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BUSINESS IN BRIEF 15/8

 Renewing procedures for FDI attraction; US imposes import duty on Vietnamese shrimp; Deals worth 17 bln VND inked at EWEC fair; Money supply rises 5.3% in H1

Creating a new wave of investment from Japan

Local entrepreneurs are expected to forge enduring links with Japanese businesses during the 2013 Vietnam- Japan Investment Cooperation Economic Forum, scheduled for August 20–22 in Hanoi.

The event—organized by the Ministry of Construction, the Japanese Embassy in Vietnam, JICA, and JETRO—will coincide with others hosted by FDI VIVINA and the Vietnam Real Estate Association.

At the forum, local businesses, organizations and administration representatives exchange information and discuss plans for cooperation with Japanese partners in the coming period.

The focus of discussion will be on how to create a new wave of Japanese investment in key areas such as infrastructure, real estate, and support industry.

Vietnamese officials will introduce a host of preferential policies for Japanese businesses to invest in localities across the country.

Provincial and municipal Vietnamese leaders will be able to pitch their localities’ particular advantages to Japanese organizations, enterprises, and investors face to face.

Renewing procedures for FDI attraction

The amount of FDI in Vietnam has declined in recent years, as seen in terms of newly-registered capital that already by 26 percent in 2011 compared to the previous year’s figure.

Over the past three decades FDI loans have proved very useful for Vietnam in the current process of national industrialisation and modernisation.

Now it’s high time to improve the local investment environment, but not all authorities are fully aware of the need to attract FDI.

At a recent Cabinet meeting, Prime Minister Nguyen Tan Dung made it clear that Vietnam would lag far behind other competitive markets in the region if it failed to improve procedures for FDI attraction.

Promoting Vietnam-Thailand trade cooperation

Vietnamese and Thai businesses should strengthen cooperation, expand production, and meet the growing demand of 600 million consumers in the ASEAN market.

The Thai Embassy’s Trade Counsellor to Vietnam Busaba Butrat says most of ASEAN countries rely on the exchange of goods. Thailand is now focused on tailoring its products to the needs of consumers within the framework of ASEAN trade cooperation.

The Thai Trade Office in Vietnam has regularly invited Vietnamese businesses to attend trade fairs or conduct fact-finding tours across Thailand.

It has also encouraged both Thai and Vietnamese businesses to achieve deeper integration into the regional economy.

Thai Ambassador to Vientam Anuson Chivanno says the 2015 ASEAN Economic Community (AEC) will present new economic opportunities and challenges facing the bloc.

He says the Thai Foreign Ministry’s Department of International Trade Promotion is responsible for sponsoring the 2015 AEC event.

For its part, Vietnam has helped organise more than 20 Thai fairs in Hanoi and Ho Chi Minh City.

One of them scheduled for August 15–18 in Hanoi will involve nearly 150 Thai businesses.

Busaba Butrat says the two-way trade turnover between Thailand and Vietnam remains stable in the face of the global economic downturn.

Thailand’s imports of Vietnamese products rose 47 percent in 2012 and more than 40 percent in the first few months of this year while Vietnam’s imports of Thai products increased by some 30 percent.

Bilateral trade value is expected to hit US$20 billion in 2015, she adds with strong belief in the bright prospects for mutually beneficial cooperation in the fields of agriculture, footwear, civil electricity, and food processing.

US imposes import duty on Vietnamese shrimp

The US Department of Commerce (DoC) on August 13 announced it was introducing a 7.9 percent anti-subsidy duty on frozen shrimp imported from Vietnam.

The department also imposed duties on shrimp imports from Malaysia (54.5 percent), China (18.2 percent), India (11.1 percent) and Ecuador (13.5 percent).

According to statistics, these five nations exported 208,000 tonnes of frozen shrimp, worth 1.7 billion USD, to the US last year.

The decision to impose the new duties will only take effect when it gets approval from the US International Trade Commission (ITC) and ballots will be cast on September 19.

Following petitions from US shrimp producers and the Coalition of Gulf Shrimp Industries, the DoC investigated shrimp countervailing from the five countries, along with major suppliers Thailand and Indonesia. However, the latter two have not been hit by import duties.

Agricultural support project reaches Mekong Delta provinces

An agricultural competition project (ACP) funded by the World Bank has passed the halfway point and is making a positive impact in seven Mekong Delta provinces.

Support activities for farmers launched by the project, which began in October 2012 and will run until June 2014, include technical training in rice production processes, building rice stockpiles and provision of agricultural machines such as rice dryers and combine harvesters.

The two agricultural cooperatives of Tan Cuong and Tan Binh in Dong Thap province has received support from the project worth 20 billion VND (950,000 USD).

The combine harvesters will help farmers in the cooperatives improve their grain quality and increase production efficiency.

Deals worth 17 bln VND inked at EWEC fair

Deals worth over 17.2 billion VND were made at the 2013 International East-West Economic Corridor (EWEC) Trade and Tourism Fair, which wrapped up in central Da Nang city, on August 13.

The fair welcomed nearly 150,000 visitors, offering them an excellent chance to explore a variety of tourism products and services and goods showcased by enterprises from Vietnam , Thailand and Laos .

It also encompassed two conferences on trade and investment promotion and an exchange programme for the participating enterprises of Vietnam, Thailand and Laos to seek business partners and expand their markets.

Phu Quoc development targeted

Preparations to transform Phu Quoc island district into a special administrative-economic zone have been discussed at a working session between the Party Central Committee’s Economic Commission and the authorities of the southern province of Kien Giang.

Specific details about the proposed zone, including its special mechanism, were also tabled at the event, which took place in Phu Quoc island district on August 13 during the on-going working visit by a commission delegation led by its deputy head Nguyen Xuan Cuong.

Cuong acknowledged proposals made by Kien Giang province and the Southwestern Region Steering Committee regarding the project, asking the provincial authorities to speed up the progress of turning Phu Quoc into a second-class city and a special economic zone.

Situated in the centre of Southeast Asia, Phu Quoc plays a vital role in marine and air transport with countries in the region and the world. It also holds a strategic national defence and security position.

According to a master plan on Kien Giang socio-economic development by 2020, Phu Quoc island will become a special administrative-economic zone by the end of this decade with its role as a national and international hi-end ecotourism and entertainment centre and a regional financial hub.

It will also act as a national and regional forest and sea biodiversity conservation centre that holds a special position in security and national defence.

The island posts an annual economic growth rate of over 24.5 percent, a 5.2-fold increase from 2004 when the Prime Minister approved its overall development plan. Its per capita income in 2013 is estimated to reach 70.3 million VND (3,500 USD).

Phu Quoc has so far attracted 206 investment projects valued at over 4 trillion VND (190.5 million USD). Of the total, 13 projects have already been put into operation.

Work has been completed on major infrastructure projects, including Phu Quoc international airport, An Thoi international seaport and Duong Dong port. The major transport axis connecting the island’s northern and southern sections is currently under construction.

Money supply rises 5.3% in H1

The country's total money supply in the past five months of the year rose 5.3 per cent against December last year to reach VND3.899 trillion (US$181.34 million), according to the State Bank of Viet Nam.

The figure was also 3.88 per cent higher than the same period last year.

Of this amount, deposits made by economic institutions at the end of May increased 2.54 per cent against the 3.58 per cent decrease in the same period last year.

Deposits made by individuals rose 14.26 per cent, down from 15.99 per cent in the same period last year.

The proportion of cash in circulation has fallen sharply to 11.43 per cent from 13.71 per cent at the beginning of the year.

Total outstanding loans for the whole banking system at the end of May were estimated to have grown 3.13 per cent from last December to nearly VND3.188 trillion ($148.27 million).

Of this figure, outstanding credit to industrial and construction sectors made up the largest proportion, with lending for agriculture, forestry and aquaculture saw the fastest growth of 9.18 per cent.

By the end of May, the ratio had crept down to 4.65 per cent from 4.67 per cent a month earlier. The ratio of non-performing loans by credit institutions in the past year remains above 4 per cent, as the central bank released the data in June 2012.

Ha Noi to host financial supervision talks

The 10th Viet Nam Finance 2013 Conference and Exhibition will take place in Ha Noi on August 27, as heard at a press conference on Monday.

The headline theme of the conference is "Reinforcing national financial supervision: Policy and Technology initiatives" and is a joint collaboration between the Ministry of Finance and the International Data Group (IDG).

The conference will review current measures for financial supervision and the development of the national system in securing the financial sector and economic development.

It will also provide a platform for new policies, initiatives and advanced technologies to be applied in financial supervision.

Support industries must fight harder to compete

Viet Nam should spare no efforts in strengthening support industry because its continued competitiveness depends on it, experts say.

They said that local spare parts manufacturers should focus more on improving product quality to meet the demand of foreign companies in Viet Nam and to expand their reach to overseas markets.

The ASEAN Economic Community, which is expected to come into being in 2015, will open new markets and channels of distribution, and create more opportunities for intra-ASEAN sourcing of goods and raw materials.

Therefore, if Viet Nam is not ready now to boost development of its supporting industry, the country will lose its competitive advantage, said Duangdej Yuaik-warmdee, deputy managing director of the Thailand -based Reed Tradex Company.

To stay competitive, local companies must also invest in modern technology, he said.

Exhibition and trade shows should be seen as opportunities for local parts producers to update their technologies as well as their management capacities to sharpen their competitive edge, he said.

To this end, domestic producers should participate in the Viet Nam Manufacturing Expo in Ha Noi and the Metalex Viet Nam 2013 in HCM City, he added.

Participation in these exhibitions will enable local businesses increase product quality to better meet strict standards of foreign manufacturers and introduce products to foreign clients. It will also enable foreign buyers to discover reliable parts producers, he said.

One of the co-organisers, the Japan External Trade Organisation (JETRO), will invite at least 50 local manufacturers to join the show.

At the Viet Nam Manufacturing Expo in Ha Noi, held from September 4-6, a delegation of 400 Japanese manufacturers will seek business partners. This is the biggest Japanese business group to visit an exhibition in Viet Nam, Yuaikwarmdee said.

The exhibition will also see the ASEAN debut of Murata Boy, a pint-sized, self-balancing, bike-riding robot.

At the Metalex 2013 show this October in HCM City, "for the first time, we have had to expand the display area to outside the hall for lack of space."

The exhibition will have nine national pavilions including Viet Nam, Japan, South Korea, mainland China, Thailand, India, Taiwan and Germany; as well as a "Star Pavilion" where eight leading foreign brands will exhibit "high quality, the most advanced technology that is also most suitable for local manufacturers."

Apart from the trading section, engineering master classes will be held where "gurus" will teach local firms some new things and give tips on enhancing product quality, he said.

Co-organised by Reed Tradex, Jetro and the trade promotion centres, in Ha Noi and HCM City, the exhibitions are expected to attract a total of 700 local and foreign firms.

ACB's Kien manipulated legal loopholes

The People's Police newspaper has outlined how banking tycoon Nguyen Duc Kien took advantage of loopholes and was powerful enough to direct both the chairman and general director of the Asia Commercial Bank, despite not being on the bank's management board.

The article came after in the case, saying Kien contributed a huge amount of capital to ACB and became a major shareholder in 1993. He then took the position of Deputy Chairman of the bank's Management Board from 1994 to 2008.

Possessing good knowledge of finance and banking operations as well as legal loopholes, he was fully aware of Vietnamese regulations that would limit the amount he could loan ACB, as well as the ramifications if he retained cross ownership in other commercial banks and private businesses while remaining a board member. He found a way to increase his power over the bank.

Kien withdrew from ACB's management board and then established five companies including Asia Financial Group Joint-Stock Company (AFG), ACB Investment JSC (ACBI), Aci-Hanoi Co Ltd (ACI-HN) and B&B Joint Stock Company (B&B). Within the firms, he played the role of management board chairman on four companies - B&B, AFG, ACBI and ACI – as well as Chairman of ACI-HN's Members Council.

To retain his influence and keep power so that he could direct ACB operations, Kien asked the management board to establish the bank's founder council and approve its working regulation before he withdrew.

In fact, this council was not under the organisational structure of a bank and was not recognised by law. It was merely a way for Kien to take advantage of legal loopholes.

The investigation agency showed that although these companies were not licensed to conduct financial business, Kien directed them to use more than VND9.7 trillion (US$462 million) mobilised and collected from their sales of bonds.

To raise ACB's share value, Kien and members of ACB's management board poured funds into ACB Securities Company (ACBS), which ACB bank owned 100 percent of equity, to buy ACB's shares.

The ACB provided VND1.5 trillion ($71.4 million) in funds for ACBS. ACBS then transferred the amount, along with its owner equity to ACI and ACI-HN with total sums of nearly VND1.56 trillion to buy more than 52.5 million ACB shares, causing ACB a loss of more than VND1.4 trillion.

According to the investigation agency, Kien also directed 19 ACB staff members to send nearly VND719 billion ($34.2 million) to VietinBank, which had then been usurped by former deputy manager of Risk Management Department of VietinBank branch in HCM City Huynh Thi Huyen Nhu and her accomplices.

The investigation has now concluded and Kien plus his seven accomplices were referred to the Supreme People's Procuracy of Viet Nam. Their imminent court date has to be announced.

Da Nang to begin urban gas system

Central Da Nang City is to install a gas reticulation system in the districts of Cam Le, Ngu Hanh Son, Son Tra, Hai Chau and Lien Chieu.

The system, including three stations and 150km of gas pipes, will cost around US$3.4 million. It will provide liquefied petroleum gas, synthetic natural gas, compressed natural gas and natural gas from 2016.

Deputy chairman of the city's people committee Nguyen Ngoc Tuan said the system would reduce the consumption of gasoline, oil, coal and electricity.

Ministry of Transport agrees on new road

The Directorate for Roads of Viet Nam has been assigned to plan for a new road via My Dinh, Ba Sao and Bao Dinh.

The 78km road will pass through the northern cities and provinces of Ha Noi, Ha Nam, Hoa Binh and Ninh Binh.

It will have four lanes for vehicles traveling at up to 100kph.

The most economical approach will cost VND3.4 trillion (US$161.9 million) but it would require land from the Van Long nature reserve. The other option will cost VND4.3 trillion ($204.7 million).

Business space prioritised for resettled people

Underneath the stairs, Nguyen Que Lam, 53, hastily packs up plastic chairs, a wooden table and cups in fact his whole lemon tea shop, when he sees his building's management officers on patrol.

He said no-one is allowed to sell products in any public space around the building, including stairs, balconies or playgrounds. However, "we could not earn a living if we obeyed the regulations."

His family of six used to live in a house at the junction of Vinh Tuy-Minh Khai where he ran a small hamburger outlet, serving passengers using the city's buses, he said.

His income was adequate for his family to survive on for many years until his land was acquired for a public project in 2005. He was then allocated an apartment on the 6th floor of the Den Lu 2 Resettlement Building, he said.

"Our fishing rod was confiscated."

Hundreds of other households found themselves in Lam's shoes when they were shifted to city resettlement buildings such as Trung Hoa- Nhan Chinh, Nam Trung Yen, Den Lu and My Dinh.

There, they take advantage of the public space in these buildings to sell various kinds of vegetables, meat and foodstuffs.

However, this situation is expected to end soon as the Ministry of Construction is about to introduce a regulation that prioritises resettled households so they can rent space for their business activities.

Construction Minister Trinh Dinh Dung said that the new draft regulation on the management of resettlement buildings states that households that are resettled for public projects will be allowed to rent space in their new residential areas at a reasonable price.

The minister explained this was due to many of them having been the former owners of restaurants or shops or even landlords, thanks to the excellent locations of their city centre houses. As a result, they have found it difficult to earn a living after they were moved.

The investors in resettlement buildings will be asked to allocate two thirds of a buildings' retail business area to rent to resettled households, after auction.

The bids will be held publicly and transparently.

In commercial buildings that includes resettled households and investors must now prioritise them when it comes to renting business space, even if they bid the same price as outsiders.

The ministry has also ruled that when a resettlement building is first set up, it is necessary to ensure that these households have an equal standard of living and the ability to earn just as good a living as they did when in their former homes.

Pham Sy Liem, vice president of the Viet Nam Federation of Civil Engineering Associations, said that there should be a management mechanism to enable residents to make a living.

If not, they have to utilise unused public space to do business. This was also one of the reasons that resettlement buildings quickly deteriorated, he explained.

Lam said that this regulation would help their lives to stabilise and prevent them from breaking public space regulations.

He added that he hoped the rent would be appropriate for them.

FAO supports Da Nang rice centre

The UN Food and Agriculture Organisation (FAO) will continue supporting the establishment of a rice seed production hub in central Da Nang City.

The news was announced by FAO representative Bae Jong-ha at a meeting with the city officials yesterday.

He said FAO will help develop the centre in Hoa Tien commune as a major rice variety centre for the city and the central coastal region.

The project will help strengthen the production capacity of the commune and increase its ability to expand its market.

The project, which has been supported by the India-Brazil-South Africa Dialogue Forum (IBSA) Fund for four crops during 2012-14 with a total budget of US$529,000, will be put into operation from next month.

Banks continue cutting staff salaries amid economic difficulties

Both small and big banks have continued slashing salaries and bonuses for their staff due to their loss-making in the context of the current economic difficulties which are affecting their operations.

Asia Commercial Bank (ACB) spent only VND597.7 billion (USD28.4 million) on salaries and bonuses for their staff in the first half of this year, down 30% from the same period of 2012.

During this year-long period, the bank posted a pre-tax profit of VND943.7 billion (USD44.9 million), fulfilling only 52.4% of the year’s target of VND1.8 trillion (USD85.72 million). Meanwhile, the bank’s bad debt rate has continued rising and is now at 2.97%, compared to 2.46%  earlier this year.

Nam Viet Commercial Joint Stock Bank, which reported a loss of VND11.3 billion (USD538,095) in the second quarter of 2013, cut its salary fund to a mere VND84.93 billion (USD4.1 million) by late June this year from VND128.78 billion (USD6..1 million) a year ago, equal to a fall of 34%.

According to the second-quarter financial report of An Binh Commercial Joint Stock Bank, the bank cut 5.8% of its spending on salary and bonuses to VND167.4 billion (USD7.9 million) in the first half this year.

A big bank headquartered in HCM City has reduced 30% of salary and bonuses for their staff as a way to cut its costs, because it fulfilled less than 60% of the year’s profit target. All its managers of different boards have had  their salaries cut by 15%.

Besides slashing salaries, banks have tended to recruit  more business contributors to lower its human resources costs. Unlike official staff members, these contributors are not provided with fixed salary, but rather just a very small salary ; instead, they are paid according to their contributions, such as the number of customers they attract for banks.

Contributors are required to have passed high-school graduation exams and be aged below 50. In some cases, though, they are not limited by their age.  

New rules give greater investor security

Vietnam will launch a new attack on white-collar crime under a new joint circular on securities markets, effective from August 15.

Investors will have greater protection under the new circular, which aims to crack down on securities-related crimes, including the willful provision of misleading information, the concealment of factual information in securities trading, insider trading and stock price manipulation.—Photo vinacorp

The circular is a joint effort between the Ministry of Justice, the Ministry of Public Security, the Supreme People's Court, the Supreme People's Procuracy and the Ministry of Finance.

Investors will have greater protection under the new circular, which aims to crack down on securities-related crimes, including the willful provision of misleading information, the concealment of factual information in securities trading, insider trading and stock price manipulation.

Damages to investors upwards of VND1 billion (US$47,100) and gains from insider trading of more than VND500 million ($23,550) will be punishable under the act.

Additionally, the circular aims to punish ‘intangible' losses to the stock market, including the disruption of the State's implementation of policies, losses in investor confidence and the creation of unfair advantages, which will be considered aggravating factors.

Crimes will be categorized as "serious", "very serious" and "extremely serious" misconduct under the law, depending on the damages inflicted.

"Serious" charges will be laid against those causing VND1 billion losses to investors with "very serious" charges put to those exceeding VND3 billion ($141,500) in damages.

The regulations aim to keep pace with securities-related crime which has evolved rapidly in recent years. The Government is hoping the new law will restore market discipline and investor confidence.

The unveiling comes amid rumours from private investors the Chairman of the Bank for Investment and Development of Vietnam, Tran Bac Ha, had been arrested on February 21.

The market fell VND29 trillion ($1.3 billion) in just a single session, while stock indices fell 3-5 per cent.

Last year, the State Securities Commission issued 180 penalties to individuals and investors totaling fines of VND11 billion ($518,800). The penalties were described as an ineffective deterrent for white collar criminals.

Hanoi to allocate US$15 million for price stabilisation

Hanoi will provide VND318 billion (roughly US$15 million) in zero-interest loans between July 2013 and April 2014 in a bid to stabilise the price of essential goods.

The announcement was made by Ho Quoc Khanh, Manager of the Trading Management Division under the Hanoi Department of Industry and Trade, at a recent conference in the capital city.

The stabilisation programme will focus on seven essential commodities including vegetables, meat, eggs and aquatic products. Stockpiled commodities such as sugar, processed food and notebooks will be excluded from the programme.

Local firms were also encouraged to use their own capital to balance supply and demand and stabilise prices.

Enterprises which participate in the stabilisation programme will need to align prices with the city's Department of Finance. Price increases can only be granted by the municipal finance department and industry and trade department, with adjustments within 10% of the market price.

The programme aims to give priority to industrial zones, low-income residential areas and canteens and hopes to provide consumers with clean, high-quality food.

Plans are underway for 38 Vietnamese Fairs to be held in suburban districts and for 400 mobile food outlets to provide subsidised food to local customers.

ASEAN-wide recognition of tourism professionalism

Hanoi hosted a conference on August 13 discussing an ASEAN Mutual Recognition Arrangement (MRA) for Tourism Professionals.

The agreement, due to take effect in 2015, allows accredited tourism industry professionals in one country to seek employment in other ASEAN member nations.

It will help Vietnam’s tourism industry hire appropriately qualified foreign nationals to fill its own staffing vacancies, said Dinh Ngoc Duc, an official from the Vietnam National Administration of Tourism (VNAT).

The VNAT developed a guide book to implement the agreement with support from an EU-funded project. The manual was adopted at the 2013 ASEAN Tourism Ministerial Meeting in Laos in January and has been distributed to all ASEAN member countries.

It has also prepared electronic documents and internet resources to help answer any questions arising from the MRA.

Uniform professionalism standards applied across the ASEAN region will assist each member nation improve the quality of its tourism services and the skills of its workers.

Staff who have attained Vietnam Tourism Occupational Skills Standards (VTOS) certificates will also be qualified under the equivalent ASEAN Common Competency Standards for Tourism Professionals (ACCSTP).

Lecturers and industry training centres should review their curricula to reflect the VTOS and ACCSTP interchangeability.

Auto sales decline in July

The Vietnam Automobile Manufacturers’ Association (VAMA) reports the domestic auto industry’s 9,360 units sold in July represents a 3% slide from the previous month’s figures.

Complete Knock-Down (CKD) vehicle sales reached 7,676 units in July, a 3% rise over June levels, but the increase could not compensate for the sharp 24% drop in,Completely Built Unit (CBU) sales to 1,684 units. The decrease is markedly different from the previous four months’ upward trend.

VAMA members sold 8,209 vehicles in July, maintaining the levels of the preceding three months and equalling a year-on-year increase of 23%. About 2,200 Multi-Purpose Vehicles were sold, 20% more than in June and 45% more than in July 2012.

The VAMA highlighted the two agents Vinacomin-Vinacoal and Vinaxuki reported zero sales in July.

Impressive sales surges were reported by Toyota (2,995 units), GM (460 units), Ford (685 units), and Honda (510 units).

The seven month total of 59,197 units sold is 18% higher than its 2012 equivalent. The VAMA expects to sell 110,000–112,000 units by the end of this year.

Seminar discusses M&A strategy

A seminar was held in Hanoi on August 12 to discuss mergers and acquisitions (M&A) strategy.

The General Director of Denscombe Corp, Professor Nigel Denscombe emphasized that the M&A strategy will be the best option for the Vietnamese market in its initial stage to make breakthroughs in economic growth.

Professor Nigel Denscombe advised that businesses should devise a clear strategy and orientations before making M&A deals.

The Deputy Director of the PetroVietnam Securities Incorporated, Marc Djandji, said that businesses should be ready for M&A deals, especially in the ASEAN region.

He added that the Southeast Asian market has become an attractive destination for businesses to carry out the M&A strategy. Foreign investment capital will continue to flow into Singapore, Indonesia, Laos, Cambodia and Vietnam.

The value of M&A in the Southeast Asian nations reached US$90 billion last year, making up 4 percent of the world’s total M&A deals and 20 percent of Asia’s M&A deals.

The value of M&A deals in Vietnam in 2012 increased by 70 percent against the previous year’s figure.

Japan helps develop Vietnamese human resources

The Japan Business Association (JBA) has pledged to provide human resource training for Vietnam under a memorandum of understanding (MOU) signed in Hanoi on August 13.

The MoU was signed by representatives of the Ministry of Labour, Invalids and Social Affairs, Ministry of Education and Training and Ministry of Industry and Trade, and the JBA, within the framework of the Vietnam-Japan Joint Initiative’s phase V.

It will allow relevant agencies to tailor their labour force strategies and encourage Japanese investors to Vietnam.

Vietnamese labourers working for Japanese businesses can learn Japanese language skills and management techniques.

The MOU will be implemented from July 2013 to December 2014.

Witnessed the signing ceremony, Deputy Prime Minister Nguyen Thien Nhan confirmed that Japan is Vietnam’s key strategic partnership, and he hoped bilateral cooperation will expand to the areas of culture, education, science-technology, alongside politics and economics.

Nhan highlighted Japan’s position at the leading edge of science and technology and explained how the MOU will help Vietnamese human resources meet Japanese capacity and quality demands.

He asked the MoU signatories to meet every six months to review progress and report the result to the government.

Market officers target suspect milk

Market officers are attempting to shore up regulations preventing substandard milk from entering Viet Nam, following the recall of Abbott Nutrition milk last week for fears of contamination.

According to Do Thanh Lam, deputy head of the Market Surveillance Agency under the Ministry of Industry and Trade, the agency dealt with about 13,000 cases annually, related to fake and substandard goods.

The ministry has also recently established a mobile market management team to ramp up inspection and and catch violations related to commercial products and activities.

Lam said it was difficult to monitor the quality of substandard imported goods entering the country as carry-on items.

A report from the ministry suggested that the domestic milk market had grown between 7 and 8 per cent annually and that total production volume had reached approximately 47 thousand tonnes for the first seven months of this year.

However, domestic fresh milk was meeting only 30 per cent of local demand.

Do Kim Lang, deputy head of the Viet Nam Trade Promotion, said the agency was also keeping an eye on discount activities of Abbott Viet Nam to spot marketing violations.

Lang said that it was difficult to coordinate between market management watchers under the authority of local administrations with ministerial market watchers.

He added that smuggling and substandard products from overseas were infiltrating Viet Nam and a new legal framework would boost coordination in market management activities at all levels.

Banks' credit target remains within reach

With banks managing to increase credit in recent months, the year's growth target is appearing within reach.

According to a report tabled at a regular Cabinet meeting last month, as of July 25 credit growth had risen to 5.02 per cent, much higher than the 1.2 per cent increase in the same period last year.

But the year had started slowly, with growth at only 2.98 per cent after five months.

The quick surge in recent times has partly been due to a fall in interest rates from 11-12 per cent a year to 7-9 per cent, according to experts.

Besides, the State Bank of Viet Nam has taken measures to resolve the problems faced by companies and to boost lending.

In addition to a VND30 trillion (US$1.43 billion) credit package aimed at home buyers and property developers, the central bank has also launched lending packages for priority sectors like coffee.

It has been working to help set up the Viet Nam Asset Management Company, which will buy bad debts from banks.

As a result, credit growth at many banks has even surpassed the limits fixed by SBV, and they been forced to seek the central bank's approval for this.

SBV recently allowed MBB and NamA Bank to raise this year's lending growth cap to 20 per cent and 30 per cent respectively from the earlier 9 per cent.

Many banks, on SBV's instructions, have cut loan interest rates.

Techcombank, for instance, has unveiled a preferential lending programme with an 8.5 per cent interest rate for companies.

HDBank has earmarked VND1 trillion ($47.34 million) for preferential loans to individuals, business households, and private enterprises this year.

Borrowers of VND500 million and more will enjoy zero interest for the first month and be charged 11.86 per cent for the next 11 months.

For loans of VND200-500 million, the rate will be zero and 12.86 per cent.

Kieu Phuong, chief accountant at Ninh Binh Nitrogenous Fertilizer Company, said the lower lending interest rates would help the company optimise its operations.

A top official at Viet Duc Steel Joint Stock Company said Techcombank's preferential credit programme is good news for the company.

But many experts remain sceptical about the banking sector meeting the growth target.

Lending interest rates are unlikely to be cut further, so credit growth in the remaining months would not be a function of interest rates or liquidity, but of credit demand, they said.

The demand depends on economic growth and recovery by the manufacturing and services sectors, they added.

Firms brace for Brazil bounty

Vietnamese businesses will have a major opportunity to crack Brazil's lucrative domestic market when import taxes are cut later this year, according to Viet Nam's trade office in Brazil.

The South American powerhouse is set to cut import rates across 100 industrial products, including steel, petrochemicals, pharmaceuticals, and construction materials.

Whilst tax rates increased last year in an effort to shield local industries from currency fluctuations, industrial import taxes are expected to drop by more than half, from 25 per cent to 8-10 per cent.

The cuts follow strong growth in Brazil's import market by almost 22 per cent in 2012, driven by solid population growth and dramatic increases in spending power.

Firms are beginning to realise the potential of tapping into this huge market, the office said. Vietnamese products have priced well below foreign competitors, enticing Brazilian businesses to ramp up imports and distribution, it said, adding that bilateral trade had seen major growth over the past decade. Two-way trade reached over US$1 billion in the first half of this year, up 31.2 per cent, while Vietnamese exports to Brazil climbed 57.6 per cent, reaching $499.4 million, according to the General Department of Customs.

Despite impressive growth, the market share of Vietnamese exports account for only 0.3 per cent of Brazil's imports.

Experts are advising businesses to accelerate trade promotions to take full advantage of the lower taxes.

This year, the Vietnamese Trade Office in Brazil hosted a range of seminars to promote exchanges and partnerships between members of both business communities.

Trade is expected to reach $2 billion by the year's end, with $1 billion expected to come from Vietnamese exports.

If current trends continue, trade is expected to reach $5 billion during the next five years and $8 billion by 2020.

Viet Nam's major exports to Brazil include seafood, electronics, textiles, steel and machinery.

Chu Lai zone told to boost infrastructure

Chu Lai Open Economic Zone authorities should build more resident-focused infrastructure, such as appartments, markets and schools, to attract more FDI projects to the zone, according to its director.

Speaking at an online seminar held yesterday in the central city of Da Nang, Huynh Khanh Toan, vice chairman of Quang Nam People's Committee and Director of Chu Lai Open Economic Zone Authority said FDI projects in the zone were declining.

"There are many reasons for the decline, but lack of infrastructure is a fundamental factor," Toan said. "Besides investing in production-related projects, we should invest in resident-focused facilities for people working and living in the zone."

He said foreign businesses would hesitate to invest in the zone as it did not have international schools, hospitals, entertainment and other resident-focused facilities.

Planning and Investment Vice Minister Dang Huy Dong agreed, saying that an economic zone needed not only factories, but also accommodations for workers.

"However, we should think twice about how much to invest, because we should not plough lots of money into these projects and then just hope the investors come. It would be very risky," Dong said.

Pham Van Tai, vice director of Truong Hai Group, the country's biggest truck maker and the largest investor in the zone, said convenient accommodation was a vital factor for attracting investors.

"Investors in HCM City, for example, would not invest here if the living standards were behind those in HCM City," Tai said.

However, Tai believed investment in accommodation should be carried out gradually following the actual demand of investors to avoid risks.

According to the Quang Nam People's Committee, after 10 years of construction and development, the face of the first economic zone in Viet Nam has been gradually formed.

Investment projects in Chu Lai Open Economic Zone have significantly contributed to the overall development of Quang Nam Province, especially by generating key industrial products and increasing local budgets.

To date, Chu Lai Open Economic Zone houses a total of 85 investment projects with combined registered capital of US$1.5 billion. Of these, 56 projects valued at over $750 million are in operation.

Investment projects in the economic zone paid VND12.2 trillion to the local State Budget in the 2006-2012 period, accounting for 50.67 per cent of the province's budgetary income.

In 2012, investment projects contributed VND3.3 trillion ($160 million) and accounted for 58.8 per cent of the province's total budgetary revenue.

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

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