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Upcoming incentives create space for tech-led projects

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New regulations on special investment incentives have been unveiled to facilitate more high-tech funding in Vietnam, giving the country a new tool to lure quality foreign investment and retain investors for the long term.

Upcoming incentives create space for tech-led projects
Vietnamese high-tech groups are welcoming added investment from Asia and beyond. VIR Photo: Le Toan

On October 6, the prime minister issued Decision No.29/2021/QD-TTg, in which new and expanded investment projects will be entitled to special incentives. The decision provides the levels, duration, and conditions for application of incentives on areas such as corporate income tax and land rent.

According to Seck Yee Chung, vice president of the Singapore Business Group (SBG), with the aim to boost the growth of startups, tech companies, and other innovative sectors, the Law on Investment 2020 supplemented the sectors that will be entitled to such funding incentives. The sectors include, among others, high-tech and sci-tech enterprises, innovative small- and medium-sized enterprises (SMEs), research and development centres, and investment in technical facilities for SMEs.

“Decision 29 has provided further guidance on the requirements and specific incentives applicable to these projects and, in general, I believe this new regulation will help promote investment in Vietnam,” he added.

Sophie Mermaz, head of the French Chamber of Commerce and Industry in Vietnam (CCIFV) in Hanoi, said, “Considering that French companies are at the cutting edge of technological progress and innovation in sectors such as digital, energy, and pharmaceuticals, a push for technology and know-how transfer to access a market as vibrant as Vietnam is more than welcome.”

The CCIFV, as one of the largest foreign business associations in Vietnam, is promoting and supporting investors wishing to do business in Vietnam and it greatly welcomes the positive announcement, Mermaz said. “We strongly believe that Vietnam is rapidly emerging as one of the world’s new manufacturing hubs. Through our business centres and associated consultancy services in Ho Chi Minh City and Hanoi, we strive to entice tech and innovative companies to set up in the new ASEAN hub that is Vietnam,” she added.

The new regulations on special investment incentives may also facilitate Vietnam to fulfil its commitments under a wide range of free trade agreements (FTA) it has signed. In particular, the EU-Vietnam FTA is expected to strengthen Vietnam’s competencies by fostering further European high-tech and innovation investments, which are important to accelerate the development of the local industrial and digital economy in line with the country’s development strategy.

Benefiting from maturity 

According to Guru Mallikarjuna, managing director of Bosch Vietnam, Vietnam has a favourable economic outlook for German investors, especially with ample advantages for further industrial and high-tech development, such as availability of a competitive labour force, preferable age brackets, and increasing focus on capacity training and development trajectory. In addition, direct effects from FTAs promote Vietnam’s standing even stronger with fewer trade barriers with countries in the EU and Asia, representing a huge purchasing power of billions of potential customers.

“The pandemic has also accelerated digitalisation, leading to higher productivity and promoting leaner production footprints that are closer to end markets,” Mallikarjuna said. “In response to this shift Vietnam, with the right pandemic management strategy, can present itself as a prime candidate for global and German investors.”

He did add, however, that it remains a valid argument that Vietnam’s supply chain could benefit from further maturity and expert availability – but the country is well on its way to addressing this matter to sharpen its competitive edge.

Specifically, for German investors and manufacturers, this is thought to be an opportunity rather than a challenge, providing that they act boldly and imaginatively to leverage the forefront capabilities that German industries are known for, in Industry 4.0 technologies and system quality. Through embracing next-generation digital technologies such as automation, advanced robotics, and more, not only will it enable German firms to significantly improve speed and productivity, but will also promote a much leaner and more flexible supply chain that is located in close proximity with end users of ASEAN’s growing markets, according to Mallikarjuna.

The new regulations on special investment incentives are being offered in the hope of aligning Vietnam’s efforts to attract high-quality investment in the Industry 4.0 era. However, there are still some concerns as to whether certain conditions under the decision would be workable. Chung from the SBG pointed out that in order to enjoy the incentive corporate income tax rate of 9 per cent for 30 years, the project must be in business lines eligible for exceptional incentives, and with a total investment capital of at least VND30 trillion ($1.3 billion), with at least VND10 trillion ($434 million) being disbursed within three years.

Given the significant size of investment capital to be disbursed within a short period of time, the number of projects that can meet the conditions for entitlement to this particular incentive is likely limited. It remains to be seen, in practice, as to how meaningfully this regulation will be interpreted and applied.

Chung also noted that the regulation on investment incentives is a significant effort from the government to facilitate foreign investment, especially in tech sectors, into the country. However, in addition to regulations on investment incentives, tech transfer and investment into a particular market, including Vietnam, depend on the various policies and circumstances.

“These can include support from the government, whether on a business-friendly environment, legal framework on protection of intellectual property rights, cybersecurity, and also taxation. In addition, the country’s ability to manage future crises can be a factor that the investor will consider before making a decision,” Chung stated.

Taking advantage 

As Vietnam is reopening its economy, the new investment incentives also give confidence for foreign financiers to retain investment in Vietnam after the implementation of tough coronavirus prevention measures.

Mermaz from the CCIFV said that Vietnam does have advantages in the fast-evolving international supply chain. The country remains in a good position as it has been open for foreign direct investment (FDI), and related regulations have been favourable. The economy is likely to bounce back strongly in 2022, attracting strong demand for relocation.

Despite the complexities of the pandemic, FDI keeps growing in terms of capital investment. Vietnam’s favourable conditions for doing business has cemented its position as a safe and stable destination for investment. “We aim at helping companies make informed decisions when beginning their operations in Vietnam and will continue to do so when the 2022 economic rebound takes place,” Mermaz added.

In the same vein, Chung said that the safety measures introduced to manage the pandemic outbreaks have seriously affected the business of many companies and investments in Vietnam. However, he believed that Vietnam is still an attractive destination for foreign investment. In 2020, Vietnam was one of the few Asian countries to continue to grow and attract new foreign investment despite the impact on the global economy.

“The country’s position in the global supply chain remains important, as investors look at other Asian countries outside of China for production activities. That being said, in order to compete with other countries to attract foreign investment, the government should continue to support companies in Vietnam, whether by way of incentives or ensuring a fair and transparent environment to do business in,” he said.

Source: VIR

Source: https://vietnamnet.vn/en/business/upcoming-incentives-create-space-for-tech-led-projects-784871.html

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Power development plan to be revised to align with Vietnam’s global climate change commitment

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The draft National Power Development Plan for the period 2021-2030 will be revised to align with Vietnam’s commitment to net-zero emissions by 2050.

Power development plan to be revised to align with Vietnam's global climate change commitment hinh anh 1

Vietnam’s consideration of raising the capacity of offshore wind power in the draft National Power Development Plan for the period 2021-2030 is applauded by wind power community. (Photo: VNA)

The draft National Power Development Plan for the period 2021-2030 (draft PDP VIII), with a vision to 2045 will be revised to align with Vietnam’s commitment to net-zero emissions by 2050 made at the 26th UN Climate Change Conference of the Parties (COP26).

The Ministry of Industry and Trade is recalculating the country’s electricity generation sources. Under a plan announced by the ministry in November, the total installation capacity of power sources by 2030 will be 155,722 MW, a reduction of 24,305 MW compared to the scenario released in March.

Under the latest scenario, coal power and LNG-fired electricity will decrease by 6,694 MW and 18,550 MW respectively, while wind power output will be promoted. Specifically, onshore wind power generation is expected to reach 17,338 MW by 2030, an increase of 1,258 MW compared to March’s scenario. Meanwhile, offshore wind power will be up by 1,000 MW to 4,000 MW by 2030.

The proportion of coal-fired power will decrease slightly, accounting for 25.49 percent of total electricity sources compared to 26.7 percent in March’s plan.

LNG-fired electricity will account for 9.49 percent while onshore wind power 11.13 percent and offshore wind power 2.57 percent in comparison with 9.9 percent, 10.7 percent and 2 percent, respectively, under the plan unveiled in March.

Mark Hutchinson, the chair of Southeast Asia Task Force at Global Wind Energy Council spoke highly of Vietnam’s commitment to reach net-zero emission by 2050 as well as the consideration of raising the capacity of offshore wind power in the draft PDP VIII, saying this is a very positive signal of the Government’s attention to and confidence in the development of offshore wind power.

According to Hutchinson, the early deployment of offshore wind power will create momentum for the development of the offshore wind power industry, thereby reducing investment costs in the future.

In the context that coal power is likely to be significantly reduced, wind power will serve as an ideal source of power to offset a reduction in electricity generation.

In addition, the development of offshore wind power will protect Vietnam’s energy industry from the risks of fuel price fluctuations in the world market, he said./

Source: VNA

Source: https://vietnamnet.vn/en/business/power-development-plan-to-be-revised-to-align-with-vietnam-s-global-climate-change-commitment-798438.html

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Magnetic strip ATM cards to remain valid next year

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A customer uses a chip card for payment at a point-of-sale (POS). VNA/ Photo

HÀ NỘI — The State Bank of Vietnam (SBV) this week issued a dispatch, noting that domestic automated teller machine (ATM) cards with magnetic strips will remain valid for normal use after December 31, 2021.

The dispatch was issued after some banks have recently started sending notices to their customers about stopping supporting cards from ATMs to meet the deadline of the SBV’s Circular 19/2016 on the roadmap to convert from issuing magnetic strip cards to chip cards from next year.

Under the new dispatch, the SBV clarified that Circular 19/2016 makes no mention of a suspension of transactions using magnetic strip cards that remain valid.

December 31 this year is the deadline for changing to chip cards, not the date that magnetic strip cards will become invalid, the SBV noted, adding customers can continue to use magnetic strip ATM cards for transactions at ATMs, point-of-sale (POS) and bank counters, and for internet and mobile banking services after December 31 this year.

Under the new dispatch, the SBV asked card issuers and card payment organisations to ensure card holders’ transactions are carried out smoothly, safely and do not affect the interests of cardholders. They were also asked not to issue policies and regulations that go against the law on bank card operations.

In addition, they were told to launch media campaigns to inform their customers that magnetic stripe cards can still be used after December 31 this year.

However, under the new dispatch, the SBV also asked card issuers to encourage and support their customers to convert magnetic cards to chip cards to enhance security and to warn them of the risks if magnetic cards continue to be used.

There are two common ways to convert magnetic cards to chip cards.

In the first way, customers only need to bring valid citizen ID card or passport to the bank’s transaction point and request to convert from magnetic card to chip card.

In the second way, customers can access digital banking applications and mobile banking to apply for and receive cards at home or at the bank’s transaction points.

Or at some banks, the process is even more convenient. For example, at TPBank, customers can exchange magnetic cards for chip cards at LiveBank 24/7 and receive cards in just a few minutes.

In order to encourage customers to change magnetic strip cards to chip cards, most banks offered this service free of charge and the change is still free at some banks.

For example, at NamABank, the bank will completely convert magnetic strip cards to VIP cards for free from now until December 31, 2021. Similarly, Techcombank is also offering this activity free of charge.

According to experts, the conversion of magnetic strip cards to chip cards is beneficial for users, contributing to improving the security level, transaction speed, safety and ensuring the interests of customers.

Specifically, a magnetic card is a card containing a magnetic strip storing customer’s encrypted information. The data is permanently stored on the magnetic strip and is encrypted only once, so it easily leads to the risk of card information theft and transaction fraud.

Meanwhile, chip cards, which are also known as “smart cards”, have a microchip attached to the surface of the card, and this is the basic difference between chip cards and magnetic strip cards. For chip cards, transaction data includes data stored on the chip and the transaction password that changes with each transaction. Specifically, every time a chip card is used for payment, the chip will generate a unique transaction code and never repeat. In case the customer’s card is stolen from a certain store, the fake card will never work because the stolen transaction code will not be reused, the card will be rejected. —      


 

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Source: https://vietnamnews.vn/economy/1092063/magnetic-strip-atm-cards-to-remain-valid-next-year.html

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Exporters told to strictly comply with EU regulations to avoid losses

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The European Union has a large demand for imported agricultural products and, thanks to the EU-Vietnam Free Trade Agreement (EVFTA), Vietnamese businesses have a unique opportunity to take advantage of this.

 However, local businesses need to strictly comply with European regulations to avoid losses when exporting to the region.

Exporters told to strictly comply with EU regulations to avoid losses
The EU applies strict requirements and regulations on imported food products. — VNA/VNS Photo Vu Sinh 

For food products, the EU has strict requirements and regulations on product quality and the maximum residue level (MRL) of pesticides.

Trade counsellor Tran Ngoc Quan, head of the Vietnam Trade Office in Belgium and EU, said that most regulations across the bloc are similar when it comes to agricultural and food products.

Germany, Austria, the UK, Netherlands and Belgium do have stricter and higher MRL levels than the standard EU regulations, though these vary with different active ingredients, fresh produce and processed products.

Dang Phuc Nguyen, General Secretary of the Vietnam Fruit and Vegetable Association, said that while Vietnamese fruits and vegetables are more competitive than those from countries without a European trade agreement, exporters must focus on improving MRL levels.

Nguyen said: “If enterprises exporting to the EU do not comply with the regulations, they face the risk of increased levels of inspections, supervision and perhaps even being banned from exporting to these markets in the future.

“The EU applies these regulations very strictly. Enterprises that want to export to the EU must obtain certificates and production levels according to GlobalGAP.”

Nguyen added that violators run the risk of incurring heavy losses if they are caught.

According to the new EU regulation No 2021/1900, effective from November 23, the frequency of pesticide testing on Vietnamese herbs and fruits will increase. Of this, 50 per cent of testing will be applied to coriander, basil, mint, parsley, beans corn and pepper and 10 per cent will be applied to dragon fruit.

Nguyen said that as vegetable products in Vietnam often have pesticides, some samples and consignments will be tested for residue. The EU has also increased the frequency of testing, adding that the more enterprises violate the regulations, the more frequent inspections will be. 

He said bans on export to the EU could be applied to violators.

According to a representative of the Vietnam Pepper Association (VPA), the EU’s increase in testing will raise difficulties in exporting to the EU and will invite increased competition from other countries.

“In order to avoid violations, businesses must do better at testing products when exporting, as well as strengthening production links to create a clean and safe raw material area,” said a representative of VPA.

The EU also conducts post-inspections away from ports, so even though goods are being consumed or sold at supermarkets or shops, if they are not of good quality they can still be recalled, said Nguyen.

Using the example of a Vietnamese pepper export enterprise that was refused by Spain when its product was tested at the border gate recently, Nguyen said that if the violation was discovered when the product was already on shelves it would cause larger financial damage to the  Vietnamese exporter. 

Nguyen Minh Lien, General Director of Vinamex Company which purchases Vietnamese goods for export to the EU market, shared that some Vietnamese enterprises do not pay due attention to food safety issues. Lien added that due to the post-inspection of the EU market, some have had to pay fines and incur additional costs due to poor quality products.

In addition, Lien said some basic errors like incorrect packaging leads to products being returned or sold cheaper to other markets.

Lien noted when exporting goods to the EU, Vietnamese businesses must work closely with importers on product quality, packaging and contract inspection to avoid loss and damage.

She said supermarkets in the EU do not directly import goods from Vietnam, so local enterprises should cooperate with importers to arrange products at the warehouse before entering the retail market there.

She also suggested Vietnamese enterprises cooperate to diversify products, ensure sufficient output and take advantage of shared containers when exporting.

Considering EU customers are increasingly interested in buying products from businesses that contribute to community development and the environment, Nguyen said: “Sustainable development should be a long-term direction for export businesses in Vietnam.”

At the same time, even enterprises and manufacturers that follow the GlobalGAP requirements must pay attention to the plant protection ingredients that the EU bans or restricts, as some may be different from the GlobalGAP.

Source: Vietnam News

Source: https://vietnamnet.vn/en/business/local-exporters-must-strictly-comply-with-eu-regulations-to-avoid-losses-798131.html

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