Russia will export Industry 4.0 solutions to Vietnam
Russia’s biggest digital solutions vendor ZYFRA has reached $30 million in revenue in its first year of operation, facilitating industrial manufacturers in-house and abroad with AI and IoT-based solutions, as well as autonomous vehicles. The company has announced plans to enter Vietnam as early as 2019.
In the next three years, it is estimated that Vietnam will overtake China in terms of GDP growth. It is planned that this number will be 6.8 per cent in 2019. According to the government’s development programme, by 2035 most of the fabrication will be turned into digital manufacturing. Particularly significant growth is expected in the areas of industry, construction, and services.
The company, founded in November 2017, currently operates in Finland, China, Russia, Bulgaria, and India, and its platform connects over 7,000 CNC machines across the countries. By the end of 2018 more than 200 production facilities will be equipped with its products.
“Smart manufacturing (the term refers to IoT and AI) is projected to grow noticeably in the next three to five years. Recent surveys showed 92 per cent of senior manufacturing executives believe that “smart factory” digital technologies such as artificial intelligence will allow them to improve their productivity and empower their staff to work more intelligently. Some even account for the smart manufacturing market to increase to over $320 billion by 2020,” said Igor Bogachev, CEO of ZYFRA Group.
By now the company offers the global market its real-time machine data collection system MDCplus that can be used to track jobs, operations, work centres, scrap, costs, downtime, and people. It also provides its clients with Industrial AI-solutions that can either predict quality and product properties or recommend process settings and material usage. The company is applying cutting edge data science combined with industrial expertise to provide end-to-end solutions to optimise production speed, quality, and costs for industries such as machinery, metallurgy, oil and gas, and mining.
Back at home, ZYFRA’s clients are giants like Gazprom, Chelpipe, NLMK Group, and United Engine Corporation.
Recently, the company started its acquisition of VIST Group, one of the industry leaders in the development and implementation of information technology for digital mining. Through the acquisition (expected to be finished by 2020) of these assets, the company is planning to occupy a significant share of the global market and to compete with Catarpillar, Komatsu, and other major competitors in certain aspects.
“Our view is that there is a tremendous opportunity for disruption in Industrial IoT and applied AI space, although it is still a nascent market to a larger extent,” said Ilia Kreisel, Investment and IR director at ZYFRA Group.
“If you look at Gartner’s latest Magic Quadrant for IIoT Platforms, you can quickly arrive at the conclusion that the market still lacks a clear leader, which leaves the doors wide open for the up and coming challengers like ourselves,” said Igor Bogachev.
Vietnam changes to meet FTA requirements
Vietnam has made big changes economically and socially this year to make the most of new-generation free trade agreements and integrate into the world economy.
This year’s new-generation FTAs have removed tariffs on many commodities and liberalized labor within ASEAN.
In 2018 Vietnam signed and ratified the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and completed the legal review of a Free Trade Agreement with the EU, opening up many new opportunities for businesses.
Robert E.Moritz, Global Chairman of the PricewaterhouseCoopers (PwC), praised Vietnam’s efforts to offer attractive business opportunities. That’s why foreign investors want to invest in Vietnam.
Moritz added that according to PwC’s survey, Vietnam is one of top 5 countries that Asia-Pacific enterprises want to invest in. This is considered strategic significance.
To benefit from the agreements, Vietnam’s exports need to meet consumer habits and tastes in quality, packaging, and design. And Vietnamese companies need to learn foreign legal, technical, and food hygiene and safety standards.
Nguyen Thi Huyen, Director of the Star Aniseed Cassia Manufacturing and Exporting Company (VINA SAMEX), said “The EU is a demanding market with strict quality standards for imported products. But it has a great potential, so we have to visit each European country and supermarkets there to study future consumer trends.”
Vietnamese enterprises have begun to adapt to technical barriers in the international market. They have assessed purchasing power, taste, market segment, and population to design appropriate business strategies in addition to restructuring their production.
Pham Van Cuong, Director General of the G.O.C Food Processing Export Company, said “It’s important to understand that exporting to the EU market will improve the company’s management capacity. My company, for example, has only two people doing logistics, but they can handle customs declarations for 4,000 containers per year without difficulty.
It will be easier to export to markets like the US, Northern Europe, Japan, and the Republic of Korea once you meet the European standards because most of those countries use the European standards.”
Vietnam has signed more than 10 FTAs and a growing number of Vietnamese firms are making the necessary changes to meet the FTA requirements.
The country has reformed local business and investment environments to adapt to integration. It has applied high-tech to administrative procedures, upgraded its payment infrastructure, and diversified methods of online payment. Many barriers to business have been removed.
Vietnam’s total trade turnover this year is projected to be at US$480 billion, of which exports will total US$239 billion, up 11.2% from last year. Exports to countries with whom it has signed FTAs have seen particularly high growth rates.
US becomes Vietnam’s largest tra fish importer
The export of tra fish from Vietnam to the US market has continued its upward trend throughout the year and is predicted to have reached US$2.3 billion during 2018, according to the Vietnam Association of Seafood Exporters and Producers.
us becomes vietnam’s largest tra fish importer hinh 0 Tra fish exports to the highly lucrative market in October increased by 38% compared to last month, while the export value rose by an additional 5.2% in November. The continuous growth has helped the US regain its leading position among the largest export markets for Vietnamese tra fish.
From the end of November, export value of tra fish to the US reached US$494.3 million, accounting for 24.2% of total export value and a 54.6% increase on-year.
According to the General Department of Vietnam Customs, tra fish exports in November remained high at 32%, making US$212 million which brings the total exports over 11 months to more than US$2 billion. This is the first time the export value of tra fish has exceeded the US$2 billion mark.
By the end of November, tra fish export value to China hit US$482.8 million, making up 23.7% of total exports and rising to 29.3% compared to last year’s figure.
China ranked second among the largest export markets for Vietnamese tra fish.
Apart from China, other markets tend to import high value tra fish products with international certificates. Vietnamese tra fish has also witnessed a resurgence in the EU market.
Get premium Japanese beef for ‘cheap’ in Vietnam
Vietnamese businesses are racing to raise upmarket Japanese cattle at home to produce cheaper Wagyu beef.
Two years ago, Huy Long An Limited Company in the southern province of Long An imported thousands of Wagyu cattle, from which the famous Japanese beef is produced.
Vo Quang Huy, the company’s director, said his company has signed a deal with Japan’s Sawai Farm to develop a farming model for Wagyu beef in Vietnam.
“We are selling the beef on a trial basis to hotels and restaurants. The product will hit the markets in 2019, when production is stabilised. Although it’s difficult to raise them (Wagyu) in Vietnam, they’re worth a lot,” Huy said.
He said a kilo of Wagyu beef can sell for VND700,000 (US$30) to VND1 million (US$42.84) a kilogram.
Like the Huy Long An company, the Kobe Beef Vietnam company has also been breeding Wagyu cattle in the Central Highlands province of Lam Dong. Nguyen Tri Vu, general director of the company, said he imported genetic material for the Japanese breed from the US.
The company is currently rearing 420 cows, and on average sells one every week. Each cow is worth VND200-250 million (US$8,567- US$10,708), many times higher than that of other cow breeds in the market today. Each kilogram of ‘Viet Wagyu’ sells for VND2-VND4 million (US$85.67- US$171.34) per kilogram.
“This beef is mostly sold to restaurants, hotels and gourmets, mainly in Hanoi, Ho Chi Minh City and Da Lat. This is a premium breed. It costs VND150,000 (US$6.43) a day to feed one cow. They are also fed some materials that have to be imported, hence the high price,” Vu said.
Local beef now costs from VND100,000-500,000 (US$4.4-US$22.02) per kilogram.
Other Japanese farms have also announced their intention to start raising cattle in Vietnam.
Speaking on the potential of the market, an agriculture expert said that demand for Japanese beef was increasing, but among those with high earnings.
Import prices are relatively high, with the cheapest around VND1 million (US$42.84) per kilogram and the most expensive nearly VND19 million (US$815.89), and the average ones at VND9 million (US$386.47) per kilogram. On the other hand, beef from cattle raised in Vietnam have very competitive prices.
However, if the local breeders do not establish good brands, they could lose market share to products of no clear origin, he said
Vietnam’s cattle industry is failing to meet the country’s increasing demand for beef, forcing local consumers to turn to imported products, the expert added.
Last year, the country imported more than 262,300 live cattle, and nearly 42,000 tons of beef and buffalo meat valued at more than US$410 million, according to the Animal Husbandry Department under the Ministry of Agriculture and Rural Development.
The deputy director of the department, Tong Xuan Chinh, said Vietnamese people’s diets have changed drastically in recent years, and they’re now eating more beef and buffalo meat.
Average consumption has doubled to 5-6 kilograms of beef and buffalo meat per year in the past decade, but the cattle industry has been unable to keep up with the rise in demand. Local supplies of beef and buffalo meat only meet 80 percent of the current demand, he said.
Binh Thuan welcomes 5.7 million tourist arrivals in 2018
The south central province of Binh Thuan expects to receive 5.7 million visitors for all of 2018, a jump of 12 percent from last year.
According to the provincial Department of Culture, Sports and Tourism, total earnings from tourism services are predicted to surge 18.8 percent to 12.8 trillion VND (550.9 million USD).
About 675,000 foreigners chose Binh Thuan for their holidays, with China and the Republic of Korea the top tourist sources, accounting for 28 percent and 13 percent of total international arrivals to the locality, respectively.
Meanwhile, stable growth was seen in tourist arrivals from traditional markets like Russia, the UK and France.
As local tourism has been enjoying the busiest months of the year, the department asked tourism service providers to improve quality and diversify entertainment options.
In addition, local authorities should work to ensure social order and food safety with a view to building Binh Thuan into a friendly and safe destination.
Oil refinery creates growth momentum for north central region
After five years of construction, the Nghi Son oil refinery and petrochemical plant in Thanh Hoa province officially began its commercial operation on December 23. The project is expected to help ensure national energy security, while providing momentum for growth in the north-central region.
With an investment of more than 9 billion USD, the Nghi Son oil refinery and petrochemical plant is among Vietnam’s largest projects in terms of investment capital. In the first phase, the project’s capacity is estimated at 200,000 barrels of crude oil per day, doubling that of the Dung Quat oil refinery in Quang Ngai province.
The project is expected to attract enterprises to invest in Thanh Hoa, especially in the Nghi Son Economic Zone. It is also believed to stimulate growth in numerous sectors, including services, seaports, hospitality, education and healthcare.
Crude oil input in 2018 in the Nghi Son oil refinery plant amounted to 4 million tonnes with 3 million tonnes of output products in 12 different categories, meeting requirements for domestic use and export. The plant is expected to contribute from 900 million USD to 1.3 billion USD to the provincial budget in the coming years.
PV Oil estimates 2018 revenue at $2.5b
PetroVietnam Oil Corporation (PV Oil) estimates its total revenue in 2018 may reach VND57 trillion (US$2.5 billion), beating its forecast by 15 per cent.
The company also estimates its pre-tax profit would be VND587 billion, exceeding its plan by 17 per cent. The company’s payment to the State budget would be VND8.25 trillion, up 15 per cent from the plan.
In 2018, the company’s sales are forecast to increase by 8 per cent year on year, accounting for 25.3 per cent of total domestic consumption.
In the first nine months of the year, PV Oil recorded VND45 trillion in revenue and VND483 billion in pre-tax profit.
According to the firm’s general director Cao Hoai Duong, the company will improve the quality of inventory governance, expand its station network and apply new technologies to become more competitive and raise market share.
PV Oil plans to spend VND7 trillion in the next five years to build more gas stations in order to win 35 per cent of the domestic market.
The company has recently capped its foreign ownership limit at 6.62 per cent of charter capital from the previous 49 per cent.
PV Oil is trading more than 200.4 million shares on the Unlisted Public Company Market (UPCoM) out of its total 1.03 billion outstanding shares.
The firm’s shares fell 0.7 per cent to close Friday at VND14,700 per share.
Techcombank chairman’s son raises stake to 3.95%
The private-equity financial institution Techcombank has announced shareholder Ho Anh Minh has bought 44.7 million shares to increase his ownership to 3.95 per cent from 2.66 per cent.
Minh, son of the bank’s chairman Ho Hung Anh, carrying out transactions from December 14 to December 19, 2018, now owns 138 million Techcombank shares.
During the same period, Nguyen Huong Lien, sister-in-law of chairman Anh, sold 45 million Techcombank shares via put-through transactions to cut her stake to 1.99 per cent from nearly 3.28 per cent.
Lien now holds more than 69.6 million shares in the bank’s capital.
The bank’s chairman Anh holds 39.3 million Techcombank shares. The ownership of Anh and his relatives is more than 595 million shares, equal to 17 per cent of the bank’s charter capital.
Techcombank is listing nearly 3.5 billion shares on the Ho Chi Minh Stock Exchange with code TCB. The bank shares inched up 0.2 per cent to end last week at VND27,300 (nearly US$1.2) per share.
Vietnamese firms urged to tap Muslim markets with Halal products
With nearly two billion Muslims world-wide and demand for Halal products being worth around US$2.3 trillion annually, there is potentially a huge market for Vietnamese firms to exploit, experts have said.
According to the Viet Nam Chamber of Commerce and Industry (VCCI), the global Halal industry is forecast to be worth $3.6 trillion by 2021, with food and drink accounting for $2 trillion.
Halal refers to any action or behaviour that is permissible in Islam, and requires animals to be slaughtered in a particular way and after a prayer.
Muslim countries with large demand are the UAE, Kuwait, Malaysia and Indonesia.
The UAE is the second largest economy in the Middle East, a regional commercial and financial centre and the third largest transshipment hub and re-export centre globally.
It has huge demand for various products, with its imports being worth $265 billion last year.
Kuwait also needs to import all sorts of goods because of its unfavourable conditions in terms of land and workers.
But so far, the market share of Vietnamese products in these countries remains modest.
For instance, Viet Nam’s share of the UAE’s imports last year was less than 2 per cent at $5 billion.
According to experts, demand in the market is increasing, offering Vietnamese firms a great chance to boost exports of products such as tea, coffee, dried and canned fruits, canned drinks, and charcoal.
Their exports to Kuwait are worth only $70-75 million out of a total of $30 billion.
Nguyen Thi Ngoc Hang, head of the marketing division at the Halal Certification Agency in Viet Nam, said this market does not have technical and tariff barriers like the US or EU but requires strict Halal standards.
Tran Phan Te, general director of Lai Phu Joint Stock Company which has exported products to Muslim markets in the Middle East, said to obtain Halal certification, companies must undergo a food processing procedures audit.
Hang said many businesses only know that Halal products are those not tainted by pork but do not know they must also meet other requirements.
Since there are very few Muslims in Viet Nam, local companies are still not familiar with Halal standards, which are different in each country, complicating the issue somewhat, she said.
But she and many other experts encouraged Vietnamese businesses to understand Halal requirements to step up exports to Muslim countries.
Coating, printing ink industries to maintain high growth
Viet Nam’s coating and printing ink industries have had annual growth of 13-14 per cent in recent years and are expected to grow further, according to the Ministry of Industry and Trade.
Speaking at a conference last week to introduce the Coatings Expo Vietnam 2019, Nguyen Van Thanh, director of the ministry’s Viet Nam Chemical Agency (VCA), said the growth rate of the two industries was higher than the average growth rate of the industrial sector.
Nguyen Thi Lac Huyen, chairwoman of the Viet Nam Paint and Printing Ink Association, said the production value of the paint and printing ink industries topped US$2 billion and $91.84 million, respectively, last year.
Huyen said stable macro-economic growth, an influx in foreign investment in various sectors in the country, and an increase in exports of many key products such as wood products have spurred growth of the coatings and printing ink industries in 2017 and 2018.
Decorative, protective and powder coatings are expected to maintain a high growth rate of 12-15 per cent, while wood coatings will reach 8-10 per cent.
The marine coatings segment, however, has not recovered because of the problems in the local and global shipbuilding industry, she said.
The printing ink sector is also expected to grow significantly along with the development of the plastic bag industry. And the flexographic, co-solvent and water-based ink segments will also prosper.
Firms should develop more green products as environmentally-friendly coatings products are increasingly in demand, Thanh from the VCA said.
He said his agency was working with the Viet Nam Paint and Printing Ink Association to minimise chemicals in coatings products.
He said the development of the construction and property sectors, as well as more infrastructure works, has also increased demand for coatings products.
“The question is about whether we [local firms] can grasp the market opportunity. In the context of globalisation, enterprises have to relentlessly be innovative in terms of technology and products,” Thanh said.
The Coatings Expo Vietnam 2019 will be an ideal opportunity for firms to learn about the latest trends and demands in the market and enhance co-operation with local and foreign counterparts, he said.
Nguyen Ba Vinh, director of the Minh Vi Exhibition and Advertisement Services Co Ltd (VEAS), one of the expo’s organisers, said the sixth international exhibition and conference on the coatings and printing ink industry is expected to attract 150 local and international exhibitors, who will showcase their latest products and technologies.
To be held from June 26 to 28 next year at the Sai Gon Exhibition and Convention Centre, the expo will also include professional seminars and B2B business matching, he said.
Organised by the VEAS and the China National Chemical Information Centre, the exhibition is expected to welcome over 3,500 trade visitors.
Vietnam’s car imports down 20 percent in 2018
Vietnam imported over 72,600 cars this year, down nearly 20 percent over 2017, according to the General Department of Vietnam Customs.
The import value of cars exceeded 1.64 billion USD this year, up 21 percent year-on-year, the agency said.
Thailand and Indonesia remain major suppliers of Vietnam’s imported cars. From Thailand alone, Vietnam has imported more than 52,100 vehicles worth a combined 1.04 billion USD since the beginning of the year.
According to customs data, from December 7-13, car imports slowed down by 701 units from the previous week, totaling over 2,800 vehicles. Total import value is reported to be 67 million USD.
Most cars sold in Vietnam are foreign brands assembled in the country from kits. But a series of free trade agreements have reduced import duties and are opening up the market. The country imports over 90 percent of auto parts.
Bac Ninh province to build 154 million USD urban area
A 360ha urban area will be built in Luong Tai district in the northern province of Bac Ninh, with an investment capital of more than 3.6 trillion VND (154 million USD).
The plan for the project in Thua town, which was recently approved by the provincial People’s Committee, will be divided into an administrative centre and an urban area.
The investment will be jointly funded by the State budget and the private sector. Nearly 1 trillion VND will be spent for housing and the urban area, nearly 1.2 trillion VND for the transport system, 207 billion VND for the administrative centre, 160 billion VND for healthcare and 145 billion VND for education.
The administrative area will hold the headquarters of the district People’s Council, People’s Committee, Han Thuyen secondary school, a sport centre, a park and roads.
Meanwhile, the urban area planning will be detailed from now until 2020 to attract infrastructure projects in housing, parks, education and training.
Tien Giang province’s export turnover hits 2.7 billion USD
The Mekong Delta province of Tien Giang exported 2.7 billion USD worth of products in 2018, surpassing its target by 1.9 percent and up 8.3 percent from the previous year.
According to Doan Van Phuong, Director of the provincial Department of Industry and Trade, 70 percent of the earnings were made by foreign-invested businesses.
Garments, footwear, copper pipes and handbags were the biggest foreign currency earners, accounting for 70 percent of the total export value with 1.9 billion USD. Other big contributors were electric appliances, fibre, stainless steel and artificial grass.
Meanwhile, agro-aquatic products brought home 538.3 million USD, with tra fish making up 92 percent of the value, while fruits and vegetables contributed 17.2 million USD to the total export revenue.
Main importers of local goods included the US, China, the European Union (EU), Japan and the Republic of Korea.
Phuong said the strong rise in export revenue showed the effectiveness of the province’s policies in export and investment attraction.
Furthermore, local firms have engaged in promotion campaigns to enlarge their markets, he said, adding that stable growth in exports helps create jobs for workers while developing the local economy.
Master plan for Lao Cai border economic zone announced
Lao Cai authorities are aiming to turn the northern province’s border economic zone into a dynamic and sustainable development economic hub, according to insiders.
Under a development master plan for the zone to 2040, with a vision to 2050, recently announced by the provincial People’s Committee, the zone will have a total area of 15,929.8 ha. It is projected to have a population of 90,000 by 2040.
The zone will have a core area and two wings, namely western and eastern economic corridors.
Planned infrastructure works include a border gate management area at the Lao Cai international border gate, the Kim Thanh international border gate and high-rise financial, bank and service centres in Kim Thanh, Duyen Hai, Ban Qua and Ban Vuoc communes.
The service area at the border gate will cover more than 356 hectares of land and is planned to house areas for fairs and exhibitions, representative offices of enterprises and organisations, a trading centre and bonded warehouse, among other facilities.
The area designated for industrial activities in the zone comprises industrial parks, a 228-ha processing and packaging zone for import-export in Bat Xat district, and an area for services, logistics, warehouses and packaging.
The plan also envisions a complex for tourism, entertainment and sports covering more than 344 ha in Ban Qua commune of Bat Xat district.
Vice Chairman of the provincial People’s Committee Le Ngoc Hung said the Lao Cai border economic zone is hoped to become one of the important trading gateways, a tourism, service and trading centre and a large-scale cargo transfer gateway in the region.
He asked local authorities to pay attention to researching and proposing policies for career change to ensure a stable life for locals living in the project area, while developing plans for land clearance and resettlement and planting boundary markers.
Italian fast fashion brand set for Vietnam debut
Italy’s OVS midrange fashion brand will open its first outlet in Ho Chi Minh City this weekend.
OVS is a popular fashion brand in Europe. In Italy, the brand has 15% of the market share in the country’s children aged 0-14 segment.
The company’s products range is geared towards consumers of all ages. Its collection stretches from bold, urban looks, to elegant, formal office attire. At the same time, the OVS price tag targets the mass consumer segment.
An increasing middle-class population has made Vietnam a magnet for international fast fashion brands, industry insiders have noted.
The middle and affluent class, categorized as those earning US$714 a month or more, would double to 33 million, about a third of the population, between 2014 and 2020, the Nikkei Asian Review reported recently, citing a study by the Boston Consulting Group.
Market research firm Nielsen estimates the number of middle and affluent class Vietnamese will reach 44 million by 2020 and 95 million by 2030.
By late 2017, there were some 200 international fashion brands, including Zara, H&M, Stradivarius, Pull & Bear and Massimo Dutti, in Vietnam, accounting for more than 60% of the market share.
A survey released in October last year by market research firm Q&Me showed fashion items topping online purchases in Vietnam, followed by IT products, cosmetics, food and beverage, and books and stationery.
According to Statista, a database portal of statistics, consumer survey results and industry studies, the apparel market will be worth US$2.74 billion this year and is set to grow at 7.7% annually until 2021.
Shrimp exports to major markets drop
Vietnam’s shrimp exports have yet to show any signs of recovery, continuing to fall in November by 15.8% year-on-year to US$304 million, VnEconomy news site reported, citing a report from the Vietnam Association of Seafood Exporters and Producers (VASEP).
The report indicated that Vietnam earned a total of US$3.3 billion from shrimp shipments in the year to November, dropping by 6.9% year-on-year.
VASEP attributed the fall to a decline in shrimp prices and low demand for shrimp imports in major markets.
In particular, freezing weather in early 2018 affected shrimp consumption in the United States and Canada, leading to high inventories.
Apart from the global shrimp price seeing a record low, a rise in shrimp exports from multiple countries and the large shrimp inventory in the United States have prevented Vietnam’s shrimp from being shipped to the major market, according to VASEP.
In November this year, Vietnam saw plunges in shrimp exports to the European Union at 36.6%, China at 25.7%, the Republic of Korea at 20.7% and the United States at 2.8%, year-on-year.
Among these shrimp importers, the European Union is Vietnam’s largest shrimp buyer, accounting for 23.8% of the country’s total shrimp exports to foreign markets.
Vietnam is currently competing with India and Thailand to export shrimp to the European Union. The two rivals, however, are reducing their shrimp exports to the EU market due to trade barriers in terms of product quality standards. Further, the European Union-Vietnam Free Trade Agreement, which is expected to take effect in 2019, will smooth the path for Vietnamese shrimp exports, as they will enjoy a preferential tax from the market. Meanwhile, Thai shrimp sellers are still subject to a 20% tax.
Besides this, the United States remained Vietnam’s second largest shrimp importer, making up 18% of its total shrimp exports. After constant declines from April to July in shrimp exports to the U.S. market, Vietnam enjoyed a turnaround in the August-October period this year. However, November this year saw a slight drop in Vietnamese shrimp shipments to the United States at 2.8% against the year-ago period. Vietnam’s shrimp exports to the U.S. generated US$593 million in revenue in January-November, inching down 2.7% year-on-year.
VASEP noted that U.S.-Sino trade tensions will offer Vietnam’s shrimp exporters the chance to boost their exports to the U.S. as it might impose a 25% tax on shrimp imports from China.
The country’s revenue from shrimp exports to foreign markets is forecast to amount to some US$3.8 billion this year, down 2% against 2017, according to VASEP.
Vietnam labor costs highest among ASEAN comparators
Vietnam’s labor cost is the highest among comparator countries in Southeast Asia, a World Bank report says.
In a report on enhancing enterprise competitiveness and enhancing small and medium-sized enterprise (SME) linkages, it says Vietnam’s labor costs are higher than in comparable Southeast Asian peers.
It defines labor costs for each firm as the cost of all payments to all workers divided by the number of workers.
It says wage costs about $2,739 per worker for the median Vietnamese firm, about twice as high as in Laos, Myanmar and Malaysia, and about 30 to 45 percent higher than in Cambodia, Thailand and the Philippines.
While Vietnam’s labor costs are higher than in the rest of the region, they seem in line with productivity levels and thus do not seem to be a major obstacle to competitiveness, the report says.
The average manufacturing firm in Vietnam produces about US$10,500 worth of value-added per worker per year, higher than in most countries in Southeast Asia. It is around US$10,000 in Malaysia, and US$5,000 in Cambodia.
Vietnam’s relatively high value appears to be partly driven by high and growing use of capital, the report says.
The report also breaks down labor productivity in the country by region. The north-central and central coastal regions of Vietnam have the highest productivity — of almost US$16,000 value addition per worker — while the southeast comes in second at US$14,000.
The Red River Delta region has a productivity of only US$7,000, and it is even lower in the Mekong River Delta at around US$6,000.
It also said that foreign-owned firms are generally more productive than domestic firms, which can be explained by their easier access to technology and finance through their parent companies.
The World Bank report also says that capital productivity is low in Vietnam. The ratio of sales to value capital in Vietnam is around 160%, lower than in any of its peers in Southeast Asia. The bank’s data confirms that capital might not be used very efficiently in Vietnam.
Businesses face challenges in seizing FTA opportunities
If Vietnamese businesses remain unresponsive to the opportunities presented by Free Trade Agreements, economists argue that the support they receive from the state will become insignificant.
The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) will come into force on January 14, 2019 and the imported commodities of Vietnam along with those of six other member nations will enjoy a substantial tariff reduction under the commitments outlined by the CPTPP agreement.
The effects of Free Trade Agreements (FTAs) are projected to have a major impact on the Vietnamese economy and the activities of businesses.
Ngo Chung Khanh, deputy head of the Ministry of Industry and Trade’s multilateral trade policy department, said when CPTPP takes effect, Vietnam’s exports to other member nations will enjoy a preferential tariff under the specific roadmap planned for Vietnam.
According to calculations, average tariffs will be reduced by over 60% during the first stage and will be slashed further to 80% over the course of the next three years.
Mr Khanh said Vietnamese businesses should take note of market demands, the rules regarding the origins of products and regulations of the markets of CPTPP member nations.
Such measures can be taken to identify concrete commodities for export and improve efficiency by noting codes and comparing the rules of origin for export commodities.
According to statistics released by the Ministry of Industry and Trade, Vietnamese businesses have taken only 30% of opportunities that have arisen from FTAs.
Mr Khanh attributed the situation to the fact that businesses have taken their eye off the ball regarding FTAs, leading to businesses to not enjoy the full advantage that FTAs bring.
He said businesses have not been proactive enough in learning about opportunities, tax rates and preferential tariffs when exporting their products to foreign markets.
Not many businesses have made contact with negotiating delegates regarding market information and incentives for their export products.
The deputy head emphasized that there are ample opportunities and challenges presented by CPTPP and businesses should be fully aware of them in order to seize them.
Vo Tri Thanh, Director of the Institute for Brand and Competitiveness Strategy, said most Vietnamese businesses have not adhere to rules of origin, noting that they must grasp the information on these regulations in order to reduce costs and avoid penalties when trying to crack foreign markets.
Dr Thanh noted that businesses must comply with international law and not make rash decisions, which could cause harm to both themselves and the wider Vietnamese business community when exporting their products to foreign markets.
Regarding the challenges of implementing the CPTPP, economist Nguyen Minh Phong stressed that Vietnamese businesses will face a number of complicated trade issues in the context of Vietnam’s deeper integration into the global economy.
He noted that the impact the CPTPP agreement could have on the national economy will depend on businesses, and their preparations and capabilities to seize opportunities and deal with challenges in carrying out the agreement.
YouTube competitor TikTok plans to get ticking in Vietnam
Short-form video hosting service TikTok is planning to step up its Vietnam operations, targeting a wider Vietnamese customer base.
TikTok, a product of Bytedance, a Chinese software company headquartered in the US, offers a short video sharing application, 15 seconds per video for basic accounts. It’s initial content is primarily lip syncing, dancing, or recording with fancy stickers and other effects.
The TikTok app has quickly attracted the attention of many young people, particularly at school age, but is yet to appeal to older adults.
Diep Que Anh, national director of communications for TikTok Vietnam and other emerging markets, said that the application is trying to “age” its content to widen its user coverage.
It has to do this before it can become an advertising platform that can satisfy the demands of its client brands, some experts and industry insiders have said.
Not revealing specific numbers, Que Anh estimated that Vietnamese users spend an average of 28 minutes per day on TikTok. Its prime time, when the app sees the highest traffic in the country, is 6 p.m.-8 p.m. every Friday and Saturday.
The platform is still in its ad-free phase. “There have been brands who have approached us regarding advertising, but we do not intend to monetize our service at the present time,” Que Anh said, adding that they were waiting for the market to mature.
TikTok has opened its first representative office in Ho Chi Minh City with around 70 employees. Que Anh said this number will continue to grow to several hundred employees.
“After just one year, Vietnam has become our biggest market in Southeast Asia,” she said.
According to Que Anh, TikTok now covers Singapore, Thailand, Indonesia, Malaysia and the Philippines.
The Telegraph reported that in October, after receiving an additional US$3 billion in capital from firms led by Softbank, KKR & Co and General Atlantic, Bytedance boosted its valuation to US$$75 billion, officially surpassing Uber to become the most valuable technology startup in the world.
The Telegraph and many other newspapers call Bytedance a Chinese tech firm, although Que Anh noted TikTok’s headquarters is in Los Angeles, the U.S., and that its products are already in 150 markets.
TikTok’s strength in the global advertising market is growing rapidly. According to Google’s ‘Best of 2018’ list, TikTok is the only social networking application named in User’s Choice Awards App of the year, while Facebook, Instagram or Youtube are no longer in the list.
Some reports estimate that the global audience for this app this year is about 500 million.
In Vietnam, the most successful content trend of the year – the 2018 AFF Cup, resulted in more than 120,000 videos released on the event, which attracted 54.8 million views.
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