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Tag: Vietnam

  • Money market changes course unexpectedly

    Money market changes course unexpectedly

    The money market has been seeing unexpected happenings in the last two weeks. Until two weeks ago, the liquidity of the banking system had been in a state of tension because lending was higher than mobilized capital. According to the National Finance Supervision Council, while lending increased by 5.2 percent, mobilized capital increased by 3.7 percent only in the first four months of the year.

    However, the money market has unexpectedly reversed with liquidity considerably improved. The interest rate performance in the interbank market last week was different from the weeks before when it decreased sharply from 4.7-4.9 percent to 3.9-4.1 percent for overnight loans (O/N).

    In OMO (Open Market Operations), no commercial bank registered to borrow capital from the State Bank on May 19, which was the first time since the beginning of the year. The average balance in OMO, which was always over VND35 trillion, has dropped to VND4 trillion.

    A BVSC report shows that the banking system’s liquidity has returned to a surplus state.

    Where’s the cash flow coming from?

    In theory, the sudden reverse in the two markets would occurs only if the State Bank (SBV) pumps capital into the market, and the quickest way for SBV to support liquidity is pumping capital through OMO.

    However, the scenario did not occur as the outstanding balance of the banks on OMO is on the decrease and is nearing zero next week.

    In the second scenario, SBV might have bought a big volume of foreign currencies from the market. This could be the foreign direct investment (FDI) flow, foreign portfolio investment (FPI), or foreign currency capital from domestic commercial banks.

    However, analysts don’t think this could happen because it was nearly impossible for foreign investors to disburse more than $1 billion within one week.

    Meanwhile, the foreign currency buy price quoted by SBV is now at VND22,675 per dollar, far lower than the prices in transactions made at commercial banks, at VND22,700 per dollar.

    The third scenario is the most likely one at this moment. SBV might have refinanced commercial banks through VAMC special bond discounts. And the VAMC special bond discount rate must be lower than the interest rate on OMO.

    With the total VAMC bond balance of up to VND280 trillion, the discount of VND35-40 trillion, or 13 percent, will not be a concern for the system.

    If the third scenario is true, many questions will be raised. How much has SBV pumped into the market, to which banks and at what interest rates? Will SBV continue pumping more capital? Which criteria do banks need to have to be refinanced?

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  • Vietnam’s pepper farmers urged to keep calm and carry on

    Vietnam’s pepper farmers urged to keep calm and carry on

    Industry leaders have called on distraught and anxious pepper farmers to remain calm and refrain from selling their produce at low prices, saying the current price plunge is most likely a fleeting phenomenon.

    Do Ha Nam, Chairman of the Vietnam Pepper Association, said farmers should break their impulse to “mass sell” their produce immediately after harvest.

    “Vietnamese pepper exports now account for nearly 50% of global output, so we are actually in a position to control the market. Farmers should be calm and not sell at lower price, and the market will revert to its equilibrium,” Nam said.

    In the Central Highlands, the price for whole peppercorns on the domestic market has dropped from VND180,000 (US$8.04) since last August to around VND80,000 (US$3.57) per kilogramme as of May 28 to reach the lowest point in seven years, and many pepper farmers are in dire straits, with some pushed to the point of having to sell their land to settle debts.

    Authorities, meanwhile, are struggling to manage what they say is the consequence of unplanned farming and poor quality crops, which is dragging the whole industry down.

    According to the Standing Committee of the Tay Nguyen Steering Board, farmers were “misled” by pepper price surges in recent years to plant the crop on a large scale, ignoring warnings from local authorities. Subsequently, gluts have led to the sharp decline in prices, the committee has said.

    Nguyen Thi Do, a pepper farmer in Dak Nong Province, said her family had taken a bank loan of VND4 billion (US$178,770) to plant pepper on a 10ha plot. At her initial calculation of VND200,000 (US$8.93) per kilogramme of whole pepper, profits were certain, but the drastic drop in prices could force her to sell her land to repay the bank.

    Pepper rush

    Originally, Central Highlands provinces like Dak Lak, Dak Nong and Gia Lai had planned to expand the farming area for pepper to a maximum of 6,000ha by 2020. But all these provinces have surpassed this limit by far. Dak Lak has nearly 28,000ha of pepper farms, Dak Nong, 25,000ha, and Gia Lai, over 15,000ha.

    The national total is about 150,000ha, set to produce about 300,000 tonnes of pepper in the next two to three years, so, going by supply and demand function alone, prices could drop as long as supply exceeds demand, said Hoang Phuoc Binh, Deputy Chairman of the Chu Se District Pepper Growers’ Association in Gia Lai Province.

    To compound matters, even with farming on such a large scale, many farmers have experienced crop failures due to poor preparation and misuse of chemical inputs.

    Huynh Van Lan of Gia Lai Province, along with his peers, is increasingly worried about drops in both production and prices as his crop nears harvesting. Of more than 2,000 vines on his farm, 250 have died while the rest are producing just half their normal yield.

    Bad habits

    Tay Nguyen authorities have recorded a common practice among local pepper farmers of planting a new crop directly on malnourished, acidic and depressed soil without taking any step to replenish the soil with nutrients. This is causing slow growth and increased vulnerability to diseases.

    To make matters worse, a number of farmers have been using seeds of dubious quality, affecting the rest of the harvest. The use of toxic pesticides and growth accelerators has further exacerbated the situation.

    As if all this weren’t enough, the irregular drizzling since February 2017 has continued to dampen the pepper vines’ roots, exposing them to pests and affecting production.

    Experts say that the combination of market glut and poor quality crop threatens sustainable development of the domestic pepper industry, most particularly its export potential.

    High non tariff barriers are another challenge for Vietnamese pepper, which has to contend with markets already familiar with exports from Indonesia, Malaysia and India, they say.

    Sustainable solutions                                

    To prevent “spontaneous” and inefficient farming, the Tay Nguyen Steering Board has asked provincial authorities to adjust and firmly implement their provincial pepper cultivation plans.

    They should also organise comprehensive training programmes for local farmers in order to synchronise production in the region, the board has said.

    It has noted that the need for sustainability stretches across all crops and agricultural products, requiring farmers to work closely with other stakeholders in the supply chain to obtain technical support and suitable farming inputs.

    In Chu Puh District, Gia Lai Province, a key pepper producing area, a farming model that saves water, uses organic fertilisers and pesticides is showing encouraging results.

    More importantly, farmers are being advised to plant exclusively on suitable soils with high drainage to allow maximum growth and minimum soil damage.

    So far, the district has implemented this model on more than 100ha, and aim to expand this to 500ha by 2020.

    The Steering Board also advised local governments to focus on brand building and vertical integration to promote exports.  Clean, ecologically sound cropping is the ideal long term solution to the problems faced by the domestic pepper industry, experts agree.

    The rosier side

    Do Huong Duong, vice chairman of the Phu Nhuan Service Joint Stock, notes that despite the ongoing problems in quality, output and prices, export turnover has continued to rise.

    According to the Ministry of Agricultural and Rural Development, Vietnam exported about 75,000 tonnes of pepper worth US$456 million in the first four months of 2017.

    Vietnamese pepper has been a stable import in the US, United Arab Emirates, Pakistan, Indian and German markets in the first three months. There are signs of improvement in other markets like Thailand, where import of Vietnamese pepper has registered a year-on-year increase of 49.6%.

    These numbers prove that Vietnamese pepper is able to meet quality criteria in the strictest markets in the world, Nam said. Farmers have to be encouraged and helped to focus on improving their produce while the Government keeps an eye on mass production and quality control, he said, adding that that this would ensure market stability as well as sustained profits from this key crop.

  • Central Bank of Vietnam maintains flexible forex regime

    Central Bank of Vietnam maintains flexible forex regime

    According to the National Finance Supervision Committee, the deficit is likely to be 3.5% of exports. The trade deficit with China rose from US$3.7 billion in 2013 to US$28 billion last year. The US Federal Reserve (FED) is expected to increase the interest rate in June and continue to do so through 2019 to take the rate to 3 per cent.

    Analysts said this is causing downward pressure on the value of the đồng against the dollar.

    In mid-May, the US Dollar Index (DXY) rose significantly to 99.60.

    The State Bank of Vietnam (SBV) recently increased the đồng reference rate by VND9 after the greenback appreciated strongly to avoid possible shocks.

    SBV Governor Le Minh Hung said the international markets remain volatile due to the UK vote to leave the EU, US President Donald Trump’s policies and the US rate hikes.

    The volatility has had an impact on the đồng exchange rate and made it harder for the Government to keep things smooth on the forex front. Since the beginning of the year, the central bank has been very cautious. As a result, the đồng has only lost 1.1% against the dollar.

    The National Financial Supervisory Committee (NFSC) officials said the central bank is flexible and keeps a close eye on the exchange rate, regulating it on a daily basis.

    Analysts said Vietnam should not pay too much attention to the US interest rate hikes since they do not always affect the đồng.

    They pointed to the rate hike in March when the dollar actually declined against the đồng.

    One of the reasons for this is that foreign direct investment has been pouring into the country.

    In the first four months of the year, US$10.95 billion flowed in, representing a year-on-year increase of 40.5%.

    Though the big trade deficit with China is a factor in the đồng’s value, the Chinese Government is unlikely to depreciate the renminbi.

    This is because its policy is to develop the economy based on the domestic market in future instead of exports as the case used to be.

    Hung said since the Government would continue to pursue its de-dollarisation policy, the central bank would remain flexible with its exchange rate regulations to ensure exporters, importers, the Government and enterprises borrowing overseas and repaying foreign loans all benefit.

    Many analysts estimate the greenback will rise 2-3% against the đồng this year, saying the economy can easily absorb this.

    Foreign retailers crowd VN market

    Koji Takayanagi, president of Japan’s second largest convenience store chain FamilyMart, said the company is reviewing its loss-making operations in Indonesia, Thailand and Vietnam.

    “If we can get them to rally we will, but we cannot continue to pour in resources,” he told Reuters.

    The Japanese franchise has forecast operating profit to more than double to 1 trillion yen (US$8.79 billion) in four years from 412 billion yen in the current fiscal year.

    But while the business is profitable in China and Taiwan, it is not doing well elsewhere.

    FamilyMart came to Vietnam in 2010 and expected to open 300 stores in collaboration with local distributor Phu Thai Group, according to online newspaper VnExpress.

    But the partnership ended in 2013, with the distributor taking over 42 stores and turning them into B’s Mart in collaboration with Thailand’s Beri Jucker Plc.

    The brand made a comeback in July 2013 and now has 130 stores in HCM City, the nearby resort town of Vung Tau and Binh Duong Province, and aims to expand to 150 by the end of this year.

    Last December, Parkson, owned by Malaysian conglomerate Lion Group, closed its second store in Hanoi after eight years of operations, citing unsatisfactory results.

    The move marks the closure of the last store in Hanoi and third in Vietnam. In May 2016, Parkson Paragon in HCM City’s upscale Phu My Hung urban area closed after five years of operations, and in January 2015, Parkson Landmark 72 in Hanoi closed.

    The management had stuck a notice on the door of the latter store that it would only close for a few days “to take inventory”, but never opened again.

    Parkson’s recent results in the third quarter of 2016-17 showed its business in Vietnam remained mired in difficulties because the retail market was getting “more and more cramped”.

    Market observers offered explanations for the failure of some foreign retailers in Vietnam, with the decisive factor being the growing presence of giant global retailers, which is making competition in the sector fiercer.

    According to a report from the Ministry of Industry and Trade earlier this year, foreign enterprises now hold a 17% market share in the shopping centre and supermarket segment, 70% in convenience stores, 15% in minimarts and around 50% in online, TV and phone shopping.

    The percentages may not be too high but the looming presence of foreign retailers can be seen in many major cities.

    For instance, Thailand’s Central Group has bought the entire stake of France’s Casino Group in Big C Vietnam, while another Thai conglomerate, TCC Holding, has acquired Metro Cash and Carry Vietnam.

    Other foreign groups such as the Republic of Korea’s Lotte and Japan’s Aeon have been steadily expanding, and have plans to double or triple the number of stores in Vietnam in the coming years.

    In terms of growth, Vietnam’s retail market is among the top five in Southeast Asia and 11th globally, according to A.T. Kearney’s 2016 Global Retail Development Index.

    The trade ministry said retail sales of goods and services rose 10.2% to VND3,530 trillion (US$156.7 billion) last year.

    It has projected the market to hit US$179 billion by 2020.

    There is indeed a lot room for the retail sector to grow in Vietnam, where more than half the population of nearly 92 million is young and incomes are rising very fast, it said.

    Business-to-customer transactions are expected to double in value from the US$2.2 billion recorded in 2013.

    The ministry also expects the country to have 1,200-1,300 supermarket outlets by 2020, up 650 from 2011. The number of trade centres and malls are projected to increase to 180 and 175, respectively.

    Thời Báo Kinh Doanh newspaper (Business Times newspaper) quoted Akiihiko Maeda, CEO of Japan’s  Ministop 24-hour convenience store chain in Vietnam as saying competition is now the biggest challenge for his company.

    Ministop would need five to six years to break even, he said.

    But to achieve that, it would have to increase the number of stores by 80-100 a year and reach around 300.

    Analysts pointed out that this means Ministop — and other foreign retailers – would have to bring in lots of money.

    Where do domestic retailers stand?

    The swift expansion of foreign firms has also piled pressure on local retailers. Domestic goods suppliers are feeling the pinch as foreign retailers are developing their own brands for selling through their stores.

    Local retailers, at least many of them, cannot take on their foreign rivals, analysts fear.

    To compete, they need good management in all areas from brand building, ensuring product quality and marketing to human resources, training and establishing distribution networks, they said.

    But most are too weak and need to be immediately restructured, they said.

    Technology is also a problem for many Vietnamese retailers in a sector that is highly technology-intensive, they said.

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  • Incurring big losses, fast food giants open fewer shops

    Incurring big losses, fast food giants open fewer shops

    The heyday of fast food chains seems to be over in Vietnam. The number of fast food shops has been decreasing in an era when people are trying to ‘live slowly’.

    Ten years ago, Hanoians and Saigonese could easily find fried chicken shops along main streets. At that time, eating fried chicken at fast food shops was in fashion. More and more fast food shops opened, not only in large cities, but also in small cities and provinces.

    In 2012, Burger King, encouraged by the fast growing market of Vietnam, announced a plan to spend $40 million to develop a chain with shops located in advantageous positions in many cities and provinces throughout Vietnam.

    A representative of Burger King once stated that Vietnam was one of its key markets.

    Nguyen Bao Hoang, who brought McDonald’s to Vietnam, said he would open about 100 shops in Vietnam within one decade, and employ hundreds of workers. Lotteria and KFC are believed to be the brands with the highest number of fast food shops in Vietnam.

    Analysts once believed that the potential of the Vietnamese market was great with the Vietnamese income on a rapid rise. Fast food chains targeted the Vietnamese middle class with average household income of $500-1,000.

    MOIT has granted licenses to 148 foreign brands to enter the Vietnamese market in the last eight years.

    This includes 42 fast food, bakery, coffee, beverage and restaurant brands, accounting for 43.7 percent of the total.

    Some fast food shops have shut down quietly after the boom. The number of shops of each fast food chain is on the decrease.

    In mid-February 2016, a Burger King shop at No 1B-1B1 on Cong Hoa street in HCMC announced its closure. One month before, another shop at the Dien Bien Phu – Cao Thang crossroads in district 3 also shut down.

    In 2015, two Burger King shops at No 26-28 Pham Hong Thai street in HCMC and 125 Lo Duc street in Hanoi stopped operation. In mid-2014, a shop closed in Da Nang.

    McDonald’s, a well known brand from the US, has set up several shops in HCMC but still hasn’t opened a restaurant in Hanoi.

    A branding expert commented that food chains can develop only if their products fit locals’ taste.

    This explains why fast food chain development has slowed down, while banh my (Vietnamese sandwich) chains have been prospering.

  • Vietnam e-commerce developing quickly

    Vietnam e-commerce developing quickly

    E-commerce in Viet Nam is more developed than some Southeast Asian countries and is poised to expand in coming years, according to a market research company.

    Ashish Kanchan, managing director of Kantar TNS Vietnam, said e-commerce is growing quite positively in Vietnam.

    He classified e-commerce development into three groups — developing customer education for e-commerce, widely prevalent e-commerce, and e-commerce as default purchase channel.

    Currently, Viet Nam is in the fledgling group together with Egypt, Turkey, Thailand, the Philippines, Greece and others. Meanwhile, in some European countries such as the UK, Germany, Demark, Sweden and Norway, and also Singapore, going online and buying online have become a default option.

    Viet Nam is already ahead of some of neighbouring countries like the Philippines, Thailand, and Indonesia and will likely join the next group within the next three years, he said.

    The United States, China, Italy, Hong Kong and Malaysia are among countries in the second group.

    Unlike countries such as Thailand, Indonesia, and India, Viet Nam is not only a mobile phone market, but tablets and laptops are still very prevalent in Viet Nam, he said. Thus, e-commerce companies must develop e-commerce platforms for multiple devices in Viet Nam.

    He urged companies to focus more on brand building as it is extremely important to gain more trust from shoppers.

    Understanding the e-commerce shopper is also very important so that businesses can provide the convenient experience for shoppers.

    Technology changes have ushered in a new era in commerce and digital branding as well as a new set of customer expectations, delegates at a recent Creative Commerce Workshop said.

    Denise Thi, managing director of Isobar Vietnam, said the customer journey has changed a lot over time.

    In the traditional marketing form, the consumer’s buying process was from attention to interest-desire to action. The process now goes from consideration to evaluate, buy, experience, advocate and bond.

    Consumers expect a lot of things, especially memorable experiences.

    To succeed in this new world, the first thing firms need to think of is to repurpose their marketing plan or sale plan to turn any point of contact into a shoppable experience, she said.

    Next, “we need to redesign, not only our campaign engagement but also our brand offerings and points of intervene”.

    The last thing is reposition. “We need to reposition what is the right thing to do first throughout the experience we want to deliver to our customers.”

    Sandipan Roy, chief strategy officer at Isobar in Asia-Pacific region, said: “People will forget what you said, people will forget what you did, but people will never forget how you made them feel.”

    Every shopping moment is an opportunity to tell a story, and every story is an opportunity to sell something, he added.

    It is key for brands to create inspirational stories and experiences through the creative use of digital and technologies, which ultimately lead to a transaction, he said.

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  • Google promises to work with Vietnam to remove ‘bad’ content

    Google promises to work with Vietnam to remove ‘bad’ content

    The tech giant has been asked to open a representative office and coordinate with Vietnamese authorities. Prime Minister Nguyen Xuan Phuc has asked that Google open a representative office in Vietnam to better manage its increasingly popular services in Vietnam, including preventing bad content on YouTube, according to a report on the government’s website.

    Phuc said during a meeting with Eric Schmidt, executive chairman of Google’s parent company Alphabet, in Hanoi on Friday that many of Google’s services are widely used by Vietnamese businesses and people.

    He reportedly asked for more cooperation from Google to prevent and remove bad information on its video site YouTube.

    According to the report, Schmidt has pledged to work with Vietnam government to filter its content, and said he will consider opening the Vietnam office.

    Vietnam has the second largest number of YouTube users in the world, he was quoted as saying.

    Major market

    Nearly 49 million people in Vietnam, or more than half of the country’s population, are online.

    A report from Think With Google, the research arm of the tech giant, last month said many Vietnamese spend their summer on searching on Google and watching YouTube.

    Trailers on the site got more than 500 million views in summer 2016, up a staggering 136 percent from previous year.

    Data from the company shows that last summer, YouTube views in Vietnam doubled compared to spring, with more than 60 percent from mobile.

    Every day during that summer, 100 million mobile searches were made on Google – that’s even more than the population.

     

    ‘Toxic’ content

    In March, Google Europe had to apologize for allowing ads to appear alongside offensive videos on YouTube, after big companies either pulled ads or threatened to do so.

    A month later, Vietnam’s government called on all companies doing business in the country to stop advertising on YouTube, Facebook and other social media until they could find a way to end the publication of “toxic” anti-government information.

    The information ministry in April confirmed that it had asked Google to block and remove 2,200 videos on YouTube that had “defamatory” content against Vietnamese leaders.

    Facebook, the most popular social network in Vietnam, last month also pledged to cooperate with the Vietnamese government to block “bad” and “toxic” content.

    Google CEO Sundar Pichai visited Vietnam in December 2015, joining a talk with Vietnamese businesspeople and startup community.

  • Vietnam to export pork to China amid supply glut

    Vietnam to export pork to China amid supply glut

    Local farmers have seen prices fallen sharply as a surplus of 200,000 tons of pork is expected this year. Vietnam is working to export some of its pork to China soon, a deal that could help many farmers stricken by an oversupply and massive price drops.

    Necessary procedures are being finalized and China will only import pork, instead of live pigs, said Nguyen Xuan Duong, deputy head of the husbandry department under the agriculture ministry.

    China, the world’s biggest pork consumer, wanted to officially open its market for Vietnamese pork years ago, but in 2012, the foot-and-mouth disease made headlines in Vietnam, prompting the northern neighbor to halt the plan.

    As for now, China has asked Vietnam’s authorities to control diseases in animal farms and monitor the quality of pork.

    Chinese officials will come to Vietnam to check the production process before working on related procedures, Duong.

    He said China has not decided on how much it will import, but it is likely that Chinese consumers will need around one million tons of Vietnamese pork a year.

    Chinese buyers currently pay VND40,000-42,000 ($1.70-1.80) per kilogram of pork. Prices of pork have fallen sharply in Vietnam this year, currently hovering around VND23,000-25,000 per kilo.

    Vietnamese small traders used to be able to sell live pigs across the border, but China has recently ended this practice.

    In May 2016, the agriculture ministry started warning traders of a possible glut.

    Farmers have been expanding their herds hoping to increase exports to China despite warnings from the ministry, and “this has caused the pork supplies to exceed domestic demand,” the ministry said in a statement on April 28.

    Vietnam’s pig herd expanded by nearly 5 percent to more than 29 million heads last year. By the end of March this year the number had edged up by at least 1.5 percent, according to official data.

    The agriculture ministry estimated that Vietnam will face a surplus of 200,000 tons of pork this year. It is trying to also export live pigs and pork to the Philippines and Singapore.

  • Vietnamese students turn to Japan in hope of getting good jobs

    Vietnamese students turn to Japan in hope of getting good jobs

    It seems like a win-win situation for Japanese companies looking for skilled employees in Vietnam. The number of Vietnamese studying in Japan grew more than 12-fold from 2010-2016 to around 54,000.

    They now account for nearly a quarter of international students in Japan, behind only Chinese students, who make up 41 percent but whose numbers have leveled off in recent year, citing the Japan Student Services Organization (JASSO) as saying in a Thursday report.

    The growing presence of Japanese companies in Vietnam has students and their parents thinking about studying in Japan in the hope of landing a well-paid job with a Japanese company, Itsuro Tsutsumi, director at JASSO’s student-exchange department.

    “I chose Japan for my children because it costs less than other countries and has a good education system, instilling good discipline in students,” the newswire quoted Tran Thi Quynh My, an official at the State Bank of Vietnam, as saying.

    “After studying in Japan my children will have a better chance of finding a good job when they get back to work in Vietnam since there are more and more Japanese companies investing in our country,” she said.

    Vietnam’s economy expanded by more than 6 percent for a second consecutive year in 2016, making it one of the world’s fastest-growing economies. Japanese companies are increasingly looking to Southeast Asia where incomes and consumption are likely to keep growing for years, quoting Shinobu Kikuchi, senior economist at Mizuho Research Institute in Tokyo, as saying.

    Japan is aggressively recruiting students from the region in the hope they will help enhance economic ties with their home countries in the future.

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  • Sugar inventory hits record high

    Sugar inventory hits record high

    Sugar plants have reported their highest ever inventory level, nearing 750,000 tons, accounting for 50 percent of their processing output. Explaining reasons for the high inventory yesterday, chairman of Vietnam Sugar and Sugarcane Association (VSSA) Pham Quoc Doanh said that unusual weather has caused material shortage at the beginning of this year processing crop. Sugarcane harvest has concentrated at the end of the crop.

    Sugar import quotas, as per WTO commitments, left  from last year has contributed to the inventory this year.  Illicit sugar import has reached 400,000 tons now accounting for one third of the total processing output.

    Mr. Nguyen Hoang Ngoan, deputy director general of Can Tho Sugar Company, said that Thai sugar has illegally imported into the Mekong Delta, the central region and the Central Highlands and been sold at lower than domestic prices.

    A kilogram of domestic sugar is priced as low as VND16,000-16,500 a kilogram but it is still unsalable. The company alone has over 20,000 tons in stock.

    Stating at a conference seeking  sugar consumption solutions recently, deputy Minister of Agriculture and Rural Development Tran Thanh Nam said that the ministry had proposed the Ministry of Industry and Trade to lengthen sugar import under quotas to the third and fourth quarter.

    The Ministry of Industry and Trade and the Ministry of Finance should rectify long lasting sugar auction to prevent loopholes for invoice fraudulence.

    In long term, the ministry proposed to increase sugarcane productivity and commercial cane sugar (CCS), representing the sugar content of cane, and regulate sugar volume in production and consumption.

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  • Vietnam’s 2017/2018 coffee output to rise 10 pct on good weather, prices

    Vietnam’s 2017/2018 coffee output to rise 10 pct on good weather, prices

    Good news for exporters with the 2016/2017 crop likely to fall short of expectations. Vietnam, the world’s largest robusta producer, is forecast to harvest 28.6 million bags (1.72 million tons) of coffee from its next 2017/2018 crop, a rise of 10 percent from the current season, thanks to favorable weather conditions and higher domestic prices, a U.S. Department of Agriculture attache said.

    Higher output from Vietnam, which stands only behind Brazil in terms of global coffee production, supports an industry view which envisages stable global supply in the next crop year.

    “Adequate rains starting in January through March helped coffee trees trigger more branches and early flowering,” the USDA attache said in a May 17 report.

    High domestic prices have also helped farmers purchase sufficient fertilizer, triggering higher yields even though the total planting area remains unchanged, the report said.

    Vietnam’s coffee crop year lasts between October and September, starting with the harvest in the Central Highlands region that accounts for around 90 percent of the country’s output.

    While it is still too early to forecast the size of the next harvest, Vietnam’s coffee belt has seen favorable weather for production  in recent months, said Bach Thanh Tuan, head of the Community Development Center, a state-backed facility in Dak Lak Province. The center is tasked with ensuring sustainable production in the province as well as the entire region.

    “The supply outlook for 2017/18 seems increasingly positive,” the London-based International Coffee Organization said in its April report, adding that initial concerns about frost in Brazil and a shortage of rainfall in Vietnam have eased.

    Coffee prices on the domestic market rose to VND47,500 ($2.1) per kilogram on March 21, the highest since September 2011. The price hike coincided with the coffee watering period, during which Vietnamese growers feed fertilizer to their trees.

    Smaller 2016/2017 crop

    The USDA report has revised down its output forecast for the ongoing 2016/2017 crop year by 2.6 percent to 26 million bags, saying extended rain in October-November 2016 had damaged cherries and reduced the quality of beans.

    Vietnam’s coffee exports in the next 2017/2018 crop year are forecast to edge up 0.4 percent to 26.65 million bags, the report said. The export volume includes green beans, soluble and roasted coffee.

    Consumption of roasted, ground and soluble coffee in Vietnam in the next 2017/2018 season is projected to rise 2 percent to 2.93 million bags, the report said.

    It cited the continuing growth of coffee shops, saying domestic market competition remains fierce due to the arrival of foreign brands.

    Even though Vietnam’s coffee exports fell to 2.25 million bags last month, a five-month low, based on Vietnam Customs data, the shipments still helped extend Vietnam’s position as the world’s biggest coffee exporter, which the Southeast Asian nation seized from Brazil in March.

    Robusta beans account for most of Vietnam’s exports and are used mainly for making soluble coffee.

    Top producer Brazil shipped a combined 2.13 million bags of arabica, conillon (a variety of robusta), soluble coffee and roasted beans in April, down 13.5 percent from a year ago, the Brazilian Coffee Exporters Council said in a report released earlier this month.

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  • Vietnam state investment arm SCIC partners Thai Kasikornbank

    Vietnam state investment arm SCIC partners Thai Kasikornbank

    Vietnam’s government investment arm SCIC, the state investor in the country’s biggest firm Vinamilk, has inked a deal with Thai Kasikorn Bank to unlock more investment opportunities in Vietnam. SCIC, or the State Capital Investment Corporation, said the collaboration will help woo foreign investors into the country as well as improve its investment climate through the exchange of expertise.

    Thailand has accounted for significant investments into Vietnam, notably in the retail sector. TCC Holding and Central Group put a war chest to acquire retail assets in Vietnam over the past two years to secure top positions in this $118 billion market. SCIC last year sold 5.4 per cent of Vinamilk to Thai beverage firm F&N in a $500 million deal. F&N had been already a major shareholder at the dairy company with an 11 per cent interest.

    Thai brewer Singha also played big with a $1.1 billion infusion into Masan Group’s units. Thai investors are also beefing up their direct investments. Direct investment and M&A capital from Thailand in Q1, 2017 were valued at $168 million, a surge of 20 times compared to the same period in 2016. Vietnam has been seen as a magnate for foreign investors thanks to its stable economic annual growth of some 6.5 per cent, blended with a rising middle class and improving infrastructure.

    The total new committed FDI and M&A capital into the country in the first four month of this year reached $10.6 billion, in which share purchases accounted for $1.36 billion, according to the General Statistics Office. The SCIC represents the State ownership in shares of major local businesses, including Vinamilk, Hau Giang Pharmaceutical, Vietnam Construction and Import-Export JSC, tech firm FPT, insurer Bao Viet and Traphaco. In March, the sovereign wealth fund had also signed a similar agreement with Singapore property developer Keppel Land to promote investment opportunity in Vietnam.

  • Vietnam plans to open ‘outstanding’ special economic zones

    Vietnam plans to open ‘outstanding’ special economic zones

    The country is becoming more selective in the kind of investment it seeks, giving greater priority to high-tech and green sectors. Vietnam plans to open three special economic zones that offer investors greater incentives and fewer restrictions than available to date in the country, the investment minister said.

    Foreign direct investment, largely in manufacturing, has been key to Vietnam’s growth. It hit a record of $15.8 billion last year and has risen 6 percent in the first five months of 2017 from a year earlier.

    The new economic zones will be in the north, center and south of the 1,650-km (1,000 mile) long country, Planning and Investment Minister Nguyen Chi Dung told in an interview on Tuesday.

    The ministry is drafting a law for the zones in northern Quang Ninh province, central Khanh Hoa province and southern Phu Quoc province. Approval from lawmakers is expected by the end of 2017.

    Dung said the zones would be free from local regulations to make them competitive internationally.

    “It will be a massive attraction to investment and investment will boom next year,” Dung said. “It will be outstanding in everything: free and favourable in every aspect.”

    Vietnam currently has 18 economic zones, offering incentives for investors from free tariffs in selected items to lower personal income tax or reduced rent and fees. There are another 325 state-supported industrial parks, which have fewer incentives.

    Broadly positive investors

    A survey by ANZ Research last year said investors were broadly positive about the industrial parks because of tax incentives and the ease of customs clearance. Occupancy in operating industrial parks is more than 70 percent.

    Vietnam’s government this week reiterated its annual economic growth target at 6.7 percent, despite a drop to a three-year low of 5.1 percent in the first quarter. The government blamed the low rate on drought, salination issues and a temporary drop in production for Samsung Electronics due to its Note 7 battery woes.

    Dung said the government was confident of meeting its 2017 growth target given factors including improved weather, solid loan growth, a rise in tourism and rising numbers of new businesses.

    He expected Vietnam to continue drawing at least $10 billion a year in foreign direct investment for each of the next five years, while adding it was becoming more selective in the kind of investment sought. High tech and clean sectors are now a greater priority than low-cost industries, he said.

    “It’s no longer about quantity but more about quality,” Dung said.

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  • Techcombank to mobilize $220mn from shareholders

    Techcombank to mobilize $220mn from shareholders

    The content of its plan to does not, in general, differ from the previous version submitted to the annual general meeting (AGM), but the offering period is expected to be extended to all of 2017, from only the second and third quarters.

    500 million shares are to be issued at a minimum price of VND10,000 ($0.44) per share. If the deal is successful, Techcombank’s charter capital will increase from VND8.8 trillion ($387.69 million) to VND13.8 trillion ($607.96 million).

    This is the largest capital increase Techcombank has made since 2008. From 2008 to 2012 its charter capital increased regularly, from VND4.7 trillion ($207.07 million) to VND8.8 trillion ($387.69 million).

    All proceeds from the share offer are expected to be invested in the VND916 billion ($40.35 million) expansion of its head office and fixed assets. It will also spend VND1.6 trillion ($70.5 million) on technology and equipment.

    The bank will also increase its capital for credit activities and investment in government bonds, to some VND2.4 trillion ($105.76 million).

    Techcombank’s pre-tax profit was VND1.3 trillion ($57.29 million) in the first quarter of this year, up 130 per cent year-on-year and representing 26.3 per cent of the 2017 plan.

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  • Vietnam sees rise in mobile e-commerce

    Vietnam sees rise in mobile e-commerce

    By January 2017, Vietnam was home to almost 47.2 million mobile internet users, half of the country’s population, according to the report “Vietnam Digital Landscape 2017” by We Are Social.

    Some 39 percent of the population have purchased products or services online, of them 29 percent have placed at least one online order via a mobile device.

    The total value of the country’s e-commerce market was estimated at about 1.8 billion USD in 2016, the report said.

    The 2017 Vietnam e-Business Index by the Vietnam e-Commerce Association (VECOM) shows that the internet has been a great tool for local enterprises in cross-border trade.

    They can communicate with overseas partners via the internet and can access online public services, for example, e-customs and e-certificate of origin.

    It also found that 45 percent of domestic enterprises own a website but only 19 percent of the websites are compatible with mobile devices, down from 26 percent in 2015.

    To succeed, domestic firms must catch up with mobile e-commerce trends to maintain a competitive edge over the others, said VECOM Vice President Nguyen Ngoc Dung at the Vietnam Mobile Day last weekend.

    Dung suggested that selecting a suitable domain name should be the first step in building a reliable online presence for a business as a domain name is not simply an address on the internet but is closely attached to the enterprise’s operations and branding.

    A mobile-friendly website will draw more customers to the brand name and improve its competitiveness, he added.

    For those who wish to reach out to the global markets, the domain name “.com” indicates credibility thanks to its popularity and stability over the past 18 years, said Executive Director of Mat Bao Corporation Huynh Ngoc Duy at the event.

    Sharing this view, Nguyen Tu Hong Quan, Director of the Nhan Hoa software company, noted that many international companies, including those listed in the Fortune 500, use “.com” for their website, aiming to reach new customers outside their regions.

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  • Big money flowing into Vietnam stock market

    Big money flowing into Vietnam stock market

    The liquidity has improved considerably with trading value of VND4.5 trillion in each trading session. One month ago, Nguyen Huu, an investor, decided to buy Sacombank shares (STB). “If I make a bank deposit, I would get an interest rate of a maximum 7 percent for six months. Meanwhile, with the investment in STB, I expect profit at 15-20 percent at minimum,” he said.

    Huu bought STB when the share price was at VND9,500 per share. And if he had sold the shares some days later, he would have made a profit of 10 percent.

    According to Nguyen Duc Hung Linh from the Saigon Securities Incorporated (SSI), the cash flow to the stock market mostly comed from big investors who prepare in financial capability and have big targets.

    The VN Index has for the first time in the last nine years has regained the 700 point threshold, while the trading value has reached VND4.5 trillion per daily trading session and foreign investors’ portfolio value has reached the highest peak.

    On May 15 morning, the stock market witnessed a record morning trading session with VND3.1 trillion worth of shares were traded. Investors were excited when seeing 56 shares hitting the ceiling price level.

    On May 16, the trading volume increased to VND3.659 trillion, an increase of 18 percent, the highest trading volume in the history of the Vietnamese market.

    “There is so much money from new sources and new investors who are more hot-headed than old investors,” the representative of a closed-end fund said.

    Nguyen Tri Hieu, a renowned banking expert, at a workshop on the stock market held some days ago, commented that this was good news for Vietnam, but investors have been advised to be cautious.

    “The index has been escalating rapidly. If the trend continues, I think the VN Index would reach the 740 point threshold or even higher,” Hieu said.

    Tong Minh Tuan from VCB Securities commented that the most important thing is that the stock market has more good commodities this year to offer.

    “Foreign funds are very excited and they have taken action. I think the market would be even more busy towards the end of the year,” Tuan said.

    Other analysts also commented that they were optimistic about the market in 2017-2018, because there would be more good shares on the market once the state divests from several profitable companies.