BUSINESS IN BRIEF 6/11

Deputy PM urges acceleration of Noi Bai-Lao Cai highway

Deputy Prime Minister Hoang Trung Hai has asked the Ministry of Transport and relevant agencies to manage and disburse investment to accelerate the construction of the Noi Bai-Lao Cai national highway.

Inspecting the construction site in the northern mountainous province of Yen Bai on November 3, he also asked the Vietnam Expressway Investment Corporation to join hands with the localities to address difficulties during the construction so that the highway will technically open to traffic in April 2014.

Contractors must meet all technical requirements, he added.

The Noi Bai-Lao Cai expressway, the construction of which was started in 2009, has a total length of nearly 265km and an investment capital of over 1 billion USD. It links Hanoi and the northern border province of Lao Cai.

Bailout disbursed in dribs and drabs into real estate

Only 120 individual clients in Ho Chi Minh City had been eligible to borrow capital from the Government's 30 trillion VND (1.4 billion USD) preferential credit package as of September 15.

The capital had been disbursed to 45 of them, totalling 15.67 billion VND (750,000 USD), the municipal People's Committee said, adding that there were no businesses in the city who could access this preferential package.

The 30 trillion VND bailout to low-income homebuyers and corporate customers developing social housing projects is planned to help shore up the real estate sector, with the focus on social housing, the market segment with very high demand and low supply.

It will offer property developers loans with low interest rates, hovering around 6 percent per year. Besides, credit loans will be also provided for low-income earners who rent or buy houses.

However, too many obstacles, including the current difficult economic climate, the frozen real estate market and barriers in fulfilling all the required documents, have made the bailout impossible for many individual clients and property developers to access the bailout money. This has resulted in its sluggish disbursement, the committee said.

In order to deal with the problem, the city had suggested that the Government, the Ministry of Construction and the State Bank of Vietnam consider providing preferential loans from the package for people who want to build first-time houses with an area not larger than 70sq.m.

In addition to petitioning for VAT and corporate income tax exemptions for businesses which could develop affordable housing projects or shifting their commercial ones to social housing, the city has also called for VAT reduction for people who are first-time house buyers. Perfecting the legal framework to better facilitate loan access will also be included.-

Goods fair draws border shoppers

Some 10,000 people flocked to a three-day Vietnamese goods fair in Vinh Gia commune, Tri Ton district, the Mekong Delta province of An Giang , on the border with Cambodia.

Twenty businesses from regional provinces and Ho Chi Minh City joined the event, showcasing food, agricultural, forestry and craft products, garments and local specialties in 40 booths.

The fair from November 1 – 3 generated over 1.1 billion VND (52,400 USD) in revenue for the firms, much higher than organisers’ estimate and the figures at the previous three fairs held in the locality this year.

This was part of the “Bringing Vietnamese Goods to Rural Areas” programme, co-organised by the Vietnam Trade Promotion Agency and the An Giang Trade and Investment Promotion Centre.

Central Highland Bao Loc silk weaves a bright future

Bao Loc in the Central Highland province of Lam Dong is famous nationwide for growing mulberries, raising silkworms and weaving silk.

Located at an altitude of over 800m, 190km from Ho Chi Minh City and 110km from Da Lat city, Bao Loc Plateau is cool all the year round with high rainfall, humidity and mist, suitable for growing mulberries and raising silkworms.

The “capital of sericulture" boasts large silk producers such as Bao Loc Silk Joint-Stock Company, A Chau Silk Joint-Stock Company, Kimono Company, Vietsilk Company and about 20 private silk production workshops.

In 2004, the Vietnam Sericulture Corporation (Viseri) joined hands with Matsumura Company (Japan) to establish three large factories in Bao Loc, including Silk Spinning Factory No. 4 with an annual capacity of 85 tonnes of silk cords and two factories producing silk for making ties and kimonos with an annual capacity of 486,000m and 480,000m respectively, opening a new development period for the sericulture sector in Bao Loc.

Bao Loc silk is produced with the modern technology of Japan and the Republic of Korea, so it is always superior in quality compared to other products of the same kind. The silk cords are very thin and velvety that help create beautiful glossy silk products, diverse in styles and designs, which are much sought after in both domestic and foreign markets.

At present, Bao Loc produces over 20 different categories, such as satin, crepedechine (CDC), jacquard, Habutai, oganza, Georgetee (GGT.Voal), Taffetas and visco mixed fabrics and cotton mixed.

Nguyen Tien Dung, former Deputy Director of Viseri, established Vietsilk Company after his retirement from a State-owned company. He recently installed 60 power-looms of weaving small-size jacquard cloth in the Japanese technology to make kimonos and 20 power-looms of producing silk lining for making kimonos.

“I believe that the brocade will bring high economic value because it is a high-grade product which is in great demand in developing countries,” said Dung who has a great zeal for Vietnam’s sericulture sector.

Vietsilk exports about four tonnes of brocade and silk per month to Japan, Singapore and Pakistan. In the past six months of this year, the company exported to Japan about 20 tonnes of brocade and silk of different kinds, worth nearly 2 million USD. In the coming years, Vietsilk will gradually increase the productivity for export.

Thai Binh agriculture leads the charge

Thanks to scientific and technological achievements in production, crop and livestock restructuring in the Red River delta’s Thai Binh province has greatly improved economic efficiency. Report by the Vietnam Economic News.

Among hundreds of scientific topics and projects and thousands of innovations put into practice in Thai Binh province, the most prominent achievement is the research and test of 637 rice varieties and 282 varieties of other food crops. Through selection, six rice varieties have been put into production.

In terms of livestock and seafood breeding, the province has put new strains into production, such as pigs with high lean meat percentage, poultry, white butterfish, snake-head fish, bass, black shrimps, crabs, clams, oysters and turtles.

In addition, it has also applied new manufacturing process, such as integrated crop management (ICM), integrated pest management (IPM) and cleaner production. In particular, the province has built a seed processing plant based on European advanced technology with a capacity of 6,000-10,000 tonnes per year.

Thanks to scientific and technological achievements in rice production, Thai Binh province has a surplus of 400,000 tonnes of rice each year. In particular, it reaches an average productivity of 12-13 tonnes of rice per hectare per year.

All high-quality rice varieties have been cultivated in the province. For example, BC15 rice variety has been cultivated in An My (Quynh Phu), Bac Hai (Tien Hai) and Thanh Tan (Kien Xuong) communes, bringing a value of 80-90 million VND (3,900-4,400 USD) per hectare per year.

The bass, tilapia and mud clam breeding model in Thai Thuy District has strongly developed in recent years. Nguyen Van Lieu from Thuy Lien commune, Thai Thuy district, said the breeding model was implemented based on research results. He raised 1,665 bass, 2,500 tilapia and 500kg of mud clams on a total area of 5,000sq.m. After nine months, total production of about 1.8 tonnes of bass, one tonne of tilapia and over 1.6 tonnes of mud clams brought him 150 million VND in revenue or 50 million VND of profit. In other communes, the model has greatly improved economic efficiency.

Since implementing the project on applying scientific and technological achievements in production, households in An Binh commune, Kien Xuong district has got out of poverty. Hong Tien, Vu Binh, Thanh Ne, Quang Trung and Tra Giang communes have applied a turtle raising model and achieved considerable success.-

VietjetAir, Chinese partners ink cooperation deal

VietJetAir has signed a strategic partnership agreement with China Construction Bank (CCB) and CCB Financial Leasing Corporation Limited, the private carrier announced on November 1.

The agreement would facilitate cooperation between the three sides in financing and aircraft leasing, including aircraft engines and other capital high-value aviation materials and equipment, it said.

It was among VietJetAir's initial steps in financing the order of 100 aircraft with Airbus last month. The first batch of this order is due for handover next year.

This addition would help VietJetAir develop a new generation and modern fleet in the Asia Pacific, it said.

SBV puts forward plan to increase lending given low credit growth

The State Bank of Vietnam had submitted a plan to the Prime Minister to boost lending from now to the end of 2013 in the face of lower-than-expected credit growth, according to Credit Department director Nguyen Viet Manh.

Under the proposal, customers experiencing temporary difficulties in production and business but can produce credible loan plans will be considered for debt restructuring and new bank loans.

The SBV also proposed allowing banks to lend in excess of the permitted 15- percent-equity limit to customers with priority projects.

Credit growth this year is expected to be lower than the 12-percent annual target.

After five months of slow growth, credit in June started to show recovery signs, posting a 4.5 percent increase against December 2012. By the end of August, outstanding loans to the economy had increased by 6.45 percent, while the figure reached 6.82 percent by the end of September.

Manh said that low credit growth since 2012 was largely due to troubles in both the world and domestic economy, leading to decreased aggregate demand and difficulty in absorbing capital into the economy. However, credit had been focused on more effective manufacturing sectors as well as ensuring economic growth.

Despite this, to reach the 2013 target of 12 percent, credit in the remaining months must achieve an average growth rate of 1.4-1.5 percent. This figure is equivalent to 40 trillion VND (1.8 billion USD) per month, representing a huge challenge for the banking industry.

To stimulate credit growth and handle bad debts, the central bank has directed commercial banks to focus funding on five priority sectors.

Public-Private Mix urged to improve TB prevention

A seminar discussing the enhancement of the Public-Private Mix (PPM) model in tuberculosis and HIV prevention in Vietnam was held in Ho Chi Minh City on November 1.

With rising demand for treatment at private medical facilities, the US Agency for International Development (USAID) started a PPM project five years ago in efforts to support the National Tuberculosis Control Programme (NTP) in four initial provinces and cities, Hai Phong, Nghe An, Can Tho and Ho Chi Minh City.

The project has proven progress by raising the number of health facilities participating in the project from 210 in 2007 to 1,100 in 2013 along with helping the localities gradually address challenges such as tuberculosis and HIV co-infection and drug-resistant TB.

It has also helped increase case detection through the connection of private and public facilities.

With its success, the model was multiplied in more than 20 provinces and cities nationwide.

However, the project is facing difficulties, namely the maintenance of the private services’ involvement, the lack of connection between private facilities with public ones, and a shortage of human resources in maintaining PPM operations, according to Nguyen Tuyet Nga, the project’s manager.

About 1.2-1.5 million people die from TB every year in the world and drug-resistant TB is common in almost all countries, the World Health Organisation reports.

In Vietnam, there are 17,000 deaths from the disease each year, ranking 12th among 22 countries in the world with the highest levels of TB infections.

Vietnam Airlines to sell 2.7pct stake in Techcombank

The country’s national flag carrier Vietnam Airlines will sell more than 24 million shares it is holding in Techcombank on December 2, announced the Hanoi Stock Exchange.

This is the second time the corporation has called for the auction after the first auction failed on September 26, as only one investor registered to buy.

The shares, accounting for 2.7-percent stake in the bank, will be auctioned at the Hanoi bourse at an initial price of 10,800 VND (0.51 USD) per share. In the first auction, shares were offered at 12,100 VND (0.57 USD) per share.

Although no share were sold in the first auction, Vietnam Airlines had successfully sold all of its nearly 828,000 ten-year convertible bonds in the first auction to five investors, earning more than 109.8 billion VND (5.18 million USD).

The selling is part of the road map to withdraw capital from non-core lines of business, in accordance with a restructuring scheme approved by Prime Minister Nguyen Tan Dung for the 2012-15 period.

Vietnam Airlines currently has 82 aircraft of various types, such as Boeing 777, Airbus A330, Airbus A321, and it plans to expand its fleet to 101 planes by 2015 and to 150 planes by 2020.-

Gov’t asked to contain inflation to attract more investors

The chairman of the Bank of New York Mellon (BNY Mellon) in Asia Pacific has suggested Vietnam continue putting great efforts on inflation control to attract more foreign investors and to give a fresh catalyst to the country’s growth.

“Investors tend to be wary of a high inflation market,” Stephen D. Lackey answered the Daily when asked about the way to effectively draw investment and to mobilize capital for projects in Vietnam in tough times as currently when he made his business trip to HCMC earlier this week to meet customers.

Lackey said inflation in Vietnam had fallen to a single digit from a double digit in previous years but great efforts were still needed to tame this issue.

“That shows that the Government is serious about running the economy in a professional manner and that helps bring in further investors,” he stressed.

The Government’s report for the ongoing sitting of the National Assembly indicated that drastic fiscal and monetary measures for macro-economic woes over the past years had paid off. As a result, the consumer price index plunged to 6.81% last year from 18.13% in the year before.

The Government puts inflation at 7% this year, or one percentage point lower than previous projection but still higher than last year.

Lackey named higher growth projections in major export markets, including the United States, Japan and Europe also supported Vietnam’s economic growth.

He said, “If monetary policies are tight globally, that will continue to pull money away from the emerging market, which may be difficult for Vietnam. But the statistics that I looked at were that Vietnam’s growth is dependent on many factors. One of the strengths of Vietnam is export and export is much dependent on demand in the U.S., Japan and Europe.

“Growth rates for the U.S. and Japan are expected to be higher than in previous years, which is positive for demand for (goods from) Vietnam. Europe continues to come out of a very weak situation.”

Vietnam exported more than US$96 billion worth of goods in the January-September period, up 15.5% from a year ago. The Ministry of Trade and Industry looks to US$131 billion for this year, up 14% year-on-year.

However, Vietnam has to find solutions to problems if it wants to woo more foreign investors.

“Unfortunately, there are still a number of negatives for foreign investors and one of them is high budget deficit. The second is accounting that is still viewed as cloudy. Thirdly, that is very important for investors is the law within Vietnam,” Lackey pointed out.

From a banker’s perspective, Lackey said Vietnam’s banking and finance sector was attractive to foreign investors but also touched on non-performing loans and cross ownership at local banks as among major problems that were not easy to address.

Lackey noted the Government had taken policies regarding cleaning up the banks, liberalizing the market or containing inflation, but everything could not happen overnight.

Lackey suggested by making the banking system more attractive, it was likely to bring in foreign investments from the banks, who want to be serving the financial needs of the Vietnamese.

Binh Duong cancels $350 mln horse racing project

Southern Binh Duong Province has pulled the plug on a project to set up a modern horse racing track at its new urban area after failure to obtain the Prime Minister’s permission, the local government announced on Wednesday.

Earlier, the province, immediately to the north of Ho Chi Minh City, earmarked 230 hectares within its Binh Duong New City, a modern industrial urban complex, to be home to the US$350 million venue.

Its South Korean investors had expected a betting service, hotel, and shopping mall would be included in the project.

However, the luxury project failed to get a nod from the government.

Binh Duong’s local government said it will build a 153-ha urban area and an 81.7-ha complex of various constructions on the land plot zoned for the horseracing track.

The proposal has been approved by the construction ministry.

Crown opens new can factory in Vietnam

The US’ Crown Holdings, a leading supplier of metal packaging products worldwide, officially launched a production facility in central coastal Danang on October 30.

The more than $40 million factory in the Lien Chieu Industrial Park has a designed capacity of 700 million cans per year.

Crown Danang supplies two-piece cans for Vietnam Brewery Limited Danang, Saigon Beer, Suntory Pepsico in neighbouring Quang Nam province, Coca Cola Danang, Dung Quat Beer in Quang Ngai province, and other beer and beverage companies in central Vietnam.

Crown Danang is the largest foreign-invested project in Lien Chieu Industrial Park to date and is expected to draw interest in the park from other foreign investors.

Lien Chieu was developed by Saigon-Danang Investment Company under Saigon Invest Group and is home to 23 Vietnamese and two foreign-invested projects. It covers 182 hectares and more than 141 ha of that have been occupied.

Government wage hike plan draws criticism

The government plans to raise the minimum wage by 14-15 per cent in 2014.

According to Government Office Chairman Vu Duc Dam, the government has received a regional minimum wage increase proposal with hike levels ranging between 14 to 17 per cent from the National Wage Council and is under consideration before making a final decision. The wage hike shall be applicable from January 1, 2014.

“We understand the importance of this wage increase to the lives of labourers, who are struggling against many hardships. However, we have to carefully consider the overall economy as well. We are being thorough and cautious,” Dam said.

When the National Wage Council proposed a regional 14-17 per cent wage hike for 2014, the Vietnam General Confederation of Labour suggested 36 per cent and the Vietnam Chamber of Commerce and Industry said 10 per cent.

Though a final decision is still pending, Dam said it is likely to be 14-15 per cent.

At current there are four minimum salary levels applied to labourers in different regions. The highest is VND2.35 million ($110) per month and the lowest is VND1.65 million ($79) per month.

Some companies, such as Thanh Hoa-based Bim Son Cement say the increase will not affect their workers’ pay as they are already getting well over the minimum wage, around $140-$190 a month. The pay hike is a problem for the company because it will require they pay more to social insurance.

“With more than 2,000 workers we will have to spend several hundred thousand dollars more to social insurance, thus driving up our input expenses at a time we are seeing slowing sales. This would put us in a very difficult situation,” said a source from Bim Son.

Also against pay rises head of the Import Export Department at Phuc Yen Footwear in Hanoi Nguyen Chi Toan said they would also be heavily burdened by increased social insurance payments.

“Our company is in the field of export processing and exports are down because of shrinking global consumption. These wage hikes would require us to negotiate higher value contracts with foreign partners, and this is very difficult,” said Toan.

EuviPharm sells 65% stake to foreign partner

Local pharmaceutical company EuviPharm has sold a 65% stake to Canada’s Valeant Pharmaceuticals International with a total value of US$20 million equivalent to VND423 billion.

HCMC Securities Corporation (HSC) is active as financial consultant for EuviPharm during the price assessment and dealing negotiations between the two sides.

Nguyen Thi Cat Trinh, research director of HSC, said both sides had started talks on the deal since early last year and then finished the stake transfer at the end of July. To sell its shares to the Canadian partner, EuviPharm had issued more shares to increase its chartered capital from VND190 billion to VND542 billion.

With the deal, Valeant now holds a majority stake in EuviPharm, which enables Valeant to manage the local enterprise actively with its wealthy experiences to prop up the firm, Trinh noted, adding EuviPharm also had developed a good distribution system. Holding the big stake is also a good chance for Valeant to make pharmaceutical products right in Vietnam for domestic sale and export, she explained.

EuviPharm, based in the Mekong Delta province of Long An, specializes in producing antibiotic, pain relief and digestion drugs. Meanwhile, Valeant is a multinational pharmaceutical company making and supplying many kinds of drugs in the dermatology, eye, nerve areas as well as generic items.

Before EuviPharm, many other local pharmaceutical companies had also transferred shares to foreign partners like Domesco and Pymepharco.

In fact, foreign investors including a slew of investment funds are tightly holding big stakes in local pharmaceutical enterprises with few share transfers seen. Foreign holdings in most local listed drug firms such as Hau Giang Pharmaceutical Joint Stock Co. (DHG) and Traphaco have reached the limit.

In related news, pharmaceutical enterprises posted strong growth in profits in January-September due to stronger demand in the market in recent times.

The financial report of DHG indicates that the firm’s after-tax profit grew by up to 112% in this year’s third quarter or around VND209 billion from the previous quarter. Overall, the enterprise’s first nine-month after-tax profit rose 26% over the same period in 2012.

Similarly, Traphaco just announced its business performance in the third quarter, with the company’s gross profit jumping 15.5% compared to the third quarter in 2012, while its net profit posted higher growth, at 41.5% or some VND40.5 billion. The entity achieved VND108 billion in profits in January-September, leaping 35.8% year-on-year.

A recent report of PriceWaterhouseCoopers unveils that due to worsening climate change and environmental pollution, pharmaceutical demand per capita in Vietnam surges an average of 16.7% annually, from US$9.9 in 2004 to US$29.3 in 2012.

Securities firms see clear divergence

The securities industry has seen clearer divergence with large enterprises earning high profits whereas small firms are struggling with losses or even facing the danger of bankruptcy.

Only around 80 out of 105 brokerages registered at the State Securities Commission (SSC) are really active now. For the remaining enterprises, some have lost membership status at the two local stock watchdogs or stopped giving main services such as proprietary trading and brokering. Other firms have merged with each other to reduce losses and escape the distress.

The stock market is following a law of divergence, of which 20 biggest enterprises hold a market share of nearly 80% while the remaining 20% is shared among 60 small companies.

On the Hochiminh Stock Exchange, the 10 securities firms with the biggest brokering market shares in the third quarter accounted for up to 65.4%, a strong rise compared to 57.7% in late 2012.

HCMC Securities Corporation (HSC), for instance, held a 14.14% market share against around 11.77% last year. HSC has always taken the lead for market share since the stock watchdog started to announce brokering service data.

SSC chairman Vu Bang said that securities firm restructuring process is taking place. Small enterprises are still trying to reduce debts borrowed by customers and other securities firms, make their financial situation healthier and focus on risk management.

Some small enterprises have had the intention to go bust but have failed to get approval from SSC because of their unsettled financial arrears. After the restructuring period ends, aside from enterprises that can survive difficulties thanks to new capital and investors, some enterprises will have to leave the playground in the coming time, Bang said.

In the third quarter, many securities enterprises escaped from losses and gained back earnings as proprietary trading brought about profits given better developments on the stock market. The enterprises included HSC, SSI and ACBS, which had strong financial capability and biggest brokering market shares.

Meanwhile, small firms such as Viet Thanh, An Thanh, Kengana, Mirae Asset, Woori and Sen Vang were still facing great hardship due to small market shares. They also failed to continue proprietary trading or had no financial capability.

HCM City to send farmers abroad for experience

The HCMC Farmers’ Association from next year will send farmers with good skills in agricultural production abroad to learn technologies and pick up some new experiences.

According to the association, 100-125 directors and farmers of the city will head to those with strengths in high-tech agricultural production such as Thailand, Malaysia, South Korea, Taiwan or China between next year and 2018. The association’s chairman will act as director of the project.

The first overseas training trip will take place in Thailand targeting flower farming technologies next year, before the next trip to Taiwan focusing on dairy cow farming technologies.

However, one of the activities that the project has mapped out is to send farmers to learn shrimp farming technologies in Asian countries, even though the large-scale shrimp farming level of Vietnam surpasses that of regional nations according to the agriculture ministry.

Regarding this matter, Nguyen Van Tui of the economic committee of the association, explained that his association had put shrimp farming into the project as Can Gio was home to shrimp farming households but that several fields in the project could be changed in the future.

The city has always offered policies and capital targeting hi-tech agriculture development in recent years, focusing on high-value products such as orchids, dairy cows and ornamental fish.

The city has recently introduced a high-tech experimental dairy farm based on the financial and technical support from the Israeli Government to increase the milk supply from the dairy cow herd citywide from 5,000 kilos per head annually to 8,000 kilos.

Besides, the municipal agriculture department now is deploying a project on establishing and boosting outlets for local ornamental plants, including developing new orchid varieties to replace imported ones.

With the hi-tech investment in the agriculture industry, the revenue of one hectare under agricultural cultivation in the city averaged out at VND239 million annually in 2012, up VND43 million against 2011 and nearly VND99 million from 2010.

Spearhead industries in city barely grow

The average growth rate of HCMC’s four key industries, namely mechanical engineering, electronics-information technology, chemicals and food processing, is only 5.5% in the January-October period while such industries account for up to 57.3% of the city’s total manufacturing sector.

At the city government’s meeting on socio-economic performance and budget spending in October, experts said that the competitiveness of major industrial products, especially electronic and engineering ones, was still blunt.

The HCMC Department of Planning and Investment’s report indicates that the average growth rate of the four major industries is lower than the overall growth index of 5.9%. Besides, electronics-information technology and mechanical engineering grow by only 2.9% and 4.7% respectively.

According to Tran Anh Tuan from the city’s Institute for Development Studies, there are many reasons for such low growth of the four major industries that have been termed spearhead industries, but the big concern is the weak competitiveness of engineering products and the declining purchasing power of electronic items.

“I think the four industries need more supports in terms of policy,” Tuan said.

HCMC exported US$15.8 billion worth of products in the ten-month period, down 3.2% year-on-year (crude oil excluded) while import spending increased by 15.5% to US$21.6 billion, resulting in a big trade deficit of US$5.4 billion.

The decline in export turnover, according to Tuan, also results from the low competitiveness of products compared to those of other countries.

Some products with dropping export turnover are rice with a decline of 49.6%, coffee with 22%, seafood with 17.2% and footwear with 3%.

HCM City says budget revenue target hard to realize

A senior finance official of HCMC said on Tuesday it is extremely difficult to realize the budget revenue target this year given the shortfall in collections in the year to date.

Dao Thi Huong Lan, director of the municipal Department of Finance, told the 10-month socioeconomic review on Tuesday that the city had to collect VND26.7 trillion each month in the rest of this year to realize the target. In the year to date, budget revenue collections averaged out at VND19.2 trillion per month.

“The city will have to collect some VND16.82 trillion from domestic sources and over VND9.95 trillion from import-export taxes if the target set by central authorities is to be realized,” she said.

Of the amount of VND192 trillion collected for the State budget in January-October, some VND100.4 trillion was generated from domestic sources, VND26 trillion from crude oil, and VND60.14 trillion from import-export taxes. The total amount accounts for 80% of the year’s target.

“Given the budget revenues realized in the year’s first ten months, it is extremely difficult for the city to collect VND26.7 trillion each month in the rest of this year,” she stressed.

The city government estimates total revenues collected for the State budget this year should be around VND216.95 trillion, or a shortfall of nearly VND20 trillion compared to the target assigned to the city by the central Government.

2013 proves to be a tough year for the city’s economy with many enterprises incurring losses. Despite the central Government’s policy to exempt, reduce or reschedule tax payments for enterprises, the budget revenue target for the city is still 20.7% higher than the realized amount in 2012.

Despite the seemingly-insurmountable hardship, HCMC Vice Chairman Hua Ngoc Thuan at a meeting of the city’s Party Committee two weeks ago still promised to collect sufficient revenues for the State budget.

Thuan said measures would include thorough examinations for prompt collection of taxes. In addition, tax inspections would be launched to fight tax evasions, especially those related to transfer pricing, transfer of assets and trade of copyrights and brands.

Spearhead industries in city barely grow

The average growth rate of HCMC’s four key industries, namely mechanical engineering, electronics-information technology, chemicals and food processing, is only 5.5% in the January-October period while such industries account for up to 57.3% of the city’s total manufacturing sector.

At the city government’s meeting on socio-economic performance and budget spending in October, experts said that the competitiveness of major industrial products, especially electronic and engineering ones, was still blunt.

The HCMC Department of Planning and Investment’s report indicates that the average growth rate of the four major industries is lower than the overall growth index of 5.9%. Besides, electronics-information technology and mechanical engineering grow by only 2.9% and 4.7% respectively.

According to Tran Anh Tuan from the city’s Institute for Development Studies, there are many reasons for such low growth of the four major industries that have been termed spearhead industries, but the big concern is the weak competitiveness of engineering products and the declining purchasing power of electronic items.

“I think the four industries need more supports in terms of policy,” Tuan said.

HCMC exported US$15.8 billion worth of products in the ten-month period, down 3.2% year-on-year (crude oil excluded) while import spending increased by 15.5% to US$21.6 billion, resulting in a big trade deficit of US$5.4 billion.

The decline in export turnover, according to Tuan, also results from the low competitiveness of products compared to those of other countries.

Some products with dropping export turnover are rice with a decline of 49.6 percent, coffee with 22 percent, seafood with 17.2 percent and footwear with 3 percent.

State budget for IT application trivial

The State budget allocated for information technology (IT) application at State-owned companies in 2014 and 2015 is only VND200 billion, which is said to be too small compared to the demand, heard a meeting in Hanoi on Monday.

At the meeting, Phung Van On, director of the IT Center under the Government Office, ascribed the low State budget set aside for IT application at State-run companies to financial constraints.

Nguyen Thanh Phuc, head of the IT Application Department under the Ministry of Information and Communications, commented that the central budget for IT application at State firms was just a small fraction compared to the actual demand.

Statistics compiled by Phuc’s department indicate that trillions of Vietnam dong is needed for meeting IT application demand among local ministries, agencies and localities while only VND200 billion is to be sourced from the State budget.

In the meantime, another report of the information and communications ministry said that the IT application demand in eight cities and provinces set for next year alone exceeds VND206 billion.

The ministry therefore has suggested tackling capital shortages for IT application at State enterprises, including extending the implementation schedule of many projects set for the 2014-2015 period. Such projects are needed to create a foundation for developing the e-Government model.

As per Decision 1605/QD-TTg issued on August 27, 2010 approving the national program on IT application by State entities in 2011-2015, there will be 56 IT schemes deployed with an estimated cost of VND1.7 trillion. However, the State budget allocated to these projects was trivial, at only VND120 billion in 2011 and VND100 billion in 2012.

Can Tho targets 1.3 mln tonnes of rice in 2014

The Mekong Delta city of Can Tho has deployed its paddy rice production plan for 2014, targeting an output of 1.3 million tonnes.

Local authorities decided to broaden VietGAP and Global GAP standard large-scale rice fields to 14,000-20,000 hectares in the year in a bid to increase the output of high-quality rice to help farmers earn higher incomes.

As a regional granary, Can Tho has set to gradually speed up the ecological rice farming process as well as renovate its processing technology to churn out rice products of high economic value.

In 2013, rice productivity in the locality averaged 5.77 tonnes per hectare on the total rice farming area of 236.538 hectares, giving a yield of over 1.36 million tonnes of paddy rice.

Can Tho has set a target of exporting 860,000 tonnes of rice in the year, up 40,000 tonnes from 2012.

As by October 14, the city shipped 755,000 tonnes of rice, earning 359.7 million USD, showing a year on year rise of 14 percent in volume and 22 percent in value.

Apart from main markets in Asia, Africa, Europe, Oceania and the US, there are many new customers registered to buy rice from Can Tho.-

Office helps further Vietnam-Bulgaria economic ties

Bulgarian businesses will have more chances to increase their operations in Vietnam and the Southeast Asian region at large following the formation of a Bulgarian economic and trade office in Ho Chi Minh City.

Bulgarian President Rosen Plevneliev, who is on an official visit to Vietnam, and Vice Chairperson of the HCM City People’s Committee Nguyen Thi Hong cut the ribbon at the office’s opening ceremony on October 31.

Addressing the event, the President described the establishment of the office as a sound and timely initiative to help realise important cooperative documents reached by the two countries and direct their relationship towards a strategic partnership and a new economic cooperation model.

Bulgaria considers the cooperation with Vietnam a significant task and a strategic basis to expand its presence in Southeast Asia and Asia as a whole, he said.

The leader committed to making it easier for Vietnamese goods to enter Bulgaria and then penetrate other European countries.

Bulgarian businesses wish to invest in Vietnam and cooperate with Vietnamese partners in all areas of mutual concern, he said, noting that the two countries have agreed to raise bilateral trade turnover from the current 60 million USD to 500 million USD in the coming time.

For her part, Hong said the office marks a new height in economic and trade ties between Bulgaria and Vietnam in general and HCM City in particular.

She expressed her hope that with a strong contingent of businesses operating in various fields, HCM City will contribute to boosting economic and trade ties between the two countries.

The same day, Roesen Plevnelive and his entourage visited the historical relic site of Cu Chi underground tunnel and Ben Duoc Temple.

Earlier on October 30, the President attended an artistic programme at the HCM City Conservatory of Music staged by Bulgarian artists and met with Vietnamese people who once worked or studied in Bulgaria.

Seminar aims to promote integrity in doing business

The role of enterprises in corruption fight was one of the focuses of a seminar on enhancing business engagement in promoting integrity in doing business in Vietnam held in Hanoi on October 30.

The two-day seminar, jointly held by the Government Inspectorate, the Vietnam Chamber of Commerce and Industry (VCCI) and the British Embassy, was the third of its kind on implementing integrity in businesses’ operation.

The outcomes of the event would serve as the inputs for the 12 th Anti-Corruption Dialogue between the Vietnamese Government and international donors to be held on November 12.

Participants also discussed corruption challenges faced by businesses in doing business and the response of the Vietnamese legal system to settling corruption cases.

In a survey on corruption, bribe and fraudulence in business operation conducted in 2012, most businesses agreed that corruption is a matter of great concern, just after high living costs, according to Deputy Inspector General of the Government Inspectorate Tran Duc Luong.

The seminar offered a chance for mangers, enterprises and relevant agencies to exchange views and reach a consensus on the issue, contributing to creating a transparent, equal and non-corruption business environment towards sustainable development in Vietnam , he added.

According to British Ambassador Antony Stokes, enterprises are both victims and actors of bribery. Thus, they will be the pioneers in corruption fight towards integrity and transparency in doing business.

Vietnam CEO Forum 2013: Reform to Perform

More than 800 leading CEOs and top economists and policy makers in Vietnam gathered at Vietnam CEO Forum 2013- CEO 3.0: “Reform to Perform” to discuss on how CEOs do effective change management amid upheaval global economy in Ho Chi Minh City on October 30.

Addressing the forum, Minister of Science and Technology Nguyen Quan said to reach the sustainable development goal in the new context, the role of CEOs was vital in dealing with challenges and opportunities for local businessmen, contributing to sustainable growth.

He hoped that the forum will help businesses pay more attention to updating information, improving management skills and investing more in machinery so as to increase production and produce highly competitive products.

Under the event’s framework, economists provided participants a broad picture of Vietnam economy, and their forecast on the upcoming challenges, and the impact of future trade agreements on Vietnamese businessmen. They also proposed solutions on how to overcome challenges and worked out management changes so that Vietnamese businessmen can change to success.

The 2 nd annual largest CEO event was co-organised by top five business associations in Vietnam and the Young Businesspeople Association of Ho Chi Minh City.-

Vietnam-China int’l trade fair slated for mid-November

The 2013 Vietnam-China International Trade Fair is slated to take place in the northern border province of Lao Cai from November 13-18 under the theme “Cooperation-Friendship and Integration-Development”.

Lao Cai and China ’s Yunnan province take turns to host the annual event with the aim of promoting trade cooperation between the neighbouring localities.

It is expected to accommodate nearly 700 pavilions, of which more than 200 run by Chinese businesses, showcasing a wide range of products such as agro-forestry, seafood, machinery, electronic equipment, chemical, handicrafts, pottery, timber furniture and household commodities.

A number of activities will be hosted during the event, including a seminar on Vietnam-China business exchange and a conference to forge trade links between enterprises from China , Lao Cai and Vietnam ’s southern province of Dong Nai . Several economic contracts are expected to be signed on the occasion.

UAE among Vietnam's 10 largest trade partners

On the occasion the Forum on Economic Cooperation between Vietnam and partners from the Middle East and North Africa to be organised on November 4-5, Vietnam Business Forum introduces an article by Ahmed Ali Almualla, Ambassador of the United Arab Emirates to Vietnam.

We are delighted at the distinguished record of active cooperation ever since we established diplomatic relations in 1993. Today, our two countries have continued an effective cooperation in politics, trade, investment, culture, education and labour, as well as reinforced high-ranking visits and friendly exchanges.

Additionally, many investment and trade promotion delegations between the two countries have been underway over the last time. Both UAE and Vietnam always stand to support and coordinate with each other in international forums. We share a common point of view of international issues, regional security.

Bilateral trade turnover has rapidly increased over the past 10 years from 67 million USD in 2002 to more than 2.4 billion USD in 2012. During the first quarters of 2013, the bilateral trade was estimated about 3.4 billion USD. It is therefore predicted to reach over 4 billion USD for the whole year 2013. Vietnam has often a trade surplus with UAE. So far, the UAE has become the leading market for Vietnam's exports in the Middle East and North Africa, and is acknowledged as one of the top ten trade partners of Vietnam. Meanwhile, the UAE has invested extensively in Vietnam through many projects. The UAE’s companies also accept a large number of employees of Vietnam who play a major role in the development of the UAE and we look forward to increasing the number in the coming years.

Recently, the launch of direct flights Dubai – Ho Chi Minh City by Emirates Airlines in 2012 and Abu Dhabi - Ho Chi Minh City by Etihad Airways in 2013 - the two of the world’s fastest growing airlines, have expanded their global network with daily service between UAE – Vietnam that has contributed further the development of trade, investment and tourism between the two countries. Indeed, our direct flights have met the travel demand for tourism and business purposes as well as cargo transportation between Vietnam’s bustling trade hub of Ho Chi Minh City and the UAE, the Middle East and the EU.

With its strategic location, comprehensive infrastructure, more than 30 state-of-the-art free zones throughout the country and open economy policies to attract foreign investment, the UAE is the second biggest economy in the Middle East and also plays an important role in the region’s business and economic affairs.

Besides Abu Dhabi, Dubai is not only a big consumption market, but also an important re-export centre for other countries in the region as well as the third biggest re-export centre globally. The Emirate takes up 75 percent of total imports of the UAE, Dubai takes up 82 percent of non-oil exports of the UAE, Dubai accounts for 78 percent of total re-exports of the UAE to other Arab countries and the MENA markets.

Every year, a large number of international exhibitions and trade fairs are held in Dubai, which are good opportunities for Vietnamese businesses to look for UAE partners. We look forward more Vietnamese companies to participate in the fairs and exhibitions i.e. Gulfood, Index, Big 5, Dubai Seafood, Autumn Fairs, Garment and Textile Exhibition, Annual Festival for Global Village, Dubai Rice, etc.

More than 25 percent of the world’s top 500 companies currently base their regional headquarters and trade centres in the Emirate, a testament to the important role played by our country in the region’s business and economic affairs.

I think the Vietnamese Whole-sale Trade Centre established recently in Dubai in line with the Vietnam export strategy to 2020 that will be a venue to showcase Vietnamese products and organise workshops and seminars where Vietnamese companies can sign big export contracts. The centre is located near Dubai seaport which handles large volumes of goods shipped to the Middle East. The Middle East is a promising market, especially for agricultural products, since there is a population of more than 210 million while 60 percent of the food needs are imported.

In my opinion, the centre should showcase agro-forestry and fisheries products and furniture, textile and garments, products which UAE has high demand for, and which are prevalent in Vietnam.

The activities of trade promotion agencies and the private sector of both sides should be strengthened further with a view to activate the agreed minutes after the first session of the Joint Committee for Cooperation between Vietnam and the UAE.

I am pleased to know that many companies from the UAE want to participate in trade fairs and exhibitions held in Ho Chi Minh City and Hanoi, like Vietnam Expo as well as Vietnam companies to attend international trade fairs in the UAE over the last time. After that, many business contracts and deals can be signed between with the private companies of both sides.

Over the last time, Vietnamese businesses highly appreciated the initiative by UAE Embassy in coordination with the Vietnam Chamber of Commerce and Industry (VCCI) to successfully organise the seminar on UAE-Vietnam Trade and Investment Cooperation Opportunities in three big cities of Vietnam, especially in the context of Vietnam strengthening its cooperation with other countries in the Middle East and North Africa. Hopefully, more seminars and forums like this will be held in both countries to boost trade and investment in the coming time.-

Export structure shifts vigorously

Viet Nam has witnessed a relative export expansion in both scale and speed and seen a positive shift in export structure.

Total export turnover touched approximately US$ 108 billion in the past 10 months, higher than the annual figure of the years prior to 2011. The figure was estimated at US$ 131 billion for 2013, soaring 14.4% against last year.

Export has shown as an outstanding field, a momentum and a gateway for the economy.

According to the General Statistics Office (GSO), export turnover of raw materials declined by over a third in 2005-10.  

Specifically, crude oil export fell from around 18 million tons in 2005 to 9.25 million in 2012 (a half) and over 5.94 million in the first ten months of 2013. Coal export dropped to over 9.8 million tons in January-October in 2013 from 32.1 million in 2007 and 15.2 million in 2012.

According to initial statistics, export turnover of raw materials and primary commodities was estimated at US$ 32.1 billion in the first ten months of 2013, representing almost 30% of export revenue, down around 4.5% against the same period last year.  

Especially, coal witnessed the sharpest decline of 29.1%; followed by coffee 23.9%; rice 16.9%; crude oil 14.2% and rubber 13.7%.

Meanwhile, export of processed products valued around US$ 75.9 billion, occupying over 70% of total export revenue and surging 26.3% against the same period last year. Overseas shipments of telephones and spare parts, computers, chemicals, suitcases, umbrellas, garments and textiles, and footwear were higher than the general growth rate of 15.2%.

Of the products, high-tech commodities gained higher growth rate and made up a relative proportion. The group of product earned over US$ 35.44 billion, making up 32.8% of total export revenue and picking up 44.2% against the same period last year.

The positive shift in export line structure has helped develop the scale and growth rate of export.

The FDI sector mainly attributed to the shift in export line structure as they mainly operate in high-tech and processing industries.

Experts suggested the domestic sector seize the opportunities and accelerate the development of the auxiliary industries in order to generate more jobs and reduce heavy reliance of imports.

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

Bailout, estate, VietjetAir, Techcombank, inflation
 
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