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BUSINESS IN BRIEF 16/1

Vietnamese bank invests in five-star hotel in Laos;  HCMC agricultural restructuring brings many successes; Power group continues proposing power price increase; VN moves to improve ship standards; WB keeps Vietnam’s GDP growth at 5.6 percent in 2015

Vietnam – a lucrative market for Thai businesses

Coming off the impressive success of Thai trade fairs in Vietnam over the past 13 years, Thai businesses and investors have begun to realise the huge potential the Vietnam market presents.

The statement was made by Nguyen Khac Luan, Director of Vietnam National Trade Fair and Advertising Company (Vinexad) at the opening of a Made in Thailand Outlet taking place on January 15-18 at the Hanoi Cultural Friendship Palace.

Luan said the fair has attracted 100 companies showcasing high-quality Thai products like food, beverages, utensils, cosmetics and skincare products, handicrafts, garments, and electronics in roughly 120 stands.

Thai Ambassador Anunson Chinvano spoke highly of the strong development of the Vietnam market and said the fair provided a good chance for Thai businesses to promote their products.

It also provided an excellent opportunity for them to seek cooperative opportunities with Vietnamese partners to further spur bilateral cooperation.

During the fair, performances by a traditional dance troupe from Thailand have been planned with the aim of advertising Thai traditional culture to Vietnamese people, the ambassador revealed.

Forum pushes Vietnam, Italy trade ties

The establishment of a strategic partnership between Italy and Vietnam has opened opportunities for the two countries to elevate trade ties across a wide spectrum of sectors and stimulate Italian investment into Vietnam.

The statement was made by Ambassador to Italy Nguyen Hoang Long at a January 14 seminar under the framework of Vietnam Cultural Day in Rome.

Speakers at the seminar appreciated Vietnam’s potential – an Asian country with abundant population, skilful workers and an average GDP growth rate of 5-6% annually.

Despites positive signals from Italian investors, Italian investment in the country has not matched with the market’s potential.

By December 2014, Italy had invested in 57 projects in Vietnam with registered capital of US$300 million, ranking 29 out of 101 foreign investors in the country.

Last year, many Italian business delegations made fact-finding tours of the country to seek opportunities.

A representative from Lazio region, Guido Fabiani spoke highly of Vietnam’s investment garnering potential and stated the region would launch a promotion programme on Vietnam to encourage its businesses to seek investment opportunities in the country.

Sharing the same view with Fabiani, Unindustria Vice President Attilio Tranquilli said Lazio could cooperate with Vietnam manufacturing of industrial equipment, garment and leather industries.

Deputy Minister of Economic Development Carlo Calenda underscored that Italian enterprises could strengthen cooperation in many fields, including techniques, high-tech and machinery manufacturing.

According to latest statistics, the two-way trade turnover hit US$3.5 billion last year and has been projected to reach US$5 billion euro in 2016.

Made-in-Thailand outlet fair underway in Hanoi

The 2015 Made in Thailand Outlet is taking place in Hanoi from January 15-18 with a variety of products on offer.

The fair houses 120 pavilions featuring food, beverages, fruits, household utensils, jewellery, cosmetics, garment-textile, souvenirs, automobile spare parts, electrical and aviation devices.

About 100 participating Thai businesses take this occasion to advertise their products and seek Vietnamese partners to boost future bilateral trade, Thai Ambassador to Vietnam Anunson Chinvano said.

A dancing troupe from Thailand is expected to join the event to promote Thai culture among Vietnamese people.

The fair is being organised by the Vietnam National Trade Fair and Advertising Company (Vinexad), the Trade Office under the Thai Embassy in Vietnam, and the Thai Ministry of Commerce’s Department of International Trade Promotion.

Vietnamese bank invests in five-star hotel in Laos

The Bank for Investment and Development of Vietnam (BIDV) and LaoVietBank, a joint venture between BIDV and Laos’ BCEL, will finance the construction of a five-star hotel and office complex in the Lao capital of Vientiane.

To this effect, a credit contract was signed in Vientiane on January 14 in the presence of Vietnamese Minister of Public Security Tran Dai Quang, Lao Acting Minister of Public Security Somkeo Silavong, and BIDV Chairman Tran Bac Ha.

Under the contract, the two banks will offer a credit loan of 35 million USD to the 62 million USD project.

Speaking at the event, BIDV Deputy General Director Tran Luc Lang affirmed that the contract reflects Vietnamese businesses’ commitment to increasing investment in Laos .

Covering an area of 2 hectares, the complex consists of a five-star hotel and residential and office buildings for lease. It is expected to serve the 10 th National Congress of the Lao People’s Republic Party in late 2015 and early 2016 and the ASEAN Summit in 2016.

Top firms strive to redress skilled worker shortage

Amid the shortage of skills in the Vietnamese workforce, many foreign companies have invested in training courses in the Vietnamese education system to bring about improved workforce quality and productivity.

Late last year, Mitsubishi Heavy Industries (MHI) held a ceremony at the Electric Power University in Hanoi to mark the fourth year of the Japanese company providing instruction in nuclear engineering at this educational institution.

In August 2010, the university established a department specialising in nuclear power generation. This department’s remit is to produce engineers qualified to work at nuclear power plants to be introduced in Vietnam. Education entails hands-on learning in the operation and maintenance of nuclear power stations. From the outset, MHI has contributed to the development of the department’s basic educational framework, including co-operation in preparing course curricula.

MHI announced that the courses it provides at the university would enable Vietnamese students to master practical expertise directly from engineers with experience in such operations. In addition, MHI is also funding courses on nuclear engineering at the Hanoi University of Science and Technology.

The courses are being  provided on the basis that  MHI is expected to be the second foreign company to build a nuclear power station in Vietnam, as it has presented the ATMEA1 reactor technology to the Vietnamese government. And when the first nuclear engineering students graduate in 2015, MHI believes that the firm will play an active role in the nuclear-related field in Vietnam which is facing severe shortages of well-trained staff to run future nuclear power plants.

Since Vietnam opened its doors to foreign companies, the shortage of skilled workers has been a bottleneck issue. Although the transitions taking place in China – including rising labour costs and the shift towards an economic model that is less reliant on exports – are creating opportunities for Vietnam to capture a greater share of global manufacturing, foreign investors worry that the advantage of low labour costs is undermined by weak output per worker.

Vietnam’s General Statistics Office last month announced that the productivity of a Vietnamese worker is 18 times lower than a Singaporean.

“This productivity challenge, along with slow development of a skilled workforce, could threaten continued growth. One study has reported that curricula are outdated, teachers overstretched and underpaid, and graduates lack the job-ready skills sought by multinationals,” said Gaurav Gupta, chairman of the American Chamber of Commerce in Vietnam.

But while the nation’s education system is slowly developing, the involvement of foreign companies, like MHI, are very supportive in tackling the issue of skills shortage in the workforce. Alongside MHI a number of other companies are investing in the up-skilling of  Vietnamese workers.

Intel Products Vietnam, which currently operates Intel’s largest chipset manufacturing factory in Ho Chi Minh City, co-operated with the United States Agency for International Development and the Arizona State University’s Ira A in 2010 to found a higher engineering education alliance programme – better known by HEEAP.

HEEAP  has attracted many other sponsors including Vietnam’s Ministry of Education and Training, Ho Chi Minh’s Hi-Tech Park, Siemens, Danaher, Cadence, National Instruments and Pearson with an aim of building ready-to-work students and providing high quality human resources with local training for hi-tech industries in Vietnam.

As recently as June 2014, 24 engineering lecturers from the five HEEAP Vietnamese partner universities travelled to the Arizona State University to take part in a HEEAP Faculty Development Training. The group spent six weeks learning about engineering curriculum design, student success, and active learning techniques. During their training, the cohort learned valuable lessons that will not only benefit their own classes, but also serve to transform education at their institutions.

Bosch Vietnam in 2013 also cooperated with LILAMA 2 Technical & Technology College in setting up an apprenticeship programme to provide Technical Industrial Apprenticeships that are in  accordance with German vocational training standards. In this partnership programme, LILAMA 2 will impart theoretical knowledge to the apprentices, who will then undergo practical training at the Bosch automotive pushbelt manufacturing plant in the southern province of Dong Nai. Through the programme, Bosch aims to build up a highly skilled local technical workforce in Vietnam, especially in Dong Nai.

Vo Quang Hue, CEO of Bosch Vietnam, said human resources was the key factor in the business growth of Bosch in Vietnam. “Bosch can only maintain double-digit growth in economically difficult times and increase activities at the software centre in Ho Chi Minh City as well as expand the factory in Dong Nai’s Long Thanh when it has successfully dealt with challenge of workforce quality,” Hue said.

Binh Duong businesess seek unskilled workforce

Enterprises in Binh Duong province, one of the southern region's economic centres, need to recruit over 45,000 unskilled workers in 2015 to meet their production demands in garment, footwear and wood manufacturing fields.

According to the province's employment centre, more than 21,000 unskilled jobs were available during its first job exchange session on Sunday, offering a monthly salary of VND4-5 million (US$235).

The businesses looking to hire new employees include Truong Thanh Wood Industry Company, Apex Viet Nam Co, Ltd, and Sheico Viet Nam Co, Ltd.

Nguyen Thanh Phuong, head of the job introduction office, said that this year the office continues to help local businesses take part in labour linkage programmes with other provinces to attract workers.

Ho Chi Minh City licenses two integrated circuit projects

An investment license has been granted to two integrated circuit projects to be implemented at the Saigon Hi-Tech Park (SHTP), a hub for high technology enterprises in Ho Chi Minh City.

The developers of both of the projects, the United Vietnam Photonic Company (UVP) and Saigon Semiconductor Technology Inc. (SSTI), are 100 percent Vietnamese-invested firms, according to the SHTP management board.

SSTI will set up an integrated circuit manufacturing plant, a research and development center, and a multi-function experimental facility on a two-hectare land plot inside the park.

The last facility will conduct research on developing energy-saving products such as light-emitting diodes and solar cells.

The total investment for the SSTI project is more than US$257 million.

Another name for a chip, an integrated circuit is a small electronic device made out of a semiconductor material.

SSTI is a semiconductor company formed in 2014, according to its website. The start-up is establishing facilities that manufacture, assemble, and test the GaAs compound.

GaAs is the chemical formula for gallium arsenide, a semiconductor compound used in some diode, field-effect transistor, and integrated circuits.

Le Hoai Quoc, head of the SHTP management board, said the park is focusing on attracting investment in the fields of semiconductors and chipmaking.

The management board is cooperating with investors in Silicon Valley in the U.S. to lure investment for the SHTP, he added.

In mid-2012, the Ho Chi Minh City administration initiated a program to develop an integrated circuit industry in the 2013-2020 period, according to The Saigon Times Online.

The municipal administration also set a target of raking in $100-150 million in revenue from the industry by 2017 and having 2,000 newly-trained engineers and technicians as well as 30 new chipmakers.

A VND6.6 trillion ($314.2 million) project to set up an integrated circuit making plant at the SHTP by the Saigon Industry Corporation had been expected to be the first under the program, but no investment license has been issued to it.

 HCMC agricultural restructuring brings many successes

Ho Chi Minh City’s agricultural restructuring program has reduced income gap between urban and rural citizens, made the city a breeding and seedling production and supply center, and increase export turnover since it was approved in 2004.

At an online conference to review the country’s agricultural industry in 2014, deputy chairman of HCMC People’s Committee Le Thanh Liem said last year the city’s agro, aqua and forestry Gross Domestic Products (GDP) went up 5.8 percent over 2013, much higher than the country’s 3.3 percent.

The growth rate averaged 5.8 percent in HCMC and appropriated 3 percent in the country in the phase of 2011-2014.

GDP per capita in HCMC suburb has increased to account for 80.5 percent of that in center areas, cutting income gap between rural and urban citizens to 1.2 times from 1.8 times before.

They are results from the city’s agricultural restructuring program, which gave farmers incentives to convert their low yield rice areas into other product farming bringing better economic value.

In the 1990s the city’s agriculture seemed to make no progress when urbanization occurred and the first real estate fever erupted. GDP growth rate swung around only 1 percent a year.

The agricultural restructuring program has been implemented towards increasing the added value and quality of farmed products and production effectiveness.

It has provided interest rate assistance to farmers to cultivate new plants and breed animals with high economic value such as safe vegetables (vegetables meet food safety and hygiene standards), orchids and dairy cows.

Last year average production value per hectare of cultivated land was VND325 million (US$15,226) in HCMC, up 15.2 percent over 2013 and twice over 2010. The country’s average number was VND100 million a year.

HCMC has become a breeding and seedling center not only supplying domestic farming but also exporting many products.

Businesses exported 415 ton seed varieties such as corn, vegetables, bean, flower, and fruit plants to the Netherlands, Italia, Taiwan (China) and Cambodia in 2014.

They shipped nearly 300,000 orchid stems worth VND3 billion to Cambodia, 1,000 frangipani grafts to Japan, and 1,000 tons of vegetables including pumpkin, cabbage, herbs and black saffron to European, American and Asian nations and Dubai in the Middle East.

On the same year 11 million ornamental fish, nearly 16,000 crocodiles together with 1,500 crocodile leathers were sold to China, South Korea, Georgia and other European nations.

HCMC also supplied over 900,000 breeding pigs and 24,000 breeding milk cows to farms across the country.

Besides mapping out a right policy on urban agricultural development, the city authorities have timely given farmers incentives such as loan interest rate assistance to make the program successful.

According to the Department of Agriculture and Rural Development the city has achieved success in carrying out Public Private Partnership, which mobilized 96 percent of investment capital in agriculture development from social sources.

HCMC is striving to complete its new rural development program by next year to celebrate the 40th anniversary of the country’s Reunification Day.

Power group continues proposing power price increase

The country’s largest power company Vietnam Electricity (EVN) has again proposed the Ministry of Industry and Trade to permit it to increase electricity prices.

At a meeting held by the company on Tuesday to review its operation last year and discuss this year plan, EVN said that electricity price calculation has not been updated with input cost changes since last year. For instances prices of coal and gas supplied for electricity production have been increased and water resource tax and forest environmental fee have been hiked too.

This has caused EVN a loss of VND8 trillion (US$374.8 million). The loss will total VND16,800 billion (US$787.08 million) with exchange rate fluctuation.

Another issue which EVN reported at the conference was that nearly 54 percent of the company’s power output supplied to industrial sector had contributed to only 39 percent Gross Domestic Product (GDP). Meantime four percent of the power output used in commerce and trade fields has contributed to 44 percent GDP.

 EVN produced and purchased 142 billion kilowatts of electricity, yielding VND196 trillion (US$9,183 million) in revenue last year.

The group has set a target to raise the power output by 10 percent against 2014 to reach 157 billion kilowatts this year.

Several more supermarkets, shopping malls opened in HCMC

Ho Chi Minh City put into operation five supermarkets and two shopping malls last year, setting a high record in the city, said the city Department of Industry and Trade.

In addition businesses have been building some new supermarkets specializing in selling electronic items and refrigeration appliances.

Besides the modern shopping system HCMC has 140 traditional markets, and a lot of spontaneous markets which local authorities have conducted several measures to clear.

HCMC has built and effectively operated three food wholesale markets Binh Dien, Thu Duc and Hoc Mon, towards forming goods exchange floors right at these markets.

VN moves to improve ship standards

The maritime sector is leaving no stone unturned in efforts to reduce the number of Vietnamese vessels detained at foreign ports and thereby take Vietnam off international maritime blacklists.

Recent reports show that in 2014 the country succeeded in reducing the number of ships detained for failing to pass Port State Control (PSC) inspections, by making several improvements to its ships and national regulations.

The Ministry of Transport's Vietnam Register reported that last year, out of 732 vessels that underwent PSC inspections, only 3.55 percent of Vietnamese vessels were detained. The new numbers show a decrease by 2.58 percent, or 21 less ships than in 2013.

In the Asia-Pacific region [also referred to as the Tokyo-MOU region], 20 Vietnamese vessels were held in Chinese ports in Guangdong, Guangxi and Hainan provinces because of failing to meet safety and security standards.

Elsewhere, one vessel was detained in the West Europe – North Atlantic region and five in the Indian Ocean region.

"The scheme to take Vietnamese seagoing ships off the 2014 Tokyo-MOU blacklist has yielded fruitful results. However, the results are not yet sustainable and more renovations are needed in the coming years," said Vu Hong Hai, Deputy Director of the Vietnam Register.

To reduce the number of vessels detained after PSC inspections, the Vietnam Register is working with partner agencies and vessel owners to implement new standards, especially in vessels unlikely to pass the Tokyo-MOU's new inspection system (NIS).

The Vietnam Register will also make a list of currently detained vessels and provide support to the vessel owners and captains in identifying and correcting their safety and security infractions.

Technical surveillance of seagoing vessels will be improved by intensifying government oversight of vessel design; the construction process; certification of machinery, materials and equipment; and certification of labour safety and security management for international vessels. Routine inspections will be performed to identify potential or actual causes for detention and call on the responsible organisations or individuals to make the necessary corrections or take precautions against future incidents.

Disciplinary actions will be taken against ship owners and registration agencies responsible for detained vessels. Heightened scrutiny will be directed towards the maritime port authorities that let the vessels leave domestic ports in the first place.

Maritime port authorities will be compelled to strictly inspect seagoing vessels operating along international routes, said a representative of the Vietnam Maritime Administration who chose to remain anonymous.

According to the unnamed representative, all seagoing vessels, especially those that have already been detained abroad, must go through additional checks before leaving Vietnamese ports. No vessels failing to meet international standards will be allowed to embark.

Vietnam officially became a member of the Tokyo-MOU on January 1, 1999. According to a Maritime Administration report, the country has consistently been put on the Tokyo-MOU country blacklist due to its high number of sub-par vessels.

Vinacomin enjoys rise in revenue

The Vietnam National Coal and Mineral Industries Group (Vinacomin) is estimated to have earned more than 108.9 trillion VND (5.06 billion USD) in 2014.

This is a 14 percent increase year-on-year, and three percent higher than the yearly target, the Voice of Viet Nam (VOV) reported.

VOV quoted Vinacomin's statistics as saying that the revenue from coal exploitation was more than 53.1 trillion VND (2.47 billion USD). It also earned more than 12 trillion VND (558.1 million USD) in revenue from electricity production and 6.47 trillion VND (301 million USD) from minerals production.

Last year, the group's earned an estimated 2.5 trillion VND (116.3 million USD) in profits, contributing 12 trillion VND (558.1 million USD) to the State budget.

Vinacomin produced 37.4 million tonnes of coal during the period, with consumption of 35.5 million tonnes. Of this, coal exports comprised 5.94 million tonnes, while 29.6 million tonnes were sold in the domestic market.

During the period, Vinacomin gained 1.6 trillion VND (74.41 million USD ) by divesting three non-core businesses in finance, insurance and the securities sector. It also issued five-year bonds worth 3 trillion VND to (139.5 million USD) mobilise capital for coal and minerals projects.

The group aims to produce 40.8 million tonnes of coal this year, with consumption of 38 million tonnes. Of the sum, coal exports will amount to 3 million tonnes, while 35 million tonnes will be for domestic consumption.

It also aims to earn more than 114 trillion VND (5.3 billion USD) in revenue.

Earlier, Vinacomin's Deputy General Director Nguyen Van Bien asked the government to lower taxes and duties, to help the group accumulate capital to develop its coal mines, while allowing it to export coal to Japan till 2015.

The rising taxes and fees, together with unchanged coal prices in the domestic market for the past three years, have caused difficulties for Vinacomin, he said. Bien added that the high taxes and fees will make the coal sector run out of capital for investment.

WB keeps Vietnam’s GDP growth at 5.6 percent in 2015

The World Bank (WB) has forecast that Vietnam’s economy will grow 5.6 percent in 2015, the same level as last year.

According to the bank’s report “Global Economic Prospects 2015” released on January 13, Vietnam’s gross domestic product (GDP) growth will further improve in the next two years, reaching 5.8 percent in 2016 and 6 percent one year later.

Vietnam’s economy may grow stronger in the years to come thanks to recent political-economic reforms and sharply increasing foreign direct investment (FDI) flows, said the report.

“In Vietnam, although macroeconomic stability is solidifying, banking sector balance sheets need to be strengthened to improve access to credit,” the WB said, adding that regulatory reform is also needed to level the playing field for private businesses – especially domestic ones – in relation to state-owned enterprises.

The WB report also indicated that the Asia-Pacific growth is expected to ease slightly to 6.7 percent in 2015 from 6.9 percent in 2014 and remain stable over the projected period.

In the Southeast Asian region, some economies such as Cambodia, Myanmar and Malaysia are forecast to grow slower than 2014.

Meanwhile, the Philippines, Indonesia and Thailand will see remarkable economic growth in the next two years after a series of political and economic fluctuations last year.

$178 million invested into Ho Chi Minh City

The southern metropolis Ho Chi Minh City has granted investment licences to a firm from the UK and a firm from the Republic of Korea (RoK) for an expected investment of 178 million USD.

An affiliate of the UK’s Gain Lucky Corporation, the Worldon Vietnam in Cu Chi district specialises in designing and manufacturing hi-end apparel and will increase its capital in the country to 300 million USD from 140 million USD.

Meanwhile, the apparel producer Nobland Vietnam under the RoK’s Nobland International Inc, registers a capital hike from 43 million USD to 61 million USD, which will be used to scale up its operation and generate jobs for over 8,000 workers.

Addressing the approval ceremony on January 14, Deputy Chairman of the municipal People’s Committee Tat Thang Cang vowed full support for investors by streamlining bureaucracy, fine-tuning legal regulations, and upgrading infrastructure.

Last year, the city drew 3.2 billion USD in both new and increasing capital investments, with processing and industrial zones hosting 523 foreign projects worth nearly 5 billion USD.

Over 90 million USD poured into Vietnam’s infrastructure company

The Philippines’ Metro Pacific Tollways Corporation (MPTC) signed a deal on acquiring a portion of stock ownership in the Ho Chi Minh City Infrastructure Investment Joint Stock Company (CII) on January 14.

MPTC purchased 30 million shares of CII Bridges and Roads Investment Joint Stock Company (CII B&R) from CII and subscribed to 1.02 million convertible bonds of the Vietnamese firm.

The transaction is worth 1.95 trillion VND (91.4 million USD).

The deal will take full advantage of CII’s local experience and MPTC’s professional practice to promote CII B&R as a leading company at both national and regional levels.

According to CII Chairman of the Board of Governors Le Vu Hoang, MPTC has financial strength and years of experience in operation and maintenance services of roads and bridges, especially with toll roads.

CII B&R has investments in infrastructure, road and bridge construction, clean water production, industrial zone infrastructure and real estate.

MPTC is the largest toll road operator in the Philippines, operating 63 percent of the 320 kilometres of toll roads.

MPI to closely manage public investment

Improved public investment management is among the key 2015 tasks not only for the Ministry of Planning and Investment (MPI), but also for other agencies and localities, stated Minister of Planning and Investment Bui Quang Vinh.

Views must universally shift from short-term vision to long-term strategies, Vinh said to the media recently.

In 2015, Vietnamese enterprises are expected to face greater challenges, including fiercer competition as a result of the formation of the ASEAN Economic Community and the implementation of other international integration commitments, he said.

To that end, the ministry will continue assisting and strengthening support to businesses, especially in building and promoting their trademarks with a focus on private firms, said the official.

He also stressed that enterprises should take the initiative in improving connections, boosting the development of the support industry, and updating their technology.

He predicted that the number of companies ceasing operations or filing for bankruptcy will be lower than that of 2014.

Vinh reiterated that reforming the economic institutions is an ongoing necessity. Vietnam is in the process of building and completing legal frameworks in line with international best practices, thus creating favourable conditions for stable enterprise operations.

He emphasised the need to mobilise resources for the renovation of growth models based on innovation, advanced technology, and high labour productivity.

The official also revealed that a decree on public-private partnership (PPP) investment model will shortly be announced, providing favourable conditions for the private sector to engage more deeply in the country’s growth process.

Currently, the Government is working to complete a list of projects calling for investment in PPP form, to be made public soon, he added.

Korean and UK firms granted investment certificates

Chairman of the Ho Chi Minh City People’s Committee Le Hoang Quan on January 14 granted investment certificates to Korean-invested Nobland Vietnam and Worldon Vietnam of the UK.

With the certificate, Nobland Vietnam will increase its investment from US$43 million to US$61 million, said Director General Kim Chung Kuk.

Meanwhile, Worldon Vietnam will build a fashion design centre and a factory on an area of 52ha to produce high-quality garment products. The company will build houses on 7 hectare for workers in Dong Nam industrial park (IP) in Hoa Phu commune, Cu Chi district with an estimated cost of US$300 million.

Nobland Vietnam was established at Tan Thoi Hiep IP in 2002 with an investment capital of US$3 million. From a plant with 15 production chains at the beginning, the company now has three factories with 120 production chains.

FIA assesses the pros of multinational corporations

The foreign capital inflows provided by multinational corporations (MNCs) have been immensely positive for the nation’s economic development, according to a representative from the Foreign Investment Agency (FIA).

Particularly the inflows into infrastructure and advanced technologies have helped to transform the way Vietnam does business by improving the quality of products, labour productivity and profits, which has driven the expansion of exports and economic growth.

This in turn has sped up the movement to a more modern and industrialised society, the representative said.

In addition, (MNCs) have created good paying jobs and have provided access to advanced education and training for labourers and employees, improving their standard of living.

Last but not least, domestic businesses directly benefit from the the significant investments in research and development (R&D) of MNCs. Only large firms with significant resources can afford R&D, which most often directly benefits suppliers of raw materials and components.

In other words, MNCs in Vietnam have spawned the development of supply chains providing domestic small and medium sized businesses with ground floor opportunities to get a footing and actively participate in the global marketplace.

Overall, they contribute directly to enhancing the nation’s competitive edge and are good for the country, the FIA representative said.

Vietnam coal imports off to an early start

Vietnam has imported its first coal for 2015 to help generate electricity to keep up with rising business and consumer demand, Vietnam National Coal and Mineral Industries Holding Corporation (Vinacomin) General Director Dang Thanh Hai has said.

Hai said the company recently imported 41,000 tonnes of anthracite coal from Russia adding that, imported coal is expected to play an increasingly larger role in meeting the increasing demand.

In the past Vietnam has relied solely on domestic coal, but supplies are proving increasingly more difficult and costly to retrieve. It has become more cost effective to import cheaper coal from other countries than mine domestic coal.

Vinacomin has recently placed orders to import coal from Indonesia and Australia to meet commitments to fuel the Vinh Tan 4 and Duyen Hai 3 power plants for Electricity of Vietnam (EVN) and to bump up its stockpiled inventories.

For calendar year 2015, Vinacomin plans on consuming 38 million tonnes of coal to ensure it meets the demands of energy for the economy, Hai concluded.

Thailand steps up tra fish imports

Thailand’s imports of Vietnam tra fish for calendar year 2014 jumped 25% on-year, according to the latest statistics from the General Department of Vietnam Customs.

Among the many factors contributing to the increase was arise in the average price to US$2.14 per kilo in 2014 from US$2.1 per kilo in 2013.

In the first eleven months of last year alone, Thailand’s tra fish imports from Vietnam were estimated at US$40.5 million, accounting for 97% of the total market share of frozen fish fillet imports.

Manila's MPIC buys stake in CII B&R to increase company's profitability

Metro Pacific Investments Corp. (MPIC) yesterday said its subsidiary entered into an equity investment and financing transaction with HCM City Infrastructure Investment Joint Stock Company (CII).

Through the transaction, Metro Pacific Tollways Corp. (MPTC) will secure a significant minority equity interest equal to about 45 per cent of the outstanding capital of CII Bridges and Roads (CII B&R) "through a combination of purchase of CII B&R secondary shares from CII, and subscription to VND (Vietnamese dong) -denominated bonds to be issued by CII, which are exchangeable into secondary shares in CII B&R."

MPTC is purchasing 30 million secondary shares of CII B&R from CII at VND22,100 (US$1.03) per share and is subscribing to 1,020,000 bonds with a face value of VND1 million ($47) or 56,666,667 shares of CII B&R.

The VND1.954 trillion ($91.54 million) transaction is expected to "enhance profitability and strengthen the balance sheet" of MPIC, according to the disclosure.

CII's investment activities are focused on infrastructure, road and bridge construction, clean water production, industrial zone infrastructure, real estate, and equity investment, according to its website.

Le Quoc Binh, general director of CII, told local media that the sale was as per CII's restructuring plan, adding that it chose the Filipino partner because they both work in the same area and can take advantage of the technology.

Binh added that his company will keep at least 51 per cent of the stake in CII B&R. Among CII's five subsidiaries, CII B&R is the most important one. It owns and operates seven construction projects in HCM City and plans to invest $1.7 million in nine other construction projects.

Major infrastructure projects to be audited

Nearly 50 big projects, including the Noi Bai International Airport Terminal 2 and the HCM City-Long Thanh-Dau Giay Expressway, will be audited this year.

The State Audit of Viet Nam said it plans to check these projects' construction, investment usage and management.

Other projects likely to come under the scanner are the National Assembly House, the National Highway 3's Ha Noi-Thai Nguyen section in the phase 1, the Nhat Le 2 Bridge and the Da Nang Administrative Centre.

In addition, the SAV will conduct an audit at State-owned groups and corporations, including the Electricity of Viet Nam (EVN), the Viet Nam National Oil and Gas Group (PVN), the Viet Nam National Shipping Lines (VINALINES), the Viet Nam National Tobacco Corporation (VINATABA) and the Song Da Corporation.

Financial reports of the State-owned groups and corporations related to capital management and usage, as well as implementation of their restructuring plan for the period of 2011 to 2015 will be examined.

An audit will also be conducted for the Viet Nam National Textile and Garment Group (VINATEX), Viet Nam National Post and Telecommunications (VNPT), Viet Nam Railway, as well as the Vietnam Airlines Corporation's restructuring plan.

The Viet Nam Shipbuilding Industry Group's (Vinashin's) restructuring plan will also be reviewed.

Thai developer Amata to invest in Dong Nai

Thai industrial city developer Amata will invest in three new high-tech industrial park and urban development projects in the southern Dong Nai province, news website dddn.com.vn reported on Tuesday.

Amata Viet Nam Public Limited will be the investor of a 753ha urban development project in the province's Tam An commune in Long Thanh district.

Meanwhile, a high-tech industrial park project and an urban development project, spreading over 410ha and 122ha respectively, will be developed by Amata's affiliates in Tam An and An Phuoc communes in Long Thanh district.

Dong Nai People's Committee has established a steering committee to help the investors in getting land clearance and giving compensation. The investors are now working with the Long Thanh People's Committee to measure the land and hire consultants to develop planning documents for the three projects.

Amata also plans to develop a large-scale high-tech industrial park in the northern Quang Ninh province and a township complex in the southern Binh Dinh Province.

In September 2014, Amata signed an agreement with the Dong Nai People's Committee to implement a US$530-million high-tech industrial zone and urban development project in Long Thanh District.

Amata also plans to develop a large-scale high-tech industrial park in Quang Ninh and a township complex in Binh Dinh, following the successful operation of its first Amata City Bien Hoa industrial park in Viet Nam, which houses multinational corporations and employs 33,000 workers.

Ha Noi property market to rebound

Experts at foreign property consulting firms expect the property market in Ha Noi to rebound strongly this year, owing to robust sales of apartments during the last quarter of 2014.

The Savills Viet Nam Ltd Company pointed out that six new housing projects, with approximately 2,900 units, have been launched recently. This reflects the highest number since the second quarter of 2013.

"The ‘apartments for sale' segment is recovering. Since the first quarter of 2014, the number of apartments placed on sale has jumped, while the inventory level has decreased," Do Thu Hang, the Head of Research and Consultancy, Savills Ha Noi, said yesterday.

"The number of sold apartments during the last two quarters is at its highest since the second quarter of 2011. The total number of sold apartments in 2014 was the highest since 2009."

There is continuing demand from end-users and investors on projects with the following characteristic: good construction progress, convenient accessibility and strong developer reputation, Savills Viet Nam revealed.

Some projects in the foundation stage are also reporting a strong absorption rate due to the participation of speculators and real-estate agents stepping up the premium on off-contracts.

Meanwhile, the CB Richard Ellis Viet Nam (CBRE) Ltd Company said sales momentum for condominiums has continued to grow firmly and steadily. The market absorbed an estimated 3,990 units during this quarter alone, which was reflected in the 47 per cent growth from last quarter.

In total, 10,700 units were reportedly sold in 2014, which was a 60 per cent increase from 2013's record.

"With the market's recovery, the real-estate risk level has decreased. Along with the disbursement from banks and other investors, the real-estate M&A activities will become more intense," said Nguyen Hong Son, Head of Savills Ha Noi's Valuation and Feasibility Study and Valuation.

"The property market in 2015 has been on the road to recovery since 2014, and is expected to see a significant increase in the residential sector. Also, the market should get a new target when the new housing law becomes effective," Son noted.

"Moving forward, it is expected that the market will continue to look positive in 2015," said Nguyen Hoai An, CBRE Ha Noi's Senior Manager.

Sales are expected to remain strong, while more launches of new projects and re-started projects will be announced in the market, especially during the first half of 2015, she added.

Luxury and high-end products will be sought-after as stock for these products is diminishing, said An, adding that while foreign ownership will be expected to stimulate demand, activities on this front will be slow in near-term as new players take their time to assess the market's movement.

By the end of 2016, about 14,200 apartments from 25 projects are expected to come online, Savills Viet Nam predicted.

The revised Housing and Real Estate Business Laws are also expected to boost demand from foreigners and Vietnamese residing abroad.

The market is expected to grow in 2015, but could be hurt by strong speculation.

Gov’t to tighten financial disciplines

Tightening financial disciplines is one of the major tasks of the Ministry of Finance in 2015, according to the Government’s Resolution 01/NQ-CP on key tasks and solutions guiding the implementation of the socio-economic development and state budget plan for 2015.

The move aims to increase the efficiency of using the national resources for development and is part of the effort to address the country’s improper budget spending structure as said by the Government during recent Cabinet meeting.

The Government tasked the Ministry of Finance not to issue more policies which may lead to the shrinkage of budget revenue in 2015, except those relevant to tax reduction in accordance with international commitments.

The Ministry will not be allowed to promulgate new policies that increase budget spending in case the resources are not clearly defined.

The Ministry must take drastic measures to counter trade evasion, strictly control tax refund, periodically publicize tax debts of each locality and enterprise, step up tax inspection while creating favorable conditions for tax payments.     

The budget will be restructured towards raising domestic share and ensuring the balance of regular spending, investment and debt payment.

The Government asked the Ministry to provide detailed instructions to cut down expenditures for conferences, seminars, festivals, ground-breaking ceremonies, overseas tours.

The Ministry is responsible for taking comprehensive measures enhance management of public debt and submit a public debt report to the Government every six months.

Since 2015, the Government will issue bonds with at least five-year term, the Resolution says.

Kien Giang sets $170m seafood export target

Cuu Long (Mekong) Delta province of Kien Giang plans to export seafood worth US$170 million this year, even though the sector is facing significant obstacles, local authorities said.

Last year, the total seafood cultivated and exploited in the province amounted to 635,000 tonnes, 9.3 percent higher than in the previous year. The quantity of shrimp reared alone reached more than 51,000 tonnes, a year-on-year increase of 23 percent.

While demand for many products with high economic value, such as cuttlefish and some kinds of larger fish, tended to rise, seafood export revenue fell by nearly 30 per cent year-on-year at less than $120 million.

According to Vice Chairman of the People's Committee of Kien Giang Mai Anh Nhin, the situation can be attributed to tough economic conditions, as global markets continued to see unpredictable fluctuations and the involvement of increasing trade barriers that focus on product quality.

"The imposition of anti-dumping duties on Vietnamese products in large markets caused many enterprises to fail in their efforts to seek export markets, although they produced significant volumes of goods," he said. "Currently, this is the biggest concern for seafood exports, not only in Kien Giang but all over the country."

Nhin added that some firms still faced difficulties in seeking capital despite banks having slashed interest rates¯since they still had limited management capacity in the face of rising costs and unstable market prices.

Moreover, Director of the Kien Giang Seafood Joint Stock Company Nguyen Viet Cuong observed that even though the government had launched financial support packages, many enterprises found it difficult to meet the requirements of banks, which ask them to have stable export markets and prove to have no bad debts in consecutive years.

Cuong further noted that almost all major markets in the European Union have not completely recovered, while exports to China and South Korea had slowed due to tensions in the East Sea last year; exports to Japan had become less competitive due to the imposition of stricter quality control measures in the market.

Seafood processing factories also bore more burdens from increasing electricity rates, breeding costs and wages, he added.

In addition, Director of the Provincial Department of Industry and Trade Huynh Van Ganh pointed out that to meet the export target of 2015, the province will strengthen links between enterprises and farmers in key shrimp- and rice-producing areas, such as West Hau River and U Minh Thuong.

This would help ensure a stable supply of material for seafood exports, besides measures to boost shrimp breeding in industrialised models. The agency would also co-operate with the Viet Nam Chamber of Commerce and Industry to hasten the certification of product origins to ease procedures for exporters.

Furthermore, the People's Committee had issued specific policies to boost the development of seafood processing and export by 2020.

Legal entities that are established in accordance with the enterprise and cooperative laws - with projects coming into operation between January 1, 2014 and December 31, 2017 - will enjoy loan interest rate support if they apply advanced technology in the provincial seafood sector.

The committee will offer interest rate support within three years after the projects come into effect at levels of 50 percent for the first year, 40 percent for the second, and 30 percent for the third. These will be applied to bank loans not exceeding VND50 billion ($2.38 million) per project.

 

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

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