times longer than in 2000. The seaport system handled a total cargo volume of more than 692 million tonnes in 2020, 8.4 times higher than 2000./.

Can Tho shrugs off COVID, achieves impressive growth

In the first five months of the year, the Mekong city of Can Tho achieved impressive growth in industrial production, retail sales and tourism despite the effects of COVID-19.

Industrial production grew by more than 9 percent year-on-year, and total retail sales and services grew by nearly 15 percent to around 63.1 trillion VND (2.7 billion USD).

The tourism sector is recovering, with its revenues rising by 18 percent to 1.25 trillion VND. The number of visitors grew by nearly 58 percent.

Investment in the city tripled during the period to 1.3 billion USD as it ranked third in the country’s FDI list.

However, only a fraction of the proposed public spending has been disbursed, one of the city’s biggest problems for many years now.

Its exports too fell.

Tran Viet Truong, chairman of the municipal People’s Committee, said that the city has been focusing on both reviving its economy and staying safe from the pandemic.

He instructed official agencies to focus on disbursing public spending funds, acquiring and clearing lands for investment projects and approving project carefully to stop unnecessary changes later.

Can Tho aims to become a major industrial hub and the Mekong Delta’s leading one by 2025, and targets economic growth of 7.5-8 percent a year until 2025.

It is focusing on restructuring its four key sectors, foodstuff and beverage processing, chemicals; machinery and electronics, and electricity generation.

It is also seeking to create a favourable environment for investment through support policies and administrative reforms, and facilitating industrial start-ups./.

Auto sales down 15 pct. in May: VAMA

The Vietnam Automobile Manufacturers’ Association (VAMA) has reported that its members posted a 15 percent month-on-month decline in automobile sales in May to 15,585 units, due to the impact of COVID-19 and a shortage of semi-conductor chips for the industry.

Its members sold 17,581 passenger cars in May, 7,482 commercial vehicles, and 522 special-use vehicles, falls of 14 percent, 16 percent, and 33 percent, respectively, against April.

Sales of domestically-assembled vehicles were down 20 percent month-on-month to 13,825 units, while those of completely-built-up (CBU) vehicles fell 7 percent to 11,760.

In the January-May period, VAMA members sold 126,894 vehicles, up 53 percent against the same period last year, with a 51 percent rise seen in the sales of passenger cars, 56 percent in commercial vehicles, and 59 percent in special-use vehicles.

These figures do not fully reflect the situation in Vietnam’s automobile market, however, as they do not include sales of brands such as Audi, Jaguar, Land Rover, Mercedes-Benz, Subaru, Volkswagen, and Volvo.

A representative from TC Motor said the company sold 6,053 vehicles in May and 28,477 in the first five months of the year. It led all brands in May sales, followed by Toyota with 5.139, Kia 3,336, Mazda 2,426, Ford 1,666, and Honda 1,423.

Toyota Vios was the best-seller during the month, with sales of 1,789, followed by the Hyundai Accent with 1,620.

Industry analysts said that along with COVID-19, a shortage of semi-conductor chips in both the global and domestic market will continue to slow down production at automobile manufacturers over the remainder of 2021 and even into 2022./.

Vietnamese overseas investment triples

Vietnamese firms poured 546.7 million USD into overseas projects in the first five months of 2021, more than triple the figure of the same period last year.

Of the sum, 144 million USD was from 21 newly-licensed projects, down 11.3 percent year-on-year, according to the Ministry of Planning and Investment.

Meanwhile, 403.2 million USD was pumped into nine existing projects, surging 22-fold year-on-year, the ministry said.

A major part of the capital outflow – 271 million USD – was poured into the science-technology sector, accounting for 49.5 percent of the total. The wholesale and retail sector came next with $148.4 million or 27 percent, following by the agro-forestry-fisheries sector and auxiliary services.

Fifteen countries received investment from Vietnam from January to May with the US the top receiver with 303 million USD, holding the lion’s share of 55.4 percent. It was followed by Cambodia with 89.1 million USD or 16.3 percent. Next were Canada and France with 32.1 million USD and 32 million USD, respectively.

Vietnamese firms have increased their overseas investments in recent years to expand their global reach.

As of May 20, Vietnam had 1,420 valid overseas projects worth a total of nearly $22 billion, mainly in the sectors of mining, with 36.4 percent of total capital, while agro-forestry-fisheries had 15.3 percent.

Laos was the largest receiver for Vietnam’s overseas investment, making up 24 percent of the total capital, followed by Cambodia (13.1 percent) and Russia (13 percent)./.

China remains key market for Vietnamese garments and textiles

China is anticipated to become a major market for Vietnamese garments and textiles moving forward due to the country facing numerous challenges when exporting items to the United States, the EU, and Japan this year.

This information was unveiled in a document unveiled at the recent annual general meeting of shareholders by the Vietnam National Textile and Garment Group (Vinatex).

Moving forward, China will not focus on producing apparel and textiles in line with its five-year strategy, thereby turning the northern neighbour into a major consumer of Vietnamese textiles and garments.

During  the first quarter of the year, local garment and textile exports to China witnessed robust growth among the five major markets, achieving the same export turnover as that of EU in the process.

Furthermore, the US remains the largest Vietnamese export market with a growth rate of 5.9% in the first quarter. During the remainder of the year, the US market is expected to bounce back thanks to the implementation of a stimulus package of US$1.9 trillion coupled with the mass rollout COVID-19 vaccination scheme.

The country’s garments and textiles to the EU and Japan will continue to face difficulties in the near future due to the EU facing the risk of a third wave of COVID-19, while the Japanese economy has not shown any signs of recovery, according to Vinatex.

McKinsey’s projection anticipate that the global apparel and textile industry will rebound by the third quarter of next year, or perhaps later in the fourth quarter of 2023.

Currently, Vietnamese garment enterprises have sufficient orders until the end of the second quarter, although prices remain low.

Vinatex predicts that the garment and textile sector will recover one year ahead of scheduled compared to the global forecast.

The industry is striving to achieve a revenue of VND17,365 billion this year, up 17% compared to 2020.

Belgium startup interested in Vietnam’s automation industry

Zorabots, a company specialized in robot and automation in Eastern Belgium, is looking towards Vietnam as a potential market.

Fabrice Goffin, co-founder and CEO of Zorabots said their robots can speak 53 languages including Vietnamese.

Explaining why he chose Vietnam for expansion, Goffin said he has read reports on the vibrant and potential Vietnamese automation market. Besides, before the global pandemic, Vietnam hosted multiple automation exhibitions and fairs with the participation of many prestigious technology and industrial automation companies.

“For a potential country like Vietnam, we will have many opportunities to expand,” the Zorabots CEO said.

Zorabots is currently working with its Vietnamese partners to quickly make its appearance in this market.

“We want to focus on education and health, which are two sectors requiring the support of robots and technology, especially education. Vietnam should prepare its younger generations well since they will master technology in all aspects of life”, Goffin emphasized.

Zorabots was founded by two tech enthusiasts, Fabrice Goffin and Tommy Deblieck, in 2011. The company now has branches in the US, Canada, Australia, Africa and serves customers all over the world. Zorabots computer engineers create software for robots according to customer needs.

Zarobots is installing robots at airports in the Netherlands and France to guide passengers in complying with COVID-19 prevention regulations. The company is pursuing the development of different robot models to serve more people in the coming time./.

Agency banking model develops in rural, remote locations

The State Bank of Viet Nam (SBV) is amending regulations related to the operation of agency banking to improve access to the banking system.

Agency banking is a type of branchless banking that allows traditional banks to extend their network of branches and services through authorised agents.

The model arrived in the country in recent years, especially since the Government issued the national comprehensive financial strategy in early 2020.

According to the SBV’s research, Brazil, Kenya, Mexico and India have all seen agency banking become an important tool to expand access to basic financial services and promote financial inclusion. Five years since Brazil launched the agents, the network has served 12.4 million new bank accounts.

The state bank said in Southeast Asia, Malaysia’s agency banking model uses the nationwide telecommunications network to expand the network of traditional banking services to customers in rural and remote areas at a low cost. The model also helps Malaysian banks save more than 80 per cent of costs for setting up service points and 60 per cent of transaction costs compared to the traditional bank branch network.

According to the latest Comprehensive Financial Report of World Bank released in 2018, 69 per cent of adults in Viet Nam were unbanked and relied on cash while the rate in the world was 31.5 per cent at the same time.

Meanwhile, the national strategy of financial services sets the goal to have at least 50 per cent of communes accessing financial service points and 80 per cent of adults having transaction accounts at banks or other institutions by 2025.

Experts reckon the low rate of bank accessing in Viet Nam is a big chance to develop banking agents across the country.

By the end of 2017, the SBV piloted agency banking in rural areas with three models.

MB Bank work with Viettel services, PGBank with Petrolimex sales points and Vietcombank with M_service Company, reaching 32,185 sales points.

More than 11 million transactions with a value of more than VND81 trillion (US$3.49 billion) were recorded among some 6 million customers.

Outside of the SBV pilot, LienVietPostBank took advantage of post office locations to develop savings services, while Jens Lottner, CEO of Techcombank, shared the bank’s plan to work with Masan Group to take advantage of convenience stores to bring the bank’s financial products and services to a wider population.

Between 2020 and 2025, Agribank plans to set up a network of banking agencies and work with postal organisations, public administrations and microfinance projects to deploy low-cost, convenient, safe products for individual payment transactions.

Seeing the potential of the model, a SBV representative said there must be a legal corridor.

The SBV said completing the legal framework on agents was proposed in the national comprehensive financial strategy) to improve the level of access to financial services for people.

The central bank said it was amending other regulations related to the operation of the model, especially those on anti-money laundering/terrorist financing, regulations on electronic money and know-your-customer (KYC) processes.

CEO of TPBank Nguyen Hung said such regulations would need to go into detail to guide the establishment of agencies to provide banking services, such as regulations on approved and prohibited services, criteria to become authorised agencies and the form of operation.

Hung mentioned two main forms of authorisation used in Brazil known as full authorisation and credit authorisation, adding a fully authorised agent will provide a full range of services from receiving and forwarding application documents for opening a payment account, savings account, deposit/withdrawal transaction, transfer, payment as well as loan applications and opening credit cards. Meanwhile, a credit agency will only provide services on payment, borrowing and credit.

Taking another example of Bangladesh, Hung said authorised dealers can provide cash withdrawal/deposit services, support for small loan disbursement and debt collection/instalment, bill payment assistance, fund transfer assistance, balance queries, collect and forward applications for opening accounts, opening savings, loans and credit cards. However, they are not allowed to approve the decision to open card/loan accounts, conduct financial appraisals and conduct foreign currency transactions.

According to another financial expert, it is necessary to clarify the quality and capacity of organisations authorised to act as banking agents.

The agents must ensure that they meet all the standards of financial capacity, reputation, ability to meet commitments under adverse conditions, ability to provide financial services based on technology and capacity of internal control, security assurance and anti-money laundering.

Binh Dinh proposes withdrawing two local ports from planning

The People’s Committee of the southern province of Binh Dinh has proposed the Ministry of Transport and the Viet Nam Maritime Administration withdraw two local ports from master planning for seaport development in 2021-30.

De Gi and Tam Quan ports were proposed to be removed from the planning and instead developed into fishing ports while the lagoon areas would be developed into storm shelters for fishing vessels.

The provincial People’s Committee said for many years, De Gi and Tam Quang estuaries have had low levels of water and narrow channels only suitable for fishing vessels. Currently, no cargo is transported via these ports.

Removing these two ports out of the planning would not cause any problems as no investment projects were being carried out at the ports, the province said.

Dang Dinh Dao, former Director of the Institute for Economics and Development Studies, said the proposal had set an example for other localities in making planning in the context that every coastal locality wanted seaports without paying adequate attention to the natural, social, economic or environmental conditions.

A lot of planning had proven to be unrealistic, Dao said, adding that it would be a big problem if every locality had an international seaport and did not pay attention to regional links or master planning.

He said Viet Nam had more than 20 international seaports but none of them had received the investment to reach international standards.

He pointed out that there were a number of lessons. The planning of the wholesale market was an example. Many wholesale markets within planning were built but had not been put into operation due to problems attracting sellers and buyers.

Planning must be innovated, not only for seaports but also for other infrastructure developments, he said.

“It’s time localities closely work with central agencies to develop realistic planning which ensures consistency with other socio-economic planning,” he said.

Viet Nam is developing new master planning for seaports in 2021-30 with a vision to 2050 to promote economic development.

There are 286 ports across the country with a total wharf length of 96km, more than 4.5 times longer than in 2000. The seaport system handled a total cargo volume of more than 692 million tonnes in 2020, 8.4 times higher than 2000.

Ben Tre’s shrimp sector targets production value of $1 billion by 2025

The production value of the shrimp industry in the Mekong Delta province of Ben Tre aims to increase by an average of 41.1 per cent each year to 2025 and reach US$1 billion.

According to a plan to develop the sector, issued recently by the provincial People’s Committee, the locality will develop 4,000 ha of brackish water shrimp aquaculture areas applying high technology by 2025, to promote the sustainable development of the fisheries economy and the coastal province’s socio-economic development.

Chairman of the provincial People’s Committee Tran Ngoc Tam said Ben Tre aims to modernise its industrialisation-oriented marine shrimp farming sector and turn it into a large commodity production sector with high levels of competitiveness, productivity, and quality, creating breakthroughs in the stable and sustainable development of the fisheries economy and, most importantly, contributing to the province’s GDP growth.

Local authorities have implemented solutions such as re-organising production, improving the quality of young marine shrimp, prompting the research and application of science and technology in production, developing infrastructure, managing the environment, and developing shrimp processing activities.

Attention will be paid to developing concentrated and large raw material production areas and expanding effective aquaculture models to help local farmers improve their earnings.

According to the Deputy Director of the provincial Department of Agriculture and Rural Development Nguyen Van Buoi, Ben Tre currently has nearly 1,700 ha of brackish water aquaculture areas applying high technology, with an annual average yield of 36 tonnes per ha and profit of VND2.1-VND2.4 billion ($91,400-$104,560) per ha per year.

Brackish water shrimp farming has been developing strongly in Ben Tre, especially intensive and semi-intensive shrimp cultivation.

According to the department, as of 2020, the locality had exploited 45,747 ha of aquaculture area out of 50,000 ha of potential aquaculture area, including 36,000 ha of intensive and semi-intensive marine shrimp farming areas, with total production reaching some 70,000 tonnes.

Infrastructure in the province’s aquaculture areas has been gradually improved, especially road and irrigation networks, basically meeting current demand.

Vegetable and fruit exports hit $1.77 billion during Jan-May

Viet Nam’s export turnover of fruits and vegetables hit US$1.77 billion in the first five months of this year, a year-on-year increase of 18 per cent, reported the Ministry of Agriculture and Rural Development.

In May alone, fruit and vegetable exports raked in $400 million, a surge of 48.3 per cent compared to the same period last year.

China remained the top importer of fruits and vegetables from Viet Nam. These products are also witnessing positive signs in other major markets such as the US, Japan, Russia, and Australia.

Notably, the fourth outbreak of the COVID-19 pandemic amid the lychee harvest season has made export activities face many difficulties. However, with flexible solutions, ministries, localities and businesses are making efforts to export the fruit during the pandemic.

Particularly, Viet Nam’s lychee crop will have more advantages when exporting to the Japanese market this year.

When lychee was first exported to the Japanese market last year, many customers appreciated the quality of the shipments. Therefore, the Viet Nam Trade Office in Japan is continuing to co-ordinate with relevant domestic authorities as well as supermarket and distribution systems in Japan to promote the fruit in Japan.

The Viet Nam Trade Office in Australia will also make proposals to Australian agencies to promote favourable customs clearance when lychees arrive in Australia. It is expected that about 100 tonnes of Vietnamese lychee will be exported to South and Western Australia within this year.

To boost the export of fruits and vegetables, the ministry assigned the Director of the Plant Protection Department to negotiate to open 19 markets for 20 types of products, assist in handling, negotiating and removing technical difficulties arising in the export process, co-ordinate with localities to build codes for growing areas and export establishments to ensure traceability and meet requirements of major importers.

Vietnam Railway revenue slumps due to a drop in passengers

Vietnam Railway Corporation (VNR) reported its five-month revenue decreased by 51.4 per cent year-on-year due to the impact of the COVID-19 pandemic.

The railway served about 1.147 million passengers, a reduction of 35.4 per cent compared to the same period last year, bringing in over VND400 billion (US$17.4 million) in revenue.

In May, which saw the peak of COVID-19 outbreaks in the latest wave, the number of passengers was only by 132,300, equal to 48.4 per cent of the corresponding figure last year. As a result, revenue from passenger transport stood at VND44.7 billion, equivalent to 55.4 per cent of the figure of the same period last year.

According to VNR, a decline in revenue and demand for transportation and travel is attributable to travel restrictions prompted by outbreaks of COVID-19 in many localities across the country.

The VNR curtailed most of its operations in May. It is currently operating only one train on the Ha Noi-HCM City route.

Also due to the COVID-19 resurgency, more than 11,300 tickets were returned on the occasion of the Reunification Day (April 30) and May Day (May 1) holidays, worth about VND4 billion.

Disease-free zones key to exporting animal products

Forming more disease-free farming zones is seen as critical to exporting livestock products as few such zones in Viet Nam meet the World Organisation for Animal Health (OIE) standards.

The country exported 2,150 tonnes of meat and related products worth US$6.95 million in April, up 27.1 per cent in volume and 3.7 per cent in value compared to March, with Hong Kong (China), mainland China, and Thailand among the main destinations, data from the General Department of Viet Nam Customs showed.

The Cong Thuong (Industry & Trade) newspaper cited Nguyen Van Long, Deputy Director of the Department of Animal Health at the Ministry of Agriculture and Rural Development, as saying Viet Nam must comply with international regulations to export animal products, including those set by the World Trade Organisation (WTO) and the OIE.

Exports of animals and related products can only come from countries and territories that have farming establishments and zones free of disease and ensure biological safety.

As of May, Viet Nam had 2,288 closed farming establishments and zones but these only satisfy Vietnamese standards, with none meeting OIE requirements, Long pointed out.

He added that as outbreaks of dangerous disease are spreading, many countries have set up strict requirements on imported fresh products. Meanwhile, Viet Nam faces difficulties in organising safe animal farming, especially in terms of disease control, monitoring of farming zones, and grassroots safety chains.

Recently, authorities have stepped up negotiations on animal product exports with some countries, Long said, noting that to secure smooth exports the most important issue is that such products hail from disease-free zones meeting OIE rules.

To do this, it is first necessary to exert sound control over disease outbreaks and minimise the risk from animal diseases nationwide. A national programme for monitoring and certifying animal products should also be carried out to pave the way for exporting qualified products, he said.

There are 15 disease-free zones around the country at present, and co-ordination with localities is needed to help such zones under Vietnamese standards meet OIE requirements.

Long recommended cities and provinces devise plans to form and maintain disease-free animal farming zones while paying attention to animal husbandry.

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

The Vietnam Association of Seafood Exporters and Producers (VASEP) forecasts that Vietnam’s tra fish (pangasius) exports will continue to grow in the coming months thanks to the control of the COVID-19 pandemic in importing countries, said VASEP Secretary Truong Dinh Hoe.

According to VASEP, after having COVID-19 vaccines, the economic and trade activities of many countries have started to recover, so the countries have also increased imports of seafood from Vietnam, especially tra fish products.

Việt Nam’s total export value of pangasius in the first five months of 2021 reached 600 million USD, an increase of 10 percent compared to the same period in 2020.

The large export markets of Vietnamese pangasius in this period were China, US, Brazil and Thailand. Of which, the tra fish export value reached about 27 million USD to Brazil and 26 million USD to Thailand, a year-on-year increase of 38.7 percent and 8.5 percent, respectively.

“The export growth to Thailand, the largest pangasius importer in ASEAN, is a good signal to increase the pangasius export value to this region in the next quarter,” said Hoe.

In addition, the US market also increased imports of Vietnamese pangasius from the beginning of 2021, according to the association. In May, Vietnma’s tra fish export value to the US increased by 120 percent over the same period last year, reaching more than 35 million USD. Since the end of 2020, the inventory of pangasius in the US has been limited.

Meanwhile, the domestic catfish production has also declined. Therefore, the US has increased imports of frozen tra fish products from the beginning of this year.

The total value of pangasius exports to Hong Kong in the first five months reached 146 million USD, accounting for nearly 24 percent of Vietnam’s total pangasius export value. This market returned to the list of largest pangasius export markets for Vietnamese tra fish products, VASEP reported.

The pandemic has had a significant impact on the sales strategy of Vietnamese seafood enterprises. Besides reducing trade activities due to the social distancing policy in many countries, high transportation costs and the shortage of containers have also had great impacts on Vietnam’s seafood exports, it said.

This forces the local seafood processing and exporting enterprises to change their sales strategies to keep customers and overcome difficulties during this period, according to VASEP.

Truong Tien Dung, general director of the Saigon Seafood Trading Joint Stock Company (APT), said the company’s exports of pangasius and catfish products in the first five months of this year increased by 10 percent over the same period in 2020.

To achieve this result, APT must actively discuss with customers to produce products according to demands of the export market, instead of offering products that the company produces. Therefore, it has enhanced production of new processed products from pangasius and catfish.

According to Ong Hang Van, Deputy General Director of the Truong Giang Seafood Joint Stock Company in Dong Thap province, in the context of COVID-19, many seafood businesses have also changed their trading methods with partners.

Instead of signing CIF contracts that the local enterprises have delivered goods at the port in importing countries, the enterprises have signed FOB contracts, in which the enterprises deliver goods at ports in Vietnam. With this method, the importers must take care of transporting the country’s export goods to the importing countries.

The Ministry of Industry and Trade’s Import-Export Department also forecasts that Vietnam’s seafood exports by year end will continue growing due to increasing demand in the US and EU markets.

After increasing 22 percent to 749 million USD in April 2021, Vietnam’s seafood export continued to surge by 24 percent in May to 790 million USD. This export value in the first five months of this year rose by 14 percent to reach 3.27 billion USD.

Although the economic recovery in the EU market is slower than that of the US, consumption demand is recovering because the pandemic is being controlled gradually. European importers tend to be more interested in Vietnamese seafood suppliers due to tariff advantages from the EVFTA and stable raw materials, according to VASEP.

Vietnam’s seafood export value to the EU in May increased by 30 percent to 95 million USD. The export value in the first five months reached 380 million USD, up 15 percent over the same period last year.

For the US market, the implementation of the COVID-19 vaccination campaign along with economic stimulus package of the US Government have encouraged quick recovery of seafood consumption demand in this market. The higher seafood demand is not only in retail but also services, restaurants, hotels and entertainment after a period of social distancing due to the pandemic. The market has higher demand for shrimp, tuna, salmon, pangasius, squid, octopus, crabs and molluscs such as clams and mussels.

In addition, Vietnam’s seafood exports to countries with free trade agreements also increased sharply in the first five months, including to Australia (65 percent), Canada (12 percent), and to the UK (17 percent). These markets are expected to play a significant role in promoting Vietnam’s seafood export growth in 2021 and beyond./.

Vietnam still lacks low-priced apartments

Vietnam has less than half of the low-income houses it targeted for in 2020, according to data from the Ministry of Construction (MoC).

According to the statistics, the total area of more than 5.1 million sq.m of built social housing accounted for only 41.4 percent of the target of 12.5 million sq.m of proposed housing in the National Housing Development Strategy by 2020.

According to realty insiders, the supply of low-priced apartments was still very scarce. The affordable segment, which was more expensive than the low-income segment, was also not easy to find while the need to improve the accommodation for people with limited income was growing.

The MoC said since 2016 there have been about 1,040 projects to build social housing for low-income people in urban areas and industrial park workers, including 507 independent housing projects and 533 social housing projects built on 20 percent of the land fund of commercial housing and urban development projects.

Up to now, only 248 projects have been completed with a construction scale of more than 103,500 apartments in a total area of more than 5.1 million sq.m. Another 264 projects with a construction scale of about 216,500 apartments and total area of about 10.8 million sq.m were being built.

While the segment of low-priced apartments dominated in terms of total number of transactions on the market, the supply will not be further improved until the end of 2022.

A representative of the MoC said: “The tightening of administrative procedures in project construction and development limited the new supply of real estate projects.”

The MoC’s latest report on the real estate market showed that affordable apartments are priced below 25 million VND per sq.m in big cities while prices for each sq.m of a low-income house far from the centre was below 25 million VND.

The report also said as there was little supply of low-income houses, the prices increased from less than 20 million VND to less than 25 million VND per sq.m.

Professor Dang Hung Vo told local media: “The State’s affordable housing developers can only meet 15 percent of the housing supply for immigrants and the rest of them have to take care of themselves.”

Vo added: “These people are in need of cheap commercial housing, ranging from 700 million VND to 1 billion VND each.”

He calculated the supply of cheap houses was nowhere near the demand.

Due to the lack of supply, according to most insiders, social housing has never experienced a crisis in transactions and the liquidity was always the most stable in the market.

The latest data and reports from realty research firm Savills Vietnam said household size in HCM City has tended to decrease over the past ten years. The household size was 3.5 people per household in 2019, much lower than the rate of 3.9 people per household in 2009.

The firm also said 66 percent of households have from two to four members, and there is a trend of separating households, which led to an increase in housing demand.

According to Savills Vietnam, the number of apartments offered for sale on the market with a value of 2 billion VND each or less accounted for about 10 percent of the total number.

Many investors and developers are following the trend of reducing the area to fit the needs of small families and make the value suitable for buyers. However, the number of apartments of less than 2 billion VND, from 50 to 60sq.m, was not many.

Vo Thi Khanh Trang, deputy director of Savills Research Department in Ho Chi Minh City, said as the land fund was limited and the price of construction materials was increasing, the prices of houses would increase.

Trang said in order to increase the supply for the low-price and affordable housing segment, “it is necessary to have co-operation from local authorities with policies to support businesses to quickly solve administrative procedures and businesses which build such projects.”

On April 15, the MoC representatives met with Korean housing experts in HCM City to share experience in social housing development of the Republic of Korea (RoK) as part of a project on the building of a master policy on Vietnam’s social housing development for the 2021-30 period, carried out using non-refundable official development assistance (ODA) from the RoK government via the Korea International Cooperation Agency (KOICA).

Director of Korea Housing and Land Research Institute (LHI) Moon Hyogon said in the current economic growth context, relying on government support alone cannot provide enough housing to meet people’s needs, especially in the low-income segments.

Moon Hyogon said using money from the private sector in housing provision should be a solution, saying: “As more Vietnamese businesses can earn profits from low-income household building, they should put a certain amount of the revenues to increase development funds for developing low-income housing.”

The Korean expert said the formation of such a fund was expected to carry out the unified, systematic management of many aspects including financial resources, thereby achieving successful results for Vietnam./.

Close to 1 tonne of Vietnamese lychees arrive in France

A ‘thieu’ lychee batch, weighing close to a tonne, from the northern province of Hai Duong arrived at the Paris Charles de Gaulle Airport in France on June 12, informed the Ministry of Industry and Trade.

Labeled with Vietnam’s itrace247 origin tracing stamp, the batch was shipped thanks to trade promotion efforts by the Vietnam Trade Office in France and the ministry’s Trade Promotion Agency (Viettrade) following a series of business matching sessions involving Hai Duong lychees.

The batch, transported to France by the Red Dragon Service Trading Manufacture Co., Ltd, will be available at the Asia supermarket chain in Paris.

Vu Anh Son, head of the office, said collaboration between Vietnamese agencies and businesses and French importers encountered various difficulties due to COVID-19.

Before the arrival of the batch, the Vietnamese fruit was imported in a small amount and made almost no appearance at big local shopping malls.

A plan has been set for more than 10 tonnes of Vietnamese lychees to enter the market by sea and air in 2022./.

Viet Nam’s tra fish exports expected to continue recovering

The Viet Nam Association of Seafood Exporters and Producers (VASEP) forecasts that Viet Nam’s tra fish (pangasius) exports will continue to grow in the coming months thanks to the control of the COVID-19 pandemic in importing countries, said VASEP secretary Truong Dinh Hoe.

According to VASEP, after having COVID-19 vaccines, the economic and trade activities of many countries have started to recover, so the countries have also increased imports of seafood from Viet Nam, especially tra fish products.

Viet Nam’s total export value of pangasius in the first five months of 2021 reached US$600 million, an increase of 10 per cent compared to the same period in 2020.

The large export markets of Vietnamese pangasius in this period were China, US, Brazil and Thailand. Of which, the tra fish export value reached about $27 million to Brazil and $26 million to Thailand, a year-on-year increase of 38.7 per cent and 8.5 per cent, respectively.

“The export growth to Thailand, the largest pangasius importer in ASEAN, is a good signal to increase the pangasius export value to this region in the next quarter,” said Hoe.

In addition, the US market also increased imports of Vietnamese pangasius from the beginning of 2021, according to the association. In May, Viet Nam’s tra fish export value to the US increased by 120 per cent over the same period last year, reaching more than $35 million. Since the end of 2020, the inventory of pangasius in the US has been limited. Meanwhile, the domestic catfish production has also declined. Therefore, the US has increased imports of frozen tra fish products from the beginning of this year.

The total value of pangasius exports to Hong Kong in the first five months reached $146 million, accounting for nearly 24 per cent of Viet Nam’s total pangasius export value. This market returned to the list of largest pangasius export markets for Vietnamese tra fish products, VASEP reported.

The pandemic has had a significant impact on the sales strategy of Vietnamese seafood enterprises. Besides reducing trade activities due to the social distancing policy in many countries, high transportation costs and the shortage of containers have also had great impacts on Viet Nam’s seafood exports, it said.

This forces the local seafood processing and exporting enterprises to change their sales strategies to keep customers and overcome difficulties during this period, according to VASEP.

Truong Tien Dung, general director of the Saigon Seafood Trading Joint Stock Company (APT), said the company’s exports of pangasius and catfish products in the first five months of this year increased by 10 per cent over the same period in 2020.

To achieve this result, APT must actively discuss with customers to produce products according to demands of the export market, instead of offering products that the company produces. Therefore, it has enhanced production of new processed products from pangasius and catfish.

According to Ong Hang Van, deputy general director of the Truong Giang Seafood Joint Stock Company in Dong Thap Province, in the context of COVID-19, many seafood businesses have also changed their trading methods with partners.

Instead of signing CIF contracts that the local enterprises have delivered goods at the port in importing countries, the enterprises have signed FOB contracts, in which the enterprises deliver goods at ports in Viet Nam. With this method, the importers must take care of transporting Viet Nam’s export goods to the importing countries.

The Ministry of Industry and Trade’s Import-Export Department also forecasts that Viet Nam’s seafood exports by year end will continue growing due to increasing demand in the US and EU markets.

After increasing 22 per cent to $749 million in April 2021, Viet Nam’s seafood export continued to surge by 24 per cent in May to $790 million. This export value in the first five months of this year rose by 14 per cent to reach $3.27 billion.

Although the economic recovery in the EU market is slower than that of the US, consumption demand is recovering because the pandemic is being controlled gradually. European importers tend to be more interested in Vietnamese seafood suppliers due to tariff advantages from the EVFTA and stable raw materials, according to VASEP.

Viet Nam’s seafood export value to the EU in May increased by 30 per cent to $95 million. The export value in the first five months reached $380 million, up 15 per cent over the same period last year.

For the US market, the implementation of the COVID-19 vaccination campaign along with economic stimulus package of the US Government have encouraged quick recovery of seafood consumption demand in this market. The higher seafood demand is not only in retail but also services, restaurants, hotels and entertainment after a period of social distancing due to the pandemic. The market has higher demand for shrimp, tuna, salmon, pangasius, squid, octopus, crabs and molluscs such as clams and mussels.

In addition, Viet Nam’s seafood exports to countries with free trade agreements also increased sharply in the first five months, including to Australia (65 per cent), Canada (12 per cent), and to the UK (17 per cent). These markets are expected to play a significant role in promoting Viet Nam’s seafood export growth in 2021 and beyond.

Textile and garment companies struggle in fourth Covid-19 wave

Most textile and garment companies in the country have received large orders for the second half of the year but the fourth Covid-19 wave is threatening to hinder production.

According to the Ministry of Industry and Trade, textile and garment orders increased significantly after the Covid-19 pandemic was brought under control in the United States, the European Union and Japan, some of Vietnam’s main importers of textile and garment products.

The manufacturing index of the textile and garment sector in May 2021 rose 2.2% from the previous month and 10% compared with the same period last year. From January to May, the index grew 8.1% year-on-year.

The country exported over US$12 billion of textile and garment products in the first five months of the year, increasing 15% year-on-year.

However, textile and garment companies are struggling with disruptions caused by the ongoing fourth Covid-19 wave, which began on April 27.

Vu Duc Giang, chairman of the Vietnam Textile and Apparel Association, said at least 45 textile and garment companies had to suspend their operations over the past two weeks. They are facing a number of problems including rising costs, salary payments to maintain the staff and compensation for customers in case of late shipments.

“If a textile and garment company has to shut down for 14-21 days, its production plan for the entire year may be ruined,” he said.

Le Tien Truong, chairman of the Vietnam National Textile and Garment Group (Vinatex), said even if textile and garment companies remain operational, they may not be able to maintain their workforce as workers staying in areas under lockdown or social distancing are not allowed to travel to the workplace. This can cause a loss of billions of dollars and affect the reputation of the Vietnamese textile and garment sector.

Nguyen Xuan Duong, chairman of the board of Hung Yen Garment Corporation, said the Government should accelerate Covid-19 vaccination for workers of industrial parks and export processing zones, especially in current hotspots such as Bac Ninh, Bac Giang, HCMC and Hanoi. These hotspots are also home to many industrial parks and export processing zones.

Enterprises under Vinatex said they are willing to use their own money to vaccinate their workers against Covid-19. The cost is estimated at VND100-200 billion.

“We hope the Covid-19 vaccination will be prioritized for workers in the textile and garment sector so that we can stabilize our production in the coming time,” Duong said.

Quang Tri seeks to build VND7.7-trillion expy

The Quang Tri government has proposed the prime minister and the ministries of Transport and Planning & Investment add the Cam Lo-Lao Bao expressway project to the country’s expressway development plan in the 2021-2025 period, with a vision toward 2030, at a cost of VND7.7 trillion.

The expressway project connecting Cam Lo District with the Lao Bao international border gate in Huong Hoa District will be 70 kilometers long and 17 meters wide and have four lanes.

Some 28.3% of the total investment of the project, which will be executed under the public-private partnership, is expected to be sourced from the State budget, the local media reported.

The construction of the expressway is aimed at helping to link economic zones and key traffic routes, enhance transport capacity and promote socioeconomic growth.

It is necessary to develop the expressway to ease the burden on National Highway 9 connecting Dong Ha City and the Lao Bao border gate and stimulate export-import activities, said the provincial government.

Over the past few months, the number of vehicles, mainly container trucks, using the national highway to transport goods between Vietnam and Laos has surged.

In 2020, the value of imports and exports through the Lao Bao and La Lay international border gates reached US$379 million with 1.28 million tons of goods. Besides, over 17,000 shipments of goods weighing 1.5 million tons were transited at the Lao Bao international border gate.

Quang Tri Province is forecast to see a boom in import-export activities in the 2021-2030 period.

HCMC’s 2020 revenue from land use fees lowest since 2015

HCMC collected only VND7.6 trillion in revenue from land use fees in 2020, the lowest since 2015, according to a report by the HCMC Real Estate Association (HoREA).

HoREA cited statistics from the HCMC Tax Department to state that the revenue from the land use fees was only higher than the VND6 trillion in 2014 and much lower than that of other years in the past decade, news site VnExpress reported.

The revenue was equal to a third of the figure in 2017 and half of that of 2019 although the market was experiencing a slowdown in 2019.

From 2015-2018, the real estate market recovered strongly after a recession period with abundant supply and the land use fee revenue hit VND15.7-21.7 trillion.

HoREA attributed the decline in the land use fee revenue in 2020 to the plunge in housing supplies and the Covid-19 pandemic, which hindered the development of new projects.

HoREA Chairman Le Hoang Chau said the revenue from the real estate market and land use fees reflected the developments of the local property market over the past decade.

The total land use fee revenue from 2011 to 2020 reached VND125.27 trillion, accounting for only 4.26% of the city’s budget revenue. The land use fee revenue plummeted in the 2011-2014 period as a consequence of the market’s recession in previous years.

From 2014, the market recovered, so the land use fee revenue increased, hitting over VND16 trillion in 2015, up 2.66 times over that of 2014.

Proposal to suspend domestic flights to Phu Quoc disapproved

The provincial government of Kien Giang decided not to endorse the suspension of domestic flights to Phu Quoc Island as previously suggested by the island city’s authorities, said a local official.

The provincial government on June 9 chaired a working session with departments, the government of Phu Quoc City, representatives of the Kien Giang Maritime Administration, the Southern Airports Authority and four local carriers that operate flights to Phu Quoc.

Nguyen Luu Trung, chairman of the provincial government, told Thanh Nien newspaper that the province made the decision after evaluating the Covid-19 development in the region, reviewing efforts to fight the disease over the past period, collecting feedback from the relevant agencies, as well as following the anti-virus guidelines of the Government and the Ministry of Health.

The Mekong Delta province will continue to tighten control over people entering Phu Quoc by air and by sea, ensuring that no virus-hit individuals from other localities spread the disease to residents of the island.

Air passengers visiting Phu Quoc have to show a negative Covid-19 test certificate conducted 24 hours prior to their departure. Or else, local competent forces will perform a Covid-19 test for the passengers and the latter will have to cover the testing fees.

As for air passengers coming from areas under lockdown in line with the prime minister’s Directive 16, they will be subject to a 21-day mandatory quarantine period.

Passengers traveling to the island by sea are required to make health declarations and scan the QR code at wharves to check in. The Kien Giang Maritime Administration was told to ask the operators of ships and ferries to collect adequate and accurate information from passengers when tickets are sold to them.

Earlier, the government of Phu Quoc Island on June 4 had written to the provincial government proposing the suspension of domestic flights, especially those from Covid-19-hit provinces and cities, to prevent the spread of the disease.

Freight costs weigh down on disrupted businesses

Vietnamese businesses are reeling under financial stress as ocean-freight costs soar to a new record level, hindering local exporters’ ambitions to further expand in foreign markets.

Viet further noted that despite rising shipping-container rates, the company could not increase selling prices with the contracts already signed before. High ocean-freight rates discourage customers to place new orders while some make slower payments than usual. As the situation continues to deteriorate, it is likely to weigh on the firm’s profit margin this year.

Meanwhile, Nguyen Dinh Tung, general director of fruit exporter Vina T&T Group, told VIR, “We have dealt with the challenges caused by rising ocean freight rates since July last year. This year, the company has to pay $6,000 per container to export its goods from Vietnam to the United States, which is three times higher than the rate of $1,800-2,000 last year. Headwinds in ocean freight result in several challenges including rising expenses and higher prices, which in turn lowers the competitiveness of made-in-Vietnam products.”

Although international carriers raise the freight rates, there is still strong demand in the market. Many companies accept higher fees to export their products from Vietnam to the US and Europe. While this trend hurts exporters and importers, ocean carriers are enjoying growing profits.

“While companies are struggling with the difficulties from another major outbreak in Vietnam, the rise of seaborne-freight costs sees no sign of cooling down. Thus, I hope that the government can work with foreign ocean carriers to address this problem soon,” Tung added.

According to the Vietnam Logistics Association (VLA), the spike in ocean freight rates comes from the fluctuating supply and demand in the market. US and European importers are ramping up the restocking of goods to serve the surging consumption demand. Meanwhile, the pandemic has disrupted the trade flow and affected the turnaround time of container vessels, which results in a shortage of empty containers. Thus, freight costs are projected to wind down when the demand for imports go down.

According to data from container liner Maersk, due to the pandemic there was a precipitous drop in the demand for container services in the second quarter of 2020. The demand plunged from 2.2 per cent in the preceding quarter to minus 8.3 per cent.

Starting from the second half of 2020, the restocking in the US and Europe has been raising demand whilst global measures to contain the pandemic have been causing severe strains across the supply chain, from a lack of vessels, containers, and trucks to significantly reduced productivity across ports, warehouses, and inland terminals.

And on top of these bottlenecks in the global supply chain, issues like the Suez Canal blockage and Yantian Port closure continue to put pressure on supply chains. A spokesperson from Maersk explained that the current market situation is exceptional. The current supply/demand picture has caused freight rates to spike, also driven by increased network costs from less efficient vessel operations, steep increases in charter rates, and box prices as well as alternative solutions to support customer supply chains.

“Equipment supply and the repositioning of empty containers remains a concern, but to further lessen the impact on our customers’ supply chains, given the extraordinary market conditions triggered by the global pandemic, we are accelerating the injection of new dry containers into our fleet,” she added. “By the end of the second quarter, we will have added around 260,000 twenty-foot equivalent units (TEU). This comes after the 400,000 TEUs already added to our fleet from July 2020 to January. We also have deployed all available vessels in our fleet and chartered in all available capacity.”

The Drewry World Container Index released on May 27 showed the rate for a 40-foot container from Asia to the Europe shot above $10,000 for the first time on record. Industry insiders predict that the trend of high freight costs will continue to the third quarter of 2021, impacting exporters’ business results.

Targets being tweaked by prepared pharma

There remains caution over interruption in the ingredient supply chain in Vietnam’s lucrative pharmaceutical industry, but new strategies to intensify growth potential ahead will ensure pharma groups maintain their profitability moving forward.

According to financial statements from Vietnamese pharma titans like DHG Pharmaceutical JSC, Traphaco JSC, and Imexpharm Pharmaceutical JSC (IMP), there were strong rises in both revenues and profit in the first months of 2021.

DHG, the biggest publicly-traded drugmaker, made consolidated revenue of $50 million, up from just over $40 million in the same period last year. Consolidated after-tax profit hit $8.87 million, up 15.24 per cent on-year.

Similarly, Traphaco, the country’s second-largest publicly-traded drugmaker, saw on-year rises of 20.87 per cent and 34.06 per cent in consolidated revenue and consolidated after-tax profit respectively during the period. IMP, Vietnam’s fourth-biggest, witnessed a 23.1 per cent on-year increase in before-tax profit in the first four months, while its net revenue rose 9 per cent.

To adapt to the pandemic and prepare for the long-term future, DHG, Traphaco, and IMP are building new strategies. Traphaco, which now has South Korean leadership, aims to achieve a strong growth rate in 2021-2025 by continuing to increase the market share of the eastern medicine segment, while investing more in development of the western medicine business with support from South Korean shareholders. The drugmaker will intensify cooperation and partnership, especially with South Korean pharma firms, while accelerating tech transfer. Traphaco now boasts three big shareholders – State Capital Investment Corporation (35.67 per cent), Magbi Fund Ltd. (24.99 per cent), and Super Delta Pte., Ltd (15.12 per cent).

In 2021, South Korea’s Daewoong will boost transfer of technology for production of western medicines for Traphaco, with the figure reaching 70 products by 2025, focusing on cardiovascular, diabetes, and digestion drugs which target the ethical drugs channel (ETC), with a vision for future export. Traphaco expects that cooperation with Deawoong will produce revenue from 2022.

Traphaco now has strong advantages in nationwide distribution and rich experience in distribution of over-the-counter products – however, growth in this segment has tended to mature. Meanwhile, the ETC has strong growth potential, although this segment saw a fall in 2020 as COVID-19 decreased the number of patients at hospitals.

Tran Tuc Ma, general director of Traphaco said, “We define that 2021 is the year of standardisation of all processes. We are focusing on upgrading and improving inefficient processes, while strengthening the core advantages”.

Traphaco is not the only group to see high potential of the western medicine channel. DHG is setting the goal of continuing to expand business over the next few years to retain its position as Vietnam’s largest generic pharmaceutical company.

It has equipped two production lines meeting Japan-GMP standards, and certified by the Japan Pharmaceuticals and Medical Devices Agency. Currently, Vietnam has only three enterprises with their production lines meeting the same standards – DHG Pharma, Rohto-Mentholatum, and Mekophar. With these lines, DHG aims to boost domestic sales and exports to 14 international markets, as well as outsource for Japanese pharma partners. The company’s main foreign shareholders are Japan’s Taisho (51.01 per cent) and FTIF – Templeton Frontier Markets Fund (2.83 per cent).

Elsewhere, IMP is seeking EU-GMP recognition for its IMP 4 factory in a move to venture further into the ETC segment. However, the proposal may be delayed till 2023. According to SSI Securities Corporation (SSI), IMP has recently decided to send most of antibiotic products to bids for the hospital channel, while enhancing research and development activities on new functional foods.

SK Investment Vina III Pte., Ltd. is now the biggest foreign stakeholder at IMP with 24.02 per cent, followed by KWE Beteiligungen AG at 15.13 per cent.

Driven by a strong rise in profit in 2020, Traphaco, DHG, and IMP set higher targets for 2021. Industry insiders said that some targets are ambitious in the context that pharma firms in the overall picture have been facing challenges in growth in recent years as shown in statistics from financial database analysts Finn Pro, which has gathering information from 37 of the 61 listed pharma firms, accounting for 50.9 per cent of market capitalisation.

According to SSI, the COVID-19 outbreaks are placing worries on rising prices of active pharmaceutical ingredients (API). At a recent shareholders’ meeting, IMP raised their concerns over rises in API costs in the first quarter due to shortfalls in supply from India, the world’s second-largest API producer.

“IMP’s inventories can be enough for three months of production. The impact from a rise in ingredients costs may happen in the second half of 2021,” said SSI expert Nguyen Ly Thanh Luong.

Nonetheless, growth potential remains high. According to an IBM Market Research forecast, revenues in the Vietnamese pharma market will reach $7.7 billion in 2021 and $16.1 billion in 2026 with a compound annual growth rate of 10.6 per cent.

Eight wind power plants in Soc Trang to be finished by October

Contractors building eight wind power plants in Soc Trang province have promised to speed up work so that they can begin generating electricity before the end of October.

Pham Quoc Hung, Director of Quoc Vinh Soc Trang Wind Power Co., Ltd., said his company’s plant in Vinh Chau township, to have an output of 30MW in its first phase, would have its turbines put together on site in June and begin commercial operation in September.

The seven other plants, being built in the town along the coast, are 30-70 percent completed and will begin operating in September or October.

Eight wind power plants in Soc Trang to be finished by October hinh anh 2

The wind power turbines could themselves become tourist attractions, he added.

Soc Trang has around 72 kilometres of coast with constant strong winds, suitable for generating power.

It plans to have 20 wind power plants in all with a total output of 1,435MW.

Sixteen have been approved, with nine of them now under construction./.

Businesses struggle with rising costs during COVID-19

Many businesses have closed down or are struggling with rising overheads due to COVID-19.

From January to the end of May, nearly 60,000 businesses around the country closed. As many as 31,800 of them closed temporarily, while the rest were dissolved or are in the process of dissolution.

Many others are struggling with rising production costs.

Ly Kim Chi, chairwoman of the Food and Foodstuff Association of Ho Chi Minh City, said that since the start of the year businesses have been struggling with rising costs for raw ingredients such as condiments, rice and seafood.

Production materials and items like packaging and rubber gloves have also risen in cost.

Do Van Khuol, supply director of the Saigon Food Company, said that COVID-19 was driving up the cost of imported ingredients, and prices could rise by 10-25 per cent in the third and fourth quarters.

Last month the Vietnam Association of Seafood Exporters and Producers called for HCM City to delay its plan to charge extra fees for using seaport infrastructure works and utilities.

The city planned to begin doing this from July 1 to raise funds to upgrade seaport infrastructure.

The association proposed delaying that plan until at least 2022.

If the plan begins in July, businesses will face a serious financial burden on top of existing problems such as rising sea transportation costs and falling purchase demands, according to the association.

Although HCM City’s seaports play a key logistical role in transportation within the southern region and the Mekong Delta, traffic infrastructure for the seaports is still underdeveloped, leading to frequent congestion and high logistics costs.

Chi said that the next few months will see businesses importing a high volume of raw ingredients.

Businesses have asked that the proposed seaport fees be lowered so they can recover and improve competitiveness more easily, she added.

Businesses are also asking the Ministry of Industry and Trade to facilitate cooperation between them and e-commerce platforms to boost their business activities./.

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