BUSINESS IN BRIEF 5/7

Vietnam Consumer Confidence Index to be launched next week

ANZ Vietnam Bank and Roy Morgan Research will launch the Vietnam Consumer Confidence Index (Vietnam CCI), a key indicator reflecting the health of an economy, this month.

The CCI for June will come out next week.

Vietnam CCI is designed to show the degree of optimism which consumers express through their savings and spending.

A rise in consumer confidence indicates better economic growth while a fall of the index shows consumers tighten their spending.

There are other major economic indicators such as the Purchasing Managers Index (PMI) which reflects the health of the manufacturing sector; the Producer Price Index (PPI) which indicates domestic producers’ input prices; the yield curve which is a line that plots interest rates, at a set point in time, of bonds having equal credit quality but differing maturity dates; and the Employment Cost Index (ECI) which measures fluctuations of wages for each working hour in quarters.

Roy Morgan Research’s Asia-Pacific regional director Debnath Guharoy said this index is available in Australia, New Zealand, China and Indonesia, and that he expected the indicator to provide policymakers, business circle, investors and citizens with information that is useful for their decision-making.  

East Sea crisis calls for new economic route

Present tensions in the East Sea have created opportunities for Vietnam to adjust its economic policies with China to avoid becoming too dependent.

This is the view of Vo Tri Thanh, Deputy Director of Vietnam's Central Institute for Economic Management (CIEM) and two other speakers at a seminar on Economic Autonomy in an Interdependent World organised by the Vietnam Chamber of Commerce and Industry (VCCI) in Hanoi on July 3.

He said that Vietnam shares a great economic relationship with China, including high imports and exports, but integration into the world market has its risks.

Therefore, the present situation has created opportunities for Vietnam to review its economic policies with China and adjust policies to avoid dependence on its neighbour in terms of economic relations.

To end any dependence on China and avoiding risks involved in doing business with Chinese enterprises, Vietnam should continue economic restructuring and integration, he added.

Thanh said Vietnam has promoted the restructuring of its national economy and integrated it further into the global economy and the conflict on the East Sea between Vietnam and China is a chance for Vietnam to speed up its economic restructuring.

Vietnam should actively seek supplies from other countries and new export markets, Thanh said, adding that Vietnam should seek actively international commercial agreements with other nations.

Economic expert Pham Chi Lan said Vietnam depends a great deal on imports and exports with China in some sectors.

Export value from Vietnam to China rose from US$1.5 billion in 2000 to $13.3 billion in 2013, Lan said.

At the same time, the value of imports from China grew from US$1.4 billion 2000 to US$37 billion in 2013.

Lan recalled Vietnam enjoyed a trade surplus of US$135 million with China in 2000, but had a trade deficit of US$23.7 billion in 2013.

She said the change is due to high imports of equipment and material for production into Vietnam. 70% of the imports from China are industrial support products, machinery, seeds, fertilisers and animal feed.

Economic expert Le Dang Doanh said integration with the rest of the world has been an advantage for Vietnam in protecting its national sovereignty. Vietnam has consolidated its internal force and developed its economy thanks to that integration.

Doanh said Vietnam has established economic relations with the second largest economy in the world and continued those relations to avoid depending on one economy.

Foreign textile firms line up for TPP bonanza in Vietnam

Foreign investment in the textile and garment sector is increasing rapidly as international firms seek to take advantage of the benefits Vietnam's will potentially derive when the Trans-Pacific Partnership (TPP) Agreement comes into being.

Several companies from mainland China, Hongkong, Taiwan, Japan, the US and the Republic of Korea have made large investments in the sector, according to Thoi Bao Tai Chinh (Finance Times) newspaper.

The textile and garment industry in the TPP member countries is expected to benefit the most from the trade deal.

For instance, products made from domestically sourced materials or imported from other TPP member countries will enjoy zero tariff when exported to signatory countries.

Le Tien Truong, vice chairman of the Vietnam Textile and Apparel Association, said up to 60% of the country's textile and garment exports go to member countries.

Analysts estimate that once Vietnam becomes a TPP member, the average tax on Vietnamese garments will be slashed from the current 17-18% to zero.

In that scenario, exports to the US market could increase three-fold from US$8.6 billion last year to US$20 billion in 2020.

It is with an eye on such opportunities that foreign firms are scrambling to invest in the Vietnamese textile and garment industry.

In June the RoK’s Dong-IL Corporation began building a US$52 million yarn factory in Dong Nai Province's Long Thanh District. The plant will have an annual capacity of 9,000 tonnes of fibre when it opens in mid-2015.

In HCM City, Forever Glorious, a subsidiary of Taiwan's Sheico Group, announced it will set up a US$50 million weaving-dyeing-garment production chain for premium sports garments.

In March city authorities issued a licence to China's Gain Lucky Limited, a subsidiary of Shenzhou International, for building a US$140 million centre for fashion design and garment manufacture. The company produces garments for brands like Nike, Adidas, and Puma.

Also in March Hong Kong-based Esqual Group opened a US$25 million garment plant in the northern province of Hoa Binh.

Not long ago the northern province of Nam Dinh issued an investment license to China's Jiangsu Yulun Textile Group for a US$68 million textile, dyeing, and yarn plant at the Bao Minh Industrial Zone.

Besides the new investments, many existing foreign garment firms have increased their investments to expand their activities.

Dang Phuong Dung, deputy secretary of the Vietnam Textile and Apparel Association, said the chronic bottlenecks in the weaving and dyeing sectors in terms of intensive investment, experience, technology, and workforce have been addressed.

According to analysts, the fact that more and more foreign firms are investing in the textile and garment industry will encourage Vietnam to hasten final negotiations for the agreement.

Becoming a TPP member will offer not only the textile and garment industry more opportunities to develop but also its support industries and even the economy as a whole, they said, pointing also to other obvious benefits like employment generation.

Vietnamese goods hold sway in local markets

Several Vietnamese goods have gained a firm foothold in the domestic market with 70% of Vietnamese consumers putting their trust in local goods.

Le Viet Nga, Deputy Head of the Ministry of Industry and Trade's Domestic Market Department, made this observation at a conference to review five years of the "Vietnamese people use Vietnamese goods" campaign, held in Hanoi on July 3.

Statistics from the ministry showed that 80% of Vietnamese people were keen on garments, textile and shoes while 58% were keen on food items and fruit.

In several supermarkets run by domestic enterprises, locally made products accounted for 80% to 90% of the total. More than 90% of goods at over 9,000 price stabilisation shops were domestic products.

"These results have helped domestic goods increase competitiveness over foreign items and changed consumers' thoughts and habits," she said.

A recent survey of the ministry also revealed that the localisation rate of input products and materials as well as equipment rose 25% since the campaign was launched.

Businesses have taken advantage of the Government's mechanism and policies to build strong distribution networks, she said.

For example, the Vietnam Garment and Textile Group (Vinatex) has established 4,125 shops in remote and mountainous areas. The Vietnam Paper Corporation has also been active in expanding selling points in rural and mountainous areas.

Nga said in rural areas, people were keen on locally produced goods.

The ministry has also approved 618 plans, with total investment of VND375.7 billion (US$17.8 million) for commercial promotion and market expansion activities for five years of the campaign's implementation.

Of these, 356 plans focused on the domestic market, remote and border areas with funds of VND167.7 billion. The plans were mainly organised to bring Vietnamese goods to these areas.

Over the past five years, the provincial Industry and Trade Department has held around 2,000 sale campaigns in the rural regions with participation from 53,000 businesses with 48,000 booths. More than three million locals visited the booths with a turnover of VND34.4 trillion.

Deputy Minister Ho Thi Kim Thoa hailed the achievements of the five-year campaign, saying that it has made a positive impact.

Thoa said the local people's awareness of Vietnamese goods has changed sharply and people have begun to pay more attention to local items.

The wholesale turnover growth rate in the past five years was in double digits, she added.

However, she said the campaign has also revealed shortcomings in building and developing the distribution networks, adding that several enterprises have not built a basic strategy for building a brand name.

In addition, some businesses lacked the experience and selling skills to promote the sale of Vietnamese goods, she added.

She noted that the ministry would pay more attention to increasing people's awareness for using Vietnamese goods.

Vietnam – Laos expo opens in Vientiane

The 2014 Vietnam – Laos Trade Fair kicked off in Vientiane, Laos, on July 3 with the aim of helping Vietnamese businesses expand the distribution network here, paving the way for their goods to Thailand’s northeastern region.

Among those attending the opening were Vietnamese Deputy Minister of Industry and Trade Nguyen Cam Tu and his Lao counterpart Siaosavath Savengseuksa.

During the five-day event, some 100 Vietnamese enterprises show their products at 120 out of the total 200 booths.

This year’s fair is said to be larger than previous events and gather a wider range of goods, from agro-forestry-fishery products, garments and electrical and electronic appliances to industrial machinery, medical equipment, and tourism services.

It is expected to bridge Vietnamese and Lao business insiders so that they can share experience, transfer technology and form closer partnerships.

In 2013, trade turnover between both countries hit a record high of US$1 billion.

The figure reached US$766 million in the first half of 2014, up 51% from a year earlier.

VN economy looks to run on faster, sustainable track

The Vietnamese government is working on an economic development plan, targeting a faster and more sustainable economy between 2016 and 2020, Deputy Prime Minister Vu Duc Dam told 400 business executives at the first Forbes Vietnam business forum in Ho Chi Minh City on July 3.

It will be done in tandem with addressing social and environmental concerns and bringing out sweeping overhaul in education and health care, he said.

The ambitious plan also requires the development of the farming sector and rural areas to ensure that all walks of life across the nation enjoy its fruits.

Challenges, however, are still ahead in the next 20 years, he acknowledged.

“Vietnam is able to keep up with regional countries only when it records an annual economic growth of 8-9%,” he stressed.

According to his announcement, the Vietnamese government will strive to reduce tax filing duration from 870 hours to 170 hours per year between now and 2015, as part of efforts to improve the business climate.

Rich Karlgaard, Forbes’s publisher, in his speech, underscored the importance of creativity that will help businesses beat their rivals.

Attendees showed their interests in how to foster economic growth, rise to the top, and access capital for business expansion and innovation investment.

Standard Chartered Vietnam wins Asset Triple A Awards 2014

Standard Chartered Bank (Vietnam) has received Asset Triple Awards 2014 as Best Sub-custodian and Best Fund Administrator – Retail Funds by the global financial magazine The Asset.

This is the second consecutive year Standard Chartered Vietnam has won the award.

Maxime De Guillebon, Head of Transaction Banking, Standard Chartered Bank (Vietnam), said that the honour recognised Standard Chartered’s outstanding achievements and re-affirmed its leading position in providing cost-effective bank services in the country.

The Asset Triple A Awards are industry excellence awards given out every year to institutions that have outshone the competition in providing best-in-class treasury, risk management and working capital solutions to their customers.

EBA cites Vietnamese company among world’s best run

The Europe Business Assembly (EBA) on July 2 honoured Civil Engineering Construction Corporation No. 4 (CIENCO4) as among one of the ‘Best Enterprises’ at an awards ceremony in Stresa, Italy.

This year a total of 46 enterprises from around the globe operating in a disparate variety of fields including culture, society, health care, trade, construction, oil, and education received EBA prizes.

CIENCO 4 was selected for meeting EBA criteria of professional skill, quality management, technology, and construction time.

At the ceremony, John Netting, CEO of the Europe Business Assembly, noted that the event not only honoured business achievements but also provided an opportunity for entrepreneurs and business leaders from Europe, Asia, Africa and the Middle East to exchange and seek business partners.

CIENCO 4 General Director Le Ngoc Hoa said that the award is a great honour in recognition of the hard and dedicated efforts of all the staff and employees of the company.

This is the first time CIENCO 4 has received such honour.

Private sector encouraged in agricultural value chain

The private sector is encouraged to cooperate with governmental and non-governmental agencies throughout the nation to assist the poor generate more income and improve their livelihood.

The Swiss Agency for Development and Cooperation (SDC) is improving cooperative relations with the private sector to bring about sustainable benefits for the impoverished in the rural communities in Vietnam, whose livelihoods principally depend on agriculture.

SDC country director Samuel Waelty made the remark at a July 3 seminar in Hanoi evaluating the private sector’s engagement in the development of the agricultural value chain for the poor. The seminar was held within the framework of the Market Access for the Rural Poor through Value Chain Promotion Programme (MARP) funded by Switzerland.

Samuel said the rural market retains many risks due to high transaction costs and a shortage of sustainable market connectivity, thus mobilising sources from the private sector for sustainable development of the poor is still a big challenge.

Sharing international and Vietnamese experience will help find the best solution for cooperation models with the private sector to raise steady income for the poor in rural areas and the sustainable development of the private sector itself, he stated.

Javier Ayala, the Executive Manager of the Vietnam Business Challenge Fund (VBCF), said doing business with low income earners is an effective way to promote economic development and poverty reduction as 70% of the world’s food is produced by farmers.

Samuel said MARP was launched in July 2013 at a total investment of US$5.2 million to support projects and organisations, mainly in Vietnam and Myanmar. The programme aims to assist poor rural households in taking part in the agricultural value chain to raise income.

He added that MARP has been implemented in 8 provinces in Vietnam covering 8 value chains: tea, rattan, bamboo, silk, brocade, cardamon, cinnamon and anise. The programme has benefitted 6,870 households in 8 localities, of which 90% are ethnic minority people and 32% are women.

Robins Department Store comes to Ho Chi Minh City

Thailand’s leading retailer Central Group plans to open its Robins Department Store at Ho Chi Minh City-based Crescent Mall in November, 2014.

After the first launch in Hanoi’s Royal City, Robins Department Store, is gaining great favours from Hanoi people for the good products, affordable prices and attractive marketing programs as well as meeting the needs of a wide range of consumer lifestyles.

This second Robins Department Store in Vietnam will spread over four floors covering more than 12,000 square meters.

The store designed by the Dubai-based Zebra Group, will bring a new shopping experience to all valued customers.

It plans to offer thousands of quality products carefully selected from leading local and international brands along with marketing programs that focus on interests and lifestyles of local consumers.

Customers can also enjoy benefits from The1Card, Thailand’s number 1 loyalty program initiated by Central Group. The campaign has a great success in Robins Hanoi, Vietnam since launched in March, 2014.

Tuna exports to Netherlands surge

Vietnam’s tuna exports to the Netherlands hit nearly US$8.9 million in the first four months of this year, representing a year-on-year rise of 123%, despite an overall decrease in the European Union.

Therefore, the Netherlands exceeded Spain to become the third largest importer of Vietnamese tuna in the bloc.

The General Department of Vietnam Customs attributed the surge to an impressive rise of as high as 396% in the export of tuna fillet in the context of dropping shipment of other tuna products.

Statistics from the Netherland-based International Trade Centre showed that over the past five years, the European country recorded an increase of 143% in tuna imports, becoming the world’s 11th biggest importer of this product.

Vietnam now ranks 9th among the nations selling tuna to the Netherlands.

Inspiring confidence for businesses

To achieve sustainable economic development, it is essential to have effective policies and procedures in place to facilitate businesses overcoming barriers and streamline administrative procedures that hamper them.

The Vietnam Chamber of Commerce and Industry (VCCI)’s recent survey shows business confidence has increased thanks to the State’s commitment to make the business environment more business friendly.

The Vietnam economy has bottomed out and is now rebounding and back on track, thanks to remarkable growth in the first half of this year despite numerous challenges, including the tensions in the East Sea.

In the past six months, the number of newly-established businesses dropped nearly 40%, but registered capital still managed to rise a hefty 20% from last year’s same period.

Roughly three-fourths of 7,000 businesses surveyed by the General Statistics Office (GSO) reported their profits in the six month period were higher than that recorded a year earlier.

The GSO report is solid evidence that the national economy is in a period of dramatic recovery, resulting in a larger scale of business operation with higher profits.

The good economic news is consistent with earlier predictions made by leading economic experts at the end of last year after the Government undertook a series of macro-solutions to contain inflation, reduce banks’ lending interest rates, and stabilize the price of domestic gold and the forex market.

Foreign investors from Europe, Japan and the Republic of Korea have also expressed strong confidence in Vietnam’s business climate, especially after the Vietnam Government effectively intensified measures to deal with civil unrest in response to China’s wrongdoings in the East Sea.

In its 15th Business Climate Index (BCI) survey, the European Chamber of Commerce in Vietnam (Eurocham) recently revealed that Vietnam’s BCI is back to its 2011 levels-having gone from last quarter’s 59 to 66, which demonstrates the European business community’s commitment to the Vietnamese market.

Foreign-invested enterprises have also enjoyed an export surplus which has contributed greatly to elevate the country’s trade surplus to US$1.3 billion in the first half of this year.

The private economic sector’s technology upgrade and market expansion efforts greatly help it perform well in the reviewed period. The sector is making thorough preparations to compete against rivals in both the local and global markets.

This is particularly pertinent given the backdrop that the ASEAN community is poised to be established and trade liberalization widened following the ASEAN-China Free Trade Agreement, scheduled to take effect as from January 1, 2016.

Leading economic experts are avidly advocating the need for increased self-reliance and independence of the nation’s economy. Focus should be given to developing trademark, creating linkage, building equal economic relationship in bilateral and multi-lateral negotiations.

Vietnam should make full use of its competitive advantages in exporting its key farm produce and take the global lead in agriculture exports. The core and fundamental objective is to lay a solid foundation upon which of outstanding businesses can boost sustainable economic growth.

Secondary steel importers in trouble

Secondary steel importers in Viet Nam are pleading with relevant management bodies for help because a newly-issued regulation on import steel quality is driving them to bankruptcy, according to Dien dan doanh nghiep (Business Forum) newspaper.

Under the Joint Circular No44/2013/TTLT-BCT-BKHCN issued by the Ministry of Industry and Trade and the Ministry of Science and Technology that provide the management of domestically produced and imported steel quality, secondary steel importers in Viet Nam, have to announce the applying standards for goods in import contracts for customs clearance instead of only the origin of products and import contracts as done earlier.

According to Dang Nguyen Thanh Chau from Ha Long Company, secondary steel includes steel used ‘one-time' or stockpiled steel. However, it has the same quality as up-to-standard steel.

Most of the secondary steel is imported from the EU, Japan, Australia, South Korea and the US, so it is of good quality and even better than up-to-standard steel imported from China.

Domestic importers say they cannot meet the new regulations, which have come into force from June 1, 2014. They say that since secondary steel is mainly imported in small batches from numerous suppliers, there can be no unified standard for evaluation.

Tran Thanh Hai, Director of Dai Kim Hai Co, says that his company has been importing secondary steel from Japanese companies for many years and there is no evaluation of import steel.

According to the MoIT, the circular is aimed at protecting domestic consumers and producers against quality fraud and tax evasion.

However, secondary steel importers opine that the regulation should apply only for imported construction steel that has no origin of product. Since most of the secondary steel has the origin of product from developed countries, there can be no fraud in terms of quality, they claimed.

Year's target rests on H2 credit growth

Credit growth in the first half of the year was only 2.3 per cent, however, banks still expect the credit will gradually improve in the second half of the year to achieve the annual target of 12-14 per cent.

The targets are to be met due to many preferential credit packages introduced in the market, said officials.

Tran Ngoc Tam, deputy general director of Nam A Commercial Joint Stock Bank (Nam A Bank), told Dau tu chung khoan (Securities Investment) newspaper that though credit in recent months has improved, it remains less available.

Since the beginning of this year, lending at Nam A Bank reached about VND2 trillion (US$93.89 million), while the bank anticipates lending to reach VND5 trillion ($234.74 million) in 2014.

Further, Tam expects that the bank's credit will double from its current growth by the end of the year through the programmes that connect businesses to overcome difficulties together and unfreeze funds.

The bank, last week, in collaboration with the People's Committee of District 1 in HCM City, provided VND390 billion ($18.3 million) to businesses in the area, with interest rates ranging from 7 to 9 per cent per year.

Compared to the other banks, Sacombank has higher credit growth, due to the advantages of diversified and small lending.

Phan Huy Khang, general director of Sacombank, said the bank's lending now reaches about 7 per cent, against the entire year target of 15 per cent, thanks to the bank's implementation of 13 preferential lending packages, worth roughly $1.2 billion. Also, bank-business linkage programmes were worth roughly $73.5 million for preferential loans to companies in 18 districts, as well as export processing zones and industrial parks in HCM City, Khanh Hoa and Dak Lak, according to Dau tu chung khoan.

At Orient Commercial Joint Stock Bank (OCB), the credit growth target for this year is 10 per cent, though a bank leader says it will strive to achieve growth of about 25 per cent, especially in the last months of the year when capital demands by enterprises increases, and lending improves.

Viet Nam currently includes 62 banks. The country's credit growth last year was 12.5 per cent.

Viet Nam to ship lychee samples to Japan

Viet Nam will ship 10 tonnes of Luc Ngan lychee to Japan as a sample this week, before getting the export licence for it.

Minister of Science and Technology Nguyen Quan said this on a weekly television programme called ‘People Ask, Ministers Answer' last week.

Luc Ngan lychee is a well-known special fruit from the northern province of Bac Giang. If the fruit is accepted by the Japanese customers, the ministry will help domestic growers to sell it in the Japanese market, said Quan.

Quan said that with the help of Japanese partners last year, the ministry has imported a technology that uses the Cell Alive System method for long-term preservation of fruit just as if it has been freshly harvested.

Bac Lieu seafood exports soar in first half

The southern province of Bac Lieu earned more than US$209 million from its export of aquatic products in the first half of the year, up 64 per cent year-on-year, and representing about 59 per cent of the year's goals.

Frozen shrimp topped the list with 20,770 tonnes, 41 per cent higher than for the same period last year.

As many as 30 exporters of the product fulfilled their expected target volume and made great profits.

Much of the success is said to be due to provincial agencies who kept firms updated on any changes in domestic and foreign markets. This helped them make timely adjustments to their production and business activities.

Crab bank to conserve the crustacean

A blue swimming crab bank set up in Phu Quoc has helped fishermen improve their incomes while also conserving the species, a speciality of the island.

Because of huge demand for the crabs, fishermen have been catching more and more of them, causing a decline in their population.

To protect them, the Department of Agriculture and Rural Development in Kien Giang Province – home to Phu Quoc — set up the bank in 2011.

The bank, sponsored by the Wetlands Alliance Programme and having an initial capital of VND30 million (US$1,400), provides loans worth VND3 million to people who catch, breed, or sell the crabs, and as interest they have to "pay" five egg-carrying blue swimming crabs every month from their catch.

The bank has also set up a floating craft with four cages to breed egg-carrying blue swimming crabs. After the eggs hatch, the babies are released into the sea and the mother crabs are sold.

Money from the sales is used to maintain the craft, buy food for the crabs in the cages, and provide the loans.

Nguyen Ngoc Huong of Bai Bon hamlet on the island said the loan helped her buy nets and other tools to catch crabs.

"The payment in the form of crabs was easy for me compared to normal payment," she said.

Fishermen who borrowed have increased their incomes and pay interest in time, bank statistics reveal.

Bui Ngoc Huan, head of the Bai Bon Hamlet Fisheries Resources Protection Team, which manages the craft, said the bank hopes to improve fishermen's awareness of the need to protect blue swimming crabs.

But the bank's capital is small and it is difficult to increase lending, he said.

Bai Bon has a population of 1,600 and 70 per cent of them earn a living from fishing. Around 60 per cent of the fishermen catch blue swimming crabs.

The department has called on companies exporting the crab variety to invest in the bank so that more people can get loans.

Companies investing in the bank will benefit from having a sustainable source of crabs.

Gas supplies cut to southern region

Electricity of Viet Nam (EVN) corporation said that gas supplies for power generation in the southern region will be reduced this month.

Accordingly, between July 6 and 19, the group will stop providing all PM3 gas for the Ca Mau 1 and 2 thermo-electricity plants.

About 4.7 million cubic metres of gas will be supplied for the plants each day for the rest of the month.

Despite the cut, EVN promised to supply enough of electricity for production and daily activities.

Kinh Do acquires major stake in PhinDeli

The Kinh Do Corporation (FDC) has bought a controlling stake in PhinDeli, a Vietnamese coffee brand owned by Pham Dinh Nguyen. (Nguyen also owns PhinDeli, a town in the US State of Wyoming.)

The news was announced at the KDC meeting of shareholders held in Ha Noi yesterday, reports the news portal baodautu.vn. However, the corporation did not reveal any information about the buying price.

Nguyen has experience in fast-moving consumer goods and has worked with KDC.

He bought Buford town in the US in 2012. A year later, he launched the coffee brand and changed the town's name to PhinDeli.

Nguyen plans to introduce Vietnamese coffee worldwide.

Soft loans target agriculture growth

The State Bank of Viet Nam approved a list of participants for a VND2.3 trillion (US$109 million) pilot programme offering preferential loans for agricultural development.

Commercial banks and customers in Lam Dong, Nam Dinh, Can Tho, Dong Thap and Nghe An will be the first to benefit, according to State Bank Governor Nguyen Van Binh.

The southern province of Dong Thap will get the most money, more than VND1.04 trillion ($48.8 million). The central province of Nghe An Province will get VND524 billion ($24.5 million), Can Tho City in the Mekong Delta, VND284 billion ($13.3 million), Lam Dong Province in the Central Highlands, VND80 billion ($3.7 million) and the northern province of Nam Dinh, VND75 billion ($3.5 million).

Businesses in these places will have to pay interest rates of just seven per cent per year for short-term loans, 10 per cent for medium-term loans and 10.5 per cent for long-term loans.

Short-term loans will be granted for farmers to buy fertilisers, seedlings and poultry and livestock breeds as well as agricultural equipment. The medium and long-term loans will support investments in infrastructure and equipment to develop hi-tech models.

The loans aim to forge finance connectivity between businesses and farmers for new farming models such as large-scale rice farms and application of advanced technology.

Many of these models had shown their effectiveness in several areas, Binh said, citing as examples the large-scale rice field model in An Giang Province, the hi-tech vegetable and flower production model in Lam Dong Province and the dairy farming and milk production model in central Nghe An.

In May, four businesses in An Giang received VND350 billion ($16.4 million) through the programme, which is jointly organised by the State Bank, the Ministry of Agriculture and Rural Development and the Ministry of Science and Technology.

After the two-year trial period, the three institutions will work together on policies to apply the programme on a larger scale.

Enterprises discuss measures to improve domestic supplies

Vietnamese manufactures are calling for improving domestic material supplies in an effort to reduce reliance on imports, especially from China, said the Saigon Times Daily.

Speaking at the seminar held by the 2030 Businessmen Club under the Saigon Times Club on June 30, participants agreed that bolstering cooperation for sustainable development was not a new story. They also noted that it was time for domestic material producers to boost their production activities.

Do Long, Chairman and General Director of Binh Tan Consumer Goods Manufacturing Company (Bita’s), said the company needs up to 360 types of material to produce a pair of shoes and thus it keeps finding domestic suppliers.

Long said his company has found around 80 material suppliers.

Le Quoc An, former Chairman of the Vietnam Textile and Apparel Association, said that Southeast Asian countries have set up the ASEAN Federation of Textile Industries (AFTEX), whose goal is to make use of strengths of each country and assisting each other.

The operating model of AFTEX is quite effective. Therefore, local enterprises need to be aware of their strengths in forging links with each other, according to An.

Meanwhile, according to Nguyen Thanh Nhan, Deputy Director of Saigon Co.op, small and medium producers fail to win customers' trust as their product quality is sometimes not as high as claimed. Besides, they are reluctant in cooperating with one another, he said.

“Many producers have refused to join us in making products bearing the brand of Saigon Co.op as they want to open their own distribution channels and build their own brands, which is a great challenge due to their limited capacities,” Nhan said at the seminar.

Enterprises that are members of the 2030 Businessmen Club and speakers agreed on developing their own material sources, but this needs careful and strategic considerations.

“I expect that cooperation opportunities will open up after this seminar, with cooperation deals to be inked in the coming time, to prove that this is not a talk shop,” said Do Long of Bita’s.

Long An province attracts Japanese investors

More and more Japanese companies are exploring and investing in Long An because of its increasingly attractive investment environment, said the Vietnamese Business Forum Magazine (VBF).

In recent years, Long An province has actively approached and learned about Japanese investors and introduced investment opportunities to them. The province has applied a lot of innovative mechanisms and policies for investors to tap local advantages, especially Japanese investors.

Presently, Japan ranks third in investment capital in Long An (after Taiwan and the Republic of Korea) with a total registered capital of over 300 million USD.

Japan’s increasing investment into Vietnam in general and Long An province in particular is a result of its accelerating reconstruction at the back of earthquake and tsunami disasters.

Besides, Japanese investors tend to relocate production facilities from China to Vietnam. In addition to investment environment, Long An province has a lot of favourable conditions and advantages to attract and meet specific requirements of Japanese investors.

The investment environment in Long An province is increasingly improved, investment promotion activities are more effective, and infrastructure developers have appropriate policies to draw investors. The province is attracting more Japanese investors because Japanese companies currently operating here are effective and because the province has good investment attraction policies.

Defining Japan as a strategic partner, Long An is targeting Japanese small and medium businesses specialised in supporting industries, tourism, service and commercial infrastructure development.

Soc Trang’s economic growth highest in 3 years

Soc Trang province, home to the largest number of Khmer ethnic minority people in the Mekong Delta, recorded an economic growth rate of 11.9 percent in the first half of 2014, the highest year-on-year rise in the past three years.

During January-June, aquatic product yield increased by 24.5 percent, and rice output is predicted to exceed the set target.

Industrial production value reached 4.3 trillion VND (202 million USD), equivalent to 51.4 percent of the yearly target and up 20 percent from the same period last year, while exports brought the locality 314.4 million USD, a year-on-year surge of 79 percent.

In the period, the province collected 1.1 trillion VND (51.7 million USD) to the State budget, up nearly 30 percent year-on-year, while its budget spending totaled at 2.7 trillion VND (126.9 million USD) and investment disbursement for construction amounted to 970 billion VND (45.6 million USD).

Soc Trang is striving for an economic growth of 10-11 percent this year. To that end, the province has directed its authorities to continue speeding up support packages to develop the fields of agriculture, fisheries, industry, trade and services, and coordinate with ministries, sectors and other localities to successfully organise the Soc Trang-Mekong Delta Economic Cooperation Forum later this year.

Local enterprises have been urged to boost business and production, and authorities asked to effectively implement social welfare policies, speed up the National Target Programme on Sustainable Poverty Reduction, and work out measures to deal with unemployment and raise income for labourers, especially those in rural areas.

Vietnamese construction corporation receives European awards

Vietnam’s Civil Engineering Construction Corporation No. 4 (CIENCO 4) was among the recipients of the “Best Enterprises” awards presented by the European Business Assembly (EBA) at a ceremony in Stresa city, Italy on July 2.

Director Generals of prize-winning companies were also presented with “Best Manager of the Year” awards on the occasion, which was held within the framework of the 2014 Summit of Leaders – an independent corporation for the development and management of economic, social and humanitarian collaboration.

This time, 46 enterprises and individuals operating in social, cultural, healthcare, trade, construction and educational fields received EBA prizes.

Speaking at the awarding ceremony, EBA Director General John Netting said that the ceremony not only aimed to honour outstanding businesses but also offered a chance for business leaders from Europe, Asia, Africa and Middle East to meet and seek partners.

Bac Lieu’s aquatic exports soar in six months

The southern province of Bac Lieu earned more than 209 million USD from its export of aquatic products in the first half of this year, up 64 percent year-on-year, and equivalent to over 59 percent of the year’s plan.

Frozen shrimp topped the list with 20,770 tonnes, 41 percent higher than that in the same period last year.

As many as 30 exporters of the product fulfilled their expected volume and made great profits.

Competent agencies of the province spared no efforts to provide local firms with information on changes in domestic and foreign markets, which helps them make timely adjustments of their production and business activities.

Bac Lieu’s exporters faced difficulties in accessing medium- and long-term loans from commercial banks, hindering them from promoting an overall business strategy. Meanwhile, the connection between the firms and producers was rather poor.

In the time ahead, solutions should be put forth to ease the difficulties as well as stabilise export activities in the locality.

State bank toughens stance on capital issues

The State Bank of Vietnam (SBV) has instructed banks to clearly detail their plans for the capital withdrawal of parties whose stakes have exceeded caps.

The central bank has noted that the withdrawal must be completed no later than the first quarter of next year.

"The specific amount of time for handling the capital withdrawal depends on the process of restructuring at each bank; however, they must meet the deadline," remarked Nguyen Hoang Minh, Deputy Head of the central bank's Ho Chi Minh City branch, as quoted by Phap Luat TP HCM (The HCM City Law) newspaper.

The HCM City Law newspaper reported, while citing SBV's sources, that there are five commercial banks where individual shareholders own more than 5 percent of the charter capital each and five commercial banks where institutional investors hold more than 15 percent of the charter capital.

As many as eight commercial banks have shareholder groups and related parties that own over 20 percent of the charter capital.

Industry experts have pointed out that the loss of control over ownership has led to the manipulation of these banks in ways that conflict with group interests.

The central bank has claimed it will undertake strict supervision of stake-related activities, such as transferring or increasing shareholdings. If anyone is found contravening the law, heavy penalties will be imposed.

Economist Vu Dinh Anh said the real question was whether the central bank could control the issue across the board.

"Penalties will depend on the complex nature of each case, the suspects, and the related parties," Anh noted.

In an attempt to hinder bank manipulation efforts, the SBV has released the draft of a new circular to suppress the increasingly sophisticated "familisation" seen at credit institutions, which is ultimately intended to tackle bad debt and improve the security of the system.

The draft, which is pending public feedback, declares that the total credit limit granted to founding shareholders, major shareholders, family members and related parties must not exceed 5 percent of the charter capital of a credit institution.

Credit limits for major shareholders and their family members must also not exceed their face-value-based capital contribution to the banks.

The draft restricts credit institutions from granting privileged loans without collateral to auditing companies, auditors, chief accountants, major shareholders, founding shareholders, subsidiaries, companies or those who have established certain relationships with the bank.

Credit institutions must report such lending plans to the shareholders, owners and the central bank.

In another attempt to soften the illusion of bank capital and improve the transparency of capital flows, the draft requires credit institutions to report actual charter capital every six months.

The actual charter capital is determined after taking out risk provision funds and calculating all income and expenditure.

If the value of the actual charter capital is lower than the legislative capital, banks must draw up solutions and report these to the central bank. If the actual charter capital falls below 80 percent of the legislative capital, the SBV will apply measures to restrict the operations of the banks.

In fact, cross-shareholding issues have complicated the process of restructuring the vulnerable banking system. The entire system was recently on the verge of a crisis following many years of excessive credit growth and easy lending to State corporations, along with cross-shareholding issues.

Financial reform is one of the three pillars in a programme of economic restructuring that Vietnam unveiled in late 2012. If the deep-seated problems in the banking system cannot be resolved effectively, the progress of the entire economic reform programme might face long delays.-

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

East Sea crisis, TPP, Vietnamese goods, Private sector, credit growth
 
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