VIETNAM BUSINESS NEWS NOVEMBER 15/2023

350 businesses to join International Exhibition of Hardware & Hand Tools 2023

As many as 350 firms from 15 countries are expected to participate in the International Exhibition of Hardware & Hand Tools (VHHE 2023) which is due to run in Ho Chi Minh City from December 7 to 9.
 
On display across 400 booths will be five main product groups, including tools, machine tools, reinforcement equipment, hardware, and supporting industrial products with a wide application in many industries ranging from manufacturing and repairing to assembling.

More than 1,000 products branded SATA, Swisstec, Onishi, Hasegawa, CML, King Blue, Snap-on, Gateway, Deli Tools, Naniwa, and others will be showcased at the event.

Most notably, a Vietnam Supporting Industry Fair (VSIF 2023) will also be held on this occasion, showcasing various components of products serving the supporting industry.

A number of trade exchange programmes will be organised during the three-day event, to help businesses stay updated on market trends, seek new partners, and expand into fresh markets.

Furthermore, a field trip to industrial parks will be held to promote linkages in terms of industrial production and manufacturing activities between Vietnamese mechanical enterprises and foreign investors.

According to the Vietnam National Trade Fair & Advertising Company (Vinaxed), the expo’s organiser, the series of events will be held concurrently with the 21st International Trade Fair in Ho Chi Minh City (Vietnam Expo HCMC 2023), which is expected to see the participation of 1,200 businesses from 20 countries and territories globally.

Economic growth of up to 6.5% in 2024 is achievable, says expert

Vietnam has reasonable grounds for recording an economic growth rate of 6 – 6.5% ahead in 2024, and the goal is set to be met if several hurdles are removed, says Prof. Dr. Hoang Van Cuong, member of the National Assembly Committee for Financial and Budgetary Affairs.

In a recent interview granted to Nguoi Lao Dong (Labourer), Prof. Dr. Cuong further elaborated on the legislature’s approval of major national socio-economic development tasks ahead for 2024, including setting a target of achieving GDP growth of between 6% and 6.5%.

The high growth set for next year is challenging amid unpredictable complications globally, although the country has reasonable grounds for meeting its expectations, he added.

According to the National Assembly deputy, the country has implemented macroeconomic policies this year quite effectively, such as going against the global trend of axing interest rates, controlling inflation, and keeping public debt at a low level. The Government has introduced a score of solutions aimed at removing and helping to stabilise corporate bonds, thereby creating new confidence. The economy has gathered steam steadily and continuously since the first quarter, with exports showing signs of a steady recovery from the third quarter onward.  

Meanwhile, opportunities have arisen locally which need to be seized, including new economic transition trends, the recent establishment of the Vietnam – US comprehensive strategic partnership, and the shift of quality investments in the country. Vietnam is speeding up economic restructuring, by not only relying on the external market but also opening up the domestic market, exporting services, and unlocking the potential for further tourism development.

The Government is working hard as it seeks to stimulate public investment, while ‘bottlenecks’ related to real estate which hinder economic growth are also being gradually removed.

As a means of spurring on business operations, Prof. Dr. Cuong said the Government should continue to introduce new support policies, such as reducing VAT, to stimulate business production and consumption. The recent supply chain disruption has created an opportunity for businesses to restructure themselves by exploiting the latest technology and deploying modern production methods. 

Vietnam also needs to quickly grasp opportunities in new markets as it seeks to expand its consumption network, he suggested.

However, the lawmaker assessed that the biggest bottleneck is the institution, and the Government is showing a strong resolve to iron out this snag.

Vietnam Expo 2023 in HCM City to draw 1,200 enterprises

The Vietnam International Trade Fair (Vietnam Expo 2023), one of the leading international trade exhibitions in Vietnam, will take place from December 7-9 in Ho Chi Minh City with the participation of 1,200 enterprises from 20 countries and territories.

According to the Vietnam National Trade Fair & Advertising Company (Vinexad) – the organiser of the event, Vietnam Expo 2023 will have 1,600 pavilions run by 1,200 exhibitors. It will also feature national pavilions of China, India, the Republic of Korea (RoK), Belarus and a project of US Agency for International Development (USAID) in Vietnam.

One of the highlights of the exhibition is the 500-sq.m RoK national pavilion filled by 65 enterprises in terms of beauty, consumer goods, household appliances and digital technology.

At the expo, the USAID, through the project on improving private sector competitiveness (IPSC), will provide 20 small enterprises with technical support for market expansion and growth adaptation. The support is expected to help the enterprises introduce their products to international markets.

Within the framework of the expo, specialised events will be designed to enhance the experience for exhibitors and visitors such as industrial park tours, Do-it-yourself workshops, seminars, conferences, competitions and demonstrations.

First held in 1991, the annual Vietnam Expo has become a prestigious event for Vietnamese firms to introduce their products and seek partnerships.

Carbon credits at service of farmers: Increased profit for farmers

According to Deputy Minister Tran Thanh Nam, the main solution to help ensure profits for farmers reach over 40 percent by 2025 and over 50 percent by 2030 is to sell carbon credits from low-emission rice production.

This year, the country shipped abroad 8 million tons of rice – a record level over the past ten years. To continue to achieve success, in addition to favorable conditions including existing brands, and abundant sources of goods, the Ministry of Industry and Trade noted that rice export businesses need to further tighten their links in the production chain.

At the same time, the country is following green rice farming, also known as aerobic rice cultivation, which is a sustainable and water-efficient method of rice production, improving quality to reach more demanding markets.

According to the Ministry of Agriculture and Rural Development, in the winter-spring crop of 2023-2024, farmers in the Mekong Delta region sowed about 1,475,060 hectares, one percent higher than the sowing area in 2022. It is expected that the winter-spring rice yield in 2023-2024 will reach about 10.7 million tons which is considered a key source of raw materials for export businesses in the first months of 2024.

Currently, the Ministry of Agriculture and Rural Development, localities and a series of businesses in the Mekong Delta region are coordinating closely to achieve high efficiency, especially in the winter-spring crop. Hydrological forecasting agencies continuously update the warnings about water resources meanwhile the agricultural sector in the Mekong Delta closely follows the winter-spring sowing schedule in upstream, middle and coastal areas to avoid drought and salinity at the end of the season.

According to the Vietnam Food Association (VFA), in comparison to the group of major rice exporting countries in the world, Vietnamese rice has the highest price by November 2023. Ms. Tran Thanh Binh, Head of the Import-Export Department under the Ministry of Industry and Trade, said that the average price of Vietnam’s rice exports has increased because Vietnamese rice has affirmed its brand. Nearly 200 Vietnamese exporting businesses set Vietnam’s rice prices in the market.

However, Ms. Tran Thanh Binh also noted that rice export businesses need to focus on the green production that the world is applying, especially European Union (EU) countries, to have an appropriate business strategy. Therefore, localities in the Mekong Delta and businesses, cooperatives and farmers are pinning their hopes on the project about sustainable development of one million hectares specializing in high-quality, low-emission rice cultivation associated with green growth in the Mekong Delta region.

According to Deputy Minister of Agriculture and Rural Development Tran Thanh Nam, in November 2023, the Ministry of Agriculture and Rural Development will submit this project to the Government for approval. However, Deputy Minister Tran Thanh Nam also asked the Mekong Delta to quickly implement the project of sustainable development of 1 million hectares specializing in high-quality rice cultivation right in the 2023-2024 winter-spring rice crop on an area of 180,000 hectares belonging to the area which was used for the VnSAT project many years ago.

Deputy Minister Tran Thanh Nam stated, sales of carbon credits at the service of farmers will help ensure profits for farmers over 40 percent by 2025 and over 50 percent by 2030. The World Bank has committed to buying carbon credits at US$10 per ton; therefore, one hectare of rice can be sold for about 10 tons of carbon credits, equivalent to $100.

Therefore, building a Vietnamese rice brand to reduce emissions will bring many profits to rice growers. Besides, it is necessary to promote the use of waste and agricultural by-products from rice cultivation to improve the value and economic efficiency of rice production. Deputy Minister Tran Thanh Nam said that this time is more than ever for businesses to join their hands with cooperatives and farmers to create linkage based on investment in raw material areas, harmoniously sharing benefits with farmers.

Despite good signs of rice export, experts in the field have also given many warnings to businesses. According to Mr. Do Ha Nam, Vice President of VFA, the sharp increase in Vietnamese rice prices has led to some cases where businesses lost a lot of money; so they canceled contracts, especially for small businesses with weak financial records while large businesses that have almost finished delivery of goods are forced to buy at high prices to collect enough goods to maintain their reputation with partners. Therefore, he advised that businesses must be very cautious in deciding to sign contracts for distance sales in 2024, because of limited supply and difficult credit capital.

Vietnamese people make impression with their commercial skills

Though the Vietnamese community is only a small group in each European country, they left a strong impression in commercial business, especially in the retail sector.

After Eastern European countries switched to a free market, the wholesale market model is very popular in Russia, nations – parts of republics of the former Soviet Union – and Germany with Vietnamese. Vietnamese businessmen in countries like Romania and Hungary rent kiosks and do business based on markets opened by Chinese people.

In the past, groups of wholesale markets, also known as delivery zones, only served customers purchasing products in bulk quantities at discounted rates for resale or distribution. Main business items are clothing, household appliances, interior and garden decorations, and food. Owners of retail stores in remote areas must drive to pick up goods quickly in the morning and soon return to their stores on the same day.

Previously, Ms. Pham Lan who used to have 3 clothing stores in Dragonul Rosu (Red Dragon Market) in Bucharest, Romania had to get up at 2:30 am, prepare breakfast for her family and bring it to the car to the market before 4 am, because wholesale markets are located in the outskirts of the city. At around 6-8 am, buying and selling was bustling in these wholesale markets ten years ago whereas retail business methods have changed a lot because e-commerce has been developing significantly.

The traditional trade model of wholesale markets is outdated, leading to a desolate and deserted scene. Kiosk owners had to change selling approaches to offer both services for retail customers even online sales so their customers no longer need to go to the market.

Many markets have become Vietnamese food markets such as Dong Xuan in Berlin, Ben Thanh in Leipzig, and Sapa in Prague.

Not only do Vietnamese people while shopping come to have lunch, but local residents also come to enjoy those Vietnamese dishes. Vietnamese people who want to cook at home also come here to buy ingredients imported from Vietnam and other Asian countries. Local people call them Asian markets.

Depending on the consumer culture of the indigenous people, Vietnamese entrepreneurs decide to change their business direction. In Germany, many restaurants and fast food restaurants selling Vietnamese dishes are seen in big cities in the entire federation. Vietnamese dishes are not only popular for their fresh ingredients, and delicious tastes at reasonable prices but also the warm and hospitable smiles of waiters.

In the Czech Republic; however, the grocery business is popular, not only in the capital Prague but in many tourist and resort cities such as Cesky Crumlov, and Karlovy Vary. Mr. Hieu Nguyen, a grocery store owner, said on the way to the King’s Palace in Prague that with a capital of about VND1 billion (US$41,118) and a store area of about 70 square meters, the rent is about VND60 million per month, he and his wife earn a good income.

In France, Vietnamese-origin sellers place glass cabinets displaying ready-to-eat cooked foods on many street corners in all corners of France, not just in the capital Paris. A person can go to a Vietnamese store to buy braised beef, beef balls, braised pork, spring rolls, and hot pot ingredients to warm up at home and cook themselves.

No matter how times change, online shopping or e-commerce, the traditional market business style is still favored by Vietnamese expatriates as they look for it as a cultural feature, reminding them of their homeland. Thousands of Vietnamese people still stick to the market to do business and spread Vietnamese flavors throughout Europe.

Dung Quat refinery substantially contributes to infrastructure development in central region

The Dung Quat oil refinery, tasked with helping guarantee national energy security and boost economic growth in the central region, has made substantial contributions to the development of local transport, seaport, and logistics infrastructure.

When a major oil and gas project is implemented, its host locality will benefit from better infrastructure because big and well-built roads are required for the transportation of giant equipment serving the construction. Operations of that project will also help fuel local economic development which will subsequently boost investment in transport infrastructure.

Binh Son district in central Quang Ngai province, which accommodates the Dung Quat refinery, has recorded strong improvements in not only road but also seaport and logistics infrastructure.

The seaport system in the Dung Quat Economic Zone currently has 45.3ha of warehouses and other storage spaces, the largest compared to other seaports in the central region.

Thanks to the wave resistant dyke that is 1.6km long and 10m higher than the sea level off the refinery, a vast area within Dung Quat Bay is not affected by sea waves, making it suitable for developing ports and logistics services.

Dung Quat Port is envisioned to become a general port which will attract goods from the Central Highlands to be transported through once the expansion of National Highway 24 is completed. In the near future, it will be turned into the biggest cargo port for handling coal, steel, petrol and oil in Vietnam.

In the plan on developing Vietnam’s seaport system by 2030 with a vision to 2030, Dung Quat Port will include terminals capable of handling vessels of 10,000 – 50,000 deadweight tonnes and container ships of up to 4,000 twenty-foot equivalent units (TEUs).

Five terminals for common use, invested by the Hao Hung One-Member Limited Liability Company, in the Dung Quat Economic Zone were completed in 2018 while 11 others for special use, part of the Hoa Phat Dung Quat cast iron and steel production complex project, in 2019. Another general terminal will be built soon to raise the capacity of the Dung Quat 1 port system to 22 million tonnes per year.

Before the Dung Quat refinery came into being, supporting industries in Quang Ngai were small and made just modest contributions to the province’s industrial value. However, since 2011, when the refinery became operational, supporting industries have been growing considerably and playing an increasingly important role in the local economy.

The Dung Quat refinery has created momentum for supporting industry projects in the fields of mechanical engineering, heavy industry, steel production, shipbuilding, petrochemistry, biofuel, textile – garment, leather – footwear, electronics, wood processing, and paper production.

Data from the General Statistics Office showed that the volume of cargo transported in the central region increased 8.73-fold in 21 years, from nearly 43.7 million tonnes in 2000 to over 381.1 million tonnes.

This refinery’s impact on the cargo transportation volume in the region could be seen in statistics recorded before, during, and after its construction. Before 2005, the volume of cargo transported in Quang Ngai accounted for just over 1% of the total across the central region. It gradually increased during 2006 – 2010 to make up more than 2%. The rate has topped 3% since the refinery was put into operation in 2011.

In addition, passenger transportation in the region has also been on the rise over years, from 93.8 million passengers in 2000 to 120.1 million in 2005, 201.9 million in 2011, and the peak of 379.7 million in 2019. Quang Ngai in particular also saw an increase from 0.9 million passengers in 2004 to 1.1 million in 2005 and 2.3 million in 2011.

Between 2005 and 2010, the number of passengers transported across the central region doubled compared to previous years. Quang Ngai posted an annual growth rate of 5.77% in the passenger volume during the period. These figures reflected certain impacts from the construction of the Dung Quat refinery on passenger transportation in the province and the central region at large.

The building of the Dung Quat refinery has shown observable positive impacts on socio-economic aspects in the central region, demonstrating the Party and State’s clear-sighted decision to place the country’s first oil refinery here.

Real estate firms offer higher salaries to attract quality brokers

Real estate firms are offering higher salaries and brokerage fees to attract quality brokers in a market where homebuyers have become more cautious and demanding.

Phạm Thị Phương Thảo, CEO of Sao Việt Real Estate Company, said her company plans by the year-end to hire 50 brokers with skills such as “sales, customer service, product knowledge, legal understanding, and market awareness.”

The company is willing to offer higher salaries and brokerage fees. It will also provide professional training for brokers, she said.

“Inexperienced brokers will have a hard time convincing buyers in this challenging market,” she said.

Nguyễn Hoài Danh, marketing director at Cát Tường Land, said his company will need to recruit around 150 specialised sales personnel in the coming time.

In addition to a fixed salary of VNĐ8 million, brokerage fees currently range from 5-7 per cent, based on the product, he said.

However, despite the attractive compensation packages, some companies are struggling to meet their hiring targets. Finding brokers with the necessary qualifications, experience, and multitasking abilities is a challenge due to the market’s low liquidity.

Nguyễn Hậu, CEO of Asian Holding Real Estate Company, said his company planned to recruit 200 brokers beginning in the third quarter, offering a monthly salary of VNĐ10 million. But it has only been able to recruit 50 per cent of the target so far.

Other real estate firms, including Đất Xanh Group, Thắng Lợi Group, Vạn Xuân, Nam Group, Đại Phúc Group, IMG, and Gamuda Land, are also hiring personnel in various positions, not just sales staff.

These companies require not only professional qualifications, market knowledge, and experience but also multitasking abilities and the willingness to take on multiple responsibilities.

According to a study by Đất Xanh Group, basic monthly salaries for real estate brokers have increased from VNĐ4-10 million to VNĐ6-20 million.

Brokerage fees have also seen a 10-20 per cent increase, with Hà Nội seeing a 5-10 per cent increase, HCM City a 20-30 per cent increase, and other localities a 30-40 per cent increase.

Sales personnel now receive bonuses ranging from VNĐ10-25 million per product, compared to the previous range of VNĐ5-10 million.

A real estate salesperson at a large real estate corporation based in Bình Thạnh District, who asked to remain anonymous, said that during difficult times with fewer transactions and unstable income, only a few brokers with financial resources and effective communication skills can withstand the pressures of the profession.

The majority of brokers tend to give up after a short period due to demands for high sales and an uncertain lifestyle, she said. “Customers are now more cautious, and it is more challenging than ever to persuade them to buy real estate products.”

Nguyễn Hoài Danh, marketing director at Cát Tường Land, said the biggest challenge in recruiting brokers today is training a skilled and dedicated workforce.

Real estate firms are now focusing on developing a skilled and dedicated workforce with market knowledge, understanding of customer psychology, and expertise in legal matters.

The survival of brokers depends on their clients’ trust, and maintaining this trust requires continuous learning, professional ethics, and credibility.

Nguyễn Hậu, CEO of Asian Holding Real Estate Company, said brokers can only survive with the trust of their clients, and if that trust is lost, they will eventually be phased out, he added.

Nguyễn Văn Đính, chairman of the Vietnam Real Estate Brokers Association, said that while recent dismissals have predominantly targeted new employees who lack expertise, brokers with strong skills and expertise remain highly sought after.

The draft of the new Real Estate Business Law will tighten the management and supervision of real estate brokerage activities, he said.

He recommended brokers continue to learn, improve their professional knowledge, and maintain professional ethics and credibility with customers.

According to statistics of the Vietnam Real Estate Brokers Association, currently, there are approximately 300,000 real estate brokers operating nationwide, with only 35,000 holding professional certificates. This poses risks for homebuyers in the event of a dispute between project developers and homebuyers. 

Top 10 banks in terms of CASA as of end Q3 2023

Q3 2023 financial statements of commercial banks have revealed the top 10 banks in terms of the current account savings account (CASA) ratio as of September 30, 2023.

The banks are MB, Techcombank, Vietcombank, MSB, ACB, VietinBank, BIDV, TPBank, SeABank, and Sacombank.

MB continued to lead the banks by recording a CASA ratio of 36% at the end of Q3 2023. Despite being at the top, MB’s CASA ratio is showing signs of going down, with a decline of 1.1% compared to the end of Q2 2023 and 4.7% compared to the beginning of this year.

In fact, not only MB, but many other banks also witnessed a decrease in demand deposit rates this year. The CASA ratio at Techcombank decreased by 3.3% in the first half of 2023 to 33.6% and remained flat in Q3 2023. Although there have been more positive changes since Q2 2023, Techcombank’s CASA ratio is still very far from returning to the highest level of 50% that Techcombank once achieved.

According to Techcombank, in the context that the interest rate environment has returned to normal and liquidity of the banking system is more abundant, customers still tend to deposit term savings because investment opportunities in asset types currently remain limited, largely due to concerns about uncertainties in the domestic and global economic outlook in Q4 2023 and next year.

Vietcombank ranked third in terms of CASA ratio, reaching 31.3% at the end of September 2023. Vietcombank’s indicator has improved compared to the end of the second quarter as it increased by 1.1%. Currently, Vietcombank is still the bank with the largest demand deposit balance in the banking system, with more than 397 trillion VND.

MSB followed Vietcombank with a CASA ratio of 27.7% at the end of Q3 2023. The ratio was flat compared to Q2 2023 and decreased by 3.4% compared to the beginning of this year. Previously, in 2022, MSB once surpassed Vietcombank to rank in the top 3 in terms of CASA in the banking system.

Ranked fifth in the list is ACB with a CASA ratio of 20.6%. The rate is flat compared to Q2 2023 and down 1.7% compared to the beginning of this year.

VietinBank closely followed ACB with a CASA ratio of 20% in Q3 2023. Notably, VietinBank is also a rare large bank whose CASA ratio has not decreased this year. This bank recorded a fairly good growth in demand deposit balance of 4.8%, equivalent to the growth rate of term deposits. Accordingly, VietinBank’s CASA ratio remained at 20% as of the end of 2022.

BIDV ranked seventh in the list, recording a CASA ratio of 18.3%, up 1.3% compared to Q2 2023 but down 0.5% compared to the end of 2022.

Notably, all the last three banks in the top 10 recorded a CASA ratio of 17.3%, with SeABank impressing by increasing its CASA ratio from 10% to 17.3% in just three months.

Specifically, the demand deposit balance at SeABank doubled in the third quarter of 2023 to more than 23.6 trillion VND, which helped the bank jump from 15th to 8th in terms of CASA in the banking industry.

Based on the financial statements of 27 listed banks, the current CASA ratio has a huge difference between big and small-sized banks. While big banks had a high CASA, the rate for small banks was only around 5%.

Companies shape up to adopt global norms

Aligning with international practices, corporate governance is becoming pivotal for sustainable business growth and investor trust – but in Vietnam, there is a need for wider industry awareness and adoption.

On November 22, the sixth annual Corporate Management Forum will be organised by the Vietnam’s Institute of Directors (VIOD), under the theme “Igniting Green Finance and Green Management”. The forum will serve as a platform for sharing missions, responsibilities, effective management strategies, and principles to address challenges in the journey of transformation and future growth.

The forum has been organised with technical support from the International Finance Corporation, sponsorship from the Swiss State Secretariat for Economic Affairs, and collaboration with the State Securities Commission.

Within the forum, the annual Board of the Year ceremony will honour outstanding boards of directors (BODs) that have excelled, surpassing over 500 other boards of listed companies in the Vietnamese market.

In September, the VIOD had representatives attending the annual meeting of the Global Network of Director Institutes. According to Ha Thu Thanh, VIOD’s BOD chairwoman, the global network focused on the modification of G20/OECD corporate governance principles and risk management culture.

“The most notable aspect in the modified principles is the addition of a chapter on sustainable development and enhanced resilience. It provides recommendations to help companies manage risks better, seizing opportunities for sustainable development amid climate change and other challenges threatening sustainability,” Thanh said.

Thanh added that these modifications also reflect market dynamics and the increasing complexity of risks that businesses face in the context of digitalisation. Accordingly, these principles will continue to be the leading national standards for corporate governance.

According to VIOD’s assessment and scoring of Vietnam’s BODs, many public companies have been transitioning to adopt advanced international corporate governance models. In this regard, the role of independent board members and environmental, social, and governance (ESG) standards are increasingly emphasised.

Despite encouraging movements, VIOD noted that there is still a limited number of companies in Vietnam that truly understand deeply and construct a systematic corporate governance framework or take steps to improve corporate governance practices.

This situation can be somewhat observed through the ASEAN Corporate Governance Scorecard assessment, where Vietnam currently ranks sixth.

Thanh emphasised that corporate governance is the foundation for the sustainable development of a business and can be considered an “international currency” for attracting capital and responsible investors. Especially in markets where investors are increasingly demanding responsibility, corporate governance should focus not only on financial indicators but also the overall framework of integrated ESG governance.

“Effective corporate governance can only be achieved when the BOD changes its mindset, successfully differentiating between the strategic narrative and execution, monitoring and reporting. With a correct understanding of corporate governance, BODs and relevant parties need clear and distinct delegation of rights and responsibilities. In doing so, they establish two necessary conditions for sustainable development: transparency and accountability,” Thanh explained.

According to VIOD observations, many current members of BODs in Vietnamese companies have not undergone sufficient training programmes, and lack the adequate preparation and awareness of critical issues. However, efforts are being made to professionalise corporate governance activities, as the institute is collaborating with relevant agencies and stakeholders.

Smart city accolades pour in for Danang

The central city of Danang will be honoured with a Vietnam Smart City Award for the fourth consecutive year at the end of this month.

As announced by the Vietnam Software and IT Services Association (VINASA) last week, Danang will be handed the Vietnam Smart City Award 2023, along with three other thematic awards: Smart Operations and Management City for Infrastructure and Public Service; Smart, Green Environmental Management City; and Attractive City for Startups and Innovation.

The awards ceremony will take place on November 30 in Hanoi.

Initially launched by VINASA in 2020, the Vietnam Smart City Award honours urban areas, organisations, and businesses that have contributed to helping cities become smarter and more liveable, have a compelling brand, and can be competitive and develop sustainably.

The award also encourages businesses to create innovative products and technology solutions; acting as a channel connecting supply and demand, and collaborating to build appropriate models to accelerate smart city development across Vietnam.

Danang has been focused in recent years to form a shared infrastructure, platform, and database for smart city applications. In addition to urban network infrastructure covering 450km and serving over 190 agencies, the city is launching a data centre expansion project with a budget approximating $2.9 million.

In particular, it will add 13 servers with about 130TB of storage. After completion, the data centre will encompass 200 servers, with storage capacity approximating 300TB.

At the same time, the city is expediting a project to expand the local online television system with a budget reaching $845,000, encompassing the provision of terminal equipment to all wards and communes, agencies and organisations.

Also this year, the city has made efforts to deploy and update more shared platform features such as parking monitoring, vessel monitoring, the Open Data portal platform, and the Danang Smart City multi-service mobile application, among others.

Thong Le Anh Tuan, CEO of social commerce platform Selly, said that businesses have received a lot of support for development from the city through training sessions, workshops, and seminars to improve their qualifications, technological capacity, and information security, so that they can remove obstacles and meet requirements during the digital transformation process.

“Businesses expect Danang to scale up domestic and international cooperation by attracting more resources, expertise, technology, and solutions from organisations, businesses, and experts to smooth implementation of smart city projects, along with introducing additional policies to uphold startups and smaller enterprises,” Tuan said.

Nguyen Trong Tin, general director of Onemore Communications and Technology, commented that the city has made swift steps into building a smart city model. However, for businesses in the Danang, barriers still persist in implementing digital transformation along with a weak high-tech workforce.

“The city needs policies and incentives to attract high-quality human resources; policies that support businesses in the process of training, coaching, capacity and skill enhancement through using smart programmes and devices; and further paying attention and strengthening connection to the national population database,” Tin proposed.

According to Tran Hanh Trang, vice president of the Danang Software Business Association and director of Enouvo IT Development, many applications have been deployed by the city in recent times, such as measuring rainfall and flood levels on the Danang Smart City app, or the My Portal digital citizen platform.

“Danang needs to strengthen cooperation with other smart cities such as those in Japan and South Korea. They already have investors in Danang, thereby learning from experience to apply successful and feasible models here,” Trang said.

Furthermore, Danang also needs to devote more resources to support startups in IT, thereby both developing the city’s innovative startup ecosystem and taking advantage of local resources, Trang added.

Tran Ngoc Thach, deputy director of Danang Department of Information and Communications, said that Danang winning the Smart City Award four times in a row comes by virtue of positive contributions and consensus from authorities at all levels as well as community digital tech groups who directly guide people to create and use online public services, bringing tech closer to all.

“In the forthcoming time, the department will continue to coordinate with relevant units to promote the efficiency of operating centres as well as data centres, speeding up tech infrastructure progress, and more effectively avail of digital data and technology to heighten the quality of service provision for individuals and businesses,” Thach said.

Large-scale timber forest development remains challenging for Vietnam

Investment in timber is needed to offset sluggish demand in the sector, according to industry insiders.

Speaking at the Forest Products Round Table on November 2, Dr. To Xuan Phuc, senior advisor at Forest Trends, stated that although Vietnam has 3.5 million hectares of domestically grown forests, just 20 per cent of that area is used in the processing of wooden products for export.

According to Phuc, the absence of legal documentation regarding the land and the transactions renders ascertaining the legitimacy of timber established in such areas exceedingly challenging, if not impossible in some cases.

“As reported by several enterprises that are presently engaging in partnerships with households to establish timber plantations and harvest substantial quantities, ownership rights have been granted to a mere 40 per cent of the affiliated households. The remaining 60 per cent have not been granted such rights. The lack of these documents means that there is no legal proof to show that the household is the legal owner of the forest land,” Phuc pointed out.

An increasing number of investors are showing interest in the substantial timber supply originating from Vietnam, particularly in light of the requirement that wood and forestry products disclose the origin of their raw materials before entering the global market.

Timber regulations are in place in Japan and South Korea, in addition to the US’ Lacey Act, Europe’s Forest Law Enforcement, Governance, and Trade, and the Regulation on Deforestation-Free Products, which Vietnam’s primary import markets are implementing to progressively enforce stricter regulations on imported wood and wooden products.

Two Japanese corporations, Tokyo Sangyo and Daichu Corporation, collaborated with the provincial leaders of Binh Dinh at the end of October to rent 15,000ha of forest to establish vast timber plantations that would provide raw materials for a wood pellet factory with an annual capacity of 160,000 tonnes.

Woodsland Furniture, located in the northern province of Tuyen Quang, has engaged in collaborative investments with five forestry companies since 2015 to procure cultivated wood products that are eligible for Forest Management certification from the Forest Stewardship Council (FSC/FM). The area under the company’s management has now been expanded to more than 28,000ha.

According to Woodsland’s president Do Thi Bach Tuyet, the company requires between 150,000 and 200,000 cubic metres of round wood annually, of which more than 90 per cent is FSC/FM-certified and unprocessed. Woodsland, a company that manufactures exterior and interior timber products for IKEA, exports to the EU, the US, and Japan.

“Developing a large raw material area is Woodsland’s strategic long-term goal,” said Tuyet.

Presently, for a minimum of seven years, the organisation, its collaborators, and afforestation households employ sustainable forest management techniques to systematically establish expansive growing areas.

Over the 2023-2025 period, Song Kon Forestry Ltd. intends to re-establish a substantial forest encompassing an approximate area of 287ha. However, Nguyen Ngoc Dao, president of Song Kon, remains apprehensive about the financial burden associated with the establishment of such large areas, which exceeds $2,900 per ha on average.

Commercial bank loan interest rates and a shortage of tree varieties are significant obstacles that impede the progress of Song Kon, a state-owned enterprise situated in Binh Dinh province. This People’s Committee has approved a loan of over $440,000 for the planting of forests by Song Kon between 2023 and 2025.

The average cost of planted forest timber, according to Song Kon, is $50 per tonne, or approximately $3,000 per ha. The productivity of three-year-old forests is modest, at approximately 60 tonnes per ha. The yield reaches 180 tonnes per ha after eight years, which satisfies the processing requirements.

As stated by Dao, “The exploitation cycle of sizable timber plantations typically spans a duration of 8-10 years. Additionally, forest producers require a substantial amount of capital to finance forest investments and other associated expenses.”

Do Xuan Lap, chairman of the Vietnam Timber and Forest Products Association (VIFORES) said, “The timber industry continues to face the challenge of gradually reducing wood imports, which have reached 6 million cu.m annually, by proactively searching for input sources.”

Vietnam spent close to $2 billion on the import of timber products in 2022. According to VIFORES, the nation primarily imports unprocessed timber from North America and Europe at this time.

As a result of the supply disruption caused by the conflict between Russia and Ukraine, which drove up the cost of raw materials in Europe, businesses are now obligated to persuade clients to substitute imported wood with domestically harvested alternatives, primarily tram wood.

However, Lap stated, “This is only a short-term remedy. Developing large timber forests necessitates policies that encourage afforestation households and businesses to expand planting areas and restrict the export of unprocessed materials, sawn wood, and peeled wood products in favour of processed goods with higher added value.”

Furthermore, Lap argues that there is a need for more robust partnerships between businesses and domestic forest-planting households. This is essential so that farmers can maintain the trees for an extended period of time, thereby supplying the processing industry with the unprocessed wood it needs.

Vietnam set to implement global minimum tax

Vietnam is poised to adopt global minimum tax (GMT) regulations, a move set to impact 122 foreign investment conglomerates and strengthen the country’s fiscal framework in line with international standards.
 
Le Quang Manh, chairman of the National Assembly’s Finance and Budget Committee, underscored the necessity of Vietnam adopting the GMT guidelines at a meeting on November 10, 2023.

“Without incorporating the GMT regulations, Vietnam risks foreign investing countries levying additional corporate income taxes – potentially up to 15 per cent – on multinational corporations operating within its borders but paying less than the stipulated minimum tax rate,” he said.

In a bid to safeguard Vietnam’s fiscal sovereignty in the face of the GMT coming into effect in 2024, a consensus has emerged within the Finance Committee.

The committee advocates for the passage of a legal framework, essential to providing a robust basis for foreign-invested enterprises within Vietnam to comply with the additional corporate income tax mandates domestically, rather than in their countries of origin.

Further elaborating on the country’s proactive approach, Manh said, “The prompt enactment of this resolution is a testament to Vietnam’s dedication to align with the GMT standard from January 1, 2024. Such a move is crucial to fortifying investor trust in the robustness and reliability of Vietnam’s legal and fiscal environment.”

Drawing from the government’s detailed analysis of 2022 corporate income tax settlements, Manh revealed that an estimated 122 foreign investment conglomerates were likely to be encompassed by this resolution.

The projected additional corporate income tax revenue from these entities is anticipated to be around $615.61 million.

The implications for Vietnam’s domestic corporate sector are also significant. The government’s projections indicate that around six major domestic conglomerates could be subject to the resolution, potentially leading to an additional tax inflow of $3.08 million from their international operations, in scenarios where the host countries have not implemented the GMT.

A notable aspect of the proposed tax reform is its application to the domestic income of these conglomerates. Starting from 2025, even income taxed below 15 per cent domestically will be subject to a minimum supplementary corporate income tax.

VND330 trillion worth of corporate bonds to fall due next year

The HCMC Real Estate Association (HoREA) has forecast that an estimated VND329.5 trillion worth of corporate bonds will fall due next year.

This will be the highest level in three years, far surpassing the figures of VND144.5 trillion in 2022 and VND271.4 trillion in 2023, HoREA said in a letter addressed to the Ministry of Finance on November 9.

HoREA highlighted the fourth quarter of 2023 as a peak period for bond repayments this year, with a total value of VND65.5 trillion, excluding deferred and postponed bond lots. Notably, nearly 80% of these bonds were issued by real estate firms.

In its letter, HoREA also called for the extension of Government Decree 08/2023, emphasizing its importance in supporting the corporate bond market in 2024.

This decree temporarily suspends some articles of Decree 65/2020 until December 31 this year, which requires professional individual investors to hold an investment portfolio worth at least VND2 billion for 180 days or longer and debt-issuing organizations to report their credit ratings and sell their bonds within 30 days.

It has had a positive impact on the corporate bond market by addressing challenges, particularly in bonds issued via private placement. It has contributed to the ongoing recovery of the economic and real estate markets.

Between January and October this year, nearly VND205.9 trillion worth of corporate bonds were issued in the market, with privately placed bonds accounting for 88.5% of the total, exceeding VND182 trillion. Approximately 33.2% of the total bonds issued were by real estate firms.

HoREA said that the extension is necessary to accommodate the practical realities of Vietnamese businesses.

The potential challenges that may arise if the application of Decree 08/2023 is not extended include the stringent criteria for identifying individual professional investors and the difficulties faced by those selling bonds via private placement in meeting credit rating conditions.

With only four credit rating agencies serving over 800,000 businesses nationwide, including 40,000 in real estate, it is challenging to meet the demand for private corporate bond issuance.

Lending to real estate investors surges

Lending to real estate developers had increased by over 6% in the year to September, while outstanding loans to real estate trading had surged more than 20%.

The State Bank of Vietnam (SBV) announced this information prior to the commencement of a webinar on the implementation of the prime minister’s official dispatch to remove obstacles in the real estate market, which was held yesterday.

As of September 30, loans granted by credit institutions for the real estate sector reached VND2,740 trillion, up 6.04% against the beginning of this year. Of this total, outstanding loans for real estate businesses accounted for 36%, or VND986.4 trillion.

Compared to the previous year, credit growth in this segment has increased substantially.

Last year, loans for real estate trading made up 31% of the total for the entire sector, reaching VND800 trillion by late 2022.

According to the SBV, the rise in credit for real estate investors in January-September showed the effectiveness of the Government’s policies in an effort to remove hardships for the property sector over the past year.

The prime minister has instructed relevant agencies multiple times to address the challenges faced by the real estate sector since 2022. However, hindrances related to legal issues, price evaluation, complicated bureaucracy, and loan access have posed significant challenges for the real estate market so far.

Phu Yen: Lobster export prices reduce by half

Authorities and traders attribute the substantial price drop of tropical rock lobster to difficulties in the export market, particularly in China.

The sharp decline in lobster prices is expected to lead to financial setbacks for farmers and aquaculture businesses, potentially resulting in bankruptcy.

On November 13, the Aquaculture Department under the Fisheries Sub-Department of Phu Yen Province reported that they were reviewing and compiling specific statistics on the significant impact of the sharp decline in prices of tropical rock lobster in this locality.

Phu Yen is the largest lobster farming hub in the Central region with nearly 87,600 breeding cages, producing 2,000 tons per year, including green spiny lobster and tropical rock lobster).

However, the export prices of tropical rock lobster have sharply decreased in the past few months, dropping from VND2.3 million to a mere VND1.1 million per kilogram and even reaching as low as VND800,000 per kilogram, and faced consumption constraints.

Authorities and traders attribute the substantial price drop of tropical rock lobster to difficulties in the export market, particularly in China, which is not accepting products without compliance with traceability and proof of origin requirements.

Currently, the majority of tropical rock lobster seedlings in Phu Yen are mainly caught in the wild.

The sharp decline in lobster prices is expected to lead to financial setbacks for farmers and aquaculture businesses, potentially resulting in bankruptcy.

Construction of Nam Can Airport base commenced

This project holds significant importance, addressing the helicopter transportation requirements for national defense, security missions, economic development, and healthcare.

On November 13, the Vietnam Helicopter Corporation under Army Corps 18, in partnership with the Southern Helicopter Company and the People’s Committee of Nam Can District of Ca Mau Province, held a groundbreaking ceremony for the investment project to build the Nam Can Airport base.

The project is divided into two investment phases. Phase 1, spanning from September 2023 to June 2024, centers on investing in the development of technical infrastructure. Phase 2, scheduled from 2024 to 2026, entails investing in the construction of operational buildings, waiting areas, residential quarters, and storage facilities to facilitate operational activities.

This project holds significant importance, addressing the helicopter transportation requirements for national defense, security missions, economic development, production, business, and healthcare in the Mekong Delta provinces, in general, and Nam Can District, in particular. Concurrently, it establishes conditions for Nam Can District to attract investments, allure tourists to the area, and contribute to socio-economic development in the years ahead.

Policy changes required to provide a boost to property sector

The government considers the property market an important pillar of the economy and measures are underway to address the sector’s difficulties in recent years, said policymakers and industry insiders at a conference on credit policy in Hanoi on November 13. 

Governor of the State Bank of Vietnam (SBV) Nguyen Thi Hong said the sector remained a key economic driver as it’s closely tied to many other industries, making it one of the top priorities for Vietnam’s policymakers. 

Ha Thu Giang, head of the credit department at the SBV, said by September 30 the total amount of credit outstanding in the sector had reached 2.74 quadrillion VND, an increase of 6.04% since the end of 2022 and accounting for 21.46% of the entire economy’s credit outstanding.

Giang said during the first nine months of 2023, the sector’s credit had shown a higher growth rate compared to the same period last year, reaching 21.86%. This had been the result of a coordinated effort by various governmental agencies and local authorities to identify and resolve the sector’s obstacles and challenges. 

For example, she said a lending programme to support housing under Governmental Resolution 02 had disbursed nearly 30,000 trillion VND to more than 53,000 households and individuals. 

In addition, the Social Policy Bank of Vietnam (VBSP) had introduced 5 different loan programmes related to the property market at a total amount of over 27 trillion VND to nearly a quarter of a million customers. 

Meanwhile, BIDV and Agribank, among some of the largest commercial banks in Vietnam, had signed various credit agreements to finance three projects with a disbursement of 105 billion VND to eligible projects in 22 local authorities nationwide.

Difficulties and challenges for the sector, however, would remain for the foreseeable future, said the governor. 

Economists and industry insiders have long voiced their concerns over a number of issues faced by the sector including lengthy legal procedures related to land clearance and acquisition, supply and demand mismatch, weakening purchasing power and limited finance and management capacity on the part of property businesses. 

In particular, economists said there had been an oversupply of high-end apartments and villas, contributing to high property prices that had been largely out of reach for middle-income buyers. 

To make matters worse, developers often overly relied on loans, bonds and deposits from future home buyers, sending prices even higher. 

The sector had also been struggling with bad debt in recent years with a ratio of 2.89% by the end of September, a sharp increase from the same figure recorded at the end of 2022 at 1.72%. There had been a significant downward trend among bank customers applying for home-buying loans compared to the last few years. 

Speaking at the conference, industry insiders called for larger credit room for the sector, lower interest rates and easier access to capital. 

Nguyen Van Cuong, Vice Chairman of Hung Thinh Group, said even after his group managed to reach an agreement with LPBank for a credit limit of 5 trillion VND, the bank soon exhausted its lending room after disbursing just over 2 trillion VND.

He called for easier lending conditions and extended credit by the banks to prolonged projects in order to give businesses more breathing room in these difficult times. 

Le Hoang Chau, Chairman of the HCM City Real Estate Association (HoREA), urged the SBV to allow for slightly loosened loan conditions for developers, investors and homebuyers.

According to the association, the current conditions set out under Article 7 of Circular 39/2016/TT-NHNN (SBV) have remained unchanged since 2016 and, given the current conditions of the property market today should be reviewed and potentially adjusted to grant easier access to credit.

Localities speed up exports of OCOP products to the UK

Several northern localities have been fostering exports of the “One Commune One Product” (OCOP) products to the United Kingdom to enjoy import tax reductions under the effective UK-Việt Nam Free Trade Agreement (UKVFTA).

According to Yên Bái’s Department of Agriculture and Rural Development, the province has shipped 10 OCOP products to the UK market. 

These products have been checked to meet food safety criteria, quality indicators, and packaging and label design requirements under European standards. Up to now, all paperwork and product quantities have been completed and these goods are ready for export, the department said. 

These products include Trà Quế (Cinnamon Tea) from Phương Nhung Co; high-quality green tea products from Bảo Hưng Cooperative; Quy Mông vermicelli from Việt Hải Đăng Cooperative; Diệp tea and Shan Tuyết black tea products from Suối Giàng Cooperative and Hòa Cuông Cinnamon from Quế Khánh Thành Cooperative.

To enter the UK market, products have to meet strict criteria, Nguyễn Thị Thanh Hương, director of R.Y.B Joint Stock Company which is in charge of packing and transporting these items to the export market, told daibieunhandan.vn. 

She added that importers always put quality criteria first, fulfilling food hygiene and safety standards and ensuring there are no pesticide residues or substances harmful to health. 

According to the provincial People’s Committee, OCOP is an important programme that aims to develop the rural economy with a focus given to developing higher value-added agricultural products.

Over the past time, the province has been implementing many solutions to support people, businesses, and cooperatives to gradually improve quality, develop brands, and speed up consumption of OCOP products, the committee said. 

To date, Yên Bái Province has 193 OCOP products, of which 21 are awarded four stars and 172 are granted three stars.

It is striving to have at least 300 OCOP products awarded three stars or higher; 20 OCOP products granted four stars and 1-2 OCOP products awarded five stars by 2025. It also targets to export 15-20 OCOP products in the next two years.

To realise these goals, Yên Bái said it would continue to improve the quality of OCOP products, expand the scale and seek new export markets.

Top priority would also be given to restructuring production areas, innovating production organisations, promoting the establishment of cooperatives, and conducting surveys on the current state of production and consumption of OCOP products, thereby improving the quality and value of these products.

In addition, the province would continue to support local businesses and cooperatives to advance trade promotion and digital transformation.

At the same time, Hòa Bình Province said it had exported the first batch of two OCOP products, turmeric starch and honey peach lemon tea, to the UK.

Turmeric starch of Nhưng Vần Artificial Powder Co and honey peach lemon tea from Hà Phong Cooperative were first exported to the UK market in July with a quantity of 60 boxes, or 1,080 jars weighing 200 to 500 grams each.

Both products had fully met the food safety criteria required by the EU and the UK. They had been also packed in standard export cartons and transported to the export market by R.Y.B Joint Stock Co. 

Vice Chairman of the provincial People’s Committee Đinh Công Sứ said that the export of the two OCOP items proved the advantages and potential of the province’s agricultural products to meet consumers’ tastes, even those in selective markets such as the UK. 

He said that in the future, the province’s agricultural sector and localities would continue to strengthen production management and the development of raw material areas.

Local authorities would support food safety certification for raw material areas and help manufacturers improve product quality, packaging design and traceability stamps, and participate in trade promotion programmes.

Departments, agencies and local authorities were the bridge connecting producers with businesses so the parties could regularly meet and exchange information to improve product quality and designs to better meet market requirements, he said.

Local authorities were asked to promptly grasp the problems and difficulties of the parties, and timely support their resolution.

He said local authorities would continue to call on investors and support them in investing and purchasing products.

Nguyễn Minh Tiến, Director of the Trade Promotion Centre for Agriculture under the Ministry of Agriculture and Rural Development, said that with special free trade agreements, including the UKVFTA, Việt Nam’s import tax rates had been greatly reduced, allowing it to compete with other countries when jumping into the UK and EU markets.

However, obtaining certificates and assessments that adhere to market standards and criteria would be our main focus for companies and OCOP goods, he said. 

To take advantage of the UKVFTA and speed up exports of OCOP goods to the market, the Government and agencies needed to support businesses in implementing the evaluation, appraisal and identification processes, especially for our agricultural products and food, to meet the customer needs, regulations, food safety and hygiene standards, and other environmental requirements. 

OCOP products would formally enter the UK market and others once they had satisfied all requirements, and then businesses would adjust and change packaging designs to suit the domestic market.

“The key now is the issue of evaluation and being granted the certificates to ensure the specified standards,” he said. 

Currently, many policies had also been integrated with capital sources to organise the implementation of the OCOP Programme, supporting infrastructure investment and product development.

He added that specific support policies would need to be developed for OCOP products in accordance with the orientation and actual conditions of the locality.

The OCOP programme, which began in Quảng Ninh in 2013, is now being implemented in all cities and provinces throughout Việt Nam.

The programme has helped provinces not only promote production locally and increase their product presence in other cities across the country, but also boost exports.

By August 2023, the number of OCOP products reached 8,478, of which 65.4 per cent were awarded three stars, 33.4 per cent four stars, and 0.2 per cent five stars. OCOP producer status has been granted to 4,351 local facilities.   

HCM City hosts conference on M&A opportunities in Vietnam

Its stable political system, large workforce and high purchasing power make Vietnam an ideal destination for investors seeking M&A opportunities, the Global M&A Partners Conference heard in Ho Chi Minh City on November 13.

The event, organsied by M&A consulting company RECOF Vietnam, was a forum meant to showcase opportunities and facilitate investment in Vietnam.

It featured presentations, discussions and networking sessions for participants to gain insights into the country’s investment landscape, regulatory frameworks and emerging sectors.

Investors had the opportunity to engage in discussions with industry experts, government officials and prominent business leaders.

Ivan Alver, Co-chairman of Global M&A Partners, said Vietnam is a fast growing market in which investors from around the world want to expand market share.

He attributed the interest to the country’s “Stable political system together with a large labour force.”

The country also has a significant population size, impressive economic growth and a burgeoning middle-class consumer base.

Over the years, the country has attracted investments from various Asian countries like Japan, Korea, Singapore, Thailand and China, but there has been a noticeable absence of investments from Europe and North/South America.

The country’s inflation has passed its peak and is showing clear signs of decline.

Domestic demand remains substantial with revenues from retail goods and services rising by 9.4% year-on-year in the first 10 months of 2023.

Interest rates have reduced, exchange rates have stabilised and foreign reserves have risen.

Speaking at the conference, Tran Thi Hai Yen, Director of the Investment Promotion Centre’s southern office, said Vietnam is an attractive investment destination thanks to “stable political and social conditions, high and steady economic growth, competitive productions costs, abundant labour resources and “golden” demographics, promising market, international integration, open policies and competitive incentives, and strategic geographic position.”

According to RECOF, fields that attract M&A deals in the country include fast moving consumer goods, retail, food processing, logistics and infrastructure; and fintech.

“We are excited to host the GMAP Conference and provide a platform for international investors to explore the untapped potential of Vietnam,” Sam Yoshida, CEO of RECOF Vietnam, said.

“Through this conference, we aim to foster stronger partnerships and encourage a diverse range of investments from our esteemed GMAP M&A professionals, ultimately contributing to the growth and development of Vietnam’s economy.”

RECOF Vietnam, a subsidiary of Japan’s RECOF Group, has been in the Vietnamese market for over 12 years.

It is a prominent M&A consulting company that specialises in facilitating cross-border transactions.

VN stock market ready for rebound as negative factors abate: VinaCapital

The negative factors that affected the stock market are in the rear-view mirror or getting there, and the prospects of higher stock prices in the months ahead are supported by rebounding earnings growth, a recovering economy and cheap valuations, according to Michael Kokalari, chief economist at VinaCapital.

In his latest report, he said the VN-Index saw a 16 per cent sell-off between mid-September and end-October despite the fact that the economy is now recovering from its earlier slowdown.

He mentioned three key factors driving the sell-off.

The depreciation of the đồng prompted concerns that the State Bank of Vietnam would significantly tighten monetary policy and prompted some selling by foreign investors, he said.

The announcement of Vingroup’s US$250 million convertible bond, exchangeable into Vinhomes shares, caused its share price to drop by more than 10 per cent, he said.

That drop in turn weighed on investors’ sentiment towards VIC somewhat — VIC and VHM account for about 10 per cent of the VN-Index — and this was the second factor, he said.

Thirdly, margin calls by local securities companies and rumours of a clampdown on certain unofficial sources of margin lending appeared to have prompted an unwinding of highly leveraged speculative positions on October 17, he said.

Besides, the 60-basis-point increase in 10-year US Treasury yields from mid-September to end-October and geopolitical issues also weighed on emerging market stock markets, with the MSCI-EM Index falling 5 per cent in that period, he pointed out.

 The chart shows the VN-Index has lost most of its gains this year. — Source VinaCapital
But the VN-Index significantly underperformed its regional emerging market peers, making it clear that concerns about the SBV and VIC/VHM drove the sell-off, he explained.

Q3 earnings have generally been lacklustre, which also weighed on investor sentiment to some extent, he said.

“We expect EPS earnings growth to rebound to 35 per cent y-o-y in Q4 2023 and 20 per cent in 2024 largely because the sharp slowdown in Việt Nam’s economy earlier this year has clearly ended, evidenced by a rebound in GDP growth from 3.3 per cent y-o-y in Q1 to 4.1 per cent in Q2 and 5.3 per cent in Q3.

“The main factor weighing on Việt Nam’s economy had been a slowdown in exports to the US, but high-frequency economic data for October confirmed our recent assertions that VIệt Nam’s manufacturing activity and exports are now recovering, reinforcing our expectation that GDP growth will rebound to 6.5 per cent next year.”

Despite those clear signs of economic recovery, valuation of the VN-Index on both forward P/E and P/B bases fell to a level seen only twice in the past 10 years, he said.

Furthermore, trading volumes more than halved from $1.3 billion a day before the sell-off to $500 million in late October.

Stock market technicians characterise reduced selling enthusiasm during a sharp market decline as a likely sign that the market will enjoy a robust rebound once the factors causing the sell-off abate, which helps explain the fairly strong performance of the market by the end of the first week of November.

“From our point of view, all of these transient negative factors have already abated or are easing, and the prospects for higher Vietnamese stock prices in the months ahead are supported by rebounding earnings growth, a rebounding economy, and the market’s cheap valuation,” Kokalari said.

Vietnamese cashew exports reach record high in October

Vietnam exported 64,320 tonnes of cashew nuts worth over US$358 million in October, increasing 47.7% in volume and 37.1% in value year on year, according to the Import-Export Department under the Ministry of Industry and Trade.

During the 10-month period, the country raked in US$2.95 billion from exporting approximately 516,870 tonnes of cashew nuts, up 21.8% in volume and up 15.9% in value compared to the same period from last year.

The average cashew export price throughout the reviewed period dropped by 4.8% to US$5,703 per tonne.

Overall, Vietnamese cashew nut exports to all major markets witnessed an increase in volume, although a decline in export value was only recorded in the Australian market.

Specifically, 10-month cashew nut exports to markets such as the United States, the Netherlands, Germany, Thailand, Saudi Arabia, Canada, and the UK inched up by 4.7%, 19.8%, 8.4%, 10.2%, 36.1%, 9.3%, and 7.3%, respectively.

Most notably, exports to China and the United Arab Emirates experienced of a sharp increase of 46.6% and 59.9%, respectively.

Industry insiders say the country’s cashew exports will thrive ahead in the remaining two months of the year thanks to rising demand for cashew nuts during the upcoming holidays.

Vietnam Airlines joins Association of Asia-Pacific Airlines

Vietnam Airlines officially joined the Association of Asia-Pacific Airlines (AAPA) on November 14, acknowledging the national flag carrier’s effort in expanding international cooperation and enhancing its position within the Asia-Pacific region.

Addressing an induction ceremony held in Kuala Lumpur of Malaysia, Subhas Menon, director general of the AAPA, expressed his honour at welcoming Vietnam Airlines to join the AAPA, describing it as a prestigious international carrier which has played an important role in both the development of the aviation industry and the Vietnamese economy.

Vietnam Airlines’ participation in AAPA will significantly enhance the association’s role whilst raising the voice of other airlines in the Asia-Pacific region, he noted.

For his part, Le Hong Ha, general director of Vietnam Airlines, stated that the airlines’ admission into the AAPA would contribute to further improving its operational efficiency in the Asia–Pacific region and at the same time elevating the position of the national flag carrier in the international arena.

A new member of AAPA, Vietnam Airlines can also propose its viewpoints relating to the entire Vietnamese aviation industry on notable issues occurring in the region, he said. 

In particular, the AAPA membership would also contribute to further ramping ties between Vietnam Airlines and leading Asian airlines, thereby bringing additional outstanding products and services to passengers around the world, Ha stressed.

AAPA represents an association of international airlines in the Asia-Pacific region, with its headquarter in Kuala Lumpur of Malaysia and representative offices in Brussels, Belgium, and Washington, D.C., USA.

Currently, airlines in the Asia-Pacific region transport more than one third of global passengers and cargo, making an important contribution to the continued development of the global aviation industry.

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