BUSINESS IN BRIEF 8/6

Tourism sector aims for effective development

The Ministry of Culture, Sports and Tourism has taken a number of approaches to develop the sector effectively and sustainably in 2015 and following years.

The ministry has proposed stablishing a fund to mobilise different resources for the development of tourism.

The fund, with 70 percent of its funding coming from businesses, is expected to expand promotion activities and markets to enhance the competitiveness of the sector.

The ministry has also sought the approval of the Government to grant visa exemptions for tourists from key markets to draw more international visitors to the country.

General Director of the Vietnam National Administration of Tourism (VNAT), Nguyen Van Tuan, argued that a more favourable visa policy would lure more foreign arrivals.

Currently, Vietnam unilaterally exempts visas for citizens of Japan, the Republic of Korea, Finland, Denmark, Norway, Sweden and Russia. It bilaterally grants 30-day exemptions for citizens from nine out of the 10 ASEAN member states, according to Tuan.

Under a resolution just issued on June 1 this year by the government, visitors from Belarus will enjoy visa exemptions from July 1, 2015 to June 30, 2020.

Meanwhile, Vu The Binh, Vice Chairman of the Vietnam Tourism Association said a favourable visa policy should be applied for key tourism markets and countries that share good political and cultural relations with Vietnam.

The association has suggested that France, Germany, the UK and Australia should also be added to the exemption list. It wants to see more visas collected at border gates in the last six months of this year.

Vietnam has seen significant increases of tourists from its key markets of Japan, the Republic of Korea, and Russian since granting visa exemptions to them.

In 2014, Vietnam welcomed 1.8 million tourists from the three countries, making up 23.6% of the total arrivals.

Vietnam Air says agents, customers decide service charges

Vietnam Airlines said service charges for ticket bookings and issuance are collected on agreements between agents and buyers but will not cause total ticket prices to exceed the ceilings set by the Ministry of Finance.

The airline explained its fare structure after the ministry requested the Civil Aviation Authority of Vietnam (CAAV) to tell the carrier to reregister its economy-class domestic fares and clarify service charges.

The ministry’s request comes after the flagship carrier’s airfares in its two latest reports were found the same, except for the new fares registered for its Buon Ma Thuot-Thanh Hoa/Haiphong flights.

Speaking to the Daily, the airline said it quoted airfares for domestic flights based on CAAV’s Document 5436/CHK-TC and the ministry’s Decision 3282/QD-BTC issued in December last year and regulating the ceilings for economy-class fares for domestic flights on the routes operated by a single airline.

The ministry said if the carrier’s highest fares equal to 90% of the ceilings, the ceilings could be broken when fares rise 15%.

In response to this issue, Vietnam Airlines said the ministry’s Price Management Department and CAAV approved its reports on tickets in the past. In Document 1236/TCTHK-TTBSP sent to the ministry, the airline noted that its one-way fares excluding tax, fee and surcharge can be adjusted up by 15% depending on the market situation but will not be higher than the highest permissible levels.

This means it can adjust fares by a maximum of 15% if one-way fares exclusive of tax, fee and surcharge do not surpass the caps.

As for surcharges for ticketing services, Vietnam Airlines said service charges for ticket bookings and issuance were collected by the ticketing offices and agents that offer the services to passengers.

Therefore, agents and customers will agree on these service charges based on service quality. However, agents must ensure one-way ticket prices excluding tax, fee and charge will not be higher than the upper limits set by the ministry.

Vietnam Airlines said the service charges help ticketing agents to improve service quality and their competitiveness and passengers can select the best service providers.

In case passengers book tickets online, the airline will collect the two service charges totaling VND50,000 (US$2.3) for economy-class domestic fares and VND90,000 for business-class domestic fares including VAT.

Fruit and vegetable exports to Turkey surge

Vietnam’s exports of fruits and vegetables to Turkey have surged this year, according to the latest data of the General Department of Customs.

Turkey imported more than US$409,400 worth of vegetables and fruits from Vietnam in the first quarter of this year, up a staggering 466% versus the year-ago period.

However, rice exports to Turkey declined strongly in quarter one. Vietnam shipped only US$249,000 worth of rice to Turkey in the first quarter, down 72.28% (US$651,000), against last year’s same period.

The decline, according to Vietnam’s commercial service in Turkey, resulted from the recovery of Turkey’s production of agricultural products in the aftermath of drought. Vietnamese rice has not met the demand of Turkish consumers.

Vietnam’s rice is of small size while consumers in Turkey consume Baldo or Osmancik rice of larger size farmed domestically or imported from the U.S. Vietnamese fragrant, long-grain rice is also imported by Turkey but import volume is not considerable.

Besides, Turkish lira has depreciated by over 10% against the U.S. dollar since the beginning of the year, pushing up costs of importing rice from Vietnam. Moreover, it is not easy for Vietnam to compete with other rice exporters like Pakistan and India which are geographically closer to Turkey.

Vigatexco to build residential-commercial complex in Tan Phu

Thang Loi Textile - Garment Joint Venture Company (Vigatexco) will spend VND2.8 trillion (US$128.6 million) developing a residential-commercial complex in HCMC’s Tan Phu District.

Vigatexco said the site of the complex is located at a prime location of the outlying district and next to Tham Luong Bridge. Vigatexco has developed its production facilities there over the years.

Nguyen Thi Dieu Phuong, general director of Vigatexco, said the project got the green light from the government of HCMC early this year. Vigatexco is now completing procedures for the project covering over 150,000 square meters.

Currently, a number of companies have factories in the area such as Victory International Spinning Company, Thang Loi International Garment Company and Nam Phu Investment and Development Company.

Vigatexco said it had asked the tenants to relocate their facilities from the area a long time ago to make room for the project. However, some of them have yet to move and Vigatexco had informed them of power and water supply cuts if they delay relocation.

In response, the tenants wrote to the city government and competent agencies asking for assistance to extend their operations until December 31 next year.

Vigatexco has a leasing contract with the HCMC Department and Natural Resources and Environment to use the land lot.

Selection of local firm backed for Ba Son development

The Ministry of Planning and Investment has thrown its weight behind the Ministry of Defense’s proposal to pick

HCMC Commercial Service Joint Stock Company to develop commercial and service facilities at the premises of Ba Son Shipyard in HCMC.

In the investment ministry’s Dispatch 2171/BKHDT-QPAN sent to the Government, Minister

Bui Quang Vinh advised the Prime Minister to assign the Ministry of Defense to select a financially capable investor to buy the existing assets and land in Ba Son Shipyard area.

The defense ministry explained selecting a competent investor is in line with the Prime Minister’s approval late last year for selling the assets and transferring the land use right in Ba Son area.

On March 30, the Ministry of Defense in Document 2490/BQP-CNQP proposed the Government allow HCMC Commercial Service Joint Stock Company to buy the properties of Ba Son in line with the land prices approved by the city government and under the existing regulations.

The ministry explained earlier that the investor chosen to develop the Ba Son area must be experienced in managing

and implementing large-scale property projects and can advance around VND4.5 trillion this year and next to accelerate relocation and construction of a new shipyard for Ba Son, pay enough money for land and meet other criteria related to financial aid for Ba Son Corporation.

The selection of a Vietnamese investor is aimed at ensuring national interests and supporting the development of local enterprises. Meanwhile, the ministry said picking a foreign investor would take more time to complete legal procedures, thus affecting the process of relocating the shipyard.

The ministry suggested the zoning plan for development of the existing Ba Son area should be in harmony with the city’s socio-economic development strategy.

Binh Dinh to cancel slow-moving tourism project

The Economic Zone Authority of Binh Dinh Province has been assigned to take steps to cancel a resort project worth around US$250 million in Vinh Hoi hamlet in Phu Cat District as it has fallen far behind schedule.

Binh Dinh Province’s chairman Ho Quoc Dung told the Economic Zone Authority to work with relevant agencies and prepare procedures to recall the Vinh Hoi report project of Viet My Hotel and Tourism Co. Ltd. in compliance with the prevailing regulations, according to the office of the provincial government.

After the project was licensed in 2007, the investor pledged to develop a golf course, villas, five-star resort, marina and sport facilities. However, the investor has yet to implement any component of the project covering 300 hectares. But the site allocated to the project remains deserted.

The project is part of the national key tourism corridor of Phuong Mai-Nui Ba.

A number of local and foreign companies want to invest in large-scale tourism and property projects in Binh Dinh, but they cannot translate their investment plans into reality as many projects were licensed before, according to the central province’s Investment Promotion Center.

As a result, the province will review foot-dragging projects and urge their investors to start work. If they are incapable, their projects would be cancelled.

Recently, Binh Dinh decided to do away with the Nhon Phu new urban area project of Asia-Pacific Investment Joint Stock Company (API) covering 24.35 hectares in Nhon Phu Ward in Quy Nhon City.

In addition to this VND2.3-trillion urban area project, API applied to develop the Ban Thanh residential development project in An Nhon Town with an estimated cost of VND280 billion. However, according to the center, the investor has not broken ground for its projects and the province will issue decisions cancelling these projects in the coming time.

Binh Dinh has also granted investment certificates to some projects like the Ky Co-Nhon Hoi hydrotherapy resort worth VND109 billion. The 50-hectare project is developed by Quy Nhon Port Logistics Service Company.

Meanwhile, Vingroup is implementing a Vinpearl amusement park capitalized at some VND3.5 trillion and FLC Group will invest around VND4 trillion in a high-end resort in Binh Dinh province. Sun Group is also planning to invest in a big tourism project in the province.

More remittances flow into property, production sectors

HCMC’s real estate and manufacturing sectors have been recovering since early this year, supported by more incoming remittances and credits.

Incoming remittances in the city between January and May were up 18% year-on-year to US$1.7 billion and the figure for all of 2015 is forecast to reach US$5.3-5.5 billion, said Nguyen Hoang Minh, deputy director of the central bank’s HCMC branch.

The remittance flowing to the real estate sector, business and production improved versus the previous year, rising 0.9 percentage point and 1.1 percentage points to account for 21.8% and 72% of the total remittances respectively. The remaining 6.2% was sent to relatives of overseas Vietnamese to spend on overseas study or illness treatment.

Meanwhile, outstanding loans for the property sector amounted to VND115 trillion by end-March, or 12.6% of the total, a significant improvement from 9.72% at the end of 2012, 11% at end-2013 and 11.5% at end-2014.

Since 2012, credit for the realty sector has registered annual growth of over 10%, making up 10-13% of the total outstanding loans. The sector now has a bad debt ratio of around 2.6%.

The city saw more credits going to project developers than individuals who needed money to buy or repair homes. Credits for urban area projects accounted for 23% of the total outstanding loans for the realty sector, up five percentage points against early this year.

Loans for high-rise office building projects made up 18.3%, up two percentage points, while those for home repairs and purchases stood at 10.27%, a rise of 1.7 percentage points.

According to a report on the city’s socio-economic situation, local banks reported total outstanding loans of VND1,113 trillion in the first five months, up 4.3% from the end of 2014 and 16.1% year-on-year.

Credits in the domestic currency stood at VND944.8 trillion, or 84.8% of the total outstanding loans, and those in foreign currency hit VND169 trillion, or 15.2%.

Medium and long-term credits made up 54.1% of the total outstanding loans, up nine percentage points against late 2014, while short-term loans accounted for 45.9%, a 0.76-percentage-point decline.

Regarding the Government’s VND30-trillion loan package for the real estate industry, credit institutions had pledged to lend over VND2.9 trillion to nearly 3,800 customers by the end of the first quarter of 2015.

Local banks’ mobilization hit VND1,358 trillion at the end of May, up 1.05% against late 2014 and 15.8% year-on-year. Deposits in dong reached VND1,163 trillion, or 85.6% of the total mobilization, and that in foreign currency was VND195 trillion, making up 14.4%.

Vietnam’s smartphone sales top $625mn in 1st quarter: data

Vietnamese consumers spent well over half a billion U.S. dollars on smartphones in the first quarter of this year, data from a market tracker shows.

Vietnam’s smartphone sales in the three months reached 3.02 million units, up 25 percent from the same period last year, a local retailer has told Tuoi Tre (Youth) newspaper, citing data by German market research firm GfK.

The Vietnamese company declined to be named as it is not allowed to reveal the nonpublic information to the media.

The more than three million unit sales were collectively worth VND13.6 trillion (US$624.71 million), meaning the price of a smartphone averaged VND4.5 million ($207), according to data from the same source.

The strongest sales were recorded during the first two months, when Vietnam celebrated Tet, or the Lunar New Year. Hanoi and Ho Chi Minh City, the country’s two biggest cities, were the largest markets for smartphones.

Vietnamese consumers have increasingly preferred smartphones to feature phones, with a wide range of brands to choose from, including Samsung, Oppo, Mobiistar, Q-Mobile, Asus, Sony, Apple and Microsoft. Oppo reported the strongest growth thanks to numerous promotional campaigns.

More smartphone users in Vietnam have switched to devices with screens bigger than four inches than the same period last year.

Handsets whose price averaged VND4.5 million were the bestsellers in the Jan-Mar period. Microsoft, Samsung, and Oppo have many products in this price segment.

Global smartphone sales in the first quarter of this year reached 310 million units, up seven percent from Q4-2014, GfK said in a press release on May 15. The total value was $96.2 billion, an eight percent increase from a quarter earlier.

Spending by consumers in Vietnam on technical consumer goods in the first quarter surged 22.8 percent from the same period last year, a GfK report has found.

Vietnamese consumers also spent more than VND36 trillion, or $1.65 billion, on technical consumer goods in the first quarter, with telecommunications accounting for the most sales.

Vietnam’s telecommunications sector generated sales of VND15.7 trillion ($721.18 million), mostly driven by the healthy demand for mobile handsets, in the three-month period, GfK said in another press release, citing findings from its TEMAX Vietnam Q1 2015 quarterly report.

LienVietPostBank, MobiFone to jointly issue new Sim Card

Lien Viet Post Joint Stock Commercial Bank (LienVietPostBank) has pledged VND10 trillion (US$460 million) to MobiFone Telecommunications Corporation (MobiFone) to assist them in short- and long-term projects.

The signing ceremony between LienVietPostBank and MobiFone. Photo ptqnews.com

A signing ceremony was held between the two sides in Ha Noi on June 3.

Under the agreement, the two sides will cooperate to issue a new SIM card, Macca, with an aim to raise public awareness of the development of macadamia trees in Viet Nam.

Macca SIM card users will be automatically updated about the Government's preferential policies, business environment, market prices, and other services related to the growth, investment, and development of macadamia.

The SIM card is part of the efforts of LienVietPostBank and Him Lam Joint Stock Company to develop macadamia in Viet Nam.

Following the agreement, the two sides will also cooperate to provide payment facilities via bank accounts for services provided by MobiFone. They will also provide FastBank services, which will allow customers to use the payment services of the bank through MobiFone apps, such as FastBank USSD, Fast Bank Application, and FastBank WAP.

NCB reserves $33 million for HCM City homebuyers

The National Citizen Bank (NCB) has reserved preferential loans worth VND700 billion (US$33.33 million) to support homebuyers across 16 projects in HCM City, in collaboration with three property firms.

The National Citizen Bank has reserved preferential loans to support homebuyers across 16 projects in HCM City.Photo laisuat.vn

Novaland Group, one of the property firms, has joined the programme with projects such as Sunrise City, Tropic Garden, The Prince Residence, Galaxy 9, and Icon 56. Its developments also include Lexington Residence, Botanica, River Gate, and Lucky Dragon, in addition to The Sun Avenue, Lucky Palace, Kingston, and Sunrise Cityview.

Novaland homebuyers can choose annual interest rates of either 7.2 per cent for a preferential term of one year or 9.0 per cent for two years.

Of the remaining two property developers, the Hoa Binh House Company offers Soho RiverView and Green Park projects, while the Tien Phat Real Estate Investment Company has joined the credit package with The Ascent.

The customers of the two developers will enjoy an annual interest rate of either 7.5 per cent for 12 months, or 9.0 per cent for 24 months.

Entrepot to be built in Lang Son

An entrepot will be built in the northern province of Lang Son, with the aim of reducing the accumulation of agricultural products at the border gates.

The 143ha centre, to cost an estimated VND986 billion (US$45.2 million), would be built in the Dong Dang border gate economic zone, Vice-Chairman of the provincial People's Committee Nguyen Van Binh said.

The centre will accommodate warehouses and quarantine and quality-testing centres. Businesses can also organise trade fairs and classify, pack and preserve their products there.

The industry and trade ministry has worked with the provincial authorities on the implementation of the project.

A representative from the ministry said the centre would help to effectively deal with the problem of products getting accumulated at the border gates, before being exported to China.

The centre would also serve as a venue for Chinese businesses to seek information about the Vietnamese market and vice versa.

An average of 1,200 trucks transporting agricultural products, chiefly watermelons and litchis for export to China, go through the customs at border gates in Lang Son each day.

Blockages at the border gate have been occurring for several years, especially when seasonal crops such as watermelons and litchis are harvested.

An estimated 100,000 to 130,000 tonnes of watermelons are exported to China under the small-scale trade each year.   

Russia's Primorye to boost trade with Da Nang

The representatives of the Chambers of Commerce and Industry from Da Nang and Russia's Union Primorye (Primorsky) signed an MoU on trade, investment, export, and tourism on June 4.

Representatives of Chambers of Commerce and Industry from Da Nang and Russia's Union Primorye (Primorsky in Russian) sign a Memorandum of Understanding (MoU) on trade, investment, export and tourism. Photo Cong Thanh

President of the Primorye Chamber of Commerce and Industry Boris Stupnitsky said the MoU would help boost Da Nang's exports and create business opportunities for the enterprises of both sides.

According to Stupnitsky, Primorye has been planning to open a representative office in the central city of Viet Nam to create favourable conditions for Russian businesses as well as the exports to the East-West Economic Corridor that links Da Nang, Laos, Thailand and Myanmar via Da Nang port.

A representative of Primorsky noted that cargo shipment between the central city's port and Vladivostok Port in Russia had remained poor for years, while budget airline Vietjet Air had been planning to open air routes between Vladivostok in Russia and a number of Vietnamese regions such as HCM City, Nha Trang, Da Nang, Hue, and Phu Quoc.

While the central city's port has a capacity to accommodate 5 million tonnes of cargo per year, some 13 shipping companies are operating at the city's ports, including Tien Sa and Lien Chieu.

Intel to move part of production from Malaysia to Vietnam

U.S.-based chipmaker Intel Corporation will relocate a part of its production facility in Malaysia to Vietnam as well as China in an effort to cut labor costs, according to government website chinhphu.vn.

The relocation of the Intel plant in Kulim to facilities in Ho Chi Minh City and Chengdu (China) will result in the layoff of 600 Malaysian workers at the plant, chinhphu.vn reported, quoting Malaysian news website The Star.

In addition to the relocation, the Kulim plant, specializing in manufacturing motherboards and assembling processor packaging since 1995, will receive new technology products from places like Costa Rica to support the server market and other trendy consumer electronic products, The Star reported.

Intel has employed about 8,000 Malaysian workers, more than 40 percent of whom are working for the Kulim plant.

That smartphones are increasingly popular has led Intel to change strategy and promote the production of processors at a higher level, the Malaysian news website said.

Many technology corporations like Samsung, LG, and Microsoft have also been also moving production bases to Vietnam due to the advantage of cheap labor and the strategic location of the country as a gateway to the Southeast Asian region.

Intel Products Vietnam CEO Sherry Boger in November last year announced that the company would install a second production line to manufacture computer CPUs at its Ho Chi Minh City factory, part of Intel’s effort to expand the production of its flagship products in the Southeast Asian country.

Four months earlier, Sherry Boger had said that eighty percent of the Intel semiconductor chips used in computers around the world would be made at its plant in Ho Chi Minh City by August 2015.  

Meanwhile, the 4th generation Haswell CPUs would be produced at the plant in the Saigon Hi-Tech Park in District 9 by October last year, Boger told local media then.

To achieve the target, the company had imported 71 pieces of equipment from factories in Malaysia and Costa Rica and sent 105 Vietnamese engineers to the Malaysian factory for training.

It would import 159 more devices to ramp up CPU production in Vietnam, she added.

Intel Products Vietnam has more than 1,000 local employees and it took them only two months to be certificated to produce the Haswell processors, which the CEO said was an unexpected success for such a hard-to-make product.

The Vietnamese plant is making two of Intel’s flagship products, the SOC (system on a chip), used for tablets and smartphones, and the Haswell CPU after the chip-making titan began its operations at the SHTP in 2010, Boger told Tuoi Tre (Youth) newspaper in July last year.

It took the Intel factory in China’s Chengdu fifteen years, and one in Malaysia 40 years, to reach a similar milestone, Boger added.

In April 2014, Intel announced that it would transfer the assembly facility from Costa Rica to Asia to enhance competitive advantage.

Legal framework requisite for infrastructure exploitation right sale, experts

Experts attending a seminar hosted by the Central Institute of Economic Management yesterday agreeing with selling exploitation rights of public infrastructure works such as canals, seaports and airports to private investors but emphasizing the need of building a close legal framework for this field.

Many countries have seen workers go on strike demanding salary increase after privatizing some railway and airway works, they cited. This has greatly affected these countries' socioeconomic activities.

It was a pressing requirement for Vietnam to build a legal framework including a specific act on equitization before selling the exploitation right of seaports, airports and other works, they said.

On the other hand, the scale of Vietnam’s private economic sector is rather small. Few businesses are with strong capital source and experienced in operating such large infrastructure works. Therefore, relevant agencies should consider inviting foreign investors to attend in possible operation phases with a suitable capital ratio.

Experts warn of more inflation risks

Economic experts have warned of a return of high inflation at the end of this year and next though the consumer price index (CPI) was low in January-May.

The General Statistics Office (GSO) announced that the CPI nationwide grew 0.16% last month against April and 0.95% over the same period last year. The CPI inched up a mere 0.83% in January-May compared to the same period last year.

If price increase factors for food and energy were excluded, the nation’s inflation went up 0.14% last month against April and 2.1% against the same month last year.

However, economic expert Nguyen Minh Phong said the risk of an inflation rise this year was higher than in 2014 as pressure on interest rate hikes is rising and crude oil prices on global markets are unpredictable.

Phong was quoted by VietnamPlus as saying that the world crude oil price exceeded US$60 per barrel in mid-May, which was much higher than the US$47 early this year. The U.S. dollar has been firmer than many other currencies.

On the domestic market, prices of many goods are seen rising, coupled with the impact of lax monetary policy aimed to fuel economic growth this year and higher credit growth this year on inflation. Early this year, the Government set gross domestic product growth of 6.2% and the Government still has much work to do if it wants to achieve the target.  

Retail indicator improved in the first five months of this year with total sales up 10.2% year-on-year to VND997 trillion. However, more spending went to luxury products, which is evident in a 185.7% rise in completely-built-up auto imports totaling US$2.3 billion in the period.

Phong said a pickup in inflation would challenge domestic enterprises as they are not yet out of the woods despite there are more businesses set up and less firms dissolved in the first five months.

More than 3,880 enterprises were dissolved and stopped operations from January to May, declining 0.5% compared to the same period last year, according to the GSO. The number of business suspensions in the period drop by 5.3% to 22,705.

Late last month, the Vietnam Center for Economic and Policy Research (VEPR) warned of a new circle of high inflation and volatile foreign exchange rate next year as macro-economic uncertainties may come back.

VEPR director Nguyen Duc Thanh said budget deficit is a major challenge this year and next. But the Government will find it hard to mobilize enough funds to finance this budget deficit, according to a report released by VEPR late last month.

The report said if the Government focused much on financing the budget deficit, monetary and fiscal disciplines may be breached. This would create a bad precedent and erode confidence in monetary policy and fiscal transparency.

VEPR proposed suitable adjustment for the exchange rate between Vietnam dong and the U.S. dollar and other foreign currencies in line with market conditions. According to the report, the local currency started to appreciate against other currencies in the region since 2011.

VEPR envisaged two scenarios for GDP and inflation growth in 2016 with the local economy expected to grow 6.1% to 6.3% and inflation expanding 1.9% to 3.2%.

RoK investors contribute to Hoa Binh’s development

Chairman of the People’s Committee of the northern Hoa Binh province Nguyen Van Quang has spoken of the contributions by investors from the Republic of Korea (RoK) to the locality’s economic development.

Quang had a working session with a delegation from the Korean Trade and Investment Agency (KOTRA) led by RoK Ambassador Jeon Dae Ju on June 4.

He told the guests that his locality is carrying out measures to improve its business climate, while supporting enterprises to overcome difficulties to efficiently implement invested projects.

He expressed his hope that the ambassador and KOTRA will work closely with the province to introduce and promote its potential, advantages and preferential policies to RoK investors.

RoK Ambassador Jeon Dae Jun showed his interest in human resources quality, water supply in the Da River left bank industrial zone and traffic safety for workers.

RoK investors are now running 11 projects in Hoa Binh with a total registered capital of over 100 million USD, ranking first in the number of foreign-invested projects in the province.

Hanoi’s six-month economic growth expected to reach four-year high

Hanoi economy is expected to grow at 7.8 percent during the first half of this year - the fastest pace in four years, reported the Ha Noi Moi (New Hanoi) daily newspaper.

The gross domestic product expansion in the first six months has seen nearly all sectors with a higher growth pace than 2014, according to a draft report read at a regular meeting of the municipal People’s Committee on June 4.

Industrial production rebounded with an expected value increase of 6.7 percent while budget revenue will exceed 72.43 trillion VND (3.33 billion USD), excluding collections from dividends and remaining profits of State-owned companies.

The draft reveals that the capital city succeeded in ensuring demand and supply balance of goods and price stability, especially during the Lunar New Year holiday in mid-February.

Hanoi still faced major problems despite such substantial progress, said Chairman of the municipal People’s Committee Nguyen The Thao, pointing out business bottlenecks, export declines and the prevalence of small-scale foreign-invested projects.

He added sluggish basic construction and administrative reform, along with mismanagement of land, construction and investment.

He stressed that for the remainder of the year, municipal agencies need to continue addressing business difficulties, improving the investment climate and harnessing resources to complete key projects.

More attention should also be paid to solving pressing civil issues, ensuring social welfares, creating jobs and reducing the rate of low-income households, Thao noted.

DHL Express provides express delivery services to Vietcombank

DHL Express – the world’s leading logistics company on June 4 announced that it will provide express delivery services to the Joint Stock Commercial Bank for Foreign Trade of Vietnam (Vietcombank).

Vietcombank Deputy General Director Pham Thanh Ha said by partnering with DHL Express, Vietcombank can deal with the current challenges to provide their customers with better services.

Ms Yasmin Aladad Khan, Senior Vice President of South East Asia and South Asia Region at DHL Express underscored the importance of the DHL Express global network and Vietcombank’s comprehensive access to the local market and highlighted the effective cooperation between the two sides in offering high quality express delivery services.

Director Commercial at DHL-VNPT Express Ltd, Md. Miarul Haque has pledged to provide maximum support for human resources training and expertise to help its partners maintain and expand business activities.

AEC could spell trouble for the furniture industry in Vietnam

Furniture executives from around the globe are knocking at the door of Vietnam, a rapidly emerging supplier for high quality and some of the least expensive woodwork exports on the global market.

With goods at prices competitive with those made in neighbouring China, Vietnam is being courted by US manufacturing and retail executives looking to purchase inexpensive desks, chairs, and household items made from pine, cajuput or rubber wood.

As a result, Vietnam currently ranks fourth in the world, second in Asia and first in Southeast Asia in exporting wood furniture and furnishings and is rapidly becoming a leading exporter to the US, according to official sources.

However, despite all the successes in the overseas markets – domestic businesses have only managed a 40% market share in the local market – which leading market analysts believe should be much higher.

Vo Van Quyen from the Ministry of Industry and Trade (MoIT) said imports account for 60% of the local market with the nation importing on average nearly US$2 billion annually— 40% for the real estate industry and 60% to meet domestic consumer demand.

Quyen, who is in charge of domestic trade affairs at the MoIT, said Vietnam has roughly 4,000 companies in the industry, primarily very small and medium sized businesses located in trade villages.

They will face increasing difficulties competing at home Quyen stressed, as Vietnam joins trade pacts and lowers import duties in line with its obligations under the ASEAN Economic Community (AEC) early next year.

Huynh Van Hanh, deputy head of the Handicraft and Wood Industry Association (HAWA) of HCM City in turn echoed Quyen’s concerns and said domestic companies are sure to face increasing difficulties when the lower tariffs under the AEC kick in.

Hanh said domestic companies need to take heed and should make plans to shore up market share in the domestic marketplace with increased brand recognition for customers or they’ll lose out from the AEC formation.

For its part, the Vietnam Wood and Wood Product Association said it is aware of no less than 26 countries that are planning, or have made moves, to expand into Vietnam’s furniture industry –  including China, Thailand, Japan, the Republic of Korea (RoK) and the UK.

According to the HAWA, the local market has been neglected as domestic companies have focused on pursuing big orders from foreign partners.

As a result they have failed to meet domestic customers’ tastes, establish distribution networks and develop brand names recognition.

There is near unanimity among the experts that limits in connectivity, trade promotion, and establishment of distribution networks have led to domestic companies and craft villages neglect of the domestic market.

This is the major cause that sales of imported goods have taken off and cornered the market in Vietnam.

It is time for companies in the industry to pay more attention to the domestic market, they advise adding that focusing on the domestic market helps businesses avoid overdependence on certain foreign markets.

In addition, it also helps businesses minimize risks in the integration process.

HAWA cautioned that though Vietnamese woodworks are exported to many countries in the world including demanding markets like the US, Japan and EU – it does not necessarily follow that they meet with the domestic demand.

Businesses must conduct market research, develop value chains for production and distribution along with good marketing and promotion policies to meet the domestic demand—or else AEC will spell trouble for the domestic market.

HSBC to stop offering monthly manufacturing indicator for Vietnam

The Hong Kong and Shanghai Banking Corporation (HSBC) has announced that it will stop publishing the Purchasing Managers' Index (PMI) for Vietnam after five years of offering it for free for the Southeast Asian country, along with others worldwide.

With the announcement released on Monday along with the HSBC Vietnam Manufacturing PMI for May 2015, Vietnam will no longer receive the PMI starting next month.

This will be the final HSBC PMI index published in Vietnam and other countries, HSBC said in a press release.

PMI comprises of many economic indicators derived from monthly surveys of companies from the private sector conducted by Markit Group, which prepares PMIs for over 30 countries worldwide, and the Institute for Supply Management (ISM), which provides PMIs for the US.

The Vietnam Manufacturing PMI, a composite index of five sub-indicators including production level, new orders from customers, supplier deliveries, inventories and employment level, have been conducted by Markit for the last five years.

The collaboration with Markit to carry out the PMI surveys has been a success, HSBC said without citing the main reason for the move.

Kawasaki Heat Metal Vietnam employees work at the company's plant in Binh Duong Province, located in southern Vietnam.

In the last Vietnam Manufacturing PMI, it is reported that growth in the Vietnamese manufacturing sector gathered pace in May, with rising client demand leading to record expansion of output and new orders.

Moreover, the rate of job creation also picked up during the month.

Meanwhile, input costs increased for the first time in seven months, but firms continued to lower their output prices, said the report.

The headline seasonally-adjusted PMI – a composite indicator designed to provide a single-figure snapshot of operating conditions in the manufacturing economy – rose for the second month, running to 54.8 in May, up from 53.5 in April.

The marked improvement in operating conditions signaled by the latest reading was the strongest since the series began in April 2011. Business conditions have now improved in each of the past 21 months.

Central to the marked strengthening of the sector’s health was a record increase in new business, as respondents indicated that the rise mainly reflected a greater need for products among customers.

New export orders also rose, albeit at a much weaker pace than seen for total new business.

As client demand increased, manufacturers raised production accordingly, resulting in increased output for the twentieth month in a row, and at the strongest pace in the series history, said the report.

The Vietnamese manufacturing sector gained further momentum in May and growth rates are now the best in four years of data collection so far.

“Central to the recent success of firms in Vietnam has been their ability to secure new work in a competitive environment, and the recent 1% devaluation of the dong against the US dollar by the State Bank of Vietnam should help efforts to maintain international competitiveness,” said Andrew Harker, senior economist at Markit.

“On the other hand, some firms did report a rise in costs as a result of the weaker currency, leading to a first rise in input prices in seven months,” he added.

Thu Duc BOO Water Plant supplies tap water

Thu Duc BOO Water Plant on Wednesday began supplying tap water to three districts east of HCMC with an initial daily output of 100,000 cubic meters after successful test runs and connection to Saigon Water Corporation’s pipe system for pressure testing last week.

Le Vu Hoang, general director of the water plant, said that site clearance for the installation of the pipelines that will link the plant to two more areas south of the city, namely District 7 and Nha Be District, is almost complete. The pipelines will raise the plant’s daily capacity to 300,000 cubic meters by September.

Invested with nearly VND1.5 trillion, the plant broke ground in September 2005 and was scheduled for completion by August 2007. Slow site clearance delayed completion for nearly two years, however.

Speaking at the inauguration ceremony, general director of Saigon Water Corporation Tran Dinh Phu said that although District 7 and Nha Be District are not yet getting water from the plant, the higher pressure that is a result of the operation of the plant will help Sawaco raise capacity to these districts by an extra 5,000 cubic meters a day.

Saigon Water Corporation, or Sawaco, as the key water supplier in the city is swiftly executing third-phase construction of Thu Duc Water Plant adjacent to Thu Duc BOO Water Plant and second-phase construction of Tan Hiep Water Plant. The company is also coordinating with Water and Environment Joint Stock Co. to hasten the progress of Kenh Dong Water Plant in Cu Chi District, according to Sawaco.

“When construction of the projects is completed in 2010, Sawaco will be able to supply over 800,000 cubic meters a day on top of the current supply of 1.3 million cubic meters,” Phu said.

Saigon Port says loose cargo upsurge the cause of congestion

A huge volume of loose cargos like cassava, sand, bran, and animal foodstuff has been said as the culprit of the current congestion at piers of the Saigon Port system, the port operator explained on Wednesday.

Such cargoes account for up to 80% of goods having arrived at the ports over the past few months while packaged cargoes and containerized cargoes like steel and iron and other were primary items earlier.

Tran Huu Chieu, deputy general director of Vietnam National Shipping Lines, said that regional ports are equipped to receive just containerized cargoes while Saigon Port’s facilities can handle all kinds of goods. Besides, loading charge for loose cargoes is low, just over VND10,000 per ton, while container loading charges may be US$43 each TEU.

More ships have flocked to Saigon Port as they had been rejected by other ports or to reduce transport fees to HCMC and Mekong Delta provinces. Moreover, loading charges at other ports are high, Chieu added.

To make mater worse, five pairs of buoys at Saigon Port have been cleared to facilitate Thu Thiem Tunnel project. The port earlier had around 20 pairs of buoys which could receive over 30 ships at a time, said Saigon Port’s deputy general director Nguyen Van Minh.

Around 29 ships are offloading goods at the port and 13 others are waiting to call on. Meanwhile, the port is capable to receive 25 ships at a time only.

Le Cong Minh, general director of Saigon Port, noted that the cargo throughput at the port has also increased strongly in the year to date.

Around 6.4 million tons of goods were handled at Saigon Port during the first four months of this year, a 43% year-on-year increase. The amount of loose cargos also increased to over 3.8 million tons from 900,000 tons in the year-earlier period.

To ease the congestion, Saigon Port’s general director Le Cong Minh has decided to provide storage charge free since on Wednesday. The solution will help ship owners carry goods to warehouses before packing to make room for other waiting ships at piers.

The port also suggested ship owners and agents to steer their ships to nearby ports like Ben Nghe, Lotus, Baria-Series, Interflow, Tan Thuan Dong, Dong Nai, Phu My, and Cat Lai or wharfs in the Saigon, Dong Nai, and Soai Rap rivers.

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