BUSINESS IN BRIEF 13/10

BIDV commits US$2 billion to restructure textile industry

Despite having an average growth rate of 18.4% for the past five years with exports reaching a record high US$24.7 billion in 2014, the clothing and textile industry hasn’t realized its full potential, said speakers at a recent conference in Hanoi. 

Manufacturers in the industry remain largely non-competitive in the global market place, relegated to performing work considered menial low level outsourcing with low added value and scant profits, they said.

In order to prepare for the onset of free trade agreements (FTAs) in the offing domestic firms in the industry working in concert with the government need to take the initiative to resolve problems plaguing it.

“The use of outdated technology, shortage of funds for investment, and weak management capacities are the most significant challenges facing companies in the industry,” said National Garment and Textile Group (Vinatex) Chairman Tran Quang Nghi.

Elaborating on the use of outdated technology General Director Truong Thi Thanh Ha of the Dong Xuan Knitting Company underscored the point that domestic clothing and textile companies have not kept pace with the latest technologies.

“In fact far too many companies in the industry are still using old dilapidated machinery and equipment purchased decades ago,” Ha underscored.

In view of the upcoming challenges arising from the trade deals, the Vietnam government should ease the financial burden by easing the tax burden and land rentals, he said.

Ha posited this move would allow the companies to use these monies to fund new modernized state-of-the-art machinery and equipment.

Additionally, Phan Chi Dung of the Ministry of Industry and Trade (MoIT) said many domestic companies depend extensively on imported raw materials, which along with low productivity will make it extremely difficult for them to take full advantage of FTAs. 

Dung said despite the high growth rates seen over recent years – the added value in the clothing industry is still far too limited. Further, there are only a few companies fully integrated that can manufacture their own yarn, and knit, dye and finish in their own factories

“In addition, local companies have not yet developed their own markets and products,” he stressed.

Chairman Tran Bac Ha of the Bank for Investment and Development of Vietnam (BIDV), in turn postulated that once the FTAs are in place Vietnam would have access to a wider market, and investors would prefer to gradually shift their manufacturing base to the Vietnam.

Bac Ha presupposed this would only happen if businesses restructure and enhance their competitiveness.

“BIDV has committed to providing loans of up to US$2 billion to support domestic companies in the clothing and textile industry over the next five-years.

There are roughly 5,000 businesses, most of them small, in the industry creating jobs for an estimated 2.5 million people, said Department Head Phan Chi Dung of the Light Industry Department under the Ministry of Industry and Trade.

The Vietnam government has targeted to increase the country's textile and clothing exports to US$35 billion by 2020 and further to US$60 billion by 2030 and the US$2 billion will contribute significantly to achieving these goals, Dung concluded.  

Sustainable livestock farming in Ninh Thuan

Ninh Thuan province is vigorously restructuring its animal husbandry sector, focusing on livestock with high profitability. 

This has contributed significantly to improving local living conditions and is helping the province complete all the criteria of the national new rural development program. 

Ninh Thuan has succeeded in boosting its livestock farming, identified as an advantage in agricultural production in the period 2011-2015, by developing collective farms and vast meadows. Ninh Thuan now has a total of 254,000 head of cattle, including 92,000 sheep and nearly 90,000 cows. 

The local authorities have encouraged farmers to apply the half free-range model and keep their herds of animals close to their houses to deal with the prolonged droughts of recent years. 

Le Quyet Thang, deputy chairman of the Nhi Ha communal People’s Committee, said, "The half free-range model has brought about certain benefits for local farmers. It has helped them cut input costs and save manpower while providing their cows with good feeding, care, and management. This has contributed to developing the local economy."

Ninh Thuan’s climate is ideal for raising goats and sheep and this trade has grown rapidly in the districts of Ninh Son, Ninh Phuoc, Ninh Hai, Thuan Nam, and Thuan Bac. Ninh Thuan has set a target of boosting livestock farming and improving the quality of animal herds to meet stricter requirements of the processing sector for exports. 

Phan Quang Thuu, Deputy Director of Ninh Thuan province’s Department of Agriculture and Rural Development, noted, "It’s important for provincial agriculture to ensure the stable growth of animal herds. The local government will step up communications activities on this subject and instruct local farmers to grow grass that can be used as additional feed for the animals. This will play a decisive role in the growth of local livestock farming."

Targeting sustainable livestock farming, the provincial Department of Science and Technology is working on a plan to create a geographical indicator for Ninh Thuan’s lambs, as part of efforts to increase the value of the province’s typical products and create a foundation for their future export. 

After 3 years of new rural development, 11 communes in Ninh Thuan are about to complete all 19 criteria of the national new rural development program. Most of the communes have upgraded their infrastructures and all of them are connected to the national grid.

Japan moves to shore up supply chains

Improving the supply chains in Ho Chi Minh City to support industrial development is a top priority, said Chief representative Yasuzumi Hirotaka of the Japan External Trade Organization (JETRO).

Hirotaka made the statement at the opening of a support industry exhibition on October 8, saying the localization of materials and components improves competitiveness of products by reducing costs and increasing profitability.

A recent survey by JETRO showed that material costs for companies in the city account for 58% of total production expenses while labour cost made up 17.4% in Vietnam.

The focus of Japanese companies operating in the city should be on attracting foreign investment to manufacture components and engineer tool and dye sets locally to capitalize on reducing – materials – the biggest component of manufacturing costs.

Cashew exports to top $2.2 billion

Cashew export revenue is expected to reach US$2.2 billion this year, after reaching robust growth due to higher prices and demand, according to the Ministry of Industry and Trade's Viet Nam Industry and Trade Information Centre.

The country's other key agricultural exports such as rubber, coffee and rice, however, fell both in export volume and value in the past nine months.

The country earned $1.78 billion from cashew exports in the reviewed period, a year-on-year increase of 20.62 per cent, the centre said.

The average cashew export price was 10.25 per cent higher than the same period last year.

The US, the Netherlands and China remain the three biggest importers of Vietnamese cashews, accounting for 36.29 per cent, 12.56 per cent and 12.32 per cent of total exports, respectively.

Among markets that recorded a strong increase in exports in the period were Germany (a rise of 79.7 per cent), Thailand (51 per cent), the US (35 per cent), the Netherlands (33.7 per cent) and United Arab Emirates (22 per cent).

The global cashew market will see more positive changes in the fourth quarter, according to the centre.

The Diwali festival in India, which falls in between mid-October and mid-November, for example, will lead to a surge in cashew demand. 

Banking sector urged to modernise

The banking sector is required to renew its business model, as well as products and services, especially e-banking, in this era of digital banking.

These remarks were made by Douglas Jackson, regional director in the Southeast Asia for Boston Consulting Group (BCG), when discussing the sustainable development of the nation's banks.

Jackson spoke at the annual conference, entitled ASEAN Region 2015: Banking and Finance Innovation, held in Ha Noi on Friday, saying banks that continue operating under traditional models without modernising their practices have removed themselves from the modern banking system.

"The changes have been performed with an increase and expansion of several online transaction services, creating large amounts of banking data and strengthening positions of banks," he said, adding that banks throughout the world have thousands of branch openings each day.

With the modern banking model, customers' data has been integrated onto electronic chips and stored in banks. Every banking procedure can now be carried out on computers or smartphones.

The back-office at banks might not continue to exist, as all work is conducted online. The opening of a new bank accounts might take only five minutes, instead of the current 30 minutes, while approval for loans might take only 10 minutes, rather than the current 3-5 days.

This banking model has seen success in Malaysia. Easy RHB bank was started at a cost of one-seventh of a traditional bank. However, its profits were eight times higher, accounting for 60 per cent of the banking market share in Malaysia.

Meanwhile, William Anthony Jennings, vice president and general director of Institute of Manpower, Banking & Finance, said that over the past few years Viet Nam had seen large changes in the banking sector. Of these changes, creation has been the first priority for local banks.

Jennings said the country's banking system had witnessed the development of retail banks. It was due to pressures of modernising and restructuring that banks provided new products and renewal in their operations, as well as focusing on developing high quality human resources.

Nguyen Huu Thai Hoa, former strategy director of FPT Group, said information and technology had provided momentum for new developments. If banks did not implement modernisation, they would not be able to participate in international integration, he noted. 

"Improving competitiveness by IT would add five per cent to Viet Nam's GDP per year," Hoa said.

Sharing these ideas, Shahrizal Suffian, director of Hay Group Malaysia, said Viet Nam remained a potential market, as it has more than 40 million people connecting to internet together with a high rate of using hi-tech products.

Additionally, banks should invest in their human resources, especially young people, to fully exploit their potential.

However, legal frameworks have been a barrier for banks to expand their services, said Do Tuan Anh, vice chairman of Techcombank's management board.

Anh said the State Bank of Viet Nam has paid attention to this issue, adding that there should be a breakthrough in thoughts, as well as a stronger move towards development. 

Vietjet opens HCM City – Yangon air route

Vietjet Airlines on October 9 launched a new nonstop service between Ho Chi Minh City and Yangon five times per week.

The inaugural flight left HCM City at 10.25am and arrived in Yangon at 12.10 pm this afternoon. The return flight departed Yangon at 1 pm and arrived back in HCM City at 3.35 pm.

The new flight schedule will operate on every Monday, Wednesday, Friday, Saturday and Sunday.

The opening of the new route coincides with the 40th anniversary of diplomatic ties between Vietnam and Myanmar and aims to meet the increasing travel demands of the two countries’ people and stimulate trade and tourism.

Hanoi honours young entrepreneurs

The Vietnam Youth Federation in Hanoi honoured 10 outstanding young entrepreneurs for their active engagement in social charitable and humanitarian activities in the city.

Among the awardees, several made their name in the 100 outstanding entrepreneurs in 2014, the Gold Star Award, and the certificates of merit from the Vietnam Young Entrepreneur Association and the municipal People’s Committee. 

Tran Thi Lan Huong, Director of the Nam Son Production & Trading Company, is the only woman to receive the Thang Long business cup. 

Other recipients include Phi Dinh Kien from the Dai An Safeguards company, a joint venture between two security solutions companies in Asia-Pacific, namely Dai An Security of Vietnam and Safeguards Corporation of Malaysia. Since its inception in 2013, the company has provided security solutions to commercial and private customers across Vietnam. 

Tran Duc Minh – CEO of the Triso Group was also in the list. Specialising in production of medicine, healthcare products, his company has generated jobs for over 150 farmers and workers and exported their products to over 30 nations across the world, especially in choosy markets such as the US, the Republic of Korea and Japan. 

The honouring programme was held on October 9 in celebration of the 61st anniversary of the Hanoi Liberation Day and 59th anniversary of the Vietnam Youth Federation.

Nghi Son 1 plant ensures electricity for northern central region

The Nghi Son 1 Thermal Power Plant ensured electricity supply for the northern central region, especially the Nghi Son Economic Zone, over the past nine months. 

Nguyen Huu Thinh, Deputy Director of the Nghi Son 1 Thermal Company, said the plant provided 2 billion kWh to the national power grid in January-September. 

The figure is projected to stand at 839 million kWh in the last quarter of this year, targeting 2.8 billion kWh set for the whole year, Thinh said. 

Currently, the coal-fueled plant is using cutting-edge technologies to ensure environmental protection in line with domestic and international standards. 

Sitting on an area of 350 hectares in the Nghi Son Economic Zone in the central province of Thanh Hoa, the plant officially joined the nation power network in October 2013. 

The plant’s two turbines, each with a capacity of 300 MW, contribute nearly 200 billion VND (9 billion USD) to the State budge annually. 

Together with the Nghi Son 2 Thermal Power Plant, the project, invested by the Electricity of Vietnam, is included in the national electricity development plan for 2011-2020 with a vision towards 2030 ratified by the Prime Minister.

HCM City businesses urged to improve integration capacity

Ho Chi Minh City’s enterprises should speed up restructuring and build strong trademarks to meet tougher integration, said Vice Chairman of the municipal People’s Committee Nguyen Thi Hong at a October 10 ceremony to mark the Vietnam Entrepreneurs’ Day (October 13).

The recently-concluded Trans-Pacific Partnership (TPP) agreement will be a great chance and also a significant challenge for entrepreneurs as well as enterprises in Vietnam and the city in particular, she said.

Hong also asked local firms to pay more attention to the interest of the community and help needy people in the locality.

Ho Chi Minh City currently has 150,000 companies and about 250,000 individually-run business facilities.

Addressing the event, Director of the Vietnam Chamber of Commerce and Industry Vu Tien Loc said after 30 years of “Doi Moi” (Renovation), Vietnamese enterprises have developed significantly in both number and quality.

Particularly, many trademarks owned by Ho Chi Minh City’s firms have been popular regionally and globally, and a contingent of young, dynamic and creative entrepreneurs are contributing significantly to the country’s growth.

Loc suggested that the Ho Chi Minh City Business Association to do more for local enterprises as the bridge for them and State agencies for timely removal of existing obstacles and those that may arise.

On the occasion, the municipal People’s Committee presented the title “Outstanding Ho Chi Minh City Business 2015” to 100 local firms with excellent performance in the 2009-2013 period.

Optimistic outlook for credit growth

Banks and credit institutions are confident about an average credit balance growth of 17.6 percent in 2015 for the whole system, stimulated by the positive outlook of the economy’s demand for financial services.

The stance also demonstrates the economy’s recovery and possibility of loan absorption as well as promising business production for enterprise from 2015-2016.

According to a recent research study on business trends among credit institutions and foreign bank branches in Vietnam conducted by the State Bank of Vietnam, capital mobilisation of the whole banking system is expected to hit an average growth of 15.56 percent by end of 2015, of which VND mobilisation has surpassed that in USD.

The report cited nearly 50 percent of the credit institutions expect deposit and loan interest rates to reduce about 1 percent a year compared to late 2014.

Around 30 percent of the credit institutions expected the interest rates would remain unchanged while about the same proportion projected the rates might increase slightly but not exceed 0.7 percent a year.

Credit institutions have acknowledged that there has been a decrease in customer risks this year compared to 2014, thus credit institutions believed bad debt will follow the same trend.

Notably, 89 percent of financial institutions believed the bad debt and credit balance ratio might reach 2.39 percent by end of 2015. 

The entire system’s liquidity is constantly maintained. Some 90 percent of the credit institutions have revealed their liquidity status is in good condition in both VND and foreign currencies.

Vietjet Air offers great travel deals

To meet travel demand during autumn, the most beautiful season in a year, low-cost carrier Vietjet Air is giving away nearly 50,000 promotional tickets just from “0” VND for international routes between Vietnam with Seoul, the Republic of Korea, and Taipei (China).

The promotion will run from October 12 to 16 for travel period from October 15, 2015 to March 26, 2016.

Accordingly, the programme is applied for flights from October 7, 2015 to March 26, 2016 on Ho Chi Minh City – Seoul route and from October 15, 2015 to March 26, 2016 on Ho Chi Minh City - Taipei and Hanoi - Seoul routes.

Tickets can be booked at www.vietjetair.com, (also compatible with smart phones at http://m.vietjetair.com or Faceboowww.facebook.com/vietjetvietnam.

Payment can be made with Visa, MasterCard, JCB, American Express and ATM cards issued by 24 Vietnam banks that they have been registered with internet banking.

Vietjet received its 28 th aircraft on October 7, an A320 with Sharket wingtips, which is the ninth of the milestone agreement between Vietjet and Airbus for acquisition and leasing 100 aircraft.

The aircraft with advanced design which helps reduce fuel costs, CO2 emissions is expected to boost the carrier’s efficiency and protect the environment.

To welcome its new aircraft, the carrier will promote SkyBoss passengers with a fare reduction of 15 percent for every payment via VISA cards from now to December 12, 2015.

Promotion programme for students underway

Students in Hanoi are being offered a chance to buy products at discount prices of up to 50 percent as a promotion programme dedicated to them opened on October 9. 

Speaking at the opening ceremony, Deputy Director of the municipal Department of Industry and Trade Tran Thi Phuong Lan said that the event, part of the “Hanoi Promotion Month”, aims to help students buy learning tools and home utensils at reasonable prices. 

It also provides an opportunity for businesses to popularise their products to young people – their potential consumers. 

The three-day programme is carried out at 150 outlets, with the participation of 22 major universities in the capital, including the Hanoi University of Science and Technology, the Hanoi University of Pharmacy, the Vietnam National Academy of Music and the National Economics University. 

Also at the opening ceremony, students took part in several mini games to win gifts. The Viet Tin Optic Company presented 1,000 vouchers worth 500 million VND (22,500 USD) to poor students with excellent learning performance.

Lane Xang Insurance – bright spot in Vietnam-Laos cooperation

The Lane Xang Assurance Public Insurance (LAP), a joint venture between the Vietnam Post and Telecommunication Joint Stock Insurance Corporation (PTI) and Laos Development Bank (LDB) celebrated its fifth anniversary in Vientiane on October 9. 

Since it was established in 2010, LAP network has covered all 18 Lao localities. Last year, its revenue reached 20 billion kip (2.5 million USD, 10 times higher than that of 2010, making it the second largest retailer and fourth largest insurer in Laos. 

LAO has also been active in social activities for the Vietnamese community in Laos with various activities in different Lao localities. 

In 2013, LAP was honoured for its contributions to ASEAN community development. 

Addressing the ceremony, PTI General Director Pham Anh Tuan thanked the Party and State of Laos for supporting the firm during its operation, pledging to continue actively engaging in social activities in the country and contribute to the local development. 

Meanwhile, LDB General Director Bouline Phommavongsa said he is delighted at achievements that LAP has gained so far with an average annual growth of 130 percent, describing the firm as a bright spot in Laos-Vietnam business affiliation.

Vietnam's largest car expo opens in Hanoi

The 2015 Vietnam International Motor Show (VIMS), the largest-ever event of its kind, opened at the Vietnam Exhibition and Fair Centre in Hanoi on October 9.

This is the first exhibition by nine authorised auto importers and distributors in Vietnam after they officially parted ways with the Vietnam Automobile Manufacturers' Association (VAMA) after three years of cooperation.

VIMS 2015 is showcasing imported vehicles from Audi, BMW, Jaguar, Land Rover, Luxgen, Mini, Porsche, Renault and BAIC.

Laurent Genet, a representative of the auto importers, said the VIMS spans more than 4,000 square meters and displays a variety of imported models including mid-end, sports, racing, luxury and super cars. It aims to create a new standard for the Vietnamese automobile industry through efforts to provide a comprehensive, attractive and high-class "playground" for clients, Genet said.

Audi Vietnam showcases its A5 Sportback, A7 Sportback, A8L, Q3, Q5 and Q7.

Euro Auto, the authorised importer of BMW Group in Vietnam , also officially launched its unprecedented booth. Displayed at the booth is a series of eight models from a variety of segments, from Sedan, MPV, to SUV and even Motorsport, targeting a number of different target customers.

VIMS 2015 not only showcases vehicles, but also serves as a venue for importers to learn about support industries and related services such as banking, insurance and financial consultancy.

The five-day exhibition is expected to attract many auto importers and distributors, as well as customers and car lovers from around the city.

The event will run until October 13.

Malaysia comes second in benefiting from TPP after Vietnam

Malaysia will be the second biggest long-term beneficiaries from the recently concluded Trans-Pacific Partnership (TPP) agreement, according to Credit Suisse. 

Credit Suisse was quoted by New Straits Times on October 7 as saying that Vietnam could see a 10 percent boost to GDP by 2025, while Malaysia’s economy could grow 5 percent and Singapore is likely to be a relatively smaller beneficiary.

Economist Michael Wan from the Singapore-based research house at Credit Suise Group AG expected the manufacturing sector to be the biggest beneficiary in Vietnam and Malaysia.

He said there could be a slight negative impact on non-TPP Asian countries, the benefits could be sizeable if these countries eventually join the deal, with GDP growth ranging from 2 percent to 7 percent.

For instance, Thailand is forecast to see just 0.4 percentage points GDP shaved off by 2025, but the country could enjoy a 7.6 percent boost to GDP when it joins the TPP, he added

Based on a Peterson Institute study, sectors which could gain the most include Vietnam’s textiles, apparel and footwear, electronics, and construction; Malaysia’s electronics, apparel and footwear; and Singapore’s garment, footwear and machinery.

Meanwhile, Fitch Ratings said while the TPP will be a significant contributor to economic integration over the long term, it is unlikely to be a game changer for the economic prospects in the short term.

If the TPP is ratified, the most significant consequence will be in setting rules and guidelines under which economic integration deepens around much of the Pacific Rim.

The agreement will likely be positive to varying degrees for those within the pact and may divert trade and investment from non-participating countries.

Within the Asia-Pacific region, China, Thailand, the Philippines, the Republic of Korea and Indonesia have not participated in the TPP. 

The TPP covers 12 countries including the US, Japan, Brunei, Chile, New Zealand, Singapore, Australia, Canada, Malaysia, Mexico, Peru and Vietnam.

Wood fair focuses on competitiveness

Discussions during the four-day bi-annual Vietnam International Woodworking Industry Fair in mid-October are expected to help producers improve competitiveness when the Trans-Pacific Partnership (TPP) and other free trade agreements come into effect. 

Tran Le Huy, Secretary General of the Forest Products Association of Binh Dinh, said at a recent press briefing in Ho Chi Minh City that producers would find advanced machinery and technologies at the expo that would help address the country's low productivity. 

"Cooperation with the Vietnam Chamber of Commerce and Industry and ILO (International Labour Organisation) for human resource training has been of help," Huy said. 

The seminar during the fair, which will be held on October 14-17, will include discussions on production management and productivity by experts and leading companies. 

The TPP poses challenges in higher standards for labour (including wage, overtime work) and environment, among others. This will push up production costs, Huy said. 

Nguyen Chanh Phuong, Secretary General of the Handicraft and Wood Industry Association of HCM City, said last year Vietnam's exports of furniture and other wood products totalled 6.3 billion USD. It is expected to rise to 7.5 billion USD this year. 

Around 280 companies from 21 countries and territories including China, Vietnam, India, Spain, Germany and Thailand will introduce 1,200 machines and industrial products and services at the exhibition's 500 stalls.

SMEs prepare for economic integration

In the context of fiercer competition as a result of open-door policies in many countries, businesses, especially small-and medium-sized enterprises (SMEs), should build their own markets apart from selling what the market demands.

Vo Tri Thanh, Deputy Director of the Central Institute for Economic Management (CIEM), made the recommendations at a seminar on October 9 as part of a business festival in Ho Chi Minh City.

Regarding opportunities offered to SMEs, he said globalisation and regionalisation via free trade agreements will increase the inflows of goods, services, capital, skilled labourers, technology and information on a larger scale.

Southeast Asia is a dynamic region with huge potential to develop goods and services, Thanh noted.

Nguyen Phuong Dong, Deputy Director of the municipal Department of Industry and Trade, stressed the need for SMEs to maximise their efforts and affirm their role as pioneers in improving the competitive edge of made-in-Vietnam commodities and boosting exports.

Victoria Kwakwa, the World Bank’s Country Director in Vietnam, suggested SMEs market products favoured by consumers with reasonable prices.

Enterprises should focus on innovations to keep their traditional customers and lure new ones while focusing on exploring the actual demands of the market instead of being concerned about their rivals, she said.

Cooperation will help them grasp more knowledge and experience to churn out high-quality products more quickly, she recommended.

The festival, which drew hundreds of businesses from cities and provinces in the southern region, featured a range of activities, including a 60-booth exhibition, aiming to help the businesses exchange and update information on Vietnam’s integration.

US newspaper: Vietnam more attractive to overseas investors

Vietnam is emerging as a more attractive destination for overseas investors, the Los Angeles Times, a US-based daily newspaper, said in an article on October 8. 

Vietnam, a country where millions of people still subsist on farming, received a major boost from Silicon Valley a decade ago when chip maker Intel launched a semiconductor factory in the nation, the largest American investment in the country at that time. 

The firm’s $1.04-billion assembly and manufacturing plant added more complex products to the mix, such as central processing units and chip systems, and sent some of its 1,000 Vietnamese employees to the US for training. 

Vietnam has since positioned technology at the centre of its growth and development goals, said General Manager of Intel Vietnam Sherry Boger, adding that the Intel facility and the technology ecosystem in Vietnam is climbing up the value chain. 

Today, foreign direct investment (FDI), led by Japan, Taiwan and the Republic of Korea, constitutes about one-fifth of the country’s gross domestic product (GDP). 

Singtex, a Taiwan-based hi-tech fabric producer, established a factory in Ho Chi Minh City last November and employs more than 400 local workers. Low labour costs and expectations that the Trans-Pacific Partnership (TPP) will help expand its business are among the reasons behind the decision, President Jason Chen said. 

However, Vietnam is also facing fierce production competition in some basic goods, particularly garments, from its neighbours such as Laos, Cambodia and Myanmar, where labour is even cheaper. 

To stay ahead of its peers, the country is trying to entice more hi-tech productions by upgrading its transportation infrastructure through Japanese development assistance. 

Japanese aid has funded Vietnam’s first metro line, scheduled to open next year in Ho Chi Minh City, and a 210-billion-USD terminal to ease congestion at Hanoi International Airport. 

Furthermore, construction started on a 1-billion-USD Samsung screen production factory last year after the Korean-based company launched a $2.5-billion smartphone assembly centre in northern Bac Ninh province. The province is also home to Taiwan’s Foxconn Technology Group facility, a key Apple contractor, to produce cameras, computers and other electronic devices. 

Another challenge facing Vietnam is its lack of skilled workers, human resources consulting firm ManpowerGroup said in a report. Only 3 percent of its 90-million-people population are graduates from its 400 colleges and universities, many of which lack lecturers for subjects relevant to working for foreign investors. 

Intel has supported the country in a project to improve local university-level engineering programmes. The project is progressing well, even in its early stages, said Boger.

Thua Thien-Hue develops collective brands for traditional products

The central province of Thua Thien Hue, Vietnam’s former capital city, said that it would develop collective brands for preserving traditional craft villages and serving tourism development.

Phan Ngoc Tho, Vice Chairman of the provincial People’s Committee, said from now to 2020, the province will focus on determining the intellectual property rights for collective brands and marks for specialties and craft village products.

The idea aims to produce stable quality goods and improve the value and pervasiveness of traditional products to serve the development of other fields such as tourism and services and protect the cultural identities of Hue and Vietnam in general, said Tho.

Among products chosen to take part in the programme are Hue salted shredded meat, Hue royal tea, Hue cajuput oil and Hue Phap Lam (ceramic-coated copper products).

Hue sesame candy will be registered for protecting the brand overseas.

Thua Thien-Hue has so far built collective brands and geographical indication for Hue copper-casting products, Hue conical hats, Hue sour shrimps and Hue beef noodle.

The province is also encouraging the development of local collective brands for Quang Dien red rice, Quang Tho centella, Chuon village alcohol, Thuy Thanh fragrant rice and Vinh Loc watermelon.

The central province currently has 88 traditional craft villages with more than 2,600 establishments in total.-

Binh Dinh fishermen provided with advanced Japanese fishing techniques

Fishermen in the central coastal province of Binh Dinh were introduced to advanced machinery and techniques that can increase tuna productivity during a three-day field trip to the sea with Japanese experts from Kagoshima University.

Three fishing vessels that took part in the field trip and are joining the provincial tuna production chain, were equipped with Japanese fishing tackles including fishing line winders, fishing light attractors and fish shockers.

They landed at Binh Dinh seaport on October 9 with quality tuna weighing 30 kilograms.

According to Tran Thi Thu Ha, Vice Chairwoman of the provincial People’s Committee, the province is continuing to consolidate and develop the tuna production chain project involving fishing, processing and consuming tuna with the participation of 25 fishing vessels.

She added that the field trip created a valuable opportunity for local fishermen and technical officials to acquire new techniques and popularise them among the remaining 22 fishing vessels.

In the first eight months of this year, three key provinces engaged in tuna fishing, Khanh Hoa, Binh Dinh and Phu Yen, caught 13,970 tonnes of tuna in total.

Vietnamese tuna products are shipped to 100 countries and territories, including the US, Japan, Israel and Canada as well as the EU and the ASEAN region.

Supply of villas, row houses on upswing in Hanoi

Some 550 villas and row houses are set to be available in Hanoi’s real estate market by the end of this year, according to statistics from Savills Vietnam, the largest property company in the country.

By the end of the third quarter this year, the total supply of villas and row houses in Hanoi was estimated at 30,400 units built by 114 property projects. Of the total, 1,200 units were available in the primary market and 29,200 units in the secondary market.

The average secondary price was approximately 48.7 million VND (2,194 USD) per square metre for villas, down 0.4 percent from previous quarter and falling 1.9 percent compared to the same period last year. Row houses were snapped up for 61 million VND (2,748 USD) for each square metre, rising 1.2 percent from last quarter and 1.8 percent from the same time last year.

The highest primary price for villas is in Tay Ho district, which stands at 117 million VND (5,271 USD) for each square metre and the lowest in Thach That district at 18 million VND ($810.9) per square metre.

Meanwhile, property projects in Cau Giay district hold the highest price for row houses, which is currently at 136 million VND (6,127 USD) per square metre. Cau Giay district is one of the most attractive areas in Hanoi due to its comprehensive infrastructure and advanced services.

Buyers have been increasingly attracted to new housing projects, which have completed infrastructure and easy access. In addition, relevant policies have offered legal procedure support to property clients.

According to statistics from General Statistics Office of Vietnam, Vietnam’s credit growth picked up 10.78 percent from the end of 2014, the highest recorded since 2011. Savills experts said that this will be the main financial support for both property investors and buyers.

Local, foreign paintmakers vie for market

Domestic paint manufacturers believe they are capable of keeping up with their foreign counterparts in what has become a fiercely competitive market, according to independent market watchdogs.

According to the Vietnam Paint and Printing Ink Association (VNPIA), from 2000 to 2012 the domestic paint sector saw substantial growth, averaging 20% a year.

The growth has led to a rapid increase in the number of paint manufacturers. About 600 companies produce 250 million litres of paint a year. Decorative paint makes up 180 million litres of that amount.

Thanks to favorable policies from the Government, many foreign paint companies have entered the Vietnam market. Only 10% are high-end brands, but they have a market share of 65%, thanks to advantages in brands and financial capability.

The domestic market is divided into four segments: AkzoNobe, Nippon and Jotun account for 35% of the market share; 4 Oranges, TOA and SeaMaster occupy 25%; and Joton, Kova and Tison 15%. The remaining 25% belong to small companies.

Although 2014 was a year of recovery for the real estate market, purchasing power remains weak.

This has had a major influence on the paint market, with consumption growth decreasing significantly, registering at only 5%.

Because of the sluggish growth of the construction market, the rate was much lower than the 10%-12% rates recorded in previous years.

As a result, competition has become stiff and all manufacturers have had to expand their production to avoid losing market share.

Though they hold 65% of market share, foreign manufacturers continue to make higher investments.

In 2014, Nippon built its third factory in the northern Province of Vinh Phuc. In 2013, Joton invested US$16.1 million to increase its plant's production capacity to 25 million litres per year.

Though domestic paint manufacturers have been overshadowed by their foreign counterparts, they have developed specific strategies to protect their market share.

In recent years, local paint brands like Kova, Nero Dong Tam and Hoa Binh have attempted to launch unique product lines.

Nero Paint, for instance, has offered a new waterproof decorative paint, Nero Cement Paint, with quality equivalent to similar foreign products but at a price 30%-50% lower.

Hoa Binh Paint has focused on stone paint for the premium segment, with its Hodastone paint. Despite having an average price two to three times higher than water-based paint, it remains popular due to its aesthetic and durable quality for buildings on the coast, where the weather is sunny and windy with salty air, and also for cold climates.

In addition, domestic paint manufacturers have strongly focused on customers at rural areas as the market in major cities is dominated by foreign companies.

Local brands Kova and Tison typify this trend. Though they have been favored more than some foreign brands, they have been mainly distributed in provinces.

Many domestic companies have offered big discounts for investors and contractors, and launched promotion programmes for agents.

The CEO of a domestic paint company, who declined to be named, said that this method had been effective because most consumers were not aware of all of the features of paint products, and could not easily distinguish the level of quality among them.

For this reason, offering high discounts to agents and contractors had helped local paint companies increase their sales revenue, he said.

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