Vietnam Industry and Trade News Bulletin for OCTOBER 22, 2018

I. ENERGY AND PETROLEUM

1. Junin 2 Oil Project Under Scrutiny: A report regarding the Junin 2 heavy oil upgrade project in Venezuela will be submitted to the National Assembly during the current session. This project is of particular interest due to significant losses incurred by the Vietnam Oil and Gas Group (PVN), leading to a cessation of operations.
2. Fuel Market Competition: Experts predict intensifying competition in the domestic fuel supply market. Local refineries will face direct pressure from imported petroleum as import taxes are expected to drop to 0%.
3. Solar Power Initiatives: Binh Thuan province has requested the Government to extend favorable electricity pricing policies for local solar projects until the end of 2020. Meanwhile, Vietcombank has signed a credit contract worth 785 billion VND to finance the 46MW BP Solar 1 plant in Ninh Thuan.
4. EVN Performance: In the first nine months of 2018, the Vietnam Electricity (EVN) reported a 9.66% increase in production and purchase volume, reaching 158.1 billion kWh, ensuring stable supply for national socio-economic activities.

II. AUTOMOBILE AND HEAVY INDUSTRY

1. Shift in Car Imports: For the first time, US-origin cars (250 units) surpassed Thai-origin cars (129 units) in weekly import volume. Meanwhile, European cars are expected to see sharp price drops in the future as import duties are phased out under the EU-Vietnam Free Trade Agreement (EVFTA).
2. Market Exit: Taiwanese automobiles, which once imported thousands of units annually, have reportedly disappeared from the Vietnamese market in 2018.
3. Paper Industry Struggles: Approximately 70% of Vietnam’s paper output relies on scrap paper. However, stricter regulations on scrap imports are posing a significant challenge for the industry, creating a conflict between production needs and environmental protection.

III. AGRICULTURE AND IMPORT-EXPORT

1. Regional Competition: China is expanding its own cultivation of dragon fruit and watermelon, which poses a direct threat to Vietnamese agricultural exports. Experts urge for a strategic shift to reduce over-reliance on the Chinese market, which currently consumes 80-90% of Vietnam’s exported dragon fruit.
2. Livestock Trends: Despite having 5.4 million cattle, Vietnam remains a prime destination for beef exporters as domestic supply fails to meet rising local demand. In the feed sector, global giants like Cargill continue to invest heavily in new production facilities across Vietnam.
3. Commodity Price Fluctuations:
   • Pork: Prices have begun to “cool down” to 50,000–51,000 VND/kg in the Mekong Delta and 47,000–50,000 VND/kg in the North.
   • Coffee: Domestic prices fell by 600 VND/kg but remain stable above 36,000 VND/kg.
   • Dragon Fruit: Red-flesh dragon fruit prices in Tra Vinh rebounded strongly to 37,000 VND/kg.

IV. DOMESTIC MARKET AND RETAIL

1. Retail Shakeup: The once-iconic retail brand Parkson is facing a period of decline in Vietnam, closing multiple stores due to heavy losses and failure to adapt to new consumer trends and fierce competition.
2. Logistics Boom: Driven by the surge in e-commerce, international logistics and warehouse operators are aggressively seeking opportunities to enter the Vietnamese market.
3. “Proud of Vietnamese Goods”: The Ministry of Industry and Trade held a Gala concluding the 2018 “Proud of Vietnamese Goods” program, noting a significant shift in consumer sentiment from merely “prioritizing” to being “proud” to use local products.
4. Market Management: Authorities in Ho Chi Minh City recently seized and destroyed 1.8 tons of “dirty” poultry meat intended for consumption. In the broader fight against counterfeit goods, over 34,700 violations were detected between 2017 and September 2018.

Analogy: The Vietnamese agricultural export market is like a climber on a single rope; being so heavily attached to the Chinese market (80-90% of dragon fruit exports) means that if the rope frays due to China’s domestic expansion, the entire industry faces a dangerous fall unless it secures additional safety lines in other global markets.