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VIETNAM BUSINESS NEWS OCTOBER 21

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JICA partners VP Bank in promoting financial access for women-led SMS in Vietnam

The Japan International Cooperation Agency (JICA) on October 20 signed a 75 million USD loan agreement with the Vietnam Prosperity Joint Stock Commercial Bank (VPBank) to promote financial access among women-led small and medium-sized enterprises through Private Sector Investment and Finance (PSIF).

The loan is in line with the “Initiatives on overseas loans and investment for ASEAN announced by the Government of Japan in 2019 and is implemented by utilising the “Facility for Accelerating Finance Inclusion in Asia:FAIA”.

Small and medium enterprises (SMEs) account for 98.7 percent of the total number of enterprises in Vietnam, 45 percent of the country’s gross domestic product and attract 63 percent of employment. However, their access to finance is limited, especially, access to finance is a big hindrance for women-led SMEs.

In accordance with the initiative of the “2X Challenge: Financing for Women” launched by financial institutions of the G7 countries, JICA provides more than 30 percent of the total loan amount for women-owned enterprises through VP Bank.

The loan will contribute to Vietnam’s sustainable economic growth and sustainable development goals on gender equality, building resilient infrastructure, and fostering a global partnership for sustainable development.

VPBank has been engaged for many years in improving financial access for small enterprises as one of the intermediary financial institutions in the Japanese ODA loan Small and Medium-sized Enterprises Finance Project that was approved in 2009.

JICA has been supporting the enhancement of women’s financial access in Vietnam through the technical cooperation project for promoting gender-responsive financial inclusion through Vietnam Women’s Union since 2019./.

Reference exchange rate down 22 VND

The State Bank of Vietnam set the daily reference exchange rate at 23,145 VND/USD on October 21, down 22 VND from the previous day.

With the current trading band of +/-3 percent, the ceiling rate applicable to commercial banks during the day is 23,839 VND/USD and the floor rate 22,450 VND/USD.

The opening-hour rates at commercial banks saw fluctuations.

At 8:25am, Vietcombank listed the buying rate at 22,625 VND/USD and the selling rate at 22,855 VND/USD, both down 5 VND from October 20.

Vietinbank cut 5 VND from both rates, listing the buying rate at 22,570 VND/USD and the selling rate at 22,850 VND/USD.

The rates at Vietinbank are the same as on October 19 at 22,635 VND/USD (buying) and 22,855 VND/USD (selling).

Meanwhile, BIDV kept both rates unchanged from the previous day, listing the buying rate at 22,655 VND/USD and the selling rate at 22,855 VND/USD./.

Workshop seeks to improve private sector’s capacity

Workshop seeks to improve private sector’s capacity hinh anh 1

A workshop took place in Hanoi on October 19 to exchange and share results of a report on “Strengthening the Capacity of Vietnam’s Private Sector in the New Stage” compiled by the Central Institute for Economic Management (CIEM).

The event was held by CIEM within the framework of the Australia Supports Economic Reform in Vietnam (Aus4Reform) programme.

Speaking at the event, Dr. Nguyen Thi Luyen, deputy head of the CIEM’s department for business reform and development studies, said over the last five years, the number of private enterprises listed in Vietnam’s 500 largest companies is on the rise. Six private firms have even made their way into the Asian and global lists, she noted.

Luyen pointed out that the private sector plays an increasingly significant part in the economy as it contributed 40 percent of Vietnam’s GDP. The country had 647,000 private enterprises in 2019, doubling 2011’s figure. Their total registered capital surged nearly 3.5 fold to 24.02 trillion VND in 2019 from over 6.87 trillion VND in 2011.

She, however, voiced concern over the private sector’s low competitiveness, weak internal capacity and slowness to change. A majority of private firms in Vietnam are of macro, small and medium sizes, she said, adding that most of them have limited capacity in terms of technology, management, business connectivity and cooperation, and joining global and regional supply chain.

To improve the capacity of the private sector, Dr. Luyen urged the Government to focus on measures to support enterprises to restore production and minimise negative impacts of COVID-19./.

Vietnam’s trade deficit with China expands

Vietnam ran a trade deficit of US$41.9 billion with China in the January-September period of this year, US$16.8 billion higher than the figure in the same period of last year, according to the General Department of Vietnam Customs.

In September alone, Vietnam exported products worth nearly US$5.5 billion to China and spent more than US$8.6 billion importing goods from the northern neighbor. Thus, Vietnam incurred a trade deficit of US$3.1 billion with China in the month, the local media reported.

In the nine-month period, exports to China were valued at US$38.8 billion, while US$80.7 billion was spent on imports from this market, up 19.3% and 40% year-on-year, respectively.

Up to 14 kinds of merchandise reported an import turnover of over US$1 billion each, of which, two kinds of products posted an import turnover of over US$10 billion each. Specifically, imports of machinery, equipment, tools and accessories from China surged 63.7% year-on-year to US$18.8 billion, and computers, electronic products and accessories rose nearly 28% to US$15.45 billion.

Meanwhile, 10 groups of Vietnam’s exports to China posted revenue of over US$1 billion each, of which phones and phone parts took the lead with nearly US$9.8 billion, soaring 52% over the year-ago period.

With import-export turnover worth US$119.5 billion, China accounted for nearly a quarter of Vietnam’s total in the January-September period.

Social distancing sends Mekong Delta’s exports tumbling

Exports of the Mekong Delta region dropped sharply in August and September 2021 due to stringent social distancing measures to curb the spread of Covid-19, Nguyen Phuong Lam, director of the Vietnam Chamber of Commerce and Industry (VCCI) – Can Tho Branch, said at a virtual seminar on September 19.

According to the VCCI branch, the Mekong Delta exported goods worth US$1.04 billion in August and US$1.02 billion in September, some US$500-900 million less than the other months of the year.

Lam said in the third quarter of 2021, there were only 981 newly established enterprises with registered capital totaling VND19.74 trillion in the region, falling 66% and 44%, respectively, compared with the same period last year.

Data of the VCCI showed that from January to September 2021, the Mekong Delta region had only 6,109 newly established enterprises, equivalent to 34% of the figure in the same period last year. The Mekong Delta stood above only two regions – the Central Highlands and the northern mountainous region.

Over 240 enterprises in the region resumed operations in the third quarter, while 1,160 others temporarily suspended operations, closed down or registered for disbandment.

From January to September, over 7,940 enterprises in the Mekong Delta suspended operations, closed down or registered for disbandment, while some 6,100 enterprises were established.

Hau Giang, Tien Giang, An Giang, Soc Trang, Ben Tre and Vinh Long are the Mekong Delta provinces that saw the most number of newly established enterprises drop sharply, down 21-30% against the same period last year.

Firms in Dong Nai asked not to deny recovered Covid workers

As several firms in Dong Nai Province have disallowed recovered Covid laborers to return to work, the Industrial Zones Management Board of the province has written to enterprises asking them to create favorable conditions for recovered workers to resume their work.

Le Van Danh, deputy head of the management board, told Thanh Nien Online today, October 19, that the management board signed a decision asking firms to prioritize employing laborers who have recovered from Covid-19.

The management board recently received many complaints about some firms turning away laborers who have recovered from Covid, while asking them to return to work six months after recovery, Danh said, adding that the act goes against the regulations issued by the Dong Nai government.

Under the regulations, workers are allowed to work if they are not living in areas under lockdown, have got at least one shot of the Covid vaccine or have recovered from the disease within six months, he explained.

The representative of the management board said that recovered Covid patients are important forces to help firms restore production, so firms should not turn them away.

Statistics from the management board indicated that some 1,500 of 1,714 firms had resumed operations.

EU-Vietnam free trade deal beginning to fulfil promise

After over one year of entry into force, the EU-Vietnam Free Trade Agreement has enabled Vietnam to attract more investments from the EU and expand trade with this bloc’s member markets.

Giorgio Aliberti, EU Ambassador to Vietnam, said that since the entry into force of the EU-Vietnam Free Trade Agreement (EVFTA) in August 2020, “the benefits and opportunities of this important trade agreement are undeniable.”

“We have received much positive feedback so far. The EVFTA has proven to create a wider positive impact on the Vietnamese economy. Attraction of capital, technologies, and expertise has been triggered thanks to this ambitious trade agreement,” Aliberti said.

The Vietnamese government last week sent a report on Vietnam’s EVFTA implementation to the 15th National Assembly which will discuss its effects over the next few weeks.

According to the report, the EVFTA has helped Vietnam attract more investment from EU member states which are considering the country a lucrative investment destination in ASEAN.

As of late September, Vietnam had 2,242 valid investment projects from the EU, registered at $22.24 billion, accounting for 5.58 per cent of all registered foreign investment capital in Vietnam. Since the EVFTA took effect, Vietnam has attracted 164 projects with total committed capital of $483 million.

Leading investors included the Netherlands (382 projects with $10.36 billion or 46.5 per cent of total EU investment in Vietnam), France (632 projects at $3.62 billion or 16.55 per cent of total EU investment in Vietnam), and Germany (405 projects with $2.25 billion or 10.13 per cent of total EU investment in Vietnam).

The government report noted that a number of major groups from the EU are effectively operating in Vietnam such as Shell Group, Total Elf Fina, Daimler Chrysler, Siemens, and Alcatel Comvik. EU investment is largely focused on high-tech industrial sectors – however, it has recently been more centred on services, clean energy, supporting industries, food processing, high-tech agriculture, and pharmacy.

“It is forecast that direct investment flows from the EU into Vietnam will significantly increase in the medium and long term, with many high-quality projects,” said the report.

Pham Thai Lai, president and CEO of Siemens ASEAN and Vietnam, told VIR that the EVFTA is a great foundation to further boost trade, attract more investment, create more jobs, and foster sustainable development between the EU and Vietnam.

“I strongly believe that we can expect robust investment growth from the EU to Vietnam and a substantial increase in exports from Vietnam to the EU as a result of the removal of over 99 per cent of tariffs on goods traded between the two,” Lai said.

Furthermore, he said, Vietnam’s commitment to ensure a more open and transparent business environment will help to increase the investment flow from high-valued projects of the EU in Vietnam. This will enable Vietnam to become a hub for trade and investment activities of the EU in the Southeast Asia.

“The increase in value chains and value-added services will support the country in restructuring its economic growth model and will be a key driver for the country’s ambition to become an industrialised nation in the near future,” Lai added.

Minister of Industry and Trade Nguyen Hong Dien reported that after over one year of implementing the EVFTA, despite massive difficulties caused by the pandemic, the total export-import turnover between Vietnam and the EU hit $54.6 billion, up 11.9 per cent on-year. In which, Vietnam’s export turnover reached $38.5 billion, up 11.3 per cent, and its import value sat at $16.2 per cent, a 12.4 per cent rise.

In the first nine months of this year, enterprises from Vietnam earned $12.43 billion from shipping goods to the EU, up 17.5 per cent on-year, and spent $28.8 billion on imports from the EU, a rise of 11.5 per cent over the same period last year.

Vietnam’s key exports to the EU include mobile phone and spare parts; computers; electronics and spare parts; footwear; textiles and garments; machinery and equipment; and steel products.

According to European Commission’s figures, the EVFTA could boost Vietnam’s booming economy by 15 per cent of GDP, with Vietnamese exports to Europe growing by over one-third. For the EU, the agreement is an important stepping stone to a wider EU-Southeast Asia trade deal.

After the agreement’s entry into force, 65 per cent of duties for EU exports to Vietnam disappeared, and the remainder will be phased out gradually over a period of up 10 years.

Enterprises accelerate production, business recovery

After more than half a month of loosening social distancing, Ho Chi Minh City records that 60 percent of enterprises have restored production with a scale of up to 83 percent. The relaxation of social distancing, along with the resumption of the transportation system from the city to other provinces, has created favorable conditions for enterprises to speed up production.

Mr. Chu Tien Dung, Chairman of HCMC Union of Business Association, informed that businesses had actively worked with workers and partners to increase production and resolve backlogged orders to create conditions to receive new orders. Mr. Do Phuoc Tong, Chairman of the Board of Members of Duy Khanh Mechanical Company, said that the company restored 98 percent of production capacity while the remaining 2 percent was waiting for replenishment. This enterprise has been closely contacting relevant authorities to determine the pandemic-free areas to support safe accommodation for workers.

According to Hepza, up to now, nearly 200,000 out of 288,000 workers have returned to work. Many enterprises have restored production to 90 percent of capacity.

Mr. Nguyen Van Be, Chairman of the Hepza Business Association, said that after 15 days of remanufacturing, 1,500 enterprises, including 500 FDI enterprises – an important link in the global supply chain – had resumed operations. It is estimated that 60 percent of enterprises have restored production with a scale of 83 percent.

The current situation at factories shows that the city’s solution of living with the pandemic has brought some effectiveness. For instance, at Freetrend Company, which used to stopped production because of Covid-19 cases, more than 4,800 workers have returned to the factory since the beginning of October. In the past 15 days, there were about 20 cases of Covid-19 but, with support from the authorities, businesses prevented the pandemic from recurring, disinfected the factories, took workers for treatment, and maintained production.

The textile, garment, and footwear sectors previously faced difficulties in finding workers but now have basically returned to normalcy. Mr. Pham Xuan Hong, Chairman of HCMC Association of Garment, Textile, Embroidery, and Knitting, said that Saigon 3 Garment Joint Stock Company had 80 percent of workers back to work. Many other large-scale member enterprises also recorded a positive situation. Only small-scale enterprises encounter a labor crunch. However, this situation will probably be overcome soon when provinces have been supporting vaccination for people wishing to return to HCMC to work. HCMC leaders have also actively worked with businesses to arrange vehicles to assist workers from other provinces to return to the city.

To support enterprises to accelerate production, the HUBA has proposed to the Government to implement two urgent solutions. The first is to issue a financial support package for businesses only, whose administrative procedures are simplified to make it easier for businesses to access. For those that have completed the application to access capital support earlier, the authority should speed up the approval process. Moreover, it is necessary to extend tax payments and reduce taxes so that enterprises can increase working capital in importing raw materials and production. From the perspective of the city, Mr. Chu Tien Dung also suggested reducing the costs of electricity and water for businesses, especially temporarily not increasing the fee for seaport infrastructure.

Sharing the same problem, according to Mr. Nguyen Hoang Ngan, General Director of Binh Minh Plastic Joint Stock Company, the fourth quarter of 2021 is the time when enterprises accelerate exports and increase the import of raw materials. The current biggest difficulty is that raw material prices are climbing rapidly. For example, raw plastic material prices have doubled or tripled those at the beginning of the year. Such an increase eats up most of the profits of enterprises. Not to mention that businesses also have to bear the costs incurred from the control of the Covid-19 pandemic. Therefore, the promptness and timeliness of the support policy packages will help them overcome difficulties and accelerate faster.

Along with the economic solution, it is also necessary to build more Covid-19 treatment facilities in areas with many manufacturing plants. The Linh Trung 2 Export Processing Zone is about to inaugurate a 1,500-square-meter Covid-19 treatment facility with 250 beds, with the cooperation of Thu Duc City Hospital. It is a model that actively supports businesses when there are Covid-19 cases, so it is necessary to replicate this model in the near future.

Over the past time, any enterprise that has a decent dormitory or accommodation for workers was very proactive in pandemic prevention and implemented the three-on-site production model. Therefore, the city needs to supplement regulations on the construction of worker accommodation when developing or renovating new EPZs and IPs.

Enterprises also said that the Government should drastically direct relevant ministries, sectors, and localities to soon unify the method of controlling inter-provincial trade by a general national management system. Accordingly, 400 EPZs, IPs, and economic zones across the country need to be quickly connected to trade activities to meet the demand for supply of goods, raw materials, and imported and exported goods through provinces to the ports. Only in this way will it create a general driving force to promote the economic recovery of HCMC and regain strong growth momentum in the last months of 2021.

According to Ms. Le Bich Loan, Deputy Head of the Management Board of Saigon Hi-Tech Park, the labor force is not a big concern of FDI enterprises. Over the past time, although the number of workers participating in production was limited to ensure the three-on-site regulations, these enterprises arranged for their workers to work alternately in shifts. Thanks to that, workers can maintain jobs and stable incomes, so they do not leave for their hometowns. Only a small number of workers, who went out of the city due to personal affairs, are still stuck in other provinces. Local authorities and HCMC are supporting them to return to work. Currently, 100 percent of enterprises in the park have resumed production with a scale of 50-75 percent. Businesses will also plan to recover the rest from now until mid-November this year.

Vietnam eyes building blue economy partnership group

The Vietnam Administration of Sea and Islands (VASI) at the Ministry of Natural Resources and Environment and the World Bank on October 19 jointly held a virtual consultation workshop on the building of a Blue Economy partnership group.

At the event, VASI Deputy Director General Nguyen Que Lam said the proposal to build a partnership group on blue economy aims to mobilise the participation of stakeholders for the efficient management and sustainable development of Vietnam’s maritime economy.

Participants discussed and share information on programmes and projects related to the field.

According to the World Bank, the Blue Economy refers to the sustainable and integrated development of economic sectors for healthy oceans and seas. Nguyen Thi Tho, an expert at the VASI, said that the blue economy model aims to improve welfare and social fairness, as well as mitigate risks in environment and scarcity.

The annual Vietnam Blue Economy Forum is among major activities of the country’s seas and islands week. The forum helps the community understand the potential and challenges in the realisation of maritime economy development targets./.

Ministry proposes banning independent operation of individual property brokers

The Ministry of Construction has proposed that individual real estate brokers should establish brokerage firms or offices and have brokerage certificates, and that such individuals must not operate independently.

In a document proposing the amendment of the Laws on Housing and Real Estate Business, the ministry also suggested that property brokers, after establishing brokerage firms or offices, must provide their information to the Departments of Construction of localities where their firms or offices are located, and the Housing and Real Estate Market Management Department under the Ministry of Construction so that their information can be publicized on the localities’ portals.

As for foreign brokers in Vietnam, after establishing brokerage firms and offices, they must provide their information to the Housing and Real Estate Market Management Department, following which their information will be publicized on the department’s portal.

The ministry also proposed working out regulations on brokers’ periodic reports.

Moreover, individual brokers must attend training courses to be granted real estate brokerage certificates.

According to the ministry, property brokerage services have become increasingly popular in Vietnam. However, the quality of brokers remains poor.

The ministry pointed out three main problems with property brokerage services. Specifically, the requirements on real estate brokerage in the 2014 Law on Real Estate Business are relaxed, resulting in the unprofessional operation of real estate brokers.

In addition, individual property brokers are not required to report their work to the State management agencies. Their target is to sell property products quickly, according to the Ministry of Construction.

Further, the fine of VND10-50 million for each unlicensed property broker is low.

Therefore, the ministry proposed amending some regulations on the real estate brokerage to improve the quality of services and improve the State management of the sector to protect the benefits of the State, the residents and enterprises.

The amendment of regulations will also help create a healthy business environment, reduce the land price fever and property bubbles, thereby preventing tax losses.

According to the Ministry of Construction, since 2008, more than 32,900 individuals have been certified as real estate brokers and some 80% of property transactions have been conducted through these brokers.

Strong stock market gives securities firms profit a boost in Q3

The active domestic market with high liquidity, mostly from local retail investors, has been supporting securities firms this year with many reporting outstanding performance.

Data from the State Securities Commission (SSC) showed that by the end of August, the market capitalisation reached over 8.101 trillion VND (357.86 billion USD), equivalent to 138.6 percent of GDP, up 21.27 percent compared to the end of 2020.

The stock market has mobilised around 292.1 trillion VND for the economy in the first nine months of the year, up 12 percent over last year, with the average trading value reaching more than 24 trillion VND per session, up 224 percent year-on-year.

During the period, the number of new accounts opened by domestic investors was 957,215, while the total number of new accounts opened for the last three years in 2018, 2019 and 2020 combined only was 837,345 accounts.

These factors are believed to be the main drivers for securities firms’ business results.

In its third-quarter financial statement, the Thanh Cong Securities Company (TCSC) reported its total revenue of 69.6 billion VND, up 60 percent year-on-year. Of which, proprietary trading accounted for the largest proportion of about 24 percent of the total revenue, reaching 24 billion VND, however, it decreased by 25 percent year-on-year.

Meanwhile, revenue from issuing stocks witnessed an impressive growth to over 12 billion VND, 5.5 times higher compared to the same period last year.

Brokering activities also earned three times higher than last year to 13 billion VND.

Operating expenses in the third quarter were recorded at 17 billion VND, up 66 percent year-on-year. Deducting expenses, the company posted a net profit of 41 billion VND during the period, up 76 percent.

For the first nine months, its revenue rose 122 percent to 244.9 billion VND, with profit after tax reaching 149.3 billion VND, 4.3 times higher than last year.

Similarly, Asia – Pacific Securities JSC (APEC) also saw good results in the third quarter of 2021, with its revenue reaching over 134 billion VND, up more than 5 times compared to last year.

With the strong growth of the stock market, the securities firm’s brokerage market share accounted for 0.15 – 0.2 percent of the total market. Therefore, revenue from brokering activities grew to 84.5 percent over the same period last year.

The company’s operating expenses rose slightly over last year, while administrative expenses reported a small fall, leading to an increase of nearly 7 times compared to the same period in 2020 in profit after tax to 97 billion VND. This is a historically high profit after tax that APEC has recorded during more than 15 years of operation.

As of September 30, its revenue reached more than 205 billion VND, up 84 percent over the same period, resulting in profit after tax of 134.7 billion VND, nearly 7 times higher than last year.

The SmartInvest Securities JSC also posted a jump of 87 percent in total revenue to 252 billion VND. Although the securities’ brokerage business is still modest, it also recorded good performance after earning 6.1 billion VND, compared to 32 million VND in the same period last year.

As a result, the company’s profit after tax was 7 times higher than last year to 136 billion VND.

In the first nine months of 2021, SmartInvest’s revenue and profit after tax both surged 243 percent to 136 billion VND and 141 billion VND, respectively.

Meanwhile the Bao Minh Securities Company was the first securities firm to post a decline in revenue in the third quarter. Of which, its revenue fell 11 percent to 55 billion VND.

The main reason for the decline in revenue was due to losses in the proprietary trading, the company said, with a net loss of 66 billion VND.

Therefore, the firm reported a loss of more than 38 billion VND during the period. It lost 26 billion VND last year./.

HCMC Trade Dept. proposes easing indoor dining restrictions

The HCMC Department of Industry and Trade today, October 19, wrote to the municipal government to seek its approval for a plan to ease indoor dining restrictions in the city, instead of only allowing take-away services.

According to the department, after the city relaxed mobility restrictions for 15 days, eateries in the city have gradually resumed operations, but the number of facilities that reopened remained low and has yet to meet the demand among local residents.

Accordingly, the department proposed the city’s government allow eateries to offer both dine-in and take-away services, except for businesses selling alcoholic drinks, to meet the demands of the local people as well as to pave the way for the recovery of the local economy and further the tourism sector.

Under the proposal, restaurants or eateries should operate at 50% capacity, follow Covid safety protocols and must close before 9 p.m. daily. They must also serve no more than two customers per table and ensure a physical distance of at least two meters between tables.

Further, customers using indoor dine-in services have to be fully vaccinated.

Construction delays prompt public financing shake-up

While almost $1 billion of the yearly public investment allocation is requested to return to the state budget, thousands of developers are aiming to meet their deadlines and ensure the highest possible quality, expecting to enhance public investment performance of the country.

At the end of September, the Ministry of Planning and Investment (MPI) received requests from 15 ministries and agencies and 23 localities to refund $946.6 million in 2021’s central budget, while six localities asked to receive an additional $71.5 million of total public investment.

A week later, nine ministries and agencies, including the Ministry of Industry and Trade and the Ministry of Natural Resources and Environment, asked to refund public investment due to the poor performance of projects.

“More than $350 million has already been requested, making up 44 per cent of total capital plan assigned by the prime minister,” said Truong Hung Long, director general of the Ministry of Finance’s Department of Debt Management and External Finance.

Explaining the reason for the refunds, Le Truong Giang, representative of the Vietnam Academy of Science and Technology said, “Social distancing rules over past months halted all construction projects and a lot of administrative procedures.” The academy has also submitted documents to refund 89 per cent of its $94-million capital plan of the year.

Director of Ho Chi Minh City Department of Finance, Pham Thi Hong Ha, said that the health crisis paused socioeconomic and construction activities for three months in the southern region. Moreover, most of these activities involved foreign factors like imported machines and devices, experts, and contractors, rendering the execution too complicated.

Most project managers complained that official development assistance (ODA) procedures and their management were also too complicated. The disbursement rate of ODA capital, as well as other foreign loans, of Ho Chi Minh City was just $70.5 million, equivalent to 12.45 per cent of the total allocated sum.

In the view of the Ministry of Agriculture and Rural Development, all projects under its management in localities with social distancing restrictions could not progress during the last few months. In addition, the prices of raw materials increased significantly – especially steel, which has become seven times more expensive compared to the time when contracts were signed.

Meanwhile, disbursement of public investment from foreign loans made up 45.5 per cent of total capital allocation of the year’s total of $123.7 million.

According to the MPI, total disbursement in the first nine months reached $9.5 billion, equivalent to 47.4 per cent of the yearly plan, much worse than the on-year 56.33 per cent rise in the same period last year. Of this, disbursement of local capital reached 51.71 per cent, and foreign capital 12.69 per cent.

As of September 30, only four ministries and 11 localities reported a disbursement performance of 60 per cent and more, while 45 ministries, agencies, and 52 localities disbursed less than 60 per cent of the yearly plan. The Ministry of Transport (MoT) was one of the few ministries disbursing 62.5 per cent of the yearly capital allocation, meeting the requirements of the government in Resolution No.63/NQ-CP from June on key tasks and solutions to boost economic growth. The ministry had accelerated transport projects across the country in the last quarter of the year.

Such projects include the North-South Expressway and two projects to improve runways at Tan Son Nhat and Noi Bai international airports, which are the best-performaning projects for the MoT in the first nine months. These projects will also be key factors for public investment disbursement in the sector in the remainder of the year.

“If the weather is not too hard on us in the last quarter, we will accomplish the public investment plan that the MoT assigned to the project,” said Nguyen Vu Quy, director of Ho Chi Minh City’s Road Project Management Unit.

Meanwhile, Hong Ha from Ho Chi Minh City Department of Finance said that the city’s people’s committee “will adjust public investment from projects that have had bad disbursement rates, and shift these funds to the better-performing ones that need more capital and may develop more quickly.”

Ministries and agencies are being urged to complete disbursement of public investment capital as allocated by the MPI or otherwise face penalties. However, due to the pandemic, many projects could not be implemented, leading to the return requests.

HCM City: 230,000 workers return to factories

More than 1,300 companies and factories in export processing zones (EPZs), industrial parks (IPs) and hi-tech parks (HTPs) in Ho Chi Minh City, or 92 percent of the total, have reopened so far, according to the HCM City Export Processing Zone and Industrial Park Authority (HEPZA).

Notably, all 85 enterprises at Saigon Hi-tech Park have resumed operation, the HEPZA announced on October 19.

More than 230,000 workers, about 70 percent of the total workforce in EPZd, IPs and HTPs, have returned to factories. The local factories have yet to reach their full capacity to ensure production to be resumed safely.

More workers are expected to return in the coming time as firms are gradually expanding operation.

The HEPZA said HCM City has 17 EPZs, IPs and HTPs which house nearly 1,500 factories with more than 320,000 workers. When social distancing order was put in place in the city from July 15 – September 30, over 820 factories had to suspend operation, affecting more than 244,000 workers./.

HSBC survey: Global expats show resilience and optimism for future

The 14th Expat Explorer study, a global survey of over 20,000 people who live and work abroad, indicates that almost two-thirds of expats feel optimistic about the year ahead despite the volatility of the past 18 months.

The key reason driving optimism is their hope to live “normally” again (75 per cent), but 6 in ten (61 per cent) are also feeling positive because of the quality of life they will be able to enjoy.

Expats in Taiwan are the most optimistic (85 per cent), closely followed by those in Australia, New Zealand, and Vietnam (all 83 per cent).

As the world has been in a state of flux during the pandemic, the study suggests that locations with stability ranked highly.

Nearly all expats based in Australia, Switzerland, and Jersey (in the Channel Islands) would recommend their location as a “stable” place to live in the next 12 months – Australia (92 per cent), Switzerland (92 per cent), Jersey (90 per cent).

Expats’ desire to live and work abroad has not been diminished by the pandemic – the majority plan to stay in their host location for the foreseeable future, with 80 per cent intending to continue living in their host country for the next year at least, and only 7 per cent planning to move.

Expats ranked Switzerland, Australia, and New Zealand as the top three places to live and work in 2021.
The findings suggest that expats are prioritising personal lifestyle choices rather than traditional relocation drivers such as career progression (34 per cent) or expanding professional network (31 per cent).

The survey shows that the top 5 goals that expats look forward to achieving in the next 12 months are getting to know the local area (50 per cent), travelling (47 per cent), understanding and exploring local culture (47 per cent), making new friends (45 per cent), and going out more (41 per cent)

Over two-thirds (67 per cent) of expats also believe their quality of life is better in their current location.

Globally, over two in five (46 per cent) of expats feel that their host communities have shifted to be more supportive during COVID-19. The number is even higher in Vietnam where 51 per cent of expats say the local community has become more supportive of each other since the start of the pandemic.

However, the study also highlights some of the challenges that expats have faced during the pandemic. Over half (63 per cent) have been stopped from travelling abroad for business, and the majority (90 per cent) were unable to see family or friends in their home countries. Yet it also points to the resilience of the global expat community, as two in five (42 per cent) say they were able to continue to manage their physical health.

“Despite the very real challenges that the entire world has faced with the COVID-19 pandemic, there is a growing sense of optimism that with the vaccine rollout picking up pace, we will all return to a more normal existence,” said Tim Evans, CEO of HSBC Vietnam.

“In Vietnam, this will mean a return to strong economic growth in a very vibrant and exciting country, where apart from the benefits of being in a fast-moving and vibrant economy, the country also offers a wide variety of geographies from mountains, jungles to beaches, wonderful food, and very hospitable people. As an expat living here in Vietnam, I would not want to be anywhere else at this exciting time for the country,” Evans noted.

Expats ranked Switzerland, Australia, and New Zealand as the top three places to live and work in 2021. Vietnam ranked the fifth location in the Asia-Pacific region, having climbed three places to the 19th position in the world.

Expat Explorer is a comprehensive and in-depth global survey of expats. The 2021 survey is HSBC’s broadest look at expat living to date, with expats from 46 countries and regions sharing their views.

HSBC is one of the largest foreign banks in Vietnam in terms of investment capital, product range, and customer base.

Hanoi tackles difficulties faced by foreign investors

The People’s Committee of the capital city held a dialogue with foreign-invested enterprises in the city on October 19 to seek measures to tackle difficulties faced by foreign firms amid the COVID-19 pandemic.

Speaking at the event, Secretary of the municipal Party Committee Dinh Tien Dung said Hanoi has so far basically controlled the pandemic and gradually returned to new normal. He appreciated the support and contribution of the foreign business community in the city to the pandemic fight. 

The official reiterated the city’s policy that considers the foreign-invested economic sector an important driving force for the city’s development, and stressed that the municipal authorities always respect and protect legitimate rights and interests of investors, and ensure harmony in interests among the State, investors and workers.

Participants at the event discussed issues regarding taxation, social insurance, licensing and extension of work permits for foreign experts and workers, regulations on entry-exit and pandemic prevention and control.

The city’s officials affirmed they will focus on helping foreign investors overcome the difficulties to maintain and restore production and business activities. The city’s administration has instructed the Taxation Department to extend the deadline for payment of added value, corporate and individual income taxes for over 31,000 taxpayers this year, with a value of nearly 22 trillion VND (956 million USD), reduce land lease by 30 percent for 650 taxpayers at a cost of nearly 250 billion VND.

 In the time ahead, the city will strongly renew its growth model, restructure its economy based on science-technology and innovation, develop digital infrastructure, intensify administrative reforms and improve planning quality to best serve businesses and people.

The city is home to 6,625 valid foreign projects worth nearly 48.7 billion USD. In 2018 and 2019 alone, it led the country in FDI attraction with 7.5 billion USD and 8.67 billion USD, respectively. Last year, it ranked third nationwide with 3.83 billion USD.

In the first nine months of this year, foreign investors poured 1.28 billion USD in the city. The FDI sector contributed about 10 percent of the city’s budget, 12.6 percent of development capital, 30 percent of jobs and 45 percent of foreign trade revenue./. 

Residential area per capita to reach 27sq.m by 2025

Vietnam’s residential area per capita is expected to reach about 27sq.m by 2025 and to surge to 30sq.m by 2030, according to the draft national housing development strategy.

The National Housing Development Strategy for the 2021-2030 period sets the goal of developing and repairing more than one billion sq.m of houses, equivalent to about 11.9 million apartments.

The housing development strategy is to create conditions for everyone to have a place to live and focus on improving the quality of housing, as well as implementing the trend of green and smart housing development.

In addition, the housing development must include urban development, urban embellishment and re-construction of old apartment buildings. The housing development in the post-COVID-19 period will be implemented according to targets on sustainable real estate market development.

At the same time, the strategy will have policies focusing on housing for workers and low-income residents in urban areas, said Deputy Minister of Construction Nguyen Van Sinh.

The Ministry of Construction is collecting comments on the draft strategy. The ministry is expected to submit the draft to the Prime Minister for consideration in the fourth quarter of 2021.

The draft of the national housing strategy aims to establish the orientation of national housing development activities and local housing development programmes, he said.

The strategy also aims to increase rental housing products and promote the development of commercial housing with medium areas and reasonable prices, meeting the needs of people. The renovation and reconstruction of old apartment buildings in urban areas will also be promoted.

The strategy focuses on renewing specific policies for each kind of housing and the target group of social housing policies including workers and low-income people in urban areas, and officers and soldiers of the people’s armed forces.

Regulations on housing management and development are also amended according to housing development master plans, strategies and programmes.

Deputy Minister Sinh affirmed that building the national housing development strategy is one of the important tasks of the construction sector in implementing the 10-year socio-economic development strategy for 2021-2030, especially targets on social housing and policies on ensuring housing security./.

Enterprises urged to strictly follow standards of imported markets: SPS Vietnam

The Vietnam Sanitary and Phytosanitary Notification Authority and Enquiry Point (SPS Vietnam) has advised enterprises to strictly comply with the rules of import markets, in order to prevent their products from being recalled and their reputations from being affected.

SPS Vietnam said the Ministry of Agriculture and Rural Development has received two dispatches from the Ministry of Industry and Trade (MOIT) which said shipments to the European Union were found to contain excess levels of agrochemicals. Specifically, importer Vinamex Group found tricyclazone residue at a level higher than the permitted level of the EU in a batch of Queen’s brand ST12 premium fragrant rice exported to Belgium. Vinamex Group has posted a recall notice and asked customers not to consume this batch of products and return it for a refund.

According to SPS Vietnam, tricyclazone is an active ingredient widely used as a pesticide in the rice industry.

The EU allowed the maximum level of tricyclazole residues in imported rice to be 0.01 mg per kg since January 2018. 

Besides, some shipments of agricultural and aquatic products to the Netherland, Italy and Spain were also found to contain residue of chemicals.  

Earlier, Norwegian and French health authorities detected nitrofurans (furazolidone) in a batch of frozen frog legs and propargite and fenobucarb in a shipment of pomelos imported from Vietnam through the rapid alert system for food and feed (RASFF).

According to the MOIT, relevant authorities at EU border gates have been notified and will enhance quarantine measures for imported goods from Vietnam./.

Nearly 14,000 labourers in Tra Vinh return to work

Nearly 14,000 workers of 15 enterprises in Long Duc industrial park in the Mekong Delta province of Tra Vinh have returned to work, according to the province’s Economic Zone Management Board.

The figure represents about 80 percent of the total number of workers at the Long Duc IP.

Local businesses have resumed operations in the new normal while COVID-19 preventive measures are in place, said Tran Vien Phuong, deputy head of the management board.

Before coming to work, labourers must test for COVID-19 within 72 hours.

Local authorities and businesses are working to fully vaccinate all workers to ensure safety and favourable working conditions./.

Associations join hands to boost sale of Vietnamese products abroad

The Vietnam-Korea Business and Investment Association (VKBIA) and the Vietnam Business Association in the United Kingdom (VBUK) on October 18 signed virtually a memorandum of understanding (MoU) on comprehensive cooperation with the aim of stepping up coordination in promoting, attracting investment in and supporting the sale of Vietnamese products abroad.

The signing of the MoU offered a chance for foreign businesses operating in Vietnam, the Republic of Korea (RoK) and the UK to meet, exchange experience and boost cooperation in multifaceted aspects.

VKBIA Chairman Tran Hai Linh said that on the basis of the Vietnam-RoK Free Trade Agreement which became effective in 2015, the two countries are striving to raise their two-way trade to 100 billion USD, promote trade balance by intensifying the RoK’s import of Vietnam’s strong products; and encouraging Korean enterprises to invest in Vietnam to create opportunities for the Southeast Asian nation’s firms to participate in global production and supply chains.

Meanwhile, VBUK Chairman Hoang Viet Phuong stated that the bilateral trade between Vietnam and the UK has seen a tenfold rise, from 600-700 million USD in 2007 to 6.5 billion USD currently. During 15 years of operation, VBUK has succeeded in connecting the two business communities, and supported many enterprises in the UK and Europe to cooperate with domestic partners.

The VBUK Executive Board in the 2021 – 2026 term aims to continue expanding and developing connectivity between the Vietnamese business community in the UK and Vietnamese businesses abroad and at home to promote trade among Vietnamese businesses around the world, he added.

Kim Seok-pil, VKBIA Vice Chairman and former General Director and CEO of Samsung Group in Europe, said that VKBIA will help promote cooperation between Vietnamese and Korean partners and those in other countries.

VKBIA Vice Chairman Simon Jeong expressed his belief that his association and the VBUK will carry out more substantive cooperation activities, thus supporting Vietnamese businesses and localities in collaborating with relevant partners of Vietnam, the RoK, the UK and other nations, boost connections between Korean, British and Vietnamese entrepreneurs and enterprises to enhance socio-economic development in each country and promote relations between them./.

Steel exports set to enjoy robust growth in remaining months

The consumption demand and steel exports ahead in the remaining months of the year are anticipated to see robust growth thanks to numerous positive outcomes achieved during the first nine months of the year, according to a forecast made by the Vietnam Steel Association (VSA).

This comes as finished steel production during the nine-month period reached over 24.8 million tonnes, marking a rise of 34.1% against the same period from last year, while steel consumption of all kinds surged by 32.5% to approximately 22 million tonnes. Of the figure, steel exports of all types surged by 78.1% on-year to reach more than 5.7 million tonnes.

Finished steel production during the third quarter of the year also reached roughly 7.16 million tonnes, up 4%, while the consumption of finished steel products of all kinds hit over 6.2 million tonnes, representing a drop of 7% due to the adverse impacts caused by the COVID-19 pandemic.  

Despite this decline, robust export growth seen during the initial months of the year has helped the steel industry maintain a steady increase in recent times.

In line with this, the nation exported 10.6 million tonnes of finished and semi-finished steel products worth over US$9 billion to over 20 countries globally during the eight-month period, an increase of 40% in volume and a two-fold increase in value compared to the same period from last year.

A representative of the VSA revealed that there are bright prospects ahead for the Vietnamese steel market in the fourth quarter of the year due to the pandemic being brought under control, with steel exports being projected to enjoy strong growth this year.

Furthermore, the signing of numerous free trade agreements (FTAs) couple with the recovery of production and construction investment are set to be key factors in helping the local steel industry rebound in the year-end period.

According to the forecast set out by the World Steel Association, global steel demand will continue to recover next year due to high stockpiles of orders, along with the deployment of vaccination in numerous countries worldwide.

RoK and UK business associations support consumption of Vietnamese goods abroad

The Vietnam-Korea Business & Investment Association (VKBIA) and the Vietnam Business Association in the UK (VBUK) have signed a comprehensive co-operation agreement for a joint scheme to boost investment, business co-operation, and support for the consumption of local goods abroad.

The signing ceremony was held  virtually on October 18 in order to clearly demonstrate the companionship of overseas Vietnamese entrepreneurs and intellectuals towards the nation, whilst also celebrating the 17th anniversary of Vietnamese Entrepreneurs’ Day on October 13.

This therefore represents an opportunity for foreign entrepreneurs and businesses who are co-operating, investing, and doing business in the nation, the Republic of Korea and the UK to exchange their experience and promote business co-operation across a variety of fields.

Tran Hai Linh, member of the Central Committee of the Vietnam Fatherland Front, and VKBIA shared, “It has been 29 years since the establishment of diplomatic relations. In 1992, the relationship between Vietnam and the Republic of Korea has seen strong developments in multiple fields such as politics, national defence, security, economy, science and technology, culture, tourism and, people-to-people exchange.

Regarding economic co-operation, on the basis of the Vietnam-Korea Free Trade Agreement (VKFTA), which took effect in 2015, the two sides need to further expand trade and investment activities, striving to increase trade turnover to US$100 billion,” Linh stated.

Along with boosting trade balance through the RoK’s increased import of key local products, the nation desires for the RoK to continue encouraging their businesses to invest in the Southeast Asian nation, thereby creating opportunities for Vietnamese enterprises to engage in the global production and supply chain.

According to Hoang Viet Phuong, chairman of the VBUK, bilateral trade between country and the UK has surged by approximately 10 times, from between US$600 million and US$700 million in 2007 to US$6.5 billion at present.

During 15 years of operation, the VBUK has succeeded in connecting the business community in the country  with that of the UK, whilst simultaneously supporting many businesses in both the UK and Europe to associate and enter into joint ventures alongside other domestic businesses.

The VBUK Executive Board for the 2021 to 2026 term has set a target of expanding and developing the connection between the local business community in the UK and Vietnamese businesses both at home and abroad. This is being done to promote trade between the Vietnamese business community around the world and develop the community moving forward.

 Speaking at the signing ceremony, Kim Seok-pil, vice president of the VKBIA Association and former General Director – CEO of Samsung Group in Europe, said that VKBIA will co-ordinate efforts to ramp up co-operation between Vietnamese and Korean partners, as well as those in other nations.

The two sides will also strive to redouble efforts to boost all-around activites in seeking multilateral co-operation opportunities in Vietnam, the RoK, and the UK. This will be done through connecting networks of overseas businesses and entrepreneurs, agencies, and organisations of numerous countries, whilst increasing the use of partner networks in accessing different markets with specific objectives, he said.

Simon Jeong, vice chairman of the VKBIA Association, expressed his belief that in the near future, VKBIA and VBUK will launch a range of practical activities as a means of supporting Vietnamese businesses and localities. These efforts will help them to boost trade exchanges with agencies and relevant partners of the three nations and other countries.

Japanese retailers are committed to the huge potential of the Vietnamese market

Following the reopening, more Japanese retailers are stepping up operations in Vietnam, betting on the huge potential consumption demand of local customers.

Sakuko Japanese Store, a Japanese supermarket chain, is still committed to the Vietnamese market after 10 years of operation. The retailer operates 33 stores in Hanoi and many other localities, selling mother and baby, cosmetics, food, healthcare, fashion, stationery, as well as home and life products.

Most recently, Sakuko Vietnam Retail Co., Ltd., the operator of the Japanese supermarket chain, has announced its plan to increase the number of its outlets to 60 stores in Vietnam by 2025. Under its plan, Sakuko Vietnam will expand its chain in the densely populated areas of Hanoi and other northern localities, targeting middle-class consumers. The retailer also plans to venture into the southern region in the next five years.

Cao Thi Dung, CEO of Sakuko Vietnam Retail Co., Ltd. said that Vietnam is an extremely promising market for Japanese retailers. In particular, Japanese goods are trusted by Vietnamese customers due to their high quality. Growing bilateral trade between the two countries also facilitate Japanese manufacturers and importers to access the local market. Thus, Japanese retailers can gain more advantage to diversify their sources of goods to meet all needs of Vietnamese consumers.

Sakuko Vietnam continues to expand its footprint in the midst of the global health crisis to satisfy the needs of customers who are looking for Japanese products with clear origin, prestige, and quality. At the same time, the Japanese retailers aims to accompany customers with tight-spending budgets during the crisis.

Dung shared that the company also faces some challenges in expanding operations amid the pandemic. In particular, the company incurred higher operation expenses, logistics costs, and human resources challenges due to social distancing. However, with 10 years of experience in retail, Sakuko has made efforts to overcome the challenges to ensure business and ensure logistics continuity.

“We accept higher expenses to keep good track of product supply so that our stores can provide continuous services to customers. We also try to diversify categories and restructure product portfolios to meet the evolving demand of customers during the pandemic. This, coupled with increasing omnichannel presence and customer care services, brings convenience to customers even in the context of the pandemic,” Dung added.

Like Sakuko, many other Japanese retailers are also looking for opportunities in Vietnam in the long run. They continue investing to expand the market share when the country is easing social distancing regulations.

UNIQLO, the Japanese global apparel retailer, will open the ninth store in Vietnam by the end of October. Located at AEON Mall Hadong, UNIQLO’s latest store covers an area of 1,000 square metres. Meanwhile, TOKYU is planning to open a new shopping center in New City in Binh Duong in 2023 and AEON will be one of the core tenants. In July, Japanese chain retailer Muji opened its first store in Hanoi after opening one in Ho Chi Minh City last November.

Hirai Shinji, chief representative of the Japan Trade Promotion Organization (JETRO) in Ho Chi Minh City, said, “Among ASEAN countries, Japanese retailers previously chose Singapore, Malaysia, Thailand, or Indonesia for their business expansion. Vietnam, the third-largest among ASEAN countries in terms of population, was regarded as a potentially attractive market, but it is only recently that most Japanese retailers decided to open their shops in Vietnam as the GDP per capita of Vietnam is close to $3,000.”

The economic ties between Japan and Vietnam is expected to be upgraded accordingly as the economy of Vietnam develops. Previously Vietnam might be looked upon as a site for production. In particular Japanese companies, entitled as an export processing enterprise, import parts, and materials from Japan, and export final product back to Japan. In this case, knowledge on local Vietnamese market does not matter so much.

“But recently, as the economy of Vietnam develops, the size of the local consumption market is attractive. The GDP of Vietnam is comparable with the size of a major prefecture of Japan. But if the GDP increases at an annual rate of 7 per cent, then 10 years later, the size will be twice. It is very promising, so not only manufacturing but also non-manufacturing companies in the retail and service sectors come to Vietnam year by year,” he added.

Improving product quality and design – key for Vietnamese fruit to enter foreign markets

Local businesses have been advised to continue investing in fruit growing areas whilst improving product quality and design in order to meet stringent standards set by European and other foreign markets to make further inroads in these demanding markets, according to industry insiders.

Despite Vietnamese fruit having a presence in several fastidious markets, such as the EU, the United States, and Japan, the import proportion of fruit products from the nation only accounts for 1%.

Duong Hoang Minh, Vietnamese Trade Counselor in Russia, revealed that since the enforcement of the Free Trade Agreement between the country and the Eurasian Economic Union (EEU) in 2016, Vietnamese export turnover of  fruit products to Russia have significantly increased. However, the overall market share of the product in the Russian market remains modest.

Vo Thi Ngoc Diep, Vietnamese Trade Counselor in the Netherlands, stated that local fresh fruit has successfully penetrated the Dutch market with limited quantities over recent years.

She underlined the necessity of investing in fruit growing areas, whilst also meeting strict European standards and regulations for fresh fruit in terms of post-harvest preservation treatment technology and packaging techniques as well as ensuring stable supply sources to penetrate both the Dutch and European markets.

In Australia, several Vietnamese fruits, such as mangoes, lychees, longans, and Vietnamese dragon fruit are highly appreciated and favoured by foreign consumers.

Nguyen Phu Hoa, deputy consul general in Sydney cum head of the Vietnamese Trade Office in Australia, have recommended local firms to improve product quality, design, and packages as a means of expanding fruit exports to the demanding market.

Aside from maintaining stable quality and preservation technology, industry insiders emphasized the importance of strengthening marketing activities regarding products and gradually changing consumer tastes and habits in host countries.

Recent years has seen the Vietnam Trade Promotion Agency (Vietrade) and trade offices abroad be effective in introducing Vietnamese lychees to demanding markets such as the Netherlands, France, Germany, Japan, and the Czech Republic.

As part of a strategy to build Vietnamese brands in the Australian market, the Vietnam Trade Office in Australia has also advised local businesses to elevate the image of the country as a green and beautiful nation imbued with cultural identities through designing relevant packages and improving product quality to meet the most stringent standards set by the market.

The Vietnam Trade Office in Australia recently stepped up advertising strategies for a number of Vietnamese farm produce such as rice, cashew nuts, and durian through creating unique slogans aimed at developing brands and affirming their position in the fastidious market.

Turkey’s Hayat Group unveils second phase of US$250 million factory in Binh Phuoc

Hayat Group of Turkey’s has officially announced the second phase of an investment package worth US$250 million in a Vietnamese factory, to expand distribution of fast-moving consumer goods (FMCG) products both nationwide and across the region.

The Turkish group announced late last year that it is to inject US$250 million to develop a factory in Becamex-Binh Phuoc industrial and urban complex.

During an online press conference held on October 19, Cetin Murat, general director of Hayat Vietnam, said the group has now completed the first phase of the project, by setting up Hayat Vietnam Company with an investment capital of US$100 million that can generate more than 500 jobs.

Murat expressed his hope that the project will receive further support from southern Binh Phuoc province to expand the site in the second phase, in which Hayat is set to launch the world’s fifth largest baby diaper brand named Molfix in the Vietnamese market.

The Hayat factory in Vietnam is set to provide FMCG products to other potential markets throughout ASEAN, such as Cambodia, the Philippines, Laos, and Indonesia. Indeed, the total export value of Hayat Vietnam is estimated to be US$50 million per year.

According to Hayat, the Vietnamese factory is anticipated to take on the role of a production hub for Southeast Asia, with approximately 40% of its output being exported to overseas markets such as Thailand and Malaysia.

“Exhausted” businesses out of reach of support

While businesses are struggling with cash shortages, the drop in interest rates and loosened borrowing conditions may yet save them and enable a quick resumption of production.

Although Ho Chi Minh City and other cities and provinces nationwide have relaxed lockdown rules for over a week, numerous businesses have decided not to resume operations at all.

Do Van Thanh, owner of a mechanical factory in the city’s Go Vap district, told VIR that the financial struggles are simply too deep to try again.

“After halting operations for such a long time, small- and medium-sized enterprises (SMEs) like us are exhausted. Without generating any revenues, we have spent around $300,000-500,000 for employee salaries, loan interest, and rent,” Thanh explained, adding that he does not have enough money to re-invest and produce in addition to the many burdens surrounding materials, partners, transport, and COVID-19 tests. “So, I intend to halt all activities and submit dissolution procedures. Without favourable policies and support, doing business amid COVID-19 is too risky.”

Thanh’s case is not the only one, as thousands of businesses across the country are struggling to restart operations. In the first nine months of the year, over 90,000 businesses left the market or were waiting for their dissolution procedures, an increase of 15.3 per cent on-year, according to the Ministry of Planning and Investment (MPI).

In September, the number of both newly-registered businesses and registered capital dropped significantly on-year. Only about 3,900 businesses were registered, down 62.2 per cent on-year, and 32.3 per cent on-month, the smallest number of new registrations in a decade. The average newly-registered capital was $2.7 million, a decrease of 69.3 per cent on-year, and 8.1 per cent on-month, which is also the lowest in the first nine months since 2016.

According to a survey from the Private Economic Development Research Department under the prime minister’s Administrative Procedure Reform Advisory Council, 69 per cent of 21,500 surveyed enterprises confirmed to cease their operation amid the pandemic, and only 16 per cent of them have remained operational under full capacity. These firms desire preferential loans, vaccines for labourers, and assurance of goods circulation to generate revenues and working capital for production and investment.

At the early-October’s meeting of the National Assembly Standing Committee, National Assembly Chairman Vuong Dinh Hue asked the State Bank of Vietnam and the Ministry of Finance to propose a bailout of direct interest rates financed by the state budget for businesses that are struggling, with value of around $87-174 million, together with a credit bailout of $2.6-4.35 million.

In a recent letter sent to the prime minister, Do Xuan Lap, chairman of the Vietnam Timber and Forest Products Association, said that although commercial banks announced to lower the annual interest rate by 0.3-1.5 per cent, along with other credit packages, this would be unremarkable compared to the losses they are suffering.

To Hoai Nam, vice chairman of the Vietnam Association of Small and Medium Enterprises said that a huge number of businesses are too exhausted to maintain operations. If the state can reach the credit bailout with an affordable interest rate, they can easily mobilise some money. “This should be built in combination with loosened borrowing conditions for businesses,” proposed Nam.

Another challenge comes from the scale of enterprises, 97 per cent of which are SMEs with modest financial capacity, and few assets to offer as guarantee. Nam said that within the regulations, businesses can access capital in the form of unsecured loans. However, in fact, banks are very reluctant to lend to them.

Can Van Luc, a member of the National Fiscal and Monetary Policy Advisory Council, said that supporting interest rates with the state budget and other borrowing conditions need the support of relevant ministries and agencies.

While SMEs are facing many difficulties and are exhausted without any promising projects, it remains risky for banks to provide loans to them. According to the Law on Credit Institutions, banks are not allowed to lend money to loss-making enterprises, and the Law on Public Debt Management stipulates that the government cannot guarantee enterprise loans.

“How can SMEs borrow money from banks? We should revive credit guarantee funds to support SMEs,” Luc said. “There are 28 funds in the country, but their performance is sub-optimal. They should be ready to guarantee SMEs like in other countries. This would help SMEs access capital, in addition to other solutions of the government.”

HCMC approves aid package for students in first semester

The People’s Council of HCMC this morning, October 19, approved a draft resolution on financial aid for students in the city in the first semester of the 2021-2022 school year, aimed at helping the students pay their tuition fees amid the negative impacts of the Covid-19 pandemic.

The beneficiaries include students of public and private kindergartens and high schools, and continuing education institutions in the city. Students of foreign-invested schools are not entitled to this support policy.

The students will be divided into two groups, with the first comprising students in Thu Duc City and districts 1, 3, 4, 5, 6, 7, 8, 10, 11, 12, Binh Thanh, Phu Nhuan, Go Vap, Tan Binh, Tan Phu and Binh Tan, and the second comprising students from the outlying districts of Binh Chanh, Hoc Mon, Cu Chi, Nha Be and Can Gio.

Kindergarten children will receive VND160,000-200,000 per month each if they are in group 1 and VND100,000-120,000 per month each if they are in group 2.

Students of junior high schools in group 1 will receive VND60,000 per month each, while those in group 2 will receive VND30,000 per month each.

Students of senior high schools in group 1 will receive VND120,000 per month each, while those in group 2 will receive VND100,000 per month each.

Students of continuing education institutions will receive VND60,000-120,000 per month each if they are in group 1 and VND30,000-100,000 per month each if they are in group 2.

Primary school students are not entitled to the new aid policy because they have already been exempt from first-semester tuition fees.

Funding for the policy, estimated at VND427 billion (US$18.9 million), comes from the city’s budget. It is expected to benefit over 1.4 million students of public schools and over 241,000 students of private schools in the city.

Besides students facing financial hardships, as of mid-September, some 1,500 students in HCMC had been orphaned by Covid-19.

Each orphaned child who is younger than four years of age will receive VND900,000 per month, while orphaned children that are four or older will receive VND540,000 per month each.

They are also entitled to a tuition fee reduction until 16 and other social incentives until 22.

The Ministry of Labor, Invalids and Social Affairs earlier decided to give an allowance of VND1 million to each child born between April 27 and December 31 whose mother had Covid-19. Children orphaned by Covid-19 would receive VND2 million each.

The funding comes from the National Fund for Vietnamese Children.

Vietnam eyes building blue economy partnership group

The Vietnam Administration of Sea and Islands (VASI) at the Ministry of Natural Resources and Environment and the World Bank on October 19 jointly held a virtual consultation workshop on the building of a Blue Economy partnership group.

At the event, VASI Deputy Director General Nguyen Que Lam said the proposal to build a partnership group on blue economy aims to mobilise the participation of stakeholders for the efficient management and sustainable development of Vietnam’s maritime economy.

Participants discussed and share information on programmes and projects related to the field.

According to the World Bank, the Blue Economy refers to the sustainable and integrated development of economic sectors for healthy oceans and seas. Nguyen Thi Tho, an expert at the VASI, said that the blue economy model aims to improve welfare and social fairness, as well as mitigate risks in environment and scarcity.

The annual Vietnam Blue Economy Forum is among major activities of the country’s seas and islands week. The forum helps the community understand the potential and challenges in the realisation of maritime economy development targets.

Vietnam’s property market at a glance in the aftermath of Evergrande 
 
In the aftermath of Evergrande’s debt bombshell, real estate enterprises with a healthy balance sheet combined with a strong land bank will have a good opportunity to develop and dominate the market.

Media outlets for many days have continuously covered the “debt bombshell” at Evergrande imminent to go off. The world’s most indebted real estate group is saddled with more than US$305 billion in debt and has warned repeatedly that it could default. Currently, Evergrande’s stock and bond prices are crashing, declining 90% from their peak in 2020. Shareholders and 70,000 investors have almost lost everything as the Chinese government is likely to let Evergrande handle it on its own under the market mechanism.

According to CNBC, real estate companies under financial stress in China are also in danger of collapse following Evergrande. The international press also lists a series of other large enterprises that will be in the spotlight of the market with credit stress after sales of house and debt credit decline. The cooling of the housing market would expose the Chinese economy to serious risks, as the real estate industry makes up nearly 30% of China’s GDP and is one of the industries that consume the most materials and use the most labor.

From the “debt bomb” Evergrande, many people have recently started to look at the Vietnamese real estate market. Data from the Vietnam Bond Market Association (VBMA) shows that, in the first eight months of the year, real estate companies mobilized the second most bonds with a total issuance value of VND107.98 trillion. Notably, about 21.6% of bonds issued by real estate enterprises are unsecured or mortgaged by shares.

In a document sent to the State Bank of Vietnam at the end of August, the Ho Chi Minh City Real Estate Association (HoREA) acknowledged that, at present, the lack of cash flow is the greatest and most worrisome difficulty for businesses in the industry. Many units no longer have money to pay interest and debts, nor have cash to maintain business and support and retain employees.

The warning bells from Evergrande and the “mountain of debt” are weighing heavily on many businesses, prompting market observers to agree with a view that Vietnam’s real estate industry is likely to be markedly polarized. Those enterprises with extremely high financial leverage, and capital from China, including Hong Kong, and having many Chinese customers will be more difficult. On the contrary, the enterprises with harmonious and balanced outstanding loans, combined with a strong land bank and seizing opportunities for extensive digital transformation will have good development opportunities.

In a short time, the market will cannon more attention onto companies with less debt and lots of land fund. Among them, there are notable names such as Khang Dien, Nam Long, and CT Group among others.

Khang Dien currently has a total debt of VND2,590 billion, or only 0.3 times its equity. This enterprise has almost no pressure to pay debts in its development plan, and has a land bank of 614 hectares available for tapping between now and 2025.

Nam Long, bearing VND2,795 billion of debt, or only 0.29 times of its equity, plans to spend VND2,000 billion to expand the land bank in 2021, serving the strategy of becoming a developer of a complex urban area.

Meanwhile, CT Land (a member of CT Group), owning a land bank of over 1,000 hectares in the city,  develops many products with high absorption rates. Recently, this enterprise also announced the search results from the Credit Information Center (CIC) of the State Bank of Vietnam, which shows CT Land has not had outstanding loans in the past 5 years and is still capable of completing many projects. This is also one of the rare enterprises operating in the real estate industry that has not had outstanding loans in the past 5 years.

In a report on the market outlook at the end of this year, a representative of Savills Vietnam said that the Ho Chi Minh City market still has advantages in terms of demographic background and scarcity of supply. Therefore, the positive point is that the demand for residential real estate is still quite well recorded. According to experts, owners and individual investors are taking advantage of this time to prepare business plans after the market is reopened. When the market gradually gains sufficient momentum and learns from the Evergrande event, products from the enterprises with harmonious and balanced outstanding loans and a strong land bank will have better resilience.

Cashew imports fall in Sept

Vietnam imported 206,810 tons of raw cashew worth US$271 million in September, down 10.3% in volume and 7.1% in value month-on-month.

Statistics from the General Department of Vietnam Customs indicated that the import of cashew from the Ivory Coast last month amounted to more than 100,000 tons valued at some US$127 million, accounting for 48.5% in volume and 47% in value of the country’s total cashew imports.

Meanwhile, the country imported a mere 8,920 tons of cashews worth US$14.5 million from Cambodia, down sharply against the previous month. In April alone, Vietnam bought some 420,000 tons of cashew from Cambodia.

However, between January and September, Cambodia remained Vietnam’s largest cashew supplier, with a volume of over 1.1 million tons worth US$1.84 billion, while the Ivory Coast exported 519,464 tons worth US$669 million to Vietnam.

On the cashew export side, as the global demand for cashew remains high, Vietnam’s cashew exports will rise after the country brings the pandemic under control, said Ta Quang Huyen, vice chairman of the Vietnam Cashew Association. The association forecast Vietnam’s revenue from cashew exports in 2021 would increase by 10% against 2020.

HCMC proposes to remove obstacles for key projects

Ho Chi Minh City proposed the Ministry of Finance support the acceleration of a new additional loan from the European Investment Bank (EIB) for the construction project of the 11-kilometer-long Ben Thanh – Tham Luong Metro Line.

In addition, the city also suggested pushing up the fourth loan package from Japan International Cooperation Agency (JICA) for the Ben Thanh – Suoi Tien Metro Line, to speed up the negotiation processes to soon reach an agreement of additional loan approval for the water environment improvement project in the city, the basin of Tau Hu-Ben Nghe-Doi-Te canal in the second phase.

The HCMC is running eight projects, including six projects of group A which comprises four projects with a total investment of over VND10,000 billion (US$442 million) and two projects of group B having a total investment of VND121,214 billion (US$5.4 billion). Regarding the project progress, the Ben Thanh – Suoi Tien Metro Line and the Ben Thanh – Tham Luong Metro Line reached 86 percent and 3.8 percent, respectively.

The Municipal People’s Committee proposed the Ministry of Planning and Investment to soon give guidance for the city to solve some difficulties and obstacles on applying the law on public investment on projects using ODA and preferential loans.

Securities companies buying out bank bonds

The market did not witness a mobilization race between banks this year, although capital mobilization increased slowly. The main reason is due to redirection of capital mobilization through bonds, as most bonds issued by commercial banks were purchased in full by securities companies.

Capital mobilization of the banking system until 25 August only grew by 4.44% compared to the end of 2020, while credit in the economy grew by 7.06%. There were low deposits, and high loans, but unlike before, commercial banks are not in a hurry to increase input interest rates to attract capital, but even reduce interest rates slightly.

In a recent report, Bao Viet Securities Joint Stock Company (BVSC) said that by the end of September, deposit interest rates continued to maintain the downward trend from previous months. In this, the average deposit interest rates in September decreased for a six-month term from 0.03% to 4.71%, and for a twelve-month term from 0.002% to 5.561%.

On the surface, low capital mobilization is explained as meeting reduced interest rates of the State Bank of Vietnam. Moreover, the current credit growth rate is still very slow due to the negative impact of the Covid-19 pandemic on production and business activities, causing a decrease in the demand for loans by enterprises. The credit growth of the economy reached 7.42%, although significantly higher than 5.48% in the same period last year, but if calculated from 25 August to now, credit only increased by 0.32%.

When businesses reopen for production again, the State Bank of Vietnam says it may consider increasing the credit limit for commercial banks, so as to stimulate the economy. It can be confirmed that liquidity in the current system is quite abundant through inter-bank interest rates that have remained at a low level. Recent evidence shows that the State Bank of Vietnam offered bids on the open market, but no banks actual bid. However, the main factor that banks are still confident about is the huge amount of money continuing to flow into banks through issue of bonds.

According to the Vietnam Bond Market Association (VBMA), based on data published until 30 September 2021, by the Hanoi Stock Exchange (HNX) and the State Securities Commission (SSC), there were a total of 42 bond issuances in September in the form of private placement with a total issuance value of VND 29,734 bn.

In this, the banking group led in terms of issuance volume, accounting for 47% of the total issuance value, with VND 13,860 bn. Banks with large issuance volume include BIDV with VND 3,240 bn, OCB with VND 2,000 bn, and Vietinbank with VND 2,050 bn. In the first nine months of the year, commercial banks took the lead with a total issuance value of VND 132,300 bn. Previously, in 2020, the banking group issued bonds worth VND 138,916 bn, up 11.2% compared to 2019, accounting for 31.7% of the total volume of corporate bonds issued, and the largest issuers in the market.

Commercial banks actively issuing bonds can be considered as throwing arrows to hit at many targets. First, the State Bank of Vietnam allows maintaining the ratio of using short-term capital for medium and long-term loans at 40% until the end of September 2021. From 1 October 2021 until 30 September 2022, this rate will decrease to 37%. From 1 October 2022, to 30 September 2023, it will be 34% and from 1 October 2023 it will be 30%. Thus, issuing bonds will help banks to meet this requirement soon, and increase long-term capital for lending in the context of the Covid pandemic, as it is difficult to mobilize capital from the people.

Second, some banks promote this channel to increase medium and long-term capital and also increase Tier 2 capital. For example, in September, there were VND 6,210 bn worth bonds issued to increase Tier 2 capital of BIDV, Vietinbank, VIB, and MB. Accumulation of last nine months shows that the banking group has issued VND 31,700 bn of bonds for the purpose of raising Tier 2 capital, accounting for 24% of the total issued value of this group.

The bond issuance report of banks shows that most of the issued bonds are bought by securities companies and domestic banks. There is an opinion that the securities companies prefer the bank bonds to diversify their investment portfolio. However, according to Dr. Nguyen Tri Hieu, a financial expert at banks and securities companies, buying a lot of bonds is not for the portfolio but for inventory to sell to individual investors. The explanation given by Dr. Hieu, is that only professional investors are entitled to buy corporate bonds as per Decree 153/2020/ND-CP of the Government.

Nonetheless, the problem of circumventing the law for individual investors to become professional investors is very easy. According to regulations, an individual holding listed securities is a professional securities investor, registered for trading with a value of at least VND 2 bn as certified by a securities company. In order to obtain this, securities companies can lend to investors in the form repurchase agreements. As the law does not stipulate how long an individual investor may be a professional investor, the loan-repayment can be done in a very short time. Accordingly, securities companies that have direct contact with the bank will be effective bond distribution channels for this group for the bank to attract capital.

Normally, bank bonds have a high level of safety, so it is natural that investors are interested in buying bonds, instead of just pouring money into stocks. However, before the phenomenon of banks buying bonds from each other, there are also many warnings. Speaking to Saigon Investment, an economic expert said that the fact that one bank buys bonds from another bank can be considered a form of increasing technical capital through bond cross-investment. The bank buying bonds will have a diversified investment portfolio, but if buying long-term bonds over five years in form of convertible bonds or secondary debt, the issuing bank will be counted in Tier 2 capital.

In fact, they are not allowed to do so, because long-term capital must be real. As for the issue of this bank, the acquisition of another bank can be a form of exchanging with each other the same amount of money, through buying and selling around, which can increase virtual Tier 2 capital. This particular economic expert also believes that the State Bank of Vietnam should further examine this issue. If it happens, it is necessary to take strong measures, because the increase of technical capital is not beneficial to the economy. The numbers are shown on the books, but the actual cash flow has not changed much.

Vietnam eyes building blue economy partnership group

The Vietnam Administration of Sea and Islands (VASI) at the Ministry of Natural Resources and Environment and the World Bank on October 19 jointly held a virtual consultation workshop on the building of a Blue Economy partnership group.

At the event, VASI Deputy Director General Nguyen Que Lam said the proposal to build a partnership group on blue economy aims to mobilise the participation of stakeholders for the efficient management and sustainable development of Vietnam’s maritime economy.

Participants discussed and share information on programmes and projects related to the field.

According to the World Bank, the Blue Economy refers to the sustainable and integrated development of economic sectors for healthy oceans and seas. Nguyen Thi Tho, an expert at the VASI, said that the blue economy model aims to improve welfare and social fairness, as well as mitigate risks in environment and scarcity.

The annual Vietnam Blue Economy Forum is among major activities of the country’s seas and islands week. The forum helps the community understand the potential and challenges in the realisation of maritime economy development targets.

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

Source: https://vietnamnet.vn/en/business/vietnam-business-news-october-21-784564.html

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Magnetic strip ATM cards to remain valid next year

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A customer uses a chip card for payment at a point-of-sale (POS). VNA/ Photo

HÀ NỘI — The State Bank of Vietnam (SBV) this week issued a dispatch, noting that domestic automated teller machine (ATM) cards with magnetic strips will remain valid for normal use after December 31, 2021.

The dispatch was issued after some banks have recently started sending notices to their customers about stopping supporting cards from ATMs to meet the deadline of the SBV’s Circular 19/2016 on the roadmap to convert from issuing magnetic strip cards to chip cards from next year.

Under the new dispatch, the SBV clarified that Circular 19/2016 makes no mention of a suspension of transactions using magnetic strip cards that remain valid.

December 31 this year is the deadline for changing to chip cards, not the date that magnetic strip cards will become invalid, the SBV noted, adding customers can continue to use magnetic strip ATM cards for transactions at ATMs, point-of-sale (POS) and bank counters, and for internet and mobile banking services after December 31 this year.

Under the new dispatch, the SBV asked card issuers and card payment organisations to ensure card holders’ transactions are carried out smoothly, safely and do not affect the interests of cardholders. They were also asked not to issue policies and regulations that go against the law on bank card operations.

In addition, they were told to launch media campaigns to inform their customers that magnetic stripe cards can still be used after December 31 this year.

However, under the new dispatch, the SBV also asked card issuers to encourage and support their customers to convert magnetic cards to chip cards to enhance security and to warn them of the risks if magnetic cards continue to be used.

There are two common ways to convert magnetic cards to chip cards.

In the first way, customers only need to bring valid citizen ID card or passport to the bank’s transaction point and request to convert from magnetic card to chip card.

In the second way, customers can access digital banking applications and mobile banking to apply for and receive cards at home or at the bank’s transaction points.

Or at some banks, the process is even more convenient. For example, at TPBank, customers can exchange magnetic cards for chip cards at LiveBank 24/7 and receive cards in just a few minutes.

In order to encourage customers to change magnetic strip cards to chip cards, most banks offered this service free of charge and the change is still free at some banks.

For example, at NamABank, the bank will completely convert magnetic strip cards to VIP cards for free from now until December 31, 2021. Similarly, Techcombank is also offering this activity free of charge.

According to experts, the conversion of magnetic strip cards to chip cards is beneficial for users, contributing to improving the security level, transaction speed, safety and ensuring the interests of customers.

Specifically, a magnetic card is a card containing a magnetic strip storing customer’s encrypted information. The data is permanently stored on the magnetic strip and is encrypted only once, so it easily leads to the risk of card information theft and transaction fraud.

Meanwhile, chip cards, which are also known as “smart cards”, have a microchip attached to the surface of the card, and this is the basic difference between chip cards and magnetic strip cards. For chip cards, transaction data includes data stored on the chip and the transaction password that changes with each transaction. Specifically, every time a chip card is used for payment, the chip will generate a unique transaction code and never repeat. In case the customer’s card is stolen from a certain store, the fake card will never work because the stolen transaction code will not be reused, the card will be rejected. —      


 

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Source: https://vietnamnews.vn/economy/1092063/magnetic-strip-atm-cards-to-remain-valid-next-year.html

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Exporters told to strictly comply with EU regulations to avoid losses

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The European Union has a large demand for imported agricultural products and, thanks to the EU-Vietnam Free Trade Agreement (EVFTA), Vietnamese businesses have a unique opportunity to take advantage of this.

 However, local businesses need to strictly comply with European regulations to avoid losses when exporting to the region.

Exporters told to strictly comply with EU regulations to avoid losses
The EU applies strict requirements and regulations on imported food products. — VNA/VNS Photo Vu Sinh 

For food products, the EU has strict requirements and regulations on product quality and the maximum residue level (MRL) of pesticides.

Trade counsellor Tran Ngoc Quan, head of the Vietnam Trade Office in Belgium and EU, said that most regulations across the bloc are similar when it comes to agricultural and food products.

Germany, Austria, the UK, Netherlands and Belgium do have stricter and higher MRL levels than the standard EU regulations, though these vary with different active ingredients, fresh produce and processed products.

Dang Phuc Nguyen, General Secretary of the Vietnam Fruit and Vegetable Association, said that while Vietnamese fruits and vegetables are more competitive than those from countries without a European trade agreement, exporters must focus on improving MRL levels.

Nguyen said: “If enterprises exporting to the EU do not comply with the regulations, they face the risk of increased levels of inspections, supervision and perhaps even being banned from exporting to these markets in the future.

“The EU applies these regulations very strictly. Enterprises that want to export to the EU must obtain certificates and production levels according to GlobalGAP.”

Nguyen added that violators run the risk of incurring heavy losses if they are caught.

According to the new EU regulation No 2021/1900, effective from November 23, the frequency of pesticide testing on Vietnamese herbs and fruits will increase. Of this, 50 per cent of testing will be applied to coriander, basil, mint, parsley, beans corn and pepper and 10 per cent will be applied to dragon fruit.

Nguyen said that as vegetable products in Vietnam often have pesticides, some samples and consignments will be tested for residue. The EU has also increased the frequency of testing, adding that the more enterprises violate the regulations, the more frequent inspections will be. 

He said bans on export to the EU could be applied to violators.

According to a representative of the Vietnam Pepper Association (VPA), the EU’s increase in testing will raise difficulties in exporting to the EU and will invite increased competition from other countries.

“In order to avoid violations, businesses must do better at testing products when exporting, as well as strengthening production links to create a clean and safe raw material area,” said a representative of VPA.

The EU also conducts post-inspections away from ports, so even though goods are being consumed or sold at supermarkets or shops, if they are not of good quality they can still be recalled, said Nguyen.

Using the example of a Vietnamese pepper export enterprise that was refused by Spain when its product was tested at the border gate recently, Nguyen said that if the violation was discovered when the product was already on shelves it would cause larger financial damage to the  Vietnamese exporter. 

Nguyen Minh Lien, General Director of Vinamex Company which purchases Vietnamese goods for export to the EU market, shared that some Vietnamese enterprises do not pay due attention to food safety issues. Lien added that due to the post-inspection of the EU market, some have had to pay fines and incur additional costs due to poor quality products.

In addition, Lien said some basic errors like incorrect packaging leads to products being returned or sold cheaper to other markets.

Lien noted when exporting goods to the EU, Vietnamese businesses must work closely with importers on product quality, packaging and contract inspection to avoid loss and damage.

She said supermarkets in the EU do not directly import goods from Vietnam, so local enterprises should cooperate with importers to arrange products at the warehouse before entering the retail market there.

She also suggested Vietnamese enterprises cooperate to diversify products, ensure sufficient output and take advantage of shared containers when exporting.

Considering EU customers are increasingly interested in buying products from businesses that contribute to community development and the environment, Nguyen said: “Sustainable development should be a long-term direction for export businesses in Vietnam.”

At the same time, even enterprises and manufacturers that follow the GlobalGAP requirements must pay attention to the plant protection ingredients that the EU bans or restricts, as some may be different from the GlobalGAP.

Source: Vietnam News

Source: https://vietnamnet.vn/en/business/local-exporters-must-strictly-comply-with-eu-regulations-to-avoid-losses-798131.html

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Moody’s upgrades VPBank’s rating to Ba3

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VPBank is one of the leading banks in Việt Nam. — Photo courtesy of the bank

HÀ NỘI — Global credit rating firm Moody’s Investors Services has upgraded Việt Nam Prosperity Bank (VPBank)’s foreign currency deposits from B1 to Ba3 which is equal to the country’s rating with positive outlook.

Moody’s BCA ratings reflect the independent intrinsic strength of the issuer. This credit rating is assessed based on the macro-environment, financial profile and qualitative assessment factors. In addition to upgrading the BCA rating, Moody’s also upgraded VPBank’s long-term local and foreign currency deposit ratings, rising to Ba3.

VPBank’s credit rating was announced after the bank completed the sale of a 49 per cent stake at its VPBank Finance Company Limited (FE Credit) to SMBC Consumer Finance Co Ltd (SMBCCF), a wholly-owned subsidiary of Japan’s Sumitomo Mitsui Financial Group, Inc (SMBC Group) at the end of October. Moody’s assessed that the capital sale brought about a significant improvement in the bank’s credit profile. Notably, according to Moody’s methodology, the bank’s capital adequacy ratio (CAR) increased from 11.4 per cent at the end of September 2021 to 13.5 per cent at the end of October 2021.

In addition to the improved capital base, the bank’s outstanding business results in recent months, despite the negative impact of COVID-19 on the economy, were also highly appreciated by Moody’s. The business results in the third quarter of the year showed that VPBank’s consolidated before-tax profit reached more than VNĐ11.7 trillion (US$513 million), up 24.9 per cent over the same period last year. The parent bank’s pre-tax profit alone reached VNĐ10.8 trillion, representing 75.2 per cent year-on-year increase. The bank’s total consolidated operating income reached VNĐ33.2 trillion, increasing 17.3 per cent over the corresponding period last year. Its consolidated return on assets (ROA) and return on equity (ROE) indices continued to be among the top of the market, reaching 2.8 per cent and 21.6 per cent respectively.

Moody’s believed that VPBank’s capital capacity will continue to be stable, as the bank has clearly demonstrated its plan to use capital obtained from the FE Credit deal to promote growth and seek new business investment opportunities. In addition, the assets scale will be further expanded thanks to the profit growth from business activities.

“VPBank’s asset quality and profitability will remain stable over the next 12-18 months,” Moody’s said in the announcement, emphasising the belief that VPBank’s asset quality will be well under control as Việt Nam’s economy recovers and vaccination rates increase.

The upgraded ratings from a prestigious international credit rating agency like Moody’s in the context that Việt Nam’s economy has suffered heavy impacts from the outbreak of the COVID-19 pandemic, has demonstrated confidence of international organisations in VPBank’s capital base and development plan this year and in the future. This also contributes to strengthening VPBank’s position, while further enhancing its ability to mobilise capital from reputable financial institutions. —

Source: https://vietnamnews.vn/economy/1092062/moodys-upgrades-vpbanks-rating-to-ba3.html

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