BUSINESS IN BRIEF 1/7

Experts advise on support industries

To develop its support industries, HCM City needs to identify the main sectors and focus on training, technology, and incentives for their development, experts told a seminar on attracting investment in the sectors last week.

Vu Van Hoa, president of HCM City Export Processing and Industrial Zones Authority(HEPZA), said Vietnam has not identified key national products to develop a suitable support industry development strategy and create mechanisms and policies to support SMEs, and this curtails the development of support industries.

He also blamed it on the shortage of skilled human resources.

He called for designating projects to develop support industries industrial parks as "special important infrastructure projects," which are entitled to various tax breaks.

"They should be allowed to enjoy interest subsidies from the demand stimulus fund for land clearance and compensation and building technical and social infrastructure and standardised factories."

He also urged the government to offer the same tax incentives for support-industries industrial parks as those given to hi-tech enterprises – a 10% rate for 15 years.

Besides they should be given import duty breaks, longer land lease periods, and financial incentives, he said, while industrial parks should strengthen ties with foreign business groups to attract investment in support industries.

The city is building the Viet-Pan Techno Park at the Hiep Phuoc Industrial Park, and it will open in October this year, when it will focus on attracting investment from Japanese SMEs in high-technology support industries.

Hirotaka Yasuzumi, managing director of JETRO (Japan External Trade Organisation) HCM City, said the Government must support the development of Vietnamese companies and foster technology transfer to boost support industries.

"If Vietnam has only foreign firms in support industries, the country cannot hope to acquire technologies or develop the industry," he pointed out.

He blamed policies that have failed to meet companies' expectations for the lack of support industries in Vietnam.

Poor policies meant companies are unable to raise funds or train human resources, lack incentives, have no forum to compare notes with other companies in the same sectors, and lack large markets, according to Yasuzumi.

Le Hoai Quoc, president of the Sai Gon Hi-tech Park (SHTP), said attracting investment from multinationals will enable the development of support industries.

The SHTP management currently has a programme to develop support industries for hi-tech manufacturing, with the first pilot project intended to create the development of a supply chain for Intel's plant at the SHTP.

Similar projects are also planned for subsidiaries of multinationals Nidec Group, Sonion, Datalogic, and Jabil.

HCM City has a semiconductor industry development programme for 2013-2020 aimed at developing an "ecosystem" for the industry comprising human resource development, research and trial production, mass production, market development, and product promotion.

Doan Hong Tam, deputy chairman of the Vie-Pan Techno Park, said Japanese investors in support industries are mostly SMEs producing specialised, high-value-added products using complex engineering and technologies.

"We must have appropriate conditions to meet Japanese tenants' requirements including power infrastructure, clean water, telecommunications, skilled workforce, and legal services."

Besides, to attract Japanese investors, the city needs to offer a skilled and disciplined workforce, support with personnel recruitment and training, comfortable housing for professionals and workers.

Japanese firms also expected Vietnam to simplify procedures of all kinds, including by having a ‘one-stop service' in Japanese at industrial parks, he added.

Vietnam Airlines proposes VND22,300 per share in IPO

The national flag carrier Vietnam Airlines propose to sell their shares at VND22,300 each at an initial public offering.

The proposal was a part of the groups’ equitization project which the Ministry of Transport submitted Prime Minister Nguyen Tan Dung on June 27.

According to the project, the company’s book value is VND57,156 billion (US$2.68 billion).

The group’s charter capital is expected to be VND14,102 billion. In the IPO, the State will hold 75 percent of the charter capital, 20 percent will be sold to strategic investors, 3.47 percent will go under the hammer and the rest will be offered to its staff.

The carrier shares will be listed on the Ho Chi Minh City Stock Exchange.

Brazil reduces import tax on 250 items creating opportunities for Vietnamese goods

The Brazilian Government has decided to temporarily lower import tax rates from 16 percent to 2 percent on 240 types of machinery and equipment goods and 10 types of information technology and telecommunications goods.

The import tax reduction went into force on June 24, 2014 and will last until December 31, 2015, according to Vietnam's Commercial Affairs Division in Brazil.

Two-way trade between Vietnam and Brazil has grown strongly in the past years, putting it behind only the US in the American region. Thus, it is said that the import tax cut will create positive effects on bilateral trade. It is also considered an opportunity for Vietnamese exporters to expand their markets, reducing the dependence on specific markets.

In the first five months of this year, the two-way trade revenue between Vietnam and Brazil totaled US$1.23 billion, a year-on-year increase of 52.9 percent. Of the total, Vietnam exported US$579 million worth of goods to and imported over US$651 million from Brazil, up 42 percent and 64 percent over the same period last year.

Several Vietnamese goods exported to Brazil recorded higher earnings than during the same period last year including telephones and components (up 594 percent), aquatic products (52%), computers and electronic products (44%) and garments and textiles (55%).

The two-way trade between the two countries is expected to reach US$3 billion by the end of 2014.

HCMC Industrial Zone to be built in Myanmar

Vice Chairwoman of People's Committee of Ho Chi Minh City Nguyen Thi Hong visited and worked with Minister of Commerce of the Republic of the Union of Myanmar Win Myint in Yangon City on June 28.

The meeting is part of the framework plan of the 2014 Ho Chi Minh City Expo, taking place in Yangon City from June 26-30.

At the meeting, Vice Chairwoman Nguyen Thi Hong expressed her determination and desire to invest in fields such as high-tech agriculture, processing industry, jewelry, hotel, tourism and exporting goods into Myanmar market.

Currently, the agricultural sector of Vietnam in general and Ho Chi Minh City in particular has focused on high- tech manufacture and investment. Although Vietnam has square for rice growing  smaller than Myanmar, Vietnam has achieved a high agricultural output because of high- tech application in creating new rice varieties, added Nguyen Thi Hong.

Vietnam became the world’s top rice exporter with the export volume of seven million tons per year in 2013 and Ho Chi Minh City achieved successfully in importing and breeding milk cows.

As result of, we have a great investment potential in agriculture and wood processing industry, Ho Chi Minh City hoped that Myanmar Government, Ministries and Departments will agree to establish a new industrial zone of Ho Chi Minh City in Myanmar in the upcoming time, aiming to introduce Vietnamese goods to Myanmar customers, Hong stated.

Minister Win Myint said that Vietnam is ranked the eighth in the list of investors into Myanmar market. Myanmar consumers have appreciated the quality as well as reasonable price of Vietnamese goods. HCMC should send the proposal of building HCMC industrial zone in Myanmar soon. He also expressed his hope to strengthen ties economic cooperation relationship to Vietnam's dynamic investors.  

For the tourism sector, Myanmar will continue to participate in the annual tourism fair under title of ‘Five countries, one destination’, held by the HCMC People's Committee.

Earlier, Nguyen Thi Hong visited and worked with Chief Minister of Yangon City Mr. Myint Swe to discuss cooperation opportunities between Yangon and Ho Chi Minh City.

Ho Chi Minh City and Yangon City trade turnover has increased year on year. In 2012, it reached US$ 66.4 million and US$ 127.4 million in 2013. The first half of 2014, it touched US$ 83.9 million.

Vietnam enjoys $6.85 billion FDI in six month

Foreign Direct Investment reached US$6.85 billion in the first half 2014, accounting for 64.7 percent over the same period last year, the Foreign Investment Agency under the Ministry of Planning and Investment has reported.

The country had 656 newly licensed projects with total registered capital of US$4.85 billion as of June 20, equivalent to 93.2 percent over the same period last year.

219 projects were registered to increase US$1.99 billion investment capital, equal to 37 percent of the same period last year.

Disbursement of FDI projects hit US$5.75 billion, up 0.9 percent year on year.

Forty one countries and territories have invested in 43 provinces and cities across the country. The South Korea took the lead with $1.55 billion, followed by Hong Kong with $1 billion and Japan of $806 million.

Ho Chi Minh City topped US$886.3 million of FDI projects. At the second and the third positions are Binh Duong Province with $876.05 million and Dong Nai Province with $688.37 million.

Central destinations attractive to tourists

The flow of tourists to major destinations in central provinces continued to grow in the first six months of this year.

Khanh Hoa province, home to the popular beach resort city of Nha Trang, welcomed more than 1.65 million visitors in the reviewed period, an increase of 22 percent year on year.

Of the figure, foreign arrivals numbered over 411,000, up nearly 33 percent, with those coming from Russia, the Republic of Korea, Australia and the US accounting for a majority. Russia continues to be a major market, with 91,000 visitors, representing a 50 percent from the same period last year.

The province has set its eye on attracting more Russian tourists while tapping into the potential North East Asia market including Japan and the RoK. At the same time, a promotional campaign to lure domestic vacationers has been launched, with the aim of receiving 3.4 million visitors this year, including 840,000 foreign holiday makers.

Meanwhile, Quang Binh province reported a 144 percent rise to 1.8 million visitors in the past six months. The surge was partly attributable to the crowd of pilgrims who travelled to the locality to pay respect to General Vo Nguyen Giap at his resting place in Vung Chua-Dao Yen area. An estimated 750,000 people visited the tomb in the period.

Besides, improved service quality and new tours to unique caves in the province also helped attract more tourists.

The province is well-known for various natural attractions, especially the ‘Kingdom of Caves’, a complex of over 300 caves, found in the Phong Nha – Ke Bang National Park, which was recognised as a World Natural Heritage Site by the UNESCO last year.

With the opening of Son Doong Cave in 2013, Quang Binh was instantly catapulted onto the bucket lists of travellers around the world.

Recently, the New York Times named Quang Binh as one of the most attractive destinations in Asia and eighth out of the world’s 52 top tourist destinations for 2014.

B. Braun looks to invest extra US$270 million

Germany’s pharmaceutical company B. Braun Melsungen AG is planning to invest an additional US$270 million in Vietnam in order to satisfy increasing healthcare demand across the globe.

According to a local source, B. Braun will expand its investment capital in Vietnam over the coming seven to nine years. The boost in investment aims to meet a rising healthcare demand in both Vietnam and abroad. The additional investment will create 1,000 to 1,300 direct jobs, and spark the creation of 2,000 to 2,500 secondary jobs.

The expansion includes a US$ 45.5 million medical equipment factory which is expected to be completed within 2014, and another medical equipment plant worth US$97 million which is expected to become operational in 2016.

Moreover, B. Bruan will also build a new pharmaceutical factory worth US$66.3 million. This factory plans to cover 10,000 squares metres and is expected to start operating in the fourth quarter of 2015. All the projects will be implemented in Thanh Oai district, Hanoi, where the German healthcare company is already running an intravenous set production factory.

“B. Braun has commenced procedures to seek construction permits and land acquisition for new projects,” said the source.

The investment underlines Vietnam’s importance in its manufacturing strategy, and follows its initial successes in the country. The expanded investment is part of the firm’s wider US$4 billion expansion plans and is aimed primarily at building or expanding production facilities in Germany and around the globe.

B. Braun has maintained a presence in Vietnam since the early 1990s in the form of a joint venture. In 1992, the company initially opened a representative office in Ho Chi Minh City, followed by other offices in Hanoi, Danang, Can Tho and Hue.

B. Braun set up its first Vietnamese production facility, an IV solutions plant in Hanoi, in 1996.

Today, B. Braun Vietnam is a wholly-owned subsidiary of the B. Braun achieved US$75 million in revenue and created around 1,000 jobs in Hanoi, reported the source.

B. Braun is not the only European pharmaceutical company to have increased investment capital in Vietnam. Last year, France’s biggest drug maker Sanofi announced it would start building a US$75 million plant in Vietnam to satisfy the burgeoning healthcare demand in Asia.

Ocean Hospitality cited among top 50 most effective businesses

Ocean Hospitality-OCH has been listed in the top 50 most effective businesses in Vietnam, according to the results of an annual survey by Nhip Cau Dau Tu magazine in coordination with Thien Viet Securities Company.

The Company was one of the top performers in the Vietnamese stock market over the last three years, with capital mobilization of over VND500 billion and revenues in 2011, 2012 and 2013 surpassing VND200 billion and post-tax profits in excess of VND20 billion.

Sven Albert Saebel, OCH Director General said that with the leading experts’ assessment and consultancy, the list of top 50 most effective businesses in Vietnam will provide both local and foreign investors with useful and reliable information. He emphasized that the results have acknowledged great efforts by OCH staff who have brought the best services to customers.

In the future, OCH will promote its advantages in hotel management and business, and develop Givral trademark to contribute to the development of Ocean group as well as the national economy.

Int’l experts share institutional reform experience

International experts shared experience with Vietnamese partners in institutional reform at an international conference in Hanoi on June 29.

The conference themed institutional reform for transformation, inclusion and sustainability was held by United Nations University WIDER (UNU-WIDER) and the Central Institute for Economic Management (CIEM).

Economic experts focused their discussion on institutional reform and three major global challenges of today's society- structural transformation, inclusion and sustainability.

Participants agreed that Vietnam has made great efforts in institutional reform, recording significant achievements in growth and poverty reduction. Promoting these achievements, the country is examining how best to deal with challenges arising from institutional reform and the policy making process, including the equitisation of State-owned enterprises (SOEs).

According to the Ministry of Finance’s report, 85% of equitized enterprises have gained profits resulting in higher contributions to the State budget.

CIEM Director Nguyen Dinh Cung said institutional reform, particularly SoE equitisation still faces challenges and difficulties as a large number of SOEs retain a monopolistic role in the market in key fields like electricity and petroleum.

Through the conference, UNU-WIDER experts want to give a clear explanation for development challenges related to transformation, inclusion and sustainability in developing countries.

Promotions help business growth

Local enterprises are increasingly launching sales promotion to limit inventory and stabilise production, according to independent market watchdogs.

Analysts said that tough economic times had forced producers to seek new ways to survive.

In addition to supplying the market with products that have diversified designs, reasonable pries and high quality, many producers have focused efforts to offer sales that meet consumer demand.

Trade centres, supermarkets and retail stores typify this trend. They have regularly launched sales promotions that last two to three months, offering discounts of up to 50 per cent or more, depending on the product.

The director of a retail company in HCM City, who declined to be named, said that enterprises often had high turnover during these promotions.

Nguyen Khanh, director of the Thien Hoa Group, agreed, saying his company had more sales and had achieved high turnover with such promotions.

He said that many promotions are launched during holiday periods.

Sales are offered for high-demand products such as household appliances, accessories and cosmetics, as well as for high-grade products with top brand names like Karen Millen, Coast, DKNY, Swaroski, ICB, Nine West and Steve Madden.

Shops at Sai Gon Tax Trade Centre have offered big discounts on name brands also.

Nguyen Thi Hong, vice chairwoman of the HCM City People's Committee, said the city government had also called on enterprises to participate in consumer support programmes through sales promotions to stimulate demand.

Analysts said consumers had welcomed the promotions, particularly during difficult economic times.

City resident Phan Thu Ha of Tan Binh District said her family "often hunts for sales programmes where we can buy good quality products at low prices" in order to reduce spending.

Vu Thi Kim Dung, marketing director of Parkson Mall in HCM City, said: "Enterprises should make thorough preparations before launching sales promotions if they want to win over consumers. In particular, they should pay more attention to quality as well as prices."

Deputy PM says Quang Ninh should lead investment efforts

The north-eastern Quang Ninh Province should lead in implementing the Government's resolution on measures to improve the investment environment, said Deputy Prime Minister Hoang Trung Hai.

In his speech delivered at a conference on promoting investment and improving provincial competitiveness held on Saturday, Hai said the province should focus on building modern infrastructure to make the fullest use of its potential and advantages.

The province needed to build a sustainable socio-economic development model along with ensuring security and defence by 2020, adding that it should prepare to develop Van Don district into the first exclusive administrative and economic zone in the country, he added.

Special attention must be paid to the transport system, including the road linking Ha Long City with the Ha Noi-Hai Phong Highway, the Ha Long-Van Don-Mong Cai Highway and the Van Don international airport, he said.

Nguyen Van Thanh, Vice Chairman of the Quang Ninh People's Committee said the province has seen improvement in its competitiveness, taking the fourth position out of 63 cities and provinces nationwide in term of provincial competitiveness index in 2013.

It was a rise of 16 places from 2012, Thanh said, adding that Quang Ninh Province also took the 4th place out of seven localities which have excellent quality in economic management.

Quang Ninh has granted investment licences to 39 foreign direct investment (FDI) projects capitalised at more than US$1 billion and 205 domestic projects at nearly VND114 billion ($5.4 million) over the past two years.

Its annual GDP growth has reached more than 7 per cent over the two-year period, higher than the national average. The province has always been in the top five localities in terms of budget revenues.

Its GDP per capital last year was $3,000.

It also revealed that over 130 delegations of foreign investors, including conglomerates like Las Vegas Sands, Texthong and Amata groups had recently conducted fact-finding tours in the province seeking co-operation opportunities.

"These figures were proof of the province's efforts in implementing reforms," said Pham Minh Chinh, Secretary of the provincial Party Committee, adding that it had gained trust from investors and businesses operating in the region.

Chinh said the province had set a target to become a stable and attractive destination for investors with an aim to maximise capitals, technologies and management experiences.

It has striven to attract investment of $2.6 to $3 billion a year of which FDI would account for over $1 billion.

Dau Anh Tuan, head of the Viet Nam Chamber of Commerce and Industry's Legal Department said, according to its latest survey on investment attraction and competitive capacity, the province has been one of the 12 that enterprises rate as attractive investment destinations.

The interest of companies to invest in Quang Ninh Province was due to its high PCI and improved infrastructure as well as administrative procedures, Tuan said.

Le Khac Hiep, Vice Chairman of the BIM Group which has operated in the province for over 20 years, told the conference that the province's authorities have always supported businesses quickly.

Atsusuke Kawada, chief representative of the Japan External Trade Organisation (JETRO), spoke highly of the province's potential as well as chances of investment in the province in the time to come, and stressed on the importance of building trust among the investors.

To do this, local authorities should fully realise what they have promised to enterprises and announce concrete indices on the quality of trade promotion activities, he added.

Over 450 representatives of the local business communities attended the conference and discussed co-ordinated marketing efforts aimed at increasing the investment attractiveness of the province.

Talks among policy makers, investors and economic experts were also held on the same day to discuss optimal solutions for improving the quality of investment attraction and competitive capacity for businesses.

Ginger prices double to hit record-high

The price of ginger has doubled, hitting a record-high, this year, according to head of a Farmers' Association branch in HCM City's Binh Chanh District.

Tran Van Thanh, who heads the branch for Hamelt 1 in the district's Hung Long Comumune, said the price of ginger rose from VND40,000 (US$1.87) in February to VND80,000 per kilo.

Vo Thanh Phong, a member of the branch, said he began to plant ginger in 2002 on on 2,000sq.m of land.

Although he did not succeed initially, he studied farming techniques from books and experienced farmers, expanding his ginger cultivation area to 7,000sq.m.

"Ginger growers were very excited this year as prices surged to VND75,000-VND80,000 per kilo," he said.

Tran Van Tung, another member of the branch, said that he now had 5.000sq.m under ginger cultivation.

Tung said demand had increased as ginger was a common ingredient in Vietnamese dishes, but also used for its health benefits.

Farmers said the price shot up because of a supply shortage, as this is not the peak season for the fruit.

Traders are visiting ginger gardens dirctly to purchase freshly harvested ginger and then resell it to export firms, they said.

Nguyen Thi Lan, a trader at the Thu Duc wholesale market, said main ginger supplies for the HCM City market were from western provinces and the Central Highland Provinces such as Dak Lak, Dak Nong, Buon Me Thuot and Lam Dong, as well as from China.

However, some traders in the market have suspended imports of ginger from China, contributing to lead to a shortage, she said.

According to ginger growers in the district's Hung Long commune, all products were being sold immediately after harvest because farmers had no preservation methods.

Farmers said they needed help with growing, caring and preservation techniques to improve ginger productivity and quality.

Besides domestic sales, Vietnamese ginger is exported to many markets, including Laos, Cambodia, Malaysia, Bangladesh and India.

Property market to recover in near future

The property market expects to see more recovery by this year end and beyond due to positive business results on the market in the first half of 2014, said experts.

According to a recent report on the local real estate market in the first half of this year released by the Ministry of Construction, the market had more positive developments than the same period of last year with a strong increase in transactions of small and medium-scale houses with medium prices. Some developers that had stopped constructions temporarily have restarted their housing projects.

The ministry said supply of apartments in large cities like Ha Noi and HCM City had increased and transactions of social apartments with medium selling prices had surged, reported the Xay dung (Construction) newspaper.

The report said that in the first half of this year, Ha Noi had 4,000 successful transactions on the property market, doubling against the same period of last year, while HCM City also saw a positive situation in property transactions, especially apartments with a price at VND15 million per sq.m.

Real estate projects had seen 50 to 80 per cent successful transactions via property trading floors, the report said.

Therefore, the ministry said, the local real estate market at present still had many challenges but it was really warmer.

However, the recovery on the local property market would be slow in the future, said experts.

According to Tran Kim Chung, Deputy Head of Central Institute for Economic Management, the local property market may not see change at present, but it has the potential to get better and this can happen quite easily.

On the other hand, the market will start a full circle of development if Viet Nam succeeds in negotiations over the Tran Pacific Partnership agreement and maintains stability in macro economy.

Pham Duc Toan, Director of EZ Viet Nam Company, said the property market has a short circle and some instability. But in future, the local market would enter a new circle with longer stability within 10 years. The market would be brighter within the next 1-2 years.

Meanwhile, Neil MacGregor, Managing Director of Savills Viet Nam, a foreign property service and consulting provider in Viet Nam, said the country's real estate market was at an attractive phase in its development having recently bottomed out and shown some encouraging signs of recovery.

The HCM City office and residential markets in particular, were starting to demonstrate a better balance between supply and demand. Whilst this had not yet resulted in significantly increasing rentals or residential prices, Savills expected this to occur in the second half of 2014 and into 2015.

Whilst Viet Nam is at the bottom of its real estate cycle, many other Asian markets are at the top and may be set for a downturn over the next few years, according to Savills. Viet Nam is therefore attractively placed for investors to take advantage of the market recovery, as other markets begin to cool.

In addition, the current investment trend is focusing on the following sectors: office, hotel, and residential. Within the office sector, the HCM City market is seen to have bottomed out with rents starting to pick up. Investors are therefore focusing on operating office buildings with stable cash flows.

Leather, footwear criteria to be set

The Viet Nam Leather and Footwear Association (VLFA) has unveiled plans to develop product quality and safety criteria to raise the industry's production standards.

The move aims to offer a basis for producers to deliver better quality products and create a level playing field between domestic and foreign players.

The VLFA General Secretary Phan Thi Thanh Xuan told Industry and Trade newspaper that despite Viet Nam's leather and footwear industry still being heavily reliant on imported materials, it did not have its own set of criteria to control the use of unsafe chemicals.

According to the association, the industry required 220,000 – 250,000 tonnes of leather each year, with domestic suppliers supplying about 100,000 tonnes.

Xuan said there were only a small group of testing centres in Viet Nam dedicated to assessing material inputs used by leather and footwear producers.

"As a result, footwear firms have to test their materials and products themselves to meet importers' requirements," she said.

Nguyen Bich Thuy, a representative from the Thuong Dinh Footwear Ltd Co, said the company usually sent its samples overseas for testing before producing bulk orders.

If the testing results failed to satisfy the client's requirements, the company would change its materials, she said.

Another representative for Ladoda Production, Service and Trading Leather Products Company, said it spent US$10,000 on testing substances in products each year.

Head of the Viet Nam Leather and Footwear Research Institute, Nguyen Hai Trung, said the absence of a system for controlling the use of chemicals in leather products meant domestic producers were being held to a double standard.

Currently, leather and footwear products that were imported to Viet Nam did not face such barriers, he said. He further explained that Viet Nam's participation in major trade pacts that imposed zero per cent tariffs on products, created even bigger challenges to domestic producers, including losing their market share at home.

Head of Science and Technology Department under the Ministry of Industry and Trade, Nguyen Dinh Hiep said most Vietnamese leather and footwear firms were being outsourced to by foreign firms and were required to meet international standards.

A set of criteria imposed by Viet Nam or technical barriers were needed to better control imported materials and products to the country, he emphasised.

Since 2007, the European Union has adopted the Regulation on Registration, Evaluation, Authorisation and Restriction of Chemicals to improve the protection of human health and the environment from risks posed by chemicals. The measure simultaneously enhanced the competitiveness of the EU's chemicals industry.

However, when developing such a set of criteria in Viet Nam, Hiep said it was important to assess the impacts on local firms and their ability to adapt.

Leather and footwear account for Viet Nam's leading export industries, with export turnover rising from more $4.7 billion in 2008 to an expected $9.6 billion this year.

Businesses eye extra incentives to boost productivity

Domestic and foreign businesses want incentives from the Government and local authorities for better operations, according to a recent survey released at a seminar in Ha Noi on Thursday.

Nearly 1,500 firms that responded to the survey have expressed the hope that they would receive tax incentives, financial support and opportunities to access loans, according to Patrick Gilabert, a representative from the United Nations Industrial Development Organisation (UNIDO).

The findings revealed that with incentives, foreign businesses have operated more productively, tended to use a large number of workers, achieved higher productivity and made more investments than local peers.

In the survey, foreign businesses gave high ratings to Viet Nam's political stability and better business environment, saying these were important factors, which determined whether they should carry out investment projects here.

At present, incentives attracting FDI in Viet Nam have played an important role in the period of economic reforms including financial incentives in taxes that attracted the attention of foreign investors. Many foreign investors have been able to expand their businesses to enjoy preferential tax benefits.

However, that is not the decisive factor in volume and quality of foreign capital, according to the report.

Therefore, the report recommended, Viet Nam should be careful while building mechanisms for incentives and implementing and supervising impacts from the incentives.

The action would help the nation to choose and manage FDI in sectors that the economy needed.

Deputy head of the Foreign Investment Agency under the Ministry of Planning and Investment, Dang Xuan Quang, called for relevant agencies to work together to introduce incentives suitable for international practices to attract more foreign investors in Viet Nam.

The report was studied in nine cities and provinces including Ha Noi, Hai Phong, Bac Ninh, Vinh Phuc, Da Nang, HCM City, Ba Ria Vung Tau, Binh Duong and Dong Nai.

Vietnam brewers in race to increase production capacity

Breweries operating in Vietnam have announced plans to increase production capacity as there is still huge potential for growth in a market that downed as much as three million liters of beer in 2013.

Sapporo Vietnam Co Ltd has approved a plan to send the production capacity of its plant in southern Long An Province from 40 million liters to 100 million liters a year, CEO Hirofumi Kishi said.

While it is currently focusing on the Ho Chi Minh City market, the chief executive officer said the company will expand into neighboring provinces in the Mekong Delta and even Hanoi.

The Saigon Beer-Alcohol-Beverage JSC, commonly known as Sabeco, has recently broken ground on the Saigon – Kien Giang brewery project in the Mekong Delta province of Kien Giang.

The VND600 billion (US$28.24 million) plant, expected to produce 50 million liters of beer every year, came just after the groundbreaking ceremony of a similar project in Can Tho.

In HCMC, where Sabeco is headquartered, the company has also planned to increase the capacity of its Cu Chi facility.

With these new expansions, Sabeco is expected to reach the milestone of producing two million liters of beer a year, given its current capacity of 1.8 million liters. The company will thus become the leading beer supplier in the Southeast Asian country.

Vietnam Brewery Ltd, which manages the popular brand Heineken, has already increased its production from 150 million liters to 420 million liters per annum.

Still, the market will soon welcome some newcomers.

Slovakia-based BTG Holding is scheduled to put its first-ever Vietnam facility into operation in the fourth quarter of next year. The EUR86 million (US$117.15 million) brewery is capable of producing 190 million liters a year.

U.S. player AB In Bev, which owns the Budweiser brand, is also speeding up the construction progress of its maiden Vietnam plant. The 100 million liter brewery is scheduled to become operational by the end of this year.

Nguyen Van Viet, chairman of the Vietnam Beer and Beverage Association, said beer consumption in the country is forecast to rise seven percent from three million liters in 2013, despite economic turbulence.

“Beer businesses are in a fierce competition for market shares,” he commented. “If the seven percent growth is really reached, it will be a great achievement given such a competition.”

Vietnamese breweries are facing yet another tougher challenge to avoid being defeated by foreign players on home soil.

“The competition pressure from international brands is truly challenging,” Sabeco general director Pham Thi Hong Hanh admitted.

Although foreign breweries have smaller market shares, their products have much higher commercial values than the locally produced, according to industry insiders.

In the same product segment, brands such as Heineken, Sapporo, Tiger and Budweiser have higher commercial values than Sabeco’s products, an analyst said.

“Sabeco may post larger sales than its foreign rivals, but it is understandable that the latter can report bigger profits,” he remarked.

SeABank funds Cat Bi Airport expansion

SeABank has signed an agreement to provide VND500 billion (US$23.8 million) for the upgrade of the Cat Bi International airport in Hai Phong port city.

The signing ceremony took place on Wednesday and was attended by representatives from SeAbank, Vietnam Airlines and the Hai Phong City People's Committee.

Under the plan, a three-kilometre runway, capable of receiving the Boeing B777, B767 and A321 aircraft, will be built. The project will also include a series of auxiliary facilities. Construction, which began in March 2013, the project is scheduled to be completed in 2015.

Generali ties up with local Techcombank

Generali Vietnam Life Insurance L.L.C and Techcombank have signed a bank-assurance partnership agreement.

The partnership between Techcombank – a leading bank in Vietnam with strong financial ability and influence in banking and financial service sector and Generali Vietnam – a member of the world leading insurer Generali Group, aims to provide the customers of Techcombank insurance solutions meeting their diversified needs for the financial protection of themselves and families in different life stages.

SSI launches trading app for iPhone, iPad

The Sai Gon Securities Inc. (SSI) has announced the launch of its mobile trading app for iPhones, iPads and other portable products.

Investors can do stock transactions on their mobiles with this app from June 30.

SSI's Mobile Trading is a stock trading application designed especially for the iPhone and the iPad, with simple and easy-to-use functions such as watch list, placing orders, margin trading, time conditional order, auto stop loss order, asset management etc, said the company.

It added that customers can use the app with wireless and 3G networks that are available everywhere in Viet Nam and other locations.

Investors owning iPhones and iPads can download and install the tool by searching "SSI mobile" in their App Store. Others having Android OS or Windows phones can access it via http://mobiletrading.ssi.com.vn or http://mts.ssi.com.vn.

FDI enterprises a driving force for many industries

Foreign-invested enterprises play an important role in bolstering the growth of many sectors, especially the processing and manufacturing industries, according to the General Statistics Office (GSO).

At a press conference on June 27 focusing on FDI enterprises’ operation in the 2000-2013 period, the GSO also affirmed that the foreign-invested sector has helped in economic re-structuring and dealing with many social issues while furthering the country’s integration into the global economy.

By the end of 2013, there were 9,093 FDI enterprises operating in Vietnam, a six-fold increase compared to the figure in 2000. Of the total, wholly foreign-owned enterprises accounted for 83 percent.

The foreign-invested sector provided jobs for more than 3.2 million workers during the reviewed period, eight times the figure in 2000.

The GSO also reported that FDI enterprises accounted for 30.5 percent of total financial contribution to the State budget of all enterprises in the country and 45.4 percent of their total profit.

However, the office noted that low added value is a weakness of the FDI sector as most enterprises operate in assembling and sub-contracting, such as automobile assembly and garment and shoe making.

Pham Dinh Thuy, chief of the GSO’s Industrial Statistics Department, said while Vietnam has pinned great hope on FDI enterprises for the transfer of technology and professional skills, the situation so far has fallen short of expectation.

Thuy added that many FDI enterprises also failed to fully carry out their commitments in terms of environmental protection./

CMC Group launches R&D Institute

CMC Group one Thursday announced they were setting up an institute that would conduct research in technology applications and develop high tech products and services.

The research conducted by the CMC Institute of Research and Development (CIRD) would also help in improving the group's competitiveness.

The institute has a charter capital of VND5 billion (US$247,000) and operating capital of VND100 billion. The capital would be mobilised from loans and donors.

Speaking at the ceremony, Nguyen Trung Chinh, the group's General Director, said CMC has clarified on the most important strategy to become a creative group.

According to international standards, the turnover of creative activities would have to account for 30 per cent of the companies.

Southern province fulfills 96 percent of FDI attraction goal

Despite complicated developments in the first months of 2014, the southern province of Dong Nai attracted nearly 825.9 million USD in foreign direct investment (FDI) as of June 15, reaching 96 percent of its yearly target.

Of the sum, about 343.9 million USD came from 37 new projects and the remaining was added to 32 existing projects, said the provincial Department of Planning and Investment.

Notably, 560 million USD of FDI was disbursed during the period, up 12 percent from a year earlier and accounting for 56 percent of the annual target.

By June 15, there were 1,433 licensed foreign invested projects in Dong Nai with a total capital of over 25.2 billion USD. Up to 1,115 of them, worth 20.8 billion USD, are valid.

Director of the department Bo Ngoc Thu said that to achieve such outcomes, local authorities have carried out a number of measures to attract investment and support businesses.

Particularly, they have provided timely assistance to those suffering from disturbances which erupted during workers’ rallies protesting China ’s illegal placement of its oil rig Haiyang Shiyou – 981 in Vietnam ’s continental shelf and exclusive economic zone.

Currently, all affected enterprises have resumed their normal operation, she noted.

Vietnamese, Norwegian firms expand factory

Executives of Norway’s Sapa Group and Vietnam’s Benthanh Group (BTG) recently inked a contract on expanding their aluminium factory in Vietnam.

With more facilities and space, the second phase, worth 8 million USD, will raise the plant’s output to 15,000 tonnes when operational in 2016.

At the signing ceremony in Oslo on June 26, Vietnamese Ambassador Le Thi Tuyet Mai and State Secretary to Norwegian Minister of Industry and Trade Lars Jocob Hiim spoke highly of the two firms’ cooperation.

They also expressed their belief that the signing of a free trade agreement between Vietnam and the European Free Trade Association (grouping Norway, Switzerland, Iceland, and Liechtenstein) will further enhance business and trade relations between both countries.

The two sides also highlighted the Vietnamese and Norwegian Governments’ commitment to continuing to bridge the two business circles so as to create more effective joint projects such as that between Sapa and BTG.

BTG General Director Nguyen Quang Tien said the joint venture’s revenue grew 9.4 percent while its pre-tax profit jumped 38 percent per year from 2011 to 2013.

Aside from serving the Vietnamese market, Sapa BTG’s products are also exported to the North America and Japan, he added.

Source:VEF/VNA/VNS/VOV/SGT/SGGP/Dantri/VIR
support industries, Vietnam Airlines, FDI , Property market
 
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