Footwear industry exports to grow 20 percent

Export value of the domestic leather and footwear industry could grow between 15 per cent and 20 per cent this year due to opportunities from free trade agreements (FTAs).

At a conference on production, export and import of leather and footwear in Ha Noi yesterday by the Viet Nam Leather and Footwear Association (Lefaso), Deputy Minister of Industry and Trade Ho Thi Kim Thoa said signing of negotiations on the Trans Pacific Partnership (TPP) deal and other FTAs would present more opportunities in production and business for Viet Nam's enterprises, including firms from the textile, garment, leather and footwear industries, reported online newspaper bnews.vn.

"To take advantage of those agreements, the local leather and footwear industry should prepare material at home to join preferential tariffs from the deal when exporting their products to the US, the European Union and some other markets," Thoa said.

Nguyen Duc Thuan, Lefaso chairman, said the local leather and footwear industry will have more business opportunities from the agreements, including the TPP, but those agreements will also create more challenges for the export activities of local footwear firms.

However, buoyed by the recovery in the economy and trade activities, the local firms expect to achieve high growth in revenue this year, he said. To ensure that, they should implement technology to improve production.

Last year, the domestic leather and footwear industry gained a year-on-year increase of about 16 per cent in export value to US$15 billion, including $12 billion from footwear, and $3 billion from handbags.

This year, the industry expects to reach a growth rate at 15-20 per cent in export value due to leftover development from last year and more export opportunities from the FTAs, especially from the ASEAN Economic Community and the TPP, Thuan said.

In 2015, traditional markets of the local footwear products registered high exports as against 2014, including the US with growth rate at 20 per cent, the EU at 10 per cent, and China at around 50 per cent.

The local footwear firms had also initiated reforms in production to increase productivity and quality of products, and also sought and expanded their export markets, he said.

A representative of the Phong Chau Leather and Footwear Company said last year, the company expanded its export markets to Africa and the ASEAN countries so its export value increased between 5 per cent and 7 per cent in 2015, as compared with 2014.

This year, the company will promote exports to those markets, while seeking out new export markets and increasing investment for expanding production scales.

Long Thanh airport project likely years behind schedule

The building of Long Thanh International Airport, which is set to become Viet Nam's largest airport, will likely be inaugurated five years behind schedule if it follows procedures as required, the National Assembly Economic Committee said.

To complete all procedures, the project could only start by 2030, it said.

At a working visit between the committee and the local authority, the Dong Nai Province's People's Committee said that it would take about three years to implement the land acquisition, land clearance and resettlement. As stipulated by the current law, these tasks could only be carried out after Prime Minister Nguyen Tan Dung approved the investment on the project.

Meanwhile, investor Corporation of Viet Nam said that by July, 2017, it would submit to the Ministry of Transport a report on the project and the National Assembly would approve the project at the first session of 2018.

Thus, in 2018 at the earliest, the Prime Minister will allocate investment capital for the construction of two resettlement areas of Loc An and Binh Son. After that, the site clearance would be implemented by 2020 and land acquisition by 2023.

This meant the project would be carried out five years behind schedule, which might pose risks of increasing initial investment capital and delays at reducing the overloading of Tan Son Nhat International Airport, it said.

Nguyen Van Giau, chairman of the NA Economic Committee said that the project must begin in 2018, so it could complete its first phase by 2025 according to the National Assembly's resolution.

The first phase of the project includes the construction of a terminal and a runway with capacity of 25 million passengers annually.

Giau said the committee has asked the Prime Minister to propose the National Assembly a special mechanism, which would allocate investment capital for resettlement and site clearance before getting the project's approval.

To make it work, the National Assembly would create the legal basis by adding the proposal to the resolution of the socio-economic development plan for the period of 2016 to 2020.

According to the resolution, approved by the National Assembly in June, Long Thanh International Airport would be the most important airport of the country and an international hub in the region.

After completing its construction by 2050, Long Thanh International Airport would have a capacity of 100 million of passengers and five million tonnes of cargo per year. Total investment capital for the project is estimated to be VND336.6 trillion (US$16 billion).

Da Lat to grow flower exports

As Lam Dong Province was aiming to expand the export of Da Lat flowers from the current 10 per cent of output to 30 per cent by 2020, greater efforts were needed.

According to Pham S, Deputy Chairman of the Tay Nguyen (Central Highlands) province, a comprehensive renovation in investment strategy, and farming techniques to thinking of doing business of both farmers and enterprises, must be carried out to achieve the export goal.

Lam Dong Province had a total plantation area for flowers of 7,600 ha with an annual output of more than 2.5 billion flowers, but the export remained modest at US$26 million last year, much below the potential of the province which has a cool climate all year long and fertile soil.

Chairman of Da Lat City Vo Ngoc Hiep said that a majority of farmer households were slow in revamping their farming techniques lading to flower plantations remaining scattered, resulting in low value adds.

Farmers and companies must connect with each other to set up a value chain for enhancing flower quality and output, which was considered a solution to expanding exports, experts said.

Pham S was quoted by Tien Phong (Vanguard) newspaper as saying that Da Lat, with support from Japan International Cooperation Agency (JICA), was developing a marketplace for flowers so as to ensure transparency in output and market demand, which would promote farmers to grow high-quality flowers, like the model of OTA Floriculture Auction.

Ryoji Kato, from Japanese OTA Floriculture Auction, said to the newspaper that flower prices would be updated daily along with information of output and demand on the marketplace. Based on such information, farmers could raise appropriate plantation plans to balance supply-demand and stabilise prices for more stable profits.

In addition, farmers and companies must ensure product quality to consumers.

The marketplace would also help promote exports.

Currently, the export of Da Lat flowers was mainly from farms such as Da Lat Hasfarm, Flower Forest Da Lat and Bonnie Farm.

HCMC IPs to see more foreign funding

Foreign investment in HCM City's industrial parks and export processing zones is expected to rise this year as Viet Nam is scheduled to sign the Trans-Pacific Partnership (TTP) on February 4, according to the HCM City Industrial Parks and Export Processing Zones Authority (HEPZA).

Last year, foreign capital in IPs and EPZs rose to US$553 million, 59 per cent higher than in 2014.

Most of the foreign enterprises are from the British Virgin Islands, South Korea, Singapore, Hong Kong, Japan, Taiwan, France, the US, China and Australia. They operate mostly in textiles, food and chemicals, among other products and services.

HEPZA targets attracting investment capital of $700 million from foreign and domestic enterprises.

Last year, the IPs and EPZs lured more than $840 million in total investment, an increase of 11.74 per cent compared to 2014.

Capital from domestic projects, however, fell by about 29 per cent.

This year, HEPZA will focus on the support industry which serves four main industries of mechanics, electronics-computers, chemicals, food processing and high technology.

It will build areas for the support industry at the Hiep Phuoc IP in Nha Be District and Le Minh Xuan 3 IP in Binh Chanh District, according to Tran Cong Thanh, head of the HEPZA's management office.

Speaking at a press meeting held yesterday, Thanh said that HEPZA aimed to improve links between foreign and domestic enterprises.

More investment promotion programmes would be carried out in Japan and Korea, he added.

HEPZA will continue to promote investment in the Vie-Pan Techno Park in Hiep Phuoc Industrial Park.

Thanh said that work would also start this year on the second phase of the Vie-Pan Techno Park.

Warehouses at IPs Linh Trung, Dong Nam, Hiep Phuoc and Tan Thuan are expected to be completed later this year.

Nine kindergartens that serve the children of 2,840 workers opened last year at several IPs in HCM City.

Three more will open this year and construction on four more kindergartens will begin this year.

Bus tickets to go home for Tet will be given to workers from northern and central provinces, Ha Noi, the Cuu Long (Mekong) Delta provinces of Bac Lieu, Ca Mau and Kien Giang, and the two Central Highlands provinces of Dak Lak and Gia Lai.

For workers who cannot return to their hometowns, entertainment programmes will be offered during the Tet holiday.

This year, the average Tet bonus will be more than VND6 million ($270) per worker, according to Thanh.

The maximum will be VND600 million ($27,000) for employees at domestic enterprises; and VND197 million (nearly $8,800) for employees at foreign-invested companies. The minimum will be VND3 million ($133).

Vinachem targets US$2.2 billion in 2016 earnings

Vietnam National Chemical Group (Vinachem) targets to reach US$2.2 billion in revenue and US$80.2 million in consolidated profit in 2016, a respective increase of 10.7 and 10.2% on-year.

The group also has plans to construct more plants and production facilities, as remarked by general director Nguyen Gia Tuong at the group’s annual business review in 2015 and plan for 2016, organised by Vinachem on January 16 in Hanoi.

In 2015, the group earned US$2.03 billion in revenue with a consolidated profit of US$62.4 million. Export and import turnover reached US$516 and US$248 million, respectively. The export of fertilisers and crop protection substances ranked first among Vinachem’s products and services, bringing in a total US$159 million, up 39.2US$ on-year.

In 2015, Vinachem continued to make headway in its key projects.

Notably, in September 2015, the group held the groundbreaking ceremony of a potassium salt mine exploration project in Laos’s Khammouane province.

The project has the total capital of US$522 million and a designed capacity of 320,000 tonnes of potassium salt per year. It is considered one of the cornerstones of the master plan to develop the Vietnamese chemical industry, and is expected to benefit both countries once on stream.

In June 2015, the group inaugurated the project upgrading and expanding Ha Bac Fertilizer plant in the northern province of Bac Giang. Covering an area of 33.4 hectares, the US$568.6 million plant’s capacity was increased to 500,000 tonnes of urea fertiliser and 300,000 tonnes of liquid ammoniac per annum. The project creates approximately 2,000 jobs for local people.

In December 2015, Lao Cai DAP Fertilizer Plant was put into operation after three years of construction. The 72ha plant, worth a total of US$235 million and producing 330,000 tonnes of DAP fertiliser, will meet the country’s demand for DAP fertiliser for agricultural production.

Experts: Vietnam has advantages in cow farming

Despite challenges, Vietnam’s cow farming sector has growth potential thanks to the country’s huge demand and favorable climate, experts said at a seminar on cow farming Ha Tinh Province last week.

John Marron, director for the ASEAN region at Purcell, which specializes in cattle import-export and technology consulting, told the seminar that the domestic cow farming sector has certain advantages over foreign rivals as Vietnamese are unfamiliar with frozen meat.

Marron said more than 70% of beef is supplied by traditional wet markets, which does not have freezers to store meat.

Therefore, the consumer’s habit of buying fresh meat will unlikely change from now until 2018 or later. This means locally produced beef has a competitive edge over imported products.        

He noted that favorable weather conditions and ample water resources are ideal to grow grass and other plants to make cow feed.

Tong Xuan Chinh, deputy head of the Department of Livestock Production under the Ministry of Agriculture and Rural Development, said at the seminar that Vietnam has great potential for cow farming development.

Beef, buffalo meat and goat meat account for around 9% of Vietnam’s total meat consumption while the world’s average is 23%. The country’s per capita milk consumption is 14.5 liters a year, lower than in regional countries such as Thailand with 23 liters and China with 25 liters per person per year.

When incomes rise, Vietnamese will consume more milk and meat. Local manufacturers currently can meet 30% of demand for milk and 50-60% of demand for meat.

The agriculture ministry has plans to transform low-yield paddy fields into land for other crops like grass and corn. In addition, some inefficient agricultural and forestry farms could be converted into cow farms.

Experts at the seminar pointed out a number of challenges for the nation’s cow farming sector.

Tran Phuong, deputy general director of the Bank of Investment and Development of Vietnam (BIDV), said given Vietnam’s participation in free trade agreements (FTA), import tariff reductions and exemptions will be offered to almost all foreign agricultural products in the next three to five years.

HoREA wants conditions for owners of resettlement homes relaxed

The HCMC Real Estate Association (HoREA) has proposed the Government and the Ministry of Construction allow owners of resettlement homes to sell and transfer these properties.

Under the prevailing regulations, owners of resettlement homes have home ownership certificates but are banned from transferring their homes in five to ten years. In addition, they cannot even transfer the rights to buy resettlement homes.

According to the civil law and the 2014 Housing Law, owners of resettlement houses have the right to make decisions on their homes. HoREA said resettlement houses are the assets of those owning them, so they can decide what to do with these properties.

Therefore, HoREA petitioned the Government and the ministry to let owners of resettlement houses transfer their houses and rights to buy resettlement homes.  

At present, many real estate brokerages and employees of property exchanges are offering for sale resettlement apartments in HCMC.   

For instance, resettlement apartments of 60-90 square meters on Chu Van An Street, Binh Thanh District are offered at VND17-18 million (US$755-800) per square meter. Meanwhile, some families acquired houses in C5-C6 resettlement apartment building on Man Thien Street in District 9.  

In reality, many households having resettlement houses do not want to live there as they need to move to places where they can earn a living.

For transactions involving resettlement homes, the name of the seller remains on the home ownership certificate due to the sale ban. This exposes risk to the buyer.

The HCMC government used to issue home ownership certificates to buyers who made full payments for resettlement homes.   

HoREA said allowing owners of resettlement houses and lots to sell is to protect their legitimate rights. This regulation, if in force, would help the property market become transparent and support State agencies to manage the market more efficiently.

According to HoREA, major cities like HCMC and Hanoi will implement a number of new key infrastructure projects, so they need more resettlement apartments for affected households.

Navigos Search: Recruitment demand for managers surges last year

Navigos Search, a recruiting agency for senior personnel, has published a report that shows that recruitment demands of enterprises for mid-level and senior managers surged 44% in 2015 compared to the previous year.

The strong increase was seen in recruitment requests that enterprises sent to Navigos Search last year, the company said in its report on the recruitment demands for mid-level and senior managers in Vietnam in quarter four of 2015 and forecast for 2016.

Navigos Search said the most recruited positions included electricity, electronics engineers and programming engineers, and marketing and sales managers, among others. The company reported the hottest recruitment demands in the smartphone manufacturing, garment and textile, retail and fast-moving consumer goods (FMCG) industries last year.

The top five sectors with the highest recruitment demands in the final quarter of last year were manufacturing, retail and FMCG, garment and textile, banking-finance-insurance, and information technology (IT).

Navigos Search named the top industries in terms of salary last year.

In Hanoi, the banking and finance sector took the lead with monthly wages for mid-level and senior managers ranging from VND100 million to VND200 million. The industry was followed by manufacturing, and real estate.

Meanwhile, in HCMC, health care topped the list of 10 industries offering the highest salaries for mid-level and senior managers, followed by FMCG, retail, and banking and finance. Salaries of these top industries were from VND70 million to VND225 million per month.

Data of Navigos Search revealed that the highest monthly salary for mid-level and senior managers last year was VND225 million, up 11% from 2014 (VND202 million).

In the report, the company projected major recruitment changes this year.

Experts of Navigos Search predicted that as the local pharmaceutical industry is growing very fast, especially for functional foods, mid-level managers of marketing and sales in this industry may be sought after.

Foreign pharmaceutical companies may step up merger and acquisition deals with local pharmacy producers, leading to high employment demands for sales and product managers and relevant technical positions.

Telecommunications firms are expected to increase employment, particularly when 4G technology has been introduced in the country. Navigos Search said 4G technology providers have been well prepared to take on more personnel for their projects.

Consumer finance will be likely to have high recruitment demand this year when many banks have planned to acquire finance companies to boost loans for consumers.

In the IT industry, foreign companies in Vietnam tend to recruit experienced overseas Vietnamese graduates from neighboring countries such as Thailand, Singapore and Malaysia. Normally, these candidates have gained five to six years of work experience in their study countries after graduating from university. With strong English competence and high technology expertise, they are preferred by foreign companies in this market.

Navigos Search said notable recruitment is also anticipated for the manufacturing sector, especially in the north where some factories will be relocated in other localities rather than in popular industrial parks in neighboring provinces of Hanoi.

For the retail industry, the opening of more convenient stores will create new recruitment opportunities for fresh graduates. Managers in the FMCG will continue to be highly hunted because of a personnel shortage in this industry.

Retailing firms target rural markets

Many domestic producers have moved their markets to rural areas as local fast-moving consumer goods (FMCG) firms are facing severe competition with imported products in urban areas.

According to the Ministry of Industry and Trade's Light Industry Department, drinks, food, milk and tobacco had stable growth during 2014 and 2015.

Drinks comprised 38 per cent of the total sale volume of FMCG and reached the highest increase of 6.7 per cent.

Beer, tonic and refreshing drinks had the highest growth. Milk and milk-related products increased by 12 per cent in urban areas and 20 per cent in rural areas.

However, other products like detergent and processed food faced difficulties.

According to a recent survey, FMCGs growth rate in the six biggest cities, including Ha Noi, HCM City, Hai Phong, Can Tho, Nha Trang and Da Nang, has fallen.

The rural market is emerging as a new growth market. At least 68 per cent of the country's population is in rural areas. But only 54 per cent of turnover for FMCG products comes from rural areas, which indicates room for growth.

The ministry said during the 2014-2015 period FMCG showed an increase of 2.7 per cent in quantity in rural areas, and growth increase in 1.6 per cent in urban areas reflected by price, not quantity.

"Local producers are facing severe competition from imported, smuggled and fake products, and they have limited their market expansion," an official of the Ministry's department was quoted as saying in the Thoi bao Kinh doanh (Business Times) newspaper.

"The situation has also caused a loss of belief in domestic products," he added.

Local manufacturers have many weak points: limited manufacturing capability, weak finance, poor management, imported raw materials, outdated technology, low quality products and unhealthy competition among domestic producers.

To improve the situation, State management offices should increase investment in trade infrastructure, especially for distribution systems, as well as provide expenditures to support high-quality producers's promotion campaigns.

Most FMCG companies are looking for support policies in advertisement, brand name registration, industrial copyright protection, market information and science and technology application.

However, enterprises have been told that they must improve their production capability, reduce dependence on imported materials and improve the quality of their products.

HCM City's RDP triples its profits

HCM City-based Rang Dong Plastic Joint Stock Company (RDP) has announced that its profits had tripled after tax in 2015, and it was planning to issue more shares for new investments.

RDP chairman Ho Duc Lam said it reached the revenue of VND1.13 trillion (US$50.4 million) in 2015, an increase of 4.6 per cent over 2014, and added that the company earned a net profit about VND70 billion ($3.1 million), more than three times the VND23 billion ($1.025 million) it had earned as profit in 2014.

Lam said that last year the plastic industry, including his business which produces different kinds of plastic products in the city, benefitted from the lower input costs.

The attractive development of the plastic market in Viet Nam, Lam saw acquisitions of domestic plastic companies by FDI companies last year. There were FDI enterprises which wanted to buy more than 20 per cent stake in his company, but he had no plans of selling, Lam said.

For their next phase of development, the RDP's board of directors approved the issuing of another 4.7 million shares to existing shareholders to increase its charter capital in the first six months of this year. The shares worth VND20,000 (89 cents) each will be released to the existing shareholders of the company with investment purposes to implement the relocation plan of the RDP headquarters to the Tan Do-Long An Industrial Park in the neighbouring Long An Province from District 11, HCM City, where it is located presently. The total investment for the new infrastructure is estimated at VND490 billion ($21.85 million) to be completed by 2017.

In the investment structure, equity accounted for 33 per cent, and mobilising loans accounted for 32 per cent, while 34.7 per cent was raised from bonds.

According to the company, it will sign co-operation agreements with Japanese partners in March, as it was committed to completing the factory in Long An this October to manufacture products for them. The new Rang Dong Plastic Factory, spanning 17 ha, will serve the growing demand of plastic products which were mostly PVC products and plastic packages.

In 2016, the company planned a revenue growth of 15 per cent and a profit of 10 per cent. It will further cut costs and increase the profit by reducing the transport fee, applying modern management systems, and enhancing inventory management and cost management progress.

This year, the RDP also expected an increase of 15 per cent in the export market compared to an increase between 10 per cent and 15 per cent in 2015. Besides the southern market, the northern market currently accounted for 20 per cent of the total market. The RDP was also focussing on garment producers as potential customers.

The RDP shares yesterday ended at VND29,200 ($1.3) each on HCM Stock Exchange.

Vietcombank funds breeze past targets

VCBF Tactical Balanced Fund and VCBF Blue Chip Fund, open-ended funds managed by Vietcombank Fund Management, have outperformed their 2015 as well as lifetime benchmarks.

The VCBF Tactical Balanced Fund rose 19.3 per cent last year and 30.6 per cent since its issue in December 2013, compared to its targets of 6.7 per cent and 15.7 per cent.

The VCBF Blue Chip Fund gained 23.4 per cent in 2015 and 19.1 per cent since inception in 2014 against targets of 4.4 and minus 2.2 per cent.

The former's benchmark is the average of two values: the change in the VN-Index and the return on 10-year government bonds.

The benchmark for the latter is the VN100 Index (comprising 100 stocks with the largest market cap and equity capital on the HSX).

The VN-Index, the benchmark HCM City stock market index, rose by 6.1 per cent last year.

Avinash Satwalekar, CEO and CIO of VCBF, said, "Our two funds outperformed their respective benchmarks in 2015, a year marked by increased global volatility.

"Our long-term focused investment philosophy and rigorous research process helped to provide strong returns for our clients.

"We continue to remain optimistic regarding the long-term prospects of the Viet Nam economy and look forward to capitalising on market opportunities."

As of December 31 the two funds managed approximately VND181 billion (US$8.04 million) sourced from nearly 600 investors.

Vietcombank Fund Management is a joint venture between Vietcombank and Franklin Templeton Investments, a pioneer in emerging market investments.

Gallery Exclusive opens carpet showroom in Hanoi

The Gallery Exclusive – featuring contemporary, old and antique carpets from the major weaving centres of Central Asia – has branched out with the opening of a stunning permanent showroom in Hanoi.

At the opening, company representatives said they put an enormous amount of heart and planning into its design so that it would reflect their vast collection of inventory from Iran, Afghanistan, Pakistan, India and The Russian Caucasus.

In addition, the company represents world class manufacturers and suppliers of wall-to-wall and commercial carpeting from China, Japan, Denmark, the US, Belgium, Canada, Malaysia, Indonesia and The UAE.

Located at 77 Xuan Dieu Street in the Tay Ho District, the showroom promises to fulfill all requirements for high end carpets for the commercial, residential and hospitality segments of the local economy.

The new showroom is true to the brand standard established by its first showroom opened in Ho Chi Minh City six years ago, said company representatives, capturing the vibrant spirit that so uniquely defines The Gallery Exclusive.

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