Interest reduced on dollar, euro loans

The interest rate on euro-denominated NPLs has been reduced by 0.6 per cent to reach 4.8 per cent per year, while the rate for dollar – denominated NPLs has been cut by 0.1 per cent to touch 4.2 per cent per year. — Photo bizlive.vn

The Viet Nam Asset Management Company (VAMC) has cut the applicable interest rates on euro and US dollar-denominated non-performing loans (NPLs) purchased from credit institutions.

Accordingly, the interest rate on euro-denominated NPLs has been reduced by 0.6 per cent to reach 4.8 per cent per year, while the rate for dollar – denominated NPLs has been cut by 0.1 per cent to touch 4.2 per cent per year.

However, the interest rate on Vietnamese dong-denominated NPLs remains unchanged at 9.6 per cent.

The new interest rates are applicable in the first quarter of this year, from January 1 to March 31.

As per Circular 19, the State Bank of Viet Nam requires VAMC to review and adjust the interest rates applicable on purchased NPLs in keeping with the repayment capacity of the borrowers, the interest rates prevalent in the market and based on the agreement with customers. These interest rates will be publicised by VAMC quarterly.

This is the seventh time VAMC has announced an adjustment in interest rates applicable to purchased NPLs. The company had adjusted interest rates for the first time during the second quarter of 2014, when it decided to significantly cut interest rates on NPLs bought in dong from 15 to 18 per cent per year to just 10.7 per cent per year.

VAMC General Director Nguyen Huu Thuy said the company acquired bad loans worth nearly VND111 trillion (US$4.84 billion) at book value from credit institutions last year, in exchange for special bonds.

The VAMC has purchased bad debts worth VND243 trillion ($10.6 billion) since its launch in 2013.

Besides the NPL acquisition, VAMC and the credit institutions have so far together retrieved NPLs worth VND22.783 trillion ($994.8 million) by selling loans and secured assets.

Site for customs checks to be built at Moc Bai border gate

A goods storage site for joint checks between Vietnamese and Cambodian customs forces will be constructed at the Moc Bai International Border Gate in the southern province of Tay Ninh under a project recently approved by the provincial People’s Committee.

Accordingly, Tan Cang Hiep Luc JSC - a subsidiary of the Tan Cang Sai Gon Corporation will be the investor of the project, which will cover an area of 8,000 ha and include storage facilities, working offices and parking lots.

It aims to ease increasingly serious congestion at the Moc Bai border gate and also for its Cambodian counterpart, the Bavet border gate, thus facilitating trade activities between the two countries.

Kieu Cong Minh, deputy head of the economic zones management board in Tay Ninh, said the project will create a foundation for deploying a one-stop-shop customs model for exports and imports at the Moc Bai-Bavet border gates, under an agreement signed between the two Governments.

Once completed and operational, the site is expected to facilitate w ork of customs officers when conducting joint checks on export and import goods.

Footwear industry exports to grow 20 per cent

Export value of the domestic leather and footwear industry could grow between 15 per cent and 20 per cent this year due to opportunities from free trade agreements (FTAs).

At a conference on production, export and import of leather and footwear in Ha Noi yesterday by the Viet Nam Leather and Footwear Association (Lefaso), Deputy Minister of Industry and Trade Ho Thi Kim Thoa said signing of negotiations on the Trans Pacific Partnership (TPP) deal and other FTAs would present more opportunities in production and business for Viet Nam's enterprises, including firms from the textile, garment, leather and footwear industries, reported online newspaper bnews.vn.

"To take advantage of those agreements, the local leather and footwear industry should prepare material at home to join preferential tariffs from the deal when exporting their products to the US, the European Union and some other markets," Thoa said.

Nguyen Duc Thuan, Lefaso chairman, said the local leather and footwear industry will have more business opportunities from the agreements, including the TPP, but those agreements will also create more challenges for the export activities of local footwear firms.

However, buoyed by the recovery in the economy and trade activities, the local firms expect to achieve high growth in revenue this year, he said. To ensure that, they should implement technology to improve production.

Last year, the domestic leather and footwear industry gained a year-on-year increase of about 16 per cent in export value to US$15 billion, including $12 billion from footwear, and $3 billion from handbags.

This year, the industry expects to reach a growth rate at 15-20 per cent in export value due to leftover development from last year and more export opportunities from the FTAs, especially from the ASEAN Economic Community and the TPP, Thuan said.

In 2015, traditional markets of the local footwear products registered high exports as against 2014, including the US with growth rate at 20 per cent, the EU at 10 per cent, and China at around 50 per cent.

The local footwear firms had also initiated reforms in production to increase productivity and quality of products, and also sought and expanded their export markets, he said.

A representative of the Phong Chau Leather and Footwear Company said last year, the company expanded its export markets to Africa and the ASEAN countries so its export value increased between 5 per cent and 7 per cent in 2015, as compared with 2014.

This year, the company will promote exports to those markets, while seeking out new export markets and increasing investment for expanding production scales.

SME support law needed

There’s a need to build a law to support small and medium-sized enterprises, according to several experts in the field.

The SME community has become an important part of the economy, making up 95-97 percent of enterprises in the country, contributing over 40 percent of GDP and creating more than 50 percent of employment, said Tran Ngoc Liem, Deputy Director of the Vietnam Chamber of Commerce and Industry ( VCCI ) - Ho Chi Minh City Branch.

Thus, supporting SMEs is crucial to maintaining the economy’s driving force, especially in the context that ASEAN, of which Vietnam is a member, has approved the Strategic Action Plan for SME Development 2016-2020, he added.

To support SMEs, there’s a need to give priority to administrative procedure reforms, as a number of regulations from the current laws are overly complicated for small and medium sized enterprises, according to Hoang Van Son from the VNC Law Office.

He also said the new laws should delete unnecessary fees and charges, with the aim of reducing the financial burden on business and production activities.

Recent surveys showed that most SMEs have not attached much importance to market research, product promotion activities or building business culture.

SMEs need to be provided with market information, and trade promotion support, so that they can develop strategies and the business culture, for sustainable development and improving competitiveness, said experts.

Vinh Phuc seeks to export farm products

The northern province of Vinh Phuc plans to expand cultivation of its strongest exports in farm produce, such as red-flesh dragon fruit, Hong aromatic bananas and chayote (a type of gourd.)

Recently, local authorities signed memoranda of understanding (MOU) on cooperation in production and export of agricultural products with enterprises from Taiwan, Japan and Malaysia.

The province has been accelerating agriculture restructuring, focusing on developing its strongest products for large-scale production using high-tech methods.

It has zoned off an area for cultivating safe vegetables by 2020, and has so far outlined 39 safe vegetable production practices.

As many as 113 agricultural production establishments were recognised to meet safe vegetable production regulations, while 35 others received Vietnam Good Agriculture Practices ( VietGap) certificates.

To realise its objectives, the locality is calling for investment in agriculture and hopes to attract interest from many domestic and foreign investors.

A red dragon fruit growing project was piloted in Lap Thach district from 2011-2013 on an area of 100 ha. Annual profit from the fruit reached around 350-400 million VND (15,750 – 18,000 USD) per ha.

Thousands of hectares of Hong aromatic banana and chayotes are also being planned for Tam Dao, Yen Lac and Vinh Tuong districts.

EVN to add 22 power projects to rural programme

The Electricity of Vietnam (EVN) group said it has completed investment preparation for a series of rural power supply projects, to commence in the 2015-2020 period.

The Ministry of Industry and Trade has approved EVN’s feasibility research reports of 22 electricity projects in rural and island areas in the period under the Electricity Supply Programme for rural, mountainous and island areas in 2013-2020, ratified by the Prime Minister.

EVN will work as the coordinator of the projects and its subsidiaries: North, Central and South Power Corporations will be investors.

According to the group, 21 out of the 22 projects will supply electricity from the national grid to local communities, and one will source electricity from a combined electricity production network of wind, solar energy, and diesel-fueled systems.

Over 7,236 km of medium voltage lines, over 13,640 km of low voltage ones , and more than 8,500 transformer stations will be built during the period, benefiting over 262,500 rural households in 22 provinces and cities nationwide.

The projects are expected to contribute to promoting poverty reduction and socio-economic development in benefiting localities.

Three more fish breeding facilities earn Global Gap certificate

Three more Tra fish breeding facilities in Tieu Can District of the Mekong Delta province of Tra Vinh have earned the Global GAP certificate.

The three facilities - Tieu Can in Hung Hoa Commune, My Kieu in Tieu Can town and Kim Loan in Tap Ngai Commune- produce a combined 11.5 million fish fry a year.

Director of Tra Vinh aquacultural breeding centre Le Tan Thoi said the centre has assisted local small-scale breeding facilities in adapting to international standards in aquaculture, particularly in breeding Tra fish.

The fish is an export staple of the province, which is facing technical barriers in many markets in the world. The supply of fish fry meeting international standard will help ensure the quality of products for export, Thoi said.

In 2014, a cooperative of Tra fish farmers in Tra Vinh became the first small-scale fish farm in Vietnam to be awarded the Global GAP certificate for their 1.2 ha fish farm.

However, dropping prices of tra fish have discouraged local farmers. Last year, only 20 households in the province raised the fish on a total area of 10.4 ha, producing an output of 4,300 tonnes.

Wood firms seek new business strategies

Wood enterprises gathered at a workshop in Ho Chi Minh City on January 20, to map out business strategies in 2016.

The event was held by the Handicraft and Wood Industry Association of Ho Chi Minh City (HAWA).

Chairman of the HAWA Nguyen Quoc Khanh said 2016 is opening up excellent opportunities for the wood sector, especially with Vietnam having joined the ASEAN Economic Community last year, and signed a series of new-generation free trade agreements (FTAs).

Businesses should have a new vision to orient their development in the light of global integration, he said.

Chairman of the Truong Thanh Furniture Corporation Vo Truong Thanh, suggested businesses should maintain many sources of material supply which can guarantee criteria on product origins - in accordance with the commitments of the free trade agreements.

This will help businesses secure their foothold in the domestic market and boost export activities, he said.

Meanwhile, Chairman of the Woodland Co. Ltd Vu Hai Bang, warned that the pressure on labour resources will become heavy if the Trans-Pacific Partnership (TPP) Agreement comes into effect, and more foreign direct investment (FDI) businesses enter Vietnam .

To ensure sustainable development, wood companies should increase investment in design and imaging - to develop recognisable brand names, he suggested.

While it is advisable for business players to devise their own strategies to join the free trade markets and economic integration, experts noted that embracing links in the field is important to enhance competitiveness.

The HAWA should serve as a bridge for businesses to set up a chain of material supply and demand, along with production and distribution.

Businesses could work together to share experience in technological transfer, improve management capacity, and human resources training, experts said.

Support to help craft villages build own brands

Supporting craft villages to build their own brands amidst strong international integration is a priority of the Vietnam Association of Craft Villages (VACV), said Chairman Luu Duy Dan on January 20.

At the VACV’s 10th founding anniversary celebration in Hanoi, Dan said his organisation will actively help its members build brands, register trademarks, and export products.

The VACV will step up personnel training for small-and medium-sized enterprises, especially in business administration, international practice and e-commerce, as Vietnam is strongly integrating into the world.

To revitalise craft villages, the association will help the villages cooperate with one another, modernise production and environmental treatment technologies, and create highly aesthetic products. More exemplary artisans will also be honoured, Dan said.

He noted that the VACV has organised over 200 fairs, exhibitions and customer meetings over the past decade to promote the sale of handicrafts. It has also offered training to over 8,330 craft students, and honoured 57 outstanding craft villages and over 330 artisans.

The association has worked with partners from Japan, the Republic of Korea, China and Germany, the Japan International Cooperation Agency, and the UN Development Programme to advertise the villages’ products, he added.

Data shows that Vietnam has 5,096 craft villages, including over 400 traditional ones. It boasts more than 200 types of handicrafts with many of them dating back centuries ago such as Van Phuc silk, Ngu Xa bronze products, Bat Trang ceramics, and Kim Bong wood products.

HCM City eyes boost for suppliers

The Ho Chi Minh City People's Committee is likely to approve a project to promote support industries next month, heard the "Vietnam - Japan Supporting Industry Forum".

Referring to the ‘Supporting Industry Development' project,' Nguyen Phuong Dong, deputy head of the city Industry and Trade Department, told the forum on January 19, "We will submit solutions and detailed plans to promote the industry soon."

The project will seek to analyse the status of supporting industries in the textile-garment, footwear-leather, electronics-IT, automobile manufacturing and assembling, mechanical fabrication, and hi-tech sectors, and seek the best producers for making products for them.

A HCM City Supporting Industry Development Centre would be established to support the industries, department officials said.

The Government had, in a decree last November, announced the latest incentives for supporting industries. The income tax rate is now 10 percent for the first 15 years after initial waivers, import tax is waived on goods used to create fixed assets and the six supporting industries can pay value-added tax on revenues on a monthly, quarterly or yearly basis.

Yasuzumi Hirotaka, head of the HCM City office of the Japan External Trade Organisation (JETRO) said that the city should set up a fund to provide low-interest credit for companies in the supporting industries.

The city has set up a series of funds to support small- and medium-sized enterprises (SMEs), but most SMEs do not have assets to mortgage.

"The city also has a fund SMEs can borrow from without a mortgage if they have good projects," Dong said.

The Government has also mandate that SMEs in supporting industries can borrow up to 70 percent of their capital on the basis of guarantees provided by the Credit Guarantee Fund for SMEs.

The city is earmarking a 200ha area exclusively for supporting industries at the Hiep Phuoc Industrial Park in Nha Be district.

In mid-March a meeting of supporting industry companies in Vietnam, Japan and ASEAN will be held in HCM City.

Phu Hung Securities Corporation operates after merger

The State Securities Commission (SSC) of Vietnam on January 20 granted a certificate of operation to Phu Hung Securities Corporation (PHS) after the company merged with Hanoi-based An Thanh Securities Company (ATSC).

According to PHS General Director Chia Ken Chen, the merged enterprise has chartered capital of 202.5 billion VND (9.03 million USD). He said that the share swap ratio for PHS shareholders is 0.482, and for ATSC shareholders it is 0.857.

The shake-up process has been made to ensure investors’ rights and interests, Chia Ken Chen underscored.

At the granting ceremony, SSC Vice Chairman Pham Hong Son stated that the merger of the two securities companies is part of the nation’s process to restructure the stock market.

During 2011-2015, the SSC reduced the number of securities brokerage companies by 25, accounting for 25 percent of the licensed firms, Son underscored, adding that improvements can been seen in the financial situation of the remaining securities companies as a result.

Japanese firms bring information technology to Vietnam’s farms

Japanese experts will pilot measuring about 1,000 square metres of farm land in the northern province of Ha Nam to collect information and plan suitable production.

The systems for collecting information about local land and weather will be installed by Fujitsu, a Japanese information and communication technology company.

The information then will be transmitted to Aeon Agri Create Co., Ltd, which has been coordinating 19 farms in Japan, for further analysis and directions.

The Vietnam Women’s Union, the only local organisation partner in the project, is tasked with updating the market prices of local produce. Farmers can access the information through their mobile apps.

Complex agricultural distribution in Vietnam has made it difficult for growers to be aware of the prices of their products when they reach consumers. The project could help them understand the market and be ready for popular, profitable production.

Previously, Fujitsu and FPT have announced the official completion of their FPT-Fujitsu Akisai Farm and Vegetable Factory project, which applies cloud computing technology to develop a smart agricultural model in Vietnam.

Urbanisation begets need for more housing

Viet Nam needs more drastic measures to boost housing development as the country's rapid urbanisation coupled with a young population has made it an urgent issue.

Experts said it was important to improve the living environment and conveniences as urban spaces were becoming narrower.

Tran Dinh Thien, director of the Viet Nam Institute of Economics under the Viet Nam Academy of Social Sciences, said that measures should be initiated to prevent an urban boom from becoming opportunities for property market speculation.

In recent years, urbanisation has been rapid not only in major cities such as Ha Noi and HCM City, but also in other provinces and cities such as Bac Ninh, Thai Nguyen, Quang Ninh, and Dong Nai, apart from Binh Duong and Ba Ria-Vung Tau.

Statistics showed that in 1997, only 20 per cent of the country's population lived in urban areas and real estate deals were conducted largely without bank loans. However, things have changed today when the percentage of urban residents has risen to 34 per cent of the population and bank loans have become more popular for real estate transactions.

With an anticipated population of 51 per cent in 2016 with the trend of smaller households, housing demand in urban areas would keep rising, especially the demand for social housing projects.

A senior expert of the Noruma Research Institution was quoted by the Vietnam Finance newspaper that the support policies for social housing development in Viet Nam remained ineffective as only a few people were lucky enough to be able to get access to preferential loans.

The newspaper cited statistics that 67 per cent of surveyed people aged between 25 and 40 did not own homes, and 60 per cent of them demanded one. Roughly 75 per cent said that they wanted a house but could not as they were financially incapable.

Experts said at a recent conference about housing issues in Viet Nam that the country needed long-term financial policies for social housing development as the government's VND30 trillion (US$1.34 billion) support package would end in June this year.

Viet Nam was urged to raise policies to support young people aged around 30, with medium incomes, to buy houses as those were in high demand.

Hidenori Hashimoto, a representative from the Japan International Cooperation Agency in Viet Nam, was quoted by the Voice of Viet Nam news website that Japan wanted to invest in social housing development for the youth in Viet Nam through official development assistance.

Accordingly, Japan and the banks might provide loan supports to those who were capable of paying back debts in five to 15 years.

Retailing firms target rural markets

Many domestic producers have moved their markets to rural areas as local fast-moving consumer goods (FMCG) firms are facing severe competition with imported products in urban areas.

According to the Ministry of Industry and Trade's Light Industry Department, drinks, food, milk and tobacco had stable growth during 2014 and 2015.

Drinks comprised 38 per cent of the total sale volume of FMCG and reached the highest increase of 6.7 per cent.

Beer, tonic and refreshing drinks had the highest growth. Milk and milk-related products increased by 12 per cent in urban areas and 20 per cent in rural areas.

However, other products like detergent and processed food faced difficulties.

According to a recent survey, FMCGs growth rate in the six biggest cities, including Ha Noi, HCM City, Hai Phong, Can Tho, Nha Trang and Da Nang, has fallen.

The rural market is emerging as a new growth market. At least 68 per cent of the country's population is in rural areas. But only 54 per cent of turnover for FMCG products comes from rural areas, which indicates room for growth.

The ministry said during the 2014-2015 period FMCG showed an increase of 2.7 per cent in quantity in rural areas, and growth increase in 1.6 per cent in urban areas reflected by price, not quantity.

"Local producers are facing severe competition from imported, smuggled and fake products, and they have limited their market expansion," an official of the Ministry's department was quoted as saying in the Thoi bao Kinh doanh (Business Times) newspaper.

"The situation has also caused a loss of belief in domestic products," he added.

Local manufacturers have many weak points: limited manufacturing capability, weak finance, poor management, imported raw materials, outdated technology, low quality products and unhealthy competition among domestic producers.

To improve the situation, State management offices should increase investment in trade infrastructure, especially for distribution systems, as well as provide expenditures to support high-quality producers's promotion campaigns.

Most FMCG companies are looking for support policies in advertisement, brand name registration, industrial copyright protection, market information and science and technology application.

However, enterprises have been told that they must improve their production capability, reduce dependence on imported materials and improve the quality of their products.

HCM City's RDP triples its profits

HCM City-based Rang Dong Plastic Joint Stock Company (RDP) has announced that its profits had tripled after tax in 2015, and it was planning to issue more shares for new investments.

RDP chairman Ho Duc Lam said it reached the revenue of VND1.13 trillion (US$50.4 million) in 2015, an increase of 4.6 per cent over 2014, and added that the company earned a net profit about VND70 billion ($3.1 million), more than three times the VND23 billion ($1.025 million) it had earned as profit in 2014.

Lam said that last year the plastic industry, including his business which produces different kinds of plastic products in the city, benefitted from the lower input costs.

The attractive development of the plastic market in Viet Nam, Lam saw acquisitions of domestic plastic companies by FDI companies last year. There were FDI enterprises which wanted to buy more than 20 per cent stake in his company, but he had no plans of selling, Lam said.

For their next phase of development, the RDP's board of directors approved the issuing of another 4.7 million shares to existing shareholders to increase its charter capital in the first six months of this year. The shares worth VND20,000 (89 cents) each will be released to the existing shareholders of the company with investment purposes to implement the relocation plan of the RDP headquarters to the Tan Do-Long An Industrial Park in the neighbouring Long An Province from District 11, HCM City, where it is located presently. The total investment for the new infrastructure is estimated at VND490 billion ($21.85 million) to be completed by 2017.

In the investment structure, equity accounted for 33 per cent, and mobilising loans accounted for 32 per cent, while 34.7 per cent was raised from bonds.

According to the company, it will sign co-operation agreements with Japanese partners in March, as it was committed to completing the factory in Long An this October to manufacture products for them. The new Rang Dong Plastic Factory, spanning 17 ha, will serve the growing demand of plastic products which were mostly PVC products and plastic packages.

In 2016, the company planned a revenue growth of 15 per cent and a profit of 10 per cent. It will further cut costs and increase the profit by reducing the transport fee, applying modern management systems, and enhancing inventory management and cost management progress.

This year, the RDP also expected an increase of 15 per cent in the export market compared to an increase between 10 per cent and 15 per cent in 2015. Besides the southern market, the northern market currently accounted for 20 per cent of the total market. The RDP was also focussing on garment producers as potential customers.

The RDP shares yesterday ended at VND29,200 ($1.3) each on HCM Stock Exchange.

Vietcombank funds breeze past targets

VCBF Tactical Balanced Fund and VCBF Blue Chip Fund, open-ended funds managed by Vietcombank Fund Management, have outperformed their 2015 as well as lifetime benchmarks.

The VCBF Tactical Balanced Fund rose 19.3 per cent last year and 30.6 per cent since its issue in December 2013, compared to its targets of 6.7 per cent and 15.7 per cent.

The VCBF Blue Chip Fund gained 23.4 per cent in 2015 and 19.1 per cent since inception in 2014 against targets of 4.4 and minus 2.2 per cent.

The former's benchmark is the average of two values: the change in the VN-Index and the return on 10-year government bonds.

The benchmark for the latter is the VN100 Index (comprising 100 stocks with the largest market cap and equity capital on the HSX).

The VN-Index, the benchmark HCM City stock market index, rose by 6.1 per cent last year.

Avinash Satwalekar, CEO and CIO of VCBF, said, "Our two funds outperformed their respective benchmarks in 2015, a year marked by increased global volatility.

"Our long-term focused investment philosophy and rigorous research process helped to provide strong returns for our clients.

"We continue to remain optimistic regarding the long-term prospects of the Viet Nam economy and look forward to capitalising on market opportunities."

As of December 31 the two funds managed approximately VND181 billion (US$8.04 million) sourced from nearly 600 investors.

Vietcombank Fund Management is a joint venture between Vietcombank and Franklin Templeton Investments, a pioneer in emerging market investments.

Gallery Exclusive opens carpet showroom in Hanoi

The Gallery Exclusive – featuring contemporary, old and antique carpets from the major weaving centres of Central Asia – has branched out with the opening of a stunning permanent showroom in Hanoi.

At the opening, company representatives said they put an enormous amount of heart and planning into its design so that it would reflect their vast collection of inventory from Iran, Afghanistan, Pakistan, India and The Russian Caucasus.

In addition, the company represents world class manufacturers and suppliers of wall-to-wall and commercial carpeting from China, Japan, Denmark, the US, Belgium, Canada, Malaysia, Indonesia and The UAE.

Located at 77 Xuan Dieu Street in the Tay Ho District, the showroom promises to fulfill all requirements for high end carpets for the commercial, residential and hospitality segments of the local economy.

The new showroom is true to the brand standard established by its first showroom opened in Ho Chi Minh City six years ago, said company representatives, capturing the vibrant spirit that so uniquely defines The Gallery Exclusive.

Hope as we look away from 2015

Last year ended with disappointing news as record OPEC supply created a global glut driving oil prices downward, which when combined with shortfalls in agricultural and seafood exports, stunted economic growth.

Demand in global markets fell for the year says the Ministry of Industry and Trade (MoIT), and the glut in oil may take another year to clear, creating a rather bleak short term outlook for oil prices.

However, there was a mild revival in the later part of last year for agricultural and seafood exports, which though not strong enough to lift overall exports is considered a positive sign, offering hope of an improved outlook this year.

To kick start exports for the year, MoIT Minister Vu Huy Hoang said the ministry is stepping up communications with local companies and trade associations about the benefits of signed trade agreements.

In addition, he strongly recommends relevant ministries, agencies and local authorities implement major solutions to simplify export procedures to reduce clearance times and cost for enterprises.

Sharing this view, MOIT Deputy Minister Tran Tuan Anh said despite the many difficulties that lie ahead in 2016, Vietnam still has a lot of potential to boost its economic and export growth.

The participation in new free trade pacts will bring a golden opportunity for domestic companies to increase their production and participate in global supply chains, he underscored.

Tuan Anh also noted with the phase-out of tariffs and other non-tariff barriers, Vietnam can secure better market access and diversify exports with its trade partners in the coming year.

Additionally, the Vietnam government is undertaking a monumental effort to revamp laws and institute policies more conducive to the creation of a more favourable business environment, he said.

Rice exports have been thriving from early this year as the number of signed contracts indicate export demand is high, says Huynh The Nang, president of the Vietnam Food Association (VFA).

He forecasts that rice exports in the first half of the year will prosper as major importers like the Philippines, China, Indonesia and Malaysia will soon sign contracts to stabilize food supplies and cope with a possible drought caused by El Nino.

Earlier, the Philippines National Food Authority had announced its plan to buy at least 50,000 metric tons of rice from Vietnam and Thailand while the Indonesian Government planned to purchase around 350,000 metric tons of rice in the first quarter of this year.

China will undoubtedly remain the largest important importer of Vietnam rice not only in 2016 but also in the coming years, said Nang.

In terms of garments and textiles, Vinatex General Director Le Tien Truong estimated the sector’s export volume for the year at US$29.5-US$30 billion, up 11%-12% compared to last year thanks to the establishment of ASEAN Economic Community (AEC).

Vietnam's wood industry is also expected to gain total export value of wood and wooden products of US$7.7 billion for this year, higher than US$7.1 billion in 2015, according to Nguyen Ton Quyen, vice chairman cum general secretary of the Timber and Forest Product Association of Vietnam (VIFORES).

Exports of wood and forestry products from the country will have the advantage of starting operations through the AEC and other trade deals, he says.

The new year brings fresh hope, says the MoIT. The Vietnam government finances are strong enough to push critical infrastructure projects and prospects for continued foreign investment never appeared stronger.

Hopefully, local companies will see productivity gains that can improve the competitiveness of our exporters. On that note, we can all hope and look forward to a happy and prosperous new year.

Vietnam’s beer output rises 4.7% to 3.4bn liters in 2015

Beer production in Vietnam reached 3.4 billion liters last year, a 4.7% year on year increase, according to a report released by the Vietnam Beer Alcohol Beverage Association (VBA) earlier this month.

Including the 2015 figures, the Vietnamese brewery industry achieved an average of seven percent in annual growth between 2011 and 2015, the VBA said.

Currently, there are approximately 129 brewery production facilities across the country, many of which are large-scale plants with an annual capacity of 200 to 400 million liters, such as the Cu Chi Brewery Plant under Saigon Beer-Alcohol-Beverage JSC (Sabeco), the Vietnam Brewery Plant in Ho Chi Minh City, and the Me Linh Brewery Plant under Hanoi Beer-Alcohol-Beverage JSC (Habeco) in Hanoi.

According to the VBA, the total annual capacity of the local beer industry has to this point reached about 4.8 billion liters.

Vietnam currently imports about three million liters of beer and exports 70 million liters per year.

With regard to wine, about 162 industrial wine production plants nationwide produce roughly 70 million liters on a yearly basis, and the production of homemade wine for local consumption is estimated at over 200 million liters per year, according to the VBA.

Regarding beverages, the country’s output reached 4.8 billion liters in 2015, growing 8.38% on average in the 2011-15 period, the VBA said.

By the end of last year, Vietnam had had nearly 1,833 beverage production facilities with a combined annual capacity of over five billion liters.

Soft drinks and fruit juices experienced a high growth rate, making up 85% of the market share of beverages, while mineral water accounted for about 15%.

Using the 2015 results, the VBA has set ambitious targets for 2020, including producing 4-4.25 billion liters of beer per year, 8.3-9.2 billion liters of beverages per year, and 320-360 million liters of wine per year.

Vietnam is considered a highly potential market for both local and foreign brewers with an annual capacity of 3.1 billion liters, and a goal of 4-4.25 billion liters by 2020 following a plan set by the VBA.

It is also a market where competition is fierce between local and foreign rivals.

Masan Consumer Holdings, one of the biggest Vietnamese producers of fast-moving consumer goods under Masan Group, last month officially began operating its VND1.6 trillion (US$70.4 million) beer plant in the Mekong Delta province of Hau Giang, one day after entering into a massive deal with a Thai conglomerate.

The Masan Brewery HG plant, which covers 14.6 hectares in Nam Song Hau Industrial Park in Chau Thanh District, will help increase Masan Consumer Holdings Brewery’s capacity from 50 million liters to 150 million liters a year to keep up with rising demand.

Masan entered the beer market in September 2014 with Su Tu Trang (White Lion) beer products.

Last month, Masan also reached a $1.1 billion deal enabling a Thai brewery conglomerate to own a 25% stake in Masan Consumer Holdings and 33.3% of Masan Brewery.

The strategic cooperation between Masan and Singha Asia Holdings Pte Ltd of Thailand, which will reduce the ownership of Masan Consumer Holdings in Masan Brewery to 66.7%, is expected to be completed this month.

The two parties said the agreement will allow Masan and Singha to immediately expand their market from national to regional scales, with a focus on inland ASEAN countries, including Vietnam, Thailand, Myanmar, Cambodia and Laos, which have 250 million consumers in total.

Singha is a member company of the Group Boon Rawd Brewery, a Thai brewery established in 1933. Today Group Boon Rawd Brewery is the owner of a wide range of products with brands like Singha, Leo, B-ing, Purra, and Sanvo produced by its 50 affiliates.

Masan said the deal would help bring the total value of the company to US$4.2 billion, up from its current VND56 trillion ($2.46 billion) capitalization on the Ho Chi Minh City Stock Exchange.

A report from the Ministry of Industry and Trade, seen by Reuters last month, revealed that Vietnam's biggest state-run brewer Sabeco does not wish to sell a major stake to a foreign shareholder.

The report was prepared for a meeting, to which no foreign media were invited, between ministry officials and heads of some state-owned enterprises, including Sabeco, on December 21, Reuters reported.

Vietnam, which consumes three billion liters annually, is currently the third-biggest beer market in Asia, after China and Japan.

In 2015, reports that the government will divest from many local beer firms captured the attention of a large number of foreign firms that do not want to miss the opportunities present in the 90-million-strong Southeast Asian country.

Many foreign brewers, like SABMiller, Kirin Brewery, Asahi Breweries, Asia Pacific Breweries, spoke publicly about their intention to become strategic partners of Sabeco after the trade ministry announced the government’s divestment plan.

Among them, Thai Beverage wanted to buy a 53% stake in Sabeco with several billion U.S. dollars, and Singha Corp also showed their intention to jump on the Sabeco bandwagon.

Currently, Sabeco’s market share is about 46%, while 17.3% is held by another state-run brewer, Habeco, and 18.2% is grabbed by Vietnam Brewery Limited, which produces and imports many products, including Heineken and Tiger.

Credit guarantee backs hydropower plant

The Multilateral Investment Guarantee Agency (MIGA), the political risk insurance and credit enhancement arm of the World Bank Group, announced its support for the Hoi Xuan Hydro Power Project in Quan Hoa district, northern Thanh Hoa province.

“Vietnam is diversifying its energy mix to increase energy supply and security, just as it is diversifying its financing sources to create a more secure base for infrastructure development in the future,” said MIGA’s Executive Vice President and CEO Keiko Honda. “MIGA is glad to play a role.”

MIGA issued a $239.7 million guarantee to a consortium of lenders led by Goldman Sachs and Bank of Tokyo Mitsubishi (BTMU). The guarantee supports the financing of the design, construction, operation, and maintenance of the 102 MW hydropower plant, located approximately 15 kilometers northwest of Hoi Xuan commune.

“We are delighted to continue our cooperation with MIGA and the Government of Vietnam in helping to meet the country’s growing energy needs,” said Mr. Tim Leissner, Vice Chairman of Investment Banking in Asia Ex-Japan at Goldman Sachs. “Clean, renewable and sustainable projects of this nature are vital as the country continues its rapid GDP growth trajectory.”

The power plant will use an indigenous, renewable, low-cost resource and mitigate Vietnam’s reliance on imported thermal alternatives.

The plant will produce and sell electricity to Electricity of Vietnam under a power purchase agreement. MIGA’s guarantee covers the risk of sovereign financial obligations not being honored in respect of the government’s repayment guarantee to lenders and carries a 15-year tenor.

Demand for electricity in Vietnam is expected to double very quickly to 2020 due in large part to the country’s sustained economic growth, which has transformed it from one of the poorest in the world to lower middle-income status within a quarter of a century.

Support for local independent power producers like Hoi Xuan is critical in meeting Vietnam’s electrification goals. More than 70 per cent of investment in the country’s new generation capacity is expected to come from the private sector.

MIGA’s support to the power plant is expected to have broad demonstrative effects in Vietnam’s hydropower sector, both with respect to future private sector investments and international environmental and social best practice for such projects.

PM approves Ca Mau wind power plant

Prime Minister Nguyen Tan Dung has given the go-ahead to plans to build a wind power plant in the Khai Long tourist area in the Mekong Delta’s Ca Mau province.

Wind power generated will be connected to the national electricity grid and sold through a power purchase agreement with Electricity of Vietnam (EVN), contributing to ensuring national energy security.

The plant has a total generation capacity of 100MW and covers an area of 2,165 ha. Construction will be conducted from 2016 to 2018.

The PM has assigned the Ministry of Industry and Trade (MoIT) in cooperation with the Ca Mau Provincial People’s Committee to guide investors on appraisal and construction. The Ministry of Finance and the Vietnam Development Bank have been assigned to evaluate the loan plans of investors.

According to MoIT, Vietnam has registered more than 50 wind power plants but only around 10 per cent are currently under construction, of which three are commercial wind power plants - Tuy Phong in Tuy Phong district, south-central Binh Thuan province, with capacity of 30MW, a wind power plant on Phu Quy Island in Binh Thuan with a capacity of 6MW, and the Bac Lieu wind power plant in the Mekong Delta’s Bac Lieu province, generating 16.5MW.

Most recently, construction began last July on the Phu Lac wind power plant in Binh Thuan province, with a capacity of 20MW and investment of nearly VND1.1 trillion ($49.5 million).

Property prices to increase 5-10%

In its report on the real estate market in 2015 released on January 18 the Vietnam National Real Estate Association (VNREA) predicted that property prices would increase 5 to 10 per cent this year.

VNREA believes the impact of the economy along with the return of investors to the market will see the market maintain its stable development and be more vibrant than in 2015. The recovery will result in prices being continually adjusted, with a rise in the vicinity of 5 to 10 per cent expected in the near future.

Mr. Tran Ngoc Quang, General Secretary of VNREA, said Vietnam’s economy is entering a new growth cycle with good indicators, such as GDP growth forecast at about 6.5 to 7 per cent, inflation remaining below 5 per cent, and credit activities to be solid throughout the year.

Together with the effects of the Law on Real Estate Business and the amended Law on Housing, the State Bank of Vietnam (SBV) raising interest rates will also add heat to the property market. A positive for the property market in 2015-2016 will be the development of infrastructure, and at the same time the effectiveness of the SBV’s monetary policy will create sustainable macro-economic development over the long term, VNREA believes.

Long-term risks, however, include the budget deficit and exchange rate issues. The latter remains a factor of some concern and there is likely to be two or three devaluations this year.

VNREA also sees the mid-range segment dominating the market this year. The lower-price segment will continue to grow but it will not see significant transaction numbers for much longer due to its dependence on government assistance.

Villas and townhouses will continue to see positive changes to meet the significant demand in the market this year as most Vietnamese people prefer to have a landed house rather than an apartment. The segment will also benefit from the considerable improvements in infrastructure and more favorable connections to city centers.

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