American debt relief

Vietnamese Americans hope better time ahead with the new US government

January 23, 2021 by hanoitimes.vn

The Hanoitimes – Vietnamese Americans are relieved that after a tumultuous presidential period, the US is entering a new phase.

In Washington and Southern California, Vietnamese supporters of the US President Joe Biden breathed sigh of relief when he promised to become president for all Americans. No violence cases broke out on this special day throughout the US.

“Anti-American” factors are under control

In Washington DC, a day after the power transition with unprecedented turmoil in the American political history, the calm atmosphere prevails. Mr. Dao from Pennsylvania who witnessed the inauguration of the US president said: “A historic moment that I will never forget .”

Mr. Dao from Pennsylvania. Photo: Gia Tuan

When asked what impressed him the most in this presidential election and inauguration on January 20, he said: “The first woman of color becomes vice president of the US”. And what he most wished for after the new president took office: “No more people die due to Covid-19 because they are required to wear a face mask that the previous president didn’t do.”

Mr. Scott Nguyen from Santa Ana said: “I was nervous during the ceremony. When the 46th president was sworn in, I felt relieved. Obviously, “anti-American” factors like what happened on January 6 have been effectively contained by the authorities.”

Although there are no parades or gatherings of hundred thousand people around the National Mall or a series of celebrations as in other presidential inaugurations, but hundreds of thousands still exploded with joy hoping for a truly great America to be back.

Many people raised doubts about the new administration could succeed in deal with current challenges. Nearly 25 million Americans have been infected with the Covid-19 pandemic and more than 400,000 others died. With the economy in deep recession, high public debt and unemployment, stigma, division and hatred, many Vietnamese Americans think “it takes time”.

“Be mindful that the new president has a four-year challenge. If he fails to fulfill his commitments, voters will oust him in the next election,” Scott Nguyen said.

Fighting together the pandemic

The reason why this presidential election drew large turnout from Vietnamese Americans in Little Sai Gon, Southern California, was their desire for a better society.

“We need a president who works for the Americans and upholds American values. A president work to overcome the prevailing political polarization,” Ms. Nguyen Mai Khanh, from San Jose said.

A Vietnamese American child in the US. Photo: Gia Tuan

According to Seattle-based pharmacist Samantha Lin, the 46th president could set optimistic directions for the US to get out of the gloomy situation caused by Covid-19. The previous administration refused to make masking up in public transport compelling, leaving it on the hand of private companies, despite recommendations from the Center for Disease Control and Prevention on using face masks.

Right after the US president Biden was sworn in, on January 21, he signed an order requiring people to wear face masks on planes, trains, buses and at airports. “This is the positive move of the new government”, said Samantha Lin.

“Americans, no matter they are Democrats or Republicans, should gather around the new administration to combat the pandemic. Let’s make the US the world’s leading superpower in terms of economy instead of the number of dead people from Covid 19,” Ms. Lin said.

The joy and the spirit for a solidarity among the Vietnamese Americans responded to Joe Biden campaign’s theme.

Mr. Hien Le from San Francisco said that Americans should give the new American administration a chance and put their faith and hope into the next four years. “I am relieved that after so much turmoil, America is entering a new era,” he said.

How can Asia avoid fallout if COVID-19 triggers a debt crunch?

March 20, 2020 by hanoitimes.vn

The Hanoitimes – How policy makers respond now will be crucial in avoiding this worst-case scenario, and deciding whether the recovery path will be V, U, or L-shaped.

Asia’s economies have generally maintained sound macroeconomic policies that can help the region withstand this latest challenge and emerge even stronger.

Illustrative photo

The coronavirus (COVID-19) pandemic raises the specter of another global debt crisis. The global economy is deep in debt—to the tune of an estimated $250 trillion in 2019—after a decade of historically low interest rates. Global debt-to-GDP hit a record high of over 320%, according to the Institute of International Finance.

Developing countries are often vulnerable to a global credit crunch. The external debt to GDP ratio for developing Asia was 33% in 2018, only slightly lower than 34% during the global financial crisis. Though macroeconomic conditions in Asia are generally sound, the previous crisis made it clear that developing Asia is far from immune to a financial crisis originating in advanced economies. First, G20 policy makers should immediately coordinate actions to provide timely and effective policy support to avoid market panic while taking aggressive, preemptive measures to contain the spread of the virus. Second, coordinated efforts within and across borders are needed to manage business continuity, shore up confidence, prevent massive defaults through tax relief and emergency loans, and provide adequate liquidity in the financial systems. Third, regulators should carefully monitor and guide orderly reduction of undue exposures to leveraged loans and collateralized loan obligations among banks and non-bank investors, particularly those that are systemically important. * Cyn-Young Park is Director for Regional Cooperation and Integration, Economic Research and Regional Cooperation Department

How strong is India’s resilience in global health crisis?

August 10, 2020 by hanoitimes.vn

The Hanoitimes – India is believed to rise stronger after the crisis unleashed by the coronavirus pandemic is over.

The pandemic has left a broad impact on India’s economy due to lockdown, restrictions, and the economic slowdown that followed, prompting the government to act to turn crisis into opportunities.

Prime Minister Narendra Modi. Photo: PTI

On May 11, Prime Minister Narendra Modi announced the Atmanirbhar Bharat (“Self-reliant India”) economic stimulus package worth US$300 billion, equivalent to 10% of India’s GDP, Ambassador of India to Vietnam Pranay Verma said at a talk in Hanoi late July.

The self-reliance package stands firm on five pillars namely Economy, Infrastructure, Technology-driven systems, Demand, and Demography.

With a long-term focus, the first tranche of measures focuses on reviving businesses through longer-term soft-lending and debt and tax relief.

The second tranche of measures focusing on migrants, small traders, and small farmers includes supplying free food grains to migrants for two months, concessional loans to small farmers, and affordable housing for migrants and the urban poor.

Boosting resilience

Atmanirbhar Bharat (“Self-reliant India”). Photo: Tomorrowmakers

On June 8, after 10 weeks of lockdown, India started a phased reopening of its economy. With Unlock 1.0, the country is trying to balance attempts to revive the economy while dealing with increasing caseloads and new hot spots.

Addressing the 45th US-India Business Council (USIBC)’s “India Ideas Summit” on July 22, Prime Minister Narendra Modi said “Global economic resilience can be achieved by stronger domestic economic capacities. This means improved domestic capacity for manufacturing, restoring the health of the financial system and diversification of international trade.”

Prime Minister talked about the need to place the poor and the vulnerable at the core of growth agenda. He underlined that ‘Ease of Living’ is as important as ‘Ease of Business’.

He said that the pandemic has reminded us of the importance of resilience of the global economy against external shocks, which can be achieved by stronger domestic economic capacities. He emphasized that India is contributing towards a prosperous and resilient world through the clarion call of an ‘Aatmanirbhar Bharat’.

India offers a perfect combination of openness, opportunities and options, the PM said, adding that in the last six years, efforts have been undertaken to make India’s economy more open and reform oriented, resulting in better competitiveness, enhanced transparency, expanded digitization, greater innovation, and more policy stability.

Meanwhile, Ambassador Pranay Verma said resilience not only enables India to move forward but also shares values to the world to help many others benefit from the stronger connectivity and cooperation.

Supporting livelihoods

Wall paintings to spread awareness on wearing masks decorate the walls of Vijayawada. Photo: K.V.S. Giri

India’s pandemic preparedness and its policy response has been varied across the states. However, both the central and state governments are constitutionally empowered to legislate various activities in response to disease outbreaks.

On March 19, the Covid-19 Economic Response Task Force was set up under India’s finance minister to tackle the economic challenges resulting from the pandemic.

On March 23, the government introduced the Pradhan Mantri Garib Kalyan Yojana (PMGKY) or Prime Minister’s Poor Welfare Food Program, the world’s largest food security project. It’s a set of relief measures, including an amount of US$23 billion, to mitigate economic distress faced by vulnerable and poor people.

This program would benefit 800 million poor people in India.

This program provides free essential food items, cooking gas, direct cash transfers to the poor, and insurance coverage to Covid-19 health workers.

In addition, tax relief and debt relief has been provided to small and medium enterprises in statutory and regulatory compliance matters related to income tax, goods and service tax, customs, financial services, and corporate affairs.

Conclusion

International analysts said the crisis unleashed by the coronavirus pandemic will almost definitely create a new global order, and India could emerge stronger.

For the rest of the world, India’s promise is huge: its historical civilization, geo-strategic location, huge labor force of 500 million people, the fourth largest military in the world, and a formidable consumer market.

There are many arguing that India will bounce back once the government eases the drastic lockdown it imposed as a response to the coronavirus pandemic.

Fitch Solutions revises down Vietnam fiscal deficit to 3.6% of GDP

October 27, 2020 by hanoitimes.vn

The Hanoitimes – The economy is likely to stage a stronger recovery in Q4 this year, versus 2.6% y-o-y real GDP growth in Q3.

Fitch Solutions, a subsidiary of Fitch Group, has revised down its forecast for Vietnam’s fiscal deficit in 2020 to 3.6% (excluding debt repayment) of GDP, from 6.4% previously, staying below the latest government projection of 5 – 5.1% in May.

Including debt repayment, the projected deficit would be 7.4% of GDP, assuming no change to the government’s budgeted repayment target of about VND245 trillion (US$10.57 billion) for 2020.

Deficit To Remain Contained

Vietnam – Fiscal Balance (Excluding Debt Repayment), % of GDP

Fitch Solutions’ deficit forecast revision is due to slow expenditure disbursements during the year alongside a sharp revenue decline owing to tax relief provided in light of weak economic conditions as a result of the pandemic.

Additionally, it also forecast a 3.6% deficit in 2021, expecting the government to continue pushing for quicker public funds disbursement to accelerate public investment to make up for delays during 2020.

Meanwhile, Fitch Solutions has revised its 2020 forecast for Vietnam’s state revenues to contract 12.9%, from a previously forecast fall of 7.3%.

According to data from the Ministry of Finance, total state revenue and grants as of September only stood at VND975 trillion (US$42.06 billion), 64.5% of the budget projection at VND1,512 trillion (US$65.23 billion). This was mainly due to a shortfall in corporate and personal tax collections which were at 58% and 70% of the full year target.

The category of export-import taxes, excise duties and environment taxes also saw an underperformance, where collection for the first nine months of 2020 only stood at 56.2% of the budget target. To be sure, shortfalls in these areas are in line with Fitch Solutions’ expectations, although the magnitude appears to be larger than it had previously anticipated.

Low collections in these areas can be attributed to tax relief measures extended by the government at mid-year to aid the economy through the pandemic-induced economic crisis. These measures included an extended deadline for excise tax payments for domestically-produced/ assembled cars to late 2020, a 30% reduction to current environmental protection tax payments until end-2020, and a 30% cut in corporate taxes payments for small and micro-sized enterprises for 2020.

Vietnam economy to stage strong recovery in Q4

The economy is likely to stage a stronger recovery in the final quarter of the year, versus 2.6% y-o-y real GDP growth in the third quarter, as Vietnam has managed to contain its domestic outbreak and has since seen most domestic containment measures been lifted, which Fitch Solutions expected to improve revenue collection in tandem. A continued recovery of the economy will support stronger fiscal revenue collection in 2021, and Fitch Solutions forecast total revenues to grow by 17.5%.

Expenditures Temporarily Falling In 2020. Vietnam – Total Fiscal Expenditure, % of GDP

Meanwhile, Fitch Solutions has revised its expenditure forecast to a 6.1% decline, from 8.3% growth previously. Expenditures for the first nine months of 2020 came in at VND1,113 trillion (US$48.02 billion), representing 63.7% of the budget target.

This was mainly due to slow fund disbursement for public investment, which was only at 57.2% of the full year target at VND267 billion (US$11.52 billion). Current expenditures were at 71.6% of the annual budget at VND758 billion (US$32.7 billion).

Fitch Solutions referred to report by Hanoitimes quoting the Ministry of Finance that public fund disbursements were mainly held back by difficulties in site clearance and resettlement, as local authorities and the landowners were unable to reach an agreement on land handover for project execution. Other problems include adjustments to financing agreements and investment procedures of overseas developmental assistance-funded projects causing delays in the construction process, and the Covid-19 pandemic causing delays in the import of capital equipment and arrival of foreign project advisors.

Prime Minister Nguyen Xuan Phuc has since set up seven task forces to speed up the disbursement of public funds as well as warning officials would face disciplinary action if their ministries or localities fail to realize their respective public investment disbursement targets for 2020.

Fitch Solutions believes that these measures will go some way in accelerating capital expenditure during the final quarter of 2020. In 2021, Fitch Solutions forecast expenditures to grow by 16.6% as a rebound of economic activity as well as government efforts to expedite public capital expenditure should drive rapid growth in expenditures. Additionally, Fitch Solutions forecast real GDP growth to recover to 8.2% in 2021, from 2.6% in 2020.

Still Well Below The Ceiling

Vietnam – Public Debt, % of GDP

A fiscal deficit will naturally imply additional borrowing. However, assuming that debt repayment is unchanged, Fitch Solutions estimates public debt-to-GDP to rise slightly to 57.0% at end-2020, from the government’s estimate of 56.1% in 2019. This is because the budgeted debt repayment amount would exceed the estimated deficit for the year. This puts the ratio even further below the government’s statutory limit (debt ceiling) of 65% of GDP.

(CORRECTION: In the previous edition, in the last paragraph, Hanoitimes wrote that “Fitch Solutions estimates public debt-to-GDP to fall slightly to 55.0% at end-2020, from the government’s estimate of 56.1% in 2019.” In fact, the ratio will not fall slightly, it will rise slightly . Therefore, the correct information is “Fitch Solutions estimates public debt-to-GDP to rise slightly to 57.0% at end-2020, from the government’s estimate of 56.1% in 2019.”

Vietnam capable of overcoming unprecedented Covid-19 crisis: ADB

September 3, 2020 by hanoitimes.vn

The Hanoitimes – Most countries that fended off the first Covid-19 wave and reopened their economies such as South Korea, Japan, and Vietnam, are now facing a second wave.

“Vietnam has the right capability and creativity to deal with the Covid-19 crisis efficiently,” Nguyen Minh Cuong, principal country economist of the Asian Development Bank (ADB) in Vietnam, told Hanoitimes .

Principal Country Economist of the ADB in Vietnam Nguyen Minh Cuong.

What is your assessment of Vietnam’s achievements in socio-economic development, especially since the Doi moi (Reform) in 1986?

Vietnam has four major achievements in socio-economic development:

Firstly , Vietnam has been able to maintain a rapid, consistent, and comprehensive economic development since 1986. This is a considerable feat, in my point of view. Indeed, Vietnam’s development is only behind China in terms of stability, and much better than regional peers.

It is worth mentioning that Vietnam did not rely purely on any single driving force for growth. And the country’s inclusive growth translates into benefits for all economic participants.

Secondly, Vietnam’s success in eradicating poverty has been recognized widely by international communities and organizations, including the ADB, the World Bank and UNDP. In a short period of time, Vietnam’s GDP per capita had surged from an extremely low point of US$100 to US$2,700 in 2019.

As a result, the rate of poverty plunged from 60% in the 1990s to around 6% in 2019, which, I suppose only Vietnam and China are capable of making this accomplishment. Notably, Vietnam has fulfilled the Millennium Development Goals (MDSs) in eradicating extreme poverty and hunger in 2005, ten years in advanced of its deadline.

Thirdly, Vietnam has successfully transitioned from a centrally planned to a market economy. During this process, many key economic sectors have been restructured to become compatible with the market mechanism. Especially, the agricultural sector embraced a fundamental change and permitted farmland use right transfer.

Another key aspect is the business reform effort. In 1990, four years since the Doi moi, the introduction of the Law on Private Enterprises and the Law on Enterprises after that served as the platform for the development of a market economy in Vietnam.

Fourthly, Vietnam has actively integrated into the global economy. This integration process has been carefully planned and implemented step by step, and began with the country’s entry into ASEAN in 1995, and later APEC in 1998, WTO in 2007. Most recently, Vietnam’s international economic integration was accelerated by the signing of the Comprehensive and Progressive Agreement of Trans Pacific Partnership (CPTPP) and the EU – Vietnam Free Trade Agreement (EVFTA).

Vietnam’s efforts showed its consistent open-door policy and mitigated potential negative impacts that countries like Malaysia or Indonesia have gone through during their respective integration processes.

What should Vietnam focus on to maintain a rapid and sustainable economic growth?

Three decades ago, instead of banking on innovation and technologies, Vietnam was highly dependent on natural resources and cheap labor cost for growth, which unfortunately resulted in low labor productivity.

However, at the moment, the country has gained a solid step in improving labor productivity by diversifying growth driving forces, as all economic components have played their parts for growth, be it the agriculture, services, industry, exports or FDI.

For the next phase, Vietnam should further diversify sources for growth, meaning a more balance in contribution between the FDI, state, private sectors or domestic consumption.

In addition, the government should pay more attention to rural infrastructures and address the weak linkages between various transportation models. For instance, the cost of freight from a train station to the expressway could be higher than the fee for taking them from the North to the South.

And the legal framework remains an issue of utmost importance. To illustrate this point, let me give you a simple example. With favorable regulatory mechanisms, traffic participants will still ride on a rough, bumpy road even though it might affect the speed of the traffic stream. On the other hand, there would be no traffic on a road in excellent condition if the mechanism is inefficient.

This showcases the significance in improving the institutional environment, which is directly related to the business environment, the quality of legislation and the subsequent law enforcement process.

What do you think about the government’s efforts in pursuing the dual target of containing the Covid-19 pandemic and simultaneously boosting economic growth?

Until this moment, Vietnam is among a handful of countries that have successfully contained the Covid-19 pandemic. However, there is no doubt that keeping pace with such a dual target is very challenging.

Nevertheless, Vietnam has acted quickly with various relief programs, including financial support for vulnerable people, waiving and freezing of taxes and fees, among others.

Similar to other countries, the issue that Vietnam was facing lied in the implementation process of these programs, which came on the back of the unprecedented scale of the pandemic and its unexpected timing.

I strongly believe that with Vietnam’s experience of dealing with hard decision, i.e. the transition to market economy in 1986 and the decision of joining ASEAN, the country has the right capability and creativity to come up with solutions to mitigate Covid-19 economic impacts in the upcoming months.

Prime Minister Nguyen Xuan Phuc has repeatedly mentioned the necessity of an expansionary fiscal policy to aid the economy. What do you think about the efficiency of this measure and what are your recommendations for the government?

There are similarities between Vietnam’s fiscal policy and that of others in terms of objectives, including support for workers, the business community and economic recovery. Besides, fiscal stimulus packages were offered in a timely manner in March and April, around the peak of the first Covid-19 wave.

A major difference is the scale of the fiscal support, which was dependent on the size of the economy. For example, Singapore’s fiscal stimulus package was around 20% of its GDP, Thailand’s at 10%, Indonesia’s at 7%, Vietnam and the Philippines’ at 4%.

But if we take into account the VND700 trillion (US$30.2 billion), or 10% of Vietnam’s GDP, in public investment funds, the combined figure would be 14% of GDP.

As international practices have demonstrated in case of an unprecedented and dual crisis such as the Covid-19 pandemic, governments tend to not care much about public debt or fiscal deficit and instead adopt a “countercyclical” fiscal policy (increasing spending and cutting taxes during a recession).

Vietnam should give this a thought when dealing with public debt and fiscal deficit amid the current crisis.

Of course these are important matters. But if you look into a broader picture with macro-economic conditions taken into consideration, Vietnam remains a country with high economic stability. This is also a major advantage to attract foreign investors to the country rather than those with lower public debt to GDP ratio, such as the Philippines and Indonesia.

The Vietnamese government has to mull over its economic recovery outlook post-Covid-19, as this is the key for Vietnam to solve the issues of public debt and fiscal deficits. Once the global economy returns to its recovery track, Vietnam would find itself in an increasingly difficult situation to rebound since a massive number of Vietnamese enterprises are already bankrupt, and the unemployment rate is considerably high.

To have a broader perspective in supporting the economic recovery process, Vietnam may need to establish a national committee specialized in dealing with crisis and supporting economic recovery post-crisis. For sure, the issue of economic recovery would be at the center of Vietnam’s socio-economic development plan in the 2021 – 2025 period. Such a committee with specific tasks would be able to see things from multiple facets, not only from a fiscal or monetary perspective, but also from economic restructuring, global integration, and social security, among others.

Thank you very much!

VIETNAM BUSINESS NEWS FEBRUARY 8

August 2, 2021 by vietnamnet.vn

Flower growers look to online sales amid COVID-19 resurgence

Workers at a flower farm in Da Lat City.

Traditionally, city dwellers shop for flowers and botanicals at flower markets to fill their home with the most cheerful blooms to celebrate the new year.

But many flower growers said that flower markets were not busy this year, leaving them with an oversupply.

Nguyen Duy, a flower farm owner in Da Lat City, said that COVID-19 outbreaks in many localities would likely affect people’s purchasing power for flowers ahead of Tet festival.

Thuy Vu, director of the The Gioi Hoa Tuoi JSC, a wholesale supplier of flowers, said it would not focus on retail sales for the Tet festival this year due to market uncertainty.

Nguyen Thi Ngoc Lan, a flower vendor at Ho Thi Ky flower market in HCM City, said flowers stockpiled for the Tet market this year were not as numerous as last year due to concerns over weak purchasing power.

Purchasing orders with flower farms are expected to change in the next few days depending on the control of COVID-19, Lan said.

Flower farms in Da Lat City have seen a 55 per cent drop in orders from wholesale markets in other cities and provinces, according to a survey of the Da Lat City People’s Committee.

The committee, however, has reported a boom in online sales of agricultural produce, flowers and botanicals ahead of Tet.

It advised farms to use bank transfer payments for retail orders and to sign contracts with merchants for wholesale orders to ensure the success of online deals.

Livestreams

Shoppers can find various types of flowers from flower farms and merchants on online shopping platforms.

Nguyen Thi Bich Thuy from Biofresh Company in Da Lat City has hosted livestreams via Facebook to guide viewers through different types of flowers and plants available on the farm.

Amid the pandemic, live commerce has helped promote and sell products, and engaged potential shoppers, Thuy said.

Tran Van Tam, a flower grower in Da Lat City, said that flower farms in the city adopted online sales to reach new buyers as wholesale buyers were reluctant to close deals due to worries about weak demand.

This year, flower farm owners are concerned that they will be left with an oversupply of flowers, so they expect to quickly sell stocked products at reasonable prices, Tam said.

Dalat Hasfarm is offering Tet collections of flower vases and combo deals for cut flowers and pot plants with discounts on online orders.

Online flower markets are also featuring extensive selections of imported flower products such as forsythia, ilex, and Japanese peach flowers. A vase of imported flowers costs VND3-9 million (US$130-390).

Rice trading businesses post good results on higher rice price

Vietnamese agricultural companies recorded high profit in 2020 as the country’s rice exports saw good results.

In 2020, Viet Nam’s rice export volume fell by 1.9 per cent year-on-year to 6.2 million tonnes, but export value increased 11.2 per cent to $3.1 billion, according to calculations based on data from the General Department of Viet Nam Customs.

Climate change and disruptions in supply chains due to COVID-19 have affected Viet Nam’s rice production, resulting in an increase in the rice price. Last year, Viet Nam’s average rice price for export rose 13.3 per cent year-on-year to nearly US$499.3/ton.

The rice price was also boosted by rising demand around the world as many countries stockpiled food due to concerns over the pandemic.

This helped rice trading companies like Loc Troi Group JSC (LTG), Vietnam National Seed Group JSC – Vinanseed – (NSC) and Trung An Hi – Tech Farming JSC (TAR).

The fourth quarter financial report showed that Loc Troi’s revenue surged nearly 77.5 per cent year-on-year to VND3.5 trillion in the last quarter of 2020. The company’s profit after tax was VND163.7 billion in the same period, four times higher than that of 2019.

In the whole of 2020, Loc Troi’s revenue declined by nearly 9.7 per cent to VND7.5 trillion, but it still recorded an increase of over 10 per cent year-on-year in profit after tax to nearly VND369 billion as its expenses reduced.

Loc Troi is a leading company in trading agriculture commodities, such as pesticides and seeds, and food which mainly is rice.

Vinaseed also saw a sharp increase in revenue in the fourth quarter after slowing down in the first three quarters.

The company’s revenue climbed 22 per cent year-on-year to nearly VND666.6 billion in the last quarter, but its profit after tax fell 6.2 per cent to over VND70 billion as sales and administrative expenses increased 15.6 per cent and 10.5 per cent, respectively. It’s profit after tax in 2020 also decreased to VND194.5 billion.

The seed sector, which mainly is rice, plays an important role in Vinaseed’s businesses, accounting for more than 93 per cent of revenue and profit. Last year, Vinaseed’s industrial centre for seed and agricultural product processing in Dong Thap Province was opened, increasing its production capacity by over 40 per cent.

In the fourth quarter, Trung An reported a rise of 8.5 per cent year-on-year in net revenue to VND613.1 billion, while its profit after tax fell sharply in the same period as its financial activities and other expenses rose. The company’s profit after tax decreased by 81 per cent year-on-year to nearly VND6.3 billion.

However, thanks to good results in the first nine months of 2020, Trung An’s profit after tax for the whole year still increased 46.5 per cent to VND88.2 billion.

With the rally of rice prices since the beginning of 2021, investors expect businesses in the industry to take advantage of this trend to see positive results in the first quarter of this year.

Viet Nam’s rice price for export was quoted around US$500/ton in January, according to a report from the United States Department of Agriculture.

Local wood industry to capitalise on export opportunities to US

With the housing market in the United States enjoying strong growth, demand for wooden furniture is expected to rise considerably, opening up bright export prospects for the Vietnamese wood industry.

According to data released by the United States International Trade Commission, during the opening 11 months of last year, the US’ imports for wooden furniture endured a decline of 0.6% to US$16.8 billion compared to the same period from 2019.

Vietnam remained as the largest supplier of wooden furniture to the United States throughout the reviewed period, with the export turnover reaching US$6.26 billion, a rise of 30.9% on-year.

The proportion of imports from the country accounts for 37.2% of the total import value, up 9% compared to last year’s corresponding period.

Most notably, Vietnam is the largest market for bedroom furniture for the US, making up 49.7% of the US’ total import value, followed by Malaysia, China, and Indonesia.

Nguyen Liem, chairman of Lam Viet Joint Stock Company, attributed this increase in US demand for wooden furniture to the impact of the novel coronavirus (COVID-19) pandemic as it has forced many Americans to remain indoors and focus on activities such as renovating their homes and purchasing new furniture.

He emphasised that Vietnamese wood brands in the US market have significantly improved in recent years due to American people being willing to purchase Vietnamese wooden furniture at more expensive prices over similar products from the Chinese market.

Do Xuan Lap, chairman of the Vietnam Timber and Forest Products Association, pointed out that the wood industry’s strategic export products in the US market will be kitchen cabinets and bathroom cabinets.

Due to this, Lap advised local firms to be aware of market changes and appropriate product strategies, while enhancing their competitiveness to deeper penetrate into the global supply in order to increase exports to the demanding market.

US to impose anti-dumping tax on Vietnamese copper pipes

The US Department of Commerce (DOC) has issued a preliminary conclusion regarding an anti-dumping investigation into copper pipes which originate from Vietnam, according to the Ministry of Industry and Trade.

This includes copper pipes coded: 7411.10.1030; 7411.10 .1090; 7407.10.1500; 7419.99.5050; 8415.90.8065; and 8415.90.8085

In line with the preliminary conclusion reached by the DOC, copper pipes have been imported from Vietnam and subsequently dumped in the US with a margin of 8.05%, which is far lower than the plaintiff’s initial allegation of 110%, along with the anti-dumping tax of up to 60% that the US is currently applying to copper pipes from China.

Based on these conclusions, the US is set to impose a preliminary anti-dumping tax rate of 8.05% on Vietnamese copper pipes.

The DOC also stated that due to the impact of the novel coronavirus (COVID-19) pandemic, it will not conduct on-site verification as part of the investigation. Instead, it will make the final determinations through use of alternative methods.

The DOC is poised to announce a deadline for stakeholders to submit its written comments, while concerned parties may also request a hearing by submitting a written request to the DOC within 30 days since the notice of the preliminary conclusion.

Vietnam’s export turnover of copper pipe products to the US in 2019 and 2020 reached US$151.1 million and US$183.9 million, respectively.

Industrial park developers promote sustainability to attract “eagles”

It is these industry leaders who are driving a movement as they look for a partner that matches their same sustainable outlook and goals.

As a result, local businesses in Vietnam, and industrial park developers in particular, are transforming their business model as well as adapting to international standards to attract these “eagles”. Although it can be tricky for industrial parks to balance profitability, concern for environment, and social commitments, there are still multiple ways they can do to stay sustainable.

In 2020, the “Eco-industrial Park Intervention in Vietnam – Perspective from the Global Eco-Industrial Parks Programme” project was launched in Ho Chi Minh City by the Ministry of Planning and Investment (MPI) and the United Nations Industrial Development Organisation (UNIDO).

At the workshop, five industrial parks across the country were chosen to implement eco-industrial park initiatives. The project will be carried out in a period of three years with an aim to establish a more sustainable industrial park model and pave the way to the replication of this model across Vietnam in the future.

One of the five pilot industrial parks is DEEP C Hai Phong I (also known as Dinh Vu Industrial Zone), the first footprint of DEEP C group in Vietnam. The industrial park cluster has gained a reputation as the only European-managed industrial park in Vietnam, with compatible European quality in all business aspects, from general infrastructures, utilities supply to park operations. Located in Hai Phong City and Quang Ninh province, DEEP C Industrial Zones is the northern representative of the project.

Long before the recent selection, DEEP C implemented their environmental sustainability strategy on four pillars: power, water, waste, and green zone. The main goal is taking the complexity out of investing in Vietnam while achieving common sustainability goals with investors. Overall, the strategy is to drive economic growth in a sustainable manner for DEEP C, investors and local community.

Depending on the nature of each industrial park, the developers can adopt different practices to stay sustainable. For DEEP C, they are the first industrial park to make a road from recycled plastics and a smart electricity grid possible in Vietnam. The recycled plastics road currently lies in DEEP C Hai Phong II Industrial Park in Hai Phong. More asphalt roads using recycled plastic will be stretched out all over DEEP C Industrial Zones as an innovative solution to address plastics waste and advance circular economy in Vietnam.

The group is now working on the generation of renewable energy from rooftop solar panel and wind turbine. By 2030, it aims to supply 50% of energy demand within its industrial park. Sustainability is also present in reusing of treated wastewater for various industrial purposes such as cooling tower of tenants, preserving mangrove forest along our port area as a natural buffering.

Construction work comply with strict standards on safety and environment before, during and after construction such as innovation (road made from plastics), sustainable sourcing of materials (containers), sustainable sites, energy efficiency (optimising solar and wind energy), indoor environment quality and water efficiency. In the years to come, DEEP C’s ready-built factories will be designed in the most nature-friendly way possible with LEED standards.

“We believe that eco-industrial park is the future of the industry and are happy to raise the standards for developing infrastructures inside industrial park and spread the benefits of eco manufacturing,” said Koen Soenens, General Sales and Marketing Director at DEEP C Industrial Zones.

“Sure it’s good for the environment, but it’s also good for the image, the quality of working and living, and it’s cost-saving for the maintenance and operations.”

DEEP C Industrial Zones launched its base in Hai Phong City, Vietnam in 1997 with the development project of Dinh Vu Industrial Zone (nowadays known as DEEP C Hải Phòng I), a collaboration between Belgian group Rent-A-Port and Hai Phong People’s Committee.

Over the past 23 years, DEEP C has evolved to be one of the largest industrial park developers in Vietnam with five sub-zones covering 3,400 ha of industrial land, forming an industrial cluster in Hai Phong City and Quang Ninh province – the most dynamic growing region in the northern region.

To date, DEEP C Industrial Zones are home to 120 projects with a total investment of US$4 billion, backed by multinational companies like Bridgestone, Idemitsu, Knauf, Chevron, tesa.

Efforts made to promote sale of crops in virus-hit provinces

According to the Ministry of Agriculture and Rural Development, the total winter crop area which had not been harvested was more than 7,830 ha, or 35 per cent of the northern province’s total crop area. In Kinh Mon district, there was about 3,500 ha of onion, 350 ha of carrot in Nam Sach and 400 ha in Cam Giang, 200 ha of vegetables in Gia Loc, 200 ha in Tu Ky and 400 ha in Kim Thanh.

In Quang Ninh, the total unharvested crop area was more than 2,000 ha, mainly potato, corn and vegetables with a total yield of about 30,000 tonnes.

The ministry said that it was important to raise solutions to promote the sale of farm produce for farmers in locked-down areas.

The ministry said that prices of farm produce in Hai Duong had decreased by around 10-20% since the outbreak of virus clusters late last month.

Nguyen Nhu Cuong, Director of the ministry’s Department of Crop Production, the sale of carrot and potato was the most difficult at the moment because these two products had high output volume while domestic consumption accounted for just 10 percent and the rest must be exported.

The capacity of cold storage in Hai Duong was limited, which would be a problem if the virus was not put under control before Tet, he said.

He added that the transportation of goods to/from locked-down areas was very difficult. Local markets were also tightening disease control measures.

Hanoi, Hai Phong and Quang Ninh were the major markets for the consumption of Hai Duong’s farm produce. However, these provinces were banning all vehicles and people from Hai Duong, which affected the consumption. Wholesalers from other provinces did not want to come to Hai Duong to collect farm produce with hesitation over the virus and worries that they must practice social distancing.

According to the Hai Duong provincial Department of Agriculture and Rural Development, around 128,000 tonnes of vegetables, meat and fish in the province were waiting for consumption.

In that context, it was important to promote consumption in the province, increase storage and implement processing for longer preservation, the ministry said.

It was a must to apply prevention measures following the guidance of the Ministry of Finance when transporting products out of the virus-hit areas, the agriculture ministry said.

At the same time, preparations must be made for the next cultivation season.

Recently, the Quang Ninh provincial Department of Industry and Trade helped connect for the sale and 17 million potatoes, worth VND153 million (US$6,600).

Six enterprises also bought more than 10,000 chickens for farmers in Chi Linh city.

First Chilean cherries enter Vietnamese market

A launching ceremony took place recently at Thu Duc wholesale market and Biovegi store in Ho Chi Minh City to mark Chilean cherries penetrating the Vietnamese market for the first time.

To meet the increasing demands of consumers, the Chilean Fruit Exporters Association (ASOEX) has been co-operating alongside the Chilean embassy and the Chilean trade promotion agency in Vietnam (ProChile) to accelerate the import and distribution of Chilean cherries within the Vietnamese market.

Cherries are popular among Vietnamese consumers due to their taste and health benefits, especially their antioxidant capacity. Indeed, the consumption season for Chilean cherries usually begins in December and lasts until the end of February.

After being imported into Vietnam, cherries will then be distributed to shopping malls, supermarkets, convenience stores, and wet markets throughout the country.

The promotional scheme started on February 5 and is due to run for the duration of February.

Agribank among most valuable global banking brands

The Vietnam Bank for Agriculture and Rural Development (Agribank) ranks 173rd among the world’s 500 most valuable banking brands, according to a list recently released by the world’s leading independent brand valuation and strategy consultancy Brand Finance.

Featuring in the Brand Finance Banking 500 list for 2021, Agribank climbs a total of 17 notches compared to the 2020 version, earning the highest spot among the eight commercial Vietnamese banks to be named on the list.

Last year saw the Vietnamese banking industry face many changes and challenges as the entire country coped with the impact of the novel coronavirus (COVID-19) pandemic.

Throughout 2020 Agribank continued to confirm its prestige by winning major prizes such as Vietnamese national brand, being among the top 10 of the VNR500 which features the 500 largest local enterprises, and being named the bank for the community.

Brand Finance is a leading independent brand valuation and global strategy consultancy that was founded in London, the UK, in 1996.

The consultancy evaluates 5,000 brands globally and announces over 100 reports annually.

HCM City industries make good start to 2021

HCM City’s Index of Industrial Production rose by 34.5 per cent in January despite the continuing problems caused by the COVID-19 pandemic.

The city’s four main industries have seen year-on-year growth, with electronics achieving the highest rate of 61.9 per cent.

The remaining three industries are mechanics (44.3 per cent growth); food and beverages (27.3 per cent); and chemical, rubber and plastic (up by 51.7 per cent).

Others such as wood and bamboo processing and automobile also reported growth.

Nguyen Phuong Dong, director of the Department of Industry and Trade, said that due to the city’s efforts to control the pandemic, economic activities are recovering.

Business activity has generally picked up, with more than 3,300 businesses reopening.

Retail sales and services were worth nearly VND120 trillion (US$5.2 billion), a 4 per cent increase.

Exports were up by 16.4 per cent.

The local authority said the city will seek to keep the pandemic under control while still ensuring economic growth.

It is guaranteeing sufficient supply of foodstuff and other high-quality goods and steady prices during Tet, and will organise festival and entertainment events for the festival while complying with the Government’s COVID-19 requirements.

It is focusing on carry out the 13th National Party Congress’ resolution (which contains social-economic targets and national development orientations) and the city’s 11th Party Congress resolution.

Digital Transformation will “give a hand” to businesses in the new era

Digital transformation holds the key to businesses keeping up with market trends, overcoming challenges and seizing opportunities amid the current unpredictable situation.

And, Microsoft’s ‘Tech Intensity’ will play a key role in enhancing businesses’ resilience and transformation of organisations.

According to a Microsoft-IDS study, 74% of all business decision-makers in the Asia Pacific say that innovation is an imperative now. They see the ability to innovate, especially digital transformation, as vital to performance and resilience before and after the Covid-19 pandemic.

Always the pioneer in technology, Microsoft has never stopped researching or developing tools and solutions to enhance digital transformation globally, especially by businesses.

In Viet Nam, it keeps businesses abreast of new digital transformation trends by organising programmes to introduce digital transformation solutions and share the experiences of businesses that have achieved the transformation.

Digital transformation is always an urgent requirement for business to survive and thrive, especially amid the pandemic. To enable businesses to embrace innovation, Microsoft has introduced the concept of Tech Intensity, which determines the success of businesses amid the current crisis.

Tech Intensity consists of four key pillars that enable the success of an organisation during the transformation process.

The first is vision and strategy. Businesses need to become more resilient to change, and also need to think beyond what organisations think is possible, especially at a time when speed and agility are vital to survive.

The next is culture, which supports strategy and vision to activate and empower employees. Organisations that are successful in digital transformation will have their employees unite and work based on a vision in which employees are shared.

The third one is differentiation of potential. Those businesses that discover the differentiation of potential of their organisations will respond and adapt to any circumstance more easily.

The last one is capacity, a combination of human capacity and technology. Businesses need human capital equipped with the right skills as well as appropriate and secure technology platforms with the ability to empower employees with remote access and promote business development under any circumstances.

Pham The Truong, General Manager of Microsoft Vietnam, said, “The combination between people and technology within an organisation will create new opportunities for businesses.”

Nanoco, a leading electrical equipment distributor, has chosen Microsoft as a trusted partner for its digital transformation. To meet its business development and market expansion needs, the company has adopted Microsoft’s digital transformation solutions and achieved much success.

Luong Luc Van, General Director of Nanoco, said: “We are really pleased with our experience with [Micosoft solutions] from Office application to Teams tool and cloud storage solution OneDrive. It is also very easy to collaborate and share documents.”

With its diverse and flexible solutions, Microsoft will continue to help businesses achieve digital transformation, successfully exploit digital data, improve their efficiency, and optimise their operation process.

Food company Vissan profit tops $9.01 million

Vissan Joint Stock Company reported pre-tax profits of nearly VND208 billion (US$9.01 million) on revenues of VND5.16 trillion ($223.4 million) for last year, in both cases achieving the targets it set for itself.

Its production of beef and processed products also met the targets while pork output fell slightly short.

It launched many new products last year, including pork braised with eggs and coconut water, beef ball, dragon fruit dumpling, gac fruit dumpling, pumpkin dumpling, five-spice mushroom spring roll, and ready-to-cook pork.

It began selling via a hotline, 19001960, Fanpage and website at vissanmart.com, and launched online stores on Sendo, Lomart and Grab.

In 2021, amid shrinking pork supply due to the African swine fever epidemic, Vissan plans to find more farms that meet VietGAP standards and TE-FOOD traceability to ensure steady pig supply.

It also plans to develop more fresh meat products using chilled meat processing technology and modified atmosphere packaging technology, and expand its distribution system, especially online.

HCM City to throw the book at high-end property developers for violations

The HCM City Department of Natural Resources and Environment plans to review the progress of high-end property projects and fine or even withdraw the licences of those found violating regulations.

If they are excessively late, their land might be repossessed as permitted by the law.

At the same time, the city’s authorities will publicise the mortgaged projects, according to the city People’s Committee.

It has instructed the Department of Planning and Investment to tighten control over foreign investment in property and the repatriation of profits to prevent money laundering and tax evasion.

The city will also review mortgaged and long-delayed projects facing obstacles caused by land regulations, delay in paying land-use fees or the slow handover of house use right certificates.

The Department of Construction has been ordered to keep a close watch on the property market to avoid price bubbles.

The directives seek to redress the imbalance in the housing market caused by the huge supply of high-end apartments and shortage of housing for low-income people.

The shortage of social housing and mid- and low-priced houses is making it hard to ensure social welfare, according to a recent report by the HCM City Real Estate Association.

It has called on developers to increase their investment in the mid- and low-priced segments to address the imbalance.

Tourism firms ask for help during new Covid-19 outbreak

Tourism firms in HCM City are calling for support from local authorities after thousands of customers cancelled their Tet tours following the new Covid-19 outbreak.

Nguyen Thi Khanh, chairwoman of the Tourism Association of HCM City, said they had sent an official document to the Ministry of Culture, Sports and Tourism, Vietnam National Administration of Tourism, HCM City People’s Committee, Vietnam National Tourism Association and HCM City Department of Tourism about support policies for tourism firms.

According to Khanh, many tourism firms in the city are facing great difficulties as thousands of customers have cancelled their bookings following the recent Covid-19 outbreak.

The official said that the government’s response to new community Covid-19 infection cases has resulted in many achievements but there are still several shortcomings. For example, tourism firms still have to pay both corporate taxes and VAT on time while the deadline for at least VAT was extended for six months in March 2020. Firms were still suffering from losses.

The programme to reduce electricity charges for restaurants ended in 2020. Khanh also sought support policy to extend the deadline to pay social insurance. Currently, the deadline will only be extended for firms who already cut 50% of their staff.

The Tourism Association of HCM City asked to waive or reduce the VAT by 50% for 2021 because most accommodation establishments, tourism firms, transportation firms and tourism sites have little to no income while having to pay interest and other costs. The government should exempt land rental fees in 2021 and 2022, help tourism firms access preferential loan packages, extend the repayment period to avoid bad debts and help renew and issue business licenses for free in 2021.

Other requests include reducing electricity charges in 2021, extending the deadline for social insurance payment until June 2022 and adjusting the requirements for unemployment insurance benefits like reducing minimum working time requirements from 12 to 3 months.

Statistics from the Department of Tourism show that 453 accommodation facilities in HCM City had electricity charges reduced, 600 tour guides were given support packages, 21 firms had various fees reduced and some firms which had collaterals had repayment deadlines extended for interest rates lowered.

In the future, firms will get support from Vietnam Bank for Social Policies so that they can access lower interest rates or longer deadlines without needing collateral.

Home cleaning services in high demand as Tet nears

Home cleaning services are in great demand again in Hanoi as busy homeowners want clean houses for Tet.

Thuy Quynh from Hai Ba Trung District said both she and her husband were all too busy at year-end so they decided to a hire cleaning service.

“Both I and my husband are not allowed to have an early break. We only have enough time to buy food for Tet,” she said. “We called many places but they were all full of orders. We kept calling and finally were able to find a provider that was still receiving orders.”

Despite higher fees, Phuong Hoa from Hoang Mai District said it was still acceptable.

Nguyen Thu Trang, an employee at Alin Cleaning Services said only a few slots left. They have different packages for cleaning apartments while the cost for cleaning houses will be calculated by square metres. A cleaning package for an apartment that is less than 60 square metres is around VND1.2m (USD52). The prices are VND22,000 per square metre for penthouse apartments that are over 150 square metres.

The services remain open until the 28th day of lunar December.

The detail of the service will be given to the customers. Another service provider in Cau Giay said they had to visit the houses or apartments first to gauge the size and materials they have to work with to set the prices. It will also be varied depending on the cleaning chemicals the owners want to use.

The usual prices are VND15,000 to VND20,000 per square metre. At year-end, the prices often increased by 20%.

Vietnamese and foreign investors open more stock trading accounts

Both Vietnamese and foreign investors continue to open more accounts as the local stock market to capitalise on perceived opportunities in the market.

According to fresh data from on stock trading from Vietnam Securities Depository (VSD), the number of newly opened domestic individual investor accounts in January 2021 reached a record high with 86,107 accounts – an increase of 36.5 per cent compared to December 2020.

This is also the fifth consecutive month domestic individual investors have opened more than 30,000 new accounts a month. Meanwhile, domestic institutions opened 162 new accounts in January, down from 168 accounts in December 2020.

As of January 31, the total number of securities accounts of domestic investors reached more than 2.8 million, an increase of 86,269 accounts compared to the previous month.

In January, the VN-Index hit 1,200 points and created a short-term market peak. Around the beginning of January, trading value on Vietnam’s stock market continuously set a record high and reached more than VND20 trillion ($870 million) in one trading session.

However, due to strong fluctuations at the end of January, trading liquidity in the first sessions of February decreased significantly and was only around VND15 trillion ($652 million) per session.

Meanwhile, foreign investors opened 476 new accounts in January, up about 23.3 per cent on-month. This is also the highest level since June 2018. Of this, foreign individual investors have opened 460 new accounts, while 16 accounts are from institutional investors. By the end of January 31, foreign investors had a total of 35,547 accounts in Vietnam’s stock market.

Which Vietnamese banks have been keeping NPLs under 1 per cent?

While a number of banks experienced sharp increases in non-performing loans (NPLs) due to the unprecedented pandemic, some lenders have successfully kept their NPL ratios below 1 per cent.

Meanwhile, Vietcombank – one of the largest state-owned lenders in Vietnam – recorded VND5.229 trillion ($227.35 million), down more than 50 per cent compared to the end of September and down 10 per cent compared to the beginning of 2020.

The bank’s NPL ratio dropped sharply from 1.01 per cent at the end of this year’s third quarter to 0.62 per cent by the end of 2020 – also the lowest level in its history.

ACB’s NPL ratio remains one of the lowest levels in the landscape. According to the bank’s financial statements, soured debts at the end of 2020 were VND1.840 trillion ($80 million), up 27 per cent compared to the beginning of the year.

Similarly, BAC A BANK’’s NPL ratio increased slightly but was still controlled below 1 per cent. The bank’s NPLs at the end of 2020 amounted to VND628 billion ($27.3 million), up 25.6 per cent from the beginning of the year.

The fifth lender reporting an NPL ratio below 1 per cent is ViettinBank (around 0.94 per cent as of December 31, 2020), according to local newswire Doanh nghiep & Tiep thi. This is also its lowest NPL ratio in the 2016-2020 period.

VietinBank and ACB in 2020 have signed exclusive bancassurance contracts with major life insurers (VietinBank with Manulife, ACB with Sun Life). These deals are envisaged to provide the two lenders with a large amount of revenue, while also boosting their stock value.

HDBank and MB had more than 1 per cent NPL ratios due to their consumer finance companies (HD Saison of HDBank, and MCredit of MB). However, the asset quality of the parent banks remains basically good in the domestic banking system.

The bad debt ratio of HDBank’s banking arm by the end of 2020 was only 0.93 per cent, while that of MB was 0.92 per cent.

Another local lender below the 1 per cent threshold is NamABank, the newly-listed ticker in UPCoM. The bank’s total bad debt ratio decreased from 1.97 per cent at the end of 2019 to 0.83 per cent as of December 2020.

Insurance segment sits in good stead

Despite several challenges stemming from intense competition, the health crisis, and low interest rates, the local insurance landscape is predicted to maintain its growth momentum in 2021.

Other insurers are also going public or working with foreigners. For instance, Petrolimex Insurance JSC – a subsidiary of Petrolimex – has confirmed to raise its foreign cap from 49 per cent to 100 per cent.

Currently Vietnam boasts 31 non-life insurers, 18 life insurers, 16 brokers, and two reinsurers. Many reputable foreign insurance companies have a presence in Vietnam in both life and non-life sectors.

However, according to brokerage Saigon Securities Incorporation (SSI), aviation, travel, and freight insurances, which make up for around 6 per cent of the total non-life insurance premium revenue, were heavily affected by the COVID-19 pandemic.

The premium revenue for both health and life insurance reported a plunge in the social distancing period in March and April of 2020. However, these segments witnessed a steady recovery in the following months.

According to the Association of Vietnam Insurance, the health and life insurance premium revenue in the first three quarters of 2020 increased by 25.6 and 21.2 per cent, respectively, against the same period of 2019.

SSI indicated that the two largest enterprises are losing market share in life and non-life insurance, demonstrating fierce industry competition.

In the first three quarters of last year, the non-life market share of Bao Viet Holdings Group and PetroVietnam Insurance decreased while six companies increased their life insurance market share – Manulife, AIA, Generali, MB Ageas, FWD, and Aviva. Others lost market shares, such as BaoViet Life, Prudential, Dai-ichi Life, Chubb Life, and Hanwha Life.

In late December, VietinBank and Canadian insurer Manulife inked an exclusive 16-year bancassurance partnership to better meet the growing financial and insurance needs of Vietnamese people.

Manulife would also acquire insurance firm Aviva Vietnam since the latter formed a joint venture with VietinBank to distribute insurance products. Manulife’s life insurance market share is predicted to reach 18.5 per cent – nearly equal to Prudential’s share of 18.8 per cent.

“We’re in an exclusive bancassurance agreement with Techcombank, SCB, and VietinBank, three prestigious groups, and are putting in our best efforts to become the market leader in this regard,” said Hoe Shin Koh, chief partnership distribution officer at Manulife Vietnam. “Bancassurance is our strategic approach not just in Vietnam, but in the entire Asian market. For instance, in 2015, Manulife Asia paid $1.2 billion to Singapore’s DBS Group Holdings for a 15-year partnership, allowing us to sell products through this lender’s Asian branch network.”

Experts at SSI forecasted that the growth of the premium revenue for life and non-life insurance segments in 2021 would be 22 and 10-12 per cent on-year, respectively.

“However, the insurance industry will still face numerous roadblocks, including low-interest rates and increasing re-insurance costs. These factors will consequently reduce insurers’ profit because their investment portfolios are bank deposits and government bonds. Also, if the government bond yields drop, profits will be negatively impeded due to higher life-insurance reserves,” said SSI.

In 2020, in spite of the pandemic, the insurance market still maintained growth momentum with total property insurance of approximately VND552.4 trillion ($24.01 billion), up 21.5 per cent on-year, according to the statistics published by the Ministry of Finance (MoF).

Total equity capital was estimated at VND113.5 trillion ($4.9 billion) and total insurance premium was VND184.7 trillion ($8.03 billion), signifying increases by 27 and 15.2 per cent respectively. The claim cost was VND48.2 trillion ($2.09 trillion).

Data revealed by the MoF also showed that between 2016 and 2020, the total assets of the insurance market witnessed an average hike by 19 per cent on-year, with the figure for 2020 estimated at VND526 trillion ($22.87 billion).

The total money that insurance companies invested back to the economy saw an average increase by 19.4 per cent, with an estimated VND416 trillion ($18.09 billion) in 2020. The whole premium income boosts an average of 19.3 per cent and was estimated at VND226 trillion ($9.83 billion) last year.

The MoF continued to improve the draft decree on compulsory civil liability insurance for motor vehicle owners, replacing Decree No.103/2008/ND-CP dated 2008 and Decree No.214/2013/ND-CP from 2013. In addition, vehicle insurance is forecast to grow strongly, especially after Decree No.70/2020/ND-CP from last year introduced a registration fee cut of 50 per cent for cars.

KIS Securities believed the local government’s eagerness to accelerate development of the domestic car market will lay a vital foundation for vehicle insurance in particular.

Source: VNA/VNN/VNS/SGGP/VOV/NDO/Dtinews/SGT/VIR