Vietnam’s support industry viewed as boasting huge potential

Chief Representative of the Hanoi Office of the Japan External Trade Organisation (JETRO) Kitagawa Hironobu said Vietnam’s support industry has huge potential during the Vietnam Support Industry Forum in Hanoi on June 15. 

According to the JETRO, Vietnam’s manufacturing currently ranks second in ASEAN, notably electronics. 

Major electronic groups such as Intel, Panasonic and Microsoft have moved to Vietnam while domestic rivals continue winning new orders. Imports tripled from 2011 to 2016 while exports surged nearly five-fold from 12.8 billion USD to 65.8 billion USD in 2015. 

Over the past years, exports of mobile phones accessories have greatly contributed to reducing Vietnam’s trade deficit. This year, Vietnam plans to earn more than 40 billion USD from electronics export. 

Speaking at the event, Hironobu said Japan is interested in Vietnamese market, evidenced by more than 570 projects in 2016. However, the rate of locally-made materials and spare parts is only 34 percent, forcing Japanese firms to import them from neighbouring countries like Thailand and China. 

He suggested Vietnamese firms raise added values for spare parts so that they could catch up with Japanese partners in the global supply chain. 

President of the Vietnam Electronic Industries Association Luu Hoang Long said Vietnam is gradually becoming a new manufacturing centre with qualified workforce costing lower than Indonesia’s and only half of Thailand’s. 

According to him, Vietnam’s electronic industry will still face challenges in the future. 

India is Vietnam’s biggest rival in terms of foreign investment attraction due to its government and federal incentives, low salaries and high technology, he said.

The event was co-hosted by the JETRO and the Ministry of Industry and Trade’s Trade Promotion Agency. 

Bank stocks rise on coming bad debt resolution

Shares ended June 19 on a positive note as banks reacted to information that the new bad debt settlement resolution will likely be approved by the National Assembly this week.

The VN-Index on the HCM Stock Exchange increased 0.73 percent to close at 766.83 points. The benchmark southern index expanded 1.5 percent last week.

On the Hanoi Stock Exchange, the HNX-Index gained 1.12 percent to end at 99.41 points. The northern market index rose 1 percent a week ago.

Bank stocks were the major contributor to the market rise as all nine listed lenders on the two exchanges gained value.

Nam Viet Bank (NVB), the smallest capitalised bank among nine listed banks, hit the maximum daily rise of 10 percent for a second session on the Hanoi Stock Exchange, closing at 10,300 VND a share. These shares have climbed 110 percent since early this year.

Other banks such as Sai Gon-Hanoi Bank (SHB), Military Bank (MBB) and Sacombank (STB) increased 4.1 percent, 2.7 percent and 1.8 percent, respectively. These shares have also increased substantially since the beginning of 2017.

Sai Gon-Hanoi Bank has gained 64 percent compared to December 30 last year; Sacombank, up 50 percent; and Military Bank up 48 percent.

Three biggest listed banks including Vietcombank (VCB), Vietinbank (CTG) and BIDV (BID) rose by a more modest 0.5-1.5 percent each.

According to Bao Viet Securities Co, the National Assembly will likely approve the new bad debt settlement resolution this Wednesday. Only one issue remains unresolved surrounding the time frame, on which there are currently two perspectives. One is dealing with non performing loans (NPLs) ending December 31, 2016 and the other is applied to bad debts arising before 2016 as well as during the period in which the bad debt settlement resolution takes effect.

“With the high possibility that the resolution of bad debt will be approved, we think that the banking stocks may continue to gain momentum in the next two sessions. As a result, the overall performance of the indices will likely also receive substantial support,” Tran Hai Yen, a stock analyst at Bao Viet Securities Co, wrote in a report on June 19.

Apart from banks, many other large-cap stocks picked up and contributed to the market rise, including Vinamilk (VNM), brewery Sabeco (SAB), Petrolimex (PLX), VinGroup (VIC), Saigon Securities Inc (SSI) and PV Gas (GAS).

“From our view, the overall market outlook is positive in the short-term,” Yen said, but warned about rising profit-taking pressure on large-cap stocks lacking supportive information.

Liquidity was positive with a total of 265.3 million shares worth a combined 5.1 trillion VND (224.1 million USD) traded on the two markets.

Ho Chi Minh City’s economy grows 7.76 percent in six months

Ho Chi Minh City’s gross regional domestic product grew by 7.76 percent in the first half of this year, higher than the same period in the past two years. 

It was unveiled during a meeting of the municipal People’s Committee on June 15 to discuss the city’s socio-economic-cultural performance and the budget expenditure and spending in the first half of the year, and major tasks for the remaining months. 

With this growth, the city is likely to fulfill the set growth of 8.4 – 8.7 percent this year, said Chairman of the municipal People’s Committee Nguyen Thanh Phong, adding that the total State collection hit 173 trillion VND (7.52 billion USD), or 49.5 percent of the yearly target. 

The services sector grew 7.38 percent while industry and construction expanded by 7.17 percent and agriculture up 5.93 percent. 

Pham Thanh Kien, Director of the municipal Department of Industry and Trade, said the six-month industrial development index rose 7.5 percent year-on-year, the highest in the past five years. 

During the period, there were more than 18,000 new businesses with a total registered capital of upwards 227 trillion VND. The total registered and additional capital topped 492 trillion VND, marking a 2.2-fold increase annually. 

The city also licensed 340 foreign-invested projects, mostly in the processing and manufacturing industries, which doubled the city’s capital attraction of the previous period in 2016 to 2.15 billion USD. 

In order to achieve set targets this year, the municipal authorities asked departments and localities to clear obstacles to businesses by improving business climate, reforming administrative procedures regarding taxation and customs while perfecting start-up ecosystem and promoting start-up innovation. 

The city will also promote programmes on supply-demand, business-bank connectivity, demand stimulation, and market stabilisation.

Exhibitions to promote Vietnam’s support industry

Three exhibitions introducing auxiliary products for industries will be held concurrently in Hanoi from September 13-15, as part of activities to realise commitments of the Japanese Government to assisting support industry development in Vietnam. 

The events are the seventh Vietnam-Japan Support Industry Exhibition, an expo on equipment and technology and support industry for the electronic industry and an expo on Vietnamese support industry products.

They will be co-hosted by the Japan External Trade Organisation (JETRO) in Hanoi, Reed Tradex Co., Ltd of Thailand, the Ministry of Industry and Trade’s Vietnam Trade Promotion Agency and the Vietnam Electronic Industries Association. 

Speaking at a press conference in Hanoi on June 15, Director of the Vietnam Trade Promotion Agency Bui Huy Son said the events are hoped to offer exhibitors opportunities to seek partners, thus promoting investment and trade cooperation between Vietnam and Japan. 

Son said the Vietnamese Government is proactively assisting firms operating in the support industries in applying modern quality management systems, improving the quality and reliability of products, thus enabling them to join global production and supply chains.

Through the exhibitions, Vietnamese firms will be supported to increase the ratio of local contents in electric products and support industries.

Hironobu Kitagawa – Chief Representative of JETRO said the organisation published a book listing outstanding Vietnamese firms working in the manufacturing industry.

This will be a useful reference for Japanese enterprises and those from other countries, which are exploring opportunities to pour investment into Vietnam, he added. 

Hironobu Kitagawa said the Vietnam-Japan Support Industry Exhibition will display the Pre-matching system for the first time, which allows enterprises to connect and exchange in a more effective way.

Suttisak Wilanan – Deputy Managing Director of Reed Tradex stressed that the organisation of the three exhibitions at the same time and same location will help increase business opportunities by three times and raise localisation index for Vietnam’s electronic industry. 

Attended by over 200 leading brands from 20 countries and territories worldwide, the events will help Japanese manufacturers to meet and tighten links with local spare part manufacturers.

After the press conference, the organisers signed an agreement on cooperation to enhance the localisation ratio, promote the support industry in Vietnam.

Ways to ensure sustainable economic growth in mid term sought

Removing business barriers, clarifying responsibility of management units and dealing with bad debts are among solutions raised at a workshop in Hanoi on June 15, aiming to ensure the rapid and sustainable economic growth in the mid term. 

Nguyen Anh Duong from the Central Institute for Economic Management (CIEM), said Vietnam’s economic growth has remained sluggish over the past years, suggesting a close and flexible combination between fiscal year and capital and monetary markets. 

It is necessary to take into account the greatest benefits while engaging in the Trans-Pacific Partnership (TPP) agreement and materialsing free trade agreements in general. 

Other delegates at the even proposed the Government well implement its commitment to building a facilitating Government that supports businesses.  

They also called for efforts to curb with bad deeds like corruption, wastefulness and group interests to ensure a fair and transparent business environment. 

The Government should consistently pursue its viewpoints on sustainable development and manage the economy on the basis of market rules, they said. 

Dr. Dang Thi Thu Hoai, from the CIEM, said reforming the growth model is an urgent task to serve the target of rapid and sustainable growth in the context of integration. 

She underscored the need to identify both opportunities and challenges facing the economy. 

Hoai noted that it is necessary to improve added values of products, especially those belonging to promising sectors, and quality of human resources, looking towards higher productivity. 

“The Government should take measures to ensure equal access to resources of businesses, avoiding wastefulness, conflicts or overlapping of interests,” she said.

Mechanical machines, equipment displayed in Hanoi

The latest equipment and technologies for the manufacturing, engineering and electronics industries are being showcased at the CA-MEXPO Vietnam 2017 which opened in Hanoi on June 15.

On display at the exhibition, the second of its kind in Vietnam, are industrial machines, vehicles, agricultural machines, wood processing machines, mining machines, security devices, household appliances and energy-saving equipment.

The three-day event, jointly held by the Trade Promotion Agency under the Ministry of Industry and Trade and the secretariat of ASEAN-China Expo, drew the attraction of over 100 prestigious producers and exhibitors from China, including firms in China’s Top 500 list.

The CA-MEXPO is a significant trade promotion activity which helps Vietnamese and Chinese enterprises further enhance business cooperation as well as facilitate the transfer of advanced technology between firms from both sides, Deputy Minister of Industry and Trade Tran Quoc Khanh said at the opening ceremony.

The organising board expects that the CA-MEXPO 2017 will continue to serve as a catalyst for the development of enterprises in both countries.

Last year’s event saw the participation of over 100 enterprises from 10 Chinese provinces and cities, attracted thousands of visitors while tens of contracts were signed.

China is currently Vietnam’s leading trade partner. Last year, two-way trade experienced a yearly rise of 2.5 percent to more than 98 billion USD.

US trade mission targets higher seafood exports to Vietnam

The Alaska Seafood Marketing Institute in collaboration with a group of other US fish and seafood advocacy organizations are gearing up for a trade mission to Southeast Asia later this year, according to multiple sources.

Hannah Lindoff, program director for the Institute, said this is the second such mission to Asia, which hopes to build on the prior success and make further inroads into cracking the yet largely untapped market.

The first trip, which was led by Food Export Northeast and principally focused on China, was positive and now the Institute is looking to double its efforts and concentrate more on exploring markets in Southeast Asia.

Food Export Northeast, is a non-profit trade group that promotes the export of food and agricultural products throughout the globe from states in the northeast region of the US such as Maine.

Industry members have been urging the Institute to spearhead more aggressive attempts to pursue market share in Southeast Asia, noted Ms Lindoff, particularly those lucrative markets in Vietnam, Indonesia and Thailand.

The trade mission will take industry members for a bevy of seminars and meetings this September 10-14 with representatives from Vietnam, Malaysia, Indonesia, the Philippines, Singapore, and Thailand.

Southeast Asia represents an emerging market that is large and diverse, driven by consumers with a hunger for fish and seafood who are predisposed to favour products from the US due to their superior reputation for quality and safety.

Southeast Asia has a lot of potential as an end and reprocessing market, so we have several interests in mind, Ms Lindoff continued, noting the US brand really stands for quality and commands consumer attention.

Particularly in high-end markets like Singapore and emerging ones like Vietnam, consumers are developing a taste for top-shelf products like sockeye salmon, king crab and spot prawns.

Interest in salmon and salmon heads is also prevalent in other countries such as Thailand and Indonesia, but Ms Lindoff said consumers need to be coached on the differences between wild and farmed salmon and why wild-caught are the tastier and healthier choice.

Land pooling policies urged     

The Government needs new policies on land pooling and accumulation, as well as credit, to develop the farm economy, delegates said at a forum held in HCM City on Thursday.

The country has 31,717 farms, of which 16,523 are animal breeding farms. Farmland covers a total of 133,826ha, accounting for 0.6 per cent of the country’s total agricultural land.

Nguyen Van Tien, head of the Central Economic Committee’s Agriculture and Rural Department, said although there has been a rapid increase in the number of farms, they are mainly household farms, with an average scale of just 4.54ha.

According to the Ministry of Agriculture and Rural Development, the farm economy is an advanced form of the household economy, bringing higher economic efficiency since farms are applying new technologies and expanding markets for their products.

Vu Trong Khai, an agricultural expert, said the shift from smallholder production to large-scale and modern agricultural production would ensure a safe and sustainable agriculture.

The Government in the past issued many policies to develop farms, but few farmers and businesses benefited from these policies, he said.

Farm owners have encountered difficulties in accumulating land as well as accessing credit to expand their scale, he said at a forum held by the Viet Nam Farms and Agricultural Enterprises Association and the Department for Economic Co-operation and Rural Development.

Vo Mai, vice chairwoman of the Viet Nam Gardening Association, said capital sources for the agricultural sector remained low compared to actual demand.

As of June 2016, total outstanding loans in the agricultural sector reached an estimate of VND886 trillion, accounting for 18 per cent of total outstanding loans in the economy.

Customers in the agricultural sector have faced difficulties in accessing bank loans due to credit regulations, she said.

For instance, the Government’s Decree 55 stipulates that customers involved in the agriculture and rural development sector can obtain loans at credit institutions without mortgaged assets, but the decree also stipulates that customers must submit their land use certificates to credit institutions when they apply for loans.

They still had to guarantee assets when applying for loans, she said.

Khai said that domestic agriculture was still small-scale and underdeveloped, which does not ensure efficiency, so banks are anxious to offer unsecured loans.

Vo Quan Huy, director of Huy Long An Co Ltd, who has a large banana farm in the southern province of Long An, said his company had to mortgage assets to obtain a loan, but he said the assets were priced by the banks at a level which is too low compared to the market price.

Similarly, Doan Minh Chien, owner of a general farm in the southern province of Binh Duong, said “Each hectare of my farm is valued at VND7-8 billion at the market price, but the bank values it at just VND300 million.”

Huy and Chien suggested that the Government and central bank reconsider amending the asset valuation policy.

Tien said household and farm economies would continue to be the base of the country’s agricultural production.

The Government should develop policies to encourage pooling and accumulating land to expand production scale, and develop linkages in agricultural production.

Delegates at the forum said the Government should complete financial and credit policies in the agricultural sector that support individuals and organisations in pooling land. Developing insurance models in agricultural production is also important, they said. 

VN eyes export boost through Chinese border     

Viet Nam should implement polices to increase its export volume through its border gates with China by taking advantage of the Viet Nam-China Border Trade Agreement, experts said.

The agreement has created favourable conditions for Viet Nam’s border provinces to change reasonably their economic structure, experts said.

However, many experts were of the opinion that Viet Nam should limit shipments of small volume of exports without legal contracts, and promote large volume of exports, as small-scale exports did not provide enterprises with incentives to improve the quality of their goods and competitive ability.

Nguyen Van Hoi, deputy head of the Border and Mountainous Trade Department under the Ministry of Industry and Trade (MoIT), said the trade agreement was signed in September 2016 with 16 articles to ensure an annual growth of 30 per cent in the trade value of goods exported through the border gates between Viet Nam and China.

The agreement will contribute partly to the socio-economic development and improvement of the living standards of the people in the border areas, he said. Viet Nam’s major export goods to China include farming, forestry, seafood and fresh fruit products.

Dinh Van Thanh, former head of the MoIT’s Trade Research Institute, said the agreement was applicable for trading via border gates and border markets in seven provinces of Viet Nam, including Cao Bang, Quang Ninh, Lang Son, Ha Giang, Lao Cai, Lai Chau, Dien Bien, and two China’s provinces of Yunnan and Guangxi.

Nguyen Van Son, chairman of the People’s Committee of the northern mountainous province of Ha Giang, said the development of border gate economy and border trade is the key to economic development in Ha Giang Province.

To promote border trade development, Ha Giang has received recommendations from enterprises to improve infrastructure, reform administrative procedure and create favourable conditions for attracting enterprises’ investment in border trade activities.

Thanh said the infrastructure at border gates was limited owing to the lack of investment, and the two countries have not had specific management policies for border trade activities because of which those activities had not developed strongly.

There are not enough warehouses at the border gates between Viet Nam and China to meet the demand of trading activities, especially cold storage system, which has not got any investment to be built.

Meanwhile, some kind of farming and fresh fruit products of Viet Nam have been exported to China, but they were not exported under contracts.

Pham Van Truong, a MoIT expert, said Viet Nam should restructure the production of farming products and goods to ensure the quality of those products and promote exports with large volume. This would help avoid "saving" farm produce from plummeting prices that happened over the past time, partly due to small-scale and lack of legal contracts.

The State should have specific solutions to provide market and capital support to enterprises, said Truong, adding that the State should continue negotiations with China to expand the market for Vietnamese goods by facilitating contracts for large exports .

Thanh from the Trade Research Institute said Viet Nam should establish a border business association to protect the interests of local enterprises engaged in trading activities with China, as well as other countries.

The Government needs to upgrade infrastructure for trading activities at border gates, creating favourable conditions for border trade development, he added.

On the other hand, he said Viet Nam must diversify its forms and methods of trade promotion with neighbouring countries and perfect a database of information on border trade activities for managing those activities. 

CBRE Vietnam wins three 1st prizes at Asia Pacific Property Awards     

CBRE Vietnam was honoured at the 2017 Asia Pacific Property Awards with three first prizes in important categories. The company won for “Best Real Estate Agency in Vietnam,” “Best Lettings Agency in Vietnam” and the “Property Consultancy Award” at a ceremony held in Bangkok earlier this month.

Meanwhile, Le Trong Hieu, director of CBRE Vietnam’s advisory and transaction of office services, won the award for “Best Real Estate Agent in Vietnam.”

With these achievements, CBRE Vietnam has become the only real estate consulting and management firm in Vietnam to win three first prizes in the nine-year history of the Asia Pacific Property Awards.

The Asia Pacific Property Awards, part of the International Property Awards, honours leading companies in all fields of the property industry world-wide. This year CBRE Vietnam has surpassed other leading firms in the industry to achieve the ‘five-star’ prizes.

Furthermore, CBRE Vietnam as the Best Letting Agency will compete against other winners from Africa, Arabia, Europe and America for the title of “World’s Best Letting Agency.”

The prizes prove CBRE Vietnam’s qualifications and professionalism in providing real estate services and customer care in highly competitive markets like the Asia Pacific and Vietnam.

Recently CBRE Vietnam was chosen as the exclusive management and leasing agent of Viettel’s head office and the Viettel Shopping Center.

The firm has continued to strengthen relations with many customers, and is the management agent for the Jamila project developed by Khang Dien and Hado Centrosa Garden and Hado Garden Villas of Ha Do Group.

In addition, CBRE has been selected as the lead agent for the Waterina, the first project in Vietnam by Japan’s Maeda Group, which is the management unit for the underground construction for the metro line No. 1 (Ben Thanh-Suoi Tien) in HCM City’s District 1.

In Hanoi, the firm is the exclusive agent for Central Field, a project by 19-12 Bac Ha Co Ltd, and the managing agency for Richy Tower and Sun Square buildings.

Dang Phuong Hang, managing director of CBRE Vietnam, said it is a pleasure to work with the CBRE Vietnam team to achieve these goals.

“We will do our best to develop CBRE Vietnam and achieve more success in the near future. Moreover, to meet the increasing demand of the real estate market, we introduced hotel services to provide advice and expertise in the hotel industry, sustainability services to provide solutions for green building, and leasing services to help investors with apartment leasing.

“With integrated real estate services, CBRE Vietnam is confident of generating benefits for customers.”

In the past CBRE Vietnam was the only property consultant in the country honoured at the Golden Dragon Awards. In addition, the company was listed among FORTUNE’s Most Admired Companies for five consecutive years.

CBRE Vietnam was also named the Best Property Consultant Agent in Vietnam for the fifth time by the Euromoney Awards.

Direct Da Nang-Incheon flight route launched     

Eaststar Jet of Korea has begun operating a new daily direct flight from Da Nang to Incheon, using the Boeing B737-800 aircraft with 189 seats.

The airline said at the launching ceremony on June 14 that the new route would help boost tourism and facilitate travel between Da Nang and Korea.

It said Da Nang is the third city in Viet Nam, after HCM City and Ha Noi, from which the airline is operating direct flights to Incheon.

According to the Da Nang tourism department, nearly 200,000 South Koreans visited the city in the first quarter of this year, a 90 per cent growth over the same period last year.

The department said eight airlines – Korea Air, Asiana Airlines, Vietnam Airlines, Vietjet, Jeju Air, Jin Air, T’way and Eaststar Jet – now operate a total 56 flights per week connecting Da Nang with Incheon, Busan, Daegu and Muan in Korea, with total capacity of more than 8,000 passengers.

It said Da Nang and world heritage destinations in central Viet Nam could promote tour exchanges between Jeju Island, Incheon and Seoul.

More than 443,000 Korean tourists – nearly 20 per cent of foreigners – visited the city last year.

At Co.opmart, the more customers buy, the more benefits they get     

Besides having close co-operation with suppliers and together foregoing profits to offer discounts on farm produce during the rainy season, starting this week Co.opmart and Co.opXtra supermarket chains nation-wide are offering huge discounts when customers buy the second, fourth and sixth items of certain products.

Until June 25, under the “Buy more, get great incentives” programme, which is part of the supermarkets’ 2017 Green Consumption Month, the price of a 40g pack of strawberry/chocolate cream-flavoured biscuit sticks is cut from VND9,900 to VND4,900 for the second item, that of a 62g paper box of egg buttermilk cake is cut from VND10,400 to VND7,500, that of a food wrap film pack is cut from VND19,900 to VND 9,900, and that of an 800ml pack of apple-scented dishwashing liquid is cut from VND16,500 to VND 9,900.

The price of an 80-piece pack of baby wet tissues is reduced from VND28,800 to VND14,800, that of a 650ml bottle of Men Classic perfumed shower cream is reduced from VND87,900 to VND37,900, that of an SGC animal-shaped bolster pillow is reduced from VND71,900 to VND39,900, and that of an SCG vacuum-packed pillow is reduced from VND96,900 to VND49,900.

Meanwhile, under the Good Price Promotion Programme, customers can buy many essential items at discounts of VND16,000-VND400,000.

For instance, two 16-sachet boxes of peach tea is sold at just VND27,000, a nine-kilogramme pack of detergent is discounted by VND40,000 to VND155,500, an SGC 37cm x 105cm vacuum packed bolster pillow is reduced by VND164,000 to VND109,000, a 360 degree aluminum floor cleansing stick is discounted by VND30,000 to VND94,000, a set of SGC 1.6x2m blanket, bed cover and pillow cases is reduced from VND1.079 million to only VND679,000.

Also under the 2017 Green Consumption Month programme, Co.opmart and Co.opXtra will present four to seven times higher than normal bonus points on customers’ loyalty/VIP cards when they buy major brands of liquid detergents, fabric softeners, coffees, biscuits, and other products from Unilever, Trung Nguyên, Vietnamcacao, Oreo, LU, and others.

Policies key to attracting foreign investment

Places with stable and favourable policies which promote business linkages are magnets for foreign investment, said Chairman of the Japanese Business Association in Vietnam Sagara Hirohide.

Sagara Hirohide, also Co-Chairman of the Vietnam Business Forum (VBF) Consortium’s Management Board, made the remark at a press conference held on June 15 on the threshold of the VBF 2017.

He lauded Vietnam’s efforts to improve its business climate, especially the recently passed Law on Support of Small-and Medium-sized Enterprises (SMEs). He said the move will encourage the development of private businesses.

Vietnam boasts huge potentials to attract foreign investors, he stressed, adding that both large enterprises and small-scale firms from Japan can set up business relations in Vietnam due to the favourable business climate and simple and transparent legal procedures.

Business links will aid the Vietnamese industrial sector, particularly the support industry, he said.

For his part, President of the Vietnam Chamber of Commerce and Industry and Co-Chairman of the VBF Consortium’s Management Board Vu Tien Loc, said that measures to connect domestic and foreign firms, especially SMEs, would be discussed at the VBF 2017 on June 16.

Enterprises must set up business cooperation and the Government will provide them with favourable policies and conditions, Loc stressed.

Luc Ngan lychee week opens in Hanoi

A Luc Ngan “Thieu” lychee week, the second of its kind, opened on June 16 at Big C Thang Long shopping centre at 222 Tran Duy Hung, Cau Giay district, Hanoi.

During the week-long event, big supermarkets and wholesale markets will sign contracts with Luc Ngan businesses, cooperatives and farm owners to buy lychees.

According to the Department of Commerce and Industry of the northern province of Bac Giang, this year’s lychee production is estimated to hit 100,000 tonnes, equivalent to 70 percent of the previous year’s output. Of them, there are 26,000 tonnes of early-ripening lychees and 74,000 main-crop lychees.

About 40,000 tonnes of fresh lychees are expected to be shipped to China, representing 80 percent of this year’s lychee exports, said the department.

Apart from China, the province has also expanded consumption markets to the US, the EU, Japan and the Republic of Korea.     

Binh Duong real estate market stagnant

Poorly-planned projects have led to large housing inventory and a stagnant real estate market in Binh Duong Province.   

Tran Khanh Quang, director of Viet An Hoa Company, said there were no new projects in Binh Duong. The real estate market had grown recently but not as much as the markets in Long An and Dong Nai provinces.

According to Quang, existing projects still have many empty apartments which was why investors were reluctant to start new projects. Moreover, because of excessive supply, prices won't increase. There are demands from Di An Commune and the areas near HCM City but the demand is small and most customers just want to buy plots of land.

Quang said Binh Duong once had like thousands of real estate products and housing units at good prices five years ago and attracted a huge number of customers. But then those homes are sold and resold, investors can't find customers.

A leader from the HCM City Real Estate Association said while the real estate market in Binh Duong had slowed because of excessive supply, Dong Nai was having a huge boost from planned Long Thanh Airport and highways. Long An Province was neglected before so it is attractive to investors now.

Nguyen Van Duc, deputy director of Dat Lanh Company said the authorities in Binh Duong was too ambitious and had miscalculated.

"They relocated their administrative centre to the new urban area, hoping that their officials would also move there but they were wrong. It's not easy to motivate people to relocate, they need long-term policies," he said.

Binh Duong authorities want to establish a similar urban area like Phu My Hung in southern HCM City. However, they set the prices too high, offering people to make an instalment payment in 20 years and no one wanted to move in. Now the area looks deserted.

A square metre of land in the urban area cost VND30m (USD1,300) while the land 100 metres away costs just VND3m per square metre.

Tran Khanh Quang, director of Viet An Hoa Company suggested lowering the prices. The province has a population of over one million, with a few hundreds of thousands of migrants from other provinces, and many of them are poor workers.

Duc also agreed that lowering prices was necessary as they need a breakthrough to deal with the high inventory.

Meanwhile, Nguyen Vu Huy, director of Ban Viet Company said Binh Duong authorities should invest in small urban areas with affordable land lots before investing in luxury projects.

Le Hoang Chau, chairman of HCM City Real Estate Association, said customers were reluctant to move to new urban areas as Binh Duong Province's infrastructure was still weak.

Hanoi tax department publishes debtors

The Hanoi Department of Taxation has recently released a list of 72 enterprises with outstanding tax, fee, and land rental debts totaling nearly VND86 billion ($3.8 million).

Six enterprises owed land rentals of VND27 billion ($3.8 million), of which the largest debtor was the Cau Giay Investment Trading Service Joint Stock Company, with over VND22 billion ($970,000).

Regarding taxes and fees, 66 enterprises owe a total of over VND58 billion ($2.55 million). The largest debtor, with nearly VND7.4 billion ($330,000), is the Ha Thanh One Member Limited Liability Company. Thirteen companies owe tax debts of over VND1 billion ($44,000).

Other large tax debtors include the Atesco Industrial Feed Joint Stock Company (VND4.4 billion ($200,000)), the VNC Construction Joint Stock Company (VND3.5 billion ($150,000)), the Thang Long Tourism and Import-Export Joint Stock Company (VND3.5 billion ($150,000)), the Tien Hung Construction and Trading Company Limited (VND3.4 billion ($150,000)), and the Havico Joint Stock Company (VND3.3 billion ($145,000)).

The department previously published the debts of 720 enterprises and projects totaling nearly VND2.7 trillion ($2.55 million). After the disclosure, 209 paid over VND69 billion ($3 million) to the State treasury.

Support to grow

The Daiwa-SSIAM Vietnam Growth Fund II, co-managed by Daiwa Corporate Investment under Japan’s Daiwa Securities Group, last month became a new investor in the Pan Farm JSC, the agriculture arm of Vietnam’s Pan Group. Along with Daiwa, the International Finance Corporation (IFC), a member of the World Bank Group, and SSI Asset Management under Saigon Securities also purchased an 18 per cent stake in Pan Farm. Earlier, DEVNET International, a Japanese organization providing development information, revealed there would be about 3,000 companies, mainly Japanese agricultural cooperatives, established in Vietnam over the next few years. 

Agriculture brings many cooperation opportunities for both Vietnam and Japan given that foreign investment capital in the sector remains limited, according to Mr. Fumiyasu Akegawa, President of DEVNET. “I think it is a good idea to quickly and skillfully combine Japanese companies’ technical ability and information resources with potential markets such as Vietnam to promote the development of agricultural production chains,” he said. 

The model of coordination between Vietnamese and Japanese enterprises in agriculture has borne positive results in recent years. In addition to direct investment, many Japanese enterprises also choose to cooperate with Vietnamese enterprises to establish fruit and vegetable farms around the country. Figures from the Japan External Trade Organization (JETRO) in Vietnam show there are 42 direct investment projects in Vietnam’s agriculture sector. “Most projects are direct investment, but there are also many established under cooperation between enterprises from the two sides,” said Mr. Hironobu Kitagawa, JETRO Hanoi’s Chief Representative. 

Deputy Director of the Ministry of Agriculture and Rural Development’s International Cooperation Department Nguyen Anh Minh told a workshop on opportunities in agriculture and investment cooperation between Vietnam and Japan in February that the number of Vietnamese firms attending the workshop this year increased five-fold compared to last year, which proves that local businesses are very much interested in seeking cooperation opportunities with foreign partners. “Local firms are seizing the opportunity to collaborate with Japanese businesses, learn from their experiences and high-tech farming techniques, develop production bases for material supplies, and secure high-tech farming equipment and agricultural machinery from partners,” he said.

Meanwhile, in order to cement investment opportunities in Vietnam, Mr. Hiroto Okabayashi, Chairman of Japan’s New Gate Co., said he is looking for a partner in Vietnam to invest 500 million JPY ($4.49 million) into energy, machinery and equipment for agricultural production in the country. A representative from Japan’s JC Service Co. said it is also seeking partners in the field of biomass power plant construction, which takes advantage of the inherent strengths in Vietnam’s agriculture sector. 

Most Japanese investors and organizations in Vietnam’s agriculture sector hope to take advantage of the country’s favorable natural conditions, climate, and large consumption market, said Mr. Kitagawa. Japanese businesses, he went on, believe that Vietnam is yet to have a complete cold storage system and form a global food value chain. Increasing value added in agricultural products is also not fully developed. 

While Vietnamese farmers cultivate onions and then sell those onions, he said by way of example, Japanese farmers process their onions to increase added value. Japanese investors therefore expect that Vietnam’s agricultural output will meet that value requirement. Incomes in Vietnam are also gradually improving, which increases demand for safe fruit and vegetables. “I also look forward to Vietnamese enterprises actively inviting cooperation from Japanese partners to create a win-win situation,” he said. 

Cooperation with organizations such as Daiwa and the IFC will help Pan Farm not only regarding capital but also present opportunities for it to expand cooperation with the broad global network of the two, said Pan Group Chairman Nguyen Duy Hung. Pan Farm will expand its production scale and improve corporate governance and financial potential, gradually implementing its strategy to become a leading company in the field of agriculture in Southeast Asia. Mr. Tatsuyuki Ota, Chief Representative of Daiwa Corporate Investment in Vietnam, said that Daiwa will help Pan Farm seek markets and partners in Japan and provide support in technology and experience. 

It’s clear to see that the need among Japanese enterprises to seek business cooperation opportunities in Vietnam is increasing, but for these to work effectively the Vietnamese Government must continue to create a friendly business environment for investors. “A transparent business environment is the key factor attracting foreign businesses,” said Mr. Akegawa. “The exchange rate also is a matter for the government to pay attention to.”

Moreover, it is difficult for foreign enterprises to acquire large parcels of agricultural land at a reasonable price, which makes it difficult to apply advanced technologies, according to Mr. Kakioka Naoki, Senior Representative at JICA Vietnam. “Agriculture contracts have not yet become common practice for farmers in Vietnam,” he said “Contracts are easily breached, which seriously affects the business of foreign enterprises and mutual benefit.” 

Completing value chains

The food value chain was expected to address shortcomings in Vietnam’s agriculture sector, including modest productivity levels and quality and the lack of proper cold storage facilities and a frozen food distribution network. According to Mr. Irie Yasuo, Chairman of Japan’s Tanka Co., which specializes in preserving fruit and vegetables, preservation methods are important for transporting vegetables from Da Lat to Hanoi or Ho Chi Minh City. Tanka therefore wishes to cooperate with Vietnamese companies to apply Japanese methods to increase the effectiveness of storage systems. 

The two governments are also working together on agriculture projects, selecting certain localities in Vietnam to conduct pilot programs addressing specific shortcomings. For example, north-central Nghe An province has received assistance to boost productivity and added value in its farming products. The central highlands province of Lam Dong is being assisted in developing key products and food processing. Outlying districts of Hanoi and Ho Chi Minh City are being helped to improve cold storage and frozen food distribution systems, while Mekong Delta provinces are being aided in adapting their farming to the impacts of climate change.

Compared with other ASEAN countries, Vietnam’s agriculture infrastructure has been well developed. Water and electricity supply and roads, which are the most important factors in the establishment of food value chains, are all in good shape, according to Mr. Naoki, However, he also pointed out that there are many lingering shortcomings, such as unsafe crop production from the incorrect use of pesticides, insufficient post-harvesting, unclassified produce, a lack of safe vegetables in markets at good prices, complex distribution channels, and poor competition, and many other issues. 

In addition, productivity is not high and Vietnamese farmers do not have sufficient knowledge and techniques to improve productivity and produce safe agricultural products. To increase agricultural productivity, the use of machinery is crucial. “Used machinery can still ensure production capacity, but the government has not adopted policies to import such equipment from Japan and facilitate access by farmers,” Mr. Kitagawa said. 

In August 2015, the Vietnamese and Japanese Governments agreed to encourage private sector investment in the agriculture sector in order to establish agriculture food value chains in Vietnam. Many Japanese companies have visited Vietnam seeking opportunities under the agreement. Actual investment in the agriculture sector has only just begun, however, and with JICA’s support is gradually increasing. “We believe Japanese investment can help to not only drive Vietnamese agriculture but also improve hygiene and safety,” Mr. Naoki said.   

Workshop promotes digitalisation in SMEs

Measures to involve Vietnamese small and medium-sized enterprises (SMEs) in the global market through digital solutions was discussed at a workshop held by the US-ASEAN Business Council and the Vietnam Chamber of Commerce and Industry (VCCI) in Ho Chi Minh City on June 15. 

Sanket Ray, CEO of Coca-Cola Vietnam, said the workshop serves as a forum for US multinationals to share experience with Vietnamese SMEs in digital marketing.

Vo Tan Thanh, VCCI’s Director in Ho Chi Minh City suggested the State renovate policies to improve the business climate, especially programmes to support enterprises in increasing investment for science and technology, human resources development, renovation and creativeness and economic digitalisation. 

According to Thanh, the Government has made every effort to improve the business climate. 

The VCCI worked with Microsoft Vietnam to deploy a project to support Vietnamese SMEs in sustainable development, aiming to help enterprises access new business opportunities and cope with sustainable development challenges, he noted.

The project focuses on assisting firms operating in materials, service and trade, he added. 

Experts said the retail is a promising sector in Vietnam thanks to the increasing income of the middle-class and consumer confidence. 

Effective use of technology and cooperation with experienced logistics suppliers will help Vietnamese SMEs in Asia and globally, they said. 

Daryl Tal, CEO of UPS Vietnam Company said online customers in Asia have a deep understanding of technology and can catch up with technology trends very quickly, so it is necessary to optimise the electronic supply chain to attract more customers. 

In 2017-2018, Vietnam is aiming to keep pace with other ASEAN nations in improving its business climate and promoting international integration in the context of the 4th industrial revolution and economic digitalisation.

Slow disbursement of public investment constrains economic growth

Deputy Prime Minister Vuong Dinh Hue and Minister of Planning and Investment Nguyen Chi Dung, have both accepted responsibility for the sluggish disbursement of public investment, resulting in lower than estimated economic growth.

At the National Assembly Q&A session on June 15, Minister Dung claimed responsibility for the weaknesses in the management of public investment and the inadequacies in the implementation of the Public Investment Law that has caused the slow disbursement of public investment.

Giving an additional explanation for Minister Dung, Deputy PM, Vuong Dinh Hue said, although the disbursement of public investment in 2016 and in the first five months of 2017 was higher than the same period in previous years, public investment has yet to be fully disbursed as estimated.

"The Government takes responsibility towards the National Assembly to do better in the future," said the Deputy PM. He admitted that slow disbursement of public investment is "one of the causes of unsuccessful economic growth", combined with ineffective use of capital.

Hue affirmed that the Prime Minister and the Government have made every effort in order to accelerate the disbursement of public investment. The disbursement rate in the last five months of 2016 was seven times higher than the rate in the first seven months of 2016. In 2017, the disbursement rate in the first five months has reached 24.7% of the plan, up nearly 4% over the same period last year. However, this result is still considered slow, he added.

The Deputy PM noted that the Government has worked out some specific solutions to this problem, such as requiring ministries and local authorities to continue inviting bids for construction projects, promoting decentralisation, accelerating land clearance, reviewing the inadequacies in guiding legal documents and applying disciplinary measures on officials causing slow disbursement, among others.

Nevertheless, the Government expects more regular attention and supervision from the NA, the Deputy PM said.

Explaining for the delay in disbursement of public investment, Deputy PM Hue identified two reasons, he said that one of the goals of the Public Investment Law is to avoid losses and over-diversification, therefore several regulations in the law are impeding the disbursement.

In addition, the decentralisation from ministries to local branches and governments is limited, also resulting in the slow progress of investment disbursement.

The deputy PM also confirmed the harassment and irresponsibility of certain public officials in the process of public investment disbursement.

At the same time, ministries are taking time to scrutinize priorities to cut down public project items and subprojects, thus slowing down the disbursement progress, He noted.

Promoting geographical indication of Dak Lak coffee

The Central Highlands province of Dak Lak boasts the country’s largest coffee-growing area, with a total area of over 200,000 hectares, producing up to 450,000 tonnes of coffee beans annually. However, in order to improve its competitiveness, as well as to protect local products, it is necessary for Dak Lak to manage and develop the geographical indication of “Buon Ma Thuot Coffee”.

According to Chairman of the Buon Ma Thuot Coffee Association, Trinh Duc Minh, a certificate of geographical indication (GI), for the Buon Ma Thuot coffee trademark in Dak Lak, has helped to increase the value of coffee beans shipped abroad.

Protected geographical indication (PGI) for Buon Ma Thuot coffee was registered in Vietnam in 2005. The province has completed the necessary procedures to gain PGIs in 15 countries and territories around the world and as many as 11 coffee producers in the province are entitled to use the GI. They are managing a combined coffee growing area of 15,300 hectares, yielding around 47,500 tonnes of coffee beans annually.

To ensure the quality of coffee products, in line with the requirements of the international market, management agencies and coffee producers have instructed local growers to follow standardised coffee-growing models, so that their products may obtain certifications granted by UTZ Certified and Rainforest Alliance, the two organisations tasked with promoting sustainable farming.

The local authorities have also encouraged coffee processing enterprises, which are allowed to use the GI, to label their products with the Buon Ma Thuot coffee trademark and inform customers in more detail about the distinctive characteristics of certificated coffee products.

Coffee growers in the province have also applied internationally-recognised programmes on sustainable coffee production to raise their incomes, according to the provincial Department of Agriculture and Rural Development. More than 40,500 coffee farming households in Dak Lak are producing coffee in line with programmes such as UTZ certificates, Common Code for Coffee Community (4C) and Rainforest Alliance Certified Coffee (RFA). They have produced 226,000 tonnes of coffee beans on a combined area of 65,000 hectares each year, accounting for over 50% of the annual output.

All 11 units granted with the Geographical Indication of Buon Ma Thuot coffee have also joined certified coffee production programmes. In Cu M’gar district, the main coffee growing locality in Dak Lak, almost 10,000 coffee farming households have taken part in certified coffee production programmes on an area of 15,000 hectares, making up 45% of the district’s total coffee area.

These households have been provided with techniques in growing, caring, watering, fertilising, harvesting, processing and preservation and have also been instructed on how to reduce production costs and use fertilizers in order to minimize impacts on the environment.