BUSINESS IN BRIEF 18/4

Automobile imports pick up speed

More than 5,200 cars were imported into the domestic market in the first quarter of 2014, representing 1,400 units more than the comparable period last year, according to Vietnam Customs statistics.

Auto imports in this period saw a year-on-year increase of 37% in volume. However, their value went up nearly 80% (around US$26.3 million) due to a large number of imported luxury cars.

Vietnam Customs reported that Vietnam’s total automobile imports rose nearly 50% from the previous year to 10,377 units worth US$188 million, up 54% in value.

The country also spent US$385 million on purchasing auto spare parts from overseas markets in the first quarter, up 30.9% from a year earlier.

Competitiveness of Mekong Delta under scrutiny

The Vietnam Chamber of Commerce and Industry (VCCI) on April 16 organised a workshop in the Mekong Delta province of Kien Giang looking into the provincial competitiveness index (PCI) of the regional localities.

Head of VCCI’s Legal Department Dau Anh Tuan said VCCI conducted a survey of over 8,000 businesses nationwide in 2013, 1,600 of which were foreign invested ones.

The competitiveness of 11 out of 13 Mekong Delta provinces was assessed as fairly good, good or very good. Notably, Kien Giang climbed to the third position in Vietnam after topping the regional chart, he said.

However, the regional localities have not performed well in some important criteria, for example their support for private businesses, trade promotion services, workforce training and transparency, Tuan noted.

He also urged them to quickly improve workforce quality to meet the stricter demands of investors so as to attract more investment.

However, Vice Chairman of the People’s Committee of Can Tho city Truong Quang Hoai Nam, tabled some problems with the VCCI survey.

He cited the business support criterion as an example. It contains up to 18 sub-criteria, making it very hard for the provinces to satisfy all standards.

In 2013, the central city of Da Nang took the lead in the PCI rankings, followed by ThuaThien-Hue, Kien Giang and Quang Ninh provinces.

Trade surplus hits over US$1.08 billion in Q1

According to Vietnam Customs statistics, Vietnam’s trade turnover in the first quarter of 2014 was estimated at US$65.99 billion, up 13.8% compared to last year’s figures.

The trade value in the second half of March reached US$13.15 billion, or 12.8% higher than the first half.

Foreign direct investment (FDI) businesses earned US$39.59 in trade revenue, representing a year-on-year increase of 17.6% and accounting for nearly 60% of the country’s total trade turnover.

In the reviewed period, Vietnam fetched approximately US$33.54 billion from exports, up 14.8% from the previous year. Its imports were valued at more than US$32.45 billion, up 12.8% compared to the same period of 2013.

As a result, the country’s trade surplus reached more than US$1.08 billion, with the FDI sector contributing US$1.88 billion.

Vietnam Expo 2014 attracts foreign businesses

Deputy Minister of Industry and Trade Do Thang Hai announced that the 24th Vietnam International Trade Fair (Vietnam Expo 2014) which opened in Hanoi on April 16, plays a vital role in connecting Vietnam’s economic organisations to international partners.

He added that the participation of businesses in the event has helped them develop their trademark to consumers and visitors in a fast and convenient way.

Hai emphasized that Vietnam Expo is considered a practical trade promotion activity to develop the domestic commodity market and support Vietnamese businesses to boost exports and help both local and foreign businesses share experiences, cooperate in investment and technological transfer.

He said his ministry submitted a proposal to build a large-scale national exhibition fair centre to meet the growing demand for trade cooperation between local and international businesses.

The highlight of the event is the establishment of a separate pavilion to introduce localities’ potential and Vietnamese industrial parks to both domestic and foreign investors.

In addition, a design pavilion helped Vietnamese and the Republic of Korea’s businesses develop their trademarks and enhance capacity in the economic integration

Vietnam Expo 2014 attracted 600 local and foreign businesses from over 23 nations and territories worldwide.

Ha Nam attracts Japan’s leading economic group

General Director of Suido Kiko Kaisha Co, Ltd under Toray Group, Shinri Sato, held a working session with the northern Ha Nam province’s People’s Committee on April 16 to seek investment opportunities.

Sato said that his group has 30 domestic subsidiary companies and 60 foreign branches. He expressed his wish to invest in Vietnam, particularly in Ha Nam province due to its attractive investment policies.

Mai Tien Dung, Chairman of Ha Nam province’s People Committee affirmed that the province has always provided preferential policies for Japanese businesses’ projects. Ha Nam has properly implemented ten commitments towards investors over the years including the provision of standard infrastructure and human resources, as well as ensuring security for businesses and providing entertainment and health services for experts.

A hotline has been set up to make it easier for the provincial People’s Chairman to connect with investors, Dung said, while hoping that Suido Kiko Kaisha and Toray Group will invest and bring hi-tech industries to the locality.

Toray is willing to help Ha Nam strengthen connectivity with Japan’s localities. Many of Suido Kiko Kaisha’s partners have already paid special attention to Vietnam and Ha Nam in particular, he said.

The same day, the Japanese general director also toured several Japanese businesses operating in the locality to learn more about investment policies.

Local company imports a batch of Japan’s Koi fish

Hai Thanh Trading and Service Co, Ltd in HCM City on April 16 completed the necessary formalities to import 400 big Koi fish from Japan.

According to the company, the lowest price of a Koi fish in the batch is US$2,000. The company imported a Koi Fish Kohaku (87 cm in length) valued at US$20,000 and several fish worth US$10,000. There was also a Sanke fish which measures over one metre in length included in the shipment.

Le Huu Hung, general director of the company said that the import of these “jumbo” fish aims to develop the production of Koi fish in the country.

Koi fish is considered the “national fish” of Japan. They are considered the friendliest ornamental fish and are like pets in families.

Vinh Long plans to expand Nam Roi grapefruit area

The Mekong Delta province of Vinh Long will expand the cultivation area of Nam Roi grapefruit – a famous specialty of the province - to reach Global Good Agriculture Practice (Global GAP) standards.

According to Tran Son, deputy head of the provincial Centre for Agriculture Encouragement, farmers are advised to increase their Nam Roi My Hoa Binh Minh grapefruit of the standards by 20-30 hectares per year.

Currently, Vinh Long has 7,780 hectares of grapefruit area, accounting for 16% of the total area under perennial trees, mainly focusing on the banks of Hau River in Binh Minh commune in Tam Binh district, where the weather conditions are best for the development of the grapefruit.

Son said the current price of the fruit applying the Global GAP process is higher than normal ones, varying from VND10,000 – VND30,000 per kilogram, up 20% over the same period last year.

Earlier in February, 26 hectares of grapefruits of the Nam Roi My Hoa Binh Minh cooperative were re-recognized with a Global GAP certificate.

The National Office of Intellectual Property also recognized the protection of geographical indications for the fruit in August last year, allowing more than 600 tonnes of Nam Roi grapefruit to be present in the supermarket system nationwide as well as foreign markets each year, he added.

Experts suggest ministries rethink IT approach

Many experts have stressed that ministries and local government offices need to hire IT service providers to manage their computer systems, rather than attempting to build and maintain their own – a practice that is currently widespread.

They made the call at a meeting chaired by Deputy Prime Minister Vu Duc Dam, who is also Vice Chairman of the recently-established National Committee on IT Application, in Hanoi on April 15.

Chairman of the FPT Group Truong Gia Binh said employing external IT experts is a growing trend among top businesses around the world. He claimed that if encouraged in Vietnam, it will forge sweeping reform across State bodies.

Participants hailed the establishment of the committee led by the Prime Minister, which they said will create breakthroughs to turn Vietnam into an IT powerhouse.

Others said that it is advisable to address constraints in putting IT projects in place. They recommended subtracting part of earnings from public services to pay for IT services.

Turkish investment in Vietnam rises to US$69 million

By the end of March 2014, Turkey had invested in 9 projects worth US$68.8 million in Vietnam, ranking it 44th among 99 foreign investors in the Southeast Asian nation.

The Foreign Investment Agency (FIA) reported that the manufacturing and processing industry made up the majority of Turkish investment in Vietnam, attracting four projects capitalized at US$64.5 million.

It was followed by education and training with 3 projects at US$3.45 million and the remaining incidental investment in agriculture, forestry, fisheries, accommodation and restaurant services.

At present, Vietnam does not have any investment projects in Turkey.

Japan leads foreign investment in Vietnam

Japan has surpassed all other nations to become the largest source of foreign direct investment in Vietnam, with 2,237 projects and registered capital of US$35.38 billion.

According to the Foreign Investment Agency (FIA) under the Ministry of Planning and Investment, the average investment of a Japanese project is US$15.8 million, substantially higher than the overall average of all nations combined of US$14.58 million.

Currently, Japan has concentrated its investments heavily in the manufacturing and processing industry with 1,213 projects at US$29.82 billion, accounting for 84.3% of its total investment in Vietnam.

Real estate with 30 projects and construction with 54 projects follow in second and third place at US$1.4 billion and US$1.05 billion, respectively.

Japanese firms have highly diversified their investment in 48 out of the 63 provinces and cities across Vietnam with Thanh Hoa province receiving the majority of funds funneled into 8 projects at US$9.67 billion, followed by Binh Duong with 224 projects at US$4.18 billion and Hanoi with 538 projects at US$3.86 billion.

Good practices earn firms low-cost loans

Companies with transparent finances, profitability and potential projects may avail of dong loans at 6 – 7 per cent interest, the State Bank of Viet Nam's (SBV's) weekly revealed on Monday.

The lending interest rate for privileged industries is 8 per cent. The five priority sectors include agriculture, export, support industries, small- and medium-sized enterprises and high-tech firms.

Other sectors may have to pay 9-10.5 per cent interest per year for short-term loans and 11-12.5 per cent interest for mid- and long-term loans.

The business trend survey of Q2, 2014 for credit organisations by the SBV's Monetary Statistics and Forecast Department reported that the majority of the industries expected lower lending interest rates.

An industry expert stated that enterprises should view the reduction in interest as an opportunity to expand business and production.

Apart from attempts to boost loans for companies in the two economic hubs of HCM City and Ha Noi, the central city's People's Committee of Da Nang late last month decided to offer preferential loans at 7.5 per cent interest to businesses for a one-year period.

Profitable or audited businesses and enterprises without bad debts in any bank in the city can avail of a loan of VND120 billion ($5.7 million) from the city's budget and the Investment and Development Fund. In other words, each eligible business can avail of a maximum loan of VND5 billion ($238,000) once, with strict regulations from this year onwards. The loan will be provided to businesses involved in the stable price programme in the city. Enterprises running at a loss but employing a large workforce can avail of the loan if they propose an effective production plan or provide confirmation of their tax returns and debt payments in the previous years.

Programme launched to help business start-ups

The HCM City Young Businesspeople Association (YBA) and the Business Start-up Support Centre (BSSC) have launched a community project to provide business expertise to minimise risks to some 10,000 young entrepreneurs starting businesses in the next five years.

"Every Businessman-A Teacher" will also provide 1,000 students with intensive training in starting a business, while 100 successful entrepreneurs will support a start-up each.

Speaking at the launch, Truong Ly Hoang Phi, BSSC director and YBA general secretary, said the project is aimed at stimulating entrepreneurship among young people in the city and create close links between them and successful business people.

"The project conveys a message that each young business person can become a teacher of a young business start-up generation.

"[Besides], each young start-up business person needs a teacher to understand, share, and support in the initial period."

The two also launched a business start-up competition titled Startup Wheel 2014 as part of the programme to create a platform for young people to present innovative ideas, promote start-ups and develop a strong start-up community.

Mongolia seeks textile partnership with HCM City

HCM City and Mongolia have much potential in trade, especially in garment and textile, Regzenda Sandag of the Mongolian Ministry of Industry and Agriculture told Vietnamese officials at a bilateral seminar held in HCM City yesterday.

Regzenda said his country, whose economy is based mostly on agriculture, is trying to integrate into the global economy.

It exports hundreds of items to the EU with low tariffs and is negotiating a free trade agreement with Japan, making it an attractive investment destination for companies, especially those building industrial parks, he said.

His country wants to co-operate with HCM City businesses in the garment and textile sector to develop its own industry and exports, he added.

Nguyen Binh An, deputy head of the Viet Nam National Textile and Garment Group's southern office, said Viet Nam's garment and textile industry, which employs 2.5 million workers, is growing at 15-20 percent annually.

Last year trade between the city and Mongolia was estimated at more than US$3 million.

Tran Xuan Dien, deputy director of the city Department of Industry and Trade, said there is huge potential for economic co-operation between the city and Mongolia.

"HCM City has advantages in human resources while Mongolia has raw materials. But the biggest challenges for the two sides are language and geography."

At a recent meeting with the chairman of the Ulaanbaatar city council, Dashjamts Battulga, Le Hoang Quan, the HCM City chairman, promised to foster ties with the Mongolian capital.

The two leaders spoke about the need to organise more business forums to create opportunities for businesses in the two cities to establish links.

Banking, insurance firms draw complaints

Banking and insurance are the two sectors that elicit the most consumer complaints in HCM City, the Viet Nam Standards and Consumers Association (Vinastas) said.

Dao Thi Cuc, a senior Vinastas official, told a conference titled Enterprises and Consumers' Faith on Tuesday that last year her office in HCM City received more than 700 complaints and 137 other cases in which complainants wanted to sue, most of them related to the two sectors.

But the conference heard that in most cases consumers' information was based on what they were told at banks and insurance companies and not on carefully reading the contracts. This often caused conflicts after the contracts were signed, delegates said.

Phan Vu Tuan, a lawyer, said many consumers did not know much about the law or to protect themselves. Insurance is a specialised sector and only people working in it can clearly understand it, he added.

Cuc said to reduce these problems a model contract is needed in the two sectors to protect consumers.

The contracts should be studied carefully by lawyers since now contracts are drafted to protect service providers rather than customers and it is difficult for consumer to identify their rights, she said.

Other products and services that consumers complained about were cosmetics, electronics, advertisements, and health care.

Vinastas said last year nearly 80 per cent of claims were settled out of court, most of them relating to food hygiene and safety.

But claims against online traders could not be settled, it said.

It was difficult to protect consumers against monopoly companies in sectors like petroleum, post and telecom, airlines, power, and water, it admitted.

Participants said the lack of knowledge of the laws prevented consumers from protecting themselves, adding that the latter should consult lawyers before signing contracts.

Tobacco lobby pushes for tax increase delay

Increasing the special consumption tax on tobacco is essential but should not be done next year since smuggling is rampant, cigarette companies and the Viet Nam Tobacco Association told a seminar late last week to discuss amendments to the Law on Special Consumption Tax.

They said the smuggling would increase further and that the tax should only be increased when contraband can be kept out.

Pham Kien Nghiep, general secretary of the Viet Nam Tobacco Association, said between 2005 and 2009, when the tax was hiked by 20 percentage points (from 45 per cent to 65 per cent), cigarette smuggling jumped by 80 per cent.

An expert said that the hike must be effected only in 2016 and the tax rate must not be above 80 per cent.

But the ministries of Finance and Health rejected their arguments, saying the time has come to increase the tax.

Smoking damages human health, they said.

Viet Nam has one of the highest smoking rates in the world, with more than 47 per cent of men aged over 15 and 1.4 per cent of women using tobacco.

The finance ministry plans to increase the tax on tobacco products by 10 percentage points to 75 per cent by July 2015, and by another 10 per cent in 2018.

It considered and rejected a second plan involving a combined excise duty of VND500 per pack and increasing the current ad valorem tax rate by 5 percentage points once each in July 2015 and 2018.

But it said it would continue to talk to companies and business groups.

It will submit a draft to the Government next month and the National Assembly in October.

If approved, the amendments will take effect in July 2015.

SOEs stakes may be sold at discount rates

A draft regulation about allowing State-owned enterprises (SOEs) to sell stakes in non-core businesses at below the face value would be presented to the Prime Minister for approval.

This is part of the efforts to accelerate the SOEs' restructuring process. According to Deputy Director of the Department of Entrepreneurial Finance Dang Quyet Tien, the decision about speeding up capital withdrawal from non-core business in the 2013-15 period was now being evaluated by the Ministry of Justice and would be submitted to the Prime Minister this month.

Tien said that the regulations would tackle the problems which the SOEs were encountering during the capital withdrawal process, while preventing losses to the State assets.

Nguyen Duc Tang, an expert in equitisation, was quoted by Dau Tu Chung Khoan (Securities Investment) newspaper as saying that the sale of stakes below the book value, in fact, did not conflict with the market principle as the investments were inefficient.

What's important was to ensure transparency during the capital withdrawal process in order to prevent losses to the State assets.

The transparency must be there right from planning, auctions and prices to the buyers, he said.

According to the Department of Entrepreneurial Finance, the plan and progress of the State's capital withdrawal from non-core fields must be approved by the relevant authorities.

Then, the share transfers would be conducted under trading on stock exchanges, public auctions or direct deals.

The restructuring of SOEs is currently underway in Viet Nam. However, the process has been going slow. Statistics from the Steering Committee on Corporate Renovation and Development showed that SOEs, to date, managed to withdraw around VND4.164 trillion, or US$198.28 million, from their non-core business, comprising 19 per cent of the total non-core investments.

HCM City plays key role in economic reform

HCM City has greatly contributed to the country's economic reform of the last three decades, a conference heard in HCM City on Monday.

Speaking at the conference – held to review the city's achievements during the 30 years of economic reform – head of Party Central Committee's Commission for Popularisation and Education Dinh The Huynh said HCM City has a great deal of experience in economic reform to share with other localities.

Le Thanh Hai, the city Party Committee Secretary, said a range of economic sectors play vital roles in the city's socio-economic development.

The city has recorded double-digit economic growth for nearly 20 years now, and its annual income per capita has reached US$5,000, he said.

The public sector plays a central role, he said, but added that it should only "facilitate the market instead of playing the role of the market."

Than Thi Thu, head of the HCM City Party Committee's Commission for Popularisation and Education, said the city has achieved many breakthroughs while overcoming challenges in the last 30 years.

It has created a legal framework for many business models, she said.

In 1989 the city issued a decision regulating many models of private businesses, limited companies, and joint-stock companies to create favourable conditions for the private sector's development, she said.

After the establishment of limited companies and joint-stock companies, the country's first export processing zones and industrial parks as well as the stock exchange were established in HCM City.

The city also developed programmes such as those to exchange land for infrastructure, socialise infrastructure, and improve the administration to serve the public better, which many other localities learnt from and followed suit, she said.

It not only taught the entire country lessons in socio-economic development but also ushered in the concept of urban management under the market mechanism, she said.

HCM City has faced a lot of challenges during the process of economic reform like lack of economic competitiveness, infrastructure that could not keep up with economic growth and the demand for improvement in people's welfare, and the widening gap between the rich and the poor, Thu said.

The country and city are now facing many other hardships in the process of globalisation.

Other challenges include the ineffectiveness of public spending that has plagued the city for a long time, the worsening budget deficit, and transfer price abuse for tax evasion by foreign firms, which has become harder to check.

Half of foreign businesses in HCM City declare losses, Thu said. Many have reported losses for many years running, but continue to thrive, she said, adding that this creates unfair competition for local firms.

Other speakers referred to a major problem: the failure of the country, especially the city, to take full advantage of available resources.

The country is divided into three key economic zones in three distinct, but they lack linkages or co-operation, and fail to tap their potential.

Hai said the city needs to take more drastic measures to improve the socialist-oriented market economy.

Huynh said democracy is another issue that many delegates discussed at the meeting.

Many suggested that the democratic mechanism should be discussed more seriously at other forums.

Huynh called on the attendees to mull over the issues and send their opinions to the Central Theoretical Council.

Bamboo, rattan sector calls for capital, technology to develop

Though Vietnam's bamboo and rattan sector has the potential for development, the sector is still facing challenges including capital, raw materials and technology the Communist Party of Vietnam Online Newspaper reported.

According to the Agro-Forestry-Aquatic Product Trading, Processing and Salt Industry Department and Vietnam Association of Craft Villages (Vicrafts), poor strategic planning in domestic handicraft sector, backward technology and poorly designed products made the sector difficult to develop. The remarks were made at a seminar on Vietnam’s bamboo and rattan trade held by the Ministry of Agriculture and Rural Development in Hanoi in early April.

Luu Duy Dan, Chairman of Vicrafts, said that the whole country has 713 bamboo and rattan craft villages, which account for 24 percent of the total craft villages and attract approximately 350,000 employees. Since 2009, famous bamboo and rattan villages such as Phu Nghia, Chuong conical hat village, the Vac village, Chang Son and Phu Tuc of Hanoi have met difficulties due to unstable market conditions and stagnant production.

Craftsman Ta Thu Huong from the Chuong conical hat village in the Thanh Oai district of Hanoi, said that previously high-qualified conical hats were sold at least 120,000 VND each, but now the price has dropped to 50,000 VND. She noted that the price of raw materials is rising, causing more difficulties for production establishments.

So far, Vietnam has hundreds of businesses and thousands of employees who participate in processing bamboo and rattan products. However, the biggest difficulty of the businesses today is instable consumption.

According to the Vicrafts, 80 percent of the production establishments do not have sufficent capital to expand their production scale and invest in technological innovations.

According to Nguyen Manh Dung from the Agro-Forestry-Aquatic Product Trading, Processing and Salt Industry Department, to stabilise and expand the market of these products, the craft villages need to quickly change traditional processing techniques.

According to forecasts, demands of the raw material of craft villages will require at least one billion bamboo trees per year by 2020. To meet this demand, the country needs to plant about 60,000 hectares of bamboo and invest in wild bamboo conservation.

In the future, the State must have plan to develop bamboo and rattan areas to supply for the industry.

Additionally, the Government should provide financial support for enterprises and households as well as promote new market strategies for rattan and bamboo products. In particular, enterprises and villages should conduct market researches and register intellectual property rights in order to protect their brand names.-

Vietnam biofuel market remains modest

Vietnam has great potential in the development of biofuels but the use of this kind of energy remains limited, according to the Vietnam Economic News on April 16.

Every year, Vietnam still exports millions of tonnes of raw cassava to other countries for producing ethanol. In order to promote the development of the biofuel industry, the prime minister signed Decision 177/2007/QD-TTg on “the project of developing biofuels by 2015 with a vision to 2025.”

Head of the Ministry of Industry and Trade's Science and Technology Department Nguyen Dinh Hiep said Vietnam has successfully carried out research and mixed some kinds of biofuels like E5 (petrol containing five percent of ethanol), E10, E15 and E20 and launched pilot sales at 160 stores nationwide. The biggest advantages of using bio-fuel are to reduce from 27-44 percent of the gases causing the greenhouse effect and also to save fuels compared with using other ordinary petrols.

According to the experts from Hanoi University of Science and Technology and the Centre for Technology Application and Transfer under the Vietnam Petroleum Institute, the E5, even E10 and E20 in conventional engines which are popular in Vietnam will not fundamentally affect the vehicle 's features. Using the biofuels even helps motorcycles and automobiles start and speed up better.

In particular, with materials mainly from industrial production, the development of biofuels can stimulate agricultural production and expand markets for agricultural products in the country. Pham Anh Tuan, CEO of Phuong Dong Biofuel Company said if cassava production remains stable, about 300 thousand households or 1.2 million people, most of them living in remote areas and so poor will stabilise their lives.

Recognising the importance of biofuel to the energy security issue, the Vietnam Oil and Gas Group (PVN) has worked out a roadmap to develop biofuel with a target by 2015 with a vision until 2025 to develop biofuels which can ensure energy security, improve the environment and increase incomes for farmers.

To accomplish this goal, PVN and Petro Vietnam Oil Corporation have put into operation three projects on producing ethanol biofuels with capacity of 300,000 cu.m per year, including Phu Tho Ethanol Plant (Tam Nong district, Phu Tho province), Quang Ngai Ethanol Plant (Dung Quat Economic Zone, Quang Ngai province) and Binh Phuoc Ethanol Plant (Bu Dang district, Binh Phuoc province).

According to PVN, the government has granted permission to build six ethanol plants using cassava chips as raw materials which helped cassava farmers in neighboring provinces stabilize production and lives.

However, finding markets and consumers at present remain limited, resulting in difficulties for the government to draw a roadmap for using biofuels across the country. According to experts, Vietnam needs to develop the distribution systems across the country, and raise people’s awareness of the benefits when using the biofuels.

The nation now has six ethanol plants with a total capacity of 535 million liters a year. Of these, domestic consumption accounts for 20 percent and the remainder is exported to Japan, the Republic of Korea and the Philippines. According to the government’s roadmap, the E5 bio-petrol will be used in seven cities and provinces and across Vietnam in 2015. From the end of 2017, bio-petrol E10 will also be used across the country.

Unbaked brick makers face slow sales

Makers of bricks made of cement and industrial waste are finding it difficult to gain market access in Viet Nam, despite the environmental benefits and encouragement from the Government.

Four years ago, the Government launched a programme to use more unbaked bricks. Prime Minister Nguyen Tan Dung and the Ministry of Construction adopted guidelines about their use.

Made from industrial waste, such as ash and cinders from thermal power stations and red mud from bauxite factories, unbaked bricks help save natural resources, especially clay and coal. They also reduce the cost of treating industrial waste.

Viet Nam now has 12 plants making concrete bricks, 30 plants making foam concrete bricks and more than 100 making pure concrete bricks. Yearly productivity is more than six billion.

The use of unbaked bricks in construction works accounts for about 27 per cent of total building materials.

Vice president of the Viet Nam Association for Construction Materials, Nguyen Quang Cung, said that the rate of unbaked brick use would be higher, but for the slowdown in the real-estate market.

There are few guidelines to promote the use of unbaked bricks, including creating public awareness and adopting technical standards that all builders are aware of.

Head of the Construction Materials Management Department under the Construction Ministry, Le Van Toi, said that State-funded buildings were actually required to use only unbaked bricks.

However, few buildings met the requirement because of loose regulations. He urged closer supervision of agencies to ensure more unbaked bricks were used in State constructions.

General director of HCM City-based An Thai Buiding Materials Joint Stocks Company, Nguyen Thi Sy, said that the company had capacity to produce 200 million clay bricks but sold only 20 million.

This was because people were not used to using the new style bricks and because of the downturn in the construction sector in Viet Nam.

Sluggish production and consumption created problems for producers in paying interest on bank loans and retaining competent staff, he said.

Director of Minh Khang Bricks Joint Stocks Company, Le Hoai An, said that unbaked brick producers needed to combine to meet consumers' requirements.

An said that producers must first register the trade mark and quality of their products and then provide qualified products to gain consumers' trust.

Vietinbank aims for Vinalines ports stake

Vietinbank, the second-largest bank by assets, would like Viet Nam National Shipping Lines (Vinalines) to name it as a strategic investor at member ports after the initial public offerings (IPO).

This is expected to act as a means of debt payment. The plan, which was disclosed by baodautu.vn newspaper, is expected to lift up grand debts, improve investment efficiency and administration after equitisation. The plan still needs the approval of the Ministry of Transport. Vinalines incurs a total debt of VND4.98 trillion (US$236 million), excluding interests paid to Vietinbank. Of this, the mother company takes VND2.05 trillion ($97 million) and subsidiaries VND2.93 trillion ($139 million).

The corporation targets to equitise eight companies this year, including Sai Gon Port, Cam Ranh Port, Nghe Tinh Port and Can Tho Port. Nam Can Port, Vinalines Hai Phong, Vinalines Shipping Company and Vinalines Container Shipping Company are also among the targeted companies. If the plan gets approval, Vietinbank and Vinalines will negotiate swap ratios and the percentage of stake in every single deal.

Next month, Vietinbank may take its stake in Hai Phong Port's IPO, the biggest port in the northern part of the country. The IPO will take place at Ha Noi Stock Exchange on May 14, 2014. Hai Phong Port is valued at VND4.32 trillion ($205.7 million), as much as 201 per cent of its book value. The state's holdings in the port are estimated at VND3.269 trillion ($155.6 million). About 25 per cent of the state's holdings in Hai Phong Port will be put on sale. Provisionally, Hai Phong Port will operate under the joint-stock-corporation model from July.

Unable to pay debts, Vinalines has finalised proposals to reschedule VND100 trillion ($4.7 billion) of local debt and $196.25 billion of foreign debt.

Vinalines has successfully equitised two units, Quy Nhon Port and Khuyen Luong Port, while Nha Trang Port has announced it will conduct an evaluation for equitisation. Last April, the Prime Minister pushed for equitisation of the country's major ports and it must be implemented within the year 2014. This is aimed at diversifying investment resources for the development of ports.

Swiss back VN business reforms

Switzerland yesterday announced its continued support for a partnership between the Ministry of Planning and Investment and the United Nations Industrial Development Organisation (UNIDO) for reforming the country's business environment, saying it would provide US$4.75 million.

The four-year (2014-18) MPI -UNIDO project for "Expansion of National Business Registration System (NBRS)" to new commercial entities is expected to cost $5.45 million.

In 2008-13 the project was funded by the MPI, Switzerland, Norway's Agency for Development Cooperation, and UNIDO.

NBRS is being used for single-point, fully-computerised services for business, tax, customs, statistics, and public-security registration of firms in 63 provinces.

As a result, online enterprise registration and enterprise information services, covering the records of over 864,596 enterprises and subordinate units registered under the Enterprise Law and 164,000 annual financial statements of shareholding companies, are available through the National Business Registration Portal at www.businessregistration.gov.vn.

The average registration time has decreased from 15 days in 2008 to only 3.5 days as of last year.

According to the International Finance Corporation's estimates, companies registering for the first time have been saving around $4 million a year and these savings nearly double when enterprise record amendment services are also considered.

Deputy Minister of Planning and Investment Dang Huy Dong said: "Business registration reform to date has not only reduced the cost and time for registration nation-wide, but also demonstrated that client-friendly and efficient public sector services benefit the development of the private sector.

Miroslav Delaporte, country representative of Switzerland's State Secretariat for Economic Affairs (SECO), said: "Improvements in the business environment, including business registration reforms have helped mobilise capital and unleashed the entrepreneurial spirit of the Vietnamese people."

He added that the expansion would further help the private sector by improving transparency and reducing the risks of doing business in Viet Nam with information provided through the NBR Portal.

Nilgun Tas, chief of the Competitiveness, Business Environment and Upgrading Unit and deputy to the director of the Business, Investment and Technology Services Branch at UNIDO, said: "The private sector will not only gain access to efficient services of NBRS, but also benefit from more appropriate enterprise supporting policies, designed and implemented based on the full picture of all commercial entities operating in Viet Nam.

"There is also great potential to link the NBRS with additional public services, for example, with social insurance, secured transactions, trademark, and patenting services, among many others and as such to expand this e-Government initiative wider."

SOEs' IPO failures reflect poor preparation

The poor first-quarter response to IPOs (Initial Public Offerings) launched by State-owned enterprises (SOEs) shows that they have not prepared well for their equitisation process, a VnExpress report said.

It said more than 70 per cent of the shares offered went unsold from January to March, during which 25 SOEs put up 355 million shares on the two stock exchanges in the country, three times higher than the same period last year. The report estimated the value of unsold stock at nearly VND2.53 trillion (US$120 million). It said many companies saw more than 90 per cent of their shares unsold.

Of the 15 businesses that could not sell out theirs, the Transportation and Unloading Company of Inland Waterway (Tranciwa) fared the worst with almost all its shares going unsold. The company, which has a charter capital of VND58.5 billion ($2.8 million), put up 5.85 million shares for sale but sold just 24.200 for VND242 million ($11.500).

Others companies like the Ha Noi Construction Corporation (Hancorp), Viet Nam Motors Industry Corporation (Vinamotor), Viwaseen Infrastructure Construction Investment JSC (Viwaseen), Civil Engineering Construction Corporation No 6 (Cienco 6) and Waterway Transportation Co (Vivaso) also had high unsold rates of 96-97 per cent.

Several company executives admitted they had not prepared well for their IPOs. Pham Ngoc Dich, Chairman of Vivaso, said the company did not have the time it needed to plan the IPO and complete its official website as required. He said the company would organise a shareholders' meeting by the end of this month and discuss continuing the share sale in 2015.

Though the Vietnam Waterway Construction Corp (Vinawaco), was able to sell all the shares offered in its IPO, chairman Nguyen Duy Hien admitted that the company did not have enough time to look for strategic investors and had picked some before a proper evaluation of the latter's capacity. Market observers have said that the IPO failures also have to do with the health of the enterprises. For example, the profits of Tranciwa and Hancorp declined in the three years before they launched their IPOs, and this could have discouraged investors.

Phan Dung Khanh, head of the Investment Division of MayBank Kim Eng Securities Co, said many businesses failed to show a clear development strategy and target suitable buyers.

Foreign investors eye manufacturing

Foreign investment in manufacturing has increased significantly in HCM City and the neighboring provinces of Dong Nai and Binh Duong as international firms seek to take advantage of the country's accession to the Trans-Pacific Partnership.

In the first quarter they have invested US$2.3 billion in 141 projects in the three places, accounting for 70 per cent of the total FDI they attracted. Binh Duong topped with nearly $800 million, and HCM City followed with $710 million.

In the last few months in Dong Nam Industrial Zone in HCM City's Cu Chi District, Worldon Viet Nam Limited built a 45ha garment factory that will go on stream in June next year.

The British Virgin Islands-based firm will invest $140 million in the plant that will produce 80 million products a year.

Samoa's Sheico Viet Nam company limited will open its $50 million plant in November with a capacity of 12,000 tonnes of fabric, 4.2 million garment items, and 1.2 million life jackets annually.

"The investment opportunities in textile and garment in Viet Nam are very promising since the country is going to join the Trans-Pacific Partnership (TPP)," a Sheico spokesperson said.

According to the HCM City Export Processing and Industrial Zone Authority (HEPZA), many firms are wrapping up procedures to increase investment to expand production.

German-owned Pepperl - Fuchs Viet Nam Limited company wants to increase its investment by $10 million and has sought an additional 9,000sq.m to expand production of high-tech sensors.

Initially the company had planned to expand its production in Singapore, but then chose Viet Nam thanks to cheaper land and human resources.

Many Japanese and Singaporean firms have invested in production of electronics components.

"We have invested $2 million and will consider investing more in the long term," Masaharu Tsukada, general director of Japan's Maruko Keihoki Viet Nam Limited company, which will produce car's horn in district 7's Tan Thuan processing zone, was quoted as saying in Tuoi Tre (Youth) newspaper.

"It is a good opportunity for investors in Viet Nam as the country is more and more globally integrated by signing more international agreements.

TranViet Ha, head of HEPZA's Investment Department, said: "This year FDI has flowed strongly into production, with many firms expanding their factories. The capability of local human resources to learn new technologies quickly is an advantage."

Luong Van Ly, an investment analyst, said: "Foreign investors have realised that Viet Nam's outdated technologies cannot benefit from the TPP agreement, and are pouring money into production in Viet Nam."

Investors from non-TPP countries were set to come to Viet Nam to take advantage of the agreement, he said.

Tobacco lobby pushes for tax increase delay

Increasing the special consumption tax on tobacco is essential but should not be done next year since smuggling is rampant, cigarette companies and the Viet Nam Tobacco Association told a seminar late last week to discuss amendments to the Law on Special Consumption Tax.

They said the smuggling would increase further and that the tax should only be increased when contraband can be kept out.

Pham Kien Nghiep, general secretary of the Viet Nam Tobacco Association, said between 2005 and 2009, when the tax was hiked by 20 percentage points (from 45 per cent to 65 per cent), cigarette smuggling jumped by 80 per cent.

An expert said that the hike must be effected only in 2016 and the tax rate must not be above 80 per cent.

But the ministries of Finance and Health rejected their arguments, saying the time has come to increase the tax.

Smoking damages human health, they said.

Viet Nam has one of the highest smoking rates in the world, with more than 47 per cent of men aged over 15 and 1.4 per cent of women using tobacco.

The finance ministry plans to increase the tax on tobacco products by 10 percentage points to 75 per cent by July 2015, and by another 10 per cent in 2018.

It considered and rejected a second plan involving a combined excise duty of VND500 per pack and increasing the current ad valorem tax rate by 5 percentage points once each in July 2015 and 2018.

But it said it would continue to talk to companies and business groups.

It will submit a draft to the Government next month and the National Assembly in October.

If approved, the amendments will take effect in July 2015.

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

Automobile imports, Mekong Delta, Trade surplus, foreign businesses, Japan
 
*
*
*
  Send