Day: September 21, 2022

The textile and garment industry’s local procurement reached a record high rate of 57 % in the first eight months of this year, approaching the target of 60% set for 2025, Le Tien Truong, chairman of the Vietnam National Textile and Garment Group (Vinatex), said.

 

He added that this is a big improvement as the rate had remained at around 50% for a long time.

 

Vinatex’s report also revealed that the whole industry’s export revenue between January and August was worth 30.2 billion USD, a rise of nearly 20% over the same period last year and the highest growth rate of the past decade. It was estimated that the industry ran a trade surplus of around 17 billion USD in the eight months.

 

Truong said that among textile and garment exporting countries, Vietnam was the earliest to ease restrictions for normal operation after the COVID-19 pandemic compared to Bangladesh, India and China, which enabled the country to grab the opportunity to promote garment exports.

 

However, challenges remain for the rest of the year, he said.

 

He pointed out that other exporting countries are also applying similar policies to promote post-pandemic recovery and resume normal production and business. Meanwhile, global demand is declining on the global economic slowdown and rising inflation.

 

Vinatex forecast that the average export revenue will decrease to 3.1-3.2 billion USD per month in the four remaining months of this year, compared to the average of 3.8 billion USD per month from January to August.

 

Truong said that the textile and garment industry hopes to receive the Government’s support in terms of tax and credits.

 

In the medium and long term, he said that Vinatex will invest in promoting a green and circular economy, adding that the investment will be large, however.

 

The Vietnam Textile and Apparel Association said that Vietnamese garment and textile enterprises face fierce competition from other major exporters in China, Bangladesh, India and Turkey, in markets with free trade deals, with the rule of origin from yarn and fabric onward being a weakness of Vietnam’s garment industry which has to import 80% of fabrics to produce garments for export.

 

Statistics showed that, on average, Vietnam spent around 2 billion USD on importing raw materials, mainly from China.

 

Besides, importing countries are also increasing product criteria. The Vietnam Trade Office in Sweden recently said that the EU and other Nordic countries such as Norway and Iceland are requiring the textile and garment industry to develop more sustainably and circularly.

 

These countries set stricter requirements for natural and synthetic fibres, which must be organic, recycled or of biological origin. For example, the cotton used in Nordic eco-labelled clothing must not be genetically modified, wholly organic or recycled.

 

Some Vietnamese firms were investing in research and development of raw materials to reduce the dependence on imported materials, but the supply remained limited.

 

The association urged the development strategy for the textile and footwear industries to 2030 with a vision to 2035 to be approved early to create conditions for the formation of large industrial parks with the concentrated wastewater treatment system, advanced technologies, and green technologies to attract investment in textile and dyeing.

 

The association said that this will help tackle the bottlenecks in the fabric supply for garment export and meet origin requirements for tax incentives from free trade agreements.

 

The Ministry of Industry and Trade said it is important to raise solutions to encourage technology renovation for the weaving and dyeing industry and build a support industry for the garment industry.

 

The focus should be on attracting investments in treating wastewater and establishing production chains.

 

Source: Vietnam News Agency

 

A recent strong influx of foreign direct investment (FDI) to Vietnam has prompted the government to design long-term policies and create a favourable and transparent environment for foreign investors to operate in a long term in the country, according to experts.

 

Statistics from the Ministry of Planning and Investment showed that 35-40% of the total FDI capital injected to underway projects in Vietnam are poured to those in industrial parks (IP) and economic zones (EZ). The rate in the manufacturing-processing sector is up to 80%.

 

Deputy Minister of Planning and Investment Tran Quoc Vuong said that Vietnam is eying a “golden chance” to attract a new FDI wave, especially to IPs and EZs.

 

To date, 61 out of the 63 cities and provinces have had IPs and EZs, with a total 403 IPs, 18 coastal EZs and 26 border EZs.

 

The IPs and EZs are destinations for large-scale firms such as Samsung, Panasonic, Boeing, Canon, LG, Sumitomo, Foxconn, and VSIP.

 

Micheal Vu Nguyen, Boeing country director in Vietnam, said that the firm’s production value in Vietnam has reached 200 million USD. He expressed his hope that the Vietnamese Government will continue to maintain open, flexible and effective policies for major suppliers in the aviation sector, enabling them to make more investment in Vietnam.

 

Experts held that Vietnam is currently a favourable destination for investors thanks to its political stability, fast post-pandemic recovery, ensured macro-economic balances and controlled inflation, along with good infrastructure system and the country’s engagement in a large number of free trade agreements (FTA).

 

Vu Tien Loc, President of the Vietnam International Arbitration Centre (VIAC), held that the FDI has benefited Vietnam in many ways, prompting the country to speed up economic restructuring and growth model reform, and improve its institution, legal policies, business environment and market economy development.

 

Nguyen Anh Tuan, Vice Director of the Foreign Investment Agency, said that despite COVID-19 impacts, foreign investment activities in Vietnam are still bustle, benefiting industrial sector, especially supporting industries, as Vietnam is prioritising FDI projects in the fields of high technology, supporting industries, renovation and digital economy, creating favourable conditions for local firms to join global value chain.

 

Source: Vietnam News Agency

The recovery and development of the food and beverage (F&B) market post-COVID-19 is providing opportunities not only for domestic companies but also those from the United Kingdom (UK), especially after the success of the UK-Vietnam Free Trade Agreement (UKVFTA).

 

After all COVID-19 restrictions were lifted and lives returned to normal, domestic consumption demand has rebounded, becoming the driving force to help the F&B industry grow again.

 

According to a report on socio-economic performance in August by the General Statistics Office of Việt Nam, the total retail sales of consumer goods and services were estimated at VNĐ481.2 trillion (US$20.3 billion), up 0.6 per cent month-on-month and 50.2 per cent over the same period last year. The result was much better in scale and growth rate than that of the same period in previous years before the outbreak of COVID-19.

 

For the first eight months of the year, the total retail sales of consumer goods and services were forecast to increase by 19.3 per cent on-year to nearly VNĐ3.7 quadrillion.

 

In the same period last year, that was down 3.5 per cent, if we exclude a gain of 15.1 per cent in prices, the total retail sales of consumer goods and services decreased by 5.1 per cent.

 

Last year, the total value of food and beverage consumption was estimated at VNĐ816 trillion, a 10.5 per cent increase year-on-year, contributing about 13 per cent to GDP, according to Statista. Spending on F&B accounted for the highest proportion in the monthly spending structure of consumers, which is about 35 per cent of total consumption expenditure, a survey made in 2018 by the Vietnam Report showed.

 

Experts said that even though the inflation pressure is still lingering for the rest of the year, prices of domestic commodities are basically under control, helping to gradually increase volumes of consumer goods in the future.

 

The research firm Business Monitor International said that total household spending in Việt Nam tends to inch higher during the 2022–2025 period. Domestic consumers will maintain their strong purchasing power for essential items, including food and beverages.

 

A report from market intelligence and advisory firm Mordor Intelligence showed that the country’s F&B industry will achieve a compound annual growth rate of 8.65 per cent during 2021–2026.

 

In the first half of the year, many enterprises in the F&B industry, including dairy producer Vinamilk and Masan Consumer Holdings under Masan Group, recorded outstanding business results in terms of revenues and profits in both domestic and international markets.

 

This opens up a huge opportunity for UK food and beverage products to expand their presence in the Vietnamese market, especially under the UKFTA.

 

Under the deal, most food and beverage product tariffs will be gradually eliminated over 2–9 years. Some products may use a tariff quota, which brings tariff rates to 0 per cent for approved exporters as part of a pre-determined quota.

 

The reduction in tariffs under the UKVFTA secures a significant market advantage for UK exporters.

 

F&B products that Việt Nam imports most from the UK are beverages (mostly wine and spirits), fish and crustaceans, products of the milling industry, preparations of cereals, flour, starch, or milk and dairy produce. Việt Nam’s most favoured nation (MFN) rates on F&B products are between 3-60 per cent.

 

Economist Võ Trí Thành said that the UK’s F&B companies have two advantages in the Vietnamese market.

 

“The first advantage is that the UK’s F&B products have had more chances to reach Vietnamese consumers since the EU-Vietnam Free Trade Agreement (EVFTA) came into effect, because it hadn’t left the bloc at that time,” said Thành.

 

This helps Vietnamese consumers get familiar with the tastes and flavours of the UK’s F&B goods.

 

In addition, in the past ten years, Việt Nam’s wine-drinking culture has boomed, especially in big cities like Hà Nội and HCM City. So, with market accessibility, tariff preferences, and higher demand, imports of the UK’s F&B commodities will definitely increase, the economist added.

 

“In fact, the UK has a traditional alcohol line that Vietnamese people have come to favour, which is whiskey. This is also a positive point,” Thành said.

 

Irish whiskey and Scotch whisky are two of the UK geographical indications (GIs) protected under the treaty.

 

However, Thành emphasised that the Vietnamese F&B industry is very competitive.

 

“Take wine as an example. Many countries in the world can produce wine and become well known thanks to it. Secondly, the taste of Vietnamese people has not completely formed according to a standard taste, so it is quite a challenge for marketing and advertising,” he said.

 

Source: Vietnam News Agency

 

Increasing domestic supply of raw materials is among the highest priorities for the development of Việt Nam’s livestock feed industry in the future, said policymakers and industry experts.

 

In recent decades, the overreliance on imported raw materials has been identified as a major shortcoming of the industry. The country’s fast-expanding livestock sector has a huge demand for feed, one that domestic producers could only meet just over 40 per cent.

 

The Southeast Asian country imported 22.3 million tonnes of raw materials, with a large part made up of corn and soybean oil, worth of US$10 billion in 2021 alone.

 

Increasing domestic supply, however, will likely prove to be a tall order, which requires solid groundwork and meticulous plans from both the Government and producers.

 

Võ Quang Nhân, head of the marketing department at Woosung Việt Nam JSC., a large producer in southern Việt Nam with an extended distribution network in the Mekong Delta, said the industry has been struggling with rising prices and on-and-off supply of raw materials as a result of disruption in the global market.

 

In the last few years, Woosung has been working around the clock to find domestic suppliers among the country’s many agricultural hubs as a way to compensate and lessen the reliance on imported raw materials.

 

However, Nhân said a key priority for major feed makers was a stable supply of standardised input, which remains a challenging task for small-and-medium-sized suppliers to pull off.

 

Similarly, CP Việt Nam, the country’s leading livestock supplier, said they have been in talks with over 300 domestic suppliers across the country. A CP Việt Nam spokesperson said the country views domestic suppliers as a key component of and the cornerstone for a sustainable supply chain.

 

In a recent meeting with the local authority of southern Đồng Nai Province, Dutch feed maker De Heus said the corporation considered the development of Vietnamese suppliers a must-do to ensure a sustainable supply chain.

 

Industry experts have long voiced concerns over the industry’s overreliance on imported materials, which renders it particularly vulnerable to market shocks.

 

Dr Chế Minh Tùng from HCM City University of Agriculture and Forestry said feed alone could account for up to 80 per cent of livestock costs yet the country has not been able to produce many key components that made up its animal feed portfolio.

 

In order to reduce reliance on imported raw materials and develop a sustainable supply chain, the country must start planning, with significant support from the Government, for production centres. Measures must also be taken to boost investment, both from domestic and international businesses, in the industry.

 

Source: Vietnam News Agency

 

The Asian Development Bank (ADB) has maintained its favourable economic outlook for Vietnam as it forecasts the country’s gross domestic product to expand 6.5% in 2022 and 6.7% in 2023, based on the update of its flagship economic report released on September 21.

 

ADB Country Director for Vietnam Andrew Jeffries commented that Vietnam’s economy recovered faster than expected in the first half of 2022 and continues to grow amid the challenging global environment.

 

The steady recovery was supported by strong economic fundamentals and driven by a faster-than-expected bounce back of manufacturing and services, he held.

 

The Asian Development Outlook (ADO) Update 2022 says Vietnam’s economy is performing reasonably well amid uncertainties in the global economy. Restored global food supply chains will boost agriculture production this year, but high input costs will still constrain the recovery of the agriculture sector, it said.

 

Softening global demand has slowed manufacturing. The manufacturing purchasing managers’ index in August softened to 52.7 from 54.0 in June. However, the outlook for the manufacturing sector remains bullish given strong foreign direct investments in the sector.

 

Fully normalised domestic mobility and the lifting of COVID-19 travel restrictions for foreign visitors will support a robust rebound in tourism in the second half of the year, driving the growth of the services sector, the report said.

 

Increasing inflation in the US and the European Union has heightened inflationary pressure in the country. However, Vietnam’s prudent monetary policy and effective price controls, especially for gasoline, should keep inflation in check at 3.8% in 2022 and 4.0% in 2023, unchanged from the projection made in April’s Asian Development Outlook.

 

The country’s economic outlook continues to face heightened risks. The global economic slowdown could weigh on Vietnam’s exports. Labour shortage is expected to weigh on the fast recovery of the services and labor-intensive export sectors in 2022.

 

The slow delivery of planned public investment and social spending, especially the implementation of the government’s Economic Recovery and Development Programme, can slow growth this year and the next, the report said./.

 

Source: Vietnam News Agency

Representatives of some 200 companies and associations gathered at Industry Innovation Forum 2022, themed “Smart Manufacturing”, held by the Board of Management of Saigon Hi-tech Park (SHTP) in Ho Chi Minh City on September 20.

 

It is the first time the forum has been organised, said Nguyen Anh Thi, head of the SHTP Board of Management.

 

It will be made an annual event for enterprises and experts to share experience and strengthen connectivity and partnership in accelerating innovation in industry in Vietnam, he noted, adding that this, therefore, will enable improved productivity and optimise operating costs and efficiency in use of resources.

 

Innovation and application of technology in production remain a major challenge for enterprises not only from Vietnam but globally, Thi said, emphasising that Vietnam can import technology but not innovation.

 

Vietnam sets to be among the world’s top 40 performers in the Global Innovation Index (GII) by 2030. It also aims to expand 5G coverage to the whole country and have the digital economy account for more than 30% of its GDP by the end of this decade.

 

It is seeking to develop a number of priority sectors, namely information technology, electronics-telecommunications, cyber security, smart manufacturing, finance-banking, e-commerce, digital agriculture, e-tourism, digital culture, health care, education and training.

 

During the forum, experts and business representatives discussed the prospect of industrial manufacturing in Vietnam and shared experience in leveraging technology to innovate the industry and maintain a leading position.

 

Last year, Vietnam’s digital economy hit 21 billion USD, a year-on-year surge of 31%, making up 5% of the GDP. Google, Temasek Holdings and Bain & Co. forecast that the Vietnamese digital economy will enjoy an annual growth of 29% to reach 57 billion USD in 2025.

 

Source: Vietnam News Agency

Good packaging can extend the storage life of agricultural produce and improve brand recognition, but not many firms are aware of such benefits.

 

Nguyễn Minh Tiến, director of the Vietnam Trade Promotion Centre for Agriculture, asserted that good packaging can protect and buffer a product from potential harm during warehousing and shipping. It also helps firms boost brand awareness and drive buying behaviours.

 

In Việt Nam, the packaging of many products, including coffee, cashew and rice, involves the use of PP woven bags whereas some others require specific types such as water-proof PE-layered bags.

 

As consumers become increasingly design-conscious, their demand for eye-catching packaging rises. It is essential to develop new types of bags that create an emotional connection between products and consumers.

 

Environmental concerns should also be taken into account since consumers are shifting their buying behaviour towards sustainability. It is equally important to replace plastic bags with degradable paper-based bags.

 

Nguyễn Ngọc Sang, chairman of the Vietnam Packaging Association (VPA), noted that packaging has reached a total global value of US$500 billion with an annual growth rate of 12 per cent. The rate tops 13 per cent in Việt Nam with over 4,500 bag manufacturers.

 

Bag manufacturing is not an easy task as consumers increasingly insist on higher standards for the product. Packaging bags need to be budget-friendly and attention-grabbing at the same time. Additionally, durability must come with environmental friendliness.

 

“Packaging should be smart to convey product information to consumers more easily,” he added.

 

The chairman called for the use of bags to not only be eye-catching but also informative, which display in-depth information about local cultures.

 

A representative from Malu Design remarked that many global environmental campaigns, including Earth Hour and Make The World Cleaner, have become prominent in recent years, attracting a large number of participants.

 

A greener mindset has had a significant impact on buying habits. Notably, green bags have become a global trend and bans on plastic bags have been the order of the day in numerous countries.

 

In the US, San Francisco was the first city to put an end to plastic bags in large shops, reducing 1.4 million tonnes of plastic waste per year. In South Africa, the use of plastic bags could incur a fine of up to US$13,800. China followed suit in 2008.

 

“Plastic bags are cheap, convenient to use and familiar to consumers, yet detrimental to the environment and human health. Many bag manufacturers have switched to green ones,” he said.

 

Huỳnh Thị Thu Hằng, a VPA expert, underscored several characteristics that agricultural producers should be mindful of when they design packaging. She said the bags should be unique, eco-friendly, eye-catching, recyclable and connected with Vietnamese cultures.

 

Each bag of agricultural produce should contain a couple of smaller bags inside for food safety. The smaller bags should be designed in a way that they can be easily put into a gift box packed with items of different kinds.

 

Source: Vietnam News Agency