Vietnam, Japan boost trade, investment ties

An investment-trade promotion forum between Vietnam and Japan was held in HCM City on October 9 in an effort to boost bilateral trade ties.

The event attracted more than 200 Vietnamese and Japanese businesses specialising in mechanical engineering, precise mechanics, support industries, processed food, farm produce processing, aquaculture, and technical consultancy.

Participating businesses shared information and discussed ways to ease difficulties and penetrate each other’s markets.

The forum created a good chance for businesses of HCM City and neighbouring provinces to explore the Japanese market and increase trade and investment promotions.

Japan is topping the list of foreign investors in Vietnam, with a combined registered and added capitalisation of more than US$4.7 billion since the beginning of 2013, accounting for nearly 32% of the country’s total.

As of August 2013 Japan had more than 2,000 valid investment projects in Vietnam, capitalised at nearly US$32.8 billion.  

The forum was jointly hosted by the HCM City Investment and Trade Promotion Centre (ITPC) and the Japan External Trade Organisation (JETRO).

Steel sector struggles to escape rut

The domestic steel industry is continuing to experience difficult times while the real estate market remains frozen, according to the Market Watch Team.

September’s steel consumption was low due to prolonged storms and the rainy season, reported the Ministry of Industry and Trade's Industry and Trade Information Centre (VITIC).

Steel consumption decreased 5% against August and 6% compared to the same period last year.

September's construction steel output reached 355,000 tonnes, down 3% against August and 4% year-on-year.

Nguyen Tien Nghi, vice chairman of the Vietnam Steel Association (VSA), blamed the situation on the frozen real estate market and stagnated construction projects.

In previous years, he said, steel typically fetched VND20 million (US$952) per tonne; it now sells for VND14-14.5 million (US$666-667) per tonne.

The purchasing power is low, about 300,000 tonnes per month as compared to the previous rate of 400,000 tonnes, he added.

Industry insiders also attributed the high inventory to low consumption of steel and the fact that domestic steel producers are facing difficulties as cheap Chinese steel floods the local market.

Many steel manufacturers have had to lower their production capacity by more than 50%, with several seeing losses.

Increases in the electricity price also affected local production costs and the competitiveness of domestic products.

However, VSA still predicted that consumption of domestic construction steel would increase by about 3-5% compared to 2012, with a volume of five million tonnes.

They believed that the domestic property market could bounce back late this year and demand for building material may also increase.

They also predicted that retail prices of construction steel would stabilise this month after the price hike in mid-September.

Steel for factories now fetches between VND13.5 to VND14.1 million per tonne, excluding the value added tax.

Cement production and consumption surged slightly during the past nine months of this year.

According to VITIC, despite increases in coal, electricity, fuel prices and financing cost that lead to higher production costs, cement prices at factories remained stable.

Cement prices ranged between VND1.3 million to VND1.5 million per tonne in the north, and between VND1.6 million to VND1.8 million per tonne in the south.

The retail price of cement went up by VND2,000 per package.

To make the domestic construction materials market more stable, the Vietnam Construction Material Association recently asked the Government to build more national highways so as to stimulate cement sales and enhance road quality.

The association also proposed the Government remove difficulties for building materials producers relating to tax incentives, debt and preferential loans.

Nguyen Huy Thang, deputy secretary general of the Vietnam Glass Association, suggested that the Government offer incentives to businesses to use industrial and agricultural waste to manufacture building materials.

Besides, Thang said, banks also need to make it easier for businesses to get loans to improve their products.

PVN on course to hit annual targets

PetroVietnam on October 8 reported after-tax profits of VND38.2 trillion (US$1.819 billion) in the first nine months of the year, accounting for 87% of the group's annual target.

It held a press conference to report its business results so far this year and its plan for the last quarter.

According to PetroVietnam's deputy director Le Minh Hong, the group has basically fulfilled its goals for the nine-month period and is looking to extend its success to the end of the year.

In the reviewed period, it increased oil and gas reserves to 21.81 million tonnes while oil output reached 19.8 million tonnes, up 2.4% over the same period last year.

Petrol production hit 4.93 million tonnes, equivalent to 91.4% of the annual target and up 27.7% year-on-year.

PetroVietnam contributed VND128 trillion (US$6.095 billion) to the State budget in the period, Hong said.

In the last quarter of this year, it plans to put three mines into operation, start construction on the Nghi Son Oil Refinery in October and connect the Vung Ang 1 Thermoelectric Plant to the power grid in December.

Regarding the restructuring of the corporation, Chairman Phung Dinh Thuc said that the work is progressing following a project approved by the Prime Minister.

However, the withdrawal of capital from non-core businesses is slow due to difficult economic conditions.

Statistics showed that the group poured VND5.8 trillion (US$276.19 million) into non-core businesses, making up a small part of the group's equity at VND300 trillion (US$14.29 billion).

Its overseas investments were estimated at US$6.5 billion, US$1.8 billion of which has been disbursed. Thuc said that PetroVietnam and Electricity of Vietnam (EVN) have also agreed on EVN's debt repayment plan, which would be submitted to the Government for approval.

Under the plan, EVN must first make an immediate payment of VND2.650 trillion (US$126.19 million) to PetroVietnam out of its VND9.650 trillion (US$459.53 million) debt.

The remaining VND7 trillion would be paid in installments over the next seven years subject to interest rates regulated by the Government.

Bridge to Vietnam-Belgium business cooperation

Since its establishment in 1995, the Chamber of Commerce and Industry of Belgium and Vietnam (CCIBV) has played a leading role in boosting business cooperation between the two countries.

In 2012, CCIBV proposed establishing ties of tertiary education cooperation between Belgium universities and Ton Duc Thang University.

During the Belgium Prince’s visit to Vietnam in March this year, the CCIBV signed a memorandum of understanding with Vietnamese trade organisations, such as the Hanoi Business Association, the Vietnam Chamber of Commerce and Industry (VCCI) and the Hufo Humanitarian Organisation.

The CCIBV is keen to help improve the capacity for officials who are involved in legislation management and trade dispute resettlement.

Its President Trang Huynh Long said as a bridge between Vietnamese and Belgium businesses, the CCIBV has regularly organised meetings and seminars on EU regulations on imported products as well as import-export tariffs.

Most recently, in early June, it coordinated with Saigon Times to organise a Meeting Vietnamese Businesses program in HCM City and conduct a fact-finding tour of Belgium.

The CCIBV is also focused on culture. It has financed the Royal Museum of Fine Arts of Belgium to buy Sa Huynh artifacts for its Vietnam collection.

Vietnam Cultural Space will be open as of October 11 to mark the 40th anniversary of diplomatic ties between the two countries.

In the near future, the CCIBV will finance a number of projects in the fields of technology, waste water treatment, environment, education and training.

Thanh Hoa promotes investment

As many as 800 local and international delegates are expected to gather at a forum on "Investment Promotion in Nghi Son Economic Zone and Neighbouring Areas" set to kick off in central Thanh Hoa Province on October 23.

"The two-day event aimed to introduce the province's socio-economic development plan by 2020 with a vision to 2030 and plan for subsequent financing of construction, land buying and human resources," said an official from the province.

Speaking at a press conference held in Ha Noi yesterday, Nguyen Dinh Xung, the provincial People Committee's vice chairman, said:

"We will organise a signing ceremony for several investment co-operation agreements and grant business licences to investors at the forum. It is expected that the total registered capital to be won at the event will be around US$4 billion," Xung said.

He claimed that the province has offered investors with the best access, best incentives, best start-up services, best development potential, best harmonious living environment and best social security of anywhere in the country.

Tran Hoa, head of the Nghi Son Economic Zone, said that the industrial region covers an area of more than 18,600ha, with most factories and plants within focusing on heavy industry, basic industry and exploiting Nghi Son seaport.

Investors in the zone have enjoyed special incentives such as land and water use tax exemption for 11 - 15 years after starting their operation, corporate tax exemption for four years and a reducing of half the tax in the next nine years.

"We provide all necessary administrative procedures at the zone to help investors succeed," Hoa said.

The province has the advantage of linking regions, with particular access to the North Central region.

Together with Nghi Son deep-water seaport and Tho Xuan airport acting as international gateways, the systems of arterial highways and trans-Asian roads have created a traffic and distribution network covering all regions and connecting with the markets of Laos and Thailand.

The province last year posted GDP growth rate of more than 10 per cent.

It ranked the sixth place in terms of FDI attraction with a total of $15 billion. It is the home of key national projects including Nghi Son Thermal Power Plant and the Nghi Son Refinery and Petrochemical Complex.

The latter is country's largest ever project of its kind with total investment of $9 billion.

The project's general director said the project would promote FDI attraction in Viet Nam, especially from Japan and Kuwait.

It is expected to supply 200,000 barrels a day, equivalent to 10 million a year. Its ground breaking ceremony will be organized on the same day as the forum. It is expected to become operational in mid 2017.

Efficient supply chain mechanism key to boosting competitiveness

The capability to switch raw material sources and having a robust supply chain could help companies cut costs and improve competitiveness, experts said.

Speaking at the 2013 Viet Nam Supply Chain Congress, Mark Millar of M Power Associates, Hong Kong, said for firms that make and distribute products, the supply chain serves all aspects from procurement to output.

The spotlight is increasingly focused on Asia, he said, with multinational companies seeking alternative and additional sources of growth, revenues, and profits.

Besides outsourcing and off-shoring procurement and production to lower costs, companies are seeking to tap into the rising consumerism in Asia, he said.

But in Viet Nam, with its unconnected supply chain, companies face a series of problems like lack of raw materials and high inventory rates, and cannot find outlets for their products, he said.

He cited the country's textile and apparel industry as an example.

It is unable to source inputs as a result of which it cannot execute customers' orders in time and loses out on exports, he said.

Businesses that manage to source the inputs pay 10-15 per cent more, he added.

Tran Tien Phat, general manager of Datalogic Scanning Viet Nam, said there are obvious differences between Vietnamese firms and those from Thailand, Philippines, or Singapore that produce the same product.

The latter take the initiative in finding feedstock and intermediate goods, connecting with distributors and retailers, finding foreign partners, and others.

But Vietnamese firms find it difficult to do any of them, he said.

He listed two reasons for that: The close links in the supply chains of foreign companies make it hard for the Vietnamese to squeeze into, and Vietnamese firms are incapable of meeting foreign partners' requirements.

In the manufacturing sector, foreign-invested companies find only a few dozen firms in Viet Nam that can meet their requirements, while in other countries they find hundreds or even thousands, he said.

Phat also pointed out other supply-chain problems in Viet Nam like poor infrastructure and high cost of transport.

Dr Charles Guowen Wang, director of the Center for Logistics and Supply Chain Management at the China Development Institute, said poor supply chains hit a company's productivity, competitiveness, and profits.

He tabled a report based on a survey of 821 senior managers in a range of industries in China done last year, which listed four types of risks in supply-chain management: related to supply, safety, policy, and environment.

The unavailability of necessary raw materials, or supply risk, was rated as the top risk (81 per cent).

An enterprise seeking to survive and develop needs first to establish and improve a supply-chain setup and cultivate supply-chain talents and professionals, Wuang said.

VN pledges to adopt global mining standard

Viet Nam is determined to participate in the Extractive Industries Transparency Initiative (EITI) in 2015 as a way to improve the efficiency of mineral resource governance and ensure a harmonised benefit to people, enterprises and the State.

The information was released yesterday in a conference on extractive industry governance jointly held by the Ministry of Natural Resources and Environment, the Viet Nam Chamber of Commerce and Industry, and the National Assembly's Committee for Science, Technology and Environment.

Chairman of the chamber Vu Tien Loc said EITI has become a trend that many countries in the world were promoting and implementing.

The initiative was considered a useful tool for the nation to better manage natural resources and ensure the extractive industries' active and effective contributions to the national development.

In Viet Nam, since 2000 to date, the industries have contributed 11 per cent of its GDP and 25 per cent of the State budget every year, and created 430,000 jobs.

However, the lack of transparency and accountability in industry governance has resulted in the low economic efficiency of the sector, serious social and environmental impacts, and unequal benefit sharing, Loc said.

Mai Xuan Hung, deputy chairman of the NA Economics Committee, agreed, saying that currently, wherever mineral resources were exploited, the poverty rate was high, the environment was polluted and the infrastructure was destroyed.

Andy Baker, chief representative of Oxfam in Viet Nam, said more than 60 per cent of the world's poorest are living in the countries that were rich in natural resources.

A study of the organisation also shows that the more a country depends on mineral exploitation, the higher the poverty rate.

Besides, without proper management, the extractive industries would cause deforestation, destroy the biodiversity and pollute the soil and water environment.

Pham Quang Tu, deputy director of the Consultancy on Development Institute, said that admission to the EITI could help Viet Nam limit losses to State budget, improve the competitiveness of Vietnamese extractive industry, prevent corruption and minimize benefit conflicts.

However, experts urged many things needed to be done before Viet Nam could join the initiative.

Hung from the Economics Committee stressed that the exploration activities must be boosted to define potential reserves of minerals so that the Government could have proper planning for each type of mineral.

So far, there is no official figures of potential reserves as well as the exploited volume of minerals.

Le Dang Doanh, former Director of Viet Nam's Central Institute for Economic Management, said "If we do not know exactly how much we have, we cannot manage it."

In fact, there were situations where enterprises could declare the scale of a mine smaller than its actual reserves to avoid petitioning the environment ministry and easily ask permission from localities.

He said licensing too many small projects had caused difficulties for State agencies to control and supervise, while they often ignored requirements of sustainable development such as environment protection and social responsibility.

Lai Hong Thanh, director of the ministry's mineral activities controlling division, said as of May this year, central authorities have granted more than 500 licences for mineral exploitation while provinces and cities issued 4,200 such licences.

Sharing experiences of Timor Leste in implementing the EITI, Alfredo Pires, Minister of Petroleum and Natural Resources, said the Eastern Asian country had implemented the EITI since 1993.

He said that when a country planned to join the initiative, it should have a strong commitment and spend at least 18 months to prepare a detailed working plan, funds and human resources for the establishment of an EITI board.

Local people should also be well aware of the significance of EITI implementation, he added.

Pires also stressed that the EITI participation did not only contribute to the enhancement of socio-economic and environmental management, but also helped consolidate people's trust in the Government.

Baker from Oxfam suggested that Viet Nam comply with some principles when building management policies such as ensuring transparency in the decision-making process and respecting the right to Free, Prior and Informed Consent (FPIC) of communities affected by the exploitation.

The initiative, launched by former British Prime Minister Tony Blair in 2002, is based on a mechanism that mining companies must make comprehensive reports on expenditure for governments, while governments must publicise the revenue it receives from the companies, said an independent agency then compares the data.

As of this May, there are 39 countries taking part in the initiative.

Experts promote sustainable aquaculture practices

Application of good agricultural practices, or GAP, to improve quality and safety will enable sustainable development of aquaculture, a conference heard in HCM City yesterday.

The conference sought to create a platform for stakeholders in aquaculture to share information and seek co-operation in strengthening application of VietGap, the Vietnamese version of GAP, and boosting sales of VietGap-certified products.

Pham Anh Tuan, the Fisheries General Department's deputy general director, said rapid development of the aquaculture industry in the last few years has led to environmental pollution and disease outbreaks, threatening the industry's development.

Consumers nowadays not only demand quality products but are also concerned about how they are produced, he told the conference, organised by the General Department of Fisheries and Metro Cash&Carry Viet Nam.

"Like other aquaculture certificates such as GlobalGap and ASC, VietGap certification also covers environmental protection, food hygiene and safety, social responsibility, and product origin to ensure our aquaculture industry can produce a lot of fish and shrimp, but do not have an adverse impact on the environment and can easily trace product origins."

It would help Vietnamese aquaculture products gain wider acceptance in both domestic and international markets, he said.

Nhu Van Can, deputy director of the Department of Aquaculture, said the country's good agricultural practices focus on inspection of on-farm production and inputs to raise awareness of standards among producers and develop brands for Vietnamese aquaculture products.

When farmers adopt VietGap they can easily upgrade to other certificates required by import countries, he pointed out.

Under the Government's policy on VietGap development in aquaculture, the country would foster its application in breeding of key export items like tra fish, tiger prawn, and white-leg shrimp, he said.

Government agencies are also working to find more markets that accept VietGap-certified products, he stated.

But he admitted that it is not easy to popularise VietGap among aquaculturists.

Many participants said farmers are reluctant to adopt the safe production method because they think it is expensive and makes them uncompetitive.

Tuan said adoption of VietGap standards may cause high production costs in the initial stage, but in the long run it helps reduce costs and improve the quality and competitiveness of Vietnamese goods.

Adopting the standards helps farmers sell their produce more easily and significantly cut costs since fish contract fewer diseases, he explained.

Philippe Bacac, chairman and managing director of Metro in Viet Nam, said his supermarket has co-operated with the Ministry of Agriculture and Rural Development to develop the fisheries sector as part of the "Public Private Task Force on Sustainable Agricultural Growth in Viet Nam."

The programme aims to raise productivity and incomes for farmers while securing the sustainability of both the fisheries industry and the environment, he said.

Under the programme, since 2011 Metro has worked with farmers in the Cuu Long (Mekong) Delta to ensure the supply of best quality products for its outlets.

Truong Dinh Hoe, general secretary of the Viet Nam Association of Seafood Exporters and Processors, said: "Most seafood processing firms have good food safety control systems. We need to focus more on checking the pre-processing stage to ensure sustainable development."

Tea industry needs to plan for the future

The tea industry must become more sustainable through building concentrated tea areas and improving productivity, quality and safety, experts said at the fifth Viet Nam Tea Outlook 2013 held yesterday in Ha Noi.

Nguyen Thi Anh Hong, general secretary of the Viet Nam Tea Association, noted that the country had exported 86,000 tonnes of tea this year, representing a 15 per cent decrease compared with the same period last year.

The supply of raw materials decreased about 20 per cent in 2013 due to unfavorable weather conditions, she said.

Additionally, fewer farmers were investing their profits back into growing tea and some grew small-scale plantations without proper planning.

"The overuse of plant protection chemicals, lack of attention to ensuring quality and safety and weak linkage with farmers are also affecting the industry," Hong said.

Nguyen Xuan Hong, head of the Ministry of Agriculture and Rural Development (MARD)'s Plant Protection Department, agreed that tea farmers were overusing plant protection chemicals but hoped that the Law on Plant Protection and Quarantine expected to be approved later this year would boost inspections of the pesticide supply and usage system.

According to the association, Viet Nam now exports tea to 61 countries and territories, down from 77. Not a single European nation is in the top 10 markets, with Taiwan, Pakistan and China holding the first three positions.

According to experts, Vietnamese tea exporters found the EU countries harder to penetrate due to risks of pesticide residue and consequently focused on easier markets such as Pakistan, Afghanistan, Indonesia and China.

The association called for a central government agency to coordinate government policies for the industry and develop concentrated tea areas to improve the safety and quality of tea leaves.

Hong also stressed the need to reduce low-scale processing factories and link the processing factories with raw material areas.

The Ministry of Agriculture and Rural Development (MARD) plans for the country's tea growing area to reach 150,000 hectares in 2020, from about 124,000 hectares in 2012.

Nguyen Quoc Vong, an expert on quality and safety enhancement of agricultural products from MARD, said that even though Viet Nam was among the top five tea exporters in the world, Vietnamese tea still lacked branding and consumers perceived it as low value.

The average export value per hectare for Vietnamese tea is about $1,200, in comparison with $5,700 for Sri Lanka and over $6,000 for Kenya, Vong said, yet tea farmers lack the motivation to improve the quality of raw materials.

Doan Xuan Hoa, deputy head of MARD's Agro-Forestry-Fisheries Processing Department, said long-term planning must tackle the challenge of supplying land for large-scale plantations, monitoring quality throughout the supply chain and restructuring the production of tea products according to changing market demand.

Latest high-profile Japan project begins in Dong Nai

The US$9 million plant of the Belmont Manufacturing Ltd Co, a subsidiary of Japan's Takara Belmont, went into operation on Monday in the southern province of Dong Nai.

Located in Long Duc Industrial Zone (IZ), the plant is expected to produce 15,000 products, including equipment and chairs used in dentistry.

The Long Duc IZ has thus far attracted 16 projects, of which 15 belong to Japanese investors with a total capital of $617 million.

Local authorities pledged to create favourable conditions for businesses to operate effectively in the province.

Viet Nam sees trade deficit with Laos in nine months

Viet Nam experienced a significant trade deficit with Laos over the past nine months, according to the Viet Nam Customs.

During the period, Viet Nam exported US$329 million worth of goods to Laos, up 12.3 per cent year-on-year, while it spent $394.6 million on imports, up 10.3 per cent.

Wood and timber products, and metals and minerals were the two key groups of import items, valued at $246.7 million and $18.5 million, respectively.

Despite the encouraging export growth, the market share of the Vietnamese products in Laos remained low.

Experts distrust new circular on price stabilisation

The new circular to deal with stabilising the price of children's formula products is not gaining much support from local traders and economists who doubt its effectiveness.

The newly-issued circular by the Ministry of Health will take effect from November 20.

Previously, firms have taken advantage of legal loopholes and classified formula products, intended for children under 36 months old, as food supplements to avoid price stabilisation policies. All these products will again be classified as milk according to the proposals of the new circular. Liquid milk will also be put under the same controls.

Tran Quang Trung, head of Vietnam Food Administration under the Ministry of Health, said they are only responsible for issuing the list of products. The prices will be under the management of the Ministry of Finance.

Since 2007, prices of dairy products have increased  30 times. While  customers made complaints about unreasonable price hikes, the Ministry of Health and the Ministry of Finance blamed each other.

Previously, the Ministry of Health said expensive dairy products are not a new issue and the public cannot blame the classification process for this. On the other hand, the Ministry of Finance affirmed that it's a huge loophole for firms to take advantage of.

Many customers place hope on the new circular, however, experts have raised doubts over its effectiveness.

"In 2008, the Ministry of Finance issued a circular in order to control  milk prices. It stated that for 15 days, firms were not permitted to raise prices more than 20% of the current price. The maximum percentage was too high and the adjustment time was short so the circular made no impact at all. Clearly, the problem is with our regulations, not the names of the products." an expert said.

Vu Vinh Phu, president of Hanoi's Supermarket Association, also said direct duties and responsibilities are not specified in the current regulations. "Why can't we investigate  the operations of foreign as well as domestic firms to find the key products and their prices?" Phu said. According to Phu, the new circular is good but not strong enough to deal with milk price problems. "It's the fault of the management agencies."

Economist Nguyen Minh Phong said the Ministry of Industry and Trade should also take some blame because it's the market manager. The problem is not milk quality but monopoly and competitiveness in the market. He went on to say that people should not place too much hope on the new circular because even prices of milk products that are on the price-stabilisation list still increase over time.

EVN’s losses attributed to its ineffective non-core business

The Government Inspectorate has said that ineffective and massive non-core business activities are to blame for Vietnam Electricity Group (EVN)’s great losses.

EVN’s non-core investment reached VND121 trillion (USD5.76 billion) by the end of 2011

Construction problems on many power projects have also caused extra costs and these are among the reasons for the group’s power-price hikes.

Many thermal power projects have also incurred extra costs for construction of “Operation and repair building” like O Mon 1, Phu My 1 and 4, Nghi Son 1,  Haiphong 1 and Quang Ninh 1.

However, in reality, the buildings provide living space for the companies’ officials such as, detached houses, luxury houses with swimming pools, tennis courts and pre-schools. The buildings cover a total area of 355,000 square meters and cost more than VND595 billion (USD28.3 million), which is considered part of the investment in the power projects, therefore, they are also added into the selling price of electricity.

The Government Inspectorate concluded that by the end of 2011, EVN’s non-core investment reached VND121 trillion (USD5.76 billion), surpassing its charter capital of almost VND77 trillion (USD3.7 billion). This is a violation of  Ministry of Finance regulations, plus, despite the big non-core business investment, EVN made a loss of VND2.2 trillion.

Earlier on July 31, in a surprise move, EVN decided to raise power prices by 5%, starting from August 1. Dang Huy Cuong, Head of the Ministry of Industry and Trade's Electricity Regulatory Authority of Viet Nam (ERAV), said the price rise was due to the higher costs of coal and gas earlier this year. That was especially true for the price hike of 37-41% which began on April 20.

Cuong noted that EVN is facing  great pressure for power price increases because of higher input costs from now until the year's end and the following years as well. It is estimated that EVN will have to pay extra coal costs of VND4 trillion for power generation by the end of 2013.

Vietnam attracts German companies: Chamber

Marko Walde, Chief Representative of the German Chamber of Industry and Trade (AHK) in Vietnam, spoke with Vietnam Economic News on the occasion of the 38th anniversary of diplomatic relations between the two countries.

In his opinion, the Vietnamese market is very attractive and has a lot of potential for German companies. With an average annual growth rate of 6 percent, Vietnam is still one of the most potential markets in the whole Southeast Asian region.

It has an increasing demand for high quality products and its young and growing population has a backlog consumer demand. Compared to its neighbour countries like Thailand, the Vietnamese market offers better business possibilities but its market entry structures for foreign companies are still weak.

Nevertheless, legal and administrative processes, for example applying for a work permit for foreigners, as well as high market regulations are still time consuming and complex. A liberalisation of the market would be desirable. For foreign companies with production facilities in Vietnam, the distribution of their products could be facilitated. Also, the support industries could be strengthened and power supply should be assured.

In the opposite side, Walde said that the demand for Vietnamese goods in Germany is also increasing significantly. However, before entering foreign markets, Vietnamese companies need to improve their international competitiveness. For that purpose, they need to be aware of the differences between the ASEAN economies and the German market.

The truth is that a good analysis of the foreign market like the analysis of the differences and similarities between the two markets is a basic requirement to be successful. Visiting German trade fairs or contacting trade fair representatives (like Messe Dusseldorf, Messe Berlin, Nurnberg Messe and Spielwarenmesse) could be first steps to get to know the German market and realise plans of expansion.

“With our role in Vietnam, our main tasks are to promote the economic relations between Germany and Vietnam. We have two service teams with one team being responsible for serving delegations and projects and the second teamp roviding consultancy and support for German and Vietnamese companies to successfully enter foreign markets. We are the official representative of Messe Duesseldorf, Messe Berlin and Spielwarenmesse,” he shared.

Every year, the AHK brings several hundred exhibitors and visitors to Germany and support export-oriented enterprises in Vietnam in developing their markets in Germany and Europe. Besides, the AHK is also the official partner for the federal states Freistaat Bayern and Sachsen-Anhalt. The AHK’s main interest is to strengthen the economic relations between Germany and Vietnam and supports both sides by their business expansion.

“It is clear that we will have more possibilities when the Free Trade Agreement (FTA) between Vietnam and the EU comes into effect. The imports will raise and many of the constraints will be omitted. Going along with these reasons we will recognise an increase of trade on both sides,” he added.

Noticeably, the Asia-Pacific Conference of German Business (APK) will be held from November 21-22 in 2014 in Vietnam. It is a platform for the exchange of ideas among companies and decision makers in Asia. This event has been organised biannually in Asia since 1986 and has evolved into one of the largest networking events in the region attracting both political and business leaders.

Nearly 800 CEOs of leading German companies and top politicians will take part next year to discuss the actual situation of the Asian economy. This is also a great chance for German and Asian companies to get to know each other and exchange their business interests.

“I believe that throughout this event German leading managers will discover Vietnam as a country for their next investment,” Walde stressed.

Car sales on rise in Vietnam

Despite economic uncertainties, purchasing power of cars has increased and the market is once again seeing new car showrooms opening with offers of numerous promotions and better after-sale services, all of which will hopefully revive the market once again.

Ngo Thanh Tri, Marketing Director of Western Ford Company in Ho Chi Minh City, said in general auto sales are better than in previous years, especially sales in 9-16 seater vehicles.

Many stores are displaying numerous new car models in many segments including luxury brands.

Along Cong Hoa Street in Tan Binh District, in just a short time, tens of automobile shops have opened and most of them are selling imported cars.

Elsewhere on Tran Hung Dao Street in District 1, An Duong Vuong Street in District 5, Phan Van Tri and Nguyen Oanh Streets in Go Vap District many car showrooms have opened.

Likewise, in outlying districts of Thu Duc, Binh Tan, or along Highway 1A, 22 new shops have opened, but these sell second-hand cars.

Nguyen Dinh Nhu, Director of Kim Thanh Automobile Company, an official Honda distributor, said auto sales this year are looking brighter. He pointed out the improvement in auto sales is thanks to the launch of a series of cars in segments  appropriate to customer demand and supported by easy and low interest loans.

According to the General Statistics Office, a total of 3,000 imported cars sold in September, 1,000 more than last month.

Among the imported cars, most are from South Korea; followed by Thailand, China and Japan. These brands are big names like Audi, BMW, Land Rover, Renault, Lexus and Infiniti.

Businesses believe that car sales can lift after registration tax reduction and lowering of import tax. Under the ASEAN Free Trade Agreement, import tax will decrease steadily from 50 percent in 2014 to zero percent by 2018.

Ministry plans change to foreign investment procedures

Investment authorities are mulling changing registration procedures to help streamline the process of and make the country more attractive to incoming foreign investors.

“Business and investment registration procedures of foreign invested enterprises (FIE) are currently viewed as overly complicated and difficult and are likely to be a major area of change when the Enterprise Law amendments are submitted to the National Assembly’s upcoming session in late October,” said deputy head of the Ministry of Planning and Investment’s (MPI) Business Registration Management Department Bui Anh Tuan.

Deputy head of the MPI’s Legal Department Quach Ngoc Tuan said the current law requires incoming projects to get both business registration and investment certificates. This slows their entry into the market.

“One of the key amendments in the draft is allowing foreign investors to apply for and receive business registration certificates first, the foreign investors then execute other procedures to invest in Vietnam and be given investment certificates,” explained Tuan from the legal department.

“New businesses must pay due heed to market entry conditions while those already doing business and looking to change or expand must critically analyze the conditions required,” he added.

The proposed change was welcomed by participants of a recent Ho Chi Minh City workshop which sourced opinions on potential amendments to the Enterprise Law. It was notably lauded for recognising recent market developments such as foreign investors pooling resources and buying stakes in Vietnamese firms.

The law will allow investors to buy stakes in or accept capital transfers from Vietnamese firms before going through the investment registration process.

“The amended law will create a legal framework that welcomes foreign investors and efficiently facilitates investment management authorities, while also supporting enterprises in dealing with their problems quickly and effectively,” said registration department Tuan.

There will also be another five proposed amendments regarding the registration of new businesses, information transparency and publication, governance of dissolutions and operation termination, acquisition of and restructuring of businesses, and corporate governance.

An Giang facilitates renewable energy investments

The southern province of An Giang has pledged to make it easier for Swedish investors in the production of renewable energy as it wants to increase the investors’ presence in the field.

An Giang, the International Development Agency of Sweden and the Swedish Energy Centre co-hosted a workshop themed “Energy and Sustainable Growth in An Giang – Potential Investment Projects and International Cooperation” in Ho Chi Minh City on October 3.

Vuong Binh Thanh, Chairman of the An Giang People’s Committee, committed to providing support to investors along with drastically reforming administrative formalities for them.

In 2009, Sweden and Vietnam inked a 70 million USD development cooperation agreement for the 2009-2011 period, which also covered environment, renewable energy and climate change issues.

Over the recent past, Sweden has worked with An Giang in three projects on sustainable community development, improving the capacity of biomass power generation and establishing a centre of excellence in renewable energy and power efficiency.

The Mekong Delta province is seeking for Sweden’s continued assistance to develop projects that use renewable resources, like rice husks, which are available in large quantity in the post-harvest time, to generate power and biogas based on clean development mechanism (CDM).

Nguyen Duc Cuong, an official from the Vietnam Institute of Energy, noted that a plenty of sugarcane bagasse, rice husks and wood waste can produce about 118 million tonnes of biomass and 4.8 billion cubic metres of biogas annually for the country.

Vietnam now ranks second in the world in export of rice husks with 8 million tonnes a year. Rice husks-generated energy contributes significantly to the power sector’s sustainable development.

Hai Phong attracts new five FDI projects in Q3

The northern port city of Hai Phong licensed five foreign direct investment (FDI) projects worth nearly 1.59 billion USD in the third quarter of this year.

According to the latest report of the Hai Phong Economic Zone Management Board, of the new FDI projects, the most significant was the 1.5 billion USD one invested by LG Electronics from the Republic of Korea .

The four other FDI projects included King Plastic Pte Ltd ( Singapore ), Dongbu Singapore Pte Ltd, IML Technology ( Indonesia ) and Knauf International ( Germany ).

The management board also granted investment certificates to three domestic projects with a total registered capital of over 290 billion VND (13.8 million USD).

Besides, the city authority agreed to add 25.1 million USD to investment capital of seven on-going FDI projects.

In the first nine months of this year, the Dinh Vu-Cat Hai Economic Zone in the city attracted 13 FDI projects valued at 1.776 billion USD and 11 local-invested ones, worth 1.765 trillion VND (84 million USD).

Additionally, 12 FDI projects increased their investment capital by 47.28 million USD and 598.123 billion VND (28 million USD) came from four local invested ones during the period.

By the end of September this year, the city’s economic and industrial parks had 138 valid FDI projects with a total registered capital of 5.368 billion USD and 70 domestic invested ones worth more than 36 trillion VND (1.7 billion USD).

Japanese businesses heavily invest in Da Nang

Named as one of the top five foreign investors in the central city of Da Nang, Japan now has more than 90 businesses and representative offices operating in the city with investment exceeding 370 million USD, equivalent to 30 percent of the locality’s total inflow of foreign investment.

In the first nine months of this year, the city gave permission for five Japanese investment projects worth a total of 31.4 million USD.

Generating jobs for around 30,000 labourers, Japanese firms in the city are on the whole operating effectively and contribute greatly to the local budget and the city’s annual average growth rate of 11 percent.

Now, the Japanese enterprises, specialising in the fields of paper, seafood and agricultural product processing, the restaurant business, electronic components and software outsourcing, are moving their investments towards high technology and quality services.

Besides investing on their own, the foreign firms have encouraged others to enter the city.

Specifically, in addition to its 40 million USD investment in the Da Nang High-Tech Park, the Tokyo Keiki Incorporation urged Niwachuzo Company to pour 22 million USD into the park.

The aforesaid ventures signal the beginning of a strong wave of investment from Japanese firms in the city, which also helps the locality attract investment from other foreign enterprises.

To accelerate foreign investment, the city now has four Japanese training centres and hundreds of university undergraduates studying the Japanese language, along with nine restaurants serving Japanese dishes.

In fact, Japanese investment is concretised by the efforts and commitments of Japanese representative agencies and firms in Vietnam.

Japanese corporations and businesses always choose Da Nang as a crucial investment partner as it meets the firms’ requirements for a favourable investment climate, socio-economic conditions and facilities, said former Japanese Ambassador to Vietnam Yasuaki Tanizaki during his Da Nang visit in August.

In further improving its investment environment, the city has held several conferences in the Japanese cities of Tokyo and Osaka, aiming to attract more investment from the country’s companies in its high-tech zone in the time to come.

Japanese firms seeking investment opportunities in Da Nang are able to invest in the electricity industry, electronics, optical and communication technologies, manufacturing machinery, nanotechnology and medical equipment.-

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