SBV raises reference rate after Tet holiday

The State Bank of Viet Nam on February 15 raised its reference rate to VND21,873 per American dollar, VND12 higher than on February 5, the last working day before Tet.

At 10am on February 15, Vietcombank listed the dollar buying and selling rates at VND22,330 and VND22,400, respectively, an increase of VND40 compared with the rates on February 5.-Photo vnexpress.net

With a margin of +/- three per cent, commercial banks are allowed to apply the ceiling rate of VND22,559 and floor rate of VND21,217 on February 15.

The exchange rate in commercial banks also soared.

At 10am on February 15, Vietcombank listed the dollar buying and selling rates at VND22,330 and VND22,400, respectively, an increase of VND40 compared with the rates on February 5.

The dollar buying and selling rates at BIDV also soared to touch VND22,300 and VND22,400, an increase of VND10 and VND30, respectively, over the February 5 rates.

Meanwhile, Vietinbank listed the buying and selling rates for the greenback between VND22,310 and VND22,400, an increase of VND30 and VND35, respectively, than the February 5 rates.

The dollar buying and selling rates at Techcombank were VND22,268 and VND22,398, an increase of VND88 and VND68, respectively, than the February 5 rates.

DVP to pay 70% dividend

Dinh Vu Port earned more than VND700 billion (US$31.25 million) in revenue and VND310.5 billion ($13.8 million) in pre-tax profit in 2015, a 21-per-cent and 28.15-per-cent year-on-year increase, respectively.

The port's board of directors approved the payment of 50 per cent dividend for the second session of 2015. They had paid a dividend rate of 20 per cent for the first session of the year. Thus, the company should pay a dividend of 70 per cent in 2015.

This year, the port in the northern city of Hai Phong plans to earn revenue and profits as it did in 2015, and hopes to pay shareholders more than 30 per cent as dividend.

The board also said the shareholders' meeting would be held on April 14.

Each DVP share closed at VND66,500 ($2.9) on the HCM Stock Exchange yesterday.

MoT to divest from VIVASO

Waterway Transport Corporation One Member Company Limited (VIVASO) will offer nearly 7.35 million shares, or a 22.42 per cent stake, in an auction on March 1.

According to the Ha Noi Stock Exchange, which will hold the auction, the shares being offered belong to the transport ministry (MOT), representing state capital in the corporation.

Locating at 158 Nguyen Van Cu Street, Bo De Ward, in Ha Noi's Long Bien District, the corporation has VND327.7 billion (US$14.6 million) in charter capital, and conducts transport, building, repair work and warehousing businesses on the waterway. It is also involved in construction and labour export services.

The divestment will be offered in a lot auction with a starting price of VND10,119 ($0.45). The whole lot will be worth a minimum VND74.3 billion ($3.3 million).

Vietnam’s first trailer manufacturing factory inaugurated

Truong Hai Auto JSC (THACO) on February 15 put into operation a factory manufacturing trailers and other heavy special vehicles at the Chu Lai-Truong Hai Complex in Nui Thanh district in the central province of Quang Nam.

Construction of the 6.75-million-USD factory, the first of its kind in Vietnam, began on November 1, 2015 on a 24,000-sq.m. site.

With a designed capacity of 5,000 products per year, the factory is equipped with state-of-the-art equipment and technology.

It is projected to churn out 3,000 vehicles in 2016. Of these, 1,200 are trailers.

Nguyen Mot, THACO’s Communications Director, said the factory aims to meet the domestic market’s increasing demand for transportation and help ease the country’s dependence on imports while looking toward exports.

HCM City’s real estate 2016 challenges and opportunities

2015 ended with plenty of highlights in the real estate market of the southern city of Ho Chi Minh, however upcoming challenges and opportunities are requiring enterprises join hand to develop the market sustainably.

The city’s real estate market rebounded and enjoyed high growth with more than 26,000 successful transactions recorded in 2015. It skyrocketed 150 percent compared with 2014, said the municipal Department of Construction.

The Ho Chi Minh City Real Estate Association (HoREA) reported that the city’s real estate credit in 2015 reached 140 trillion VND (6.3 billion USD). Meanwhile, more than one fifth of 5.5 billion USD of overseas remittance sent to the city came into real estate investment.

In the first month of 2016, the city recorded about 1,600 successful real estate transactions, an increase of 3 percent compared with the last month of 2015, according to the Housing and Real Estate Management Department under the Ministry of Construction.

The HoREA has acknowledged that the locality’s real estate price in 2015 rose from five to six percent compared with 2014, due to multi-selling channels in the sector that caused a “bubble” price in the market.

In order to restrict the negative impacts of the “bubble” price, HoREA suggested relevant State units study policies and mechanisms that will help the market grow sustainably and protect consumers’ rights.

Le Hoang Chau, Chairman of HoREA, said the number of secondary investors in 2015 accounted for about 15 percent, three times that of 2014. Up to 80 percent of them had to use loans with high interest rates, which pose high potential risks.

Nam Long Investment Joint Stock Company Board of Directors Chairman Nguyen Xuan Quang said the city’s real estate sector will prosper in 2016 due to an increase in the number of immigrants to the city. Business is booming for 50 to 70 sq.m apartments with selling prices of about one billion VND (45,000USD) per unit.

On the other hand, Le Huu Nghia, Director of Le Thanh Trading and Construction Limited Company, worried about the increasing speculation in the sector, which he said could hinder the market’s development.

HoREA executives said authorities should announce housing demand in order to help enterprises adjust their business strategies, and avoid oversupply.

They also said prolonged construction administrative procedures have increased construction costs, making consumers pay more for their apartments.

Government gives incentives to small firms to invest

Small and medium-sized enterprises (SMEs) can borrow up to 70 percent of the capital they need for investing in supporting industries prioritised by the Government from February 22.

This is stated in the State Bank of Vietnam's (SBV's) Circular No 01/2016/TT-NHNN, which was issued on February 4 to provide guidelines for a decree on the development of supporting industries.

Decree No 111/2015/ND-CP, issued last November 3, said preferential policies related to credit, taxes and land rents would be offered to projects applying new technology, equipment and manufacturing processes that can help increase their production capacity by at least 20 percent.

It also said the money borrowed by the SMEs must be guaranteed by credit underwriting organisations, and the SMEs must register a mortgage value of at least 15 percent of the loans at the lending institutions.

The firms should also have at least a 20 percent stake in the investment projects, and they must not owe anything to the state budget or be responsible for any bad loans with any lenders.

According to the circular, credit institutions and foreign banks' branches in Vietnam will finance the prioritised projects with short-term loans in dong, with interest rates being equal to or less than the specific rates set by the central bank's governor at certain periods of time.

The Vietnam Development Bank and other organisations authorised in conformity with the law would be the guarantors of the SME loans, the circular said.

Industry insiders asked, however, whether the loan incentives could truly help domestic SMEs take part in the development of supporting industries, as Vietnam integrated more deeply with the global economy.

As the country has entered into a variety of free trade agreements, especially the large Trans-Pacific Partnership trade deal, multi-national companies might take up supply chains right in the domestic market.

Yasuzumi Hirotaka, Chief Representative of the Japan External Trade Organisation in HCM City, told news website enternews.vn that Vietnam still lacked a solid foundation for supporting industries, with the enterprises being internally weak.

"There is a high risk that many of them will have to withdraw from the market. This will be clearly seen in the next one year or two, so the domestic firms need timely support from the government to improve their strength now," he said.

He said about four million SMEs were offered low interest rates for loans in Japan, following government policies.

In Vietnam, SMEs and support industries are among several areas that the Government prioritises for funding, besides exports, high-tech firms and agriculture and rural development.

According to the latest SBV report on dong lending rates, commercial banks applied rates of six to seven percent per year for short-term loans, and nine to 10 percent per year for medium to long-term loans, in the prioritised sectors in January.

In normal business areas, the short-term rates were between 6.8 percent and nine percent per year, and the medium to long-term rates were between 9.3 percent and 11 percent per year.

Dong Nai sees increasing FDI inflow

The southern province of Dong Nai has welcomed 440 million USD in foreign direct investment (FDI) and 30 billion VND (1.34 million USD) from domestic investors so far this year, according to the province's IZs Management Board.

The figures represent positive signals for a strong influx of FDI in 2016.

As of February, the province has lured in 1,560 FDI projects, with total registered capital of nearly 29 billion USD. Most of them remain valid, according to the provincial Department of Planning and Investment.

Numerous big international groups from Japan, the Republic of Korea, Singapore and Thailand have expanded their investments and operations in anticipation of opportunities brought by free trade agreements (FTA), particularly the Trans Pacific Partnership (TPP) deal.

They include Hyosung, Changshin, Taekwang Vina, Amata, CP Fujitsu, Formosa, VPIc, Kenda and Pouchen.

Ly Duc Ky, Director General of the Vietnam Precision Industry Joint Stock Company at the Ho Nai IP in Trang Bom district, said up to 90 percent of the company’s products are shipped to the US, Japan and Canada, which are members of the TPP.

The company has invested approximately 70 million USD in building facilities and recruiting more than 1,000 employees to expand its operations in the Giang Dien IP, Ky said.

According to Chairman of Thailand’s Amata Group Surin Pitsuwan, the group has put another 635 million USD in three projects in the Long Thanh IP.

Increased presence of Thai imports challenges domestic products

The increased presence of Thai imports will motivate local producers and the economy, but it also poses a fierce challenge for domestic products, said Vietnam Retailers’ Association (VRA) President Dinh Thi My Loan.

Overseas retailers were allowed to establish 100-percent foreign-invested businesses in Vietnam from January 2015 based on the country’s WTO commitments. The formation of the ASEAN Economic Community that enables the free movement of goods, capital and human resources within the region, in addition to the recently signed Trans-Pacific Partnership (TPP) deal, will add more pressure for domestic manufacturers.

The Ministry of Industry and Trade expects Vietnam to have 1,200 to 1,300 supermarkets and 180 shopping centres by 2020 with estimated retail sales of 25 to 30 billion USD, offering appealing opportunities for overseas producers.

Thai investors have scaled up their presence in the country through a number of deals since 2013. The deals include Thai-based Berli Jucker (BJC) purchasing convenience-store chain Family Mart from Vietnam’s Phu Thai Group and introducing it as B’s Mart in 2013. The firm continued acquiring Metro Cash & Carry Vietnam for 876 million USD in August 2014.

In January last year, Central Group, a leading Thai electronics store operator, bought 49 percent stake from electronics retailer Nguyen Kim for 200 million USD. The group also expanded its Robinson department stores which distribute Thai goods in Hanoi and Ho Chi Minh City.

Both BJC and Central Group are expressing their intention to acquire Vietnam’s Big C retail chain.

Loan voiced her concern over Thai firms’ aggressive expansion into the domestic market, warning that Vietnamese goods find it hard to enter Thai retailers’ systems.

According to the VRA president, Thai products are favoured by many Vietnamese, as they are well-designed, high-quality and affordable.

Central Group plans to spend 1.3 billion USD to open stores and pursue merger and acquisition (M&A) deals in Southeast Asia, including in Vietnam, over the next three years. It is expected to pave the way for more Thai products to enter Vietnam’s market, Director of the Ministry of Industry and Trade’s Domestic Market Department Vo Van Quyen said.

To gain a stronger foothold in the domestic market, local firms should shift from traditional to modern retail models and draw up strategies that reflect lessons learned from global brands, Loan suggested.

Additionally, local enterprises should cooperate to create strong links and compete with imported products. The government needs to encourage customers to use Vietnamese goods by regulating the minimum proportion of local products sold at supermarkets, she added.

HOSE announces outstanding members

The Ho Chi Minh Stock Exchange (HOSE) announced 2015’s outstanding security member companies at a New Year trading session in the southern city on February 15.

Chairman of the municipal People’s Committee Nguyen Thanh Phong praised the HOSE’s remarkable achievements in the fields of trading, liquidity and infrastructure.

He said after 15 years of development, the HOSE has proved the significant role of the stock market, contributing to the stable and sustainable development of Vietnam’s stock market and the city’s financial market.

At the event, the HOSE honoured outstanding stock firms in 2015 in several categories, such as best stock and bond intermediaries.

HOSE Board of Directors Chairman Tran Khac Sinh said the country’s stock market prospered in 2015 with market capitalization of 1,360 trillion VND (61.2 trillion USD), up 17 percent compared with the end of 2014, or 34.5 percent of GDP.

The total capital mobilisation through stock tender and additional stock issue activities was estimated at 300 trillion VND (13.5 billion USD). It rose 7 percent compared with 2014.

Late last month, the HOSE announced its Global Industry Classification Standards (GICS), an international standard developed by MSCI (Morgan Stanley Capital Investments) and S&P Dow Jones Indexes, to provide an effective, detailed and flexible tool for investors to record rapid changes in separate fields.

The application of the GICS is expected to help the Vietnamese stock market become more global, enabling investors – especially foreign ones – to enter Vietnam and diversify their investment projects.

HCM City seeks to build domestic supply chain through support industry

Ho Chi Minh City has focused on drawing investment in the support industry in a bid to assist the development of the domestic supply chain and lay a foundation for sustainable high technology development.

Over the past several years, many projects have been licensed in the Saigon Hi-tech Park (SHTP), bringing with them satellite supply projects.

In 2015, the SHTP drew up 28 projects, worth a total of 1.5 billion USD – 3.7 times the yearly target, many of which were part of a supply chain for the Samsung Complex Project.

According to Chairman of the municipal People’s Committee Nguyen Thanh Phong, the Samsung project is expected to boost support industry development, contributing to shifting the city’s economic structure and local socio-economic development.

It also helps boost the development of skilled human resources and the domestic supply chain, enhancing the competitiveness of domestic enterprises and the rate of locally made content in hi-tech export products.

In October 2015, a decision was promulgated on offering incentives, including interest rate subsidy, for investors in the support industry. During the year, nearly 60 investors, most from Japan, the Republic of Korea, the US and Europe, came to study investment conditions in the park.

According to Le Hoai Quoc, head of the SHTP Management Board, the park has built production facilities on more than 13 hectares to serve small enterprises operating in the support industry – especially those which focus on advanced technology.

At the same time, the park requires investors to commit to promoting research and development (R&D) and the localisation of production. Within three to five years of operation, the local content of product value should reach at least 35 percent.

Quoc said the requirements are geared towards developing the domestic supply chain, noting that domestic enterprises should also make greater efforts, particularly investing in R&D.

The Saigon Hi-tech Park (SHTP) has attracted 68 investment projects with a total registered capital of 4.1 billion USD since its establishment in 2002.

Hanoi Stock Exchange celebrates post-Tet opening

The gong rang out on February 15 to open the first trading session of the Hanoi Stock Exchange (HNX) after the Lunar New Year holiday (Tet).

Addressing the event, Finance Minister Dinh Tien Dung said the stock market gained positive outcomes in 2015 while expecting a similar trend for 2016.

The sector needs to take drastic measures implementing the Government’s policies on equitising state-owned enterprises, and divesting capital from non-core business, the Minister said.

He urged the sector to continue restructuring in line with the roadmap designed by the Government, with focus on offering incentives for domestic and foreign investors.

The market’s capitalisation saw an increase of 17 percent in 2015 compared to the previous year, equivalent to 34.5 percent of the country’s GDP.

The market mobilised 300 trillion VND (13.4 billion USD) for the state budget and enterprises, accounting for 34 percent of the total mobilised capital.

Tightened credit expected to stop real estate bubble

Loans pouring into the real estate sector are expected to be tightened given that the sector is said to be experiencing robust growth.

In a draft document issued by the State Bank of Viet Nam circulated for the opinion of financial institutions, the risk index of receivable lending for real estate and securities might be raised from 150 per cent (the lowest level) as stipulated in Circular No 36, to 250 per cent.

Maximum ratio of short-term funds used for medium and long term loans might be adjusted from 60 per cent to 40 per cent.

The Ministry of Construction's Department of Housing and Real Estate Market Management reported that as of November 2015, outstanding loans invested in the market was up to VND375 trillion (US$16.67 billion), a surge of 20 per cent compared to the figure of December 2014. This is the result of the Circular No 36 which was in effect from February 1, 2015.

Three activities which have the highest rate of increase in loans are, buying the right to use land with 36.3 per cent, building new urban areas with 10.7 per cent, and investing in other real estate businesses at 11.2 per cent.

The proposed amendments imply the central bank's concern about the overheating of the real estate sector, according to a report of the Ho Chi Minh City Securities Company.

The new rules, if applied, would have a negative impact on developers such as Novaland, Vingroup, Dat Xanh, and Nam Long as well as their customers, it said.

Lenders that are major players in the mortgage market, such as ACB, Sacombank and Techcombank, would also be affected, it said.

This change would not affect families and individuals who buy houses to live under the scheme of pay-by-instalment.

Previously, experts also raised concerns over the real estate "bubble" which might occur in the future if the lending for property investments was not controlled.

Expert Nguyen Tri Hieu told news website ttvn.vn that the warm-up of the real estate market could help deal with bad debts, but in fact, the market was still facing difficulties as the volume of inventories was still high.

Therefore, commercial banks should not only speed up the lending, but also need to strictly supervise the quality of loans as well as the sources of debt servicing, he said.

It is the time for the central bank to tighten credit in the real estate market, he stressed, while adding that property businesses should prepare financial resources themselves to avoid over-reliance on the banking system.

New products attract high export demand

Exports of some new products such as charcoal and wood pellets have witnessed high demand in niche markets, opening opportunities for Vietnamese companies.

Nguyen Tuan Viet, general director of VietGo Company – one of the companies specialising in import-export consultancy told Viet Nam News that charcoal and wood pellets from Viet Nam have been in demand in countries which have cold weather. Over a year, Viet Nam has become the main exporter to the Middle East, South Korea and Japan due to fluctuation of their supplies.

"These countries have a tradition of consuming grilled food that has high demand of charcoal from Viet Nam," Viet said, and added that charcoal has been exported at US$500 to $600 per tonne.

In the rest of the world too, Laos, Cambodia, Viet Nam and Africa are the usual suppliers of charcoal. However, the recent Ebola outbreak in Africa has made Asia, including Viet Nam, the biggest charcoal exporters.

In addition, Viet Nam has also been the temporary import-for-re-export destination of charcoal from Laos and Cambodia. The two countries have a large charcoal supply. However, Viet Nam has the advantage of cheap transport costs to Middle East, thus making it convenient in export the product from here.

"Before 2014, VietGo promoted charcoal exports from about six businesses a year. The number was increased to 32 in 2015 with the successful rate of up to 75 per cent. The product would cause a "fever" in the upcoming time as charcoal exports from Africa have been limited because of the effects of Ebola," he noted.

He added that in December 2015 alone, there were 25 orders from foreign partners to buy charcoal and wood pellets. Each day, there were one to two orders on an average while the supply has not been enough. Each order often required several thousands to hundreds of thousands of tonnes.

Provinces of Hau Giang, Thanh Hoa, Nghe An, Vinh Phuc and Bac Kan have been the biggest areas providing charcoal for exports.

He said wood pellets have been exported since 2007 with the highest profit of 30 per cent to 40 per cent as several countries have enhanced use of clean energy instead of oil and coal.

The supply of wood pellets in Viet Nam has also been limited despite the demand. An importer often orders between 3,000 tonnes and 5,000 tonnes a month, while a local factory on an average could provide just 300 tonnes to 500 tonnes.

The reason for the limited supply is because furniture businesses have scaled down their production of wood pellets – a substandard product that has become less.

Another reason was that wood pellet plants were small scale and found it hard to meet the high quantity of exports.

Le Quoc Phuong, deputy director of Trade Information Centre under the Ministry of Industry and Trade, said that the import demand for these products from the Middle East was relatively high. However, the ministry did not have adequate statistics from its export turnover as they are new products.

"We often have statistics of key export products with high value that could affect the import-export balance. However, potential products should be encouraged due to their high effectiveness, especially in niche markets," Phuong added.

Binh Dinh seeks investment

The south-central province of Binh Dinh has announced plans to solicit investment in many major projects this year, mostly in the tourism sector.

Many of them require investment in trillions of dong, the province said.

Some of the main tourism projects include the Thi Nai complex in Quy Nhon city to be built on an area of over 5,000ha at US$400 million, the $100 million Mui Rong – Tan Phung tourism complex in Phu My District, and the $40 million Tra O Lagoon project in the same district.

The 2,000ha De Gi project needs $50 million.

A five-star hotel will be built in An Duong Vuong Road and a resort in Quy Nhon.

In the last two years Binh Dinh has attracted many major projects like the FLC Quynhon Beach and Golf Resort worth over VND5 trillion ($230 million) and Hoa Sen Group's VND2 trillion ($92 million) Nhon Hoi Steel Plant.

The province has also greenlighted construction of a trade-industry-service complex by Becamex IDC and the five-star Kim Cuc Hotel.

Binh Dinh has so far attracted nearly $1.8 billion in FDI, mostly in industry and construction.

Last year there were only six foreign projects worth $43 million.

To attract more investment, the province has announced many measures.

The province website quoted Nguyen Bay, director of the Trade Promotion Centre, as saying that this year many delegations would visit Japan, Singapore, and Thailand to solicit investment.

The province would provide support to investors and offer incentives to attract investment and talented people, he said.

Japan to continue support for HCM City

The Japan External Trade Organisation (JETRO) will continue to help HCM City develop supporting industries, its chief in the city has promised.

Hirotaka Yasuzumi said JETRO has organised many business-matching events, exhibitions and others to boost co-operation between Vietnamese and Japanese firms in supporting industries, but the same Vietnamese participants attend again and again, and not many "new faces" took part.

Therefore, JETRO would co-operate with relevant ministries, industries and localities to identify "new" companies that have the capability to co-operate with Japanese firms, he said.

Most businesses in supporting industries are small or medium-sized, have modest resources and management, and use outdated technologies, resulting in inconsistent quality for their products, he said.

This is a challenge for Japanese firms seeking local content to serve their expansion plans, he said.

Opacity of information is an obstacle to collaboration between Japanese and Vietnamese firms, especially in supporting industries, he said.

State firms are reluctant to release information, making it hard for foreign companies, including Japanese, to study potential business partners, he explained.

Japanese firms expect the Government and local authorities to better manage State-owned enterprises to ease this problem and to have more support policies for SMEs to mitigate their lack of capital and technologies.

According to JETRO, the rate of locally-made products supplied to Japanese producers in Viet Nam has increased significantly compared to many years ago but remained low compared to other countries in the region.

Yasuzumi said foreign direct investment in Viet Nam, especially Japanese, would continue to rise meaning local manufacturers would be called on to supply more products to foreign investors.

The Government has passed a decree on developing supporting industries and HCM City has policies in place to boost their development.

Yasuzumi said the city should make use of legal documents innovatively to come up with clear policies such as offering financial guarantees for companies without assets to mortgage and set up funds to support businesses.

Viet Nam's environmental policies are outdated compared with other countries, and to minimise environmental impacts, most localities, including HCM City, have curtailed industries that potentially affect to the environment.

Localities should allow enterprises to invest in such industries with the caveat that they must use advanced eco-friendly technologies, he said, explaining that this would help boost supporting industries.

In 2016-20 the city would focus on developing four major industries — mechanical engineering, electronics and information technology, rubber and plastics, and food processing — and the two traditional industries of garment and textile and footwear, especially their supporting industries.

France’s Casino Group has yet to sell Big C Vietnam: representative

French mass retailer Casino Group is only in the initial phase of transferring its supermarket chain in Vietnam, according to a Big C Vietnam representative.

The representative denied on Friday recent reports that Casino Group has finished selling Big C Vietnam to a new owner, adding that the group is still looking for a suitable partner for its business in the country.

Since its announcement on December 15, 2015 that Casino Group is seeking a new owner for its business activities in minor markets, the group has only agreed to pass on its controlling stake, which accounts for 58.6 percent, in Thai Big C to Thai Charoen Corporation Group (TCC), one of Thailand’s leading corporations, the representative toldTuoi Tre (Youth) newspaper.

The transaction, which was worth US$3.5 billion, was made during an auction on February 5 and is expected to be completed before the end of March, the representative added.

The decision to sell Big C Vietnam has been welcomed by several investors, including Singaporean retailer Dairy Farm International Holdings, South Korea’s Lotte Shopping, and Japanese retail corporate group AEON, according to a Reuters source.

Big C is among several major foreign retailers who took up an early presence in Vietnam and is a big competitor in the country’s retail sector.

There are now 32 Big C outlets across Vietnam, with eight in Ho Chi Minh City.

On December 15, Casino Group issued a memorandum stating that it may seek a new owner for its supermarket chain Big C in Vietnam, as the company plans to strengthen its financial flexibility by selling assets in the country, as well as Thailand and Colombia.

In multiple annual reports, the French retailer has assessed Vietnam as a market with high potential for growth in the future, once the economic slowdown is over and consumption begins to grow again.

However, given the minor contribution of Big C Vietnam and the small market size, especially compared to neighboring country Thailand, the chain is now on the priority list to change hands.

Japan’s growing fondness for doing business in Vietnam

The majority of Japanese companies operating in Vietnam are looking to expand their business operations in the coming year, says the Japan External Trade Organization (JETRO).

At a recent meeting in Hanoi, JETRO Chief Atsusuke Kawada announced the results of a survey of Japanese companies doing business in Asia shows that 66% of those operating in Vietnam have expansion plans.

“This rate is consistent with that of other countries in the Asia Pacific region, for which the median range was 60-70%,” said Kawada, adding that the rate was relatively unchanged from last year’s similar survey.

While the majority of manufacturing companies pointed to higher revenue growth as the driver for expanding operation, non-manufacturing businesses cited higher potential for domestic retail sales as the primary factor.

Other factors that Japanese companies found most appealing about Vietnam is the higher than average GDP growth over the past several years, relatively lower cost labour along with the stable political environment.

On a more practical level, by far the overwhelming majority of respondents reported they and their Japanese co-workers enjoy living in Vietnam.  Out of the 15 nations included in the survey, Vietnam ranked fourth in liveability.

Kawada said, in regards to political stability it also ranked high— as it was fifth among the 15 nations in the Asia Pacific region.

The survey indicated the biggest perceived risks of doing business in Vietnam were the incompleteness of the legal system, lack of transparency in the legislative process and complex income tax procedures.

“Laws are passed without adequate due process and research prior to enacting them, which places undue burdens on FDI companies, who are often left trying to ferret out inconsistent and incomplete legislation and regulations,” said Kawada.

He said on the upside he expects that income tax and other administrative procedures such as customs procedures will be greatly simplified in the near future as a result of the birth of the ASEAN Economic Community (AEC).

“In addition, the Vietnam government is continually striving to make favourable changes in the laws on enterprises and investment Kawada underscored, adding that he is optimistic the business environment will change for the better as a result.

In 2015, Japanese companies represented the fourth largest FDI group operating in Vietnam – trailing the Republic of Korea, Hong Kong and Singapore with the majority of the investments under US$5 million each.

Due to the weakening Japanese yen, Kawada said he does not anticipate a surge in large value investment projects in the coming year.

Meanwhile, the 12th National Party Congress re-election of General Party Secretary Nguyen Phu Trong has been highly welcomed by Japanese FDI companies who view him with high respect as a talented and dynamic leader.

First 100 tons of Edor longan shipped to US

Chau Thanh Longan Co-operative has supplied exporters with 100 tons of Edor longan to ship to the US.

This is a good news for farmers in southern Dong Thap province as the US is a demanding but potential market with strict requirements on food hygiene and safety.

After applying VietGap production standards, Chau Thanh longan has overcome strict barriers to enter the demanding market.

2015 was also a bumper year for mango growers in Cao Lanh district and Cao Lanh city, Dong Thap province. They have succeeded in building Cat Chu mango brand name and exported hundreds of tons of mango to demanding markets like Japan, the Republic of Korea and Taiwan.

Vietnam dong may slide 5% against US dollar

The dong will fall around 4%-5% against the US dollar this year as the Federal Reserve is expected to rate interest rates further and push up the greenback, the Vietnam News Agency reported on February 15, citing new forecasts.

The drop will be similar to the depreciation of the Vietnamese currency seen last year, Vietcombank Securities Company was quoted as saying in its new report.

Considering that the Fed may increase rates gradually, Vietnam has enough time to get ready for a weakening dong, the company said.

Vietnam's central bank, in fact, has made a necessary move which is setting a mid-point rate for the dollar/dong every day, according to the report.

The new policy, which has showed the central bank's flexibility, came after its plan to keep the dong from falling by more than 2% amid strong US dollar purchases and unexpected plunges in China's yuan last year, it said.

The company said it does not see any clear internal factors that will put pressure on the dong. Dollar hoarding has been considerably curbed by recent measures taken by the central bank, including zero interest rates on dollar deposits.

Trinh Quang Anh, director of Maritime Bank's economic research center, gave a similar forecast, saying the dong will drop by around 4% this year.

Le Xuan Nghia, a banking and finance expert, also said with the central bank's recent policies, the exchange rate will rise about 5%, which is not a big change.

The central bank set the mid-point rate at VND21,873 on February 15, down 0.1% since it first set the rate on January 4. Banks are allowed to trade the dollar within 3% below or above the reference rate.

VDB urged to restructure for sustainable development

The Vietnam Development Bank needs to accelerate restructuring for more effective operation and sustainable development, Head of the Party Central Committee’s Economic Commission Vuong Dinh Hue has said.

During his New Year visit to the bank on February 14, Hue urged the Bank to focus on mobilising resources and continuing to handle bad debts in accordance with the Prime Minister’s instructions.

Acting Chairman of the Bank Nguyen Quang Dung said the bank has to date mobilised over 47.44 trillion VND (2.12 billion USD) and 135 million USD.

It has provided funding for 1,321 projects, totaling nearly 208 trillion VND (9.23 billion USD), with 180.6 trillion VND disbursed so far.

The bank is also managing 460 foreign-funded projects with total committed capital of 13.24 billion USD, according to Dung.

He reported that the banks’ total outstanding debt as of December 31, 2015 stood at more than 314 trillion VND, up 4.3 percent from one year ago.

Quang Ninh pushes joint ventures

The northern coastal province of Quang Ninh has been promoting the public-private partnership (PPP) investment and management model aiming to become a service-industry oriented locality by 2020.

Chairman of the provincial People's Committee Nguyen Duc Long said 2015 was a successful year for the PPP model, especially in infrastructure development, transport and tourism projects.

Local authorities have granted an investment license to the joint venture between Cong Thanh Investment and Construction JSC and Phuong Thanh Investment and Construction JSC to build the Ha Long- Van Don expressway and upgrade the Ha Long – Mong Duong section of National Highway 18 under the build-operate-transfer (BOT) model with a total investment of nearly 14 trillion VND (616 million USD).

Once completed by the end of 2017, the project will help reduce traffic on National Highway 18 and shorten the distance from Hanoi to Ha Long City and the Van Don Special Economic Zone, and from Ha Long to the Mong Cai Border Economic Zone.

The chairman said the projects will help complete the infrastructure network in the province and attract more investment, promoting socio-economic development in Quang Ninh and the key northern economic region.

A series of projects have been implemented under the PPP model since late 2014.

The provincial People's Committee said that 25 PPP projects have been conducted on schedule so far.

Vu Van Khanh, Director of the provincial Department of Transport said the transport sector will co-ordinate with relevant sectors to complete the Ha Long-Hai Phong by late 2016.

Quang Ninh has also applied the PPP model to social and working infrastructure, medical and educational establishments and information technology. Local authorities have also asked for approval from the Government to build the Quang Ninh Airport and Van Don-Tien Yen-Mong Cai expressway under the model.

In 2015, the province attracted a total investment of 51 trillion VND (2.24 billion USD), a year-on-year increase of 12.5 percent.

During the year, it welcomed a number of major projects worth trillions of dong from both domestic and foreign businesses such as the Vincom Centre Ha Long and Vinpearl Ha Long invested by Vingroup, Ha Long Ocean Park invested by Sun Group, and Ha Long Star Tourism Urban and Entertainment Complex Casino invested by real estate developer Nakheel from the United Arab Emirates.

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