Mekong Delta’s fishing boats stopped fishing due to the Covid-19 pandemic
Many fishing boats are mooring at the Tac Cau fishing port in Kien Giang Province's Chau Thanh District.
With many localities in the Mekong Delta mandating social distancing to combat COVID-19, selling and distributing seafood has become difficult, causing many fishing boat owners to suspend operations.
Many seafood traders in Kien Giang Province said social distancing and travel restrictions were disrupting seafood supply chains and causing prices to fall.
Tran Van Phinh, a fishing boat owner in Ca Mau Province, said his two boats have stopped going out to sea since it is difficult to sell their catch and there are not enough people to crew them.
Kien Giang has the largest number of fishing vessels measuring six metres or more in the delta, 9,861.
But only about 30 per cent of fishermen who work on boats are local, and the rest travel from other places.
Phan Van Khanh, a boat owner in Kien Giang Province, said: "Strict social distancing makes it very difficult for fishermen to travel. Therefore, my fishing boat is unable to go out to sea because there are not enough crew members."
The number of fishermen who have quit due to fear of contracting COVID is worsening the shortage.
The high cost of COVID testing is also hindering fishing activities.
Tran Van Nam, a seafood trader in An Giang Province, said it now takes five days for a boat to transport seafood from Kien Giang to An Giang compared to a maximum of three days previously, while the cost has doubled.
"The cost for a rapid COVID-test is nearly VND3 million for his workers and valid for only three days. Many boat owners or traders have stopped buying due to the high test cost."
Prices of export rice fall to lowest figure in two years
After witnessing a sharp rise during the beginning of the year, the export price of rice has continuously dropped in recent times.
This comes amid the price of Vietnamese 5% broken rice falling sharply to US$385 per tonne, the lowest level seen over the past two years.
According to details given by the Ministry of Agriculture and Rural Development (MARD), Vietnamese 5% broken rice in July was sold at US$390 per tonne, the lowest level since February, 2020.
The export price of rice continued to decrease in August, even dropping to as low as US$385 per tonne on August 19, approximately US$100 per tonne lower than the average price of US$485 per tonne seen at the same period last year.
Pham Thai Binh, general director of Trung An High-Tech Agriculture Joint Stock Company, said due to the negative impact caused by the global spread of the COVID-19 pandemic, a number of companies and factories have been forced to suspend their operations, leading to late delivery for orders placed by foreign partners.
Binh went on to reveal that Trung An High-Tech Agriculture Joint Stock Company was initially expected to resume export orders to the Republic of Korea after August 16.
However, due to the implementation of social distancing measures because of the spread of the pandemic in southern provinces and cities, this has caused the delivery time to be delayed until September or even beyond.
Nguyen Van Don, director of Viet Hung Company Limited in Tien Giang province, said that the company’s rice inventories remain high, therefore it has yet to sign new contracts with partners. Due to a number of challengers, including high transportation costs, the low export price of rice has seriously impacted the cash flow of the company.
According to the MARD, the country's domestic supply source will become more abundant after the winter-spring rice harvest season, with the nation likely to export between 6 million and 6.2 million tonnes of rice of all types, with the value of this being worth roughly US$3.325 billion this year.
Vietnam, US eye sustainably equal trade ties
Since the normalisation of bilateral relations in 1995, economic and trade ties between Vietnam and the US have seen great progress, with two-way trade hitting an all-time high of 90.8 billion USD in 2020, up 19.8 percent year-on-year, despite serious impacts of the COVID-19 pandemic.
US Vice President Kamala Harris's ongoing visit to Vietnam is expected to open up new business and investment opportunities for the two countries' enterprises.
According to the Vietnamese Ministry of Industry and Trade (MoIT), since the Vietnam – US Bilateral Trade Agreement (BTA) took effect in December 2001, two-way trade has continuously increased.
Bilateral trade was maintained in the first seven months of 2021 as the US continued to be Vietnam’s largest importer with a turnover of 53.7 billion USD, up 37.7 percent year-on-year.
Vietnam mainly shipped machinery, equipment, tools and spare parts to the US. Therefore, despite being affected by the pandemic, the country’s revenue from exporting these items to the US still reached 12.2 billion USD last year, up 141.5 percent compared to 2019. In the 2016-2020 period, exports of these products to this market enjoyed an annual average growth rate of 54.8 percent.
According to insiders, this confirms that Vietnam has become an important link in the supply chains of many products to many markets, including the US.
Deputy Minister of Industry and Trade Do Thang Hai said that the Vietnamese and US economies are complementary. In the coming time, Vietnam will continue speeding up its economic reform and international integration, and strengthen mutually-beneficial economic, trade and investment cooperation with the US.
According to the Deputy Minister, the value of imports from the US in the coming time will increase through the improvement of Vietnam's business environment, thereby attracting more enterprises to Vietnam.
The US's becoming Vietnam’s largest export market is considered a positive signal. However, the Vietnam Trade Office in the US recommended Vietnam to be careful about anti-fraud and trade protection issues.
Phan Mai Quynh from the MoIT’s Vietnam Trade Remedies Authority said that in order to avoid risks, businesses should actively answer questions from the investigation agency, and fully prepare documents as required, and build an advanced governance system.
To support businesses in boosting exports to this market, Vietnam will continue cooperating with US partners to comprehensively address the US’s concerns.
The MoIT is working on big projects to enhance the competitiveness of export products, Hai said, adding that businesses must actively develop their markets to improve their domestic production capacity and integrate deeper into the global supply chains./.
EVN production costs rise sharply due to higher input prices
Electricity of Vietnam (EVN) costs for buying materials for electricity production increased by VND16.6 trillion (USD721.73 million) between July and August 20 this year against the same period of last year.
According to the group, input material prices during the time were much higher than those in the first half of this year.
Imported coal prices in July grew by 17.5% against those in June, 51.8% against the average prices in the first six months of this year and 250% on-year.
Newcastle coal's average imported prices increased by USD98.8 per tonne in the first half and USD150 per tonne in July. The figure rose to USD159.7 per tonne in the first ten days of August. Meanwhile, (heavy sulphur fuel oil) HFSO prices in July grew by 23% compared to the first six months of this year and 68.3% on-year. Since the beginning of August, HSFO prices increased by USD419 per tonne to USD374.4 per tonne.
EVN reported that coal and oil-fuelled electricity accounts for up to 51% of the group's electricity sources.
The group added that as the water level at many hydropower plant reservoirs remained low it had affected operations. EVN has to buy more coal and oil for thermal power plants.
Vietnam becomes second largest wooden furniture supplier to Australia
The country made up the second largest supplier of wooden furniture to Australia during the first half of the year, with export turnover reaching US$103.1 million in the reviewed period, representing a year-on-year rise of 72.1%, according to the Ministry of Industry and Trade.
Statistics compiled by the International Trade Center (ITC) indicated that Australia's import value of wooden furniture in June reached $138.64 million, marking a rise of 9.7% compared to June of last year.
During the opening half of the year, Australia's import value of wooden furniture enjoyed an annual surge of 47.7% to US$871.54 million.
The import proportion from the Vietnamese market accounted for 11.8% of Australia's total import value of wooden furniture throughout the reviewed period, climbing by 1.7 percentage points compared to the same period from last year. This figure shows that there is plenty of room for the export of the product in the near future.
Australia also increased its import of wooden furniture during the six-month period, with wood-framed chairs taking the lead with turnover of US$358.14 million, an increase of 66.3% against the same period last year.
Furthermore, the import revenue of living room and dining room furniture soared by 46.5% on-year to reach US$280.7 million, accounting for 32.2% of the country's total import value of wooden furniture.
Most notably, Australia mainly imports the product from China, Vietnam, Indonesia, and India.
ADB finances climate resilience infrastructure projects in Vietnam
The Asian Development Bank (ADB) has approved a $60 million financing package to improve the climate resilience of transport and water supply infrastructure in Vietnam's south-central coastal provinces of Binh Dinh and Quang Nam, especially in remote upland districts with large ethnic minority communities.
The Climate Resilient Inclusive Infrastructure for Ethnic Minorities Project I will upgrade 121.8 kilometers of roads using climate-resilient design standards, construct 115 kilometers of water supply pipelines, and help provide reliable weather and climate data in a timely, cost-effective manner. About 243,000 people, including 126,300 from ethnic minority groups, are expected to benefit from the project.
"The project aims to improve the living conditions of ethnic minority communities in remote areas of Vietnam," said ADB Programs Officer Hong Anh Nguyen. "It will better link remote rural production sites with markets and processing facilities for crops such as acacia and boost beneficiaries' access to health, education and market services. The project will also expand access to safe water supply and irrigation."
The financing package includes $58 million in regular ADB loans and a $2 million grant from ADB's High-Level Technology Fund. The grant will fund the supply and installation of data systems for climate risk management. In addition, the project will include $21.73 million in financing from the Government of Vietnam.
Vietnam's economy grew 7.0% on average from 2016 to 2018, but it slowed to 2.9% in 2020 due to the coronavirus disease (COVID-19) pandemic. Significant gaps exist between the economically booming coastal communities and the interior upland areas with a high ethnic minority population. About 87% of the ethnic minority households in Binh Dinh and 55% in Quang Nam are poor or near poor, compared with the provincial poverty rates of 5.5% and 10.3%, respectively.
These areas are challenged by low-quality, fragmented transport and water resource infrastructure. Most of the ethnic minority communities are often isolated during the rainy season, cut off by flooded roads situated in hilly or mountainous terrain. Less than 60% of households within the project area have access to reliable and safe water supply. Limited access to water and poor sanitation have led to high incidence of waterborne diseases and poverty.
Vietnam faces a high risk of disasters and climate change. The country experiences an estimated annual average loss of $2.37 billion due to natural hazards, especially floods, with Binh Dinh and Quang Nam among the most affected areas.
Reference exchange rate down 8 VND on August 26
The State Bank of Vietnam set the daily reference exchange rate at 23,143 VND/USD on August 26, down 8 VND from the previous day.
With the current trading band of +/- 3 percent, the ceiling rate applied to commercial banks during the day is 23,837 VND/USD and the floor rate 22,448 VND/USD.
The rates at major commercial banks saw decreases.
At 8:25am, Vietcombank listed the buying rate at 22,670 VND/USD and the selling rate at 22,900 VND/USD, both down 15 VND from August 25.
BIDV cut both rates by 20 VND, listing at 22,695 VND/USD (buying) and 22,895 VND/USD.
Vietinbank also reduced both rates by 25 VND, listing the buying rate at 22,670 VND/USD and the selling rate at 22,890 VND/USD (selling)./.
Vietnam's Covid-19 outbreak poses setback to recovery
An escalation in COVID-19 cases and deaths over July and August threatens to undermine Vietnam's previously strong recovery and may temporarily set back positive rating momentum, according to Fitch Ratings.
The Vietnamese authorities had succeeded in keeping the number of COVID-19 cases low prior to the latest outbreak. The economy expanded by 5.6 per cent on-year in H1/2021, accelerating from 2.2 per cent in the previous year, but the restrictions to control the spread of the disease continue to weigh on economic activities in the third quarter and could persist if the outbreak is not controlled soon.
“This poses significant risks to our current forecast that growth will average 6 per cent in 2021,” stated Fitch Ratings. However, the organisation still expect Vietnam's GDP performance over to be the strongest among Fitch-rated sovereigns in ASEAN. Some lost growth momentum may also be made up in subsequent quarters as output and social activities normalise, although the risk of further outbreaks will linger as Vietnam's vaccination rate remains low.
Public finances will also be affected. Officials have indicated plans for a relief package worth roughly $5 billion (around 1.4 per cent of GDP), focused on reducing taxes and fees for small- and medium-sized enterprises. However, Vietnam's public debt-GDP ratio is expected to remain well below the median for 'BB' sovereigns in 2021-2022.
Exports have been an important support for Vietnam's economy during the crisis. Tourism's share of GDP fell to 3.5 per cent in 2020 from 9.3 per cent in 2019, and the sector’s earnings will remain at very depressed levels well into 2022 as a result of the pandemic.
However, goods exports have been strong, with merchandise exports rising by 26.2 per cent on-year in the first seven months of 2021. Some factories producing for export have been disrupted by the recent outbreak, but the impact on output could also be temporary.
In April, Fitch Ratings said that a material reduction in risks posed to the sovereign balance sheet from weaknesses in the banking sector could be a trigger for a sovereign rating upgrade. However, the adverse effects of the recent outbreak could reduce the likelihood of this, at least in the near term.
“A loosening of credit policy designed to cushion the impact of the pandemic may have been one of the factors supporting import growth. Financial system credit rose by 15.2 per cent on-year in H1/2021, faster than nominal GDP growth of 6.7 per cent. This trend is expected to be sustained in H2/2021 as the authorities guide banks towards lower lending rates and accept faster system credit growth,” stated Fitch Ratings. “Nonetheless, it is not clear if market forces will put upward pressure on the VND in the near term. Strong import growth in recent months has already reversed the record trade surplus in 2020; in 2Q21, Vietnam posted its largest quarterly goods trade deficit since 2011.”
MPI supports digital transformation to improve business efficiency
The Ministry of Planning and Investment is developing a draft programme to support digital transformation in enterprises, cooperatives and business households for 2021-2025, to meet the practical and urgent needs of the fourth industrial revolution and tackling the pandemic.
The purpose of the programme is for digital transformation through transforming awareness, vision and business strategy; supporting the digitisation of business, management processes, technology and production; supporting digital transformation to improve the efficiency of production and business; enhancing capacity and competitive advantage; and creating new values for production and businesses.
The goal is that 100 percent of production and businesses will be aware of digital transformation by 2025; 500,000 production and businesses receive support from the programme; at least 800 businesses, 100 cooperatives and 4,000 business households supported gain successes in digital transformation.
The programme will also establish a network of experts, including at least 500 organisations and individuals, advising digital transformation in production and businesses; as well as map and publish a database of at least 100 digital transformation technology solutions for production and businesses.
To achieve the objectives, the draft proposes several groups of activities to be implemented.
Specifically, it will develop documents and tools to guide digital transformation and the digital environment.
It will also form and coordinate a network of consultants on digital transformation for production and businesses.
In addition, the programme will support digital transformation training for production and businesses.
The Ministry of Planning and Investment said that funds for the programme’s implementation include funds from central and local state budgets and contributions and donations from organisations and individuals, as well as businesses participating in the programme.
The draft has been posted on the website of the Ministry of Planning and Investment for consultation.
New BOT approaches bring investment opportunities
As Vietnamese invesstors are moving to accelerate corporate bond issuances and new business models to raise funds for transport initiatives to ease reliance on bank loans, more opportunities are coming for international ventures.
"The US partner made this proposal after studying our investment activities. It aims to venture further into transport projects in Vietnam," said vice chairman Tran Van The. "Investors from the US, Singapore, South Korea, and others are also seeking cooperation with us and want to become strategic stakeholders."
Deo Ca made the move amid difficulties related to bank loans facing their BOT transport schemes. The company plans to attract foreign investment, apply new business models, and issue corporate bonds to ease reliance on bank credits.
Deo Ca and other infrastructure investors are also proposing to the government to establish an investment fund, allowing them to issue construction bonds to lure in capital. This proposal got support from ministries and agencies, opening a new approach for public-private partnership (PPP) projects.
These are the initial steps for Deo Ca to mobilise foreign capital from investors and international financial institutions to optimise profits and gradually reduce domestic bank loans with high lending rates, thus improving financial indexes in the long term.
At the Cam Lam-Vinh Hao section that is part of the eastern cluster of the North-South Expressway, Deo Ca leads a consortium of investors and is confident to successfully implement the venture with diversified plans to mobilise funding without reliance on credit loans. Deo Ca is known for many key BOT transport projects such as the Deo Ca, Cu Mong, and Hai Van tunnels, among others. Other BOT transport developers include Vinaconex and Tasco, which are now facing problems related to fundraising and VAT refunds.
Members of the Vietnam Association of Road Systems Investors (VARSI) are now waiting for a solution related to lending rates and VAT refunds from the Ministry of Finance (MoF), which could come out in August as requested by the government.
Tran Chung, chairman of the VARSI, said, "For a year we have sent similar proposals to the MoF. However, the problems have not been solved yet. This time, we sent it to the prime minister, hoping for a way out."
"Many members of the association are stuck with problems," Chung added. "Transport projects often require huge investments, with the majority coming from bank loans, thus causing a heavy burden on developers, especially in the first years of operation. Meanwhile, BOT transport projects often produce low revenues at first."
According to the VARSI, the existing rules on lending rates by the MoF will cause losses for project developers in the first years, who often only make higher profits in the last months of the operation circle.
BOTs, a type of PPP, are the most popular model in Vietnam. However, banks still hesitate to lend to BOT initiatives for fear of capital increase, long investments, and high risks. Previously, a number of initiatives have hit the rocks, including Dau Giay-Phan Thiet Expressway, the first pilot project in this format, despite strong interest from international investors.
Meanwhile, other initiatives were credit stuck, such as at Huu Nghi-Chi Lang, Van Don-Mong Cai, and Trung Luong-My Thuan. Many of them halted construction for a number of years due to loan access problems.
Despite strong interest from international investors mainly from China, South Korea, France, and Japan, Vietnam has not attracted much overseas investment in roads yet due to lack of bankability and a suitable legal framework.
In 2017, the market witnessed the acquisition of 20 per cent in Vietnamese FECON Corporation in the Phu Ly Bypass project by Japanese East Nippon Expressway Co., Ltd and Japan Expressway International Co., Ltd., making them the first foreign enterprises to enter such a scheme.
In 2014, Vietnam Infrastructure Development and Finance Investment JSC signed an agreement in principle to sell 70 per cent in the BOT Hanoi-Haiphong expressway project to Indian investors. In 2016, France's VINCI Concessions signed a cooperation agreement with Vietnam Expressway Corporation, covering concession schemes for road infrastructures operated by the latter.
With the approach among Vietnamese road transport businesses and a more favourable legal framework under the Law on Public-Private Partnership Investment, BOT transport projects are expected to welcome more overseas financiers, and Vietnam aims to develop additional 4,000km of expressways by the end of the decade.
Vietnam's participation contributes to success of 6th Eastern Economic Forum: Russian expert
Vietnam is one of the active members of the Eastern Economic Forum and its engagement will contribute to the success of the upcoming 6th edition, said Grigory Trofimchuk, Chairman of the Council of Experts of the Eurasian Research Fund.
In an interview with the Vietnam News Agency’s correspondents in Russia at the threshold of the event slated for September 2 – 4, the expert said the forum, an initiative of Russia President Vladimir Putin, aims to promote economic relations between all countries wishing to exploit the great potential of the Russian Far East.
He said Vietnam has for years put forth initiatives and suggestions in contribution to the forum’s common activities in order to facilitate the development of the region.
According to Trofimchuk, over the past decade, Vietnam has contributed to setting the paces and working styles of many international organisations and promoted cooperation on a global scale.
He noted it should be taken into consideration that Vietnam was the country which has expanded the size of the free trade area within the framework of the Eurasian Economic Union (EAEU). As such, the country's representatives, particularly entrepreneurs across different economic sectors, will make contributions to the success of the 6th forum, thus increasing its prestige.
The 6th EEF will be held in both face-to-face and online formats under the theme of "The Opportunities for the Far East in a World under Transformation". It will feature about 70 activities in its agenda in addition to many cultural, sport, and youth exchange programmes./.
Financial powers scratch heads over coal shift
International institutions are making plans to buy off some of Vietnam's coal-fired power plants to shut them down as quickly as possible – but while this could reduce greenhouse gas emissions dramatically, national energy security needs to be kept in balance.
According to a statement from the financial institutions, they are planning to raise $9-17 billion to buy back a number of coal-fired power plants that are currently operating in Vietnam. After acquiring these facilities, the partners will allow them to retire 30-40 years earlier than their average life cycle, which means after just 15-20 years of operation.
"This is a very positive and drastic move by these financial institutions," said Vu Chi Mai, technical advisor at the German Corporation for International Cooperation GmbH (GIZ), in an interview with VIR.
Vietnam has committed to reducing its greenhouse gas emissions by 8 per cent by 2030, but global organisations do not consider the goal to be very ambitious. Emission mitigation measures for the next 10 years have been identified for the energy sector, including in energy production and sectors like industrial production and construction, transportation, agriculture, and commercial services, as well as residential projects.
The impacts are poised to make a positive contribution to reducing emissions and combating climate change. However, environmental problems are largely being created by coal power. Among the drivers of climate change, the generation of electricity and heat – mainly by thermal power plants – accounts for a quarter of all emissions. Buying and selling coal power plants is a business that is not yet very popular in Vietnam.
"We have not received a specific proposal from the ADB for the acquisition of coal-fired power plants in Vietnam," said Hoang Tien Dung, director of the Electricity and Renewable Energy Department under the Ministry of Industry and Trade.
Dung believed that financial institutions would not buy thermal power plants for business. If so, they would finance the acquisition for developers to then close and switch to cleaner sources of electricity. "At some meetings related to energy transition, some British and Japanese partners also mentioned this idea," Dung said, adding that experienced overseas investors could help the energy industry develop eco-friendly power sources.
Coal has long been considered a massive problem for the environment. In Vietnam, however, coal-fired power plants remain an important part in the development of the electricity market, despite the fact that many facilities have not been deployed on schedule due to a lack of capital arrangements.
Coal-fired power is still considered cheap and with a competitive price while offering stable operation. As Vietnam's electricity demand increases rapidly, these objective factors remain to be considered.
In the country's National Power Development Plan VIII, it is expected that by 2025 the total capacity will increase to over 118,000MW, of which hydropower accounts for up to 19 per cent; coal power up to 29 per cent; gas – including liquefied natural gas (LNG) – up to 13.7 per cent; and renewables like small hydroelectricity, wind, solar, and biomass account for up to 43.8 per cent; with a small remainder of up to 4 per cent in imported electricity.
This master plan also envisages that by 2030, the total capacity will be increased to 167,000MW, of which hydropower would make up around 15 per cent; coal power about 27 per cent; gas-fired power around 20.9; and renewables up to 41.4; with imported electricity accounting for about 4 per cent.
Thus, coal power is still one of the preferred energy forms in Vietnam, and one of the fastest growing in the region. Since 2015, more than half of the current capacity of 20.4GW has been newly added, now accounting for about 30 per cent of the power structure.
According to Mai of GIZ, as coal-fired power remains important in Vietnam's electricity system, the gradual reduction needs a roadmap, ensuring national energy security and the reduction of property entanglements, as well as a roadmap for job transitions.
"If they buy out coal-power plants, global financial institutions must take this into account, along with supporting the stabilisation of the power system amid the penetration of renewables," Mai advised.
In addition, Mai said, "The negotiation process will not happen overnight. Financial institutions hope to spend less than a year raising funds for piloting and demonstrating successful acquisitions at the COP27 event in 2022. However, Vietnam must calculate carefully."
LNG has a quarter of the emissions of coal-fired power, but the cost of infrastructure development as well as other price and supply factors must be carefully considered, ensuring energy security. For many European countries, LNG is seen as a form of transitional energy for a certain period of time, and they do not see it as a permanent solution.
Mai, who has been researching clean energies for more than 20 years, added, "Vietnam needs to be alert as it is gradually reducing coal-fired power and replacing it with new technologies for sustainable energy like hydrogen, which is a stable, safe, and clean example."
Da Nang strives to complete public investment disbursement
Public investment disbursement of the central city of Da Nang was estimated to reach 3.4 trillion VND (over 149 million USD) as of August, according to the municipal Department of Planning and Investment.
This is a great effort as the city is facing difficulties due to the complicated developments of the COVID-19 pandemic.
In the remaining months of the year, the local authorities will implement many solutions in order to complete the set disbursement plan at the highest level.
According to Chairman of the municipal People’s Committee Le Trung Chinh, the city will focus on accelerating land clearance and compensation, and simplifying administrative procedures in order to speed up public investment projects, especially major projects.
During the second session of the municipal People’s Council on August 12, participants approved a resolution on adjusting the city’s public investment capital plan in 2021.
Accordingly, the total public investment capital in 2021 is nearly 9.7 trillion VND (over 425.4 million USD), down 140 billion VND compared to the previous plan set for the year.
In order to adjust the allocation of public investment capital in 2021, the municipal authorities will review works that have been suspended or have yet to carry out due to matters related to compensation and land clearance, and those that are unable to fully disburse the arranged capital.
Since the beginning of this year, the central city of Da Nang has adopted synchronous, flexible and effective measures to realise the Government's double goals of fighting the COVID-19 pandemic and restoring socio-economic development.
Thanks to drastic anti-pandemic measures, the city has basically put the pandemic under control while maintaining production and trade.
According to the management board of the Da Nang Hi-tech Parks and Industrial Zones Authority, in the first seven months of this year, the local hi-tech parks and industrial zones drawn 499 projects with a total registered capital of nearly 26.7 trillion VND and over 1.74 billion USD, and 65,000 workers.
The board has assisted firms in conducting administrative procedures, while monitoring the observance of pandemic prevention and control measures, and coming up with plans to develop production while effectively combating the pandemic.
The local economy is gradually recovering and escaping the 2020 negative growth, evidenced by the gross regional domestic product growth of nearly 5 percent in the first half of this year, up 1.05 percentage points from the same period in 2019. The services sector expanded by 5.34 percent, and the industrial and construction sector picked up 2.85 percent. Such results proved that the management of the local political system and efforts by departments, agencies, people and businesses have been effective.
One of the factors helping Da Nang to regain the growth trend is the control of the COVID-19 pandemic. The key to the city’s success in curbing the spread of the coronavirus is fast tracing and isolation and large-scale testing.
Drastic measures will be implemented to restore economic growth, speed up public investment capital disbursement, and remove difficulties for key projects, especially delayed ones.
The locality will also pay attention to solutions to boost economic growth, speed up the disbursement of public investment, and remove difficulties for key projects, especially delayed ones.
During the fourth conference of the 22nd municipal Party Committee, delegates proposed key solutions for the last half of this year, including promptly providing assistance for residents and firms hit by the pandemic; dealing with "bottlenecks" in investment procedures, basic construction, site clearance, compensation; calling for investment in industrial clusters; and stepping up awareness campaigns to popularise Da Nang as a safe and attractive destination.
Pharma drive a chance for real estate
Despite having limited facilities for life sciences real estate, Vietnam could open up to potential development in the industry, analysts say.
"Even though the country is limited in developing complex pharmaceuticals, its potential for real estate opportunities is real," Ginolin said.
This month, Vingroup collaborated with Arcturus Therapeutics Holdings Inc. to establish a facility in Hoa Lac High-tech Park in Hanoi's Thach That district for the production of COVID-19 vaccines. The facility is under construction and expected to have a capacity of 100-200 million doses per year. It is expected to be put into operation by mid-2022.
VABIOTECH is proposing to be in charge of packaging the Russian Sputnik V vaccine tubes from semi-finished products with a volume of five million doses per month. Advanced International JSC (AIC) and VABIOTECH have signed a deal with Japan's Shionogi to transfer COVID-19 vaccine production technology, and is also expected to be completed by June next year.
Ginolin of Boston Consulting added that outsourcing trends are explained by cost optimisation as major groups re-focus on core competencies. Several directions were highlighted by Ginolin for Vietnam's life science real estate, including developing manufacturing facilities, especially outsourcing from global corporations and focusing on fast-growing sub-segments – potentially high-potency molecules, biologics, and smaller flexible plants.
"In addition, focus may be placed on setting up specialised logistics facilities for both export and import, with specific cold chains for pharmaceuticals. To a lesser extent, research and development (R&D) centres and offices for growing local life science companies will occur," he added.
To unlock the potential, Ginolin said that Vietnam would need the right regulation and certification approach to ease local and foreign investments and to work closely with the private sector regarding tech and talent transfer. "An ambitious yet pragmatic and coordinated national plan is also a key success factor," he added.
According to the global commercial real estate services company JLL, in 2021, investor interest is growing in critical areas during the health crisis in Vietnam.
Life sciences generally consist of corporate offices, logistics facilities, R&D laboratories, and manufacturing facilities. Logistics assets, which have been one of the hottest areas in recent years, will continue to receive increased capital allocation amid the online shopping boom.
Meanwhile, domestic and international investors have targeted the health and medical logistics segment. They need more cold storage locations closer to customers to serve the growing demand for businesses and for temperature-sensitive products such as vaccines, cosmetics, foodstuffs, and pharmaceuticals.
But the driving force behind the cold logistics industry, JLL added, is not only that but also unique healthcare products. The most prominent are the COVID-19 vaccines and other vaccines that may be required. In addition to the rise in manufacturing facilities, the demand for specialised R&D facilities across the region is being supported by new establishments in key industrial zones.
Vietnam has become the R&D centre for many giant technology companies. Along with Samsung's building of a $220-million centre in Hanoi, Vietnam is now also an R&D hub for many other companies such as LG Electronics, Panasonic, and Toshiba.
Exports push steel industry's growth
Steel enterprises are seeking ways to boost exports as the sector's growth is now mainly driven by export activities.
According to the Vietnam Steel Association (VSA), steel production reached nearly 2.4 million tonnes in July, down 6.48 percent month-on-month, while steel sale reached more than 2.1 million tonnes, equal to that of the previous month but up 7.4 percent over the same month of 2020, in which steel exports hit 658,207 tonnes, up 5.96 percent month-on-month and 55 percent year-on-year.
Trang Thu Ha, Chief of the VSA Office, attributed the increase in steel sale to export growth, adding that due to the current COVID-19 outbreaks in southern localities, steel production and sale will face numerous difficulties in the remaining months of this year.
Nguyen Van Sua, an expert of the steel industry, said that in order to maintain production and employment for workers, many enterprises in the steel industries in particular and many other industries in general have to find ways to promote exports. As in the domestic market, social distancing caused by the pandemic has hindered transportation and construction.
Minister of Industry and Trade Nguyen Hong Dien issued Directive No. 10/CT-BCT dated August 23, 2021 on strengthening management over export and import activities of several products to support production activities and domestic consumption.
Accordingly, the ministry requested the VSA, the Vietnam Steel Corporation and iron, steel and iron ore producers and exporters to consider issues related to input materials, reduce production costs, take measures to increase steel production to meet domestic demand, and limit the export of products that are in high demand in the domestic market.
Measures to turn Vietnam into digital powerhouse: WB economist
World Bank (WB) Lead Economist and Programme Leader for Vietnam Jaques Morriset has pointed out solutions to turn the Southeast Asian nation into a digital powerhouse.
Digital revolution has never been just about discovering breakthrough technologies, he stated. For most countries in the world, including Vietnam, the future will not be determined by their drive for innovation but rather by their capacity to make the most of digital technologies developed elsewhere.
To become a digital powerhouse, Vietnam will need to offer the conditions that will enable its local operators to adopt and adapt new global digital technologies. So far, the country has done a good job, Morriset said.
"Today, it compares well to peer and aspirational comparators in penetration of mobile phones and its citizens and enterprises are well connected to the Internet. Its digital infrastructure is quite modern, covering all provinces, and funded by forward looking national telecommunication companies", he wrote on a post on World Bank blogs on August 24.
The country also hosts several world leading IT firms such as Apple, Samsung, and Intel, among others. This demonstrates Vietnam's competitiveness and offers a unique platform for local firms and developers – the model adopted by Japan and the Republic of Korea in the 1970s and 1980s, and more recently by China.
Vietnam needs to ensure the development of a digitally skilled labour force, the emergence of a dynamic and agile local private sector, and good but secure access to information.
The WB expert said that ensuring the availability of a labour force with digital skills is central because up to one third of existing jobs in Vietnam are at risk to be lost in a five-year span due to digitalisation. While digital transformation will create new jobs, those will require a new set of skills.
One can expect the labour market to adjust gradually as the excess demand for skilled labour will lead to higher relative wages. This will in turn incentivise workers and firms to further invest in education and training. However, international experience has demonstrated that workers may not have the information or the financial resources to invest in longer education paths.
He went on to say that at the current pace, it might take 25 years for Vietnam to catch up with the number of students registered at the university in Thailand today.
In successful countries, the government has acted to address the market failure by removing legal obstacles to labour mobility; providing information to workers on labor market trends and demands to inform their decision making; improving the quality of technical/vocational education programmes; and supporting financial firms and workers in their efforts to acquire sets of new skills.
To keep the private sector agile and motivated to adopt new technologies, the Vietnamese Government should act to preserve competition when some markets are almost naturally dominated by digital champions because of their know-how, network externalities, and economies of scale.
“Such concentration is already observed in the fixed broadband market and rises sharply in social media and other digital subsectors, including e-commerce, fintech, digital financing, and data management,” the economist said.
The reduction of barriers to entry and the strengthening regulations is often a necessary policy to avoid abuses. Concurrently, at the other hand of the spectrum, the authorities should support local startups and small and talented investors who face financing constraints by offering them alternative funding options as done successfully in several countries, including Singapore.
Morriset advised that Vietnam needs to facilitate access to data and information. This is a public good by definition as the benefits of sharing information largely exceed the cost of collecting it. The Vietnamese Government can improve access to information by developing inter-operability across its databases and through open data initiatives – which consist of sharing online public data in a user-friendly manner.
The Government can also encourage the private sector to collect and share data. All these efforts should also consider data and data-users privacy and security.
Vietnam would need to urgently apply measures to set the country on the path to achieve its ambitious digital economy goals. As a principle, the Government's interventions must be designed and implemented in close collaboration with the private sector and with maximum transparency to avoid their capture by either vested public or private interests, the WB expert concluded.
Funding urged for project linking Con Dao with national grid
The southern province of Ba Ria-Vung Tau has urged the Ministry of Industry and Trade and the Vietnam Electricity (EVN) to promptly allocate funding to a project to connect Con Dao island of the province with the national grid, with nearly 2.53 trillion VND (110.88 million USD) to be channeled from the State budget in the 2021-25 period.
The total investment needed by the project is estimated at 4.8 trillion VND.
The transmission line built by the project is set to start at the 220kV power station in Vinh Chau town in Soc Trang province and will include 3 km of power lines on the mainland, another 15 km in shallow waters, 78 km of submarine cables, and 4.5 km of 110kV lines on Con Dao Island.
In a working session with Ba Ria-Vung Tau authorities in March, the Prime Minister assigned the Ministry of Planning and Investment to include the project in the medium-term public investment plan for the 2021-25 period, which was passed by the National Assembly last month.
Electricity demand on Con Dao, which is an increasingly popular tourist destination, has been on the rise.
Solar, wind, and gas-fired power generation on the island is neither stable nor profitable enough for investors, and solar or wind energy can only serve as supplementary power sources, according to experts.
Vietnamese diaspora to offer new solutions for innovation
Mobilising the brainpower of Vietnamese intellectuals abroad can not only help provide resources for Vietnam to make a breakthrough in various innovative areas, but is also one of the key solutions to help the country ensure business activities as the world attempts to claw its way out of pandemic difficulties.
"The InnoCity 2021 programme is being carried out thanks to the efforts, intelligence, and enthusiasm of many young intellectuals who are studying, researching, and working in Europe, and directing their attention to the homeland," said Vu Quoc Huy, director of the MPI's National Innovation Centre (NIC).
The NIC has supported InnoCity 2021 to spill across the world and lure more of Vietnam's intellectuals to propose initiatives and solutions for the country to overcome the major issues.
InnoCity 2021 is a global programme created by the Union of Vietnamese Students in Europe to connect creatives serving the socioeconomic recovery of the country after the pandemic, as well as mobilise all resources for the innovation of Vietnam over the globe.
During August and October, a hybrid model in combination between online and offline meetings and workshops will be applied to spread the message of the programme. Several professional activities involving the 50 most outstanding initiatives and leading experts will be carried out.
"Numerous activities like art shows, workshops, and investment promotion will gather 200 experts and leaders of ministries, agencies, international and local organisations, and businesses to take place on the last days of December, selecting and honouring a Vietnamese 'Innovation Rising Star' in every area," Huy explained.
Vietnam's Resolution No.52-NQ/TW dated 2019 on active participation in the Fourth Industrial Revolution outlines that it is crucial to develop science and technologies in all areas, as well as a national digital transformation. The resolution also highlights the role of innovation in the development of the country, and requirement to build outstanding policies to lure and use talent, promote innovation, and also work towards fast and sustainable development.
Vietnam is currently facing challenges to contain the pandemic and keep the economy on track. The government is interested in tech-applied solutions to track and fight against the coronavirus, as well as assist people financially. Thus, in addition to measures in supporting individuals and businesses, the MPI is also mobilising solutions in social welfare.
Nguyen Viet Anh, vice chairman of the Germany-Vietnam Innovation Forum and chairman of the Union of Vietnamese Students in Germany, said that innovation "can help seek resources providing vaccines, ventilators, test kits, and medicines for COVID-19 to help the government manage the health crisis."
Le Viet Nguyen, a representative of the InnoCity programme, said that the pandemic could yet be a chance for some countries, including Vietnam, to compete with developed countries in some areas. "Countries will pour trillions of US dollars into recovering their economy and production. Thereby, good concepts, productions, and solutions from Vietnamese intellectuals overseas would be more than welcome here, and Vietnam can enjoy this know-how to progress and compete with cutting-edge products sooner rather than later," Nguyen said.
Three years ago, the Vietnam Innovation Network was launched to gather hundreds of overseas Vietnamese scientists and other experts to mobilise resources and brainpower in science and technology. To date, the network has connected over 1,000 young Vietnamese talents around the world and boasts four representative offices in Germany, the United States, Japan, and South Korea.
COVID-19 threatens Asia-Pacific’s progress on SDGs
The pandemic is threatening Asia-Pacific's progress towards the fulfilment of the critical targets under the Sustainable Development Goals (SDGs), according to a new report by the Asian Development Bank (ADB).
Key Indicators for Asia and the Pacific 2021presents comprehensive economic, financial, social, and environmental statistics for ADB's 49 regional members. According to the report, about 203 million people, or 5.2 per cent of developing Asia's population, lived in extreme poverty as of 2017. Without COVID-19, that number would have declined to an estimated 2.6 per cent in 2020.
"Asia-Pacific has made impressive strides, but COVID-19 has revealed social and economic fault lines that may weaken the region's sustainable and inclusive development," said ADB chief economist Yasuyuki Sawada. "To achieve the 2030 SDGs, decision-makers need to harness high-quality and timely data as a guide for actions to ensure that the recovery leaves no one behind – especially the poor and vulnerable."
The SDGs are a global call to action to end poverty, protect the earth’s environment and climate, and ensure that people everywhere can enjoy peace and prosperity. As many as 17 interconnected and ambitious goals, which address the major development challenges faced by people in Vietnam and around, have been set forth for Vietnam to achieve.
According to a report by the Ministry of Planning and Investment last year, Vietnam will be able to achieve seven of the 17 SDGs by 2030, including (1) no poverty, (2) zero hunger, (4) quality education, (8) decent work and economic growth, (9) industry, innovation, and infrastructure, (13) climate action, and (17) partnership for the goals. The eight remaining goals will face a lot of challenges, and two others will not be achieved by 2030, that is (12) responsible consumption and production and (14) life below water.
In recent years, Asia-Pacific's economy has grown at a robust pace and contributed as much as 35 per cent to global GDP – measured in current US dollars, in 2019. But COVID-19 took a toll just when weaker domestic investment and slowing global trade and economic activity were starting to challenge this momentum.
Among reporting economies in Asia-Pacific, only about one in four posted GDP growth last year. The region lost about 8 per cent of work hours due to mobility restrictions, deeply affecting poorer households and workers in the informal economy.
The Key Indicators report includes a special supplement introducing a practical framework for measuring the digital economy and its growing role in modern life, which has been particularly evident during the pandemic.
Key Indicators for Asia and the Pacific 2021also presents the status of SDG indicators in Asia-Pacific, as well as regional trends and tables, including indicators across eight themes – people; economy and output; money, finance, and prices; globalisation; transport and communications; energy and electricity; environment; and government and governance. The pandemic's impact on global value chains and their role as both a dampener and amplifier of shocks are also analysed in the report.
Source: VNA/VNS/VOV/VIR/SGT/SGGP/Nhan Dan/Hanoitimes
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