BUSINESS IN BRIEF 13/10

Govt sets ambitious goals for 2017

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The Government has set high socio-economic growth targets for next year, including gross domestic product (GDP) growth of 6.7%.

Total export revenue would grow 6-7% and the ratio of trade surplus to total export would rise 3.5%, said a report which the Government delivered at a session of the National Assembly (NA) Economic Committee last Friday.

The report puts consumer price index (CPI) growth at 4%, total development investment at 31.5% of GDP and the poverty rate at 1-1.5%.

NA vice chairman Phung Quoc Hien expressed concern over these high targets.

The GDP growth target of 6.7% for next year is higher than this year’s forecast but based on export growth of 6-7%, this GDP growth projection seems groundless, he said.

According to the report, prospects for the global economy would remain uncertain next year. Meanwhile, the nation would have to implement 10 free trade pacts and climate change would continue impacting on the local economy.

The Government’s report makes little mention of environmental issues such as the 200-ton fish kill in the West Lake in Hanoi. Environmental pollution is the biggest problem now, Hien said.

The National Financial Supervisory Commission in a recent report put this year’s GDP growth at 6.3-6.4%. The report pointed out challenges such as lower-than-expected GDP growth in the first three quarters of 2016, the low global oil price and the disappointing performance of the agriculture and mining sectors.

Inflation is expected to rise 4% at the end of this year if the price rises in healthcare services and education are not taken into account. Between January and September, public services accounted for 72% of the consumer price hike, the commission predicted.

The State budget deficit in the period was equivalent to that in the same period of 2015 but it would surge heftily in the final months of this year, the report said.

Local firm launches video-on-demand service

BHD Co Ltd has commenced its video-on-demand (VOD) service called Danet to provide movie lovers with copyrighted films with stable HD quality.

BHD said the company has signed contracts with world’s leading film studios like Paramount, Fox, Disney and NBC. All the new movies on Danet will be released on the same dates with those in the U.S. and in the region.

BHD has also inked deals with some leading Korean television stations like SBS, KBS and MBC to distribute TV dramas and exclusive music programs like DMC Festival 2016 and APAN Star Award 2016.

VOD customers have options for a free package for watching Korean and Chinese dramas, Vietnam’s reality shows and game shows and some exclusive programs of Danet; and a movie package of Hollywood, Asian and Vietnamese movies without advertisement at VND50,000 per month. They can choose a package of films for rent, inclusive of the latest blockbusters and first-time premiere films in Vietnam at VND12,000-29,000 per movie. 

Customers can watch movies at www.danet.vn or download an application on iOS or Android mobile operating system to watch the productions. People who wish to watch Danet on TV can contact local cable TV operators of VTVCab, MyTV, FPT and Next TV or call the hotline 1900 6887.

Vietnam steel exporters accused of tax evasion in U.S.

Four U.S. steel makers have filed a case against Vietnamese exporters, claiming they have sold cheap steel imported from China to avoid anti-dumping and anti-subsidy duties slapped on Chinese products, the Vietnam Competition Authority (VCA) said.

According to the authority under the Ministry of Industry and Trade, the U.S. Department of Commerce (DOC) has handled the case filed by ArcelorMittal USA, Nucor Corporation, United States Steel Corporation, and AK Steel Corporation. They asked the DOC to launch anti-dumping and anti-subsidy investigations into cold rolled steel (CRS) imports from Vietnam.

The four firms said they had sufficient evidence that Chinese CRS products had been exported to Vietnam before being shipped on to the U.S.

The U.S. probed CRS imports from China, Brazil, India, Japan, South Korea, the Netherlands, Russia and the UK in August last year before an anti-dumping tax of 199.76% and an anti-subsidy duty of 256.44% were levied on them in May this year.

As claimed by the four U.S. steel firms, since the high tariffs were applied, the volume of Chinese CRS products to the U.S. has dipped sharply, but imports of the product from Vietnam into the U.S. have surged. They wanted the DOC to request Vietnamese steel exporters place deposits equivalent to the tariffs on Chinese steel products when shipping CRS products stateside.

U.S. steel companies California Steel Industries and Steel Dynamics have asked the DOC to look into corrosion-resistant carbon steel products imported from Vietnam. They claimed Vietnam had imported the Chinese corrosion-resistant carbon steel subject to the respective anti-dumping and anti-subsidy duties of 199.43% and 241.43% for export to the U.S.

Over the past years, many steel products of Vietnam have been sued for being dumped on the U.S. market, including welded carbon-quality steel, oil steel pipe and stainless steel pipes; steel nails; and steel hangers.

Vietnam ranks third for remittances in Asia

Vietnam is the 11th biggest remittance recipient worldwide and third in the Asia in 2015, according to the World Bank.

A conference on Vietnam’s remittances was held by Banking Academy of Vietnam and Banking University of Ho Chi Minh City on October 10.

Remittances are an important source of capital for developing countries with low domestic saving rates, helping boost economic growth and reduce poverty. With 500,000 overseas workers and four million Vietnamese living abroad, remittances have increased greatly.

Remittances increased from USD14 million in 1993 to USD13.20bn in 2015. From 2002 to 2015, remittances accounted for 6% of GDP while Vietnam’s FDI and ODA accounted for 7.7% and 3% respectively.

Thanks to remittances, Vietnam was able to cover the trade deficit and stockpile foreign currency.

There are three main reasons for Vietnam’s increasing remittances including more people working abroad. Policies and the legal framework for remittances and overseas Vietnamese are being completed, encouraging more people to return and invest in Vietnam.

Foreign exchange control legislation has been made clearer after the State Bank of Vietnam simplified many administrative procedures to help people send money home more easily. Money transfer services in Vietnam have also developed.

Vietnam was urged to have more supportive policies toward the overseas Vietnamese community as it will inevitably grow during the globalisation process.

Berlin honours two Vietnamese benefactors

Berlin leaders have presented certificates of merits to two Vietnamese people – Nguyen Thi Quyet Thang, chairwoman and Ms Nguyen Thi Van, member of a Vietnamese charity association in Berlin, for their contributions to charitable activities in the city.

berlin honours two vietnamese benefactors  hinh 0 They are among 77 outstanding individuals from 23 social organizations, who have actively taken part in charitable activities in culture, sports, health care and employment consultancy.

berlin honours two vietnamese benefactors  hinh 1 Thang and Van has done charity work for ten years and supported many people with disability and terminal illness.

At the award ceremony at the Rotes Rathaus (Berlin City Hall) on October 10, Ms Thang said she was very happy getting the acknowledgement.

Vietnam lacks funding for new expressway: Finance Ministry

The Ministry of Transport has been advised to seek out foreign investors with access to low-interest loans.

Vietnam’s Ministry of Finance has called for a cautious review of a massive cross-country expressway project currently under consideration.

The Ministry of Transport requested approval of a $10.2 billion expressway linking Hanoi and Ho Chi Minh City to relieve the country’s overburdened National Highway 1A.

According to the proposal, the government would cover 40 percent of the cost for the 1,372km expressway. Private investors would cover the rest.

However, officials at the Ministry of Finance warn that the state will have a hard time rallying its share of the funds. As it seeks to map the allocation of public funds between 2016 and 2020, the ministry warns that the country cannot raise further funds by issuing bonds, taking out preferential loans or seeking official development assistance to fund the expressway project.

“In the event that it proves impossible to mobilize funds from the state budget for the project as specified in the proposal, we recommend the project timelines be adjusted,” the Ministry of Finance said in a statement.

The ministry also expressed doubts about banks financing the remaining 60 percent cost because they have already lent local BOT (building-operation-transfer) investors too much in recent years.

“The project should seek cooperation from foreign companies that can secure loans at reasonable interest rates,” the ministry added.

According to a proposal recently submitted to the government, the transportation ministry expects to secure approval by July 2017 and begin construction no later than May 2019.

It hopes that work will finish by December 2022 on the roadway, which has a designed maximum speed of 120kph (roughly 75mph).

If approved, the project will join a larger north-south expressway system that spans over 1,800km. About 470km of that system remain under construction and are set to be completed by 2020.

Forum connects companies of HCM, Daegu cities

A business forum between Ho Chi Minh City and Daegu city of the Republic of Korea (RoK) was held in the southern hub of Vietnam on October 11 with a view to spurring bilateral investment and trade. 

In his opening speech, Vice Chairman of the HCM City People’s Committee Le Thanh Liem rejoiced at the thriving economic cooperation between his city and Daegu. 

The RoK is now the fourth biggest foreign investor in HCM City with more than 1,260 projects worth about 4.3 billion USD. Their trade and tourism relations have also developed steadily, contributing to a bright panorama of bilateral cooperation, he noted. 

Daegu Mayor Kwon Young-jin spoke highly of HCM City’s attraction, adding that his city’s inauguration of a representative office here on October 10 aims to meet businesses’ urgent demand for investment promotion support. 

As one of the localities with strong economic growth and many big enterprises in the RoK, Daegu city wants to foster exchanges and collaboration with HCM City in culture and economic experience sharing, he said. 

At the forum, companies were given information about investment potential, conditions and incentives in the two cities. They also had a chance to seek partners and investment opportunities in both HCM City and Daegu. 

On this occasion, the Daegu Chamber of Commerce and Industry inked a memorandum of understanding (MoU) on trade promotion cooperation with HCM City’s Investment and Trade Promotion Centre. 

The two sides’ businesses also signed four MoUs on trade partnerships in food and beverage production, real estate and communications, along with one contract on restaurant operation.

Vietnam, Sudan partner in industry

Vietnam and Sudan signed a memorandum of understanding (MoU) on industrial cooperation at the second session of their Inter-Governmental Committee held in Hanoi on October 11. 

Under the MoU, both sides have agreed to foster collaboration across food processing, mechanical engineering, footwear, garment and manufacturing of electronics, devices and tools. 

They also discussed the possible signing of several agreements on finance, culture, education and agriculture. 

Chairman of the Vietnam Sub-Committee of the Vietnam-Sudan Inter-Governmental Committee and Deputy Minister of Agriculture and Rural Development Vu Van Tam asked relevant agencies to quickly actualise agreed cooperative contents. 

Sudanese Secretary of State for Agriculture and Forestry Yagoub Mohamed Eltayed Ibrahim, who is Chairman of the committee’s Sudanese Sub-Committee, expressed wish to further strengthen bilateral cooperation in agriculture, communications infrastructure, oil and gas, mining and garment. 

Sudan will make it easier for Vietnamese firms to invest in such fields, he said. 

The two countries will also facilitate visits to seek business opportunities at exhibitions and talks, popularise information about management and taxation. 

Since the first session two years ago, the two countries have signed a MoU on agriculture cooperation, an agreement on maritime transport and another one on visa waive for diplomatic and official passport holders. 

Established in 2013, the Vietnam-Sudan Inter-Governmental Committee is tasked with monitoring and coordinating bilateral ties. It convenes biennial meetings, alternately in Sudan and Vietnam.

Vietnam-UK Network to facilitate trade with Ho Chi Minh City

The Vietnam-UK Network (VUN) will facilitate trade and exchange between UK and Ho Chi Minh City firms, its visiting Chairman Ben Chapman told Vice Chairman of the municipal People’s Committee Tran Vinh Tuyen during a meeting on October 11. 

Chapman said the VUN’s members, including hundreds of overseas Vietnamese working in many fields, wish to develop Vietnam-UK ties as well as contribute to the development of Ho Chi Minh City. 

The network is willing to share experience with the southern economic hub in building a financial centre and smart urban areas, he said. 

Tuyen said the city is working to build an international-standard financial centre and a smart city, and deal with arising problems such as flooding and environment pollution. 

The host hoped that the VUN will encourage experienced UK investors, particularly overseas Vietnamese experts and businesspeople, to invest in the city.

HCM City publishes investment handbook to assist businesses

An investment handbook in different languages is being compiled by the Ho Chi Minh City Export Processing and Industrial Zone Authority (Hepza) to provide businesses with necessary information on local investment procedures. 

The handbook publication is among important measures to promote investment into export processing and industrial zones in the city, Tran Viet Ha, head of Hepza’s investment management division, said on October 11. 

He noted Hepza will continue asking the municipal People’s Committee and relevant ministries to expeditiously tackle investment-related problems, especially regulations on land lease which is a major cause of a slump in investment into local export processing and industrial zones compared to 2015. 

It will also enhance assistance for enterprises to access capital and update production technologies, maintain the single-window mechanism for investment projects, and cut down 30 percent of the administrative procedure handling time. 

Hepza is urging new industrial parks to build infrastructure to ensure land supplies for companies to rent, Ha noted. 

By September 30, 354.77 million USD of new and additional investment was poured into export processing and industrial zones in HCM City, representing 50.68 percent of this year’s plan and a decline of almost 54 percent from a year earlier. 

About 167 million USD of the sum was foreign investments, down 67.4 percent, while domestic investments decreased by 27 percent to 187 million USD, according to Hepza office manager Tran Cong Khanh. 

Experiencing the same trend, only 50 hectares of land were leased during the period, dropping by 58 percent. The area of rented facilities approximated 40,000 square metres, down 25.5 percent from the same period in 2015. 

Khanh attributed that tumble to problems emerging in the enforcement of the 2013 Law on Land, and the sluggish guidance for the implementation of the 2014 laws on investment and enterprises. Meanwhile, many investors also wants to wait for the parliaments of the member countries of the Trans-Pacific Partnership (TPP) agreement to ratify this deal.

PetroVietnam aims to produce 6.5 mln tonnes of oil in Q4

The Vietnam National Oil and Gas Group (PetroVietnam) plans to exploit 6.49 million tonnes of oil equivalent, including 3.88 million tonnes of crude oil and 2.61 billion cubic metres of gas in the remaining months of this year.

The plan aims to lift the total output in the year to 27.59 million tonnes of products, raking in 514 .5 trillion VND (23.15 billion USD) in revenues and contributing 104.2 trillion VND (4.68 billion USD) to the State budget.

To that end, the group will expand exploration in high-feasible areas. It will also focus on examining factors that can affect the group’s exploitation for timely solutions.

It will operate gas pipelines and processing plants in a stable and safe manner to improve the processing efficiency.

It will also continue directing its subsidiaries to accelerate restructuring of approved enterprises, while coordinating with the Government Office and relevant ministries and sectors to have more firms approved for restructuring.

In the last three quarters, PetroVietnam produced over 21.1 million tonnes of oil equivalent, or 82.3 percent of the yearly target. Of which, the crude oil output was 13.03 million tonnes.

The group earned 327.4 trillion VND (14.7 billion USD) in revenues in the period, fulfilling 64 percent of the plan set for the year.

Its industrial production value and domestic crude oil exploitation exceeded 11 percent and 8.1 percent respectively in comparison with the nine-month targets, significantly contributing to the nation’s 5.93 percent GDP growth in the period.

Suspending raw cotton import from Ghana

The Ministry of Agriculture and Rural Development has issued a decision on halting raw cotton imports from Ghana as a large volume of raw cotton was found infected with Trogoderma granarium Everts.

The decision comes into effect 60 days after the issuance date on October 11. 

The MARD urged the Plantation Protection Department (PPD) to tighten quarantine control of imported cotton from Ghana from now until the day the decision is valid.

A PPD representative said from July 2 to September 26, relevant authorities detected 58 containers of raw cotton weighing more than 1,384 tons imported from Ghana via Haiphong port infected with alive Trogoderma granarium Everts.

They are very dangerous moth, which have not found in Vietnam. They damage many kinds of agricultural products like cereals, vegetables and rubber.

VN-China Int’l Trade Fair on the horizon

The Viet Nam-China International Trade Fair is scheduled to take place in Dongxing City, in China’s Guangxi Province from November 8-12.

The fair will accommodate more than 830 booths, including 100 from Viet Nam, displaying special products from ASEAN member countries, heard a conference in Mong Cai City, northern Quang Ninh Province, on Monday.

Nguyen Tien Dung, Vice Chairman of the Mong Cai City People’s Committee, said the city would set up a booth at the fair to introduce products of wards and communes in Quang Ninh province.

There will be exhibitions, forums and seminars on cross-border trade and tourism, along with various cultural, sports and tourism activities within the framework of the event.

Mong Cai and Dongxi cities have taken turns hosting the annual event since 2006, aiming to help the two countries’ enterprises seek partners.

Bilateral trade reached US$66.6 billion in 2015, a year-on-year rise of 13.7 percent, of which Viet Nam exported $17.1 billion worth of goods to China (up 14.8 per cent) and imported $49.5 billion in commodities (up 13.3 per cent).

In 2016, Viet Nam’s exports reached $10.85 billion (up 14.93 per cent) while its imports stood at $16.47 billion (down 3.42 per cent). 

New legislation strengthens Vietnam’s trade remedy rules: finance ministry

Safeguard measures can now be applied for a maximum of 10 years to protect local industries from injury.

A new law that came into effect last month is particularly important for foreign companies exporting to Vietnam as it has strengthened existing regulations on trade remedy duties, according to the Ministry of Finance.

The Law on Export and Import Duties 2016, for the first time, includes a whole chapter on antidumping, countervailing and safeguard duties, the ministry said in a recent post on its website.

Under the new law, trade remedy duties will be added on top of ordinary import tariffs, but only after the result of dumping investigation is affirmative.

The extra duties will be reduced or removed when foreign enterprises no longer have any harmful impact on the local industry.

The law also stipulates that the maximum applicable period for safeguard measures will be 10 years, while previously it was only four years, not including extensions. Antidumping and countervailing duties can be imposed for up to five years with possible extensions.

Pham Anh Tuan, deputy director of the ministry’s International Cooperation Department, said trade remedies have been included in various legal documents since 2014 and are consistent with the legal framework of the World Trade Organization.

But this is the first time detailed rules regarding trade remedies have entered a Vietnamese law, Tuan said, adding that each particular case will be given specific guidelines by the authorities to protect local industries against unfair competition.

Since becoming a WTO member in 2007, Vietnam has signed several more trade agreements that have and will open up the local market for imports.

Vietnamese authorities have taken antidumping and safeguard actions in six cases so far.

On the global market, Vietnamese products have been the subject of approximately 100 trade remedy cases in foreign countries.

The government is also drafting the Law on Foreign Trade Administration. The bill is expected to be discussed by legislators later this month.

Vinh Long authorities talk with businesses

The People’s Committee in the Mekong Delta province of Vinh Long held a dialogue with 150 entrepreneurs on October 11 to provide new assistance policies.

The locality is enacting several measures to improve the business environment and increase competitiveness.

In addition to reducing time to complete administrative procedures and building a startup supporting system, the province has helped small-and medium-sized enterprises (SMEs) compete and access capital and the market.

It also signed commitments with the Vietnam Chamber of Commerce and Industry (VCCI) to create a favourable environment for businesses.

Chairman of the provincial People’s Committee Nguyen Van Quang said local authorities will simplify procedures, push administrative reform, and host dialogues with enterprises to extricate difficulties in production.

Businesspeople suggested developing services, providing market information and legal consultation, and updating modern science and technology to make it easier for startups to do business.

Chairman of the provincial young business association Nguyen Tuong Nam said nearly 90% of businesses in the province are SMEs, hence it is necessary to put forth measures to connect firms with the market.

Vinh Long is now home to more than 2,700 businesses. Over the past nine months, the province saw 193 newly-established businesses with total registered capital of VND804 billion (US$36.18 million).

In January-September, the locality attracted seven foreign direct investment projects worth US$139.92 million, up 10.3 times year-on-year.

The province aims to attract 4,200 businesses by 2020 and encourage the private economic sector to contribute 45% to total social investment capital.

Italian firms eye Vietnam’s infrastructure

A number of Italian firms wish to engage in transport infrastructure projects in Vietnam.

Cecilia Piccioni, Italian Ambassador to Vietnam, told VIR that in line with their international vocation, “Italian top-tier companies have been closely monitoring Vietnam’s infrastructure projects in pipeline, focusing their interest on the urban metro rail system.”

Italian infrastructure firm Ghella, together with the Republic of Korea partner Hyundai, was awarded contract package 3 for Hanoi Metro Line 3 (Nhon-Hanoi station section) to build a tunnel and underground stations. Another Italian infrastructure builder, Rizzani de Eccher, is already involved in the work on Line 1 of the urban metro in Ho Chi Minh City.

Ghella and Rizzani de Eccher are among many Italian firms making moves towards a heightened role in Vietnamese infrastructure development. Together with Astaldi, CMC Ravenna, and CNH-Iveco, they joined a recent luncheon on bilateral co-operation, on the occasion of the visit to Vietnam by Minister of Infrastructure and Transport of the Italian Republic, Graziano Delrio.

They want to get updated overview of infrastructure developments and opportunities in Ho Chi Minh City and surrounding southern provinces.

“Their participation is further confirmation of their increased interest towards Vietnam,” the ambassador said.

Italy has substantial experience in the implementation of public-private partnership projects, especially in the fields of expressways and ports, which were among the topics discussed in Minister Delrio’s bilateral meetings in Vietnam.

According to Piccioni, in the framework of this new chapter of bilateral relations between the two countries strongly supported also by the opening of the Consulate General of Italy in Ho Chi Minh City in 2014, the infrastructure and transport sector features a tremendous amount of untapped potential, to be further nurtured by the EU-Vietnam Free Trade Agreement.

“The future implementation of a memorandum of understanding signed in 2015 by the two state-owned Ferrovie dello Stato and Vietnam Railway Corporation will importantly fuel the development of the high-speed rail system in Vietnam,” Piccioni added.

In addition, the forthcoming visit to Italy of Vietnamese President Tran Dai Quang will be another important step in strengthening the two countries’ ties in the infrastructure sector, she noted.

New prospects for economic and trade relations between Vietnam and EAEU

As from October 5th, the free trade agreement (FTA) between Vietnam and the Eurasian Economic Union (EAEU) has came into force, opening up new development opportunities for the two business communities.

The agreement promises to create favorable conditions for both sides to promote their goods and attract investment.  

The FTA between Vietnam and EAEU members –Russia, Belarus, Kazakhstan, Armenia, and Kyrgyzstan – was signed on May 29, 2015.

Under the agreement, more than 90% of Vietnam’s export items to EAEU countries will be exempted from tax. In the first year of the agreement, exporters will save about US$40 million in taxes.

Dang Hoang Hai, Director of the European Market department under the Ministry of Industry and Trade, said that, as the first partner to sign a free trade deal with the EAEU, Vietnamese exporters will have more opportunities.                 

He said “It is a comprehensive state-level agreement but will not only open the commodities market, but also boost investment and services. This is the first agreement the EAEU has signed with a non-member country and the first Vietnam has signed with an economic alliance. With careful preparation, the agreement will surely create a breakthrough in the relations between Vietnam and the EAEU.”

Currently more than 900 Vietnamese businesses are exporting to the EAEU market, 200 of which have a large turnover, mainly in seafood, coffee, tea, rice, textiles, and footwear.

Russian Ambassador to Vietnam Konstantin Vnucov said that pursuant to the agreement’s commitments, the two sides will open market access for certain trade services and investment in addition to slashing nearly 90% of tariff lines.

“The agreement aims to increase the volume of trade and create favorable conditions for investment and technology using qualified personnel resources. Thanks to this mechanism, Vietnam can access a larger and more promising market involving 5 countries with a total GDP of nearly US$2.2 trillion and more than 180 million consumers. EAEU countries can promote their products to Vietnam, which has a population of 90 million people,” according to the Russian Ambassador.

Bilateral trade is forecast to grow from the current level of US$4 billion to US$10 billion in the next few years.

Vietnam will abolish import duties on more than 59% of tariff lines on all kinds of goods from EAEU members. For another 30% of tariff lines, the import duty will gradually be reduced to 0% in the transition period. Vietnam’s average import tariff on goods from these countries will fall from 10% to 1%.

Hai explained further: “To optimize the agreement’s opportunities, the two sides need to outline specific support measures on transportation, customs, and policies that can make the deal practically useful for the business communities and the economies of Vietnam and the EAEU. Both have also set out an ambitious goal that bilateral trade revenue will reach US$10 to 12 billion by 2020. To this end, Vietnam hopes to get close cooperation from embassies, ministries, and agencies of the EAEU members in implementing the agreement.”

Under this deal, Vietnam producers will get preferential treatment in market access from the EAEU members and can improve their competitiveness there against similar products.

Penetrating the EAEU market will create a golden opportunity for Vietnam’s most competitive items but will also create stiff competition from imports from the union. 

Nguyen Quang Thai, Vice Chairman and Secretary General of the Vietnam Economic Association, said “We need to learn more about market, forces, and regulations when penetrating a new market. It’s important to pay particular attention to the origin of products. 

For a new market, it is essential to learn in details consumer tastes, requirements for product quality, and possible technical barriers. 

The government should provide legal support, certification of the origin of goods, and labeling for Vietnamese products so that they can penetrate these potential markets and reach other markets in the future.”

HCM City publishes investment handbook to assist businesses

An investment handbook in different languages is being compiled by the Ho Chi Minh City Export Processing and Industrial Zone Authority (Hepza) to provide businesses with necessary information on local investment procedures.

The handbook publication is among important measures to promote investment into export processing and industrial zones in the city, Tran Viet Ha, head of Hepza’s investment management division, said on October 11. 

He noted Hepza will continue asking the municipal People’s Committee and relevant ministries to expeditiously tackle investment-related problems, especially regulations on land lease which is a major cause of a slump in investment into local export processing and industrial zones compared to 2015. 

It will also enhance assistance for enterprises to access capital and update production technologies, maintain the single-window mechanism for investment projects, and cut down 30% of the administrative procedure handling time. 

Hepza is urging new industrial parks to build infrastructure to ensure land supplies for companies to rent, Ha noted. 

By September 30, US$354.77 million of new and additional investment was poured into export processing and industrial zones in Ho Chi Minh City, representing 50.68% of this year’s plan and a decline of almost 54% from a year earlier. 

About US$167 million of the sum was foreign investments, down 67.4%, while domestic investments decreased by 27% to US$187 million, according to Hepza office manager Tran Cong Khanh. 

Experiencing the same trend, only 50 hectares of land were leased during the period, dropping by 58%. The area of rented facilities approximated 40,000 square metres, down 25.5% from the same period in 2015. 

Khanh attributed that tumble to problems emerging in the enforcement of the 2013 Law on Land, and the sluggish guidance for the implementation of the 2014 laws on investment and enterprises. Meanwhile, many investors also wants to wait for the parliaments of the member countries of the Trans-Pacific Partnership (TPP) agreement to ratify this deal.

Macro-economic stability maintained

Vietnam’s economy has developed significantly in the third quarter but achieving this year’s target growth rate of 6.3-6.5% requires a doubling of efforts.

This is mentioned in macro-economic report for Vietnam in the third quarter, released in Hanoi on October 11 by the Vietnam Institute for Economic and Policy Research. 

The report suggested Vietnam should focus more on macro-economic stability rather than the growth rate.

The country’s GDP in the third quarter was 6.4% and the September growth rate was 5.93%, lower than the year-on-year figures. 

The government has recently lowered this year’s target growth rate to 6.3-6.5% while the institute retained their forecast of a growth rate of under 6% or even lower for this year. 

The credit growth rate is expected to reach up to 18%, so Vietnam is likely to see incremental credit growth in the last quarter, making it possible for the inflation rate to hit the 5% target set by the National Assembly.

Economists demanded policy makers be cautious in monetary policy adjustments.

Nguyen Duc Thanh, head of the Institute, said moderate credit growth and abundant liquidity are favorable conditions for lowering interest rates. 

“The interbank interest rate stayed under 1% in September. There was no pressure on interest rates hike. It’s time for commercial banks to reduce their interest rates, which will be the incentive for business operation and provide the momentum for economic growth,” he added.

London business networking group tours HCM City

On October 11, a contingent of members from the London office of the Vietnam-UK Network participated in a conference with the Ho Chi Minh City People’s Committee.

london business networking group tours hcm city  hinh 0 In opening remarks, Executive Director Ben Chapman of the Network, noted the purpose of the visit was to obtain feedback from governmental, nongovernmental and business entities to help shape the agenda for trade talks between Vietnam and the UK later this year. 

The group is also interested in finding out first-hand from UK companies doing business in Vietnam what their greatest concerns are about the downside of doing business in Vietnam and how those concerns might best be addressed.

They specifically, he said, want to get recommendations for bilateral initiatives that might improve the business climate and what if any support the various parties would be willing to offer in implementing these proposals.

In addition, the contingent wants to find out about specific examples of good business practices in Vietnam and which government policies are working well.

Lastly, said the Executive Director, the group wants to know what the Network could do to encourage trade and investment between businesses and other organizations of both the UK and Vietnam for the mutual benefit of both countries.

Furniture and forest exports face cloudy future

The furniture and forest segment of the Vietnam economy has experienced solid growth over the past few years and brighter days lie ahead, says the Vietnam Timber and Forest Product Association.

In 2015, exports jumped by 10.7% to US$6.9 billion, Nguyen Ton Quyen, chair of the association, told a recent conference, adding that he optimistically expects the segment to see annual growth of 15-20% over the next few years. 

Mr Quyen said that new free trade pacts such as the Vietnam-EU Free Trade Agreement and the Trans pacific Partnership (TPP) will help boost overseas consignments by slashing tariffs.

However, he failed to support his rather overly sanguine predictions with any hard facts or well-grounded logical reasoning, say many industry analysts.

As it currently stands, most analysts are in general agreement that the growth of the furniture industry in Vietnam is severely limited by the scarcity of raw materials, which must be imported from other countries, principally China.

As long as the industry continues to be dependent on Chinese raw materials, then neither exports to the EU or the US under either of the aforementioned trade pacts would qualify for the reduced tariffs Mr Quyen referred to.

Nor did he address the fact that with both current US presidential nominees opposed to the trade deal, ratification of the TPP appears highly unlikely at this time.  Clearly there are no realistic prospects for passage or implementation any time soon.

Lastly, even in markets where import tariffs are low or non-existent, non-tariff barriers (NTBs) can be a major impediment to trade and Mr Quyen failed to address how the segment plans to address these issues.

This is especially true as it relates to Vietnam exports of furniture and forest products to the EU, say analysts, which will undoubtedly face significant NTBs following implementation of the Vietnam-EU free trade pact.

Many of these barriers can easily be readily identified, but it is a great deal more difficult to calculate their precise impact on export returns and what their removal might mean for the furniture and forest industry.

NTBs are defined as government measures, other than tariffs, that distort international trade. Typically, they either protect domestically produced products from the full weight of foreign competition or artificially stimulate exports of those products.

They may include quantitative restrictions, administrative procedures, phytosanitary and technical regulations and standards, price control measures, subsidies, forest management certification and product labelling, and illegal activities.

According to the World Trade Organisation the number of reported NTBs has been steadily growing worldwide.

For the first nine months of 2016, Vietnam exports of furniture and forest products have stayed consistent with the prior year pace having reached US$4.9 billion, roughly the same figure as exports for the same corresponding nine-month period in 2015.

As it stands, the country is now the fourth largest wooden furniture and forest product exporter around the globe, trailing China, Germany and Italy in descending order of magnitude from first to third biggest.

Taiwan reopens its doors to dragon fruit

Taiwan has agreed to reopen its borders to dragon fruit imports from Vietnam, following a seven-year hiatus.

On October 7, a consignment of 18 metric ton of the fruit met with Taiwan’s tough import requirements and were allowed passage through customs.

Earlier in March 2009, dragon fruit shipments were suspended over concerns that melon fly disease, which had been detected in Vietnam might spread into Taiwan and threaten the country’s guava production.

Among the many strict requirements, Taiwan has required the fruit be sterilized with hot stream before leaving Vietnam. They also require it be quarantined upon arrival in Taiwan, standard practice throughout the globe for fruit imports.

Drafting a law on planning, a start to reforming Vietnam’s planning

Over the years, Vietnam’s planning has revealed many shortcomings, weakening national economic development.

A law on planning is needed to help the government direct socio-economic activities more effectively during the current international integration.

Vietnam has more than 19,000 projects whose planning shortcomings at the central or grassroots level have wasted national resources and hampered investment attraction.

Phan Xuan Dung, head of the National Assembly’s Committee for Science, Technology, and Environment, says a law on planning is needed. “This law revolutionizes planning and has been carefully thought out,” Dung added.
The law on planning combines existing ordinances into a system of planning. It overrides the current haphazard and ineffective circulars and decrees issued by ministries, sectors, and provinces. 

It will be a tool to settle conflicts between sectors, or provinces toward more sustainable development.

All the current shortcomings are ultimately due to a lack of coordination in the legal system.

Nguyen Quang, Director of the UN Habitat Vietnam, said that in developing countries like Vietnam, the law on planning should pay attention to people, not just growth.

Quang called for “removing the subsidy mechanism and make planning more a matter of identifying targets. Continuous evaluation and oversight are needed to adjust the planning to development goals. Our current planning is not based on sustainable development outcomes. Many localities now only focus on economic targets and disregard environmental and social factors.”

According to Nguyen Duc Kien, Deputy Director of the NA Economic Committee, the law should create better conditions for market operation and policies to encourage investment, taxation, and environmental protection. It should also create a detailed mechanism for coordinating implementation.   

He said, “The law respects three missions: the state’s management role, the indispensability of the market economy, and the concern of the social community.”

The law on planning defines a planning system that coincides with the national master-plan. It is one stage of the national strategy on socio-economic development and will be a bridge to the national development plan in later years.

VSSA proposes annual tenders for sugar import quota

The Vietnam Sugar and Sugarcane Association (VSSA) has proposed the Government allow for the holding of a tender for the annual sugar import quota following the success of a pilot tender for 2016.

VSSA made the proposal in a document sent to the Prime Minister early this month. It wants the tender to be held in the first quarter of next year.

The Ministry of Industry and Trade usually announces the sugar import quota for a year at the end of quarter three. The reason is that the sugarcane crop nearly comes to an end at that time, so the ministry considers allowing for sugar imports to minimize their impact on the domestic prices of the product.

VSSA suggested that sugar import quota tenders should be conducted early to enable firms to actively map out their plans for sugar imports and production of sugar-based items. Only raw sugar should be imported under the quota rather than refined sugar included as in previous years, the association added.

VSSA explained the country has 40 sugar plants with a total daily capacity of 155,000 tons, with around 50% of the output being refined sugar. Therefore, these plants can take more crude sugar to make refined products.

The association calculated the import price of raw sugar is US$100-120 per ton lower than that of refined sugar, so allowing raw sugar imports only will help the nation save millions of U.S. dollars, not to mention many jobs to be created for local people.

Early last month, the Ministry of Industry and Trade put on a pilot tender for the sugar import quota of 85,000 tons this year, after VSSA had petitioned many times.

VSSA forecast the domestic sugar output would total around 1.5 million tons in the 2015-2016 sugarcane crop. With inventories of nearly 200,000 tons and a large quantity of sugar imported from Laos under an agreement between the governments of Vietnam and Laos, local demand for the product is secured.

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

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