Promoting effective use of ODA loans

The recent decision of Da Nang Port in declining to borrow capital from Japan’s ODA for the Tien Sa Port expansion project has been considered unusual and surprising to many people.

According to calculations from the Da Nang Port JSC, the project will cost nearly VND13 trillion (US$ 59.8 million) if developers seek capital from domestic and foreign commercial loans, much less than that of VND2.16 trillion (US$100 million) if the decision is made to use Japanese ODA loans.

Da Nang Port leaders have defined specific plans to be conducted in two phases, in which Phase 1 will mobilise over VND1 trillion and is expected to be completed by the end of 2017. Currently, Da Nang Port has arranged 30 capital internal sources, plus 30 loans and more than 30 deposits from external capital markets.

With the entire plan having already been mapped out, it is no coincidence that Da Nang Port decided to decline ODA. This was a brave decision. A genuine business must consider how to use capital for the most efficient and profitable way, especially among equitised enterprises.

ODA involves borrowing capital from countries and paying that back together with priority terms for contractors from ODA providers. Therefore, much of the value of the ODA projects will fall into the hands of contractors from lending countries. Local subcontractors are usually hired to perform small jobs with cheaper costs.

ODA recipients are bound to use technologies, machinery and equipment from the creditors, plus other conditions such as duty-free import of goods, receiving a portion of loans in the same kind of payment as the type of loan, as well as bearing the risk of exchange rate fluctuations. Therefore, most developing countries must strive to cease borrowing ODA in a certain timeframe if they want to succeed. The Republic of Korea cut ODA flow after 20 years of receiving loans and completely ceased receiving ODA after 30 years.

In the use of ODA, borrowing countries also adhere to strict conditions, including that loans should be firmly managed, efficiently used and infrastructure quality should be ensured with a long-term vision. At the same time, borrowers must only use ODA to invest in essential infrastructure and poverty alleviation; they ought to not use ODA to pursue other unnecessary projects.

Any aid received always has two sides. These specific loans, with preferential interest rates always imply pluralism objectives, both economic and non-economic from the lenders, are beneficial in both the short and long terms. In addition, the recipients have to arrange reciprocal capital during project implementation, which is sourced from taxation. Therefore, it can be said that the use of ODA can cost more than domestic capital.

In the context of domestic economic difficulties, ODA is very necessary to healthcare, clean water, environmental protection, infrastructure development, agricultural and rural development, hunger eradication and poverty reduction and national industrialisation and modernisation acceleration. Therefore, effective ODA management can promote the efficient use of ODA.

Over the last 20 years, Vietnam has mobilised approximately US$80 billion in ODA, at the average borrowing rate of US$3 billion a year. The fund has contributed positively to national socio-economic development with many programmes and projects achieving positive results.

However, there is also losses and wastefulness in ODA use, even violating laws and influencing the country's credibility with donors. For that reason, it is necessary to implement a transparent policy in ODA projects to effectively use loans. Simultaneously, staff capacity should also be enhanced.

If localities and related agencies use ODA for unnecessary non-urgent projects, it is inevitable that low-interest ODA loans will become a burden for the country.

Brand development imperative in integration process: experts

Building and promoting brands is vital for Vietnamese businesses to integrate deeply and widely into the global economy, experts said.

The establishment of the ASEAN Economic Community (AEC) at the end of this year will offer both opportunities and challenges for small- and medium-sized enterprises, they added.

Pham Ngoc Hung, Vice Chairman of the Ho Chi Minh City Union of Business Associations, noted that other ASEAN member nations have thoroughly prepared laws, policies and strategies to support their businesses to make inroads into Vietnam.

Meanwhile, up to 60-70 percent of Vietnamese firms are unaware of integration issues, he cited, adding that only a few Vietnamese brands are competitive in both domestic and foreign playgrounds such as Ton Hoa Sen, Vissan and Saigon food.

Most businesses have yet to increase goods quality due to financial shortages and difficulties in accessing capital, he noted.

Chairwoman of the Association of Vietnam Retailers Dinh Thi My Loan said the operation of foreign retail firms in the local market is inevitable since Vietnam is expanding its market and joining a number of new generation free trade agreements.

The engagement of the overseas retail businesses, which make up 25-26 percent of the market, is considered important momentum to develop the retail industry in Vietnam, she said, naming popular brands at home such as Saigon Coop, Fivimart, Vinmart, Satra and Fahasah.

However, local manufacturing firms could face substantial pressure due to the flood of imported goods from ASEAN member countries with various designs and reasonable prices such as consumer products from Thailand, Indonesia, Malaysia and the Philippines.

Domestic businesses should reform their operations and management to improve competitiveness and strengthen their foothold in the market while increasing cooperation for mutual benefit, experts advised.

They called on the State to build technical barriers to protect domestic products and enhance market management to prevent counterfeit goods from entering the market.

HCM City looks for ways to raise capital for SMEs

Raising capital remains one of the biggest difficulties for companies, and so programmes that help connect businesses with capital sources play a very important role, a conference heard in HCM City yesterday.

Pham Ngoc Hung, deputy chairman of the HCM City Union of Business Associations (HUBA), said Viet Nam is integrating deeply with the global economy with a series of free trade agreements either signed or under negotiation.

But a recent study by HUBA came up with the extremely worrying result that 65 per cent of local firms are vague about the opportunities and challenges thrown up by FTAs, he said.

Asked what was the biggest difficulty in the context of deeper integration, companies said it was capital followed by trade barriers, he said.

Nguyen Manh Tue, deputy head of the Department of Planning and Investment's economic sub-department, said there are around 150,000 businesses in HCM City, of which 97 per cent are small and medium-sized enterprises.

The city has many programmes to support enterprises – such as organising dialogues with government agencies to help resolve their difficulties in a timely manner, he said.

The city does surveys on businesses' demand for credit and organises programmes to connect businesses and credit institutions, he said, adding that banks have signed agreements to provide loans worth more than VND120 trillion (US$5.5 billion) to businesses in the past three years.

It also provides VND100 million ($4,591) for each project in the agricultural sector under a resolution issued on June 8, he said.

Speaking about the HCM City Credit Guarantee Fund for Small and Medium Enterprises, Tran Buu Long, its deputy director, said to qualify for credit guarantees, enterprises must have good projects, own at least 55 per cent of the projects, have collateral worth at least 15 per cent of the loan, and are not tax defaulters.

However, several attending business executives said SMEs face difficulties in getting bank loans.

Tue said the city needs to establish a fund for supporting SMEs.

Marcel Laneville, senior trade commissioner at the Canadian consulate general in HCM City, said, like Viet Nam, Canada's private sector too is dominated by SMEs, which are obviously vital to the economy.

"Canada actively supports SME development in Viet Nam as we believe these enterprises will lead to changes, like improving competitiveness and productivity, driving growth and reducing poverty."

Canada is implementing two projects in Soc Trang (2011-17) and Tra Vinh (2014-20) provinces that focus on local SMEs, he said.

The conference was organised by the HCM City Union of Business Associations, HCM City Union of Friendship Associations, the city Departments of Industry and Trade and Planning and Investment, and the Viet Phu Payment Services Support Corporation.

Wood product export value set to meet annual target

Viet Nam gained growth in the export value of wood in the first five months of this year, raising expectations of reaching the yearly export value target in this field.

According to the Ministry of Agriculture and Rural Development, the export value of wooden products recorded a year-on-year increase of 6.9 per cent to US$2.56 billion in the first five months.

The three largest markets out of the 120 export markets for Vietnamese wooden products during the first five months were the United States, Japan, and China, accounting for 65.3 per cent of the total export value.

South Korea was the fifth largest market, after the European Union at the fourth place, said the ministry, adding that the free trade agreement between Viet Nam and South Korea will create more favourable conditions for local wooden products to enter their markets.

After the signing of the agreement, Viet Nam's wooden products will enjoy zero export tax to the South Korean market instead of the 3-6 per cent tax rate before the agreement.

The ministry said that the local wood production industry enjoyed some advantages during the first five months of the year because Europe had reduced the production of wood products and an anti-dumping tax had been imposed on China's wooden products exported to the United States, according to the Thoi bao Kinh te Viet Nam (Viet Nam Economic Times) newspaper.

In the first five months of this year, the percentage of the foreign direct investment enterprises' wooden products' export value reduced from 80 per cent to 60 per cent, while the percentage of export value for local wood producers increased from 20 per cent to 40 per cent.

Local enterprises saw an increase in the export value of wooden products because in recent years, local enterprises had adopted the modern production technology of foreign countries such as Italy and the United States, Huynh Quang Thanh, chairman of the Binh Duong Wood Association, was quoted as saying by Viet Nam Television (VTV).

The national export value of wooden products is expected to continue its growth till this year end as local enterprises have bagged large export orders for wooden products, said Tran Quoc Manh, a member of the Handicraft and Wood Industry Association of HCM City's executive board.

Therefore, the wood processing industry is believed to meet its total target export value of $7 billion for this year, Manh added.

However, many experts noted that in coming time, Vietnamese export wooden products will face high competition from other countries. The high production cost of wooden products, including high transport costs, will be a challenge for local wood producers in improving their competitive ability.

Vietnamese airlines speed up with ASEAN Open Skies

Vietnamese airlines have drastically invested in modernizing their fleets in preparations for the ASEAN Open Skies or Single Aviation Market, which sets to be fully effective by the end of this year.

Vietnam approved the impact which was signed in 2010 four years ago. This yearend will be the deadline for other ASEAN nations to approve the policy allowing airlines to fly freely throughout the region via the liberalization of air services under a single and unified air transport market.

The national flag carrier Vietnam Airlines has invested most in modernizing their fleet to practice the policy.

It will become the first airline in Asia Pacific region to use two most advanced aircraft lines in the world including Boeing 787-9 Dreamliner and Airbus A350-900 XWB, which will be put into service for flights to Europe.

Low-cost joint stock airline Jetstar Pacific has also made efforts for the regional integration.

The company director general Le Hong Ha said that they had changed into using A320/A321 aircrafts in all flights and brought new blood into its aircrew to improve service quality.

It has also worked with experienced shareholders such as Vietnam Airlines and Australia Qantas Airways to open new international and regional flights besides 25 under operation flights.

The country’s first private own and low cost carrier VietJet Air has also modernized its squadron and launched new flights in local and foreign markets.

However their efforts seem to be insufficient to compete with other carriers in the region.

Many airlines have met four star and five star standards in the 10 ASEAN nations such as Singapore, Malaysia, Brunei and Thailand. Vietnamese carriers have just reached three star standards.

At a March conference, local carriers said that airway infrastructure had been developed behind the quick growth of flights, causing flight delay and cancel.

Ten years ago, the Airports Corporation of Vietnam implemented a Government’s policy to upgrade and build airports, which has much eased overloading at main airports such as Tan Son Nhat and Noi Bai.

However, there are still many problems. For instance, traffic congestion continuously repeated along streets leading to airports last Tet holidays. Some heavy rains rendered flooding to block entrance gates to the airports.

In principles, the Skies policies will benefit Vietnamese airports because new airlines will open flights there. However it will be more harm than good if local infrastructures fail to meet demand, resulting in revenue and customer losses.

Another challenge is from ticket fare which will be a tense competition among local and regional low-costs carriers.

Mr. Le Hong Ha worried that low-cost carriers might meet with difficulties to book departure and arrival times at international airports because of the increase in airline number.

Vietnamese carriers need the Government’s assistance to conveniently practice the Skies Policy and improve their competitiveness, he added.

Defense ministry wants 3,000 apartments in Ba Son area

The Ministry of Defense expects the investor of Saigon-Ba Son complex project will sell around 3,000 apartments in the project in the Ba Son Shipyard to families affected by cityscape embellishment projects in District 1.

In Dispatch 1934, the ministry requested the HCMC government to consider and approve adjustments of the 1/500 scale zoning plan of the Ba Son area, also known as Saigon-Ba Son complex. The ministry said it would ask the project’s investor to sell around 3,000 apartments to the affected residents at market prices.

Under the adjusted plan, the population of the 22-hectare complex will rise to 11,593 people from 5,400 people.

With around 3,000 resettlement apartments proposed for the affected households, the total number of people living in the apartments will amount to 12,000 if a household has four members on average.

Therefore, if the city government agrees on the ministry’s proposal, the Saigon-Ba Son complex may see its population rising five times, from 5,400 to around 24,000 people.

A bigger population means more floors will be added to buildings at the project. According to the ministry’s proposal, of 22 hectares in the Ba Son area, 7.5 hectares (33%) should be for high-rise buildings of 150 meters (50 floors), and 3.5 hectares for garden houses, villas and adjoining houses (25 meters high).

In the dispatch, the ministry also proposed some changes to the direction of the riverside road and the location of the elevated track of Metro Line No. 1 planned to go through the Ba Son area.

The adjustments in the zoning plan of the Saigon-Ba Son complex, according to the ministry, aims to ensure effective transfer of the land use right of the Ba Son area.

However, Vo Kim Cuong, former deputy head of the HCMC Chief Architect Office, said changes aimed to meet actual demands were normal but adjustments with a sharp population spike like the Saigon-Ba Son complex project needed to be weighed, particularly in terms of infrastructure development.

The ministry earlier requested the Government to pick HCMC Commercial Service Joint Stock Company as the investor of the Ba Son area after Ba Son shipyard is relocated.

New bridges seen affecting port operations

The HCMC Maritime Administration has expressed concern that the planned construction of new bridges over the Saigon River to connect the downtown area and Thu Thiem New Urban Area in District 2 would affect the operational ports in the city.

In its recent document sent to the Vietnam Maritime Administration, the agency said Thu Thiem bridges 3 and 4 are planned in the river stretches where piers and berths of Saigon, Ba Son, VICT, Ben Nghe and Tan Thuan Dong ports are located. Besides, there are six sites along the river for vessels of 15,000-30,000 DWTs to dock.

If the vertical clearance of Thu Thiem bridge 4 is too low, it will hit the vessel handling capacity of piers K12, K12A and K12B of Saigon Port and narrow the safety zones of these piers. K12A could be suspended as it is planned in the safe corridor of the bridge.

“The limited vertical clearance of Thu Thiem bridge 4 would affect the handling capacity of piers of Saigon Port and prevent vessels from making U-turns at VQ2 area,” the HCMC Maritime Administration said in the document.

Therefore, the agency wanted development of a new area for vessels to turn around to replace VQ2 area; otherwise, vessels will have to transport goods lower than their designed capacity before they sail to and leave the piers.

The agency called on the city to consider building Thu Thiem bridge 4 with a higher vertical clearance and a new turnaround for vessels to minimize impact of the bridge on the operations of piers and berths along the nearby river section.

Statistics of the HCMC Maritime Administration showed Ba Son, Saigon, Ben Nghe, Tan Thuan Dong and VICT ports account for nearly 25% of bulk goods and almost 21% of total containerized goods handled at all ports in the city.

Nha Rong and Khanh Hoi wharves will be relocated or have their functions changed before 2020, according to Decision 3327/QD-BGTVT issued in August last year by the Ministry of Transport approving the master zoning development plan for seaports in the southeastern region until 2020 with a vision towards 2030. The city plans to build Thu Thiem bridge 3 at the location of these wharves.

Thu Thiem bridge 4 is expected to go up at the location of Tan Thuan Port. This port and Saigon, Ben Nghe and VICT ports will be upgraded and expanded as envisioned in the zoning plan.

Thu Thiem Bridge 1 has been opened to traffic while Thu Thiem Bridge 2 under construction is scheduled to be put into use in 2018. Local relevant agencies are drawing up investment plans for Thu Thiem bridges 3 and 4.

EU FTA to unlock green-growth

The free trade agreement being negotiated between Vietnam and the EU is expected to encourage businesses to reform and update technology, an important factor in promoting green growth in the country, according to the deputy chairman of the HCM City People's Committee.

Tat Thanh Cang, speaking at a briefing organised by EuroCham and its Green Growth Sector on June 18 in HCM City, said that Vietnam should target green growth to ensure sustainable development.

"In Vietnam, green growth mainly includes sustainable production and consumption, reduction of greenhouse gas emissions, greening business activities business via environmentally-friendly advanced technologies, building sustainable infrastructure, and reforming economic instruments," Cang said.

To achieve the green growth target, however, other goals should be met, he said.

Management agencies, businesses and the public must all be part of the national effort, he added.

He said that challenges exist in implementing green growth, particularly in funding, regulation and education.

A large source of investment capital, for example, is needed for environmentally friendly technologies.

Vietnamese enterprises, most of which are small- and medium-sized companies, do not have sufficient capital for such investment.

Cang suggested the Government issue new policies to help SMEs, especially in tax, credit policies and administrative procedures. This would help them access loans more easily to update technologies.

He said that schools, hospitals and residents also need to be better informed about environmental protection, and suggested that Vietnam learn from other countries, including the EU.

The EU-Vietnam free trade agreement began three years ago, and has gone through 13 rounds of negotiation.

Speaking at the briefing yesterday, Jana Herceg, deputy head of the economics and trade section at the EU Delegation to Vietnam, said the most recent round of the FTA was held in Brussels.

"We are now hopefully approaching the final stage of these negotiations," she said.

Herceg said that Commissioner Cecilia Malmstrom and her Vietnamese counterpart Minister Vu Huy Hoang, who met recently in Kuala Lumpur for the EU-ASEAN Economic Minister Meeting, said negotiations were expected to conclude this summer.

"They are meeting in Brussels next week and we can expect further progress in the discussions," Herceg said.

Agreement has been reached on tariffs and provisions on trade and sustainable development, she said. This includes commitments to core International Labour Organisation standards and conventions as well as multilateral environmental agreements.

Negotiations, however, continue on a Green Tech Annex, which is expected to foster trade and investment to promote energy generation from renewable and sustainable non-fossil fuels, according to Herceg.

Under the Green Tech Annex, tariffs would be reduced or removed for products that are relevant for this sector. In addition, all the parties involved would have regulatory convergence in the renewable energy sector (solar, wind, biomass), Herceg said.

Trade in the renewable energy sector would be beneficial to all countries in the FTA, and clear rules would provide better trade opportunities and instill investor confidence.

Vietnam would be able to profit from the EU's successful experience in developing a renewable energy sector, Herceg said.

"It is our aim to conclude the Annex, which would contain specific rules for the renewable energy sector on non-discriminatory treatment in general (licensing and authorisation procedures), on local content in particular, and on the use of standards. In addition, we want to foster cooperation in this sector to bring about further regulatory convergence," she said.

Eurocham said the FTA would have a positive impact on trade for Vietnam. In 2013, the EU was not only one of Vietnam's biggest trade partners, with a total value of trade in goods of EUR27.6 billion, it was also among the biggest investors in Vietnam, with 1,810 foreign development investment projects.

The Vietnam Joint Stock Commercial Bank of Industry and Trade (VietinBank) announced on June 18 that it selected Singapore’s InterbrandPte Ltd to provide consulting services for building and deploying trade name strategies for the bank.

Accordingly, the Singaporean partner will assess the reality of the Vietinbank trade name; build a trade name strategy to promote the trade name of the bank; design trade name administration models; and organise relevant training programmes.

The direction and building of the Vietinbank-trade name management system is expected to contribute to standardising trade name promotion activities and trade name administration procedures in line with international standards, thus improving the bank’s competitiveness and making Vietinbank’s business activities more effective.

According to Nguyen Van Thang, Chairman of Vietinbank’s Board of Directors, the building of a trade name strategy is the bank’s key project in 2015.

Jonathan Bernstein, a representative from Interbrand, noted his firm will implement the contract signed with Vietinbank on schedule and ensure high service quality.

He said he hopes services provided by his company will help Vietinbank improve its prestige in the international market.

Interbrand is the world’s leading brand consultancy group with 25 years of experience consulting on trade name building. It has successfully implemented a number of projects in the financial and banking sectors.

Germany supports Vietnam in green credit development

The State Bank of Vietnam (SBV) and the Deutsche Gesellschaftfuer Internationale Zusammenarbeit (GIZ) GmbH co-hosted a seminar titled ‘Access to International Green Funds – Opportunities for Vietnam’ in Hanoi on June 18.

The seminar is part of the German-Vietnamese Macroeconomic Reforms/Green Growth Programme, implemented by GIZ Vietnam on behalf of the German Federal Ministry of Economic Cooperation and Development (BMZ).

Chaired by SBV Deputy Governor Nguyen Thi Hong, the seminar is an opportunity for experts from the SBV, ministries, agencies, credit institutions and other related international organisations to share experiences and discuss on how to access to international green funds, especially the Green Climate Fund with its global scale, and to develop and implement green credit programs under real conditions of development of Vietnam.

The seminar has the participation of many important credit institutions, foreign banks, related ministries and SBV departments, as well as donors and international organisations, who interested in supporting and funding for environmental purpose, green growth and sustainable development.

This is a concrete and practical step to facilitate SBV and credit institutions to initially pilot and develop credit programs in order to successfully implement the Government’s Green Growth Strategy, hence contribute to economic restructuring towards sustainable development.

In the opening speech, SBV Deputy Governor Nguyen Thi Hong emphasized that the banking system plays a decisive role as "the main channel for providing green funds, having the role to promote and orient green investments and credit risk management towards green growth".

In particular, "the two most important issues are funding and development of credit programs with appropriate targets in line with green criteria and standards". Besides, a number of factors also plays an essential role to encourage green investments, such as policy coordination (credit policy, fiscal policy); coordination of sources (domestic, international, greenbankcredit, capital market, etc.); coordination of financial instruments, technical advice, trainings and capacity building; using funds from international sources and from the state as leverage and encourage the participation of commercial credit and private funds, etc.

Ms Carola Menzel, Senior Advisor and Project Manager from Frankfurt School – UNEP Collaborating Centre for Climate & Sustainable Energy Finance, shares international experiences and lessons learned on green credit policies, international green credit facilities and Green Climate Fund in the seminar.

Besides, Mr Anders Nordheim from UNEP Finance Initiative introduces a range of initiatives and current programs of UNEP FI and sustainable banking.

In order to implement the National Strategy for Green Growth and the National Action Plan on Green Growth for period 2014 - 2020, the SBV Governor issued Directive No.03/CT-NHNN dated March 24, 2015 to promote green credit and social & environmental risk management in the credit activities.

On June 2, 2015, the SBV and GIZ together with other international organisations organized a conference on implementation of Directive 03 for the entire banking sector.

The seminar is the next step in a series of SBV's efforts to support the economic transformation towards green and environmental and social sustainability.

Through the German-Vietnamese Macroeconomic Reforms/Green GrowthProgramme, GIZ Vietnam has directly connected the activities in the priority areas to ‘Green Growth Strategy’ of Vietnam to achieve long term impacts across all sectors and facilitate Vietnam towards a sustainable future.

Green growth, green finance, green banking and credit isan extremely new field for many countries around the world, not only for Vietnam.

Therefore, this kind of seminar is essential to collect ideas, initiatives and practical experience from Vietnamese credit institutions and international organisations in this field.

Since then, the parties involved may pilot, draw lessons learned and replicate initiatives on national level.

Vietnam, Japan boost deposit insurance cooperation

The Deposit Insurance of Vietnam (DIV) and the Deposit Insurance Corporation of Japan (DICJ) recently signed a memorandum of understanding with a view to fostering dialogues and bilateral cooperation, the DIV said on June 17.

The document is intended to enhance deposit insurance efforts in general and the management of deposit insurance providers in particular.

Specifically, the DIV and DICJ will exchange deposit insurance-related experience and knowledge, along with discussing international and professional issues of mutual concern.

Training courses, workshops and joint surveys will be organised, while regular working visits will also be made by the leaders of the two institutions.

DIV is a State-run non-profit financial institution that was set up in 2013, while its Japanese counterpart was established as early as 1971.

Tra fish exports continue to fall

Tra fish export turnover this year would be US$1.7 billion, posting a four per cent year-on-year drop due to difficulties in imported markets and tighter regul-ations.

The Viet Nam Association of Seafoods Exporters and Producers (VASEP), quoting statistics from the General Department of Customs, said that for the four months to May 15, the total export revenue of tra fish fell 9.3 per cent from the same period last year to $544.8 million.

The statistics further revealed that the export turnover to China had surged 46 per cent, and Canada went up 12.5 per cent as against the corresponding period last year, while exports to the US increased slightly by 8.8 per cent.

However, the export value of tra fish to the EU saw a sharp decrease of 16 per cent, to Mexico of 21 per cent and Colombia of 8 per cent.

According to VASEP, in the US, the export value of tra fish represented a strong reduction of 23 per cent in January due to anti-dumping operations by the US Department of Commerce.

The rising US dollar also had importers hesitating while buying even as they requested a price reduction. The average export price of tra fish to the US in the first quarter fell 5 US cent over the same period last year.

The association said the difficulties to the Viet Nam's biggest importer, who accounted for 22 per cent of the country's total exports, was a key reason for the drastic reduction in the tra fish price.

The tra fish price saw a decrease of VND300 to VND500 a week since the end of February. By the end of May, it was between VND20,000 and VND25,000 per kilogramme – the lowest level so far this year.

In the EU, Viet Nam's second biggest importer, the export value in the first half of last month dropped 16 per cent against the same period of the previous month. The tra fish exports to the market were not expected to improve in the next few months.

VASEP said the main reason for the decrease in exports in the market was because the importers cut down on their imports. The strong drop in the value of the euro against US dollar has proved difficult for importers, it added.

Move to help insurance brokers

The legal framework for the operation of insurance brokerage companies will be improved to enhance their competitiveness, according to the Insurance Supervisory Authority under the Ministry of Finance.

The department's director Phung Ngoc Khanh said at a conference on Wednesday that insurance brokerage was becoming an important factor for the development of the insurance market as well as the country's socio-economic development.

At the conference, brokerage firms spoke about the difficulties they face and proposed various improvement measures to the insurance watchdog.

Firms said that detailed regulations for operations and insurance brokerage fees are needed.

They pointed out that in Viet Nam, there are currently no regulations allowing firms to charge fees for providing consultancies to customers and this has limited the operations of insurance brokerage firms.

According to the statistics of the Ministry of Finance, total insurance premiums through the brokerage channel increased rapidly by 22 per cent last year.

During the 2011-14 period, total insurance premiums through brokerage reached VND21.165 trillion (US$979.8 million), or equivalent to 22.7 per cent of the total non-life insurance premiums during the period, and contributed nearly VND300 billion ($13.88 million) to the State budget.

Commissions from insurance brokerage last year reached VND492 billion ($22.7 million), rising by around 10 per cent.

A representative of the department said that studies on the development of insurance brokerage in foreign countries are being carried out to seek measures that can be applicable to boost the development of this sector in Viet Nam.

Currently, there are major gaps between foreign insurance brokerage firms and domestic firms in management capacity and market shares. Last year, five foreign brokers dominated the market, holding a combined share of more than 92 per cent.

In addition, insurance premiums collected through brokerage remained modest, just 12 per cent of the total premium of the insurance market, while the percentage of Thailand and the US were 30 per cent and 85 per cent, respectively.

The department revealed that a regulation to allow insurance brokerage firms to offer consultancy services will be taken up for consideration in line with international practices.

Meanwhile, firms have urged the foundation of an association of insurance brokers to enhance their operation capacity and standards.

BIDV offers cheap health sector loans

Bank for Investment and Development of Viet Nam (BIDV) has became the first join stock commercial bank to offer a preferential credit programme worth VND20 trillion (US$921.65 million) to the healthcare sector.

The programme provides financial support to speed up the implementation of targets set in the Government's Decision 93/NQ-CP on mechanisms and policies for healthcare development.

Under the programme, BIDV will offer preferential loans for the maximum term of around 20 years to hospitals to upgrade facilities and purchase medical equipment for easing patient overload and improve the quality of healthcare services.

Interest rates on the loans in the first two years will be 12-month deposit rates + the band of 1 per cent, but the maximum interest rate must be 7.5 per cent, lower than the preferential rate of 7.8 per cent that the Development Bank of Viet Nam offers policy borrowers.

For the next years, interest rates will be 12-month deposit rates + the band of 2 per cent.

Both central and local hospitals can borrow under the programme.

BIDV chairman Tran Bac Ha said BIDV is not looking to profit from the credit programme but only expecting to join hands with the Government to improve the services and quality of the healthcare sector. The bank's current medium- and long-term deposit rate is at 7 per cent, while the lending rate for both terms is 11-12 per cent.

According to Health Minister Nguyen Thi Kim Tien, Viet Nam's hospitals are overloaded, especially those in large cities. Statistics reveal that in Viet Nam, hospitals have only 23 beds per 10,000 people compared with 80 beds in South Korea and 140 beds in Japan. The World Health Organisation's recommended figure is 39 beds.

Tien noted that the investment capital demand for the healthcare sector was very large at roughly VND45.454 trillion ($2 billion) during the 2012-15 period; however, the Government funds had met only 44 per cent of this demand. Therefore, loans from commercial banks are very important to develop the sector's infrastructure, she stressed.

Ceramic maker starts food styling course

Binh Duong-based ceramic manufacturer Minh Long 1 has signed a deal with the HCM City Saigontourist Travel and Hotel Services School to train tourism students in food styling.

Minh Long 1 will provide cooking equipment and utensils and send chefs and professional food stylists to the school to teach the students how to prepare food for photographs used in magazines, cook books and others.

Speaking at the signing ceremony, Tran Van Hung, principal of the school, said: "I hope that with support from Minh Long 1 and the organisers of the Golden Spoon Cooking Contest, the school will provide its students with necessary knowledge and know-how for this creative culinary art."

The course will start next school year.

Forum focuses on Mekong tourism

Tourism officials from countries in the Greater Mekong subregion have gathered in Da Nang to discuss creating a common destination.

Viet Nam, Laos, Cambodia, Myanmar, Thailand and China will work closely together to make the region an attractive venue for visitors around the world.

Last year, the region received 54 million visits, accounting for 20 per cent of tourists in Asia and the Pacific region.

They spent a total of US$61 billion, which was significant in overcoming poverty and developing economics in the region, particularly through tourism, which created jobs for millions of residents.

By 2020, tourism in the region expects 70 million visitors a year to bring in US$90 billion.

To achieve this goal, tourism sectors in the five countries and the Chinese provinces of Yunan and Guangdong will work together.

According to Le Khanh Hai, deputy minister of Culture, Sports and Tourism, Viet Nam borders Laos, Cambodia and China, making it a convenient arrival place for visitors to the region.

Speaking at the Mekong Tourism Forum's symposium held in Da Nang yesterday, Hai highlighted huge the potential for Viet Nam. During the forum's technical meetings from June 15-17, about 600 participants from the region's tourist authorities suggested several ways of making the region a common destination.

This included a regional marketing programme and a master action plan for the whole region.

Participants also agreed to create a central tourism office to represent the entire region.

Deputy Minister Hai suggested fostering public-private partnership in tourism.

Chris Bottrill from Canada-based Capilano University recommended the promotion of responsible tourism among residents in the region.

He also promoted community-based tourism to create sustainable humanity values.

Representatives from social network Facebook and travel publications like TripAdvisor encouraged promotion campaigns on mobile phones, smart phones, social network and magazines.

Chinese airline to launch more services to Vietnam

China Southern Airlines on June 17 announced it would operate more flights between Vietnam and China and connecting flights to other markets.

The airline looks set to launch an air route linking Guangzhou and Nha Trang City in the central province of Khanh Hoa this Saturday.

The airline will operate three weekly flights on the route on Tuesdays, Thursdays and Saturdays. Flights will depart from Guangzhou at 2:40 p.m. (local time) and from Nha Trang at 4:40 p.m. (local time).

According to Airports Corporation of Vietnam (ACV), three Vietnamese and four foreign airlines fly to and from Cam Ranh Airport in Khanh Hoa Province.

In addition to the Guangzhou-Nha Trang service, China Southern will operate flights between Shenzhen and HCMC from July 26 with four flights per week on every Monday, Wednesday, Friday and Sunday.

On August 5, the airline will open the HCMC-Guangzhou-Nairobi (Kenya) air route and operate three flights on this route every week.

Besides the launch of new air routes, since the middle of this month China Southern has conducted more flights on the HCMC-Guangzhou-Los Angeles, HCMC-Guangzhou-New York and HCMC-Guangzhou-San Francisco routes to 11, 10 and four flights per week respectively.

The airline will also increase the number of daily flights between HCMC and Guangzhou to four in late October.

A representative of China Southern said the airline currently holds a 50% market share of passenger transport between Vietnam and China.

IRRI helps farmers better manage crops

The International Rice Research Institute (IRRI) has developed the crop manager software to help farmers in Vietnam and other regional countries better manage crops and increase incomes by US$100 per hectare per crop.

The tool accessible through the web browser was developed by IRRI in coordination with the regional countries where the majority of people mainly live on agriculture like Bangladesh, India, Indonesia, the Philippines and Vietnam.

The tool available in English and Vietnamese will benefit Vietnamese farmers in the Red River Delta and Mekong Delta regions.

The crop manager tool is being run on the trial version on computers and smart phones to support rice and corn farming.

Via the software, farmers are instructed to use fertilizers and pesticides effectively to raise the productivity of their crop at low costs. Therefore, IRRI hopes farmers can earn an additional US$100 from every hectare of crop.

According to the Department of Crop Production under the Ministry of Agriculture and Rural Development, only farmers taking part in the large-scale rice fields developed by enterprises make their farming records to better supervise the farming process while a majority of farmers grow corn and rice based on their experience.

With the software, instead of using notebooks, farmers will get technical guidance given by the tool after they have provided basic information.

A study of An Giang Province’s agriculture promotion center indicated that farmers can earn around VND8.5 million from a hectare of paddy after deducting farming and harvesting costs.

IRRI has plans to open a representative office in Vietnam. In the past years, Vietnam has imported many short-day rice varieties with high yields imported from IRRI for mass farming.

HDBank selected for on-lending to major water project

The Government has picked HCMC Development Bank (HDBank) to use over VND3 trillion (US$137.6 million) of an official development assistance (ODA) loan from the Japan International Development Agency (JICA) to lend on to Nhon Trach water supply project.

The bank has been assigned to represent the Ministry of Finance to fund the second phase of the project, according to Vietnamplus.

The second phase needs over VND3.56 trillion, with 85% from JICA’s ODA capital. This is an important project aimed to meet water demand in Dong Nai Province and economic development in the province.

HDBank is the first joint stock commercial bank the Ministry of Finance has picked for ODA on-lending and sharing 20% of credit risk with the ministry. The lender has assessed the investment efficiency of the project and conduct procedures such as disbursement, collection of debt, interest and fee and capital use supervision.

Tran Hoai Nam, deputy general director of HDBank, said the bank has been mandated for ODA on-lending and management via three forms. Either the Finance Ministry or HDBank takes 100% risk responsibility or both sides will share risk on an agreed ratio.

For the project, HDBank is responsible for 20% of risk, helping ease pressure on the nation’s public debt, Nam said.

Nghi Son to become general industrial zone

The Prime Minister has approved a plan to turn Nghi Son Economic Zone in Thanh Hoa Province into a general industrial zone for enterprises active in various sectors instead of certain industries.

Nghi Son in the central province will develop based on its strong advantages including deep-water seaports. In addition to petrochemical and shipbuilding, the zone will be home to enterprises in other industries such as production of quality steel products, engineering, energy, building materials, consumer products and agro-aqua-forestry processing.   

The general industrial zone will help develop human resources and create a center for high-quality human resource development in the region, according to the Prime Minister’s decision on adjustments to Nghi Son Economic Zone.

The zone will have a total area of 106,000 hectares, including 66,500 hectares of land and islands in Tinh Gia District and more than 39,000 hectares of water surface.

Thanh Hoa Province is urged to improve its business environment and boost infrastructure development to woo both foreign and domestic investors to the zone until 2025.

After 2025, the province is expected to build strong linkages between manufacturing, commercial, financial and tourism industries and providers of related services to prop up socio-economic development.

HCM City IPs to construct multi-storey workshop buildings

The authorities of industrial parks (IP) and export processing zones (EPZ) in HCMC will develop multi-storey workshop buildings to help small and medium-sized enterprises (SMEs) save costs and make the most of their land.

Nguyen Phuong Dong, vice director of the HCMC Department of Industry and Trade, told representatives of business groups on Tuesday that the city government will implement a pilot plan to construct multi-storey workshop facilities at Hiep Phuoc and Dong Nam IPs, Tan Thuan and Linh Trung EPZs, and Saigon Hi-Tech Park between now and 2018. These facilities will have three to eight stories and workshops will be 100-3,000 square meters.     

Dong said such multi-storey workshop buildings would help HCMC make full use of limited land and the operational IPs and EPZs attract manufacturers as part of the city government’s strategy to woo more investors.

The city government has plans to relocate manufacturing enterprises to IPs in order to minimize the negative impact of their production on the environment and local residents.

Currently, as occupancy and rentals at the operational IPs are high and these IPs eye large investors, SMEs find it difficult to lease space suitable to their production scale and financial capability. Therefore, multi-storey workshop facilities will be a good opportunity for SMEs to set up shop in IPs.

Dong said the advantage of multi-storey workshop buildings is to enable IPs and EPZs attract enterprises of the same sectors and support them to create and join supply chains. The city government will provide financial support for workshop construction to reduce rentals for small manufacturers.

According to Saigon VRG Investment Holdings Corporation, the investor of Dong Nam IP in Cu Chi District, multi-storey workshop facilities will help ease pressure on initial capital for manufacturers when they implement new and expansion projects as they do not have to invest in building workshops and wastewater treatment systems.

At the meeting, a representative of the HCMC Electrical Engineering Association said more than 20 out of over 100 member enterprises need a total of 30 hectares for production expansion and relocation of their factories to outlying districts.

However, some corporate representatives expressed concern that they would have to face more challenges to recruitment of skilled employees and spend more on transport costs for their employees if they relocated their factories to IPs on the outskirts of the city.

Affordable condos still beyond reach of low-income earners

The local real estate market has seen clearer signs of recovery but low-income people still find it hard to find and buy apartments.

Luxury apartments priced at several billion dong each, villas and high-class homes abound but condos costing between VND500 million and less than VND1 billion (US$45,890) per unit are scarce.

Experts said most finished budget and medium-class condos have been snapped up.

For instance, Dat Xanh Group has almost sold out apartments at Sunview Town project in HCMC’s Thu Duc District, which provides over 1,600 low-cost units. Other projects such as Idico Tan Phu and Hung Ngan Garden distributed by Hoang Anh Sai Gon Co. have also sold well.

Industry insiders said the market now lack affordable apartments and just a few low-cost condo projects have been launched in HCMC in recent times.

Saigon Thuong Tin Real Estate Co. (Sacomreal) has offered for sale apartments in Carillon 2 project in Tan Phu District slated for completion in June 2016 but the project has just over 200 units. Thu Duc Housing Co. has also introduced TDH Phuoc Long project in District 9 with just 168 units.

Many people, mostly workers, still meet obstacles to buying budget condos as State-owned housing projects mainly serve civil servants.

The city has seen a few private budget home projects including HQC Plaza developed by Hoang Quan Co., some new projects of National Housing Organization Co. (N.H.O), Thu Thiem Sky of Thu Thiem Investment Joint Stock Co. and Jamona Apartment of Sacomreal.

The high-class condo segment has been active since 2014 with many projects such as Masteri Thao Dien, Vinhomes Central Park and Sala Thu Thiem launched, offering nearly 20,000 units.

An Gia Real Estate Co. and Hung Thinh Real Estate Trading Joint Stock Co. have shifted to the high-class segment, developing condos priced over VND1 billion each after gaining success in medium-class projects.

Nguyen Trung Tin, vice chairman of An Gia Co., said property investors want to cash in on potential high-income customers.

A leader of a property firm said budget home projects bring low incomes and enterprises have shunned cheap housing projects given few incentives from the Government.

In fact, businesses have had difficulty taking out loans from the VND30-trillion package to develop budget home projects.

Nguyen Van Duc, vice chairman of the HCMC Real Estate Association, said condos priced under VND700 million each should account for 70% of the total number of housing products given the current standards of living in Vietnam. The Government should even encourage building of condos under this price level.

There has been an imbalance between supply and demand on the real estate market. With young population and low income per capita, the demand for low-cost apartments is huge, Duc said.

A survey of property service provider CBRE showed 40% of the 5,150 apartments at 17 projects launched in HCMC in the first quarter of this year were for low-income people and condos of this segment accounted for nearly 30% of around 5,000 apartments sold in Hanoi in the period.

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