BUSINESS IN BRIEF 18/3

Garment exports surge by 18 per cent

Garment exports in January and February posted an 18 per cent year-on-year increase to US$3.4 billion, the Ministry of Industry and Trade (MoIT) said.

The surge has made the achievement of this year's export target of $28 to 28.4 billion a strong possibility.

The United States remained the largest export market for the Vietnamese garments and textiles industry, accounting for 8.4 per cent of the country's market share. It was followed by Japan and South Korea.

This year's exports to the US market are forecast to reach $11 billion, representing a 13 per cent jump from the previous year.

Meanwhile, the European Union (EU) continued to be a key market for Vietnamese garments and textiles, considering that the EU-Viet Nam Free Trade Agreement (EVFTA) would come into effect in the future.

Accordingly, a tax cut of 12 to zero per cent on Vietnamese garments would help Vietnamese companies step up their competitiveness.

As for the US market, it is expected that the Trans-Pacific Partnership (TPP) would be signed soon, resulting in lower taxes, as well as create favourable conditions for businesses to expand market share in the country.

This year is being considered as favourable for export activities in the sector as negotiations on several trade pacts could conclude.

Earlier this year, most enterprises under the Viet Nam National Textile and Garment Group (Vinatex) had received orders till the second quarter of the year.

ANZ raises GDP growth forecast

ANZ Bank upped its annual gross domestic product (GDP) growth rate target for Viet Nam to 6.5 per, for both 2015 and 2016, from 6.2 and 6.4 per cent, respectively.

In a report dated March 13, ANZ economists for ASEAN and the Pacific, Glenn Maguire and Eugenia Victorino, said support from external demand continues to be robust and various indicators are pointing to a recovery in domestic demand.

A steeper-than-expected pull back in inflation had led experts to revise their inflation forecasts to 2.6 per cent in 2015 and 3.8 per cent in 2016, lower than the previously anticipated 3.0 per cent and 4.5 per cent, respectively.

The economists estimated that industrial production growth over the first two months of this year is 14.2 per cent, up from 5.6 per cent from a year ago. This is the fastest annual gain since 2012, when this series was re-based.

PVN to develop fuel facility on Phu Quoc

The Viet Nam Oil and Gas Group (PetroVietnam) has received approval from Kien Giang authorities to conduct a survey for the construction of a bonded warehouse for a fuel and logistics port system.

The People's Committee of Kien Giang Province said construction will be carried out on Phu Quoc Island.

It said, the project, which is expected to supply and distribute fuel for wholesalers in Kien Giang Province and neighbouring localities, is estimated to cost some VND500 billion (US$23.4 million), which would be sourced from PetroVietnam's equity and bank loans.

The warehouse and the port system would operate as a gateway for temporarily importing and re-exporting fuel to Southeast Asia and other parts of the world.

The warehouse would be able to store up to 100,000 cubic metres of fuel, while the port system would include an import port, which can handle cargo ships of at least 30,000 deadweight tonnage (DWT), and an export port for ships of no more than 15,000DWT.

PetroVietnam is expected to start work on the project this year if related procedures are completed as soon as expected. The firm plans to complete the project within two years.

The People's Committee of Kien Giang Province said it would further consult relevant ministries and agencies over the project's impact on provincial environment and tourism.

VN-India venture to help manage Bao Viet Fund

The HPT-Credence joint venture signed yesterday a contract to provide an investment management system for Bao Viet Fund Management Co, Ltd for the 2015 to 2016 period in Ha Noi.

The system, which meets international standards, would help the Bao Viet Fund optimise portfolio management and achieve an end-to-end transaction processing system in order to innovate and scale up operations.

It would also offer a risk management module for maintaining limits and tracking exposure, improve efficiency and deliver a better performance for business processes.

The solution would not only enable the Bao Viet Fund to minimise operational costs, but also simplify and automate its compliance with regulations and policies of the government.

Domestic investment was also slowly gaining traction, as the construction sector was expected to rise 8.8 per cent during the last fourth quarter, pushing up the 2014 sector growth to 6.3 per cent year-on-year – the fastest growth rate since 2011.

Retail sales growth averaged 14.5 per cent year-on-year during the first two months of 2015, and the real average was 13.7 per cent in light of weak inflation. This is also the fastest rise in retail sales in five years.

HCM City to host int'l maritime exhibition

An international maritime industry exhibition opens in HCM City tomorrow with the participation of almost 300 companies from over 20 countries and territories.

The 2015 INMEX Vietnam at the Tan Binh Exhibition and Convention Center will showcase products and services related to shipbuilding, ports and supply chain management solutions among others.

The four-day event will feature a wide range of activities including the VIP Buyer Programme (an initiative that will facilitate the sourcing process for buyers by pre-arranging meetings with exhibitors present at the show) and the Networking Night (a platform for all exhibitors and VIPs to meet and discuss business opportunities).

Local firms encouraged to expand trade in Cambodia

Vietnamese firms should focus more on promoting their products in Cambodia, the Investment and Trade Promotion Centre of HCM City (ITPC) has said.

Viet Nam enjoys a trade surplus with Cambodia, but its exports to that country dropped by 8.7 per cent last year to US$2.66 billion, according to Nguyen Tuan, ITPC's deputy director.

Political instability, cumbersome administrative procedures and fraud are among the reasons Vietnamese firms are unsure about making long-term investments in the neighbouring nation.

The fierce competition from Thai and Chinese goods is also making it more difficult for Vietnamese firms to export to Cambodia.

"Therefore, organising trade promotion programmes to promote Vietnamese goods there is imperative," Tuan said.

Pho Nam Phuong, ITPC director, said the north-western region of Cambodia, which includes Battambang, the province with the second highest population in Cambodia, and Siem Reap, which attracts three million visitors a year, had great demand for many kinds of goods.

The ITPC said people in the region mainly consumed products imported from Thailand and China, especially consumer goods, construction materials, farm machinery, animal feed, and refrigeration appliances.

Since Vietnamese firms focused mainly on Phnom Penh, not many of their goods were popular here, it said.

Vietnamese goods do have a market in Cambodia, and many Cambodian consumers are fond of products made by companies like ABC Bakery, Vissan, and Saigon Cosmetics, according to Phuong.

If there was a focus on trade promotion and transportation of goods, Vietnamese goods would surely grab a huge market share in Cambodia's north-west, she said.

Vietnamese businesses should also tie up with Cambodian partners in services like tourism, transportation, healthcare and hospitality, she added.

Trade between the two countries was worth $3.28 billion last year, and they have set a target of $5 billion this year.

Trade deficit with China on the rise

Viet Nam's trade deficit with China has continued to widen over the past two months, a recent report of the Ministry of Industry and Trade revealed.

According to the report, Viet Nam exported US$997 million worth of goods to China in February, bringing its total export value to the market in two months to $2.31 billion.

Meanwhile, Viet Nam's imports from China reached over $4.48 billion in February. The latest import figure lifted the country's two-month import value from China to $7.48 billion. That had resulted in a trade shortfall of $5.17 billion, $2.8 billion higher than the figure reported a year ago, the Voice of Vietnam (VOV) quoted Deputy Minister of Industry and Trade, Do Thang Hai, as saying.

Currently, Viet Nam's major exports to China include processed farm produce, seafood, cashew nuts and rubber, while its imports from the market are materials related to garments and textiles, leather shoes and aquaculture feeds.

Hai said that stepping up exports and reducing imports were two of the most direct ways for slashing the trade deficit with China. He also emphasised the importance of strengthening domestic production and encouraging Vietnamese to use domestically produced goods.

Previously, the Ministry of Industry and Trade had formulated a scheme for export strategy in which the solutions will focus on removing difficulties for businesses and strengthening trade promotion to reduce import dependence on the market.

Viet Nam's imports from China have increased significantly over past years from $28.78 billion in 2012 to $36.93 billion in 2013 and $43.86 billion in 2014.

Rethink machinery priority, says Deputy PM

Vietnam needs to re-prioritise its machinery production, Deputy Prime Minister Hoang Trung Hai has said.

Meeting with the Steering Committee of Key Mechanical Product early this week, he acknowledged Government support was needed for making mechanical products that are currently in high demand to increase the sector's profits.

"We need to be thinking about whether we should prioritise products such as oil tanks, container ships, 50-tonne cranes and 200kV electric transformers.

"We should focus instead on agricultural equipment or oil rigs."

Relevant offices and engineering firms said at the meeting that the support programme for mechanical production approved by the Government in 2009 was facing certain obstacles that slowed its implementation.

Under the programme, 11 out of 24 projects have been approved for loan assistance with a total value of 10 trillion VND (roughly 476 million USD).

However, only three of those projects have completed their loan contracts, and just 374 billion VND (17.8 million USD) had been dispersed.

Delegates at the meeting agreed that, on paper, the policies were sufficient, but the financial sources and disbursement mechanisms were weak.

Investment in large machinery production projects is currently low, and co-operation among production businesses is said to be lacking. Delegates blamed these factors for the products' high-prices and therefore low-competitiveness.

Heavy machinery producers also said that credit interest was still prohibitively high.

Bids for contracts to supply equipment to large-scale projects need huge initial capital, but many domestic producers cannot afford the loans so the projects usually go to foreign bidders who already have the start-up capital.

To remedy the situation, the deputy PM has asked relevant offices to review loan assistance procedures.

"Along with assistance on loan interest rates, market creation should be a high priority."

The Ministry of Industry and Trade (MoIT) and investors have also been asked to review projects which have received approval but have been delayed or proven ineffective, and bar them from the programme's priority list.

The MoIT has been tasked with considering military enterprises capable of manufacturing equipment for thermo-electricity plants to help get electricity projects back on schedule.

In a related move, Deputy PM Hai has asked the Ministry of Science and Technology to cooperate with the MIC to accelerate research and development activities in an effort to redefine the nation's key mechanical products.

Samsung tops list of 500 fastest growing firms

Samsung Electronics Vietnam has been ranked first place among the top 500 fastest growing companies in the country in 2014.

The FAST 500 rankings' list was released by the Vietnam Report yesterday and showed that Samsung was followed by the Electricity of Vietnam (EVN), the Vietnam National Coal and Mineral Industries Holding Corporation Limited (VINACOMIN) and the Vung Ang Oil and Gas Petroleum JSC (VungAng PV Oil).

According to the Vietnam Report, the compound annual growth rate (CAGR) of the ten leading firms in the FAST500 was 102.18 percent. More than three-fourth of the enterprises included in the survey said they would expand their business activities to boost turnover and their presence in the market, while 19.2 percent said they would continue with the same operations as in 2014.

In addition to the list of the 500 fastest-growing firms, the Vietnam Report also published a list of 500 small and medium-sized enterprises (SMEs) with the fastest growth rates in Vietnam.

The Son Trang Construction JSC was ranked first in that list, while the Kien Khe Quarry Material Co Ltd came in second and the Noi Thuong Bac Transportation Car Co Ltd bagged the third spot.

The CAGR of the ten leading SMEs was pegged at 82.29 percent.

The top ten in the list are Samsung Electronics Vietnam Co Ltd, Vinacomin Power Corporation-a one member limited liability company, Vung Ang Petroleum Jsc, Long Son Co Ltd, European Plastic Jsc, Thanh Long Jsc, Eco Phamar Jsc, Dai Huu Jsc, Sigma Engineering Jsc and Vina Food Breeding Jsc.

The report revealed that during the 2014 to 2015 period, enterprises' operations saw some improvement. Most of the surveyed firms said the number of orders, turnover, machine utility rates, after-tax profit and money flow in 2014 were better than previous years, with increases of 82.2 percent; 79.5 percent; 78.9 percent; 78.7 percent and 77.6 percent, respectively.

This is a positive sign that shows the economy's recovery and indicates businesses' expectation of entering a new growth period.

During the 2015 to 2018 period, companies will maintain their growth rate target. The increase in productivity, improved management and development of new products and services will be given priority going forward.

However, Vietnamese businesses have not paid much attention to mergers and acquisitions as nearly 77 percent of the firms did not choose M&A as their key strategy during the past four years and the next four years.

More than 60 percent of the enterprises said the emergence of rivals in the same sectors would present the biggest challenge. This is why transparency in information will be vital for them and will help map out a feasible and suitable growth plan in the longer term, thus reducing losses.

Around 78 percent of the FAST500 businesses suggested that the Government should maintain low interest rates and create favourable conditions for accessing loans needed for expansion.

The State Bank of Vietnam has also paid attention to the issue. In addition, the Government can extend support to businesses by reducing the corporate income tax, invest in infrastructure and train human resources.

This is the fifth consecutive year that FAST500 was announced, pointing towards the maturity of Vietnamese businesses amidst economic fluctuations at home and abroad.

The FAST 500 rankings are also based on international standards, including the models of the Inc. 500, Fortune 500 and Deloitte 500 companies.

The performance of the companies is calculated, based on CAGR of revenue for the 2011 to 2015 period and is also based on other criteria, such as total assets, the number of workers, after-tax profits and prestige in the media.

The ceremony to announce the FAST 500 Ranking List 2015 will be held at the National Convention Centre in Hanoi on April 22.

Growth in 2016-2020 unlikely to surpass 6 percent

The country's average annual economic growth rate for the 2016 to 2020 period is unlikely to exceed 6 percent due to little improvement in growth motivation.

This has been forecast by a research group under the Vietnam Institute for Economic and Policy Research (VEPR).

The group said the high growth rate of 7.5 percent seen during the 1990s and in early 2000s will not return going forward.

The institution noted that if there is no new growth motivation stemming from an improvement in labour productivity, it will make it difficult for the country's economic growth to avoid a long-term slippage.

It added that a credit growth of 12 to 15 percent will help maintain an inflation target of 6 percent. However, a credit growth of around 20 percent will lead to a risk of high inflation (over 10 percent).

To improve the growth rate and quality of the economy, research group VEPR stated that it is necessary to boost productivity of the total economy and restructure it for higher quality.

Innovations in economy and administration are also decisive actions, the group said.

The VEPR also forecast that GDP will increase by about 6.2 percent this year. This ratio is 0.2 points more than the estimated growth rate for 2014.

The inflation rate by the end of 2015 is expected to reach to 4.09 percent, higher than 1.84 percent in December 2014.

According to the VEPR, the inflation rate has allowed the Government to adjust the prices of public services, including electricity prices. The increase in electricity prices will affect manufacturing costs, but will be limited to consumer prices.

In addition, if crude oil prices continue to decrease sharply, the balance in the economy will be affected. Therefore, the growth rate will possibly lose 1 to 1.5 percentage points, while the inflation rate will lose 4 to 6 percentage points, the VEPR pointed out.

In the case of an easy monetary policy, combined with the sensitivity of consumers and investment with low interest, the growth rate could possibly increases by 0.1 to 0.2 percentage points, while the inflation rate will remain below the target of 5 percent.

Vietnam shares economic attainment with Egypt

Vietnam is willing to share experience in national economic development with Egypt – a promising market with a population of nearly 90 million and a favourable geographic position for trade between Africa, Asia and Europe.

The two countries have a lot of potential for wider cooperation, Minister of Agriculture and Rural Development Cao Duc Phat said in an interview granted to the Vietnam News Agency on the sidelines of the Egypt Economic Development Conference (EEDC) held in the resort city of Sharm El-Sheikh on March 13-15.

Vietnam’s involvement in eight free trade agreements and six agreement negotiations, and Egypt’s participation in the Arab Free Trade Area will open up opportunities for the two countries’ businesses to export their products to the respective markets, he said, citing Vietnam could export farm produce, seafood and consumer goods to Egypt.

He suggested the two sides increase information exchanges and cooperation for mutual benefits.

He proposed the two countries’ State management agencies enhance coordination to create a legal framework for specific fields to facilitate business operation.

At the same time, it is important to raise the role of the commercial and industrial chambers to bridge cooperative activities of the business community, he said.

The minister highlighted the EDDC as an important political and economic event to Egypt that drew many heads of states, leaders of ministries, sectors, and major economic groups around the world.

The conference also offered a good chance for Vietnamese businesses to seek investment opportunities, contributing to elevating bilateral trade between Vietnam and Egypt to 500 million USD in 2015, he said.

He expressed his belief that the outcomes of the conference will help Egypt revive its economy and become a partner of Vietnam in the path of development.

Ambassador suggests creating trade promotion centre in Czech

Vietnam’s Ambassador to the Czech Republic, Truong Manh Son, suggested establishing a Viet-Czech Trade Promotion Centre in Prague to bolster economic ties between the two countries.

He made the recommendation at a recent meeting with around 20 representatives of the Vietnamese business community in the Czech Republic.

The business representatives agreed that the centre is necessary, noting that the lack of accurate information led to the failure of many Czech enterprises in Vietnam.

Trade between the two countries reached 652 million USD in the first half of 2014, in which Vietnam’s trade surplus accounts for 86 percent, according to Son.

The ambassador noted that Vietnam is listed among 12 priority markets of the Czech Republic to 2020, and is the only Asian country in the list. At the same time, the Czech government wants to reduce its trade deficit with Vietnam.

Son urged the Vietnamese enterprises in the Czech Republic to better their role as a bridge for trade between the two coutries.-

Quang Tri grants investment license for concrete project

The People’s Committee of central coastal Quang Tri province granted an investment certificate to the My Thuy International Port Joint Venture Company to build a concrete factory in the Dong Nam Economic Zone on March 12.

Construction on the 54 billion VND (2.53 million USD) factory is scheduled to be completed over 12 months across eight hectares in Hai Lang district.

The factory is expected to supply 85,000 concrete products annually to Vietnam’s market, primarily for the large-scale My Thuy deep-water seaport project.

The My Thuy Port is a 750 million USD project with a 4-kilometre edge-to-shore length, a 15-metre depth, and a 700-metre passageway. Once completed, it will be capable of receiving ships weighing up to 50,000 tonnes.

Ca Mau expands trade investment activities

The Mekong Delta province of Ca Mau will mobilise 10 billion VND (476,000 USD) for promoting its trade and investment programme in 2015, said Director of the provincial Investment Promotion Centre Mai Van Bo.

The programme aims to expand exports and attract investors to local government-approved projects and industrial parks.

In 2015, the province targets to augment its seafood exports to the US, Japan and the European Union (EU).

The province has actively carried out promotion activities including participating in international exhibitions and trade fairs to advertise locally-produced products and seek business opportunities for local enterprises.

It has also expanded trade promotion activities with China and member nations of the ASEAN bloc.

As scheduled, more than 20 business groups and economic specialists will take part in fact-finding trips to over 30 countries and territories in a bid to promote trade and participate in exhibitions and trade fairs.

The provincial trade promotion centre will also open 10 training courses to help local businesses become more proactive in trade, export activities.

To date, the province’s seafood products have been presented in over 50 countries and territories with export revenues of 1.3 billion USD annually.

Officials say price transparency needed

Officials agreed on March 16 that they need to do more to ensure commodity prices operate on market mechanisms with greater transparency, even as national utility Electricity of Vietnam (EVN) was roundly criticised for opacity in its price calculations.

In an online conference organised on the issue by chinhphu.vn, officials from the ministries of Finance and Industry and Trade also argued that there have been significant movement towards the desired objective.

The discussion was held in the context of electricity prices increasing by 7.5 percent from March 16, and that of petrol going up by 1,600 VND per litre recently. The hikes fuelled public concern about a domino effect on the prices of many other essential goods.

Electricity prices, always a contentious issue, have been increased eight times since 2007, but the magnitude of the latest increase as well as the lack of transparency in EVN operations has angered customers, said Ngo Tri Long, former Director of the Institute for Price Studies under the Finance Ministry.

Starting March 16, electricity prices went up to an average of 1,622.05 VND per kWh.

However, officials said the increase will help EVN compensate for losses (estimated at about 8 trillion VND or 380.95 million USD at present) incurred in recent years from exchange rate disparities.

Without the price increase, EVN's losses will exceed 12 trillion VND (over 571.42 million USD) in 2015, they said.

Long said Electricity of Vietnam (EVN) was basing its calculation on output prices, not that of inputs. The country's input prices are lower than other countries in the region, he noted, adding that the national utility has not taken labour productivity and insurance into consideration.

"All operations of the EVN are currently inefficient and customers have to bear the consequences. These shortcomings cause them to disagree with EVN every time it changes its prices."

However, Nguyen Anh Tuan, General Director of Pricing Department under the Ministry of Finance, said that with fluctuations in input prices, the government only approved the lowest price increase proposed.

To increase electricity prices by seven to 10 percent, EVN needs approval from the ministries of Industry and Trade and Finance. For increases of 10 percent and above, the Prime Minister's go ahead has to be obtained.

Tuan said that EVN has been transparent recently about electricity prices. The hike of 7.5 percent has taken into account economic growth as well as the impact on inflation and consumer price index (CPI), he said.

He also said that to avoid price hikes in other commodities following the increases in electricity and petrol prices, the Ministry of Finance has sent documents to provinces and cities, calling for tightened price inspections and control.

He said local authorities have also been told to strictly punish those who raise prices unreasonably.

"Curently, petrol prices are managed following market developments with the accommodation of the Government, which closely tracks global market moves," he said.

Tuan further said that the price hike is an opportunity for enterprises to reevaluate their production methods. They should innovate their technologies and upgrade their machines to improve efficiency if production costs are high.

He said the State will maintain subsidies for poor families to the tune of 153 billion VND (7.19 million USD) per year.

Vo Van Quyen, head of the Ministry of Industry and Trade's Domestic Market Department, said petrol prices are being fixed in accordance with market mechanisms.

In fact, the prices could have increased by 3,500 VND per litre, he said.

However, to avoid a "shocking" increase for customers and enterprises, the ministries of Industry and Trade and Finance used the petrol price stability fund, he said.

Quyen also said that petrol prices were reduced by about 40 percent over fourteen adjustments since July last year, and the recent price increase was only 10 percent.

"Price adjustments should be considered with long-term perspectives to avoid shocking adjustments, but they should still follow the market."

Vietnam eyes agricultural support from Japan

A seminar will be held on March 23-24 in Lam Dong Province to strengthen investment cooperation in the agricultural sector between Japanese and local businesses.

The seminar held by the Japan International Cooperation Agency in collaboration with the Japan External Trade Organisation, Bank of Tokyo-Mitsubishi UFJ and Lam Dong Province People's Committee will be an opportunity for b2b meetings to exchange information about each countries' businesses.

Forty-five Japanese and 60 Vietnamese businesses will take part in the event.

The Japanese businesses will take field trips to production facilities in Lam Dong Province to promote investment cooperation during several stages, including production, processing, storage, transport and consumption.

The seminar is held as part of the Japan-Viet Nam Agricultural Cooperation Dialogue, which aims to develop the agricultural sector.

Viet Nam has abundant natural resources but the country has not yet exploited its potential and has low quality and productivity as a result.

Japanese businesses expect to have many opportunities to join production and trading activities in this sector.

The Vietnamese Government hopes that Japanese businesses will bring hi-tech, modern machines to help local companies produce value-added products.

Lam Dong is well-known for its vegetable and flower cultivation. The province is chosen as a model for Japan-Viet Nam agricultural cooperation in the mid and long term.

Garment exports hit US$3.4 bln in Jan-Feb

Garment exports in the January-February period surged 18% to US$3.4 billion on-year, signalling a good sign for this year’s export target of US$28-28.4 billion, according to the Ministry of Industry and Trade (MoIT).

The US remained the largest export market for Vietnamese garment and textiles, accounting for 8.4% of the country’s market share.

This year’s exports to the highly lucrative market is forecast to explode 13% to US$11 billion over a year earlier.

Meanwhile, the EU continues to be a key market for Vietnamese garment and textiles in the time ahead after the EU-Vietnam Free Trade Agreement (EVFTA) comes into effect.

Accordingly, a tax cut of 12 to zero % on Vietnamese garment products will help Vietnamese firms sharpen their competitiveness.

Indian Pharma Expo to be organized in Vietnam this March

On March 19 and 20, Ho Chi Minh City will host the Indian Pharma Expo Buyer & Seller Meet 2015 at GEM Center, 8 Nguyen Binh Khiem Street, Da Kao Ward, District 1.

The exhibition is open to the public from 9:00 am to 5:00 pm during the two days.

The event is jointly organized by the Pharmaceuticals Export Promotion Council of India (PHARMEXCIL) and the Indian Chamber of Commerce (INCHAM) in Vietnam, with active support from the Consulate General of India.

The exhibition will attract more than 50 companies from India that specialize in formulations, active pharmaceutical ingredients, nutraceuticals, biologicals, herbal products, equipment & pharma machinery.

PHARMEXCIL takes regular trade delegations to several countries, including Vietnam. It has so far maintained interactions with Vietnamese trade associations through the Indian embassy.

The expo expects to get a fresh jump for the cooperation between India and Vietnam in the pharmaceutical sector.

Indian pharmaceutical companies started supplying medicines to the Vietnamese market in the early 1990s.

Since then, the Indian pharmaceutical industry has helped Vietnam stabilize finished formulation prices, making available the latest molecules and newer therapy options at reasonable prices. On this account, Vietnamese doctors and patients have developed tremendous faith in Indian pharmaceutical products.

India is an important supplier of raw materials, technology and machine parts to Vietnamese pharmaceutical manufacturers as well. Now, Indian experts are working in senior positions for Vietnamese formulation manufacturers.

India is also a major supplier of pharmaceutical medicines to the Vietnamese market. Indian medications include almost all therapeutic groups like vitamins, painkillers, advanced antibiotics, injectable products, infusions, anti-hypertensive products, anti-diabetic products, anti-cancer products, neuropsychiatric products, vaccines, etc.

Imports of pharmaceutical products from India to Vietnam have grown ever since, and maintained a good growth rate for the last five years. In 2009, it was US$148.6 million and in 2013, it was US$246 million.

For the year of 2014, imports from India reached US$267 million, posting 7.75% growth and occupying a 13.12% share of the total. India is the single largest exporting country to Vietnam in the pharmaceutical sector.

India tops the list of the number of pharmaceutical companies registered and the number of product registrations in Vietnam. Indian registrations in 2014 stood at 4,269, accounting for almost 26% of the total foreign medicines registered in Vietnam.

Besides the prominent position held by Indian pharmaceutical companies in Vietnam, pharmaceutical products are included in the Free Trade Agreement (FTA) between ASEAN and India and now entitled to a preferential tax rate of 0 to nine percent only.

This will enhance the importation of pharmaceutical products from India to Vietnam.

Tuna exports slump due to poor demand

Tuna exports have continued to slide this year due to a fall in consumption in major import markets, according to the Vietnam Association of Seafood Exporters (VASEP).

VASEP’s data showed that tuna exports plummeted 22% in January to US$33 million.

The downward trend started in 2013, with a 7.2% fall from the previous year to US$527 million and an 8.1% drop in 2014 to US$484 million.

Experts predict a rocky first half of this year for tuna exports, as there are no signs of recovery in tuna consumption demand and tax pressures on Vietnamese exporters remain high, especially in major import markets, including Japan, the United States and the European Union (EU).

According to VASEP, unstable sources of raw tuna are the primary reason for falling tuna exports. Vietnam remains reliant on the import of half of its raw tuna, on which a temporary import tax rate of 10 to 24% has been imposed. While the import tax rate on raw tuna is zero in several countries, tax imposition is also undermining the competitiveness of Vietnamese tuna exporters.

High demand in major import markets, related to the quality, origin and compliance with international standards in tuna exploitation, are also some of the challenges faced by Vietnam.

VASEP said management and data collection on tuna exploitation remains weak and must be enhanced to meet requirements of highly demanding importers.

In addition, Vietnam’s tuna exports to the EU will encounter obstacles this year, as its rivals, including Ecuador and the Philippines, have signed a trade agreement that entails a zero tax rate on tuna exports sent from these countries to the EU.

As negotiations for the Vietnam-EU Free Trade Agreement are nearing conclusion, experts have urged Vietnamese tuna exporters to remain well prepared to grasp any opportunity for expanding exports.

Vietnam moulding demand increases

Mould and die-making is an important support industry since their related products represent more than 70% of the components used in engineering consumer products.

However, foreign investors have said Vietnam’s mould and die-cutting industry suffers from severe shortcomings.

Mould and die-making is the foundation of the manufacturing sector, electronics, plastics, automotive, electrical, instruments, meters and all sorts of home appliances. However, Nguyen Van Hung, chairman of Tan Phu Plastic Joint Stock Company, one of leading plastics manufacturers in Vietnam, said due to weaknesses in Vietnam’s support industries, most of the raw materials were still imported, while mould and die-making skills remained lacking.

Hoai Nam, a representative of Japan’s Vina Miuld and Metal Products Co., Ltd, a mould manufacturer specialising in extruded aluminium shapes for architecture, car and food industries, told VIR that his firm had to import parts for stamping moulds. “For machines processing mould and die-cutting, the machine service and repair facilities aren’t good. We have to ask engineers from abroad to fix any problems”, he said.

Investments into mould and die production are regarded as capital-intensive and carry many risks which seem to have deterred local interest.

According to Vietnam Custom’s figures, Vietnam imported US$22.5 billion worth of machinery, mechanical appliances and electrical equipment in 2014, up 20.4% against 2013 or US$3.82 billion.

General Director of Sodick Vietnam Company Asada Kiyoji told VIR that “foreign countries have continuously increased direct investment in Vietnam over the past decade.

But the capacity of the local supply chain in terms of moulding and die-cutting support industries remains at a low level. And this is also a major weakness that Vietnam support industries need to address to win investor approval.”

He added that “robustness is really needed to deal with this situation. In the next couple of years, Japanese suppliers are going to come to Vietnam increasing numbers. But the local supply chains have to improve.”

Vietnam already boasts significant investment from Samsung, LG, Canon, Microsoft, Intel, Bosch, and Nokia.

Samsung Electronics has pledged US$11.2 billion to Vietnam to build three manufacturing complexes in Bac Ninh, Thai Nguyen, and Ho Chi Minh City. Two of the complexes have entered operation, with the last preparing to begin production.

In a meeting with the Ministry of Planning and Investment, Hironori Funahashi, chief representative of Japan’s Sojitz Corporation, also said that many Japanese small and medium-sized enterprises wanted to supply major foreign direct investment projects.

“In my view, Vietnam needs to resolve this issue, particularly with greater inward investment. Furthermore, with the upcoming formation of ASEAN Economic Community, there will be fierce competition. Therefore it is necessary that Vietnam quickly finds a way to be more competitive than other ASEAN countries”, said Asada.

The Ministry of Industry and Trade last year issued Decision 9208 approving a new plan on support industries with three main areas of focus being spare parts, industrial textiles and hi-tech products.

According to the plan, by 2020 Vietnam is expected to see 1,000 businesses supplying support industrial products, accounting for  11% of manufacturing industry.

This would meet 45% of essential domestic production demands and account for 25% of the total industrial production export value.

By 2030, Vietnam will be able to produce 70% of domestic support industry product needs.

In 2020, Vietnam would, if this plan becomes a reality, satisfy 60% of the demand of metal, plastics, rubber, and electrical-electronics parts.

Vietnam has had two supporting industry development complexes in Vung Tau and Haiphong following a co-operation deal with Japan, however, after 13 years they have largely operated without focus. As a result, most of the support industry products are provided by the foreign-invested firms themselves.

Asada suggested that “we can’t forget about enhancing the abilities of local firms. There are too many new independent companies which are still weak.

They will die in this battle, even if they think they can continue churning out products at their current quality levels. Local firms need to understand we need on-time delivery and good quality products in order for them to survive.”

He said Sodick provided wire-cut electric discharge machines which were used to press dies and parts processing.

“Many customers want resin mould making, therefore our product form carving electric discharge machines are indispensable. And I also think that plastic injection moulding machines which are indispensable manufacturing facilities are under-developed. In short, we also help clients that want to enhance their technology.” he added.

Property sector hopes to heal in 2015

Property companies nationwide geared up their operations right after the Tet (Lunar New Year) holiday, accompanied by high expectations of market recovery this year.

This is different from the previous years, when transactions were often quiet in the month following Tet, reflecting the high hopes of property companies after a long freeze.

According to statistics of the Vietnam Real Estate Association, 1,550 successful property transactions were recorded in January, the month before the Tet holiday, three times higher than the same period last year.

With credit policies being eased and new policies such as allowing foreigners to own houses in the country about to come into force, property developers are aiming for higher targets this year.

Novaland Company says that it expects the property market to thrive this year, adding that the company's sales are projected to increase by more than 30% against last year, online newspaper Vnexpress reports.

FLC Group says that its profit this year might reach VND1 trillion (US$46.94 million), more than double that of last year.

Property giant Vingroup aims to maintain a high growth rate in 2015, after reporting a 51% growth in turnover in 2014 over the previous year.

Several projects in the country's major cities also resumed construction after the nine-day Tet holiday, to speed up progress and to take advantage of the market recovery.

Nguyen Xuan Quang, chairman of the Nam Long Investment Corporation, says the prospects of the property market will be bright this year. As a result, several property companies have set targets for higher turnovers and profits than the previous years.

Quang adds that the macroeconomy has shown positive signs, such as a growing GDP, lower interest rates and abundant remittances, which will stimulate the property market towards recovery after a long freeze since 2007. He points out that the confidence of investors and buyers returned with many projects resuming construction right after the Tet holiday, with a higher supply of apartments and booming mergers and acquisitions.

Still, low-priced apartments will remain the dominant market demand this year, while the demand for high-end apartments will rise, thanks to the government's policy of allowing foreigners to buy houses in the country, he says.

However, Huynh Phuoc Nghia, an expert from the Global Integration Business Consultants, says that property companies should be cautious about their business plans this year. He points out that although the market has shown signs of recovery, it will be difficult to return to the peak of 2007, adding that the maximum profit growth should be expected at 15 to 20%.

Nghia says that competition will grow harsh this year, weak companies will be eliminated and chances will be better for companies that have prestige and offer good services and good quality.

Nghia lists the three kinds of property that will be the most attractive for investors this year, thanks to stable and high profits, as being industrial zones, medium and high-end apartments and tourism property projects.

According to a report by Ban Viet Securities (VCSC), the easing of the credit policy, the policy to allow foreigners to buy houses in the country and the development of the infrastructure system will be the drivers for the property market's recovery this year.

VCSC says it is a good time to buy houses or invest in the property market as the interest rates are at their lowest in three years, adding that the low rates will encourage cash to flow into the property market rather than deposits.

With about 80,000 foreigners currently working in Viet Nam, the policy to allow foreigners to buy houses in the country will heat up the property market.

Infrastructure development also largely supports the development of the property market, VCSC says, adding that the government's speeding up of infrastructure development is expected to be worth more than US$3 billion this year.

Minister of Construction Trinh Dinh Dung has said that this year, the ministry will focus on restructuring property products, especially housing projects, to meet the market demand, and ensure a healthy and sustainable development.

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

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