Demand for cold storage facilities grows with e-commerce popularity
|Logistic service to develop further in the future. — Photo courtesy of JLL Vietnam|
It told a seminar held last week to discuss trends in logistics that investors are already partial to cold storage facilities after online grocery sales skyrocketed during the pandemic, requiring more refrigerated warehouses close to buyers.
“There has been a spike in short-term logistics requirements directly linked to the immediate impact of the pandemic, particularly in relation to the significant expansion of online grocery spending, and the need to support critical health services such as vaccines distribution.”
Since all leading vaccines require very low temperatures to remain effective, cold storage for the new COVID-19 vaccines might be the next big thing in the supply chain and logistics industry.
Another trend seen in the market is automation.
Trang Bui, head of markets, JLL Vietnam, said: “The COVID-19 pandemic is accelerating automation in the logistics sector and will become a major trend in the near future.
“Tenants are upgrading from outdated, often small and owner-occupied facilities, to newer facilities in premium locations. Simultaneously, the consolidation of logistics operations into more modern facilities is improving efficiency and reducing the overall logistics costs of tenants. Growth in other industries will also support three-party-logistics market expansion, including growth in the food and beverage, healthcare and pharmaceuticals and office and technology equipment industries.”
Rapid urbanisation and the growing middle class are among the biggest drivers of growth. Demographic forces drive demand for commercial real estate, and this is a major factor that underpins demand in Viet Nam, and the Asia Pacific in general.
Around 35 per cent of Viet Nam’s population currently lives in urban areas, up from 29 per cent just about a decade ago. As the market matures, the level of logistics space required to serve the population is likely to rise, leading to greater requirements for logistics space.
E-commerce is likely to drive demand for logistics real estate. Typically, e-commerce firms use more logistics space than brick-and-mortar retailers largely due to a more extensive product range, greater inventory levels, larger outbound shipping space requirements, and increased reverse logistics
In recent years the supply chain has become increasingly consumer-driven. Delivery speed has always been a major factor in the buying decision, with major online retailers offering same-day delivery options.
To keep ahead of the curve, retailers and logistics providers need to respond to changing customer needs.
In order to achieve growth goals, Viet Nam’s logistics industry will have to overcome the many challenges that remain. For Viet Nam to enter the next phase of the industrial/logistics cycle, become more competitive and move ahead of regional peers, it is vitally important to continue investing in infrastructure, both highways and utility networks, and renewable energy.
Also, Viet Nam’s cross-border trade process still needs significant improvements in both processing time and costs.
According to the 2020 Vietnam Logistics Report by the Ministry of Industry and Trade, the global logistics sector has been seriously affected by the COVID-19 pandemic. Although governments work to maintain the supply chain of goods and give priority to the circulation of essential goods, due to disease control measures like social distancing and work-from-home orders, there are times when most commercial markets are paralysed.
Massive chicken processing plant targets 100 million USD revenue by 2023
CPV Food’s chicken processing complex for export, the country’s biggest, is expected to generate 100 million USD during its first phase from 2019 – 2023.
Located at the Becamex Binh Phuoc Industrial Park in the south-eastern province of Binh Phuoc’s Chon Thanh district, the 250 million USD project shipped its first batches overseas this year.
The complex is the first closed processing model in Vietnam, consisting of one animal feed factory, five breeding farms, one egg incubation factory, 24 broiler farms for meat, and one slaughter-processing factory.
All facilities have been built in line with safety standards set by the World Organisation for Animal Health, with advanced technologies applied in management and production activities.
In the first phase, the project has an annual capacity of 50 million broilers per year. The annual capacity and revenue are set to be double in the second phase./.
Singapore’s labour market on recovery
Singapore’s resident employment staged a strong rebound in the third quarter of 2020, lifting resident employment levels to near pre-pandemic levels, according to the Ministry of Manpower (MOM).
Resident employment jumped 43,200 to 2.34 million in September, which is just a notch below September 2019 figure of 2.35 million, according to the Labour Market Report Q3 2020.
Non-resident employment, excluding foreign domestic workers, however, contracted by 72,300 in Q3, even more sharply than the first half of the year. This led to a contraction of 29,100 in total employment for Q3, easing from the contraction of 103,800 in Q2, when Singapore was on a partial economic shutdown.
Overall and citizen unemployment rates were 3.6 per cent and 4.9 per cent respectively in October, unchanged from September. Resident unemployment inched up from 4.7 per cent to 4.8 per cent during this period.
Minister of Manpower Josephine Teo said the support measures for local employment played a key role in stabilising the job market, adding these include Jobs Support Scheme and National Wages Council guidelines that helped to preserve a strong Singaporean core across all sectors.
Almost 60,000 local job seekers were placed into work and training opportunities under the SGUnited Jobs and Skills Package from April to October, the MOM said. More than 120,000 openings are still available.
However, Teo warned that challenges lie ahead as the nature of jobs changes./.
Singapore benefits from rising global drug demand
Singapore’s pharmaceutical industry is benefiting from the skyrocketing demand for pharmaceuticals in the world market.
The Singapore economy is heading to the worst recession in history this year but the operation of pharmaceutical factories has held up, thanks partly to countries rushing to stockpile medicines during the COVID-19 pandemic.
The country has become a centre for drug makers and is home to more than 50 factories, owned by big players including Pfizer, Roche, GlaxoSmithKline and Takeda.
Singapore’s drug sector plays an important role in the global pharmaceutical industry supply chain.
In 2020, governments and private-sector firms have been increasing inventories of critical drugs as a result of the severe supply chain disruptions in many countries during the pandemic.
The biomedical manufacturing industry, including pharmaceuticals, has grown strongly, with production in September 2020 increasing by 90 percent over the same period last year.
The country’s exports also posted stable growth most of the year, helped by drug shipments.
Singapore, with a population of 5.7 million, is one of the few countries that exports more pharmaceuticals than it imports. In 2019 it shipped pharma products worth 8.1 billion USD while spending only 3.1 billion USD on imports./.
Vietnamese, Malaysian enterprises boost cooperation
The Vietnam Malaysia Business Association (VMBIZ) and Malaysia’s Blue Ocean Capital Group Berhad (BOCGB) signed a Memorandum of Understanding (MoU) on December 20 to bolster collaboration and exchange between enterprises of both nations.
Accordingly, the VMBIZ and the BOCGB agreed to create favourable business cooperation climate for corporations of the two countries, help them to find potential partners, and mobilise resources for investment projects.
They also reached consensus on providing members with necessary market and project information, as well as latest updates on related policies so that they can seize business opportunities not only in Vietnam and Malaysia but also in the region and the world.
The two sides want to become a bridge to enhance cooperation between non-governmental organisations in Vietnam and Malaysia, and promote integration activities with a view to contribute to the Vietnam-Malaysia relations.
On the occasion, Vietnamese Ambassador to Malaysia Tran Viet Thai said Vietnam always treasures the relations with Malaysia, and wishes to enhance the strategic partnership with the nation, with economy-trade-investment being an important pillar.
Apart from being a favourite destination of large corporation like Apple and Samsung, Vietnam is also a potential market with a population of nearly 100 million people, he said, adding the VNBIZ and BOCGB should concretise their MoU with specific business and investment projects.
After the signing ceremony, several BOCGB’s members unveiled their plan to enter the Vietnamese market, and pave the way for Vietnamese goods to enter Malaysia and many other Muslim markets.
The VMBIZ, established in 2018, has conducted a wide range of activities to link Vietnamese and Malaysian firms. During the pandemic, the association worked with the Vietnamese trade office in Malaysia to organise many online conferences on enhancing Vietnamese exports to Malaysia. Additionally, the association has made positive contribution to activities by the Vietnamese people community in the host nation, and supported citizens who were battered by floods in the homeland./.
Craft villages busy as Tet countdown begins
Craft villages in the Mekong Delta are increasing their production of foodstuff to ensure sufficient supply for Tet, which falls in mid-February 2021.
To Ngoc Hoang, owner of a pork sausage making facility in Dong Thap Province, said he is preparing for the festival, and prices of inputs have more than doubled since last year.
Since demand for pork sausages rises by up to five times around Tet, he said he needs to hire more workers and invest in more machinery.
Tan Phu Dong rice flour village in the same province is also becoming busier, with rice noodles and pho making businesses scrambling to prepare for the festival.
Nguyen Viet Em said his family always makes rice noodles for Tet, but this year his family and others could produce less than last year due to COVID-19. He plans to produce one ton every day.
Meanwhile, in a craft village for dried goods and fish sauce in Hong Ngu City’s An Lac Ward in the same province, fishes are being dried along the side of roads, while many workers are busy.
Tran Van A, owner of a business that makes dried snakehead murrel, said that his business would produce some 20 per cent less than last year due to the pandemic, and increase prices of dried products due to higher raw material prices.
In Ca Mau Province’s Cai Doi Vam Town, where many people make a living with processing seafood, they are currently making dried fish, with some businesses starting work early each morning.
To Truong Son, chairman of the town People’s Committee, said there are around 40 households making dried fish, and local authorities are working to ensure they are adhering to food safety standards through inspections and propaganda.
EVN plans to launch competitive retail electricity market next year
Vietnam Electricity (EVN) is eyeing the operation of a competitive retail electricity market in 2021 following its official run of a competitive wholesale market since 2019.
The development is part of a long-term plans for Viet Nam’s electricity sector as mandated in the 2004 Electricity Law.
The details were specified in the Prime Minister’s Decision 63/QD-TTg in 2013, which laid out the conditions and structure of the new market. The marketplace was set to be developed in three distinct parts – the power generation market, the wholesale market and the retail market.
EVN put into operation the competitive generation market in 2012, attracting 32 electricity plants capable of generating 9,200 MW in total at first. The number of participating plants has reached 99 now, whose accumulated capacity reaches 27,000 MW.
Vinaconex to end HNX-listing, move shares to HoSE
Viet Nam Construction and Import-Export Corporation (Vinaconex) will de-list nearly 442 million shares from the Ha Noi Stock Exchange (HNX).
The company will cancel its listing on December 22. The last trading day for its shares will be December 21.
After cancelling the HNX listing, Vinaconex will list its shares on the Ho Chi Minh Stock Exchange.
The company’s shares, listed with code VCG, rose 0.7 per cent to finish Friday at VND43,800 (US$1.89) apiece.
In the third quarter, Vinaconex posted a robust gain in post-tax profit, which was more than VND1.03 trillion ($44.86 million) by offloading its ownership in some property projects.
The figure helped boost the firm’s nine-month post-tax profit by 57 per cent on-year to VND1.45 trillion.
Revenue in the third quarter dropped nearly 45 per cent on-year to VND1.27 trillion and fell nearly two-fifths on-year to VND3.8 trillion in nine months.
Vinaconex has recently bought back 39.3 million shares, worth VND1.6 trillion. The capital was taken from its undistributed profit.
In addition, two major shareholders have quit the company. Cuong Vu Real Estate Co Ltd sold its 94 million shares, equal to a 21.28 per cent stake, and Start Invest Co Ltd sold its 33.44 million shares, equal to a 7.57 per cent stake.
The deals were executed on August 14.
Since the two major shareholders exited the company, Vinaconex shares have gained substantially by a total of 82.5 per cent.
Gelex mulls capital increase via share issuance
Viet Nam Electrical Equipment Joint Stock Corporation (Gelex) plans to issue nearly 293 million shares to increase charter capital.
The shares will be sold to current investors. Each share is equal to one purchase right and every shareholder will have the right to purchase six new shares for each 10 rights they have.
Gelex will set the price at minimum VND12,000 (US$0.52) apiece, hoping to raise more than VND3.5 trillion ($151.4 million) from the sale to raise charter capital to VND7.8 trillion.
The deal will be discussed at the firm’s extraordinary shareholder meeting on December 29. If approved, it will be done by the end of June 2021.
In recent years, Gelex has continuously made borrowings to expand operations and enhance investments.
Those loans helped the company raise revenues annually from VND8.6 trillion in 2015 to an estimate of VND17.5 trillion in 2020.
Gross profit also rose from VND1.1 trillion in 2015 to an estimated VND2.5 trillion in 2020.
However, financial expenses soared from VND75 billion ($3.24 million) in 2016 to an estimated VND1 trillion in 2020, mostly because of the firm’s acquisition of Viglacera Corporation.
After the acquisition completes in 2021, total revenue and gross profit are expected to reach VND33.4 trillion and VND5.2 trillion in 2021, respectively.
Earnings per share (EPS) is forecast to rise to VND1,500 apiece in 2021 from an estimate of VND1,348 apiece in 2020.
The upcoming capital increase will serve the group’s planned projects such as two wind power projects in Quang Tri Province and two hospitality projects in Ha Noi.
In addition, Gelex plans to widen its working capital by VND415 billion and spend VND800 billion restructuring and increase capital for its subsidiary Gelex Electrical Equipment JSC.
In July-September, Gelex reported nearly VND4.75 trillion of net revenue, up 21 per cent on-year, and VND218 billion in post-tax profit, down 5.2 per cent on-year.
In January-September, the corporation earned a combined net revenue of total VND12.06 trillion, an annual increase of 9.6 per cent.
Nine-month post-tax profit dropped 7.89 per cent on-year to VND641 billion.
Gelex is listing more than 488.2 million shares on the Ho Chi Minh Stock Exchange with code GEX.
The company’s shares edged up 0.5 per cent to end Friday at VND20,800 apiece.
Recently, Gelex has decided to sell 12 million treasury shares to employees at VND12,000 apiece.
LienVietPostBank issues bonds to international investors
LienVietPostBank has issued five-year bonds worth VNĐ1.5 trillion (US$65.2 million) under the form of private placement with the fixed interest rate of 6.5 per cent annually.
According to the bank, the non-convertible bonds, with no collateral nor secondary debt, issued and paid in local đồng, were sold to experienced and well-known international financial investors.
The issuance contributed to increasing the working capital scale of the bank as well as improving the quality of prudential ratios under the State Bank of Việt Nam’s regulations.
Last month, the bank issued more than VNĐ 2 trillion of tier-2 capital bonds in a very short time, becoming one of the first commercial joint stock banks to issue bonds in large volume.
MSB to debut on December 23
Viet Nam Maritime Commercial Joint Stock Bank (MSB) will start listing on December 23, the Ho Chi Minh Stock Exchange (HoSE) has announced.
The bank will debut more than 1.17 billion shares at an initial price of VND15,000 (US$0.65) apiece. The share price will move within a trading band of 20 per cent.
The stock code is MSB.
After the listing, MSB will sell its treasury shares to the current shareholders, worth VND825.2 billion ($35.7 million). The plan was approved by the State Securities Commission on November 30.
The number of treasury shares owned by MSB in post-issuance will be 18 million. These shares will be sold or issued as bonus shares for the employees.
In January-November, MSB posted a 13 per cent year-on-year increase in total assets, which reached VND166 trillion ($7.18 million).
Pre-tax profit in the 11-month period jumped 116 per cent year-on-year to VND2.3 trillion ($99.5 million) and beat the full-year profit target by two-thirds.
Japanese firm acquires 23.7% stake at Transimex
Japanese firm Ryobi International Logistics Viet Nam has acquired nearly 16.8 million shares to become the major shareholder at Transimex Corporation.
The deal was executed on December 14, the Japanese logistics company said in a filing to the Ho Chi Minh Stock Exchange (HoSE).
After the deal, Ryobi International Logistics Viet Nam owns 23.7 per cent of the capital at Transimex Corporation.
Ryobi International Logistics Viet Nam has replaced Casco Investments Limited in the shareholder structure of Transimex Corporation.
On December 14, Casco Investments Limited offered the entirety of more than 17.2 million shares for sale, equal to 24 per cent of capital.
The shares were completely sold on the day and Casco Investments Limited was no longer the major shareholder at Transimex Corporation.
Casco Investment Ltd was reported to earn VND560 billion (US$24.2 million) from the divestment.
Beside Casco Investment Limited, some other shareholders have also wanted to divest from Transimex.
Toan Viet Investment Co wanted to sell 1.16 million shares between November 12 and December 11. However, the deal failed.
After the one-month period, Toan Viet Investment Co still holds 3.62 million shares, equal to 5.1 per cent of capital at Transimex Corporation.
Thien Hai Investment and Trading Co has registered to sell more than 2.2 million shares or 3.14 per cent of Transimex’s capital between December 18 and January 15, 2021.
Transimex shares, listed on the Ho Chi Minh Stock Exchange with code TMS, rose 1.6 per cent to VND37,600 ($1.63) apiece on Friday.
Transimex shares have soared more than 31 per cent in the last week.
Ryobi International Logistics Viet Nam is the member of the Japan-based Ryobi Holding. The company was founded in September 2014, focusing on logistics and warehouse provision.
Transimex Corporation was established in 1983. The company was equitised in 2000 and debuted on HoSE the same year.
Transimex specialises in delivery and transport of imports and exports, and provides warehouse services. The company has six subsidiaries and seven affiliates.
Transimex on September 30 recorded VND3.82 trillion worth of total assets, including VND1.3 trillion worth of short-term assets and VND2.52 trillion worth of long-term assets.
Total debts were worth VND1.52 trillion in September-end with more than half being borrowed from creditors.
Owners’ equity was worth VND2.3 trillion and undistributed post-tax profit was worth VND886 billion.
In January-September, total revenue increased by 29 per cent on-year to nearly VND2.3 trillion and beat the full-year plan. Nine-month post-tax profit gained nearly two-fifths on-year to VND234 billion.
Mekong Connect 2020 seeks to introduce products into global value chain
The Mekong Connect 2020 forum got underway on Dec. 21 in the Mekong Delta province of Dong Thap in order to discuss ways in which to introduce local products into the global value chain.
Reports show two-way trade turnover between Vietnam and the EU increased to EUR45 billion last year from just EUR10 billion euros in 2009, making the EU become the country’s second largest export market.
The enforcement of the EVFTA on August 1 has served to help reduce tariff barriers of up to 71% on the total value of Vietnamese exports to the EU, with tax rates poised to be slashed by 99% over the next decade. Indeed, tariffs on Vietnamese agricultural products will be reduced to 0% during the course of the next decade.
The World Bank estimated that the full implementation of the EVFTA will help Vietnamese exports increase by 12% throughout the 2021 to 2030 period, with fruit exports growth alone anticipated to reach 20%. This will present an array of opportunities for producers and exporters operating in the Mekong Delta to make inroads into the demanding market.
Experts believed that, aside from boosting local exports to the EU, the EVFTA will better protect items against counterfeit goods in the EU market by making use of the provisions set out in the terms of geographical indications (GI).
Nguyen Hai Minh, vice president of the European Chamber of Commerce in Vietnam (Eurocham), said there are currently 39 Vietnamese GIs being protected in the EU, including sea salt and star apples from the Mekong Delta region.
Bui Kim Thuy of the US – ASEAN Business Council, revealed that the quarantine of plants and animals, along with anti-dumping tax and safeguard measures, represent technical barriers faced by local businesses.
In line with the EVFTA, local businesses have been advised to meet stringent food safety standards set by importers from the EU, in addition to other requirements such as origin traceability, quarantine, and food hygiene, in order to penetrate the market and participate deeper in the global food supply chain.
Vietnam becomes sixth largest furniture exporter to the UK
Vietnam has emerged as the sixth largest wooden furniture exporter to the UK, grossing an export value of approximately US$422 million last year to make up 3.6% of the import market share, according to the Ministry of Industry and Trade.
Experts say wooden furniture represents one of the key export industries that are anticipated to greatly benefit from the impending UK-Vietnam Free Trade Agreement (UKVFTA).
Once the trade deal comes into effect, a range of timber and wooden products are poised to enjoy a preferential tariff of 0% in line with the five-year roadmap from the current tax rate of between 2% and 10%.
Most notably, there appears to be plenty of demand for Vietnamese wooden products as these items have tended to sell well in the UK market, largely due to their highly-competitive prices and high quality.
Several major companies operating in the wood industry in the UK have moved to establish production facilities, or have signed long-term partnership contracts with manufacturers operating in Vietnam, including IKEA, the world’s largest furniture retailer.
According to economists, the UKVFTA will not only help to increase the export of this commodity to the UK, but will also serve to create a favourable business climate that can attract FDI inflows into Vietnam, especially with regard to the local wood processing industry.
Throughout the opening 11 months of the year, the timber and wooden product industry has witnessed robust growth of 14.1%, despite the facing a range of adverse impacts caused by the novel coronavirus (COVID-19) epidemic, grossing a revenue of nearly US$10.9 billion.
Data compiled by the International Trade Center (ITC) shows the leading exporters of wooden furniture to the UK market are currently China, Italy, Germany, Poland, and the United States.
Vietnamese exports to Eurasia enjoy strong growth of approximately 18%
The ten months of the year witnessed the nation’s exports to the Eurasian region record impressive growth, with two-way turnover reaching a sum of US$10.34 billion, marking a rise of 17.98%, according to figures released by the Ministry of Industry and Trade (MoIT).
Following the announcement of this data, Deputy Minister of Industry and Trade Dang Hoang An stated that, despite facing unstable developments in global trade and the novel coronavirus (COVID-19) pandemic, trade turnover with the Eurasian region during the reviewed period remained strong. This is largely due to a range of positive signs emerging in the overall picture of local import and export activities.
Most notably, total two-way turnover between the country and the Eurasian region hit US$10.34 billion over the past ten months, an increase of 17.98%, including US$7.18 billion from exports and US$3.16 billion from imports, representing annual increases of 16.15% and 22.35%, respectively.
According to statistics compiled by the Europe-America Market Department, out of the nation’s 27 partner countries throughout the Asia-Europe region, 11 have joined the EU, whilst a further five countries are in the process of joining the EU. In addition, five countries, including Russia, Belarus, Kazakhstan, Armenia, and Kyrgyzstan, have established the Eurasian Economic Union (EAEU), an economic bloc that already has a Free Trade Agreement (FTA) with the nation known as the VN-EAEU FTA.
Furthermore, solid institutions and legal frameworks have been successfully established between the nation and other countries in the Asia-Europe region for the purpose of developing bilateral co-operation ties. This includes the setting up of 14 intergovernmental and joint committees, along with one consultation mechanism for bilateral economic co-operation.
Due to these factors, it can be considered that local businesses enjoy favourable conditions in which to promote trade with countries from this region, while striving to take advantage of economic support and a reduction in tariffs and non-tariff barriers.
Moreover, export growth has seen an improvement following the enforcement of the VN-EAEU FTA, although according to the total import demand of this market area, there remains more to be done for domestic enterprises to boost the export of a range of strategic commodities.
Specifically, the total import turnover to this region during the reviewed period stood at roughly US$1.400 billion, with the nation’s export turnover only accounting for 0.5% of the market share, indicating that there remains ample room to grow local exports.
“In the future, the effective use of FTAs with the Eurasian Economic Union and the European Union will also promote stronger trade, industry, and investment co-operation between Vietnam and other Eurasian nations in general, and countries in Eastern Europe and Central Asia in particular,” noted Deputy Minister An.
Moving forward, the EAEU market has a huge demand for all products that are the strengths of Vietnamese enterprises in terms of exports, such as garments, footwear, electronics, and agricultural products such as rice, pepper, fruit and vegetables, and seafood. In contrast, with regard to the EAEU’s key export products to the country, they include petroleum products, machinery, chemicals, iron and steel, and consumer goods. The product structure between both sides therefore complements each other and does not come into direct competition, he added.
50 top Vietnamese brands honoured
Most of the honoured firms have operated for at least more than a decade, including Minh Long I, Vinamilk, Viettel Group, The gioi di dong (Mobile World), VPBank, PNJ, Nutifood and Saigontourist, among others.
During a workshop on brand building amid COVID-19 on the same day, participants said that in 2020, the pandemic has dealt a blow to all sectors, including how firms approach their customers. Along with uncertainties, it also acts as a catalyst for faster digital economic development, requiring enterprises to change their mindset in brand building in the new context.
Nguyen Anh Dung, Executive Director of Retail Measurement Services at Nielsen Vietnam advised firms to identify different groups of consumers as the internet and smart hand-held devices have changed buying behaviours, especially of young people.
Marketing via social networking sites has become more popular in the global market, he added.
Social corporate responsibility also has a great role to play in brand building, said Nguyen Ha Thanh, Public Relations Manager of Viettel Group, adding that it should be considered in firms’ decision-making.
Significant gains towards public investment goals
Despite slow disbursement of foreign loans, that of public investment has become faster, contributing to making the country’s positive economic growth target feasible for the year.
State-owned Electricity of Vietnam (EVN) reported that in the first 11 months of this year, its public investment disbursement reached nearly VND521.2 billion ($22.66 million), hitting 73.6 per cent as compared to the initial plan assigned by the government.
Of the figure, the capital disbursed for the group’s industrial activities was VND191.4 billion ($8.32 million), or 96.6 per cent of the initial plan.
The Ministry of Industry and Trade (MoIT), which manages EVN, also reported positive disbursement of public investment. Specifically, the total public investment for the MoIT to disburse in 2020 is VND293.48 billion ($12.76 million). Of which 71 per cent or VND208.7 billion ($9 million) has been realised before the end of November.
According to the Ministry of Planning and Investment (MPI), which is in charge of conducting state management over Vietnam’s public investment plans, the MoIT and EVN are big contributors to the country’s encouraging 11-month public investment disbursement picture, which reached 79.3 per cent of the initial plan and increased by 34 per cent on-year. This was also the highest 11-month rise in the 2011-2020 period.
As of late November 15 ministries and central agencies, as well as 18 cities and provinces, had a disbursement rate of over 75 per cent, including nine ministries and central agencies, and seven localities having a rate of more than 85 per cent.
For instance, Dang Ngoc Quynh, Deputy Chairman of Hung Yen People’s Committee, said that the northern province was given a sum of nearly VND6 trillion ($260.87 million) as public investment for 2020.
“In the first 11 months of 2020, the province disbursed close to VND4.3 trillion ($186.95 million), exceeding by 34 per cent of the initial disbursement plan assigned by the central government, and hitting 71 per cent of the plan assigned by the provincial government,” Quynh said. “Hundreds of infrastructure works have been constructed and put into operation. It is expected that the remaining investment capital will be fully disbursed by late December, with another 170 works to be put into operation.”
Meanwhile, according to the Ministry of Transport (MoT), the capital disbursement rate of some state-funded infrastructure projects of national importance has also been quickened.
For example, disbursement of some component projects of the eastern cluster of the North-South Expressway project hit over VND7.86 trillion ($341.74 million) out of the assigned VND10.82 trillion ($470.4 million) for 2020, or 72.6 per cent.
“Disbursement of public investment has been significantly improved,” stated Prime Minister Nguyen Xuan Phuc at the government’s cabinet meeting over a week ago. “This will contribute to the government’s efforts to achieve an economic growth rate of 2.5-3 per cent this year, and laying firm groundwork for next year’s higher growth.”
According to the Ministry of Finance (MoF), in the entire 2020, about VND633 trillion ($27.5 billion) worth of public investment must be disbursed. This sum includes VND470.6 trillion ($20.46 billion) assigned for this year and VND162.4 trillion ($7 billion) transferred to 2020 from 2019.
The MoF last week reported that in the first 11 months of 2020, the disbursement of official development assistance and concessional loans was VND6.31 trillion ($274.34 million), hitting 34.65 per cent of the initial plan and 45.51 per cent of the revised plan. This would mean that many projects have been delayed, and such assistance and loans may not be fully disbursed as planned for this year.
For example, according to an MPI report, a project to develop urban roads in the northern city of Haiphong, funded by the World Bank, was unable to disburse $13 million due to international consultants not being able to enter Vietnam to verify payments. In addition, the bidding activities of many projects using loans from the Export-Import Bank of Korea were disrupted because many South Korean surveyors were stuck at home.
“In addition, the COVID-19 pandemic has caused shortages of materials and equipment at construction sites as they are produced in and imported from many European and Asian countries. This has badly affected the implementation of bidding packages,” MPI Minister Nguyen Chi Dung said. “Projects in many localities, for example in the central city of Danang, had to halt implementation due to social distancing.”
Vietnam’s wood exports grow in anticipation of UKVFTA
Vietnam’s wood exports to the UK are expected to grow strongly as the two countries have recently concluded the UK-Vietnam Free Trade Agreement (UKVFTA).
The UKVFTA will see 99 per cent of tariffs between the two countries eliminated over the course of seven years. According to the Import and Export Department of the Ministry of Industry and Trade of Vietnam, Vietnam’s wood sector will reap significant benefits from the UKVFTA.
Currently, Vietnam is one of the UK’s largest wood and wooden product exporter. In 2019, Vietnam was the UK’s sixth-largest wood and wooden product exporter with the export turnover reaching 421.8, accounting for 3.6 per cent market share of the UK’s wood and wood product imports. According to data from the International Trade Center (ITC), the leading exporters of wooden furniture to the UK are China, Italy, Germany, Poland, and the US.
Once the UKVFTA comes into effect, many Vietnamese wood and wood products are subjected to zero per cent tax rate within five years. Therefore, Vietnam’s wood industry will enjoy tremendous benefits from this agreement.
Furthermore, Vietnam has many opportunities to increase the export of wooden products to the UK, thanks to their highly-competitive prices, good raw materials, and high product quality. In addition, a number of major companies in the wood industry in the UK already have production facilities or signed long-term partnership contracts with manufacturers in Vietnam such as IKEA, the largest furniture retailer in the UK. The UKVFTA is expected to make Vietnam more attractive to foreign investors to invest in Vietnam’s wood processing industry.
Despite the impact of the COVID-19 pandemic, the wood and wooden product sector have enjoyed good growth. In the first 11 months of 2020, the sector witnessed an increase of 14.1 per cent over the same period last year, reaching $10.88 billion.
MIC launches “Make in Vietnam” Viettel Data Mining Platform
Viettel Data Mining Platform debuted on December 18 to support businesses in optimising data analysis to increase business efficiency in the digital transformation era.
Dang Duc Thao, vice head of Viettel CyberSpace Centre, said that data is a valuable resource in the digital economy. Technology giants like Google, Amazon, Microsoft, Apple, or Facebook have enriched their business activities partly by tapping into digital data.
Developed by Viettel CyberSpace Centre, Viettel Data Mining Platform applies advanced technologies such as AI, big data, machine learning, and others. It helps businesses in different sectors conduct dep analysis of business activities, finance, human resources, quality management, and others. It is able to make forecasts, analyse risks, and detect unusual issues in business administration.
With these, Viettel Data Mining Platform will help businesses ensure their prestige; and analyse customer tastes, prices, and custmers, and then give them appropriate recommendations. Especially, the platform uses the technology to work with Vietnamese language (Natural Language Processing and Optical Character Recognition).
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Banks work to boost consumer credit at year-end
Since Covid-19 has been brought under control and consumer demand at the end of the year has been rising, local banks have now focused on attracting borrowers of consumer credit, offering many preferential consumer loan packages.
Many banks, including Techcombank, HDBank, VPBank, TPBank, VIB and MBB, have been allowed by the central bank to extend credit room to support credit growth, according to a report of Vietcombank Securities Company.
VPBank has introduced a VND2-trillion preferential credit package to car buyers with a credit limit up to 85% of the value of each car. Car buyers can enjoy a fixed interest rate of 8.5% for an initial period of 24 months.
Meanwhile, SeABank has offered a lending program for those who intend to buy houses and land, repair their homes or buy cars with a fixed interest rate of 7.5% for the first 24 months.
Joining the chorus, Techcombank continued to introduce various preferential loan packages for home and car buyers with fixed interest rates of 6.99%-8.75% for two years.
The launch of these credit packages, coupled with refund and reward point programs, is aimed at stimulating consumption at the end of the year.
Personal loans are expected to grow strongly at the end of the year as the demand for consumption is rising.
In the third quarter of 2020, many banks saw a quarter-on-quarter increase in personal loans, with MB reporting a rise of 10.9% and VIB’s personal loans soaring by 16.7%.
The growth in personal loans will contribute to the increase in net profits and the net interest margin of banks, according to a recent report of FiinGroup, Vietnam’s leading integrated service provider of financial data, business information and industry research services.
VCBS also said that the individual client segment offered much potential for development.
Why it’s tough for lending rates to go lower
This year, commercial banks have so far revised down many times their deposit and lending rates. However, lending rates are thought to be high. Why are these rates difficult to be further slashed?
On December 4, information released from the State Bank of Vietnam, the central bank, showed that the current short-term lending rate ceiling in some industries in Vietnam dong is 4.5% per year.
That rate is already 1.5%-4.5% lower than those in 2019. It is applicable to several industries where the maximum rate is fixed by the central bank to encourage production in line with the Government’s decisions, such as agriculture and export production relevant to the support program for small and medium enterprises.
According to the State Bank, the present annual deposit rates in Vietnam dong are commonly at 0.1%-0.2% for no-term and less-than-one-month deposits; 3.3%-3.9% for terms from one month to less than six months; 4.2%-6.0% for terms from six months to less than 12 months; and 5.8%-6.9% for terms longer than 12 months.
That means deposit rates are lower than those at the end of 2019: 0.1%-0.6% lower for no-term and less-than-one-month deposits; 1%-1.1% for terms from one month to less than six months; and 0.6%-1% for terms from six months to less than 12 months.
Lower interest rates for no-term deposits and those with less-than-six-month terms seem to be enough only for banks to balance short-term loans for priority industries, those whose caps are set by the State Bank or some lists selected by the respective banks in line with their business strategies.
For a long time, banks have maintained high interest rates for six-month term deposits, at over 6% a year, which makes it difficult for their lending rates to further plunge.
Credit management and banks’ profit targets
In March, May and October this year, the central bank ordered the cuts of deposit rates to 0.8%, 0.5% and 0.2% for no-term deposits, and 5%, 4.7%, 4.25% and 4% for less-than-six-month terms. The average deposit rate ceiling was about 4.42%/year.
The central bank in March, May and October also requested banks to cut the lending rate ceilings for short-term loans to 6%, 5%, 5,5% and 4.5%. As a result, the average lending rate ceiling is about 5.16% per year.
It can be said that to carry out management by specific objectives, each bank must implement its own strategies and policies to keep their customers and partners loyal to them. In lending activities, VIP clients are often eligible for banks’ incentives, including preferential lending rates, which are sometimes very low, even lower than the deposit rate for the one-month term. That’s why banks often have to keep interest rates in other sectors high to offset these cases.
Meanwhile, to comply with the State Bank’s regulations, commercial banks have to implement standards for balancing efficiency and risks. Loans must be evaluated in line with risks. Consequently, loans for industries facing high risks have to bear high interest rates. For instance, real estate is one of the high-risk industries whose lending interest rates are more or less 10% at present.
In a broader perspective, it’s hard for banks to cut deeper both their deposit and lending rates because credit institutions have to retain interest rates suitable for 2020 when enterprises across the board issued corporate bonds at an annual interest rate between 10% to 15% per year. The total value of corporate bonds successfully issued during the first 10 months of this year amounted to more than VND222.3 trillion, or a third of all the deposits attracted by the entire banking system in the same period.
To fix the right lending rate for a specific industry, it needs to compare it with the profit margins of that industry and of the entire economy. Regrettably, such figures are not available or are unofficial at the moment.
To make banks’ lending rates more compatible with the new economic situation, it requires each bank to calculate the difference between lending rates and deposit rates in a more conspicuous and appropriate way. A lending rate is often fixed by adding a certain margin to the corresponding deposit rate. However, such a margin must rely on some concrete base, not a 3.5% gap applicable universally to all loans at all times.
At the same time, banks’ credit management and the application of preferential credit programs should be consistent and transparent. In this process, the State Bank must play a crucial role in checking and inspecting banks’ operations and making information on their mobilization and lending activities available to clients.
Weak manpower leads to failure of e-commerce strategies: experts
The e-commerce strategies of many enterprises have been ineffective or have failed because they don’t invest enough in their e-commerce human resources, experts said at the Omnichannel Playbook – Conquering the Future of Unified Commerce event in HCMC on December 17.
The event was co-organized by The Purpose Group and SmartOSC with the participation of leading experts in the e-commerce sector from Google, Adobe, Amazon, The Coffee House, ANTS Digital and Zalo Business and representatives of more than 150 retailers.
The experts said Vietnam has seen drastic e-commerce development and there is still room for further development in the coming years.
Tran Xuan Thuy, director of Amazon Global Selling Vietnam, said e-commerce helps businesses reach out to more customers and supports their growth. Many businesses in Vietnam have invested in e-commerce or had e-commerce development strategies. However, insufficient investment in e-commerce human resources has led to ineffectiveness or even failure.
Thuy said the operations of e-commerce and traditional channels differ significantly, but many enterprises usually make use of their staff working on traditional channels to operate e-commerce channels. He stressed that businesses should have specialized staff for their e-commerce channels, who are skillful and have a deep knowledge of the sector.
Some experts said e-commerce is a modern retail business model that opens up many opportunities for Vietnamese enterprises. To be successful, businesses must invest much time to research, build their e-commerce strategies and develop e-commerce human resources.
To save time, many businesses have hired digital marketing consulting companies to build e-commerce strategies and support them to operate their e-commerce channels. The experts agree this is an effective way to shorten the time.
Le Ba Linh, founder of Link Nature Power Company, said to help the company’s Mami fish sauce become one of the five bestselling fish sauce brands on Amazon in the United States, the company has to invest in digital marketing.
“We have to hire a specialized company to be in charge of our company’s digital marketing. The partner helps us follow up and take care of customers regularly,” he said, adding that investment in digital marketing accounts for some 20% of the company’s revenue.
Data of the General Statistics Office of Vietnam showed that despite the negative impacts of the Covid-19 pandemic, Vietnam’s retail revenue has maintained the growth momentum this year. The country’s retail revenue in the first half of 2019 reached more than VND3.63 quadrillion, increasing by 6.2% compared with the same period last year.
E-commerce has contributed significantly to this development by helping retailers in Vietnam adapt to the new spending and shopping behaviors of consumers and provide them with a better shopping experience.
Vietnam to end 2020 on an optimistic note
Although all countries in the world, including Vietnam, have seen a sharp slowdown in economic growth and other indicators, most assessments and projections of the Vietnamese economy remain fairly upbeat.
In its latest report released on December 10, the Asian Development Bank upgraded its growth forecast for Vietnam in 2020 from 1.8% to 2.3%, with growth in 2021 projected at 6.1%.
2020 was a successful year for Vietnamese rice, in terms of output, price and export revenue. The business community was strengthened with an average of 15,000 new enterprises established each month. Digital transformation is also accelerated in businesses and government agencies.
2020 also recorded new milestones in international integration with Vietnam assuming the roles as a non-permanent member of the UN Security Council, ASEAN Chairmanship and AIPA Chairmanship. Vietnam adopted a trade agreement with the European Union, signed the Regional Comprehensive Economic Partnership and reached a free trade agreement with the UK. Vietnam was also named as the World’s Leading Heritage Destination at the 2020 World Travel Awards.
According to the UN Sustainable Development Report 2020, Vietnam is the sole Southeast Asian country to have fulfilled five UN action goals, which include those on reducing carbon dioxide emissions, promoting renewable energy and enhancing resilience to climate change. The ratio of multidimensional poverty is expected to fall to 2.75%, compared with 9.88% in 2015 and 3.75% in 2019, making Vietnam one of the first countries to attain the UN goal on poverty reduction.
Such positive results are based on the achievements and growth drivers of 2019 combined with Vietnam’s success in containing the spread of Covid-19 and early introduction of financial and monetary measures to support businesses and the people.
Vietnam has managed to accelerate public investment disbursement, continued to improve the business climate, took part in global value chains more deeply, promoted economic reform and digital transformation, diversified supply chains and formed new economic links. Vietnam is expected to benefit from its participation in bilateral and multilateral trade agreements as well as the relocation of supply chains to lower-cost and safe countries.
In order to achieve a greater success in 2021 and the following years, all agencies and sectors need to give priority to protecting public health while facilitating socio-economic activities.
Vietnam is aiming for GDP growth of 6% in 2020, with GDP per capita at US$3,700 and inflation at 4%. The initial successes in the fight against Covid-19 and efforts to maintain economic growth, social stability and the country’s prestige are the important foundations for Vietnam to look to higher goals in the future.
Over VND4 trillion invested in hotel complex in Van Don Economic Zone in Quang Ninh
The northern province of Quang Ninh held a conference to announce the detailed plans for sub-zones within the Van Don Economic Zone and grant investment permission to a VND4 trillion (US$173 million) project in the economic zone.
The sub-zones include the Cai Rong Area, North Cai Bau Area and the Van Don airport area.
Speaking at the conference, Quang Ninh Vice Chairman Cao Tuong Huy praised the Van Don Economic Zone management board for completing the plans for the economic zone’s most important areas.
He also spoke highly of investors who had overcome the difficulties caused by Covid-19 to quickly finalise procedures for their projects.
The official added that such plans are the basis to call for capable and reputable investors to implement high-quality projects, helping boost sustainable socio-economic development in Van Don.
At the conference, Quang Ninh Province granted an investment license to a high-end hotel and resort complex to Cat Linh Van Don Company and Mai Quyen Tourism Company.
The project will cover 2.34 hectares and has total investment capital of VND4 trillion (US$173 million).
The call for investment in the Van Don Economic Zone has affirmed Quang Ninh Province’s consistent policy of reforming administrative procedures and improving the business environment.
Tan Cang – Cai Mep deep-water port handles two millionth TEU in 2020
The Tan Cang – Cai Mep International Terminal (TCIT) in Ba Ria – Vung Tau province received the two millionth TEU of this year on December 17, an increase of 6.2 times over the figure for its first year of operation in 2011.
Thus, TCIT is the first deep-water port and the second container port in Vietnam after Tan Cang – Cat Lai port in Ho Chi Minh that has reached this record volume, contributing to the economic development of the Southeast region and southern provinces in general.
TCIT is a joint venture between Saigon Newport Corporation and Mitsui O.S.K. Lines (Japan), Hanjin Transportation (the Republic of Korea) and Wan Hai Lines (China’s Taiwan) which has been in operation since 2011.
Despite difficulties caused by the COVID-19 pandemic, the port has achieved impressive results in 2020.
The port is expected to handle 2.1 million TEU in the entirety of 2020, up 7% over 2019. The container handling capacity of the port reached 130 containers per hour, up 13% over 2019.
The port also posted rapid growth in throughput of about 27% per year and reported the second largest throughput in Vietnam.
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