Cashew sector predicted to secure good export growth in 2022
The target of 3.8 billion USD in export revenue of cashew nuts for this year set by the Ministry of Agriculture and Rural Development (MARD) is quite feasible given the forecast on high demand for the product in the time to come, according to experts.
The coming into force of major free trade deals such as the EU-Vietnam Free Trade Agreement (EVFTA), the UK-Vietnam FTA (EVFTA) and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), has also brought about many chances for Vietnamese products to access the European, America and Chinese markets.
According to the Vietnam Cashew Association (Vinacas), the global cashew nut market is predicted to expand 4.6 percent each year in the 2021-2026 period and reach 7 billion USD in 2025. Vietnam is currently the top exporter of cashew nut in the world.
Last year was a successful year for Vietnamese cashew sector with export volume of 579,800 tonnes and value of 3.64 billion USD, year-on-year rises of 12.6 percent and 13.3 percent, respectively.
The highest growth in cashew export earnings was seen in the African market with 35 percent, followed by the Asian market with 24 percent. Vietnamese cashew took 22 percent of market share in Europe and 23 percent in the US and even 89 percent in the Chinese market.
President receives executives of leading financial, energy firms of Singapore
President Nguyen Xuan Phuc on February 26 received executives of leading Singaporean firms in different areas such as finance, infrastructure and energy.
Meeting leaders of United Overseas Bank Ltd (UOB), the Vietnamese State leader welcomed the bank’s commitment to engage deeper into the Vietnamese country’s market investment.
He said Vietnam is giving priority to developing green and sustainable finance, and proposed that the UOB cooperate with Vietnamese State agencies to promote digital transformation in the areas of finance and credit.
At the reception for leaders of DBS Bank, President Phuc hailed the bank’s investment in finance-banking sector of Vietnam through digital platforms.
At his meeting with leaders of CapitaLand Group, the President recommended that the real estate firm expand its investment in ecological industry, smart city, green urban areas and logistics, which are prioritised sectors that Vietnam is calling for investment in.
Meeting leaders of the Singapore Manufacturing Federation (SMF), President Phuc said he hopes that the federation will continue to encourage Singaporean firms to make stronger investment in Vietnam. He underlined that Vietnam prioritises environmentally-friendly FDI projects with high quality and efficiency, using high technology, especially those in innovation and digital economy.
Receiving leaders of Temasek Group, Phuc welcomed the firm’s investment in Vietnam’s technology, financial service, consumption, agriculture, logistics and innovation areas. He spoke highly of Temasek’s support for Vietnamese partners, especially startups, proposing that the firm expand its cooperation scale towards green and sustainable development.
Meeting leaders of ACTIS, a leading investment fund in sustainable infrastructure, and Bridgin Power company, President Phuc lauded the firms’ investment of 250 million USD in green energy development in Vietnam. He welcomed them to invest in the areas of solar and wind power, LPG and energy port.
Meeting leaders of Changi Airport Group, the leading Singaporean aviation consultation and investment management firm, the President proposed that the firm partner with Vietnamese counterparts in the field, especially in the development of airports meeting standards of regional transport hubs. He hailed the firm’s partnership with Vietnamese SOVICO Group in developing aviation infrastructure and services as well as in human resources training.
Mindset reform critical to agricultural development: minister
The agricultural sector will have to reform its production mindset so as to turn Vietnam into one of the countries with leading agriculture in the world, according to Minister of Agriculture and Rural Development Le Minh Hoan.
Deputy Prime Minister Le Van Thanh recently approved the strategy for sustainable development of agriculture and rural areas for 2021 – 2030, with a vision to 2050, which continues to affirm that agriculture is the sustainable foundation of the country.
Among the detailed targets for 2030, agriculture – forestry – fisheries are expected to achieve GDP growth of 2.5 – 3 percent, an increase of 5.5 – 6 percent in labour productivity, and exports rise of 5 – 6 percent each year on average.
The strategy looks to turn Vietnam into one of the countries with leading agriculture in the world by 2050, by which time its agricultural processing will have become modern, efficient, and environmentally friendly.
To that end, the agricultural sector will have to reform its production mindset, which is shifting from that of agricultural production to that of agricultural economy that focuses on value and efficiency improvement and inter-sectoral development, Minister Hoan said.
TH Group inks MoU on strategic cooperation with Singapore’s HAO Mart
TH Group has signed with HAO Mart, the leading retail supermarket system of Singapore, a memorandum of understanding (MoU) on strategic cooperation on consuming and promoting the former’s fresh milk products, safe foodstuffs and organic agricultural products in the Singaporean market.
The signing ceremony on February 25 was witnessed by President Nguyen Xuan Phuc on the sidelines of his state visit to Singapore during February 24-26, 2022.
HAO Mart is managed by HAO Corp operating in the two key sectors namely electronics and retails. Established in 2016, HAO Mart has so far expanded its retail chain to a large network of nearly 50 stores in Singapore. Currently, the group is ranked in the list of top retailers in this island city-state, distributing more than 70,000 types of fast-moving consumer goods imported from 43 markets. Its annual revenue hit more than 90 million USD.
CAAV issues urgent notice regarding airspace restriction related to Russia-Ukraine tension
The Civil Aviation Authority of Vietnam (CAAV) has sent an official document to Vietnam Airlines, Vietjet Air, Bamboo Airways, and Pacific Airlines, on the restriction and closure of airspace and airports in Russia and Ukraine in connection with the Russia-Ukraine tension.
The document stated that the CAAV received a letter dated February 24, 2022 from the European and North Atlantic (EUR/NAT) Office of the International Civil Aviation Organisation (ICAO) regarding the closure of the airspace over Moldova, Ukraine and part of the flight information region (FIR) of Russia.
Ukrainian authorities announced the closure of the airspace within the FIRs Dnipro (UKDV) Simferopol (UKFV), Lviv (UKLV), Odesa (UKOV) and Kyiv (UKBV). Meanwhile, Russian authorities also announced the closure of a part of the airspace within the Rostov (URRV) FIR. Moldova’s airspace is also closed.
The ICAO said it will continue to coordinate with relevant authorities and other countries in the region to keep a close watch on next developments, especially those that may affect flight safety.
Director of CAAV Dinh Viet Thang said that Russia and Ukraine had released telegrams announcing the closure of airports, the restriction and closure of some airspace and air routes, especially in the area adjacent to the northeast of Ukraine, citing a report from the Vietnam Air Traffic Management Corporation (VATM).
Vietjet signs aircraft component support contract with Singapore’s ST Engineering
Budget airlines Vietjet Air and ST Engineering have signed a comprehensive component Maintenance-By-the-Hour (MBH™) contract under which the Singaporean firm will support the airline’s entire fleet.
The signing ceremony took place on February 25 during the State visit of Vietnamese President Nguyen Xuan Phuc to Singapore.
Under the contract, ST Engineering will provide Vietjet with a full suite of component support solutions covering component pooling, repair, overhaul, modification, main base kits, component health monitoring and logistics services for the airline’s entire fleet.
Vietjet, Changi Airports International work together to develop aviation services supply in Vietnam
Vietjet, SOVICO Group and Changi Airports International (CAI), the international arm of Changi Airport Group, have signed a strategic partnership agreement worth 1.5 billion USD to develop the provision of aviation services at airports in Vietnam and in the region.
The signing ceremony was witnessed by Vietnamese President Nguyen Xuan Phuc and high-ranking dignitaries of Vietnam and Singapore, business representatives of the two countries and representatives of SOVICO Group, Vietjet and CAI.
The signing marks the first time that a private corporation and an airline in Vietnam collaborate with an international airport group to develop aviation services and facilities. The parties will cooperate in the research and development of projects at airports in Vietnam, which include green, sustainable and smart infrastructure development projects.
Vietnam, Singapore seek to step up trade cooperation
Minister of Industry and Trade Nguyen Hong Dien had a working session with Singaporean Minister for Manpower, and Second Minister for Trade and Industry Tan See Leng, on the occasion of President Nguyen Xuan Phuc’s State visit to Singapore from February 24 – 26.
During the meeting, the two ministers noted with pleasure the strong and comprehensive development of the Vietnam – Singapore relations, especially in economic and trade cooperation.
The two-way trade between Vietnam and Singapore hit 8.3 billion USD last year, up 23 percent compared to 2020. Singapore is now the 5th biggest trading partner of Vietnam and the third largest foreign direct investor in the country.
Common green zone needed to deal with congestion in northern border gates: Deputy PM
Deputy Prime Minister Le Van Thanh has asked leaders of northern border provinces to work with Chinese authorities to set up a “common green zone” model to speed up customs clearance procedures and settle the congestion in border gates.
Speaking at an online working session with leaders of Lang Son, Quang Ninh, Cao Bang and Lao Cai on February 25, Thanh said that the provinces should arrange a parking area for vehicles near the border gates, where goods and vehicles are disinfected and drivers get COVID-19 tests under the coordination of Vietnamese and Chinese authorities.
For a long-term solution, the Deputy PM asked the Ministry of Industry and Trade to coordinate with other relevant ministries to form a policy research group to, within 15 days, devise and submit to the Prime Minister mechanisms and policies regarding quality standards for goods to be exported to China through border gates, and policies to encourage exporters to switch to official channels.
HCM City restructures urban agriculture
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Ho Chi Minh City’s agriculture sector is transforming with the application of high technology, meeting market demand while taking into account the little productive land it has. Urban agriculture and green agriculture will therefore continue to be its development orientation in 2022 and subsequent years.
From just over 1 hectare in 2012, this orchid garden has expanded to 7 ha in the time since. Each year it provides more than 100,000 pots per hectare to the market.
The restructuring of crops and livestock in the city has proven to be adaptable and flexible amid market fluctuations, especially during the COVID-19 pandemic. This clean vegetable cooperative focused strongly on essential agricultural products when COVID-19 hit, helping stabilise production.
Many creative models appeared as part of adapting to the market during the pandemic.
Big room for shrimp industry to increase exports: VASEP
There remains large room for Vietnam’s shrimp industry to strive for greater export growth in the next few years, said the Vietnam Association of Seafood Exporters and Producers (VASEP).
According to a recent report of the VASEP, Vietnam’s shrimp export turnover is likely to expand annually by 9 percent in the 2022-2025 period, hitting 5.6 billion USD by 2025.
Regarding seafood export opportunities in 2022, VASEP General Secretary Truong Dinh Hoe said seafood exports in 2022 will continue to grow as the global demand for shrimp is rising by around 5 percent a year.
If the seafood industry can expand its market share in the global market, and at the same time continues to promote processing of value-added products, it will be able to maintain growth in the coming time, he said, adding that the shrimp industry continues to be expected to be a key contributor to the country’s seafood export turnover.
VCCI- important factor in national economic development
The Vietnam Chamber of Commerce and Industry (VCCI), which so far has almost 200,000 member businesses, has accompanied the business community and become an important factor in the country’s economic development.
Although the number of VCCI members remains modest compared to the total 800,000 enterprises operating across the country, the VCCI’s support for the business community has contributed to create the synergy of the nation and enhance the country’s international prestige.
Prime Minister Pham Minh Chinh has asked the VCCI to become a common home for more businesses, thus making the chamber’s proposals to the institutional reform more practical.
Tra fish export value predicted to top 1.6 billion USD in 2022
The Tra fish industry aims to earn 1.6 billion USD from tra fish export, and produce between 1.6 – 1.7 million tonnes of tra fish products in 2022, according to Nhu Van Can, head of the Aquaculture Department of the Directorate of Fisheries under the Ministry of Agriculture and Rural Development (MARD).
According to To Thi Tuong Lan, deputy general secretary of the Vietnam Association of Seafood Exporters and Producers (VSEP), prices of tra fish are forecast to increase by 5 percent this year compared to 2021.
Meanwhile, good recovery has been seen in China, the US, member nations of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), and the European Union (EU), which are the biggest importers of Vietnamese tra fish, with respective growth rates of 31 percent, 23 percent, 13 percent and 6.6 percent.
Deputy Minister of Agriculture and Rural Development Phung Duc Tien requested the Directorate of Fisheries to build projects and set tasks in order to improve the quality of young tra fish serving commercial farming.
VinFast to join Mobile World Congress 2022
Vietnamese automaker VinFast on February 25 announced that it will take part in the Mobile World Congress 2022 (MWC 2022) – the most influential technology and mobile exhibition in the world that will take place from February 28 to March 3 in Barcelona, Spain.
At the event, VinFast plans to introduce the details of its lastest connection technologies applied on its electric vehicles, strategies for the European market as well as its important partnerships that help them continue to promote its electric vehicle revolution globally.
During the Industry City, the largest forum on automobile industry, manufacturing and financial technology that will take place on February 28 as part of the MWC, VinFast will highlight connection technologies used in its electric vehicles, including Smart Services and ADAS.
EVFTA helps compensate for pandemic-caused economic downturn: experts
The implementation of the EU – Vietnam Free Trade Agreement (EVFTA) has greatly helped make up for a downturn in the economy caused by the COVID-19 pandemic, experts said at a workshop in Hanoi on February 25.
Nguyen Thi Thu Trang, Director of the Centre for WTO and International Trade at the Vietnam Chamber of Commerce and Industry (VCCI), said since the EVFTA took effect on August 1, 2020, trade between Vietnam and the EU has posted impressive growth.
Despite numerous pandemic-triggered difficulties, Vietnam’s exports to the EU still hit 40.06 billion USD and imports 16.89 billion USD last year, respectively rising 14.1 percent and 15.3 percent from 2020.
Dr Le Dang Doanh, an economic expert, described the EVFTA signing as a demonstration of Vietnam’s success in diversifying its external economic relations to avoid overdependence on a single market or a single source of supply and reduce risks for the economy.
The Vietnamese and EU economies are complementary to each other, so the EVFTA implementation benefits both sides, he said, elaborating that Vietnam can import the products it is unable to make from the EU, which in turn can import the commodities Vietnam has strength in such as apparel and agricultural products.
Bamboo Airways launches regular direct flights to Germany
Bamboo Airways has launched a direct route between Vietnam and Germany, with the first flight on the route taking off from Noi Bai International Airport in Hanoi on February 25 morning.
This is also the first regular direct fight to Europe conducted by the carrier this year, as part of its plan to expand the international network in the time ahead.
Initially, there will be two flights per week between Hanoi and Frankfurt. The frequency will be increased based on market demand.
1 billion USD tourism project kicked off in Ninh Thuan
The F.I.T and Crystal Bay groups on February 25 began the construction of the over-1-billion-USD Cap Padaran Mui Dinh project in the south-central coastal province of Ninh Thuan’s Thuan Nam district.
In his remarks, Nguyen Van Sang, Chairman of the Board of Directors at F.I.T Group, said the international-standard project covering nearly 800ha features hotels, resorts, beach villas, and entertainment and sport complex, among other facilities.
In its first phase, the 64ha Bai Trang resort will be built at a cost of about 150 million USD.
Investment funds pour more money into Vietnamese startups
A record of over 1.3 billion USD was poured into Vietnamese startups in 2021 despite the complicated developments of the COVID-19 pandemic, helping the country rank third in the group of the most dynamic innovative startup ecosystems in Southeast Asia, only after Indonesia and Singapore, statistics show.
Most of the investment capital has been pumped into startups in the fields of FinTech, game, education, health care, and e-commerce.
Innovative ideas to respond to the pandemic and support the Government’s prevention and control initiatives have shown the dynamic adaptation of Vietnamese startups.
Investment funds have placed their trust on many startups with outstanding competence and, as a result, so many big deals have been signed, contributing to making Vietnam’s startup ecosystem more vibrant.
Tuna exports enjoy three-digit growth in January
Tuna exports enjoyed a three-digit growth rate in the first month of this year, according to the Vietnam Association of Seafood Exporters and Producers (VASEP).
Statistics from the General Department of Vietnam Customs showed that tuna export turnover reached nearly 88 million USD, up 108 percent compared with the same period last year.
Vietnamese frozen tuna fillets remain the key export product, accounting for more than 66 percent of the total export value.
Shipments of Vietnamese tuna products to eight major markets are on the rise, except for China. The US is still Vietnam’s largest importer, making up nearly 50 percent of the country’s total tuna export value in January. The country earned 44 million USD from the export of the product to the US in the month, an increase of 210 percent year-on-year.
New airline receives green light to take off
Deputy Prime Minister Le Van Thanh on February 25 approved in principle the granting of the general aviation business licence to new airline, paving the way for the new airline to join the burgeoning aviation market.
In early 2022, the Civil Aviation Administration of Vietnam (CAAV) received two documents seeking a licence to set up new air carriers.
The first came from Imex Pan Pacific Group which wants to establish a cargo airline (IPP Air Cargo). And the other came from a powerful luxury resort group, proposing to receive the aviation licence to operate charter flights from Thailand, Singapore, Hong Kong, Taiwan, China, South Korea, and Japan to Vietnam.
Since July 2020, Vietnam has welcomed no new airline.
The country now has six air carriers, namely Vietnam Airlines, Pacific Airlines, VASCO, Vietjet, Bamboo Airways, and Vietravel Airlines, as well as four others with general aviation licences, namely Vietstar Airlines, Blue Sky Air, Vietnam Helicopters, and Hai Au Aviation.
Over 2,200 hectares of land along ring road might be auctioned
More than 2,200 hectares of land along the Ring Road No. 3 project in HCMC can be auctioned to recover the capital poured into the project, the municipal Department of Natural Resources and Environment has said.
The Dong Nai government is planning to auction three land lots totaling 214 hectares along the road, which are expected to fetch VND4.3 trillion.
According to the prefeasibility study for the project, the first phase of the Ring Road No.3 project requires an estimated VND75.8 trillion. The State budget is expected to fund half of the investments in subprojects in HCMC, Binh Duong, and Dong Nai, and all the investments in subprojects in Long An.
The prime minister has directed HCMC, Dong Nai, Binh Duong, and Long An to study plans to exploit the land along the road.
Nam A Bank gets VND2,860 billion from recent share issue
Nam A Bank (NAB) said it has finished distributing 143 million individual shares which were recently issued with a total value of VND2,860 billion.
The shares were bought by eight investors at VND20,000 per share. They are untradable for one year, beginning February 17, 2022.
After this share sale, M8 Trading and Services Company Limited holds a 0.3% stake in NAB, while seven other investors own 3.14-3.59% of the bank.
In December 2021, NAB issued around 57 million shares to pay a dividend of nearly 12.49% for shareholders.
Through share sales, the bank has revised up its charter capital to VND6.5 trillion.
NAB posted VND1,799 billion in after-tax profit in 2021, surging 79% versus 2020. The bank’s total assets rose 14.1% year-on-year to VND153,238 billion.
HCMC seeks to develop new industrial park in Binh Chanh
The HCMC government has proposed developing the Pham Van Hai Industrial Park covering 668 hectares of land in Binh Chanh District to replace three industrial park projects—Phuoc Hiep, Bau Dung and Xuan Thoi Thuong—which had been rejected earlier.
The city also asked for the prime minister’s permission for the development of an adjacent residential area covering 100 hectares of land to serve workers of the Pham Van Hai industrial park, Thanh Nien Online newspaper reported.
The industrial park is expected to become a high-quality and competitive one, serving hi-tech firms and innovative startups and attracting investment effectively.
Singapore becomes Vietnam’s biggest investor
As many as 33 countries and territories invested in Vietnam in January, with Singapore being the biggest investor with nearly US$666 million, according to the Foreign Investment Agency under the Ministry of Planning and Investment.
Singapore’s pledged investment made up 31.7% of Vietnam’s total foreign investment approvals.
South Korea came second with US$481 million, followed by China with some US$451 million.
A few years ago, South Korea or Japan always took the lead in total registered capital poured into Vietnam, but since the start of the Covid pandemic, Singapore has gained the top spot.
In 2021, Singapore’s capital flows into Vietnam were 2.2 times higher than those from South Korea and 2.7 times higher than Japan’s flows as the former developed a new major project, contributed funds and acquired shares in a local firm.
Last operational border gate in Cao Bang suspends customs clearance
The Ta Lung International Border Gate, the last operational border gate in the northern province of Cao Bang, has suspended customs clearance as the Chinese authorities detected a Vietnamese driver infected with Covid-19.
Thus, all border gates in Cao Bang have suspended customs clearance. The Soc Giang Border Gate in Ha Quang District and the Po Leo and Tra Linh border gates in Trung Khanh Districts had been shut for many weeks, the local media reported.
Since the Tet holiday, the customs procedures for some 250 vehicles, mainly those transporting agricultural products, have been completed at the Ta Lung International Border Gate. At present, nearly 100 container trucks have still been stuck at the border gate.
HCMC mobilizes all resources to accelerate educational development
With fast-growing populations and economic development resulting in new urban areas mushrooming, with an average increase of 50,000 students each year, Ho Chi Minh City has many large classes. Therefore, many schools in the city have not organized two shifts a day. The southern metropolis ought to mobilize all resources for the acceleration of the education sector’s development.
At a recently held conference summarizing the implementation of Decision No. 02/2003 on February 25 of the People’s Committee of Ho Chi Minh City on approving the school network development plan to 2020 with the orientation In the period of 2020-2030 and a vision to 2045, Director of the Ho Chi Minh City Department of Education and Training Nguyen Van Hieu said that the Resolution of the 10th and 11th Ho Chi Minh City Party Congress targeted to build 300 classrooms per 10,000 children in the school-age from 3-18 years old, including those without permanent residence or KT3.
However, only 11 out of 22 districts have completed this goal set by the Ho Chi Minh City Party Congress. Some districts such as Cu Chi, Hoc Mon, Binh Chanh, District 12, Go Vap only have approximately 220 classrooms per 10,000 people.
Samsung workers in Vietnam bear brunt of slowdown in global demand for electronics
Samsung Electronics Co Ltd has scaled back production at its massive smartphone plant in Vietnam, employees say, as retailers and warehouses grapple with rising inventory amid a global fall in consumer spending.
America’s largest warehouse market is full and major U.S. retailers such as Best Buy and Target Corp warn of slowing sales as shoppers tighten their belts after early COVID-era spending binges.
The effect is acutely felt in Vietnam’s northern province of Thai Nguyen, one of Samsung’s two mobile manufacturing bases in the country where the world’s largest smartphone vendor churns out half of its phone output, according to the Vietnam government.
Samsung, which shipped around 270 million smartphones in 2021, says the campus has the capacity to make around 100 million devices a year, according to its website.
“We are going to work just three days per week, some lines are adjusting to a four-day workweek instead of six before, and of course no overtime is needed,” Pham Thi Thuong, a 28-year-old worker at the plant told Reuters.
“Business activities were even more robust during this time last year when the COVID-19 outbreak was at its peak. It’s so tepid now.”
Reuters could not immediately establish whether Samsung is shifting production to other manufacturing bases to make up for reduced output from the Vietnamese factory. The company also makes phones in South Korea and India.
Samsung told Reuters it has not discussed reducing its annual production target in Vietnam.
The South Korean tech giant is relatively optimistic about smartphone demand in the second half, saying on its earnings call last week that supply disruptions had mostly been resolved and that demand would either stay flat or even see single-digit growth.
It is aiming for foldable phone sales to surpass that of its past flagship smartphone, the Galaxy Note, in the second half. It is expected to unveil its latest foldables on Aug. 10.
But a dozen workers interviewed by Reuters outside the factory almost all said business is not good.
Thuong and her friends who have been working for Samsung for around five years said they had never seen deeper production cuts.
“Of course there is a low season every year, often around June-July, but low means no OT (overtime), not workday cuts like this,” Thuong said.
She said managers had told workers inventories were high and there were not many new orders.
Research firm Gartner expects global smartphone shipments to decline by 6% this year due to consumer spending cuts and a sharp sales drop in China.
Samsung is Vietnam’s biggest foreign investor and exporter, with six factories across the country, from northern industrial hubs Thai Nguyen and Bac Ninh where most phones and parts are manufactured, to Ho Chi Minh City’s plant making fridges and washing machines.
The South Korean company has poured $18 billion into Vietnam, powering the country’s economic growth. Samsung alone contributes one fifth of Vietnam’s total exports.
Its arrival nearly a decade ago in Thai Nguyen, about 65 km (40 miles) from the capital Hanoi, transformed the area from a sleepy farming district into a sprawling industrial hub that now also manufactures phones for Chinese brands including Xiaomi Corp.
Generous benefits including subsidised or free meals and accommodation have lured tens of thousands of young workers to the region, but reduced workhours have now left many feeling the pinch.
“My salary was cut by half last month because I just worked four days and spent the remaining week doing nothing,” said worker Nguyen Thi Tuoi.
Job cuts are on some workers’ minds but so far none have been announced.
“I don’t think there will be job cuts, just some working hour cuts to suit the current global situation,” said one worker, declining to be named because she did not want to risk her team leader role.
“I do hope that the current cut will not last long and we will soon be back to normal pace.”
Government debt drops by VND57 trillion when exchange rate fluctuates
According to the Ministry of Finance, based on the selling rate of the State Bank, from the beginning of the year until August 1, 2022, one USD equals VND23,400 an increase of 1.1% compared to the beginning of 2022 estimated to increase the Government debt balance in USD in VND by about VND 5 trillion (compared to the end of 2021).
One EUR equals 24,385 VND, down 9.5% compared to the beginning of 2022. It is estimated to reduce the outstanding government debt in EUR in VND by about VND17 trillion ($727 million) compared to the end of 2021.
JPY is equal to 180 VND, down 13% compared to the beginning of 2022. It is estimated that the government debt balance in JPY in VND is about VND45 trillion ($1.9 billion) compared to the end of 2021.
According to the Ministry of Finance, only taking into account the exchange rate fluctuations of 3 main currencies USD, JPY, and EUR, the government debt balance by the end of 2022 is estimated to decrease by about VND57 trillion ($2.4 billion) down 2% compared to the last outstanding balance 2021.
Currently, the volume of domestic loans from the Government accounts for 90% and foreign debts only account for about 10% of the total annual value.
As reported by the Ministry of Finance, from the beginning of the year to July 31, 2022, repayment of government debt is about VND192,122 billion ($8.2 billion) (57.2% of the plan), of which domestic debt repayment is VND148,717 billion ($6.3 billion), foreign debt payment VND43,406 billion ($1.8 billion); direct government debt repayment is about VND 175,835 billion ($7.5 billion) (58.6% of the plan), on-lending is about VND16,287 billion ($696 million) (45.3% of the plan). The Government’s direct loan repayment obligation compared with state budget revenue in the first 7 months is about 16.1%.
Vietnam’s THACO and philosophy of no surrender
Truong Hai Auto Corporation (THACO), a typical successful firm in Vietnam’s automobile sector, has been investing heavily in mechanics and the manufacturing of accessories.
THACO leaders shared the firm’s journey to resolve the issue: increasing the localization rate or surrendering to auto imports flooding the local market.
They also shared the one-stop model to help other Vietnamese enterprises cooperate to develop, thereby improving the internal power of Vietnam’s industry.
THACO chairman Tran Ba Duong said at a meeting with mechanical enterprises that “you have technology and machinery. We will build factories and lease them at low prices.”
“If we fail to demonstrate our commitment, you can take your machinery away.
“We will not go back on our words. Only actual acts and thoughts will create values.”
Refreshing itself by enhancing investment
Returning to Chu Lai Industrial Park in central Quang Nam Province nearly three years after Tuoi Tre (Youth) newspaper held the forum ‘Last chance for Vietnam’s automobile industry,’ a series of factories mushroomed, and container trucks have been nose to tail.
The industrial park is home to not only THACO automobile assembly factories measuring thousands of hectares in area but also newly-built factories manufacturing accessories and mechanical products.
Enthusiastically sharing a project to develop THACO Chu Lai into a hub manufacturing mechanical products, accessories, and devices for industries in the central region, Do Minh Tam, general director of Truong Hai Supporting Industries and Mechanics Limited Liability Company (THACO Industries), an arm of THACO, expected the project to boost the development of Vietnam’s industry.
“At first, everyone seemed dubious. They only thought of automobiles whenever mentioning THACO. However, we separated mechanics from the automobile segment in November 2021,” Tam said.
From 17 factories producing automobile parts, THACO Industries has developed a complex of 19 factories whose strategy is to concurrently increase the localization rate and supply accessories and mechanical products to the domestic and foreign markets.
It is a must to develop the factories on a large scale and in a methodical manner as in 2019, THACO and many other automobile manufacturing and assembly enterprises faced a selection: increasing the localization rate or letting car imports flood the local market due to their competitive advantage given import tariff cuts.
Fruitful results and development ambitions
Nevertheless, it is not easy to develop an empire.
In 2021, a meeting on the restructuring of the firm was held by key leaders to choose a new business model, restructure a board responsible for the company’s products because of its more diversified product portfolio, develop a research and development (R&D) center, and boost digitalization, Tam remembered.
However, the results surprised many people. With revenue from mechanics amounting to VND5.7 trillion (US$244.2 million) in 2021, THACO Industries set a target to generate revenue of $1 billion by 2025 and invest in 15 more factories, operating in the mechanics, automobile, agricultural mechanics, construction, household appliance, and product design sectors.
“Mechanical accessories, electric wires, car seats, specialty chemicals, and bodywork will be localized first,” Tam said.
“Once our staff are experienced and we can research and develop as well as design products, we will expand to industrial equipment.”
According to Tam, together with changes in supply chains, purchasers have had a higher demand for the one-stop model, which is like a food market with multiple dishes.
With THACO Industries’ advantages in a closed manufacturing chain with lower logistics costs, THACO has repeatedly secured orders of foreign direct investment enterprises, including those ordering a combo of molds, plastic injection equipment, paint and packaging services, instead of sourcing them from four to five separate suppliers.
THACO has a plan to develop industrial parks in the north and the south of the country, thus establishing new-generation specialized industrial parks to suspend the transport of huge volumes of products from Chu Lai to other provinces.
“The close connection and support in the three regions will contribute to optimizing the effectiveness of our value chain, reducing logistics costs, improving the competitiveness, and opening up new business opportunities,” Tam noted.
He added that THACO had also sought to develop a mechanical engineering outsourcing center in association with R&D to support small and medium enterprises in southern Binh Duong Province. The center will be developed under the one-stop model.
This will not be a normal mechanic engineering outsourcing center. R&D services and core technology will be invested in heavily.
|Employees monitor a spring production system at THACO Chu Lai Industrial Park in Quang Nam Province, Vietnam. Photo: Huu Hanh / Tuoi Tre|
The center is expected to attract enterprises with the same sense of purpose of getting involved in global production chains and forming a sustainable mechanical engineering ecosystem.
No rivals, only partners
In the past, THACO manufactured and assembled automobile models for KIA and Mazda and it could be considered a rival of Hyundai and Ford.
However, with the policy of making friends with partners, THACO is currently manufacturing plastic bumpers for Hyundai Vietnam and Toyota at a lower price than those offered by Thai manufacturers.
It is also a supplier of springs for Isuzu Vietnam, and will be a partner of Ford Ranger in the near future.
THACO has launched four cooperation models: partners manufacturing and outsourcing products for THACO; THACO manufacturing and outsourcing the entire or part of products for R&D enterprises; THACO offering R&D services and manufacturing, outsourcing and providing products for enterprises having their own markets; and THACO and partners joining hands to manufacture products.
These models are expected to enhance the cooperation and competitiveness of enterprises, creating a strong industrial ecosystem and manufacturing society to pave the way for the breakthrough of the mechanical engineering sector and supporting industries.
Methodical support needed
Tam said state agencies’ support should be more methodical and specific.
Amid the shift of foreign investment to Vietnam, if institutes and state agencies conduct macro-scale and specialized research, or assess the advantages and competitiveness of Vietnam’s mechanical engineering sector, enterprises will have more information to grasp opportunities.
It will be too late to make investments after securing orders.
In addition, the mechanical engineering sector requires large capital while the rate of return is low. Therefore, to secure orders, the state should issue appropriate preferential interest policies for each sector.
Moreover, it is advised to focus on labor training on the basis of support packages for schools and students in engineering majors to help them approach advanced technology and techniques.
Incentives in taxes, land, and site clearance are also needed for companies to scale up their investment.
Notably, the development of industrial parks should involve plans to connect them with value chains, associated with expanding markets and seeking new customers.
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