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VIETNAM BUSINESS NEWS MARCH 23

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FLC inks Vientiane-Vung Ang railway project

VIETNAM BUSINESS NEWS MARCH 23

Vietnam’s FLC Group and Laos’ Petroleum Trading Lao Public Company (PetroTrade) have signed a memorandum of understanding on developing the Vientiane-Vung Ang railway project.

The signing took place in the Lao capital of Vientiane, with the ministers of Planning and Investment of the two countries witnessing.

FLC and PetroTrade will jointly prepare to construct a railway section from the Vung Ang seaport in the north-central province of Ha Tinh to the Cha Lo border gate in Quang Binh. This is an important section of the Vientiane-Vung Ang rail line, whose total investment is some US$5 million.

The project has a total length of around 555 kilometers, with a 452-kilometer section in Laos and the rest in Vietnam.

The two sides expected to break ground on the project in the fourth quarter of this year.

The railway project linking Laos and Vietnam is expected to enhance the goods transit capacity at the Vung Ang port, thereby bolstering trade between Vietnam and neighboring countries as well as strengthening regional and international connectivity.

Over VND12.5 trillion proposed for expressway project in Lam Dong

A consortium of T&T Group and FUTA Group has proposed developing an expressway in the Central Highlands province of Lam Dong with an investment of over VND12.5 trillion in the first phase.

The 73.64-kilometer expressway will start at an intersection with Nguyen Van Cu in Bao Loc City and end at an intersection with the Lien Khuong-Prenn Expressway at the gateway to Dalat City.

Of the total investment, VND2.5 trillion would be sourced from the State budget and VND1.5 trillion from Lam Dong’s budget, the local media reported.

On March 22, the Lam Dong Department of Transport stated that the provincial government had proposed the Ministry of Planning and Investment consider the prefeasibility study for the expressway project, which will be conducted under the public-private partnership (PPP) model.

More progress seen in handling suspected cashew nut scam in Italy

A new positive development has been seen in the suspected scam involving 100 containers of Vietnamese cashew nuts exported to Italy, with eight containers already re-exported to the Netherlands by March 22, according to the Vietnam Trade Office in Italy.

To continue supporting Vietnamese exporters who lost original documents of their goods in the case, representatives of the trade office made a business trip to the port northern Italian city of La Spezia on March 22, to ask the port authorities, financial police and shipping lines to help reduce the loss of the Vietnamese exporters to the lowest.

Vietnamese Trade Counselor in Italy Nguyen Duc Thanh said that La Spezia port authorities and Italian police had promised to detain 14-16 containers without original documents at the port.

Twenty-one others are expected to arrive in La Spezia and Genova ports in the coming time, including six to La Spezia on March 26 and two also to this port on March 28-29.

In the coming time, the Trade Office and the Embassy of Vietnam in Italy will continue to work with shipping lines on issues related to the case. According to Thanh, if it becomes a criminal case, the handling may be faster, because there is information that the buyer has hired lawyers and has contacted the lawyers of the sellers (Vietnamese enterprises), shipping lines, and the court to claim delivery when they have the original documents.

Currently, there is at least one set of original documents that have been identified by COSCO (the freight forwarder) as real. This is the first evidence that suspected scammers in Italy have somehow obtained the original documents illegally without paying Vietnamese businesses.

More than 500 enterprises honoured with ‘High-Quality Vietnamese Goods’ title

A list of 524 enterprises winning the title of high-quality Vietnamese products in 2022, as selected by consumers, was announced by the Association of High-quality Goods Enterprises at a ceremony in Ho Chi Minh City on March 22.

The winning firms operate in a wide range of industries including confectionery, fresh food, dairy products and beverages, cosmetics, textiles and garments, leather, pharmaceuticals, and ceramics.

They were selected through a survey conducted by the Business Association of High-Quality Vietnamese Goods from November 2021 to January 2022, during which a total of 13,648 survey questionnaires were handed out with 2,830 enterprises named in all product groups. The association also collected recommendations from 77 departments and agencies in 39 provinces and cities, to choose the final 524 enterprises.

Tra fish exports to EU bounce back

After two consecutive years of decrease, tra fish exports to the European Union (EU) have bounced back.

According to the Vietnam Association of Seafood Exporters and Producers (VASEP), Vietnam earned 20.2 million USD from the exports in the first half of February, up 40.2 percent year-on-year.

The Netherlands, Belgium, Germany and Spain are currently the four largest importers of Vietnam.

Vietnam is home to nearly 120 facilities processing tra fish products for export with a combined capacity of 1.8 million tonnes of input per year.

Vietnam’s financial strategy aims at sustainable development

According to Government Decree 368/QD-TTg approved by Deputy Prime Minister Le Minh Khai on March 21, top priorities for the State’s budget include a comprehensive reform of budget management by central governmental agencies, increased local government autonomy and the development of a transparent and sustainable financial market.

Reforms also include large investments to improve the quality of human resources, the implementation of technology, digitalisation and information technology in the field of financial management. The government encourages all stakeholders to invest in the development of the country’s infrastructure to speed up the process of economic recovery post-pandemic.

The government said it prioritises long-term development projects, sustainable financing while strengthening national reserves, social security and investing in human capital. Meanwhile, government spending is to be reduced to 60 percent, from the current level of 62-63 percent, by the end of 2030.

State budget deficit, public debt and financial security lie at the core of future reforms. The decree laid out a road map to ensure the country will be able to meet all financial obligations in the 2021-25 period with a goal to reduce the portion of public debt from 3.7 percent GDP in the period to 3 percent by the end of 2030.

The government said it is committed to limiting the debt ceiling to 60 percent of GDP, with government debt not higher than 50 percent, foreign debt not higher than 50 percent in the 2021-2025 period. The stock market’s capitalisation by 2025 is to reach 100 percent of GDP with a goal to increase to 120 percent of GDP by the end of 2030.

Meanwhile, the insurance market has been earmarked for an annual 15 percent growth rate from now until 2025 to account for 3-3.3 percent of GDP and a 10 percent annual growth rate from 2025-30.

State-owned enterprises (SoEs) are to go through a restructuring process to improve business and financial performance by 2025. SoEs with strong business performance may receive additional investment to bolster the State’s ability to support key industries. On the other hand, governmental offices and agencies are to have their budget slashed by 10 percent on average by the end of 2025, and 15 percent by the end of 2030.

Other key objectives include measures to modernise the country’s customs and tax procedures and to establish a digital treasury by 2030.

Techfest Vietnam 2022 promotes innovative solutions

The National Innovative Entrepreneurship Day (Techfest Vietnam 2022) was launched on March 22, aiming to promote innovative solutions from start-ups amid the strong technology development, attracting resources from domestic experts, intellectuals, entrepreneurs and overseas Vietnamese.

The annual and larges event for Vietnamese innovative start-ups is jointly organised by the Ministry of Science and Technology (MOST) and other agencies and localities.

Last year, the national innovative startup ecosystem attracted more than 1.5 billion USD, the highest amount of investment capital. It is the clearest evidence of the potential and capacity of Vietnamese intellectuals, the deputy minister said, adding that this impetus needs to be encouraged to develop a new wave of innovation, contributing to economic recovery and development in the post-pandemic era.

Gabonese trade minister explores rice production in Long An

Gabon is seeking Vietnamese enterprises that can transfer rice farming technology and invest in rice production, not only to serve domestic consumers but also to export to neighbouring countries, Gabonese minister of trade Yves Fernand Manfoumbi said during his visit to Vietnam.

Manfoumbi and his entourage on March 22 made a field trip to the factory of Cong Thanh Ut Hanh Co., Ltd – a major rice producer and exporter in Tan An city, the Mekong Delta province of Long An. Nguyen Tuan Thanh, Director of the provincial Department of Industry and Trade, also joined the visit.

Long An has formed a plan to develop 60,000 hectares of high-quality rice farming regions and sub-regions by 2025, Thanh told the Gabonese minister. The province now has over 22,000 hectares of hi-tech rice farming areas, he said.

Long An exports some 600,000 – 800,000 tonnes of rice annually, accounting for around 10 – 13 percent of the country’s total rice shipments, the Vietnamese official noted, adding that Long An rice has been available in 40 countries and territories, mostly China, the Philippines, Indonesia, and Malaysia. It has also been shipped to foreign markets with high standards, such as the Netherlands, the UK, the Republic of Korea, Spain, the Czech Republic and Israel.

There is plenty of room for Long An, Vietnam and Gabonese provinces to expand trade of rice, Thanh stressed.

Israel-Vietnam Chamber of Commerce makes debut

The Vietnamese Embassy in Israel, in collaboration with the Israel-Asia Chamber of Commerce, held a ceremony on March 22 to inaugurate the Israel-Vietnam Chamber of Commerce.

Einat Halevi Levin, President of the Israel-Vietnam Chamber of Commerce, said that the decision to set up the chamber was prompted by the huge cooperation potential and rapid trade growth between the two countries.

The chamber will provide support for the two business communities with a goal of doubling the two-way trade value, she said, adding that it has received big assistance from the Israeli Government.

Firms seek to bolster exports to Mexico

A virtual trade promotion and cooperation conference for businesses of Vietnam and Mexico will be held on March 23-24.

Nearly 60 firms of the two countries have registered to join the event to be jointly organised by the Vietnam Trade Promotion Agency (Vietrade) under the Ministry of Industry and Trade and the Trade Office in Mexico, together with the Mexican Secretariat of Economy.

It aims to help localities, firms and cooperatives supplying agro-fishery-forestry products and foodstuff of Vietnam seek partners and chances to export to Mexico; and introduce the countries’ staples and know-how when entering the markets.

The conference will host sessions assisting Vietnamese firms seeking the supply of electronic devices, air conditioners, optical instruments and medical equipment from Mexican manufacturers.

Can Tho supports start-ups in digital transformation

An investment fund intended to support start-ups in digital transformation has made its debut in the Mekong Delta City of Can Tho.

Named FUNDGO, the fund is the first of its kind in the city to support and invest in start-ups. It is established by the city-based TRUSTpay Joint Stock Co.

During the launching ceremony, FUNDGO also signed a strategic co-operation agreement with Can Tho Youth Union to implement programmes on supporting young start-ups and deploying community activities.

FUNDGO aims to incubate and make a long-term investment in not only start-ups but also in small and medium-sized enterprises with high creative abilities.

The fund will diversify its portfolio into food chains, agriculture, healthcare, education technology, financial technology, medical technology, and marketing business models.

Bamboo Airways launches Hanoi-London direct air route

Bamboo Airway’s direct air route linking Vietnam and the UK was officially launched on March 22 with a flight departing from Hanoi’s Noi Bai international airport to London.

The route will see two flights per week at present.

Bamboo Airlines uses 787-9 Dreamliner on this route, which helps shorten the travel time between the two countries to more than 12 hours, saving nearly seven hours compared to transit flights.

Francophone business forum opens in HCM City

The Vietnam Chamber of Commerce and Industry (VCCI) and the International Organisation of La Francophonie (OIF) held a Francophone business forum in Ho Chi Minh City on March 22.

The forum is among a series of events held within the framework of a visit by the Economic and Commercial Mission of La Francophonie (MECA) from March 21 – 30.

OIF General Secretary Louise Mushikiwabo emphasised that the presence of representatives from 25 OIF member countries at the forum has reflected their expectations for cooperation opportunities in Vietnam.

Lauding Vietnam’s dynamism, she said the country offers many opportunities for foreign businesses and investors, which has been highly valued by OIF businesses.

The visit to Vietnam by the Francophone delegation is part of the efforts to implement the Francophone Economic Development Strategy from 2020 – 2025.

Vietnam attends Singapore Apex Business Summit 2022

Vietnamese Ambassador to Singapore Mai Phuoc Dung will be among speakers at a discussion of the ongoing Singapore Apex Business Summit 2022, together with ambassadors of Indonesia and the Philippines.

The discussion, part of the ASEAN Conference slated for March 23, is to look into the future of jobs and skills in ASEAN to capture business opportunities.

The ASEAN Conference will host panels discussing the future ASEAN cities and industries in 2030, consumers in the digital era, and the future of jobs and skills.

The Singapore Apex Business Summit 2022, themed “Accelerating Business Transformation in an Endemic World”, aims at empowering businesses to maximise their potential in an endemic world.

Low level of car production holds back Vietnamese auto part suppliers

Some 50,000 vehicles per year is the minimum production level needed for the growth of the Vietnamese auto part industry. Unfortunately, few car producers in Vietnam have reached such a level.

Only Toyota and Hyundai crossed the threshold in 2021, with 64,172 and 56,028 vehicles, respectively.

Meanwhile, Kia fell short of the threshold with just 35,181 vehicles. VinFast followed with 34,746 and Mitsubishi with 26,346.

Truong Thi Chi Binh, an expert at Vietnam Institute of Strategy and Policy for Industry and Trade, underlined the low level of car production as a setback for the Vietnamese auto part industry.

She said low production meant low demand for domestic auto parts, discouraging suppliers from investing in new production lines. Without new production lines, the suppliers become less competitive in price as they cannot achieve economies of scale. Consequently, car producers have to find their auto parts elsewhere.

The expert believes that Vietnam should introduce favourable policies to boost the growth of the domestic industry. Otherwise, Vietnamese suppliers will be priced out of the market by foreign competitors.

Binh Duong keen to attract investors from Netherlands

The People’s Committee of the southern province of Binh Duong held a dialogue with businesses from the Netherlands on March 22.

Binh Duong is placed second nationwide in foreign direct investment (FDI) attraction, with 65 countries and territories pumping more than 37 billion USD in 4,016 projects, only after Ho Chi Minh City.

Those from the Netherlands have invested in over 40 projects with combined capital exceeding 1.1 billion USD in Binh Duong.

Binh Duong and Eindhoven city of the Netherlands have forged cooperation in the field of infrastructure planning, construction and urban development, economic-trade cooperation, science-technology, health care, and education-training since January 2015.

Over the past more than five years, the sides have exchanged delegations, conducted many trade and investment promotion activities, and carried out various cooperative programmes, especially in the development of the smart city project.

Hanoi welcomes 2.8 million domestic visitors during first quarter

Hanoi capital welcomed a total of 2.8 million domestic tourists in the first quarter of the year, a rise of 45.3% compared to the same period last year, according to details given by the municipal Tourism Department.

The capital earned approximately VND7.8 trillion, a fall of 45.3% on year.

As of March, Hanoi features 3,725 tourist accommodation establishments with 70,001 rooms. Of the figure, only 591 establishments are rated between one and five stars, offering 24,415 rooms and accounting for 15.9% of the figure.

During the first quarter of the year, the average occupancy rate of one to five star hotels is estimated to be at 19.3%, down 1.9% compared to the same period from last year.

The municipal tourism department has handed over design documents for the production of tourist signage systems, brand identity sets, tourism logos for craft villages, and Hanoi tourism souvenir products to the People’s Committees of Hoan Kiem, Ha Dong, and Gia Lam districts.

Tuna exports skyrocket thanks to effective FTA enforcement

Local tuna exports reported a spike during the initial months of the year due to tuna exporters taking full advantage of opportunities from new trade agreements such as the EU-Vietnam Free Trade Agreement and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership.

According to data compiled by Vietnam Customs, after skyrocketing 108% to reach US$88 million in the initial month of the year, tuna exports in February continued to grow at a high rate of 57%, reaching US$67 million in the process.

This figure stands at nearly double of that recorded in February, 2019, the period before the outbreak of the COVID-19 pandemic.

Tuna market expert, the opening two months of the year witnessed Vietnamese tuna exports reach US$155 million, up 82% over the same period from 2021. In order to achieve this figure, local businesses have effectively capitalised on opportunities from new trade agreements such as the EU-Vietnam Free Trade Agreement (EVFTA) and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).

Accordingly, throughout the reviewed period, besides the US market which increased sharply by 99% with turnover of US$80 million, local tuna exports to markets which have signed new generation FTAs with the nation were also on a sharp upswing. Of this the CPTPP market saw tuna exports to Canada expand by 52%, whilst those to Chile grew by 99%. Elsewhere, tuna exports to the EVFTA bloc increased sharply, with the Netherlands seeing a 114% climb, and Belgium recording a rise of 163%.

UK investment focuses on local processing and manufacturing industry

British investment in the Vietnamese market is enjoying an increase following the UK’s withdrawal from the EU and the UK-Vietnam Free Trade Agreement (UKVFTA) coming into force, according to the Foreign Investment Agency under the Ministry of Planning and Investment.

Deputy Minister of Industry and Trade Tran Quoc Khanh noted that in addition to two-way trade growing by 17% in the first year of the UKVFTA being enacted, foreign direct investment (FDI) flows from the UK into the nation have significantly increased.

Specifically, there were 48 newly-granted British investment projects in Vietnam last year, featuring a total registered capital of more than US$53 million, an annual rise of 157%.

The total registered capital of UK enterprises in the country currently stands at approximately US$4 billion, thereby accounting for nearly 1% of the total registered FDI in the nation. The UK ranks 15th out of 141 countries and territories with investment projects in the Vietnamese market.

British investment projects in the country primarily focus on the processing and manufacturing industry, constituting 38.7% of total registered investment capital, whilst real estate businesses make up 26.2%, and mining represents 17.6% of the total.

The rise of construction materials price

Prices of construction materials like iron and steel, cement, stone, and sand have increased relentlessly since the beginning of this year due to a surge in demand caused by the peak construction period being delayed by COVID-19 from February-April last year.

In recent times steel manufacturers have been notifying customers of higher prices of all types of finished steel. They have increased six times, adding up to VND2.4 million per tonne, including three times in March alone (VND1.6 million). According to manufacturers, the prices of billets and other raw materials have shot up, and they have hiked steel prices to more than VND19 million per tonne.

The prices of many other construction materials such as sand and bricks have increased by 10-20 per cent since the beginning of the year.

In HCM City, most building materials and interior decoration stores have hiked prices: levelling sand is VND170,000-190,000 per cubic metre, building sand is VND400,000 – 470,000, pipe bricks are VND1,3001,400 each, and cement is more than VND90,000 per bag.

Besides, suppliers used to deliver goods until recently, but now retailers need to foot the shipping costs. Ceramic tiles, imitation wood and plastic floor panels, laminate flooring, and water-based paint all cost more now.

VN targets $20 billion in timber exports by 2025

Viet Nam is targeting US$20 billion in total timber exports by 2025, an increase of more than $9 billion compared to now.

The goal is to develop a sustainable and efficient wood processing industry for 2021-2030, approved by Deputy Prime Minister Le Van Thanh on March 10.

The total export value of timber and forest products is targeted at $25 billion by 2030.

The value of timber and wood products for domestic consumption will reach $5 billion in 2025 and over $6 billion in 2030.

According to the project, more than 80 per cent of wood processing and preservation establishments will have advanced production technology, and all timber and wood products for export and domestic consumption will be made from the legal raw material of timber.

By 2030, the domestic wood processing industry will become an important economic sector and build and develop a reputable brand for Vietnamese wood products in domestic and export markets.

Most firms not legally well-informed

Vietnam Competition and Consumer Authority (VCCA) and Japan International Cooperation Agency (JICA) have recently surveyed several small and medium firms to assess their awareness of Competition Law.

Respondents are categorised according to the degree of their understanding of the law on a scale from “never heard of” to “have an excellent understanding of.”

The survey shows that only 12.68 per cent of respondents say they have an excellent understanding of Competition Law. About 3.1 per cent have a good understanding, and 17.18 per cent have a fairly good understanding.

Alarmingly, firms that have never heard of Competition Law take up 16.34 per cent. Firms that have heard of but are ill-informed about the law is even higher, at 28.45 per cent.

VCCA and JICA were concerned that about 25 per cent of firms are unaware of anti-competitive agreements, ticking the box “have no idea”. Worse still, 20-30 per cent misperceived the agreement as a legal business practice.

Regarding abuse of a dominant position, 21.13 per cent of firms gave wrong answers to the questions related to the practice, whereas 32.68 per cent had no idea.

Concerning economic concentration, 22.81 per cent gave wrong answers, and 25.07 per cent had no idea.

It is also worth noting that a majority of respondents (78.02 per cent) said they learnt about Competition Law through the mass media, including television and social networking sites.

37.46 per cent get their information from experts and lawyers.

Only 2.53 per cent are aware of the law through competitions cases.

Tax increase on tobacco must be backed by crackdown, control of smuggling: experts

Any increase in special consumption tax on tobacco must be accompanied by a crackdown on cigarette smuggling, experts have said.

Some National Assembly members discussing changes to eight laws at a recent extraordinary meeting, including the Special Consumption Tax Law, proposed a hike in the tax on tobacco and beverages.

They said the tax increase would increase the Government’s revenues and reduce negative impacts on society.

But others said the increase in tax needed to be studied carefully and it should only be hiked when tobacco smuggling is well controlled.

Besides, it is important to assess the proposal carefully to see how the special consumption tax increase will impact society and the economy, especially when businesses in all sectors and common people including farmers face many economic difficulties caused by the COVID-19 pandemic.

Nguyen Manh Cuong, deputy chairman of the National Assembly’s Judicial Committee, said the tax increase requires careful assessment of its likely impacts.

He too stressed that an increase in the special consumption tax on tobacco must go hand in hand with the fight against smuggling.

Increasing tax without fighting smuggling will be counterproductive, and cause an increase in tobacco smuggling since profits from contraband cigarettes could be higher than from drugs, he explained.

The tax hike and resultant increase in tobacco prices would increase demand for contraband tobacco, he warned.

PVcomBank and Vemanti Group co-operate on digital banking

PVcomBank and Vemanti Group from the US on Monday signed a cooperation agreement on developing and providing a digital banking platform for small- and medium-sized enterprises (SMEs).

Under the agreement, the bank would offer customers its strengths in network brand value and products. At the same time, Vemanti Group will use cloud computing, APIs, AI, and blockchain technology for the digital platform.

At the same time, the two sides would work together to research and provide SMEs in Viet Nam with innovative digital financial solutions through PVcomBank’s existing core banking system.

The digital banking platform that Vemanti Group provides will allow customers to sign up for an account and access services entirely online while still having the option of physically going to a convenient branch office if needed.

All customers will have access to tailored banking services and financial products that can seamlessly integrate into their business.

Viet Nam’s rapid loan growth impedes bank capitalisation drive

Low capitalisation levels are likely to remain a credit weakness for rated Vietnamese banks as rapid loan growth will make it challenging to raise capital adequacy ratios (CARs) in the next two to three years, according to Fitch Ratings.

In a report released recently, the rating agency said the capitalisation of Viet Nam’s banking sector has improved gradually in recent years amid rising profitability and banks’ capital raising efforts. Fitch estimates that the banks that are still to become Basel II compliant need only about US$0.6 billion of new capital to meet the local Basel II minimum CAR requirement of 8 per cent before the implementation deadline in January 2023.

According to Fitch, the capital accumulation has been low, despite the strong profitability many domestic banks have reported in recent years. This is because most of the rise in retained earnings was consumed by rapid loan growth.

Fitch said the State Bank of Viet Nam’s credit growth target remains at a high 14 per cent for 2022 (2017-2021 average: 14 per cent), indicating that the system capital ratio is not likely to improve quickly. This is especially true if restrictions on cash dividends, in place since March 2020, are relaxed.

Fitch could assess most Vietnamese banks’ viability ratings a notch higher if their core capital ratios were 2-3 percentage points higher. However, the rating agency believes that, except for those banks raising external capital, organic improvements are likely to remain modest in the near term, in spite of rising profitability.

Hoa Sen Group set profit target up to US$110 million

Hoa Sen Group (HSG) set an after-tax profit target of VND1.5-2.5 trillion (US$65.8-110 million) for the financial year 2021-22, depending on input material price movements, the pandemic situation and energy prices.

The business plan was approved at its shareholder meeting held in HCM City on Tuesday.

Accordingly, HSG targeted sales of 2 million tonnes and revenue of VND46.3 trillion in the financial year (from October 1, 2021, to September 30, 2022).

HSG also submitted to shareholders for approval the policy on transforming the operating model of Hoa Sen Group Joint Stock Company.

Specifically, HSG will convert a member company into Hoa Sen Plastic Joint Stock Company, take the plastic segment’s overall production and business activities, and establish a new Hoa Sen Furniture and Building Materials Distribution JSC (Hoa Sen Home).

Banks to pay dividends ahead of annual meetings

Shareholders are now focusing on news about bank dividends, especially as banks have been doing well throughout the past year despite the COVID-19 pandemic.

The draft document of the 2022 Annual General Meeting of Shareholders of Asia Commercial Joint Stock Bank (ACB) said that the bank will submit to shareholders a plan to issue more than 675 million shares to pay dividends at the rate of 25 per cent.

Meanwhile, in the 2022 business plan, Orient Commercial Joint Stock Bank (OCB) set profit growth at 25-30 per cent, maintaining a dividend of 20-25 per cent for shareholders.

Previously, Nguyen Hoang Linh, General Director of Vietnam Maritime Commercial Joint Stock Bank (MSB), said that he will submit to the General Meeting of Shareholders to approve dividend payment at the rate of 30 per cent for 2021. Capital raising plans will be submitted to the General Meeting of Shareholders by MSB for approval and implemented in 2022.

In the coming annual general meeting of shareholders, it is expected that the plan to pay dividends in 2021 by shares with the minimum rate of 15 per cent will also be presented to shareholders by Saigon Hanoi Commercial Joint Stock Bank (SHB).

Similarly, Vietcombank (VCB) recently issued more than 1.02 billion shares to pay dividends from the remaining profit of 2019 at the rate of 27.6 per cent. After the issuance, the bank’s charter capital increased by VND10.23 trillion to more than VND47.3 trillion.

BIDV (BID) just completed a plan to pay a stock dividend at the rate of 25.7 per cent, raising the charter capital to nearly VND50.6 trillion. It also plans to issue 341.5 million new shares, equivalent to 8.5 per cent of charter capital through a public offering or private placement.

Vietnam International Commercial Joint Stock Bank (VIB) was the first bank that has successfully organised the Annual General Meeting of Shareholders and approved the plan to raise its charter capital to over VND21 trillion, up 35.7 per cent. Of which, VIB will distribute bonus shares at the rate of 35 per cent to existing shareholders and 0.7 per cent to employees (ESOP) from equity.

The Banking Industry Outlook Report for 2022 of MBS Securities Company estimated that about 75 per cent of capital raising activities come from stock dividends, 22 per cent through private placement and issue of stock options, and about 3 per cent comes from ESOP.

Tourist arrivals in Hanoi soar over 45% in Q1

Some 2.8 million domestic tourists visited Hanoi City in the first quarter of the year, up 45.3% year-on-year, according to the municipal Department of Tourism.

The city made an estimated VND7.8 trillion in tourism revenue between January and March, a 45% year-on-year rise.

As of March, Hanoi City had more than 3,720 operational lodging facilities with 70,000 rooms. Of the total, 591 one- to five-star hotels provided 24,410 rooms, accounting for nearly 16%. These one- to five-star hotels saw their room occupancy reach over 19% during the three-month period, down 1.9% year-on-year.

CII seeks to divest from subsidiary

HCMC Infrastructure Investment JSC (CII) has approved the divestment from its subsidiary Sai Gon Water Infrastructure Corporation (SII) and authorized its management to decide the relevant issues.

As of December 31, 2021, CII owned 50.61% of SII.

Earlier, CII repeatedly sold shares of NBB Investment Corporation to reduce the ownership at the corporation from 87.94% to 49%. In specifics, CII sold 6.3 million NBB shares from October 26 to 29 last year; 11.5 million between November 9 and 19; 3.1 million from November 24 to December 14; 5.2 million from January 12 to 20 this year; and nine million from January 25 to February 23.

AirAsia to restart air services linking Vietnam, Thailand in April

AirAsia will restart international flights between Vietnam’s three major cities — Hanoi, HCMC and Danang — and Thailand’s Bangkok from April.

The airline will restart the air link between Hanoi City and Bangkok on April 9, with five weekly flights, while re-launching daily flights on the HCMC-Bangkok air route on May 1.

AirAsia will re-operate four weekly flights on the Danang-Bangkok route on Mondays, Thursdays, Fridays and Sundays from early May.

Passengers can book tickets priced from nearly VND1.3 million each for these flights from now until March 27.

Wind power investors ask PM for help over fear of bankruptcy

Facing the risk of bankruptcy, several wind power investors have sent a petition to the Prime Minister, the Ministry of Industry and Trade and other relevant agencies proposing removing tumbling blocks related to mechanism.

This is the second time that the investors of the Nhon Hoi, Nam Binh 1, Cau Dat and Tan Tan Nhat wind power projects have asked for help.

The four wind power projects have had the construction and installation processes completed and got certificates of appraisal prior to October 31 last year.

However, several objective factors such as Covid and unfavorable weather conditions have prevented these plants from running on a trial basis before October 31, 2021, which was the deadline for investors of projects in commercial operation to earn incentives. As such, the projects failed to be entitled to the feed-in-tariff mechanism in line with Decision 39 issued in 2018.

Due to the delay in their operation, many technical devices and wind turbines have deteriorated, causing a heavy loss and wastefulness for investors.

These projects have yet to undergo a technical test, while the deadline has passed. Since November, no new guidance for wind power projects has been issued.

To be put into commercial operation, these plants must meet many requirements, including technical tests and safety, according to a representative of the Vietnam Electricity Group.

As technical tests heavily depend on objective factors, it is necessary to make it more flexible for commercial operation to minimize the damage for investors, according to the petition.

These investors proposed the prime minister and the ministry consider either allowing their wind power plants to undergo technical tests to begin commercial operation in line with Decision 39, or offering an aid package for wind power plants affected by Covid.

Vietnam checking security vulnerability in securities trading system

The State Securities Commission of Vietnam has announced its cooperation with the Department of Cyber Security and Hi-tech Crime Prevention – Hanoi Public Security Department to detect a number of subjects trying to illegally access the IT system of securities companies via security vulnerabilities.

Accordingly, these subjects have obtained sensitive information of clients such as username, password to perform securities transactions or withdraw money via these accounts.

Therefore, the State Securities Commission of Vietnam requested that securities companies immediately check and fix these security holes, especially on the online security transaction systems; review the authentication procedure for each online securities transaction; adjust their system so that any money transfer or account information change requires an instant OTP authentication.

These companies are also demanded to contact their clients for proper risk warning if confidential information is revealed, and advice of regular password change, password format to be dissimilar to those of other accounts.

Source: VNA/SGT/VOV/VNS/SGGP/Hanoitimes

Source: https://vietnamnet.vn/en/business/vietnam-business-news-march-23-824832.html

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Samsung workers in Vietnam bear brunt of slowdown in global demand for electronics

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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 town

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.”

Source: https://tuoitrenews.vn/news/business/20220804/samsung-workers-in-vietnam-bear-brunt-of-slowdown-in-global-demand-for-electronics/68444.html

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Government debt drops by VND57 trillion when exchange rate fluctuates

Public debt is not much affected by the increase in the USD. The evolution of outstanding loans and debt repayment obligations is still under control.

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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%.

Source: VGP

Source: https://e.nhipcaudautu.vn/economy/government-debt-drops-by-vnd57-trillion-when-exchange-rate-fluctuates-3347118/

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Vietnam’s THACO and philosophy of no surrender

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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.”

Multifunctional model

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 the THACO Chu Lai Industrial Park in Quang Nam Province. Photo: Huu Hanh / Tuoi Tre

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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Source: https://tuoitrenews.vn/news/business/20220804/vietnam-s-thaco-and-philosophy-of-no-surrender/68420.html

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