GMS countries foster trade ties

Fostering cooperation in trade and investment among the Greater Mekong Sub-region (GMS) countries was the focus of discussions at a forum on October 15 in Vientiane, Laos.

The event was jointly organised by the Vietnamese Ministry of Planning and Investment, the Vietnam-Laos-Cambodia Association for Economic Cooperation Development (VLACAED) and the Lao National Institute of Social Sciences.

Participants included VLACAED President Phuong Huu Viet, representatives from relevant ministries, the Embassy of Vietnam in Laos, and crowds of Laos-based enterprises from Vietnam, Thailand and Cambodia.

The forum aimed to boost trade and investment cooperation among GMS nations in the context of the official formation of the ASEAN Economic Community (AEC) by the end of this year.

It presented opportunities for enterprises to better understand the impact of the AEC and connect ASEAN with the GMS in a bid to fully tap the potential of the AEC.

The GMS Economic Cooperation Programme, initiated by the Asian Development Bank in 1992, has worked to promote integration, trade and tourism; expand energy access; improve transport infrastructure; and enhance human resources for the sub-region nations.

Vietnam has actively implemented a wide range of infrastructure projects and initiatives to facilitate cooperation and travel among GMS nations, including road links with China and Laos, and one-stop customs checkpoints at some border gates.

The GMS comprises Cambodia, China, Laos, Myanmar, Thailand and Vietnam.

China’s low-quality steel imports take a toll on domestic manufacturing

Influxes of low-cost and sub-standard iron sheets and steel, particularly those from China, are dominating the market and taking a toll on domestic manufacturing, according to the Vietnam Steel Association (VSA). 

From January-August, Vietnam imported 13 million tonnes of steel worth nearly 6.4 billion USD, up 37.2 percent in volume and 11 percent in value. Up to 60 percent of which are of Chinese origin and the figure is likely to rise in the future. 

Tran Ngoc Chu, General Director of Hoa Sen Group, said Chinese steel flows with ambiguous sources are paving the way for fake products to reach the hands of consumers. 

Last year, Vietnam imported up to 936,000 tonnes of various kinds of iron sheets, up 379 percent from 2012. 

In the first seven months of this year, the country bought more than 1.06 million tonnes of iron sheets from abroad, soaring 836 percent from the same period in 2012. As many as 93 percent of the imports were made in China, a 1,312 percent increase from 2012. 

Chu said China’s iron sheets and steel are continually subject to trade defence lawsuits, including anti-dumping and anti-subsidy legal proceedings lodged by exporters from America, Europe and Southeast Asia. 

In Vietnam, there has yet to be any trade defence action taken against Chinese steel imports, he noted. 

He called on Vietnam to file trade defence lawsuits against imported iron sheets and steel and launch an anti-dumping probe on similar Chinese products. 

According to Chu, Vietnam’s iron sheets and steel for export to Malaysia and Indonesia must meet their SIRIM and SNI quality standards, among others. 

To protect consumers and domestic manufacturing, he said Vietnam needs to devise a set of national standards to better manage imported iron sheets and steel. 

The VSA together with firms such as Bluescope, China Steel Sumikin, Ton Phuong Nam and Ton Dong A stressed the need to make a list of steps to test the imports, including their origin, trademarks, certification and technical properties.

EU investments start to recover

Foreign direct investment (FDI) from the European Union (EU) to Vietnam is recovering this year after a downtrend since 2011, according to a report from the Ministry of Planning and Investment's Foreign Investment Agency (FIA).

A report released this week pointed out that the EU's total investment in Vietnam in the first half of this year reached US$600 million, nearly the same as in the entire 2013 and even higher than in the whole 2014. The FDI from the EU has had recovery after reduction from 2011 to 2014 due to recession in the global economy.

The total FDI was expected to be higher by the end of this year, the agency forecast.

Now, 23 EU nations have invested in Vietnam with the number of existing projects at 1,688 and total investment capital at US$21 billion. Average investment is US$12.6 million per project.

The biggest investors include the Netherlands, the United Kingdom (UK), France, Luxembourg and Germany, who account for 82% of the total FDI, according to the agency. 

The EU's investment is mainly concentrated in large cities such as Hanoi and Ho Chi Minh City as well as provinces and cities with oil and gas resources or large industrial zones including Binh Duong, Dong Nai, Ba Ria-Vung Tau, and Danang, in addition to Haiphong, Khanh Hoa and Hai Duong. Large amounts of FDI were invested in Hanoi and Ho Chi Minh City.

Regarding the investment sectors, the EU investors mainly put their money into the processing and manufacturing sector, with 573 projects and a total investment of US$6.29 billion. Their other major investment sectors have included the power production and real estate sectors.

The agency said that from 1988 to 1994, the EU's investment in Vietnam was limited, but the investment increased quickly from $15 million in 1988 to US$707 million in 1995. The Netherlands and France were the two largest EU investors to Vietnam during that period. They focused on the processing and manufacturing sector.

From 1997 to 1999, the EU's investment took a plunge.

Meanwhile, 2000 and 2001 saw a huge increase in the EU's investment to Vietnam and the important role of FDI from the Netherlands. The investment from the Netherlands surged by 20% while capital from the UK continued to rise. The EU became one of Vietnam's important foreign investors, accounting for 38% of the national registered FDI.

However, from 2002 to 2004, the percentage dropped to 16.8% due to the EU's low demand in investing abroad, the agency said.

The EU's investment in Vietnam recovered to reach US$1.7 billion in 2005 and continuously rose to US$2.3 billion in 2008 but then fell to about US$450 million in 2009.

The FDI has gained a record high of US$2.6 billion in 2010, the agency said.

VN embracing integration

Viet Nam has been integrating robustly into the global economy, with eight free trade agreements it has signed and the Trans Pacific Partnership (TPP) negotiation it concluded recently opening up new economic opportunities for it as well as for foreign investors.

Deputy Minister of Finance Truong Chi Trung told participants at an annual investor conference held by investment management and real estate firm VinaCapital in HCM City yesterday that the country's investment environment is improving.

"We are perfecting our market economic system, with a focus on the legal framework, administrative procedures, human resources, and infrastructure, and expect to reach the ASEAN-4 average level in terms of business environment, which includes taxation, customs, and social insurance.

"Viet Nam is carrying out investment reforms to enable domestic and international investors to participate in infrastructure projects, and a list of projects in transport infrastructure, energy, water supply, and wastewater treatment seeking investment in the form of private-public partnership (PPP) will be released.

"Restructure of State-owned groups and corporations is speeding up, more SoEs will go public and list on the stock market, offering foreign investors the opportunity to participate in IPOs and mergers and acquisitions as well as invest in listed companies."

The banking sector had been made over, with 17 banks being whittled down to six to improve their financial capacity and governance, he said.

But he expressed concern about the small size of the stock market – with market cap being just 30 per cent of GDP – compared to others in the region.

He said the solutions lie in mandating that equitising SoEs should list on the stock market and increase the foreign ownership cap in companies.

The legal foundation required for creating voluntary pension funds would be developed, he said. Pension funds are major investors in securities globally.

Andy Ho, managing director of VinaCapital, said Viet Nam would benefit from the TPP with taxes cut on 18,000 items.

TPP member countries account for 39 per cent of Viet Nam's exports and 22 per cent of its imports.

Ho said low inflation (1.5-2 per cent expected for this year), stable GDP growth – 6.8 per cent in the third quarter and 6 – 6.5 per cent for 2015 – burgeoning FDI, quickly recovering property market and the devaluation of the dong were all positives for the investment environment.

Investors are showing less interest in "safe" assets and are shifting to securities and real estate, he said.

VinaCapital, founded in 2003, manages US$1.3 billion in assets. Its closed-end funds VinaCapital Vietnam Opportunity Fund, VinaLand, and Vietnam Infrastructure trade on the AIM Market at the London Stock Exchange. 

Real estate credit may rise 15% this year

Estimates by the Ministry of Construction reveal that real estate credit may increase by 15 per cent this year, to an estimated VND340 trillion ($15.3 billion).

Mr. Nguyen Tien Dong, Director of the Economic Credit Department under the State Bank of Vietnam (SBV), told local media that the recovery in the real estate market is good news for both the economy and banks.

“Credit is essential to restoring the real estate market and removing difficulties in many economic sectors, and recovery in the market will also enable commercial banks to settle their bad debts,” Mr. Dong was quoted as saying.

“However, the department is carefully studying the supply of real estate credit to avoid the reappearance of a real estate bubble,” he said.

Although real estate credit is at its strongest for the last five years there is concern over a bubble as real estate loans bear the greatest risk. Enterprises should therefore not overly depend on bank credit, while banks need to anticipate the risk the real estate sector poses and enhance their control.

Deputy Governor of the SBV Nguyen Thi Hong said that although real estate credit growth is higher than the average it only accounts for 8 per cent of the total and there is no cause for alarm.

The SBV is directing reviews and research on real estate credit and is likely to provide a credit growth target in the future that will rely on the capacity of each bank and economic growth objectives.

Idle money eyes resort properties as investment

Along with the warming up of the property market, idle money was eyeing resort property as a second home and an investment with promising returns.

Industry experts found that owning a resort property as a second home was becoming a popular trend amid the country's socio-economic development boosting citizens' income, urging them to look for investment channels for their idle money.

While the interest rates stayed low and the stock market experienced huge fluctuations, the resort property market with guaranteed profits has become an attractive investment destination for the rich.     

From the beginning of this year, many high-end property projects in coastal provinces and cities such as Kien Giang, Khanh Hoa, Nha Trang, and Da Nang were released into the market and received huge attention from buyers and attracted great capital inflows.

The BIM Group, one of large property developers in Viet Nam, said it saw great potential in the resort property segment, given the infrastructure development, rising travelling demand and especially rising demand of seeking safe and profitable investment channels.

The BIM Group, during the past two years, continuously launched sales of two high-end tourism property projects – Little Vietnam and Lotus Residences – located in the group's Halong Marina Urban Area, northern Quang Ninh Province, and the sales were beyond expectation, reflecting the emerging trend of owning a second home.

The group said 101 out of 109 townhouses of Little Vietnam were sold out within three months and a large number of successful transactions involving Lotus Residences' townhouses were recorded this year. On October 25, the BIM Group will open the fourth sale of Lotus Residences since June when the project was first introduced.

This has revealed that investors were grabbing projects with well-developed infrastructure, quality and guaranteed profits from the developers.

The resort property segment has benefitted largely from the development of the infrastructure system, which enables people to travel more conveniently, industry experts said.

For example, Quang Ninh Province was becoming a more attractive tourism destination with the construction of the highway connecting Ha Noi, Hai Phong and Quang Ninh, reducing travelling time from the capital city by one hour. The Infrastructure development also helped channel huge capitals to resort property projects in Phu Quoc.

One of the most important factors which drove buyers to look for a second home was profit, according to the BIM Group, which added that the group guaranteed a profit of 8 per cent of the townhouse's value per year in the first three year of operation under the rental pool management model, worth totally VND1.7 billion (US$75,560), besides other attractive promotions.

"Quality is also important," Le Minh Dung, director of BIM Group's property business said, while urging second home seekers to take prestige and capacity of developers into careful consideration before choosing projects to invest in.

VEC seeks loans for land clearance for expy

Vietnam Expressway Corporation (VEC) has written to the Government and the Ministry of Transport asking for approval to take out bank loans to speed up land clearance and compensation for a major expressway linking Long An and Dong Nai provinces.

VEC plans to use bank loans to compensate for households affected by the Ben Luc-Long Thanh Expressway project, heard a meeting held on Tuesday for leaders of VEC and Dong Nai Province to discuss ways to expedite site clearance for the big-ticket project. 

The road is designed to stretch more than 57 kilometers, including 27 kilometers in Dong Nai. The section will start from Long Tau River in the province’s Phuoc Khanh Commune in Nhon Trach District and end at the intersection with National Highway 51 in Phuoc Thai Commune in Long Thanh District.   

VEC was quoted by the Vietnam News Agency as saying that 1,240 houses would be relocated to make room for the expressway. The number includes 970 households in Nhon Trach District and 270 households in Long Thanh District.

In late 2014, the government of Dong Nai approved a detailed compensation plan with payments for affected families totaling more than VND813 billion (US$36.3 million).   

However, land clearance has been progressing slowly and most of the affected households have not moved due to slow compensation from VEC, which is the investor of the project.

According to the existing regulations, the investor is required to redo procedures for site clearance if it does not have money to complete compensation as approved. This is not what VEC and Dong Nai Province want.

At the meeting, VEC called for the government of Dong Nai to approve payments for site clearance based on decisions made before the revised land law took effect and additional decisions will be issued for the land price differential before and after the law came into force.

Tran Van Vinh, vice chairman of Dong Nai Province, requested relevant agencies and the investor to work out an appropriate compensation plan for affected households to protect their legitimate interests.

As designed, 2.7 kilometers of the road will pass through Ben Luc and Can Giuoc districts of Long An, 26.4 kilometers through Binh Chanh, Nha Be and Can Gio districts of HCMC, and the rest through Dong Nai Province. The expressway will have four lanes for vehicles to travel at a maximum speed of 100 kilometers per hour and two emergency lanes.

The project comprises more than 20 kilometers of bridge including the 2.76-kilometer-long Binh Khanh bridge spanning the Soai Rap River in HCMC and the 3.18-kilometer-long Phuoc Khanh bridge over the Long Tau River to connect HCMC’s Can Gio District and Dong Nai Province’s Nhon Trach District.

In July this year, VEC broke ground for the cable-stayed Phuoc Khanh bridge as part of Package J3 of the expressway project. The package is being implemented by a consortium of Japanese company Sumitomo Mitsui Construction and Vietnam’s Civil Engineering Construction Corporation (Cienco 4) within 42 months.

The expressway project costs VND31.32 trillion (US$1.4 billion) including US$636 million financed by the Asian Development Bank (ADB) and around US$635 million by the Japan International Cooperation Agency (JICA).

When in place, the Ben Luc-Long Thanh expressway will link southeastern and southwestern provinces as well as create a direct route leading to Cai Mep-Thi Vai port complex and an international airport planned in Long Thanh District in Dong Nai Province.

The expressway will be connected to the planned Bien Hoa-Vung Tau expressway to form the southern part of an economic corridor of the Greater Mekong Subregion linking Thailand, Cambodia and Vietnam. 

Promotion program props up sales

More than 2,000 enterprises and over 4,000 household businesses in HCMC reported sales growth of 3% to 30% in the first month of the city’s major sales promotion program.

The program, which kicked off last month and will last until the year-end, has helped supermarkets obtain higher revenues. Sales at Maximark Cong Hoa grew 10-15% in September compared to normal months, said Nguyen Phuong Thao, director of Maximark Cong Hoa.

Meanwhile, sales at Co.opmart supermarkets soared 30%, especially for foodstuff, apparel and cosmetics, said Vo Hoang Anh, marketing director of Saigon Co.op., which is the operator of the Co.opmart supermarket chain.

Saigon Supermarket reported last month’s sales of VND24 billion, up 11% compared to other months and 27% year-on-year, according to Le Thi Tam, director of Saigon Supermarket.

Food processing firm Vissan obtained total revenue of over VND300 billion last month, up 3% versus the previous month and 5% over the same period last year. Demand was high for canned and frozen food, meat and sausages.

This year’s sales promotion program is also carried out at many small wet markets and shops. Retailers of many products such as clothes, cosmetics and electrical appliances offer discounts of 10-49%.

Trade fairs and mobile markets in HCMC’s District 6 have earned sales of a combined VND25 billion, said Ngo Thanh Luong, vice chairman of District 6’s People’s Committee.

VN access to TPP markets to affect China exports

The World Bank in Vietnam has projected that Vietnamese exports would replace an increasing share of Chinese exports to Trans-Pacific Partnership (TPP) markets when the comprehensive trade agreement comes into force.

The TPP is expected to create opportunities for Vietnam to diversify trade and enhance market access to key export markets, especially the United States and Japan. This trend has already been ongoing even before the conclusion of TPP talks, the WB said in a report on the impact of the trade pact on Vietnam.

The TPP will generate considerable benefits for Vietnam. Among the TPP member states, Vietnam, which has the lowest per-capita gross domestic product (GDP), has comparative advantages, in particular in labor-intensive manufacturing.

The TPP is also expected to lead to further increases in FDI inflows to build up export capacity, including in upstream suppliers to sectors that are subject to strict rules of origin like textiles and garments.

As for economic impacts, the bank said simulations suggest that the TPP could add as much as 8% to Vietnam’s GDP, 17% to its real exports, and 12% to its capital stock over the next 20 years. About half of the benefits are generated by tariff reductions and half by non-tariff measures (NTM), including liberalization of key service sectors.

In terms of sectors, labor-intensive manufacturing and especially sectors which currently face high import tariffs in the TPP markets will benefit most. These include textile, apparel, and footwear and to a lesser extent food processing and electronics.

On the contrary, primary export sectors, including agriculture and services, are expected to decline mainly as a result of accelerated structural transformation, with production factors reallocating to manufacturing.

However, the WB warned some challenges arising from the TPP for Vietnam, including the implementation of TPP commitments and the impact of rules of origin.

The WB said the TPP would not only remove trade barriers and enhance access to key export markets, but will also have tangible impacts on regulatory quality, intellectual property rights, investor protection, competition, state-owned enterprises (SOE) management, labor and environmental standards, food safety, public procurement and liberalization of services, including financial services and telecommunications.

While implementation of these commitments will be particularly challenging for Vietnam - given its gradual reform path and institutional legacies, Vietnam has shown in the context of its accession to the WTO that it is able to leverage external commitments to advance domestic reforms, especially in challenging reform areas.

“The TPP is expected to serve as an external anchor for structural reforms,” the WB said.

The TTP’s strict rules of origin also pose a challenge for Vietnam, as its exports are highly dependent on material imports and intermediate goods, particularly in the textile sector.

Currently, Vietnam imports 60-90% of textiles from other countries, mostly from China and Taiwan, neither one a TPP member. A large part of Vietnam’s current exports in the sector could not comply with TPP rule of origin requirements, according to the WB. 

The textile sector would have to restructure to maximize TPP benefits. While this poses a challenge in the short term, FDI in upstream businesses is expected to build up needed production capacity and a number of Japanese, Chinese and South Korean firms are investing heavily in fiber production in Vietnam.

The WB said it stands ready to support Vietnam in the implementation of TPP commitments and advancing accompanying measures to further enhance Vietnam’s competitiveness. 

The bank is also providing both lending and non-lending support to enhance competiveness and to strengthen linkages between FDI and domestic enterprises - both key for Vietnam to maximize the benefits of the TPP and other free trade agreements (FTAs).

The WB said it is already discussing with more developed TPP member states the creation of a multi-donor trust fund to help Vietnam prepare for successful implementation.

Prospects for Vietnam-Australia trade after TPP

Trade between Vietnam and Australia is expected to see strong growth once the Trans-Pacific Partnership (TPP) agreement – which involves the two of them and 10 other countries – comes into effect. 

According to the Vietnam Trade Office in Australia, the two nations had similar benefits and approaches during the TPP negotiation process. Australia carried out numerous initiatives to accelerate the completion of the world’s largest free trade agreement while helping Vietnam in its international integration. 

Vietnam and Australia are mutually important trade partners. From 2005-2014, trade posted an average growth rate of 7.83 percent annually, doubling to over 6 billion USD in 2014 from 3 billion USD in 2005. 

Australia is now the eighth biggest importer and 12th biggest exporter of Vietnam while the Southeast Asian country is Australia’s 14th largest importer and exporter. 

Under the ASEAN-Australia-New Zealand free trade agreement, which enters into force on January 1, 2010, Australia and New Zealand will remove taxes imposed on all Vietnamese products exported to the two countries by 2020. From 2015-2019, 96.3 percent of export tariffs will be decreased to zero, while the remaining 3.7 percent will remain at 5-10 percent, mainly on insect pesticides, leather, cloth, machines and equipment. 

With the freshly-reached TPP, both Vietnam and Australia play a central role in the value chain of the Asian-Pacific region, which will boost their bilateral trade, production and investment. 

Regulations on trade and customs facilitation and transparency will create favourable conditions to increase trade while compatible investment and intellectual property principles will help facilitate Australian investments in Vietnam.

Lenders hopeful of local economic outlook

Lenders are optimistic about banking and economic prospects, the latest quarterly survey by the central bank has revealed, announced the State Bank of Vietnam recently.

The central bank cited its poll of local credit institutions and branches of foreign banks that 71.6 percent of the lenders found the inner conditions were stable and improved this year as compared to last year.

The progress was seen the most in their customer services, risk management ability and credit policies.

About 34 percent said the business environment was more positive, while nearly 60 percent said the environment was relatively stable.

National interest and exchange rate policies, supervision of banking operations by authorities, and the demand for products and services of banks were relatively better off.

Most of the credit institutions expected demand for loans from customers to rally strongly this year following a drop in interest rates.

Nearly 78 percent of the lenders said their business situation was better, with some 46 percent expecting significant advancement. About 14 percent affirmed business stability.

They were hoping for an average profit growth rate of 9.73 percent for the banking system this year, a rise from the 8.89 percent expectation polled in mid-2015.

Growth of net incomes, which is likely to reach 16 percent to 20 percent this year, drove profitability.

Eighty-nine percent of the credit institutions believed that their bad debt ratios would fall to three percent or lower this year, meeting the national goal for non-performing loan control.

The expected bad debt ratios will average 2.39 percent for the whole credit institution system by end-2015.

Related to liquidity, ninety percent of the lenders said they are seeing good conditions for both the dong and dollar, and nine percent said their situation is stable. Only one percent said their liquidity is not up to expectations.

Overall this year, credit institutions expected deposit growth to average 15.56 percent, and credit growth to reach 17.6 percent.

"These expectations show that the credit institutions are quite optimistic about economic recovery and the ability to absorb loans of enterprises, as well as their outlook for production and business in 2015 and 2016," the central bank said in a report.

Positive automobile market trends

Vietnam’s automobile sales in September amounted to 21,366, up 32 percent from the same period last year, according to the Vietnam Automobile Manufacturers Association (VAMA).

The figure marks the 30th consecutive upward trending month for the market, which is forecast to continue to rise in the last quarter of this year thanks to a number of incentives and automobile exhibition events including the ongoing VIMS 2015 and the Vietnam Motor Show 2015, which will take place at the end of this month.

The Truong Hai Auto Corporation (THACO) continued to make up the largest portion of the automobile market with 7,357 cars sold in the month, up 75 percent from the same period last year.

THACO Deputy Director General Bui Kim Kha said his group aims to expand its network to 120 showrooms across the country to realise the yearly target of selling 40,000 units this year.

THACO was followed by Toyota with 4,670 cars and Ford with 1,888 units, up 25 percent and 36 percent from the same period last year, respectively.

Other big names such as Honda Vietnam, GM Vietnam and Mercedes-Benz Vietnam also saw year-on-year surges.

By the end of September, total automobile sales had reached 163,443, up 53 percent from the same period last year.

Within the first nine months of this year, 83,000 imported cars had been sold worth nearly VND2.1 trillion ($93.3 million) were imported, up 88 percent in volume and 113 percent in value year-on-year.

Expectations positive for Q4 business prospects

About 85.6 per cent of the surveyed 4,028 enterprises in the processing-manufacturing sector expect to maintain their current growth trends or expand their business operations in the fourth quarter. The findings were released by the General Statistics Office (GSO) late last month.

According to data from the GSO, 46.8 per cent of respondents were upbeat about their performance prospects, another 38.8 per cent forecast stable business operation while 14.4 per cent said that they would face difficulties.

Escalating and stable output production will be seen in 86.2 per cent of the surveyed businesses while only 13.8 per cent forecast a decline. The foreign-invested sector has the highest amount of enterprises expecting a productivity surge in the last quarter of this year with 53.5 per cent, followed by State-owned enterprises with 50.7 per cent and private enterprises with 47.2 per cent.

Regarding the number of orders, 87.3 per cent of the respondents anticipated higher stable orders in the next three months and 12.7 per cent said that they would have fewer orders than the previous quarter.

The largest number of orders is predicted to be in the pharmaceutical production sector, the electronic production sector and other manufacturing industries.

Additionally, 86.9 per cent of the enterprises are preparing for stable export orders during the period while 13.1 per cent prophesied a fall. Foreign-invested enterprises had the highest optimism for export order increases with 41.5 per cent of the respondents compared to the private sector with 35.7 per cent and the State-owned sector with 29.6 per cent.

Pham Dinh Thuy, Head of the Industrial Statistics Department, affirmed that industrial production is making a remarkable recovery from its recession between 2008 and 2014. 

VN expects to collect more taxes next year

The General Department of Taxation anticipates an 11.7 per cent increase in tax collection next year, based on macroeconomic forecasts for 2016.

With the gross domestic product estimated at 6.7 per cent and the consumer price index below 5 per cent, tax collection was expected to reach VND805 trillion (US$35.78 billion) in 2016, a rise of 11.7 per cent over 2015's anticipated figure.

The tax collection for crude oil was estimated at VND50 trillion ($2.22 billion), equivalent to 80 per cent of this year's anticipated result, based on an expected 1.72-million-tonne drop in crude oil output to 14.02 million tonnes and a price of $60 per barrel.

The general tax department estimated that the domestic collection (excluding crude oil) would rise by 9.9 per cent to VND755 trillion ($33.55 billion).

If collection from land use is also excluded, an estimated VND650 trillion ($28.8 billion) in taxes will be collected, accounting for more than 80 per cent of the estimated total collection.

Figures from the Ministry of Finance showed that the country's tax collection was derived primarily from value added tax, corporate income tax and import and export taxes, as well as special consumption tax on imported goods.

With Viet Nam integrating deeply into the global economy following the signing of free trade agreements with many reduced or eliminated tariffs, collections that support the country's budget will be heavily affected.

Deputy Minister of Finance Vu Thi Mai said at the ministry's recent quarterly meeting that the percentage of collections from imports and exports would decrease, given the country's commitment to liberalising trade.

In order to ensure collections meet the needs of the budget, domestic collection must rise, she said.

Brand Finance: Vinamilk tops 50 brands, worth US$1.14 billion

Vietnam Dairy Products JSC (Vinamilk) has been listed at the top of the Vietnam Top 50 Brands 2015, with a brand value of US$1.14 billion, according to London-based Brand Finance.

The world's leading brand valuation consultancy firm conducts valuations based on a number of criteria, including the ability to generate added value and profits, the brand’s influence on clients’ selection of products and services, and the market cap.

According to the ranking, the brand value of Vinamilk accounts for 23% of the leading Vietnamese dairy group’s value, which currently reaches US$5.001 billion.

In addition, at the price of VND107,000 a share, Vinamilk ranks No. 2 for capitalisation on Vietnam’s stock market, after the Joint Stock Commercial Bank for Foreign Trade of Vietnam (Vietcombank, at over VND126 trillion).

The next positions on the chart belongs to military-run telecom group Viettel (US$580 million), Vingroup real estate firm’s Vinhomes (US$343 million), mobile network operator MobiFone (US$306 million) and PetroVietnam Gas (US$288 million).

Combined, the 50 brands are valued at a total of about US$5.5 billion.

The banking system contributes eight brands to the list but their brand value only accounts for a modest rate of the companies’ value, at an average of 5-12%.

According to Brand Finance, brand value lies in the intangible assets of a company. In Vietnam, this element contributes only 38% of the total value of a company, while the average ratio worldwide is 53%.

The brand value of Vietnamese enterprises is still low, said the brand valuation consultancy firm, adding that it will be more difficult for domestic firms to compete with global brands in keeping market shares.

However, experts said that the announcement of valuation of the leading brands in Vietnam will offer a new perspective on the value and essence of brand development for businesses. Accordingly, awareness of brand importance will increase as the value of intangible assets of a brand name can be expressed in a specific amount. This is a step forward to raise Vietnam’s awareness and brand management capacity to the average level in the region and internationally.

In the context of Vietnam joining the Trans-Pacific Partnership (TPP), branding will be a ‘tool’ to help domestic businesses compete with foreign companies as tariff barriers are removed.

Every year, Brand Finance conducts independent valuations for about 57,000 different brands worldwide. It is the first time the company has conducted an assessment of Vietnam’s 50 top brands with shares listed on its stock exchange.

Package deals at Mövenpick Hotel Hanoi

Mövenpick Hotel Hanoi is offering a special deal of 15 per cent off room rates for bookings made via the hotel’s website prior to October 31 for stays from October 5 to November 5. All bookings are pre-paid and non-refundable.

The hotel also provides a Sparkling Escape package for guests to enjoy the sensory massage experiences offered at the Kinetic Gym & Wellness Studio. The package is available for a minimum two-night stay and starts at VND2.7 million++ ($121) per night, including accommodation, breakfast buffet, and two 60-minute spa treatments per stay.          

In October the hotel’s culinary team offers a variety of enticing and frightfully fun treats. A special welcome drink, Scarytini, is offered to whoever comes in Halloween costumes. At the kid’s area, children can enjoy a number of Halloween-themed activities with new friends. The “Halloween menu: no tricks just treats” is priced at VND750,000++ ($33) per adult. Children between the ages of 6 and 12 dine for half price, while those under five dine for free. The hotel will hold a Halloween party on Friday October 30 at the Mangosteen Restaurant on the second floor.

Other promotions on food and beverages are also offered daily to maximize the experience when guests come to the hotel.

Mövenpick Hotel Hanoi is conveniently located in the heart of Hanoi’s CBD, a 40 minute drive from Noi Bai International Airport and only five minutes from the city center and the Old Quarter. With 154 well-appointed rooms and suites the hotel is the perfect base for a visit to Vietnam. Guests can relax and enjoy some fine-dining at its restaurant or stay fit using its modern exercise equipment, massage, and sauna facilities at the Kinetic Gym and Wellness Studio.

PetroVietnam shows strong performance despite oil price fall

The National Oil and Gas Group (PetroVietnam) earned 428.3 trillion VND (roughly 19.45 billion USD) in the first nine months of this year, fulfilling 60 percent of its yearly target despite a sharp drop in oil prices, Nguyen Quoc Khanh, acting chairman and general director of the group, said on October 16. 

According to Khanh, PetroVietnam’s revenue and production targets were affected by low oil prices in the first nine months of the year. The price in the last quarter of this year is estimated at about 50 USD per barrel – much lower than the group’s earlier expectation of 100 USD per barrel. 

The group still performed well in production, Khanh said, noting that total output reached 21.86 million tonnes (as converted to oil), equivalent to 82.2 percent of the yearly target, a rise of 7.4 percent year on year. 

Of the figure, crude oil made up 13.96 million tonnes, up 9.8 percent over the same period last year. Meanwhile, gas exploitation was 7.9 billion cubic metres, or 80.6 percent of the target for the year, representing an increase of 3.4 percent over the same time in 2014, he said. 

In 2015, PetroVietnam will strive for a total 17.58 million tonnes in oil output, 0.78 million higher than the set target, and 10 billion cubic metres of gas, 0.2 billion cubic metres more than the yearly goal. 

At the same time, the firm will strengthen international cooperation, seeking new overseas projects, while calling for investment from prestigious companies and developing new products such as fibre and bio-fuel. 

Also on October 16, Nguyen Quoc Thap, PetroVietnam’s deputy general director, told the media that the group would organise a conference and exhibition themed “PetroVietnam – 40 years of integration and development” in Ho Chi Minh City from October 21 to 23. It is expected to draw 80 Vietnamese and foreign enterprises.-VNA

Work starts on 192-million-USD thermal power plant in Lang Son

The Power Holding Corporation under the Vietnam National Coal and Mineral Industries Group (Vinacomin) held a ceremony to kick off construction of the Na Duong II power plant in the northern province of Lang Son on October 16.

Covering an area of 11 hectares in Toong Gia Village, San Vien Commune, Loc Binh Cistrict, the coal-fired plant has garnered a total investment of nearly 4.2 trillion VND (192 million USD).

Once completed in 2018, the plant will have a capacity of 110MW, generating 650 million kWh of electricity each year and helping ensure stable power supply for Lang Son and other northern border provinces, as well as national energy security.

The plant will use about 500,000 tonnes of low-quality coal with high sulfur content from Na Duong Coal Mine to generate electricity.

The operation of the Na Duong II thermal power plant will also create jobs for hundreds of local workers, helping improve the people’s lives and increasing the annual remittance to the State budget.

Expected reform in anticipation of TPP deal

Economists have called for improving the business climate, fine-tuning market economy regulations and increasing dialogues with businesses in anticipation of the Trans-Pacific Partnership (TPP) reached by 12 member states on October 5. 

The TPP is expected to lift Vietnam’s exports and gross domestic product to 68 billion USD and 36 billion USD by 2025, respectively, or 28.4 percent and 10.5 percent, said Deputy Director of the Central Institute for Economic Management (CIEM) Vo Tri Thanh. 

However, he also warned of lessons drawn from Vietnam’s entry into the World Trade Organisation eight years ago, saying that opportunities could become challenges in the absence of appropriate policy and reform. 

Economist Can Van Luc said Vietnam is forecast to be the TPP’s biggest beneficiary, because the deal will enable the country to navigate previously inaccessible markets and its trade openness index is the highest among the 12 member countries. 

The World Bank predicted that the Vietnamese economy is likely to expand by 6 percent this year and 6.6 percent following the TPP entry, Luc said, adding that foreign languages and legal regulations are among possible hindrances. 

CIEM Director Nguyen Dinh Cung said that as a new-generation deal, the TPP includes chapters on global trade, intellectual property, investment and State-owned enterprises. 

Once the deal comes into full effect, it will be easier for Vietnam to export its products, thanks to reduced tariffs and barriers. In reply, the country will also open its door to more foreign investors, which requires improved transparency in the goals, finances and governance of State-owned enterprises. 

To make the best of the opportunities brought about by the TPP, Vietnam should change State management mindsets and help firms meet global standards, he said, urging domestic enterprises to adopt technological advances and update the manufacturing process. 

Nguyen Duc Thanh, Director of the Vietnam Institute for Economic and Policy Research, said sectors with weak competitiveness, particularly animal breeding, forestry, wooden furniture, mining and industry will be hurt. Therefore, these sectors need restructuring to raise their productivity. 

Vietnam should provide legal assistance for sectors with comparative advantages, including garments, fisheries and farm produce, which have been urged to take control of their workforce, land and other resources, he added. 

The State should devise appropriate policies to stimulate production and consumption, Thanh said. He stressed the need to conduct institutional reforms and increase trade liberalisation in terms of labour, capital and land. 

Vu Tien Loc, Chairman of the Vietnam Chamber of Commerce and Industry, said the business community needs to thoroughly grasp the impacts of global integration on its development. Each company should map out an action plan detailing market orientations, partners, manufacturing and governance overhaul, social responsibility and changes to business culture.

Int’l agency puts forth financial support for Vietnamese agriculture

The Vietnamese financial market will witness the start of numerous agricultural credit products as the International Finance Corporation (IFC), a member of the World Bank Group, rolls out a handbook to develop credit packages for farmers and enterprises.

Agriculture has played a crucial role in Vietnam’s economy and development, said Kyle Kelhofer, IFC’s country manager for Vietnam, Cambodia and Laos. 

He said the IFC was fostering financial support in the agricultural sector, given that long-term capital and reasonable interest rates would help Vietnamese farmers and agricultural enterprises increase their income and create more export revenue.

The handbook will support financial institutions in the country as they design and implement new credit products. The book will give them some insight on the risks and opportunities in agriculture credit, and ways to manage and mitigate risk by adjusting internal processes and suitable loan models. It aims to foster economic growth and create jobs.

It also shares the experiences of regional financial organisations that have successfully implemented the packages.

The handbook was built under a programme to develop agricultural finance and consultancies after harvest in Vietnam. It was sponsored by the Canadian Department of Foreign Affairs, Trade and Development, aiming to support sustainable development in rural areas.

The progamme is expected to help farmers earn 36.6 million USD more by the end of 2019.

The IFC will help by increasing the financial organisations’ capacity and helping them expand their financial services in the agricultural sector.

Vietnam favourable for new waves of investments: conference

Vietnam is in a good place to lure new investment, a conference in Ho Chi Minh City heard on October 15. 

The tenth investor conference held by VinaCapital Investment Management Ltd (VinaCapital Investor Conference) drew more than 100 representatives from major groups and companies in Asia and Europe. 

Many participants said tamed inflation, lower interest rates, average economic growth at a high rate of about 6 percent over the past five years, better infrastructure and investment incentives have raised Vietnam’s competitive edge compared with other Asian countries. 

Deputy Minister of Finance Truong Chi Trung briefed investors about Vietnam’s socio-economic situation and prospects for development. 

Vietnam has sped up its economic restructuring, focusing on investment, banking, State-owned enterprises, the stock market and insurance, he said. 

Such efforts have paid off, he said, citing total foreign direct investment (FDI) registered at about 270 billion USD, to date, with more than 19,000 projects by investors from 105 countries and territories. 

According to the official, Vietnam is maximising efforts to complete its market economic institution, focusing on revamping the legal framework and administrative procedures, and implementing an investment reform programme. This would create optimal conditions for private investors at home and abroad. 

During the two-day conference, investors also discussed positive signs regarding the Trans-Pacific Partnership (TPP) agreement, negotiations on which recently concluded in the US.

Legal documents revised to accord with TPP

The Ministry of Justice is co-ordinating with relevant ministries and sectors to review domestic legal regulations for necessary revision and supplementation in accordance with stipulations in the newly reached Trans-Pacific Partnership (TPP) agreement.

Speaking at a press conference in Hanoi on October 16, head of the Ministry’s Office and Spokesperson Tran Tien Dung said the government was effectively building and assessing legal normative documents.

The TPP started out as P-4 with Chile, New Zealand, Singapore and Mexico. The US joined in September 2008 and Vietnam in early 2009. The deal now brings together 12 countries: Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the US and Vietnam.

The completion of the world’s largest free trade pact on October 5 in Atlanta, the US, has elicited positive responses from many countries.

After the signing, the document must receive approval from member countries’ governments and parliaments before taking effect.

The TPP will become a free trade region of 800 million people, accounting for 30 percent of global trade and about 40 percent of the world’s economy.

Vietnam is expected to benefit the most among the 12 countries. The pact will help expand Vietnam's GDP by 23.5 billion USD by 2020 and 33.5 billion USD by 2025.

The nation's export turnover should increase by 68 billion USD by 2025. The zero import tariffs in large markets like the US, Japan, and Canada will create a huge advantage for Vietnamese exports.

In the third quarter of this year, ministries submitted 14 bills and ordinances to the Government, including three draft laws and one ordinance drafted by the Ministry of Justice (MoJ).

The Government, Prime Minister Nguyen Tan Dung, ministries and ministerial-level agencies promulgated 22 documents, encompassing 11 decrees, one decision, nine circulars, and one joint circular.

The MoJ proposed revising or removing 88 out of the 103 administrative formalities in 26 draft documents.

VEF/VNA/VNS/VOV/SGT/SGGP/Dantri/VET/VIR