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VIETNAM BUSINESS NEWS MAY 6

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Vietnam’s production rises at fastest pace since Nov 2018

VIETNAM BUSINESS NEWS MAY 6
People work at an auto plant. The improvement in Vietnam’s manufacturing sector in April 2021 was the strongest since November 2018 – PHOTO: VNA

 Vietnam’s production in April 2021 rose at the fastest pace since November 2018 amid sharp new order growth, according to a report released by IHS Markit on May 4.

New orders rose at a sharper rate, with firms responding by upping their rate of job creation and ramping up purchasing.

Input costs continued to rise sharply, leading to the fastest increase in selling prices in nearly a decade. Meanwhile, there were some signs that supply-chain disruption had started to ease during the month.

The Vietnam Manufacturing Purchasing Managers’ Index (PMI) increased for the third straight month, posting 54.7 in April following a reading of 53.6 in March. The manufacturing sector was boosted in April by signs that customers were willing to commit to larger orders than they previously did, given the general improvement in demand and control of the Covid-19 pandemic.

The total new orders increased for the eighth straight month running and at the fastest pace in close to two and a half years.

New export orders also continued to rise amid an improving international demand climate. Higher new orders led to a similarly-sized expansion of manufacturing output, with production also up at the fastest pace since November 2018.

Companies boosted production by increasing workforce numbers. Staffing levels were expanded for the third month running and to the greatest extent since December 2018.

This increased capacity, however, was not sufficient to prevent a first rise in backlogs of work in 15 months due to the strength of new order growth.

Besides raising staffing levels, firms also posted a sharp and accelerated expansion of purchasing activity. Respondents indicated that the increase in input buying was both in response to higher new orders and as part of efforts to build reserves to support production growth in the months ahead.

Efforts to expand inventory holdings were generally successful in April, with both stocks of purchases and finished goods increasing. In both cases, the rate of accumulation was solid and faster than at the end of the first quarter.

There were some signs that recent severe disruption to supply chains eased in April. While suppliers’ delivery times continued to lengthen, the latest deterioration in vendor performance was modest and the softest since last September.

Supply shortages and rising shipping costs continued to feed through to higher input prices. The rate of cost inflation remained substantial and was only slightly slower than that seen in March. In turn, firms raised their selling prices sharply, with the rate of inflation quickening to the fastest for close to a decade.

Expectations that the pandemic will remain under control led to higher demand, and the introduction of new product lines, supported ongoing confidence among firms regarding the 12-month outlook for production.

“The Vietnamese manufacturing sector hit the ground running at the start of the second quarter. Output and new orders each rose to the greatest extent since late 2018, and there were encouraging reports that customers were often happy to place larger orders amid greater confidence in the sustainability of the current expansion,” said Andrew Harker, economics director at IHS Markit.

“Inflationary pressures remained elevated, with output prices increasing at the fastest pace for almost a decade. There were some signs, however, that the severity of the difficulties in supply chains may be easing, which will hopefully reduce some of the upward pressure on prices,” Harker added.

Binh Phuoc seeks to bolster investment from US

The Becamex IDC Corporation together with the People’s Committee of southern Binh Phuoc province held an online conference on May 5 with investors from the US.

Addressing the gathering, Vice Chairman of the provincial People’s Committee Huynh Anh Minh said trade and investment promotions remain restricted as the COVID-19 pandemic wreaks havoc across the world.

The conference, therefore, holds significant and practical meaning for Binh Phuoc and the US business community and affirms the province’s determination to expand cooperation and attract investment and the attention from US firms.

Binh Phuoc hopes to bolster cooperation with US investors in the fields of industrial engineering, electromechanics, the agricultural processing industry, supporting industries, and high-tech agriculture, among others, he said.

He also pledged that Binh Phuoc will improve its investment climate to ensure transparency, revise policies, and create favourable conditions for businesses operating in the province.

At the conference, Vietnamese Ambassador to the US Ha Kim Ngoc underlined that the US is among Vietnam’s leading trade partners, with bilateral economic and trade cooperation maintaining growth levels despite the adverse impact of COVID-19.

Binh Phuoc is currently home to 13 industrial parks (IPs) covering 4,686 ha. To satisfy economic development demand and attract investment in the 2021-2030 period, the province eyes the expansion of three IPs and the establishment of four others, raising the total area to 10,000 ha.

Prominent among these will be the Becamex – Binh Phuoc Industrial and Urban Complex in Chon Thanh district, which has drawn 49 projects with registered capital of nearly 1 billion USD.

Becamex Binh Phuoc is set to build the 1,000-ha Dong Phu Urban IP in the time to come./.

115 trillion VND for tax payment extension

The total value of taxes and land lease fees under the Government’s recently-issued decree on the extension of deadlines for tax payment is 115 trillion VND (4.97 billion USD), heard a press conference of the Government on May 5.

Minister-Chairman of the Government Office Tran Van Son said Decree No. 52/2021/ND-CP aims to support enterprises, organisations, family businesses and individuals who are affected by the COVID-19 pandemic.

Under the Decree, a five-month extension will be given to value-added tax of the assessment periods of March, April, May, June, the first quarter and the second quarter this year. This means the payment of VAT of March assessment period will be extended to September.

Timeframe for payment of value-added tax of July and August will be extended by four and three months, respectively.

Payment of corporate income tax in the first and second quarters will be extended by three months, according to the Decree.

A six-month extension will be given to payment of land rent fees, starting from May 31, 2021.

This is the third time the Government has introduced tax and land rent payment deadlines since the first COVID-19 cases reported in Vietnam on January 23, 2020.

Earlier, the Government promulgated Decree No. 41/2020/ND-CP dated April 8, 2020 on extension of deadlines for tax and land rent fee payment and Decree No. 109/2020/ND-CP providing the extension of time limits for excise tax payment for domestically manufactured or assembled cars.

In implementing the two previous Decrees, a total of 184,900 dossiers on tax and land lease payment extension were passed with a total sum of 87.3 trillion VND./.

Capital injections loom in finance M&A

Although the pandemic is still taking a serious toll on the economy, foreign investors are banking on cross-border mergers and acquisitions in the financial industry, especially in consumer finance and retail banking, illustrating the urgency to acquire new capabilities.

Japanese financial group Sumitomo Mitsui Financial Group (SMFG) – parent of Sumitomo Mitsui Banking Corporation (SMBC) and consumer arm SMBCCF – was last week reportedly to acquire 49 per cent in FE Credit, Vietnam’s largest consumer finance company under VPBank.

Deputy Prime Minister Pham Binh Minh told Masahiro Yoshimura, general manager of Business Development Department at SMFG, at a reception last week that he welcomed SMBC’s investment in FE Credit, and noted his belief that the cooperation will be a success.

SMFG will pay $1.4 billion to buy 49 per cent at FE Credit, making it the largest deal conducted by a Japanese bank in Vietnam’s financial institution landscape. “The looming acquisition comes as Vietnam’s consumer loan market rapidly expands on the back of strong and sustained economic growth,” reported Nikkei Asia. “Sumitomo is aiming to widen its business in Asia by leveraging its digitalisation and customer management expertise.” FE Credit, after the deal, is now valued at $2.8 billion.

A representative of VPBank told VIR, “Through this transaction, FE Credit is expected to receive additional support and international expertise in capital resources, as well as management skills from SMFG, especially from SMBCCF.

“At the same time, this transaction will inject a large amount of capital to VPBank, bolstering the bank’s solid growth fundamentals and enhancing its financial capabilities to explore its huge potential as well as capitalise on the emerging financial industry in Vietnam,” the representative added.

VPBank’s Board of Directors initially forecast that a successful initial public offering could triple FE Credit’s share price compared to the book value after equitisation.

The $1.4 billion bet on FE Credit is part of SMFG’s strategy to increase its footprint in Asia. The mega deal will offer mutual benefits, where the Japanese lender fund could jump on the lucrative consumer finance bandwagon in Vietnam, and FE Credit could enhance its operations to international standards.

SMBC Group is one of the three biggest banking and financial groups in Japan, with total assets of over $2.1 trillion as of December 31 last year. The group operates in retail banking, corporate banking, and investment banking worldwide, and is present in over 40 countries.

Last December, SMFG was allegedly planning to acquire an Asian lender, specifically in Vietnam, the Philippines, and India. Accordingly, the bank would cooperate with a global investment bank on US deal-making activities.

Elsewhere, international banks including DBS Group, Mitsubishi UFJ Financial Group, OCBC, and Standard Chartered are allegedly vying to each other to buy Citibank’s retail banking business in Asia after the latter’s announcement to shut down this arm in 13 markets a fortnight ago.

“The sale process will start within a couple of weeks, they added, declining to be named as they were not authorised to speak to media. Potential bids from the regional banks and Standard Chartered, which makes most of its profit in Asia, underscores their growing appetite for businesses like credit cards and mortgages in a push to lock in long-term income growth,” Reuters noted.

“Asia is critical to our group’s strategy, and we will allocate resources to drive profitable growth,” a Citi spokesman in Hong Kong said.

At the same time, Japanese banks MUFG and Sumitomo Mitsui Financial Group, along with Brit-based Standard Chartered, are mentioned as other potential bidders. In South Korea, financial institutions OK Financial Group and DGB Financial Group are strong candidates if a bidding war to acquire Citibank’s retail subsidiary takes place.

Specifically, DBS – the Singaporean multinational banking and financial services corporation – is reportedly mulling over buying Citibank’s retail business in India, according to The Hindu Times.

“DBS has always been open to exploring sensible bolt-on opportunities in markets where we have a consumer banking franchise and where we can overlay our digital capabilities,” DBS said in a statement.

Besides DBS, Standard Chartered and Kotak Mahindra Bank and Axis Bank also show their interest in the deal in India. Meanwhile, Bloomberg reported the Bank of the Philippines – the country’s oldest lender – is mulling over acquiring Citibank’s retail arm domestically.

“We have told them that as soon as there is any information, we will take a look at it and most likely, we will be interested,” the bank’s president TG Limcaoco said, referring to Citigroup’s retail banking business.

In Vietnam, Citibank has been one of the most prestigious foreign lenders for years, providing a wide range of services from credit cards to wealth management, among others.

Citibank’s representative in Vietnam previously said that the withdrawal will not affect to its long-term commitment in this country. Citigroup’s consumer banking business in 13 markets made up for $4.2 billion of the bank’s revenue in 2020 of $74.3 billion.

Developers work around foreign cap

To meet the increasing demands of non-nationals on owning a property in Vietnam, many real estate developers are moving such buyers towards a long-lease term of 50 years instead after using up their restriction of 30 per cent of foreign ownership per project. 

According to the Law on Housing 2014, foreign organisation and individual ownership of units in an apartment building may not exceed 30 per cent of total units in one apartment building.

In the event of an area with geographical boundary equivalent to ward level with many apartment buildings for sale or lease purchase, those organisations and individuals may own no more than 30 per cent of the total units of each apartment building, and not more than 30 per cent of the total units of all the apartments.

Some projects, however, have used up the limitation such as Gateway Thao Dien, Nassim, and Thao Dien Pearl. In response, the project developers are persuading their overseas buyers to a long-lease term of 50 years instead.

According to Le Hoang Chau, chairman of Ho Chi Minh City Real Estate Association (HoREA), in several projects that that reached the ownership rate ceiling, non-nationals are being offered two options for short-term rent or long-term home lease. “In reality, there is not much difference between being in or out of the 30 per cent limitation. Foreign buyers who are consistent in wanting a property in their target projects will choose the long-lease term,” Chau said.

While current regulations include the 30 per cent cap for foreign ownership in Vietnam, no such limitation is applied for long leasing.

Some nations are currently tightening foreign ownership policy to avoid speculation, like South Korea, or trying to limit the number of homes being bought by foreigners, causing prices to soar and making it difficult for local middle- and low-income people to acquire accommodation, like in Australia.

Chau stressed that housing needs and housing ownership are different. “Most of the foreigners living in Vietnam would choose to rent a house instead of buying. This is because if they stay in Vietnam for more than 180 days each year will have to pay personal income tax. They will not buy fixed assets and then waste half a year of not using them,” Chau said.

Keeping the limitation of 30 per cent does not affect the target of attracting foreign investment while ensuring the advantage for Vietnamese in the luxury segment, he added.

According to unofficial figures, more than 320,000 foreigners live and work in Vietnam, mainly in Hanoi and Ho Chi Minh City.

Ho Chi Minh City has recorded the highest percentage of foreign buyers nationwide. According to HoREA, 17 leading real estate groups and corporations in Vietnam have sold more than 12,000 homes to foreign individuals and enterprises during the past five years.

The majority of overseas buyers come from China, South Korea, Taiwan, Hong Kong, and Singapore, while leasers are mainly from Europe, the US, Australia, and Japan. Nationwide, the HoREA predicts that around 16,000 units have been sold to non-Vietnamese buyers during this time.

Among the 17 real estate groups, 85 per cent of the total units belong to five leading ones with more than 10,000 units. Of those, Vingroup occupies around 40 per cent, with more than 5,000 units sold to foreigners.

Figures from the Ministry of Construction said that more than 4 million units were built in Vietnam in the last 10 years.

Under Decree No.99/2015/ND-CP to guide to the implementation of Law on Land 2013, the ministries of defence, public security, and construction work with local authorities to set up a list of projects eligible for foreign buyers. Developers must propose those projects and meet the required conditions so as to not harm national security.

However, many localities have not released their list of eligible projects for them, causing a prolonged process in handing out red books for buyer certification.

Only localities such as Hanoi, Ho Chi Minh City, Binh Duong, Khanh Hoa, Danang, and Ba Ria-Vung Tau have offered up lists so far.

“This slow process is confusing and brings risks to buyers if they bought a project but has not had it permitted yet,” said Nguyen Van Minh, a consultant in Ho Chi Minh City’s District 4.

Beer battle ahead shakes up goals

The country’s biggest brewers, SABECO and HABECO, have been quizzed over their ambitious profit targets and possible solutions at their annual general shareholders’ meetings as tough competition and beer consumption figures stand in their way.

Although domestic brewers have been faced with social restrictions during the pandemic and stricter regulations on road traffic to keep beer lovers safer, this year’s revenues and net profit targets show an attempted direction towards economic recovery.

The publicly-listed Hanoi Beer, Alcohol, and Beverage JSC, or HABECO (code BHN), approved its business plan at last month’s annual general shareholders’ meeting. Revenues from its main product lines of beer and UniAqua water was presented, reaching VND5.3 trillion ($230.4 million), while profits after tax amounted to VND225.4 billion ($9.8 million), down 8.5 per cent and 59.2 per cent on-year, respectively.

Although the beermaker holds the largest market share in the north, HABECO predicted that its business situation this year will still face many difficulties as the global fight against the pandemic persists.

In the context of the generally weak demand due to lowered consumers’ purchasing power, HABECO also must deal with pressure from competitors that are concentrating large resources on continuous promotions, investing heavily in their distribution systems, and bringing new products to the market that directly compete with popular segments of the company.

Ngo Que Lam, general director of HABECO, said that in the northern and north-central regions, which are the company’s main markets, the beer industry has experienced a stronger decline compared to other markets.

Despite being subject to stiff competition from international and local beer brands, HABECO however still maintains its position as the leading brewer in the market and recovered its business in the summer season and by the end of 2020 as a whole.

According to a report conducted by SSI Securities Corporation, the beer sector’s recovery momentum will continue but the demand is forecasted to not return to pre-pandemic levels before 2022.

Although Vietnam has handled the pandemic well, with catering and entertainment improving, the overall performance of the food and beverage sector is still a long way off pre-pandemic levels, and customer frequentation at restaurants, cafes, shopping centres, theme parks, and museums remains weak, representing an overall decrease of 10 per cent compared to the average rates.

Meanwhile, SABECO (code SAB) set a target revenue of VND33.5 trillion ($1.33 billion) with net profits of VND5.2 trillion ($208 million) for 2021, a 20 per cent and 7 per cent on-year increase, respectively.

Explaining the figures, Bennett Neo, general director of SABECO shared, “Our business plan for 2021 was made in January, but the goal of increasing sales by 20 per cent is not easy. Even so, the Management Board still maintains its commitment and strives to fulfil it.”

Despite the challenges from the pandemic, new regulations, and natural calamities last year, SABECO was able to post better-than-expected bottom-line results by implementing cost savings, leveraging new sales opportunities, and expanding the market by introducing new brands such as Lac Viet and Saigon Chill. With this, SABECO has also been able to meet its previously-approved 2020 dividend plan which maintained a rate of 35 per cent.

At the company’s presentation of its 2020 financial results, SABECO highlighted that while revenues and profit after tax went down 26 per cent and 8 per cent from the previous year, respectively, SABECO still managed to surpass its targets by 17 per cent and 52 per cent, respectively. In absolute figures, SABECO exceeded its revenue target by VND4.1 trillion ($178.2 million) and its net profit goal by VND1.6 trillion ($69.6 million).

“We were able to weather headwinds in 2020 by remaining fiscally prudent and operationally nimble,” said Neo. “We focused our spending on the essentials and continued to find efficiencies, where possible, while making sure that we are able to leverage on market opportunities.”

The spirit of accepting tough trials is rooted in the company’s transformation strategy that started three years ago after Thai Beverage acquired a majority stake in the state-owned brewer.

Both SABECO and HABECO showed solutions to shareholders to reach their targets, including improving the distribution network and adjustments to customer tastes, resulting in a larger market share.

Although the beer sector faced the dual pressure of the pandemic and regulations on drink-driving last year, the newly-introduced product lines could be utilised to increase market share as Vietnamese consumers begin to pay more attention to such products thanks to quality and taste, and thus are more willing to pay higher prices.

Pushing agricultural product consumption through e-commerce

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A number of localities in Son La province have recently supported agricultural product consumption via social networks and e-commerce sites. The move has brought initially positive results compared to traditional methods of consumption.

The use of livestreaming to sell agriculture produce is quite a new concept and only recently applied in Son La province. Here, an influencer with a huge number of followers introduces plums to boost consumption of the local specialty. The effort is the result of coordination between a number of individuals, organisations, and local authorities to provide support to the promotion and consumption of local plums.

One hour of livestreaming attracted more than 500,000 views, and after two days the number had increased to more than 3 million, with a total of 20 tonnes of plums sold. Online sales have contributed to promoting the Tam Hoa plum brand among many more people throughout the entire country.

Tam Hoa plums are a high yield crop, and in recent years there have been many localities planting the variety as their main crop. But due to a lack of communications and promotional efforts, they were still mostly consumed locally or in neighbouring areas. To remove the obstacles, the local government established a campaign committee to support the promotion and consumption of plums and of agricultural products in general through social networks and e-commerce sites.

Selling goods online and through e-commerce sites has many benefits, but quality must be ensured when products reach consumers. In order to guarantee the fair sale and uniform quality of agricultural products, authorities at all levels in Son La have created specific lists, giving priority to households that do not use fertilisers or chemical pesticides in the growing process./.

Questions over air titans’ funding plans

While Vietnamese airlines are looking at  fundraising on the stock market as a way to shelter from financial storms, the possibilities of making it a success remain narrow.

According to Pham The Anh, chief economist at the Vietnam Institute for Economic and Policy Research, airlines plan fundraising on the stock market as favourable conditions in the stock market are in reach. This may therefore be a good solution for them to access more financial sources for operations amid the pandemic.

However, many experts warn that it will not be easy for air carriers to mobilise tens of trillions of VND in the stock market at this time because their tickers are simply less attractive than others.

In a specific case, the Ho Chi Minh City Stock Exchange decided to issue warnings to HVN, the ticker of Vietnam Airlines, from April 15 due to business losses. An expert at FPT Securities told VIR, “HVN has fallen in recent days due to serious concerns over COVID-19.”

Also, VJC – the ticker of Vietjet – also saw a downtrend from over $5.66 per share on April 22 and $5.53 on April 27 to $5.47 on April 28.

Bamboo Airways is currently selecting an international auditing company to prepare for its initial public offering (IPO) in the United States, planned for the third quarter.

Chairman Trinh Van Quyet, also the chairman of private-run property developer FLC Group, said that the airline aims to raise $200 million in the IPO by offering 5-7 per cent of stake at a starting price of VND60,000-80,000 per share ($2.60-3.47), thus increasing its market capitalisation to $4 billion.

“The IPO in the US is part of Bamboo Airways’ efforts to expand its services globally,” Quyet said. “This is the latest development of the airline and the IPO on a local stock exchange is a backup plan, depending on market conditions.”

In similar moves, Vietjet offered nearly 18 million treasury shares on the Ho Chi Minh Stock Exchange from March 30 to April 28 to increase its working capital. Elsewhere, national flag carrier Vietnam Airlines, in which the state holds 86 per cent, has received government approval to issue additional shares worth VND8 trillion ($348 million) regardless of the issuance schedule.

Together with issuance plans, airlines are seeking government support policies on loans after Vietnam Airlines earlier received refinancing loans worth VND4 trillion ($174 million) with interest rates for refinancing loans set at zero per year.

Specifically, Vietjet seeks a loan of VND4-5 trillion ($174-217 million) with a term extending to 2023 and lending rate of 4 per cent annually. In the meantime, Bamboo Airways also seeks a loan of VND10 trillion ($435 million).

While Anh said that the government should have similar credit supporting policies for airlines to ensure equal treatment, others suggested careful consideration to ensure fair treatment, as aviation is not the only sector badly hit by COVID-19.

As a result of the uncertainty, airline expansion and restructuring plans are inevitably placed on the back-burner. Market analysts forecast that the struggling sector will start recovering at the end of this year, with expectations pinned on regular international flights for those with “vaccine passports”. But numerous obstacles abound in terms of adequacy of evidence, effectiveness, technology, and vaccine efficacy.

Vietnam emerges as top alternative for global supply chain shift

The number of US-based companies seeing Vietnam as a top sourcing market has doubled over the past four years as a result of the global investment relocation trend from China.

Hong Kong-based QIMA specialised in providing supply chain compliance solutions has just released a survey of over 700 companies across the globe. Of this, the number of US-based respondents selecting the Southeast Asian country as the leading sourcing location has doubled against four years ago, to 43 per cent in early 2021.

Similarly, 25 per cent of EU companies also listed Vietnam as one of the three leading sourcing markets in this year’s first quarter, down 15 per cent on-year but up 11 per cent against the same period of 2019.

Of all establishments switching to suppliers in new geographic regions last year to avoid COVID-19 impacts, nearly one-third revealed that the 100-million population country is one of their best options. For US-based business, the rate was even higher, at 40 per cent.

QIMA also forecast the trend to continue this year. Of the companies asked for finding new suppliers over the next 12 months, 38 per cent of US-based establishments and 28 per cent of those from the EU stated that they are planning to relocate some sourcing to Vietnam or buy more from current suppliers there. On the other hand, only 6 per cent of US-based brands and 11 per cent of those from the EU were looking for suppliers in China.

Also, US-based respondents showed some signs of dissatisfaction with Chinese sourcing. While one-third of them are planning to purchase more from Chinese suppliers in 2021, almost as many reported plans to completely stop buying from the market.

Nevertheless, words and actions often differ. Pointedly, in the survey, 73 per cent of companies said they had plans to look for new suppliers in 2020 but only 38 per cent were able to follow through on those schemes. For brands headquartered in the US, 93 per cent declared to diversify supply chains in early 2020 but only 49 per cent carried out these plans.

Indonesia speeds up foreign investment appeal with Vietnam and Singapore

Indonesia is stepping on the gas in the race for foreign investment with Vietnam and Singapore, with new incentives targeting the production of electric vehicles and batteries.

To compete with Vietnam and Singapore, Indonesia is offering plenty of made-to-measure inducements, including the latest programmes accepting carbon offset, according to Bloomberg newswire.

The 270 million population country is reviewing its carbon-offset programmes to promote investment. The Indonesia Investment Coordinating Board is drawing up a list of peatlands which can store huge volumes of CO2 emissions, and also artificial lakes that could house solar panels, according to Nurul Ichwan, deputy chairman for Investment Planning at the Indonesia Investment Coordinating Board.

Bloomberg stated that the moves aimed to lure in electric vehicle and battery makers who want to source nickel from the country.

The Indonesian government has attempted to attract South Korea-based LG Chem that is present in Vietnam, China-based battery manufacturer Amperex Technology, and US-based electric car maker Tesla to set up shop in the country.

Ichwan said that Vietnam and Singapore offer similar incentives for overseas investors, however, Indonesia will draw in many big investment projects on account of its natural resources, large market, economic efficiency, and the directions of the country’s government.

The Indonesian administration late last year approved the Omnibus Law creating jobs for labourers in the nation. Accordingly, the law favours foreign investors pouring in large capital to develop industries, said Ichwan.

Similar to Vietnam, Indonesia has found that its traditional growth engines have all seen a downturn during the COVID-19 pandemic and the country is looking for investment into more modern industries such as manufacturing electric vehicles and batteries.

The competition for foreign capital has been heating up in Southeast Asia like Vietnam, Thailand and the Philippines which are all lowering tax rates and rolling out other incentives for foreign companies. As a result, Indonesia – the region’s largest economy – has accelerated policy reforms to encourage investment for years now.

The efforts have been paying off: in 2020, the country received Rp826 trillion ($57.2 billion) in total investment capital, up 2 per cent on-year. This is a positive sign as the nation has experienced the first recession over two decades due to the pandemic. Indonesian government targets to get Rp900 trillion ($62.5 billion) in investment this year.

Southern provinces brace for high temperature

The Hydrometeorological Forecasting Center for Southern Region stated that the southern provinces will witness hot weather throughout May, with temperatures expecting to reach 35 degrees Celsius or even higher.

May 4 was a sunny day for many areas within the Southern region as the Eastern provinces and some areas in the Western provinces experienced hot weather, with the temperature oscillating between 35 and 36 degrees Celsius at 1.00 p.m.

Throughout May 5, most southern provinces will experience sunny weather, which will gradually intensify in the afternoon, the local media reported.

The intensity of the heat in the Southern region will decline as the areas affected by the hot weather will narrow down compared to yesterday.

The highest temperature for today is predicted to oscillate between 33 and 35 degrees Celsius, with some places experiencing temperature over 35 degrees Celsius. Convective clouds are likely to develop gradually, causing thunderstorms at approximately one third of the affected area, while local areas will have moderate to heavy rain in certain areas.

Vietnam identifies three locally-infected cases of Indian coronavirus variant

Three locally-transmitted Covid-19 cases linked to Sunny Club in Vinh Phuc Province have been found infected with the Indian coronavirus variant.

The Ministry of Health today, May 4, released the results of a genetic analysis of the virus from the locally-infected cases which have been reported recently in Vinh Phuc, Ha Nam, Hung Yen and Ha Tinh provinces.

Three samples of three employees of Sunny Club in Vinh Phuc Province tested positive for the Indian variant, while six samples in Ha Nam, two samples in Hung Yen and two others in Ha Tinh came out positive for the UK coronavirus variant.

On May 2 and 3, Vinh Phuc Province reported 14 community-transmitted Covid-19 cases related to Sunny Club, which were suspected to have caught the virus from Chinese experts. After these Chinese experts completed their quarantine period at the same quarantine facility as a group of Indian experts in Yen Bai Province, they travelled to Vinh Phuc Province.

The Indian coronavirus variant is said to be more transmissible than others and reduce the efficacy of Covid-19 vaccines, the local media reported.

Danang imposes ban on beach swimming, events to prevent Covid-19 wave

Earlier this morning, May 4, a warning tape fence was placed along the over 20-kilometer-long Danang coastal road, stretching from the Nam O beach (in Lien Chieu District) to the Marble Mount area.

This is in response to the official letter by the Danang People’s Committee last night on strengthening prevention measures against Covid-19 after a case was discovered in the central city on the same day.

Specifically, gymnastics, sports, bodybuilding at the gym, yoga, billiards, indoor sports activities, sports and martial arts and swimming on the beach were banned from May 4 until further notice.

Nguyen Van Loi, owner of an establishment offering freshwater bathing and parking services near My Khe beach in Son Tra District, said that earlier this morning, many people went to the beach as usual, but they had to return because it was forbidden by the local authorities.

This is the latest beach swimming ban in Danang after the first two in March and August 2020 when the Covid-19 waves broke out.

In addition to swimming activities being banned, some other activities in Danang were also suspended, including cultural and entertainment festivals.

Those running entertainment and beauty establishments, bars, pubs, discos, karaoke and massage parlors, video game arcades, movie theaters, casinos and public internet services must also remain shut. Activities at walking streets, night markets or dining with more than 30 people have also been prohibited.

Public passenger transportation services are available, but they must carry no more than half of the allowed number of people for each type of vehicle, ensuring safety.

This morning, Le Trung Chinh, Chairman of the Danang People’s Committee, signed an official letter, proposing all students take 4-5 days off school until further notice.

Previously, the Steering Committee for Covid-19 Epidemic Prevention in Danang had announced a Covid-19 case.

Phu An Hotel where the patient worked has been shut down, while 11 people working there have also been quarantined at the hotel.

In another development, the  government of Hoi An City in Quang Nam Province also suspended visits to the ancient town, traditional crafts villages and pedestrian streets from May 4.

Prices of consumer goods about to climb

The promotional program to stimulate the purchasing power on the occasion of the Reunification Day and the International Workers’ Day is going to end, while the prices of input materials have been climbing sharply, significantly affecting the pressure of increasing the selling prices of many essential goods.

Although there have not any official statistics from the authorities yet, according to some retailers and enterprises, the purchasing power in the last holidays increased by two times compared to normal days. Many retailers reduced prices sharply on thousands of products. Particularly, fresh food discounted 10-20 percent, kitchen utensils dropped 21-47 percent, and health care products offered a discount of 50 percent for the second item.

According to the representative of Co.opmart supermarkets, because the holiday of the Reunification Day and the International Workers’ Day this year lasted for four days, the purchasing power at Co.opmart supermarket network, on average, rose two to four times higher compared to normal days. The highest increase in the purchasing power focused on fresh foods, some types of processed foods, frozen goods, beer, and soft drinks. Other products, such as household appliances and garments, were being strongly discounted, so the purchasing power also doubled compared to before.

Similarly, at Lotte Mart, Emart, and MM Mega Market An Phu, in recent days, the purchasing power has also increased significantly and increased drastically in the afternoons and evenings of the holiday, focusing on fresh food products, including meat, fish, seafood, fruits, and vegetables. Items, such as confectionery, canned food, and garments, were also interested by consumers. Ms. Nguyen An Nhien, a resident in Thu Duc City said that the holiday is a “golden” opportunity for her family to buy many items at the best prices. For instance, Emart currently offers promotions for hundreds of essential items with attractive combo gift packages applicable to food, beverages, cosmetics, clothing, and household appliances. To meet the increasing shopping demand on the occasion of the holiday, supermarkets have also enhanced their staff of all stages, at the same time, increased the source of goods to best ensure the demand of customers.

Shopping centers in Ho Chi Minh City, especially Vincom Center, Takashimaya, and Giga Mall, were always highly patronized. Besides the need for window shopping, entertainment, shopping, and dining, a large number of visitors go to the shopping centers to escape the heat, contributing to making the atmosphere of these places bustling during the holiday.

In terms of prices during the holiday, retailers had worked closely with suppliers to reduce prices by up to 50 percent for various products to stimulate consumer demand, so they have created a stable common ground of selling prices. The supply of goods for the market is plentiful and diverse. At traditional wet markets, many small traders said that the selling prices of all kinds of goods were fairly stable. The groups of items that were bought heavily at the markets included fresh food, fruits, and ready-made clothes.

According to forecasts of the domestic market management unit, in May and the coming time, the market of essential goods will not have any major fluctuation in supply and demand. However, the impacts of the global prices or the increase in import duties on some input materials in the first months of the year will affect the prices of some commodities, such as agricultural products, milk, and processed foods.

It is recorded that the prices of some items retailed at grocery stores, such as instant noodles, seasoning powder, spice powder, cooking oil, and cake flour, increased by 7-10 percent compared to those at the end of last year. Some cake flour producers explained that the prices of many input materials increased by up to 20 percent. Currently, the purchasing power in the market remains weak, if they increase the selling prices of finished products based on the prices of raw materials, it will be difficult to convince consumers. Therefore, for these manufacturing enterprises, increasing the selling prices at this time is a necessary evil.

The group of fresh food products, such as poultry meat and eggs, also increased by 10-15 percent compared to the beginning of 2021. This situation is because the price of animal feed surged by more than 20 percent and that of packaging went up by about 15 percent. Besides, the pressure to increase the selling prices of many fresh foods also comes from the increasing gasoline prices, which affected freight rates from provinces to HCMC.

A representative of the purchasing department of one of the major distribution network in HCMC said that although suppliers sent requests to increase the selling prices, mainly the group of fast-moving consumer goods, from May, to harmonize the interests of all parties, the supermarket will carefully consider the possibility of increasing the selling price of each item, as well as the group of goods, avoiding causing a disturbance in the general price level of commodities, affecting consumer psychology. Besides the increase in the prices of input materials, the prices of many product groups are higher than before because the promotional program has ended.

The selling prices of some products may increase slightly, but essential goods will certainly be plentiful and diverse. Even the group of items serving the prevention of the Covid-19 pandemic, such as hand sanitizers and masks, are also fully prepared.

To continue stabilizing the goods and services market, the domestic market management unit recommended ministries, industries, and localities to continue to closely coordinate in the management of market and prices of goods and propaganda to create consensus in public opinion with the State’s administration, and stabilize the commodity market.

Chili price sinks heavily, farmers forsake harvesting

According to the journalist of Sai Gon Giai Phong Newspaper, farmers in Phu My District and some midland and mountainous districts of Binh Dinh Province have entered the harvest of chilies. This year, thanks to favorable weather, chili plants give more fruits than in previous years. Because farmers harvest chilies at the same time, the price of chilies drops steeply.

In Phu My District, traders are buying bird’s eye chilies for only VND3,000-VND5,000 per kilogram while at the beginning of the season, the price was VND15,000 per kilogram. Many chili farmers even cannot find any trader to sell. Many households with a large area of chilies have to leave the ripe chilies in the field because they cannot afford to hire workers to pick them.

The representative of the Department of Agriculture and Rural Development of Phu My District said that the growing area of chilies in the whole district this year was about 1,262 hectares, an increase of 30 hectares compared to last year. This year, the yield of chilies is extremely high, from 1 to 1.5 tons per 500 square meters. Currently, the price of chilies is too low, so the locality has reported to the higher level to find a solution to help farmers.

Vietnam trade turnover records 10-year high growth to US$207 billion in Jan-Apr 

Vietnam posted a trade surplus of US$1.29 billion during the four-month period, a positive result amid difficult global trade environment as a result of the Covid-19 pandemic.

Vietnam’s trade turnover in the January-April period rose by a 10-year high growth of 29.5% year-on-year to reach US$206.5 billion, the General Statistics Office (GSO) has said in a monthly report.

Upon breaking down, the country’s exports during the period surged by 28.3% year-on-year to US$103.9 billion, while imports were estimated at US$102.61 billion, up 30.8%.

As Vietnam reported an estimated trade deficit of US$1.5 billion in April, the overall trade surplus in the first four months of 2021 was narrowed to US$1.29 billion, but remained a positive note amid difficult global trade environment as a result of the Covid-19 pandemic.  

According to the GSO, the foreign-invested sector made up 75.2% of the total exports with US$78.14 billion, representing an increase of 34.4% year-on-year, while the domestic-invested sector exported US$25.76 billion, or 24.8% of the total.

Among Vietnam’s key export staples, phones and parts earned the largest export turnover during the January-April period of US$18.4 billion, up 19.4% year-on-year and accounting for 17.7% of Vietnam’s total exports.

In addition, electronic products, computers and components have earned an estimated US$15.9 billion, up 30.8% year-on-year; followed by equipment and parts (US$12 billion and up 76.9%); garments (US$9.5 billion and up 9%).

Deputy Director of the Ministry of Industry and Trade’s Import and Export Department Tran Thanh Hai attributed Vietnam’s effective measures against the Covid-19 pandemic to its strong performance in trade.

“No disruption to business and production activities was key to help local traders fulfill their  their foreign peers’ orders,” said Hai.

Meanwhile, efforts from Vietnamese enterprises in adjusting to the new situation during the pandemic have also been decisive, he noted.

On the trade outlook for this year, Deputy Minister of Industry and Trade Do Thang Hai warned any resurgence of the Covid-19 pandemic would cause negative impacts on trade activities.

“Given the current context, safety measures to combat the pandemic continue to be the utmost priority,” said Hai.

Amid growing uncertainties surrounding the pandemic situation, Head of the Macroeconomic Policy Department under the Central Institute for Economic Management (CIEM) Nguyen Anh Duong called for enterprises to focus on markets having free trade agreements (FTAs) with Vietnam.

In the first four months of the year, the US, China, EU, ASEAN and South Korea remained Vietnam’s largest five export markets.

Meanwhile, China continued to be Vietnam’s largest supplier, selling US$33.1 billion worth of goods to Vietnam, or an increase of 47.8% year-on-year. 

South Korea claimed the second place by exporting US$16.9 billion worth of goods to Vietnam, up 16.9% year-on-year, followed by ASEAN countries with US$14.1 billion, up 48.2%. 

COVID-19 developments remain complicated in regional countries

The Lao Ministry of Health confirmed 46 new COVID-19 cases on May 5, mostly in Vientiane and Bokeo province with 19 and 15 cases, respectively.

According to the ministry, the decreased number of newly-confirmed cases showed the efficiency of drastic measures applied by the Lao Government.

From May 4, the Lao government decided to apply lockdown for additional 15 days until May 20.

So far, Laos has discovered 1,072 COVID-19 cases, including 99 recoveries and no death.

Meanwhile in Thailand, the pandemic is still developing complicatedly with 2,112 new cases confirmed on May 5 and 15 deaths, raising the total cases to 74,000 cases, with 318 deaths.

Bangkok is still a hot spot of COVID-19 with 789 cases.

In Indonesia, 155,000 soldiers and policemen will be deployed within the framework of Operation Ketupat Jaya 2021 from May 6-17 to minimise the spreading of COVID-19 during the Muslims Eid al-Fitr holidays from May 13-14.

Some 4,276 personnel will be stationed in the capital city and its adjoining areas. The Jakarta Police will deploy these personnel at 14 isolation points and 17 check points.

The Operation Ketupat Jaya 2021 is being conducted to block access to and from Jabodetabek, to maintain security, and to monitor the implementation of health protocols to stem the transmission of the coronavirus disease before, during, and after Eid al-Fitr, among others.

Meanwhile, spokesperson for the COVID-19 Handling Task Force Wiku Adisasmito affirmed that all forms of homecoming activities, including the local homecoming, are banned during Ramadan and Eid al-Fitr to lower the rate of COVID-19 infection.

At the same time, Malaysia’s capital city of Kuala Lumpur will re-apply movement control order (MCO) from May 7. This will be the third time the city is placed in MCO to control the COVID-19 pandemic.

Malaysian Defence Minister Ismail Sabri Yaakob said that the order is given after 17 new clusters were recorded.

The order will be applied until May 20. Food premises, such as restaurants, food trucks, hawkers and kiosks, are allowed to operate from 6am to midnight only. Dine-ins are not allowed and food served are for delivery and takeaways only. 

Malaysia on May 5 logged 3,744 new cases in the last 24 hours to bring the total to 424,376. There were 17 more deaths, bringing the total fatalities to 1,591.

The MCO was applied for the first time on March 18, 2020 and the second time on January 13, 2021.

The same day, Executive Secretary of the Philippine Presidential Office Salvador Medialdea said that the Southeast Asian country will ban tourists from Pakistan, Nepal, Sri Lanka and Bangladesh from May 7-14 as part of efforts to prevent the entry of SARS-CoV-2 variants found in India.
         
Travellers coming directly from those countries, or with a history of travel to any of them within the last 14 days, would be barred from entering, he said.

Earlier, the Philippines banned travelers from India from April 29 to May 14.

On May 5, the country confirmed 5,685 new COVID-19 cases and 178 deaths, raising the count to more than 1 million with 17,800 deaths.

In Cambodia, Prime Minister Hun Sen on May 5 ordered to vaccinate more than 52,000 people in all areas in the red zones of Phnom Penh with COVID-19 vaccines, with the administration of the first dose to be completed soon and the second dose to commence once the stipulated time frame has been reached.

To date, more than 1.5 million people have been vaccinated with either Sinopharm, Sinovac or Covishield (AstraZenacca vaccines) since February 10.

The same day, the Cambodian Ministry of Health confirmed 672 new cases, raising the total cases to 16,971, including 110 deaths./.       

Party chief commends role of banking sector in growth

Party General Secretary Nguyen Phu Trong lauded efforts and achievements made by the banking sector during the national cause of economic development as he delivered a speech at a ceremony marking the sector’s 70th founding anniversary (May 6).

Describing the sector as the lifeblood of the economy, he hoped it to continue contributing to the nation’s reform, industrialisation and modernisation.

The Party leader recommended the sector enhance the efficiency of the State Bank of Vietnam (SBV)’s management and monetary policy, while ensuring the security, safety, and effectiveness of credit organisations’ operations.

The sector should keep up its efforts to control inflation, stabilise the macroeconomy, mobilise and meet demand for credit, and offer banking services serving socio-economic growth, Trong said.

At the event held on May 5, State Bank Governor Nguyen Thi Hong underscored the SBV will closely follow orientations and policies issued under the 13th Nation Party Congress’s Resolution in directing and managing banking activities in contribution to realizing targets set in the 2021 – 2025 plan and 2021 – 2030 strategy for socio-economic development as well as the vision toward 2045.

The SBV will boost the effectiveness of its monetary policy monitoring and its capacity to adapt to domestic and global economic fluctuations so as to realize the goals of inflation control, stable macroeconomics, helping enhance the economy’s independence and autonomy amid international integration, she noted.

Restructuring, completing legal frameworks, diversifying services, and promoting administration reform and innovation are also other tasks of the sector, the SBV governor added.

On the occasion, the SBV was conferred with the Labour Order, first class./.

Source: VNA/VNS/VOV/VIR/SGT/Nhan Dan/Hanoitimes

Source: https://vietnamnet.vn/en/business/vietnam-business-news-may-6-733112.html

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Vietnam Airlines gets clearance for Canada flights

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Vietnam Airlines gets clearance for Canada flights

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


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

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

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

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

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

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

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

Source: https://e.vnexpress.net/news/business/economy/vietnam-airlines-gets-clearance-for-canada-flights-4296412.html

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Vietnam to protect production at industrial parks

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

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

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

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

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

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

Other IPs in Bac Ninh Province are following similar models.

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

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

Co-operate to protect the IPs

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

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

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

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

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

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

Other IPs to be protected

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

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

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

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

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

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

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

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

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

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

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

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

Source: Vietnam News

Source: https://vietnamnet.vn/en/business/vietnam-to-protect-production-at-industrial-parks-747013.html

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

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

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

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

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

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

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

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

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

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

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

Source: VIR 

Source: https://vietnamnet.vn/en/business/japanese-investors-secure-foothold-in-leading-vietnamese-brands-through-m-a-747031.html

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