Turning back the tide: Japan attracting investment from Vietnam

Japan is calling for Vietnamese enterprises and investors to do business in the land of the rising sun.

Japan External Trade Organisation (JETRO) recently held a press conference in Hanoi, where JETRO called for Vietnamese investors and enterprises to do business in Japan, introducing it as an attractive investment destination.

“Come invest in Japan,” said Hironobu Kitagawa, chief representative of JETRO in Hanoi. “We would like to attract investment from Vietnam into numerous sectors in Japan, such as IT, health care, manufacturing, and foodstuffs.”

“Japanese consumers attach great importance to the quality of goods. If you can meet Japanese people’s standards, you are as good as set for any other market,” Kitagawa said, adding, “Many global groups often launch their new products in Japan before other markets. A number of Vietnamese firms have been investing in Japan, with very good results, such as FPT and CMC.”

Previously, Japan did not lay heavy emphasis on luring in foreign direct investment (FDI). However, due to its economic development requirements, the nation is now changing its mind.

JETRO currently has a programme to assist Vietnamese firms and investors to invest in Japan. This programme offers free-of-charge services for Vietnamese people at Invest Japan Business Support Centres (IBSC) in Japan.

These centres are located in six major cities, including Tokyo, Yokohama, Nagoya, Osaka, Kobe, and Fukuoka.

At each IBSC, experienced staff and advisors provide information by using a broad network across the public and private sectors, and offer consultation according to foreign companies’ needs. Each IBSC also offers temporary office space for a maximum of 50 days for overseas firms that have yet to enter the Japanese market or for foreign-affiliated companies already present in the country and set to deploy a new base.

IBSC temporary offices are located near major government offices and have convenient access to important business centres across Japan. Such proximity enables overseas companies to complete applications, registrations, business negotiations, and other preparation to smoothly establish and expand their business.

Besides, IBSC also provides free individual consultation for companies. IBSC staff and advisors can provide information about such matters as industrial structures and market shares, Japanese business practices in regard to procurement, product sales, and industrial systems, as well as offering advice based on the needs of the company.

Australia renews commitment to support Vietnam’s economic reform

The Australian Government and the Vietnamese Ministry of Planning and Investment jointly launched Aus4Reform – a four-year long programme to boost the productivity and competitiveness of Vietnam’s economy, in Hanoi on December 13. 

The 6.5 million AUD programme will support the Government of Vietnam to achieve its targets for improving the business environment and move Vietnam towards a more market-based economy through assisting the development and implementation of economic policies, laws and institutions critical to helping Vietnam’s economy meet its potential. 

The initiative will also build linkages between Australian and Vietnamese institutions to share expertise and experience. 

Australian Ambassador Craig Chittick said Vietnam has a long history of pursuing economic reform and Australia is proud to have offered our support throughout this process. “Economic reform is tough, but Australia will continue to support Vietnam on this journey,” he said.

Australia’s support will help Vietnam achieve its goal of one million new formal private enterprises by 2020, increase the percentage of women-led enterprises and accelerate the growth in private sector employment.

Aus4Reform brings together Vietnam’s leading think-tanks and government agencies responsible for economic policy making and implementation, including the Central Institute of Economic Management (CIEM), Vietnam Competition and Consumer Agency (VCCA), the Institute of Policy and Strategy for Agriculture and Rural Development (IPSARD), Vietnam Chamber of Commerce and Industry (VCCI), the Party Central Committee's Economic Commission and the Economic Committee of the National Assembly.

The programme builds on the reform momentum achieved through previous Australia support including “Beyond WTO” and “Restructuring for a more Competitive Vietnam”.-

US companies explore smart city opportunities in Central Vietnam

Consul General Mary Tarnowka from the US Consulate General in Ho Chi Minh City joined 14 smart city-related companies in Nha Trang on December 12 for the first leg of a three-city business development mission to Central Vietnam.

The delegation of 27 US government and industry representatives met with city officials and local businesses to present innovative smart city solutions from the United States to address Vietnam’s growing urban challenges. The delegation will continue to Danang and Hue on December 13 and December 14, led by Commercial Counsellor Stuart Schaag from the US Embassy in Hanoi.

The delegation is comprised of representatives from US firms like Honeywell, KPMG, Microsoft, Uber Technologies, Baker & McKenzie, Dell,  Qualcomm, 3M, Alta Planning + Design, Arcadis, HACH, Koolspan, Palo Alto Networks, and Xylem.

"Vietnam is facing rapid urbanisation, posing challenges for city officials and planners to provide basic infrastructure in transportation, energy, healthcare, water, and e-government services to make their communities more attractive and liveable,” said Consul General Mary Tarnowka. “US firms have innovative products and services in the smart cities area that can support Vietnamese cities.”

On the same note, US Embassy Commercial Counsellor Stuart Schaag commented, “I am confident that this week’s events will help US delegates learn more about each city’s smart city objectives and unique needs, and showcase to city officials and local businesses not only some of the best US technology and services in the smart city area, but US firms’ desire to develop relationships in Vietnam that can create win-win-win solutions for the city, industry, and most importantly, its citizens.”

During the trip, the delegation will meet with government officials from Danang, Khanh Hoa and Thua Thien-Hue provinces for a series of meetings. 

Presentations from city leaders and heads of relevant departments, such as information and communications, transportation, health and planning, will expose US firms to the unique challenges that each city faces in dealing with rapid urbanisation and efficiently managing services offered to citizens and visitors. 

US delegates will then present their smart city solutions, as well as share best practices from the US and around the world.

Ride-hailing firm Grab expands service

Ride-hailing firm Grab is expanding its GrabTaxi service in Vietnam to boost its coverage on one hand and promote cooperation with taxi drivers following the strong opposition from taxi operators towards its GrabCar service in Hanoi City and HCMC.

The company on December 11 offered its GrabTaxi service to customers in Ba Ria-Vung Tau and Dong Nai provinces. The service is already available in Hanoi City, Quang Ninh Province, Danang City, Khanh Hoa Province and HCMC.

Unlike GrabCar service allowing car owners to join the ride-hailing service, the GrabTaxi service targets drivers of traditional taxi operators, encouraging them to use the platform provided by Grab to attract more passengers.

The company has recently expanded its GrabBike and GrabTaxi services to other parts of the country before a pilot scheme for ride-hailing service included in the Transport Ministry’s Decision 24/QD-BGTVT is set to come to an end next month. The company may have to suspend its GrabCar service if the Transport Ministry does not extend the pilot scheme.

As such, by introducing GrabTaxi to more localities, the company may become a provider of the ride-hailing platform to other taxi operators across the country.

Apart from GrabTaxi, the ride-hailing firm intends to extend its GrabBike service to six other provinces and cities, namely Haiphong, Bac Ninh, Danang, Nha Trang, Vung Tau and Can Tho. The service may become a key product of Grab, and may lure a host of local drivers.

Local taxi operator Mai Linh has introduced its new service M.Bike at competitive fares as those offered by GrabBike and UberMoto. Meanwhile, Anh Duong Vietnam JSC, the owner and operator of Vinasun Taxi, plans to launch a similar service called V.Bike.

Two new trains put into service

Saigon Railway Transport JSC put two new trains into service on Sunday replacing the deteriorating Thong Nhat trains that ply the north-south route.

The new trains are more convenient and spacious than the old ones, with cars made of high-strength steel and interiors of composite.

Seats in 56-seater cars can be converted into beds. There are electrical outlets at every seat for passengers to charge their mobile devices.

Each car has eight TVs for entertainment, induction doors, and reading lights above the seat rows.

The toilets are larger, with automatic faucets, windows, ventilators, and advanced waste treatment systems.

Data of the Vietnam Railways Corporation shows that the country’s railway system has nearly 6,000 cars, including 1,000 for passenger transport and nearly 5,000 for cargo transport.

About 2,000 cars have been used for 30-40 years and 1,500 others for 40 years or more.

Some of the deteriorating trains have been upgraded but they cannot meet the standard speed of 100 kilometers per hour for freight trains and 120 kilometers per hour for passenger trains.

In 2016, Saigon Railway Transport JSC spent VND80 billion (US$3.5 million) upgrading 37 cars.

Dao Anh Tuan, general director of the company, said almost all deteriorating trains will be replaced in the next two years.

To compete with other modes of transport, the company has ordered 30 new cars to replace old ones.

MasterCard deploys QR code payment in Vietnam

Financial services firm MasterCard on December 11 introduced electronic payment service Masterpass QR in Vietnam, enabling MasterCard holders to pay by scanning QR codes at thousands of points of sale across Vietnam.

Users can make payments via QR codes at more than 7,000 points of sale set up by MPOS Vietnam Technology Joint Stock Company. MasterCard will later on cooperate with other companies to expand the network of places accepting Masterpass QR in Vietnam.

Masterpass QR, a new electronic payment option of MasterCard, has been deployed in over 20 countries. In Vietnam, users only need to register MPOS QR in order to make Masterpass QR payments via all banking applications with the QR scanning function.

QR payment, an option to promote non-cash payment, is suitable in countries with a large number of smart phone users and developed 3G/4G networks.

Nguyen Huu Tuat, general director of MPOS Vietnam, said QR payment holds high growth potential in Vietnam as all banks have offered Internet banking to their clients. The cooperation with international financial services company like MasterCard makes QR payment as easy as card swipe at mPOS/POS machines, he added.

From now until the year-end, clients making QR payment for the first time via MPOS will get refunds worth 10% of their bills each, with a maximum refund of no more than VND500,000.

Before MasterCard, MPOS has also cooperated with Visa to provide QR payment.

Power punch

When the Ministry of Industry and Trade convened an ad-hoc press conference last Thursday to explain the power price hike, not only journalists attending the event but also the public were stunned. It is not the increase - the average power tariff rising 6.08% to VND1,720.65 per kWh exclusive of tax – but rather the abrupt price change being announced on such short notice that wildly frustrates electricity users.

The ministry last Wednesday announced the power price hike that took effect on the following day. State utility Vietnam Electricity Group (EVN) had mulled ways before launching the power punch, sending an unprepared public to the corner as electricity users have no other options than to take the hit.

As covered by local media, few have decried the price hike but have shown disappointment at the way the power price change has been deliberated by EVN as well as the Ministry of Industry and Trade. In explanations at the press conference, the ministry said the change has been considered by all relevant agencies so as not to create any strong adverse impacts on the people’s livelihood and business.

Nguyen Anh Tuan, head of the Electricity Regulatory Authority of Vietnam under the ministry, stated that the price hike would spur December’s consumer price index by 0.08% and next year’s CPI by 0.1%, which is trivial as inflation this year has been tamed at less than 4% as endorsed by the National Assembly, according to Thoi Bao Tai Chinh newspaper.

For most households, the higher power tariffs will also leave little impact. Tuan is quoted as saying in Tien Phong newspaper that “those households using up to 100kWh a month will pay an additional VND6,600… while those using 400kWh a month will pay an additional VND34,800.”

Similarly, enterprises will see their input costs rising by only 0.07% due to the power price hike, according to Thoi Bao Ngan Hang.

Tuan of the ministry said that the power price hike is inevitable as input costs at EVN have increased, which have been inspected by multiple agencies including the National Assembly Economic Committee, the Vietnam Chamber of Commerce and Industry, and even the Vietnam Standards and Consumer Protection Association.

The power price hike, however, is understandable, as EVN has kept the prices unchanged for nearly three years despite rising input costs, according to experts.

Le Dang Doanh, an economist, says in Nguoi Lao Dong newspaper that the power sector has managed to contain the power price for over two years, exerting great pressure on its investment activities. Therefore, raising the power tariffs is unavoidable.

Similarly, Nguyen Minh Duc of VCCI comments that the power price hikes have lagged behind the inflation in the past few years.

But, as stated early on, many experts have likened the price hike as an ambush on consumers.

Nguyen Manh Hung, general secretary of the Vietnam Standard and Consumer Protection Association, said his agency was only invited to inspect input costs at EVN, but not consulted when it comes to the power price hike. “This is the seller-buyer relationship. The buyer should have the right to negotiate with the seller over the price, rather than the price being imposed upon them by the seller,” Hung is quoted in Thoi Bao Tai Chinh.  

Nguyen Minh Duc of VCCI, who also joined the input cost inspection at EVN, says in Thanh Nien newspaper that the power price hike plan has remained confidential despite prevailing regulations on power price transparency. The price increase all rests with the seller’s decision, without the buyer’s opinion, says Duc.

Nguyen Duc Thanh, director of the Vietnam Institute for Economic and Policy Research (VEPR), bluntly says in Nguoi Lao Dong that “we are taken hostage by EVN. They ask for a price hike, and we have to accept it.” Thanh opines that the power price hike is based on calculations by the monopoly without any transparency.

Similarly, Nguyen Minh Phong, an economist, also decries the absence of transparency in the power pricing scheme. He says in the news site VOV.vn that the power sector needs to provide all relevant information so that the public could understand the rationale behind the price hike.

More importantly, both EVN and the Ministry of Industry and Trade made the decision abruptly, making life tough for electricity users, especially enterprises.

Tuoi Tre Online, citing experts, says that there should be a roadmap for power pricing so that enterprises can actively conduct business.

“The power price hike should have followed a specific roadmap, instead of ‘announcing the hike today with effect tomorrow’ that causes difficulties for enterprises, since they have to make business plans on a quarterly or annual basis,” the online paper quotes Nguyen Minh Due of the Vietnam Energy Association.

Nguyen Van Tuan, chair of the Vietnam Cotton and Spinning Association, echoes the point, saying enterprises will suffer damage due to the sudden price hike. “The price hike of 6.08%, in my opinion, is acceptable. However, enterprises can cope with the problem only if they are informed of the price hike long beforehand,” he is quoted in the paper.

In the news site zing.vn, Le Dang Doanh says that mechanisms regarding the power sector need to be reformed so that buyers can have their opinions upon any plan of price hike. The power market needs to be restructured so that all stakeholders can supervise each other, he asserts.

In a market economy, the genuine seller-buyer relationship must be safeguarded to ensure benefits for all sides, and to prevent a power punch from a monopolistic player.

HCMC’s tax and fee hikes may cut both ways

A plan by the HCMC government to raise a number of taxes and fees is expected to boost the city’s budget revenues but it might put negative impacts on enterprises and citizens.

The city government on December 11 held a meeting with representatives of departments and experts to discuss the implementation of a special mechanism for the city that was approved by the National Assembly and will go into force on January 15, 2018.

Under the special mechanism, the city has plans to raise some taxes, such as special consumption and environment taxes, and impose new fees from mid-2018.

At the conference, many experts said the municipal government should carefully weigh impacts, both positive and negative, of fee and tax hikes on socio-economic development.

They said a tax increase will result in higher production and living costs, which would badly affect enterprises’ operations and people’s lives.

Tran Ngoc Tam, director of the HCMC Tax Department, said it would be easy to assess impacts of raising taxes on alcohol and tobacco. However, the city should carefully assess impacts of raising environmental protection tax on petrol and plastic bags because these are not only essential goods but also large revenue sources.

Huynh The Du of the Fulbright Economics Teaching Program said the city had better improve the investment environment to lure investors and use tax revenues effectively.

“Enterprises may choose other localities rather than HCMC if the city raises taxes and fees. This will not boost but reduce the city’s budget revenues,” Du said.

According to Tran Hoang Ngan, director of the HCMC Cadre Academy, the city’s budget plans, including tax plans, should focus on addressing traffic congestion, flooding, environmental pollution, and overloaded infrastructure.

According to Resolution 54 on the special mechanism for the development of HCMC, the National Assembly allows the city government to raise special consumption tax and environmental protection tax, with increases not exceeding the current levels by more than 25%.

Garment, textile obtain highest trade surplus value in export items

After the US withdrew from the talks on Trans-Pacific Partnership (TPP), Vietnam’s garment and textile export met with difficulties in the first two quarters this year. However the industry has posted the record high trade surplus value taking the lead in export items.

Chairman of Vietnam Textile and Apparel Association (Vitas) Vu Duc Giang yesterday said that garment and textile export this year posted the highest value in all export items of Vietnam, reaching US$15.51 billion increasing 7.15 percent over 2016.

That was partly thanks to the hike in the export ratio of garment items under original design manufacturer (ODM) method. The number of original design manufacturers accounted for 3 percent last year, increasing to 7 percent this year and expected to reach 11 percent next year.

According to Mr. Giang, Vietnam’s garment and textile industry met with difficulties after the US withdrew from TPP. Some importers transferred their orders to other markets such as Sri Lanka, Myanmar and Bangladesh in the first and second quarter to take advantage of 0 percent tax rate. However, orders have returned to Vietnam since the third quarter.

Besides good quality and on time delivery, businesses have improved their competitive ability, invested in new technologies and sought new markets besides traditional ones such as the US, EU, Japan and South Korea.

In 2017, Vietnam has started exporting garment items, fiber and cloth to China with the total turnover of $1.04 billion.

In addition, the industry has lot of opportunities from bilateral and multilateral free trade agreements which will be signed in the next 1 and 2 years such as EVFTA and ASEAN + 6 (China, Japan, South Korea, New Zealand, Australia, India).

Vitas said that many businesses have already had orders to produce until the second quarter next year, forecasting that garment and textile export turnover will approximate $33.5-34 billion.

Customs industry cooperates with eleven banks to implement e-tax collection

The General Department of Vietnam Customs yesterday signed a cooperation agreement on 24/7 e-tax collection project with six banks from December 15.

Previously the customs industry had signed the agreement with five banks to implement the project, which is the major one of the general department in 2017.

The project enables enterprises to pay tax directly in customs website anytime and anywhere with Internet access.

Implementation of the project is considered as a breakthrough in tax collection and payment, creating advantageous conditions for tax payers.

HCMC to pilot cargo supervision projects in four seaports, airport

HCMC will start pilot implementation of cargo management and supervision at Lotus, SPCT, ICD Phuoc Long seaports and SCSC warehouse in Tan Son Nhat Airport from January 1, 2018, said Mr. Dinh Ngoc Thang, deputy head of HCMC Customs Department yesterday afternoon. 

The project aims at simplifying customs procedures for businesses, reducing time and cost to do custom clearance and preventing trade frauds and smuggling, he said.

In addition, it will contribute in improving the automation of information technology system in cargo inspection.

According to HCMC Customs Department, cargo supervision at seaports and airport in the city now accounts for 50 percent of the industry’s work volume. The work volume this year is 15-20 higher than previous year but human resource has been unable to meet demand.

American firms receive investment certificates in Saigon Hi-Tech Park

Secretary of HCMC Party Committee Nguyen Thien Nhan this morning visited US businesses in San Francisco and witnessed a ceremony of granting investment certificates to American technology firms into Saigon Hi-Tech Park of Ho Chi Minh City. 

The first project is a life sciences research and development center invested by Quantus Corporation under Allied Telesis Group and Cao Sinh Biomed Company with the total capital of US$500 million.

Implementation comprises two phases. The first phase from 2018-2020 will include the center’s investment and human resource training. The second phase from 2019-2022 will build a high technology hospital and buy modern equipment.

The second project is Greenvity Silicon by Greenvity Communication Inc, an overseas Vietnamese business in San Jose with the total capital of $35 million. Its goal is to design and manufacture integrated electronic circuits, GV-LORA chips and GV- power line communications (PLC) chips applied in internet of things (IoT) such as motion, temperature and light censors.

The third one is Aipac Vietnam by Aipac Inc, an overseas Vietnamese company in San Jose, with the total funds of VND20 million. It will apply IoT technology in making products such as smart home connection system, environmental supervision devices, motion censors and microelectromechanical systems (MEMS).

Previously, Mr. Nguyen Thien Nhan and the delegation worked with leaders of the world’s leading chipmaker Intel Group and Zoom Video Communications Company.

Meantime, standing deputy chairman of HCMC People’s Committee had a meeting with Marvell Group. At the meeting, Mr. Liem affirmed that HCMC committed to creating advantageous conditions for technology groups and companies to operate efficiently and achieve more successes in the city.

So far, Saigon Hi-Tech Park (SHPT) has been the investment destination of many large groups in the world such as American Intel and Microsoft, South Korea’s Samsung, Japanese Nidec and Nipro, French Sanofi and Schneider.

Mr. Nguyen Thien Nhan has been leading a high level delegation of HCMC to visit the US states and cities.

Truong Thanh Furniture to work with SAM Holdings

One of Vietnam’s largest wooden furniture manufacturers, Truong Thanh Furniture (TTF), has signed a cooperation agreement with materials supplier SAM Holdings (Stock code SAM) on supplying materials and services.

TTF and SAM are related businesses, as Mr. Hoang The Quang is a Board Member of the former and Deputy CEO of the latter.

SAM is engaged in the manufacture and trading of cables, telecommunications materials, and wooden materials, construction, real estate, golf courses, accommodation, and tourism.

In the first nine months of this year its revenue reached VND1.52 trillion ($66.8 million), an increase of VND210 billion ($9.24 million) over the same period last year. After-tax profit was nearly VND49 billion ($2.15 million). Total assets as at September 30 stood at nearly VND4 trillion ($176 million).

TFF is engaged in the manufacture and sale of wooden furniture and floorings in Vietnam and also exports products to the UK, France, Belgium, the US, Denmark, Finland, Germany, Greece, and Japan.

Revenue in the first nine months of this year was VND756 billion ($33.2 million) and after-tax profit more than VND4 billion ($176,000). As at the end of the third quarter, remarkably, TFF also recorded nearly VND1.4 trillion ($61.6 million) in accumulated losses.

The company’s consolidated financial statement for 2016’s fourth quarter shows a total loss of VND145 billion ($6.4 million), bringing its full year losses to VND1.63 trillion ($72 million), of which its cumulative losses amounted to VND1.768 trillion ($7.8 million). Moreover, the company had negative owner’s equity of more than VND195 billion ($8.6 million) as at December 31, 2016.

Foreign investors suggest improvements to Vietnamese taxation policy

In the framework of Vietnam Business Forum (VBF) 2017, representatives of foreign investors complained that they still face difficulties in investing and manufacturing in Vietnam due to the lackluster taxation policies.

According to Natasha Ansell, chairwoman of American Chamber of Commerce in Vietnam (Amcham), importing products into Vietnam remains more costly and complicated given Vietnam’s $32-billion trade surplus towards the US last year, thus, it is particularly important for Vietnam to be seen as seriously addressing the numerous non-tariff technical barriers and the so-called behind-the-border barriers which restrict the activities of companies and hamper the flow of US exports into Vietnam.

Regarding the Ministry of Industry and Trade (MoIT)’s proposal to apply a special consumption taxation (SCT) of 10 or 20 per cent on soft drinks, the representative of Amcham expressed concerns about its impact on enterprises’ revenue and profit.

“If MoIT’s proposal comes true, the selling price of soft drinks will increase by 12 per cent due to the increased manufacturing expenditure, leading decreasing sales. In this case, small- and medium-sized enterprises will see the largest impact because of their weaker financial potential. They may even face bankruptcy,” Ansell stated.

Based on comments from European enterprises, vice chairman of European Chamber of Commerce in Vietnam (Eurocham) Tomaso Andreatta expressed that the responses from tax authorities (both local and central tax offices) to written requests for clarification have been very general and do not provide specific guidance to enterprises.

As a result, after receiving the responses from the tax authorities, the enterprises are still be confused and unsure about applying the regulations. Enterprises are growing disappointed about the transparency of the tax authorities’ implementation of the regulation. Thus, it is important to improve the quality of responses from the tax authorities, especially the ones addressing concerns over tax policies.

European distributors quitting Vietnam

Vietnam last year saw the exit of European investors from large-scale distribution.

This was announced by Tomaso Andreatta, vice chairman of European Chamber of Commerce in Vietnam (EuroCham), at the Vietnam Business Forum (VBF) 2017 co-chaired by Minister of Planning and Investment Nguyen Chi Dung, IFC senior country manager for Vietnam, Laos, and Cambodia Kyle F. Kelhofer, chairman of Vietnam Chamber of Commerce and Industry (VCCI) and VBF co-chairman Vu Tien Loc, and VBF co-chairman Hirohide Sagara. The forum took place this morning at Lotte Hotel in Hanoi.

Andreatta said that European companies bring with them a way to do business that wed respect for the environment, employees, and for the society where they operate, with high value-added goods.

They do not come to Vietnam only to make shirts and shoes or to assemble electronics, but to develop the entire supply chain and all the sophisticated services that support it. To bring these to Vietnam, European companies need qualified employees who speak foreign languages and they need reassurance that intellectual property rights are effectively protected.

Along with the concerns about employees, European investors saw three main challenges to address, including corruption, protectionism, and a lack of legislative co-ordination.

Therefore, EuroCham issued three proposals to deal with the above challenges.

As to the first, EuroCham warmly welcomes and appreciates the work of the government in reducing opportunities for corruption and upholding the law. At lower levels, the main levers are adequate salaries, pride of belonging to the administration and moving people around, while at higher levels they are the lack of transparency, the excess reliance on permissions and certifications, and the high degree of arbitrariness by those in charge.

As the consequence of protectionism, local companies and the local administration must pay more, otherwise they are unable to access higher quality and safer, more reliable goods.

The government should reduce overlapping and conflicting procedures in public administration, which not only create the waste in fees and taxes, but also the time and human resources.

In addition, the government needs to reconsider the corporate income tax, fully implement the national single window policy, and extend online payments in foreign currency.

JCCI tables reform proposal for transparency

At Vietnam Business Forum 2017, the Japanese Chamber of Commerce and Industry (JCCI) posted a number of proposals to make administrative procedures simpler and faster, strengthening openness, transparency, and the efficient use of official development assistance loans.

In recent years, the Vietnamese government has been ramping up loan control measures as the state budget is in chronic deficit and government debt is nearing the 65 per cent of the GDP upper threshold set by the National Assembly.

However, if long-term, low-interest ODA loans continue to be used inefficiently, infrastructure—the foundation for economic development—will remain undeveloped, which in turn may have negative impacts on economic growth in the medium and long run.

Thereby, JCCI agreed with the IMF’s proposals to push core reforms, both from the perspectives of budget revenue and spending and the ability to guarantee financial sufficiency at the earliest possible.

On the revenue side, a policy review is required to move towards expansion and diversification based on tax categories, such as: higher environmental protection taxes, imposing property taxes, increasing excise tax rates, levying and transaction taxes to finance infrastructure projects, and revisiting tax incentives.

On the expenditure side, there is a need to revisit budgetary spending cuts through widening cost recovery or inviting the participation of the private sector in education and healthcare, reviewing the social security coverage in a society entering the ageing phase, promoting administrative reforms, and downsizing in the public sector.

Despite the Vietnamese government’s proactivity in reforming its administrative system, many foreign enterprises, including JCCI members, have been facing legal difficulties in Vietnam. 

Due to ambiguities in the language of ordinances and the arising multitude of interpretations, enterprises are often confused or are unsure of whether they have dispensed with their legal obligations. Besides, enterprises are forced to wait for a long time for an interpretation from the relevant ministries, according to JCCI.

It said that a public administration with such a glaring lack of transparency and certainty may seriously undermine Vietnam’s attractiveness as an investment destination.

At the mid-term Vietnam Business Forum 2017 (in June 2017), JCCI put forward two proposals related to administrative procedures. The first one is to establish a new inter-ministerial organisation with a vested power to deal with interpretation issues. They also proposed developing a regulatory framework and practical procedures through references to the grievance redress system for domestic and foreign businesses established by the Japanese side.

The second recommendation is to enhance procedures for prior confirmation relating to regulations and ordinances in order to prevent emerging issues related to law enforcement. Procedures need to be flawless to allow private sector practitioners to obtain prior confirmation of the relevance of the transactions that they will be engaging in with the ministries in relation to applicable regulations and ordinances, so that they can get answer from these ministries.

JCCI welcomes the strong and passionate efforts of the Advisory Council for Administrative Procedure Reform (ACAPR) to reform administrative procedures, particularly the dialogue between the prime minister and the head of the government office with ACAPR members in next August.

Thereby, JCCI proposes to establish a new organisation under ACAPR called “Professional team,” which would consist of private sector and foreign enterprises. Each chamber of Commerce and Industry would forward their highest priority requests to the “Professional team” which would then come up with concrete plans within a few months. ACAPR would submit these plans to the prime minister, who would discusses it with ministers and make decisions, after fully considering these plans.

Leveraging productivity is key for sustainable growth

Vietnam Development Forum (VDF) 2017 with the theme of “Leveraging Productivity Growth for Sustainable Development” took place this morning, offering an opportunity to find solutions for sustainable economic growth.

2017 was a successful year for the Vietnamese economy. All 13 socioeconomic development targets set forth by the National Assembly have been reached or even exceeded. The economy has been growing well at an estimated 6.7 per cent.

On the other hand, the quality of growth is becoming an issue as the country has been dependent on investment capital, low-cost labour and natural resources mining. That growth model is no longer appropriate in the current context, as the global and domestic situation has changed.

Especially, Industry 4.0 has come and opened up many opportunities and challenges for the economy.

“Against this background, the economy cannot develop quickly and sustainably to improve living standards and narrow the development gap with other countries. Leveraging productivity is the key of sustainable growth, this is one of the core issues for the Vietnamese economy today," confirmed Nguyen Chi Dung, Minister of Planning and Investment, at VDF 2017.

Acknowledging the importance of increasing productivity, the Vietnamese government has been deploying many solutions to promote innovation and apply science and technology to improve productivity, quality, efficiency, and the competitiveness of the economy.

However, leveraging productivity is a challenge for Vietnam and the government needs the advisory of development partners, the business community, and experts to specify its goals.

According to the assessment of the World Bank (WB) at the forum, Vietnam’s average labour productivity growth rate is about 4 per cent, as compared to the 7 per cent of China and the 5 per cent of Korea when these countries were at similar levels of development.

Current productivity growth rates are unlikely to deliver the sustained rapid growth that could see Vietnam follow the development trajectory of these countries.

“Improvements in efficiency must take place both within individual sectors as well as across the whole economy, which requires effective market institutions and government support,” noted Ousmane Dione, WB country director in Vietnam.

Dione also highlighted four areas where there is ample room for efficiency gains within individual economic sectors. This could include enhancing industrial energy efficiency, enhancing agricultural transformation and agribusiness development, more efficient transport, logistics, and connectivity.

Going beyond efficiency gains and moving up the value chain is critical to improve productivity. Effective linkages between domestic and foreign invested firms are also critical for Vietnam to move up in the global value chain and ultimately improve its productivity.

Second, reforms to develop and enhance market institutions will need to be significantly stepped up to achieve higher productivity growth. This includes continued effort in improving the business environment with a focus on simplifying administrative procedures and reducing cost burdens, fostering more effective market mechanisms to improve resource allocation.

Third, education, skills, and innovation agendas are very important in the country’s quest for productivity growth. A new set of knowledge and skills are needed to contribute to productivity growth and to change the economy. As Vietnam integrates further into the global economy, industry and manufacturing as well as agriculture and services are expected to become increasingly sophisticated.

Fourth, it is important for Vietnam to find ways to mobilise and use its scarce public resources efficiently to finance its ambitious development agenda over the next five years. When concessional development assistance is phased out, Vietnam will need to increasingly rely on domestic resources. Efforts must be stepped up significantly to create an enabling environment for private sector participation in quality infrastructure development, a critical contribution to Vietnam’s needed productivity growth.

“Development partners stand ready to support Vietnam, including knowledge and access to international experience and best practices,” stated the WB country director.

VDF addresses Vietnam’s productivity issues

Vietnam needs to conduct a series of projects to improve productivity, a major factor slowing down the country’s economic growth.

This was the proposal of Kenichi Ohno from the National Graduate Institute of Economic Management at Vietnam Development Forum (VDF) 2017 organised this morning in Hanoi.

According to Kenichi Ohno, the quality of Vietnamese policies needs to be improved so that the government can assist the private sector more effectively.

"By comparing the average income and industrial development policies in Vietnam with 12 other countries in Asia and Africa, Vietnam is in the medium-income segment, but is lagging behind in policies, ranking in the same group as Laos, Cambodia, and Indonesia and following Singapore, Malaysia, Thailand, and the Philipines," he said.

Regarding labour productivity in the manufacturing and processing sector alone, Vietnam ranks tenth, following Singapore, South Korea, Japan, Malaysia, China, and India, among others.

“With the existing weaknesses in policíe and labour productivity, Vietnam will face difficulties in exiting the medium income trap as well as reaching its economic growth targets,” said Ohno.

Thus, the Vietnamese government should consider improving the productivity of the overall economy in general and labour productivity in particular.

Notably, Vietnam needs to effect a radical change in its mindset, draw up specific productivity targets, revamp its industrial support policies, and issiue specific productivity tools.

In addition, Vietnam’s institutional capacity for productivity enhancement must be strengthened through policy mechanisms.

“Since 1995, Japan has been supporting Vietnam’s research on industrial policies, methodologies, and soft components in various ways but with limited results. In the upcoming time, Japan commits to continue supporting Vietnam to improve the productivity of the overall economy,” Ohno added.

VDF 2017 took place on December 13, 2017 at Sheraton Hotel Hanoi. The forum was co-chaired by the Minister of Planning and Investment and the country director of World Bank in Vietnam with the participation of Prime Minister Nguyen Xuan Phuc, Deputy Prime Ministers Vuong Dinh Hue and Pham Binh Minh, and over 350 representatives from ministries, leaders of cities and provinces, embassies, foreign and domestic organisations, and the business community.

GE Healthcare becomes strategic partner of Vinmec

GE Healthcare, the medical arm of General Electric, yesterday signed a memorandum of understanding with Vinmec Healthcare System, fostering science and technology application, boost the development of infrastructure as well as to invest in the human resources of the industry fitting international best practices. 

Particularly, GE Healthcare will dedicate its innovative medical equipment for imaging, nuclear medicine, ultrasound system and anaesthesia solutions to help Vinmec advance healthcare outcomes, focusing on two prime segments: cardiology and oncology.

Likewise, GE Healthcare will be a strategic party in nurturing a new generation of clinicians at Vinmec University of Health Sciences (VUHS), setting the new standard for medical education in Vietnam.

The health science university is scheduled for the debut in 2019 as the first hospital design partnership between a foreign-owned conglomerate in the medical industry and Vinmec.

Terri Bresenham, vice president and CEO of GE Healthcare in South Asia, Africa and Southeast Asia said, “Vinmec is one of the leading healthcare organisations in Vietnam in terms of scale, infrastructure as well as modern equipment. We have a long history of collaboration with Vinmec and we are proud to continue to be Vinmec’s strategic partner for its future development and specifically with regards to development plans for VUHS. Medical education and capacity building are vitally important to a sustainable healthcare system and will have long-term impact on healthcare access and quality for generations to come.”

Doctor Bui Duc Phu, director of Vinmec Times City, noted “in order to meet such a deluge of demands for healthcare services, to upgrade the quality and medical safety for our patients and to facilitate international-standard hospitals, we sought a strategic partner with the capability of providing cutting-edge technology to actualise those three objectives.”

GE Healthcare, with a track record of over a century in the field, a leading provider of medical imaging equipment, whose goal is to deliver better outcomes for providers and patients.

Vinmec, founded in 2012, is the not-pro-profit healthcare system invested by Vingroup Corporation targeting at catering high-quality healthcare service.

Creativity- key to growth promotion

In many countries' experience, "creativity" is considered as a key factor behind growth promotion, said UNDP Senior Adviser in Vietnam Rajah Rasiah at the Vietnam Development Forum (VDF) 2017 held in Hanoi on December 13.

Minister of Planning and Investment Nguyen Chi Dung and World Bank (WB) Country in Vietnam Ousmane Dione co-chaired the forum on the theme “Increasing Productivity - Leverage for Sustainable Development”  in the presence of Prime Minister Nguyen Xuan Phuc.

Those in attendance included development partners, investors, and representatives from research institutes, ministries, embassies, foreign and domestic organisations, and the business community along with provincial and municipal leaders.

VDF 2017 focused on specific solutions to spur productivity, creating long-term solutions for Vietnam to overcome the middle-income trap and catch up to developing economies, the trend of global productivity growth and challenges for Vietnam.

The forum’s topic this year is considered very practical for Vietnam’s current affairs when its economic growth has experienced a continued reduction. According to a report released at the forum, Vietnam’s average economic growth in the period 1990-2000 stood at 7.3% and the figure fell to 6.7% for 2001-2010 and below 6% for 2011-2016.

Experts said that over the past years, Vietnam’s growth was primarily contingent on capital and natural resources and labour intensive industries. Therefore, slower labor productivity is the cause of slow economic growth. Meanwhile, the world is entering the era of the 4.0 industrial revolution and Vietnam is making every effort to maintain substantial growth.

In 2017, labor productivity has contributed up to 89% to GDP growth, much higher than the 66.3% level recorded in the 1990-2000 period. Thus, productivity growth is the key to ensuring Vietnam’s steady growth in future.

In order to avoid productivity decline, UNDP Senior Advisor in Vietnam Rajah Rasiah suggested that Vietnam should learn experience from other regional countries. Experiences of the Republic of Korea (RoK) Taiwan (China), and Singapore show that "creativity" is a key factor for growth promotion and these economies focus their investments on infrastructure, capital accumulation, and human resource development, export orientations.

Therefore, what Vietnam can learn is to focus on human development by strengthening science and technology education, and vocational training, and attracting talents and experience from overseas Vietnamese overseas and from abroad.  In addition, it is essential to increase funding for innovation, including preferential interest rates for innovative activities, and sponsor or work out incentive financial policies for research and development, he said.

Like the Vietnam Business Forum 2017 on December 12, speakers once again underlined the close connectivity between domestic and FDI enterprises by becoming involved in production and business activities towards joining the global value chain.

World Bank Country Director in Vietnam Ousmane Dione said improved productivity is significant to turning Vietnam into a middle-income country till 2035. 

He hailed Vietnam’s growth over the past five years, saying there remains room for the country to improve economic productivity, upgrade transport and logistics and closer collaboration between domestic and foreign firms is vital to elevating Vietnam’s status in the global value chain. 

The Vietnamese government needs to continue improving its business climate, simplify administrative procedures and properly allocate land and capital resources, he said while stressing the importance of skill training, innovation and effective use of preferential loans. 

In addition, ministries, sectors, localities and especially enterprises themselves need to raise their awareness about higher investment in research and application of science and technology so as to increase product value and productivity.

WTO forum looks to promote dialogues between State and private firms

Entrepreneurs and politicians from World Trade Organisation (WTO) member nations gathered at a business forum in Argentina on December 12 to promote dialogue between State and private businesses.

The forum is part of the 11th WTO Ministerial Conference, which is taking place in Buenos Aires from December 10-14, with more than 400 delegates from 164 member countries in attendance.
 
Participants affirmed their determination to promote dialogues between state and private firms to remove barriers for global trade and establish a framework suitable with globalisation.

Director-General of the WTO Roberto Azevedo said business activities have impacted trade exchanges, fuelling the development of economies, generating jobs, promoting entrepreneurship and innovation to boost growth and prosperity. 

He underlined the significant role of e-commerce for newly-established enterprises.

President of the host country Mauricio Macri said states and businesses should enhance dialogues to bring benefits for people.

He called on WTO member countries to remove trade barriers and promote sustainable growth by using modern technologies.

He emphasised focusing investment on poverty reduction, food security and gender equality.-

Expo-Russia Vietnam 2017 opens in Hanoi

The Expo-Russia Vietnam 2017, the second of its kind, kicked off in Hanoi on December 13.

Speaking at the opening ceremony, Deputy Prime Minister Trinh Dinh Dung said that the free trade agreement between Vietnam and the Eurasian Economic Union is opening up more cooperative opportunities for Vietnam and Russia and other signatories.

He asked the two countries’ business communities to actively study the agreement’s contents to take advantage of opportunities brought by this agreement.

Russia is Vietnam’s important trade partner with two-way trade hitting 3.2 billion USD in the first 11 months of 2017, or a year-on-year rise of 26.7 percent. However, the figure is quite modest compared with the target of 10 billion USD in 2020 set by the two countries’ leaders, Dung said.

Therefore, Dung expressed his hope that Vietnam’s garment, footwear, agricultural, electronic products, and consumer products can better approach the Russian market.

At the same time, Vietnam is willing to welcome agricultural and industrial products, especially in Russia’s strong fields such as energy, oil and gas exploitation, industrial equipment, automotive production and mineral, he said.

He also stressed that Vietnam hopes Russia will create favourable conditions for Vietnamese enterprises to seek investment opportunities in Russia in agriculture, food processing, information technology, services, real estate and mining.

The Expo-Russia Vietnam 2017, which will last until December 15, is attracting about 100 Russian enterprises operating in energy, mechanics, transportation infrastructure, telecommunications, mining, chemical, agriculture and high technology.

On the day, the Vietnam Chamber of Commerce and Industry, in collaboration with the second EXPO Russia-Vietnam Organising Board, held the Vietnam-Russia Business Forum as part of the Expo-Russia Vietnam 2017.

Retail customers urged to complete transactions with ANZ before Dec 18

ANZ Vietnam has urged individual customers to consider making early cash withdrawals, payments and transfers prior to December 18 when the transfer of its retail business to Shinhan Bank Vietnam is completed.

From 5pm of December 15, the bank will stop providing services for Visa debit and ANZ credit cardholders, including all local and overseas ATM cash withdrawal, all POS and online usage and SMS alert services.

From December 11 to December 15, ANZ ATMs will be shut down gradually. 

For internet banking services, payment instructions submitted via internet banking after 12pm on December 15 or an instruction having payment transfer value date beyond December 15 would become null and void.

Also from 12pm on December 15, ANZ will no longer accept cash payment for credit card or loan due on the same day. If retail customers are due to pay their credit card bills or monthly loan installment on the day, they are advised to arrange the payment to be received by ANZ no later than December 14.

ANZ’s retail customers can access to Shinhan branches from Monday, December 18.