Hiep Phuoc IP to be expanded

The city government has allowed Hiep Phuoc Industrial Park Joint Stock Company (HIPC) to lease more than 231,000 square meters of land for infrastructure development as part of an expansion project for phase two of Hiep Phuoc Industrial Park (IP).

The land lease will last until September 23, 2058. The city government told Nha Be District to withdraw land to make room for the expansion project.

As zoned, the second phase of Hiep Phuoc IP covers 597 hectares in Hiep Phuoc Commune in Nha Be. It will be developed at a cost of VND5 trillion (US$224.3 million) for enterprises operating in the building material production, mechanical engineering, electronics, food processing, port services, transport, and warehousing sectors.

Earlier, HIPC completed infrastructure development for the first phase of the IP on 331.4 hectares and invested heavily in power and water supply, wastewater and solid waste treatment, medical service, telecom, and accommodation facilities.

The first phase of the IP attracted 97 foreign and domestic investment projects worth US$391.5 million and almost VND7.7 trillion. These projects are in the chemical, building material, textile, steel production, and mechanical engineering sectors.

The park is home to Saigon Premier Container Terminal (SPCT), a deep-water port which can handle ships of over 50,000 DWT. Besides, Tan Cang-Hiep Phuoc Port covering 15.4 hectares in the industrial park has a 420-meter main pier and can receive 30,000-DWT ships.

Vietnam attends 2016 Boao forum

Deputy Prime Minister and Foreign Minister Pham Binh Minh is leading a Vietnamese delegation to the 2016 Boao Forum for Asia (BFA), which opened on March 22 in Boao city, China’s Hainan province.

The forum, themed “Asia’s New Future: New Dynamics, New Vision”, is expected to voice hot issues related to artificial intelligence and “Internet Plus”. High on its agenda is China’s 13th Five Year Plan for the 2016-2020 period and the country’s pursuit of supply-side reform.

As innovation and startups have heated up the economy, leading start-ups in traditional and emerging areas will share their experience at ten dialogues to be held in the framework of the forum.

A sports industry sub-forum is scheduled for the first time at the BFA, alongside 15 roundtables among business leaders and their bilateral dialogues.

The BFA is a non-governmental and non-profit international organisation with a fixed conference date and fixed domicile. The forum has won great support from Asian countries and drawn extensive attention from the whole world.

The purpose of the BFA is to promote economic exchange, coordination and cooperation within Asia and between Asia and other parts of the world. It also aims to offer a high-end dialog platform for governments, enterprises, experts and scholars to jointly discuss economic, societal, environmental and other issues.

Through its working network with the political, business and academic circles, the BFA will serve the ever-growing economic ties among its members and between its members and other entities.

VN firms need to work hard to maximise opportunities from TPP

Hiep Phuoc IP to be expanded, VN firms need to work hard to maximise opportunities from TPP, Forum on support industry to take place in Hanoi, Vietnam aims to fine-tune national power development

The Trans-Pacific Partnership agreement would bring opportunities for Việt Nam, but they would not by themselves turn into benefits or market strength, Deputy Minister of Industry and Trade Trần Quốc Khánh has said.

It would depend much on how Việt Nam takes advantage of the pact and copes with related problems, and only with appropriate efforts would the country be able to achieve its potential and overcome challenges, Khánh, who was the head of Việt Nam’s TPP negotiation delegation, said.

Speaking at the “TTP Dialogue – Envisioned growth opportunities for businesses in Việt Nam” conference yesterday, he said the TPP would facilitate trade with and investment in the 12 countries involved in the pact, who account for 40 per cent of the world’s GDP.

It would help attract more foreign investors to Việt Nam for setting up their production chains, enable the nation to become a part of their manufacturing and supply chain base, and help Vietnamese firms become part of the chains, he said.

Besides investment and trade commitments, the new generation free trade agreement requires much higher standards of international compliance, including creating a fair and non-discriminatory business environment, which would help create a sound trade and investment environment in the country, he said.

Trần Đắc Sinh, chairman of the HCM Stock Exchange, said the TPP is expected to benefit the bourse as companies, including in the supporting industries, take advantage of trade benefits.

Portfolio investment from abroad would also increase sharply, creating a momentum for market growth, he said.

Khánh said: “Several studies have found that the TPP would create huge economic opportunities for Việt Nam, but these researches were based on the premise ‘with other conditions remaining stable’.

“If the world economy suddenly faces difficulty, our economy will be affected.

“Opportunities cannot by themselves turn into benefits; it depends on the efforts made by all: the more you prepare, the more successful you will be.”

Besides, opportunities always go hand in hand with challenges due to fierce competition, and businesses need to be courageous to compete and should take the initiative to innovate to improve their competitiveness, he said.

“Businesses should not compete only on price, but also quality and prestige.”

He urged Vietnamese firms to focus on improving their management and adopt modern marketing methods.

To enjoy the benefits of TPP, Vietnamese goods would have to comply with regulations on origins, quality, and others, he said.

For instance, the “yarn-forward” rule in the garment and textile sector could be a challenge in the short term, but in the long term it would help the domestic industry develop a complete supply chain, he said.

In the last two years investment in the fibre and yarn making has shot up, equalling the entire previous investment, he said.

Nguyễn Công Ái, deputy general director of KPMG, said, “A number of Taiwanese and South Korean investors have poured hundreds of millions of dollars in Việt Nam’s textile and dyeing sectors.”

Local companies have also stepped up investment in the sectors, he said, adding they have done extensive studies to thoroughly understand the “yarn-forward” rule to capitalise on opportunities to boost exports to markets like the US and Japan when the TPP comes into effect, he said.

The seminar was organised by the Việt Nam Chamber of Commerce and Industry in collaboration with KPMG and HOSE.

On the sidelines of the second Việt Nam International Advertising Equipment and Technology Exhibition, or VietAd 2016, which opened at Hà Nội Exhibition Centre yesterday, local experts spoke about benefits and challenges for local companies in advertising industry when the TPP comes into effect.

Nguyễn Thanh Đảo, general secretary of the HCM City Advertising Association (HAA), said that the TPP agreement would bring opportunities for the northern advertising firms to exchange and study new technology in this field.

Nguyễn Tiến Thành, manager of ASEAN Import-export and Technology JSC told Viet Nam News that now domestic ad firms have more opportunity to work with local and foreign companies. Currently, 80 per cent of equipment and products were imported from China and Japan. In the near future, they planned to import equipment from other advanced countries. Thanh said the company hoped the TPP agreement would help importers get more incentives on import tariffs.

According to industry insiders, Việt Nam’s advertising industry is still young compared with other countries in the area in terms of creativity and equipment, but 90 per cent of equipment is imported currently.

The Việt Nam Advertising Association reports the advertising industry’s annual revenue is estimated at around US$1 billion.

Vietjet increases frequencies to meet rising summer demand

Low-budget carrier Vietjet will offer more than 5,000 flights to meet the increasing travel demand during the summer while launching a golden week promotion from March 28 to April 3.

Under “It’s 12, Let’s Vietjet!” campaign, the promotion will provide customers with 2 million discounted air fares priced from zero dollars. It applies to all domestic routes and for travel from April 1 to December 31 (excluding holidays).

The airline will also increase flight frequencies for a number of routes including HCM City to Hanoi, which will have 25 daily return flights in total, HCM City to Da Nang with 13 daily return flights, HCM City to Phu Quoc with six daily return flights and HCM City – Nha Trang with five daily return flights.

The routes from Hanoi to Da Nang and Nha Trang will have 15 daily return flights and five daily return flights, respectively.

Meanwhile, the international routes from HCM City to Chinese Taipei will also have two return trips per day from June 18. The HCM City-Singapore route will also have two return flights a day and HCM City – Bangkok (three return flights) and Hanoi-Bangkok (two return flights a day).

Vietjet is the first airline in Viet Nam to operate as a new-age airline with low-cost and diversified services to meet customers’ demands. It provides not only transport services but also uses the latest e-commerce technologies to offer various products and services for consumers.

Winds of change threaten Asia Pacific businesses

The accelerating pace of change, together with its complexity in the Asia-Pacific region, is leaving businesses unprepared and feeling threatened.

According to the Nielsen report Asia 2020 Progressing, Prepared or Pessimistic, which sought opinions from senior leaders across the Asia Pacific business community on the winds of change, eight in 10 believe that they will have to conquer major change in the next five years.

Altering consumer preferences, regulations, taxation policies, as well as legislative or political changes, economic development, and new competitors are among the events most commonly anticipated by the business community.

“The pace of change is accelerating, and nowhere is that pace more exponential than in the Asia Pacific,” said Regan Leggett, Nielsen’s executive director, Southeast Asia, North Asia and Pacific.

Regardless of the nature of such challenges, the survey warns that businessmen in the region are not yet ready to tackle change. Specifically, 43 per cent of respondents are not confident that they can spot early indicators, while a massive 78 per cent feel that they will have to significantly alter their business models in five years to keep pace with the change. Moreover, six out of 10 leaders feel threatened by innovative competitors.

Despite the difficulties on the horizon, the majority of business leaders (58 per cent) from across the region believe that trade agreements, such as the ASEAN agenda or the Trans-Pacific Partnership (TPP), will have a positive impact, while one in three believes it will have little or no impact on the business environment in the future.

Regional and cross-country agreements, such as the ASEAN Economic Community or the TPP, and other bilateral/unilateral exchanges are already being discussed and implemented, which will allow organisations to compete in more countries, regardless of their origin. Those previously enjoying a protected industry or marketplace will have to face local competition, while others will be able to look for expansion opportunities in other markets.

Among leaders looking to expand their businesses in new, dynamically growing overseas markets, Vietnam, Indonesia, and China are the most common priority targets.

In addition, eight in 10 respondents anticipate technology to influence business organisations. Half of the business leaders believe e-commerce will contribute 30 per cent or more of their organisation’s growth by 2020, and a further 32 per cent think e-commerce will capture more than 20 per cent of total sales for their organisation over the next five years.

Labour productivity critical for growth: minister

Improving labour productivity is now critical for Việt Nam to boost gross domestic product (GDP) per capita to become an industrialised and upper-middle income nation in the next two decades.

Minister of Planning and Investment Bùi Quang Vinh said that with an ambitious goal of achieving a GDP growth rate of 7 per cent to 8 per cent set in the Socio-economic Development Strategy in the 2011-2020 period, the Southeast Asian country must shift its economic growth model from extensive to intensive, and the core issue in the transition process was improving labour productivity.

According to Nguyễn Quốc Việt from the Việt Nam National University’s University of Economics and Business, limitations of an extensive economic growth model which are based on the expansion of the quantity of inputs such as capital, labour, and resources, were hindering the implementation of economic stimulus policies.

Việt wrote in a story published on that the capital now contributed around 60 per cent to GDP growth while total factor productivity (TFP) contributed about 25 per cent, compared to the rate of 50 per cent in developed economies.

An analysis by the General Statistics Office (GSO) said that labour productivity of Việt Nam remained lower than other countries in the region and was uneven between industries. The statistics office said that the gaps between labour productivity based on purchasing power parity in 2005 of Việt Nam were widened during 1994 to 2013 period with Asean+4 countries, including Singapore, Malaysia, Thailand and Indonesia by between 50 per cent, 43 per cent, 17 per cent and 7 per cent, respectively.

The Statistics office said that this was due to the slow economic growth model transition, with labour in the farming sector accounting for a large percentage with low productivity.

According to Nguyễn Thị Hương, Director of GSO’s Agricultural Statistics, many labour-intensive industries such as the farming sector had low added value, resulting in low productivity.

The 12th National Party Congress’s documents also pointed out problems of the Vietnamese economy. There was heavy dependence on investments for growth, low-skilled labour, modest application of science and technology, and slow improvement in productivity.

Improving labour productivity and growth quality were the two most important issues for Việt Nam with regard to macroeconomic stability, economic efficiency and sustainable development, experts said.

“Increasing labour productivity is the only way to reach a GDP per capita between US$15,000 and $18,000 by 2035,” Vinh said.

The TFP of Việt Nam must be increased to around 35 per cent to enable the country to fulfil its goals by 2020.

An economic expert said that one solution to enhancing labour productivity was shifting to sectors with high content of science and technology and high added value from sectors such as support, IT and processing.

Developing the private economic sector was also important to drive the development of a skilled labour market and improve management capacity, which would contribute to boosting productivity.

The report “Việt Nam 2035: Toward Prosperity, Creativity, Equity and Democracy” last month in co-ordination of the Vietnamese government and the World Bank said that improving productivity was essential for the country to reach upper-middle income status by 2035.

Christine Largarde, managing director of the International Monetary Fund, at a meeting with students of the National Economics University last week urged Việt Nam to boost labour productivity, adding that local SOEs and private companies currently have very low productivity, which is only about one-fifth of that of foreign-invested firms.

VINA-BAT’s new plant in Mekong Delta hopes to repel low-quality smuggled tobacco

VINA-BAT, a joint venture between the Viet Nam Tobacco Corporation and BAT Group, one of the world’s four biggest tobacco companies, has begun construction of a tobacco plant in the Cuu Long (Mekong) Delta province of Kien Giang.

The plant is expected to support the Government’s efforts to keep out low-quality smuggled tobacco from the delta and Viet Nam in general.

The VND160 billion facility will both sell its products domestically and export when it begins production in 2017, turning out an expected 750 million cigarettes in the first five years, 50 per cent of it for export.

Annually, the plant will consume around 175 tonnes of tobacco, paving the way for expansion of tobacco cultivation as well as improving the quality of domestic supply. It is also expected to pay more than VND2.6 trillion in taxes in the first 10 years of operations.

Speaking at the ground-breaking ceremony, Peter Henriques, general manager of BAT East Asia, said: “The new plant will help Kien Giang Province, especially Chau Thanh District where our plant is, usher in new production values and restructure the economy, and contribute to local revenues.

“Apart from providing jobs to local workers, we will carry out training programmes to help employees acquire professional skills and knowledge to run the plant efficiently and make products of international quality. The plant will also benefit from BAT Group’s world-class business management in creating a well-trained local workforce”.

The setting up of the plant marks an important milestone for VINA-BAT, a joint venture between Vinataba, Viet Nam’s leading tobacco company, and BAT.

“At BAT, we believe that the successful cooperation between BAT and Vinataba over the past two decades is an outstanding symbol of sustainable and bonding relationship between foreign-invested enterprises and Vietnamese companies since Vietnam opened her doors to foreign investment,” Henriques said.

Vu Van Cuong, chairman of Vinataba, said: “We believe VINA-BAT’s factory in Kien Giang Province with its high-quality products will effectively contribute to the fight against illicit tobacco and to the local budget.

“More importantly, this will help Viet Nam’s tobacco industry gradually integrate with the tobacco global chain as well as the global economy.”

In recent years the tobacco industry has been paying VND19,000-20,000 billion (nearly US$1 billion) a year in taxes and providing six million jobs including to workers, tobacco farmers and workers in related commercial and service sectors.

The industry has also contributed hundreds of billions of dong for social improvement and poverty mitigation.

But it has been facing many difficulties and challenges, including the rapid increase in tobacco smuggling into Viet Nam. Trading in contraband tobacco has become highly sophisticated. In the past illicit tobacco was found mainly in the Mekong Delta, but now it can also be found in the central and northern regions. In other words, it is now a national problem.

In this context, the Government and competent authorities have adopted many effective measures to prevent smuggled tobacco from entering Vietnam.

To reduce the consumption of illicit tobacco, one of the key solutions is to offer consumers and promote legal products of better quality that comply with health-warning and packaging regulations.

From that perspective, VINA-BAT’s tobacco plant has received strong support from local authorities in the hope it will help decrease contraband tobacco and provide consumers with quality products.

On the occasion of the ground-breaking, BAT Group and Vinataba jointly donated VND500 million to a Kien Giang Province fund to build charity houses, actualizing their commitment to fully support the Mekong Delta province’s socio-economic development.

Forum on support industry to take place in Ha Noi

The Viet Nam Electronic Industry Association (VEIA) will join with Thailand’s Reed Tradex Co to organize a forum on support industry in the capital on April 8.

The forum will discuss the impact of the Trans-Pacific Partnership on domestic support industries, as well as what steps businesses need to take to prepare for the future, organisers said.

Duangdej Yuaikwarmdee, Deputy Managing Director and General Manager Vietnam of Reed Tradex Co, described the event as a valuable chance for top executives, management members, and decision makers to share technical knowledge and seek new opportunities to cooperate.

The forum will be organised under the framework of the Viet Nam Manufacturing Expo 2016, which will take place from April 6-8, 2016 at the Ha Noi International Center for Exhibition.

With the participation of 200 brands from 20 countries, this event is expected to sharpen and encourage supporting industries in Viet Nam to keep up with, or lead the change, that the promising future of the ASEAN Economic Community (AEC) and the Trans-Pacific Partnership (TPP) will bring.

Participating enterprises would also enjoy the chance to expand their markets for machinery and know-how with 10,000 buyers who are actively seeking new machinery, materials and chemicals, and measuring, control and test equipment, besides parts and components that would best fit their operational needs, Yuaikwarmdee said.

The expo will be held along with Sheet Metalex Viet Nam 2016, the country’s first-ever exhibition of sheet metal fabrication technology and machinery.

Vietnam aims to fine-tune national power development

Vietnam will promote development of renewable energy resources, aiming to increase the proportion of power produced from these sources in the national electricity structure.

Under an adjusted plan on electricity development from 2011 to 2020 with a vision to 2030 that was approved recently, around 148 billion USD will be invested in the work in the period (excluding projects invested in the build-operate-transfer (BOT) form).

Priorities will be given to developing hydropower plants – especially projects that can prevent flooding, supply water and produce electricity. Research will be made toward building pumped-storage hydropower plants in line with the development of the national electricity system, thus bettering the operation of the electricity system.

Total capacity of hydropower plants across the country is expected to increase to 21,600 MW by 2020, about 24,600 MW by 2025 and around 27,800 MW by 2030.

Meanwhile, total capacity of wind and solar power plants will reach 800 MW, and 850 MW respectively by 2020. The figures were hoped to hit 2,000 MW and 4,000 MW by 2025, and 6,000 MW and 12,000 MW by 2030.

The country also aims to lift total capacity of thermal power plants nationwide to 26,000 MW by 2020, generating about 131 billion kWh of power and accounting for 49.3 percent of total electricity output.

The plan stressed the necessity for maximum use of domestic coal resources for northern thermal power plants, and for building a number of plants in the Duyen Hai, Long Phu, Song Hau and Long An electricity centres, which will use imported coal.

Vietnam plans to put its first nuclear power plant into operation in 2028. It will produce about 32.5 billion kWh by 2030, 5.7 percent of total power generation.

Electricity infrastructure nationwide will also be upgraded.

Gas-insulated substations (GIS), transformer stations, underground substations and self-operation transformers will be constructed, while smart electricity grid technology will be used to transmit electricity.

Japan constitutes key partner of HCM City

Japan is one of the key partners of Ho Chi Minh City in various fields from official development assistance (ODA) to investment and trade, a local official said.

Chairman of the municipal People Committee Nguyen Thanh Phong made the remark at a reception for Japanese Minister of Economy, Trade and Industry Motoo Hayashi in the city on March 20.

He said the Vietnam – Japan Extensive Strategic Partnership for Peace and Prosperity in Asia is thriving, thanks to regular high-level delegation exchanges between the two countries.

He expressed his belief that the bilateral relations will enjoy new developments, especially given the Trans-Pacific Partnership (TPP) agreement. Vietnam and Japan are among the 12 involved countries.

The Japanese Business Association in HCM City has around 800 members who made significant contributions to local socio-economic development, he noted.

Minister Motoo Hayashi thanked municipal authorities for supporting Japanese firms as they invest in the city.

He told the host that with his visit, he aims to promote economic cooperation between the two countries based on the TPP deal, and embrace connectivity between the two business communities to seek cooperation in fields of their interests.

House prices forecast to increase after steel price hike

The cost of building houses is expected to increase due to the recent rise in steel prices, which will in turn likely cause a spike in home purchase prices.

Real estate developers raised these concerns after the Ministry of Industry and Trade (MoIT) announced additional tariffs to be levied on imported steel products as of March 22.

This is a temporary safeguard measure against inexpensive imports that were said to be threatening the domestic industry.

Under the new decision, the import tax imposed on steel billets would increase from 10 percent to 23.3 percent while the tax imposed on long steel products would rise to 14.2 percent from below 5 percent.

With the new tariff, steel prices are expected to increase by three percent.

Nguyen The Diep, Deputy Chairman of the Hanoi Real Estate Club, said the prices of steel and cement account for 40 percent of a real estate project’s construction costs, and thus the hike in steel prices will definitely lead to a surge in house prices.

Property developers whose projects are in the first stage of construction would be the most affected, Diep said.

Nguyen Viet Hai, General Director of the VIC Investment Joint Stock Company, said that over the past few days, the company had to purchase steel at higher prices.

Steel is the most important material for construction projects, and the hike in building costs would force investors to adjust prices for the final products to gain profits, Hai said.

However, housing developers are unsure how long the price hike will last.

Hai said that decisive factors involving house prices were not only materials, but also labour costs and demand. In addition, the safeguard measure will only be in effect until October.

When prices increase, demand might fall because people tend to wait until prices drop, he said.

Economic expert Ngo Tri Long said the rise in house prices is predictable, but how long the steel price hike would affect the market is hard to say because it depends on the relationship between supply and demand.

JICA assists Vietnam in practising sustainable agrifinance

The Japan International Cooperation Agency (JICA) is helping Vietnam practice sustainable agrifinance in order to ensure long-term funding for agricultural activities and improve output.

A sustainable agrifinance model will be tested out in the Central Highlands province of Lam Dong, which is taking the lead on hi-tech agriculture in Vietnam.

Though advanced technology costs a lot, potential businesses are ready to spend the extra amount. Hence, financial assistance should be available to attract investment in agriculture, JICA Vietnam Chief Representative Mori Mutsuya said at a meeting in Hanoi on March 18.

Farmers who switched to floriculture in Lam Dong have earned nine times more than they did harvesting coffee. However, many farmers have been unable to build greenhouses and other necessary facilities for flower cultivation, as they lack the necessary funds, he noted.

Based on the case of Lam Dong, JICA suggested a comprehensive assistance programme to tackle bottlenecks in local agrifinance, ultimately looking to increase agricultural products’ value chain.

Mori Mutsuya said JICA’s proposed assistance would help agricultural businesses increase competitiveness. It aims to help large-scale farmers, while others working on a smaller scale will participate in cooperation contracts.

Specifically, the programme will help enhance farmers’ and agriculture companies’ ability of designing financially feasible business plans, thus accessing concessional bank loans more easily.

A similar programme has been carried out successfully in the Philippines, the JICA official said, adding that he hopes the programme will be successful in Lam Dong so it can be expanded to other localities.

In addition to the perferential ODA provision, JICA will also offer technical support to help augment banks’ abilities to verify loan-seeking dossiers and monitor enterprises’ use of the loans, Mori Mutsuya said.

Nearly 450 enterprises to join Vietbuild Hanoi 2016 Expo

Some 450 enterprises in the construction industry will showcase their products at the Vietbuild Hanoi 2016 International Exhibition, at the National Exhibition Construction Centre, Hanoi from March 24-28.

The exhibition, the first of its kind in Hanoi, will feature 216 domestic enterprises, 171 joint ventures and 63 foreign companies from China, Germany, France, Indonesia, Japan, Malaysia, the Republic of Korea, Singapore, Thailand, the UK and the US.

It will have more than 1,350 booths displaying new and advanced products suitable for modern and high-quality buildings and meeting the requirements on urban development planning.

Conferences on advanced technology and products used in the building material industry, and interior and exterior decoration are also scheduled during the exhibition.

To meet the demands of local people and businesses, Vietbuild expo will arrange two extra event in Hanoi; in July with 1,000 booths from 12 countries and in November with 1,200 booths from 15 countries.

Addressing a press conference held on March 18, Chairman of the Vietnam Real Estate Association Nguyen Tran Nam said that the exhibition is expected to create a golden opportunity for enterprises and managers to further their understanding about the market during the ongoing integration process.

Better development strategies will be mapped out by businesses to promote and improve product quality and brands to serve consumers, he added.

Farmers need better access to loans: JICA

Helping farmers gain access to loans not only helps to reduce interest rates, but also lifts the technical barriers in credit programmes and improves their business competitiveness.

This was agreed upon by participants at the conference entitled “Towards sustainable agri-finance in Việt Nam: the case of Lâm Đồng Province”.

At the conference held in Hà Nội by the Japan International Cooperation Agency (JICA) and the Vietnam Academy of Social Sciences, experts said that bottlenecks in the credit guarantee mechanism should be solved to promote investment in agriculture.

Mori Mutsuya, chief representative of the JICA Office in Việt Nam, said a lack of capital was hindering many Vietnamese enterprises that engage in the agricultural sector from expanding their business.

According to a survey conducted by JICA on agriculture business enterprises in the Central Highland province of Lâm Đồng last year, 83 per cent of enterprises need short-term loans and 60 per cent of them received less than VNĐ50 million (US$2,243) in loans.

During a working visit to the province, he found that local farmers’ incomes could increase ninefold if they shifted from growing coffee to flowers. However, many farmers couldn’t do so because they didn’t have enough financial resources to install greenhouses for flower production, Mutsuya said.

Lâm Đồng is one of the leading provinces in developing hi-tech agriculture in Việt Nam, and thus, it was chosen for a pilot project, he said.

In order to ensure the goal of enhancing the whole value chain of agricultural produce, JICA proposed a comprehensive support framework by addressing current bottlenecks of agriculture promotion such as non-preferential loan terms, strict collateral requirements, poor business planning and huge upfront investment burdens, he said.

According to Nguyễn Đỗ Anh Tuấn, director of the Institute of Policy and Strategy for Agriculture and Rural Development, only 50 per cent of people in rural areas have access to loans, and for those who do have access, the funds meet just half of their needed investment.

Up to 65 per cent of enterprises regard capital shortage as their biggest production obstacle, and 40 per cent of enterprises called for greater efforts in administrative reforms to create favourable conditions for them.

He suggested there should be a special mechanism for lending in agriculture.

Mori Mutsuya, the chief representative of the JICA Office in Việt Nam said, in addition to concessional funding by Official Development Assistance loans, JICA would provide technical assistance to enhance banks’ capacity for loan appraisal and proactive monitoring of business assets.

Nguyễn Đồng Tiến, deputy governor of the State Bank of Viet Nam, said in the future the banking sector would keep prioritising agriculture and the rural sector for resource concentration and lending.

The sector would simplify borrowing procedures and strengthen supervision loans for agricultural production.

It will also enhance dissemination activities so that people in rural areas can better understand credit policies in the sector.

Đoàn Văn Việt, chairman of Lam Dong Province’s People’s Committee, said the province has over 39,237ha of agricultural production applying high technology, accounting for 15 per cent of cultivated land. Of this area, 14,060ha are for vegetables and flowers, 15,335ha for coffee, 5,635ha for tea and 3,585ha for rice.

He said that once pilot agrifinance projects succeed in Lâm Đồng, it would help boost hi-tech agriculture for the province in particular and the country in general.

GM’s new Chevrolet Captiva unveiled in VN

General Motors Viet Nam on Monday unveiled the new 2016 Chevrolet Captiva at VND879 million (US$39,240), offering SUV customers outstanding smartphone connectivity and safety features.

It is equipped with the new Chevrolet MyLink infotainment system, providing connectivity and plug-and-play convenience for smartphone users through the downloadable Apple CarPlay and Android Auto applications.

It introduces Side Blind Zone Alert, Rear Cross Traffic Alert and Rear Park Assist to help prevent accidents.

Its active and passive stability and safety features also include Electronic Stability Control that features Anti-lock Braking System, Traction Control System, Active Rollover Protection, Electronic Brake-force Distribution and Hydraulic Brake Assist.

The car comes with a 2.4L four-cylinder E85-capable gasoline engine and first-in-class six-speed automatic transmission with Driver Shift Control.

GM is offering promotions worth VND40 million ($17,850) this month, and expects the new model to set a new standard in the midsize SUV segment in Viet Nam.

Mercedes-Benz organises Golden Week to support customers

Germany automaker Mercedes-Benz Viet Nam has announced plans to organise a Golden Week to support its clients.

Under the programme, from this week to March 26 and designed for owners of series A, CLA, GLA, C, and GLK, cars will be freely checked at authorised agents around the country.

A discount of 15 per cent will be given for spare parts and oil.

A luxury pen will be delivered to customers to mark the occasion.

Golden Week is expected to attract more than 800 customers.

For more information, clients can contact agents.

Vietnam’s textile exporter raises nearly US$6.9 million in IPO

State-controlled Gia Dinh Textile and Garment Company has sold more than 15 million shares, equivalent to a stake 24.28%, for over VND155.8 billion (US$6.89 million) in an initial public offering.

No foreign investors bid in the IPO that was oversubscribed nearly three times at Ho Chi Minh City Stock Exchange on March18.

The Ho Chi Minh City-based company, also known as GIDITEXCO, is slated to sell another stake of 25% to strategic partners and 1.72% to its staff, so the state ownership will be reduced to 49%, according to the plans.

With 14 subsidiaries and ventures, all operating in the textile and garment sector, the company accounts for more than half of Vietnam’s garment exports to Japan, and nearly 45% to the US, news website Dau Tu reported.

It posted a post-tax profit of over VND2.6 billion (US$115,000) at the end of the third quarter last year, down nearly 42% year on year, according to the company’s latest financial statement.

Vietnamese farm produce exports should prosper in 2016

Vietnamese farm produce exports are predicted to thrive this year due to increased market demand and several free trade agreements Vietnam has signed.

The Ministry of Agriculture and Rural Development and the Ministry of Industry and Trade have outlined a number of measures to help domestic businesses boost export volumes.

In the first two months of this year, Vietnam earned nearly US$3 billion from exporting agricultural, forestry, and aquatic products, up 9.7% from last year and making up 12.5% of the total export revenue. Cashew nuts, rice, and coffee are among the items with the greatest expected rise in export volume.

This year Vietnam’s farm produce exports are said to boom due to market demands and the impacts of free trade agreements between Vietnam and partners.

Vietnam’s main export markets are the US, the EU, China, and Africa. The key market is the US, which is forecast to rise strongly. Exports of vegetables and fruits in particular have grown, with possible revenues of US$2 billion by the end of this year.

Nguyen Van Bich, a market analyst, suggests several ways to ensure exports to demanding markets like the US, the EU, and Japan.

“The first and foremost thing we should do now is restructure agricultural production and make more accurate market forecasts. Vietnam has 11 major agricultural export items but many of them have found it hard to grow any further, so we need to identify new agricultural products of high potential and competitiveness”, said Bich.

“For example, bananas could reach US$1 billion in revenue. Vegetables could also earn billions of US dollar in profits. As far that I know Malaysia, Indonesia, and Singapore have a high demand for imported Vietnamese vegetables”, he noted.       

Vietnam’s agricultural exports are facing challenges. In addition to quality and food safety barriers, certifying product origin is a headache for Vietnamese producers and exporters.

The Ministry of Agriculture and Rural Development and the Ministry of Industry and Trade have stepped up planning and building specialized material production zones and diversifying products. Farmers and businesses are working hard to turn out qualified items that meet food hygiene and safety standards.

Economist Vu Dinh Anh said both hard currency earners and potential export products should focus on two things.

First, they should choose either quality or quantity. Second, they should develop a brand for every agricultural export item”, Dinh Anh added.

To take advantage of international integration, trade counsels abroad must work harder to create accurate market forecasts and effective trade promotions.

The government, meanwhile, has taken a number of steps to help farmers invest in new technology, apply science and technology to production, preservation, and processing, and strengthen links among farmers, processors, and consumers.

Danang calls for private investment in US$177mln port project

Authority in the central city of Danang is calling on private investors to join it in expanding a local port terminal for a cost estimate of VND4 trillion (US$177 million), local media have reported.

Details about the plan of upgrading Lien Chieu, a small terminal of Danang Port, are still sketchy at the moment.

However, under a plan announced by the transport ministry in 2011, the terminal was expected to be able to receive 50,000-DWT ships after 2020. With two wharfs, it was also slated to handle 2.5-3.5 million tons a year.

At a meeting with the transport ministry on March 18, Danang’s senior officials said the expansion of Lien Chieu is “necessary,” as Tien Sa, the main terminal of Danang Port, is on the verge of being overloaded with the increasing flows of goods and tourists, local media reported.

Although Tien Sa is being upgraded, the officials said, more cargo ships and tourist cruises will only worsen its current “traffic conflict.”

With cruises docking at Tien Sa for a long time, there have been delays in cargo ships’ loading and unloading of goods, Tuoi Tre reported, citing Nguyen Huu Sia, CEO of Danang Port JSC.

He also expressed concerns about the safety of tourists who have to walk under lifting structures.

With three wharfs, Tien Sa currently handles 6.7 million tons of goods a year and the shipment is expected to increase to 10-15 million tons a year in 2020, news website Dau Tu reported, citing figures released at the meeting.

According to Danang’s tourism department, around 110 cruises will dock Tien Sa this year with over 100,000 tourists on board, more than a double from the figures last year.

Nearly 450 enterprises to join Vietbuild Hanoi 2016 Expo

Some 450 enterprises in the construction industry will showcase their products at the Vietbuild Hanoi 2016 International Exhibition, at the National Exhibition Construction Centre, Hanoi from March 24-28.

The exhibition, the first of its kind in Hanoi, will feature 216 domestic enterprises, 171 joint ventures and 63 foreign companies from China, Germany, France, Indonesia, Japan, Malaysia, the Republic of Korea, Singapore, Thailand, the UK and the US.

It will have more than 1,350 booths displaying new and advanced products suitable for modern and high-quality buildings and meeting the requirements on urban development planning.

Conferences on advanced technology and products used in the building material industry, and interior and exterior decoration are also scheduled during the exhibition.

To meet the demands of local people and businesses, Vietbuild expo will arrange two extra event in Hanoi; in July with 1,000 booths from 12 countries and in November with 1,200 booths from 15 countries.

Addressing a press conference held on March 18, Chairman of the Vietnam Real Estate Association Nguyen Tran Nam said that the exhibition is expected to create a golden opportunity for enterprises and managers to further their understanding about the market during the ongoing integration process.

Better development strategies will be mapped out by businesses to promote and improve product quality and brands to serve consumers, he added.

New taxes unlikely to dampen growth in Vietnam’s auto market

Nguyen Hoang Ha decided to make his luxury dream come true when he ordered a car at a showroom on Hanoi’s Tran Khat Chan street.

For him, not upgrading was unthinkable, despite higher prices.

“Car prices have increased due to many reasons like higher foreign exchange rates, import costs and taxes. They have never fallen,” Ha said, inspecting a new Lexus RX 350.

“So I could not wait for lower prices to buy it.”

With the rapid expansion of a young, style-conscious middle class after many years of economic growth of over 5%, demand for automobiles has surged.

The recent jump in prices of imported cars due to a new methodology for calculating special consumption tax is unlikely to put the brakes on the automobile market.

From January 1 the tax is calculated on an imported car’s retail price and no longer on the cost, insurance freight (CIF) price before the addition of duties and markups.

The change has reportedly forced auto importers to increase their prices by 2%-13%.

As a member of the World Trade Organization since 2007, Vietnam cannot directly raise duties on imported cars to the benefit of local companies, thus the special consumption tax.

In a car showroom filled with latest BMW and Audi models in Hanoi’s Thanh Xuan Street, Nguyen Son Tung, the manager said: “The price increase is insignificant compared with the value of a car. Customers will accept even higher prices.”

He said sales had not changed much since the new rule came into effect, and customers still pay deposits in advance and wait for two to five months to get their cars.

The prices would rise further when the special consumption tax on cars with engines of more than three liters, including motor homes, is hiked to 150% in July. The tax is now 15%-60% depending on the number of seats and engine size.

Most of these big cars are made by Japanese and European luxury brands.

But the new taxes seem unlikely to dampen growth in either the mid-market or luxury segment. Last year Mercedes-Benz, Lexus and BMW all reported strong growth after selling in excess of 6,000 units.

Local consumers are already used to paying high prices for vehicles, which are on average up to 20% more expensive than elsewhere in Southeast Asia.

The number of households in Vietnam with assets of US$100,000 to US$2 million would soon be among the fastest growing in the world, Reuters quoted the Economist Intelligence Unit as saying, fuelling luxury vehicles sales. Vietnam’s GDP per capita reached US$2,109 in 2015, up from US$2,052 in the previous year, according to the World Bank.

Porsche Cayennes and Bentleys can nowadays be seen jostling with budget cars and scooters on the chaotic streets of Hanoi and Ho Chi Minh City.

For many Vietnamese, a car is not a vehicle but a means to show their success and social status.

A Toyota Vietnam spokesperson said there is always a waiting list of dozens of people for imported Lexus cars.

More than half the cars sold in the country last year were imported at nearly US$2.96 billion, a 88% rise from 2014. India topped the list of exporters to Vietnam, followed by China, the Republic of Korea, and Thailand.

Vietnam is enjoying a surge in interest among automobile importers as sales saw a record growth of 55% last year, following growths of 35% and 23% the previous two years.

Sales growth will continue to be strong this year, albeit quite a bit slower, according to industry insiders.

Major producers and importers like Ford Vietnam, GM Vietnam and Truong Hai Auto Corporation estimate overall sales to grow at around 30%, saying the economy would continue to grow strongly, boosting demand.

Yoshihisa Maruta, chairman of the Vietnam Automobile Manufacturers Association, said on the other hand its members only expect a rise of 10%.

Bui Kim Pha, deputy CEO of Truong Hai Auto Corporation, said the market is stabilizing and so its growth would not be as high as last year when it saw a six-year record growth in sales to nearly 245,000 units.

Mercedes-Benz Vietnam plans to invest an additional EUR11 million (US$12.2 million) this year. The money would be used to set up two new assembly lines, Dirk Adelmann, sales director of the company, said.

The firm sold 3,600 units last year, its 20th year in Vietnam. A 50% growth meant Vietnam was one of Mercedes-Benz’s five fastest growing markets in the world, Adelmann said.

Rolls-Royce and Bentley recently opened their first dealerships in Vietnam.

The abolition of import tariffs on vehicles as part of the ASEAN Trade in Goods Agreement also makes the market attractive.

The tariff was reduced to 40% in January from 50% previously, and will further fall to 30% next year.

Import duties on cars from ASEAN member countries will go in January 2018.

While importers are eagerly waiting for the tax abolition, domestic auto manufacturers are worried about competing with imports. The automobile industry has been focusing mainly on assembling since it was established two decades ago. Vietnam imports most components or vehicles in knocked-down form, which are subject to tariffs of 10%-30%.

This means cars cost that much more to make in Vietnam than in other ASEAN countries, according to the Vietnam Automobile Manufacturers Association.


Leave a Reply