Japan helps Vietnam enhance industrial competitiveness

The trade ministers of Japan and Vietnam earlier this month reaffirmed their commitment to work collaboratively to help the emerging Southeast Asian country elevate its industrial competitiveness at the international level.

Japan Economy, Trade and Industry Minister Hiroshige Seko and Vietnam Industry and Trade Minister Tran Tuan Anh told reporters following their meeting in Hanoi that they had agreed to several specific measures aimed at strengthening bilateral economic relations.

Mr Seko said Japan wants to expand relations with Vietnam across a wide spectrum of segments of the economy.

A memorandum of understanding signed by the two trade ministers called for collaboration among the Japanese and Vietnamese private sectors in the automobile and auto parts segments and the food industry in addition to infrastructure and energy support.

Subsequent to the meeting between the two trade ministers, major convenience store chain operator Seven-Eleven Japan unveiled plans to start accepting students from Vietnamese universities for its internship program.

Through the training program, the company will work closely with six major universities in Vietnam to hand pick an estimated 10 students for advanced vocational training in accounting, merchandising and marketing.

The training will take place in Tokyo and last for approximately one year, after which the trainees will return to Vietnam to assume managerial positions in Seven-Eleven stores throughout Vietnam.

Through the vocational training program, Seven-Eleven hopes to open more future employment opportunities for the Vietnamese interns.

Meanwhile Japanese Yamato Holdings has unveiled plans to start training Vietnamese workers in Ho Chi Minh City in advanced technologies in the cold parcel delivery services related to the food chain.

Yamato Holdings and a Vietnamese logistics company have established a joint venture in Ho Chi Minh City to offer the new service starting in late September.

The joint venture has set up a cold storage centre near the Tan San Nhat Airport to store perishables imported from Japan. The company will use trucks and motorbikes to deliver fresh food to customers throughout the City.

In connection with the launch, the head of the joint venture, Hiroshi Matsuda, told reporters that the company has plans to transfer Japanese advanced know how in the cold delivery services in the food chain to workers in Hanoi on the drawing board as well.

Lastly, the Japanese Nippon Automated Cargo and Port Consolidated System,which electronically manages customs procedures and centralizes interactions with relevant government bodies has unveiled plans to further expand support for Vietnam.

The company is specifically looking at transferring better technologies to handle quarantine inspections for importing and exporting of food products, said representatives of Japanese Nippon.

The program is an extension of Japanese support for modernizing customs management through the export of infrastructure systems in ASEAN nations that was initially adopted in 2013.

The objective is to ensure systems connectivity and information sharing functions within ASEAN are up to the level of Japanese technology, thereby reducing custom clearance times by reducing documentation requirements while enhancing safety and profitability in the food chain.

Vinacomin seeks to expand Lâm Đồng Aluminum Plant

The Việt Nam Coal and Minerals Industry Group (Vinacomin) seeks to expand the Lâm Đồng Aluminum Plant in the Bauxite-Aluminum Tân Rai Lâm Đồng Complex.

The group proposed the expansion to the Ministry of Industry and Trade in a meeting on Tuesday. 

Đặng Thanh Hải, Vinacomin’s general director, said that after three years of operation, the public’s doubts relating to the project’s effectiveness have been resolved.

He said that the project has always strictly adhered to environmental norms, following instructions by the ministry as well as supervision by the local people.

An inspection conducted by the Government earlier this year concluded that the factory suffered a loss of VNĐ3.7 trillion ($161.8 million) in the first three years of operation, which surpassed Vinacomin’s scheduled losses of VNĐ1.66 trillion.

However, Vinacomin’s report showed that the factory earned a profit of VNĐ50 billion in the first half of this year.

The project’s ealier losses were attributed to its expansion, which led to higher investment costs. The decreasing aluminum prices across the world coupled with increasing taxes also contributed to the losses.

China buys 35% of Việt Nam’s crude oil

China International United Petroleum and Chemicals Co Ltd (UNIPEC) bought 35 per cent of Việt Nam’s crude oil exports in the first eight months of this year.

UNIPEC spent US$733 million to buy 1.78 million tonnes of crude oil from the Việt Nam National Oil and Gas Group (PVN). According to PVN, it extracted 10.49 million tonnes of crude oil between January and August, with 9.19 million tonnes exploited locally.

PVN and its partners sold 8.81 million tonnes at some $3.6 billion through the PetroVietnam Oil Corporation (PVOIL), of which, 4.97 million tonnes of crude oil worth $2 billion was shipped to other countries, and more than 3.8 million tonnes was supplied to domestic customers at $1.59 billion.

China was among 30 customers to buy crude oil directly from Việt Nam or via third-party international traders.

A few days ago, there were rumours that although the average price of Việt Nam’s crude oil exported to foreign markets in the first eight months of 2017 was some $408 per tonne, Vietnamese crude oil shipped to China only fetched $400 per tonne.

With 1.78 million tonnes of crude oil sold to China at this price, Việt Nam lost more than VNĐ340 billion ($15 million) because of the price difference.

However, PVN denied the rumours.

The group claimed that Chinese customers imported the product directly from PVN at an average price of $412 per tonne, $9.59 higher than the average export price. For all China’s crude oil imports from Việt Nam, the average price was $405.31 per tonne, $2.9 above the average export price.

PVN added that the price depended on the quality of crude oil and existing market conditions.

Việt Nam currently extracts and exports 18 types of crude oil, with 17 kinds being extracted from local oil fields and one from an overseas oil field. The quality of the crude oil is different, leading to a price difference of $17-18 per tonne between high-quality crude oil, such as from Bạch Hổ (White Tiger) and Sư Tử Đen (Black Lion) fields, and other types of crude oil. 

Fuel distributors seek to secure sufficient E5 bio-fuel supply

Fuel distributors are finding ways to make sure that bio-gasoline supply will be sufficient to meet demand before RON92 petrol is banned from the market nationwide next year.

RON92-E5, a long-touted type of bio-gasoline, and RON95, a higher-grade type of normal gasoline, will be the only two kinds of gasoline to be available on the market next year.

Data of the Ministry of Industry and Trade shows that the total volume of RON92-E5 petrol sold nationwide between December 2015 and October 2016 was nearly 631,000 cubic meters, representing a mere 9.21% of total gasoline sales.

However, there is concern that when all gas pumps in the country switch to selling RON92-E5 and RON95 gasoline only, the former fuel might be insufficient to meet the demand. 

There is currently only one plant of Tung Lam Co Ltd producing ethanol, which is mixed with RON92 to make RON92-E5. This facility has a designed capacity of 200,000 cubic meters of E100 (pure ethanol) a year but it is operating at 15% capacity only.

Binh Phuoc and Dung Quat ethanol plants are expected to resume operation in late 2017, with a combined capacity of 200,000 cubic meters of ethanol a year. Together with Tung Lam ethanol plant, they will be able to ensure sufficient ethanol supply for RON92-E5 producers.

Licogi 16 Company, which holds a 22% stake in Binh Phuoc ethanol plant, decided on September 15 to resume the factory in the southern province of Binh Phuoc. Particularly, the company will spend more to revamp the plant, which has been put on hold for years, so that it can resume production early next year.

Leading fuel traders like Vietnam National Petroleum Group (Petrolimex) and PetroVietnam Oil Corporation (PVOil) will have to upgrade their existing fuel blending stations and build new facilities. These stations are responsible for mixing ethanol with RON92 gasoline to turn out RON92-E5.

Petrolimex is building new blending stations in Hanoi and HCMC while PVOil is upgrading its existing stations as well.

Three other fuel distributors operating fuel blending stations are HCMC One-Member Limited Liability Oil & Gas Company (Saigon Petro), Military Petroleum Corporation (MIPE Corp) and Nam Song Hau Petroleum Investment JSC (NSH Petro).

For gas stations, they will have to invest in pumping and storage facilities to ensure the quality and safety of RON92-E5 gasoline.

Vinachem still laden with massive debt

State-owned Vietnam National Chemical Group (Vinachem) made an after-tax profit of VND47 billion in the first half of this year but it is still sitting on a mountain of debt which has resulted from its loss-making megaprojects.

Vinachem’s first-half financial report showed the group made an after-tax profit of VND47 billion, compared to its loss of VND203.5 billion as of late 2016. However, its holding company still suffered a loss of VND192.7 billion given its huge debts and its affiliates’ loss-making projects.

The group’s total debts as of late June this year had amounted to VND38.1 trillion, of which its loans accounted for VND29.1 trillion, VND11.4 trillion of it in short-term loans.

The holding company’s short-term loans were VND572 billion, Ha Bac Fertilizer and Chemical JSC VND535 billion and Ninh Binh Urea Fertilizer Plant VND1.3 trillion. In addition, their long-term loans were around VND6.9 trillion, VND7.4 trillion and VND1.9 trillion respectively. They were the largest loss-making enterprises among a dozen of the group’s affiliates and joint ventures.

According to the report, Vinachem’s loan interest payments were about VND1.05 trillion in the six-month period.

The group had equity of VND19.2 trillion, so the ratio of liabilities to equity was 1.99 times. The ratio of loans to equity was 1.52 times as of late June.

Vinachem asked the Government to pay a Ninh Binh Urea Fertilizer Plant debt of US$162.5 million for the Export-Import Bank of China on its behalf. However, the Ministry of Finance rejected the proposal and told it to improve its cash flows to pay out the debt.

In particular, according to the ministry, the group still holds stakes in 40 other companies and even makes fresh and long-term investments in a Laos-based potassium chloride salt project whose feasibility is still a big question mark. If the group divests from all projects, it might improve its business performance.

The Inspection Commission of the Party Central Committee decided to take disciplinary actions against Vinachem’s former and present leaders due to their violations and negligence in the process of developing Ninh Binh Urea Fertilizer Plant and Ha Bac Fertilizer and Chemical JSC, among other projects.

Hau Giang props up investment in hi-tech agriculture

The Mekong Delta province of Hau Giang is in need of investments totaling US$50 million in a 5,200-hectare hi-tech agriculture zone.

At a press conference on an investment promotion conference in Hau Giang on September 19, Pham Van Tuu, director of the provincial Department of Information and Communications, said the province is looking for local and foreign investors to build the zone.

The hi-tech agriculture zone development project, which includes construction, equipment installation and manpower training, is among seven projects which require a total investment of US$261 million.

At the investment promotion conference slated for September 28, the province will introduce the hi-tech agriculture zone project and others to produce high-quality rice for export, and develop infrastructure for Dong Phu, Nhon Nghia and Phu Huu A industrial parks, a commercial and residential area in Vi Thanh City, and Lung Ngoc Hoang Nature Reserve.

To attract investors to these projects, the province will offer policy incentives such as a preferential corporate income tax rate, and exemptions of import tax for equipment and machinery, and land and water use fees for at least 15 years from the first year of project operation.

Nguyen Huu Nghia, director of the Hau Giang Department of Planning and Investment, said the province currently has 4,300 enterprises with registered capital of VND45 trillion (US$1.98 billion).

Hau Giang has lured 29 foreign direct investment (FDI) projects capitalized at US$808 million. The total investment of Vietnam Lee & Man Paper Manufacturing Ltd’s paper and pulp projects is US$650 million, Nghia said.

According to a report of the Foreign Investment Agency under the Ministry of Planning and Investment, fresh foreign investment approvals in the country amounted to US$23.36 billion in the first eight months of 2017, up 45.1% year-on-year.

The report also said foreign enterprises got involved in 18 sectors, with processing and manufacturing accounting for the highest investment, at US$11.69 billion, followed by electricity generation and distribution with US$5.36 billion, and mining with US$1.28 billion.

FPT Retail to list before April next year

FPT Digital Retail JSC, or FPT Retail, plans to list on the Hochiminh Stock Exchange (HOSE) prior to April next year, said an FPT Corporation source.

A report issued last month said FPT completed the sale of 30% of its shares in FPT Retail to Dragon Capital and VinaCapital. The group will continue offering 10% of FPT Retail’s shares to individual investors in the retailer’s initial public offering (IPO).

In the first eight months of this year, FPT made VND27.34 trillion (US$1.2 billion) in consolidated revenue and VND1.7 trillion in after-tax profit, up 11% and 15% year-on-year respectively. Pre-tax profits from its technology and telecommunications operations grew 28% and 13% versus the year-ago period.

Total revenue from foreign markets reached VND4.2 trillion, up 16% from a year earlier, and pre-tax profit was VND628 billion, rising 24% and accounting for one-third of the group’s total.

FPT Retail and FPT Trading met 99% of their revenue and pre-tax profit goals for the first eight months. FPT Retail achieved growth of 25% in revenue and 44% in pre-tax profit.

After FPT sold 30% of FPT Retail and 47% of FPT Trading, the two firms’ revenues and profits would not be included in the group’s. Technology and telecom services are expected to account for 95% of the group’s revenue from 2017.

FPT has agreed to transfer a 47% stake in FPT Trading to Taiwanese firm Synnex this month.

Experts discuss metro development and private vehicle restriction at EASTS

Domestic and foreign experts at a conference in HCMC on September 19 discussed measures to make urban railway development successful and restrict private vehicle traffic in Vietnam’s major cities which have become increasingly crowded.

At the 12th International Conference of Eastern Asia Society for Transportation Studies (EASTS 12), Jeahak Oh, vice president of the Korea Transport Institute, said populous cities in Vietnam need a thorough integration of transport planning, design, investment and management to ensure efficiency and smooth operation of the transport system.

He stressed a balance between road and metro investment and suggested major traffic infrastructure projects, especially metro lines, should be developed in the public-private partnership (PPP) format.

However, Shigeru Morichi, a Japanese expert in transportation planning and policies, and transportation Engineering, said some PPP metro line projects in East Asian cities have failed due to shortages of capital and insufficient state subsidies.

He said metro projects should be invested and operated by State-owned enterprises. When the projects begin to make profit, they could be sold to the private sector.

According to Vu Hong Truong, general director of Hanoi Metro Co Ltd, it takes Hanoi 8-10 years to complete a metro line. To speed up the construction of the metro system, the city is calling for more official development assistance (ODA) and considering developing some metro projects in the PPP format, of which basic infrastructure like tracks and stations would be developed with domestic private funding while trains and traffic signs would be invested by State-owned companies.

Speaking about private vehicle restriction and overloaded traffic infrastructure in Vietnam’s major cities, Pham Dinh Duc, head of the Road Transport Management Division under the HCMC Department of Transport, said the mushrooming of high-rise apartment and office buildings has put pressure on HCMC’s infrastructure and caused traffic jams on many roads.

“Traffic infrastructure in many parts of the city has been the victim of inappropriate urban planning. To reduce traffic congestion, the city should restrict private vehicles and at the same time develop public transit networks,” Duc said.

Lee Sungwon from the Korea Transport Institute suggested HCMC link urban planning, especially urban area development, with transport planning. According to Lee, the city’s traffic infrastructure is now unable to keep pace with the rise of residential high-rises and urban areas, especially in outlying districts.

To boost the development of public transport, deputy chief of the National Traffic Safety Committee Tran Huu Minh said the Government should have preferential policies and offer more incentives for public transport services.

Besides, there should be stronger investments into public traffic infrastructure, and service quality of public transport needs to be improved to encourage more people to use it, instead of relying on private vehicles.

Strong exporter demand sends fish, shrimp prices rising

The growing demand for unprocessed fish and shrimp in the Mekong Delta, helped by a surge in exports, has sent their prices soaring.

Nguyen Huu Nguyen, head of the Fisheries Cooperative of Chau Phu District in An Giang Province, said unprocessed tra (pangasius) fish of small size is priced at VND26,000-27,000 a kilo, up by VND3,000 over the previous month. Meanwhile, he added, the price of fish of bigger size is VND24,500-25,000 a kilo, up VND2,000-2,500.

The demand for tra fish has stabilized in some foreign markets, thus fueling the consumption of unprocessed fish, he noted.

Vo Hong Ngoan, a farmer in Bac Lieu Province, told the Daily that the price of giant tiger prawn ranges from VND240,000 to VND300,000 a kilo, up VND5,000-10,000 against half a month ago.

The supply for shrimp has been falling while the demand for shrimp export has been growing, especially in the rest of the year, thus making the price of the crustacean higher.

White-leg shrimp sells for VND103,000-165,000 a kilo, up VND5,000 against haft a month ago, according to Nguyen Van Hau, a Ca Mau Province farmer.

The Vietnam Association of Seafood Exporters and Producers (VASEP) said in a report that the nation had made US$1.9 billion in shrimp export revenue in the year to July, an 18.5% rise against the same period last year.

Japan imported US$383.8 million of shrimp from Vietnam, up 35.2% year-on-year. The European Union came in second with US$380.6 million, up 20.5%, followed by China with US$348.4 million, up a staggering 106.3%.

The nation shipped US$344.7 million of shrimp to the United States, a year-on-year decline of 5.5%. However, VASEP forecast the situation would improve in the months to come.

A Ministry of Agriculture and Rural Development report said seafood export turnover in the year to August had amounted to US$5.13 billion, up 18.1% against the year-earlier period. Among the main buyers were China, South Korea, Japan and the U.S., which made up 55.6% of the total.

VASEP general secretary Truong Dinh Hoe predicted Vietnam could earn US$2.7-2.8 billion in the last quarter and meet the full-year target of US$8-8.1 billion.

The report also said that in January-August, the total area under tra fish farming nationwide rose by 1.9% year-on-year to more than 4,700 hectares while output increased by 10% to over 815,000 tons.

The acreage of brackish water shrimp nationwide expanded 4.2% from a year earlier to around 679,000 hectares. Farmers harvested a total of about 363,000 tons, up 21.4%.

Businesses see wide door but difficulties to enter Korean market

After Vietnam-South Korea Free Trade Agreement (VKFTA) took effective in December 2015, South Korea has committed to cutting 95.4 percent of tax lines on Vietnamese goods. 

Businesses have expected to boost export to the market however it has been more difficult than before as the country has tightened technical barriers.

According to the Ministry of Industry and Trade, despite enjoying tax incentives, Vietnamese farm products are always inspected most strictly. Therefore, the country has been able to export some products such as dragon fruit, mango, guava, banana, carrot, broccoli and cabbage with limited volume.

Processed vegetables and fruits must meet norms according to export certificates granted by Korean sides after they have inspected production lines and process from fields to harvest, storage, processing and preservation.

Mr. Hong Won Sik, representative of Lotte Group, said that Vietnamese agricultural products are more low-cost than Thai and Chinese goods but quality has not been ensured. They are not uniformed in size, flavor and color. Packaging technique is weak while products have not been carefully selected with rotten products, soil and leaves remaining in packages.

While South Korea’s import standards have been stricter, some Vietnamese businesses have been vague about export conditions to this market, resulting in low export turnover. Vietnam has still seen trade deficit from South Korea.

Mr. Nguyen Quang Phuc from Export Import Department under the Ministry of Industry and Trade said that Korean businesses and associations had carefully prepared conditions to enjoy tax incentives from the FTA before it took effect. Meantime, many Vietnamese firms have so far been unable to grasp fully information and enjoy benefits from the agreement.

The only way to boost export to South Korea is that businesses must quickly access regulations on quality, food safety and hygiene, renew technologies and abide by production and processing regulations to overcome technical barriers, he said.

He noticed businesses that South Korea has not only returned unqualified consignments but also penalized exporters for breaking contracts.

Mr. Chu Thang Trung, Vietnamese commercial counselor in South Korea, said that most of agricultural products in South Korea were imported from China during the past years. Recently, the country has started seeking new suppliers from Southeast Asia nations including Vietnam.

In 2016, Vietnamese agricultural, forestry and seafood export turnover to South Korea topped US$1.4 billion, accounting for 4 percent of the country’s import demand. This number is still low compared to the potential of Vietnamese firms who have strengths in agricultural and food products.

There are many opportunities for Vietnamese goods including processed vegetable and fruit, pepper, cashew nut, coffee, shrimp and cuttlefish to enter the Korean market if businesses can take advantage of incentives from VKFTA.

Mr. Trung advised firms to pay attention to taste of local consumers when exporting South Korea to have suitable adjustments, survey the market to access consumers and attend locally organized fairs. In addition, they should ensure food safety and hygiene, uniformed quality and eye catching package to lure more Korean consumers.

Honouring innovative climate ideas of Vietnamese start-ups

The Vietnam Climate Innovation Centre (VCIC) honoured the leading Vietnamese start-up businesses on September 20 for employing innovative approaches to addressing climate-related challenges in local communities.

The awards ceremony recognised the efforts of the first seven enterprises in graduating from a year-long incubation period, alongside 17 winners of the second Proof-of-Concept Competition (POC2).

VCIC, a World Bank project supported by the Australian and British governments, provides financing, mentorship and advisory services to local clean-tech entrepreneurs.

Managed by the Ministry of Science and Technology (MOST), the VCIC supports local entrepreneurs in their attempts to develop innovative technologies and business models in a range of climate technology related areas.

In winning the POC2, the 21 entrepreneurs will receive incubation services and financial support from the VCIC, while the 7 graduates from POC1, which have considerably strengthened their businesses as the results of the VCIC’s support, will now be in the best position to access new markets.

MOST Minister Chu Ngoc Anh said that he expects that these enterprises will have positive impacts on the economy, environment, and society.

For his part, Ousmane Dione, Country Director for the World Bank in Vietnam, said that the winners and graduates that were honoured today are in the best position to find innovative solutions to climate challenges within communities, whilst playing a key role in contributing to the local economy and creating jobs.

Representing the two project sponsors, Layton Pike, the deputy head of the Australian Embassy in Vietnam and British Ambassador to Vietnam Giles Lever also underlined the VCIC’s important work in championing climate-related innovation.

Following the awards ceremony, the VCIC will hold a training programme from 21-23 September to increase the knowledge and skills of both groups of enterprises, focusing on business plans, market research, marketing and technology descriptions.

Can Tho city posts strong export growth in nine months

Businesses in the Mekong Delta city of Can Tho have enjoyed good export growth, with sharp rises in shipments of rice and aquatic products which make up more than 70 percent of local total export value.

According to the Can Tho Department of Industry and Trade, the city’s goods and services export revenue reached 1.27 billion USD in January-September, up 16.3 percent year on year. Of that sum, goods exports were estimated at 1 billion USD, up almost 17 percent from a year earlier.

About 638,100 tonnes of rice worth 261.9 million USD were shipped abroad, respectively increasing 22 percent and 19.6 percent year on year. Meanwhile, 117,000 tonnes of aquatic products were exported, bringing home 378.7 million USD, up 15 percent and 4.8 percent respectively.

Other products with good growth included processed agricultural products (55.4 million USD, up 24.4 percent), steel products (17.3 million USD, 46.7 percent), and pharmaceuticals (12.8 million USD, up 33.7 percent).

Deputy Director of the municipal department Duong Nghia Hiep said on September 20 that poor rice export figures in the first half of the year were attributable to fierce competition with Thai rice. However, the situation has improved since June, especially in September.

Many Can Tho businesses have won contracts to ship rice to the Philippines, Singapore and Indonesia, he noted, forecasting a positive export outlook in the rest of the year as several companies are negotiating new contracts.

Exports of catfish and shrimp products have also been growing rapidly since early September. Many shrimp processors face a material supply shortage and have to import raw materials from Bangladesh and India to fulfill their contracts.

Meanwhile, catfish exports have thrived thanks to China, a new and undemanding market with considerable demand, Hiep said.

He predicted that catfish and shrimp exports to European countries are likely to increase strongly after September to satisfy demand at year-end holidays.

Advanced manufacturing trade show to open Oct. 11 in Hanoi

Organizers of an advanced manufacturing trade show held a press conference Wednesday, September 20, to announce plans for this year’s event to run October 11-14 in Hanoi.

In response to last year’s record attendance showcasing technology solutions to improve productivity and profitability, the number of seminars at this year’s machine tools and metalworking exhibition has been expanded, said the organizers.

This year’s metalworking hall is a concentration of companies offering the latest advancements in cutting tools, coatings, work and tool holding, as well as metal working fluids and inventory management solutions. 

In addition to the more than 400 exhibitors, there will be free seminars on new technologies in the metalworking industry.  The organizers will post a complete list of topics and presenters on the event’s website soon.

For more information on the show, interested individuals can access the website at https://www.metalexvietnam.com/.

Forum seeks ways to reform public finance

The Ministry of Finance with support from the United States Agency for International Development (USAID) on September 21 in Hanoi held the first annual Vietnam Finance Forum under the theme ‘Public Finance Reform Towards Sustainable Development.

The event was attended by Minister of Finance Dinh Tien Dung, Mission Director of USAID in Vietnam Michael Greene, and nearly 200 delegates from across the country, consisting of managers, policy makers, experts, and members of the business community in the fields of economics and finance.

This is one of several activities supported by USAID’s Governance for Inclusive Growth Program (GIG). Over the past three years, the GIG has supported researchers to build capacity at the National Institute for Finance by using quantitative modeling techniques.

These techniques enable the development of effective public policies that address the challenges posed by global trade integration and public finance.

With the aim of securing a healthy, safe and sustainable public finance sector, the Politburo issued Resolution No. 07/NQ-TW on November 18, 2016 that enforces restructuring of the state budget and public debt management to ensure a secure and sustainable national finance sector.

The resolution proposed a number of measures to reform public finances, such as the restructuring of budget revenues and expenditures in the direction of expanding the revenue base and increasing the proportion of domestic revenues, ensuring a reasonable balance between indirect taxes and direct taxes, and making effective use of taxes on property, natural resources and the environment.

The resolution pointed out measures to restructure state budget expenditures in a way that increases the proportion of investment expenditures while gradually reducing the proportion of regular annual expenditures. These reform measures must be associated with strong reforms of the public sector, better state budget expenditure management, and improvements in budget expenditure outcomes.

To implement the policy orientations for state budget restructuring and public debt management toward a safe and sustainable national finance sector, the Ministry of Finance is developing a proposal to amend and supplement relevant legal provisions on tax, fees, state budget management, and public debt management.

In addition, the Ministry of Finance will also guide the implementation of the provisions of the State Budget Law and other relevant regulations on medium-term financial planning, administrative expenditure packages, autonomy mechanisms for public service delivery agencies, effective exploitation and utilization of public resources, and the development of a mechanism for budget management based on performance.

The forum provided an open platform for discussions and exchanges between national and international economic and financial experts, and for listening to the opinions of the business community and managers from both public and private sectors.

The forum led to recommendations, proposals and specific policy directions for the Party, National Assembly, Government, and relevant ministries, making significant contributions to address a number of socio-economic issues posed by society.

Tax on income from bank savings proposed

The latest proposal to tax an individual’s income from the interest accrued from the savings deposited in banks has become a bone of contention between the parties concerned.

At a meeting held last week to discuss tax laws, lawyer Trương Thanh Đức from Basico Law Firm noted that all the savings in banks earn an income of more than VNĐ200 million (US$8,800 ) per year through the interest rate should be taxed.

At an interest rate of roughly 6 per cent to 7 per cent per year, individuals will have to deposit roughly VNĐ3 billion in banks to get an interest of VNĐ200 million per year.

According to the current legal regulation, only income from the interest rate on savings deposited in banks by companies is subject to income tax.

Đức said that the tax proposal was in accordance with the international rules. An income of up to VNĐ200 million, which is earned through the interest rate accrued on savings in banks, should be considered an investment, and so, taxing it is appropriate, he added.

Besides, he said, under the country’s current legal regulation, an income exceeding VNĐ108 million per year is subject to the personal income tax (PIT). Therefore, an interest rate on an individual’s savings of more than VNĐ200 million should be subject to taxation.

Similar to the 5 per cent PIT regulation for dividends applied currently, a similar tax should be considered on a deposit of more than VNĐ3 billion, Đức said. If the tax management agency does not have a comprehensive database, it is possible to apply the tax collection method for current income.

In addition to this, the income from the purchase of bonds and central bank bills should also be subject to PIT, he said.

Backing this proposal, financial expert Nguyễn Trí Hiếu said that in principle, all income must be taxed. He said that in many countries, at the end of the year, the banking system provides a list of customers to the tax authority, who then calculates the PIT based on the income.

However, Hiếu admitted that if the tax was applied, then it would make it difficult for banks to mobilise deposits. Therefore, a limit should be considered to exempt or raise family allowances for PIT deduction, in a move to reduce the impact on people, he suggested.

Other experts, meanwhile, opposed the proposal, saying that it would hurt investment capital.

Nguyễn Anh Phong from the HCM City University of Economics and Law said that banks were still the main channel to mobilise and supply capital for the country’s investment and development. The annual credit growth was in proportion to the GDP growth.

If interest on deposits is charged, many depositors would withdraw their money from the banks. The banks would then have to increase the deposit rates to retain depositors, triggering a corresponding increase in the lending rates, Phong said. It will increase the pressure on capital costs for enterprises, and reduce the competitiveness of goods and services.

This is not the first time that a tax on interest from savings deposited in banks has been proposed. In 2013, HCM City Real Estate Association also issued a proposal to impose an income tax on deposits of over VNĐ500 million to encourage the cash flow into production and business, but the proposal faced strong opposition from the local people and economists.

HCM Cities host largest startup conference and exhibition     

HATCH! FAIR, an international startup conference, will return to the three cities of Ha Noi, HCM City and Da Nang, the event’s organiser said on Tuesday.

HATCH! FAIR Elite conference, which discusses challenges and opportunities to promote the role of businesses in sustainable development, will take place in the capital city on Saturday.

A similar conference, slated to be held in Da Nang on October 7, will showcase leading influential entrepreneurs, while discussing actions towards improving the early-stage startup ecosystem in the city.

The conference will be held in HCM City on October 27-28, as part of HCM City’s Innovation and Entrepreneurship Week 2017. It will gather international and national players within the startup ecosystem in Viet Nam and feature top national and international leaders, entrepreneurs, investors and ecosystem builders.

An annual startup exhibition will be held at the same time as the conference, showcasing more than 200 innovation-based startups, which will be vying for the attention of potential customers and media coverage.

Notably, over 30 shortlisted early-stage innovation-based companies will compete for awards including cash, investment and field trips in HCM City.

Since 2013, HATCH! FAIR has been organised by HATCH! Ventures Vietnam with support of the United Nation Development Programme in Viet Nam and the Embassy of Australia in Viet Nam.

The previous event witnessed the participation of 128 start-up companies and orgnisations while attracting over 80 speakers from 20 countries, including successful entrepreneurs, experienced investors and top experts in their own industries. 

Spare parts company Futu 1 to trade shares on UpCOM     

The Hanoi Stock Exchange has approved Machinery Spare Parts No 1 Joint Stock Company (Futu 1)’s request to trade 7,079,853 shares on UpCOM under the code FT1.

The shares will be traded on September 27 at the reference price of VND21,700 (US$0.95) per share.

Futu 1 was established in 1986 and was formerly the No 1 Auto Parts Factory located in Chuong My District, Ha Noi. The company became a joint stock company in 2008, focusing on manufacturing, assembling and trading electronic and electrical appliances and parts for agricultural machines. Its main products include auto and motorbike spare parts and components, mechanical parts and agricultural machines.

The company has more than 1,000 workers and 10 main production lines supplying spare parts, components and motors for many companies such as Yamaha, Honda and Piagio.

The Vietnam Engine and Agricultural Machinery Corporation (VEAM) is currently the firm’s parent company, owning 55 per cent of Futu 1.

In 2016, Futu 1 earned revenue of VND808 billion, up 4.7 per cent from the previous year and made an after-tax profit exceeding VND53.3 billion, representing growth of 7 per cent. The dividend payout ratio was 46.6 per cent in 2016 and 50 per cent in 2015.

Futu 1 expects to reach VND830 billion in revenue this year with an estimated after-tax profit of VND40 billion, down 25 per cent from the previous year. 

Initiative launched to empower women entrepreneurs in VN     

Facebook has launched #SheMeansBusiness in Viet Nam, an initiative that celebrates and empowers women entrepreneurs across the country, at a ceremony on Wednesday in Ha Noi.

The initiative will run in partnership with the Viet Nam Women Entrepreneur’s Council (VWEC) and the Viet Nam Chamber of Commerce and Industry (VCCI), which supports women entrepreneurs through investment and technology development, training and capacity building.

"We are excited to partner with Facebook to introduce #SheMeansBusiness in Viet Nam. The programme will help Vietnamese women learn how to start and grow their businesses,” Nguyen Thi Tuyet Minh, chairwoman of VWEC and vice president of Central Council of the Viet Nam Business Associations, said.

“We hope to inspire more women to grow their businesses because the next successful entrepreneur could be anyone. A developed society is reflected by the rising status and role of women, and investing in women’s entrepreneurship brings benefit and prosperity to countries,” Minh added.

Through a series of workshops, training sessions and online resources, #SheMeansBusiness will arm women entrepreneurs with the knowledge, connections, skills and technology required to build and grow their business online.

“#SheMeansBusiness will not only connect entrepreneurial women with empowering tools, peers and networks, but also raise greater awareness of the importance of women’s entrepreneurship for overall economic and social development,” Clair Deevy, ‎head of Economic Growth Initiatives, APAC at Facebook, said.

“Along with the Viet Nam Women Entrepreneur’s Council, we are closer to making Viet Nam an even better place for women to start and run a business,” Deevy said.

By not addressing the challenges facing women who want to start a business, Viet Nam is missing out on a potential boost to the economy, according to new research released Wednesday by Facebook. The study reveals that four in five women in Viet Nam would like to start a business. If only half of these women were empowered to start a business today, it would not only boost economic growth, but also help to build 1.1 million new businesses and create 3.9 million additional jobs – all by the end of 2021.

Despite the fact that entrepreneurship is the engine of economic growth, Vietnamese women still admit to facing many barriers to starting and growing their own business. In Viet Nam, the two main barriers to starting one’s own businesses are personal financial security (35 per cent) and lack of direction (35 per cent). The research also revealed the lack of access to finance (34 per cent) and the level of readiness to start a business (32 per cent) as additional barriers.

Can Tho city posts strong export growth in nine months

Businesses in the Mekong Delta city of Can Tho have enjoyed good export growth, with sharp rises in shipments of rice and aquatic products which make up more than 70 percent of local total export value.

According to the Can Tho Department of Industry and Trade, the city’s goods and services export revenue reached 1.27 billion USD in January-September, up 16.3 percent year on year. Of that sum, goods exports were estimated at 1 billion USD, up almost 17 percent from a year earlier.

About 638,100 tonnes of rice worth 261.9 million USD were shipped abroad, respectively increasing 22 percent and 19.6 percent year on year. Meanwhile, 117,000 tonnes of aquatic products were exported, bringing home 378.7 million USD, up 15 percent and 4.8 percent respectively.

Other products with good growth included processed agricultural products (55.4 million USD, up 24.4 percent), steel products (17.3 million USD, 46.7 percent), and pharmaceuticals (12.8 million USD, up 33.7 percent).

Deputy Director of the municipal department Duong Nghia Hiep said on September 20 that poor rice export figures in the first half of the year were attributable to fierce competition with Thai rice. However, the situation has improved since June, especially in September.

Many Can Tho businesses have won contracts to ship rice to the Philippines, Singapore and Indonesia, he noted, forecasting a positive export outlook in the rest of the year as several companies are negotiating new contracts.

Exports of catfish and shrimp products have also been growing rapidly since early September. Many shrimp processors face a material supply shortage and have to import raw materials from Bangladesh and India to fulfill their contracts.

Meanwhile, catfish exports have thrived thanks to China, a new and undemanding market with considerable demand, Hiep said.

He predicted that catfish and shrimp exports to European countries are likely to increase strongly after September to satisfy demand at year-end holidays.

Vietnam, Japan promote trade, economic cooperation

Nearly 100 Vietnamese and Japanese enterprises in agriculture, food, garment and support industry attended a Vietnam-Japan trade and economic cooperation conference in Tokyo on September 20.

The event was held by the Vietnam Trade Promotion Agency under the Ministry of Industry and Trade, Trade Office of the Vietnamese Embassy in Japan and the ASEAN-Japan Centre (AJC). It created opportunities for enterprises from the two countries to find trade partners, enhancing bilateral economic relations.

AJC Secretary General Masataka Fujita lauded Vietnam’s stable trade growth in recent years, with export revenue standing at 177.6 billion USD in 2016, a year-on-year increase of 9 percent, adding that the Japanese market was a major part of the trade expansion.

Vietnamese enterprises need to enhance their competitiveness to boost exports to Japan, he highlighted.

Trade counselor at the Vietnamese Embassy Ta Minh Duc noted the advantages of investing in Vietnam.

Along with the sound bilateral relations between the two countries, Vietnam has a stable political situation and an abundance of young labourers. Ties with Vietnam will also help Japanese businesses break into an ASEAN market with a population of more than 600 million, Duc said.

Businesses from both sides can enjoy tariffs of nearly 0 percent as the two countries are involved in several cooperation frameworks, he stated, stressing that his office stands ready to help businesses promote trade relations and bring benefits to both countries.

Meanwhile, Deputy Head of the Vietnam Trade Promotion Agency Bui Thi Thanh An called on Japanese enterprises to invest in some projects which are significant to Vietnam’s economy. 

Vietnam backs GMS Economic Cooperation Programme

The Vietnamese Government is committed to strongly supporting the Greater Mekong Sub-region (GMS) Economic Cooperation Programme initiative, said Minister of Planning and Investment Nguyen Chi Dung. 

Speaking at the 22nd Ministerial Meeting on the GMS Programme in Hanoi on September 20, the minister said Vietnam is mobilising capital resources from international organisations, both bilaterally and multilaterally, to materialise high-priority projects to which Vietnam is a participant by integrating the GMS’s priority programmes and projects into programmes funded by foreign donors. 

Vietnam will continue to closely coordinate with other GMS countries, the Asian Development Bank (ADB) and other development partners, including the private sector, to achieve targets set by the GMS Programme, he said. 

ADB Vice-President Stephen Groff said although ADB facilitated the process, the initiative was driven by the countries themselves, with a sharp focus on joint action to address common challenges.

The GMS Programme has been guided by the 3 Cs: connectivity, competitiveness, and community, he said, adding that this overarching approach to regional development produced significant results.

The participating ministers used this occasion to celebrate 25 years of GMS economic cooperation, acknowledging the achievements of the programme in creating a strong bond of openness, mutual trust and shared commitment.

They welcomed the preparation of the Hanoi Action Plan (HAP) 2018-2022, which calls for an expansion of economic corridors to boost connectivity between countries as well as within rural and urban centres to ensure a more equitable distribution of the benefits of economic growth.

The plan will be submitted to the 6th GMS Summit slated for March 2018 in Vietnam for consideration and approval. 

The minister also endorsed the GMS Regional Investment Framework 2022 to support the HAP through a pipeline of 222 investment and technical assistance projects valued at 64 billion USD. 

The ministers urged greater engagement of development partners and private sector to meet financing requirements in the GMS.

They extended strong support for a new GMS Transport Sector Strategy that aims to build a seamless, efficient, reliable, and sustainable GMS transport system. This will be achieved through the improvement of the sub-region’s links with South Asia and other parts of Southeast Asia, better cross-border transport, strengthened intermodal transport links and logistics development, as well as enhanced road safety.

The GMS Tourism Sector Strategy 2016-2025 was also endorsed to enable more competitive, balanced, and sustainable destination development. The ministers welcomed the progress towards the formal establishment of the Mekong Tourism Coordinating Office as an inter-governmental organisation.

The six countries — Cambodia, China, Laos, Myanmar, Thailand, and Vietnam— entered the GMS Programme in 1992, with assistance from the ADB, aiming to enhance economic relations.

 Under the programme, investment projects worth more than 19.1 billion USD have so far been undertaken, according to the ADB.