Saigon market vietnam

Comprehensively reforming State’s economic management

February 26, 2021 by en.nhandan.org.vn

With five groups of solutions and 25 tasks, the plan puts forward that by 2030, the State’s management methods will be reformed in a fundamental and comprehensive manner and aligned with international principles and practices in a bid to create a favourable business climate for all economic sectors, thereby helping achieve all targets relevant to the private economic sector as stated in Resolution No 10-NQ/TW, developing the private economic sector into an important driving force of the socialist-oriented market economy.

During the course of the three years implementing the resolution, Vietnam’s private economic sector has seen robust development and has gradually become a driving force in promoting national economic growth.

Private businesses, particularly large scale ones, have made remarkable strides in establishing their roles and position in the national economy. Many private enterprises have shown performance levels as effective as or even more so than State-owned and foreign-invested enterprises.

More and more major private corporations and domestic joint stock companies have invested abroad in developed countries to expand their markets and promote their brands such as Vingroup, Vietjet Aviation Joint Stock Company, Truong Hai Auto Corporation (Thaco), T&T Group, Vietnam Dairy Products Joint Stock Company (Vinamilk), and FPT Group.

Private enterprises made up only 20% of the 500 largest enterprises in Vietnam (VNR500) in 2017, the figure then reaching 57.8% in 2019. The proportion of overall revenue from private enterprises also increased to 37.51% in 2019 from 27% in 2016.

These figures were made possible thanks to the efforts of enterprises themselves as well as Government policies designed to create a favourable and equal business environment in recent years.

However, according to the General Statistics Office, private enterprises only contribute about 9.1% of GDP.

To address the problem, the 13th National Party Congress’s Resolution was adopted with many new viewpoints and orientations for the State’s economic management, aimed at making major breakthroughs in developing the private economic sector.

The resolution stresses the development of a strong entrepreneurial force, the restructure of State-owned enterprises, and the strengthening of links between domestic and foreign-invested enterprises.

To achieve these goals, State management activities must respect the law of the market in order to promote the socialist-oriented development of the private economic sector. It is also necessary to remove hindrances facing production and business activities, including those in the private sector, in order to facilitate businesses’ operation and encourage them to make even bigger contributions to the country’s development.

Developing value chains for agricultural products

February 18, 2021 by en.nhandan.org.vn

Many effective models

According to the Department of Agriculture and Rural Development of Bac Lieu Province, through the process of agricultural restructuring, many models of the linking value chains in the production, processing and consumption of agricultural products have been formed, bringing high economic efficiency. Currently, the province’s many companies and units of shrimp farming in the form of a closed value chain were recognised as agricultural enterprises applying high technology or certified by international standards of aquaculture such as GlobalGAP, BAP, ASC, and Organic. In addition, the province has steadily developed the rice industry following a large production model, joining the value chain, with rice output increased from 1.066 million tonnes in 2015 to 1.15 million tonnes by 2020.

In Hai Duong, the agricultural sector has also been promoting the formation of value chains for agricultural products. Accordingly, the province has been focusing on building agricultural production zones for export processing, high-tech agricultural zones, and expanding production scale according to the GAP assessment process. Up to now, the whole province has 335 hectares of organic rice, 114 rice-growing models of “one zone, one variety, one time”, with the minimum scale of 30 hectares per zone. Specialised vegetable growing areas with high efficiency continue to be maintained and expanded. Thanks to production in value chains in 2020, many agricultural products of the province will be exported through official channels to high quality markets, such as: lychee, longan exported to Japan and the US; carrots to the Republic of Korea (ROK), Japan, and Middle Eastern countries; cabbage to the ROK and Japan; pickled cucumbers to Russia and the ROK; and onion and garlic to Malaysia.

Meanwhile, according to the Hung Yen Provincial Department of Agriculture and Rural Development, the province has successfully implemented the project “Building and developing models of production and consumption chain of agricultural products” in the direction of producing quality goods, ensuring food safety. The project spent more than VND26 billion to support science – technology, infrastructure, and promoting product consumption, including applying advanced technology in production chains, food business, disseminating knowledge and guidance on cultivation and husbandry techniques. Through project implementation, in Hung Yen, many typical models appeared, such as: Hoang Minh Chau Co., Ltd. with a group of turmeric products including: Nano Curcumin, Nano Collagen turmeric milk, turmeric cream, turmeric starch; and the Mien Thiet longan cooperative with Hung Yen longan.

Towards sustainable development

Building value chains for agricultural products is one of the important solutions towards the sustainable development goals of the entire agricultural sector. Over the past time, several models of value chains have been formed and have been remarkably effective, but they are not high in quantity nor evenly distributed in fields and trades. This is attributed to the fact that agricultural production in many regions of the country is still small and fragmented, it is difficult to form concentrated production zones to apply science – technology as well as control issues related to food safety and hygiene. Therefore, in the coming time, it is necessary to promote the formation of value chain models in the forms such as cooperatives, cooperative groups associated with enterprises; Manufacturing enterprises associated with distribution firms; Enterprise performing all stages in the chain.

Therefore, localities should soon plan concentrated agricultural production zones, as a basis for the formation of value chains. In Bac Lieu Province, according to the plan, by 2025, the province will promote investment in building an aquaculture zone, a high-tech aquatic seed production area with 4,000 hectares of farming; implementing large fields associated with rice consumption to reach 100,000 hectares, accounting for more than 51% of the cultivated area. In addition, the local agricultural sector also continues to guide and support production and business establishments in the direction of scaling up, ensuring all the conditions to convert activities into new-style cooperatives or business. At the same time, the province will also support businesses, cooperatives, and business households to participate in the programme “One Commune, One Product” (OCOP) to link production and consumption in the value chain to increase high added value.

In order to develop the value chain of local specialty products, in 2018, the Prime Minister issued Decision No.490/QĐ-TTg approving the National Programme of One Commune, One Product for the 2018-2020 period (OCOP Programme). The goal of this program is to standardise at least 50 percent of the existing products, or about 2,400 products, while consolidating and perfecting production organisation in the direction of linking production households with cooperatives and enterprises.

Leverage of funding models imperative for health sector

February 26, 2021 by www.vir.com.vn

Hospitals have gained in recent years thanks to improved facilities and more strategic partnerships

Nipro Pharma Corporation – Japan’s biggest prescription drug contract manufacturer – has nearly completed procedures to increase investment capital by about $270 million to enlarge its facility at Saigon High-tech Park (SHTP) in Ho Chi Minh City so as to increase production volume.

“The procedure completion is expected in the next few weeks, thus increasing Nipro Pharma’s total investment there to $570 million,” a SHTP representative told VIR. “Nipro has performed well since it began investment in the park in 2016.”

Nipro Pharma is among the Japanese investors which have strong interest in Vietnam’s healthcare sector. Many more are expanding to and in Vietnam, according to the Japan External Trade Organization.

Together with Japan, South Korea and the EU also have more sights set on the lucrative local market.

Positive signals

The healthcare sector has welcomed new investment inflows in recent times, especially in 2020 when a number of new projects were announced despite pandemic restrictions. Late last year, a consortium led by Singaporean sovereign fund GIC acquired a minority stake in Vietnam-based private hospital operator Vinmec, part of Vingroup, for $203.1 million.

The year also witnessed VinaCapital using $26.7 million to acquire 30 per cent stake in Thu Cuc International General Hospital; and British Real Capital London’s launch of the $156 million Hong Anh Medical Campus project in Ho Chi Minh City.

In addition to foreign investment, new domestic private capital flows into the sector were also reported during the year. Last January the southern province of Tra Vinh licensed the high-tech pharma project from TV Pharma with initial investment of VND650 billion ($28.26 million). A few months later, the Van Phuc-Saigon Hospital and Hoan My General Hospital projects were also kicked off. Elsewhere, the Long An Obstetrics and Pediatrics Hospital, a public-private partnership (PPP) with Technical World Group being the investors, was put into operation.

The hospital segment is among the most attractive to international financiers and domestic ventures. Since 2015 when the government issued a policy on encouraging private investment in the health sector, over 200 private-run hospitals and more than 35,000 private-owned clinics were built nationwide.

Together with newly-built facilities, existing hospitals are advancing digitalisation projects to cash in on the unmet demands for high-quality services among Vietnamese who were spending an estimated $2 billion on overseas treatment every year before the pandemic.

In addition to infrastructure advances, the trend of focusing on social business programmes has been reinforced by recent moves among multinational corporations like Novartis, Roche, Sanofi, GSK, and AstraZeneca. The moves are in anticipation of a sharp rise in non-communicable diseases thanks to an ageing population.

For example, AstraZeneca Vietnam in collaboration with the Ministry of Health (MoH) and three specialised associations has launched a communications campaign to improve community awareness in asthma management.

Similarly, late last year the Vietnam Medical Association and Roche Vietnam signed a strategic partnership to implement a scheme on improving access to innovative therapies for high-risk breast cancer patients until 2025.

Also last year, GSK Pte., Ltd. in Vietnam signed an MoU with the MoH to fight against antimicrobial resistance in Vietnam, with the deal lasting until 2023.

Despite the growing interest, the quality of such initiatives has yet to satisfy the demand. According to the Vietnam 2035 Report by the World Bank and the Ministry of Planning and Investment, total spending on healthcare in the local market makes up about 5.8 per cent of the country’s GDP, among the highest rates in the region.

New motivations

Like other sectors in Vietnam, the healthcare sector faces a mismatch between the demand for investment and the fiscal space available to meet such demand. In 2016, it was estimated that the public healthcare network would need infrastructure investment of VND176 trillion ($8 billion) for the 2016–2020 period. Since 2010, the government has only allocated and met around two-thirds of capital demand for that period.

Therefore, the government sees private resources as critical to filling that gap, with government master plans for facility investment explicitly directing the MoH and hospitals to mobilise funding from the private sector.

Despite the sector’s importance, private investment in healthcare remains low due to shortcomings including a lack of a legal framework for PPP investment. However, the Law on Public-Private Partnership Investment, which took effect from January, will open the room for private investment in healthcare.

According to a VIR source, the government is gathering ideas from ministries and central agencies for the draft decree guiding the implementation of the law so that it is expected to be issued in the next few days, becoming the key piece of legislation governing PPP transactions in the country.

Under the law, health remains one of the priority sectors for PPP investment. Moreover, some legal concerns among investors are being solved. Specifically, Vietnam will, for the first time, apply revenue risk allocation for related initiatives.

Investors of such projects will be also ensured the right to access and use land and other public assets. Additionally, PPP businesses will enjoy incentives in tax, land use fee, land lease fee, and will be more in line with the prevailing rules on tax, land, and investment.

In addition to the Law on Public-Private Partnership Investment, the new Law on Investment and the new Law on Enterprises are expected to further facilitate capital flows into healthcare.

Moreover, it is projected that the EU-Vietnam Free Trade Agreement will bring more investment opportunities to EU-based pharma businesses in Vietnam and stiffening market competition. The landmark agreement will open the Vietnamese market in fields that businesses have been seeking particular solutions to for years, such as intellectual property rights, direct pharmaceuticals imports, and tenders, among others.

A representative of the MoH said, “Vietnam’s health sector is working on a number of tasks to achieve its goals. The sector always encourages private investment to join.”

Barriers remain

According to the World Bank’s “PPP for Health in Vietnam – Issues and Options” publication, the application of such partnerships in the health sector is still limited despite several facilitators such as the promotion of private investment into healthcare activities, deepening of hospital autonomy, the expansion of universal health insurance coverage, and the development of healthcare credits.

Thus far, a long wish list of 63 projects remains in the health PPP project pipeline. This high number is indicative of ineffective PPP project screening criteria rather than high potential, and only a small percentage of these projects are expected to reach implementation.

Most health PPP projects are proposed and developed at the sub-national level, especially in Ho Chi Minh City, and focus on hospital infrastructure and services rather than on preventive and primary healthcare. They are oriented towards higher-income groups in urban areas rather than disadvantaged groups in rural areas. The proposed health PPP pipeline, therefore, raises serious questions about equity and efficiency in public sector health service delivery.

Furthermore, PPPs have not been embedded in health policies and related regulations, hampering the use of PPPs to expand infrastructure and improve services in the sector. Stakeholders have far greater motivation and incentives to engage in healthcare projects using the joint venture models that were made possible through private investment attraction policy rather than the more complicated and prolonged PPP route.

In the current context, the World Bank experts said that health PPP models and contracts should be adopted with caution. The “asset-heavy, service-light” PPP models, such as equipment and facility PPPs, seem to be the most feasible options. Meanwhile small-scale “asset-light, service-heavy” models such as specialised services and integrated PPPs at the primary healthcare level may be suitable for selected projects for which the private sector has a competitive advantage.

Vietnam, however, does not yet seem to be ready for a fully integrated hospital PPP model because of various barriers in the existing regulatory framework as well as the capacity mismatch between the public and private sectors.

Experts recommend that the MoH should develop a circular guiding the screening, preparation, implementation, monitoring, and evaluation of health PPP projects.

By Minh Nguyet