BUSINESS IN BRIEF 22/4
Thailand’s leading retailer opens first store in Vietnam

The grand opening of the “Robins”department store in Hanoi’s Royal City MegaMall on April 20 marks the initial appearance of Thailand’s leading operator of department stores, Central Group in Vietnam.

Tos Chirativat, Chairman of the Executive Council  and CEO of Central Group,said that Vietnam hasgreat potential for economic development noting that over 60% of itslabour force is young and talented.

“Therefore, Vietnam has become a promising destination for investors in the retail field,” he said.

Chirativat highlighted that Hanoi and neighboring areas have maintained sustainable growth over recent years concurrent with anincrease in the average income of workers.

Additionally, foreign investment inflows into Vietnam have increased remarkably, which provide fresh impetus for promoting consumption models in the community he said.

At the opening ceremony, Alan Thomson, President of Robinson Department Store Public Company Ltd, said that this is the first time a trade centre like Robins has been opened outside  ofThailand.

The Centre covers an area of 10,000sq.m, and is located in the Royal City Trade Centre in Nguyen Trai street, Thanh Xuan district, Hanoi.

The Royal CityTrade Centre has attracted over 100 famous brand names such as M.A.C, Clinique, Lancome, Body Shop, F&F, Mc Jeans, Samsonite, Giordano and Pacific Union.

From now till April 30, Robins has implemented a discount programmewith savings of up to 50% off on hundreds of products.

Customers also have an opportunity to receive valuable promotional gifts such as a Yamaha motorbike, a tour of three days and two nights at Centara Sandy Beach Resort Da Nang.

Customers can find more detailed information about the programme at the website www.robins.vn or www.facebook.com/RobinsVietnam.

Rice exports to China continue to rise

China remained Vietnam’s largest export market for rice during the first quarter of 2014, accounting for 40% of market share.

Many leading export firms and market analysts are reporting that Vietnam’s exports to China are continuing to increase and are forecasting sharp rises in the future, predicated on Vietnam’s reservation of the right to export 800,000 tonnes of rice to the Philippines.

In the past, Chinese traders often delayed rice purchases to take advantage of downturns in the price, analysts report.

However, with the Philippines purchase propping up much needed price support for the spring-winter crop, the market dynamics have changed in favour of Vietnam.

According to analysts, geographical factors are also a very important factor which has contributed to make Vietnam’s rice supply source highly competitive and the No 1 option of China.

In terms of transport costs, Vietnamese rice is US$10 per tonne lower than Thai rice.

Newly merged banking giant on the cards

Maritime Bank shareholders have agreed with the bank’s plan to merge with smaller Mekong Bank to create one of the five biggest banks in Vietnam.

Maritime Bank held a congress for its shareholders on April 19 and reached a consensus on the merger with Mekong Bank.

Dao Trong Khanh, Vice Chairman of Maritime Bank, said the two banks have completed initial steps towards the deal, which is due to be submitted to the State Bank of Vietnam (SBV) for approval.

At present, Maritime Bank has chartered capital of VND8,000 billion, while its partner - Mekong Bank – owns VND3,750 billion with nearly 300 transaction offices nationwide.

At an April 15 congress, Mekong Bank also received strong support from its shareholders for a merger deal with Maritime Bank.

Once merged, the new bank is expected to sharpen competiveness and fully tap potential to earn more profit.

Pottery, porcelain exports increase

High demand has led to an increase in Vietnam 's pottery and porcelain exports in the early months of 2014, reported the Vietnam General Department of Customs.

The department stated that in the first two months of this year, the nation had a year-on-year surge of 9.52% in the export value of pottery and porcelain products reaching US$77.6 million.

During the first two months, 12 out of the 21 export markets for the products reported a growth in export value, including Italy, which recorded a year-on-year increase of 187.02% to reach US$1.2 million.

The growth in export value in those markets increased the total export value of pottery and porcelain products during the first two months.

The export value of pottery and porcelain products to Japan reached its highest value at US$13.4 million, an increase of 14.33% against the same period last year, accounting for 17.3% of the total national export value. The US recorded the second-highest export value at US$12.6 million, up 22.81% as compared to the same period last year.

In the first two months, Vietnam added many new export markets for its pottery and porcelain products, including Sweden, Singapore, Hong Kong, India, Laos, and the Philippines .

However, some markets saw a decrease in export value of those products, of which exports to China decreased by 56.24% to reach only US$259,500.

Experts in the pottery and porcelain industry said export markets, such as Vietnamese pottery and porcelain products, expanded because of their superior designs and the high quality of the products.

The national exports of pottery and porcelain products increased also due to an export recovery noted in the Dong Nai province.

According to the Dong Nai Fine Art Porcelain Association the recovering global economy has led to increased retail sales and construction activities.

Also, since the end of 2013 the province's pottery and porcelain products have recorded an increase in export volume to its traditional markets, especially black porcelain items made in Bien Hoa that sell well in the US market, said association officials.

Additionally, the pottery and porcelain export companies have so far received export orders from new markets.

The associations said porcelain producers in the province have planned to expand their export markets to potential countries in Europe and Asia , while promoting exports to the traditional markets.

Large porcelain export companies in Dong Nai include Taicera Pottery and Porcelain Industrial Joint Stock Company, Pancera International Joint Stock Company and Viet Thanh Pocerlain Joint Stock Company.

Most modern radial truck tyre factory inaugurated in Binh Duong

Deputy Prime Minister Hoang TrungHai on April 19 cut the ribbon to inaugurate an all-steel radial truck tyre factory in the southern province of Binh Duong.

Covering 120,000 sq.m in the Nam Tan Uyen Industrial Park , the factory, the most modern of its kind in Vietnam, was built at a cost of VND3.38 trillion (US$161 million).

Co-invested by the Vietnam National Chemical Group (Vinachem) and the Southern Rubber Industry Joint Stock Company (Casumina), the plant is capable of producing 1 million units per year.

Its aims at both domestic and foreign markets such as the Middle East, South Asia and Southeast Asia, the US, North America and Europe.

Speaking at the ceremony, Deputy PM Hai urged the investors to do more to ensure the factory will operate effectively.

Businesses honoured for excellent trade services

One hundred and twenty businesses were presented with the Vietnam Top Trade Services Award in Hanoi on April 19, acknowledging their excellent contribution to the trade, services sector in 2013.

They beat hundreds of other businesses through dossier appraisals and fact-finding tours by the jury.

The award is to honour businesses specialising in 11 trade service groups, including the environment, distribution, finance, construction, information, travel, transport, health care, education, and culture-entertainment.

Speaking at the ceremony, Deputy Minister of Industry and Trade Do Thang Hai thanked the award recipients for their outstanding efforts to renovate management and technology and excel in performance, contributing to national economic development.

The event, organised by the Ministry of Industry and Trade, was part of activities to mark Vietnam’s accession to the World Trade Organisation (WTO) (2007).

New project to lift Tra fish sustainability

The Prime Minister has approved a new project to implement a sustainable supply chain for the Tra fish (pangasius) industry.

The project is funded by the European Union under the Switch-Asia network of the EU and implemented by the Vietnam Cleaner Production Centre (VNCPC).

It is designed to help Vietnam’s Tra fish industry increase its competitiveness,expand its global market reach,and improve the sustainability of its production.

The EU will directly support the whole supply chain, bringing Vietnam’s Tra fish to foreign importers and end-users. The EU is Vietnam’s largest Tra fish consumer.

The project will be implemented over four years (2013–2017), focusing on increasing production capacity, enhancing product quality, and reducing environmental impact and cost of production through applying Resource Efficient and Cleaner Production (RECP) standard.

It also helps Vietnamese small and medium enterprises exchange information and apply sustainable standards including ASC and GlobalGAP, towards sustainable production in order to improve the competitiveness of the Tra fish industry on the world market.

Vietnam remains Spain’s second largest footwear exporter

Vietnam earned EUR268.5 million from shipping 27.7 million pairs of shoes to Spain last year, ranking it second among footwear suppliers to this South European nation.

Spanish Footwear Producers Federation (FICE) statistics show Vietnamese footwear exports to Spain increased 11% in volume, but decreased 1.1% in value compared to 2012’s figures.

Over the years, Vietnam has been one of Spain’s leading footwear exporters, second only to China, except for 2011.

Last year, Spain imported 329 million pair of shoes worth EUR2.07 billion, or a year-on-year rise of 3.7% in volume and 0.9% in turnover. It exported 134.8 million pairs, reaping EUR2.26 billion, up 1.9% in volume and 10.3% in value.

Spain’s key footwear importers included France, Italy, Germany, Portugal, the UK, the US, Belgium, the Netherlands, and Japan.

No bad effects from EU-Vietnam forest law deal

The Forest Law Enforcement, Governance and Trade/Voluntary Partnerships Agreement (FLEGT/VPA) now under negotiation between Vietnam and the EU will not affect Vietnamese wood exporters and forest owners, according to an official from the Vietnam Administration of Forestry (VAF).

Speaking at an April 18 consultation seminar on the pending agreement, Nguyen Tuong Van, Deputy Director of VAF’s Department of Science, Technology and International Cooperation made clear that the content of the agreement does not surpass the EU Timber Regulations that took effect last March. Therefore, the FLEGT/VPA will not raise production costs while helping businesses raise their governance capacity.

According to Deputy Minister of Agriculture and Rural Development Ha Cong Tuan, the EU has agreed that the FLEGT/VPA is built on the basis of Vietnam’s existing laws, so no additional administrative procedures will arise for domestic exporters. He added that most domestic wood processors, particularly those selling to the EU market, have well abided to relevant policies and laws in this aspect.

Regarding the progress of the FLEGT/VPA negotiations, Van from the VAF said the two sides have finished negotiations on most technique-related appendices and reach basic agreement on the appendices on the list of commodities covered by the deal, and necessary conditions for Vietnamese exporters to gain a FLEGT certificate.

She added that the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES) Management Authority of Vietnam is intended to be in charge of granting the FLEGT certificate.

The two sides hope to sign the agreement in October this year. It is expected to provide a legal framework and regulations on wood exports to the EU, thus maintaining Vietnam’s wood and wooden products foothold in EU markets and expanding to other markets.

Int’l handicrafts fair attracts foreign businesses

Businesses from 12 countries are exhibiting their handicrafts, timber products and souvenirs at an international fair which opened in HCM City on April 18.

Of particular interest are displays of distinctive handicraft products from Vietnam’s Central Highlanders and the latest products from French and Swiss designers.

The fair also includes a design contest on durable products, to encourage businesses to innovate and improve designs.

Do Nhu Dinh, Chairman of Vietnam Handicraft Exports Association, said the fair has been promoted in many countries around the world, and importers have been offered special incentives to come and seek partners.

The event has so far received nearly 2,000 customers from 32 countries and territories, including Japan, Europe, the US, Australia, Canada, Chile and Mexico.

Last year, handicraft, timber products and souvenir export earnings reached US$6.5 billion, including US$1.5 billion from handicrafts and US$5 billion from wood and timber products.

Many of the products have high competitive edge and have aqquired a firm foothold on international markets, such as bamboo, ceramics and outdoor furniture.

The fair will run until April 24.

Trade with Mexico expands nearly 40%

Vietnam’s exports to Mexico grew by 37.25% to US$235.75 million in the first quarter of 2014, meeting 26.2% of this year’s target.

Key export items were footwear, seafood, garment, electronic components, coffee, and means of transport, with footwear topping the list, accounting for 28.38% of total export revenue.

Products attaining high growth included computers, electronics and components (US$31.07 million, up 87.19%) and garments (US$26.72 million, up 84.36%).

However, footwear and coffee saw a decline in export value.

The Vietnamese Trade Office in Mexico reported that all Vietnamese goods exported to Mexico are consumer products, while imported products are mainly input materials for production, such as machinery, equipment, electronic components, animal food, fertilisers and steel scrap.

Japan invests in high-tech steel making

Japan’s Kawada Group will invest in Vietnam’s Thanh Long Steel Company based in Hung Yen province to produce high-tech steel in Vietnam.

Group President Tadahiro Kawada revealed the plan at a working session with managers of Thanh Long Steel Company on April 17.

Kawada spoke highly of Thanh Long’s potential and capacity for a specific cooperation agreement on high-tech steel production between the two businesses in the near future.

He said Kawada is the leading Japanese steel maker specialising in advanced production and management technologies, and it will transfer new technologies to Thanh Long Company.

Tran Dinh Thien, Director of Vietnam Economic Research Institute, noted cooperation capacity between domestic and foreign businesses remains weak, particularly in the mechanical engineering industry. He said cooperation between Thanh Long and Kawada will help the Vietnamese partner produce large-sized steel composition to serve the modern industry in the future.

Vu Thanh Long, Director General of Thanh Long Steel Company, said his company will work closely with Kawada in producing high-tech steel, developing human resources and transferring technologies.

Established in 1995, Thanh Long Company has taken part in many major projects across the country, such as My Thuan Bridge in Tien Giang, Han River Bridge in Danang, Tran Phu Bridge in Nha Trang, Tuan Bridge in Hue, and Nguyen Tri Phuong Bridge in Ho Chi Minh City.    

Businesses seek to penetrate Middle East market

Businesses are advised to study the cultural tradition, religious customs and political system of the Middle East if they want to successfully break into this potential market.

Addressing an April 18 seminar in HCM City, Tran Quang Huy, a senior official of the Ministry of Industry and Trade (MoIT), revealed Middle East countries have a high import demand for food, agricultural products, seafood and consumer goods, creating a great chance for Vietnamese businesses.

Huy, who is head of the Africa, West Asia and South Asia Department under the MoIT, said the MoIT and State management agencies always provide maximum support for domestic businesses to access this lucrative market.

Middle East countries have huge potential in oil& gas and financial resources. Due to extreme weather, they have high demands for dairy products, pepper, cashew nuts and rice, which are Vietnam’s key export items.

Processing shrimp according to Halal standards to export to Middle East

Turkey, Israel, Iran and Iraq are promising markets for Vietnamese businesses, Huy said, adding entering markets of the Gulf Cooperation Council (GCC), businesses even enjoy low import tariffs of between 0 and 5%.

However, they impose strict requirements on imported food, for example Halal certificate.

To obtain such certificate, businesses must follow regulations on food processing. For instance, meat must not be pork or related products, and it must be slaughtered by Muslim people. Wine and other alcohol products are never granted Halal certificate.

Local businesses can apply for Halal certificate at relevant agencies in Vietnam. If they meet all requirements, they will be issued the certificate which is valid for one year.

Last year, Vietnam’s exports to the Middle East reached nearly US$6.7 billion, including US$184 million from milk and dairy products, US$96 million from pepper and US$78 million from cashew nuts.

Steel imports rise in first quarter

Vietnam imported 2.2 million tonnes of steel valued at US$1.5 billion in the first quarter of 2014, up 1.5% in volume and down 3.7% in value compared to a year earlier.

According to Vietnam Customs statistics, Vietnam spent US$568.3 million on the purchase of 827,000 tonnes of steel from overseas markets in March, principally from China, Japan, Taiwan, and the Republic of Korea.

The Vietnam Steel Association (VSA) reported that its members consumed 570,000 tonnes in March, rising by 60% from the previous month, up nearly 26.5% against last year’s corresponding period.

In the reviewed period, steel consumption volume in the local market hit approximately 1.2 million tonnes, or 5.7% higher than the same period last year. As a result, the inventory level of the domestic steel industry reduced to less than 260,000 tonnes.

Recently, the Ministry of Industry and Trade (MoIT) has coordinated with the Ministry of Science and Technology to apply national technical standards, aimed at supporting local producers, increasing inspection on imports, and preventing trade fraud.

The Finance Ministry also asked customs offices to keep a tight grip on the import of steel products.

Phu My 3 celebrates decade with Labour Order

Phu My 3 Company Limited celebrated its 10th anniversary of Vietnam operations last week during which the government granted the firm a Second Class Labour Order.

Over the past ten years Phu My 3, Vietnam’s first build-operate-transfer (BOT) power project, has made significant contributions to the development of the energy industry and the national economy. With a 716.8 megawatt capacity, Phu My 3 contributes around 4 per cent of total national power output.

Over the last decade the company has generated 47.22 billion kWh for the country’s power grid. “We are honoured to receive this medal from the president on the occasion of our 10th anniversary. This marks an important milestone in the course of our operations and development in Vietnam,” said Do Ba Canh, the company’s general director.

“The company will continue to work harder and contribute further to the country’s development to be worthy of this achievement,” Canh affirmed.

He also said that to meet Vietnam’s increasing power demand, the Phu My 3 power plant consistently looks for ways to maintain maximum output to accelerate the growth of gas power in the country. Also on the occasion, the company presented Ba Ria-Vung Tau province with a mobile medical clinic valued at VND4.5 billion ($214,000) to service people in remote areas. Phu My 3 regularly contributes to charity and community activities.

The company, in coordination with a number of government agencies, has successfully implemented a number of community development projects in the area, such as sponsoring heart and eye surgeries for the poor, awarding scholarships, building gratitude houses and contributing to road safety projects.

Supermarkets hit pay dirt with own brands

Whenever she shops at a supermarket, Pham Thu Phuong of District 7, HCM City, goes straight to shelves stocking the supermarket's own products.

Here, she buys stuff like soaps, shampoos, beverages, and noodles.

She has had the habit of buying supermarkets' own brands for nearly a year now after being tipped off by a friend that they are cheap and as good as other brands.

These are made by producers for a supermarket and sold under the latter's own labels and are the rising stars on the market at a time of economic gloom since they offer customers alternatives at low prices and good quality. Many supermarkets in HCM City told Viet Nam News that they keep around 10 per cent of their space for such products, which include home appliances, beverages, food, and even cloth.

Khuat Quang Hung, head of general affairs and corporate communications for Metro Cash & Carry Viet Nam, said the German wholesaler owns seven brands, including Aro, Fine Food, H Line, and Horeca Select, which account for 10 per cent of its stocks.

Customers are increasingly turning to its brands as they tighten their purse strings, he said, adding Metro plans to double their volume to 20 per cent by 2015. A source from Big C said at the French supermarket around 5 per cent, equivalent to 1,000 products, are its own. Other supermarkets like Co-op Mart and Lotte Mart also sell hundreds of such products.

Hung said: "The price is often 5-20 per cent lower than normal products because there is no need to pay for distribution and advertisement.

"More importantly, the quality is comparable because the supermarket's partners are strong and experienced producers. When they tie up with supermarkets, producers can take their products to many provinces around the nation and even abroad."

Huynh Ngoc Diep, marketing director of 584 Nha Trang Fishery JSC, said supermarkets' own-brand products help producers diversify their customer base as well as make use of their redundant capacities.

Labor supply-demand gap wide in Q1

Although both labor supply and demand increased in the first quarter of this year, there was still a wide gap between them, according to the country’s leading online recruitment provider VietnamWorks.

VietnamWorks’ latest report showed that the recruitment demand in the first quarter grew 11% year-on-year while the labor supply rose at a slower pace of 8% in the period.

There was an imbalance between supply and demand for the two groups of fresh graduates and experienced employees who are not managers. These groups accounted for 66% of the total demand but up to 75% of the supply.

Jonah Levey, chairman of VietnamWorks, said inexperienced job seekers were fighting it out for a limited number of jobs while employers found it difficult to look for senior employees.

The situation did not change compared to last year, indicating that Vietnam’s labor market was growing steadily in number but the quality of candidates has not improved as expected.

Job seekers faced fierce competition for low-level places at companies, and each had to compete with 101 other candidates for a position in the January-March period, according to VietnamWorks.

The competition ratio is three to five times higher than that for entrance examinations of the country’s leading universities. This reflects how tough job seekers have to cope with for low-level positions at enterprises.

To help job seekers find their jobs as wished and employers find skilled employees, VietnamWorks will organize a major career event entitled the Boulevard to Success in HCMC on May 10 and Hanoi on May 24. Around 20,000 experienced job seekers and 150 reputable companies in Vietnam will take part in the events to share necessary skills.

In related news, 91 companies, centers and schools joined a third job bazaar of the HCMC Job Placement on Tuesday to look for more than 2,000 candidates. Applicants had more opportunities to find jobs in garment, sales, business management and office area.

The center plans 17 more job bazaars for this year in different locations in HCMC help people find jobs. More than 1,140 candidates landed jobs at the two previous bazaars.

Quang Binh province attracts US$1 billion in investment

Quang Binh Province attracted nearly US$1 billion in investment at the first Conference Investment Promotion to Quang Binh Province held in Dong Hoi City on April 5.

The local authorities granted investment licenses to 13 projects. The Sungroup invested VND 5,000 billion in tourism project in Phong Nha-Ke Bang and Bao Ninh-Hai Ninh. Vetnam National Textile and Garment Group (Vinatex) invested in three projects worth VND 500 billion. Truong Thinh Group Joint Stock Company invested in Dong Hoi City with total capital of VND 650 billion.

The provincial People’s Committee signed five memorandums of understanding with domestic and foreign investors such as Vinatex, Petrolimex Laos, and Vietnam Rubber Group.

Deputy Prime Minister Nguyen Xuan Phuc highly appreciated the province’s success in attracting investors, creating opportunity for businesses to complete their projects, and cooperating with investors in Laos and Thailand.

600 files register online-business

The HCMC People’s Committee received 600 applications for Internet-based businesses.

They are processing about 30 per day. Businesses registering for new licenses have increased compared to the same period in 2013.

About 5,200 businesses have been issued licenses registering in VND 25,813 billion, an increase of 8 percent of businesses and 47 percent of registered capital compared to the same period last year.

About 8,600 businesses registered to increase capital of VND 25,903 billion.

The total of registered and added capitals are VND 51,717 billion, an increase of 3 percent compared to the same period last year.

Drastic changes in store for railway system

The Ministry of Transport has vowed to take drastic measures to restructure and improve the country's stagnant rail sector.

It is said that Vietnam Railways holds a monopoly over the sector, controlling both infrastructure and the business. Nguyen Xuan Thuy, an expert, said he was surprised when Vietnam Railways reported a VND170 billion (USD8.1 million) profit in 2013. Thuy said the state provided VND2 trillion for infrastructure development maintenance, while the company only contributed VND1 trillion to the state budget. "It's a loss, not a profit," he said.

Another expert said that Vietnam Railways is highly vulnerable to corruption, as they use the maintenance fund to award contracts to one of their subsidiaries without bidding and regardless of the cost. In addition, Vietnam Railways even allows unlicensed companies to rent their train cars.

At a conference last year, the deputy minister of transport, Nguyen Ngoc Dong, said that Vietnam Railways is a corporation, not a ministry, and that this reveals various management problems in the government. Dong said they are carrying out various measures to restructure and equitise Vietnam Railways.

The Prime Minister also demanded that authority to manage railway infrastructure and business be spread out to different entities, encouraging private firms and individuals to invest in the sector.

Even though the Ministry of Transport asked Vietnam Railways to upgrade its stations last year, the operator sent a request to build new roof and service buildings for the stations on January. The Minister of Transport Dinh La Thang then reprimanded Vietnam Railways for being slow, and assigned them a number of specific tasks such as improving the price of tickets, services on board and dirty stations.

Previously, Thang reprimanded many leaders of Vietnam Railways for playing golf most of the time instead of working. "Playing golf is everyone's right. But it's another matter if their work is not done," he said.

Thang agreed to not let Vietnam Railways manage both the railway infrastructure and business.

New Circular of Housing Law takes effect

The Ministry of Construction’s Circular 3 Housing Law will take effect starting April 8, replacing the controversial Circular 16.

Apartment prices will slightly change because instead of calculating area from the center of the wall, only usable area will be calculated. Although the apartment areas will be calculated smaller, the prices increase but the payment is unchanged, said Doan Chi Thanh, director general of Hoang Anh Sai Gon Real Estate Company.

The regulation may cause confusion for sold apartments because the area in the contract will be larger than in the ownership certificates, said Pham Ngoc Lien, director of the Land Use Right Registration Office under the HCMC Department of Natural Resources and Environment. He proposes solutions to deal with the issue.

The ministry also provides a new form in housing contracts. Sellers and buyers must comply with authorized agencies to grant ownership certification.

Some investors have appropriated the 2 percent maintenance fee instead of handing over to management boards. Buyers will now pay the fee to sellers or investors before receiving ownership documents.

The investors will deposit this money in their bank accounts with non-term interest rate within one week after collecting the fee.

They will be required to transfer this money with the interest rate to the apartment block’s management board 30 days after the board is set up by district people’s committee.

Apartment investors have the right to stop supply of water, electricity and other convenient services if dwellers break the Ministry of Construction’s bylaws on apartment use and the apartment block’s internal rules.

In the case of buyers transferring their contract to third parties before receiving apartments, investors will have to do so without collecting any fee from the assignors.

Major airlines to expand operations in foreign markets

Several major airlines in Vietnam have showed their ambitions to expand their operations in many new international routes in the time to come.

Vietnam Airlines currently holds 40% of the market share in international routes. The national- flagship carrier plans to open several international flight routes this year, including several routes to Japan such as Hanoi - Haneda, Danang - Tokyo, and Danang - Narita as well as one route from Vinh to Laos’ Vientiane.

The airline plans to increase the frequency of several international routes in order to meet increasing market demand such as Hanoi - Fukuoka (Japan), Hanoi - Beijing (China), HCM City - Narita (Japan) and HCM City - Beijing.

According to Vietnam Airlines, there is currently a fierce competition in the international aviation routes to Vietnam due to the recent mushroom of many aviation firms from the Middle East. These rivals have advantages over local airlines as they own a wide flight route network in many major cities in Europe. They often gather passengers in the Middle East to Vietnam with a frequency of seven flights per week. Meanwhile, Vietnam Airlines currently has only four flight routes to Western Europe including to Paris, London, Moscow and Germany’s Frankfurt.

Jetstar Pacific Airlines (JPA) also plans to expand their operations in foreign routes.

“We’ll launch two new flight routes to Macau at the same time including Hanoi - Macau and Danang - Macau with a frequency of one flight per day. In April, we also open more new international flight routes from Hanoi to China’s Hong Kong, Thailand’s Bangkok, HCM City to Singapore and HCM City to Hong Kong,” JPA’s General Director Le Hong Ha said.

According to Ha, these are the busiest flight routes in the Southeast Asian region but they are facing fierce competition with several strong international rivals like Singapore Airlines, Thai Airways, Cathay Pacific, and Air Asia.

In order to prepare for the plans, JPA has been speeding up its restructuring process over the past year. It has changed the old Boeing 777- 400 airplanes to more popular Airbus 320 in order to save expense and to increase its competitiveness.

Meanwhile, VietJet Air (VJA) will launch many new international flight routes with duration time of less than three hours to Singapore, Taiwan, Hong Kong, China’s Kunming, Myanmar, South Korea’s Seoul, and Japan’s Fukuoka and Osaka.

Flight routes to South Korea and Japan are expected to be opened in the second half of this year.

Initially, VJA is considering increasing the frequency of the Hanoi - HCM City flight route to 14 flights per week. Its capacity is expected to significantly increase when its joint venture with Thailand’s Kan Air starts operation with five local flight routes and two to three international flight routes in the South East Asian region.

Recently, VJA has signed a major contract to buy and hire a total of 100 new A320  airplanes from Airbus. The delivery will be conducted from now onto 2024.

The Civil Aviation Administration of Vietnam said that all airports in the country welcomed over 40 million passengers including 29.5 million passengers carried by local airlines in 2013.

To date, 45 foreign airlines have opened flight routes to Vietnam with a combined 71 flight routes frequently to 22 countries and territories in the world annually.

VCCI and Microsoft sign cooperation deal

Today, the Vietnam Chamber of Commerce and Industry (VCCI) and Microsoft officially signed a Memorandum of Understanding to cooperate in building awareness for small- and medium-size enterprises (SMEs) of adoption and implementation of IT, especially in term of equipment and cloud computing technology to optimise potentials of these enterprises.

The both sides will jointly implement practical supporting programmes to help SMEs and businesswomen to maximise their potentials and to be able to turn their ideas into reality, as well as support SMEs create added value in agriculture supply chain through IT applications. Additionally, Microsoft will cooperate closely with VCCI to study and propose a roadmap to enhance IT applications and cloud computing technology to improve productivity of VCCI.

Speaking at the MoU signing ceremony, Pham Thi Thu Hang, general secretary of VCCI said: ‘The MoU signing ceremony with Microsoft today marks a new stage of development for VCCI in delivering supports in more effective and practical ways to SMEs in Vietnam. We expect, through this cooperation, there will be more successful SMEs, contributing to the socio-economic development of the country.”

According to VCCI, the majority of the total registered enterprises operating under the Enterprise Law, SMEs sector plays a crucial role in the Vietnam’s economy. It cannot be denied that SMEs sector is the life-blood of the economy and has been carried an essential role for the development of the national economy. Therefore, in recent years, VCCI has implemented many meaningful activities in promoting the sustainable development of this sector.

IT application in activities of SMEs in Vietnam has not yet been effective because many enterprises still using simple management applications. A reason that affects accessibility of SMEs in Vietnam to IT comes from IT service and solution providers. These companies targeting large enterprises – potential customers – those have ability to pay for complex IT services, while lack of appropriate solutions that suit financial conditions of SMEs.

Understanding these limitations, in the framework of the MoU today, Microsoft emphasised the cooperation with VCCI to offer and propose the most appropriate cloud computing solutions to support SMEs in maximising their operation with reasonable cost.

“Microsoft Vietnam is very proud to be a companion with VCCI in promoting IT applications in SMEs community in Vietnam through technology solutions and optimal services, especially in the field of cloud computing. With the portfolio of over 200 cloud computing services, including Bing, MSN, Outlook.com, Office 365, SkyDrive, Skype, Xbox Live and Window Azure platform, to date, over one billion individuals and 20 million businesses in 88 markets worldwide are using cloud computing services from Microsoft and achieve superior benefits,” said Vu Minh Tri, general director of Microsoft Vietnam stressed. “Therefore, we have a reason to believe that cloud computing solutions from Microsoft will certainly bring great benefits to the SMEs community in Vietnam and support them to quickly seize opportunities to succeed in the future”

Through the cooperation with VCCI, mission to optimise growth potentials of SMEs again show a stronger commitment of Microsoft in supporting the government of Vietnam to realise the goal to become a strong country in IT by 2020.

Agency cracks down on tobacco smugglers

The Market Management Agency under the Ministry of Industry and Trade has launched a probe into cigarette producers as part of attempts to curb smuggling.

The spot checks will go from April 1 to June 6 and cover the whole country with emphasis on major cities such as Hanoi, Lang Son, Quang Ninh, Quang Tri, Can Tho and Ho Chi Minh City, as well as border areas.

Nguyen Trong Tin, deputy head of the Market Management Agency said that the agency along with appropriate authorities check tobacco business in trade centres, supermarkets, restaurants, tobacco stores and bars. "The agency will strictly deal with violators. If the units are fined on several occasions, we will withdraw their business certificate for one to two years," added Tin.

Tin shared that the agency was also working with military forces and customs to check potentially smuggled cigarettes in border areas such as the northern border in Quang Ninh, southwest provinces along the Cambodian border and the central provinces bordering Laos that had seen strong smuggling operations.

Mobile checkpoints will patrol routes often used by smugglers. In addition, public awareness will be raised about the issue.

However, according to Tin, the checks still faced obstacles because of the sophisticated nature of smuggling operations and slow issuance of warrants.

According to figures from the Ministry of Industry and Trade, more than 6.8 million packs of smuggled tobacco have been intercepted with the Market Management Agency confiscating 1.5 million packages in 2013 and the first three months of this year.

Vietnam-EU FTA to benefit enterprises in Vietnam

An upcoming free trade agreement with the European Union will benefit many enterprises in Vietnam.

David O’Sullivan, EU diplomatic representative, said the Vietnam-EU Free Trade Agreement (FTA) was prompting many multinational companies to invest in Vietnam. Speaking at last week’s 9th Vietnam-EU joint meeting, he claimed that sectors like textiles, footwear, agriculture, high-technology and the motor industry would benefit from the FTA via tariff reductions which are due to be implemented by late 2014.

According to a March-released Mutrap report on a sustainable impact assessment of the FTA, by 2020, tariffs on footwear will be reduced to 0 per cent from the existing 12.4 per cent.

Locally-owned Hung Yen Garment Joint Stock Company is optimistic about the effects of the FTA. Last year the company’s export turnover from the EU was $21 million. “If the average export tariff is slashed to 0 per cent thanks to the FTA, this figure will be far higher,” said the company’s general director Nguyen Xuan Duong.

The local textile and garment industry last year earned an export turnover of $2.7 billion from the EU. If the FTA is agreed upon, this figure may rise to over $3 billion.

Also according to the report, a zero tariff rate will be applied for at least 90 per cent of wooden products exported to the EU.

With the local wood sector’s export turnover of $756 million last year from the EU, the tariff reductions from the existing average of 20-25 per cent would also greatly benefit the industry in the coming years, according to the Vietnam Timber and Forest Product Association.

The report emphasised that regarding the electronics sector, reducing tariffs will have an impact on volumes and prices of electric products imported from Europe. The FTA will create a huge business advantage for European exporters compared to their Asian competitors.

Regarding the motor sector, Vietnam can benefit from the increase in foreign direct investment from European manufacturers. The high-quality products in Europe can have a significant market share in Vietnam and the potential markets in neighbouring countries like Laos and Cambodia.

Claudio Dordi, the EU-Mutrap team leader for a European trade policy and investment support project, stated that negotiated reductions in tariff barriers alone would increase Vietnam’s exports to the EU by 30-40 per cent.

The FTA would enable Vietnam to have annual gains of about $1.5 billion in 2020 when most of the tariff reductions will have been implemented. The estimated increase in gross domestic product is about 2-2.5 per cent and real wages are estimated to improve by around 5 per cent.

Likewise, imports from the EU will increase by 25-35 per cent, reflecting the greater reduction in tariffs.

Currently, the EU is Vietnam’s major trading partner, with exports of over $24 billion. About one quarter of Vietnam’s exports go to the EU, while 13 per cent of imports originate from the EU.

Vietnam’s merchandise exports to the EU currently face an average tariff of 4.6 per cent, but this hides a number of tariff peaks. The highest tariff is on garlic, 300 per cent, but there are also very high tariffs on beef and dairy products.

EU exporters to Vietnam also face significant barriers on specific items, most notably on alcohol and tobacco products, where the tariff is set at 100 per cent. Motor vehicles, especially motorcycles, are also highly levied as are livestock products and textiles.

The FTA’s seventh round of negotiations concluded last week. “Vietnam suggested that the EU consider the differences in development levels and offer more flexible terms, especially in rice, farm produce, aquatic products, textiles and garments, and footwear. Other issues include public procurement, or points of origin for products. We want to see a win-win between Vietnam and the EU,” said Tran Ngoc Quan, head of the Ministry of Industry and Trade’s Market Department.

Successful leased offices still rely on basic values

Office for lease landlords in Hanoi should find the right balance between their buildings and the tenants that they are trying to target, instead of just finding ways to increase occupancy and rental.

According to Nigel Smith, managing director of CBRE Hong Kong at the office leasing seminar in Vietnam last week, the relationship between owners, the buildings and the tenants was a business strategy that needed to be clearly understood.

“You only get effective business from an office building when you can balance these elements,” Smith told VIR.

Smith’s comments were made in the context where landlords in Hanoi are suffering from tougher competition due to huge oversupply.

“Of most importance is cost effectiveness. That means if the landlord wants to successfully maintain their buildings, it is about finding the right rental level but at the same time they also have to create the right environment. Creating this environment sometimes will increase the rental fees, so finding the balance between rental and occupancy is something building owners should be aware of,” he said, adding that landlords should think about branding and how to make the property stand out from the crowd.

According to Smith, during the golden period for office leasing in the 1980s and 1990s, investors often emphasised strategic location to raise the value of their buildings. However, in the recent context, they have switched to stressing stability and the working environment.

“One way to do this is in the arrival experience, which has become vital for companies when considering real estate options. The way people socialise and work is completely different today and landlords who design their buildings to accommodate this new breed of employee will ultimately attract more tenants,” Smith said.

“Containing and reducing costs is still common practice and for many companies they can only achieve this through either a reduction in floor area, a drop in quality or decentralisation,” he added, noting that savvy developers can help tenants achieve savings simply by providing a more efficient working environment, not just on the office floors but also in the common areas and facilities a project has to offer.

Developments such as the Lotte Hanoi Centre and Vietcombank Tower and Viettel Centre in Ho Chi Minh City have put Vietnam in the property spotlight this year.

Vacant office space in Hanoi reportedly accounts for more than 30 per cent of the total 1.6 million square metres available. Meanwhile, the total office space by 2016 would double Hanoi’s current office supply.

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

Robins, Rice exports, Maritime Bank, footwear, Housing Law
 
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