Japan firm builds US$28-mln plant in Dong Nai

Japan’s Nishin Seifun Group on November 13 kick-started a food factory in the southern province of Dong Nai.

The factory at Amata Industrial Park in Bien Hoa city will be built at a total investment of more than US$28 million. It will engage in producing foodstuff such as sauce, curry and soup.

The factory will be capable of producing nearly 10,000 tonnes of sauce a year, mostly for export to Japan.

In the future, apart from being sold in Vietnam, its products are expected to be exported to other Asian countries.

Phan Thi My Thanh, Vice Chairwoman of the provincial People’s Committee, said the province’s 31 industrial zones have so far attracted 1,370 projects, including 900 valid ones, from 39 countries and territories, including Japan, Taiwan and the Republic of Korea.

She added the province has lured as many as 29 Japanese-invested projects, worth more than US$210 million, over the last ten months of this year, accounting for nearly 70% of the locality’s new FDI projects.

Thanh also said that Dong Nai will create all possible conditions for foreign investors to fare well in the locality.

Law to be revised to ensure fairness

Amendments to the Enterprise Law are being discussed so as to create a level-playing field for all, from State-owned enterprises to foreign-invested entities and domestic private concerns, heard a seminar on Tuesday.

The roundtable discussion was jointly held in HCMC by the Government Office and the Central Institute for Economic Management (CIEM) to identify flaws in the law, whose amendments are expected to be passed by the National Assembly next year.

Pham Tuan Khai, head of the legislation department under the Government Office, noted that the 2005 Enterprise Law had not yet created a level-playing field for all businesses, with local enterprises more in favor.

“The procedures for business establishment are more complicated for foreign-invested enterprises than for domestic ones,” Khai said.

As per the law, the duration for screening and licensing a foreign-invested project is 45 days, but in reality, it often takes many months, if not years, for the investor to obtain a license, the HCMC Department of Planning and Investment noted.

Nguyen Dinh Cung, acting head of CIEM, pinpointed a problem right in the law that makes the procedures complicated for foreign-invested enterprises.

The law specifies that the investment certificate is also recognized as the business registration certificate, while it is time-consuming to issue an investment certificate as competent State agencies have to review many aspects before giving approval.

Lawyer Phung Anh Tuan from the HCMC Bar Association suggested that the amended Enterprise Law should separate the two. For the business registration certificate, the same procedures should apply for both foreign-invested and domestic enterprises, while for the investment certificate, procedures will be considered later when the investor files an application for the business spheres it wants to get involved in.

Phan Duc Hieu of CIEM agreed, saying business registration procedures, understood as market entrance, should be the same for all entities. Regarding business rights for foreign investors, the law should specify business conditions, such as the ownership limit and acquisition of stakes, which should be in line with international conventions.

The law should also specify incentives for foreign investors depending on the business area for investment and the investment scale, according to Hieu.

Nguyen Dinh Cung of CIEM also suggested changes regarding operations of State-owned enterprises, which benefit from special privileges given by the State but also suffer from State interventions, which are seen as non-market factors.

Vietnam prioritises trade ties with EU

Vietnam expects to accelerate the ongoing negotiations of a free trade agreement (FTA) and sign the pact with the European Union in 2014 as scheduled.

Minister of Industry and Trade Vu Huy Hoang was speaking at a reception for visiting Antonio Tajani, Vice President of the European Commission in Hanoi on November 13.

The EU is one of Vietnam’s leading partner in its foreign policy, and Tajani’s visit accompanied by 50 businesses will create a good chance for both sides to capitalise on the future Vietnam-EU FTA, said Hoang.

He proposed the EC support the FTA negotiations, provide continued ODA for 2014-20, and maintain the generalised system of preferences (GSP) for Vietnamese commodities as of January 1, 2014.

For his part, Tajani stressed the importance of economic, trade and investment cooperation between the EU and Vietnam, saying the European grouping will expand cooperation in industry, farm produce processing, and cosmetics with Vietnam.

Once the FTA is signed, it will add fresh impetus to stronger economic, trade and investment cooperation between the EU and Vietnam, he said.

Statistics show the EU is Vietnam’s largest export market and the country’s second largest bilateral trade partner.

In the first nine months of 2013 two-way trade rose 20.8% to more than US$24.8 billion, and the figure is expected to hit US$32-33 billion by year’s end.

Both sides recently concluded the fifth round of their FTA negotiations and they believe the trade pact will be signed by late 2014.

This FTA will help Vietnam expand its outlets, improve its competitive capacity, and attract more foreign investment, especially from the EU.

To date 23 of the 28 EU member countries have invested in over 1,800 Vietnam-based projects with a total registered capitalisation of more than US$32.8 billion. Of the total, US$13.1 billion has been disbursed.

Trade fair promotes agricultural development

The Vietnam International Agriculture Trade Fair, AgroViet 2013, kicked off in Hanoi on November 14 to promote safe and sustainably developed agriculture.

The fair features 400 stands from 200 local and foreign businesses, displaying agro-forestry and aquatic products, machinery, equipment and technologies for production, processing, and post-harvest preservation.

During the fair, a “Farmer bridge” programme will be organised to connect farmers with scientists and businesses.

Additionally, a seminar entitled "Production and supply of agricultural products in chain food safety" will also be held, offering cooperation and investment opportunities and increasing the added value of goods by improving product quality, productivity and food safety.

Local enterprises will participate in a business matching programme with over 30 Chinese firms in the field. China is currently one of the biggest importers of Vietnamese agricultural products.

AgroViet is expected to promote Vietnam’s main farm products, expand multilateral agricultural trade relations between countries, towards a safe, effective and sustainable development of agriculture.

Social enterprises need legal status to succeed

The Government should provide incentives and a legal framework for social enterprises as many have not been recognised officially and established or restructured from old non-governmental organisations, said speakers at a recent forum in Ho Chi Minh City.

Vietnam has 300 social enterprises, many of which operate in difficulties. About 50 social enterprises are established every year, said Luu Minh Duc of the Central Institute for Economic Management (CIEM) on November 12, adding that without sufficient State support, most of them cannot exist on their own profits.

There is no overarching definition of social enterprises, and many of them vary from one locality to another, with different perspectives.

According to Duc, they are generally defined as enterprises that pursue the objectives of social development and environmental protection. They have different legal forms, depending on countries, such as NGOs, charity organisations, co-operatives and private firms.

Many social enterprises lack specific business strategies and plans, according to research conducted by the British Council.

The Enterprise Law in 2005 did not clearly define establishment, operational methods, rights and obligations of social enterprises.

The enterprises should make clear why they are established and to whom they serve. They also need to define the purpose of their products and services and how they affect society.

Pham Kieu Oanh, director of the Centre for Social Initiatives Promotion, said many of these enterprises do not have preferential incentives like corporate income taxes, export duties, credit support and infrastructure support.

Speaking at the forum, Nguyen Dinh Cung, also of the Central Institute for Economic Management, said the Law on Enterprises should include a provision on the recognition of the legal status of social enterprises.

Social enterprises should be allowed to receive funds from stakeholders for social purposes and have tax incentives regarding tax and land, Cung said.

The law should also stipulate their obligations such maintaining their principles and goals during operation. In addition, they must not use funds from others for other purposes, except for cost for community service activities.

Other speakers at the event said that there should be a clear distinction between charitable organisations and social enterprises to prevent abuse of charitable activities for illegal benefits.

The forum, co-organised by the CIEM, the British Council and Southern Social Enterprise Club, focused on the creation of a sustainable environment for social enterprises, including a closer relationship between social enterprise and other businesses.-

Vietnamese retail market to watch for big rewards

Deputy Head of the Ministry of Industry and Trade's Domestic Market Department Tran Nguyen Nam has said domestic enterprises can still compete in Vietnam's increasingly competitive retail market.

The country's retail market is preparing for a massive influx of foreign retailers amid its World Trade Organisation (WTO) obligations, which will come into effect from January 11, 2015.

Under the changes, Vietnam will have to permit the establishment of wholly foreign-owned businesses, including retailers, with some of the world's leading retailers expressing their interests in the Vietnamese market.

The changes have also attracted the interest of foreign investors eager to take advantage of the lax investment rules.

In response, many domestic stakeholders have raised concerns with foreign retailers setting up shop in Vietnam.

Fielding questions in an online forum held in Hanoi on November 13, Nam said foreign firms would bring the benefits of financial resources and qualified workers.

Domestic retailers, he said, needed to adapt their management systems, training and customer service to compete with foreign firms, who were skilled in these areas.

Statistics from the department showed that by the end of last year, foreign groups accounted for only 40 percent of around 700 supermarkets in Vietnam. Meanwhile, 31 out of 125 commercial centres in the country were foreign-invested.

"Domestic retailers still have the opportunity to make changes to compete with foreign businesses by 2015," he said.

Dinh Thi My Loan, chairman of the Vietnam Retailers Association, said market share commanded by local retailers had increased in recent years. She said both domestic and foreign retailers had benefited from preferential Government policies.

However, she commented that some localities had offered preferential policies for foreign enterprises. In one example, domestic firms were required to wait for longer periods to apply for land for building trade centres or supermarkets, while foreign companies received easier access to land.

In addition, local retailers have faced difficulties with the economic downturn and decreasing purchasing power, Loan said, adding that domestic retail companies needed to plan how they would compete in a liberalised market.

She said domestic retailers have not been good at promoting co-operation between producers and companies as foreign firms. "We have worked hard to promote co-operation to increase domestic company' competitiveness," she said.

Talking about co-operation among four best big domestic retailers, Hapro, Satra, Phu Thai Group and Sai Gon Co.op, she said the association aimed to strengthen logistic system.

Creative renovation vital for local enterprises

The enhancement of competitiveness through creative innovation is vital for Vietnamese businesses, according to Deputy Minister of Science and Technology Tran Viet Thanh.

The official made the statement during a November 13 international seminar in Ho Chi Minh City , jointly organised by the Southern Cooperation Department and the Korean Standard Association (KSA).

Thanh said that the Vietnamese economy is still facing difficulties, with 55,000 enterprises entering bankruptcy and 25 percent of companies posting on the stock market failing to make a profit.

Over the past years, Vietnam has issued and implemented a number of laws on science and technology, creating an important legal corridor for businesses to apply technology in their management and production, he noted.

This is a good opportunity for Vietnamese experts and managers to learn experience from the Republic of Korea – a country that succeeded in the field – thus developing their ideas to improve competitiveness for businesses.

According to Pham Ngoc Hung, Vice President of the Ho Chi Minh City Business Association, Vietnam has deeply integrated into the international economy, while products from ASEAN member countries are soon to enter Vietnam with zero percent tax rate.

Therefore, he said, it is crucial for Vietnamese businesses to enhance their competitiveness through improving product quality and the productivity of their factories.

However, as the majority of enterprises are using old fashioned equipment and have poor access to market information and consultation services, their application of standards remains dependent on foreign partners, he said.

Additionally, he argued that quality management has yet been implemented stably, with an uncompleted standard system for each sector.

Hung also proposed that enterprises should focus on strengthening the application of a new standard management system of international quality for production sectors, while building and expanding the model of manufacturing enterprises with renovated equipment for better productivity and quality.

He also suggested that the government should design policies to support businesses by issuing technical standards and providing guidelines about how to meet them.

Within the seminar framework, the KSA and the Small and Medium-Sized Enterprise Development Centre (SMEDEC), under the Ministry of Science and Technology, signed a memorandum of understanding allowing the two sides to coordinate in supporting small and medium-sized enterprises to approach new technology, increasing productivity and products quality and developing environmentally friendly products.

Accordingly, KSA will send experts in various sectors to Vietnam to offer training courses, while receiving those from Vietnam to study successful management and production models.-

Vietnam, EC step up support of SMEs

Minister of Planning and Investment Bui Quang Vinh and Vice President of the European Commission (EC) Antonio Tajani signed a Letter of Intent on fostering support to small- and medium-sized enterprises (SMEs) in Hanoi on November 13.

Under the document, the two sides will share their experience and policies to support the expansion of the SME sector as well as enhance activities to link domestic and EU firms together, with the view to promoting the establishment and development of their linkage clusters and value chains.

Both sides will also work together to raise their technical capacity to assist SMEs, especially in the sphere of high-tech applications, a strong point of the EU.

At an earlier working session, Antonio Tajani who is also Commissioner for Industry and Entrepreneurship, told Vinh that many EU firms want to do business in Vietnam, adding that 40 business representatives are accompanying him during this trip to seek business opportunities.

He said SMEs have contributed greatly to economic development in Europe, and are known for their technological innovations. Therefore, they can help with Vietnam’s economic development.

Minister Vinh noted SMEs, which account for over 90 percent of the total number of firms in Vietnam, play an important role in the national socio-economic development. He declared the Government always pays much attention to facilitating the development of the sector.

Two-way trade turnover between Vietnam and the EU reached more than 24.8 billion USD in the first nine months of this year, up 20.8 percent over the same period last year.

As of September 2013, the club had 1,800 valid investment projects in Vietnam valued at 32.8 billion USD including an implemented capital of 13.1 billion USD.

The EC Vice President is leading a business delegation on a visit to Vietnam on November 12 and 13 as part of EU’s efforts to deepen economic relations with the country.

On November 12, he witnessed the inaugural of the EU-Vietnam Business Network (EVBN) in Ho Chi Minh City, which aims to serve as a bridge connecting business communities of Europe, Vietnam and ASEAN region.-

Credit institutions urged to handle bad debts

The State Bank of Vietnam has issued a document on the implementation of the Prime Minister’s decision on dealing with credit institutions’ bad debts and the establishment of the Vietnam Asset Management Company.

Under the document, the central bank requires credit institutions to basically handle current bad debts by the end of 2015 and improve credit quality, contributing to successfully implementing the project on restructuring the credit institution system in the 2011-2015 period.

Credit institutions are also asked to assess bad-debt situation and credit quality in 2011, 2012 and the first half of this year alongside rechecking bank loans and their potential risks, and evaluating loan borrowers’ financial capacity.

The central bank also urged credit institutions to propose solutions for settling bad debts and improving credit quality.

Exports to Malaysia up in first nine months

Vietnam earned nearly 3.76 billion USD from its export to Malaysia in the first nine months of this year, up 16.4 percent from the same period last year, according to the trade office at the Vietnamese Embassy in Malaysia.

Computers and electronic products and components topped the list of key exports to Malaysia , fetching 882 million USD, followed by crude oil (785.3 million USD), telephone and spare parts (501.5 million USD), rubber (367.1 million USD) and steel (147.3 million USD).

In the same period, Vietnam spent 3.01 billion USD purchasing commodities from Malaysia, a year-on-year surge of 23.8 percent, bringing two-way trade turnover between the two nations in the reviewed period to 6.77 billion USD.

The main goods imported from Malaysia include computers (639.3 million USD), petroleum products (363 million USD), animal and vegetable oil (324 million USD), chemicals and chemical products (205 million USD), crude oil (202.6 million USD) and plastic materials (201 million USD).

As of October 20 this year, Malaysia had 477 valid investment projects in Vietnam valued at 10.32 billion USD in total, ranking 8 th among 100 countries and territories investing in the nation.

Meanwhile, Vietnamese investors are running nine projects in Malaysia with a total capital of more than 800 million USD.

Quang Tri lures nearly-200-mln-USD ODA projects

The central province of Quang Tri has lured 21 ODA-funded projects which have been implemented on the East-West Economic Corridor during 2007-2013 period.

The projects, worth nearly 200 million USD, focused on urban development, water supply and wastewater treatment.

Additionally, the official development assistance (ODA) funding was also poured into an infrastructure system at the Lao Bao Special Economic and Commercial Zone, upgrading roads and setting up a tourist information centre.

The East-West Economic Corridor is an economic development programme aiming at promoting development and integration of four Southeast Asian countries, namely Myanmar, Thailand, Laos and Vietnam. The economic corridor is created based on a road of 1,450 km linking the four countries. In Vietnam, the corridor crosses Quang Tri, Thua Thien-Hue province and Da Nang city.-

Italian economist extols Vietnam market

A senior Italian economist has called on more domestic firms to invest in Vietnam, which in his view is a market of huge potential and a springboard into other Southeast Asian (SEA) economies.

Vice President of the European Chamber of Commerce in Vietnam Tommaso Andreatta made the call in a recent interview with Italy ’s largest economic daily Sun 24 hours.

With rich working experience with Vietnamese businesses and an insight into the SEA, Andreatta stressed that it is time Italian firms become aware of Vietnam’s potential and the opportunities awaiting them ahead, especially with ASEAN due to become a common economic bloc by 2015.

According to him, Vietnam is one of the key gateways for Italian enterprises to enter the greater production system in the SEA and the Association of Southeast Asian Nations with its 610 million people.

He hailed the country as one of the fastest-growing economies in Southeast Asia with a skilled workforce and a huge clientele base.

The Italian shoe sector has moved their production facilities away from China to Vietnam while heavy industry groups like Piaggio and Danieli have owned plants in Vietnam for quite a long time, considering it a hub of production and distribution to neighbouring countries.

Despite last year’s trade value reaching some 2.8 billion USD, the two- way trade has yet to match potential. Italy now ranks 29th out of the 98 countries and territories with the biggest investment in Vietnam.-

Microsoft fosters ties with FPT

Microsoft today officially strengthens its cooperative relationship with Vietnam’s telecom giant FPT to the next level by entering an EA (Enterprise Agreement) contract signing.

Attending the signing ceremony in Hanoi were Microsoft Vietnam’s general director Vu Minh Tri; Microsoft Vietnam, EPG director Aung Maung; FPT Corporation’s CEO Bui Quang Ngoc and representatives from partners as well as local media agencies.

Under this EA, FPT will deploy Microsoft solutions inclusive of Windows Server, SQL and System Center, Microsoft Office and a lot of Microsoft productivity products.

As part of the partnership, a Microsoft licensing agreement will provide FPT with a significant Microsoft software product licenses as well as the great support via offering suitable commercial terms to help FPT to license genuine Microsoft software through multi-year agreements.

"Microsoft is thrilled to partner with typical enterprises like FPT to accelerate Vietnam’s ICT industry growth to the next level through capacity building and intellectual property protection,” said Microsoft Vietnam’s general director Vu Minh Tri.

This licensing agreement is a strong demonstration of FPT commitment to protecting intellectual property rights.

Microsoft solution and products will help FPT streamline operations, and introduce more efficient services to better support the demands of a growing and modern enterprise.

Microsoft products, which provide value-added benefits of technical support and upgrades, will be supplied by FPT Information System.

“Vietnam now is one of the fastest growing economies in Asia. Creating a higher value-added economy is key to future growth, and it requires a strong focus on creating a productive environment via IT, where skills are valued and opportunity abounds – this is the goal of our partnership today,” said FPT’s CEO Bui Quang Ngoc.

“This agreement demonstrates the willingness and determination of FPT’s management board to bring its IT system to the world level with the most advanced technologies that Microsoft can provide and shows high awareness and serious commitment of IPR laws compliance of the company.”

Microsoft latest advanced technology solutions shall help enterprises protect their systems better, save cost and time, improve service quality, professionalism, stability and higher security.

According to the Security Intelligence Report Volume 15- which examines the security risk that consumers and businesses face when using unsupported operating systems and software- the modern Microsoft software always includes advanced security technologies that are specifically designed to make it harder, more complex, more expensive, and, therefore less appealing for cybercriminals to exploit vulnerabilities.

The multi-year strategic partnership showcases strong FPT commitment to intellectual property protection which will help not only the enterprise but bring the best new practice for the country and bring Vietnam’s competitiveness to the new level.

The two parties are committed to working closely to deploy and apply IT successfully in FPT’s business activities.

Royal Foods crowns $25 million Nghe An investment

Leading Thai food firm, Royal Foods has officially started construction on two factories in the central province of Nghe An with the total investment of $25 million.

The two facilities, canned fish plant Royal Foods Nghe An and Fresh Food Plant and Frozen Storage, are being built at the Nam Cam Industrial Park in the Dong Nam Economic Zone (EZ).

The Royal Foods Nghe An tinned fish plant will comprise two production lines capable of producing more than 100 tonnes of fish per day. This is the company’s second tinned fish plant in Vietnam.

Products from the new facility are to serve consumers in the central and northern provinces, according to the local authorities.

Meanwhile, Fresh Food Plant and Frozen Storage is designed to be capable of storing 20,000 tonnes of foodstuffs. It is to process and preserve frozen products as well as produce alcohol-free drinks and mineral water.

Once operational, the two new facilities will use input materials from Nghe An and neighbouring provinces such as Thanh Hoa, Ha Tinh and Quang Binh, providing some 300 stable jobs for local residents.

“Nghe An expects Royal Foods will continue to invest in other projects in the province in the near future, promoting and acting as a bridge for other Thai companies to study and invest in Nghe An. We pledge to provide the most favourable conditions for Royal Foods while building the two factories,” said Huynh Thanh Dien, Vice Chairman of the Nghe An Provincial People’s Committee.

Royal Foods set up its first tinned fish plant in My Tho Industrial Park in the southern province of Tien Giang. The plant, about 75 kilometres south of Ho Chi Minh City, starting operations in 2007, produces more than 200 tonnes of tinned fish to serve the market in the south of Vietnam. It employs around 700 local workers.

Royal Foods’ canned fish products, including the Three Lady Cooks brand, are being distributed in Vietnam by Thai Corp International via more than 50,000 wholesale and retail outlets across the country.

Auto firms given stability promise

Foreign investment is expected to increase in Vietnam’s automobile industry in the coming years as the government explores measures to expand the local market.  

“The Vietnamese government realised that there were barriers to the development of the automobile industry and is trying to remove them through a long-term master plan. The purpose is to develop an automobile industry strong enough to compete with other countries in the region,” said Nguyen Thi Xuan Thuy, head of Strategy and Integration Policy Division under the Industrial Policy and Strategy Institute.

Thuy, who is also a member of the master plan’s drafting team, said the Vietnamese government wanted to attract more car foreign investors into the industry by reducing taxes and fees. Even though the master plan has not yet been approved, it offers a bright outlook for car-makers.

Kiyoshi Teshima, deputy director of Vina Star Motor – a subsidiary of Mitsubishi Motors in Vietnam, said he hoped the Vietnamese government would maintain stable policies for the car industry.

“Tax reductions are also indispensable to motivate customers to buy new cars,” said Teshima.

Over past years, the Vietnamese government has deliberately restricted the growth of the domestic car market because of chronically bad traffic infrastructure. The policy includes high taxes and fees imposed on cars, meaning cars in Vietnam are three times more expensive than other markets.

Vietnam’s car ownership currently averages at 20 cars per 1,000 people, according to the Ministry of Industry and Trade.

“The difference about the new master plan is that the government will encourage the growth of the car market,” said Thuy, adding that a ratio of 50 cars per 1,000 people in the next ten years was being targeted. “Although the market is still small now, there will be huge opportunities for car-makers once the new master plan is approved.”

Vietnam’s car industry began in the early 1990s when foreign car-makers like Toyota and Ford started building factories in the country.

Statistics from the Industrial Policy and Strategy Institute showed that there were around 300 domestic and foreign companies operating in the car industry in Vietnam, with Toyota Vietnam as the biggest player, followed by local firm Truong Hai. However, all of them operate on a small scale and boast a localisation rate for components of just 10 per cent.

Jesus Metelo N. Arias Jr, chairman of Vietnam Automobile Manufacturers’ Association, in an interview last month with VIR said that the lack of clear and stable policies had hindered the development of the car industry in Vietnam.

Arias, also managing director of Ford Vietnam, stressed foreign car-makers and suppliers would continue to invest in Vietnam but only if the government maintained a stable policy and reduced business costs.

Higher tariff to spark waste energy power

High feed-in-tariff has been proposed to generate interest in waste-to-power investment

The Ministry of Industry and Trade (MoIT) has proposed instigating a supporting mechanism for a solid waste-generated power plant, which will pay the way for private investors to build waste-to-power projects in Vietnam.

The proposal is a set feed-in-tariff of 10.05 UScents per kilowatt hour for renewable power generated from solid waste-to-power plants. This level is higher than the tariff of 7.8 US cents set for wind power plants and the feed-in-tariff proposed for biogas plants generated from solid waste which stands at just 7.28 US cents.

If the proposal is approved by the Vietnamese government, it will be the first time Vietnam has introduced a feed-in-tariff for waste-to-power projects.

“This mechanism will be an important support for renewable power projects generated from solid waste. It would help attract investors in this type of renewable energy,” said Nguyen Duc Cuong, head of the MoIT’s Institute of Energy.

During the past years, several private investors have proposed building renewable energy projects generated from solid waste in the country, but most of them have not been realised due to the lack of supporting mechanisms which would make the investment safer. Those include Australia-based Trisun International Development’s $400 million project and Vietnam Waste Solutions’ $400 million project in Ho Chi Minh City. The joint venture of Japan’s Hitachi Zonen and the Hanoi Urban Environment Company is the only one to have begun construction.

Cuong said the supporting mechanism was expected to take effect in 2014.

Besides favourable feed-in-tariffs, the MoIT also proposed a number of financial and land incentives for waste-to-power investors that are presently applied for wind power projects. Proposals include exempting developers from import duty for goods required for building the projects, and fixed contracts with Electricity of Vietnam agreeing to buy power from the projects for the first six months of commercial operation.

Foreign firms put foodstuffs on the menu

Foreign firms have shown big appetite for investing in Vietnam’s husbandry and foodstuff sector.

Le Van Tu, vice director of investment consultants Japan-Vietnam Commercial Investment, told VIR that the company was helping Japan’s Ogawa to prepare a pre-feasibility study for a project to raise cows and process beef in Hanoi’s Ba Vi district.

“This project is expected to become operational by late 2014, providing beef for the Vietnamese market,” Tu said.

Tu added that another Vietnamese investment consultancy firm was also providing consultancy for another Japanese firm, Sanei to implement a similar project, also in Ba Vi, which would begin operating early next year.

“According to Japanese investors, Vietnam has big potential for beef production. While Vietnam has to import large volumes of beef annually at high prices, the Japanese projects here will provide beef at cheaper prices,” Tu said. “Vietnamese workers will be sent to Japan for training before they can officially work at the factories.”

According to Vietnam’s Institute of Policy and Strategy for Agricultural and Rural Development, the local husbandry and foodstuff sector has become a magnet to foreign investors, especially given the financial woes. Foreign investors are investing into the sectors via mergers and acquisitions (M&A) or direct investment.

“We think agriculture is still one of the sectors in Vietnam that has lots of potential. We have seen more interest in this sector, but overall, the interest and actual investment via M&As or direct investment still seem to be short of the market’s potential,” Nguyen Thuy Hang, special counsel of international law firm Baker & McKenzie, told VIR.

Baker & McKenzie has advised Minh Phu - Hau Giang Seafood Processing (MPHG) on a VND400 billion ($19 million) acquisition by Japanese company Mitsui.

The deal involved the purchase of more than 30 per cent of MPHG’s shares by Mitsui through a private placement, which also led to the conversion of the company’s corporate form. MPHG is Minh Phu Corporation’s (MPC) major processing subsidiary.

MPC’s exports make up approximately 15 per cent of Vietnam’s total seafood export volume, and it is the market leader in the sector.

“We have seen that Vietnamese companies not only need foreign capital, but more importantly, they need strategic foreign investors who can partner with the business for growth. They need expertise and access to international markets, and companies like Mitsui can provide this,” Hang said.

Nguyen Hoang Hung, chairman of the Japan-Vietnam IP Management Company, which engages in industrial park development, said that about 20 Japanese husbandry and foodstuff companies were eager to invest in the Mekong Delta, due to the low price of input materials.

Hanoi’s authorities in September also allowed Japanese-Vietnamese joint venture Foodstuff Fuji-Vietnam to build a modern beef-processing facility in the city. This project is now underway.

Saigon Securities Incorporation’s (SSI) SSI Asset Management Company and Israel’s LR Group, which provides infrastructure consulting services, have also inked a memorandum of understanding on jointly raising capital to establish an eight-year span agricultural fund.

It is expected that about $50 million will be raised for the fund, which will invest into agricultural projects and companies, including those in the husbandry and foodstuff sector.

“Vietnam’s entrance to the Trans-Pacific Partnership Agreement, if possible, will foster the development of the agricultural sector with more tariff reductions. We expect to see more developments in term of interests and investment in the sector in the future,” Hang said.

According to the Ministry of Agriculture and Rural Development, the total foreign direct investment into Vietnam’s husbandry sector currently sits at $428.2 million, via 152 projects.

PPP framework gets tidy-up

The Ministry of Planning and Investment has proposed that the Vietnamese government combine two documents guiding a wide range of investment models in the infrastructure sector in order to provide a more robust legal framework.

The documents include Decision 71/2010/QD-TTg guiding the implementation of pilot public-private partnership (PPP) projects, and Decree 108/2006/ND-CP guiding the implementation of infrastructure projects under build-operate-transfer (BOT), build-transfer-operate (BTO) and build-transfer (BT) contracts.

The Ministry of Planning and Investment (MPI) admitted the existence of two legal documents had confused investors.

“Given the shortcomings in these documents, they need compiling, not only to remove the inconsistencies but to also ensure that a more comprehensive and effective policy for PPP model is put into place,” an MPI report claimed.

The ministry added the revision was also necessary due to the ADB’s requirement for state financial support that would be used to prepare PPP projects in Vietnam.

According to the MPI, although Decree 108 set an important milestone to promote private investment in the infrastructure sector, especially regarding roads and power projects, it still contains unclear regulations on the selection process for investors and how money would be raised to fund such projects.

Meanwhile, Decision 71 which was issued in 2010 failed to attract private investors to PPP infrastructure projects because it did not clearly regulate the role of the state in guaranteeing the financial risks alongside the private investors.

In the new draft decree based on the combination of Decision 71 and Decree 108, the MPI provides a new definition of PPP projects, in which a PPP project is an investment model implemented through a contract between a state authority and private investors to invest in infrastructure or public projects.

Apart from contract forms of BOT, BTO and BT, PPP will include forms of build-own-operate, design-build-finance-maintain-operate-transfer, build-finance-operate-maintain, and operate-maintain models.

“The new definition of PPP indicates this is a comprehensive policy, which will hopefully encourage private investors into infrastructure sector," the MPI stated in the document.

To make PPP models more attractive to private investors, the MPI also proposed that the government increase the state's cap on financial contributions to PPP projects to 50 per cent of the total investment, instead of a previous 30 per cent regulated in Decision 71.

However, the disbursement of state contributions could only be implemented after half of the total investment cost of the project was disbursed, according to the MPI.

“This regulation aims to ensure private investors behave responsibly, and it reflects that the state contribution is just aimed at enhancing the project’s feasibility,” the MPI explains.

The MPI estimates that from now until 2020, Vietnam will need around $170 billion to develop its infrastructure, including transport systems, bridges, power plants, water supply networks and waste treatment plants and ports. Meanwhile, traditional capital sources such as the state budget, government bonds and official development assistance from international donors would only satisfy half the demand. This means that more than 50 per cent of investment must be raised from domestic and foreign investors. The Vietnamese government hopes to attract more private investments via PPP projects.

Nghe An drafts new agricultural development plan

To take advantage of its potential, the central province of Nghe An is drawing up plans to restructure the agriculture sector, preparing the ground for investment opportunities.

As part of the project, Nghe An will revise policies that will help boost agricultural production by connecting agricultural businesses and stimulate investment in the field.

The province will also aim to provide simplified mechanisms to raise capital for agricultural and rural development, as well as strengthen state management to raise the efficiency of public investment projects in the agricultural and rural development sector. The plan will prioritise four key production areas for development, including cultivation, livestock, aquaculture and forestry.

Nghe An plans to develop large-scale production, by establishing complete value chains that will localise production of high quality finished products.

The province will maintain the area presently used for corn and rice cultivation, while hoping to stabilise food output at more than one million tonnes. Setting up specialised production zones cultivating tea (12,000ha), rubber trees (22,000ha), sugar-canes (25,000 ha), peanuts (20,000ha), cassava (4,000ha) and orange trees (2,000ha), will add further value.

Nghe An’s livestock production is due for a complete overhaul, with small scale breeding replaced with industrial scale crops, relocate livestock farming from flat to more mountainous areas.

Meanwhile, the province hopes to restructure the aquaculture sector towards developing intensive aquaculture zones, encouraging industrial-scale breeding, applying high technology, attaching special importance to raising white-leg shrimps, molluscs and aquaculture in large lakes.

In addition, the province will develop forest coverage with the aim of enhancing economic value in line with environmental protection, promoting bio-diversity and coping with climate change, contributing to poverty reduction.

Nghe An covers 16,492 square kilometres, is the largest province in Vietnam. Its population of 2.95 million people, feeds a workforce of more than 1.7 million people, 62.4 per cent of whom work in agriculture.

Over the years, despite natural calamities, epidemics, climate change and the economic downturn, Nghe An has continued to excel in the field of agriculture. The province’s agricultural output expanded 4.5-5 per cent on average during 2000-2013.

This year, the agricultural sector is estimated to account for 83.09 per cent, forestry 7.63 per cent and fisheries 9.28 per cent of Nghe An’s structure. The province estimates that it can produce nearly 1.2 million tonnes of food.

Indochina Land invests in EHome project

Indochina Land, the real estate division of Indochina Capital, and Nam Long Investment Corporation on Tuesday announced cooperation in the EHome 3 Saigon West project located in HCMC’s Binh Tan District.

EHome 3 consisting of around 2,000 apartments requires an investment of some VND1.5 trillion, with 65% contributed by Nam Long and the rest by Indochina Land.

Talking about the investment in Nam Long, CEO of Indochina Land Peter Ryder said that his firm wanted to seek investment opportunities in the affordable housing segment besides the high-end segment.

According to Ryder, Nam Long has a long-term vision in the affordable housing segment with a plan of developing 14,000 EHome apartments in the next five years. EHome is a housing model meeting the demand of a large number of people, which is one of the reasons behind Indochina Land’s decision to cooperate with Nam Long.

Nguyen Xuan Quang, chairman of Nam Long, said that cooperation with Indochina Land ensures new development steps of the project and help Nam Long have more financial resources to develop property projects.

There have been around 630 among 880 apartments of the EHome 3 project bought since they were launched in August 2012, indicating the strong demand for such budget homes. Apartments are priced at some VND700 million per unit.

Nam Long has recently launched the sale of apartments of the EHome 4 Saigon North project located in Binh Duong Province, with some 170 apartments offered for sale at around VND450 million per unit.

Nam Long has signed a strategic cooperation deal with Vietcombank to help homebuyers of EHome 4 apartments to get access to the VND30-trillion home loan package.

According to Nam Long, if a customer buys an apartment at VND450 million and enjoys an interest rate of 6% in ten years, he or she will pay only a maximum of VND4.8 million each month in both principal and interest sums.

With the EHome 3 project, there have been some 40 customers accessing the VND30-trillion package.

Nam Long has also coordinated with VPBank to offer a financial package with a stable lending rate of 6-8% in the first two years to customers.

Piaggio Vietnam unveils new Vespa scooters

Piaggio Vietnam on Tuesday introduced two new scooters - Vespa Primavera and Vespa GTS Supper 125cc 3V - for women and men respectively.

Vespa Primavera which is the same size as Vespa LX is priced at VND68.8 million. Meanwhile, Vespa GTS is sold at VND79.9 million.

The two new models are equipped with a three-valve engine which increases engine efficiency compared to the two-valve engine. The fuel consumption is one liter for 64 kilometers at a speed of 50 kilometers an hour. Piaggio Vietnam offers a warranty of three years or 30,000 kilometers on the new models.

IIB lends 50 mil. euros to BIDV

International Investment Bank (IIB) and Bank for Investment and Development of Vietnam (BIDV) on Tuesday signed an agreement in principle on a medium and long-term loan worth 50 million euros.

The signing ceremony was witnessed by State President Truong Tan Sang and his Russian counterpart Vladimir Putin.

The deal comes after a memorandum of understanding on comprehensive cooperation was signed by both sides early this year, says a statement of BIDV.

The two banks will continue negotiations and complete necessary procedures for the loan in the coming time.

The two banks will also cooperate in information exchange, training, survey, lending and transaction on financial and capital markets.

Vietnam offers big potential for European companies

Antonio Tajani, Vice President of the European Commission (EC) has underscored that Vietnam promises big potential for European companies and more businesses from the continent are keen to explore opportunities in this market.

Speaking at the opening function for the EU-Vietnam Business Network in HCMC on Tuesday morning, Tajani said more European companies were seeking to invest and strengthen cooperation with their counterparts in Vietnam.

Clear evidence is that nearly 50 representatives from EU industry associations and companies, particularly those operating in such areas as tourism, agri-business and manufacturing, are accompanying Tajani in his visit to Vietnam for a “Mission for growth” on Tuesday in HCMC and today in Hanoi.

After the opening of the EU-Vietnam Business Network in HCMC, two letters of intent with the Government of Vietnam on small- and medium-sized enterprise (SME) policy and on sustainable tourism will be signed in Hanoi today.

Tajani elaborated at a press conference after the function that as only 13% of European SMEs had invested or done business outside the continent, it was important to increase investment and operation of European SMEs overseas. Therefore, building strong links between European SMEs and their counterparts in Vietnam in key sectors was part of this goal.

The EC vice president emphasized that the companies visiting Vietnam this time were not only SMES but also big companies, and they wanted to invest in Vietnam and other countries in Asia.

“The Mission for Growth paves the way for joint ventures and for European investments here and also for Asian investments in our countries in Europe,” said Tajani, who is also European Commissioner for Enterprise and Industry.  

“Vietnam is one of the most important countries… as its economy is growing and there are opportunities for our companies to invest,” Tajani said, adding trade with Vietnam was also important.

The EC vice president said tourism was one of the important industries of EU and this bloc wanted to increase the number of travelers from China, Vietnam, Japan, Korea and elsewhere because there were more rich people and those of the middle class. To attract more tourists, more flexible rules for visa will be proposed for tourists coming from abroad, including those from Vietnam.

Speaking at the opening function, HCMC Vice Chairwoman Nguyen Thi Hong said in support of Tajani that trade between Vietnam and the EU had expanded strongly over the past two decades.

According to Vo Tan Thanh, director of the Vietnam Chamber of Commerce and Industry (VCCI) in HCMC, two-way trade between Vietnam and the EU increased by 15-20% every year, exceeding US$29 billion last year. Vietnam’s major export earners included garments and textiles, footwear, coffee, furniture, seafood, cellphones and accessories.

Thanh told the meeting between the EU and Vietnamese companies in the afternoon that EU companies have registered more than US$18 billion for over 1,430 projects still valid in Vietnam. Vietnamese companies have invested in some 33 projects in the EU with combined investment pledges of US$107 million.

As scheduled, Tajani will have meetings with Government and ministry leaders in Hanoi today before he and his entourage leave for Myanmar and Thailand.