BUSINESS IN BRIEF 10/10

Vietfood, Beverage-ProPack Ha Noi exhibit

Vietnamese farmers urged to shift from rice to corn, Japanese businesses interest in Vietnamese market, Indian firm wants to supply garment-textile machines for Vietnam, Fish exporters face difficulties in hitting year-end goal

The Vietfood and Beverage-ProPack international exhibition will take place at the Ha Noi International Exhibition Centre at 91 Tran Hung Dao street on November 9 through 12.

It is the first time the exhibition will come to Ha Noi after being held in HCM City for 20 years.

The event is organised by Vinexad. It is expected to attract 180 enterprises with more than 200 pavilions from 11 countries and territories, including South Korea, Thailand, Russia, Malaysia, Italia, Denmark, Spain, Lithuania and China.

Products displayed at the exhibition include vegetables (fresh, dried, canned, processed), seafood (cooked, frozen), agricultural products (coffee, tea, cashew, pepper), food ingredients, beverage, confectionery, and packaging and food preservation equipment.

The four-day event is also expected to attract about 15,000 visitors, especially e-commerce partners from agricultural areas, including the northern provinces of Hai Duong, Bac Giang, Lao Cai and Bac Ninh. 

Product origin key to seafood exports to EU

Certificates of origin is a must for Vietnamese seafood exported to the EU, Siegfried Bank, an expert from the European Trade Policy and Investment Support Project (EU-MUTRAP), affirmed at a conference concerning the issue held in Ho Chi Minh City on October 7. 

Looking at the growth of Vietnam’s aquaculture in recent years, Bank noted the sector had low export volume but reeled in good revenue, ranking fourth worldwide. 

He stated the fact proved that Vietnamese seafood products have high added value, which Vietnamese businesses should consider as their strength and continue to go this way in the future. 

Comparing the Chinese and EU markets, Bank said China ’s market requires little conditions but only pays about half the prices that importers from the EU are willing to pay. 

Higher prices mean more conditions, he added, saying choosing the more demanding market is likely to pay off in the long term. 

Participating experts said to boost exports to the EU, Vietnamese enterprises must pay attention to quality and origin to avoid heavy fines, adding that in case of wild-caught seafood, they need to obtain certification of sustainable practice from the World Wide Fund for Nature (WWF). 

Cao Le Quyen, Deputy Head of the Vietnam Institute of Fisheries Economics and Planning, highlighted that EU is among important markets for Vietnam’s seafood in recent years and is projected to continue to hold this position for years to come. 

Vietnamese exporters ought to understand clearly the EU’s requirements and policies on food safety, she said. 

The EU is now the second biggest importer of Vietnamese seafood, accounting for 18 percent of the total export revenue earned by the sector. In 2015, Vietnam shipped 1.2 billion USD worth of fishery products to the bloc, 46 percent of which were shrimp.

Business community among key economic growth impetus

The business community is among the three key groups of driving forces proposed to help achieve the economic growth goal at 6.7 percent for 2016, according to the General Statistics Office (GSO).

GSO Director General Nguyen Bich Lam said in the first nine months, over 100,000 businesses registered establishment and resumed their operation. Of them, 81,000 were new enterprises with a total capital of over 629 trillion VND (28.3 million USD). 

Lam attributed the increase to a favourable business condition.

He affirmed the business community is a driving force for economic growth in the remaining months of this year.

Lam emphasised economic restructuring as the second driving force with focus on the agricultural sector to boost economic development.

In the first nine months this year, the agricultural sector accounted for 15 percent of the GDP, Lam said, adding that restructuring agricultural sector will promote exports.

Boosting domestic consumption is described as the third driving force in order to ensure sustainable economic growth, according to Lam.

In the reviewed period, the country’s GDP grew 5.93 percent, lower than the previous years. The agro-forestry-fisheries sector increased 0.65 percent, a six-year low increase, according to the GSO.

Vietnamese farmers urged to shift from rice to corn

Economists and experts warn that Vietnam should restructure its farming industry, making it less rice-oriented and focusing more on producing breeding materials in order to reduce its dependence on imported animal feed. 

In an article published in early October, the Vietnam Economics News quoted some industry insiders as saying that the shift from rice to corn might help ensure sustainable development of local animal feed production 

The head of the Ministry of Agriculture and Rural Development’s Plantation Department, Ma Quang Trung, said Vietnam records a rice surplus of approximately seven million tonnes each year, but needs to import a large quantity of corn for animal feed due to its failure to meet domestic demand. Currently, the price of Vietnamese corn is higher than that of imported corn. Thus, the most important tasks involve effectively converting rice farming to corn while reducing the cost of corn, Trung said. 

According to the latest ministry statistics, Vietnam imported roughly 2.1 billion USD worth of animal feed and raw materials, including corn and soybean, over the past eight months, down 6.2 percent from the same period a year ago. 

Most of the animal feed and raw materials were imported from Argentina, the US and China, according to the data. 

To deal with the issue, the chairman of Vietnam Animal Feed Association Le Ba Lich has called for State financial assistance to help farmers convert from rice to corn crops, as well as help in technical aspects of cultivation. 

He also emphasized the importance of developing a sufficient irrigation system to raise domestic corn productivity, which stood at only only 4-5 tonnes per hectare, much lower than 9-10 tonnes in other countries. 

The State should also give incentives to enterprises investing in animal feed production, he added. 

The ministry has set a goal of turning 668,000 hectares of rice-growing land into corn-growing land in northern mountainous provinces within five years. 

Earlier this year, the Government decided to provide farmers shifting from rice growing to corn with up to 3 million VND per hectare to buy seeds.

Binh Duong posts 3.4 bln USD in trade surplus

The southern province of Binh Duong ran a trade surplus of more than 3.4 billion USD in the past nine months, a record level for the period in recent years, Director of the provincial Department of Industry and Trade Vo Van Cu said. 

During the period, Binh Duong shipped abroad more than 16.3 billion USD worth of goods, up 16.2 percent annually, or 12.7 percent of the country’s total exports. 

Of the figure, over 3.12 billion USD was contributed by domestic firms, up 10.5 percent while the remaining was from the foreign-invested sector, marking a 17.6 percent increase. 

Of 23 key export items, wooden furniture, apparel, footwear, phones and spare parts each earned more than 1 billion USD. 

Huynh Quang Thanh, Chairman of the provincial Wood Processing Association, said the total wood export has so far hit 2.7 billion USD, a 10 percent rise year-on-year and making up nearly 20 percent of the province’s total. 

BInh Duong is currently home to 500 wood processors and exporters, 70 percent of them are domestic ones, 5 percent are State-owned enterprises and the remaining are foreign-invested. 

In January-September, the province spent more than 12.8 billion USD on imports, up 16.1 percent annually and equivalent to 10.2 percent of the country’s total.

Hau Giang expands certified rice cultivation

The Mekong Delta province of Hau Giang plans to expand the cultivation area planted with certified rice to 60-70 percent of its total rice cultivation. 

About 40 percent of the province’s 80,000ha of rice are planted with certified rice seeds, according to the province’s Department of Agriculture and Rural Development. 

Nguyen Van Dong, director of the department, said the province’s agricultural sector was cooperating with research institutes and universities to produce new high-quality rice varieties. 

Last month, the province’s Agricultural Seed Centre signed a cooperation agreement with the Mekong Rice Research Institute to produce new rice varieties which will have a Hau Giang brand name. The institute will also provide techniques to the centre in how to create new rice varieties. 

In addition, as of May, more than 5,000ha of rice in Hau Giang had been guaranteed outlets through linkages between farmers and enterprises in planting rice, according to the province’s Department of Agriculture and Rural Development. 

In Vi Thuy District, for instance, more than 100ha of the 2015-16 winter-spring rice in Vi Thang Commune’s Hamlet 9 and Hamlet 11 have been guaranteed outlets by the Cong Binh Private Enterprise. 

Nguyen V a n T a o, who owns 3ha of rice fields in Hamlet 11, said his family began participating in the cooperation model for the 2015-16 winter-spring rice and earned a profit of 110 million VND (5,000 USD) for this crop. 

The profit is 40 million VND (1,800 USD) higher than in previous rice crops, he said. 

In the next winter-spring rice crop 2016-17, Vi Thuy District targets a yield of 124,400-127,700 tonnes, up about 7 percent against the last winter-spring rice crop. 

Tran Hong Tim, Head of the Vi Thuy Agriculture and Rural Development Bureau, said the bureau would encourage farmers to use more certified rice seeds to increase yield and quality. 

The bureau will also encourage farmers to apply advanced farming techniques. 

In the 2015-16 winter-spring crop, Hau Giang achieved the lowest production costs in growing rice compared to the delta’s other provinces and Can Tho , according to the Ministry of Finance. 

Hau Giang spent about 2,802 VND planting one kilo of paddy. 

Advanced farming techniques, high-quality seeds and rice production models that use less material inputs have helped the province reduce production costs, according to the province’s Department of Agriculture and Rural Development .

About 80 percent of rice in Hau Giang is now harvested by combine machines.

Mercosur businesspeople to visit Vietnam

A delegation of officials and businesspeople from member countries of the Southern Common Market (Mercosur) will visit Vietnam, Singapore and Indonesia from October 10-23, President of the Mercosur-ASEAN Chamber of Commerce Rodolfo Caffaro Kramer announced on October 8. 

Besides Kramer himself, the delegation will include Uruguayan Foreign Minister Rodolfo Nin Novoa, and Director of Paraguayan Foreign Ministry’s External Commerce and Investment Department Luis Ramiro Bianchi, along with business representatives from Argentina, Paraguay and Uruguay. 

Kramer told a Vietnam News Agency correspondent in Buenos Aires that the delegation will hold working sessions with Vietnamese partners to discuss promotion of bilateral trade and investment. 

The Mercosur – ASEAN Chamber of Commerce made its debut in Uruguay in June last year. 

The opening of a representative office of the Mercosur – ASEAN Chamber of Commerce in Hanoi nearly one year ago has significantly contributed to trade exchange between Mercosur member states and Vietnam, Kramer said. 

According to him, Argentine businesses are interested in importing Vietnamese coffee. 

He also underlined the importance of the ASEAN market. With the birth of the ASEAN Economic Community on December 31, 2015, ASEAN currently boasts a 630 million-market with a GDP of more than 2.6 trillion USD, or 7 percent of the world’s total. It is also the world’s most vibrant economy. 

Established in 1991, Mercosur currently groups Brazil, Argentina, Uruguay, Venezuela and Paraguay. 

As the fifth largest economic bloc of the world and one of the top manufacturers of food, materials and energy, Mercosur has a market of 275 million consumers, 3.3 trillion USD worth of GDP, accounting for 83 percent of the South America’s total. Annual trade within the bloc comes close to 62 billion USD each year.

Japanese businesses interest in Vietnamese market

After more than 20 years investing in China with success, Japanese businesses are now looking for opportunities in the Vietnamese market, said Amano Shinya, Director of the Japan External Trade Organisation (JETRO) in Guangzhou, China.

He made the statement during a meeting with Vice Chairman of Ho Chi Minh People’s Committee Le Thanh Liem on October 7.

Amano Shinya is leading a Japanese business delegation on a market study trip to Ho Chi Minh City.

Liem stated HCM City, as the largest southern economic hub, welcomes foreign investors, including those from Japan, adding that the municipal authorities have facilitated the operation of Japanese enterprises in the city for many years.

Answering his guests’ questions about policies on labour and investment attraction, he stressed the salary and labour policy for locals working for foreign companies is in line with regulations of the Vietnamese law.

The city has implement a range of measures to improve administrative procedure in licensing investment projects and to boost competitiveness of the local economy, he said.

Equitised firms urged to list in stock market

Deputy Prime Minister Vuong Dinh Hue has urged equitised companies which have not listed in the stock market to expeditiously complete procedures to register for listing and transaction.

Accordingly, ministries, agencies, provincial-level People’s Committees and the Council of Members of State-owned economic groups and corporations must urge equitised enterprises under their management to speed up the firms’ registration for transaction and listing.

They have to report the work’s progress to the Prime Minister before November 1.

Vietnam is accelerating the restructuring of State-owned enterprises (SOEs) in an effort to improve their performance.

However, the Ministry of Finance said the restructuring in the first nine months of 2016 failed to meet the set target, with 49 SOEs having their equitisation plans approved in the period.

Meanwhile, only 42 SOEs and two public service institutions were equitised between January and August, according to the Steering Committee for Business Reform and Development.

Ho Chi Minh City promotes trade in Russia

More than 50 businesses from Ho Chi Minh City displayed their products at a Vietnamese trade fair held in Moscow, Russia, on October 6.

Their products showcased at the event ranged from handicrafts, agricultural produce to medicine, furniture, apparel and electronic appliances.

Speaking at the opening ceremony, Vietnamese Ambassador to Russia Nguyen Thanh Son stressed the exposition was part of promotion programmes to help Vietnamese firms carry out market research and seek partnerships, particularly after the free trade agreement between Vietnam and the Eurasia Economic Union (EAEU) took effect.

He said he believes goods from the southern economic hub will gain favour with Russian consumers for competitive prices and diversity.

Pham Ngoc Nhung from the HCM City People’s Committee stated the city accounts for 30 percent of Vietnam’s total export value, but its shipments to Russia still fall short of potential.

Local businesses have brought to the fair goods they want to export in the hope of winning over Moscow consumers and from Moscow reaching out to markets across Russia and in other EAEU member states, Nhung noted.

Yury Morozov, Head of the International and Interregional Cooperation Division at the Moscow Chamber of Commerce and Industry, said fairs selling made-in-Vietnam products have been warmly welcomed by Russian consumers.

He added that the range and quality of these goods have been improved year by year, reflecting significant progress of each business and the whole economy.-

Indian firm wants to supply garment-textile machines for Vietnam

Numerous Indian firms are seeking opportunities to export their garment-textile machines to Vietnam. 

Executive Director of the India International Textile Machinery Exhibitions Society (India ITME Society) Seema Srivastava made the remark while introducing the 2016 International Textile Machinery Exhibitions (ITME 2016) in Ho Chi Minh City on October 7. 

India wants to expand its investment in garment-textile machinery and technology overseas, including Vietnam, she said, adding that this is a favourable time for the two countries to boost their cooperation in the sector. 

Director of the Vietnam Chamber of Commerce and Industry – Ho Chi Minh City branch Vo Tan Thanh noted that an increasing number of Indian investors have been surveying business opportunities in Vietnam, saying that India is an important partner of Vietnam in the garment-textile sector while Vietnam is also a potential market for Indian firms.

According to Thanh, Vietnam’s textile-garment sector, which is dependent on imported materials and machinery, needs to switch to more sustainable development models.

Therefore, Indian firms can seize the chances to partner with Vietnamese counterparts for mutually-beneficial cooperation. 

Sanjiv Lathia from the organisation board of the ITME 2016 said the event, with the participation of 77 international industrial associations, will allow Vietnamese firms to meet with potential partners, access new suppliers of materials and green technology and expand their market. 

The India ITME is the world’s second biggest garment-textile machinery exhibition. The event will take place in Mumbai, India, from December 3-8 under the auspices of the Indian Ministries of Textiles and Heavy Industry.

Vietnam-Eurasian FTA offers opportunities, challenges

The free trade agreement (FTA) between Vietnam and the Eurasia Economic Union (EAEU), which came into force on October 5, 2016, provides both opportunities and challenges for Vietnamese businesses, Vietnamese Trade Counsellor in Russia Duong Hoang Minh said in an interview granted to the Vietnam News Agency. 

He noted that the FTA, signed on May 29, 2015 in Kazakhstan, is the first of its kind that the EAEU, including Russia, Belarus, Kazakhstan, Armenia and Kyrgyzstan, has sealed with the third country. It is also the first trade pact that Vietnam inked with traditional partners of the former Soviet Union. 

This is a new-generation agreement covering all economic-trade cooperation fields between Vietnam and the EAEU, he said, adding that apart from facilitating trade of goods via tariff reduction, the deal also features commitments of the signatories to intellectual property protection, sustainable development, e-commerce, government procurement, and competition. 

The EAEU pledged to offer numerous incentives for Vietnamese staples such as farm produce, seafood, garment-textile, footwear and woodwork, he said. 

In return, Vietnam vowed to open its market for some EAEU animal husbandry products and industrial ones like machinery, equipment, and vehicles, he said, adding that such goods will not compete with locally-made products but contribute to diversifying the local market. 

According to experts, after the agreement entered into force, two-way trade is likely to reach 10-12 billion USD by 2020 compared to 4 billion USD at present. 

Minh said the EAEU is a large and potential market with a population of over 180 million along with rich natural resources, total gross domestic product (GDP) of over 2 trillion USD, and foreign trade turnover of around 1 trillion USD. 

As nearly 60 percent of tax lines are eliminated and reduced after the FTA took effect, Vietnamese goods have more advantages in the market, especially seafood, apparel and footwear. 

Additionally, Vietnam also sees a good chance to invest in the fields of the union’s strength such as mineral processing and exploitation, energy, machinery and chemicals. 

Through the trade pact, Vietnam is able to expand investment in the EAEU member counties in light industry, oil processing and exploitation as well as update the latest technologies to improve competitiveness, said Minh. 

However, to benefit from the FTA, he noted that Vietnamese firms should study carefully regulations on the certificate of origin; enhance participation in trade promotion programmes, trade fairs and exhibitions; map out plans to increase competitiveness; and strengthen relations with Vietnamese banks to address payment difficulties.

An Giang lures more investment projects

The Mekong Delta province of An Giang has attracted 49 projects valued at over 13.8 trillion VND (roughly 621 million USD) so far this year. 

The figures represent a 2.53-fold increase in the number of projects and a 3.6-fold rise in capital. 

According to the provincial Department of Planning and Investment, the locality has licensed one new foreign project and adjusted another, raising the total number of valid foreign direct investment (FDI) projects to 37 with accumulated capital of more than 213 million USD, of which 76.1 million USD was disbursed. 

The province has established a board supporting businesses in the locality while carrying out programmes to accelerate administrative reform in order to create an open and friendly investment climate.

Dak Lak targets sustainable coffee production

The Central Highlands province of Dak Lak is expanding coffee production towards certified sustainability, bringing high economic efficiency and protecting the environment.

According to the provincial People’s Committee, local farming households and businesses have produced coffee certified by various organisations, including the UTZ good quality agricultural products , the Common Code for Coffee Community (4C), the Rainforest Alliance Certified Coffee (RFA) and the Fair Trade Labelling Organization (FLO).

They produced 364,800 tonnes of sustainable coffee on 102,150 hectares, accounting for more than 82.1 percent of local coffee output and 50 percent of coffee cultivating area.

The production of coffee according to UTZ was 88,470 tonnes, 4C 256,000 tonnes, RFA 16,490 tonnes, and FLO 3,840 tonnes.

Cu Mgar district in Dak Lak is now home to over 10,000 farm households and 30 cooperatives in the programmes. It is home to 15,000 of the 35,000 hectares of coffee being produced sustainably.

The certificates look towards sustainable development, helping coffee growers ensure productivity, quality, and environmental protection while increasing their products’ value.

Local authorities are also encouraging farmers to apply good agricultural practices for sustainable coffee cultivation.

Fish exporters face difficulties in hitting year-end goal

The local fishing industry continues to face many challenges toward reaching its year-end export target of 7 billion USD, according to experts.

The Vietnam Association Seafood Producers and Exporters (VASEP) said that the first nine months of this year showed stable export value growth for seafood products, excluding cuttle-fish and octopus. Many export markets trended up, creating solid conditions for local enterprises to promote seafood exports at this year end.

In particular, the free trade agreement between Vietnam and Eurasian Economic Union (EAEU) that came into effect on October 5 should create favourable conditions for Vietnam’s fishing industry to increase seafood exports to EAEU member countries.

However, VASEP General Secretary Truong Dinh Hoe reported that in the last three months of this year, shrimp export volume sent to the US might remain stagnant or even reduce. The US Chamber of Commerce has decided to raise its anti-dumping tax on Vietnamese shrimp at rate 5 times higher than previously suggested.

Meanwhile, exports of tra catfish to the US have continued to grow since the beginning of this year. However, local exporters fear anti-dumping duties on the fish and the US tra fish inspection programme, the association said. The tra fish exports to the EU grew slowly in the first nine months while competing with other kinds of white-meat fish.

Tran Van Linh, chairman of the Thuan Phuoc Seafood Joint Stock Company, said hitting the yearend export target of 7.1 billion USD will require great effort from the nation’s fisheries.

By the end of December 2016, the industry will almost certainly have growth, but there likely will not be many more large export contracts signed, he said. Enterprises already have orders for Vietnamese seafood products for the Christmas and New Year occasions from main markets.

Seafood exports were expected to increase in Japan and the Republic of Korea by end of the year, he said.

According to the Ministry of Agriculture and Rural Development, in this year’s nine-month period, seafood exports brought home more than 4.9 billion USD, surging 4.3 percent year-on-year. The US, Japan, China and the Republic of Korea were the four main importers of Vietnamese seafood, making up 53.7 percent of the total export revenue.

If Vietnam were to earn 7.1 billion USD in export value of seafood for this whole year, the figure would be 7 percent higher than 2015.

HCM City honours young businesspeople

Businesspeople, especially young ones, have played a very important part in Việt Nam’s industrialisation and modernisation, a city leader confirmed.

Speaking at the 9th “HCM City’s Excellent Young Businessperson” award 2016 on Friday, the municipal People’s Committee Chairman Nguyễn Thành Phong admitted that: “HCM City can’t develop without contributions from the business community, especially young business people in the context of international intergration.”

This year, the award honoured ten young businesspeople and ten other outstanding businesspeople.

The awardees have been carefully selected by local authorities and mass media from 68 people, and their business results were considered for the last three years.

These businesspeople have worked in different fields, including: construction, textiles, phamarcy, furniture, food processing, chemistry, electronics and information technology.

The award, which is organised every two years, has honoured 76 excellent young businesspeople and 15 others on eight occasions.

The HCM City’s Communist Youth Union launched the award in 2000 and it became the most prestigious award for young businesspeople who do well in business and obey all Government regulation.

The award ceremony took place ahead of the upcoming Vietnamese Business Day on October 13.

2016 is considered the foundation year to build a better business environment with higher competitive ability, and to ensure a goal that by 2020, the city would have at least 500,000 enterprises.

Long An solicits all sorts of investment

Long An Province will solicit investment in residential areas, transport infastructure, industrial infrastructure and hi-tech agriculture, according to the province’s Department of Planning and Investment.

The province has prioritised supporting environmentally friendly industry, hi-tech agriculture, as well as projects using technology, value-added products, energy efficiency, Nguyễn Văn Tiều, the department director, told a press briefing held to introduce the Long An Investment Promotion Conference.

Planned in Long An for October 17, the conference will feature discussions on investment policy between local authorities, businesses and economists, enabling investors to understand more about the province, he said.

Trần Văn Cần, the province chairman, said soliciting investment is one of the ways for the province to achieve its goals of industrialising by 2020, achieving per capita income of VNĐ80 million (US$3,587), and average GDP growth of 13 per cent a year in accordance with its master plan.

Despite difficulties, the province has achieved growth of 11.26 per cent and its per capita income has climbed to VNĐ50.7 million, among the highest in the Cửu Long (Mekong) Delta, he said.

It is home to 16 industrial parks and 14 industrial clusters with occupation rates of 61 per cent and 88 per cent, he said.

It ranks first in FDI attraction in the delta, with 768 projects with a total investment of over $5.1 billion, he said.

It is also home to 1,259 local projects with a combined investment of VNĐ139.84 trillion. 

Vietnamese pepper exports surge

Viet Nam earned US$1.2 billion from the export of nearly 145,500 tonnes of pepper in the first nine months of the year, a year-on-year increase of 31.5 per cent in volume and 13.1 per cent in value.

The Viet Nam Pepper Association forecasted that pepper exports will reach 150,000 tonnes this year.

The average pepper export price in the first eight months of the year was $8,141 per tonne, a reduction of 13.6 per cent over the same period last year.

In the domestic market, pepper prices have fluctuated wildly, dropping to around VND130,000 per kilo in March then jumping to VND170,000 per kilo in early June and then slumping again.

Viet Nam accounted for 32 per cent of the world’s total pepper output and held more than 56 per cent of world market share, according to the association.

Vietnamese pepper products are exported to 100 countries and territories, with Asia, Europe and the US being the biggest markets.

Do Ha Nam, the association’s chairman, said the industry had seen robust growth, but faced challenges related to climate change and stunted vines on farms.

High pepper prices in recent years have persuaded farmers to expand cultivation, even on unsuitable land without any planning, while the overuse of fertilisers has caused plants to degenerate quickly and be more vulnerable to disease.

“New free trade agreements will open opportunities for the industry to boost exports but there are challenges, especially in ensuring quality, hygiene and food safety,” he said.

With import markets like the US and EU demanding higher food safety requirements, farmers, processors and distributors need to focus more on safety and hygiene.

The area being used for pepper cultivation has increased rapidly in the past years, reaching 85,000ha by the end of last year.

The figure reached 100,000ha by the end of the first quarter of this year, doubling the figure set by the Ministry of Agriculture and Rural Development’s master zoning plan for the development of the pepper industry by 2020.

Many farmers in the Central Highlands and southern provinces had chopped down their rubber, cashew and coffee trees to plant pepper.

Tran Thi Hien, deputy head of the Crop Production and Plant Protection Department in southern Ba Ria-Vung Tau Province, said under the provincial zoning plan, the province targets to have 8,300ha under pepper cultivation by 2020.

But at present, the pepper cultivation area in the province already reached more than 11,160ha, she said.

Pepper prices might remain high in the short term, but with the increase in cultivation, supply would exceed demand and prices would drop, affecting the income of farmers, she said.

Doosan sells VN-based plant to GE

The Republic of Korea’s Doosan has sold the Heat Recovery Steam Generator (HRSG) business unit of Doosan Engineering & Construction to General Electric (GE).

A source from Doosan Heavy Industries Viet Nam (Doosan Vina) confirmed the deal to Viet Nam News, stating that the deal was worth US$250 million.

Doosan Vina said it would transfer the HRSG shop – one of five shops built in central Quang Ngai province – to GE Power Systems Korea by the end of this year.

The HRSG business unit accounted for a minor share of Doosan Vina’s overall business, the company said.

Doosan Vina, situated in the Dung Quat Economic Zone in Binh Son District of the Province, is a high-tech industrial complex with nearly 2,500 employees, supplying mega infrastructure products for thermal power plants, desalination plants, cranes and chemical processing equipment for export.

The company exported goods worth $300 million in 2015. 

Fish exporters face difficulties in hitting year-end goal

The local fishing industry continues to face many challenges toward reaching its year-end export target of US$7 billion, according to experts.

The Viet Nam Association Seafood Producers and Exporters (VASEP) said that first nine months of this year showed stable export value growth for seafood products, excluding cuttle-fish and octopus. Many export markets trended up, creating solid conditions for local enterprises to promote seafood exports at this year end.

In particular, the free trade agreement between Viet Nam and Eurasian Economic Union (EAEU) that came into effect on October 5 should create favourable conditions for Việt Nam’s fishing industry to increase seafood exports to EAEU member countries.

However, VASEP general secretary Truong Dinh Hoe reported that in the last three months of this year, shrimp export volume sent to the US might remain stagnant or even reduce. The US Chamber of Commerce has decided to raise its anti-dumping tax on Vietnamese shrimp at rate 5 time higher than previously suggested.

Meanwhile, exports of tra catfish to the US have continued to grow since the beginning of this year. However, local exporters fear anti-dumping duties on the fish and the US tra fish inspection programme, the association said. The tra fish exports to the EU grew slowly in the first nine months while competing with other kinds of white-meat fish.

Tran Van Linh, chairman of Thuan Phuoc Seafood Joint Stock Company, said hitting the yearend export target of $7.1 billion will require great effort from the nation’s fisheries.

By the end of December 2016, tnhe industry will almost certainly have gro,  but there likely will not be many more large export contracts signed, he said. Enterprises already have orders for Vietnamese seafood products for the Christmas and New Year occasions from main markets.

Seafood exports were expected to increase in Japan and South Korea by end of the year, he said.

According to the Ministry of Agriculture and Rural Development, in this year’s nine-month period, seafood exports brought home more than $4.9 billion, surging 4.3 per cent year-on-year. The US, Japan, China and South Korea were the four main importers of Vietnamese seafood, making up 53.7 per cent of the total export revenue.

If Viet Nam were to earn $7.1 billion in export value of seafood for this whole year, the figure would be 7 per cent higher than 2015.

Start-up Exchange to be held in City

Viet Nam is seeing positive growth in creative industries as more and more businesses in advertising, design, TV, music, apps, games and other sectors are operating in the country, according to the British Council.

Nguyen Phuong Thao, head of the British Council’s projects on Arts and Creative Industries, said the Ministry of Culture, Sports and Tourism was working with the council and UNESCO to compile a national strategy on cultural industries by 2020.

Speaking at the Viet Nam Creativity Festival, which was part of HATCH! FAIR 2016 that ended October 8 in HCM City, Thao said that cultural industries were expected to contribute 4 per cent to the country’s gross domestic product by 2020.

“The strategy will create an important foundation for further development of creative industries in the country,” Thao said.

The British Council has provided the community of creative industries with training courses on creative skills and start-ups as well as field trips to the UK, where the value of the creative industry is £84.1 billion, according to figures released in January by the UK.

The council plans to continue providing support for the development of culture and tourism, as well as high-value traditional handicrafts, according to Thao.

Nguyen Viet Dung, head of HCM City’s Department of Science and Technology which helped organise the fourth fair, said that in May the government approved a project to provide assistance to the creative and innovative start-up ecosystem by 2025.

The department will also give support to small- and medium-size enterprises so they can better adapt to global integration.

Products and services of 128 start-ups and incubators were displayed at the HATCH! FAIR. Many of them were apps for phones, websites and handicrafts.

Products that attracted attention during the fair included bags, shoes and soaps made from loofah with other agricultural materials.

At the fair, an Angel Investment Forum was held for 30 investors and representatives of domestic and foreign investment funds to discuss investment start-ups. A Social Innovation Summit was also held during the fair .

MBBank increases charter capital by $36 million

The State Bank of Viet Nam (SBV) gave written consent for Viet Nam based Military Bank’s (MBBank) increase in charter capital to VND17.127 trillion (US$766 million) from VND16.31 trillion ($730 million).

MBBank’s decision to increase charter capital was approved at the bank’s annual shareholders’ meeting on April 28, 2016, and by their Board of Directors on June 14, 2016.

SBV directed MBBank to increase charter capital in accordance with the appropriate legal requirements.

In March 2016, MBBank increased its charter capital from VND16 trillion ($716.6 million) to VND16.31 trillion after merging with the Song Da Finance Company.

According to MBBank’s financial report in the second quarter of 2016, the bank’s before tax revenue reached VND979 billion ($43.8 million), down by five per cent compared with the same period in 2015. 

Removing deposit interest rate cap considered

Deputy Prime Minister Vuong Dinh Hue has recently instructed relevant authorities to scrutinise the possible removal of the deposit interest rate cap on short-term deposits.

Viet Nam currently still applies an interest rate cap of 5.5 per cent for short-term deposits of 1-6 months. The rates for longer terms are floating.

The cap regulation has been imposed since 2010 when commercial banks, especially ailing ones with poor liquidity, took part in a race to increase deposit interest rates to lure depositors, causing a sharp rise in lending interest rates.

Industry insiders and experts have proposed removing the deposit interest rate cap several times, saying that the cap regulation is an administrative measure and it does not follow international rules so it should be removed at a suitable time.

Banking expert Can Van Luc said that the cap regulation has been imposed for the past six years and now is a suitable time for the central bank to remove it.

He said that currently there is almost no unhealthy competition in deposit interest rates among banks thanks to their good liquidity. The loan deposit ratio (LDR) of the banking system has also improved, staying at more than 80 per cent.

The interest rate cap regulation, therefore, is unnecessary, Luc said.

He also said the Government should reduce its administrative measures in managing the economy in general, and the monetary and finance industry in particular, to meet international rules.

Echoing Lực, economist Nguyen Minh Phong said that there would be no problem if the central bank removes the cap at this time, adding that the removal would help commercial banks lure more deposits in the context that the country is boosting lending.

Analysts from the Viet Nam Institute for Economic and Policy Research (VEPR) also proposed to fully remove the cap soon or apply the rate cap only for deposits of less than one month so that the market itself could adjust flexibly, balancing capital demand and supply.

It is time to consider removing the cap as the country currently has the necessary conditions for its removal: inflation remains low and liquidity in the banking system is good, according to economist Nguyen Tri Hieu.

Some, however, are concerned that removing the cap could cause a resumption of the high inflation seen in previous years. However, Hieu said that he was not worried about the threat, explaining that the adjustment of interest rates, if it occurred, would be within certain limits.

Besides, he said, the central bank could use other measures such as the refinancing rate, discount rate, overnight rate and reserve requirements to control the market.

He said that central banks around the world often use the three key tools of open market operations (OMO), refinancing rates and reserve requirements to execute monetary policies. Therefore, eventually, the State Bank of Viet Nam also has to use the tools to manage the banking system to meet international rules, especially as Viet Nam integrates more deeply into the global economy.

Though agreeing about the removal of the cap regulation, some experts have said that caution is necessary and a timeline for the removal should be taken.

In the opinion of Tran Du Lich, a member of the National Financial and Monetary Policy Advisory Council, the application of the cap over a long time is not good, especially when Viet Nam eventually aims to manage banking activities and interest rates according to market principles.

After the restructuring period of credit institutions in 2011-15, the performance of commercial banks have become pretty good. Besides, four State-owned banks have recently cut deposit rates. It shows that liquidity in the banking system is good so relevant authorities could consider removing the deposit interest rate cap.

Besides, Viet Nam is deeply integrating into the global economy so the country needs to apply international rules through the reduction of using administrative measures to intervene in the monetary market.

However, Lich said, the removal should not be made immediately. He suggested that early next year might be a suitable time, after relevant authorities had scrutinised the potential impacts of the removal and closely monitored the market over the next several months.

Another member of the National Financial and Monetary Policy Advisory Council, Vo Tri Thanh, said that the removal of the cap must be considered carefully and if taken, certain itineraries should be applied to avoid disorder, ensuring the stability and health of the banking and finance system.

It must be also implemented in co-ordination with other monetary and fiscal policies, Thanh said.

Collaboration good for VN securities

Vietnamese securities firms will see opportunities as collaboration between ASEAN exchanges brings more capital to Viet Nam’s stock market and makes firms improve their competency to satisfy international standards, stock regulators said yesterday at a meeting.

Collaboration between stock exchanges in the Association of Southeast Asia Nations (ASEAN) would benefit all stakeholders, including investors, issuers, intermediaries and local governments, the Malaysian bourse Bursa Malaysia Director of Securities Market Ong Li Lee said.

ASEAN capital markets are small compared to the US and European markets, thus co-operation was needed to take advantage of the free flow of goods, services, investment and capital offered by the harmonisation between regional countries, according to Lee.

If regional markets were able to join together, the collaboration would facilitate economic growth, diversify sources of financing, investment channels and lower prices for financial services for economies of scale, she added.

Issuers and financial companies would be able to tap a larger pool of investors and reduce administrative costs, thus improving the quality of products and services at more competitive prices.

For local governments and regulatory offices, collaboration would allocate capital more efficiently as savings may flow to investment at a lower cost because barriers have been partly removed, according to the Bursa Malaysia official.

The collaboration would also help improve the competitiveness for ASEAN countries on international markets and enhance the development of capital markets in the region, she added.

“ASEAN market capital growth between 2010 and August 2016 outpaced Asia peers following the information of ASEAN Exchanges collaboration,” Lee said when she presented the statistics of the World Federation of Exchanges.

In addition, individual ASEAN stock exchange recorded higher trading value growth than most other Asian peers following the information of ASEAN Exchanges Collaboration, launched in April 2011. The only bourse in Asia having higher trading value growth than ASEAN markets is the Shenzhen stock exchange.

Increasing growths in market capitalisation and trading value also help financial institutes improve their income and offer them opportunities to expand.

According to the Ha Noi Stock Exchange, total revenue and after-tax profit of 76 securities firms on the northern market last year fell 8.5 per cent and 14 per cent, respectively, from 2014’s figures to more than VND9.6 trillion (US$427.46 million) and VND6.4 trillion as the overall market trading liquidity dropped on the slowdown of the global economy and share prices declined.

The picture got better in the first half of this year. The same 76 securities companies on the northern market earned more than VND5.8 trillion in revenue and VND1.2 trillion in after-tax profits, increases of 30 per cent and 4 per cent, respectively, from the same period of last year.

The improvement came after the benchmark VN Index and the HCM Stock Exchange jumped 9.2 per cent during this period and the HNX Index in the northern market advanced 6 per cent, leading to increases in both trading liquidity and share prices.

Things could improve for market members as up to the end of yesterday’s trading session, the VN Index surged more than 18 per cent from the beginning of this year, and the HNX Index gained about 6.7 per cent.

Pham Hong Son, deputy chairman of the State Securities Commission, said in the first nine months, brokerage firms had made efforts to improve their products and services.

“They have succeeded in improving risk management and assuring the security of customer accounts, and following market regulations better,” he said.

However, those companies still had to improve business conditions as regulatory agencies would try to make the derivatives market come into effect by the end of this year, and that would be an opportunity for securities firms to perform better, he said.

“Derivatives markets are complicated to operate, so it may take some time for brokerage firms and investors to get familiar with the new products,” he said.

The SSC would continue to reduce the number of operating securities firms in the future to enhance the health of the stock market as only 15 of the current 76 companies met requirements of the market regulator and 20 others were labeled as weak-performing ones, he said. 

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

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