Vietnamese law firms

In particular, ST25 rice was sold for more than $1,000 per ton and Jasmine rice for $600 per ton.

The Vietnam National Seed Group (Vinaseed) has also inked many contracts to export rice to Australia, the Netherlands, and the Czech Republic at high prices.

The first batch of Vietnamese rice exported in 2021 was 1,600 tons of Trung An High-tech Agriculture Joint Stock Company. Its two types of Jasmine rice were sold for $680 and $750 per ton.

Pham Thai Binh, general director of Trung An, told VietNamNet that the company has changed its policy: producing and exporting high quality rice only.

Vietnam was known for exporting low-grade, low-priced rice for the past 30 years. Now, Vietnamese firms export high-quality rice for high prices. Vietnam is also the producer of ST25, the most delicious rice product in the world.

According to Deputy Minister of Agriculture and Rural Development Le Quoc Doanh, after more than 30 years of conquering the world rice market, Vietnam is no longer inferior to others in terms of the quality and price of its exported rice. The country currently has many valuable rice varieties and the price for Vietnamese rice is sometimes higher than that of Thailand and India.

Doanh said that five to six years ago Vietnam had 35-40% of high-quality rice varieties, but now the ratio is 75-80%. As the quality of rice has increased, the export price has risen very quickly. The rice industry has been successfully restructured in recent years, although the rice cultivation area has been reduced.

Recently, many people were “startled” by the information that Vietnam imported rice from India. But for experts, this is ‘the new normal’ of Vietnamese rice. Vietnam lacks and has to import low-grade rice to process cattle-feed as the proportion of high-grade rice varieties is overwhelming.

The Bangkok Post on January 25 commented that this is “Vietnam’s wise rice strategy”. Vietnam chose to import Indian rice at lower prices to meet domestic demand, while focusing on producing high-quality rice for export. The production of high-quality rice is on the right track with the world, taking advantage of export opportunities to the EU when the EVFTA went into effect.

Dr. Dang Kim Son, former director of the Institute of Policy and Strategy for Agriculture and Rural Development, acknowledged that rice is the most successful export commodity in recent years. From exporting 1 million tons per year, Vietnam has become the world’s leading rice exporter. If in the past, the price for Vietnamese rice was much lower than the world rice price, especially Thai rice, now it is equal or even higher.

Vietnamese rice holds No. 1 position in world

In mid-2018, when the price Vietnamese rice surpassed Thailand’s, many people called it a “miracle” because, for many years, Vietnamese rice had been inferior to Thai and Indian rice in both quantity and quality.

As a result, the position of Vietnamese rice has changed. In 2020, Vietnam overtook Thailand to become the world’s second rice exporting country, with 6.15 million tons, earning $3.07 billion. Notably, the export volume decreased by about 3.5% but turnover increased by 9.3%.

Vietnamese rice has surpassed both Thailand and India to take the number one spot in the world in terms of selling price. In 2020, with an average export price of $499 per ton, an increase of 13.3% compared to 2019, Vietnamese rice farmers earned high profits. It is estimated that with an output of about 7 million tons per hectare, farmers can earn from VND65-VND70 million per hectare, while the cost is only about VND16-VND17 million per hectare. It means a profit of 70%, equivalent to about VND50 million per hectare.

In early 2021, Vietnamese rice maintained its top position in price. On March 25, the price for Vietnam’s 5% broken rice increased to $515-520 per ton, compared to $500-$518 per ton for Thai rice and $398-403 per ton for Indian rice of the same kind. In January 2021, Vietnam’s rice export price hit $551.7 per ton.

‘Heavenly pearls’

According to the Vietnam Food Association (VFA), rice exports in 2021 will be very positive. The Asian rice market started to heat up again as customers were rushing to buy. Many countries have great demand for fragrant rice and sticky rice, which are an advantageous commodity of Vietnam. Vietnam’s export outlook is wide open thanks to opportunities from a number of markets that have signed free trade agreements (FTA) with Vietnam. In particular, under the EU-Vietnam Free Trade Agreement (EVFTA), Vietnam has a quota of 80,000 tons of rice per year with 0% tax.

However, Pham Thai Binh said that to ensure a stable future for Vietnam’s rice export, it is necessary to strengthen the link between enterprises and farmers to improve quality of rice. Local governments need to find solutions to promote these links. This is a prerequisite for enterprises and farmers to jointly produce rice for export to serve various needs of the international market.

Agricultural expert Hoang Trong Thuy said that rice trading firms should keep shifting the structure of exported rice to high value-added types because if Vietnam produces low-grade rice, it will not be able to compete with India and Pakistan. Investing in the production of high-quality rice will help increase export value and enable Vietnamese rice to enter big markets such as Japan, Korea, and the EU.

Tam An

Top exports

According to the Ministry of Industry and Trade, in the first two months of 2021, the export value of nine groups of products exceeded US$1 billion each, accounting for 73.8 percent of Vietnam’s total export value. Of these, the export value of phones and components reached US$9.3 billion, accounting for 19.2 percent of the total, a year-on-year increase of 22.8 percent.

Computers, electronic and optical products also significantly contributed to export growth. In the first two months of 2021, the production index of these products grew 21.2 percent compared with the same period last year. The manufacturing of communication devices, mostly phones and components, grew 22.9 percent. Specifically, 35 million mobile phones were manufactured, up 1.2 percent; phone component production reached VND95.4 trillion, up 55.7 percent. Major export markets of these products include the EU, the US, and China. Exports to China in the first two months of this year reached nearly US$2.5 billion, a year-on-year increase of 103.9 percent.

In 2010, phones and components accounted for 3.2 percent of Vietnam’s total export value. This increased six-fold to 19.5 percent in 2016 and has been maintained around 20 percent since then. In the first two months of 2021, these products topped the list of Vietnam’s exports to the United Arab Emirates (UAE), with value reaching US$551 million, a year-on-year increase of nearly 108 percent, accounting for two thirds of total export value.

Mobile phone manufacturing at VinSmart

Opening way for domestic firms?

Foreign investment in Vietnam in manufacturing phones and components has been increasing. While Apple’s major suppliers such as Foxcon, Luxshare, GoerTek, and Compal already have factories in Vietnam, the mobile giant keeps encouraging its suppliers to shift manufacturing from China.

The export value of Samsung’s phones and components grew sharply in the first two months of 2021. By the end of 2020, about 50 Vietnamese companies had become Samsung’s tier-1 suppliers. However, foreign firms keep importing input components for phone manufacturing in Vietnam.

In the first two months of this year, Vietnam imported US$3.64 billion worth of phones and components, a year-on-year increase of 74.6 percent. Domestic companies are expected to contribute to a resurgence in phone and component exports.

Do Thi Thuy Huong, member of the Executive Board of the Vietnam Electronic Industries Association, said that in the post-Covid-19 period, additional electronics companies with foreign direct investment (FDI) will move their manufacturing facilities to Vietnam, creating opportunities for Vietnamese businesses to supply them with components and accessories. “We want FDI projects in the electronics sector to create breakthroughs for Vietnamese companies to create domestic value added in exports to benefit Vietnamese consumers,” she said.

In February 2021, VinSmart, a member of Vingroup, launched three made-in-Vietnam smart phone models on the website of the leading US conglomerate AT&T. This development has encouraged Vietnamese companies to invest in manufacturing phones and components for export and boosted their confidence in their global competitiveness. Nguyen Thi Hong, General Director of the Mobile Division of the VinSmart Research and Manufacture Joint Stock Company, said that in 2021, VinSmart will concentrate on creating high-quality products for sale to the US market.

Lan Anh

Sharp increases in capital contributions and share purchase

According to the Ministry of Planning and Investment (MPI), there were 1,321 valid projects invested in by Vietnamese enterprises abroad with a total registered capital of US$20.6 billion by the end of 2019. The disbursement of the investment capital was US$9.49 billion by the end of the same year.

Vietnamese enterprises have invested in 78 countries and territories across the world with the largest investments poured into Laos, Russia, Cambodia, Venezuela, and Myanmar. Enterprises invested in 18 key industries and sectors with the biggest capital running in the oil and gas industry, accounting for 38.4% of the total offshore investment capital.

About 15.3% of the investment capital was poured into agricultural, forestry and fishery sector while 12.8% of the capital was invested in telecommunications and information technology and 7.2% of the capital went into the hydroelectricity sector.

The number of small and medium-sized projects run by the private sector has increased over the years while the number of large-scale projects run by State-owned enterprises in the areas of oil and gas exploration and extraction, telecommunications, industrial crops and hydroelectricity has fallen sharply.

The volume of investment capital transferred abroad has tended to decrease since the 2015-2017 period due to a plummet in the number of large projects.

According to the MPI, accumulated profits transferred to Vietnam from abroad was approximately US$3 billion while the profit retained for reinvestment was about US$363.4 million. Nearly 10,000 Vietnamese workers have been sent abroad to work.

In addition, Vietnamese enterprises have established a significant amount of assets abroad including factories and production facilities worth billions of US dollars. These are favourable conditions for Vietnamese enterprises to expand their overseas investment and business activities in a context of deeper international economic integration.

Notably, investment abroad in 2019 was entirely implemented by the private sector with no projects conducted by State-owned enterprises. More and more large private corporations and domestic joint stock companies have invested in developed countries in order to expand their market and affirm their brands such as Vingroup, Vietjet, Thaco, T&T, Vinamilk, FPT, and others.

Investment forms are also diverse with an increasing number of investment projects in the form of capital contributions and share purchase in foreign enterprises.

Minister of Planning and Investment Nguyen Chi Dung said that there are Vietnamese enterprises that have spent US$3-5 million to buy shares of foreign enterprises that are now valued in the hundreds of millions of US dollars.

Major global changes due to the COVID-19 pandemic have led to a wave of mergers and acquisitions through capital contributions and share purchase at potential companies for very cheap prices. Vietnamese enterprises need to have big aspirations to participate in this market segment to accelerate the process of reaching out to the world and bringing greater value into the country.

To date, five Vietnamese enterprises have invested abroad with registered capital of over US$1 billion each including the Vietnam Oil and Gas Group (Petrovietnam), Military Industry and Telecoms Group (Viettel), Vietnam Rubber Group, Hoang Anh Gia Lai Group, and Long Thanh Golf Investment and Trading JSC.

Besides these impressive achievements, there remain inadequacies including legal risks, international lawsuits and disputes, slow progress of projects, and ineffective implementation of projects, among others.

According to experts, the change in the investment tendency of Vietnamese enterprises in recent years has been market-oriented and consistent with the process of trade and investment liberalisation and international economic integration.

There is large room and great potential in international markets, thus, the most important thing for offshore investment is to perfect mechanisms and policies and create more favourable conditions for private enterprises to easily invest their resources abroad in order to transfer the profits to Vietnam. Meanwhile, enterprises need to improve their governance capacity, their ability to grasp the market and sufficiently strong cash flows.

The amended Law on Investment which will take effect on January 1, 2021 has completed policies on investment abroad regarding clear updates of cases prohibited from investment abroad, conditions accompanied with investment abroad, lending abroad, reporting the process of State management agencies related to investment abroad, the use of profits from overseas projects to contribute to other projects abroad, and others.

To prevent risks in offshore investment activities, the MPI has proposed the Government assign relevant agencies to review and evaluate investment trends abroad in the areas of real estate and the investments of foreign investors in Vietnam abroad in order to devise timely solutions to problems arising.

In addition, Vietnam should boost negotiations and early signing of investment promotion and protection agreements with countries receiving large investment from Vietnam or with Vietnam’s potential partners to create a legal framework for safe and effective investment abroad.

An artist’s impression of Samsung Electronics’ research and development center in Tay Ho District, Hanoi. Photo courtesy of Samsung.

The former is expected to be completed in 2022 and employ 3,000 engineers.

The South Korean giant also has other R&D centers in Vietnam to research into mobile devices, household electrical appliances, artificial intelligence, and data analysis.

The Qualcomm R&D center opened in June last year in Hanoi with four laboratories for developing wireless technologies (4G, 5G) and camera technologies and boosting the performance of mobile device batteries. It has around 50 engineers, all of them Vietnamese.

The Samsung facility will develop smartphones for the Southeast Asian market and software for Australia, New Zealand and Europe, and serve as a 5G network testing hub.

Others have also chosen Vietnam to set up R&D centers, including ride-hailing company Grab (in HCMC), South Korean tech giant LG Electronics (Hanoi and Da Nang) and Japan’s Toshiba and Panasonic (Hanoi).

Samsung also has 11 labs in Vietnamese universities to conduct collaborative education programs and enable students to take part in research into mobile phone technologies.

Many students have gone on to become researchers at the company.

Vu Thanh Thang, vice chairman of cybersecurity firm BKAV, said the trend of tech giants setting up R&D centers in Vietnam shows the country “has the ability to take part in high value-added activities in the global value chain.”

Vietnam is now in a golden demographic period with 45 percent of its population being under 30 years of age, which is attractive to global companies, he said.

But this trend is causing difficulties to local tech companies since they have to compete with global giants to attract talent, he pointed out.

He suggested that instead they should proactively train their own R&D engineers.

To better understand this concept, VietNamNet talks with Dr. Nguyen Van Dang, an expert on public Administration and policy from the Ho Chi Minh National Academy of Politics.

Dr. Nguyen Van Dang. Photo: Pham Hai

The media is familiar with the concepts of corporate governance, urban governance, global governance. Is this the first time the documents of the Party Congress have used the “national governance” concept?

It is true that this is probably the first time the Party documents have mentioned the concept of “governance”. More specifically, in the Political Report of the 12th Party Central Committee presented at the 13th Party Congress, in the section “The key tasks and strategic breakthroughs of the 13th term”, the Party advocated: “Changing national governance in the direction of modernity and efficiency”.

This concept is also used with the same connotations in the “Lessons from experience” section of the 2016-2020 socio-economic report; Resolution of the 13th Party Congress; Socio-economic development strategy for the period 2021-2030. Thus, the concept of “national governance” has been used four times in the documents.

When did the concept of “governance” appear and what does it mean?

The concept of “governance” originated in the ancient Greek as “kubernan”, meaning control/guide. Later, Plato used the word with the connotation of “designing a ruling system”. In the Middle Ages the word “gubernare” appeared in Latin, which also implied to guide/control or rule through law. Until the 1970s, “governance” was still commonly used in the same meaning as “government”.

In the early 1980s, the concept of “governance” became more common and used with a broader meaning.

Government not only refers to the activities of the state, but also extends to non-state subjects. This diverse network of actors gradually reduces the notion of boundaries between units in government, between public – private sector, or domestic – international.

So far, there still exist different interpretations of the concept of “governance” among the sciences. In terms of solving common problems of the community, “governance” or “public governance” is generally understood as the establishment, application, and enforcement of “rules of the game”.

More specifically, it is a set of principles for collective decision-making in multidisciplinary contexts, and there is no formal system of control between them that governs the terms of the relationship between the subjects participating in the governance system.

The difference between “state management” and “national governance ”

What are the key features of national governance?

The first is the multi-subject feature. The governance system will include not only the government, laws, principles and administrative regulations and state agencies, but also private subjects and non-profit organizations, as well as the more active role of every citizen.

Therefore, the public interest is no longer the only basis for governance decisions. In the framework of a multi-subject relationship, the interests of different subjects must be respected. Consequently, policies or management decisions tend to be dominated by diverse interests, not just public interests.

Second, reduce the gap and narrow the public-private boundary. The governance system integrates administrative systems with market and non-profit mechanisms, thereby narrowing and blurring the boundaries between the state and society.

Third, the cooperation between partners will gradually replace the imposed relationship in order as in the traditional government model. Due to the participation of diverse subjects in governance relationships, the form of those relationships will gradually change to a horizontal relationship, which is more collaborative, cooperative, and equal.

Fourth, governance is interconnected – governance models and paradigms that include institutions and people at all levels of government as well as different policy areas, and are not limited by the local territory border.

So, what is the most fundamental difference between “state management” and “governance”?

Management, whether at the organizational, local or national level, always has a subject that controls relationships and decision-making (government, board of directors, administrators…). However, when it comes to governance, such a central subject does not exist.

The 13th National Party Congress. Photo: Pham Hai

Therefore, the most fundamental difference among management systems is that there will not be a single subject that can fully control the collective decision-making process in multi-subject governance relationships.

Good sign

How will the role of the government be in the national governance system?

Governance systems require the government to gradually adapt to its role of coordinating the differences in expectations and interests of subjects of governance. It also means that the government cannot easily impose its will on related parties as in a traditional governance model.

How do you evaluate the emergence of the concept of “national governance” in the documents of the 13th Party Congress?

First of all, I think it is a good sign because it shows the change in the Party’s perception. However, the limited use of this concept also proves a certain caution of the Party towards this new concept.

In your opinion, why is there such caution?

In my opinion, “governance” is a concept of Western origin so it reflects tradition and reality in Western societies. This concept, thus, will still be very strange to many Vietnamese people.

In addition, the tradition and reality of the political – administrative system in Vietnam and many East Asian countries in general are also very different from the West. Therefore, we cannot rush to use arbitrarily foreign concepts.

Building a national governance model

What is your opinion about the future of “governance thinking” in Vietnam?

We live in a rapidly changing and interdependent world. Therefore, since the late 1990s, management thinking has been an increasingly popular trend in the world.

At home, reforming the political – administrative system towards respecting and promoting the people’s mastery has been a consistent policy of the Party in many recent congresses.

The reality also shows the limitations of the state’s ability and resources in solving community problems. Therefore, we are witnessing the increasingly active participation of businesses, social organizations and individual citizens, working side by side with the government to solve collective problems.

What are the challenges in the process of building “national governance” in Vietnam?

“Governance” is an exotic concept so the first challenge is that we must define this concept associated with the actual context in Vietnam today. This has not been shown in the documents of the 13th Party Congress.

On that foundation, the next step is to build a national governance theory and model, which can catch the world’s movement trends and reconcile with the traditional and current characteristics of Vietnam.

I think that this is a theoretical challenge that the Party should be concerned about in coming years.

Hien Anh