Indian group eyes Vietnam as future market

Seven companies from Indian group Tata Sons plan to focus on Vietnam and Myanmar as key markets, reported The Economic Times and International Business Times.

Vietnam and Myanmar have growing economies, an expanding middle class and will enjoy positive impacts from recent trade deals.

These have made the two countries important destinations for firms looking to expand their operations in Southeast Asian markets.

The newspaper quoted as saying a spokesperson from the group that the demographics and economic development of the countries represent a market for several products and services.

Tata companies operating in power, construction, chemicals, automobiles and trade are exploring opportunities in Vietnam and Myanmar .

Established in 1868, the Indian conglomerate conducts operations in more than 100 countries and territories worldwide, employing around 600,000 workers.

From 2014 to 2015, the group reached over 108 billion USD in revenue.

Vietnam is considered an attractive market after it signed the Vietnam-EU Free Trade Agreement last December and the Trans-Pacific Partnership (TPP).

The country enjoyed economic growth of 6 percent in 2014 and 6.7 percent last year.

Vinalines to sell 13 vessels in 2016

The Vietnam National Shipping Lines (Vinalines) announced its plan to deal in shipping in 2016, including selling and transferring 13 ships.

The 13 ships are capable of loading approximately 400,000 tonnes.

Besides, Vinalines will focus on infrastructure and equipment projects with a view to raising its production and business capacity.

The construction of warehouse facilities of the Dinh Vu port project’s phase II in Hai Phong will be completed, while the Cat Tien Sa port in Da Nang will be further expanded to increase throughput.

Vinalines intends to speed up the building of Vinalines Hau Giang and Vinalines Dinh Vu ports.

This year, the firm expects to transport 22.5 million tonnes of goods and handle 64.5 million tonnes of cargos at domestic ports. The workload is projected to earn 19 trillion VND (855 million USD) in revenue, up 3 percent annually. The minimum profit is set at 126 billion VND (5.67 million USD).

Bac Lieu: fishing boats head for the sea

The fishery sector in the Mekong Delta province of Bac Lieu has resumed its operation, with sailings beginning on February 9 – the second day of the lunar New Year.

Currently, some 85 percent of local boats are active at sea.

In January, offshore fishing vessels in Bac Lieu caught nearly 7,300 tonnes of aquatic products, including over 1,100 tonnes of shrimps.

A shrimp-netting trip between 60 and 75 days can earn an average revenue of up to 800 million VND (36,000 USD). Profit is ranging from 200 million VND (9,000 USD) to 300 million VND (13,500 USD).

Vietnam gears towards low-carbon economy

Vietnam is making all-out efforts to build a low-carbon economy towards green growth in order to realise the United Nations Framework Convention on Climate Change.

According to Professor Dr. Tran Thuc, Deputy Chairman of the Advisory Council for the National Committee on Climate Change, Vietnam has coped well with climate change.

By June 2015, the country had 254 Clean Development Mechanism (CDM) projects recognised by the CDM Executive Board (EB). Of which, projects on energy made up 87.6 percent, waste treatment 10.2 percent, forestry 0.4 percent, and others 1.8 percent.

Vietnam has received 12 million certified emission reduction (ECR) certificates granted by the EB, ranking 11 th worldwide.

The Vietnamese Government has issued a host of policies on the economical and efficient use of energy, including the National Target Programme on Energy Efficiency and the Law on Energy Efficiency.

Vietnam has also offered incentives for renewable energy development suitable with the country’s potential and conditions, in tandem with ensuring energy security and protecting the environment.

Such policies have encouraged the public to use energy economically and efficiently in production and in their daily lives, Thuc said.

He added that Vietnam has made efforts in forest protection and afforestation to ease greenhouse gas emissions.

The Paris Agreement, approved at the 21 st Conference of the Parties to the UN Framework Convention on Climate Change (COP21) which took place in December last year, requires developed countries to achieve net zero greenhouse gas emissions by the end of the 21 st century.

Meanwhile, developing nations like Vietnam were also asked to put forth short, medium and long-term plans to cut emissions, the official noted.

He suggested State agencies outline specific climate change-adaptation plans and strategies suitable with each region and locality, since the Government has prioritised shifting the economy toward low-carbon and green.

Vietnam should work harder to reduce greenhouse gas emissions to zero within the century, Thuc stressed.

The Intended Nationally Determined Contributions report manifests Vietnam’s intended efforts in reducing greenhouse gas emissions and adapting to climate change, which will be realised between now and 2030, he said.

The professor pointed to the fact that the Southeast Asian nation is mainly using fossil fuels, while many countries worldwide have completely turned to clean and renewable energies.

He, therefore, urged businesses active in technology and energy to improve their capacity by pouring more investment into technological development to increase the presence of renewal and clean energies.

Attention should be paid to solar and wind energies, Thuc said, explaining that Vietnam boasts substantial potential to develop these resources.

Regarding the “Vietnam: Building the 3rd National Communication for the United Nations Framework Convention on Climate Change (UNFCCC)" project, Nguyen Khac Hieu, deputy head of the Department of Meteorology, Hydrology and Climate Change, said the third National Communication aims to collect greenhouse gas emission statistics in various socio-economic areas to complete a national scenario for this issue.

The Ministry of Natural Resources and Environment will collect feedback from relevant ministries and agencies, while maximising resources to provide the latest information for the UNFCCC.

The project also targets enhanced scientific and technological capacity, and heightened public awareness of climate change.

The project, to last from 2016 to 2018, will cost 630,000 USD, of which 480,000 USD will come from the Global Environment Fund.

Cai Lan Port welcomes international container ships

The Cai Lan International Container Terminal (CICT) in the northern province of Quang Ninh received the first foreign cargo ships of the Year of the Monkey on February 10 and 11.

On February 10, the third day of Tet, the Pelicana of Singapore anchored at the port with 5,500 tonnes of ore.

On February 11, three more arrived, of which the Hong Fu from Hong Kong transported over 24,000 tonnes of wheat, while Liberia’s Menelaos and India’s Goodwill carried over 24,000 tonnes of wheat and 32,000 tonnes of dry beans, respectively.

In January 2016, the port welcomed 132 ships and handled 524,500 tonnes of commodities, mainly ore, cattle feed, fertiliser and wood chip.

Major solutions to socio-economic development in 2016

The Government has promulgated a Resolution underlining key measures to realise the socio-economic development plan and State budget estimates in 2016.

The Resolution No. 1/NQ-CP clarifies that the overall target of the 2016 socio-economic development plan is maintaining macro economic stability, recording higher economic growth than 2015, improving growth quality, and ensuring sustainable development.

Expediting the implementation of strategic brea kthroughs, together with boosting economic restructuring and shifting growth models, are also among the general goals apart from increasing productivity, quality, efficiency and competitiveness of the economy.

The plan is structured to remove difficulties for businesses so as to stimulate production and expand business. But it is also about ensuring social equality and welfare, and improving local living standards.

It looks to carefully manage, while making effective use of natural resources, proactively cope with natural disasters and climate change, and protect the environment.

Enhancing administrative reform, increasing the efficiency in corruption prevention and state management, and encouraging thrift practices - are each essen tial alike.

Strengthening national sovereignty defence and security, as well as ensuring political and social order, and promoting external affairs and international integration - are all included in the 2016 socio-economic plan.

In 2016, the national gross domestic product (GDP) is expected to increase by 6.7 percent, while the export turnover is hoped to expand by 10 percent, with a trade deficit of below 5 percent.

The country strives to keep the consumer price ind ex growth below 5 percent; reduce the rate of poor households according to multi-dimensional poverty standards by 1.3-1.5 percent; and increase health insurance coverage to 76 percent.

The total investment in social development will be equal to 31 percent of the GDP.

The Government requested the State Bank of Vietnam to coordinate with relevant ministries, agencies and localities to put forth flexible monetary management policy, fiscal policy, and macro economic policy - to curb inflation, stabilise the macro economy, and boost economic growth.

Meanwhile, the Ministry of Finance is responsible for managing the State budget estimates in a strict manner - such as increasing budget collection while reducing spending and ensuring all expenditures are in line with the estimates.

The ministry should devise measures to balance the State budget collection in 2016 in case of fluctuating oil prices, while intensifying tax inspection.

Is is tasked with keeping close control of public debts, Government debts, and foreign debts; speeding up the selling of State-capital in businesses, in which the State does not need to hold ownership.

The Government asked the ministries, centrally-run agencies, and localities, to reduce spending on organising conferences and workshops, as well as limit expense on fact-finding tours overseas, or purchasing expensive cars and equipment. It suggested popularising online workshops and conferences to save State budgets.

Special attention should be paid to economic restructuring: towards increasing the economy’s efficiency and competitive edge – focusing on public investment, State-run economic corporations and companies, commercial banks, and credit organisations.

The Ministry of Planning and Investment is responsible for keeping a close watch on investment targets and efficiency, along with monitoring the impacts of official development assistance (ODA) loans and foreign loans on the macro economy.

It is recommended to focus investment of State credit capital on key and ur gent projects, that are crucial to socio-economic development, while encouraging domestic and foreign investors to inject money into building infrastructure via public-private-partnership (PPP), foreign direct investment (FDI), and joint ventures.

The Finance Ministry is asked to devise measures to improve the capacity of management and inspection agencies, which oversee finances of State-run businesses and those businesses receiving State capital.

The State Bank of Vietnam ought to push ahead with restructuring credit organisations, especially poor-performing ones, to improve their financial capacity - by redirecting their activities towards a low-risk and efficiency ethos.

The Government directed the Ministry of Industry and Trade to forecast the import-export situation so as to map out orientations for business and production plans, while strengthening measures to boost exports of high added value products to new markets.

The Ministry of Home Affairs must push the implementation of the State administrative reform programme in 2016-2020.

The Government Inspectorate and the Ministry of Finance are requested to continue with legal and institutional improvements in anti-corruption and thrift practices.-

First batches of goods sent abroad via Lao Cai border gate

The first batches of goods of the New Year, mainly fruit and seafood, were shipped abroad through the Lao Cai international border gate, on February 9, the second day of the Lunar New Year (Tet).

Deputy head of the border gate’s customs office Vu Quang Vinh said the fruit and aquatic produce from farmers and fishermen of southern and central Vietnam were exported to the southwestern province of Yunnan in China.

The customs procedures were conducted quickly and in accordance with the sector’s regulations on administrative reform, he said, adding that he believes it will be a fruitful year for agro-aqua farmers.

Tan Phat was the first company to ship through the border gate, with over 40 tonnes of mangoes and rambutans from the southern region to the Chinese market.

Meanwhile, Viet Tu company exported nearly two tonnes of lobster from the central province of Phu Yen.

Director of the company Nguyen Thi Cam Tu said lobster is a hi-end aquatic product sold to well-known hotels and restaurants in Yunnan, China.

The Lao Cai international border gate has arranged forces to ensure quick and smooth customs clearance for local exporters.

Develop human resources to raise national competitiveness

Improving human resources and revamping the labour structure are strategic solutions to improving the competitiveness of the economy in the context of deeper and wider international integration.

The decision to shift to the market economy in 1986 has been proved to be a sound move by the Party and State to mobilise all resources and potential to develop the economy. Notably, the country’s membership of the World Trade Organisation (WTO) in 2007 served as an important premise for economic growth.

During the past 30 years, a series of market-oriented reforms have been carried out, especially in the agricultural sector, the private economic sector, export and international economic integration. Vietnam’s economy has undergone a transition from self-sufficiency with low income to a multi-sectoral one.

As a result, the domestic labour market has been formed and developed on the right track. The State no longer played the role of directly creating jobs, instead it now creates the necessary environment for job generation while ensuring labourers’ rights through improving the legal system.

Acknowledging the market economy’s risks and ensuring the unemployed find jobs soon, the policy on unemployment insurance has been enforced.

The country has also focused on the labour export market, with several key markets seeing positive growth including Chinese Taiwan and Japan. The quality of Vietnamese workers abroad and the operations of labour export companies have improved.

Policies related to salaries, social and unemployment insurances, labour safety and hygiene, and management of foreign workers in Vietnam have been implemented well. The regional minimum wage in 2015 increased 2.3-fold compared with 2011, while the average monthly income in 2015 also rose 1.8 million VND (79.2 USD) per capita from 2011.

During that time, labour relations have also improved. As of October 2015, the number of strikes had fallen by 25 percent compared to the same period in 2011.

Thanks to new policies and mechanisms on employment and developing the labour market, more than 7.8 million jobs were created throughout the country from 2011-2015, helping reduce the unemployment rate to below 4 percent in urban areas.

Last year, over 1.6 million people found new jobs, of which approximately 115,000 people went abroad to work.

Vocational training has been linked to the demands of the market and businesses, and international integration requirements. The forms of vocational training have been diversified, with priority given to people in rural areas, ethnic minorities and people with disabilities.

In 2015, vocational training was provided for more than 2.1 million people. As of late 2015, the rate of trained workers reached 51.6 percent, up 11.6 percent from 2010.

However, several targets have yet to meet expectations. The proportion of labourers working in the agricultural sector and the non-official sector remains high, accounting for nearly 65 percent of the total.

The number of workers who have taken out social insurance accounts for only 20 percent of the total, posing a challenge for fulfilling the target of 50 percent by 2020.

Integration into ASEAN is also posing challenges for Vietnam as the newly-formed ASEAN Community will allow the free flow of labour among the bloc’s countries.

The Ministry of Labour, Invalids and Social Affairs forecasts that Vietnam will have 59.13 million labourers by 2020 and around 68 million labourers in 2030. In 2020, the rate of trained workers is expected to reach 70 percent.

To improve labour quality and utilise human resources effectively, the ministry will continue to update the legal system and align the domestic labour market with international integration requirements in order to ensure a modern, effective, competitive and equal labour market, thus contributing to fulfilling development targets in the 2011-2020 Socio-Economic Development Strategy.

It will also expand the labour export market, while intensifying management to protect the interests of Vietnamese workers abroad.

Attention will be paid to vocational training for rural workers, and building a vocational education network that matches the country’s socio-economic development strategy and human resources development plans.

Singaporean bank branch to increase charter capital

The State Bank of Vietnam (SBV) has allowed the Ho Chi Minh City branch of the Development Bank of Singapore Limited (DBS Bank Ltd.) to increase its charter capital.

Under the decision, the branch's charter capital can now be raised from the current 20 million USD to 70 million USD.

The HCMC branch of DBS Bank Ltd. is responsible for implementing its recapitalisation programme in accordance with applicable laws. After the completion of all recapitalisation procedures, the HCMC branch will have to submit the documents on revising its charter capital to the SBV.

DBS Bank Ltd. is one of the largest banks in Southeast Asia, with more than 280 branches spread across 18 markets. The bank opened its office in Ho Chi Minh City in 2010.

As of September 2015, DBS Bank Ltd. earned 5.246 billion USD in net interest income.

Mid-term public investment need estimated at almost 495 million USD

The Ministry of Construction has completed its mid-term public investment for 2016-2020 under the Law on Public Investment to submit to the Ministry of Planning and Investment.

Under the plan, total public investment need for the period is estimated at nearly 11 trillion VND (495 million USD), equal to 75.6 percent of the amount spent from 2011 to 2015.

More than 8.7 trillion VND (391.5 million USD) from the proposed amount will be sourced from the State budget, some 950 billion VND (42.75 million USD) from Government bonds and approximately 1.288 trillion VND (57.96 million USD) from foreign fund.

The mid-term investment will focus on building facilities for education-training and science-technology establishments to assist them in switching to the self-control financing mechanism.

According to the ministry’s statistics, it was assigned to manage the spending of almost 1.6 trillion VND (72 million USD) from the State for 38 public projects, six of which have become operational.

Meanwhile, the ministry mobilised some 17.5 million USD in four projects from the United Nations and the government of Japan, Germany and Republic of Korea.

Cam Pha port handles over 33,000 tonnes of coal on first New Year day

Cam Pha port and logistics company, an affiliate of the Vietnam National Coal and Mineral Industries Group (Vinacomin), in the northern province of Quang Ninh loaded 33,000 tonnes of coal for two ships on February 8, the first day of the Year of the Monkey.

The Hai Phong 19 and Vinacomin Ha Long vessels– the first New Year footers in the port, are to supply coal to Vinh Tan 2 thermal power plant and Duyen Hai 1 thermal power plant, respectively.

Last year, Cam Pha port handled over 25 million tonnes of coal, 674,000 of which was for exports. It earned more than 37 trillion VND (1.68 billion USD) in revenue.

Vinacomin last year turned out 37.6 million tonnes of coal and sold 35.5 million tonnes domestically, including 1.26 million tonnes went overseas.

In 2015, it raked in more than 106.8 trillion VND (4.85 billion USD), up 3 percent from 2014 and contributed 12.5 trillion VND (56.8 million USD) to the State budget, or 103.4 percent of their target.

The group plans to earn more than 110 trillion VND from selling 38 million tonnes of coal, 1.2 million tonnes of which is for export, in 2016.

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.

El Nino leads to global rice shortfall

The El Nino weather event that began last year and has continued into early 2016 has negatively impacted agricultural production in several countries.

This has caused a fall in rice supply and stockpiles in many parts of the world.

The unfavorable weather condition has forced many countries that traditionally import rice such as the Philippines, Indonesia and China to increase imports to maintain rice stockpiles for ensuring food security.

India, Thailand and Việt Nam, the three largest rice exporters in the world, have seen a sharp fall in their rice output.

Dry conditions caused by the El Nido weather phenomenon in two consecutive years of 2014 and 2015 have severely affected India's agricultural production. The world's largest rice exporting country's stockpile is at such a low level that the country has had to cut down its rice export by a huge amount.

In the ASEAN bloc, the world's second and third-largest rice exporters Thailand and Việt Nam have also suffered a reduction in their rice stockpiles. Recently, Thailand's rice stockpile fell to 13.5 million tonnes, of which only seven million tonnes are good enough for consumption. About three to four million tonnes of that stockpile can be used only for producing alcohol. The rest cannot be used due to its poor quality.

Thailand's paddy yield in the upcoming crop is expected to fall by three to four per cent, equivalent to two to three million tonnes of rice. During the whole of 2016, rice production in Thailand is expected to drop by four to five million tonnes, the heaviest fall since 2000.

The country will not increase its rice exports this year.

Việt Nam, the world's third-largest rice exporter after Thailand, is expected to suffer slight fall in paddy yield and rice production this year.

The Philippines will fail to achieve its target of producing enough rice for domestic consumption because of the El Nino effect. In the first quarter of 2016, the country's paddy yield is expected to fall by five per cent. The rice imports of the country will be closely monitored by local traders, because that will decide the number of countries the Philippines has to buy rice from.

Last year, Manila suggested buying additional rice from its two main suppliers, Việt Nam and Thailand, after the country's paddy output fell.

The regional rice market has seen a noticeable rise in demand of late for imported rice. The Philippines will purchase 400,000 to 600,000 tonnes of rice in February. In 2016, it will buy an additional 800,000 tonnes of rice to meet the domestic demand.

Indonesia will import 800,000 tonnes of rice between February and April. The two markets will import rice during the winter –spring crop of 2015 – 2016 of Việt Nam. It is said that the situation is very favourable for Việt Nam to conduct negotiations.

According to experts, Việt Nam and Thailand should coordinate in bidding to get good prices in the contract to sell rice to the Philippines. It is possible that Thailand will not sell much rice because of its current crop failure.

Thai enterprises also appear to be discouraged after the recent bidding contracts for the sale of rice to the Philippines and Indonesia. Most of the Thai enterprises involved in the trade pact faced losses, because after selling the cereal, rice prices in Thailand increased sharply, while much of the rice stockpile was not owned by the exporting enterprises, but by processing factories.

Thai enterprises are now being more careful, following the current problems in paddy production due to the El Nino impact. With the reduction in paddy yield, the rice price will increase after the contracts are signed.

Thailand will not take a risk by exporting a large quantity of rice to other countries. Thailand can only give the Philippines 40 per cent of its demand and 300,000 to 400,000 tonnes of rice to the Indonesian market.

"Việt Nam should not conduct only a single negotiation with Indonesia, but conduct the negotiations in several phases to get good prices. Việt Nam would have made a lot of profit if the negotiations had been divided into several parts for selling one million tonnes of rice to Indonesia recently," an expert said.

"The first lot can be sold at a reasonable price, but the second lot can be sold at a slightly higher price, and the third lot should be sold at a price higher than the second lot," the expert said.

The most important thing is that China will import a lot of rice after the Lunar New Year holiday. Once China imports rice, the world's rice market becomes much more animated. If the cold weather continues, vegetables and paddy being cultivated in China will perish and the demand for imported food in the country will increase sharply.

Of course, a huge amount of rice will be imported from Việt Nam.

"The Philippines, Indonesia and especially China will increase rice imports and the rice price in Việt Nam will improve dramatically. If local rice enterprises start purchasing rice, they will gain a lot. However, the problem is of capital, which, in turn, depends a lot on banks," the expert said.

US – Viet Nam's top trade partner

The US has become Viet Nam's leading trade and investment partner, which has been reflected through impressive trade values between the two countries over recent years.

Bilateral trade has expanded from zero since the day Viet Nam and the US normalised their diplomatic ties 20 years ago to US$36.3 billion in 2014. The figure is expected to hit $40 billion in 2015.

According to Deputy Minister of Industry and Trade Tran Tuan Anh, among the free trade agreements Viet Nam has engaged in, the Trans-Pacific Partnership (TPP) agreement is expected to afford favourable conditions for Vietnamese exports.

Nguyen Duy Khien, head of the American Market Department under the Ministry of Industry and Trade (MoIT), said Viet Nam shipped $30.6 billion worth of goods to the US in 2014, up 24 per cent against the previous year.

According to the MoIT, Viet Nam began to access the US market in 1995. Viet Nam's export turnover to the country reached $800 million in 2000 – the year the Viet Nam-US Bilateral Trade Agreement was signed.

The US has become Viet Nam's largest importer, purchasing garments, electronic products, footwear, rice and fish from the Southeast Asian nation.

In the sphere of investment, the US ranked seventh among the countries and territories investing in Viet Nam with a total direct investment of $10.7 billion by June this year.

Vu DucGiang, President of the Vietnam Textile and Apparel Association, said Viet Nam was the world's fifth largest garment-textile exporter, and the US remained the country's top market in this field.

However, the garment-textile and footwear sectors are forecast to face difficulties as a result of Viet Nam's TPP membership as the US has initiated the "yarn forward" rule of origin.

In order to benefit from tax breaks, Vietnamese companies must use materials imported from other TPP members, Giang said, noting this would be a real challenge for Vietnamese businesses when up to 70 percent of materials they are currently using are purchased from foreign countries, mainly China – a non-TPP member.

Deputy Minister Tran Tuan Anh said the TPP would be an impulse for Viet Nam's economy to gear towards comprehensive renovation, a higher competitive edge and a better business environment.

Anticipating opportunities afforded by the TPP, lots of US businesses have suggested expanding footwear orders with Viet Nam, while many others have invested in weaving and dyeing projects in the country.

The trend sparks the hope that the TPP will continue creating a momentum for the two countries' relationship, he said.

Economists also stressed the need to provide more information about the two countries' markets and conduct trade promotion activities such as exhibitions, workshops and market surveys.

The US now has more than 720 valid projects in Viet Nam. In the first quarter of 2015, US investors poured nearly $68 million into eight new projects in the country.

SMEs can borrow investment capital for supporting industries

Small and medium-sized enterprises (SMEs) can borrow up to 70 per cent of the capital they need for investing in supporting industries prioritised by the government from February 22.

This is stated in the State Bank of Viet Nam's (SBV's) Circular No 01/2016/TT-NHNN, which was issued on February 4 to provide guidelines for a decree on the development of supporting industries.

Decree No 111/2015/ND-CP, issued last November 3, said preferential policies related to credit, taxes and land rents would be offered to projects applying new technology, equipment and manufacturing processes that can help increase their production capacity by at least 20 per cent.

It also said the money borrowed by the SMEs must be guaranteed by credit underwriting organisations, and the SMEs must register a mortgage value of at least 15 per cent of the loans at the lending institutions.

The firms should also have at least a 20 per cent stake in the investment projects, and they must not owe anything to the state budget or be responsible for any bad loans with any lenders.

According to the circular, credit institutions and foreign banks' branches in Viet Nam will finance the prioritised projects with short-term loans in dong, with interest rates being equal to or less than the specific rates set by the central bank's governor at certain periods of time.

The Viet Nam Development Bank and other organisations authorised in conformity with the law would be the guarantors of the SME loans, the circular said.

Industry insiders asked, however, whether the loan incentives could truly help domestic SMEs take part in the development of supporting industries, as Viet Nam integrated more deeply with the global economy.

As the country has entered into a variety of free trade agreements, especially the large Trans-Pacific Partnership trade deal, multi-national companies might take up supply chains right in the domestic market.

Yasuzumi Hirotaka, chief representative of the Japan External Trade Organisation in HCM City, told news website enternews.vn that Viet Nam still lacked a solid foundation for supporting industries, with the enterprises being internally weak.

"There is a high risk that many of them will have to withdraw from the market. This will be clearly seen in the next one year or two, so the domestic firms need timely support from the government to improve their strength now," he said.

He said about four million SMEs were offered low interest rates for loans in Japan, following government policies.

In Viet Nam, SMEs and support industries are among several areas that the government prioritises for funding, besides exports, high-tech firms and agriculture and rural development.

According to the latest SBV report on dong lending rates, commercial banks applied rates of six to seven per cent per year for short-term loans, and nine to 10 per cent per year for medium to long-term loans, in the prioritised sectors in January.

In normal business areas, the short-term rates were between 6.8 per cent and nine per cent per year, and the medium to long-term rates were between 9.3 per cent and 11 per cent per year.

Vinaseed reports higher revenue in 2015

The Viet Nam National Seed Joint Stock Company or Vinaseed (NSC) has announced a revenue of VND1.25 trillion (US$55.8 million) and after-tax profit of VND157 billion ($7 million) in 2015.

Vinaseed also announced that its total assets were worth VND1.56 trillion ($56.1 million) by the end of 2015, an increase of VND610 billion ($27.28 million) compared with the beginning of the year.

According to the consolidated financial statements of Q4, Vinaseed earned VND426.55 billion ($19 million) in revenue, an increase of 78 per cent year-on-year. It also earned VND153 billion ($6.8 million) in gross profit, an increase of 86 per cent year-on-year. With increasing input and other costs, Vinaseed earned VND41.26 billion ($1.8 million) in after–tax profits.

In 2015, Vinaseed was in control and became the parent company of the Southern Seed Corporation (SSC). The consolidated business results of SSC helped Vinaseed increase its size and strengthen its leading position in the field of providing a variety of seeds.

Based in Ha Noi, Vinaseed is a scientific and technological corporate entity engaged in the research, breeding, production and business of crop seeds and service transfer of agro-forestry techniques.

The company continues to provide the market high-quality and productive crop seeds and transfer scientific and technological services to satisfy customers in all parts of the country, as well as make practical contributions to the development of Vietnamese agriculture and society.

Vinaseed has now the most diverse products and mass consumer products in Viet Nam, with an annual consumption of nearly three tonnes of seeds, equivalent to one million hectares of cultivation, a market share of 15 per cent of the rice, 10 per cent of corn and five per cent of the vegetable seeds market, as well as a distribution network of more than 1000 dealers of level I around the country. The company is the first seed exporter that has taken the Vietnamese seed brand to regional countries, especially in the export of the tropical hybrid vegetable seed F1 to the South China market.

Vinaseed shares closed at VND93,000 ($4.1) each on the HCM Stock Exchange.

Domestic retailers urged for better links

Domestic enterprises in the retail industry should strengthen their connections to take better advantages of resources and increase their competitiveness over foreign investors, Chairman of the Hanoi Supermarket Association Pham Vinh Phu said.

According to Phu, Vietnamese retailers are vulnerable to integration because of their lack of business strategies and weak management. Some 90 percent of Vietnamese supermarket executives haven't been trained in retail skills.

He called for Government incentives in terms of finance, land and policy to help enhance domestic retail enterprises' competitiveness.

Phu also said the production industry played a significant role in the development of the retail sector, adding that Vietnamese products would be no match for their foreign rivals with an inefficient, poor quality and slow production process.

Sharing Phu's view on the need for Government assistance, Le Thi Thanh Tam, Deputy General Director of the Saigon Food Joint Stock Company, pointed to the fact that the majority of domestic retailers were small-and medium-sized enterprises, even super-small ones with weak financial capability and poor experience in production, marketing and distribution.

The Government should provide more support for domestic enterprises to develop new products and invest more in product designs in order to compete with foreign enterprises, she said.

Meanwhile, Yukio Konishi, General Director of AEON Mall Vietnam, highlighted the potential of Vietnam's restaurant and recreation market thanks to its young population.

He expressed his belief that his company could compete with other first-come foreign investors and domestic enterprises thanks to its rich experience, good management ability and high quality and reasonably priced products.

Viet Nam and Japan would both join the Trans Pacific Partnership (TPP), which would present huge opportunities for the two nations to boost trade cooperation, Yukio Konishi said.

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, according to 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.

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 VND41.5 trillion (US$1.8 billion), 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, up 15 percent compared with 2014.

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

AEC integrations: hopes and worries

The establishment of the ASEAN Community on December 31, 2015, was an important milestone in ASEAN’s history and Vietnam’s international integration.

The ASEAN Community is based on 3 pillars: Political-security, economics, and culture and society. Economics plays a fundamental role in integration.

The ASEAN Economic Community (AEC) has integrated 10 of  Southeast Asia economies into a single market of 625 million people, a combined gross domestic product of  US$2.6 trillion, and without tariff and non-tariff barriers. It will be Vietnam’s biggest foreign market with a number of economic opportunities.

Nguyen Son, Deputy Director of the National Committee for International Economic Cooperation of the Ministry of Industry and Trade, said: “First, it will be a regional integrated market with open business opportunities. Second, ASEAN and its member countries have signed many Free Trade Agreements with partners. Vietnamese businesses who invest in the AEC will have opportunities to access other FTAs. ASEAN has become a competitive region for attracting foreign investment.”

The AEC exposes Vietnam not only to advantages. In the AEC, all member markets are equal and a poorly performancing market will become less competitive and left behind. If Vietnam loses its appeal to investors, they will shift to other ASEAN countries with more favorable conditions. In the World Economic Forum’s Global Competitive Report, Vietnam’s ranking has improved but has never been higher than that of the 6 ASEAN founding members. A survey of investment and trade environment in ASEAN countries ranked Vietnam at a low level of policy transparency, particularly in tariffs and customs.

The biggest commercial challenge for Vietnam is to cut 7% of tariff lines, equivalent to about 400 items, between now and 2018. These items were categorized as highly sensitive products or Vietnam’s less competitive products.

Regarding other obstacles, Pham Binh An, Director of the WTO center in Ho Chi Minh city said “Vietnamese businesses have little information about the AEC. We have conducted a survey on this matter. It’s the biggest challenge because they do not know about opportunities and challenges, and have made no preparation.”

Vietnamese policy-makers and businesses should be aware of the challenges so that they can act to grasp opportunities.

At a seminar earlier this year, Deputy Prime Minister Pham Binh Minh said it is important to change awareness through from the top level to enterprises and for people about the ASEAN Community.

“Since ASEAN initiated the building of an ASEAN Community in 2009, Vietnam had worked out a cooperative plan until 2015 including government actions. In its international integration strategy, Vietnam has orientations to work with ASEAN countries to develop the Community by 2025,” Deputy PM Minh added.

Besides macro-policies, businesses have to promote the spirit of self-reliance and improve their capability to be ready for integration.

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