Day: August 5, 2021

Record-high sea freight rates have seen shipping companies produce positive second-quarter earnings reports.

The VN-Index gained 41.22 points last week, or 3.25 percent to close at 1,310.05 points after three consecutive weeks of decline. Total trading value on the Ho Chi Minh Stock Exchange (HOSE) fell 7.3 percent to 84.9 trillion VND (3.7 billion USD).

Shares of the Hai An Transport & Stevedoring JSC (HAH) increased 12.06 percent, Vinaship JSC (VNA) rose by 11.17 percent, Duyen Hai Multi Modal Transport JSC (TCO) 6.98 percent, Vietnam Ocean Shipping JSC (VOS) 6.29 percent, Petrovietnam Transportation Corporation (PVT) 5.11 percent and Pacific Petroleum Transportation JSC (PVP) 4.17 percent.

In the second quarter, the Hai An Transport & Stevedoring JSC (HAH) recorded a 72 percent increase in net revenue compared to the same period last year, reaching 449.3 billion VND with a net profit of 97.7 billion VND, up 150 percent.

In the first six months of the year, HAH’s revenue reached 808 billion VND and post-tax profit recorded more than 183.2 billion VND, up 49 percent and 161 percent, respectively. With this result, HAH only fulfilled 49 percent of its revenue target but surpassed its profit target by 16 percent.

The Petrovietnam Transportation Corporation (PVT) also reported Q2 revenue of 1.87 trillion VND, a slight increase over last year. Post-tax profit rose by 8 percent to 256.5 billion VND. In the first half of this year, PVT collected 3.6 trillion VND in revenue, completing 60 percent of its yearly plan and 438.9 billion VND in post-tax profit, exceeding 8.6 percent of its yearly plan.

The net revenue of the Vietnam Ocean Shipping JSC (VOS) decreased slightly compared to the same period last year, reaching 325 billion VND, but post-tax profit was 242 billion VND. During the same period last year it suffered a loss of 32 billion VND.

In six months, VOS recorded revenue of 580 billion VND, down 15 percent year-on-year and fulfilling 47 percent of the yearly revenue target. Post-tax profit reached 222 billion VND, 7.4 times higher than the yearly plan, while in the same period last year it lost 118.2 billion VND.

Last week, shares of the Seagull Shipping Company (SSG) increased by 25.93 percent, from 5,400 VND per share to 6,800 VND per share. In the June 9 session, SSG suddenly hit the daily limit rise of 12.5 percent, starting a series of rising prices in the sessions that followed. Since its listing so far, SSG has increased by 183.3 percent.

At the annual general meeting of shareholders in 2021, the company submitted a business plan to shareholders with total annual transportation revenue of 23.4 billion VND and an after-tax loss of 200 million VND. However, 32.85 percent disagreed and asked the company to adjust revenue to 24.9 billion VND and post-tax profit to 1.3 billion VND. SSG has adjusted the plan accordingly, but so far the company has not announced its second quarter results.

Shares of Transport And Chartering Corporation (VFR) also increased by 20.45 percent during the week, rising from 4,400 VND per share to 5,300 VND per share.

Recently, VFR announced Q2 revenue of 37.4 billion VND, down slightly over the same period last year. Post-tax profit still reached 7.8 billion VND while in the same period last year it lost 7.4 billion VND.

In the first six months, VFR’s net revenue reached 78.6 billion VND, down 5.1 percent year-on-year. Post-tax profit was 1.3 billion VND while it lost 21.9 billion VND last year.

Shares of Transportation and Trading Services Joint Stock Company (TJC) also recorded growth of 17.02 percent last week.

In the second quarter, TJC’s net revenue reached 33.8 billion VND, up 42 percent, post-tax it was 3.1 billion VND. In the first six months, the company recorded revenue of 62.9 billion VND, up 22.1 percent. Post-tax profit reached 4.7 billion VND, 899 times higher than the same period last year. With the yearly target of pre-tax profit of 2.5 billion VND, the company has exceeded its plan for the whole year.

Since July 2020, sea freight rates worldwide have begun to increase sharply.

According to The Vietnam Maritime Administration, the sea freight rate (including surcharges) from Vietnam to the US for the highest 40 feet container is 14,250 USD per container, the lowest is 8,000 USD per container. So far, there have been at least four upward adjustments, 14 times higher than at the beginning of 2020.

The World Shipping Council (WTC) previously said that it would be difficult to determine when shipping costs will peak as global demand has not yet fully recovered.

SSI Research said that there were many factors affecting the shipping market. Some factors were temporary while others were quite long-term and will not change anytime soon.

“This means that an escalation of short-term factors could push freight rates to new highs, but are not sustainable in the long-term,” it said.

Accordingly, SSI forecasts that freight rates may peak in the fourth quarter of 2021, then adjust slightly in the first half of 2022.

“Freight rates may decrease significantly in 2023 when the supply of new ships comes into operation, but will maintain a higher level than before the COVID-19 pandemic as carriers gain more experience in supply management and increase cooperation,” it said.

Source: Vietnam News Agency

The COVID-19 pandemic not only creates challenges for banks, but also pushes them to foster digital transformation to survive, experts have said.

A recent survey by the State Bank of Vietnam found that 95 percent of credit institutions in Vietnam have either implemented digital transformation strategies or are in the process of formulating them.

It is expected that in the next three to five years digital-only banks will have revenue growth of at least 10 percent, while regular lenders will have more than 60 percent of customers using digital transaction channels.

State-owned banks seek to digitise their entire system, while smaller banks have identified certain areas to improve service quality and the customer experience.

Commenting on digital banking development in Vietnam at an online talkshow IDG TekTalk on August 3, Phan Viet Hai, director of information technology and also the digital banking centre at Viet Capital Bank, said digital banks must create a superior customer experience by changing the way services are provided using technology.

Nguyen Quang Minh, deputy CEO, partnerships, Timo Digital Bank, said, “In addition to offering perfect and up-to-date financial products and services, we also have to really understand the market, customers’ needs and expectations and more importantly, identify the problems and difficulties they are facing every day in each transaction.”

Pham Quang Minh, general director of Mambu Vietnam, said banking services have changed greatly in the past few years. In Asia, including Vietnam, rising customer expectations for online and mobile banking services are the driving force behind the digital transformation of financial service providers.

Nguyen Van Tuan, deputy general director of VCCorp & founder of Bizfly Digital Transformation, said currently banks are not only competing with each other but also with rapidly growing fintech companies, which have created “amazing” services and experiences through digital technology and transformation.

For succeeding at the digital transformation, the determination shown by a bank’s bosses plays an important role, he said.

“Technology contributes only around 30 percent to the success with the remaining 70 percent being owed to other factors like the mindset of businesses’ leaders and digital transformation,” he added.

According to experts, banks still face challenges in digital transformation related to regulations on electronic transactions, data sharing, network security, and an inadequate legal framework among others.

They said completing a comprehensive legal framework would provide a fillip to digital transformation.

The standardisation of technical infrastructure is also very important to facilitate interconnection and seamless integration between the banking industry and others to form a digital eco-system, they added.

Yeo Siang Tiong, cybersecurity company Kaspersky’s general manager for Southeast Asia, said: “Digital transformation, in any sector, always presents new challenges, but especially for banks and for financial services. To put it simply, revolutionising banks’ way of doing transactions means overhauling their legacy systems including people, processes and technologies.”

Humans remain the weakest link, especially those who lack proper awareness of the simplest risks like phishing and spam, while employees require new training and third-party services should be assessed comprehensively, he said.

“When it comes to security, the endpoint should be the foundation and banks should have known this by now. Financial services should be looking at an adaptive approach in security, which should be proactive rather than reactive – ready before an attack happens.”

Online transaction increases

Due to social distancing restrictions amid the pandemic, online payment has become more convenient than cash, and, with just a smartphone and banking application, users can save, borrow money, pay for electricity, water, television, and internet bills, buy movie and airplane tickets, make hotel reservations, or even buy vegetables or meat online.

Pham Tien Dung, head of the State Bank of Vietnam’s payment department, said online transactions in the first four months of the year jumped by 66 percent in terms of numbers and 31.2 percent in value year-on-year, including 86.3 percent and 123.1 percent on mobile phones and 95.7 percent and 181.5 percent using QR codes.

Statistics from the National Payment Corporation of Vietnam, show that in the first five months its automatic clearing house processed over 800 million transactions worth over 8 quadrillion VND (347.7 billion USD), an increase of 113 percent and 169 percent.

A recent survey by Visa also revealed strong increases in the use of e-wallets, contactless payment via cards and smartphones and QR Code. The year-on-year growth rate of the total e-commerce transaction value in the first quarter of 2021 rose by 5.5 times compared to the fourth quarter of 2020.

Source: Vietnam News Agency

Joining in new-generation agreements like the European Union-Vietnam Free Trade Agreements (EVFTA) and the Comprehensive and Progress Agreement for Trans-Pacific Partnership (CPTPP) has brought great economic benefits to Vietnam, according to the Ministry of Industry and Trade (MoIT).

Last year, export turnover of Vietnamese goods to the European market and CPTPP member countries reached more than 40 billion USD and 38.7 billion USD, respectively.

These figures were revealed by the MoIT in a report on the implementation of the CPTPP and the EVFTA which has been submitted to the Prime Minister, the Tuoi Tre (Youth) newspaper reported.

The ministry said that exports to the European Union and CPTPP countries still achieved positive results amidst the outbreak of the COVID-19 pandemic in 2020.

Accordingly, two-way trade between Vietnam and EU member countries obtained 55.4 billion USD, down 1.8 percent compared to that of 2019.

The country exported goods worth 40.1 billion USD to the EU, while it imported 15.3 billion USD, leading to a trade surplus of 24.8 billion USD last year with the bloc.

The biggest importers of Vietnamese goods among European countries include Belgium (2.3 billion USD), Germany (6.6 billion USD), the Netherlands (6.9 billion USD), France (nearly 3.3 billion USD) and Italy (3.1 billion USD).

According to the MoIT, goods with great export value to the EU inlude footwear, plastic products, rice, textiles and garment and farm produce.

Along with the export growth thanks to the EVFTA, Vietnam’s export turnover to CPTPP members also rose in 2020 compared to the previous year, it said.

Total import-export turnover between Vietnam and other CPTPP member countries reached 79 billion USD last year, an year-on year increase of 1.9 percent. Vietnam exported goods worth 38.7 billion USD to these countries and spent 40.3 billion USD on imports, resulting in a trade deficit of 1.6 billion USD last year.

The country enjoyed a trade surplus with some countries namely Canada and Mexico with a year-on-year rise of 11.8 percent and 12.1 percent, respectively.

Key products for exports to the CPTPP member countries are aquatic products, textile and garments, footwear, pepper, and wooden products.

Vietnam’s participation in new-generation trade agreements has helped the country attract more foreign direct investment (FDI), the MoIT said.

In 2020, FDI investment from CPTPP member countries into the country hit 11.6 billion USD, up 23.4 percent compared to that in 2019 while investment capital of EU enterprises into Vietnam stood at 1.4 billion USD, down 6.7 percent over the same period last year.

Despite the fact that Vietnamese businesses have initially taken opportunities from EVFTA and CPTPP, there still much room to improve.

According to a survey by the Vietnam Chamber of Commerce and Industry, only 29 percent of the enterprises that exports goods to CPTPP member countries have enjoyed preferential tariffs as regulated by the agreement.

Regarding to the EVFTA, only 38 out of 63 provinces and cities in Vietnam run import-export activities with EU countries.

Thus, it was necessary for Vietnamse enterprises to make more efforts to exploit the advantage of the new-generation trade agreements, the VCCI said.

Source: Vietnam News Agency

The Vietnam Manufacturing Purchasing Managers’ Index (PMI) ticked up to 45.1 in July from 44.1 in June, signalling a marked deterioration in business conditions across the sector for the second month in a row.

The latest survey from Nikkei and IHS Markit revealed on August 2 that the current wave of the COVID-19 pandemic in Vietnam has led to disruptions across the manufacturing sector during July. Rates of decline in output and new orders increased from the previous month and employment was down sharply amid reports of temporary company closures and social distancing restrictions.

Meanwhile, disruption was also felt in supply chains, with delivery times lengthening to the greatest extent in more than ten years of data collection. The rate of input cost inflation accelerated sharply, but efforts to secure orders meant that firms raised their selling prices at a relatively modest pace.

“Anecdotal evidence from manufacturers highlighted the impact that the latest COVID-19 outbreak has had on operations. Some firms have been forced to close temporarily, while others are having to operate with reduced capacity due to social distancing measures,” the survey stated.

These effects, alongside a marked drop in new orders, resulted in a further sharp reduction in manufacturing production at the start of the third quarter. The decline in output was softer only than those seen following the initial outbreak of the COVID-19 pandemic in March and April last year.

According to the survey, alongside lower total new orders, new business from abroad was also down. That said, the reduction in exports was softer than that seen for total new business amid some reports of improving demand in international markets.

Reduced workloads, temporary closures and limits on staff numbers due to social distancing requirements meant that employment decreased markedly for the second month running. While disruption to operations led to backlogs of work to build up at some firms, this was outweighed by a sharp drop in new orders. Overall, outstanding business decreased moderately.

Severe disruption to supply chains was noted in July, with the extent of delivery delays the most marked since the survey began more than a decade ago. Panellists linked longer lead times to difficulties with transportation both domestically and internationally due to the pandemic, as well as raw material shortages.

Manufacturers were also faced with surging input costs. The rate of input price inflation accelerated the fastest since April 2011. Higher costs for raw materials such as iron and steel, products imported from China and freight charges were all reported by respondents.

While some firms passed on these higher cost burdens to clients, others were reluctant to do so given a weak demand environment. As a result, the rate of output price inflation was much softer than that seen for input costs, suggesting pressure on profit margins.

Concerns around the ongoing impact of the pandemic meant that business confidence remained below the series average in July, although firms remained optimistic overall of output growth over the coming year.

Commenting on the latest survey results, Andrew Harker, Economics Director at IHS Markit, said: “The current wave of the COVID-19 pandemic is having a severe impact on Vietnamese manufacturers, according to the latest PMI data, with company closures and social distancing contributing to a steep drop in production. Rules are also limiting how many staff members can be on site at any time, further disrupting production lines.

“Added to issues with new orders and production, firms are also facing severe supply-chain disruption. Supplier lead times lengthened to an even greater extent than after the initial outbreak of the pandemic last year when price pressures surged.”

“The sector is likely to remain under pressure and struggle to generate growth until the outbreak can be brought under control, so it will be important to keep watching the COVID-19 case numbers for signs of improvement,” Andrew said.

IIP up nearly 8 percent

The General Statistics Office (GSO) reported Vietnam’s index of industrial production (IIP) rose by 7.9 percent year-on-year in July.

The rise was much higher than the 2.6 percent growth rate of the same period in 2020, but lower than the 9.4 percent rate of the same period in 2019.

Manufacturing recorded the largest gain in the first seven months of this year at 9.9 percent, against the 4.2 percent increase of the same period in 2020. The rise contributed 8.1 percentage points to the whole industry’s growth.

It was followed by an increase of 8.2 percent in power generation and distribution.

Water supply and waste treatment climbed 5.6 percent while mining and quarrying declined by 6.3 percent.

Source: Vietnam News Agency