Vietnam Garment Firms Prepare for Tough Battle at Home as Trade Deals Loom
Vietnamese textile and garment companies will face tough challenge with the market set to be flooded with imports following the country’s accession to the ASEAN Economic Community (AEC
) and Trans-Pacific Partnership (TPP) treaty.
“I realize that customers will support domestic goods, but the most important factor to retain Vietnamese clients is to ensure quality,” said Nguyen Thi Dien, chairwoman and executive director of An Phuoc Shoes Sewing and Embroidering Company.
Since competition with garment products from other ASEAN countries would be unavoidable, local companies should improve their quality and expand models to strengthen their competitiveness, she added.
Vietnam Targets Annual GDP Growth of 6.5%-7% till 2020
Vietnam aims to achieve annual average economic growth of 6.5%-7% in the coming five years, striving to turn itself into an advanced industrial country soon, according to the resolution of the recently-concluded 12th National Party’s Congress.
The resolution mapped out several targets in terms of socioeconomic development as well as environmental protection that will set the specific working checklist for the new party and government leaders in the next five years.
According to the resolution, GDP per capita is expected to rise to $3,500 by 2020 from $2,019 in 2015.
Lending Rates in Vietnam Likely to Climb This Year
Interest rates will likely increase again this year, after remaining at the low levels of 2006 for the past few years, as credit has outpaced capital mobilization at banks, causing a temporary shortage of liquidity in some banks, the Vietnam News Agency cited experts as saying.
Credit growth was 18% in 2015, compared to 12% in 2011, 10.9% in 2012, 12.51% in 2013, and 14.16% in 2014.
This year, capital demands on the economy are expected to be higher than last year. The central bank has projected total lending to grow 20% this year to meet the anticipated 6.7% growth in GDP.
Market Research App Qandme Nears Venture Funding
Qandme, a Tokyo-headquartered startup of Asia Plus Inc but operating mainly in Vietnam, is about to close its seed funding round, DealStreetAsia cited a top executive as saying.
The funding raised will help it offer quicker and more affordable market researches and expand to Asia, its founder Kengo Kurokawa said, without disclosing the identity of the potential investors.
Canada-headquartered Canadian Solar Inc. has secured $70 million in loans and equity investment from the International Finance Corporation (IFC) to carry out a plan to establish a 300MW module assembly plant in Vietnam and fabs elsewhere.
The terms of the deal include a $60 million loan and a $10 million subscription in Canadian Solar common shares.
Clearly growth slow-down of neighboring countries did not affect Vietnam and we have also seen the recovery out of global financial crisis, said Victoria Kwakwa, country director of the World Bank in Vietnam.
Vietnam stood out in terms of recovery compared to other countries in the region thanks to exceptional export performance, she added.
However, the recovery was driven mainly by the FDI sector that used labor intensive manufacturing. Vietnam also had high import content but low domestic value added.
The headline Nikkei Vietnam Manufacturing Purchasing Managers’ Index (PMI), a single-figure indicator of manufacturing performance-edged up to 51.5 in January from 51.3 in December 2015.
“The reading signaled a second consecutive monthly strengthening of business conditions, with the health of the sector improving at a slightly greater pace than seen at the end of 2015,” a joint report by Nikkei and Markit Economics says.
Japan’s Araimichi finished installing its machinery in the Viet-Pan Techno Park late last year and has started operation to provide mechanic precision products for Toyota and other Japanese firms in Vietnam, the Dau Tu (Investment) newspaper reported.
Six other Japanese companies operating in supporting industries have completed negotiations on workshop leasing and will begin installing their machinery after the Tet Holiday, said Nguyen Quoc Vinh, vice general director of Viet-Pan Techno Park Company.
Vietnam’s gasoline imports from South Korea are set to rise this year, after import duty was cut last December under a bilateral trade deal, the Platts newswire cited trade sources.
Under the Free Trade Agreement with South Korea, Vietnam slashed the import tariff on gasoline imports from South Korea by half to 10%, effective December 20, 2015. The 10% import tax on gasoline from South Korea is expected to remain in place till 2018.
Singapore’s Dairy Farm International Holdings and South Korea’s Lotte Shopping have joined a race with other two Thai retailers to acquire French supermarket operator Casino Group’s Thai and Vietnam units, Reuters reported.
Central Group, Thailand’s biggest retailer led by tycoon Tos Chirathivat, has advanced interest in buying Casino’s wholly owned unit, Big C Vietnam, which may have a price tag of between $800 million and $1 billion, and Casino’s 58.6% stake in Thailand’s Big C, worth around $3.1 billion at current market prices.
Investors should put their money into state-owned enterprise (SOE) privatization, Trans-Pacific Partnership (TPP) and FOL opportunities, said Don Lam, founding partner and chief executive officer of VinaCapital
, the largest fund manager in Vietnam.
“The government’s ambitious SOE privatization plan for 2011-2015 was partially accomplished and we should expect to see a new massive divestment plan to address government budget deficit,” he added.
Mr. Don Lam suggested investing in MobiFone, SATRA, Ben Thanh Group, Vietnam Cement Industry Corporation, Vietnam Rubber Company, Vinamilk, FPT Telecoms, Binh Minh Plastics and other medium-size SOEs with good assets, solid market share and strong management.