7.5 million farming households to be connected to Postmart.vn
The Vietnam Post Corporation (VNPOST) will cooperate with the Central Committee of the Vietnam Farmers’ Union (VFU) to support 7.5 million farming households to introduce free of charge their products in its e-commerce platform Postmart.vn in 2022.
Deputy General Director of VNPOST Nguyen Kien Cuong said from now to 2025, the coordination will focus on introducing and connecting consumption; developing a supply chain of safe and high quality agricultural products of farmers; building and developing sustainable value production chains in association with national target programmes; and developing a network of sales collaborators and agents.
VNPOST will provide preferential products and services to the VFU and members of its chapters, professional associations, farmers’ clubs, cooperative groups, and cooperatives.
It is managing to update agricultural production households’ information on the platform, as well as helping farmers and agricultural cooperatives actively apply digital technologies in their production and trading activities.
It planned to connect with postal e-commerce platforms of Japan, Singapore and some other regional countries in the coming time.
Reference exchange rate down 6 VND at week’s beginning
The State Bank of Vietnam set the daily reference exchange rate for the US dollar at 23,140 VND/USD on February 28, down 6 VND from the last working day of previous week (February 25).
With the current trading band of +/- 3 percent, the ceiling rate applicable to commercial banks during the day is 23,834 VND/USD and the floor rate 22,446 VND/USD.
The opening-hour rates at commercial banks showed a declining trend.
At 8:40am, Vietcombank listed the buying rate at 22,640 VND/USD and the selling rate at 22,950 VND/USD, both down 30 VND from February 25.
BIDV kept both rates unchanged at 22,700 VND/USD (buying) and 22,980 VND/USD (selling).
During the week from February 21 to 25, the reference exchange rate fluctuated variably but ended the week up 13 VND from the rate on Monday.
Pandemic-hit firms to enjoy preferential interest rate credit package
Loans of pandemic-hit enterprises will enjoy an interest rate cut of 2 per cent under a government support package to remove difficulties for the businesses.
The total preferential interest rate package is worth 40 trillion VND (1.75 billion USD), which comes from the State budget.
The proposal was drafted in the State Bank of Vietnam (SBV)’s decree on interest rate support from the State budget for loans of enterprises, cooperatives and business households, which has been made public for comment.
According to the draft, beneficiaries of the preferential interest rate credit package are enterprises, cooperatives and business households in aviation, transportation, warehousing, tourism, accommodation-food services, education-training, agriculture, forestry, fishery, industry, manufacturing, processing, software, computer programming and IT industries.
Under the draft, loans of the borrowers, which have been disbursed from January 11, 2022 to December 31, 2023, will enjoy the interest rate cut. However, the borrowers will not be supported with the interest rate cut if their loans have overdue principal balances or late payment interest.
GIZ project to nurture German startup ideas in Vietnam
German development agency GIZ on February 26 hosted a virtual event called “Innovate for Impact” to attract new business ideas from German alumni who are interested in applying them in Vietnam.
Part of the 12-month project “Business Ideas for Development”, the event aimed to connect successful entrepreneurs with German alumni who wish to do business in Vietnam this year.
It will be followed by a start-up training course “Business Ideas for Development” (BID Vietnam 2.0). The three most outstanding impact start-up ideas will go through to the next rounds – start-up consultation and start-up acceleration – which will take place in March 2023.
BID, a component of the GIZ’s Programme Migration and Diaspora (PMD), provides knowledge and consultation for German alumni to translate their innovative ideas and what they had learnt in their country into reality for sustainable development goals in Vietnam.
Four had received 5,000 EUR (about 5,640 USD) each in funding to establish their business, develop brands and conduct trial production.
ACV wins Asia Pacific Entrepreneurship Awards
The Airports Corporation of Vietnam (ACV) has been honoured at Corporate Excellence Category at the 2022 Asia Pacific Entrepreneurship Awards (APEA) held in Ho Chi Minh City under the theme “The Epitome of Success.”
It was the fourth consecutive times the State-run corporation has earned the awards.
The AVC operates 22 airports across the country, including nine international and 13 domestic airports.
Launched in 2007, the APEA is a regional award recognition programme hounouring entrepreneurial excellence.
APEA honours business leaders and organisations who have shown outstanding performance and tenacity in developing successful businesses, whilst not neglecting the social responsibilities that come with leadership.
Mindset reform critical to agricultural development
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.
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.
EVFTA helps compensate for pandemic-caused economic downturn
The implementation of the EU – Viet Nam Free Trade Agreement (EVFTA) has greatly helped make up for a downturn in the economy caused by the COVID-19 pandemic, according to experts.
Nguyen Thi Thu Trang, Director of the Centre for WTO and International Trade at the Viet Nam Chamber of Commerce and Industry (VCCI), said since the EVFTA took effect on August 1, 2020, trade between Viet Nam and the EU has posted impressive growth.
Despite numerous pandemic-triggered difficulties, Viet Nam’s exports to the EU still hit US$40.06 billion and imports $16.89 billion last year, respectively rising 14.1 per cent and 15.3 per cent from 2020.
Dr Le Dang Doanh, an economic expert, described the EVFTA signing as a demonstration of Viet Nam’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.
Trade experts held that amid the pandemic’s adverse impacts on the entire trade and investment activities in the world, including Viet Nam, the EVFTA enforcement held great significance as it helped compensate for a downturn in the economy, diversify market opportunities, and create momentum for post-pandemic growth.
Environmental tax policy may be adjusted
The Tax Policy Department and the General Department of Taxation has been assigned to prepare, research, and develop a plan to adjust tax policies for environmental protection for petroleum products and promptly report to the Prime Minister before February 28.
It was essential to carefully consider and evaluate the impact of this policy because in the VND350 trillion support package for the socio-economic recovery and development programme, there was a tax reduction policy of up to VND64 trillion, Minister of Finance Ho Duc Phoc told Tien Phong (Vanguard) newspaper.
Ngo Tri Long, former deputy director of the Ministry of Finance’s Price and Market Research Institute, said that currently, the taxes applied to petroleum products include import, value-added, excise, and environmental protection. Of which, imported gasoline is subject to 10 per cent import tax, a special consumption tax on gasoline at 10 per cent, an environmental protection tax for 1 litre of gas at about VND4,000, and VND2,000 for 1 litre of oil.
The domestic petrol price depends entirely on the world petrol price. When the world gasoline price increases, domestic prices will also increase. The petrol price of a country depended on each country’s world price and tax policy, he noted.
Block B-O Mon project benefits oil and gas businesses
As the US$10 billion Block B-O Mon gas power project chain is expected to start construction in the second half, businesses in the oil and gas value chain in Viet Nam will benefit.
With a total investment of about US$ 10 billion, the project located in the Malay-Tho Chu basin, southwest Viet Nam, and comprises the development of a gas field and pipeline, was announced in April 2016 and is one of the most significant gas exploitation projects in the country.
Besides benefiting from world oil prices continuing to stay high due to concerns surrounding Russia-Ukraine relations, the project will become a new growth engine for businesses in the oil and gas value chain in Viet Nam, said experts.
According to the VNDIRECT Securities Joint Stock Company, oil and gas production in Viet Nam has continuously decreased since 2015 due to the absence of critical upstream projects. The Block B gas power project chain includes component projects upstream to downstream.
Novaland, Tai Nguyen start Grand Sentosa mixed-use project in HCM City
Novaland Group and Tai Nguyen Joint Stock Company on Tuesday broke ground for the Grand Sentosa in HCM City.
The mixed use development comprising commercial space and luxury housing on one of the main streets in the south of the city, Nguyen Huu Tho, has two facades overlooking rivers.
Spread over 8.3ha, it will bring to the market over 2,000 condominiums and town houses.
It will have modern amenities to meet the requirements of high-income buyers including foreigners living and working in the southern part of HCM City.
It is expected to be completed in 2024.
Property-buying consumer survey released
A study of consumer sentiment in the domestic real estate market in the first half of 2022 was launched on Friday by Batdongsan.com, the leading real estate trading website in Viet Nam.
According to this study, homebuyers in Viet Nam tend to seek green and spacious areas. Sixty-one per cent of people surveyed want to live near green space, and 45 per cent are looking to move to the suburbs and less crowded areas.
The top factors buyers look for are entertainment areas, schools, trees and public transport. Many older married Vietnamese people have a higher income and high demand for these factors.
Fifty-two per cent of people surveyed think that real estate prices are too high, but 72 per cent said they need to buy real estate and that real estate prices have decreased due to COVID-19.
Ninety-two per cent of people surveyed plan to buy real estate in the future.
More than half are looking to buy a house in the next two years, with HCM City and Ha Noi the two most attractive locations for buyers, followed by nearby cities and provinces.
The biannual real estate consumer sentiment study will measure buyer confidence and expectations.
Shares to move sideways before returning to uptrend
The market will continue to move sideways this week with low liquidity to gradually form a strong enough accumulation base before returning to the uptrend, analysts said.
The Joint Stock Commercial Bank for Foreign Trade of Viet Nam (Vietcombank) said cash flow would return to the group of large-cap stocks, which had had a rather deep decline last week.
According to VCBS, short-term profit-taking force is still quite large around 1,520 points, so the index is still tending to move sideways around 1,500 points since the beginning of February.
Besides, developments related to Russia-Ukraine tensions also raised concerns about the short-term market outlook. The bottom-fishing demand in the past week remained, but it was not strong enough to make VN-Index go against the general trend of the world market.
Phu Hung Securities Joint Stock Company (PHS) stated that the market reversed and gained again in the last session of last week when investors seemed to have eased their worries about the tension between Russia and Ukraine.
According to statistics of Saigon-Hanoi Securities Joint Stock Company (SHS), the tension between Russia and Ukraine has caused world oil prices to continue to climb. This helped the oil and gas group to perform best last week.
Embracing the hybrid-working opportunities provided by the pandemic
The hybrid-working model, that is combining ‘work-from-home’ with more traditional office-based work, has remained popular despite an end to social distancing mandates, experts have said.
In fact, hybrid-working is the preferred working model around the world in the ‘new normal’, according to Microsoft’s Work Trend Index survey.
Microsoft’s 2021 survey has taken answers from over 30,000 people in 31 countries and territories around the world.
With a hybrid-working model, employees can choose to work from anywhere and only go to the office when needed. This way of operating allows employees to choose the best working hours for them, and could reduce mental pressures caused by COVID-19, as well as reducing the risk of cross-infection.
Currently, giant technology firms like Microsoft, Google and Facebook have utilised this model, so that employees can flexibly work from home or office.
In Viet Nam, this model has not been popular before, but after the period of working from home due to prolonged social distancing, this model could be a popular trend. According to Microsoft’s latest report on the trend of “Hybrid Workplace” in Viet Nam, up to 81 per cent of workers want to continue working remotely, especially young Gen Z workers.
Number of auctions fail on the stock market
Despite an active stock market, a number of share auctions still failed, with some even cancelled, due to a lack of investors participating.
The Ha Noi Stock Exchange (HNX) said that as the auction, with the seller Viet Nam Post Corporation (VNPost), expired, only seven local retail investors registered to buy 800 shares, much lower than the total of nearly 122.2 million shares offered by VNPost.
In fact, the reserve price, at VND28,930 a share (US$1.27 a share), was much higher than the matching price in the stock market. During the period of investor registration and deposit payment, which lasted from January 25 to February 16, LPB’s share price only traded in the range of VND23,000 – 25,000 a share.
The market price of LPB closed yesterday at VND23,050 per share. Therefore, the reserve price of VNPost’s LPB shares auction was 25.5 per cent higher than the trading price.
Recently, the Ho Chi Minh Stock Exchange (HoSE) said that only four local investors registered to buy shares, with a volume of 50,000 units, from an auction of Binh Duong Trade And Development JSC.
The auction failed as the order volume was only 50,000 units, 0.14 per cent of the offering volume. The average bid price was equal to the reserve price of VND27,900 a share.
Ziva Asia, Orsini enter partnership in local hotel market
Ziva Asia, a consultancy firm which provides solutions for the hospitality industry at all stages ranging from pre-opening to daily operations, has become a strategic representative of Orsini SPI, the world’s procurement company, in the Vietnamese hospitality industry.
Both Ziva Asia and Orsini have agreed a deal to build and deploy solutions aimed at developing the local hospitality industry.
The two firms will provide consultancy and provide services for pre-opening and daily operations when the project eventually comes into operation.
The purpose of the deal is to develop luxury resort real estate projects and international hotel chains in Vietnam.
Vietnam holds crucial position as part of global supply chain
A number of large financial institutions and foreign media agencies have agreed that the Vietnamese economy is on track to recover from the negative impact caused by the COVID-19 pandemic.
Fitch Ratings is among the leading organisations to hold the most optimistic forecast that the Vietnamese economy is likely to grow by 7.9% this year. In its recent report, Fitch outlined that Vietnamese economic recovery is set to gather momentum in the year ahead, particularly as domestic demand rebounds and export performance remains strong.
Major Japanese media outlets such as NHK, Nikkei, Yahoo Japan, and JiJi News have reported on the Vietnamese Government’s decision to reopen all borders to international tourism as of March 15. They noted that the decision indicates the leadership’s strong resolve to spur further economic recovery coming off the back of its successful vaccine rollout and high inoculation coverage.
Hiroyuki Moribe, director of the Vietnam Economic Research Institute in Japan, stated that the Vietnamese Government has prioritised post-COVID economic recovery by adopting a policy which will see borders reopened slightly early compared to Japan.
Meanwhile, Nikkei Asia has run a series of articles detailing the rapid recovery of supply chains throughout Southeast Asia. The paper assessed that Southeast Asia plays a particularly large impact on the Japanese auto industry as up to 40% of the country’s automotive electrical wiring is supplied from the Vietnamese market.
The Japan International Co-operation Agency (JICA) also highly values the important position held by Vietnam in the global supply chain. Shimizu Akira, chief representative in Vietnam of the JICA, said if the country slows down its production, it would disrupt the entire global supply chain, and consequently, it would also reduce the advantages it holds in investment attraction and business readiness.
CapitaLand Development signs MoU for $1 billion investment in Vietnam
CapitaLand Development (CLD), the development arm of CapitaLand Group, has signed an MoU with the People’s Committee of Bac Giang province valued at $1 billion.
The MoU outlines CLD’s and the provincial government’s mutual interest to explore the development of CLD’s first industrial park, logistics park, and township development in Vietnam.
The exchange of the signed MoU was witnessed by President Nguyen Xuan Phuc during his state visit to Singapore. The MoU marks one of the largest investments sealed between a Singaporean company and the government of Vietnam during the state visit.
Aviation and tourism activities to restore quickly
According to the plan, from mid-March, Vietnam will officially reopen tourism activities. Therefore, the aviation industry is facing the prospect of a quick recovery, when the number of international passengers going to or from Vietnam, is forecasted to increase sharply.
The Government’s policy of reopening regular international routes is a very favourable condition to help airlines reduce costs, actively build flight schedules, and open two-way ticket sales for passenger transportation.
The International Air Transport Association (IATA) has forecasted that the aviation market will recover around 2023, but the recovery speed of different markets depends on each country’s vaccination process and plans to open international flights. IATA also forecasts that in 2022, Asia will recover gradually, but the recovery speed will be slower than Europe and North America.
According to statistics of the Civil Aviation Administration of Vietnam (CAAV), as of February 15, there were regular passenger flights between Vietnam and a number of countries and territories, such as Japan, the Republic of Korea, China, and Taipei (Taiwan, China), Singapore, Thailand, Cambodia, Laos, Australia, Germany, Russia, France, the UK, the US, Hong Kong (China), Malaysia, Turkey, Qatar, the UAE.
Da Nang launches policy to attract more MICE tourists
The Da Nang Department of Tourism organised a ceremony on February 25 to welcome the first MICE (meeting, incentives, conferences and events) delegation in 2022 and officially launch a special preferential policy for MICE tourists in 2022.
On February 21, the Chairman of Da Nang City People’s Committee signed and promulgated the Da Nang MICE Policy 2022. The Danang MICE Policy 2022 gives priority to the first 100 MICE delegations to Da Nang (or until the classes have completed the support item), applied from February 21, 2022, until the end of December 2022.
There are five main groups of supporting policies, including: welcoming delegation; souvenirs; the media; sightseeing tickets; and consulting-support for groups, with sizes ranging from 50 guests to 150 guests, 300 guests, 700 guests or more.
The delegation from 700 guests will be welcomed by the city leader and arranged to lead the group.
Particularly, the service supporting policy group will be registered by businesses and posted at: www.danangfantasticity.com/mice. The Danang Tourism Promotion Centre will receive support requests through the online application at: https://danangfantasticity.com/mice/benefits.
Central Vietnam region’s travel, tourism sector suffering major staff shortage
Deputy Prime Minister Vu Duc Dam has just agreed to the proposal of the Ministry of Culture, Sports and Tourism on the time to reopen tourism activities under new normal conditions from March 15, showing an effort to recover the tourism industry as soon as possible. However, the tourism economy has been heavily hit by the coronavirus pandemic and countries shut down their doors in two consecutive years, a serious shortage of staff in the Central region’s tourism industry has been seen.
The pandemic has pushed over 50 percent of hospitality workers out the door. Hotels and restaurants in Thua – Thien Hue, Da Nang and Hoi An have shown significant shortages of experienced reception, room staff, and maintenance from the beginning of 2022 until now.
According to statistics of the Da Nang Department of Tourism, from the end of April 2021 up to now, in Da Nang, about 80 percent of tourism workers including about 42,000 direct workers in the tourism industry have been unemployed and switched to work in different jobs. Many of them won’t return to the tourism industry.
Worse, some hotels have seen a shortage of up to 50 percent of employees because they have previously laid off many employees or employees decided to quit their jobs over wages and benefits.
Site clearance processes of North-South expressway revealed before June 30
The Ministry of Transport has asked 15 provinces and cities to submit the date when the construction project of North-South expressway must be definitely be kicked off.
The ministry asked for cooperation among the localities of Ha Tinh, Quang Binh, Quang Tri, Quang Ngai, Binh Dinh, Phu Yen, Khanh Hoa, Can Tho, Hau Giang, Bac Lieu, Kien Giang, Ca Mau, Dong Nai, Dong Thap and An Giang to come to an agreement on designs of routes, frontage roads, tunnels, overpasses, intersections and others with the project management board before March 10.
Localities must submit documents of designs and site clearance processes from March 15 to June 30; and determine resettlement demand, land fund, resettlement housing fund, resettlement categories and build construction projects of resettlement areas.
Provinces and cities have to promptly complete a report of agriculture and forest land use change to send to the Ministry of Natural Resources and Environment for assessment before March 20.
CPI up 1.68 percent in first two months of 2022
Increases in petrol prices, and those of food, food stuff, restaurant food and public transport services during the Lunar New Year led to a rise of 1 percent in the consumer price index (CPI) in February compared to that of the previous month, the General Statistics Office (GSO) announced on February 28.
The February index was also up 1.42 percent year-on-year, and 1.2 percent against December 2021.
In the first two months of 2022, CPI climbed by 1.68 percent over the same period last year, and core inflation by 0.67 percent.
In February, among the 11 commodity and service baskets, 10 reported increases, with the highest seen in transport. Meanwhile, prices of post and telecommunications declined by 0.04 percent.
Also in the month, the price of gold went up by 1.85 percent, while that of US dollar reduced by 0.28 percent.
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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