BUSINESS IN BRIEF 13/6

Quang Tri seeks to develop macadamia farming

The Lien Viet Post Joint Stock Commercial Bank (LienVietPostBank) will give central Quang Tri province a credit package worth 500 billion VND (22 million USD) to help the locality develop macadamia farming. 

The credit package was signed by representatives of the province and the bank at a workshop on macadamia cultivation in the mountainous district of Huong Hoa on June 10. 

Within the framework of the workshop, more than 200 local farmers visited a macadamia farm of My Anh Khe Sanh Co., Ltd. They were also instructed by leading professors and experts in macadamia farming techniques, from designing orchards to the planting, caring, harvesting and processing of macadamia. 

Participants said that Khe Sanh town in Huong Hoa district has favourable soil and climate conditions and labour advantages for the cultivation of macadamia, which was planted in Vietnam since 1994.  

Quang Tri province has instructed the provincial agricultural sector and Huong Hoa district to zone off areas suitable for macadamia farming, while working with My Anh Khe Sanh Co., Ltd. to help local farmers with macadamia growing techniques.

Over the past time, LienvietPostBank has partnered with the Vietnam Macadamia Association to organise workshops on macadamia in the Central Highlands and Northwestern regions. 

According to a plan approved by the Ministry of Agriculture and Rural Development, the northwest and Central Highlands regions will plant macadamia trees on 9,940 hectares of land and develop 12 processing units by 2020.     

By 2030, there will be 34,500 hectares nationwide and 30 processing units in the two regions.

Industry 4.0 poses great challenges to ASEAN, including Vietnam

The Fourth Industrial Revolution, or Industry 4.0, was named one of the biggest challenges facing ASEAN at a recent conference in Hanoi to review the association’s prospects.

industry 4.0 poses great challenges to asean, including vietnam hinh 0 ASEAN, or the Association of Southeast Asian Nations, is a ten-country politico-economic bloc whose members include Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam.

Formed in 1967, the association promotes intergovernmental cooperation and facilitates economic, political, military, educational and cultural integration amongst its members and other countries in Asia.

On Friday, international delegates gathered in the Vietnamese capital for a conference on “geo-political transition in the Asia-Pacific and the half-century road of ASEAN,” hosted by the Diplomatic Academy of Vietnam in cooperation with ASEAN-Institutes of Strategic and International Studies (ASEAN-ISIS) and German-based political foundation Konrad-Adenauer-Stiftung (KAS).

“Will ASEAN be able to grasp the opportunity that Industry 4.0 presents, when most remarkable inventions in the world are not the works of ASEAN countries?” Vu Khoan, former Deputy Prime Minister of Vietnam, asked at Friday’s conference.

“If the answer to that question is no, then we will become obsolete in terms of quality, not quantity,” Khoan said in the audience’s unanimous applause of agreement.

Friday was not the first time the challenges that Industry 4.0 poses to ASEAN had been brought, as it had been thoroughly discussed at the World Economic Forum (WEF) on ASEAN in Cambodia last month.

In an article written for the forum, Shirley Santoso, senior partner at American global management consulting firm A.T. Kearney, stressed that with every industrial revolution there had been a requirement for a skill change, and the same trend was true for Industry 4.0.

“Previous revolutions were seen as job and growth creators; with Industry 4.0 there is a concern that it may eradicate jobs and lead to unemployment,” Santoso wrote.

As other nations lead the charge in embracing the Fourth Industrial Revolution, she said, ASEAN countries have so far failed to keep up, which is particularly worrying given that China, already a manufacturing hub, has a clear plan in place.

While countries such as Vietnam and Thailand have been slowly emerging as manufacturing bases partly due to rising costs in China, the latter is threatening to regain ground with its ‘Made in China 2025’ plan if labor issues and Industry 4.0 are not addressed quickly by ASEAN, she stressed.

The global shift to automation is two-pronged for ASEAN countries, Santoso asserted, in that it grants other countries low-cost production capabilities, while threatening to take away a huge part of human jobs within the grouping.

Vietnam, Cambodia and Indonesia have the highest number of workers at risk from automation, according to a recent declaration by the United Nations’ International Labor Organization (ILO).

“If we take the automotive sector, for example, ASEAN is the seventh largest producer globally, with over 800,000 employed within the sector,” Santoso wrote. “A majority within this sector are low-skill workers; those who will be most affected by automation.”

According to Santoso, Industry 4.0 requires governments in the region to formulate and implement a strategic industrial direction that focuses on developing skills, including private sector partnerships and infrastructure and capital requirements.

She suggested rolling out a nationwide capability and capacity building program in each of the ASEAN countries to cope with the challenge.

“South Korea’s success shows that, with a visionary government that supports its people and implements and monitors close partnerships with private sectors, a workforce can be transformed to unlock huge economic potential,” Santoso wrote.

Indonesia’s Minister of Industry, Airlangga Hartarto, has said that the country’s government would focus on prioritizing policies that aim to shift its manufacturing sector in the face of Industry 4.0.

Hartarto gave an example of the auto industry, where Industry 4.0 could boost production by allowing one assembly line to put together multiple car designs instead of only one as before.

The Indonesian minister added that the country would also place emphasis on educating the people, especially Indonesian youths, about the Internet of Things, while promoting vocational education.

The government of Vietnam has not been inactive toward the impacts and challenges of Industry 4.0.

Last month, Vietnamese Prime Minister Nguyen Xuan Phuc issued a directive on improving Vietnam’s capabilities to embrace the Fourth Industrial Revolution to take a more proactive stance in grasping the opportunities and minimizing the negative impacts of the revolution.

The directive focused on developing Vietnam’s IT infrastructure and encouraging local businesses to upgrade their technologies to catch up with the global trend.

According to Santoso, Singapore has been the exception where, through its SkillsFuture initiative, it has already begun to roll out a capacity-building program to brace for the coming Industry 4.0.

According to Vu Khoan, Vietnam is faced with four big challenges with the advent of the Fourth Industrial Revolution.

Firstly, Vietnam’s manufacturing base has yet to complete its transformation from the previous industrial revolutions.

This is demonstrated by the fact that Industry 1.0, 2.0, and 3.0 are still observable here and there across the country, due largely to inequality in industrial development between different areas.

Secondly, Vietnam’s human resource is limited in terms of quality.

Industry 4.0 is made possible by the amount of intelligence put into inventions and innovations, Khoan said, an area where Vietnamese workers find themselves at a disadvantage compared to their regional peers.

Thirdly, the way of life and attitude at the workplace of the Vietnamese population can pose a challenge to their ability to catch up with the fast-changing world of Industry 4.0.

Lastly, the destruction of human jobs by Industry 4.0, especially in the fields of agriculture and handmade artifacts can create social insecurity and unemployment, placing pressure on Vietnam’s welfare system.

Binh Thuan boasts great potential for solar power development

Five solar power projects worth over 14.8 trillion VND (651.2 million USD) have been approved to invest in the central coastal province of Binh Thuan as of May 2017. 

They included a 200MW plant covering 309 hectares in Thien Nghiep commune, Phan Thiet city, and a 150MW plant in Bac Binh district and Phan Thiet city with a total area of 211 ha. 

Dry climate and sunny weather, especially in the northern area, are advantages allowing Binh Thuan to develop solar power apart from wind power mills. 

Many investors are interested in investing in the field in the locality.

The provincial People’s Committee has approved studies for investment in 30 other solar electricity projects in the locality, with two of which, Eco Seido and Da Mi solar plants, which have respective capacity of 40 MW and 47 MW, getting  approval from the Ministry of Industry and Trade.

Binh Thuan has 40 locations that have been planned to call for investment for developing solar power projects, mainly in Bac Binh, Tuy Phong and Ham Tan districts.

According to Chairman of the provincial People’s Committee Nguyen Ngoc Hai, the local authorities encourage the mobilisation of capital from economic sectors to fully tap the locality’s advantages of natural and energy resources. 

The locality is calling for investment into developing clean energy in connection with key economic sectors, towards realising its goal of becoming an energy centre by 2020, with a total capacity of over 12,000 MW. 

As scheduled, by 2030, Binh Thuan is likely to attract solar electricity projects with a combined capacity of over 4,000 MW. The locality is hoped to become a clean energy centre in the future.

First container of Vietnam’s ngao oysters shipped to Italy





Lenger Seafoods Vietnam shipped its first container of ngao oyster grown in northern Nam Dinh province to Italy on June 10, ushering in a new opportunity for local breeders.

Nam Dinh is home to about 2,000 hectares of ngao oyster farming, mostly in Giao Thuy and Nghia Hung districts, that produce over 30,000 tonnes of oyster annually, said Vice Chairman of the provincial People’s Committee Nguyen Phung Hoan.

A majority of the locality’s ngao oysters have been consumed by local buyers while a small amount have been exported to China by petty traders. 

After one year of construction, the Lenger Seafoods Vietnam, a member of Lenger Seafoods from the Netherlands, has become operational, setting the scene for the development of the seafood processing industry and ngao farming in the province.

The company has also helped establish a supply chain, from breeding, harvesting, to transporting and processing, under strict requirements of Italy.

Ngao oysters of Nam Dinh gaining access to the foreign market will bring many benefits to the province, Hoan noted, urging businesses and farmers involving in the supply chain to comply with the importer’s requirements.

According to Nguyen Ho Nguyen, Director General of Lenger Seafoods Vietnam, the firm collects ngao oysters from farms certified to have clean and safe water environment. 

After harvested, the oysters will be processed in a closed hi-tech production line from cleaning to preservation to ensure the oysters to stay fresh when they reach to the end consumers in the EU market, he added.

Lenger Seafoods Vietnam is capable of producing up to 300 tonnes of ngao per day. It expects to soon export ngao to more markets, including the Netherlands, Spain, France, the Republic of Korea, Japan and the United States. 

It plans to send about ten more containers of ngao to the EU this June and develop a distribution channel in supermarkets and restaurants across the country.

Central Highlands not to expand rubber area

The Central Highlands provinces of Dak Lak, Dang Nong, Lam Dong, Gia Lai and Kon Tum will focus on raising rubber latex productivity instead of expanding the area of rubber trees. 

According to the Steering Committee for the Central Highlands Region, the localities collected more than 200,000 tonnes of rubber latex in 2016 with Gia Lai and Kon Tum recording the highest amount. 

Since 2016, the provinces have banned the transformation of natural forests into plantations of industrial trees in general as well as rubber in particular. 

Statistics show that the region now houses nearly 251,350 ha of rubber trees. 

Up to 220 projects turning exhausted forests or forestry land into rubber farms have been implemented in the region. However, such projects have failed to yield good results. 

Vietnam is among the three largest rubber exporters in the world, after Thailand and Indonesia. 

The General Department of Vietnam Customs reported that since the beginning of this year to the end of April, rubber exports reached 301,500 tonnes in volume, a drop of 2.1 percent against the same period last year. However, its turnover hit 607.9 million USD, a year-on-year increase of 65.4 percent. 

China is the leading importer of Vietnamese rubber, accounting for 63.2 percent with 190,000 tonnes valued at 383.7 million USD, a 12.08 percent rise in volume and nearly 90 percent in value over the same period last year.

Vietnam’s first dine-‘n’-slide hotel begins construction

Vietnam’s first hotel to use tubular slides to carry guests between floors, Fusion Suite Vung Tau, has started construction on June 1, 2017.

Designed for the modern traveller, Fusion Suites Vung Tau will provide a range of 171 unique and well-appointed suites and apartments, perfect for young families, couples, or groups of friends. Featuring expansive windows, this 20-storey hotel will make full use of the breathtaking ocean view and natural light this dynamic coastal city is famous for.

Aside from the unique slide system, the property will also include functional areas and guest facilities, including an on-site spa, a rooftop infinity pool and cocktail bar, a refined yet informal restaurant serving healthy, balanced, and creative Fusion menus, plus a coffee lounge, meeting rooms, and conference facilities.

The project will also feature high-quality services to Vietnam’s rapidly developing tourism sector, aimed at attracting domestic and foreign tourists alike.

The hotel is located in the heart of Vung Tau city, within easy reach of all major tourist attractions and key sites, such as Bai Truoc Park, the cultural centre, Vung Tau Lighthouse, and the Ho Chi Minh City-Vung Tau express ferry port.

Vung Tau welcomes over 15 million international and domestic travellers each year, making hospitality one of the fastest-growing sectors in the province.

According to Fusion’s founder and CEO Marco Van Aggele, fuelled by original ideas, the company’s team of in-house designers and wellness-inspired hoteliers worked hard to present a feeling of true openness in a sensible and logical structure.

“At Fusion Suites Vung Tau, we will bring the calm and revitalising nature of Vietnam’s coastline into our interior design concept. We also offer daily spa journeys at all of our suites, where guests can get a massage, manicure, reflexology or beauty treatment at no extra cost,”Aggele added.

Fusion Suites Vung Tau is scheduled for completion in the third quarter of 2019.

Hai Phong takes lead in IIP

The nation’s Index of Industrial Production (IIP) saw a year-on-year increase of 20% compared to the same period last year, according to the General Statistics Office.

The industrial production index for May was estimated to increase by 7.2% in comparison with the same period last year. Specifically, the manufacturing index increased by 11.2%; electricity production and distribution by 13.8%; and water supply and waste water increased by 8.2%; while mining continued a decline of 7.8%.

Generally, for the five month period, the whole industry’s index increased by 5.7% when compared to the same period last year.

Although this year’s figure is lower than the 7.4% growth rate of the same period last year, this is a positive figure when compared to the 5.2% growth rate in the first four months of this year, according to the GSO.

The northern city of Hai Phong took the lead, followed by Thai Nguyen with an increase of 17% and Da Nang with 10.8%. The two major economic hubs of Ho Chi Minh City and Ha Noi recorded a growth of 7.2% and 5.9%, respectively.

Spotify to stir up Vietnamese and Thai music streaming markets

Newswire TechCrunch has recently aired news that global music streaming giant Spotify will likely set up shop in Vietnam and Thailand—possibly even within the year. With a global user base of 100 million registered and 50 million paying subscribers, Spotify has yet to conquer certain market pockets in Asia and there might be very good reasons for this.

According to TechCrunch, Spotify is looking to step up its game in Asia by launching its music streaming service in Vietnam and Thailand and “seriously considering” expansion in India, perhaps even within the year.

While Spotify declined to comment on its plans in Vietnam and Thailand to TechCrunch, it has started hiring for music editor positions in both countries. The move is considered a precursor to launching services, as the company followed a similar strategy in Indonesia in 2015. Then, it started hiring for the exact same post in October and launched its service within six short months.

The positions will likely be headquartered at Spotify’s Asia-Pacific headquarters in Singapore and based on the events in Indonesia, the music streaming service might be launched within 2017 already—though there is little to justify the six-month timeframe.

Spotify is one of the largest music streaming services in the world, with more than 100 million registered and 50 million paying subscribers. The company’s service is available in 60 countries worldwide, though significant markets in Asia remain unexplored.

The company was reported to have financial difficulties as it decided to streamline its business model before going public without actually staging an IPO. At the time, they chose to push the move off to 2018, but Snap’s and other successful IPOs signified ideal market conditions to forge ahead. This likely lead to Spotify shifting focus from India to “easier” markets, like Vietnam, Thailand, and Japan.

In India, Spotify would meet significant competition from iger Global-backed Saavn and Times Internet’s Gaana, as well as Apple’s iTunes (available since 2015) and Google Play Music that arrived just this year. Despite the Indian market’s sheer size and the significant monetary benefits of seizing just a small slice of the market, Spotify’s management likely found following the path of least resistance their best bet to boost performance before going public.

Internet statistics portal Statista Inc. offers insightful data on the global and Vietnamese digital music industry’s performance that can be utilised to understand Spotify’s choice of entering Vietnam and Thailand as well as the challenges ahead in its unexplored Asian market pockets.

According to Statista’s database, the global digital music industry’s three largest markets are the US, Europe and China. While the US and Europe signify largely developed economies with high per capita incomes, an undoubtedly vital factor in people’s choice of accessing online musical content, China is a budding market with lower incomes and rampant semi-legal streaming and downloading alternatives—features widely shared by Vietnam, Thailand, and even India, that could serve as a basis of comparison.

Indeed, many network operators offer free 3G data for music streaming, liberating gigabytes of memory on mobile phones in exchange for subscribing for monthly data plans and subscribing to music streaming services, like that of Spotify, for a fixed charge or simply downloading a free application that features third-party advertisements.

Recent years show a marked change in digital consumption habits both in the US and Europe, and to some degree, in China as consumers are departing from downloading their favourite tunes to streaming them online.

This broke the 13-year growth series of music download sales that began in 2003 with Apple’s iTunes, as now that there is bandwidth, internet speed, and mobile internet accessibility, streaming is a better choice.

The global digital music market was about $9.2 billion in 2016, and accounted for 11 per cent of the global digital media market. Combined, the US, Europe, and China cover 81 per cent of the global digital music market, with a cumulated amount of $7.4 billion. Of this, the US is the peerless champion in digital music consumption, standing at $4.2 billion in 2016. The size of the European market was $2.3 billion in 2016, and China is $0.4 billion, far below its peers.

In the case of wealthy US and European consumers, the one-off payments and subscriptions seem to be worth the extra storage, as more and more of them choose to stream music instead of downloading it. According to Statista, from now till 2021, revenue from streaming will increase at a 17.2 and 11.39 per cent rate in the US and Europe, respectively, while revenues from downloaded tracks will fall by 8.9 and 10.36 per cent, annually.

It is interesting to note how music streaming accounts for 67 per cent of the digital music market in Europe, far outstripping the US’ 56 per cent.

In China, on the other hand, both streaming and downloading are going through the roof, growing by 21.19 and 33.29 per cent on annum, respectively. Nevertheless, based on the sheer differences in market size, China is far from catching up with the US and EU within a foreseeable time, as its revenue is poised to hit the $1 billion mark by 2021, while the US and EU are pretty much over that threshold by their individual sectors already.

China is also different from the US and Europe markets in that the “willingness to pay for digital music is very low,” as most music is streamable for free on semi-legal alternatives. On the other hand, 92 per cent of the market is generated by “mostly ad-based streaming,” at least partially thanks to the fact that Chinese consumers arrived to the market equipped with better devices than the US and European pioneers some 13 years ago, with ready access to smoother technological solutions.

Also a feature shared by Spotify’s newest coming markets, a constant thorn in the side of music streaming and downloading service providers on the Chinese market is the abundance of free streaming services operating in constant violation of property rights.

A one-time payment or monthly subscription for unlimited music streaming might sound nice for US and European customers who can easily afford these prices than Chinese customers. While doubtlessly, service providers are making an effort to tailor service fees to regional purses, prices in China remain above the affordable for the wide Chinese population, leading to ample demand for illegal streaming and downloading, and downward pressure on the charges of legally operating providers.

Spotify is bound to find similar issues in Vietnam, Thailand, and India as the generally outlined issue in China. As Vietnamese telecommunications firms are busy rolling out 4G and enhancing 3G services and the majority of internet users are connected through mobile devices, the market seems ready for renowned music streamers to enter.

To step further into the grounds of speculation, Vietnamese consumers are likely to pose higher demand for streaming than for downloading their favourite tracks, as their devices are mostly capable of handling 3G (and, with time, 4G), provided that network operators will accommodate this demand.

While per capita incomes are on the uptake and the country’s economic prospects are rosy, Vietnamese consumers may not be ready to spend big on streaming music, given easy content piracy and freely accessible illegal streaming platforms. Similar to the $1.5 average revenue per internet user in China, Vietnamese users spend about $1.3 per person.

As it stands, copyright infringement and the violations of intellectual property rights make Vietnam a difficult market. Just last October, nhacSO.net, one of the three biggest music streaming websites in the country, stopped operations as consumers are “moving towards other models, which are unlike the one that nhacSO.net provides,” as a manager of FPT Telecom said in an interview with ICTnews, also reported by VIR.

During its eleven years of operation, nhacSO.net grew up to be the leading music streaming site, to be then taken over by Zing mp3 (operated by VNG Corporation) and Nhaccuatui (NCT Corporation) in 2010. To this day, Zing mp3 and Nhaccuatui are doing well, ranking as the 7th and 23rd on the list of top 25 most visited websites in Vietnam compiled by reachingvietnam.com.

However, officially operating subscription-based or ad-supported unlimited access music streaming services have only a limited user penetration (not counting internet radio and video streaming). In 2017, the figure was only 3.5 per cent, and is forecasted to grow to 4.2 per cent by 2021. The market size, similarly, is relatively small: in 2017 Statista expects a total market revenue of $3 million. The market is forecasted to see a compound annual growth rate of 8.7 per cent until 2021, when revenue will be $4.1 million.

What Spotify’s success rides on in Vietnam (and indeed in Thailand and India, as well) is creating a package strong enough to force open Vietnamese users’ purses, which might prove insanely difficult. The company will not only need to come up with a library of tracks fitting local tastes (one that will contain an unparalleled variety of not only Vietnamese songs, but Korean and Japanese content) and land a deal with mobile operators to offer free data for music streaming—essentially starting a turf-war with Hong Kong’s PCCW Media that launched the music streaming brand MOOV that offers (arguably) the largest K-pop collection in Vietnam and is freely accessible for Vietnamobile 3G subscribers for only $3 a month.

And far be it from me to say MOOV is king of the market—it is relatively obscure, looming in the background behind Zing mp3, Nhaccuatui, Nhac Vui, Keeng, and Nhac DJ. At the least MOOV may provide a sensible starting point from which Spotify can improve for success.

MobiFone's 2016 pre- and after-tax profit down

MobiFone has released its audited 2016 financial statement for the parent company, with net revenue from goods and services reaching nearly VND35.08 trillion ($1.54 billion), up nearly VND3.7 trillion ($162.9 million), or 12 per cent, over 2015.

Gross profit and financial income declined, however, while sales costs increased 27 per cent, to more than VND1.2 trillion ($52.8 million, resulting in a 27 per cent decline in pre-tax profit, from VND7.1 trillion ($312.5 million) to VND5.025 trillion ($221.2 million). After-tax profit fell 22 per cent, to VND4.223 trillion ($185.9 million). 

At the end of 2016, MobiFone’s total debts stood at VND8.4 trillion ($369.7 million), mainly short-term payables but with no bank debt. Total cash and short-term deposits fell significantly since the beginning of the year, from approximately VND9 trillion ($396.2 million) to VND1.8 trillion ($79.2 million).

MobiFone also said that 2016 was the first year that its subsidiary AVG returned a profit, of VND54 billion ($2.4 million). The acquisition of AVG was part of its business development strategy for 2016-2020 based on four pillars: Telecommunications and Information Technology, Television, Distribution and Retail, and Multi Services. MobiFone has three other subsidiaries: MobiFone Services, MobiFone Plus, and MobiFone Global.

In 2017, MobiFone targets total revenue of VND44.205 trillion ($1.9 billion), of which the parent company’s revenue is VND39.669 trillion ($1.75 billion). Pre-tax profit and after-tax profit are to be VND5.589 trillion ($246 million) and VND4.471 trillion ($196.8 million), respectively. Planned investment capital for development during the year is estimated at VND10.2 billion ($449 million).

Saigon Newport keen on transit through Kazakhstan.

The Saigon Newport Corporation (SNP), the owner of Vietnam’s largest seaport, Saigon Newport, and Kazakhstan’s National Railways Corporation have met to discuss plans for developing an effective logistics chain between Southeast Asia and the EU via Kazakhstan.

SNP CEO Mr. Nguyen Dang Nghiem led a delegation on May 26-31 to Lianyungang seaport, Kazakhstan’s largest investment project in China, with the aim of boosting cooperation between SNP and Kazakhstan’s National Railways Corporation and researching the potential of transit through the country.

The two sides introduced development plans for infrastructure of the two seaports. They also proposed establishing a group to research bilateral cooperation within the framework of China’s “One Belt, One Road” initiative. 
Mr. Nghiem said that SNP is willing to support goods shipments from Vietnam to countries in the Eurasian Economic Union (EAEU), Kavkaz (the Caucasus region), and the EU.

Wrapping up the meeting, the two sides agreed to establish the research group and for the Kazakhstan side to soon provide goods shipment fees and hold a business forum in Ho Chi Minh City attended by Vietnamese exporters.

A delegation from the Vietnam Railway Corporation (VRC) led by Deputy General Director Phan Quoc Anh visited Kazakhstan, the Khorgos economic free zone, and Altynkol train station on the Kazakh-Chinese border in March.

Mr. Anh said he highly regarded the important role of Khorgos and the railway station at the border. “This trade route has great potential and is a connection between Southeast Asia and Europe,” he said.

The Vietnam-EAEU FTA, which took effect on October 5, 2016, is expected to expand trade between Vietnam and the five EAEU countries of Russia, Belarus, Kazakhstan, Armenia, and Kyrgyzstan.

Under the agreement, 90 per cent of tariff lines have been cut or reduced. Of those, 59 per cent were removed immediately after the agreement took effect, offering great advantages for Vietnam to compete with other countries in exporting to the region.

Most local firms lagging in 4th industrial revolution

The fourth industrial revolution, which entails Internet of Things. intelligent robots. self-driving cars, and genetic editing, among others, remains quite new to domestic enterprises.

A majority of Vietnamese businesses, especially those in the finance and accounting sectors, have just entered the third industrial revolution, heard an annual conference held on May 31 by the Vietnam Association of Certified Public Accountants (VACPA) and the Association of Chartered Certified Accountants (ACCA), the global body for professional accountants.

Most Vietnamese firms are still in the third revolution, said Will Nguyen, director of information technology (IT) advisory services at KPMG Vietnam.

He added just a small fraction of domestic enterprises, especially those having annual revenues of US$500-700 million, are working forwards the fourth industrial revolution.

Le Thanh Binh, chief financial officer at Lazada Vietnam, said local e-commerce firms are even at the half stage of the second industrial revolution, and that his company’s staff still handle 20-30% of work manually when it comes to financial matters.

VACPA general secretary Tran Khanh Lam said small and medium enterprises are extremely reluctant to change. The bottom line is these business owners should be persuaded to change their mindsets, he said.

ACCA’s senior business insights manager Jimmy Greer shared the findings of “Business models of the future: emerging value creation” published by the ACCA, and the Economic and Social Research Council.

The report identifies six business models which could transform the way in which startups and large companies transact. They are platform-based businesses, mass customization 2.0, frugal, modern barter, ‘pay what you want’, and mega-hyperlocal.

Organic products to be made available at Saigon Co.op stores nationwide

The Saigon Union of Trading Co-operatives (Saigon Co.op) has said organic products can be found on the shelves of its stores in HCMC and elsewhere in the country this year, said Nguyen Thanh Nhan, general director of Saigon Co.op.

At the Green Consumption Campaign in the city held by Sai Gon Giai Phong newspaper and Saigon Co.op on May 31, Nhan said Saigon Co.op in early May launched Co.op Organic brand at seven of its supermarkets in HCMC.

Saigon Co.op will make organic vegetables, rice, shrimp and fish available at 87 supermarkets and 130 Co.opFood stores this year.

Saigon Co.op is partnering with companies such as Vien Phu Organic & Healthy Foods JSC with a 300-hectare farm in Ca Mau Province, which supplies rice, vegetables and fish, and Vinamit JSC, which provides other types of vegetable.

Saigon Co.op will find ways to improve its productivity and supply chain to lower prices of organic products.

Before they are put on the store shelves, organic products must be carefully checked at farms and processing facilities, and Saigon Co.op’s depot and supermarkets to make sure they meet quality standards.

Saigon Co.op does not accept products with pesticide residues or of poor quality to protect consumers’ health, Nhan noted.

Markets, commercial centers pledge to not sell fake goods

Five markets and two commercial centers in HCMC pledged at a conference on May 31 that they would not store and sell counterfeit and contraband goods.

The five markets are Ben Thanh in District 1, Kim Bien in District 5, Binh Tay in District 6, Tan Binh in the district of the same name, and Ba Chieu in Binh Thanh District. The two commercial centers are Saigon Square and An Dong Plaza.

The HCMC market monitoring agency will join hands with these markets and shopping centers to inform small vendors of relevant laws and regulations.

According to business owners, the trading of fake goods and those of poor quality is prevalent. Most of these products are mainly imported from China.

Jun Okubo of Japanese sport equipment maker Yonex said many fake products bearing Yonex brand can be found at numerous markets and sport equipment stores in Vietnam and that they come from China.

A Panasonic representative said lots of counterfeit electric kettles, water purifiers and other household appliances have brand names like Panasoni and Panasonie, which consumers, especially those in rural areas, might mistake for those of Panasonic.

Fake goods bearing international luxury brands like Chanel, Louis Vuitton, Nike, Adidas and Rolex also abound on the market.

The city market monitoring agency said 200 violations involving counterfeits had been detected this year. Nearly 2,700 pairs of shoes, over 250 kilograms of waterproof material and nearly 49,000 fashion, functional food and cosmetics products were confiscated.

HTC to abandon low-end smartphone market segment

HTC Vietnam will stop marketing low-end smartphones to focus on the premium segment, said HTC Vietnam director Nguyen Hong Chau.

At a launching ceremony of HTC U11 smartphone in HCMC on May 31, Chau said the company’s withdrawal from the low-end smartphone segment was aimed at avoiding the fierce competition with cheap Chinese phone brands.

With the lowest price of around VND9 million (US$395.13), eye-catching design and high quality, HTC phones can compete with products of larger firms  such as Apple and Samsung.

The HTC U11 smartphone comes with a price tag of VND17 million, and a built-in sensor which makes photo taking and camera activation easier.

However, the Taiwanese manufacturer said it would add new features to its products and replace the HTC Desire phone line with 10 and U product lines in the coming time.

Analysts said HTC has had a hard time competing with Apple and Samsung in the high-end segment and with Chinese manufacturers in the mid-end segment.

HTC earlier launched two new premium smartphone models, U Ultra and U Play, which come with artificial intelligence and voice recognition features.

Imports far outpace exports

Vietnam’s import spending in January-May grew a staggering 23.9% year-on-year to US$82 billion while exports expanded 17.4% to US$79.3 billion, resulting in a trade deficit of US$2.7 billion, data from the General Statistics Office shows.

While foreign invested enterprises increased their dominance in both trade volume and trade surplus, the domestic sector underperformed in the year’s first five months.

Specifically, the foreign investment sector gained US$57.2 billion from exports, growing 19% from the year-earlier period, while their import expenditures edged up 27.5% to US$49.6 billion. Still, foreign invested enterprises generated a trade surplus of US$7.65 billion.

Meanwhile, the domestic sector saw exports expanding 13.6% from the year-earlier period to US$22.1 billion, but imports also rose 18.9% to US$32.4 billion, thus resulting in a trade deficit of US$10.36 billion.

A positive sign in imports in the first five months is that much of the spending went to materials and machinery for local manufacturing, according to the General Statistics Office.

Machinery and equipment imports grew 38.8% to US$14.9 billion, while spending on electronics products and accessories increased 27.5% to U$13.3 billion, and the import value of cellphones and accessories rose 23.4% to US$5 billion. Import expenditures on such materials as plastic materials, steel, chemicals, and animal feed also rose at double-digit rates. 

Regarding trade partners, no major changes were seen in traditional markets.

Vietnam shipped US$16 billion worth of products to the U.S. in the five-month period while importing US$3.8 billion worth of goods from this market. Exports to the EU brought in about US$14.6 billion while imports totaled US$4.6 billion. That means Vietnam gained high trade surpluses with these major partners.

Exports to Japan generated US$6.4 billion and imports cost US$6.5 billion.

However, Vietnam suffered huge trade deficits with China and South Korea.

Exports to China generated only US$10.5 billion while imports from this market surged 15.7% to US$22 billion, leading to a deficit of US$11.5 billion. Exports to Korea totaled US$5.7 billion while imports from this market skyrocketed by 51.9% to US$18.6 billion, causing a trade deficit of nearly US$13 billion.

The General Statistics Office notes that both exports to and imports from the U.S. have been galloping at double-digit rates in as many years.

The growth of exports stateside between 2000 and 2016 averaged out at 28.1%, from US$732 million to US$38.45 billion, while imports from this market also rose by an average 22.2% in the period, from US$352 million in 2000 to US$8.7 billion in 2016.

Milk consumption in cities declines

Consumption of milk and other dairy products in cities in January-April 2017 fell 2% versus the same period last year, according to a new report on fast-moving consumer goods (FMCG) market released by Kantar Worldpanel.

The report of the market research firm showed that in Hanoi and HCMC, the country’s two biggest cities, powdered milk for children aged over one year marked down in both value and volume despite a more optimistic FMCG market outlook. Consumption of dairy products in rural areas posted strong growth of 10% in value and 7% in volume.

The FMCG market in four big cities – Hanoi, Danang, HCMC and Can Tho – has grown significantly, 5.6% in value and up 2.8% in volume, while the rural market has recovered its growth momentum. In the short term, there were positive signs as the FMCG market growth in rural areas reached the highest since the second quarter of 2016 at 5.1% in value and 2.9% in volume.

According to the Kantar Worldpanel report, beverages and packaged food continued to take the lead in the FMCG market in urban areas. Personal and family care products also achieved good results thanks to an improvement in consumption.

Instant tea and household hygiene products posted strong growth in big cities as well as rural areas as they attracted many more buyers.

Vietnam must commit to US Food Safety Modernization Act

On January 4, 2011, the US Food Safety Modernization Act was signed into law, which greatly expanded the authority of the Food and Drug Administration to oversee the safety of most food products.

The FSMA gave the FDA broad new powers to better protect public health by strengthening the US food safety system, with a special focus on instituting preventative practices for those who grow, process, transport and store food. 

According to official statistics, 19% of food consumed in the US today is imported. Carrying out port-of-entry food inspections is therefore an arduous task and of ten times unreliable in keeping unsafe foods from entering the US.

With that in mind, the FDAhas implemented FSMA regulations that task importers with verifying that their foreign suppliers are being held to the same food safety standards as producers in the US.

Additionally, the FDAphysically inspectsfacilities of at least 1,200 foreign food suppliers per annum. Foreign countries or suppliers that deny entry are automatically refused access to the US market.

With this food inspection scheme,US importers are responsible for identifying and evaluating the myriad of potential food product hazards and verifying that the items they import are not adulterated.

Consequently, Vietnamese food suppliers are now subject to a growing number of compliance costs, such as onsite auditing, sampling and testing, and validation studies for multiple biological hazards for their products.

Speaking at a recent forum in Hanoi, Dao Duc Huan from the Institute of Policy and Strategy for Agriculture and Rural Development bemoaned the FSMA inspection system saying it hinders food exports to the US.

It was clear from the comments of Mr Huan that he has little to no concern for food safety and believes food suppliers to the US market should be put on the honour system for ensuring their products are not harmful.

He also complained about the FSMA strict rules of origin requirement saying they are unnecessary. 

The problem, of course, said other experts at the forum, is that US consumers demand and have a right to know the origin of their food—and that origin must be clearly identified on products and labelling.

Nestor Scherbey, senior advisor to the Vietnam Trade Facilitation Alliance in turn was supportive of the FSMA inspection scheme, noting the importance for Vietnamese suppliers to not only produce safe food, but demonstrate this fact through rigorous inspections.

Fruit, vegetables, fish and fishery products are all now coming under closer scrutiny under the FSMA, which is aimed at minimizing food safety risks or hazards in processing, packaging and transportation.

The days of Vietnamese companies simply putting a product on the market with little concern for food safety or the desires of the consumer are now history, Mr Scherbey acknowledged.

If companies in the food segment want to export their products to the US or other markets such as the EU, they must up their game and be prepared to demonstrate unequivocally that their products meet with the highest of quality standards.

This means, said Mr Scherbey, that Vietnamese companies must work closely with US importers to insure they understand what is required of them and of the best practices to follow in complying with food safety regulations.

Neither can cost be considered a factor in the discussion of food safety, as the US consumers demand these food safety inspections and are more than willing to pay for their cost. 

Without question, Vietnamese food suppliers must committo the FMSA inspection scheme, he underscored, noting that any additional costs for complying with food inspections, should simply be added on to the sales price and passed on to the US importer.

Binh Dinh licenses solar wind power project

The Binh Dinh Provincial People’s Committee has granted an investment license to the Fujiwara Solar Wind Power project, which has total investment capital of $63.69 million.

The project is 100 per cent foreign-invested by Japan’s Fujiwara Corporation and located on Phuong Mai Mountain at the Nhon Hoi Economic Zone on an area of 60 ha and with a capacity of 100 MW. The operating period is 50 years.

This project will be deployed during the second quarter and is expected to enter its first operational phase in the first quarter of 2019, producing 64 MW of solar power. The second phase, with additional investment in the 36 MW wind power plant, is expected to enter into operations in the first quarter of 2020.

The production of solar and wind energy is a field the Vietnamese Government strongly encourages.

When put into operation, the project will create stable employment for more than 100 people and contribute to the local budget and stabilizing social security. It will also involve landscaping work, which will attract tourists to Binh Dinh.

Various national and international investors are interested in solar power wind power in the south-central province. Eighteen investors have projects registered and six have been licensed to build.

This is the second Japanese foreign direct investment (FDI) project at the Nhon Hoi Economic Zone and the 12th in Binh Dinh, bringing the total FDI from Japan to nearly $100 million. Other projects include a factory for furniture production belonging to Japan’s Marubeni Lumber Joint Stock Company.

Binh Dinh expects to attract huge investment capital from foreign investors at the Nhon Hoi Economic Zone.

Hilton & BRG Group meet with PM

Hilton CEO and President Mr. Christopher J Nassetta was joined by a key strategic business partner in Vietnam, Ms. Nguyen Thi Nga, Chairwoman of the BRG Group, the leading multi-sector group in Vietnam, at a special meeting with Prime Minister Nguyen Xuan Phuc during his visit to the US, in which he is being accompanied by a Vietnamese trade delegation.

Hosted by the US Secretary of Commerce, Hilton and BRG told the Prime Minister of their perspectives on Vietnam’s tourism sector being a key pillar of future economic and employment growth, as it already contributes 7.3 per cent to employment and 9.1 per cent to GDP.

“We are living in a golden age of travel, with an exponential increase in international tourism taking place,” said Mr. Nassetta. “Vietnam is an incredible destination with the potential to be a significant beneficiary, and, at Hilton, we are committed to bringing our unique brand of hospitality everywhere our customers want us to be. Alongside one of our key strategic business partners, BRG Group, it was a pleasure to meet with Prime Minister Phuc to highlight our expanding business operations and discuss opportunities to support the government’s tourism strategy.”

During the meeting, Hilton and BRG outlined the details of their partnership, which includes two hotels in Hanoi, the Hilton Hanoi Opera and the Hilton Garden Inn Hanoi, plus the recently announced dual brand project to develop Hilton Hanoi Westlake and Double Tree by Hilton Hanoi Westlake. Hilton has also previously announced management agreements for Hilton Hai Phong, which is under construction, and the Double Tree by Hilton Doson, also in Hai Phong.

“Travel and tourism are a significant component of the BRG Group’s business model and we are excited about prospects in Vietnam,” said Ms. Nga. “With 2 million people already directly employed and a further 2 million jobs supported by the sector, it is a major contributor to our society. By strengthening ties with iconic international brands such as Hilton, attracting further inward investment and international visitors, the industry will continue to flourish.”

Hilton operates two hotels in Vietnam with a further six under development. BRG Group has business interests in banking, goods production and trade, golf course development and operation, and real estate development.

Hilton (NYSE: HLT) is a leading global hospitality company, with a portfolio of 14 world-class brands comprising nearly 5,000 properties with more than 812,000 rooms in 103 countries and territories. It is dedicated to fulfilling its mission to be the world’s most hospitable company by delivering exceptional experiences - at every hotel, to every guest, every time.

Fahasa hosts Japanese book exhibition

Fahasa, a leading book distributor in Vietnam has cooperated with Japanese bookshop chain Kinokuniya opened the Japan’s book exhibition at Nguyen Hue bookstore in Ho Chi Minh City’s District 1 on June 1.

The event displays more than 15,000 titles with 30,000 copies in various genres, such as comics, literature, Bunko (Japanese small-format paperback book), culture, fashion, architecture, text and reference books and more.

The Ho Chi Minh City Book Distributors Joint Stock Company (Fahasa) has been selected as one of the top ten retailers in Vietnam and among the top 500 Asia-Pacific retailers by the Singapore-based Retail Asia magazine. The company plans to have between 100-120 bookstores cross the country with a focus in northern provinces by 2020.

Kinokuniya is one of the largest bookstore chains in Japan, with more than 80 stores and 35 sales offices worldwide.

Forum discusses auto industry cooperation with Indonesia

The Embassy of Indonesia in Vietnam held a forum on promoting Vietnam – Indonesia partnership in the auto industry in Hanoi on June 2, bringing together businesses from both nations.

Opening the event, Indonesian Ambassador to Vietnam Ibnu Hadi stressed the Indonesian auto industry has strengths in producing spare parts for sports, SUV cars, sedans and light trucks, adding that the country also export cars domestically assembled using spare parts all imported.

Indonesia has close partnership with Japanese automobile firms and is striving to be among the region’s biggest auto producers, the diplomat stated.

He said that Vietnam is a newcomer in the field but has strong background and resources and that the forum will boost cooperation between Vietnamese and Indonesian car makers.

Doan Duy Khuong, Vice Chairman of the Vietnam Chamber of Commerce and Industry, noted the large number of Indonesian auto companies at the forum shows their interest in the Vietnamese market and its potential.

Nguyen Van, Vice Chairman of the Hanoi Supporting Industries Business Association, Vietnam’s support industry is young and faces difficulties in accessing land, capital and technologies.

The sector needs preferential policies to overcome these challenges, he added.

Vietnam Airlines adds flights to HN-Chu Lai, HN-Pleiku routes

The national flag carrier Vietnam Airlines will add three flights per week to Hanoi – Chu Lai and Hanoi – Pleiku routes from June 15 to meet increasing domestic travel demand.

The move will bring up the number of weekly flights on these routes to 7.

The 4-star flight, departing from Hanoi at 7:00 am and from Chu Lai, central Quang Nam province, at 9:10 am, is operated on Airbus A321 aircraft, according to Vietnam Airlines.

Meanwhile, the flight departs from Hanoi at 6:30 am and from Pleiku (Central Highlands Gia Lai province) at 8:50 am on the Hanoi – Pleiku route.

On the occasion, the airline will offer special airfares at 399,000 VND per flight for Hanoi – Chu Lai and at 599,000 VND per flight for Hanoi – Pleiku, excluding fees and taxes. The tickets will be on sale from June 3 to the end of June 15 for travel from June 15 to the end of August 31.

The tickets can be purchased on the carrier’s booking offices and official website at www.vietnamairlines.com.

For more information, please visit www.vietnamairlines.com or call the customer service centre 19001100.

Over 300 projects displayed at Viettreal Expo 2017

Domestic and foreign real estate investors and enterprises are introducing their products and projects to customers in Hanoi through the Viettreal Expo 2017, which kicked off on June 2. 

The annual event, organised by the Vietnam Association of Realtors (VAR) under the sponsor of the Ministry of Construction, specialises in urban and resort housing projects.

Over 300 projects featuring apartments, houses, villas and resorts are exhibiting in nearly 200 booths from prestigious property firms, real estate services firms, and trading floors such as Dat Xanh mien Bac, Cen Group, Maxland, and Phu Quy. 

According to Vice Chairman of the Vietnam National Real Estate Association (VNRESA) Nguyen Manh Ha, the event provides a great opportunity for investors and property developers to share experience and promote brand building and investment.

Ha said the VAR the VNRESA hope the Viettreal Expo will be organized frequently in Hanoi and Ho Chi Minh City, becoming a reliable venue for property firms and trading floors to showcase their products and services and establish partnerships. 

Chairman of the Board of Directors of Maxland Tran Duc Dien said the fair enables investors to access new products, transparent information and select best products, while investors can set up partnership with competent property brokers.

State treasury raises VNĐ5.9 trillion from government bonds

The State treasury has successfully raised VNĐ5.9 trillion (US$260 million) for the State budget through an auction of Government bonds on the Hà Nội Stock Exchange (HNX) on Thursday.

The bonds were offered for four tenures: five years and seven years, with VNĐ2 trillion for each term; and 10 years and 15 years, valued at VNĐ1 trillion.

The five-year bonds brought in only VNĐ1.343 trillion with a winning yield of 5.05 per cent, up two basic points compared to the previous sale on May 24.

The seven-year and 10-year bonds sold for a total value of VNĐ3 trillion, at lower interest rates compared to the previous sessions, with winning yields of between 5.34 per cent and 5.91 per cent per year.

The 15-year bonds raised VNĐ950 billion, with a winning yield of 6.64 per cent, which is six basic points lower compared to the session held on May 17.

A total of VNĐ600 billion was raised in the sub-session sales for the 10-year and 15-year terms.

Since early this year, the State treasury has been selling Government bonds. So far it has sold bonds worth around VNĐ103.4 trillion through auctions at HNX.

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

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