BUSINESS IN BRIEF 18/12

Authorities mitigate impact of falling oil price to State budget

The government will implement comprehensive measures to meet next year's annual state budget collection target of VND911.1 trillion (US$42.774 billion), notwithstanding the insignificant effect of the global oil price decline.

Some experts are concerned about the reduction of the state's budget next year as the export value of crude oil, which has fallen by 30% to a four-year low of roughly $60 per barrel, contributes significantly to the nation's coffee.

However, Deputy Finance Minister Do Hoang Anh Tuan said that as of 2014, the state coffer has not been heavily dependent on the fluctuation of the world's oil price due to a shift in the state's budget collection sources.

Tuan explained that the oil export revenue is estimated to account for only approximately 10.2% of the total state budget in 2014 compared with the previous 20–25% rate.

State budget collection from domestic production makes up more than 70% of the total budget, which diminishes the gravity of the impact of oil export collection.

Dr. Tran Hoang Ngan, a member of the National Assembly's Economic Committee, also expressed continued optimism despite the predicted oil price fluctuations, saying that the gains will be larger than the losses.

Vietnam has to spend more on importing petroleum products compared with its earnings from exporting crude oil.

Therefore, an ongoing decline in oil prices will result in lower prices of petroleum products. In turn, this will help enterprises cut back on their production costs.

Hence, enterprises can expect higher profits, which will consequently add to their taxes to be paid to the state coffer. Ultimately, this will help increase the state's revenue.

Finance Minister Dinh Tien Dung also said that the ministry will focus on eliminating obstacles and creating favourable conditions for firms to assist them in boosting production and business.

The measure will create a long-term collection source for the state budget, Dung said. He also explained that the firms will only be able to meet their tax obligations when their businesses and production performances are good.

Moreover, the finance ministry has worked closely with other relevant departments and agencies to employ relevant measures to guarantee the achievement of the state budget collection target, Dung said.

One of the measures is to increase the collection of tax arrears, which has reached more than VND60 trillion (US$2.816 billion) thus far.

To increase the state budget collection next year, experts also recommended that the government should effectively manage state budget collection and reduce spending, including administrative and regular expenditure as well as public debt payment.

Strict punishment should be meted out against those responsible for improper, wasteful and ineffective expenditures, the experts asserted.

Chile introduces market potential in Vietnam

Although Vietnam-Chile Free Trade Agreement came into effect as from January 1, 2014, investment and trade cooperation between the two countries still faces obstacles.

Together with the Governments’ determination, the business communities from the two countries should pay more effort to lift bilateral trade and investment cooperation into a new height.

These statements were made by Nguyen The Hung, Vice Director of the Vietnam Chamber of Commerce and Industry (VCCI) branch in HCM City at December 16 seminar to introduce Chile market.

Hung said Chile has established Free Trade Area with Vietnam. Bilateral trade between the two countries has grown stably, creating a firm foundation for investors, importers and exporters to actively approach their two markets.

Chile is strong in mining, metallurgy, fishing, red wine and food processing, which are products Vietnam need to import. Vice versa, Vietnam mainly exports footwear, garment, agricultural products, vegetables and fruit, wooden products and plastics to Chile.

Nguyen Thanh Quang, a representative from Chile Consulate General in HCM City said Chile has stable politics, and transparent investment environment. The country’s major export markets are the US, China and Japan, which are gateway for Vietnamese products to penetrate not only Chile but also other countries.

Vietnamese businesses can invest in Chile’s potential fields, such as agricultural products, forest plantation, services, mining and metallurgy.

Over the past three years, Vietnam has balanced trade with Chile. For instance, two-way trade turnover last year hit more than US$530 million, of which Vietnam’s exports were nearly US$220 million and imports were more than US$310 million.

In the first ten months of this year, it grossed more than US$710 million, of which Vietnam’s exports were nearly US$420 and imports were more than US$290 million.

EU supports enforcing Competition Law

The Vietnam Competition Council (VCC) and the European Trade Policy and Investment Support Project (EU-MUTRAP) reviewed ten years of implementing the Competition Law in the country and lessons learnt at a seminar in Ho Chi Minh City on December 16.

EU-MUTRAP Technical Assistance Team Leader Claudio Dordi said the Competition Law has been implemented over the past 20 years and proved effective. Notably, it has played an important part in Free Trade Agreements (FTAs) negotiations among concerned nations.

Mr Dordi added that Vietnam is now a dynamic nation on the right track of international integration, so it is urgent for the nation to promote the efficiency of the Competition Law. Valuable experiences from the EU and the EU-MUTRAP project’s experts will enable the country to enhance its capacity of law enforcement in the context of global market integration.

So far, Vietnam has dealt with over 100 cases which have violated the law.

Dr. Tran Mai Hien, VCC Director General emphasised businesses, especially exclusive enterprises need to possess detailed knowledge of what should be done to avoid violating the Competition Law.

Dr Trinh Minh Hien, an EU-MUTRAP expert, stressed that state management agencies should limit the fields of business with the involvement of exclusive enterprises. Violations should be publicised and handled as soon as possible to help businesses to create a healthy competition environment in Vietnam.

The Competition Law was issued on December 3, 2004 with the purpose of restricting unhealthy competition.

Mexico,Vietnam seek to grasp investment opportunities

The Vietnam Embassy on December 15 sponsored an international marketing seminar in Mexico City, providing an opportunity to discuss ways it could assist Latin American businesses in promoting investment and inbound tourism to Vietnam.

Speaking at the seminar, Vietnam Ambassador Le Linh Lan highlighted the status of the Trans Pacific Partnership (TPP) negotiations noting that 2015 marks the 40th anniversary of diplomatic ties. Lan said it would be fitting if the agreement could be signed on the occasion.

The two-way trade turnover surpassed US$1.8 billion this year, Lan said, adding that this represents a ten-fold increase over the past decade, yet the two nations have barely scratched the surface of their potential.

During the seminar, representatives from the Association of Professional Promotion of Mexico (AMPPRO) and other businesses spoke highly of Vietnam’s socio-economic achievements over the years, the Vietnamese people’s talent and creativity as well as the country’s beautiful landscapes and unique culture.

The representatives said the gap between the nations in distance and in cultural understanding are the biggest hindrances for Mexican businesses optimally realizing trade and investment opportunities.

To overcome these obstacles, Mexican businesses pledged to seek new outlets in the Vietnamese market with the support from the Vietnam Embassy and expressed hope that Vietnam will become a gateway for them to get a toehold in Southeast Asia.

After hearing reports on investment and tourism opportunities in Vietnam, representatives from Mexican businesses posed questions on administrative formalities, Vietnamese laws, and import-export commodity lists. Many expressed hope to visit Vietnam in the near future to explore investment opportunities more fully.

On the occasion, the Vietnamese embassy also held a photo exhibition on Vietnamese culture and people to introduce Mexican people to – dynamic Vietnam on the right track to international integration.

UAE a leading trade partner for Vietnam

The United Arab Emirates (UAE) is one of Vietnam’s most dynamic economic partners in the Middle East and North Africa region with the two-way trade turnover in 2013 jumping 180% on-year in value, striking US$4.46 billion.

Deputy PM Phuc, who is on an official visit to the UAE, made the statement at a Vietnam-UAE economic forum held in Dubai that was attended by hundreds of governmental dignitaries and entrepreneurs from the two countries.

In the last decade, trade between the two countries has exploded more than 63 fold Deputy PM Phuc said and cooperation has expanded across the board in all areas of politics, diplomacy, economics and culture.

As of November 2014, Dubai businesses including – DP World, IPIC, Emirates Investment Gate, and Dubai Holding – have heavily invested US$135 million in 8 projects in Vietnam.

Vietnam has sent 8,000 workers to the UAE and the two governments have agreed to raise the number to over 20,000 coming years.

Deputy PM Phuc said he hoped that the forum would help businesses from the two countries find yet even more areas for expanded cooperation for mutual benefit to further stimulate trade and investment between them.

Also on December 15, the Deputy PM took time to visit with Overseas Vietnamese (OVs) at the Vietnamese Embassy in Dubai.

Vietnam- Algeria bilateral trade aims for US$1 billion by 2020

Vietnam and Algeria are aiming for US$1 billion in two-way trade by 2020, Vietnamese Ambassador Vu The Hiep said at a workshop in Algeria’s capital city on December 15 to seek ways to boost trade exchange between the two countries.

Speaking before representatives from around 30 Vietnamese and Algerian businesses, the ambassador highlighted the potential for economic cooperation between the two nations, particularly in construction, agro-fishery product processing, consumer goods, pharmaceuticals and tourism.

In the first 10 months this year, Vietnam earned nearly US$315 million from export to Algeria, including more than US$116 million worth of coffee and US$23.6 million worth of rice. However, Algeria’ exports to Vietnam stood at only US$702,000.

Ambassador Vu The Hiep also urged both sides’ enterprises to further their cooperation in labour, as Algeria is expected to see high demand for skilled workers in construction, infrastructure and mining.

Vietnam hopes to send between 1,500-2,000 skilled workers and technicians to the country by 2020, Hiep added.

Commercial Counsellor Nguyen Van Mui briefed the participants on economic development and the international integration process in Vietnam, recent developments in Vietnam-Algeria economic, trade and investment partnership and its orientation in the coming time.

Director of the Department of International Relation under the Algeria Chamber of Commerce and Industry (CACI) Belhoul Ouiahiba introduced Vietnamese businesses to investment opportunities in Algeria. She said Algeria hopes to benefit from Vietnam’s technology transfer through business joint ventures in different economic sectors, especially between small- and medium-sized enterprises.

Participants proposed that the two Governments sign agreements on two-way trade, labour cooperation and investment as well as hold more trade and investment promotion activities to help their businesses find partners and opportunities.

Wood product exports expect to grow next year

The export value of wood products is forecast to reach 7 billion USD next year, said General Secretary of the Vietnam Timber and Forest Products Association (Vifores) Nguyen Ton Quyen.

This is five years earlier than the target set in the national forestry strategy in the 2006-20 period, as approved by the Prime Minister.

Quyen added that the forestry industry expects to increase exports when Vietnam signs more trade agreements, including the Forest Law Enforcement, Governance and Trade Voluntary Partnership Agreement (VPA/FLEGT) about the management of wood processing for legal exports to the European Union, the Trans-Pacific Partnership (TPP) and the ASEAN Free Trade Area (AFTA).

According to the Ministry of Agriculture and Rural Development, the eighth joint expert meeting and fourth negotiation session on the VPA/FLEGT recently took place with the aim of ensuring that all Vietnamese timber and timber products that are exported to the European Union are legally sourced and produced. The two sides showed their willingness to complete the negotiations over the FLEGT-VPA in 2015.

Quyen revealed that the forestry industry is also considering increasing its previous export target in the 2006-20 national forestry strategy by 5 billion USD to touch 12 billion USD by 2020.

If suitable measures and effective support policies are taken, the annual export turnover of the industry will likely reach 15 billion USD to 20 billion USD in the next 10 years, Quyen said.

However, he added, the scale of the world demand for wood products is roughly 300 billion USD per year, which means Vietnam's total exports are still quite modest.

This year, Viforest estimated that the export of wood products will reach 6.2 billion USD, five times higher than that of five years ago.

Exports to the main markets, such as the United States and Japan, have increased significantly by 14.17 percent and 19.47 percent respectively.

Experts attributed the preference for Vietnamese wood products in large markets to their good quality and competitive prices.

They said that many importers have turned to Vietnam's products instead of China's, due to high Chinese labour costs.

Vietnam's wood products have so far been presented at more than 100 markets, including major ones such as the United States, the European Union, Japan and China.

Vietnam is the sixth largest exporter in the world and the second largest exporter of wood interior decoration products, claiming nearly four percent of the world market share.-

Tra fish exporters adapt to tougher markets

Deputy Minister of Agriculture and Rural Development Vu Van Tam has urged tra fish processors and exporters to tighten quality control over fish fry at farms and input materials to meet international quality standards in the context of forecast difficulties for tra fish export next year.

Industry insiders have said farming costs are expected to go up and the purchasing power in foreign markets remains uncertain in 2015.

At a meeting with seafood exporters from Mekong Delta localities in An Giang on December 15, Nguyen Huy Dien, Deputy Director General of Fisheries Directorate, said the Mekong Delta recorded a total tra fish farming area of over 5,430ha this year, exporting more than 718,000 tonnes for 1.58 billion USD, up 0.5 percent in volume and 0.04 percent in value.

He noted that poor quality fry have resulted in low living rate during the farming process, while the prices of feed and other input materials are on constant rise.

At the same time, many foreign markets have tightened quality control of imported tra fish, he said, adding that the European Union, Republic of Korea and Japan are closely checking the amount of antibiotic residue in seafood while the Middle East is also asking for Halal certificate for no use of pig bone in fish feed.

Deputy Minister Vu Van Tam asked localities to improve cultivation and processing process up to VietGap standards for a start. The Directorate of Fisheries were requested to appraise the quality of breeding and feed-making facilities.

Tam praised An Giang and Dong Thap for their preferential credit model and production chain. He also promised all possible State support in extending markets, including lower interest rates and tax incentives, among others.

The Mekong region is currently home to 193 businesses producing frozen tra fish and basa for export.

Vietsovpetro fulfils yearly plan

The Vietnam-Russia Oil and Gas Joint Venture (Vietsovpetro) has fulfilled its yearly plan of exploiting 5.1 million tonnes of crude oil, the Vietsovpetro’s 44th Council meeting reported on December 15.

Vietsovpetro plans to pump up an additional amount of 260,000 tonnes of crude oil in the remaining half of this month, increasing this year’s total output to 5.36 million tonnes. However, the figure is 196,000 tonnes lower than that of 2013.

Besides, the venture provided over 1.4 billion cubic metres of gas, up 0.2 billion cubic metres as planned.

Vietsovpetro also fulfilled its yearly target revenues of 3.86 billion USD and expects to rake in 4.34 billion USD for the whole year.

Japan’s Hamamatsu City promotes investments in Vietnam

The Ministry of Planning and Investment and the Japanese City Hamamatsu signed a memorandum of understanding that will look to reel in more investments from Hamamatsu into Vietnam.

The document was inked by Deputy Minister of Planning and Investment Nguyen Van Trung and Hamamatsu’s Mayor Yasutomo Suzuki in Hanoi, on December 15.

Under the pact, both sides agreed to create favourable conditions and provide available information for their businesses, particularly those operating in the support industry.

They will work together in organising conferences and delegation visits to seek investments or establishing business support centres to aid enterprises’ search for partnerships and investment opportunities.

Addressing the signing ceremony, Minister of Planning and Investment Bui Quang Vinh stated that Vietnam always gives high estimations to Japanese investors and comes up with the most possible conditions for their projects in the country to run productively.

The Hamamatsu Mayor expressed his belief that the cooperation will bring a lot of benefits, pledging to facilitate investments by his city’s businessmen in Vietnam.

Located in western Shizuoka Prefecture, Hamamatsu made a GDP of 28 billion USD in 2013. It holds vast potential for the support industry, the manufacture of musical instruments, and the garment and textiles industry.-

Mekong Delta city develops irrigation system

The Mekong Delta city of Can Tho plans to spend 8 trillion VND (376 million USD) building irrigation systems to prevent inundations in flood-prone areas from now to 2020.

The money will be soured from the local and central budgets, the Government bonds, and the official development assistance (ODA) capital, said Vice Chairwoman of the municipal People’s Committee Vo Thi Hong Anh.

The submergence has become more serious in the city since 2008 due to the impact of climate change, according to the Southern Institute for Water Resources Planning.

Ninh Kieu, Binh Thuy, Cai Rang, O Mon, and Phong Dien districts are the most vulnerable, being submerged under 20-50cm of water within several hours as a result of tidal surges and floods.

In addition to building new sewage pits and reinforcing breakwater and embankment systems, Can Tho aims to complete the dredging of canals inside and outside the city to protect farming areas and aquatic breeding facilities.

Comprising 12 provinces and one centrally-run city, the Mekong Delta plays an important role in the nation’s economic growth. However, the region is threatened by climate change impacts such as rising sea level and saltwater intrusion.

Scientists predict that a one-metre rise in sea level could let saltwater in 70 percent of the Mekong Delta’s area. As a result, Vietnam would lose two million hectares of farmland, and many coastal localities would be submerged in water.

Vietcombank gets Germany’s information security certificate

The Bank for Foreign Trade of Vietnam (Vietcombank) has won the ISO/IEC27001:2013 certificate, an internationally acclaimed standard for information security management, by Germany’s technical inspection organisation TUV Rheinland.

Vietcombank is the first bank in Vietnam awarded the certificate for all its business activities and products at its headquarters and 90 branches nationwide.

Getting the certificate is considered to be one of the bank’s commitments to building an information security system following international standards and regulations.

The application of the international standards will also bring helpful information to the bank and protect its system better.

Additionally, the certificate will help the bank to know about its rivals in the banking and finance sector, and reduce the costs and shortcomings in information.

To earn the recognition, Vietcombank has implemented a large project on international communication to improve its staff's awareness and obedience of information security in the whole system. It has also invested in infrastructure to ensure business activities and meet the required standards.

The bank is the pioneer in building and applying information security system in all its business activities and products in the country.

It was the first and only Vietnamese bank listed among the Top 500 leading banks in the world for two consecutive years. Last month, it was also voted as one of the top three favourite e-banks in 2014.

This year, the bank opened 15 new branches and 38 transaction offices nationwide to expand its network.

TUV Rheinland is a global leading provider of technical, safety and certification services , with more than 500 branches in 66 countries and territories.

Mekong Delta to see wind power plants

The Ho Chi Minh City-based Phu Cuong Corporation has unveiled plans to invest 436 million USD in building a 170MW wind power plant in the Mekong province of Soc Trang.

Speaking on the sidelines of a wind-power conference held by the Swedish consulate in HCM City last week, Nguyen Viet Cuong, President of Phu Cuong Group, said work on the plant is scheduled to start in 2016 and it would start generating power in 2017.

Initially 15 turbines with a total capacity of 30MW will be built in the coastal town of Vinh Chau at a cost of 75 million USD.

He said Phu Cuong Group has plans to build wind power plants with a total capacity of 800MW.

At the conference, Vestas Wind Systems, a Danish company producing wind power equipment and parts, signed an agreement to supply equipment for the Vinh Chau plant.

A master plan for the development of wind power in Soc Trang has been approved by the Ministry of Industry and Trade, and the provincial People's Committee has issued a licence for Phu Cuong's project, Dau Tu (Vietnam Investment Review) newspaper reported. According to the ministry's General Department of Energy, nearly 50 wind power plants with a total capacity of 4,876MW have been licensed in the last three years. However, just three plants are up and running so far.

Seafood exports to achieve US$7.7 bln in 2014

Viet Nam’s seafood export value is estimated to achieve more than US$7.7 billion in 2014, accounting for 6-7% of the country’s total export value and up 18% compared to the previous year.

The nation is currently among the world's leaders in aquaculture and ranks fourth in aquatic exports. The Vietnamese aquatic products have been exported to 165 nations and territories around the world.

When bilateral agreements between Viet Nam and large markets, especially the Viet Nam-EU free trade agreement, are signed in early 2015, Vietnamese seafood exports will enjoy a range of preferential treatments, including tax incentives, said Deputy General Secretary of the Viet Nam Association of Seafood Exporters and Producers (VASEP) Nguyen Hoai Nam.

Hai Phong attracts US$5.4 bln in FDI in three years

The northern city of Hai Phong attracted US$5.402 billion in Foreign Direct Investment (FDI) between September 2011 and October 2014.

The sum came from 124 licensed projects and 91 operating ones that increased their investments. These projects mainly focused on the processing and manufacturing sectors such as the Bridgestone Factory Project with a total investment of US$574.8 million, Nipro Pharma Corporation with US$250 million and LG Electronics Viet Nam Hai Phong with US$1.5 billion.

Besides high-tech projects, in 2011-2014, a number of investors from Japan and the US arrived in Ha Phong to seek opportunities in the construction of commercial houses, hotels and commercial centers.

To improve its FDI attraction, the city will enhance investment promotion activities, step up the reform of administrative procedures, speed up the implementation of crucial infrastructure projects and train human resources.  

Attracting FDI to the agricultural sector

According to the Foreign Investment Agency under the Ministry of Planning and Investment (MPI), the country has 516 effective foreign direct investment (FDI) projects in agro-forestry-fisheries sectors with a total registered capital of US$3.6 billion, accounting for 3% of all projects and nearly 1.5% of the total registered capital. Drastic changes in both thinking and approaches are required to attract further FDI capital in the sector.

It is not difficult to recognise causes leading to the recent reduction of FDI in agriculture. Poor structuring of the system for agricultural investment has discouraged investors while the number of skilled agricultural workers is still low. In addition, there are too many steps in licensing investment, production and general business among the MPI, the Ministry of Agriculture and Rural Development (MARD) and the Ministry of Industry and Trade.

In the above-mentioned situation, FDI attraction to agriculture is still assumed to be positive and able to increase sharply in the future. When negotiating the Trans-Pacific Partnership, Vietnam saw many countries looking to become its crucial agricultural partner. However, it is not easy to accomplish this task.

To find appropriate solutions to revive the agricultural sector’s attraction of FDI, a series of macro-level policies and actions have been taken. The MARD has boosted the implementation of a scheme on agricultural restructuring. Notably, the scheme on improving the attraction and management of FDI in agro-forestry-fisheries in the 2015-2020 period with a vision to 2030, has drawn great attention from international organisations and foreign enterprises and groups. Many countries consider Vietnam as a new destination for agricultural investment and this opportunity should be grasped with proper preparations.

FDI in agriculture has seen positive developments with numerous new projects in agriculture in the north, the south and the Mekong Delta region in particular. Agriculture has become attractive to many businesses from Japan, a country with a green economy and sustainable environmental protection, appropriate for Vietnam. After a meeting between leaders of the State and the MARD with Japanese leaders in June, Japanese Minister of Agriculture, Forestry and Fisheries Yoshimasa Hayashi visited the country and met with Minister of Agriculture and Rural Development Cao Duc Phat to discuss agricultural co-operation between the two countries. Numeous business delegations from Japanese localities have also visited Vietnam to seek investment opportunities in agriculture.

Explaining Japanese enterprises’ recent great attention to Vietnam’s agriculture and food sectors, economic experts said that Japan’s policy on local agriculture has seen fundamental changes as the country has joined trade agreements with other countries, including Vietnam. Natural conditions for agricultural production make Vietnam an ideal choice for them. Nearly 70% of Vietnam’s population, including the young labour force, is in rural areas but the country’s agriculture system is outdated — including cultivation, harvesting, processing, preservation and product distribution meathods. Vietnam and Japan clearly have the conditions to benefit each other.

Meanwhile, the Korea Rural Community Corporation (KRC) of the Republic of Korea and the Dong Thap provincial People’s Committee have recently signed a public-private partnership agreement on agriculture, in which the KRC is responsible to mobilise the RoK’s official development assistance sources and multilateral funds to provide equipment to mechanise rice production on a 20,000ha area in Dong Thap province.

According to Vice Chairman of the Ben Tre provincial People’s Committee Cao Van Trong, among 47 effective FDI projects in the province were two projects of Thailand and one of France, investing in agricultural product processing.

Ben Tre province has improved the quality of administrative reforms to attract foreign investors while actively contacting each investor in certain projects without organising promotion activities such as general workshops and conferences, keeping in touch with investors and providing necessary information promptly. Promotional activites are only conducted for feasible projects.

Drastic restructuring in agriculture and flexible solutions for localities are expected to be the golden key to the flow of FDI into the country’s agriculture.

Master Dang Kim Son from the Institute of Policy and Strategy for Agriculture and Rural Development said reduntdant capital around the world is a golden chance for Vietnam to attract investment in agriculture. Large groups have paid great attention to Vietnam’s agriculture, noticing the sector’s potential. Despite limited investment, many agricultural products of Vietnam have held leading position on the world’s export list. If further changes are made to investment encouraging policies, more foreign investor will be attracted to the country’s agriculture.

Vietnam to loosen regulations for foreigners to buy houses

Foreign residents can buy residential and commercial property in Vietnam under the Law on Real Estate Business, the deputy minister of construction, Nguyen Tran Nam has clarified.

Ownership, by foreign individuals or companies, would be on the basis of a renewable 50-year lease, but property purchases would have to go through recognised legal entities, such as real estate firms or developers.

Foreign ownership would  be restricted to no more than 30 percent of an apartment building, or 250 houses in a residential street.

“Foreigners who are allowed to enter Vietnam can own houses in the above-mentioned cases except for national defense and security areas,” Nam said.

Inpyung beheads Daewoo Cleve apartment blocks

Korean property developer Inpyung has decapitated apartment blocks in its Daewoo Cleve development in Hanoi’s Hadong district due to construction and sales difficulties.

The gigantic 30 to 40 storey blocks have been dramatically scaled back to 23 to 27 storeys. The height adjustments were announced by the Hanoi Architecture and Zoning Department, applicable for the entire Van Phu New Residential Area where Daewoo Cleve is situated.

Inpyung has made the cuts as costs rise on higher blocks. The cost-cutting has also followed a decline in apartment values in the area over the last two years, causing Inpyung to restructure its designs and prices to woo customers.

The decision to reduce the heights of buildings at Daewoo Cleve may include in a plan to restart the project, which has been delayed for the last three years.

Once slated as the biggest apartment project in the west of Hanoi, Daewoo Cleve was intended to be a high-end apartment project with a ‘strongly Korean style’ in Hanoi.

Beginning construction in 2010 with a plan of constructing 15 high-rise buildings including more than 4,500 apartments, Daewoo Cleve’s first two blocks were planned to be handed over to buyers by the end of 2013 and the whole project will be finished in 2018. However the project was stalled after a year of construction, at six storeys and had remained untouched since then.

Daewoo Cleve is one of many Korean real estate developments affected by the down-turn in Vietnam’s real estate market. Among those Booyoung Vina also located in Hadong district has been delayed for more than six years and the financial capacity of its investor – Booyoung International remains in doubt.

Meanwhile, other on-going foreign-invested projects face different troubles. Posco E&C, a partner in a joint venture to develop the $2.1 billion Splendora development in Hanoi, is facing heated complaints from its customers.

Customers in another Korean backed project – Hyundai Hillstate, are suing the developer – Hyundai RNC Hatay over management fees, the deliberate miscalculation of apartment space and low quality construction.

Many others face worse fates. Daewon Binh Khanh Investment Company, an affiliate of Korea’s Daewon in early 2012 withdrew from the 2,200 apartment Binh Khanh Resettlement Residence project in Ho Chi Minh City.

In another project, GS Cu Chi Development Co., a subsidiary of Korea’s GS Engineering & Construction Corporation in March 2012 sold its 200 hectare 36-hole golf course project in Cu Chi district, Ho Chi Minh City to Vietnam’s C&T Group.

Ba Ria-Vung Tau calls for investment in logistics potential

The southern province of Ba Ria-Vung Tau is calling for investment into logistics services at the Cai Mep-Thi Vai port complex in Tan Thanh district to serve the local industrial parks.

As the province aims to develop Tan Thanh district into a modern port city in the near future, it is orienting the district towards developing logistics and port services as well as industrial parks. Ba Ria-Vung Tau intends to adopt many incentives for investment projects in these services at the Cai Mep-Thi Vai port complex.

“Tan Thanh district aims to become one of the most important port centres of Ba Ria-Vung Tau by 2020,” said Le Van Xuong, Chairman of the Tan Thanh District People’s Committee, “In the 2015-2020 period, the district is going to invest in infrastructure, trade and services in order to orient its economy towards services.”

Tan Thanh has National Road 51 – the road linking Ba Ria-Vung Tau with provinces in the southern economic zone – running through it. The district has a system of national and international deepwater ports to meet the demand for goods transportation for firms in nearby industrial parks, many of which operate in heavy industry and energy.

“The Cai Mep-Thi Vai port complex is one of the two most important international transit port groups of Vietnam,” said Bui Quang Vinh, Minister of Planning and Investment. “The port complex is located close to Ho Chi Minh City and southern provinces. Therefore, its operation affects the economy of the whole southern region.”

As of now, Ba Ria-Vung Tau’s ports have the total capacity of 87.1 million tonnes. The total cargo volume through the province’s ports in 2014 was estimated at 57.8 million tonnes, up 15 per cent on year, of which import-export container cargo would increase by 22.5 per cent to 9.36 million tonnes, equivalent to 1.38 million TEUs (twenty-foot equivalent units). Meanwhile, dry bulk estimatedly went up 18 per cent to 17.2 million tonnes, liquid bulk up 1.5 per cent to 13.1 million tonnes, and transit goods up 18.5 per cent to 18.11 million tonnes.

Between 2011 and 2020, Ba Ria-Vung Tau plans to develop international-standard logistics services at two port complexes, namely the Cai Mep-Thi Vai and the Sao Mai-Ben Dinh.

Tra fish export to US reduces due to antidumping tax

Vietnam’s tra fish export turnover to the US was recorded at US$273.3 million in the first ten months this year, down 16.2 percent over the same period last year, reported the Vietnam Association of Seafood Exporters and Producers and the General Department of Vietnam Customs.

High antidumping tax rates imposed by the US have made several businesses limit the fish export to this market.

Despite of a reduction in volume, average export price increased nearly 4 percent.

The US is the second largest importer of Vietnamese tra fish after the EU, accounting for 18.7 percent of the total export turnover.

Motorbike manufacturers increase export

Domestic vehicle production output reached 5 million units this year, nearly doubling the market demand. However, companies still expanded their scale with expectation to turn Vietnam into one of the largest motorbike manufacturing countries in the world.

Though motorcycle manufacturers’ turnover decreased drastically recently, manufacturing capabilities increased sharply. As per a statistic, the companies have produced nearly 5 million a year. Furthermore, many manufacturers have continued expanding scale.

Honda Vietnam has recently put into operation of the third motorbike factory with capacity of 500,000 units a year.  Similarly, Yamaha has also spent nearly US$30 million on its factory to raise its manufacturing capability to 1.5 million vehicles per year.

Along with expansion of scale, the companies have introduced more new vehicles to promote local consumption. In addition, they have also raised export of vehicles and vehicle parts. For instance, since the second quarter this year Honda Vietnam has achieved export turnover of nearly US$ 200 million. The company has expected to reach US$247 million for export in 2014.

The manufacturers have explained the turnover decreases was due to the economic crisis and consumers tightened spending. They have predicted that in the coming years motorcycle consumption would increase as the world economy recovered. Vietnam has many advantages including reasonable  labor prices which help strengthen its competition against other countries.

Economist Bui Hai Minh said that Japanese, South Korean and China's Taiwanese enterprises have transferred vehicle production technologies to Vietnam through investing in motorbike accessories. In addition, Vietnam is located in the world’s largest motorbike consumption region.

Annually, around 43 million motorbikes are sold in the world; of which, 10 million, 5 million and 5 million motorbikes are sold in China; India and Indonesia respectively.

So Vietnam can become one of the largest motorcycle manufacturer with the export turnover of US$ 500 million every year, said Mr. Minh.

PM approves Licogi’s equitization plan

Prime Minister Nguyen Tan Dung has approved an equitization plan for Infrastructure Development and Construction Corporation (Licogi) operating under the umbrella of the Ministry of Construction.

Licogi will sell part of State-owned capital and issue shares for investors to raise its chartered capital.

The firm now has chartered capital of VND900 billion, equivalent to 90 million shares at the price of VND10,000 each. Of the amount, the State holds 36 million shares, accounting for 40% of the enterprise’s chartered capital.

Licogi will sell nearly 1.17 million shares (1.3%) to its employees, 63,000 shares (0.07%) to its trade union, and 31.5 million shares (35%) to strategic investors. The remaining 21.27 million shares (23.63%) will be auctioned.

PM Dung has ordered Minister of Construction Trinh Dinh Dung and Licogi to decide the starting price for its shares, select a financial institution as a consultant and a stock exchange for the IPO, and make preparations for issuing shares on a stock exchange in line with current regulations.

PM Dung has authorized the construction minister to decide criteria and select strategic investors for the corporation in accordance with Decree No. 59/2011/ND-CP issued on July 18, 2011 on converting State-owned enterprises into join stock companies.

Licogi now has 510 employees and 442 of them will work for the company after the equitization. Established in 1960, Licogi has 28 member companies.

The enterprise has taken part in many projects, particularly power and infrastructure fields. The projects include Ham Thuan-Da Mi Hydro-electricity Plant in Binh Thuan Province; A Vuong, Song Tranh 2 and Dak Mi 4 hydropower projects in Quang Nam Province; Pha Lai 2 Thermal Power Plant in Hai Duong Province, Uong Bi and Mong Duong power projects in Quang Ninh Province; and Noi Bai International Airport.

HCM City chairman calls for prudence in borrowing

The government of HCMC will continue to rely on bank loans to implement development projects but only projects that are gauged as effective can have access to loans, HCMC chairman Le Hoang Quan said.

At a question-and-answer session at the HCMC People’s Council meeting last Friday, he said the key task for the city next year would be to successfully carry out the 2011-2015 socioeconomic development plan and prepare a new plan for the 2016-2020 period.

Deputy Vo Van Sen asked why the city had kept public debt at a low level, and whether this tight budget policy had affected the city’s economic recovery.

Chairman Quan said controlling public debt plays an important role in stabilizing the macro economy, thus contributing to the nation’s financial sector stability.

HCMC needs credit for development investment but has to prepare various resources for loan repayment. The city has handed over land to investors to develop infrastructure, including four major roads, at an estimated cost of VND12 trillion, Quan said.

As the city’s economy is facing a host of challenges, efficient public debt control is a top priority. Therefore, it is impossible to borrow money for ineffective investment, Quan stressed.

Meanwhile, deputy Lam Thieu Quan said the city sets aside nearly VND20 trillion for development investment a year. However, most projects have lagged behind schedule, piling pressure on the city budget if loan interest is taken into account.

The deputy wondered whether the city had calculated the average length of delay in a project or planned rewards for investors and contractors who complete projects ahead of schedule. He also asked whether the authorities had taken actions to speed up construction progress.

Explaining the situation, Le Hoang Quan admitted slow progress at many projects, saying relevant agencies have adopted measures to cope with the problem.

The city now is managing three finished projects funded by official development assistance (ODA) loans, and supervising debt payments at 19 other ODA-funded projects under construction with a combined investment of nearly VND120 trillion (including VND98.5 trillion worth of ODA loans and VND21.3 trillion worth of counter capital). Of which, total disbursements are estimated at VND6 trillion this year.

Next year, the city targets a GDP growth rate of over 9.5%, development investments at 30% of GDP and export growth from 8-10%, State budget collections at over VND265.7 trillion and 120,000 new jobs.

Believe it or not

Governments use import tariffs to restrict trade since they cause prices of imported items to surge, thereby making them less affordable. This is clearly a tool of a country’s authorities to regulate trade flows in a given period of time.

Nonetheless, a report by the online version of Tuoi Tre newspaper published last Saturday reveals that PV Oil, an oil products trading arm of Vietnam National Oil and Gas Group (PVN), had been behind a December 6 decision jointly issued by the ministries of industry-trade and finance to hike import tariffs on fuels by up to 10 percentage points.

The report says that just before the two ministries announced the tariff spike, PV Oil had written to the two ministries indicating that the requirement for fuel trading houses to store volumes of fuels enough to cover 30 days of distribution while world oil prices are in decline has eaten into their profits.

In the statement, PV Oil says that since August this year it had racked up losses. To support PV Oil and other fuel traders, it proposes the two ministries temporarily keep fuel retail prices at high levels by raising fuel import tariffs by 5-7 percentage points.

So when world oil prices edge higher, the tariffs would just be reverted to the previous levels or lowered a little to give fuel traders scope to hike retail prices. This practice would prevent the market from a sense of strong price volatility.

Bui Ngoc Bao, chairman of Petrolimex, the country’s leading fuel trading firm, throws support behind the fuel import tax hikes.

Fuel traders have to store fuel volumes sufficient for 30 days of sale, meaning they import fuels at higher prices but sell them at lower prices due to steady price cuts in line with global market movements. The 11 rounds of fuel price cuts this year have delivered a blow to traders, he reasons.

If this principle of reasoning applies to previous years when fuel prices kept rising, traders must have earned hefty profits because they import fuels at low prices but sold them at high prices due to the 30-day storage rule.

The chairman of Petrolimex even sounds hypocritical when saying he worries the State would lack money for social welfare if it did not raise fuel import tariffs.

This is the job of others, not for-profit businesses like Petrolimex.

VN backed to improve competitive edge

The Vietnam Trade Facilitation Alliance (VTFA) will come into existence to help the nation enhance its competitiveness and the customs and other agencies to find and remove barriers to trade and business in the market.

The United States Agency for International Development (USAID), the American Chamber of Commerce in Vietnam (AmCham) and the Vietnam Chamber of Commerce and Industry (VCCI) last week signed a memorandum of understanding on the establishment of VTFA.

The VTFA will provide policy and technical support for the General Department of Customs and related trade promotion agencies in Vietnam to make trade easy in order to increase the country’s competitiveness.

The alliance will also back the implementation of the Trade Facilitation Agreement (TFA) in Vietnam as well as other free trade agreements such as the Trans-Pacific Partnership (TPP) under negotiation. It will help better the competitiveness of Vietnamese firms and foreign companies operating in this market by developing a more transparent business environment.

One of the main objectives of the cooperation program is to back Vietnam’s efforts to accelerate its trade across borders by sharply reducing the time and cost of imports and exports to the average level in the region.

Source: VEF/VNA/VNS/VOV/SGT/SGGP/Dantri/VIR

Competition Law, Vietsovpetro, Vietcombank, wind power, FDI in agriculture
 
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