FDI businesses receive Gold Dragon Awards

Seventy-eight foreign direct investment (FDI) businesses have been presented with Gold Dragon Awards and a hundred domestic enterprises have won the title of strong trademarks.

Last year, FDI activities achieved significant results reaching a total capital of US$21.628 billion from newly licensed projects, a 54.5% increase against the previous year and much higher than the target of US$13-14 billion.

FDI projects also disbursed approximately US$11.5 billion last year, demonstrating an annual increase of nearly 10%.

Seven FDI projects have investment capital of a billion US dollars, namely Japan-invested Nghi Son Oil Refinery Project which has raised capital by US$2.8 billion.

Samsung is considered the success story of the year. It has implemented two new projects in Thai Nguyen and Bac Ninh with a combined capitalisation of more than US$4 billion and is committed to long-term investment in Vietnam.

In addition to leading world brand names, such as Samsung, Dutch Lady, Heniken, and Honda, domestic trademarks like Vinamilk, Traphaco, Hoa Sen and Truong Hai were also honoured.

The organising board said awardees are chosen based on criteria, such as the quality of products and services, environmentally friendly operation, and their contributions to the local community and the country in general through tax obligations for the State, employment generation, and their social responsibility

The Gold Dragon and Strong Brand Names Awards were initiated by Vietnam Economic Times in 2001 and has become an annual event for both FDI and domestic businesses.

PM chairs rice consumption conference

Prime Minister Nguyen Tan Dung on March 15 presided over a conference in Can Tho addressing pressing matters to provide adequate funding for agricultural rice production and consumption.

The Ministry of Agriculture and Rural Development (MARD) reported that this year’s rice production output in the Mekong Delta region is estimated at 8.6 million tonnes, including roughly 4.3 million tonnes in winter-spring crop.

The current most pressing issue is that beginning in early March rice prices have been dropping and now stand at VND4,400-5,000 per kilo for normal rice and VND4,500-5,300 per kilo for high-graded rice.

Participants discussed Thailand’s announced plans to reduce its stockpiles of rice inventories by 20 million tones and the potential adverse effects on rice prices and consumption.

To cope with the detrimental effects on the market, localities are implementing comprehensive urgent and long-term measures to prop-up support rice production and consumption.

The State Bank of Vietnam (SBV) is committed to providing VND8,000 billion preferential credits to purchase rice for reserves and is offering 2-3 year agriculture loans at a 7% rate per annum aiming to encourage the expansion of large-scale field models and application of high technologies in agricultural production.

The Ministry of Industry and Trade (MoIT) is actively negotiating to close deals on contracts to export rice while the MARD is accelerating research efforts to improve the quality of rice and production.

Int’l experts hail Vietnam’s economic development

Austrian experts, scientists and businesses representatives have compared notes on Vietnam’s economic issues at a recent seminar held at the Diplomatic Academy of Vienna.

They agreed that after the Doi Moi (renewal) process, the Vietnamese economy is enjoying robust growth with significant results. However, such rapid growth causes various problems for the economy.

Dr Thomas Jandl from the US, an economic policy adviser for the Vietnamese Government, introduced his new book on Vietnam’s international economic integration and highlighted the country’s renewal achievement.

Dr Thomas Jandl cited FDI capital to Vietnam much higher than India’s as saying that in 2007, it attracted US$21.3 billion while India’s FDI reached US$15 billion.

He said when the economy develops the Government has enough capital to invest in infrastructure and public welfare projects, such as hospitals, schools and kindergartens, to improve living conditions for local people.

He added that Vietnam’s membership of many regional and international economic organization provides an opportunity for Austrian and international companies to benefit from the joint ownership of Vietnamese businesses, such as airports and ports.

Dr Jankowitsch, President of the Austria –Vietnam Friendship Association, said since the renewal period, the Vietnamese economy has grown strongly, even when  regional and world economies have been in recession.

In 2012, Vietnam’s Austrian exports reached US$1.101 billion, higher than its imports of US$160 million from the country.

Vietnam is on the right track of development, he said suggesting that the country should make the shift from producing popular raw products like footwear, coffee and pepper to high-graded ones. He also advised the country to pay more attention to training highly qualified human resources to supply other countries around the world.

The seminar offered a good chance for Austrian experts and businesses to gain a better understanding about Vietnam’s economy and suggest new investment strategies for Austrian and foreign companies in Vietnam.

Deputy PM urges businesses to raise standards

Deputy Prime Minister Vu Duc Dam has called upon the Vietnamese business community to modernize technology and improve productivity and the quality of products to conquer both domestic and foreign markets.

At the recent national quality awards and Global Performance Excellence Award (GPEA) ceremony held in Hanoi on March 16, Dam said that despite global and domestic economic woes, domestic businesses have still managed to excell and win national and international awards.

He asked the Ministry of Science and Technology to work closely with ministries, sectors and the businesses community to devise practical solutions to increase the productivity and the quality of products.

Proper measures are need to encourage businesses to update technology and pay closer attention to quality control and raising the standards of products and services, he added.

This year’s national quality awards were presented to 82 businesses, including 20 with gold and 62 with silver awards.

Two businesses awarded with GPEA are the Vietnam Bank for Industry and Trade (Vietinbank) and Traphaco.

EU to promote trade ties with Vietnam

EU Trade Commissioner Karel de Gucht is scheduled to arrive in Vietnam on March 17 as part of his Southeast Asian tour to strengthen trade cooperation with these countries.

In Hanoi, he will meet with Prime Minister Nguyen Tan Dung and Minister of Industry and Trade Vu Huy Hoang to review progress in bilateral negotiations of a free trade agreement (FTA).

The seventh round of FTA talks is taking place in Hanoi from March 17-21, and both sides hope to end negotiations very soon, enabling their business communities to benefit from this ambitious trade pact.

Vietnam and the EU began FTA negotiations in June 2012, focusing on goods and services, investment, public market, intellectual property rights, tariff barriers, animal and plant quarantine, food hygiene and safety, trade technical barriers, customs cooperation, trade and sustainable development.

Vietnam was the fourth largest ASEAN trade partner of the EU last year. Two-way trade turnover reached nearly EUR24 billion in 2012, of which EU exports were EUR5.3 billion.

The EU is also the largest source of foreign direct investment for Vietnam with capitalisation in excess of EUR1.37 billion.

The EU primarily exports high-tech products, machinery, electronic equipment, airplanes, bikes, pharmaceuticals, iron and steel to Vietnam.

It mainly imports mobile phone components, electronic products, footwear, garments, coffee, rice, seafood, and timber products.

Fresh impetus for Vietnam-Japan economic ties

Japan was the first G7 nation to recognise Vietnam’s full market economy status, a valuable legal and trade appellation with far-reaching implications for the developing nation, and has since become Vietnam’s leading trade partner.

The Chief Representative of the Japan External Trade Organization (JETRO) in Hanoi, Atsusuke Kawada, was recently quoted as saying that “Vietnam-Japan relations are continuing to prosper with Japan’s investment capital increasing steadily in recent years”.

He suggested that State President Truong Tan Sang’s upcoming visit to Japan will provide an opportunity for Japan and Vietnam to discuss enhancement of the country’s investment in Vietnam and seek increased cooperation on a number of fronts.

Twenty years ago, Japan was the vanguard of countries resuming overseas direct assistance (ODA) for Vietnam. Japan also provided a wealth of assistance to the Vietnamese Government that positively impacted economic development and played a vitally important role in poverty reduction.

Through the construction of infrastructure such as roads, railways, power plants and ports, Japan’s ODA sources have helped attract more foreign investment in Vietnam, generate jobs, promote trade and contribute to a more vibrant socio-economic development.

Over the past 20 years, Japan has been Vietnam’s largest ODA provider, making up 30% of all donors’ cumulative capital.

From 1992 to March 31, 2013, Japan committed US$24 billion in ODA to Vietnam. Japan provided US$2.8 billion in ODA loans to Vietnam in the fiscal year 2011 and about US$2.03 billion in the fiscal year 2012.

At a recent press conference, Mori Mutsuya, Chief Representative of Japan International Cooperation Agency (JICA) Vietnam Office, said that in 2014, Japan will provide at least over US$2 billion in ODA to Vietnam, an equivalent figure to the amount provided in 2013.

Mr Mori added that his statement was made based on the fine relations between Vietnam and Japan. Japan recognised the important role of Vietnam and it is an important mission for Japan to help Vietnam restructure the country and promote economic growth.

Vietnam is making strong breakthroughts in its efforts to become an industrialised nation by 2020 and Japan will continue its support for Vietnamese people, he said.

He expressed hope to witness Vietnam’s new developments in the next 20 years.

The fourth phase of the Vietnam-Japan joint initiative on improving investment environment in Vietnam has been finalized while the fifth phase kicked off in 2013.

JETRO Chief Representative in Hanoi Atsusuke Kawada said that Japanese investment in Vietnam is on the rise with 416 projects capitalised at US$5.7 billion in 2013.

As from December 20, 2013 Japan has had 2,166 valid FDI projects in Vietnam with total registered capital of US$34.764 billion, topping among 101 nations and terrtories investing in Vietnam.

In January 2014, Japan had five newly-licensed projects worth US$5.19 million. According to JETRO, more than 2,000 Japanese businesses have been operating in Vietnam so far. In addition, many Japanese businesses have selected to invest in Vietnam instead of Chinese and Thai markets.

Recent JETRO survey on Japanese businesses’ operations has indicated that over 70% of Japanese businesses investing in Vietnam want to expand business activites in the next two years due to low-cost labour force compared to China and Thailand. In fact, several Japanese businesses have opened their second and third factories in Vietnam.

Statistics from Vietnam Customs show that total import-export turnover between Vietnam and Japan reached US$4.02 billion in the first two months of the year, up 15.1% from last year’s period.

Of the figure, Vietnam’s Japanese exports hit US$2.2 billion, a sharp rise of 22.8% while Vietnamese import from Japan reached US$1.7 billion, up 6.3%.

Vietnam Customs office said that Japan remains a significantly important trade market of Vietnam, accounting for 10% of the country’s total import-export turnover.

\ Japan ranked fourth among Vietnam’s largest trade partner last year. Two-way trade turnover reached US$25.163 billion, of which Vietnamese exports to Japan hit US$13.581 billion, up 4% compared to 2012 and its imports from Japan was US$11.582 billion, down 0.2 %.

Vietnam’s key export items to the Japanese market are garments and textiles, crude oil, machines, equipment,seafood, wooden and plastic products, computers, electronics and components.

In a joint statement in 2011, both sides voiced their resolve to double bilateral trade turnover by 2020. Both nations have exchanged the Most-Favoured-Nation status since 1999.

Last but not least, on January 21, 2014, Japan abolished the examination of Ethoxyquin residues on Vietnamese shrimp products, thus facilitating bilateral agro-forestry-fishery trade.

Mercedes-Benz expands operation in Vietnam

Mercedes –Benz, currently in its second year of operations in Vietnam, has decided to raise its registered capital by an additional US$10 million to US$30 million.

Mercedes-Benz Director General Michael Behrens said on May 14 that half of the additional capital will be designated for developing new production lines and the remainder will be utilised for environment equipment.

Last year, the German auto manufacturer placed a modernised environmentally friendly paint factory into operation at a cost of US$10 million.

This year, the company will introduce 18 new models, bringing the total number of its up-scale automobile models on its showroom floors to 40.

Last year, sales of the auto retailer grew by 65%, triple that of the country’s average dealer, and Mr Behrens has high expectations they will continue to prosper this year.

According to Vietnam Automobile Manufacturers Association (VAMA), Mercedes-Benz has sold 381 cars in the first two months of this year.

Foreign invested companies in Vietnam honoured

Vietnam MM Company and Dobal Company were presented with this year’s coveted Belgium-Luxembourg-Holland Award for business achievement in Vietnam.

The Belgium Luxembourg Chamber of Commerce in Vietnam (BeluxCham) and the Dutch Business Association Vietnam (DBAV) made the announcement at a ceremony held on March 14.

Additionally the Excellent Enterprise Award was presented to De Heus Company.

Fresh Studio received honours for its contribution to renovation and sustainable development while Gabor Fluit, General Director of De Heus Company received the Management Excellence Award.

Puratos Grand-Place Vietnam has also been recognized for gaining long-term and stable business achievements in the country.

The Belgium-Luxembourg-Holland Award was launched in 2011 and is presented annually to promote cooperative relations and highlight achievements by Belgian, Dutch and Luxembourg enterprises and individuals operating in Vietnam.

Automobile parts factory opens in Hoa Binh

Nissin Manufacturing Vietnam Co. Ltd. on March 14 opened a factory producing automobile and motorcycle spare parts in the northwestern mountainous province of Hoa Binh.

The factory, located in Luong Son Industrial Park, is the first opened overseas by the Japanese firm in its 60-year history. It is considered the company’s first step in constructing an auto component centre in the Southeast Asia.

Built at a total cost of US$75 million, the factory is designed to turn out 23 million products a year for the domestic market and export.

It is expected to gain an annual revenue of US$28.2 million, contribute over US$1 million to the State budget every year and create jobs for 242 locals.

Business forum discusses green growth

Green growth and sustainable development were key subjects discussed at a business forum held by the Vietnam Economics Times in Hanoi on March 14.

Participants said that the two trends are key strategies that enterprises should to look for in the future.

They stressed that green growth supports enterprises outline their specific short-and long-term development.

Participants also noted that the sustainable development should be built based on the foundation of information transparency to enhance prestige of businesses and improve confidence of customers.

According to Vice President of the Vietnam Steel Association Le Phuoc Vu, enterprises should pay attention to developing their green growth strategies by building environmentally friendly and energy-saving production facilities.

They should also turn any limitation of resources into an advantage, thinking outside the box to promote growth and reduce negative effects on the environment, Phuoc said.

Vietnam’s steel sector is said to remain small-scale with outdated technology and high production costs, while labour productivity and competitiveness are limited. Therefore it consumes a great volume of energy and fuel.

Attendees said that it is necessary for the sector to develop production technology that can save energy and seek clean energy sources to reduce environmental pollution.

Japanese investment in HCM City continues to rise

HCM City has experienced a spike of 226.1% in foreign direct investment (FDI) in the first two months of the year, primarily attributable to a high influx of Japanese businesses swarming into the city.

The Municipal Department of Planning and Investment says Japanese businesses are keen on investing in Vietnam, especially the southern key economic zone as established companies are adding capital and new projects are registering capital at an impressively high rate.

In line with this information, a report from the HCM City Export Processing and Industrial Zone Authority

(Hepza), a series of Japan’s projects spearheaded the expansion into the city in 2013.

For example, Sai Gon Precision Co, LTd in Linh Trung IP, Tosok Co, Ltd, Nidec Tosok, Akiba Co, LTd and Juki Co, Ltd have increased their capital to US$129 million, US$95 million, US$10 million and US$12 million, respectively.

Notably, many other hi-tech international companies expanded their investment in Hepza including Roeders Vietnam from Germany, Marvel Vietnam Technology from Singapore and Kijima Musen Vietnam from Japan.

Last year, total investment in Hepza IPs peaked at US$608 million, up 47% over the previous year. In 2014, investment in Hepza is expected to cap out at US$550 million, up 10% compared to the 2013 plan.

According to the 2013 Japan External Trade Organization (JETRO) survey on Japanese companies in Asia and Oceania, 70% out of 435 Japanese businesses currently investing in Vietnam have plans to expand operations in the country.

Over 50% of Japanese businesses listed Vietnam’s scale of market, growth capacity and political stability in Vietnam as advantages.

In 2013, Japanese investment in Vietnam increased from US$2.57 billion to US$2.78 billion.

The survey showed that the Republic of Korea (RoK) took the lead in terms of project numbers in Vietnam, but Japan continued to top in total investment with newly registered capital of US$5.74 billion, followed by Singapore, the RoK, China, Russia, Hong Kong and Taiwan.

Hepza attributed strong FDI inflows in its EPZs and IPs in the early months of the year to the fact that investors are gearing up for the signing of the Trans-Pacific Partnership (TPP) agreement.

In addition, HCM City’s investment environment has been steadily improving, resulting in a relocation of many FDI projects from other provinces to the city.

To entice increased investment capital in 2014, Hepza said that EPZs and IPs have set aside 408 hectares of land and 67,400 square metres of workshop areas for investors in IPs such as Tan Phu Trung, Dong Nam, An Ha, and Hiep Phuoc, and Tan Thuan EPZ.

The Vietnam-Japan Techno Park in Hiep Phuoc IP has been underway to attract investment from Japan’s small and medium-sized enterprises in the field of hi-tech support industry.

Last but not least, it is incumbent to streamline procedures of granting investment licenses, and conduct transparent and publicized administrative formalities, improve infrastructure facilities, and promote investment in the green and hi-tech industry.

Mexico wants to buy An Giang rice

The Mexican government has expressed a desire to purchase Vietnamese paddy rice from An Giang province for further processing in its husking factories.

At a meeting with An Giang leaders on March 14, Mariana Rodrigue Alvere, Director of the Mexican Rice Council in the Asia Pacific region, said if Vietnamese paddy rice meets requirements on quality and prices, Mexican businesses will purchase it.

Mai Thi Anh Tuyet, Director of the provincial Department of Industry and Trade, said An Giang is willing to meet all the Mexican requirements and create the best possible conditions for them to develop material zones if necessary.

An Giang will set up a group to monitor prices in order to avoid unhealthy competition among businesses and to ensure benefits to both exporters and importers, Tuyet said.

The group will timely deal with obstacles and facilitate Mexican businesses’ rice purchase.

This is the first foreign partner that wants to purchase Vietnamese paddy rice, Tuyet emphasised.

Mexico is a potential market, opening a huge opportunity for An Giang as it can expand to neighbouring markets in Central and South America and the US.

An Giang annually produces around 4 million tonnes of paddy rice and exports more than 700,000 tonnes of rice to 62 countries in the world, including 22 in Africa, 19 in Asia, 4 in Americas and 2 in the Oceania.

An Giang’s rice specialities, such as Jasmine, can meet the high demand of countries, like Japan.

A foreign business recently developed  a 2,000ha material zone to plant, process and export rice to Japan.

Protecting the Vietnamese trademark

Vietnamese companies have yet to pay sufficient attention to solidifying their business identity through trademark investment and promotion.

The view was shared by experts at a March 14 seminar in Hanoi where economists, policymakers and businesses examined ways of developing trademarks for Vietnamese goods.

They held that it is difficult to build a brand name, and it is even more difficult to keep and promote it in the fiercely competitive world marketplace.

Trademark protection is only one of the many issues that Vietnam companies face in gaining a competitive edge in the national, global and international markets.

Vu Tri Dung, a marketing lecturer at Hanoi National University of Economics, said Vietnamese trademark protection in the international market is not strict enough so many domestically-recognised trademarks are infringed upon in the international arena.

In recent times, many Vietnamese brand names have been regularly imitated or infringed upon, such as Ben Tre Coconut Candy in 1998, Vinataba cigarettes, Trung Nguyen (Highland) coffee, and Vifon noodles in 2001.

Noteworthy is that the intellectual property rights of Buon Ma Thuot Coffee were violated by a Chinese company. Only when the Vietnamese company lodged a lawsuit to an international court, was the situation rectified.

Dung said the Government plays an instrumental role in protecting Vietnamese trademark and assisting Vietnamese businesses with legal support.

He suggested the Government sign and implement intellectual property rights and trademark protection agreements and protocols, as well as showing its role in dealing with disputes on international market.

Laos, Vietnam promote investment cooperation

Laos has licensed 412 Vietnamese projects with pledged capital of more than US$5 billion, ranking Vietnam second among foreign investors in the country.

The figure was released at a meeting between the Ministries of Planning and Investment (MPI) of Vietnam and Laos in Vientiane on March 14.

Vietnamese Minister Bui Quang Vinh and Lao Minister Somdi Duong briefed each other on their respective countries’ economic situation and evaluated cooperative results in recent times.

They noted Vietnam’s official development assistance (ODA) for Laos has been used effectively on schedule.

Both sides have worked closely to timely address concerns to promote development investment.

They agreed to strengthen comprehensive cooperation in investment and planning, increase investment promotions in each country, and handle obstacles to joint projects over 2014-2015.

They will closely monitor the implementation of signed agreements, including the 2011-2020 cooperation strategy, the 2011-2015 cooperation agreement, and the Laos-Vietnam cooperation strategy in Xiengkhouang and Houaphan province till 2020.

Vietnamese furniture companies expand overseas markets

Twenty-nine Vietnamese companies taking part in the International Furniture Fair Singapore 2014 and the 31st ASEAN Furniture Show (IFFS/AFS) in Singapore from March 13016 are all aimed at seeking more customers and expand markets overseas.

Phan Thi Thuy Hang, Director of Kien A Interiors Co. Ltd. said this is the first time the company participated in the IFFS/AFS. The company has shipped its furniture to New Zealand, the US and some European countries like the UK and Iceland and it has been planning to export furniture to other countries in Europe.

Also in the first day of the IFFS/AFS, Saigon River Factory Vietnam, a company run by a Belgian couple and specialising in creating handmade furniture and tiles for worldwide distribution, received orders for three containers of products.

Director Peter Arts said this is the fourth time his company has been exhibiting at the event. The company has about 160 workers and needs to expand.

Nguyen Thanh Tung, Director of Tan Phu Furniture Co. Ltd, said after each year of participation to the event, its market share increased and more and more overseas customers knew Tan Phu brand. This is the 11th time that Tan Phu has participated in the annual IFFS.

Tan Phu has exported furniture to Australia, New Zealand and European countries, worth from US$6-7 million a year.

According to Vietnamese Ambassador to Singapore Tran Hai Hau, many of Vietnamese companies displaying at the IFFS received export orders on the very first day of the show, which indicated that Vietnam’s furniture production technology has been on the progress and the country’s economy has been improved, including the furniture industry.

Last year, Vietnam exported US$6 billion worth of furniture, wooden, bamboo and rattan works, including US$20 million to Singapore.

Leading economists have forecast a healthy 10% increase in Vietnam’s garment and textile exports for 2014 to US$23 billion.

However, the National Garment and Textile Group (Vinatex) cautions that a number of thorny problems, particularly those dealing with the procurement of raw materials, must be overcome if such an optimistic outlook is to be achieved.

The sector is overly dependent on the importation of raw materials to meet its production quotas, which adds significantly to its production costs Vinatex reports.

Additionally, businesses are under financial pressures resulting from increases in other production costs such as electricity and transportation, which are even more exaggerated by an increase in the minimum wage that went into effect on January 1 of this year.

Further exasperating the sector is the lack of highly trained workers and an uneven distribution of them in regions throughout the country, the report states.

Deputy Minister of Foreign Affairs Nguyen Thanh Son in turn has stated that weaknesses in terms of design and product quality also plague the sector.

“To be competitive in the international market, businesses need to overcome these design and quality defects”, Son said.

“The goal of becoming a full member of the World Trade Organization (WTO) by 2018, cannot succeed if businesses do not rise to the challenge and effectively resolve these issues.”

Vinatex also points out that, local businesses face challenges from “black market activities” such as illegal smuggling in the domestic market along with an influx of a myriad of fake and inferior quality products with the phony “Made in Vietnam” label flooding the market.

These “black market” activities are denting the images of many high-profile Vietnamese garment and textiles businesses and creating a lack of consumer trust in their international consumers.

Vinatex’s said its priorities are to maintain an export growth by focusing on increasing the rate of growth in original design manufacturer (ODM) products to 12-14%. Regarding Free-on-Board (FOB) products, the group must optimise orders to bring added value to their products.

Vinatex will diligently strive to duplicate a production model in 2014 which has been applied successfully in similar businesses to reduce stockpiles, improve labour productivity and increase the competitive edge of products.

To develop domestic material sources, Vinatex said that it is imperative to strengthen coordination between garment and textile businesses and production sectors in order to shift resources of materials among businesses.

The promotion of both foreign and domestic investment in garment and textile material will facilitate an increase in the rate of localization and increase the added value of products as well as reduce import surplus.

Concurrently, the State should devise much improved zoning plans to support the development of the dyeing and textile industry to produce high-quality raw materials in country.

Without good materials produced in Vietnam, the garment and textile sector will not be able to satisfy the quality demands of Vietnamese and international consumers.

Garment sector promotes exports to Middle East

Vietnam’s garment and textile sector now considers the Middle East a promising market as it is facing product origin requirements from traditional markets like the US and the EU.

According to the Vietnam Textile and Apparel Association, there is an increasing demand for products, especially gowns, shirts, jeans and kids ready-made garments from the Middle East over recent years.

Experts say products from Vietnam enjoy a favourable condition as they can be shipped directly to the region by local importers without going to an intermediary country.

Vietnam’s garment and textile exports to the Middle East witnessed a remarkable increase over the past time, with the value raising from US$43.3 million in 2009 to US$117.4 million last year.

The industry in the first two months of this year gained a year-on-year increase of 30 percent in export value to reach US$3.2 billion. In February alone, it earned US$1.3 billion from exports, a surge of 44.9 percent.

ICAEW forecasts Vietnam’s economy to grow by 5.4% in 2014

Increased net exports will help Vietnam’s economy achieve growth of 5.4% in 2014, according to the first quarterly report of ICAEW Economic Insight – South East Asia.

ICAEW is a highly acclaimed leading professional membership organization and a founding member of Chartered Accountants Worldwide and the Global Accounting Alliance.

The report states that a healthier banking sector in Vietnam with a lower proportion of non-performing loans will provide the underpinning and solid impetus for GDP growth this year.

In the next few years, Vietnam is expected to become more transparent towards international investors, which will entice new capital into its economy, the report said.

Meanwhile, increased government spending, partially due to the equitisation of state-owned assets, will also pump money into the economy and support higher growth rates. As a result, we expect annual GDP to increase by 5.7% in 2015 and 2016, the report concluded.

Douglas McWilliams, Chief Economist of the ICAEW and the Centre for Economics and Business Research (CEBR) forecasts that Vietnam’s economy will grow every year over the next few years thanks to a low-cost, highly skilled and disciplined workforce, and incentive policies to attract capital sources from investors.

Vietnam will continue enjoy strong economic growth and FDI inflows from investors thanks to these advantages, he said.

Lack of funds chokes social housing projects

A shortage of funds has stopped work on many social housing projects for low-income earners in southern Dong Nai Province.

Nguyen Khac Son, manager of Son An Urban Development and Investment JSC, said 408 apartments in Tam Hoa Commune, Bien Hoa City, were left unfinished at the third-storey level. According to the design, the housing project should have 23 storeys.

Son said he had no idea when the project would be resumed.

Another project to build 500 apartments in the city's Buu Hoa Commune by Minh Luan Co, Ltd is in a similar situation. The VND229 billion (US$10.7 million) project was brought to a halt after site clearance was completed.

Figures from the provincial Department of Construction show that seven social housing projects providing a total of about 6,000 apartments had been approved in the province.

However, according to project investors, at least four projects were forced to halt due to a serious shortage of capital.

Most banks in the province refuse to lend money for these projects due to high risks.

Tran Quoc Tuan, director of Dong Nai's State Bank, said enterprises offered their apartments as security for borrowing money, but many lacked capital or were experiencing bad debts.

This has caused prices for apartments to spiral, putting them out of range for many low-income earners. Many apartments in the social-housing range remain unsold.

Tuan cited apartments built by Son An Urban Development and Investment JSC as an example. Low-income workers and civil servants could not afford to buy housing worth VND500-600 million ($23,500-28,200).

Investors have asked the department to help them get favourable loans from the Government and the State Bank's VND30 trillion ($1.4 billion) credit package so that they can complete their projects.

Da Nang offers preferential loans

The central city's people's committee of Da Nang has decided to offer preferential loans at 7.5 per cent interest to businesses for a one year period.

Following the decision, only profitable or audited businesses and enterprises without bad debts with any bank in the city are eligible to avail the loan of VND120 billion (US$5.7 million) from the city's budget and the Investment and Development Fund.

It means that each eligible business will be offered a maximum loan of VND5 billion ($238,000) once, with strict regulations from this year.

However, the loan will be provided to businesses involved in the stable price programme in the city.

Loss-making enterprises employing a large workforce will get the loan if they propose their effective production plan or provide confirmation of their tax returns and debt payments in the previous years.

The city also increased the budget contribution to the Credit Guarantee Fund from VND30 billion ($1.43 million) to VND50 billion ($2.38 million).

Vice Chairman and General Secretary of the city's Small-and Medium-sized Enterprises Association, Nguyen Van Ly, stated that businesses will have more opportunities to get loans from the Credit Guarantee Fund and the Investment and Development Fund.

"We propose loans with low interest rates, ranging between 9 and 13 per cent, for small- and medium-sized enterprises, under the city's guarantee and the association, but they (businesses) have to negotiate with the banks for the eligible rates of interest," Ly said.

Last year, the city implemented the Credit Guarantee Fund worth over VND100 billion ($4.8 million), of which 30 per cent will come from the city's budget and 70 per cent from banks and large firms.

Over 1,200 enterprises, or 10 per cent of the total businesses in Da Nang, were dissolved or closed due to poor operations and loan deficits last year.

The year 2014 has been designated as the Year of Enterprises by the city.

2014 insurance market hopes for booming growth

The domestic insurance market is expected to fare well this year, fuelled by economic recovery trend and the sector’s remarkable growth rate of 14 percent recorded in 2013, according to economists.

The Ministry of Finance’s Insurance Supervisory Authority (ISA) forecast that the sector could reach a total premium of 51.63 trillion VND (2.42 billion USD) this year, up 9.7 percent over 2013.

Non-life insurance is hoping for a growth rate of 8 percent while life insurance targets an increase of 11.5 percent year-on-year.

At the sector’s recent annual conference held in northern Ninh Binh province, Finance Minister Dinh Tien Dung emphasised that the insurance market is an important pillar supporting the financial service sector, together with the banking system and the stock market.

The market has tapped its role in mobilising idle money in society to reinvest in the economy. The annual reinvested sum reportedly reached 47 trillion VND (2.2 billion USD) in the 2002-12 period, and 105 trillion VND (4.93 billion USD) in 2013, equivalent to 3 percent of the year’s GDP.

Besides, stable jobs were generated for more than 350,000 people, contributing greatly to social welfare.

Since its inception in 1993, the market has offered a variety of insurance products. Most of them, however, are alike in type.

The country’s annual insurance premium has to date accounted for nearly 2 percent of its GDP while that of the regional market was 3.2 percent and the world market, 6.5 percent.

Towards this year’s target, domestic insurance businesses need to put forth strategies to further diversify their services, expand their distribution systems, and improve the quality of customer services, Minister Dung said.

According to the ISA, management agencies this year continue to perfect related mechanisms and policies to create a favourable legal framework for the development of the industry.

Various measures will be taken to step up the restructuring of insurance businesses and foster their mutual collaboration.

 29 state businesses pledge on-schedule equalization in HCMC

Director Generals of 29 state-owned businesses pledged to equitize their businesses by the end of next year as per schedule in Ho Chi Minh City on March 13.

Their pledges were witnessed by Deputy Chairman of Ho Chi Minh City People’s Committee Le Manh Ha and officials from relevant departments.

Leaders of the companies have agreed for severe penalties if they failed to equitize their companies on schedule.

HCMC planned to equitize 31 state businesses by 2015. Nine of them ran behind schedule in 2013.

Tay Ninh: More farmers join VietGAP rice model

The southwestern province of Tay Ninh has seen a rising number of households joining the Vietnamese Good Agricultural Practices (VietGAP) model in rice cultivation, with 1,398 households, 174 ones higher than that of the same period in 2013.

In the 2013-24 Winter-Spring crop, the province has 2,658 hectares of VietGAP rice area, up 568 hectares, mainly in 12 chosen communes of the districts of Ben Cau, Go Day, Trang Bang, Chau Thanh and Hoa Thanh where the pattern of large-scale paddy fields is underway.

Vuong Quoc Thoi, director of the provincial Department of Agriculture and Rural Development, said his department has supported farmers with guidance in varieties to maximise the efficiency of the model.

It has also worked with a number of fertilizer producers to ensure sufficient supply for them.

According to the department, VietGAP rice fields have an average yield of 8-9 tonnes per hectare, 2 tonnes more than that of non-VietGAP fields.

Japanese investment trends in Vietnam

The Japan International Cooperation Agency (JICA) and the Japan External Trade Organisation (JETRO) recently announced a report on investment trends of Japanese enterprises in Vietnam and a handbook on the supporting industry.

According to JETRO's survey, in the supporting industry, although the localisation rate of Japanese enterprises in Vietnam has reached 32.2 percent, up 4.3 percentage points compared with the year before, this level is still low compared to 64 percent in China, 53 percent in Thailand, 42 percent in Malaysia and 41 percent in Indonesia, said the Vietnam Business Forum on March 13.

Supporting industry is considered to play a very important role in the development of Vietnamese economy. But despite the fact that investment in high-quality machinery and equipment is crucial for success, many small and medium businesses have yet to overcome difficulties in this area such as accessing formal sources like bank loans.

Yasuzumi Hirotaka, CEO of JETRO Ho Chi Minh City, suggested that attracting only FDI enterprises in developing supporting industry is not advisable, it’s also important to simultaneously develop Vietnamese companies, expanding the domestic market.

Regarding supporting industry, JICA also published the handbook on Vietnam’s supporting industry to aid small and medium enterprises working in Vietnam’s supporting industry.

There are two main reasons behind the supporting industry in Vietnam having difficulty in getting loans.

The first one comes from the banks. According to the State Bank of Vietnam (SBV), the credit risk assessment of small and medium enterprises in supporting industry is still uncommon. On one hand, enterprises of the supporting industry are subject to fluctuations in the supply chain of global and domestic manufacturing, on the other hand, the investment in support machinery and equipment requires technical characteristics and specialities which many banks right now are not confident to handle.

The second reason stems from enterprises itself. The majority of businesses in the survey share common obstacles such as lack of a good business plan, insufficient financial information and lack of collateral.

According to Manabu Tsurutani, Chief Advisor of the Small & Medium Enterprise Finance Programme (SMEFP III), this situation can be resolved through coordination between banks, supporting industry enterprises and third parties such as machinery sellers.

Third parties can make up for banks’ shortcoming in giving loans to small and medium enterprises. In return, banks can help machinery companies accelerate the process of credit assessment and apply better loan conditions so that these suppliers can serve customers with better total solutions, including financial solutions.

“Handbook on Vietnam’s supporting industry” provides the basis for cooperation between banks and third-parties to solve difficulties, to promote Vietnam’s supporting industry’s development. It’s assessed that the publication of the handbook during this time will be a good motivation, creating a solid ground for the innovation of Vietnam’s supporting industry.

In recent years, Japan has always been one of the leading investors in Vietnam. Accumulation by the end of 2013 shows that registered investment from Japan to Vietnam was 34.58 billion USD, of which investment in 2013 alone reached 5.747 billion USD.-

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