BUSINESS IN BRIEF 21/10

Petrol price hike of over VND400 per litre

Retail prices of RON 92 petrol and E5 bio-fuel increased by VND441 (US$0,019) and VND392 per litre, respectively, yesterday.

Following a joint decision issued by the ministries of Industry and Trade and Finance, the price of diesel 0.05S rose by VND599 per litre, while that of kerosene went up by VND520 per litre.

This was the nineth hike Vietnamin fuel prices so far this year with a total increase of nearly VND5,000 per litre.

By contrast, the prices have been dropped eight times since the beginning of the year, with the decreases amounting to about VND4,463 per litre.

Current ceiling prices of RON 92 and E5 bio-fuel are VND16,845 per litre and VND16,533 per litre, while maximum prices of diesel and paraffin are kept at VND13,023 per litre and VND11,543 per litre.

The average global price of RON 92 during the last 15 days was $59.995 a barrel, while that of diesel 0.05S was $62.338 per barrel, the ministries said. They also decided to maintain subsidies for RON 92 and E5 at VND600 and on diesel and kerosene at VND300 per litre. The subsidies are sourced by the fuel stabilisation fund. 

Vinafood 1 Flourmill offering 34% stake for sale

Vinafood 1 Flour One Member Company Limited, a member of State-owned Vietnam Northern Food Corporation (Vinafood 1), will auction over 8.2 million shares, equivalent to a 34 per cent stake.

The auction on the Ha Noi Stock Exchange will take place on October 28 and the starting price is set at VND10,000 (US$0.45) per share. The deadline for participation in the event is October 26.

Foreign investors are allowed to buy all the shares put up for sale.

The precursor of Vinafood 1 Flour One Member Company Limited was Hung Quang Flour Production, a unit of Nghe An Food Company. In 2008, the flour mill company was established under the management of Vinafood 1.

The company produces and processes food, flour and related products and trades food materials and cattle feed. It has two flour production factories – Hung Quang Flour Factory in Vinh City, central Nghe An Province, and Bao Phuoc Flour Factory at the Dinh Vu Industrial Park in northern Hai Phong City.

The flourmill firm expects its charter capital to reach VND242 billion (nearly $11 million) after equitisation, of which the state will hold 65 per cent of capital, employees will hold 0.99 per cent and other investors 34 per cent.

Due to fierce competition in the local wheat market and volatile prices of input materials, business results of the company declined during the 2013-15 period.

Its net profit decreased from VND6 billion in 2013 to just nearly VND143 million in 2014. It even incurred losses of VND2.6 billion in 2015.

The company’s performance improved in the first half of this year with total revenue of VND252.4 billion and net profit of VND894 million. Until the end of June 2016, its total assets value was VND316 billion.

It expects to earn over VND1 billion in net profits for the whole of 2016 and nearly VND6.8 billion in 2017. The company targets paying 2 per cent dividend from next year, with the rate increasing to 2.2 per cent in 2018 and 2.4 per cent in 2019.

Hong Kong TAL Group inaugurates US$50 million garment plant in VinhPhuc

A US$50 million garment plant invested by Hong Kong TAL Group has officially been operational in northern Vinh Phuc province.

TAL built the garment plant on an area of 8ha in Vinh Phuc province after receiving an investment licence in 2014. The plant is expected to produce and export around 12 million men and women’s shirts per year and generate 3,500 stable jobs.

TAL is one of world leading garment groups, which was set up in 1947 in Hong Kong. It set foot in Vietnam in 2004 with the establishment of the TAL Apparel Limited in Phuc Khanh Industrial Zone in northern Thai Binh province.

90% of TAL products have been exported to the US under brand names like Burberry, Brooks Brothers, Banana Republic and Tommy Hilfiger.

The group has so far had 11 plants in China, Thailand, Indonesia, Malaysia, Ethiopia and Vietnam with an output of 60 million shirts per year and created 26,000 stable jobs.

TAL President Roger Lee said the group will continue to invest in building textile plants with state-of-art and environmentally friendly technologies to join the global supply chain and contribute to promoting Vietnam garment brands on the world market.

Customs bill promotes new int’l trade opportunities

Vinafood 1 Flourmill offering 34% stake for sale, Hong Kong TAL Group inaugurates US$50 million garment plant in Vinh Phuc, Mekong Delta adopts smart rice cultivation model, Viettel targets US$1.5 billion in revenue from overseas markets

A new customs bill spelling out mandatory requirements for the electronic exchange of information on ships’ cargo, crew and passengers will open new international trade opportunities.

The new law, which was signed by the Prime Minister on August 23, aims to harmonize procedures for ships’ arrival, stay and departure from port and imposes an obligation on public authorities to establish systems for the electronic exchange of information.

There is a transitional period of three months with the new law making electronic transmission mandatory taking effect November 15, 2016, during which period paper and electronic documents would be allowed.

The new law aims at securing the highest practicable degree of uniformity in formalities and other procedures, including mandatory standards and recommended practices on formalities, documentary requirements and procedures that should be applied on arrival, stay and departure to the ship itself, and to its crew, passengers, baggage and cargo.

These include standardized forms for the maximum information required for the general declaration, cargo declaration, crew list and passenger list; and agreed essential minimum information requirements for the ship’s stores declaration and crew’s effects declaration.

The law is aimed at ensuring the shipping industry’s present and emerging needs and serves to facilitate and expedite international maritime traffic. The objective is to prevent unnecessary delays to ships and to the persons and property on board.

The overarching goal of the new law is to encourage the use of a ‘single window’ concept, that will enable all the information required by public authorities regarding the arrival, stay and departure of ships, persons and cargo, to be submitted via a single portal without duplication.

The effect of the measure will put policies and procedures in place that will streamline Vietnam Customs procedures, lessen the cost to ship internationally and strengthen trade enforcement at the nation’s borders.

These changes will provide more opportunities for small and medium-sized businesses to participate in international exporting and importing, said Pham Duyen Phuong.

Pham Phuong, who is the deputy director of the Department of Information Technology and Customs Statistics noted that this will directly bear on increasing the competitiveness of small businesses with global companies, creating more job opportunities.

The potential impact this bill will have on easing the international trade process and opening great growth opportunities for Vietnam businesses should not be understated, continued Phuong.

Do Duc Tien, deputy director of Vietnam Maritime Administration, said, the new law will result in consistency of internal control systems within the network of maritime ports that will bear fruit in many areas.

Tien said some of the key benefits of the new law include – reducing paperwork burdens for low-value shipments by increasing the de minimis allowance and modernizing the customs systems and bringing other border agencies together in a ‘single window’ that supports advanced data and pre-clearance of shipments

It also allows for better enforcement of obligations in Vietnam trade agreements, intellectual property rights, and antidumping and countervailing duty laws as well as promotes small-business exports by improving export promotion coordination.

Vietnam’s new lottery ticket sales boom after first jackpot

State-owned lottery company Vietlott announced a 67% sales increase following its first jackpot.

A representative from the company said revenues rose in all six of the southern cities and provinces in which it operates, following its VND92 billion jackpot (over US$4 million).

The winner on October 16 took home the first jackpot since the debut of the American-style lottery in July. The company had held 39 draws before a winning ticket was declared.

Sales increased nearly 5% on October 17, the day after the jackpot win, compared to the previous week, and 67% on October 18.

Ticket sales in Ho Chi Minh City increased 230% on October 18, followed by 170% in the neighboring Binh Duong Province and 117% rise in the Mekong Delta city of Can Tho.

Nguyen Thanh Dam, deputy general director of Vietlott, said the company took in VND159 billion (US$7.13 million) in the first three months of its operations.

In January, Vietlott, or Vietnam Computerized Lottery One Member Limited Liability Company, signed an exclusive 18-year contract with Malaysian conglomerate Berjaya to launch the country’s first computerized lottery.

Mega 6/45 players select six numbers from 1 to 45 and win the jackpot, starting at VND12 billion (US$538,000), by matching all six winning numbers from the draw.

The jackpot prize keeps growing until there is a winner. The odds of winning are extremely low, somewhere around one in 8.14 million.

The first winning ticket was sold in Ho Chi Minh City to a woman from Tra Vinh Province. Her father attended a ceremony at Vietlott office on her behalf, and received a bank transfer of US$3.7 million, on which he paid 10% income tax.

On October 19, the company drew numbers again. This time, there was no winner.

Fiery Samsung Note 7s fail to cut off Vietnam’s mobile phone exports

During the first nine months, Vietnam’s mobile export value reached US$25.5 billion, up 11% on-year, making it the most valuable export sector.

This might come as a surprise amid the Galaxy Note 7 fire scandal which forced Samsung to stop its production and recall all devices. 

Previously, Nguyen Mai, president of Vietnam’s Association of Foreign Invested Enterprises, said recalling the Note 7 could reduce Vietnam’s exports by an estimated 0.5%-1% this year.

But the company insists: “The Note 7 incident may not have any significant impact on our exports in 2016; in fact this year’s export turnover is expected to increase.”

Garments and textiles, and computers and electronic devices came second and third in terms of export value, reaching US$18 billion and US$13 billion respectively.

As of the third quarter of this year, Vietnam’s import-export turnover had reached over a quarter of a trillion dollars, up 4% compared to the same period last year, recording a trade surplus of US$3.7 billion – the highest in the past seven years.

Mekong Delta adopts smart rice cultivation model

Experts have recommended that the Mekong Delta should expand “smart” rice cultivation to reduce production costs and increase profits.

The delta, the country’s rice granary, began a smart-rice pilot programme for this year’s summer-autumn crop with 65 participating farmers in the delta’s 12 provinces as well as Can Tho City. 

The farmers, who used the model on an area of 0.5 ha each, were instructed in farming techniques, including use of proper seeds and fertilisers. 

They also learned how to pump water into their fields to destroy pests before sowing rice seeds. 

Speaking at a seminar held in Can Tho early this week, Mai Van Quyen, a programme consultant and former head of the Southern Institute of Agricultural Science, said that reducing the quantity of sowing seeds was a mandatory part of the programme. 

All of the farmers had reduced the quantity of seeds to 74-82 kilos per ha in the summer-autumn crop, he said. Farmers who planted rice under traditional cultivation method used 104-200 kilos of seeds per ha. 

The reduction of seeds had helped farmers cut costs, reduce disease and produce better rice, Quyen said. 

The quantity of fertiliser used was also less compared to traditional growing methods, while the yield of paddies was 0.5-1 tonnes higher than that of traditional cultivation methods. 

Tran Van Khoi, acting director of the National Agricultural Extension Centre, said agricultural production in the delta was facing difficulties because of drought and salt water intrusion caused by climate change.

Farmers using the model have had higher profits in the summer-autumn rice crop, according to the delta’s provincial agricultural extension centres. 

Farmer Phan Thien Khanh from Can Tho’s Thoi Lai District said he had once used 200-250 kilos of seeds per ha but had cut back to 60-80 kilos under the new method. 

His profits rose 5 million VND (230 USD) per ha compared to profits under the traditional cultivation method. 

Dong Van Tiep from Hau Giang province’s Long My district said he earned a profit of 22 million VND (1,000 USD) per ha by participating in the programme.

Tiep said he would apply the smart rice cultivation model to the rest of his 2016-17 winter-spring rice crop.

Viettel targets US$1.5 billion in revenue from overseas markets

Telecom giant Viettel is optimistic about achieving the goal of collecting US$1.5 billion from its nine overseas markets in 2016 following positive signals from these markets, the Dau Tu (Investment) newspaper reported.

Viettel has so far invested in Laos, Cambodia, Timor Leste, Cameroon, Haiti, Mozambique, Burundi, Peru and Tanzania. 

At the end of the second quarter, overseas markets have brought about US$493.8 million, up 13% from last year but equal to just one third of the year target. 

But a surge in revenues of Bitel, Viettel’s brand in Peru, a two-digit growth in African markets and the stable expansion in the remaining markets, plus the expected stronger growth in year-end months, justify the corporation’s confidence in meeting its target. 

According to Tao Duc Thang, deputy general director of Viettel who is in charge of the Peru market, Bitel has recorded revenues of US$60 million in the first half of this year, double the figure for the entire 2015. Bitel’s subscribers are increasing at 41%, five-fold the average rate of Peru’s telecom sector. 

Bitel hopes to achieve 3 million subscribers in 2016, double from 2015 figure. 

Meanwhile, all African markets of Viettel posted positive growth with a subscriber growth of 21%, Le Dang Dung, deputy general director of Viettel, said. 

Halotel, Viettel’s brand in Tanzania, reported two million subscribers after just nine months in operation while Nexttel in Cameroon, which was launched in September 2014, now has 2.5 million customers. 

But it is Laos and Cambodia which are really “the geese that laid golden eggs” for Viettel among its nine overseas markets. 

Unitel, Viettel’s brand in Laos, reached US$1 billion in accumulated revenue after seven years and aggregate profit has been over US$300 million . 

Unitel now has more than 2.5 million customers and accounts for 47% of the mobile market and 35% of the broadband market in Laos. 

According to the UK-based Brand Finance, Unitel is Southeast Asia’s most effective mobile brand in 2016 and its brand value increased 106% from 2015 to reach US$132 million, entering the top 30 most valuable brands in the region and the number one in Laos. 

Meanwhile, Viettel’s Metfone brand in Cambodia is valued at US$94 million in 2016. 

After seven years of operation, Metfone has now become the leading mobile service provider in Cambodia with 5.5 million customers, equal to 37% of the market share. 

Metfone brought in US$256 million in revenue in 2015.

Global cold chain to grow 7% annually through 2020

The global cold chain market is projected to grow at a combined annual growth rate of 7% from 2016, to reach a value of US$234.49 billion by 2020, according to a report from Research and Markets.

The report analysed the cold chain market in terms of type, application, temperature range, technology, and region.

It said the primary factors that have and continue to drive growth and success of the global cold chain are factors such as an increased demand for chilled and frozen food and beverages due to changing consumer preferences.

Furthermore, the report concluded that factors such as increasing disposable incomes and rapid urbanization in emerging markets such as Vietnam have also heightened the demand for frozen food and hence for cold chain services.

Based on application, the report classified the cold chain market into five segments –  fruit and vegetables; bakery and confectionery; dairy and frozen desserts; meat, fish and seafood; and others.

The cold chain market was further segmented into chilled and frozen.

With the increasing international trade of perishable food products, particularly from Southeast Asia, the report noted, the demand for cold chain is expected to continue to experience enhanced market growth.

Cold chain, said the report, plays a singularly key role in storage and transport of meat, fish and seafood products as they require refrigeration right after slaughter, during processing, and during packaging.

Per Julien Brun, general manager of CEL Consulting, the increased demand for frozen and pre-packaged foods in Vietnam is expected to drive the cold supply chain to exponential market growth over the next few years.

Citing a recent report from the Directorate of Fisheries, Mr Brun said the average rate of loss for farm produce in Vietnam has averaged 25%-30% of total value over recent years, even as high as 45% for some fruit and vegetables and 35% for many seafood products.

Mr Brun pointed out that over the past decade, the scale of the frozen food supply chain in Vietnam has increased 4-fold, which has barely scraped the surface of this lucrative market. The increase, he said, has primarily been concentrated in the southern region in support of aquaculture.

The expansion of the cold supply chain for frozen food in the local retail marketplaces throughout the remainder of the country such as for transporting products to restaurants and supermarkets has been severely restricted.

The solution to the problem, he said, is to let competition, the profit incentive and other open market forces come into play. 

The cold chain market in Vietnam has been and is expected to continue to attract  increasing expansions and acquisitions by key global players such as Americold Logistics, LLC (US), Preferred Freezer Services (US), and Nichirei Logistics Group Inc. (Japan).

The cheap and low quality supply chain logistics of using motorbikes lacking cold storage technology to transport products nationwide that have little regard for food safety will soon be a relic of the past as Vietnam moves on to a whole new modernized world.

It’s important for small business owners throughout Vietnam during this transition, said Mr Brun, to realize that they much too often opt for what they perceive to be the lowest cost alternative— only to find out that because of the lack of quality control and food safety, it leads to higher losses.

The losses caused by shortened product life and the lack of a cold supply chain is a factor that small businesses across the Southeast Asian nation must consider and open their eyes to the realization that it is more profitable for them to opt for cold storage transport only.

Retailers look for e-commerce uplift

More and more retailers in the country are shaking hands with big e-commerce companies in order to widen their business activities while ensuring cost savings.

Experts say that this is an unavoidable trend as e-commerce is strongly developing in the country with many websites, mobile applications and social networks currently set up. 

A report from the E-commerce and Information Technology Department shows that in 2016, 34% of companies are selling their products on social networks. Many traders and shop owners have also developed phone applications. 

In 2014, the volume of websites having phone applications was 15%. It jumped to 21% in 2015.

More and more retailers in the country are shaking hands with big e-commerce companies in order to widen their businesses while ensuring cost savings (Photo dkt.com.vn)

However, not all retailers, especially the small ones, can afford this investment. 

Instead of pouring a big amount of the money into developing websites or mobile applications, traders choose to cooperate with big e-commerce companies as the latter will help them manage and sell products on their platforms and marketplaces.

The cooperation is a smart choice as it helps them widen distribution while saving investment costs.

Currently, the biggest online-shopping company, Lazada, has signed contacts with 40 retailers to distribute their products on their website. Lazada said the cooperation will benefit all: consumers, Lazada and retailers.

Alexandre Dardy, CEO of Lazada Vietnam, said the cooperation will help retailers widen their distribution throughout the entire country, including remote places, thanks to a strong network.

This is a chance for them to reach 47 million customers of Lazada, he added.

Shopee, a mobile shopping app, has officially been launched and has attracted many shops and retailers. 

Last year, Sendo, an e-commerce company, together with Bizweb developed an application, offering a market place for shop owners.

Zalo also launched a service to help shoppers sell their products.

Talking about the effectiveness of the cooperation, a representative of Kid Plaza said his company has 55 supermarkets in the whole country and they now focus on e-commerce.

After three months of shaking hands with Lazada.vn, this company’s growth has reached 200% per month.

Nguyen Hong Phong, an amateur shop owner who cooperates with Shopee, said he came to the company without previous knowledge in e-commerce. 

“With the support of the company, especially Shoppe university, which is a training programme where sellers can pick up key skills, it has helped me become a successful entrepreneur with more than 100 orders per day,” he said.

Bac Giang offers helping hand to investors

The northern province of Bac Giang will continue its efforts to improve the local investment and business environment with the goal of attracting investors and facilitating the operation of local businesses.

Director of the provincial Department of Planning and Investment Trinh Huu Thang said the department will push the pace of major investment projects including the international logistics service centre in Bac Giang City and the Tay Yen Tu eco-tourism complex. 

The Management Board of Industrial Parks will coordinate with relevant agencies in speeding up land clearance for the infrastructure development project in Ho Phu industrial park in Hiep Hoa district. 

Meanwhile, the provincial Department of Home Affairs is to work with other agencies to manage the operation of the province’s public administrative centre, proposing measures to increase the effectiveness of the centre, thus contributing to local administrative reform and providing better public services. 

As of the end of September 2016, Bac Giang was home to 1,091 investment projects with combined capital of over US$5.5 billion, according to the Department of Planning and Investment. 

Of the total, 250 projects worth over US$3.1 billion are run by foreign investors. 

In August and September this year, the province also granted business licences to 158 new firms with combined registered capital of more than VND2.36 trillion, raising the newly-established companies so far this year to 626, a rise of 39% year on year. 

Currently, Bac Giang is hosting 5,633 enterprises and 812 business branches and representative offices, with a total investment of VND31.2 trillion (US$1.41 billion), he said. 

During the past two months, a number of Japanese businesses arrived in the province to study the possibility of safe vegetable production, while Seah Vina company from the Republic of Korea met local officials to discuss investment in a solar power plant. 

Anti-dumping duty of 111.47% on Vietnam steel pipes maintained

The US Department of Commerce (DOC) has issued a preliminary conclusion of its administrative review (POR) for anti-dumping duties on oil country tubular goods (OCTG) imported from Vietnam from February 25, 2014 to August 31, 2015.

Accordingly, the DOC will impose a common tariff of 111.47% on Vietnamese OCTG exporters while only one business working hand in hand with the DOC during the investigation process is subject to duty of zero percent as it did not dump prices on the US market.

Judging from the initial duties as announced on July 11, 2014, it is considered a success of a Vietnam business. The DOC creates the possible conditions for relevant sides to send case briefs within 30 days since it publishes a notice in the Federal Register and rebuttal within five days since the submitted day.  Besides, if relevant sides request a hearing, they must send their official requirement to the Assistant Secretary for Commerce within 30 days since the notice is published.

The DOC will issue its final decision on the review within 120 days since the preliminary decision is announced in the Federal Register.

In 2014, the Canada Border Services Agency initiated anti-dumping and anti-subsidy investigations on Vietnam OCTG products and imposed AD duties of 28.6%.

Vietnamese real estate braces for Japanese capital

Japanese companies have shown great interest in developing real estate in Vietnam, with a focus on Ho Chi Minh City and Hanoi.

About ten Japanese companies are rumoured to be pouring US$2 billion into the Vietnamese real estate market.

According to Than Thanh Vu, chairman of Sao Khue Investment and Trade Promotion Corporation, the company has just taken a delegation of Vietnamese real estate companies to Japan to find cooperation opportunities. Many Japanese companies showed interest in luxury hotels, trade centres, office towers, and high-end apartments in Ho Chi Minh City and Hanoi. Most notably, Sumitomo plans to erect a $100-million office tower and Toshin to develop a so far unnamed, $200-million project.

According to Vu, many Japanese companies are choosing to tap into the real estate market of Ho Chi Minh City and Hanoi through the means of M&A. Their reasons include the drying up empty land supply and the complicated procedures making it difficult to make direct investments. He added that many Japanese investors have requested his company to advise them on buying luxury apartments and hotel projects in Vietnam.

Le Hoang Chau, president of the Ho Chi Minh City Real Estate Association, said that even though the Japanese companies have yet to sign an agreement, the possibility is a good sign. “The resources and management capacity of domestic real estate companies are now higher than before and now is a good time for them to call for foreign capital,” he said.

He also said that Vietnam and Japan have many similarities in culture and geography, and the two countries have become comprehensive strategic partners, making it an opportune time for Vietnamese companies and Japanese investors to rely on each other. 

Vietnamese companies need capital for big projects, because, according to current regulations, projects with higher-than-20 hectares must keep the owner’s equity at a minimum of 15 per cent and find professional management partners. Meanwhile, Japanese investors show a growing thirst to make foreign real estate investments.

Niche passion fruit growers expect good harvest

Vietnam niche fruit growers and processors are looking forward to realizing a 30-50% increase in passion fruit exports as they eagerly await the start of harvest season in November.

Sales to France, the company’s largest overseas market, says Daniel Huynh, CEO of Viet Exotic Co., Ltd, are expected to more than double this year as demand continues to see explosive growth.

Our company harvests and ships passion fruit to France and other countries in the EU throughout the year, said Mr Huynh, but our biggest season starts in late October and runs through mid-April.

He said Viet Exotic Co., Ltd elected to forego the larger Asian market, which has obvious advantages of proximity and size in favour of the niche markets in the EU for reasons of profitability.

Orders in the Asian market are generally for larger quantities of fruit that we simply can’t handle. As well, the profit margins are much too thin.

France is Viet Exotic’s favourite and largest EU market with relatively stable prices in every part of the year. In addition, the company ships passion fruit on a regular and recurring basis to Switzerland, Holland, Germany and Italy.

He said his company ships four metric tons of passion fruit every week to the EU market by air, adding that meeting the tough European quality standards has been a major undertaking.

Most of our fruit is sourced from local smallholders who require a great deal of oversight to ensure compliance with the strict EU standards.

The major hurdle we face is the overuse and abuse of pesticides so prevalent in Vietnam agriculture, so we have to spend an inordinate amount of time ensuring our suppliers comply with EU rules.

There’s a lot of work that goes into supervising the farms to ensure we only process clean fruit.

In addition, Mr Daniel noted that Viet Exotic imports its passion fruit seedlings from Taiwan for quality control purposes.

He said his person favourite variety is Tainon One from Taiwan and it is also the biggest seller in Europe.

Vietnam growers have decent varieties that are fine but, he said—however, Viet Exotic prefers getting seedlings from Taiwan as they are assured of a good quality for export which is the number one concern.

He also added that sourcing the seedlings isn’t as easy as it sounds.

Seedling imports require the authorization of the Vietnam government, which is very strict and specific on the quantity and quality of seedlings being brought into the country.

Despite the obstacles, he believes that the market for passion fruit will continue to grow in the EU, noting there is ample opportunity for Vietnamese niche fruit growers if they work smart, hard and ensure proper standards are met.

Vietnam’s govt urged to sell entire stake in dairy giant Vinamilk

The government plans to cut its 45% stake in Vinamilk, one of the country’s most sought after firms among foreign investors, into several small pieces before offering them to the public.

However, the sale of minority stakes might largely cut into the actual revenue that the government is supposed to earn by about US$1 billion, Zing News cited the Association of Financial Investors (VAFI) as saying.

Big investors are not interested in buying minority stakes in state-owned enterprises because being minority shareholders prevents them from joining management boards. This means they will not have much say on corporate governance or have enough power to push through reforms to boost efficiency, said the VAFI.

“By selling Vinamilk stakes in small pieces at a time, the State may earn US$1 billion less than if it put the whole 45% stake up for sale,” said the VAFI.

The VAFI explained that global investors, including multinational dairy giants, would be more willing to pay a premium to own a 45% in Vinamilk.

“An offer like this would be attractive to investors,” said the VAFI.

The government’s 45% stake in Vinamilk is now valued at about US$4.5 billion on the stock market, and the State Corporation of Investment Capital (SCIC) is about to make the first 9% public offering worth more than US$800 million at the current market price.

The SCIC said it has hired top-tier advisers, led by Morgan Stanley Asia, to help evaluate its options for the sale.

In the government’s latest privatization push, it is estimated that the country could rake in more than US$5 billion following share sales in 10 major listed companies with public stakes managed by SCIC, including Vinamilk, IT firm FPT and insurer Bao Minh.

Successful exits from Sabeco and Habeco, which are currently under the control of the Trade Ministry, will add US$2 billion more to the nation’s coffers.

Vĩnh Phúc’s budget collection to rise to VNĐ26 trillion

The People’s Committee of Vĩnh Phúc expects this year’s provincial budget collection to be as high as VNĐ26 trillion because of business stability and rise in foreign investment in the region.

Vĩnh Phúc’s budget is dependent on businesses that produce and assemble auto and motorbikes such as Toyota Việt Nam and Honda Việt Nam. However, income from the motorbike business had dropped because of lower demand for motorbikes in the local market.

To stabilise industrial production, Vĩnh Phúc has been offering attractive investment opportunities, especially to foreign businesses that have high technical and scientific skills and offer value-added products.

Provincial authorities have also worked to resolve issues faced by businesses and made reformative changes in state-related investment activities and activities of consulting and appraisal for projects.

In the first nine months of this year, the committee said, the provincial budget collection has crossed VNĐ22 trillion, an increase of 25 per cent year on year. This includes VNĐ20 trillion from domestic enterprises, which is up by 26 per cent.

The budget collected has been higher than the province’s initial target because of increased production and business, especially in foreign-investor auto and motorbike enterprises, and a surge in number of businesses supplying to the province.

Besides, to collect efficiently provincial budget, the province has also pushed enterprises and taxpayers to make tax declarations on time and has resolved difficulties in paying tax of enterprises and individuals.

Private consumption expected to boost economic growth

Việt Nam’s economy is expected to grow at 7 per cent from around 6 per cent currently, while private consumption should increase by 5 per cent per annum from the current 4.4 per cent, says an expert.

Nguyễn Xuân Thành, director of Fulbright University Vietnam told participants at a seminar “Wealth through Consumption” held by the Nhịp Cầu Đầu tư magazine on October 20 that private consumption contributed 4.9 per cent annually to GDP growth between 2006-2010. The rate decreased to 4.4 per cent during the 2011-15 period.

He said private consumption represented major stakes in the country’s GDP, up to more than 84 per cent in 1990, then decreasing to 65 per cent during 2011-2015. It was, however still higher than the East Asia average and in other countries including China, Indonesia and India.

Thành also said domestic producers should improve their competitiveness to satisfy higher consumption to control higher imports.

In the short term the driver for consumption growth is low global commodity prices, but in the medium term, it is the growth in consumer finance, and in the long term, a growing middle class.

“The consumption-driven growth  is only sustainable when supported by higher productivity and strong institutions and governance as well as improved firms’ competitiveness,” he said.

New expectations on business environment improvement

The Ministry of Planning and Investment has chaired the drafting of a law on revising and supplementing the laws on investment and business, which sparks hopes for productive improvements in the business climate in the country.

According to Deputy Minister of Planning and Investment Dang Huy Dong, the prominent point in the draft law is the screening of Appendix 4 pertaining to conditional business and investment lines in the Law on Investment.

Over 50 out of the current 267 conditional business sectors and lines are suggested to be cut with a view to providing a more relax investment environment for businesses.

In addition to that, 12 laws with regulations relating to business and investment conditions, including the Law on Investment and the Law on Enterprises, will be reviewed, Dong said.

He noted that the review followed Prime Minister Nguyen Xuan Phuc’s instruction on establishing a smooth investment environment in the next three years, and aims to tackle inconsistencies in relevant regulations contained in different laws. 

Dong admitted that many legal documents pertaining to business and investment have not been fine-tuned promptly with revisions of the Law on Investment, thus causing difficulties for businesses and investors. 

The draft law on revising and supplementing the laws on investment and business is expected to be submitted to the National Assembly for consideration at its second meeting.

New expectations on business environment improvement

The Ministry of Planning and Investment has chaired the drafting of a law on revising and supplementing the laws on investment and business, which sparks hopes for productive improvements in the business climate in the country.

According to Deputy Minister of Planning and Investment Dang Huy Dong, the prominent point in the draft law is the screening of Appendix 4 pertaining to conditional business and investment lines in the Law on Investment.

Over 50 out of the current 267 conditional business sectors and lines are suggested to be cut with a view to providing a more relax investment environment for businesses.

In addition to that, 12 laws with regulations relating to business and investment conditions, including the Law on Investment and the Law on Enterprises, will be reviewed, Dong said.

He noted that the review followed Prime Minister Nguyen Xuan Phuc’s instruction on establishing a smooth investment environment in the next three years, and aims to tackle inconsistencies in relevant regulations contained in different laws. 

Dong admitted that many legal documents pertaining to business and investment have not been fine-tuned promptly with revisions of the Law on Investment, thus causing difficulties for businesses and investors. 

The draft law on revising and supplementing the laws on investment and business is expected to be submitted to the National Assembly for consideration at its second meeting.

Local firms urged to exploit EU market

Vietnamese firms must draw up long-term business strategies to exploit opportunities in the European Union (EU), as the EU-Vietnam Free Trade Agreement (EVFTA) will come into force by 2018.

The EU, an open market with an integrated legal framework for all its members, can offer more export opportunities to local firms, experts told Vietnam News Agency correspondent.

In the past few years, trade between Vietnam and EU has been on a continuous rise. In the first half of this year, the total import-export turnover to EU touched 21.2 billion USD, posting a 9.05 percent year-on-year rise. Of this, Vietnam’s exports to EU were worth 16.2 billion USD and imports were 4.97 billion USD, both recording an 8.68 percent and 10.28 percent increase, respectively, from the same period last year.

The annual growth rate of Vietnam’s export turnover to EU could be 4 to 6 percentage points higher once the EVFTA comes into effect. The trade pact can help Vietnam promote the export of key products such as garments and textiles, leather shoes and seafood to one of the most developed economic regions in the world.

Experts said Vietnamese companies had so far only been shipping raw materials, though EU had brought the biggest export turnover for the country. Made-in-Vietnam products are tough to find a place in big commercial centres in EU.

Businesses said they were concerned that their technology may not meet the requirements, so they were sticking to export raw products and letting EU firms package and label the products. This, however, means that Vietnamese products could lose their trademark if they did not register brand names and geographical location.

Dang Hoang Hai, director of the industry and trade ministry’s EU Market Department, said local businesses should know the tax cut roadmap under the EVFTA, make precise calculations for their products and draw up long-term export plans.

Bui Huy Son, Director of the ministry’s Vietnam Trade Promotion Agency (Vietrade), said the country had the ability to conquer the EU market once the EVFTA takes effect. Vietnam had two years to improve its capacity through reforms of mechanism and policies.

Truong Dinh Tuyen, former Minister of Commerce, said the EVFTA would mean greater export opportunities for Vietnamese firms as the EU market was bigger than the US and Japan in terms of marketshare and value.

However, the EU is a demanding market, and Vietnamese companies can face issues relating to assessment, retention, competition and domination of the market. Tuyen said under the World Trade Organisation principles, the importing companies have the right to initiate anti-dumping duty and impose sanitary and phytosanitary (SPS) non-tariff barriers and technical barriers to trade (TBT).

In addition, Vietnamese companies can be levied anti-dumping taxes if they focus on only one market. Domestic firms should come up with suitable policies to avoid concentrating on a certain market or a specific product.

Vietnam’s strength of offering inexpensive products may no longer be an advantage once the EVFTA commitments are applicable. Product quality and trademark will be the decisive factors in the market. It will be useful if local businesses develop items that are in low supply instead of trying to offer similar products at lower costs.

Valentin Tran, Exporting Director of Casino, said he was optimistic about Vietnam’s exports to the EU and that Vietnamese goods would benefit from zero tax. Firms should understand the market properly.

Vietnamese businesses should participate in exhibitions and fairs in the EU and visit its supermarket chains to understand consumption habits. The most important thing to promote export is to pay attention to the quality of goods and meet international standards, he said.-

HCM City seeks Spanish investments

HCM City has called for investment from Spanish businesses in urban waste treatment, transport and flood control during a recent visit by a Spanish delegation to the city to explore business opportunities. 

The delegation was led by Jaime Garcia Legaz Ponce, Deputy Minister of Commerce and Chairman of the Foreign Trade, Investment and Export Institute.

At a meeting earlier this week with the delegation, Vo Van Hoan, Chief of the city People’s Committee Office, said the city is seeking to accelerate socio-economic development, including expansion of transport infrastructure.

However, it faces a number of challenges caused by rapid urbanisation and climate change, including worsening traffic congestion, regular flooding, and environmental pollution, he said.

He called on Spanish investors to build a modern waste treatment plant since the metro with a population of more than 10 million now has only one plant.

The lone plant also uses obsolete technologies and cannot cope with increasing volume of household waste, he noted.

The city also sought help from the Spanish Government to speed up major flood-control works, especially one to renovate the drainage system and dyke embankment.

Hoan appreciated Spain’s support for the metro route No 1 and No 5 and sought its continued help to expand the metro network.

Ponce spoke highly of the metro route No 1 project that has many Spanish contractors, and assured that his government is committed to continuing support for the city’s metro projects.

He also said that his government is willing to co-operate with HCM City for anti-flooding projects and a large-scale waste treatment facility.

Workshop looks to increase Vietnam-France trade

Nearly 80 Vietnamese and French enterprises attended a workshop in Paris , France , on October 20 to increase trade and investment exchanges under the Vietnam-EU Free Trade Agreement.

Minister-Counselor at the Vietnamese Embassy in France Nguyen Manh Thang underlined France as the second biggest European investor in Vietnam with total capital of more than 4 billion EUR (4.36 billion USD).

Two-way trade topped 4.07 billion EUR (4.44 billion USD) in 2015, he said, adding that France was the third largest country in the EU to export to Vietnam , after Germany and Italy . Meanwhile, Vietnam led ASEAN in exports to France .

The bilateral strategic partnership was signed in 2013 and has been realised through various activities, particularly the official visit to Vietnam by French President Francois Hollande in September 2016, boosting bilateral trade and economic relations.

Deputy head of the Vietnam Trade Promotion Agency under the Ministry of Industry and Trade Ta Hoang Linh said as of September 2016, Vietnam was ranked 90 th out of the 189 global economies on the ease of doing business globally by the World Bank, improving three places from 2015.

He revealed that Vietnam exported 2.63 billion EUR (2.87 billion USD) worth of goods to France in 2015, including electronic equipment and spare parts, garment-textile, footwear, timber products, coffee and seafood.

Meanwhile, France exported 1.13 billion EUR (1.23 billion USD) worth of goods to Vietnam, encompassing medicine, chemicals, equipment, machinery, milk and dairy products, and cosmetics, he noted.

Director of Business France’s international cooperation department Philippe Yvergniaux said about 2,000 French companies export goods to Vietnam while 300 French businesses invest in the Southeast Asian market.

He lauded Vietnam’s attractive investment environment, political and social stability, high economic growth, improved legal environment, and young and dynamic population.

Apart from major companies such as Airbus and Peugeot, many French small-and medium-sized enterprises operate in Vietnam , he said, referring to business opportunities in transport infrastructure and agro-forestry-fisheries.

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

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