Dinh Vu closes on deep sea access

Deep-sea port access will soon become a reality for Dinh Vu Industrial Zone in the northern city of Haiphong.

The Dinh Vu Industrial Zone will soon benefit from direct sea access for 100,000 DWT ships

Construction is now underway on a deep sea port connection between Dinh Vu Industrial Zone (DVIZ) and Cat Hai Island.

This infrastructure project is part of the development of the Dinh Vu-Cat Hai Economic Zone, focusing on transportation links to and from the DVIZ, which also benefits from the economic zone package, the best tax package available in Vietnam, and one of the most competitive packages in ASEAN.

The project will provide direct access to the Lach Huyen Deep Sea Port for ships of up to 100,000 dead weight tonnage (DWT); direct access to the Dinh Vu General Port of 20,000 DWT; direct access to the Dinh Vu Liquids Jetty up to 20,000 DWT; direct access to Highway 5 and the new Hanoi-Haiphong-Dinh Vu road. It also connects to Cat Bi International Airport, and is only seven kilometres from Haiphong city centre.

The Dinh Vu-Cat Hai sea-crossing bridge connecting the existing DVIZ to the deep-sea port of Lach Huyen is currently under construction. The Tan Vu-Lach Huyen sea-crossing bridge is directly linked to the new Highway 5 connecting Haiphong with Hanoi and other provinces.

Linked with DVIZ, these important projects will provide easy access to transportation links for businesses in the DVIZ Industrial Park Zone.

Japanese contractors built the bridge, with the access road constructed by a domestic firm. This link will facilitate the transportation and distribution of materials and products in DVIZ to and from the Lach Huyen deep sea port to the rest of the world.

The Lach Huyen deep sea port is being constructed by international developers. Upon completion in 2016, Lach Huyen will cater to vessels of up to 100,000 DWT. This crucial development will compliment Haiphong’s other ports, enabling direct shipment of goods to and from other ports across the world.

In other words, Dinh Vu-Cat Hai Economic Zone will be a strategic location for investments with convenient access to local markets and direct access to countries in the region and further afield.

The critical features of this project have pointed towards a comprehensive development picture of Dinh Vu-Cat Hai Economic Zone, differentiating DVIZ from other industrial zones and bringing success to DVIZ’s clients.

To date, DVIZ has welcomed 54 projects from Europe, Japan, Korea, Singapore, the US and other countries in the region.

DVIZ has proven to be a well-considered location in the eyes of international and local industries thanks to its advantages in terms of transport, utilities, workforce, economic issues and tax benefits.

DVIZ is an industrial park developed by a consortium of international developers together with the city of Haiphong. The zone began operations some 15 years ago and has proven to be one of the most successful developments in the north of Vietnam.

Nam Van Phong refinery still in infancy, six years on

Six years since being licensed, the Nam Van Phong oil refinery is still calling for investment capital as its scale has nearly doubled requiring a total $8 billion investment.

Located in the Nam Van Phong Economic Zone in Khanh Hoa province, the refinery is on the list of 127 large-scale projects calling for foreign investment through 2020.

The local investor in the project is Vietnam National Petroleum Group (Petrolimex), which is calling on foreign investors to join under the joint venture model.

When the project was approved by the government in 2008 it had an expected investment of $4.4 to $4.8 billion with a capacity of 10 million tonnes per year. It was planned to start construction in 2011 and go operational by 2013.

After it received the license, Petrolimex was instructed by the government to conduct an investment plan and feasibility study for the project.

The government also suggested the investor carefully conduct the environmental impact assessment, implement appropriate technologies, design a careful capital structure, and find appropriate partners who could supply crude oil over the long-term.

Near the end of 2011, it was reported that Korea’s Daelim Industrial Corporation had negotiated with Petrolimex to invest in the Nam Van Phong project. The two sides also signed a memorandum of understanding on the investment. However, since then no further information has been released about co-operation between Petrolimex and Daelim.

To this day, the refinery is still calling on investors with total needed capital doubling since 2008 to $8 billion.

The slew of refineries and petrochemical complexes in the pipeline has roused concerns from the public of excessiveness.

However, at the end of last year Prime Minister Nguyen Tan Dung confirmed that the government would strictly manage the efficiency of these projects.

The only refinery currently operational in the country is the Dung Quat, while the Nghi Son started construction just last year. The remaining projects are still in the preparation phase. Can Tho oil refinery is behind schedule and local authorities have proposed revoking its investment license.

Already in Vietnam there is another refinery, the $28 billion Nhon Hoi, to be financed by PTT of Thailand and located in Binh Dinh province.

Meanwhile, also in the Nam Van Phong area, last year the Khanh Hoa People’s Committee decided to put a stop to a $1.3 billion oil service centre invested in by Sao Mai-Ben Dinh Joint Stock Company (under PetroVietnam) as the firm failed to source the needed capital.

Waste not, want not incentives offered

Vietnam has introduced an incentive policy for the first time which will encourage private investors to build waste-generated power projects in Vietnam.

“The mechanism, effective from June 20 this year, will be one of the most important pillars to support renewable power projects generated from solid waste. It will help attract investors in this type of renewable energy,” said Nguyen Duc Cuong, head of the Ministry of Industry and Trade’s (MoIT) Institute of Energy.

The incentive feed-in-tariff for renewable power generated from solid waste-power plant will be 10.05 US cents per kilowatt hour. This is higher than the tariff of 7.8 US cents fixed for wind power plants.

MoIT’s Deputy Minister Le Duong Quang said that the waste-to-power model contributed to Vietnam’s environmental protection policy as well as its energy programme.

Le Anh Hung, chairman of Ecotech Vietnam, a technological and environmental solution provider, stated that investors in this sector were waiting for this mechanism to come online. He added that Ecotech Vietnam had a strong desire to contribute to the development of the waste-to-power sector as well as develop environmental protection and pollution treatment facilities here.

He said his company was currently consulting on the establishment of waste-to-power projects in Hanoi, Ho Chi Minh City and Ba Ria-Vung Tau with the estimated investment capital of $150 million for each project.

Although Vietnam is said to have huge potential for renewable energy, private investors have not yet invested much in this sector due to a lack of incentive mechanisms. Currently, the Vietnamese government is supporting small hydro-power projects, wind power projects and biomass power projects dating from 2008, 2011 and 2014 respectively.

In past years, several private investors proposed building renewable energy projects generated from solid waste, but most of them were not actually built due to a lack of support mechanisms. Australian-based Trisun International Development proposed a $400 million waste-to-power project, as did Vietnam Waste Solutions Company, however neither of these projects made it off the ground. The $30 million waste-to-power project in Hanoi, which is a joint venture of Japan’s Hitachi Zosen Company and Hanoi Urban Environment Company, is the only one being developed so far.

All investors have proposed a feed-in tariff of around 10 US cents per kilowatt hour. Trisun International Development even proposed a feed-in-tariff of 12 US cents per kilowatt hour.

Before the provision of support mechanisms for power generation projects using solid waste in Vietnam, Yoshioka Toru, director of Hitachi Zosen stated that the cost of investment in a waste-to-power plant was very high. He added that investors would hardly make a profit if they built renewable power plants in Vietnam due to the low retail price of electricity.

Its project is scheduled to go into operation in 2014 with the capacity to treat 75 tonnes or 30 per cent of Hanoi’s daily industrial waste. The plant will use advanced Japanese technology, and the subsequent energy produced will be harnessed to generate power for about 4,500 households and a neighbouring industrial park.

Haiphong Port IPO offers poor return

The northern region’s busiest port at Haiphong Port only sold 47 per cent of its marketed shares during its initial public offering.

In the initial public offering (IPO) last week for the Vietnam National Shipping Lines (Vinalines) owned Haiphong Port, just 17.699 million of the 37.635 million registered shares available were successfully sold.

This amounts to 5.41 per cent of the port’s total shares compared to the initial target of 11.51 per cent. The total value of sold shares reached VND238 billion at an average selling price of VND13,507 per share. The highest bidding price reached VND17,000 per share. The auction saw the participation of just one institution and 77 individual investors.

“The disappointing results for the Hai Phong Port IPO probably don’t come as much of a surprise given the current turmoil in the domestic stock markets,” the Ho Chi Minh Securities Company (HSC) commented in its newsletter to clients last week.

Post-IPO, the port’s expected chartered capital should reach VND3,269 billion ($172 million).

Haiphong Port is now the biggest port in the northern region, accounting for 40 per cent of cargo volumes carried through Haiphong’s waterway network. In 2013, the company posted consolidated net revenues of VND1,939 billion ($92.3 million), up by 0.7 per cent year-on-year and net profits of VND288 billion ($13.7 million), up by 73 per cent on-year.

According to the Vinalines restructuring plan for the 2012-2015 period, the corporation will sell 25 per cent of the state stake in the port.

Meanwhile, Vietinbank has requested that Vinalines seek approval from the Ministry of Transport to allow them to become a strategic partner of Vinalines’ port members once equitisation is complete.

Via a debt-equity swap with the ownership portion and swap ratio for each outstanding loan to be agreed via negotiation.

Vietinbank’s total outstanding loans to Vinalines and its related entities amount to VND4,982 billion ($237 million), equivalent to 1.3 per cent of the bank’s total loan book, of which loans to Vinalines total VND2,051 billion ($97.6 million) and subsidiaries and associates are valued at VND2,931 billion ($139 million).

According to Haiphong Port’s IPO document, it currently holds a 35-40 per cent market share in the Haiphong area with revenue mainly derived from cargo handling (74.5 per cent); storage and warehousing (13 per cent) and other services (12.5 per cent).

This year, the parent company is targeting net revenues of VND1.4 trillion ($66.6 million), up 3 per cent year-on-year and net profits of VND178 billion ($8.47 million), down by 7.3 per cent year-on-year, while consolidated net profits are set at VND215 billion ($10.2 million), down by 25 per cent. This would generate a forward EPS of VND658 ($0.031) and a forward PE of 20.5xs.

Gas-fired power prices may sharply increase

The recent gas price increase  would lead to Vietnam’s gas-fired power plants’ fear of a sharp hike in their production costs in the coming period.

The price of non-contract gas increased from April 1. Gas sold to the power sector for production reached a value of 70 per cent of market price plus transportation and distribution expenses and this level will be later revised up to entirely meet the market price plus transportation and distribution costs from 2015.

The market price is set at 46 per cent of the average FO oil prices on the Singapore market.

At present there are only three gas purchase contracts signed with the state-owned Electricity of Vietnam (EVN), Mekong Energy Co which manages Phu My 2.2 build-operate-transfer (BOT) power plant and Phu My 3 BOT power plant, meaning other gas-fired power plants mainly source non-contracted gas for production.

A power firm based in Nhon Trach district in the southern province of Dong Nai said power plants in this area could be seriously affected by the gas price hike.

Before the decision on the new gas price from April 1 took effect, the gas price at Nhon Trach power plant was about 40 per cent more expensive than that of power plants in Phu My which use contract-based gas.

Gas costs often account for about 70 per cent of power production costs. Therefore, the higher non-contract gas price would inevitably lead to a jump in power production costs at gas-fired plants.

“This additional cost will inevitably be added to electricity prices,” said the firm.

In the southwest, the Ca Mau 1 and Ca Mau 2 power plants, with the combined capacity of 1,500 megawatts, source gas from MP3-CAA and Cai Nuoc gas-fields and the gas price here is equal to the Singaporean market price (46 per cent of average FO oil prices). The gas here is currently priced at about $8 per million BTU.

The southeast hosts the Phu My power centre which comprises EVN’s power plants, Nhon Trach 1 and 2 power plants which have huge investment from the state-run PetroVietnam and some BOT power plants operated by foreign investors. This power centre source gas from the Cuu Long and Vietnam’s leading gas field of Nam Con Son basin.

Here, the price of gas sold to those power plants is set following two mechanisms, for contract-based gas volumes and for non-contract gas volumes.

The gas from Nam Con Son basin to feed those power plants was reported at 6.05 billion cubic metres in 2012.

Of this, contract-based gas volumes accounted for 58 per cent of the total, tantamount to about 3.55 billion cubic metres.

The price for contract-based gas was reported at $3.68 per million BTU and subject to a 2 per cent price adjustment annually. This means the gas price will be nearly $3.9 per million BTU within this year. Meanwhile businesses using con-contract gas have to pay about $5.39 per million BTU.

According to the National Load Dispatch Centre’s figures, Vietnam’s gas-fired power plants last year produced 42.8 billion kWh, accounting for 32.6 per cent of the nation’s total power output.

More credit opportunity for home buyers

Individual and institutional investors will be allowed to use their homes of the commercial projects that are under construction or will be developed as collateral to take out bank loans as stated in a recent joint circular.

Circular 01/2014, issued by the central bank and the ministries of Construction, Justice, and Natural Resources and Environment, clarifies owners of apartments, villas and attached houses at the housing projects will be eligible for bank loans from June 16 this year.

A number of banks and property companies have expected that the circular, which was issued to provide guidelines for the Government’s Decree 71/2010/ND-CP featuring guidelines for Housing Law, will give a boost to credit growth in the real estate sector and accelerate disbursements of the VND30-trillion home loan program.

The projects to benefit from the circular should have designs approved, foundation construction completed, contracts signed between the seller and the buyer, units handed over to the buyer although the ownership certificates have not been issued by authorities among others.

If housing projects have been used as collateral for bank loans, the investors must settle their payments with the lenders; otherwise, these projects and their customers are not subject to the benefits of the circular. This is considered a bottleneck as the investors cannot pay bank debts easily at a time when the country’s real estate market is not showing clear sign of recovery.

Speaking to the Daily, representatives of some banks said that the new circular would leave little impact on credit growth for the real estate sector.

Nguyen Dinh Tung, general director of Orient Commercial Bank (OCB), said that banks had already allowed clients to take out loans when they used their future apartments as collateral as this already existed in a number of legal documents.

However, Tung acknowledged the new circular provide more details for banks to follow and transact more confidently with the clients who use their future property to take out bank loans.

Tung noted that risks still loomed large for banks if they were not strict with their lending procedures. Banks should disburse their loans depending on the construction pace of the projects used as collateral and business plans of the investors.

Le Hoang Chau, chairman of the HCMC Real Estate Association (HoREA), said the content of the new circular was actually what the association had proposed to the Government in previous years.

Chau expected the circular would facilitate fast disbursements of the VND30-trillion home loan package, which is said to progress at a snail’s pace.

Nguyen Phuong Chi, board member of Binh Chanh Real Estate Commercial JSC, was concerned that if the legal document was not executed transparently, certain banks and their close property clients could benefit.

But Chau said banks had the right to chose projects for lending based on their business relationships with investors.

Agriculture needs drastic restructuring

Minister of Agriculture and Rural Development Cao Duc Phat has underscored an urgent need to restructure the agriculture sector toward applying more scientific and technological advancements to large-scale production and increase quality exports to global markets.

Phat told a seminar on application of high technology to large-scale agricultural production in Hanoi last week that the country’s agriculture sector managed to meet domestic demand 30 years ago and had been able to earn much from export these days.

However, things have changed and the agriculture sector needs drastic structural changes. Phat said that like other sectors, the agriculture sector was facing fiercer competition with imported products right on the domestic market when the nation was opening its doors wider to imports to fulfill commitments to bilateral and multilateral trade agreements.

Phat stressed a restructuring overhaul for the agriculture sector rather than just small changes to help it improve competitiveness.

“Restructuring covers not only technological changes but also policies for finance, trade, land and labor. The Ministry of Agriculture and Rural Development itself cannot do with those policies but needs help from other ministries and agencies,” Phat said.

Nguyen Van Binh, governor of the central bank, told the seminar that old and small production methods, coupled a lack of effective general orientations, were major barriers to Vietnam’s agriculture sector to join the global supply chain.

“Therefore, the agriculture sector needs restructuring to add value, apply modern technology and achieve large-scale production goals,” Binh said.

Binh said the central bank, the ministries of Agriculture and Rural Development and of Sciences and Technology had worked together to select effective models to connect enterprises with households and apply pilot financing to production of key farm produce for export, including seafood, rice, vegetables and livestock.

The central bank plans to trial the production for two years before expanding it throughout the country.

Nguyen Viet Manh, director of the central bank’s credit department, said the pilot lending program focused on helping farmers reduce input costs by soft-interest loans and offering loans without collateral if farmers and enterprises secured contracts.

The program would allow enterprises to use the low-interest loans to supply seeds and materials to farmers to cement ties between the two sides, Manh said.

Central bank spends big on core banking

The State Bank of Vietnam has picked FPT Information System Company (FPT IS) as supplier for a core banking and budgetary planning package worth US$9 million as part of a project to develop a modern management system.

The package, which is also known as SG3.1 in Vietnam, will focus on core banking, auditing application and systematic compatibility for the central bank.

The information and modernization program of the central bank costs US$71.83 million and financed by the World Bank.  FPT IS won the package through an international competitive tender.

FPT IS will begin work on the package next month and will complete stages of demand analysis, system design and development, quality test, system operation and support, including training for the bank within 24 months.

When put in place, SG3.1 will facilitate the central bank’s core banking, financial governance and budgetary planning in compliance with international standards. It will enable the central bank to better connect to credit information and deposit insurance facilities in Vietnam.

NA deputies question efficiency of bauxite projects

National Assembly deputies still questioned the economic efficiency of Nhan Co and Tan Rai bauxite mining projects in the Central Highlands.

Presenting a report on the two projects to the committee on Saturday, supervisors said that the loss-making duration would be shortened by one to two years compared to the earlier estimate.

However, the committee still urged caution in evaluating impacts of the projects.

According to a report of the Ministry of Industry and Trade in February, investment capital for each of the two projects has soared by 30%. Tan Rai project is predicted to rack up losses of VND176-258 billion a year while Nhan Co would suffer losses from 2015 to 2020.

The ministry still called for more incentives for the investor - Vietnam Coal and Mineral Industries Group (Vinacomin), proposing that environmental fees and compensation for site clearance should be reduced. Therefore, the NA Standing Committee requested a review of the projects.

Phung Quoc Hien, head of the NA Finance and Budgetary Committee, insisted on economic efficiency of the projects as over 70% of the total capital was sourced from credit.

With total investment of VND15-16 trillion for each project while revenue is only VND7-8 trillion a year, it was necessary to reconsider the projects.

Vietnam to attend Future of Asia conference

Deputy Prime Minister Vu Duc Dam will attend the 20th International Conference on The Future of Asia in Tokyo, Japan, on May 22-23.

The annual conference organised by Nikkei Inc. attracts top governmental and business leaders from around the world, discussing the maelstrom of issues related to the socio-economic development of Asian countries.

Dam is scheduled to meet with Japanese leaders on the sidelines in search of ways to promote the strategic partnership between the two nations.

SBV vows vigilance as forex, gold prices tumble

The price of gold at commercial banks declined sharply on May 20 after the State Bank of Vietnam (SBV) announced a commitment to stabilising the gold and forex market.

Central bank leaders stressed that they continued to monitor the situation of the gold and forex market closely and were willing to take any measures needed to stabilise the market.

On May 20, the forex rate continued to decrease by 30-40 VND per US dollar.

Currently, the rate is between 21,150 VND and 21,160 VND per US dollar for selling while buying price hovers at 21,070 VND to 21,110 VND per US dollar.

Vietcombank's morning rate sank between 20 VND and 30 VND to stand at 21,100 VND per US dollar for buying and 21,150 VND for selling.

The US dollar price at the Bank of Investment and Development of Vietnam (BIDV) was listed 30-40 VND per dollar lower, finishing at 21.100 VND and 21.150 VND respectively.

VietinBank also significantly reduced its buying price. Its greenback note was listed at 21,100 VND for buying and 21,155 VND for selling.

Similarly, Agribank's price was 21,095 VND per dollar for buying and 21,150 VND for selling.

Other commercial banks such as Techcombank, ACB and Dong A Bank also reduced their buying and selling prices. However, Eximbank and Sacombank did not. Their rates for buying and selling stayed at 21.080VND/21.160 VND and 21.080 VND/21,170 VND respectively.

The average inter-bank exchange rate was maintained at 21,036 VND per US dollar and the Central Bank's interest rate also hovered at 21,100 VND and 21,246 VND.

The nation posted a 19.5 tonne increase in gold demand in Q1 this year, including 4.5 tonnes of jewelry and 15 tonnes of gold bullions with a value of 810 million USD, a 5 percent rise compared to the same period last year, according to the latest report of the World Gold Council.

Last year, the nation ranked seventh worldwide in terms of gold consumption, importing 92.2 tonnes of gold worth 4.16 billion USD.-

Royal City receives Asia Pacific Property Awards

The Royal City Complex of Vingroup Joint Stock Company has won top honours at the Asia Pacific Property Awards 2014 in two categories: Best Retail Development Vietnam and Highly Recommend for the Mixed-Use Development Vietnam.

The Asia Pacific Awards are only presented to real estate projects that meet the highest of international standards based on the criteria of architecture, unique planning and humanities, safety, security, sustainability and innovative technology, environmental protection and the provision of services to people.

To achieve the awards, Royal City underwent evaluation and assessment by the jury comprised of over 100 leading experienced professionals in the real estate sector around the world.

Vincom Mega Mall Royal City is the Asia’s largest underground retail and entertainment complex. It has modern recreational areas such as the biggest indoor water park the Southeast Asia, and Vietnam’s largest indoor ice rink.

Since 2008, the number of candidates competing for Asia Pacific Property Awards has steadily increased. This year, the organizing board received more than 1,000 entries from nearly 300 companies across the region, competing in more than 40 categories including architecture, development, real estate, design, consulting and interior.

Last year, an ecological residential area of Vingroup Joint Stock Company received the “Best Complex Project in Asia-Pacific” of the International Property Awards.

HCM City conference highlights Vietnam-Russia trade prospects

The prospects for bilateral economic, trade and investment ties between Vietnam and Russia are bright, said Deputy Minister of Industry and Trade Do Thang Hai at a Russian trade and investment promotion conference on May 20 in Ho Chi Minh City.

He pointed out that the sound relationship between the two countries, as well as a forthcoming free trade agreement between Vietnam and the Russia-Belarus-Kazakhstan Customs Union, will enable more Vietnamese goods to enter the Russian market.

He noted that despite the fact that the current trade between the two countries accounts for only 1 percent of Vietnam’s trade revenue and 0.5 percent of Russia’s, the figure is expected to surge thanks to the joint efforts of both sides.

Sharing Hai’s opinion, Russian Deputy Minister of Industry and Trade Evtukhov Viktor Leonhitdovich stated that Vietnam has been a traditional and credible partner of Russia. Russia has given a reduced import duty rate and preferential tariff policies to some countries, including Vietnam, he noted.

He said the growing cooperation between the two countries will bring about good opportunities for Vietnamese enterprises to promote their exports to Russia.

At the conference, participants were introduced to the Hanoi-Moscow multifunctional cultural centre and hotel in Moscow, which is expected to act as a support centre for businesses of both sides in their trade and investment activities.

Last year, two-way trade between Vietnam and Russia hit nearly 4 billion USD. In the first three months of this year alone, the figure had already reached over 1 billion USD.

Vietnam mainly exported telephones, computers, footwear, seafood, coffee, cashew, rice and vegetables to Russia . Meanwhile, it imported oil and gas products, steel and iron.

Currently, Russia has 97 projects in Vietnam with a total capital of nearly 2 billion USD. Vietnam has 17 projects worth 2.4 billion USD in Russia.-  

Businesses eye rural market

Vietnam's rural market holds great potential for the consumer industry, a new study has found.

The 2014 Nielsen Vietnam Rural Study of 700 rural consumers nation-wide said the rural community, which accounts for 68 percent of the country's 90 million population, is investing in education and enjoying similar income growth as its urban counterpart.

Vaughan Ryan, managing director of Nielsen Vietnam, said, "There is increasing interest from the local and multinational business community alike around Vietnam's rural consumers."

Rural consumers account for half of the domestic spending on Fast-Moving Consumer Goods (FMCG) – products that are sold quickly and at relatively low cost goods, yet they are not just purchasing the cheapest offering but looking for value for money, he said.

The rural consumer wants more and wants it fast, he said.

"They want their kids to live a better life than they did and they aspire for them to have more choices. They see education as a key vehicle to making this happen as more of them have regular incomes."

The study found that traditional channels continue to play a pivotal role in rural regions though the number of modern retail outlets is increasing.

Wet markets are the most popular retail channel in rural Vietnam with a person making 16 visits per month on average, followed by fairs and street vendors.

Modern outlets such as grocery stores experience between six and nine visits a month on average, while supermarkets trail below at just one visit every two months.

A shopper spends 655,200 VND (31.2 USD) a month on average at traditional outlets and only 175,000 VND (8.3 USD) at modern outlets.

Shoppers tend to buy items such as personal and household care products, beverages, seasoning, and dairy products from modern trade outlets and fresh foods, seasoning, and some household items from traditional outlets.

The study also found that retailers' recommendations are a powerful brand endorsement as 90 percent of retailers recommend products to shoppers and 31 percent of the latter follow the recommendations.

With rural consumers' aspirational outlook and fascination with urban lifestyles, there is opportunity for growth in categories that appeal to the desire for progress and lifestyle changes, in particular health and beauty and household cleaning products, according to the study.

Rural consumers also show a thirst for new products – 77 percent want to try new products and 95 percent appreciate having a wide range of products to choose from.

The study also pointed out that television is the key to reach and connect with rural consumers as 99 percent watch TV on a regular basis and 69 percent claim to obtain product information from this source.

Television viewing accounts for 88 percent of total media consumption.Vaughan said more and more consumers were willing to buy Vietnamese-made and -owned products. The perception of quality remained for certain internationally made products, but even this was changing, he said.

"The real concern for rural consumers is more around products imported from within the region with unclear origins and low quality, which are perceived to be far inferior or even a threat to the health and safety of their families."

Fakes and copies are rife in Vietnam, with one in four rural consumers having experienced fake and low-quality products, and as a result being cautious about their purchases.

The study, carried out from January 1 to 18 this year, was aimed at providing an overall picture of Vietnam's rural areas for firms who have been or are going there, research consuming habits, and measure the purchasing capacity of people there. It used qualitative (interview) quantitative (questionnaire) and retail methods (watch on retail market at rural areas).-

Young people encouraged to start up new businesses

The Vietnam Chamber of Commerce and Industry (VCCI) experts recommended that the government should make greater effort to encourage people to start up their new businesses.

According to a VCCI survey, four in every 100 adults in Vietnam started a new business, 12 were business owners under 3.5 years and 16 run business over 3.5 years. In some other countries, these figures were 10, 12 and 14, meaning that the number of new business establishments in Vietnam remained low, the Vietnam Economic News reported on May 19.

Most of these business activities were on the processing field and performed on a small scale.

The number of young people engaged in the first stage of business cycle was high. Business starters aged between 25 and 34 remained the highest percentage.

Establishing new businesses would create new jobs, thus helped promoting economic growth. However, the educational programme at high school level has not offered business development, creativity and self-confidence and guiding market principles for students.

Business support services such as consultancy, law, accounting and audit have not been commensurate with the country’s economic growth. Vietnamese infrastructure has remained backward and financial services have not met development requirements.

To promote business development, experts recommended that the state should publish transparent policies, creating favourable conditions for doing business. In addition, the state should create fair competition between economic sectors and strengthen the dissemination of information to people in terms of market needs.

Building the educational system at high school level towards creativity, independence and teamwork ability is mentioned. In addition, the state should put some business knowledge into curriculum for students and popularise business awareness programmes.

The state should also develop business centres based on technology, encourage the development of the manufacturing industry and support industries.

Improving the transport system, waste water treatment plants and industrial zones, completing network of business support services and giving new products in accordance with businesses’ characteristics are underlined.

Domestic fibres boost Vietnam’s exports

Domestic fibre supply has increased in recent years because local enterprises have expanded production to improve the competitiveness of garment products.

The Vietnam Textile and Apparel Association (Vitas) announced that the domestic enterprises have many large projects to expand fibre production for the manufacturing of local garments and to reduce imports of fibre, reported Dau tu (Vietnam Investment Review) newspaper.

Last year, Nha Trang Textile and Garment Joint Stock Company, with a total charter capital of 185 billion VND (8.8 million USD), invested 80 billion VND (3.8 million USD) in fibre production with a capacity of 16,000 tonnes a year, said company chairman Pham Xuan Trinh.

The investment also helped the company gain revenue of 1.304 trillion VND (62 million USD) last year, 100 billion VND (4.76 million USD) higher than the previous year.

Pre-tax profit reached 45 billion VND (2.1 million USD), an increase of 5 billion VND (238,000 USD) against the previous year, he noted.

This month, the Century Synthetic Fibre Corporation started a fibre producing project in Trang Bang Industrial Zone, Tay Ninh province, with a total investment of 33.9 million USD.

Dang Trieu Hoa, chairman of the company, stated that the company planned to put the factory into operation from the third quarter of 2015, and the factory will run its full capacity of 50,000 tonnes of draw textured yarn (soi xo dai) each year from the first quarter of 2016.

The factory would help the company have enough fibre products to take advantage of the Trans Pacific Partnership agreement.

This would also enable it to co-operate with other partners to expand production to the fields of textile dyeing, completing its supply chain, Hoa noted.

Phu Nam Fibre Joint Stock Company located in Thua Thien Hue province said this year that the company would continue investment to increase its capacity by more than 30,000 units of whorl.

Last year, the company had 30,000 whorls to supply fibre for domestic and foreign markets.

Vitas noted that the increase in local fibre products had reduced imports and even led to exports.

The association added that exports of material and sub-material products of Vietnam, mainly including fibre, increased to 2 billion USD last year. In the first four months of this year, exports reached 800 million USD.

Each year, local textile enterprises imported fibre worth 1.3 billion USD from Taiwan, the Republic of Korea and India for home consumption.

Meanwhile, the local textile and garment industry had 3,700 enterprises, including about 630 textile enterprises supplying 40 percent of the local demand of fibre.

Therefore, the local fibre market was still a potential market for foreign firms, the association claimed.

TPP meeting fails to reach final agreement

Ministers and heads of delegation of 12 countries involved in the Trans-Pacific Partnership (TPP) were unable to reach a final agreement at their freshly-concluded meeting in Singapore.

During the two-day ministerial meeting, they regained momentum for resolving thorny issues of tariffs and market access.

“There has been some progress. Of course it is not entirely satisfactory. We have some way to go on market access issues,” Malaysian Trade Minister Mustapa Mohamed said after the meeting on May 20.

New Zealand’s Minister of Trade Tim Groser, on behalf of the Ministers and Heads of Delegation, said: “We focussed in particular on making meaningful progress on market access and also advanced outstanding rules issues in an effort to narrow our remaining differences.”

According to the New Zealand Minister, the meeting reviewed recent bilateral engagements, including the US-Japan negotiations last month, as well as the results of the Chief Negotiators meeting last week in Ho Chi Minh City.

“In a series of positive meetings we cemented our shared views on what is needed to bring negotiations to a close. In order to further build on the momentum of negotiations, we have decided on a pathway of intensified engagement over the coming weeks on market access and rules,” he said.

The meeting agreed that chief negotiators will meet in July while ministers will continue to engage bilaterally to direct negotiations, coordinate, and tackle the most challenging outstanding issues.

“Our negotiations during this most important period will continue to reflect our long-standing commitment to deliver an ambitious, comprehensive and high-standard agreement consistent with the instructions of our Leaders,” they said in the joint statement.

“We will also continue to be guided first and foremost by our shared desire to create jobs, economic growth and opportunity for the people of our countries,” it added.

Ambassador Michael Froman, head of the United States at the meeting, told the press that there is no particular deadline for the final agreement.

The TPP agreement talks are involved 12 countries bordering the Pacific Ocean, namely Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States and Vietnam.

Irish businesses encouraged to invest in ‘dynamic’ Vietnam

The recently-published Ireland - Asia Business Yearbook 2014, an annual guide for Irish companies doing business in the emerging region, has proclaimed Vietnam to be a dynamic and growing market.

A profile in the publication wrote that Vietnam has successfully transformed from a centrally-planned economy into a socialist-oriented market economy which has recorded average annual gross domestic product (GDP) growth of 7 percent over the past two decades, with international trade exceeding 160 percent of GDP.

The yearbook also hailed Vietnam as the world’s top exporter of rice, coffee, and black pepper, and a major exporter of textiles, seafood, electronics, software, crude oil and furniture.

The country is regarded as one of the top investment destinations in the region, attracting an estimated 6.5 billion USD in foreign direct investment in each of the past five years.

The feature noted that an Ernst & Young report 2012 on rapid growth markets called Vietnam a rising star, and expected to see GDP per capita increase six times over the next 25 years and the number of households earning over 30,000 USD to rise from less than 6,000 in 2011 to more than 60,000 in 10 years’ time.

According to the yearbook, infrastructure, agriculture, energy, information technology and human resource development continue to be the sectors that will offer the best opportunities for Irish businesses both over the short and long-term.

It commented that the ongoing equitisation of state-owned enterprises enables foreign investors to join in the restructuring of its economy.

As the 150 th member of the World Trade Organisation, Vietnam is integrating deeper into the regional and world economy, it said.