Singaporean investment in Vietnam up 157% in 2013

Singapore invested US$4.37 billion worth of newly registered and additional capital in Vietnam last year, up 153% against 2012.

Vietnamese authorities licensed 105 Singaporean-invested projects with total registered capital of more than US$3 billion and approved 34 other existing projects with total increased capital of nearly US$1.4 billion.

Worthy of note are a US$2 billion Samsung Electronics Vietnam plant in Thai Nguyen province, and US$1 billion in increased capital for the Samsung Electronics Vietnam plant in Bac Ninh province.

These are Singapore’s biggest investment projects and among the 10 biggest foreign investment projects in Vietnam last year.

By the end of 2013, there were 1,219 operational Singaporean-invested projects capitalized at more than US$29 billion, making the island nation second among foreign investors in Vietnam.

Vietnamese businesses also poured nearly US$35.7 million into Singapore, raising their total investment there to nearly US$185 million.

Consumer confidence shows early year bounce

Hanoi consumers appear to be growing in optimism according to a new consumer confidence survey.

The Ministry of Planning and Investment’s National Centre for Socio-Economic Information and Forecasting survey shows, 41.7% of consumers in the last six months of 2013 had described Vietnam’s economic situation as good, compared to 3% that rated the economy as good in 2013’s first half.

This was a marked improvement on the first six months where 54% of respondents described Vietnam’s economic situation as bad, and the rate reduced to 39.4% in the second half of last year.

With more than 1,500 inhabitants in Hanoi involved in the survey, the rate of respondents upbeat about the country’s economic situation rose from 41 to 55% from the first to the second half of last year.

Some 65.9%said their employment was more stable in the second half of the year versus 52.4% in the first half. The rate of those saying their employment was unstable reduced from 44.3 to 31%bfrom the first to the second half of 2013.

“This show that the economy has been showing very positive changes,” commentary on the survey claimed. “It also shows that Hanoi’s economy in general and household employment and incomes in particular have been improving. Households and individuals spending are increasing, meaning that the city’s consumption is growing.”

However, Pham Phuong Thao, a housewife in Hanoi’s Ba Dinh district, told Vietnam Investment Review that like thousands of families in her area, her five-member family still faced difficulties.

“Salaries haven’t increased, while the prices of petro and gas, water and electricity all increased,” she said. “We have also heard that their prices will continued rising in 2014, meaning that our life will become more difficult.”

Since December 2012 power prices have risen by 10%.

In 2013, despite six reductions, petro prices overall increased 4.48% after a series of five increases.

In 2013, gas prices also climbed seven times.

Last month, the National Centre for Socio Economic Information and Forecasting announced a study showing that it expected the government to increase power prices by 11% in 2014 and another 11% in 2015 based on the government’s average power retail price framework for 2013-2015 enacted last month.

“This hike will have the biggest impact on the prices of garments, footwear, home appliances, and housing and construction material,” said Pho Thi Kim Chi, a representative from the centre’s Analysis and Forecasting Department.

The centre also predicted a 20% bump in the prices of drugs and medical services in 2014 and 20% in 2015, which would raise the country’s consumer price index (CPI) by 0.71%.

US firm offers advanced cyber protection

US-based Symantec Corp has freshly announced in Hanoi new additions to its leading technologies that protect organisations, especially small and medium-sized enterprises, from targeted attacks.

Defending against sophisticated attacks is now the norm, and it is not just large companies that are being affected. Targeted attacks against businesses with fewer than 250 employees are growing significantly. Globally, small businesses are the target of 31% of all such attacks.

Small companies are an attractive target for cyber criminals as they have fewer security safeguards and often have business relationships with larger companies, which may be the ultimate target of attackers.

"One of the main concerns for Chief Information Security Officers (CISOs) and IT managers today is safeguarding their organisations against evolving targeted attacks which have become an established part of the threat landscape," said Raymond Goh, Symantec's Senior Director of Systems Engineering, Asia South Region.

"The new technologies, combined with our comprehensive solution portfolio, will protect organisations in Vietnam from threats at the gateway, on the endpoint and in the data centre," he added.

Most targeted attacks are now in the form of malicious but seemingly innocuous documents delivered over email. Each such malicious document, like a PDF, DOC or XLS file, contains an embedded attack. When a victim simply views the document, his computer is automatically and silently compromised.

To deal with this problem, companies can use powerful new innovations including Disarm technology in Symantec Messaging Gateway and Network Threat Protection in Symantec Endpoint Protection for Mac computers.

The new Disarm technology in Symantec Messaging Gateway uses a first-of-a-kind technique to protect companies from targeted attacks.

Traditional protection technologies attempt to scan documents for suspicious characteristics. The problem is that many of these document-based attacks are deliberately crafted so that they do not look suspicious and as a result, they go undetected.

Disarm technology takes a whole new approach. Instead of scanning the document, it essentially makes a digital, harmless copy of every incoming email attachment/document, and delivers this copy to the recipient, rather than the original, potentially malicious document.

The result is that the recipient is never exposed to the attacker's malicious attachment, said Goh.

FPT set 30pct gain in revenue for 2014

The country's software giant FPT has set a target of earning revenue of US$130 million this year, a year-on-year increase of 30%.

At the company's 15th anniversary in Hanoi this week, General Director Nguyen Thanh Lam said that last year, the company earned US$100 million in revenue and employed 5,000 IT workers.

Lam said FPT software plans to earn US$200 million in revenue and employ 10,000 employees in 2016.

According to Hoang Nam Tien, Chairman of FPT Software, over the past decade, the company has seen an average annual growth rate of 49% and 43% in terms of revenue and profits respectively.

The company has branches and representative offices in eight countries. Currently, it is the leading provider of software outsourcing services in Vietnam and has 219 partners in different countries and territories around the world.

Last year, FPT signed many important software outsourcing contracts with partners such as Recruit Technologies of Japan and a bilateral agreement with Vietnam Airlines to modernise its IT system.

To attain its dream of earning US$1 billion in revenue and employing tens of thousands of IT workers, FPT leaders said they will make every effort to take advantage of opportunities offered by traditional clients.

The company will invest further in developing technology, including cloud computing, big data, machine to machine (M2M) and SmartTV.

Deputy Minister of Information and Communications Nguyen Minh Hong said that the company's results last year have made it one of the biggest software firms in Southeast Asia, and noted its important role in the development of the domestic software industry.

However, Vietnam still needs more companies that have a scale of business similar to FPT Software, which could help maximise the country's software opportunities and make it more competitive on a global scale, said Hong.

He said the Ministry of Information and Communications will establish appropriate favourable mechanisms and policies for the further development of the sector to help Vietnamese enterprises participate in larger projects in the near future.

Plastics & Rubber Vietnam 2014 attracts businesses

As many as 300 domestic and foreign businesses will take part in the fifth Plastics & Rubber Vietnam 2014 exhibition in HCM City from March 4-6.

This is Vietnam’s key international exhibition where plastics and rubber makers showcase and market their latest innovations, state-of-the art machinery and cost-effective solutions to Vietnam and its neighbouring countries.

Despite the slow global economic recovery, Vietnam has achieved an annual growth rate of 5.8% for the past few years, offering plenty of opportunity for domestic and export businesses.

The plastic and rubber industry alone has secured an annual impressive growth rate of 20-25% thanks to high demands for domestic use and export.

Trade promotion targets key exports

The Ministry of Industry and Trade (MoIT) will increase trade promotion overseas this year with a focus on Vietnam’s key export items.

MoIT deems increased trade promotion necessary to meet the 10% export growth target set for 2014 by the National Assembly.

In 2013 the National Trade Promotion Programme benefited key export businesses, helping the country maintain high export value, expand potential markets, and reduce trade deficit.

Major contributors include garment makers earning US$20 billion from exports, footwear makers US$8.37 billion, seafood processors US$6.73 billion, timber producers US$5.5 billion, rice businesses US$3 billion, coffee processors US$2.7 billion, and rubber producers US$2.5 billion.

The programme approved 23 trade promotion plans worth VND28 billion for the agro-forestry and fishery sector, accounting for 28.6% of the total.

To make the programme more efficient in 2014, experts suggest an increase in funding for the programme and close coordination from Vietnamese Trade Offices overseas.

The garments sector began exporting accessories for the first time in 2013, a milestone in industry development after decades of purchasing input material from overseas.

Vietnam’s garments and accessories exports raked in US$20 billion last year, beating set targets by US$1 billion and maintaining an annual growth rate of 18%.

The Vietnam Garment and Textile Group (Vinatex) noted accessories exports contributed US$700 million to the total.

Domestic support industries are unable to supply as many as 30 Vietnamese economic and technical sectors. Production often relies on imported materials

Vinatex reports domestic accessories are finally enabling garment makers to cease costly material purchases from China, the Republic of Korea, Bangladesh, and other markets.

Garment 10 Company General Director Nguyen Thi Thanh Huyen says the proportion of locally made materials in its products has increased considerably over the years, from 30–40% originally to its present 60%.

The company, one of Vietnam’s leading garment makers, manufactures more than 200 million products annually for both domestic use and export. Garment 10 has earned consumer trust.

Vietnam’s garments export earnings are almost certain to exceed US$20 billion in the very near future after the successful negotiation of free trade agreements like the all-important Trans-Pacific Partnership (TPP) deal.

But the availability of locally made materials remains comparatively modest—the cumulative US$10 billion total value is not enough to attract additional investors to material manufacturing.

Raising the proportion of local content in garments will become even more important after Vietnam joins the TPP. Experts believe Vietnam has little choice but to increase the scale of its exports.

Spring fair celebrates Lunar New Year

A Hanoi spring fair is displaying a variety of specialty farm produce as part of the lead-up to 2014 Lunar New Year celebrations.

The annual event creates opportunities for local businesses to introduce their trademarks to consumers and consolidate the reputations of their brands.

As many as 250 pavilions showcase a wide range of agro-forestry and fishery products, handicraft products, jewellery, souvenirs, garments and textiles, and home appliances.

Renowned Vietnamese regional delicacies are also a major draw, including Dien Bien sticky rice, Uoc Le pork pie, Hoa Binh mushrooms, wine, and bee honey, Thai Nguyen tea, Buon Ma Thuot coffee, Ly Son garlic, and Tay Bac buffalo meat.

Fruit is another especially big seller as locals prepare for end of year festivities.

The fair kicked off at 07.00pm on January 18 at an exhibition centre, 489 Hoang Quoc Viet Street, Cau Giay precinct. It will last until January 28.

Vietnam-RoK trade turnover hits US$27.3 billion

The Republic of Korea (RoK) became Vietnam’s largest trade partner in 2013 after two-way trade turnover climbed to US$27.3 billion, 29.5% higher than a year earlier.

Vietnam Customs statistics indicate Vietnam increased its Korean imports 33.3% to an estimated US$20.7 billion, 15.7% of the country’s total import value.

The import value of computers and electronics and spare parts alone was US$5.1 billion, up 54.7% compared to 2012’s figure.

Half of Vietnam’s 2013 Korean import value came from machines, garment accessories, and telephones and associated spare parts.

Vietnamese exporters earned US$6.6 billion from the RoK market, an 18.9% rise and equivalent to 24.3% of the country’s total export earnings.

Major export commodities spanned garments and textiles (US$1.6 billion, up 53.5%), crude oil (US$724 million, down 9.3%), and seafood (US$512 million).

The quantity and scope of the two countries’ trade ties have benefited from Vietnam’s admission to the World Trade Organisation (WTO) and the signing of ASEAN-RoK Free Trade Agreement (AKFTA).

Vietnam has sustained an import surplus with the RoK for many consecutive years. The 2009 trade deficit of US$4.9 billion grew to US$14.1 billion last year.

Many Vietnamese businesses, and especially importers, are eager to invest in or explore emerging opportunities on the Korean market.

About 9,800 local businesses began importing goods from the RoK in 2012. Another 1,100 businesses had joined their ranks by the end of 2013.

Vietnam, EU progress in FTA negotiations

Vietnam and the European Union conducted the sixth round of free trade agreement negotiations in Brussels from January 13-17 and they planned to end bilateral talks this September.

In an interview granted to Vietnam News Agency, Truong Dinh Tuyen, advisor to the Vietnamese delegation to the negotiations, said both sides defined the roadmap for concluding the talks and their leaders would release a joint statement to mark the event.

According to Tuyen, who was also former Trade Minister, both sides are likely to sign the trade pact during Prime Minister Nguyen Tan Dung’s scheduled visit to the EU this October.

In Brussels, 12 working groups of Vietnam and the European Union examined a number of issues related to trading of goods and services, investment, customs cooperation, the rule of origin, competition, sustainable development, institution and legislation.

They worked out solutions for satisfying their requirements. The EU demands Vietnam further open its market, especially for services and government procurement. Vietnam is keen to facilitate trade.

Tuyen said they need to strike an overall balance of their interest, taking into account Vietnam’s low-development level.

If the trade pact is signed, Vietnam will first create a sound and transparent investment environment for EU businesses. It will also help Vietnam boost key export commodities such as garments, footwear and seafood, and generate jobs for local people.

Mauro Petriccione, Director at European Commission's Directorate General for Trade, EU chief negotiator, acknowledged both sides’ efforts in addressing differences during the talks, saying they had found common ground on sensitive issues.

He said the signing of the agreement greatly depends on technical and legal work, but expressed his belief the FTA will be reached this year.

Vietnam is the third Asian economy negotiating the trade pact with the European Union after Singapore and Malaysia.

Auto sales meet targets

The auto market has defied numerous difficulties to record the rather impressive growth of 19 percent in 2013, providing leverage for even more improvement in 2014.

The Vietnam Automobile Manufacturers Association (VAMA) reports as many as 110,519 vehicles were sold in 2013, 19 percent more than 2012’s 92,584.

Four-seat car sales numbered 44,389 units (up 25 percent) while truck sales stood at 66,130 (up 16 percent).

Last year’s improvements were attributed to a brighter economic outlook, attractive financing deals, discounting, and lower car registration fees. They exceeded industry expectations of 10 percent annual growth and marked a significant change from years of disappointing auto sales.

Local auto makers sold 13,205 units in December alone, a year-on-year increase of 32 per cent.

VAMA Chairman Jesus Metelo Arias noted December was the ninth consecutive month of year-on-year improvement.

While December’s increase is partly thanks to the traditional end-of-year shopping, industry insiders also acknowledge the role of attractive auto maker discounting.

Most car makers have been forced to reduce retail prices by between VND6 million (US$295) and VND58 million (US$3,330).

Toyota cut the price of its popular Corolla Altis sedan by VND6 million, and GM lowered its Cruze Sedan prices by VND30 million (US$1,428).

Mitsubishi offered the industry’s largest discount, a whopping VND58 million (US$3,300), on its Pajero Sport model, while also slashing the price of its Triton pickup truck by VND40 million (US$1,904).

Even Suzuki, a Japanese car maker rarely offering discounts, reduced the price of its compact Swift model by VND30 million.

A number of car manufacturers began using promotional gifts, such as free car insurance, free tuning and service packages, and installment payment options at preferential interest rates.

The Government's March 2013 decision to lower vehicle registration fees helped bolster market demand.

Most cities and provinces have reduced registration fees to 10 per cent of vehicle value. HCM City’s cuts entered into effect on January 1, 2014. Hanoi reduced its fee to 12 percent of vehicle value, still the highest in the country.

VAMA Chairman Jesus Metelo Arias has subsequently revised 2014 sale estimates upwards to 120,000 units.

Mercedes-Benz, the only luxury car trademark assembling vehicles in Vietnam, grew an impressive 44 percent to sell 1,700 units last year.

Toyota Vietnam General Director Yoshihisa Maruta predicts the Vietnamese auto market will continue to grow in 2014.

Mercedes-Benz Vietnam General Director & CEO Michael Behrens concurs with the optimistic assessments echoed by the VAMA chairman.

Arias is confident Government policy adjustments, consolidated customer trust, and the general economic recovery will create more opportunities for the auto industry.

He is careful to note 2014 is still vulnerable to market fluctuations, predicting a relatively modest vehicle sales growth rate of 9 percent.

Vietnam attends Green Week in Germany

Vietnam is one of the 70 countries represented at the 79th Green Week, kicked off in the German capital Berlin on January 17.

The opening ceremony for what is currently the world’s largest agricultural fair featured European Agriculture, Food Security, and Rural Development Commissioner Dacian Ciolos and agricultural ministers from a range of participating countries.

German Minister of Food and Agriculture Hans-Peter Friedrich highlighted the agriculture and food sector’s significant role in Germany’s economic development.

Germany’s agricultural export value approached 54 billion euro in 2013, he said.

Friedrich revealed the 750,000 businesses operating in the field generate jobs for 4.5 million workers.

Germany prioritizes small and medium-sized enterprises specialising in sustainable development and environmental protection.

The 10-day event attracts 1,650 businesses and is expecting more than 400,000 visitors.

A 124,000 square metre display space is showcasing traditional agricultural products alongside the latest in food processing technology.

The fair also incorporates a global forum on food and agriculture involving almost 70 ministers and deputy ministers and representatives from leading international food and agricultural businesses.

About 300 conferences, seminars, and bilateral meetings are also planned for the sidelines of Green Week, covered by over 5,000 reporters.

HCM City grants foreign businesses preferential tax policy

Tax policy amendments have improved the conditions facing foreign businesses operating in Vietnam.

This view was shared by participants at a January 17 dialogue between the HCM City Tax Department and the European Chamber of Commerce in Vietnam (EuroCham).

Representatives from the city’s tax department answered questions regarding tax payments and deductions for agricultural businesses and enterprises expanding operations over 2009–2014.

They also explained payment methods for the value added tax levied on international cargo transport services.

Chairman of the EuroCham Taxation Committee, Thomas McClelland, said corporate tax rates have been cut from 25% to 22% and will drop further to 20% in 2016.

Small and medium-sized enterprises will enjoy a 20% tax rate reduction at present but can expect a 17% drop by 2016.

McClelland underscored these positive moves will encourage foreign businesses to expand their Vietnamese market operations.

He warned foreign businesses still face a number of difficulties keeping abreast of the latest developments in Vietnamese tax policy. Taxation officials should provide a greater degree of practical assistance and guidance.

Deputy Head of the HCM City Tax Department Tran Thi Le Nga summarised taxation policy updates regarding value added tax and corporate tax amendments in the Government’s Decrees.

She also affirmed HCM City’s commitment to providing the conditions most conducive to both local and foreign businesses honouring their tax obligations.

Positive indicators offer real estate market boost

Economic stability and increased sales seen at the end of 2013 is offering hope for 2014, according to real estate consultants.

According to CBRE Vietnam, 2013 ended with a range of positive signs such as slightly higher economic growth which is being supported by exports and foreign investment, having helped offset faltering bank lending. The increase in registered FDI to $21.6 billion was particularly encouraging.

CBRE Vietnam’s managing director Marc Townsend added that the trade balance was in surplus thanks to a booming year for Vietnamese exports to the US market and the tight control of inflation, despite the fact that it edged up toward the year-end.

He also predicted that the newly amended Land Law, passed in December, had increased clarity for investors, and that a draft bill on foreign ownership in the real estate market was promising for investors.

“Combined with a tax rate cut and an increase in the minimum salary, these indicate a more focused government policy intended to mitigate the effects of the sustained economic downturn that has been witnessed in Vietnam,” he said.

Townsend predicted that this year’s performance was expected to grow from stronger external demand, but also face headwinds from weak bank balance sheets and on-going structural reform at state-owned enterprises.

“It is believed that the government will manage to keep inflation in check, which means no major currency devaluation will be seen. This means that with the US dollar strengthening, Vietnam’s exports will become even more competitive and will provide momentum for economic growth next year,” he said.

In Ho Chi Minh City, more cranes are expected to be seen in Thu Thiem peninsula as development prospects in District 1 remain difficult to access, while in Hanoi the east and north of the city will be the focus due to oversupply in the west and access to new developments in the CBD is almost impossible.

CBRE also predicted that by the end of 2014, the volume of sales in the mid-end residential sector will be equal if not greater than those in the affordable sector. They are even expecting a return of luxury residential to the market in 2014.

The office segment between Hanoi and Ho Chi Minh City is showing great divergenc. With limited availability of Grade A properties in District 1 of Ho Chi Minh City, and no new properties on the horizon, landlords will seize the opportunity to push rents. On the other hand, Hanoi will continue to see oversupply putting power in the hands of renters.

The entrance of famous brands like McDonald’s to the retail segment this year, and Vietnam’s obligations under WTO agreements to permit 100 per cent foreign ownership in the restaurant sector in 2015, will see a wide variety of retailers enter Vietnam during 2014.

Coastal destinations will continue to be the top performing hospitality sector. Deep-pocketed Russian will continue to shift strongly from Thailand to Nha Trang and Mui Ne (Binh Thuan), and gambling revenues are expected to surge, most notably in Danang.

EVN subsidiary to up electricity supply in 2014

Electricity of Vietnam’s National Power Transmission Corporation (EVNNPT) has set a target of providing between 122-122.5 billion kWh of electricity in 2014, up 9-9.5  percent from last year.

The target was released at the company’s conference in Hanoi on January 7 to review its 2013 operations and launch its production and business plan in 2014.

To realise the goal, EVNNPT asked its units to pay attention to technical management to prevent and reduce interruptions in the national electricity network, while making every effort to safely operate transmission lines and transformer stations, especially the 550kV North-South transmission line.

According to EVNNPT Deputy General Director Vu Ngoc Minh, his company safely transmitted 111,86 billion kWh of electricity last year, eight percent higher than 2012.

The company ran its power plants at full capacity in 2013, ensuring sufficient supply of electricity to power substations to serve socio-economic development and people’s everyday lives across the country.

To cut down the loss of power to eight percent by 2015, the corporation said that apa rt from ensuring the progress of electricity infrastructure development projects, it will also work with its subsidiaries to timely update the demand of regional power substation development.

At a recent conference in Hanoi, Electricity of Vietnam (EVN) was also requested to ensure the national power supply from 2014.

In 2013, the group generated and purchased over 127.8 billion kWh of electricity, up 8.47 percent from 2012.

Deputy PM seeks Italian help in economic restructuring

Deputy Prime Minister Hoang Trung Hai sought a Vietnam-Italy partnership in economic restructuring, including public investment, finance-banking and human resources as he greeted Vice President of the Italian Chamber of Deputies Marina Sereni in Hanoi on January 7.

Deputy PM Hai thanked the Italian Government and people for their support to Vietnam over the past time, particularly the official development assistance for national progress.

The Government of Vietnam wants more Italian investment in fields of its strength like oil and gas, manufacturing, small and medium-scale business, scientific and technological transfer, tourism and cultural exchange, he noted.

He suggested stronger efforts to realise the action plan signed in September 2013. According to him, Italy is now the ninth biggest European Union investor in the country.

Sereni said the joint declaration on the establishment of a strategic partnership and an action plan signed by both countries’ leaders in 2013 will lay the groundwork for concrete actions.

Sharing the same view as her host, she said Vietnam and Italy need to expand partnerships, especially in business and investment.

She said that Italy is encouraging more investment in technology and an extension of commercial reach at home, in European Union markets, and beyond.

The guest also highly valued Vietnam’s business climate.

Leading think tank discusses economic development

The Party Central Committee’s Economic Commission - a think tank in socio-economic affairs - will keep up its good work and exert more effort this year, heard a conference in Hanoi on January 7 to review its 2013 operations and set tasks for 2014.

Last year, the commission paid attention to perfecting its apparatus while fulfilling its political task.

Its studies reflected the high sense of responsibility of experts and scientists across the northern, central and southern regions. After referring to global experience, they produced research studies and proposals up to the expectations of the Party Central Committee, Politburo and Secretariat.

This year, it will review the 30-year economic overhaul and contribute to the 12th National Party Congress’s documents, particularly those involving socio-economic development for the 2016-2020 period.

The body will work on a report on the five-year implementation of a resolution on socialist-orientated market economy adopted by the 10 th Party Central Committee’s sixth conference, a project on renewing the legal framework, mechanisms and policies on foreign direct investment and support industry.

Its proposals to build a socialist-orientated market economy in pace with national renewal and global integration will also come up, the quality of periodic socio-economic reports will improve and its projects will meet their schedules.

Apart from other resolutions and directions set by the Politburo and Secretariat, the commission will also monitor economic restructuring in line with the renewal of the growth model.-

Leading think tank discusses economic development

The Party Central Committee’s Economic Commission - a think tank in socio-economic affairs - will keep up its good work and exert more effort this year, heard a conference in Hanoi on January 7 to review its 2013 operations and set tasks for 2014.

Last year, the commission paid attention to perfecting its apparatus while fulfilling its political task.

Its studies reflected the high sense of responsibility of experts and scientists across the northern, central and southern regions. After referring to global experience, they produced research studies and proposals up to the expectations of the Party Central Committee, Politburo and Secretariat.

This year, it will review the 30-year economic overhaul and contribute to the 12th National Party Congress’s documents, particularly those involving socio-economic development for the 2016-2020 period.

The body will work on a report on the five-year implementation of a resolution on socialist-orientated market economy adopted by the 10 th Party Central Committee’s sixth conference, a project on renewing the legal framework, mechanisms and policies on foreign direct investment and support industry.

Its proposals to build a socialist-orientated market economy in pace with national renewal and global integration will also come up, the quality of periodic socio-economic reports will improve and its projects will meet their schedules.

Apart from other resolutions and directions set by the Politburo and Secretariat, the commission will also monitor economic restructuring in line with the renewal of the growth model.-

HCM City targets to become regional services hub

A socio-economic development master plan to 2020 with a vision to 2025 recently approved by the Prime Minister requires Ho Chi Minh City to take the lead in national industrialisation and modernisation, gradually becoming an economic, financial and scientific and technological hub of the country and the region as a whole.

To fulfil the goal, the city is asked to take concrete steps to produce an average economic growth rate of 10-10.5 percent per year during the 2011-15 period, and 9.5-10 percent in the five following years, with GDP per capita reaching 4,970 USD by 2015 and 8,820 USD by 2020.

Its economic structure will also be shifted, with priority going to the services sector which will account for about 60 percent, followed by industry, making up approximately 40 percent, and agriculture with less than one percent.

In regard to social development, the city with a population of 8.2 million in 2015 is requested to cut down the number of poor households according to its new criteria to 7-8 percent overall.

The plan includes a target to basically address submergence by rainwater and risin g tides in the city’s central area within the 2011-15 period, and completely deal with the problem by 2020.

Under the plan, the city will focus on improving the quality of services including finance-credit-banking-insurance, trade, transportation, information technology, telecommunications and property.

The development of the modern infrastructure system in support for the aforesaid services such as supermarkets, plazas, office buildings, hotels, hi-tech health centres and universities that meet international standards is also part of the plan.

Furthermore, urban development is not encouraged at conservation parks such as the Can Gio biosphere reserve and protected forests in the suburban districts of Binh Chanh and Cu Chi.

To realise the master plan, the Government recommends the city mobilises capital from both domestic and foreign enterprises while taking proactive measures to balance its annual budget for key projects.

FDI inflow feared to dwindle in 2014

The inflow of foreign direct investment (FDI), having beaten all expectations last year, is feared to dwindle in 2014 as authorities tend to be more choosy while the business environment remains unfriendly to investors, experts said.

Last year saw registered FDI surge to US$21.6 billion compared to the target of US$13-14 billion set at the year’s beginning by the Ministry of Planning and Investment. The total FDI disbursement also rose 9.9% to US$11.5 billion.

“Such results are beyond all expectations,” said Phan Huu Thang, former chief of the Foreign Investment Agency under the MPI.

Conditions for FDI attraction this year and next look more favorable owing to better macroeconomic stability, while the global economy gets stronger, according to the National Financial Supervision Committee. In addition, more foreign investors anticipating the conclusion of the Trans-Pacific Partnership agreement this year will come knocking.

Researchers at the Bank for Investment and Development of Vietnam noted that the Government has issued a new resolution to attract FDI by urging more changes to investment regulations, which will restore investors’ confidence.

Despite such favorable conditions, officials and experts alike predict a fall in FDI attraction this year as both central agencies and provincial authorities tend to be more choosy in licensing new FDI projects.

Minister of Planning and Investment Bui Quang Vinh in a televised Ask & Answer session weeks ago stressed that Vietnam would prioritize high-tech and environment-friendly FDI projects, meaning many projects would not be accepted.

Dong Nai Province’s authorities last week also made clear that it would set up more stringent screening procedures with an aim to attract more high-tech and environment-friendly projects.

The European Chamber of Commerce (AuroCham) in a recent conference in HCMC also noted the more stringent FDI screening process.

The Government restricts labor-intensive FDI projects and looks to hi-tech ones to create higher added values, but the local readiness for such projects is low, especially in terms of skilled laborers and industrial property protection, according to EuroCham.

In addition, the FDI flow into Vietnam has yet to be sustainable, as it depends heavily on just a few billion-dollar projects.

Of the total registered FDI of US$21.6 billion in 2013, up to US$11.54 billion belonged to just seven large-scale projects, whose implementation will normally take a long time.

Phan Huu Thang said that the FDI inflow can only be more sustained if the country can improve its competitiveness. Whether the year 2014 can see a strong FDI inflow or not also depends on the progress of talks on TPP and other free trade agreements between Vietnam and other international partners, he said.

Smuggled sugar injures local producers

Local sugar refiners are losing in the competition against smuggled sugar that amounts to hundreds of thousands of tons a year, said the Vietnam Sugar and Sugarcane Association.

The association said that local production is sufficient to meet demand, but each year still sees a huge amount imported into the country via illicit trade.

The sugar consumption per capita now is some 90 kilos, meaning the total demand amounts to 1.45 million tons, according to the association. An official with the Ministry of Agriculture and Rural Development said the sugar demand at home this year would be almost the same with that last year, at over 1.5 million tons.

Meanwhile, local refiners turn out between 1.5 and 1.6 million tons in the 2013-2014 sugar crop, more than sufficient for the domestic market. The association, therefore, calls on State agencies to further tighten control on sugar trade to prevent smuggled sugar.

The official with the agriculture ministry confirmed that hundreds of thousands of tons of sugar was smuggled into the country via the southern borderline each year.

Experts in the industry said locally-produced sugar cannot compete with the smuggled one as illicit traders could evade taxes and thus offer smuggled sugar at a lower price.

The sugar price on the domestic market has fallen slightly, with the factory price quoted at VND13,000 a kilo in late December compared to VND14,000 earlier last month.  

Meanwhile, smuggled sugar was offered at VND500-1,000 lower.

As the sugar inventory is on the rise, the Ministry of Industry and Trade has allowed sugar producers to export sugar at unlimited quantities until January 30. The sugar export will be halted after that to allow for the ministry to calculate the supply-demand balance.

Farm produce exports expected to grow further this year

The nation is expected to obtain strong growth in farm produce exports this year following positive export figures in 2013. Most of major farm products are expected to bring higher export revenues.

The Vietnam Cashew Association (Vinacas) expects this year’s export growth rate would be equal to last year’s figure.

In 2013, local cashew exporters fetched an export value of US$1.66 billion compared to the earlier target of US$1.5 billion. With cashew shell oil and deeply-processed cashew products included, the export revenue would be around US$1.8-1.9 billion.

Veggies export value also hit over US$1 billion, rising by 25% against 2012. Of which, dragon fruit, green skin pomelo, and fresh, frozen or canned veggies reported strongest earnings.

The Vietnam Fruits and Vegetables Association (Vinafruit) also forecasts 2014 to be a robust year for veggies exports. Veggies exports have reported an annual growth rate of 20-30% over the past years, so Vinafruit expects that the growth rate will be maintained this year.

Meanwhile, the Vietnam Pepper Association (VPA) projects export volume of around 125,000 to 130,000 tons with revenue of around US$900 million, equivalent to 2013’s earnings. The forecast is rather cautious after pepper prices stayed stable at around VND120,000 a kilo during last year.

For rice exports, the Ministry of Agriculture and Rural Development and Vietnam Food Association (VFA) said export situation would be almost unchanged compared to 2013. However, the nation will face tough competition with Thailand and other rice suppliers in Asia.

Vietnam will have to compete with Thailand in terms of fragrant rice and white rice. Thailand’s government is trying to lower prices to clear up inventories, resulting in rice price decline on the market, VFA said.

In addition, India despite natural disasters will remain a leading supplier and a strong rival of Vietnam this year.

Concerning export markets, despite falling demands in Southeast Asia, Vietnam still has chances to win government-to-government export contracts with regional countries this year.

In addition, China, the biggest rice importer from Vietnam, is projected to raise imports this year. However, enterprises have been warned of trade risks from this market.

VFA said that Vietnam’s rice exports will be around 6.5 to seven million tons in 2014, almost unchanged compared to that predicted early 2013. The figure does not include rice exports via unofficial channels.

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