VIETNAM NEWS HEADLINES FEBRUARY 27/2023

Decreasing input costs as Europe eases sanctions against Russia and increased fertiliser supply will benefit rice export businesses, said Vietcombank Securities Company (VCBS).

A recent report on the rice sector from VCBS showed that the global rice output is estimated at 519.7 million tonnes at the end of the 2021/2022 crop. China, India, and ASEAN are key consumption markets, while India, Viet Nam, and Thailand are the largest rice exporters.

Rice prices witnessed an uptrend in global markets last year as the Indian government’s ban on rice export, floods in Pakistan, and adverse weather in China and the Philippines caused reductions in rice output in these countries.

While depleted inventories in the Philippines will result in higher imports in 2023, rice production will drop due to prolonged droughts in China and India. On the other hand, due to heavy rain in Viet Nam over the past year and gradually neutral weather in the first half of 2023, the country’s rice output is forecast to be stable this year, according to the US Department of Agriculture (USDA).

Therefore, VCBS said that Viet Nam is very likely to benefit from the upward trend in rice prices which is fueled by limited supplies and a shift away from the Indian supply.

Meanwhile, input costs are also expected to go down in 2023 as Europe eases sanctions and welcomes back Russian fertiliser exporters, increases reservations, and aggressively reduces gas consumption.

The availability of fertiliser on a global scale is anticipated to rise, boosting rice industry profit margins.

According to VCBS, the business growth prospects of Loc Troi Group are positive thanks to the promotion of rice exports to the European market, starting with the French market. The merger with Loc Nhan Food also increased the company’s capacity.

With three production facilities under its control, Loc Nhan can now dry more than 12,000 tonnes of rice per day and export 6,000 tonnes of rice a day. Its projected revenue for 2022 was close to VND8 trillion ($336.8 million).

This company also has a wide partner network. In particular, it has signed contracts to supply up to 350,000 tonnes of rice to Vinafood 1 in 2023.

VCBS said that the food segment will be the main growth driver for Loc Troi this year, making up for the decrease in revenue in the pesticide sector. However, it noted that the company still struggles with the plan for issuing private placement bonds and transferring from the current listing exchange – UPCoM – to the Ho Chi Minh Stock Exchange (HoSE).

The securities firm expects that Loc Troi’s net revenue and profit after tax will grow by 28 per cent and 15 per cent year-on-year, respectively, this year to VND14.9 trillion and VND475 billion. The growth for 2024 is projected to advance 1 per cent in revenue but fall by 17 per cent in profit.

Meanwhile, Vietnam National Seeds Group posted a positive growth in business results in 2022, mainly boosted by the rice segment, with a gross profit margin of about 40 per cent.

VCBS believes that the company’s rice and fruit crops will grow well in the next five years.

In the national key product development project, the government plans to increase the rate of high-tech cultivation from 70 per cent to 75 per cent, the rate of using certified varieties from 78 per cent to 90 per cent, the area of ​​fruit trees from 1,067 million ha to 1.2 million ha, and the yield from 10 tonnes/ha to 12 tonnes/ha.

Vietnam National Seeds also has an ambitious business plan to double its size in the next five years, with an annual growth rate of approximately 20 per cent/year.

By doing so, the market share of plant varieties across all fields can rise from 21 per cent to 25 per cent of the entire nation. The market shares will rise to nearly 60 per cent of the national market, particularly for grain corn.

It is forecast that the company’s net revenue and profit after tax will rise by 11 per cent and 25 per cent on-year, respectively, this year, to more than VND2.09 trillion and VND282 billion. 

PouYuen Vietnam provides financial aid for laid-off workers

PouYuen Vietnam will provide VND275 billion in financial aid for employees who will be laid off next month.

Each laid-off employee will be entitled to an amount equal to 0.8 month of salary for each year of service, and the average allowance for each employee will be VND116 million, according to the Vietnam News Agency.

The total amount the company will spend to support the laid-off employees is VND275 billion.

Employees who have worked with the company for over 20 years will be entitled to an allowance of VND300-379 million for each person. Those with the shortest working service will be paid VND12 million per person as the redundancy allowance by the company.

These employees will continue receiving salary, other benefits and social insurance payments until the company terminates their labor contracts.

For the unemployment insurance premiums, the social insurance agencies will pay the laid-off employees in accordance with the law.

PouYuen Vietnam, the Taiwan-invested footwear material manufacturer, is the city’s largest employer, with over 50,500 employees. However, it planned to lay off 3,000 employees next month due to a sharp drop in new orders.

Poland seeks to promote exports of food products to VN
     
Viet Nam and Poland both grow a lot of agricultural products, but they are complementary to each other, offering them the opportunity to tie up, a bilateral business matching heard in HCM City on February 24.

Nguyen Huu Nam, deputy director of the VCCI in HCM City, said: “Poland has high demand for Vietnamese products such as rice, basa fish, shrimp, mango, pineapple, passion fruit, coffee, and cashew, while Poland is capable of supplying Viet Nam with various EU-standard fresh and processed foods and fruits, beef, lamb, pork and others.”

Their trade and investment relations have made solid progress, but are still not commensurate with their traditional friendship and potential, partly due to the lack of information about each other’s markets, he said.

Alexander Nowakowski, second secretary of Economic Affairs at the Polish embassy in Viet Nam, speaking at a press briefing held before the meeting, said after COVID many business delegations have come to each other markets to seek co-operation opportunities.

The EU-Viet Nam Free Trade Agreement has also helped boost trade ties between the two countries.

Poland’s Deputy Minister of Agriculture and Rural Development Lech Kołakowski told the press briefing that his country is one of largest producers of food products such as pork, beef, chicken, fruits and vegetables, and dairy products in Europe, and exports them to more than 200 markets.

The Government of Poland is paying great attention to expanding export portfolios to Viet Nam, he said, adding that his ministry is now working with its Vietnamese counterpart for finalising procedures to allow Polish exporters of beef, goose and duck access to the Southeast Asian country.

He hoped that beef, duck, goose meat from his country would soon be available in Viet Nam.

At a meeting with the Ministry of Agriculture and Rural Development in Ha Noi on February 23, he asked that Viet Nam should also open up Polish barley and wheat, he said.

He said the agricultural products of the two countries do not compete with each other.

Viet Nam could become an important destination for the distribution of Polish agri-food products to the Asian region, and Poland is ready to do the same for Vietnamese products headed Europe, he said.

Executives from 70 Vietnamese food companies and eight Polish companies met and exchanged information to seek business opportunities at the business matching. 

Visa renews partnership with HCM City’s Department of Transport

Visa, the world’s leader in digital payments, has renewed its memorandum of understanding (MoU) with Ho Chi Minh City’s Department of Transport to transform urban mobility across the city.

The partnership aims to develop modern public transit systems with open-loop EMV tap-to-ride technology, allowing riders to use their existing payment cards, and mobile wallets to pay for their transit fare, e-tickets, electric vehicle charging, toll fees, and car-park fees, The Saigon Times has reported.

The first MoU between HCM City’s Department of Transport and Visa saw contactless tap-to-ride payments rolled out in 50 buses in the city. Under the renewed deal, HCMC aims for a 20-fold increase to 1,000 buses.

The two sides will also continue to engage themselves in initiatives and public policies that will enhance smarter mobility across the city.

HCM City is adopting measures to develop a smart city, including the establishment of an interconnected online ticketing system for public transportation. The suggested plan states that by 2025, all bus public services would accept e-tickets.

With the development of Metro Line 1, the use of cashless payment for public transportation in HCM City will be more popular in the future.

Gov’t bodies asked to coordinate in prevention, control of money laundering, terrorist financing

Prime Minister Pham Minh Chinh has signed Decision No. 64/QD-TTg dated February 8, 2023, promulgating the regulations on coordination among ministries, ministerial-level agencies, and governmental agencies in prevention and control of money laundering and terrorist financing.

The regulations stipulate the principles, form, content, and responsibility for coordination and information exchange among ministries, ministerial-level agencies, and governmental agencies in the prevention and combat of money laundering and terrorist financing.

Accordingly, Government bodies must ensure close and effective coordination based on their functions, tasks, and powers. The coordination must be compliant with the guidelines and policies of the Party and the laws, and the international treaties that Vietnam has joined and signed in the field of prevention and control of money laundering and terrorist funding.

The coordination must be carried out regularly and timely, ensuring guidelines are effective. The coordination must also ensure compliance with the law on the protection of State secrets. The government bodies only use information that they are provided for professional work and legal work when eligible.

Hanoi to spend 437 trillion VND on housing development until 2025

Hanoi will spend 437 trillion VND (18.3 billion USD) on housing development in the 2021-2025 period.

Under a housing development plan between 2021 and 2025 which has been approved by the municipal People’s Committee, the city targets the average housing floor area per person to be 29.5 sq.m. The size of dwelling in the urban areas is 31 sq.m per person and 28 sq.m per person in rural areas.

The capital city also plans to develop 0.55 million sq.m of floor areas for resettlement purposes and speed up the renovation of old buildings, especially those deemed dangerous for living.

Regarding commercial projects, the city will strive to complete 109 projects that are capable of finishing in 2021-2025  with 19.4 million sq.m of floor.

Hanoi will continue to remove makeshift houses and raise the permanent housing rate in the city to 90%. 

Of the total investment of 437 trillion VND, 5.8 trillion VND will be used for social housing, resettlement housing projects, and apartments upgrading. The investment will be sourced from the city’s budget.

The city will also mobilise social resources for the development of commercial houses and other real estate projects.

The municipal People’s Committee requested agencies comply with the city’s housing development plans to ensure a balance between housing supply and demand as well as fulfil the set targets.

Legal documents will be reviewed to remove difficulties and problems relating to housing and construction investment management of infrastructure works, it said.

The city will also issue preferential mechanisms and policies to support construction investment for technical and social infrastructure works in social housing and resettlement areas towards civilisation and modernity in order to ensure the quality of life and affordable for local residents.

UK’s joining CPTPP will benefit agreement members: Vietnamese minister

The UK’s participation in the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) will bring about wonderful trade and investment opportunities to each CPTPP member, while affirming the deal as a model of economic cooperation in the region in the 21st century, a Vietnamese official has said.

During his phone talks with Kemi Badenoch, Secretary of State for the Department for Business and Trade of the UK, on February 23, Minister of Industry and Trade Nguyen Hong Dien stressed that Vietnam will continue its coordination with other CPTPP members to soon conclude the negotiations on the UK’s joining the agreement.

For her part, Badenoch said joining the CPTPP is one of her top priorities as the Secretary of State for the Department for Business and Trade of the UK, and thanked Vietnam for its cooperation and support for the process.

Vietnam’s hosting the next round of talks in Phu Quoc late this month will contribute to the accelerating the process, especially in the context of the two countries celebrating the 50th anniversary of the bilateral diplomatic ties this year, she noted.

Badenoch expressed her hoped that CPTPP members and the UK will handle the pending issues during the meeting to end the negotiations in principle.

After the four rounds of talks held online in 2022, the next meeting is scheduled for February 27 in Phu Quoc, off the Mekong Delta province of Kien Giang.

ATM Online app launched

Fintech company ATM Online has officially launched its ATM Online app that offers customers online installment-loans.

The company, which has been in the Vietnamese market for five years, said the app is now available on Android and will be available on iOS by the end of the first quarter of this year.

ATM Online app provides all services such as registering for a loan with simpler procedures. It takes less than two minutes to fill out all information, 15 minutes for new customers to get a loan and five to seven minutes for existing customers to get a loan.

Using the new app, customers are able to easily track their payment and transaction history. E-contracts will be available on the app.

New customers can download the app to have a loan from 2 million VND (80 USD) to 6 million VND (24 USD) within three months with a 14-day grace period. Within 14 days after receiving the disbursement amount, customers have the right to consider their loan. In the event of a change of mind, the customer can completely refund the disbursed amount without paying interest, consulting fee or service fee.

With this programme, ATM Online and its partners want to make sure customers feel comfortable using the service. The 14-day period is considered a grace period to experience the product.

ATM Online is a financial technology company and a member of TM Online with headquarters in Singapore and is in three other markets including Vietnam, the Philippines and Sri Lanka.

In Vietnam, ATM Online was established in October 2017 with the brand name ATM Online. Targeting customers with low incomes, the company is a pioneer in applying technology in consulting and offering small online loans with a value of 2 million VND to 20 million VND (800 USD) for a period of up to eight months.

In more than five years of operation in Vietnam, more than 76% of customers after applying for a first loan have returned to use the service provided by ATM to apply for a second loan. The rate of customers continuing to apply for third and fourth loans is up to 80%.

Samsung – evidence of Vietnam-RoK relation development: official

Investment cooperation of Samsung Group in Vietnam is a clear embodiment of the fine development of the relationship between the Republic of Korea (RoK) and the Southeast Asian country.

The statement was made by Chairman of the Party Central Committee’s Economic Commission Tran Tuan Anh at his reception in Hanoi on February 24 for a working delegation of the Korea-based group led by Choi Joo-ho, President of Samsung Vietnam.

Appreciating the role of Samsung as the RoK’s largest investor in Vietnam, Anh affirmed that its placing of its largest research and development centre in Southeast Asia in Hanoi holds not only strategic significance for Samsung’s investment activities in Vietnam but also great significance for Vietnam’s foreign investment attraction activities, as well as bilateral cooperation in the context that the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), the European Union – Vietnam Free Trade Agreement (EVFTA), and the Regional Comprehensive Economic Partnership (RCEP) have entered into force.

He proposed Samsung promote research – development activities and production and export of key products to the international market, step up cooperation in technology transfer, maintain investment in supporting industry and smart technology, and boost collaboration in research.

Choi thanked Vietnamese agencies for helping Samsung overcome difficulties caused by the COVID-19 pandemic, and creating a favourable environment for businesses’ operations.

Appreciating Vietnam’s socio-economic development orientations and achievements, he affirmed that Samsung will continue accompanying and cooperating closely with the country to contribute more to the bilateral relations.

Hai Phong works towards target of luring 7.5 million visitors in 2023

The northern port city of Hai Phong will strive to welcome 7.5 million visitors in 2023 by strengthening connectivity with domestic and foreign localities in developing tourism products to meet the demand from major markets.

Vu Huy Thuong, Vice Director of the city Department of Tourism, said that in 2023, the city will foster links with localities in the Red River Delta region and those that have had direct air routes with Hai Phong such as Da Nang, Khanh Hoa and Phu Quoc.

The city will promote the development of its strong tourism products such as sports and cruise tourism, while coordinating with airlines and travel firms to exploit the markets of Republic of Korea and Japan, and build exclusive products for these markets.

Vice Chairman of the People’s Committee of Hai Phong Le Khac Nam said that tourism is one of the key economic pillars of the city. In order to turn Do Son and Cat Ba into international tourism centres, the city will popularise the destinations in major domestic and foreign markets, while focusing on designing new, unique and attractive products and enhancing the quality of services.

Nam also pointed to the need for the city to build a strong tourism trademark and a contingent of high-end hotels eco-tourism sites and resorts to lengthen the stays and and increase spending of visitors.

According to the city Department of Tourism, Hai Phong currently has 576 accommodation facilities with 15,763 rooms, including seven five-star, 13 four-star and 21 three-star hotels.

Real estate keen to explore AI tech

Although it is too early to say that AI systems like ChatGPT will become a mainstay in the real estate sector, brokers believe that they could transform the market in the coming years.

If before, real estate agents had to write plenty of descriptions of the house they wanted to sell, now ChatGPT could help them do it in seconds.

Hoang Duc, a private real estate broker in Ho Chi Minh City, wants to advertise for sale a 4-bedroom house in Thu Duc city. With just entering a few keywords, an AI chatbot tool can create an extremely attractive description. Duc said that it would have taken him an hour or more to write such a paragraph himself.

According to Tong Duong, CEO and founder of Homenext Corporation, more people in his area of expertise are wondering if AI will replace humans at some tasks sooner rather than later. “I think, if ChatGPT or a similar platform is officially released in Vietnam, it will become a tool which will impact education, business, and technology,” Duong told VIR.

According to Duong, from a business perspective, people will either quickly adapt and control the new ways of working, or be replaced or eliminated because of their slow process to adapt.

In less than two months, ChatGPT has sparked discussions about the potential to disrupt other industries, from publishing to law. It is made up of large amounts of online data, to answer users’ questions. It can write essays, stories, song lyrics, and research paper summaries, and some CEOs are using it to write emails or do accounting work.

Although not yet used in Vietnam, the system is currently being discussed enthusiastically throughout the real estate market, from investors and professionals to brokers and end-users. ChatGPT is currently free, but owner OpenAI is considering a $42 monthly fee. Real estate broker Duc said he is willing to pay hundreds of US dollars a year for a tool like this.

However, for questions surrounding the Vietnamese real estate market, this chatbot has revealed certain limitations. Although the product from OpenAI does not officially support Vietnamese users, the words and expressions of the chatbot are still relatively easy to understand. For those who only need to find basic information, the data it provides is relatively accurate.

However, for experts or those who want to look up more detailed information, results are deemed unsatisfactory. Data that ChatGPT owns is also limited to 2021 and is therefore not suitable when looking at current market prices.

Although OpenAI has updated calculation capabilities, many users acknowledge that the software incorrectly answers basic calculations.

According to Daniel Vu, a private broker, all advice is for reference only, even if it is advice from an expert.

However, he said that he highly appreciated ChatGPT’s ability to create documents. He thinks that if it is to write documents or contracts, this chatbot could completely perform well. Even the team in the company’s marketing department could use it to support ideas and any content creation.

Water suppliers riding high in 2023

The outlook for water suppliers is optimistic this year as water prices are expected to grow on the back of mounting demand.

Nguyen Ngoc Diep, Chairman of the Vietnam Water Supply and Sewerage Association (VWSA), reveals that water suppliers are categorised into two groups: one comprising companies that run water distribution systems and the other including those that operate water treatment plants.

Companies in the first group fall under the management of provincial authorities, thereby having a monopoly on water distribution. Their performance depends solely on the water loss ratios of their systems and the population density of their localities.

Those companies, according to the securities firm SSI, are forecast to have their revenues increase by 8% this year, supported by a 6% rise in total water consumption and a 3% rise in water prices.

For companies of the second group, VWSA estimates the total capacity of their water treatment plants at about 11.5 million cu.m per day, against the total consumption of around 8.6 million cu.m per day in 2023, up 6% year-by-year.

SSI forecast that water usage would continue to rise by 12% annually in Hanoi between 2025 and 2030 and about 8% in HCM City during the period, adding to water suppliers’ revenues.

Meanwhile, water suppliers are operating more efficiently thanks to regular system upgrades and the installation of advanced water leak detectors. On such a ground, water loss ratios are expected to fall to 16.5% this year, from 17.5% in 2022, raising their profit margin by 1.1%.

SSI also forecast that water prices would climb by around 5% in Hanoi and HCM City, and by 3% in Binh Dinh province this year. However, the prices would remain unchanged in Hai Phong city and Dong Nai province.

Additionally, price rises would be more evident in industrial parks as a result of the growing demand for basic utilities among FDI investors.

The securities firm VCSC shares this view, saying that water consumption would soar in Binh Duong province as several new industrial parks are expected to come into operation between 2022 and 2025.

Two of the industrial parks are the Industrial Park VSIP III at Tan Uyen district and Cay Truong Industrial Park in Bau Bang district, which covers an area of 1,000ha each and are expected to give a huge boost to water prices in the province.

SSI believes that M&A activities in 2022 among water suppliers would add to their operational success this year, allowing them to outperform the market’s average growth.

For instance, Binh Duong Water Environment JSC took over Can Tho Water Supply – Sewerage JSC and Gia Tan Water Plant to expand its water distribution systems to rural areas in the two provinces, significantly improving its market reach.

However, good news goes only as far. SSI is concerned that the enactment of the Law on Water Resources and Environment in 2023 would incur higher costs to water suppliers because the environmental taxes imposed on them will be recalibrated from capacity-based to output-based taxes.

Such a rise in the environmental taxes would, under SSI estimation, reduce their profit margins by between 0.2 to 0.4%. Fortunately, these slight drops in profits would be overwhelmed by the rise in revenues and water prices, resulting in strong positive growth eventually.

According to the Ministry of Construction, Vietnam had 750 water plants in 2022 with an aggregate capacity of 11.2 million c.m per day. On the demand side, household consumption rose by 5% year-by-year and industrial consumption by about 8%, against an annual rise of 3% in water prices.

Domestic sugar under pressure on home turf

Domestic sugar producers have been facing mounting pressure in competition with imported sugar in recent years. 

According to the Vietnam Sugar and Sugarcane Association (VSSA), there has been a surge in supply since the beginning of 2023 while retailers were sitting on a large stockpile left over from the previous year. It has resulted in an excess in supply in the market, which was already saturated and hindered by low demand. 

The VSSA said in a recently released report that the country’s domestic supply last year was estimated at 2.8 million tonnes, significantly higher than demand, which was estimated at 2.1-2.3 million tonnes. The association expected the surplus to last for the foreseeable future as imported sugar continued to trickle in. 

For the long term, however, the association said there is a risk of market disruption should the surplus prevail, which will likely force domestic producers to cut prices, even lower than production costs to compete or reduce buying prices from sugarcane farmers. 

Industry experts said imported sugar often had the upper hand due to lower prices. 

Ninh Thị Hue, a merchant at Tan Hiep Market in the southern city of Bien Hoa, said her customers often prefer imported sugar while buying in large quantities. For example, her quotes for imported sugar were at around 20,000 VND while domestic brands typically were at 24,000-25,000 VND per kilogramme. 

While being sold at a higher price point, there was not much of a difference in quality between imported and domestic brands. This has pushed most consumers, who require large quantities, to go for imported sugar. 

Industry experts have long voiced their concern over a lack of strong domestic brands, as well as an inadequate distribution network to reach consumers. 

A number of domestic producers, however, had taken the initiative to build their own network by collaborating with major retailers and e-commerce platforms. 

He said his firm has started expanding on popular e-commerce platforms such as Lazada, Tiki, Sendo and Shoppee in recent years. 

He said Vietnamese consumers still have a preference for domestic sugar but it’s crucial for producers to introduce new lines of products and bring down prices to compete against imported sugar.

Viet Nam’s banking brands post high growth: Brand Finance

Vietnamese banking brands posted an overall growth of 31.3 percent in brand value, amounting over US$2 billion compared to their 2022 positions.

The above figures are part of the Brand Finance’s Banking 500 2023 report, which ranks the world’s top 500 most valuable and strongest brands in the banking industry.

Almost all the 12 Vietnamese banking brands listed in the rankings improved their positions, with Vietcombank taking the lead among Viet Nam’s banks, ranking 137th. 

It was followed by Agribank at 159th and BIDV at 161st while VIB made its first ranking appearance in the list (492nd).

Brand Finance’s research indicated that recovered revenue and revenue forecasts were important drivers of the impressive growth. 

Overall, Vietnamese banking brands recorded improved business performances in 2022, underpinned by the nation’s strong credit growth of nearly 13 percent, as well as remarkable economic recovery that is reflected by a GDP growth of 8 percent–its fastest pace in 25 years.

Managing director of the Asia Pacific of Brand Finance Alex Haigh commented that Vietnamese banking brands are rapidly adopting digital banking as a primary business and becoming leaders in this space regionally. 

For instance, Techcombank (brand value up 46.7 percent to US$1.4 billion), the second-fastest growing Vietnamese banking brand in our study, is embracing digital banking, which has resulted in significant growth of its retail banking unit, he noted. 

He expressed his belief that Viet Nam’s banks are ready for consolidation in the next few years–given that the nation has many brands relative to its scale–to leverage efficiencies and bolster their strength. 

If this proceeds, it is important that these brands play a central role in the process and that the resulting combined entities identify the individual brands that will deliver maximum value, he added.

Enterprises accelerate investment to anticipate new opportunities

As 2023 is forecast to be a difficult year driven by increasing inflation and economic recession at the global level, enterprises in Vietnam have actively built scenarios to adapt to market recovery and anticipate new business opportunities.

According to the General Statistics Office (GSO), Vietnam attracted foreign direct investment (FDI) worth 1.69 billion USD as of January 20 this year, down 19.8% annually.

However, in the month, local authorities granted licences for 153 new FDI projects worth 1.2 billion USD, up 48.5% in number and 3.1 times in value.

This is considered a new signal that opens up more chances for businesses in 2023.

Duong Nguyen Thanh, deputy director of Haast Industries Vietnam Co., Ltd, said that the number of new electronics orders in the world has declined sharply since late 2022, mainly in the consumer electronics sector.

The decrease is affecting Haast’s operation and output. However, the factory has taken different measures to ensure flexible adaptation such as strengthening connectivity with existing partners, seeking new customers to maximise production capacity, and increasing the governance capacity and human resources quality to meet high requirements of choosy markets.

Trinh Van Quang, Vina CPK-Project Development Manager, said that his company is investing in building Ba Thiet II industrial park in Binh Xuyen district in the northern province of Vinh Phuc with an area of 308 hectares.

At present, the occupancy rate at the cleared area reaches 100% with many large enterprises from the Republic of Korea, Japan, the US, Sweden, and Taiwan (China), which operate mainly in high-tech and environmentally-friendly production and business industries.

Brand positioning, proper planning needed to capitilise on urban tourism potential
     
Urban tourism has the potential to contribute to the socio-economic development of a locality significantly but to capitalise on this potential, experts have identified strong brand positioning, proper planning, and development as key areas to focus on.

In Viet Nam, the urbanisation rate has reached nearly 40 per cent, with over 860 urban areas.

Cities are the driving force of socio-economic development, facilitating economic restructuring towards industrialisation and modernisation.

However, not all cities are tourist destinations, even though most have outstanding tourism potential.

Viet Nam has numerous urban areas, especially coastal cities or key tourist destinations like HCM City, Da Nang, Nha Trang, Phan Thiet, Vung Tau and Phu Quoc.

To improve tourism competitiveness and attractiveness, cities with strengths in tourism development must create and position a brand. According to Nguyen Thu Hanh, President of the Science Union for Sustainable Tourism Development, brand positioning is one of the important strategies for cities with a focus on tourism.

Vung Tau City, for example, is rich in advantages such as convenient traffic locations, seaports, a large oil and gas centre, a four-season climate, and beautiful beaches.

This urban area also converges different cultures through religious monuments, churches, communal houses, and pagodas.

Hanh describes Vung Tau as a “smart, modern and dynamic coastal city” with a system of industrial parks, high-tech zones, event centres, festivals, entertainment, and shopping operating on a digital platform.

Phu Quoc, located on the southwest coast, is considered a centre of eco-tourism and high-class beach resorts. With around 150km of coastline, the length of beaches suitable for tourism development is about 50km.

Sustainable planning and development

In recent years, experts have warned that coastal cities are at risk of sea level rise and unusual natural disasters due to climate change.

In response, architects Nguyen Viet Huy and Do Dinh Trong, from the Ha Noi University of Civil Engineering, have proposed measures to minimise the harmful effects of natural disasters and develop stable technical and economic-tourism infrastructure systems that can adapt to climate change.

To achieve this, it is necessary to think differently and have a more open and positive view of climate change. Building construction plans should be based on integrated planning that promotes the socio-natural potential of the region while adapting to climate change.

Additionally, rational exploitation and strengthening solutions are essential to manage and use freshwater resources and protect coastal lands, sea mouths, and estuaries.

Associate Professor Pham Trung Luong, Vice President of the Viet Nam Association for the Protection of Marine Resources and Environment and a member of the National Planning Advisory Group, emphasises the importance of promoting sustainable marine tourism urban development.

To achieve this, he recommends reviewing and adjusting the planning of existing sea tourism urban areas, especially for coastal spaces.

Separate services, shopping, and entertainment areas should be planned with little impact on the lives of residents, ensuring that tourism activities can take place 24/7, thereby promoting the development of the urban night economy, in which tourism will be the core. 

New way out for medical investment

While the problems related to the legal framework about joint venture and private investment engagement to be solved in the newly-adopted amended Law on Medical Examination and Treatment, bringing about new opportunities for businesses and health facilities, the enforcement will be the answer for long-year expectations.

The Presidential Office on February 3 announced the promulgation of the amended law, adopted by the National Assembly at its extraordinary session. One of the new key changes in the law is the legalisation of joint venture and private investment engagement in hospitals, making it the first-time adjustment in the field. This is a long-waited solution among not only hospitals, but also businesses because a lack of fully legal framework for this activity has caused many difficulties for them.

Dr. Nguyen Trong Khoa, deputy head of the Ministry of Health’s (MoH) Department of Medical Examination and Treatment said, “We have not had a fully legal framework for private investment engagement in medical devices and machines. We have not taken into account depreciation of equipment during the building of services fees, so machines at hospitals have been under the placement model, or borrowed from contractors winning chemical bids, thus causing many difficulties for them.”

The doctor elaborated that the amended law makes a change in the structure of service costs that will include four factors: direct cost of medicines and bioproducts, staff salaries, management costs, and depreciation of equipment.

State-owned hospitals and businesses are waiting for the changes to be fully come into effect from early 2024 to get out of the impasse.

Cho Ray Hospital in Ho Chi Minh City, one of top state-owned hospitals in Vietnam having over 3,200 sickbeds caring for thousands of outpatients each day now has most of its testing system being under the placement model, or borrowed from winning chemical contractors.

Cho Ray and Le Thuy are among those facing a lack of legal frameworks in private investment engagement activities in such devices. According to statistics from Vietnam Social Security, in state-owned health facilities in 45 cities and provinces, more than 2,000 medical devices being used are borrowed or those under the placement model of winning contractors of chemicals and bioproducts.

Members of the European Chamber of Commerce’s (EuroCham) Healthcare Forum and its sector committees are interested in public-private partnerships (PPPs), including machine installation models in hospitals. Obviously, the new law is important to them because Vietnam’s medical devices and diagnostics market reports double-digit annual growth, with 90 per cent made up of imports.

EuroCham representing the voice of multinational corporations like B. Braun, Roche, Abbott and others many times proposed the government to build a more appropriate legal framework that will drive PPPs to their potential.

Now there will be one year ahead for authorised agencies to work on documents guiding the implementation of the law and soon issue them to ensure successful enforcement from early 2024.

The MoH expects that a circular on customised medical examination and treatment cost will be issued in the first or second quarter of this year, adding the third factor – management cost to the medical service cost – once it gets a green light from the government.

Dr. Khoa of the Department of Medical Examination and Treatment said the next step is for the MoH and relevant agencies to compile guiding documents. The adjustment will be made under roadmap, especially management cost, and depreciation of medical equipment from now to 2025.

Mekong delta mobilises to support miscalculating king orange farmers with a glut
     
Localities in the Cuu Long (Mekong) Delta are joining hands to consume the huge volumes of unsold king oranges grown by farmers in Vinh Long and Hau Giang provinces amid oversupply.

Nguyen Van Tam, head of the Sub-Department of Agriculture and Rural Development of Vinh Long’s Tra On District, said before Tet (Lunar New Year) the oranges fetched VND8,000-10,000 per kilogramme, but farmers waited to sell hoping for higher prices later as happened in previous years.

But the price has not increased after Tet while the harvest has been huge this year, causing prices to drop further and sharply, he said.

According to the Vinh Long Province Farmers Association, traders buy 200 tonnes of king oranges from farmers every day at VND1,500-4,000 per kilogramme depending on size, with overripe ones only selling for VND1,500-2,000. At such low prices, farmers face heavy losses, it said.

Nguyen Van Liem, deputy director of the Vinh Long Department of Agriculture and Rural Development, said an estimated 50,000 tonnes need to be sold.

Local authorities and the Farmers Association have managed to help farmers sell some of their stocks, including on e-commerce platforms, he said.

The province has also called for support for farmers, he said.

GO! and Big C supermarket chains rolled out a programme called “Accompanying farmers” on February 15 and hope to buy around 25 tonnes of king oranges at VND10,000 a kilogramme directly from farmers and co-operatives.

The supermarket chain is selling the oranges at no-profit prices of VND10,900 in the south and VND12,900 in the central and Central Highlands regions, she said.

District 5 in HCM City is also carrying out a programme to support the orange farmers, with local individuals and businesses ordering nine tonnes of the fruit.

The Student Support Centre of Can Tho is coordinating with the city Labour Cultural House to support farmers. They will buy oranges directly from orchards at VND4,000-4,500, and hope to consume around 14 tonnes by February 19.

Vietnamese enterprises ready for digital transformation

The impacts of COVID-19 and the complexity of the global situation have boosted Vietnamese enterprises in many industries, and they will continue to pursue digital transformation in 2022.

Orientation and strategy, people and organisation, and customer experience and omnichannel are the three aspects with the best digital transformation readiness, according to the Annual Report on Enterprise Digital Transformation 2022: “The readiness of Vietnamese enterprises for digital transformation.”

The report also showed that there are eight key technologies – mobile internet, cloud computing, big data, artificial intelligence, fintech, IoT, advanced robotics, and additive manufacturing – that are likely to help Vietnamese businesses transform.

In 2022, the number of surveyed businesses that are conducting digital transformation showed signs of increasing, and many businesses have also spent more or less on this activity after learning, researching, and consulting information in 2021. This change is mainly due to rising awareness, skills, and experience related to the community of leaders and human resources of the enterprise, the report stated.

According to the report, businesses have made a breakthrough in applying digital technologies in marketing, distribution, and omnichannel to enhance customer experience and care.

The readiness of businesses is also positive, with 12 out of the 16 surveyed industries scoring above the average rate of 2.5.

This means that most of the surveyed industries have been developing digitalisation goals in strategic planning, and creating management positions or separating digital transformation projects.

Industries with the highest rates of readiness in digital transformation are all those whose activities are closely related to production, goods transportation, and services, such as agriculture, forestry, and fishery; the manufacturing and processing industry; wholesale and retail, repair of motor vehicles; accommodation and catering services; or construction.

Agriculture, forestry, and fisheries have a readiness of 3, wholesale and retail have a readiness of 2.9, and manufacturing and processing have a readiness of 2.8, the report showed.

The report, which is the result of a survey of 1,000 enterprises from various fields and industries across the country, was released on Thursday by the Enterprises Development Agency, which is part of the Ministry of Planning and Investment, and the US Agency for International Development (USAID).

Fruits face slow consumption due to excess of supply over demand

The prices of oranges and some fruits in the Southern and the Northern regions have dropped dramatically while the demand for purchase from merchants and consumption remains low.

The information was shared by Nguyen Nhu Cuong, Director of the Department of Crop Production under the Ministry of Agriculture and Rural Development after the article of “Oranges and pineapples are ripe amid sluggish consumption” published by Sai Gon Giai Phong (SGGP) Newspaper on February 18.

In recent years, the area of growing oranges has increased sharply although authorities have issued warning about the risk of disrupting the planning and excess of supply over demand.

Various kinds of oranges in Vinh Long, Ha Giang and Tuyen Quang provinces are mainly consumed in the domestic market, mostly in the Southern region in these days of scorching weather.

Currently, oranges cannot be exported due to complicated procedures so farmers mainly expect traders to buy the products for domestic consumption, added Mr. Nguyen Nhu Cuong.

Director of the Department of Crop Production Nguyen Nhu Cuong also mentioned the solutions regarding the issue. Notably, it is important to adjust the planning of citrus plants.

For a long time, the media and social networks have only focused on providing information about how farmers have earned benefits from growing oranges without sharing the difficulties and limitations of this plant. Farmers have long concentrated on growing oranges and citrus fruit crops.

In many localities, the actual area for growing oranges and citrus plants has exceeded the planning. For example, the planning of growing oranges in the Mekong Delta province of Vinh Long has been expanded from 12,000 hectares to 17,000 hectares while the capital city of Hanoi has developed from 2,000 hectares of citrus plants to 10,000 hectares accounting for 50 percent of the total area of fruit trees.

Currently, there are 125,000 hectares of growing fruit trees in the whole Northern region.

Vietnam to add value to vegetable and fruit

Capital shortage and backward technology have been blamed for the underdevelopment of vegetable and fruit processing in Vietnam.

The Vietnam Fruit Association has called on the Government and concerned ministries and sectors to have policies to encourage investment and support the development of fruit and vegetable processing with capital and technology transfer.

Secretary General of the association Dang Phuc Nguyen said it is necessary to strengthen the control of growing areas, the quality of materials and seedlings, and the course of production and processing to ensure product quality.

The Ministry of Agriculture and Rural Development will soon submit to the Government mechanisms and policies improving the connection of the production, processing, and consumption stages within the framework of value chains and encourage businesses with the financial and technological potential to lead this process.

Companies and cooperatives are expected to shift production towards thorough processing, thereby increasing the proportion of high-value-added products.

Vietnam produces some 31 million tons of vegetables and fruits annually, but only 1.1 million tons are processed with modern technology in 150 factories across the country.

About 7,500 micro-factories or households process about another 3.4 million tons, but their quality does not meet export requirements.

According to the Ministry of Agriculture and Rural Development, up to 76% of vegetables and fruits are exported fresh or semi-processed, while the world’s consumers are leaning towards processed ones.

It is the reason why Vietnam’s fruit and vegetable export volume only reached US$3.34 billion in 2022, including more than US$1 billion in processed products.

Chairman of the Board of Directors cum Director-general of Dong Giao Foodstuff Export JSC., Dinh Cao Khue said processing the fruit and vegetable will help control prices and increase product value by 3 – 4 times compared to fresh items.

However, he said it requires significant investments, while most companies in the sector are small-scale (80% of facilities have less than VND2 billion).

According to Chairman of the Board of Directors of Nafoods JSC., Nguyen Manh Hung, the Ministry of Agriculture and Rural Development and the Ministry of Industry and Trade plan to work out policies on preferential loans for enterprises in the sector to invest in cold storage, technological innovation, and development of vegetable and fruit processing factories.

Circular economy gains momentum back home
     
The circular economy has begun to gain traction in Viet Nam for its potential to optimise resource use, stabilise supply, and offer competitive advantage opportunities for businesses.

Pham Minh Thien, general director of Thanh Binh Company Ltd, revealed that his company’s production process had been designed so that waste in one stage becomes fodder for another.

He said his company had bought land in the Tan Hong region to grow a particular strain of rice, which can easily do without fertilisers, pesticides, and crop care. As such, the strain causes a minimal impact on the environment.

At harvest time, its straw is reused as a medium to grow mushrooms whereas its rice husk as a biomass fuel for export. Its rice bran is processed to produce bran oil and animal feed. The residue from this oil-making process is reclaimed to feed poultry.

The circular economy embraced by Thanh Binh Company Ltd has proved to be highly beneficial to its stakeholders, not only economically but also environmentally.

As a result of the sustainable farming practices, the soil cultivated by the company, which was contaminated previously by chemical substances, has been gradually improving in quality.

Nestle Viet Nam Company Ltd is another name that has managed to incorporate the circular economy into its production.

The company has put coffee grounds to good use by turning them into biomass, which is used to fuel its boilers. The ash left after the combustion will serve as a raw material for the production of bricks.

Coffee sludge is processed into microbial fertilisers to enrich the soil, whereas the steam from the boilers goes to the cooling towers for further reuse. Even the wastewater is not wasted: it will be recycled into A-standard clean water to close the production loop.

Tran Thi Hong Minh, head of the Central Institute for Economic Management, asserted that the circular economy would serve businesses well by enabling the efficient use of resources and facilitating their deeper involvement in the global supply chains.

She said the circular economy is no longer an option but an imperative for businesses because global customers have become more eco-conscious and willing to shift toward a more sustainable buying behaviour.

Vu Kim Hanh, chairman of the Association of Vietnamese High-quality Products, opined that the Government needs to take active steps to lay the groundwork for a broad-based transition to the circular economy.

The to-do list should comprise a long-term scheme for the transition and the entry into force of a sufficient number of legal documents that regulate the notion.

She also said the feasibility of the circular economy in the country would hinge on technological, institutional, infrastructural, and human resources factors.

Nguyen The Chinh, director of the Environmental Economic Policy Institute, underlined several obstacles in the way of businesses trying to embrace the transition.

The first obstacle involves advanced technology, which is not always readily accessible to a large number of businesses. Without advanced technology at their disposal, many businesses get stuck in their traditional linear way of production.

The second obstacle centres around the rigidity of domestic consumption habits. For instance, a wide range of consumers back home keep using plastic bags for their convenience and show a reluctance to shift gears, posing a setback for recyclable bags. 

Uplift in processed fruit and veg sector

Processed fruit and vegetables are making up a growing percentage of fruit and vegetable exports, leading to potential for increased investment in the sector.

According to the Agency of Foreign Trade (Ministry of Industry and Trade), exports from Vietnam’s fruit and vegetable sector in 2022 were seriously impacted by China’s pandemic strategy and totalled just $3.34 billion, a decrease of over 6 per cent on-year. According to analysts, however, the structure of Vietnam’s fruit and vegetable exports has undergone favourable adjustments, with the share of processed goods growing substantially.

The $3.34 billion in exports comprised approximately $2.3 billion of fresh and frozen products and just over $1 billion in processed fruit and vegetables, surpassing that mark for the very first time. This has provided impetus to invest in strategically designed and certified processing factories and growing areas in order to quickly achieve the $2 billion export goal.

The growth rate of processed fruits and vegetables may be in part due to the increasing number of Vietnamese goods that are satisfying the stringent standards of the US, European Union, Japanese, and Korean markets. It is anticipated that this pattern will continue in the future as more Vietnamese businesses invest in fruit and vegetable processing factories.

Investments in deep processing increase the value of agricultural goods in Vietnam, but this is also a vulnerability of the agricultural sector. The Ministry of Agriculture and Rural Development (MARD) estimates that Vietnam produces over 30 million metric tonnes (MT) of fruits and vegetables annually, but less than 20 per cent gets processed.

According to the MARD, the nation as a whole has 153 fruit and vegetable processing facilities that handle over 30 million MT of vegetable products annually. Therefore, it is necessary to boost investment in processing plants and integrate them into production chains to keep up with global market sentiment.

This means that more than 70 per cent of exported fruits and vegetables are still in the raw or preliminary preservation stage. Although the nutritional requirements of people throughout the globe, and in Europe in particular, are shifting towards processed fruit and vegetables.

According to the Netherlands’ Center for the Promotion of Imports from Developing Countries, European imports of processed fruit and vegetables accounted for 45 per cent of worldwide imports in 2020. This explains why Vietnam’s fruit and vegetable exports only make up a small fraction of its total export revenue.

As a promising indicator of future growth, an increasing number of significant companies have committed hundreds of millions of dollars to construct processing facilities with contemporary technology. These factories guarantee that items produced for overseas markets fulfil their stringent requirements.

In particular, it is anticipated that Dong Giao Foodstuff’s Doveco Son La Factory, with a capacity of 52,000 MT of goods per year, will be put into operation later this quarter, contributing to an increase in revenue compared to the more than $100 million attained in 2022.

Nonetheless, investment in a modern processing facility and cutting-edge equipment must be paired with a variety of other elements. It is not rare for manufacturing plants to be operating at only 60 per cent capacity, either because the plant is not conveniently located near a sufficient raw material source or because the raw materials do not adhere to requirements.

Nguyen Manh Hung, general director of Nafoods Group, said, “If raw materials are plentiful, that’s great for the processing facility, but the quality of commodities may not be consistent, or high levels of pesticide residuals remain in the product. This results in post-processed commodities that can only be supplied to low-value markets”.

Hung stated that these deficiencies must be remedied swiftly in order to advance towards a more sophisticated manufacturing and export business that generates greater actual value.

According to European Statistics, the global market for processed fruit and vegetables is expected to reach $392 billion by 2025. Vietnam mostly exports fresh fruit to the Chinese market. Exports to the markets of the European Union, the United States, Japan, and Australia are still restricted since the preservation stage has not yet satisfied their standards and the expense of air transport makes it difficult to compete.

Can Tho seeks to build new bridge to Dong Thap

The Mekong Delta city of Can Tho has proposed building O Mon bridge over the Hau river to connect the city with Dong Thap province.

According to a document signed by Vice Chairman of the municipal People’s Committee Nguyen Ngoc He on February 20 sent to the Ministries of Planning-Investment and Finance, the proposed bridge will have a total length of 5.4km including the access roads, starting at the intersection with National Highway 54 in Dong Thap province and ending at the interchange with provincial road 920 in Can Tho City’s O Mon district.

The project will require nearly 9.2 trillion VND in investment (374 million USD), with over 7.2 trillion VND to be sourced from Japan’s official development assistance loans and the remainder from the city’s budget and other sources.

The province also proposed executing the project in the 2023-2030 period.

O Mon bridge, coupled with a road connecting O Mon district and Thoi Lai district in Can Tho with Giong Rieng district in Kien Giang province and a route linking O Mon and Sa Dec in Dong Thap, will form a regional route and boost socio-economic development in the Mekong Delta region, according to the municipal government.

Can Tho has two bridges over the Hau river. Can Tho bridge connects the city with Vinh Long while Vam Cong bridge links the city with Dong Thap.

However, the city government said that a distance of 50km between the two bridges is not convenient for regional connectivity. Besides, the longer travel time for vehicles increases greenhouse gas emissions, leading to climate change.

As such, the O Mon bridge project will create a safe and effective route, reducing environmental pollution and traffic accidents, the Can Tho government said in the document sent to the ministries.

Swiss daily: Vietnam becomes a new destination for foreign companies

Swiss daily Tribune de Gèneve has recently published an article hailing Vietnam as a new destination for foreign companies.

The article said Vietnam recorded the strongest economic growth in Asia in 2022 following a period of closure due to the COVID-19 pandemic. Switzerland is well-positioned to leverage advantages brought about by the Vietnamese economy. Two-way trade between Switzerland and Vietnam hit about 3.2 billion USD in 2020.

Hundreds of Swiss companies have been among the most important European investors present in Vietnam. In particular, the Swiss industrial equipment sector should fully tap the growing trend of “Made in Vietnam” products.

According to the article, the industrial boom in Vietnam could be clearly felt when entering the Van Trung Industrial Park, which is an hour’s drive to the north of Hanoi. Early in the morning, many people were lining up in front of recruitment office of Foxconn – the most famous subcontractor for Apple. In front of a large dormitory for workers, there is also a large poster with a notice that Foxconn is recruiting 10,000 employees with favourable working conditions.

Foxconn is not the only factory hiring a large number of workers. Not far away, LuxShare, a competitor, is announcing that it will recruit 13,000 new employees. An automobile supplier is seeking 700 eligible positions while a solar panel manufacturer is announcing the recruitment of 6,000 positions.

Large industrial zones are being built and taken over by advanced electronics manufacturers, said the article.

The Republic of Korea’s electronics conglomerate Samsung inaugurated a brand new research and development centre in Hanoi in December 2022. It also plans to invest around 3.2 billion USD to produce semiconductors in a neighbouring province. The US’s semiconductor equipment company Amkor Technology will soon open a factory near the airport. And Pegatron of Taiwan (China) that produces components for electric carmaker Tesla and assembles iPhones, has recently begun operations near Ha Long Bay.

The article attributed Vietnam’s above-said attraction to various factors such as a stable investment environment, 15 free trade agreements, including one signed in 2020 with the European Union (EU), helping Vietnam become a hub of industrial production at affordable costs.

Vietnam is being rated by foreign investors as a top priority for investment. Therefore, the country will continue to witness the emergence of super factories in the future, it concluded.

Vietjet offers 1 million more zero-dong tickets to fly to Australia

Low-cost airline Vietjet is offering promotional tickets priced from 0 VND every Monday, Tuesday, Wednesday at www.vietjetair.com and Vietjet Air mobile apps, applying to all routes connecting Vietnam and Australia (Sydney, Melbourne) from now until October 25, 2023.

The flight time is from April 8 to October 28, for all routes connecting Vietnam and Australia. Moreover, passengers can enjoy free payment fees when booking and paying via Vietjet SkyClub.

Especially, Vietjet offers 50% discount for passengers to experience SkyBoss/SkyBoss Business tickets from now until June 8, with many priorities, including the luxury lounge, private cabins, the cocktail bar, flat bed seats, free carry-on luggage of up to 20 kgs and 60 kgs of checked baggage, to guarantee comfort and priorities throughout the journey..

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

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