KTFA: Vietnam
Henig: Businesses exporting medicinal herbs to China required to register
13:05 | 06/02/2023
Vietnamese businesses which want to export medicinal herbs to China must submit information about growing areas and packaging establishments to the provincial Departments of Agriculture and Rural Development.
The departments were required to report to the Plant Protection Department under the Ministry of Agriculture and Rural Development by April 15, 2023.
The Vietnamese authority will the work with the General Administration of Customs of China (GACC) to grant export licences to eligible exporters.
According to the Plant Protection Department, GACC has informed it about China’s plan to review the supervision system for exported medicinal herbs and the registration of enterprises which produce, process and preserve medicinal herbs for export to China.
To meet the requirements of the Chinese side and minimise its impacts on the export of Vietnamese medicinal herbs to the market, the Plant Protection Department asked agencies to review the growing areas and packing facilities of medicinal herbs.
Source: VNA LINK
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Henig: Trade ministry to support enterprises in boosting exports
February, 07/2023 – 08:01
The Trade Promotion Agency under the Ministry of Industry and Trade (MoIT) will collaborate with relevant agencies in carrying out measures to help enterprises expand their shares in foreign markets, said Vũ Bá Phú, head of the agency.
HÀ NỘI The Trade Promotion Agency under the Ministry of Industry and Trade (MoIT) will collaborate with relevant agencies in carrying out measures to help enterprises expand their shares in foreign markets, said Vũ Bá Phú, head of the agency.
Localities will get support relating to trade promotion activities in key markets, the official told Sài Gòn Giải Phóng (Liberated Saigon) newspaper.
Support programmes will be devised, aiming to improve the capacity for enterprises to meet the trend of green trade, he said, adding the MoIT will also facilitate the connection between businesses and localities.
Attention will be paid to enhancing the effectiveness of the National Brand Programme, thus helping enterprises’ products go deeper into global supply chains.
According to the MoIT, the total import-export turnover of Việt Nam reached US$732 billion last year, up 10 per cent year-on-year.
Minister Trần Hồng Diên said rising inflation, energy shortages and disruptions of raw material supply chains in many countries will result in a decline in orders. This will have a negative impact on Việt Nam’s economy, he noted.
To maintain traditional export markets as well as expand new ones, it is necessary for enterprises to grasp market signals, the minister said, noting that Vietnamese trade offices abroad play a vital role in collecting market information and providing it for enterprises, associations and localities.
Trần Công Quỳnh, Vietnamese Trade Counsellor in Canada, said her trade office is working with the textile, garment, footwear and food processing associations in the host country to capture demand for importing goods from Việt Nam. A delegation of Canadian businesses is expected to arrive in Việt Nam to explore opportunities in this regard, she revealed.
A representative of a Vietnamese trade office in Europe said preparations are underway to bring domestic trade promotion delegations to international trade fairs in this continent, including Global Seafood Expo 2023 from April 25-27 in Barcelona, Spain and Fruit Attraction 2023 from October 3-5 in Madrid. VNS LINK
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Henig: M&A 2023 prospects looking up
06:00 | 07/02/2023
Although the market for mergers and acquisitions (M&A) in Vietnam decelerated in 2022, many economists are looking ahead to plentiful prospects for 2023
From quantity to quality
In its most recent report, the Ministry of Industry and Trade’s Vietnam Competition and Consumer Authority (VCCA) found that M&A activities encountered significant challenges in Vietnam and around the world. It noted that the world is experiencing rising inflation and economic contraction, and that interest rate hikes to combat inflation have driven up the price of M&A. With the securities market in constant flux, reaching an agreement on the value of M&A deals has also posed challenges.
2022 saw a decline in M&A compared to the pre-pandemic levels, according to economists. However, the quality of M&A deals improved at a faster rate than the quantity, with investors shifting their focus from “opportunity” to “strategy” in favor of creating long-term profit rather than capitalizing on opportunities that present themselves on temporary terms.
Data from KPMG Vietnam show that in the first 10 months of 2022, the total value of M&A deals reached US$5.7 billion, down 35.3 per cent compared to the same period in 2021. Singapore is the leading country in cross-border transactions with about US$1.2 billion, followed by the US with US$570 million and the Republic of Korea (RoK) with US$370 million. The average size for a transaction of published value has decreased from US$31.1 million in 2021 to US$16.5 million in the first 10 months of 2022.
M&A activity has been relatively dormant among domestic firms until recently. In a reversal, domestic investors are increasing their share of deal value compared to their overseas counterparts. In 2022, investors from Singapore, the US, the RoK, and Spain (the top five investors in the M&A market) typically contributed some 40 percent to the overall deal value.
Future M&A drivers
Tran Quoc Phuong, Deputy Minister of Planning and Investment, said maintaining political stability, economic growth and macroeconomic stability, inflation control, and business investment environment improvement will be an important foundation to both attract and promote investment.
“These will be big drivers for Vietnam’s economic growth in 2023, and the driving force for Vietnam’s M&A market to develop. The recent slowdown of such activities in Vietnam is expected to be short-term and will recover soon. The market in the country has always been assessed as a safe and attractive market to activate new opportunities,” Phuong said.
Dr. Nguyen Cong Ai, Deputy General Director at KPMG Vietnam, foresees three drivers of M&A expansion in 2023 and 2024. He pointed particularly to the sustainable energy development trend gaining increasing traction in Vietnam, and the country’s wave of digital change and innovation. The middle class is also growing quickly, creating a promising consumer market. Therefore, investors with adequate funds will soon be able to purchase attractive projects at reasonable prices. Ai believes that when interest rates rise and liquidity decreases, foreign investors will contribute more than ever before.
On the same note, Dr. Le Duc Khanh, Investment Capability Development Director of VPS Securities Joint Stock Company agrees that many businesses are facing difficulties, forcing them to restructure or liquidate valuable assets. Therefore, 2023 will likely be a hectic year for M&A in the finance, real estate, technology, science, consumer goods, and retail industries.
According to economists, numerous new investors will enter the Vietnam M&A market. Middle Eastern investment institutions, for example, seeking to alter the economic structure and reduce reliance on oil, are supporting investments in startups and renewable energy. Therefore, investors from the Middle East will invest in developing nations with high growth rates, such as Vietnam.
Future M&A in Vietnam will be primarily focused on digital transformation, clean energy, the consumer market, and ESG (environment, social, and governance) awareness.
Ngan Thuong LINK
Henig: Việt Nam wrestles with labour productivity issue when heading to innovation-based development
February, 07/2023 – 08:50
Rasing labour productivity is key to Việt Nam’s sustainable development strategy by 2030.
*Võ Trí Thành
Việt Nam achieved and exceeded 14 out of 15 targets assigned by the National Assembly for 2022 with many impressive numbers including GDP growth, export turnover and the number of newly-established and re-opened businesses. Only labour productivity was under expectations.
Việt Nam’s labour productivity was expected to increase by between 4.7 per cent and 5.2 per cent on average in 2022, higher than the average growth rate of 4.7 per cent in 2021 but behind the target of 5.6 per cent set for the whole of 2022.
On January 10 this year, the Government issued Resolution No 06/NQ-CP on the development of a modern, efficient, sustainable and integrated labour market serving quick socio-economic recovery, setting the average labour productivity target for 2023 at more than 6.5 per cent.
Labour productivity is an important economic indicator that is closely linked to economic growth, competitiveness and living standards within an economy. According to International Labour Organisation (ILO), labour productivity represents the total volume of output (measured in terms of Gross Domestic Product, GDP) produced per unit of labour (measured in terms of the number of employed persons or hours worked) during a given time period. This indicator provides general information about the efficiency and quality of human capital in the production process.
Paul Krugman has said: “Productivity isn’t everything, but in the long run it is almost everything.”
After more than 35 years of implementing Đổi Mới (Renewal) policy, Việt Nam has made remarkable achievements in socio-economic development. The economy has continuously grown positively for many decades, averaging 6.8 per cent during 2016-19. Even in challenging times due to the COVID-19 pandemic, Việt Nam’s economy still maintained positive growth.
Despite 2022 being a tumultuous year for the world economy, Việt Nam’s economy still grew by over 8 per cent, the highest pace since 1997.
The process of renovating the growth model has also witnessed important initial results towards gradually reducing dependence on the exploitation of natural resources, raw exports and cheap labour and slowly turning to the strong application of science, technology and innovation.
The Vietnam 2035 Report (World Bank, 2016) emphasises Việt Nam’s aspirations of modernity, industrialisation and a higher quality of life on “three pillars: balancing economic prosperity with environmental sustainability, promoting equity and social inclusion, and bolstering the state’s capacity and accountability. The rapid growth needed to achieve these aspirations will be sustained only if it stands on faster productivity growth and reflects the costs of environmental degradation.”
In its draft project on the national programme on increasing labour productivity to 2030, the Ministry of Planning and Investment in December 2022 pointed out Việt Nam’s labour productivity improved relatively quickly and continuously in the period of 2011-21, increasing 2.5 times from VNĐ70.3 million (US$3,004) per employee in 2011 to VNĐ172.8 million ($7,385) per employee in 2021. The average growth rate of labour productivity in 2011-20 reached 6 per cent. However, the growth rate was not stable and has shown signs of slowing down.
In 2020 and 2021 when Việt Nam was hit hard by the COVID-19, Việt Nam’s labour productivity grew by 5 per cent and 3.8 per cent, respectively. World Bank data shows that although Việt Nam’s labour productivity has improved relatively quickly in the 2011-21 period, it is still low compared to other countries in the region in absolute terms.
By 2021, Việt Nam’s labour productivity reached $18,792, equivalent to 10.25 per cent of Singapore, 14.20 per cent of Brunei, 24.32 per cent of Japan, 22.67 per cent of South Korea, 33.02 per cent for Malaysia and 59.15 per cent for Thailand. In Southeast Asia, Việt Nam’s labour productivity is only higher than that of Laos, Cambodia, Myanmar and East Timor. In addition, the Asian Productivity Organisation Report (APO, 2020) also shows that Việt Nam’s labour productivity lags by 60 years behind Japan, 40 years behind Malaysia and 10 years behind Thailand.
Việt Nam has searched for solutions to boost labour productivity quickly and sustainably. However, the pandemic in the past three years has significantly affected the implementation of this task.
The report on the evaluation of the five-year socio-economic development during 2016-20 and the tasks for the next five years recognised: “Science, technology and innovation have yet to become a driving force to improve labour productivity, competitiveness and promote socio-economic development. Labour productivity remains much lower than in other countries in the region and the gap continues to widen.”
Most recently, the 2022 Global Innovation Index Report of the World Intellectual Property Organisation (WIPO) ranked Việt Nam at 48th out of 132 countries and economies, a slip of four places compared to 2021, although it was still among the group that has made the greatest progress over the past decade and was one of only three middle-income economies (along with Iran and the Philippines) to have the highest innovation performance in 2022.
The Government’s leader Phạm Minh Chính has affirmed that increasing labour productivity is an important factor to improve the competitiveness, independence and self-reliance of the economy. Việt Nam’s labour productivity has improved significantly but not fast enough to close the gap with other countries in the region.
Prime Minister pointed out the main reasons including inadequate awareness and investment for this task while the quality of human resources is still limited. The growth rate of trained workers, especially those with degrees and certificates, is still low along with backward technology and unreasonable economic structure.
The Government is expected to approve the MPI’s proposal on the National Programme on increasing labour productivity to 2030 with some key targets including raising the average labour productivity growth by 6.5-7 per cent/year, of which the growth rate of the processing and manufacturing industry is 6.5-7 per cent/year; of agriculture, forestry and fishery at 7-8 per cent/year; of service sector at 7-7.5 per cent/year; the labour productivity growth rate of key economic regions and five centrally-run cities is higher than the national average labour productivity growth rate in the 2022-30 period.
The project also targets to increase the proportion of contributions of science, technology, and innovation to the growth of total factor productivity (TFP) to 45 per cent of GDP by 2025 and 50 per cent by 2030.
By 2025, investment in science and technology will reach 1.2-1.5 per cent of GDP. By 2030, the number of enterprises meeting the criteria of science and technology enterprises and the number of innovative start-ups will increase by two-fold compared to 2020; the rate of enterprises having innovative activities reached 40 per cent of the total number of enterprises.
In terms of international standards, Việt Nam will strive to be listed in the top 40 countries ranked by the Global Innovation Index by 2025 and the top 60 of the United Nations e-Government Development Index (EGDI). It will also strive to be in the leading group of ASEAN in terms of labour productivity growth by 2030.
To realise these goals, besides many solutions such as improving the business investment environment to attract both foreign and domestic investment in high-added value industries, enhancing the competitiveness of industries, and developing regional economic linkage, the policies should focus on two key areas – the quality of human resources and promoting science and technology, innovation and digital transformation.
Việt Nam needs to build a strategy for developing human resources to meet the requirements of the Industry 4.0 and digital transformation through completing mechanisms and policies for labour market development towards greater flexibility and integration through strengthening employment services to connect workers with employers and standardise vocational training qualifications according to national and international vocational skills standards.
The country should develop mechanisms and policies to attract overseas Vietnamese experts, intellectuals and workers to return to work in Việt Nam, participate in innovation activities, cooperate in capacity building and improving labour productivity in Việt Nam, expand the network of links and promulgating policies to encourage the use of Vietnamese talents abroad.
With regard to innovation, the policymakers are expected to amend and supplement legal documents related to science, technology and innovation to remove difficulties and create a favourable environment for businesses, especially small and medium enterprises to innovate, perfecting the policy of socialising investment resources for scientific research, technology development and innovation, promote the policy of commercialising research results, technology development and improvement. VNS LINK
