VIETNAM BUSINESS NEWS OCTOBER 7/2023

From this week, a regulation from the State Bank of Vietnam (SBV) has come into effect, decreasing the ratio of short-term capital used for medium- and long-term loans from 34 per cent to 30 per cent.

As stipulated in Circular 08/2020/TT-NHNN, both Vietnamese banks and foreign bank branches in Việt Nam are required to reduce the maximum ratio of short-term capital for medium and long-term loans to 30 per cent as of October 1, 2023.

Experts view the change as necessary to ensure liquidity and stabilise the banking system, as the implementation of the new regulation aims to prevent liquidity risks, stabilise banking operations and drive sustainable economic growth.

According to finance expert Đinh Trọng Thịnh, this move is to ensure capital safety at commercial banks and ensure lending conditions in accordance with international practices.

Utilising short-term capital for medium and long-term loans presents numerous risks. When short-term capital matures but the long-term loan hasn’t been on due date, it can strain the bank’s liquidity and adversely impact the operations of the banking system, according to Thịnh’s analysis.

Thịnh said that there’s a need to incrementally lessen the economy’s reliance on commercial banks’ medium- and long-term capital. Instead, it should explore other avenues in the capital market, such as bonds.

Data from the SBV showed 88 per cent of capital at banks comes from deposits with tenors of less than 12 months. Meanwhile, 52 per cent of the banking system’s outstanding loans are mid- and long-term loans.

However, there are also concerns that the new circular will increase pressure on the operations of the banking system and firms with large capital needs.

The HCM City Real Estate Association (HOREA) has recently sent an urgent proposal on extending the new policy for 12 months to the Prime Minister and the SBV. HOREA expects the extension will create conditions for banks to appropriately use short-term mobilised capital for medium- and long-term loans.

Lê Hoàng Châu, chairman of HOREA, stated that both the economy and the real estate market are grappling with challenges due to various headwinds. Many companies across different sectors have had to reduce their production and business activities, thus reducing their need for bank credit. On the other hand, numerous real estate companies still require bank loans, yet accessing such capital has been challenging for them. A primary reason for this is that many real estate and commercial housing projects are encountering legal issues.

Châu explained that while real estate companies have procured and planned land for development projects, they haven’t yet received the Government’s nod for detailed planning of these projects. Banks, on the other hand, are only willing to finance projects that possess detailed planning.

Therefore, HOREA expects banks to lend to real estate firms whose investment projects are feasible or whose secured assets are land use right certificates.

Commenting on the new circular, in a recent analysis report, KB Securities Vietnam Company (KBSV) said the reduction of banks’ ratios will have certain effects on banks.

According to KBSV’s analysts, in the short term, lowering the ratio of short-term capital for medium and long-term loans will slow down the process of reducing long-term lending interest rates of banks in the context that the country is needing support for economic growth. At the same time, the new circular will also partly put pressure on banks’ long-term mobilisation needs, increasing banks’ capital costs, causing pressure to narrow net interest margins (NIM).

However, in the long term, the analysts believe with the policy of healthy credit activities and ensuring liquidity for the banking system, the application of new regulations is expected to help banks better control liquidity risks and stabilise operations in the face of changes at home and abroad, while promoting sustainable economic development.

KBSV commented that the new circular is part of the motivation for banks to buy back bonds before maturity and focus on issuing long-term bonds in the near future, in addition to the motivation coming from the reduced interest rate level.

The latest data from the SBV showed as of July 2023, the ratio of short-term capital used to make medium- and long-term loans of the entire banking system was 26.14 per cent, of which the ratio of State-run commercial banks and joint-stock commercial banks was 24.97 and 33.66 per cent, respectively.

Notably, a few banks, such as Vietcombank and HDBank, have a ratio below 10 per cent, so they are not affected by this new policy. 

Exhibition week helps Vietnamese goods penetrate into AEON supermarkets

High-quality processed goods, organic agricultural products and many regional specialties are being displayed at the Week of Exhibiting Vietnamese Enterprises’ Goods, which opened at AEON Tan Phu Celadon in Ho Chi Minh City on October 5.

The six-day event, jointly held by the Investment and Trade Promotion Centre of HCM City (ITPC) and AEON Vietnam Co., Ltd, aims to support Vietnamese firms to bring their products to AEON stores and supermarkets.

ITPC Director Tran Phu Lu said that the event is organised annually with a view to creating opportunities to strengthen collaboration between AEON- one of the biggest retailers in the world, and Vietnamese enterprises with products meeting stringent quality standards and prestigious brands.

Throughout the event, more Vietnam-branded products are expected to hit the shelves of AEON supermarkets, making them become more popular among domestic and international consumers, he said, adding this is an opportunity for businesses to grasp the consumption trends so that they are able to outline rational production plans and improve products’ quality and competitive edge for export to Japan and many other demanding markets.

A representative from AEON Vietnam Co., Ltd said that the company commits to providing high-quality products, making contributions to sustainable development, and promoting the economy through retail sales as well as many programmes to support producers and suppliers.

Since the event was first held in 2017, it has helped suppliers improve their products, helping them win AEON customers’ taste, he said, highlighting new products have been introduced at AEON retail system that helps promote domestic consumption.

AEON Vietnam is seeking partners for its AEON TOPVALU brand so as to bring more AEON outstanding products to consumers, he added.

Within the framework of the exhibition week, a conference that seeks to enable Vietnamese firms to bring their products to AEON stores and supermarkets will be organised on October 9, drawing the participation of some 200 Vietnamese suppliers.

Japan has been a leading trade partner of Vietnam in recent years, with two-way trade developing in a balanced and sustainable manner. The East Asian country is the 4th largest trading partner of Vietnam, with bilateral trade reaching 47.6 billion USD in 2022 and some 29.1 billion USD in the first eight months of 2023.

Forum boosts trade collaboration between Vietnam, Indonesia

A business forum on expanding trade cooperation between Indonesia and Vietnam, introducing the 38th Trade Exhibition Indonesia (TEI) 2023, and learning about the Halal market was held in Ho Chi Minh City on October 5.

In his opening remarks, Ho Xuan Lam, Vice President and General Secretary of the HCM City Union of Friendship Organisations (HUFO), said that since Vietnam and Indonesia set up diplomatic ties in 1955, their relations have developed strongly in all fields, with two-way trade enjoying positive growth to hit 14.1 billion USD in 2022, a threefold increase compared to the figure 10 years ago.

The forum was a chance for the two sides’ enterprises to meet and seek opportunities to boost trade cooperation and nurture close friendship between the Vietnamese and Indonesian people.

Cao Thi Phi Van, Deputy Director of the Ho Chi Minh City Investment and Trade Promotion Centre, said that Indonesia, which has the largest Muslim population in the world with more than 267 million people, has the biggest demand for Halal-certified products, which is a potential market for Vietnamese businesses.

Export businesses should proactively learn about and apply for Halal certification to access this market, Van advised.

Indonesian Consul General in HCM City Agustaviano Sofjan said that the forum provided detailed information about Halal products that have the potential to become an important economic growth driver for Indonesia with a contribution of about 5.1 billion USD per year.

It also helped the city’s businesses better understand the concepts of Halal and the Halal market, therefore contributing to increasing opportunities for cooperation between firms of the two countries in the coming time.

Vietnamese firms explore chances for economic partnerships with Germany

A delegation of Vietnamese enterprises has engaged in business matching and trade promotion events in Germany as part of the national trade promotion programme 2023.

On October 5, an economic cooperation conference and a business matching programme were held in Berlin by the Vietnam Trade Promotion Agency (Vietrade), the German Embassy and the Delegation of German Industry and Commerce Vietnam (AHK Vietnam).

Addressing over 50 delegates from associations, trade and investment promotion organisations, and enterprises of both countries, Volker Treier, Chief Executive of Foreign Trade at the Association of German Chambers of Industry and Commerce (DIHK), said economic and trade partnerships between the two countries have obtained numerous positive results over the past years, especially since the EU – Vietnam Free Trade Agreement (EVFTA) came into force.

German businesses have created about 50,000 jobs in Vietnam, and counting, showing the huge potential of the Vietnamese market for German firms which are working to expand and diversify their markets and supply chains.

Potential cooperation areas include renewable energy and vocational training, he said, noting that vocational training helps attract workers from Vietnam to solve the shortage of skilled manpower in the European country.

Vietnamese Ambassador to Germany Vu Quang Minh said the countries’ strategic partnership has been flourishing in all fields and at all levels for the last 12 years, helping raise bilateral trade by over two-fold and turn Germany into a highly important investor in Vietnam.

The two economies are complementary to each other and boast substantial cooperation potential. German businesses working in Vietnam also have opportunities to access other markets thanks to many regional cooperation frameworks Vietnam has signed, he continued.

Minh called on enterprises of both countries to capitalise on opportunities to further strengthen bilateral cooperation. He also expressed his hope that Germany and Vietnam can sign a framework agreement on labour cooperation soon to strengthen ties in this field.

Vietrade Director Vu Ba Phu said trade and investment activities have become bright spots of bilateral relations in recent years. The two sides have also inked many deals to provide a legal basis for economic cooperation.

Germany is the largest trading partner of Vietnam in Europe as it accounts for nearly 20% of Vietnam’s exports to the EU. It also serves as an important gateway for Vietnamese goods to enter other European markets, he noted.

Phu affirmed Vietrade’s readiness to coordinate with German authorities to assist the countries’ businesses to seek partners and boost cooperation. He also suggested some measures for improving trade and investment promotion activities of both sides.

Later on October 5, the visiting delegation attended a business matching programme at the Vietnamese community’s Dong Xuan trade centre in Berlin.

Chu Tuan Duc, Minister Counsellor of the Vietnamese Embassy in Germany, highlighted the countries’ enormous cooperation potential and called on Vietnamese firms to tap into current advantages to enter the German market.

He considered the about 200,000 Vietnamese people with many successful companies in Germany an important bridge for enterprises from the Southeast Asian nation to access this market.

Aviation experts visit aircraft maintenance centre in Hanoi

A delegation of aviation experts from 22 organisations and airlines of 14 countries on October 6 visited the aircraft maintenance centre operated by Vietnam Airlines Engineering Company Ltd (VAECO), a subsidiary of Vietnam Airlines located at Noi Bai International Airport in Hanoi.

The field trip took place within the framework of the Maintenance Cost Conference organised by the International Air Transport Association (IATA) from October 4-6, with the national flag carrier Vietnam Airlines as the host.

The conference brings together 150 experts to address key topics relating to Maintenance, Repair, And Operations (MRO) trends, aircraft health monitoring (AHM), supply chain issues, sustainability in technical operations, digitisation of MRO documents, according to Vietnam Airlines.

Vietnam Airlines being selected as the host of the conference affirms Vietnam’s capability in the maintenance field and represents an opportunity for Vietnam to gradually realize its plan to become a passenger and cargo hub, a center for MRO, both regionally and globally.

VAECO currently provides maintenance, repair, and overhaul services for the entire fleet of Vietnam Airlines and over 80 other civil airlines worldwide.

Currently, Vietnam Airlines is the only Vietnamese airline with aircraft repair and maintenance facilities. The airline is implementing a strategy to expand its aircraft maintenance infrastructure to serve the regional and global market, providing specialized aircraft repair and maintenance services at competitive costs for international customers.

Forum connects Vietnamese localities, firms with Japan’s Kyushu region

An economic forum connecting localities and businesses of Vietnam with those of Japan’s Kyushu region took place in Fukuoka prefecture on October 6.

The forum was held by the Vietnamese Consulate General in Fukuoka and the Kyushu Economic Federation on the occasion of the 50th anniversary of the two countries’ diplomatic ties. It attracted nearly 400 delegates who are representatives of Vietnamese businesses and localities, including Bac Giang, Ca Mau, Dien Bien, Hai Duong, Lang Son, Thai Nguyen, Ho Chi Minh City and Vinh Long, and officials of Japanese prefectures in the Kyushu region.

In her opening remarks, Vietnamese Deputy Minister of Foreign Affairs Le Thi Thu Hang, who is also head of the State Committee for Overseas Vietnamese Affairs, expressed her hope that the Vietnam – Japan relations, including those between Vietnam and Kyushu, will become a role model of the partnership for development. She said she wished for effective implementation of cooperation frameworks and projects in trade-investment, hi-tech agriculture, labour, manpower training, climate change response, green growth, new-generation official development assistance (ODA), strategic infrastructure, food security, and energy transition.

Hang said she believes that with many complementary advantages, Vietnam will be part of the answer to the search for growth momentum for the economy of Japan and Kyushu.

Particularly, the nearly 6 million overseas Vietnamese, including many successful entrepreneurs and intellectuals, in more than 130 countries and territories is an important resource for Vietnam’s development and also high potential partners of Japanese and global businesses, she added.

Fukuoka Governor Hattori Seitaro said businesses of his prefecture are highly interested in the Vietnamese market. He cited a survey by the local investment promotion agency as showing that Vietnam ranks second among the foreign markets that Fukuoka companies want to seek investment chances in.

He voiced his hope that Vietnamese and local businesses could source cooperation opportunities at the forum so that investment in each other’s markets will increase.

Meanwhile, Vu Chi Mai, Consul General of Vietnam in Fukuoka, affirmed that the Consulate General in the prefecture and the local administration will serve as a sustainable bridge helping the two countries’ localities and businesses, including the overseas Vietnamese companies in Japan, promote substantive and effective economic partnerships.

Earlier, Deputy Minister Hang and officials of the Vietnamese localities had a meeting with the Fukuoka Governor. Participants in the forum also visited an exhibition of products from Vietnamese and Kyushu localities and businesses.

Hai Phong’s FDI attraction growth tops 140%

The northern port city of Hai Phong reeled in more than 3 billion USD worth of foreign direct investment (FDI) in the past nine months, up over 140% year-on-year and exceeding the yearly plan by over 52%.

With these results, the city has kept its top position nationwide in terms of FDI attraction.

In September alone, the Hai Phong Economic Zone Authority (HEZA) granted investment registration certificates to new projects valued at nearly 1.4 billion USD in total. It also gave the green light to the Japanese-funded Kyocera Document Solutions Inc. to add 237.5 million USD to its machinery-equipment manufacturing project in VSIP Hai Phong.

Le Trung Kien, head of HEZA, attributed the sound growth to HEZA’s proactive promotion of the local business climate.

According to him, the city continues to attract selective investment, and actively cooperate with leading global conglomerates in sectors and industries prioritised by Vietnam. Hai Phong is devising its own mechanisms to promote modern technology projects with commitments to technology transfer, market expansion, supply chain and human resources development, helping domestic businesses participate more deeply in the global value chain.

To date, Hai Phong has lured more than 1,000 FDI projects, valued at nearly 28 billion USD.

VinFast showcases four electric vehicle models at Geneva International Motor Show

VinFast is showcasing four electric vehicle models – VF 6, VF 7, VF 8 and VF9 – at the Geneva International Motor Show Qatar 2023, the first to be held in Doha, from October 5 – 14.

This is also the first time VinFast, the electric vehicle (EV) maker of Vietnamese conglomerate Vingroup, officially introduces its fully-electric vehicles to the Middle East market, expanding in this market by researching investment potential and partnership opportunities.

At the exhibition, VinFast will showcase four electric vehicle models, allowing the public and local investors an opportunity to experience the stylish designs and smart features of the vehicles.

The VF 6 and VF 7 models compete in the B and C segments and are crafted by Torino Design with modern and sophisticated styling. While the VF 6 is suitable for young families who promote a green lifestyle, the VF 7 is an ideal choice for successful and individualistic young people.

The VF 8 and VF 9 are VinFast’s two premium models in the D and E segments and are designed by Pininfarina. Both models offer fashionable and classy designs, creating smart and safe driving experiences for consumers. The VF 8 and VF 9 are currently open for reservations globally, with the VF 8 being delivered to customers in the North American market.

VinFast also aims to find partners in the Middle East market and research partnership opportunities while contributing to promote green mobility solutions in the region.

SABECO names Lester Tan Teck Chuan as new General Director

The Saigon Beer – Alcohol – Beverage Corporation (SABECO) on October 6 officially announced the appointment of Lester Tan Teck Chuan as its new General Director, effective from October 1, 2023.

In his new role, Lester Tan assumes responsibility for shaping SABECO’s overall business and sustainable growth strategies while reinforcing its core strengths.

Lester Tan, a Singaporean national, brings to SABECO a wealth of experience, boasting over 28 years of expertise in the beer, spirits, and beverage industry across various Asian markets, including Thailand, Myanmar, Mongolia, and Singapore. Throughout his career, Lester Tan has consistently catalysed positive changes and fueled business growth within the organisations he has led.

Before assuming his role at SABECO, he served as the Chief of Beer at ThaiBev PLC, overseeing Thailand’s beer market from 2020 to 2023. He also held CEO positions in beer and beverage businesses in Mongolia, Myanmar, and Thailand.

Vietnam plays active role in ASEAN agricultural cooperation

A Vietnamese delegation led by Deputy Minister of Agriculture and Rural Development Nguyen Quoc Tri, head of the ASEAN Ministers on Agriculture and Forestry (AMAF) Vietnam, attended the 45th AMAF meeting, which took place in Kuala Lumpur, Malaysia, from October 4-6.

The meeting reviewed ASEAN cooperation in agriculture and forestry, which has contributed to ensuring food security, and sustainable, adaptive and low-carbon agriculture in the region.  

It encouraged ASEAN Working Groups to continue implementing priority tasks in collaboration in food, agriculture and forestry.

A total of 16 important documents submitted by the working groups regarding cultivation, husbandry, aquaculture and fishery, along with a press release were adopted on this occasion.  
    
Vietnam has raised and participated in many ASEAN agriculture and forestry initiatives, including the ASEAN Integrated Food Security (AIFS) and the 2021-2025 Strategic Plan of Action on Food Security in the ASEAN Region (SPA-FS).

The country has also initiated the ASEAN strategy on promoting biomass energy and raised the initiative to develop rural communities and craft villages in the region.     

Within the framework of AMAF 45, there was the ASEAN-Japan conference on agriculture and forestry, the first of its kind for ministers of the two sides on the occasion of the 50th anniversary of their friendship and cooperation.  

The conference adopted that ASEAN-Japan MIDORI Cooperation Plan for Strengthening Cooperation towards Enhancing Resilient and Sustainable Agriculture and Food Systems for Ensuring Regional Food Security.

Second Overseas Vietnamese Economic Forum opens in Japan

The second Overseas Vietnamese Economic Forum opened at Fukuoka International Congress Center, Japan, on October 6, to promote connectivity between Vietnamese business expatriates and their peers in the fatherland.

The forum, co-organised by the Consulate General of Vietnam in Fukuoka and Japan’s Kyushu Economic Federation, brought together 400 representatives from Vietnamese localities and Japanese prefectures, as well as Vietnamese and Kyushu enterprises. It is part of activities held to mark the 50th anniversary of Vietnam-Japan diplomatic relations.
  
Addressing the ceremony, Deputy Foreign Minister of Vietnam Le Thi Thu Hang stressed that the comprehensive ties that exist between Vietnam and Japan in general and Kyushu in particular not only serve to help boost goods exchanges, investment attraction, technology transfer, and cultural exchanges, but also create chances for Vietnamese businesses to absorb Kyushu’s philosophy of harmonious development and apply them creatively for Vietnamese localities in many fields.

Hang, who is also head of the State Committee for Overseas Vietnamese Affairs expressed her belief that with a lot of advantages which are complementary to each other, Vietnam continues to be part of the solution to the problem of finding the economic growth driver of Japan and Kyushu in particular.

In particular, she said that six million overseas Vietnamese living, working, and studying in over 130 countries and territories constitute an important source for Vietnamese development and also serve as potential partners for both Japanese and international enterprises.

In response, Governor of Fukuoka Prefecture Hattori Seitaro hoped that the forum would build connections and boost the development of Fukuoka after the COVID-19 pandemic.

He revealed that Fukuoka businesses are hugely interested in the Vietnamese market. According to a survey conducted by the prefecture’s investment promotion agency, Vietnam ranks second among foreign markets that Fukuoka businesses are keen to seek further investment opportunities.

The forum offers businesses from Vietnam and Kyoto a golden opportunity to connect and build cooperation ties, through which Vietnamese investment in Kyushu will increase and vice versa, said the governor.

Ample room for Vietnam – Germany business links

There remains great potential to build stronger ties between Vietnamese and German businesses, especially in the field of renewable energy and vocational training, heard an economic and trade promotion conference held in Berlin on October 5.

Addressing the event, Dr. Volker Treier, chief executive of Foreign Trade at the Association of German Chambers of Industry and Commerce (DIHK), emphasized that economic and trade ties between Germany and Vietnam have yielded positive results over recent years, especially following the enforcement of the EU-Vietnam Free Trade Agreement (EVFTA).

Dr. Treier pointed out a number of potential areas of cooperation, such as renewable energy and vocational training, saying vocational training has not only attracted workers from Vietnam, but has also helped to ensure a skilled workforce that is in short supply in Germany.

For his part, Vietnamese Ambassador to Germany Vu Quang Minh noted that the strategic and trustworthy partnership between the two countries over the past 12 years has witnessed plenty of positive developments in multiple fields.

Most notably, he said German businesses operating in Vietnam also have the opportunity to reach out to partners in the region through many regional cooperation frameworks that Vietnam has signed.

With these existing advantages, the Vietnamese diplomat expressed hope that businesses of the two countries can utilise opportunities to further strengthen bilateral ties, while suggesting that both sides sign a framework agreement on labour cooperation in the near future.

Vu Ba Phu, director of the Vietnam Trade Promotion Agency (Vietrade), stressed that Germany is Vietnam’s largest trading partner in Europe, accounting for nearly 20% of Vietnamese exports to the EU.

Germany is also an important transit gateway for the country’s exports to other markets throughout Europe.

He said Vietrade is always ready to coordinate with German authorities to implement solutions aimed at supporting businesses from both sides in strengthening connectivity and seeking partners.

At the event, Phu also proposed a number of specific measures which seek to improve the efficiency of trade promotion and investment activities of the two sides.

Vietnam Airlines lands award for sustainable solutions

Vietnam Airlines has been honoured as the airline with Boldest Moves by SkyTeam during the global airline alliance’s second Sustainable Flight Challenge (TSFC).

SkyTeam greatly valued the efforts and creativity of Vietnam Airlines in implementing solutions to recall and reissue dry food products and disposable utensils after flights and donate them to VietHarvest food rescue organisation.

Donated products are unused dry foods that are still of good quality such as dry cereals and snacks. Donated meals will be through a process of recall, inspection, and classification. They will be stored separately to ensure their quality when transferred to VietHarvest. Vietnam Airlines has widely applied this solution on its flight network over the past three months, proving the feasibility and long-term applicability of the solution.

Vietnam Airlines Deputy General Director Dang Anh Tuan said that winning the Boldest Moves award showed the airline’s outstanding efforts in reducing aviation emissions.

The airline’s cooperation with VietHarvest affirms the company’s commitment to reducing food loss and waste, while giving a helping hand to the needy by providing them with food sources with ensured quality, he said.

Tuan affirmed that the airline hopes to continue to accompany airlines around the world in promoting practical actions to jointly realise the goal of net-zero emissions by 2050.

At the same time, the national-flag carrier has also been named among top three airlines showing the best ability to handle in-flight sanitary waste.

Earlier in May 2023, Vietnam Airlines competed in the TSFC on its flight from Hanoi to Germany’s Frankfurt.

On the long-haul Hanoi-Frankfurt flight, the carrier adopted environmental protection measures, such as giving its passengers bags recycled from old life jackets, serving sustainable meals, and encouraging passengers to carry their personal items instead of utilising single-use items provided on board.

First launched in 2022, TSFC aims to stimulate sustainable development initiatives in the aviation sector. This year, the second edition of the challenge drew the participation of 22 airlines on 72 flights.

Bình Dương boosts investment attraction

The southern province of Bình Dương is focusing on attracting investments in science-technology, especially high-tech, and digital technology, aiming to concretise its development targets, a local official told representatives of MiTAC, an IT solution provider of Taiwan (China).

Bình Dương aims to develop itself into a smart city and form an innovation region, Vice Chairman of the provincial People’s Committee Nguyễn Văn Danh said at the working session on October 4.

The province has rolled out 38 projects on technological application, and supported more than 60 enterprises in digital transformation, he disclosed.

MiTAC Vice Chairman Chen Po Yen noted his hope for cooperation with the province in science-technology, particularly IT, cyber security and AIoT smart cameras, which have been accelerated in Bình Dương to reach the smart city status.

The same day, the committee announced that a delegation of the province led by its Chairman Võ Văn Minh visited Nebraska to promote investment from the US state, saying the trip took place after the two localities’ authorities signed a memorandum of understanding on July 12 to tighten their relations.

Accordingly, they will enhance collaboration in education, industry and agriculture, with priority to be given to education and training.

As of September 15, Bình Dương had attracted nearly US$1.3 billion in foreign investment, with 85 newly-invested projects worth some $500 million. 

Vietnam – promising destination for industrial production shift

Vietnam is considered an attractive destination for multinationals amidst the wave of industrial production shift, enterprises have said while attending Vietnam’s International Exhibition on Machine Tools & Metalworking Solutions for Production Upgrade (METALEX Vietnam 2023) in Ho Chi Minh City.

The Southeast Asian country has welcomed an influx of investment from many tech giants such as Foxconn, Samsung and LG. However, efforts should be exerted to develop green energy and high-quality human resources so as to meet the requirements of investors.

Investors give social and environmental responsibility careful considerationbefore injecting capital or setting up joint ventures with Vietnamese firms.

General Director of RX Tradex Vietnam Vu Trong Tai said that with a view to capitalising on foreign investment and expansion of industrial production, Vietnamese producers should improve their competitive edge by upgrading machines, applying state-of-the art technologies into production, and improving human resource quality.

He particularly stressed that support industries and electronics hold huge potential to join the global value chain.

Meanwhile, Hirabayashi Tomoya, a representative from Yahama Vietnam’s business and marketing division, said the world’s leading technology brands have enhanced promotion in the Vietnamese market as they see Vietnam as an attractive venue for industrial production in ASEAN.

Experts said as demand for precise manufacturing and production of electronic devices in the country is on the rise, new solutions and technologies will help Vietnamese producers improve their productivity.

Vietnam’s economic recovery from the outset of this year has been largely spurred by industrial production, especially stable FDI inflow.

In Ho Chi Minh City alone, some 406 million USD was registered in 860 new FDI projects during January – September, up 16.7% and 51.7%, respectively.

Regarding the industrial sector, the city granted business licenses for 6,941 firms who registered more than 94.9 trillion VND (3.88 billion USD) for their operation.

Workshop stresses PPP’s role in cutting emissions from tra fish chain

A workshop was held in the Mekong Delta city of Can Tho on October 5 to discuss public – private partnership (PPP) in reducing emissions in the tra fish production chain in Vietnam.

With about 6,000ha of the farming area and an output of over 1.5 million tonnes, tra fish is among the key fishery commodities of Vietnam. The country’s tra fish products have been exported to more than 140 markets in the world, bringing home about 2 billion USD in annual export value. Vietnam’s tra fish production and the related food safety and hygiene control system have also received positive assessment from the US Food Safety and Inspection Service.

However, there remain certain shortcomings and problems in the production, processing, environmental treatment, connectivity, and sale in the tra fish industry, heard the workshop held by the Directorate of Fisheries at the Ministry of Agriculture and Rural Development (MARD), the Sustainable Trade Initiative (IDH), and the Vietnam Pangasius Association.

Pham Thi Thu Hong, Vice Secretary General of the Vietnam Pangasius Association, cited research findings that show to produce an average of 200 tonnes of fish per ha, at least 320 tonnes of feed is needed and 256 tonnes of organic substances will be discharged into the environment. Besides, there are more than 100 tra fishing processing establishments nationwide with the designed capacity of 1.5 million tonnes of raw materials each year. Though equipment and technology for producing by-products such as fish oil and powder are relatively modern, they haven’t been able to make full use of fish blood, thus worsening the pollution of water used for processing.

That has resulted in an environmental challenge to tra fishing farming and processing, she said, holding that to secure sustainable development for the tra fish industry, it necessary to pay due attention to environmental protection, especially appropriate and highly practical solutions to waste from farming and processing.

Tran Dinh Luan, Director of the Directorate of Fisheries, considered PPP as a good approach to sustainably develop the tra fish chain under the circular economy model.

Given this, he noted, the MARD put forth the initiative of establishing a PPP group involving universities, research institutes, businesses, and domestic and foreign organisations to devise ideas for reducing emissions in each link of the tra fish chain.

In addition, PPP will help provide more information about the domestic and foreign markets in order to facilitate innovation, studies, and application to bring emissions down to the lowest possible level, thereby maintaining the reputation of Vietnam’s fishery products, including tra fish, in international markets, Luan added.

Hong said that following the global trend, the Vietnamese Government has committed to reducing emissions. Importers of Vietnamese fish also hope and pledge to cut carbon emissions by 20 – 30% during 2025 – 2030, so they want suppliers of fishery products to carry out emission reduction initiatives accordingly.

Therefore, fish farmers and processing businesses of Vietnam need to curb emissions during the production process to concurrently ensure product quality and keep emissions low, thereby promoting their competitiveness and maintaining reputation in the global market, she remarked.

Binh Duong’s key exports lack orders

The southern province of Binh Duong’s export turnover went down by 13% year-on-year to 23 billion USD in the first nine months of this year as its key exports faced difficulties due to lack of orders.

According to the provincial People’s Committee, its traditional export markets all reported decreases compared to those in the same period last year. Notably, the US, which accounts for 34.4% of Binh Duong’s exports, recorded a year-on-year decline of 16.8%, the EU 3.4%, Japan 20.2%, China 7.7%, and the Republic of Korea 8.7%.

The declines were attributed to a fall of 20-50% in orders received by local businesses.

Although rosy signs were seen at the end of the third quarter, the number of new orders remained modest.

Over the past time, Binh Duong has actively coordinated with the Ministry of Industry and Trade and Vietnam trade offices abroad to carry out a lot of trade promotion programmes.

This year, the province’s export revenue is estimated to reach 32.9 billion VND, down 5% year-on-year and equal to 86% of the set target, with a trade surplus of about 9 billion USD.

HCM City’s industrial production regains attractiveness to investors

Ho Chi Minh City’s Index of Industrial Production (IIP) in the first nine months of this year increased by 3.2% year-on-year, regaining its attractiveness to foreign investors, suppliers and clients.

Earlier, the seven-month and eight-month figures stood at 2.2% and 2.6%, respectively, which demonstrated that industrial production in the country’s southern biggest economic hub has overcome the downturn period. In September alone, the index went up 2.9% month-on-month, and 8.1% year-on-year.

According a survey conducted by HCM City’s competent agencies among local processing and manufacturing enterprises, 31.8% said their production and business got better in the third quarter as compared with the previous three months, 35.4% said their operations remained stable and 32.8% said they faced more severe obstacles.  

Notably, State-owned enterprises were the most optimistic, with up to 89.7% saying their operations got better or remained stable, as compared with 65.3% and 65.2% in foreign-invested and non-state businesses.

For the fourth quarter, 35.8% of the respondents hoped for better performance, 36.8% expected stability in production and business, and 27.3% forecast more difficulties. Up to 76.9% of State firms showed optimistic views, while that among foreign-invested and non-State enterprises was 73.3% and 70.3%, respectively.

Over the past time, a range of fairs and exhibitions in HCM City showcasing machinery, equipment and materials in service of industrial production have attracted the participation of businesses from many countries and territories.

Vietnam is stepping efforts to achieve its target of net zero carbon emissions by 2050, which would create favourable conditions for investors and suppliers to engage in industrial production in Vietnam in general and HCM City in particular.

Vietnam – poweful magnet for foreign direct investment

Vietnam has become one of the leading countries in Southeast Asia in attracting foreign direct investment (FDI), according to an article published on September 21 on the website gfmag.com of Global Finance Magazine.

The writing attributes it to a range of advantages of the country, including its favourable demographics as 40% of Vietnam’s population of 100 million are under 25. In addition, it has tariff-free access to the Southeast Asia region with 800 million people thanks to being a member of the Association of Southeast Asian Nations (ASEAN).

According to Thierry Mermet, CEO of Source Of Asia (SOA), a consultant to companies looking for business opportunities in Vietnam and ASEAN, the 2023 outlook for the business environment in Vietnam shows promising signs of improvement. He cited foreign direct investment capital reaching about 10 billion USD in the first quarter of 2023, an increase of 0.5% over the same period last year. Mermet predicted that this trend will continue in the near future.

The expert said that in the long term, Vietnam is really strengthening its position as one of the top three locations where European business leaders want to invest. According to the Business Confidence Index report conducted by the European Chamber of Commerce in Vietnam (EuroCham), 3% more leaders have picked Vietnam as one of the top three investment choices.

The article said that 90 countries and territories invested in Vietnam in the first half of this year; the top five are Asian countries. with the Republic of Korea in first place, accounting for 81 billion USD. It was followed by Singapore and Japan with 72 billion USD and nearly 70 billion USD committed, respectively. Notably, while the US stood in the 7th position in terms of investment capital, it is Vietnam’s first key export partner.

Another indicator of Vietnam’s attraction is homegrown electric vehicle (EV) manufacturer VinFast, which recently became the world’s third-largest automaker by market capitalisation, behind Tesla and Toyota.

According to Barry Elliott, Vice President of Tomkins Ventures and a supply chain guru long active in Vietnam, this not only signals a promising future for the EV industry in Southeast Asia in general, but also exemplifies Vietnam’s emerging prowess in manufacturing.

Meanwhile, S&P Global said that Vietnam’s robust economic growth is also a factor that helps attract foreign investors to the country. Although its economic growth slowed to 3.7% in the first half from 8% in 2022, the World Bank predicts a rebound in the second half of this year.

The S&P Global forecast an increase in mergers and acquisitions in Vietnam’s banking sector over the next two years as lenders seek to bolster their capital.

Thailand’s Kasikornbank PCL is reportedly in talks to acquire consumer finance provider Home Credit Vietnam in a deal valued at about 1 billion USD. If successful, this would be the second-largest deal in Vietnam in 2023, following Sumitomo Mitsui Banking Corp.’s acquisition of a 15% stake in Vietnam Prosperity Joint Stock Commercial Bank in March.

According to Mukuru Kato, managing director and head of frontier markets research at EFG Hermes Research said deals will likely surge between 2023 and 2024, including among state-owned commercial banks (SOCBs), as the State Bank of Vietnam is keen to have a Vietnamese bank rank among the top 100 in Asia.

Ivan Tan, an analyst at S&P Global Ratings, said that acquiring a strategic stake in Vietnamese banks provides an opportunity for foreign investors to participate in the growth and tap the country’s favourable demographics via retail lending, particularly via digital channels.

Promising outcomes for 2023’s FDI

Billions of US dollars flowing into Vietnam is contributing to the country’s whole-year target for foreign investment capital.
 
On September 22, three months after the signing of a comprehensive business agreement in Seoul city of South Korea on eco-friendly, high-tech material between SKC Group and Haiphong People’s Committee, the group’s representatives were present in the northern port city to receive an investment registration certificate for $500 million.

South Korea’s second-largest conglomerate will start construction of the first phase of the project in mid-December and complete construction within nine months.

Woncheol Park, CEO of SKC Group which is part of SK Corporation, said, “We have invested around $3 billion in Vietnam over five years. Haiphong is a city with modern infrastructure and good investment attraction mechanisms, which is why we decided to invest here.”

The company has fulfilled the commitment signed with the city in June, and it will continue to call for more South Korean businesses to invest in Haiphong. The project was one of 14 that Haiphong Economic Zones Management Authority granted investment certificates to on the same day, with a total registered capital sum of nearly $1.3 billion.

SK Group is also investing in a wide range of sectors in Vietnam via the in-paid capital method with a total investment of around $3 billion, such as a deal with Vingroup, Masan, Imexpharm, and PV Oil.

Moreover, Acuity Funding will provide Tin Thanh Group, a pioneer in renewable energy in Vietnam, with $1 billion in credit for the construction of four biomass power plants and thousands of hectares for sorghum cultivation in the southern and central regions of Vietnam (see Page 19).

In recent months, management authorities of industrial and economic zones in Bac Giang, Nghe An, and Bac Ninh have granted approval for dozens of projects worth hundreds of millions of US dollars each. For example, the management authority of an industrial zone in the central province of Nghe An granted investment certificates to nine foreign-invested projects worth over $778 million. The province also approved additional capital for six projects totalling $110 million, bringing newly registered and additional capital to $888 million in August, an on-year increase of over 160 per cent. In addition, the management authority of Dong Nam Nghe An Economic Zone released information that the province is preparing to license two foreign-invested projects with the total registered capital of $153 million.

Nguyen Van Toan, vice chairman of the Vietnam Association of Foreign-Invested Enterprises, said, “These positive statistics are the result of the very long process with the involvement of the political system from the government to the locality via upgrading the bilateral relationship between Vietnam and other countries and the investment promotion programmes abroad.”

For example, in late 2022, Vietnam and South Korea elevated their bilateral relationship to a comprehensive strategic level. In addition, Vietnam and the United States have also decided to uplift their relations to a comprehensive strategic partnership.

“Furthermore, Vietnam is also active in participating in economic forums and associations in the region and all over the world. At these events, the Vietnamese leaders have called foreign investors to invest in Vietnam in collaboration with private meetings with large corporations. On these trips, many agreements and investment certificates are signed. They are the premise for the current billion-dollar projects in recent months,” he added.

According to Thierry Mermet, CEO at Source of Asia, a consultant to companies looking for business opportunities in Vietnam and ASEAN, the whole 2023 outlook for the business environment in Vietnam shows signs of improvement.

“In the long term, Vietnam is strengthening its position as one of the top three locations where European business leaders want to invest. According to the Business Confidence Index report conducted by the European Chamber of Commerce in Vietnam, 3 per cent more leaders have picked Vietnam as one of their top three investment choices,” Mermet said.

Do Van Su, deputy director of the Foreign Investment Agency under the Ministry of Planning and Investment, optimistically predicted that foreign investment into Vietnam will likely reach $36-38 billion in 2023.

“This is largely thanks to a new flow of Chinese investment capital, which was previously hampered by the country’s pandemic restrictions. The electrical and electronics manufacturing sector is expected to be the largest beneficiary as global technology giants such as Samsung, LG, and Foxconn continue to diversify their production lines,” Su said.

Tet air ticket prices surge

Prices of air tickets for the Lunar New Year are sharply increasing due to demand.

All economy class seats on flights from Hanoi to Nha Trang on February 11, 2024, the second day of the Lunar New Year, have already been sold. Each return business-class ticket on this route is priced at VND10-14.52 million (USD 408.16-576.13).

Budget airline VietJet Air is offering a return economy ticket on the Hanoi-Nha Trang around Tet for VND4.6 million. The price is VND6-7 million for Bamboo Airways flights.

Return economy tickets on Vietnam Airlines’ Hanoi-Phu Quoc flights during Tet are VND10-13 million each. Only flights which depart very early in the morning have prices of VND7-8 million.

Air tickets from Hanoi to Southeast Asian destinations such as Bangkok, Kuala Lumpur and Bali have also increased to VND8-12 million.

According to some air ticket agents in Hanoi, Tet flights are higher than the same period of previous years. The agents said that people should consider the time to buy air tickets. Rushing to buy tickets at one time can cause higher prices. Airlines often increase flight frequency based on demand. The provision of more flights would help to ease ticket prices.

Tax revenue from foreign trade falls 18.6%

Weak demand has led to an 18.6% year-on-year drop in tax revenue from import-export activities for the period from January to September.

The General Department of Vietnam Customs on October 4 reported that tax collections from import-export activities in the first nine months of the year totaled VND268.9 trillion.

The total value of Vietnam’s imports and exports for January-September was estimated at US$497.7 billion, decreasing 11% versus the same period last year. Exports were estimated at US$259.7 billion, down 8.2%, while imports stood at US$237.99 billion, a 13.8% decline.

This year, the National Assembly has set a state budget revenue target of VND425 trillion for the General Department of Vietnam Customs.

VND120 trillion injected into economy in final week of Sept

Vietnam’s banking sector injected nearly VND120 trillion, equivalent to around 1% of total outstanding loans, into the economy during the final week of September.

As of September 29, total credit in the economy had expanded by 6.9% compared to the beginning of the year at VND12.7 quadrillion. This growth surpasses the State Bank of Vietnam’s (SBV) initial forecast for for the entire year, which was 6.1-6.2%.

Data indicated a notable surge in credit growth within just nine days. In the year to September 21, total credit had grown by only 5.9%. However, in the subsequent nine days, an additional 1% was added, equivalent to about VND120 trillion.

The SBV had set a credit growth target of 14-15% for 2023. Despite the recent acceleration, credit growth until the end of the third quarter has reached only half of the annual target.

The sluggish credit growth has raised concerns among authorities, leading to multiple meetings between the Government and the central bank to explore ways to stimulate the economy, including capital injection.

The SBV has made four consecutive adjustments to reduce key interest rates, resulting in an average interest rate decrease of around 1% compared to the end of 2022.

In the real estate sector, banks have been directed to relax credit conditions for developers and homebuyers who meet specific criteria. This initiative aims to improve capital turnover and liquidity in the real estate market.

Moreover, the Government has introduced a VND120 trillion program to support social housing and worker accommodations. BIDV and Agribank have signed credit agreements to finance three social housing projects in Phu Tho, Quang Ninh, and Bac Ninh provinces, with a disbursement of VND82.7 billion.

Vietnam plays active role in ASEAN agricultural cooperation

A Vietnamese delegation led by Deputy Minister of Agriculture and Rural Development Nguyen Quoc Tri, head of the ASEAN Ministers on Agriculture and Forestry (AMAF) Vietnam, attended the 45th AMAF meeting, which took place in Kuala Lumpur, Malaysia, from October 4-6.

The meeting reviewed ASEAN cooperation in agriculture and forestry, which has contributed to ensuring food security, and sustainable, adaptive and low-carbon agriculture in the region.  

It encouraged ASEAN Working Groups to continue implementing priority tasks in collaboration in food, agriculture and forestry.

A total of 16 important documents submitted by the working groups regarding cultivation, husbandry, aquaculture and fishery, along with a press release were adopted on this occasion.  
    
Vietnam has raised and participated in many ASEAN agriculture and forestry initiatives, including the ASEAN Integrated Food Security (AIFS) and the 2021-2025 Strategic Plan of Action on Food Security in the ASEAN Region (SPA-FS).

The country has also initiated the ASEAN strategy on promoting biomass energy and raised the initiative to develop rural communities and craft villages in the region.     

Within the framework of AMAF 45, there was the ASEAN-Japan conference on agriculture and forestry, the first of its kind for ministers of the two sides on the occasion of the 50th anniversary of their friendship and cooperation.  

The conference adopted that ASEAN-Japan MIDORI Cooperation Plan for Strengthening Cooperation towards Enhancing Resilient and Sustainable Agriculture and Food Systems for Ensuring Regional Food Security.

Gov’t determined to fulfill 2023 socio-economic development targets

The Government has requested ministries and localities to double efforts to achieve socio-economic development targets in 2023, according to Resolution No. 164/NQ-CP issued following the Cabinet meeting held on September 30.

The request was made following positive signals recorded in the first three quarters this year despite impacts of global headwinds.

Specifically, the country’s GDP growth accelerated to 5.33 percent in June-September period from 4.05 percent in the second quarter and 3.28 percent in the first quarter.

Industrial production grew by 4.57 percent in the third quarter and 1.65 percent in the first nine months against the same periods last year, reported the General Statistics Office (GSO).

Meanwhile, consumer price index increased by 2.89 percent in the third quarter compared to the previous quarter and 3.16 percent on year, said GSO.

Given the positive signals, Asian Development Bank Country Director for Viet Nam Shantanu Chakraborty emphasized that Viet Nam’s economy remains resilient, and recovery is expected to pick up in the near term.

The international lender forecasted that the Southeast Asian country’s economic growth is expected to reach 5.8 percent in 2023 and 6.0 percent in 2024, mainly due to weak external demand.

The Government also urged subordinate levels to step up administrative reform, including reduction of bussiness conditions, in association with digital transformation.

Apart from enacted tax and fee exemption policies for 2023, the Ministry of Finance was tasked to mull over and put forward necessary policies to support businesses to overcome this challenging time.

Quảng Bình Province shows off its products in HCM City

A promotion week for Quảng Bình Province’s farm produce, rural industrial items, products made under One Commune One Product programme, and other specialities opened in HCM City on Friday.

Over 40 businesses and co-operatives from the province have brought more than 100 products, including rice, rice paper and rice noodles, essential oil, handicrafts made from bamboo and other materials, dried seafood, and turmeric powder.

Speaking at the opening ceremony, Phạm Quang Hải, director of the Quảng Bình Department of Industry and Trade, said the province has 145 OCOP certified products rated three-star or higher, and 150 products recognised as typical rural industrial products at the provincial level, 20 at the central region – Central Highlands level and nine at the national level.

Firms and co-operatives have made relentless efforts to improve their product quality and competitiveness, and many of their products are widely distributed at home and exported, he said.

But in the current tough period, like businesses elsewhere in the country, they are also having difficulty selling their products.

The event offers an opportunity for the province’s businesses to introduce their safe and high-quality products to supermarkets, distributors and consumers in the city, he said.

It also helps them understand consumer tastes in HCM City and develop appropriate products to meet domestic and foreign market demand, he added.

A conference to help enhance trade ties between businesses in Quảng Bình Province and distributors and export companies in HCM City was also organised on the same day.

Organised by the Centre for Industry Promotion and Trade Promotion of Quảng Binh, the event will run until October 11.

Workshop stresses PPP’s role in cutting emissions from tra fish chain

A workshop was held in the Mekong Delta city of Cần Thơ on Thurday to discuss public – private partnership (PPP) in reducing emissions in the tra fish production chain in Việt Nam.

With about 6,000ha of farming area and an output of over 1.5 million tonnes, tra fish is among the key fishery commodities of Việt Nam. The country’s tra fish products have been exported to more than 140 markets in the world, bringing home about US$2 billion in annual export value.

Việt Nam’s tra fish production and the related food safety and hygiene control system have also received positive assessment from the US Food Safety and Inspection Service.

However, there remain certain shortcomings and problems in the production, processing, environmental treatment, connectivity, and sale in the tra fish industry, heard the workshop held by the Directorate of Fisheries at the Ministry of Agriculture and Rural Development (MARD), the Sustainable Trade Initiative (IDH), and the Vietnam Pangasius Association.

Phạm Thị Thu Hồng, deputy secretary general of the Vietnam Pangasius Association, cited research findings that show to produce an average of 200 tonnes of fish per ha, at least 320 tonnes of feed is needed and 256 tonnes of organic substances will be discharged into the environment.

Besides, there are more than 100 tra fishing processing establishments nationwide with a designed capacity of 1.5 million tonnes of raw materials each year. Though equipment and technology for producing by-products such as fish oil and powder are relatively modern, they haven’t been able to make full use of fish blood, thus worsening the pollution of water used for processing.

That has resulted in an environmental challenge to tra fishing farming and processing, she said, holding that to secure sustainable development for the tra fish industry, it is necessary to pay due attention to environmental protection, especially appropriate and highly practical solutions to waste from farming and processing.

Trần Đình Luân, director of the Directorate of Fisheries, considered PPP as a good approach to sustainably develop the tra fish chain under the circular economy model.

Given this, he noted, the MARD put forth the initiative of establishing a PPP group involving universities, research institutes, businesses, and domestic and foreign organisations to devise ideas for reducing emissions in each link of the tra fish chain.

In addition, PPP will help provide more information about the domestic and foreign markets in order to facilitate innovation, studies, and applications to bring emissions down to the lowest possible level, thereby maintaining the reputation of Việt Nam’s fishery products, including tra fish, in international markets, Luân added.

Hồng said that following the global trend, the Vietnamese Government has committed to reducing emissions. Importers of Vietnamese fish also hope and pledge to cut carbon emissions by 20-30 per cent during the 2025-30 period, so they want suppliers of fishery products to carry out emission reduction initiatives accordingly.

Therefore, fish farmers and processing businesses of Việt Nam need to curb emissions during the production process to concurrently ensure product quality and keep emissions low, thereby promoting their competitiveness and maintaining their reputation in the global market, she remarked. 

Source: VNA/SGT/VNS/VOV/Dtinews/SGGP/VGP/Hanoitimes