Vietnam’s textile and garment industry generated US$30.2 billion in export revenue in the first eight months of this year, a 20% year-on-year increase, said a report of Vinatex.
Le Tien Truong, chairman of the board of directors of the Vietnam National Textile and Garment Group (Vinatex), said the localization ratio of textiles and garments reaches around 50%, but the first eight months of 2022 saw the rate rising to 57%, near the 60% target for 2025.
Vinatex’s report said that the export growth rate of nearly 20% for the first eight months is the highest of same period in 10 years.
According to data from the General Department of Vietnam Customs, imported materials and accessories for the industry totaled US$13 billion.Despite being ranked f ourth among the largest export earners, the textile and garment industry boasts the highest trade surplus, at US$20 billion in 2021 alone.
Dollar exchange rates at commercial banks near VND24,000 per dollar
The VND/USD reference exchange rate, on September 20, was increased by VND6 per US dollar by the State Bank of Vietnam compared to the previous day, to be listed at VND23,301 per US dollar. The US dollar price at commercial banks also climbed by VND15-VND30 per US dollar.
On the free market, the US dollars at foreign currency exchange agencies in Ho Chi Minh City were traded at VND24,050 per dollar for buying and VND24,150 per dollar for selling.
Deep processing to develop the local agricultural products
Vietnam’s annual fruit and vegetable output has reached 31 million tonnes, but processing rates are only around 12% to 17%. As a result, the processing industry only meets about 8% to 10% of the fruit and vegetable output’s annual output.
Experts said the lack of a processing industry had caused potential economic loss due to damaged fruits and vegetables after harvest.
Nong Ngoc Trung, Chairman of Golden Field Agriculture and Forestry Joint Stock Company, said the application of deep post-harvest technology was key to reducing logistics costs, opening and accessing many markets worldwide, and increasing product value.
To solve the problem of consuming post-harvest products and meeting fastidious markets, Trung’s company owns a versatile drying technology, helping to diversify products and increase consumption time for products from agriculture to the fishery.
Le Thi Nguyen Ha, Director of the Phuc Ha Juice Co., Ltd., recognised the importance of investing in processing technology for fruit, saying: “Modern processing brings high economic value and increases income for farmers.”
Sales Director of Sasaki Vietnam Dang Tran Viet said refrigeration drying technologies were also a new trend to bring higher product quality with low production costs and high efficiency as well as environmental friendliness. Moreover, post-harvest agricultural products could retain their delicious taste, colour, smell and taste thanks to this technology.
Ngo Quang Tu, a representative of the Department of Agricultural Products Processing and Market Development (MARD), said more than 76% of exported fruits and vegetables had not been processed. As a result, the consumption is still in the form of fresh or preliminarily processed and preserved, leading to very high post-harvest losses and high spoilage rates in transit and during consumption.
Expanding processed products from agricultural products
With five years of experience in the fruit processing industry in Vietnam, representative of Andros Company Asia, Valentin Tran, said that the firm was trying to build a chain of production and consumption of fruit products in Tien Giang and the safe material areas with Global GAP certification in provinces such as An Giang and the central highlands area.
Fruits will be processed into finished products such as jams, ingredients for making drinks, cakes, bottled water, and fruit products for children, then exported to the European market.
Tran said that he processed 20,000 tonnes of fresh fruit each year and exported more than 40,000 tonnes of processed fruit to foreign markets.
Tran said that Vietnamese fruit had a lot of potential for development in foreign markets because it possesses many advantages in terms of varieties, product quality and good price, adding the deep production of fresh fruit into other materials will increase the product’s value.
Le Duy Toan, director of the Duy Anh Food Company Limited (HCMC), uses post-harvest agricultural products to process into various types of vermicelli and rice paper, creating surprises and attraction for the Japanese and RoK markets.
Toàn’s firm has more products made from other agricultural products, such as coffee vermicelli, sweet potato vermicelli, moringa vermicelli, spinach noodles, beetroot noodles, pumpkin noodles, black sesame noodles and carrot noodles.
Director of the Institute of Agricultural Mechatronics and Post-Harvest Technology, Pham Anh Tuan, said: “Although the application of post-harvest technology to preserve and process products has been applied by many units, the situation of good harvests resulting in devaluation still recurs.”
As more than 80% of establishments have less than 2 billion VND capital, while the loan mechanism and policy are not suitable for 80% of these small and medium enterprises, it is also trouble for the development.
Therefore, to increase the value of post-harvest agricultural products, it is necessary to reorganise production and material areas to promote chain production to ensure raw materials for processing, according to experts.
UKVFTA helps to promote agricultural trade exchanges with UK
The UK-Vietnam Free Trade Agreement (UKVFTA) has had a clear impact on trade exchanges between Vietnam and the UK, particularly in the field of agriculture, since it officially took effect on May 1, 2021.
Exports of agricultural, forestry and fishery products to the UK have recorded positive results after the UKVFTA took effect, according to the Trade Promotion Department of the Ministry of Industry and Trade.
In the first six months of 2022, Vietnam’s revenue from coffee exports to the UK more than doubled from the same period last year to reach nearly 62 million USD.
Nguyen Khanh Ngoc, Deputy Director of the ministry’s European-American Market Department, said the reduction of the import tax to zero per cent after January 1, 2021, had helped many Vietnamese products to have a more competitive advantage in comparison with the same products of other countries exporting to the UK.
Affirming that the UKVFTA is a great opportunity for Vietnamese export businesses, Trade Counsellor at Vietnam’s Embassy to the United Kingdom Nguyen Canh Cuong said Vietnamese businesses still faced many obstacles in seeking partners and meeting quality standards and export procedures needed to export products to the UK as well as risks relating to contracts, payment and prevention measures.
In the field of seafood, Deputy General Secretary of the Vietnam Association of Seafood Exporters and Producers (VASEP) Nguyen Hoai Nam said the UKVFTA with preferential tariffs had brought many competitive advantages for Vietnamese seafood products. In order to effectively exploit the UK market, and in particular tapping opportunities from the UKVFTA, Vietnamese exporters, processing businesses and farmers needed to resolutely abide by regulations on product traceability.
Among Southeast Asian countries that exported rice to the UK in 2021, Vietnam enjoyed the highest average unit price at 1,012 USD per tonne, while rice from Thailand, Cambodia and Myanmar stood at 999 USD, 991 USD and 502 USD per tonne, respectively, according to the VASEP.
Vietnamese rice in the UK is mainly sold to the Vietnamese community and part of the Chinese, Thai, Malaysian, and Filipino communities. Popular Vietnamese rice brands in the UK include Golden Lotus Premium Jasmine Rice, Longdan Rice, Buffalo Saigon Fragrant Rice and Buffalo Brand Northern Vietnam Glutinous Rice.
Vietnam ranks 15th among countries exporting rice to the UK, making up a modest 0.42% of the total import turnover to this country, according to Trade Counsellor of the Vietnamese Embassy to the UK Cuong.
However, in order to turn potential into reality, he recommended Vietnamese farmers and rice exporters thoroughly apply Global GAP on a large scale while promoting the production of high-quality fragrant rice.
To support Vietnamese businesses to export products to the UK, Deputy Director of the Trade Promotion Department Bui Thi Thanh An said the Government had national brand programmes, and the department would continue supporting businesses to promote their brands via trade promotion programmes.
Director of the WTO and Integration Centre of the Vietnam Chamber of Commerce and Industry Nguyen Thi Thu Trang said it was necessary to have measures to help businesses get access to the market, connect with partners, improve product quality and meet standards and requirements of the UK market. Management agencies need to create mechanisms and simplify administrative procedures to create the best conditions for businesses.
US food, beverages introduced to Vietnamese consumers
MM Mega Market, in collaboration with the Foreign Agricultural Service under the US Department of Agriculture (USDA/FAS), launched a programme introducing US food and beverages in Ho Chi Minh City on September 20.
The programme, part of the “United Tastes” campaign launched by FAS last year, is attracting the participation of eight US Agricultural Trade Promotion Associations.
Running to September 28, the programme will introduce more than 140 food items of major US brands such as vegetables, fruits, beef, chicken, seafood, canned food, sauces, wine and non-alcoholic beverages at 12 MM Mega Market centres in different provinces and cities across Vietnam.
Benjamin Petlock, Senior Agriculture Attaché at the US Consulate General in HCM City, said that US food and beverages are becoming more popular to Vietnamese people because of their high quality, safety, convenience and diversity. And Vietnamese consumers can easily find a wide variety of US food and beverages in domestic retail chains, including the MM Mega Market system.
Vietnam rakes in US$400 million annually from bamboo product exports
Vietnam grosses between US$300 million and US$400 million from the export of bamboo products annually, with the European Union, the Republic of Korea, and Japan being the country’s largest export markets, reports the Ministry of Agriculture and Rural Development.
Vietnam has approximately 1.6 million hectares of land under bamboo cultivation, producing 2.5 – 3 million tonnes of bamboo products. Items made of bamboo are varied, ranging from plywood, sedge mats, tables and chairs to teapots, bamboo chopsticks and other household utensils.
Michel Abadie, president of the World Bamboo Organization, who is in Vietnam for the fourth world bamboo conference, said with adequate investment, bamboo cultivation combined with eco-tourism will rapidly develop, helping to generate income for local people in rural areas and protect the environment.
Good packaging key to product success
Good packaging can extend the storage life of agricultural produce and improve brand recognition, but not many firms are aware of such benefits.
Nguyen Minh Tien, director of the Vietnam Trade Promotion Centre for Agriculture, asserted that good packaging can protect and buffer a product from potential harm during warehousing and shipping. It also helps firms boost brand awareness and drive buying behaviours.
In Viet Nam, the packaging of many products, including coffee, cashew and rice, involves the use of PP woven bags whereas some others require specific types such as water-proof PE-layered bags.
As consumers become increasingly design-conscious, their demand for eye-catching packaging rises. It is essential to develop new types of bags that create an emotional connection between products and consumers.
Environmental concerns should also be taken into account since consumers are shifting their buying behaviour towards sustainability. It is equally important to replace plastic bags with degradable paper-based bags.
Nguyen Ngoc Sang, chairman of the Vietnam Packaging Association (VPA), noted that packaging has reached a total global value of US$500 billion with an annual growth rate of 12 per cent. The rate tops 13 per cent in Viet Nam with over 4,500 bag manufacturers.
A representative from Malu Design remarked that many global environmental campaigns, including Earth Hour and Make The World Cleaner, have become prominent in recent years, attracting a large number of participants.
A greener mindset has had a significant impact on buying habits. Notably, green bags have become a global trend and bans on plastic bags have been the order of the day in numerous countries.
VN must ramp up production of feed raw materials
Increasing domestic supply of raw materials is among the highest priorities for the development of Viet Nam’s livestock feed industry in the future, said policymakers and industry experts.
In recent decades, the overreliance on imported raw materials has been identified as a major shortcoming of the industry. The country’s fast-expanding livestock sector has a huge demand for feed, one that domestic producers could only meet just over 40 per cent.
The Southeast Asian country imported 22.3 million tonnes of raw materials, with a large part made up of corn and soybean oil, worth of US$10 billion in 2021 alone.
Increasing domestic supply, however, will likely prove to be a tall order, which requires solid groundwork and meticulous plans from both the Government and producers.
Vo Quang Nhan, head of the marketing department at Woosung Viet Nam JSC., a large producer in southern Viet Nam with an extended distribution network in the Mekong Delta, said the industry has been struggling with rising prices and on-and-off supply of raw materials as a result of disruption in the global market.
Similarly, CP Viet Nam, the country’s leading livestock supplier, said they have been in talks with over 300 domestic suppliers across the country. A CP Viet Nam spokesperson said the country views domestic suppliers as a key component of and the cornerstone for a sustainable supply chain.
In a recent meeting with the local authority of southern Dong Nai Province, Dutch feed maker De Heus said the corporation considered the development of Vietnamese suppliers a must-do to ensure a sustainable supply chain.
Dr Che Minh Tung from HCM City University of Agriculture and Forestry said feed alone could account for up to 80 per cent of livestock costs yet the country has not been able to produce many key components that made up its animal feed portfolio.
Garment sector’s local procurement rate up but challenges ahead
The textile and garment industry’s local procurement reached a record high rate of 57 per cent in the first eight months of this year, approaching the target of 60 per cent set for 2025, Le Tien Truong, chairman of the Vietnam National Textile and Garment Group (Vinatex), said.
He added that this is a big improvement as the rate had remained at around 50 per cent for a long time.
Vinatex’s report also revealed that the whole industry’s export revenue between January and August was worth US$30.2 billion, a rise of nearly 20 per cent over the same period last year and the highest growth rate of the past decade. It was estimated that the industry ran a trade surplus of around $17 billion in the eight months.
Truong said that among textile and garment exporting countries, Viet Nam was the earliest to open up policies for normal operation after the COVID-19 pandemic compared to Bangladesh, India and China, which enabled the country to grab the opportunity to promote garment exports.
Vinatex forecast that the average export revenue would decrease to $3.1-3.2 billion per month in the four remaining months of this year, compared to the average of $3.8 billion per month to August.
The Viet Nam Textile and Apparel Association said that Vietnamese garment and textile enterprises faced fierce competition from other major exporters in China, Bangladesh, India and Turkey, into markets with free trade deals.
The association pointed out that the rule of origin from yarn and fabric onward was a weakness of Viet Nam’s garment industry which must rely on importing 80 per cent of fabrics to produce garments for export.
Statistics showed that, on average, Viet Nam spent around $2 billion on importing raw materials, mainly from China.
Besides, importing countries were also increasing product criteria. The Viet Nam Trade Office in Sweden recently said that the EU and other Nordic countries such as Norway and Iceland were requiring the textile and garment industry to develop more sustainably and circularly.
These countries set stricter requirements for natural and synthetic fibres, which must be organic, recycled or of biological origin. For example, the cotton used in Nordic eco-labelled clothing must not be genetically modified, wholly organic or recycled.
Some Vietnamese firms were investing in research and development of raw materials to reduce the dependence on imported materials, but the supply remained limited.
Transition from CE to UKCA could cause headache for exporters
The new UK Conformity Assessed (UKCA) mark is about to be used in place of the Comformite Europeenne (CE) mark for products sold on the market in Great Britain (England, Wales, and Scotland).
The UKCA technical requirements for a product will depend on the specific legislation on that product.
Certain assessment procedures allow manufacturers to self-declare their conformity. However, some other procedures for typically high-risk products require third-party conformity assessment.
Technical documentation and the UK Declaration of Conformity are compulsory in both cases and must be available to market surveillance authorities on request.
Regarding third-party assessment, manufacturers must find a UK-approved body to carry out the work. Once assessment procedures are completed, they will receive a certificate of conformity issued by the body and must affix the UKCA mark and the body’s identification number to their products.
After December 31, 2022, assessment for new product types needs to be carried out by the bodies as well. Assessment procedures and modules applicable are the same as those in CE marking.
Official points out risks to CPI during year-end period
Though inflation was under control in the past eight months, the economy still poses risk to the consumer price index (CPI) in the remaining months of this year and next year, said Director General of the General Statistics Office of Viet Nam (GSO) Nguyen Thi Huong.
Huong said amid inflation in many countries worldwide due to the prolonged Russia-Ukraine conflict, the COVID-19 pandemic and disrupted supply chains, the Vietnamese Government took drastic measures to reduce petrol prices, stabilise electricity and water prices and tuition fees, and maintain reasonable interest rates. As a result, inflation was kept at 2.58 per cent in eight months of this year, easing pressure on input costs.
The Government, ministries and agencies directed localities to manage prices while a number of firms actively joined the price stabilisation programme to ensure the supply of necessities to people, especially food.
Pointing out risks that could potentially impact CPI during the remainder of this year and next year, Huong said the global material prices remain high which could push up prices of consumer products at home, thus exerting pressure on inflation.
The fuel prices are also likely to hike again due to the complicated Russia-Ukraine conflict and rising demand for energy in China when its economy is recovering from the pandemic.
At the same time, the supply of fertilisers and cereals used for animal feed production is falling, potentially leading to an increase in food prices.
Removing IUU fishing yellow card would benefit industry: deputy PM
Removing the European Commission’s ‘yellow card’ on fishing would benefit industry workers and prove the country is committed to responsible and sustainable fishing, Deputy Prime Minister (PM) Le Van Thanh has said.
The Deputy PM was speaking at a meeting of the national steering committee on illegal, unreported, and unregulated (IUU) fishing prevention yesterday, ahead of a European Commission (EC) visit to Viet Nam next month to assess anti-IUU fishing measures, as well as the infrastructure for aquaculture.
The warning was issued to Viet Nam on October 23, 2017.
Deputy PM Thanh said: “This is the opportunity for Viet Nam to remove the IUU yellow card and prove the country’s commitments to the globally integrated, responsible and sustainable development of fisheries.”
According to the director-general of the Directorate of Fisheries Tran Dinh Luan, Viet Nam has more than 91,716 fishing boats nationwide.
Of these boats, 95.27 per cent have a vessel monitoring system (VMS) installed. This figure reaches 100 per cent in several localities, including Quang Ninh, Thua Thien Hue, Ninh Binh, Soc Trang, Ca Mau, Vinh Long and Can Tho.
Approximately 80,000 fishing vessels have been inspected from the fourth quarter of last year until now.
Deputy Minister of Agriculture and Rural Development Phung Duc Tien added that the legal frameworks and policies are fundamentally completed. However, shortcomings still arise during actual implementation, with negligence in logbook-keeping or disrupted connections to the VMS.
Deputy PM Thanh said while there has been progress in management, marine patrol and VMS installation, the achievements have not met the demands.
The issuance of fishing licences has not reached the goal, with 96.7 per cent completion for fleets over 15m in length and 46.6 per cent for those less than 15m.
The installation of VMS is still slow, with only a 5 per cent increase, while violations in foreign waters still persist.
Deputy PM Le Van Thanh affirmed that Viet Nam is fully committed to limiting and eliminating IUU fishing.
Thanh said the country considers the protection and management of maritime resources of great importance to improving the livelihood of Vietnamese fishermen, as well as Viet Nam’s pleas to uphold international standards in preserving the environment and developing a sustainable fishing industry.
Changes in regulations to strengthen private placement bonds
The Government on September 16 issued a new decree on offering and trading private placement bonds.
Decree 65/2022/ND-CP amends and supplements a number of articles of Decree 153/2020/ND-CP dated December 31, 2020 on offering and trading private placement bonds in the domestic market and offering corporate bonds to the international market.
The new decree amending regulations on bond issuance purposes seeks to strengthen issuers’ responsibilities and obligations in using bond proceeds for the intended purposes.
It also supplements Clauses 4 and 5, Article 5 on principles of bond issuance and use.
Specifically, for issued bonds in the domestic market, enterprises may only change the conditions and terms of bonds specified in Article 6 of this decree if they are approved by leaders of the issuing business, and approved by the number of bondholders representing at least 65 per cent of the total number of bonds of the same type in circulation.
Information on the change in conditions and terms of bonds must be deemed irregular information disclosed by the issuing enterprise.
EDPR Sunseap completes acquisition of two solar PV projects in VN
EDPR Sunseap has completed a US$284 million deal with Xuan Thien Group, paving the way for its expansion in Viet Nam.
The latest acquisition is the largest utility-scale solar investment for the company which is the Asia Pacific hub for the world’s fourth largest renewable energy firm – EDP Renewables.
The deal is the first step in establishing a long-term relationship between Xuan Thien Group and EDPR Sunseap to jointly explore opportunities in the region, according to EDPR Sunseap.
Vietnamese exporters face declining orders due to high inflation
Many companies in HCM City and other southern localities are facing a drop in new export orders due to the impact of high inflation globally.
Nguyen Thi My Chau, director of the VNF Company in Binh Tan District, HCM City, said that her company has received garment orders until October 10 and is seeking for new orders, but Europe’s ongoing high inflation rate has slowed demand, posing more difficulties for the company.
Duong Quang Hiep, human resources manager of Hoang Thong Wood Ltd. Co., said that his firm was working at half capacity because of the decline in orders. This has forced the firm to reduce working hours, triggering a quarter of workers to leave their jobs due to lower income.
According to Nguyen Liem, chairman of Binh Duong Wood Processing Association, orders from key markets such as the US and Europe have sharply decreased. Meanwhile, prices of input materials and production costs have been on the rise, which has caused many wood processing companies to reduce production.
Tran Viet Ha, deputy head of the HCM City Export Ho Chi Minh City Export and Industrial Zones Authority, said that lots of local enterprises have had to reduce production.
Changshin Vietnam Company in Dong Nai Province which has 35,000 staff has witnessed a 30 percent decline in footwear orders. Many workers have stayed contracted but haven’t worked since July.
Local recruitment has drastically fallen following lower order numbers according to the Dong Nai Department of Labour, Invalids and Social Affairs.
Korean investors propose solutions on taxation and labour
Korean companies have many proposals for the government so that they can make more efforts for the sustainable development of Vietnam.
At a working session between the government and the foreign business community on September 17, Han-Yong Kim, chairman of the Korean Chamber of Commerce (KorCham), mentioned four proposals to deal with problems that foreign investors, particularly those from Korea, face.
One of their concerns is the transfer pricing and the Advance Pricing Agreement (APA). According to KorCham, taxpayers who do business with foreign-related parties are exposed to the risk of double taxation due to transfer pricing, and to prevent this risk in advance have applied for APA, but negotiations have not been made so far due to the revision of Vietnam’s tax management act.
There has cases in Vietnam where foreign-invested enterprises collectively attract research and development (R&D) personnel who have been painstakingly nurtured, but later they go elsewhere. Han-Yong Kim is concerned that if R&D labour flows out, there will be no incentive for foreign-invested companies to train in R&D or expand in Vietnam, and there is a worry that it will limit investment.
Businesses hope that The General Department of Taxation of Vietnam will distribute detailed guides for existing APA applications and new applicants as per the amended law, and guide us to achieve tangible results through mutual agreement procedures this year.
KorCham members agree with the legislation for the Enforcement Decree of Personal Information Protection. However, they see the fine of up to 5 per cent of Vietnam’s sales for the violation, which is mentioned in the Draft Decree on Personal Data Protection, as too high.
Thus, to avoid putting an excessive burden on companies, they hope a more balanced bill can be enacted that is more predictable, such as calculating fines based on a fixed amount (for example, VND500 million) rather than sales.
The Korean business community has also proposed that Vietnam has a more open visa policy to become a global tourism powerhouse and attract more investment.
Fuel price stabilization fund still needed
A majority of the members of the National Assembly’s Finance and Budget Committee have agreed to maintain the fuel price stabilization fund during a session on the revised draft law on prices.
Minister of Finance Ho Duc Phoc, authorized by the Prime Minister to deliver a Government report at the session, said the draft law on prices would have some additional regulations and a separate article about the price stabilization fund.
The Government said that the fuel price stabilization fund was not an administrative intervention but an economic measure to control and regulate fuel prices nationwide.
When fuel prices worldwide fluctuate sharply, the fund will play the role of a regulator to reduce the frequency and level of price adjustments, contributing to reducing inflation, the fluctuation of prices and negative impacts on businesses.
Vietnam’s fuel market has yet to run in compliance with the world market and requires regulation from the Government, according to the chairman of the Finance and Budget Committee, Nguyen Phu Cuong.
He said it is not the right time to eliminate the fuel price stabilization fund, especially when the world’s fuel prices are still volatile.
Previously, many enterprises and experts proposed dropping the regulation on the establishment and usage of the fuel price stabilization fund, as it is no longer in line with the current price management and regulatory practices.
They suggested using other measures like taxes and supporting those negatively affected by the price surges.
Chairman of the National Assembly Vuong Dinh Hue required the Government to assess the impact of maintaining the price stabilization fund as it is a controversial issue.
According to statistics from the Ministry of Finance, the fuel price stabilization fund has received over VND1 trillion from April until the end of June this year. The total use of the fund during this period reached over VND526 billion.
Tasco to take over Groupama Vietnam
After getting approval from the Ministry of Finance, Tasco JSC, which lists its HUT shares on the Hanoi Stock Exchange, has announced a plan to take over Groupama Vietnam General Insurance Company.
France’s insurer Groupama Assurances Mutuelles will transfer its entire stake in Groupama Vietnam to Tasco, the local media reported.
The move will mark the real estate developer’s entry into the insurance market, part of the firm’s restructuring plan in the 2022-2027 period. The company will thus be active in infrastructure, auto service, real estate, hospitality and insurance fields.
Vietnam’s textile and garment industry generated US$30.2 billion in export revenue in the first eight months of this year, a 20% year-on-year increase, said a report of Vinatex.