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BUSINESS IN BRIEF 15/12

Vietnam’s trade promotion in three EU nations; Vietnam, US amend air transport agreement; Viettel gets Cameroon telecom contract; DHL opens new depot in Da Nang; Avon to trim 1,500 jobs, exit Vietnam; Over 62,7000 businesses set up in 11 months
Vietnam’s trade promotion in three EU nations

Various activities have been held in Belgium, Luxembourg and the Netherlands from December 11-14 as part of the 2012 National Trade Promotion Programme.    

This was announced by businesses from the Vietnam Trade Promotion Agency (VIETTRADE) and businesses from Wallonie region in Belgium’s Namur province at a seminar on December 12.

At the seminar, Denis Mathen, Mayor of Namur province emphasised the need to establish a “Welcome Office” project for ASEAN in Namur province which he believes will play an important role in boosting Vietnam-Belgium relations in particular as well as Vietnam-ASEAN relations in general.

He said the project will create favourable conditions for Vietnamese companies to penetrate the Belgian and EU markets, adding that he will lead a delegation from Namur province to visit Vietnam in March next year.

Representatives from the Wallonia Foreign Trade and Investment Agency (AWEX) also briefed Vietnamese businesses on the potential of Wallonie and other regions for cooperation in bio-technology, farm produce, health, construction, and hi-tech industry.

Representatives from VIETRADE spoke of Vietnam’s need for more investment to promote economic growth.

Addressing the seminar, Vietnamese ambassador to Belgium, Pham Sanh Chau described Namur as one of Belgium’s provinces which have established special relations with Vietnam. He considered the seminar as a prelude to the upcoming visit to Belgium by General Party Secretary Nguyen Phu Trong in January 2013.

The Vietnam trade office in Brussels said it will co-ordinate with local authorities to organise another similar seminar in the near future.

Vietnam, US amend air transport agreement

Minister of Transport Dinh La Thang and the United States Ambassador to Vietnam David Shear have signed an agreement on the amendments to the Vietnam-US Bilateral Air Transport Agreement.

The agreement was officially signed in 2003. It was amended in 2010, under which the two sides agreed that the 2003 version would remain in effect until March 31, 2012.

The new amendment extends the validity of the 2003 agreement indefinitely. It will come into effect after both sides conclude the exchange of diplomatic notes.

Once completed, the amended agreement will create a legal basis to open up opportunities to strengthen civil aviation cooperation between the two countries.

It is particularly relevant to the national flag carrier, Vietnam Airlines, which is preparing to launch a direct route that will link Vietnam and the US.

 Tighter laws on competition needed

More detailed regulations could help Vietnam control anti-competitive practices, claims a report compiled by the Vietnam Competition Authority (VCA).

The report, which was released on December 12, assessed the competitiveness of the ten major sectors in Vietnam's economy and presented an overview of the market, a list of the barriers to joining or promoting the market, and the competitive status of five manufacturing sectors and five service sectors.

These sectors include medicine distribution, life insurance, advertising and vegetable oil production.

According to the report, the four manufacturing sectors (except paper production) have a high concentration ratio, which may lead companies in these sectors to abuse their dominant positions and promote anti-competitive strategies, said Tran Phuong Lan, head of VCA's Competition Supervision and Management Department.

However, Lan said, not many anti-competitive practices have been uncovered in the five surveyed manufacturing sectors.

In fact, these sectors face tougher competition, Lan said, citing high inventories in paper and building glass production and competition between domestic products and imported ones.

Tran Hung, General Secretary of the Vietnam Advertising Association, said that more legal documents should be written explaining the Law on Advertising and related decrees, which he said were too general and led to confusion for management bodies and enterprises.

Hung said that his association was in the process of drafting a professional ethics code that would help enterprises compete properly.

VCA Director Bach Van Mung said that the report would hopefully raise awareness about competition-related policies and regulations and build a healthy competitive business environment.

The report is part of a project to improve the VCA's capacity to boost market economy mechanisms in Vietnam, which is supported by AusAID and the UK Department for International Development through the Beyond WTO Programme, which provides technical support for newly-admitted WTO nations.

Viettel gets Cameroon telecom contract

Viettel Cameroon S.A.R.L, a joint venture between Viettel Global and Bestinver Cameroon S.A.R.L, has won a mobile phone service contract in Cameroon.

The Cameroon government announced bidding results on December 10.

Other renowned companies such as Bharti Airtel, Monaco Telecom, and Korea Telecom also joined the bidding process.

Under the contract, mobile phone services will cover 81 percent of the country’s territories, providing both 2G and 3G services.

Cameroon is one of few African nations that have two mobile phone service providers, and have yet to develop 3G infrastructure.

Viettel, the military - run telecom group, has expanded its operations abroad, including in Cambodia, Laos, Bangladesh, Mozambique, and Cameroon.  

It aims to provide services to 500 million customers and become one of the top ten telecom investors overseas by 2015.

Domestic retail businesses gearing up

At a seminar in Hanoi on December 12, economists emphasised the need to develop a strategy to improve their competitive capacity and discuss development in the context of international integration.

The seminar was co-organised by the Vietnam Retailers Association and the post-WTO support programme.

According to the association, due to the impact of economic downturn, Vietnam’s retail businesses are managing to cope with the shortage of cash, high interest rates on bank loans and fierce competition from major domestic and foreign-invested enterprises.

Other participants insisted that foreign businesses getting involved in the retail market in the next two or three years. Relevant agencies should provide strong support for the merger of small retailer businesses to hold sway.

The Ministry of Industry and Trade said it has a plan afoot to support their merger to corner the market.

Seafood exports to RoK on rise

Seafood exports to the Republic of Korea are expected to grow steadily in the near future, said Trinh Nam Phuong from the Vietnam Association of Seafood Exporters and Producers (VASEP) at a seminar in HCM City on December 12.   

She said that the RoK is currently the fourth largest importer of Vietnamese seafood after the US, EU and Japan. It is only second to Japan as the largest importer of Vietnamese cuttlefish and octopus.

Seafood exports to the RoK market reached US$421.49 million in the first 10 months of the year, up eight percent compared to the same period last year, with shrimp, cuttlefish, octopus, and bivalve mollusks in bulk orders, Phuong said.

In recent years, the RoK has reduced its exploitation of tuna in the sea and increased its import of fish especially tuna from 27 countries, including China, Vietnam, Japan, the US and Thailand.

"The RoK’s demand for tuna is offering a great opportunity for Vietnamese firms," she said.
Vietnam's shrimp exports to the RoK are expected to grow steadily.

Under the ASEAN – RoK Free Trade Agreement (AKFTA) exporters should improve the quality of seafood products in the post-harvest processing period, she added.

Ho Quang Trung, head of the Ministry of Industry and Trade's International Cooporation Department, said preferential treatments to export goods under the ASEAN-Korea Free Trade Agreement.

Enhancing SMEs’ IT capacity

The project “Developing and Improving small- and medium-sized enterprises’ (SMEs) Information Technology (IT) and Communication Skills” was jointly launched by the Vietnam Chamber of Commerce and Industry (VCCI) and the ASEAN Foundation on December 12 in Hanoi.
   
The project sponsored by Microsoft Corporation, is expected to run until the end of 2014 to improve the IT capacity of SMEs in Vietnam, Indonesia, Thailand and the Philippines.

In Vietnam, it aims to increase young entrepreneurs’ awareness of and ability in IT and communications - especially in business and e-commerce.

Vietnam Microsoft pledged to improve the IT capacity of SMEs by equipping them with modern and suitable technologies. The project will target young people that are in the process of setting up their own business in traditional trade villages, said Director-General of Microsoft Corporation in Vietnam Vu Minh Tri.

VCCI Secretary-General Pham Thi Thu Hang stressed that the project will significantly develop and raise Vietnam SMEs’ IT skills as well as promoting this sector’s competitiveness by expanding e-commerce.

The launching also witnessed the signing of a cooperation agreement among participating agencies to deploy the project.

 Vietnam Airlines opens new routes to Taiwan

The national flag carrier Vietnam Airlines has announced it will launch 11 new routes from Can Tho City and other Mekong Delta provinces to Taiwan to mark the upcoming New Year.
   
A Vietnam Airlines representative said this is the fourth year the company has opened new routes to fly directly between Vietnam and Taiwan, aiming to create better opportunities for expatriate Vietnamese to return to their home country.

The first flight is expected to depart from Taipei at 11.25 on February 4 and arrive in Can Tho International Airport at 13.55.

VN, Thailand talk transport development

Thailand and Viet Nam transport officials are meeting for two days to discuss capacity enhancement for Vietnamese transport and logistics companies to prepare for the creation of the ASEAN Economic Community (AEC).

The AEC, which targets integration of the economies of 10 member nations in the Association of South East Asian Nations, will become official in 2015. Each nation in the association must show that it has sound preparation in various sectors, including transport and logistics, to boost trade and the exchange of goods.

The conference, which is being held December 13 and 14, is discussing the legal framework for trans-border transport, traffic infrastructure development for AEC, and standards for roadway logistics.

Speaking at the conference, Nguyen Ngoc Thuyen, deputy director of International Cooperation Department under the Transport Ministry, said Thailand had been very active in helping with the preparation for AEC and had assisted Viet Nam in integrating into the community.

Also in attendance at the meeting are officials from the Department of Land Transport of Thailand. Viet Nam and Thailand have close roadway cooperation in programmes related to the East-West Economic Corridor, which runs through Myanmar, Thailand, Laos and Viet Nam.

Retailers urged to forge alliances

The nation's retailers should join hands to compete more effectively against major foreign rivals as the market is fully opened over the next few years, said experts at a seminar held here on Wednesday.

Pursuant to the country's commitments to the World Trade Organisation, foreign investors were going to be able to establish wholly foreign-invested enterprises in the retail industry within the next three years, placing increasing pressure on domestic retailers, said Viet Nam Retailers Association chairwoman Dinh Thi My Loan.

The capacity of Vietnamese retailers to compete remained limited due to a lack of capital, long-term business strategies for effective distribution, as well as adequate corporate governance, Loan said.

To open a convenience store chain, for instance, retailers would have to accept losses of roughly VND400-500 billion (US$19-23.8 million) in the first five years of operation. Joining hands with foreign partners would therefore be essential for local retailers to develop, she said, urging the Government to issue policies to ease the establishment of joint ventures with foreign partners.

The country's retail market remained limited with small scale and low consumption, Loan said. Much commerce took place in traditional outdoor markets, with modern supermarkets and shopping centres currently accounting for only about 20 per cent of total retail sales value nationwide.

To support retailers, the Ministry of Industry and Trade has said that it would implement a series of measures as well as issue of a national plan for development of the retail industry. Besides giving priority to large-scale supermarkets, the plan would also support household retailers in training to help them make the transition to more modern retail systems.

Bianfishco targets $90 million in 2013

After nearly four months of restructuring, Binh An Seafood Joint Stock Company (Bianfishco) had stabilised production and targeted US$90 million in export turnover next year, according to a company report submitted to the People's Committee of Can Tho City.

Bianfishco has resumed production in three factories employing 1,000 workers, and processes 100 tonnes of tra fish per day. The company has also signed 40 contracts in the past two months to export fish to the US.

DHL opens new depot in Da Nang

Logistics firm DHL has strengthened its Viet Nam network by opening a new VND10 billion (US$500,000) depot in the central city of Da Nang which is capable of handling 250,000 shipments each year.

The depot, the company's ninth in the country, is fully compliant with both Global Standard Operations Procedure and Transported Asset Protection Association standards.

State Bank backs PGBank capital boost

The State Bank of Viet Nam (SBV) issued Decision No.2547/QD-NHNN on Monday to approve the revised charter of the Petrolimex Group Commercial Joint-Stock Bank (PG Bank).

Accordingly, the SBV Governor approved PGBank's revised charter to raise its charter capital to VND3,000 billion (US$143 million).-

Taxes hike petrol prices 30 per cent

Statistics from the Ministry of Finance showed that the retail price of 92-RON gasoline in Viet Nam was subject to four types of tax that made up 29.5 per cent of the total cost.

The rate is higher than Cambodia, but lower than Thailand, Laos and China.

According to the Ministry, the said retail prices currently stood at VND23,150 per litre.

BR-VT fetches US$800 million of exports from supporting industries

The export value of supporting industries in the southern province of Ba Ria-Vung Tau has reached nearly US$800 million this year, mainly owing to mechanical engineering products, footwear and leather items.

A recent report on the local supporting industries released by the provincial Department of Industry and Trade on Tuesday shows that there are 99 projects in these industry with total investment of some US$1.8 billion. Among these, there are 62 foreign-invested projects worth a combined US$1.53 billion and 37 local schemes costing over US$220 million.

Supporting-industry products in Ba Ria-Vung Tau are mainly mechanical products, electricity and electronics components, plastic items, and footwear and leather parts.

The department is currently reviewing and adjusting industrial parks to attract more investors, especially those involved in supporting industries in the years to come.

According to the Center for Supporting-Industries Enterprises Development under the Ministry of Industry and Trade, Ba Ria-Vung Tau is among the three localities besides Hai Phong City and Dong Nai Province entrusted by the Government to develop specialized industrial parks for developing supporting industries.

The ministry now is working with the Ministry of Finance on preferential policies to help the targeted localities provide stronger incentives to call for investment into such industrial parks.

VBCF continues non-refundable aid for small firms

Vietnam Business Challenge Fund (VBCF) under the British government on Wednesday announced non-refundable aid from US$100,000 to US$800,000 for small enterprises to help them realize creative business plans.

The fund organized a seminar in the city on Wednesday to call for businesses to submit production and business plans. VBCF is designed to help private companies develop business models that help low-income populations through job creation, income improvement and access to affordable goods and services.

The fund capitalized at seven million British pounds is managed by the SNV Netherlands Development Organization.

VBCF targets three sectors of agriculture, low-carbon growth, small-scale infrastructure and basic services. It will give funds depending on project scale, sustainability, commercial feasibility and potential of creating social impacts.

Enterprises qualifying for aid must have at least two years’ experience and own equities of 51% of the total capital of the project.

Applications will start from January and it will take around six months for VBCF to sign disbursement contracts. VBCF will also provide training on project management and consultancy for businesses.

Information about the program is available at www.vbcf.org.vn.

BIDV research team proposes national mortgage company

A national mortgage company, if established, would help settle the high volume of unsold property products, develop a housing market for low-income earners and solve the problem of medium and long-term capital for the real estate market. This is the suggestion of experts from the research center of Bank for Investment and Development of Vietnam (BIDV).

As per a report of the research team, the mortgage company can mobilize ODA capital and issue government-guaranteed bonds in a bid to buy home loans with terms of up to tens of years from financial institutions in the primary mortgage market.

Then, the company can issue securities based on home mortgage loans (securitize home mortgage loans) and thus play a role of a channel leading medium and long-term capital from the capital market to the mortgage market.

In addition, the company can provide the property market with long-term capital, develop a long-term housing finance market and become a tool for the Government to support those having difficulties in realizing their housing dream.

“The housing finance market in Vietnam is still limited in the primary mortgage market via operations of banks, while the secondary mortgage market is underdeveloped. It is because there has been no reputable and financially-capable mortgage company to act as an intermediary to regulate capital for home loans and play the role of a spearhead institution to stimulate the development of the housing finance market,” says the report.

The research team considers Cagamas Berhad, the National Mortgage Corporation of Malaysia, as the most successful secondary mortgage model among developing countries, adding that Vietnam can adopt this model.

According to its website, Cagamas Berhad was established in 1986 to promote the growth of the secondary mortgage market in Malaysia. The Cagamas model is well regarded by the World Bank as a successful secondary mortgage liquidity facility.

Cagamas issues debt securities to finance the purchase of home loans. It is currently the second biggest debt securities issuer after the government of Malaysia, holding 41% of the housing finance market share in that ASEAN nation.

To develop the secondary mortgage market, other nations have to set up special financial institutions for re-mortgage in order to improve the liquidity of the primary mortgage market. The national mortgage company will help resolve many problems of the property market, says the research team.

PwC helps manage risks on stock market

The State Securities Commission (SSC) and the Hanoi Stock Exchange on Wednesday clinched a cooperation deal with auditing and consulting group PricewaterhouseCoopers (PwC) to build up a risk management system on the local stock market.

The agreement aims to build an early warning system for local securities enterprises.

SSC chairman Vu Bang said that this system will help SSC supervise operations of securities firms, foresee possible risks to have timely solutions and avoid adverse impacts on the market.

Risk management should stay on the focus to help managing agencies respond to fluctuations on the financial and stock markets in Vietnam and overseas, Bang said at signing ceremony.

PwC will help the northern stock watchdog evaluate the current risk management status, systematize major risks and suggest solutions for problems.

PEB Steel inaugurates Vung Tau plants

PEB Steel Co. Ltd. on Wednesday announced synchronous operations of four pre-engineered buildings steel plants in Dong Xuyen Industrial Park in the coastal city of Vung Tau with a combined capacity of 60,000 tons a year.

Products of PEB Steel are heavy steel structures and prefabricated steel building frames among others. The four plants have helped create over 460 jobs for local workers.

Speaking with the Daily at the launch ceremony, Sami Kteily, general director of PEB Steel, said his firm is planning to construct the fifth factory in Hanoi next year with a designed capacity of some 10,000 tons annually.

Half of PEB Steel’s products made in Vietnam is exported to Asia, Africa and the Middle East, with the remainder for the local market, Sami said.

The Vietnamese market is the foundation for PEB Steel to expand steel structure factories in Asia, he said. Besides, the company also has a plant operational in India with an annual capacity of 50,000 tons and another in Bangladesh with a capacity of 10,000 tons annually.

Despite the current economic difficulties, PEB Steel has always achieved sale growth target over the years from 2010 to 2012. In 2012 alone, it has obtained about US$50 million in sales in Vietnam.

After 18 years of operation in Vietnam, PEB has developed a group of 100 engineers in HCMC, Hanoi and Danang. The firm’s prefabricated steel structures have satisfied many customers such as Obayashi, Teisei, Shimizu, Samsung, Posco and other multinational firms like Unilever, Doosan Heavy Industries and GE.

Avon to trim 1,500 jobs, exit Vietnam

Avon Products Inc., the world’s largest door-to-door cosmetics seller, will cut about 1,500 jobs globally and exit South Korea and Vietnam as part of plan to save $400 million by the end of 2015, according to Bloomberg.
 
The steps will result in pretax costs of about $80 million to $90 million, with $50 million to $60 million recorded in the fourth quarter, the New York-based company said on December 11 in a statement.

Chief Executive Officer Sheri McCoy, who took over in April, announced the cost-cutting goal last month and said she would lower the company’s dividend as it works to recover from three years of declining profit. The actions announced on December 11 will be completed by the end of next year and account for about 20 percent of Avon’s savings target.

“The new management team is making definitive changes to the company’s cost structure,” Connie Maneaty, an analyst at Bank of Montreal in New York, wrote in a note yesterday. She rates the shares outperform, the equivalent of a buy.

Avon rose 0.5 percent to $14.54 at 10:34 a.m. in New York. The shares fell 17 percent this year through December 11.

Truck, paper, glass see few new players

Most production, trading and distribution sectors in the local economy have been fully opened and highly competitive, but some manufacturing industries like truck, paper and glass hardly draw new players.

This is a result of the second report on competition in ten sectors of the economy that the Vietnam Competition Authority under the Ministry of Industry and Trade announced in Hanoi on Wednesday. The ten sectors selected for survey are drug distribution, life insurance, pay TV, shipping, advertising, truck, detergent, paper, vegetable oil and architectural glass.

The report evaluates market size, market entry and exit barriers, market structure and the current state of competition in the market. Thereby, it detects anti-competitive practices that already exist or will likely emerge in the market of each chosen sector.

Apart from drug distribution, which is a conditional business, requiring foreign players to import only and not distribute their products directly, the remaining nine areas face no legal and institutional barriers to competition.

Truck, paper, architectural glass, detergent and vegetable oil are the industries with considerable market sizes and potentials. The numbers of market participants, including manufactures and traders, in these five sectors are large and relatively stable, according to the Vietnam Competition Authority.

However, these sectors by their nature have high requirements for technology, financial capability and technical standards. This does not create a direct barrier to market entry, but it makes only large-scale financially capable enterprises able to join the market.

A current problem for truck, architectural glass and detergent manufacturers is that lower import tariffs on finished products and raw materials have reduced the competitiveness of locally-made products against imported goods of the same type. For example, import tax cuts under the ASEAN Trade in Goods Agreement (ATIGA) and the ASEAN Free Trade Area (AFTA) will lessen competitiveness of local producers.

In addition to natural barriers such as resources, technology and economic efficiency, difficult access to raw materials and distribution channels for new industry players is also considered a barrier.

Competition in the five aforesaid sectors is quite tough, proven by the volumes of unsold products in some industries like paper and glass.

As for detergent, the competitive pressure is also great. Therefore, even those with major market shares still have to launch long-term advertising campaigns.

Competition in vegetable oil and truck industries is also heating up with the number of commercial enterprises on the rise.

Therefore, the five sectors see very few new producers joining the market. The numbers of players in these sectors remain unchanged during the period of the report survey, from 2009 to 2012, or have even declined in the fields of paper and glass due to high inventories and difficulties to compete with imported goods.

In the five other sectors, namely drug distribution, shipping, life insurance, advertising and pay TV, the numbers of market participants are large and keep rising. However, the leading players are foreign enterprises.

For instance, the life insurance market is dominated by foreign players. Bao Viet is the only Vietnamese enterprise with a major market share.

Shipping and advertising face the same situation. In these two sectors, Vietnamese firms mainly play the role of subcontractors for foreign companies as their financial capability, human resources, management skills and experience have not met the requirements of customers.

Work starts on thermal power plant

Vietnam Electricity Group last Saturday started work on Duyen Hai 3 thermal power plant in the Mekong Delta province of Tra Vinh, which can generate around 7.8 billion kWh a year.

Duyen Hai 3 is one of the three power stations in the 4,400 MW Duyen Hai Power Center which is part of the national power development plan in the 2011-2020 period.

The total cost of the project is around VND28.4 trillion, with the engineering, procurement and construction (EPC) contract accounting for some VND22.3 trillion.

Duyen Hai 3 will need around 3.6 million tons of coal dust. Coal will be transported by sea from the northern province of Quang Ninh.

The plant’s first generator is scheduled for completion and operation after 46 months of construction.

Private firms post strong growth

Despite the dominant number of State-owned companies in the top 500 biggest firms announced by Vietnam Report on Monday, private enterprises have still continued to strengthen their presence in the list.

Vietnam Report in a press release noted some points that makers of the report had drawn from a survey of the country’s biggest entities this year.

The number of private firms entering in the top list has steadily marked up over the past six year. Only 103 private companies were selected for the VNR500 list in 2007 but the figure surged to up to 225 entities this year, rising over two times.

However, in spite of the declining number, State-run companies have still accounted for more than 63% of the total revenue of enterprises belonging to the 2012 VNR500.

The biggest firms of this year’s VNR500 are still dominated by State-owned economic groups.  But it is noted that Samsung Electronics Vietnam has for the first time entered the top-five group.

As for the ranking of top local private entities, the list sees the presence of high-profile private firms like Doji Gold & Gems Group, FPT Group or Asia Commercial Bank.

Despite the rising of private firms, several enterprises surveyed expressed their pessimism about the 2013 economic prospect, the research group said. A large number of companies deemed it impossible for the economy to recover next year.

As much as two thirds of companies thought that the economy could not be improved in 2013. Only 33% of respondents said the economy would recover in the second half of 2013 while a mere 1% believed the economy would get better in the next six months.

The confidence that the economy will change for the better in 2013 has fallen compared to August when up to 60% of companies surveyed said the economic improvement would be seen in 2013 or sooner.

Vietnam, RoK accelerate FTA negotiations

Vietnam and the Republic of Korea discussed ways to speed up negotiations of a free trade agreement (FTA) between the two countries at a workshop in Hanoi on December 12.

Both sides decided to kick-start their FTA negotiations in August 2012 in an effort to expand bilateral trade and investment relations.

The workshop provided domestic businesses with up-to-date information on the negotiation process after the first round conducted in the RoK in September.

Nguyen Cam Tu, Deputy Minister of Industry and Trade, told participants that Vietnam-RoK trade ties have seen a 36fold increase over the past 19 years, from just US$0.5 billion in 1992 to US$18 billion in 2011.

Last year, the RoK was Vietnam’s fourth largest trade partner, and eighth largest export market, he said.

Vietnam mainly imports machinery, equipment, and leather shoe and garment accessories, petrol, steel, plastics, chemicals, and vehicles. It exports minerals, raw materials, agro-forestry and fishery products, garments, and furniture.

Choi Kyong-lim, RoK Deputy Minister of Foreign Affairs and Trade, said the RoK-Vietnam relations have grown and flourished in all areas, and they have been upgraded to a new level of the strategic cooperation partnership.  The two countries have set a target of raising bilateral trade to US$20 billion by 2015 and US$30 in the years beyond.

Both Vietnam and the RoK have made use of the 2007 RoK-ASEAN FTA, raising their annual trade exchanges by 28.5 percent from merely 14.4 percent before the agreement took effect.

However, Vietnam’s trade growth and liberalisation remain low compared to other Asian countries, barring exchanges between the two countries. Accelerating bilateral FTA negotiations is considered an effective solution.  

Ha Chan-ho, RoK ambassador to Vietnam, said once the FTA is signed, it will offer numerous opportunities for the two countries’ business circles to expand trade and investment cooperation.

The RoK is Vietnam’s second largest foreign investor with a total capitalisation of US$20.4 billion, and many Korean businesses are planning to pour more investment into Vietnam, said the diplomat.

Koh Kyung Sok, a member of the RoK negotiation team, said when the FTA is signed, bilateral cooperation will expand to other areas such as energy, infrastructure, agro-aquaculture, and the official development assistance (ODA), besides traditional trade and investment.

November auto sales leap 20 percent

November vehicle sales figures are up 20 percent over the previous month at 9,570 units, including 4,048 cars and 5,522 trucks.

The figures were released by the Vietnam Automobile Manufacturers Association, which reported that locally assembled cars totaled 7,789 units, up 15 percent, while imported vehicles topped 1,780, up 46 percent.

However, sales over the last 11 months were down 28 percent against the same period last year.

The association forecasts 102,000 units will be sold in 2012.

Competition assessment report unveiled

The Competition Management Agency under the Ministry of Industry and Trade unveiled a competition assessment report on December 12 in Hanoi, focusing on ten key economic areas in 2012.

The ten areas, divided into either production or service groups, survey a range of industries such as pharmaceutical distribution, life insurance, pay TV, advertising, trucking, washing powder, paper, plant oil, construction glass, and marine transportation.

The production group includes industries such as car manufacturing, construction glass, washing powder, paper and plant oil which all have strong potential for revenue and will lead to investment in new technologies, technical standards, and financial capacity.

For the service group, four areas such as marine transportation, life insurance, advertisement and pay TV have been permitted to open their doors to foreign investment under Vietnam’s WTO commitments, with the majority of foreign-invested enterprises operating in Vietnam now involved in these industries.

Australia, Vietnam foster cooperation in accounting

During his current visit to Australia, Vietnamese Finance Minister Vuong Dinh Hue on December 11 worked with leaders of the Australian Society of CPA (Certified Practising Accountants), known as CPA Australia.    

The two sides reviewed the implementation of the memorandum of understanding (MoU) signed between the Vietnam Finance Ministry of CPA Australia early this year.

They discussed measures to strengthen links between the two countries’ accounting and auditing sectors.

Representatives from CPA Australia shared their experience in public auditing and accounting with Vietnamese officials. On this occasion, Minister Hue granted an interview to the “In the black” magazine of CPA Australia regarding financial-related issues.
CPA Australia is a global professional accountancy body with 139,000 members in over 116 countries.

Over 62,7000 businesses set up in 11 months

More than 62,700 new businesses were established in the first eleven months of this year, with a total capitalization of almost VND403,000 billion.
    
The figures were released at a business forum held by the Ministry of Planning and Investment (MPI) in Hanoi on December 11.

Most of them are small-and-medium-sized enterprises (SMEs), operating in real estate, stock exchange, transport, accommodation, and restaurant services.

Phan Thu Thu Hang, Secretary General of the Vietnam Chamber of Commerce and Industry (VCCI), said they are facing a shortage of capital but finding it difficult to access business support funds.

Dr. Cao Sy Kiem, Chairman of the SMEs Association, put this down to complicated procedures for businesses to get preferential loans when bank are facing a rising ratio of bad debts. Negotiations between banks and enterprises should be conducted to iron out snags for business operation.

Other participants expressed their concerns over slow progress in administrative reform and technology application.

They stressed the need to complete the legal framework, promote trade, expand the market, and increase the efficiency of loan use.

EU supports Vietnam’s global integration

The European Union has shown its continued support for Vietnam’s global economic integration with the launch of the European Trade Policy and Investment Support Project in Hanoi on December 11.

The project, worth US$19.5 million, will be implemented over five years, aiming to help the country integrate into the global, ASEAN and sub-regional trading systems and strengthen trade and investment relations between the EU and Vietnam.

The project is the continuation of the Multilateral Trade Policy Assistance Projects which started 1998 and supported Vietnam when the nation transitioned to a market economy and began to participate in the WTO.

Director of the Department of Asia and Pacific Market cum Project Director Bui Huy Son said the project is in line with Vietnam’s integration process, and should be viewed in the context of the recently signed EU-Vietnam Partnership and Cooperation Agreement and the recent negotiations of the Vietnam-EU free trade agreement.

The main purpose of the project is to support Vietnam in facilitating sustainable international trade and investment through improving the capacity of the Ministry of Industry and Trade and relevant agencies for policy making, policy consultation, negotiation and implementation of related commitments, particularly with the EU, said Claudio Dordi, head of the project’s consultant group.

The project will also help enterprises penetrate the EU market and attract more high-tech investment into Vietnam.

The EU is among the major export markets of Vietnam, with a population of more than 500 million and high demand for Vietnamese products such as garments and textiles, footwear, seafood and wood products.

During the past 11 months of this year, Vietnam’s exports to the EU reached US$18 billion, 21.3 percent higher than the same period last year.

Bilateral trade for the 11-month period hit US$26 billion, US$2 billion higher than all of 2011.

Agricultural and craft village fair opens in Hanoi

A trade fair opening in Hanoi on December 11 features 150 pavilions introducing a variety of agricultural and craft products to interested visitors.
    
The week-long event has attracted the participation of agricultural cooperatives and craft villages from Hanoi and its surrounding cities and provinces - Ha Nam, Lao Cai, Vinh Phuc, Bac Giang, Thai Nguyen, Ha Giang, and Haiphong.

The showcases include vegetables, fruits, agro-aqua-forestry produce, processed food, fresh food, plant varieties, and traditional handicraft products.

The fair is an excellent opportunity for local enterprises to promote trade, advertise and enhance the reputation of their trademarks in the eyes of domestic and foreign customers, and hopefully attract new investment to the agricultural sector.

A ceremony at the fair will present awards to the winners of a photo contest celebrating the beauty of Hanoi’s agricultural and rural areas. An agricultural production and consumption seminar is also scheduled.

Lower corporate taxes proposed

Corporate income tax rates will fall from 25 per cent to 23 per cent in 2014, under a draft revision to the Law on Corporate Income Taxation issued yesterday by the Ministry of Finance.

The draft would also ease controversial limits on tax-deductible expenses for advertising and promotion. Under current law, such expenses exceeding 10 per cent of all costs of the enterprise are not deductible. The proposed law would lift this limit to 15 per cent.

If passed, the revised law would put Viet Nam's corporate tax rates on a level closer to that of other countries in the region and help make the country more attractive to foreign investors, the ministry said.

"With the change, the country's corporate tax rates will be equal to those in Thailand and lower than those of China, Indonesia, Malaysia and the Philippines," the ministry said. However, it estimated that the State budget would lose roughly VND12 trillion (US$571 million) in the first year of applying the lower rates.

Under the proposed changes to the law, small- and medium-sized enterprises (SMEs) with earnings of less than VND20 billion and a workforce of fewer than 200 workers would enjoyed an even lower rate of 20 per cent.

SMEs account for nearly 88 per cent of all enterprises nationwide and contribute about 40 per cent of the country's total tax revenue, according to the Viet Nam Chamber of Commerce and Industry.

Preferential rates of 10-20 per cent are also proposed for firms in the fields of education, healthcare, culture, and environment, as well as agricultural co-operatives and credit unions.

Under the proposal, however, preferential rates would not apply to real estate or mining companies, companies deriving income overseas, or for companies providing services subjected to special consumption taxes.

To discourage debt defaults, the proposed revision to the law would include a provision that interest costs would not be deductibe if amounts owed by firms exceed four times equity. The rate for banks and credit institutions would be 10 times. However, these provisions would not take effect until 2016, giving business two additional years to anticipate the tax effects of the changes.

The Viet Nam Chamber of Commerce and Industry strongly supports the proposed changes to the corporate tax laws. Chamber chairman Vu Tien Loc said that the current tax rate of 25 per cent was higher than other countries in the region. Thailand recently cut its corporate income tax from 30 per cent to 23 per cent, while rates applied to SMEs in Japan, South Korea and Taiwan all hover at around 15-17 per cent.

"A tax rate of 20 per cent is reasonable," Loc said, making the case that the tax cut would offer a chance to many enterprises to increase their investments and create jobs. According to a recent survey conducted by the chamber, 30 per cent of SMEs had closed down, and the rest were in deep difficulties. It was estimated that 50,000 enterprises would go out of business this year.

Finance minister visits headquarter of CPA Australia

Minister of Finance Vuong Dinh Hue visited CPA Australia's head office in Melbourne as part of a four-day working visit to the country.

Rob Thomason, executive general manager for business development of CPA Australia, said that the visit would consolidate the relationships between the two nations' accounting bodies.

Both sides hope to work together to contribute to the on-going development of Viet Nam's accounting and auditing industry.

CPA Australia, previously known as the Australian Society of Certified Practising Accountants, is one of the largest global accounting bodies. It has had a Viet Nam presence since 2008, with two representative offices in Ha Noi and HCM City.

Conference helps boost nation's IT partnership with India

Indian and Vietnamese enterprises in electronics and information technology joined a conference on Monday to find ways to boost co-operation and find business partners.

The confab was held in Ha Noi by the Ministry of Information and Communications, the Viet Nam Chamber of Commerce and Industry and the Indian Embassy in Viet Nam.

The two nations have already implemented co-operative projects, including a human resources centre with an investment of US$2 million at the Ha Noi Department of Information and Communications.

In 2011-12, the total value of IT products and services Viet Nam imported from India reached US$47.78 million, according to statistics from the Indian Electronics and Computer Software Export Promotion Centre.

India plans to assist Viet Nam in establishing a super computer centre at the Ha Noi University of Technology.-

Source: VEF/VNA/VNS/VOV/SGT/SGGP/Dantri/VIR

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