KTFA: Vietnam: 

Henig:  Circular economy gains momentum back home

February, 21/2023 - 10:04

The circular economy would serve businesses well by enabling the efficient use of resources and facilitating their deeper involvement in the global supply chains.

HÀ NỘI — The circular economy has begun to gain traction in Việt Nam for its potential to optimise resource use, stabilise supply, and offer competitive advantage opportunities for businesses.

Phạm Minh Thiện, general director of Thanh Bình Company Ltd, revealed that his company's production process had been designed so that waste in one stage becomes fodder for another.

He said his company had bought land in the Tân Hồng region to grow a particular strain of rice, which can easily do without fertilisers, pesticides, and crop care. As such, the strain causes a minimal impact on the environment.

At harvest time, its straw is reused as a medium to grow mushrooms whereas its rice husk as a biomass fuel for export. Its rice bran is processed to produce bran oil and animal feed. The residue from this oil-making process is reclaimed to feed poultry.

"The global demand for these by-products is considerable. For instance, bran oil has become much sought after by Japanese traders," said Thiện.

The circular economy embraced by Thanh Bình Company Ltd has proved to be highly beneficial to its stakeholders, not only economically but also environmentally.

As a result of the sustainable farming practices, the soil cultivated by the company, which was contaminated previously by chemical substances, has been gradually improving in quality.

Nestlé Việt Nam Company Ltd is another name that has managed to incorporate the circular economy into its production. 

The company has put coffee grounds to good use by turning them into biomass, which is used to fuel its boilers. The ash left after the combustion will serve as a raw material for the production of bricks.

Coffee sludge is processed into microbial fertilisers to enrich the soil, whereas the steam from the boilers goes to the cooling towers for further reuse. Even the wastewater is not wasted: it will be recycled into A-standard clean water to close the production loop.    

Trần Thị Hồng Minh, head of the Central Institute for Economic Management, asserted that the circular economy would serve businesses well by enabling the efficient use of resources and facilitating their deeper involvement in the global supply chains.

She said the circular economy is no longer an option but an imperative for businesses because global customers have become more eco-conscious and willing to shift toward a more sustainable buying behaviour.

Vũ Kim Hạnh, chairman of the Association of Vietnamese High-quality Products, opined that the Government needs to take active steps to lay the groundwork for a broad-based transition to the circular economy.

The to-do list should comprise a long-term scheme for the transition and the entry into force of a sufficient number of legal documents that regulate the notion.

She also said the feasibility of the circular economy in the country would hinge on technological, institutional, infrastructural, and human resources factors.  

Nguyễn Thế Chinh, director of the Environmental Economic Policy Institute, underlined several obstacles in the way of businesses trying to embrace the transition.

The first obstacle involves advanced technology, which is not always readily accessible to a large number of businesses. Without advanced technology at their disposal, many businesses get stuck in their traditional linear way of production.

The second obstacle centres around the rigidity of domestic consumption habits. For instance, a wide range of consumers back home keep using plastic bags for their convenience and show a reluctance to shift gears, posing a setback for recyclable bags.

— VNS  LINK

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Henig: Cash flow waits to step in as interest rates fall

February, 20/2023 - 09:33

Banks’ reducing deposit interest rates is driving cash flow back to the stock market, but investors are advised to take a prudent approach.

HÀ NỘI - Banks’ reducing deposit interest rates is driving cash flow back to the stock market, but investors are advised to take a prudent approach.

The main factors that are expected to affect the market that investors need to pay attention to include inflationary pressure, exchange rates, the operation of monetary policy of the State Bank, interest rate fluctuations; risks associated with the corporate bond market; the first quarter business results reporting season as well as the 2023 shareholder meeting season.

The global stock market recently traded strongly as inflation in the US dropped rapidly and the Fed and other major central banks were entering the final stage of the interest rate hike cycle, while China is about to fully reopen the economy after a long blockade due to the COVID-19 pandemic.

Nguyễn Đức Anh, Director of Strategy and Macro, KB Securities Việt Nam, said that the recovery of the VN-Index in the three months before Tết was in line with macro changes. The risk of a deep correction from the current price range is not high, although profit-taking pressure may cause a strong shake-up.

Đinh Quang Hinh, Head of Macroeconomics and Market Strategy Department, VNDIRECT Securities Company, predicts that at the moment, many domestic macro factors are improving.

Exchange rate pressure has decreased significantly, leading to a strong return of foreign indirect investment inflows. Interest rates on government bonds have fallen sharply in the past month, which is an early indicator that the market interest rates for mobilisation and lending may soon be adjusted down.

Interest rates and exchange rates are always the factors that have a great impact on the trend of the stock market, when these factors improve, the pressure on the market is somewhat removed.

The market in the first half of 2023 still faces risks related to the decline in earnings of listed companies in the context of economic growth and slowing exports. In addition, difficulties in the corporate bond market and the real estate market have not been resolved.

According to VNDIRECT, macro factors are gradually improving, so it is less likely that the market will fall to a deeper bottom than the old bottom that was set in November last year around 900 points.

Bùi Văn Huy, Director of HCM City Branch, DSC Securities Company, said that the stock market might fluctuate to establish a medium-term bottom before forming a clear uptrend in the second half of this year. However, the zone of 950-980 points is a strong support zone, and is hard to be penetrated.

The market's deep correction, if any, is an opportunity to buy in, according to Huy.

In the scenario where the general market adjusts significantly at the current price range, new cash flow can confidently join in.

However, Đức Anh said that the recent increase in the market was consistent with the macro changes and it would be difficult for the VN-Index to have a deep correction if there were no new negative impact factors.

The group of information technology, securities and public investment industries would be in attractive valuation areas for investors to consider disbursing.

Since the beginning of 2023, the market has clearly diverged, some stocks surged to historic peaks such as Phú Nhuận Jewelry (PNJ), Vietcombank (VCB), while there were still stocks that moved sideways in low areas such as Novaland (NVL) and Phát Đạt Real Estate (PDR).

Nguyễn Tuấn Anh, founder of Finpeace, said the current cash flow was at a low average level and belonged to professional investors, partly reflected in the continuous net buying of foreign funds. The market showed signs of waiting for more positive information from listed companies, especially before and after the 2023 general meeting of shareholders to clearly see the direction of the business, as well as the next developments from macroeconomic policy.

“At the beginning of this year, investors can still follow last year's focused groups such as banks, insurance, and electricity. However, from the end of the second quarter of this year onwards, investors should focus on high-growth business groups such as technology, retail, retail banking, and securities. In addition, investors can pay more attention to the ability to grow revenue and market share," he said.

After a generally difficult period, the market often shows businesses that suddenly reaches a high position thanks to sudden improvements in technology and product upgrades. The 2023 General Meeting of Shareholders is the best place for investors to define the difference in the growth orientation of listed companies, from which they will have a closer look at the business to make suitable investment decisions.

VNS   LINK

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Henig:  Thai largest retailer to pour over 1.4 billion USD in Vietnam

06:12 | 21/02/2023

Central Retail Corporation (CRC), the largest retailer of Thailand, has announced its biggest investment in Vietnam at 50 billion baht (1.45 billion USD) in the 2023-2027 period to accelerate its market presence in the country.

According to CEO of CRC Yol Phokasub, the firm sees Vietnam as a high-potential market that posted continuous economic growth. With CRC's strong foothold in the country, it has set a five-year roadmap to continue its expansion there, allocating 50 billion baht over a five-year period. The Vietnamese retail market, valued 49.7 billion USD, is expanding 10-125 each year.

The CRC invested more than 10 billion baht to expand its retail business in Vietnam during 2012-2022. It has more than 340 stores with a total gross floor area exceeding 1.2 million square metres across 40 provinces.

Olivier Langlet, CEO of Central Retail Vietnam, said that the company recorded rapid sales revenue growth in the country, rising from 300 million baht (8.7 million USD) in 2014 to 38.6 billion (1.12 billion USD) in 2021.

He said that Vietnam's economy continues to grow despite uncertainties, with GDP growth expected to increase by 6.7% and 7.2% in 2023 and 2024, respectively, compared with 3.5% a year in Thailand over the next two years. This will make Vietnam Southeast Asia's fastest growing market, he said.

Central Retail Vietnam wants to grow its food business nationwide to reinforce its leading position in Vietnam's hypermarket segment by rebranding and renovating 10 GO! branches and expanding Tops market and Mini go! branches by adding 8-10 outlets to better serve the needs of local consumers, he said.

The company vows to strengthen its fresh food category and the non-food category to drive customer traffic via renovation, in addition to preparing for new branch launches in the future, he underlined.

He said the firm plans to renovate 10-12 branches of Nguyen Kim, an electrical appliance chain, and add 3-5 new branches, including stores in its GO! malls.

Source: VNA   LINK

Henig:  Businesses back CPTPP expansion

06:00 | 20/02/2023

(VEN) - Export-driven firms and online sellers in potential member countries see accession to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) as providing new e-commerce export opportunities and diversifying trade away from China. The CPTPP is one of the world's largest free-trade areas by gross domestic product (GDP).

In a 2020 survey of 269 Philippine and Republic of Korean (RoK) firms on their views about potential CPTPP accession, commissioned by a fellow at the Washington-based think tank Center for Strategic and International Studies, over 70 percent of exporters reported having heard about the CPTPP; of these, export-driven online sellers that already sell to the CPTPP market are especially enthused by CPTPP accession as a means to help secure new customers (45 percent), grow export sales (41 percent), diversify into new markets (39 percent), and sell more online (29 percent).

Philippine firms, in particular, believe that the agreement could also promote inbound and outbound investment. RoK firms are also enthusiastic about the CPTPP – even though the RoK already has 17 free trade deals that encompass 56 countries.

A substantial set – 43 percent of online seller-exporters and 29 percent of other exporters – also agree that it would be beneficial for their country to enter into a trade agreement that does not include China (as opposed to the 10-nation Regional Comprehensive Economic Partnership (RCEP) agreement, which both the RoK and the Philippines signed recently). While non-exporters in the RoK and the Philippines often do not know about the CPTPP, both non-exporters and exporters in these countries agree that the RCEP will not suffice for satisfying their growth aspirations. These data suggest that companies in prospective member countries are hungry for new agreements with better rules than the RCEP’s non-binding e-commerce provisions.

Advantages of membership

The UK, China and Chinese Taipei have already applied to join the 2018 agreement that brings together the Pacific Rim countries of Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, and Vietnam. These countries’ combined economies represent 13.4 percent of global GDP, making the CPTPP one of the world's largest free-trade areas by GDP.

The surveyed firms in the Philippines and the RoK – and especially small online sellers that use data intensively – regard the CPTPP’s e-commerce provisions such as free data transfer, ban on server localization, promotion of consumer privacy and protection, and liberalization of services as especially beneficial for their businesses. Some 47 percent of online seller-exporters see the CPTPP’s provisions on free data transfer across borders as “very beneficial” for their businesses; 37 percent see self-regulation among businesses to manage data as “very beneficial”; and 35 percent find the CPTPP’s ban on server localization and the ability to store their data where they wish as “very beneficial,” with another 37 percent seeing this as “somewhat beneficial.” The survey also suggests that firms see the CPTPP’s commitment to protecting consumer privacy and shielding consumers from spam as important to the growth of their e-commerce sales.

The CPTPP is emerging as an attractive trade deal for many countries around the world. The interest in joining is motivated by several reasons, including (1) the rise of China’s share in the import baskets of both CPTPP members and nonmembers; (2) in the UK’s case, by a drive to operationalize its post-Brexit “Global Britain” strategy; and (3) as the indicative survey data suggest, by interest on the part of firms in such member economies as the RoK and the Philippines in CPTPP’s deep liberalization and high-quality e-commerce provisions to open new markets, set clear rules of the game for digital trade, and preempt data localization.

Japan and other members are urging the US to join the deal, which would make the CPTPP a powerful counterweight to China, attract further members, and significantly advance US interests. However, the Biden Administration has so far avoided such a move.

Tuyet Minh   LINK

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Henig:  Bank race in attracting demand deposits cools down

February, 21/2023 - 10:21

The race to lure demand deposits, or current account savings account (CASA), among banks seems to be decelerating as it is more difficult for banks to attract the cheap capital source in the context of high interest rates on term savings.

HÀ NỘI — The race to lure demand deposits, or current account savings account (CASA), among banks seems to be decelerating as it is more difficult for banks to attract the cheap capital source in the context of high interest rates on term savings.

Demand deposits at banks are mainly from customers’ payment accounts. Previously, due to low interest rates on term deposits, a number of customers did not pay much attention to transferring idle money in their payment accounts to term deposit accounts. Banks, therefore, raced to lure customers with many incentive policies to benefit from the low-cost capital source.

However, the trend has changed after interest rates for term deposits sharply surged to hit nearly 10 per cent per year, which has caused more customers to select term savings to get higher interest rates.

According to the Q4 2022 financial report of banks, up to 23 out of 28 banks, even big names, have recorded a decrease in CASA ratio in the last year.

Specifically, Techcombank, which topped in terms of CASA for many years, saw its CASA ratio decline sharply from 50.5 per cent at the end of 2021 to 37 per cent at the end of 2022.

Despite surpassing Techcombank to top the CASA list in 2022, Military Bank also reported a CASA decline from 44.6 per cent at the end of 2021 to 37.6 per cent at the end of 2022.

According to Techcombank, the CASA ratio dropped sharply because customers have tended to reduce cash holdings for investment or spending, but increase opening term savings accounts in the context of the global high interest rate environment, restricted liquidity of the banking system and negative sentiment on the real estate and bond markets.

However, Techcombank noted, the bank took measures to increase its term deposits to ensure capital, with Q4 2022 seeing a growth rate of 32.3 per cent in term deposits against Q3 2022.

Many other banks also recorded a sharp drop in CASA ratio in the past year such as KienlongBank (from 15.5 per cent to 4 per cent), VietABank (11.9 per cent to 4.1 per cent) and TPBank (23.3 per cent to 18 per cent).

However, there were still some banks recording an increase in CASA ratio in 2022 compared to 2021 such as VietinBank (with a slight increase of 0.1 percentage point to 20 per cent), PG Bank (with a 2.5 percentage point increase to 17.9 per cent), and Bắc Á Bank (with a 3.9 percentage point rise to 7.3 per cent).

Economist Đinh Trọng Thịnh told Việt Nam News that the term deposit interest rate has continuously increased, especially in the last quarter of 2022, while other investment channels such as securities, real estate, gold, and cryptocurrencies have been less attractive and continuing the downward trend for a long time.

“This was why cash flows look to long-term savings channels to enjoy high interest rates. As a result, the amount of demand deposits decreased sharply, and the input capital also became more expensive,” he said.

According to Thịnh, improving the CASA ratio, controlling capital costs, and concentrating resources to support firms and people to recover production and business are posing big problems for banks, especially in the context of interest rates being forecast to remain high in the first half of 2023. Because when interest rates are high, individual customers transfer their idle money into term savings instead of keeping them in current accounts. As for firms, high interest rates made it difficult for them to access bank capital, thereby they had to withdraw available cash to serve their operations.

According to experts of Vietcombank Securities Company (VCBS), the State Bank of Vietnam’s policy interest rates in 2023 may not increase further. After peaking in the first half of 2023, the rates will be flat and gradually cool down in the second half of this year.

Sharing the same view, Yuanta Vietnam Securities Company (Yuanta) believes as the interest rate on term deposits is still high and the liquidity of the banking system remains limited, the growth of demand deposits will be low in the first half of 2023. However, Yuanta expects the CASA ratio to improve further as deposit rates gradually cool down in the second half of this year.

Besides, Yuanta said in the context of rising interest rates, banks with the advantage of a high CASA ratio such as MB, Techcombank and Vietcombank will suffer less negative impacts on net profit margin than banks with a low CASA rate.

Meanwhile, SSI Securities Company’s experts are more optimistic as, based on data analysis, they forecast the CASA ratio will be affected adversely only in the short term and will recover in the near future.

— VNS        LINK