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The company has taken this decision after deciding to withdraw from the smartphone market and failing to find buyers for its production line in the northern port city.

The Yonhap news agency reported Tuesday that the company will complete the transformation within this year and reallocate affected workers. The factory employs more than 16,000 workers at present.

“Exiting smartphone production there is part of LG’s plan to restructure our core product portfolio,” said Jung Hai-jin, president of LG Electronics in Vietnam.

He also affirmed that the shutdown of LG’s smartphone business will not significantly impact LG’s production, business activities or employees in Hai Phong.

LG launched the production line in Hai Phong, around two hours east of Hanoi, in 2015. The plant has been producing home appliances, smartphones and in-vehicle infotainment components.

Earlier, a Business Korea report had said that the tech giant has decided to terminate its loss-making mobile phone production and sales business, but not been able to find buyers for its largest smartphone factory in Hai Phong.

The report mentioned that Vietnamese smartphone makers already have their own facilities and local firms can’t afford to pay the large sum it would take to buy LG’s factory.

However, at a meeting with the Foreign Investment Agency under the Ministry of Investment and Planning last week, LG leaders said the smartphone factory in Hai Phong was still operating normally. It is also building a new 4-hectare factory to produce refrigerators there, it said.

LG’s smartphone division has posted losses of around $4.5 billion over the last five years, according to Reuters . The group has said that dropping out of the fiercely competitive smartphone business would allow it to focus on growth areas such as electric vehicle components and connecting devices.

Many of the world’s food producers are struggling to get their products to market during the pandemic. Photo: ADB

Hunger and malnutrition were an increasing problem worldwide before the pandemic. Restrictions imposed to curb disease spread have disrupted local and international food supply chains, making the problem even more urgent.

Global hunger and malnutrition have been rising for the past five years. Lockdowns imposed to combat the coronavirus pandemic have disrupted the local and international food trade, as well as production and distribution. Tens of millions of urban and other migrant workers have lost their jobs, many perhaps permanently—pushing them into a hunger trap.

Efforts to end hunger and malnutrition (Sustainable Development Goal 2) now seem in jeopardy. Even after full lockdowns are relaxed, continued disruption in food production and distribution will likely increase consumer prices. With lost livelihoods for tens of millions of households, increased food insecurity and malnutrition will become a grim reality without focused measures to support food production and marketing.

Food insecurity and malnutrition should have been headline news before Covid-19 pandemic. Despite impressive economic growth in Asia and the Pacific region over the last four decades, endemic food insecurity and malnutrition have persisted. The number of people living in extreme poverty (under $1.90 a day) declined from 53% in 1990 to about 9% in 2013. Still, 326 million people lived below the poverty line. Poverty is inextricably linked to food insecurity, and accordingly the number of food-insecure people in the region has remained high.

Feeding these hungry and malnourished millions is a daunting challenge. Malnutrition affects people of all ages—ranging from severe undernutrition to obesity—but children bear the heaviest burden. Over 86 million, or 25% of children younger than five suffer from stunting, and 34 million children are wasting. A further 12 million suffer from acute malnutrition with high risk of death. The income penalty of stunting amounts to 7%-10% of GDP in the region. But governments allocate only 1% of public expenditure for nutrition programs.

The widespread loss of employment and income triggered by the Covid-19 pandemic will make the situation much worse.

Take the example of unsafe food. Even before the Covid-19 pandemic, the impact of unsafe food on human health was staggering. In 2018, the World Health Organization estimated that globally over 600 million fall ill after eating contaminated food and 420,000 die every year. Children under five years of age carry 40% of the foodborne disease burden with 125,000 deaths every year. If loss in employment and disruptions in food production and distribution continue and safe food becomes even harder to find for poor communities, this toll of sickness and death could escalate in the Covid-19 era.

There’s no easy fix for these pressing challenges. But there is a single step, albeit a large one, that will have immediate beneficial impacts on the region’s food security.

Governments need to devote at least as much attention to the rural sector as they do to their urban communities. Rural development and the farm sector have been largely neglected in some parts of the region. The resulting underinvestment has taken a significant toll on the agriculture sector, and on the food security and health status of societies.

Smallholder farmers provide 80% of the region’s food. When they don’t make a profit, they can’t invest in modern technology and higher quality inputs. As a result, farm productivity across the region is low, cost of production is high and consumers pay higher prices.

Poor quality and contaminated food has corrosive effects on public health. Malnourished people have weak immune systems, making them more vulnerable to diseases like Covid-19. This vicious cycle can only be broken by focused government attention at senior policymaking levels.

What can governments do to help farmers produce safe, nutritious, and affordable food in the region?

The first priority is to provide smallholders with access to quality seeds, fertilizers, and pesticides. Often, these are not available on time and are adulterated. Governments either do not have adequate quality and safety regulations or do not enforce them. Three actions will bring significant improvements: expand smallholders’, especially women’s, access to input financing; improve marketing of key inputs by easing constraints on imports and distribution; and enhance compliance with quality standards, especially for seeds and chemicals.

Second, the region desperately needs functional markets for perishables and nutritious food such as fruits and vegetables, meat, fish, eggs, and dairy. Post-harvest losses amount to 30%-40% of production due to a lack of cold-chain facilities and proper market infrastructure.

In the short-term, governments should improve hygiene and compliance with food quality standards at existing wholesale markets. In the medium-term, there’s a need for investments in modern wholesale and retail market infrastructure through public-private partnerships. An Asian Development Bank study estimates that in order to achieve SDG 2 in Asia and the Pacific, annual investments in agricultural research and development, market infrastructure, irrigation, and water use efficiency must increase from the current US$42 billion to as much as US$79 billion. Given the unfolding toll of Covid-19 on the food sector, this investment requirement will be even higher.

The third way governments can head off pandemic-induced food shortages is to improve their own capacities. Ministries dealing with agriculture in most governments are sometimes the weakest link in the system. Their capacity to make evidence-based policies require significant improvement immediately.

Due to Covid-19, unemployed urban migrant workers are heading home to rural areas. It’s safer there, as social distancing is easier in households with larger living spaces than in cramped urban communities. Improved rural development and profitable farming will also generate plentiful non-farm jobs. Increased income in rural areas will also generate higher demand for city jobs. The pandemic is a threat, but also an opportunity to reap dividends as workers return to farms—but only if governments invest more in agriculture and take helpful and decisive policy actions.

Decent on and off-farm rural incomes and jobs will deliver safe, nutritious, and affordable food that societies—especially poor communities—and economies need to survive and thrive in the Covid-19 era. Hanoitimes

Akmal Siddiq (Chief, Rural Development and Food Security Thematic Group, ADB)

The real estate frenzy across the nation has pushed land prices to record heights, while lenders are taking a vigilant approach. However, tightening real estate loans may not be the magic bullet to rein in buyers.

Commercial banks are more equipped than ever to deal with bubbles that occur in the real estate market, photo Le Toan

In this first quarter, land price rises were experienced across various provinces and cities, in the range of 30-50 per cent. Cities and provinces neighbouring Hanoi and Ho Chi Minh City have witnessed a significant increase, usually up to as much as 50 per cent.

“Low interest rates, an improving domestic economy, the rising popularity of urban lifestyle, and glittering appeal of industrial property as well as potential infrastructure projects have significantly spurred property buying across the nation in the past few years,” explained State Bank of Vietnam’s (SBV) Deputy Governor Dao Minh Tu.

The price hikes from north to south have attracted large amounts of cash flow. As of mid-March, real estate credit increased by 2.13 per cent, higher than the banking sector’s credit growth rate of the whole system (2.04 per cent). However, the SBV noted that real estate credit increased tremendously at a limited number of banks.

Both foreign-invested and local lenders are also trimming their interest rates to cash in on the increasing mortgage demand, illustrated in the cases of Shinhan Bank, UOB, and Standard Chartered. For instance, UOB reduced its rates from 8.7 to 6.49 per cent annually, while Shinhan Bank cut its annual rates from 6.7 to 6.3 per cent.

Some market watchdogs believed that, in the short term, the economic downturn has pushed investment capital flows out of manufacturing, tourism, and services sectors, which could find their way to the real estate industry. In the long run, real estate will be consistently placed high on the investment portfolio of individual and institutional investors, as its glitter of offering physical shelter and value stand the test of time.

Deputy Governor Tu of the SBV noted that the central bank has kept a firm hand on capital flows into the real estate sector due to their risky nature. Accordingly, credit pouring into the real estate sector has been gradually reduced during the last three years, especially in 2020 due to the pandemic. This ratio had grown by 11.89 per cent, compared to 26 and 28 per cent in 2018 and 2019, respectively.

In the first three months of this year, credit had grown by 3 per cent against the end of 2020, nearly equal to the normal ratio of 2.93 per cent in general.

“The figures show that the SBV is keeping a tight grip on the real estate loans, especially the flow into the high-end and hospitality segment,” Tu said.

Specifically, the central bank has set limits and safety ratios in banking operations to gradually reduce the ratio of short-term capital reserved for medium- and long-term loans and apply higher risk ratios for the loans of high value house buyers, aiming to direct credit flows into medium- and low-cost and social housing which are in major need of the end-users.

On the same note, commercial lenders are also taking a cautious approach to the real estate sector.

According to Nguyen Dinh Tung, general director of OCB Bank, when granting credit quotas to lenders, the SBV also guides the orientation of pouring capital into five priority areas. The portfolio of loans for securities and real estate, which are considered as risky sectors, has been strictly curbed accordingly.

Nguyen Hoang Linh, general director of MSB, said that by the end of the first quarter of 2021, the bank’s real estate loan proportion was only about 11 per cent of its total outstanding loans, much lower than 21 per cent in 2019.

Nguyen Thanh Do, vice chairman of HDBank’s board, stated that the real estate loans account for around 19 per cent of the total outstanding loans of the whole economy.

“Commercial banks are now becoming well-equipped to make it through the real estate bubble. Besides the SBV’s tightening regulations in this regard, each lender should implement its own legal corridor to set a loan ceiling ratio in this risky sector, which is in line with its financial health,” Do suggested.

Notwithstanding, the credit on the real estate market is not the main reason for the land price hike, and the stricter tightening of real estate credit cannot halt the increasing price, cited the SBV.

Even credit has increased slightly again, and not signalled any abnormal signs. Amid the turmoil of the real estate market in 2011-2012, credit for the real estate sector accounted for 40 per cent of the total outstanding loans of the whole system.

“Real estate-linked credit is not a major foundation for the land price hike. Real estate-related firms are hunting for more cash through various channels, such as corporate bonds, remittances, foreign direct investment, and mergers and acquisitions,” said Deputy Governor Tu.

Nguyen Tu Anh, general director of the Department of Economics Affairs at the Party Central Committee’s Economic Commission noted, “The main reason for the land price hike stems from the announcement of future plans for infrastructure, industrial parks, and new construction. Thus, tightening real estate credit would not be the magic pill to stop the feverish excitement in land.”