Viet Nam is Asia’s hottest investment destination: Forbes

An article published by US magazine Forbes named Việt Nam the hottest investment destination in Asia.

According to the article, Việt Nam attracted US$17 billion in FDI commitments last year, arguably the largest for an emerging market relative to its $250 billion GDP.

In the first quarter of 2018, it became the fourth largest Initial Public Offering (IPO) market in the region, surpassing the Republic of Korea (RoK), Singapore and Australia. The realty market in HCM City is booming and GDP is growing at about 7 per cent per year.

The Comprehensive and Progressive Agreement for Trans Pacific Partnership (CPTPP) and the EU-Việt Nam Free Trade Agreement (EVFTA) are expected to come into force in the coming months, helping Việt Nam further integrate into the global economy. In 2020, the capital Hà Nội will host the Formula 1 Grand Prix.

The article said such rapid progress could be due to the fact that the country’s leadership has settled on an economic development vision that focuses on offering highly productive, cost effective labour to manufacture export goods. This tactic has driven record FDI inflows, largely from more mature Asian economies such as Japan, RoK and Taiwan (China), of which more than 90 per cent goes into manufacturing.

It said Việt Nam has become integral to the global supply of many goods, from smartphones and electronics to catfish and cashews. The country is also poised to be a major beneficiary of the ongoing US-China trade tensions as foreign companies seek to restructure their supply chains.

The article said the Government’s plan to equitise hundreds of State-owned enterprises (SOEs) has been critical to Việt Nam’s growth. The equitisation is attracting a flood of portfolio investments across several sectors, most notably retail and healthcare.

According to the writer, investment interest is likely to accelerate following recent legislation drafted by the Ministry of Finance, which stipulates that foreign ownership caps on listed companies – currently set at 49 per cent – will be lifted in 2019.

In addition, it mentioned the country’s young, educated entrepreneurial population of 95 million, which is rapidly urbanising and experiencing real spending power for the first time.

The article said it is easy to understand why international brands like Apple, Starbucks and McDonalds are betting big on Việt Nam, adding that the country’s tech scene is thriving.

Vietnam’s CPTPP ratification signals good news for economy

Vietnam’s CPTPP ratification signals good news for economy
The Vietnamese National Assembly has unanimously ratified the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and related documents. Vietnam is seventh among the 11 signatories of the Pacific Rim trade deal to ratify the pact, after Mexico, Japan, Singapore, Australia, New Zealand and Canada.
Since the CPTPP has been ratified by more than half its member states, the agreement can take effect on December 31, with tariff cuts to start on January 1, 2019.

More exports, jobs

The CPTPP is a high-quality trade deal that will reduce market entry barriers and promote trade in a common market with 500 million consumers and annual trade value exceeding US$10 trillion, which accounts for 13.5 percent of global gross domestic product (GDP).

Access to this large market will benefit the Vietnamese economy by gradually eliminating all import taxes, including those applied by countries that have yet to sign bilateral free trade agreements with Vietnam, such as Canada, Mexico, Chile and Peru. The CPTPP is also expected to create new opportunities for Vietnam to boost exports to major markets, such as Japan, Australia, Canada and Mexico.

A government report to the National Assembly suggests the CPTPP can help Vietnam increase its GDP and export value respectively by 1.32 percent and 4.04 percent by 2035. The import value is also expected to grow 3.8 percent.

Given these forecasts, the government foresees the CPTPP will have a positive impact on Vietnam’s trade balance. The government also expects the agreement will help generate more jobs, increase worker incomes and contribute to hunger eradication and poverty reduction. Specifically, the CPTPP is expected to help generate an additional 20,000-26,000 jobs annually; reduce the number of poor people, i.e. those earning US$5.5 or less a day) by 0.6 million.

Answering reporters’ questions after the ratification vote, Minister of Industry and Trade Tran Tuan Anh said that the agreement was a source of encouragement for Vietnam to increase its internal strength and diversify export markets to cope with the adverse impacts of changes in the global economy, especially in the context of growing trade protectionism by major economies.

Major beneficiaries

Export sectors are expected to be the first to benefit from the CPTPP. These include seafood, textiles and garments, leather and footwear, electronics assembly, food processing, beverages, and confectionery, followed by logistics and manufacturing infrastructure.

The pact is likely to challenge other sectors, such as pork, chicken, paper, steel and automobile, due to their low competitiveness. However, the government affirmed that various measures would be taken to help them cope with challenges.

“Despite numerous challenges and obstacles, the CPTPP will enable Vietnam to seek and make the most of global opportunities and turn them into a driving force of its development,” Minister Tran Tuan Anh said.

The CPTPP is also expected to help Vietnam improve its business and institutional environment, encouraging it to amend policies and laws according to international standards in order to promote domestic investment and attract more foreign investment.

Data from the Ministry of Planning and Investment’s Foreign Investment Agency show that except for Peru, all CPTPP member states have invested in Vietnam. They have invested a total of about US$123 billion, accounting for nearly 37 percent of total foreign direct investment (FDI) registered in Vietnam over the past more than three decades. This considerable amount reflects the significance of CPTPP members’ investment to Vietnam.

At the CPTPP signing ceremony in March 2018 in Chile, the ministers of the 11 member economies released a statement affirming that the CPTPP would benefit all parties involved, and that domestic procedures would be accelerated for the agreement to be ratified at the earliest possible. CPTPP ministers also expressed their willingness to welcome any other economies that want to join the agreement.

The UK, the Republic of Korea, China, Indonesia, Thailand and the Philippines have shown an interest in the agreement. The US, the initiator of the deal’s initial version, TPP, still leaves open the possibility of coming back after President Donald Trump withdrew from the pact last year.

The CPTPP was formerly known as the Trans-Pacific Partnership Agreement (TPP). After the US withdrawal in early

2017, the size as well as the attraction of the agreement decreased. Although negotiations sometimes reached an

impasse, the 11 remaining members carried on their efforts and finally signed the deal on March 9, 2018.

Vietnam among 10 fastest-growing economies

While growth is set to ease in 2019, Việt Nam will still be among the top 10 fastest-growing economies globally, according to the “Economic Insight: South-East Asia” report recently released by the Institute of Chartered Accountants in England and Wales (ICAEW).

In the report, ICAEW predicts that economic growth across Southeast Asia (SEA) is expected to slow down in 2019 to 5 per cent, after an estimated 5.3 per cent in 2018.

It attributed the slowdown to US-China tensions.

“The resulting slowdown in Chinese demand will weigh significantly on SEA growth, especially for export-dependent economies with a high level of exports to China, like Singapore and Malaysia,” the report said.

Economic growth continued to moderate across most SEA economies in the third quarter of 2018, with the average GDP growth slowing to 4.8 per cent year-on-year, from 5.2 per cent in second quarter of 2018, it said.

Việt Nam was the exception, with GDP growth accelerating 6.9 per cent on the year, up from 6.7 per cent in the second quarter as FDI inflows continued to support growth in manufacturing activity and exports.

“GDP growth across the region is set to slow next year, as many of the region’s economies are small, open and heavily dependent on exports to China, due to both supply-chain linkages as well as tightening Chinese domestic demand,” the report said.

Domestic demand would likely provide some relief amid a more difficult outlook for exports. In addition, expansionary fiscal policy would also help, with fiscal spending expected to be strong in Indonesia, Thailand and the Philippines ahead of upcoming elections in the first half of 2019.

Many governments in the region, including Indonesia and Malaysia, are expected to miss their ambitious fiscal consolidation targets for 2019.

In Việt Nam, while the Government’s fiscal position has improved, there is limited space for any expansionary fiscal policy next year, the report said.

However, Mark Billington, ICAEW Regional Director for South East Asia, said that although domestic demand had held up well this year, it was unlikely to reach the stellar pace achieved in 2018, partly due to lower monetary policy support.

“Combined with a moderation in export growth, we expect GDP growth across all of the SEA economies to ease next year, as a result of the ongoing US-China trade conflict and tighter global monetary conditions,” he said.

Vietnam reduce Pepper area to focus on quality

The pepper industry plans to reduce the area under the spice and focus on improving quality to ensure long-term growth, according to the Ministry of Agricultural and Rural Development.

The cultivation area has increased sharply since 2010 to 152,668ha last year, exceeding the area zoned in the Government’s plan by 100,000ha.

High prices for pepper in recent years have incentivised farmers into expanding even to unsuitable lands and without any planning.

Speaking on the sidelines of an international conference titled Việt Nam Pepper Outlook in HCM City on December 4, Minister of Agricultural and Rural Development Nguyễn Xuân Cường said: “Pepper is a special agricultural product, a kind of spice. Therefore, demand for it is just at a certain amount. We cannot increase the cultivation area and output by too much.”

Việt Nam is among the five biggest pepper producers in the world, with its cultivation area and output accounting for a third of the world total, and exports for 60 per cent.

“So we must be aware and have responsibility.

“But we need to focus more on applying modern processing technologies to add more value to the spice and strictly comply with quality and hygiene and food safety standards during the production and processing processes.

“We also develop certain areas for organic pepper.”

Nguyễn Nam Hải, chairman of the Việt Nam Pepper Association, said spice is among the country’s key agricultural exports, with shipments being made to more than 100 countries and territories.

But with supply outstripping demand in the last three years, prices have fallen, affecting farmers’ incomes, he said.

The sector would mobilise farmers to stop growing the crop in places not suitable for it and replace it with others, he added.

Hoàng Thị Liên, executive director of the International Pepper Community, said: “The good news is that pepper demand will double in the next 30 years from the current 500,000 tonnes to one million metric tonnes.”

The new trend is “the industrial use of pepper to make nutraceuticals, skin care products and others”, she said.

Increased awareness of sustainable growing practices would benefit growers and consumers, she said.

Quality improved

Liên and many other delegates agreed that the quality of Việt Nam’s pepper has improved significantly in the last few years, but said more efforts are needed to further improve and should start at the farm level.

Gerhard Weber, secretary general of the European Spice Association, said: “A small decrease in pesticide residues has been observed in pepper coming from Việt Nam.

“But only 46 per cent of pepper imports from Việt Nam meet the EU’s legal requirements. Efforts are needed to improve the situation.”

Liên said food safety is an increasing concern in many countries, with many new regulations emerging.

All stakeholders involved in the industry should join hands to further improve quality, she said.

Nguyễn Mai Oanh, the association’s vice chairwoman and secretary general, said in processing black pepper, farming households and growers have begun to comply more with hygiene and food safety standards to meet global criteria.

“A majority of Vietnamese farmers harvest and store pepper in accordance with GMP (good manufacturing practices), harvest when 10 per cent of berries ripen, dry them under the sun for two to three days to reduce moisture to under 13 per cent and store in double-layer bags to prevent moisture.”

Most pepper processors use state-of-the-art equipment and apply international management systems such as GMP, HACCAP, ISI 22000 and BRC, she said.

According to the Ministry of Agriculture and Rural Development, Việt Nam has reduced pesticide use by 30-50 per cent, including for pepper, improving quality, the environment and eco-systems, she said.

Farmers would continue to be trained in GAP, IPM and how to use fertilisers and pesticides at the right time and in the right way, she added.

Pepper exports

Pepper exports increased by 9.3 per cent in volume terms but fell by 32 per cent in revenue terms in the first 10 months of the year, with the US, China and India being major markets.

Việt Nam expects to export 230,000 tonnes this year consisting of nearly 200,000 tonnes of black pepper, 23,000 tonnes of white pepper and 7,000 tonnes of ground pepper, nearly 8 per cent higher than last year.

Talking about the outlook for Việt Nam, Oanh said it would continue to be the world’s production and export hub, with 50-60 per cent of its output meeting the EU and US’s ASTA by 2020 and 80-90 per cent by 2030.

Source: Vietnamnews

Japan pepper imports rebound after falling for three consecutive years

Over the past three years, Japan’s pepper imports have fallen from 9,100 tons in 2015 to 8,750 tons in 2016 and to 8,200 tons in 2017.

Approximately 60% of pepper imports into Japan are whole grains, mainly from Malaysia and the rest are mainly from Indonesia and Vietnam.

In 2018, Japan’s pepper imports are expected to increase. In the first 7 months of 2017, imports to Japan reached 5,450 tons, including 3,170 tons of whole pepper and 2,280 tons of ground pepper. Total import volume increased 21% over the same period of 2017 4,520 tons (including 2,510 tons of whole pepper and 2,010 tons of ground pepper), of which whole pepper increased 27% and pepper increased 13%.

According to the customs of Vietnam, exports of pepper to Japan in July reached 264 tons, equivalent to $ 1.16 million, the total in the first 7 months of 2018 exports to this market reached 1983 tons equivalent to turnover 9.7 million USD. However, the general effect of the world market, prices decreased due to supply pressure exceeded demand, pepper prices for export to most countries are reduced. The average pepper export price to Japan decreased 44.3% to $ 4,980 / tonne

Imports of ground pepper to the UK accounted for a high proportion

In 2017, imports of pepper into the UK fell 9% to 14,300 tonnes (including 7,450 tonnes whole grain and 6,850 tonnes of groundnuts) compared to 12,900 tonnes (4,550 tonnes whole and 8,350 tonnes of ground pepper) by 2016. whole pepper was up 39% while pepper was down 23%.
In the first half of 2018, total imports to the United Kingdom reached 6,000 tonnes, down 5% from the same period last year (6,300 tonnes).

Vietnam and the Netherlands are the two major suppliers to the UK market, accounting for over 50% of total UK imports. Total pepper in the first 6 months fell by 14% while pepper imports increased by 1%. Currently, British imports of ground pepper account for over 70% of pepper imports.

Imports of Netherland pepper increased again

The Netherlands is an important trade partner of EU countries. Successful exports to this market play an important role in penetrating the EU market.

For pepper, in 2017, the country imported 13,200 tonnes of pepper (including 8,400 tonnes of whole grain, 4,800 tonnes of groundnuts), up 6% from 12,400 tonnes in 2016. Imports of whole pepper fell 7%, while import of ground pepper increased by 38%.

By 2016, Dutch imports have fallen each year since 2014 (import of 16,100 tonnes), in 2012 the volume of imports is 17,000 tonnes, while in 2010 it imported 19,400 tonnes of pepper.

The main cause is that suppliers from the producing countries export directly to the buyers in the consuming markets.

In 2017, new imports grew again. 2018 is expected to increase imports, based on import data in the first half of the year.

From January to June 2018, imports of pepper from the Netherlands were 7,900 tonnes (5,500 tonnes whole grain and 2,400 tonnes ground pepper), up 26% from 6,300 tonnes in the same period last year. Import of whole pepper and ground pepper increased by 37 and 7% respectively.

Vietnam is currently the largest supplier to this market, accounting for 40% of total Dutch imports, followed by Brazil with 26% and Indonesia with 14%.

By: Asia Pacific Commercial & Production Co., Ltd (Apaco)

Italy moved to import pepper of Vietnam

Italy moved to import pepper of Vietnam
As one of Europe’s major pepper import markets, in 2016, Italy imported 4,533 tonnes of pepper, including 3,711 tonnes of whole grain and 822 tonnes of ground pepper, worth $ 41.2 million.

In 2017, Italy imported 4,810 tonnes of pepper, including 3,888 tonnes of whole grain and 822 tonnes of ground pepper, worth $ 33 million, up 6.1 percent in volume but down 19.6 percent in value.

 By 2018, Italy imported 2,861 tonnes of pepper, including 2,415 tonnes of whole pepper and 446 tonnes of ground pepper valued at $ 15.5 million. Compared with the same period in 2017, Italy decreased in both volume and value, down 1.8% in volume and 33.7% in value. There has been a change in the import of whole grain, the main import product of Italy in 2018. As of July, most of the whole grain imported from Brazil has been imported from Vietnam, 592 tonnes, up 15.6% over the same period in 2017.

Vietnam to boost exports through foreign retail chains

Vietnam’s goods have successfully entered several European and Asian markets through government initiated programs.

Vietnamese Goods Week in Singapore, an important trade promotion event, took place at 140 supermarkets belonging to NTUC FairPrice on November 13-26.

The Vietnamese Trade Counsellor in Singapore, Tran Thu Quynh, said that besides 600 items available at the Singaporean retail chain, the partner Saigon Co-op put another 20 new items in the NTUC FairPrice network. These included Vietnamese specialties such as shrimp, fish, dairy products, pho and three kinds of fruit.

This was the first time a national goods week was organized on such a large scale and for such a long period. The New Paper in Singapore reserved two pages of its publication on November 12 to introduce 40 of Vietnam’s products.

Currently, at FairPrice, the largest retail chain in Singapore, with 56 percent of market share, about 650 Vietnam’s products are available. Besides farm produce, household consumer goods including plastics, tissues and cosmetics have also entered the Singapore’s largest retail chain.

Nguyen Anh Duc, deputy general director of Saigon Co-op, the partner of NTUC Fair Price, said Saigon Co-op exports $2 million worth of farm produce to Singapore. The fact that Vietnamese goods are accepted by Singapore is good for Vietnam’s branding.

From 2016 to the first half of 2018, Saigon Co-op, through its partner NTUC Fairprice, exported $6 million worth of goods, a report found.

Bringing products directly to foreign retail chains is one of the goals of trade promotion programs implemented by the Ministry of Industry and Trade (MOIT) for many years.

The first Vietnamese Goods Week event was organized by the ministry in cooperation with Casino at Big C supermarket chain (one of the largest chains in France) in 2011.

Vietnam’s goods increased their presence in France and other European countries through the retail chain. Vietnam’s frozen shrimp competes well with products from other countries in the European market.

Following the success, MOIT in 2012 organized the Vietnamese Goods Week event in Germany at Metro Cash & Carry. The distribution chain helped Vietnam’s enterprises increase export turnover and better understand the tastes of the market.

Since then, the Vietnamese Goods Week has been organized regularly in France, Germany, and in Italy through a Bologna supermarket chain.

In Asia, the first Vietnamese Goods Week took place in 2015 in South Korea through Lotte Mart. Later, it was organized in Thailand through Central Group.

In the last three years, Vietnam’s goods, through Central Group’s Big C chain, have approached more Thai consumers.

Ho Chi Minh city’s economy grows at 8% in 9 months

Ho Chi Minh City’s economy grew at 8% in the first nine months of 2017, posting the highest growth since the beginning of this year.

Vietnam’s biggest city’s gross regional domestic product (GRDP) reached VND775.874 trillion (US$34.2 billion) during January-September.

The city’s three key sectors – services, industry and construction, and agriculture – continued to perform strongly, contributing greatly to the city’s economic growth.

Both services and industry and construction, which accounted for 57.2% and 25.1% of the city’s GRDP, respectively, expanded 7.7% in the first nine months. Agriculture increased 6.2% and contributed 0.7% to the city’s GRDP.

Revenues from tax on products minus subsidies accounted for 17% of total GRDP.

Ho Chi Minh Citycontinued to increase proportion of high-quality services (which have high added value and competitive advantage) in its economic structure. Nine major services include trade, finance-banking, tourism, information and communication, transportation-ports-warehouses, science and technology, real estate, education and health.

These nine segments accounted for 51.52% of the city’s GRDP, of which the real estate, trade and transportation and logistics made up the highest proportion of 27.31%.

The city’s export revenue is estimated at US$26.3 billion in January-September, up 15.7% year-on-year. Excluding crude oil, the export value was expected at US$23.96 billion, up 15% year-on-year.

Total retail sales of goods and services are estimated at over VND675.57 trillion (US$29.8 billion) in the nine month period, a rise of 10.82% compared to the same period of last year. Particularly, sales of goods increased 64.5% year-on-year, accounting for 64.5% of total sales.

New enterprises increase

More than 29,900 new enterprises with total registered capital of VND396.5 trillion (US$17.5 billion) have been licensed in the first nine months.

This represented an increase of 13% in the number of newly established businesses and 84.5% in registered capital compared to the same period of last year.

Overall, the total registered capital of new and operating companies in Ho Chi Minh City reached nearly VND615 trillion (US$27.1 billion), a year-on-year increase of 70.4%.

Real estate service and trading companies had the largest registered capital valued at VND156.6 trillion (US$6.9 billion), accounting for 39.5% of the city’s total number, up 75% year-on-year.

Auto and motorbike repair and sales companies made up 16.2% with over VND64.3 trillion (US$2.8 billion), up 66.6% year-on-year; and construction businesses registered with VND52.8 trillion (US$2.3 billion), a two-fold increase over the same period of last year.

Foreign direct investment (FDI) increased 64.3% to US$3.71 billion during the period. In September, automation and manufacturing attracted the biggest proportion of FDI of 51% valued at US$471 million.

The city focused on attracting investment in the high-tech sector and providing human resource training.

Source: Vietrade