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Tag: Vietnam

  • Once successful fitness studio goes belly-up

    Once successful fitness studio goes belly-up

    Fitness studio chain Lamita has announced the closure of all of its 16 centers after Covid-19 caused it to go bust.

    Vu Thi Thuy Linh, the CEO of Lamita Fitness, said the main reason for the failure has been Covid-19 and not internal problems but admitted she was at fault for not realizing the risk of expanding the business despite the pandemic.

    “The pandemic has left the company unable to revive, resulting in cash flow imbalance and unpaid wages, and so we had to make the decision to shut down,” Linh said.

    “If we had not relied on the investment fund but on ourselves, developing steadily just like seven years ago, then maybe all of these regretful outcomes could have been avoided.”

    Founded in 2012, Lamita started off as a dance center called Zumba Hanoi. In 2018 restructured, changed its name to Lamita and developed the Lamita Fitness, Lamita Star, Lamita Shop, and La Pham brands.

    It used to have 65 studios and 200 employees before the pandemic outbreak. But, starting in July 2020, it began to close some and cut staff since it was unable to pay their wages as Covid-19 hit cash flows. By August only 16 studios were left.

    In 2019, Linh persuaded Do Thi Kim Lien, chairman of Song Duong Surface Joint Stock Company, and Pham Thanh Hung, chairman of Century Real Estate Investment and Development Joint Stock Company, to invest VND10 billion ($435,000) for a 35 percent share in Lamita Fitness, but the former failed to bring in the money as promised.

    At the end of 2019, Lamita Fitness got in touch with a domestic investment fund. In February 2020 it got its business appraised and was valued at VND100 billion. Linh claimed that the fund had agreed to invest VND30 billion for a 30 percent stake.

    Then, a month later, Covid-19 broke out and Lamita found itself mired in difficulties since, despite not receiving the investment from the fund, it had to maintain the growth it had committed to. It thus had to pay growing rents and staff salaries despite having little income.

    When the Government imposed social distancing, it retained all its studios and staff thinking the pandemic would soon pass. In the middle of 2020, it reopened, but business was non-existent and the lack of cash flows was beginning to tell.

    Linh plans to revive Lamita, reduce its scale and launch online products. It has agreed to refund the fees people paid for dance lessons, but those staying back can get a 50 percent discount when the next course starts.

    Lamita is the first business in the fitness industry to fail in 2021. Last year WeFit, an application connecting gyms and spas, went bankrupt due to Covid-19.

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  • Shrimp exports to rise 15 pct

    Shrimp exports to rise 15 pct

    Vietnam has advantageous conditions to increase shrimp exports by 15 percent year-on-year to top $4 billion in 2021, industry insiders say.

    Global demand has remained stable while other shrimp exporting countries have not recovered from pandemic impacts, according to the Vietnam Association of Seafood Exporters and Producers (VASEP).

    China is the biggest shrimp producer in Asia, yet it lacks shrimp supply for processing and consumption.

    Vietnam’s shrimps will benefit from tariff cut under new-generation FTAs that the country has signed.

    However, Vietnamese shrimp exported will have to face strong competition from India, where low production costs make its export prices more competitive, according to the Agro Processing and Market Development Authority.

    China has imposed import restrictions based on quality, quarantine, and procedural issues which can result in a plunge in shrimp exports to the neighboring giant.

    Shrimp exports are set to increase by 12.4 percent in 2020 to $3.78 billion despite the major impact Covid-19 has had on the seafood industry.

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  • HSBC sees Vietnam growing slower than earlier forecast

    HSBC sees Vietnam growing slower than earlier forecast

    HSBC has revised downward its Vietnam GDP growth forecast for 2021 from 8.1 percent to 7.8 percent, pointing to the slow recovery in tourism.

    Travel-related services such as accommodation and transportation remained in a deep slump, it said in a note.

    “There is nothing to be surprised when immigration restrictions are still in place, although Vietnam has made some travel agreements with neighboring countries.”

    The tourism industry could hardly revive until an effective vaccine for Covid-19 was developed and there was a new approach toward global tourism co-operation.

    It also said the inflation rate in 2020 was probably 3.3 percent, much below the 4 percent target set by the State Bank of Vietnam.

    Though the country escaped the worst effects of the pandemic, its businesses and consumers affected by Covid-19 needed great support, but it would be difficult since Vietnam’s public debt-to-GDP ratio was 65 percent.

    The fiscal deficit would increase to 5.2 percent of GDP in 2020 before falling to 4.6 percent in 2021, resulting in public debt falling below 60 percent.

    With the economy likely to revive, the central bank would stick to its monetary policy in the first quarter of 2022 before raising interest rates by 0.25 percentage points in the third quarter.

    Vietnam would remain a “shining star” in 2021, and also benefit from a technology-driven revival, consistent FDI inflows and various trade agreements, HSBC said.

    The only challenge was likely to come from the labor market since, despite some improvement in the third quarter of 2020, unemployment was still on the rise and salaries were declining.

    If this continued, consumer spending, a major factor boosting the economy, would take longer to recover.

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  • KardiaChain CEO aims to popularize blockchain in Vietnam

    KardiaChain CEO aims to popularize blockchain in Vietnam

    The KardiaChain platform founded by Pham Minh Tri has attracted Vietnamese experts globally to join the local blockchain sector.

    After graduating with a master’s degree in science from the University of East Anglia, famous for practical research, in London in 2013, Tri is now focusing on location-based messaging, text-speech processing, computer vision, and augmented reality.

    During his tumultuous years outside Vietnam, blockchain attracted Tri’s attention. He first approached this technology in 2012, after learning about the core peer-to-peer network of decentralized systems.

    Five years later, Tri had the opportunity to delve into and invest in new blockchain projects in London. In 2018, he and Huy Nguyen, currently senior technical manager at Google, Silicon Valley, founded KardiaChain, which rapidly researched blockchain interoperability.

    This breakthrough technology has helped solve the problem of communication between networks, allowing the transfer of data and assets from one blockchain to another. Important applications of cross-chain blockchain include decentralized exchanges.

    Today, only a few companies have successfully built cross-chain infrastructures like Polkadot and Cosmos, all worth billions of dollars, according to the KardiaChain CEO.

    Studying the potential market, Tri considered Vietnam one of the most promising environments for blockchain development due to its legacy system, golden population, and open regulatory environment.

    Unlike the U.K. or U.S., blockchain in Vietnam enjoys less competition with existing systems according to centralized design. Digital conversion and digitization of data are still in the early stages, so if combined with blockchain nation, our country would be able to take a shortcut, said Tri. Besides, its young population, rapid increase in education, and strong development of the middle class are all suitable for newly introduced and well-received technology products.

    More importantly, the Vietnamese government supports the startup movement, especially industries in the 4.0 revolution like blockchain and AI. Besides, the legal corridor for Fintech that is gradually being improved is also a great driving force for blockchain users.

    Returning to Vietnam in 2018, he and his partner founded KardiaChain, specializing in developing blockchain platforms. One of its most outstanding inventions is its non-invasive cross-chain technology Dual Node, pending patent. This technology helps blockchains communicate with each other despite algorithmic differences.

    KardiaChain’s decentralized platform allows any business to build transparent, secure applications with open functionality. According to business representatives, this makes blockchain infrastructure invisible, like electricity and the Internet, through mobile applications to benefit end-users.

    One of the most successful application units of KardiaChain is Youth Union in District 5, Ho Chi Minh City. The solution called TuoiTre Q5 helps the unit manage 10,000 youth union members, update daily news, support online assignments, and recognize emulation and rewards.

    With the above advantages, the app has received nearly 8,000 good reviews in recent surveys. The product initially asserted that the blockchain platform, when properly applied, is a useful tool to transform traditional models to suit contemporary society.

    From initial research and application, in April this year, KardiaChain raised $19.2 million from 2,500 investors through the Gate.io platform. KardiaChain then successfully signed a strategic cooperation with LG CNS – a subsidiary specializing in providing technology solutions of LG Group to develop blockchain infrastructure in Vietnam.

    According to Tri, the process of popularizing blockchain in Vietnam is a long journey, requiring a combination of technology, people, law and timing. But with careful preparation, we believe we will achieve this goal, inspiring people with the same passion and understanding of blockchain, he said.

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  • Solar power boom poses a distribution challenge

    Solar power boom poses a distribution challenge

    The increasing solar power capacity has made it difficult for national utility Vietnam Electricity (EVN) to ensure stable power distribution nationwide.

    The nature of solar power capacity, which accounts for 25 percent of the total, is to produce high volumes during the day and no production in the evening. This poses difficulties for EVN in operating the national grid, the national utility has said in a report.

    There have been times when the grid was oversupplied during the low-demand hours between 10 a.m. and 2 p.m. when solar radiation is at peak, the report says.

    On the contrary, when power demand is at the highest, the 5:30-6:30 p.m. period, solar power production falls to nearly zero and the traditional power generators have to be mobilized.

    “The ratio of renewable power generation is increasing and with it comes instability in operation,” the report says.

    Vietnam’s solar power capacity was roughly 16,500 megawatt by the end of last year, nearly 48 percent of it coming from rooftop panels and the rest from plants.

    Solar power production reached 10.6 billion kilowatt-hours last year, accounting for 4.3 percent of total.

    There was a surge in the number of solar power projects after the government offered an incentive feed-in tariff scheme to promote renewable energy production to meet rising demand in a fast-growing economy.

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  • Vietnam economy to grow almost five times by 2035

    Vietnam economy to grow almost five times by 2035

    Vietnam’s economy is expected to grow five times, becoming the 19th largest economy in the world in 2035, a report says.

    Steady and consistent growth is set to help it go past major Asian economies like Taiwan and Thailand by 2035, U.K consultancy the Centre for Economics and Business Research (CEBR) said in its annual league table on the growth prospects of 193 economies released last week. The country now is the 37th largest economy.

    Its GDP growth is forecast at 7 percent a year over the next five years, and 6.6 percent in the subsequent decade.

    The report estimated Vietnam’s nominal GDP by 2035 to be $1.59 trillion from the current $341 billion, a nearly five-fold increase in 15 years.

    Despite the Covid-19 pandemic, the Vietnamese economy, unlike most others, was able to escape a contraction in 2020 thanks to competent handling of the crisis, the report said. It grew at 2.91 percent.

    The government has set a GDP growth target of 6.5 percent for 2021.

    China will overtake the U.S. as the world’s biggest economy in 2035 after outperforming its rival during the global Covid-19 pandemic, according to CEBR.

  • Vietnam not considering international flight resumption

    Vietnam not considering international flight resumption

    Vietnam is not considering a resumption of international commercial flights with the Covid-19 situation remaining intense globally and vaccine distribution uncertain.

    The pandemic has been complicated by the appearance of a new coronavirus variant, with no certainty a vaccine would be distributed on a large scale this year, Deputy Minister of Planning and Investment Tran Quoc Phuong told press Monday.

    Resumption of tourism activities would only occur when deemed safe, he stressed.

    Vietnam suspended commercial international flights in late March last year to contain the spread of the novel coronavirus.

    However, the country still allows a limited number of flights for experts, businesspeople, workers and overseas Vietnamese, who are all quarantined by up to 14 days upon arrival.

    Phuong said authorities are struggling to contain illegal immigration as travel demand spikes ahead of the Lunar New Year holiday, or Tet, which falls in February this year.

    Foreign arrivals last year fell nearly 79 percent to 3.84 million, according to the General Statistics Office.

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  • Big state banks gradually lose credit market share

    Big state banks gradually lose credit market share

    The credit market share of Vietnam’s three largest banks has fallen by 2.7 percentage points in the last two years due to liquidity constraints.

    The three, all state-owned and listed and the country’s largest by assets, Vietcombank, Vietinbank and BIDV, account for 34 percent of all loans outstanding, securities company VDSC said in a note last week.

    But this represents a 2.74-percentage-point fall even as the four largest non-state banks, Techcombank, VPBank, Military Bank (32.42 percent state-owned), and ACB, increased their share of loans outstanding by 1.6 percentage points.

    During the two years ending in the third quarter of 2020, VietinBank’s share fell by 1.96 percentage points, BIDV’s by 0.7 percent and VCB’s by less than 0.1 percent.

    The big fall in VietinBank’s market share is because it has been strapped for cash. There have been no major infusions of capital in the past few years, return on equity has been low, bonuses and employee welfare funds cause a big drain on resources, and the government appropriates much of its earnings.

    This situation has been exacerbated by Basel II standards, which prescribe a capital adequacy ratio (CAR) of 8 percent of risk-weighted assets for all financial institutions. Thus, to lend more, banks have to increase their charter capital.

    Though the Government has agreed to reduce its ownership in state-owned banks from 65 percent to 51 percent by 2025, it has yet to be implemented.

    But the government issued a decree in October allowing state-owned banks to pay dividends in stocks to increase their capital, helping them improve their growth prospects in the medium and long terms.

    According to the State Bank of Vietnam, banks’ total outstanding loans were worth VND8.69 quadrillion ($376.87 billion) at the end of the third quarter.

    Credit growth is expected to be 11 percent in 2020, down from 13.5 percent in the previous year.

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  • Container shortage hits exports

    Container shortage hits exports

    Exporters complain they face difficulty delivering goods due to a shortage of containers, whose rentals are rapidly increasing as a result.

    The Vietnam Maritime Administration (VMA) on Monday wrote to container shipping lines, instructing them to publicly declare their freight rates and surcharges, warning it would not countenance profiteering or unreasonable prices, which cause difficulties for exporters and disrupt the shipping market.

    It has received numerous complaints about inflated prices due to a shortage of containers and ships.

    Most shipping lines have hiked freight by 2-10 times in the last two months, depending on the sector. For instance, while it normally costs $1,420 to ship a 20-foot container to the U.K., it rose to $5,420 in November and $7,200 in December.

    Before October renting a container from the U.S.’s Los Angeles to Vietnam cost $700-1,000, but this increased to $5,000 in November.

    Phan Minh Thong, CEO of Phuc Sinh, one of the largest pepper and coffee exporting companies, said the cost of a container increased by 700 percent yet many of his orders were not delivered because “they were unilaterally canceled by the shipping company.”

    “There have been occasions when we reached an agreement with the shipping line at night but were told in the morning it was canceled because they received a higher bid. On some days we received cancellation notices for 40-50 containers.”

    From shipping 40-50 containers a day, Phuc Sinh was down to three to five in November and December.

    As a result, they had to buy less from suppliers, reducing from nearly 10 tons a month to three tons or less now though it is the harvest period for items such as pepper and coffee.

    The Vietnam Association of Seafood Exporters and Producers has advises its members to have plans in place to minimize supply chain disruptions and export losses.

    It had expected rising exports in the fourth quarter to take seafood exports for 2020 to $8.6 billion, but lack of containers and ships in the last two months could affect this.

    The Covid-19 pandemic is the main reason for the container shortage, Kieu Ngoc Phuong, deputy general director of Tan Thanh Trading Mechanic JSC, which manufactures and distributes containers, said.

    Many are stuck at ports since they could not be emptied, while the pandemic itself has caused many shipping lines to go bankrupt, she said.

    “The number of customers contacting Tan Thanh to rent containers has increased by 10 times from normal months. We have to reject a lot of orders because we cannot meet all the demand.”

    Concurring, Thong also said shipping lines had to cut routes this year, resulting in a shortage of cargo space, and there has been a slowdown in goods processing and freeing up empty containers at ports in Europe and North America, the world’s two biggest import markets, while demand during the year-end holiday season is huge.

    According to the Ministry of Industry and Trade, China has been getting containers from various countries by paying high prices following a serious shortage earlier this year.

    It did so just in time to see exports rise 21 percent year-on-year in November, as manufacturing recovered post-pandemic, creating a general scarcity in the region.

    Given the situation, the VMA assured that it would inspect shipping lines and crackdown if there are deliberate violations of transparency rules.

    The Ministry of Industry and Trade forecasts the shortage of ships and containers to continue until March or even longer if Covid-19 is not controlled.

  • Apple leads in Vietnam smartphone awareness survey

    Apple leads in Vietnam smartphone awareness survey

    Apple is the most popular smartphone brand in Vietnam with 46 percent of respondents thinking about it first.

    Samsung is second with 36 percent, followed by Oppo (9 percent) and Nokia (2 percent), according to a survey of nearly 600 respondents conducted by Ho Chi Minh City-based market research firm Q&Me.

    Top reasons cited for favoring Apple were high quality (78 percent), good brand (71 percent), good security (65 percent), good design (59 percent) and good camera (57 percent).

    The survey found Apple was much loved by young people, while Samsung was popular among those aged 30 and above.

    The survey’s results also showed 79 percent of Vietnamese users buy smartphones at electronics chain stores, 14 percent from e-commerce sites and the remaining from friends or relatives.

    It says 44 percent of Vietnamese users give highest consideration for Apple products for their next purchase, followed by Samsung (26 percent) and Vingroup’s Vsmart (6 percent).

    Hundreds of Vietnamese people last month queued up in front of Apple stores to become the earliest owners of iPhone 12.

    Around 75 million people, or almost 80 percent of the country’s population, use smartphones, according to We Are Social, a social media marketing and advertising agency.

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  • Vietnam Airlines gets new CEO

    Vietnam Airlines gets new CEO

    Vietnam Airlines deputy director Le Hong Ha will take over as the national carrier’s new CEO starting January 1, 2021.

    Ha, 48, will replace Duong Tri Thanh who retires Thursday after almost five years at the helm.

    Ha began working for Vietnam Airlines in 1994 as has occupied several key positions.

    In 2015, he was appointed the CEO of Vietnam Airline’s subsidiary Jetstar Pacific (now Pacific Airlines), and is currently the chairman of the jet fuel supplier Skypec.

    Vietnam Airlines has forecast a loss of VND14.44 trillion ($625 million) this year because of the Covid-19 pandemic.

    The number of passengers it served this year is estimated to fall 51 percent year-on-year to nearly 14.23 million, with the number of flights plunging 48 percent to 96,500.

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  • Stock market raises standard trading lot to 100 to cope with overload

    Stock market raises standard trading lot to 100 to cope with overload

    The Ho Chi Minh Stock Exchange is set to raise the minimum number of shares that can be transacted in order from 50 to 100.

    It had planned to effect the change on January 18, but after testing and interaction with securities companies it has decided to advance it by two weeks to January 4 “if everything goes smoothly,” a bourse spokesperson said.

    Currently investors wanting to trade odd lots of 1-49 shares have to transact with securities companies instead of on the exchange.

    HoSE executives said securities companies are keen to make the switch and willing to speed it up.

    A standard lot of 100 is the norm in many countries in the neighborhood such as SET (Thailand), BM (Malaysia), and SGX (Singapore) consistent with international practices and reasonable given the current market conditions, HoSE said.

    The larger lot size is expected to reduce the load on the system at a time when market liquidity is at historic highs. Between December 17-28, the exchange had to halt trading completely for short periods of time as volumes approached VND14 trillion ($606.14 million).

    Le Hai Tra, head of its board of directors, said at a press conference last week that the exchange was receiving 3-12 times higher volume of orders than before.

    Although the system has backup capacity, it cannot cope with this sudden surge immediately, he explained.

    Before Covid-19 caused other asset classes such as property to lose their charm and redirected cash into securities, HoSE saw average daily trading of VND3-5 trillion.

    But in the last two months, it has surged to VND12-14 trillion as the benchmark VN-Index kept rising and approached the 1,000-point mark, a threshold it struggled to cross in the last two years.

    The VN-Index on Wednesday shed 0.18 percent to close at 1,097.54 points. Trading was worth VND13.5 trillion.

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  • Government discontinues discount on car registration fees

    Government discontinues discount on car registration fees

    The government believes domestic car producers have received enough support from the discount scheme, and so will not extend it.

    The 50 percent discount scheme on the registration fees of cars produced domestically, which came into effect on June 28 this year, will not be continued, and will terminate on Thursday as planned, a leader of the Ministry of Finance’s Tax Policy Department said.

    According to the ministry, the 50 percent discount on car registration fees had only been a short-term solution, solving difficulties for domestic automobile manufacturing and assembling enterprises facing impacts of the epidemic.

    This policy has cost the state budget an estimated VND3.7 trillion ($160.56 million) in revenue, while embassies of car manufacturing countries such as Indonesia and Thailand, as well as the European Chamber of Commerce in Vietnam have approached the MoF to complain about discrimination between imported and domestically produced vehicles, the ministry said.

    Meanwhile, fees and charges continuing to receive discounts include those in the fields of citizenship registration, road maintenance, food safety, project appraisal, healthcare, and securities trading.

    The MoF said that the above policies have cost the state budget an estimated VND1 trillion this year.

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  • Malaysia says Vietnam dumping cold rolled stainless steel

    Malaysia says Vietnam dumping cold rolled stainless steel

    Malaysia has slapped anti-dumping duties on Vietnamese cold-rolled stainless steel after completing a preliminary determination.

    The duties, ranging between 7.73 percent and 34.82 percent, have been imposed for three months starting December 26 on coils, sheets and all other forms of cold-rolled stainless steel, Malaysia’s Ministry of International Trade and Industry said in a statement.

    The country initiated the anti-dumping investigation on July 28 based on a petition by Bahru Stainless Sdn. Bhd., which claimed Vietnamese steel is being imported into Malaysia at a price lower than the selling price in Vietnam, which has caused it major injury.

    Malaysia will conclude the investigation before April 23, 2021. Similar steel products from Indonesia were also slapped with the duties.

    Last week Malaysia had also imposed anti-dumping duties on certain flat-rolled steel products from China, South Korea and Vietnam.

  • Vietnam Airlines set to perform better than expected

    Vietnam Airlines set to perform better than expected

    National carrier Vietnam Airlines expects 2020 losses of VND12 trillion ($521.11 million), about 17 percent lower than it had forecast in August.

    The carrier’s consolidated revenue this year is estimated at VND42.5 trillion, with parent company revenues reaching VND33 trillion, exceeding targets set earlier this year by 4.8 percent and 1.4 percent respectively, Vietnam Airlines chairman Dang Ngoc Hoa said Tuesday at an extraordinary general shareholders’ meeting.

    This allows the company to undershoot the VND14.45 trillion loss figure forecast at the annual general meeting in August, he said.

    This year’s loss could be reduced further by VND2.86 trillion after completing adjustments for amortization of repair, maintenance and ground services costs in accordance with government policy that allows delayed payments to help support airlines, Hoa said.

    In 2020, Vietnam Airlines operated about 96,500 flights, down more than 48 percent over last year. The airline transported 14.23 million passengers and about 195,000 tons of cargo, down 51 percent and 47 percent respectively over 2019, he said.

    Hoa said that for the next five years (2021- 2025), Vietnam Airlines will focus on restoring production and business activities, undertaking a comprehensive restructuring plan which will overhaul areas such as capital ownership and finance, assets and portfolios. It will strive to ensure lean production, and improve business efficacy with the sale and leaseback of aircraft.

    The national carrier will also wholly or partly divest its capital in a number of high-performing enterprises in the air-transport service supply chain to improve cash flow, offset accumulated losses, and create funds for investment and development, he added.

    Vietnam Airlines currently operates more than 60 domestic routes with an average of 300 flights per day. It has resumed one-way flights to Japan and plans to reopen routes soon to mainland China, Taiwan, Laos and Cambodia.

    In mid-November, Vietnam’s National assembly approved a bailout for the carrier that can see it get up to VND12 trillion in funds and will be allowed to sell more shares to existing shareholders to boost cash reserves.