Outstanding farm produce at HCM City fair

Outstanding farmers in HCM City and many other provinces are showcasing their products at a fair that opened at Lê Văn Tám Park in the city’s District 1 on Monday.

The “Achievements of excellent farmers in the integration time - Urban agriculture and business matching in the south-eastern region 2017” fair features 300 booths, half of them set up by the farmers, provincial farmers associations and traditional craft villages.

All outstanding farmers honoured by the Việt Nam National Farmers Union (VNFU) in recent years and model agricultural co-operatives have been offered booths for free to enable them to show off their produce.

According to the VNFU, finding reliable outlets for their products is always a major concern for farmers and co-operatives.

The exhibition offers a good platform for farmers, localities, and local and foreign companies to meet, discuss and foster co-operation, boosting economic development of the south-eastern region, Nguyễn Hồng Lý, deputy chairwoman of the VNFU, said.

Lưu Quang Định, editor-in-chef of Nông Thôn Ngày Nay (Countryside Today) newspaper, said through the fair farmers would have a chance to access new production technologies.

To week-long event will also feature a ceremony to honour outstanding farmers and entertainment events.

The fair is organised by Countryside Today along with the city Department of Agriculture and Rural Development and other departments and organisations.

500 exhibitors to attend Expo 2017

The 27th Việt Nam Expo, scheduled to take place April 19-22 in the capital city, assumes added significance given the “special context” in which it is happening, organisers say.

Bùi Huy Sơn, head of the Trade Promotion Department under the Ministry of Industry and Trade, said the event was being held “in the special context of the country actively pushing ahead with international economic integration, hosting the Asia-Pacific Economic Co-operation (APEC) 2017 and celebrating the 25th anniversary of diplomatic relationship with South Korea.”

 Appropriately, the Việt Nam International Trade Fair 2017 (as the event is also known) would carry the theme “Strengthening Regional and International Economic Links,” he noted.

The expo will gather more than 500 exhibitors from over 23 countries and territories, including leading economies from Asia, Africa, South America and Europe.

Some 600 booths will display a diverse range of products including industrial machinery and equipment, construction materials, electronics, information technology, beverages, healthcare products and services.

Việt Nam Expo 2017 has been organised annually for more than two decades. It has become the largest and most significant event for the nation’s industry and trade sectors, generating more economic benefits and opportunities for local firms to expand export as well as domestic markets.

Sơn said that the event would contribute to the nation’s global integration process.

South Korea, as a “honoured nation” at Việt Nam Expo 2017, would bring in 130 companies taking up 138 display booths, he added.

Among other things, the Korean companies will present electrical and electronic products, cosmetics, smart toys and processed food. These products belong to the category that will have tariffs cut under the Việt Nam-Korea FTA signed in 2015.

Park Chul Ho, General Director of the Korea Trade-Investment Promotion Agency (KOTRA) in Hà Nội, said Việt Nam Expo 2017 would not only be a platform for Korean businesses to sell and introduce their products, but also an opportunity for promoting investment co-operation and technology transfer between enterprises of both countries.

Several activities on the sidelines of the expo, including the Việt Nam Exports Promotion Forum, fact-finding tours to industrial zones, policy consultancy, capacity-building for enterprises in terms of marketing and promotion strategies, will provide added value to participants, organisers said.

Việt Nam Expo 2017 is a collaborative effort involving the Ministry of Trade and Industry, the Việt Nam National Trade Fair and Advertising Company (Vinexad) and other agencies.

It will be held at the Hà Nội International Exhibition Centre, 91 Trần Hưng Đạo, Hoàn Kiếm District, Hà Nội.     

EVN prepares power for dry season

Demand for electricity in the second quarter of this year will increase by 12 per cent at the peak of the dry season, which usually records the highest power consumption of the year, according to the national power company, Electricity of Vietnam (EVN).

To meet demand, EVN will use reservoirs to ensure sufficient water to operate hydropower facilities in the lowlands, and will continue tapping coal and gas sources to run coal turbines, including the Vĩnh Tân 2, and Duyên Hải 1 and Duyên Hải 3 thermoelectric plants. If necessary, the group will operate oil turbines to ensure supply.

EVN will also put into operation several key electricity generation projects in the second quarter 2017 to ensure power supply. The first turbine of the Thái Bình thermoelectric plant will be launched in May. The Thác Mơ hydropower plant expansion project has been completed and will begin generating electricity in July.

In addition, EVN will focus on urgent projects to provide electricity for the south and the capital Hà Nội, along with launching construction of the 500kV power line Vũng Áng–Dốc Sỏi–Pleiku 2 in September. Constructions of 26 new power lines was started in the last three months, including four 500-220kV lines and 22 lines of 110kV.

EVN will propose to the Ministry of Industry and Trade that Vietnam National Oil and Gas Group (PVN) and related units are asked to ensure enough gas for power generation during the dry season. The group will also request the National Power Transmission Corporation to ensure safe operation and continuous transmission, especially the 500kV North-South transmission line.

In the first quarter, the total produced and imported electricity output was 44 billion kWh, up 7.7 per cent year-on-year. The biggest capacity of the whole system reached 27,066 MW, up 10.6 per cent from the same period last year.

Deputy Director General of EVN, Hồ Mạnh Tuấn, said that since the beginning of this year, the corporation had also asked its subsidiaries to develop power supply plans for the dry season.

Work on improving power grids must be completed by May. Staff and equipment must focus on fixing problems to minimise black-out periods and restored power supply as soon as possible, Tuấn said.

The Northern Power Corporation has also made preparations to ensure supply to the country’s 27 northern provinces during the season. 

Vice director of EVN Nam Định in northern Nam Định Province, Đỗ Văn Thiện, said the company carried out 20 projects to curb electrical overload, including 50 distributing transformer stations, nearly 62 km of medium-voltage lines and over 70km of low-voltage lines.

Director of EVN Thanh Hóa, Trịnh Xuân Như, said that as the province was calling on domestic and foreign enterprises to invest there, the EVN subsidiary gave priority to power for economic and industrial zones.

Former Trade Minister Trương Đình Tuyển said Monday that power prices should be increased this year after being unchanged for the last two years to curb inflation and stabilise Việt Nam’s economy.

Speaking at a talk on Việt Nam’s macro economy organised by the Việt Nam Institute for Economic and Policy Research (VEPR), Tuyển said that if Government keeps power prices cheap, it would be difficult to attract investors to clean energy, the Dân Trí online newspaper reported yesterday.

Cheap power is good for short-term and middle-term development, but in the long-term, enterprises will lose motivation to change technologies and exhaust cheap power sources like hydropower and coal-fired power.

Finance and banking expert Cấn Văn Lực agreed on the need for a power price hike. Last year saw low inflation because the Government succeeded in stablising commodity prices, but during the first quarter of this year, higher transport and healthcare costs resulted in a return of inflation. “It’s time to think about how to harmonise the increased power price with other commodity prices and inflation,” he said.

 HCM City aims at higher position in PCI rankings

Officials of Ho Chi Minh City held a meeting on April 11 in an effort to improve the city’s Provincial Competitiveness Index (PCI), which dropped from the 6th in 2015 to the 8th last year.

Vice Chairman of the municipal People’s Committee Tran Vinh Tuyen urged swift actions to better HCM City’s PCI ranking, especially the sub-indices with lower points. 

Local departments and agencies must focus on the sub-indices of land access, informal charges, policy bias, pro-activity of provincial leadership, and legal institutions, he noted.

Although businesses’ land access was among the five sub-indices with higher points, from 5.18 points in 2015 to 5.45 points in 2016, the modest increase shows that this sub-index hasn’t been improved substantially, according to Tuyen.

In terms of informal charges, he requested leaders of municipal departments and agencies to have more dialogues with and listen to businesses while stepping up the provision of online services to minimise direct contact, thus cutting red tape and saving time and expenses for enterprises.

He also called for businesses’ coordination through turning down civil servants’ unregulated requests.

Regarding policy bias, the Vice Chairman said HCM City will promptly establish an enterprise support centre to help solve difficulties facing businesses.

He also asked municipal officials to review businesses’ feedback to find out the cause of the dissatisfaction with the administration’s performance, which led to a worse pro-activity index.

As legal institutions saw the biggest drop last year, from 5.04 points to 4.25 points, relevant agencies must immediately set up supervision mechanisms to ensure that all opinions of enterprises will be settled in an appropriate manner. They also need to review economic disputes and accelerate the enforcement of civil judgments so as to solidify businesses’ trust in the city’s law protection agencies, he added.

Nguyen Hoang Minh, Deputy Director of the municipal Department of Planning and Investment, said although HCM City’s PCI ranking in 2016 fell from the previous year, its average score increased by 0.36 point from 61.36 to 61.72 points.

More than 36,000 companies were set up in the city in 2016, a year-on-year rise of nearly 14 percent. The local business environment was also highly valued at international economic forums, he noted. 

Audi Vietnam provides cars serving APEC 2017

Carmaker Audi Vietnam handed over the first batch of 131 cars to the National Committee on APEC 2017 on April 11, while the rest 186 others are scheduled to be delivered to the committee in July.

As asked by the committee, Audi, which has been chosen as the major car sponsor of APEC 2017, will also provide additional 72 Audi cars to serve the event.

According to the brand, the cars are imported into Vietnam via Ho Chi Minh City’s port and are transported to Hanoi by trucks and train.

The limited editions of Audi to be used at the event include Audi A4 2.0 TFSI, A6 1.8 TFSI, Q7 2.0 TSFI quattro and the newly introduced A5 Sportback 2.0 TFSI quattro and Q5 TFSI quattro.

Special options for the cars have been carefully chosen by the National Committee on APEC 2017.

Audi Vietnam provided training for 600 drivers from Vietnam’s security force. The first group of 300 drivers took a course in Hanoi from March 27-April 1 and the rest was trained from April 3-8 in Bac Giang.

Many activities and events are scheduled to take place in Vietnam as it is hosting the APEC Year 2017 under the theme “Creating new dynamism, fostering a shared future.” 

The APEC forum includes 21 members - Australia, Brunei, Canada, Chile, China, Hong Kong (China), Indonesia, Japan, the Republic of Korea, Malaysia, Mexico, New Zealand, Papua New Guinea, Peru, the Philippines, Russia, Singapore, Chinese Taipei, Thailand, the US and Vietnam. 

Bac Ninh takes lead in FDI attraction

The northern province of Bac Ninh is leading the country in foreign direct investment (FDI) attraction, drawing over 2.6 billion USD from 14 newly-licensed projects and 48 capital-added projects in the first quarter of this year. 

Bui Hoang Mai, head of the industrial parks (IP) management board of Bac Ninh province, said the Samsung Display Vietnam Co. Ltd. in February asked for permission to raise investment capital of its project in the Yen Phong IP to 2.5 billion USD. 

The board also granted a new investment certificate to Hanwha Techwin Security Vietnam to implement a project worth 100 million USD in the Que Vo IP. 

Mai said Bac Ninh has been focusing on developing high-tech and supporting industries. The province has been also stepping up the manufacturing industry to tighten linkages between local businesses and FDI enterprises.

Local officials have regularly held meetings with representatives of enterprises in order to remove their difficulties, thus promoting production and improving the efficiency of investment attraction into IPs and industrial clusters. 

In recent years, Bac Ninh’s investment climate has improved thanks to the province’s efforts to simplify administrative procedures, especially those related to land, construction, labour and customs, thus making it easier for enterprises to effectively operate in the locality. 

To date, the IPs management board has granted 1,093 investment certificates to domestic and foreign-invested projects with a combined registered capital of nearly 15.9 billion USD.

US authorizes import of fresh star apple fruit from Vietnam

The Animal and Plant Health Inspection Service (APHIS) of the US Department of Agriculture authorized imports of fresh star apple fruit from Vietnam into the country from January 19, 2017.

Based on the findings of a pest risk analysis published in the July 19, 2016 Federal Register, the APHIS determined that if treated properly, Vietnamese star apples can be shipped safely to the continental US.

The analysis indicated that the use of one or more phytosanitary measures would be sufficient to mitigate the risks of introducing plant pests or noxious weeds through star apple imports.

APHIS offered a period of 60 days for public comment which ended on September 19, 2016 and it received one comment from a manufacturing company during the period.

The company said fresh star apple should be allowed to be treated with irradiation after arriving in the US. 

APHIS argued that while an approved irradiation treatment may be conducted for any import either prior to shipment to the US or in the US, the particulars of any treatment are examined on an individual basis as part of a country’s market access request.

In the request by the national plant protection organisation of Vietnam (NPPO), it stipulated that fresh star apple fruit be subject to a pre-clearance programme within Vietnam. Considering this request, APHIS determined that Vietnam possesses sufficient infrastructure for in-country treatment.

The analysis also indicated that the fruit must be individually wrapped in plastic prior to shipment to reduce the risk of post-treatment re-infestation. APHIS determined that individual wrapping provides equal phytosanitary protection to insect-proofing cartons and pallets as described in US regulations.

In addition, the fresh star apple fruit from Vietnam must be imported in commercial consignments only and each consignment must be accompanied by a phytosanitary certificate issued by the NPPO of Vietnam and treated in accordance with Title 7 Part 305 of the US Code of Federal Regulations. Each consignment is also subject to inspection upon arrival to the US.

The US has to date allowed imports of five fruits from Vietnam, namely dragon fruit, rambutan, lychee, longan and star apple. It has been considering allowing imports of Vietnamese fresh mangoes.

PVN wants to expand cooperation with Japanese partners

The Vietnam National Oil and Gas Group (PVN) hopes to expand ties with Japanese partners.

PVN leaders made the assertion during their working sessions with Tokyo Gas, Sumitomo, Jogmec, and Eni. from April 6-7 while attending the Gastech Exhibition & Conference held in Tokyo, Japan, from April 4-7.

The event allowed the PVN to boost cooperation in the field of oil and gas as well as exchange experience with foreign partners and update information on Liquefied Natural Gas (LNG), advanced science and technology and new trends in the global gas industry.

Phan Ngoc Trung, a member of Board of Directors of PVN, delivered a speech at the LNG Procurement Forum, highlighting LNG imports in the gas industry’s development plan.

The biennial Gastech Exhibition & Conference was first held in 1972.

This year’s event drew nearly 200 speakers and 2,500 delegates.

Frequent inspections tire Vietnamese business owners

Despite a government order dictating that authorities only inspect businesses once a year, enterprises in Vietnam are facing repeated inspections that do more harm than good to their business.

A paper manufacturing company based in Ho Chi Minh City said it has been the subject of approximately 30 inspections by authorities since 2015.

In 2015, it was inspected 13 times by various administrative bodies, including three environmental units and four firefighting departments.

Last year, it was checked by eight firefighting delegations of varying levels, two environmental units, a food hygiene agency, a nuclear radiation safety body, and the municipal Department of Natural Resources and Environment.

The firm was subjected to inspection four times in January-April this year.

The government said in December 2016 that companies could only be inspected one time a year.

The company’s owner, who asked to remain anonymous, said that there had been times when his company had been forced to ‘welcome’ two delegations of inspectors on the same day, both inspecting compliance on environmental protection measures.

“My company has had to establish a new division dedicated to the reception of inspectors,” the owner said. “Isn’t there communication between the authorities so that they won’t have to inspect things that have already been inspected?”

Moreover, he said, the authorities seemed to be ‘determined’ to find fault with the company and would rarely conclude their inspections without some kind of ‘violation.’

“It takes up a lot of our time to receive one inspection after another; it’s almost unbearable,” the owner said, drawing a sigh.

According to Van Duc Muoi, the former CEO of local food producer Vissan, the mindset of inspectors is to 'dig up dirt' on businesses, instead of facilitating compliance.

“There needs to be comprehensive changes in our regulatory environment if we are to encourage the growth of business,” Muoi said.

N., director of a local auditing firm, said not only have tax authorities carried out too many inspections, but the duration of each one has also been unnecessarily long.

The maximum allowable duration of a tax inspection is “five actual working days," an ambiguous term that has been taken advantage of by tax authorities in order to lengthen their checks over weeks, N. said.

Rather than commencing their inspection on Monday and concluding it on Friday, the authorities inspect his company once a week, prolonging the course of their work to over a month.

“We have no choice but to grin and bear it, for it only takes up more time to pursue a legal angle,” N. explained. "Bringing the case to court might hurt our business in the future."

FLC Faros offering attractive returns for foreign funds

Bloomberg data shows that FTSE Vietnam ETF holds some 3.12 million shares in the FLC Faros Construction Company (ROS) valued at over VND530 billion ($23.31 million), making it the fifth-largest investee company in the fund’s portfolio.

Almost all of the shares were purchased during the fund’s first quarter review in 2017, which ended on March 17, at a price of VND160,100 ($7.03) apiece, totaling VND499 billion ($21.9 million).

As a result, the investment in ROS has yielded more than $2 million in returns for FTSE Vietnam ETF, the second-largest exchange-traded fund (ETF) by net asset value (NAV) on Vietnam’s stock market.

It’s worth noting that FTSE Vietnam ETF saw poor performance during 2016, when its NAV per fund certificate ended the year at $22.28, down 2.4 per cent from a year earlier. The fund, however, has turned things around, with its NAV increasing 10.07 per cent since the start of this year, reaching $24.62 on April 10.

With the inclusion of ROS since the second quarter, the fund’s NAV is expected to perform well and this will be one of its best investments.

Before FTSE Vietnam ETF, MSCI Frontier Markets Index ETF - a wider-reaching fund that covers global frontier markets with total assets worth $589 million - announced the addition of ROS to its portfolio from February 10.

Based on the last trading day on February 28, the fund is calculated to have purchased a large amount of ROS shares at a price of VND148,000 ($6.7) each, translating into a return rate of 14.8 per cent for the fund to date.

Besides these two ETFs, a number of offshore funds were also early birds in investing in ROS. Foreign players bought ROS shares as soon as it debuted on the Ho Chi Minh Stock Exchange with low market prices, according to exchange data.

Together with Vietjet Air (VJC), Novaland (NVL), Mobile World (MWG), and Airports Corporation of Vietnam (ACV), ROS has become one of the cash cows for foreign funds since 2016.

Notably, foreign-run funds acquired shares in VJC, MWG, and NVL before their listings at prices that were two-thirds or one-fifth of the present market price. Meanwhile, the appetite for ROS became strong after its share debut and purchasing demand emerged in early 2017, with prices having already risen sharply.

Market perspectives remain unclear as the shareholders’ meeting season comes to an end and short-term supportive news is thin on the ground. On such a backdrop, ROS is among the highlights, as its remains appealing to foreign traders, evidenced by stable trading volumes and uptrend.

Positive factors lie behind this bright outlook.

FLC Faros has announced that it has established subsidiaries in a bid to expand its involvement in real estate items in the golf-resort-villa complex at the Nhon Hoi Economic Zone in south-central Binh Dinh province. It has also purchased a stake and become the investor of an expansion to an eco-tourism compound in northern Vinh Phuc province.

The company is also proceeding with a whopping golf-resort-villa-entertainment project on an area of 1,900 ha in central Quang Binh province with total investment of VND13.8 trillion ($606 million). It has also acquired a golf operator to improve capital usage.

FLC Faros and FLC Group last month received in principle approval to invest in a high-end entertainment complex at the Van Don Special Economic Zone in northern Quang Ninh province, with an estimated investment of $2 billion. According to the preliminary plan, the project includes a wide range of properties, such as a resort complex, a five-star hotel, an international convention center, a casino, a golf course, a safari park, a museum, a farm community, and a library.

Meanwhile, Market Vectors Vietnam ETF (VNM ETF), run by Van Eck Global, will reshuffle its holdings in May as part of its second quarter review. It has $294 million worth of assets under management, making it the largest ETF on Vietnam’s stock market.

Based on previous reviews, it is highly likely that a ticker that has been included into FTSE ETF will be added to VNM ETF’s portfolio. The most notable difference is that the candidate ticker needs to have at least six months of being listed before the review. This may have been the reason ROS was not included in the fund’s portfolio in its latest review.

Already meeting requirements for listing time, liquidity, and float ratio, ROS is likely to be added to VNM ETF’s portfolio when the ETF is poised to collect data as at May 26 and announce the new portfolio on June 2. According to calculations, ROS could account for 5-8 per cent of the ETF’s holdings, equivalent to $15-$24 million.

The requirement on listing time has been the greatest obstacle in ROS becoming eligible for inclusion into the VN30-Index, which represents the 30 largest tickers on the Ho Chi Minh Stock Exchange. Consequently, it has not been included into funds that track the index, including South Korea’s KINDEX Vietnam VN30 ETF, whose NAV stands over VND300 billion ($13.2 million).

With its listing time exceeding six months, ROS is now entitled to join the VN30-Index given its liquidity and market capitalization. Under relevant legislation, the VN30-Index is reviewed every six months and the next review will take place in July.

With major shareholders holding nearly 80 per cent and the probability of being bought by foreign funds, ROS will likely experience an uptrend in the time to come.

Bao Viet official insurer of Audi fleet for APEC 2017

Continuing the series of cooperative activities during 2017 between Bao Viet Insurance and Automotive Asia (Audi Vietnam), the official Audi importer in the country, the two have signed a comprehensive agreement that makes Bao Viet Insurance the official insurance provider for the Audi fleet to be used during Asia-Pacific Economic Cooperation (APEC) 2017, the 25th such summit and to be held in central Da Nang city in November.

This latest cooperation is within the roadmap of both Bao Viet Insurance and Auto Asia to become comprehensive partners, bringing bilateral benefits and contributing to enhancing the competitive advantages of both.

The Audi fleet will be used during APEC 2017 to welcome State leaders from 21 member economies within the Asia-Pacific region, 2,000 ministers and high-ranking officials, 3,000 journalists and reporters, and 5,000 businesses.

The contract is an important event between the two sides. Auto Asia will have priority in using all Bao Viet products and services, including asset insurance, motor vehicle insurance, and construction insurance, among others.

Bao Viet Insurance commits to providing high quality products and services at preferential rates for Auto Asia and other members of Audi Group’s network. Bao Viet also prioritizes Auto Asia by introducing insurance products and services to the latter’s customers at preferential rates.

With a long-term goal of sustainable development, Bao Viet Insurance has continued to prove its brand and post solid business results. It retained its No.1 position within the non-life insurance segment last year, with total revenue of VND6.56 trillion ($289.6 million) and profit of VND301 billion ($13.3 million); the highest of all non-life insurers.

From 2016 to early 2017, it opened another eight subsidiaries, expanding its network to a total of nearly 80, along with more than 300 insurance offices and 30,000 agencies nationwide, shoring up its position as possessing the largest network in the country to serve and interact with customers.

Furthermore, its 24/7 customer service center and specialized insurance management software has helped it manage its customer database and ensure transparency in insurance activities.

Auto Asia was selected by the APEC 2017 National Committee as the official car sponsor for APEC 2017. The German group has produced limited edition models for the event, such as the Audi A4 2.0 TFSI, the A6 1.8 TFSI, the Q7 2.0 TFSI Quattro, and all-new A5 Sportback 2.0 and Q5 2.0 TFSI quattro. Special equipment to be used during APEC 2017 was carefully selected by the National Committee.

Audi Group is famous within high-end vehicle segment for brands such as Audi, Lamborghini, and Ducati. It has a presence in more than 100 countries and production bases at 16 locations in 12 countries. Last year it increased deliveries of its core brand, Audi, by 3.6 per cent, to a record 1,867,738 motor cars. Globally, it has 85,000 employees, 60,000 of whom are German.

Through this contract signing, the two sides restate their relentless efforts to bring new experiences to customers and ensure the greatest satisfaction with their products and services while adding more valuable benefits for customers of both.

ADB: Financial sector remains vulnerable

Progress on bank restructuring and non-performing loan (NPL) resolution has been slower than hoped, leaving banks exposed to large contingent liabilities, the Asian Development Bank (ADB) wrote in its latest report on Vietnam economic outlook.

Although the official bad debt ratio in 2015 and 2016 remained low, at about 2.5 per cent of outstanding loans, this largely reflects the transfer of $12.7 billion in bad debts from banks to the State-owned Vietnam Asset Management Company (VAMC).

As at the end of 2016, the debt bank had resolved only 18 per cent of NPLs purchased from banks. Real progress in reining in NPLs would thus depend on how fast it can resolve its impaired assets and at what cost. Moreover, progress in consolidating the banking system continues to languish, with no mergers or acquisitions completed in 2016, the report notes.

As at December 31, the ratio of bad loans on balance sheets, those bought by VAMC from banks, and loans that may turn sour had reached 8.86 per cent of all outstanding loans, given the difficulties in dealing with assets used as collateral for bank loans and settling bad debts.

The capital adequacy ratio was the regulatory minimum of 9 per cent, but it was not calculated according to international Basel II standards. “With the government planning to have all commercial banks meet Basel II capital standards by 2020, they will likely need capital injections from foreign investors,” Mr. Aaron Batten, Country Economist for Vietnam, told the “Asian Development Outlook 2017: Transcending the Middle-income Challenge” conference on April 10.

Vietnam may increase the limits on foreign ownership in banks as early as this year to quicken the overhaul of the country’s banking sector and further attract overseas investments to boost economic growth, Prime Minister Nguyen Xuan Phuc told foreign media on January 13. “Right now, if there are any foreign investors interested in buying any of our under-performing banks, we will sell them entirely,” he said.

While the Prime Minister didn’t specify the new ceiling to be introduced, with the cap currently standing at 30 per cent, he indicated that the government may completely sell the more troubled banks. No progress has been seen so far this year.

As the State Bank of Vietnam (SBV) targets credit growth of 18 per cent in 2017, the rise of domestic lending at a faster rate than deposit growth also challenges the maintenance of bank liquidity. “This will require significant improvements to the legal framework, including the lifting of limits on foreign ownership of banks,” Mr. Batten added.

During the first quarter this year, the SBV continued to follow a stable inflation target in a cautious manner, contributing to reducing pressure on inflation. Overall liquidity increased 3.5 per cent year-on-year, slightly lower than in the same period last year.

On the capital market, the modest decrease in mobilization together with the sharp increase in credit caused slight disturbances to deposit rates in the first quarter. The exchange rate followed a stable trend in the last few weeks, significantly reducing the differences between commercial banks’ exchange rate, the average inter-bank exchange rate, and the free rate.

Enterprises contribute an average VND1.7 billion per year to budget

Enterprises contributed a total of VND746.4 trillion (US$32.84 billion) to the State budget in 2015 with an average of VND1.7 billion (US$74.800) per enterprise, which was a very small number, showing low efficiency and profits of enterprises, said Pham Dinh Thuy, head of the General Statistics Office (GSO)'s Industrial Statistics Department.

He made the remarks at a meeting in Hanoi, on April 11, which was jointly held by the National Steering Committee for Enterprise Reform and Development in co-ordination with the General Statistics Office and the Vietnam Chamber of Commerce and Industry.

The meeting was organised to announce some key indicators reflecting the development of enterprises in centrally-run provinces and cities in 2016.

According to the report, there were 477,808 enterprises operating in the whole country in 2016, an increase of 8% compared to 2015 (excluding registered enterprises, not yet in operation, and enterprises that stopped working).

Ho Chi Minh City and Hanoi posted the highest number of enterprises, accounting for over 50% of the total number of enterprises nationwide. Of which, Ho Chi Minh City accounted for 33.6% and Hanoi accounted for 23.1%.

The year 2016 also reported a record high in the number of newly-established enterprises at 110,000 enterprises, up 16.2% over the previous year.

The modest figure in the average annual contribution to the State budget was also one of the reasons explaining why the GDP growth in the first quarter of 2017 remained low at 5.1%, despite a record high in the number of newly-established enterprises in 2016.

At the announcement of the consumer price index (CPI) in the first quarter of 2017, in late March, Pham Dinh Thuy also affirmed that although the number of newly established enterprises increased, they were mainly small and micro enterprises.

GSO General Director Nguyen Bich Lam also pointed out that out of the 110,000 newly-established enterprises in 2016, 98,757 enterprises began operation, accounting for 89.7%.

Of which, 35.4% of enterprises are operating in the wholesale and retail trade and automobiles and motorcycle repair; and only 13.72% of enterprises are operating in the manufacturing and processing sector, resulting in modest contributions to the economic growth.

High growth, high risk of lag forecast for Vietnam

Though Vietnam has one of the highest growth rates in Asia, the possibility of it lagging behind other countries is huge, according to the Asian Development Bank (ADB).

Vietnam’s GDP growth is projected to be 6.5% in 2017 and 6.7% in 2018, says a report published by ADB in Hanoi on April 10.

With growth forecast at 6.5% in 2017, Vietnam is one of the Asian nations to grow well, ADB Country Director in Vietnam Eric Sidgwick said at the launch of the Asian Development Outlook (ADO 2017). “The economic outlook is bright.”

The main growth drivers, according to ADB, include foreign direct investment (FDI). ADB predicted FDI disbursements will be about US$15 billion and pledges will further rise despite the TPP failure.

Besides, Vietnam has become a manufacturing hub of the region. Its exports have outperformed many ASEAN countries with annual growth of up to 8.3% in recent years.

The proportion of Vietnamese exports in ASEAN expanded from 7% in 2009 to 14% in 2015. In particular, the share of high-tech goods jumped from 2% to 12% of the region’s total exports.

Another factor, said Sidgwick, is the rapidly growing middle class, which also helps fuel economic growth.

It is expected that the group with average income of more than US$8,500 a year will double between 2014 and 2030, numbering 33 million. As a result, wholesale and retail sales have increased by an average of nearly 9% over the past five years.

“This is a new growth engine for Vietnam,” he said.

Asked whether ADB is optimistic about Vietnam’s economic prospects, Sidgwick said: “Are we highly optimistic? I do not think so.”

He said Vietnam was still facing many challenges such as public debt, overspending, reform of State-owned enterprises and slow growth of agriculture. “In order to achieve such growth, we suggest many policies attached. For example, it is necessary to reduce budget deficit, introduce good policies to develop the domestic financial market.”

However, Vietnam’s growth remains “below the necessary level” to become a high-income country by 2030, said ADB’s chief economist in Hanoi, Aaron Batten.

“Vietnam still faces the risk of lagging behind as GDP growth remains below 7% a year,” Batten said. He added that if growth was two percentage points higher, Vietnam would be able to reach a high average income by 2026.

ADB commented that agricultural growth had been still around 2.4% per year since 2011, which is a low rate. “If annual agricultural growth stands at 5%, Vietnam’s economic growth could amount to 7%,” he added.

In addition, Vietnam’s labor productivity is much lower than in other ASEAN countries, one-third of Indonesia’s, and half of the Philippines’ or Thailand’s.

Meanwhile, Sidgwick explained: “Agricultural growth will not only help promote growth, but also bring greater benefits to farmers. Their benefit rate is not as high as it ought to be.”

Sidgwick added Vietnam’s economic growth had been good from the mid-1990s to the mid-2000s, with per capita income soaring and many good results in the long run. Vietnam developed better in that period.

“ADB’s ADO outlines a number of factors that need to be addressed. Now, everyone understands (the challenges to growth). However, the Government is having a hard time figuring out what to do. That’s the difficulty for Vietnam,” he said.

VEPR: Growth target of 6.7% beyond reach

Vietnam will not be able to obtain this year’s gross domestic product (GDP) growth target of 6.7% given the poor economic performance in quarter one, the Vietnam Institute for Economic and Policy Research (VEPR) said.

The institute forecast the economy would expand by 6.1% this year, and the full-year inflation rate may be below 5%, according to a report on quarter-one macro-economic conditions released by the institute on April 10.

However, the inflation rate would likely to be higher than expected as a result of rising public service costs nationwide and global price uncertainty.

In regards to the economic situation in quarter one, VEPR said the unexpected slowdown in industrial manufacturing led to lower-than-expected GDP growth.

The nation’s GDP growth has been heavily dependent on the foreign direct investment (FDI) sector, especially some large-scale enterprises like Samsung. Similarly, trade has achieved strong growth but export volumes have not recovered yet.

Meanwhile, the export proportion of the domestic economic sector has dropped to 28% in value. This showed the domestic manufacturing sector has become increasingly vulnerable in the international integration process.

Notably, the industrial production and consumption indexes have dipped to five-year lows as inventories have built up.

VEPR director Nguyen Duc Thanh said that if shrinking growth is attributable to Samsung’s seasonal manufacturing and exporting performance, it only shows that the Vietnamese economy is more dependent on a few multinational corporations and major industries.

He said the national industrial sector has been less competitive, an indication that it is losing in the process of global economic integration.

The FDI inflow into the nation has shown signs of decline through disbursed and newly-registered capital.

The competitive advantage of attracting FDI through the Trans-Pacific Partnership trade pact has been lost, which only reveals Vietnam’s disadvantages in integrating into the ASEAN Economic Community. Therefore, enhancing the competitiveness of the economy is an urgent need, he added.

Ministry says hike of environmental tax on gasoline a must

The expansion of the environmental protection tax bracket for gasoline to VND3,000-8,000 per liter does not affect businesses until a specific level is determined, said a representative of the Ministry of Finance.

The Minister of Justice has reported to the Standing Committee of the National Assembly (NA) on the addition of the amended Law on Environmental Protection to the 2017 law-making program. If approved by the Standing Committee, this law is expected to go before the NA this October, said Pham Dinh Thi, head of the Department of Tax Policies under the finance ministry.

At a press conference on April 10, Thi stressed that gasoline contains chemicals that adversely affect the environment. This item is subject to special consumption tax and environmental protection tax with different names around the world.

In Vietnam, the tax bracket for gasoline is now VND1,000-4,000 per liter and the current applicable rate is VND3,000. In 2015, the hike of the environmental protection tax from VND1,000 to VND3,000 also provoked criticism, with some arguing that such an increase would hit consumers and affect the competitiveness of businesses.

However, after an analysis of world fuel price developments and price comparisons between Vietnam and neighboring countries, the ministry believes the national interests would be threatened without any adjustments.

The current environmental protection tax of VND3,000 a liter on gasoline is near the maximum level in the bracket. Therefore, the finance ministry assesses that in case of necessity, the tax should be adjusted in line with the socio-economic development policy in each period.

Besides, import tariffs have been brought down in line with international agreements, while gasoline retail prices in Vietnam are lower than in neighboring and regional countries. This is why the Ministry of Finance has proposed expanding the environmental protection tax bracket for this item to VND3,000-8,000 per liter with a long roadmap.

The specific level of adjustment is to be decided by the NA Standing Committee depending on each socio-economic period and the acceptance of businesses and people.

Responding to public opinion that the environmental protection tax is being used “not for the right purpose” and “spent less than collected”, the head of the Department of Tax Policies emphasized the ratio of 1% budget collection spent on environmental protection was just direct expenditure, not including indirect expenditure.

“The environmental protection tax is collected according to the State Budget Law and spent according to the State Budget Law, not that the revenue from the environmental protection tax is only used for environmental protection,” said Thi.

Therefore, “it is impossible to say the environmental protection tax is spent less than collected and used not for the right purpose.”

Navigos Search unveils top industries with recruitment demand

Executive recruitment service provider Navigos Search on April 10 announced the top five industries in terms of recruitment demand for mid- and senior-level managers in Vietnam in the first quarter of this year.

The top five industries were manufacturing, information technology, consumer goods and retail, banking and finance, and business service, Navigos Search said in a report on demands for mid- and senior-level managers in Vietnam that was compiled based on recruitment requests of its clients in quarter one.

Navigos Search noted that for the first time the business service industry had made the top-five list. The highest-demand jobs in the industry were reported for financial advisory, management advisory, promotion-advertising and education.

As for the manufacturing sector, industrial construction and civil construction categories registered the largest proportions of labor demand, followed by electricity and electronics. In the consumer goods industry, the highest demand came from food and beverage and fashion and cosmetic categories.

Regarding the IT industry, the recruitment demand for developers and engineers in embedded software increased significantly. The report showed many companies had doubled the demand compared to last year but had to cope with shortages of qualified and experienced developers and IT engineers in Vietnam, with the most difficulty being their lack of proficiency in English.

Navigos Search said previously employers prioritized the technical skills of candidates but they had changed the recruitment process to test their English skills firstly to eliminate the incompetent candidates. They accepted to have extensional training on the technical skills.

Many firms in the mobile application area were ready to train potential employees on new technologies, with their prerequisite being a good command of English. However, this remains a major challenge for international companies with investment plans in Vietnam.

Notably, several businesses with worldwide famous fashion brands have obtained business certificates in Vietnam, and they are recruiting employees with the assistance of recruitment agencies. According to Navigos Search, the positions needed by the firms were related to marketing, sales, human resource and administration.

The report showed recruitment demands for mid- and senior-level managers surged 73% in the first quarter of this year compared to the year-earlier period.

Navigos Search’s data also revealed the highest salary in quarter one was paid for a senior-level management position in the real estate sector with about VND240 million (around US$10,560) per month. The quarter saw mid- and senior-level managers in the  manufacturing, trading and consumer goods sectors earning monthly salaries of VND100 million to VND180 million.

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