Ports see increase in goods handling despite COVID-19
Thanks to the adoption of drastic COVID-19 prevention measures at ports, the volume of goods that passed through ports in the first eight months of the year increased by 18 percent year-on-year to 16.8 million TEUs, the Vietnam Maritime Administration said.
They comprised exports of 5.4 million TEUs, up 16 percent, and imports of 5.5 million TEUs.
With 3.2 million TEU, the Cai Mep – Thi Vai Port Cluster in Ba Ria-Vung Tau province accounted two thirds of the imports and exports in the south and 100 percent of shipments from and to the US.
Amid the COVID-19 outbreak in many southern provinces and cities, port authorities have been adopting many preventive measures like keeping its employees on site and testing them all every three days.
Nguyen Xuan Ky, general director of the Tan Cang – Cai Mep International Terminal Company Limited, said thanks to the strict implementation of prevention and control measures, some COVID cases were detected in time and immediately quarantined.
But after more than two months the model has also revealed certain limitations, he said.
The cost for the “three on-site” model and the periodic COVID-19 test fee for more than 350 company employees, up to more than 1 billion VND (44,000 USD) a week, are causing many difficulties for businesses, Ky said.
Keeping the workers at the port and not allowing them to go home for a long time also adversely affects their psyche, directly affecting productivity and safety, he added.
His company has called on the provincial People’s Committee to allow the adoption of other solutions such as allowing local employees living in areas with little or no COVID-19 cases to go home./.
Bloomberg hails Vietnams as hotspot for branded residence
The US’s Bloomberg has hailed Vietnam as a growth hotspot for branded residences in Asia in its recent article.
The newswire said Vietnam’s number of high and ultra high network individuals have increased impressively over the past five years, with those amassing over 1 million USD and 30 million USD accounting for 26 percent and 108 percent, respectively. Therefore, owning a branded apartment is considered a “testament” to their class, apart from the purpose of living and pure investment.
The growth arose from Vietnam’s impressive economic growth. In 2019, Bloomberg said Vietnam was one of the fastest growing economies globally with a growth of over 6 percent in 20 consecutive years.
The South China Morning Post also wrote that Vietnam’s property sector has been increasingly favoured by international investors because of its stellar economic growth. The US-based hotel operator Marriott International is also making a foray into Vietnam’s branded residence segment.
In early 2021, Marriott International announced the first branded residence project in Vietnam – Grand Marina Saigon in District 1, Ho Chi Minh City. It also plans to embark on another branded Ritz-Carlton in downtown Hanoi in late 2023./.
Demand for domestic travel information plunges due to COVID-19
Since late April when the latest wave of COVID-19 hit Vietnam, the volume of domestic tourists searching for travel information has dropped sharply to a very low level, according to statistics from Google Destination Insights.
Data from the Vietnam National Administration of Tourism also showed that the number of domestic visitors fell from 9 million in April to 3.5 million in May and 0.5 million in July.
Demand for seeking information about tourism accommodation services has plunged since May. In major tourist destinations nationwide, the rate of room cancelation has exceeded 90 percent and lodging facilities have been forced to close on a large scale.
The entire nation logged 4.6 million in-house tourists in April, with the figure dropping to 1.8 million in May, 0.9 million in June, and 0.3 million in July.
Following the downward trend, demand for aviation information between May and now declined by 85 percent compared to the same period last year.
According to Google Destination Insights, the top searched domestic destinations included Ho Chi Minh City, Da Lat, Phu Quoc, Hanoi, Da Nang, and Nha Trang.
Joint efforts needed to surmount COVID-19 challenges
Local economists have underlined the need to reach consensus, share difficulties and seize upon opportunities among the State, businesses, and workers amid the national economy facing several challenges caused by the fourth wave of the COVID-19 pandemic.
Dr. Nguyen Duc Kien made this assessment when analysing the resilience of domestic firms over the past seven months, making projections, and discussing solutions aimed at overcoming the challenges caused by the pandemic from now until the end of the year.
Despite social distancing measures being applied across several localities due to the complicated developments relating to the COVID-19 pandemic, the country’s total additional registered capital during the seven-month period hit VND2,432.1 trillion, representing a rise of 16.1% against the same period last year.
Of the figure, the registered capital of newly-established enterprises enjoyed a surge of 13.8% to VND1,065.4 trillion. Dr. Kien therefore attributed these encouraging results during the reviewed period to the recovery of production activities by businesses and COVID-19 containments efforts, particularly as the six-month GDP increased by 5.64%.
However, there continues to be a number of difficulties relating to the adverse impacts of the fourth wave of the COVID-19 pandemic.
In line with this, the number of newly-established enterprises has endured a decline of 22.8% compared to the previous month, along with a drop of 33.8% against the same period last year.
Furthermore, the registered capital of newly-established businesses has also decreased by 25.3% compared to the previous month with a fall of 48.7% in relation to last year’s corresponding period.
Most notably, the bankruptcy rate in July saw an increase of 17%, while the number of newly-established firms rose only between 1.6% and 2%, an issue which is anticipated to pose numerous challenges ahead in the remaining months of the year.
In this context, Kien emphasised the need to reach a consensus, gain understanding and share difficulties among the State, enterprises, and employees. Indeed, the Government has already made decisions aimed at supporting residents and businesses, including bailout packages such as tax exemptions and reductions.
He also underlined the necessity to effectively implementing the government’s support policies from now until the end of the year.
Moreover, local firms continue to face several hurdles, including supply chain disruptions, high transportation costs and a shortage of workers, while factories have been forced to reduce their capacity, according to Kien.
Dau Anh Tuan, director general of the Legal Department at the Vietnam Chamber of Commerce and Industry (VCCI), expressed his hope that these negative impacts will be minimised in the near future due to prevention and control activities being carried out in a drastic manner.
According to the VCCI, despite facing a limited state budget, the National Assembly and the Government have issued several policies which can support negatively-affected businesses.
Sharing this viewpoint, Kien revealed that the VND 26,000 billion bailout package is expected to bring about a range of practical benefits to residents and businesses. Indeed, through the aid package, businesses will be able to pay basic wages for workers and keep them in order to maintain production activities, he added.
Experts also highlighted the flexible method of fighting the pandemic whilst simultaneously maintaining production in some localities, noting that despite the social distancing order in several provinces in July, a total of 29,600 businesses were able to resume operations, an annual increase of 3.6%.
Both Tuan and Dr. Kien note that these moves have been consistent with the Government’s policy by containing the pandemic and simultaneously maintaining economic development, adding that these support policies should be promoted in a timely manner in the near future.
Seven-month credit in HCMC rises 5.8 percent
According to the Ho Chi Minh City Statistical Office, by August 1, the total credit outstanding balance of the banking system in the city had exceeded VND2.68 quadrillion, an increase of 13.1 percent over the same period last year and 5.8 percent compared to the end of last year. This is a good credit growth in the context of the Covid-19 pandemic.
The State Bank of Vietnam-HCMC Branch said that credit in the first months of the year in the city mainly flowed into export processing zones and industrial parks because export orders still posted optimistic growth. In addition, foreign enterprises still maintained their operations efficiently, so credit demand increased steadily. However, this group of customers mainly belongs to foreign banks in Vietnam.
Accordingly, in the first seven months of this year, the credit growth rate of foreign banks was stable at 5.35 percent. In July alone, the credit growth of foreign banks in HCMC reached 2.2 percent, higher than the general credit growth in the area.
Besides, credit into many business lines of essential goods, such as food, masks, and medical protective clothing for pandemic prevention, also grew positively.
Canadian firms hopeful on medium-term Vietnamese economic prospects
Despite the negative impacts of the latest COVID-19 wave in the nation, Canadian businesses remain optimistic about Vietnamese economic prospects in the medium term and future business opportunities.
According to official statistics, Vietnam’s Gross Domestic Product (GDP) during the first half of this year grew by 5.64%. Recently, the World Bank (WB) forecast that the nation’s GDP growth is estimated to be at approximately 4.8% for the entire year, an impressive figure for international partners, particularly as the whole country is struggling to cope with a challenging wave of COVID-19 outbreaks.
Marc Djandji, founder and managing director of ASEAN Strategy Group Ltd – a firm which provides key services in the areas of market access, sourcing, import/export, and management consulting, said that the country is one of the best performing stock markets in the world. Indeed, the local economy also maintained a strong recovery until the first half of the year.
However, the recent wave of COVID-19 infections has forced a number of businesses in major cities and industrial centres to close, thereby limiting Vietnamese economic activities over the subsequent months.
The industrial, manufacturing, and construction sectors have all been affected, while household income, savings, and spending are also forecast to suffer a decline.
Despite this, Djandji expressed his appreciation for the spirit of solidarity shown by the Vietnamese people in the fight against the invisible enemy, emphasising that the economic recovery this year will depend on the results of the COVID-19 vaccination campaign.
On that basis, he predicts that in the medium term the growth prospects for the Vietnamese economy will remain solid, driven by the process of industrialisation and urbanisation.
Moving forward, the country will continue to benefit from integration into the global supply chain, FDI attraction, and rapid growth in the manufacturing sector, he said.
Echoing this viewpoint, Phil Witherington, chief financial officer of Manulife Financial Corp., expressed his optimism about the future growth of the Vietnamese economy. Although the resurgence of COVID-19 may have a short-term negative impact, the market’s long-term potential remains strong and will stand firm, he stated.
The Vietnamese Government is therefore on the right track to work alongside firms like Manulife to protect workers and customers, whilst also taking actions to encourage greater economic development.
Witherington outlines that Manulife sees a great opportunity in meeting the health, protection, savings, and investment needs of customers nationwide, with the firm having a long history of operations in Asia. Indeed, it has already established a presence in several ASEAN markets such as Singapore, Malaysia, Indonesia, and the Philippines over the past 100 years.
He went on to highlight the Vietnamese market as being one of the region’s biggest economic success stories and one of Manulife’s biggest markets within ASEAN.
With an estimated population of 120 million by 2050, the country can be viewed as an attractive destination for Canadian businesses.
Alongside trade in goods and services, many co-operation opportunities have emerged in other areas such as investment, financial service, infrastructure development, supply chain diversification, technology, and human resource development.
Businesses careful with ethylene oxide content in exports to different nations
The Department of Science and Technology of the Ministry of Industry and Trade has said businesses should be careful with ethylene oxide content in exports to various countries because the regulation of technical standards for each type of food in each country is different.
The Department has just released detailed information on the results of controlling Ethylene Oxide residues in the food production process in Vietnam after the Food Safety Authority of Ireland recalled some batches of Acecook Vietnam’s Hao Hao and Thien Huong noodles for containing banned Ethylene Oxide substance.
Moreover, the Department added that Ethylene Oxide content in exports greatly depend on the balance of trade between countries, regions or countries, import and export policies of each country, technical conditions, management methods, and consumers’ habits.
According to the Department of Science and Technology, these products have many components such as dry noodles, seasoning packages, vegetable packages, chili oil packages and there are many branches in the supply chain dedicated to different ingredients before being packaged in the final product.
Vietnam has not yet issued the regulation on the use of Ethylene Oxide in agricultural production or limiting Ethylene Oxide residues in food.
Therefore, the allowable Ethylene Oxide residue limit for the same food item may meet the regulations of this country or region but exceed the allowable threshold of another country or region. As a result, the Department of Science and Technology has asked enterprises to study and regularly update the information to control the standards of their products before exporting.
Moreover, businesses were advised to often evaluate production processes, machinery and equipment, and factory hygiene for the risk of causing food insecurity. They should periodically inspect their products and materials, especially outsourcing and manufacturing components to assess risks, control quality, and reduce risk levels.
Efforts to maintain safe green zones at seaports
Considered as one of the leading important links in the global shipping chain, over the past time, despite being heavily affected by the Covid-19 pandemic, Vietnam’s seaport system in general, and the Cai Mep – Thi Vai port system in particular still achieved impressive growth.
Accounting for two-thirds of the import and export activities of the South and 100 percent of import and export activities to the US, in the last days of August, the road to Cai Mep – Thi Vai port is still bustling. In the context that the Covid-19 pandemic recurs and develops complicatedly in many cities and provinces in the Southern key economic region to minimize damage to import and export activities, seaport enterprises have been implementing effective solutions to prevent the penetration of Covid-19 to maintain operations.
Specifically, at Tan Cang – Cai Mep International Port (TCIT), from July 7 to now, enterprises have actively applied the three-on-site solution. They arrange the living and working areas independently among departments, implement distancing each workgroup that often directly contacts customers, such as sales and cashiers, and maintain quick testing every three days. The representative of TCIT said that the unit encouraged customers to register for service procedures and deploy online payment to prevent the pandemic.
Along with TCIT, Hung Thai Marine Offshore Service Port and Cai Mep International Port (CMIT) also quickly implemented the three-on-site solution, carefully controlling workers, contractors, and customers entering and leaving the port, separating areas and cargo flows to minimize contact between areas and cargo flows and easily localize when there is an F0 case in each area.
According to the Vietnam Maritime Administration, more than 90 percent of commercial cargo is transported by sea. Deep-water ports are essential infrastructures for export activities. Thanks to drastic and synchronous solutions, in the first eight months of this year, the volume of cargo containers through the seaport system still reached nearly 16.8 million TEUs, up 18 percent over the same period. Exported goods exceeded 5.4 million TEUs, up 16 percent, while imported goods surpassed 5.5 million TEUs, up 21 percent year-on-year. In the Cai Mep – Thi Vai port cluster alone, cargo containers through the port reached 3.2 million TEU, up 35 percent.
Thanks to strict implementation of Covid-19 prevention and control measures, some Covid-19 cases appeared at some ports and were detected in time. However, after more than two months of implementing the “three-on-site” and “one route, two destinations” models, it has also revealed certain limitations.
Mr. Nguyen Xuan Ky, CEO of CMIT, said that the investment costs of essential infrastructure, accommodations, living, allowances, and periodic Covid-19 testing fees for more than 350 employees and contractors in the port were up to more than VND1 billion per week, which have been causing many difficulties for the company. Besides, if the pandemic prolongs, workers’ sentiment will be affected after a long stay at the workplace, directly affecting productivity and work safety.
CMIT has sent a proposal to the provincial People’s Committee to allow it to combine many solutions. Specifically, the company only continues to apply the “three-on-site” solution for employees with the place of residence in other provinces and employees living in the red and high-risk yellow zones. In addition, it will apply the solution “green zone + two-on-site + one route”.
Specifically, employees in green zones will be allowed to go to work every day provided that when they return home, they will not go anywhere outside their current residence area; comply with the 5K message and implement “two-on-site” at work. The company also recommends the province to develop a consistent policy between localities and businesses to be able to pick up and drop off employees at some specified pick-up points on a route instead of picking up at home or being forced to carry out “one route, two destinations”.
These combined solutions will open a new direction to both ensure Covid-19 prevention and help port enterprises maintain flexible operations and at the same time, can provide support and receive more ships from Cat Lai Port or other ports in HCMC if these places are congested.
Amid the difficulties of enterprises, the People’s Committee of Ba Ria – Vung Tau Province has issued a document requesting enterprises to assess the implementation of safe production models, clearly analyze the advantages and disadvantages, and choose the most suitable model for implementation in the coming time. However, they must ensure the principle of “production is only carried out when it is safe, and production must be safe”.
Banks do away with physical offices to aid digital services
As Vietnam implements strict social distancing measures, banks have been stretched thin with some temporarily closing their brick-and-mortar offices to help customers go digital.
Hoan Kiem District People’s Committee in Hanoi has issued Decision No.3973/QD-XPVPHC sanctioning a VPBank branch in Hai Ba Trung street for not reporting its recent COVID-19 cases. According to the decision, the branch was fined $8,260.
Meanwhile, the Vietnam Banks Association (VBA) has sent a document to the people’s committees of cities and provinces, requesting further support for vaccination for bank officials and workers.
“Although the government, the Ministry of Health, and local authorities have specified bank staff as the prioritised group for vaccination, until now the number of officials and employees receiving vaccines remains limited,” the VBA stated.
“Due to the nature of the banking industry, many employees have to physically work in the office and regularly interact with customers. Therefore, the best solution at present is to promote vaccination for bank staff,” the VBA added.
In these challenging times, banks are redoubling their efforts to smooth customers’ transition to digital means. However, a minority of branches are being allowed to open in case of emergency.
Nguyen Hoang Minh, deputy director of the State Bank of Vietnam’s (SBV) Ho Chi Minh City Branch emphasised, “Due to the latest wave of infections, more than 300 branches and transaction offices of commercial banks are temporarily shut down. However, all banks will ensure smooth payment activities to address the customers’ demands, and all ATMs are always open for people to withdraw cash.”
A representative from Viet Capital Bank told VIR that the bank had to temporarily shut down some of its branches and transaction offices in the city due to the pandemic.
“Despite temporary closures, we are managing our services on an integrated online platform and a user-friendly portal. We believe an effective approach in this health crisis is clear communication in an advanced digital infrastructure – our digital banking “Digimi”. Viet Capital Bank is fully equipped to help customers maintain their banking needs and discover new services remotely,” the representative said.
Another southern-based bank, OCB, also announced the closure of 26 of its 30 branches and transaction offices in order to implement social distancing.
The remaining four locations that are still operating are its main Business Centre in District 1 as well as branches in Thu Duc, Tan Thuan, and Tan Binh.
Other commercial banks such as HSBC Vietnam, ACB, Eximbank, VPBank, Techcombank, and Shinhan Bank also announced the temporary closure of many offices and branches and maintained only a few other transaction points to meet the needs of customers.
From August 23 to September 6, VIB would maintain 11 branches and transaction offices in Ho Chi Minh City to serve the needs of customers in District 1, Phu Nhuan, Go Vap, Binh Thanh, District 5, and District 7. VIB also encourages customers to make online transactions via the MyVIB app or internet banking.
Meanwhile, Sacombank has arranged for employees to work at home as well as at transaction points. “Currently, Sacombank’s system can fully address customers’ transaction needs, including both in-person and online transactions. We also prepare contingency plans and ATM funding plans to ensure operation in difficult situations and a smooth supply of cash for the people,” the bank’s representative said.
Nam A Bank also announced the temporary suspension of a number of business units in Ho Chi Minh City to ensure pandemic prevention at the request of the local authorities. Transaction points will be temporarily closed from August 23 until further notice.
Currently, Nam A Bank only maintains a few branches and offices to serve customers at the Business Centre in District 3, Ham Nghi in District 1, and Ly Thuong Kiet in District 11. The bank encourages customers to use the Open Banking application for payments, transfers, and open online accounts via the electronic Know Your Customer method (eKYC).
“As soon as the pandemic is brought under control in Ho Chi Minh City, banks will reopen. At the moment, customers are encouraged to adopt cashless payments and limit contact in a bid to reduce the risk of infections,” said Minh of the SBV.
Long Thanh International Airport to operate in 2025
The first phase of the Long Thanh International Airport project in the southern province of Dong Nai will be completed by the first quarter of 2025, in time for the airport to be put into operation at the end of that year.
The information was revealed in a report on the progress of the project sent by the Ministry of Transport to the government.
According to the report, the Airports Corporation of Vietnam (ACV) has conducted some 65% of the bomb and mine clearance work and is expected to complete this December, making land available for the construction of the foundations for the passenger terminal in February 2022.
Water drainage and power system construction are also on schedule.
Construction of the terminal is planned to start in February 2022 and be completed in June 2025. Meanwhile, the air traffic control tower will be built between January 2023 and January 2025. These are the two most important parts of the project so should be given special attention according to the transport ministry.
In the first phase, the project will build Runway1 with a length of 4,000 metres, width of 75 metres and a system of taxiways and aprons to ensure that all types of aircraft can operate with a capacity of 25 million passengers and 1.2 million tonnes of cargo per year.
One passenger terminal will also be built with a designed capacity of 25 million passengers per year and a total floor area of 373,000 square metres.
The contractors have been warned to prepare for the challenges posed by the Covid-19 pandemic which is affecting the import of equipment and the work of foreign experts.
Once fully operational, Long Thanh International Airport will reduce the load on Tan Son Nhat International Airport in HCM City as it is expected to handle 100 million passengers and 5 million tonnes of freight each year.
The project has a total investment is VND336.63 trillion with construction divided into three phases.
Lam Dong faces labour shortage for coffee harvesting season
The central highland province of Lam Dong is facing a shortage of labour as the coffee harvesting season nears.
Lam Dong needs over 7.8 million working days to complete the harvest of 173,000ha of coffee in 2021. However, the province can currently only meet 45-50% of the demand.
Nguyen Van Chau, deputy director of Lam Dong Department of Agriculture and Rural Development said, “It’s difficult to hire people from other provinces. We need plans for Covid-19 preventions while ensuring that the harvest season will go smoothly.”
Nguyen Van Thuy from Lam Ha District, said, “We have nearly 4ha of coffee. I don’t know if we can hire enough people to harvest the coffee. I hope the outbreak can be controlled in the last months of the year so I can hire more people. Last year, I hired five H’mong people for VND1,000 per kilo. They told me they would work for me again but I’m not sure. The payment will be higher too.”
Districts and cities with a large area of coffee like Bao Lam, Lam Ha, Dam Rong, Bao Loc and Da Lat review the crops and capability of each household to have suitable support plans, especially to families with few members or whose members stuck in outbreak areas.
“Harvest groups can work in shifts. We can also call for local organisations to help families in difficulties,” Chau said.
He went on to say that local authorities can connect workers with employers and ensure that all fees and payments are reasonable. They have asked Lam Dong Department of Labour, Invalids and Social Affairs to direct work centres to help.
Port stocks boom thanks to thriving businesses in Vietnam
Foreign fund Asia Frontier Capital noted in its latest investment report that port businesses in Vietnam would benefit in the second half of 2021 thanks to higher demand.
According to investment report highlighting Vietnam’s perspective, Asia Frontier Capital (AFC) emphasied after the boom of shipping stocks at a time when shipping fees skyrocketed, port stocks also jumped aggressively.
The fund believes port stocks would be a main beneficiary of the Vietnamese export boom in a controlled competitive environment.
Port businesses in Vietnam will also continue to benefit in the second half of 2021 with a strong increase in demand in many developed markets such as the US, Europe, and the UK. Meanwhile, the virus outbreak in Asian countries continued to have a negative impact on sea freight cargo handling efficiency, which created a supply and demand imbalance and therefore led to dramatic increases in shipping fees.
In Vietnam, shipping fees also increased sharply but port fees remained almost unchanged in the first half of 2021. Since July 2021, most of the ports in Vietnam started to increase their fees due to strong demand and limited capacity. The COVID-19 outbreak in Vietnam has lengthened loading and unloading times from an average of five to eight days at most ports. This forced many ships to line up for a long time to load and unload their cargo.
Since shipping companies already benefitted from increasing shipping fees, they are willing to pay higher fees to the ports to get priority handling of their containers and many ports had already increased their fees with shipping companies for H2/2021 and 2022. AFC, therefore, expects their profits to increase strongly during this period.
According to the Vietnam Maritime Administration (VMA), container throughput via Vietnamese seaports hit double-digit growth in the year to date despite COVID-19.
Some seaports witnessing the highest container throughput in the first seven months of 2021 were Quang Nam, My Tho, Haiphong, and Ho Chi Minh City. Meanwhile, seaports at Quang Ninh, Danang, and Can Tho saw strong falls in container throughput, according to the VMA.
Becoming a billionaire by growing cinnamon
Local residents’ efforts to cover the hills with cinnamon fields, a valued herbal tree, have changed the face of the northern province of Yen Bai.
Bank staff at VBSP Yen Bai in Van Chan district helping Giang A Sau in depositing money
“A billionaire is coming”, the whispers spread out across a transaction unit based in Van Yen district’s An Luong commune of the Vietnam Bank for Social Policies (VBSP) in Yen Bai province as Giang A Sau, a young local arrived carrying a heavy bag of money, followed by his wife and young child.
Sau piled money on the table, saying that he wanted to deposit VND4 billion ($173,910) that he earned from selling one of his cinnamon hills. Bank staff helped the young man count the money while everyone looked on with eyes of admiration.
Giang A Sau is not the person owning the largest cinnamon field area in An Luong commune, as commune officials say many other households have several dozen hectares of cinnamon fields. But the story of his making money from cinnamon trees is unlike others.
In the 1990s, Sau often left the village to make a living elsewhere as his homeland was bereft of almost everything: no fields, no decent roads, no electricity, and very little water.
Eventually, he found out that there is no place safer than home and settled down at his home village to grow cinnamon forests to protect water resources.
The larger cinnamon trees grow, the higher theri value. In the first years, to make a living, Sau grew rice and other cereals on his cinnamon fields which also helped reduce grass, floods, and nourished cinnamon trees by keeping the soil humid.
His efforts paid off. In the 2019 season, Sau sold a cinnamon hill for VND3 billion ($130,430), setting a record not only in An Luong commune but also in Van Chan district. Early this June, he sold his other hill for VND4 billion, breaking his own record. He deposited the whole sum at VBSP’s Van Chan district and became the largest depositor across VBSP’s system in Yen Bai province.
The cinnamon trees have been grown in An Luong commune for many years now. Not just a herbal tree, cinnamon trees are regarded as the “money” tree by ethnic minorities in the area as all parts of the tree can be sold, from branches and leaves to the trunk, bark, and even the roots.
In the late 1990s, Dang Van Thong, an old man living in Tang Cham hamlet, logged down and sold seven cinnamon trees to buy a Honda Dream motorbike for a more than VND30 million ($1,300). The story had created a stir in the province’s different parts, encouraging many locals to start growing cinnamon trees.
These days, the hills and mountains in An Luong are covered with a lush green coverage of cinnamon trees, and the entire commune is now home to more than 1,700ha of this valued tree.
These days, the hills and mountains in An Luong are covered with the lush green coverage of cinnamon trees and the commune is now home to more than 1,700ha of this tree.
According to Loc Van Doan, Deputy Chairman of An Luong People’s Committee, in light of the communal Party Committee’s latest resolution, the cinnamon growing area will reach 2,200ha by 2025. Currently, a kg of preprocessed cinnamon skin fetches around VND100,000 ($4.35); the leaves can fetch VND1,500-1,600 (6.5-7 US cents) per kg, while a trunk of more than 30cm in radius is also sellable.
Doan is confident that An Luong commune would soon reach the target, turning the area into a thriving cinnamon “kingdom” as Dai Son and Vien Son communes in Van Yen district.
These days, the people of ethnic minorities in An Luong commune are growing more vocal about their need for decent roads and power infrastructure to improve their daily lives. With better roads and stable power, more households would build permanent houses and could use machinery for production to drive down the rate of poor and near-poor households in the area.
The project to build Nghia Lo-Mau A Road crossing An Luong commune is now under intensive constructionm and transmission lines are being laid to provide more households in An Luong with access to power, helping to make the dreams of the local H’Mong, Dao, and Tay people come true.
Vietnam in a stronger spot for Thai bankers
Thai financiers are forging a stronger partnership in Vietnam’s alluring demographics to scale their businesses further, particularly with the increasing assistance from deep-pocketed Thai banks.
The Bank of Ayudhya (Krungsri) – the fifth-largest bank in Thailand in terms of loans and deposits – last week announced it would wholly acquire SHB Finance from Vietnamese lender SHB, which is among the top 10 consumer finance companies in the country. The size of the deal has been rumoured to be around $156 million.
Under this agreement, SHB will transfer 50 per cent of SHB Finance’s charter capital to Krungsri and the remainder will be transferred after three years.
Seiichiro Akita, Krungsri president cum CEO said, “SHB’s local expertise and an extensive network in Vietnam complemented by Krungsri’s strength in consumer finance will enhance SHB Finance’s business competitiveness. This milestone also underscores our commitment to our ASEAN expansion strategy following the current medium-term business plan for the 2021-2023 period.”
“Currently, Krungsri has secured its foothold in the ASEAN market including a branch and a consumer finance business in Laos, a commercial bank in Cambodia, a consumer finance business in the Philippines, and a representative office in Myanmar,” the bank said in a statement.
Japan’s Mitsubishi UFJ Financial Group (MUFG) is currently the major shareholder of Krungsri, owning more than 77 per cent stake of the Thai bank. MUFG also holds nearly 20 per cent of VietinBank in Vietnam.
According to the Ministry of Planning and Investment, in the first seven months of 2021, Thai financiers invested in 23 new projects in Vietnam, with the newly-registered capital of nearly $106 million. There were nine projects registered for adjustment of capital amounting to almost $24.5 million. Meanwhile, Thai investors have made 24 capital contributions and share purchases with a combined value of $107.5 million in the given period.
Almost all investments made from Thailand have been via corporates looking to expand their value chain into sectors such as food and beverages (F&B), retail, construction, and packaging-related materials and industrial products.
Also last week, the Thai cabinet greenlit a capital injection of nearly $128.2 million for the Export-Import Bank of Thailand (EXIM Bank). EXIM Bank can use the money to support small- and medium-sized enterprise (SME) loans for investment in trading, both domestically and internationally.
Meanwhile, Vietnam’s F&B and retail market has lured numerous Thai giants, such as Central Group’s acquisition of Big C Vietnam and TCC Group’s purchase of METRO Cash & Carry Vietnam. In April, Central Retail announced its 5-year plan with an investment value of approximately $1.12 billion for the Vietnamese market.
Speaking at last week’s webinar themed Emerging Vietnam Market 2021 by the Thai Business Association in Vietnam, Cong Ong, co-founder of food distributor Good Food, said that the growth potential of the Vietnamese market has attracted many overseas financiers.
Vietnam will be the second-fastest growing economy in ASEAN with expected GDP growth of 6.5 per cent in 2021, higher than the global average of 6 per cent. It is estimated that Vietnam will be home to 17 million middle-class households in 2030, becoming the third-largest urban market in terms of consumer numbers and the fifth-largest in terms of total spending in Southeast Asia by 2030.
In addition, Ong also pointed out other favourable indicators such as the projected increase of household income by about 40 per cent in the next five years and the expansion of purchasing power in rural areas. Emerging channel formats including online channels, mini supermarkets, and convenience stores continue growing at a fast pace. Meanwhile, mass grocery retail expansion drives up per capita food consumption levels, making the Vietnamese market more attractive to Thai investors.
SCG, one of Thailand’s top industrial groups, is another active Thai investor in Vietnam. After 25 years of operation here, SCG has 21 local subsidiaries in packaging, chemicals, and cement and building materials. During the global crisis, SCG still stepped up its expansion in Vietnam by acquiring Bien Hoa Packaging in 2020 and Duy Tan Plastics this year.
Aurojyoti Bose, lead analyst at GlobalData said, “Vietnam remains a prolific market in ASEAN. It was the best performing Southeast Asian country in 2020 without a single quarter of contraction despite the pandemic. GlobalData forecasts that the Vietnamese economy will grow at an annual average of 7.3 per cent over the next three years.”
According to GlobalData’s Country Risk Index (GCRI) 2020, Vietnam is a manageable risk nation ranked 65 out of 136 nations in the GCRI Q4 2020. The country’s risk score was 42.8 out of 100 according to the GCRI, placing it in the manageable risk nations band.
“On the back of economic stability and decent risk score, Vietnam is attracting various investments from several companies globally, including those from Thailand. Along with the Bank of Ayudhya, other Thai banks are also eyeing on expansions in Vietnam,” GlobalData said.
State budget revenue reaches over VND1 quadrillion in eight months
According to the Ministry of Finance, in the first eight months of 2021, total State budget revenue has been estimated at over VND1 quadrillion, equaling 74.8% of the estimate, and up 14.3% over the same period in 2020.
Of which, domestic revenue was estimated at VND820.4 trillion, equaling 72.4% of the estimate, up 12% over the same period in 2020 (the same period in 2020 reached 57.9% of the estimate, down 9.9%).
The budget balancing revenue from import and export activities is estimated at VND157.5 trillion, equaling 88.2% of the estimate, up 31.2% over the same period in 2020. However, the complicated developments of the Covid-19 epidemic are expected to continue to affect budget revenues in the coming months.
Meanwhile, total state budget expenditure in the eight months is estimated at VND918.1 trillion, equaling 54.4% of the estimate; of which development investment expenditure reached VND187.3 trillion, equaling 39.2% of the estimate.
By the end of August 2021, VND18.8 trillion had been spent from the state budget, of which VND17.2 trillion was for epidemic prevention and control; with VND1.6 trillion used to support people facing difficulties due to the Covid-19 epidemic.
Banks struggle to snap up distressed domestic lenders
Financially sound local and foreign banks are turning a deaf ear to acquire distressed and insolvent Vietnamese banks as they find it hard to access better equipment to address a range of adverse outcomes under a widely accepted supervisory regime.
State-owned lender VietinBank was last week rumoured to have acquired some illiquid domestic banks which are on the cusp of restructuring. Particularly, there are three “zero-VND” banks (Ocean Bank, GPBank, and Construction Bank), which are deemed weak and insufficient lenders. These banks were taken over by the State Bank of Vietnam (SBV) in 2015 at no cost and had to undergo compulsory restructuring.
Brokerage VNDIRECT stated, “In its recent analyst meeting, VietinBank, given its special state root and extensive network, would choose one among three weak lenders to acquire as a part of its development plan.”
Meanwhile, Vietcombank Securities Company (VCBS) also said that VietinBank may purchase GPBank and OceanBank in order to shorten the development period of outstanding loans.
“Particularly in the case of OceanBank, because it is jointly owned by state shareholders, the merger will only be approved if the majority of the remaining shareholders agree,” VCBS noted.
However, a VietinBank representative told VIR that the bank has no specific plan in this regard.
VietinBank was assigned by the SBV to support the administration and management of GPBank and OceanBank in 2015. The bank also had a plan to merge with PGBank, but the deal could not be completed.
In late April, Sovico’s HDBank also confirmed its cancellation in acquiring PGBank. HDBank said that although the bank received the green light from the SBV in October 2018 in terms of procedures, the merger transaction between the two lenders has not been officially approved for various reasons.
Last year, Vietnam National Petroleum Group (Petrolimex), the largest shareholder making up for 40 per cent of PGBank’s charter capital, also announced that it would divest its stake at PGBank in case the merger plan is not approved.
Nguyen Quang Dinh, PGBank’s chairman of the board, said at the bank’s annual shareholders’ meeting in April, “PGBank has not successfully executed any collaboration with potential suitors after six years. We will shift our focus to strengthen independent operation to boost both the bank’s financial soundness and performance.”
“The prolonged merger period has impeded PGBank’s business performance,” he added. “So, at the moment, we have no plan to look for strategic partners or acquires.”
Experts noted the common symptoms of weak banks are usually associated with their poor asset quality, lack of profitability, structural imbalances, loss of capital, excessive leverage, excessive risk exposure, reputation problems, and liquidity concerns.
Besides local lenders, some foreign financial institutions have emerged as strategic partners to join the restructuring journey.
In March 2019, Japanese financial conglomerate JTrust expressed its keen interest in the restructuring of Construction Bank (CBank).
Nobiru Adachi, director of JTrust Asia, said at that time that the group had carried out intensive research to understand the restructuring process of CBank, and proposed some supportive movement from the SBV.
Likewise, Clermont Group, an international business group headquartered in Singapore, had also expressed its fondness for the emerging Vietnamese financial market and signalled its intention to delve into the banking restructuring process.
Notwithstanding, the foreign partners are giving the cold shoulder, and expected deals have come to fruition, as both sides did not reach mutually beneficial agreements.
“Appropriate guidance on dealing with distressed banks is not very common here in Vietnam. Moreover, given Vietnam’s foreign ownership limit on the banking sector and complex procedures, foreigners might find it hard to have absolute control and completely transform an insolvent bank into a lucrative one.
Furthermore, early intervention is one of the most essential steps when dealing with illiquid banks to avoid an escalation of the problem, but there has been more than half of the decade since these banks were acquired by the SBV,” an industry insider told VIR.
“Emerging markets like Vietnam have suffered significant foreign capital outflows amidst the outbreak. And as foreign investors are repricing their risk, they will become more selective before executing any deals regarding acquiring weak banks. In fact, it is not economically viable and cost-effective at the moment to go all-in with such ‘doom and gloom’ banks.”
Last week, the Hanoi People’s Procuracy issued an indictment against the accused Tran Phuong Binh, former general director of DongA Bank, and nine accomplices, for causing losses of approximately VND184 billion ($8 million) to the bank. DongA Bank was previously being offered by ABBank to tie the knot. However, the bank fell under special control before the plan could be implemented.
In the past, many financially unstable banks have merged such as Ficombank, Tin Nghia Bank, Dai A Bank, Habubank, Mekong bank, SouthernBank, and MHB.
Interest rates gradually decrease
The wave of interest rate cuts has been activated, and it is forecasted that the interest rate level will remain low from now until the end of the year to support businesses and the economy amid the context that the Covid-19 pandemic prolongs as currently.
In August, the savings interest rate chart at some commercial banks is decreasing by 0.1-0.5 percent per annum, depending on the term loan. Some commercial banks even reduced by up to 0.8 percentage points for term loans over 12 months.
Specifically, from mid-August, TPBank cut interest rates by 0.5 percentage points for the 9-month loans to 5.7 percent per annum and by 0.8 percentage points for the 18-month loans to 6 percent per annum. In addition, this bank also slashed up to 0.75 percentage points for online savings to 6.15 percent per annum. Techcombank, after two adjustments, currently offers a 12-month deposit interest rate of 4.4 percent per annum and a 36-month savings rate of 4.8 percent per annum. Similarly, State-owned commercial banks have also joined the game. At Agribank and BIDV, interest rates for terms over 12 months have decreased by 0.1 percentage points per year.
With deposit interest rates decreasing, data from the State Bank of Vietnam (SBV) recently showed that capital mobilization growth in the first six months of this year was at a record low level of nearly VND5.3 quadrillion, merely up 2.94 percent compared to the end of last year. This is the lowest household deposit growth over the same period in the past ten years. The leader of a commercial bank recognized that as the savings interest rate would continue to be cut in August, it is difficult to avoid the decrease of capital mobilized from now until the end of the year. Currently, banks are under pressure to reduce input costs to cut lending interest rates to support businesses and the economy, so they cannot maintain high savings interest rates to attract idle money of people.
According to an analyst of SSI Securities Company, deposit interest rates will be under slight upward pressure, especially for long-term loans, because the SBV’s regulation on tightening the ratio of short-term capital for medium and long-term loans will be effective next October. However, the lending interest rate level will continue to remain low in the coming time because inflation is forecasted to be in the control zone.
In fact, input interest rates continue to decrease, so lending rates also have a new turn of decrease after the interest rate cut in mid-July. Currently, many commercial banks have deployed more support packages for people and businesses in southern cities and provinces implementing social distancing following Directive No.16. Specifically, from now until the end of this year, Vietcombank will cut lending interest rates by up to 0.5 percentage points per year for all outstanding loans of customers in HCMC and Binh Duong Province. At the same time, it will reduce the lending interest rate by 0.3 percentage points per year for all outstanding loans of individuals and businesses in the remaining 17 southern provinces, except for loans for securities and real estate trading activities and loans mortgaged by valuable papers.
“Especially, customers who received lending interest rate cut in July will be considered to receive further cut, in which priority will be given to individual and corporate customers who are heavily affected by the pandemic,” the leader of Vietcombank said.
Similarly, besides reducing the lending interest rate by up to 1 percentage point per year for all existing outstanding loans of customers affected by the Covid-19 pandemic, Vietinbank has just launched a low-interest credit package from 4 percent per annum, with a scale of VND20 trillion to support customers in severely affected industries, such as textiles and garments, footwear, pharmaceuticals, medical supplies, and essential consumer goods, increasing the total scale of the support package to VND150 trillion. Besides reducing interest rates for existing loan balances affected by the pandemic, the leader of Agribank said that the lender had decided to cut the credit card interest rate by 1.2 percentage points per year to 11.7 percent per annum – the lowest credit card interest rates on the market – for all existing individual and corporate customers.
Mr. Pham Nhu Anh, a member of MBBank’s Executive Board, said that in the last five months of this year, interest rates of VND1 trillion will be axed for customers affected by the Covid-19 pandemic. By mid-August, the bank had reduced an accumulated interest of VND400 billion. In the second half of August, MBBank is estimated to reduce another VND300 billion, and the rest VND300 billion will be lowered in the last four months of the year. According to Mr. Pham Nhu Anh, at this level, about VND70 trillion of outstanding loans of individual customers and VND50 trillion of corporate ones will be lessened by 0.5-1.5 percentage points per year, depending on the customer and the extent of the impact.
Regarding the fact that many enterprises report that they still have not been able to access preferential policies of the bank, MBBank affirmed that it is reducing interest rates for priority customer groups following the regulations of the SBV and MBBank. Accordingly, for old customers in priority sectors, the bank will actively announce the interest rate cut in writing and send messages to them. Customers do not need to sign any documents or propose to MBBank. For newly disbursed customers, the bank will apply an interest rate cut of 0.5-1 percent compared to its current interest rate level.
“To support customers and maintain credit flows in the context of social distancing, MBBank makes agreements with customers through electronic transaction channels and simple procedures,” said Mr. Pham Nhu Anh.
Source: VNA/VNS/VOV/VIR/SGT/SGGP/Nhan Dan/Hanoitimes
Insurance stocks get boost thanks to State divestment
HÀ NỘI — Revenue of the whole non-life insurance market recorded modest growth this year, but most insurance stocks on the stock market rose sharply.
In the past two months, most insurance stocks have rebounded, with some stocks like Military Insurance Company (MIG), Bảo Minh Insurance Corporation (BMI) and Post – Telecommunication Joint Stock Insurance Corporation (PTI) up about 60 per cent compared to the beginning of the year. Vietnam National Reinsurance Corporation (VNR) even jumped 145 per cent.
This stands in contrast to the sideways trend that occurred a few years ago.
On the stock exchange, there are currently seven insurance stocks, including VNR, PTI, MIG, BMI, Petrolimex Insurance Corporation (PGI), PVIRe (PRE) and BIDV Insurance Corporation (BIC).
These companies are operating in the field of non-life insurance. In Việt Nam, there is no life insurance company listed or registered for trading on the stock exchange.
Two other stocks, including Bảo Việt Holdings (BVH) and PVI Holdings (PVI), have long been considered by many investors as insurance stocks, but are actually financial investment stocks in the financial – insurance sector. BVH is holding 100 per cent of capital in Bảo Việt Insurance Corporation, while PVI holds 100 per cent of capital in PVI Insurance Corporation and 73 per cent of capital in PRE.
PVI shares, which were trading at VNĐ48,100 per share on Thursday morning, rose about 50 per cent this year. Meanwhile, BVH shares fell slightly, despite its profit climbing 41.2 per cent year-on-year in the first half of 2021.
The negative and complicated developments of the COVID-19 pandemic are creating short-term risks for insurance companies due to a decrease in customer income, the risk of inflation and an increase in premiums, but insurance stocks are expected to inch higher.
The bullish trend of insurance stocks is believed to be driven by the divestment of state capital and extraordinary business results of some enterprises.
According to the plan to divest state capital of the Department of Corporate Finance, the Ministry of Finance, BMI and VNR are two insurance companies managed by the State Capital and Investment Corporation (SCIC) expecting to divest in the first quarter of 2022. The value of State capital at par value at BMI is VNĐ463.1 billion (US$20.3 million), while at VNR is VNĐ529 billion.
However, VNR has not received any documents from the authorities on the divestment of State capital, Nguyễn Thị Minh Châu, who is in charge of information disclosure of VNR, told tinnhanhchungkhoan.vn.
Finance-insurance expert Trần Nguyên Đán said that it is understandable that investors’ cash flow is poured into insurance stocks, especially those on the list of State divestment. But investors need to assess the business performance and growth potential.
Accordingly, if an enterprise subject to divestment has an almost exclusive segment, it is an investment opportunity, while if that field has been opened and liberalised, it is not attractive.
“For example, previously, a month after the successful State divestment, Sabeco (SAB) share price declined from VNĐ340,000 per share to VNĐ230,000/share. The shares’ fluctuation, then, created a lot of emotions in the market, but SAB shares currently are just traded over VNĐ160,000 per share,” Đán added.
Preliminary data from the Insurance Association of Việt Nam showed that in the first eight months of 2021, the revenue of the non-life insurance market is estimated at nearly VNĐ37.3 trillion, up 3.61 per cent over last year, the lowest growth rate in the last decade.
The slowdown was due to declines in both major retail businesses, with negative growth in vehicle insurance, while health insurance’s growth was lower.
Of which, vehicle insurance’s revenue reached nearly VNĐ10.3 trillion, down 7.7 per cent, while revenue of health insurance rose 3.39 per cent year-on-year to more than VNĐ11 trillion. —
Upcoming incentives create space for tech-led projects
New regulations on special investment incentives have been unveiled to facilitate more high-tech funding in Vietnam, giving the country a new tool to lure quality foreign investment and retain investors for the long term.
|Vietnamese high-tech groups are welcoming added investment from Asia and beyond. VIR Photo: Le Toan|
On October 6, the prime minister issued Decision No.29/2021/QD-TTg, in which new and expanded investment projects will be entitled to special incentives. The decision provides the levels, duration, and conditions for application of incentives on areas such as corporate income tax and land rent.
According to Seck Yee Chung, vice president of the Singapore Business Group (SBG), with the aim to boost the growth of startups, tech companies, and other innovative sectors, the Law on Investment 2020 supplemented the sectors that will be entitled to such funding incentives. The sectors include, among others, high-tech and sci-tech enterprises, innovative small- and medium-sized enterprises (SMEs), research and development centres, and investment in technical facilities for SMEs.
“Decision 29 has provided further guidance on the requirements and specific incentives applicable to these projects and, in general, I believe this new regulation will help promote investment in Vietnam,” he added.
Sophie Mermaz, head of the French Chamber of Commerce and Industry in Vietnam (CCIFV) in Hanoi, said, “Considering that French companies are at the cutting edge of technological progress and innovation in sectors such as digital, energy, and pharmaceuticals, a push for technology and know-how transfer to access a market as vibrant as Vietnam is more than welcome.”
The CCIFV, as one of the largest foreign business associations in Vietnam, is promoting and supporting investors wishing to do business in Vietnam and it greatly welcomes the positive announcement, Mermaz said. “We strongly believe that Vietnam is rapidly emerging as one of the world’s new manufacturing hubs. Through our business centres and associated consultancy services in Ho Chi Minh City and Hanoi, we strive to entice tech and innovative companies to set up in the new ASEAN hub that is Vietnam,” she added.
The new regulations on special investment incentives may also facilitate Vietnam to fulfil its commitments under a wide range of free trade agreements (FTA) it has signed. In particular, the EU-Vietnam FTA is expected to strengthen Vietnam’s competencies by fostering further European high-tech and innovation investments, which are important to accelerate the development of the local industrial and digital economy in line with the country’s development strategy.
Benefiting from maturity
According to Guru Mallikarjuna, managing director of Bosch Vietnam, Vietnam has a favourable economic outlook for German investors, especially with ample advantages for further industrial and high-tech development, such as availability of a competitive labour force, preferable age brackets, and increasing focus on capacity training and development trajectory. In addition, direct effects from FTAs promote Vietnam’s standing even stronger with fewer trade barriers with countries in the EU and Asia, representing a huge purchasing power of billions of potential customers.
“The pandemic has also accelerated digitalisation, leading to higher productivity and promoting leaner production footprints that are closer to end markets,” Mallikarjuna said. “In response to this shift Vietnam, with the right pandemic management strategy, can present itself as a prime candidate for global and German investors.”
He did add, however, that it remains a valid argument that Vietnam’s supply chain could benefit from further maturity and expert availability – but the country is well on its way to addressing this matter to sharpen its competitive edge.
Specifically, for German investors and manufacturers, this is thought to be an opportunity rather than a challenge, providing that they act boldly and imaginatively to leverage the forefront capabilities that German industries are known for, in Industry 4.0 technologies and system quality. Through embracing next-generation digital technologies such as automation, advanced robotics, and more, not only will it enable German firms to significantly improve speed and productivity, but will also promote a much leaner and more flexible supply chain that is located in close proximity with end users of ASEAN’s growing markets, according to Mallikarjuna.
The new regulations on special investment incentives are being offered in the hope of aligning Vietnam’s efforts to attract high-quality investment in the Industry 4.0 era. However, there are still some concerns as to whether certain conditions under the decision would be workable. Chung from the SBG pointed out that in order to enjoy the incentive corporate income tax rate of 9 per cent for 30 years, the project must be in business lines eligible for exceptional incentives, and with a total investment capital of at least VND30 trillion ($1.3 billion), with at least VND10 trillion ($434 million) being disbursed within three years.
Given the significant size of investment capital to be disbursed within a short period of time, the number of projects that can meet the conditions for entitlement to this particular incentive is likely limited. It remains to be seen, in practice, as to how meaningfully this regulation will be interpreted and applied.
Chung also noted that the regulation on investment incentives is a significant effort from the government to facilitate foreign investment, especially in tech sectors, into the country. However, in addition to regulations on investment incentives, tech transfer and investment into a particular market, including Vietnam, depend on the various policies and circumstances.
“These can include support from the government, whether on a business-friendly environment, legal framework on protection of intellectual property rights, cybersecurity, and also taxation. In addition, the country’s ability to manage future crises can be a factor that the investor will consider before making a decision,” Chung stated.
As Vietnam is reopening its economy, the new investment incentives also give confidence for foreign financiers to retain investment in Vietnam after the implementation of tough coronavirus prevention measures.
Mermaz from the CCIFV said that Vietnam does have advantages in the fast-evolving international supply chain. The country remains in a good position as it has been open for foreign direct investment (FDI), and related regulations have been favourable. The economy is likely to bounce back strongly in 2022, attracting strong demand for relocation.
Despite the complexities of the pandemic, FDI keeps growing in terms of capital investment. Vietnam’s favourable conditions for doing business has cemented its position as a safe and stable destination for investment. “We aim at helping companies make informed decisions when beginning their operations in Vietnam and will continue to do so when the 2022 economic rebound takes place,” Mermaz added.
In the same vein, Chung said that the safety measures introduced to manage the pandemic outbreaks have seriously affected the business of many companies and investments in Vietnam. However, he believed that Vietnam is still an attractive destination for foreign investment. In 2020, Vietnam was one of the few Asian countries to continue to grow and attract new foreign investment despite the impact on the global economy.
“The country’s position in the global supply chain remains important, as investors look at other Asian countries outside of China for production activities. That being said, in order to compete with other countries to attract foreign investment, the government should continue to support companies in Vietnam, whether by way of incentives or ensuring a fair and transparent environment to do business in,” he said.
IT giant FPT reports high profits over first nine months of 2021
HÀ NỘI – Information technology giant FPT has recorded VNĐ24.95 trillion (over US$1 billion) in sales and VNĐ4.57 trillion ($198 million) in pre-tax profits over the first nine months of 2021, up by 17.9 per cent and 20 per cent respectively.
Both revenue and profit enjoyed positive growth, with the technology and telecommunications sectors providing the primary impetus.
FPT’s technology sector accounted for 22.1 per cent of its revenue and 30.4 per cent of its pre-tax profit.
Overseas, sales increased in all of the major markets, especially in the US and Europe, due to high COVID-19 vaccination rates and steady economic recovery. FPT has consistently received substantial orders.
Revenue from digital transformation reached VNĐ3.94 trillion over the nine months, up by 59.6 per cent, thanks to growth in key technologies such as cloud computing (Cloud), Artificial Intelligence (AI), and low-code.
FPT secured 16 projects totalling more than $5 million by the end of the third quarter this year.
After three quarters of 2021, the group has achieved 72 per cent of its revenue target and 74 per cent of its profit target for this year, indicating that it is on track to meet its full-year targets.
FPT’s telecommunications sector has generated revenue of VNĐ9.23 trillion, an increase of 11 per cent with a pre-tax profit of VNĐ1.78 trillion, a 21.9 per cent increase over the same period last year.
Due to increased profits from PayTV, combined with the postponement of infrastructure investment due to the pandemic, the pre-tax profit margin of telecommunications services, including broadband and other services, continued to improve in the first nine months of 2021, reaching 20.8 per cent and 14 per cent, respectively. —
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