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Business support packages in the frame for maximum impact



With many businesses becoming gradually exhausted and in critical need of state support, many National Assembly members have asked the government to apply feasible solutions to lift them out of woes.

 What will the government do to continue assisting them in the time to come?

Business support packages in the frame for maximum impact
Vietnam is looking to ensure its financial injections find their intended destinations. Photo: Le Toan/ VIR

Never in Vietnam has a government-initiated pro-business policy been complained about as much by enterprises, experts, and National Assembly (NA) members as the VND62 trillion ($2.7 billion) package to support 20 million poor and unemployed people, with major difficulties in disbursement.

This package includes a VND16 trillion ($695.65 million) sum aimed to provide loans for enterprises at a zero lending rate to pay salary for employees. While the package was announced in April, meagre results have been made in disbursement so far because of too many hurdles.

“Amid numerous difficulties, slow-paced implementation of government policies like this package to assist enterprises hit by COVID-19 is leaving many businesses in the lurch, making it hard to boost economic growth,” said NA deputy Luu Binh Nhuong, representing the Mekong Delta province of Ben Tre.

“Though the government has been making big efforts to boost administrative reforms by reducing and removing tens of thousands of administrative procedures and developing an e-government, the public and businesses are still lamenting over difficulties they are facing when conducting business and production. Enterprises are in critical need of state support or the number of enterprises shutting down production will continue rising.”

Stronger policies in need 

The General Statistics Office reported that in the first 10 months of 2020, almost 85,600 enterprises halted operations, up 15.1 per cent on-year.

In April, the Vietnam Bank for Social Policies (VBSP), in charge of implementing preferential credit policies for the poor and other policy beneficiaries, offered a VND16 trillion package to struggling enterprises at a 0 per cent lending rate in order to pay salaries for their employees.

However, to obtain the loans, borrowers are required to meet tough conditions. Specifically, an enterprise has to have 20 per cent or at least 30 employees with social insurance who are forced to stop employment during April 1 and December 30. The time of layoff must be at least one continuous month. Besides this, the employer must be facing financial difficulties and cannot pay additional salaries, and must not have any bad debt at credit institutions and foreign banks before December 31, 2019.

If the borrower can meet all of these conditions, he must submit a loan proposal to the district-level people’s committee where the enterprise and the bank’s branch are located. Within three working days, the committee must appraise the proposal and then submit it to the chairperson of the provincial-level people’s committee. Within two working days, the chairperson must issue a decision on the proposal, and send it to the VBSP branch which will process the final procedures to provide the loan for the enterprise.

Commenting on this package, NA deputy Mai Thi Anh Tuyet representing the Mekong Delta province of An Giang said the policy does not seem feasible.

“As far as I know, very few enterprises have been able to obtain loans from it,” Tuyet said. “The VND62 trillion package is too slow to be disbursed.”

Tran Manh Dung, a representative from the People’s Committee of Xuan Dinh ward in Hanoi’s Bac Tu Liem district, told VIR that the locality was given by the city’s government VND5 billion (about $217,400) as part of the VND62 trillion package to support those hit by the pandemic in the locality.

“However, only a few people and no enterprises have been able to access the financial support so far,” Dung said. “It is because there is a lack of specific standards for disbursement. Meanwhile, thousands of residents and hundreds of businesses in the locality want the support.”

It is estimated that about 20 per cent of the whole package has been disbursed nationwide so far.

Nguyen Cong Bang, director of Hanoi foodstuff processor Cong Bang JSC, told VIR that his company used to have 100 employees. “However, the pandemic has hurt our business and we had to lay off 50 workers. Now we want to access the preferential loans, but the conditions are quite complicated and we think we will never be able to approach such a kind of loan,” Bang said. “We have had to resort to loans from other sources to secure our business.”

According to many NA deputies like Tuyet, the government needs to review all pro-business policies it has already enacted so that practical and feasible solutions can be taken to lift enterprises out of their problems.

“It is strongly recommended that the government review how the VND62 trillion package has been implemented. Under the reports we have, the implementation of the package is too slow, while too many enterprises are suffering from difficulties and need urgent support. All of them are small- and medium-sized enterprises, and they are the key driving force for job creation and economic growth,” said NA deputy Cao Dinh Thuong, representing the northern province of Phu Tho.

Thuong cited a survey from the Vietnam Chamber of Commerce and Industry stating that as of mid-September, about 3 per cent of the surveyed enterprises received loans from the package. “What is the cause? Is it the lack of responsibility of those in charge of disbursement of the package?” Thuong wondered.

According to NA members, direct financial support is just a situational solution, and in the long term the government should have sturdier solutions. “There must be special policies to help enterprises to spur on demand. If there is no breakthrough in administrative reform, the pro-business policies in 2021 will likely not help enterprises reduce costs and also impede their development and recovery,” Thuong said. “This will badly affect the country’s 2021-2025 Socioeconomic Development Plan.”

Since the second quarter of 2020, the government has also been deploying some drastic measures to support businesses. For instance, the State Bank of Vietnam has been deploying a package worth VND180 trillion ($7.82 billion) for enterprises and households, in the form of debt payment deferral and preferential loans.

However, no concrete reports on how this huge package has been carried out have been revealed.

The World Bank recently published results of a survey of around 500 businesses in Vietnam, asking how they have been affected by COVID-19. Firm revenues reduced substantially and despite the easing of social distancing rules, 85 per cent of firms still reported a reduction in sales by June. Over 50 per cent of respondents reported having their operations affected by a decrease in input availability.

This shock affected firms in the manufacturing and wholesale and retail sectors similarly. On average, firms are expecting highly negative growth over the next six months of -27 per cent for sales and -20 per cent for employment.

Breathing new life 

Assigned by the government, the Ministry of Planning and Investment (MPI) is asking ministries and agencies to provide it with policy recommendations for the second economic stimulus package expected to be offered by the government in the time to come. Besides policies for labourers, this package will likely have a major focus on assisting firms operating in the sectors of aviation, tourism, and consumption services.

One of the notable policies in this package is that the MPI may ask the government to guarantee loans worth about VND11 trillion ($478.26 million) for aviation businesses.

“COVID-19 has caused a massive reduction in revenues of aviation firms and this may lead to insolvency and then bankruptcy,” said MPI Deputy Minister Tran Quoc Phuong. “Without special policies, the aftermath would be extremely negative. This policy is expected to be a kiss of life for firms.”

Moreover, the MPI also proposes a reduction of 70 per cent of environmental protection tax for aircraft fuel for 2021. However, some NA deputies have different angles at the new possible package.

Do Van Sinh, member of the National Assembly Economic Committee, told VIR that a new economic stimulus package is “quite necessary given enterprises face massive complications.”

However, he said, in order for the package to be materialised, it is necessary to have a close look at the current state budget situation, as revenue is expected to be VND1.32 quadrillion ($57.52 billion), down 14.7 per cent on-year.

“Thus, if another economic stimulus package is enacted, how much will it be, especially given the numerous issues with the state budget? I think it is necessary now to first effectively carry out the existing packages,” Sinh said.

Meanwhile NA deputy Truong Minh Hoang, representing the southernmost province of Ca Mau, also told VIR, “It is quite necessary to have a new economic stimulus package to further support enterprises. However, before implementing this initiative, it is necessary to consider the existing state budget situation, which is expected to see a big budget deficit this year.”

“Thorough studies must be made so as to decide on what sectors and who will benefit from the new package,” he said. “It is urgent now to provide more support to businesses.” VIR

Nguyen Dat



Vietnam Airlines gets clearance for Canada flights



Vietnam Airlines gets clearance for Canada flights

A Vietnam Airlines aircraft at the Tan Son Nhat International Airport, HCMC. Photo by Shutterstock/EQRoy.

National flag carrier Vietnam Airlines has received a permit from Transport Canada to carry passengers and cargo to every airport in the country starting June 11.

Vietnam Airlines is the first Vietnamese carrier to get this permission is granted after a stringent process. The examination process for Vietnam Airlines took four months.

The airline plans to launch repatriation flights to bring the Vietnamese in Canada back home, as also carry the Canadians and students who want to study abroad to Canada. It will operate flights mainly to Toronto and Vancouver.

The airline will use its biggest wide-body aircraft – the Boeing 787 or the Airbus A350 for these flights. It will implement strict Covid-19 prevention measures on the flights.

The first flight is set to take off on June 30 to Toronto to bring home Vietnamese citizens stuck in the country.

The carrier has also received permission from U.S. authorities to conduct 12 repatriation flights this year, the first of which is scheduled for this month.

Vietnam Airlines had been allowed to operate flights to Canada last year, but only for four months from July to November.


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Vietnam to protect production at industrial parks



The fourth wave of COVID-19 has changed the routines of many people working in industrial parks (IPs) in northern Vietnam.

Vietnam to protect production at industrial parks
A worker of Samsung Company in Yen Phong IP, Bac Ninh Province, is vaccinated against COVID-19. — Photo 

As IPs play an important part in the country’s exports and local economic development, the re-emergence of the COVID-19 pandemic could cause disruptions to production and business activities, causing tens of thousands of workers to work alternate shifts or take temporary leave, said experts.

To deal with the situation, Bac Ninh Province, which is home to 1,120 companies including big names such as Samsung, Canon, Foxconn and Microsoft, as well as about 450,000 workers in 10 industrial parks and 26 industrial clusters, started the first ever production-residence-combined model in the country to deal with the ongoing outbreaks in the IPs.

Vu Ninh, who worked as a manager at Samsung’s vendor at the Yen Phong IP told Việt Nam News: “I was vaccinated against COVID-19 on June 2 and feel thankful and safe for that.”

Ninh said: “Now, everything is served at the factory. Instead of going back and forth between Hanoi and Bac Ninh every day like usual, we are working, eating and staying at the factory all the time.”

Other IPs in Bac Ninh Province are following similar models.

Nguyen Thi Khai, a worker at Bujeon Vietnam Electronics Company in Que Vo IP, said: “I feel peace of mind while I keep my job and income and am protected.”

Nguyen Thi Thu, a worker at Yen Phong IP, said: “We get VND100,000 per day and extra each month to call home.” 

Co-operate to protect the IPs

While Bac Ninh Province People’s Committee set up teams to inspect, supervise and guide enterprises to implement the work-stay model, local enterprises were also working hard to make sure their staff stay safe.

Bujeon Vietnam Electronics rearranged an equipment line, temporarily suspending an expansion project to take advantage of the space for accommodation. 

Song Yu Hoon, director of the company’s Administration and Human Resources Department, said: “We always ensure the best conditions for workers’ accommodation as they need to be safe to maintain stable production.”

Choi Joo Ho, general director of Samsung Vietnam, said: “In a short time, equipment has been installed for workers to stay at the factories and at 51 schools in Yen Phong district.”

To ensure peace of mind for tens of thousands of employees, the company provides free accommodation, as well as three meals and a snack a day.

Bui Hoang Mai, Head of the Provincial IP Management Board, told local media: “The policy of the province has received the consent of enterprises as it is the most practical solution to fulfil the “dual goal” of both economic development and fighting the COVID-19 pandemic.” 

Other IPs to be protected

There are 3.8 million people working in 369 industrial zones and border areas nationwide, while some 600,000 people work at industrial clusters. 

Hanoi, HCM City and Bac Giang Province also suffered from the fourth wave of COVID-19. In the top ten exporting localities, valued at US$213 billion, the top four accounted for 51.2 per cent of the volume. HCM City and Hanoi accounted for 40 per cent of the country’s GDP.

In the fourth wave of the virus since April 29 to June 16 afternoon, Bac Giang reported 4,590 cases, Bac Ninh followed with 1,432, while HCM City and Hanoi reported 1,015 and 464 cases, respectively.

With more positive cases reported, HCM City’s factories implemented measures to deal with the pandemic and ensure production.

Head of Viet Thang Jean Co. with thousands of workers and vice president of the HCM City Textile, Embroidery and Knitting Association, Pham Van Viet, said: “The textile and garment industry is labour-intensive and works on a chain, so if a worker is isolated for 14-21 days, the enterprise’s production plan and the production chain are interrupted.”

Viet said: “We are very worried because if we cancel orders, we have to compensate customers, while thousands of workers have to quit or lose their jobs.”

As in Bac Ninh, the city’s businesses have prepared plans for on-site production and accommodation. On June 11, the management board of the city’s Hi-Tech Park organised an online scenario when workers stay and work in the factories.

Economist Ngo Tri Long said that the fourth wave poses other problems. The first priority was to fight the pandemic, but at the same time keep production chains intact. 

“In the planning and development strategy of IPs, it is necessary to prepare and respond to the pandemic and limit the spread of the disease. The construction of concentrated accommodation and catering for workers in a closed chain in industrial parks and factories will be a long-term solution. Thus, it is easy for us to stamp out the pandemic, not to spread it in the community.”

Long said it was necessary to urgently trace, localise and stamp out new infection clusters, especially outbreaks that have spread to industrial parks and export processing zones, adding that foreign experts working in the IPs need to undergo mandatory isolation.

Economist Nguyen Tri Hieu told Việt Nam News: “The local economy has spent the first five months relatively optimistic. Exports grew over the same period last year, foreign trade maintained growth, jobs were restored, and GDP continued to grow. However, from now until the end of the year the situation will be very unpredictable.”

He added: “We still have strength in exports. Many markets around the world are being strongly affected by the pandemic, but there is a lot of demand for goods, especially agricultural products. However, the pandemic must be controlled and the production must be maintained.”

Source: Vietnam News


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Japanese investors secure foothold in leading Vietnamese brands through M&A



Japanese investors have poured billions of dollars to purchase stakes at Vietnamese businesses over the past decade.

Japanese investors secure foothold in leading Vietnamese brands through M&A
After a decade of M&A, Japanese investors now own several leading brands in Vietnam.

As of May 2021, Japan was the second-largest foreign investor in Vietnam with the total registered capital of $63 billion. Japanese investors have also been actively contributing capital and share purchases to Vietnamese firms in various fields such as retail, food and beverage, pharmaceutical, real estate, and finance.

Many well-known Vietnamese brands are now owned by Japanese investors. In 2011, Unicharm acquired local company Diana. In 2015, Unicharm expanded its factory in Bac Ninh Province, targeting a bigger slice of the market.

Also in the same year, brewery group Kirin Holdings acquired major Vietnamese soft drink producer Interfood Shareholding Co. as part of its plans to capitalise on the Vietnamese market. Kirin purchased 57.25 per cent of the total outstanding shares in Interfood for an undisclosed sum and also bought out Wonderfarm Biscuits & Confectionery Sdn. Bhd., a Malaysia-based firm that manages the intellectual property rights of Interfood.

Eath Chemical also took over A My Gia, which is known for the Gift brand household detergent and Ami brand air fresheners. Sojitz Corporation spent around $91 million on acquiring a 95 per cent stake in Saigon Paper Corporation, which is the largest tissue paper and industrial paper producer nationwide. Japanese drugmaker Taisho Pharmaceutical Co., Ltd. also takes control of Hau Giang Pharmaceutical JSC. Other M&A deals involving Japanese investors include NTTData’s acquisition of Payoo, AEON Group’s acquisition of Citimart, and Line’s acquisition of Webtretho.

In 2021, Maruha Nichiro decided to acquire Saigon Food in order to secure a new marine product processing base and to acquire a platform for the development, processing, and sales of processed foods. Meanwhile, Japanese mega financial institution Sumitomo Mitsui Financial Group (SMFG) has just acquired 49 per cent stake in Vietnam’s largest consumer finance company FE Credit. The Japanese bank will invest more than $1.4 billion in FE Credit as early as October.

Speaking at the Vietnam M&A Forum 2020, Masataka “Sam” Yoshida, head of the Cross-border Division of RECOF Corporation and CEO of RECOF Vietnam Co., Ltd. said that M&A investments in Vietnam will be a trend for Japanese companies which will last for the years to come.

The first trigger is the destiny for Japanese companies to find new markets to expand outside Japan. The fact is that most of the sectors in Japan are already mature. For instance, almost one-third of the Japanese population is over 65 years old. This makes the average age of Japanese people 48.4 years, almost 20 years older than the figure for Vietnam. Also, around 276,000 people (more than a quarter of a million) are disappearing every year.

“The second trigger is ‘M&A as a growth strategy’ which is backed up by the abundant accumulated cash during the last 20 years which is reaching $2.34 trillion as bank deposits with almost zero interest rate. Pushed by shareholders’ requirements to make use of the money, these funds have started to flow into the M&A market which made its highest record in 2019 by 4,088 deals. This means there were more than 4,000 active and successful Japanese investors,” he said.

Source: VIR 


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