BUSINESS IN BRIEF 28/10
Compatibility between Vietnam’s laws, TPP commitments reviewed
Representatives from ministries, sectors and businesses associations as well as legal experts gathered at a conference in Hanoi on October 27 to discuss the compatibility between domestic laws and the country’s commitments under the Trans-Pacific Partnership regarding investment.
Nguyen Thi Thu Trang, Director of the World Trade Organisation and Integration Centre under the Vietnam Chamber of Commerce and Industry (VCCI), remarked that among new generation free trade agreements (FTA) that Vietnam has signed, the TPP and the Vietnam-EU FTA have the greatest influence on Vietnam’s institutions and laws, including policies in investment.
She said once the two deals take effect, TPP and EVFTA investment commitments, which are said to be at the highest level so far, will lead to considerable changes in investment policies in Vietnam .
The VCCI also reported that Vietnam ’s legal regulations are basically compatible with international commitments.
For a number of legal contents and law enforcement viewpoints that have yet to align with the commitments, it is necessary to collect ideas from ministries, sectors and trade associations in order to amend them in a way that ensures both compatibility with TPP commitments and balanced benefits for domestic and foreign investors.
Trang noted that Vietnam ’s laws, including the Law on Investment and Law on Enterprises have no regulations discriminating between domestic and foreign investors, except for a difference in investment procedure.
She added that domestic regulations on principles on market opening and barrier removal as well as requirements in operation and senior personnel are mostly compatible with TPP commitments.
However, the rules on transferring property abroad and procedures on consultation and mediation in case of disputes are not as specific as TPP commitments, she said.
Meanwhile, Pham Manh Dung, former head of the Ministry of Planning and Investment’s Legal Department, underscored the need to review regulations related to intellectual property.
The observance of intellectual property will help attract more FDI to Vietnam , he asserted, highlighting the need to complete legal system in the field.
Petrolimex Laos – a bright spot in Vietnam’s investment
Deputy Minister of Industry and Trade Ho Thi Kim Thoa has urged Petrolimex Lao One – member Limited Company (Petrolimex Laos), a subsidiary of the Vietnam National Petroleum Group (Petrolimex), to expand its network and apply up-to-date science and technology in management.
Speaking at a ceremony to mark Petrolimex Laos’ fifth founding anniversary in Vientiane on October 26, the official underlined the need for the company to ensure safety in business activities and contribute to promoting the time-honoured friendship between Vietnam and Laos.
Lao Deputy Minister of Industry and Commerce Somchit Inthamit hailed the company’s contributions to national construction and development in his country, saying it has generated jobs for many locals.
Petrolimex Chairman Bui Ngoc Bao asked the subsidiary to roll out long-term targets and strategies and contribute more to socio-economic development in the host country.
Founded on July 17, 2011 with an initial capital of 2 million USD, Petrolimex Laos now owns 22 million USD with 20 petroleum retailers and 200 distributors across the country.
The company earned up to 100 million USD and contributed about 35 million USD to the Laos’ State coffers each year.
It has been listed as one of the 22 leading petroleum companies in Laos and ranked second in terms of quality and services in the neighbouring country.
Vietnam-Mexico trade to benefit from TPP
The Trans-Pacific Partnership (TPP) agreement, once approved by its member countries, is expected to benefit trade ties between Vietnam and Mexico thanks to tax preferences and the removal of tariff barriers, said Ambassador to Mexico Le Linh Lan.
Vietnam will eliminate 65 percent of import taxes imposed on Mexican products right after the pact takes effect and 95 percent of the duties within 10 years, the ambassador told Mexico’s Trade and Investment Promotion Agency (ProMexico).
In response, Mexico has committed to lifting 77.2 percent of taxes on Vietnamese goods, making up 36.5 percent of Vietnam’s total export revenue to the Latin American country, she said.
To observe the commitments and maximise opportunities brought about by the agreement, Lan suggested the two countries enhance their cooperation, exchange information and experience, support each other and raise competitiveness of their small-and medium-sized enterprises, helping them gain a firm niche in the domestic market while expanding the export market.
However, she stressed, the deal is also predicted to pose a range of challenges to both countries such as higher competitiveness and stricter regulations regarding technologies, environment, product safety, hygiene and origin.
During the first eight months of this year, Vietnam imported 312 million USD worth of goods from Mexico, a drop of 2.5 percent year-on-year, while exporting more than 1.2 trillion USD to the country, up 20 percent against the same period last year.
Vietnam’s key exports to Mexico include phones, footwear, electronic equipment and components, garments, aquatic products and coffee. It imports computers, electronic products and parts, machines, tools and cattle feed from the country.
The TPP started out as P-4 with Chile, New Zealand, Singapore and Mexico. The US joined in September 2008 and Vietnam in early 2009. The deal now brings together 12 countries: Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the US and Vietnam.
The pact aims to break down trade and investment barriers between these countries of 800 million people, which constitute 30 percent of global trade and about 40 percent of the world’s economy.
TPP negotiations began in March 2010 and concluded in October 2015 after 19 rounds. The full-text of the deal was released a month later. Most contents of the agreement have remained unchanged by members apart from some technical aspects.
France sees Vietnam as attractive market: Ambassador
Vietnam is an attractive destination for foreign investors in various fields, including infrastructure, health care, tourism, information technology, and climate change, stated French Ambassador to Vietnam Bertrand Lortholary.
Addressing the France-Vietnam Business Forum in Ho Chi Minh City on October 27, the diplomat noted that Vietnam is enjoying a more stable economic growth compared to other Southeast Asian countries and becoming the most open economy in the region.
Free trade deals with various partners also make Vietnam an appealing market for foreign investors, he held, adding that the French business community is keen on seeking investment and business opportunities in Vietnam and expanding partnership with local firms.
Nguyen Thao Hien, deputy head of the European Market Department under the Ministry of Industry and Trade, revealed that since Vietnam and France became strategic partnership in 2013, the two countries have seen an average rise of over 15 percent in trade annually.
The Vietnam-EU Free Trade Agreement, which will become effective in 2018, will bring about new prospects for bilateral trade partnership through the removal of the tariff and non-tariff barrier as well as simplification of import-export procedures, she said.
Meanwhile, Le Thanh Liem, Vice Standing Chairman of the Ho Chi Minh City People’s Committee, said that France is always among the 10 largest investors in the city. As of July 2016, France had 185 projects with a total capital of 848 million USD in the city. Two-way trade reached over 423 million USD.
With their dynamism and cooperative spirit, Ho Chi Minh City’s enterprises are reliable and effective partners of French businesses, he said, pledging that the local government will give the most favourable conditions for foreign investors, especially those from France, to develop their business.-
Rice exports hit 4.2 million tonnes
Vietnam’s rice exports in the first ten months of 2016 reached 4.2 million tonnes, earning 1.9 billion USD in revenue, a year-on-year decrease of 21.2 percent in volume and 16.9 percent in value.
In October alone, the country earned 164 million USD from shipping 368,000 tonnes of rice abroad.
China remained the leading importer of Vietnamese rice in the first three quarters of 2016, accounting for 35.4 percent of market share. Vietnam exported 1.35 million tonnes of rice worth 613.8 million USD to China during the period, down 23 percent in volume and 13.9 percent in value from a year earlier.
A decline has seen in rice exports to other markets like Philippines, Malaysia, Singapore, the United States, Ivory Coast and Hong Kong.
However, Vietnam’s rice export to Ghana and Indonesia increased strongly. Ghana became Vietnam’s second largest rice importer in the first nine months with 387,000 tonnes worth 189.6 million USD, up 41.8 percent in volume and 36.2 percent in value compared to the same period last year.
By the end of September, Indonesia spent 142.5 million USD buying 359,000 tonnes of rice from Vietnam, a 21.5-fold rise in volume and a 22.5-fold increase in value.
Vietnam’s rice export to Angola increased 4.4-fold and 3.5-fold in volume and value, respectively.
According to the Vietnam Food Association, domestic businesses have a chance to boost rice exports as the Philippines plans to import 293,100 tonnes of rice from Vietnam to meet food demand during the 2017 between-crop period.-
VN laws need fine tuning for TPP: report
Việt Nam’s legal framework is compatible with most of the commitments on investment it has undertaken under the Trans-Pacific Partnership agreement (TPP) but not compatible with commitments on transfer and investor-State dispute resettlement, Việt Nam Chamber of Commerce and Industry (VCCI) announced yesterday.
Among the new-generation free trade agreements (FTA) of Việt Nam, the TPP and the Việt Nam-EU FTA (EVFTA) are considered the two with the most significant impact for trade and investment policies.
The VCCI, with support from the British Embassy in Việt Nam, completed a draft review of the EVFTA and TPP commitments on investment.
When the pacts take effect, investment commitments are expected to change Việt Nam’s investment environment given that investors from 38 partner states account for a huge proportion of Việt Nam’s Foreign Development Investment (FDI).
Nguyễn Thị Thu Trang, Director of VCCI’s World Trade Organisation Centre and a member of the review group, said the team reviewed TPP’s Investment Chapter and Việt Nam’s Investment Law, its guiding documents, relevant laws such as the Civil Law, laws on enterprise, State compensation liability and specialised laws related to market access of foreign investment.
They found that Việt Nam legal framework is compatible with most of TPP commitments on investment, especially basic principles on market access and removing investment barriers.
For example, Việt Nam’s laws on investment and enterprises make no distinction between domestic and foreign investors, a fact compatible with the Nation Treatment principle.
Việt Nam’s legal provisions also do not distinguish among investors from different countries, which is compatible with Most-favoured Nation Treatment principle.
However, she said, Việt Nam’s legal framework does not address the overseas transfer of goods and money. Việt Nam regulates cases allowed for transfer while TPP regulates cases which could be limited for transfer.
When it comes to foreign investor-State dispute settlement, Việt Nam’s legal framework does not provide for consultation and mediation, unlike the TPP. Moreover, its legal framework is completely different than the TPP with regard to arbitration procedures, Trang said.
The incompatibility could result in situations in which some actions following domestic laws but violating TPP commitments, she said, noting that foreign investors could sue Việt Nam’s Government.
“Việt Nam has made efforts to fine-tune its legal framework since joining … in the global integration … but it should pay more attention to law enforcement to ensure the benefits for the parties involved,” she said.
Trang also suggested that local businesses learn about Việt Nam’s commitments to foreign investors.
Learning the TPP commitments would also be useful to Vietnamese businesses that want to invest in TPP member countries, she said.
Phạm Mạnh Dũng of the LCT Lawyer Company and former director of the Legal Department under the Ministry of Planning and Investment, said that commitments on investment are not only included in TPP’s Investment Chapter but also other chapters on finance, logistic or communication services, chapter on State-owned enterprises, small and medium enterprises, labour and labour dispute settlement.
“The VCCI’s review could have been comprehensive if its scale was larger and if it could review legal documents issued by local governments and provincial/municipal People’s Committees,” he said.
He added that a similar review of Việt Nam’s TPP commitments on intellectual property was needed because investors from developed countries care much about intellectual property protection.
Twelve Pacific Rim countries, including Việt Nam and the US, signed the TPP in New Zealand in February, 2016. The TPP is now undergoing a two-year ratification period in which at least six countries – which account for 85 percent of the 12 nations’ combined gross domestic production – must approve the final text for the deal to be implemented.
Public-private apparel firms ink deal
Representatives from public private partnerships (PPP) in apparel and footwear yesterday signed a co-operation agreement for the two sectors’ sustainable development in Viet Nam.
The co-operation, which is the first of its kind in Viet Nam, marks a new step in promoting the sustainable development of the apparel and footwear sectors in terms of economy, society and environment.
Participants in the PPP co-operation were the Department of Light Industry under the Ministry of Industry and Trade, the Viet Nam Environment Administration under the Ministry of Natural Resources and Environment, the International Co-operation Department under the Ministry of Labour, Invalid and Social Affairs, the Viet Nam Textile and Apparel Association (VITAS), the Viet Nam Leather, Footwear and Handbag Association (LEFASO), the Viet Nam Cotton and Spinning Association (Vcosa), multinational companies such as Marks & Spencer, and IDH Sustainable Trade Initiative.
The agreement was under the Race to the Top (RttT) programme with supports from all members.
RttT has been an initiative of the Global Green Growth Forum (3GF), the Dutch and Danish governments, multinational companies including GAP, Nike, Marks & Spencer, Levi Strauss & Co, Sustainable Apparel Coalition, IDH, Better Work and producers.
The programme aimed to provide support to apparel and footwear products and the application of global sustainable production in Viet Nam.
The agreement would see the co-operation of all members to enhance environmentally-friendly production, improve productivity, reduce negative effects on the environment and promote dialogue among labourers.
Speaking at the signing ceremony, Flavio Corsin, IDH Viet Nam country director said the programme expected to improve the economic and social benefits and reputation for the Government, the industries, workers and communities.
RttT would create a supportive policy and regulatory environment for sustainable apparel production while encouraging manufacturers and mills to invest in environmentally-friendly technology, he said.
Under the agreement, participants would quarterly meet up to review outcomes.
Delta provinces urged to adapt to climate change
The Cuu Long (Mekong) River Delta needs to be more innovative in production and development to grow sustainably in the context of climate change and environmental and integration challenges, a conference heard.
Deputy Minister of Science and Technology Tran Van Tung told the Mekong Connect-CEO Forum in Can Tho on Wednesday that the region needs to urgently address that global warming and environmental and integration issues.
It should work to change the perceptions and actions of farmers and enterprises and enhance the use of technology in production to come up with safe products meeting the demands of both local and foreign customers, he said.
Economist Pham Chi Lan said consumers globally want farm produce that meets hygiene and food safety standards.
“If we don’t shift to compete through quality, we cannot compete in the markets despite having various kinds of farm produce.”
Viet Nam’s agriculture faces challenges, including a scarcity of land and water, natural disasters, failure to use technology, poor infrastructure, low labour productivity, and a lack of links between stakeholders and with parts supply industries, she said.
Besides, investment in the sector, including public investment, remains low, though some businesses have entered it recently, she said.
Some economic policies have created unfavourable conditions for the agricultural sector to develop, she said.
To overcome the problems, Viet Nam, especially the delta, should focus on institutional reforms, enabling farmers to pool land to create medium- to large-scale farms, strengthening mechanisation in agriculture and creating agricultural value chains, she said.
Dr Le Anh Tuan, deputy head of Can Tho University’s Research Institute for Climate Change, said climate change has helped raise awareness among all stakeholders about the need to reduce the causes leading to it, such as selecting more environment–friendly technologies and energy.
Many reports show that in future dry seasons would be longer and hotter, and this could help the tourism industry as well as enable greater production of solar energy, he pointed out.
New enterprises associated with modern agriculture would appear in the delta in the near future, he predicted.
Phan Van Mai, deputy secretary of the southern Ben Tre Province’s Party Committee, said as one of the provinces in the delta threatened by severe saltwater intrusion, Ben Tre has made certain adjustments to its agricultural production to increase resilience to climate change and they have been well-received by the public.
Delegates also called for establishing close links between localities in the region as well as between them and HCM City.
Such links are key to mitigating the region’s environmental problems, finding outlets for their agricultural produce and attracting human resources from outside, he said.
But they remain below expectations, and localities should be more pro-active in improving the situation, he said.
The delta’s provinces should define what their common products are to join hands to invest and develop, he added.
Nguyen Quan, a former science and technology minister, said recently the Government has identified four key products of the region – rice, vegetables, tra fish and shrimp.
Based on this, the region should discuss how to co-operate and each locality should have investment policies for these products, he said.
An Giang, Ben Tre, Can Tho and Dong Thap have co-operated under a programme called ABCD Mekong to jointly invest in and develop certain products, and it is a good lesson for others, he added.
The delta with 13 cities and provinces plays an important role in the country’s economy, accounting for 80 per cent of rice exports and nearly 60 per cent seafood exports.
Law on bad debt settlement necessary: experts
The Government must create a law on bad debts settlement to tackle difficulties during the process, experts said at a recent conference held by the State Bank of Viet Nam.
Nguyen Quoc Hung, chairman of the Viet Nam Asset Management Company (VAMC), said on Wednesday the company had bought non-performing loans worth a total of VND262 trillion (US$11.7 million) from 42 credit institutions since 2013.
However, it recovered nearly VND38 trillion, equivalent to 15 per cent of the bad debts.
Hung attributed the modest result to limited human resources and the huge amount of bad debts which are guaranteed by various types of assets, saying that dealing with collaterals was not as effective as expected.
He said legal regulations of the debt trading market were not sufficient enough.
For example, VAMC buys bad debts from credit institutions but is not able to sell them to a third party except the Debt and Asset Trading Corporation, and the rights and liabilities of debt buyers and debt sellers as well as those handling collaterals are not clearly regulated.
Due to limited financial capacity, VAMC also wanted to be allowed to issue corporate bonds to raise capital, Hung added.
Le Xuan Nghia, former deputy chairman of the National Financial Supervisory Commission, said “If we cannot give more money to VAMC to deal with bad debts, we must give it more power to do so by issuing a specific mechanism.”
Chairman of the National Assembly’s Economic Committee Nguyen Duc Kien said to formulate the law, it was necessary to have reports on provisions and articles related to collaterals in existing laws, such as the Civil Code, the Penal Code and the Law on Housing, which are creating obstacles.
Can Van Luc, senior advisor to the chairman of the Bank for Investment and Development of Viet Nam, urged that a mechanism to trade bad debts at market prices needed to be worked out.
“Experiences from other countries show that bad debts will only be successfully addressed if a debt trading market is properly formed,” Luc said.
He added debt value must be assessed by an independent agency to ensure transparency and foreign investors should also be encouraged to participate in the market.
Luc said South Korea allowed foreign investors to trade debts by mandating a local company and Viet Nam could do the same.
VAMC chairman Hung admitted that many international institutions and foreign investors came to VAMC to inquire about purchasing its bad debts, but they did not end up offering a deal after realising that VAMC lacked the rights to determine debt trade and collateral sale.
Since its establishment, VAMC has met with 35 international and 17 domestic investors, Hung said.
Local ship-builder to co-operate with Russian partner
The local Song Thu Shipyard Corporation has agreed to co-operate with Vostochnaya Verf shipyard (Primorye), Russia in the production of cruise ships for tourism development in Viet Nam.
General director of Đa Nang-based ship builder, Ha Son Hai said the two sides will start construction of ships to serve local property developer Sun Group’s tourism projects in Đa Nang, before expanding to mass production in Viet Nam’s market and for export.
Hai said Song Thu had inked an agreement on education, science and innovation development projects with the Admiral Nevelskoy Maritime State University, in Vladivostok, Primorye of Russia.
Russia is a very new market for local ship builders when it launched a dredger, the TSHD2000, for Russia’s Rosmorport company in 2015.
Song Thu Corporation, which is a major shipbuilder in Viet Nam, in co-operation with the Damen Group from the Netherlands, has exported 40 vessels, including fast-crew supply ships, rescue ships, salvage tugs and drive tugs, besides patrol boats to the Middle East, South America, Europe and the domestic market, with an annual export volume of US$55 million.
The company also constructed four oil tankers for Australia’s DMS Maritime and two Stan Patrol ships, SPA 5009, for export to Venezuela, and two Azimuth Stern-Drive Tug (ASD) ships to Gabon in 2014-15.
The company was assigned as the National Centre for Oil Spill Risk Response in the central region.
In 2015, the chambers of Commerce and Industry from Đa Nang and Russia’s Union Primorye signed a Memorandum of Understanding (MoU) on trade, investment, export, and tourism as well as boosting exports from Russia to ASEAN through the East-West Economic Corridor that links Viet Nam, Laos, Thailand and Myanmar via Đa Nang port.
USG Boral bags three prestigious awards
Leading building materials supplier USG Boral was awarded three of six prominent industry awards at the 16th Annual Global Gypsum Conference and Exhibition held in Bangkok on October 26.
The awards included the Global Gypsum Company of the Year, Global Gypsum Plant of the Year and Global Gypsum Product of the Year.
The Global Gypsum Conference is the largest and most established event in the gypsum industry. Since 2006, the Global Gypsum association presents several awards annually to recognize outstanding companies and products within the gypsum industry.
Amata IP, complex expected to start before Tet
The northeastern province of Quang Ninh has asked Thailand’s Amata Group to start constructing the first phase of the high tech industrial park (IP) and township complex before Tet (Lunar New Year) in 2017.
The province’s chairman, Nguyen Duc Long, on October 26 held a meeting with the group on the project’s progress.
Amata said it is planned to complete the project at Uong Bi City and Quang Yen Town by 2035.
According to the plan, in the 2016-20 period, under the project, the IP would be built in Quang Yen Town’s Song Khoai Commune. The IP’s detailed plan was submitted to authorities for approval. In addition, Amata would co-operate with the province to submit a proposal to the Prime Minister to change the location of the approved Phuong Nam IP to Song Khoai Commune.
Long hailed the efforts of the group and relevant departments in resolving difficulties.
He said the province had established a special board to implement the project. The board would give support to the investor in completing procedures to shorten time for the start of the construction.
According to the initial plan, the project has a total area of 6,403ha, of which, the Song Khoai IP covers 700ha. The investor has not provided the project’s total investment.
At the previous meeting with the province, the project was valued at US$1.5 to $2 billion when the IP was planned to be located in Phuong Nam Commune.
Amata Viet Nam was established in December 1994 as a joint venture of Amata Corp. PCL and Vietnamese Sonadezi Bien Hoa, a State-owned industrial estate developer in Dong Nai. Till date, they have completed Bien Hoa 1, Bien Hoa 2, and Go Dau IZs.
Kien Long Bank posts loss in Q3
Kien Long Bank is the country’s first bank to have reported a loss of VND8.8 billion (US$392,000) in the third quarter of this year. In the same period last year, the bank had made a profit of VND27.6 billion.
As per the the bank’s financial report, its pre-tax profit in the first nine months also dropped nearly 90 per cent year-on-year to VND19.8 billion.
In Q3 alone, the bank posted a profit reduction of nearly 12 per cent, at VND172 billion, while operation costs rose 21 per cent to VND153 billion and provision funds inched up to VND50 billion.
Between January and September, the bank mobilised a total capital of VND22 trillion, up 10 per cent; and lent VND17 trillion, up 6.2 per cent.
By end-September, Kien Long Bank’s non-performing loans rose to 1.46 per cent from 1.12 per cent in early 2016.
The bank’s total assets at the end of September were more than VND26 trillion, up 4 per cent against early this year.
Thaco recalls Mazda2 to fix check-engine light system
Local carmaker Truong Hai Automobile JSC (Thaco) is recalling 4,809 Mazda2 cars to fix a fault related to the check-engine light.
The programme will begin on November 28. All units produced by VinaMazda from August 24, 2015 to September 26, 2016 will be checked for faults and fixed.
According to reports, after running for a period, a deposit is somehow produced on the injection holes of injectors which lead to congestion and less injection amount. Based on the feedback signals from sensors of the engine control system and the check-engine light, an illumination phenomenon appears.
The main reason behind this is the deposit, which is difficult to wipe off while the engine is running by a self-cleaning mechanism. The check-engine light illumination phenomenon may cause poor engine performance, poor acceleration or engine vibration when the car is running.
The cars under the recall programme all have an engine displacement of 1,500cc, for both sedan and hatchback versions. It is estimated that the time required to fix the fault will be four and a half hours.
In June this year, VinaMazda recalled more than 10,000 Mazda3 cars for a similar fault.
EU food and drink businesses want to join Vietnam retail network
An EU trade delegation comprising senior trade officials and representatives of 41 European food and drink companies will make a fact-finding tour of Vietnam in early November to seek investment opportunities, according to the European Union delegation in Vietnam.
The delegation, led by EU Commissioner for Agriculture and Rural Development Phil Hogan, visits Southeast Asia to seek investment opportunities in the region.
Vietnam will be its first destination and the EU trade officials and businesspeople will hold working sessions with their Vietnamese counterparts in Hanoi and Ho Chi Minh City on November 2-4.
Representatives of 41 food and drink firms from different EU countries – Belgium, Bulgaria, Denmark, Finland, France, Greece, Germany, Hungary, Ireland, Italy, the Netherlands, Poland, Portugal, Romania, Spain and the UK join the delegation with the aim of seeking new business opportunities and promoting their food and beverage products which are safe, nutritious and of high quality.
They will introduce a wide range of agricultural, food and beverage products like fresh fruits and vegetables, cattle and poultry meat, processing food, milk and dairy products, red wine and alcohol.
While in Hanoi, Mr Hogan and EU businesspeople will attend a seminar on Vietnam-EU Free Trade Agreement and discuss issues relating to food hygiene and safety, investment, license and distribution of food and drink products and business opportunities.
They will also visit retail chains of domestic and foreign investors to gain a better understanding about Vietnam’s market.
In Ho Chi Minh City, they will attend a seminar on geographical indicators (GIs) and business opportunities in Vietnam.
A business forum will also be held to help the EU businesspeople update information about market, regulations and laws, and customers’ tastes.
Domestic cotton source yet to grow up for local fibre industry
As domestic supply has yet to meet the Vietnamese fibre industry’s demand for volume and quality, the industry has been dependent on cotton import sources.
The country’s cotton output meets only 2 per cent of domestic fibre enterprises’ demand, the remaining 98 per cent was covered by import. The land area of cotton plantations is gradually receding because farmers seem to have accepted inferiority in this segment.
According to statistics compiled by the General Department of Vietnam Customs, in the first three quarters of this year, Vietnam spent $1.245 billion to import 787,000 tonnes of cotton. The figure is expected to reach $1.6 billion by the end of the year. In September alone, despite a light decrease compared to the monthly average, the total volume stood at 75,400 tonnes.
During the nine months of this year, Vietnam imported cotton from 11 countries. The US is the largest cotton supplier, providing 50 per cent of the total cotton import volume, equalling 400,000 tonnes and worth $635 million. The runners-up are India with 90,100 tonnes (worth $131.3 million) and Australia with 68,000 tonnes (worth $119 million).
Phan Tien Dung, director of fibre factory Vinatex’s Nam Dinh branch, domestic cotton does not meet the domestic industry’s quality and quantity requirements, forcing all domestic fibre factories in general and Vinatex’s fiber factory in particular to look for foreing sources.
Along with the usual risks associated with dependence on import materials, domestic fibre enterprises face the risk of missing delivery times or a strong change in material prices when they import cotton from the US, South Africa, and India.
According to Jonathan Devine, senior economist at the Corporate Strategy & Program Metrics Department at Cotton Incorporated, in 2016, fibre enterprises have seen continuous fluctuations in material prices due to numerous reasons, including unstable material sources. Unreasonable price swings will impact enterprises’ decision to continue to buy cotton. Meanwhile, unstable material sources can cause serious delays in delivery, impacting enterprises’ reputation.
However, according to a representative of a fibre enterprise in Thai Binh Province, the Vietnamese fibre industry is on the upswing, generating larger appetite for cotton. In the context of a lack of domestic cotton suppliers, imports will continue to be the major source, despite risks of delivery time, low quality, as well as shifting material prices.
In Mid-October, Vietnam’s fiber industry met a break-down on importing cotton. Notably, the Ministry of Agriculture and Rural Development issued a decision on halting raw cotton imports from Ghana.
The decision was made after a large volume of raw cotton was found infected with living khapra beetles (Trogoderma granarium Everts).
The decision will come into effect 60 days after the October 11 issuance.
The Plant Protection Department’s representative said, from July 2 to September 26, relevant authorities detected 58 containers of raw cotton, weighing more than 1,384 tonnes, imported from Ghana via Haiphong port to be infected with the very dangerous beetle not native to Vietnam.
A khapra beetle infestation can cause serious damage to various kinds of agricultural products, such as cereals, vegetables, and rubber. It is considered one of the 100 worst invasive species in the world.
Public investment focuses on key projects
The government has submitted to the National Assembly the mid-term public investment plan from 2016 to 2020. It’s the first time Vietnam has built a 5-year public investment plan instead of an annual plan.
The plan mentions a number of high-priority investment areas including poverty reduction and infrastructure construction.
The 2016-2020 mid-term public investment plan earmarks US$896 billion for building new rural areas, sustainable poverty reduction, flood prevention in Ho Chi Minh City, and transportation projects like the North-South Highway, land clearance for the Long Thanh International Airport project, the East Truong Son Highway project, and the Vietnam-Cambodia border patrol project (phase 2).
National Assembly Vice Chairwoman Tong Thi Phong said “Public investment is an important issue which must focus on key sectors, for example the transportation sector and its key north-south highway. It’s necessary to seriously consider the progress of each phase and report to the National Assembly.”
The mid-term public investment plan will enhance discipline in public investment management. Ministries, sectors, and localities can allocate budget for new projects only when they have arranged sufficient funds for civil construction. It’s important to avoid massive investment and to effectively use tax revenues.
Nguyen Nhan Chien, a National Assembly deputy for Bac Ninh province, said “The public investment plan should be strictly managed based on the state budget and other resources. It’s necessary to attract resources from other economic sectors for high-priority public projects to prevent unnecessary investment.”
The implementation of the 5-year public investment plan will ensure that national financial resources are spent wisely.
PTSC pushed off project by retracting province
After the central province of Quang Binh decides to withdraw from previous commitments over the second phase of Hon La Port, the port operator Petroleum Technical Services Corporation (PTSC) is now at risk of losing the project to a domestic contender.
The Quang Binh People’s Committee and the Quang Binh Economic Zone Management Authority had plans to develop the second phase of Hon La Port, aiming to relieve the overload of the existing facility.
However, instead of authorising PTSC to develop the project as per the deal the two parties signed in 2009, the province entrusted another domestic firm operating in the province to study the project. The name of the contender has yet to be disclosed.
PTSC director Hoang Tuan told VIR that in August 2009, the province’s leadership signed a deal to transfer Hon La Port to PTSC.
Under the contract, PTSC will take over the port to continue operations, exploit and invest in the following phases.
PTSC will take over the rights and duties of the former owner and benefit from local preferential polices to develop the port under the government’s sea port development plan.
However, at present, the province has broken the commitment and refused PTSC to develop the second phase. The company will hold a working session with the province to work out a solution to this debacle.
“Arranging capital to develop Hon La Port is not a challenge for PTSC, thus, if the company receives the province’s approval, it will be determined to implement the project,” Tuan added.
Belying the importance of the Hon La Port extension, the Quang Binh People’s Committee and the Quang Binh Economic Zone Management Authority issued numerous incentives, including land lease fee and enterprise income tax, and other incentives in the Law on Investment to call for investors to join developing the second phase of Hon La Port.
According to Pham Van Nam, director of the Quang Binh Economic Zone Management Authority, Hon La Port is located in the economic zone (EZ), thus investors in the extension project will be accorded the highest incentives the EZ can legally provide. These benefits extend to discounts on the land lease fee and the corporate income tax, among others.
A representative of the Quang Binh Economic Zone Management Authority stated that extending Hon La Port is becoming vital because it has been operating way beyond its designed capacity of 1.2 million tonnes of cargo per year in recent years.
Notably, in 2015, the port handled 1.5 million tonnes of cargo. In addition, the port is located on a strategic point along the North-South sea transport route, at a crossroads to Central Vietnam, Laos, and Thailand.
The authority plans to increase the port’s capacity to five million tonnes and extend the harbour area to receive up to 50,000 deadweight tonnage vessels. The authority estimated that the total investment capital for enhancing the port would be about VND300-400 billion ($13.2-17.6 million).
Agricultural fair draws record number of foreign traders
A record number of foreign traders from 30 foreign countries will participate at the 16th International Agriculture Trade Fair (November 11-15) in Hanoi, reports the Ministry of Agriculture and Rural Development (Mard).
At a press conference on October 27, a spokesperson for Mard announced this year’s fair is being held at the Economic Transaction & Commercial Area at No. 489 Hoang Quoc Viet Street in the Cau Giay District of Hanoi.
The fair expects representatives from 300 companies from home and abroad and more than 20,000 visitors to attend the 5-day event. To date 28 foreign companies from China, the Republic of Korea, South Africa, India and Japan have registered to participate.
The fair will exhibit and introduce regional specialty agricultural products including rice, cashews, tea, coffee, cattle, poultry and seafood along with beverages such as milk, beer, tea and a large variety of seeds and livestock.
In addition, it will showcase fertilizers, pesticides; equipment, mechanical engineering and technology products to boost production and a bevy of equipment touting the latest technologies for processing and storage of agricultural products.
Vietnam, Belgium seek economic cooperation development
More than 100 officials and businesspeople from Vietnam and Belgium participated in a workshop in Belgium’s northern city of Ghent on October 26 to study trade and investment between the two countries.
Vietnamese Ambassador to Belgium Vuong Thua Phong said Belgium was an important partner of Vietnam with two-way trade seeing growth in recent years.
Bilateral trade reached nearly US$2.3 billion in 2015 compared to only several million USD in 2000, he said, adding that Belgian investors are active in major economic sectors in Vietnam like industry, agriculture, and financial services.
The European country runs 65 projects worth US$724.21 million in Vietnam, he noted.
Head of Economy, European and International Cooperation unit in East Flanders province Astrid Vliebergh said the province opened an economic office in Ho Chi Minh City six years ago to help Belgian businesses in Vietnam.
Since then, Vietnam has gained impressive economic achievements, she said, noting that some provincial companies promote cooperation in animal husbandry in HCM City and its vicinities.
In December 2016, a delegation of scientists and businesspeople in cultivation will arrive in Vietnam to discuss collaboration in growing flowers and vegetables in Da Lat and HCM City , she revealed.
Lawyer Oliver Massmann commented that Vietnam’s recently-adopted Law on Investment and Law on Enterprises is clear and transparent, while other legal regulations on foreign investment have been revised in line with international standards.
Vietnam has a favourable investment environment, especially after the country’s engagement in the World Trade Organisation, he said.
Japanese tourism promoted in Vietnam
Japanese destinations were introduced to Vietnamese visitors at a tourism workshop and tourism fair held by the Bureau of Tourism, Culture & Exchange of Nagoya city, Japan’s Aichi prefecture in Ho Chi Minh City on October 27.
The events were part of activities forming a memorandum of understanding on cooperation signed between Aichi and HCM City in September.
Addressing the workshop, Chairman of the HCM City People’s Committee Nguyen Thanh Phong said Japan is a market that has attracted Vietnamese tourism firms and those from HCM City in particular.
Vietnam has promoted various programmes to bring Vietnamese holiday-makers to Japan and vice versa, he noted.
The events offered an opportunity for travel firms of both countries to learn about potential and demand in the two nations, he said, adding that they contributed to cooperative relations between Aichi and HCM City, and strengthened the partnership between Vietnam and Japan.
Representatives from the organising board hoped the workshop would foster tourism links, saying that Nagoya wishes to welcome more Vietnamese tourists.
According to HCM City’s Tourism Department, some 276,000 visitors arrived from Japan in the first nine months of this year, a year-on-year increase of 8.6%, accounting for 49% of the number of Japanese tourists to Vietnam in the period.
The number of Vietnamese tourists visiting Japan hit more than 185,000 as of late 2015, said the Nagoya bureau.
Vietnam combines economic development with environmental protection
Vietnam will not develop the economy at all costs but will combine economic development with environmental protection, aimed towards a green economy, Minister of Labour, Invalids and Social Affairs Dao Ngoc Dung said.
The country has aimed to train labourers who can work in a green economy, the official said at the ASEM Conference on Green Skills for Sustainable and Inclusive Growth in Hanoi on October 27.
The conference looks to implement then Prime Minister Nguyen Tan Dung’s initiative adopted at the 10 th Asia-Europe Meeting (ASEM) Summit in Italy in 2014. This is one of the four major ASEM activities hosted by Vietnam this year to mark the 20 years of the forum.
Participants at the event discussed promoting green skills towards sustainable growth, and boosting Asia-Europe cooperation in the field.
They suggested increasing dialogues and collaboration between Government agencies and social partners in developing policies and programmes on green skills.
They also proposed initiatives on vocational training raised by the ASEM specialised cooperative group and narrowing development gaps.
The 53-member ASEM was created in 1996 as a forum for dialogue and cooperation between Europe and Asia.
It makes up nearly 63 percent of the world’s population, 57 percent of GDP and 68 percent of global trade.
ASEM leaders have displayed resolve to ensure sustainable and comprehensive growth, focusing on helping labourers adapt to rapid environmental changes.