Quang Ninh highway work starts
Prime Minister Nguyen Tan Dung on Saturday gave the order to start construction of a highway linking Ha Long city in the northern coastal province of Quang Ninh to a new bridge over the Bach Dang river in the port city of Hai Phong.
The 19.5km highway will be built at a total cost of over VND6.4 trillion (US$300.8 million) from Quang Ninh Province's budget and other sectors. It will open in 2017.
The four-lane highway has been designed for vehicles to run at a maximum speed of 100km per hour.
When completed in 2016, it will shorten the distance between Ha Long and Hai Phong from 75km to 25km.
Dung hailed Quang Ninh's efforts in mobilising resources for the project. He said this was the first highway construction project started by a locality by mobilising local resources.
He said it was significant in economic, cultural and social development terms and also for security and defence for the province and the nation.
Dung praised the province for strictly complying with Government regulations on land clearance and compensation.
He said by time work started, all land clearance work had been fully completed. He also expressed his appreciation to the more than 900 affected households for co-operating with the project in the common good.
He asked the Ministry of Transport and the Ministry of Planning and Investment and other relevant agencies to facilitate work with Japanese partners so that an early start could be made on construction of the Bach Dang bridge that will link the Ha Long-Hai Phong highway to the Ha Noi-Hai Phong highway.
Work on Bach Dang bridge is expected to begin in the first quarter of 2015. The bridge will be 5.45km long and cost VND7.2 trillion (more than US$342.85 million) under the build-operate-transfer form by Japanese group SE.
The new highway will help increase the flow of goods between Quang Ninh and northern provinces.
Dung also attended a conference in Quang Ninh to announce the province's seven strategic plans.
The plans, which cover the period to 2020 with a vision until 2030, include overall socio-economic development for the province, construction for areas within the province, tourism development, environmental goals, land-use, scientific and technological development, and human-resources development.
Dung praised provincial authorities and people for their remarkable achievements in socio-economic development. He cited the province's high annual GDP growth rate of 9 per cent - and the sharp decline to 2 per cent in the number of poor households.
At the same time, Dung urged the province to ponder its failure to take full advantage of its potential. As an example, he said agriculture contributed to only 6 per cent of the province's GDP, yet it used 40 per cent of the province's workforce, indicating that this mismatch was unsustainable.
He also said many issues related to environmental pollution remained unsolved, and labour productivity was still low.
Dung urged the province to pay special attention to administrative reforms so prospective investors would be impressed.
He also instructed the province to build a strong, transparent and effective political system, strengthen national defence and security, safeguard national sovereignty and promote relations with neighbouring China on the basis of friendship, and mutual respect.
Trade surplus forecast on export growth
Viet Nam is expected to achieve a trade surplus in the remaining months of 2014 following positive results from exports in the first eight months of the year.
If so, this will be the third consecutive year that the country has achieved a trade surplus. Viet Nam 's trade surplus was US$749 million in 2012, and this increased to $863 million in 2013.
Figures from the Ministry of Industry and Trade (MoIT) showed that the country's trade surplus in the first eight months of the year reached $1.7 billion, or 1.8 per cent of total export value.
But the MoIT noted that most of the exports came from foreign-invested enterprises.
In the first eight months, Vietnamese enterprises reported a $10.16-billion trade deficit while foreign-invested enterprises reported nearly $11.86 billion in surplus.
Vietnamese exporters have to import a large volume of imported input materials. Although Viet Nam is an agricultural country, it has to import a large quantity of raw materials for agriculture, forestry and fisheries.
Its dependence on imports has incurred for the country a trade deficit with China, South Korea, Thailand and Singapore.
To boost exports of high value-added products, the MoIT said it was co-ordinating with the Ministry of Agriculture and Rural Development in adopting restructuring measures to increase the added value of Viet Nam's agri-forestry and fishery products.
The Government has also issued a decree to enable domestic enterprises to invest more in support industries so that components, equipment and machines produced at home could gradually replace those imported from abroad.
Producers of the country's key exports such as textiles and garments, mobile phone and electronics products, footwear and agricultural products have so far remained optimistic about their prospects in the last months of the year.
After surpassing mobile phone and electronics products as the country's top export earners, textiles and garments are expected to continue its leap into the last quarter of the year, when demand is expected to rise sharply ahead of holidays such as Christmas and New Year.
A good number of garment export producers say they have cornered enough orders for the whole year. The country's textile and garments industry targeted $23 billion in revenues from exports this year. In the first eight months of the year, its revenues reached $13.65 billion, a 19.7 per cent year-on-year increase. Export value to major markets rose significantly by 36 per cent in South Korea, 26 per cent in the European Union, 15 per cent in the United States and 14 per cent in Japan.
Industry insiders say garments exporters are also benefiting from a decrease in the world price of imported input materials such as cotton. In the US market, cotton prices declined by 24 per cent and the same trend is being seen in the Indian and Chinese markets.
Producers of agricultural exports are likewise optimistic. Tran Anh Tuan, MoIT deputy minister, said rice exports this year would meet Government targets.
According to the Viet Nam Food Association, rice exports this year will surpass the 6.2-million tonne export target and earn $1.83 billion.
With 4.2 million tonnes of rice exported in the first eight months of the year and a forecast of 1.9 million tonnes for the third quarter and 1.4 million tonnes for the fourth quarter, the country's rice exports for 2014 will likely reach 6.3 million tonnes, excluding unofficial exports in small quantities through the borders, the association said.
Rice demand in import markets from now till year-end are also trending upwards, the association added. It cited the Philippines and Indonesia, which will each import about 500,000 tonnes of rice from October to December and are expected to import more.
The Viet Nam Association of Seafood Exporters and Producers also predict the industry's export revenue this year to increase by 13 per cent more than that of last year to $7 billion. Shrimp is expected to be the industry's biggest earner at $3 billion.
Export forum focuses on prospective markets
Japan, Indonesia, India, and countries in Africa and Latin America import lots of products, but Vietnamese firms need to study them carefully to export to them, a conference heard in HCM City yesterday.
They also need to focus on improving quality to meet the demands in importing countries, according to attendees at the Export Forum.
Nakajima Satoshi, the Japanese consul in HCM City, said there was plenty of demand for farm produce and seafood in his country.
But to export there, Vietnamese companies had to strictly follow its quality, hygiene, and safety requirements, he said.
Bui Trung Thuong of the Viet Nam Trade Office in India said trade between the two countries had risen sharply in recent years but remained low compared to the potential.
The Indian Government annually adjusted its trade policy and so Vietnamese exporters should monitor it, he said.
"Indian consumption habits are quite different from that of Viet Nam, and companies should study them to export appropriate products to the market."
Others spoke about the pros and cons of exporting to Indonesia, France, Russia, Latin America, and Africa.
Indonesia, the biggest economy in ASEAN and with a population of 250 million, has huge demand for goods and offers Vietnamese firms a good opportunity to boost exports, according to Le Hong Minh of the Viet Nam Trade Office in Indonesia.
But exporting to the market is complicated, requiring many kinds of licences, and firms need to understand its regulations.
Latin American countries also have similar demand for consumer goods, but the lack of market information, high transport costs, fierce competition with Chinese and Indian goods, and trade barriers in some markets in the former are among difficulties Vietnamese firms could face, Tran Duy Dong, deputy head of the America Market Department, said.
More effort should be made to provide Vietnamese exporters more information about these markets, he said.
Delegates said businesses should take part in foreign trade fairs and exhibitions to do market research and look for new business partners.
Minh said they should also invest in improving their design and packaging.
Free trade agreements the country has signed or plans to sign offered great opportunities for Vietnamese firms to boost exports, attendees said.
Guillaume Crouzet, director of the French Chamber of Commerce and Industry in Viet Nam, said, "Trade between the EU and Viet Nam will be boosted by the FTA under discussion."
Delegates urged Vietnamese companies to reform export-promotion activities and do research on customer preferences.
While focusing on exports, local firms should not ignore the domestic market either, Tran Du Lich, member of the National Assembly's Economic Commission, said.
"A product looking to compete in foreign markets must firstly be competitive in the domestic market both in terms of quality and price," he said.
The problem now is not that what products are to be exported, but how to create differentiation of products to improve competitiveness, he said, adding that this is a challenge to Vietnamese firms trying to expand exports.
They should diversify exports to five key markets — the US, EU, ASEAN, Japan, and China — he said.
They should continue to try and expand market share but not to excessive levels in any market because that would then prompt the importing country to erect barriers such as anti-dumping duties to protect local production, he warned.
The forum was organised by the Investment and Trade Promotion Centre of HCM City.
According to the Ministry of Industry and Trade, despite many difficulties Viet Nam's exports grew at 14.1 per cent in the first eight months of the year, reaching US$96.98 billion.
The ministry promised to keep a close watch on the global economic situation and provide information about export opportunities.
Trade deal to widen access to EU
A bilateral Free Trade Agreement with the EU will yield tangible and intangible benefits for both Viet Nam and the bloc, the largest market for Vietnamese products and the country's second most important trading partner, a top EU official said.
"The FTA currently under negotiation targets to reduce at least 90 per cent of tariff lines on Vietnamese exports," Dr Franz Jessen, ambassador and head of the EU Delegation to Viet Nam, told a business lunch organised on Thursday by the EU-Viet Nam Business Network.
"This implies that greater opportunities lie ahead for Vietnamese business to penetrate deeper into the EU market."
Viet Nam's exports to EU account for around a fifth of all its exports, but only 40 per cent of them are tax free or subject to preferential lower rates while the remaining attract ordinary import duties.
For instance, Vietnamese producers could have saved 150 million euros (US$194.4 million) a year on footwear products and 180 million euros ($233 million) on textiles in each of the past three years if an FTA had been in place.
Footwear products attract 3.5-4 per cent import duty and textiles, 9.6 per cent.
In return, European drug producers pay import duties of 5 – 8 per cent on shipments to Viet Nam, or nearly 60 million euros ($77.76 million).
"Furthermore, the EU with advanced technologies, abundant capital, and management expertise can offer what Viet Nam is not yet able to produce at home," Jessen added.
Viet Nam, with its cheap labour and strengths in agriculture, can offer European consumers good quality products at competitive prices, he said.
Viet Nam has opened up protected sectors such as telecom and retail to third countries (under FTAs and other bilateral trade and investment deals) and so there should not be any reason to restrict market access to EU members, he said.
"The FTA will create wider impacts on Viet Nam's economy and not only with regard to trade."
A study by the EU-Viet Nam Multilateral Trade Project in 2011 found that an FTA between the EU and Viet Nam would have a "largely positive impact on the country's GDP" estimated at around 2.7 per cent a year in case of rapid dismantling; in case of progressive dismantling, there will be a gradual increase from the second year to 3.7 per cent in 15 years.
If the implementation is properly managed, the FTA can trigger necessary reforms in Viet Nam, contributing to a more stable and predictable environment, which can in return boost stronger FDI flows, technology transfer, and know-how sharing, it said.
During a recent visit to Viet Nam, the president of the European Commission, Manuel Barroso, said the EU, Viet Nam's largest provider of grants, has decided to significantly increase its assistance in 2014-20 to 400 million euros ($518 million).
Leading businesspeople and representatives of EU member states and national business groups attended the luncheon meeting.
In June 2012 the EU and Viet Nam began negotiations for a comprehensive FTA
The negotiations cover tariffs as well as non-tariff barriers to trade and other trade-related aspects such as public procurement, regulatory issues, competition, services, intellectual property rights, and sustainable development.
It is expected to be signed next month.
Lenders fail to jumpstart sluggish borrowing in August
Vietnamese banks are likely to promote lending programmes that hopefully will help them to either unleash idle capital or boost the sluggish credit growth toward the end of the year.
Viet Nam's credit growth in August was an estimated 4.5 per cent, well below expectations in the light of the government's target of 12 to 14 per cent growth in credit for 2014.
State Bank of Viet Nam Deputy Governor Nguyen Thi Hong expected credit growth to reach 10 per cent by the end of the year, but expressed the hope that it would exceed this figure.
Given the minimum 10 per cent rate, banks still need to add 5.5 per cent to make it up.
"Capital demand may increase in the last few months of the year when businesses get busy, preparing for Tet festival," said Cao Sy Kiem, chairman of the management board of DongA Bank. "However, a 12 to 14 per cent target is very difficult to achieve."
"The 10 per cent target is only achievable if the government's programmes to bolster the total demand are laid out clearly with every single effective step and taken seriously, while banks and enterprises are able to work cooperatively to pump and absorb capital," Kiem said.
Some bankers said the competition was likely to become tougher that would keep all lenders on their toes.
DongA Bank, which achieved 4 per cent credit growth in the last eight months, now aims to provide loans to borrowers from rural and agricultural businesses, private sector and households who evidently have high capital demand, good capital utilisation and low risk of bad debts.
Sacombank earlier this week launched a priority package of VND2.5 trillion (US$118 million) for importers, exporters, and those in aquaculture, pharmacy, gasoline, transport, tourism, textile and garment, shoes, electronic components, food and consumer goods sectors. The minimal lending rate is 7 per cent in the first six months.
One of the big four banks by assets, Vietcombank has just announced a VND3-trillion ($141.5 million) credit package, with the lending interest rate set at 7.99 per cent per annum.
MaritimeBank offers VND1 trillion ($47 million) loans to Ha Noi-based companies at a borrowing cost of 7 to 8 per cent per year for short-term credit and 9 to 11 per cent for mid and long-term loans.
Tran Xuan Quang, CEO of SME Banking at Maritime Bank, said that banks were always willing to help enterprises to overcome economic difficulties. However, enterprises themselves needed to improve their financial management to get their money's worth.
HDBank has made a similar move by giving VND1.5 trillion ($70.7 million) to individuals, and for consumer purposes and production plans, and by setting aside VND5 trillion ($235.8 million) for small and medium-sized enterprises.
ABBank has joined the race by offering personal loans worth VND1 trillion ($47.07 million) at 8.5 per cent for the first 12 months.
LienVietPostBank announced to lend VND2 trillion ($94.3 million) for various terms at interest rates starting from zero per cent.
Under the current circumstances, bankers expect an improvement in the total demand, purchasing power and employment rate, which are important factors to bolster businesses and production.
Viet Nam seeks to lure more Russian travellers to hotspots
The tourism sector will carry out measures to attract more Russian visitors to Viet Nam as there is huge potential for the development of the Russian market, according to the Viet Nam National Administration of Tourism (VNAT).
The Russian market, which has more than 11 million outbound travelers per year, is a major market of the country's tourism sector, said Nguyen Quoc Hung, deputy head of VNAT.
Many more hotels and resorts with a wide range of high-quality services will be built to meet the demand of Russian vacationers who usually spend seven to 14 days for their vacation with high spending, he said at a workshop held yesterday (Sep 11) in HCM City.
Marine tourism products will be diversified to attract Russian vacationers to beaches in Nha Trang, Mui Ne, Phu Quoc, Ba Ria-Vung Tau, Ninh Thuan, Da Nang, Phu Yen and Quang Nam.
The unrest in Egypt, Spain and Thailand has caused more Russian travelers change their favourite vacation destinations to beaches and resorts in Viet Nam, he added.
Various promotional programmes have also been carried out in Russia.
A delegation led by officials from HCM City's Department of Culture, Sports and Tourism will take part in the 20th International Trade Fair for Travel & Tourism- OTDYKH Leisure 2014 in Moscow from September 16-19.
The departments of culture, sports and tourism from Ha Noi, Da Nang and HCM City and the provinces of Khanh Hoa, Ninh Thuan, Binh Thuan, Ba Ria-Vung Tau and Lam Dong will promote marine resort tourism products to the Russian market at the event.
The Vietnamese delegation will also meet with local partners from Russia and the CIS (Commonwealth of Independent States).
In March next year, the Viet Nam National Administration of Tourism will lead tourism and travel agencies and enterprises to promote the country's tourism industry at Moscow International Travel & Tourism Exhibition (MITT).
The number of Russian tourists rose to 298,000 last year from 174,000 in 2012 and 101,000 in 2011.
In the first eight months of the year, Viet Nam welcomed more than 240,500 Russian tourist arrivals, an increase by 27 per cent compared to the same period last year, according to VNAT.
Marks & Spencer opens with a bang
British retailer Marks & Spencer, which opened in Viet Nam just a fortnight ago, has announced that it has already achieved its first month's sales target.
At the official opening ceremony of its first store in Viet Nam yesterday, Munish Rishi, country manager and senior VP – department store at franchisee Central Retail Corporation, told Viet Nam News: "We have been open for 14 days and have only started marketing now. But the response has been fantastic; we reached our one-month target in the first 10 days."
The result has surprised them, he said, adding that 80 per cent of customers were Vietnamese, proving that the Vietnamese retail market is very promising.
Marks & Spencer's first outlet in the country is in HCM City's Vincom Centre Dong Khoi.
Talking about future plans, Bruce Findlay, the retailer's regional director for Asia, told Viet Nam News that "there is great potential in the Vietnamese retail market … We see about 20 stores in the next five or six years. We will open another store here in HCM City and we are looking to go in to Ha Noi and beyond; so we are very excited."
The second and third stores will open in 2015 before going to other major cities in 2016.
The company plans to update its products every month, and customers can also order online and get delivery from the store.
Marks and Spencer, one of the UK's leading retailers, has over 800 stores in that country and 460 others in 56 countries and territories.
In Viet Nam, its stores will be operated by Central, which has a long-standing franchise agreement with it.
Housing law restricts foreign homebuyers
Foreigners entering Viet Nam are no longer automatically allowed to own houses in the country, according to the latest draft of the amended Law on Housing.
The National Assembly's Standing Committee was still discussing the latest version of the law last Wednesday and was expected to submit the final draft to the National Assembly for approval by year-end.
The amended law, which will take effect on July 1, 2015, aims to tighten regulations on the right of foreign individuals and organisations to own houses in Viet Nam. However, to what extent the regulations will be tightened remains a controversial matter.
The regulation allowing all Viet kieu (overseas Vietnamese) and foreigners to own houses in the country was seen in the previous draft, along with the Standing Committee's comments, during a meeting last month.
At that meeting, National Assembly Chairman Nguyen Sinh Hung said foreigners who bought houses for accommodation, doing business, studying or settling in Viet Nam would be encouraged, but those who would enter the country for several days and leave after buying a house would be discouraged.
The draft sets clear conditions for foreigners to buy houses in Viet Nam. They must be working, studying or living in the country to be eligible for house purchases.
In addition, the number of apartments in a building or area that will be sold to foreigners will be capped to ensure security.
Payments must be done through banks and credit institutions accredited for the purpose to prevent speculation and money laundering.
Foreigners will be allowed to own their houses for a maximum of 50 years from the date the house ownership certificate was granted.
Extensions will be allowed but must be in compliance with existing laws.
Vietnam rethinks approach to tobacco smuggling policy
In the years preceding 2010, it seemed that enforcement efforts were effective, with huge amount of cigarettes were destroyed. However, since then the amount of smuggled tobacco has increased by 50%. One official from Market Control Department commented that their staff, customs officials and police were discouraged because of low funding.
According to the Vietnam Tobacco Association, 30% of Vietnam's current tobacco market is smuggled. They added that smugglers take in an estimated USD240 million each year by avoiding taxes.
There are some who argue that revenues from tobacco sales contribute a great deal to state coffers, and that ways should be found to support the domestic industry, which would aid in the anti-smuggling efforts.
One suggestion was that smuggled tobacco of genuine origin be re-exported after it is confiscated, instead of being destroyed.
They claim that this could save the state budget up to VND100 billion in expenses for destroying smuggled tobacco, not to mention the funds from re-exportation.
Many experts have gone on record as saying the best way to fight tobacco smuggling is to improve the domestic industry. There is somewhat of a consensus that the government should create more favourable conditions so that Vietnamese producers can compete with foreign brands.
Vietnam tops US investment choices in SEA
Vietnam is expected to be the top choice for American companies shifting investments from China to Southeast Asia, according to a recent survey by the American Chamber of Commerce in Singapore (AmCham Singapore).
AmCham Singapore just released their survey of business prospects in ASEAN for 2015, based on opinions of nearly 600 leading investors of the US doing business in ASEAN countries.
The survey showed that as many as 37% of companies who responded said they had plans for future business expansion in Vietnam, only after Indonesia with 41%. Coming at the third is Myanmar with 35%.
Among the respondents, 75% said that they would choose Vietnam for investment expansion, and 22% wanted to keep up the current scale. Particularly, Vietnam is at the top of the list of choice for American companies for shifting their investment to ASEAN nations.
Of those asked, 79% of companies said that the Trans-Pacific Partnership (TPP) agreement with the participation of 12 countries, including Vietnam and the US, would have positive impact on American trade and investment activities in Vietnam.
More than half, 57%, said that Vietnam expects their workforce to increase this year, while 66% expected increases in profits this year. Expectations for next year are even higher, at 82%.
The respondents pointed out some particular advantages of investing in the country, including cheap labour, tight security and political stability. Still, some had worries about issues such as corruption, lack of infrastructure. The anti-China protests caused particular worry.
According to the Ministry of Planning and Investment, the US ranks 7th among territories and countries investing in Vietnam, with a total investment capital of USD2.55 billion.VNN/VNS/dtinews/VIR