Many Vietnamese enterprises, including Truong Hai Auto Corporation (THACO) and Duy Khanh Engineering Co. Ltd., have sought ways to improve their manufacturing capacity so that they can fulfill orders ushered in by the global supply chain shifts, these firms’ leaders said at a seminar held in Binh Duong Province on Thursday last week.
“Many partners and customers have immediately rushed to our factories after they arrive in Vietnam to see our production capacity,” said Do Minh Tam, general director of Truong Hai Supporting Industries and Mechanics Limited Liability Company (THACO Industries), an arm of THACO.
“We are expanding many factories to increase the capacity to grasp opportunities coming from the shift of supply chains from other countries to Vietnam.”
Tam was addressing the ‘The shift of supply chains – opportunities for Vietnamese enterprises’ seminar jointly held by Tuoi Tre (Youth) newspaper, the Industry Agency under the Ministry of Industry and Trade, and the Binh Duong People’s Committee.
He added that THACO Industries plans to enhance its investment in the southern key economic zone through various affiliate investment models.
This is an indispensable move when the firm has penetrated deeply into global supply chains.
THACO has taken the initiative in production and outsourcing to its partners who can help the group fulfill orders meeting standards in quality and progress.
“During the COVID-19 pandemic, which disrupted supply chains and caused a stagnancy of orders, the combination helped us satisfy the surging demand and remove the production pressure. Above all, this is an inevitable step to expand production,” Tam said.
According to the Vietnamese manufacturer, the supply chain shifts show that no manufacturers can produce all parts and accessories of a product themselves. This is also a challenge of large-scale industrial producers.
The outsourcing to other firms will go hand in hand with the technical and capital support and even the technology transfer, thus helping smaller enterprises get involved in global supply chains.
The sharing of orders and experience in governance also helps THACO’s business partners become more mature and standardize their product quality.
Meanwhile, Do Phuoc Tong, chairman of Duy Khanh Engineering Co. Ltd. and chairman of the Ho Chi Minh City Association of Mechanical and Electrical Enterprises, said global supply chains are being shifted strongly.
So as to brace for this trend, enterprises must make investments to refresh themselves and improve their competitiveness.
|A view of the seminar held on September 15, 2022. Many enterprises have taken the initiative in bracing for the supply chain shifts. Photo: Huu Hanh / Tuoi Tre|
As for Duy Khanh Company, Tong has seen opportunities in the mechanical engineering sector since 2016, so he has invested in a new factory at the Saigon Hi-Tech Park in Ho Chi Minh City.
At the end of this year, the factory is expected to be put into operation and participate in global supply chains with multiple products ordered by its partners.
“With more support policies to pave the way for local manufacturers to foray into the mechanical engineering sector, enterprises will have more opportunities to become part of global supply chains,” Tong noted.
According to Bui Ta Hoang Vu, director of the Ho Chi Minh City Department of Industry and Trade, from the connectivity of local and foreign supporting industry and manufacturing enterprises, the department realized that foreign direct investment (FDI) firms and industrial producers tend to increase their localization rates and most of them have their own localization strategies.
They always want to purchase domestic products due to more efficient logistics services, specifically a short distance from suppliers, a smaller inventory volume, faster delivery, easy control of suppliers, and competitive prices.
“If Vietnam promotes and optimizes these advantages, enterprises will have ample opportunities to participate in regional and global supply chains, and attract large hi-tech groups with a demand of shifting their production and supply chains,” Vu affirmed.
An Cuong Wood to list neary 134 mln shares on HOSE
An Cuong Wood-Working, which holds 55% of the market for decorative materials and industrial wood, announced the first six month revenue of VND1,915 billion ($80 million), up 12% and a 17.4% increase in after-tax profit to VND279 billion ($11.7 million).
Since this firm enjoys the benefit of name and brand recognition in the industry, leadership claimed that they are not particularly interested in the low-end category.
With an aim of building 30 more showrooms between 2022 and 2025, the Vietnamese enterprise An Cuong Wood already operates almost 30 showrooms around the country, mostly in Hanoi, Da Nang, and Ho Chi Minh City.
Builders, construction units, and agents account for 69% of the income generated by customers, followed by export customers (15%), consumer customers (5%), and real estate developers like Vingroup (11%). As of June 30, there were 2,962 persons working for the entire firm.
To enhance capacity, the firm is marketing the export market. With a concentration on the US, An Cuong Wood has exported goods to 15 nations.
By 2025, it’s anticipated that exports would account for 15–18% of overall income. The firm aspires to generate $300 million in sales by 2025 through a strategy of consistently growing its product line and finding new markets.
The profit after tax for An Cuong Wood- Working is VND947 billion ($40 million). The business continues to invest an additional VND393 billion ($16.5 million) in the first half of 2022 to acquire 30% of Central Hill Real Estate Company.
The leadership determined that the goal of VND550 billion ($23 million) in profit was realistic and anticipated that it will be exceeded by 10% to 20%. This will be the wood industry’s finest outcome ever.
Vietnamese dong ranked among currencies with lowest depreciation: SBV
Among the countries in the region and worldwide grappling with currency depreciation, the Vietnamese dong is listed in a group with the smallest devaluation, Pham Chi Quang, deputy director of the Monetary Policy Department under the State Bank of Vietnam, told a press briefing late last week.
In the year to date, the dong dropped by nearly 4 percent against the U.S. dollar, much lower than other currencies, said Quang.
After the U.S. Federal Reserve (Fed) hiked interest rates by 75 basis points on September 21, many nations followed suit.
In the past nine months, the Taiwanese dollar, the Japanese yen, the Philippine peso and the euro have lost 13.5 percent, 25 percent, 13.65 percent and 13.49 percent, respectively, against the greenback.
“The Vietnamese dong is one of the currencies reporting the lowest depreciation in the region and the world, at some 4 percent,” Quang stressed.
After the Fed’s move, a number of the central banks of many nations such as Thailand, Norway and Indonesia raised key interest rates to tame inflation.
Dao Minh Tu, deputy governor of the State Bank of Vietnam, said that many countries’ rate hikes are expected to take a toll on Vietnam’s foreign exchange rates.
Following the Fed’s rate spike, the central bank decided to set new interest rate caps on deposits.
The highest rate for savings from one month to fewer than six months is 5 percent per year, up 1 percentage point, taking effect from September 23.
“The central bank will continue to control its currency in a flexible and appropriate manner to stabilize foreign exchange rates and ensure a reasonable and legal supply of foreign currencies for firms and residents,” Tu affirmed.
The central bank’s top mission for the control over monetary policy is curbing inflation and stabilizing the economy, Tu added.
Besides, the banking system will focus on supporting enterprises with their post-COVID-19 recovery, contributing to reaching the full-year target of the country’s economic growth at 6.5 percent set by the National Assembly.
To ease fears over a spike in lending rates after the deposit rate cap hikes, the central bank will continue to maintain interest rate stability, said the representative of the central bank.
Tu also added that lending rates will follow the move of domestic and foreign inflation in a suitable way.
Further, the central bank will continue to encourage credit institutions to cut operating costs to lower lending rates for the government’s priorities, including small and medium enterprises and firms active in agriculture.
“We called on commercial banks for a cost-cutting plan to slash lending rates to share difficulties with customers. This has been implemented well over the past two years, with VND25 trillion ($1.05 billion) in lending rate reduction,” said Tu.
The credit growth target will be kept at 14 percent this year. In the year to date, the nation’s credit has jumped by over 10 percent.
Trade ministry aims to bring Vietnam Rice trademark into high-end markets
Vietnam’s Ministry of Industry and Trade is drafting a strategy to increase the country’s direct rice export rate and boost the sale of the Vietnam Rice national brand to high-end markets by 2030.
The trade ministry is making a draft strategy to develop Vietnam’s rice export until 2030, which highlights many solutions for boosting demand through negotiations, entering new markets, and increasing exports with a tariff reduction road map.
By 2025, the proportion of low- and medium-grade white rice will have accounted for no more than 15 percent of the country’s rice exports, while high-grade and fragrant rice, japonica rice, and specialty rice will constitute 40 percent.
Rice with high added value such as nutritious rice, parboiled rice, organic rice, and processed products will make up five percent.
By 2030, the direct export of rice will have generated 60 percent of the country’s rice export turnover, while products under the Vietnam Rice trademark will account for 25 percent.
To realize these goals, Vietnam needs to implement policies related to agricultural land, attract investment, promote mechanization and high technology in production, develop more rice varieties, and effectively use the Vietnam Rice trademark, the trade ministry stated.
Certain requirements in production and processing should be established to make sure that the quality of rice meets standards of the country as well as of demanding markets such as the European Union.
The development strategy also focuses on restructuring the rice industry and agricultural production, as well as providing solutions for the production and control of pesticide residues toward the implementation of clean agricultural production.
In addition, the country will tighten the management of imported rice via non-tariff measures and technical barriers.
Vietnam has grown and exported rice for many years, Nguyen Thanh Phuoc, head of the Sub-Department of Cultivation and Plant Protection in the Mekong Delta province of Soc Trang, stated, adding that it is a pity that no rice brand has become the national trademark.
The rice cultivation skills of local farmers have improved, and it is not difficult to produce high-quality rice varieties, Phuoc continued.
In order to have large output and stable quality, export businesses need to cooperate closely with farmers, the official proposed.
Farmers and businesses must play the central roles in boosting the exports of products under the Vietnam Rice brand, said Vo Cong Thuc, head of the food quality management department of Loc Troi Group, a manufacturer and supplier of agricultural products and services.
After noticing the positive signals from the European market, Loc Troi Group has boosted its investment into local farmers to ensure the interests of both sides.
If farmers do not comply with European rice export standards, businesses will suffer losses as they fail to provide high-quality products for their partners.
Farmers’ compliance with international standards of farmers is decisive in producing high-quality rice grains and increasing the value of Vietnam’s rice export in the global market, Thuc remarked.
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