BUSINESS IN BRIEF 7/4

Japanese firms take interest in HCM City market

Japanese firms take interest in HCM City market, PM okays smart grid network development, Local wood makers should develop domestic market, Prawn export sees increase in first quarter, Vietnam continues enjoying trade surplus with Canada

The Ben Thanh – Suoi Tien urban railway project in Ho Chi Minh City is funded by Japan (Photo:dangcongsan.vn)

A new wave of Japanese investment is forecast to emerge in Ho Chi Minh City, Vo Van Hoan, Chief of the municipal People’s Committee office, said during a press conference on April 4.

To assist the future capital flow, overhauling administrative procedures is the top priority, Hoan noted.

He said research is underway to establish a trade promotion centre supporting investors based on the application of the one-stop-shop mechanism.

According to the official, other tasks include promoting the role of business associations, boosting the performance of promotion agencies and encouraging start-ups.

Japan has thus far invested in 828 projects in the southern hub, with the total registered capital reaching approximately 2.7 billion USD.

The city has received 3 billion USD worth of Japanese official development assistance (ODA) for eight local projects.

In a recent visit to Japan, a delegation from Ho Chi Minh City asked for additional ODA to be granted to its environmental and metro projects.

PM okays smart grid network development

The Prime Minister has ratified a draft content of an agreement between Vietnam and Germany’s KfW Development Bank for the first phase of a project on smart grid for electricity transmission in Vietnam.

The 65 million Euro (73.8 million USD) project will be signed by Deputy Minister of Finance Truong Chi Trung and KfW representatives.

Smart grid networks have become popular in developed countries worldwide due to their outstanding advantages such as reliability, cost savings and energy independence, allowing more choices on electricity providers for consumers.

In late 2012, the PM approved a master plan on developing smart grids and many projects in the area have already been carried out effectively.

In 2014, the US Trade and Development Agency (USTDA) provided 700,000 USD in non-refundable aid to the pilot application of Vietnam’s Smart Grid project, that will help Vietnamese energy companies efficiently manage the use of electricity during peak hours, and optimise power distribution.

In the same year, the World Bank (WB) approved a 500-million-USD loan to help increase the capacity, efficiency and reliability of the electricity grid in Vietnam’s key economic areas.

Agro-fisheries festival opens in Ba Ria – Vung Tau

As many as 22 cities and provinces in the southern region are engaging in the 2016 agro-fisheries festival that opened in Ba Ria – Vung Tau on April 4.

Permanent Vice Chairman of the Vietnam Farmers Association Lai Xuan Mon said the festival offers an opportunity for businesses and farmers to promote their products as well as share production and trade experience, increase investment cooperation and trade promotion to expand markets.

This also helps improve competitive capacity for domestic agro-fisheries products at home and abroad, he added.

The festival, which will run until April 10, features 80 booths selling a variety of farm produce and fishery products.

Other activities include ceremonies to highlight successful farming models, brand names and products and services; a workshop on sustainable development of agriculture, fisheries, farmers and rural areas and a programme to provide technical consultation and promote trade for farmers.

Visitors are also entertained by cuisine and beer festivals as well as bonsai and bird contests, among others.

Local wood makers should develop domestic market

Local wood producers should focus on developing their business in the domestic market to avoid domination of foreign products.

Deputy Chairman of the Vietnam Wood and Forest Product Association (Vifores) Nguyen Ton Quyen made this observation at a seminar on chances and challenges from importing material of wood held on April 4, 2016 in Hanoi by the association and Forest Trends Organisation.

At present, the local wood producers have ignored the domestic market so they should come back home, Quyen said, adding that if they don’t do that, the foreign producers would enter further the local market because Vietnam would integrate further into the global market in the future, he said.

In addition, he said the State should have policies on encouraging local wood producers to put more investment in the domestic market.

The domestic wood market has great potential for doing business but domestic enterprises lack information about it. They have set up independent business to exploit the domestic market but lack cooperation in developing that business. Meanwhile, state management offices have not done any market research for the domestic wood market, including the kinds of wood and demand for wooden products.

In the future, free trade agreements that Vietnam has signed with its foreign partners would come into effect, and that would open up opportunities for foreign producers to develop the domestic market further, he said.

Now, there were enterprises from 30 countries and territories registering to invest in the wood industry in Vietnam, especially those from China.

That would help foreign enterprises to join the origin tax at zero, clear origin and low selling price for material of wood, he said.

According to Vifores, last year, Vietnam imported 4.79 million cubic metres of sawn logs worth 1.66 billion USD, an increase of 11.3 percent year on year.

To ensure the legal origin of wood imported into the market, experts from domestic associations and Forest Trends suggested that Vietnam should have a list of all kinds of wood imported. The state should have a channel to contact domestic wood importers directly to receive full information about wood imports and then have mechanism to control wood imports efficiently in the future, including the legal origin of imported wood.

Vietjet Air to launch Hanoi – Tuy Hoa with special fare starting at VND599,000 (US$25)

Vietnamese budget carrier Vietjet Air will further connect the capital city with Southern Vietnam by launching Hanoi – Tuy Hoa in the central province of Phu Yen route from May 20, 2016, the carrier announced on April 7.

The route is now open for booking at the special price only from VND599,000 (US$25), looking to ease travel of tourists, individuals and businessmen among the localities.

The new domestic route will last 1 hour 40 minutes per leg. The Hanoi-Tuy Hoa flight takes off at 11h15 and lands at 12h55. The return flight departs at 13h30 arrives at 15h10.

Tickets can be booked at www.vietjetair.com or by calling to the national call center at 19001886. Payment can be easily made with Visa, MasterCard, JCB, American Express, and ATM cards issued by 24 Vietnam banks that have been registered with internet banking.

As a part of Vietjet’s domestic route expansion plan, travelers now can easily fly from Hanoi to Tuy Hoa, a popular beach destination being known for natural sightseeing and activities. With its non-stop developing fleet of modern aircraft and dynamic and friendly flight crew, Vietjet Air offers its passengers with a full suite of high-quality services, including SkyBoss as well as opportunities to win special low-fare tickets and special surprises from the airline’s inflight activities.

Prawn export sees increase in first quarter

The export of prawn saw a year-on-year increase of 8.5 percent in the first two months of this year, earning the country 378.4 million USD, according to the Vietnam Association of Seafood Exporters and Producers (VASEP).

The increase was greatly attributed to the strong growth in the two major markets – the United States and China-Hong Kong.

Prawn export to the United States went up 24.8 percent against the same period last year following the tariff cut from 6.37 percent to 0.91 percent as a result of the ninth Period of Review (POR9) on anti-dumping duty on Vietnam’s frozen shrimp.

The China-Hong Kong posted an even greater increase at 36.5 percent, making it the second largest export market for Vietnamese shrimp.

The strong growth of the two markets helped offset the decrease in the European Union, Japan, the Republic of Korea and Canada.

The export price of prawn rose by 4 to 5 percent.

Petrol prices up over 500 VND per litre

The prices of RON 92 petrol and E5 bio-fuel increased 518 VND and 551 VND per litre, respectively, as from 5 p.m. on April 5.

Prices of diesel oil, paraffin and mazut remain unchanged.

This is the second upward adjustment of petrol prices this year, pushing the cost up by more than 1,170 VND per litre in total.

Following a joint decision issued by the ministries of Industry and Trade, and Finance, the ceiling prices of RON 92 petrol and E5 bio-fuel will be 14,940 VND and 14,442 VND per litre, respectively.

The maximum prices of diesel oil and paraffin are maintained at 9,873 VND and 8,905 VND per litre.

E5 bio-fuel and diesel oil were among commodities selected to be subsidised by the Price Stabilisation Fund.

Economists suggest ways to access global supply chains

Nestor Scherbey, a senior advisor of the Vietnam Trade Facilitation Alliance (VTFA), has suggested Vietnamese cities and provinces establish an information database on foreign direct investment (FDI) businesses and domestic suppliers.

The move aims to help local suppliers take part in the operation of the FDI enterprises, the expert said at a conference in Bien Hoa city, in the southern province of Dong Nai on April 4 which aimed to seek ways to improve the business climate and promote investment activities in Vietnam.

Scherbey further said that trade activities in the 21st century require the integration of global supply chains in order to facilitate the circulation of goods globally.

He suggested multi-national companies draw up and adjust their own global supply chains, to meet requirements on the rules of origins stipulated in the Trans-Pacific Partnership (TPP) agreement, the Vietnam-EU Free Trade Agreement and other trade deals.

The advisor described this as essential to help companies make the best use of tax preferences offered by such pacts when exporting their products to EU or TPP member nations.

Local authorities should conduct surveys on FDI businesses to study their demands for materials and intermediate goods, he said, noting that it is a must for local firms to prove that they satisfy profile-related requirements set by the agreements.

Dau Anh Tuan, head of the Legal Department under the Vietnam Chamber of Commerce and Industry (VCCI), said improving the provincial competitiveness index (PCI) to improve the business climate is crucial to attract investors and spur local economic growth.

A survey recently conducted by the VCCI among FDI and TPP businesses shows that Vietnam holds advantages in terms of tax, low risk of asset reclamation, political stability and positive business policies.

The respondents also described Vietnam as a safe destination, as evidenced through the increasing number of FDI firms investing in the country.

Economists said apart from the transport infrastructure and other services, investment in logistics infrastructure is necessary to facilitate international trade.

Scherbey added that the global supply chains are evolving rapidly, requiring goods to be available in warehouses.

Conference seeks trade facilitation in Binh Duong

A conference to seek join efforts for trade facilitation in the southern province of Binh Duong was held in the locality on April 5.

The event gave an appraisal of the impacts new-generation free trade agreements could have on trade and investment, along with recommendations for local development.

Participants discussed how to improve the business climate via analysing the provincial competitiveness index, as well as taxation and customs surveys.

Executive Director of the American Chamber of Commerce in Vietnam Herbert Cochran presented an overview of the Vietnam Trade Facilitation Alliance (VTFA), its policy and technical support, that is contributing to creating a more transparent and convenient environment.

Speaking before the conference, Vo Tan Thanh, Vice President of the Vietnam Chamber of Commerce and Industry (VCCI), said he believed that the conference would put forth specific action plans to support businesses while strengthening close cooperation between local authorities and the VCCI and VTFA.

Vice Chairman of the provincial People’s Committee Tran Thanh Liem also expressed his belief that solutions proposed at the event would facilitate production and business in the locality.

Binh Duong enjoyed a trade surplus of over 1.2 billion USD in the first quarter of this year, with exports of over 5.6 billion USD and imports of nearly 4.4 billion USD.

Commemorative note issuance marks central bank’s anniversary

The State Bank of Vietnam (SBV) has announced the issuance of commemorative banknotes to mark its 65th founding anniversary (May 6, 1951).

According to SBV Deputy Governor Dao Minh Tu, the commemorative banknotes, which cannot be used for payment, will feature the portrait of the late President Ho Chi Minh as well as a number of the country’s symbolic items such as the image of ancient coins, a depiction of an ancient Ngoc Lu bronze drum and a portrait of Phu Dong Thien Vuong (Saint Giong), a Vietnamese legendary hero.

The launch of the notes is intended to mark the banking sector’s remarkable development in the new era, promote Vietnam’s image to an international public and foster a sense of national pride among Vietnamese people, Tu said.

Alain Marchand from one of the banknote printing sponsors Arjowiggins Security said the notes are created using the world’s most advanced technology with a number of security features.

It will be printed on highly durable Composite Diamone paper, using security ink with colour-shifting effect and security ribbon, he added.

ACE Life Vietnam changes name to Chubb Life

ACE Life Vietnam has changed its name to Chubb Life Vietnam Insurance Company Ltd (Chubb Life) with effect from April 4 following its parent’s acquisition of Chubb Corporation last January.

The company said the new name would not affect the company’s business and all rights and obligations with respect to existing clients and partners would remain unchanged.

“Our name is new but our commitment remains the same – to provide our customers, business partners, employees and other stakeholders with superior quality and service that both ACE and Chubb have developed over many years,” Lam Hai Tuan, chairman and country president of Chubb Life in Vietnam, said.

“The new Chubb is defined by underwriting, service and execution. Together, these three elements form the basis for what we believe is superior insurance craftsmanship.

Chubb was a US-based insurer with over 130 years of history and ACE is a global leader in insurance.

Vietnam continues enjoying trade surplus with Canada

Vietnam enjoyed a trade surplus of nearly 2.683 billion USD last year, an increase of 25.9 percent against 2014, according to Statistics Canada.

In the period, Canada spent 807 million USD on Vietnam ’s electronic products and accessories, 342 million USD on knitwear, 338 million USD on footwear and 259 million USD on wooden products and spare parts, among others.

Meanwhile, Canada exported commodities worth 513 million USD to Vietnam , up 18.7 percent compared to 2014, and accounting for 0.35 percent of the country’s total export value.

The North American country shipped mainly fertiliser, soybeans and oilseeds, machines, and leathers to Vietnam .

In 2014, Vietnam enjoyed a trade surplus of 2.131 billion USD with Canada . The Southeast Asian nation’s exports were valued at 2.562 billion USD while import value was 431 million USD, up 23.4 percent and 4.1 percent, respectively.

HCM City companies invited to augment investment in Lao province

Ho Chi Minh City enterprises have been invited to invest in energy – mining, processing, tourism and agro-forestry-fisheries in Laos’ Xaysomboun province as the industries are key to local economic development.

HCM City companies should also beef up trade activities and optimise incentives, said Xaysomboun Deputy Governor Phoikham Houngbounyuang, who is also the Vice Secretary of the provincial Party Committee, at an investment promotion conference in HCM City on April 5.

He added that t he province is expanding the transport network to rural areas to serve mass production and attract projects in clean agriculture, hydropower plants and mining.

According to the provincial Department of Planning and Investment, Xaysomboun is rolling out preferential policies on tax, land use and capital, among others, to invite both domestic and foreign private investment.

At the conference, Vice Chairman of the HCM City People’s Committee Le Van Khoa said the ASEAN Economic Community is opening up numerous opportunities for investment and trade cooperation between Vietnam and Laos.

The two sides’ relevant agencies and businesses should actively exchange information about potential industries and design coordination mechanisms to boost bilateral partnership, he noted.

More than 30 HCM City companies are investing over 250 million USD in Laos at present. Two-way trade approximated 6 million USD in 2015.

For its part, the Vietnamese southern municipality has also been involved in a host of campaigns in Laos to fuel investment and trade partnership.

YouthSpark 2016 launched with 270,000 USD investment

The YouthSpark 2016 programme was officially launched on April 4 with an investment of 270,000 USD.

Co-organised by Microsoft Vietnam and the Vietnam Chamber of Commerce Industry (VCCI), this year’s programme is entitled “Career Readiness” and aims to empower the youth by providing them with opportunities for education, employment and entrepreneurship.

Of the total investment, Microsoft Vietnam has funded about 230,000 USD and VCCI has provided more than 40,000 USD. According to the programme’s initial plan, about 4,600 adolescents would directly benefit from the support provided by the programme.

During the launching ceremony, nearly 200 participants including youth, lecturers and representatives of enterprises gathered to share their practical experiences in training and entrepreneurial opportunities. Experts provided youth with the latest information on education and business, and nurtured their passions while encouraging their entrepreneurial spirits.

There was also a discussion between local and foreign experts about the opportunities and challenges that the Vietnamese labour market is facing as Vietnam has recently signed many Free Trade Agreements and joined regional and international economic communities.

This programme served as an open dialogue between experts, businesses and universities as well as vocational schools, aiming to strengthen the links between businesses and educational institutions, said General Secretary of VCCI Pham Thi Thu Hang.

“Not only do enterprises provide information about their demand for employers, but they also directly participate in the vocational training process so they can conduct an objective assessment of their labourers, providing them with practical knowledge and experiences,” she said.

Microsoft’s YouthSpark is a global initiative that aims to offer opportunities to 300 million youth in more than 100 countries around the world. The programme aims to provide technological skills in training, along with connections for employment and entrepreneurial opportunities for youth.

In Vietnam, it focuses on three areas including employment, investment for youth and support for young leaders across the country.

Chinese diplomat hails Vietnam’s investment climate

The business environment in Vietnam has been increasingly improved since the birth of the Law on Foreign Investment, Economic and Commercial Counsellor of the Chinese Embassy in Vietnam Hu Suo Jin has said in an interview granted to Nhan Dan (People) Newspaper.

The diplomat, who has been in Vietnam for 15 years, said the law has been supplemented and revised for many times to build a more favourable environment for overseas investors, including those from China.

In particular, the new Law on Investment adopted in July 2015 created an even more open, equal and flexible foreign investment climate, he added.

According to Hu, many Chinese firms hope to step up investment in Vietnam in the coming time, especially after the country participates in the Trans-Pacific Partnership (TPP) Agreement, which has high standards but also opens up a variety of opportunities.

In addition, the establishment of the ASEAN Community in late 2015 on three pillars: politics-security, economics, and culture-society not only brings opportunities for economic ties between China and ASEAN in general and Vietnam in particular, he said, adding that China supports ASEAN’s bid to promote the regional single market.

He noted that Chinese businesses are interested in all cooperation fields relating to the ASEAN Economic Community, especially garment-textile, real estate, services and tourism.

The diplomat cited Vietnam’s statistics that showed two-way trade surpassed 66 billion USD in 2015, a year-on-year rise of 13.3 percent, helping China reinforce its position as the biggest trade partner of Vietnam for the 12th consecutive year.

Currently, China is the largest import market and the fourth largest export market of Vietnam while Vietnam is the second biggest trade partner of China among 10 ASEAN nations.

China has over 1,280 foreign direct investment (FDI) projects in Vietnam with the total registered capital of nearly 10 billion USD, ranking ninth among foreign investors in the Southeast Asian country.

Popular Vietnamese products in the Chinese market include timber and fine arts products and dried fruits.

Prawn export sees increase in first quarter

The export of prawn saw a year-on-year increase of 8.5 percent in the first two months of this year, earning the country 378.4 million USD, according to the Vietnam Association of Seafood Exporters and Producers (VASEP).

The increase was greatly attributed to the strong growth in the two major markets – the United States and China-Hong Kong.

Prawn export to the United States went up 24.8 percent against the same period last year following the tariff cut from 6.37 percent to 0.91 percent as a result of the ninth Period of Review (POR9) on anti-dumping duty on Vietnam’s frozen shrimp.

The China-Hong Kong posted an even greater increase at 36.5 percent, making it the second largest export market for Vietnamese shrimp.

The strong growth of the two markets helped offset the decrease in the European Union, Japan, the Republic of Korea and Canada.

The export price of prawn rose by 4 to 5 percent.

Binh Dinh attracts over 137 mln USD in investment in Q1

The central province of Binh Dinh granted eight investment certificates and issued new business certificates to 167 enterprises with total registered capital of over 3.16 trillion VND (137 million USD) in the first quarter of this year.

Notable investment projects included the FLC hotel and shopping mall complex invested by Faros Construction JSC with a registered capital of over 2 trillion VND (87 million USD) and a high-tech pig breeding farm worth 300 billion VND (13 million USD) in Phu Cat district.

The newly-established firms have registered a total capital of 726 billion VND (over 31 million USD), up 13.3 percent compared to the same period last year.

So far, Binh Dinh has attracted 59 foreign-invested projects worth 554 million USD.

ASEAN finance ministers commit to cautious fiscal policies

The ASEAN Finance Ministers have committed to adopting cautious monetary and fiscal policies to sustain economic growth and stabilise the macro-economy, in which, economic restructuring remains a priority in the region.

They made the commitment at the 20th ASEAN Finance Ministers’ Meeting, the 12th ASEAN Central Governors’ Meeting, and the second Finance Ministers and ASEAN Central Governors’ Meeting that took place in Vientiane, Laos on April 3-4.

Finance Minister Dinh Tien Dung and Deputy Governor of the State Bank Nguyen Thi Hong attended the event.

Ministers agreed to strengthen cooperation and launch integration initiatives with a view to maintaining ASEAN’s stable development amid potential external shocks and financial uncertainties.

Reviewing tasks in the ASEAN’s financial-monetary integration roadmap in terms of liberalisation of financial services and capital, as well as capital market development, they said regional countries concluded negotiations on the seventh package of financial services liberalisation and are set to launch the eighth round of negotiations this year to further open the financial services market, with a focus on further liberalising insurance services in the region.

Ministers and central governors pledged to continue removing existing obstacles to trade and direct investment. Indirect investment and other sources of capital will continue to be liberated depending on each country’s conditions and appropriate trade defence measures.

They vowed to promote regional capital market connectivity via creating a regional integration environment and building infrastructure while supporting financial cooperation initiatives for increased connectivity and internal trade development.

At the meetings, participants reaffirmed the commitment to developing inclusive finance as a policy priority and a pillar in the ASEAN financial cooperation within the framework of the ASEAN Economic Community Blueprint.

They also discussed an action plan on ASEAN financial integration strategy with a vision to 2025, which will serve as a reference to orient regional integration and financial coordination for the next decade.

On the occasion, they also agreed to hold the ASEAN Finance Ministers’ Investors Seminar this year.

On the sidelines of the event, ministers held meetings with the US – ASEAN Business Council and the EU – ASEAN Business Council.

Airport architecture examination to be held

Airports Corporation of Việt Nam (ACV) has asked the Ministry of Transport to approve a competitive examination for architecture of Long Thành International Airport terminal.

The national and international candidates will be individuals, groups or companies. The examination dates are from April to June, 2016.

According to the contest theme, the airport terminal project’s first phase will have designed capacity for 25 million passengers and 1.2 million tonnes of goods per year, covering a total area of 400,000sq.m.

The terminal must meet both International Civil Aviation Organization and International Air Transport Association standards that ensure user-friendly services designed for passengers.

The terminal’s overall design must ensure enough acreage to connect runway, airplane and car parking grounds, and supporting infrastructure, including ingoing and outgoing airport roads.

An official of ACV said the competitive examination aims to select the best feasibility study meeting mandatory criteria regarding maximum usage and capacity, aesthetics, and architectural programming.

The winning feasibility study must also be relevant to construction of a terminal at an international airport set to become Việt Nam’s largest airport. The winning study must also be suitable for the airport’s long-term programming goals.

”The investor will work with the competitive examination results to set up a terminal project,” the ACV official said.    

A council of examiners will be established. It will include senior officials from ACV and other relevant ministries and agencies.  

The Ministry of Transport previously acknowledged the Prime Minister for allowing it to receive US$4.3 million in non-refundable aid from the Japanese Government. The money will be invested in the Long Thành airport terminal project’s feasibility study.   

Official plans said that Long Thành airport terminal will have a capacity of 100 million passengers and 5 million tonnes of freight per year when it is fully completed by 2050. The first phase of the terminal project is expected to be completed in 2025.

Investment in the Đồng Nai southern province’s Long Thành airport terminal project is estimated to total about VNĐ336.63 trillion ($14.96 billion), with the first phase costing about VNĐ114.45 trillion ($5.09 billion).

FDI projects on rise in Cần Thơ

Cần Thơ last month issued a licence to South Korea’s Tae Kwang Vina Industrial for setting up a shoe production plant in its 2B Hưng Phú Industrial Park.

At over US$ 171 million, it is the Mekong Delta city’s biggest ever foreign project, the chairman of its People’s Committee, Võ Thành Thống, said.

Many investors from Japan, South Korea and other countries have come to explore the city’s investment environment and many have sought to invest, he said.

“The city will issue licences for some new FDI projects in the coming time.”

The city would continue to make efforts to improve its investment environment to facilitate smooth business operations, he said.

It prioritised investment in electronics, garment and textile, agricultural machinery and supporting industries, production and processing of hi-tech agri and fisheries products, transport and tourism infrastructure, logistics, industrial parks, IT zones, urban areas, hospitals, and international schools, he added.

According to its Department of Planning and Investment, the city attracted seven FDI projects last year with a total registered capital of $19.1 million.

In seeking foreign investment, the city has focused on money instead of quality, and it plans to change this.

The city has so far attracted FDI worth more than VNĐ20.08 trillion ($900.7 million), a quarter of all business investment.

Most of the investors are from Asian economies like South Korea, Singapore, Hong Kong, Thailand, and Taiwan, with western countries like the US, Germany and France not having a major presence.

Many of the projects were small in scale and use outdated technologies, and with little collaboration between large foreign firms and their domestic counterparts, the occurrence of technology transfer is rare.

The city seeks to improve its investment promotion efforts to attract more quality foreign projects.

Consumption tax hike needed

Health activists say special consumption taxes imposed on alcohol, beer and tobacco should be increased to improve community health and tackle the national budget deficit.

Special consumption taxes were meant to limit the consumption of products harmful to consumers. But alcohol, beer and tobacco remain cheap and easy to buy in a local market, experts said at a forum about special consumption tax and community health held on Monday.

Nguyễn Tuấn Lâm from the World Health Organisation (WTO) in Việt Nam was quoted by infonet.com as saying that increasing tax would be a win-win solution for both the Government and citizens, amid heavy budget deficits. Citizens could potentially avoid diseases caused by consuming those products. And the national budget would have more revenue sources. Experience in Thailand and the Philippines had proven this, Lâm said.

Experts said at the forum that the increases in special consumption taxes on alcohol, beer and tobacco which followed the amended Law on Special Consumption Tax 2014 were not high enough.

For example, the tax rate on tobacco increased from 65 per cent to 70 per cent at the beginning of this year. This tax rate will increase to 75 per cent on January 1, 2019. This  would make the retail price of tobacco increase by around 2.9 per cent and 2.8 per cent, respectively. Excluding inflation, the average increase totalled just one per cent per year from 2015 to after 2020, compared to an average economic growth rate of five per cent.

In other words, the price of tobacco would decrease over the years, as would the prices of alcohol and beer, one expert explained. So the special consumption tax will fail to discourage consumption.

“Increasing the special consumption tax is necessary to limit consumption”, said economic expert Lê Đăng Doanh.

Phạm Thị Hoàng Anh, director of Health Bridge Việt Nam, said that beer and alcohol caused 5.7 per cent of deaths and 4.7 per cent of disease burden measured by disability-adjusted life year (DALY), while tobacco accounted for 16.9 per cent of deaths and 8.8 per cent of disease burden.

Cheap tobacco, alcohol and beer was the number one cause for rampant consumption, especially in rural areas of Việt Nam. This negatively impacted community health and caused economic and social burdens, Hoàng Anh said quoted by the infonet.

The news website also reported that on Monday several non-Government organisations sent a document to the National Assembly and several Government agencies, regarding their agreements as to the calculation of special consumption tax as regulated in the new rules which went into effect on January 1, 2016.

The calculation of the tax is expected to push up retail prices of tobacco, alcohol and beer by 2.7 per cent. This would help increase budget revenue, while limiting consumption of those products, experts said.

But beverage companies want to delay the application of amended regulations on calculating special consumption tax until the beginning of 2017. They say they need time to adapt because the new legal amendments pose challenges for them.

So far, the special consumption tax – with 60 per cent coming from tobacco, alcohol and beer – contributed around seven per cent to the budget, according to Hà Huy Tuấn, Deputy Chairman of the National Financial Supervisory Committee.

Localities urged to use vendor database

To effectively utilise opportunities through free trade agreements (FTAs) provinces and cities should launch databases on foreign-invested enterprises and domestic suppliers to help domestic firms become suppliers of foreign counterparts.

Nestor Scherbey, senior consultant at the Việt Nam Trade Facilitation Alliance (VTFA), made this suggestion during a conference held yesterday in the southern province of Đồng Nai.

With the assistance of technical experts, provincial governments need to conduct surveys on foreign-invested enterprises in order to define types of materials and intermediate goods that local manufacturers could provide foreign firms. This move would ensure that the final product would be eligible for tax incentives from agreements such as Trans-Pacific Partnership (TPP) and EU-Việt Nam FTA.

Not only localities, he said, but multinational companies should also draw up plans and make changes in their global supply chains, in order to meet TPP’s regulations on origin and that of other agreements if they wanted to take advantage of tax incentives that these agreements could bring, as countries to which they exported their finished products participated in these agreements.

In his speech, Đậu Anh Tuấn, director of the Việt Nam Chamber of Commerce and Industry’s Legal Affairs Department, said Việt Nam remained a safe destination for many foreign-invested companies, and the ratio of foreign-invested firms which used materials and parts supplied by Vietnamese enterprises has been increasing.

A report from the Japan External Trade Organisation (JETRO) showed that the purchase of spare parts from Japanese firms in Việt Nam in 2015 was 32.1 per cent. The rate was higher than 22.4 per cent in 2010. However, the rate was lower than those of Japanese enterprises operating in China with 64.7 per cent, Thailand with 55.5 per cent, Indonesia with 40.5 per cent, and Malaysia with 36 per cent.

Economists suggest ways to access global supply chains

Nestor Scherbey, a senior advisor of the Vietnam Trade Facilitation Alliance (VTFA), has suggested Vietnamese cities and provinces establish an information database on foreign direct investment (FDI) businesses and domestic suppliers.

The move aims to help local suppliers take part in the operation of the FDI enterprises, the expert said at a conference in Bien Hoa city, in the southern province of Dong Nai on April 4 which aimed to seek ways to improve the business climate and promote investment activities in Vietnam.

Scherbey further said that trade activities in the 21 st century require the integration of global supply chains in order to facilitate the circulation of goods globally.

He suggested multi-national companies draw up and adjust their own global supply chains, to meet requirements on the rules of origins stipulated in the Trans-Pacific Partnership (TPP) agreement, the Vietnam-EU Free Trade Agreement and other trade deals.

The advisor described this as essential to help companies make the best use of tax preferences offered by such pacts when exporting their products to EU or TPP member nations.

Local authorities should conduct surveys on FDI businesses to study their demands for materials and intermediate goods, he said, noting that it is a must for local firms to prove that they satisfy profile-related requirements set by the agreements.

Dau Anh Tuan, head of the Legal Department under the Vietnam Chamber of Commerce and Industry (VCCI), said improving the provincial competitiveness index (PCI) to improve the business climate is crucial to attract investors and spur local economic growth.

A survey recently conducted by the VCCI among FDI and TPP businesses shows that Vietnam holds advantages in terms of tax, low risk of asset reclamation, political stability and positive business policies.

The respondents also described Vietnam as a safe destination, as evidenced through the increasing number of FDI firms investing in the country.

Economists said apart from the transport infrastructure and other services, investment in logistics infrastructure is necessary to facilitate international trade.

Scherbey added that the global supply chains are evolving rapidly, requiring goods to be available in warehouses.

New wave of Japanese investment to arrive in Vietnam

A new wave of Japanese investment is expected to arrive in Vietnam in the near future thanks to the Trans-Pacific Partnership (TPP) Agreement.

According to Chairman of the Vietnam Chamber of Commerce and Industry (VCCI) Vu Tien Loc, Hanoi as an economic and trade hub in the north, is likely to be an attractive destination to foreign investors.

He suggested domestic business players proactively take this opportunity to make use of the preferential tariff as committed under TPP.

He noted that the country has spared no effort to improve the investment climate and management efficiency.

That Hanoi leaped two places in the Provincial Competitiveness Index (PCI) shows the city’s determination to better institutions and accompany businesses to attract foreign investment, especially in the field of tourism.

Director General of the Tien Bo International Company Nguyen Thi Thanh Nhan said numerous pharmaceutical and water environment companies are studying investment in Hanoi.

Japanese firms also showed special interest in the fields of designing and decorating the urban landscape and craft villages towards modern trends but still keep the capital’s traditional unique features, she said.

Besides, many are eyeing tourism and service projects in Hanoi, in recognition of the city’s historical and intangible cultural values, she added.

Minister of the Japanese Embassy in Hanoi, Katsuro Nagai, described the cooperation of businesses between the two countries through specific projects as a practical move to boost bilateral strategic relations.

In addition to transport, Japanese companies want to invest in tourism, he said, adding that the cooperation opportunities for Hanoi and Japanese businesses are promising if the two sides make good preparation.

The Hanoi Promotion Centre on Trade, Investment and Tourism have introduced Japanese firms to the city’s tourism potential and called on them to invest in hi-tech and industrial parks in the city, as well as some projects under the public-private partnership (PPP) form.

The Japan Desk set up by Hanoi in 2014 is effectively assisting Japanese businesses.

Regarding the investment ties between Hanoi and Japan , Chairman of the municipal People’s Committee Nguyen Duc Chung confirmed that the city treasures and hopes to expand cooperation with Japanese partners.

Hanoi will push ahead with administrative reform and synchronise its policies and institutions to support Japanese businesses and build a friendly investment environment.

GrabCar officially launched in HCM City

Southeast Asian taxi hailing app Grab officially launched its GrabCar service in HCM City last week after receiving approval from the Government.

Grab last January successfully sought the Government’s approval to trial GrabCar as well as the creation of a legal framework for the new service.

It began the trial in Hanoi, HCM City, Da Nang, Khanh Hoa, and Quang Ninh.

Nguyen Xuan Thuy, deputy director of the transport ministry’s Department of Transport, said so far only GrabTaxi and transport companies and cooperatives using vehicles under nine seats are selected to participate in the programme.

Le Hoang Minh, deputy director of the HCM City Department of transport, said the department would work to ensure proper implementation.

Nguyen Tuan Anh, general manager of Grab Vietnam, said with more than 30 million mobile phones users with 3G services, Vietnam is a promising market.

Regional workshop discusses gender integration in rural transport operations

About 80 delegates from 11 countries in the East Asia Pacific Region gathered in Vietnam April 4 to discuss how to meaningfully and effectively integrate gender in rural transport operations.

The workshop, lasting from April 4-6, 2016, is part of a regional Gender Capacity Program for Rural Transport projects, which also involves exchange visits; technical assistance to participating countries, and a forum for rural transport clients to discuss how to reach male and female beneficiaries optimally.

Recognizing that development targets in the rural transport sector are to be met though joint efforts and cooperation, the workshop brings together technical experts from the social and transport sectors, national gender institutions and policy, and project management levels.

The objective of the Program is to strengthen capacity for government partners in the region to meaningfully address gender inequalities in transport projects through learning from lessons and good practices from within and outside the region.

The program will assist participating clients establish an action plan that adopt relevant lessons from other rural road projects and modify them to fit the local context and individual project development objectives.

Consideration of gender in the transport sector is essential to ensure that transport is equitable, affordable and that it provides access to resources and opportunities required for inclusive growth and poverty reduction.

The World Bank (WB) is facilitating the peer-to-peer learning as a way of transferring, replicating, and scaling up what works in development. The workshop discusses rational and good practices for i) integrating gender in project design of rural roads; ii) how to institutionalize effective road maintenance and poverty reduction and iii) how to take account of gender aspects of road safety.

Participants discusses  examples from for example Vietnam, Laos, China, Nepal, India and Solomon Islands on why and how to integrate gender in project designs, and specific experience with road maintenance as a means of involving women and reducing poverty on a sustainable basis, and road safety and security, and how these affect women differently from men.

Participants also visit Lao Cai Province to experience firsthand the operations of local women’s road maintenance groups in four communes of Bac Ha district, which focused on commune and village roads.

SBV wants new contracts for cheap home loans halted

The State Bank of Vietnam (SBV) has told commercial banks to stop signing new contracts with customers under the Government-endorsed VND30-trillion home loan program from March 31.

As the loans pledged within the program have exceeded VND30 trillion (US$1.34 billion), the central bank has told lender banks to focus on loan disbursements, instead of clinching new deals.

A number of banks continued signing low-interest home loan contracts under the program last week after the central bank informed that disbursements of the home loan package will continue after the previously scheduled deadline on May 31 until all the signed loans are disbursed.  

Participating in the home loan program are 19 commercial banks: Agribank, BIDV, Vietcombank, VietinBank, PVcomBank, Eximbank, SHB, TPBank, SCB, NamABank, SeaBank, VPBank, OCB, LienVietPostBank, VietBank, VIB, NCB, BaoVietBank and ACB.

According to the SBV, banks have pledged around VND30.12 trillion (US$1.3 billion) in loans for 46,246 customers, with over VND21.32 trillion of it disbursed as of March 10.

Earlier, the SBV said it will ask the Prime Minister for approval to extend the disbursement deadline for the program after the May 31 deadline.

The central bank will suggest refinancing the banks participating in the program so that they could continue disbursing low-interest loans for individual and household borrowers to acquire, build or upgrade homes.

The central bank said in a statement that it would send documents to banks about refinancing the participating banks at the request of the Prime Minister and about the disbursement process. It told commercial banks to get updated information about the disbursement on the SBV’s website.

Experts, who took part in a conference in HCMC last week, hailed the central bank’s move, saying it would help individual and household borrowers. However, Le Huu Nghia, director of Le Thanh Company, said the extension should be implemented carefully.

As the loans pledged by banks have exceeded VND30 trillion, banking and financial expert Nguyen Tri Hieu called for a halt to the signing of new loans to avoid risks and stressed all the loans signed should be disbursed.

At the conference, experts emphasized the need to launch new home loan packages with low interest similar to the VND30-trillion program to support low-income people to buy homes.

The package was launched in mid-2013 to help civil servants and low-income people buy homes, prop up the real estate market and solve bad debt caused by long-delayed property projects.

The package has partially achieved its goals as it has helped medium-income earners while the poor, who are in dire need of homes, have not benefited much from it, experts said at the conference held to discuss the impact of the home loan package.

Hieu said people with monthly income of about VND4 million (US$178) cannot afford to buy social and commercial homes. Meanwhile, medium-income customers with an average income of VND10-15 million (US$446-669) per month can pay by installment plan.

Hieu said more home loan packages are needed for low-income people but suggested the Government map out plans to support people who really need to buy and lease houses. Borrowers should be allowed to enjoy annual interest rates of 4-5% and pay the principal over a period of 20 to 30 years.

Other experts said low-income people should be backed to lease homes and that apartments with lower prices should be built to give them the opportunity to acquire houses.

The property market has steadily recovered in the past years and Hieu said the VND30-trillion home loan package has contributed a little to the recovery as it accounts for only 10% of loans totaling VND300 trillion (US$13.4 billion) for the market nationwide.

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

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