EU pledges more ODA for Vietnam in next 7 years

The European Union (EU) is weighing to raise the amount of official development assistance (ODA) for Vietnam in the next seven years, said the head of the EU Delegation in Hanoi last week.

“We will substantially raise ODA for Vietnam in the 2014-2020 period,” said Franz Jessen, adding this effort was significant in that the EU is cutting ODA for other countries.

Jessen elaborated that officials at the EU headquarters were still debating over ODA for middle-income economies, as such funds should normally be choked off. But Vietnam remains an economy of low middle income, he said.

The diplomat declined to clarify the amount of ODA for Vietnam, but stressed it would be bigger than 300 million euros that EU granted to Vietnam each year in the past.

EU pledged US$1.01 billion for Vietnam in 2012, with nonrefundable grants accounting for roughly one-third.

EU is the second biggest ODA donor for Vietnam after Japan, and the biggest provider of nonrefundable grants, with pledged ODA for Vietnam in the 1996-2010 period totaling US$11 billion.

In related news, Jessen said several business delegations from EU will come to Vietnam in the next few weeks, including a big group representing 70 European companies.

Vietnam to introduce G-bond index

The Hanoi Stock Exchange (HNX) is expected to introduce later this year or early 2014 the G-bond index, which is aimed to measure developments of the local government bond market.

G-bond index represents liquidity and attractiveness of government bonds and status of the economy to provide accurate information for investors. The index will help enhance transparency and assist local and international investors in making bond transaction decisions.

At the seminar introducing the index building plan last Friday, HNX said that the set of indices for State treasury bills will be introduced first because the bills bear lowest risks and are the foundation for investors to evaluate other bonds.

In the coming time, HNX-Index will continue to develop indices for government-backed bonds, municipal bonds, standard bond index and liquidity index.

According to the Vietnam Bond Market Association, the scale of the bond market has increased steadily. The total winning volume was over VND421 trillion as of September 30.

The winning ratio of bond auctions has also increased from 32% in 2010 to 52% in 2012 and 53% in the Jan-Sep period this year. Turnover of the market was nearly VND690 trillion with the highest value per session reported at over VND2 trillion.

Members of the bond market also agreed on the market development plan for next year, upgrading the modern bond information system, studying to launch new products and transaction tools such as When-issued and Repo products.

Dai-ichi Life Vietnam launches retirement insurance

Dai-ichi Life Vietnam has become the first insurer winning approval from the Ministry of Finance to introduce retirement insurance products for individuals and enterprises.

When the circular on voluntary retirement insurance takes effect tomorrow, the enterprise will introduce retirement insurance products “An nhan huu tri” for individuals and “Hung nghiep huu tri” for businesses.

Takashi Fujii, chairman and general director of Dai-ichi Life Vietnam, will be the first client of the “An nhan huu tri” product.

According to Dai-ichi Life Vietnam, the nation’s population is now at the golden period with over 50 million people in the working age. The population is expected to grow old quickly within the next 20 years, spurring the need to develop retirement insurance products to help retired people secure stable incomes.

Dai-ichi Life Vietnam was established in 2007. The enterprise raised its capital from US$25 million to US$72 million in 2008, making it one of two foreign life insurers with biggest chartered capital in the country.

Payment notice to dairy-cow farmers via SMS

FrieslandCampina Vietnam has officially launched the payment notice via SMS on mobile phones to farmers who supply fresh milk to the company, enabling them to easily keep watch of their production and income.

SMS replacing the original paper-based payment notice is part of the “automation milk purchasing system” that had been started from the beginning of the year and applied for nearly 50 fresh milk collecting stations.

After a trial period, the SMS payment notice has been successfully implemented via five Vietnam mobile networks namely Vinaphone, MobiFone, Viettel, Beeline and Vietnamobile.

Every 14 days, farmers receive the notice via SMS from FrieslandCampina Vietnam with details about their production, bonuses and total amount of money. Besides, farmers can also view the detailed information via the internet or with the computers at each milk purchasing station. The successful implementation of SMS notification system has saved time and reduced the risks of missing notices.

The automation milk purchasing program has been invested with over VND6 billion to deploy the automatic system of milk procurement and pricing and enhance the transparency, accuracy, and convenience in the process of purchasing milk and making payment.

This system incorporates the process of testing raw milk to ensure quality of the whole produce. This process ensures the milk quality “from farm to factory”, while it is also a part of the quality control program called “from grass to glass” applied by the company.

According to the “automatic milk purchasing system”, each farm or farmer who delivers milk for FrieslandCampina Vietnam will receive a card with a unique code. The milk purchasing details would be saved automatically with this code including weights, sampling, the test results, analysis and quality evaluation, the amount of milk, the amount of money and bonus for farmers in each unit of milk assigned.

This system also allows the company to monitor the quantity and quality of milk purchased, which helps farmers improve their milk quality. Moreover, this could link to the original source of raw milk if necessary.

Luu Van Tan, head of dairy industry development of FrieslandCampina Vietnam, said: “The successful application of notification by SMS in particular and the “automation milk purchasing system” in general helps farmers avoid waste of time spent on taking notes and storing documents as before. It also enables farmers to avoid making mistake, errors or loss of documents, because all are automatically recorded, and saved in the system.”

Moreover, famers can check information about the quantity and quality for the price and the bonus  at any time, he added.

The convenience, speed, and transparency in dairy procurement has encouraged farmers to improve quality, ensuring the sterilization at the maximum level for raw milk  produced and provided for FrieslandCampina Vietnam.

HCMC, Japan boost microchip industry cooperation

Japanese semiconductor associations and enterprises sent a delegation to HCMC on Friday to seek investment opportunities in Saigon Hi-tech Park (SHTP) and discussed cooperation in manpower training with local authorities.

The Japanese delegation included representatives of Kyushu Semiconductor Industries & Electronics Technology Innovation Association and Kyushu Economic Research Center. They joined the meeting with a number of agencies and enterprises in the city to exchange information and experiences, discuss cooperation possibilities and technology transfer between the nations in the future.

During the meeting with the HCMC’s Integrated Circuits Design Research and Education Center (ICDREC), Japanese enterprises discussed manpower training programs to serve semiconductor microchip production.

Ngo Duc Hoang, director of ICDREC, said that the city is developing some microchip production and design projects. Therefore, human resources must be ready when the projects are officially deployed.

The center has developed some training projects in the fields of microchip design and semiconductor component production in the country and overseas. As Japanese firms have decades of experience in these sectors, Hoang suggested that the Japanese side consider joining hands with the city and building up the Design House, a project ICDREC and the HCMC Department of Information and Communications are developing.

The microchip industry in Vietnam is still in its infancy and the city government is looking for opportunities to cooperate with semiconductor associations and enterprises worldwide, Hoang added.

Japanese enterprises at the meeting highly appraised achievements obtained by ICDREC in the past, its professional staff and modern facilitates at the center.

During the meeting with the management authority of SHTP, Japanese enterprises also expressed interest in the investment environment and incentives for high-tech projects at the park.

SHTP has been the venue of many high-tech projects. The park has conducted many research projects and successfully launched products such as Fast Recovery Epitaxial Diode and bio-chip.

Hoang said that the local semiconductor sector has drawn more attention from Japanese semiconductor associations and businesses after the Vietnam Semiconductor Strategy Summit was organized in the city by the Semiconductor Equipment & Materials International and the HCMC Semiconductor Industry Association in September.

The meeting will bring about many opportunities for the city to realize the microchip industry development strategy.

The Viet Nam - Korea Medical Corporation (Vikomed) will continue investing in building its third plant in early 2014, following the construction of its second plant this month.

In addition to supplying digital medical equipment to the domestic market, Vikomed also plans to export products to South Korea and other countries in the region.

Vikomed's product diagnostic systems and equipment include diagnostic ultrasound, digital X-ray and blood analyzers; as well as high frequency generators and CCD detectors.

CPI to rise slightly on tuition hike

Consumer price index (CPI) this month will likely increase slightly by 0.5-0.6 per cent against September, according to the Domestic Market Regulation Department under the Ministry of Industry and Trade.

Besides cyclical factors such as season change, the ongoing storm season and prices of goods and services, CPI also faces pressure this month from the credit growth target and price hikes of clean water and school tuition, the department said.

Prices of some essential commodities such as rice, fresh meat and aquatic products and animal feed will stabilise this month thanks to abundant supply while prices of vegetables and urea will rise slightly.

Ongoing price stabil-isation programmes in big cities such as Ha Noi and HCM City would help keep prices from increasing, the department said.

Credit institutions expect this month's CPI to rise by 0.76 per cent from September, according to a survey conducted by the Monetary Forecast and Statistics Department under the State Bank of Viet Nam.

The institution also expected inflation to hit 7 per cent this year, lower than the 7.05 per cent expectation in the previous survey.

The department forecast that domestic prices would rise significantly in the last months of the year due to high demand on the occasion of the new year and a price hike in the world market.

CEO summit to attract hundreds of leaders

The Viet Nam Business Association has said that around 800 chief executive officers in Viet Nam will attend the annual 2013 Viet Nam CEO Summit at the end of this month.

The event is expected to attract 30 local and international speakers to discuss key topics on the country's current business landscape.

Vietnam entrepreneurs honoured in Laos

The Vietnamese Business Association (VBA) in Laos held a ceremony to mark Vietnam Entrepreneurs Day on October 14.

VBA General Secretary said the association has 197 members involved in various fields of activity to serve as a bridge to investment cooperation between Vietnam and Laos.

On the occasion, a representative of the Lao Ministry of Finance granted certificates to Vietnamese enterprises and individuals for their contribution to improving social welfare and helping flood victims in Laos.

Consumer product forum gathers firms

The second “Connecting producers and distributors” conference for southern provinces scheduled to be held in Ho Chi Minh City early next month will bring together players in many consumer-goods industries.

Ho Chi Minh City, the regional distribution hub, and the Ministry of Industry and Trade seek to set up a cooperation mechanism among southern provinces to bolster the region’s strength and reduce expenditure as part of efforts to mitigate the current economic difficulties.

Last year, 16 provincial Trade and Industry Department and 200 companies, half of them based in the city, attended the first event. Then 33 kiosks were set up to showcase foods, fruits, vegetables, sweets, and candy among other goods.

Producers signed 43 contracts with supermarkets like Coop Mart, Citimark, Maximart, and Big C.

Following its success, this year even more favourable conditions will be created for firms to introduce their products to distributors.

The number of kiosks is expected to double, with Ho Chi Minh City firms getting 10 kiosks, northern firms and banks getting slightly fewer, and firms based in southern provinces the rest.

At a seminar, producers and distributors will swap information about quality for supermarkets, raw materials, and localities’ specialties. Organizers expect to draw over 200 participants.

HCM City to host Mobile Marketing Association Forum

Around 25 renowned speakers will deliver speeches at the Mobile Marketing Association (MMA) forum in Ho Chi Minh City on October 23.

The forum is considered the most prominent mobile marketing event in Vietnam this year. It provides an excellent opportunity for marketers, communications agencies, technology and telecommunications companies to share experiences and the latest information in the field.

The event, co-organised by MMA and Goldsun Focus Media, is expected to attract more than 300 guests.

Vietnam-China int’l trade fair bound for Ha Giang

The 2013 Vietnam-China International Industry and Trade Fair is scheduled to take place in Ha Giang province from October 25-31.

As many as 570 stands from Vietnamese and Chinese enterprises will showcase high quality consumer goods, and agricultural and industrial products.

A number of kiosks will be installed to help visitors sample food specialties and distinguish authentic from counterfeit goods.

The event provides an excellent opportunity for local companies to introduce their products, seek business partners and expand markets.

Within the framework of the fair, the organising board will launch a series of seminars on trade and industrial promotions in 28 northern provinces.

The fair will be co-organised by the Ha Giang provincial People’s Committee and the Ministry of Industry and Trade.

Vietnam-FAO cooperation framework announced

The UN Food and Agriculture Organisation (FAO) will support Vietnam’s agriculture restructuring plan to ensure food security, maintain sustainable development and improve farmers’ livelihoods.

Jong Ha Bae, FAO Chief Representative, was speaking at a meeting in Hanoi on October 14 announcing the 2012-2016 Vietnam-FAO cooperation programme.

According to Jong, an agriculture-based country like Vietnam needs to restructure its farming system to address macroeconomic instability, including slow growth recovery and big trade deficit.

Deputy Minister of Agriculture and Rural Development Nguyen Thi Xuan Thu emphasised that agriculture plays an important role in ensuring food security and social welfare and contributing to poverty reduction in Vietnam.

She pointed out the fact that the country’s agriculture will find it difficult to develop sustainably if it only relies on exploiting natural resources, excessively using input materials, and exporting unprocessed products.

It’s time to apply a new sustainable production model focusing on product quality, efficiency and added values, she said.

The 2012-16 programme identifies UN support for Vietnam in the next five years to meet national socio-economic development targets in the 2011-2015 and 2011-2020 periods.

It will support Vietnam’s policy and legal framework on livelihood, nutrition and food security, and accelerate institutional restructuring to boost the development of the agricultural market. It will assist Vietnam with climate change adaptation and mitigation, including coping with and managing disasters, building early warning systems and minimising the effects of global warming.

The programme will also help improve the sustainable supply of agricultural goods and services, raise value and reduce losses post-harvest, and encourage vulnerable farmers to take part in effective food and agriculture systems.

Thu acknowledged assistance from FAO, international organisations and donors and expressed her hope to receive more technical and financial support from the international community.

International assistance help Vietnam successfully restructure agriculture and implement a national target programme on agriculture, farmers, and rural areas to develop a green agriculture, and raise added value and competitive edge of agro-forestry and fisheries products.

Japan ICT Week 2013 due late October

Japan Information and Communication Technology (ICT) Week 2013 will be held in Hanoi and Danang from October 23-26.

The annual event, co-organised by the Vietnam Software and IT Services Association (VINASA) and Vietnam-Japan IT Cooperation Club (VJC), began in 2007.

It will include workshops on Vietnam-Japan business cooperation, a forum on developing offshore business, a writing contest on smartphone and tablet apps, a job fair, a meeting between Vietnamese and Japanese businesses and some culture and tourism exchanges.

This year, the number of registered businesses from Japan has increased a double compared to last year, alongside 30 Japanese businesses operating in Vietnam and nearly 200 Vietnamese businesses to take part in, according to organisers.

Truong Gia Binh, VINASA President, said Japan is the world’s third biggest ICT market, just after the US and EU.

Manpower shortage forces Japan’s ICT businesses to cooperate with foreign partners to meet its market demand, he noted.

In 2012, Vietnam surpassed India, becoming Japan’s second biggest ICT partner. Since 2009, it has won Japanese ICT businesses’ trust as their most favourite partner.

All Vietnamese software businesses have reported high revenue earnings from the Japanese market, and some big names such as Luvina and Run System even shifted to this lucrative market.

FPT Software-the biggest software company in Southeast Asia, now has 50% of its revenue sourced from Japan, recording an impressive 44% growth rate last year.

First Vietnamese solar batteries meet int’l standard

Vietnam has produced the first line of solar batteries that meet international standards, offering consumers quality and affordable alternatives that cost 20-30% less than imported batteries.

The Saigon Giai phong (Liberated Saigon) daily reported on October 14 that Irex, an affiliate company of the Bach Khoa solar energy investment and development company, recently won the recognition from TUV Rheinland, a global provider of technical, safety and certification services.

As one of the pioneers in the application of solar energy in production and everyday use, Irex is the first organisation in Vietnam to win a TUV Rheinland certificate recognising its batteries meet the IEC/UL standard – viewed as a passport into the global market.

Electronics market sees poor purchasing power despite promotions

Despite alluring promotional programs offered by electronic outlets in Ho Chi Minh City, purchasing power remains stagnant.

Cho Lon Electronics Supermarket in District 5 is offering discount on a variety of refrigerators and other electronic appliances, with even gifts thrown in, yet few items have been sold.

Some products are being offered at 50 percent discount, but most customers turn out to be only window-shoppers.

A similar situation prevails at Nguyen Kim and Thien Hoa Electronics & Furniture Shopping Center in Districts 5, 12, and Tan Phu.

Thien Hoa is offering discounts from 10-50 percent on mobile phones, deluxe televisions, washing machines and infrared stoves.

Nguyen Kim Electronic Supermarket allows customers to use products for 30 days, even increasing warranty period. Shopkeeper Le Van Tan at Thien Hoa Center hopes purchasing power will increase by year end.

Tran Chi Cuong, a staff member at Nguyen Kim Electronic Supermarket, said customers have increased in number only slightly in October as against August and September but not as much as expected.

Le Tan Loc, Deputy Head of Thien Hoa Outlet on Cach Mang Thang Tam Street said they are implementing discount programs on household and electronic products in the hope of seeing positive change in the market from now to year end.

Black credit in Vietnam is estimated at USD50 billion

According to Dr. Vo Tri Thanh, Deputy Head of the Central Institute for Economic Management (CIEM), black credit is part of “shadow banking” which exists along side the traditional banking system.

Using “black credit”, borrowers are not required to use any assets as collateral but can easily and quickly get money. Lending is recorded by handwritten contracts or verbal agreements that include basic information about the borrowers like name, address, commitments and signature.

This has contributed to the black credit boom.

Vu Viet Ngoan, Chairman of the National Financial Supervisory Commission, said the State Bank of Vietnam (SBV) and the commission will have specific regulations on shadow baking operations.

At the conference on the financial market restructure, experts and delegates agreed that the black credit and the shadow banking system have bad impacts on the national economy and should be restricted.

Con English, from PRISM Supervision Support Team Leader- Risk Division at Central Bank of Ireland, said strict banking regulations may actually boost shadow banking activities.

Dr. Vo Tri Thanh noted that shadow banking is not illegal, but just outside of the formal credit system and out of the hands of management agencies. This will lead to economic and social impacts, he said, adding that informal credit’s activities should be gradually formalised.

The black credit rate of 30% is quite high, said former Deputy PM Vu Khoan, adding that the traditional credit system should be consolidated to attract public confidence.

Dr. Nguyen Duc Thanh said that many people choose the black market because they do not have to complete complicated procedures as required by banks. Besides, this is the choice of people who do not have assets to use as collateral.

He also warned of a serious case in which individuals and organisations get black loans to pay banking loans. This may appear to reduce bad debt in the banking system, but in fact the rate would remain unchanged, or even higher due to the high interest rates of the black loans.

Downturn continues to burden the economy

Decreasing salaries has lowered consumer demands and badly affected many enterprises and the whole economy in general.

According to the Ministry of Industry and Trade, as of September 1, the inventories of the industries of processing and manufacturing increased by 9.3% compared to the same time last year. This shows Vietnamese firms are still having great difficulties.

Revenue from the retail and services industries in the first nine months increased 12.5% compared to last year, which is lower than normal annual growth rate of 20-24%. In August and September, the CPI for medical care and education sharply increased, and rising fuel and electricity prices has also made people tighten their purses.

Phan Van Thien, head of Bibica Corporation-a confectionery manufacturer, said even though they have been trying their best to keep prices stable while introducing more promotions and discount programmes, consumer demand remains weak.

Also in the same situation, Thu Trang, deputy head of Maximart Supermarket in HCM City, confirmed that people are buying less despite of monthly discount and promotion programmes. Several small supermarkets face bankruptcy.

Currently, Vietnamese firms and labourers are in great difficulty because of declining job slots, low consumption and consumer demands. "Firms are exhausted, we are now far behind regional countries." said Cao Si Kiem, president of Vietnam Association of Small and Medium Enterprises.

Small and medium sized enterprises make up the biggest portion Vietnamese economy and provide 40% of jobs in the country. But since 2010, 250,000 firms have shut down and 69% reported losses.

According to Vietnam Chamber of Commerce and Industry, at least 5 million people became unemployed when the tax debts increased and firms lowered capacity by 30-35%. The number of jobs also decreased because 1.5 million people join the job market each year. Farmers are also impacted because of prices of agriculture products was on the decline from February until July.

It is expected that consumer demand may increase slightly in the last months of the year, however, the revenue from retail industry may only increase 13-14% compared to 2012.

Lax management of mineral exploitation causes harm

Local authorities granting permission to too many mineral exploitation projects to begin operations has caused ineffective business management as well as a state budget deficit since 2005.

The problem was discussed at a conference on mining management held recently by the Vietnam Chamber of Commerce and Industry (VCCI), the NA's Committee for Science, Technology and Environment and the Ministry of Natural Resources and Environment (MNRE) in Hanoi.

There are more than 5,000 mines with about 60 different types of minerals being exploited in Vietnam, but management of this work is weak.

Since July 2011 until June 2013, the MNRE granted only 90 exploration and mining licences, however authorities in 57 provinces and cities granted a total of 957 licences between July 2011 and December 2012, a large number of them granted despite regulation. Inspectors from the MNRE discovered that 345 projects do not have investment certifications and 196 projects do not even have mineral exploitation plans.

Lai Hong Thanh, head of the Administration of Mineral Activities, said investors must make periodic reports, but only 40% have followed the rules. "The government is unable to keep up with the situation, taxes and assessments of the country's remaining natural resources."

Andy Becker, head of Oxfam International in Vietnam, said profits from mineral exploitation can be used to stimulate other sectors, but could also have very adverse effects on forests and biodiversity. 60% of poorest people in the world live in countries that are rich in natural resources. High mineral dependence can lead a high poverty rate, he added.

Mai Xuan Hung from the NA's Committee for Science, Technology and Environment, also said environmental and infrastructural systems surrounding mineral mines are often damaged.

Expert, Le Dang Doanh, said authorities in localities may ask to divide the mines into multiple parts for several projects and cause harm to the local ecology. "The responsibilities of local and national governmental agencies must be made clear in these situations," he said.

Meanwhile, many experts suggested Vietnam join the Extractive Industries Transparency Initiative (EITI) in order to improve management of such works. Since EITI was introduced in 2002, 39 countries have joined, bringing benefits to both government, enterprises and local people.

Finance ministry confirms no salary cuts next year

Although state budget revenues for this year may be lower than the estimate, monthly minimum wage for 2014 will be maintained at VND1.15 million (USD54.43), one official said.

Deputy Minister of Finance, Vu Thi Mai, made the confirmation at the ministry’s third quarter press conference on October 10.

According to the ministry’s report, state budget revenues in September reached VND52.8 trillion (USD2.5 billion), up 5.4% from the previous month.

Even though state budget revenues in the first nine months of this year were VND543.83 trillion (USD25.9 billion), up 8.7% from a year earlier; the figure is equal to only 66.6% of the estimate.

“State budget collection during this year’s nine-month period is a bit slower than several years ago. In  previous years, the nine-month state budget collection often netted around 80% of the estimate. It’s likely that the country will not achieve the estimated figure set by the National Assembly for this year,” Mai commented.

According to her, the situation is a result of the global economic downturn. The ministry is coordinating with several other ministries to outline a solution, which they will submit to the NA for approval.

By the end of September this year, only 23 localities met the tax collection target, while the other 40, including many big cities like Hanoi, HCM City, Haiphong and Danang and Quang Ninh Province, failed to do so.

“As state budget revenues for the whole year may be lower than the estimate, several solutions are being considered, including a possible halt to salary rises, in order to balance the state budget,” she added.

Earlier this month, the Ministry of Finance encountered disagreement from the prime minister as well as many other government officials when it proposed a cut to the minimum wage by VND100,000 per month, from January 2014.

EVN receives accolades at Asian Power Awards 2013

The Vietnam Electricity Group (EVN) announced on October 11 that the Son La Hydro Power Plant and the Alstom Group, a subcontractor, have won three prizes at the 2013 Asian Power Awards.

The prizes, awarded by Asian Power Magazine, include a gold award for Fast-Track Power Plant of the Year and awards for Hydro Power Project of the Year and Power Utility of the Year in Vietnam.

Another of Vietnam’s power stations, the Mong Duong 2 Thermal Power Plant, earned two bronze awards for Coal Power Project of the Year and Fast-Track Power Plant of the Year.

Thirty-four Asian power companies were nominated for the awards, which honour leading power companies and their outstanding projects. The winners are selected based on the creativity, dynamism and efficiency of their projects.

Supporting industries essential to continuing Japanese investment

Japanese investment in Vietnam is increasing though the deficiency of supporting industries is holding some back, said a leader at the Japan External Trade Organisation (JETRO).

Japanese direct investment into Vietnam accounted for 51 per cent of the total in 2012 and 32 per cent between January and September this year, said Hirotaka Yasuzumi, managing director of JETRO’s Ho Chi Minh City office.

“Investment from Japanese companies is vigourous,” he told the Vietnam-Japan Investment Promotion Forum in the southern hub on October 9.

He said Vietnam needed to learn from Thailand in terms of boosting the development of supporting industries to attract Japanese companies, particularly as they are eager to make the move to Vietnam due to rising labour costs in China and Thailand.

Yasuzumi added that small and medium-sized enterprises (SME) in Japan are anxious to invest in Vietnam as well, though they face similar problems with supporting industries.

JETRO started a business conference today in Ho Chi Minh City that will run through the 12th at the Saigon Convention and Exhibition Centre in District 7.

“This time our focus is on business alliances, much more complicated than the last time,” he told the forum, held by Ho Chi Minh City’s Investment and Trade Promotion Centre (ITPC).

State-run leading lender VietinBank, of which Japan’s Tokyo-Mitsubishi UFJ holds a 20 per cent stake, provides a lot of credit to Japanese companies investing in Vietnam as well as local exporters to Japan.

Nguyen Thanh Tung, a Vietinbank Ho Chi Minh City director, said the Japanese bank is one of the world’s largest and has greatly supported the Vietnamese lender.

The Japan Finance Corporation, another Vietinbank partner, regularly recommends the lender to Japanese SMEs and issues stand-by letters of credit to guarantee Japanese enterprises’ loans.

ITPC director Pho Nam Phuong announced that Ho Chi Minh City would be sending a business mission in October to Tokyo, Osaka, Kobe, and Yokohama to further enhance the cooperation between the two.

Experts foresee increasing bank M&As

Experts are adamant that banking sector restructuring via mergers and acquisitions will be increasingly popular in the coming time.

Over the last two years, banking sector liquidity has faced significant challenges as underperforming institutions faced bankruptcy.

In response, the government developed a highly prioritised restructuring plan.

There is change afoot with the State Bank of Vietnam (SBV) more closely regulating underperforming banks.

According to SBV supervisory body chief inspector Nguyen Huu Nghia, over the last two years of restructuring banks’ liquidity has risen markedly, responsibility has been upheld and risks have withdrawn.

“People are confident in their deposits and state assets are secure. Banks that were on the verge in 2012 have found their footing again thanks to the shake-up,” Nghia said.

Mergers & acquisitions (M&A) have been essential to this success.

At an M&A focused forum hosted by Vietnam Investment Review in Ho Chi Minh City last August the head of a department of the central bank Nguyen Thi Hoa said the government’s restructuring plan facilitated the increase in M&A deals.

Nguyen Thuy Duong from Ernst&Young Vietnam asserted that M&A was highly advantageous to local banks in both escaping crisis and pushing forward their restructuring goals.

With that all said, member of the National Financial and Monetary Advisory Council Le Xuan Nghia said there was significantly more behind bank mergers over the past year than policy.

Nghia argued that the formation of fewer but larger institutions is a natural banking system trend toward stability, strength and market share.

“Only larger-scale banks will have the ability to meet the State Bank’s increasingly international standards on non-performing loans and risk management,” Nghia emphasised.

Banking Academy’s expert Pham Tien Dat asserted that with bank restructuring on the move and a likely influx of foreign investors M&As will be vibrant in the coming time.

Electronics market sees poor purchasing power despite promotions

Despite alluring promotional programs offered by electronic outlets in Ho Chi Minh City, purchasing power remains stagnant.

Very a few customers at Nguyen Kim Electronic Supermarket (Photo: Cat Tuong )

Cho Lon Electronics Supermarket in District 5 is offering discount on a variety of refrigerators and other electronic appliances, with even gifts thrown in, yet few items have been sold.

Some products are being offered at 50 percent discount, but most customers turn out to be only window-shoppers.

A similar situation prevails at Nguyen Kim and Thien Hoa Electronics & Furniture Shopping Center in Districts 5, 12, and Tan Phu.

Thien Hoa is offering discounts from 10-50 percent on mobile phones, deluxe televisions, washing machines and infrared stoves.

Nguyen Kim Electronic Supermarket allows customers to use products for 30 days, even increasing warranty period. Shopkeeper Le Van Tan at Thien Hoa Center hopes purchasing power will increase by year end.

Tran Chi Cuong, a staff member at Nguyen Kim Electronic Supermarket, said customers have increased in number only slightly in October as against August and September but not as much as expected.

Le Tan Loc, Deputy Head of Thien Hoa Outlet on Cach Mang Thang Tam Street said they are implementing discount programs on household and electronic products in the hope of seeing positive change in the market from now to year end.

Cambodia cartels prove to be elusive

Smuggling of cigarettes and other goods from Cambodia into south-western Viet Nam is becoming more sophisticated and remains a step ahead of the law, which is unable to combat it, a meeting heard last week.

Duong Cong Khanh of the HCM City Market Watch Department said smugglers take advantage of border waterways to transport contraband cigarettes by boat to Long An Province.

Their mules, most of them young, are ready and waiting with motorcycles to carry the goods to HCM City, he said.

Smugglers bringing contraband from Cambodia into Tay Ninh Province have changed their modus operandi, switching to tourist buses and taxis from public transport buses, officials said.

In border areas in Long An, smuggling is mainly done at night and in small quantities to avoid detection and minimise problems if caught, they said.

Smugglers also come through the Moc Bai border gate in Tay Ninh by using various tricks, others said.

Smugglers keep a close watch on anti-smuggling authorities to find the best time to make their runs through the border, they said.

Nguyen Van Mon of the Cu Chi District Market Watch Team said his team and those of his counterparts in Long An and Tay Ninh had discovered and seized massive quantities of cigarettes and alcoholic drinks being smuggled from Cambodia to HCM City.

Phan Hoan Kiem, head of the HCM City Market Watch Department, said co-operation between HCM City, Long An, and Tay Ninh has produced early results, but a shortage of personnel, the tricky terrain, and smugglers' sophisticated methods make it difficult to combat smuggling.

Relevant agencies should regularly exchange information about the market and smuggling situation and provide each other information about people involved in transporting contraband, he added.

Samsung’s billion-dollar project accelerates FDI inflow

With the newly licensed 1.2 billion USD Samsung Electro-Mechanics project in northern Thai Nguyen province, the flow of foreign direct investment (FDI) into Vietnam looks likely to witness a robust growth this year.

The new factory is the sixth billion-dollar project (accounting for both newly licensed and capital- increased projects) in Vietnam so far this year.

In the first nine months, FDI to Vietnam (both new capital and capital added one ) was posted at over 15 billion USD. As much as 8.3 billion USD of that figure came from billion-dollar projects in northern Bac Ninh, Thai Nguyen and Hai Phong provinces, and central Thanh Hoa and Binh Dinh provinces.

Thanks to Samsung’s new project in October, the total FDI in the first 10 months will be secured at a minimum of 16.2 billion USD, a considerable increase from 10.49 billion USD of the corresponding period last year and the target of 13–14 billion USD for 2013.

The situation is even more promising when considering that the Vung Ro oil refinery project is set to receive a licence in October to raise its investment capital from 1.7 billion USD to 3.18 billion USD. In addition, a 2 billion USD project of Thailand ’s Amata Corporation to build an urban area is expected to be licensed at the end of this year.

Chairman of the Vietnam ’s Association of Foreign Invested Enterprises Nguyen Mai hailed the level of capital disbursement – 8.62 billion USD – in the nine month period, a yearly increase of 6.4 percent, and the attraction of big projects from large groups like Samsung and LG.

According to the National Financial Supervisory Commission, the progressively stable and improving macro economy has helped regain foreign investors’ confidence in Vietnam .

HSBC bank said that the vigorous inflow of FDI has improved the country’s export and import in the last nine months and is a positive signal for continued economic development.

Dong Nai rolls out incentives for businesses

The southern province of Dong Nai has pledged to help local businesses overcome economic challenges, particularly regarding the volatile market and bad debts.

According to Le Van Danh, Director of the Dong Nai provincial Department of Industry and Trade (DoIT), from now until the end of 2013 his department will assist businesses in expanding their distribution networks in rural areas and shop chains as well as support the development of new and popular products.

The department will also target export market development through trade promotion programmes.

These goals are set to be achieved through technical transfer, vocational training schemes and managerial capacity building. Greater links will also be sought between commercial banks and businesses.

The provincial Department of Science and Technology will partner DoIT to help businesses build their own brand names, improve their quality management systems and raise their technological capacity.

At the same time, unnecessary administrative procedures have been cut to facilitate businesses’ operation.

According to DoIT, over 60 businesses in Dong Nai have dissolved over the past three quarters, up 3.3 percent against the same period last year, while a total of 51 businesses and branches suspended their operation.-

Quang Ninh on the road to rural prosperity

After more than three years implementing the National New Rural Area Construction Programme, northeastern Quang Ninh province has registered positive results, with many shaped-up farming area. Report by the Vietnam Economic News.

Quang Ninh province’s Steering Committee for New Rural Area Construction has coordinated resources from the provincial budget and others from the private sector for the implementation of the National New Rural Area Construction Programme, gradually raising living standards for farmers.

Seeing that raising farmer's incomes is key to the success of the programme, local authorities have decided to earmark nearly 300 billion VND (14.3 million USD) to implement more than 450 New Rural Area Construction (NRAC) projects and production models that effectively help reduce poverty while increasing per capita income for farmers.

After more than three years of implementation Quang Ninh has registered positive results, with many shaped-up farming areas, for example the 1,500ha field of high-quality rice, 880ha garden of custard-apple in Dong Trieu District and 150ha field of safe vegetables in Quang Yen Town. In addition, there are also many 200-5,000 pig farms and 40,000-60,000 chicken farms across the province.

According to the committee, the annual average income per farmer increased from 10.98 million VND in 2010 to 14 million VND last year; the annual poverty rate was reduced from 4.89 percent in 2011 to 3.68 percent last year; the monthly average income per farmer was 1.158 million VND last year and is estimated to reach 1.326 million VND this year, up by 145 percent compared to 2010.

Quang Ninh has coordinated various financial sources for building essential infrastructure constructions from Programme 120, Programme 134, and a sea and islands programme to perform hundreds of NRAC works.

Last year, the provincial People’s Committee allocated nearly 46 billion VND as funding for the construction of rural water works to bring clean water to 90 percent of provincial rural population. As of May 2013, the province registered 1,287km of concreted or asphalted roads in and linking local communes.

The construction of rural roads last year in Quang Ninh received 7 billion VND from the provincial budget and private sectors, apart from 3 billion VND worth of building materials from provincial producers. Also in last year, provincial farmer households voluntarily cleared 211,800sq.m of land for rural infrastructure constructions.

This year, the committee will continue integrating central funds to support the provincial programme on the work, along with encouraging local community to participate in the programme with a view to reaching all the NRAC criteria by 2015.-

Central provinces continue to receive financial aids

Vietnam Red Cross Society in coordination with the healthcare sector of the Hai Lang district in the central province of Quang Tri conducted environmental sanitation and offered free health check to more than 500 locals in Hai An commune on October 12.

The activity was among efforts to prevent disease outbreaks, especially pink–eye disease and diarrhea, from spreading in the locality after the recent devastating Wutip storm.

A team of 12 health staff from Hai Lang General Hospital was sent to the locality and delivered free medicine worth 60 million VND.

The team also sprayed insecticides to kill mosquitoes and larvae, while collecting rubbish and cleaning sewages.

Earlier on October 11, the Bank of Investment and Development of Vietnam (BIDV) presented one billion VND in cash and 10,000 notebooks to families and schools in Quang Tri that were suffered from the storm.

The bank earlier offered five tonnes of instant noodle worth 170 million VND to the locals.

The General Department 2 under the Ministry of Defence also raised 20 million VND to help hard-hit families in Quang Tri.

In Quang Binh, BIDV in conjunction with the provincial Border Guard Command presented nearly 6 billion VND to Quang Binh People’s Committee.

The bank also considered the reduction of interest rates and risk handling for customers that seriously hit by the storm.

In a bid to assist people in central region, the Mekong Delta province of Kien Giang also offered 200 million VND to Quang Binh, Nghe An and Ha Tinh provinces to help the localities overcome the disaster consequences.

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