BUSINESS IN BRIEF 3/3

Cambodia outdoes Vietnam in EU garment market share

Vietnam currently ranks sixth among the biggest garment exporters to the EU, trailed by China, Bangladesh, Turkey, India and Cambodia, according to the Vietnam Textile and Apparel Association (Vitas).

Last year, the EU imported US$3.11 billion of apparel products from Vietnam, up 5.01% in value and 3.21% in volume, and accounting for 3.45% of the EU market share.

Despite a price reduction of 2.31% from a year earlier and lower price levels than Vietnam, Cambodia’s EU market shares were higher than Vietnam, constituting 3.64% with its EU garment exports registering US$3.27 billion.

Garment experts described Cambodia outpacing Vietnam in garment exports to the EU as a big surprise.

Vitas reported that during the first two months of this year, garment exports hit US$3.6 billion, up 12.4% against last year’s same period. However, price levels were just as same as last year even down by 0.5-1%.

Vietnam exports over 1mln tons of rice in two months

More than one million tonnes of rice were exported in January and February at US$445 million, doubling that of 2015 in terms of volume and value.

The Ministry of Agriculture and Rural Development said the volume of rice exported in February is estimated at 523,000 tonnes for US$228 million.

The surge in rice exports is largely due to the Philippines and Indonesia strengthening rice imports and price increases of about 40%.

According to the Vietnam Food Association (VFA), the increase in rice exports was due to the fact that Vietnam’s rice exporters had to complete government-to-government deals with the Philippines and Indonesia.

The Mekong Delta farmed about 1.54 million out of 1.56 million planned hectares in the winter-spring crop. Localities have harvested about 120,000 hectares with an average productivity of 6.3-6.4 tonnes per hectare.

In 2015,Vietnam exported 6.5 million tonnes for US$2.68 billion, a decrease of 3.94% in value. Asian countries were the main buyers, accounting for 74.5% of exports, followed by Africa (13.77%) and the US (6.72%).

Vietnam concerned about US’s tra fish inspection rule

Representatives of Vietnamese businesses and agencies have expressed concern about the US’s rule establishing an inspection program for fish under the order Siluriformes, including tra and basa fish that are widely farmed in Vietnam.

They said the rule will hurt millions of farmers, processors and exporters in the country.

During working sessions with experts of the United States Department of Agriculture’s (USDA) Food Safety and Inspection Service (FSIS) over the past days, relevant agencies and businesses said that the rule would also affect U.S. consumers and disturb bilateral trade in farm produce between the two countries.

The U.S. delegation is paying a visit to Vietnam from February 24 to 26 to clarify regulations and respond to questions over the issue. Earlier this month, a Vietnamese delegation led by Deputy Minister of Agriculture and Rural Development Vu Van Tam had a working trip to the U.S. to discuss the rule and prepare for implementation in Vietnam.

The final rule, released by the USDA in 2015, will be applied on locally raised and imported Siluriformes fish. The rule has been formulated to implement provisions of the 2014 Farm Bill. The rule will become effective in March 2016, 90 days after it is published in the Federal Register.

From March 2016, an 18-month transitional implementation period for both domestic and international producers will begin, and all Siluriformes fish, including catfish, will be under the regulatory jurisdiction of FSIS and not the United States Food and Drug Administration (FDA).

The Vietnamese delegation suggested the U.S. provide technical support and create favorable conditions for Vietnam to meet requirements. Local businesses also complained there is a wide gap in production conditions and development levels between the two countries.

The rule may hit Vietnam’s tra and basa fish exports to the U.S., which now generate around US$340 million in revenue a year.

Besides, the rule is contrary to regulations of the World Trade Organization (WTO). It is unnecessary as Vietnamese fish products have been exported to the U.S. for nearly 20 years with no food safety risks found.

The new rule is considered a barrier to Vietnam’s tra and basa fish exports to the U.S. Besides, it goes against WTO regulations and commitments stipulated in the Trans-Pacific Partnership (TPP) trade pact.

If Vietnam’s fish exports to the U.S. are affected, the country may consider bringing the case to the WTO. However, Vietnam still expects the U.S. to review and lift this rule, according to a delegation of the Ministry of Agriculture and Rural Development.

Meanwhile, the USDA pledged not to cause interruption in Vietnam’s fish exports to the U.S. and expressed its good will for better cooperation in implementation of the rule. Both sides will also discuss contents of a technical support program to help Vietnam meet the requirements soon.

The USDA and the Vietnamese agriculture ministry plan to hold an international seminar on fish inspection in HCMC in April. Representatives of 17 countries affected by the rule are invited to the event.

Making small-scale fish farming sustainable in Vietnam

Sustainability was the ‘buzz-word’ at a recent conference in Hanoi looking at the long-term viability of commercial pangasius catfish farming in Vietnam, sponsored by the Vietnam Association of Seafood Exporters and Producers (VASEP).

At the conference, many experts said that they believe the industry, as it exists today, is not truly sustainable because it relies too heavily on external feeds, chemicals, energy inputs and lacks sufficient profitability.   

The key components of sustainability as they defined it in relation to fish farming— is that it be profitable, use non-renewable resources efficiently, enhance renewable resources and improve the quality of life in rural areas.

If the pangasius industry is to have long-term commercial feasibility, fish farmers as well as other businesses in the industry must improve both their earnings and ability to compete in the global marketplace, said speaker Le Xuan Thinh.

Overcrowding of fish farms has led to problems with environmental degradation, disease, off-flavour, and a reduction in individual performance of the pangasius species itself, which in turn has resulted in overuse and abuse of chemicals.

The long-term results of these intensive production practices have been economically and environmentally devastating Thinh said, and they have also manifest in antibiotic resistant bacteria, thereby placing the future of the industry in jeopardy.

“To get the industry on the right track there needs to be strengthened management and structural change along the entire supply chain from hatcheries, feed producers and processers located in Vietnam to the traders and end-use customers in foreign countries,” said Thinh.

In a prepared speech, Thinh cited statistics showing the nation’s catfish industry exports have declined overall from 2002 onward in terms of both volume and value.

“Three or four years ago everything came to a crunch for pangasius exports,” said Thinh.

“Beginning in 2002 and through 2009 pangasius exports grew on average nearly two and one-half fold annually, but then overseas sales tapped out and in 2011 began their descent.”

Thinh, who is the manager of a project aiming to establish a sustainable pangasius supply chain in Vietnam (SUPA) by 2020, forcefully made the point that the profit margins for fish farmers are precariously too thin.

The cost of grains for feeding catfish have and continue to soar while the sales price of catfish is on a marked path spiralling downwards with the average sales price for catfish having gone from US$3.11 per kilo in 2002 to recently as low as US$2.10 per kilo.

Meanwhile the high feed and waste loads associated with intensive catfish farming have significantly negatively impacted water quality in production ponds creating heightened dependence on external feed, energy and chemical inputs.

They have also resulted in increased energy costs as in many instances more frequent, if not daily, aeration is now needed.

Thinh emphasized the point that businesses in the industry need to restructure and strictly apply sustainable standards such as those promulgated by the Aquaculture Stewardship Council (ASC) and Global GAP.

“Without such restructuring farmers and others in the industry are at extremely high risk of going broke,” said Thinh.

“Poor management techniques have cut deeply into the profitability of fish farming and only by restructuring and refocusing will the best managed businesses have any reasonable chance of long-term survival,” he said.

The ACS and Global GAP standards will assist the nation’s farmers and others develop their capacity, increase product quality, mitigate the environmental impact and reduce production costs, all of which add directly to the bottom line earnings.

Thinh said businesses must also be more innovative in coming up with novel catfish products to sell as well as get more creative in their marketing efforts to nurture their overseas retail markets.

VASEP Deputy General Secretary Nguyen Hoai Nam, in turn talked at length about the importance of implementing better more creative marketing and public relations policies and procedures.

Certainly, small-scale, low-input farming practices offer an attractive opportunity for improving the sustainability of catfish farming and have distinct advantages over large farms, said Nam— but it’s going to take significant reform and a lot of hard work to make it happen.

HCM City reports 55.5 % drop in FDI in 2016

Foreign direct investment in Ho Chi Minh City has plummeted this year and there are no large projects on the cards.

The city statistics department said US$225.4 million worth FDI has been registered as of mid-February, down 55.5% year-on-year.

Nearly US$152 million of it will be in new projects, mostly in manufacturing, processing and trading.

Sources from the Department of Investment and Planning and industrial zone management said they have so far not licensed any large-scale projects.

The number of local companies incorporated this year has also fallen by 11% to 3,400.

Vinamilk to close representative office in Cambodia

Soon after revealing plans to expand its overseas operations, Vietnamese dairy giant Vinamilk has said it will close its representative office in Cambodia next week when its license expires.

It was not immediately clear what the company plans to do with a US$23-million dairy plant it runs in that country in collaboration with Cambodia’s Angkor Dairy Products Company Limited.

Vinamilk owns a 51% stake in the plant, which was licensed in January last year and had a revenue target of around $35 million in the first year, Vietnam News Agency reported.

The company, officially known as Vietnam Dairy Products JSC, has two other overseas plants in New Zealand and the US, and a subsidiary in Poland.

It exported baby formula, soymilk and UHT milk products to 42 countries worth US$242 million last year, up 77% from 2014.

Earlier this week Vinamilk had invited trade counselors at Vietnamese embassies around the world to discuss its plans to boost dairy exports to new markets.

At least Africa and Myanmar have been identified as target markets for 2016.

It also revealed plans to boost sales in the Middle East, where it recently closed a US$12.5 million deal to export formula.

The most recognizable brand in Vietnam with a brand value of US$1.13 billion, Vinamilk is now one of the country's biggest magnets for foreign portfolio investors, after the government announced plans to divest its entire 45.1% stake in it.

Increasing Total Factor Productivity in int’l integration

The resolution of the 12th National Party Congress targets increasing Total Factor Productivity (TFP) from 30% to 35% in 2020.

Total Factor Productivity (TFP) is a variable with inputs such as knowledge, experience, labor skills, commodity, service, efficiency of investment, technology, equipment, and management skills. In 2010 Vietnam’s TFP was 0.27%.

Minister of Science and Technology Nguyen Quan said that since 2011 Vietnam’s TFP has increased steadily.

From 2011 to 2014, TFP contributed about 26% of Vietnam’s national economic growth. TFP growth will boost GDP growth without much dependence on increasing investment capital, labor, ỏ natural resource exploitation.

Like other countries, Vietnam has focused on improving TFP growth towards a sustainable economic growth strategy. The resolution of the 12th National Party Congress sets that scientific and technological activities contributing 35% to economic growth by improving TFP.

Minister Quan said, “This goal is feasible. Last year TFP was 35%. It’s projected to rise to 39% this year. From 2011 to 2020, we expect the TFP average to be between 30 and 35% because it was below 20% in the initial years. With the current economic growth rate, we hope the average TFP in 10 years will be 35%.”

High labor productivity means increased income for workers. Joining the TPP and the ASEAN Economic Community may boost the average income, but Vietnamese workers will have to compete with high-quality labor from other countries.

International integration will require workers to improve their skills to international standards and adapt to a new work and management environment.

Vu Thi Thao Vy, Vice President of the Students’ Association of the Hanoi University of Economics, said, “It will bring both opportunities and challenges to Vietnam. Job competition is a matter of fact. Each person has to improve their skills, such as English fluency.”

To reach its TFP goal, Vietnam has imported technology, hired experts, rallied scientists, and enhanced collaboration among institutes, universities, and businesses.

Localities and sectors have continued the 2nd phase of the program to improve product quality from 2016-2020, which includes creating 2,000 national criteria matching regional and international standards and helping 60,000 enterprises update their technology.

Domestic exporters urged to restructure to utilise TPP deal

Vietnamese exporters should restructure their production to improve profit and enjoy preferential of the Trans-Pacific Partnership agreement (TPP), Tran Tuan Anh, Deputy Minister of Industry and Trade said.

Anh said agro-forestry and fishery sector has strengthened and has been one of Vietnam's key export products.

However, the products would lose their strengths in the middle- and long-term if businesses do not restructure production, thus bringing in higher added value, he said.

"This was the reason that Vietnam has issued the export strategy by 2020 with a vision to 2025 to take advantage of international integration," he added.

The wood sector has been considered one of the key export staples with an average turnover of US$6 billion.

However, domestic wood exporters have focussed on products of sawdust, wood plank, ply wood, and fibreboard, in addition to furniture.

Apart from furniture, the remaining products have been exported to the Republic of Korea, Malaysia, Taiwan (China) and Japan as input materials for production of paper, medium fibreboard and interior furniture.

Nguyen Tuan Viet, General Director of Vietgo, one of the companies specialising in import-export consultancy, said the various sectors in the country would have to change their structure as foreign firms with big capital and modern technologies would pour their investment into Vietnam to enjoy tax preferential under the TPP.

"There will be a wave of businesses from China and Sweden, the leading wood exporters in the world, to invest in furniture production in Vietnam," Viet said.

Nguyen Ton Quyen, Chairman of the Timber and Forest Product Association of Vietnam (VIFORES) said several wood producers have to strive to change their technology to produce products with higher quality and added value.

"This is one of the critical solutions needed to take advantage of integration," Quyen said.

In addition, several agricultural products such as coffee, dragon fruit and lychee would be hard to ship in big amounts to the big markets of the US and Japan which have strict food requirements. Vietnam would benefit most from the countries as the TPP comes into effect.

Being one of the key export products, the garment and textile sector has witnessed difficulties as most of the producers have been small- and medium-sized enterprises.

With strict regulations on the certificate of origin, garment and textile firms would not enjoy a tax preferential if they still rely on imported materials.

Vietgo's CEO said they received five contracts from China in December to seek cotton and down and feather for jacket production.

"This has been a vital trend as the TPP will take effect soon. If local businesses do not change, they will become employees in their own country," he said.

He recommended that Vietnamese firms should invest in design, and material production to manufacture high quality products that penetrate demanding markets such as the US, Canada and Japan.

TPP may help Vietnam sew up clothing exports

Vietnam looks set to become the biggest beneficiary of the US-led Trans-Pacific Partnership trade deal out of the four Southeast Asian participants, the other three being Brunei, Malaysia and Singapore.

This according to an article written by David Robinson recently published in the UK Financial Times.

The 12-country pact — covering about 40% of the world’s economy — will grant Vietnamese manufacturers tariff-free access to several large markets. It should also force Vietnam’s communist government to speed up the restructuring of its domestic economy and push ahead with the difficult task of privatising its influential state-owned enterprises.

Vietnam’s new leadership remains committed to the pact following the national party congress in January and it is expected to ratify the agreement this year, although the deal also requires ratification by the US Congress, where it faces a tricky passage.

Once ratified, the TPP will grant Vietnamese companies tariff-free access to the US, with which it does not presently have a free trade deal, along with other large markets such as Japan and Australia.

This will boost demand for Vietnamese exports and create a wealth of new jobs at home. The sectors that stand to benefit the most are apparel, footwear and textiles, which together accounted for 26% of Vietnamese exports in 2014.

These industries have already grown rapidly over recent years.

At present, US import tariffs on Vietnamese-made footwear can be as high as 48%, while certain items of clothing can face tariffs of 20%, according to the World Trade Organisation.

The TPP will cut these tariffs to zero or close to zero, depending on the goods. This promises to accelerate an already steady increase in Vietnamese exports to the US of footwear, which were up 23% in 2015, and apparel, which were up 14%. At present, only China ships more of these goods to the US.

Moreover, the reduction of tariffs will provide further incentives for Chinese footwear and apparel producers to relocate or expand across the border to Vietnam. Over the past decade, rising labour costs in China have encouraged lower-value-added industries to move production to the Mekong region, with Vietnam receiving the lion’s share.

Japanese capital flows en masse to southern Vietnamese localities in Jan-Feb

Many foreign investors, especially those from Japan, have poured hundreds of millions of dollars of investment into Ho Chi Minh City and Dong Nai Province for the past two months, according to official statistics.

Foreign direct investment (FDI), both channeled into newly registered projects and added to existing ones, has rocketed to US$225.35 million in January-February, the Ho Chi Minh City Department of Planning and Investment said.

Most of the FDI has come from medium-sized projects run by Japanese firms, namely $35.5 million of Yazaki Eds Vietnam Ltd., committed to Tan Phu Trung Industrial Park in Cu Chi District, and $30 million poured into Tan Thuan Export Processing Zone in District 7 by Furukawa Automotive Parts Ltd.  

Of almost US$500 million worth of newly-registered FDI in Dong Nai Province, a neighbor of Ho Chi Minh City, within the first two months of this year, 26.08% have been supplied by Japanese investors, the local Department of Planning and Investment said.

By June 20 last year, Japanese investors had had 2,661 existing projects in Vietnam worth US$37.7 billion, according to the Foreign Investment Agency under the Ministry of Planning and Investment.

In 2014, Japan's FDI in Vietnam fell 65% to US$2.05 billion from US$5.87 billion in 2013, according to data released by the Japan External Trade Organization (JETRO).

Despite this, a number of business delegations from different Japanese localities visited Vietnam to seek cooperation opportunities in the agro-industry following high-level meetings between the two countries, Nguyen Trung Dung, a trade counselor at the Vietnamese Embassy in Japan, told Tuoi Tre (Youth) newspaper in an interview in November 2014.

Many suspended firms resume operation

More than 7,415 enterprises have been back to business in the year to February after a period of suspension, a strong rise of 69.5% from a year earlier, data of the General Statistics Office (GSO) showed.

The total figure includes 2,544 businesses in February, surging 69.2% over the same period last year.

Market watchers said the rise in businesses that resumed operations has been high in the year to date as the increase in the first two months of 2015 was 20.2% against the same period of 2014.

However, the business environment remains tough this year since the number of suspended enterprises has gone up by 17.3% to 16,471 in the January-February period. The number consists of 7,220 firms registering for temporary suspension and 9,251 others waiting for business code cancellations.

Around 2,546 out of 16,471 suspended companies in January and February are one-member limited liability companies, 2,556 limited liability companies with two members, 829 joint stock companies and 1,289 private enterprises.

Regarding the businesses waiting to cancel tax codes, 3,685 are one-member limited liability companies, 3,005 limited liability companies with two members, 1,097 joint stock companies and 1,464 private firms.

Of 2,195 enterprises completing procedures for dissolution in this year’s first two months, 93.4% are small-sized firms having registered capital of less than VND10 billion each. As many as 905 businesses are one-member limited liability companies, 654 limited liability companies having two members, 266 private firms and 370 joint stock companies.

According to the GSO, over 13,900 enterprises have been established in the first two months of 2016, with combined registered capital of VND113 trillion (US$5.04 billion), up 1% in number and 45.8% in value year-on-year. They have average registered capital of VND8.1 billion each, up 44.4%, and planned to recruit 198,500 laborers, up 0.7%.

Local authorities pass the buck after resort blights national park

A large four-star resort has been illegally built in Hanoi's Ba Vi District, yet the local authorities claim they had no knowledge of the project.

On February 29, the Ministry of Agriculture and Rural Development asked the investor of Le Mont Bavi Resort and Spa to halt the construction from March 1. The construction, in the middle of Ba Vi National Park, is almost completed. Despite the buildings being located on an 'particularly important area' the local military steering committee and authorities claimed to be completely unaware of major building work.

Luong Ngoc Anh, the project's investor, said documents from the Ministry of Agriculture and Rural Development allows managers of Ba Vi National Park to establish joint ventures or to call for investment.

"We completed and submitted all documents from planning to fire safety to environment impacts but the agencies keep pushing the responsibility onto each other. My project was in limbo, waiting for the permit and we had already spent money on it," he said.

Anh said he would follow the ministry's instruction to halt construction but some continues to believe that he has remained within the law. "I believe that in the coming time, the authorities will support us so the project can be continued."

Nguyen Quang Nhuong, head of the district construction inspectorate said the resort was built in 2008 and the inspectorate was established in 2011. "We have conducted several inspections since 2011 but nothing new was built," he said.

When being asked why they hadn’t filed a report on this major breach, Nhuong said that the responsibility belonged to the Ministry of Agriculture and Rural Development, which manages Ba Vi National Park directly.

Nguyen Van Ha, chairman of Ba Vi District People's Council said he hadn't received any reports. He said, "We don't know anything. Moreover, projects inside national parks never go through us. For every project that is located on areas of military interest we always ask for the military's opinion, even projects inside Ba Vi National Park."

Bach Cong Tien, chairman of Ba Vi People's Committee, refused to comment on the subject, saying that Ba Vi National Park is not under their management. "We don't have authority over the park. They also never seek out our opinions for the activities inside it so we don't know anything."

HCM City generates strong growth in first two months

Ho Chi Minh City posted strong economic growth in the first two months of this year, according Vo Van Hoan, Office Chief of the municipal People’s Committee.

Speaking at a press conference on February 29 to review the city’s socio-economic situation, culture, national defence and security in January and February, and roll out key tasks for the next month, Hoan said the southern metropolis’s total retail sales were estimated at nearly 121 trillion VND (5.4 billion USD), up 11 percent year-on-year.

In February alone, the figure stood at over 56 trillion VND (2.52 billion USD). This month’s consumer price index (CPI) increased 0.05 percent over the previous month, he added.

The CPI remained lower than the average national figure, he said, attributing the result to great efforts by municipal leaders and businesses in market regulation, especially during the Lunar New Year (Tet) holiday.

The locality’s export turnover, excluding crude oil, has been estimated at 3.9 billion USD so far this year, representing a rise of 8.2 percent against the same period last year. Meanwhile, its import revenue hit some 4.7 billion USD, a year-on-year increase of 5 percent.

During the reviewed period, HCM City welcomed nearly 902,000 international visitors, up 7.6 percent over the corresponding time last year, and earned nearly 17.3 trillion VND (778.5 million USD) from the tourism sector, up 7.6 percent year-on-year.

The city’s industrial development index edged up 5.7 percent against the same period last year.

More than 3,600 domestic businesses registered to establish, while 90 foreign projects received investment licences with a total capital of 155.9 million USD.

The municipal People’s Committee said that in March, the city will employ solutions to speed up production, remove difficulties facing enterprises and improve the investment environment in order to lure more domestic and international resources.

At the same time, the southern metropolis will lay out measures to raise the capacity of local retail businesses to meet the market’s demands in the context of international integration, the committee noted.

To meet these goals, the city plans to hold two working sessions with domestic and foreign enterprises to help them solve problems, Hoan said.

Vietnamese firms join Food & Hotel Asia 2016 exhibition

Four Vietnamese companies will exhibit their products at Food & Hotel Asia 2016, a leading international food, beverage and hospitality exhibition to be held in Singapore in April.

The companies are well-known for their products including Long Son Joint-Stock Co for cashews, Minh Long I for porcelain wares, Yilin Vietnam for foodstuff and sauces, and Hoang Mai Production and Trading Co for confectionery.

The exhibition, which is expected to attract a total of 3,300 exhibitors from 90 countries and regions.

Held from April 12 to 15 at the Singapore Expo, FHA2016 will feature six specialised exhibitions, namely Food Asia, Hotel Asia, Speciality Coffee&Tea, Bakery&Pastry, Hospitality Style Asia and HospitalityTechnology, each with their own unique themes and areas of focus.

HSG exports 20,000 tonnes of steel coil to US

The giant steel maker, Hoa Sen Group (HSG), on February 29 exported 20,000 tonnes of steel coils, worth a total of 10 million USD, from SSIT terminal in the southern province of Ba Ria – Vung Tau to the US.

A representative of HSG told Vietnam News that though it had not exported to the US for years, this was the biggest volume of steel it had exported to the US.

Hoa Sen was also the first company in the country to export such an amount to the US, he added.

The activity marked a special step for the company in its expansion in its export market, in anticipation of the Trans Pacific Partnership, a trade agreement signed earlier this month.

Exports contribute 40 percent of the company's revenue each year.

Last year, HSG exported over 400,000 tonnes of steel. The figure this year is estimated to be 450,000 tonnes.

The company's products are exported to more than 60 nations and territories.

RoK to sell securities trading system to Vietnam

The Republic of Korea Exchange (KRX) will sell a securities trading system to Vietnam in May, according to the agency’s press release issued on February 29.

Head of KRX Choi Kyung-soo will come to Vietnam in late March to sign a 28-million-USD contract to sell an integrated information technology system that monitors transactions, payments and the securities market to the Southeast Asian country.

The system is expected to be officially transferred to Vietnam in the first half of this year.

KRX said this is the first time it has sold such a system to another country. It will continue to bolster cooperation in related fields with Vietnam.

So far, KRX has gained 12 contracts with six countries on establishing an electronic securities trading system, including Malaysia, the Philippines and Azerbaijan.

It was established in January 2005 through the merger of the Korea Stock Exchange (KSE), the Korea Futures Exchange (KOFEX), the KOSDAQ market and the KOSDAQ Committee. It is the only exchange in the Republic of Korea.

KRX operates the centralised securities and derivatives markets where stocks, bonds and derivatives are traded on a common platform called EXTURE.

HCM City pledges favourable conditions for investors

Ho Chi Minh City will speed up administrative reform to create optimal conditions for businesses, Secretary of the municipal Party Committee Dinh La Thang said.

The official made the commitment at a reception for representatives from Singapore’s Temasek Holdings in HCM City on February 29.

HCM City wishes to receive feedback from investors and enterprises in order to improve local investment climate, he said, adding that businesses can call hotlines of the city or local departments and agencies if they have any concerns.

Thang promised to ask municipal departments and agencies to take the initiative in holding working sessions with investors and enterprises to learn about emerging problems and increase their supervision to ensure the smooth progress of projects in the city.

He called on Temasek Holdings and other businesses to pour more investments in the southern metropolis.

Cheo Hock Kuan, Temasek Holdings’s Head of Strategic and Public Affairs, briefed her host on the company’s investment plans in the time ahead.

She noted her hope that municipal leaders will create the best possible conditions for her company to implement its project in the city.

TMT inaugurates truck production line in Hung Yen

The TMT Motor Joint Stock Company inaugurated a truck production line with an annual capacity of 20,000 units in the northern province of Hung Yen on February 29.

The company also signed an agreement with the Chinese Sinotruck Group on manufacturing, assembling and distributing trucks and passenger buses.

It aims to produce and export commercial trucks to the regional and international markets.

The same day, TMT reached a cooperation agreement with the Bank for Development of Vietnam (BIDV), under which the bank will provide financial assistance to TMT’s operations.

SBV asks lenders to back policies to control inflation, boost growth

The State Bank of Vietnam (SBV) has called on lenders to carry out proper monetary policies and assure secure and efficient operations this year.

The SBV Governor Nguyen Van Binh said in Directive No 01/CT-NHNN issued earlier this week that these were needed to support national goals of controlling inflation, stabilising the macro-economy and boosting economic growth in 2016.

The SBV will run the banking system, which includes domestic credit institutions and foreign bank branches, with active and flexible monetary policies in tight conjunction with fiscal and other macro-economic policies.

The central bank targets growth rates of 16 percent to 18 percent for total money supplies, and 18 percent of 20 percent for overall outstanding loans in the system. The figures may be adjusted based on the real situation.

It urged lenders to continue to create advantageous conditions for enterprises, cooperatives and households to access loans, helping them enhance efficiency in their production and business activities.

The SBV will continue to speed up the restructuring of credit institutions and drastically handle weak lenders, in a bid to improve lending quality and maintain the bad debt ratio at less than three percent of the overall outstanding loans.

Governor Binh's directive is in line with the government's resolution on socio-economic development plans in 2016, following which this year's inflation will reach less than five percent and gross domestic product growth will be around 6.7 percent.

Enterprises should take full advantages during integration: experts

Economic experts said Vietnamese enterprises need to further promote the country’s advantages and strengths such as export of farm products, textiles and footwear in the coming time, aiming to fully integrate into global economy.

Cao Si Kiem, Chairman of the Vietnam Association of Small and Medium-sized Enterprises (SMEs), noted that SMEs have begun perceiving increasing influence of competitiveness brought from international integration.

To cope with challenges from the process, SMEs should build suitable strategies, with focus on promoting production and business, improving products’ quality, building trademark and prestige, designing customer care services and enhancing trade promotion in and outside the country.

Sharing Kiem’s opinion, Vice Director of Ho Chi Minh City’s Department of Industry and Trade Tran Vinh Nhung stressed the need for enterprises to immediately take more actions, affirming that those will help improve their business results.

He said firms should be active in seeking new markets, and taking advantage of the State’s policies on credit, land, tariff and training, in order to boost their development.

The Trans-Pacific Partnership (TPP) agreement is scheduled to become effective in two years. The ASEAN Economic Community was officially established at the end of 2015, and negotiations of the Vietnam-EU free trade agreement (FTA) have basically completed.

A range of new-generation FTAs is forecast to have a significant impact on the Vietnamese economy as a whole.

Vice Director of the Central Institute for Economic Management (CIEM) Vo Tri Thanh took note of domestic companies’ confidence in their comparative advantages, which will help them overcome difficulties and gain footholds internationally.

Yen Bai improves business climate to lure foreign investors

Authorities in the northern mountainous province of Yen Bai will enhance measures to improve the local investment climate in the locality, aiming to facilitate the operation of enterprises – especially foreign-invested ones.

During a new year meeting with foreign direct investment (FDI) firms operating in Yen Bai on February 29, Chairman of the provincial People’s Committee Pham Thi Thanh Tra said the locality will focus on improving administrative procedures and resolving difficulties facing enterprises.

The province will also work to better its State management over businesses, including FDI enterprises, thus ensuring benefits for investors, Tra affirmed, adding efforts will be promoted to lift the locality’s competitiveness index.

The provincial Department of Planning and Investment will work with relevant sectors to devise action plans to raise the province’s competitiveness index.

The FDI-enterprise community is required to abide by Vietnam’s policies and laws on investment and business, especially those related to taxes, land, environmental protection and the rights of employees.

Representatives from FDI firms asked local authorities to give out more preferential policies and continue building a transport infrastructure system.

They also called for greater support from the locality in recruiting employees, seeking partners and expanding markets. The local authorities should pay more attention to vocational training for the local workforce, and solving land-related disputes in order to ensure enterprises’ stable development, they said.

Foreign investors, mainly from India, Singapore, Taiwan, China and Japan, have poured over 204.8 million USD into 21 projects in Yen Bai.

The export value of FDI enterprises in the locality reached 30.96 million USD in 2015, up 10.6 percent over the yearly target. Foreign-invested businesses have brought jobs to 1,484 labourers and contributed 124.4 billion VND to the State budget.

Transport ministry sets sights on business equitisation

The Ministry of Transport will accelerate equitisation of transport corporations this year, an official from the ministry said in a recent interview.

Enterprise Management Department Director Vu Anh Minh told Giao thong, a newspaper of the ministry, that the key targeted businesses include Vietnam National Shipping Lines (Vinalines), Shipbuilding Industry Corporation (SBIC), and the Vietnam Expressway Corporation.

Nam Thang Long Transport Hospital, and Cuu Long Corporation for Investment Development and Project Management of Infrastructure are also among the list.

The equitisation of these firms began last year, but has not yet been completed. The delay in Vinalines and SBIC cases were particularly attributed to obstacles related to their capital and debt settlement.

This year, the ministry also plans to equitise Academy of Aviation, Thang Long Vocational Training School, and two transport hospitals in Vinh and Da Nang central cities.

A registration centre of the Vietnam Register and five technical centres of the Directorate for Roads of Vietnam are also up for equitisation in 2016.

"The sooner enterprises get off ‘their parents' nourishment', the more experience and resources they will gain to better adapt to market developments," Minh said. "This is especially meaningful when we are integrated more deeply into the global economy."

Minh said that the one important thing to accelerate the equitisation process and improve competitiveness and efficiency of the companies is to seek strategic investors who are truly capable.

The authorities have been cautious about looking for investors with adequate ability in terms of management, market, technology and finance, he said.

Minh said the ministry will not equitise four of its corporations, which serve the public. They are Vietnam Maritime Safety – North, Vietnam Maritime Safety – South, Vietnam Air Traffic Management Corporation and Vietnam Railway (VNR).

The ministry will maintain controlling stakes in national flag carrier Vietnam Airlines and the Airports Corporation of Vietnam, which is managing 22 airports nationwide.

It will withdraw state capital from all other corporations in the long run.

In January, Minh told the Vietnam News Agency that the ministry planned to complete capital withdrawal from Vietnam Motor Industry Corporation, Transport Engineering Design Inc, Civil Engineering Construction Corporation No 5 (Cienco 5), Cienco 6 and Cienco 8 this year.

It will also step up divestments in a number of its seaports and VNR affiliates in 2016.

Between 2011 and 2015, 137 businesses in the transport sector went public, 67 more than the target that the ministry set for the period, according to Deputy Minister of Transport Nguyen Hong Truong.

Five FDI projects land in Vinh Phuc in first two months

The northern province of Vinh Phuc granted investment licences to five new FDI projects in the first two months of 2016, the Vinh Phuc Investment Promotion Agency (IPA) said on February 29.

The province also allowed other two operational projects to add capital, bringing its total FDI registered capital over the last two months to 60 million USD.

Most of the projects are in the fields of textile and garments, export-import and electronic component manufacturing. They are expected to create jobs for thousands of locals.

Vinh Phuc has focused its work on land clearance and infrastructure development for local industrial parks and clusters in order to meet basic demands of foreign investors.

It has also provided prompt support to create a better business climate for investors.

Last year the province approved a 1.5-billion-USD project by Japan-based Sumitomo Group to develop infrastructure in the Thang Long Vinh Phuc Industrial Park in Binh Xuyen district.

Nearly 80 projects from Japanese firms are scheduled to be built in in the 213-hectare industrial park once it is complete, providing employment for about 25,000 workers.

HCM City’s retail property market to see new trends

The property market in Ho Chi Minh City will see good prospects for all segments this year and the retail sector will see new trends, according to experts in the field.

2016 is a key year for the retail market in HCM City, as domestic consumption increases and foreign retailers enter the market to take advantage of opportunities created by free trade deals, said Neil MacGregor, General Director of Savills Vietnam, the leading real estate service provider in the country .

A young population and rising middle class are two important factors that contribute to the retail market’s growth.

The emergence of a number of mid-sized shopping centres in the city’s new urban areas demonstrates the trend of satisfying the two groups’ demands.

According to Savills experts, retail development has been feverish as foreign and local developers compete in this rapidly changing environment. In 2015, the year-on-year growth in goods and services retail sales stood at 9.5 percent, one of the highest rates globally.

This year, the retail property market in HCM City will see a number of business premises as well as retail models, including Takashimaya in Saigon Centre building.

The retail market will see new trends that encourage customers to spend more, according to Henry Chin, Head of Research at CBRE Asia-Pacific.

He said the retail markets in HCM City and Hanoi added 150,000 square metres of space for rent last year. He added that the vacancy rate for commercial centres in HCM City is forecast to remain at 10 percent thanks to key clients.

Habit of using cash remains popular in Vietnam

According to the Vietnam E-Commerce and Information Technology Agency, though the country's e-commerce market has seen significant growth, the habit of using cash remains overwhelmingly popular, accounting for 65 percent of online transactions.

In fact, some e-commerce firms said the number of customers opting for "cash on delivery (COD)" accounts for 90 percent, with few buyers using credit cards.

It is this habit of consumers that has hampered the growth of e-commerce, especially e-retailers, and not the lack of online payment facilities, as many experts claim.

With more than 120 million mobile subscriptions and more than 40 million internet users in Vietnam, electronic transactions have a lot of potential.

Besides, the number of ATM cards has increased relentlessly as more and more companies force their employees to collect their wages using ATM cards as desired by the Government.

The reluctance to use plastic forces many e-commerce players to keep tracking payments made in cash or by cheque and bank transfers at the desk instead of developing applications for online payments. This is a unique trend that runs contrary to what is happening in other countries.

Consequently, e-commerce firms accept higher operating costs because they have to pay delivery companies a considerable amount since they help them collect money from customers in addition to delivery.

The habit also has an effect on sellers' turnover since people paying cash are always more reluctant to part with their money than those paying by card. The product exchange/return rate is also higher in case of cash payments.

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

Cambodia outdoes Vietnam in EU garment market share, Vietnam exports over 1mln tons of rice in two months, Vietnam concerned about US’s tra fish inspection rule, HCM City reports 55.5 % drop in FDI in 2016
 
*
*
*
  Send