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HEADLINES

Port of Gothenburg – Your gateway between Vietnam and Sweden

The Port of Gothenburg recently celebrated 400 years of service to Scandinavian industry. CEO Elvir Dzanic has been with the port a slightly shorter period of time, but is determined to keep it going for another 400 years, as well as to take it to the next level through digital and sustainable transformation. We had a chat with Mr. Dzanic to catch up on what’s going on at the Port of Gothenburg right now.

Could you please tell us a little bit about the history of the Port of Gothenburg?

The port turned 400 years in 2020 and has served as Scandinavia’s backbone in terms of trade with the rest of the world ever since. Sweden and Scandinavia would not have been as prosperous and internationally imprinted as it is today without our port’s long history of giving Scandinavia access to the world, and conversely, to give the rest of the world access to Scandinavia. This is something that gives pride to all “Gothenburgians”, myself included.

So where does the port stand today?

Well, we are basically doing the same thing today as we did 400 years ago. Our main purpose is still to be the guarantor for Scandinavian industry’s access to the world. But at the same time, the world has changed, everything is different. Our job is to adapt, to serve our customers and to offer innovative, effective and sustainable solutions to their needs. Today we have grown in to a modern, innovative port at the forefront of sustainable development in shipping and logistics. We are a unique port in Scandinavia, in many ways. We are the biggest port by far, with the widest lining network and the only port to offer direct traffic to both the Americas and to Asia every week, for example.

How does the ports’ role fit into the current and future society?

We try to be a natural part of it and also an agent to shape it. Global trade is necessary for business and people to prosper, and it has to be done in a sustainable fashion. The transport sector has a huge part to play in the planets sustainable development, and the industry needs to work together and take responsibility.

Many of us are all concerned about the environment, and we often tend to think about emissions in connection with transports. How is the Port of Gothenburg contributing to the environment?

We have loads of emission reducing efforts planned, in progress and in the books. The Port Authority and the port terminals are climate neutral already today, mainly due to a port-wide switch to fossile free and electrified terminal equipment and vehicles, which we are very happy about. Our main focus today and going forward is reducing transport emissions to and from the port, both on land and at sea.

How?

We are currently working together with Volvo, Scania and Stena Line to accelerate the transition to fossile free trucks using the port. We are in the process of building a fossil free, port wide electric and hydrogen gas infrastructure, as well as giving green priority to fossil free trucks in our terminals. On the seaside we are working on becoming the primary bunkering hub in Europe for alternative fuels, including methanol, LBG, electricity and other techniques. I could go on and on, but these are some of the ongoing projects now.

One of your key goals is within digitalization, can you please expand on digitalization and what it means to me as a customer?

Digitalization in itself is pointless unless it adds value to our customers, so we are working towards making customers lives easier and their business more cost effective, and making port connected operations throughout the logistics chain more efficient and transparent through digitalization. One key project we just launched is “Allberth”, a berth planning tool that shortens the approach- and mooring time for ships at the port through AI and machine learning, making port calls more predictable and quicker. Just-in-time calls are also more sustainable as less fuel is needed with a more streamlined, digitally supported ship call process.

Sweden is a rather long stretched country with a wide range of cities and production facilities located all over the country. How can the Port of Gothenburg assist me to transport my cargo to the hinterland?

The port of Gothenburg has a highly developed and reliable railway system called Railport Scandinavia, reaching upwards of 30 destinations in Sweden and Scandinavia every day. About 60% of the port’s container goods is distributed directly to and from the port by rail.

In connection with the pandemic and various supply chain challenges, we hear of new sourcing patterns, e.g. “China + 1” where often Vietnam comes up. What’s your view on this opportunity?

I believe this is something that we’ll see more of as companies need to ensure they secure their supply chains in order to better serve the markets in which they do business. Looking at the trade between Vietnam and Sweden the last ten years, we have had a staggering development of 258% when it comes to the value of goods from Vietnam to Sweden and 131% for Sweden to Vietnam. Since 2020 we also have the Trade Agreement between the EU and Vietnam in place which is a fantastic incentive to further let the trade between our countries flourish! Electronics, furniture, footwear, foodstuff to mention a few, are all commodities which are frequently being imported and on the export side there’s the machinery, forest products, vehicles and so on. More or less all the major container lines in the Asia-Europe trade offer a wide selections of options to ship cargo between various Vietnamese ports and Gothenburg so we encourage customers to explore the opportunities in this market.*

Finally, before we let you go, what are the challenges you foresee in the shipping market and how is the Port of Gothenburg preparing itself to tackle these challenges?

The supply chain has been under extreme pressure the last two years, much in the aftermath of the Covid-19 pandemic resulting in various challenges when it comes to container equipment availability, bottle necks along certain routes, reduced schedule reliability, port congestions, shortage of truck drivers, increased fuel costs, etc. The list goes on, but these are all serious topics that need to be addressed to get us back on track. Actually, we’re trying to turn these challenges into opportunities and much of the work and investments we’ve done and are continuing to put in place will gear us to be ready to tackle these topics more efficiently. But the environmental tasks ahead in terms of more sustainable fuels and cutting emissions is definitely a huge challenge that needs to be taken very seriously.

Fact file: The Port of Gothenburg

The Port of Gothenburg is the largest port in the Nordic region. 30 per cent of Swedish foreign trade passes through the Port of Gothenburg, including over half of the container traffic.

The Port of Gothenburg is the only port in Sweden with the capacity to receive the world’s largest container vessels and has the broadest range of shipping routes within and outside Europe. Including weekly direct services to Asia and America. Some 30 rail shuttles depart each day, giving companies throughout Sweden and Norway a direct, environmentally smart link to the Port of Gothenburg and overseas markets. The Port of Gothenburg is a full-service port with terminals for containers, energy products, vehicles, ro-ro and passengers.

* Please feel free to contact Richard Mellgren at [email protected] for further information.

Port of Gothenburg’s vision for 2030


www.portofgothenburg.com

Conference seeks to drive Vietnam – Latvia trade

The Vietnam Trade Promotion Agency (Vietrade) is holding an online business-to-business conference to seek ways for bolstering trade with Latvia.

In 2021, bilateral trade increased 2 percent year on year to around 240.7 million USD, with Vietnam exporting 219.24 million USD and importing 21.46 million USD worth of goods, respectively up 4.4 percent and down 17.9 percent.

The trade turnover stood at 66.7 million USD in the first quarter of 2022, statistics show.

Edmunds Valantis, State Secretary at the Latvian Ministry of Economics, highlighted the great strides in bilateral relations over the past years, especially in the trade of agro-fishery products, wood items, apparel, and footwear, noting that Vietnam’s participation in free trade agreements has positively affected their trade ties.

Latvia is the largest Baltic economic partner of Vietnam, which in turn is also the biggest ASEAN partner of the European nation, Phan Dang Duong, Vietnamese Ambassador to Sweden and Latvia, told the event being held on May 31 and June 1.

Vietnam wishes to further enhance partnerships with Latvia in economy, trade, investment, education – training, labour, and tourism, he said, stressing that with common efforts, new opportunities will be opened up for their enterprises to tighten links in all the fields they are strong at after a two-year hiatus caused by the COVID-19 pandemic.

Vietrade Director Vu Ba Phu noted the Ministry of Industry and Trade hopes to welcome a Latvian business delegation to come to seek cooperation chances, especially in digital transformation, artificial intelligence, information technology, and the wood industry.

Latvia holds a strategic geographical location for business activities between the EU and emerging markets situated to its east. It is like a gateway linking the US and the EU with Asia and, especially, Russia.

Vietnam and Latvia boast sound cooperation over the three decades of their diplomatic ties, but bilateral trade remains modest, Phu pointed out.

He added Vietnam’s main exports to this country include seafood, cashew nut, coffee, peppercorn, plastic products, bamboo, rattan and wood items, apparel, and footwear. Meanwhile, Latvia has sold rubber, wood products, textile – garment materials, machinery, and medicine to the Southeast Asian country.


Vietnam Approves Long Term Strategy on Environmental Protection: Decision 450

The Vietnamese government issued Decision 450/QD-TTg to promote environmental protection to 2030 with a vision to 2050. The Decision is a turning point for Vietnam’s national strategy as the country strives to achieve its dual goal of environmental sustainability and economic profitability.

Vietnam is facing an alarming rate of environmental damage and resource depletion, contributed by climate change. Currently, Vietnam ranks 4th globally with the highest rate of plastic waste, at 1.83 billion tons per year while water pollution is expected to cost the country 3.5 percent of its GDP by 2035, according to World Bank (WB). It is further forecast that climate change and natural disasters will cost up to 11 percent of Vietnam’s GDP by 2030.

Recognizing potentially far-reaching consequences on a societal level, the government issued Decision No 450/QD – TTg in April 2022, to 2030 with a vision for 2050 of ensuring that the environment is restored and the right to living in a clean and safe environment is fulfilled. The aim is to develop a society in harmony with nature and a circular economy, towards the goal of being carbon neutral by 2050.

Here, we explore the key highlights of the Decision and examine the potential for businesses and investors.

Developing a circular economy with sustainable production and consumption

Decision 450 emphasizes the ultimate importance of developing a circular economy. The government aims to steer industrialization in an environmentally friendly direction by promoting the development of green industries, high-tech industries, and ecological industrial parks while encouraging the utilization of environmentally friendly materials for input.

The government also prioritizes ecological agriculture and organic agriculture, in parallel with the abandonment of inorganic fertilizer, chemical pesticides, and antibiotics in cultivation, animal husbandry, and aquaculture.

It is also worth noting that the government encourages recycled materials as input for production, in substitution for raw materials. By doing so, manufacturers can avoid potential supply disruptions and generate profit from using used materials for input.

The promotion of a circular economy by the Decision has set a promising business environment. Investors should consider the potential of investing in organic fertilizers and pesticides, as the food production industry in Vietnam is shifting its focus to organic products and green cultivation.

The past few years have seen a surge in the number of organic food ventures and start-ups such as Organica and Dalat FOODIE, many of which have been certified by VietGAP and drawn a sizeable flow of consumers.

Meanwhile, Decision 450 has also created a demand for new services, such as product refresh services, remanufacturing components for future input, and the supply chain of recycled materials. This means new opportunities for investment and doing business in Vietnam.

Reinforcing waste management

Decision 450 especially puts emphasis on the regulation of solid and hazardous waste management as well as wastewater treatment, particularly in urban areas and industrial parks.

It further promotes the development of recycling industries, and recycling industrial parks; encourages investment into recycling facilities with modern technology, while gradually abandoning small-scale, manual recycling establishments that cause pollution in craft villages.

The government calls for investment in the modernization of the waste collection equipment, the system of transfer stations in urban areas, and the expansion of solid waste collection networks in rural areas.

The emphasis on waste management highlights opportunities for investment in the waste–to–energy sector in Vietnam as this is a promising waste treatment model.

The Decision also puts forward reusing, recycling, sorting, and treating plastic waste. After 2025, Vietnam will abandon the circulation and consumption of single-use plastic products and non-biodegradable plastic packaging.

In addition, from 2030, Vietnam will stop manufacturing and importing goods containing microplastic and promote the development of environmentally friendly materials. Investors may also look into developing eco-friendly packaging materials, such as paper, bamboo, seaweed, and cornstarch.

Promoting renewable energy and limit the exploitation of natural resources

The promotion of renewable energy has been a top priority for the Vietnamese government. In Decision 450, the importance of this industry has been emphasized as the key driver of the circular economy. Vietnam has a competitive advantage when it comes to green energy, thanks to the country’s geographical features which facilitate the development of both wind power and solar energy.

In 2020, Vietnam was in the top 10 countries with the highest solar capacity worldwide. Vietnam’s potential for wind power in Vietnam is substantial as the country possesses 8.6 percent of land area suitable for the construction of large-scale wind power farms. In parallel with the advantageous geographical features are the incentive policies for businesses operating in the green energy sector

Concerning air quality in metropolitan areas

In 2021, Vietnam ranked 36th out of 118 countries with the most serious air pollution.

To restore air quality, Decision 450 aims at accelerating the construction and up-gradation of public transport systems, mass passenger transport (MRT), and limiting the utilization of private means of transport, especially internal combustion engine (ICE) cars.

Nevertheless, challenges remain as the construction of the metro system in Vietnam has been dogged by delay and prohibitive costs. The Hanoi metro line only came into operation in November 2021, after a decade of delay while the metro line in Ho Chi Minh City is still in its construction stage.

Further, the government also targets the expansion of urban green space as well as developing greening plans for cities to purify the atmosphere in metropolitan areas.

The Decision also highlights the importance of electric vehicle development and implementation of the roadmap for abandoning vehicles that run on fossil fuels. Here, the potential for investment in electric vehicles (EVs) can be seen as Vietnam is shifting towards greener transportation.

However, as Vietnam’s EVs industry is still in its infancy, the government is yet to issue attractive policy incentives for investors wishing to enter the industry.

Restoring areas contaminated by chemical residues and land environment

The government prioritizes the replacement of outdated technological lines, machinery, and equipment that pose a threat to the environment and a risk of fire and explosion incidents. At the same time, the government aims to accelerate the restoration of the soil environment in areas contaminated by chemical residues and pesticides or solid waste landfills.

Controlling pollution in the marine environment and island

The long-term goal of the Decision includes monitoring and preventing pollution in coastal areas by calling for investment in modern infrastructure and equipment for treating hazardous wastewater discharges and domestic waste in coastal localities and islands such as Phu Quoc and Con Dao.

The discharge treatment system in Vietnam is currently low-tech and unable to cover an extensive area. According to the Vietnam Water Portal, the rate of wastewater collection in urban areas is only 12.5 percent-15 percent.

The Vietnam Water Supply and Sewerage Association (VWSA) states that Vietnam needs an additional amount of US$10 billion from investment ventures to upgrade wastewater drainage. Investors may step in and plan investments in wastewater treatment plants for coastal localities by applying cutting-edge technology to make the systems more efficient and capable of handling sewage on a larger scale.

Takeaways

The issue of Decision 450 on environmental protection is a timely development of the Vietnamese government as the country’s economy, society and ecosystem are all currently facing threats from climate change and pollution.

The Decision is also an indication of prospective investment opportunities that investors can take advantage of. For further details on how to actively invest in Vietnam’s industries during its shift to a green economy, contact our experts to get an insightful discussion.

FROM THE BEGINNING OF THIS YEAR

Sweden exports to Vietnam

Products5M/20215M/2022Change (%)
All products (USD)148,251,337152,451,8062.8
Other machinery, equipment, tools and spare parts50,119,50548,273,573-3.7
Pharmaceutical products34,624,35043,513,89225.7
Paper products14,415,0438,328,441-42.2
Iron or steel5,271,6107,349,89739.4
Chemical products8,373,3985,758,301-31.2
Wood and articles of wood5,575,7143,478,451-37.6
Articles of iron or steel3,094,3452,075,391-32.9
Plastic materials1,503,6081,700,51313.1
Plastic products2,925,6851,553,596-46.9
Computers, electrical products, part thereof1,044,6801,466,12640.3
Other petroleum products589,872965,83463.7
Telephone sets, parts thereof27,71566,594140.3

Sweden imports from Vietnam

Products5M/20215M/2022Change (%)
All products (USD)446,489,676489,528,3969.6
Telephone sets, parts thereof197,974,233147,240,487-25.6
Articles of iron or steel18,613,87352,973,564184.6
Textiles and garments27,155,65748,814,19179.8
Footwears, parts of such articles38,696,17745,696,73718.1
Computers, electrical products, part thereof25,113,00634,141,62336.0
Machinery, mechanical appliances, equipment, parts thereof24,832,03631,932,61028.6
Wood and articles of wood15,963,48015,027,572-5.9
Bags, purses, suitcases, hats, umbrellas12,810,61112,800,423-0.1
Fish and crustaceans, molluscs and other aquatic invertebrates7,589,9399,483,24324.9
Plastic products6,762,3778,507,96925.8
Products of rattan, bamboo, sedge and carpet5,444,0315,447,4170.1
Toys, sports equipment and parts4,500,0945,027,37511.7
Materials for textiles and garments, and footwares4,774,6043,049,402-36.1
Ceramic products1,144,9081,342,53317.3
Other metals and products801,811752,683-6.1
Rubber347,281307,857-11.4

Denmark exports to Vietnam

Products5M/20215M/2022Change (%)
All products (USD)106,362,29491,325,343-14.1
Other machinery, equipment. tools and spare parts25,127,48022,407,174-10.8
Chemical products12,648,32710,788,644-14.7
Fish and crustaceans, molluscs and other aquatic invertebrates9,821,6799,577,479-2.5
Pharmaceutical products13,654,3638,504,344-37.7
Plastic products3,309,4673,593,1058.6
Computers, electrical products, part thereof2,021,4453,415,95469.0
Articles of iron or steel3,666,4313,272,938-10.7
Milk and dairy products897,5102,273,437153.3
Electric wires and cables1,178,1211,441,44422.4
Materials for textiles and garments, and footwares3,930,12982,985-97.9
Iron or steel36,46876,966111.1

Denmark imports from Vietnam

Products5M/20215M/2022Change (%)
All products (USD)147,886,508227,196,88953.6
Fish and crustaceans, molluscs and other aquatic invertebrates19,809,54533,185,51567.5
Textiles and garments16,030,16431,743,16998.0
Transport vehicles and spare parts3,321,17930,232,628810.3
Wood and articles of wood20,538,19223,517,56014.5
Furniture products from materials other than wood15,843,23617,451,79110.2
Other machinery, equipment, tools and spare parts10,129,33713,069,40629.0
Footwears, parts of such articles5,541,35810,259,37685.1
Plastic products9,647,8299,166,883-5.0
Electric wires and cables5,020,5948,527,40769.8
Articles of iron or steel6,950,2267,148,4472.9
Bags, purses, suitcases, hats, umbrellas3,634,7015,367,28947.7
Products of rattan, bamboo, sedge and carpet3,828,7744,679,40222.2
Toys, sports equipment and parts3,008,6234,164,64138.4
Ceramic products4,073,9352,963,989-27.2
Coffee663,037798,32320.4

Norway exports to Vietnam

Products5M/20215M/2022Change (%)
All products (USD)146,123,087158,734,2608.6
Fish and crustaceans, molluscs and other aquatic invertebrates101,797,86497,826,481-3.9
Chemical products2,023,2291,719,738-15.0
Fertilizers3,291,68410,865,348230.1
Articles of iron or steel1,321,2043,660,860177.1
Other machinery, equipment. tools and spare parts16,380,97828,384,61473.3

Norway imports from Vietnam

Products5M/20215M/2022Change (%)
All products (USD)51,837,15856,728,7969.4
Fish and crustaceans, molluscs and other aquatic invertebrates3,534,9694,795,41935.7
Fruits and vegetables1,343,916945,566-29.6
Cashew nuts2,238,5642,994,16933.8
Plastic products1,846,6752,425,14331.3
Bags, purses, suitcases, hats, umbrellas1,282,0921,850,44444.3
Wood and articles of wood1,072,5221,190,50711.0
Textiles and garments6,358,2157,918,43624.5
Footwears, parts of such articles10,066,53914,522,64044.3
Articles of iron or steel903,859313,910-65.3
Cameras, camcorders and components1,667,3702,569,66654.1
Other machinery, equipment, tools and spare parts3,309,6591,134,482-65.7
Transport vehicles and spare parts733,825857,64016.9
Furniture products from materials other than wood2,638,2322,465,547-6.5

EVFTA

Vietnam-EU trade increases 14.8 percent in 2021

In the year, Vietnam exported 45.8 billion USD worth of goods to the EU, up 14.2 percent year on year, while importing 17.9 billion USD worth of products from the market, a rise of 16.5 percent.

The results to the EU – Vietnam Free Trade Agreement (EVFTA), which took effect more than one year ago.

Notably, the export revenue of products using the EUR.1 certificate of origin (C/O) reached about 7.8 billion USD, which showed Vietnamese firms’ greater attention to optimising of incentives from the deal.

The EVFTA is a bilateral commitment with incentives and long-lasting value.

At present, 20 percent of local enterprises have taken export tax incentives from the EVFTA with the EUR.1 certificate of origin (C/O). For shipments to the EU worth less than 6,000 EUR, local enterprises are allowed to self-certify origin. This helps ensure smaller businesses do not have to spend time applying C/O, while still being able to enjoy tax incentives.

OTHER NEWS

Vietnam’s Health Supplement Market: Trends, Opportunities, Market Entry

Vietnam’s health supplement market is seeing a rapid increase due to the country’s demand for health-related and personal care products. In this article, Vietnam Briefing gives an overview of the health supplement market including industry drivers, challenges, and market entry options and requirements for investors.

Vietnamese health products have started to see a rapid increase recently compared to its regional peers.

Over the last two decades, there have been substantial changes in Vietnam’s health supplement (also known as dietary foods or functional foods). Based on a report from the British Chamber of Commerce in August 2021, the total market value of the local health supplement market reached US$562.9 billion, with a growth rate of 13 percent. And the year-on-year (y-o-y) average growth rate of the market is expected to be 20 percent in the next 10 years.

Growing personal disposable income and increased health awareness

Vietnam possesses one of the fastest-growing middle-income and affluent classes in Southeast Asia. According to the World Bank, in 2020, Vietnam’s GDP per capita was US$2,785 while the government will attempt to reach GDP growth of up to 6.5 percent in 2022. This is expected to have a positive effect on consumer spending and drive the demand for products that can cover the nutritional deficit.

Further, with a population of approximately 97 million people, more than 8 million of whom are over the age of 65, the demand for healthcare supplements in Vietnam has expanded significantly in recent years. The local population is becoming more aware of health risks, prevention through the use of dietary food products to alleviate diseases such as high blood pressure, diabetes, obesity, and cardiovascular disease which have increased.

Self-medication

Self-medication has been recognized as a common issue in Vietnam. The self-medication rate has ranged from 40 percent to 60 percent in rural areas and up to 76 percent in urban areas. This practice is favored due to the lax management of over-the-counter medications and the increasing cost of healthcare services.

The cost of paying for medical examination and treatment services from the pocket of individuals is at 43 percent, quite high compared to many countries in the world. This is related to the fact that health insurance funds have not yet covered the full range of health care needs and services while the level of financial coverage is limited.

Foreign brands trusted more than domestic ones

The growing demand for health supplements has resulted in increased usage of imported products as people tend to trust these brands more than domestic ones. Foreign brands tend to be positioned in the premium segment to attract mid-to-high-end consumers, while local brands generally concentrate on the mass market.

Further, foreign players are more active in non-herbal or traditional dietary supplements, while local players are more active in herbal/traditional/curing items. Imported goods account for 40 percent of the market, indicating that locals are more open to trying foreign brands.

Herbal health supplements preferred

In Vietnam, herbal, traditional, and curing supplement products accounted for more than 70 percent of the market in 2021.  It has been forecast that herbal supplements will continue to dominate the health supplement market.

The high prevalence of herbal supplements in the beauty and personal care sector has also driven the health dietary supplements market in Vietnam. This is because people assume that herbal or traditional products have less or no side effects than standard products made from natural ingredients.

Ginseng is the most popular herbal dietary supplement in Vietnam, and it is expected to increase rapidly since it boosts the immune system, which is a major issue in the context of the pandemic.

Domestic players dominate

Herbalife, Trafaco JSC, Amway Vietnam Ltd, Nu Skin Vietnam Co Ltd, and Hau Giang Pharmaceutical JSC are the top five health supplement companies in Vietnam. However, the majority of the top corporations own less than 5 percent of the market, which demonstrates that the Vietnam supplement sector is highly competitive as the number of establishments increased to 3,108 with 11,127 products in 2021.

In addition, more than 70 percent of the health supplements consumed in the market are domestically produced goods. The remaining 20 percent are imported from well-known markets such as the US, Germany, Canada, South Korea, Japan, and so on.

While domestic products still dominate with a 70 percent market share, several large foreign brands have invested significantly to expand the market such as Cheing Kwan Jang, Pharmaton, IMC, and so on. With advantages in technology, product quality, inspection, and a strict manufacturing process, these are formidable competitors that are likely to quickly dominate the market in the near future.

It is worth noting that, under Decree No. 15/2018/ND-CP, all functional food production establishments must fulfill Good Manufacturing Practices (GMP). GMP is a system that ensures products are produced as per quality standards. In 2020, more than 200 factories met or exceeded GMP requirements.

Opportunities

Besides high demand among older adults, the proportion of people consuming health supplements has increased to 58.5 percent for the population over the age of 18, thanks to the exposure of the benefits of these products through the internet and health-focused media.

In addition, the Vietnam Association of Functional Foods (VAFF) – which is a social occupation organization of Vietnamese businesses, institutions and entrepreneurs – has not only signed cooperation agreements with domestic agencies such as the Food Safety Department (Ministry of Health), the Department of Competition Management (Ministry of Industry and Trade) but is also a member of the ASEAN Alliance of Health Supplement Associations (AAHSA) and the International Alliance of Dietary/Food Supplement Associations (IADSA).

Such agreements will allow Vietnam access to extensive regional and international expertise attracting investors who can place their regional or global manufacturing and research and development facilities in the country

VAFF maintains the relationship by exchanging information and updating new information about health supplements with markets such as the US, China, Japan, and the EU, particularly about legal documents, standards, and new products to keep up with new trends and quality for the Vietnamese market.

Challenges

Although the health supplement industry has rapidly developed, the policing of illegal products is a challenge for the authorities. Local and international companies must compete with substandard and illegal products which can be more appealing due to lower prices.

Further, there are many misleading claims in ads on online platforms such as Zalo, Facebook, and Youtube. With high demand consumers often don’t bother to verify claims or are unaware of the origin of products.

Government regulations have also been unable to keep up with false advertising campaigns.

Market entry strategy

Foreign manufacturers of health supplements may enter the Vietnamese market through a local distributor or by establishing a trading company.

In terms of entering through a local distributor, choosing the correct partner can make or break a company’s investment strategy, and is understandably a source of concern for most executives. Therefore, the first and most important condition to consider is that the local partner must be granted a business license for trading the investor’s products.

If the investor has set up trading company within Vietnam, they should be aware of the risks and certain requirements. Since the health supplement industry is a conditional sector, investors should be aware of the following key requirements:

  • application for an investment registration certificate;
  • application for a business registration certificate; and
  • application for a license to sell functional foods.

In both cases, to distribute health supplements in Vietnam, enterprises must carry out procedures for product declaration and must ensure that their products comply with the labeling and health and safety requirements.

In addition, the Certificate on Satisfaction of Standards on food hygiene and safety must be obtained, while all standards concerning health, safety, and hygiene must be maintained as long as the business is in operation.

Takeaways

The health supplement market is a promising field not only for manufacturers but also for consumers. Nevertheless, issues about safety standards and advertisements are the main concerns for investors. However, with a local population that is increasingly aware of health risks along with a sizeable population that is over 65, there are several opportunities for investors as the sector is only expected to grow.


Vietnam’s Blue Economy Potential and Opportunities for Investors

Vietnam’s blue economy is a relatively new concept that encompasses economic activities related to oceans and seas while improving livelihoods and preserving the health of the ocean ecosystem. The sea and coastal areas of Vietnam account for approximately 47-48 percent of the country’s GDP. Vietnam Briefing highlights some distinct characteristics of the blue economy as well as opportunities for investors.

The development of Vietnam’s blue economy is a relatively new concept but is necessary to address the environmental issues, its carbon footprint, and the exploitation of natural resources along its coastlines.

What is the blue economy?

The blue economy is a relatively new term. It means the assurance of economic growth and the development of marine ecosystems while ensuring the reasonable exploitation of natural resources with lesser environmental impact. It also means the construction and development of infrastructure adaptable to climate change and extreme weather.

The World Bank describes the blue economy as the sustainable use of ocean resources for economic growth while improving livelihoods and preserving the health of the ocean ecosystem.

As such, the blue economy is the central point to enable Vietnam achieve its Sustainable Development Goals (SDGs) by 2030 with vision to 2045, with the environment being one of the pillars of this development.

The blue economy would also help meet Vietnam’s climate change goals. Recent studies show that a 1-meter rise in sea level would impact 11 percent of Vietnam’s population and 7 percent of its agricultural land. Depending on the severity of sea-level rise, climate change may eventually expose 38‐46 percent of Vietnam’s population to flooding.

The development of the blue economy, however, must be based on a balanced growth of six industries: fisheries and aquaculture; oil and gas; marine renewable energy; coastal and marine tourism; the maritime sector; and environment and ecosystems.

Opportunities for the development of Vietnam’s blue economy

Vietnam’s long coastline is advantageous as it is situated near international and regional maritime routes. Vietnam’s coastal areas lie in areas with high economic growth rates and serve as a bridge between several regional trading partners and shipping routes.

These are favorable conditions for Vietnam to develop its maritime sector, shipbuilding, and logistics industries, given its 114 estuaries, and 52 deep-sea gulfs along the central coast (gulfs, bays, and lagoons stretching over 60 percent of the coastline), and over 100 positions for construction of big seaports.

Vietnam is home to several natural resources and contains about 35 minerals of various groups: fuel, metal, building materials, precious and semi-precious stones, and liquid minerals. Sand mines under sea beds in Quang Ninh province and Hai Phong city have a deposit of over 100 billion tonnes and nearly 9 billion tonnes respectively.

Besides, the potential of seawater resources is significant with diverse types of marine energy such as natural hydrate, tidal energy, wave energy, and heavy-water nuclear energy.

Vietnam is also rich in marine resources. Apart from fish, a major resource, there are many high economic resource value items such as shrimps, crabs, sea cucumbers, and seaweed. The fish deposit in Vietnam’s sea areas is approximately 5 million tons/year, with the annual fish catch at around 2.3 million tons.

As per the Ministry of Agriculture and Rural Development (MARD), annual marine aquaculture output is expected to reach 850,000 tonnes and export turnover is estimated to be between US$800 million and US$1 billion. Moreover, the 3,260 km-long coastline and thousands of islands constitute favorable conditions for Vietnam to develop sea tourism. Along its coast, there exist about 12 beaches, some ranked as the best in the world.

Vietnam’s coastal areas lie in a tropical climatic zone with many parts enjoying long sunshine hours throughout the year, which is ideal for tourists, especially those coming from countries with cold winters.

Regulations that foster the development of the blue economy

Vietnam has launched many strategies and policies to help in transitioning its economy from a “brown” to a “green” one, including the National Strategy on Green Growth 2021-2030 with a vision to 2050; the strategy on sustainable exploitation and use of marine resources, and the protection of marine environment up to 2020, with a vision toward 2030, among others; and made many international commitments on environment and development, such as the net-zero carbon commitment at COP26.

Vietnam has approved several laws, and master plans for the deployment of green growth tasks, such as the National Action Plan on Green Growth, the 2012 Law of the Sea of Vietnam, and the 2015 Law on Marine and Island Resources and Environment.

Additionally, the government also issued Resolution 36-NQ/TW on October 22, 2018, on the Strategy for sustainable development of Vietnam’s marine economy to 2030, with a vision toward 2045.

The strategy states that by 2030, the marine economic sectors will be developed in the following priority order: sea tourism and services; maritime economy; exploitation of petroleum and other marine minerals; marine resource farming and exploitation; coastal industries; renewable energy and new marine economic sectors.

It can be observed that resource-intensive economic sectors have been given lower priority and replaced by natural resource-saving ones such as tourism and the maritime industry.

The highlight of the strategy is the inclusion of marine resource farming besides exploitation. In addition, it lists the renewable energy industry and new marine economic sectors, such as wind power, on-sea solar power, sea-tide power, and exploitation of marine biodiversity resources (marine pharmaceuticals, seaweed growth, and processing).

This is the first time that Vietnam has developed robust plans related to the blue economy to sustainably develop the marine economy in line with international standards, which shows the country’s objective toward a more sustainable marine industry.

Opportunities for investors

The maritime industry

Investors currently have many opportunities to participate in maritime projects after Vietnam’s master plan for seaport system development was approved.

The master plan for 2021 – 2030 is among the five national plans developed by the Ministry of Transport and approved by the Prime Minister. The highlight of the master plan is the list of seven infrastructure development projects using non-budget capital sources.

The total capital needed for these projects in the 2021-2025 period is about VND 150,357 billion (US$6.5 million) and VND 146,643 billion (US$6.3 million) in the 2026-2030 period. Among them are projects that are attracting special attention from domestic and foreign investors such as Lach Huyen port, Tran De – Soc Trang port, Nghi Son – Thanh Hoa port, Cai Mep Ha port, and the shallow port system.

The shipping industry itself is also a potential industry in the marine economy for investment with attractive tax incentives and policies, which Vietnam Briefing has discussed in the previous article.

Offshore wind power industry

Another marine industry that can offer significant potential for foreign investors is wind power. It is forecast that total wind capacity will increase from around 3GW in 2021 to just under 13GW by 2030, with the government also looking to develop 21GW of offshore wind by 2045.

Additionally, Vietnam is an energy transition leader in ASEAN as the country plans to develop its wind power capacity outpacing its neighbors such as Thailand and the Philippines.

Vietnam has a geographical advantage, particularly it’s over 3,000-kilometer coastline with high wind speeds, favorable for offshore wind development.

Regarding the policies, unlike in other countries, like the Philippines, there are no restrictions on foreign direct investment. Investors can therefore have 100 percent foreign ownership.

Vietnam has also had a generous tariff of US$0.085/kWh for wind projects, which helped spur a flurry of development ahead of that tariff’s expiration on 1 November 2021.

Tourism

As another resource-saving marine industry, tourism also boasts attractive investment opportunities for investors. This proves feasible now as Vietnam has reopened after the pandemic, with international flights resuming, and rapid COVID-19 test requirements on international entry no longer required.

According to data from the General Statistics Office (GSO), in the first two months of 2022, international visitors to Vietnam were estimated at 49,200 arrivals, up 71.7 percent over the same period last year.

Many resort real estate projects have announced investment policies or officially opened for sale on the market from the beginning of 2022.

Particularly, the central provinces such as Binh Thuan, Khanh Hoa, and Thua Thien-Hue, known as the center of coastal tourism, have also introduced many large-scale real estate projects, catering to the tourism industry.

Takeaways

As Vietnam aims to reach net zero-carbon status by 2050, sustainable development will be the main theme that covers all economic sectors in Vietnam, including the marine economy. Therefore, with the country’s supportive government policy-making and advantageous natural resources, the blue economy now emerges as another potential investment opportunity for investors.


Now is the time for sustainable Vietnamese certified natural rubber: experts

Experts have said that great market opportunities will open for Việt Nam if sustainable natural rubber production receives adequate Government supports with enterprises determined to follow a sustainable development.

Global demand for sustainable natural rubber has been increasing and expanding. Việt Nam is the third-largest natural rubber producer globally.

“However, the rubber area in the country under sustainably certified is very small. There’s no FSC-certified rubber in Việt Nam by now. This is a missed opportunity for the country,” according to Dr Tô Xuân Phúc, a policy analysis expert at Forest Trends.

The expert made his statement at the workshop themed “Việt Nam Sustainable Natural Rubber” held recently both online and offline in Hà Nội by Forest Trends, Yulex LLC and business and community leaders.

The workshop presented hurdles restricting rubber growers, including rubber companies and smallholders, from pursuing sustainable rubber production and discussed solutions for addressing those hurdles.

“Global markets are demanding certified natural rubber. Việt Nam, the third-largest rubber producer in the world, should not be left economically behind,” said Dr Phúc.

The expert affirmed that sustainable natural rubber production in the future was an inevitable direction for Việt Nam. It will open opportunities for the country to improve its economic value per output product while helping ensure compliance with stringent environmental and social requirements in production.

However, assessing the world market demand for sustainable natural rubbers, Phúc said global rubber consumption was changing a lot. Regulations on the legality and sustainability of input rubber materials are increasingly strict, and demands for sustainable natural rubber also exist in the country.

There are currently two sustainability certification systems in the world: PEFC (Programme for the Endorsement of Forest Certification) and FSC (Forest Stewardship Council).

The FSC criteria are considered to be more stringent than that of PEFC.

Việt Nam has developed a national Forest Certification System (VFCS) currently recognised by PEFC.

Up to now, the country has about 97,300ha of rubber area granted VFCS certificate, all belonging to state-owned companies.

Despite the rapid expansion of certified acreage, it is still not commensurate with the industry’s potential, the workshop heard.

All smallholder areas have not been certified so far. This proves some of the current limitations of the industry.

The reason is that many of the smallholders have not been interested in producing certified rubber. Moreover, there is a lack of information, and many businesses only focus on exporting to markets that do not require certifications like China.

In addition, the industry’s current supply chain is complex, including a mix of large and smallholder components depending on domestic and imported sources. This makes traceability – which underpins the assessment and recognition of certificates – difficult and even impossible in many cases. The sector’s internal linkage chain is still loose and unsustainable.

According to Phan Trần Hồng Vân, Deputy General Secretary of the Việt Nam Rubber Association (VRA), the pressure of sustainable development has pushed the sector to continuously strengthen its role in improving the environment and social conditions in the rubber planting area.

To cope with current issues, the VRA has proposed an action plan for the rubber industry to sustainably develop, encouraging members to soon build sustainable development programmes under their own conditions.

The VRA has also built and developed the certificate label “Cao Su Việt Nam/Viet Nam Rubber” for the quality and prestige products. Up to now, the label has been granted 82 product items for 29 factories belonging to 17 companies.

Yulex LLC – a global company, using sustainable natural rubber with FSC – has conducted surveys on several rubber companies and smallholders to set up links and promote sustainable rubber production in Việt Nam.

The company made strong commitments to purchasing Vietnamese output products at a higher price than the market price of normal rubber if producers can sustainably supply natural rubber sources, especially those with FSC certificates.

Dr Elizabeth Bui from Yulex LLC said: “Smallholders in Việt Nam are the backbone of the country’s rubber production, and Yulex is committed to ensuring that they are included in the economic upside with their participation in producing sustainable rubber.”

To promote the development of the rubber industry and to make it continuously contribute to economic development, it is necessary to have supportive policies from the Government at the same time as determination of businesses and organisations and individuals to implement sustainable development programmes, the workshop heard.

The State needs to create a legal framework for strengthening and encouraging management models of sustainable rubber forests with agroforestry closely connected with environmental protection in the direction of national or international quality certifications.

A representative of Liên Anh Rubber Production Co., Ltd. mentioned difficulties in the link between businesses and smallholders, saying 87 per cent of smallholder rubber gardens with a planting area of less than 3ha while those with over 10ha account for only 1.5 per cent.

“Latex trading through intermediaries still makes up a majority, so farmers easily break their commitments with purchasing companies to sell latex to different traders. Therefore, it is necessary to have a mechanism to support linkages between smallholders and their business partners under transparency and with fewer intermediaries to ensure fairness, legality, and clear origin,” said the company representative.

Dr Phúc said: “For promoting sustainable natural rubber in Việt Nam, besides solving the mentioned limitations, it is necessary to carry out support programmes for the connection between potential business partners such as Yulex, Weber & Schaer as well as Vietnamese companies with smallholder rubber households.”

The expert gave an example of success in the wood industry, which has implemented very effective linkage models to “create FSC certified timber sources.”

The rubber industry could learn from the model of the wood industry, Phúc said.

Export potentials

Like some other agroforestry sectors, the development engine of Việt Nam’s rubber industry is based on rubber exports, including the current two main items of natural rubber and rubber products.

The country’s export makes up 17.4 per cent of the global total rubber trade, with a turnover of the rubber industry in 2021, including natural rubber, rubber products and rubber wood, reaching US$9.5 billion, up 20.8 per cent compared to 2020.

Natural rubber exports reached more than 1.9 million tonnes in 2021, bringing in a revenue of nearly US$3.3 billion, up 11.7 per cent in volume and 37.5 per cent in value over the previous year, thanks to an average export price increase of 23 per cent.

Export turnover of rubber products in 2021 reached $3.7 billion, up 18.5 per cent compared to 2020. Rubberwood exports also achieved over $2.5 billion, accounting for 17.1 per cent of total export turnover from wood and wood products, an increase of 6.9 per cent compared to 2020.

Last year, Việt Nam’s rubber area was about 939,000ha, making up 7.2 per cent of the total global area. Its rubber latex harvest reached 1.26 million tonnes in 2021, accounting for 8.7 per cent of global rubber production with an average yield of 1,682kg/ha, ranking first in Asia.

Phúc said, among that figure, rubber area owned by large holders (State-owned companies) made up 455,000ha, equivalent to nearly 48 per cent of the total rubber area of ​​the country.

The remaining 477,000ha, or 52 per cent, was owned by farmer households or small-scale companies known as smallholders.

In the smallholder rubber area, farmer households own about half of the total. The rest belongs to ​​state-owned companies (nearly 40 per cent) and private ones (10 per cent), according to Phúc.