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Vietnam proves potential to profit from shifts in global supply chain

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Years of economic growth and success in fighting Covid-19 paved the way for Vietnam to receive shifting FDI inflows, but limited participation in manufacturing industries might hinder its progress.

Vietnam proves potential to profit from shifts in global supply chain
Processing seafood for export.

The global crisis

About 500 int’l delegates on November 18 attended the 2020 Export Forum on shifting the global supply chains and sustainable development post-Covid. The forum was held by HCMC Investment and Trade Promotion Center.

At the forum, according to the World Bank (WB), developing countries have to face with “strong headwinds” brought about by the epidemic. Covid-19 accelerated the trend of global trade, GDP and productivity slowdowns.

Representatives from the World Bank Group (WBG) stated how developing countries are fighting an uphill battle brought about by the epidemic which stagnated global trade, GDP growth and productivity.

The WBG also predicted that global GDP will decrease by 5.2% in 2020, which would be the deepest recession in 8 decades and the 4th deepest of 14 global recessions in the past 150 years.

In the same report, they said commodity trade could shrink 13%-32% in 2020. Per capita income this year is also expected to decline in 93% of all countries.

Major sources of development capital like FDI, indirect investment and remittances have all seen a sharp decline. The inflows of external private finance into developing economies could be reduced by US$700 billion compared to 2019, exceeding the impact of the 2008 global financial crisis by 60%. FDI inflows into emerging markets and developing economies will also go down by 21.4% this year.

What’s more, important int’l supply chains are over-concentrated in several specific countries, notably China, causing the supply chain to seriously break down when the pandemic hit. 

The role of Vietnam

Director of Baker & McKenzie Vietnam Co., Ltd. and American economist Frederick R. Burke at the forum noted that Vietnam’s macroeconomic indicators shows huge potential for growth despite the impact from the pandemic.

As of now, Vietnam is one of the most open economies in the world with great opportunities for new supply chains, with 13 global free trade agreements (FTAs) already in effect and an RCEP agreement on the way.

FDI investment into Vietnam within the first 6 months of 2020 reached nearly US$16 billion, down 15% year-on-year but still better than the average global drop rate of 30%-40% in 2020.

However, Vietnam’s participation in global value chains (GVCs) is still lacking compared to other ASEAN countries. According to the World Bank, Vietnam in 2018 only generated US$20.4 billion through GVCs, ranking 53rd out of 174 countries.

At the same time, the nation’s degree of participation in complex manufacturing processes remains low. According to the 2020 World Development Report (WDR), it is currently at the “limited processing-manufacturing” level and needs to move forward in GVCs to increase productivity.

Numbers show Vietnam’s GVCs account for 66% of commercial transactions, but localized trades only take up 28% of the total trade turnover. Not only that, the country’s economy is hyper-focused on specific markets such as textiles, electronics, chemicals and metals, which in total accounts for 2/3 of national trade.

At the same time, the 4 largest markets for Vietnamese manufacturers are China, Japan, Korea and the United States which account for 60% of total trade turnover. The top 4 corporations in the country are Samsung, Foxconn, Intel, Panasonic which account for 70% of trade turnover in GVC. This also means that 70% of Vietnam’s export turnover is earned by FDI enterprises.

It is estimated that every 1% increase in participation in GVC will increase per capita income by more than 1% in 2020, twice the amount earned from traditional trades.

Experts believe that Vietnam should adjust policies based on close association between public and private investment, and work hard to attract investors when they seek providers outside of China to diversify its GVC.

They also suggest to focus on the training of high-quality workers and promoting higher level education if one wants to move on from product assembly.

To grow ancillary industries, it is necessary to reduce logistic costs, build connecting infrastructures, improve administrative procedures, and improve the role of economic associations in connecting businesses. SGGP 

Hai Ha 

Source: https://vietnamnet.vn/en/business/vietnam-proves-potential-to-profit-from-shifts-in-global-supply-chain-690278.html

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Vietnam gains high trade surplus amid Covid-19 pandemic

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An employee is at work at a textile factory. Vietnam’s exports continued their upward spiral between January and November, sending the country’s trade surplus up to a record high of US$20.2 billion amid the Covid-19 pandemic – PHOTO: VNA

HCMC – Vietnam’s exports continued their upward spiral between January and November, sending the country’s trade surplus up to a record high of US$20.2 billion amid the Covid-19 pandemic, double the figure from the same period last year.

Statistics from the Ministry of Industry and Trade indicated that the country’s export revenue amounted to over US$25.1 billion in November, pushing the total export value during the 11-month period up to US$254.9 billion, up 5.5% year-on-year.

The largest export earner was processed and manufactured products, contributing nearly US$216.4 billion to the total export earnings during the 11-month period, up 6.1% year-on-year, VietnamPlus news site reported.

The exports of the agro-forestry-fishery sector made an impressive recovery in November, generating some US$2.2 billion, up 3.2% year-on-year.

Vietnam exported wood and wooden products worth US$10.9 billion during the period, up 14.1% over the same period in 2019.

The U.S. was still the largest buyer of Vietnam during the 11-month period, spending US$69.9 billion on Vietnamese goods, followed by China with US$43 billion.

As for imports, the country’s total import turnover during the January-November period reached US$234.7 billion, inching up by 1.6% against the same period last year.

Over the past 11 months, Vietnam’s import value from computers, electronics and accessories surged by 22% year-on-year, while mobile phones and accessories and plastic products were among the country’s top imports.

Source: https://english.thesaigontimes.vn/79625/vietnam-gains-high-trade-surplus-amid-covid-19-pandemic.html

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VN-Index continues to fly high

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Maybank Kim Eng Securities employees monitor share prices in this file photo. The VN-Index of the Hochiminh Stock Exchange expanded by 0.54% on December 2 – PHOTO: THANH HOA

HCMC – Despite unfavorable news about the complicated Covid-19 situation, active trading continued to help the VN-Index of the Hochiminh Stock Exchange fly high, ending at 1,014.32 points today, December 2, increasing by 0.54%, or 5.45 points, against the previous session.

Winning stocks outnumbered losers by 234 to 199. The southern market saw 684.5 million shares worth over VND14.3 trillion change hands, surging by 17.4% in volume and 22.6% in value against the previous session. Some 200 million shares worth over VND4.64 trillion were traded in block deals, including 160 million shares worth VND3.44 trillion of construction enterprise DIG.

The strong cash flow helped many bluechips extend. In the VN30 basket, electricity stock POW shot up to the ceiling price at VND10,800. Other top performers were property firm VHM, brewery SAB and low-cost air carrier VJC, increasing by 2.28% to VND85,200, 1.71% to VND196,800 and 1.27% to VND119,500, respectively.

Among bank stocks, TCB grew by 2.45% to VND25,100, while MBB and VCB were up 2.4% to VND21,350 and 1.63% to VND93,500, respectively.

Other large-cap stocks that gained ground included GAS, MSN, GVR, VRE, PLX, FPT, BVH and EIB, but at modest rates.

In contrast, industrial development corporation BCM, lender TPB and mobile phone retailer MWG were the biggest losers, declining by 4.16%, 2.01% and 1.72%, respectively.

Lender TCB led the southern market by liquidity with 27.5 million shares traded, followed by POW with 24.8 million shares.

On the Hanoi Stock Exchange, the HNX-Index increased by 1.25%, or 1.86 points, against the previous session, to close the day at 150.8 points, with gainers outnumbering decliners by 95 to 63. There were 69.8 million shares worth over VND1 trillion traded on the northern bourse.

The top gainers were service company THD and port operator PHP, which soared by over 9% to VND121,000 and VND15,700, respectively, and investment and trading company TNG and industrial development firm IDC, which shot up to the respective ceiling price of VND15,000 and VND32,400.

Major contributors also included securities company SHS, bank stock SHB and construction stock VCG, up 2.07%, 0.58% and 0.48%, respectively.

SHB led the northern market by liquidity with 9.8 million shares changing hands.

Lender ACB, one of the largest and most actively traded stocks on the Hanoi Stock Exchange, will be moved to the Hochiminh Stock Exchange from December 3.

Source: https://english.thesaigontimes.vn/79632/vn-index-continues-to-fly-high.html

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Social impacts key success factor for Vietnamese startups: experts

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Social impacts key success factor for Vietnamese startups: experts

Entrepreneurs attend the Gala Startup Viet 2020 in Ho Chi Minh City in December 2020. Photo by VnExpress.


Vietnamese startups using technology to create positive and sustainable impacts on the larger community have higher chances to succeed, experts say.

Le Diep Kieu Trang, a popular entrepreneur in Vietnam’s tech industry and founder of private equity firm Alabaster, said while many entrepreneurs focus on short-term benefits, those who can deliver products and services that are both profitable and have a positive influence on society are usually more well-received by the public.

Trang, one of the judges of the Startup Viet Gala 2020, a competition hosted by VnExpress Wednesday for young entrepreneurs to pitch their ideas and raise funds, said many youngsters think creating an app is by itself guarantees success, but in reality, attracting users to the app is the key and this is not easy.

“Apps only have impacts if they can attract users,” she reiterated.

Truong Gia Binh, chairman of tech giant FPT, said although technology is very important and the modern entrepreneur needs to have knowledge of artificial intelligence and Big Data, the most important knowledge is about humans.

“Startups need to know what value are you bringing and to whom.”

To succeed, entrepreneurs also need to find the right teammates and persevere. “No matter how many times you fail, stand up again,” he said.

Other experienced entrepreneurs also said that being persistent was very important. Phan Xuan Canh, CEO of recruitment platform Viec.Co, said in order to achieve a vision, startups will have to try different paths and fail, and perseverance is needed to go through the process.

As a judge at Startup Viet Gala 2020, Trang said she prefers startups that can bring a new and breakthrough product to the table with high technological application, and the company needs to be able to expand its market throughout Vietnam and the world.

“If your business model does not survive in Vietnam, I don’t think you can survive overseas.”

Step out of comfort zone

The problem with many startups in Vietnam is that they try to improve on the traditional business model with modern technology without bringing in any breakthrough idea, and those that only do this will not attract investments, she added.

Trang said she wants Vietnamese startups to think bigger. Although the Covid-19 pandemic has caused major difficulties in most sectors, it has also opened new doors for startups, not just in the Vietnamese market, but the world as a whole, she said.

Entrepreneurs who are willing to step out of their comfort zone and take this opportunity to move forward with more emphasis on the online market will have bigger advantages, she added.

Startup Viet 2020 Gala seeks to identify the best 15 startups in Vietnam and award them with a prize pool of VND3 billion ($130,000).

The winner of the competition on Wednesday was Tep Bac, which provides management and analysis services for seafood farms using technology. Other notable startups in the top five were Drone Pro, a provider of delivery services using drones, and BioStarch, which produces environment-friendly plastic bags using a mixture of cassava powder and primary microplastics for fast decomposition.

Source: https://e.vnexpress.net/news/business/economy/social-impacts-key-success-factor-for-vietnamese-startups-experts-4200504.html

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