Internet impacts on global business

The Hanoitimes – An increasing influx of foreign capital shifting to Vietnam prompts higher demand for industrial estate.

Vietnam’s industrial real estate has the potential to be a destination for multinational companies that are increasingly pursue the “China Plus One” strategy to diversify their operations as the global health crisis causes disruptions in supply chains.

As an example in containing the novel coronavirus for the past few months and its effective pandemic-control measures, the shifting in the investment continues to grow, resulting in greater demand for Vietnam industrial space as corporations seek to mitigate risk and diversity locations, according to executives from Savills Vietnam.

Troy Griffiths, Deputy Managing Director, Savills Vietnam. Photo: Savills Vietnam

“Industrial continues to be the ‘poster child’, with mounting enquiries and heightened capital market activity”, Troy Griffiths, deputy managing director, Savills Vietnam said.

“The key factors contributing to post-pandemic opportunities are extensive,” he said, naming the factors that include an effective and rapid pandemic response, robust middle-class growth, an increasingly stable business environment, labour force, infrastructure spend, corporate income tax incentives, and growing FTA’s.

The current situation is already expected to accelerate multinational manufacturer relocations out of China. Recent announcements from major blue-chips Apple, Pegatron, and Foxconn will see higher proportions of production shifting to Vietnam.

Troy Griffiths went on to say the recent Japanese government US$2.2 billion stimulus package with the core aim of underwriting Japanese manufacturing relocations out of China is another example.

So far, 15 companies including Meiko Electronics, Nikkiso, Fujikin, and Yamauchi have registered to move production to Vietnam. The Japan External Trade Organization (JETRO) confirms six of the 15 are large companies, with the remainder small and medium-sized enterprises (SMEs). Most produce medical equipment, while the others manufacture semiconductors, phone components, air conditioners, and power modules.

Demand for supply

According to Matthew Powell, director of Savills Hanoi, the recently ratified EU-Vietnam Free Trade Agreement (EVFTA) has bolstered global industrial investor confidence in Vietnam.

The property segment most resilient to Covid-19 has further significant growth potential, he said.

Demand continuing to outpace supply underscores the need for further development in key industrial provinces. In reality, occupancy rates have grown significantly since 2018 in key areas Binh Duong, Dong Nai, Long An in the south; Bac Ninh, Hung Yen, and Haiphong in the north.

Matthew Powell, Director, Savills Hanoi. Photo: Savills Vietnam

“Supply being the one limiting factor has developers needing to quickly catch up, especially with new developments needing to be close to main routes, ports, and airports. Though this process can be slow, we all need to better manage demand, especially under the Covid-19 situation. Of course, there is much to be done, but all credit to the government and the property sector in doing such a fantastic job attracting these industries,” Matthew Powell commented.

With the expected manufacturing influx out of China in 2021 and 2022, new projects are increasingly vital to accommodate high value manufacturing investments. Dong Nai has eight additional industrial zones (IZs) in planning. An official of Long Thanh district People’s Committee recently announced plans to build four extra IZs in the district. Phuoc Binh commune will have two more IZs covering up to 900 ha, with total leasable areas around 500 ha. Tan Hiep and Binh An communes will each develop another IP. Furthermore, ‘rental’ developers such as BW Industrial Development JSC keep expanding, from an initial 130 ha in 2018 to almost 500 ha this year.

In June 2020, Vietnam had 336 Industrial Parks (IPs) over approximately 97,800 ha. Among them, 261 IPs are operational while 75 are under construction. Nationwide, operating IPs have a steady average 76% occupancy.

Smarter manufacturing

The EU-Vietnam Free Trade Agreement (EVFTA) will provide further impetus for Vietnam Industrial’s transition from low-skilled, labor-intensive to higher-value industries.

By enabling the latest production technologies and ramping up workforce training, the Vietnamese government is easing concerns of viability, labor shortages, and rising costs. Moving to a more transparent business environment will help mitigate investor concerns and improve quality.

However, the profiles of countries looking at Vietnam are evolving, resulting in higher skilled labor demand, and increased vocational aptitude. Investing in education and training is essential for Vietnam to properly accommodate higher-value projects.

John Campbell, Savills Vietnam Industrial Services Manager. Photo: Savills Vietnam

John Campbell, Savills Vietnam Industrial Services Manager, commented that Industry 4.0 is under global attention and Vietnam is focused on the opportunity. A national strategy, robust legal 4.0 framework, with policies favoring business and industrial communities is vital.

“According to the Central Institute for Economic Management (CIEM), a 4.0 Manufacturing strategy supported by mid-level technology can expect 16% growth by 2030. CIEM research also indicated Vietnam Manufacturing, supported by leading technologies has up to US$14 billion growth potential.

Lenovo and Schneider Electric recently announced a strategic partnership to make smart green solutions for the Chinese manufacturing sector, and both already have a strong presence in Vietnam. As the national economic and Industry 4.0 strategies both develop, these leading companies will increase their presence to meet growing demand”.

The rapid growth in Vietnam Industrial has been powered by a tenfold increase in foreign direct investment (FDI) over the last ten years. However, the country must be increasingly project-selective to successfully move up the value chain, while improving competitiveness to ensure sustainable growth.

This will require continued investment in infrastructure and intermodal transport links; higher education standards; a national skills development plan to increase skilled labour supply; increased focus on attracting priority hi-tech and Smart Manufacturing, while refining FDI incentives and policies. Vietnam, already adapting to these needs, has a clear opportunity to harness the extensive potential of Industry 4.0.

Vietnam climbs up Brand Finance’s Global Soft Power Index 2021. Photo: Unsplash

Ranking 47 ^th in the overall index, Vietnam (33.8) is a nation that objectively managed COVID-19 extremely well. Vietnam was spared a year of lockdowns and besieged hospitals, and has one of the lowest COVID-19 infection and death rates in the world.

Not only is the response to the pandemic impressive – given its shared border with China – but Vietnam also experienced one of the highest economic growth rates globally in 2020 – one of a handful of countries with positive growth in 2020.

Commenting on the achievement, Samir Dixit, managing director of Brand Finance Asia-Pacific, stressed that the historical way of managing soft power through strong individual personalities and political diplomacy are no longer relevant. Soft power today is about a sum of perceptions across all stakeholders, be it consumers, corporates, media, global policymakers, investors, the leadership of other countries, and so on.

According to Dixit, economic growth in the 21 ^st century is all about sustained collaborations amongst various stakeholders and the correlation of perceptions of the nation brand with the brands from the country, which can truly enhance the country’s soft power – both internally and externally. Vietnam seems to have managed all aspects of its perception quite well. Especially the integration and alignment of its nation brand and the brands from the country.

At a national level, Vietnam had established diplomatic relations with 187 out of 193 member states of the United Nations and completed the process of negotiating and signing new-generation FTAs – including the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the EU-Vietnam Free Trade Agreement – making the country an important factor in all regional and intra-regional economic links, which is a booster for Vietnam’s imports and exports.

The representative of Brand Finance said that the “Vietnam Value” programme management agency, the Ministry of Industry and Trade of Vietnam, has actively supported Vietnamese enterprises to improve their capacity through consulting business development, establishing information systems, and updating branding knowledge.

All these initiatives and efforts have helped increase the awareness of the public, international consumers, and customers about the programme and Vietnam Value products through various domestic and international media channels.

“Thanks to the efforts of the Vietnam Value programme, Vietnam’s processed food industry now contributes upwards of $17 billion of Vietnam’s exports. The apparel industry makes up over $22 billion of Vietnam’s exports. These economic contributions are absolutely crucial for Vietnam’s overall growth, its reputation, and contribution to Vietnam’s soft power,” he added.

Hanoi (VNS/VNA) – Investors from the UK were showing significant interest in investing in renewable energy projects in Vietnam, especially wind power, expecting the Vietnamese Government to introduce long-term support policies as well as simplification of procedures for project implementation.

British Ambassador to Vietnam Gareth Ward said at the UK – Vietnam Renewable Energy Dialogue on Wednesday that clean energy was becoming a global trend, adding that every 1 investment USD in clean energy would help generate from 3-8 USD.

The Vietnamese Government in 2015 approved the renewable energy development strategy to 2030 with a vision to 2050 which aimed to increase the percentage of renewable power from 35 percent in 2015 to 38 percent in 2020 and 43 percent in 2050.

The Government also introduced incentive policies to encourage the development of wind power , biomass energy, energy from waste and solar power.

Hoang Tien Dung, Director of the Ministry of Industry and Trade’s Electricity and Renewable Energy Authority, said developing renewable energy was important in the context that sources for hydropower were being exhausted, thermopower was limited due to commitments to global climate change and gas-fired power had high production costs.

According to the draft national power development planning for 2021-30 period with a vision to 2045, Vietnam had large potential for renewable energy development which was estimated to amount up to 855GW, mostly solar power (434GW), and wind power (375GW). The potential for off-shore wind power was estimated at 158GW.

Off-shore power was attracting increasing interest from foreign organisations and investors, Nguyen Ninh Hai, Head of the Renewable Energy Department under the Electricity and Renewable Energy Authority, said.

Hai said that as off-shore wind power was a new thing to Vietnam, the Ministry of Industry and Trade was cooperating with some research organisations to have a comprehensive evaluation about the off-shore wind power development potential in the country.

Bui Vinh Thang, Director of Mainstream Renewable Power Vietnam, said that the Government’s planning and policies played a very important role for renewable energy investors, especially in wind power and off-shore wind power.

Benjamin Dubas, a representative from Lightsource BP, said that renewable energy investors expected the transparency and stability of policies in the long term to invest in Vietnam, especially feed-in tariffs (FIT).

According to Dung, FIT pricing was applied to accelerate investment in renewable energy in the first stage in Vietnam but this mechanism would not be maintained for a long period and be replaced by competitive bidding when the technology development helped push down prices of solar and wind power.

He added that the national power development planning which was being completed would give priority to renewable energy on the basis of ensuring balance of power sources and the power transmission between regions.

The ministry expected to continue receiving support from the UK in renewable energy, especially off-shore wind power which the UK had experience in and Vietnam had large potential.

By the end of 2020, the total renewable energy output accounted for around 25 percent of the total output worth 69,000MW of the Vietnam’s power system. There were 148 solar power projects with a total capacity of more than 8,800MW, 100,000 rooftop solar power projects with a total capacity of 9,300MW, and 11 wind power projects with a total capacity of 511MW./.

VNA

Tien Giang (VNA) – The Mekong Delta province of Tien Giang has invested 15 billion VND (650,000 USD) in 70 in-field irrigation projects on 27,000ha of farming land in the coastal districts of Go Cong Dong and Go Cong Tay during the 2020 – 21 dry season.

The projects include building or upgrading in-field irrigation canals and ditches that ensure water and help to prevent saltwater intrusion in the dry season.

The projects have protected more than 18,000ha of rice, 6,000ha of vegetables and 3,000ha of other crops from water shortage and saltwater intrusion in the winter – spring crop.

They have also helped to secure daily-use water for 38,000 households in coastal areas.

In Go Cong Dong, apart from investing in in-field irrigation canals and ditches, local authorities have built four new sluices for taking irrigation water since the beginning of the dry season.

The district has organised the collection of rubbish and water hyacinths on in-field irrigation canals and ditches so that irrigation water can flow easily into each field.

The district has taken measures to restructure agricultural production to suit each area, according to local authorities.

In the winter – spring crop, farmers in Go Cong Dong have expanded cultivation of vegetables and other crops on 1,500ha.

Go Cong Dong and Go Cong Tay districts normally face severe saltwater intrusion in the dry season and face shortage of irrigation water at the end of the winter – spring crop.

The two districts have also expanded advocacy activities about the impact of saltwater intrusion to the public.

Local authorities in the two districts have encouraged farmers to dredge irrigation ditches in orchards to preserve fresh water for irrigation.

Ngo Van Dung, head of the Go Cong Tay Bureau of Agriculture and Rural Development, said the district has invested in irrigation projects and taken measures to cope with saltwater intrusion and drought.

Besides investing in in-field irrigation canals and ditches, the district has built 124 temporary dams to preserve irrigation water for the dry season, he said.

In the ongoing winter – spring crop, the two districts have solved the shortage of irrigation water for growing rice and other crops as more irrigation projects have been built and the winter – spring crop rice was planted earlier than normal.

Farmers are having a bumper harvest of winter – spring rice, getting a yield of 6.5 tonnes per hectares, up 1.2 tonnes against the last winter – spring crop, according to local authorities.

Profits from growing vegetables are two to three times higher than from rice, said local authorities./.

VNA

VietBank’s president has unexpectedly resigned and his position has been transferred to a former government official.