BUSINESS IN BRIEF 23/4
Vietnam seeks new avenues into Cambodia markets
The Ministry of Industry and Trade (MoIT) is undertaking initiatives to work with local companies hoping to spur more cross-border commercial trade through the nation’s 295 border crossings.
Nguyen Cam Tu, deputy minister of the MoIT, told attendees at conferences in Hanoi and Ho Chi Minh City earlier this month that last year Vietnam recorded combined imports and exports with neighbouring China, Laos and Cambodia of US$27.56 billion.
China accounted for 85% of the combined commercial trade followed by Cambodia at 11% and Laos at four percent, said Deputy Minister Tu.
All things being equal, Deputy Minister Tu said he believes that with some concerted effort local companies have a realistic shot at increasing cross-border exports bringing total trade for 2016 to US$30 billion.
He said total trade in 2015 through the border-crossings was robust, experiencing a 27% year-on-year surge, with Vietnam exports consisting primarily of products from the agriculture, forestry and fishing industries.
Imports through the crossings were diverse consisting of clothing and textile raw materials and intermediary goods from China, agriculture products, consumer goods, machinery and vehicles, to name only a few of the major items.
In past years, Vietnam local companies pretty much had a lock on the Cambodian market, having the largest market share of all ASEAN countries exporting to the market, said Deputy Minister Tu.
However, this year with China’s economy slowing down, he said to expect competition to be much tougher, both from Chinese and Thai businesses, as they look to expand market share to offset the slowdown on their home turfs.
Van Duc Muoi, CEO of Vissan Limited Company, a local food processor in Vietnam, said his company is experiencing significant competition from Chinese competitors in the Cambodian market this year.
Last year, said Mr Muoi, out company’s sausages and dried products sales exploded, but this year we are being overwhelmed by Chinese companies who are offloading product at ridiculously low prices.
“We simply can’t match the low prices the Chinese companies are offering,” said Mr Muoi.
Our growth in establishing distribution centres in the Cambodian market actually stopped advancing in mid-2015 and since then we have been exploring other avenues to increased market share, said Mr Muoi.
“We’ve tried investing in manufacturing facilities in Cambodia,” said Mr Muoi, but to be honest we’re simply tapped out and don’t have the funds needed to take that avenue right now.
Le Anh Dung, deputy CEO of Saigon Cosmetics Joint Stock Company, echoed Mr Muoi’s sentiments about the increased competition. Our company’s growth has also slowed significantly since the middle of last year, said Mr Dung.
For the whole of last year, we averaged a 20% growth in market share, which has slowed to 10 percent in the first quarter of this year, said Mr Dung.
New import policy changes under which Cambodia tightened its import of goods have created difficulties for companies like ours as a result of high tariffs, sad Mr Dung, with foodstuffs incurring a 35 percent import duty.
Vietnamese exports to the market fall into one of four tariff levels (0%, 7%, 15%, 35%), and in addition are subject to a VAT of 10%, resulting in many products being priced right out of the market.
Many Chinese and Thai businesses are flooding the Cambodian market with foreign direct investment resulting in their products not being subject to the high tariffs the Vietnamese companies must incur.
As a result, local companies must find alternative avenues and wait until Cambodia complies with its ASEAN commitments to reduce tariffs to access to the Cambodian market in order to remain competitive.
Lao Cai moves to promote mineral processing
The northern mountainous province of Lao Cai will focus investment on mineral processing in line with its socio-economic development master plan through 2020 with a vision to 2030.
Home to rich reserves of 35 kinds of minerals, Lao Cai became a centre for metallurgy and chemical industry in the region and the nation in 2010-2015, particularly the processing of apatite, iron, copper and phosphorous.
Many projects in the locality have been operating efficiently, contributing to the province’s industrial production value and budget. They also create jobs and stable incomes for thousands of locals.
The Lao Cai Copper Refining Plant in the Tang Loong Industrial Park (IP) is an example of the firms that brought economic benefits to the province and the nation in general.
Constructed in 2005, the plant is the first of its kind in Vietnam. It uses modern and environmentally friendly technologies with a capacity of 10,000 tonnes of refined copper a year, meeting one third of copper demand in the country.
The Apatite Vietnam Company is also a successful example in Lao Cai with three plants for sifting ore, producing golden phosphorus and fertiliser.
However, the expansion of mineral processing is also putting strain on the environment and daily life of local people.
In 2015 alone, eight enterprises in Tang Loong IP were fined for violating environmental rules.
The issue was also a hot topic in many meetings between National Assembly deputies and local voters as well as in a large number of complaints lodged by local residents.
At a recent meeting with enterprises operating in the locality, Chairman of the provincial People’s Committee Dang Xuan Phong stressed the need to pay special attention to protecting the environment.
The provincial authorities have required enterprises to upgrade their waste water, solid waste and exhaust gas treatment in line with the regulations.
Local businesses have been encouraged to use advanced environment treatment technologies and equipment to replace backward ones, especially those in treating dust, exhaust gas and waste water. They were also asked to build automated environment observation systems, which can directly transmit data to relevant agencies for supervision.
The provincial authorities are investing in infrastructure facilities in the Tang Loong IP and a number of concentrated facilities for solid, water and harmful waste.
Eximbank undergoes surprise personnel reshuffle
Eximbank has undergone another senior personnel reshuffle following its stock being placed under injunction on the southern stock exchange.
The Ho Chi Minh City-based lender recently accepted the resignation of Cao Xuan Ninh, a member of Eximbank’s Board of Directors (BOD). Ninh was elected as a board member last mid-December, at Eximbank’s unusual general meeting. His tenure was supposed to end in 2020.
At the beginning of April, Eximbank’s stock (EIB) received a warning from the Ho Chi Minh City Stock Exchange for misleading its investors. Not long afterwards, Eximbank appointed Le Van Quyet as the bank’s new general director, pending approval from the State Bank of Vietnam.
Prior to his appointment, Quyet had only been a member of Eximbank’s BOD since December 15, 2015. He replaced Tran Tan Loc, who formerly served as the bank’s acting general director. Loc, meanwhile, has been assigned as Eximbank’s standing deputy general director.
Eximbank’s major shareholders include Japan’s Sumitomo Mitsui Banking Corporation, Vietcombank, and VinaCapital’s Vietnam Opportunity Fund, which hold 15.07, 8.24, and 4.99 per cent of the bank’s stakes, respectively. The remaining shares are held by private individuals.
In order to remove the warning that took effect on April 8, the bank has mapped out its business plan for 2016. Eximbank has set its pre-tax profit target at VND720 billion ($33.02 million) and its post-tax profit target at VND576 billion ($26.42 million). It also expects to recover a sum of VND298 billion ($13.66 million), as accounts receivable from a previous property sale.
Given the bank’s 2015 post-tax profit of VND576 billion ($26.2 million), factoring in the accounts receivable of VND298 billion ($13.54 million), and VND817.47 billion ($37.49 million) in accumulated losses, the bank will post an accumulated profit of VND57 billion ($2.61 million) for the year ending 2016, helping it to get from under its current injunction.
According to VinaCapital managing director Andy Ho, the bank will need some time to clear up its financial issues.
“Our investment standpoint is from a US perspective, meaning that they should gather up all the issues, replace personnel, and kick-start it all over again, instead of fleeing from their troubles or leaving them unattended. This is consistent with the bank’s present situation,” said Ho during an interview last week.
Ha Long catches eye of resort property developers
The breakthrough in infrastructure development in Quang Ninh Province, coupled with its immense tourism potential, has attracted a number of giant developers to Ha Long City.
The developers were pouring money into building resort properties, with promised irresistible returns of up to 9 per cent per year.
A series of giant infrastructure projects in the city were nearing completion, which would make travel from neighbouring provinces easier than ever before.
The projects included the VND13 trillion (US$580 million) Ha Long-Hai Phong Expressway, expected to be operational in 2017 and reduce travelling time from the capital city to less than two hours; upgraded highways connecting the city with Van Don and Mong Duong, worth a total of VND14 trillion; the VND10 trillion Tuan Chau International Tourism Port; and a VND 6.7 trillion airport in Van Don, whose investor had pledged it would begin operation in late 2017.
Over the past two decades, Ha Long has retained its position as an attractive tourism spot in the northern region, with Ha Long Bay recognised as a World Natural Heritage site. Last year, the province attracted nearly 8 million visitors, including 3 million foreigners. The growth in tourism revenue was at an average 20 per cent.
Nguyen Nam Son, chairman of Singapore-based Tanzanite International, said the best locations for the development of resort properties were places that were some two hours away by car from the major cities such as Ha Noi and HCM City, with a beautiful natural landscape, such as the sea shore.
All these factors were met in Ha Long, making it an ideal destination for investment in resort properties in the northern region, attracting giant developers, such as Vingroup, FLC, Sun Group and BIM Group.
Property expert Dang Hung Vo said there was immense potential for the development of resort properties in Viet Nam, with promising returns, He said profit could amount to 9 per cent per year.
Story of pioneer BIM Group
BIM Group was founded and diversified into a group with business interests ranging from food to property development by businessman Doan Quoc Viet. The group was the pioneer in property development in Ha Long City with some large-scale projects. Its first project here was the four-star Ha Long Plaza Hotel, the first four-star hotel in the city. The idea for the hotel arose after Viet’s trip to Hạ Long Bay in the early 1990s. Viet was then doing business in Poland.
After nearly two decades, BIM Group is now credited with a number of high-profile projects – the $2 billion Halong Marina Urban Area covering 248ha, along the Ha Long Beach, was its flagship project, designed as a mini replica on the lines of Australia’s Sydney Port.
The urban area consisted of a line-up of projects that provided not only quality living with all the amenities, but also investment opportunities.
One of projects was Van Lien (Lotus Residences), a luxury resort townhouse project at the prime Ha Long Marina area, with 159 environment-friendly townhouses and amenities such as an all-season swimming pool, a park and a children’s playground.
Lotus Residences opens for sale on April 23
On April 23, Syrena Viet Nam, a member of the diversified BIM Group in charge of property development, will join hands with the G5 Property Trading Floor Alliance to begin sale for the next phase of Lotus Residences in Ha Noi.
The developer has guaranteed a return of 8 per cent per year in the first three years of operation, if buyers join the rental pool, which is a management model in which developers and buyers share the expenses and the profits of Lotus Residences and 65 per cent of the rent profits from the following years.
Any deposits for purchases made in April and May will be given a 5 per cent discount from the before-tax price of the townhouses and a membership card of BIM Group’s luxury sports club Elite Passport worth VNĐ35 million. Early payment worth 95 per cent of the contract value will also get 5 per cent discount.
The previous sales saw a large number of buyers, with some 80 per cent of units on offer being sold, according to Syrena Viet Nam.
IFC expands TPBank credit line
The International Financial Corporation (IFC) under the World Bank has increased the credit line extended to TPBank from $10 million to $30 million, after five months of research.
The move expresses its appreciation of the bank’s business performance and is based on an assessment made in its Global Trade Finance Program.
TPBank became a medium-sized bank in 2015, with total assets of VND76.2 trillion ($3.41 billion), a 1.5-fold increase against 2014.
Over the years the bank has introduced many preferential interest rate programs and assisted Vietnamese enterprises, especially import and export enterprises, bolstering competitive capacity.
Thanks to the expanded credit line the bank can enlarge its assistance to small and medium-sized enterprises in Vietnam and provide more favorable conditions in conducting international trade.
In 2016 the bank targets to increase total assets by 20 per cent and pre-tax profits by 11 per cent and have about 1.5 million customers.
The IFC focuses on supporting the private sector in emerging economies. It has supported over 2,000 private enterprises around the world thanks to its professional capabilities and financial capacity.
In 2015 total long-term investment in developing countries by IFC stood at almost $18 billion, improving the capacity of the private sector and reducing poverty.
JLL: M&A to rocket in 2016
Merger and acquisition (M&A) activity in real estate has continued where it left off in 2015 with deal volumes increasing in the first three months of 2016 and many successful transactions made, said Mr. Stephen Wyatt, General Director of JLL Vietnam.
The market continues to see strong interest from foreign investors from South Korea, Japan and Singapore.
The most notable transaction in the first quarter was the deal between Keppel Land and the owners of Empire City in District 2, Ho Chi Minh City, where Keppel Land acquired 40 per cent in a deal worth $93.9 million.
There were many transactions in investment assets (core producing properties), such as A&B Tower (Ho Chi Minh City), The Nam Hai Resort (Quang Nam province), TNR Tower (Hanoi), and Six Senses Con Dao Resort (Ba Ria Vung Tau province).
A&B Tower in Ho Chi Minh City has attracted much attention from the market due to the good quality of the office building and the fact that asset trades have been rare in District 1.
There are also many M&A deals in development sites between foreign and local developers.
“We expect M&A activity to improve through 2016 with more transactions over the remainder of the year thanks to a combination of an improved property market, positive changes in legislation, and soft conditions in other countries in the region,” said Mr. Wyatt.
2015 was seen as the year of M&A. Mr. Wyatt also told VET that foreign investors are prepared to look at a number of ways to invest in Vietnam. “Their main criteria for looking at opportunities will depend on location, deal size, ownership structure, the remaining term of the lease, the quality and track record of the joint venture partner, and any outstanding legal issues, and above all the acquisition will have to be viable, as it is unlikely any foreign investor will pay above market value for an asset, unless it is a ‘trophy asset’ or has the potential to add significant value by proactive asset management or has a potential upside from improvements in infrastructure,” he said.
Banking and insurance services attract more complaints
Consumer complaints about financial, banking and insurance services increased and ranked second after consumer goods in the first quarter of 2016, according to the Vietnam Competition Authority under the Ministry of Industry and Trade.
The authority said it received 1,406 telephone calls via its 1800.6838 Private Branch Exchange (PBX) launched for consumers in the January-March period. Of which, 849 calls were answered by operators and the remainder were replied by email and SMS texting.
In the period, more complaints about daily consumer goods were reported to the authority with 56 cases or 22.3% of the total. The group of financial, banking and insurance services came second with 31 cases, followed by telephone and telecommunications with 30 cases.
The number of complaints about financial, banking and insurance services sent to the PBX is on the rise, as more people have been annoyed by telephone calls from employees of credit institutions and insurance companies to introduce consumer loans and insurance products.
The authority got many complaints about the groups of household electronic appliances and transport services. Other groups with few or no complaints included office equipment, Internet connections, mobile networks, and packaged and processed food.
The authority said 25% of 251 requests and complaints sent to it in quarter one were related to information about consumer protection and infringements of consumer rights, followed by complaints about product delivery quantity, quality and time with 23%, warranty and information provision with 18%, and contracts with 10%.
There were more complaints about violations of consumer interests and rights in Hanoi and HCMC in the first quarter of 2016 than in Thanh Hoa, Binh Duong, Ba Ria-Vung Tau and other localities.
The agency handled 44 complaints by documents sent via email, post and direct contact. There were cases with the participation of many consumers and one of them was about the suspension of contract renewal by a life insurance company.
IP should be part of businesses’ development strategies
Businesses need to be fully aware of the importance of intellectual property (IP) and make it a critical part of their development strategies, especially when the country is now a member of the Trans-Pacific Partnership (TPP).
TPP, the world’s biggest free trade agreement with its 12 member countries making up 40 percent of the global economy, has an IP chapter that covers patents, industrial designs, trademarks, geographical indications, copyrights, among others.
Vietnam’s efforts to protect IP rights have yet to meet the real demand as well as international commitments, Deputy Minister of Science and Technology Tran Viet Thanh said at a discussion in Hanoi on April 20.
Thanh said the country has implemented IP rights from the central to grassroots levels with such programmes as the one on fighting smuggling, trade fraud and counterfeits, and the other on preventing IP infringements.
However, the violation of IP rights is still rising and becomes more complicated, he emphasised.
The market control force has dealt with more than 22,400 cases relating to fake and low-quality goods and IP rights violation, said Pham Van Toan – Deputy Chief Inspector of the Science and Technology Ministry (MoST).
Of the figure, MoST inspectors have handled 752 cases and fined 344 violating organisations while their counterparts in the culture, sports and tourism ministry have tackled 419 cases and fined 384 violators.
As a TPP member, Vietnam must realise the commitments on IP rights, foreign investment, environment and labour standards, competition and State-owned enterprises, and the settlement of disputes, Deputy Minister Thanh noted.
To promote the law enforcement’s effectiveness, Toan stressed the need for aligning relevant legal documents, such as the Law on Intellectual Property, the Penal Code, the Law on Customs and the Law on Pharmaceuticals, with the reality and international commitments.
While the law enforcement staff should receive intensive training, inspections and the punishment of violations must be strengthened, he added.
At the discussion, many insiders called on companies to survey the market regularly to timely detect any violations of their IP rights.
The function, held by the MoST and the Vietnam Chamber of Commerce and Industry, was among activities in response to the World Intellectual Property Day (April 26).
Kim Lan commune gains foothold in ceramics market
Kim Lan, a commune on the outskirts of Hanoi, has taken steps to escape from the shadow of the renowned Bat Trang ceramic village and establish itself as a prestigious pottery producer.
According to archaeologists and historians, the making of ceramics in Kim Lan dates back more than 1,000 years. The craft there reached its peak around the 13th and 14th centuries, making the village a pottery production centre for the capital city of Thang Long (now Hanoi).
Kim Lan ceramics such as roof tiles, decorative bricks and blue and white enamelled wares were high-end products in the past. They were possibly shipped abroad as patterns on ceramic pieces found in the Philippines and Indonesia are similar to those on the village’s products under the Tran Dynasty (from the 13th – 14th century), archaeologists say.
Despite this storied history, pottery making in Kim Lan was on the decline a long time.
This was partly because of the village’s abundance of farmland which pushed natives towards farming. Those who wanted to continue the craft moved to neighbouring Bat Trang village.
Vice Chairman of the Kim Lan communal People’s Committee Nguyen Tien Mung added Bat Trang boasts many advantages such as location and transport links that Kim Lan did not have.
Most pottery makers in his commune worked separately and were not skilled at marketing, making local ceramics almost unknown, he noted.
The production of ceramics has been revived in Kim Lan over the last three decades. Now, the commune is home to 240 ceramics making families. Their ceramics and porcelain make up 60 percent of local economic production value.
Nguyen Chi Phuong, a ceramics workshop owner, said although the quality was the same, Bat Trang products were sold at higher prices.
He said he used to be discouraged because of weak sales, low productivity and high labour costs.
However, Phuong tried to create his own new designs, unlike many other families who produce ceramics with the same designs. He also does not sell his products all year round but only during four months ahead of the Lunar New Year.
Tu, a worker at Phuong’s workshop, said selling products then can prevent other makers from copying their designs as purchasing power usually increases in the run up to the year’s biggest festival.
Their ceramics are also marked with their own brand, instead of “Bat Trang” like in the past, to build up prestige for the workshop and Kim Lan.
Residents in Kim Lan specialise in making ceramics for daily use such as bowls, plates, flowerpots and vases, as well as for construction like bricks and roof tiles.
Kim Lan Vice Chairman Nguyen Tien Mung said the communal administration has zoned 4.9ha of land for ceramics manufacturing and will build a product promotion centre.
The local potters’ association has also designed a logo for Kim Lan ceramics so that their products are sold with their true origin, not under the name of “Bat Trang” any more, he added.
Communication work should be stepped up to promote national brand
Deputy Minister of Industry and Trade Do Thang Hai has lauded the media’s role in promoting made-in-Vietnam products and services both at home and abroad.
Through cooperation agreements signed with leading news agencies and newspapers such as Vietnam Television, Radio the Voice of Vietnam, the Vietnam News Agency and Vietnam Economic Times, the ministry’s Trade Promotion Agency, as the Secretariat of the National Branding Programme, has carried out a number of activities to raise consumers’ confidence in Vietnamese goods, the official said at a forum in Hanoi on April 20.
Building a national brand to gain a position in the world market in the context of international integration is a right track, he affirmed.
The move requires time and a specific roadmap as well as endeavours of ministries, agencies, associations, localities and enterprises themselves, Hai noted.
The agency has exerted great efforts to support businesses in promoting their goods and services on par with the country’s new position in the world, he said.
Nguyen Thi Thu Hien, Managing Director of the Hanoi Trade Corporation (Hapro), described national branding development as a way to help raise enterprises’ position in a long term.
After being recognised as a national brand, Hapro has rolled out a specific plan with the aim of popularising the national brand “Vietnam Value” among the community, she said.
Bui The Duc, deputy head of the Party Central Committee’s Information and Education Commission, suggested stepping up communication work in the time ahead to promote Vietnamese goods and services, explaining that many Vietnamese exporters have been unaware of building and protecting their own brand names.
Moreover, Vietnamese brands have lost their advantages right in the domestic market due to the flood of foreign rivals.
The National Branding Programme, also known as “Vietnam Value”, is an initiative of the Government to promote the country’s image through well-branded Vietnamese products and services.
It is a long-term trade promotion programme to foster domestic and worldwide recognition of trade names, geographical indicators and appellation of origin to services and products made in the country.
A major mission of the programme is supporting Vietnamese export products under the Vietnam brand so they become more competitive in the global market.-
Hoa Phat to build 180 mln USD plated-steel sheet plant
Hoa Phat Group (HPG) has decided to invest about 4 trillion VND (180 million USD) in building a plated steel sheet plant in the Pho Noi A Industrial Park, the northern province of Hung Yen.
The project aims to diversify products of the firm and meet increasing demand for plated steel sheets in the market as well as provide materials for its steel pipe factories in Hung Yen.
Construction of the plant is scheduled to be commenced next month and completed in early 2018. It will use advanced technologies of Italy, Japan and Germany, a group representative said.
HPG was named in the Top 10 highly trusted performance enterprises of Vietnam in 2015 by the Enterprise Credit Rating Appraise Science Centre thanks to its steady achievements and great contributions to the national economic development.
It also received many prestigious awards such as top five largest private enterprises in Vietnam, Top 50 enterprises with outstanding business achievements in the ranking V1000, and Top 50 most expensive enterprises.
Last year, the group posted 27.8 trillion VND (1.34 billion USD) in revenue and 3.5 trillion VND (155.6 million USD) in post-tax profit. It contributed 2.76 trillion VND to the State budget, up nearly 26 percent compared to 2014.
SOE equitisation sped up to increase competitiveness
The equitisation of State-owned enterprises (SOE) should be accelerated in an effort to cut the number of SOEs in 2015 by half to about 200 during 2016-2020.
According to the Department of Enterprise Finance under the Ministry of Finance, SOEs need to improve administrative capacity, transparency, and competitiveness to meet the requirements of the market and ASEAN integration.
Dang Quyet Tien, Deputy Head of the department, said the SOE equitisation requires a specific roadmap with focus on quality, meaning that after the process, businesses will operate more effectively with higher competitiveness.
The equitisation in 2014-2015 saw the strong engagement of the private economic sector. Major local private businesses competed with foreign investors to acquire shares in State-owned firms such as Quang Ninh, Sai Gon and Hai Phong ports.
He revealed that as many as 30 SOEs carried out equitisation and reforms by the end of March this year and a number of big firms, including the Vietnam Rubber Group, the Power Generation Corporation 3 under the Electricity of Vietnam (EVN) and the Mobifone Corporation, will speed up the process in 2016.
However, representatives from the Vietnam National Oil and Gas Group (PVN) and the Vietnam National Coal and Mineral Industries Groups (Vinacomin) said equitisation in key industries such as electricity, oil and gas, and petrochemistry is facing hindrances in finding strategic shareholders since it requires a large amount of capital while the State still owns a high proportion of capital in those sectors.
Minister of Finance Dinh Tien Dung said related policies should be completed soon as economic groups, State-owned corporations, and large scale firms are confronting several difficulties during the equitisation process.
MoIT proposes Philippines boost rice purchases
The Ministry of Industry and Trade (MoIT) has asked the Philippine government to boost its imports of rice and give priority to renegotiating a government to government trade deal set to expire at the end of the year.
At a recent conference, Minister Tran Tuan Anh of the MoIT told Secretary Fredelita C Guiza, the new Presidential Assistant for Food Security and Agricultural Modernization, that fresh demand from the Philippines is important to help underpin export prices in the region.
The National Food Authority (NFA), said Minister Anh, has been given standby authority to import up to half a million metric tons of rice to boost the Philippines reserves and mitigate the impact of an El Nino-linked drought on food supply.
The new allowance can only be purchased from Vietnam, Thailand or Cambodia and is on top of the 750,000 metric tons bought by the NFA from Vietnam and Thailand and shipped within the past six months, said Minister Anh.
Rice trade in Vietnam has been slim in recent days as high prices have kept buyers at bay. Vietnam has also been hit by severe droughts, putting more pressure on its limited supply.
Minister Anh said the Philippines annual rice imports from Vietnam last year was roughly 1 million metric tons far in excess of year-to-date current year purchases and the time is ripe to boost imports and negotiate a long-tern rice deal.
Vietnam copes with free, fair trade and anti-dumping
Trade remedies are trade policy tools that allow foreign governments to take remedial action against imports from Vietnam thus causing irreparable material injury to a domestic industry.
Such remedies, said Nguyen Chi Mai, head of the Vietnam Competition Authority (VCA), are divided broadly into three types – anti-dumping actions, countervailing duty measures, and safeguard actions.
At a recent seminar in Hanoi discussing trade remedies and their impact on exports Mr Mai underscored the point that each of these remedies is triggered in response to different situations— but anti-dumping actions are by far the most common.
“One recent study showed that right at 88% of all trade remedy actions involve anti-dumping,” said Mr Hai, so it is very important that all local businesses thoroughly grasp the basics of this type of action.
The World Trade Organization (WTO) Anti-Dumping Agreement and the General Agreement on Tariffs and Trade 1994 (GATT 1994), allow foreign countries to take action against Vietnamese imports that are allegedly being ‘dumped’.
“The action is technically undertaken in response to an application from one or more companies within an industry in the foreign country alleging injurious dumped imports,” said Mr Hai.
A local company is said to be ‘dumping’ when it sells its product at a price lower than its normal selling price in the export market, said Mr Hai, and it is important to note that the cost of producing the product by the local company is not relevant to the determination.
Many local companies are under the false impression that if they can produce a product at a significantly lower cost in Vietnam, they can then sell that product at a much lower selling price in the foreign market
Their thinking, on the one hand, is that demand is elastic and a lower sales price will inevitably result in higher gross revenues and bottom line earnings and that the lower price gives them a competitive advantage, said Mr Hai.
Unfortunately, that thinking is totally incorrect. If a local company sells its product in a market below the normal selling price for that product in the export market, then that by WTO and GATT 1994 definition is dumping.
Provided, of course, the complaining companies in the export market can prove their damages. Further, damages by those companies, if proven, is legally presumed to be the same as damage to the industry in the export market.
Markets that are the most litigious when it comes to filing anti-dumping actions are the US, EU, India, Argentina, Australia and Brazil, said Mr Hai. While countries that have had the most actions lodged against them are China, the Republic of Korea, the US and Taiwan.
Citing official statistics of the government, Mr Hai said, through 2015, 98 trade remedial actions have been lodged against Vietnam with 59 of them classified as anti-dumping cases.
Many anti-dumping actions filed by countries regarding exports by local companies are the result of their use as – non-tariff trade barriers – and are baseless and filed solely as a means of impeding competition from Vietnam, sad Mr Hai.
At the seminar, Nguyen Phuong Nam of the VCA spoke about the procedural steps for local companies in responding to an anti-dumping action filed against them and steps in preparing information needed to file an effective defence.
Mr Nam said local companies should learn as much about issues related to trade defence and how to utilize the VCA Early Warning System on these types of cases, to avoid the lodging of actions against them.
The seminar on free trade versus fair trade and the effective use of trade defence remedies to protect domestic production was organized by the VCA and is part of its continuing series of seminars on trade related issues.
Vietnamese construction group opens first showroom in Cuba
The Vietnam Glass and Ceramics for Construction Corporation (Viglacera) recently inaugurated its first showroom under the Cuban Ministry of Construction’s Escambray chain stores, in the capital of Havana, according to Viglacera General Director Nguyen Anh Tuan.
With the aim to bring more Viglacera construction products to Cuban people, the corporation will continue introducing its products at 15 outlets of the Escambray chain, he added.
The Vietnamese firm recently participated in the 11th International Construction Fair (FECONS 2016), in Havana.
Viglacera exhibited products including sanitary wares, ceramic tiles, glass for construction and showers.
Vietnam is the second largest Asian trade partner of Cuba, with two-way trade value exceeding 205 million USD in 2014.
Rice and aquatic products are among Vietnamese key exports to Cuba.
Circular being drafted on venture capital for start-ups
The Ministry of Planning and Investment was drafting a circular on a venture capital fund to create a legal framework for promoting start-ups and make Vietnam a start-up nation.
The draft, which is now being raised for public comments, would regulate the establishment, management and operation of venture capital funds for start-ups in Vietnam.
The draft circular said that venture capital into start-ups was defined by investors contributing funds in a start-up or by buying stakes to launch the business or increasing equity when the business had not earned a pre-tax profit.
It would take only three days to launch a venture capital fund in Vietnam, according to the draft circular.
In addition, the operation of a venture capital fund would not apply regulations on the equity investment fund. A venture capital fund could raise additional capital from existing members or new members but would not be allowed to borrow money for investments.
The draft circular was raised amidst conditions that the wave of start-ups in Vietnam were in their infancy with several successful examples which managed to raise money from foreign venture capitalists. However, a majority of Vietnamese start-ups were still struggling to find funding.
The draft would trigger a wave of venture capital funds, especially from the private sector, in start-ups, according to the ministry’s Agency for Enterprise Development (AED).
The AED said that while success stories of Apple, Facebook and Uber were proving that start-ups were changing the world and creating huge economic values, Vietnam saw start-up as a new driver for growth which relied on innovations rather than by undermining natural resources, labour and capital.
“Capital is a pre-requisite for the success of any start-up business,” the AED said, and added that raising capital for start-ups was critical, while borrowing money from banks was an impossibility for start-ups which had not earned profits.
However, the AED said that the presence of venture capital funds was modest in the country. Foreign funds like CyberAgent, 500 Startups, and Golden Gate Ventures had just opened offices in Vietnam while local banks were not interested in funding small projects and start-ups.
FPT Venture appeared the most active among domestic funds in investing in start-ups, providing funding for some 10 start-ups each year.
“The demand for capital to launch a start-up is still large,” the AED said.
According to the AED, Vietnamese start-up companies mainly got funding from angel investors who invested in the early stage of a business start-up, often with a sum of between 5,000 USD and 50,000 USD in exchange for equity ownership interest following the laws on Enterprise and Investment.
Facts showed that many angel investors wanted to start a fund for start-ups but the requirements for the foundation of an investment fund following the Law on Securities were very strict. In addition, an equity investment fund and venture capital fund were different, the AED said. The former invested in firms with revenues, profits or those listed on the stock exchange, while the latter provided seed funding in the early-stage of start-up firms with perceived long-term growth potential.
So, the securities law could not be applied to venture capital, the AED said.
“It is necessary to develop a legal framework for venture capitalists to promote funding for start-ups that did not have access to capital markets,” the AED said.
At a conference on improving national competitiveness, Nguyen Quoc Toan, Deputy Head of the Party Central Committee’s Economic Commission, said that funds for start-up businesses should be developed to promote innovations and help develop a start-up nation.
Deputy Prime Minister Vu Duc Dam said at the National Start-Up workshop held on March 30 that the Vietnamese Government was willing to invest and join hands with private investors to support the national start-up community.
Vietnam attends ASEAN-Mercosur trade dialogue
Representatives from the Vietnamese Embassy in Argentina on April 15 participated in a round of talks between the Association of Southeast Asian Nations (ASEAN) and the Southern Common Market (Mercosur) with the aim to boost the two blocs’ trade.
The event was held by the Federation of Medium Enterprises in Argentina (CAME) and the Mercosur-ASEAN Chamber of Commerce in Tucuman province, Argentina .
At the event, Vietnamese Commercial Attaché in Argentina Nguyen Thi Thanh Van along with representatives from Indonesia and the Philippines discussed with Argentine and Uruguayan businesses on trade and investment opportunities.
The Vietnamese representative briefed participants on Vietnam ’s active role in ASEAN as well as informed them of the country’s 6.7 percent average growth rate over more than two decades.
Meanwhile, Argentine and Uruguayan businessmen showed their interests in knowing about the laws for foreign investment in Vietnam .
They also expressed wishes to import coffee, rubber, tires, motorbikes, bicycles, and wooden products from Vietnam as well as shipping wine, beef, flour, juices, and cattle breeding products to the Asian country.
Argentina is one of the three Latin American countries (together with Mexico and Brazil ) whose trade value with Vietnam exceeds 1 billion USD.
In 2015, two-way trade hit more than 2.5 billion USD, up 34 percent from 2014.
In the first quarter of this year, Vietnam ’s export turnover to Argentina reached 220 million USD, an increase of 134 percent from the same period last year.
Meanwhile, bilateral trade between Vietnam and Uruguay was 124 million USD in 2014, of which Vietnam ’s exports were valued at 41 million USD.
Created in 1991, Mercosur is a sub-regional bloc grouping Brazil , Argentina , Uruguay , Venezuela and Paraguay .
Mercosur is currently the fifth world economic power with a GDP of 3.3 trillion USD and represents 83 percent of total GDP in South America . The bloc’s internal trade reaches 62 billion USD annually.
Meanwhile, ASEAN, established in 1967, consists of Malaysia , Indonesia , Brunei , Cambodia , Laos , Myanmar , Singapore , Thailand , the Philippines and Vietnam.
Japanese investors enter Vietnam’s individual housing market
An individual housing project, called Fuji Residence, will be developed in District 9, Ho Chi Minh City after Nam Long Group and partnership investors Hankyu Realty and Nishi Nippon Railroad signed a Memorandum of Understanding (MoU) on April 15.
Accordingly, the two Japanese investors will buy 50 percent of the capital poured into the project by ASPL-PLB-Nam Long, a subsidiary company of Nam Long Group while sharing costs with the Vietnamese enterprise to build the project.
Covering an area of 5.38 hectares, Fuji Residence, built at a total cost of 1.3 trillion VND (58.3 million USD), will have 84 Valora villas and 789 Flora apartments, located along Rach Chiec River.
According to a representative of the Japanese investors, along with a favourable transport system, an attractive real estate market in Ho Chi Minh City is a compelling reason for Japanese businesses to land investment in the city.
Vietnam makes good use of WTO chances: WTO head
Vietnam has made good use of opportunities brought about by the country’s membership of the World Trade Organisation (WTO), according to WTO Director General Roberto Azevedo.
Speaking at a dialogue with Vietnamese businesses during his official visit to Vietnam on April 15, Azevedo said Vietnam is among members having benefited the most from the WTO, earning around 3.6 billion USD as a result of WTO assistance.
He underlined remarkable changes in Vietnam both before and after it joined the WTO, citing noteworthy trade liberation, lower taxes and positive reforms in the service sector. The enforcement and protection of intellectual property has also been improved clearly, he said, adding that the Vietnamese government has taken steps to modernize the economy and create a more attractive and favourable business environment.
With all those moves, Vietnam has enhanced its prestige among the international business community, which it would not have achieved without joining the WTO, Azevedo said. He added that WTO membership also helps Vietnam avoid trade protection measures and non-trade barriers which are on the rise.
Sharing this view, Deputy Minister of Industry and Trade Tran Quoc Khanh reported that Vietnam’s foreign trade value has risen threefold since its WTO accession, while substantial changes have been seen in the country’s institutional environment.
Chairman of the Vietnam Chamber of Commerce and Industry Vu Tien Loc affirmed that accession to the WTO forced Vietnam to follow world standards.
According to the WTO Director General, Vietnam is on the right track in the process of international integration and trade liberalization. He appreciated Vietnam’s efforts to join regional and bilateral free trade agreements alongside the multilateral trade institution of the WTO.
Multilateral and bilateral mechanisms will supplement each other and assist with Vietnam’s integration process, he said, adding that there is no other choice for Vietnam than to strive to meet world trade standards.
Tourism association moves to ensure tourist etiquette observed
The Vietnam Tourism Association (VITA) officially launched a campaign that looks to encourage outbound Vietnamese tourists to observe tourism etiquette, in Hanoi, on April 16.
The event, participated by over 2,000 students majoring in tourism, formed part of the ongoing Vietnam International Travel Mart 2016.
Vu The Binh, VITA Vice President, said some outbound Vietnamese tourists have recently been committing uncivilised social behavior, which could adversely impact the tourism sector in particular, and the country’s image generally.
In 2015, more than 6 million Vietnamese holidayed abroad. However, a lack of consultation and guidance allowed the tourists to bring such bad-mannered habits overseas as public nuisance, littering, food waste, inappropriate clothing, shoplifting and queue-jumping.
Such uncouth habits will harm Vietnam’s image in the eyes of international friends, especially when the country is involved in the global economic integration process, Binh said.
VITA has worked with the Vietnam Administration of Tourism to craft a document guiding required manners and etiquette for Vietnamese holidaymakers when travelling in and outside of the country.
The document will soon be submitted to the Ministry of Culture, Sports and Tourism for publication.-