BUSINESS IN BRIEF 28/6

Vietnam-Japan dialogue on agricultural cooperation

Vietnam has great potential for developing agriculture, said Japan’s Minister of Agriculture, Forestry and Fisheries Hayashi Yoshimasa at the first Vietnam-Japan high-level dialogue on agricultural cooperation in Hanoi on June 26.

The event aims to reach a consensus on the Vietnam-Japan cooperative programme on developing Vietnam’s agricultural sector in a comprehensive manner in the long and medium term as well as devising concrete actions for the 2015-2019 period.

Addressing the conference, Minister of Agriculture and Rural Development (MARD) Cao Duc Phat extended thanks for the Japanese Government’s active support in developing Vietnam’s agricultural sector in recent times through technical support projects and research programmes.

Minister Phat emphasized that agricultural cooperation with Japan is of great significance for Vietnam which has nearly 70% of population earning their livelihoods from agricultural production.In the future, the two sides agreed to cooperate in science and technology, the application of new technologies in agricultural production, biology, processing and post-harvest preservation, especially in improving the value chain on food production.

Dong Thap partners with Netherlands in hi-tech agriculture

The Mekong Delta province of Dong Thap has benefited from its cooperation with Netherlands partnership to develop hi-tech agriculture.

A delegation from the province recently made a fact-finding tour to the Netherlands to study the country’s agriculture techniques, especially in flower growing.

During the trip, Dong Thap officials signed an agreement with the Demokwekerji Westland company and the Vietnam Business Centre in the Netherland, under which the two Dutch partners will conduct a feasibility study for the establishment of a hi-tech agriculture centre in the province. This project has already been approved by the Dutch Ministry of Economy.

The visit was also a good chance for Dong Thap experts to seek partners and concrete ways to apply the latest farming techniques suitable with the local climate and soil.

Notably, during the recent Vietnam visit by Dutch Prime Minister Mark Rutte, the Vietnam Business Centre in the Netherland reached a deal with Sa Dec city of Dong Thap on cooperation in flower growing, trade and tourism.

Also on the occasion, the Dong Thap People’s Committee and business players from the Netherlands set up a working group comprising Vietnamese and Dutch experts for the development of new plant varieties and training of agriculturalists for the province.

The Netherlands pledged to assist the southern province with the import of new flower varieties and restoration of specialty species of Sa Dec, which is the largest supplier of flowers in the southwestern region.

Vietnam, Laos promote “one-stop-shop” model at border gates

Vietnam and Laos have agreed to intensify inspection work following the “one-stop-shop” model at the Lao Bao-Dansavanh international border gates.

Lieut. Gen. Vo Trong Viet, Commander of the Vietnamese Border Guards and Major General Bounthieng Chanthamounkhoun from the Lao Ministry of Public Security signed a Memorandum of Understanding in Vientiane on June 26.

Accordingly, agencies of the two sides will be enabled to supervise import-export and entry-exit activities to help realise the cross-border transport facilitation agreement between Greater Mekong Sub-region (GMS) countries.

Both Vietnamese and Lao officials have closely worked together over the past time in border gate management, which contributes to the strengthening of the special friendship between the two countries.

The “one-stop-shop” customs mechanism aims to simplify administrative procedures and facilitate the flow of vehicles and goods.

Businesses hope to greatly benefit from incentives

Domestic and foreign businesses have all wished for incentives from the Vietnamese Government and local authorities for better operations, according to a recent survey released at a seminar in Hanoi on June 26.

Nearly 1,500 responded firms have expressed hopes to receive tax incentive, financial support, and opportunities to access loans, according to Patrick Gilabert, a representative from the United Nations Industrial Development Organisation (UNIDO).

The findings revealed that with incentives foreign businesses have operated more productively, tended to use a large number of workers, achieved higher productivity and had greater investment than local peers.

In the survey, foreign businesses gave high estimations to Vietnam’s political stability and better business environment, saying these were important factors for them to carry out investment projects there.

Deputy head of the Foreign Investment Agency under the Ministry of Planning and Investment, Dang Xuan Quang, called for relevant agencies to work together to introduce incentives suitable for international practices as well as reality in Vietnam to attract more foreign investors.

Wood exports forecast to reach a record US$6.2 bil

Wood processing exports are likely to reach from US$6-6.2 billion this year, according to the Ministry of Agriculture and Rural Development (MARD).

MARD reports that wood exports reached US$2.87 billion in the first half of the year, up 15.3% over the same period last year. While some key commodities such as rice, rubber and cassava encountered difficulties, most wood processing products continued to realize double-digit increases.

The US, China and Japan are Vietnam’s three biggest importers of wood products, comprising 66.74% of total export value.

Nguyen Quoc Khanh, President of the Handicraft & Wood Industry Association of Ho Chi Minh City (HAWA), said that in recent times, many international wood importers have placed orders in Vietnam instead of China due to more competitive prices.

MARD also reported that, Vietnam imported nearly US$1.23 billion worth of wood in the first half of the year, up 82.3% over the same period last year.

Vietnam seeks stronger food processing partnership with RoK

As many as 100 Korean businesses operating in the food processing came to an investment seminar held in Seoul on June 26 by the Vietnamese ministries of industry and trade, and planning and investment, the ASEAN-Korea Centre and the Korea Chamber of Commerce and Industry.

Vietnamese ministry experts provided participants with detailed contents of the country’s preferential policies on investment and potential projects in the field.

Meanwhile, Deputy Minister of Industry and Trade Do Thang Hai reiterated the Vietnamese Government’s commitments of creating all possible conditions for foreign investors, including those from the Republic of Korea (RoK) in the country.

The seminar is part of the activities of a Vietnamese delegation’s trade promotion tour to the RoK from June 25-28.

After the event, the Vietnamese guests will continue promotion activities in other localities across the RoK.

Bilateral trade between Vietnam and the RoK rocketed to 27.3 billion USD in 2013 from half a billion USD in 1992.

Last year, the RoK was the third largest trade partner of Vietnam, while Vietnam was the sixth biggest importer of Korean goods.

The RoK now is the second largest foreign investor in Vietnam with 3,827 projects totalling 31.2 billion USD.

Seafood exports reach US$3.45 billion in first half

Seafood exports hit US$536 million in June, bringing the total export value to US$3.45 billion for the first half of the year, up 24.2% over the same period last year, according to the Ministry of Agriculture and Rural Development (MARD).

The US remains Vietnam’s leading seafood importer, making up 23% of the country’s total export value.

Most notably, Vietnam’s aquatic exports to the US hit a record US$671.86 million in the first five months of the year, up 45.83% over last year’s same period.

Vietnamese seafood exports to Japan, the Republic of Korea (RoK) and China sharply increased by 8.36%, 45.92% and 51.74% respectively.

According to the Vietnam Association of Seafood Exporters and Producers (VASEP), the EU is one of the largest consumption markets for Vietnamese seafood, accounting for nearly 18% of the nations total export value. Shrimp products have posted the highest export value.

Last year, Vietnam’s aquatic exports to the EU stood at US$1.18 billion, earning US$409 million for shrimp and US$385.4 million for Tra fish.

GDP per capita to reach 5,500 USD in northern key economic area

The Ministry of Planning and Investment on June 25 announced an overall socio-economic development plan by 2020 of the northern key economic region, in which GDP per capital is targeted at 5,500, the Saigon Giai phong daily reported.

The plan was approved by the Prime Minister in January this year with visions until 2030.

The area consists of two sub-regions, namely an urban zone including Hanoi and the provinces of Vinh Phuc, Bac Ninh, Hung Yen and Hai Duong, and a coastal zone encompassing Hai Phong city and Quang Ninh province.

Hanoi will be developed into a financial and banking center at international level.

Under the plan, by 2020, agro-aqua-forestry sector will account for 5.5 percent of GDP while industry and construction will occupy 49 percent. It is determined to hit 45.4 percent for services.

The area’s export value will account for 32 percent of the country’s total.

With regard to culture and social affairs, it is expected to have 80-85 percent of workers trained, annually cut down the rate of poor households by 2 percent and reach 80 percent of communes meeting national standards regarding health services.

In terms of services and tourism development, the economic area prioritises spiritual cultural tourism and will accelerate services exports, upgrade infrastructure and create a healthy business environment along with strengthening finance-banking services with the focus on turning Hanoi into a prestigious finance-banking centre meeting international standards.

The region pays heed to developing industries of strength and capable of integrating into the global value supply such as information technology, telecommunications, machine manufacturing, shipbuilding, garment and textiles, among others.

Industries with high technology and low emissions, and the industrialisation of agriculture are also now a top priority.-

CMC Corporation forms wholly owned subsidiary CIRD

CMC Corporation has announced that it has formed a wholly owned subsidiary called CMC Institute of Research and Development (CIRD) infused with an initial charter capital of VND5 billion.

The new company was formed as a research and development arm of the company specializing in developing high technology products and services with high commercial value.

CMC Corp CEO Nguyen Trung Chinh said the establishment of CIRD will allow the company to consolidate its present research and development units into a more efficient model that will benefit the overall operations.

"We have established CIRD to orient technological research, implement testing research and apply the latest technologies in the production of the corporation," he noted.

In the near future, CIRD will organize research and development on matters pertaining to SMAC (Social, Mobile, Analytics, Cloud), information security, software and services based on cloud computing, the value-added services related to digital content and Internet TV, catching new trends of world technology such as 5G.

On June 26, CIRD signed a strategic cooperation agreement with the Institute of Information Technology and Communication at the Hanoi University of Science and Technology under which the two sides will cooperate in staff training, organizing innovative product competitions and developing system products and hardware.

FDI disbursement in first half slightly increases

The country's foreign direct investment (FDI) disbursement saw a modest increase of 0.9 percent in the first half of 2014 and was estimated to touch 5.75 billion USD.

However, registered capital in the period declined 35 percent to 6.85 billion USD in the reviewed period.

According to the latest report of the Foreign Investment Agency, of the total investments, 4.85 billion USD came from 656 newly-licenced projects while the remainder was from 219 existing projects, which raised their levels of capital.

The manufacturing and processing sector absorbed the largest share of FDI, touching 4.8 billion USD or 70.2 percent of the nation's total registered capital. Construction and real estate trading industries ranked second and third, respectively.

Among the 41 countries and territories investing in Vietnam, the Republic of Korea was the leading source of FDI with 1.55 billion USD, accounting for 22.6 percent the total FDI registered in the country. It was followed by Hong Kong (China) with 1 billion USD and Japan, 806 million USD.

According to the report, Ho Chi Minh City was the most attractive destination for foreign investors with 886.3 million USD or 13 percent of the nation's total FDI, followed by the southern provinces of Binh Duong and Dong Nai, with 876.1 million USD and 688.37 million USD, respectively.

Other ideal localities preferred by foreign investors included the northern provinces of Quang Ninh and Hai Duong and southern Tay Ninh province, where they registered to invest 573.5 million USD, 382.1 million USD and 349.9 million USD, respectively.

During the January to June period, the foreign-investment sector generated 47.82 billion USD from exports, a yearly rise of 17 percent or equivalent to 67.5 percent of the country's total export turnover, while its imports reached 39.29 billion USD, up 11.4 percent.

Japanese food producers eye Vietnamese market

Many Japanese businesses keep a close eye on Vietnamese food industry, but hesitate to invest in the market due to weaknesses of the country’s transport infrastructure and logistics system, a Japanese representative has said.

Hirotaka Yasuzumi, Managing Director of the Japan External Trade Organisation (JETRO) Office in Ho Chi Minh City, spoke about this concern at a dialogue between representatives of some Vietnamese ministries and agencies and the Japanese business community, held in the city on June 25.

He urged Vietnam to swiftly upgrade its road system and improve the operation of logistics services, in order to shorten delivery time as well as ensure the quality of goods, especially fresh food.

This will also help increase the attractiveness of Vietnam to Japanese businesses, particularly small and medium-sized food producers, he said.

Vietnam and Japan have agreed to further expand their agro-forestry and fisheries processing industry under Vietnam’s industrialisation strategy within their cooperation framework for through 2020, with a vision towards 2030.

Doan Xuan Hoa, Deputy Director of the Agriculture and Rural Development Ministry’s Department of Agro-Forestry Products Processing and Salt Industry, said Vietnam hopes to attract Japanese investment in the food industry from farming to distribution, with focus on products of great potential such as rubber, coffee, tea, shrimp and vegetables and fruit.

FDI businesses want to enjoy incentives in Vietnam

The impact of tax incentive and other preferential policies on attracting foreign-invested enterprises (FDI) and their advanced technologies was the topic under discussion at a seminar held in Hanoi on June 2.

Patrick Gilabert, UNIDO Chief Representative said that the results of a survey conducted of industry in Vietnam, reflect that 1,500 local and FDI businesses reported preferential incentives were a key factor in their decision to invest.

FDI busineses listed preferential tax and other incentives, political stability and favourable business climate as the four primary factors affecting their decision to invest in the country.

Deputy Director of the Foreign Investment Agency, Dang Xuan Quang, said that to lure more foreign investment capital, relevant governmental agencies need to strengthen communication with the business community to insure that proper incentives in accordance with the international norms and the real situation in Vietnam are negotiated.

In addition, it is necessary to insure that high importance is attached to negotiating incentives in a timely manner to attract state-of-the-art large-scale foreign-invested projects, Quang said, adding that time is money and FDI businesses are dissuaded from investing when the time delay in negotiating offsets the benefits.

The event was co-organised by from the United Nations Industrial Development Organisation (UNIDO) and the Foreign Investment Agency (FIA) under the Ministry of Planning and Investment.

Argo-forestry-fisheries exports earn 14.6 billion USD in six months

Vietnam’s agro-forestry and fisheries exports in June reached 2.2 billion USD, pushing the six-month results to 14.67 billion USD, a rise of 11.2 percent over the same period last year, according to the Ministry of Agriculture and Rural Development.

Strongest growth was seen in pepper export, with 111,000 tonnes shipped abroad for 790 million VND, up 36.2 percent in volume and 47.8 percent in value.

Vietnamese pepper was mainly exported to the US , Singapore , the UAE, India and Spain . Notably, the amount of pepper consumed by Spain was five times higher than that in the same time in 2013.

The wood processing sector also enjoyed a 17.5 percent rise with 130,000 tonnes, earning 829 million USD, up 19.5 percent.

Meanwhile, aquatic exports brought home 3.45 billion USD, up 24 percent year on year. While the US remained the largest markets for Vietnam’s aquatic products, major markets such as Japan, the Republic of Korea and China also recorded strong growth.

A total of 130,000 tonnes of cashew nuts were exported in the reviewed period for 829 million USD, representing increases of 17.5 percent and 19.5 percent in volume and value, respectively.

With a 32 percent increase in volume to 1.04 million tonnes, coffee export earned 2.12 billion USD compared to 1.71 billion USD of the same period last year, despite a 6 percent drop in price.

However, falls in both volume and value were seen in the export of rice, rubber, tea and cassava products.

Rice export experienced decreases of 9.9 percent in volume and 8 percent in value with 3.2 million tonnes and 1.44 billion USD. It is notable that the Philippines emerged as the second largest importer of Vietnam’s rice after China.

At the same time, the rubber sector also suffered from a 29 percent fall in volume and a 33 percent decrease in value with only 337,000 tonnes shipped for 644 million USD.

In the first half of this year, Vietnam exported 57,000 tonnes of tea for only 92 million USD, down 6.6 percent and 1.6 percent, respectively, while the figures for cassava export were 1.8 million tonnes and 569 million USD, dropping 13 percent in both volume and value.

Microchip Technology to build HCM City factory

The U.S-based Microchip Technology Inc. is looking for a land lot to build a chip manufacturing plant in Ho Chi Minh City.

A Microchip representative revealed the plan at a working session with leaders of the municipal People’s Committee in HCM City on June 25.

The firm is seeking a location in the city that has complete infrastructure and trained workers for the project, said Ganesh Moorthy, Chief Operating Officer at Microchip Technology.

He also proposed that HCM City offer more incentives to the firm to realise its project.

Moorthy said the plant is part of an investment strategy the firm committed to HCM City in 2013, when it began to build the Research and Development Center (R&D) at the Saigon Hi-Tech Park (SHTP).

Microchip Technology Inc. is a leading provider of microcontroller and analog semiconductors, providing low-risk product development, lower total system cost and faster time to market for thousands of diverse customer applications worldwide.

Japans call on Vietnam to improve logistics services

Representatives of Japanese enterprises have suggested that Vietnam beef up its efforts to improve transport and logistics services to bolster the development of agriculture.

Hirotaka Yasuzumi, Director of the Japan External Trade Organisation (JETRO) in Ho Chi Minh City, offered the suggestion at a June 25 forum discussing measures to improve agriculture and the foodstuff industry.

Hirotaka said that to ensure the freshness and quality of agricultural produce, Vietnam should reduce the time it takes for the produce to get from the harvest point to the consumer.

This also contributes significantly to reducing post-harvest food losses in farm products such as fruits and vegetables he, said.

Ironing out these types of issues will also result in increased Japanese foreign investment in the country.

Members of the Japanese business community, especially small-and medium-sized enterprises, who are seeking cooperative projects with Vietnamese partners in the food industry look favorably on the ability to quickly transport products as a means of minimising costs, Hirotaka said.

Vietnamese officials attending the forum said that an action plan to fast-track development of the transport infrastructure is in the pipeline for the agro-forestry and seafood processing industry within the framework of Vietnam-Japan cooperation towards 2020 and with a vision to 2030.

Deputy Head of the Agro-forestry Processing and Salt Industry Department Doan Xuan Hoa said the Ministry of Agriculture and Rural Development (MARD) is also spearheading restructuring transport restructure as part of efforts to raise the added value and promote sustainable development in agriculture.

Rubber, rice exports drop in six months

In contrast to the majority of key agro-forestry and seafood products, which experienced significant export growth in the first half of the year, rubber and rice exports fell sharply.

The Ministry of Agriculture and Rural Development (MARD) reported that exports of agro-forestry and seafood products were US$2.227 billion in June, bringing the six month total to US$14.67 billion, an increase of 11.2% over last year.

Of which, export earnings from agricultural products jumped by 6.6% to US$7.15 billion, forestry products by 14.9% to US$3.01 billion and seafood by 24.4% to US$3.45 billion.

Products with high growth in both volume and value included coffee, pepper, cashew nuts, seafood, wood and timber products, while other key products like rice, rubber, tea, cassava and cassava products witnessed significant decline.

As one striking example, pepper exports spiked up 36.2% in volume and 47.8% in value during the first six months of the year.

In June, 16,000 tonnes of pepper were shipped abroad, earning US$127 million, bringing the total exports for the six months to 110,000 tonnes worth US$790 million.

Meanwhile, the country exported 109,000 tonnes of coffee in June, fetching US$229 million, raising sixtotal -month exports to 1.04 million tonnes worth US$2.12 billion (up 31.7% in volume and 24.7% in value).

Seafood brightened up exports with a value of US$3.45 billion in six months, including US$536 million in June (up 24.2%).

Products witnessing a sharp decline were rubber (down 33% in value and 11.7% in volume), cassava (down 12.8% in value and 13% in volume) and rice (8% in value and 9.9% in volume).

Only 3.2 million tonnes of rice were sent abroad in the first half of this year, yielding approximately US$1.44 billion.

Brighter pathway for Vietnam-Germany cooperation

Vietnam-Germany friendship and economic ties have been flourishing over recent years, since the two countries agreed to elevate their relationship to that of an equal strategic partnership.

Minister of Industry and Trade Vu Huy Hoang made the comment on June 25 in a keynote address delivered at the opening of a Vietnam-Germany Business Forum in Berlin that attracted more than 200 business representatives from the two countries.

Two-way trade turnover has risen astonishingly over 7.5 fold from 2000 to set an all time record high of nearly US$8 billion in 2013, Hoang said, adding that in just the first four months of this year, it surpassed US$2 billion.

The minister stressed that Germany is the largest European Union trade partner of Vietnam, accounting for 20% of the Southeast Asian nation’s total exports to the EU and is an extremely important gateway for Vietnamese products to penetrate other markets in Europe and around the globe.

As of May 2014, German companies had nearly 230 foreign-invested projects in Vietnam with total capitalization in excess of US$1 billion. Additionally, the country is one of leading official development assistance (ODA) providers for Vietnam.

Hoang emphasised the two countries are well on the pathway to comprehensive, well coordinated and sustainable cooperative relations, and when the EU-Vietnam free trade agreement (EVFTA) comes to fruition later this year, the opportunities for trade and economic cooperation will rise exponentially.

The minister singled out cooperation in education and training as well as science and technology as prime areas that Vietnam and Germany can mutually benefit from.

Speakers and businesses at the forum dilated at length on the opportunities for investment in Vietnam, along with the obstacles and barriers facing foreign investment and measures needed to overcome them.

They were in general agreement that the EVFTA trade pact will have a dramatically beneficial impact on trade relations,

Although the overall impact of the trade pact is positive, it will also raise the bar for Vietnamese products exported to European countries as new strict and demanding regulations will also come into play, they agreed.

At the forum, the MoIT and the Vietnamese business community expressed their keen interest in forming cooperative ventures aimed at diversifying the country’s industrial base in the support industry, which is another area of German strength.

Earlier, Minister Hoang held a working session with Vice Chancellor and Minister for Economics and Energy Sigmar Gabriel to discuss measures needed to bolster cooperation in economics, trade and investment.

They also talked about measures to accelerate negotiations on the EVFTA and to prepare for the upcoming Asia-Pacific Conference of German Business (APK) to be held in Ho Chi Minh City in November 2014.

Treasury bills, bonds sell more

Transactions of Treasury bills and Government bonds have risen because of the good liquidity of banks for the second consecutive week. Despite this, positive credit growth in the banking system is out of sight.

As treasury bills are organised as short-term instruments of less than a year, they are different from long-term Government instruments in the market, including Government bonds, Government-guaranteed bonds and municipal bonds.

Treasury bills are open-market instruments issued as book entries and are only available to commercial banks. They are kept in State Bank custodial accounts and help the central bank control liquidity.

Latest statistics quoted by Lao Dong (Labour) newspaper show that about VND30.13 trillion (US$1.4 billion) worth of treasury bills for tenures of 28, 56 and 91 days were issued last week.

Yields were raised from 2.6 to 3 per cent for a 28-day term; from 3.2 to 3.3 per cent for a 56-day term; and from 4 to 4.2 per cent for 91 days.

The pumping and withdrawal of money in the last two weeks indicate that the central bank has taken active control over liquidity, and that commercial banks have abundant sources of capital.

In another development in long-term instruments, about VND4.9 trillion ($223 million) worth of Government bonds was sold last week on the primary market - 98 per cent of the total on offer. Bond yields fell 10-15 percentage points lower to reach 5.65-7.15 per cent a year.

The market moves show that idle money from people and banks is flowing into state coffers instead of being pumped into the economy to serve production and business. An executive officer of Vietcombank said commercial banks had already poured a large sum of money into bills and bonds. He added that credit growth was a key factor in making the decision.

In fact, banks are struggling to increase lending.This is indicated through credit growth of only 1.31 per cent from January to May 23 compared to the target of 12-14 per cent growth by year-end.

Generally, banks seem likely to continue injecting money into bonds if they cannot find borrowers.

In the secondary market, transaction volume last week increased by 42 per cent against the previous week. Yields range from 4.3 to 6.1 per cent annually.

According to a State Treasury report, about VND96.704 trillion ($44.4 billion) headed for state coffers by the end of May, equal to the total bond value mobilised for all of 2013.

The Asian Development Bank's (ADB) Asian bond report released on June 4 showed that Viet Nam was the fastest-growing bond market in South East Asia in the first quarter of 2014.

The issuance of Government bonds in large quantities has put Viet Nam on the list of the fastest-growing newly emerging markets in East Asia.

It now has a growth rate of 23 per cent compared to the previous quarter and 17.8 per cent compared to last year.

This has produced a record-high of $35 billion, according to the report.

Business optimism on the rise this year

Businesses are more optimistic about the growth prospects now than two years ago.

This was revealed by a survey on business trends in 2014, conducted by the General Statistics Office of 8,100 firms from January 1, 2014 to April 30, 2014.

According to the survey, though many difficulties remain, most of the surveyed firms are more optimistic about the recovery and development prospects this year.

As many as 71.6 per cent of the firms, including State-owned firms, private firms and foreign direct investment (FDI) firms, expected their turnover to increase by roughly 70 per cent this year as compared to last year.

Another 14.7 per cent forecast that their turnover would remain unchanged this year, while 13.7 per cent were concerned about declining turnover.

Also, 75.1 per cent believed their pre-tax profits this year will be higher than last year, 5.8 per cent expected it to remain unchanged and 19.1 per cent forecast a decrease of profits this year.

As for exports, 34.1 per cent expected their export value to rise this year. The number of firms which believed that their export turnover this year would remain unchanged from last year was 60.6 per cent. Only 5.3 per cent anticipated their export turnover to be less this year over last year.

However, only 34.8 per cent were optimistic about the domestic market this year, while 16.2 per cent were concerned that the local market would be worse than last year.

According to the survey, 49.5 per cent of the firms were borrowing loans for production and business activities as of March 2014, and 63.3 per cent of them got the loans from State-owned commercial banks.

Firms in the industrial and construction sectors topped the list of the borrowers with a rate of 60 per cent, followed by firms in the service sector with 43 per cent. The agriculture, forestry and fishery sectors accounted for only 33.7 per cent.

Most firms that did not receive bank loans noted that they did not need to take loans frequently. Complicated lending procedures, high interest rates, the ability to borrow from other sources, and being able to meet lenders' requirements were all obstacles preventing firms from gaining access to bank loans.

Quang Ngai to sell E5 RON92 biofuel

The Vietnam National Petroleum Group on Wednesday announced that it will begin selling biofuel E5 RON 92 in the central province of Quang Ngai from September 1 this year.

E5 RON 92, which has unleaded gasoline and 4 per cent to 5 per cent ethanol, will replace the traditional Mogas 92. Therefore, all petrol stations in Quang Ngai will sell gasoline E5 RON 92 and Mogas RON 95.

Petrolimex Quang Ngai will receive the two kinds of gasoline from the Dung Quat Oil Refinery and then send them to its agents throughout the province.

E5 RON 92 is expected to be more widely available nationwide from December 1, 2015.

Quang Nam hard-sells business in Nagasaki

The central Quang Nam Province on Tuesday began a five-day investment promotion programme in Japan's Nagasaki city , aiming at increasing Japanese investment in the province in the coming years.

The provincial investment promotion centre said the programme will introduce Japanese investors to the potential and investment environment in the province at various business forums.

The two sides also discussed the possibility of cooperation in the fields of culture, human resource education, investment and heritage preservation.

The central province has attracted six investment projects from Japan worth US$52 million. Japan has provided $366 million of the Official Development Assistance (ODA) for the province's development projects.

Legislators want public debt at safe level

The National Assembly (NA) in a resolution issued at its closing session on June 24 requested the Government and the Finance Ministry to attend more to financial security by keeping public debt at a safe level and restricting rollover loans.

In the resolution on question-and-answer (Q&A) results at this session, legislators demanded the Government take measures to restructure public debt by turning short-term loans into long-term ones, issue Government bonds with longer tenors, reduce budget overspending and review public debt and government debt to balance between borrowing and payment.

The solutions to deal with public debt should be presented at the next session of the NA by the end of this year.

Before the resolution was passed, many deputies suggested removing the phrase about restrictions on rollover loans as this content is already included in the provision on “turning short-term loans into ones with longer tenors.”

However, the NA Standing Committee threw support behind the Government’s plan for converting short-term loans into long-term ones as this measure could ensure enough time and flexibility for debt repayment. Meanwhile, making rollover loans is a temporary solution to ease pressure on overdue loans, so it will not be encouraged in the long term.

Earlier, Minister of Finance Dinh Tien Dung at a Q&A session said that public debt was still within safety territory. Each year, the Government’s debt payments account for 25% of total budget collections, in which the Government takes out 10% new loans to reschedule old loans.

This suggests that there are problems with due debt while the loans guaranteed by the Government have surged 50% annually over the past four years.

For the Ministry of Justice, the NA urged agencies to review the legal system to detect regulations going against the Constitution.

The NA also told the Ministry of Education and Training to take measures for deploying the Government’s action plan on comprehensive education reform. The ministry will present the measures at the eighth NA session.

The education ministry and the Ministry of Labor, War Invalids and Social Affairs will work together to forecast labor demand to balance supply and demand. The ministry was also told to improve training quality at universities.

Leather-shoe sector needs restructuring

The leather-shoe industry posted high growth last year but experts at a seminar in HCMC on Monday urged a restructuring of the sector to help address its shortcomings and improve its export performance in the longer term.

Diep Thanh Kiet, vice chairman of the Vietnam Leather and Footwear Association (Lefaso), told a seminar on prospects for leather-shoe-bag and apparel sectors that now was the right time to restructure these sectors to enable them to achieve sustainable development.

Kiet suggested the Ministry of Trade and Industry map out master plans for these industries to improve productivity in the sectors and enhance product quality alongside lessening reliance on material imports.

Last year leather-shoe-bag exports brought in US$10.4 billion, accounting for 10% of the country’s gross domestic product (GDP) and surpassing the target of US$9.11 billion set for 2015 in the master development plan until 2020.

The leather-shoe sector is estimated to grow 14% in the first six months while bag manufacturing also has grown around 18% during the period, higher than the target of 13-14% set by the association.

However, the leather-shoe-bags and apparel industries still have many difficulties that need to be resolved, if such industries are to maintain stable growth.

Kiet said small and medium enterprises in the leather sector now depend on materials imported from China, with 60% of materials for synthetic leather production imported.

Apart from leather, the country has to import some US$2.5 billion worth of other materials for making leather-footwear products, 60% of which are from China, a worryingly high figure, Kiet said.

Phan Chi Dung, head of the Light Industry Department under the Ministry of Industry and Trade, noted that despite high growth, local manufacturers in these sectors have not been able to join the global supply chain.

Although Vietnam offers low-cost labor, productivity remains low. Research by Vietnam Chamber of Commerce and Industry (VCCI) general secretary Pham Thi Thu Hang indicates that the average productivity of a Chinese worker is double that of a Vietnamese laborer.

On the other hand, enterprises in Vietnam consume power and water three times higher than those in China, according to the study.

Kiet said in the coming time, the industry should be restructured to create its own materials, targeting to reach a local content ratio of 60-65% by 2015 and 80% by 2020.

To do so, enterprises must change themselves first and authorities should have preferential treatments to support them.

To increase local productivity, the association will open its own training centers for workers, managers and company leaders as well, Kiet said, explaining that colleges and training schools now focus too much on theory and therefore students after graduation still fail to meet the actual needs of enterprises.

According to Lefaso, around 500 firms are operating in the leather-shoes-bags industry and their exports rank behind only apparel products and cellphones.

Draft strategy targets three million new condos in 2015-20

Vietnam will need to build around three million housing units with a total floor space of 425 million square meters in 2015-2020, according to a draft strategy for national housing development by the Ministry of Construction.

The ministry targets an average housing area in Vietnam of 25 square meters per capita by 2020, with 29 square meters for an urban dweller and 22 square meters in the countryside, according to the draft just submitted to the Government for consideration.

It also aims to develop 12.5 million square meters of budget housing in urban areas in the period of 2015-2020.

At a recent conference on the real estate market, Nguyen Tran Nam, Deputy Minister of Construction, said the housing area per capita in Vietnam is the lowest in the world.

The country now has an average housing area of 20 square meters per capita compared to 30 square meters in China, Nam said.

The draft strategy for national housing development was finished after the Government Office released a document on February 6 requesting the ministry to cooperate with other related ministries and departments to work on a strategy to develop the country’s real estate market.

According to the ministry, it is necessary to build the strategy for real estate market development as this market has revealed its weaknesses and haphazard development.

Prices of real estate and housing projects are still high, especially in major cities, while small- and medium-scale projects with soft prices for sale and rent are insufficient.

Financing for social housing projects is limited, causing the lack of such products in cities, while investments are poured into real estate without specific orientations, creating products which do not meet actual demand, leading to high inventories and a waste of land and social investment capital.

Sales of cement, steel bounce back in H1

Sales of cement and steel have rebounded in the first half of 2014 after years of decreases and industry insiders view this as a positive sign of recovery in the local building material market.

Nguyen Quang Cung, chairman of the Vietnam Cement Association, told the Daily that nearly 33 million tons of cement has been consumed domestically and exported from January to June, up nearly 10% against the year-ago period. Sales and prices of this building material are forecast to be stable in the second half of this year.

“The cement industry has performed better in the year to date than last year with a year-on-year rise of nearly10% or equivalent to the growth rate of 2010 after declines from 2011 to 2013,” Cung said.

Cung said the association forecast domestic cement sales for 2014 will rise by nearly 9% year-on-year to 49-50 million tons and exports will reach 16-20 million tons compared to some 15 million tons last year.

Currently, operational cement plants in the country can turn out more than 70 million tons a year and this volume meets local demand for cement and clinker as well as orders from foreign markets.

Steel consumption has been on track to recovery this year. Nguyen Van Sua, vice chairman of the Vietnam Steel Association (VSA), said nearly 2.5 million tons of construction steel has been sold in the first half, a year-on-year rise of 8%.

The steel sales volume in the period has increased by up to 12% to more than five million tons if steel and iron-coated sheets and pipes are taken into account.  

“Steel prices have been pretty stable this year,” Sua said and added that a number of producers have sold a ton of steel at VND100,000-150,000 higher this year but other companies have revised down their prices by at least VND100,000 per ton.

Sua said despite higher transport cost, the majority of steel makers have refrained from hiking prices as the rise of local demand looks unsustainable.

Another problem is that supply still surpasses demand for construction steel and this is one of the reasons steel mills are running at 40-60% capacity.

VSA projected local steel producers will be able to sell approximately 12 million tons on domestic and overseas markets this year, up 5-7% over the year before.

Design competition launched for young entrepreneurs

National Instruments (NI) on June 24 inaugurated a design competition for young entrepreneurs in Vietnam with an aim to help advance innovation and entrepreneurship among young engineers in the country.

Developed in collaboration with the Higher Engineering Education Alliance (HEEAP) in Vietnam, the first competition is open to all engineering students and graduates from academic partners of this alliance in this country and will award the market-ready projects that support sustainable development in local communities.

Chandran Nair, managing director of NI for Southeast Asia, said NI is looking for “the most innovative, most relevant projects that solve real-world problems and benefit communities.”

Through its Planet NI program, the company will provide access to development platforms for participants to design prototypes of their projects and further on-going testing of their research work. Besides tools, NI will also offer training and consultation so that good ideas are turned into functional prototypes.

NI said developers of the most innovative project prototypes that address challenges in the local communities of Vietnam will be awarded, including an opportunity to present their research at the global NIWeek Conference in Austin, Texas, the United States.

Planet NI representatives will select the top two projects and pick one winner from the finalists from Can Tho University, Cao Thang Technical College, Industrial University of HCMC, Hanoi University of Technology, Hanoi University of Science and Technology and HCMC University of Technology.

“In Vietnam and the rest of Southeast Asia, there are a host of community-based challenges that our young engineers can help solve. The ingenuity and feasibility of the ideas of this year’s finalists, from simple and affordable medical devices to the use of sensors to prevent road accidents, are immensely encouraging,” Nair said.

NI opened its office in HCMC in 2011 and has since grown its presence in Vietnam with customers in industries such as automotive, infrastructure, oil & gas, and electronics and semiconductor manufacturing. As a strategic partner of HEEAP, the company works closely with tertiary institutions and research agencies and assists them with better access to software, hardware and training.

In March this year, NI announced its partnership with HCMC Vocational College to open a first LabVIEW academy in Vietnam to help raise the standards of engineering education in Vietnam.

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

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