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Tag: Vietnam

  • Covid-19 troubles push over 100,000 businesses to suspend operations

    Covid-19 troubles push over 100,000 businesses to suspend operations

    The Covid-19 pandemic’s severe impacts have seen as many as 101,700 businesses in Vietnam close up shop in 2020, up 13.9 percent year-on-year.

    Of these 46,600 have registered to temporarily suspend operations, while 37,700 are waiting to complete dissolution procedures, according to a new report by the General Statistics Office. The report also says that 17,500 enterprises completed their dissolution procedures this year.

    The surge in business suspensions has been attributed to the adverse impacts of Covid-19, which has cripped key sectors and seriously affected socio-economic activities worldwide.

    The number of newly-established enterprises in Vietnam this year fell 2.3 percent year-on-year to 134,900 with a combined registered capital of VND2,200 trillion ($94.31 billion), up 29 percent.

    If the VND3,300 trillion in additionally registered capital for 39,500 companies is included, the total registered capital added to the economy this year is more than VND5,500 trillion, an increase of 39.3 percent year-on-year.

    The GSO report says a survey on business sentiment in the manufacturing and processing sectors in the fourth quarter of 2020 found 40.6 percent of enterprises experiencing improvement in business performance over the previous quarter, while 24.7 percent faced difficulties and 34.7 percent said their business remained stable.

    Almost 43 percent of companies expect things to get better in the first quarter of 2021, while 19 percent foresee more difficulties and 38.2 percent believe the situation will be stable.

    Vietnam’s economic growth slowed to 2.91 percent this year, its lowest level in a decade, given the negative impacts of Covid-19, natural disasters and a sluggish global economy. However, it was one of the few economies in the world to record positive growth, most others experiencing contractions.

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  • Vietnam’s sixth carrier making plans to take of by mid-January

    Vietnam’s sixth carrier making plans to take of by mid-January

    Vietravel Airlines, Vietnam’s sixth carrier, has received permission to fly aircraft for commercial purposes, and plans to begin operations in mid-January.

    It received the aircraft operator certificate from the Civil Aviation Authority of Vietnam (CAAV) last week, the last permit it needed to fly.

    Vietravel would start selling tickets in January, Vu Duc Bien, its general director, said. It targets breaking even in its second year of operations, he said

    Starting amid the turbulence created by the pandemic has helped the carrier acquire good aircraft and pilots and engineers at competitive rates besides benefiting from low fuel costs and a stimulus package from the government, he added.

    It recently took delivery of its first 220-seat Airbus A321CEO plane and is due to get two more soon to meet the increased travel demand during the Lunar New Year Tet in Februrary, 2021.

    Based at Phu Bai International Airport near Hue, Vietnam’s former imperial capital, it will start with services to Hanoi and HCMC before expanding to major tourist destinations like Nha Trang, Da Nang and Da Lat.

    It has hired some 200 pilots and flight attendants, and is looking to expand its fleet to 30 to prepare for international operations.

    It plans to fly to Southeast Asia, especially Thailand, the Middle East and Northeast Asia, markets that Vietravel services.

    The airline enters a fiercely competitive aviation market which already has five players, Vietnam Airlines, Vietjet, Jetstar Pacific, Vietnam Air Services Company, and Bamboo Airways, at a time when the industry has gone through one of its most challenging years ever due to Covid-19 restrictions, which have caused airlines huge losses.

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  • More Japanese firms opt for Vietnam after China

    More Japanese firms opt for Vietnam after China

    Twenty-two more Japanese firms have registered Vietnam as their next investment destination under a scheme in which the Japanese government will fund a production shift from China.

    With the latest additions, 37 out of 81 Japanese firms receiving the government’s subsidies to move factories out of China and set them up in Southeast Asian markets have opted for Vietnam, Japanese ambassador to Vietnam Yamada Takio said at a conference between Japanese firms and the Vietnamese government Monday.

    In July, the Japan External Trade Organization (Jetro) released an official list of 15 Japanese firms that had chosen to move to Vietnam. Most of these firms make medical equipment while the rest produce semiconductors, phone components, air conditioners or power modules.

    “Vietnam currently tops the list of potential investment destinations among Japanese firms choosing to diversify their supply chains,” Yamada said, adding that Thailand came second with 19 firms.

    He said while many economies around the world were struggling to fight against the Covid-19 pandemic, Vietnam has successfully contained outbreaks and is one of the few economies posting positive growth in 2020, estimated at 2.48 percent.

    In the first 11 months of this year, Vietnam’s total export value reached $489 billion, up 3.5 percent year-on-year.

    “In the world, only Vietnam has achieved such great success,” Yamada said. As a result, Vietnam has become more attractive for foreign investors, including Japanese enterprises, he said.

    The Japanese government had earlier announced a 243.5-billion-yen ($2.3 billion) stimulus package to help Japanese companies move production out of China. Jetro said the Japanese government will give each company 0.1-5 billion yen for the move.

    Though Vietnam has emerged as an attractive destination for Japanese investors, there are investment environment problems that need to be resolved, it added.

    Many Japanese firms have complained to the Vietnamese government about complicated administrative procedures.

    Nakagawa Tetsuyuki, general director of Aeon Mall Vietnam, said their projects often take a long time to complete admin procedures. Some projects have to wait more than one year to receive the investment registration and land use right certificate.

    For projects that need approval under the Prime Minister’s licensing authority, it takes even longer, Tetsuyuki added.

    Therefore, Japanese businesses expected the government to shorten and speed up administrative procedures to improve business environment.

    Japanese firms are also concerned about tax incentives, equitization and entry and quarantine policies, infrastructure, and human resources.

    Japan was the fourth-largest foreign direct investor in Vietnam in the first eight months of this year with a total registered capital of $1.64 billion, behind Singapore, South Korea and mainland China.

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  • Thai cement giant buys 7th packaging firm in Vietnam

    Thai cement giant buys 7th packaging firm in Vietnam

    Thai cement giant SCG Group has acquired its seventh packaging company in Vietnam, Bien Hoa Packaging, at a cost of VND2.07 trillion ($89 million).

    The company owns a 94.11 percent stake in the company through its subsidiary Thai Containers Group Company Ltd, according to a recent statement.

    It paid VND171,450 ($7.38) for each share of Bien Hoa Packaging, 84 percent higher than the current market price.

    Bien Hoa’s clients are mainly high-growth consumer brands that are multinationals, the statement said.

    Its three manufacturing facilities in southern Vietnam will enlarge SCG’s customer base in the food, beverage and fast-moving consumer goods segments, it added.

    One of the six companies SCG acquired earlier is the largest in the country, Kraft Vina, a joint venture with Japanese packaging firm Rengo.

    SCG was one of the earliest foreign investors in Vietnam, coming as it did in the 1990s.

    Over the last decade it has been pouring money to acquire major companies, including one of the largest plastic producers, Binh Minh Plastics.

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  • Abbott accelerates healthcare transformation in Vietnam

    Abbott accelerates healthcare transformation in Vietnam

    A conference will be held in Hanoi this month to accelerate digital transformation in the health sector, using technological achievements to raise the quality of treatments as Vietnam seeks to expand its remote healthcare network nationwide.

    Overview and approaches of the sector’s digital transformation will be high on the agenda of eHealth Vietnam Summit 2020, to be held by the Health Ministry on December 29-30, organizers stated on the event website.

    Remote healthcare consultation and support has become critically important this year when travel is restricted and hospitals face huge challenges due to Covid-19.

    Vietnam, which has been praised by the international community for its success in containing the outbreaks, has established Telehealth, a network aimed to connect some 14,000 health facilities nationwide and link them with other countries in the medical field, part of the nation’s digital transformation program towards 2025, with a vision to 2030.

    The network will allow people nationwide to access medical services, receive consultation and treatment by doctors from higher-level hospitals remotely, thus reducing patient congestion at central hospitals, said a report shared on the Ministry of Health website in September. By late September 2020, the network had connected 1,000 medical examination and treatment facilities with nearly 30 key hospitals in Hanoi and Ho Chi Minh City, the ministry stated. In late November, it required all hospitals in the country to connect to the network for treatment, practice sharing, and learning.

    Amid the country’s drive for digital transformation this year, Abbott, the Chicago-based company on the forefront of innovation for more than 130 years, has continuously brought life-changing technologies and breakthroughs in diagnostics, medical devices, medicine and nutrition to Vietnam. This demonstrates the company’s long-standing commitment as a strategic partner to shape the future of healthcare in Vietnam and the region.

    In order to boost speed, efficiency and accuracy in patient diagnosis and treatment, Abbott has brought in Alinity, a family of systems that reinvents the way diagnostic laboratories work by simplifying diagnosis.

    Alinity, derived from Alignment, Innovation and Unity, has been made available in 18 hospitals and six blood banks including Medic, Cho Ray Hospital, Tu Du Hospital, Hung Vuong Hospital, Ho Chi Minh City Medical University Hospital, Danang General Hospital, DIAG, Hanoi Medical University Hospital and the National Institute of Hematology and Blood Transfusion.

    In 2020, Abbott introduced Alinity m, its latest new-generation platform, fully integrated and automated molecular diagnostics analyzer that uses innovative technology to deliver greater flexibility and efficiency. The platform is now available in hospitals and healthcare facilities including Military Hospital 108, Medic, Medlatec, Bach Mai Hospital in Hanoi as well as Cho Ray Hospital in Ho Chi Minh City.

    Vietnam’s health facilities are utilizing Abbott’s advanced technology, diagnostics systems and devices, including High-Sensitivity Troponin-I Test, DBS viral loading test and first-of-its-kind, life-saving device MitraClip designed for those with common heart valve disorders.

    High-Sensitivity Troponin-I Test, also known as Hs Troponin-I test, aims to check the level of troponin, a protein found specifically in heart muscle cells. A high content of the macronutrient detected from the test provides better predictive information for determining a person’s chances of developing future heart disease when added to the current standard of care.

    The test also offers gender-specific cut-offs, allowing physicians to more accurately diagnose myocardial infarction, commonly known as heart attacks, in women. A study published in the British Medical Journal found Abbott’s test uncovered twice as many heart attacks in women than standard troponin screening. It is exceptionally crucial for doctors to conduct early diagnosis of a heart attack to act quickly in critical moments. As in Vietnam, one out of three people suffers a heart attack each year.

    Abbott’s Hs Troponin-I test has become the first and only approved by the Health Ministry to aid cardiac risk stratification thanks to its significance and efficiency. Therefore, the test now not only serves patients facing heart disease risks but is also dedicated to better health management.

    If the Hs Troponin-I test is aimed to serve a larger community, the DBS test, known as the dried blood spot test, helps ease access to HIV viral load testing for Vietnamese in remote areas as the procedure is simple and requires no refrigeration. It uses a few blood drops dried on a filter paper before being shipped to a laboratory for analysis. The process has recently been expanded to HCV testing, and proves efficient especially in this tough time of fighting the pandemic.

    In order to advance heart and cardiovascular disease treatment, Abbott has introduced minimally invasive mitral valve repair device MitraClip, a transcatheter-based device, to help Vietnamese with common heart valve disorders. The MitraClip procedure involves doctors guiding a thin tube through a patient’s vein toward the mitral valve to help it close more efficiently without open-heart surgery, thus enabling speedy recovery.

    In October, Prix Galien USA honored Abbott’s MitraClip therapy as the Best Medical Technology for 2020. Considered as the industry’s equivalent of the Nobel Prize in biopharmaceutical and medical technology research, the award recognizes excellence in scientific innovation that improves the state of humankind. This device has transformed the lives of more than 100,000 people globally living with mitral regurgitation, or a leaky heart valve.

    After 25 years’ expansion in Vietnam, Abbott has achieved sustainable business growth, developed strong local talent and offered significant opportunities. The company has continuously offered Vietnam with breakthroughs in nutrition, medicines, diagnostics and medical devices.Glucerna, the newly enhanced reformulation designed to help people with diabetes, is the latest arrival from Abbott. The dual therapeutic benefits of Glucerna’s new formulation promote GLP-1 secretion with its unique nutrients and improves insulin sensitivity for better glycemic control.Vietnam has been one of the first countries where Abbott’s nutrition business has launched breakthrough products, such as Similac Eye-Q Plus with HMO that nurtures stronger immunity and brain development among babies; PediaSure MRI with Arginine and natural Vitamin K2 that help children reach their optimal growth and potential; Ensure Gold with special nutritional ingredient HMB, protein, calcium, vitamins and nutrients to help the elderly overcome the loss of muscle strength.

    Besides, Abbott has also introduced Surbex Natural Lingzhi, another science-based health supporting product available in capsules that boost immunity, enhance liver function and overall body resistance.

    Last month, Abbott again made No.1 in Pharma/Medical Equipment/Healthcare for the seventh consecutive year in the list of “Vietnam Best Places to Work 2020.” Its recognition in Vietnam affirms Abbott’s leadership in the healthcare industry, having created an innovative and winning culture that empowers employees to reach their full potential.

    Abbott and its foundation, Abbott Fund, have provided more than VND250 billion ($10.5 million) in grants and product donations to address critical health issues, focused on removing barriers preventing Vietnamese from living healthy lives, and strengthening the country’s health sector.

  • Vietnam Airlines seeks shareholder loans

    Vietnam Airlines seeks shareholder loans

    Vietnam Airlines Group has called an extraordinary shareholders’ meeting next week to source low-interest loans to accelerate Covid-19 recovery.

    At the meeting, to be held on Dec. 29, the flag carrier will seek loans from its shareholders that comprise the government with an over 86 percent stake, Japanese aviation company ANA Holdings with 8.7 percent, and other organizations and individuals.

    The National Assembly in November approved a plan for the central bank to refinance Vietnam Airlines and rollover loans. The airline had earlier asked for a relief package of VND12 trillion.

    The group will also seek shareholder approval to issue more shares to existing stakeholders and so increase its capital.

    Vietnam Airlines Group, consisting of the carrier and subsidiaries Pacific Airlines and Vietnam Air Services Company (VASCO), posted a loss of VND10.75 trillion ($464 million) for January-September as the Covid-19 pandemic slashed its number of flights.

    It has forecast the figure would rise to VND15.2 trillion for the whole year.

    All Vietnamese airlines have fallen victim to Covid-19 this year with the number of flights plunging 36 percent year-on-year to 19.

  • Vietnam child labor rate lower than regional average

    Vietnam child labor rate lower than regional average

    Vietnam’s rate of child labor, 5.3 percent, is around 2 percentage points lower than the average in Asia and the Pacific, a study has found.

    This equates to more than one million children in the ages of 5-17 engaged in labor, the survey was done in 2018 by the Ministry of Labor, Invalids and Social Affairs, the General Statistics Office, and the International Labour Organization and released recently, said.

    They undertake work that is prohibited because of their age, the number of working hours or the nature of the tasks involved.

    In line with global trends, 84 percent of child laborers in Vietnam are in rural areas, over half working in agriculture, forestry or fisheries.

    Other sectors where child labor is prevalent include services, industry, and construction. More than 40 percent are unpaid.

    “Child labor tends to take place in informal household enterprises down the manufacturing and production supply chains, which makes it difficult to detect,” ILO Vietnam director Chang Hee Lee said.

    The survey estimates that nearly 520,000 children in Vietnam are engaged in hazardous work or work which poses significant risks to a child’s health, safety or morals. Many of them work in industry and construction.

    The number of hours children in hazardous jobs work tends to be high, with 40.6 percent working over 40 hours a week.
    Only half of child laborers attend school, compared to the national average of 94.4 percent.

    Efforts must be speeded up immediately to end child labor in all its forms, the ILO said.

  • Vietnam gives second electricity discount as Covid-19 relief

    Vietnam gives second electricity discount as Covid-19 relief

    The government has cut electricity prices by 10 percent for the year’s last quarter to support economic recovery from Covid-19 impacts.

    The discount applies to businesses and households for a maximum of 300-kilowatt-hour consumption per month from October to December. Consumption above this limit will attract normal prices.

    Covid-19 quarantine centers will get a 100 percent discount on their electricity bills, while medical facilities that test and treat Covid-19 patients can enjoy getting a 20 percent discount.

    The government had already given a 10 percent discount in the second quarter, which was estimated to cost the state coffers nearly VND11 trillion ($476 million).

    The discounts came as Vietnam’s economy was badly hurt by the Covid-19 pandemic, with key sectors posted drastically reduced or even negative growth.

    In the first nine months, 31.8 million workers were affected by the pandemic, losing their jobs or having their working hours reduced, according to the General Statistics Office.

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  • Private banks drive VN-Index pull-back

    Private banks drive VN-Index pull-back

    The VN-Index gained 1.11 percent to 1,066.99 points Tuesday, after seeing one corrective session, with private banking blue chips the best performers.

    The Ho Chi Minh Stock Exchange (HoSE), on which the VN-Index is based, was a sea of green with 296 stocks gaining and 134 losings. Total trading volume abated over 10 percent compared to Monday, reaching VND11.86 trillion ($514.79 million).

    Unlike the previous few sessions, where investors were focused on mid-caps with more growth potential, blue chips were the main driving force behind gains on the market this session.

    The VN30-Index for the HoSE’s 30 largest caps soared 1.65 percent, with 13 stocks gaining and three losings, soaking up over 50 percent of the trading volume.

    TCB of private lender Techcombank topped gains with 6.9 percent, followed by VPB of VPBank, up 4.3 percent, and STB of Sacombank, with 4.1 percent.

    Also in the private banking sector, HDB of HDBank added 0.7 percent, while EIB of Eximbank kept its opening price.

    State-owned banks were also some of the best performers. Of Vietnam’s three biggest lenders by assets, BID of BIDV was up 2.8 percent, VCB of Vietcombank 2.1 percent, and CTG of VietinBank, 1.1 percent. MBB of mid-sized Military Bank surged 3.5 percent.

    Another sector that outperformed this session was real estate. NVL of Novaland was up 2.4 percent, KDH of Khang Dien House 1.8 percent, ROS of FLC Faros 1.4 percent, VHM of giant Vinhomes 0.2 percent, while TCH of Hoang Huy Group was flat.

    Other major gainers, this session included VJC of budget carrier Vietjet Air with 2.5 percent, VRE of mall operator Vincom Retail with 1.3 percent, and SBT of agricultural exporter TTC-Sugar, with 1 percent.

    The only three losing stocks this session were SSI of top brokerage Saigon Securities Inc., down 1.8 percent, REE of appliances maker Refrigerated Electrical Engineering, and PLX of gasoline distributor Petrolimex, both by 0.4 percent.

    Indices for secondary main bourse Hanoi Stock Exchange (HNX), home to mid-and small-caps, and mezzanine bourse Unlisted Public Companies Market (UPCoM) rose 2.23 percent and 0.90 percent, respectively.

    Foreign investors continued to be net sellers to the tune of over 225 billion on all three bourses, with the most net offloaded stocks being HPG of steelmaker Hoa Phat Group, which gained 0.5 percent, and SSI of Saigon Securities Inc.

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  • Foreign firms intent on stronger foothold in Vietnam’s pharma industry

    Foreign firms intent on stronger foothold in Vietnam’s pharma industry

    Foreign firms are pouring increasing sums of money into acquiring stakes in Vietnamese pharmaceutical firms, targeting larger market shares in a thriving industry. Dutch firm Stada Service Holding B.V. last month obtained permission from Vietnam’s Pymepharco to increase its ownership in the Phu Yen Province-based company to 100 percent.

    Stada had increased its stake in Pymepharco by six percent to nearly 76 percent last week. The deal is estimated at around VND380 billion ($16.4 million), based on closing stock price on December 11. In September, Hanoi-based Hataphar issued an additional 5.28 million shares, or 20 percent of its charter capital, to Japan’s ASKA Pharmaceutical Co., Ltd. The deal was valued at VND370 billion.

    Earlier last year, Japan’s Taisho Pharmaceutical took a controlling share of over 51 percent in the DHG Pharmaceutical Joint Stock Company, the biggest pharmaceutical firm in the Mekong Delta region.

    In December 2017, CFR International SpA, a subsidiary of U.S.-based medical corporation Abbott Laboratories, transferred all of its 51.69 percent stake in Domesco Medical Import Export JS Corp, based in the southern province of Dong Thap, to another Abbott subsidiary in a transaction valued at around VND2.3 trillion ($99.5 million).

    Vietnam’s rapidly growing pharmaceutical industry has been a magnet for foreign firms. The industry is set to record double-digit growth in the 2020-2025 period and is set to reach a value of $7.7 billion next year, according to a report by brokerage Yuanta Vietnam.

    There is a rising demand for healthcare products and services, and with domestic production unable to meet it, Vietnam imported $3 billion worth of medicines last year. This figure is set to reach $4.35 billion this year, the report said.

    Foreign firms are therefore keen on pouring cash into companies with growth potential, like DHG, which ranks fourth in market share behind three multinational pharma giants.

    Analysts of RongViet Securities Corporation said that their strategy is to help Vietnamese companies increase their manufacturing standards and eventually take over instead of establishing its own business and build a factory.

    CFR International SpA, a leading pharmaceutical firm in Chile, was the first strategic partner in local firm Domesco and was assisting the Vietnamese company in research and development, technology transfer, businesses consultancy and supply chain management before securing a controlling stake in it.

    Ly Thi Hien, lead analyst at Yuanta Vietnam, said the pharmaceutical industry is one that requires years of investment to build up a brand and acquire a decent market share. Domestic firms with relatively shallow pockets find it difficult to spend money on researching and developing new medicines, creating an opening for foreign firms.

    To develop further, domestic firms need to take advantage of the exclusive formulas and scientific achievements of foreign pharma giants, she added.

    Industry insiders say that partnerships with foreign companies has brought both short-term and long-term benefits.

    Le Xuan Thang, CEO of Hataphar, said that establishing a partnership with ASKA meant that the company has VND370 billion to build a new factory. It also receives consultancy services from the Japanese company on building that factory with advanced technology.

    Meanwhile, DHG, thanks to its partnership with Japan’s Taisho, was able to acquire international certification in less than two years for its effervescent tablet production chain and another Japanese certificate for its antibiotics chain.

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  • Headwinds buffet Vietnamese carriers through 2020

    Headwinds buffet Vietnamese carriers through 2020

    The Vietnamese aviation industry has gone through one of its most challenging years ever as the Covid-19 pandemic restricted flights and caused airlines huge losses. The number of flights the country’s five commercial airlines operated fell 36 percent year-on-year in the first 11 months to 196,600, according to the Civil Aviation Authority of Vietnam (CAAV).

    They carried 29.4 million passengers, down 41.7 percent, according to the General Statistics Office.

    Vietnam Airlines was the worst hit. Duong Tri Thanh, its CEO, said that the pandemic has set back the aviation industry by three or four years, and has brought down his company’s cash holdings to near zero.

    Vietnam Airlines Group, consisting of the carrier and its subsidiaries Pacific Airlines and Vietnam Air Services Company (VASCO), posted a loss of VND10.75 trillion ($464 million) for January-September.

    The number of passengers it served in the period fell by 41 percent to 10.2 million.

    It has cut sales and management expenses and reduced the salaries of pilots and cabin crew. It has increased the number of repatriation flights bringing Vietnamese nationals home from other countries.

    But these efforts cannot save the company from suffering one of its worst years in nearly three decades as a commercial airline, with its losses this year forecast to rise to VND15.2 trillion. Budget carrier Vietjet is in a similar situation, with losses of nearly VND925 billion in the first nine months and the number of flights falling by 43 percent to 58,300.

    The airline was forced to cut managers’ salaries by half as revenues plunged, and it would take three years for the industry to recover to pre-pandemic levels, a Vietjet spokesperson said in November.

    In contrast, 2019 saw new carrier Bamboo Airways enter the Vietnamese skies, Vietnam Airlines achieve all-time high profits and the number of air passengers continues to grow in double digits.

    The tough times began in March when the government ordered the suspension of all international flights to curb the spread of the novel coronavirus and domestic travel demand slumped amid fears of the pandemic.

    “The impact of Covid-19 has been unprecedented for the aviation industry,” Dinh Viet Thang, head of the CAAV, told the media in June, pointing out there were times when only 1-2 percent of Vietnam’s 250 aircraft were operating.

    The second and third quarters were the most challenging period for the industry as a three-week nationwide social distancing campaign in April caused airlines’ revenues to plummet and the second outbreak in July halted their attempts to boost domestic travel and achieve recovery.

    Aviation expert Nguyen Thien Tong said it would take at least until 2022 for the industry to recover to pre-pandemic levels because the fear of contagion remains globally.

    Air travel demand would rise slowly even after Covid-19 is contained globally because many business people have learned to conduct meetings online to keep their companies running during the pandemic and people’s incomes have shrunk, he said.

    One major factor in any possible recovery will be government support. The National Assembly in November approved a plan for the central bank to refinance Vietnam Airlines and rollover loans. The airline had earlier asked for a relief package of VND12 trillion.

    Lawmakers also cut environmental tax on jet fuel by 30 percent from August this year until the end of next year.

    Tong said: “More low-interest loans should be given to airlines based on how much tax they have contributed in recent years, not how much ownership the government has in them.”

    The tourism industry needs to offer more promotions to foster domestic aviation since it is unclear when regular international flights would resume, he said.

    The newly licensed Vietravel Airlines should wait until the market recovers in 2022 before it begins flying since its entry would only worsen things for existing airlines, he added.

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  • Manulife to become VietinBank’s exclusive insurance partner with Aviva purchase

    Manulife to become VietinBank’s exclusive insurance partner with Aviva purchase

    Canadian insurer Manulife will acquire the Vietnamese business of British company Aviva and its 16-year bancassurance deal with VietinBank.

    It will take over the exclusive partnership with VietinBank when the deal is completed, Manulife and the lender agreed on Monday.

    The state-owned lender chose Manulife as its bancassurance partner because of its long-term commitment to Vietnam, deputy director of VietinBank, Nguyen Duc Thanh, said at the agreement-signing ceremony.

    He said his bank’s board expects the bancassurance business to grow by 30 percent annually and contribute 6-8 percent of the income from services.

    Manulife expects the partnership to increase its market share in the country from 20 percent to 30 percent in the coming years. It is currently the exclusive insurance partner of the country’s largest private lender, Techcombank.

    Aviva did not reveal the value of the sale but said in a statement that it expects the transaction to increase its net asset value and solvency surplus by around GBP100 million ($133.67 million).

    The company is looking to sell its operations in continental Europe and Asia to focus on Britain, Ireland and Canada.

    Vietnam had 18 life insurance companies with combined premium revenues of VND106.6 trillion ($4.6 billion) last year, up 24 percent year-on-year. In terms of new contracts, Manulife led the market for the first time last year with 17.7 percent followed by Bao Viet Holdings with 16.49 percent and Prudential Vietnam with 15.78 percent, according to the Ministry of Finance.

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  • Gojek Vietnam raises fares after tax regime change

    Gojek Vietnam raises fares after tax regime change

    Ride-hailing company Gojek has raised fares by 8.3-10 percent following the recent revamp of the value-added tax regime, which requires it to pay more.

    The hike applies to all three services it offers in Vietnam, motorbike taxi, food delivery and goods delivery, and takes effect on Saturday, the Indonesian company said in a statement.

    In Hanoi, a two-kilometer GoRide trip now costs 8.3 percent more at VND13,000, while in HCMC, it costs 10 percent more at VND11,000.

    From December 5 the government mandated that ride-hailing companies should pay the VAT of 10 percent on the full fare passengers pay instead of just their share of it.

    Gojek also increased the commission it gets from drivers from 20 percent to 27.2 percent like its competitor Grab did recently.

    But it assured that the increase would not affect drivers’ incomes.

    A trip that cost a passenger VND51,000 before would now cost VND56,000, but the driver’s income would remain unchanged at VND40,000, it said.

    Grab last week raised its fares by 5-6 percent and increased its commission by over 7 percentage points, causing hundreds of drivers in Hanoi and Ho Chi Minh City to strike.

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  • Vietnam jet fuel tax cut to continue through 2021

    Vietnam jet fuel tax cut to continue through 2021

    Lawmakers have decided to continue the 30-percent cut in environment tax on jet fuel through next year to support the aviation industry.

    It will remain at VND2,100 (9.1 U.S. cents) per liter until the end of next year before returning to VND3,000 in 2022, the National Assembly Standing Committee decided on Thursday.

    Deputies had originally approved the cut from August until the end of this year.

    The government’s loss of revenues is estimated at VND360-400 billion this year, but it expects the tax break to reduce airlines’ costs and help them recover from the crisis caused by the Covid-19 pandemic.

    Airlines have gone through major difficulties due to travel restrictions and limited international flights.

    Vietnam Airlines forecasts a loss of VND14.8 trillion this year, while for budget carrier Vietjet it is likely to be VND3 trillion.

    The aviation industry served 29.4 million passengers in the first 11 months, down 41.7 percent year-on-year, according to the General Statistics Office.

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  • Korea’s Emart set to scale back in Vietnam

    Korea’s Emart set to scale back in Vietnam

    South Korea’s largest supermarket chain operator Emart Inc. is pulling out of Vietnam, the second major Asian market after China, in the face of regulatory hurdles.

    The retailer opened its first outlet in Vietnam’s Go Vap district in 2015 and had procured a site at Ho Chi Minh City for a second opening last year. But the project has been delayed due to licensing setbacks, disrupting its plans to open five to six more outposts.

    Emart’s direct foray has proven difficult as Vietnam, like China, prioritizes joint ventures in permitting a foreign business. Emart started operation in Vietnam in 2014 after setting up a wholly-owned local entity.

    A retail industry source said a hypermarket needs at least 10 outlets to have bargaining power with vendors and maintain logistics efficiency. Unable to meet this number, Emart may have concluded it was better to fold the business, the source added.

    The retailer has been rolling back investments in the country. In its 2019 semiannual report, it had vowed to invest 460 billion won ($424.3 million) in its Vietnamese entity through 2022. But it had slashed that amount to 247.8 billion won in the third-quarter report.

    An Emart representative, however, denied the exit rumors and said it was studying other options such as strategic alliance or business partnership.

    Industry observers believe Emart is wary of making the same mistake as in its Chinese operation.

    Emart entered China in 1997 and aggressively expanded its operations, running at one point 26 outlets across the country. But it failed to overcome Beijing’s stiff regulations and saw losses snowball to 150 billion won over four years from 2013.

    In 2016, it found itself caught in the crosshairs of a diplomatic feud over Korea’s decision to build an anti-missile system, a move China vehemently opposed on national security grounds. Emart, along with many other Korean brands, suffered the brunt of Beijing’s retaliatory nationwide boycott on all things Korean. After suffering steep losses, the retail chain in 2017 sold off its remaining five outlets in China to a Thai company and pulled out of the country altogether.

    After scaling back its Asian operations, Emart is expected to focus more on the U.S. market, where Korean brands have been making rapid grounds. According to its regulatory filings, Emart generated 1.28 trillion won in the first three quarters of this year from overseas, up 122 percent from the same period last year and topping last year’s full annual sales of 778.5 billion won.

    Emarts’ robust overseas performance owes largely to its U.S. subsidiary Good Food Holdings, which the Korean retail conglomerate acquired for $275 million in 2018. The Los Angeles-based company owns five upscale food retailing brands, including Bristol Farms, Lazy Acres Natural Market, Metropolitan Market, New Seasons Market, and New Leaf Community Markets, operating mostly in the West Coast.

    Good Food Holdings raked in sales of 1.2 trillion won in the January-September period, up 136 percent from a year ago, on explosive demand for food products among people sheltering at home during the coronavirus outbreak. The company alone was responsible for nearly 93 percent of Emart’s total global sales in the period.

    Emart plans to invest 83.7 billion won through 2022 to expand its U.S. footprint. It is scheduled to launch PK Market, a shop specializing in Asian goods including Korean food, as early as next year in downtown Los Angeles.

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