BUSINESS NEWS IN BRIEF 20/3

Processing, packaging exhibition opens in Ho Chi Minh City

The ProPak Vietnam 2019 attracts 540 exhibitors. (Photo: thegioitiepthi.vn)

The 14th International Processing and Packaging Exhibition and Conference (ProPak Vietnam 2019) kicked off at the Saigon Exhibition and Convention Centre in Ho Chi Minh City on March 19.

The three-day event attracts the participation of 540 exhibitors from 31 countries and territories, including first-timers such as Vietnam’s Dai Chinh Quang and Thien An Loc companies, China’s Beijing Omori Packing Machinery , and Sidel India.

BT Tee, General Manager of UBM VES – the exhibition’s organiser, stated that the processing and packaging sector is facing several difficulties, including the overuse of plastics in production and the lack of orientations on environmental protection.

Therefore, Propak 2019 wants to introduce new technologies that can solve these challenges.

Paolo Lemma, Italian Trade Counselor in Vietnam, said that Propak Vietnam is one of the important annual events of Italian businesses in the Vietnamese market.

Last year, Vietnam imported machines and equipment in this field worth 25.2 million EUR (28.6 million USD) from Italy, up 2.4 percent year-on-year.

More than 20 Italian enterprises are taking part in Propak Vietnam 2019 to introduce their products and new technologies, he added.

A wide range of new technologies are expected to introduced at the fair, including those in processing, packaging and bottling of food-beverage, pharmaceuticals and cosmetics, along with printing machinery and materials, among others.

In addition, the Vietnam Association of Food Science and Technology (VAFoST) will join hands with competent authorities to organise the “Food Engineering and Packaging for Sustainable Development” seminar, which is expected to lure many domestic and international experts.

ProPak Vietnam is the premier sourcing and networking trade event for food, beverages, and pharmaceutical processing and packaging technology in Vietnam. Since its inception in 2003, ProPak Vietnam has grown steadily in stature and prestige to become a regional industry hub which has helped evolve and improve the processing and packaging sector in Vietnam and beyond.

Last year, the event drew the attention of more than 9,000 visitors and 407 exhibitors from 31 countries and territories. 

Samsung opens first showcase experience center in Vietnam

This is the third such Samsung center in the world, following those in New York and Frankfurt.

Samsung on March 15 opened the Samsung Showcase, an immersive technology experience center, in Ho Chi Minh City, local media reported. 

This is the third such Samsung center in the world, following those in New York and Frankfurt, the only place where customers can experience all products within the Samsung ecosystem.

Spread across 1,010 square meters, the two-story center in the heart of Ho Chi Minh City comprises of four zones. 

Each zone offers visitors the opportunity to discover the latest groundbreaking technologies and products by Samsung. From mobile devices and home appliances, to virtual reality entertainment.

Kyung Wook Suh, president of Samsung Vina Electronics, said he hopes this experience center to become the new technological destination for millennials in the city. The center would fully encompass passion points such as art, entertainment, sports, health and cuisine, which are brought to life by the latest and most advanced technology products and services offered by Samsung.

Ten years on since Samsung’s first factory in Vietnam came into operation in 2008, Samsung has increased its investment capital in Vietnam from US$670 million to over US$17.3 billion, a 26-fold increase.

During the period, the South Korean tech-giant has exceeded the 1-billion mark of its made-in-Vietnam products, including smartphones, phones, tablets, and smart devices. 

According to Samsung’s statistics, around 50% of Samsung’s smartphones and tablets are produced in Vietnam and exported to 128 countries and territories, including the US, Europe, Russia and Southeast Asia. 

In 2018, Samsung Vietnam’s exports are estimated to top US$60 billion, up 12% year-on-year and accounting for 25% of Vietnam’s total export turnover. 

Lee Jae Yong, Samsung’s vice chairman, in his visit to Vietnam in October said the group considered Vietnam its largest production hub worldwide.

Creating favourable environment for attracting agricultural investment

A member of Tam Vu Dragon Fruit Cooperative in Chau Thanh district, Long An province harvests dragon fruits.

The Government has issued multiple preferential policies and support schemes regarding taxes, credit and land use to attract both domestic and foreign investment in agriculture and rural areas. The policies are being implemented right from their promulgation and have been continuously improved towards creating a more convenient environment for investors.

According to reports from the Ministry of Agriculture and Rural Development, the agricultural sector has attracted more and more domestic enterprises to invest in large-scale and high-tech agricultural production models. During the 2005-2016 period, the number of enterprises engaged in production and business activities in the area of ​​agriculture, forestry and fisheries increased from more than 2,000 to over 4,000. In 2017, there were 1,955 newly-registered enterprises in the agricultural sector, bringing the total number of businesses operating in this field to over 5,661 enterprises. If counting those in agro-forestry and seafood processing and commercial food and foodstuff enterprises, the number has increased from more than 12,000 in 2005 to 42,000 up to the present time. Thus, it can be seen that the number of enterprises has increased dramatically in the sector.

In addition to the increase of small and medium-sized enterprises in agriculture, a number of large corporations outside the agricultural, forestry and fishery sectors have also boosted investment in agriculture, such as Vingroup, Masan, Him Lam, Viettel, FLC, Hoang Anh Gia Lai and Pan Group. They also apply modern new technologies to production and have generated initial good results, successfully mobilising foreign capital to develop domestic agriculture, helping enhance Vietnamese products’ competitiveness.

In the past 10 years, the total investment capital in the agricultural sector has quadrupled from VND22 trillion to over VND231 trillion. The average capital size in agricultural enterprises in 2016 was at VND35.8 billion/enterprise (the national average is VND72.82 billion/enterprise).

It can be said that, although being exposed to risks related to weather, climate change and market fluctuations, agricultural enterprises still have stable and somewhat higher efficiency than other kinds of businesses. According to the Vietnam Chamber of Commerce and Industry (VCCI), their return on assets (ROA) in the 2007-2015 period has always reached over 10% compared with 3.4% of the average figure. In addition, return on equity (ROE) reached an average of more than 15%, the highest level in all sectors. This also shows that agriculture is a potential field and there are many good businesses operating in the sector.

The development of agricultural enterprises also plays an important role and contributes greatly in promoting production and exports, and creating jobs for agricultural and rural workers, as well as contributing to the national socio-economic development and social stability. The total number of regular employees working in agricultural enterprises in 2017 was at more than 300,000, accounting for 2.3% of the total number of employees in all businesses across the country. On average, each agricultural enterprise employs 30 employees, higher than the average number of 28 employees per enterprise.

The positive results in attracting investment in agriculture have partly inspired the business community, however, the number of businesses, though increasing, still accounts for a very small proportion (at over 1%) of the total number of businesses nationwide. In addition, more than 95% of agricultural enterprises are small and medium-sized, proving a major challenge in improving competitiveness and developing production linkages under the agricultural production chain.

Meanwhile, the capacity in applying science and technology by agricultural enterprises is still low. Also according to the report from the VCCI, up to 75% of enterprises are using machines out of depreciation. Domestic enterprises, especially micro, small and medium-sized, are still struggling to escape machines with outdated technology.

In addition, their cooperation and value chain development capacity is still limited, halting them in seeking linkage with partners to find and access market information, technical barriers and international trade regulations. Businesses only focus on production, while processing and marketing stages are weak, and the link between businesses and farmers or farmers’ representative organisations is unsustainable, unrelated to the interests and responsibilities of the concerned parties.

According to experts, the Government needs to synchronously implement solutions to accelerate the restructuring of the agricultural sector in association with the innovation of growth models and new rural construction, with the focus on identifying priorities for the sector’s development in to a three main product axis, including national flagship products, provincial key products and local specialties.

It is necessary to give priority to enterprises investing in technology research and transfer in cultivation, animal husbandry, aquaculture and developing plant varieties and breeding, as well as investing in processing and preserving agricultural, forestry and aquatic products and herbs, and promoting administrative reforms to strongly attract enterprises to invest in agriculture and rural areas.

In the future, agricultural enterprises are considered the driving force of agricultural value chains, which will create spillover effects for socio-economic development. The Government has instructed the ministries, branches and localities concerned to continue to promote administrative reforms, reduce unnecessary business investment conditions, improve the quality of the business environment in agriculture, and effectively implement preferential policies and mechanisms to support enterprises to have long-term access to land use, in accordance with the investors’ legitimate rights, and enhance rural infrastructure upgrades to facilitate investors implementing their projects.

They have been asked to build a mechanism to encourage investors to develop and join the trading of agricultural and rural infrastructure in many different forms, especially public- private partnerships.

Hoa Sen Group’s FY 2017-2018 export revenue up 27%

The Hoa Sen Group’s export revenue exceeded $538 million in the 2017-2018 fiscal year, up 27 per cent against the previous year.

According to the Vietnam Steel Association, Vietnam exported 1.75 million tons of galvanized steel last year, of which more than 639,000 tons came from the Hoa Sen Group, accounting for nearly 37 per cent of the total and representing the highest share among exporters.

The group exports an average of 50,000 – 60,000 tons of finished steel products a month to more than 75 countries and territories, in particular to fastidious markets that require strict quality standards and precise delivery times be met, such as the US, Europe, and the Middle East.

An official from Hoa Sen said it now quite difficult to expand export markets as Vietnam must deal with trade defense lawsuits, especially in the steel industry. The group, however, has successfully maintained its key export markets over recent years, he added.

On March 13, 2019, the Malaysian Ministry of International Trade and Industry (MITI) issued a final decision on an anti-dumping lawsuit on imported galvanized steel products from Vietnam and China. Anti-dumping tariffs on products from Hoa Sen are zero per cent, with a dumping margin of -3.34 per cent. Hoa Sen was the only enterprise from Vietnam to be exempted from tariffs on its iron and steel roll exports to Malaysia.

On August 18, 2017, a WTO Panel dismissed self-defense measures adopted by Indonesia and asked the country to revoke trade safeguard measures before March 27, 2019, thus offering an opportunity for the Hoa Sen Group and other steel exporters from Vietnam.

The Australian Anti-Dumping Committee (ADC), meanwhile, announced the final conclusion of an investigation on August 16, 2017, finding that the Hoa Sen Group did not dump and that is was not accused of benefiting from illegal government subsidies.

Since the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) came into effect in the first seven of the eleven member countries – Australia, Canada, Japan, New Zealand, Mexico, Singapore, and Vietnam – the future for Vietnamese steel exporters has become more optimistic.

On the first day of the recent lunar new year, the Hoa Sen Group signed a contract to export 4,300 tons of steel worth about $3.7 million to Mexico; a good sign for a successful 2019.

Earlier, on January 10, it exported 17,000 tons of steel worth more than $14 million to the US; the first batch of steel products exported to the country this year.

The export of 15,000 tons of steel, valued at $11.5 million, to the UK, Germany, and Italy on March 16 further affirmed the competitiveness of the Hoa Sen brand in the international market.

The Group recently opened a hot-dip galvanized factory with total investment of over VND500 billion ($21.5 million) from the Hoa Sen Phu My Company Limited, a wholly-owned subsidiary of the Hoa Sen Group.

With the most modern and fully-automated production line from Italy’s Gimeco, including six black steel pipe rolling lines, a tape sawing machine, and a hot dip galvanizing line with a designed capacity of 85,000 tons per year, the factory will produce high quality hot-dip galvanized steel pipe products under the Hoa Sen brand.

After nearly two years of implementation, on March 16, 2019, Hoa Sen announced its successful deployment of the ERP Oracle – EBS system (Enterprise Resource Planning), Version 12.5, with consultation from the Ho Chi Minh City-based SSG Management Solution Joint Stock Company.

With a network of ten factories and more than 500 retail outlets nationwide, the Group’s successful deployment of ERP Oracle – EBS will bring substantial benefits, helping improve management efficiency and reduce operating costs while providing the Group with the resources to achieve its goal of expanding production and business.

One of the Hoa Sen Group’s strategies is to stand firm on both “legs”: domestic consumption and export. It has made significant breakthroughs in exports over recent years.

Looking back over the past year, the steel industry experienced a particularly difficult period, facing major challenges in and from the market, as hot rolled steel prices fluctuated continuously and unpredictably, creating problems for many steel enterprises in Vietnam.

With great efforts made to overcome the tough market challenges, the Hoa Sen Group stabilized and improved its production and business situation, strengthened growth momentum, and continued to maintain its leading position, with market shares of 34 per cent of galvanized steel and 18 per cent of steel pipe.

Guidebook on CSR rolled out

Early this month, the French Chamber of Commerce and Industry in Vietnam (CCIFV) and KPMG presented the first edition of “Corporate Social Responsibility in Vietnam: The Guidebook” in Hanoi.

At the event, Monsieur Bertrand Lortholary, French Ambassador to Vietnam, expressed his confidence in the future of Corporate Social Responsibility (CSR), stating that French companies have this sense of responsibility in their DNA.

He truly believes that the development of responsible business practices will foster the soci-economic development of the country. He also acknowledged the success of CCIFV and KPMG’s partnership, joining forces to promote CSR and create positive a impact on Vietnam.

Ha Do, senior partner at KPMG’s Hanoi office, shared information and insights about Socially Responsible Investing, a sustainable process that combines investors’ financial objectives with their concerns about environmental, social, and governance (ESG) issues.

Since 2018, CCIFV and KPMG have partnered on a journey to nourish CSR and sustainability in Vietnam, striving to encourage businesses in their networks to create positive social and environmental impact.

Although specific data on ESG issues is not always measured and monitored in Vietnam, many foreign investors consider ESG as part of their due diligence process when they are assessing a potential investment in Vietnam.

Ha Do explained how companies can build trust and credibility through enhancing ESG, considering there is a greater awareness of the subject and more attention is being paid to CSR and sustainability issues.

Since 2018, CCIFV and KPMG – one of the world’s leading professional services firms – have partnered on a journey to nourish CSR and sustainability in Vietnam, striving to encourage businesses in their networks to create positive social and environmental impact.

The purpose of the 30-page guidebook is to help companies better understand what CSR is through basic knowledge and concrete examples of how the private sector can embrace sustainability.

One thousand copies of the CSR Guidebook have been issued and were provided to businesses operating in Vietnam, business associations, NGOs, and international organisations.

Ministry forecasts changes in market tendency

The development of the economy, rapid urbanization, growing market size due to increasing income and consumption of consumers along with modern lifestyle will basically change consumer habits and generally affect domestic trade in the near future.

According to the draft domestic trade development strategy to 2025 and a vision to 2035 by the Ministry of Industry and Trade, Vietnam’s population was estimated to reach 91.7 million people in 2015, of which urban population accounted for 33 percent. Average population growth rate is expected to be at 1 percent per annum in the next years. Therefore, the country’s population will reach 98 million people by 2020, 105 million people by 2030 and about 108 million people by 2035. The urban population ratio is forecasted to account for 36 percent by 2020, 39 percent by 2025, nearly 42 percent by 2030 and 44 percent by 2035.

Noticeably, the population will tend to age with the 65-and-over population increasing from 6.7 percent in 2015 to 14.4 percent in 2035. An ageing population and increasing urban population will change the structure of goods, consumption methods and consumption level in the future.

As for income and purchasing power, the income of people has increased significantly in the past 10 years and is expected to be higher in the future thanks to open trade and foreign investment attraction policies. Average income per capita will be at US$4,900- $5,200 by 2030, leading to an increase in purchasing power and changes in methods and structure of consumption of people.

As for consumption trend, the draft said that spending on food and foodstuffs will reduce drastically whereas spending on housing, education, entertainment, tourism and restaurants will go up. Consumer taste of middle-income-and-above population will affect domestic trade. This tendency is occurring and will continue to happen in the future when income and life of people is improving.

As for goods, consumers will have stricter requirements on quality and food safety and tend to favor natural goods. They will feel a need for goods diversifying and have an interest in health care products. Accordingly, consumers will pay more attention to appearance, design, brand and after-sales service. Therefore, firms should focus on building brands, advertising to gain consumer trust and enhancing their prestige with consumers.

As for methods of shopping, according to the ministry, shopping via modern channels will be more and more popular. Along with the development of information technology, online-shopping via the Internet, TV and smartphones will strongly develop in Vietnam. At rural and mountainous regions, ways of shopping will also gradually shift to modern shopping. Shopping at traditional markets will little by little decrease.

The forecast of the ministry also said that newly-signed free trade agreements have expanded to other non-commercial sectors, such as investment, environment, intellectual property and labor, creating pressures on institution reformation and domestic business environment improvement. In order to make the most out of these agreements as well as tackle disadvantages caused by these agreements, it requires thorough changes and reformation in domestic production and trade.

Among four channels of distribution services, retail remains the most developing channel. Wholesale service is expected to step by step grow in accordance with domestic production scale as well as the opening of commodity market and the participation of foreign direct investment enterprises in wholesale sector.

Investment via merger and acquisition in distribution and retail sectors will become more popular in the future. Impact level of international market to domestic commerce will be faster and stronger, prompting changes in state management, especially in forecasting and providing market information to firms and consumers.

The trend of protectionism and nationalism has gradually increased in various economies, of which there are major trade partners of Vietnam. This is obliviously showed through increasing and more sophisticated non-tariff barriers, including sanitary and phytosanitary measures, technical barriers to trade and trade protection, while tariff barriers are gradually being lifted.

The ministry warned that making use of signed free trade agreements should closely attach to upgrading standards of domestically-made products as well as building an effective domestic trade protection barrier. Firms should improve their competitiveness and enhance their facilities to immediately adapt to market propensity which is changing strongly. Only by that, domestic firms in general and trading firms in individual are able to thrive healthily and sustainably in more and more cutthroat business environment.

Korean Sourcing Fair 2019 to link Vietnam and S.Korea companies

The Korean Sourcing Fair 2019 would serve as a cooperation opportunity for enterprises from Vietnam and South Korea, said a representative of VTVcab, a co-organizer of the conference as reported by local media. 

The conference – scheduled to take place on April 15 in Dragon City, Yong San, Seoul, is part of a series of events facilitating bilateral trade between Vietnam and South Korea, while introducing Korean enterprises about investment opportunities in Vietnam. 

VTVcab, Korea Federation of SMEs and Vietnam Chamber of Commerce and Industry (VCCI) are organizers of the conference. 

This year’s conference is expected to attract 130 small and medium enterprises (SMEs) from South Korea and 15 from Vietnam. At the conference, participants could introduce their products, sharing experience and technologies, and searching for investment and business opportunities. 

The bilateral trade turnover between Vietnam and South Korea has increased by 100 fold from US$500 million in 1992 to US$60 billion in 2017, which is on course to reach the target of US$100 billion by 2020. 

Vietnam is currently one of South Korea’s largest trading partners, especially in importing cars, equipment and machinery. 

Among 130 countries and territories investing in Vietnam, South Korea was the largest investor as of 2018 with registered capital of US$62.5 billion, according to the Vietnamese investment ministry. 

Investment capital from South Korea to Vietnam has contributed significantly to Vietnam’s rapid economic growth. During this process, some major South Korean corporations have chosen Vietnam as its production base in the fields of electronics, energy, car production, textile and garment, among others, indicating high confidence from South Korean investors towards Vietnam’s business environment and its growth potential. 

Measures to make breakthrough in economic development

A manufacturing line of lens at the R Technical Research Vietnam Limited Company 

In addition to positive growth with several bright spots in the first two months of this year, the socio-economic situation still faces several worrying signals.

According to the General Statistics Office (GSO), Vietnam still maintained a trade surplus of US$816 million in January. However, in February, the trade balance reversed with the trade deficit of US$900 million, thereby, the country’s trade balance enjoyed a slight deficit at US$84 million.

Despite the early efforts from the relevant agencies to control African swine fever, the disease is showing signs of rapid spread, negatively affecting production and the psychology of farmers. In addition, the speed of disbursement of public investment remains sluggish.

The Ministry of Planning and Investment (MoPI) judged that the Vietnamese economy is facing many difficulties and challenges, particularly the risk of avoiding the origin of goods from several countries to Vietnam and the change of the supply chain as the US – China trade war is increasing. Meanwhile, the process of economic restructuring and growth model transformation in the country is facing great limitations.

In order to achieve the GDP growth rate of 6.6% – 6.8% as planned at the first construction growth scenario in the end of 2018, the MoPI said that ministries, agencies and localities should deploy their best efforts and take advantage of all opportunities from both domestic and international factors. It is crucial to focus on implementing measures to accelerate production and business activities to push the GDP growth of the industry and construction sectors (third region) in the remaining three quarters of 2019 higher than the set scenario. According to the GSO, the sectors enjoyed a growth rate of 8.85%, contributing 48.6% to the general growth of the whole economy. In particular, the industry sector maintained a growth rate of 8.79%, accounting for 28.44% of the GDP.

There are many opportunities for industrial development in 2019 thanks to the positive impact from the improvement of the business environment that contributed to better growth of the investment in production and the private sector. Moreover, the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) officially came into force, which will increase the investment capital into Vietnam, creating a new production capacity.

Recognising the advantages and difficulties for the country’s socio-economic development in the first two months of this year, the Government has asked the ministries and agencies to review and update the quarterly growth scenario of each sector to be submitted to the MoPI for the report to the Government in March. This is the second year in a row that the Government has required quarterly growth scenarios so that personal responsibilities in management will be clarified, towards the highest target.

In addition to measures to promote production and economic growth, the MoPI asked the ministries, agencies and localities to closely monitor the changes of prices in both domestic and world markets in order to timely and proactively handle arising problems, thus ensuring the target of curbing inflation below 4%.

Associate Professor and Dr. Ngo Tri Long said that normally, the first quarter usually records the lowest growth rate in the year due to the long Tet (Lunar New Year) holiday, however, it is essential to set appropriate solutions to boost growth so that the 2019 GDP will not be lower than the previous year.

He also noted that inflation in the first quarter has not been worrisome but inflation control will witness many issues to be addressed from the second quarter. In March, the consumer price index (CPI) will reflect the impact of the gasoline price adjustment, while the increase of 8.36% of the electricity price will affect the CPI in April and the following months.

Dr. Long also analysed that under the Decision No.24 by the Government, the electricity price would be adjusted to rise in the range of 5% – 15%, however in fact, it has been increased around 6% – 7% in recent years to keep the target of curbing inflation. Electricity price is the input costs of many manufacturing industries, so the increase of electricity price will have all-round impacts on the economy, causing GDP reduction and inflation to increase. The rise of 8.36% is high, requiring the relevant agencies to set measures to prevent the price increase of other commodities, he added.

Another notable issue is the hidden price of food in the context of the outbreak African swine fever in many localities. Pork is an important food in people’s daily meals, so the disease will affect the ability to re-herd later, causing the reduction of the supply sources and pushing the prices up. According to experts, inflation control has begun to face unfavorable factors compared to the last year. The fact requires the close coordination among ministries and agencies to prevent price increases of essential goods, while maintaining the proactive and flexible management of monetary policies. Furthermore, it is crucial to tighten the coordination between fiscal policy and price management policy, ensure macroeconomic stability, promote economic growth and curb inflation.

BCG: Tourists to Mekong Delta will triple in 2030

A corner of Azerai Can Tho Resort in Can Tho City. The number of tourists staying overnight in the Mekong Delta region will triple in 2030 

The Mekong Delta region will attract 19 million tourists staying overnight in 2030, or a three-fold rise against the current figure, if the region’s tourism receives more investment, according to a representative of Boston Consulting Group (BCG).

Vietnamese textile firm could lose over $2 million in Sears bankruptcy

US lawyers believe Vietnamese textile company Thanh Cong can only recover part of the $4 million bankrupt US retailer Sears Holdings owes it, reported VNexpress.

Tran Nhu Tung, a director at Thanh Cong Textiles (TCM), said Sears’ debt of VND95 billion ($4.1 million) accounts for 3 percent of his company’s total assets.

“U.S. lawyers say we can recover 40-50 percent of this debt, but when is still not known,” he said at a recent conference. His firm is still awaiting a decision from a U.S. court on the bankruptcy proceedings the retail chain filed in October 2018. 

“We have also been trying to negotiate with Sears to switch from pay-after-delivery to a letter of credit,” he said. 

TCM expects to make a provision for bad debts to reduce its tax burden.  

According to Tung, Sears Holdings had ordered for certain fabrics to create fashion products, and because they were made to specific designs, TCM would find it hard to sell them even if Sears ended up returning them.

But a report by Phu Hung Securities said Sears Holding recently received a $300 million injection from a partner to continue its business but with fewer stores to cut costs, meaning Thanh Cong may not have to write off the $4.1 million. 

Sears Holdings used to be a major customer for Thanh Cong, with its subsidiaries, Roebuck and Kmart, accounting for almost 7 percent of the textile firm’s revenues. 

Exports account for 88 percent of Thanh Cong’s revenues.

The bankruptcy filing by Sears follows a decade of revenue declines, hundreds of store closures, and years of deals by billionaire Eddie Lampert in an attempt to turn around the company he acquired in 2005 for $11 billion, according to Reuters.

Technology remains driving force for ecommerce growth: officials

Technology plays a key role in the development of the ecommerce sector. In the file photo, staff members of Tiki, one of leading ecommerce operators in Vietnam, wrap products for delivery – PHOTO: COURTESY OF TIKI

Vietnam is completing the legal frameworks for the ecommerce sector which local experts say is in need of a complete ecosystem, with technology playing a crucial role, to achieve stronger growth.

Tran Trong Tuyen, general secretary of the Vietnam E-commerce Association (VECOM), highlighted the important role of technology in developing the local ecommerce sector at an event to launch White Book 2019 recently.

Tuyen stressed that to obtain stable growth, the sector requires a complete ecosystem, including telecom infrastructure, advanced information and technology systems that will enable local residents to get easier access to the internet through mobile devices and the building of trust in online transactions and logistics services.

Also, online business owners would find it easier to approach public services as well as mobilize capital for their businesses, noted the VECOM representative.

The country saw impressive growth in the local ecommerce sector last year, with a 30% increase in revenue, at some US$8 billion. The figure is forecast to reach US$15 billion by 2020, stated Dang Hoang Hai, head of the Ecommerce and Digital Economy Agency at the Ministry of Industry and Trade.

Seeing the high growth rate, many firms may join the ecommerce sector and reap positive results, under the condition that they are able to take advantage of technology, since getting involved in the sector will cost them a large amount of capital if they fail to apply technology to their operations, Tuyen noted.

Alongside technology, companies with an interest in the field should bear in mind that it takes time to reap profits from ecommerce businesses, explained the VECOM representative. Accordingly, these companies have to invest in and apply consumer-friendly technology to their ecommerce platforms.

As for small and medium enterprises (SMEs) that usually have limited capital, personnel and experience, Tuyen advised them to use technologies that are custom-made for SMEs, which will help them save costs and increase their competitiveness.

Local SMEs would struggle to compete in the field if they do not leverage technology right now, Tuyen stressed.

Regarding the impressive growth rate of the sector, Hai expected that Vietnam would become one of the three strongest ecommerce countries in the region.

Vietnam shares experience in developing cooperatives with Laos

Deputy Prime Minister Vuong Dinh Hue (R) and Head of the Lao National Economic Research Institute Bouasone Bouphavanh 

Deputy Prime Minister Vuong Dinh Hue shared Vietnam’s experience in developing cooperatives with a delegation of the Lao National Economic Research Institute in Hanoi on March 19. 

Vietnamese cooperatives have seen a change for the better after 15 years implementing the resolution adopted at the fifth plenum of the ninth Party Central Committee on collective economy, and 10 years implementing the resolution of the seventh plenum of the tenth Party Central Committee on agriculture, rural areas and farmers, he said. 

The official said new-style cooperatives have not adversely affected household economy but, on the contrary, helped increase values of the model. 

Up to 60 percent of Vietnamese cooperatives are operating effectively instead of the previous 10 percent, he said. 

The Deputy PM stressed that leaving farmers to operate cooperatives by themselves or using administrative orders to get farmers join in cooperatives will not produce good outcomes, adding that cooperatives should be formed and developed on the basis of economic benefits. 

He also underlined the need to develop cooperatives in tandem with the process of agricultural production restructuring, and the building of new-style rural areas.  

Regarding the State-owned sector, Deputy PM Hue affirmed Vietnam’s policy of equitisation of State-owned enterprises and divestment of State capital while applying market standards and norms towards enhancing transparency in the sector’s operation, and separating the State management function from the representative role of State capital in enterprises. 

Hue expressed his hope that Vietnam’s experience will be useful for Laos to promote its economic reform in the time ahead, contributing to tightening the traditional friendship between the two countries. 

Head of the Lao National Economic Research Institute Bouasone Bouphavanh, who is a former Lao Prime Minister, lauded Vietnam’s strong development, saying his visit aims to learn from Vietnam’s experience in reforming State-owned enterprises and developing new collective economic models and cooperatives. 

He shared that Lao State-owned enterprises are meeting various difficulties, thus affecting the country’s public debt, while there are many shortcomings in production relations in agriculture. 

While in Vietnam, the Lao delegation is scheduled to have working sessions with the Party Central Committee’s Economic Commission, the Vietnam Academy of Social Sciences, and the Committee for Management of State Capital at Enterprises to study Vietnam’s experience in such fields, he said.