C. bank drafts rule on gold custody service

The central bank has announced a draft circular guiding operations of gold bar custody service of commercial banks under which banks and customers have to reach agreement on gold bar return.

The draft circular regulates that banks will either return to customers gold bars they have deposited before or return them products of the same brand, quality and quantity. For the first choice, banks will have to note serial numbers of the gold bars on the transaction certificates with customers when receiving and returning gold to depositors.

The draft decree also prohibits banks from paying interests for the gold custody service, and service fees must be published. Besides, lenders are not allowed to entrust other organizations and individuals to provide the service or provide the service through agents.

Banks qualified to provide this service must list the business in their operation licenses and must have standard facilities for gold bar storing. They have to report on provision of this service in the previous month to the central bank before the fifth day of each month.

Some 12 banks in the country have won licenses to provide gold bar custody service but just half of them have offered this service to customers.

Water treatment has good chances for investors

Potential in Vietnam’s water treatment sector is still huge as the current rate of tap-water supply in urban and rural areas is only 60%, according to Saigon Water Infrastructure Corporation (Saigon Water).

Truong Khac Hoanh, general director of Saigon Water, told the Daily on Monday that the sector of treating and distributing clean water in Vietnam was in need of large investment. Investors have to be financially capable, and apply modern technology and solutions to water loss reduction in distributing if wanting to earn high profits, he said on the sidelines of a ceremony for signing an agreement with Manila Water in HCMC on Monday.

Saigon Water on Monday cut the deal to issue 18.37 million shares worth VND400 billion to Manila Water. The local firm expects to have stronger financial capability and more experiences in water treatment after the deal.

HCMC Infrastructure Investment Joint Stock Company (CII) and Manila Water are two major shareholders of Saigon Water.

In the coming time, Saigon Water will build Pleiku water plant in Gia Lai Province and Du Long plant in Ninh Thuan Province which are worth a combined VND400 billion and have respective treatment capacities of 30,000 and 15,000 cubic meters per day.

Besides, Saigon Water is preparing to develop Tan Hiep 2 water plant which is expected to treat 300,000 cubic meters of water per day in HCMC’s outlying district of Hoc Mon. The firm has received approval from the city government to implement the project which will be kicked off next year.

According to Gerardo C. Ablaza, CEO of Manila Water under the Philippines’ Ayala Corporation, Manila Water has invested around US$100 million in Vietnam’s water treatment sector, including a 49% stake in BOO Thu Duc and a 47% stake in Kenh Dong water plants in HCMC.

Ablaza said that via Saigon Water, Manila Water would continue to invest in clean water treatment projects in HCMC, and will eye wastewater treatment projects in neighboring provinces and clean water supply projects in central provinces.

Fernado Zobel De Ayala, chairman of Ayala Corporation, noted the wide investment chance in the clean water treatment sector in Vietnam. The corporation will continue to make investments in the sector via cooperation with Saigon Water, he said.

According to Saigon Water Corporation (Sawaco), water in HCMC is supplied by Thu Duc, Binh An, Tan Hiep, Trung An, Kenh Dong and Tan Phu water plants having a total treatment capacity of nearly 1.7 million cubic meters per day.

Sawaco targets to increase the treatment capacity to 3.4 million cubic meters, upgrade over 1,500 kilometers of water pipelines, build a water supply management system and reduce the water loss to 25% in 2025. However, such projects will need up to US$2.5 billion, to be mainly sourced from official development assistance (ODA) loans.

Price rise agreement propels wind power growth

The domestically-owned Cong Ly Company has received support from the Ministry of Industry and Trade to sell electricity from its Bac Lieu wind power project at a price higher than regulated by the government.

The Ministry of Industry and Trade (MoIT), in a document sent to the prime minister late July which has been seen by VIR, proposed that the power tariff at the Bac Lieu project should be set at 11.5 US cents for 1 kilowatt per hour during the first ten years and 9.8 US cents during the four following years. From the fifteenth year of the project, the power tariff should be at 6.8 US cents.

The proposed tariff is much higher than the 7.8 US cents fixed by the government under Decision 37/2011/QD-TTg.

According the MoIT, the higher tariff would make the Bac Lieu project effective given its expensive initial investment costs. However, the tariff that the MoIT proposed is still lower than Cong Ly’s original demand. The power investor previously proposed a tariff of 12 US cents for the first ten years and 10 US cent for four following years.

Cong Ly’s general director To Hoai Dan told VIR that although the MoIT’s proposed tariff was lower than he had hoped he thought it was an “acceptable” level. “We understand that we also have to share the burden with the government,” he said.

The wind power project, situated in southern province of Bac Lieu, is the second wind power connected to the national grid and follows in the footsteps of the Binh Thuan 1 wind power project in the central province of Binh Thuan.

The Bac Lieu project has total investment capital of around $45.8 million and a design capacity of 99.2 megawatts. Cong Ly has installed 10 turbines in the first phase and is planning to install an additional 52 turbines during the second phase.

“As this project is located on the coastline we had to spend lots of money on constructing the foundations for the turbines. We also used the most advanced turbines, which pushed up our investment costs,” said Dan.

He revealed the second phase of the project would start in May, 2014 and be completed in April, 2015.

“This is the first wind power project to be implemented on the coastline and is the first project of its kind in the Mekong Delta. Its success will pave the way for the development of more wind-power projects in the region,” Dan said.

HCM City’s CPI increases 0.31% in August

Ho Chi Minh City’s August consumer price index (CPI) nudged up 0.31% from July’s figure and 3.17% on the equivalent timeframe in 2012.

According to the municipal Statistics Office, transport services saw the highest price rises of 1.24%.

Slight price increases were seen in housing, electricity, and fuel (up 0.58%), beverages and cigarettes (up 0.28%), culture, entertainment, and tourism (up 0.28%), garments, textiles, headwear, and footwear (up 0.19%), food and restaurants (up 0.19%), household appliances (up 0.03%), and medicine and healthcare (up 0.02%).  

Postage and telecommunications saw no price rises while the price of education edged back 0.01%.

The gold price dropped 0.48% during the month while the US dollar fell 0.41% from July.

Seminar promotes inter-locality ICT links

The central city of Hue will hold Vietnam’s 17th information and communications technology (ICT) development seminar on August 30–31.

Themed “Promoting IT Infrastructure for Socio-economic Development”, the event is intended to encourage linking cities, provinces, and economic zones, boosting ICT application and development.

Delegates can present their ideas and share their experiences of using ICT in administrative reforms responding to the demands of the nation’s businesses and citizens.

Le Sy Minh, Director of Thua Thien-Hue province’s Department of Information and Communications, said the seminar will focus on familiar topics like future directions for ICT infrastructure, applying IT advances at a national level, establishing e-government services, and using ICT in education, healthcare, and banking.

The seminar also encompasses a science and technology product exhibition, an equipment presentation to disadvantaged Thua Thien-Hue tertiary students, and tours of model provincial management and production agencies capitalising on IT’s potential.

Samsung factory to take shape in Thai Nguyen

Samsung Electro-Mechanics is expected to build a factory to produce intergrated circuits and electronic components in the northern province of Thai Nguyen.

The US$1.2 billion project is scheduled to start this October and enter operations in August 2014, by that time the total investment of the Samsung Group in Vietnam is predicted to reach US$5.7 billion.

Phan Manh Cuong, Deputy Head of the provincial Industrial Zones Management Board, said that Samsung submitted the documents requesting an investment recognition certificate for the Samsung Hi-tech Complex in the Yen Binh Industrial Zone and the group expects to receive the certificate in September.

The new factory is Samsung Group’s third investment project in Vietnam.

Vietnam – attractive country for new business expansion

US companies find Vietnam the second most attractive country, after Indonesia, for new business expansion in the Association of Southeast Asian Nations (ASEAN).

The finding was part of new survey results released on August 20 by the American Chamber of Commerce in Singapore (AmCham Singapore) and the US Chamber of Commerce.

In a poll of 475 senior executives from US companies operating in the 10 ASEAN countries, 43 percent of all respondents said they have plans for business expansion in Vietnam as compared with 49 percent for Indonesia.

Of the 69 respondents in Vietnam, 61 percent expect their workforce to increase in the country in the remaining months of 2013 and in 2014 as 62 percent expect profits to increase in 2013 and 85 percent, in 2014, 59 percent speak highly of availability of low cost labour, 55 percent of personal security and 55 percent of sentiments towards the US.

They indicate dissatisfaction in Vietnam’s infrastructure (65 percent), laws and regulations (59 percent) and tax structure (57 percent).

As many as 42 percent of respondents in Vietnam are operating in the service sector and 51 percent in the manufacturing sector, mostly in electronics, pharmaceuticals and medical manufacturing.

Vietnamese goods week to be launched in Dong Nai

A Vietnamese goods week is set to take place in the southern province of Dong Nai between August 27 and September 4.

According to Director of the provincial Department of Industry and Trade Le Van Danh, the week aims to promote Vietnamese goods and provide local high-quality products to consumers with reasonable prices.

More than 300 supermarkets, shops, trade centres and manufacturers will showcase their products during the week, which will also feature a 350-stall high-quality Vietnamese goods fair.

In response to the programme to bring Vietnamese goods to rural areas, Dong Nai province has organised a wide range of activities, including market days for farmers and workers.

Between now and the year-end, the province plans 27 shipments of Vietnamese goods to rural areas and factories.

Foreign gaming company seeks investment chance

Austria-based gaming company Casinos Austria AG on Monday had a meeting with HCMC Vice Chairwoman Nguyen Thi Hong to discuss its casino and computerized lottery plan in HCMC.

According to Karl Stoss, CEO of Casinos Austria, the company has worked with HCMC Lottery Company on supporting technology and developing new products such as bingo and scratch card. In addition, Casinos Austria has signed a cooperation agreement with HD Bank and a memorandum of understanding with Savico.

Casinos Austria will have a working session with the Ministry of Finance on the possibility of a computerized lottery project in Vietnam.

In response to Stoss, Hong said that the city did not have authority over such projects and lottery was managed by the Ministry of Finance.

Casinos Austria AG established in 1967 is one of the leading international gaming companies. Together with some partners, Casinos Austria AG is operating 40 land-based casinos in 16 countries, eight shipboard casinos, 750 gaming tables and over 7,600 slot machines.

Many Singapore projects to get rolling this year

Many projects invested by Singaporean enterprises will be implemented and put into operation this year, according to the Ministry of Planning and Investment’s Foreign Investment Agency (FIA).

Sembcorp will start work on the urban-industrial-service complex in Quang Ngai Province (VSIP Quang Ngai) next month via a joint venture with Becamex IDC Corporation.

The complex consists of 600 hectares of industrial land in Dung Quat Economic Zone and 520 hectares of urban-service land near Quang Ngai City’s central area. In the first phase, the project will focus on developing 160 hectares of industrial land and 100 hectares of urban-service facilities.

Besides, Sembcorp has received approval from the Government to study a thermal power plan worth around US$2 billion and having a capacity of 1,200 MW in Quang Ngai Province.

Meanwhile, Hoa Lam-Shangri-La Healthcare, a joint venture between Singapore’s Shangri-La Healthcare Investment Pte. Ltd and Vietnam’s Hoa Lam Co., will soon put into operation Thanh Do International Hospital having 320 beds. This is the first hospital in the 40-hectare Hoa Lam-Shangri-La International Hi-tech Healthcare Park to be finished.

In the education sector, KinderWorld Education Group will build Pegasus International UniCollege in Danang and other schools of the kind will be then built in Vung Tau, Nha Trang and HCMC.

Such moves are positive signals showing that Vietnam is still a favorite destination for Singaporean investors.

According to FIA, Singapore’s investment capital in Vietnam amounted to over US$3.72 billion in the January-July period, accounting for 31.3% of the country’s total FDI capital and only smaller than that of Japan (nearly US$4.1 billion).

Regarding freshly licensed projects in the seven-month period, Singapore took the first position with 61 fresh projects having total registered capital of US$2.48 billion (60%).

Singapore has so far had over 1,180 investment projects in Vietnam with total registered capital of US$28.6 billion and is the second biggest foreign investor in Vietnam after Japan, which has 2,014 projects worth US$32.78 billion.

The sectors Singapore invests in are also Vietnam’s prioritized sectors such as processing and manufacturing industries, industrial park infrastructure, urban-tourism property and logistics.

In the healthcare sector, Chandler Corporation has officially entered Vietnam after buying 80% stake of Hoan My Medical Corporation.

Meanwhile, Singapore’s largest retailer NTUC FairPrice has recently signed an agreement with Saigon Co.op to open the hypermarket called Co.opXtra Plus in HCMC.

Bien Hoa bypass expanded right in first phase

The section of National Highway 1A bypassing Dong Nai Province’s Bien Hoa City will be expanded from four to six lanes right in the first phase instead of waiting till the second phase as planned initially.

The Ministry of Transport has approved the project’s investor Dong Thuan Investment Joint Stock Company to expand this road section to six lanes to ease the traffic load on the backbone highway.

Nguyen Van Khang, director of the firm, said the expansion will cost an additional VND75 billion and one more month of construction compared to the previous design. However, in return the capacity of the bypass will increase dramatically.

The bypass’ foundation and drain system have been completed, but around 200 households living near two ends of the road have not yet been relocated.

Dong Nai Province has recently delivered an ultimatum demanding local authorities finish site clearance and transfer the site to the investor in October.

Khang said that if site clearance was finished in October, the bypass could be put into use in next year’s first quarter.

After completion, the bypass will help reduce traffic congestion in Bien Hoa City, improve the city’s infrastructure and contribute to the socioeconomic development of Dong Nai Province in particular and of the southern key economic zone in general.

The project invested under the build-operate-transfer (BOT) model has a length of 12.2 kilometers, starting from Tra Co Church in Trang Bom District and connected to National Highway 51 in Bien Hoa City.

The project will need VND751 billion for construction costs and two resettlement areas, not to mention a supplementary VND75 billion when it is expanded to six lanes.

Kicked off in July, 2010, the project scheduled for completion at the end of last year has fallen behind schedule due to slow site clearance.

According to the investor, the project’s payback period via toll collection will be 23 years and 11 months.

Old projects introduced at Vietbuild 2013

Just a few real estate enterprises joined Vietbuild 2013, the international exhibition on real estate, interior and exterior design, and construction materials, while most projects introduced at the fair were those already launched earlier.

In previous years, there were quite many enterprises joining the annual exhibition. But this year, due to scant participation, exhibitors had chances to lure visitors to their booths at the fair, which took place in HCMC from August 14 to 18.

Hung Thinh Land Company introduced three condo projects, including a project on Pham Van Hai Street with apartments priced from VND1.7 billion each, Phuc Yen 2 project in Tan Binh District at VND1.2 billion each and Chuong Duong Garden in Tan Phu District at VND13.5 million per square meter.

Meanwhile, Phuc Khang Construction & Investment Joint Stock Company continued to introduce to investors the Sunflower City project in Dong Nai Province, offering land lots at VND337 million each. The land lots are measured nearly 100 square meters each and payment will be made in two years.

The enterprise also offered Eco Town residential project in HCMC’s Hoc Mon District with land lots from VND600-800 million each.

Minh Vinh Khang Trade Joint Stock Company offered special sale for Bao Loc residential area in Lam Dong Province. The enterprise offered land lots at VND599 million each and houses at VND988 million each.

A staff of the enterprise said the houses previously were offered at VND1.6-1.7 billion each. So, the enterprise expected to speed up sales with the special discount.

Vietbuild 2013 took place at the Saigon Exhibition and Convention Center in HCMC’s District 7. Around 800 local and international enterprises featured 2,200 booths at the fair.

HAGL restructures portfolios to cut debts

Hoang Anh Gia Lai Group (HAGL) is refraining from hydropower projects to focus resources on farming and real estate in a move to cut debts that have exceeded its charter capital, said the group’s chairman Doan Nguyen Duc.

Duc told the company’s investors meeting here on Monday that the restructuring plan would also include the establishment of one more enterprise to solve the bad debts, which hit VND16 trillion as of December 31, 2012 compared to its equities of VND10 trillion.

“The goal is to reduce debts to less than VND10 trillion while spurring the group’s equities to VND13 trillion later this year,” he said.

The restructuring plan focuses on agriculture and real estate sectors as the group’s two core business activities. The target agricultural area of HGAL comprises of sugarcane-sugar and rubber-palm oil while the group considers investments in Myanmar as its crucial plan in the property area.

Meanwhile, the hydropower industry, which used to be HAGL’s strategic business in the past due to its high investment efficiency, will now be forsaken.

Duc said that after four years of operation, four hydropower projects of HAGL have posted low profits while the firm now sees many better choices. It therefore decides to transfer hydropower schemes in Vietnam to pay back loans and to make investments in either operational projects or new ones in Myanmar.

HAGL has almost completed necessary procedures to transfer its hydropower projects in Vietnam, Duc said, adding the transfer value plus the reduced bank loans of his firm totaled nearly VND4 trillion.

At the same time, HAGL will separate subsidiaries owning apartment projects from the parent company, especially those with housing schemes with low economic efficiency.

Similarly, the mining projects will also be downscaled and then be transferred by HAGL. As the current three iron mines in operation in Vietnam, Laos and Cambodia are facing many legal and social risks, HGAL decides to remove the mining industry out of its core business.

Regarding the woodworking and stone industries, Duc said his company would transfer stakes of its enterprises in the sectors to employees who have been working for the group from the very beginning. The group will retain a 20% stake only.

Specially, HAGL will formally establish An Phu Company to tackle the present bad debts as a way to clean up the parent company’s financial sheet.

In fact, An Phu was established some two years ago but has not been formally inaugurated, said Vo Truong Son, deputy general director of HAGL.

An Phu would have a charter capital of VND360 billion.

Under the scheme, Hoang Anh Housing Development Company as an offshoot of the group will sell stakes in An Phu to the parent firm HAGL, which will hold a stake of up to over 99% in the new firm.

Hoang Anh Housing Development Company will transfer its stakes in other subsidiaries to An Phu such as Dong Nam, Phu Hoang Anh, Phuc Bao Minh, Minh Tuan, Hoang Anh Incomex and Hoang Anh Mekong.

An Phu will borrow funds from the parent firms to acquire stakes mentioned above, and will also issue shares to investors.

Hoang Anh Housing Development Company will use sums from the stake transfer to refund loans of over VND3 trillion for the parent firm.

With all the restructuring and stake transfer, it is expected that the parent firm by the end of the year will have a clean balance sheet, said Vo Truong Son.

Incentives for supplementary pension insurance

The Department of Social Insurance on Monday suggested the State to provide tax incentives for supplementary pension insurance to encourage local enterprises and laborers to join the program.

Specifically, supplementary pension insurance premiums paid by employees will be exempted from personal income tax while those paid by employers will be considered as reasonable expenses for corporate income tax deduction.

Besides, retired employees will not pay taxes for retirement pension they receive each month. They will only pay taxes if they take their entire pension as a lump sum.

Speaking at a meeting fielding suggestions for the Government’s draft decision on piloting the pension policy in HCMC on Monday, Pham Truong Giang, deputy head of the department, said that enterprises will join the insurance program on a voluntary basis and will negotiate with employees on payment ratios.

The program aims to help employees receive higher retirement pensions and reduce pressure on the State budget and social insurance fund. At present, whenever the State revises up minimum wages for civil servants, basic retirement pension must follow suit.

When employees have received supplementary pensions, it will enable the State to separate minimum wage increase from pension increase, reducing State budget spending on pension increase, which is standing at around VND3 trillion each year.

The department expects to field suggestions for the draft decision from now to the end of this month and submit it to the Government in November. The program will be piloted early 2014, beginning with State-owned groups and corporations and other enterprises with demands.

The pilot program is expected to last three years to help managing agencies complete legal framework for the insurance policy.

Employees are estimated to contribute 5-22% of monthly wages to the supplementary pension fund. Enterprises and employees will negotiate on payment ratios but the premium will be no higher than VND5.06 million a person each month and VND60.7 million a year.

SSC supports issuing shares under par value

The State Securities Commission (SSC) from now until the end of the year will continue to help listed firms in issuance of shares under the par value based on the decisions of such firms’ annual general meetings.

Initially, listed enterprises that do not belong to conditional business sectors are allowed to issue shares under the par value if they have sufficient capital surplus to offset the shortfall, said sources from SSC.

According to a draft circular guiding issuing shares under par value, one of the conditions is that companies must have enough capital surplus or retained profit to make up for charter capital losses due to the issuance.

However, the circular has not been released as it is not aligned with current laws. Therefore, SSC has sought to delay issuance of the circular and will study to supplement the conditions to other legal documents, said SSC chairman Vu Bang.

“We are in a tough position. As SSC just implements regulations and doesn’t release legal documents, the capability of solving legal problems is limited,” Bang said.

However, SSC has granted approval for several enterprises to issue shares under the par value in recent times.

At present, over half of total stocks listed on the two local exchanges have their market prices under the par value of VND10,000 each. Truong Thanh Furniture Corporation (TTF) has recently obtained approval to issue shares under the par value, opening the door for enterprises thirsty for capital or mired in financial difficulties.

According to SSC, the number of newly-listed firms has declined sharply given economic difficulties and stricter listing rules, especially in information proclamation. Meanwhile, the number of delisted enterprises has also reached a record high.

Seven new enterprises debuted on both markets in the first six months of this year while 21 firms and one investment fund were delisted. There are around 737 enterprises trading shares on both exchanges, excluding 135 firms on the UPCoM, the market for unlisted public companies.

The total mobilization via share issues, share and government bond auctions in the year’s first half reached nearly VND115 trillion, up 37% against the same period of 2012. However, mobilization via share issues plunged 58% year-on-year to over VND2.3 trillion.

Zalo attracts four million users

VNG Joint Stock Company says the number of users of Zalo social media website has reached four million after just one year of deployment.

With the four million users, Zalo has become the second most popular free calling and messaging service or over-the-top content (OTT) after the U.S.-based Viber which has more than five million users in Vietnam.

Some 40 million text messages are sent via Zalo daily, VNG said, adding that a version of the service for mobile application running on Windows Phone has now been available while the other for Android and iOS operation systems has been updated.

Equipped with the locking application feature to protect users’ privacy, the new version allows users to set up a four-character password to access Zalo. Besides, with the version, all incoming and outgoing messages are encrypted in line with the Advanced Encryption Standard (AES), a security method recommended by the U.S. National Institute of Standards and Technology.

Commenting on the local OTT market, Vuong Quang Khai, deputy general director of VNG, remarked that this was a highly potential market with tough competition between local and foreign technology firms.

The Vietnamese market so far has welcomed foreign-invested companies like Japan’s Line, South Korea’s KakaoTalk, Facebook Messenger, Viber, WhatsApp and Yahoo Messenger. Meanwhile, domestic technology enterprises have also marked their presence in the market, including VNG, FPT with FPT Chat, Microgame with Ola and Wala.

OTT players now are directly competing with telecom service providers such as Viettel, MobiFone and VinaPhone who have seen their revenues falling as a result. A number of OTT application providers like Zalo, Viber, Line or Kakao Talk have also expressed a desire to cooperate with the telecom companies.

Regarding this issue, Bui Quoc Viet, spokesman of VNPT Group, said OTT applications like Viber, Zalo or Line have cut into the revenues of MobiFone and VinaPhone by up to 30% at certain times.

Similarly, Tong Viet Trung, deputy general director of Viettel, affirmed OTT had resulted in a serious revenue decline for his firm.

Telecom experts believe that with the current strong growth of OTT applications, telecom companies will have to join hands with OTT service providers to offer new service packages. They expect telecom firms to soon launch new 3G service packages with OTT services.

HCM City adjusts industrial clusters

The HCMC government will exclude from planning or change the functions of some industrial clusters in residential areas that have no infrastructure developers and lack facilities such as roads and power supply.

In the industrial cluster development plan until 2020 with the vision till 2030 sent to the Ministry of Planning and Investment last week, local authorities suggested eliminating nine industrial clusters out of planning. These are Binh Dang, Hiep Binh Phuoc, East of National Highway 1A, Hiep Thanh, Tan Thoi Nhat, Tan Hiep A, Tan Hiep B , Dong Thanh and Phu My with a total area of 342 hectares.

The city also suggested eliminating Long Son, Tan Thoi Nhi and Binh Khanh clusters, with the total area of 209 hectares. The city will also revise down areas of some industrial clusters, of which Tan Tuc will have its area shrink from 40 hectares to 29.8 hectares, Xuan Thoi Son A from 38 hectares to 21 hectares, and Nhi Xuan from 230 hectares to 54 hectares.

Besides, certain industrial clusters like that of Saigon Agriculture Corporation, Da Phuoc, Pham Van Coi and Bau Tran have been suggested to be upgraded to industrial zones.

Meanwhile, local authorities also suggested adding some industrial cluster projects into the planning. The projects are expected to cover a total area of 450 to 500 hectares to facilitate industrial development in the 2025-2030 period.

According to the plan approved by the Government in 2004, HCMC would develop 30 industrial clusters on the total area of 1,900 hectares. The city up to now has set up planning for 27 industrial clusters on over 1,600 hectares. Of which, there are 16 active industrial clusters that have attracted around 600 projects and created 32,000 jobs.

According to local authorities, some 13 out of the 16 industrial clusters have no infrastructure developers. Most industrial clusters have yet to finish infrastructures and just a few enterprises have invested in private wastewater treatment systems.

Fertilizer maker helps farmers’ children continue schooling

PetroVietnam Fertilizer and Chemicals Corporation specializing in urea fertilizer production has donated more than 17,500 presents to students who are children of needy farmers in 19 provinces with a total value of up to VND5.5 billion.

With the program “Supporting farmers’ children in schooling,” the company wants to assist farming households facing financial troubles by creating favorable conditions for their children to continue schooling. The firm cooperates with its subsidiaries, local study promotion associations and schools to hand over gifts including notebooks and cash to the target students.

Presents for primary students include notebooks worth VND100,000 and VND200,000 in cash, while high school students receive notebooks valued at VND200,000 and a cash sum of VND300,000 each. Besides the presents, the fertilizer maker also supplies teaching equipment for 44 schools, with each school given VND10-20 million.

The donations to needy students are aimed to help farmers who have suffered from falling prices of farm produce this year.

The company has actively carried out many direct supporting programs targeting troubled farmers, including the donation of fertilizer to farmers in eight provinces in the Mekong Delta in July. It is looking to finance a total of around VND100 billion for social welfare programs this year, with some VND60 billion set aside for the education sector.

Opportunities and challenges created by TPP

Vietnam is approaching the signing of a Trans-Pacific Partnership (TPP) agreement, which creates both opportunities and challenges for the country’s international integration process.

Vietnam has just completed the 18th TPP agreement negotiation round in Malaysia. The country is set to join the 19th round in Brunei from August 24-30.

Since November 2010, Vietnam has been involved in official TPP negotiations together with New Zealand, Brunei, Chile, Singapore, Australia, Peru, the US, Malaysia, Canada, and Mexico.

The 18th round of negotiation in Malaysia has admitted one nation, Japan, which became the 12th member getting involved in TPP negotiations.

Once reaching consensus in November and signing an agreement by the end of 2013, TPP will be established, becoming one of the world’s largest trade regions with a total population of 792 million that contribute nearly 40% to GDP and account for one third of the global trade value.

Vietnam is enjoying many favourable conditions to take advantage of the TPP. The country’s participation in the agreement may help increase its GDP by 35.7% in 2025 and reap an export revenue of US$67.9 billion.

The garment and footwear sector is expected to receive a boost in export growth from US$133 billion at present to US$165 by 2025, up 45.9% year on year.

Tran Viet, head of the External Relations Department of the Vietnam Textile and Garment Association (Vinatas), said Vietnam’s participation in the TPP agreement would help the local garment sector achieve an export turnover of US$55 billion in 2015, generating jobs for nearly 6 million workers.

Previously, experts had predicted that Vietnam might face hurdles in joining the TPP agreement. However, positive signs from the US – an initiator and full member of the agreement – showed that the negotiation process is accelerating. In particular, among negotiators the US is always considered the most demanding partner.

Vietnamese State President Truong Tan Sang paid a visit to the US at the end of July. He met US President Barack Obama and the two sides also discussed issues related to the TPP agreement.

President Obama said: “We are making efforts to complete the TPP agreement in 2013 as it can generate jobs and increase investment in the region, as well as in both countries.”

The two leaders then released a joint statement affirming their strong determination to complete negotiations on the TPP agreement in a comprehensive and efficient manner in the earliest time this year. Vietnam is entering the final stage.

Vietnam needs to be careful, taking into account opportunities and challenges posed by the TPP agreement, which does not provide any special mechanisms for economies with different development status. The country will face heavy pressure when it joins the agreement, especially when Vietnam still depends much on imported materials from non-TPP members like China and the South Korea. TPP will only offer lower tax rates for products using materials imported from its member countries.

TPP is not an absolutely open market as it provides a common list for the opening of the service sector that Vietnam has not perfected. Requirements for employment are also strictly regulated in the TPP agreement. Those businesses that fail to meet these requirements will receive no preferential tax policies when they export their products to TPP member countries.

Dr. Le Doang Doanh, former Head of the Central Institute for Economic Management (CIEM), said Vietnam would attract foreign investors thanks to benefits offered by the TPP agreement, such as an expanded export market, low tax rates and low-cost labour force.

However, Professor Nguyen Mai, former Deputy Chairman of the State Committee for Cooperation and Investment (SCCI) (now the Ministry of Planning and Investment), voiced his concern over Vietnam’s more open market and its ability to balance export revenue, which was currently higher than GDP. Moreover, he said, Vietnam’s current investment disbursement of US$10-11 billion/year was suitable.

Specialists worried about technical problems, the role of State-owned businesses, and organizations of workers. The TPP agreement requires the independent organization of workers which connects to other relevant agencies across the country to protect legitimate rights of employers. At present, Vietnam only has such an organization – the Vietnam General Confederation of Labour (VGCL) with its trade unions members nationwide.

Above all challenges, the TPP agreement is considered a good playground for potential economies like Vietnam to boost the development of key sectors such as garments, footwear and farm produce. After joining the agreement, there will be a strong flow of imported goods and foreign direct investment (FDI) into Vietnam, thus providing the country with a fresh impetus for stronger growth.

Making Chu Lai Open Economic Zone a preeminent economic hub

Deputy Prime Minister Nguyen Xuan Phuc has asked Quang Nam province and its relevant ministries work towards making the Chu Lai Open Economic Zone Vietnam’s largest economic hub.

Phuc issued his urging during an August 17 ceremony commemorating the 10th anniversary of the zone’s establishment and awarding it the Labour Order, Third Class.

Chu Lai has thus far granted investment licenses to 89 projects capitalised at US$1.514 billion, a tally including 21 foreign-invested projects. Sixty-two out of 82 planned projects have already been implemented with total investment capital of US$783 million.

Some of the zone’s most notable successes are the Chu Lai Truong Hai automobile mechanical industrial park, the Chu Lai Float Glass Plant, and the Chu Lai Soda Production Factory.

Its 2013 projects range from a US$25 million German-funded Chu Lai Nui Thanh urban area waste water treatment project to developing Chu Lai Airport into an international cargo transport centre.

The Prime Minister has selected Chu Lai Open Economic Zone as one of five leading national economic zones deserving preferential attention over the 2013–2015 period. The zone generates nearly 50,000 jobs in the province.

In addition to the zone’s Labour Order, its management board was also licensed to invest US$1.6 billion in an international port and Doctor Thanh industrial park.

Vietnam, Laos cooperate on Tuan Chau Island luxury resort

Vietnam and Laos have signed an August 16 Memorandum of Understanding (MoU) in Vientiane confirming plans to work together on a Tuan Chau island luxury resort in Quang Ninh province’s  Ha Long City.

The MoU’s signatories were Vietnam Father Front (VFF) Central Committee member and Tuan Chau Group President Dao Hong Tuyen and Chitchareun Construction Co. Ltd General Director Somvang Vongvilay.

The MoU specifies the resort will be constructed on four hectares of land following a collaborative design and architectural process and legal and contract formalities. The project is scheduled for investment licensing in September and construction to begin in October.

At a reception held earlier for Tuyen, Laos Deputy Prime Minister Somsavad Lengsavath highlighted exisiting Vietnamese business investment in Laos and extended his welcome to the visiting Tam Chau Group President.

The Deputy PM expressed confidence in Tuan Chau Group’s expertise and declared the project will only consolidate the special relationship between the two countries.

Mr Tuyen pledged to spare no effort in ensuring the project is effectively realised and honours the venerable history of Vietnam-Laos solidarity and cooperation.

Garments, textiles maintain stable growth

Vietnam’s garment and textile export turnover in the first seven months of this year surpassed US$9.6 billion, up 16.3 percent over the same period last year.

During the reviewed period, with a contribution of 13.2 percent to the country’s total export revenue, the sector maintained its high position in the US$1 billion club, only mobile phones and spare parts stand before it.

The industry is expected to rake in over US$8 billion in the remaining months of the years, fulfilling the target set by the Government.

Despite its stable growth, the sector is facing a range of difficulties in material production, according to the Ministry of Planning and Investment.

Statistics show that the garment and textile sector spent more than US$7.6 billion purchasing materials from foreign countries in the past seven months, up 18.2 percent year-on-year.

Given this situation, domestic and foreign businesses are pouring huge sum into the fibre supply chain, weaving and dyeing in order to raise the sector’s competitive edge while minimising its dependence on imports.

Joining the move, the Vietnam National Textile and Garment Group kicked off the construction of Phu Hung fibre plant at the Phu Bai Industrial Park in the central province of Thua Thien-Hue.

Hong Kong-based Texhong Group recently put into operation the first phase of its fibre plant in the northern province of Quang Ninh.

Le Tien Truong, Vice Chairman of the Vietnam Textile and Apparel Association, said the sector is now confident it can compete in overseas markets.

The Trans-Pacific Partnership (TPP) agreement, once signed, together with other bilateral and multilateral free trade agreements, is expected to stimulate the sector, he said.

Vinacomin targets sustainable coal and mineral industry

The Vietnam National Coal and Mineral Industries Group (Vinacomin)’s visions of sustainable development for the nation’s coal and mineral industries will require mechanizing production as much as possible and focusing on mine exploitation.

Delegates reached this general consensus at an August 16 seminar in Quang Ninh province’s Ha Long City.  

Discussions emphasised Quang Ninh province’s important contributions to developing Vietnam’s coal and mineral industries.

Swedish Ambassador to Vietnam Camilla Mellander said the coal and mineral sector presents excellent opportunities for Vietnamese and Swedish cooperation.

As a leading European mining nation, Swedish can help Vietnamese businesses negotiate the partnerships that can fuel the industry’s technological innovations.

Major Swedish companies such as ABB, Scania, and SEK are willing to commit to long-term partnerships with Vietnamese colleagues working towards building an advanced mining industry.

Both sides used the seminar to strategise cooperation capable of assisting Vietnamese mining’s development.

Exports to France surpasses US$1 billion

Vietnam’s exports to France hit more than US$1 billion in the first half of this year, up 6.3% on the same period last year.

According to the Trade and Industry Information Centre (TIIC) under the Ministry of Industry and Trade (MoIT), products exported to France are diverse, such as footwear, garment, utensils, agriculture, forestry and seafood products, electrical equipment, electronics and rubber.

Telephones and its components topped the list of export commodities with more than US$383 million in revenue (up 25.1%), followed by computers, electrical products and components with US$112.7 million (up 156.9%) and footwear with US$109.8 million (down 15.3%).

Some other items also achieved high export growth, such as garment, pepper, confectionary and cereals.

Vietnam is currently negotiating Free Trade Agreement with the EU in an effort to reduce import taxes for some of its products.

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