The lack of materials for processing and the unhealthy competition among tea producers are the consequence of the uncontrolled increase in the number of tea processing workshops.
Nguyen Duy Chanh, director of Moc Chau Tea, said there are about 10 preliminary processing workshops in Moc Chau area, but not all of them have material growing areas.
Moc Chau Tea cooperates with farmers to develop material growing areas, committing to buy all the material output from farmers. However, it sometimes loses materials to the mini workshops which pay more for materials.
Nguyen Thi Anh Hong, secretary general of the Vietnam Tea Association (Vitas), said there is unhealthy competition among tea producers.
According to Hong, the material areas are limited and cannot be expanded.
A Vietnamese owned tea processing plant located in an ancient tea area, for example, now has to compete with a new plant established as a Vietnamese business. But it is Chinese owned in reality.
The plant offers very high prices to farmers.
“If Vietnamese plants offer the price of VND20,000 per kilogram, Chinese pay VND30,000. As a result, Vietnamese plants fail to collect materials for processing,” she explained.
Meanwhile, the current laws stipulate strict requirements on material areas.
According to Nguyen Hong Son from the Ministry of Agriculture and Rural Development (MARD), the institutions and businesses that process and trade tea, must develop material areas of their own, or sign contracts with farmers on collecting materials.
The processing workshops must be equipped with modern production lines and technologies which ensure food safety.
However, the regulations have been ignored.
According to Vitas, Vietnam has 130,000 hectares of tea area. It is the fifth largest tea exporter in the world with 500 processing workshops. However, Vietnam’s tea export price is just equal to 60-70 percent of the world price.
Every year, Vietnam’s tea industry loses VND1 trillion because of weak cooperation in production organization.
Hong said tea exports have been going very slowly in recent months, which is blamed on the sharp appreciation of the dollar against the local currencies of import countries.
As of mid-August, Vietnam had exported $110 million worth of tea products, a decrease of 7.3 percent compared with the same period last year.
It is estimated that 80 percent of tea exports bear VAT. The problem is that tea exporters can get VAT refunds only 30 months later, so they lack working capital to maintain production.
Vietnam needs a digital ecosystem with focus on made-in-Vietnam social media instead of foreign owned players such as Facebook and Google.
The breakthrough targets in the 4.0 era were highlighted in a speech made by Minister of Information and Communication Nguyen Manh Hung at a working session with PM Nguyen Xuan Phuc on September 8.
He said Vietnam should target becoming a software development powerhouse, returning to the top 10 countries in telecommunication development as recognized in 2008-2010, and be listed in the top 30 in information technology, top 20 in information and cyber security, and top 5 in telecommunication technologies and equipment. He also hopes that Vietnam can manufacture microchips for export.
To reach these goals, Hung stressed that it is necessary to create made-in-Vietnam products which compete with world giants such as Google and Facebook.
At present, revenue from ads on social networks is estimated at $370 million. However, the biggest market share is now in the hands of foreign players, including Google, which earns $135 million and has 35 million users, and Facebook, with $235 million and 60 million users.
Hung pointed out that foreign social networks still do not observe Vietnamese laws on taxes, payments and security.
Meanwhile, the market share held by Vietnamese firms is small with 436 domestic social networks. Even the most prestigious one, with 40 million users, has revenue of only $7 million.
The Ministry of Information and Communication (MIC) has suggested policies to encourage the development of Vietnamese social networks, which would have as many or more Facebook accounts in VN and hold 60-70 percent of market share by 2022.
Hung suggested applying both technical and economic measures to put foreign social networks under control.
Together with the social network development, MIC’s leaders hope Vietnam will be listed among top 10 countries in digital ecosystem development, with 60-70 percent of people using a Vietnamese ecosystem.
A digital ecosystem development comprises a social network, search engine, browser, operating system and anti-virus software. Vietnam will need to mobilize all resources in the society to build up the digital ecosystem.
In terms of the software industry, Vietnam now has 9,000 businesses with total revenue of $3.8 billion. However, Vietnam still lacks leading businesses with $1billion revenue or more.
At the working session, Hung made a daring proposal that mobile network operators should be allowed to join the payment service sector. Hung said if the government approves the proposal, e-banking services would cover 100 percent of the population.
The undisclosed amount of funding puts the company’s valuation at US$4M.
Vietnam-based travel and accommodation booking marketplace in Southeast Asia VLeisure has raised an undisclosed amount of investment led by South Korean early-stage investor BonAngels Venture Partners, as reported by Deal Street Asia. In this round, Nextrans of South Korea and VIC of Vietnam also participated.
Reportedly, this funding puts VLeisure’ valuation at US$4 million.
The funding will allow VLeisure to focus on growth acceleration in its current focus markets, as well as expansion to new ones.
VLeisure was founded in 2013 by Phan Le with a mission to provide a platform that enables agencies to manage and distribute travel products and services to online partners. To date, the company has partnered with 3,000 agencies.
For VLeisure, the next move would be providing services in Indochina Hotels targeting the Chinese and Korean markets.
BonAngels and Nextrans have history investing in Vietnamese companies. VIC Partners is a private investment group of entrepreneurs who are doing angel investing.
Vietnam’s travel sector has shown a spike in investment numbers, with Vietnamese online travel agency Vntrip.vn recent funding from Switzerland’s IHAG Holding that resulted in its valuation to go up to US$45 million.
CEO & CMO Summit Vietnam 2018 is set to open in Ho Chi Minh City for the first time on September 28, 2018.
With the theme “Shape the Future”, the summit will be providing an opportunity to gather, connect, and share learning opportunities among business leaders and marketers from a variety of industries that have been using technology to build competitive advantages and sustainable business in the recent fierce environment.
The future of business in the technology era 4.0
Technology plays an important role in the survival and development of many businesses. Applying technology to the right people, in the right circumstances and at the right time will help businesses bring better service to their customers. Allan Thygesen, President of Google United States, said: “Utility support is a new war for business development.” As Google users are tending to search “now,” he has noticed a simultaneous increase in the way marketers connect with customers. For example, Wayfair, an e-commerce site specializing in selling furniture in the United States, has allowed customers to place a virtual version of the interior into their home for review before making a purchase decision. Technology has made the connection between businesses and customers more convenient.
Broadly speaking, in fact, businesses must face and respond to the changing and rapid development of technology in the 4.0 era. The story of the application of blockchain / AI / Internet of Things in advertising marketing, changes in customer approach, performance measurement, product innovation and the impact of technology to business and social, … will be shared and exchanged directly between the leaders of the big companies in Vietnam. The sharing of Alphabeta, Facebook SEA, Fossil, SuntoryPepsico, Active, … will surely bring participants new perspectives on business issues in the digital age.
Factors of building and developing a sustainable business
In addition to technological elements, leaders are still pondering on many other issues that help businesses grow sustainably, such as corporate culture and leadership styles, people, and so on. Dara Treseder, CMO of GE Ventures, said, “Today, brands and cultures are intertwined. The brand reflects the culture and culture that reflects the brand.”
The conference is also a place to capture more investment opportunities as well as how to successfully enter the business boat through the roundtable from CEOs of large enterprises in Vietnam.
Expanding the business relationship, looking for potential partners
The CEO & CMO Summit Vietnam 2018 will gather more than 300 leaders and marketers of large enterprises in different industries in Vietnam. Participants have the opportunity to expand their business relationships, seek for potential partners or prospects at the networking event. Besides, this is also an opportunity for participants to share and learn experiences from people with similar interests in business development, leading the market.
Held by MMA Vietnam for the first time
The CEO & CMO Summit is an annual event of MMA being held worldwide. This is the first time the CEO & CMO Summit is being held in Vietnam. MMA has affirmed its leadership in accelerating the transformation of mobile marketing and innovation as well as the role of connecting businesses and creating a platform for Vietnamese businesses to seek collaborative opportunities and development, through annual events such as CEO & CMO meetings. In particular, qualified marketers (C level) will be invited to the event.
Dollar index pops up on tariffs news before losing steam.
U.S. to impose 10 percent tariffs on $200 billion worth of Chinese imports.
Some Asian shares rise, taking in stride latest trade news.
Chinese Vice Premier Liu He is set to convene a meeting in Beijing on Tuesday morning to discuss the government’s response to the U.S. decision to impose extra tariffs on $200 billion of Chinese goods, Bloomberg News reported, citing a person briefed on the matter.
In the latest trade salvo from Washington, U.S. President Donald Trump spared smart watches from Apple and some other consumer products, but he warned that if China takes retaliatory action he will pursue tariffs on approximately $267 billion of goods. Ryan Woo reports on Reuters
According to an updated news on CNBC, US Dollar bounce fades, yuan dips, markets brace for China’s response to US tariffs.
The dollar was slightly higher on Tuesday and China’s yuan fell as global markets braced for Beijing’s response to new U.S. tariffs on Chinese goods.
The dollar index against a basket of six major currencies was up 0.09 percent at 94.585. The greenback in recent months has benefited from safe-haven flows amid the escalating Sino-U.S. trade conflict.
The index had popped up to 94.607 earlier in the session after U.S. President Donald Trump said on Monday that he will impose 10 percent U.S. tariffs on about $200 billion worth of Chinese imports, effective Sept. 24.
Trump said that if China takes retaliatory action against U.S. farmers or industries, “we will immediately pursue phase three, which is tariffs on approximately $267 billion of additional imports.”
“Of immediate concern to the market is how China responds to the tariffs,” said Junichi Ishikawa, senior FX strategist at IG Securities in Tokyo.
China’s yuan was a shade weaker at 6.8740 per dollar in onshore trade, though Chinese stocks managed slim gains.
“The dollar’s knee-jerk reaction has subsided somewhat as some equity markets are managing to rise despite the trade news. It appears that a consensus had already been formed beforehand on what the trade announcement would be,” said Shusuke Yamada, currency and equity strategist at Bank of America Merrill Lynch in Tokyo.
The dollar was 0.1 percent higher at 111.94 yen. It had briefly dropped to 111.66 against the yen, another safe-haven currency that draws demand in times of market tensions and risk aversion, before bouncing back.
The Australian dollar, seen as a proxy to China-related trades as well as a barometer of broader risk sentiment, was nearly flat at $0.7176, having climbed off a low of $0.7144 plumbed earlier in the session.
Some analysts doubted Beijing would be in the mood to hold trade negotiations with Washington in the wake of Trump’s latest decision. U.S. Treasury Secretary Steven Mnuchin last week invited top Chinese officials to a new round of talks, but thus far nothing has been scheduled.
The euro was down 0.05 percent at $1.1678 after rising 0.5 percent the previous day.
The pound dipped 0.1 percent to $1.3147.
Sterling had gained 0.7 percent on Monday, hitting a six-week high of $1.3165, helped by reports of progress on the Irish border question, an obstacle to Brexit that diplomats will try to overcome this week at a European Union summit. [GBP/]
Emerging market currencies including the Turkish lira, South African rand and the Mexican peso were all slightly lower on Tuesday.
Conversations have heated up on Internet forums about Ho Ngoc Dai, the father of the ‘education technology’ program, who wrote a textbook for first graders.
In 1978, Ho Ngoc Dai opened the Hanoi Experiment School. At that moment, Vietnamese linguists reviewed the 300-year research of phonetics and the document was brought to university to serve as the official syllabus for third-year students in linguistics at the Hanoi National University.
Dai then used the research achievements when compiling textbooks in Vietnamese language for first graders.
Three goals were set by Dai when compiling the textbook: students need to read and write, have correct spelling, and remain literate.
In the first eight years, Dai’s textbook was used only at the Hanoi Experiment School. In 1986, it began going beyond the experiment scale.
In 2002, the Ministry of Education and Training (MOET) began curricula renovation and stated that only textbooks compiled by the ministry could be the official textbooks used in grammar schools.
In 2016-2017, the textbook was used in 48 cities and provinces by 7,857 schools. In 2018-2019, nearly 800,000 students study with the method.
In 2006, Lao Cai provincial authorities once again used Dai’s textbook. The number of provinces voluntarily using the textbook increased gradually. By 2008, about 20 provinces had used the textbooks at some schools.
In 2017-2018, as requested by MOET Minister Phung Xuan Nha, the textbook underwent reevaluation two times.
Over the last 40 years of existence, Dai’s textbook and ‘education technology’ have continuously raised controversy. However, it is now facing severe criticism.
Some people have accused Dai of using anti-scientific method to teach students to read and write, thus ‘distorting the Vietnamese language’.
On September 8, Dai once again appeared on mass media, affirming that the method applied in the textbook is correct and it has been proved in reality.
Meanwhile, some observers have doubts that the wave that calls for a boycott as the ‘education technology’ textbook has relations to the battle for textbook market share.
Dai’s textbook, which is popular among parents and students, could be a threat to other textbook compilers.
To date, the ‘education technology’ textbook exists along with the textbook compiled by MOET, though it is not considered official material used in teaching.
And the new ‘education technology’ has become more popular among Vietnamese parents and students.
In the 2015-2016 academic year, it was used at 23,336 schools in 47 cities. The provinces of Lao Cai, Lang Son, Thai Nguyen, Phu Tho, Nam Dinh, Ha Tinh, Quang Tri and Kien Giang used the textbook for first graders in the localities.
In 2016-2017, the textbook was used in 48 cities and provinces by 7,857 schools. In 2018-2019, nearly 800,000 students study with the method.
As such, about 50 percent of Vietnamese first graders are studying with Dai’s textbook.
Vietnam has been seeing a new wave of technology firms and co-working operators, creating new opportunities for the real estate industry.
There is no better place to witness the growing demand from technology firms and co-working operators than Vietnam, according to Stephen Wyatt, country head of JLL Vietnam.
“The country is catching up fast with its regional peers, due to a young, dynamic, tech-savvy, entrepreneurial population. We have seen a dramatic increase in demand from technology firms and co-working and flexible working operators over the past three years and anticipate this will be one of the key trends over the next five years,” said Wyatt.
Hanoi and Ho Chi Minh City now have around two million square metres of office for lease each, and also limited co-working space. “It is high time for developers to focus on this investment field,” Wyatt told VIR.
Technology and e-commerce will dominate the market
As growth in Southeast Asia’s online economy gains pace, JLL projects that technology companies will drive office occupancy, potentially accounting for 15 to 25 per cent of annual gross office leasing volumes in the next decade, compared to about 5-10 per cent three years ago.
Technology companies have become a key office occupier group in the region, and they are frequently the earliest tenants to pre-commit to newly constructed buildings, according to JLL’s report “Technology firms transform Southeast Asia.”
“Given that technology firms will become a key source of office occupancy, this is an opportunity for real estate investors and developers to create space that will meet this need,” said Regina Lim, head of Capital Market Southeast Asia Research, JLL.
“Last year, the tech sector attracted more than US$6 billion in funding, and the industry’s growth will contribute significantly to the future office leasing volume, which we estimate will rise at 6 per cent annually amid a GDP growth rate of around 5 per cent,” said Lim.
Southeast Asian economies are forecast to expand at 5 per cent annually until 2020, exceeding the global rate of 3.5 per cent.
The region’s internet economy could be worth more than $200 billion by 2025, with e-commerce seeing the fastest growth. Along with an expanding middle class, this segment is predicted to rise at 30 per cent in the next five to 10 years to reach $88 billion by 2025, based on a Google-Temasek study.
As internet companies developed their presence rapidly in the region in the last decade, e-commerce firms have been flourishing in the past two years. The biggest global technology companies, including Alibaba, Facebook, Google, and Sea, currently each occupy a total of 20,000 to 50,000sq.m spread across three to five cities. Many of these companies have increased their headcount by 30 to 50 per cent annually over the last five to 10 years, says the JLL report.
Office demand accelerates in developing countries
Separately, co-working and flexible workspace operators have also contributed to the region’s office demand. Flexible workspaces have climbed by an estimated 40 per cent annually in the last three years and now take up 2 per cent of office stock in the region, compared with the 0.5-1 per cent in 2015.
“We think in the next decade, e-commerce companies will continue to grow, together with flexible workspace and co-working operators,” said Lim. “As e-commerce firms spread their footprint, we predict that gaming and e-sports platforms may become the next driver of office occupancy in Southeast Asia.”
According to JLL, the acceleration in office take-up by technology firms in the last three years has occurred mainly in Jakarta, Bangkok, Manila, and Ho Chi Minh City. Lim explains that the sustained growth of these companies has been driven by strong socioeconomic trends.
A fire broke out at a house on the capital city’s La Thanh Street, near the Central Children Hospital, on September 17, forcing patients and their families in parts of the hospital to be evacuated.
Reportedly starting at around 6pm, the fire later spread to seven neighbouring houses and was approaching the hospital with smoke seen billowing from the area
All patients being treated in the B and C sections of the hospital were evacuated, NDO reported.
Many fire engines were dispatched to the scene, while several nearby streets were cordoned off. Traffic through La Thanh Street was also diverted to other routes.
The fire was mostly contained by 8pm with no reports of human casualties. The cause of the fire is now under investigation.
The fire broke out at a house on La Thanh Street. (Photo: Truong Son)Assets of nearby shops were moved outside to prevent them from catching fire. (Photo: Minh Ha)Evacuated patients and their families returned to their rooms after the fire was contained. (Photo: Manh Hung)
Rong Viet Securities (VDSC), one of the leading full service brokerage houses in Vietnam, has partnered with Exotix Capital, the London-based developing markets investment bank, to offer investors premium access to investing in Vietnam’s capital markets.
Paul Domjan, Global Head of Research, Analytics & Data at Exotix Capital, commented: “Rong Viet has a focus on covering the Vietnamese market beyond the typical large cap names, and this focus on including smaller cap names complements Exotix Capital’s commitment to providing our clients with best in class local expertise.”
“This partnership is an excellent fit for Rong Viet Securities. It aims to expand Rong Viet’s international reach and help Exotix Capital’s extensive network of institutional investors benefit from our high quality research and best execution capabilities,” said Rong Viet Securities’ Chief Executive, Hieu Nguyen. “Our relationship with Exotix Capital will enable us to build relationships with some of the largest investors in the world by offering them greater local market colour and better trade execution in Vietnam’s capital markets.”
Marc Djandji, Head of Institutional Sales at Rong Viet Securities, commented: “Our primary mission is serving the needs of institutional investors with in-depth research and analysis of Vietnamese companies. We are delighted to be expanding our reach by joining Exotix Capital’s global network.”
Rong Viet Securities’ Equity Research department counts 16 analysts covering over 50 companies, representing more than half of the total market capitalization in Vietnam. The company specializes in identifying and championing predominantly under-covered Vietnamese listed companies. Its sales traders work in close collaboration with the Equity Research and Investment Banking teams to help clients gain exposure to superior Vietnamese companies across a broad spectrum of sectors. Over the last few years, Rong Viet’s research has been highly regarded for its unparalleled perspective.
About Rong Viet Securities: Established in 2006, Rong Viet Securities is a fully licensed brokerage house with offices across Vietnam. The company is publicly listed on the Ho Chi Minh Stock Exchange (HSX) under the ticker VDS. Thanks to our qualified professionals, advanced technology and extensive network of local business owners and foreign institutions, we provide a comprehensive range of financial services and products to clients. In 2017, we were voted among 13 categories within AsiaMoney’s Brokers Poll. This prestigious award was a recognition from our clients of our continuing efforts to enhance our core value proposition. For more information, please go to https://www.vdsc.com.vn/en/home.rv
About Exotix Capital: Exotix Capital provides a comprehensive and integrated cross-asset platform to penetrate full capital structures in developing markets. Analysts spanning Emerging Europe, the Middle East, Africa, Asia and the Americas cover over 170 companies and government entities, more than any other frontier markets firm. Stretching beyond equity and fixed-income markets, the Exotix Capital advisory team provides a full range of investment banking services to companies, financial institutions, investment funds and governments. These services include strategic advisory assignments from debt capital to private equity fund raising. More information is available at http://www.exotix.com
The US President Donald Trump will put 10 percent tariffs on an $200 billion in Chinese goods, which will go up to 25 percent at the end of the year.
The action heightens the trade conflict between the world’s two largest economies.
Trump is considering whether to put tariffs on more than $250 billion more in Chinese products.
Donald Trump will impose 10 percent tariffs on $200 billion worth of Chinese imports, and those duties will rise to 25 percent at the end of the year. Jacob Pramuk reports on CNBC.
The action, announced by the Trump administration Monday, escalates a trade conflict between the world’s two largest economies. China has already threatened to retaliate against new duties.
The White House removed about 300 goods from a previously proposed list of affected products, including smart watches, some chemicals, and other products such as bicycle helmets and high chairs.
Trump, in a statement, said that the tariffs would rise to 25 percent on Jan. 1, 2019, adding that “if China takes retaliatory action against our farmers or other industries, we will immediately pursue phase three, which is tariffs on approximately $267 billion of additional imports.”
Trump has previously said that those additional duties are “ready to go on short notice if I want.”
The action will only ratchet up tensions between Washington and Beijing. The president seeks a new trade agreement amid complaints about alleged theft of intellectual property by Chinese companies and concerns about the U.S. trade deficit with China. The two sides have failed to reach a deal to resolve the White House’s concerns with China’s trade practices despite a series of talks.
“We have been very clear about the type of changes that need to be made, and we have given China every opportunity to treat us more fairly,” Trump said in the statement.
“But, so far, China has been unwilling to change its practices.”
The president has defended his tariff moves, despite mounting criticism from Republican lawmakers and potential political damage. On Monday morning, he tweeted: “Tariffs have put the U.S. in a very strong bargaining position, with Billions of Dollars, and Jobs, flowing into our Country – and yet cost increases have thus far been almost unnoticeable. If countries will not make fair deals with us, they will be ‘Tariffed!'”
Industry groups reacted with dismay following the announcement.
In a statement on Monday, National Association of Manufacturers (NAM) President and CEO Jay Timmons said imposing the tariffs risked undoing the results that manufacturers have achieved in the past year because of tax and regulatory reforms.
“With every day that passes without progress on a rules-based, bilateral trade agreement with China, the potential grows for manufacturers and manufacturing workers to get hurt. No one wins in a trade war, and manufacturing workers are hopeful the administration’s approach will quickly yield results,” Timmons said, in the statement.
The White House has already levied tariffs on $50 billion worth of Chinese products. Beijing responded with measures targeting $50 billion on American goods, raising fears about damage to the American farm industry.
Some administration officials have pushed for additional talks with China as they try to ease tensions with the world’s second-largest economy. But Trump contended last week that the U.S. was under “no pressure” to reach an agreement.
Earlier Monday, White House economic advisor Larry Kudlow said Trump “has not been satisfied with the talks with China on this.”
China’s Foreign Ministry has said the government would hit back if the U.S. moved forward with tariffs.
But Trump said he hopes the situation will be “resolved, in the end, by myself and President Xi [Jinping] of China, for whom I have great respect and affection.”
Tariffs have put the U.S. in a very strong bargaining position, with Billions of Dollars, and Jobs, flowing into our Country – and yet cost increases have thus far been almost unnoticeable. If countries will not make fair deals with us, they will be “Tariffed!”
Read Trump’s full statement announcing the new tariffs below:
Today, following seven weeks of public notice, hearings, and extensive opportunities for comment, I directed the United States Trade Representative (USTR) to proceed with placing additional tariffs on roughly $200 billion of imports from China. The tariffs will take effect on September 24, 2018, and be set at a level of 10 percent until the end of the year. On January 1, the tariffs will rise to 25 percent. Further, if China takes retaliatory action against our farmers or other industries, we will immediately pursue phase three, which is tariffs on approximately $267 billion of additional imports.
We are taking this action today as a result of the Section 301 process that the USTR has been leading for more than 12 months. After a thorough study, the USTR concluded that China is engaged in numerous unfair policies and practices relating to United States technology and intellectual property – such as forcing United States companies to transfer technology to Chinese counterparts. These practices plainly constitute a grave threat to the long-term health and prosperity of the United States economy.
For months, we have urged China to change these unfair practices, and give fair and reciprocal treatment to American companies. We have been very clear about the type of changes that need to be made, and we have given China every opportunity to treat us more fairly. But, so far, China has been unwilling to change its practices. To counter China’s unfair practices, on June 15, I announced that the United States would impose tariffs of 25 percent on $50 billion worth of Chinese imports. China, however, still refuses to change its practices – and indeed recently imposed new tariffs in an effort to hurt the United States economy.
As President, it is my duty to protect the interests of working men and women, farmers, ranchers, businesses, and our country itself. My Administration will not remain idle when those interests are under attack.
China has had many opportunities to fully address our concerns. Once again, I urge China’s leaders to take swift action to end their country’s unfair trade practices. Hopefully, this trade situation will be resolved, in the end, by myself and President Xi of China, for whom I have great respect and affection.
Vietnam has become an increasingly attractive destination for foreign investors. The international manufacturing sector is moving to Vietnam and more FDI is flowing into the country, showing growing confidence among investors in the market, according to a representative from Agility – a leading global logistics group.
Vietnam News Agency has interviewed Mr. Sushant Palakurthi Rao – head of Global Partnerships at Agility – who attended the recent 27th World Economic Forum on ASEAN (WEF ASEAN) in Hanoi to the on FDI-related issues. Following is the full text of the interview.
Sushant Palakurthi Rao – head of Global Partnerships at Agility | Photo credit: @palakurthirao
Over the last 30 years, Vietnam has actively improved its business environment in order to attract more foreign investment. How do you assess the results achieved from this?
We heard at the WEF on ASEAN conference from Vietnamese Prime Minister Nguyen Xuan Phuc and other leaders as how FDI is growing in the country. From the mere 10 billion USD in 1988 when Vietnam first started absorbing FDI, the country’s total export revenue is now expected to hit 225 billion USD in 2018. FDI firms have made up 20 percent of the total State budget collection, 10 times higher than the figure in 2000. In particular, over 50 percent of Vietnam’s total industrial production value comes from FDI firms.
I believe the numbers do the talking. Companies make their business plans very carefully because it is a very competitive world. So if a lot of FDI is flowing into Vietnam, it means an increasing confidence among investors in the market in terms of administrative procedures, labour productivity, connectivity, and infrastructure.
We can see increasing manufacturing here. If you are a manufacturer and looking for a country to invest in, you will think, okay, I can have access to Vietnam, a big talent pool, more and more skills, flexible, very suitable for what I need. I can move my products easily out of Vietnam to my export markets.
The FDI flow figures show Vietnam’s investment environment becoming more facilitating for businesses. They also attest to the role of the Vietnamese Government and this fact that helps facilitate the country’s investment climate.
Agility is a global logistics group with offices throughout more than 100 countries, including ASEAN. In Vietnam, you have offices in Hanoi and Ho Chi Minh City. With the experience of operating in air, ocean, and road logistics in Vietnam for 25 years, how do you place Vietnam’s market against other countries in the region?
We have a very strong presence in ASEAN. We see Vietnam as part of ASEAN, providing a lot of opportunities for us. We look for local talents, knowledge, and key local resources in logistics to help us build our global network.
In Agility’s recent report on emerging markets in logistics, we analyse how countries are performing and improving their logistics environment. If you look at our top 20 company performers in the report, five of them are from ASEAN and one is from Vietnam.
Vietnam has become an increasingly important market for us. The country is growing at about 7 percent. Any markets that grow that high means they are good for logistics, that logistics is needed. We like to invest in countries that are growing fast.
As mentioned earlier, manufacturing is moving to Vietnam. Our customers move to Vietnam from other countries. One of the reasons is manufacturers are looking to diversify their production, for various reasons – cost of labour, market access, and tariff, etc.
Hanoi is our major export facility for Vietnam. Most of our freights go from Hanoi to Chicago, to Amsterdam, to Europe for example. We have been here for a long time. We will continue to be here and invest in whatever opportunities arrive towards our customers. We will invest to support them.
Foreign-invested enterprises have become an important driving force for Vietnam’s economic development and international integration, while SMEs are the backbone of the national economy. Vietnam is looking forward to boosting the development of its private sector. In your opinion, what should we do to complete this mission?
Let me tell you this. I opened the newspaper Vietnam News the other day. I don’t know if it is you (the Vietnam News Agency) or your competitor, my apology, but there is a story in there about how local authorities in Vietnam are now trying to move a lot of activities online. A lot of admin things going online will have a very positive impact, not only to the business ecosystem. But it also gets citizens to work in that mindset. The Government is making some good strikes in that sense.
What I can see in practice is that the Government plays an effective role in facilitating, encouraging, and incubating. All I want to say is that the Vietnamese Government and authorities are doing a good job in making Vietnam an attractive place for foreign investors.
From a logistics and freight point of view, Vietnam has a lot of capability for distribution, which is clustered around the manufacturing zones across Vietnam. However, the geography of Vietnam is such a long country. In some cases, it is more convenient to move goods from Ho Chi Minh City to Cambodia then to Hanoi. The distance is shorter, not just a matter of hundreds, but thousands of kilometres.
We hope that our growth of hubs in Vietnam could stretch to many. It could go to Hai Phong, Hue, Da Nang, etc. Growth hubs could be well spread across the incredible geography of this country. The growth will help more equitable development for the nation. That will also be good for logistics and the private sector because it allows SMEs located somewhere else in provinces to have better access to the capacity.
Connectivity is a key driver of this growth. If you make it difficult to go north-south, let alone into land and countryside, you will miss out on some opportunities. If Vietnam becomes more convenient to do business, you are going to get more businesses here.
The world economy is entering the Fourth Industrial Revolution era. How do you think Vietnam will fit in the revolution and take advantage of it?
The Fourth Industrial Revolution offers both opportunities and challenges. I am a strong believer that technology can be an aid that helps processes and systems in every area.
Vietnam is an agricultural country. So, let’s take agriculture as an example. Again, every sector will be touched by the advancement of technologies – and agriculture is, of course, part of it too. If you think about a simple thing like drone technology. It allows you to make predictions, where flooding or drought might take place. Telephones work for fishermen. It is a revolution because it allows you to shorten times between the catch and the move to fisheries, sales, and the market. Drone technology is a good example of the ways farmers are going to benefit and be better prepared for any disruption in their work. That is just one example of how Vietnam can benefit from the Fourth Industrial Revolution.
Another example of how Vietnam fits in the revolution: I think a meeting like the WEF on ASEAN 2018 is a good indication that Vietnamese leaders and the Vietnamese Government are prioritizing new advancements in technology, in science, and innovation. They are very keen to see how to capitalize on the opportunities.
In just 10 years, Vietnam is now a middle income country. So I think Vietnam is fitting very well.
But it is important that you move with the speed because the changes are fast and require agility. It also requires nimble approaches because the pace is so quick.
Things are getting better, but as we mentioned at the beginning, the competitive pressure never stops – and the era of technology is definitely one of those competitive pressures.
Seven Vietnamese have died and five are in a coma after taking drugs at an electronic dance music festival in Hanoi, officials said Monday, as authorities scrambled to trace the substance.
The Sunday night disaster, believed to be the deadliest drug-related incident in the country, shocked the Communist nation´s conservative capital. Synthetic drug use is on the rise but remains largely underground among a relatively niche group of hard-partying youth. The News reports.
The victims, all Vietnamese, tested positive for an unspecified drug, prompting officials to ban all electronic dance music (EDM) festivals in the capital.
“Police investigators are trying to figure out what type of drug that was,” deputy director of Hanoi police Nguyen Van Vien told reporters Monday.
Officials said the dead were all in their 20s, while the five people in a coma in intensive care are aged between 18 and 30.
If the deaths are confirmed as drug-related it could be one of the worst cases anywhere in recent memory of mass narcotics-related deaths at a music festival.
Sunday night´s “Trip To The Moon” festival was hosted by Vietnam Electronic Weekend in Hanoi´s upscale West Lake, a neighbourhood popular among expats, teachers and youth for its nightlife.
Commuters pass the entrance to the West Lake Water Park in Hanoi where partygoers died from drug use during electronic dance music festival ‘Trip to the moon’ inside the park ( AFP)
Thousands attended the event which sprawled across three stages at a water park and included EDM big hitters Yellow Claw and Headhunterz on the line-up, according to the online flyer.
One festivalgoer said she saw several people collapse in the crowd and about four people shuttled out on stretchers.
“I thought maybe they were just exhausted but when I saw more people (being carried out) I was shocked… there were so many ambulances outside I was freaking out,” she told AFP, declining to be named.
Another who attended the festival said she saw many people she suspected to be high standing around dazed for most of the night.
“They didn´t dance much, just swayed a bit and they didn´t like the lights shining directly at them,” she told AFP, adding that security did not spend much time checking people at the entrance.
Organizers did not respond to AFP´s calls on Monday.
– Synthetics on the rise –
Investigators are trying to confirm who brought the drugs into the venue and said all events of its kind would be banned in the capital pending the probe.
“The incident yesterday… was very painful. It was a great loss,” said Tran Xuan Ha, deputy head of the Hanoi government´s propaganda department.
Tickets cost between $21 and $135 in a country which has joined Asia´s multi-million-dollar fixation on EDM.
Most ravers are found in the cosmopolitan and more free-wheeling southern hub of Ho Chi Minh City.
But the EDM party scene has gained popularity in the capital as has drug use among young people, in a city where most bars and clubs are supposed to close at midnight in line with the official curfew.
It was the third Vietnam Electronic Weekend festival held in the country and was slated to be the biggest yet, according to state media.
There are some 220,000 registered drug users in Vietnam, according to official figures.
In the past most users were hooked on opium and heroin, though strong synthetics such as methamphetamine and ecstasy are becoming increasingly popular.
Use of synthetic drugs rose seven percent between 2001 and 2016.
The synthetic substances largely come into Vietnam from the notorious “Golden Triangle” drug producing zone — comprised of lawless parts of Laos, Myanmar and Thailand — though some high-profile busts in recent years in Vietnam have uncovered domestic labs.
September 15 recorded the beginning of the shift from 11 to 10-digit phone numbers for more than 60 million subscribers across the country. The shift, a stepping-stone to approach mobile number portability (MNP), is expected to be completed by November 15.
Several days ago, mobile operators MobiFone, Viettel, and VinaPhone sent notices about the shift to all subscribers. Accordingly, aiming to shorten the shifting time, the operators integrated the task into their mobile applications. Thus, subscribers can easily change their phone numbers by themselves.
In line with the shift, local banks also support their clients via phone messages to update their new phone numbers into mobile banking applications. Specifically, with the banks’ support, customers can easily update their phone numbers via texting a message to the banks’ hot line instead of visiting transaction points as before.
The Ministry of Information and Communications’ (MIC) decision behind the shift means to create favourable conditions to approach high-quality telecommunications services like 5G, as well as to take the first step towards mobile number portability (MNP), which enables mobile phone users to retain their phone numbers while changing carriers.
“As science and technology are striding forward and new telecommunications services emerge, such as 2G, 3G, 4G, and 5G, we need to adjust the phone number database to match the long-term development needs of the telecommunications market and the Fourth Industrial Revolution. The move is realistic and matches international technology trends,” said Tran Manh Tuan, deputy general director of the Authority of Telecommunications.
MobiFone’s representative also said that MNP cannot be achieved without the shift from 11 to 10 digits. Mobile operators first have to complete the change in phone numbers, then they can change to MNP. Both shifts are sizeable projects and need a lot of technical staff as there are millions of subscribers.
According to the MIC’s plan on shortening mobile phone numbers to 10 digits by replacing three-digit carrier prefixes with new two-digit prefixes, mobile phone numbers beginning with 166, 122, 199, 188 will be replaced by 80, 30, 50, and 70, depending on the carrier. Mobile phone numbers currently using two-digit prefixes will remain unchanged.
Weakening en route to China’s Guangdong Province, Super Typhoon Mangkhut could trigger heavy downpours in north Vietnam.
Vietnam can breathe a sigh of relief as the massive storm, which has killed 64 people in the Philippines and two others in China, turned into a tropical depression at 10 a.m. on Monday after it made landfall on the coast of Jiangmen city, in China’s Guangdong Province.
At that time, the center of the depression was around 200 kilometers (124 miles) from the Vietnam-China border with wind speeds of up to 60 kilometers per hour.
The National Center for Hydrometeorological Forecasting said northern mountainous provinces should expect more rain from Monday, with rainfall ranging from 40 to 80 millimeters.
The mountainous provinces of Cao Bang, Ha Giang and Tuyen Quang can receive rainfall of up to 150 millimeters, the center said.
Both Vietnamese and international weather stations have predicted that the storm turned depression will directly affect the northern and northern central regions.
Mangkhut is the sixth storm to threaten Vietnamese waters this year.
After formed in the east of the Philippines, the storm intensified into a super typhoon with maximum wind speeds of 250 kilometers per hour and sustained the strength for days before slamming into the northern Philippines on Saturday with violent winds and torrential rain.
Weather forecasters in Vietnam have predicted that four to six typhoons and tropical depressions could develop off the country’s east coast from now until the end of the year. Around two to three storms will make landfall in Vietnam and batter the central region, they said.
Vietnam was struck by a record-breaking number of 16 tropical storms last year that left 389 people dead or missing and injured 668 others, mostly in northern and central regions.
Big moves by some players are exerting severe pressure on many e-wallet service providers in Vietnam.
Twenty seven payment service providers had been licensed in Vietnam as of last March, with 20 of them offering digital wallets. Others provide services such as financial switching, electronic clearing and payment gateway.
There are many reasons why banks, tech companies and fintech companies are venturing into the world of electronic wallets, including the growing global trends of digital banking and setting up financial startups.
Besides, Vietnam has a large population of young people who are compulsive smart phone users and fond of technology but lack interest in traditional banking services.
“Consumers are increasingly living a modern lifestyle that is accompanied by digital services,” Tran Thanh Nam, founder and director of mobile payment player Moca Technology and Services Corporation, said.
“In addition to free social networks, they have begun to pay attention to incorporating electronic services for their daily needs. From ride hailing to food delivery, it comes with safe and convenient non-cash payments.”
Who are offering e-wallets?
Moca’s popular rivals included MoMo, Bankplus, Vi Viet, VTC Pay, WePay, Mobivi, and Vimo.
As of December 2017 MoMo had more than five million users and expects to see a two- to three-fold increase this year. Vi Viet has more than two million users and hopes to increase the number to 3.5 million this year.
Late last year Pham Tien Dung, head of the State Bank of Vietnam’s Payment Department, said only about five payment intermediaries earned profits. The rest of the market has been labeled “unstable”.
Nguyen Dinh Thang, chairman of LienVietPostBank, which owns Vi Viet, said: “E-wallets need more time to develop to meet customer needs and market potential, and using cash cannot be changed in the blink of an eye. The market needs time to experience the utility and convenience of e-wallets.”
Industry insiders said each e-wallet has its own development strategies and target customer segments.
But they admitted that the failure by many e-wallets to adapt to the financial ecosystem in Vietnam and the lack of widely accepted payment gateways are holding the industry back.
In 2017 MoMo garnered more customers by offering discounts and promotions and spending on advertising. Then, this year it decided to exploit the power of the ecosystem by signing a deal with ride hailing company Uber Vietnam. Unfortunately, Uber withdrew from Southeast Asia a few months later.
Zalo Pay was a latecomer but achieved great success at the beginning of this year by running a “lucky money” campaign during the Lunar New Year that enabled users to gift lucky money to their loved ones using the digital wallet.
This campaign was a huge hit also in China when WeChat and AliPay ran it.
Zalo has an advantage over other e-wallet rivals since it already has an enormous user database from its messaging application.
The competition is fierce
The most recent tie-up, and one that could be a game changer, is between Moca and Grab. The CEOs of both companies are ambitious about developing their electronic wallets. Their strategy is “if we grow, we grow together”.
More specifically, the deal indicates that those who partner with Moca e-wallets will benefit from the large number of Grab population of millions of drivers and passengers across the country.
Grab users will soon be able to choose from all payment services offered by Moca, including bill payments, phone credit recharging, and non-cash payment at retail stores and fast food chains like 7-Eleven and McDonalds.
A combination of Momo popularity, rising Zalo Pay and the Moca-Grab marriage are exerting great pressure on dozens of other e-wallet providers.
Traditional mobile payment services of Vietnamese banks are also intimidated by the competitors.
Responding to this challenge, TPBank has updated the flight ticket support service on its mobile application.
UOB Bank Vietnam now allows in-app opening of new accounts in 10 minutes, reducing the time spent opening one at the bank by 80 percent.
“In big cities like HCM City, four out of every five people have smart phones which can assist them in completing everyday tasks in a much faster and convenient way. We always want to develop and leverage technology so that banking services are much simpler, safer and smarter for our customers from the very first transaction,” said Harry Loh, CEO of UOB Vietnam.
