BUSINESS IN BRIEF 9/6
Vissan to list on UPCoM and HSX
State-owned meat processor Vissan will list its shares on the market for unlisted public companies (UPCoM) and then move to the Hochiminh Stock Exchange after it completes procedures to become a shareholder-owned concern this July.
At a general meeting in the city last week, Vissan shareholders elected members of the board of directors and the supervisory board and approved a plan to list shares on UPCoM and the HCMC bourse later. Shareholders permitted Vissan’s board to choose a listing date.
Van Duc Muoi, general director of Vissan, said the firm would try to complete listing procedures three months after it gets a business registration certificate, and float shares on the southern exchange a year later in line with the prevailing regulations.
According to the Prime Minister’s Decision No. 51/2014/QD-TTg, effective from November 1, 2014, within 90 days after getting a business registration certificate, State-owned enterprises must finish procedures for their recognition as public firms, register their shares at the Vietnam Securities Depository and apply to list on UPCoM.
Besides, eligible SOEs are required to get listed on the stock market within one year after getting a business registration certificate.
Vissan will do business registration paperwork and get a new seal for a joint stock company.
Vissan’s board in the 2016-2020 term has a representative from Vietnam’s International Agriculture Nutrition JSC (Anco) which owns 14% of Vissan’s chartered capital. Last year, Masan Group announced to own a 70% stake in Anco after its acquisition of a strategic stake in Sam Kim Co Ltd.
Vissan’s board members now include Pham Trung Lam, Anco general director, Nguyen Ngoc An, Vissan deputy general director, Van Duc Muoi, Vissan general director, Nguyen Phuc Khoa, deputy general director of Saigon Trading Group (SATRA), and Tran Ngoc Dang, SATRA deputy director for finance and accounting.
Khoa has been appointed Vissan chairman and Muoi took up the post of general director in the 2016-2020 term. At present, SATRA represents a State stake of over 67% in Vissan.
Doan Thi My Duyen, chief accountant of Masan Group, has joined Vissan’s supervisory board, together with Nguyen Kim Khanh, deputy head of Vissan’s finance-accounting department, and Hoang Thi Kim Phuong of the department. Khanh has become head of the supervisory board.
According to the 2016-2020 business plan, Vissan looks to attain net revenue of nearly VND4 trillion in 2016 and the figure is forecast to rise to VND5.25 trillion in 2020. Its after-tax profit is expected at VND99.1 billion this year, VND99.4 billion in 2017, over VND106 billion in 2018, VND9 billion in 2019 and VND52 billion in 2020. The firm said it would pay an annual dividend of 5%.
Vissan general director Van Duc Muoi said low after-tax profit forecasts in 2016-2018 are attributable to an expected surge in operation costs. Meanwhile, its 2019 and 2020 after-tax profit would drop as Vissan plans to invest an estimated VND1.5 trillion into a plant in Long An Province in 2019.
This facility will be up and running in the same year, so loan interest and depreciation cost of fixed assets could edge up.
Muoi said the company was planning to use VND1.5 trillion from its budget, 30% of the investment cost of the plant, and borrow the remaining 70% from banks to fund the new facility.
Vissan launched an initial public offering in March with the State holding a 67.76% stake, Anco 14% and five other investors 14%. Its employees hold a 4.21% stake and the labor union 0.02%.
HCMC seeks ODA for underground walkways
Authorities of HCMC have asked the central Government for permission to use a Japanese loan to develop facilities for public use in an underground shopping mall in the downtown area.
An official development assistance (ODA) loan from the Japan International Cooperation Agency (JICA) which is being sought by the city will go to building public walkways, public square and auxiliary works in the underground mall linking the stations of Metro Line No. 1 in front of the Ben Thanh Market and the Opera House.
The city has also asked Japan’s Toshin Development Company to work with JICA to seek ODA.
The company submitted the underground shopping mall project to the city government in March. The 45,420-square-meter center would comprise 21,600 square meters of underground walkway, 16,850 square meters of retail, dining and entertainment space, and auxiliary works.
The project is estimated to cost VND8.4 trillion (US$376.6 million), including an ODA loan of VND4.98 trillion used to finance public walkways, public square and auxiliary works. The rest would be funded by investors to build and manage the shopping mall in the form of direct investment, and construct public works under the build-transfer (BT) format.
According to Toshin, the project would be carried out from late 2019 to early 2024 and the time needed for recovering State capital is 13 years from the date of inauguration.
Currently, the Metro Line No.1 station in front of the Opera House and the underground track under Le Loi Boulevard are under construction.
Experts warn of environmental hazards behind FDI attraction
Experts have sounded an alarm bell over environmental hazards associated with a race to attract foreign direct investment (FDI) at all costs.
Speaking at a seminar in Hanoi last week on free trade agreements with investment flows and environmental issues, Tran Thanh Thuy from the Center for People and Nature Reconciliation said nearly 90% of the projects in the textile sector belong to Chinese and South Korean investors in Nam Dinh Province.
Data of Nam Dinh’s Department of Planning and Investment show the province’s FDI approvals totaled around US$190 million last year, up from 2014’s US$135-140 million, he said.
Thuy said the most polluting industries in Vietnam include leather tanning, fish farming, textile, iron and steel.
The free trade agreements Vietnam has recently signed have led to an upsurge in investment in polluting sectors, Thuy noted.
According to Do Thanh Bai from the Chemical Society of Vietnam, the textile sector can attract a lot of investments thanks to low labor cost. However, the major challenge is how to properly treat wastewater.
In addition to textile, other sectors with high FDI approvals such as leather tanning, oil refinery and electronics also pose a high risk of environmental pollution.
In her presentation, Thuy cited the National Economics University’s statistics on compliance with regulations on environmental protection as showing 60% of FDI enterprises discharge wastewater that fails to meet standards. Nearly 70% of FDI enterprises said they could save environmental costs by 10-50% by setting up shop in Vietnam in comparison to their home countries.
Speaking at the seminar, economic expert Le Dang Doanh said foreign investors have come to Vietnam because they want to maximize profits while Vietnam’s oversight of environmental issues is lax.
According to Doanh, Vietnam is not yet an industrialized country but environmental pollution is really serious, which affect the quality of life.
Each year damages caused by environmental pollution in Vietnam account for 2.5% of GDP while the percentage in China is 6.5%, Doanh said, adding Vietnam might surpass China in this regard if no action is taken to remedy the situation.
Thailand helps Vietnamese firms join exhibitions effectively
The Thailand Convention and Exhibition Bureau (TCEB) on May 30 hosted a meeting with enterprises in HCMC to help them build skills to effectively join international trade exhibitions.
TCEB has also launched support programs for those Vietnamese businesses partnering with Thai firms in the wake of a strong rise in Vietnamese tourists to Thailand. The programs will fund Vietnamese firms’ travel costs when they participate in trade fairs in Thailand and offer other forms of assistance like making arrangements.
TCEB has cooperated with the Vietnam Trade Promotion Agency (Vietrade) to provide financial aid for Vietnamese firms to participate in trade shows in Thailand. Nguyen Ba Vinh, a TCEB representative in Vietnam, said the support is targeting local dealers and small and medium-sized enterprises which seek assistance and information on exhibitions.
Supawan Teerarat, TCEB’s vice president for strategic and business development, said Thailand is home to various exhibitions, prompting the Thai government to introduce programs to attract businesses in the region to join. It has set a goal of welcoming 191,000 foreign visitors to exhibitions in 2016, from which it could earn US$447 million.
The number of Vietnamese visitors to Thai exhibitions has been on the rise in recent years.
TCEB statistics showed Vietnamese firms made up 6.63% of the total arrivals to Thailand shows in the 2013-2015 period. The sectors that attracted attention of Vietnamese corporate visitors included food and farming with 48% the total Vietnamese arrivals, automotive engineering with 25% and healthcare with 10.5%.
HCMC’s Jan-May exports grow slightly
Export revenues of HCMC amounted to nearly US$12 billion in the first five months of the year, up a mere 1.2% against the same period a year earlier, heard a review meeting of the city on May 30.
If crude oil had not been taken into account, the city’s exports would have picked up 7.1% year-on-year to US$11 billion, director of the HCMC Department of Planning and Investment Su Ngoc Anh told the meeting on January-May socio-economic performance.
Strong export growth was recorded in some export markets like China with 37.3%, South Korea with 16%, Hong Kong with 16.6%, Indonesia with 163.7%, the Netherlands with 22.3% and India with 20.8%. Meanwhile, the city’s exports to Japan, Malaysia, Australia, Singapore and Thailand slowed down.
In the five-month period, the city imported US$14 billion worth of products, up 9.2% year-on-year. Most of the imported products were equipment and materials for production of pharmaceuticals, electronic products and parts, and autos.
Regarding the monetary market, banking operations in HCMC were stable in the period, with borrowing and lending inching up against the same period a year ago.
In particular, borrowing by credit institutions in HCMC as of the end of this month is estimated at VND1,637 trillion, increasing by 4.5% against late last year and nearly 20% year-on-year. Meanwhile, HCMC banks have reported VND1,297 trillion in total outstanding loans, up 5% versus late last year and 16.2% from the year-ago period.
The bad debt ratio as of late March had edged up against earlier this year and accounted for over 4% of total outstanding loans, up 12 basis points against late last year.
According to Anh, the city will continue taking measures to promote production, help enterprises ride out difficulties and improve the investment environment.
In addition, the city will foster trade promotion, expand markets, introduce contents of the Trans-Pacific Partnership (TPP) trade agreement, the ASEAN Economic Community (AEC) and free trade agreements, and support enterprises to actively prepare for the implementation of these accords.
In all, HCMC’s total sales of goods and services in the January-May period surged by 11.2% to VND288.55 trillion.
According to Nguyen Phuong Dong, deputy director of the HCMC Department of Industry and Trade, the industries of textiles, plastics, beverages and electronics posted positive growth in the period.
To assist enterprises and further boost supporting industries, the city is preparing workshops for foreign-invested enterprises active in supporting industries, he said, adding next month the department will send the city government a draft decision on stimulus for supporting industries.
Interbank interest rates drop further
Interest rates for overnight to one-week loans on the interbank market on May 30 plunged to the lowest in more than one year after the State Bank of Vietnam (SBV) issued Circular 06/2016/TT-NHNN to reduce adequacy ratios at banks.
The overnight rate fell 0.32 of a percentage point to 1.46% a year and the one-week rate dropped 51 basis points to 1.55%. In contrast, the annual interest rate for two-week loans inched up 7 basis points to 2.45%, a low level in recent months.
Low interest rates on the interbank market indicate that liquidity has been ample in the banking system. An investment fund told the Daily that interest rates might fluctuate slightly this week and liquidity would remain stable.
The SBV last Friday issued Circular 06 amending and supplementing a number of provisions in Circular 36/2014/TT-NHNN which stipulates limits and adequacy ratios at banks. Notably, the maximum ratio of short-term funds used for medium- and long-term loans is unchanged at 60% until the end of this year. The ratio will dip to 50% from January 1, 2017 and 40% from the beginning of 2018.
This is expected to keep the interbank currency market stable in the coming time.
Experts at Bao Viet Securities Company said the new circular would give banks time to prepare to meet the requirements for adequacy ratios set by the central bank. It will ease pressure on liquidity at banks in the short term.
Sales of Government bonds on the secondary market shot up 36% against last week. Foreign investors net bought over VND2.2 trillion worth of G-bonds.
Meanwhile, coupons for one-year, two-year and three-year bonds declined more than 4 basis points each to 4.58%, 4.93% and 5.376% a year respectively. The respective bond interest rates for seven-year and 15-year tenors stood at 6.754% and 7.693%, down 1 basis point each.
The coupon for five-year bonds inched up 0.004 percentage point to 6.22% and that for ten-year bonds stayed unchanged at 6.99%.
A foreign investment fund said the central bank’s new circular is to ensure stability for the banking system, pump more credit into the property sector and boost economic growth as Vietnam’s first-quarter gross domestic product (GDP) growth was lower than in the same period last year.
The circular is expected to fuel credit growth in the coming time. The investment fund said credit growth would hit its peak this year before falling next year. Higher credit growth will prop up GDP growth.
However, the circular may lead to an increase in bad debt and net interest margin (NIM) and the capital adequacy ratio (CAR) may become worse.
Vietnam – Canada trade revenue grows in Q1
Vietnam leads ASEAN members in bilateral trade revenue with Canada, with the figure hitting 928.97 million USD in the first quarter of 2016, up 11.8 percent year-on-year.
According to Statistics Canada, Canada exported 92.9 million USD worth of goods to Vietnam, an annual decrease of 38.7 percent during the period. The country spent 836.1 million USD on Vietnamese imports – mainly machinery, electronic devices, apparel and footwear, 23 percent higher than last year.
Vietnam secured a trade surplus of 743.2 million USD, with an annual surge of 123 percent in the overall value of machinery and electronic devices exported to Canada.
Canada bought less seafood from Vietnam, leading to a drop of 22.4 percent in revenue compared to last year.
Vietnam mostly imported fertilizer, nuts, seafood, machinery-spare parts and fur from Canada.
Vietnam ranked fifth in ASEAN in terms of imports from Canada but exports the most to the country.
In the period, the ten ASEAN state members together recorded almost 2.9 trillion USD worth of exports to Canada and more than 1 trillion USD worth of imports from the country.
Belarus ratifies EAEU – Vietnam trade deal
Belarusian President Alexander Lukashenko signed to ratify the free trade agreement (FTA) between the Eurasian Economic Union (EAEU) and Vietnam on May 31.
The pact was given the green light by the House of Representatives of Belarus on May 25.
Belarusian First Deputy Minister of Foreign Affairs Aleksandr Mikhnevich noted the trade pact would boost bilateral cooperation with Vietnam, helping Belarus’ products make inroads into Vietnam, a gateway to the Southeast Asian market.
The EAEU, which comprises Russia, Belarus, Kazakhstan, Armenia and Kyrgyzstan, signed the FTA with Vietnam in May 2015. This was the first FTA signed between the EAEU and an external partner.
Previously, Russia and Kazakhstan ratified the trade pact, which will lift most tariffs on goods traded among participants.
The deal is expected to increase trade revenue between Vietnam and the EAEU to 10 billion USD in 2020 from the current yearly average of 4 billion USD.
Vietnam, China look to boost trade ties
Minister of Industry and Trade Tran Tuan Anh and General Director of China’s Administration of Quality Supervision, Inspection, and Quarantine (AQSIQ) Zhi Shuping discussed measures to enhance trade and export links between the two countries in Ho Chi Minh City on May 31.
Minister Anh said Zhi’s working visit to Vietnam will promote cooperation between ministries and sectors in many fields.
He stressed that enhanced connection between Vietnam’s Ministry of Industry and Trade (MoIT) and the AQSIQ will help implement the two countries’ strategic cooperation programmes, creating favourable conditions for Chinese and Vietnamese enterprises to forge trade and export connections.
The Chinese official highlighted the great potential for cooperation between his agency and Vietnam ’s MoIT because the two sides work in similar fields.
He said his agency hopes to closer work with the MoIT to build long-term cooperation, towards fostering trade links between the two nations and their business communities.
During the talks, representatives from the two agencies also looked at issues related to cross-border trade management and export-import goods quarantine.
Vietnam-China trade ties have recorded rapid growth in recent years. Vietnam is now China’s biggest ASEAN trade partner.
Chinese statistics show that bilateral trade revenue hit 95.8 billion USD in 2015, a year-on-year increase of 14.6 percent.
In January 2016, 7.8 billion USD worth of goods were traded between the two nations.
Hai Phong remains among top FDI destinations
The northern port city of Hai Phong still holds its position among the country’s top performers in foreign direct investment (FDI) attraction with 31 newly-registered and capital adjusted projects valued at more than 1.74 billion USD in the first five months of the year.
Large economic groups from Japan, the Republic of Korea (RoK) and Belgium chose Hai Phong to land their investments thanks to the city’s favourable geographical location and potentials. The city is housing more than 450 valid FDI projects with a total registered capital of over 12 billion USD.
The RoK LG Display Co.Ltd’s OLED display project at Trang Due Industrial Park is among the largest foreign-invested projects. Kicked off in May, covering 40.2 hectares, the 1.5 billion USD factory will come on stream next year and is expected to provide jobs for some 6,000 local people.
The robust results in FDI attraction represents the municipal authority’s concerted efforts to improve administrative procedures and the business investment climate, as well as further investment promotion activities, said Secretary of the municipal Party Committee Le Van Thanh.
He highlighted that prompt land clearance and policies to attract a high-quality workforce are also significant contributors to the city’s FDI attraction.
Such projects as Cat Bi International Airport and Hai Phong International Container Terminal (Component B) together with a comprehensive and modern transport infrastructure will give huge advantages to the city to lure more FDI capital and tap its position in the northern coastal region to the fullest extent, in the coming years, he noted.
Ho Chi Minh City’s customs sector looks to facilitate trade
Ho Chi Minh City’s Department of Customs has said it always defines trade facilitation as one of its most important tasks.
At a seminar on comprehensive approaches to trade facilitation and capacity improvement for businesses held in the city on May 31, the department reported that e-declaration and handling dossiers online have helped businesses save much time, costs and manpower.
Ho Chi Minh City is home to over 140,000 active firms with customs filing, accounting for 40 percent of the country’s total.
According to the department, nine out of 18 ministries and agencies have so far connected with the national single window. The city’s customs sector has also renewed its supervision and risk management, adopted technological advances in its automatic cargo clearance system and built e-permit, e-payment and e-certification of origin systems.
Deputy Director of the municipal chapter of the Vietnam Chamber of Commerce and Industry Tran Ngoc LIem acknowledged progress in customs procedures reform but also admitted existing hindrances, saying that delayed customs clearance is the result of a number of overlapping legal regulations.
Statistics show that Vietnam has 256 documents instructing specialised management, including 20 customs laws and ordinances, he added.
Dinh Ngoc Thang, Deputy Director of the city’s Department of Customs, said licensing for exports-imports and specialised inspections are major obstacles to customs clearance.
He called for closer cooperation among ministries, departments and the business community throughout the customs procedure reform.
In the near future, the department plans to halve the time needed to process customs clearance and work with specialised inspection agencies to reduce the timeline for handling specialised inspection procedures to 5-7 days, from the current 10-15 days.
Investors to seek opportunities in Hanoi at upcoming event
Hundreds of Vietnamese and foreign investors interested in business opportunities in Hanoi will be present at a conference slated for June 4 in the capital city.
They are among at least 500 domestic and foreign delegates to the event, which is themed “Hanoi 2016 – Cooperation, Investment and Development,” said Deputy Director of the municipal Department of Planning and Investment Vu Duy Tuan.
At a meeting with the press on May 31, Tuan noted that the conference is a chance for Hanoi’s authorities to reiterate their commitment to creating a transparent and favourable environment for all enterprises.
The municipal People’s Committee and businesspersons will discuss and devise measures for improving the local investment climate and methods for attracting investments and development cooperation with companies.
The conference will also serve as a platform for enterprises to seek partnerships, he said.
During the function, the local administration is to call for companies to engage in social welfare programmes in environment, health care, education and culture to raise local living standards.
It will also grant investment registration certificates to major projects while honouring investors who have substantially contributed to the socio-economic growth in Hanoi, Tuan added.
EVFTA – boost for bilateral trade and intestment
The EU-Vietnam free trade agreement (EVFTA) will create a boost for trade and investment between the two sides, affirmed Deputy Minister of Industry and Trade Tran Quoc Khanh at a seminar on opportunities brought by the agreement for businesses in Hanoi on May 31.
According to Khanh, two-way trade increased from 6.3 billion USD in 2003 to 41.2 billion USD in 2015, making the EU one of the leading trade partners of Vietnam .
Statistics from the ministry showed that Vietnam ’s exports to the EU in 2015 were valued at 31 billion USD, while its import value was over 10 billion USD.
EU enterprises are running 1,809 projects in Vietnam , with a total registered capital of 23.16 billion USD.
However, the deputy minister said that Vietnam has yet to fully tap its export potential to the EU.
Vietnam ’s export value to the EU accounts for only 0.75 percent of the bloc’s total import value.
Khanh asked Vietnamese businesses to directly approach the distribution system, study European consumers’ taste, and listen to their product feedback in order to improve product quality.
Mauro Petricione, Deputy Director General of the European Commission’s Directorate General for Trade, said that the EVFTA is an important step in the roadmap to intensify bilateral trade and investment.
Both Vietnam and the EU agreed to make efforts to complete the ratification to make the agreement effective in 2018.
At the event, a guidebook on the agreement was introduced to the public.
Promoting business connections between Thailand, Viet Nam
More than 100 trade officials and business executives attended a training course on maximising business opportunities by taking part in international trade shows held by the Viet Nam Trade Promotion Agency and the Thailand Convention and Exhibition Bureau in HCM City on May 30.
The training sought to improve Vietnamese firms’ skills in participating in trade shows abroad, Bui Thi Thanh An, chief representative of Vietrade in HCM City, said.
It is an effective way to market and sell a company’s products, especially in foreign markets, she said.
But not all businesses know how to capitalise on the business opportunities fairs and exhibitions bring or even how to effectively participate, she said.
Vietrade helps businesses promote their products abroad through national trade promotion programmes, and also collaborates with foreign organisations to enable more Vietnamese firms to market their products abroad, she added.
At the event, TCEB introduced the “Thailand Extra Exhibition” that aims to provide support to international trade visitors looking to grow their business via exhibitions in Thailand.
Supawan Teerarat, strategic and business development vice president at TCEB, said Thailand organises a slew of exhibitions on the food industry, agriculture, automation, health care, infrastructure, and others.
More and more Vietnamese businesses have been visiting trade shows in Thailand in recent years to explore business opportunities, accounting for 6.63 per cent of the all foreign visitors in 2013-15, she said.
Exhibitions specialising in the food and agriculture, automotive and medical and healthcare sectors attract high numbers of Vietnamese corporate visitors, she said.
Thailand is a major trading partner for Viet Nam in Southeast Asia, with bilateral trade reaching $1.6 billion in the first two months of 2016.
Bad debts rise to 2.62% by Q1 end
Non-performing loans (NPLs) at credit institutions by the end of the first quarter this year increased to 2.62 per cent from 2.55 per cent late last year.
This news was released in a new report from the State Bank of Viet Nam.
Financial reports from credit institutions also showed that their bad debts had increased significantly in Q1.
BIDV, the country’s second-largest bank in terms of assets, remained the bank with the highest NPLs, amounting to more than VND11 trillion (US$488.8 million) at the end of Q1. The amount accounted for 1.8 per cent of the bank’s total outstanding loans and marked an increase against the 1.67 per cent rate reported at the end of last year.
BIDV attributed the rise in bad debts to its merger with the ailing Mekong Housing Bank (MHB) last year.
The same trend was seen at major banks Vietcombank and Vietinbank. By the end of March this year, Vietcombank’s NPL ratio increased to 1.84 per cent and the rate at Vietinbank was 0.96 per cent.
Eximbank’s bad debts were worth VND2.3 trillion, accounting for 2.78 per cent of the bank’s total outstanding loans. The ratio was up against the 1.85 per cent rate reported at the end of last year.
Some other banks reported a sharp rise in risk provision costs, though they have not released information on their NPLs as yet. SHB, for example, spent more than VND168 billion on provisions in the first quarter. The bank’s provisions in the same period last year was only nearly VND8 billion.
For the Asia Commercial Joint Stock Bank (ACB), although its pre-tax profits in Q1 increased by 8.35 per cent over the same period last year to VND389 billion, the bank had to spend VND22.25 billion on provision costs, an increase of 23.91 per cent year-on-year.
At the recent annual shareholders meeting, ACB said the total liabilities related to the group of six companies under its former CEO Nguyen Duc Kien remained at VND5.767 trillion. In Q1/2016, ACB set aside VND200 billion in reserve to pay towards this debt.
ACB leaders also said the bank still had two bad debts linked to two major banks that the central bank had acquired for zero dong, with VND400 billion in bad debts from the Construction Bank and VND772 billion from GPBank. ACB had to set aside VND176 billion in reserve to cover the bad debts of the Construction Bank alone.
Another listed bank that also had to increase provision costs in Q1 was Saigon-Hanoi Commercial Joint Stock Bank (SHB). SHB’s Q1 profit reached VND244 billion, up 47 per cent year-on-year, but its provision costs amounted to more than VND168 billion.
Experts warned that credit institutions should scrutinise their plans to boost lending as overextending credit at this time could cause a sharp rise in bad debts later.
Japan asked to help Vietnam finalize major infrastructure projects
Deputy Prime Minister Trinh Dinh Dung has asked Japan to support Vietnam in building and completing national major infrastructure projects at a May 31 meeting with Japanese Minister of Land, Infrastructure, Transport and Tourism, Keichi Ishi.
The two sides agreed to promote cooperative agreements in training, human resource development in construction, ecological urban development, foster people-to-people exchanges and tourism cooperation.
The Deputy Prime Minister also met with leaders from Japan’s leading economic groups. Dung said Japan is Vietnam’s leading and significant partner. At a meeting with Kyohei Takahashi, President of the Vietnam-Japan Economic Committee under the Japan Federation of Economic Organizations (Keidanren), the Deputy Prime Minister asked Keidanren to continue in cooperating with and implementing the Vietnam-Japan joint initiative to further improve Vietnam’s investment environment.
He asked them to encourage the Federation’s enterprises to further invest and transfer technology in 6 selected sectors as part of the industrialization strategy and assist Vietnam in implementing action plans in each sector.
While meeting with Hiroshima Sakuma, Vice President of Mitsubishi Corporation, Deputy Prime Minister Trinh Dinh Dung asked the Mitsubishi group to expand its investment and trade in Vietnam in various fields including infrastructure, auxiliary industries and agriculture.
On the same day, the Deputy Prime Minister also met with Shigeki Dantani, President of Sojitz group, and Takashi Yamauchi, President of Taisei group.
Deputy Prime Minister Trinh Dinh Dung concluded his trip to Japan for the 22nd Asia Future Conference.
Firms urged to seize FTA opportunities
Vietnamese businesses should be active in seeking information about markets to further penetrate into distribution systems abroad to improve their export turnover, a minister has said.
“Several local firms have been waiting for orders instead of directly seeking information from markets and listening to responses from their partners. This could make them lose several business opportunities which could benefit from Free Trade Agreements (FTAs),” Tran Quoc Khanh, deputy minister of Industry and Trade (MoIT) said.
Khanh told the seminar, “EU-Viet Nam Free Trade Agreement (EVFTA): Opportunities for Businesses” held in Ha Noi yesterday that each firm should prepare itself with an active action plan in the aspects of market orientation, partners, renewing production and administration methods, together with corporate social responsibility and business culture.
“There could be different market segments in the Asian region, but the European market is quite united. The only way for local firms to penetrate into the market is to ensure high quality,” he added.
In addition, consumers in the European Union (EU) have always paid attention to the environment and ensuring benefits to labourers. For this reason, Vietnamese exporters should note the requirements to ensure higher export turnover in the market.
Over the past decades, the EU-Viet Nam trade and investment relations have witnessed remarkable progress. The two-way trade between the EU and Viet Nam has increased nearly seven-fold from US$6.3 billion in 2003 to $41.2 billion in 2015, making the EU one of Viet Nam’s biggest trade partners.
However, a survey of the Central Institute for Economic Development (CIEM) shows that around 30 per cent of private firms had no plans in place to increase their business operations for their EU partners. Some did not even pay attention to renewal plans for long-term strategies.
“The Government should further improve awareness of businesses in implementing the renewal to avail the opportunities from the FTAs,” Tran Toan Thang, deputy head of the CIEM’s Business Environment and Competitiveness Capacity Department, said.
Mauro Petriccione, deputy general director of DG Trade, EU’s chief negotiator for the EVFTA said the conclusion of the negotiations in December 2015, had been an important step towards strengthening bilateral comprehensive relations, especially trade and investment relations.
With the level of commitment undertaken by both sides, the EVFTA has been a comprehensive agreement of high quality and balanced interests for both Viet Nam and the EU which is also expected to further promote trade and investment between the two parties.
To realise the benefits gained from the EVFTA, the EU and Viet Nam have agreed to attempt to complete the ratification process so that the agreement could take effect in 2018.
He said they would facilitate businesses both in the EU and Viet Nam to access and expand investment opportunities as well as business corporations.
The two sides have been in negotiations to find a way to implement commitments for better exchange while encouraging the business community to support each other in investment, he said, and added that the economic relations are expected to see a strong growth in the upcoming time.
Concretised efforts needed for business development
The Government is promoting the role of private enterprises for national growth, yet significant obstacles lie ahead as agencies work to accelerate their development.
Officials from several business associations revealed these sentiments to Hai quan, a newspaper of Viet Nam Customs, after Prime Minister Nguyen Xuan Phuc told a meeting in late April that private enterprises would be a driving force for economic growth.
Phuc said special support policies were needed to foster the development of start-ups and small- and medium-sized enterprises, and to intensify investor confidence.
The PM signed Resolution No 19-2016/NQ-CP in late April, which entrusts ministries with specific action plans to improve the country’s business environment and competitiveness for the third year in a row.
“I highly appreciate the PM esteeming private enterprises,” said Viet Nam Timber and Forest Product Association General Secretary Nguyen Ton Quyen. “Recent moves of the Government and the spirit of the resolution have blown a new breath of air into the business community.”
“However, enterprises are most interested in whether the policies will rapidly come to life,” he said.
Quyen said private firms needed significant capital to renew technology and improve productivity, but currently they found it hard to compete with State utility and foreign direct investment (FDI) companies in accessing credit.
Domestic timber enterprises need loans worth US$1.5-17 billion per year, but it would not be easy for them to borrow with annual interest rates of 7 per cent to 8 per cent. Firms in many other countries could manage dollar loans with rates of 1 per cent to 2 per cent, he said.
Quyen also suggested that the Government should enact more appropriate policies for human resources. Up until 2010, there were about seven vocational schools for forestry workers nationwide. Now, they have become junior colleges that educate teachers, no longer labourers.
“This makes skilled and productive workers become less and less so, causing difficulties for enterprises,” he said.
Viet Nam Textile and Apparel Association Vice President Truong Van Cam said a Government policy requiring annual minimum wage increases at enterprises was causing challenges for sectors using numerous workers, especially in the footwear, garment and textile sectors.
He said regular wage increases would push up manpower costs and restrict the ability of firms to boost investment for more productivity and competitiveness, as well as regulation of the labour market.
Cam also said it was still time-consuming for businesses to deal with customs clearances, as this process largely depends on licences of other agencies in inspecting import and export goods. There was a need for closer connection among these authorities to speed up the process, he said.
Nguyen Hoai Nam, the deputy general secretary of the Viet Nam Association of Seafood Exporters and Processors, said the country’s policies related to temporary imports for re-export were making domestic seafood and farm produce less competitive in some cases.
For example, Viet Nam enabled fish, shrimp, poultry and vegetable imports to pass through the northern port of Hai Phong before these goods were exported to China with border trade policies between the two countries.
The policy virtually helped Chinese importers dodge tariffs, and they even received value-added tax refunds in their country when exporting the goods again to other nations. This explained why China’s fish and shrimp exports were cheaper in Japan, the US and the European Union.
Nam said the Ministry of Industry and Trade should soon ask the Government to remove the temporary import for re-export policy. They should stimulate that only domestic enterprises could import materials and process them for export, he said.
A representative of production, trading and service firm Thien Bao told Hai quan under the condition of anonymity that some local authorities still ignored the national determination to improve the business environment.
Resolution No 19 recognised this situation.
“Heads of some ministries, agencies and localities do not pay adequate attention to the implementation of Resolution No 19, treating it as a movement or campaign rather than a specific task or a must-do item,” it stated.
“Oftentimes, businesses have to pay (the authorities) significant amounts of ‘lubricant fees,'” the anonymous official said. “The Government asks us to raise our voices about that, but we hesitate about ‘hitting’. We hope for more drastic actions from top to bottom so that business conditions can be eased with less costs and risks.”
To Hoai Nam, General Secretary of the Việt Nam Association of Small and Medium-Sized Enterprises, said the Government should focus on building a law to support these firms. This would ensure the most effective enforcement of national policies for them.
Nam said the policies should include a reduction in corporate income taxes, the designation of key enterprises to serve as a guarantee for other businesses in a business area, and preferential loans of commercial banks and credit funds extended to companies producing high added value products or contributing to a production chain.
The Government must continue to speed up administrative reforms, especially in providing public services, he said.
Govt keeps growth target unchanged
The Government will keep major socio-economic growth targets unchanged despite emerging woes, Prime Minister Nguyen Xuan Phuc told a review meeting in Hanoi on Monday on the nation’s January-May macroeconomic situation.
He urged mobilization of internal and external resources to maintain high growth, swift disbursement of capital for construction works, and quick equitization of State-owned enterprises (SOEs) to create new resources for growth.
Phuc also requested a working group be set up to inspect, review and remove obstacles to capital disbursements. Deputy Prime Minister Vuong Dinh Hue was assigned to head this group.
He called for a closer coordination among fiscal, monetary and other policies. He also underlined the need to guarantee the quality of growth, saying people in underprivileged areas and those affected by natural disasters should be taken care of.
Participants at the meeting agreed that the economy has been performing better, the macro economy has remained stable, inflation has been put under control, the number of startups has increased and social security has been ensured.
However, difficulties and challenges remain to be solved, with macroeconomic stability not yet sustainable and the possibility of high inflation returning still high.
The meeting was attended by Deputy Prime Minister Vuong Dinh Hue, Minister of Planning and Investment Nguyen Chi Dung, Minister of Finance Dinh Tien Dung, Governor of the State Bank of Vietnam Le Minh Hung and Minister-Chairman of the Government Office Mai Tien Dung, other government officials and economic experts.
Sugar imports likely as domestic supply falls short
The Ministry of Industry and Trade has asked the Government for permission to import 200,000 tons of sugar to offset a domestic undersupply in the coming months, the Vietnam Sugar and Sugarcane Association (VSSA) said.
This volume is outside the tariff-rate quota. If 85,000 tons of sugar Vietnam imports as committed to the World Trade Organization (WTO) is taken into account, the total import volume would surge to at least 285,000 tons this year.
Nguyen Hai, general secretary of VSSA, said the ministry’s sugar import proposal was based on supply and demand on the market but authorities should practice prudence because the domestic sugar industry might get hurt in future.
An industry source told the Daily that only 120,000 tons of sugar should be imported first to see market reactions before the remaining 80,000 tons is brought in.
According to the Agro-Forestry-Fisheries Processing and Salt Production Department under the Ministry of Agriculture and Rural Development, the country turned out 1.4 million tons of sugar in the 2014-2015 crop, down 13% year-on-year.
According to VSSA, 41 sugar mills nationwide had produced nearly 1.2 million tons of sugar by May 20, down 200,000 tons against last year. This was the second consecutive year of domestic sugar production fall.
VSSA statistics indicated the domestic price of sugar ranged from VND16,400 to VND17,100 per kilogram in the third week of May, up from the range of VND12,750 and VND13,400 in the same period last year.
Tough times ahead for shrimp exporters
Shrimp exporters will see market conditions getting dismal in the coming time even though their performance in the first four months of the year was better than in the year-earlier period.
Le Van Quang, chairman and general director of Minh Phu Seafood Corp, the country’s leading shrimp exporter, said severe drought and salination had left a negative impact on shrimp stocking. Since early this year 20-30% of the shrimp stocking target has been met.
The El Nino weather phenomenon has caused drought in the Central Highlands and Mekong Delta. Unusually low water levels in the Mekong Delta’s rivers have allowed saltwater to make its way into rice fields and fish/shrimp farms.
However, El Nino is often followed by La Nina which dumps rains, so the prospect of the shrimp export sector is bleak.
Moreover, local exporters are facing strong competition from Chinese traders who are ready to pay higher prices for breeder shrimp. Shrimp price competition from India and Indonesia is strong as well.
Minh Phu still looks to obtain export revenue of US$687 million this year, up 30% versus last year.
A report by the Vietnam Association of Seafood Exporters and Producers (VASEP) says that in the first four months this year, shrimp exports grew 7.8% year-on-year to US$858.8 million as world shrimp prices were on the rise and demand of major markets like the U.S. and the EU was strong.
Research center plans farming of deepwater rice
The Research Center for Rural Development (RCRD) at An Giang University is mulling a project to revive the cultivation of deepwater rice in the Mekong Delta.
With financial aid from Japanese firm Mitsui & Co Ltd and professional help from the Australian National University, RCRD expects the project could be expanded to Cambodia and Myanmar.
Speaking to the Daily on the sidelines of a conference on deepwater rice cultivation held in An Giang Province on May 31, RCRD director Nguyen Van Kien said Mekong Delta provinces and his center’s partners in Cambodia and Myanmar have expressed interest in expanding the farming of such a rice variety.
In the three years to end-2015, the Mekong Delta had revived a total of 190 hectares of land for cultivating deepwater rice. Of the figure, Vinh Phuoc and Luong An Tra communes in An Giang’s Tri Ton District account for 100 hectares.
Farmers have high demand for expanding the cultivation area of the variety, according to Kien.
In Dong Thap Province, Thanh Binh District has planned to expand its rice growing acreage to 1,000 hectares while Hong Ngu District has 1,000 hectares of unoccupied farmland which can be used for growing deepwater rice. The area around Tram Chim National Park is also suitable. Vinh Hung and Tan Hung districts in Long An Province want to farm this variety as well.
Cambodia has nearly 1,000 hectares of land under deepwater rice farming and Myanmar farmers are still living on this crop.
“The two countries really want us (RCRD) to come and share our experience gained through research. They want help to expand deepwater rice farming in an eco-friendly way,” he said.
Kien said his center has taken the first step by outlining a rough plan and that the next step will be to hold conferences in Vietnam, Cambodia and Myanmar to collect opinions from farmers.
RCRD’s reviews on economic efficiency in An Giang’s Chau Phu District showed that in the conventional three-crop, high-yield rice cultivation system, farmers earn VND4.8 million (US$214.42) per 1,000 square meters while the ratio of profit to investment is 0.71.
The respective figures are VND4.4 million and 1.81 in An Giang’s Tri Ton District where farmers adopt a crop rotation between deepwater rice and cassava farming.
Moreover, there are more fish in deepwater rice growing areas, a key source of nutrition and growth for farmers, Kien said. Since a lot of hydropower dams in the upper reaches of the Mekong River are forecast to result in a 40% decline in fish, growing deepwater rice could be seen as a solution to conserving aquatic resources.
AutoExpo 2016 opens in Ha Noi
The 13th International Exhibition on Automobile and Supporting Industries (AutoExpo 2016) opened at the International Convention Centre in Ha Noi on June 8.
The four-day event showcased passenger cars, trucks, and buses, along with motorcycles, bicycles and special-purpose vehicles, in addition to materials and facilities for production and assembling of autos, motorcycles and bicycles, spare parts and accessorises.
Other services such as garage, repairing and maintenance, banking, insurance and counselling for production, business and consumption also attended the expo.
The exhibition attracted the participation of domestic manufacturers and automobile companies as well as businesses from Japan, Thailand, South Korea, and United States, in addition to Portugal, China, and Taiwan.
With an exhibition space spanning more than 7,000sq.m, commercial cars and special-purpose vehicles have become an advantage for the Vietnam AutoExpo in the recent years.
Vietnam Engine and Agricultural Machinery Corporation (VEAM) showcased many models of trucks and buses, which are the favourite ones in the domestic market such as VEAM trucks, Hyundai, Maz and Chang An. Other companies including FAW-Long Giang, Dong Phong, Inamco and Tin Quang, showed many new commercial vehicles.
At the event, a statistic revealed that nearly 59,700 cars were sold in the first three months of this year, a year-on-year increase of 23 per cent. Of these, passenger cars, commercial cars and special-purpose cars rose 6 per cent, 55 per cent and 57 per cent, respectively.
Three int’l trade shows kick off together in HCM City
The Vietnam International Retail and Franchise Show (VIETRF), the 2016 Korea Sourcing Fair and the 2016 Vietnam International Coffee & Dessert Fair were kicked off together at the Saigon Exhibition & Convention Centre (SECC) in Ho Chi Minh City on June 8.
The VIETRF 2016 is organised by the Korea International Trade Association (KITA), the Association of Vietnam Retailers (AVR) and Coex, an exhibition company in the Republic of Korea (RoK).
The event has attracted more than 250 exhibitors from 14 countries and territories worldwide who are franchisers and retailers in different fields, such as food & beverage, education & training, beauty & health, fashion & accessories, home products, electronics and gifts & toys.
Among these are major education franchisers in Vietnam like AMA, Wall Street, Eye Level and Global Art.
The 2016 Vietnam International Coffee & Dessert Fair, the first of its kind, is hosted by Coex and the Vietnam Coffee and Cocoa Association (VICOFA), featuring more than 200 enterprises from 14 countries and territories.
The Vietnam Super Barista Championship will take place at the fair. The winner will have the chance to compete in the 2017 World Super Barista Championship in Seoul, the RoK.
The Korea Sourcing Fair is held by the KITA bringing together various brands from the RoK. On display are food, beverages, fresh fruits, home appliances, clothing, accessories, decór and electronic products.
In addition to the exhibition are side events that provide visitors with authentic Korean cultural experiences, including a K-Pop Festival, K-Food Tasting, K-Fashion, K-Makeup and K-Hair.
The three trade fairs will run through to June 10.
Japanese businesses eye investment in Vietnam agriculture
A workshop on opportunities in agriculture and investment cooperation between Vietnam and Japan was held by the Consulate General of Vietnam in coordination with Japan’s Kokorozashi Network in Osaka, Japan on June 7.
Participants to the event were representatives of 45 Japanese enterprises, operating in the areas of agriculture, farm produce processing, and agricultural machinery manufacturers who are eagering to learn about investment opportunities in Vietnam.
Local enterprises at the event were provided with the latest information on Vietnam’s economic development situation, its policies on hi-tech agriculture growth and investment attraction in the field, as well as information on other general investment and business opportunities in Vietnam.
They spoke highly of the potential in investment and business opportunities in the Southeast Asian country, especially in the context of the establishment of the ASEAN Economic Community (AEC) and the participation of Vietnam in bilateral and multilateral trade agreements such as the Trans-Pacific Partnership (TPP) and the Regional Comprehensive Economic Partnership (RCEP).
According to Japan’s leading bank Sumitomo Mitsui (SMBC), Japanese and Vietnamese enterprises should form business affiliations in accordance with food value chains from production to processing, sales and exports.
The participating enterprises to the event will take a working tour to Vietnam’s provinces of Ha Nam and Lam Dong between July 5-12.
Vietnam-RoK policy dialogue on ODA held in Hanoi
A policy dialogue on official development assistance (ODA) between Vietnam and the Republic of Korea (RoK) was held in Hanoi on June 8.
Vietnam’s 2016-2020 socio-economic development plan, medium-term public investment plans, and several laws were introduced at the event, along with the RoK’s new regulations and policies on development cooperation and ODA.
Head of the Foreign Economic Relations Department under the Ministry of Planning and Investment, Le Quang Manh, said that financial cooperation will play a main role in development partnership between the two countries.
To have the most effective cooperation, Vietnam should take advantage of assistance from the RoK Government and the Korea International Cooperation Agency (KOICA) and attract their investment in the fields that the RoK is strongest and where Vietnam has demand; such as transport, health, environment and high technology, Manh suggested.
The country also needs to be proactive in making proposals for projects that are in conformity with its medium- and long-term and annual development plans and policies.
Lee Sang Kyu, a representative from the KoK Ministry of Strategy and Finance, stated that the RoK Government treasures and attaches importance to its development cooperation with Vietnam, as the country is an important partner. Priority will be given to transport and urban infrastructure, education, health, environment, clean energy and information technology.
Currently, the government is building a Country Partnership Strategy (CPS) with Vietnam to help the nation achieve its goals on transport infrastructure, information technology, and human resources in its 2011-2020 socio-economic development strategy and 2016-2020 socio-economic development plan, he added.
The RoK Government signed lending agreements or committed to providing credit for nearly 60 projects worth 2.8 billion USD in Vietnam from 1992 to 2015.
At present, the country is running 34 ODA-funded projects in Vietnam with a total registered capital of 1.7 billion USD, of which 0.9 billion USD has been disbursed.
The two nations are preparing for negotiations on a framework credit agreement for 2016-2020. The RoK plans to provide ODA loans worth 1.5 billion USD for Vietnam during the period, with the focus on large-scale infrastructure, railways, health and information technology.
Air route linking Vinh to Bangkok launched
A new air route linking Vinh city in the central province of Nghe An to Thailand’s capital city of Bangkok was launched on June 8 with a ceremony at Vinh Airport.
There will be from three to four flights each day on the new route.
Speaking at the ceremony, Nguyen Xuan Duong, Chairman of Nghe An’s People’s Committee, affirmed that the launch of the route will be of great significance to the province’s social-economic development.
It also opens up opportunities for boosting investment and social-economic development for the north central region.
The route will promote links among Nghe An, Thanh Hoa and Ha Tinh provinces in building local and international tourism products and marks a new step of development in localising Thailand-bound tours via direct flights from the province to Bangkok.
Construction of Coco Bay project begins
The Empire property investor started construction of the Coco Bay project – the first and biggest entertainment-cum-hospitality complex in the central region – in the central city on June 5.
The project investor said the complex will cover 31ha with total investment of VND14 trillion (US$622 million).
The complex, which runs 600m along the coastline linking Da Nang and Hoi An, will include a series entertainment and recreational centres, resort, condotels, and a conference centre, in addition to a park and opera house.
The Coco Ocean Resort is expected to begin operations in 2017 for the first stage of the complex.
As scheduled, the complex will be managed and operated by Naman Hospitality.
The complex would be an ideal location for recreation and stay as it is sandwiched by the two biggest golf courses – the Montgomerie Links and Da Nang Golf Club.
Earlier this year, An Thinh Da Nang Investment joint-stock company commence its Soleil Da Nang Five-star hotel and luxury apartment complex project on My Khe Beach with total capital of VND10 trillion (US$444 million).
Tourist real estate remains a favourite investment magnet in this central city, attracting 25 foreign direct investment (FDI) projects worth US$1.8 billion.
The city has so far developed 16 tourist property projects, consisting of 749 villas, of which 609 are for sale and 140 for lease.