Do not miss opportunity from TPP

Trade and economic ministers from 12 member countries of the Trans-Pacific Partnership (TPP) agreement created an historic moment, officially signing the deal in Auckland, New Zealand on the morning of February 4.

It is neither the first free trade agreement (FTA) Vietnam has participated, nor the only new generation FTA that Vietnam has completed negotiations for so far.

With the presence of two of the three largest economies (the US and Japan), a large market with 800 million people, accumulated GDP of 12 member states accounting for 40% of the world GDP, and trade flow of goods accounting for 30% of global trade, the TPP is expected to be the FTA with the biggest impact on production and business operations in Vietnam in the near future. All organisations and individuals doing business in the country will be under the direct or indirectly impact of the TPP’s commitments.

Compared with enforcement mechanism of the World Trade Organisation (WTO), the TPP is diverse and tighter, providing its member states a better ability to supervise TPP enforcement of other countries, at the same time putting each member under pressure to properly implement the agreement.

As planned, the time for the TPP countries to complete necessary steps to judicial review, signing and ratification according to internal procedures of each country will be about two years - the TPP will likely take effect by 2018.

During that period, TPP member countries as well as companies do not have to implement the commitments in the deal, so it is an important period for them to prepare necessary conditions, as well as take advantage of opportunities available to compete in the TPP. For example, to enjoy preferential tariffs from the TPP, Vietnam's exports need to meet the rules of origin; businesses may have to adjust production lines and set up new sources of raw materials to meet that rule while also looking for customers in the TPP markets.

FTAs that Vietnam has signed and is implementing focus mostly on opening markets for goods, in which, Vietnam and its partners pledge preferential tariff treatment for goods of each other, if they meet regulations the rules of origin in concerned FTAs. Thus, in a market that Vietnam has commitments together under FTAs and the TPP, regarding import and export of goods, businesses can choose to follow the most profitable commitments under any FTA.

The Vietnam Chamber of Commerce and Industry emphasised the need that every enterprise, organisation and individual doing business in Vietnam pay attention to the TPP, at least commitments directly affecting their business operations, from which making appropriate preparations, especially to take advantage of market and institutional opportunities, as well as to overcome competition challenges generated from the agreement.

According to economic experts, rather than just noting the tariff, businesses should focus on self-improvement, innovation, expanding production, and improving product competitiveness, particularly stressing the importance on the origin and quality of goods.

Meeting the rules of origin should be done right from the beginning (from the stage of looking for materials and designing the manufacturing process). It could be a significant problem for many enterprises in Vietnam, but also an opportunity to force the nation to improve the quality of ancillary industries.

It is important take measures to prevent activities from foreign companies of non-TPP members with advantages in raw and auxiliary materials to turn their products into made-in-Vietnam goods to enjoy benefits of the TPP.

Food safety crucial for Vietnamese produce's reputation abroad

Foreign markets, especially Trans-Pacific Pảtnership (TPP) agreement members, will take in Vietnamese fruit and vegetables this year, but the question now is how to supply enough volume while following strict safety standards, an official said.

Fruit and vegetables are among the commodities Vietnam has an advantage in when it comes to the TPP. They made inroads into many demanding markets in 2015, including major TPP members like the US, Japan and Australia .

One of the most critical factors in Vietnam's export of fruit and vegetables is to control chemical residues.

Director of the Ministry of Agriculture and Rural Development's Plant Protection Department Nguyen Xuan Hong said his agency will tighten control over the use of plant protection chemicals this year while encouraging the use of advanced technology to reduce the need for those substances.

Eliminating the use of protective chemicals will help minimise not just production expenses, but also food risks due to pesticide residue, he said, noting that Vietnam aims to cut the spending on plant protection chemical use by half by 2020.

Though the country has sent many kinds of fruit abroad, including dragon fruit, mango, lychee and longan, to many strategic markets like the US , Japan and Australia , the point is to produce large quantities to improve revenue – while meeting importers' food safety and plant quarantine standards, Hong stressed.

He assured Vietnamese exporters that his department will be able to help them treat products in line with importers' health quarantine criteria. All businesses need to do is ensure food safety through good agricultural practices.

He suggested multiplying good cultivation role models and increasing coordination between enterprises and farmers as well as among enterprises themselves, noting that if a product from one company does not pass quarantine checks, importing countries will stop buying the same goods from all Vietnamese firms.

The poor performance of one company will affect the entire exporter community, the official emphasised.

According to the General Statistics Office, Vietnam grossed 2.2 billion USD selling fruit and vegetables abroad in 2015, a record annual increase of 47 percent.

The country is home to more than 100 fruit and vegetable processing factories, which can produce 300,000 tonnes of products each year. Vietnam exports fruits and vegetables to 40 countries and territories.

Viet Capital Bank gets nod for 10 new branches, transaction offices

The State Bank of Vietnam has licensed Viet Capital Bank to open 10 branches and transaction offices this year.

The bank will open a branch each in Hanoi, Hai Phong, Quang Ninh, and Kien Giang, and transaction offices in Binh Duong, Dong Nai, Tay Ninh, and Da Nang.

It now has 38 branches and transaction offices in 18 major cities and provinces.

The bank had assets of 29.579 trillion VND (1.32 billion USD) last year and deposits of 25.904 trillion VND.

It had outstanding loans of 16.663 trillion VND while bad debts were less than 3 percent.

Da Nang targets 12 percent rise in industrial production value

The central city of Da Nang has set targets of raising its industrial production value by 11-12 percent and the city’s industrial production index by 10.8 percent in 2016.

The city’s total retail sales and services are also projected to increase by 16-17 percent, and export turnover is expected to climb 15-16 percent.

To fulfill these objectives, the municipal Department of Industry and Trade will put forth projects, programmes, plans and tasks while implementing the city’s economic restructuring project, among others, said Phan Van Kha, the department’s director.

At the same time, Da Nang will organise more conferences connecting local businesses and their partners nationwide on a larger scale.

The city will continue prioritising high-tech and support industries, especially major projects, the production of high-end consumer goods and products for export, and e-commerce.

It will also pour investment into building modern trade infrastructure and improving the competitive edge of local businesses.

Trade promotion activities will target markets with which Vietnam has signed free trade agreements and the Trans-Pacific Partnership (TPP) agreement, Kha said.

Along with assisting local production and export businesses, Da Nang will increase inspections over the market and food hygiene.

Other tasks include ensuring electricity supplies across the city and promoting trade commitments Vietnam has signed.

Statistics released by the department showed that the central city’s industrial production value in 2015 is estimated at 41.5 trillion VND (1.8 billion USD), up 11.3 percent against the previous year.

Meanwhile, the locality’s industrial production index increased by about 12.6 percent year-on-year. Export revenue stood at nearly 1.3 billion USD, up 15 percent compared with 2014.

During the year, Da Nang attracted a total of 21 new industrial production projects worth 16.3 billion USD.

Dong Nai, highlight in foreign investment attraction

Despite economic difficulties during 2015, Dong Nai remained one of Vietnam’s leading provinces in foreign direct investment attraction, earning US$2.4 billion, up 250% against the set target.

The achievements together with improved infrastructure and administrative procedure reforms have opened a path for Dong Nai to attract more FDI this year.

To date, Dong Nai has licensed nearly 1,600 FDI projects, worth a total of nearly US$24 billion. Last year alone, it had 186 FDI projects, 100 of them new projects totaling nearly US$1.8 billion.

Most of the new investors come from Japan, the Republic of Korea, and Taiwan, mainly operating in advanced and environmentally-friendly technologies and support industries.

The achievements are attributed to efforts by the local administration who have held many trade promotion delegations abroad, upgraded the infrastructure in industrial parks, and speeded up administrative procedure reforms.

Mai Van Nhon, Deputy Director of the Management Board of Dong Nai Industrial Zones Authority (DIZA), said, “Administrative procedure reforms play a key role for enterprises to make investment decisions or expand the existing production."

"Our motto is to renovate, initiate, and offer the best service for businesses. We always do anything we can to relieve burdens for enterprises. It takes a maximum of 60% of the time needed to deal with administrative procedures in comparison with other places,” he added.

Now it takes only five days to get an investment license from the Management Board of Dong Nai Industrial Zones Authority. More particularly, the province has stepped up administrative procedures in the tax and customs sector.

The provincial customs department has launched a program linking the bureau and businesses under which the latest regulations in exports and imports have been updated to answer enterprises’ queries quickly.

To further attract FDI, in addition to the above mentioned measures, provincial authorities and leaders from the relevant agencies have regularly organized talks with the business community to meet their requirements.

Phan Thi My Thanh, Deputy Chairwoman of Dong Nai People’s Committee, said, “Currently there are many small-scale social housing projects which have been given the green light to change to houses for workers. But these haven’t been realized."

"Enterprises can work with investors to make them come true. We really need support from consulates, associations and their branches to provide us more regularly with information relating to business difficulties so that we can help them in time,” she noted.

In 2016, Dong Nai has set a target of US$1 billion in FDI attraction.

Vinamilk's profit rises 28 percent

The Vietnam Dairy Products Joint Stock Company (Vinamilk) posted an after-tax profit of nearly 7.8 trillion VND (350 million USD) last year, an increase of 28 percent year-on-year.

The company's total revenue in 2015 reached 40.2 trillion VND (1.8 billion USD), up 14 percent against 2014.

Vinamilk reported revenue of 11.1 trillion VND (500 million USD) in the fourth quarter of 2015, an increase of 19 percent year-on-year. The company earned 1.9 trillion VND (85 million USD) in after-tax profit, up 10 percent compared with the same period last year.

Although a majority portion of Vinamilk's revenue comes from the domestic market (more than 80 percent), the revenue earned from overseas markets has witnessed strong growth, increasing 39 percent compared with 2014.

The company's expenditure in 2015 rose by 70 percent to touch 6.2 trillion VND (280 million USD), of which advertising expenditures comprised 1.8 trillion VND (80 million USD), up 82 percent.

Forbes praises VN's ‘silent’economic success

Forbes has published an article titled ‘Viet Nam: The Quiet Economic Success Story Of Asia’, praising positive changes of the country’s economy.

The article said that Viet Nam has risen up after three decades of Doi Moi from one of the poorest nations on earth to become a lower middle income country with a market oriented economy.

It was said that the image of a poor and at-war Viet Nam described by international press during the 1960s and 1970s has disappeared and been replaced by office towers, high-end boutiques and bustling streets.

Ho Chi Minh City was described as the most dynamic city in the region with the image of being-built skylines. Near the city’s tallest  building the Bitexco Financial tower, a symbol of the city, is the almost completed Vietcombank tower which was designed by renowned architecture firm Pelli Clarke Pelli - a soaring art deco-inspired structure.

In 1986, the average annual income was around US$100 and the figure is now almost US$2,000 and double that in urban areas, the article said.

Despite negative effects of the global economic crisis in 2008, Viet Nam has achieved a 6.3% gross domestic product growth in the first half of 2015, the equivalent of its growth average during the 2000s. After struggling with rising inflation in recent years, the consumer price index rose only 0.6% in August 2015 compared to 4.3% for the same period the year before.

Helping to drive this growth in a country of 94 million people is a disproportionally young and well connected population. According to 2014 data, more than 40% of the populations was under 25 years of age.

The country is also incredibly connected, with just about every café, restaurant or bar offering free wifi to patrons, and smartphone ownership exploding. The 2014 The Global Connected Consumer Study by research firm TNS found 40% of the population access the internet on a daily basis, while one in thee Vietnamese own a smartphone.

However, the article stated arising matters, including income disparity which leads to increasing the rich-poor gap and remained poverty in ethnic minority groups. It was said that corruption, red tape, business and property ownership regulations still need to be resolved. The World Bank’s ease of doing business index ranks Viet Nam 90th out of 189 surveyed economies.

However, despite these challenges there is much to be positive about in the economic outlook for Viet Nam.

Considering where the country came from only 30 years ago, it can be regarded as one of the quiet success stories of Asia, the story concluded.

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