BUSINESS IN BRIEF 9/10

Taxman collects VND24.5 trillion in tax arrears

Tax agencies had collected more than VND24.5 trillion (over US$1 billion) in tax arrears as of late last year, according to a report of the Ministry of Finance.

The report released last Friday showed tax agencies inspected nearly 52,000 enterprises in January-September, up 13.5% against the same period a year earlier.

Tax agencies collected an additional VND8.4 trillion, with over VND6 trillion paid to the State budget, and particularly over VND24.5 trillion of tax debts owed last year.

Meanwhile, the customs authority carried out 1,835 post-clearance inspections and collected around VND1.2 trillion in tax arrears, rising by three times against last year’s same period.

The finance sector has identified inspecting tax payments, combating smuggling and trade fraud and collecting tax arrears as key tasks to increase budget collections at a time when tax revenue from the crude oil has tumbled.

In the first nine months of this year, State budget collections reached VND683 trillion, up 7% compared to a year ago.

Domestic sources contributed VND504.3 trillion of total State budget revenues in the first three quarters, equivalent to 79% of the entire year’s target and up 17.1% year-on-year. Contribution of crude oil was down 34.8% year-on-year to VND51.78 trillion while collections from exports and imports reached VND187.4 trillion, including VND64 trillion from VAT.

Budget spending rose by 7.8% in the period to VND823.97 trillion, accounting for 71.8% of the year’s target. Development investment totaled VND127.28 trillion, loan repayments were VND114.79 trillion, and regular expenditures were VND574.89 trillion.

In all, the budget deficit in the January-September period was put at VND140.97 trillion, or 62.4% of the year’s estimate.

According to the ministry, VND2.56 trillion was raised from Government bond sales in September, bringing the total figure in the first nine months of this year to over VND127.47 trillion, equivalent to the 51% of the year’s target.

The ministry said developments of the financial market were not favorable for G-bond sales as China’s devaluation of the yuan hit currencies in the region, including the Vietnam dong currency.

Therefore, the State Bank of Vietnam raised the inter-bank exchange rate by 1% and twice widened the trading band from 1% to 3% on either side in August to ease pressure on the domestic currency.

Besides, movements of the forex market left considerable impact on investor sentiment on the bond market, resulting in lower-than-expected G-bond sales.

Sacombank gets two deputy general directors from Southern Bank

Saigon Thuong Tin Commercial Bank (Sacombank) has picked two former Southern Bank leaders as deputy general directors after the merger of the two commercial joint-stock banks was completed last week.

Nguyen Van Nhan and Trinh Van Ty began to serve as deputy general directors of Sacombank on October 1. Currently, Sacombank general director Phan Huy Khang has 22 deputies.

Prior to their new posts at Sacombank, Nhan was general director of Southern Bank and Ty was his deputy.

Last Thursday, Sacombank struck a deal to take over all assets, personnel, network and data of Southern Bank. It is responsible for the legitimate rights and interests of Southern Bank’s customers, partners and shareholders.

The merged bank has become one of the five largest banks in Vietnam with total assets of nearly VND297.2 trillion (US$13.22 billion) and equity of nearly VND24.5 trillion (US$1.09 billion) including chartered capital of VND18.85 trillion (US$838.8 million).

The merged bank, called Sacombank, has a network of 563 transaction offices in Vietnam, Laos and Cambodia as well as 15,510 employees.

Foreign lenders provide more funding for second metro line in city

The Asian Development Bank (ADB), the European Investment Bank (EIB) and the German Development Bank (KfW) have agreed an additional US$725 million loan for HCMC to implement Metro Line No. 2.

Le Khac Huynh, deputy head of the HCMC Management Authority for Urban Railways (MAUR), told the Daily on October 5 that the three lenders would provide the extra finance for the city to have sufficient funding for the project. 

On September 30, the city government wrote to relevant ministries seeking approval for a capital increase in the city’s second metro line from nearly US$1.37 billion to over US$2 billion due to the fall of the Vietnam dong against the U.S. dollar and metro track design change.

Huynh said the design change has led the total cost of the metro line to go up and the foreign lenders have agreed on funding the differential.

Metro line No. 2 was approved by the city government in 2010 and revised in 2013 with a total investment of US$1.37 billion. The HCMC Management Authority for Urban Railways is the investor of the project.

Of the total amount, the ADB finances US$540 million, KfW US$313 million and EIB US$195 million and the city’s reciprocal capital is US$326.5 million.

The additional lending includes US$500 million from the ADB, US$56 million from the EIB and US$168 million from KfW.

Huynh said the construction site of the project is being cleared. The city government has approved taking back land from around 800 households in districts 1, 3, 10, 12, Tan Binh and Tan Phu. 

In a document sent to the Ministry of Planning and Investment late last month, the city government said it was reviewing and completing a capital adjustment file for submission to the Prime Minister for consideration this month in accordance with the Law on Public Investment.

Metro line No. 2 is designed to stretch nearly 20 kilometers from Thu Thiem New Urban Area in District 2 to Tay Ninh Coach Station. As scheduled, the 11-kilometer section from Ben Thanh in District 1 to Tham Luong in District 12 will be developed in phase one with 9.3 kilometers going underground along Cach Mang Thang 8 Street and the remaining elevated section along Truong Chinh Street.

In mid-January, MAUR started work on the control building and auxiliary works at Tham Luong Depot. This was the first package of Metro Line No. 2 to get off the ground.

The control building comprises one basement and eight floors and is being constructed at a cost of VND173 billion in around one year and a half.

Processing-manufacturing firms upbeat about Q4

Up to 85.6% out of 4,028 surveyed enterprises in the processing-manufacturing sector are optimistic about their business results in the final quarter of 2015 as reflected in a report of the General Statistics Office.

The survey on production trends of the sector in quarter three and forecasts for quarter four revealed only 14.4% of respondents are concerned about a rise in difficulties in the final quarter over quarter three while 46.8% expect better performance and 38.8% hope their operations would be stable.

Regarding production output, 86.2% project their output would increase or remain stable in quarter four and only 13.8% forecast a decline.

The foreign-invested sector has the highest percentage of enterprises anticipating a spike in output in the final quarter with 53.5%. Meanwhile, the respective rates of the State and local private sectors are 50.7% and 47.2%.

Sectors with better output projections are drug with 70.3%, electronics and optical products with 64.5%, apparel with 56.1% and chemical with 53.6%.

Besides, up to 87.3% of enterprises hope for higher or stable orders and only 12.7% said the number of orders might decline this quarter.

Enterprises in the foreign-invested sector continue to hold the most optimistic view of increasing orders with 47.8% compared to 43.4% of the State sector and 41.8% of the private sector. Regarding exports, 86.9% of respondents look to more and stable orders in quarter four while only 13.1% worry about a fall.

The survey found 50.3% of respondents said product inventories would be unchanged while 33.5% and 16.2% predict declining and increasing inventories respectively.  Around 85.1% expect material inventories to remain unchanged or drop and 14.9% project higher inventories.

The survey also pointed out 67.7% of enterprises plan to maintain production costs for major products, 20.5% forecast rising costs and 11.7% hope costs would decline.

German technology drives green energy development

Vietnam and Germany are boosting their energy development co-operation, with the latter committing to support the former in improving energy-related policies which can help lure more investors.

Yiannis Neophytou, counsellor for Development Co-operation at the German Embassy to Vietnam, told VIR that energy co-operation would continue to be a key area of the German-Vietnamese co-operation in the future.

“Germany is fuelling Vietnam’s efforts to implement green growth, focused on effective usage of natural resources, development of renewable energy, and the development and application of environmentally-friendly technology, via a series of projects,” he said.

According to the Delegation of the European Union to Vietnam, though Vietnam has significant domestic energy sources, including crude oil, coal, and hydropower, and is presently a significant energy exporter, it will become, as of 2015, a net energy importer and will import half of its energy resources by 2030. This is due to the country’s rapid economic growth, industrialisation, and export market expansion, which have spurred domestic commercial energy consumption that is unlikely to subside in the near future.

The German government has provided more than $120 million in official development assistance for Vietnam to implement the 500 kilovolt power transmission line between the northern mountainous provinces of Son La and Lai Chau, and expand another power transmission line in Son La.

Vietnam and Germany have also concluded the final round of negotiations on development co-operation, with the German Ministry for Economic Cooperation and Development deciding to use 219 million euros ($245.3 million) to support Vietnam over the next two years in the environmental, energy, and vocational training sectors, via programmes and projects.

In another case, the Vietnamese General Department of Energy and the German Federal Government’s GIZ also signed a 6.9 million euro ($7.73 million) deal to boost Vietnam’s wind power development, in a project that will be implemented until 2018. This project is focused on three major areas, including compiling the legal framework for wind power development, improving the capacity of local authorities and power plants, and transferring high technology to Vietnamese partners.

According to GIZ, with its dynamic economic growth, Vietnam’s energy demand will triple by the year 2020. Some 64 per cent of the country’s power needs are currently provided by fossil energy sources. As a result, experts expect a fourfold increase in carbon dioxide emissions from electricity generation in the coming years.

GIZ is now also supporting a Vietnamese-German cooperation project for further developing renewable energy in Vietnam. The project is part of the International Climate Initiative of the German Federal Ministry for the Environment, Nature Conservation, Building, and Nuclear Safety. The main focus of the project is the development of grid-connected bio-energy in Vietnam. It advises Vietnam’s Ministry of Industry and Trade on the design of incentive mechanisms to encourage grid-connected power generated with biomass, biogas and solid waste. The aim is to stimulate interest among investors, project developers, and governmental and non-governmental bodies in the construction of bio-energy power plants.

The project also supports capacity development for relevant stakeholders in the field of bio-energy. With regional and international training events, exchange formats, and consultation missions, it aims to consolidate knowledge while creating a platform for international dialogue.

However, Neophytou stressed that ineffectual measures and a lack of incentives were impeding the expansion of renewable energies in Vietnam. “Any policy must help attract private investors. Currently, the government offers a feed-in tariff for renewable projects that is too low, which discourages private investors,” he said.

Hue industrial zones attract $146m in nine months

Companies have invested more than VND3.3 trillion (US$146 million) in industrial zones in the central province of Thua Thien - Hue this year.

Thua Thien-Hue province is speeding up work on infrastructure and offer favourable policies to attract more investment in industrial zones.-Photo thuathienhue.vietc.cr.vn

The money, invested in eight new projects and 11 existing ones, has taken the total investment in the province's IZs to nearly VND23 trillion ($1.02 billion).

Important among the new ones are Baosteel Can Making Hue Ltd. Co.'s plant with a capacity of 700 million cans a year, which is likely to go on stream in April next year. The 5.6ha facility has an investment of $74.8 million.

The industrial zones management is appraising three other projects for the People's Committee's approval: two garment companies in the Phu Bai IZ with a combined investment of VND627 billion ($27.8 million) and a VND50 billion ($2.2 million) synthetic production plant in the Phu Da IZ.             

The province is speeding up work on infrastructure and offering favourable policies in a bid to attract VND2.5-3 trillion ($111-133 million) into IZs this year.

The province has begun construction of the 284ha Phong Dien - Viglacera Industrial Park in Phong Dien District, which will bring the total number of IZs in the province to seven.

Renault to launch three cars

French auto maker Renault will unveil three new models to the Vietnam market - Duster, Logan, and Sandero Sepway - at the Vietnam International Motor Show 2015 from October 9 to 13.

Duster is the most notable model, as Renault wants it to compete against the Honda CR-V and Mazda CX-5. In India the Duster is equipped with 2.0 liter engine with 143 horsepower at a price from $12,700.

The Logan, meanwhile, is in the hottest segment in the industry - small-size sedan. When it comes to Vietnam it will have to compete with rivals such as Toyota Vios, Honda City, and Mazda 2.

The Sandero Sepway, on the other hand, is in the narrower segment of small-size sports utility. In overseas markets it is equipped with a 1.6 liter engine with 102 horsepower. This is a fairly new segment, so there is still space for new entries, with existing names including Ford EcoSport and Hyundai i120 Active.

The new Renault trio is unfamiliar with Vietnamese consumers but the French auto marker isn’t pinning its hopes on the novelty factor. According to Renault it is no coincidence that the three models will compete against famous opponents. The design and usability of France’s new generation autos are not inferior to those of its Japanese and Korean competitors. The features are actually considered better, but the retail price is lower.

Though the technical specifications and prices of the three new models are yet to be released, the decision to put affordable range products into Vietnam shows that Renault is changing its business strategy and brand image.

Christian Louboutin coming to Hanoi

The Maison Joint Stock Company, one of Vietnam’s leading fashion brand distributors, has recently announced a Christian Louboutin flagship store will open at 23 Trang Tien Street in Hanoi’s Hoan Kiem district in the beginning of December.

“Our long-term vision is to expand the list of international luxury brands in Vietnam,” said Ms. Pham Thi Hong Nhue, Director of Maison Hanoi. “As the exclusive distributor for Christian Louboutin in Vietnam we are happy to finally open its first store in Hanoi. Despite the challenging retail market and the limited vacant space in the CBD, Maison believes that Christian Louboutin’s first store in Hanoi will be an attractive destination.”

Savills has assisted Maison in finding suitable retail space in a location that meets the high standards of the global luxury brand.

The store has a 200 sq m area in a two-storey prime address. Renovations are underway and it will officially open in December to meet the shopping needs of luxury customers in the holiday season.

The past three years have been a tough time for Vietnam’s retail market due to global economic crisis, increasing unemployment rate, and consumers’ tightened spending, according to Ms. Hoang Dieu Trang, Senior Manager of Commercial Leasing at Savills Hanoi.

Vietnam still has potential in the eyes of luxury retailers, however, as it is an emerging market with a young population and fast-growing spending habits. “The grand opening of Christian Louboutin will not only appeal to luxury shoppers but also to international retailers who want to expand their business and networks in Asia,” Ms. Trang added.

Christian Louboutin is a French luxury brand famously known for its signature red-lacquered-sole footwear. Since opening its first store in 1992 it has continuously expanded its business and now has more than 100 stores worldwide.

In 2011 Maison JSC successfully distributed the luxury brand in Vietnam, at 143 Dong Khoi in District 1, Ho Chi Minh City.

Founded in 2002, Maison JSC has been an exclusive distributor of world famous brands in Vietnam with more than 60 stores, including Topshop / Topman, Mango, Karen Millen, Coast, Warehouse, Oasis, Charles & Keith, Pedro, Accessorize, Havaianas, Bebe, NYS, Miss Selfridge, Dorothy Perkins, MAX&Co., and Max Mara.

Viettel's Tanzanian mobile network to open shortly

Viettel is in the final stages of establishing a mobile network in Tanzania, according to Deputy General Director Tao Duc Thang, which will open shortly. Its fiber optic cable now covers almost all of the African country, a feat existing network providers have been unable to accomplish.

Viettel targets becoming the third largest mobile network provider in the country within three years and the largest within five years, Director of Viettel in Tanzania, Mr. Nguyen Thanh Quang, said.

The Trade Promotion Agency of Tanzania (TIC) received an award for having the best investment projects in 2014 at the fifth annual investment meeting among Eastern, Western and Middle African countries. Viettel’s telecommunication project was a major factor in TIC picking up the award.

In 2014 Viettel gained approval to invest $736 million in the country. It has laid 12,000 km of fiber optic cable since with another 5,000 km to come. Over 2,000 base transceiver stations have also been built around the country.

Viettel Tanzania has the fastest investment pace among Viettel’s other global subsidiaries.

Work underway at $66 million Ha Tinh port

The Hoanh Son Group JSC began construction of the Hoanh Son International General Port in north-central Ha Tinh province on October 4.

The port sits on an area of 16.1 ha with total investment of VND1.5 trillion ($66.7 million) and will be able to berth 50,000 ton ships. Completion is expected in June 2017 and capacity is expected to be 2.3 million tonnes of cargo a year.

The project will play an important role in the development strategy of not only the Hoanh Son Group but also of Ha Tinh province, Chairman of the Provincial People’s Committee Le Dinh Son said. Along with Vung Anh Port, Hoanh Son Port will improve the infrastructure in the province and, more importantly, increase revenue, bolster local socioeconomic growth, and create jobs.

Hoanh Son Port will ease the burden on nearby Vung Ang Port. Over the last three years the latter’s capacity has reached the maximum possible. In 2014 it handled some 3 million tonnes of cargo; double its designed capacity of 1.3 million tonnes. More than 80 per cent of ships coming to the port have to wait offshore before berthing, according to the Maritime Administration in Ha Tinh province.

Hoanh Son Port is part of plans for developing Son Duong - Vung Ang Port with a vision to 2020, approved by the Ministry of Transport in April this year. The project was officially licensed in May.

Vingroup to boost hi-tech agriculture in Quang Ninh

Vingroup reported its investment plan to build a hi-tech agricultural center in Quang Ninh province to the Provincial People’s Committee on October 2.

The project will cover an area of 198 ha in Hong Thai Dong commune in Dong Trieu district and have total investment of VND650 billion ($28.9 million). There are two phases, with the first on 90 ha.

Vingroup will begin construction this month on a cleared area of 40 ha and aims to have harvested the first products of VinEco Quang Ninh by Tet next year.

The group will apply high technology at the center, including greenhouses, net houses, automatic irrigation systems, and environmental monitoring system for the land, water and the atmosphere, from Japan, South Korea, and Israel.

Deputy Chairman of the Quang Ninh Provincial People’s Committee Dang Huy Hau said the province believed the project will contribute to local agricultural development and he asked related departments and agencies in Dong Trieu commune to adopt quick solutions for handing over land for the project.

The group also began construction of a 24.5 ha greenhouse in northern Vinh Phuc province on August 28 with investment of VND1 trillion ($44.2 million), using Israeli technology and is the largest in Vietnam. The first fresh vegetables from the group became available on October 1, six months after production got underway at green houses in Cu Chi in Ho Chi Minh City and in southern Dong Nai province.

Government bonds struggle in September

The government bond market continued to be subdued in September. Mobilized capital remained modest despite interest rates increasing 0.2 per cent per annum, being equal to 10.3 per cent of bids and calls and falling 66.4 per cent against August.

The Hanoi Stock Exchange (HNX) held 34 auctions of government bonds in the month, mobilizing VND2.6 trillion ($115.6 million). The State Treasury mobilized VND2.5 trillion ($110 million) and the Vietnam Development Bank (VDB) VND125 billion ($5.5 million).

Mobilized total reached just 10.3 per cent of calls and bids for the month, lower than the 26.1 per cent success rate in August. State Treasury bonds reached 16.7 per cent of bids and calls, or VND2.5 trillion ($110 million), out of a tender value of VND15 trillion ($660 million).

The winning rate in the month was quite modest for all terms. Three-year bonds reached 63.2 per cent, or VND2.4 trillion ($105.6 million) out of VND3.8 trillion ($162.7 million). Five-year bonds saw a sales rate of 13.25 per cent, or VND1.6 trillion ($71.7 million) out of VND12.3 trillion ($541.2 million), while ten-year bonds sold just 2 per cent, or VND70 billion ($30.1 million) out of VND3.5 trillion ($154 million). Fifteen-year bonds, meanwhile, saw sales of 15.2 per cent, or VND928 billion ($40.8 million) out of VND5.9 trillion ($259.6 million).

There are high expectations of interest rates rising, but the State Treasury appears in no rush to do so.

In the last week of September the Ministry of Finance (MoF) confirmed that the State Bank of Vietnam provided it with a VND30 trillion ($1.32 billion) loan under a ministry proposal from July.

The loan is a technical measure to handle the State budget deficit and will be repaid during this fiscal year. Analysts view the move in a positive light as the loan will help ease pressure to raise government bonds at any price in the short term. Bidding interest rates in the October auctions are therefore expected to be under little pressure.

Following the trend of increasing interest rates in August, the winning rate on government bonds in September rose slightly, by 0.2 per cent per annum.

The coupon rate ranged from 6.45 to 6.60 per cent per annum on five-year bonds, 6.9 per cent on ten-year bonds, and 7.65-7.9 per cent on 15-year bonds.

Compared with August the winning interest rate on five-year bonds and ten-year bonds rose about 0.2 per cent per annum, while 15-year bonds remained stable.

On the secondary government bond market, the total volume transacted reached more than 361 million, with a transaction value of VND39.4 trillion ($1.73 billion), down 14.7 per cent compared to August.

The total volume of government bonds secured by repurchase agreement (repos) reached more than 276 million, fetching VND27.3 trillion ($1.2 billion), a 31.2 per cent increase in value against August.

The value of transactions for government-guaranteed bonds reached over VND5.2 trillion ($228.8 million), while repos reached over VND4.5 trillion ($198 million).

Outright purchases by foreign investors stood at over VND3 trillion ($132 million) in value while sales transactions totaled VND896 billion ($39.4 million). There was no repos trade by foreign investors in September.

The net purchase by foreign investors in September came after strong net selling in August. Analysts believe this is a positive sign, expressing improved confidence among foreign investors after a poor August performance.

In the secondary treasury bills market, trading volume reached 13.3 million in September, with a transaction value of VND1.3 trillion ($57.2 million). There were not repos transactions in treasury bills.

BIDV puts 2015 credit growth at 17%

In its report on the macroeconomic situation in the first nine months of the year and forecasts for the remaining three months and certain proposals, the Research Group of the Bank for Investment and Development of Vietnam expects that credit growth will reach 17 per cent this year.

As at September 21 credit growth stood at 10.78 per cent, double the figure in the same period of last year. Most capital went to the manufacturing and trade sectors, especially in five areas prioritized by the government.

However, according to the National Financial Supervisory Commission, in the first nine months, despite the significant increase in credit and the slight growth in net interest margin (NIM), risk provisions also rose so the profitability of commercial banks fell.

Chairman of the Management Board of the Vietnam Assets Management Company (VAMC), Mr. Nguyen Quoc Hung, said that in order to bring bad debts in the banking system down to 3 per cent by September 30, the company had to sell a principle balance of VND77 trillion ($3.4 billion) through issuing special bonds worth VND67.8 trillion ($3.1 billion) before August 31.

When banks hold special bonds they must have risk provisions for the bonds and for loans, which are not sold to VAMC. As a result, the provision has reduced the profitability of commercial banks. The government also encourages interest rates cuts, which also results in lower profits. Meanwhile, over the last four years support for social security and poverty reduction has also seen falling return-on-equity (ROE) ratios.

Observation Complex kicks off in HCMC

Empire City held a breaking ground ceremony for its Observation Complex in Ho Chi Minh City’s District 2 on October 2.

The project is located on an area of 14.5 ha in the Thu Thiem New Urban Area and has investment capital of $1.2 billion. Completion is expected in 2022. 

The project comprises a luxury shopping mall, a five-star hotel, office space for lease, apartments for sale, serviced apartments, an underground car park and, in particular, an 86-storey observation tower - the highlight of the project.

Empire City is a joint venture between two Vietnamese partners, the Tien Phuoc Real Estate JSC and the Tran Thai Real Estate Company, and the UK’s Denver Power Ltd under Gaw Capital Partners.

The Thu Thiem New Urban Area is located to the east of the Saigon River, opposite District 1, on a total area of 657 ha. It is to be a new modern central district, enlarging the existing center of Ho Chi Minh City. The City’s People’s Committee continues to call for other investors to develop projects in the urban area.

A number of projects are already underway, such as the central square and riverside park, which started in February 2014, Thu Thiem 2 Bridge, which started in February this year, technical infrastructure in the northern residential quarter, and a north-south road.

HCMC, Leipzig cooperate in healthcare and biotech

HCMC will partner with German city Leipzig for cooperation programs in areas including healthcare and biotechnology as agreed by HCMC chairman Le Hoang Quan and head of Leipzig’s economic development office Michael Schimansky at a meeting in HCMC last Friday.

Quan told the meeting that economic ties between HCMC and the EU country have been progressing well. German firms are involved in many projects in different sectors and contributed significantly to the city’s economic growth.

The two sides agreed to boost collaboration in the healthcare field, especially injury treatment and physiotherapy. Meanwhile, Quan called for the German city’s cooperation in biotechnology with the HCMC Biotechnology Center in District 12, animal conservation with Saigon Zoo and Botanical Garden in District 1, higher education and tourism.

Schimansky said Leipzig is strong in energy industry, medicine, education and training, among others. He will proceed with plans for enterprises, hospitals and universities of the two sides to sign long-term cooperation deals in those areas.

Earlier, Quan chaired an investment and trade promotion conference of HCMC in Leipzig as part of a business visit by HCMC’s leaders to Hungary, Italy and Germany in September. Many local companies including Saigontourist and Saigon Water Corporation (Sawaco) got cooperation proposals from German firms.

New Zealand looks to woo more Vietnam tourists

New Zealand organized seminars in HCMC and Hanoi last week to showcase its attractions to Vietnamese travel companies as part of a plan to attract more tourists from Vietnam.

Nearly 100 representatives of leading local travel companies and hotels attended the senimars to look into New Zealand’s tourist products and services as well as get updates about opportunities for expanding tourism links between the two countries.

At the seminars held by the New Zealand embassy in Hanoi and New Zealand tourism partners, New Zealand’s national flag carrier Air New Zealand, General Travel and other companies highlighted tourism products such as whale watching, Māori cultural performances and helicopter tours. 

New Zealand is one of the world’s leading tourism destinations, with numerous attractions, activities and adventures for a fun-filled vacation, New Zealand’s ambassador to Vietnam Haike Manning said in a statement.

Manning said New Zealand offers products which can suit tastes and budgets of different groups of tourists like tours for viewing landscapes of mountains and sea, adventure activities, wines, food, unique culture and wildlife.

“People visit New Zealand to enjoy the pristine natural environment, see where some of the most famous films of recent times have been made (such as  the Hobbit), go bungee jumping and rafting, and participate in other adventure activities, relax, go fishing, play golf and to enjoy some of the world’s best food and beverages. There is an activity or attraction to suit everyone’s tastes, age, culture and budget in New Zealand,” Manning said.

Manning expected the seminars would help tour operators of New Zealand and Vietnam jointly design and offer more tour options for Vietnamese holidaymakers who are keen to discover New Zealand.   

The seminars also featured cultural performances staged by a Māori cultural performing group from the New Zealand Māori Arts & Crafts Institute.

According to the New Zealand embassy, more than 33,000 New Zealanders visited Vietnam last year while New Zealand welcomed over 3,000 Vietnamese, a 50% rise against 2007.

“We’re very keen to see similar numbers of our Vietnamese friends visiting New Zealand,” Manning said.

In the New Zealand-Vietnam comprehensive partnership established in 2009, the two governments identified tourism as a key sector with significant potential for future growth. Tourism is one of New Zealand’s largest export industries after the dairy industry in terms of foreign exchange earnings.

Expert urges change in rice distribution

Local rice expert Nguyen Dinh Bich has called on the rice sector to make significant changes to streamline the rice distribution chain and improve the quality of this staple food to help farmers earn more profit and prop up exports in the coming years.

Vietnam has a complicated rice distribution chain as this commodity goes a long way from farmers to rice exporters, Bich told a conference on consumption of farm products at a time of the country’s accelerated global integration in Can Tho City last week. 

There are so many intermediaries, he noted. Such a long chain eats into profit of both rice farmers and exporters and at the same time, makes it impossible to control antibiotic residues and trace the origin of the product. This is one of the reasons why local enterprises cannot export rice to markets with strict quality requirements.

In addition, local exporters have focused on Malaysia, Indonesia and the Philippines as they can easily ship the commodity to the three regional markets at higher prices.

Bich said that in 2008, the average export price of rice exported to the three ASEAN markets was US$95 per ton higher than in other markets. The differential rose to US$106 in 2009 and US$164 in 2010.

Bich said higher profit from Malaysia, Indonesia and the Philippines made Vietnamese rice exporters dependent on the three markets and reluctant to look for new markets for years. They fought to gain quotas for rice exports to these regional markets.  

However, Vietnam has had difficulty exporting rice in recent years as it has become tougher to sell rice to Malaysia, Indonesia and the Philippines since 2013 due to their rice self-sufficiency policy while exports to other markets including China have been volatile.

To deal with the problems, Vietnam needs to improve rice quality, manage to export rice to more markets including those with stringent requirements, and streamline the distribution chain.

Some experts pointed out that one of the solutions to improve the distribution chain is to reorganize rice production and develop large-scale paddy fields.

Toyota Vietnam hikes prices on weaker dong

Toyota Vietnam last week adjusted up prices of automobiles assembled and distributed by the company on the local market with the highest spike of VND225 million (around US$10,000) for the imported luxury car Lexus LS640L.

Toyota Vietnam said in a statement that prices of Camry cars had gone up by VND44-55 million per unit, Fortuner by VND37-57 million, Corolla Altis by VND38 million, Vios by VND25 million,  Innova by up to VND34 million and Yaris by up to VND27 million.

Higher prices also apply to Lexus cars imported and distributed by Toyota Vietnam in Vietnam. Accordingly, the LS640L model has the highest price rise by VND225 million, selling for over VND5.8 billion per unit.

Prices of the other two Lexus models ES350 and GX460 are up by VND175 million and VND153 million respectively.

Toyota Vietnam said the price adjustment was made following its business and sales changes and the central bank’s devaluation of the Vietnam dong currency against the U.S. dollar.

After the devaluation of the dong twice last month, the domestic currency fell 2.54% against the dollar and 2.7% against the euro, piling pressure on auto companies as they have to import completely built-up (CBU) autos or components to assemble cars for local sale.

Other carmakers and auto importers such as Thaco, Ford Vietnam, Audi and BMW have not made a move despite the fall of the dong.

But a source from an auto firm told the Daily that it is possible that auto enterprises would meet soon to discuss price hikes, especially after leading firm Toyota Vietnam has raised its prices.

However, an importer of cars from Europe said it would not adjust up its prices because the Vietnam dong only weakened against the dollar, not the euro.

An industry observer said the dong slid by 2.7% versus the euro for a short time only but strengthened 6% against the euro in the year to date.

CIEM’s Cung: Private sector key driver for growth

The Central Institute for Economic Development (CIEM) president said the private sector is an important driving force for economic growth, so institutions should be reformed to facilitate the sector’s development.

Nguyen Dinh Cung told a conference on the private corporate sector in Hanoi last Saturday that the market level of Vietnam’s economy is lowest in the ASEAN and this is one of the major hurdles to the development of the sector in Vietnam.

Cung cited sources as saying that the market level of Vietnam’s economy was 50.8 points while those of Laos, Cambodia and Singapore were 51.2, 57.4 and 89.4 respectively.

Every year, the National Assembly (NA) passes around 20 laws, the Government issues around 100 decrees, ministries roll out 700-800 circulars and the Government Office releases some 4,000 documents. The number does not include numerous documents issued by lower levels of bureaucracy.

The laws passed by the NA are stable but ministerial circulars change regularly and even compromise laws. “Changes to circulars do not reflect the will of the legislature but of some officials who want to protect their rights and interests,” Cung said.

Such changes greatly impact enterprises and cost them dearly in terms of compliance, Cung said.

In Vietnam, laws and institutions have not been much improved to support the development of a market economy.

A higher market level of an economy backs higher economic growth but the state of Vietnam’s market economy is still lower than that of Laos and Cambodia, according to Cung. He also pointed out that private enterprises have to grapple with a host of barriers to survive and grow.

According to Cung, the State will not voluntarily improve institutions without pressure for change and the private sector should ask for an improvement of institutions and push for improvements via the Vietnam Chamber of Commerce and Industry and industry associations to protect their interests.

Cung called for the private sector to require laws to be specific and practical and get involved in policy consultations instead of leaving this matter decided by ministries or even interest groups.

HSBC predicts interest rate stability until Q3 next year

HSBC Bank has projected that the central bank would keep the open market operations (OMO) interest rate stable before delivering an interest rate hike by 50 basis points in quarter three of next year as inflation may rebound on stronger economic growth.

HSBC Bank said in a macro-economic report released last Friday that since the 2011 banking crisis put an end to excessive credit growth and consumption, Vietnam’s economy has been driven by its resilient export sector. Taking up the slack is the non-manufacturing sector, which helped gross domestic product (GDP) in the third quarter grow 6.8% year-on-year from 6.5% in the previous quarter.

Domestic demand has been gradually reviving, led by stronger activity in the construction industry. This is also reflected in credit growth, which is forecast to be higher than the 2015 target set earlier by the central bank.

Fortunately, the acceleration in growth this year has not been accompanied by rising price pressures, according to HSBC Bank. In fact, headline inflation slowed to 0.0% year-on-year in September from 0.6% year-on-year in August while core inflation remains subdued, slowing to 1.6% year-on-year in September from 2.4% previously.

“With oil prices expected to stay subdued and the dong depreciation path confined by the peg, near-term price pressures remain limited, allowing the central bank to keep the OMO rate steady at 5% through the first half of 2016,” the report said.

However, HSBC estimated inflation to bottom out in the last quarter of this year before rebounding to 3.3% year-on-year by the end of the first half 2016, partly on the back of base effects.

“We then expect it to accelerate to 5.2% year-on-year by the end of 2016. Our current assumption is that rates will be kept on hold through the first six months of 2016, but with the economy seemingly having shifted gear to a higher pace, we are now penciling in a 50-basis-point hike in the third quarter of 2016,” the bank said.

Another reason is that the next move from the central bank will likely be a hike, and not a cut, is the trade deficit. The combination of slowing exports and recovering domestic demand has meant that Vietnam’s trade balance has fallen back into deficit.

Though not yet alarming, what is worrying is that the deterioration has been driven by the widening deficit in the domestic sector. As opposed to foreign-invested firms, whose imports are used as inputs in Vietnamese shipments abroad, domestic enterprises primarily import to serve domestic consumption.

In the past, the trade deficit of domestic firms, especially State-owned enterprises, widened on the back of credit-fuelled consumption and investment, piling pressure on the local currency.

“For now, we think Vietnam’s macro risks are limited, given the central bank’s prudent management of monetary policy. However, we’ll be monitoring the trade deficit closely to see whether the domestic economy is at risk of overheating,” the bank added.

The September manufacturing Purchasing Managers’ Index (PMI) is a reminder that Vietnam is not immune from the slowdown in the global trade cycle as the headline index slowed to 49.5 from 51.3 in August, the weakest reading since August 2013.

In the report, HSBC also upgraded its GDP growth forecast for Vietnam to 6.6% this year from 6.3% previously and 6.7% next year from 6.5%.

Email remains crucial to local businesses

Email is still one of the best tools for brands to interact with their customers, according to IBM's 2015 Email Marketing Metrics Benchmark Study released recently.

Researchers combined data from feedback sent by nearly 750 companies representing 3,000 brands in 40 countries working in various industries.

The survey found that top performing brands in the travel industry had email open rates of 50 per cent, 10 times more than their lower performing peers.

Travel brands, which often use strong visuals and attractive offers, had high click-through rates of over 15 per cent.

Meanwhile, retail and e-commerce agencies were the lowest in customer engagement rates.

These low rates resulted from retailers that continued to rely on traditional email methods that lacked the personalisation that today's consumer demands.

Nearly 50 per cent of companies increased their digital marketing budgets in 2015.

Marketing officers and teams are looking to meet customer's demands by bringing experiences across multiple channels including social, mobile, web and in-store.

The US Direct Marketing Association reported that for every US$1 spent on email marketing, there was an average return of $44.25.

The study found that brands that used email campaigns triggered by a person's previous actions, such as a recent purchases or the resetting of their passwords, drove higher customer engagement due to the timeliness and relevancy of these messages.

These campaigns, known as transactional emails, produced an open rate of 72 per cent and an average click through rate of 30 per cent. 

HCM City plans massive special economic zone

HCM City plans to set up a special economic zone spread over the four districts of 7, Binh Chanh, Nha Be, and Can Gio to develop its maritime economy and logistics industry.

The Development Research Institute of HCM City, which has provided the draft of the zone to the city administration, said the zone would spur the development of the area and create jobs and other livelihoods for local residents.

It also said it would promote tourism and help preserve the Can Gio Mangrove Biosphere Reserve and help develop the entire southern region.

In a report, it said the establishment of the zone would help convert an inefficient agricultural area into a developed urban area.

It would attract international investors and could be used to test new policies, it said.

The zone will have 35sq.km and a population of 321,000 in District 7, 49sq.km and 125,000 people in Binh Chanh, 100sq.km and 163,000 people in Nha Be, and 704sq.km, half of which will be protective forest, and 77,000 people in Can Gio.

The report also mentioned possible difficulties facing the construction process. Since the area is low–lying, it will require a huge investment. It has poor infrastructure, especially for vehicles, and will need at least 10 years to prove its effectiveness, meaning public pressure could mount for its success.

The institute was hoping the draft plan would be approved in 2014-2015 by the HCM City Party Committee and People's Council.

In 2016-18 final plans for the zone will be made and a search for strategic investors will start.

In 2018-25 investment will be made in infrastructure and policies and administrative mechanisms will be finalised when the zone becomes operational. 

Worldstar Land opens sales at Star Tower

Worldstar Land officially introduced its Star Tower project to customers on October 10 at the Hanoi Daewoo Hotel.

Located at 283 Khuong Trung in Hanoi’s Thanh Xuan district, Star Tower includes residential areas and commercial services and is an ideal place for young families who want to own a luxury apartment in the city.

Star Tower has 27 storeys and is invested by the Vietnam Construction Investment and Design JSC. Residents can easily access local attractions and facilities such as the Royal City Commercial Center, the hospital of the Hanoi Medical University, many schools, from pre-school to universities, and traditional markets.

Amenities for residents include a commercial center, an indoor pool with separate areas for children and adults, a gym, a kindergarten, a community room, and green areas.

The apartments at Star Tower range from 69 sq m to 92.2 sq m with beautiful views of the To Lich River, Royal City, and Nguyen Trai Street.

To mark the official introduction the investor is offering a special discount of 1 per cent off the apartment’s total value for the first 30 customers to sign up.

Huge energy demand increases localization problems

Opinions have been expressed both in support of and against energy localization, Mr. Nguyen Duc Cuong, Director of the Center for Renewable Energy and Clean Development Mechanism under the Institute of Energy, told the APEC Workshop on Local Content Requirements (LCR) in Energy on October 7 in Hanoi.

“Electricity demand is huge,” he said. In Vietnam when GDP  grows 1 per cent, electricity demand grows 2 per cent and so needs to develop to drive the economy forward. Hundreds of coal-fired power plants will be built in the future around Vietnam. “This will raise the problem of whether Vietnam should import technology from foreign investors,” he said.

There are several advantages in energy localization, he went on, one of which is that it ensures national security. LCR also motivates demand for domestic research and development in electricity equipment.

“Localization incentives are often given to mechanical industries as encouragement,” he said, and Vietnam can produce ancillary equipment, which accounts for 30-40 per cent of power consumption in coal-fired power plants. Localization also creates jobs.

International experts said that LCR has attracted more attention since the global financial crisis in 2008. They agreed that LCR had a positive impact on domestic development but it also has negative impacts. Competition between foreign and domestic firms, however, drives development and cuts production costs.

Localization encourages the development of domestic market but limits the participation of foreign enterprises, according to General Secretary, China Energy, at Storage Alliance, Tina Jing Zhang. Mr. Ronald Steenblik, Senior Trade Policy Analyst OECD Trade & Agriculture Directorate, suggested that localization requires a macro viewpoint.

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Taxman collects VND24.5 trillion in tax arrears, Sacombank gets two deputy general directors from Southern Bank, Foreign lenders provide more funding for second metro line in city, German technology drives green energy development
 
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