Vietnam Airlines receives first Airbus A321neo plane
The national flag carrier Vietnam Airlines has received its first Airbus A321neo from US-based Aviation Capital Group (ACG) in Hamburg, Germany earlier this week.
The new aircraft will be used for domestic flights and routes connecting destinations in Southeast Asia.
It is among the 20 new-generation A321neo planes the airline plans to lease from the ACG, ICBC Leasing of China, and US-based Air Lease Corporation (ALC), expected to be fully delivered by the end of 2019.
These planes will help expand its aircraft fleet to about 110 in 2020.
Khanh T. Tran, president and CEO of ACG, expressed his delight at the delivery and stressed the company looks forward to Vietnam Airlines operating these highly fuel-efficient aircraft in their growing route network.
For his part, Vietnam Airlines’ president and CEO Duong Tri Thanh said his firm selected the Airbus A321neo for its exceptional operational performance with 15-20 percent reduced fuel burn and its outstanding passenger comfort and amenities, describing the event as marking a milestone in Vietnam Airlines’ ongoing programme to upgrade its narrow-body fleet as well as our 4-star service quality.
Founded in 1989, the ACG is one of the world’s premier full service aircraft asset managers with approximately 500 owned, managed and committed aircraft as of September 30, 2018, which are leased to about 90 airlines in 45 countries.
Vietnam Airlines is operating 94 routes to 21 domestic and 29 international destinations with an average of 400 flights per day. In 2017, it was named “Asia Pacific Airline of the Year” by CAPA; and “World’s Leading Airline – Premium Economy Class” and “World’s Leading Cultural Airline” in the World Travel Awards 2017.
In July, Skytrax – the world’s leading airline and airport rating organization – rated Vietnam Airlines as a 4-star airline for three consecutive years.
The State-run company recorded sales of 88.4 trillion VND (3.7 million USD) and carried 26.5 million passengers last year. Its on-time performance index (OTP) exceeded 90 percent.
New direct air route linking Vietnam and Switzerland opens
The first direct flight linking the southern economic hub of Ho Chi Minh City and Switzerland’s northeast city of Zurich has been successfully conducted by the Edelweiss airlines of Switzerland.
The A340-300 plane arrived at Zurich airport in the afternoon of November 16 to the warm welcome of representatives of the airline, the Switzerland Tourism, and the Vietnamese Embassy in the country.
Speaking at the event, Ambassador Pham Hai Bang said that the route is expected to help boost the tourism development and trade between the two countries.
For his part, member of the management board of Edelweiss Markus Dander spoke highly of the opening of the route. It will help tourists from Switzerland in particular and Europe in general to have more favourable conditions to explore the numerous points of attraction and relaxation in Vietnam which are becoming more and more popular among the tourist community in the region and the world.
Edelweiss will conduct two return flights a week on this route, starting from Zurich on every Monday and Thursday, and from Ho Chi Minh City on every Tuesday and Friday. Each of the A340-300 planes has 314 seats, including 27 business-class ones.
The carrier has been posting information on Vietnam’s famous tourist attractions like Ho Chi Minh City, Phu Quoc, Hoi An, Da Nang, Phan Thiet, Nha Trang, Hue and Ha Long Bay on its website to attract customers to the route. The opening of the Ho Chi Minh City – Zurich air route lies within its expansion plan.
Vietnam posts trade surplus of US$7.21 billion in 10 months
Export value of the FDI sector in the first ten months of 2018 reached US$142.8 billion, up 14.9% year-on-year or US$18.49 billion, accounting for 70.7% of Vietnam`s total export value.
Vietnam gained a trade surplus of US$770 million in the second half of October, resulting in a favorable balance of US$7.21 billion in the first ten months of 2018, according to the General Department of Vietnam Customs (GDVC).
Total trade value in the last 15 days of October reached US$23.88 billion, up 17.6% or US$3.57 billion compared to 15 days earlier.
This resulted in a trade turnover of US$396.85 billion in the January – October period, up 13.8% or US$48.12 billion year-on-year.
The country’s export turnover in the second half of October reached US$12.33 billion, up 21.1% or US$2.15 billion compared to 15 days earlier, resulting in total export turnover of US$202.03 billion as of the end of October, up 15.2% or US$26.67 billion year-on-year.
Export turnover of the FDI sector in the second half of October increased by 20.9% or US$1.53 billion to US$8.84 billion compared to the first half of October.
The figure brought total export value of the FDI sector to US$142.8 billion as of the end of October, up 14.9% year-on-year or US$18.49 billion, accounting for 70.7% of Vietnam’s total export value.
Meanwhile, Vietnam’s import value in the second half of October was reported at US$11.56 billion, up 14% or US$1.42 billion compared to the first half of October.
In the first ten months of 2018, total import turnover stood at US$194.82 billion, up 12.4% or US$21.45 billion year-on-year.
FDI sector’s import turnover in the second half of October reached US$7.01 billion, up14% or US$863 million compared to 15 days earlier.
Overall, total import turnover of foreign companies in the January – October period amounted to US$116.99 billion, up 12.3% year-on-year or US$12.8 billion, equivalent to 60.1% of Vietnam’s total import turnover.
Vietnam’s listed banks see credit grow 11% in Jan-Sep
It is expected that around VND391 trillion (US$16.76 billion) of credit could flow into the economy in the last quarter of 2018, which will be enough to meet the entire demand of the economy in the remaining months.
By the end of September, credit growth of the 14 listed banks was 11% year-to-date, implying that total credit growth of those banks in the third quarter was approximately two percentage points, according to Vietnam Dragon Securities Company (VDSC).
Meanwhile, state-owned commercial banks still had positive credit growth compared to the average of listed banks, with Bank for Investment and Development of Vietnam (BIDV), Bank for Foreign Trade of Vietnam (VietinBank) and Vietnam Commercial Bank for Industry and Trade (Vietcombank) gaining 4.9, 2.6, and 3.5 percentage points in the July-September quarter, respectively.
Besides their role as commercial banks, state-owned banks also have duties supporting the State Bank of Vietnam (SBV) in stabilizing the monetary market. Therefore, it is possible that a large amount from these banks was lent to important sectors at low interest rates. To compensate, somehow, the amount of deposits from the State Treasury in these three banks also increased sharply, more than 16% compared to the end of June 2018.
Profit-before-tax (PBT) of these banks grew more than 28% year-on-year in the first nine months of 2018. Excluding Vietnam Prosperity Bank (VPBank), most banks fulfilled more than 75% of their PBT target for the year. However, the sum of total operating income (TOI) of those banks grew 22% year-on-year, lower than the growth of PBT.
This implies that the profit growth in 2018 was mainly due to lower expenses, especially provision expenses which significantly decreased in some banks like Asia Commercial Bank (ACB) and Vietnam Technological and Commercial Bank (Techcombank).
Some banks reported high earnings growth due to income from bancassurance up-front fees or divestments. Meanwhile, net interest income (NII), which contributes more than 70% to bank earnings grew a mere 16%. Given that the SBV will gradually slow down credit growth in the upcoming years, VDSC expected the growth of NII will be even lower than of 2018.
Therefore, it is predicted that banks with high growth in 2018, mainly due to the reduction of provision costs and one-off earnings, will be unlikely to maintain such levels in 2019. Some banks, which have bought back all of their special bonds in 2018, are still likely to record high earnings growth in 2019. The picture for profit growth of banks will generally be uneven in 2019.
It is expected that around VND391 trillion (US$16.76 billion) of credit could flow into the economy in the last quarter of 2018. Considering the lending amount in the fourth quarter of previous years, such an amount will be enough to meet the entire demand of the economy in the fourth quarter of 2018, stated VDSC. Hence, VDSC believed the credit growth for 2018 will be around 16.5 – 17%.
Human capital remains driving force for Mekong Delta’s sustainable growth
Human capital is seen as the key driving force for ensuring sustainable growth in the Mekong Delta, in addition to other resources, such as natural resources, wild and domesticated animals, and plants.
Talking on the sidelines of a “Sustainable development of the Mekong Delta: Water – Agriculture – Business” conference, which was held recentaly in Can Tho City, Duong Van Ni, a biodiversity expert at Can Tho University, said human capital is the most indispensable factor for the region.
In reality, if people do not know how to leverage the diversity of natural resources, as well as plants and animals, the region’s sustainable growth may be a difficult target to achieve.
Ni added the three main resources should have mutual connections, which could be only formed by mechanisms and supporting policies of the State.
In short, on the journey to achieve regional sustainable development, human capital will serve as the key determining factor, while other infrastructure facilities and investments function as supporting tools, said Ni.
Earlier, Nguyen Hieu Trung, head of the Institute of Climate Change Study at Can Tho University, spoke at a seminar, saying that the region currently faces multiple challenges, such as the rising sea level, drought, salinity intrusion, and landslides, despite significant efforts by local authorities to tackle these issues.
However, looking on the bright side, these obstacles will also motivate the Mekong Delta to make needed changes, said Trung.
He added that the region will need to make appropriate land use allocations. For instance, intensive farming and the use of fertilizers should be reduced, while focusing on production based upon market demand.
PM approves orientations on ODA use
The Prime Minister has approved new orientations on the attraction, management and use of official development assistance (ODA) and preferential loans from foreign lenders for the 2018-2020 period, in a bid to meet the goals of the 2021-2025 period. The loans will be used for developing investment projects, not for funding regular expenses, news website VnEconomy reported.
For the 2018-2020 period, the Government asked agencies to work to overcome existing obstacles, bolster disbursements and utilize the loans efficiently. Additionally, agencies are to continue selecting and making preparations for potential public investment projects based upon their socio-economic and financial efficiency, while the disbursement for such projects will be carried out after 2020 to ensure their use for their original purpose.
In addition, the potential public projects should be shortlisted to help obtain sustainable socio-economic growth. Meanwhile, the budget deficit must be brought under control so that public debt will not exceed the ceiling.
The loans will be set for crucial sectors and projects which have effective dissemination and inter-regional connectivity, and serve as the driving force for regional development. In addition, the projects should be evaluated in a transparent, objective manner to increase the efficiency of the use of ODA loans.
According to the Government’s orientations, the ODA and preferential loans will be only injected in fields and projects whose public investment capital fails to fund, and fields in which the private sector shows no interest due to low or nearly no profits, or special fields that need support from the State to supervise and control prices to pave the way for development of other economic sectors, comprising sea ports and river ports.
Apart from that, private enterprises are encouraged to team up with the State to assist infrastructure projects. Additionally, local firms should be given supporting policies to take out loans from the World Bank and the Asia Development Bank, alongside preferential loans from other lenders without the Government’s guarantee, aiming to launch further projects deploying renewable energy and responding to climate change.
Notably, the Government said that the ODA and preferential loans will not be used for regular expenses.
Further, the Government prioritizes using the concessional loans in areas such as poverty reduction, knowledge and technology transfers, climate change, the fighting and prevention of natural disasters, and other social sectors. In addition, large-scale infrastructure projects that can generate high profits to pay debts will be given priority to take advantage of the loans.
For the 2021-2025 period, the Government required utilizing ODA and preferential loans for projects that will have highly positive socio-economic results, or can generate foreign income in medium and long-term periods to assist in payment for public debt, such as projects in the fields of transport, smart urban, smart agriculture, and general innovations.
Work on two North-South expressway sections begins next year
All 11 subprojects of the Eastern North-South Expressway for the 2017-2020 period have had their feasibility studies approved. As such, work on the first two of the three sections funded by the State budget will start early next year.
The first section, Cam Lo-La Son, has a total length of 102 kilometers, connecting the north-central province of Quang Tri with the neighboring province of Thu Thien-Hue.
A contract with a technical design consulting firm for this subproject is expected to be struck next month, allowing the consultant to immediately conduct a survey for the technical design, demarcation and site clearance.
During the technical design stage, the ministry will put the project up for tender to select a construction contractor. By the end of the first quarter next year, there will be some land available to start work on the project.
The second sector linking Cao Bo of Nam Dinh Province with Mai Son of Ninh Binh Province – both in northern Vietnam — has a total length of some 15 kilometers.
The selection of a technical design consultant for this subproject is ongoing, and construction work is also expected to begin early next year.
Eight other subprojects are to be executed under the public-private partnership (PPP) mode. Bidding will be conducted to choose technical design consultants for these subprojects later this month.
The signing of consultancy contracts is to be completed next January. It takes an estimated eight months to produce technical designs and cost estimates.
From September 2019, the ministry will put these PPP subprojects up for tender to select their investors. Work on these projects will commence in 2020.
The construction timeline of the PPP projects is slower than that of budget-funded projects because of the need for prequalification and international bidding for investor selection, according to the ministry.
The expressway, which is expected to get off the ground in 2019 and be complete in 2021, will pass through 32 cities and provinces and four key economic regions — the North, the Center, the South and the Mekong Delta — and will connect Hanoi and HCMC, the nation’s two largest cities.
In 2017-2020, some 654 kilometers of the expressway will be built with four to eight lanes and divided into 11 subprojects. Covering a total area of 3,700 hectares, the project may affect some 8,200 households. The cost of resettling 2,020 households could amount to VND14.3 trillion.
Stable growth predicted for steel consumption until year’s end
The Vietnam Steel Association (VSA) predicts that consumption for steel in both domestic and foreign markets will maintain stable growth until year’s end, after rises in production and sales over the last 10 months.
VSA Vice Chairman Nguyen Van Sua said without any big changes, steel consumption in large markets is likely to remain steady until the end of 2018.
He noted some factors that may affect global steel consumption, including US tariffs on Turkey, winter production cuts in China and US-China trade tension. Demand for the product in Europe is forecast to increase by 2.2 percent this year, driven by surging auto and construction demand.
In the domestic market, steel production and sales are enjoying fast growth and this trend will likely maintain through December, he added.
VSA data showed that more than 20 million tonnes of steel products were manufactured between January and October, up 17.7 percent year on year. More than 18 million tonnes of steel were sold with some 3.9 million tonnes exported, respective increases of 27.7 percent and 31.6 percent.
Construction steel is one of the products enjoying the best growth recently, with more than 8.3 million tonnes produced in the 10 months, up 9.8 percent, and almost 8.3 million tonnes were sold, up 13.8 percent.
Hoa Phat topped the construction steel market share with 23.45 percent, followed by the Vietnam Steel Corporation (17.5 percent), Pomina (9.97 percent), Posco SS (9.35 percent), and Vinakyoei (8.38 percent), according to the VSA.
Woodwork industry sees strong rises in both domestic consumption and exports Vietjet sees 1,355 flights delayed in Oct
Steel exports up almost 50 percent in 10 months
Steel products are among export staples with high growth in the first 10 months of this year, according to statistics of the Ministry of Industry and Trade.
In the period, the steel industry earned 2.47 billion USD from the export of various types of steel products, up 49.1 percent from the same period last year.
The output of unprocessed iron and steel also increased by 40.5 percent, while that of rolled steel went up 6.6 percent and shape steel, 6.9 percent on a yearly basis.
Main export markets of Vietnam’s steel in the first nine months of this year were Cambodia, which bought 631.2 million USD worth of Vietnamese steel products, the US (613.1 million USD), Indonesia (360.6 million USD), Malaysia (330.6 million USD), and Thailand (172.3 million USD).
The MoIT said the steel industry faced fierce competition from imports, along with many anti-dumping lawsuits in importing countries.
A problem of concern for Vietnam is the launch of anti-dumping investigation in several traditional ASEAN markets such as Thailand and Malaysia targeting steel products with Chinese origin or imported from China into Vietnam.
The ministry advised steel firms to use domestic materials and strive towards closed production chain to avoid anti-circumvention investigations.
Domestic supply makes automobile industry more competitive
Vietnamese automobile firms can gain a competitive edge over their rivals in ASEAN if the domestic supporting industry uses more locally-produced parts, heard a conference recently held in Hanoi by the Central Institute for Economic Management (CIEM).
The Ministry of Industry and Trade said Vietnam has 358 automobile-related manufacturing enterprises, including 50 auto assembly companies and 308 auto part producers. The number of auto part producers is much lower than in Malaysia and Thailand, which have 385 units and 2,500 units respectively.
The industry produces simple parts such as components for chassis, trunks, cabinets, car doors, tires and tubes, radiators, brake lines, electrical wires and wheel rims, which have been shipped to Cambodia, China, Myanmar, Laos and the US.
Vietnam’s exports of automobile components and spare parts hit 3.5 billion USD in 2015. The figure rose to 3.9 billion USD in 2016 and more than 4.4 billion USD in 2017.
Experts at the conference described difficulty accessing capital as a major challenge to small spare part producers, as a car part production line costs tens of millions of USD. Meanwhile, preferential policies and support mechanisms have only been offered in the short-term and lack efficiency.
According to Deputy General Director of Toyota Motor Vietnam Shinjiro Kajikawa, Vietnam’s automobile development depends much on the growth of its support industry. Small automobile output and low localisation rate increase car production costs.
The cost to produce cars in Vietnam is 10-20 percent more than that of imported automobiles from ASEAN countries, he said.
Vietnam should draw up policies to aid the automobile supporting industry, making it more competitive in terms of quality, costs and delivery.
McKinsey: Banks in the changing world
McKinsey released its eighth annual review of the global banking industry on November 7, “New rules for an old game: Banks in the changing world of financial intermediation”, based on data and insights from Panorama, McKinsey’s proprietary banking research arm, as well as the experience of clients and practitioners from all over the world.
Since the financial crisis, the global banking industry and financial regulators have worked in tandem to move the financial system to a solid grounding with a higher level of safety. The Global Tier 1 capital ratio – one measure of banking system safety – increased from 9.8 per cent in 2007 to 13.2 per cent in 2017. Other measures of risk have improved as well; for example the ratio of tangible equity to tangible assets, which increased from 4.6 per cent in 2010 to 6.2 per cent in 2017.
However, growth in the banking industry continues to be muted. Industry revenues grew at 2 per cent per year over the last five years; significantly below the historical annual growth of 5 to 6 per cent.
Furthermore, global banking return on equity (ROE) has hovered in a narrow range of between 8 and 9 per cent since 2012. McKinsey found significant geographical variance. Banks in both the UK and Western Europe increased their ROEs significantly, whereas their counterparts in the US and Japan registered declines.
Emerging markets are beginning to falter. In 2017, the price-to-book ratio of developed-market banks overtook that of emerging market banks for the first time in 14 years.
However, the banking sector’s price-to-book ratio was consistently lower than that of every other major sector over the 2012-17 period, trailing even relatively sluggish industries such as utilities, energy, and materials. This difference persists even when other valuation multiples, such as price-to-earnings ratios, are compared.
At the heart of the report is McKinsey’s new analysis (sizing and mapping) of the global financial intermediation system – the system that stores, transfers, lends, invests, and risk manages roughly $260 trillion in funds. The revenue pool associated with intermediation – the vast majority of which is captured by banks – was roughly $5 trillion in 2017, or approximately 190 basis points. As recently as 2011, the average was approximately 230 basis points. The report explores how this revenue pool could evolve over time.
“We believe the lack of investor faith in the future of banking is tied, at least in part, to doubts about whether banks can maintain their historical dominance of the financial intermediation system,” said Mr. Miklos Dietz, report author and McKinsey senior partner. “The report looks at the two forces – technological (and data) innovation and shifts in the regulatory and broader socio-political environment – that are reshaping the market structure of financial intermediation and the role of banks in this system. These dual forces are opening great swaths of this financial intermediation system to new entrants, including other large financial institutions, specialist finance providers, and technology firms.”
A number of case studies are detailed in the report (cash equities, Swedish consumer finance, and Chinese payments) to illustrate the shift in market structure already underway as a result of the dual forces mentioned above.
McKinsey sees the current complex and interlocking system of financial intermediation streamlined by the forces of technology and regulation into a simpler system over the coming years, with three layers: Everyday commerce and transactions (for example, deposits, payments, and consumer loans). Intermediation here would be virtually invisible and ultimately embedded into the routine digital lives of customers.
The second layer would comprise of products and services in which relationships and insights are the predominant differentiators (for example, M&As, derivatives structuring, wealth management, and corporate lending). Leaders here will use artificial intelligence to radically enhance, but not entirely replace, human interaction.
The third layer will revolve primarily around business-to-business services where scale will be a key differentiator (for example, parts of sales and trading and standardized portions of wealth and asset management). Institutional intermediation will be heavily automated and provided by efficient technology infrastructure with low costs.
“We believe that the changes coming to the global financial intermediation system will be profound,” said Mr. Rushabh Kapashi, report co-author and McKinsey partner. “However, they do not assume that banks will become irrelevant. For instance, there will always be demand for risk intermediation. The question is whether banks will be disintermediated, disaggregated, or commoditized, or whether they can maintain and expand their role in intermediation. Our report outlines a number of strategic choices that banks can make to thrive in this new world of financial intermediation.”
McKinsey & Company is a global management consulting firm deeply committed to helping institutions in the private, public and social sectors achieve lasting success. For 90 years, the firm’s primary objective has been to serve as clients’ most trusted external advisor. With consultants in over 120 cities in more than 60 countries, across industries and functions, McKinsey brings unparalleled expertise to clients anywhere in the world. The firm works closely with teams at all levels of an organization to shape winning strategies, mobilize for change, build capabilities, and drive successful execution.
Regional highlights for Vietnam include:
Despite a moderate deterioration in revenue margin, risk cost and cost efficiency, ROE moved upwards due to an increase in other items and leverage.
The price-to-book is higher than emerging market counterparts while the valuation gap is marginally lower than the global average.
Other global / regional insights:
Global banking return on equity (ROE) has typically hovered in a narrow range between approximately 8 and 9 per cent since 2012.
Banks in both the UK and Western Europe increased their ROEs significantly whereas their counterparts in the US and Japan registered declines.
Emerging markets are beginning to falter. In 2017, the price-to-book ratio of developed-market banks overtook that of emerging market banks for the first time in 14 years.
In China, soaring internet and e-commerce penetration has enabled tech giants such as Alibaba, Tencent, Ping An, and Baidu to muscle in on this attractive market, particularly in retail payments. Technology firms grew their market share in Chinese retail payments to almost 50 per cent in 2017, up from just 5 per cent in 2012.
Vietnam taps opportunities to thrust exports to US
The US is the largest export market of Vietnam, with export turnover hitting 39 billion USD in the first ten months of 2018, representing a year-on-year increase of 12.8 percent.
Experts said that the trade war between the US and China is creating many opportunities for Vietnam to promote exports to the market.
According to the General Statistics Office (GSO), the export of main products to the US recorded strong rise in the period.
Particularly, the export of tra fish to the US has sharply surged in the first three quarters of 2018, totalling 369.1 million USD, up 42.9 percent against the same period last year.
Representatives from Vinh Hoan – one of the leading firms in catfish processing and exporting, said if the US imposes tax on tra fish and tilapia products from China, Vinh Hoan will have more opportunities to occupy the market share in this large market.
Nguyen Xuan Thanh from Fulbright Vietnam University said Vietnamese enterprises must mostly compete with Chinese firms when exporting to the US.
With the taxation imposition on Chinese goods exported to the US, Vietnam’s processed and fresh seafood will have a competitive advantage in this market.
Apart from the seafood sector, other sectors of Vietnam such as wood processing, machinery, electronic and electrical equipments, handbags, plastic, rubber, metal products and sport equipment are also benefiting from the US-China trade war.
According to Dr. Su Ngoc Khuong, investment director of Savills Vietnam, said the war is one of the agents causing the biggest change to the global economy in 2018. It is creating great opportunities for many types of exports from Vietnam in the US market.
Khuong noted that it is necessary to have specific orientations and policies to support Vietnamese enterprises in improving the quality of their products, meeting the requirements in terms of quality and price, towards increasing the market share of Vietnamese goods in the US market.
Majority of German firms plan to expand Vietnam business: report
As many as 54 percent of the German businesses operating in Vietnam wish to expand their operation in the next 12 months, while 52 percent hope to recruit more employees for their factories, according to the annual AHK World Business Outlook released recently.
The report, made by the German Chambers of Commerce in various countries around the globe, includes comments from German businesses in Vietnam and the world on economic development at present and in the future.
It has the engagement of 3,500 German enterprises around the world who gave their ideas on the growth of the host countries and themselves as well as their future plans.
According to Marko Walde, Chief Representative of the GIC/AHK in Vietnam, the Vietnamese economy has been growing, while the conclusion of negotiations with the EU on a bilateral free trade agreement has created momentum for the country’s economic expansion.
The signing of the deal will be an evidence for the trade facilitation trend, he added.
Walde said that Vietnam is an important ASEAN partner of the EU and Germany. Amidst the US-China trade tension, enterprises are moving their production facilities to China’s neighbouring countries to avoid tariff measures.
However, shortcomings in the legal corridor for trade and business as well as the shortage of high-quality human resources have been great challenges facing German investors in Vietnam.
The report also gives optimistic comments on prospects of economic growth in the Asia-Pacific region. However, German firms have no longer kept high expectation in the region as the beginning of 2018.
The firms held that the region’s economy will slow down due to the adjustment in interest rate of the US as well as impact of the US-China trade tension.
Experts: CPTPP to create impetus for textile, footwear industries
The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) agreement is expected to aid Vietnam’s exports, especially textiles and footwear industries, when it takes effect, according to experts.
One of the key contents of the CPTPP is the removal of 95-98 percent of tariff lines as soon as the agreement enters into force. The remaining tariff lines will be cut over the next seven years, moves predicted to aid the growth and export turnover of the two industries.
Vietnam’s garment and textiles export turnover hit 25.2 billion USD in the first 10 months of 2018, up 17.1 percent year-on-year. Meanwhile, footwear exports were valued at 13 billion USD, 9.7 percent higher than in the same period last year.
The export turnover of garment and textiles recorded growth in key markets such as the US, the EU, the Republic of Korea, China and member nations of the CPTPP.
According to the Vietnam Textile and Apparel Association (VITAS), the CPTPP will help Vietnam accelerate its growth and make the export market more balanced. The zero-percent tariffs will help the country’s textile and garment industries expand market share in countries with high tax rates like Canada, New Zealand and Australia.
Vietnam’s export turnover of the industry is forecast to reach 35 billion USD in 2018. The figure is expected to climb to 50 billion USD in 2025.
Experts, however, also pointed out difficulties facing the sector.
The CPTPP sets strict requirements on product origin, which is a big challenge for Vietnamese enterprises and the textile and garment and footwear sectors in particular, as they are heavily dependent on material sources imported from China, India and other ASEAN countries.
Truong Van Cam, Vice President of VITAS said the current source of materials for Vietnam’s textile and garment industry is limited.
The US, the EU and Japan are now the three largest export markets of Vietnam.
Vietnamese exporters have been advised to continue promoting the support industry, and ensure the origin of raw materials for production.
For the footwear industry, the CPTPP is also an opportunity for exporters to expand their markets to Chile, Australia, New Zealand, Mexico and Canada and Japan.
Experts said Vietnamese exporters of footwear have great opportunities to sell products in Japan, one of the key markets for the sector.
If enterprises know how to make full use of terms from the CPTPP, growth in this market is likely to increase, they stressed.
Vietnamese businesses will also have more opportunities in Canada, which will impose a zero import tariff on both leather shoes and handbags immediately.
However, to benefit from this agreement, footwear enterprises will have to overcome considerable challenges.
According to Nguyen Duc Thuan, Chairman of the Vietnam Leather and Footwear Association (Lefaso), businesses should explore regulations related to customs procedures and logistics of member countries of the CPTPP, while improving the quality of their products.
The government should support enterprises by creating a fair playground and minimising administrative procedures to protect Vietnamese firms in the domestic market, Thuan said.
Phi Ngoc Trinh, General Director of the Ho Guom Garment Group, said his company has invested in equipment and built more factories and production lines to meet quality standards of fastidious markets.
Meanwhile, Vu Duc Giang, Chairman of the Board of Directors of Bao Minh Textile JSC, said all production lines of the firm use the most advanced equipments from famous global brands.
Each year, Bao Minh provides more than 35 million metres of high quality fabric for the fashion brands.
The firm has contributed to increasing the supply of raw materials in the country, helping businesses reduce imports of raw materials.
EuroCham marks 20-year operation in Vietnam
A ceremony to honour great contributions of European firms to Vietnam’s socio-economic development was held by the European Chamber of Commerce in Vietnam (EuroCham) in Vietnam on November 16 in Ho Chi Minh City.
The event also aimed to review the operation of EuroCham since its establishment 20 years ago.
Addressing the event, Chairman of the municipal People’s Committee Nguyen Thanh Phong highlighted the fruitful development of the Vietnam – European Union (EU) relationship over the last 28 years, as seen in the signing of the Framework Cooperation Agreement between Vietnam and the European Council (EC) in 1995; the EU-Vietnam Agreement on Comprehensive Partnership and Cooperation in 2012, and the completion of negotiations on the EU-Vietnam Free Trade Agreement (EVFTA), which is pending signing by the EC and ratification by the European Parliament.
Phong expressed his appreciation of EuroCham’s goodwill and enthusiasm in promoting the signing of the EVFTA as well as its role as the largest foreign business association with the most active contributions in Vietnam.
EuroCham is an active member of the Advisory Council to the Vietnamese Prime Minister on administrative procedure reform, and it also works alongside the Vietnam Business Forum in supporting the reform of Vietnam’s legal framework, Phong noted.
The official spoke highly of the effectiveness of EuroCham’s cooperation activities in Vietnam in general, and in HCM City in particular. He affirmed that the municipal authorities have been building appropriate policies and mechanisms to create a favorable business environment for domestic and foreign enterprises, especially in the context that Vietnam has joined several new-generation free trade agreements.
For his part, Nicolas Audier, co-chairman of EuroCham stressed that EuroCham, with over 1,000 members, has become one of the biggest business associations in Asia.
In recent years, EuroCham has become a valuable voice of the community of European businesses and investors to the Government of Vietnam, he said, noting that the ties between EuroCham and central and local agencies of Vietnam, especially the People’s Committee of HCM City, has contributed to continuous development of Vietnam.
Regarding EuroCham’s contributions to Vietnam’s development, Nicolas said the chamber have made efforts to promote connection between European firms with the EU’s committees, towards making Vietnam a key destination for European investors and traders.
EuroCham is also actively involved in many lobbying activities to ensure that the submission process of the EVFTA to the European Parliament will be made before the European Parliament elections which is slated for May next year.
At the ceremony, EuroCham also recognised the most successful European companies with its first-ever Business Awards.
Ground breaking ceremony held for Phu Yen’s first solar power plant
The Truong Thanh group of Vietnam and its Thai partner – Bgrimm Power, held a ground-breaking ceremony on November 17 for their solar power plant in Hoa Hoi commune, Phu Hoa district, the central province of Phu Yen.
The Hoa Hoi plant, the first solar power plant in Phu Yen, has a capacity of 256 MWp, and is the largest among Truong Thanh’s solar power projects. It is designated by the Prime Minister as a key project in Phu Yen’s socio-economic development master plan to 2020.
Total investment in the plant is estimated at over 4.9 trillion VND (approximately 212 million USD).
Truong Thanh’s chairman Dang Trung Kien said the plant will contribute to the country’s energy security while creating jobs for local workers and resources for the local budget.
Construction of the plant is scheduled to be completed in the second quarter of 2019.
According to Vice Chairman of the provincial People’s Committee, the provincial administration has submitted to the Ministry of Industry and Trade for approval a proposal to add 16 solar power plants with total capacity of 1,059.57 MWp to the power development plan.
Silicon Valley billionaires seek investment opportunities in Vietnam
The US investors want to know more about Vietnam’s policies and regulations with regard to new technologies and business models, especially the Cyber Security Law and investment procedures for digital currencies projects.
A group of Silicon Valley billionaires, including founding partners at US$2.7-billion venture capital fund 8VC Joe Lonsdale and the Winklevoss twins, among others, is in Vietnam to seek investment opportunities, Tuoi Tre online newspaper reported.
The trip is part of the group’s plan to look at Vietnam’s policies and regulations with regard to new technologies and business models, especially the Cyber Security Law and investment procedures for digital currencies projects.
Other high profile investors of the group include Jack Abraham, founder and managing partner of Atomic, a company that builds start-ups, and Elad Gil, a serial entrepreneur, operating executive, and investors advisor to private companies including Airbnb, Coinbase, Gusto, Instacart, OpenDoor, Pinterest, Square, Stripe and Wish.
At present, 8VC has been investing in Vietnam and implementing projects which bring high skilled engineers from Ho Chi Minh City to the US, and from Silicon Valley to Vietnam, said Joe at a meeting with Le Thanh Liem, vice chairman of Ho Chi Minh City People’s Committee on November 14.
According to Joe, 8VC has set up a center in Canada which connects 1,000 engineers in with start-ups in the US. The model could be suitable in Vietnam, stated Joe.
At the meeting, the Ho Chi Minh City’s leader said the city has approved a project developing a creative urban area similar to the Silicon Valley model, adding that the city gives priority to start-ups development and building smart city.
Quang Ninh, Vietjet Air discuss new service launch at Van Don airport
Low-cost carrier Vietjet Air met with leaders of the northern province of Quang Ninh on November 15 to discuss its air services at the newly-built Van Don International Airport in the province.
Viejet Air CEO Luu Duc Khanh gave his hosts an overview of the budget airline, saying it has a fleet of about 60 aircraft and Quang Ninh is a promising market in its expansion plan.
Khanh hoped Vietjet Air would receive continued support from local authorities and airport operators once the new route is launched. He also revealed that the carrier plans to introduce various promotional deals and discounts to attract passengers to the new services, so he wants the province to provide it with subsidised airfare and airport fees.
Chairman of the provincial People’s Committee Nguyen Duc Long, for his part, said after three years of construction, Van Don International Airport is scheduled to open in late December.
The province will consider offering its own incentives to airlines in the early stages of the airport’s operation, he added.
Construction on Van Don International Airport started in 2015 with total investment of 7.5 trillion VND (330 million USD). Located in Doan Ket commune in Van Don district, the airport covers 288 hectares and is the first in Vietnam to operate under the build-operate-transfer (BOT) model.
It will have support facilities and a two-module terminal. A cargo terminal is expected to be built by 2030.
Under a March decision by the Ministry of Transport, Van Don will be an international airport, serving both civilian and military flights with a 3.6km-long and 45m-wide runway. The airport will have an annual capacity of 2 – 2.5 million passengers by 2020, which will increase to five million by 2030.
The first calibration flight landed safely at Van Don International Airport on July 11.
As Van Don District is among three special economic zones planned in the country, the airport is expected to boost the local economy, including tourism at world-famous Ha Long Bay.
The airport is located roughly 50km northeast of the world heritage site in Quang Ninh province.
With 60 A320 and A321 aircraft, Vietjet Air runs more than 385 flights per day and has carried more than 65 million passengers on 103 routes to destinations at home and abroad. The carrier plans to operate more than 120,000 flights and serve some 24.1 million passengers by the end of 2018.
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