VN electronics exports expand

Viet Nam's electronics sector is becoming a force in Asia. While electronics exports from Asia rose by 17 per cent between 2010-14, Viet Nam's contribution ballooned by about 10 times, according to Singapore-based DBS group research.

The country has leapfrogged the Philippines and Thailand and will likely overtake Singapore to become the fifth largest electronics exporter in the region over the next two years.

The electronics cluster has grown rapidly in recent years. Electronics exports have expanded by 78 per cent per year for the past four years, reaching US$35 billion in 2014. Electronics accounted for 23 per cent of all exports in 2014, up from a mere 5 per cent in 2010. Electronics are now a key driver of the economy, accounting for 23.4 per cent of GDP last year, up from just 5.2 per cent in 2010.

Viet Nam's electronics boom started after 2010 due to a confluence of factors. Faced with weak global demand and persistent cost pressure, many manufacturers were searching for cheaper locations from which to produce.

In addition, competition was intensifying, making the need to restructure the supply chain even more compelling. Viet Nam's pro-foreign direct investment policies, a weaker currency, and competitive labour force all added more development fuel to the sector in subsequent years.

Its electronics cluster largely benefited from the structural shift in the regional electronics supply chain, as the influx of foreign electronics manufacturers enabled the transfer of technology and skills. So much so that it has now captured market shares from many of its regional peers.

The rise of Viet Nam's electronics cluster is due in part to the structural shift in regional electronics supply chain. Viet Nam has captured market share from many of its regional peers. In a process seen over and over in Asia, earlier players saw incomes and wages rise, opening the door for lower cost producers. Viet Nam is the latest new kid on the block.

For example, after year of rapid growth, wages in China are now about three times higher than in Viet Nam. This has led to margin compression, forcing manufactures to relocate their production bases.

Beyond the cost advantage, geography plays a role. Viet Nam's proximity to China makes it easier to integrate into existing supply chains. A growing middle class supporting domestic demand has further strengthened Viet Nam's overall attractive for global manufactures.

FDI into Viet Nam's manufacturing sector has picked up sharply in recent years. This has not been limited to low end labour-intensive manufacturing. Increasingly, high tech electronics producers are establishing a presence in the country.

Intel, LG, Panasonic and Microsoft are among the global tech giants to have expanded in the country in recent years, making a shift away from China. This trend is likely to persist. Korean electronics giant Samsung Electronics, for example, announced late last week, plans to invest $3 billion in a new smartphone factory, alongside its existing $2 billion factory.

In the longer term, the Government expects electronics exports to reach US$40 billion by 2017. Growth of a seemingly modest five per cent a year would achieve that target.

Nonetheless, the longer-term sustainability of the industry will depend on whether Viet Nam can raise productivity and move up the value chain. The country will also need to develop its own talent pool to sustain the trend.

Otherwise, electronics will only migrate to cheaper locations once wages start to rise. Indeed, Indonesia, Cambodia, Laos, and Myanmar all represent competitive alternatives for global manufacturers.

Speculating on the stock market a risky business

Speculating on rumours in the stock market can earn you quite a fortune, but it can also drive you to bankruptcy.

Shares of Japan Vietnam Medical Instrument Co (JVC) were traded at the floor price for most of June's trades, on the gossip that its former chairman cum CEO Le Van Huong was arrested for deceiving customers.

JVC's price nosedived from around VND22,000 per share in early June to just VND7,600 on July 1 among shareholders' bewilderment. JVC recovered and hit the ceiling in the last three sessions on Monday, although its shares were put on warning status by the HCM Stock Exchange from July 3.

The company released information to investors three times in June. On June 12, it refuted rumors surrounding a project in Binh Dinh Province. On June 21, it announced it would dismiss Huong and appointed a new chairman and CEO. Then it gave notice from the investigation agency about the detainment of Le Van Huong for customer deception.

However, both foreign and domestic investors were unsure about what had happened.

"We do not know the specific reason why Huong was arrested, and we have heard many different rumors, including that he changed the stamps on medical devices," a representative of major shareholder DI Asian Industrial Fund, which holds almost 20 per cent of JVC's stakes, said at the company's unusual shareholders' meeting on Monday.

New Chairman Hosono Kyohei, also an equity representative from DI Asian Industrial Fund, apologised to investors for the fallout from the prosecution of Huong. He also said the company could not answer investors' questions related to its financial problems at the present time.

JVC is an example of a rumour that turned out to be true, but there have been a lot of ungrounded rumors in the past, which are often related to big companies with high liquidity in the market.

One "well-known" rumor that caused serious damage on the stock market was the arrest of the chairman of Bank for Investment and Development of Viet Nam (BID), one of the biggest banks in Viet Nam, Tran Bac Ha in February 2013. The stock market lost VND29 trillion ($1.33 billion) in the day after the news. Two investors were fined later for spreading false rumours online.

Several years ago, some leaders of big businesses were favourite subjects of misleading arrest rumors, including the chairman of Masan Group (MSN) and the CEO of Saigon Securities Inc (SSI).

Shares of the companies related to litigation or bankruptcy rumours also fall quickly. Examples from the past two months include Dat Xanh Real Estate Service & Construction Corp (DXG) and Hoang Anh Gia Lai Co (HAG).

According to Alan Phan, former president of Hong Kong-based Viasa Fund, creating a rumour is easy in underdeveloped markets, due to the lack of transparency. Investor sentiment here is often fragile and they trade on herd mentality.

Securities firms can apply for FOL increase

Local securities enterprises can now submit foreign ownership limit (FOL) increase applications to the State Securities Commission (SSC) after the Government signed Decree 60 approving the removal of the FOL on most listed companies.

Speaking to the Daily, SSC vice chairman Nguyen Thanh Long said a higher FOL would apply to securities firms from September 1 when Decree 60 takes effect.

Given the new rule, brokerages can register at the SSC to raise their foreign ownership cap to over 49% or even 100%. They are able to sell shares to foreign investors after they get approval from the agency rather than having to wait for a guidance circular.

Long said the objective is to help struggling enterprises seek new sources of capital and boost restructuring plans. This is also in line with Vietnam’s commitments to the World Trade Organization (WTO).

The new decree stipulates that foreigners can own up to 100% shares at a securities enterprise or establish a 100% foreign-owned securities firm in the country.

It replaces Decree 58, which allows foreigners to either own a 49% stake at a Vietnamese brokerage or set up a 100% foreign-owned company. The old decree prevents foreigners from holding a stake of over 49% at local securities enterprises.

According to a representative of a 49% foreign-owned brokerage, the firm is facing difficulties but the parent firm in Malaysia cannot inject capital. The reason is that it cannot acquire stakes of all shareholders to hold a 100% stake at the company.

Therefore, the new rule will enable the enterprise to revise its foreign ownership cap, the representative said.

A leader of a HCMC-based securities firm told the Daily that the company would consider selling stakes to foreigners. Earlier, a foreign company offered to buy a majority stake of over 49% at the stock brokering house but both sides failed to conclude the deal due to the old rule.

Having negotiated with the partner, the enterprise will seek approval from shareholders to raise the FOL to over 49%, the leader said.

As enterprises need time to seek partners, negotiate and prepare procedures, it is difficult for them to finish FOL increase applications by early September.

There are around 90 active securities companies, including 40 foreign-invested firms, over 10 of them with foreign holdings of 49% and one 100% foreign-owned company (Maybank Kim Eng Securities Co.).

Property developers, brokers mislead buyers to push up sales

Real estate developers and brokers in HCM City are misleading investors with false information to promote sales.

Home buyers in HCM City are having to deal with inaccurate promotions, taking advantage of inadequate laws and lax financial management.

Le Huu Nghia, the director of Le Thanh Commercial Construction Co, said many investors and brokers claim there more demand than exists for apartments to pressure investors to buy quickly or risk losing out, even though occupancy rates of many property developments are low.

"They may increase an apartment's price the next day to try to fool customers into believing that they are being sold fast. Such marketing tricks aren't banned," he said.

Real estate inventory is still high due to recession, while new projects continue roll out. There are about 1,400 projects in the city worth about VND12.5trn. Even though the number of transaction in the first six months reached 8,750, doubled than the same period last year, many developments remain unsold.

The Ministry of Construction is planning to set up a Vietnam Real Estate Broker Association to improve market transparency.

Vu Dinh Trung, the director of Viethome Co, urged the authorities to set up a real estate information centre for customers.

Nissan recalls vehicles over faulty airbags

Japanese carmaker Nissan is recalling 166 vehicles in Viet Nam to repair the faulty airbags in the front passenger seat.

Here is an image of a X-Trail SUV car. The vehicle's faulty airbag will be checked and repaired from August 17, 2015, to January 18, 2016. Photo vneconomy.vn

The recalled vehicles include Sunny sedans, the X-Trail SUV, the Patrol SUV and the Navara pick-up. The vehicles were produced between February 2, 2005, and March 9, 2007.

The campaign to check for and repair the faults will run from August 17, 2015, to January 18, 2016.

US packaging-labelling firm opens distribution centre in HCM City

US-based Avery Dennison, a global labelling and packaging materials and solutions firm, on July 2 opened its first distribution centre in Viet Nam in HCM City's Tan Binh Industrial Park to support the company's investment in the high growth Viet Nam market.

The first distribution centre set up in Viet Nam by Avery Dennison, a global labelling and packaging materials and solutions firm, in Tan Binh Industrial Park in HCM City.  Photo Avery Dennison.

"We place a high emphasis on the ASEAN region, especially the rapidly growing Viet Nam market in which we have been a major player since 2004," Georges Gravanis, president of materials group, Avery Dennison said.

"Our new distribution centre in Viet Nam is an important step in further expanding our footprint in the emerging markets. We believe that Viet Nam will be the company's key driver of success in this region."

The 5,600sq.m centre, which cost almost US$700,000 to set up, features high-speed slitting machines that are capable of finishing high-quality paper and filmic pressure-sensitive materials.

Development of Vietnamese cashew industry faces difficulties

While other farm produce and seafood products saw a decline in both export value and volume, cashew nuts continue to help Vietnam to remain as the largest cashew nut exporter for ninth year.

According to Mr. Nguyen Duc Thanh, chairman of the Vietnam Cashew Association, figures showed at a recent international conference on nuts said that Vietnam has currently had the highest amount of processed cashew nuts.

Mr. Thanh said that in the first half of this year, businesses exported 150,000 tons of cashew nuts, bringing in US$1.1 billion. At this rate, the country will possibly export 300,000 tons of cashew nuts this year, earning $2.2 billion, equal to that in the previous year. If including products made from cashew nuts, export turnover by cashew industry might reach $2.5 billion. Exports of cashew nuts have been better than other products because current export prices are higher than they were last year. Experts said that drought has caused the prices of all kinds of nuts, including cashew nut, to climb.

However, cashew industry is still facing many challenges. Food safety is a hot issue as several containers of cashew nuts have been returned because they are contaminated with Salmonella or E. coli bacteria, of which there are cases of cross-contamination after cashew nuts had been sterilized.

Currently, the US Food and Drug Administration is checking food safety at cashew nut processing plants. Preliminary figures show that 15 out of 32 businesses failed to meet food safety standards.

Products in a same plant were not of equal quality because input materials were from different origins. Customers prefer Vietnamese cashew nuts because of their better aroma and taste. However, Vietnamese cashew nuts were mixed with raw cashew nuts imported from other countries, especially from Africa, during processing process. This will lose prestige of Vietnamese cashew nuts and affect the building of Vietnamese cashew nut brand name. According to Mr. Thanh, processed Vietnamese cashew nuts are sold 30 cent higher than African ones.

In addition, Vietnamese businesses compete with each other by offering lower prices in order to promote export whereas Brazilian and especially Indian companies do otherwise.

The fact that there are too many cashew nut exporters in Vietnam with 345 companies in 2014, of which the number of companies whose export turnover was below $5 million per annum accounts for 73 percent has created unfair competition and unequal quality, affecting the country’s cashew industry. In 2014, 119 out of 265 facilities inspected did not meet food safety standards, accounting for 44.9 percent. In order to maintain prestige of Vietnamese cashew nuts and create fairness among cashew companies, authorities should slap strict penalty on those companies.

The biggest drawback of cashew industry is that despite the fact that cashew nut exports keep increasing, the area of cashew trees and production continually drop, causing the industry to depend on imported raw material whose quality is not as good as domestic one.

In 2007, the area of cashew trees was 444,000 hectares across the country. However, because of poor care, average productivity dropped to 0.8 tons per hectare from 1.1 tons per hectare. To 2014, there was around 294,000 hectares of cashew trees. From a country that mainly uses domestic material for processing, it has become the second largest cashew nut importer with imported volume of cashew nuts nearly equal to that of India, and ten times higher than that of Brazil, the third largest cashew nut importer.

Considering cashew tree as a cultivar that brings advantage to Vietnam, since 2013, the Ministry of Agriculture and Rural Development has taken many measures to help farmers to increase productivity. In 2014, productivity of cashew trees rose by 10 kilogram per hectare compared to the highest yield in the past years. The area of cashew trees has also risen by nearly 4,000 hectares in the past two years.

Mr. Pham Van Nguyen, a cashew expert, said that the current demand for cashew sapling is very high as replantation and improvement of 60,000 hectares of cashew trees from now to 2020 will require millions of cashew saplings every year. The quality of cashew saplings is very important so authorities should keep close watch on multiplication of cashew trees so as to prevent sapling providers from producing poor saplings.

Currently, average productivity of cashew trees is around 1.2 tons per hectare. Some farmers even have seen a productivity of 4.5 tons per hectare.

Workshop highlights trade deal between Vietnam and EAEU

The commitments of the free trade agreement (FTA) between Vietnam and the Eurasian Economic Union (EAEU) and their impacts on domestic enterprises was the focus of discussions among experts at a workshop held in Hanoi on July 7.

The workshop was held jointly by the Vietnam Chamber of Commerce and Industry (VCCI), the Ministry of Industry and Trade, and the Ministry of Finance.

Participants at the workshop highlighted the huge potential for domestic enterprises to access the 175 million-people market. They also pointed out the impact of the FTA on a number of domestic sectors, saying that FTA commitments will include cutting 82% of tax lines on the garment-textile sector, and 77% for the leather, footwear and handbag sector.

Domestic businesses should enhance their understanding of the FTA to overcome difficulties, raise product competitiveness and improve product quality to meet the strict requirements of these markets.

The free trade agreement between Vietnam and the Eurasia Economic Union (EAEU) (grouping Russia, Belarus, Kazakhstan, Armenia and Kyrgyzstan) was signed on May 29 after more than two years of negotiations, opening up a new chapter in the partnership between Vietnam and the union as well as each EAEU member nation in particular.

The inked FTA covers programmes across goods trading, origin principles, investment, intellectual property, legality and institutions, among others.

Labor exports in H1 achieves 60% of year’s plan

Taiwan (China) remains the largest recipient of Vietnamese guest workers, recruiting 7,505 in June this year, according to the Department of Overseas Labor Management, under the Ministry of Labor, Invalids and Social Affairs (MOLISA).

Viet Nam sent 56,173 workers abroad in the first half of the year, achieving 59.13% of the year’s plan and equal to 101.75% of the same period last year.

The number included 11,777 in June only, including 7,505 in Taiwan (China), 2,324 in Japan, 654 in the Republic of Korea, 582 in Malaysia, 377  in Saudi Arabia and 112 in Qatar.

Over the first six months of the year, the MOLISA inked and launched the Memorandum of Understanding and bilateral agreements with other nations.

The Department of Overseas Labor Management directed and supported businesses in realizing contracts to send more workers to Saudi Arabia and Qatar and appetencies to Japan.

Viet Nam and Germany on July 3 signed a Letter of Intent (LOI) on Vietnamese citizens working in Germany as caregivers.

It is the first such document on labor export that has officially been signed between the two countries.

Under the LOI, 200 people who will be sent to Germany as the first batch of caregivers will attend a German language course starting in August for a B2-level certificate at the Goethe Institute (of Germany) in Ha Noi.

More challenges for construction firms ahead

Local construction enterprises will have to face a slew of challenges in the country’s regional and global economic integration process.

Construction experts and contractors voiced concerns over a possible rise in competition at a conference on opportunities and challenges from the ASEAN Economic Community (AEC), which was held by the Vietnam Chamber of Commerce and Industry (VCCI) and the Vietnam Association of Construction Contractors (VACC) in HCMC last week.  

Pham Van Chat, a member of the Vietnam International Arbitration Center (VIAC) and a Ministry of Industry and Trade rapporteur for international economic integration, said life for domestic construction firms would be tougher when the AEC takes shape late this year.

Chat said import tariff reductions would pile pressure on domestic companies. In the construction sector, Vietnamese producers of building materials will face fierce competition from rivals in Europe, Japan, the U.S., South Korea and China.

Large volumes of construction materials, interior decoration items and machines of ASEAN nations like Thailand, Malaysia and Singapore have been exported to Vietnam. Therefore, many domestic firms may be forced out of business due to ample imports.

Labor-intensive construction businesses will see huge challenges ahead.

Other problems are that marketing and production capabilities of local firms remain weak and their labor productivity is low.

Nguyen Ba Duong, chairman of Cotec Construction JSC (COTECCONS), said Vietnam lacks skilled labor and its labor productivity is two to three times lower than that of China. To deal with this, COTECCONS must set up a department to train its employees.

However, Duong said a number of private construction enterprises in Vietnam have grown strongly and have applied modern technologies. Therefore, they can compete with Japanese and Korean firms in terms of quality and prices.

Le Viet Hai, chairman of Hoa Binh Corporation, shared Duong’s view but stressed that just some big enterprises are able to compete with foreign rivals in terms of cost.

He said construction costs have been sharply cut. It cost US$2,000-3,000 to build one square meter of buildings in the luxury segment 10 to 15 years ago, but the rising participation of domestic constructors has sent the price down to US$1,000.

Hai said Vietnamese construction firms should learn from developed countries in terms of technology and governance to fare better and prepare to deal with challenges from Vietnam’s increased international integration.

“In Malaysia, some 30 people manage the construction site of a building with 1,000 apartments and constructors use less labor than in Vietnam,” Hai said.

Duong of COTECCONS suggested big construction enterprises gauge opportunities and expand operations in foreign markets like Laos and Cambodia as one of the measures to cope with rising competition on the domestic market.

HD Saison Finance makes debut

HCMC Development Bank (HDBank) and Japan’s finance corporation Credit Saison held an inaugural function for HD Saison Finance in the city over the weekend, VietnamPlus reports.

HD Saison Finance Co. Ltd. was renamed from HDFinance after Credit Saison contributed capital to HDFinance in April and became the strategic investor of the latter.

The two big financial institutions in Vietnam and Japan joined forces to tap into each other’s strengths, experiences, human resources and technologies to expand operations and offer more products to local customers.

HD Saison Finance has cooperated with over 2,000 partners and agents to serve nearly one million clients in need of loans for consumption purposes via its 3,000 transaction points in 63 provinces and cities. Its financial products include consumer loans for vehicle, electronic device, home appliance and mobile phone purchases and travel packages.

HD Saison Finance plans to launch more financial products and services such as credit cards and repaid cards to make the most of Credit Saison’s experience and HDBank’s local market knowledge and wide network. It aims to become a leading retail finance company in Vietnam.

HDBank and Credit Saison plan to branch out to other ASEAN nations like Myanmar and Cambodia.

Takahashi Naoki, a board member at Credit Saison, said in 2012 Credit Saison set up its first representative office in ASEAN in Hanoi City to explore opportunities to cooperate with domestic partners and enter the consumption finance market.

France’s second cheese factory commences in Binh Duong

Bel Vietnam, a subsidiary of France’s Bel Group, broke ground on its second cheese factory in southern Binh Duong province on July 8.

The US$17-million- facility, which will cover 17,000 square metres in the Song Than (Tsunami) 3 Industrial Zone, has an annual capacity of 15,000 tonnes of cheese to supply domestic and regional markets.

At the ground-breaking ceremony, General Director of Bel Vietnam Chafip Hammadi said the project is buoyed by the success of its first factory in Vietnam.

He also underlined the favourable conditions facilitating the project, including skilled labour forces, location and incentives.

Vietnam is the first Asian nation where Bel Group has built its factories, Chafip said, adding that the company plans to build a Centre for Research and Development (R&D) in the province.

Addressing the event, Vice Chairman of the provincial People’s Committee Tran Thanh Liem said the project is in line with local policies calling for investment in developing industrial zones.

The factory is scheduled to be completed and put into operation in the third quarter of 2016.

Hanoi sees highest first-half growth rate in four years

Hanoi recorded an economic growth rate of 7.8% in the first half of 2015 – the fastest pace in the same period of the last four years, revealed the 13th sitting of the 14th municipal People’s Council.

At the three-day meeting, Chairman of the municipal People’s Committee Nguyen The Thao reported that local inflation was curbed and budget revenue exceeded 50% of estimates in the first two quarters.

A number of key infrastructure facilities were put into use, such as the Nhat Tan and Dong Tru bridges and the expanded section of National Road 5, helping foster the capital city’s growth, he added.

Concluding the sitting on July 8, Chairwoman of the Hanoi People’s Council Nguyen Thi Bich Ngoc said Council Members reviewed the implementation of the council’s Resolution on socio-economic affairs, security-defence and budget collection and spending between January and June. They also set orientations for the remaining months of the year.

The People’s Council adopted a Resolution on policies for carrying out the hi-tech agriculture development programme from 2016 to 2020. It also questioned officials of the municipal People’s Committee and departments about pressing issues of public concern, including urban planning and management, agriculture and rural areas and education-training, she noted.

All Council Members agreed on the establishment of the Department of Tourism separate from the current Department of the Culture, Sports and Tourism and passed a resolution naming 19 new streets, Ngoc added.

Vietnam – EAEU trade pact to mutually benefit

The free trade agreement (FTA) between Vietnam and the Eurasian Economic Union (EAEU) represents a turning point and huge mutual benefit, said Nguyen Thi Thu Trang, Director of the World Trade Organisation Centre under the Vietnam Chamber of Commerce and Industry (VCCI).

She made the statement during a workshop held in Hanoi on July 7 to present and discuss the FTA signed on May 29 after more than two years of negotiations.

The two economies complement each other and Vietnam is currently the only EAEU trade partner, Trang went on to clarify.

The EAEU encompasses Russia, Belarus, Kazakhstan, and Armenia. Kyrgyzstan is waiting for the union’s approval to become an official member.

With a total current population of 182 million people, the community posted a combined gross domestic product worth more than US$2.2 trillion in 2014. It boasts rich mineral resources of oil, coal and iron ore.

The market major imports phones, electronic devices, apparel, footwear and agricultural produce from Vietnam while its main exports to the country are oil and gas, iron and steel, fertilisers and machinery .

Dao Thu Huong from the Ministry of Finance's Department of International Cooperation noted there is no direct competition in the Vietnam- EAEU import-export structure, adding that some 53% of current tariffs will be zero percent once the pact takes effect.

According to Huong, the volume of iron and steel products, fertilizers and machinery account for 12%, 25%, and 9% of Vietnam’s total good import from the EAEU, respectively. Those commodities are scheduled to have reduced tariffs.

Vietnam, Thailand step up trade cooperation

Representatives of 300 Thai and Vietnamese entities from the public and private sectors gathered at a forum in Ho Chi Minh City on July 8 seeking ways to enhance trade and investment ties between the two nations.

The event was organized by the Embassy of Thailand in collaboration with the Thai Chamber of Commerce and Industry (CCI).

Thailand businesses have cumulative foreign direct investment (FDI) of US$6.6 billion in Vietnam, ranking tenth among all foreign investors, speakers at the event announced.

According to Nguyen The Hung, deputy general director of the Vietnam Chamber of Commerce and Industry (VCCI), Vietnam has been an attractive destination for Thai businesses thanks to its rapid economic growth and low labour costs.

To increase exports to Thailand, Hung said domestic companies need to enhance their competitiveness through innovation and improve the quality of products.

US$1.73 billion spent on livestock feed and material imports

Vietnam splashed out US$1.73 billion on livestock feed and material imports in the first two quarters of the year, a year-on-year increase of 7.8%, according to Ministry of Agriculture and Rural Development (MARD).

Most of the products were imported from Argentina (36.6%), the US (19.2%) and China (7.4%), the Hanoi Moi newspaper reported.

In the period, US$329 million was spent on importing 1.28 million tonnes of wheat, rising 5.1% in value and 31% in quantity from the same period last year.

Australia and Brazil became Vietnam’s key wheat exporters with a market share of 53.8% and 28.5%, respectively.

The country also bought 948,000 tonnes of soybeans for US$438 million, up 5.8% in quantity but down 17.1% in value against the first six months in 2014.    

Chan May Port upgrades to be completed by August

The central province of Thua Thien-Hue is striving to complete upgrades to the Chan May Port before August 9.

The province is currently investing 310 billion VND (14.2 million USD) in upgrading the Chan May Port’s infrastructure system to enable it to receive large vessels carrying up to 4,000-5,000 passengers each. The Royal Caribbean International Group contributed 5 million USD to the upgrades.

Once the project is completed, the port will be able to accommodate Quantum- or Oasis-class super-large ships.

In January, Thua Thien Hue welcomed the first cruise liner, the Celebrity Century, carrying 2,500 tourists to the ancient imperial city of Hue.

The central province has set its sights on drawing 60,000 tourists through the Chan May Port this year.

Wave of Thai investments into Vietnam: forum

Major and small- and medium-sized enterprises from Thailand have expanded operations in Vietnam in recent years, helping create an inflow of Thai investments, experts said at a business forum in Ho Chi Minh City on July 8.

Vietnam and Thailand are close partners in all fields and especially in education and tourism. The AEAN Economic Community (AEC), scheduled to be formed in late 2015, will be a platform for the two countries to further share experience and resources, expand markets, and tap into the bloc’s potential, said Malinee Harnboonsong – Director of the Commercial Office at the Thai Consulate General in HCM City.

According to Tharabodee Serng-Adichaiwit, General Manager of the Bangkok Bank’s HCM City branch, Vietnam’s political stability, growing economy and improving legal system create a favourable investment and business climate for domestic and foreign firms. The country is also a large market in ASEAN with a population of over 90 million, increasingly skilled workforce, low production costs and clear regulations on personal and enterprise taxes.

He suggested Thai companies boost their activities through forming joint ventures and building factories in industrial parks.

The forum, held by the Ministry of Industry and Trade’s Trade Promotion Agency and the Thai Commercial Office, revealed that Thailand is currently the biggest Southeast Asian trade partner of Vietnam with trade reaching 10.6 billion USD in 2014 and approximately 4.4 billion USD in the first five months of this year. They aim to reach 15 billion USD in trade revenue by 2020.

Nguyen The Hung, Deputy Director of the HCM City branch of the Vietnam Chamber of Commerce and Industry, said Vietnam still recorded a trade deficit with Thailand and is striving to ensure balance.

Since the AEC will bring about dramatic shifts in trade, services and capital flows, Vietnamese and Thai businesses need to gear up to optimise opportunities, ultimately bolstering bilateral commerce, he noted.

Among ASEAN business circles, Thai enterprises are considered dynamic and active in preparing for AEC integration, Hung said, asking Vietnamese firms to join trade and investment promotion delegations to promote their capacity of entering Thai markets and those in ASEAN in general.   

Steel imports surge in first six months

Vietnam’s total steel import turnover surged to seven billion USD in the first six months of this year, according to the Ministry of Industry and Trade.

Statistics from the ministry show that in the reviewed period, steel import increased over 36 percent in volume and 10 percent in value.

China remained Vietnamese biggest steel exporter.

In June, steel imports jumped 205.3 percent in volume and 94.4 percent in value.

Experts have warned that rising demand for steel imports will not only impact domestic manufacturing businesses but is also an indication of a “bubble” phenomenon in the domestic real estate market which the country has previously experienced.

Dong Nai seeks socio-economic breakthroughs

The southern province of Dong Nai will make maximum efforts to see socio-economic breakthroughs, said Tran Minh Phuc, Vice Chairman of the provincial People’s Committee.

The locality aims to boost the modernisation of logistic services and information and technology application, particularly in building and operating the Long Thanh international airport.

The province will also continue investing in building high calibre human resources and developing comprehensive and green industrial zones, centres for bio-technology application and hi-tech agricultural projects.

The province also aims to develop three key economic axis, namely the Bien Hoa-Long Thanh- Nhon Trach (along the national road 51 and 25B); the Bien Hoa – Trang Bom – Long Khanh – Xuan Loc (along the national road 1A); and the Thong Nhat- Dinh Quan – Tan Phu – Long Khanh – Cam My (along the national roads 20 and 56).

Under the plan, Dong Nai t argets an average annual gross regional domestic product (GRDP) growth of 8-9 percent between 2020 and 2025 and 8.5-9.5 percent between 2020 and 2025.

The province’s annual per capita income is expected to reach between 5,300 and 5,800 USD by 2020 and 9,000-10,000 USD by 2025.

The share of industry and construction is targeted to reach 55 percent with services at 39.5-40.5 percent. Export value is also expected to increase 8-10 percent annually in the period.

Controlled inflation should ensure economic growth: paper

The year's target of a 5 percent increase in the consumer price index (CPI) is feasible amid encouraging results for inflation and price controls in the first six months of 2015, Nhan Dan (People) online newspaper reported, adding that the CPI and inflation control should create momentum for GDP growth.

The CPI, an indicator of inflation, increased by 0.55 percent in June compared to December 2014, and 1 percent over the same period in 2014, according to the General Statistics Office (GSO).

But the figures marked the lowest June CPI since 2001, said Deputy Director of the Academy of Finance’s Institute of Economics and Finance Nguyen Duc Do. He noted that the rate of inflation in the past year has slowed noticeably and the economy is now relatively close to an inflation rate of 0 percent - far from the target of 5 percent.

Do said concerns about a low rate of inflation were raised in 2014 when inflation in December 2014 decreased by 1.84 percent over the same period in 2013, attributed to the sharp decline of petrol prices. However, in the past six months, inflation has been mainly driven by the higher prices of electricity, the exchange rate and health services, but not petrol prices.

According to the GSO, a 2 percent VND/USD exchange rate adjustment led to a CPI increase of 0.6 percent, and a 8.47 percent rise in electricity prices led to a 0.22 percent increase in the CPI. Do added that the six-month inflation rise was mainly fuelled by costs, but the low inflation pace in the past year was due to lower aggregate demand than aggregate supply.

He noted that since 2008, economic growth has always been lower than the potential of 6.5 percent, which means the increase in aggregate demand was lower than that of aggregate supply, pulling down inflation. The downward trend of inflation will stop when the economic growth rate increases to 6.5 percent or above.

Economist Ngo Tri Long said inflation over the past six months posted a 0.55 percent increase compared to December 2014, equivalent to nearly a tenth of the year's target - the lowest figure in the past 14 years. Thus, the year's target of less than a 5 percent increase in the CPI is achievable.

Long emphasised that low inflation will create positive impacts on socio-economic development, making investors and enterprises feel secure, creating favourable conditions for policy makers and managers to put forth and implement measures to remove barriers to production and business activities. But effective control of inflation must create a driving force for GDP growth, he added.

Long said GDP increased by 6.28 percent in the first six months of this year - a relatively high level for recent years - indicated economic recovery. It is expected that the GDP growth rate for the entire year will reach 6.2 percent. Despite the high growth rate, a number of economic factors have yet to be improved, requiring greater efforts from the Government including a high trade deficit, and a large number of bankrupt enterprises among others.

The Government set a target of reaching an annual GDP growth rate of 6.5 percent-7 percent in the 2016-2020 period to avoid deflation - but attaining this growth is a significant challenge. Do said the reduction of interest rates, particularly the lending rate, is one of the prerequisites for achieving this target.

In the 2012-2014 period, the State Bank was successful in lowering interest rates, reducing inflation and stabilising the exchange rate and the gold market, which was attributed to the flow of cash into the bonds market. Do noted that when the money flows into bonds, the pressure on the exchange rate will decrease, creating good opportunities for lowering interest rates and issuing government bonds, as well as increasing credit growth and allowing the easier settlement of non-performing loans. Thus, it is advisable to put money in bonds in the current context, Do said.

Meanwhile, Head of the State Bank of Vietnam's Banking Strategy Institute, Nguyen Thi Kim Thanh said monetary control should be at the top of the list, along with a balance between the supply and demand for goods, to maintain stable inflation. The facts show that the prices of commodities in the past six months were mainly driven by supply and demand.

In the remaining months of this year, credit growth will continue to increase along with expanded ownership limits and voting rights for foreign investors in listed enterprises, posing a challenge to the State Bank in controlling cash inflow and the exchange rate to curb inflation. Thanh also suggested strengthening the fight against goods smuggling and improving distribution channels of goods which otherwise may create negative impacts on price management policies.

Vietnamese phone maker faces fine for repeated delays of Bphone delivery

Bkav, an Internet security firm turned phone maker, apparently got off on the wrong foot in its bid to make “the world’s best smartphone,” as the company is now facing a fine for the tardy delivery of its flagship device.

More than a month after the lavish launch of the Bphone on May 26, no buyers have been able to actually own and experience the handset, while the Hanoi-based phone maker has been crippled by scandal after scandal.

Those who placed orders for the Bphone on its first day of sales on June 2 have yet to receive the devices, with Bkav so far breaking its promise on delivery three times in a row.

The company, known for the Bkav antivirus software, first announced that the Bphone would be delivered to customers’ door on June 9, before delaying the date to June 18, and then June 29.

While some customers reportedly received the smartphones on June 29, Bkav announced shortly after that it would recall the first batch of products for upgrades, and made yet another promise that delivery would come on July 3.

And then the company broke their word for the third consecutive time, forcing buyers of what Bkav CEO Nguyen Tu Quang dubbed “the world’s best smartphone” to express their anger and disappointment on social networks and local tech forums.

Do Thu Hang, director of public relations with Bkav, told Tuoi Tre(Youth) newspaper on Monday that most customers in Hanoi had received the devices on Friday and Saturday last week.

“Those in Ho Chi Minh City and other provinces and cities would receive the products on Sunday or Monday,” she said yesterday.

Hang attributed the late delivery to “the very big number of orders” the company received. Bkav has said it received 11,822 orders on the first day of sales of the Bphone.

However, many customers in Ho Chi Minh City told Tuoi Tre late Monday their Bphone has yet to arrive. Bkav, in the meantime, has not apologized to customers for constantly breaking its promises.

Many buyers have complained that Bkav is going against the commitment to serve customers its executives pledged during the launch ceremony, adding they feel disrespected by the phone maker.

Many local consumers have said they would buy the Bphone to support a Vietnamese firm, but most are now losing faith in the promise breaker.

Lawyer Nguyen Van Hau, deputy chairman of the Ho Chi Minh City Lawyers Association, said Bkav is facing a fine for violating the law on protecting customers’ rights and interests.

If Bkav does not publicize the reasons as to why it keeps delaying delivery of the Bphone, it can be considered as concealing information, or providing insufficient information about its production and business ability.

“This breaches the law on the protection of customers’ rights and interests, and shall be subject to fines of VND20-40 million [US$920-1,840],” Hau told Tuoi Tre.

“The company can also have its license suspended for up to six months, or be suspended from operations for one to six months over repeated violations.”

Those who placed orders for the Bphone, meanwhile, can ask to terminate the purchase contracts and request compensation from Bkav, according to the lawyer.

Hau said the order customers placed online is a contract which stipulates that the manufacturer delivers the product on time as agreed upon by both parties.

“The seller is only allowed to deliver the product prior to or after the agreed time with the consent of the buyer,” he said.

“So by repeatedly failing to deliver the smartphone on time, Bkav has violated the contract's terms and the customers have the right to terminate [the contract] and ask for compensation.”

Temasek closes its fiscal year with upbeat results

Temasek Holdings Pte, a Singapore-based investment company, yesterday released a media statement demonstrating its solid fiscal year ended March 31, 2015.

Accordingly, the company saw its net portfolio value rose 19.2 per cent to S$266 billion ($193.3 billion), more than double the portfolio value of S$103 billion 10 years ago.

The company also announced a one-year return to shareholders of 19.2 per cent, underpinned by strong performance of Singapore and China portfolios.

Its three-year total shareholder return (TSR) was set at 9.62 per cent, longer term 10-year and 20-year TSRs were 9 per cent and 7 per cent, respectively.

Temasek ended the year in a net cash position.

In its fiscal year, the company registered new investments reaching S$30 billion, almost half flowing in growing Asia, followed by recovering North America and Europe. It also saw record divestments of S$19 billion, capitalising on liquidity-driven market rallies.

“This was the most active year for us since the global financial crisis,” Temasek chairman Lim Boon Heng commented.

Besides to business activities, the company has made contributions to community development.

To date, it has made 16 endowments, including Temasek Emergency Preparedness Endowment Fund which was launched last year as part of Temasek’s 40th anniversary commemoration.

In total, the company’s non-profit philanthropic organisations have touched the lives of over 240,000 people in Singapore and Asia.

For example, over 13,000 disadvantaged and vulnerable children in Singapore were provided with standard masks and micro ventilators under a Temasek Cares Stay Prepared initiative in April 2015. This followed Temasek Cares’ initiative to distribute quality masks to all households in Singapore a year ago.

In line with efforts to build resilience and prepare for emergencies and recovery,

Temasek Cares also initiated a programme in 2014 to train counsellors in Singapore to support children who have experienced trauma.  

Commenting on future economic outlook, Ravi Lambah, senior managing director, Investment, noted, “We are cautiously optimistic for the next few years. The US economic recovery, while uneven at times, remains on track.  In China, growth is taking place at a more sustainable rate.”

“At Temasek, we embrace the future and all that it brings,” Temasek chairman Lim Boon Heng concluded, “we continue to look to tomorrow, as we have always done, working together to turn bold dreams into enduring reality.”

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