China’s slowdown may widen Vietnam trade gap, official says

China’s economic slowdown may widen Vietnam’s trade deficit as the Southeast Asian nation counts on its largest trading partner to buy commodities, according to a government official.

“It would hurt our exports to China, especially with agricultural products,” Nguyen Duc Kien, deputy head of the National Assembly Economic Committee, said in a telephone interview on July 10. “Meanwhile, our imports from China may surge as Chinese producers may lower prices to dump their products abroad.”

China has been Vietnam’s biggest trade partner since at least 2007. The recent stock plunge and the slowdown in China’s growth has triggered concerns in regional governments including Indonesia and Philippines.

“A surge in sales of Chinese products at low prices in Vietnam would hurt domestic manufacturing with producers of goods similar to those imported from China likely suffering the most,” said Kien. “Yet, the Chinese stock rout may prompt investors to switch to other regional markets, including Vietnam.”

Vietnam posted a trade deficit of US$700 million in June, data from the Hanoi-based General Statistics Office showed. Imports from China reached US$24.4 billion in the first six months, up 24% from a year ago while exports to China climbed 3.6% to US$7.7 billion in the same period.

The benchmark VN Index climbed 0.4%t as of 10:40 a.m. in Ho Chi Minh City. The measure has advanced 15% this year.

Certain Vietnamese industries may benefit from cheaper Chinese raw materials, said To Hoai Nam, vice-chairman of Vietnam Association for Small and Medium-sized Enterprises.

“Producers of garment, apparel and footwear will have a chance to expand production as the slowdown will force Chinese suppliers to lower prices,” Nam said in a phone interview.

Banks to stop counter tax payment from December

The Ministry of Finance has sent a document to commercial banks asking them to work with tax agencies to implement online tax payment service by the end of this year and put an end to counter payment.

From December, the banks will only provide online tax payment service. Counter payment will be applied in case of internet system errors.

The ministry proposed banks to consider preferential mechanism on the service fee to e-tax payers.

From now until December, banks must cooperate with the General Department of Taxation and local tax agencies to mobilize 100 percent of customers with bank accounts to use the e-tax payment service.

It can be made via the general department’s e-portal and other online banking services such as Internet banking, ATM, HomeBanking and SMS.

Banks should establish customer service divisions to handle any issues arising from the e-tax payment and ensure that customers can use the service 24 per 7.

Those banks having yet to supply the e-tax payment service should take action to make it available as soon as possible.

Construction of Vu Yen ecotourism complex started

The construction of an ecotourism complex in Vu Yen Island, off the northern Vietnamese city of Hai Phong has been kicked of on July 12.

The Vu Yen project covering on an area of 872 hectares spans the entire Vu Yen Island at a total investment capital of US$1 billion.

The project includes eco-villas, an international-level 36-hole golf course, eco-park, entertainment-shopping-cuisine complex, five-star hotel, casino, marina, cable car system connecting the ecotourism hub with the mainland of Hai Phong.

As planned, the golf course is expected to complete in 2016 while the entire will be finished in 2019.

Speaking at the groundbreaking ceremony, Deputy Prime Minister Hoang Trung Hai stressed that the project will attract investment and contribute to the city’s tourism development. He asked local authorities to create advantages for the investor, Vingroup to complete the project soon.

Conference discusses increasing foreign investment in agriculture

Difficulties facing foreign businesses investing in agriculture in Vietnam, especially those concerning policies on land, infrastructure, tax and administrative procedures, were pointed out at a conference in Hanoi on July 13.

Held by the Ministry of Agriculture and Rural Development, the event was organised to gather opinions to the drafting of a decree on encouraging foreign investment into the country’s agricultural sector.

A representative from Nestle Vietnam highlighted questions from foreign investors on how to invest in agriculture in Vietnam, saying foreign companies hesitate to funnel capital into the field due to difficulties caused by Vietnam’s Land Law.

The Decree should clarify high-tech agriculture investment and tax policies, participants stressed.

According to representatives from Syngenta Vietnam , the firm has invested in a centre for researching rice varieties in the northern province of Nam Dinh and another for researching plant protection chemical solutions in the Mekong Delta province of Tien Giang, but it is not permitted to rent land from local farmers to serve the company’s experiments.

They asked for appropriate measures and policies to facilitate foreign agriculture investment in Vietnam.

Tran Thi Thanh Tam from the Vietnam Chamber of Commerce and Industry said it is necessary to encourage businesses to invest in hi-tech sectors, post-harvest processing and developing infrastructure facilities for agricultural production.

At the conference, participants from the Japan International Cooperation Agency ( JICA ) revealed Japan’s hesitation to import farm products from Vietnam, saying further attention is needed to ensure the safety of farm products.

Dong Nai Port to handle 20 million tonnes of goods

Dong Nai Port in the southern province of Dong Nai is striving to handle 20 million tonnes of goods by 2020, four times the current capacity.

The port is expected to be one of the leaders in the country in terms of goods handling capacity, said General Director of the Dong Nai Port JSC Nguyen Thi Bach Mai.

The port system includes the Long Binh Tan terminal situated on the Dong Nai River and Go Dau A and Go Dau B terminals on the Thi Vai River.

The terminals are within the vicinity of major seaports in Ho Chi Minh City and southern Ba Ria – Vung Tau province as well as centralized industrial parks, leading to the high demand for goods transport.

The port is improving its service quality given fierce competition with domestic ports in southern Binh Duong province and Ho Chi Minh City.

It plans to expand areas and increase the capacity of the Long Binh Tan and Go Dau terminals to maximise their advantages.

Dong Nai port invested over 200 billion VND (9.2 million USD) to build a wharf capable of handling 30,000 tonnes of goods per year at the Go Dau terminal.

So far 80 percent of the project has been completed and it is expected to be commissioned this September.

Minister calls on sustainable sea food development

Localities need to accelerate the sustainable development of key seafood products including shrimp and tra fish, said Minister of Agriculture and Rural Development Cao Duc Phat at a conference to review two years of implementing seafood sector reforms held in the Mekong Delta province of Bac Lieu on July 13.

The Minister demanded the agricultural sector maintain cultivation areas and shrimp productivity while taking full advantage of shrimp-mangrove and shrimp-rice farming models, saying the move is designed to increase competitive advantages and global market share.

White leg shrimp are encouraged to grow during favourable weather conditions and productivity must be improved at intensive farming areas and advanced intensive farming areas by upgrading irrigation systems, applying advanced farming techniques and providing high-quality breeding shrimp.

Measures to prevent shrimp diseases in must be popularised among famers while hi-tech cultivating models are highly recommended, such as shrimp farming in greenhouses and multi-stage shrimp grow-out systems.

Meanwhile, farmers must follow regulations on breeding commercial tra fish and build value chains in their businesses and production.

The agricultural sector will cooperate with localities to build fishery centres, creating an impetus to form and recover fishery equipment production as well as provide logistics services.

In 2014, aquatic productivity reached 3.6 million tonnes, rising 5.9 percent from the previous year and valued at 188.6 trillion VND (8.8 billion USD). In the first two quarters of this year, 1.8 million tonnes of aquatics animals were cultivated across nearly 1.3 million hectares.

The southern coastal swathe is home to 540,000 hectares of intensive farming and advanced intensive farming, accounting for 88 percent of the total cultivation areas.

Last year, the agricultural sector raked in 1.7 billion USD from exporting 750,000 tonnes of tra fish from 1.1 million tonnes of productivity.

The country has 100 breeding tra fish farms, mostly in Dong Thap, An Giang, Can Tho and Tien Giang. Shrimp has 1,200 breeding stations in the Mekong Delta region, producing 45-50 billion juvenile shrimps every year and making up of 40 percent of the total breeding animals nationwide.

Vietnam agriculture on a path to prosperity

Just about all of the Vietnam Trade Office programs are directly related to the goal of helping Vietnamese farmers become competitive in foreign agricultural markets – it’s one of the office’s core missions, says Nguyen Trung Dung.

Today, Dung, a trade counsellor to Japan, says the Trade Office supports agricultural goods in a vast number of ways.

The Trade Office organizes promotional activities for the supermarket, hotel and restaurant industries, conducts market research, holds seminars and offers trade servicing and market reporting on commodities and high value foodstuffs.

It also provides technical information on such things as the Japanese and United States Department of Agriculture (USDA) import standards, development of new food products, and introduction of new food technologies.

Dung says it’s important for domestic businesses to stay in contact with and use the services of the trade offices to successfully gain and maintain entry into foreign markets.

In particular the office helps domestic producers to become more proficient marketers themselves – through providing a constant supply of information, technical assistance, trade negotiation and other support.

Recently, the Trade Office has achieved great success for domestic producers by helping negotiate import licensing agreements for getting fresh lychees access to both the US and Australia markets.

Now it looks like there are openings in the Japanese and Republic of Korea (RoK) markets for fresh mangoes. At least there is agreement in principle that Japanese regulators will allow the import of mangoes.

However, ‘the devil is in the details’, says Dung and  numerous specific details remain to be hammered out including checking technical parameters in terms of origin, the quality of product and chemical residues.

In addition, a contingent of Japanese regulators will travel in the near future to Vietnam for head-to-head discussions on specific pertinent issues with political and industry leaders before making the final decision, Dung said.

With the rapid expansion of markets brought about by integration it is an interesting new world not easily understood by many Vietnamese – but through the work of its visionary marketing and trade professionals, the Vietnam Trade Office is ready to lead agriculture to prosperity.

Exporters lack tariff knowhow

Vietnamese exporters are not making use of Free Trade Agreement (FTA) opportunities as many of them do not know how to claim priority tariffs from FTAs.

Bui Kim Thuy, deputy head of the Ministry of Industry and Trade's Foreign Trade Agency, said that Trade in Goods Agreements, which reduce or eliminate tariffs to zero per cent on schedule, was the most important component of an FTA. Thuy spoke last week at a forum held by Vietnam Plastics Association in collaboration with Enterprising Fairs India Pvt Ltd.

The importance of the rule of origin (ROO) is to identify whether import goods can be eligible for tariff concessions, to keep a rational balance between "trade facilitation" and "fraudulence prevention", and to rate the use of FTA benefits from each of the FTA parties, she said.

"To get the ideal tariff rate from FTA, export products have to satisfy ROO prescribed in a specific FTA," Thuy said.

To meet the preferential ROO, exporters will be issued a preferential C/O and then will enjoy preferential tariff treatment. This would help stimulate production and exports-imports from FTA countries.

Thuy said that for non-WTO members, the tariff rates on plastics was 150 per cent, compared to WTO members' tariff of an average of 13.5 per cent.

However, for FTA members, the tariff rate on plastics was an average of 0-5 per cent.

Vietnam is part of 15 FTAs, including 10 signed FTAs and five which are undergoing negotiation (RCEP; VN-EU; VN-EFTA; TPP and ASEAN-Hong Kong).

Ho Duc Lam, chairman of the Vietnam Plastics Association, said that since the 1970s the Vietnamese plastics industry had grown steadily at two digits, with an average annual growth rate of over 12 per cent.

The plastic sector's revenue reached US$9.053 billion, an increase of 8.3 per cent over 2013 and 7.6 per cent in 2012.

For the first six months, the sector had revenue of US$4.2 billion, an increase of 10.3 per cent compared to the same period last year.

Raw material imports last year were 3.45 million tonnes worth a total of US$6.32 billion, an increase of 9.4 per cent in volume and 10.6 per year in value against 2013.

Polyethylene and polypropylene were imported mostly from Saudi Arabia, Korea, Taiwan, Thailand, Singapore, Japan and Malaysia, accounting for 55 per cent of total import volume.

In the last 10 years, plastic packaging has been one of the key export items of the plastics sector, with an annual growth rate of 7.8 per cent per year. B. Swami-nathan, managing director of Enterprising Fairs India Pvt. Ltd, said Vietnam's plastics market was one of the fastest-growing markets in Southeast Asia.

At 4.2 million tonnes per annum, it is the second largest market after Thailand in Southeast Asia.

At the forum, Vietnam Plastics Association called on domestic enterprises to participate in the first edition of three-in-one exhibition: Plastics Viet Nam, RUBEXPO Viet Nam and COMPACK Viet Nam, which will be held on July 23-25 at Sai Gon Exhibition Centre.

The exhibition, co-organised by VPA and Vietnam Rubber Association, will include more than 100 booths from India, China, Taiwan, Singapore, Korea, Iran, Malaysia and Italy, showcasing the latest products and technologies in plastics processing.

Minister calls on sustainable sea food development

Localities need to accelerate the sustainable development of key seafood products including shrimp and tra fish, said Minister of Agriculture and Rural Development Cao Duc Phat at a conference to review two years of implementing seafood sector reforms held in the Mekong Delta province of Bac Lieu on July 13.

The Minister demanded the agricultural sector maintain cultivation areas and shrimp productivity while taking full advantage of shrimp-mangrove and shrimp-rice farming models, saying the move is designed to increase competitive advantages and global market share.

White leg shrimp are encouraged to grow during favourable weather conditions and productivity must be improved at intensive farming areas and advanced intensive farming areas by upgrading irrigation systems, applying advanced farming techniques and providing high-quality breeding shrimp.

Measures to prevent shrimp diseases in must be popularised among famers while hi-tech cultivating models are highly recommended, such as shrimp farming in greenhouses and multi-stage shrimp grow-out systems.

Meanwhile, farmers must follow regulations on breeding commercial tra fish and build value chains in their businesses and production.

The agricultural sector will cooperate with localities to build fishery centres, creating an impetus to form and recover fishery equipment production as well as provide logistics services.

In 2014, aquatic productivity reached 3.6 million tonnes, rising 5.9% from the previous year and valued at VND188.6 trillion (US$8.8 billion). In the first two quarters of this year, 1.8 million tonnes of aquatics animals were cultivated across nearly 1.3 million hectares.

The southern coastal swathe is home to 540,000 hectares of intensive farming and advanced intensive farming, accounting for 88% of the total cultivation areas.

Last year, the agricultural sector raked in US$1.7 billion from exporting 750,000 tonnes of tra fish from 1.1 million tonnes of productivity.

The country has 100 breeding tra fish farms, mostly in Dong Thap, An Giang, Can Tho and Tien Giang. Shrimp has 1,200 breeding stations in the Mekong Delta region, producing 45-50 billion juvenile shrimps every year and making up of 40% of the total breeding animals nationwide.

Australia bullish on Vietnam’s beef market

Chairman of the Australian Livestock Export Corporation Ltd David Galvin will meet with representatives from the Ministry of Agriculture and Rural Development (MARD) this July 24-25 in regards to increasing live cattle exports for slaughter.

According to Vietnam’s Trade Office in Australia, Chair of the Australian Livestock Exporters Council Simon Crean will also accompany Galvin on the visit to provide assistance on technical matters.

According to official Australian statistics, live cattle exports to Vietnam have witnessed a 90-fold increase over recent years, having risen from 1,500 to 131,000 during the period 2011-2013.

Last year, Vietnam imported an estimated 150,000 heads of cattle for slaughter and processing from Australia to satisfy the increasing demand for beef in the Southeast Asian nation.

Food makers go increasingly hi-tech

Foreign governments and modern-day food manufacturers are increasingly imposing requirements that take a lot of investment in high-tech agriculture said attendees to a July 13 conference in Hanoi.

Obscure land lease laws, income tax regulations, inadequate infrastructure, and overly burdensome administrative procedures are just a few of the obstacles to attracting higher levels of foreign investment.

The adoption of new technology is going to be critical for Vietnam to maintain its competitiveness in the global arena of high-tech agriculture but that takes large amounts of investment, one representative said.

The representative added that if Vietnamese agriculture doesn’t find the funds to invest in modern technology then the nation may as well forget the ambitions on becoming a food bowl in Asia.

The unclear land lease laws are causing much trepidation by investors, a representative from Nestle Company said, indicating that there are just too many unanswered questions.

The representative also raised a number of queries regarding the future of high-tech agriculture in relation to governmental and administrative policies adding that the lack of clarity makes it difficult, if not impossible, to attract funds.

Meanwhile, a representative from Syngenta Vietnam Co, Ltd also emphasised the need to devise a policy for foreign companies to establish research and development subsidiaries and improve intellectual property laws.

A Vietnam Chamber of Commerce and Industry (VCCI) representativeTran Thi Thanh Tam in turn said Vietnam has signed several free trade agreements (FTAs) which have opened up huge opportunities for farm produce to access foreign markets.  

However, many of these nations have set up strict requirements and technical barriers in terms of product quality and significantly higher levels of investment are needed to purchase the technology and equipment needed to comply.

She underscored the importance of especially encouraging more investment in post-harvest processing as well as hi-tech agriculture.

A representative from the Japan International Cooperation Agency said Vietnam’s farm produce have not entered the Japanese market yet as they have not met requirements of food safety and hygiene, which again is directly related to lack of investment.  

Minister urges move toward sustainable seafood sector

Agriculture Minister Cao Duc Phat said yesterday that localities nationwide need to step up efforts to ensure sustainable aquaculture, especially of key products like shrimp and tra fish.

Addressing a conference held in the Cuu Long (Mekong) Delta province of Bac Lieu to review two years of implementing seafood industry reforms, he called for existing shrimp ponds and productivity to be maintained while taking full advantage of shrimp-mangroves and shrimp-rice farming models.

Doing this will increase the industry's competitiveness and help expand its global market share, he said.

He said the breeding of white-legged shrimp should be done during favourable weather conditions and productivity improved in intensive farming and advanced intensive farming models by upgrading irrigation systems, applying advanced farming techniques and using high-quality shrimp breeds.

Measures to prevent diseases must be popularised among shrimp farmers and the application of hi-tech breeding models like shrimp-farming in greenhouses and multi-stage shrimp grow-out systems strongly encouraged.

Meanwhile, farmers must follow regulations on breeding commercial tra fish and build production and distribution value chains, the minister said.

He said the agricultural sector will co-operate with localities in building fisheries centres, creating an impetus for production of fisheries equipment and provision of logistics services.

The conference heard that in 2014, aquatic productivity reached 3.6 million tonnes, 5.9 percent more than the previous year, for a value of VND188.6 trillion (US$8.8 billion). In the first two quarters of this year, 1.8 million tonnes of seafood was produced from nearly 1.3 million hectares.

The southern coastal swathe is home to 540,000 hectares of intensive farming and advanced intensive farming, accounting for 88 per cent of seafood cultivation areas.

Last year, the seafood industry earned $1.7 billion from exporting 750,000 tonnes of tra fish, out of a total production of 1.1 million tonnes.

The country has 100 tra fish breeding farms, mostly in Dong Thap, An Giang, Can Tho and Tien Giang provinces.

There are 1,200 shrimp farms in the Mekong Delta region producing 45-50 billion juvenile shrimps every year.

The restructuring of agriculture in the Cuu Long (Mekong) Delta over the past two years has helped farmers increase their incomes though there are hurdles to carrying out the restructuring, experts have said.

Speaking at a seminar held in Dong Thap Province on Saturday to review implementation of the restructure, Minister Phat said the delta's production models have undergone significant renovation.

The mechanisation rate has increased significantly, helping increase yields and quality and reduce post-harvest losses, he said.

Around 96 per cent of rice fields are ploughed by machines and 76 per cent are harvested by machines.

Also under the restructuring, more than 78,000ha of poor rice fields in the delta have been converted into cash crops like vegetables, corn, sesame, and soy bean.

These crops have fetched 20-30 per cent higher profits than rice, according to the Ministry of Agriculture and Rural Development.

The delta has also earmarked large areas for rice, fruit and fish farming based on Vietnamese and Global Good Agriculture Practices (Vietnamese and Global GAP).

Truong Canh Tuyen, deputy chairman of the Hau Giang Province People's Committee, said, "After restructuring agriculture, the province has chosen to develop 10 key products."

Hau Giang farmers have been growing other high-value crops for the past two years on 3,000ha of sugarcane farms and low-yield orchards and rice farms, he said.

The province has also strengthened support for farmers seeking to improve production methods and use advanced farming techniques, he said.

But participants also spoke about the difficulties faced in restructuring, including small and scattered production.

The regulations that limit land ownership and the delta's poor agriculture infrastructure are other obstacles.

For instance, irrigation for shrimp breeding cannot meet demand, causing water pollution and leading to shrimp diseases.

Though the large-scale rice field model is encouraged, it has developed very slowly and accounts for a mere 3.3 per cent of the delta's total rice cultivation area.

The development of cultivation models complying with Vietnamese and Global GAP has faced difficulties because of high costs.

Price volatility has been a constant factor for years.

Deputy Minister of Agriculture and Rural Development Tran Thanh Nam said, "Many provinces in the delta have made plans to restructure agriculture but lack market information and have weak intra-regional links."

To restructure agriculture is efficient, the delta should speed up the switch to large-scale production, employ advanced technologies, and secure outlets for produce, he said.

Forum tackles foreign investment struggles

Measures to deal with problems related to land, infrastructure, taxation and administrative procedures were among the key issues discussed during a conference in Ha Noi yesterday.

The consultative meeting was held to elicit experts' opinions on formulating a draft decree on policies to encourage foreign investment in agriculture.

A representative from Nestle Viet Nam said foreign investors face the first obstacle while investing in agriculture when it comes to issues related to land. Land clearance and compensation procedures, regulated by Land Law, pose difficulties, he said.

Besides, some businesses sign contracts with farmers to take their land on lease, but many farmers breach the contracts, thus discouraging investors, he said.

He proposed that the draft decree clarify the concept of investment in hi-tech agriculture and grant of tax exemptions to such investors.

A representative from Syngenta Viet Nam, a wholly foreign-owned company, said the firm had invested in a rice breeding research centre in the northern province of Nam Dinh and in a plant protection chemical research centre in the Mekong Delta province of Tien Giang.

However, the company could not lease land from farmers to test these centres' products because it did not fulfil current regulations, he said.

He suggested that the draft decree include measures to help foreign companies get better access to land so that the company could acquire land to produce different varieties of rice in Viet Nam.

Tran Thi Thanh Tam from the Viet Nam Chamber of Commerce and Industry said Viet Nam had signed many free trade agreements and would sign more to increase opportunities for exporting Vietnamese farm produce. However, local businesses should prepare to meet product quality standards, which were technical barriers put up by other countries, she said.

The decree should contain policies to encourage businesses to invest in hi-tech agriculture and in technology to process harvested produce, she said.

Preferential policies are also needed to encourage businesses to invest in agricultural infrastructure, she added.

A representative from the Japan International Cooperation Agency said Japanese investors paid great attention to food hygiene and safety, so it was essential to have mechanisms to accord priority to these issues.

Many of the participants pointed to the need for measures to strictly implement contracts between businesses and farmers, and the need to have a system to collect and process feedback from businesses.

According to Ministry of Agriculture and Rural Development figures, foreign direct investment (FDI) in agro-forestry and fisheries accounts for just 0.6 to one per cent of the investment in the country.

By October last year, there were 516 FDI projects in agriculture, with a total registered investment capital of US$3.6 billion — equivalent to three per cent of all the FDI projects and 1.5 per cent of the registered FDI capital in the country, according to the Ministry of Planning and Investment's Foreign Investment Agency.

The scale of FDI projects in agriculture is small – an average of $6.6 million per project. The figure in case of other industries stands at around $15 million on an average.

Domestic steel consumption up

The domestic steel industry saw strong growth in consumption in the home market in the first half of this year, according to the Viet Nam Steel Association (VSA).

The association reported the purchase of building steel products gained a year-on-year surge of 24.4 per cent to reach three million tones in the first half of this year.

Viet Nam Steel Corporation (VNSteel) had the largest consumption volume at 696,059 tonnes, accounting for 22.78 per cent of the total domestic consumption in the first six months.

The second largest producer was Hoa Phat Steel Company with a volume of 675,710 tonnes, Pomina with 407,426 tonnes and Vinakyoei with 246,262 tonnes.

Meanwhile, the consumption of steel pipes also saw a growth of 34.7 per cent in the first six months to 664,583 tonnes against the same period last year, the association said.

The Hoa Phat Steel Company had the largest consumption of steel pipes at 145,300 tonnes, holding 21.85 per cent of the total steel tube consumption, followed by Hoa Sen (130,528 tonnes).

Nguyen Van Sua, VSA vice chairman, said the growth in the local steel industry supported domestic steel producers in reducing inventories and increasing their production, according to the Cong Thuong (Industry and Trade) newspaper.

To increase consumption, in recent years, companies have promoted exports, but these countries have launched various safeguards, including anti-dumping measures.

Of note, in the first six months the VSA's member companies exported 175,543 tonnes of steel, 5 per cent lower than in the same period last year.

Experts said free trade agreements (FTAs) would bring more opportunities and also challenges to local steel producers because the FTAs open more export markets, but cause challenges to local consumption.

Nguyen Van Phong, deputy general director of the NS BlueScope Steel Viet Nam, said the local galvanised steel industry would have more chances to export galvanised steel products due to advantages from the FTAs, though local steel exporters should be ready to face safeguards in countries participating in the FTAs.

Tran Tuan Duong, general director of Hoa Phat Group, said the FTAs offer opportunities and challenges, so local steel producers should reduce production costs and selling prices, and improve production management during the integration process into the world economy.

Sua said to gain efficiencies in exports, the producers should study regulations on taxes and schedules of cutting taxes under the FTAs at export markets to avoid lawsuits for dumping Vietnamese steel products in export markets, the Hai Quan (Customs) newspaper reported.

Meanwhile, the producers should improve their competitive abilities, including quality, price and services, to maintain their growth production and business after the FTAs come into effect, Sua said.

To assure continued sustainable development, local steel producers should update technology and equipment, improve corporate management and reduce production costs to reduce selling prices of products, he added. They should also increase knowledge about safeguard measures to avoid commercial lawsuits.

Further, domestic steel industry should develop large steel producers that have financial and technological abilities and an annual capacity at 2-3 million tonnes to compete with import products in the future, he noted.

Dong Nai Port plans big growth

Dong Nai Port in the southern province of Dong Nai hopes to be able to handle 20 million tonnes of goods a year by 2020, four times the current capacity.

The port is expected to be one of the leaders in the country in terms of goods handling capacity, said the director of Dong Nai Port JSC, Nguyen Thi Bach Mai.

The port system includes Long Binh Tan terminal on the Dong Nai River and Go Dau ‘A' and Go Dau ‘B' terminals on the Thi Vai River, which are earmarked for expansion.

The terminals are close to major seaports in HCM City and southern Ba Ria-Vung Tau Province as well as central industrial parks. The port is improving its service because of fierce competition from other ports in southern Binh Duong Province and HCM City.

Dong Nai port has invested more than VND200 billion (US$9.2 million) to build a wharf capable of handling 30,000 tonnes of goods per year at Go Dau terminal.

JAKS finds partner for Hai Duong power plant

A deal over investing in a coal-fired power plant in Hai Duong province has been struck by JAKS Resources Bhd from Malaysia and China’s Power Engineering Consulting Group.

The investment capital for the power plant is $1.87 billion, with each side to contribute half. JAKS Resources is to be responsible for integrated water supply and other water related issues while the Chinese partner will provide technical consulting and financial support.

Located in Kinh Mon district in northern Hai Duong province and with a capacity of 1,200 MW, the power plant will be constructed under the build-operate-transfer (BOT) mode and was approved by the government in August 2011. The pace of the project is well behind schedule, however, having been originally planned to commence in 2014.

After finding a new partner JAKS Resources is now expected to the speed up the project, though it must still wait for approval from the Vietnamese and Chinese governments.

The group hopes to get construction underway in the first half of next year and complete it by 2020.

After operating it for 25 years JAKS will transfer the power plant to Vietnam. The group has already signed a deal to sell its electricity to Electricity of Vietnam (EVN) and the Vietnam National Coal - Mineral Industries Holding Corporation Limited (Vinacomin).

Automation conference slated for November

Northern Thai Nguyen city to host "Vietnam Conference on Control and Automation" in late November.

The third national conference on automation, entitled the “Vietnam Conference on Control and Automation”, will be held on November 27 and 28 at Thai Nguyen University in northern Thai Nguyen city.

Minister of Science and Technology Nguyen Quan, who is also Chairman of the Vietnam Automation Association, said that the conference will allow Vietnamese scientists to introduce their research and exchange their experiences with the automation community.

He emphasized that “here is an opportunity for researchers, policy makers and enterprises to discuss the development of technology in control and automation to serve the country’s development.”

The main topics at the conference will be control and automation and their application.

Explaining why Thai Nguyen city was chosen to host the conference, Minister Quan said that Vietnam’s north has the potential to develop steel manufacturing, mining, hydroelectricity and other industries, so the demand for applying the latest in science and technology is increasing in the region.

Firms advised to make use of rule of origin

Vietnam has signed and will sign 15 free trade agreements (FTA) in which enterprises should pay attention to the rule of origin to enjoy incentive tariffs, heard a seminar of plastics CEOs last Friday.

Bui Kim Thuy, deputy head of goods origin at the Export and Import Department at the Ministry of Industry and Trade, said the signatory countries of FTA would gradually lower import tariffs to 0%.

Factors like low-cost and young labor are now no longer a competitive advantage of Vietnam. Therefore, tariff incentives are one of the favorable conditions for export-import enterprises, according to Thuy.

Media reports have said FTAs will send tariffs down to 0% and they have not pointed out how to benefit from such tariffs, she added.

The most important condition to enjoy low tariffs is that goods have to meet the rule of origin set out in each TFA. Importing countries will make the origin of goods and determine whether they are eligible for preferential tariffs.

According to Thuy, the rule of origin is one of the most important issues in FTAs as it decides if goods can enjoy incentive tariffs or not. It also helps prevent trade fraud and measure the level of utilizing incentives in FTA member economies.

Of the 15 FTAs, ten have been signed and five are currently under negotiation.  

After the 12-country Trans-Pacific Partnership agreement (TPP), Vietnam is negotiating another important trade agreement, which is the Regional Comprehensive Economic Partnership (RCEP) comprising 16 countries, Thuy said.

Haiphong Port seeks to list on UPCoM

Haiphong Port Joint Stock Company has written to the Hanoi Stock Exchange (HNX) seeking approval for trading its shares on the market for unlisted public firms, or UPCoM, more than one year after its initial public offering (IPO).

With chartered capital of over VND3.26 trillion (US$149.8 million) equivalent to over 326 million shares, Haiphong Port’s chartered capital is higher than other port operators already listed on HNX and the HCMC Stock Exchange (HOSE).

However, the State still holds a 95% stake in the company as its IPO attracted few buyers. After the IPO, the Ministry of Transport and Saigon Port’s parent firm Vietnam National Shipping Lines (Vinalines) planned to convert Vinalines’ debts owed to banks into stakes at Haiphong Port.

The plan has not been realized as Haiphong Port is not the debtor and there are no detailed guidelines for converting debts into shares.

However, Haiphong Port has turned attractive to investors since the end of last year when Vietnam-Oman Investment Joint Stock Company (VOI) expressed its interest in buying the highest stake permissible at the port.

The Government gave the nod to VOI to acquire19.68-29.68% of shares at the port before Vingroup Joint Stock Company (Vingroup) jumped in with a bid for an 80% stake at the port.

The ministry has forwarded Vingroup’s proposal to the Government and is waiting for a final decision.

When Haiphong Port lists on UPCoM, foreign investors can negotiate pricing to acquire stakes at the port in line with the current regulations.

Over 100,000 autos sold in H1

Auto sales continued rising last month, bringing the total volume in the first half to more than 100,000 units, up 58% against the same period last year.

A recent report of the Vietnam Automobile Manufacturers Association (VAMA) showed 18,686 autos found buyers last month, increasing by only 4% against May but 57% year-on-year.

The sales volume of passenger cars was the highest last month with 9,769 units, a 9.2% rise against the previous month. Meanwhile, 7,834 commercial and 1,083 special-purpose vehicles were sold, up 0.5% and down 8.1% respectively.

Consumption of domestically assembled autos in June grew 3% to 14,448 units over the previous month while sales of imported vehicles rose 9% to 4,238 units over May.

In all, the country consumed nearly 103,500 autos in the first six months, jumping a staggering 58% year-on-year. Passenger cars made up the largest proportion, 60,132 units, followed by commercial autos with 37,320 units and special-purpose vehicles with 6,040 units.  

The automakers that reported high sales growth in January-June include Ford Vietnam with more than 8,959 units, up 70%, Mercedes-Benz Vietnam with 1,764 units, up 59%, GM Vietnam with nearly 3,200 units, up 29%, and Toyota Vietnam with over 23,000 units, up 38%. Truong Hai Auto Corporation (Thaco) sold nearly 34,600 units, up 93%, maintaining the lead in auto sales.

Sales of domestically assembled autos in the period picked up 56% to 76,738 units while sales of imported autos surged 64% to 26,754 units.

According to analysts, the auto market can hit 200,000 units in sales this year as demand tends to edge up towards year-end.

Vietnam’s auto sales leapt to a record high of around 180,000 units in 2009. However, auto consumption had since dipped steadily before bouncing back last year with 157,810 units sold.

HCM City seeks to improve business environment

The HCMC government will focus on improving the business environment and streamline administrative procedures this year and next to make life easier for investors.

In a plan issued last week, the city will reduce the time for tax payment to no more than 121.5 hours per year, goods export to 13 days and goods import to 14 days, business registration to three days, and business closure from 60 months to 30 months. These reforms will be carried from now to the year-end.

Next year the time needed for registering for rights to ownership and use of assets will be brought down from 57 days to 14 days, settling trade disputes from 400 days to 200 days, and processing a bankruptcy request from 60 months to 24 months.

According to the city government, the competitiveness of the city is still lower than a lot of other provinces in the country.

Of the 10 sub-indexes in the Provincial Competitive Index (PCI), namely entry costs, land access and security of tenure, transparency, time costs, informal charges, proactivity of the provincial leadership, policy bias, business support services, labor training policy and legal institutions, HCMC has seven below average.

After 10 years in the PCI Survey, HCMC got into the top five of the best-governed provinces and cities in Vietnam. But its ranking was still below Danang, Dong Thap and Lao Cai though it is an attractive destination for many domestic and foreign investors.

State-funded projects plagued with cost overruns

Cost overruns have become the norm in State-financed projects, according to State Audit of Vietnam.

Many projects reported far higher actual costs than originally estimated last year. For instance, the cost of Hanoi-Haiphong expressway shot up to VND20.92 trillion, Nghi Son 1 thermal power plant to VND10.515 trillion, Noi Bai-Lao Cai Expressway to VND10.15 trillion, Nhat Tan Bridge and approach roads to VND6.1 trillion, Phu Ly-My Loc road to VND1.18 trillion, and the expansion of National Highway 1 section from My Thuan to Can Tho to VND775 billion.

In addition, the sizes of a lot of projects were adjusted up but still won approval from authorities. For example, a road linking the two tourist areas of Huong Son in Hanoi and Tam Chuc-Kha Phong in Ha Nam Province saw its cost leaping to VND122.2 billion.

Under Directive 1792, work cannot start on projects that have yet to secure funding. But many localities still broke ground for such projects such as HCMC with 1,097 projects, Quang Ninh 262 projects, Cao Bang 302 projects, Bac Kan 240 projects, Lang Son 229 projects, Lai Chau 278 projects, Phu Tho 289 projects, Vinh Phuc 293 projects, Ha Nam 220 projects, Ninh Thuan 208 projects, Dak Lak 206 projects and Dong Nai 403 projects.

Local governments approved a slew of projects even though financing sources were not decided. Such projects are National Highway 1’s expanded Ben Thuy-Ha Tinh bypass in Ha Tinh Province, Quang Tri irrigation and hydropower project and expansion of the Authority of Radio Frequency Management’s headquarters in Hanoi, according to State Audit of Vietnam.

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