BUSINESS IN BRIEF 18/1
Plan to implement VN-Italy customs cooperation agreement approved

The PM has approved a plan to implement the Agreement on cooperation and mutual administrative assistance in customs signed between the Governments of Viet Nam and Italy.

Accordingly, the Ministry of Finance’s General Department of Customs is responsible for implementing the contents of the aforesaid agreement, including information sharing, protection and use; technical cooperation among others.

The Ministry of Public Security shall direct its agencies to coordinate with the General Department of Customs in implementing the relevant contents and in exchanging information related to smuggling of narcotics, psychotropics, pre-substances and other substances that may causes damages to the environment, public health, safety and security; money laundering and illegal money transfer among others.      
MoIT sets nine tasks in 2018

Minister of Industry and Trade Tran Tuan Anh stressed nine key tasks for the sector in 2018.

The Minister made the announcement at a conference to summarize the sector's performance in 2017 and set its tasks for 2018. The event drew the attendance of PM Nguyen Xuan Phuc. 

Minister Tuan Anh said that 2017 marked not only a challenging year for the sector but also fundamental transformations that it made in the sector reform. 

Specifically, industrial production index picked up 9.4%, higher than the rate of 7.4% in 2016, outstripping the preset goal. 

Last year, Vietnamese export exceeded US$ 200 billion, jumping over 21%. The MoIT led others in streamlining administrative procedures and business and investment conditions; personnel  apparatus. 

Especially, in 2017, the ministry cut 675 unnecessary business lines and streamlined 183 out of 508 administrative procedures. 

Addressing the event, Minister Tran Tuan Anh stressed nine key tasks including:

Firstly, building and perfecting regulations to facilitate investment and business; rallying resources for industries and trade; cutting business and investment conditions; streamlining administrative procedures; and improving online public services;

Secondly, restructuring the Ministry in line with the Project which was passed by the PM; implementing the fourth industrial revolution; 

Thirdly, reviewing and balancing national energy resources;

Fourthly, fundamentally resolving shortcomings and weaknesses for inefficient projects;

Fifthly, handling issues on export, trade promotion, and export market development;

Sixthly, supervising and guiding the implementation of Viet Nam’s international commitments in a more effective and sustainable manner; 

Seventhly, reorganizing market management forces; 

Eighthly, effectively conducting the Strategy on domestic trade development by 2025 with a vision towards 2035;

Ninthly, speeding up SOEs equitization and State capital withdrawal.  

Dong Thap develops mango value chain


Plan to implement VN-Italy customs cooperation agreement approved, Vietnam must address three hurdles to economy, GrabBike drivers subject to 4.5% tax, Finance Ministry: SOEs heavily in debt




The Mekong Delta province of Dong Thap has revamped its mango farming towards lower price, higher quality and value, GAP standards, and market-led production. 

To that end, the province has applied scientific-technological advances and developed value-added products as well as a mango value chain. 

The farming of mango has been listed as one of the five key sectors of Dong Thap in the local agricultural restructuring programme. 

The province has the largest area of mango in the Mekong Delta with more than 9,300 ha and an annual output of 90,000 tonnes. Cat Chu and Cat Hoa Loc are the major mango varieties accounting for 70 percent and 20 percent of the total mango area.

Each year, Dong Thap earns about 1.5 trillion VND (66 million USD) from mango. 

According to Nguyen Van Cong, Director of the provincial Department of Agriculture and Rural Development, Dong Thap has established two cooperatives and 29 groups which provide mango for Long Uyen Company, Injae Corporation of the Republic of Korea (RoK), Thuan Phong Co., Ltd, Good Life Co., Ltd and Viet Duc Food Technology Co., Ltd in an effort to develop the mango value chain. 

Such cooperatives and groups have been assisted to get the GAP certificate, which allows them to export mango to the RoK, Japan, New Zealand, China and Russia through businesses in Hanoi and Ho Chi Minh City. 

Nguyen Hong Su, Chairman of the Cao Lanh district People’s Committee, said Cao Lanh boasts the largest area of mango in Dong Thap with over 3,600 ha, mostly Cat Chu and Hoa Loc mangoes which yield more than 11 tonne per ha and an annual output of over 40,000 tonnes. 

Of the total area, 5 ha of mango have met VietGAP standards, more than 21 ha have received the GlobalGAP certificate and tens of ha have been cultivated organically. 

Through the cooperatives and groups, Cao Lanh mango has been shipped to the RoK, Japan, New Zealand and Russia. 

Dong Thap has rolled out a project on sustainable development connection in the Dong Thap Muoi sub-region encompassing Dong Thap, Tien Giang and Long An provinces during 2018-2020 with a vision towards 2030. 

More than 6,000 ha of Cat Chu and Cat Hoa Loc mangoes in Dong Thap and over 3,900 ha in Tien Giang province, making up about a quarter of the total mango area in the Mekong Delta, have been identified as major supply sources of mango for both domestic and foreign markets.

Viet Nam, Cambodia develop model border market
     
The Viet Nam Ministry of Industry and Trade and Cambodia Ministry of Commerce on Tuesday began constructing a model border market in Memot District, Tbaung Khmum, Cambodia.

The 20,000sq.m market would have a total investment of US$2 million from the non-refundable aid the Vietnamese Government provided to Cambodia.

Located near Chang Riec Border Gate, Tay Ninh Province, the market aimed to promote economic exchange and bilateral trade, as well as to enhance the quality of living of residents near the border between the two countries.

Vietnamese Ambassador to Cambodia Vu Quang Minh said the border market was the initial step in the development of a border market system of the two countries.

Cambodian Minister of Commerce Pan Sorasak appreciated the non-refundable aid of the Vietnamese Government, which he said would not only bring benefits to residents, but also contribute to boosting trade between the two countries to reach $5 billion threshold.

In the first 11 months of 2017, Viet Nam and Cambodia reached a bilateral trade of more than $3.4 billion, representing a rise of 31.5 per cent over the previous year.

Vietnam must address three hurdles to economy: VEPR

Vietnam's macroeconomy is forecast to continue its stable growth in 2018 but it should overcome three existing hurdles for further development, according to a report released by the Vietnam Institute for Economic and Policy Research (VEPR).

The VEPR's quarterly report featuring an independent assessment on Vietnam's macroeconomic policies was announced on January 16.

The report stated that the stable macroeconomy, along with the institutional reform pursued by the government in order to improve the investment environment, will continue to promote its effectiveness and support business activities in 2018.

However, many inherent problems in the economy have yet to be thoroughly resolved and will remain a drag on the economy.

The VERP pointed out the first barrier to the economic growth which is the low labour productivity in comparison with other countries in the region. Vietnam's productivity is equal to only one fourteenth of that of Singapore, one sixth of Malaysia and one third of Thailand.

In addition, increasing budget deficit and public debts continue to be a serious problem hindering the national economy. While the expenditure for public investment remains limited, high regular spending will impose a burden on the State budget, the report stated.

Vietnam's dependence on the world economy and the foreign invested sector will also create uncertainties for the economy, particularly in the context of emerging risks related to geopolitics, trade protectionism, and changes in global science and technology.

BASF AgSolutions Farm launched in Tien Giang

Global chemical company BASF last week inaugurated its AgSolutions Farm, an agricultural solution research center for crop protection products, in Cai Lay District in the Mekong Delta province of Tien Giang.

BASF said the AgSolutions Farm will serve as a technical and training hub to support farmers and industry players to boost agricultural productivity and profitability, and promote food safety and environmental protection. Demonstration plots and field trials at the center will also complement the work of the company’s research farms elsewhere in the world.  

Vietnam is a major rice exporting country in the world and one of the most important agricultural centers in Asia Pacific. However, Vietnamese farmers are coping with challenges related to a lack of arable land, climate change, weeds and diseases, according to Gustavo Palerosi Carneiro, senior vice president of BASF Crop Protection Asia Pacific.

“With our AgSolutions Farm, we aim to bring our crop protection innovation and technical knowledge to the farmers and other industry players, so that they can increase their productivity in a sustainable manner,” Carneiro said in a statement.

The BASF AgSolutions Farm will introduce the latest technology and best practices from around the world to help step up innovation in farming in Vietnam, as well as share innovative solutions with regional countries, including Thailand, Indonesia and the Philippines.

BASF said the facility will also foster partnerships between the company and local universities and institutes to provide training and develop customized products and solutions to meet needs of local growers.

Tanachart Ralsiripong, managing director of BASF Vietnam, said the AgSolutions Farm will enable the company to get closer to farmers and work to provide better services and contribute to sustainable agricultural development in Vietnam. He added Vietnam is one of the fastest growing markets in Asia Pacific.

The Mekong Delta is Vietnam’s major production region for rice, vegetables and fruits.

BASF Crop Protection Division has been active in major farming centers, including the Mekong Delta, since it launched its direct business model in Vietnam in 2013. It works with farmers, distribution partners and agriculture industry players to offer innovative solutions and product stewardship training to support their efforts to boost productivity and profitability.

BASF said it will introduce a broader range of innovative products in the next three years to back sustainable development in the country’s agricultural sector.

BASF opened a representative office in Vietnam in 1994 and BASF Vietnam Limited was set up in 2009. BASF Vietnam now operates two production sites for construction chemicals and provides a wide range of products, including plastics, petrochemicals, construction chemicals, fine chemicals, performance chemicals, paper chemicals, and crop protection.

BASF sales to customers in Vietnam were put at 245 million euro in 2016. The company employed 142 people in this market as of the end of 2016.

Private investors asked to join canal-side home relocation project

Given its tight budget, the HCMC government will call for private enterprises to participate in a project to relocate more than 20,000 makeshift homes along the city’s canals.

According to data of the HCMC Department of Construction, these homes are located along some 57 canals in the city.

The relocation project is part of a program to revitalize the urban landscape in the 2016-2020 period.

The project will need VND50 trillion (US$2.2 billion) for compensation and settlement. However, the city’s budget is not enough to cover such a huge amount.

Therefore, the city will hold a conference at the end of this month to call for investors to get involved in the project under the public-private partnership (PPP) format. Investors may be allowed to use land along canals to recover their capital.

HCMC currently has nearly 3,300 canals and rivers with a total length of more than 5,000 kilometers. Most of them are polluted by garbage and wastewater, mainly from residential areas and industrial parks.

Travel companies in the city have complained about pollution in rivers and canals, especially Tau Hu-Binh Dong Canal in District 8 and a section of the Saigon River from the city center to Cu Chi District. They have proposed the city quickly find solutions to reduce river and canal pollution to attract more guests to buy river tours.

With such river and canal systems, the city holds strong potential to develop waterway tourism.

HCMC says will strengthen tax collection

The HCMC Tax Department will this year prevent tax losses and enhance inspections of enterprises with new business models like Uber, Grab and e-commerce traders.

At a review meeting on 2017 operations and 2018 plans held last Friday, director of the department Tran Ngoc Tam said the department will try to attain the domestic tax collection target of VND268.78 trillion. Solutions to tax loss prevention will be presented to the city government soon, he added.

According to the department, a number of areas will be put under close inspection this year, including suspicious banking transactions, business activities suspected of transfer pricing, and capital or project transfers. 

Inspections will focus on enterprises active in new business areas such as Uber, Grab, multi-level marketing, and those running e-commerce.

Speaking at the meeting, HCMC vice chairman Tran Vinh Tuyen underscored the need for cooperation among tax and other departments.

In particular, the HCMC Department of Health will have to assist the tax department in managing and collecting taxes from pharmaceutical business, whereas the HCMC Department of Industry and Trade and the central bank need to work with the tax department to build an e-commerce management scheme.

According to Tuyen, though it is hard to manage e-commerce activities, but HCMC, if being able to do it well, can generate high tax revenue.

In addition, there must be coordination between the customs and tax departments in preventing transfer pricing.

Bui Van Nam, general director of the General Department of Taxation, said inspections should focus on transfer pricing, e-commerce and informal economy.

The city’s tax department collected nearly VND239 trillion in taxes last year, up 16.8% against 2016. Of the amount, domestic business and production activities accounted for VND129.08 trillion.

According to Nam, tax revenue in HCMC has soared steadily in recent years, making great contributions to the country’s total collections. While HCMC made up 20% of total collections in 2014, the proportion rose to 24% last year and may continue to rise this year.

Satra plans 60 more Satrafoods stores this year

Saigon Trading Group (Satra) looks to launch 60 Satrafoods convenience stores later this year, raising its total to 217, heard a review conference on its 2017 performance and its 2018 plan on January 15.

Satra is also expected to open its commercial center called Center Mall Cu Chi in the outlying district of Cu Chi, HCMC in the third quarter of this year.

The center covers more than one hectare of land and has a total floor area of over 12,000 square meters, with the first and second floors for shopping, eatery, fashion and books, and the third floor for film screening and entertainment.

Regarding a shopping center in District 6, Satra said that after all legal procedures are done, it would start work on the facility right away.

Satra has been also working on the Tax Plaza in downtown HCMC.

Notably, Satra plans to set up a product development division in charge of developing areas for growing organic rice, vegetables, fruit, seafood, poultry and cattle and selling these products in its retail systems, and others at home and abroad.

Satra reported total revenue of more than VND63.09 trillion (US$2.77 billion) last year, rising 12.69% year-on-year and beating its target by 3.17%. Its profit was estimated at VND12.45 trillion (US$548.5 million), 3.81% above its target.

It exported goods, mainly processed food, seafood, rice and fish fat, worth over US$101 million to Europe, the United States, and some Asian countries last year, meeting 99% of its target.

As of late last year, Satra had 157 Satrafoods stores, eight restaurants, and five bakery and coffee stores, and two shopping centers.

GrabBike drivers subject to 4.5% tax

Drivers of GrabBike and GrabExpress have 4.5% of their revenues deducted for tax payment as from early this year, according to Grab Vietnam.

Starting from this year, Grab Vietnam will file for tax based on revenues of GrabBike and GrabExpress drivers, discounting 4.5% from drivers’ revenues.

Currently, drivers earn 80% of revenues while the balance of 20% belongs to Grab Vietnam. Therefore, the 4.5% tax on driver’s revenue, with 3% in value added tax and 1.5% in personal income tax, is equivalent to 3.6% of total revenues.

According to some GrabBike drivers, Grab Vietnam planned tax deductions last year but delayed the collection. This is the second time the firm has announced the tax collection.

Following the tax deduction, GrabBike drivers on Wednesday protested by turning off Grab app and gathered at the HCMC office of Grab Vietnam to express their opposition as they already pay for their own phone and fuel costs.

Nguyen Trung Thanh, head of GrabBike and GrabExpress, said Grab Vietnam used its money to pay taxes for drivers in 2016-2017. Tax collection and payments as from this year are made in accordance with Document 1531/TCT-TNCN of the General Department of Taxation dated April 20, 2017 and Document 5729/CT-TTHT of the HCMC Tax Department dated June 19, 2017.

According to Grab Vietnam, tax payments are obligatory to only GrabBike and GrabExpress drivers with revenues higher than VND100 million per year.

Govt urges BR-VT to solve issues in major seaport project

Deputy Prime Minister Truong Hoa Binh has told Ba Ria-Vung Tau Province to solve issues involving the long-stalled Cai Mep Ha general cargo and container terminal project as soon as possible, news website Dan Tri quoted a notice of the Government Office.

Developed by Vung Tau Shipbuilding and Oil Gas Services JSC, also known as Vung Tau Shipyard, the terminal is expected to cover around 86.6 hectares and cost more than VND10.23 trillion (US$450.3 million).

The provincial government reached an agreement with the investor on the location of Cai Mep Ha (downstream Cai Mep) and its total area in 2006.

The central Government put Cai Mep Ha on a list of planned seaports in southeastern Vietnam in 2008. Then the province allocated land to Vung Tau Shipyard in 2011.

The terminal was expected to come into service in 2013, and accommodate vessels of up to 160,000 tons. Vung Tau Shipyard teamed up with South Korean partners to carry out the project.

However, Vung Tau Shipyard faced many issues such as those related to compensation and land rent, between 2011 and 2016.

According to Vung Tau Shipyard, the main reason is long delays in developing transport infrastructure to the terminal. The Cai Mep-Thi Vai inter-port road was opened to traffic last year though it was originally planned for 2012.

During the period, Vung Tau Shipyard sent more than 100 documents to the provincial government and its departments to seek their support for the project.

Instead, the local government launched an inspection of Vung Tau Shipyard and scrapped its terminal project last September, leading the company to file a complaint to the Government Office.

According to the investor, in addition to delays in the inter-port road, it was not until 2014 that the provincial government had issued a decision on land rent for the project, so the company could not obtain a land use right certificate, thereby leading to long delays in the terminal project.

The deputy PM requested Ba Ria-Vung Tau to send a report on its decision to revoke the project prior to the end of last year. However, the provincial government has yet to do so.

Nguyen Van Hai, head of the Ba Ria-Vung Tau People’s Committee Office, said the local government has been inspecting the project. When it is done, it will report to the Prime Minister.

Finance Ministry: SOEs heavily in debt

Many State-owned enterprises (SOEs), though holding huge resources and enjoying big incentives from the Government, saw profit and revenue declining in 2016, Tien Phong newspaper quoted a Ministry of Finance report.

As of late 2016, there were 583 enterprises wholly owned by the State. They did play a role in stabilizing the macro economy, controlling inflation and developing public services.

However, they faced numerous challenges, especially in sectors like real estate, oil and gas, and agriculture.   

According to the ministry report, weaknesses and shortcomings of SOEs included inefficient production, debts, losses, wastefulness and poor performance of SOE leaders.

Total assets of 583 SOEs in the nation amounted to more than VND3,000,000 billion (US$132 billion), while their equity was VND1,390,000 billion. They also enjoyed incentives such as holding monopolistic power in some sectors and having the right to extract and process the country’s natural resources.

However, they performed poorly. Pre-tax profits of large SOEs totaled a mere  VND140 billion in 2016, down 14% year-on-year.

Particularly, pre-tax profits of seven State-owned business groups dropped 25%. Vietnam Oil and Gas Group (PVN) reported a 38% decline in profit due to the low world oil price while Vietnam National Chemical Group (Vinachem) posted a loss of VND335 billion.

According to the Ministry of Finance, the average ratio of pre-tax profit to equity in 91 SOEs in 2016 was 10%, down two percentage points compared to 2015, while the average ratio of before-tax profit to assets was 4.5%, down one percentage point.

In 2016, total debts of SOEs amounted to more than VND1,530,000 billion, including more than VND265 trillion of external debt. SOEs with the largest debts included Vietnam National Coal and Mineral Industries Group (Vinacomin) with more than VND100 trillion, Investment and Industrial Development Corporation with more than VND44 trillion and Vinachem with nearly VND37.5 trillion.

Accumulated losses of 17 leading SOEs had reached more than VND12.5 trillion as of late 2016. Vietnam National Shipping Lines (Vinalines) reported the biggest loss with more than VND5 trillion, followed by Global Telecommunications Corporation (Gtel) with more than VND3.9 trillion and Vinachem with more than VND1.3 trillion.

Total debts of SOEs were 1.2 times larger than equity on average.

Despite large debts, SOEs spent nearly VND434 trillion on financial investments, including VND267.5 trillion on short-term investments and VND166.4 trillion on long-term investments.

Data of the Ministry of Finance shows total bad debts owed to State-owned corporations and groups were nearly VND334.5 trillion in 2016, up 3% year-on-year, while those owed to holding companies amounted to nearly VND462 trillion, up 10% year-on-year. Total inventories of SOEs were worth nearly VND191 trillion, up 1% compared to 2015.

HSBC lands top honors in Euromoney Trade Finance Survey 2018

HSBC has been recognized as the top trade finance bank in Vietnam and as the world’s top global trade finance bank in the 2018 Euromoney Trade Finance Survey.

The annual poll, which is highly regarded across the banking industry, recognizes leadership in trade finance by asking businesses engaged in international trade worldwide to indicate which international banks they currently use for trade finance and how they rate that bank’s various trade finance services and products.

“I am delighted that we have been recognized by our clients in Vietnam as the country’s number one trade finance bank,” said Mr. Winfield Wong, Country Head of Wholesale Banking at HSBC Vietnam.

“Historically, HSBC was established to facilitate the growing trade between countries and continents in the 19th century, and we’re extremely proud that today HSBC is playing its part to ensure the bank remains at the forefront of the global trade industry.”

As with other countries where HSBC operates, HSBC Vietnam offers a full suite of trade solutions ranging from traditional documentation services to highly sophisticated tailor-made solutions to enterprises, both multinational corporations (MNCs) and local corporates; all of which come from a local team of experts that are always willing to go the extra mile for their clients.

The bank’s wide range of trade products accommodates five areas of needs among customers: "Working Capital Optimization", "International Trade Growth", "Trade Risk Management", "Supplier Finance Management", and "Sale Finance Management", from pre-shipment financing that supports raw material purchases in preparation for manufacturing and delivery, to post-shipment financing, including negotiation or factoring services. HSBC has also continued to introduce industry-leading measures to prevent financial crime and sanction risks while facilitating global trade.

“By leveraging our global reach in more than 60 countries and by sharing our in-depth knowledge of markets, we connect buyers and suppliers, helping our clients manage risk and liquidity costs more effectively, and that has always been HSBC’s core strength,” said Mr. Wong.

“Trade is forever evolving and so our role as industry leader is not just to adapt to change but also to anticipate what our clients will need tomorrow so we can continually provide them with the best in class capital solutions,” he added. “That’s why we always put our clients at the heart of everything we do.”

In the annual survey, which this year compiled votes from more than 7,000 businesses engaged in international trade, HSBC was also named as the leading bank for trade finance in the UK, the US, and multiple countries across Latin America and the Middle East as well as Asia. 

HSBC Vietnam was recently named Best Domestic Cash Manager in the Euromoney Cash Management Survey 2017, making it the best transactional banking franchise in the market.

VeriME links with three leading Asian fintech companies

VeriME, a blockchain-based identity verification and payment authentication solutions provider under the NextTech Group, has recently cooperated with three leading financial technology (fintech) companies in Asia: TrakInvest, the Cement Finance Company (CFC), and MC Payment.

Given the rising cost and challenges of KYC and payment authentication processes, the tech startup’s D-KYC and D-SECURE solutions are quickly being adopted by many Asian fintech companies.

“VeriME’s efficacious and secure digital identity verification solutions have leveraged blockchain technology to ensure thorough and foolproof identity verification in seconds,” said Mr. Sanjeev Kumar, Co-Founder of VeriME. “Our approach to digital identity verification will enable fintech organizations with high volume requests for identity verification and payment authentication to conduct these processes securely, while ensuring compliance with local data sovereignty and PDPA laws.”

VeriME’s cooperation with TrakInvest, CFC, and MC Payment comes shortly after it partnered with NganLuong, Vietnam’s largest payment gateway, Weshop, a leading online marketplace in Southeast Asia, and Moin, a South Korean cross-border remittance services provider.

TrakInvest, a Singapore-based virtual social equity trading platform, aims to streamline verification and authentication processes for customers trading on the TrakInvest platform by integrating VeriME’s solutions into its system. “TrakInvest wanted to ensure transparent and socially-responsible trading practices, where users are held accountable for their trades,” said CEO Bobby Bhatia. “At the same time, it is important to ensure user privacy and ease of use. Users can now verify their identities on TrakInvest’s online trading platform within seconds, thanks to VeriME’s decentralized, paperless authentication services. This partnership fortifies the outstanding efficiency of our platform and our user-centered approach.”

Vietnam’s Cement Finance Company specializes in mobilizing funds in money and capital markets, and believes this cooperation will help it benefit from the efficiency gains of Blockchain.

Founded in Singapore in 2005, MC Payment is a fintech and business platform services provider that specializes in supporting non-cash payments across Asia-Pacific. Its comprehensive suite of products provides solutions for in-store, mobile, online, and digital payments across the region and across a variety of industries, ranging from non-profit to financial services. “Compliance with local data sovereignty and PDPA laws cannot be ignored,” said Mr. Anthony Koh, Founder and CEO of the company. “We are well aware of the gravity of the issue and, hence, we are ready to take the best measures possible to ensure our complete compliance.”

JD.com to be one of Tiki’s largest shareholders

China's JD.com Investment on January 16 announced that it will become one of Tiki’s largest shareholders after its strategic investment in Vietnam’s leading B2C e-commerce platform.

Under the plan, JD will partner with Tiki in a range of areas including merchandising, cross-border trade, logistics, technology, financing, and operational capabilities.

Son Tran, Tiki's founder and CEO, said that, "We are delighted to partner with JD.com, China's most trusted online retailer, as we enter a new phase of growth."

"JD and Tiki share the same business philosophy: to win market share by winning consumers' hearts. Since inception, Tiki has always focused on providing best-in-class, authentic shopping experience and amazingly fast delivery. We believe that JD.com, with its proven track record in superior user experience, procurement, logistics, and technology will be an invaluable asset for Tiki as we work to become Vietnam's top e-commerce platform,” he said.

JD launched its Indonesian business in 2015 and formed a joint venture with Central Group in Thailand in 2017. With its investment in Tiki, JD adds Vietnam to its growing presence in Southeast Asia. JD's latest move is aimed to battle the increasing presence of Alibaba and Amazon in the regional market.

JD.com is both the largest e-commerce company in China and the largest Chinese retailer by revenue.

Before JD.com, Tiki received investments from VNG, Seedcom, Sumitomo, and CyberAgent Ventures to fuel its growth. According to Statista, the value of the Vietnamese e-commerce market reached US$2.1 billion in 2017, up 16.7% year-on-year. The market value is expected to reach US$3.7 billion in 2020.

Independent Assessment of Vietnam’s Macroeconomic Policies

The Vietnam Institute for Economic and Policy Research (VEPR) and the Konrad Adenauer Foundation (KAS) on January 16 co-hosted a workshop in Hanoi to unveil the Quarterly Report (IV) – Independent Assessment of Vietnam’s Macroeconomic Policies.

At the event attended by numerous senior economic experts, VERP President Nguyen Duc Thanh briefed participants on the world and Vietnam's quarterly macroeconomic report.

The world economy in Q4 and in 2017 witnessed steady growth. The US economy continued to expand despite the impact of two major hurricanes (Harvey and Irma), which led to the Fed’s decision to hike interest rates in December. The EU’s economy recovered rapidly, with the highest growth rate in recent years, whilst the UK lost its position as the world’s fifth largest economy.

In Asia, Japan continued to face labor shortages as well as population decline.  The Chinese economy experienced slightly lower growth following the introduction of government controls on the property market and debt risks.  ASEAN economies maintained their impressive growth, while BRICS countries also saw signs of an economic rebound.

After an abnormal Q3, the Vietnamese economy posted an even more impressive growth rate of 7.65%, fueling 2017’s overall growth rate of 6.81%, which surpassed the National Assembly’s target of 6.7%. Agriculture, forestry and fishery, and service sectors improved greatly compared to previous years. 

The number of foreign visitors set a record at nearly 13 million, contributing to the recovery of the service sector.  The manufacturing sector witnessed tremendous growth at 14.4%, becoming the driving force for the whole industry sector despite the downturn in the mining and quarrying sub-sector due to restructuring. All industrial production indicators showed growth in Q4.

The number of jobs created and newly established firms increased considerably again in Q4. CPI remained stable, only increasing by 2.6% in December, while the inflation rate for 2017 was 3.53%, fulfilling the target of not exceeding 4% as set by the National Assembly.

Trade balance saw a surplus of US$ 3 billion in Q4. Annual trade turnover in 2017 reached US$400 billion for the first time in history. Turnover in both exports and imports boasted impressive growth rates of more than 20%. The total trade surplus in 2017 was reported as US$2.7 billion.

The Republic of Korea is replacing China as the country with the highest deficit among Vietnam’s trading partners.

Total investment capital grew steadily by 12.7% in Q4. Private sector investment witnessed the strongest growth rate among the three sectors of the economy in both Q4 (17.7%) and over the whole year (16.8%).

Credit growth rate was 16.96% to December 20. This rate did not meet the Government’s target of 21%. Liquidity remained abundant in the banking system this year as the State Bank of Vietnam injected a large amount of VND into the economy but not (intentionally) strictly sterilized. Total foreign exchange reserves reached US$51.5 billion by the end of 2017.

In the real estate market, transactions and the number of new apartments for sale increased significantly in both Hanoi and Ho Chi Minh City. The end of year boom in market supply may signal a decline in property prices on the horizon. 

Dr. Le Dang Doanh, former president of CIEM highlighted 2018 as a challenging year for Vietnam as the country will implement a series of Free Trade Agreements (FTAs) this year. Most of the goods covered in the agreements will enjoy a zero percent import tariff from January 1, 2018, in line with the country’s commitments within the framework of the FTAs, which will impact upon the state budget collections.

At the workshop, economic experts also touched upon key issues pertaining to the business climate and changes to institutions and policies in support of domestic businesses, especially small and medium-sized enterprises (SMEs), as well as the importance of the application of science and advanced technologies, and the Fourth Industrial Revolution.

Vietnam Airlines concerned about losses from first direct flights to US

Lack of passengers is likely to be one of the biggest challenges facing Vietnam Airlines if it opens direct flights to the US, according to the Civil Aviation Administration of Vietnam (CAAV).

Up to 90% of passengers flying between Vietnam and the US are tourists and Vietnamese students, said the CAAV, explaining that they are not a stable source of passengers for the airline.

The number of Vietnamese students in the US increased for the 16th year in a row to more than 22,400 in the 2016-2017 academic year, a 5% increase from the previous year, new data shows.

Vietnam remained the sixth leading economy of origin for all international students in the US, according to the annual Open Doors report by the US.-based Institute of International Education, which focuses on international student exchange and aid, foreign affairs and international peace and security.

Another reason non-stop flights to the US may be unprofitable is that students and tourists often go for the cheapest tickets available. Meanwhile, the number of business clients who can afford expensive tickets is still limited, said the CAAV.

Competition from other airlines will also be a factor for Vietnam Airlines, the country’s national flag carrier. Big Asian airlines such air Japan Airlines, China Southern Airlines, Singapore Airlines, Malaysia Airlines and Thai International Airways already operate regular flights to the U.S.

Fierce competition has forced United Airlines, the world's third-largest carrier, to stop operating flights to Vietnam from the US, local media quoted vice head of the CAAV Vo Huy Cuong as saying.

The airline ended its service to Vietnam in October 2016 after many years of serving Ho Chi Minh City via Hong Kong from San Francisco, Chicago and Newark.

“Vietnam Airlines could face an average annual loss of US$30 million in the first five years of operation if we opens a direct route to the US,” local media quoted CEO Duong Tri Thanh as saying.

We could start to break even after five years, he added.

Vietnam’s government has recently approved a plan to expand its air network to major markets including Australia, China, Europe and the US starting this year.

According to the plan, Vietnam Airlines will open non-stop services to the US starting with direct flights to the west coast this year. San Francisco and Los Angeles are two destinations being considered.

However, it will be impossible to launch the flights in 2018, Thanh said. “We hope the routes will open in 2019 or 2020.”

Explaining the delay, Thanh said it takes time to complete the strict legal requirements imposed by the US to launch direct flights to the country.

To open direct flights to the market, Vietnam’s aviation authority needs to have its safety credentials approved by the US.

Vietnam expects the US Federal Aviation Administration (FAA) to grant the CAAV its Category 1 (CAT1) rating in 2018, recognizing that it has the capacity to ensure the safety of Vietnamese airlines.

The CAAV currently follows standards set by the International Civil Aviation Organization, but in order to earn the CAT1 it has to make certain improvements, including completing a new set of regulations, ensuring a sufficient number of staff and improving its supervisory capacity.

Vietnam and the U.S. signed an air transport agreement in 2003 to allow airlines to operate direct flights between the two countries.

In 2004, Vietnam Airlines sought permission from the US to provide direct services, but the request was denied because the CAAV did not meet the safety supervision requirements set by the FAA.

The airline said it has reapplied to the US Department of Transportation to launch direct flights.

In addition to strict legal requirements, a shortage of aircraft eligible to operate direct flights to the US could also cause delays.

“Vietnam Airlines does not have any airplanes that are currently eligible to fly direct to the US,” Thanh said.

Vietnam Airlines currently operates seven flights per week to cities in the US under codeshare agreements with foreign carriers.

The US is the fourth largest source of foreign visitors to Vietnam, with more than 614,000 arriving in 2017, up 11% from the previous year, according to the General Statistics Office.

Vietnam’s fisheries sector aims for US$9 billion export turnover in 2018

Vietnam’s fisheries sector has set a target of earning US$9 billion from exports in 2018, while increasing its production value by 5.3%-5.8% compared to 2017.

The information was released at a conference held by the General Department of Fisheries, in Hanoi, on January 16, to devise the plans for this year.

Accordingly, the total output of aquatic products is expected to reach from 7 to 7.5 million tonnes, up 3.8% over last year, including 3-3.5 million tonnes in fishing yields and 4 million tonnes in farming productivity.

Specifically, the sector aims for 750,000 tonnes of shrimp (up 3.6%) and 1.3 million tonnes of tra (pangasius) fish (up 3.9%).

The year 2017 saw the highest ever growth in the fisheries export revenue with US$8.3 billion, up nearly US$1 billion compared to 2016. The sector’s increase in its production value and output brought the sector to the highest position in terms of agricultural exports in the past year.

Deputy Minister of Agriculture and Rural Development Vu Van Tam said that in order to reach the target, the industry should give priority to high-tech shrimp and tra fish farming and processing models.

He also noted that until June 30, drastic solutions need to be implemented according to the EU's recommendations for the removal of the yellow card.


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