BUSINESS IN BRIEF 18/8

Vietnamese goods introduced at Ukrainian fair

Many Vietnamese enterprises and associations in Kharkov and Odessa cities of Ukraine are displaying their products at the country’s traditional trade fair Sorochinsky Yarmarok in central province of Poltava, which has been organised annually in mid-August since the 18th century.

On showcase at Vietnam’s booths are traditional farm produce and foods, herbal medicines, handicrafts, and cultural and tourism products.

Visitors to the event, which runs until August 21, also have a chance to enjoy Vietnamese traditional songs and dances, which are performed by the Vietnamese community in Kharkov and Odessa.

Vietnamese booths at the fair have attracted a large number of visitors including Poltava governor Valery Golovko, who came to learn about Vietnam’s socio-economic development and the country’s key export products.

Director of the fair Olga Oleshko praised Vietnam’s participation in the fair in the last two years, saying that she hopes Vietnam will continue to join the fair in following years.

Covering an area of 16.2 hectares, this year’s fair draws the participation of over 1,000 businesses, small traders and craftsmen, who presented various commodities such industrial products, handicrafts and souvenirs.

Many artists and art troupes nationwide also performed at the fair, bringing animated and colourful atmosphere to the event.

More FDI pours into Hai Phong

The northern port city of Hai Phong has so far this year attracted more than 2 billion USD in foreign direct investment (FDI), according to the municipal Department of Investment and Planning. 

The funds came from 27 new projects and 19 added-capital projects. 

Among the biggest investors was the Republic of Korea (RoK)’s 1.5-billion-USD LG Displays Co. Ltd, which produces organic light emitting diodes (OLED) for smart phones, watches and notepads. 

This project is one of LG’s two largest investment projects in the city. 

The RoK is the biggest investor in the Dinh Vu – Cat Hai Economic Zone, with 3.7 billion USD. It is followed by Japan, with 3.3 billion USD. 

As of July 20, Vietnam attracted 12.94 billion USD in FDI in 2016, up 46.9 percent against the same period last year, according to the General Statistics Office.

Of the total, nearly 8.7 billion USD came from 1,408 new projects, with the remainder from 660 added-capital projects.

Investors poured money into new projects across 47 provinces and cities nationwide in the period.

Hai Phong topped the country in attracting new FDI projects, followed by Hanoi, and southern Binh Duong and Dong Nai provinces, and Ho Chi Minh City.

Ghost month hampers real estate sales

The property market tends to stagnate in August, a normal thing for this time of the year as August coincides with the seventh lunar month, traditionally called the Ghost Month. 

The folk belief makes many people keep off making “big” business this month such as real estate sales and purchases. 

Meanwhile, some people have taken advantage of this time to make deals at better prices as property sellers also want their business affairs to remain smooth during the Ghost Month, according to real estate agents. 

As a result, the unsold property inventory has shrunk though the pace of reduction has slowed down. 

Total unsold real estate is valued at nearly 36 trillion VND (1.6 billion USD) nationwide, down over 14.9 trillion VND (or 29.3 percent) from the end of 2015 and 1.5 trillion VND from Q2 this year. 

Notably, up to 16 trillion VND of the inventory is housing land at nearly 4.4 million square metres. It is followed by low-rise houses (4,951 units worth some 9.9 trillion VND), and condominium apartments (4,883 units – nearly 6.9 trillion VND). 

More than 1 million square metres of land for commercial purposes worth 3.25 trillion VND remain unsold. 

Ho Chi Minh City posts the largest unsold property value in Vietnam at present, about 6.6 trillion VND – a decline of over 3.5 trillion VND (or 35 percent) from 2015 and 216 billion VND against the end of Q2. 

The value of unsold real estate in Hanoi is around 5.8 trillion VND, down 923 billion VND (or nearly 14 percent) from 2015 and 64 billion VND from Q2.

Vietnam shifts towards high-quality rice export

Vietnam will restructure its export rice products towards increasing the proportion of high-quality, high-value, organic, highly-nutritious rice and products made from rice. 

The direction is highlighted in a draft on the strategy for developing Vietnam’s rice export market in the period 2016-2020 with a vision to 2030, which has been released by the Ministry of Industry and Trade. 

According to the draft, from 2016, the export rice production will focus on long-grain white rice and high-quality rice with 5 to 10 percent of broken grains and reduce rice with more than 15 percent of broken grains. 

By 2020, the low-quality white rice export proportion in the total volume of export rice will be reduced to 15 percent.

Woodchip exports tumble in first six months

Vietnam shipped abroad 1.8 million tonnes of woodchip in the first half of this year, making up of only 61 percent of the same period last year, the Ministry of Agriculture and Rural Development reported. 

The export is predicted to continue facing more difficulties in the rest of the year.

The year, it is estimated that around 7 million tonnes of woodchips will be exported for 600 million USD in revenue, equivalent to about 60 percent and 50 percent of last year’s respective figures. 

The fall is attributed to the decline in demand in China – the world’s biggest woodchip consumer.

More tech urged for longan farms

Longan growers should apply technologies in production to improve their fruit’s quality and value, heard attendees at a conference to promote longan consumption held in the northern Hung Yen Province’s Khoai Chau District on Tuesday.

Businesses at the event, which saw the participation of over 200 representatives from cooperatives, local farmers and businesses from Ha Noi and HCM City hailed Hung Yen’s longan varieties. Hapro Ha Noi’s Managing Director Mai Khue Anh suggested local authorities and relevant bodies provide technical support to local farmers to ensure their longan products are in line with standards on food safety in the growing, harvesting and packaging processes.

Director of Agri Viet Hung Trading Company, Do Dinh Hung also underlined the significance of the brand name and quality of Hung Yen longans, saying that farmers need to grow their longan trees in line with the VietGAP standard to secure their consumption niche.

Chairman of the Khoai Chau District People’s Committee Nguyen Duc Son said the Ham Tu Commune produces 120 tonnes of longans meeting VietGAP standards for export. The district has also called on local farmers to select high-yield varieties of longan and ensure their production meets the requirements of food safety. Vice chairman of the provincial People’s Committee Dang Ngoc Quynh highly valued the link among co-operatives, farmers and businesses in promoting the local longans. He said the province would facilitate businesses dealing with agricultural products as well as support the connection among stakeholders in the field to boost exports.

The co-operation among commercial centres and supermarkets would help longan and other agricultural products penetrate demanding markets such as the US, EU and Japan. Participants also witnessed the signing of a number of agreements between longan growers and businesses.

Khoai Chau District is the biggest longan growing area in Hung Yen, with over 1,600 hectares of trees, mostly in Ham Tu, Dong Ket, Binh Kieu, An Vi and Ong Dinh communes. This year, the district produced 20,000 tonnes of fresh longans, worth over VND400 billion (US$16 million). — VNS

Nguyen Van Dung, chairman of the northern Hoa Binh Province People’s Committee on the same day granted trademark registration for Son Thuy longan in Kim Boi District.

The intellectual property protection would help Son Thuy longan expand its market as well as bring clean agricultural products to consumers.

This has been the 8th product in the province registered for intellectual property protection.

The registration has been considered a condition to promote production and public awareness. It would also help develop traditional products.

By the end of June, the province had 107ha of Son Thuy longan with productivity of 14 tonnes per ha and average income of VND300 million each. The selling price of the longan are VND20,000-25,000 per kilo.

The province’s Department of Agriculture and Rural Development also granted food safety certification to 31 households growing the longan. 

CJ Group seeks investment in Binh Dinh

The South Korean CJ Group wants to invest in several sectors in the central province of Binh Dinh, the company’s chairman Chang Bok Sang said during a meeting with provincial authorities on Tuesday.

The group hopes to develop an animal feed processing plant at Nhon Hoa Industrial Zone in An Nhon Town, a pig breeding farm, and a seafood processing plant, the chairman said, adding that it also studied the possibility of building cinemas to meet the entertainment demands of local people and tourists in Quy Nhon City.

He asked local authorities to update the province’s investment policies in IZs and proposed that they create conditions for his group to rent 120ha of land to construct the pig breeding farm.

Chairman of the provincial People’s Committee, Ho Quoc Dung, spoke highly on the group’s investment plan in the province and pledged to create the favourable conditions for it to implement projects here.

Competitiveness key for local retailers

Several domestic retailers have been actively changing their business strategies to improve their distribution channels after big foreign supermarkets such as Big C and Metro increased discount levels to 20-25 per cent.

Vu Vinh Phu, chairman of the Ha Noi Supermarket Association said Vingroup for example has been continuously expanding their retail system to around 600 Vinmart mini markets and convenience stores nationwide after acquiring the supermarket systems of Oceanmart, Vinatexmart and maximark.

Vingroup has directly invested into their partners as well as signing with producers and suppliers to develop VinEco agricultural products meeting VietGAP standards. The group also set targets to become one of leading suppliers for processed products.

This has been one of their steps to reaffirm Vingroup’s brand name and enhance competitiveness in the retail market, Phu added.

The Sai Gon Union of Trading Co-operatives (Sai Gon Co.op) has improved the quality of its current supermarkets and is planning to build new business models for different market shares.

Sai Gon Co.op expects to open 10 new Co.opmart supermarkets in big cities and 20 other small and medium sized supermarkets. By the year 2020, they plan to have 130 Co.opmart supermarkets, 8-10 Co.opXtra and 3-5 Sense City commercial centres. Nguyen Thanh Nhan, Sai Gon Co.op’s deputy general director said they are committed to co-operate with Vietnamese producers despite pressure in the retail market. Up to 90 per cent of goods in their supermarket system are Vietnamese goods.

In addition, Sai Gon Co.op would continue to research and develop e-commerce, on top of convenience stores to widen their network. This could help local producers in the market, Nhan said.

Sai Gon Co.op would give priority to Vietnamese goods to help consumers access locally produced products.

Vo Van Quyen, director of the Ministry of Industry and Trade’s Domestic Market Department said if Vietnamese businesses ensure product quality, they would not be dependent on foreign distribution channels. Especially, the association between retailers and producers would help them to overcome difficulties, Quyen said. However, he said domestic firms should invest into modern science and technology and take advantage of knowing Vietnamese habits to provide suitable products which could compete in both local and foreign distribution channels.

Viet Nam’s businesses have also been urged to find new niche markets. The ministry would facilitate local firms in expanding their networks and renewing technologies, he said.

VITAS calls for new garment sector strategy

The Viet Nam Textile and Garment Association (VITAS) has suggested the Government and related authorities review and adjust the development planning for the industry as the planning to 2010 with vision towards 2030 is obsolete.

Under current planning, the industry’s export value was targeted to reach US$20 billion by 2020, but the figure exceeded $27 billion in 2015 and is expected to hit $31 billion this year.

From 2010 to 2015, the industry had stable growth of export value of 15 per cent per year.

VITAS chairman Vu Duc Giang said “There is a big gap between what we achieved and what we planned.”

Viet Nam’s demographics – a population structure with more than double the number of working age than dependents – was advantageous for the expansion of the sector, so the Government should help the industry keep up with the country’s integration and make use of the abundant resources, he said.

Deputy Minister of Industry and Trade Ho Thi Kim Thoa said that global textile and garment producers were moving production to areas with good labour forces and lower production costs.

Thoa endorsed VITAS’ recommendation, saying that the industry should make changes to its planning as it was enjoying opportunities stemming from the country joining free trade agreements.

To help textile and garment firms take advantage of opportunities and overcome challenges brought by free trade agreements, VITAS suggested the Government update the sector development strategy that was approved by the then Prime Minister in 2008 and the Ministry of Industry and Trade in 2014.

The association proposed the Government create a development strategy to 2025 with a vision towards 2040.

It also asked the Government, the Ministry of Industry and Trade, and the Ministry of Planning and Investment to group textile and garment enterprises in concentrated industrial parks.

This issue was important for the industry’s sustainability and the environmental protection, Giang said, adding that the concentration would facilitate the treatment of wastewater from the enterprises.

Currently, there are several textile and garment industrial zones in the northern provinces of Hung Yen, Thai Binh and Nam Dinh and the southern province of Dong Nai and Binh Duong, which cover a few hundred hectares each.

VITAS suggested the Government allow the establishment of textile and garment industrial zones with 500-1,000 ha to draw domestic and foreign capital.

Giang said that it was necessary to upgrade transportation infrastructure connecting the zones with logistics centres and ports.

On wastewater treatment, the VITAS chairman said that it was headache for the sector because building a wastewater treatment system was very costly.

He suggested the Government offer a preferential lending rate for enterprises which invested in wastewater treatment systems in the parks.

Giang also recommended the Government amend environment regulations applied to the sector.

Specifically, requiring a firm specialised in processing with more than 400 workers to build a wastewater treatment plant worth billions of dong was beyond its capability and a waste of money because processing companies did not discharge wastewater like dying ones.

Than Duc Viet, deputy general director of the Garment 10 Corporation, said most firms in the textile and garment industry were small- and medium-sized enterprises with limited financial capacity, so they need support from the Government.

In China, India and Bangladesh which have a developed textile and garment sector, enterprises did not have to invest in wastewater treatment factories but the Government did, Viet said, adding that it would encourage investment in the sector.

Attracting investments in producing fabric and yarn, and dying would held address the shortage of materials supply to the sector, the CEO said.

Viet Nam’s garment and textile exports in the first half of this year reached $12.6 billion, representing a 4.72 per cent year-on-year increase and accounting for 41 per cent of the sector’s target for 2016.

Novaland unveils Park Avenue promotion

Housing developer Novaland Group has unveiled a new promotion for The Park Avenue office-tel and apartment complex in HCM City’s District 11.

Customers buying the project this weekend will have a chance to win diamonds valued at VND75 million (US$3,400) in a lucky draw.

Customers, who have to pay 35 per cent down, can borrow from banks without interest for the first two years.

Buyers in districts 5, 6, 11, 10, Tan Binh and Tan Phu will get a discount of 1 per cent.

The Park Avenue, situated on Ba Thang Hai Street, is easily accessible from districts 3, 5,6,10, 11, Tan Binh and Tan Phu.

Besides office-tel and apartment units, it also has a shopping centre, swimming pool, coffee shops, and restaurants.

Apartments cost around VND38 million per square metre.

Plastics and rubber exhibition to open next month

More than 320 companies from around the world will participate in a plastic and rubber industries exhibition opening in HCM City next month.

The exhibitors, from 11 countries and territories including Singapore, Korea, Japan, Thailand, and India, will showcase products and services like plastic compressing machines, PET bottle blowing machines, mould manufacturing equipment, plastic materials, chemicals and others at 500 stalls at the Saigon Exhibition and Convention Center.

The organisers, Vinexad of Việt Nam and Taiwan’s Chan Chao, expect the expo, to run between September 28 and October 1, to help exhibitors find partners.

Besides, local companies will be updated on the latest market information.

Việt Nam exported over 444,000 tonnes of rubber in the first half of the year for US$551 million, over 5 per cent up and 10 per cent down respectively year-on-year. China and India were the two major buyers.

Việt Nam sold plastic products worth $1.05 billion, up 4.7 per cent over the same period in 2015, with Japan and the US being the major buyers, accounting for over 38 per cent of the export value.

Agriculture, IT promise success to Vietnamese firms in Japan

Vietnamese businesses should consider investing in agriculture and information technology (IT) in Japan, Chief Representative of the Japan External Trade Organisation (JETRO) in Hanoi Atsusuke Kawada has suggested.

He explained in an interview granted to Cong Thuong (Industry and Trade newspaper) that Japan is now thirsty for investors in the farming sector due to labour shortage, and has a great demand for IT, which is also strength of many Vietnamese enterprises.

Kawada cited FPT, a Vietnamese IT firm that is running successfully in Japan to clarify his views, adding that this is one of the 35 Vietnamese projects in the country with a total registered capital of 7 million USD.

However, he reminded the Vietnamese businesses which are interested in investing in Japan about the rising Japanese yen. He noted that his country’s rapidly aging population is leading to employment scarcity and high labour cost.

Given this, Kawada suggested the enterprises employ Vietnamese engineers fluent in Japanese in order to cut labour cost.

These firms can use offices provided by JETRO free of charge for two months, he said, noting that the organisation will also give them advice about tax, labor and legal procedures.

The Chief Representative mentioned the first-ever conference on trade promotion recently held by JETRO in conjunction with the Vietnamese Ministry of Planning and Investment in Hanoi, aiming to introduce Japan’s investment climate to Vietnamese businesses.

The event demonstrates the Japanese Government’s wish to attract foreign investments, especially those from Vietnam, he said.

Through the conference, the Japanese side hopes that the Vietnamese enterprises which intended to do business in the country will learn more about investment opportunities there, he noted.

Woodchip exports tumble in first six months

Vietnam shipped abroad 1.8 million tonnes of woodchip in the first half of this year, making up of only 61 percent of the same period last year, the Ministry of Agriculture and Rural Development reported. 

The export is predicted to continue facing more difficulties in the rest of the year.

The year, it is estimated that around 7 million tonnes of woodchips will be exported for 600 million USD in revenue, equivalent to about 60 percent and 50 percent of last year’s respective figures. 

The fall is attributed to the decline in demand in China – the world’s biggest woodchip consumer.

High consumption to raise steel prices

Domestic steel prices are expected to rise in the near future, thanks to increasing construction demand, the real estate market’s recovery and high consumption, Vietnam Steel Association (VSA) said. 

Nguyen Van Sua, VSA’s Vice Chairman, said the selling price of steel billets and bars had risen since July. 

Specifically, steel billet prices increased from 300-310 USD per tonne in July to 315-325 USD per tonne at the beginning of this month. The prices of steel bars also increased from 308-315 USD per tonne to 330-338 USD per tonne. 

The prices of building steel, excluding VAT, delivered at factories have remained stable over the past two months at 9.4 million-9.9 million VND per tonne in the north and 9.4 million-9.7 million VND per tonne in the south. 

Sua said steel prices could rise further as the prices of steel billets have been rising, while the property market was expected to develop in the last few months of the year. 

In addition, reports from VSA showed that the steel output of its members last month reached 1.4 million tonnes, posting a 13.6 percent year-on-year increase. 

Steel sales in July reached more than 1.2 million tonnes, increasing 27.3 percent year-on-year, and 20 percent higher from the previous month. 

The exports of steel products in July also posted a 57 percent year-on-year rise to reach 246,500 tonnes. 

Sua said the surge in both steel production and consumption showed that domestic steel producers could meet the demand for building steel. 

However, he said steel businesses should further improve their products’ quality and reduce production costs to offer more competitive prices.

Textile & garment sector needs new development strategy

The textile and garment industry development planning to 2020 with a vision towards 2030 has set to earn an export value of 20 billion USD by 2020, which is seen as a setback when it already achieved the value of 27.5 billion USD in 2015 and expects 31 billion USD this year.

As the industry has sustained a stable export value growth of 15 percent in 2010-2015, the Vietnam Textile and Garment Association (Vitas) has suggested that the Government adjust the development planning for the industry, enabling it to obtain more success.

Deputy Minister of Industry and Trade Ho Thi Kim Thoa pointed to the current trend that the global textile and garment producers are moving to production areas with advantageous labour force and lower production costs.

The industry should make changes to its planning as it is enjoying fresh, lucrative development opportunities stemming from the country’s joining of bilateral and multilateral free trade agreements, she said.

Vitas Chairman Vu Duc Giang said the country is having an advantageous productive working-age population, which would greatly support the textile and garment industry’s expansion so the Government should devise a strategy towards making the industry keep up with the country’s integration pace.

To help its members optimise opportunities from free trade agreements, Vitas has suggested that the Government should fine-tune the textile and garment industry development strategy that was approved by the Prime Minister in decision No. 36/2008/QĐ-TTg dated March 30, 2008 and the Ministry of Industry and Trade in decision No. 3218/QĐ-BCT dated April 11, 2014.

It has proposed the Government to envisage a development strategy by 2040 so the textile and garment industry could advance to new goals that are meeting the nation’s speedy and extensive integration.

Vitas has asked the Government, the Ministry of Industry and Trade, and the Ministry of Planning and Investment to group textile and garment enterprises in concentrated industrial parks to easily handle the treatment of wastewater they discharge.

There are several textile and garment industrial zones in the northern provinces of Hung Yen, Thai Binh and Nam Dinh and the southern province of Dong Nai and Binh Duong, which cover over 100 ha each.

Vitas, therefore, suggested the Government allow the establishment of textile and garment industrial zones with 500-1,000 ha to reel in investments in dyeing, and fabric and yarn production, along with upgrading transportation infrastructure connecting the zones with logistics centres and ports to reduce transport costs.

Vietnam’s garment and textile exports in the first half of this year reached 12.6 billion USD, a year on year increase of 4.72 percent and accounting for 41 percent of the sector’s target for 2016.

Hong Kong seeks ties with Vietnam

Hong Kong looks forward to stronger ties with Vietnam, its chief secretary for administration, Carrie Lam, has said. 

Speaking at a luncheon meeting on “Opportunities for Hong Kong and Vietnam under ASEAN Regional Co-operation” in HCM City on August 17, she said Vietnam is Hong Kong’s third largest trading partner in ASEAN. 

Bilateral trade topped 16 billion VND last year, a year-on-year increase of 16.7 percent. Hong Kong is Vietnam’s 10th largest trading partner, while the latter is the island’s ninth largest partner. 

It was Vietnam’s sixth largest source of FDI in the first fours month of this year, valued at around 196 million USD, she said. 

The conclusion of free trade agreement talks between ASEAN and Hong Kong, scheduled this year, would promote economic and trade ties, including with Vietnam, she said. 

In his welcome speech, Jonathan Choi, permanent honorary president of the Chinese General Chamber of Commerce in Hong Kong, and chairman of the Hong Kong-based Sunwah Group, said the East Asian economies were entering a new stage of regional cooperation and integration.

“I believe that there is a great deal of potential for Hong Kong and Vietnam to work closer together to make strategic contributions in regional collaboration.” 

As a major international financial centre, Hong Kong is an ideal place to provide adequate infrastructure financing for Vietnam and other ASEAN markets, he said, adding Vietnam’s investment incentives can attract foreign investments across a wide range of sectors. 

“Both Hong Kong and Vietnam can act as a bridge and facilitator for companies from Vietnam, Hong Kong and mainland China in attracting investments as well as grasping the huge opportunities in the region,” he said. 

Lam spoke about Hong Kong’s competitiveness and strengths. 

Thanks to its rule of law, business-friendly environment and connectivity with the globe as well as the mainland, it is a preferred location for global businesses, according to Lam. 

It is seeking to strengthen its leading position in traditional industries like trading and logistics, financial services, professional services and tourism, while developing new economic sectors such as creative industries and innovation and technology.  

On the conclusion of the ASEAN-Hong Kong FTA, Hong Kong will enhance its “super-connector” role between mainland China and the ASEAN Economic Community. 

Lam encouraged more Vietnamese firms to use Hong Kong as a gateway to enter the Chinese market and other regional and global markets. 

Co-organised by the Chinese General Chamber of Commerce in Hong Kong (CGCC) and the Hong Kong Economic and Trade Office in Singapore, the luncheon attracted over 300 participants, including CGCC committee members, government officials, and business leaders from ASEAN, mainland China and Hong Kong. 

The annual event aims to explore further opportunities and future development between Hong Kong and ASEAN. 

It was held in Kuala Lumpur and Singapore in 2014 and 2015.

Conference promotes Hung Yen longans

A conference to promote longan consumption was organised in Khoai Chau district, northern Hung Yen province on August 16 with the participation of over 200 representatives from cooperatives, local farmers and businesses from Hanoi and Ho Chi Minh City. 

Business representatives hailed Hung Yen longan varieties, saying that longan growers should apply technologies in production to improve their fruit’s quality and value. 

Hapro Hanoi Managing Director Mai Khue Anh suggested local authorities and relevant bodies provide technical support for local farmers to ensure their longan products are in line with standards on food safety in the growing, harvesting and packaging processes. 

Director of Agri Viet Hung Trading Company Do Dinh Hung also underlined the significance of the brand name and quality of Hung Yen longans, saying that farmers need to grow their longan trees in line with the VietGap standard to secure their consumption niche. 

According to Chairman of the Khoai Chau district People’s Committee Nguyen Duc Son, Ham Tu commune produces 120 tonnes of longans meeting VietGap standards for export. 

The district has also called on local farmers to select high-yield varieties of longans and ensure their production meets the requirements of food safety. 

For his part, Vice Chairman of the provincial People’s Committee Dang Ngoc Quynh hailed the link among cooperatives, farmers and businesses in promoting the local longans. 

He pledged the province will facilitate businesses dealing with agricultural products as well as support the connection among stakeholders in the field to boost exports. 

Participants also witnessed the signing of a number of agreements between longan growers and businesses. 

Khoai Chau is the biggest longan growing area in Hung Yen, with over 1,600 hectares of trees, mostly in Ham Tu, Dong Ket, Binh Kieu, An Vi and Ong Dinh communes. 

This year, the district produced 20,000 tonnes of fresh longans, worth over 400 billion VND (16 million USD).

Making a VN shrimp brand

The Minister of Agriculture and Rural Development Nguyen Xuan Cuong said that it was necessary to identify shrimp as a national strategic product to boost farming, enhance quality and build a globally-recognised Vietnamese shrimp brand.

At a conference on Monday which gathered shrimp producers and processors from 28 coastal provinces and cities, Cuong said that Viet Nam had a large potential for shrimp production. However, scattered farming, shortage of quality raw materials together with the lack of a comprehensive development strategy and value chain were blocking its potential.

He said that shrimp had immense consumption markets.

In addition, boosting shrimp farming turns out to be a good choice for Viet Nam’s agricultural production as it could turn the salt intrusion in the Cuu Long (Mekong) River Delta into an opportunity.

“The ministry, for the long term, will join hands with relevant agencies to build up a strategy for shrimp farming and processing towards a world-recognised Vietnamese shrimp brand,” said Cuong.

He urged local authorities to enhance management towards all shrimp farming stages, from breeding to disease prevention, while shrimp farmers apply new farming techniques and technologies to improve shrimp quality.

Experts at the conference said that developing breeding shrimp became critical to boosting shrimp farming, adding that heavy reliance on imported breeding shrimp existed as a major challenge.

Dang Quoc Tuan, deputy director of Viet Uc Seafood, said Viet Nam had a great opportunity to become one of the world’s biggest shrimp producers, given the chances coming from the participation in free trade agreements (FTAs) such as the ASEAN Economic Community and Trans-Pacific Partnership.

“Quality breeding shrimp is the decisive factor for success,” Tuan said.

According to Nguyen Hoang Anh, president of Binh Thuan Province Shrimp Association, the quality of breeding shrimp will decide up to 70 per cent of the output of shrimp farming.

However, failure in controlling the origin and quality of breeding shrimp as well as managing the uses of chemicals were badly affecting shrimp quality.

Viet Nam currently needed around 130 billion breeding shrimp every year, but local breeding could meet only 40 per cent of the demand.

The Viet Nam Seafood Exporters and Processors early this month forecast that Vietnamese shrimp exports would top US$3 billion this year, after achieving $1.4 billion in the year’s fist half. 

Seafood shifts focus back to the domestic market

Many large exporters of seafood and other actors in the marine fish and aquaculture segments of the economy have begun to shift their focus away from the developed markets of the globe back to the domestic market.

“In the past, exports accounted for right at 95% of our business,” said Nguyen Thi Thu Sac, general director of Hai Nam Seafood, and “though we have shipped to more than 60 countries, orders have now weakened significantly.”

We, like all major companies operating in Vietnam in the seafood business, of necessity are refocusing our attention back at the domestic markets, as leverage in the event of a deterioration in overseas markets, said Sac.

Sac noted the business sentiment has totally changed over the last year. Until last year, we had been focusing only on exports, but with the formation of the ASEAN economic community our priorities have changed.

There are also a large number of free trade agreements in the offing said an executive of the Minh Phu Seafood Corporation, a leading seafood processor in Vietnam, that could signal potential troubled waters ahead for exports.

This has contributed to a heightened sense of uncertainty for many larger companies sparking a market strategy re-evaluation for a fall-back position should the bottom drop out of the export market. 

That’s why we’ve turned our attentions back to capturing a larger share of the domestic market, said the executive adding that his company is now targeting a 20% share of the domestic market over the next two years.

Minh Thu, deputy director of Saigon Co-op, said most smallholders in the Vietnam fisheries and aquaculture domestic industries are not well equipped at this time to cope with the superior foreign competition that is headed this way via the AEC.

She said, most of these smallholders don’t have sufficient funds to modernize and upgrade their facilities with state-of-the-art equipment and technologies needed to innovate and compete effectively.

The situation creates a perfect opportunity for the larger companies to cast their nets into the domestic market and catch market share, Thu underscored, adding that there a number of different marketing strategies these larger companies can apply to that end.

Most notably, the rising number of transnational chain supermarkets entering the domestic market create an attractive channel for these companies to utilize effectively to advertise their products and promote sales.

Data compiled by the Vietnam Association of Seafood Exporters and Producers (VASEP) shows wild fish exports for the first seven months of 2016 jumped 2.7% year-on-year to 1.776 million metric tons, comprised of 1.676 million metric tons of offshore fish and 100,000 metric tons of inland freshwater fish.

Aquatic farm production for the same seven-month period reached 1.97 million metric tons, an increase of 1.3%.

Combined, total aquatic sales for the seven months January-July tallied in at 3.741 million metric tons, registering total export and domestic revenue of US$3.65 billion, roughly equivalent to last year’s same period figures, according to VASEP. 

Vietnam tuna much sought after in Italy

Italy is the biggest importer of Vietnam tuna in the EU, according to the Vietnam Association of Seafood Exporters and Producers (VASEP).

vietnam tuna much sought after in italy hinh 0 Tuna exports to the market hit nearly US$13 million in the first half of this year, up 99% against the corresponding period last year.

Currently, Vietnam exports various fresh and frozen tuna products to Italy while exports of Thailand, the Philippines and Indonesia decline.

VSAEP reported that Vietnam tuna products get dolphin-safe certificates, which makes exports to the EU more favourable than other countries.

VASEP forecast that tuna exports to Italy will continue to rise in the coming time.

New multibillion-dollar oil refinery to create loss in Vietnam’s state budget

A multibillion-dollar oil refinery to begin operating next year in north-central Vietnam will cause millions of dollars in loss to state coffers every year, the Department of State Budget has said.

Located in Thanh Hoa Province, Nghi Son Refinery is the Southeast Asian country’s second oil refinery, with a total capital investment of US$9 billion. The first and only operational refinery is Dung Quat, located in the central province of Quang Ngai.

Nghi Son is a joint-venture between four parties: PetroVietnam, Kuwait Petroleum, Idemitsu Kosan, and Mitsui Chemicals, with each company respectively holding a 25.1%, 35.1%, 35.1%, and 4.7% stake in the project.

According to preliminary calculations from the Department of State Budget, once the refinery is fully commissioned in July 2017, the national budget will lose VND1.3 trillion (US$58.3 million) caused by a decrease in oil imports at the end of that year.

As Nghi Son Refinery begins increasing its capacity in 2018, the budgetary losses will continue to rise, reaching VND10.929 trillion (US$490 million) in 2018, VND10.6 trillion (US$475 million) in 2019, and VND14.1 trillion (US$632 million) in 2020.

Furthermore, state-run PetroVietnam, the country’s oil and gas giant, has pledged to buy all of the refinery’s products for a ten-year period at a price equal to that of oil imports plus tariffs.

If the price of oil is US$45 a barrel, then PetroVietnam will have to spend US$1.54 billion purchasing Nghi Son’s products by the end of the ten-year period, while its profit as a shareholder of the project will be a meager US$71.8 million per year.

The loss from this worsens if the price of oil increases to $50 per barrel, in which case PetroVietnam will be paying $179.4 million per year in purchasing and only receiving US$62.8 million from dividends.

Furthermore, Nghi Son Refinery will enjoy a modest corporate tax rate of 10% for the entire 70 years of its lifespan, with a corporate tax exemption in its first four years and a 50% tax reduction for the next nine.

Dr. Ngo Tri Long, an economic expert, claimed that despite the importance of energy, any project, with the exception of national defense ones, needs to have its economic effectiveness evaluated before investment.

According to Long, the project does not bring any societal benefit because it leads to a net loss in the national budget, while consumers certainly do not benefit because domestic oil prices currently depend on international prices.

“In order to ensure energy security and develop the petroleum industry, Vietnam should only favor exploration and extraction, not underwriting an entire oil refinery project like Nghi Son,” Long concluded.

RoK’s CJ Group seeks investment opportunity in Binh Dinh

A delegation of the CJ Group from the Republic of Korea (RoK) led by its President Chang Bok Sang has made a fact-finding tour of central Binh Dinh province to seek an investment opportunity.

rok’s cj group seeks investment opportunity in binh dinh hinh 0 At a meeting with Chairman of the provincial People’s Committee Ho Quoc Dung on August 16, Sang said CJ Group was set up in 1953 and is now comprising numerous businesses operating in various industries of food and food service, pharmaceutics and biotechnology, entertainment and media, home shopping and logistics industries.

During this tour of the province, the group wanted to invest in building an animal feed processing plant at Nhon Hoa Industrial Zone in An Nhon town, a breeding pig farm, and a seafood processing plant. It also studied the possibility to construct cinemas to meet entertainment demands of local people and tourists in Quy Nhon City.

Sang asked Dung to provide information about investment policies at IZs in the province and proposed that provincial leaders create conditions for the group to rent 120ha of land to construct the breeding pig farm.

Dung welcomed the CJ Group and pledged to create the best possible conditions for it to implement projects in the province.

Draft law on supporting SMEs, a new driver for business growth

Small and medium-sized enterprises account for 97% of Vietnam’s businesses and play an increasingly important role in Vietnam’s economy.

In recent years, the government has created programs and policies to help SMEs maximize their productivity. The draft law on supporting SMEs is hoped to create a breakthrough in helping the sector grow. 

The Vietnamese government has exerted great efforts to develop and maintain an open, fair, and favorable business environment for enterprises by keeping a stable macro-economy, streamlining administrative procedures, cutting unnecessary costs, and improving access to supportive loans and opportunities to expand production and access markets.

The introduction of the draft law on SME support will create a legal framework and become an important tool for the development of such enterprises.

Dao Trong Ly, Chairman and CEO of Aprocimex Joint Stock Company, told VOV: “The draft has been carefully prepared and in details. Although there are some certain overlaps the draft law can get approval from the National Assembly once it’s put for discussions to get contributions and adjustments.  If the bill is passed, our SMEs will be treated fairly without discrimination. We happily appreciate the law.”

The draft law has 5 chapters with specific support programs being stipulated in 10 articles of chapter 2. They are incentives in land, innovative technologies, access to credit, trade promotion, and information.

Under the bill, SMEs will be supported by the State to carry out some export activities, product research, prioritized in product consumption, guaranteed in borrowing loans, tax exemption and extension.

Pham Thi Thu Hang, Secretary General of Vietnam Chamber of Commerce and Industry, said most Vietnamese businesses are small and medium-sized enterprises which often find it hard to compete with foreign companies and are in need of more practical and appropriate support to grow.

“It’s necessary to mobilize various sources in society to support SMEs. The sources come not only from SMEs themselves, and state agencies, but also business associations, banks, and investment funds. The state assistance and these levers will create a positive effect for the development of SMEs,” explained Hằng.

The introduction of the draft law is hoped to help enterprises escape difficulties to continue growing. It will be the highest and consistent legal framework for the SME community and help to increase the number and quality of SMEs through incentive policies and support programs appropriate to the targets and directions set for the national economic development.

Do Tien Thinh, Director of the Center for Supporting Business Registration under the Ministry of Planning and Investment, said, “The bill is expected to develop a mechanism to encourage the development of SMEs and will add household businesses as beneficiaries of the draft law. 

Currently there are nearly 2 million household businesses in Vietnam, which are important contributors to Vietnam’s economy. The draft law introduces incentives in land, innovative technologies, and access to credit.”

One of the highlights of the bill is that it defines the responsibility and role of the government, central agencies, provincial agencies, social organizations, and the private sector in helping SMEs and consolidating the implementation of policies for SMEs. 

The draft Law on Supporting Small- and Medium-sized Enterprises will be submitted to the NA’s second session in October. The bill needs more feedback and recommendations from experts and businesses and should be reviewed with reference to international experience. 

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

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