VietNam Breaking News

Update latest news from Vietnam

Non competitive markets

Domestic lawyers taking over market

by www.vir.com.vn

1523 p18 domestic lawyers taking over market
Foreign lawyers are increasingly outplayed by domestic expertise, Photo: Freepik.com

Having been working for years as a lawyer and policy adviser in the country, Vaibhav Saxena from Vietnam International Law Firm has witnessed drastic changes in the legal market, seeing it become more mature, competitive, and attractive for domestic lawyers at the same time.

“I have experienced the complexities of the continued refinement of the Vietnamese legal system, which has made it more difficult for lawyers from overseas,” he told VIR. “Unlike 10 or 20 years ago when foreign lawyers had an upper hand with their law degrees and English skills, now we see the legal industry in Vietnam has become far more competitive with refined local lawyers who stand on par with international legal standards.”

Vietnam’s legal market has witnessed the participation of foreign law practitioners since doi moi was introduced in 1986. Since then, the legal community in Vietnam has been supporting the domestic and international industry and contributing to improving the business environment.

Economic development and growing global integration have led to strong rises in the number of newly-established enterprises and rising foreign investment, thus resulting in an increase in demands for legal consultation services. Businesses have also been aware of the important role of this kind of service to ease possible risks in the market due to confusion about on-site legal issues and changeable rules.

The legal system continues to develop quickly, and local courts are working on systematising the judiciary database in order to have a better blend in legal brainstorming with the backing of precedence judgments and citations of the case laws.

The demand for legal consultancy services ascended from 67.5 per cent among enterprises in 2010 to 85 per cent in 2015 and to 94 per cent in 2020, with the rate to continue rising in the coming months.

Together with improving the prestige and presence among domestic players, with a number of Vietnamese law firms capturing the domestic market, some new trends among them have also emerged. They tend to join foreign-run lawyers’ alliances, employing international lawyers and improving staff skills to increase competitiveness.

Elsewhere, some even have gone cross-border to set up a liaison office in neighbouring countries to boost dispute resolution practices and offer business opportunities to clients in different jurisdictions. This has been carried out through providing non-legal services and merging business consulting through which the law firms generate indirect business and stay alert to pitch in for any legal requirements in such business consulting transactions.

Pham Duy Khuong, managing director of ASL Law, said the times of Vietnamese law firms being sidekicks to more established international counterparts due to foreign language limitation, lack of standard legal drafting skills, and limited connectivity seems to be over.

According to Saxena, quality and skills of legal professionals always vary in all the countries and same applies to the case of Vietnam. Although, it is very challenging market for foreign lawyers now and require them to pace up with the legal framework and regulations of this country.

“Lawyers on a daily basis experience the complexities with continued refinement in Vietnam’s legal system, and increasing local lawyer expertise has further made it challenging for others to get a hold on Vietnamese laws and practice,” he elaborated.

Industry insiders said that although there are few foreign lawyers in this country who have gained recognition based on their professional capabilities and adapted to match the wavelength of the local Vietnamese mindset, usually international lawyers stay in Vietnam for one to two years and then move to other jurisdictions due to the highly complicated structure of Vietnamese regulations and practical implementation of the laws.

Evidently, a blend of local and foreign expertise can make the legal market more mature and law firms can see an opportunity to attain market leading status at a faster pace and with international standards of the legal services that can create a better mix to support the domestic and foreign businesses.

The insiders point out that the legal service market will continue to be more competitive, and legal consultancy demands will continue to ascend, driven by more inflows of foreign investment and establishment of new enterprises in the future who come to Vietnam to tap into open market entry from free trade agreements, especially the EU-Vietnam Free Trade Agreement and the Regional Comprehensive Economic Partnership.

By Bich Thuy

Competition heating up in alcoholic beverages sector

by www.vir.com.vn

tet 38 competition heating up in alcoholic beverages sector
Nguyen Van Viet, chairman of the Vietnam Beer-Alcohol-Beverage Association

What is your assessment of the beer, wine, and spirits market in the past year, along with the efforts of companies to take on new challenges?

The beer, wine, and spirits sector has undergone three decades of development. Many years ago it was one of the sectors bogged down in difficulties due to the chronic shortage of input materials, while foreign goods – particularly Chinese items – overwhelmed the domestic market. With the clear-sighted leadership of the government, the sector has gradually consolidated its footing and managed stable on-year growth.

From last January, the Law on Prevention and Control of Harms of Liquor and Beer Abuse came into force, and shortly after that was the enactment of a decree featuring heavier sanctions on drivers with alcohol on their breath. After the pandemic approached in March, the sector had almost been paralysed in the wake of these factors. Earlier last year, the tax authorities even delivered a forecast of a possible loss of more than VND30 trillion ($1.3 billion) in tax payments.

The sector’s contribution is significant given the fact that each year the alcoholic beverage sector contributes more than VND50 trillion ($2.2 billion) to the state coffers with its revenue doubling that level.

From the second quarter last year, the government began to deploy wide-ranging measures to support businesses. Although players in the sector were not direct beneficiaries of this support, improved performance by other sectors is a favour factor to their growth.

New circumstances have prompted businesses to adopt innovative measures in order to get ahead. Businesses launched products directly serving consumer needs, for instance the rollout of non-alcoholic drinks and fruit-based beverages that are selling well. These include Saigon Chill and Lac Viet from SABECO, HEINEKEN’s non-alcoholic offering, and Habeco’s canned draught beer.

Businesses have also diversified the sales format with an aggressive shift to online transactions. Consequently, the sector’s business rebooted sharply in the second and third quarters of 2020, even reaching revenues seen in the similar periods in 2019.

Over the whole year due to pandemic implications, the sector incurred about 15-16 per cent drop in revenue on-year. But with improvements in products and profits, other business targets had resumed to fairly satisfactory levels amid COVID-19 impacts.

This year continues to be a challenging one due to a combination of factors, especially the complex and unpredicted situation with the pandemic both domestically and globally. But with effective containment of COVID-19, I expect the sector’s performance this year here could be equal to, and even surpass, last year.

tet 38 competition heating up in alcoholic beverages sector

The sector is deemed a fertile land which is charming a slew of leading players, as the country integrates further into the global economy. What difficulties does this pose to its development?

The domestic market has certain advantages. For years, the government has been stimulating development with fairly open policies that provide the best conditions for foreign players. Key global players like AB InBev, HEINEKEN, Carlsberg, and Sapporo have all made forays into Vietnam. This has heated up competition in the domestic market that forces local players to improve themselves, including their management expertise to compete head-on with foreign players.

However, current management mechanisms are cause for some concern. For instance, in regards to equitisation plans at state-owned enterprises, there are roadmaps on stake sales to strategic investors or capital divestment. These plans sometime bother management and employees in crafting well-conceived development plans for the long haul. Otherwise, state-owned enterprises trusted with their proven capacity and well-conceived investment in improving consciousness, management skills, and finance can compete head-on with weighty foreign players.

Sustainability is one of the key pillars of business development. How have businesses in the sector embraced the trend?

Since the first years of open-door policy in Vietnam, many local businesses in the sector have made great efforts in investment to reach the level seen in the wider region and worldwide in terms of equipment, technology, management expertise, environmental protection, and sustainable development.

For instance, the personnel at the sector’s top players like SABECO possess very good management skills. They have a good grip on advanced management such as environmental management, or latest management methods.

Foreign players based in Vietnam also do a smart job in this field, leveraging their track record.

These top players, both from here and overseas, are not only good at production but also properly care for sustainability factors. They have all participated in national programmes on sustainable development, worked on concrete annual plans, and held top positions on Vietnam’s sustainability list.

Effective Covid-19 response will further boost Vietnam’s status as an attractive market: AmCham

by hanoitimes.vn

The Hanoitimes – On the occasion of the 25th anniversary of the US-Vietnam diplomatic relations, Adam Sitkoff, executive director of AmCham Hanoi, has shared with Hanoitimes his thought about US-Vietnam relations and the outlook of economic ties.

This year, Vietnam and the US celebrate 25 years of diplomatic relations and the remarkable changes that have occurred. It is a credit to the Vietnamese and American people that two countries have been able to move beyond the tragedies of the shared past to build such a vibrant and strong friendship.

Adam Sitkoff, executive director of AmCham Hanoi

One of the relationship’s strengths is its multifaceted nature. Economically, the US is a key trading partner and investor for Vietnam. Politically, Vietnam and the US share the same interest: peace and stability in East Asia, and mitigating the impact of the Covid-19 pandemic that has upended lives, jeopardized employment for millions, and disrupted the global trading system on which both nations depend.

The two countries now have a strong friendship anchored in mutual respect and work closely in many areas including regional security, education, global health, food and energy security, disaster response and more.

Of equal importance are cultural links. The US has the largest population of Vietnamese people outside Vietnam. Americans of Vietnamese ancestry are playing a critical role in Vietnam’s development. Their investment as well as their talent and entrepreneurship have helped drive Vietnam’s impressive economic growth.

Back in 1995, only 60,000 Americans visited Vietnam. Last year’s total was almost 700,000 visitors and AmCham hopes to accelerate that growth once international travel normalizes after the pandemic.

In addition, there are over 30,000 young Vietnamese people studying in the US, where they are acquiring much-needed skills and knowledge.

Impressive trade growth

Witnessed by Prime Minister Nguyen Xuan Phuc, Vietnamese Minister of Industry and Trade Tran Tuan Anh and US-ABC President Feldman exchanged a Memorandum of Understanding in March. Photo: VGP

Trade is the cornerstone of the bilateral relationship and great changes have taken place in the development of the American business community here. Soon after the resumption of economic relations, a small group of Americans founded the American Chamber of Commerce (AmCham) at its first meeting at the Dragon Hotel near West Lake in April 1994.

AmCham members have contributed significantly to the transformation and growth of Vietnam’s economy and many of the longtime members were instrumental in helping normalize the bilateral relationship.

Together, AmCham members represent billions of dollars in foreign investment, tens of thousands of direct employees, hundreds of thousands of indirect employees, and a significant share of Vietnam’s exports and tax revenues.

Business activity started slowly for Americans here, but now the Cham saw US companies and investors active in almost every sector of Vietnam’s economy. US exports to Vietnam have more than quadrupled in the last decade, and the US remains the largest export market for Vietnam, even during this terrible pandemic.

Prospects for the future

A discussion between representatives from Vietnamese and the US startups at Techfest Vietnam 2019 held in the US in September, 2019.

Looking towards the future, AmCham hopes both governments can begin efforts towards a bilateral Free Trade Agreement. This would improve investment and trade flows, would assist sustainable supply chains, and would improve business conditions that strengthen the private sector, ensure sustainable economic and social development, and promote prosperity here.

Many of the American investors I have worked with are optimistic about business prospects in Vietnam. AmCham supports efforts to create a modern economy that will attract future investment and high-paying jobs for Vietnamese people.

For Vietnam to be successful, non-productive red tape must be controlled and the country’s regulatory framework must be stable and predictable. Many business people remain concerned with changes in policy and regulations which are not consistent with international best practices.

AmCham encourages continuous improvements in infrastructure development, protection of intellectual property, education reform, legal and tax policy certainty, and enhanced transparency in Vietnam.

Maybe most important is to enact smooth, fair, and consistent tax and audit procedures. Too often, US investors feel there is an arbitrary and unpredictable audit and tax system. Progress in these areas will not only help attract more foreign investment, but will also will support Vietnam’s aspirations to propel itself to the next sphere of economic competitiveness.

With a growing trade imbalance, it is critical that our members encounter an equal, level, and predictable playing field as a solid foundation, not only to attract new investment, but also to maintain and grow the investment that is already here.

In addition, AmCham recommends that foreign investment limitations, an overly restrictive legal framework of laws, and burdensome administrative procedures should be carefully reviewed and selectively relaxed to encourage increased US investment.

Everybody has an interest in Vietnam’s continued success. That is why actions that increase productivity and reduce the costs and risks of doing business here really help the business climate for all investors – regardless of where they are from. In fact, decreasing the cost and complication of doing business benefits Vietnamese-owned businesses the most because many are small businesses.

Challenges to address

I have lived and worked in Hanoi for almost 20 years and I see great opportunity and a bright future here. This year, however, is proving to be quite challenging for many people. The economic implications of the pandemic for Vietnam are severe and will impact people for quite some time.

Millions of jobs have disappeared, many people have seen their salaries cut, and business activity in most sectors remains slow. The number of people receiving unemployment benefits in the first half of the year rose 32% year-on-year, and Vietnam’s economic growth in the second quarter fell to its slowest pace since the country started publishing economic data in 1991. Even as the economy begins to recover, the financial pressure for many companies will be significant.

While the future is unknowable, the Vietnamese people have done an outstanding job to contain the spread of the virus. This success enabled a fast start on the path to economic recovery and the government’s effective response to the pandemic will further boost Vietnam’s status as an attractive market.

Foreign competition the smallest concern for Vietnam’s logistics firms in CPTPP

by hanoitimes.vn

The Hanoitimes – Direct impacts from the CPTPP agreement would not be significant, but means a more stable and predictable environment for logistics firms in Vietnam, according to an expert.

Foreign competition is the smallest concern for Vietnamese logistics firms when the Comprehensive and Progressive Trans – Pacific Partnership (CPTPP) comes into play, according to Nguyen Thi Thu Trang, director of the WTO Center and Integration under the Vietnam Chamber of Commerce and Industry (VCCI).

Overview of the conference. Source: Ngoc Thuy.

“The major concerns would be weak state management capabilities, deficiencies of logistics infrastructure, unfavorable business environment and unofficial costs,” said Trang at a conference under the program “Australia supports Vietnam’s economic reform” (Aus4Reform) on November 25, discussing the country’s challenges and opportunities from the CPTPP.

Trang argued the domestic logistics market has basically opened to foreign companies since Vietnam’s participation in the World Trade Organization (WTO) in 2007, therefore, “direct impacts from the trade deal would not be significant, but rather a more stable and predictable environment for logistics firms.”

Similarly, there would be no major changes in the landscape of Vietnam’s distribution and e-commerce sectors.

“Indirect impacts are much anticipated,” said Trang, adding the CPTPP’s pressure to reform would force Vietnam to have a more transparent and attractive market for all businesses involved.

“Commitments to eliminate tariff and non-tariff barriers will create conditions to increase the supply of goods for distribution – e-commerce sectors, and increase the demand for logistics services,” said Trang.

Meanwhile, commitments in custom – trade facilitation are presenting opportunities to reduce business costs, she stated.

Ngo Chung Khanh, deputy director of the Multilateral Trade Policy Department under the Ministry of Industry and Trade (MoIT), said the CPTPP’s market-opening principle, namely the “Select to exclude” (some services are selected to exclude), provides higher commitment compared to “select to include”, and means huge opportunities to attract investment into Vietnam’s business sectors.

Khanh also noted the “ratchet” provisions under the CPTPP encourage the privatization of public services. Under these provisions, anything that is public can be made private. However, once a service is privatized it cannot be brought back into public hands.

“Such clause would help maintain a predictable legal environment for Vietnam,” said Khanh.

CPTPP to boost logistics services

Vietnam’s logistics sector recorded growth rate of 12 – 14% annually over the last few years, reaching an annual revenue of US$40 – 42 billion and contributing 4 – 5% of the GDP, said a VCCI’s report.

Statistics showed Vietnam currently has 30,000 logistics companies, an increase from 23,000 in 2016, including 4,000 operating in cargo transportation domestically and internationally.

Local logistics firms, mostly small and medium sized, are holding 23 – 30% of the market share, while the remaining share belongs to around 30 multinational peers.

In 2018, Vietnam ranked 39th out of 160 countries and territories in the World Bank’s Logistics Performance Index (LPI), up 25 places from 2017, and only behind Singapore and Thailand in ASEAN.

The World Bank estimated by 2030, the CPTPP would help boost Vietnam’s GDP growth by 1.1 – 3.5 percentage points, resulting in an increase of 4.2 – 6.9% in exports and 5.3 – 7.6% in imports.

“This would present opportunities for the logistics sector, particularly international logistics services,” said VCCI.

Vietnam’s logistics and warehousing market is expected to register a positive compound annual growth rate (CAGR) of 13.3% in the 2018-2022 period, reaching revenues of US$86.7 billion by 2022, according to Ken Research – a market research and consulting company based in India and the US.

In addition to Vietnam, country members of the CPTPP include Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, Singapore, New Zealand and Peru. President Donald Trump withdrew the US from the pact in January 2017 days after his inauguration.

The 11-nation deal economies represent around 13% of global economic output, including third largest economy Japan, and 500 million people. It includes cuts to tariff and non-tariff barriers among its members and is designed around high standards on human rights, labor practices, and environmental standards.

LODGIS HOSPITALITY’S LONG-TERM VISION AND INVESTMENT STRATEGY FOR VIET NAM’S TOURISM MARKET

by vietnamnews.vn

Lodgis Hospitality, the investment partnership between the leading global Private Equity Firm Warburg Pincus and Viet Nam’s leading investment manager, VinaCapital – is focused on Viet Nam’s tourism industry, with the strategic aim to support the development of Viet Nam as an international tourism destination by delivering a range of high-quality hospitality real estate developments and services.

Viet Nam – timeless charm

Viet Nam – a truly fascinating country, offers a 3,260 km coastline, connecting the North and South with white-sand beaches. Beyond its significant coast, the country boasts overlapping ranges of mountains, primeval forests, and world-famous caves. The destination is also known for its rich history, deep culture and arts, and unique street food cuisine.  More than its diverse natural landscape, Viet Nam also has vibrant cosmopolitan cities such as Ha Noi and HCM City, each with their own distinct ambience and rhythm. Ha Noi offers a traditional setting with heritage dating back 1,000 years. HCM City is a high energy urban and business centre with skyscrapers and a bustling streetscape. There are also the idyllic landscapes of the Vietnamese countryside and craft villages. These include bountiful fruit orchards across the Mekong Delta; narrow Hoi An streets adorned with bright red Bougainvillea trellises of ancient yellow houses; and the terraced paddy fields in Sapa.

Viet Nam and its timeless beauty

Viet Nam has become one of the top destinations in the Asia-Pacific region, attracting tourists from all over the world. The US-based Go Overseas website ranked Viet Nam 8th in its list of top 10 travel destinations for 2019, saying the nation is “filled with beauty at every turn”. As a home to eight UNESCO World Heritage sites, Viet Nam was also rated as one of the 10 most unique destinations in Southeast Asia in 2019 by The Quarterly Tourism Monitor, while Condé Nast Traveler ranked Viet Nam 9th out of 20 favourite destinations of 2020.

Factors that accelerate Vietnamese tourism into an economic juggernaut

Prior to 2020, global demand for travel and tourism was booming around the world, with growth of roughly 4 per cent per annum expected over the next decade (2019-2029). In addition, Viet Nam’s GDP growth, young population, and rapidly expanding middle class are factors driving tourism. According to World Bank statistics, between 2002 and 2018, GDP per capita in Viet Nam increased by 2.7 times, while real GDP grew by an estimated 7 per cent in 2019 – one of the fastest growth rates in the region. According to the International Monetary Fund (IMF), Viet Nam’s GDP per capita ranks 5th in ASEAN, reaching US$5,212 by 2025.

Demographic change with a population of 96.2 million in 2019 is expected to increase to 120 million by 2050. Moreover, the proportion of the young population under 35 is around 55.5% according to the Census Report 2019; while Viet Nam’s new middle class is expected to reach 26% of total population by 2026. All these factors will drive robust demand for tourism. Domestic tourism has experienced an excellent surge – a four-fold increase in the number of domestic traveler-trips, from 20.5 million in 2008 to 80 million in 2018. Generally speaking, in the 2015-2019 period, the tourism industry had a significant growth rate of 22.7%. According to the World Economic Forum’s 2019 Tourism Competitiveness Index (WEF), Viet Nam ranked 32nd globally (out of 120 countries) in terms of quantity and attractiveness of natural resources and culture, and 3rd in Southeast Asia (after Indonesia and Thailand).

The direct contribution of tourism to GDP is also increasing. If in 2015, tourism contributed 6.3% to the national GDP, the rate in 2019 was 9.2%. Tourism is gradually aiming to become a key economic sector according to the Politburo’s Resolution 08-NQ / TW dated January 16, 2017.

Despite the current situation of the COVID-19 pandemic, Viet Nam’s tourism has remained relatively resilient thanks to strong local demand and the Vietnamese Government’s leadership and success in limiting the number of cases, contact tracing and social distancing. Once international travel resumes, Viet Nam’s tourism will grow further, creating significant economic opportunities for Southeast Asia travel destinations.

By 2030, tourism is set to become a key industry, making Viet Nam one of the top 30 most competitive countries in the world in terms of tourism with an average growth rate of 11-12%/year, contributing 15-17% to GDP.

Lodgis Hospitality – Viet Nam’s leading fully-integrated hospitality investment platform with a proven track-record

Realising the enormous long-term potential of the tourism market in Viet Nam, in 2016, Warburg Pincus, VinaCapital and its co-founder Don Lam established Lodgis Hospitality with the vision to aggregate a portfolio of high-quality hospitality assets and build an institutional grade, fully-integrated lodging investment platform.

With its operating headquarters in HCM City as well as with offices in Singapore and Bangkok, Lodgis has a team of highly experienced and dedicated industry professionals with disciplines in investment, asset management, development, project management, design and operations. Through its wholly-owned hotel management company – Fusion Hotels and Resorts – the company provides management and design consultancy services across a suite of brands including Fusion Resorts, Fusion Suites, Fusion Originals, Maia, Hiive, Glow, Glow the Premium Collection and Glow Inn.

Today, Lodgis has amassed a portfolio of best-in-class hospitality assets across Viet Nam and Southeast Asia represented by more than 30 hotels, approximately 3,000 rooms under ownership and approximately 3,100 rooms managed. Leading luxury properties include one-of-a-kind hotels such as the Sofitel Legend Metropole Hanoi, Raffles Le Royal Phnom Penh, and Raffles Siem Reap.

Lodgis owns and manages one of Viet Nam’s leading, large-scale integrated resorts – Ho Tram Strip Complex – located outside of HCM City, which has the 5-star InterContinental Grand Ho Tram, Holiday Inn Resort, an international quality casino and Viet Nam’s number one ranked golf course.

Fusion Hotels and Resorts has representation in all of the leading cities and resort destinations in Viet Nam including HCM City, Da Nang, Cam Ranh, Phu Quoc, Quy Nhon, Vung Tau with many more flags under discussion. Glow has properties in Thailand’s most popular markets including Bangkok, Phuket, Pattaya, and Krabi.

Ho Tram Strip Complex has the 5-star InterContinental Grand Ho Tram, Holiday Inn Resort, an international quality casino and Viet Nam’s number one ranked golf course.

Among one of the most exciting projects at Lodgis is the planned launch and development of the Ixora Ho Tram by Fusion located at the Ho Tram Strip Complex, set along the beachfront. This exclusive beachfront development designed by leading international consultants will have 46 pool villas and 164 condotels. Ixora Ho Tram by Fusion will be part of the broader integrated Ho Tram Strip Complex, providing guests with a number of restaurant and entertainment options, whilst having a strong sense of privacy. Ho Tram is conveniently located an approximately 2-hour drive from HCM City. This location will benefit from the existing and upcoming infrastructure such as HCMC – Long Thanh – Dau Giay Expressway, Ben Luc – Long Thanh Expressway, Bien Hoa – Vung Tau Expressway, Dau Giay – Phan Thiet Expressway, Long Thanh International Airport, and Cai Mep Thi Vai Port. Ixora Ho Tram by Fusion is expected to offer appealing long-term investment potential.

In discussing our long-term Viet Nam investment strategy, Mr. Peter T. Meyer – CEO of Lodgis Hospitality – said: “Viet Nam is a beautiful country, ranking among the most exciting travel markets. With its natural beauty, interesting history, unique culture, appealing cuisine, and strong hospitality, it is a very attractive international destination. Given its great prospects, Viet Nam is central to our investment strategy. We hope to play our part in further developing Viet Nam into a world-class tourism destination.”

VIETNAM BUSINESS NEWS FEBRUARY 8

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