Netherlands-Vietnam Chamber of Commerce (NVCC)

Vietnam’s economy kept growing in the first half of this year: maintained GDP growth rate and stable CPI.

Highlights of Vietnam’s economy in H1/2019

Source: HanoiTimes

Vietnam’s economy stayed strong in the first half (H1) of this year with robust retail turnover, record import-export turnover, high foreign direct investment (FDI), stable consumer price index (CPI), growing international arrivals, and a surge in newly-established enterprises. 

GDP growth on track 

Vietnam’s economy maintained stable growth with 6.76% in H1, a little bit hurt from abnormal movements of the livestock industry caused by African swine fever virus which spread nationwide. 

Within the general growth, the industrial and construction sector posted an increase of 9.14%, the highest rate amongst sectors, the General Statistics Office (GSO) reported. 

Meanwhile, services and agro-forestry-fisheries sectors grew by 6.85% and 2.19%, respectively during the first half. 

The whole year’s growth target of 6.6%-6.9% is likely achievable thanks to manufacturing and processing sector as they maintain a relatively high level, JLL predicted. 

Recorded import-export turnover 

The import-export turnover of US$245.48 billion in H1 has been the largest six-month value ever, with a trade deficit of US$34 million between January and June. 

The US and EU remained the two largest export markets of Vietnam, contributing US$27.5 billion and US$20.6 billion, respectively to the Southeast Asian country’s total exports in the six-month period, with key products namely phones and devices, electronic appliances, garment and textile products. 

Meanwhile, China and South Korea continued to be the biggest importers with US$36.8 billion and US$22.9 billion, respectively, with metals, garments, machinery, electronic equipment, computers and mobiles.

Rising retail sales, international arrivals 

In H1, the total sales of consumer goods and services rose 11.5% compared to the previous year.

While the total number of foreign tourist arrivals reached 8.48 million, up 7.5% on year, as Vietnam remained a favorable destination, according to the Vietnam National Administration of Tourism. 

Visitors from Asia still made up the biggest proportion, of which Chinese, South Korean, and Japanese took the lead amongst visitors coming to Vietnam.

Strong FDI inflows 

FDI commitments to the country totaled nearly US$18.47 billion in H1, demonstrating a surge of 90.8% from the same period last year.

As much as 1,723 newly-registered projects worth US$7.41 billion were reported during the period, increasing 62.8% on year. 

FDI disbursement was recorded at US$9.1 billion, representing an increase of nearly 8% on year.

Among 19 investment industries, processing and manufacturing was the most attractive sector, recording US$13.15 billion, equivalent to 71.2% of the total capital, followed by real estate sector with US$1.32 billion and trade and services with US$1.05 billion. 

Hong Kong (China) took the lead among 95 countries investing in Vietnam in H1 with a total of US$5.3 billion, accounting for 28.7% of the total FDI during the period. It is followed by South Korea with US$2.73 billion and China with US$2.2 billion.

Stable CPI 

CPI increased approximately 2.64% in H1, representing the lowest 6-month average increase in the last three years. 

The price hike was mainly owing to: (1) demand for food and foodstuff rose 5.4%, of which pork meat increased 14.85%; (2) the price of construction materials increased by 1.99%; (3) stationery price for 2019-2020 school year increased by 2.57%, and (4) the price for electricity up 5.84% compared to same period last year. 

CPI for the remaining two quarters of 2019 is projected to go within the National Assembly’s target of around 4%.

Soaring newly-established enterprises 

Roughly 67,000 enterprises were newly set up in H1. The registered capital hit a new level at VND12.8 billion per newly-established enterprise each, up 27.7% on year.

The number of newly set up firms in real estate sector was 4,000, up 22.2% on year and accounting for 6% of the total newly-registered enterprises.

THE DREAM OF THE NETHERLANDS VIETNAM HORTI BUSINESS PLATFORM: BRING THE VIETNAMESE HORTICULTURAL SECTOR TO THE NEXT LEVEL

PRESS RELEASE

24 July 2019, Hanoi

On Tuesday 23 July in Hanoi, a fruitful and successful kick-off round the table meeting took place for potential Vietnamese companies, institutes and governmental organisations active in the horticultural sector by The Netherlands Vietnam Horti Business Platform and its partner the Crop Production Department of the Ministry of Agriculture and Rural Development. A long term vision and cooperation with the platform as a business tool is needed to let the dream come true -Bring the Vietnamese Horticultural Sector to the next level. The attendees expressed their enthusiasm and intention to contribute to this ambition.

The platform, a legally registered cooperative, which connects Vietnamese and Dutch companies and institutes in the horticultural sector in order to stimulate long-term working relationships in this industry between the two countries. Through introducing smart farming technologies and sharing of knowledge and expertise covering all aspect of the value chain – from seed to consumer- the members work together on sustainable, high-quality and efficient fresh production of fruit, vegetables, herbs, flowers and plants.

The meeting was attended by a diverse group of more than 20 Vietnamese companies, institutes and governmental organisations (MARD and Vietnam Trade Promotion Agency) representing the Vietnamese horticultural value chain and the Dutch platform members – Kenlog, Van der Valk Systems, Gakon and Ridder Group.  

The meeting was opened by speeches of Mr. Nguyen Nhu Cuong – General Director Department of Crop Production Ministry of Agriculture and Rural Development, Mr. Willem Schoustra – Dutch Counsellor for Agriculture in Vietnam and. Mr. Henk van Eijk – Chairman of the Netherlands Vietnam Horti Business Platform. The reasons for setting up the platform- the strong bilateral trade relations between Vietnam and the Netherlands, the strong growth and high potential of the Vietnamese horticulture sector and the strong position of the Dutch horticulture industry were emphasised in these speeches.

After the speeches a presentation in which information about the platform and the meaning of being member was given in order to give the potential Vietnamese members a detailed insight into the Horti Business Platform. Followed by an interactive discussion about the opinion and needs of the attendees.

The Horti Business platform aims to organise a meeting for potential Vietnamese companies, institutes and governmental organisations in Da Lat as well as in Ho Chi Minh City later this year. If you are interested, please contact us.

For more information:

Ms. Mai Hong – Coordinator Vietnam

info@nvhortiplatform.com

+84 90 341 6983

Ms. Mirjam Boekestijn – Coordinator the Netherlands

info@nvhortiplatform.com

+31 6 25 27 60 71

www.nvhortiplatform.com

Full House at Meeting on the occasion of the signing of the EU-Vietnam (EVFTA)

H.E. Mme Ngo Thi Hoa, Ambassador Extraordinary and Plenipotentiary to the Netherlands and the Board of the Netherlands-Vietnam Chamber of Commerce hosted a well attended meeting on the occasion of the recent signing of the EU-Vietnam Trade and Investment Agreements (EVFTA) on Thursday 18 July 2019 at the Embassy of the Socialist Republic of Vietnam to the Netherlands. The interest in the meeting was so large, extra chairs had to be brought in to seat the more than 50 guests.

The meeting was moderated by Mr. Koos van Eyk, the Vice Chairman of the NVCC. Following a speech by H.E. Mme Ngo Thi Hoa, Ambassador Extraordinary and Plenipotentiary to the Netherlands, presentations were made by Mr. Hans Peter van der Woude, Dutch Ministry of Foreign Affairs and by Mr. Joost Vrancken Peeters, Chairman of the NVCC.

The meeting was concluded with a reception.

You can find an album with photos taken during the event here.

EU set to sign trade and investment agreements with Vietnam on 30 June

The Council of Ministers today (25th June 2019) approved the EU-Vietnam trade and investment agreements, paving the way for their signature and conclusion. EU Commissioner for Trade Cecilia Malmström and Romanian Minister for Business, Trade and Entrepreneurship Ștefan-Radu Oprea will sign the agreement on the EU’s behalf in Hanoi on Sunday 30 June. The agreements are set to bring unprecedented benefits for European and Vietnamese companies, consumers and workers, while promoting respect for labour rights, environmental protection and the fight against climate change under the Paris Agreement.

President of the European Commission Jean-Claude Juncker said: 
“I welcome the decision taken today by EU Member States. After Singapore, the agreements with Vietnam are the second to have been concluded between the EU and a Southeast Asian country, and represent stepping stones to a greater engagement between Europe and the region. It is also a political statement by two partners and friends standing together for open, fair and rules-based trade.”

Commissioner for Trade Cecilia Malmström said: 
“I am very pleased to see that Member States have given a green light to our trade and investment agreements with Vietnam. Vietnam is a vibrant and promising market of more than 95 million consumers and both sides have much to gain from stronger trade relations. Beyond the clear economic benefits, this deal also aims to strengthen respect for human rights as well as protecting the environment and workers’ rights. I welcome Vietnam’s engagement in the process so far – their recent ratification of the International Labour Organisation Convention on collective bargaining is an excellent example of how trade agreements can encourage higher standards.”

The trade agreement will eliminate nearly all customs duties on goods traded between the two sides in a progressive way that fully respects Vietnam’s development needs. The agreement also contains specific provisions to remove technical obstacles, such as those in the car sector, and will ensure that 169 traditional European food and drink products recognised as Geographical Indications are protected in Vietnam. Thanks to the agreement, EU companies will also be able to participate in bids for procurement tenders in Vietnam on an equal footing with domestic companies.   Besides offering significant economic opportunities, the EU and Vietnam have agreed strong sustainable development measures. This includes a commitment to implement the Paris climate agreement effectively. The agreement also commits both sides to respect and effectively implement the principles of the International Labour Organisation (ILO) concerning fundamental workers’ rights. To this end, Vietnam has recently ratified the ILO Convention on collective bargaining and has notified the EU of its intention to ratify the two outstanding fundamental ILO conventions by 2023 at the latest. It is also in the process of reinforcing its labour legislation. The agreement also establishes dedicated platforms for the EU and Vietnam to involve civil society in the implementation of these commitments. In addition, the trade agreement includes an institutional and legal link to the EU-Vietnam Partnership and Cooperation Agreement, allowing appropriate action in the case of human rights’ breaches.  
The investment protection agreement includes modern rules on investment protection enforceable through the new Investment Court System and ensures that the right of the governments on both sides to regulate in the interest of their citizens is preserved. It will replace the bilateral investment agreements that 21 EU Members States currently have in place with Vietnam putting in place new legal guarantees preventing conflict of interest and increasing transparency.  

What is the next step ?
Following the endorsement by the Council, the agreements will be signed by the EU and Vietnam and presented to the European Parliament for consent. Once the European Parliament has given its consent, the trade agreement can be officially concluded by the Council and enter into force, while the investment protection agreement will first need to be ratified byMember States according to their respective internal procedures.  

Background
Vietnam is the EU’s second largest trading partner in the ASEAN region after Singapore, with trade worth €49.3 billion for goods and over €3 billion for services. While EU investment stock in Vietnam remains modest standing just at €6 billion in 2017, an increasing number of European companies are establishing there to set up a hub to serve the Mekong region. Main EU imports from Vietnam include telecommunications equipment, footwear and textiles, furniture and agricultural products. The EU mainly exports to Vietnam goods such as machinery and transport equipment, chemicals and food and beverages.   
The agreements reached with Vietnam, alongside those signed recently with Singapore, help paving the way for a future region-to-region agreement with the entire Association of Southeast Asian Nations (ASEAN).    

FDI into Vietnam hits four-year high

Saigon Times, 1 June 2019 – Foreign direct investment (FDI) approvals in Vietnam last month reached US$2. 15 billion, bring in the total FDI pledges in the first five months to US$16.75 billion, surging 69.1% year-on-year and the highest Jan.-May FDI over the past four year

According to the Foreign Investment Agency under the Ministry o Planning and Investment, 1,363 FDI projects with total registered capital of US$6.46 billion were licensed in the period, up 38.7% year-on-year. In addition, 505 operational projects were allowed to increase capital by a combined US$2.63 billion, up 5.5%. Meanwhile, foreign capita! inflow from 3,160 mergers and acquisitions deals amounted to US$7.65 billion, 2.8 times higher than the figure a year ago.

FDI capital disbursement in the five-month period was reported a US$7.3 billion, up 7.8% from a year earlier.

New FDI capital was mainly poured into the processing and manufacturing sector, at over US$10.5 billion the real estate sector at US$1.1 billion, and wholesale and retail US$74 million.

Among the 88 countries and territories making fresh investment in Vietnam, China, including Hong Kong, took first place, with US$7.1 billion. South Korea carne second with US$2.62 billion, and Singapore third with US$2.09 billion.

Hanoi attracted the largest FDI capital, at some US$4.8 billion, followed by HCMC, at US$2.7 billion, and the Southern province of Binh Duong US$1.25 billion.

Joost Vrancken Peeters: Vietnam is the One in China plus One.

Nowadays I receive many questions from companies about the so-called “China plus One” strategy. In this article I will explain the concept of the China plus One strategy, the reasons why more companies are looking into it and the reasons why Vietnam is such a popular destination. In a next article I tell more about how to implement such a strategy.

Over the past three decades China has become a major production center and also a very important consumer market. Today the Chinese economy is still growing and offers many opportunities for companies to expand and grow. However,  more companies nowadays are looking more closely to their China operations. The obvious reasons for US companies of course being the growing tension between the US and China and the resulting trade war and tariff increases. But I US companies are not the only ones approaching me, , more and more European companies too want to discuss the China plus One strategy.

The China plus One strategy can best be described as the strategy whereby companies with an existing investment in China are also setting up a company or production facility in a ‘nearby’ location. The most popular nearby locations are Vietnam, Cambodia, Thailand and Indonesia. But why do international companies want to spread their investment across multiple countries, next to China. As stated above China still offers a lot of advantages as manufacturing base and of course as soon to be biggest consumer market it the world.

When asked about their motives, most companies mention a concern about the rising costs in China, predominantly labor costs. Many investments in China were driven by getting access to low labor costs and there is no doubt that China is no longer the lowest cost source. The minimum wages in most countries around it are lower. However, lower costs are not the only reason. Many companies also mention the risk of being active in a transitional economy.  China faces political, economic and social changes, which may bring pressures. Another motive is the changing business climate in China. Although China still welcomes foreign investment, it has also become more selective. And last but not least, some companies do not wish to be depended on one market and one production location. They want to take advantage of the growing middle class in most countries that are a member of the Association of Southeast Asian Countries (ASEAN).

What explains the popularity of Vietnam in the China plus One strategy? Most companies mention five reasons.

The first being the Vietnamese labour force. Not only because the wages are lower. Due to China’s ageing population, it is not so easy to find enough workers. Vietnam offers a young and dynamic workforce, even if this workforce  still needs to be developed into a skilled one. Another reason is that Vietnam is close to China. This means lower costs of transport and since production is nearby, manufacturers can limit delay times. A third reason is  that Vietnam is close to regional shipping lines, is rapidly improving its infrastructure and has more than 100 ports, many of them capable of handling deep sea ships. Vietnam also offers a relatively stable government and the government has worked hard to improve the business laws. Last but not least Vietnam is very active in free trade agreements.

As a member of ASEAN, Vietnam has access to several agreements ASEAN has signed. In August 2018, the EU and Vietnam agreed on the final texts for the EU-Vietnam trade and investment agreements (EVFTA). This EVFTA is expected to be ratified soon. The EVFTA contains full dismantling of nearly all tariffs except for a few tariff lines that are subject to duty-free tariff rate quotas. Moreover, the EVFTA also offers a modern and reformed investment dispute resolution mechanism which guarantees the respect of the substantive investment protection rules applicable to European and Vietnamese investors.

So, based on the above, it is not surprising that many companies set up a second facility in Vietnam. How to set up such a facility and the factors to consider will be the topic of my second article on Vietnam the one in China plus one.

This article was written by Joost Vrancken Peeters, chairman of the NVCC and partner Asia Practice at law firm Kneppelhout & Korthals.

NVCC Visit to Royal IHC Great Success

More than twenty members and guests of the Netherlands Vietnam Chamber of Commerce joined an interesting and sunny visit to the Royal IHC shipyards in Krimpen aan den IJssel and Kinderdijk on Friday 24th May 2019.

Chairman Joost Vrancken Peeters was delighted to welcome, as special guests of the Chamber, H.E. Ambassador Ngo Thi Hoa and Mr. Nguyen Hai Tinh, Commercial Counsellor of the Embassy of Vietnam.

At the Royal IHC shipyard in Krimpen aan den IJssel, the NVCC delegation was warmly received by Mr. Dingeman van Woerden, Area Sales Manager of Royal IHC.

After donning special safety vests, shoes and spectacles, the delegation made a tour around the yard, where, in a huge hall, the reel lay vessel SEVEN VEGA was nearing completion for the launch, one day later.

Click here to read more about the launch.

Click here to see a video of the launch

After the visit in Krimpen aan den IJssel, the delegation moved by watertaxi to the Royal IHC location in Kinderdijk. After lunch, Ambassador Ngo Thi Hoa updated the NVCC members and guests about the developments in Vietnam.

Mr Dingeman van Woerden gave a fascinating presentation about the history of Royal IHC and its current projects.

During the afternoon, the delegation was split up in two groups who toured the Kinderdijk wharf where, at present, the largest cutter suction dredger in the world, the Spartacus, is moored for final fittings.

Click here to see a video of the launch of the Spartacus.

In the training centre, Mme Ngo thi Hoa and others had the opportunity to try out the dredging simulator and ‘virtually’ deepened the River Maas in the Centre of Rotterdam.

to have a look at the photo album of the visit, click here.

Note about photo album: The NVCC cannot publish, due to legal restrictions, photos showing the Seven Vega and the Spartacus.

NVCC Chairman Meets Party Secretary Ho Chi Minh City

Center left Mr Vrancken Peeters; Center right Mr Nguyen Thien Nhan

The Hague, 19 May 2019.

The Chairman of the Netherlands Vietnam Chamber of Commerce, Mr Joost Vrancken Peeters, had a meeting on 19 May with the Party Secretary of Ho Chi Minh City, Mr Nguyen Thien Nhan. The Ambassador of the Socialist Republic of Vietnam, H.E. Madame Hoa, Economic Counsellor Mr Tinh and NVCC Board Member Hanh Do were also present at the meeting.

Key topic of the meeting: the importance of co-operation between Vietnamese and Dutch companies. Mr Nhan endorsed the importance of the role the NVCC plays in this co-operation.