BUSINESS IN BRIEF 14/9

Markets to hold ahead of Fed announcement

The market is expected to move sideways early this week as it awaits a mid-week "market watch" decision by the US Federal Reserve (Fed) regarding a possible interest rate hike.

"Investors appear to be standing outside and waiting for the Fed's move, instead of strongly investing in the market at this stage," analysts at BIDV Securities Co wrote in a report, mentioning the market's current low liquidity and narrow trading band.

They further said that whether or not the US Fed raises interest rates in September, the result would cause market volatility, in the short run. Therefore, the "current value accumulation will likely end soon when the Federal Open Market Committee's meeting takes place from September 16-17".

Shares rose in two out of the total five trading days last week, mainly driven by large-cap stocks.

On the HCM Stock Exchange, the VN-Index gained a cumulative 1.78 per cent during the week, closing Friday at 566.74 points. Meanwhile, the HNX-Index on the Ha Noi Stock Exchange increased 1.59 per cent to end the week at 77.53 points.

Blue chips were the largest gainers last week. The VS-Large Cap, the index measuring performance of the largest stocks with a market capitalisation of over VND10 trillion (US$444.4 million), developed by the financial website vietstock.vn, climbed 4.12 per cent.

Other indices, including VS-Mid Cap, VS-Small Cap and VS-Micro cap. increased just 0.5-1.3 per cent.

Liquidity continued to decline from the previous week.

In HCM City, the daily trading volume dropped 9 per cent from a week ago, averaging only 87.5 million shares, valued at over VND1.5 trillion ($66.7 million) per session. These figures were low, compared with the last three-month average of 135 million shares and VND2.3 trillion ($102.2 million).

The similar number was much more modest in Ha Noi, as the market volume reached just 33 million shares, worth VND367 billion ($16.3 million) per session.

According to data on the vietstock.vn, 14 of 20 sectors saw gains, of which banks were on top with an average growth of 7.73 per cent. Insurers were the second largest gainers, with an average rise of 4.62 per cent, followed by real estate, construction and securities companies, with increases from 1.7-2.2 per cent.

Bank for Investment and Development of Viet Nam (BID) was the second largest listed lender by market capitalisation, with over VND77 trillion ($3.4 billion) on September 11, becoming the leading lender. Its share value gained almost 9 per cent last week, thanks to information that the share was included in the FTSE Vietnam Index and FTSE Vietnam All-Share Index, managed by the FTSE Vietnam exchange-traded fund in its third-quarter review.

Its liquidity also improved, with an average of over 2.6 million shares traded per day, higher than the previous week's average of just 1.7 million shares per day.

According to analysts at Bao Viet Securities Co, investment capital in shares will be segmented in the short run, based on third-quarter business results of listed companies. They said those benefiting from lower input costs, thanks to declines in global commodity prices, include steel, iron ore, plastic, oil and foreign currency, which could attract higher attention. 

Guidance for Law on Real Estate Business in pipeline

Documents guiding the Law on Real Estate Business, which took effect in July 1, are expected to be issued sometime this month, according to Mr. Nguyen Trong Ninh, Deputy Head of the Housing and Real Estate Market Management Agency under the Ministry of Construction (MoC).

The content of the documents were completed by the agency at MoC’s direction and have been submitted to the Prime Minister, Mr. Ninh was quoted as saying.

Their official issue will create the legal framework to support the sustainable and vibrant development of Vietnam’s real estate market, he added.

Including specific content regulating detailed procedures and conditions, the documents will help businesses and homebuyers complete housing transactions in compliance with the law.

The Amended Law on Real Estate Business took effect on July 1 and contains important amendments on the rights of key players in the real estate market compared to the Law on Real Estate Business dated June 29, 2006. The rights of local organizations and individuals to conduct real estate business remain generally unchanged, according to the Vietnam International Law Firm (VILAF).

They continue to have the right to purchase houses/buildings and construction works for sale, lease or grant of hire-purchase, lease houses/buildings and construction works for sublease, and develop new projects. However, following the restructuring of the rights of land users with respect to different types of land use rights in the Land Law 2013, the new Law also restructures the corresponding development rights for each type of land use rights, VILAF said.

For overseas Vietnamese and foreign-invested enterprises (FIEs), beside the right to develop new projects the new Law adds the right to sublease houses/buildings and construction works that are already developed. Overseas Vietnamese and FIEs, however, have different rights in the development of new projects. Since overseas Vietnamese and FIEs do not have access to certain types of land, their rights to develop new projects are also narrower than those of local organizations and individuals, according to VILAF.

Tonnes of dragonfruit in stockpile

At the end of the harvest, farmers in Ham Minh commune in south-central Binh Thuan province still had 1,500 tonnes of dragonfruit in stock as Chinese buyers have stopped importing. Price fell as a result, to a low of VND1,000 ($0.04) per kilo for high-quality fruit and VND500 ($0.02) for low-quality fruit.

Some households left their fruit on their farm, while others hired trucks to transport them to Ho Chi Minh City and sold them on the street for VND10,000 ($0.45) for four kilos.

In response, domestic enterprises have bought the fruit to support the farmers. After one week nearly 1,000 tons of dragonfruit were sold, according to one company selling them. It is expected that the remainder will be sold over the next ten days.

As transport costs differ based on location, so do prices. In Hanoi dragonfruit are selling for VND10,000 ($0.45) a kilo, in Da Nang VND8,000 ($0.36), and in north-central Nghe An and Thanh Hoa provinces VND7,000 ($0.32).

These enterprises are not selling dragonfruit in Ho Chi Minh City because it will create competition with farmers.

Besides retail selling, enterprises also do business with other companies. For example, one is working with a beverage business in Da Nang and sell dragonfruit for use as a raw material.

It is also researching methods to keep the fruit fresh for export to ASEAN countries, receiving interest from one Singaporean importer.

To prepare for sales over the long term it is building a processing plant in Quy Nhon in south central Binh Dinh province with a capacity of 1,000 to 2,000 tons per day.

The difficult thing for all enterprises, it said, is that production capacity in provinces is unclear.

“Sometimes we are told that there are tens of thousands of tonnes in stockpile, but when we start buying them the stockpile is actually in the hundreds of thousands of tonnes ,” its CEO said.

US$116.59 million for intersection construction in District 7

The Ho Chi Minh City Department of Transport has presented a project to build Nguyen Van Linh-Nguyen Huu Tho Intersection, District 7 with total capital being expected at VND2,620 billion (US$116.59 million).

The department plans to implement the project in two phases. The first phase will build a tunnel under Nguyen Van Linh Street and traffic light system at nearly VND840 billion(US$37.38 million).

The second phase will construct other items of the project and enlarge Nguyen Huu Tho Street at a total fund of VND1,780 billion, of these VND1 trillion for site clearance.

The city People’s Committee has tasked Tan Thuan Industrial Promotion Company to work with Phu My Hung Development Company to consider and negotiate investment cooperation measures under BT form (Build-Transfer).

Nguyen Van Linh-Nguyen Huu Tho crossroads is among hot traffic jam spots in HCMC.

FDI attraction prospers in Mekong Delta

Six provinces and cities in the Mekong Delta region have attracted 100 foreign direct investment (FDI) projects with total registered capital topping US$738 million this year, reported the Foreign Investment Agency under the Ministry of Planning and Investment.

Long An province has attracted most with 78 new projects at US$208 million. Hau Giang province has lured two projects with US$288 million.

So far, the delta has had over 1,000 FDI projects with the total capital of US$12 billion, accounting for 5 percent of the country’s number.

Long An has taken the lead with 600 projects and US$4 billion, accounting for 60 percent the region’s total projects and 35 percent capital.

According to experts, despite showing good signs for the region, FDI attraction has still yet to appropriate with the Mekong Delta's potentials.

Therefore, the region should have solutions in human resources and infrastructure to foster FDI's attraction in agricultural field and improve its competitiveness, added experts.

Customs procedures still headache for firms

Many enterprises still complain that customs clearance procedures remain complicated though the law on customs expected to ease export and import activities came into force early this year.

Speaking at a meeting with business executives held by the General Department of Customs and the U.S. Agency for International Development (USAID) in Hanoi on Tuesday, the Vietnam Textile and Apparel Association’s vice chairwoman Dang Phuong Dung said textile firms normally import quarantined feather but when shipments arrive in Vietnam, the item would be quarantined again.

Importers have to wait five to seven days for getting a quarantine certificate from the Animal Health Department after they submit their applications. Then they have to register for quarantine and fumigation at border gates and this progress lasts one to two days. Post-fumigation results must be sent to science academies for verification.

Dung calculated that it would take up to 20 days for the imported product to go through the customs. Enterprises have to pay storage fees which amount to dozens of millions of dong.

Au Anh Tuan, deputy head of the Customs Control and Supervision Department, said customs procedures have been streamlined. Since August 15, goods in more than half of more than five million declaration forms has been allowed to go through the green channel and 8.34% through the red channel.

However, Dung said goods of many enterprises had been diverted to the red channel though these goods were subject to customs clearance at the green channel.

Nguyen Hoai Nam, deputy general secretary of the Vietnam Association of Seafood Exporters and Producers (VASEP), said a few seafood enterprises are permitted to have their products cleared at the green channel.

The General Department of Customs said it has proposed removing 19 procedures and simplifying 46 others. Besides, the agency has reduced unnecessary customs documents and the time for application checks and goods inspections.

Pham Thanh Binh, a consultant for the GIG project, said improved customs procedures could not be measured precisely.

A study funded by GIG showed shipments subject to specialized inspections at customs offices in HCMC, Hanoi, Haiphong and Binh Duong made up 30-35% of total import shipments.

Quarantine durations often range from 24 hours to 48 hours while those for some products like dairy products and beverages take up to 168-240 hours. In addition, popular quality inspections take 168 hours while products like milk, food and food containers should be 240 hours.

Inspections of functional foods require 360-400 hours compared to the average food inspection duration of 168 hours.

When asked to compare goods inspections this year with those before, 63.2% of respondents said quarantine procedures were not simpler or even more complicated and 78.6% said the quarantine duration was not faster or even was slower.

Besides, the quality inspection duration was not shortened or even longer as complained by 90.9% of respondents in the survey. In terms of food safety inspection, 81.8% said the duration was not faster or even was slower before 2015.

VITAS: Apparel firms can enjoy part of TPP tax incentives

The vice chairwoman of the Vietnam Textile and Apparel Association (VITAS) said that with heavy reliance on material imports, it would be a success for local apparel firms if they take advantage of just 30% of tax incentives offered in the Trans-Pacific Partnership (TPP).

Dang Phuong Dung told the Daily on the sidelines of a seminar on apparel technology in HCMC on September 9 that most of the materials imported by local apparel enterprises came from China.

“Therefore, when Vietnam joins the TPP, which provides a strict rule of origin, Vietnam’s apparel sector will not be able to enjoy all tax incentives in the TPP but getting around 30% of them would be an achievement,” Dung said.

The biggest problem of the apparel sector is the knitting and dyeing process, so most of fiber output is for export. The country exports over US$2 billion worth of fiber annually, accounting for 70% of the volume of domestically produced fiber.

Therefore, Dung said the knitting and dyeing sectors should be developed so that the fiber production can better serve domestic demand rather than export.

Speaking at the seminar, the VITAS vice chairwoman said local apparel enterprises entered global markets slower than their rivals from other countries and have since focused on low-cost labor and outsourcing contracts instead of investing in material development.

The local apparel sector expects exports will rise from US$24.5 billion last year to US$36-38 billion in 2020 and US$64-67 billion in 2030. The target for local content is 55% in 2015, 65% in 2020 and 80% in 2030.

The U.S. is still the biggest market for Vietnamese apparel. Last year, garment shipments to this market accounted for 48% of Vietnam’s total apparel export turnover of US$24.5 billion. Meanwhile, Europe made up 16%.

Experts said Vietnam should develop industrial parks and complexes for knitting and dyeing factories. However, many provinces have not welcome such plants as these facilities could cause environmental pollution.

At the conference co-held by the Ministry of Industry and Trade and the representative office of the Korea Institute of Industrial Technology on September 9, South Korean investors presented environmentally-friendly technologies for knitting and dyeing projects.

Current rice export system unbeneficial for small firms

The exisiting rice export mechanism prevents many small businesses from shipping the staple food though the country needs them to boost exports amidst mounting competition from regional rivals.

The challenges faced by small rice exporters were raised at a forum on agriculture policy in HCMC on Tuesday. The event was held by the Institute of Policy and Strategy for Agricultural and Rural Development (IPSARD) and the Coalition for Farmers’ Rights and Effectiveness of Vietnamese Agriculture.

Nguyen Duc Thanh, president of the Vietnam Institute for Economic and Policy Research (VEPR) at Vietnam National University in Hanoi, said the Government’s Decree 109/2010/ND-CP issued in 2010 defines rice export as a conditional business area. The Vietnam Food Association (VFA) is tasked with managing rice export operations.

VFA is permitted to set out requirements to limit the number of rice exporters, and decide the floor export price for a each particular period.

Some speakers at the forum said VFA’s current rice export management has benefited big businesses instead of small ones.

Nguyen Thi Hong Minh, former deputy minister of fisheries, said other nations force companies in a sector to join an association and that they must be under the management of the association.

In Vietnam, not all businesses in the same sector are members of an association, so a Government policy for a sector benefits just a number of businesses.

Thanh of VEPR, who has studied the impact of Decree 109 on farmers in the Mekong Delta, said to improve the efficiency of Vietnamese rice exports, a proper mechanism should be put in place to ensure fair competition among members and non-members of VFA.   

Thanh said VFA should not limit the number of rice exporters and create favorable conditions for firms to join hands with farmers to produce high-grade rice varieties for export.

According to the Ministry of Agriculture and Rural Development, Vietnam shipped abroad nearly 4.1 million tons of rice worth US$1.76 billion in January-August, down 8.6% in volume and 13% in value against the same period last year.

The average export price reached US$429 per ton in January-July, falling 5.33% year-on-year.

G-bond issuance slides to dismal low

Only VND29 billion ($1.29 million) of the VND6 trillion ($267 million) of bonds that were offered in the primary bond market from August 24 to 28 were successfully issued. The winning ratio plummeted to 0.48 per cent, its lowest level this year.

Specifically, the State Treasury (ST) offered VND3 trillion ($133 million) of five-year and ten-year bonds, but did not successfully issue any of them. The Vietnam Bank for Social Policies (VBSP) also offered VND1 trillion ($44.5 million) of bonds across different tenors, but there were no registered bids in the bond auction.

The Vietnam Development Bank (VDB) offered VND2 trillion ($89.0 million), equivalent to one-third of the last week’s total offer. However, only VND29 billion ($1.29 million) of fifteen-year bonds were issued successfully, at a yield of 7.9 per cent per annum, unchanged from the previous week.

As of August 28, VND112,046 billion ($4.99 billion) of government bonds and government-guaranteed bonds have been issued. Of these, VND94,258 billion ($4.19 billion) were ST bonds, completing 38 per cent of the full year target; VBSP accounted for VND8,459 billion ($376 million); and the Vietnam Development Bank (VDB) has mobilised VND9,329 billion  ($415 million).

There were no bill transactions recorded during the reviewed week.

During the week, VND2 trillion ($89 million) of five-year municipal bonds were mobilised from the Hanoi State Treasury. The winning ratio reached 100 per cent, due to an attractive bond yield of 7.9 per cent per annum. Thus, the Hanoi State Treasury completed the first phase of its capital construction bonds issuance plan.  

Next week, VND4 trillion ($178 million) of bonds will be offered on the primary market. The ST will offer VND2 trillion ($89 million) of five-year bonds and VND1 trillion ($44.5 million) of  fifteen-year bonds. The VBSP will offer VND500 billion ($22.2 million) of three-year bonds, VND200 billion ($8.9 million) of five-year bonds, and VND300 billion ($13.4 million) of fifteen-year bonds.  

Secondary market

The secondary market slightly decreased last week from the previous week’s strong results, with total trading value of VND18,810 billion ($837 million). The average value per session was VND3,762 billion ($167 million), down 9.31 per cent from the previous week.

Outright transactions dominated trading, with 72 per cent of total volume, equivalent to VND13,486 billion ($599 million). Meanwhile, trading volume of repo transactions was VND5,325 billion ($237 million), which only accounted for 28 per cent of the total.

Trading of three-to-five-year bonds dominated the market, with 30 per cent of total outright transactions. Less-than-one-year bonds and more-than-seven-year bonds transactions occupied 21 per cent and 26 per cent, respectively. One-to-three-year bond transactions accounted for 15 per cent, while five-to-seven year bonds were the lowest, occupying only 9 per cent.

Foreign investors net sold for the fifth consecutive week, with their highest volume year-to-date of VND2,121 billion ($94.4 million)

Bond yields fluctuated in a narrow band last week. Yields continued to rise for most tenors except for a slight decrease of one-year, two- year and seven-year bonds. The VND devaluation significantly reduced demand for domestic currency bonds, thereby pushing bond yields up continuously over the last month. However, in the absence of other specific factors affecting the market, once the exchange rate started to cool down, bond yields only fluctuated in a narrow band.

VAMC to buy bad loans from lenders

The State Bank of Viet Nam has issued a circular with new regulations on encouraging credit institutions to handle non-performing loans (NPLs).

VAMC chairman Nguyen Quoc Hung said banks had registered to sell bad debts worth VND64 trillion ($2.84 billion) in the first seven months of this year, and the VAMC had agreed to buy VND59 trillion ($2.62 billion) of it for VND54 trillion ($2.4 billion). Photo TNCK

Under Circular 14/2015/TT-NHN, which will take effect from October 15 this year, the Viet Nam Asset Management Company (VAMC) will directly issue a new type of bonds to purchase NPLs at market value from credit institutions.

The new bonds are allowed to transfer between the central bank and credit institutions, as well as among credit institutions.

Currently, the VAMC also issues special bonds in return for bad debts from credit institutions, but the bonds are not allowed to be transferred. The special bonds may be used only as collateral to secure funding from the central bank.

VAMC will continue to implement its bad debt handling process via the special bonds it issued in the past. According to the new regulations, credit institutions will no longer have to make risk provisions for NPLs which have been sold to the VAMC. Currently, the lenders still have to establish yearly provision funds amounting to 20 per cent of the value of the bonds they received from VAMC.

Credit institutions will also have more benefits as the new type of bond is defined as having a risk ratio of zero per cent when calculating the Capital Adequacy Ratio (CAR), while the special bond has a risk ratio of 20 per cent.

For credit institutions that are under restructuring or facing financial difficulties, the VAMC new bonds will help reduce pressure on them as the expiry date of the bonds can be extended to 10 years from the 5 years of special bonds.

The VAMC targets buying roughly VND500-700 billion (US$22.5-31.1 million) of NPLs at market value this year to boost the implementation of the new method next year.

Credit institutions are now required to sell a minimum amount of bad debts fixed by the central bank by September 30 in a move to cut bad debts to below 3 per cent by the end of September, a target previously set for the year end.

VAMC chairman Nguyen Quoc Hung said banks had registered to sell bad debts worth VND64 trillion ($2.84 billion) in the first seven months of this year, and the VAMC had agreed to buy VND59 trillion ($2.62 billion) of it for VND54 trillion ($2.4 billion). Deputy director of the central bank's HCM City branch Nguyen Hoang Minh said HCM City banks would have to sell another VND22 trillion ($977.7 million) worth of bad debts to reduce the ratio to below 3 per cent from nearly 5 per cent in June.

FDI boon for City property

The HCM City property sector has attracted more than US$1.42 billion worth of foreign direct investment this year, the city's Statistics Office has reported.

The amount accounts for almost 62 per cent of total FDI in the period.

The city has granted licences for 327 projects with total registered capital of more than $2.31 billion.

The city continued to overwhelmingly top the country in terms of FDI in property, accounting for nearly 78.5 per cent of the total investment of $1.82 billion in 18 new projects and seven existing ones that are expanding.

They include a $1.2 billion joint venture in HCM City between several local firms and Denver Power Ltd of the UK.               

Experts forecast a torrent of FDI in the property sector by year-end thanks to the changes to the Law on Housing and Real Estate Business that allow foreigners and Viet kieu (overseas Vietnamese) to buy houses in Viet Nam.

More Vietnamese fruits to enter choosy markets

Vietnam is expected to export more fruits to a number of selective markets including the United States, Australia, Japan, New Zealand and Taiwan as it has reached agreements on technical measures.

Hoang Trung, deputy head of the Plant Protection Department under the Ministry of Agriculture and Rural Development, said the agency has gone through numerous negotiations and technical procedures for Vietnamese fruits to be exported to more markets.

The department has negotiated with Japan and met all necessary requirements for exporting Vietnamese mango this September.

A group of New Zealand specialists will arrive in Vietnam next month for the last round of negotiations over the re-opening of that market for Vietnamese rambutan. Meanwhile, Taiwan has issued final export conditions for thanh long (dragon fruit) to enter that market.

Trung said Vietnamese officials have been in talks with their Australian counterparts for a resumption of mango exports to Australia. Vietnam has completed technical procedures for shipping mango and star apple to the U.S.

Trung noted that the Vietnamese side has completed all procedures as required by the U.S. but the U.S. has not allowed import of the two fruits.

Data of the agriculture ministry showed agro-forestry-fishery product exports last month stood at US$2.4 billion, down over 10% compared to July. In contrast, the export of fruits and vegetables surged 40.8% in August over the previous month.

Trung said China remained the largest importer of Vietnam’s farm products and that agricultural export turnover from the northern market kept rising in the first eight months of the year. Major export products shipped to China included litchi, longan and dragon fruit.

For example, in the first eight months Vietnam exported to China 700,000 tons of dragon fruit, equivalent to last year’s volume. Litchi and longan shipments in the period were 150,000 tons and 10,000 tons.

Vinacomin seeks to add losses to power generation costs

Vietnam National Coal and Mineral Industries Group (Vinacomin) has sought the Ministry of Industry and Trade’s nod to put all losses caused by the volatile exchange rate between Vietnam dong and the U.S. dollar this year into the costs of electricity generation.

Speaking at a meeting of the ministry in Hanoi on September 3, Vinacomin’s deputy general director Vu Anh Tuan said the group had incurred total losses of some VND1.2 trillion (around US$53.4 million) due to the exchange rate volatility. The group wants to add such losses to the costs of its electricity in line with the ministry’s Circular 56/TT-BCT.

“We request the ministry to consider allowing us to either add the losses to the production costs of electricity or reduce or delay tax payments for us,” Tuan was quoted by VietnamPlus as saying at the meeting.

Vietnam National Oil and Gas Group (PVN) did not disclose how the group has been hit by the volatile exchange rate but said it had cut into its financial spending. The group has supplied more than 100 billion kWh to the nation’s power grid.

Ngo Son Hai, deputy general director of Vietnam Electricity Group (EVN), acknowledged that the exchange rate volatility had dealt a blow to the power sector and electricity suppliers. Vinacomin, which contributes 10-15% to the national power grid, has racked up losses of VND1.2 trillion and power plants of PVN have also been affected.

According to EVN, the exchange rate volatility-triggered losses of power plants could have been over 10 times higher than the VND1.2 trillion reported by Vinacomin.

Hai said EVN is calculating losses of power plants operated by Vinacomin and PVN and will report the final figure to the industry ministry so as to find solutions to help the groups deal with their losses.

Deputy Minister of Industry and Trade Do Thang Hai admitted the volatile exchange rate has impacted on production and business activities of local enterprises. The ministry will submit the requests of electricity producers to the Government for consideration.

Statistics of EVN showed electricity output in the first eight months of this year totaled 105.1 billion kWh, growing 11.7% compared to the same period last year. Around 42.47 billion kWh of the total volume was generated by EVN, 62.58 billion kWh by facilities of other groups, and 1.17 billion kWh imported.

However, Hai said China’s devaluation of the yuan has helped Vietnamese firms import materials from the northern neighbor at lower prices to turn out products for export.

Earlier, the State Bank of Vietnam widened the dong/dollar trading band to 3% from 1% and raised the reference exchange rate by 1% against the greenback after the sharp yuan depreciation to support exports.

The central bank’s deputy governor Nguyen Thi Hong said the adjustments helped the local currency have greater scope to adapt to unfavorable market movements until early 2016, and ensure the stability of the foreign exchange market and the competitiveness of Vietnamese export goods.

Speaking at the meeting, the ministry’s head of planning department Nguyen Tien Vy said Vietnam’s exports in the first eight months went up by 9% year-on-year to US$106.3 billion. Of which, foreign-invested enterprises accounted for US$74.6 billion, up 14.7%, and domestic firms made up US$31.7 billion, down 2.5%.

Despite the rise in total export turnover in the period, outbound sales of agro-aqua-forestry products went down by 4.8% year-on-year to US$19.31 billion.

Trade deficit in the period was put at US$3.6 billion, equivalent to 3.4% of total export revenue and lower than the 5% target approved by the National Assembly. Vietnam’s trade deficit with China in the January-August period was US$22.3 billion.

To reduce trade deficit, the ministry said the Government has approved a scheme to accelerate exports to US$300 billion in 2020 with an average annual increase of 11-12% in the next five years.

The country is expected to ship more goods to both traditional and new markets, including ASEAN, Japan, Korea, China, Australia, the United States, the European Union, Russia, the Middle East, Canada and India.

Vingroup ventures into hi-tech agriculture

Can Tho City is looking for around 200 hectares of land for Vingroup to develop a hi-tech agriculture project in the Mekong Delta city.

At a meeting on Tuesday, the city’s chairman Le Hung Dung asked relevant agencies to find land for Vingroup to produce farm products for its retail store chain.

According to Dung, Vingroup said it would move the hi-tech agriculture project to other areas if Can Tho cannot secure sufficient land for it. The company wants cleared land to avoid possible disputes.

Can Tho plans to allocate land at Co Do or Song Hau farms to the company, which is known for high-end property development projects through the country.

Pham Van Quynh, director of the Department of Agriculture and Rural Development of Can Tho, confirmed the news when reached by the Daily. Co Do Farm might be a priority area as it has more favorable conditions than Song Hau Farm, Quynh said.

However, Quynh said the government of Can Tho City needs further discussion with the investor and review investment policies before making a final decision.

Besides the agriculture investment project, Vingroup mulls other projects in the city, including an 18-hole golf course, villas and amusement complex on Au and Noi islets.

In July, Vingroup inaugurated its first Vincom shopping center in Can Tho City and the Mekong Delta. The company plans to open a second Vincom facility in the city on April 30 next year.

Dung told the meeting that Vingroup could invest around VND2 trillion in Can Tho if everything goes smoothly.

HCM City’s property projects attractive to FDI

Foreign companies registered more capital for projects in the real estate sector in HCMC than other sectors in January-August.

According to the HCMC Department of Planning and Investment, foreign direct investment (FDI) approvals in the property sector made up 61% of the total capital registered by foreign firms in the period.

Data of the HCMC Statistics Office showed that HCMC granted investment certificates to 327 FDI projects worth a combined US$2.31 billion. Notably, five projects in the real estate sector accounted for nearly US$1.43 billion of the total, much higher than in other sectors.

FDI pledges for property projects in HCMC accounted for nearly 78.5% of all FDI approvals for the sector in the first eight months in the country.

The Empire City commercial center-office-hotel project worth some US$1.2 billion of Empire City Limited Liability Company in Thu Thiem New Urban Area in District 2 is a major contributor to the city’s FDI pledges, according to the Foreign Investment Agency under the Ministry of Planning and Investment.

This is the first project worth over US$1 billion approved by HCMC in the year to date. It also helps the city rank second in terms of FDI attraction in the country after the northern province of Bac Ninh.

Empire City is a consortium grouping two local firms, Tien Phuoc Real Estate JSC and Tran Thai Real Estate Co. Ltd., and Denver Power Co. Ltd., a member of Gaw Capital Partners based in the UK.

The investor is completing procedures to begin work on the megaproject in the last quarter of this year and expects to finish it in 2022.

Experts said lax conditions for foreigners to own houses in Vietnam together with the good prospect of the country’s economy had encouraged more foreign firms to invest in the real estate sector in Vietnam, especially in HCMC. They eye apartment building, office, commercial center and luxury hotel projects in the southern economic center of Vietnam.

South Korea’s Lotte Group has agreed to place a deposit of some VND2 trillion in land rent for the right to use six land lots in Thu Thiem New Urban Area to develop a complex worth US$2.1 billion there.

Realty developers said Vietnam holds much potential for property investors and the real estate market is steadily recovering. This is the reason why FDI pledges for the sector have increased.  

A large population and high demand for houses and trade centers have led foreign companies to invest in the property market in HCMC.

In the first eight months, the city approved eight projects worth US$71.3 million in the education sector, 73 projects in the technology sector and 53 projects in the information and communication technology sector.

According to the Foreign Investment Agency, total FDI pledges for new and operational projects in Vietnam reached US$13.33 billion in January-August, up 30.4% year-on-year.

Of the amount, FDI approvals in the manufacturing-processing sector accounted for 77.7%.

The real estate sector ranked second with US$1.82 billion, equivalent to 13.7% of the total.

The northern province of Bac Ninh ranked first with FDI approvals of US$3.33 billion, or 25% of Vietnam’s total, followed by HCMC with US$2.42 billion, or 18.2%.

Sagri City mulls IP for supporting industries

Saigon Agriculture Incorporation, or Sagri, has proposed the city government a plan to invest nearly VND1 trillion in developing an industrial park (IP) for enterprises in supporting and food processing industries.

The company is expected to complete investment procedures next year and break ground for the project in 2017 if it is approved. The IP is planned to cover 370 hectares of agricultural land under Sagri’s management in Binh Chanh District.

Relevant agencies in the city had a meeting on Tuesday to evaluate the proposed IP project of Sagri.

According to the HCMC government’s plan, the city will set aside 500 hectares of land at IPs for projects in supporting industries in 2015-2020 as well as develop multistory workshop buildings with total floor space of 100,000 square meters for small and medium enterprises (SMEs) in the industries.

Priority will be given to attract SMEs to supporting industries to back the development of manufacturing and engineering, electronics-information technology, chemical-pharmaceutical-plastics-rubber, and food processing sectors.

In addition to the industries, the city government will continue calling for investments in apparel, leather and footwear as well as develop material sources for these industries. The city will select some typical industrial and supporting industries products in the next few years to supply domestic and foreign markets.

Earlier, HCMC drew up a plan to develop 6,000 hectares of IP and 1,900 hectares of industrial cluster. The HCMC Export Processing and Industrial Zones Authority (Hepza) said the city now has approved 23 IPs covering a total of 5,788 hectares, including 18 IPs under construction and put into operation.

Domestic traders to join multi-national distribution networks

By 2020, Vietnam will have its exports distributed directly to large markets of Europe, North America, Southeast Asia and Northeast Asia as well as countries that have signed free trade agreements with Vietnam.

This goal is set forth in a Prime Minister decision approving the scheme to promote Vietnamese enterprises’ direct participation in foreign distribution networks through 2020.

Under Decision No. 1513/QD-TTg dated September 3, the Prime Minister specifies tasks and measures to implement the scheme, including building information systems and databases to provide information about Vietnamese enterprises and export goods to foreign importers.

Specifically, in order to create favorable conditions for domestic enterprises, concerned agencies are requested to collect accurate and adequate information and data on foreign distribution networks, especially those engaged in the aforesaid markets, and provide official information on foreign parties that import Vietnamese goods to Vietnamese exporters through the e-portal of the Ministry of Industry and Trade.

The cabinet head directs ministries and sectors to work with foreign distribution groups in guiding Vietnamese manufacturers and exporters in applying international regulations and standards to their manufacturing processes, and supplying goods up to technical specifications and quality requirements of foreign distribution systems.

The country will prioritize first of all exports with advantages and high exportability to be distributed by major distribution systems in strategic markets.

Trade promotion and connection with foreign distribution systems within the framework of the National Trade Promotion Program will be intensified, while overseas trade promotion offices will increase assistance for Vietnamese enterprises in seeking market information, making connections with customers and exporting directly to foreign distribution systems.

Draft decree to draw more foreign investors into agriculture

Foreign investors investing in agriculture would be treated on an equal footing with domestic businesses.

This is highlighted in a draft decree on policies to encourage foreign investment in agriculture and rural development recently released by the Ministry of Agriculture and Rural Development (MARD).

There would be no discrimination between foreign and local investors in accessing materials and resources, the draft says, adding that support and incentive policies applicable to foreign investors would be exactly the same as those offered to domestic businesses.

Specifically, foreign-invested enterprises having cultivation, husbandry or aquaculture projects in extreme difficulty-hit areas or projects applying high technologies or large-scaled field models would be entitled to exemption from corporate income tax (CIT) for the first four years of operation and a 50-percent reduction of the payable tax amount in the subsequent nine years.

Meanwhile, FDI projects to manufacture machines and equipment for agricultural, forestry and fishery production and projects to produce and process animal feed would enjoy the preferential CIT rate of 20 percent in 10 years.

The draft decree also says that the State would provide guarantee for performance of large-sized project. It would also adopt policies to facilitate land accumulation, support association between businesses and farmer households, provide clear land to agricultural projects, and encourage the application of large-scale field models and development of concentrated material zones serving agricultural projects.

The  draft decree is scheduled to be submitted to the Government in the third quarter of this year.

VEF/VNA/VNS/VOV/SGT/SGGP/Dantri/VET/VIR

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