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Vietnam eyes 600 billion USD in export turnover in 2021


Vietnam posted solid export performance in the first quarter of 2021, and at such a growth speed, its export turnover is likely to hit 600 billion USD for the whole year, experts have said.

Tran Thanh Hai, Deputy General Director of the Agency of Foreign Trade under the Ministry of Industry and Trade (MoIT), attributed the positive results to Vietnam’s success in fighting the COVID-19 pandemic.

It is necessary to continue paying special attention to responding to the pandemic, he stressed, noting that this will be the foundation and most important factor in sustaining export growth in the time to come.

Free trade agreements (FTAs) Vietnam has signed, especially the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the EU-Vietnam FTA (EVFTA), have benefited local exporters and helped them expand to new markets.

To maintain export growth, the MoIT has promoted online trade promotions and trade fairs as well as e-commerce, to support enterprises in maintaining trade links with partners, Hai said.

The ministry will also focus on accelerating institutional and administrative reform relating to exports, and providing information to exporters to address the difficulties they face./.

Shoppers want seamless store-online experience: survey

Shoppers world-wide expect a seamless experience between stores and online and are increasingly shopping on the internet, according to a report by Zebra Technologies Corporation.

The 13th annual Global Shopper Study said there was a 60 per cent increase in online orders in the last three months.

In the Asia Pacific including Viet Nam 70 per cent of shoppers preferred delivery of items rather than picking them up at a store, while 65 per cent of people who like to shop at stores preferred contactless payment options.

“Issues such as lack of stock, lack of product variety, online delivery costs, and timing and returns contributed to a significant decline in [both] in-store and online satisfaction among shoppers in 2020, our study found,” Tracy Yeo, country lead for Viet Nam, Zebra Technologies Asia Pacific, said.

“Retailers in Viet Nam are aware that success relies on improving the shopper experience. In order to provide a more seamless and satisfying omnichannel experience, these retailers must invest in analytics, mobile ordering, smart checkout and other retail technology solutions that can enhance efficiency and accuracy.”

The survey said retail decision-makers and store associates have seen a dramatic increase in the need for convenience and efficiency as the pandemic has catapulted shoppers’ usage and affinity for mobile ordering and smart checkout solutions.

Mobile orders, using smartphones and tablets, have seen tremendous growth and been instrumental in helping maintain social distancing and adherence to local guidelines.

Seventy two per cent of shoppers have ordered from mobile devices and 82 per cent of them are “highly likely to continue using it.”

Half of surveyed shoppers have interacted with self-checkouts in the last six months and more than 60 per cent agreed they provide an improved customer experience.

The Global Shopper Study analyses the attitudes and behaviours of shoppers, retail associates and retail executives, and examines the retail and technology trends impacting shoppers’ purchasing behaviours, both in-store and online.

This year it surveyed 4,175 shoppers, 577 retail associates and 412 retail executives in North America, Latin America, the Asia-Pacific, Europe, and the Middle East in August – September 2020.

Viet Nam should continue support for vulnerable groups to ensure growth: IMF official

Viet Nam will record positive economic growth in 2021, at about 6-7 per cent, if the country continues to support vulnerable groups in the economy and carries on its vaccination campaign, said Jonathan Ostry, Deputy Director of the Asia and Pacific Department of the International Monetary Fund (IMF).

The Southeast Asian country needs to lay a foundation for strong growth in the mid-term, including ensuring sufficient revenue resources for infrastructure development and implementation of public investment, he said.

It is necessary for the nation to ensure a resilient financial system, and continue efforts to improve the investment climate, Ostry added.

Regarding a plan being drafted by the Vietnamese Government to assist enterprises during the pandemic, the IMF official said the country’s fiscal policy should be loosened to support economic activities, and limit negative impacts from the pandemic.

Policy adjustments depend largely on the speed of economic recovery at the global level, which faces a lot of uncertainties, he said.

Pointing out the weak uptake of tax deferrals in Viet Nam, particularly in the hardest-hit sectors of the economy, the IMF recommended the introduction of temporary corporate income tax (CIT) loss-carry backwards to improve firms’ cash flows, better targeting of temporary CIT reductions to benefit distressed but viable small and medium-sized enterprises, and the introduction of temporary provisions for accelerated depreciation or investment tax credits.

He said Viet Nam’s economic growth story in the past three decades is notable since it is sustainable and inclusive growth that helps improve local livelihoods.

Thanks to market-oriented reforms which enable improvements in the business climate, and the attraction of huge amounts of foreign direct investment, Viet Nam has risen from being in the group of the world’s poorest countries to gaining “middle-income” status.

The country should work to improve the business environment and ensure an equal playground, he said, adding this includes reforms geared towards simplifying and reducing the regulatory burden for domestic firms, easing entry costs for enterprises, continued reform of State-owned firms, and enhancing good governance.

Additionally, he suggested Viet Nam enhance human capital and technology access to boost labour productivity, which facilitates investments in more complex products that can gain a better competitive edge in the international market. 

Vietnam among top three buying geographies of US firms

A new report finds that 43 percent of US-based respondents cited Vietnam among their top three buying geographies as of early 2021, doubled from 2019, according to Material Handling & Logistics, a US website.

The data shows a 16 percent year-over-year increase in demand for inspections and audits in Vietnam in the first quarter of this year, which represents a third consecutive quarter of growth that had initially begun as a post-lockdown rebound in mid-2020, the article cited a report from QIMA, a provider of supply chain compliance solutions.

It is worth noting that this growth is more than just a return to pre-pandemic levels, as Q1 2021 inspection demand has, on average, doubled compared to Q1 2019.

Furthermore, the appetite for Vietnam sourcing is far from satisfied and is poised to redefine the sourcing landscape in 2021: around one-third of buyers globally and 38 percent of US-based buyers name it among countries from where they plan to buy more in 2021.

The website said Vietnam is not the only country in the region to benefit from expanded business volumes, as data on inspection and audits demand in Southeast Asia shows double-digit growth across the board, fueled by the renewed interest from American and European brands alike./.

Pandemic gives push to digital transformation, SMEs urged to join in the race

The COVID-19 pandemic has sped up the process of digital transformation in businesses, experts said, and has urged companies to consider their own resources and conditions to ensure and increase efficiency.

Workers at a construction site in Hanoi use FaceID on their smartphones to register their arrival at work making it faster and more convenient to clock on.

In the logistics sector, the application of technology was growing. Drivers are using their smartphones to track the routes and shipments.

According to the Vietnam Logistics Association, between 50 and 60 percent of logistics enterprises were applying technology in their operations.

At Sai Gon Newport Corporation, the application of advanced management system helped reduce the time shipments stayed at the port by 55 percent and reduce delivery time by 75 percent.

Vu Tuan Anh, deputy director at consulting agency Dr SME, said that digital transformation was an inevitable trend of enterprises, especially during the COVID-19 pandemic. If enterprises were slow in digital transformation, they would face difficulties when competing with others especially in the rapid international integration.

“Digital transformation is not simply buying a software or a technology,” Anh said. “Enterprises must pay attention to their resources and conditions to ensure the efficient process of digital transformation.”

Nguyen Hoa Binh, Chairman of NextTech Group, said that micro and small–sized enterprises, despite accounting for 96.7 percent of the total number of enterprises in Vietnam, contributed 40 percent to the country’s gross domestic product (GDP) and provided 60 percent of jobs.

But due to their limited budgets, they had not benefited much from the digital transformation.

Digital transformation solution providers often paid more attention to Government agencies and medium and large enterprises who had a greater budget and were often located in major cities, he said.

Nguyen Văn Khoa, CEO of FPT, said that there were about five million household businesses in Vietnam who were also subject to digital transformation at different levels.

A study by Cisco showed that the participation of SMEs in Vietnam in the digital transformation process could contribute 24-30 billion USD to the country GDP’s by 2024 and significantly help the post-pandemic recovery.

FPT Chairman Truong Gia Binh cited statistics that revealed 50 percent of SMEs went bankrupt in the first five years and 90 percent in the next five years, stressing that the competition would be much fiercer in the digital transformation.

Binh said that digital transformation was accelerating the transition to a digital economy which was enabling enterprises to develop platforms to promote their operation and business.

It was more convenient for big enterprises to digital transform because they had their own ecosystems while SMEs did not have much budget for this.

Under the digital transformation programme during the 2021-25 period, the Ministry of Planning and Investment wanted 100 percent of enterprises to receive training in digital transformation to enhance their awareness./.

Increase in Vietnam – Belgium trade brings more opportunities for investors: Experts

The published by Dezan Shira & Associates – a consultancy firm on foreign investment in Asia – on May 6 run an article, emphasising that since the EU-Vietnam Free Trade Agreement (EVFTA) took effect in August 2020, Belgium has played a significant role in promoting trade and foreign investments into Vietnam.

According to the article, major sectors that Belgian investors have particularly shown interest in is industrial zones, food and beverage, processing and manufacturing, pharmaceutical, and renewable energy.

It noted that with increasing trade and investment between Belgium and Vietnam, Belgian investors have opportunities to invest in Vietnamese industries, favoring the economic and political landscape between the two countries.

Over the past decade, trade and investment relations between Vietnam and Belgium have improved considerably. This has been attributed to Vietnam’s growing economy and the expansion and globalisation of some Belgian corporations.

The article quoted Riccardo Benussi, Head of European Business Development of Dezan Shira & Associates, saying that more Belgian companies are looking to invest in Vietnam, especially with the implementation of the EVFTA and subsequent reduced tariffs.

As of March 2021, Belgium has 78 investment projects in Vietnam, with a total registered capital of 1.1 billion USD, ranking 23rd among 131 countries and territories investing in Vietnam.

On the other hand, Vietnam is Belgium’s 14th largest trade partner, with a trade value reaching approximately 707.55 million USD in 2020, up 6.7 percent compared to 2019.

In the first seven months of 2020, due to the COVID-19 pandemic, Vietnam’s export value to Belgium totaled 1.4 billion USD, down 17.7 percent year-on-year. On the other hand, Vietnam imported 459 million USD worth of goods from Belgium, up 11.9 percent year on year.

The article said these figures demonstrate that while Vietnamese exports to Belgium experienced a depression, Belgium’s exports to Vietnam still grew, which is a positive signal for the future of bilateral trade between the two countries.

In 2019, within the EU, Belgium was the seventh-largest exporter to Vietnam and the sixth-largest in 2018. Belgium’s top exports to Vietnam in 2020 are chemicals (46.2 percent), and machinery and equipment (13.7 percent). Meanwhile, Vietnam’s top exports to Belgium were textiles, footwear and headgear, and base metals.

The most substantial Belgium investment in Vietnam is the development and operation of an industrial park cluster known as the Deep C Industrial Zone (initially named the Dinh Vu Industrial Zone – DVIZ).

Geert Dom, Head of Marketing & Sales for DEEP C Europe and the US, said that DEEP C has attracted over 130 projects with foreign investors of different nationalities such as Belgium, Germany, Japan, the Republic of Korea, the US, and Singapore. Looking towards the future, DEEP C is still attracting more Belgian and other investors to do business and establish factories and warehouses in this industrial zone.

Meanwhile, Filippo Bortoletti, Senior Manager for Dezan Shira’s Hanoi Office, noteed that apart from industrial zones, Belgian investors also play a significant role in the Vietnamese food and beverage (F&B) industry.

Belgium investments are focused on the supply chain of the industry, catering ingredients to restaurants, F&B factories, and retail, he said.

Vietnam’s manufacturing and processing industry also proves to be a prospective investment sector for Belgium corporations. Over the years, most of the investments that Belgian investors have made in Vietnam are in seaports, infrastructure, real estate, manufacturing, and power generation.

Pharmaceuticals is also a significant sector for foreign investment in Vietnam. Most EU investors source raw pharmaceutical materials from the EU, ship them to Vietnam, manufacture and process the products in Vietnam before they re-import the products back to the EU.

Thanks to the EVFTA, about 71 percent of import tariffs have been eliminated. Moreover, non-tariff barriers also brought opportunities in improving intellectual property rights and direct pharmaceutical imports. This means that Belgian investors can establish an entity to import pharmaceutical products and sell to local distributors or wholesalers. In addition, Belgian investors are also eligible to build warehouses and perform clinical research and trials, the article said.

The article also noted that Vietnam is an attractive investment destination for green energy production projects, and it is predicted that many foreign investors, especially those from the EU, will continue to establish and expand their businesses in this sector in the country.

The increase in bilateral trade between Belgium and Vietnam, as well as the increasing FDI from Belgium, demonstrate bright prospects for the two countries’ relations, it said, adding that the long-term presence and successful investment of Belgian companies in Vietnam offer a good indication and reference for business opportunities in the country./.

Bamboo Airways gets ready to launch Vietnam-US direct flights

Bamboo Airways is finalising preparations to operate regular direct flights from Ho Chi Minh City to San Francisco and Los Angeles of the US, starting September 1, 2021.

Besides asking for permits, the carrier is training pilots and crew members, while finalising the preparation of other necessary conditions for the operation of the route.

Bamboo Airways had received a permit from the US Department of Transportation to carry passengers and cargo to the country last year.

Vietnam’s Ministry of Transport is also finalising procedures to designate Bamboo Airways to operate charter flights between Vietnam and the US following a proposal made by the Civil Aviation Administration of Vietnam at the end of April.

It will allow the private airline to carry passengers and goods from Vietnam to the US and vice versa on charter flights upon approval by the Prime Minister and relevant agencies.

Passengers on these flights could be experts, foreign investors and Vietnamese citizens in the US wishing to return home.

Bamboo Airways Chairman Trinh Van Quyet said the airline expects to operate charter flights to the US from July.

At the San Francisco International Airport, the daily flights are expected to land at 10:00 and depart at 13:00 (local time); and the landing and takeoff times for its flights at the Los Angeles International Airport are 9:30 and 12:30 (local time), respectively.

The flights would be operated using long-haul Boeing 787-9 Dreamliner aircraft.

There are currently no non-stop routes between the two countries, and passengers have to transit in Hong Kong, the Republic of Korea or Taiwan, taking about 20 hours in all. A direct flight would shorten the travel time to 15-17 hours.

Americans are among the top foreign visitors to Vietnam, with 687,226 arrivals in 2019, and an ethnic Vietnamese population of over 2.1 million in the US is also expected to be a steady source of travel demand.

Meanwhile, the carrier is also working to complete procedures to launch new international direct routes to the Republic of Korea, Taiwan (China), the UK, Germany, Tokyo (Japan), Melbourne and Sydney (Australia), Singapore, Thailand, and China./.

VPBank posts 173.2 million USD pre-tax profit in Q1

VPBank recorded pre-tax profit of more than 4 trillion VND (173.2 million USD) in the first quarter of the year, an increase of 38 percent over the same period last year.

According to its recent financial statements, VPBank saw positive changes in risk management and asset quality, optimising cost of capital and good growth in the proportion of CASA (Current Account and Savings Account) deposits. In addition, the fee income increased the growth driver for profit and the safety indicators were strengthened.

By the end of March 31, 2021, VPBank’s total assets were 436.2 trillion VND, up 4.1 percent from the end of 2020. Of which, loan balance was 301.1 trillion VND, posting a 3.6 percent year-on-year increase. Consolidated non-performing loans (NPLs) on outstanding loans are at 3.46 percent.

In terms of capital, equity of the bank by the end of March 31 reached 55.9 trillion VND, up 6.1 percent from the same period last year. Deposits from customers reached 232.4 trillion VND, down 0.4 percent while deposits and loans from financial institutions and other credit institutions sharply increased by 25 percent in the three-month period.

With this result, VPBank’s efficiency ratios continued to be enhanced and ranked at the top of the market, with return on asset (ROA) and return on equity (ROE) reaching 3 percent and 23.5 percent, respectively.

In the first quarter of 2021, fee income continued to make a major contribution to the bank’s revenue with consolidated growth of 42 percent. The main growth driver in the period came from the promotion of credit card issuance, insurance services and payment activities.

To achieve high profit growth, VPBank has saved surprising operating costs. In the first quarter of 2021, the bank only recorded 2.5 trillion VND in operating expenses, down 21 percent year-on-year. The cost to income ratio (CIR) accordingly dropped to 23.5 percent from 33 percent in the same period last year, most likely the bank with the lowest CIR in the system in the first quarter of the year.

The digitalisation and customer experience improvement have continued to be promoted by VPBank and yielded very positive results. VPBank reached 9 million transactions a month in March 2021, 2.25 times more than the same period in 2020 in terms of the number of transactions. The value of online transactions reached 128 trillion VND in March, 2.2 times higher than the same period of 2020.

In addition to the value of enhancing customer experience, increasing utilities and benefits in using products and services, the digital transformation also helps the bank optimise the process system and operations, streamlining human resources and improving labour productivity./.

Techcombank achieves 238.1 million USD before-tax profit in Q1

Techcombank has reported before-tax profit of 5.5 trillion VND (238.1 million USD) in the first quarter of the year, increasing 76.8 percent from the same period last year.

The bank continues to lead the market with a healthy 3.5 percent return on assets (ROA) for the twelve months ending March 31, 2021. Capital position remains robust with Basel II CAR of 15.8 percent at quarter end.

“Our robust first quarter performance built on the strong momentum from the fourth quarter of 2020. We continue to focus on consistent execution of our strategy and invest in digitalisation to scale our business to meet the needs of our growing customer base. For 2021 our priority will be on building foundational capabilities in data, digital, and talent to deliver the 2021-25 plan. While the benefits of these investments will become more evident over time we can see already some of the upside potential in parts of our business like bancassurance where improvements in digital, data and people have led to an 80.5 percent year-on-year growth in the first quarter,” said Techcombank CEO Jens Lottner.

The bank’s Total Operating Income (TOI) grew 46.2 percent to 8.9 trillion VND in 2020, outpacing the 15.7 percent increase in operating expenses.

Its total assets were 462.8 trillion VND at the end of the first quarter, an increase of 18.1 percent from a year ago. Total credit provided to customers as of March 31, 2021 was 336.2 trillion VND, 26.7 percent higher than the corresponding period last year.

The bank remains one of the best capitalised banks in Vietnam with a Basel II Capital Adequacy Ratio (CAR) of 15.8 percent, nearly two times higher than the Basel II Pillar I minimum requirement of 8 percent.

NPL ratio was 0.4 percent as at March 31, 2021, against 1.1 percent last year and 0.5 percent at the end of 2020.

Consolidated results also benefited from the robust performance of Techcom Securities (TCBS) which recorded revenues of VNĐ1 trillion up 60.9 percent year-on-year and before-tax profit of 843 billion VND. TCBS captured 68 percent of the corporate bond brokerage market share and more than 30 profit market share of new securities account openings in the first quarter of 2021.

TCBF, an open-ended bond fund managed by TCBS, continued to be the largest bond fund in the market with 28.6 trillion VND, up 91 percent year-on-year.

Techcombank added 245,000 net new customers in the three month period to bring total customers served to 8.6 million. Retail customer transaction volume during the period through Techcombank’s e-banking channels increased to 136.9 million and value of transactions were nearly 2 quadrillion VND, up 88.6 percent and 101.8 percent year-on-year, respectively./.

Local garment industry looking towards sustainable development

The Vietnam Textile and Apparel Association (VITAS) is committed to promoting the sector’s sustainable development with the aim of raising the living standards of its employees under the UN’s Sustainable Development Goals (SDGs).

It has been estimated that the global fashion industry consumed 79 billion cubic metres of water, emitted 1,715 million tonnes of CO2, and generated 92 million tonnes of waste in 2015 alone. The figures are forecast to grow by at least 50 percent by 2030.

To achieve sustainable development and be able to compete in the fashion industry’s global supply chain, Vietnam should not rely on cheap labour but on quality, technology, productivity, delivery time, and transparency, said VITAS President Vu Duc Giang. It also needs to minimise the consumption of energy and resources and invest in advanced technology to meet international standards on work and the environment, he added.

Dr Do Quynh Chi, Director of the Research Centre for Employment Relations (ERC), said Vietnamese manufacturers must boost production values to have the necessary resources to invest in complying with international labour and environmental standards and build a long-term and direct relationship with fashion brands.

A recent survey by the ERC shows that if local producers remain outsourcing sub-contractors who have profit margins squeezed by buyers in most cases, there is no other way for them to secure the resources needed for investing in sustainable development. They could even “fall out” of the global supply chain.

Manufacturers must see employees as their greatest resource, Giang said. They must establish links with peer producers to not only bring their strengths into full play but also to take advantage of the strengths of others, he noted.

He went on to cite the fact that at the outset of the COVID-19 pandemic last year, a number of Vietnamese producers succeeded in delivering orders for billions of face masks to buyers in the US and France within a month, due to their level of cooperation.

According to a report from the ERC, up to 50 percent of fashion brands only purchase from major factories with 1,000 workers or more, as they assume that smaller suppliers will be unable to meet quality standards and fulfil their corporate responsibility requirements.

If there are no doors left open for small and medium-sized enterprises (SMEs), they will easily fall into the supply chains of discounters, which can lead to the entire domestic garment industry joining a “race to the bottom”, Chi said.

She stressed the need to design support policies for SMEs in terms of technology and management, allowing them to engage in sustainable development standards and climb up sustainable global supply chains./.

HCM City: IIP up 9.7 percent in four months

Ho Chi Minh City’s Index of Industrial Production (IIP) rose 9.7 percent year-on-year in the first four months of 2021, signalling a positive outlook for the local economy in the face of COVID-19, according to the municipal Department of Industry and Trade.

In April alone, its IIP increased 3.3 percent month-on-month, with mining experiencing the highest growth, of 58.4 percent, department director Bui Ta Hoang Vu said. Electricity production and distribution rose 25.6 percent, manufacturing and processing 2.8 percent, and water supply and waste treatment 1 percent.

Data from the municipal Statistics Office shows that the four-month IIP of four key industries grew 11.7 percent from a year earlier and was over 2.0 percentage points higher than the overall IIP. The highest growth was seen in electronics manufacturing (27.7 percent), followed by mechanics (17.5 percent), food and beverages (7.4 percent), and pharmaceuticals (2.4 percent).

Meanwhile, the IIP of traditional industries was down 4.4 percent year-on-year, most notably the leather industry, which contracted 3.2 percent, and the fashion industry 12.6 percent.

The southern economic hub saw foreign trade growing 21.3 percent during the period, with exports up 13.9 percent and imports 27.7 percent. The foreign-invested sector remained the primary engine of this growth, with exports and imports rising 20.5 percent and 11.7 percent, respectively.

China continued to be HCM City’s largest customer, importing more than 3.52 billion USD worth of goods and services in January-April, up 11 percent year-on-year and accounting for 24.8 percent of the city’s total exports. It was followed by the US, Hong Kong (China), Japan, and the EU.

According to the latest report from the European Chamber of Commerce in Vietnam (EuroCham), European business leaders started 2021 feeling positive and optimistic about Vietnam’s trade and investment environment.

EuroCham’s Business Climate Index (BCI) hit 73.9 points in the first quarter – the highest score since the third quarter of 2019, before COVID-19 hit global trade and investment. This continues a positive upwards trend in the index, which has risen more than 47 points over the last 12 months.

“The BCI confirms once again that Vietnam is open for business,” said EuroCham Chairman Alain Cany. “While countries continue to struggle with the impact of COVID-19, Vietnam has ensured that companies here can continue their operations as close to normal as possible. This is helping to drive economic growth and fuel the confidence of European business leaders.”/.

Businesses advised to diversify capital sources in new context

Participants at a May 7 workshop in Hanoi recommended that Vietnamese businesses diversify capital sources funding their activities in the new context instead of being over-reliant on the banking system.

Addressing the workshop, Chairman of the Economist Club Dang Duc Thanh said enterprises are operating in a volatile and uncertain environment amid global climate change, unpredictable epidemics and pandemics like SARS, Ebola, and COVID-19, and other challenges such as terrorism, lack of water resources and food, and cyber insecurity. Given this, they have significant demand for medium- and long-term capital.

However, he pointed out, their own capital accounts for just 20-30 percent while the remainder comes from credit from commercial banks, which are often unable to meet their demand for medium- and long-term capital.

The enforcement of free trade agreements (FTAs), especially new-generation agreements like the EU-Vietnam FTA and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), will create substantial opportunities for Vietnamese enterprises to boost exports and attract more foreign investment, both direct and indirect. COVID-19 has also triggered a shift in production and supply chains to developing countries like Vietnam.

Local companies therefore need ready capital to seize investment and business opportunities, Thanh said.

Experts at the workshop noted that Vietnamese enterprises are over-reliant on bank loans while the credit market is currently “overloaded” since it has to concurrently provide short-, medium-, and long-term capital for businesses and the economy.

As the strength of Vietnamese banks remains modest, to ensure capital supply, they must borrow short-term capital, mostly from individual clients, to issue medium- and long-term loans, which poses considerable risk to the banks themselves as well as to businesses and the economy, they added.

Nguyen Hoang Phuong, Director of Business Training and Support at the Ho Chi Minh City Securities Corporation, said that listing on the Unlisted Public Company Market (UPCoM) and raising finance from the stock market are considered effective measures for companies with capital of less than 30 billion VND (1.3 million USD).

He also identified angel investors and venture capital funds as capital sources.

Le Anh Tu, a senior advisor at PwC Vietnam, said that due to the pandemic, enterprises around the world are now tending to seek capital from non-bank sources like the stock and bond markets or via crowd-funding and crypto currencies.

To meet demand in the post-pandemic context, the financial services sector has been introducing swift changes. Many fintech companies are also emerging and directly competing with banks. Traditional banks themselves have also had to quickly adapt to new trends to stay competitive, the workshop heard./.

Domestic gold prices hit nine-month high

Local gold prices continued to climb on May 8 as they passed historic highs over the past nine months to reach over VND56 million per tael.

Phu Quy Group therefore listed each tael of SJC gold at between VND55.75 million and VND56.2 million for buying and selling, adding an additional VND170,000 for buying and VND380,000 for selling from the previous day.

Elsewhere, Doji Group priced goal at between VND55.6 million and VND55.95 million per tael for buying and selling, marking an increase of VND200,000 per tael in terms of buying and a drop of VND250,000 per tael in relation to selling.

The recent fluctuations recorded within the domestic gold market can largely be attributed to the impact of the global gold market which has caused prices to rise by US$18 per ounce, thereby reaching US$1,831 per ounce during the opening session on May 8.

In terms of the local forex market, the State Bank of Vietnam listed US$ prices at VND23,179 per dollar on May 8, representing no change in comparison to the previous transaction.

Local firms have opportunity to promote products in Saudi Arabian market

As a means of assisting Vietnamese enterprises to boost exports to the Saudi Arabian market amid the novel coronavirus (COVID-19) pandemic, the Vietnamese Embassy in Saudi Arabia has launched a range of incentivizes for local businesses to send samples and trial goods through the embassy.

Most notably, the Vietnamese Embassy will suggest that airlines transport these samples to the Middle Eastern country on future repatriation flights.

Based on a recent market survey, the embassy also discovered the there is great interest within the Saudi Arabian market for items such as ceramics, handicrafts, dried agricultural products, pepper, unroasted and instant coffee, food, canned fish, charcoal, and frankincense.

Furthermore, Saudi Arabia represents a significant market in the region and is one of the nation’s key partners throughout both the Middle East and Africa. Indeed, economic and trade co-operation between both sides has seen constant and positive developments, with the structure of imports and exports between the two countries being mutually complementary.

As a result, the total import-export turnover between the two countries has continued to see a rapid increase, reaching the highest figure of U$S1.87 billion in 2014. Last year alone saw two-way turnover hit US$1.6 billion, despite the negative impacted caused by the global outbreak of the COVID-19 pandemic.

Foreign investors still show interest in Vietnamese market

Despite the nation suffering an annual drop in foreign direct investment (FDI) during the four months of the year, foreign investors still signed major deals in the country and confirmed its ongoing investment appeal.

Early April saw the SK Group of the Republic of Korea announce the signing of an agreement with the Masan Group Corporation in order to acquire a 16.26% stake in VinCommerce, a Masan subsidiary, for a cash consideration of US$410 million.

Elsewhere, Sumitomo Mitsui Finance Group (SMFG) of Japan spent US$1.37 billion on 49% of FE Credit.

The two deals served to warm up the Vietnamese merger and acquisition (M&A) market, indicating that it remains attractive to investors, with foreign financiers still seeking to conduct valuable deals.

Throughout the reviewed period, FDI in the nation was not far below the figure recorded during the same period from last year. This is due to major projects being signed, including a US$3.1 billion gas-fuelled power plant in Long An province, the US$1.31 billion O Mon II thermal power project in Can Tho city, and the adding of US$750 million to the LG Display project in Hai Phong city.

The country attracted a total of US$12.25 billion worth of FDI throughout the reviewed period, equal to 99.3% of the figure from the same period last year, including US$8.5 billion which went on new projects.

According to Nakajima Takeo, chief representative of the Japan External Trade Organisation (JETRO) in Hanoi, its survey conducted on business trends indicates that the majority of firms think it will be difficult to expand production and business over the next one to two years. Despite this, they still consider the Vietnamese market to be a leading investment destination among ASEAN members.

Furthermore, a recent survey conducted by EuroCham shows that European firms based in Vietnam remain confident about local recovery, with its Business Climate Index (BCI) reaching 73.9 points.

When questioned about the prospects of the Vietnamese business environment over the next quarter, 67% anticipate it will be either “excellent” or “good”, a 12% increase compared to the previous quarter.

Moreover, business leaders continue to be optimistic about the prospects of their own companies. Indeed, more than two-thirds (68%) predict that orders and revenue will remain steady or increase over the coming three months, which is a 25% increase compared to the fourth quarter of 2020.

Alain Cany, president of EuroCham, attributes these results to confidence shown by European firms within the Vietnamese market due to enterprises not being significantly impacted by the COVID-19 pandemic.

However, amid fierce competition coming from other countries in terms of FDI attraction, experts believe that the country should work harder to win favour.

John Rockhold, vice chairman of Amcham, said that Vietnam should consider non-carbon facilitation, while Nguyen Hai Minh, vice president of EuroCham, believe that it requires more high-tech human resources in order to meet the various needs of investors.

PV Power rated ‘Positive’ by Fitch Ratings

Credit rating agency Fitch Ratings has for the first time assigned PetroVietnam Power Corporation (PV Power) a Long-Term Foreign-Currency Issuer Default Rating (IDR) of “BB” with a positive outlook.

The rating is on par with that of Viet Nam and major groups such as the Vietnam National Oil and Gas Group (PetroVietnam) and Vietnam Electricity (EVN).

PV Power is the first Vietnamese power producer and the first unit of PetroVietnam to be assigned an international credit rating.

Despite the adverse effects of the COVID-19 pandemic last year and in the opening months of 2021, PV Power still stably, safely and effectively operated its power plants and fulfilled its targets.

The total output of commercial electricity reached 19.166 billion kWh last year or 103 per cent of the plan. The company earned more than VND30.2 trillion (US$1.31 billion) in revenue and posted some VND2.87 trillion in pre-tax profit, or 107 per cent and 120 per cent of the targets, respectively. Its contribution to the State budget exceeded VND1.68 trillion, or 118 per cent of the plan.

Its pre-tax profit stood at VND720 billion in the first quarter of this year, or 106 per cent of the plan.

With this rating from Fitch, it is expected that PV Power will have a greater capacity to raise capital in the international market. 

Inflation fears begin as economy recovers

The cost of raw materials used in many industries have risen sharply in the last few months, putting pressure on the prices of many essential goods.

Instant noodles, seasoning, cooking oil, and others have seen prices increase by 7 -10 per cent since the end of 2020.

The price of meat and poultry has increased by 10 -15 per cent.

Nguyen Thi Tram, a pig farmer in Dong Nai Province’s Thong Nhat District, said the price of a 25kg bag of bran has increased from VND245,000 in October last year to VND295,000 now.

Prices of raw materials used to make feed, such as corn, rice bran and fish flour, are also rising.

But farmers cannot hike poultry price since they have to compete with cheap imported products.

Globally, the prices of raw materials and fuels are expected to rise again as COVID is gradually controlled, vaccination is done on a large scale and production and trade recover.

Dr Nguyen Ngoc Tuyen of the Academy of Finance predicted the consumer price index (CPI) to rise more than last year but remain below 4 per cent for the year, the target set by the National Assembly.

Nguyen Anh Tuan, director of the Ministry of Finance’s price management department, warned there would be pressure on prices this year because of the rise in fuel prices.

But a spokesperson for a large supermarket chain in HCM City said the price of each item would be carefully considered before any increase is made, and essential goods are not expected to be affected much in general. 

Viet Nam, Cambodia lift trade ties

Minister of Industry and Trade Nguyen Hong Dien held a working session with Cambodian Ambassador to Viet Nam Chay Navuth in Ha Noi on Thursday to discuss measures to strengthen bilateral ties across trade, industry and energy.

Dien expressed his belief that under the leadership of the Cambodian Government and with prevention and control measures, Cambodia will soon wipe out COVID-19 and restore its economy.

On the occasion, he presented 10,000 anti-bacterial cloth masks to the Cambodian Embassy in Viet Nam, and 10,000 others to each of the Cambodian Ministry of Commerce; Ministry of Industry, Science, Technology and Innovation; and the Ministry of Mines and Energy.

Both sides spoke highly of bilateral trade ties over the past years, with an annual growth of around 18 per cent during 2010-2019.

Last year, two-way trade tripled from 2010. In 2019, it reached US$5.2 billion, surpassing the target of $5 billion. They expressed their belief that the figure will grow more strongly in the near future.

The two sides agreed to maintain and renovate customs clearance model at border gates on roads and waterways, ensuring that the supply chain will not be disrupted, especially for necessities such as medical and food supplies, amid the pandemic.

At the same time, they will review, revise and sign legal frameworks related to trade, especially an agreement between the two Governments to step up bilateral trade for the 2022-2023 period.

They vowed to accelerate the implementation of a master plan to carry out the Memorandum of Understanding on connectivity and development of border trade infrastructure between the two governments.

Further support will be offered to firms to promote trade, build trademarks and distribution channels, enhance information sharing, fight smuggling across the border, enhance power purchase partnership, and ensure the stability and safety of each nation’s electricity system.

Dien affirmed that the Ministry of Industry and Trade is ready to work with the Cambodian Embassy and other units to lift Viet Nam – Cambodia relations in the near future.

The ministry’s Department of Asian-African Markets reported that two-way trade reached $2.69 billion in the first quarter of this year, up 103.68 per cent annually. Of the figure, Viet Nam’s exports to Cambodia rose by 15.83 per cent year-on-year to $1.22 billion, with iron and steel up 20.8 per cent, apparel 15.5 per cent, oil and gas 18.4 per cent, apparel and footwear materials 10.6 per cent.

Meanwhile, imports from Cambodia soared by 443 per cent annually to $1.47 billion, including cashew nuts $711 million, up 497 per cent; rubber $318.3 million, up 999 per cent; vegetables $13.3 million, up 48.2 per cent, iron and steel scrap $10.7 million, up 216.7 per cent. 

FTA providing impetus for Viet Nam – Chile trade

Despite there being no commitments on services and investment in the Viet Nam – Chile Free Trade Agreement (FTA), the pact has boosted trade and economic ties between the two countries.

The view was shared at the fourth meeting of the Viet Nam – Chile free trade council, which was held online and chaired by Deputy Minister of Industry and Trade (MoIT) Do Thang Hai and Vice Minister of Trade at Chile’s Ministry of Foreign Affairs, Rodrigo Yanez on Thursday.

According to the Ministry of Industry and Trade’s European – American Market Department, the two countries have enjoyed robust relations over the years.

Despite the difficulties posed by the COVID-19 pandemic, two-way trade in 2020 topped US$1.28 billion, up 4.43 per cent year-on-year and 2.5-fold higher than the figure recorded in 2013, prior to the FTA coming into effect.

Chile is one of Viet Nam’s four largest trade partners in Latin America, while Viet Nam is the largest trade partner of Chile in ASEAN.

Goods trade in the first four months of this year rose 15.3 per cent year-on-year to $401.1 million, with Viet Nam’s exports standing at $321.3 million, up 11.8 per cent.

Both sides recognised the efforts made to implement the FTA.

The subcommittee for trade in goods discussed matters regarding tariffs and origin of goods and considered the application of electronic certificates of origin to simplify procedures for exporters in both countries.

Meanwhile, the subcommittee for hygiene and phytosanitation worked on import procedures for several agricultural products.

Viet Nam has begun risk analysis on Chilean kiwi fruit while the South American country said it will begin analyses of Vietnamese rambutan in July.

Both agreed to step up measures to help Vietnamese and Chilean businesses capitalise on the Viet Nam – Chile FTA as well as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) after it is ratified by Chile. 

How to grab business opportunities in EU: webinar spells it out

Europe offers export opportunities for Vietnamese firms, but it is a market with stringent requirements in terms of quality and other aspects.

To exploit the market, firms need to thoroughly understand its demands and requirements, and have appropriate export strategies, experts said.

Tran Thi Trang, head of the Investment and Trade Promotion Centre of HCM City’s training office, said Europe is one of Viet Nam’s largest trading partners and the country is the second largest Southeast Asian trading partner for the EU.

Speaking at a webinar on ‘How to expand and secure sustainable business opportunities with EU clients’ held by the ITPC and Source of Asia (SOA) on May 5, Zacharie Blondeau, the latter’s sourcing department director, said Viet Nam has sustained its exports to the EU despite the impacts of the Covid-19 pandemic.

The EU-Viet Nam Free Trade Agreement that took effect in August last year has significantly increased bilateral trade, he said.

Viet Nam’s exports to EU account for only 2 per cent of the bloc’s total imports, meaning there is enormous potential for increasing them, he pointed out.

But a change in European consumer behaviour is a growing challenge for businesses, who need to pay closer attention to sustainability in terms of the environment, social benefits, green energy, use of recycled materials, and having short supply chains with traceability, he said.

In that context, Vietnamese exporters should “assess your current positioning towards sustainability, understand your export market, import rules and recommendations, adjust your supply chain to match international standards and rules and invest in ‘continuous improvement’,” he said.

Huynh Thanh Trung, director of LeanWares Industry Co., Ltd, said, “To penetrate a market, we must understand its demands and requirements to set up factories complying with them.”

Markets like the EU set the bar high not only for product quality but also design, product information on the packaging, added value, and so on, and businesses targeting them need to focus on building a factory that conforms from the outset and controlling their entire supply chain, logistics and distribution to ensure product consistency, he said.

Do Van Huy, account manager of Shire Oak International, too said EU consumers care about how a product is made and want factories using renewable energy.

Dinh Thi Tuyet Nhung, head of SOA’s international market expansion department, said the key factors in expanding markets are quality and branding, understanding the markets and having effective sales channels, appropriate resource planning and clear objectives.

F-Soft eyes Korean and Japanese markets

FPT Software Da Nang, a member of FPT Group, began training software engineers for the Japanese and South Korean markets by signing a human resource training programme with the Da Nang-based Dong A University.

Chairman of F-Soft Da Nang, Nguyen Tuan Phuong, said the programme was part of the company’s 10,000-Bridge Software Engineers (BrSE) plan that was launched from 2014 to promote deeper access into the two key markets.

He said the first course, which will open later this year, aims to provide Japanese and Korean language IT engineers as Japan is a key traditional export destination of F-Soft Da Nang with 70 per cent of software export turnover, while South Korea and the US is an emerging market for the firm.

He said F-Soft Da Nang has employed 3,200 Vietnamese IT engineers, and more than 2,000 Japanese and Vietnamese employees working for F-Soft Japan in Japan.

Phuong said success in Japan and South Korea would help the company expand its exports to the United Arab Emirates, Europe and the US.

Dong A University is the only educational centre training Korean and Japanese language IT engineers in central Viet Nam.

More than 2,000 students have been training in Japanese and Korean in the IT, nursing, automobile, food and tourism industries.

F-Soft alone earned US$53.4 million, of which 96 per cent was from software exports, in 2020.

The software exporter has poured a $23 million investment in the 5.9ha FPT Complex for the first phase.

Da Nang’s IT industry created revenue of $1.3 billion, half of which in software development, offering 40,000 jobs in 2020.

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



Phuc Long tea chain to open first US store



Phuc Long tea chain to open first US store

An artist’s impression of the first Phuc Long store in California, U.S. Photo courtesy of Phuc Long.

Phuc Long beverage chain will open its first store in the U.S. next month, following in the footsteps of other Vietnamese coffee brands that have branched out to other markets.

The store will be located in Garden Grove, California, the company said in a Facebook post.

Phuc Long has over 80 stores in Vietnam. It had recently signed a deal with conglomerate Masan Group to establish Phuc Long kiosks in over 2,200 VinMart+ conveniences stores.

Last month, TNI King Coffee chain opened its first store inside a mall in California.

Other Vietnamese coffee chains that have branched out to foreign markets include Cong Ca Phe with six stores in South Korea and two in Malaysia, and Trung Nguyen E-Coffee with a store in Laos.


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Private enterprises lack internal strength and driving force to develop



How will Vietnam overcome challenges to realize its development plans? Nguyen Dinh Cung, former head of Central Institute for Economic Management (CIEM), shares his perspective with VietNamNet.

Private enterprises lack internal strength and driving force to develop

One of the great successes of economic reform in Vietnam since doi moi (renovation) is the establishment of a community of businesses from different economic sectors with many ownership modes. Vietnamese enterprises are operating under similar legal forms as in other market economies.

High in quantity, small in scale

In terms of quantity, enterprises in the private sector account for the overwhelming proportion, 97 percent, while SOEs (state owned enterprises) account for 0.38 percent and FIEs the remaining.

The enterprises employ 16 million workers. The workers in SOEs account for 7 percent, private enterprises nearly 60 percent and 33 percent in FIEs (foreign invested enterprises).

In terms of total assets, SOEs account for 28 percent, private enterprises 53 percent and FIEs 29 percent.

In terms of stockholder equity, SOEs account for 20 percent, non-state owned enterprises 56 percent and FIEs 24 percent.

In terms of net revenue, SOEs account for 14.5 percent, non-state owned 57 percent and FIEs 28.5 percent.

In terms of pre-tax profit, SOEs account for 21 percent. The figures are 36 percent for non-state owned enterprises and 43 percent for FIEs.

If considering financial efficiency, the ROE (return on equity) is 9 percent for SOEs, 4.5 percent for non-state owned enterprises and 15 percent for FIEs. Meanwhile, the profit to sale ratio is 5.6 percent for SOEs and FIEs, while it is just 2.4 percent for non-state enterprises.

The figures show that while private enterprises account for the overwhelming proportion, they mostly have small and micro scale, with very few enterprises having medium scale. They have low technology and low competitiveness.

Lacking inner strength and driving force to develop

This is attributed to several reasons:

First, the ratio of profit to revenue and to assets is too low. Stockholder equity is not high enough for re-investment and development. Therefore, most private enterprises have to rely on working capital from relatives and friends. Only a small part of the enterprises can access bank loans.

Most private enterprises lack capability to innovate and receive technology transfer, and lack the driving force to research, develop and renovate technology. In other words, private enterprises lack inner strength and motivation for development.

Second, one part of private enterprises doesn’t want to expand investment to become large enterprises.

This is attributed to unclear and overlapping laws which can be understood and implemented in different ways by different state management agencies. The bigger that enterprises become and the more business fields they cover, the higher legal risks they face, which may cause big losses or loss of all of their assets that had been created over decades.

While private enterprises account for the overwhelming proportion, they mostly have small and micro scale, with very few enterprises having medium scale. They have low technology and low competitiveness.

In this situation, there is no reliable and effective tool and institution, especially independent courts, capable of protecting their rights and benefits.

Third, another part of private enterprises wants to grow but cannot, because they cannot access resources for investment and development. Surveys have found that capital costs are too high. The inability to get enough capital and access land are the big barriers for private enterprises in this group.

Fourth, some of the hundreds of thousands of private enterprises are crony enterprises. The number of these enterprises is not high if compared with the total number of operating enterprises, but they appropriate significant resources and deprive business opportunities from authentic investors and businesses.

The enterprises of this kind contribute to creating an unfair business environment which lacks transparency; distort the allocation of national resources; and distort the value and constrict the business motivation of genuine businesses.

It is the enterprises of this kind that make it difficult for other enterprises to access resources and business opportunities. This is a major obstacle for the development of private enterprises.

Large private groups vulnerable

Vietnam now has some large-scale private enterprises, called economic groups. There are some similarities and differences between the economic groups and groups in some Asian economies prior to 1979 as follows:

The similarities include investment in multi business fields; reliance on bank loans; lack of transparency in administration and business; and relatively friendly relations with the government. They are big if compared with the size of the economies, and so they are not allowed to collapse.

Regarding differences, some foreign economic groups specialized in manufacturing, developed strong R&D (research and development), and expanded their business across the region and the world. They have had specific products and strong brands. Meanwhile, Vietnamese private economic groups mostly target the domestic market, focusing on real estate and consumer services. They still cannot develop and master technologies in their fields and don’t have global competitiveness.

It is obvious that Vietnam’s private economic groups are not as powerful as Asian private economic groups before 1979, and they are vulnerable. If the businesses collapse, it will take a longer time to recover them and the collapse may cause bigger losses to the national economy.

Therefore, developing the private sector, including economic groups, in a balanced, effective and sustainable manner must be a top priority task in the coming time.

It is necessary to amend unreasonable policies to help private enterprises increase their strength and overcome obstacles so they can feel secure to expand investment for development.

The 13th Party Congress Resolution has set specific goals for Vietnam’s socio-economic development.

By 2025, Vietnam would become a developing country with industry going towards modernization and income surpassing the lower average level.

By 2030, Vietnam would become a developing country with a modern industry and higher than average income.

By 2045, it would become a developed country with high income.

Nguyen Dinh Cung


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Excited but anxious: Hanoi business owners reopen



Though they eagerly reopen after being closed for 27 days due to the Covid-19 outbreak, many Hanoi businesses are also worried about changing consumer behaviors.

Closed restaurants inside a shopping mall in Ha Dong District, Hanoi, June 20. Photo by VnExpress/Duc Minh.

Closed restaurants inside a shopping mall in Ha Dong District, Hanoi, June 20. Photo by VnExpress/Duc Minh.

After Hanoi authorities announced that indoor dining and hairdressing can resume on Tuesday, Bui Quang Hung, co-founder of barber shop chain 30Shine, showed his excitement with a post on social media saying, “see you Hanoians on Tuesday morning.”

He said the shops would open from 7.30 a.m. until late night to clear a backlog of almost a month.

“Men have to visit the barber once every three weeks on average because they feel irritated if their hair is one to two centimeters too long.”

There would be two or three times the usual number of customers for two weeks, he said based on his experience from previous waves.

But some other businesses are less hopeful.

Trieu Nguyen Quan, owner of the Goofoo Gelato chain of ice cream shops, does not expect many customers for 10 days after reopening since people are afraid of the pandemic.

Hoang Tung, CEO of fast-food restaurant chain Pizza Home, said the outbreak could cause him to lose a number of customers since people have adopted a new habit of eating at home.

To survive the stop-start nature of their business amid the pandemic, many have sought to improve their business model. Tung said Pizza Home has closed some stores that were not doing well but has expanded into home delivery and apps.

“The restaurants have to operate both online and offline, and must be prepared for the worst, which is closure, amid the pandemic.”

Goofoo Gelato too has managed to pull on thanks to online sales.

Quan said he plans to increase the number of outlets but only after vaccination. He said vaccination is the only way to make him feel secure and the ultimate solution for businesses to open and the economy to revive.

Around 2 percent of the population has received the first shot, and 0.1 percent has received both.

Vietnam has received delivery of around three million vaccine doses so far, and is expected to get over 120 million this year.

It seeks around 150 million in all to cover 70 percent of its population.


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