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BUSINESS IN BRIEF 17/6

 Binh Duong: All affected businesses re-operate; Coca-Cola bubbles with joy over first profits; HCM City to establish special economic zone; EPZs pledge to help foreign firms

Binh Duong: All affected businesses re-operate

All businesses affected by recent anti-China protests in the southern province of Binh Duong have resumed their normal production.

Up to 98% of the workers at these enterprises have returned to their work, according to the provincial People’s Committee.

The committee will announce concrete support measures given to the affected businesses on June 18.

Earlier, the Ministry of Finance cooperated with the province and insurance companies to advance insurance payments of VND114.7 billion for 113 the affected enterprises.

A total number of 87 Taiwanese investors have received the advance of VND59.5 billion.

The disturbances erupted on May 13 and 14 in Ha Tinh, Binh Duong and Dong Nai provinces during workers’ rallies against China’s illegal dispatch of oil rig Haiyang Shiyou-981 to a location within Viet Nam’s continental shelf and exclusive economic zone.

Some protesters incited others to destroy the property of foreign firms, the State, and private domestic businesses. They acted against law enforcement officials, disrupting social order and business activities. Thanks to the Government’s timely interference, most affected companies have returned to work, and social order and security have been restored.

Vietnam emerges as an important destination for real estate investors

A large number of economists said that the real estate market of Vietnam is attractive after bottoming out and showing signs of recovery, the Government news portal reported.

Dang Duc Thanh, Dean of the Vietnam Economists Club said that real estate prices in Vietnam fell by a half against 2007 and costs of numerous departments bottomed out.

In the period from third quarter of 2014 to early 2015, the domestic real estate market will be improved if the Government continues to support enterprises to handle high inventory levels and non-performing loans and raise liquidity for the real estate market.

According to Neil MacGregor, Managing Director of Savills Vietnam – a real estate developer, the domestic real estate market is in an attractive period.

Neil MacGregor said that Vietnam is standing at the bottom point of a real estate cycle when other Asian markets remain at the other side and are likely to be on the decline in the next few years. Hence, Vietnam serves as an important destination for investors in Southeast Asia.

He also revealed that customers of Savills Vietnam from Japan, Singapore, and the Republic of Korea are intending to join long-term and large-scale projects on housing development in Vietnam.

Phan Thanh Mai, Secretary General of the Vietnam Real Estate Association said eight commercial banks are working on a pilot programme to connect investors, bidders, material providers and banks to remove difficulties and handle high inventory levels in the real estate market. The move has defrosted the real estate market.

Coca-Cola bubbles with joy over first profits

Despite Coca-Cola being the biggest beverage company and one of the most valuable brands in the world, it has apparently taken almost 20 years to make a profit in Vietnam.

Coca-Cola Company’s executive vice president Irial Finan told Ministry of Planning and Investment leaders in a meeting last week that the firm had now gained a profit.

However, Finan did not specify the level of profits the fizzy drinks maker has achieved. He said Coca-Cola Vietnam had repaid all of its debts and the firm was well on the way to expanding in the country.

The information of Coca-Cola’s profit came just a year and a half after the firm faced transfer pricing investigations from Vietnamese tax authorities in late 2012. Prior to that point, Coca-Cola had reported huge losses while continually expanding its investments in Vietnam.

Previously, Coca-Cola claimed cumulative losses in Vietnam of $181 million up to September 30, 2011, a figure that even outstripped its equity of $141.8 million, according to the Ho Chi Minh City Department of Taxation. The company blamed the high price of materials exclusively provided by its parent company for the losses.

Coca-Cola, which entered Vietnam in 1995, currently operates three plants in Ho Chi Minh City, Hanoi and Danang. Although it had reported huge losses for a long time, Coca-Cola still expanded investment, raising doubts over transfer pricing activities to avoid tax payment.

Danang City People’s Committee at one point rejected a major Coca-Cola production line expansion plan in 2012, citing Coca-Cola’s continual losses as a reason.

Finan said Coca-Cola this month put three new production lines in Ho Chi Minh City into operation in order to meet rising demand in Vietnam.

He said the production expansion showed that Coca-Cola had seriously implemented its investment commitment in the country. In October 2012, Coca-Cola announced it would invest an additional $300 million into Vietnam over the next three years, bringing its total investment in the country to $500 million.

Tuna fishing to be modernised

The Ministry of Agriculture and Rural Development is putting the final touches to a project building a complete production chain in tuna fishing, in an effort to improve the industry’s output, product quality and added value, thus achieving sustainable development.

Tuna ranks third among the major seafood exports of Vietnam after “tra” fish and shrimp. It brought home more than 526 million USD from 112 markets around the world in 2013. However, stricter demands on product quality, origin and labour safety by international organisations and consumers, as well as fierce competition in the world market, are posing challenges to the industry.

Meanwhile, tuna fishing in Vietnam still relies on small-scale activities, with fishermen focusing mainly on output while neglecting post-harvest preservation, affecting product quality, said Vu Dinh Dap, President of the Vietnam Tuna Association.

According to the Agriculture and Rural Development Department of central Phu Yen province, one of the three leading tuna fishing localities in the country, most local fishermen use small and low-capacity boats with poor preservation equipment.

The pending project will be implemented in the central provinces of Binh Dinh, Phu Yen and Khanh Hoa with a total budget of 760 billion VND (35.72 million USD). Under the project, the tuna fishing fleet will be upgraded with credit assistance offered to fishermen. The management of fishing activities will also be re-organised in the direction of issuing quotas and licences depending on the seasons.

In addition, a fleet of logistics vessels will be built on a trial basis to provide supplies and buy products from fishing vessels at sea. With modern post-harvest preservation equipment, the logistics vessels aim to reduce post-harvest losses to under 10 percent while meeting international standards on origin. A specialised port will also be built at Quy Nhon fishing port in Binh Dinh province to offer a wide range of facilities including cold storage and an auction market.

Experts have pointed to the need for a training plan targeting fishermen, which should equip them with up-to-date fishing and fish preservation skills in order to turn tuna fishing into a modern industry.

SHB receives two awards by UK magazine

The Saigon-Hanoi Commercial Joint Stock Company (SHB) has been named as the “Fastest Growing Trade Finance Bank” and “Most Innovative Trade Finance Bank” by the UK-based Global Banking and Finance Review magazine.

SHB is the only commercial bank in Vietnam to have won these two awards so far.

From 2009, the bank has continuously recorded an annual growth rate in international payment and finance trade at over 50 percent. In 2013, the number of its customers doubled compared to 2012, while the number of transactions reached nearly 40,000.

Besides, the bank also provides corporate customers with dynamic solution packages, suitable with business operations of each company.

Global Banking and Finance Review is a UK-based online news portal, formed and developed from the growing demand for independent reports on global banking and financial activities.

Readers include decision-makers in the Fortune 500 companies, major financial institutions and central banks of 190 countries.

In addition to providing information and consulting services, every year the magazine applies a comprehensive set of selection criteria to honour outstanding achievements of financial institutions in different sectors: banking, insurance, fund management, securities brokerage and investment.

Binh Duong set to become economic hub by 2020

The southern province of Binh Duong is set to become a centrally-run city, acting as a core centre for socio-economic development in the southern key economic region by 2020.

Under a new master plan for the province’s socio-economic development by 2020, which was approved by Prime Minister Nguyen Tan Dung on June 11, Binh Duong will focus on promoting environmentally-friendly industry by applying high-tech and green technology.

At the same time it will also improve the modern infrastructure system for trade and services, while diversifying tourism products and developing agriculture in attachment with advancing biotechnology.

The locality’s annual economic growth in the 2011-2015 period will be adjusted downwards to 13.5 percent instead of the 14.9 percent stated in the 2007 plan.

The ratio of the service sector in its economic structure will increase to 38 percent from 30 percent, while that of the industry-construction sector, 59 percent from 62.9 percent. The figure will be 3 percent for agro-forestry.

The total population of the locality by 2015 is predicted to stay at 2.043 million. Its urbanisation proportion is predicted to stand at 70 percent, while per capital GDP will be 63.2 million VND (around 3,000 USD).

Binh Duong will also have under 1 percent of poor households by 2015, according to the plan.

For the 2016-2020 period, Binh Duong will finish its road to become a centrally-run city with an annual economic growth of 13 percent and per capital GDP of 135.2 million VND (6,170 USD) every year. Meanwhile, the ratio of poor households will be brought down to only 0.8 percent.

By 2020, Binh Duong is set to become one of the major industrial hubs in the region, focusing on wood processing, garment and textiles, footwear, rubber processing and food and beer for its key exports, among others.

The proportion of the support industry and green industry in economic zones is hoped to account for at least 30 percent of the province’s total exports.

Binh Duong expects to have 35 industrial parks by 2020, covering an area of 13,764 hectares. By 2025, it is planned to put 18 industrial clusters to operation with a total area of 1,190 hectares.

Lao Cai: foreign businesses run smoothly

Foreign businesses in the northern province of Lao Cai, which borders China, have been running smoothly despite the ongoing tensions at sea between Vietnam and China.

A tour of foreign-invested businesses based there gave Vietnam News Agency reporters insights into the current performance of their facilities.

The Lao Cai iron and steel factory, which is partnered by the Vietnam Steel Corporation and the Chinese Kungang steel and iron company, is operating steadily with the participation of more than 200 Chinese experts and workers.

Wang Xu, first Vice Director General of the Vietnam-China Mineral Resources and Metallurgy Company, the project’s investor, stated that the plant has enjoyed fantastic assistance from the local authorities.

He recalled the presence of Nguyen Thanh Duong, Vice Chairman of the provincial People’s Committee, at the May 26 ceremony to witness the first batch of cast iron being churned out from workshops of the factory and answer workers’ problems.

With construction started in 2011 with a total investment of 337 million USD, the factory can produce 12-13 batches of cast iron every day, with a total output of 1,500 tonnes.

The factory’s Vice Director, Do Xuan Thanh, said despite the tensions at sea between the two countries, Vietnamese and Chinese experts and workers at the plant have maintained a good relationship and the Chinese have been provided with the best possible living and working conditions.

At Tang Loong Industrial Park, where Chinese people account for the majority of the 422 foreign experts and workers, construction and production activities are running as normal.

Although spontaneous protests against China’s illegal placement of its oil rig in Vietnam’s waters took place in other parts of the country, sparking some social disorder, none occurred here, according to the Lao Cai Economic Zone Management Board on June 11.

Construction of the DAP fertiliser plant No.2 of the Vietnam Chemicals Group – a national work – is running smoothly with the involvement of 164 foreign workers and experts from the UK, Malaysia, the Philippines, India, Thailand and China.

Costing 265.2 million USD, the plant is designed to produce 330,000 tonnes of DAP a year, which would bring in a revenue of 4 trillion VND a year.

Nguyen Thanh Duong, Vice Chairman of the provincial People’s Committee, said the province has unceasingly worked to better its investment environment along with rolling out incentives pertaining to tax, administrative formalities, and site clearance favouring foreign staff.

Ronan Biachi, Director of five-star Victoria Sa Pa hotel, said he is pleased with the local authorities’ assistance. Policies such as tax exemption or reduction have helped the province reel in more foreign businesses, he said.

At present, the locality is home to 30 Foreign Direct Investment (FDI) projects with a total registered capital of 504.5 million USD.

HCM City to establish special economic zone

Ho Chi Minh City is planning to build a special economic zone encompassing districts 7, Binh Chanh, Nha Be and Can Gio, and part of the city’s south, the Saigon Times Daily newspaper reported.

According to the newspaper, in a document issued last week, Chairman of the Ho Chi Minh City People’s Committee Le Hoang Quan said the economic zone was one of the major projects to support the city’s sustainable development for 2016-2020 with a vision toward 2030.

The special economic zone is expected to create a catalyst for production and business, investment attraction, export and import, services, tourism, infrastructure, seaport, and marine development.

The plan for the special economic zone is now in its infancy and is scheduled to be ready in the third quarter this year. Currently, the Ho Chi Minh City Department of Interior Affairs is assisting the city government in establishing a team responsible for analysing the scale of the zone; reviewing existing zoning plans, investment methods and policies; and building an implementation roadmap for the project.

In December last year, the Government approved a master zoning plan for socio-economic development in Ho Chi Minh City until 2020 with a vision toward 2025. This plan envisages a system of satellite urban areas, industrial clusters, commercial areas and special economic zones.

The city’s economy will be developed based on a service-industry-agriculture structure with priorities given to value-added and main industries, including engineering, electronics and information technology, chemistry-rubber and food processing as well as biotechnology, green industry, garment and footwear fashion design.

Ho Chi Minh City needs total investment of nearly 109,000 trillion VND in 2011-2025 with only 8 percent of it sourced from the State budget and the rest from other sources.

Industrial production up by 2 percent in May

Signs of economic recovery have become clearer as industrial production especially processing and manufacturing continued to grow, the Vietnam Economic News reported on June 13.

According to the Ministry of Industry and Trade, the index of industrial production (IIP) in May 2014 rose two percent compared to April 2014 and 5.9 percent compared to the same period in 2013.

Of this, the mining industry decreased 0.8 percent, the processing and manufacturing industry was up 7.5 percent, electricity production and distribution increased 10.4 percent, and water supply and wastewater treatment soared 7.2 percent compared to the same period last year.

The IIP in the first five months of this year increased 5.6 percent, which is higher than that in the same period last year, of which the processing and manufacturing industry increased 7.5 percent, higher than the industrial sector’s average.

Retail sales and service revenues in May totaled an estimated at 240.27 trillion VND, up 1.38 percent from April, taking the total in the first five months of this year to an estimated 1.179 trillion VND, up 11.01 percent or 5.99 percent (excluding the price factor) from the same period last year.

The economy’s recovery was reflected through the high growth of the processing and manufacturing industry. Fisheries, yarn, footwear and electronic component industries grew 10-30 percent. These industries played an important role in export development. Although exports in May decreased 8.2 percent compared to April to reach an estimated 12 billion USD they were 3.5 percent higher than May 2013.

Promoting new markets and taking the initiative in sourcing raw materials is something that many production industries are doing to increase sales and exports and decrease inventories.

The processing and manufacturing industry’s inventory index on May 1 increased two percent over April 1 and 12.6 percent over the same time last year, while that on April 1 was 6.2 percent higher than March 1.

Businesses have taken the initiative in sourcing materials to take opportunities to be provided by the Trans-Pacific Partnership Agreement (TPP). Many leading yarn producers in the country have had plans to expand production and investment and improve their material supply capacity to gradually decrease imports.

To avoid heavy dependence on the Chinese market, the Vietnam Textile and Apparel Association (VITAS) encouraged businesses in the textile and garment sector to take the initiative in new, potential markets to import materials. The association said that they could import fiber from Thailand, the Republic of Korea (RoK) and Indonesia, yarn from Thailand, Indonesia and India and cloth from the RoK, Thailand and Malaysia.

EPZs pledge to help foreign firms

Hanoi's industrial parks (IPs) and export processing zones (EPZs) will co-ordinate closely with relevant bodies, to help foreign direct investment (FDI) firms in dealing with export and import procedures.

It was suggested during a workshop held by the Ministry of Industry and Trade's Export and Import Department, and the Management Board of Hanoi's Industrial Parks and Export-Processing Zones (HIPEPZ) on June 10 that difficulties for FDI firms in the capital's IPs and EPZs be removed.

Nguyen Thai Long, HIPEPZ's Deputy Director admitted that FDI firms in the capital this year have had significant difficulties amid rising input costs.

Long said that complicated administrative procedures in export and import have also hindered the firms' performances. HIPEPZ will closely entrust and authorise relevant authorities to cut time for the firms' customs clearance.

As land lease fees in the capital's IZs and IPZs are also higher than that of other cities and provinces, Long said that the HIPEPZ has so far proposed to the Hanoi's People Committee for a reduction in the fees for FDI firms.

The board will also open more training classes to help FDI firms have skilled workers.

According to the Hanoi Department of Planning and Investment, Hanoi's FDI registered capital to date this year is estimated at 560 million USD, up 13.7 percent against the same period last year.

The rise is mainly thanks to the capital addition of existing projects including the Republic of Korea (RoK) Tay Ho Tay urban area's 234 million USD, German B.Braun healthcare company's 30 million USD, Vietnam-France Hospital's 40 million USD, RoK’s Lotte Hotel's 54 million USD and Yamaha Electronic's 10.5 million USD.

FDI disbursement capital in the period also increased 6.5 per cent to 405 million USD.-

Northern port city backs businesses

Authorities from the northern port city of Hai Phong on June 12 met with hundreds of businesses operating there to help them overcome difficulties and improve the investment climate.

Representatives from the 350 firms petitioned for an array of issues relating to credit interest rate, administrative formalities and taxation policy, while sharing experience in various fields, such as tyre manufacturing and ship building.

Chairman of the municipal People’s Committee Duong Anh Dien said specific measures to iron out difficulties for businesses must be taken.

The city will also take into consideration the opening of direct flights from Cat Bi international airport to Japan to make it easier for foreign investors’ business, Dien said.

Hai Phong, the third largest city in Vietnam, plays an important role in the country’s sea transport network. It is striving to become a green port city by 2020.

So far this year, the city’s gross domestic product (GDP) growth has been estimated at 7.27 percent, the highest level in three recent years.

In the provincial competitiveness index (PCI), it leaped 35 places to the 15 th position nationwide. It has so far attracted 496.5 million USD in foreign direct investment (FDI), 1.8 times over the previous year.

In 2013, Hai Phong drew nearly 30 FDI projects totaling almost 2 billion USD in registered capital, a year-on-year increase of over 60 percent.

It expects to attract about 1.2 billion USD in FDI in 2014.

Vietnam seeks to foster exports to FTA markets

Opportunities and challenges for Vietnam’s exporters in accessing international markets, especially now that the country has entered into free trade agreement (FTA) negotiations, were analysed at a workshop held in the northern province of Ha Nam on June 12.

Speaking at the event, Phung Thi Lan Phuong from the WTO Centre under the Vietnam Chamber of Commerce and Industry (VCCI), underlined the importance of signing FTAs to improve the competitiveness of Vietnamese goods in lucrative export markets.

Through the reduction and exemption policies of tariffs and nontariffs, Vietnam’s goods can easily access its partner nations’ markets within FTAs, she said.

She mentioned challenges for Vietnamese businesses in overcoming barriers on technical standards, quarantine procedures and proof of product origin. She also stressed the necessity of further promoting regulations to the business community and trade associations so as to help them produce goods that meet export standards.

Dr. Le Dang Doanh, former Director of the Central Institute for Economic Research and Management , said Vietnamese enterprises should not only take advantage of benefits from FTAs but also pay heed to expanding their markets to promote exports.

Vietnam’s coffee output forecast to fall

Vietnam, the world’s largest grower of robusta beans, will probably see a drop in its coffee output in the 2014-15 crop, which starts from October.

The decline is attributed to the previous bumper crop.

The harvest may shrink by 4 percent to 1.64 million tonnes from 1.71 million tonnes a year earlier, according to the median of 12 trader and analyst estimates compiled by Bloomberg.

While the Bloomberg survey showed a contraction in output next year, the Foreign Agricultural Service of the US Department of Agriculture expects an increase. It says Vietnam will produce 29.2 million bags (1.75 million tonnes) compared with 29 million bags a year earlier, according to a report on May 23.

Earlier, the Vietnam Coffee and Cacao Association (Vicofa) forecast a fall in Vietnam’s coffee output in the 2014-15 crop due to the prolonged unfavourable weather conditions so far this year.

The Central Highlands, which boasts the country’s largest coffee growing area, targets to harvest at least 1.2 million tonnes of coffee in the 2014-15 crop.

Singapore declared key trade partner of Vietnam

Singapore is the third largest trade partner of Vietnam within the Association of Southeast Asian Nation (ASEAN) and its sixth biggest global partner, according to Deputy Minister of Industry and Trade Tran Tuan Anh.

Two-way trade between Vietnam and Singapore was estimated at 3.3 billion USD in the first four months of 2014, a year-on-year increase of 21.2 percent.

Last year, bilateral trade hit 8.4 billion USD, with Vietnam mainly exporting crude oil, computers, electronics and spare parts, equipment, and agro-forestry and aquatic products.

Meanwhile, the country’s primary imports from the market are petroleum, computers, electronics and components, machinery, equipment, and chemical products.

There is large potential for Vietnamese rice exporters entering the Singaporean market – the trading centre within the bloc which enables the shipment of rice to Indonesia, the Philippines and African countries. Vietnamese grain currently accounts for over 20 percent of the market share.

During the Vietnam visit by Singaporean Prime Minister Lee Hsien Loong in 2013, both countries agreed on economic cooperation, which has become a cornerstone in the bilateral relationship.

Prime Minister Lee has already noted Vietnam’s suggestions on making it easier for local exporters of agro-forestry-fishery products and garments and textiles to make inroads into the Singaporean market, while supporting Vietnamese firms to join the global market chain at the same time.

Deputy Minister Anh said that to boost agro-forestry-fishery exports, his ministry has exerted every effort to remove trade and technical barriers during the negotiation process of free trade agreements (FTA), such as the Trans-Pacific Partnership (TPP) and the Regional Comprehensive Economic Partnership (RCEP).

Positive signs for cement industry

The cement industry’s production and business activities in the first five months of this year remained satisfactory, creating an engine for enterprises to develop the domestic market and promote exports, the Vietnam Economic News reported.

According to the Vietnam National Cement Association, the cement market has strongly developed in the recent two months, representing through an increase in consumption and exports.

Cement consumption in May reached 4.87 million tonnes, an increase of 11.9 percent compared to the same period last year. In the first five months of this year, cement consumption reached 20.42 million tonnes, an increase of 1.75 million tonnes and 9.3 percent compared to the same period in 2013.

Cement and clinker exports in May reached nearly two million tonnes. In the first five months of this year, its figure stood at 6.952 million tonnes, an increase of 42.5 percent compared to the same period last year.

Vietnam National Cement Association Chairman Nguyen Quang Cung said that the cement industry has recorded a good growth like 2010. Thanks to domestic cement consumption in the first five months of this year of 20.42 million tonnes, its figure in the whole year would reach 50 million tonnes.

Nguyen Quang Cung also added that thanks to an increase in cement exports in the first five months of this year by 42.5 percent compared to the same period last year, its figure in the whole year would reach 20 million tonnes.

Many cement companies have also achieved good production and business results in recent times. FiCO Tay Ninh Cement Joint Stock Company Deputy General Director Trang Thanh Ba said that market demand has strongly increased and all plants currently have run at 100 percent of capacity.

According to statistics, in the first four months of this year, the company sold 450,000 tonnes of cement, an increase of 10 percent compared to the same period last year. In terms of the southern market, the company would provide about 1.5 million tonnes of cement in the whole year.

Vicem Ha Tien 1 Cement Joint Stock Company said that the company has achieved good production and business results in recent times. Cement consumption in the first five months of this year increased compared to the same period last year. The company plans to sell about 4.9 million tonnes of cement and about 800,000 tonnes of clinker in 2014.

According to the Vietnam National Cement Association’s statistics, there were 70 investors in the cement industry. Nguyen Quang Cung said that compared to a total capacity of the country (65-70 million tonnes), 70 investors were a large number.

Government Office’s Sectoral Economic Department Director Tran Van Duong said that the Government has aggressively abolished nine unfeasible projects as investors have faced to financial difficulties. He also stressed that abolishing a project that has not met necessary conditions or adding a potential project is a normal thing in development planning.

Nguyen Quang Cung said that the cement industry needs to focus on improving the quality of upcoming cement projects. A number of areas with rich limestone reserves such as Ha Nam, Ninh Binh, Thanh Hoa, Quang Ninh and Hai Phong will be advantageous for the cement industry. The cement projects’ location and investors’ financial capacity will play a key role in the cement industry planning.

Investors need to invest in advanced machinery and equipment, contributing to reducing coal and power consumption and environmental pollution and improving labor productivity and product quality.

Mekong Delta’s tra fish farming area down 19 percent

The Mekong Delta farmed 2,954 hectares of tra (pangasius) fish in the first five months of 2014, down 19 percent from a year earlier, according to the Directorate of Fisheries at a conference on June 9.

Over the period, the harvest also fell by 19.7 percent annually to 335,023 tonnes.

Meanwhile, fluctuating prices have been recorded since the beginning of this year. They reached the peak of 27,000 VND/kg in early April and dropped to 22,000 – 23,000 VND/kg for the 0.8 – 0.85kg per fish type at present.

The conference in Can Tho city focused on the implementation of the Government’s Decree No. 36, which is the first of its kind regulating the farming, processing and exporting tra fish.

Nguyen Huu Dung, Vice Chairman of the Vietnam Association of Seafood Exporters and Producers, suggested introducing a volume quota for each locality as well as concrete regulations on breeding fish, fry and feed along with credits for the tra fish farming.

He also urged international criteria to be applied in the field since those of the country such as Vietnam Good Agricultural Practices (VietGAP) standards have not been recognised globally.

According to the Vietnam Tra Fish Association, Mekong Delta localities plan to produce up to 1.3 million tonnes of tra fish in 2014, aiming for 650,000 – 680,000 tonnes in export volume and 1.75 billion USD in value.

Vietnam now makes up over 90 percent of the world tra fish supply, with the US , EU and Japan as its major markets.

Bac Lieu wind power plant generates 31 mln kWh for grid

A wind power plant in the Mekong Delta province of Bac Lieu contributed 31 million kWh of power to the national grid after one year of operation.

During the year, the plant operated safely at 38 percent of its designed capacity.

The installation of an additional 52 turbines in the project’s second phase, with a total investment of over 4.19 trillion VND (197 million USD), is being sped up. These facilities are expected to be put into operation by the end of 2015.

The wind plant, covering 500 hectares in coastal Vinh Trach Dong commune, Bac Lieu city, is funded by the Cong Ly Construction-Trading-Tourism company at a sum of over 5.2 trillion VND (244.4 million USD).

Once complete, the plant is expected to contribute 320 million kWh to the national grid every year.

RoK considers funding further transport projects in Vietnam

The Republic of Korea is considering funding three more key transport projects in Vietnam, Minister of Transport Dinh La Thang said on the June 8 inauguration of Vinh Thinh Bridge in Hanoi.

The new bridge, which links Hanoi’s outlying town of Son Tay with Vinh Tuong district in Vinh Phuc province, has been built with preferential official development assistance (ODA) capital from the RoK.

The minister said the Vietnamese government has proposed the three future projects to the RoK via the Economic Development Cooperation Fund (EDCF). The mooted developments are Hung Ha Bridge linking Ha Nam and Hung Yen provinces across the Red River, the second phase of the southern coastal corridor road and the Tan Van-Nhon Trach section of Belt Road No.3 in Ho Chi Minh City.

He said the three projects are important to socio-economic development in the respective areas.

Besides the newly-completed Vinh Thinh Bridge, the EDCF has funded many transport projects in Vietnam, including an Intelligent Transport System for the Ho Chi Minh City-Trung Luong Highway, as well as construction of the southern coastal corridor, Vam Cong Bridge and the Lo Te-Rach Soi Road.-

More policies needed to develop high-tech support industry

So far, high-tech industries have recorded the lowest localisation rates, accounting for only 15-20 percent of product prices. Therefore, more policies are needed to encourage investment and development in this segment, the Vietnam Economic News reported.

According to head of the Saigon Hi-Tech Park (SHTP) management board Le Hoai Quoc, the localisation rates in new industrial products account for only 20 percent and the remainder depends on imported materials. Take the electricity – electronics sector which is growing strongly in Ho Chi Minh City for example, although the localisation rates increase but account for only 20-30 percent, which remains too low compared with requirements. Operating electronic enterprises in Vietnam mainly deal with assembling and integrating accessories and parts to make products based on imported basic electronic parts like circuit boards and transistor components.

General Director of Intel Products Vietnam Sherry Boger said Intel has become one of the investors that have the biggest export revenue in the SHTP. However, until 2013, the localisation rate of this group only reached 10 percent, equal to about 11 million USD. Even though the group wants to increase this rate but the capabilities of Vietnamese enterprises to meet Intel’s requirements remain quite modest.

Like Intel Group, Director of the Japan External Trade Organization (JETRO) in Ho Chi Minh City Kazuhiko Osato said in 2013 Japan undertook over 500 projects in Vietnam with total capital of nearly 6 billion USD but unfortunately, the Vietnam’s localisation rate for Japanese enterprises have not reached 32 percent yet, equal to half of the rates of China and Thailand.

Deputy head of SHTP management board Le Bich Loan said the high-tech enterprises in SHTP have been aware of the importance of localisation and given more priorities to seeking domestic partners.

However, material sources for localisation are mainly to make simple products like packaging and plastic trays. Vietnamese enterprises have not been capable to produce high tech demanding electronic spare parts like transistor components or electronic mechanical parts.

Vietnamese enterprises are just at the stage of doing research or piloting production on small scales like wafer FRED of the SHTP’s R&D Centre or pressure sensors jointly produced by SHTP and Vietnam National University Integrated Circuit Design Research and Education Centre (ICDREC).

According to Director of the Ho Chi Minh City Investment and Trade Promotion Centre (ITPC) Pho Nam Phuong, apart from current preferential treatments for enterprises working in the support industry, the city has asked relevant departments and sectors, including the SHTP management board to study and offer better preferential packages regarding tax, infrastructure and training workforce to encourage domestic enterprises join the support industry.

In terms of infrastructure, preferential policies on land lease need to be adopted. In pieces of land where no infrastructure has been built, the land lease rentals should be calculated like those levels in the High-tech Park in District 9: from 12,300-18,500 VND/sq.m a year. As for pieces of land with infrastructure: from 17,200-26,000 VND/sq.m a year and workshop rentals from 4-5 USD/sq.m a year depending on different locations.

Dung Quat Economic Zone calls for $2b investment in new projects

Dung Quat Economic Zone (EZ) in central Quang Ngai Province is seeking investment capital of US$2 billion in 10 to 15 projects over the next two years.

Pham Nhu So, vice chairman of the provincial People's Committee and head of the EZ management board, said the EZ has received more than VND781 billion ($37.1 million) from the State budget to invest in infrastructure to attract investors.

Its management board also granted investment licences to 21 projects worth VND15 trillion ($730 million) over the past three years.

In the past 16 years, the EZ has approved 113 projects with total registered investment capital of more than $8 billion. Its disbursement was estimated at $5 billion, accounting for 60 per cent of the total. The EZ would licence 125 projects by 2015, bringing the total capital to $10 billion.

Of these, the number of foreign direct investment projects totalled 13 and total FDI registered capital of $3.85 billion.

Its industrial production, service and commercial value last year reached VND130 trillion ($6.1 billion).

However, Nguyen Minh, acting Secretary of the provincial Party Committee said financial resources poured into the EZ has not been up to its development.

In addition, mechanism and policies on providing clean land for the EZ have been slowly promulgated to accelerate investment attraction.

Minh said the EZ should give priority to untie the difficulties while continuing to mobilise all resources to appeal investment.

It should also build a long-term and sustainable development strategy.

The zone was urged to further improve its investment environment by upgrading infrastructure and timely addressing investor concerns.

It planned to attract investment into projects to expand and upgrade Dung Quat Oil Refinery and setting up oil refinery complex, Build-Operate-Transfer Thermal Power Plant and Jk-Sojitz Paper Pulp Plant in the period of 2015-20. The EZ targets to contribute VND16 trillion ($761.9 million) to the State budget by 2015.

SBV head vows to keep forex changes on hold

The State Bank of Viet Nam Nguyen Van Binh made clear that he would keep the forex market stable till the year-end; if adjustment is a must, the margin would be within 2 per cent.

The policy-maker's commitment was delivered in a broadcast programme titled "Taxpayers ask, ministers answer" (Dan hoi, Bo truong tra loi) on Sunday by VTV, that was to response to recent public's expectation of a foreign exchange adjustment.

The expectation indicated through ‘remarkable changes' in selling/buying prices of US dollar on the parallel market and fluctuations of gold prices.

In the last two weeks, foreign exchange went through strong adjustments of up to VND40-60 per US dollar. Last Wednesday, banks pushed the exchange to VND21,246 per dollar, marking the highest price since last July.

Binh said that psychological factors somehow ruled the market, which was caused by tension in the resource-rich East Sea due to China's illegal placement of the Haiyang Shiyou-981 oil rig in Viet Nam's exclusive economic zone and continental shelf.

"In fact, deposits in foreign currencies keep sliding while those in Vietnamese dong are on the rise," Binh said. "Market supply and demand relations are balanced and secured."

Trade surplus recorded positive signals when it reached US$1.65 billion in May, and $2 billion in April.

The State Bank of Viet Nam added $10 billion in foreign reserves in the first months of the year, raising the total foreign reserves to $35 billion.

The country's foreign direct investment (FDI) registered in the first five months capital was $5.51 billion while disbursement was slightly inched up 0.4 per cent against the same period last year to $4.6 billion.

"Under this circumstance, we assume that factors leading to forex adjustment don't exist," Binh said.

Last week, the central bank's Head of Monetary Policy Nguyen Thi Hong said that the changes on the parallel market were almost caused by speculations and prices manipulation to take the most of herd mentality.

BIDV enters partnership with Myanmar bank

The Bank for Investment and Development of Viet Nam has signed an agreement with a Myanmarese bank under which they will swap information, develop product and technical services, and support business and investment activities in both countries.

Under the deal they signed last Saturday in Yangon, BIDV and Myanmar's Small and Medium Industrial Development Bank (SMIDB) will share experiences and information about local regulations, and consider providing financial and banking products for trading and investment by businesses in Viet Nam and Myanmar.

BIDV will also help SMIDB upgrade its IT systems and make greater use of IT applications in its operations.

It will help SMIDB undertake study tours to Viet Nam in 2014-15.

BIDV chairman Tran Bac Ha said, "With our experience and advantages in providing services to SMEs in Viet Nam, we wish to share our experience to facilitate the development of Myanmar's financial market and its SMEs."

SMIDB's chairman U Maung Myint, who is also Myanmar's Minister of Industries, welcomed BIDV into his country's financial market, saying the agreement underlined BIDV's role in strengthening economic ties between the two countries.

VN mulls lifting foreign ownership limits

Securities companies are likely to get a jump start over other types of businesses in having their foreign ownership limits increased, according to the State Securities Commission.

"Lifting foreign ownership in all eligible businesses is not likely to take place as quickly as we think. The regulation may be applied to securities companies first," the commission's chairman Vu Bang told The Saigon Times.

Bang said the Government has assigned the Ministry of Planning and Investment (MPI) to classify eligible industries and sectors where the foreign ownership limit can be raised. The commission is awaiting a final decision from the Government, he said.

He explained the likelihood of an earlier raise in ownership limits for securities companies saying it would be a simpler process than for other businesses.

The commission plans to separate securities business from the general scheme and submit an early implementation request to the MPI, he added.

Under the proposed plan, securities companies willing to increase their foreign holdings only need endorsement of their shareholders to submit a request for the commission's approval.

Bang said stressed the importance of raising the foreign holdings limit in securities companies soon in order to abide by commitments as a World Trade Organization (WTO) member.

Currently, foreign investors can hold either 49 per cent or 100 per cent of the stake in brokerages or establish a wholly-owned securities firm. However, many foreign firms only want to have controlling stakes.

Since the issuance of a decree (58/2012/ND-CP) that allows foreigners to take full ownership of brokerage firms, Maybank Kim Eng is the only one wholly foreign-invested firm among the 90 securities companies operating in Viet Nam's stock market.

Forty companies have foreign ownership ranging from 5-49 per cent.

However, Bang warned that investors should be watchful as many traders use false information to drive stock prices up.

Bao Viet compensates riot-hit FDI enterprises

Bao Viet Insurance Company has compensated some foreign direct investment (FDI) enterprises affected by recent riots in southern Binh Duong Province with nearly VND27 billion, or US$1.28 million.

According to Bao Viet Deputy General Director Nguyen Quang Phi, the payments included $1 million for Esquel Company, $33,330 for Mega Step Company, $23,800 for CSB Company and $4,760 for Alhonga Company, and $14,280 for Viet Hsing International Garments Company.

An individual investor from Taiwan was also advanced over $9,500.

An Esquel representative stated that insurance officials rapidly assessed damages at the local factories and assisted the firms in resuming normal production activities within two weeks. "The cash advance has helped us much in this tough time," the representative noted.

Phi stated that the quick support for businesses was in line with the government's resolve to ensure community interests and social welfare.

Quang Ngai to open fish processing plant

The central Quang Ngai Province authority has announced that a large fishing centre will be built at Sa Ky fishing port with an investment of about VND995 billion (US$47.3 million). It will create work for thousands of labourers.

The project, backed by Vien Duong Construction and Trade Companym will cover more than 26 hectares at Tinh Ky Commune in Quang Ngai City.

The project will include the buying, selling, processing and exporting seafood products, building new ships and supplying fuel and food for ships offshore.

Other plants that will be built include a seafood processing plant with a capacity of 5,000 tonnes per year, a mechanical accessories factory, an ice processing plant with a capacity of 15,000 blocks of ice daily and a livestock feed plant capable of producing 6,000 tonnes per year.

The project is expected to be open by 2018.

The Tinh Ky Commune's People's Committee said that the centre would significantly contribute to the consumption and processing of seafood from the thousands of fishing vessels in Sa Ky and neighbouring coastal areas such as Binh Son, Tu Nghia, Ly Son, Mo Duc and Duc Pho.

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

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