BUSINESS IN BRIEF 20/8

Vietnam HR moving forward




More and more companies in Vietnam have shown advancements in the human resources field, and “are on their way to be change agents with disruptive HR management strategies and policies,” according to Edward Foong, an HR expert in the Southeast Asia region.

Foong, who has been a judge for Vietnam HR Awards 2014 and 2016, said he has seen great improvements from all participants at the awards competition this year.

“I was impressed with how fast they have progressed, and several participants showed us how they successfully reached out to prospective candidates,” he said.

“What impresses me are also companies in sensitive and controversial industries. They showed us how they swam against the current to successfully attract talent they wanted … Also, the meaningful programmes HR put in place to continue to motivate their current staff impresses me a lot.”

“Singapore may seem to be ahead of Vietnam, but it is not that many years ahead of Vietnam as some may think,” he said. “The gap between the two countries is quickly narrowing.”

Colin Blackwell, chairman of the HR committee of the Vietnam Business Forum, which represents views of the foreign business community to assist the Government in developing labour legislation, said “For over 20 years, the quality of Vietnamese management, staff and human resources has been steadily coming up to international standards.”

“The Vietnamese are naturally creative and inventive. The attitude is, if there is a challenge there will always be a way around it. There is natural motivation and optimism that is missing in most other countries,” he said.

On the positive side, this attitude can results in improvements at all levels in a company, but on the negative side it can be used to get around rules and in some cases fraud, he added.

“Obviously, the trick is to channel creativity as positively as possible. This is the role of HR management,” he said.

He said good policies and processes will enhance the positive side.

The best companies in Vietnam have multiple sets of systems for organising work, but with very clear performance management to show who is being positively creative.

These performance management systems are not so different to what is used internationally.

He said it is “a matter of clear work structure, good organisational design, aligning company with individual goals, individual target setting, regular performance measurement, training support and very clear linkage to variable rewards”. The latter factor seems to work well in Vietnam, with bonuses for tasks completed.

Blackwell said that it is not enough just to channel creativity. It also needs to be raised, and the solution of how to motivate Vietnamese is culturally based.

Vietnamese staff like to be respected, listened to, and have their contributions recognised and to feel they are part of a team. The family is an important part of Vietnamese culture and companies that treat employees as family will get the most loyalty and performance in return.

“How can Vietnamese companies make their staff feel like part of a family? It may seem like a “soft” nice-to-have low priority, but it is the “secret ingredient” to top company performance.” The answer is workplace environment.

Good working conditions include a mix of staff benefits, activities and facilities to make the workplace enjoyable. The best companies that have exceeded the global standard all have this in common, he said.

He said that for many years, the Mercer staff surveys in Vietnam have quantified this – that Vietnamese staff valued an inspiring workplace environment, even more than pay.

Workplace environment initiatives need to be combined with other HR elements of clear organisational structures, good policies, fair pay systems, bonuses, personal development plans and quality training.

These are the foundation upon which a good workplace environment can be built.

For Vietnamese companies that plan to expand their business to region or global, Foong encourages HR professionals and business leaders to continue putting more focus on investment in their people, especially in line with AEC integration. 

“Automation is going to replace some people, but humans are still the most intelligent,” he said.

Vietnam, Indonesia promote trade, investment

A workshop highlighting economic and trade cooperation potential between Vietnam and Indonesia, one of the top priorities of their strategic partnership, was held in Hanoi on August 19.

Chairman of the Vietnam – Indonesia Friendship Association Nguyen Dang Tien cited that two-way trade had topped US$5.4 billion in 2015 and is expected to hit US$10 billion in 2018.

The establishment of the ASEAN Economic Community at the end of 2015 will enable businesses to make the best use of investment opportunities to fulfill the bilateral trade target, he said.

Ambassador to Vietnam Ibnu Hadi evaluated that as ASEAN member states, Vietnam and Indonesia share a lot of similarities such as income and strong economic growth. Both are looking towards industrialisation in agriculture, fisheries and mining, he added.

The two countries also have a young population, efficient labour forces and improved infrastructure, he said, adding that the two governments define each other as key partners and hope to increase bilateral relations to a new height.

Indonesia mainly imports mobile phones and rice from Vietnam, while shipping various products like paper, automobile spare parts and motorbikes to the Vietnamese market.

Fifty-four Indonesian companies are operating in Vietnam .

Indonesia is the fourth most populous country in the world with over 250 million, while Vietnam ranks 14 th globally with over 90 million.

13th China-ASEAN Expo to be held in September

The 13th China-ASEAN Expo (CAEXPO) will take place in Nanning city of the Guangxi Zhuang Autonomous Region from September 11-14, drawing more than 2,000 companies.

13th china-asean expo to be held in september hinh 0 The exhibition area will be set up by Vietnam, Cambodia, Indonesia, Laos, Malaysia, Myanmar and Thailand.

Established in 2004, CAEXPO is an important framework that helps promote trade ties between the two sides.

China was ASEAN’s largest trade partner and the ten-member group was China’s third largest trade partner in 2010. Two-way trade reached nearly US$472 billion in 2015.

Imports of raw cashew nuts jump high

Vietnam is one of world leading exporters of processed cashew nuts and cashew products, however, imports of raw materials from Ivory Coast and Cambodia have increased sharply in recent times, according to Vietnam Cashew Association (Vinacas).

Vinacas has quoted latest statistics from the General Department of Vietnam Customs as saying that Vietnam imported 158,300 tons of raw cashew nuts worth US$231.3 million in June, up 56.5% in volume and 59.2% in value compared to the previous month. Earlier in May, the country bought 101,300 tons.

Totally, 403,600 tons of raw cashew nuts were imported in the first half of this year, which cost more than US$602 million, down 7.5% in volume but up 9% in value.

Most raw cashew nuts were imported from Ivory Coast, Cambodia and Indonesia, of which Ivory Coast made up 35.7% with 144,000 tons worth US$211.8 million.

Cambodia came second with 75,200 tons worth US$111.5 million and Indonesia ranked third with 25,300 tons at the value of US$40.8 million.

Vinamilk’s success down to understanding of consumers: CEO

Vinamilk, the largest dairy company in Vietnam, is looking to conquer the global markets, but its roots are still deeply planted in its home country.

Mai Kieu Lien, the firm's CEO, has set a goal for the company to become one of the top 50 global dairy firms in the next three years.

The goal might sound far-fetched for a dairy company based in a developing Southeast Asian economy, but Lien has cause for hope.

Vinamilk’s products have now reached 43 countries, with US$250 to US$270 million in total export revenue.

Since going public in 2003, Vinamilk has seen its market capitalization soar from US$103.1 million to a whopping US$9.2 billion in 2013, an eighty-eight-fold increase, sitting atop the Vietnamese stock market as the listed company with the highest market capitalization.

To fulfill its global ambition, the company has invested heavily in foreign countries, beginning in 2010 with a US$9.1 million investment in Miraka, a New Zealand dairy company specializing in the production of powdered milk.

The dairy giant has also made its entrance into the United States with its acquisition of a long-established California dairy company, Driftwood Dairy, allowing it to gain access to the lucrative US market.

The company has established its presence in Southeast Asia with the opening of a milk factory in Cambodia and is making inroads into Europe with a project in Poland.

Despite her recent success in the international markets, Lien firmly believes that Vinamilk’s success today has its foundation in the early effort to establish itself in Vietnam.

When Vinamilk was founded in 1976, it was not an instant success. The fledgling company, lacking experience, struggled in a country whose climate and geographical condition are not naturally favorable to the development of a dairy industry.

Consumers were more enamored with foreign brands, with their hundreds of years of history and high standards of quality.

In order to compete, Lien and her colleagues are committed to understanding the specific needs of their consumers.

As a result, Vinamilk’s products are not only based on international research, but also tailored to the conditions of Vietnamese people.

One of the products that best exemplifies Vinamilk’s approach is its powdered milk for children.

Before releasing the product, Vinamilk cooperated with the National Institute of Nutrition to perform a scientific study on 50,000 Vietnamese children over a five-year period in order to determine their nutritional needs.

Vinamilk’s carefully researched and relatively inexpensive powdered milk began to gain consumer trust as its market share climbed from eight percent after its release to 40 percent today.

“That is the result of truly understanding consumers, knowing what they need and want, not just making empty promises to improve the health of Vietnamese children,” Lien said.

With potential challenges from international dairy companies flooding the domestic market after the Trans-Pacific Partnership (TPP) comes into effect in 2018, Lien is determined to hold her ground with new technology set to increase Vinamilk’s output and productivity.

Well aware of the challenges of expanding to foreign countries, the prudent CEO is looking to conquer global markets while maintaining a firm foothold at home.

Thai and Chinese firms steal Vietnamese brands to export to US, EU

Famous Vietnamese brands including fish sauce from Phu Quoc and coconut candy from Ben Tre are being ripped off.

thai and chinese firms steal vietnamese brands to export to us, eu hinh 0 Established Vietnamese brands are being exploited by Thai and Chinese firms who are stealing their names to export their products to the United States and Europe, confusing both enterprises and consumers.

During overseas trips, the owner of an agricultural export company was surprised to see Phu Quoc fish sauce labeled as ‘made in Thailand’, and this is not the first time foreign products have stolen Vietnamese brands.

Director of Vietnam's Trade Promotion Agency Bui Huy Son told VnExpress that some foreign firms are also passing off products produced in their countries as Vietnamese, such as mangoes from Hoa Loc, pomeloes from Nam Roi and Hue's famous 'bun bo Hue' (beef noodles).

Bui said that Phu Quoc's fish sauce has been recognized by 28 E.U. members with 450,000 liters already sold to the market. Before products can be protected by their geographical status, they must undergo a strict examination process that looks at input materials, techniques, tools and equipment.

Bui underlined that Vietnamese products do not receive adequate protection. Even in the domestic market, only 11 enterprises have certificates of origin to label their fish sauce 'Phu Quoc', but countless companies do so anyway.

Pham Ngoc Thanh, director of fish sauce distributor Lam C&C JSC, said that foreign products that use registered Vietnamese brands have a direct impact on protected Phu Quoc fish sauce products, damaging the reputation of the genuine product. “Most customers are buying unqualified products,” the director concluded.

Bui Huy Son underscored that: “Vietnamese enterprises need to strengthen PR and marketing activities, improve product quality and get involved in distribution systems in rigorous markets like the E.U. to dislodge counterfeit products from foreign markets.”

Phuoc Son Gold resumes operation

Phuoc Son Gold Company Ltd. (Phuoc Son Gold), managed by Canadian Besra Inc.’s Vietnamese subsidiary, has restarted the operation of its Dak Sa gold mine, thanks to Viet A Bank taking hold of 35% of the company’s shares as debt payment.

phuoc son gold resumes operation hinh 0 Accordingly, Viet A Bank will be Phuoc Son Gold’s tax debt guarantor to pay VND334 billion ($14.9 million) in tax arrears and VND100 billion ($4.48 million) in late payment fines.

The debt will be paid within 12 months, starting in August 2016, with an average payment of VND27 billion ($1.2 million) per month.

According to Phuoc Son Gold’s acting general director Paul Seton, restarting Phuoc Son Gold’s operation will maintain 1,000 jobs, create revenue to cover the tax debt, as well as contribute to preventing illegal gold exploitation.

Dak Sa is currently Vietnam’s largest gold mine, with a deposit of 30 tonnes. Once it resumes operation, it will have an exploitation and processing capacity of 18,000 tonnes of ore per month.

Tran Dinh Tung, Deputy Chairman of the Quang Nam People’s Committee, said that the province will provide favourable conditions for the company to operate effectively. However, the province will supervise tax payment and ensure that environmental regulations are upheld.

Earlier in July, the Quang Nam Department of Planning and Investment withdraw the business registration of Phuoc Son Gold, due to delays in paying its tax arrears.

Along with the tax debt, Phuoc Son Gold had to suspend its operations for two years due to a chronic lack of capital and huge losses. Notably, the company generated a loss of US$15.9 million, US$60.6 million of which is short-term debt.

 The company has not published a financial report for the 2014-2015 period.

FrieslandCampina Vietnam exports dairy products to Hong Kong

FrieslandCampina Vietnam marks its first step in Hong Kong by shipping the first consignment of sterilized milk to the market early this July.

The consignment included five types of sterilized milk under the Dutch Lady brand name, which were processed and packed in Binh Duong Plant.

This is the initial success of FrieslandCampina Vietnam to infiltrate Hong Kong, which is a stable and demanding market with strict requirements on product quality.

FrieslandCampina Vietnam plans to export around one million of milk cartons to Hong Kong annually, which helps consume another 335 tons of fresh milk from farmers and generate more jobs for local people. It also opens an opportunity to export other dairy products to other Asian countries.

Vedavyas Vemuri, production director of FrieslandCampina Vietnam, said the company has worked with Hong Kong partners to promote its products on the Hong Kong market.

Japan’s Daikin plans new customer service center in Vietnam: report

Japanese air conditioner maker Daikin Industries will spend about US$50 million to set up new offices in Vietnam in 2018 as its business here is growing at a strong pace, the Nikkei Asian Review reported on August 18.

These offices, which will be located in Ho Chi Minh City, will serve as a call center and a place for local employees to receive sales training, the newspaper said. It also said Daikin will relocate its local sales headquarters to the new facility its growing business.

The manufacturer expects to have 1,000 employees in the new facility eventually. 

Earlier this month, Daikin Vietnam signed a land lease agreement with Thang Long Industrial Zone 2 to start construction of a $93.6 million air conditioner factory in the northern province of Hung Yen. The factory is scheduled to operate in April 2018 with an estimated output of about 500,000 air conditioners in 2018, and up to 1 million units in 2020.

It is expected to provide jobs for approximately 500 local workers in the first years and up to 1,500 people

Vietnam’s residential air conditioner market is one of the Southeast Asian region's biggest, totaling roughly 2 million units a year, and is growing at an annual pace of more than 10 percent.

Daikin holds a quarter of that market, vying with Panasonic for the lead.

RoK bank opens branch in Ho Chi Minh City

The Busan Bank (BS) of the Republic of Korea (RoK) opened its branch in Ho Chi Minh City on August 18.

Chief Executive Officer and Director of BS Financial Group Sung Se Hwan said that BS is the RoK’s fifth largest bank, through which more than 60 Korean enterprises have invested in Vietnam. 

The opening of the BS branch in Ho Chi Minh City will facilitate the investment of businesses from the RoK in general and Busan in particular in Vietnam, he said. 

The bank will strive to become a financial partner of both Korean and Vietnamese enterprises, he added. 

Speaking of the bank’s branch opening, Vice Chairman of the municipal People’s Committee Tran Vinh Tuyen pledged to create favourable conditions for Korean enterprises to seek investment and business opportunities in the city. 

The RoK ranks fourth among countries and territories investing in Ho Chi Minh City. Currently, Korean investors are running 1,200 project in the city with a total capital of US$4.22 billion.

Vietnam, RoK work to enhance technology transfer

A workshop was held in Ho Chi Minh City on August 18 to promote technology connectivity and transfer between Vietnam and the Republic of Korea (RoK).

It aims to connect technology supply and demand between the two sides so as to introduce advanced technology that RoK companies can transfer to or cooperate with their Vietnamese partners to develop.

At the event, RoK businesses said they are ready to transfer technology in mechanical manufacturing, electricity-electronics, automobile components, automation and energy saving, according to Tran Thi Hong Lan, Deputy Director of the Technology Application and Development Department under the Ministry of Science and Technology. 

Hong Chang Woo, Executive Director of Innobiz – the RoK’s innovation business association, said both RoK and Vietnamese enterprises want to seek new markets and new technologies to develop. As the RoK side has strength in technique and technology, they can partner with Vietnamese firms to grow together. 

Over the last couple of years, the technology application department and Innobiz have surveyed the technology-related demand of nearly 300 small- and medium-sized Vietnamese companies in such fields as agriculture, energy, environment and mechanical manufacturing. 

They have connected nearly 400 Vietnamese enterprises with 96 RoK businesses that want to cooperate and transfer technology.

Sapphire drops Sanctuary Ho Tram to focus on core lines

Vietnamese property developer Sapphire JSC (Sapphire), a subsidiary of Australian Sakkara Group, will let go of its entire 51 per cent holding in Sanctuary Ho Tram, to focus its core operations.

However, specific information about the cessionary as well as the value of the 51 per cent stake has yet to be disclosed.

The divestment comes on top of an earlier announcement that Sakkara and its partners, namely Dragon Capital and GIC, are searching for new investment opportunities in the real estate sector, including renovating old and degraded apartment blocks as well as acquiring land plots suitable for shopping centres, office buildings, apartments, and multifunctional buildings in Ho Chi Minh City.

David Clarkin, managing director of Sapphire, said that the company has created solid development from its core operations. Thus, moving forward, the company will continue to enhance the value of these operations, while simultaneously seeking opportunities to boost profit by developing real estate projects in Ho Chi Minh City. 

Sanctuary Ho Tram is a signature tourism development on the now-famous Ho Tram Strip in the southern province of Ba Ria-Vung Tau, a gleaming section of clean, sandy coastline between Vung Tau City and Phan Thiet. 

The first phase of Sanctuary Ho Tram project is comprised of 28 luxury villas, widely acknowledged as the highest standard of beachfront properties to hit the market in Vietnam so far. The second phase, named Sanctuary Villas, boasts 44 luxury villas, each with a large living area, gourmet kitchen, media room, and three double bedroom suites with generous balconies.

Since entering Vietnam in 2004 Sapphire implemented numerous projects, including City Garden, President Place, and Centre Point. However, in February, Sapphire divested its minority shareholding in City Garden.

In addition, in May, Sapphire launched premium private community HOLM Residences with an exclusive showcase of the secluded riverfront project’s show villas. Situated on the edge of Thao Dien peninsula, HOLM is developed on a 2.7-hectare land area and takes full advantage of over 200 metres of waterfront. The 29 residential villas will ultimately count 11 riverfront, six pool, and 12 garden villas, each with a private parking garage.

Other amenities located throughout the private residence will include two swimming pools, a clubhouse with a fitness centre, a landscaped waterfront parkland, a centralised back-up power system, and unmatched security.

InterContinental Hotels Group announces new regional general manager

InterContinental Hotels Group (IHG) has announced Michael Hoe-Knudsen as general manager of InterContinental Asiana Saigon Hotel and Residences and regional general manager of IHG Vietnam and Cambodia.

Hoe-Knudsen will be based at InterContinental Asiana Saigon in HCMC. He formerly served as regional vice president of operations, IHG Latin America & Caribbean, and interim director for IHG Hotels in New York. He joined IHG in 1996 and since then has successfully moved within the organization assuming different roles in North and South America and Caribbean.

In his spare time, he enjoys playing tennis and spending time exploring the local lifestyle and destinations with his family.

Kido forays into dumpling market

Kido Corporation has expanded to dumpling production after it sold most of its snack business to a foreign investor, said general director Tran Le Nguyen said.

Nguyen told reporters in HCMC on August 17 that the corporation has made full use of its extensive ice cream distribution network to sell dumplings with 120,000 units per day. This product has been available for purchase at a number of supermarkets.

To meet high market demand, Kido is building another dumpling plant in HCMC’s Cu Chi District to triple its dumpling production capacity. The new plant is scheduled to come on stream at the end of this year.

Kido plans two more ice cream and dumpling factories in HCMC and Hanoi to meet demand and reduce transport costs. It will sell dumplings at 60,000 points across the country. Besides, the corporation expects to produce and sell new products including sausages.

Nguyen said a majority of dumplings available on the domestic market are made manually and sold in limited areas, so this market still has room for Kido. The corporation uses Japanese technology to produce dumplings.

Regarding its snack business, Kido is completing procedures to transfer the remaining 20% stake worth VND2 trillion (US$89.68 million) to Mondelez International. Kido expects to earn profit of at least VND1.7 trillion (US$76.23 million) from the deal.

Kido reported pre-tax profit of VND160 billion (US$7.17 million) for its ice cream business in the first seven months of this year, rising by 100% year-on-year. The corporation looks to obtain VND230-240 billion (US$10.31-10.76 million) this year.

Regarding cooking oil, Kido plans to raise its stake at Vocarimex to 51% at the end of this year from 24%. In addition, the corporation will step up merger and acquisition (M&A) activity in the cooking oil segment in the coming time.

Shipments of EU-flagged seafood exporters halted

The Ministry of Agriculture and Rural Development has stopped licensing seafood shipments by exporters that have been blocked by the European Union (EU) for containing banned substances in their products.

According to the ministry’s Decision 3328/QD-BNN-QLCL, which took effect on Monday, disqualified exporters can take back their export licenses if they provide satisfactory explanations about the EU suspension of their shipments.

They also need to provide solutions to the situation and pass quality tests conducted by Vietnam’s National Agro-Forestry-Fisheries Quality Assurance Department (Nafiqad) under the ministry.

The European Commission’s (EC) Directorate General for Health & Food Safety wrote to Nafiqad on August 2 saying that the EU had decided to remove a Vietnamese seafood exporter whose name remains undisclosed from the list of exporters allowed in the EU. The sanction was made after antibiotics were found in the company’s shipments to the EU.

In late April, the EC directorate issued a warning against several seafood shipments of four Vietnamese exporters, saying the products did not meet the EU’s food safety requirements.

The four exporters include Mekong Delta under Can Tho Export-Import Seafood Joint Stock Company, whose frozen tra fish fillets were found by Germany to have an ammoniac smell and contain the banned Sodium carbonate, and Southern Fishery Industries Co Ltd, which received a warning from Spain for Sodium erythorbate found in its tra fish fillets.

The other two companies are Foodtech Joint Stock Co, which allegedly exported canned tuna containing histamine to Germany, and Khang Thong Joint Stock Company, which shipped sailfish containing mercury to the Netherlands.

Nafiqad announced on May 30 that the EC Directorate General for Health & Food Safety will weed out Vietnamese seafood exporters found to have used prohibited substances from the list of firms permitted to ship products to the EU.

Four investors keen on Rach Chiec sports complex

At least four domestic and foreign firms have expressed interest in developing Rach Chiec sports complex in HCMC’s District 2.

The companies are Nutifood Nutrition Food Joint Stock Company, Thai Son Nam Co, Japan’s J-Code Group and South Korea’s Vietnam Sports Platform.

Nikken Sekkei Co, which won a contest held to seek the best design for the scale-1/2000 zoning plan for the Rach Chiec sports complex, estimated the complex project to cost VND34 trillion (US$1.5 billion).

The HCMC Department of Culture and Sports said in a report sent to the city government on Tuesday that the complex covers 180 hectares, down from 466 hectares approved for the project in 1994. As planned, the city will spend VND7 trillion compensating affected households when carrying out site clearance in 2017-2020 to make room for construction of facilities at the complex.

Vietnam Sports Platforms suggests investing US$195 million in building an international-standard stadium, which comprises an indoor bike race track and an outdoor motorcycle race track on an area of 15 hectares. In return, the investor wants to operate the stadium plus a license to run a sport betting business.

Meanwhile, J-Code Group plans to develop technical infrastructure at the Rach Chiec sports complex under the public-private partnership (PPP) format.

Thai Son Nam seeks to build a futsal field on 11 hectares while Nutifood proposes developing a modern football academy covering five hectares at the sports complex.

Earlier, Nutifood got the city government’s green light to open a Nutifood-Hoang Anh Gia Lai-Arsenal JMG football academy in the city.

Seafood firms fret over wage hike plan

Like apparel firms, many labor-intensive seafood processing enterprises have expressed concern over a possible region-based minimum wages hike by an average 7.3% next year.

After the National Wage Council passed the 2017 minimum wage raise plan, the Vietnam Association of Seafood Exporters and Producers (VASEP) issued an official letter last week urging the Government to suspend the plan.

VASEP also proposed that wage adjustments be made every two or three years, instead of annually, and insurance payments for workers also be reviewed.

The wage rise for next year would spell great trouble for seafood companies as high labor costs will undermine their competitiveness on global markets, the association said.

According to VASEP, higher production costs could erode the competitiveness of the Vietnamese seafood industry while the country will implement the free trade agreements it has signed.

VASEP said seafood processing and exporting firms often pay their employees 50-70% higher than the minimum wage.

In fact, the minimum wage is used as the basis to calculate social and health insurance payments and labor union fees, which will surge when the lowest permissible wage is raised. This will place an extra financial burden on enterprises, the association said. 

Earlier, the Vietnam Textile and Apparel Association (VITAS) also voiced similar concerns.

Under the wage council’s plan, which will be submitted to the Government for approval, the minimum monthly wage for four regions will be adjusted up by 7.3% next year. The highest minimum wage will be VND3.75 million, up VND250,000 compared to this year.

Connecting southern key economic region

Southern key economic region, one of Vietnam’s four major economic regions, has contributed greatly to the national growth.

connecting southern key economic region hinh 0 But this region hasn’t done well in the transport connectivity between its localities.

Southern key economic region includes 8 provinces and cities: Ho Chi Minh city, Dong Nai, Ba Ria-Vung Tau, Binh Duong, Binh Phuoc, Tay Ninh, Long An, and Tien Giang. 

Although the region accounts for 8% of Vietnam’s area and its population accounts for 17% of the national population, it has attracted more than half of foreign investment capital into Vietnam and contributed 60% of the national GDP. 

The connectivity of this economic region has created an essential socio-economic infrastructure system such as bridges, roads, schools, and clinics. However, the biggest obstacle for the region’s development is the transport connectivity between local cities and provinces. 

Artery trade routes from Ho Chi Minh city to Binh Duong, Dong Nai, Vung Tau, and Tien Giang are overloaded, adversely affecting good’s circulation. Nguyen Thanh Phong, Chairman of Ho Chi Minh city’s People’s Committee said: “Ho Chi Minh city will invite neighboring provinces do discuss how to improve regional transport connectivity. 

Transport between Ho Chi Minh city and Binh Duong and Long An provinces is poor. A meeting on this issue will be convened soon.”

The development of land, water, railway and air routes should be taken into consideration. Nguyen Thanh Lam, Vice Chairman of Ba Ria-Vung Tau People’s Committee, said: “If the transport system is not improved, it’s difficult to turn our region into a dynamic growth momentum. 

So, it’s necessary to build a railway route from Ho Chi Minh city to Long Thanh and Vung Tau, or at least to Cai Mep-Thi Vai port’s industrial zone.”

Cities and provinces in the southern key economic region have proposed the government to finance the region’s transport system, with priority given to connectivity to airports and seaports. 

MARD: Shaping pepper’s food safety culture

In the fresh fruit and vegetable supply chain of today, foodborne disease is a major challenge for growers who take pride in providing nutritious and healthful produce to consumers.

mard: shaping pepper’s food safety culture  hinh 0 Pepper growers, for one, said the Ministry of Agriculture and Rural Development (MARD) at a recent conference in Pleiku, have made significant strides during the past decade to reduce the likelihood of foodborne illnesses.  

However, judging from the ongoing prevalence of recalls much more can and should be done on this front.

MARD speakers noted that from the beginning of 2015 through mid-2016, a total of 17 shipments of pepper to the EU exceeded the maximum residue levels (MRLs) for pesticides and were rejected.

In this regard, MARD joins with pepper growers in welcoming the new EU regulations amending the MRLs for pesticides in or on food and feed of plant and animal origin that have gone into effect as of August 10 for all produce entering the market.

On the heels of these recently enacted rules, MARD is now in the process of amending and publicizing food safety laws and regulations along with policies and procedures benchmarking its own standards and requirements to the new EU rules.

MARD, wants to be confident that the country's pepper farmers comply with the new EU standards and ensure there is robust evidence that Vietnamese farmers and other actors in the industry certifiably abide by them.

Consequently, speakers told those in attendance that MARD has determined that compliance requires mandatory worker training for work forces industrywide on how to use pesticides safely and the importance thereof.

Most importantly, the speakers highlighted, the training will encompass the broader connection between welfare and produce safety and the link between improper use of pesticides resulting in disease and death of pepper industry workers.

Overuse of MRLs also results in an ‘invisible’ erosion of the soil resulting in a decrease in the soils productivity resulting in lower crop yields as they contaminate soil, water, and other vegetation and kill a host of other organisms including birds, fish, beneficial insects, and non-target plants.

MARD representatives noted workers who are trained to recognize and address the most common sources of abuse of MRLs are the first line of defence against foodborne diseases.

When these workers understand the intent of preventive protocols and have channels to signal problems with implementation, they can then help verify the country’s compliance with food safety measures.

Our ultimate goal, the MARD reps continued, is to increase consumer assurance in the EU that safety protocols are followed in the Vietnam pepper industry on a thorough and continuous basis. 

Pepper they said is principally grown in the Central Highlands and the South Eastern Region of Vietnam. It is a vitally important agriculture commodity, having produced 133,000 metric tons of product in 2015.

The volume of exports in 2015 was down significantly from the range of 140,000-150,000 metric tons for the three period 2012-2014 primarily as a result of the invisible erosion caused by overuse of MRLs.

Nguyen Quy Duong, deputy head of the Plant Protection Department under MARD, suggested that growers and other actors in the segment of the economy need a new vision.

Imagine what the industry would be like if workers had received adequate training to understand the connection between their use of MRLs and the safety of the produce they are growing, he said.

Imagine an industry where workers were encouraged to identify common threats to produce safety not only from MRLs but from animal waste to fungal infestation to handling procedures.

An industry where workers and management directly communicate to develop solutions that are best for the growers and others in the industry and one that ultimately serves the best interest of the final consumer.

This is the vision that MARD has and wants to instil in the pepper industry, Mr Duong emphasized.

Vietnamese farmworkers are extremely skilled, said Mr Duong, and their experience and knowledge can be refined and tapped into, to serve as a vital component of an effective strategy to prevent foodborne disease, he noted.

SCIC to divest from GMD

The State Capital Investment Corporation (SCIC) has announced it will divest its entire 8.42 per cent stake, or 15.1 millions shares, in the Gemadept Corporation (GMD) from August 15 to September 13.

SCIC’s announcement was made through a statement sent to the State Securities Commission (SSC) and the Ho Chi Minh City Stock Exchange (HoSE) on August 9.

The shares will be competitively offered at an initial price of VND28,000 ($1.26) and SCIC is expected to reap VND420 billion ($18.8 million) from the divestment.

GMD, the local leader in port operations and logistics with business in rubber plantations and real estate, was initially a State-owned enterprise and founded in 1990. As at the end of May it had two main shareholders: Re Collection Pte Ltd with 11.98 per cent and the SCIC with 8.42 per cent.

In the first half GMD’s consolidated after-tax profit was VND506 billion ($22.7 million), up 10 per cent year-on-year. Its consolidated net profit margin increased of 28.5 per cent year-on-year.

While holding the leading domestic position in port operations and logistics, GMD’s investment in rubber plantations has not been as effective as expected.

As at the end of 2015 it had invested approximately VND1.35 trillion ($60.5 million) in planting rubber in Cambodia. The project consisted of 30,000 ha, of which 10,000 ha have been planted, and GMD is expected to expand by a further 1,000 ha every year.

Operating costs have cut into GMD’s consolidated profit. Its financial statement for the second quarter this year saw the transfer of fixed assets resulting in a loss of VND55.3 billion ($2.48 million), which brought down after-tax profit by 16 per cent year-on-year.

GMD shares have not been overly attractive to investors in recent times due to concerns over the VND900 billion ($40.3 million) convertible bonds GMD issued to the Vietnam Investment Fund II and the impact on the share price if these were to be sold. Another issue is the threshold of 30 per cent foreign ownership.

However, Beta Securities Incorporation (BSI) has emphasized GMD’s potential to grow during the second half of 2016, especially with the divestment from Gemadept Tower, which BSI estimates would bring in profit of VND100 billion ($4.48 million) for the corporation. The construction of a new depot will also help boost annual capacity at Nam Hai-Dinh Vu Port by 25 per cent to 625,000 TEUs.

SCIC still holds shares in other profitable companies and is not showing an interest in divesting, including the Bao Minh Insurance Corporation, where it holds 51 per cent, Vinamilk (45 per cent), Tien Phong Plastics Company (45 per cent), and Binh Minh Plastics Company (30 per cent).

These all have high growth in revenue and profit each year so SCIC retains the shares to earn dividends. This has raised questions over whether SCIC is selling its holding because it doesn’t believe GMD can earn profits over the longer term or whether it considers its 8.42 per cent holding no longer worth retaining because of its small size.

GMD’s shares have been “cold” compared to the rest of the market. Since the start of this year, despite a significant increase in the VN-Index of some 14 per cent, GMD’s stock has only traded around the reference price.

GMD owns and operates a port network consisting of Phuoc Long Port, Gemalink, Gemadept-Hoa Sen International Port, Dung Quat Port, Nam Hai Port, and Nam Hai-Dinh Vu Port.

The Gemadept Logistics Company (a 100 per cent owned subsidiary) has been developing a vast range of logistics services, including a distribution center, an air cargo terminal, maritime shipping, cargo transport, inland transport, and freight forwarding.

Investors interest in urban planning projects in District 8

Many investors have sent documents to the city People’s Committee proposing to invest in urban planning projects including canal house clearance and building of new apartments for dwellers in district 8, said deputy chairman of the committee Le Van Khoa recently.

However, a breakthrough mechanism is needed for the city to permit the attendance of investors, he said. It will raise huge funds for implementation of the projects, limit spending from the city budget and mobilize social resources.

Land for infrastructure swap program and low interest loans definitely lure most of investors in the projects.

Reporting to secretary Dinh La Thang of the city Party Committee in a recent meeting, the People’s Committee of district 8 said that the district has over 12,389 low-roofed houses on and along 45 kilometers of canals stretching over 16 wards.

District 8 said that total compensation will reach VND13.7 trillion (US$614.31 million) for clearance of canal houses alone.

About 3,747 apartments are needed to be built for resettlement on the spot. At present, there are seven projects that will provide 6,100 apartments. However they are still on paper because construction has met with difficulties in capital.

Plastics and rubber exhibition to open next month

More than 320 companies from around the world will participate in a plastic and rubber industries exhibition opening in HCM City next month. 

The exhibitors, from 11 countries and territories including Singapore, the Republic of Korea, Japan, Thailand, and India, will showcase products and services like plastic compressing machines, PET bottle blowing machines, mould manufacturing equipment, plastic materials, chemicals and others at 500 stalls at the Saigon Exhibition and Convention Center. 

The organisers, Vinexad of Vietnam and Taiwan's Chan Chao, expect the expo, to run between September 28 and October 1, to help exhibitors find partners. 

Besides, local companies will be updated on the latest market information. 

Vietnam exported over 444,000 tonnes of rubber in the first half of the year for 551 million USD, over 5 percent up and 10 percent down respectively year-on-year. China and India were the two major buyers. 

Vietnam sold plastic products worth 1.05 billion USD, up 4.7 percent over the same period in 2015, with Japan and the US being the major buyers, accounting for over 38 percent of the export value.

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

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