Gov’t orders solutions to support rice exporters to EU
The Government has directed the Ministry of Industry and Trade to coordinate with other relevant agencies to support local enterprises exporting rice to the European Union (EU) to make the most of the European Union-Vietnam Free Trade Agreement (EVFTA).
The ministry will continue cooperating with the relevant ministries and agencies, the Vietnam Food Association and rice traders to develop the market share and promote Vietnamese rice in the EU market and seek new distribution channels.
The Ministry of Industry and Trade will have to direct the competent agencies and Vietnamese trade offices in European countries to continue to review, update and keep a close watch on the demands of these markets and their import policies.
In addition, the ministry must promptly provide information to the Vietnam Food Association and rice traders and cooperate with them to address any possible issues at the earliest.
Regulations on food safety, quality management and traceability in Europe should be provided to enterprises.
The ministry was assigned to coordinate with the Ministry of Agriculture and Rural Development to review and sign agreements on the recognition of rice quality and food safety standards with European markets, facilitating Vietnam’s rice exports.
Regarding trade promotion and branding activities, the ministry should diversify activities to introduce Vietnamese rice to foreign partners and introduce partners that have a demand for rice imports to Vietnamese firms.
It is especially important to work with the relevant ministries and agencies to improve policies to support rice exporters and encourage them to participate in public private partnership projects, global value chains and distribution systems.
Meanwhile, rice traders should apply quality management and food safety models and improve their marketing ability and ability to address trade disputes.
According to the Import-Export Department under the Ministry of Industry and Trade, Vietnam is always among the largest rice exporters in the world.
The country annually ships 6.4-7 million tons of rice to more than 100 countries and territories worldwide. In 2019, Vietnam exported more than 6.3 million tons of rice worth over US$2.8 billion.
In the January-September period this year, the figures were 4.99 million tons and US$2.45 billion, respectively. Asia remained Vietnam’s largest buyer with 3.2 million tons, accounting for 66.36% of the country’s total rice export volume.
The Philippines became the major importer of Vietnamese rice with 1.76 million tons, making up 36.14% of Vietnam’s total rice exports. Africa came in second with 0.91 million tons.
The department also stated that rice exports to Europe were modest, at 0.07 million tons, accounting for only 1.39%.
However, some European markets reported a surge in rice imports from Vietnam, such as Spain (up 107.1%), France (up 112.99%) and the Netherlands (up 36.58%).
This will be a good premise for Vietnam to continue grasping opportunities in the EU market as EVFTA has taken effect.
Experts also agreed that EU is a potential market for Vietnamese rice as its demand for rice imports is over two million a year, while Vietnamese rice exports to the region have accounted for a small proportion.
Under EVFTA, the EU provides an annual rice quota of 80,000 tons to Vietnam—30,000 tons of husked rice, 20,000 tons of unhusked rice and 30,000 tons of fragrant rice—and completely liberalizes the trade in broken rice.
Therefore, EVFTA will open up good opportunities for Vietnamese enterprises to diversify markets and boost the export of high-quality rice products.
Vietnam reviews Chinese and South Korean steel
The Trade Remedies Authority of Viet Nam under the Ministry of Industry and Trade decided to review new exporters in the case of the application of anti-dumping duties on some colour-coated steel products originating from China and South Korea.
The authority said that the Ministry of Industry and Trade issued Decision No 2880/QD-BCT on the case on Tuesday.
Previously, the Ministry of Industry and Trade issued Decision No 3198/QD-BCT of the Minister of Industry and Trade on the imposition of anti-dumping duty on colour-coated steel products originating from China and South Korea on October 24 last year.
The authority received a request to review KG Dongbu Steel Co., Ltd on August 12.
It then conducted verification and requested the supplementation and clarification of some information and contents.
It issued Official Letter 875/PVTM-P1 confirming that the request was complete and valid on October 13.
Export of Vietnamese mangoes to US on the rise
The high demand for mango imports coming from the United States represents an opportunity for fresh Vietnamese mangoes to expand their market shares in this demanding market, according to projections made by the Ministry of Industry and Trade.
The average import price of mangoes to the US during the reviewed period recorded a boost of 0.2% to US$1,140 per tonne compared to last year’s corresponding period.
Throughout the reviewed period Vietnam was the 12th largest mango supplier to the US market, exporting 135,000 tonnes worth US$2.8 million, up 87.4% in volume and 99.9% in value on-year. In addition, the import prices from the country stood at US$2,064.8 per tonne, up 6.7% against the same period last year.
Most notably, the US mainly imported frozen and fresh mangoes from Vietnam in the reviewed period. According to experts, local firms have been advised to meet stringent standards set by the US to increase their market share in the demanding market.
A prime example of raising standards can be seen in growing areas and packaging facilities requiring relevant codes for management and origin traceability, as well as a quarantine certificate issued by the Plant Protection Department and the US Department of Agriculture (USDA)’s Animal and Plant Health Inspection Service (APHIS).
US$4.6 billion Long Thanh Airport project gets go-ahead
The government has approved the first phase of the Long Thanh International Airport construction project worth more than VND109 trillion, equivalent to over US$4.6 billion.
Deputy Prime Minister Trinh Dinh Dung signed a decision to build the terminal dubbed a super project of its kind in Vietnam.
The airport will be designed to reach 4F level as assigned by the International Civil Aviation Organization (ICAO), in addition to becoming an important international air transit hub for the region.
The first phase will see construction get underway on a four km long runway with a width of 75 metres. This will be done alongside a system of taxiways and an apron with a 373,000 sq.m passenger terminal designed to meet the demands of 25 million passengers and 1.2 million tonnes of cargo per year. Construction is expected to be completed in 2025.
The site’s essential facilities will include buildings, the airport’s apron, passenger terminals, and cargo terminals with the task being assigned to the Airport Corporation of Vietnam (ACV), which operates 21 airports nationwide. According to the Government’s decision, the ACV will raise its own capital to fund the construction.
Once in use, Long Thanh International Airport will apply a range of modern and open technologies meeting international standards.
Work on the airport will have three phases which are expected to run up to 2040. By then, it will have four runways, four passenger terminals, and auxiliaries to accommodate 100 million passengers and 5 million tonnes of cargo annually.
Vietnam takes lead in Indo-Pacific economic integration: Italian media
2020 is the year that Vietnam was poised to make progress on its rise as a regional leader, Italy-based Inter Press Service said in its article published on November 13.
Assuming the Chair of ASEAN in January, Vietnam’s diplomacy has proven adaptable amid the constraints of COVID-19, the article wrote, adding that the successful completion of the Regional Comprehensive Economic Partnership (RCEP) trade agreement under Vietnam’s watch this year will improve the country’s important role in the Indo-Pacific region.
Eight years in the making and spanning over thirty rounds of negotiations, RCEP promises to buttress the post-COVID-19 economic recovery of its fifteen members. Covering 29 percent of global GDP, its provisions spur the further development of regional value chains and greatly lower regulatory barriers to investment, the article noted.
Vietnam’s leadership of RCEP marks its transformation to become one of the region’s fastest-growing and most internationally-engaged economies, it said.
The article said RCEP perhaps represents the apex of Vietnam’s efforts to integrate into the global economy starting in the mid-1990s.
According to the article, coming on the back of its domestically-focused Doi Moi (renewal) economic reforms that began in 1986, Vietnam joined ASEAN in 1995 and acceded to the World Trade Organization (WTO) in 2007. It eschewed protectionism and began pursuing a number of free trade agreements starting in 2005.
At present, Vietnam has signed a number of free trade agreements (FTAs) with advanced economies.
Vietnam has emerged not only as a participant in multilateral trade efforts, but as a leading proponent of regional trade integration. It is a member of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) with the participation of many countries, including Australia, New Zealand, and Japan.
RCEP continues Vietnam’s efforts, and Vietnam once again delivers an important new institution while it presides in its moment as ASEAN Chair. RCEP will put Vietnam and its Indo-Pacific partners in a good place to solve the economic problems pressuring the region, not the least the fallout from the COVID-19 pandemic, which has hit Southeast Asia particularly hard, the article said.
According to the article, with its domestic outbreak under control, Vietnam’s standing in the forecasts for economic growth is promising. Even under the most pessimistic modelling, Vietnam’s economy should maintain positive growth in 2020.
By the time Vietnam next takes the reins as ASEAN Chair, presumably in 2030, its economy will be well on its way to becoming one of the regional’s largest economies, and RCEP will get a lot of credit for that progress.
Along with catalysing post-COVID-19 economic growth in the broader Indo-Pacific region, RCEP will further enhance Vietnam’s ability to attract the investment it needs to propel its economy in this promising direction, it said./.
Vietnam’s economy forecast to grow bigger than Singapore by 2029
Vietnam’s economy could grow bigger than Singapore by 2029, the UK-based Global Business Outlook recently cited the Development Bank of Singapore (DBS)’s report.
In its report, the DBS predicts that Vietnam could grow at a pace of 6 percent to 6.5 percent in the next ten years.
“If it can sustain that pace of growth, the Vietnam economy will be bigger than the size of the Singapore economy in ten years’ time”, the magazine citied the bank’s senior economist Irvin Seah as saying.
The DBS’s forecast is largely based on factors such as robust foreign investment inflow and productivity growth in the next couple of years.
Currently, the Vietnamese economy is worth 224 billion USD. This means it covers 69 percent of Singapore’s economic size which is worth 324 billion USD./.
Transparent business climate key to attracting German investors
Despite German investors viewing Vietnam as a potential market and attractive investment destination, foreign direct investment (FDI) inflows from the European country have failed to meet expectations, according to insiders.
Economists attribute the current situation to unstable policies, an increase of trade barriers, inadequacies in legal corridors, and a general lack of transparency in the local business environment.
Until August, Germany had invested in 350 FDI projects capitalised at US$2 billion, ranking 18th among countries and territories investing in Vietnam.
At present, German projects largely focus on big localities such as Ho Chi Minh City, Hanoi capital, and Binh Duong province, with several popular brands such as Bosch and Ericsson.
Experts pointed out that despite not being large-scale projects, German FDI projects are of high quality, focusing on hi-tech spheres.
During the recent Vietnam-Germany Economic and Trade Forum 2020, Le Viet Thai, vice chairman of the Vietnam-Germany Friendship Association, underscored the importance of effective solutions by policy-makers in an effort to attract high-quality investment projects, especially coming from G7 countries.
Doan Hoang Minh, deputy director of the European Department under the Ministry of Foreign Affairs, said Germany, along with other European countries, have been hesitant to invest in Vietnam, but remain keen on injecting money into other markets such as China, Japan, and India.
Minh therefore attributed issues to the unclear nature of Vietnamese legal framework, poor infrastructure, coupled with an underdeveloped supporting industry.
Thai also noted other factors, including institutions, infrastructure, human resources, and non-official costs and unstable policies that serve to hinder German investment into the country.
Minh emphasised that it is anticipated that the enforcement of the EU-Vietnam Free Trade Agreement (EVFTA) and other FTAs will provide greater investment and trade opportunities for both countries moving forward.
Recent years have seen a number of German businesses enter the Vietnamese market to explore co-operative opportunities, while Germany’s new laws offer plenty of opportunities for local workers to learn skills and gain better qualifications.
Representatives of some German enterprises said the Vietnamese Government should strive to create a level playing field for both domestic and foreign firms, with a focus placed on improving human resources by offer training schemes for businesses.
According to experts, a transparent business climate is key to attracting German businesses and helping them to grasp new regulations while setting out priorities in terms of their business plans.
Mekong Delta businesses should work with Vietnamese-owned counterparts in the US: experts
Mekong Delta businesses should connect with businesses owned by ethnic Vietnamese in the US to facilitate the distribution of Vietnamese goods in that country, experts have said.
According to Viet Nam’s ambassador to the US, Ha Kim Ngoc, who spoke at an online conference to connect delta-based exporters with Vietnamese businesses in the US, the delta is renowned for its rice and other high-quality agriculture produce and it accounts for 50 per cent of the country’s food production.
Provinces there are also getting investment in traffic and logistics, and are becoming large exporters.
Demand for Vietnamese goods in the US is on the rise, and there are over 300,000 businesses owned by ethnic Vietnamese in the US, many of which focus on distributing goods to Vietnamese communities.
They could become a bridge between Vietnamese goods and the US and between Vietnamese businesses overseas and in Viet Nam, he said.
Nguyen Hoanh Nam, deputy chairman of the State Committee for Overseas Vietnamese, said overseas Vietnamese business communities were making an effort to develop distribution systems in foreign countries for Vietnamese goods, including in the US, where nearly half of all overseas Vietnamese live.
“Vietnamese businesses in the US are paying more and more attention to the Mekong Delta.”
Connecting Mekong Delta businesses with Vietnamese businesses in the US means local exporters can utilise the latter to boost exports and improve their goods’ profile in international markets, according to Nam.
Ngoc said there were however barriers to the Mekong Delta’s exports to the US, such as criteria regarding the environment, labour and origin.
US businesses also expected Vietnamese partners to do long-term business with them, provide steady supply and know their country’s regulations well, he said.
According to Vietnamese businesses in the US, there is a lot of potential for selling Mekong Delta products in the US, but logistics issues and failure of product quality to meet US standards remain big challenges.
Bui Huy Son, head of the Viet Nam Trade Office in the US, said businesses in Viet Nam needed to carefully research market demand and relevant regulations and requirements, improve their competitiveness by cutting costs and record goods information carefully.
Delta businesses needed to improve their products’ quality, make use of their regional specialties and utilise networking opportunities with overseas Vietnamese businesses, Ngoc said.
Trade between Viet Nam and the US was worth nearly US$76 billion last year, up 25 per cent year-on-year.
Start-up Wheel 2020 attracts outstanding local and foreign start-ups
The top 60 Vietnamese start-ups chosen from thousands of contestants competed at the semi-final round of the 2020 Viet Nam Start-up Wheel contest in HCM City on November 13.
Then the top 10 local start-ups and five foreign start-ups entered the final round on the same day, which had total prizes of VND10 billion (US$431,120).
The foreign start-ups had two minutes to pitch and 10 minutes for Q&A via online format.
Startup Wheel 2020 wants to encourage start-ups to find a ‘silent moment’ to contemplate their business model and evaluate their business efficiency; find the ‘low notes’ to focus on their business’ core values, optimise resources for lean operations, and consolidate their strengths and resources to be ready to grab opportunities when the economy recovers, Truong Ly Hoang Phi, founder of the Business Start-up Support Centre, said.
The ‘Back to Basics’ theme of the event would help start-ups respond to difficult times, she added.
Organised by the Business Start-up Support Centre and the HCM City Young Businesspeople Association, the event seeks to help young start-ups find investors, consultants and mentors, business partners, and customers.
It also aims to honour Vietnamese and international start-ups who have demonstrated resilience during the Covid-19 pandemic.
Start-up Wheel 2020 is one of the largest and most intensive start-up events in Southeast Asia, with the offline event in HCM City attracting more than 500 investors, venture capital funds, leading corporations, executives from local and foreign organisations that support start-ups, more than 100 outstanding local and international start-ups, and a large number of visitors.
Homestay operators in Vietnam struggling due to pandemic
Many homestay owners in Vietnam are struggling to look for customers as the country has remained closed to foreign tourists.
In early November, O Moi Ferry Wharf in the southern province of An Giang was buzzing with a large influx of visitors. However, the atmosphere is very different since the outbreak of Covid-19 in Vietnam.
A homestay owner in Ong Ho Island said that her area used to attract many travellers who came to experience local people’s lives, but because of the pandemic, the number of visitors has sharply decreased.
Around 25 kilometres from My Hoa Hung area, the homestay service in Tan My, My Hiep and Binh Phuoc communes of Cho Moi District have been in the same situation.
Trinh Quoc Phong, owner of Phong Levent homestay service, in Dong Thap Province’s Sa Dec City, said that visitors to his facility have dropped by 80% against the time before Covid-19.
Ut Trinh homestay in Vinh Long Province which has been recognised as meeting ASEAN homestay standards in the 2017-2019 period has attracted almost no customers. Pham Thi Ngoc Trinh, the facility landlord, said that her chain, which specialises in serving foreigners, has a total 55 of rooms in Vinh Long and Ben Tre. Since the Covid-19 resurgence in July, service revenues have been nearly zero, while it has still had to shoulder costs.
According to Le Dinh Minh Thy, director of Viettravel branches in the Can Tho and southwest region, the company is launching domestic tourism products, focusing on the Mekong Delta region.
Nguyen Khanh Hiep, director of An Giang Department of Culture, Sports and Tourism, said that the department is wanting local authorities to support travel firms, including homestay operators. Homestay facilities in An Giang are mostly located in My Hoa Hung, Tan My, My Hiep and Binh Phuoc Xuan communes.
Focus on efficiency for new incentives
A list of sectors that could benefit from special tax incentives in Vietnam would be utilised to grow enthusiasm for overseas investors and, as a result, help to contribute towards luring more high-quality foreign direct investment.
Before being published to collect comments, the list was reviewed and adjusted to be suitable with the direction of the law’s Clause 15.
According to the proposal from the MPI, specific incentives could be provided for the high-tech, IT, supporting, and agricultural industries, as well as building infrastructure projects, and projects in culture, sports, and even healthcare.
Notably, projects such as startups and venture capital funds aiming to develop high-tech ventures would be classed as a priority for such incentives. In agriculture, the government will utilise incentives for projects to plant forests, processing seafood, and developing fishery logistics and ship-building facilities.
For infrastructure and environmental protection, incentives would be applied for projects relating to concentrated waste collection and treatment, waste recycling, and reuse. In addition there could be good news for those funding the development of water and power plants, water supply, and drainage systems; bridges, roads, and railways; air, sea, and river ports; and other particularly important infrastructure works as decided by the prime minister.
There could also be specific sweeteners for sports training and coaching centres, drug addiction and smoking cessation centres, and other cultural or sporting facilities.
The MPI is currently still in the process of collecting opinions on the draft decree
The ministry’s fresh move has grasped the attention of numerous overseas investors, who said it is critical that all companies and investors encounter an equal, level, and predictable playing field as a solid foundation, not only to attract new funding, but also to maintain and grow investment that is already in the country.
“With these changes, international investors will bring their well-known technology in management and training to this country, allow more value-added production and less waste of material and resources, and support local companies in accelerating the modernisation process,” said Marko Walde, chief representative of the Delegation of German Industry and Commerce in Vietnam.
“For the long-term, we hope that German and European investors more generally will increase investments in Vietnam based on improved conditions here. We strongly believe that there will be many funds flowing into high-value projects,” he said.
According to John Gu, manager of the Korean Chamber of Commerce and Industry in South and Central Vietnam, Vietnam is required to promote investment in research and development (R&D) and foster a long-term technical manpower programme, and thus offering special incentives is understandable.
If Vietnamese companies and the government cooperate with South Korean counterparts in terms of high technology to develop an advanced technical manpower training programme, Gu said, it would be another good opportunity for economic development for both countries.
One project Gu took as an example is Samsung’s $220 million R&D centre, which enjoys preferential incentives relating to import tax and financial incentives in terms of electricity cost and land-use rights for the project.
The tech titan recently began construction of the largest R&D centre in Southeast Asia, in Hanoi’s Tay Ho district. The scheme is a strong example of the efforts by South Korean companies to develop R&D and raise the advanced technical manpower of Vietnam for the long term.
Vietnam’s internet e-conomy reaches $14 billion
Vietnam’s internet economy reaches a total value of $14 billion in 2020, which is one of the fastest growth rates in Southeast Asia, according to a Google report.
The report on Southeast Asia’s internet economy released by Google, Temasek, and Bain & Company pointed out that Vietnam and Indonesia’s digital economies are still growing at double digits. In Vietnam, with its various stages of lockdowns, users turned to the internet for solutions to their sudden challenges. A significant number tried new digital services: 41 per cent of all digital service consumers were new (higher than the SEA average), with 94 per cent of these new consumers intending to continue their new habit post-pandemic.
Vietnamese were spending 3.1 hours online (for personal use) pre-COVID-19, which spiked to 4.2 hours at the height of lockdowns, and now rests at 3.5 hours per day. With eight out of 10 users viewing technology as very helpful during the pandemic, it has become an indispensable part of people’s daily lives.
HealthTech and EdTech have played a critical role during the pandemic, with impressive adoption rates to match. Even so, these sectors remain nascent and challenges need to be addressed before they can be commercialised at a larger scale. Nonetheless, the boost in adoption, compounded with fast-growing funding, is likely to propel innovation in this space over the coming years.
E-commerce has driven significant growth in Vietnam at 46 per cent, alongside strong growth across most sectors, except for travel. Overall, 2020 GMV is expected to reach a total value of $14 billion in 2020, having grown at 16 per cent on-year. Looking at 2025, the overall e-conomy will likely reach $52 billion in value, re-accelerating to around 29 per cent compound annual growth rate.
The report shows that internet usage in Southeast Asia continues to multiply, with 40 million new users this year alone. The region remains in the throes of COVID-19, and its economic impact is still unfolding. Already evident, however, is that the coronavirus has brought about a permanent and massive digital adoption spurt, with more than one in three digital services consumer (36 per cent of total) being new to the service, 90 per cent of whom intend to continue their newfound habits post-pandemic.
E-commerce, online media, and food delivery adoption and usage have surged this year, while transport and online travel have suffered significant challenges. Ultimately, the net effect is that the internet sector will remain resilient at $100 billion GMV by year-end 2020, and is poised to grow to over $300 billion GMV by 2025, a clear indication that momentum has not been derailed by the year’s challenging environment. The crisis will also boost digital financial services, as consumers and small- and medium-sized enterprises become more receptive to online transactions.
Proper mechanism needed to attract investors to PPP projects
A proper mechanism is needed to attract investors to infrastructure projects implemented following the public-private partnership (PPP) model, experts have said.
In the context of a tight State budget, PPP projects are a model which helped attract private investment in infrastructure projects. However, investors recently showed hesitancy in participating in PPP projects.
In early October, the Ministry of Transport opened bidding for five component projects of the North-South expressway.
However, the road project from Nghi Son to Dien Chau did not attract any bidders. The project from national highway No 45 to Nghi Son attracted only one, but the bidding was cancelled because the bidder did not meet technical requirements, according to the Ministry of Transport.
The other three component projects – Dien Chau – Bai Vot, Nha Trang – Cam Lam, Cam Lam – Vinh Hao – were underbid evaluation.
The Ministry of Transport said that it was necessary to develop a mechanism which would harmonise the benefits of the Government, the investors and the users as well as solutions to solve difficulties in existing build-operate-transfer (BOT) projects to create favourable conditions and trust to attract investors and credit institutions in PPP projects.
According to expert Nguyen Huu Duc, the failure in attracting investors in two-component projects of the North-South Expressway demonstrated that PPP projects were not attractive enough to investors.
Duc said converting these projects into fully-public invested forms needed careful consideration in term of urgency, importance, economic efficiency, finance and implementation mechanisms, in the context of a tight State budget.
Bui Quang Thai, Deputy Director of the PPP Department under the Ministry of Transport, said that the Government would report to the National Assembly Standing Committee for consideration in case PPP projects failed to select investors.
Regarding credit for North-South Expressway projects, at a recent working session between the Ministry of Transport and commercial banks, Tran Long, deputy director general of the Commercial Joint Stock Bank for Investment and Development of Vietnam (BIDV) said that BIDV had so far provided credit for 43 BOT transportation projects with a total outstanding loan of 30 trillion VND (1.3 billion USD).
However, lenders were facing difficulties as many projects must restructure their debts and some turned into bad debts.
Because the North-South Expressway was a key national project, BIDV was willing to provide credit if the projects could guarantee investment efficiency and meet requirements of the lender and the laws, Long said.
He stressed the most important point was that the Ministry of Transport must tackle problems in existing BOT projects so that banks could recover debts and consider new loans.
Chairman of the Vietnam Association of Road Systems Investors Tran Chung said that PPP projects were experiencing too many problems which must be resolved early to attract investors.
According to Vu Tien Loc, Chairman of the Vietnam Chamber of Commerce and Industry, three things must be tackled for PPP projects, including ensuring the fairness between the State agencies and investors, solutions to deal with changes in mechanisms and policies which might affect PPP projects’ finance and mechanisms to share risks between the State agencies and investors.
Tran Dinh Thien, member of the Prime Minister’s advisory group, said that PPP was giving significant opportunities for Vietnamese companies. However, the Government should also create a proper mechanism to attract investors.
Vingroup to launch two industrial parks in 2021
Conglomerate Vingroup will launch two industrial parks in 2021 to meet the demand from the wave of investors shifting operations to Vietnam.
This was published by Savills Vietnam at a conference related to Vietnamese industrial parks (IPs) organised in Hanoi on November 12.
According to the Savills report, the two IPs of Vingroup located in Haiphong include the 200-hectare Nam Trang Cat IP and the 319ha Thu Nguyen IP. Both of them are developed by Vinhomes Industrial Zone Investment (Vinhomes IZ).
Previously, Vingroup announced plans to pour over $400 million into industrial real estate, hoping to gain from the shifting of production from China.
The group requested permission from authorities to spend over VND4.1 trillion ($178.3 million) developing infrastructure at the Thu Nguyen IP planned in the suburbs of Haiphong.
In June, Vinhomes JSC released information that it acquired part of the shares owned by Vingroup in Vinhomes IZ to become its parent company.
At the same time, Vingroup issued information that the charter capital of Vinhomes IZ from VND70 billion ($3 million) to VND6 trillion ($260.87 million).
The move marks Vingroup’s entry into the IP real estate sector and follows a plan based on Vietnam’s economic stability as well as increasing foreign direct investment and a growing manufacturing sector.
In addition, Vinhomes entering the development of IP also contributes to creating favourable conditions for the world’s leading auxiliary equipment providers to establish their first manufacturing facilities in Vietnam and then build out an ecosystem for domestic automobile manufacturing, aligning with Vingroup’s overall target of developing the industrial sector.
Clearing path for safer corporate bond market
The Vietnamese corporate bond market, largely dominated by real estate providers, may become a hotbed of non-performing loans as it is set to adopt greater transparency following decree alterations.
By industry, realty businesses were the most active bond issuers in the first half of 2020, accounting for 35 per cent of the aggregate issuance amount, versus only 16 per cent in the same period of 2019. In the same period, the issuance value of real estate increased by 197.6 per cent on-year, of which the top three issuers were Vinhomes JSC, TNR Holdings JSC, and Sovico Holdings.
Corporate bond issuance in the first nine months doubled year-on-year to approximately $14 billion, equaling to 12.6 per cent of Vietnam’s GDP. Success rate of bond issuance has also witnessed an upward trajectory, of which the strongest was the real estate sector when it increased from 87.5 per cent in 2019 to 97.2 per cent in nine months of 2020.
“Amid unfavourable market conditions for new share issuance, listed companies have been issuing bonds as an alternative to capital mobilisation from stock markets, with new bond issuances soaring nearly 70 per cent on-year,” said Tran Nguyen, analyst at Mirae Asset Securities. “Rising financing demand after the lockdown period was in line with our expectation. We expect a revival of new issuances by corporates in the rest of the year to finance business recovery, fuelled by tightening banking credit standards for new loans.”
Experts calculate that the average interest rate of corporate bonds issued primarily range from 10.1-11.2 per cent per year for a period of 1-5 years. Thus, compared with the most competitive deposit rates, corporate bond yields are currently 0.8-1.7 per cent per year higher. Depending on the terms, corporate bond yields are also 1.8-4 per cent higher than the deposit rates of large commercial banks.
After Decree 81 took effect in September, brokerage SSI stated that private placements will drop sharply, and most of the businesses that need to make issuances will have to convert to public distribution.
Chairman of Ho Chi Minh City Real Estate Association (HoREA) Le Hoang Chau said that issuing bonds is a very effective channel for real estate businesses to mobilise capital from society and reduce their dependence on banks.
When issuing bonds, businesses often offer interest rates from 12-14 per cent, especially businesses that bring the bond issuance interest rates up to 18-19 per cent. With such high interest rate, there will be potential risks for the real estate market and for investors.
“In addition, the corporate bond market is not really transparent. Control mechanisms are not effective enough for private corporate bond issuance and transactions as there are not many qualified consulting units to evaluate the credit rating of bond issuers or assess the feasibility of bond issuance plans,” Chau explained.
Experts from law firm LNT & Partners noted in October that the outstanding amount of corporate bonds in the form of private placement (including the anticipated number of bonds to be issued) must not by five times exceed the equity of owners at the time of the issuance in accordance with the most recent quarterly financial report. Credit ratings can help issuers to secure more favourable terms including longer tenors and lower credit spread. This lowers borrowers’ cost of capital and spurs economic growth.
“However, ratings are sparse because Vietnam lacks a dominant domestic credit rating agency. Two agencies have been licensed, but both are nascent,” said Donald Lambert, principal private sector development specialist at the Asian Development Bank.
Elsewhere, domestic credit rating agencies have partnered with global rating agencies to gain that credibility and Vietnam should follow suit, according to Lambert.
HoREA’s survey showed that it is within reason when over 80 per cent of real estate businesses still issue bonds within 3-4 times of equity and leave interest rates between 10-12 per cent per year.
Nguyen Thien Quan, general director of Southeast Housing Development Company, reaffirmed that although it is only an auxiliary channel, corporate bonds are now becoming the major capital mobilisation channel of the business to lure more funds for project development.
Apec Group recently issued bonds to mobilise up to VND3 trillion ($130 million) named Happy18Bond, with coupon rates of 18 per cent. This has been attracting the attention of the market and investors, especially in the ongoing difficult economic context. With the abnormally high annual interest rate of 18 per cent, Apec is leaving other property giants in the shade. For instance, Novaland Group offers coupon rates of 10-11 per cent for its corporate bonds, while City Garden does 13 per cent, Phat Dat Real Estate 10-14 per cent, TNR Holdings 10.9 per cent, and Phu My Hung 7.15 per cent.
Currently, many investors are not able to analyse the financial situation of bond issuers, with this intangible creating great risks for the economy as many corporate bonds can turn into bad debts.
Norwegian Scatec Solar ASA’s SN Power to acquire its first wind farm in Vietnam
The Norwegian SN Power AS has signed a binding agreement to acquire 100 per cent of the shares in the 39.4MW Dam Nai Wind Power JSC in Vietnam from Mekong Wind Pte., Ltd. which is fully owned by Singapore-based Armstrong Southeast Asia Clean Energy Fund.
Dam Nai Wind is located in the “renewable energy capital” of Vietnam, in Ninh Thuan province approximately 350km north of Ho Chi Minh City in the southern part of the country. The wind farm was constructed in two phases – Phase I (7.9MW) and reached commercial operations in October 2017 and Phase II (31.5 MW) reached commercial operations in December 2018. The site encompasses an area of approximately 133,000 square metres, 10 metres above the sea level with flat topology surrounded by and interspersed with rice fields.
The asset consists of 15 Siemens wind turbine generators, each with a rated capacity of 2,625MW. The average annual generation will be 123GWh with expected annual revenues of $10.5 million under the 20-year feed-in tariff scheme for wind in Vietnam. The wind farm is financed by non-recourse debt from the Bank for Investment and Development of Vietnam (BIDV).
Scatec Solar supports this investment and the project economics meets the return thresholds of Scatec Solar.
The closing of the Dam Nai Wind transaction is expected to take place in the first quarter of 2021.
On October 16, 2020, Scatec Solar signed a binding agreement to acquire 100 per cent of the shares in SN Power, a leading hydropower developer and IPP. The Dam Nai Wind acquisition was not included in the SN Power transaction scope and purchase price announced on 16 October, and the Dam Nai Wind acquisition will now be included in the SN Power transaction scope and purchase price.
The SN Power transaction is conditional upon customary regulatory approvals and local competition approvals and is likely to be completed in the first half of 2021. Until then the two companies will continue to operate as separate entities.
Danang launches circular economy hub to promote sustainable development
The Danang Business Incubator and the United Nations Development Program (UNDP) in Vietnam jointly launched the Danang Circular Economy Hub and kicked off the Green Avengers program on November 11, aimed at helping Danang become a greener and more sustainable city.
According to Sitara Syed, UNDP deputy resident representative in Vietnam, the hub will focus on people and resources for sustainable development and circular economic practices in the central region.
“The hub will also focus on the development of current solid waste treatment systems and advocacy for green consumption. From there, we will see positive benefits for the environment and the community in the future,” she added.
A linear economy usually starts with the extraction of natural resources, to manufacture, for consumption and to dispose. Such an operation leads to resources being continuously exploited and waste being discharged back into the environment at an increasing rate.
In 2016, Vietnam’s amount of urban solid waste was 11.6 million tons, which is forecast to double by 2050. Although Vietnam is ranked 68th in the world in terms of area and 15th in terms of population, the amount of plastic waste in the sea of Vietnam is currently ranked fourth in the world, with more than 1.83 million tons per year.
According to Vo Duy Khuong, chairman of the Danang Startup Council, an economy that is cyclical, or a circular economy, is considered to be the best way to break the longstanding bonds between economic growth and negative environmental effects. More specifically, the circular economy helps promote economic development by reducing both resource extraction and waste in the environment.
This is why the Danang Circular Economy Hub was born. “It will support talented people with innovative projects for the environment to promote the improvement of solid waste treatment systems in Danang and central provinces and, at the same time, promote sustainable and green consumption in communities in the central region,” he said.
Addressing the launch event, Nguyen Tuan Luong, head of Solutions Mapping, UNDP Accelerator Lab in Vietnam, stated, “In 2020, the world, especially Vietnam, suffered many natural disasters, the most recent being the historic flood in the central region. This urges us to act even more.”
According to Luong, Danang is the economic and cultural center of the central region and as part of this project, the city will be at the center of spreading environmental protection in the region.
“The Danang Circular Economy Hub will be a platform for dedicated people, connecting projects and creating innovative solutions for the environment to cope with the current situation. In the more distant future, the hub promises to become a powerful network thanks to enthusiastic individuals who commit to join hands for the sustainable development of Danang City, thereby spreading inspiration in the central region,” he added.
After the launch event, the hub immediately activated the Green Avengers program with the Bootcamp, through which members of environmental organizations who cherish ideas and projects to create social impact can connect and share social responsibilities together.
There are also training sessions to provide expert advice, leadership capabilities, cooperation promotion and funding for the members to realize their ideas together.
Vietnam to make rubberwood for sustainable exports: Vietnam Rubber Association
Vietnam will make rubberwood for sustainable exports, the Vietnam Rubber Association (VRA) has announced.
VRA revealed it has kicked off a project promoting the sector’s compliance with the Vietnam Timber Legal Assurance System (VNTLAS) – a national system to ensure compliance with timber legislation at each stage of the supply chain, including harvesting, importing, purchasing, selling, transporting, processing, and exporting.
The project supported by the UN Food and Agriculture Organization (FAO) and the Vietnam Administration of Forestry aims to help rubber farmers and businesses to improve their capacity and meet VNTLAS’s requirements for sustainable export.
According to VRA, in 2019, Vietnam was home to 941,300 ha of rubber forests making up 51 percent of the country’s. Last year, rubber timber and woodwork products exported to more than 100 countries and territories earning more than US$2.38 billion from exports.
The contribution of rubberwood to the country’s total wood export is 22 percent. Satisfying VNTLAS’s requirements may greatly affects on rubber sector especially rubber farmers.
Experts in the field of rubber and forestry participating in the project will have assessment of challenges and difficulties as well as write guidance booklets for farmers and businesses.
Additionally, the project will help all parties relating to rubberwood supply chain as per VNTLAS’s requirements and issues relating to the Voluntary Partnership Agreement (VPA) between the EU and Vietnam.
Vietnamese enterprises desire to have goods distribution center in US
An online conference on connecting between enterprises in the Mekong Delta and overseas Vietnamese entrepreneurs in the United States was held in Ho Chi Minh City yesterday.
The Center for Foreign Service and International Conference (FSC) coordinated with the Business Association of Overseas Vietnamese and the Vietnamese Entrepreneurs Association in the United States to perform the event.
Speaking at the conference, Ambassador Extraordinary and Plenipotentiary of Vietnam to the US Ha Kim Ngoc said that more than 3,000 overseas Vietnamese enterprises have been granted business certificates in their hometown. Among them, many businesses have become representatives of Vietnamese products and brand names via goods distribution channels in the US.
The Mekong Delta provinces with great advantages in agricultural production contributed over 50 percent of food production, nearly 70 percent of seafood export turnover and became one of the country’s largest export hubs. Meanwhile, the US is a large import market of Vietnamese goods in addition more than 2 million people owned about 300,000 business establishments throughout the 50 states. Therefore, the connection between US enterprises and local businesses will open great opportunities for increasing the amount of exported cargos to the US, especially the agricultural products of the Mekong Delta such as fruits and seafood, processed foods, etc.
As this reason, Vietnamese enterprises desire to have goods distribution center in the US.
Within the framework of the conference, six cooperation agreements on cargo export between 12 domestic and US enterprises with a total value of US$200 million were signed.
MoIT to hold auction on Tariff rate quota (TRQ) of 103,000 tons of sugar
The Ministry of Industry and Trade has just announced the decision to auction the right to use the tariff rate quota of 103,000 tons of sugar in 2020.
The auction of 72,000 tons of raw sugar and 31,000 tons of refined sugar will take place on December 2 at the headquarter of the MoIT, with the starting price at VND2.4 million per ton.
According to regulations, the participants of the auction are enterprises that use raw sugar to produce refined sugar and traders who directly use sugar as raw material for production.
USI kicks off construction of electronic board manufacturing and assembly plant in Hai Phong
Universal Scientific Industrial (USI) on Saturday started construction for its new production base located in DEEP C Industrial Zone in the northern port city of Hai Phong.
USI will produce the electronic circuit boards for wearable devices (watch, phone and earphone) to supply the world’s top electronics companies. The 65,000-square-metre plant will employ 2,000 employees in full production and have the capacity to produce up to 14 million products annually.
Construction work is expected to be completed in the second quarter of 2021, followed by the initial commissioning and testing period. Production launch is targeted for the third quarter of 2021.
USI first announced its intention to invest in a new facility in Hai Phong in December last year. In June, USI obtained the investment registration certificate issued by the Hai Phong Economic Zone Authority with an initial investment of US$200 million.
The future investment scale and plan will be determined according to the needs of customers and company development. For the moment, USI expects to increase investment capital to $400 million in the next phase.
“This sizable investment in a Southeast Asia facility is intended to move us closer to our overseas customers and accommodate their ever-increasing demand. North Viet Nam, with its strategic geographical position and an extended infrastructure in place, offers USI an optimal way to facilitate fast and flexible response to customers’ orders,” said Kuei Chun Chi, manufacturing service director of USI.
In addition, the preferential economic zone tax incentives and competitive labour costs give it significant advantages in international competition.
“The plant we are building in Viet Nam constitutes a key element in our approach to increase manufacturing capacities on a global scale,” said Chi.
USI is expected to become a key manufacturer in the growing electronics manufacturing sector of Hai Phong by helping form a new production hub and contributing to the development of the electronic supply chain.
“Having a global electronics manufacturer like USI in Hai Phong is a ringing endorsement of the quality of the workforce and the opportunities that exist in our area. This will build up the confidence of other big players who are seeking for a reliable destination for their next expansion,” said Bruno Jaspaert, General Director of DEEP C Industrial Zones, adding that they are proud to be selected as the site for USI’s new production facility after an intensive search and investigation.
USI, Universal Scientific Industrial (Shanghai) Company Limited provides design, miniaturisation, material sourcing, manufacturing, logistics, and after services of electronic devices/modules for brand owners. USI is a member of ASE Technology Holding and has many years of experience in the electronics manufacturing services industry and leverages the industry-leading technology of ASE Group, which enables USI to offer customer diversified products in the sectors of wireless communication, computer and storage, consumer, industrial, and automotive electronics worldwide. USI has a sales service network in America, Europe, and Asia; and manufacturing sites in mainland China, Taiwan, Mexico and Poland.
DEEP C Industrial Zones is a Belgian developer and operator of an industrial zone and port infrastructure cluster in Hai Phong City and Quang Ninh Province – the most dynamic and growing region in north Viet Nam. DEEP C has become one of the largest industrial property developers in Viet Nam with five industrial zones, forming DEEP C industrial zone cluster covering 3,400 hectares at the epicentre of the region’s manufacturing and infrastructure boom. DEEP C provides a large portfolio of products and services including industrial land and workshop/warehouse for lease, port development, and operation, utilities supply and distribution, renewable energy generation.
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