Vietnam’s forest product exports hit record this year
The export value of Vietnamese forest products is estimated to reach US$16.5 billion in 2022, up 4% over the same period last year, resulting in a trade surplus of around US$13 billion, according to the Ministry of Agriculture and Rural Development.
Despite woes being caused by the Russia-Ukraine conflict, the Covid-19 pandemic, and competition, Vietnam gained around US$15.57 billion from exports of forest products in the first 11 months of this year.
This remarkable result is partly because of the price surges of forest products. For example, wood pellets increased from US$120 per ton to US$195 per ton, while wood chips soared from US$130 per ton to US$200 per ton in 2022.
Due to the Russia-Ukraine conflict and disruptions to supply of gas for heat and power, many European countries imported wood pellets from Vietnam for heat in the winter.
China, Japan, and South Korea, the three countries consuming over 85% of wood chips worldwide, decided to import wood chips from Vietnam, instead of Australia, Chile, South Africa and Brazil because of the surges in fuel and shipping costs.
However, the export of wood and non-timber forest products will face challenges in 2023 when consumer demand ebbs as runaway inflation forces people to tighten their belts.
Christmas décor, gift market vibrant in Hanoi
Christmas décor accessories are plenty for sales on streets around Hanoi downtown as days are away from the festive festival.
In the evening, shops light up with a variety of décor items such as Christmas tree, tinsel, reindeer, flashing lights, laurel wreath, bauble, snow rope, candy canes, Santa’s clothes.
Fresh pine trees imported from Denmark, the Netherlands and China are also available. One that is more than 6m in height costs up to nearly 150 million VND (6,500 USD), exclusive of transport and decoration costs.
The price of a pine branch imported from China is between 170,000 VND and 200,000 VND while that from the Netherlands is about 250,000 – 300,000 VND. A bunch of 5-6 fresh pine branches from Denmark and the Netherlands is priced at a range of 1.8-2.2 million VND.
Christmas gifts and accessories are also sold well on e-commerce sites such as Lazada, Sendo, Shopee or social media pages Facebook, Zalo, with prices about 20% cheaper than those on traditional market.
Ha Nam, Japanese prefecture consider more business opportunities
Director of the Mayoral Office of Izumiotsu city of Japan’s Osaka prefecture Nakayama Hideto paid a working trip to the northern province of Ha Nam on December 19 to learn about its investment environment.
Welcoming the guests, Vice Chairman of the provincial People’s Committee Tran Xuan Duong described Japan as a strategic and trustworthy partner of Ha Nam, which is now home to 115 Japanese enterprises.
Ha Nam has an industrial zone reserved for Japanese investors with synchronous infrastructure and quality electricity, water and telecom services, he said, adding that the province is drawing investment in manufacturing and eco-friendly support industry, hi-tech agriculture, tourism, services, healthcare, education, human resources training, inland ports, and logistics.
With advantages in geographical location and traffic infrastructure, Ha Nam is committed to rapid administrative procedures, workforce training, and supply of high quality manpower and essential services to investors, Duong said.
He said he hopes the trip will encourage more investors and businesses from Izumiotsu to come to Ha Nam.
Hideto, for his part, expressed his interest in partnering with Ha Nam in agriculture and building a food supply chain, especially quality rice, and said both sides will sign economic and culture deals in the future.
During the visit, the Japanese delegation visited the Thai Ha and Dong Van IPs and held a working session with the provincial Department of Agriculture and Rural Development.
Ten containers fall into the sea due to violent waters
As many as 10 shipping containers have fallen into the sea off the coast of the central city of Danang.
The shipping containers fell into the waters due to rough seas. They contained electric products such as TVs, refrigerators, and washing machines.
The incident occurred around 5 pm on December 17 near Hon Ong Island when Ship Pacific Express was travelling from Saigon to Haiphong. Big waves and strong winds knocked ten containers off the ship.
Ship Pacific Express is under the management of Gemadept Corporation.
According to Pham Cong Thang, captain of the vessel, the case was immediately reported to Danang authorities for search support. The ship is now on its way to return to Haiphong.
On December 19, two shipping containers were found to have drifted onto a beach in the central province of Quang Ngai’s Binh Son District. The containers have been suspected to be part of the ten which had fallen into the sea from Ship Pacific Express, as they bear the name “GEMADEPT LOGISTICS.” Currently, the bad weather continues, so a full search has not yet been carried out.
Hanoi to organise lunar New Year fireworks at 31 locations
Hanoi will organise firework displays at 31 locations across the city to welcome in the Lunar New Year 2023.
Hanoi’s chairman Nguyen Ngoc Tuan has announced that 31 fireworks performances including six high-altitude will be organised to celebrate the Lunar New Year Festival this year. Investment will come from private organisations.
Some other localities including Danang, Ha Nam, and HCM City, have also announced plans for holding firework displays to welcome the new year.
Last year the capital city held a 15-minute high-altitude firework display at only one location on Lunar New Year’s Eve due to the Covid-19 outbreak. Many cities and localities in the country also had to cancel their firework displays on this occasion for Covid-19 prevention efforts.
Consumer product sales to increase by 7-9 per cent during Tet: market research company
Following two years of low sales during Tet (the Lunar New Year), things are expected to look up for the fast moving consumer goods industry this time around since the Vietnamese economy has recovered and consumers have a positive outlook on economic prospects, according to market research company Kantar Worldpanel Vietnam.
In its ‘Tet 2023: A cautiously optimistic FMCG outlook’ report, the company says FMCG sales during the 2023 Lunar New Year are expected to grow by 7-9 per cent from last year.
With inflationary pressure continuing, consumers are feeling the squeeze on their wallets and adapting to the situation in various ways.
The occurrence of two major holidays in a single month (New Year and Lunar New Year) is expected to provide a boost to spending.
CMA CGM Air Cargo to file for flight licence in Vietnam
CMA CGM Air Cargo – the cargo airline division of the CMA CGM shipping group from France – is reportedly seeking a flight licence in Vietnam.
Last week, the carrier’s vice president of business development Patric Bergamini reportedly revealed the information during the Asean-EU Business Summit in Brussels as part of Vietnamese Prime Minister Pham Minh Chinh’s official visit to the EU.
Bergamini said that CMA CGM was dedicated to continuing to help Vietnam’s economic growth by expanding Gemalink and providing logistics solutions via Ceva Logistics and CMA CGM Air Cargo.
The French corporation has invested in Vietnam’s seaports since 1994 through its joint-venture partnership with Sowatco and Mitsui for the VICT Terminal in Ho Chi Minh City. CMA CGM also partnered with Gemadept to launch the Gemalink Container Terminals at the Cai Mep deepwater port in the south and Lach Huyen port in Hai Phong in the north.
CMA CGM Vietnam has over 250 staff and five offices and offers 30 services throughout the country, including six at APM Terminals’ Cai Mep International Terminal (50 km southeast of Ho Chi Minh City).
In May this year, CMA CGM Air Cargo announced a ten-year partnership with Air France KLM covering the operation of freighters.
Meanwhile, Vietnam’s IPP Air Cargo JSC – whose chairman is billionaire Johnathan Hanh Nguyen – proposed withdrawing its application for an air cargo transport licence last month.
The company cited various reasons for its suspension, such as increasing inflation, interest rate hikes, and fuel price fluctuations.
Foreign groups locking eyes on F&B
Vietnam’s food and beverage sector is expected to see robust mergers and acquisitions amid the tough economic context.
Filipino food company Jollibee Food Corporation is in discussions to sell a minority stake in its Vietnamese coffee chain Highlands Coffee, noted Reuters at the start of December. The sale could pave a way for an initial public offering for the coffee chain, a move that Jollibee has been mulling for several years.
The group plans to sell 10-15 per cent of its stake in Highlands Coffee to an investor, the source shared with Reuters.
The previous month, Cool Japan Fund made a minority stake investment into Pizza 4P’s, following the successful divestment of Mekong Capital. The move aims to help Japanese ingredient producers and breweries expand internationally, particularly in Vietnam.
In September, Southeast Asian private equity firm Navis Capital pumped over $100 million in Dan-D Foods for the majority stake of the company. Headquartered in Canada, Dan-D Foods is a healthy nut producer with sourcing and processing facilities in Vietnam.
In July, Hong Kong conglomerate Swire Pacific announced that it has acquired Coca-Cola bottling operations in Vietnam and Cambodia for $1 billion. This deal marks a major milestone for Swire Coca-Cola to deepen its footprint in the region.
Besides foreign investors, local companies remain active in dealmaking activities in Vietnam’s food and beverage (F&B) market. The Sherpa Company, a subsidiary of Masan Group, increased its ownership in Phuc Long to 85 per cent. Meanwhile, The PAN Group bought a 39.9 per cent stake in Bibica for $22.6 million to raise its ownership of the confectionary company to 98.3 per cent. Likewise, restaurant chain operator Golden Gate completed a minority equity stake sale to a group of investors led by Temasek.
According to a report by VNDIRECT Securities Corporation, the F&B sector will recover and enjoy a higher growth rate going forward, mostly driven by the reopening of on-site catering services and the recovery of consumption. Food producers and drinks companies will be the main beneficiaries from such a recovery. The resilient growth of Vietnam’s F&B sector is being fuelled by higher people’s income and rising urbanisation, the report said.
In addition, Vietnam is also witnessing changing customer behaviour including a shift in spending towards fresh and packaged foods, increasing demand for luxury consumer goods, and a preference for shopping online. Companies with wide distribution systems and diverse product portfolios can quickly catch up with consumer spending trends.
Additionally, in Vietnam, there is generally no restriction on foreign ownership applicable to F&B companies. This opens various opportunities for foreign investors to penetrate Vietnam market via M&A, especially for those who prefer to seek controlling stakes in the target companies.
Haiphong continues goal to boost business climate
Thanks to its potential and favourable investment climate, the northern port city of Haiphong continues to attract both domestic and non-national financiers into its industrial and economic zones.
With a tradition of industrial development, Haiphong has issued many supportive policies for investors, especially in the fields of high-tech, processing, and manufacturing. In the first 11 months of 2022, the city became home to 80 newly-licensed projects worth almost $1.04 billion.
Newly-licensed ventures in industrial zones (IZs) have a combined investment capital of $920.9 million, accounting for 88.7 per cent of the total capital. New projects outside IZs and economic zones have a combined capital amount of $116.9 million, making up 11.26 per cent.
Meanwhile, there were 36 projects registering to adjust their capital in the given period, with this total reaching $881.5 million. The processing and manufacturing industries attracted the most new initiatives and capital increases. By the end of November, there were over 850 valid foreign-invested projects in the city, with the total investment capital of $24.5 billion.
Aside from increasing capital inflows into the city, Haiphong has also experienced impressive economic growth. In 2020, Haiphong’s regional GDP increased by 11.22 per cent, posting the second-highest regional GDP growth rate in the country. Last year, Haiphong took the lead with a growth rate of 12.38 per cent, four times higher than the GDP growth rate of the whole country.
In 2022, Haiphong achieved a growth rate of 12.3 per cent year-on-year, about 1.5 times the national average. The city is among the leading localities in Vietnam in terms of economic growth.
Haiphong has made great efforts to improve the business climate. A leader of LG Display Vietnam Haiphong said that the company will continue to pour capital into the locality, not stopping at $4.65 billion.
LG Group has invested almost $7.24 billion into Trang Due IZ. LG Group has formed a network of more than 50 satellite suppliers with a combined investment capital of nearly $1 billion.
The province has attracted foreign-invested powerhouses with significant influence in their industries. For instance, Taiwanese-backed Pegatron Corporation, which produces 30 per cent of components for Apple, has boosted its investment capital by $300 million, bringing the total to $800 million.
Pegatron’s manufacturing expansion has led to the rising demand for other suppliers in the supply chain. Thus, some suppliers of Pegatron have considered Haiphong as the top investment destination when coming to Vietnam.
Many other foreign groups have come to Haiphong to explore and pour capital into the city. However, there is growing competition in foreign direct investment (FDI) attraction, and there is no gap between countries and regions. As a result, funding promotion strategies must be constantly updated and innovated to meet the changing demand.
Le Trung Kien, director of Haiphong Economic Zones Management Authority, stressed that the implementation of new IZs is one of the solutions to lure investment capital into Haiphong. Before 2025, the city will develop and expand 15 IZs over more than 6,100 hectares, creating top conditions for investors to explore Haiphong.
According to Kien, thanks to the heavy funding in seaport, transport, and IZ infrastructure, Haiphong has become more attractive to investors.
According to Nguyen Hoang Long, director of Haiphong Department of Planning and Investment, the city set a goal of attracting $11 billion in FDI in the 2021-2025 period. The city will focus on promoting the linkage between local and foreign-invested enterprises to increase the efficiency of cooperation.
Compal to start construction of $260 million facility
Taiwanese laptop maker Compal Electronics to expected to kick off the construction of $260 million manufacturing facility in the first quarter of 2023.
A new manufacturing facility of Compal will be located in Lien Ha Thai Industrial Zone (IZ) in the northern province of Thai Binh. On December 16, representatives of Compal and Green i Park – the investor of the IZ – signed an agreement to rent land in the IZ.
The facility is expected to start operation in the second quarter of 2024. Once completed, it will have a capacity of over four million of products per year, such as smart clocks, 5G modules, IoT equipment, and tablets.
Previously, a Taiwanese laptop maker organised a field trip to WHA Industrial Zone 1 in Nghe An in June to explore the possibility of expanding its manufacturing activities in Vietnam.
In 2021, Compal expanded its Vietnam production by adding more manufacturing capacity to its existing facility based in Vinh Phuc.
To further meet the global demand, Compal is currently planning to set up operations in other localities across Vietnam, such as Quang Ninh and Nghe An provinces where the company can thrive in the local economy.
Mobile Money usage falls short
After one year of trial operation, the results of Mobile Money services fell below expectations owing to a number of factors, including customer hesitation and legal impediments.
The Vietnam Telecommunications Authority targeted all mobile phone users to have Mobile Money accounts by the end of 2022. But after one year of trial deployment, Vietnam reports just 2.34 million Mobile Money accounts, including 1.62 million accounts open in rural and island areas, accounting for 69.23 per cent of the total.
Three Mobile Money operators – military-run Viettel, state-owned post and telecom group VNPT, and MobiFone – have developed more than 82,200 transaction points connected with over 14,500 card acceptance units.
The number of Mobile Money transactions is around 15 million so far, valued at about $41.3 million.
Pham Anh Tuan, head of the Payment Department under the State Bank of Vietnam, said that despite several initial encouraging results in promoting cashless payment in rural, remote and island areas, Mobile Money deployment had encountered scores of obstacles.
From the user’s angle, hesitation in using new tech services with privacy impediments is still common. Meanwhile, service provider networks and payment infrastructure are mainly based in urban areas. The speed of service deployment in rural areas fell below expectations.
From an enterprise angle, there are limited cashless payment services tailored to the diverse needs of customers, therefore failing to stimulate users.
According to Truong Quang Viet, deputy CEO of Viettel Digital, the company is expected to serve 2 million Mobile Money customers, with more than 60 per cent living in rural and remote areas, developing over 3,000 transaction points serving people in rural and remote areas.
To facilitate the service, from October 2022, National Payment Corporation of Vietnam (NAPAS) and the aforesaid telcos began money transfers between Mobile Money accounts and bank accounts.
More solutions are needed to reach the target of three-digit growth in the number of Mobile Money users in 2023, equal to about 10 million users.
Pham Tien Duing, deputy governor of SBV, stressed the importance of raising the number of payment acceptance points and linking Mobile Money to essential products and service providers.
Pham Minh Tu, deputy director of MobiFone Digital Service Centre, asked for permission to allow the relevant services to be connected to the national database on population to verify the data, connect to each other to form Vietnam’s Mobile Money ecosystem, as well as for the provision of several novel services on Money Money to attract users.
Industrial property an outlier within a weakening market
In the midst of a difficult time in real estate in many segments, from land plots to individual houses and apartments, industrial real estate remains attractive to both investors and tenants.
According to data from the Housing and Real Estate Market Management Agency under the Ministry of Construction, in the third quarter of 2022, the occupancy rate of industrial parks (IPs) remained high, especially for ready-built and rental demand.
The occupancy rate of IPs was about 83 per cent in the northern provinces and 84 per cent in the south. Along with that, land rental prices in IPs in Q3 increased slightly by about 5 per cent compared to the previous quarter.
International investors have quickly seized the opportunity to meet this high demand.
Savills’ Industrial Insider report shows that, in 2022, a number of ready-built factories have started construction to add supply to the market, including SLP Long Hau in Long An province, Ho Nai IP in Dong Nai province, Core5 Haiphong in Haiphong city, and VLI in Hung Yen province.
The industrial real estate market is also supplemented with new supply from a number of projects that have been launched, such as the Soc Son, Dong Anh, Bac Thuong Tin, Phung Hiep, and expanded Phu Nghia IPs in Hanoi; as well as Son My I IP in Binh Thuan province.
Currently, the entire southern key economic region of eight provinces and cities boasts around 140 parks in operation with a total leased area of more than 33,000 hectares, accounting for one-third of the country’s leasable area and twice the leasable area in the north.
The demand for industrial land rental in recent years has increased sharply, and especially so this year. The southern market witnessed big deals such as Lego and Pandora leasing in VSIP 3 in Binh Duong province, and Coca-Cola in the Phu An Thanh IP in Long An province.
Ho Chi Minh City is leading the market with an average rental price of $6 per sq.m per month. The rental market has witnessed a trend of longer-term rentals for factory leasing contracts lasting for 2-3 years instead of the typical 6-12 months. In some localities such as Ba Ria-Vung Tau, Tay Ninh, and Tien Giang, the lease term is up to 5-6 years, much higher than the rest of the market.
Vietnam rises to become seventh largest trading partner to the US
Vietnam is on track this year to jump ahead of the UK and break into the United States’ top seven trading partners, according to information compiled by Bloomberg.
The news publication pointed out that this would be the first time the UK hasn’t been among the group since 2004.
The UK’s share of trade with the US declined by 2.6% during the first 10 months of the year, while Vietnam’s rose to 2.7%, according to details given by the Census Bureau data.
In terms of full-year numbers going back almost 20 years, the top seven US partners in terms of goods trading have consistently been Canada, Mexico, China, Japan, Germany, the Republic of Korea, and the UK, though positions within the group have shifted around.
Most notably, the country didn’t appear in the top-15 list until 2019, with a rapid climb seeing it end last year at 10th position. If Vietnam’s lead over the UK holds for the final two months of the year, then it will be the first time that a majority of the top seven are Asian economies.
According to economic experts, the nation’s new position highlights that the Vietnamese economy has secured a stronger foothold within the global supply chain.
Vietnam’s export rice price increases highly
According to the Vietnam Food Association, Vietnam’s export rice prices have risen sharply recently. The price of Vietnam’s five-percent broken rice currently stands at US$453 per ton, an increase of $25 per ton compared to October.
This is the third increase in the price of Vietnamese rice in 2022.
According to the Vietnam Food Association, Vietnam’s export rice prices have risen sharply recently. The price of Vietnam’s five-percent broken rice currently stands at US$453 per ton, an increase of $25 per ton compared to October. This is the third increase in the price of Vietnamese rice in 2022.
At this price, Vietnam’s five-percent broken rice is higher than the export rice price of Thailand, Pakistan, and India by $5-50 per ton.
In 2022, Vietnam’s rice exports are forecast to exceed 7 million tons. Currently, in the first 11 months of 2022, Vietnam’s rice exports have reached over 6.67 million tons, equivalent to more than $3.23 billion, with an average export price of $484.9 per ton.
Gov’t establishes Viet Nam Securities Depository and Clearing Corporation
The Government has decided to establish Viet Nam Securities Depository and Clearing Corporation (VSDC) with a charter capital of VND1,000 billion.
Viet Nam Securities Depository and Clearing Corporation is a wholy State-owned enterprise
This is a wholy State-owned enterprise headquartered in the capital city of Ha Noi and has a branch in Ho Chi Minh City – Viet Nam’s biggest economic engine.
The corporation has legal status and its own seal; may open accounts in Viet Nam dong and foreign currencies at the State Treasury and domestic commercial banks, foreign bank branches; independent accounting, implementing financial regimes, statistical reporting, accounting, auditing, information disclosure, and financial obligations as prescribed by law.
VSDC inherits all rights and responsibilities of the Viet Nam Securities Depository Center in accordance with the law; exercise the rights and perform the obligations as prescribed in the Law on Securities, the Law on Enterprises, the Law on the management and use of state capital invested in production and business at the enterprise and relevant provisions of law; carry out enterprise registration according to the provisions of the Law on Enterprises.
Trade Committee of EVFTA holds 2nd meeting
The Trade Committee of the EU-Viet Nam Free Trade Agreement (EVFTA) held its second meeting virtually on December 19.
Minister of Industry and Trade Nguyen Hong Dien chairs the second meeting of the Trade Committee of the EU-Viet Nam Free Trade Agreement (EVFTA), December 19., 2022
Minister of Industry and Trade Nguyen Hong Dien and Executive Vice President of the European Commission cum European Commissioner for Trade Valdis Dombrovskis co-chaired the event.
At the meeting, both sides spoke highly of the outcomes of the two-year implementation of the EVFTA, acknowledging efforts made by both sides’ monitoring agencies and enterprises in taking advantages of opportunities brought from the agreement.
They discussed issues of mutual concerns including an amendment to Protocol 1 on Rules of Origin; pharmacy, rice, geographical indication; reform in labor sector; special tax levied on alcohol; and preferential tariff treatment for the customs territory of the EU.
Other issues relevant to the application of the provisions of the agreement to motor vehicles and refurbished goods and illegal, unreported and unregulated (IUU) fishing were also referred at the meeting.
Both sides pledged to foster close coordination to accelerate bilateral trade and investment ties with a view to promoting the development of Viet Nam-EU relations in the upcoming time.
During August 2020-July 2022, Viet Nam earned US$83.4 billion from exporting goods to the EU, up 24 percent compared to the average export value during the 2016-2019 period.