Australia provides AUD1.4 mil to develop fruits in northwest region

Increasing income for small households in the mountainous north-western region by enhancing competitiveness and market approach for temperate zone fruits.

The project, with total funding of AUD1.4 million provided by the Australian Centre for International Agricultural Research (ACIAR), is set for implementation over the four year period from 2014-2018.

It aims to assess opportunities at localities and finalise plans to control the development of temperate and semi-temperate fruits in the north-western region.

The goal of the project is to apply advanced techniques and varieties to develop a market based on the consumers’ demand to connect to markets which can make greater profit.

Speaking at the seminar, Deputy Prime Minister of Agriculture and Rural Development Le Quoc Doanh said the north-western is the poorest region in Vietnam and has received investment and foreign aid to improve people’s living conditions.

The Deputy Minister said developing temperate zone fruits is one of the orientations to help farmers in the region reduce poverty. However, there remain difficulties and challenges such as lack of information about the market, the application of cultivation techniques and post-harvest management.

Doanh in turn expressed hope that the project will help the region seek economic solutions to connect farmers to the market and offer opportunities for growers of fruits to increase their income.

For his part, Australian Ambassador to Vietnam, Huge Borrowman emphasised cooperation among localities and organisations should put the results of research into practice and improve people’s living standards.

The ambassador affirmed the project will adopt a new approach to promote a dialogue and information sharing to develop temperate fruits in accordance with characteristics of each locality.

182 businesses attend electricity technology exhibition

The 6th Electrical Power, Transmission & Distribution Technology Exhibition and Conference opened in Ho Chi Minh City on September 17 with the participation of 182 businesses from 26 countries and territories.

The event, co-organised by the Hong Kong Exhibition Services, SES Allworld and Vietnam Chamber of Commerce and Industry (VCCI) Exhibition Services Company, is the leading international event in electrical power technology, automation and energy in Vietnam.

It helps to accelerate trade promotion, and technology transfer, contributing to meeting the increasing demand for power distribution and transmission in Vietnam.

VCCI Vice President Hoang Van Dungsaid the electricity market has been opened in Vietnam for 10 years, driving the electricity demand up by 15% each year.

Independent producers from Japan, Thailand, the Republic of Korea and the US and many other foreign businesses have paid more attention to business potential in Vietnam, by investing in large-scale projects like Nghi Son 2, Vung Ang 2, Van Phong 1, Vinh Tan and Thai Binh power plants.

The national electricity capacity is projected to increase from 69,000MW now to 75,000MW in 2020, creating plenty of opportunity for foreign investors to penetrate this market.

HCM City hosts int’l support industries expo

Vietnam International Supporting Industries Expo 2014 (VSI Expo 2014) kicked off in Ho Chi Minh City on September 17, attracting over 140 domestic and foreign companies.

Exhibited industries include garments and textiles, footwear, electronics, plastics, mechanics, and automotive assembly.

Speaking at the event, Vice Chairman of the HCM City People's Committee Tat Thanh Cang said VSI EXPO 2014 aims to connect businesses, promote formation of the value chain in manufacturing industrial products and expand the market for support industry products.

In addition, the exhibition helps increase exports of high quality Vietnamese products and boost competitiveness, creating favourable conditions for small and medium companies to reduce imported products, and avoiding overdependence on foreign markets.

Within the framework of the four-day event, a seminar on “Solutions to promote support industries in Vietnam” and a forum on “Realising production cooperation opportunities – Driving force for support industry development” is planned.

Seminar discusses Vietnam-RoK construction cooperation

A seminar was held in Hanoi on September 16 discussing cooperative opportunities between Vietnam and the Republic of Korea’s (RoK) construction businesses.

Nguyen Noi, deputy head of the Foreign Investment Agency (FIA) under the Ministry of Planning and Investment said the RoK ranks second among 101 nations and territories investing in Vietnam with 3,930 projects capitalised at US$32.845 billion with a focus on such fields as manufacturing, real estate, construction, art and entertainment, and transport.

Mr Noi said to lure RoK investment, Vietnam should speed up the attraction of support and processing industries, and construction sector. In addition, priorities should be given to projects which are associated with modern and environmentally friendly technologies to fully tap natural resources and develop infrastructure.

During the seminar, experts discussed the Construction Law 2014 and related policies, the RoK’s investment capital for the Vietnamese construction sector, financial management, and investment formalities. Moreover, businesses discussed prospects for cooperation among construction businesses of both nations.

President of the Academy of Managers for Construction and Cities (AMC), Bui Duc Hung said through the seminar, the RoK businesses should gain a better understanding of the legal framework, policies, opportunities and challenges of investing in Vietnam.

Additionally, the event helps Vietnamese businesses seek partners from the RoK businesses, bolster cooperation in the construction field and contribute to the development of both nations.

Kim Kyungil, head of the Prime Minister’s office affirmed the RoK has always considered Vietnam as top priority in its investment strategy and will continue to increase investment in the Vietnamese market.

Amplifying export market share in Northeast Asia

Thanks to favourable legal frameworks from free trade pacts, geographical advantages, and traditional ties Vietnamese companies have ample opportunity to expand exports in Northeast Asia and increase their market share.

China is currently the largest export market for Vietnamese agricultural products and a key potential market for other sectors such as garment and textiles, leather and footwear, seafood, furniture, commodities, electronics, and auto parts.

Russia is a traditional market of Vietnam with many bright spots on the horizon for exponential export growth.

The two countries are currently negotiating a free trade agreement between Vietnam and the Customs Union (Russia, Belarus and Kazakhstan), which negotiations are expected to conclude early next year, bringing promise of much liberalised trade.

The Republic of Korea (RoK) and Japan are also considered highly lucrative markets with an inordinate potential for market share growth.

Le An Hai, Deputy Head of the Asia-Pacific Market Department, reveals the Ministry of Industry and Trade (MoIT) has an elaborate marketing plan in the works to carry out a wide foray of activities to stimulate trade in the two markets in the near future.

Japan is the largest trade partner of Vietnam. Exports to Japan, ranking second after the US, have been on an uptrend and in the first eight months of this year alone two-way trade turnover reached US$17.3 billion.

In recent years, a host of successfully negotiated important economic agreements have created favourable conditions for Vietnam to increase its agricultural exports to Japan. A sharp reduction in tax rates on for all farm produce has opened opportunities for Vietnamese businesses to gain ground.

Most notably the ASEAN-Japan Comprehensive Economic Partnership (AJCEP) Agreement and the Vietnam-Japan Economic Partnership Agreement (VJEPA) have provided increased incentives for Vietnamese exports to Japan.

Likewise, the ASEAN-Korea Free Trade Agreement (AKFTA) has actively facilitated Vietnamese exports to the RoK in recent years. Many exported products have achieved robust growth as a result.

However, not all products fully capitalise on incentives brought by trade agreements. RoK commitments to Vietnamese advantaged products like tea, pepper, coffee and fruits remain severely limited.

Quarantine and technical standards are the major barriers restricting Vietnamese exports to the RoK. In the current negotiations of a Vietnam-Korea Free Trade Agreement (VKFTA), Vietnam is making greater efforts towards addressing these obstacles and eliminating them.

Garments are one of the RoK success stories, having fully exploited incentives and propelled exports upwards. In the first 7 months of this year, garment exports to the market skyrocketed 36%.

Due to different crop and weather patterns plenty of opportunity exists to export agriculture products to the Japanese market but there are snags in complying with the stringent food hygiene and safety requirements of the Japanese market.

Official statistics show impressive growth rates in recent years ranging from 10-30% annually, however the overall agriculture export value is still modest, and remains only a fraction of its fullest potential.

Le An Hai says Japan and the RoK are two of the most demanding markets in the world and they are not easily penetrated.

As a case in point, Hai cites the deal to export fresh mango and dragon fruit to the two markets, which took Vietnam over four years to negotiate.

Vietnamese products have barely scratched the surface of the Japanese market Satoshi Nakajima, Japanese Consul General to HCM City, says, adding Vietnam accounts for just 1.65% of total Japanese market share.

Despite huge potential, local businesses have not been able to effectively tap into the market due to weak capacity and competitiveness.

A representative from Thang Long Company says Vietnamese Trade Offices overseas should support businesses by supplying information about market trend and taste and lists of strong partners as if they access the information their competitiveness should improve.

In addition to market promotion programmes, local businesses should pay more attention to approaching Japanese and Korean retailers who are operating in Vietnam, as this should offer opportunity to penetrate their supply chains in other countries, Hai advises.

The most important thing is businesses must ensure the quality of products and grasp opportunity to access purchasers to boost exports.

Trade surplus hit over US$3 billion in eight months

Impressive performance of the foreign-invested businesses in August helped Vietnam maintain a trade surplus of US$3.07 billion in the first eight months of the year, according to Vietnam Customs.

Customs statistics show Vietnam’s eight-month exports grossed over US$97.23 billion in value while its imports fetched US$94.16 billion.

In the reviewed period, FDI businesses earned US$59.64 billion from exports, and spent US$52.83 billion on imports, obtaining an export surplus of US$6.81 billion.

In the second half of August alone, they enjoyed a trade surplus of US$770 million thanks to a boom in exports.

By contrast, the domestic economic sector suffered an import surplus of US$3.8 billion between January-August.

Local seed companies lose ground to foreign giants

Foreign giants hold over 80 percent of Vietnam’s vegetable seed market share, local companies occupy less than 10 percent and the remaining is from farmers’ reserve.

Vietnam produced 14 million ton vegetables last year, ranking third after China and India. Of these, ninety percent was consumed in local markets, the rest 10 percent was exported to about 40 markets in the world including EU, Japan, the South Korea, the US and China.

Production of the 14 million vegetables needed as much as 8,000 tons of seeds worth US$500 million.

However foreign companies are the main seed providers in Vietnam, holding over 80 percent of local market share.

Six out of ten leading seed companies who provide 70 percent of the world vegetable seeds have been present in Vietnam such as orange agent producer in Vietnam war Monsanto and Du Pont from the US, Syngenta from Switzerland, Bayer Crop Science from Germany and Sakata and Takii from Japan.

Seed production requires large investment capital and high technology and brings huge profit, said Mr. Ngo Van Giao, chairman of the Vietnam Seed Trade Association.

Dr. Nguyen Quoc Vong, who used to study in Japan and worked in Australia for several years, said that foreign companies hold the main market share in Vietnam because their hybrid seeds have high resistance ability against diseases and weather changes.

Foreign seeds have better quality, high sprouting ratio, short harvest time and high output.

Vietnam even imports seed varieties which can be produced domestically such as turnips, tomato, cucumber, cabbage and kohlrabi, he said.

Study and production of vegetable seed is time-consuming and costly, which foreign companies with qualified human resources are affordable.

Vietnam has 650 seed production and trade companies but they are short of capital to access new technologies. Their human resources are also limited.

As a result, they have focused on producing seeds for food crops and taken the command of ten varieties including rice, maize, coffee, rubber and pepper and popular vegetables like water morning glory, mustard greens, beans or water melons.

Professor Tran Dinh Long, chairman of the Vietnam Seed Association, proposed that the Government should create clear policies to attract local investors.

Seafood exports likely to hit 7 billion USD in 2014

The Vietnam Association of Seafood Exporters and Producers (VASEP) estimated that seafood exports would reach about 7 billion in 2014, 4.5 percent more than last year, reported the Ministry of Industry and Trade’s Vietnam Economic News.

According to the Ministry of Agriculture and Rural Development’s sources as saying that seafood exports came to an estimated 679 million USD in August 2014, taking the total to 4.95 billion USD in the first eight months of this year, up 25.4 percent from the same time in 2013.

Shrimp exports alone amounted to 2 billion USD in the first seven months of 2014.

The US, Japan and the EU remained the largest importers of Vietnamese shrimp, with Japan becoming the biggest importer of Vietnamese black tiger shrimp. In the first seven months of 2014, seafood exports to the Netherlands, the Republic of Korea (RoK) and the US grew 100-298 percent compared to the same period last year.

Russia, one of the biggest importers of Vietnamese seafood, officially lifted the embargo on Vietnamese seafood in late August 2014. This is expected to help Vietnamese businesses to increase their seafood exports in the remaining months of the year.

Previously, the fact that Russia applied an embargo on Vietnamese seafood in early 2014 in addition to difficulties in major markets including Europe, the US and Japan caused Vietnamese seafood exports in general and Tra fish exports in particular to suffer difficulties in the first six months of this year.

According to VASEP, Tra fish exports to the Association of Southeast Asian Nations (ASEAN) countries reached 87.5 million USD from January to mid-August 2014, up 13.3 percent from the same period last year. ASEAN was the third biggest importer of Vietnamese Tra fish, after the EU and the US. Thailand and Singapore were the biggest ASEAN importers of Vietnamese Tra fish.

Tra fish exports to the Middle East came to US$ 90.65 million in the first half of 2014, up 7.5 percent from the same time in 2013. Saudi Arabia was the largest Middle East importer of Vietnamese Tra fish, after Egypt and the United Arab Emirates (UAE).

Vietnam is piloting a tuna production line according to Japanese standards in three central provinces of Binh Dinh, Phu Yen and Khanh Hoa. This is important to improve the competitiveness of Vietnamese tuna products and increase Vietnam's seafood exports in 2014.

VASEP said that since last year, Tra fish exports to major markets such as the US and Europe have faced many difficulties and therefore Vietnamese seafood exporters are interested in shifting to smaller markets. With reasonable prices and good quality, Vietnamese Tra fish is loved in these markets.

About 100 Tra and Ba Sa fish farms in Vietnam, totaling more than 2,800 hectares of water surface, accounting for about 40 percent of Vietnam’s total Tra and Ba Sa fish farming area, have achieved VietGAP, ASC, BAP, and SQF 1000/2000 CM certifications. Notably, 2,000ha of the 2,800ha were awarded the GlobalGAP certification.

According to VASEP, shrimp exports in 2014 will likely exceed 3.5 billion USD if disease control is well implemented and good sales to markets are maintained, and Tra and Ba Sa fish exports will probably reach 1.8 billion USD in 2014, taking the country’s total seafood export revenue to 7 billion USD this year.

HCM City commences electronic tax claim system

Ho Chi Minh City has launched an online tax filing service for businesses in a bid to reduce bureaucratic delays and improve tax management.

Taxpayers with bank accounts at BIDV, Vietcombank, Vietinbank, Agribank and MB Bank can use the service. All the documents will be verified via digital signatures.

This year, BIDV is offering the service for free.

Businesses are required to register online at http://kekhaithue.gdt.gov.vn. Once they have set up an account, they need to sign in and follow the instructions, a representative from the General Department of Taxation said during the initiative’s launching ceremony in Ho Chi Minh City on September 16.

The initiative moves Vietnam one step closer to a modern e-government, whilst also reducing costs, Deputy Director of the municipal Taxation Department Tran Ngoc Tam said.

This alternative tax filing method is optional.

The People’s Committee of the central province of Binh Dinh held a seminar on September 15 to assess the province’s tuna fishing methods and  tuna exports to Japan.

Speaking at the seminar, Chairman of the People’s Committee Nguyen Huu Loc requested the joint efforts of local bodies and fishermen to  increase the use of advanced technology and improve the efficiency of tuna fishing. He urged authorities to submit a plan of action in September  to address the sector’s shortcomings.

The province pledged to provide credit assistance for local fishermen to equip vessels with better bait and tools, safety kits, and refrigerated  storage. Training courses will be conducted in Vietnam and in Japan to educate them on standard fishing procedures and tuna identification  techniques.

The advanced technology will also be applied to 15-20 vessels, mainly in Hoai Nhon and Quy Nhon district.

Binh Dinh province has the big tuna fishing fleet in the country, and is also the first to apply modern technology in tuna fishing.

According to a report presented at the seminar, very few tuna fish caught by local residents m eet the quality standards for the Japanese market.  

In fact, data shows that only ten out of 57 caught tuna fish were exported to Japan, with only four classified as first class.

This failure to export high quality tuna is attributed to a number of reasons, including inappropriate fishing and hauling techniques, delayed  processing, lack of refrigerated storage and long transportation times.-

Thailand’s BJC ready to audit Metro after buy-out

Berli Jucker Plc, Thailand’s leading retail group and the new owner of Metro Cash & Carry Vietnam, has committed not to change its current wholesale suppliers or employees.

Aswin Techajareonvikul, chief executive officer of Berli Jucker Plc (BJC) paid a visit to Ho Chi Minh City early last week to attend town hall meetings with Metro management and staff. He said that he was keen to meet BJC’s 4,000 employees, wholesale suppliers and partners in order to reassure people that no major changes would occur following the hand-over from the previous German owners.

“The quality of goods from Vietnam and Vietnamese consumer demand will decide which wholesalers BJC uses in the future,” added Techajareonvikul.

He added that the transaction between BJC and Metro AG would be confirmed with the local authorities next month and be concluded by the end of this year.

However, BJC remained vague about expansion plans, business predictions or a potential name change which Techajareonvikul said were all under discussion. He also said that Metro Cash & Carry Vietnam employed 4,000 people and currently boasted 19 cash-and-carry outlets in 14 major cities across Vietnam. Metro had been a key purchase for the Thais due to the extensive existing chain.

“$879 million is a suitable price for the Metro chain here,” underlined Techajareonvikul.

Last month, the eurozone’s second-largest retailer signed an agreement with BJC to sell its Vietnam business, including 19 wholesale stores and its associated real estate portfolio. Metro Vietnam has a 22 per cent share of the country’s modern grocery market and a total net sales area of almost 110,000 square metres.

Techajareonvikul revealed that after merger, BJC would employ 14,000 people including 7,000 Vietnamese. BJC will select quality goods from Vietnam and Thailand.

Actually, the very first step that BJC took in the distribution adn retail business in Vietnam was when it acquired a 75 per cent share of Thai Corp, one of the domestic leading distribution companies with the network coverage of 314 sub-distributors, 1,800 wholesalers, 220 supermarkets and minimarts and 50,000 retailers.

Standard Chartered offers online services

Standard Chartered Bank is boosting its online banking services in Vietnam and around the world to better serve client needs.

This move is in-line with the fact that clients and customers today expect maximum simplicity in their transactions from the comfort of their homes or through their smartphones.

They also expect their transactions to be processed efficiently, error free and with the highest level of security, while banks have to strike a balance between client needs and regulatory requirements.

“The biggest obstacle for banks is their mindset. The new digital generation thinks and behaves very differently than we did in the past. Internet, smartphones and social media have revolutionised the whole paradigm of banking and payments,” said Standard Chartered Vietnam’s CEO Nirukt Sapru.

Investment and growth into digital banking is now at the top of Standard Chartered’s agenda worldwide and in Vietnam. This focus was recognised when the bank was named Best Consumer Internet Bank in Vietnam for the third consecutive year by Global Finance Magazine, a world leading economic and financial publication.

“This clearly established Standard Chartered as the leader in the digital arena. Vietnam is a fast growing country with a young, literate, and internet savvy population. It is only natural that they have online and mobile conveniences. As a result of this insight, we invested early in the right capabilities,” Sapru explained.

Standard Chartered Vietnam reported that it has consistently upgraded its digital platform for online and mobile banking, SMS, and ATMs. Customers can now make local and overseas transfers, create term deposits, pay bills at ATMs, and sign up for automatic payment of their phone, mobile and internet bills. They can even apply for personal loans online and get approval in 24 hours.

“With digital, any person with a mobile phone can be a customer, it’s that simple. The digital platform also drastically reduces the time and cost of doing banking, which can then be passed on to customers through fee reductions. It’s a win-win for both banks and customers,” said Nirukt.

Experts say market demand core to agricultural production

Market demand is of crucial importance to developing agricultural production and raising farmers’ income, experts stressed at a meeting held in the Mekong Delta province of Dong Thap last week on sustainable agriculture development.

Professor Vo Tong Xuan, rector of Nam Can Tho University, told the Daily on the sidelines of the meeting that it is important to determine what the market really needs and to adjust production accordingly.

As for rice farming, enterprises after sealing contracts with importers should join forces with farmers to make products meeting buyers’ demands in terms of category and quality, Xuan added.

However, the professor also noted that there are two decisive factors, namely the active participation of enterprises and the Government’s support.

“For certain firms that have yet to find outlets, I believe they will be able to do so if the Government gives them a helping hand,” Xuan said.

Meanwhile, some delegates at the meeting said there should be supportive incentives for farmers to establish cooperatives that are capable of fulfilling enterprises’ orders in line with Good Agricultural Practice (GAP).

Nguyen The Ha, a consulting and investment specialist at Bui Van Ngo Industrial & Agricultural Machinery Co., Ltd, said enterprises should strongly invest in post-harvest technology in addition to their market expansion and collaboration with farmers.

Professor Xuan also suggested the need to develop a full value chain to make the most of rice.

For example, apart from rice as the main item, husk can be processed to make fuel for thermal power plants, while rice bran can be processed to make oil for domestic consumption and export.

Straw is used to feed cattle and grow mushrooms. Meat from the animals is provided to markets while their dung is used to make compost.

This method can be also applied to fruit and seafood processing industries, Xuan added.

BJC says US$879 million for Metro Vietnam reasonable

Thailand’s Berli Jucker Public Co. Ltd. (BJC) said spending US$879 million on the acquisition of Metro Cash & Carry Vietnam is rational as the wholesale network will be of great help for its product and service distribution activities in Vietnam.

“US$879 million is a reasonable figure, neither expensive nor cheap,” Aswin Techajareonvikul, president and CEO of BJC, told the Daily at a meeting with reporters in HCMC last week.

Techajareonvikul said BJC and Metro reached an agreement on the price after over a year of negotiations with consulting assistance of the U.S.’s Lazard Company.

Both sides will submit dossiers to the HCMC Department of Planning and Investment next month and the deal is expected to be concluded in the first half of next year. As part of the deal, BJC will be allowed to use Metro brand for 18 months afterwards.

Clarifying the spending in the deal, Techajareonvikul said BJC sees huge potential in product and service distribution in Vietnam and Metro is a good opportunity for the company to realize this.

Metro’s foundation and structure are suitable for BJC, so it can help BJC grow faster than a new business start-up. In addition, nearly 4,000 well-trained Vietnamese staff of Metro is also an important factor to back this growth, he said.

After BJC announced to take over the entire business operations of Metro in Vietnam including 19 distribution centers and related real estate portfolios, many people have been concerned that it would use the Metro network to distribute Thai goods instead of maintaining the current ratio of Vietnamese goods at 90% at the distribution centers.

However, Techajareonvikul said BJC will prioritize Vietnamese goods, but the products should suit the needs of local consumers.

“We don’t have plans to restructure or change suppliers. However, their products should meet requirements of local consumers,” he said. “Quality is the top priority of BJC in our history of over 132 years in Thailand. This is also our first requirement for the current Metro suppliers.”

BJC has expanded its business quickly in Vietnam in recent years.

Last year, BJC spent around US$4.5 million acquiring a 75% stake of Ichiban, a tofu producer and distributor in Vietnam.

In 2011, BJC and Ball Corporation established TBC-Ball Beverage Can Vietnam Limited in Binh Duong Province with investment capital of US$60 million and designed capacity of 850 million cans a year. The factory has been operational since March 2012.

The enterprise also set up tissue manufacturer BJC Cellox in 2011. In the same year, it became a partner of Sabeco in Malaya Vietnam Glass Limited and also acquired a 75% stake of Thai Corp., a leading distributor in Vietnam.

Techajareonvikul said the Metro deal is just a beginning and the company will boost investments in Vietnam in years to come.

Last year, BJC obtained revenues of 42 billion Thai bahts, or nearly one billion euros.

BJC is one of the affiliates of TCC Group, which owns Melia Hotel in Hanoi City.

Construction Ministry: Too many housing projects licensed

Vietnam has had 4,015 realty projects approved with combined investment capital of VND4,500 trillion, and their supply will be much higher than demand if all of them are implemented on schedule, according to the Ministry of Construction.

Nguyen Tran Nam, Deputy Minister of Construction, told a conference on Vietnam’s real estate market in HCMC last week that if the projects were executed, they would provide the market with more than 416 million square meters of housing, equivalent to nearly three million apartment units with 520,000 in Hanoi and 570,000 in HCMC.

However, only 17% of the investments of the approved projects have been realized as many investors lack capital.

Nam gave an example that if all housing projects in Hanoi were completed, the capital city would have an additional 520,000 apartments and houses, excluding the same number of houses built by citizens. To implement the projects, investors would need around VND900 trillion, (US$42.5 billion) while urban areas in the city just have around 730,000 households with three million people.

As of August 20, realty inventories were estimated at less than VND82.3 trillion, down around VND12.2 trillion or 12.88% compared to late last year. The figure included 17,000 apartments valued at some VND26 trillion and land lots of over 8.7 million square meters worth VND28,500 billion, Nam said.

He said in the first seven months of this year, there were nearly 10,000 successful property transactions in Hanoi and HCMC and the majority were medium-size apartments and land plots sold at affordable prices.

Exporters reluctantly register tra fish export contracts

Despite reluctance, many exporters have registered their tra fish export contracts with the Vietnam Pangasius Association (VN Pangasius) in accordance with Government Decree 36/2014/ND-CP.

Vo Thi Thu Huong, secretary of VN Pangasius, said the association received around 400 registration forms from tra fish exporters on September 11 and 12, as a circular guiding implementation of the decree on farming, processing and export of tra fish took effect.

Nguyen Viet Thang, chairman of VN Pangasius, said the registration requirement via VN Pangasius instead of the General Department of Customs aims to ensure the sustainable development of the industry.

He noted exporting firms had to comply with the regulation on ice content that was required to account for less than 10% of product’s weight.

Earlier, the Vietnam Association of Seafood Exporters and Producers (VASEP) repeatedly objected to the tra fish export contract registration requirement due to their concerns over exposure of confidential business information.

Nguyen Huu Dung, vice chairman of VASEP, described the requirement on the ice rate as unnecessary as each country provides a different rate.

Gov’t pledges continued support for Vietnam Airlines after IPO

All incentives for Vietnam Airlines will remain in place after the national air carrier goes public, as indicated in the airline’s initial public offering plan recently approved by the Government.

The IPO plan still refers to the Government’s guarantees for Vietnam Airlines when the carrier takes out bank loans, a special incentive that will make it more attractive to foreign investors.

The airline has been allowed to launch the IPO in November this year. After the IPO, the State owns 75% of the carrier’s chartered capital of VND14.101 trillion, while investors can possess 20% and the remainder goes to the company’s employees and the public.

The airline is also offered preferential policies to facilitate a divestment of 20% of State capital at a time when the aviation market has become less appealing to investors.

In particular, the Government allows the airline to use the amount earned from the IPO to increase the State capital when it raises its chartered capital. According to book value, the State capital at the firm is currently VND10.57 trillion.

According to the plan submitted previously, the price of each share would be VND22,300 and 20% of the total number of shares would be offered to strategic investors, 3.46% to the public via auction, and nearly 2% to the airline’s employees at a preferential price.

If the IPO goes as well as planned, the carrier is expected to gain a surplus of VND4,172 billion which will be later used to increase its chartered capital and to purchase aircraft.

Given the Government’s guarantees, Vietnam Airlines will be sufficiently financed with commercial loans and export credits to buy jetliners between now and 2020.

It has plans to purchase ten Airbus 350s, three Airbus 321s and eight Boeing 787s from now until 2019.

Financial institutions in Europe and the Export-Import Bank of the U.S. said that export credits can only be disbursed for Vietnam Airlines under the finance-leasing format provided that the Government provides guarantees. Those loans can account for 85% of an aircraft’s price.

Besides, as the State will maintain a majority stake of 75% in Vietnam Airlines upon the IPO and later it will be reduced to 65%, it will be difficult for the carrier to persuade its strategic shareholders to provide loan guarantees. Thanks to the all-out guarantees by the Government to buy aircraft, the carrier will have advantages when implementing contracts signed previously or those to be sealed in the coming time.

Authorities discover large fake coffee production factory

A large workshop in Dak Lak Province has been shut down for making instant coffee from corn, soya bean flours and chemicals.

According to the Dak Lak Agro-Foretry-Fisheries Quality Assurance Department, the facility did not have business license. Using substandard equipment and ingredients, it churned out up to one tonne of instant coffee a month. Most of the coffee was sold to other business in surrounding provinces under different brand names.

During the inspection, the authorities did not find any coffee beans, only corn, soy bean and some unidentified chemicals. Corn and soy beans were ground to make the 'coffee powder, and other chemicals added to produce flavour and foam. The facility's owner admitted that he did not know exactly what the chemicals were.

Tran Ngoc Thanh, head of the department, said, "We gave a warnings to this facility in early 2014 but they went unheeded. We have suspended operations of the facility and seized 100kg of instant coffee, branded as Nhat Thien Coffee."

An ex-employee said he quit because he felt it was not right. He went on to say that it is actually more complicated to produce fake coffee powder that the real coffee. "No matter how minimal the danger of those chemicals are, overexposure to them must still be bad," he said.

The leader of a large coffee company in Dak Lak said their products are for export and contain 80% coffee. They could not compete with other domestic products because of the prices.

Samples from the seized materials have been sent for testing at the Central Highlands Institute of Hygiene and Epidemiology. The case will be referred to police if no coffee substance is found.

Vietnamese suppliers not up to standard for Samsung

While the Samsung Group plans to significantly increase their investment in Vietnam, most Vietnamese enterprises do not have the capacity to become suppliers to the giant firm.

Speaking at a recent meeting with nearly 200 Vietnmese enterprises, all seeking partnership opportunities, Deputy Minister of Planning and Investment (MPI) Nguyen Van Hieu said Samsung’s registered investment capital in Vietnam would reach as much as USD10 billion by the end of this year, with a network of nearly 100 suppliers.

However, Nguyen Mai, chairman of the Association of Foreign Investors, said, “Among the nearly 100 suppliers for Samsung’s operations in the country, only seven are Vietnamese, and these only supply packing and printing services.

There are very few Vietnamese companies with the technical capacity to qualify for component contracts with the Samsung, and they are small companies and trade through intermediaries."

According to Mai, Vietnam may miss out on much of the opportunity to be brought by Samsung if local enterprises do not improve their capacity.

Shim Won Hwan, general director of Samsung Complex,  said, “Vietnam’s support industry leaves much to be desired. This is unfortunate, because Samsung would like to contribute the the country's economic technological development."

After Samsung announced eight strict criteria for companies seeking direct partnership, Do Nhat Hoang, director of the MPI’s Foreign Investment Agency, said that none of the 200 enterprises represented at the gathering met the requirements of becoming "level 1 suppliers".

Jang Hoyoung, general director of purchase at Samsung Electric Vietnam, said, “It would be very difficult for any Vietnamese company to immediately acquire the technologies needed to provide Samsung with the quality of supplies required. Currently the company must make most of its components for in-country production directly."

One anonymous expert in the field said that it would be unrealistic to expect Samsung to readily transfer its technologies to Vietnamese suppliers, as the company has spent billions of USD in R&D developing them.

He suggested that Vietnamese enterprises take a gradual approach and become secondary suppliers first, with an aim to work their way up to "level 1 suppliers".

Meanwhile, Nam said that enterprises should not wait for support from the government or from Samsung Group but begin to improve their technological capacity themselves.

Vietnam rethinks approach to tobacco smuggling policy

Several experts have said that Vietnam should improve the domestic tobacco industry to reduce the demand for smuggled tobacco.

In the years preceding 2010, it seemed that enforcement efforts were effective, with huge amount of cigarettes were destroyed. However, since then the amount of smuggled tobacco has increased by 50%. One official from Market Control Department commented that their staff, customs officials and police were discouraged because of low funding.

According to the Vietnam Tobacco Association, 30% of Vietnam's current tobacco market is smuggled. They added that smugglers take in an estimated USD240 million each year by avoiding taxes.

There are some who argue that revenues from tobacco sales contribute a great deal to state coffers, and that ways should be found to support the domestic industry, which would aid in the anti-smuggling efforts.

One suggestion was that smuggled tobacco of genuine origin be re-exported after it is confiscated, instead of being destroyed.

They claim that this could save the state budget up to VND100 billion in expenses for destroying smuggled tobacco, not to mention the funds from re-exportation.

Many experts have gone on record as saying the best way to fight tobacco smuggling is to improve the domestic industry. There is somewhat of a consensus that the government should create more favourable conditions so that Vietnamese producers can compete with foreign brands.

HCM City offers business incentives to Samsung Group

Authorities of HCM City said they were going to propose certain incentives for the USD1 billion project by Samsung Group.

In June, Samsung announced that it will invest USD1 billion in the construction of an electronics production factory in HCM City. The new factory will produce televisions, DVD players, air conditioners and other electronic items for the domestic market, as well as for exportation.

A representative of Samsung said the incentives from HCM City municipal authorities would be similar to the incentives offered by Thai Nguyen Province when the group built a cellphone factory there last year.

Provincial authorities in Thai Nguyen offered four years of tax exemption and a 50% reduction of taxes for the next 12. Samsung was given a 50% reduction in land use fees in exchange for fulfilling all the positive contributions expected from a high-tech company, including technology transfer, investment in domestic research and development and a minimal environmental impact.

The first project of the company in Vietnam was Samsung Vina Company, in HCM City in 1995. In 2007, Samsung initiated a USD670 million factory in Bac Ninh Province, eventually increasing the registered capital to USD2.5 billion. After that, it invested USD3.2 billion into two factories in Thai Nguyen Province. Recently, a USD1 billion project in Bac Ninh was approved. In total, Samsung Group has invested more than USD6.7 billion in Vietnam.

A spokesperson for Samsung said the number of projects showed that the company has long-term business plans for Vietnam.

ETF rebalancing seen boosting liquidity

Securities firms predicted that liquidity would remain healthy this week as exchange traded funds (ETFs) would boost trading to finish their quarterly portfolio rebalancing.

Last Friday was another good day for oil and gas stocks following recent news reports about multi-billion-dollar foreign investments in Vung Ro and Nhon Hoi oil refineries on the country’s central coast. Nearly 40% of the Hanoi market’s total trading value concentrated on PVC, PVS and PVX and four of the five most actively traded stocks also belong to PetroVietnam affiliates.

The three former oil and gas stocks contributed the bulk of the HNX-Index’s 1.09- point gains to close at 89.49. The VN-Index also ended the week in positive territory on the back of VIC and KDC, closing at 632.5, up 0.56% against the previous day.

However, Viet Capital Securities Company noted flows were mainly focused on small and mid cap stocks. Turnover on the HCMC market dropped 6.4% at VND2.4 trillion while volume increased 11.3% at 144 million shares.

On the northern bourse, volume reached  88.6 million shares worth VND1.2 trillion, up 18.4% and 20% respectively. The combined turnover of both exchanges declined around 4% from the previous session.

Market breath expanded as gainers outnumbered laggards by almost 2-to-1. Foreigners were net sellers of roughly VND56 billion on the HCMC and Hanoi bourses, selling mostly KDC on the southern exchange and PVC on the northern exchange. Foreign investors also supported the rally in oil and gas stocks, net buying PVD, PVC and PVG shares, the firm said.

Viet Dragon Securities Company (VDSC) said that after a session of deep correction early last week, the VN-Index recovered to 630 points in the last session.

Money continued to flow into the stock market, showing the strong confidence of most investors. Notably, many pennies of fishery and oil/gas industries shot up to the ceiling prices, such as PVL, CMX and AVF.

VDSC said investor sentiment would remain positive this week because liquidity had been high in recent sessions. This week will be the last week of ETFs review, so this Friday is expected to see a strong surge in liquidity.

“We are also afraid that if positive sentiment could not help the VN-Index break out of the current range in the upcoming sessions, a correction could occur again. Thus, short-term investors should be watchful to reduce T+ risk,” it said.

Binh Duong to lower state-financed lending

The southern province of Binh Duong will reduce State-funded loans to 8.5% of its total investment in the local economy by 2020 and 7.5% by 2025 from the current 9.5%.

Mai Hung Dung, director of Binh Duong’s Department of Planning and Investment, was telling the media about this lending shift on the sidelines of a meeting held last Friday on a revised comprehensive socio-economic development plan by 2020 and with a vision toward 2025.

Foreign investment will still account for a staggering 50% by then, equivalent to the rate of 2010. Loans from the State budget and local companies will make up 10.5% and 26.4% respectively, Dung said.

In the revised plan, foreign investment will continue to be a major source of capital in the province. Investment credit from the State will be channeled to vital socially beneficial projects.

Up to now, Binh Duong has attracted US$1.3 billion in foreign direct investment (FDI), mostly from operational projects.

The revised plan for 2016-2020 puts the province’s economic growth at around 13.3% per annum.

Fragrant rice exports grow strongly

Exports of fragrant rice have registered double-digit growth this year though shipments of normal rice types have slid, according the Vietnam Food Association (VFA).

The latest report of VFA shows that member enterprises of the association exported more than 4.2 million tons worth over US$1.8 billion in January-August, down nearly 9.2% in volume and more than 8.5% in value over the same period last year.

The association said shipments of 5% and 15% broken rice decreased but fragrant rice shipments soared.

VFA vice chairman Pham Van Bay said the association’s member enterprises had shipped 800,000 tons of fragrant rice as of end-August, up 36% year-on-year. In the year to date, they have already clinched contracts to sell the rice of this type to foreign markets.

“Therefore, our member enterprises will deliver at least 400,000 more tons of fragrant rice to partners towards the end of this year,” Bay said.

Exporters credited the strong increase to their success in boosting consignments to the markets with high demand for fragrant rice, including China, the Philippines, Hong Kong and the United States.

Pham Thai Binh, director of Trung An Co. Ltd. based in the Mekong Delta city of Can Tho, said his firm has completely switched to exporting fragrant and high-quality rice products this year.

Firms in the Mekong Delta said export prices of fragrant rice have stayed high and stable in the year to date, with a ton of jasmine rice sold at US$580-590.

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