BUSINESS IN BRIEF 9/1

WB's reports on Vietnam logistics, waterway transport

The World Bank (WB) released findings from its study on Vietnam’s logistics and inland waterway transport in Hanoi on January 7.

Addressing the launch ceremony, WB Country Director Victoria Kwakwa said as Vietnam is integrating into the world economy and facing climate change risks such as rising sea level and unpredictable weather, a more sustainable and effective use of inland water transport and coastal shipping is expected to help increase competitiveness while controlling greenhouse gas emissions.

The report “Efficient Logistics” looks at how competitive transport and trade logistics can become a new driver of sustained growth through their positive impact on productivity and their direct influence on business competitiveness.

It says while Vietnam has attained a strong track record in economic growth over the past 20 years, the drivers that fuelled that growth are rapidly depleting, making it critical to develop new drivers of growth going forward.

The report “Facilitating Trade through Competitive, Low Carbon Transport” examines Vietnam’s inland waterway transport and coastal shipping sector, which are facing significant under-investment in terms of both capital and maintenance expenditures.

It argues that promoting waterborne transport will bring about significant economies of ship size, lowering emissions of pollutants and greenhouse gases, as well as other intra-sectoral benefits.

Vinamit named Outstanding ASEAN Entrepreneur Entering China

The China-ASEAN Business Council on January 7awarded Vinamit Joint Stock Company the honorary title of Outstanding ASEAN Entrepreneur Entering China in 2013.

This is the first time ever that a Vietnamese business has been bestowed with the award which is part of the councils program aiming to strengthen cooperation between China and ASEAN.

Nguyen Tien Thanh, a representative from Vinamit Joint Stock Company, said that the company received the prestigious award as a result of its successful introduction of its products into the Chinese market.

Vinamit’s products are now available in numerous provinces and cities throughout China and at present the Chinese market accounts for 60% of the company’s export revenue.

The winning ASEAN businesses are operating in a diversity of fields including real estate, manufacturing and trade and have actively promoted economic development at localities in China and attached high importance to protecting the environment.

The China-ASEAN Business Council has also organized a meeting to boost trade promotion activities in the Hunan province and Fangchenggang Port city in Guangxi province in order to develop the economic potential of these localities.

ASEAN is now the third largest trade partner and the second biggest export market of Hunan province.

Hunan province has established 337 businesses in ASEAN member countries with total investment capital of US$1.4 billion. It has also operated three industrial parks in Vietnam, Thailand and Laos.

Chinese firms seek investment opportunities in Danang

Twelve Chinese businesses involving in construction, mechanics, electronics, finance, and trade have toured the central city of Dannang to seek investment and cooperation opportunities.

At a January 7 reception for Chinese business representatives, municipal leaders said they hope that the two sides’ potential partnership will produce positive outcomes and help further enhance the friendship between the two countries.

By October, 2013, bilateral trade between Vietnam and China reached about US$41 billion, up 31.7 percent from last year.

The two countries pledged to work together to bring the figure to US$60 billion by 2015.

China is the biggest trade partner of Vietnam while Vietnam is one of the key partners of China in ASEAN member countries.

Vietnam seeks US support for TPP negotiations

Vietnam wants to receive support from major US retailer Walmart in the Trans-Pacific Partnership (TPP) negotiations as well as free trade agreements with other nations.

Deputy Prime Minister Vu Van Ninh was speaking at a January 7 meeting with Bill Foudy, Vice President, Home and Apparels of Walmart Global Sourcing in Hanoi.

Deputy PM Ninh spoke highly of Walmart’s plans to source Vietnamese goods for sale to its customers in the US and world market and said he believes its retail expertise will greatly assist Vietnamese businesses improve technological and production skills.

Vice President of Home and Apparels of Walmart Global Sourcing Bill Foudy,  told the Deputy PM that his group’s visit aims to seek goods and supplies to accelerate preparations for opening a Walmart representative office in Vietnam in the time ahead aiming to boost Vietnam’s exports to major countries like the US and Canada.

Foudy affirmed his group’s willingness to transfer technology to assist Vietnamese enterprises in increasing productivity and business efficiency and improving their competitiveness.

Draft US regulations hinder Vietnamese seafood exports

The Ministry of Agriculture and Rural Development (MARD) warns the seafood inspection legislation the US Government is considering risk negatively affecting Vietnam’s seafood export businesses.

The MARD’s surveys of export businesses themselves suggest the industry is concerned about the likely impacts of the legislation.

If enacted, Vietnam’s fish producing, processing, and packaging procedures would need to mimic their American equivalents. Vietnamese tra fish imports might be halted.

At a recent commercial councillor meeting in HCM City, Vietnamese Councillor for US Trade Dao Tran Nhan, urged Vietnamese businesses to keep abreast of legislative developments.

Nhan noted Vietnamese businesses would need at least five to seven years to upgrade their production and processing procedures to US seafood industry standards.

Vietnamese seafood exporters would have no US market access during the interim.

The MARD’s International Cooperation Department believes the US Food and Drug Administration (FDA)'s draft regulations aim to implement its Food Safety Modernisation Act.

The department said businesses should scrutinize and submit their opinions on amendments to the draft regulation for consideration by the World Trade Organisation (WTO).

These opinions should be submitted before January 27.

Vietnam enjoyed a 5.7% share of the US seafood import market in the first half of 2013.

The US Department of Agriculture lists it fifth among 134 seafood-exporting nations.

UK volunteers support for Vietnam-EU FTA negotiations

The Right Honourable UK Minister Grant Shapps believes the UK’s experience as one of the European Union’s economic locomotive can assist Vietnam in its ongoing EU Free Trade Agreement negotiations.

At the seventh meeting of the Vietnam-UK Joint Economic and Trade Committee (JETCO) in Hanoi on January 7,

Shapps expressed the UK’s enthusiasm for cooperating with Vietnam. He noted two-way trade turnover reached US$4.3 billion in 2013, surpassing the US$4 billion set target one year ahead of schedule.

He shared some experiences of UK enterprises that have worked to develop a Vietnamese civil nuclear program as well as urban areas in HCM City and Hanoi.

Deputy Minister of Industry and Trade Ho Thi Kim Thoa affirmed Vietnam’s commitment to promoting bilateral ties in accordance with the 2010 strategic agreement focusing on economics and trade.

Both sides concurred JETCO’s ambitions should be oriented towards the future strengthening of bilateral trade.

Vietnam’s key exports to the UK include audio and radio equipment and materials, televisions, mobile phones, automated machines, digital equipment, coffee, footwear, wooden furniture, and plastics bags.

Vietnam imports the UK’s fungicides, flour, steel, tuna, pharmaceuticals, cars, and leather products.

JETCO proactively resolves difficulties and hindrances in bilateral relations and promotes economic and investment ties.

Local businesses hope for brighter future in 2014

Most of the businesses at a Vietnam Chamber of Commerce and Industry (VCCI) seminar in Hanoi on January 7 were optimistic regarding changing fortunes in the new year.

VCCI organised the event in the hopes of helping Vietnamese businesses address any issues hampering their development.

According to recent Ministry of Planning and Investment statistics, nearly 55,000 businesses were dissolved or suspended operations during the first 11 months of 2013. But almost 13,000 have already bounced back.

VCCI Secretary General Pham Thi Thu Hang said local businesses are likely to enjoy more opportunities in 2014, assisted by up to date market information increasing operational efficiency.

Seminar participants highlighted Vietnam’s achievements in maintaining macroeconomic stability, controlling inflation, and gradually shifting underlying economic structures through Government reforms.

They acknowledged a number of persistent shortcomings in the economic restructuring process itself, insufficient industrial innovation, low productivity, and input material costs—all of which threaten Vietnam’s sustainable economic development.

They stressed the importance of business self-sufficiency, apart from State incentives and support.

Local businesses should focus on honest assessments of their individual strengths and map out detailed long-term development plans, they suggested.

Lao Bao economic zone attracts investment

The central province of Quang Tri has so far attracted 102 investment projects with total registered capital of VND 8,500 billion into its industrial and economic zones.

Of the project number, 57 have been invested in the Lao Bao special economic and commercial zone alone, capitalized at VND 3,600 billion.

In 2014, the Provincial People’s Committee will adopt incentive policies on tax, vocational training and employment, creating favorable conditions for investors.

It will accelerate land clearance and improve infrastructure such as electricity and water supplies in its industrial zones.

Since the Lao Bao special economic-commercial zone took shape 15 years ago, synchronous technical infrastructure has been upgraded to facilitate business operations.

Can Tho aims for higher rice exports in 2014

The Mekong Delta City of Can Tho City plans to export 1 million tonnes of rice in 2014, nearly 100,000 tonnes higher than 2013’s figure, earning US$516.5 million.

The city considers rice an important key export item, helping to bring in foreign currency resources, generate jobs and ensure stable incomes for farmers.

City leaders have directed departments and relevant agencies to ease production and consumption difficulties for farmers and businesses, while making recommendations to the central government to support rice production and sales.

This year, Can Tho is applying the large-scale rice field model on more than 20,000 hectares in the 2013-14 winter-spring crop. It will sign contracts with businesses and farmers to ensure sufficient rice for orders.

Currently, local rice businesses have secured orders to export thousands of tonnes to the Philippines.

To ensure sufficient products for export and domestic consumption during the upcoming Lunar New Year (Tet) festival, businesses are continuing to purchase abundant rice from farmers.

In 2013, Can Tho earned US$1,500 billion from exports, including nearly US$500 million from rice.

Thua Thien-Hue targets 3 trillion VND to IPs

The Central province of Thua Thien-Hue has set a target of drawing about three trillion VND (about 141 million USD) to its industrial parks (IPs) in 2014.

The province also hoped to achieve an industrial production value of about 10 trillion VND (roughly 470 million USD) this year.

To realise the goals, the province will focus on completing four IP projects approved by the Government, including Chan May industrial park in Phu Loc district, Phu Bai industrial park in Huong Thuy town, Tu Ha industrial park in Huong Tra town and Phong Dien industrial park in Phong Dien district.

It will also allocate land lots to develop other industrial parks in the districts of Phu Vang, Phu Loc and Quang Dien, while establishing 16 small-scale industrial clusters in the province with a total area of about 650 ha.

In 2013, the province granted investment certificate to nine new projects and allow three projects increase their investment capital, with a total registered capital of almost 1.9 trillion VND (89.3 million USD).

The province’s industrial parks have so far attracted 87 projects with a total investment capital of 17.7 trillion VND (about 831.9 million USD).-

Updated techniques increase agricultural production value

The value of agricultural production has risen because of advanced farming techniques, according to the city's Department of Agriculture and Rural Development.

The city's land for farming fell to 55,000ha in 2012 and to 51,300ha in 2013. Also, agricultural revenue increased to 239 million VND (11,300 USD) per ha in 2012 and to 282 million USD (13,300 USD) last year.

Le Thanh Liem, the department director, said revenue had risen an average of 19 per cent a year in the 2009-13 period.

Farmers also decided to switch to high-value crops like flowers and ornamental plants.

In addition, the city's 88-ha Agricultural Hi-Tech Park in Cu Chi District conducted research on new imported plants, developed agricultural production models, and transferred farming techniques to farmers over the past years.

Last year the park succeeded in planting many new imported plants, including 19 kinds of pear from the US , Japan and China and 15 kinds of melon from Japan .

Pham Dinh Dung, director of the Research and Development Centre for Agriculture High-Technology under the city's Agricultural Hi-Tech Park, said the centre recently transferred more than 2 million orchid seedlings and 201,000 red chili seedlings to farmers.

The centre has been transferring farming techniques and clean seedlings of several plants, including orchids, cucumber, leaf vegetables and fruits, to households and farms in outlying districts.

New farming methods had helped farmers receive a yield two times higher than traditional farming methods, he said.

The centre has also worked with enterprises to guarantee outlets for farmers, he said.

Nguyen Van Nga, who owns 3,500sq.m of farmland in Cu Chi District's Tan Thong Hoi Commune, said after he was offered a training course to grow orchids, he had used 3,000 sq.m of his farmland to grow the flower for three years.

Previously, Nga planted rice and cash crops and had a low income.

Nga said he now earned an income of 20-25 million VND a month.

"My family life has improved," he said.

Like Nga, many farmers in Tan Thong Hoi have also escaped poverty by using new agricultural production models.

Textile, garment exports surpass yearly target

Vietnam’s export turnover from fibre, textiles and garments surpassed 20 billion USD in 2013, up 18 percent from 2012 and surpassing target by over one billion USD, according to Dau Tu (Investment) newspaper.

Such an outcome put the commodities at the top of Vietnam’s key exports.

The sector also maintained considerable growth in major markets such as the US, EU, Japan, the Republic of Korea and ASEAN.

Last year, Vietnam’s exports of these goods to the US increased by 13 percent in the context that total textile and garment imports into the US only rose three percent.  

This market alone generated more than eight billion USD for Vietnam’s textiles and garment sector, representing 45 percent of the sector’s export revenue in 2013.

Vice Chairman of the Vietnam Textile and Apparel Association (Vitas) Le Tien Truong said the outcomes showed that the sector had managed to overcome hardships thanks to the right steps to enhance competitiveness, look for niche markets while consolidating its share in key markets.

The growth in 2013 was attributable to investment in expansion made by businesses, thus boosting the sector’s production, he added.

For example, the Hue Textile Garment Joint Stock Company (Huegatex) last year spent 50 billion VND (2.4 million USD) on buying new machinery, creating new products and enhancing its factory’s productivity despite the unstable situation of the global market and growing input costs, according to Huegatex Deputy General Director Ho Van Dien.

Meanwhile, the Hanoi Textile Garment Join Stock Company put into operation a fabric factory worth 420 billion VND (20 million USD) in July 2013. The factory exported 100 tonnes of fibre, contributing to the firm’s 1.9 trillion VND (90.5 million USD) of turnover last year.

The Vitas leader said business outcomes in 2013 will drive enterprises to adjust their export structures to each market’s taste and speed up their production in 2014.-

Ca Mau to pour 500 bln VND into urban upgrade

Ca Mau city of the Mekong Delta province of Ca Mau will invest nearly 500 billion VND (23.5 million USD) to construct significant transport facilities between 2014 and 2016 to upgrade its urban infrastructure.

Accordingly, the city will construct the Nguyen Trai-Lam Thanh Mau section of Ring Road 1 and another section connecting Hung Vuong Street with roads 6A and 6B.

The investment will also be used to broaden a section of Truong Phung Xuan Street and build the sewerage system of Thong Nhat (Reunification) canal and a bridge over Tac Thu River.

In addition, the locality will reorder the planning of night market areas and others to facilitate local people’s consumption on the occasion of the upcoming Tet (Lunar New Year) holiday.

Chairman of the Ca Mau city People’s Committee Ho Trung Viet said the works will help to gradually perfect urban infrastructure in the city and create a foundation for local socio-economic development.-

State Bank tightens rules on use of foreign currencies

The State Bank of Vietnam (SBV) has issued regulations on restricting the use of foreign currencies in the country.

Under Circular 32/2013/TT-NHNN, which will take effect on February 10, in the territory of Vietnam, except for cases allowed, all transactions, payments, quotations, advertisements, pricing, prices in contracts, agreements and similar forms (including conversion or adjustment of prices of goods and services, the value of contracts and agreements) of residents and non-residents will not be allowed to be conducted using foreign currencies.

Currently, Circular 16 also specifies those cases in which foreign currency exchanges are allowed in Vietnam and in which banks, non-bank credit institutions and branches of foreign banks licensed to do business and provide foreign exchange services are allowed to perform transactions, payments, quotations, advertisements, pricing, prices in contracts, agreements in foreign exchange within the scope of business and foreign exchange services permitted by the SBV in accordance with the law.

Other cases that allow foreign exchange transactions will be considered and approved by the SBV Governor on the basis of actual situations and the necessities arising with each case.

The central bank recently confirmed that it will seek to maintain the USD/VND exchange rate to within 2 percent of current value next year. This follows the VND being depreciated by 1 percent in 2013.

The central bank weakened the dong by 1 percent against the USD in June last year, in what it said was a move to accurately reflect supply and demand on foreign currencies.

The prevalence of USD in the Vietnamese economy had decreased significantly since the end of 2011 and the exchange rates had been stabilised. The decline of dollarisation was seen in the narrowing ratio of foreign currency deposits against total money supply. The figure fell from 30 percent in 1990, to 15.8 percent by the end of 2011, most recently dropping to 12 percent by the end of August 2013, according to a SBV statement.

The central bank has also taken measures this year to stabilise exchange rates and the foreign exchange market, helping to raise the country's forex reserves, support the implementation of monetary policy and control inflation.-

Fisheries look to net more exports on surging value

Vietnam will continue expanding its seafood export market in 2014 after successfully increasing export value last year, noted the Vietnam Association Seafood Exporters and Producers (VASEP).

Nguyen Hoai Nam, VASEP deputy general secretary, told VNews, the Vietnam News Agency's television network, that local seafood exporters will focus on pushing  

exports, especially value-added products, to China to increase the export value in that market and in India and the Middle East due to their rising demand for seafood products.

In addition, local exporters will continue driving seafood exports to traditional markets such as the US, the European Union (EU) and Japan as the economic recovery is stepping up demand for the consumption of goods and services, including for seafood, he stated.

This year, if trade agreements such as the Trans-Pacific Partnership (TPP) and the free trade agreement between Vietnam and the EU are signed, they will create advantages in exports for all involved, including for seafood products, Nam claimed.

To make use of these advantages for boosting exports, local seafood exporters should focus on increasing output and improving quality further for export seafood products, he said.

Under the agreements, he explained, tariffs are zero or at a low level but the export markets will add stricter non-tariff barriers for exported products, including barriers based on origin, quality standards, food hygiene and safety, and standards of preservation and packaging.

According to the Ministry of Agriculture and Rural Development, Vietnam gained a year-on-year surge of 10.1 percent in the export value of seafood to hit 6.7 billion USD in total for 2013, including 617 million USD for December.

The US was still the largest seafood export market for Vietnam, accounting for 21.89 percent of the total seafood export value of last year.

Meanwhile, the export value of seafood to China, Canada and Thailand last year also saw a surge of 62.87 percent, 33.65 percent and 7.53 percent respectively, against  2012.

Nam noted that at present, Vietnam is one of a few countries with high competitive ability in selling seafood products on the world market because it has an adequate fisheries supply, high quality seafood products, and seafood exporters with integrative abilities.

In October 2013, Vietnam gained a record high of 776 million USD in export value for the year due to the high growth in the export value of prawns and shrimp, Nam remarked.

The value of shrimp and prawn exports last year gained a year-on-year increase of 40 percent, while other kinds of seafood products remained at the same rate or even reduced because of high demand for shrimp on the world market and the low supply from other producers due to a shrimp disease outbreak.

Vietnam develops prawns and white leg shrimp, Nam stated, and the country has received more orders to export prawns and shrimp, so export prices for those products have increased.

The nation will continue to see sustainable development of the prawn and shrimp market for the near future, he said, because local shrimp exporters have had a low supply  

of prawn and shrimp in recent years as Chinese traders have purchased these for export to China through the border gates.

The association has called on the State to adopt policies that encourage the export of value-added seafood products to China to enhance the total export value, he added.

Hau Giang plants seeds for rice-husk power plant

Malaysia’s C.H.E Group and the Hau Giang Power Plant Joint Stock Company plan to build a rice-husk generated power plant in Hau Giang province this year, making it the nation’s first rice-husk generated power project.

Huynh Thanh Hoang, deputy director of Hau Giang’s Department of Industry and Trade, told VIR the joint venture was preparing to begin construction work.

The first rice husk generated power plant worth roughly $31 million is located in the rice basket of Hau Giang province. The investor plans to build the 10 megawatt plant within the next two years using techniques and equipment provided by the UK’s Torftech LTD and Germany’s ERK EckRohrkessel GmbH through C.H.E. After completion, the plant will consume 250 tonnes of rice husks daily with waste redeployed to produce cement and insulation materials.

Pham Trong Thuc, head of the Ministry of Industry and Trade’s Renewable Energy said that the rice husk generated power plant in Hau Giang was the first project in the wider plan. Last year, Hau Giang Power Plant Joint Stock Company and Malaysia’s C.H.E Group signed a memorandum of understanding to build 20 biomass-fired power plants across Vietnam. Five will be built in the Mekong Delta provinces of An Giang, Kien Giang, Hau Giang, Dong Thap and Can Tho, with a total capacity of 200 megawatts.

Chong Che Chek, business director of C.H.E was recently quoted by foreign media as saying that the plants would be installed in four phases over five years. “This is the power plant of its kind to be built in Vietnam. Another unique feature is its production of non-hazardous high quality ashes,” he said.

Although Vietnam is said to have huge potential for renewable energy, private investors have shunned the sector because of a lack of incentives. So far, the government has issued just two decisions to support small hydro and wind power projects in 2008 and 2011, respectively. Accordingly, the feed-in-tariff for renewable power generated from solid waste-power plant stands at 10.05 US cents per one kilowatt hour. This level is higher than the tariff of 7.8 US cent fixed for wind power plants. However, the feed-in-tariff proposed for biogas power plant generated from solid waste is just 7.28 US cents per one kilowatt hour. The subsidy is likely to take effect in 2014 after receiving government approval.

Fines up to VND100 mln for e-commerce regulation breach

Individuals can be fined from VND10-50 million ($470-2,350) while organizations and businesses have to pay VND10-100 million ($470-4,700) if they violate regulations on establishing websites without registration with authorized State agencies.

This is stated in Decree 185/2013/ND-CP, which came into effect on January 1, 2014.

The fines are also applied when individuals, organizations and businesses do not inform or register with the authorized agencies about the changes in information related to their websites supplying e-commerce services.

In addition, the fines are also imposed on individuals, organizations and businesses, who take over e-commerce websites from others without registration, supply e-commerce services which are not registered, or different from their registered ones or wrongly communicated, as well as those who use e-commerce to sell counterfeits, illegally copyrighted and prohibited goods and services.

The violated websites will be closed from six to twelve months whilst exhibits and domain names ‘.vn’ are confiscated. The website owners have to retrieve damages they cause and refund illegal interests gained from their violations.

Japan fund invests in online payment firm

Japanese investment fund CyberAgent Ventures published news of its investment in online selling solutions Bizweb.vn of Viet Nam's DKT Technology Joint Stock Company on January 7.

The fund, which is under the management of CyberAgent Group, has not revealed details about the agreement, but announced it would invest US$20 million in Viet Nam, Thailand and Indonesia.

Nguyen Manh Dung, head of Viet Nam and Thailand investments at CyberAgent Ventures, said the investment in Bizweb indicated their belief in the strong future of electronic commerce and other internet industries in Viet Nam, VietnamPlus.vn reports.

"Bizweb.vn is an online commercial solution which has developed rapidly. CyberAgent Ventures commits to pushing the growth of this solution by taking advantage of our resources across Asia," he said.

Tran Trong Tuyen, chief executive officer of Bizweb, said that choosing CyberAgent as its investor in 2014 helped the online payment company to move deeply into the Vietnamese e-commerce market and position itself globally in the future.

Bizweb.vn, officially launched in April 2010, has attracted 4,000 customers from 30 different fields, as of January 2014. This easy-to-use solution integrates useful tools, such as Bizmail, to send emails to targeted customers, and Vietclick advertising network, which publishes advertisements for products on more than 1,000 websites. It also provides clients with a software version for mobile devices.

Bizweb was awarded third prize in the field of information technology products at the Nhan Tai Dat Viet 2013 (Vietnamese Talent Awards 2013) in November in Ha Noi.

Overseas Vietnamese set to enjoy Tet goodies

Several domestic companies are exporting a variety of traditional Tet goods for the Vietnamese community abroad.

Tran Thanh Toan, owner of Tran Gia establishment, which produces banh chung (square glutinous rice cakes) in southern Dong Nai Province, has signed contracts to export 35 tonnes of banh chung to the EU, Asia, Australia and other markets ahead of the holiday. He also plans to export about five tonnes of dong (phrynium) leaves for wrapping banh chung.

A representative of Hai Minh Company in HCM City's Cu Chi District said his company had already shipped several consignments of banh trang (griddle cakes), banh da (rice pancakes), cu kieu (pickled scallion heads) and other common Tet foods to several countries.

The French-owned Big C supermarket exported four containers of dried and frozen foodstuffs as well as Tet specialties to supermarkets in France, Brazil, Thailand and other countries that belong to its owner, the Casino Group.

The exported products include griddle cakes, dried vermicelli, noodles, teas, soya sauce, fish sauce, dried fruits, shrimp crackers, frozen sugpo prawns, spring rolls, ha cao (a kind of Chinese dumpling), crab meat and potato shrimp roll.

Many Vietnamese goods have been exported to Casino Group branches since 1997, a company representative said, adding that the exports totalled US$20 million last year.

Other companies, including Vinamit Joint Stock Company, Tan Dong Trade Production Co and Huong Canh Co, are filling export orders for Tet goods.

In order for the country to maintain a high export rate, food hygiene and safety must be a top priority during the production process as well as in preservation and transport, Toan and other producers said.

Several local food export company owners hope to earn reputations for quality during the holiday period so they can increase exports throughout the year.

VN firms need to prepare for hidden risks

Vietnamese enterprises have done well to improve productivity and sales in the face of several challenges last year, but they need to temper optimism for 2014 with awareness of risks that lie ahead, a new report says.

The Viet Nam Chamber of Commerce and Industry (VCCI)'s Report on Corporate Finance Competence says local firms need to prepare well for coping with hidden risks associated with the expected economic revival even as they look to take advantage of new investment and trade opportunities.

The report noted that despite several positive achievements, Vietnamese enterprises reduced their staff numbers as well as bank loans despite lower borrowing costs.

In an online discussion of the report yesterday afternoon, VCCI General Secretary Pham Thi Thu Hang said that an upward tick in the Corporate Sentiment Index showed enterprises were looking forward to brighter economic prospects this year.

Their optimism was based on positive results from enterprise reform that have "sorted out good resources for development," including a rise in orders and infrastructural improvements, he said.

However, Nguyen Truong Son, vice chairman of the Viet Nam Young Entrepreneurs' Association, predicted that difficulties would dominate commerce this year.

His view was echoed by Vo Tri Thanh, Deputy Director of the Central Institute for Economic Management (CIEM), who warned that the slow recovery of the global economy and the moves of emerging economies like India and Malaysia represented a high degree of risk for Vietnamese firms.

Vietnamese enterprises should take into account the impacts of speculation as they built strategies for short-term development, Thanh said.

He said local entrepreneurs should learn to adapt to global trends and apply them well in the local context.

Meanwhile, Hang highlighted the need for long-term development strategies if local firms are to benefit fully from the Government's policies.

Nguyen Trong Hieu, deputy head of Enterprises Development Department under the Ministry of Planning and Investment, proposed five measures to improve the environment for domestic enterprises in 2014.

These included the completion of a comprehensive legal framework that supports development of Small and Medium Enterprises (SMEs), including pricing and advertising regulations; the establishment of an SME Development Fund and credit guarantee mechanism to facilitate the sector's access to badly needed capital; and the promotion of a transparent information system to connect enterprises, facilitating the exchange of products and services.

SAP recognises Viet Nam's ERP solutions

FPT Information System Company (FPT IS) and Germany-based software provider SAP launched their enterprise resource planning (ERP) solutions for Vietnamese steel companies on January 6.

Called FPT SAP Express Steel Solution (FPT.SAP iFESS), this is the first specialised ERP solutions in Viet Nam recognised by SAP Asia- Pacific.

Also, FPT IS has made available its solutions in data storage on SAP's website for customers to access.

The solutions, which were developed in 10 months, aim to shorten the time to implement ERP for steel companies to 18 weeks.

With a variety of subsystems, such as financial accounting and management accounting, ERP helps firms save both time and expenses, noted officials.

Corruption weakens anti-smuggling fight

The fight against cross-border smuggling is complicated by several factors including wrongdoings in anti-trafficking operations, officials admitted at a conference yesterday.

The conference, broadcast live on radio and television channels, was held by the National Assembly Economics Committee for its members to question relevant ministries and other agencies about the situation regarding cross-border smuggling and discuss potential solutions.

Vu Huy Hoang, Minister of Industry and Trade, admitted that cross-border smuggling continued to allow the entry of many counterfeit and low-quality goods into the domestic market.

He said that over the last three years, authorities had registered nearly 828,500 cases of smuggling, counterfeit products and commercial cheating. Confiscated products include firecrackers, wildlife, rare timber and beverages like wine, beer and soft drinks.

Hoang called for trade associations to be more proactive in the fight against smuggling, saying domestic firms needed to protect themselves and develop trademarks, "enhancing the competitiveness of Vietnamese products."

He also urged the establishment of a forum where authorities and enterprises can discuss measures to prevent smuggling.

Relevant agencies should develop specific policies for border areas so that local people can have stable jobs and improve their living standards, which will prevent them from joining hands with smugglers, he said.

Hoang admitted that there was corruption among the anti-smuggling forces, including market watchdogs, but this was a minority.

He blamed a shortage of market watchdogs for the problem, noting that at just 5,200, border localities were understaffed to carry out the work of detecting and preventing cross-border smuggling.

"We have asked the Government to recruit another 1,000 market management officials for key spots," he said.

Deputy Tran Du Lich of HCM City expressed dissatisfaction with the official response, saying the ministry's report had not properly evaluated the situation of cross-border smuggling, which was destroying the economy and undermining the confidence of local enterprises.

"The important thing is to cut the root of the problem by finding the heads of the smuggling rings," Lich said, adding that right now, authorities were only apprehending the smugglers, not those controlling the operations.

Lieutenant general Nguyen Tien Luc, deputy head of the Ministry of Public Security's Crime Prevention Bureau, said that the current legal framework was not strong enough to prevent smuggling.

He called for stricter punishments for violations.

Luc also blamed an overlap in policies that led to difficulties in controlling and preventing smuggling, especially in border areas.

In her concluding remarks, Nguyen Thi Kim Ngan, Vice Chairwoman of the National Assembly, stressed the need to modify and supplement policies to promote production of quality goods by domestic enterprises.

She also urged ministries, sectors and local authorities to enhance their responsibility and commitment to preventing smuggling and trade fraud.

Logistics sector needs to up efficiency

While Viet Nam has seen strong economic growth over the past 20 years, developing the logistics sector was key to further boosting trade, according to a World Bank report released yesterday.

World Bank transport specialist Luis Blancas, leading author of the report, said that logistics operations in Viet Nam were costly relative to key regional peers like China, Malaysia and Thailand.

This primarily due to the unpredictability of supply chains, which increased logistics costs by making it necessary for business to carry more inventory than they otherwise would, he explained.

Logistics costs in Viet Nam were estimated to account for about 20 per cent of gross domestic production. In contrast, the percentage in the US was 9.2 per cent, while it was 12 per cent in Europe, 13.5 per cent in Mexico and 13.8 per cent around the world.

"The key root causes of Viet Nam's supply chain unpredictability are cumbersome and inconsistently-applied government regulations, lack of automation in key trade-related processes and fragmented modal planning in transportation," he said.

Moreover, Blancas added, Viet Nam's infrastructure projects still lacked a strategic multi-modal corridor strategy. He cited highway congestion, landside infrastructure failing to keep pace with port requirements, fragmented port terminals and the lack of international standard logistics parks.

Compounding the problem, shippers and logistics service providers in Viet Nam believed that facilitation payments or bribes to customs and police officials were necessary to avoid delays in supply chains.

Senior governance specialist of the World Bank in Viet Nam James Anderson said corruption was the biggest obstacle for trucking firms, according to the bank's Viet Nam urbanisation review in 2010, which surveyed 246 firms— one-fourth of the registered road transport companies in the country.

About 8 per cent of the costs of trucking firms go to "facilitation payment" such as bribes, while fuel costs amount to roughly 65 per cent and operating costs and salaries 16 per cent.

To make logistics more efficient, the report recommended minimising paper-based processes and ensuring transparent regulations, as well as defining and managing "multi-modal logistic corridors" with adequate infrastructure and minimal regulatory delays.

Transport Deputy Minister Nguyen Van Cong said that among the approximately 1,000 logistics firms operating in the country, foreign ones still held most of the market share, while Vietnamese firms were mostly small and less competitive in terms of management and finance.

He added that the government of Viet Nam sought to help the logistics sector by seeking resources to develop transport infrastructure, creating favorable conditions for logistics firms and boosting co-operation among domestic and foreign firms.

Also yesterday, the World Bank released a report that examines Viet Nam's inland waterway transport and coastal shipping sector.

According to this report, these sectors face significant under-investment in terms of capital and maintenance expenditures. Promoting waterborne transport can bring about significant economies of ship size, lowering emissions of pollutants and greenhouse gases.

Quang Ninh to boast foreign-investment windfall

North-eastern Quang Ninh province is expected to reap a heavy foreign direct investment crop in 2014.

According to the provincial Department of Planning and Investment, after months of discussion, five large scale foreign invested projects look likely to be implemented in Quang Ninh in 2014.

A Hong Kong-backed joint venture between Hai Ha International Investment and Hai Ha Industrial Park is planning a $953.6 million project to build infrastructure works on  

3,300 hectares of land in Hai Ha Industrial Park, while another Hong Kong company, Black Peony is also building a $100 million jean cloth producing factory at Hai Yen Industrial Park.

Chinese investors are also appearing with a joint venture between Chin Pech, Kinyet Pelated Enterprises and Dong Guan Kynyet Metal Products investing in a $30 million project to produce automobile wiper blades at Viet Hung Industrial Park.

Joining the list is Singapore’s Profit International, expected to implement a $150 million project to expand the province’s Hai Ha sea port, and a joint venture between  

Vietnam’s Tuan Chau group and Singapore’s Winglee Resources is also planning to build a $35.5 million mill to process natural minerals at Viet Hung Industrial Park.

While these are the showcase projects, Nguyen Duc Tiep, deputy head of the province’s Investment Promotion Agency’s Investment Promotion Division announced that many smaller projects would also increase their investment capital.

“Many other foreign invested enterprises are planning to increase investment capital in 2014, having poured money into projects in 2013,” he told VIR.

For example, VFM-Wilmar, a Singapore and Samoa joint venture making and exporting wheat and wheat-based products, will invest an additional $28 million in production, having invested $12.35 million in 2013.

The Singaporean-Vietnamese joint venture Cai Lan Oils and Fats Industries also reported that it would additionally invest nearly $3 million into production in 2014, in addition to the $11.3 million they spent in 2013.

Hong Kong-backed cloth maker Texhong Ngan Long said it was planning to invest another $90 million in making assorted cotton, natural and artificial fibres, cloth and by-products in 2014. The company began its investment in 2013 with a $120 million factory.

In July 2013, Texhong began operation of the $200 million first phase of a fabrics plant, while also beginning construction of the $400 million second phase of this plant, which will become operational in 2014.

Japanese-backed Yazaki, which produces electric wiring for the automobile industry, reported that it would invest $35 million into production expansion in Quang Ninh in  2014.

“In 2013, we also received a record number of more than 50 groups of foreign investors looking to invest into projects of property, tourism, entertainment and urban development,” Tiep said.

Quang Ninh is now on the radar of many other foreign enterprises. They include US’ Las Vegas Sands, China’s Phenix Macau Tailoi and Australia’s investment fund Westar  

that want to build an entertainment complex, Thailand’s Amata wishing to build an urban and hi-tech industrial park, and South Korea’s Chamvit that plans to build a golf course and five-star hotel in the province.

Source: VEF/VNA/VNS/VOV/SGT/SGGP/Dantri/VIR

logistics, WB, TPP, Walmart, rice exports, agricultural production
 
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