Insurance revenues seen higher than payouts in 2016

The Prime Minister has issued a decision requiring Vietnam Social Insurance (VSI) to ensure insurance revenues would be higher than payouts this year to balance the social insurance fund.

According to the decision announced by the Government Office on Wednesday, VSI is assigned to collect VND269.3 trillion (US$12 billion) this year. The total amount includes VND158.4 trillion for social insurance, VND66.3 trillion for health insurance, VND10.4 trillion for unemployment insurance and VND34.2 trillion profit generated from financial investments.

Meanwhile, VSI is expected to spend more than VND200 trillion this year, including VND110.1 trillion on social insurance, VND7.4 trillion on unemployment insurance, VND72.7 trillion on health insurance, and VND9.9 trillion on management costs.

This year, VSI’s revenues and expenditures this year are higher than last year. In 2015, VSI was tasked with collecting VND233.7 trillion and spending VND171.6 trillion last year.

The decision states that the numbers of insurance payers and beneficiaries will be different from the numbers used to decide the social revenue and payment estimates this year as the Government adjusted up the base wages of officials, civil servants, and armed forces as well as pensions and allowances for some beneficiaries including kindergarten teachers who have been working since before 1995.     

Therefore, the Minister of Finance will consider revising insurance revenue and payment targets in line with the actual situation.

Vietnam enjoys US$760 million trade surplus in January

Vietnam unexpectedly enjoyed a trade surplus of US$760 million in the first month of 2016, equivalent to 5.7% of the total export revenue, announced the General Department of Vietnam Customs.

According to the latest statistics, Vietnam earned an export revenue of US$13.36 billion in January, down 2.7% compared to the previous month. Of which, foreign direct investment (FDI) enterprises reported an export revenue of US$9.04 billion, a slight decrease of 0.2%.

The export of phones and components posted the highest revenue at US$2.27 billion, up 31.4% compared to the previous month. Despite a decrease of 9.3% over the previous month, the export revenue of garments and textiles came in second, reaching over US$2 billion.

In the meantime, the nation's import revenue was recorded at US$12.6 billion in January, down 11.9% against the previous month. The FDI sector saw an import revenue of US$7.17 billion, down 6.3% over the previous month.

In 2015, Vietnam reported a trade deficit of US$3.54 billion after three consecutive years with a trade surplus.

Taxi firms to cut rates as petrol prices plunge

Taxi firms in the capital are likely to slash fares after domestic petrol prices plunged to a seven-year low on Thursday, but any cut would take time to implement.

Ha Noi Taxi Association Chairman, Do Quoc Binh, said the fares would be slashed by about 300 dong (a US cent) per kilometre, and it would take some 10 days for the companies to complete procedures for the cut.

He explained to Dau tu (Vietnam Investment Review) that in order to cut fares, taxi firms would have to register with the authorities, reset meters, reprint price lists and notify their customers about the change.

He calculated that these changes would cost about VND500,000 (VND496,137) per vehicle, and a firm operating 200 cars would have to pay VND100 million (VND99,227,340) for such a one time adjustment.

Ha Noi Transportation Association Bui Danh Lien said the association had set specific price levels at which transport enterprises were to adjust their charges, to facilitate the response in transport charges to petrol price fluctuations.

Companies would have to reduce charges if gasoline prices fell to around VND15,000 (67 cents) per litre, and diesel prices fell to around VND10,000 (44 cents) per litre.

On Thursday, the retail price of petrol was cut by 961 dong to VND13,752 (61 cents) per litre. The price of the E5 RON 92 biofuel also dropped by 942 dong to VND13,321 (59 cents) per litre.

The price of diesel remained unchanged at VND9,580 (43 cents) per litre.

However, Lien said continuous fluctuations in petrol prices and complicated administrative procedures still made it hard for transport charges to be adjusted in a timely manner.

The association had asked the municipal taxation department to permit transport companies to overprint their tickets with new prices, for a quicker and less costly adjustment.

It had also proposed allowing taxi firms to list the new prices on an easily seen external part of the cars, while waiting for permission from the authorities to reset their meters.

HCM City Department of Finance official, Nguyen Mau Phuong Quynh, said that this agency had already asked local automobile transport enterprises to register new rates in light of recent fuel price declines earlier this month.

She told the Voice of Vietnam that, as of Thursday, 16 out of 49 fixed-route passenger transport firms in HCM City registered rate cuts of 3-5 per cent. Three out of 14 taxi firms in Ha Noi offered rate cuts of 1.2-2.4 per cent.

Quynh said that local authorities had asked companies to register their fares again with next Tuesday being the deadline, after last Thursday's petrol price cut.

It was estimated that route transport companies whose vehicles use diesel would have to reduce rates by 4.8 per cent, and those using gasoline would have to slash rates by 4.2 per cent, she added.

In mid-January, the HCM City Taxi Association announced on its website that its members would reduce fares by 300 to 500 dong per kilometre to pass savings onto their customers.

This came as fuel prices tended to decline, bucking the trend of rising wages, social insurance spending, as well as parking and car maintenance costs in 2016, it said.

Thursday's cut was the fourth consecutive reduction in domestic petrol prices this year, and the ninth since October 19, 2015.

The last price revision was on February 3, when the price of petrol fell by 729 dong and that of E5 RON 92 was reduced by 496 dong per litre.

Spain to control pepper imports

Spain will initiate special measures to control black pepper imports to this country after a warning about high residue of carbendazim fungicide found in some batches of Vietnamese pepper.

The warning was issued by the European Commission (EC), according to the Viet Nam's Trade Office in Spain.

The office said the EC issued the warning after authorities in Malta detected high carbendazim residue in Phuc Sinh Joint Stock Company's batches of black pepper imported to the country.

Initially, Spain will retain the special control measures until there are official guarantees in quality inspection from exporting countries and/or result of inspection for next imports that reach quality standards, or until the EC issues general control measures for its all member countries, the office said.

For Phuc Sinh Company's export black pepper, Spain will seize suspected samples of the company's export black pepper batches to analyse amounts of carbendazim and keep all shipments until they receive official results on the level of carbendazim in the products.

The Viet Nam Pepper Association said it was really unfortunate to see Viet Nam's black pepper exports being returned, although at very small volumes.

However, Do Ha Nam, chairman of the association was quoted by Vietnam Television (VTV) as saying that the action would affect the reputation of Vietnamese pepper on the world market.

Nam said Vietnamese pepper with high fungicide and pesticide residues were partly due to the strong increase of the area growing pepper plants, so the relevant offices could not control the use of fungicide and pesticide by farmers.

In addition, Viet Nam had not yet controlled the quality of pepper products before shipping them to other countries, he said. Therefore, Viet Nam should invest more in quality control for its export products to maintain the reputation of local export pepper on the world market and for sustainable development of the domestic pepper industry.

Last year, Viet Nam exported pepper with a total value at VND764,319 million to Spain, a year-on-year increase of 33.6 per cent, according to the Viet Nam's Trade Office in Spain. Viet Nam is the second largest exporter of pepper to Spain, after China.

The country gained a total export value of VND27,712 billion from pepper in 2015.

ODA disbursement expected to reach US$25-30 billion during 2016-2020

Vietnam plans to disburse between US$25-30 billion of official development assistance (ODA) over the next five years.

The target was revealed via a proposed scheme on ODA attraction, management and use over the 2016-2020 period recently approved by the prime minister.

The Party and State have relied mainly on internal strength for national development while considering ODA and other preferential loans as importance sources of finance.

Data shows that an estimated US$22 billion in ODA and concessional loans from the 2011-2015 period are yet to have been disbursed, therefore one of the key tasks over the next five years is to complete ODA-funded projects as scheduled.

In each of the next five years, ODA disbursement is expected to reach US$5-6 billion, up 14% from the previous period.

Developers flock to untapped provinces

Many property developers are moving into provinces rather than try their luck in the fiercely competitive metro markets like Ha Noi and HCM City.

Tecco, which built the Greenest and Tecco Tower in HCM City is one of them.

"Tecco has moved to the central province of Thanh Hoa, an emerging market with many incentives to boost the real estate market," Nguyen The Manh, chairman of Tecco, told Thoi Bao Kinh Te Sai Gon (Sai Gon Times) newspaper.

Earlier HUD Corporation, which developed many projects in Ha Noi like Greenlife Tower and Newskyline, had moved into Thanh Hoa, but FLC, another major Ha Noi developer, is the biggest investor in the province with its VND5.5 trillion (USVND5,587,125 million) FLC Sam Son project.

Vingroup, the country's biggest developer, has also invested in the province.

For many developers, Thanh Hoa's attraction is partly due to its Party Committee Secretary Trinh Van Chien's determination to develop the local property market.

Nghi Son Economic Zone with its under-construction Nghi Son Oil Refinery is another magnet for developers.

Thanh Hoa has attracted the biggest investment of Japanese projects – 12 with a combined investment of VND116,212 billion.

The southern province of Dong Nai is attracting real estate investors again, with many buying lands in attractive locations.

Soon after the HCM City – Long Thanh – Dau Giay highway opened to traffic, Dat Xanh Corporation, which has developed a slew of projects in HCM City, unveiled its Gold Hill project on an area of 27 ha at a price of VND300 million (VND231,306,975) for each land plot.

It also has other projects in Dong Nai like Viva City and Sakura Valley.

Besides, it is preparing to launch projects on Phu Quoc Island and the central Quang Nam Province.

In Long An, another southern province, major developers like Phuc Khang, Nam Long, Tan Tao and Dong Tam corporations have begun to pour money and competition is likely to become fierce soon.

"Provincial real estate markets have their own potential if investors know what the strong points of the market are," Nguyen Tran Nam, chairman of the Viet Nam Real Estate Market Association, said referring to the trend.

"This is also time for strong investors with financial and management capabilities to enter the market."

Market moving away from social housing

The number of social housing projects in 2016 is expected to fall as there is a boom in the middle and high-end market segments, experts said.

In 2012, the development of social housing projects was seen everywhere from the north to the south. Several such projects, such as Rice City west-south Linh Dam, EcoHome and 31 Tran Phu, were implemented, while many property investors also applied to reduce the area of apartments for the benefit of low-income buyers.

The social housing project boom at that time was due to a stagnant estate market. Investors had to focus on the low-income housing segment as there was abundant supply of high-end projects.

However, in 2016, the property market is showing signs of warming up, and it seems social housing projects are disappearing.

Statistics from the construction ministry showed that HCM City would welcome 50,000 to 60,000 new apartments by 2017, with a majority being in the middle and high-end segments.

Vu Cuong Quyet, director of Dat Xanh Company in the north, said most of their transactions in Ha Noi in November involved high-end apartments, villas and terraced houses. The number of transactions for low-income apartments was on hold.

Vo Huu Khoa, deputy general director of CityLand Company, said the boom in the high-end segment was happening due to an estate market that was warming up. Investors will focus on the high-end segment because of higher profits. In addition, speculators are also paying attention to the segment.

Khoa said the trend would continue in 2016.

The World Bank also released a survey at the end of 2015, showing that more than 40 per cent of the Vietnamese households had an average income of less than VND10 million a month, which made it hard to buy an apartment.

Huynh The Du, director of Fulbright Economics Teaching Programmes, said if the average housing price was VND9.7 million (USVND9,654,552) per sq.m, people with incomes of VND5 million (VND4,983,716) to VND7.7 million (VND7,665,536) a month would have no opportunity to buy an apartment. Those with incomes of VND10.2 million (VND10,146,219) to VND14.3 million (VND14,191,298) a month can buy a 39sq.m to 55sq.m apartment.

However, in reality, a report of Savills Viet Nam showed that the average housing price in Ha Noi and HCM City was VND25.6 million (VND25,410,245) per sq.m in the last quarter of 2015.

Tran Ngoc Hung, chairman of the Viet Nam Federation of Civil Engineering, said Viet Nam should have a new mechanism for social housing investment. Accordingly, the investment should follow the market mechanism, while a low-income earner would enjoy low interest rates of 0.5 to one per cent for their loans, when buying an apartment.

Statistics from the ministry and the Viet Nam General Confederation of Labour showed that the demand for low-income apartments in urban areas would be one million a year by 2020, while the country could supply only 10,000 apartments. In industrial zones, only 20 per cent of the labourers have stable accommodation.

Cheaper housing offered in HCMC outskirts

Many real estate companies are offering properties at cheap prices in some hot localities in HCM City's North-western region after the Tet holiday expecting high demand from there.

Thang Loi Real Estate Company offered its project in Binh Chanh District on the local market the early this week with prices ranging between VND500 million and VND1 billion.

Meanwhile, Cat Tuong Duc Hoa Real Estate Joint Stock Company also offered its remaining properties in its projects located in the place 3km from Hoc Mon District, HCM City. The company was successful with its debut project before Tet due to the convenience of travel to industrial zones.

In addition, many new projects also had their debuts since early this week on the local market, including Daresco Residence, An Ha Lotus, Ecity Tan Duc, and My Hanh Hoang Gia, along with Lang Sen, with prices ranging from VND2.5 million to VND5 million per sq.m.

Duong Long Thanh, general director of Thang Loi Real Estate Company, said land and other properties in HCM City's North-western region are the cheapest on HCM City's market, including District 12, Hoc Mon District, Cu Chi District and a part of Binh Chanh District.

The cheap price was one of the conditions that attracted buyers who have small investment capitals and low incomes, he said.

This year strong growth is predicted in cheap properties so the projects in the city's North-western region were offered right after Tet holidays, he said.

Tran Khanh Quang, general director of Viet An Hoa Company, said there were many reasons that property products in the region were offered early. The first was that infrastructure in the region was expected to improve in the future. Then, the Ho Chi Minh national highway connecting Binh Phuoc, Tay Ninh and Long An provinces to HCM City would be developed to create favourable conditions for developing real estate, investment and trade.

The environment in the region is clean so it is good for development of eco-property products, including eco-regions, villas and tourism regions, according to Quang.

Meanwhile, the region has large tracts of land but low population so the price of land there is often cheaper than the western and South-western regions.

According to the Ministry of Construction's Housing and Real Estate Market Management Department, in HCM City, there were 1,600 success property transactions in January, 3 per cent higher than December 2015.

There have been numerous transactions for medium and small sized apartments with a selling price of about VND1 billion per apartment.

However, Do Thi Loan, deputy chairwoman and general secretary of HCM City Real Estate Association, said the city's property market still had many projects that had not sold all their properties. To avoid excess supply in the coming time, the HCM City Construction Department should ensure public demand on housing in the city and then, property companies would have suitable business strategies with real demand in the market.

Viet Nam property prices set to increase

Property prices are expected to increase by five to 10 per cent in the year of 2016, especially hot projects that have good infrastructure and ensure construction progress.

The Viet Nam Real Estate Association (VNREA) forecast the estate market would continue to develop, with the middle-income housing segment to be the majority segment. The villa segment is expected to see positive changes in the market as most Vietnamese homebuyers prefer independent houses rather than apartments. The prices of offices for lease will also be four to nine per cent higher than that of 2015.

However, VNREA said the property market this year would face the challenge of bad debts as most investors have to borrow loans with interest rates of more than 10 per cent a year, while the market has not been provided support from the VND30-trillion (USVND29,947 billion) stimulus package.

The number of transactions in the market in 2015 were double that of 2014. The estate inventory value fell to VND50 trillion (VND49,614 billion), while property credit rose by 20 per cent to touch more than VND373 trillion (VND370,538 billion).

Five-star resort to open in Vinh Phuc

The five-star FLC Vinh Thinh Resort in the northern Vinh Phuc Province's Vinh Tuong District will open on March 6.

The FLC Group, the project investor, will started the resort's phase two construction, covering 250ha, with a total investment of VND4.6 trillion (USVND4,570,268 million). Phase two will see the construction of a golf institute, a five-star hotel, villas and high-end entertainment services.

Located in an area with tourism potential and a one-hour drive from Ha Noi, the resort offers 7ha of a lake, trees, bungalows and restaurants, besides swimming pools, a golf course and tennis courses. It will have a conference room system, making it an ideal destination for meetings, incentives, conferences and exhibitions (MICE).

26 land projects in Hoan Kiem planned

The municipal people's committee has promulgated a decision on the land-use plan in 2016 in the city's Hoan Kiem District.

Accordingly, the district will have 26 land projects, including 19 unfinished plans of 2015, and seven new ones. About 15.76ha will be allocated for agriculture, while 521.99 ha will be used for non-agricultural purposes.

The city has been asked to review and evaluate the feasibility of the projects, as well as collect ideas from the people to report to the committee before the end of May.

Tuan Loc to run Nghe Tinh Port

Tuan Loc Investment and Construction JSC has purchased 51 per cent of the Nghe Tinh Port in Nghe An Province from Vietnam National Shipping Lines (Vinalines).

Local media reported that the company, which already held an 18.1 per cent stake in the port, was referenced by Vinalines as a suitable investor for the whole package of shares in a document sent by Chairman of the People's Committee of Nghe An Nguyen Xuan Duong to the Ministry of Transport last month.

Earlier, Prime Minister Nguyen Tan Dung had allowed Vinalines to divest the whole package of nearly 11 million shares, or 51 per cent of the stake, in the port.

So far, Nghe Tinh Port is a national general port acting as the main hub in the central areas, including the Cua Lo and Ben Thuy ports. The Nghe Tinh Port, covering 230,000sq.m of storage space, was the largest port in northwestern Viet Nam, located 12 km from Cua Hoi Beach and spanning well into the northeast, east of Vinh City.

In particular, Cua Lo Port, which is a Type 1 seaport located along the international maritime route, connects the province with the central northern provinces and Laos.

Cua Lo Port has 6 terminals, including 4 active terminals that were designed for vessels with a capacity of 10,000 tonnes. Terminals 5 and 6, which were constructed by Tuan Loc, were designed for vessels with a capacity of 30,000 tonnes.

According to the Dau Tu (Investment) newspaper, Vinalines has also completed a divestment plan for Nghe Tinh Port JSC, wherein it will sell the whole package of shares in a lot. The plan was said to be awaiting the MoT's approval.

Under the plan, investors must have minimum equity capital of VND500 billion (USVND498,372 million), with no accumulated losses. The investor must commit to buying all the shares of other shareholders (if required by these shareholders) after purchasing the shares of Vinalines. At the same time, investors must maintain and develop the core business of the port.

If the deal had been struck, Vinalines would have received at least VND110 billion (VND109,508 million) to serve its own financial restructuring efforts. Nghe Tinh Port has charter capital of VND215.2 billion (VND214,546 million).

So far, Tuan Loc JSC, with charter capital of VND1.6 trillion (VND1,593,448 million), was expected to meet the conditions to seal the deal. Established in 2005, it has expanded its operations in the construction industry across Viet Nam. In Nghe An Province, it was charged with constructing water plants for Vinh City, as well as the infrastructure of the industrial zone in Dong Nam Economic Zone and Terminals 5 and 6 of Cua Lo Port, with a total investment of VND1.4 trillion (VND1,394,546 million).

Previously, Tuan Loc JSC had also struck a deal with the MoT to buy a stake in the Civil Engineering Construction Corporation 4 JSC (CIENCO4), which is one of the leaders in road construction in Viet Nam, with annual sales of more than VND10 trillion (VND9,971,901 million). Currently, it holds a 51.5 per cent stake in CIENCO4.

Shares of Nghe Tinh Port (NAP) have been traded in the UPCoM market in the northern bourse since last October. The port is expected to officially list its shares this June after the deal is completed.

PVGas reports 78% decrease in Q4 profits

The slump in oil prices has strongly influenced business result of Vietnam Gas Corporation (PVGas) in the last quarter of 2015, which reported a drop of 78 per cent in profit.

PVGas reported a sale of VND17.26 trillion (USVND17,208,345 million) in the fourth quarter, a reduction of 9.2 per cent over the same period last year. Meanwhile, cost of sales increased 27 per cent to reach VND492 billion (VND489,432 million).

The company earned over VND1 trillion (VND996,743 million) in net profit in the quarter. Compared with the profit of VND4.8 trillion for the same quarter last year, they lost 78 per cent in profits. Thus, for the whole of 2015, PVGas earned VND64.29 trillion (VND63,917 billion) in net revenue, a reduction of 13 per cent compare to the previous year. Its net profit of the whole year was VND8.5 trillion (VND8,505,839 million), down 38.5 per cent compared to the results of 2014.

As of the end of 2015, the total assets of PVGas reached VND56.7 trillion (VND56,542 billion), an increase of more than 5 per cent compared with the balance in the beginning of the year.

Based in Vung Tau-city in the south of Viet Nam, PVGas was one of Viet Nam's largest State-run companies, which runs integrated operations, from drilling for gas through to marketing, and controls nearly 70 per cent of the domestic market for liquefied petroleum gas. It has a market capitalisation of about VND201,137 billion, making it one of the largest publicly traded Vietnamese companies.

The company is actively pursuing a policy of collaborating with foreign companies, and in June 2014 signed a liquefied natural gas trading contract with Royal Dutch Shell.

Yesterday each GAS share ended at 42,500 (VND42,462) on the HCM Stock Exchange.

Foreign meat flooding onto Vietnam market

Imported meats from India, Australia, the US and the Republic of Korea (RoK) are flooding the domestic retail market and can be found in barbeques and kitchens across the nation, reports the Vietnam Husbandry Association (VHA).

Housewives are opting for the premium quality (but less expensive) foreign cuts of meat saying they particularly like the fact that expiry dates are clearly marked on the label and they know the product is safe to consume.

They also prefer the labeling of the foreign meats because the country of origin is clearly listed on the label.

According to the VHA, the production cost of meat in the US and Australia is on average 25-30% lower than that of Vietnam, which allows for it to be sold at a much lower price than domestic meat that has been selling for about VND200,000 per kilo as of late.

Last year, the Ministry of Agriculture and Rural Development (MARD) reported that Vietnam imported 4,000 metric tons of pork and 80,000-90,000 metric tons of chicken, said the VHA.

Live cattle import also surged to more than 200,000 head from Australia, Cambodia, Laos, Myanmar and Thailand in 2015.

Given the number of free trade agreements that are set to come into effect over the next couple of years, it will be hard to close the floodgates now that the market has opened up, said VHA Chairman Nguyen Dang Van.

Van said last year the country spent more than US$400 million purchasing foreign meats and it all seems very unnecessary and wasteful, given the country’s agricultural advantages.

President Le Ba Lich of the Vietnam Animal Feed Association echoed Van’s view saying the livestock industry must develop an effective strategy to compete with the larger-scale foreign farms.

Currently, Lich said Vietnamese smallholder farmers aren’t equipped either financially or technologically to compete, nor do they have appropriate management techniques to produce the quality of meat of the foreigners.

The unfortunate reality however, is that farmers have been trying for the past decade to develop an effective strategy to compete with their foreign counterparts but have failed— and may never do so.

Vietnam Register warns against purchase of electric cars

Several made-in-China affordable electric cars being advertised on Facebook by Vietnamese sellers have grabbed the attention of local consumers while raising the eyebrows of authorities.

Over the last few days, sellers have posted Facebook advertisements for what they call 'mini electric cars,' appealing to consumers with sleek design and affordable prices.

“There are two types of electric cars: those with handlebars, like scooters, and those with steering wheels, like normal cars,” reads one of the Facebook ads.

The four-seater cars are advertised as being able to travel at up to 100km on a charge, and can accommodate features such as air-conditioners and music systems.

The sellers made no secret that the vehicles are sourced from China, and ask VND33 million (US$1,473) for each of the “customizable electric cars.

A Facebook user, Pham Thu Trang, is selling a “deluxe version” of the electric cars. For VND35 million (US$1,563), half the market price, she says she will deliver an electric car capable of traveling at 45kph.

“The length, width, and height of the cars are 2.3 meters, 1.1 meters and 1.45 meters,” she wrote.

Trang claims that the cars are eligible to travel and consumers only need a normal motorbike driving license to legally operate the vehicle.

“Still, you must get it registered and we will provide all the necessary papers for registration,” the seller said, asserting that her products are “officially imported, not smuggled, so no worries of getting them seized.”

Such electric cars have captured attention from many Facebook users interested in their attractive prices, which are even cheaper than a medium-segment scooter such as Honda Air Blade.

However, such ads are misleading, according to an official from the Vietnam Register, the state agency in charge of vehicle registration.

Legally speaking, four-seater electric cars are treated as any regular automobiles, so they are required to be imported, certified, registered, and get a license plate as per regulations,” Nguyen Huu Tri, deputy head of the Vietnam Register, told VnExpress.

The official added electric cars must have their technical safety and environment standards supervised by the Vietnam Register before being allowed to be imported.

“So far we have received no requests from customs officers to inspect any batches of imported electric cars,” he said.

Thus far, the Vietnam Register has only certified electric cars used for internal travel at resorts and tourist attractions, according to the official.

“Traveling on unregistered and unlicensed electric cars is against the law, so it is highly recommended that people beware of electric vehicles advertised online,” Tri said.

“Such vehicles have dubious origin and their quality and safety are uncertified.”

Vietnam preparing for opportunities and challenges created by TPP

The Trans-Pacific Partnership (TPP) agreement was signed by Vietnam and 11 other Asia-Pacific countries on February 4 in New Zealand after 5 years of negotiations.

Vietnam’s signing of the TPP is part of its effort to integrate into the world economy. Here’s the gist of an article by Prime Minister Nguyen Tan Dung on Vietnam’s preparations for opportunities and challenges the TPP will create.

The TPP encompasses 40% of global GDP and 30% of global trade. This new-generation free trade agreement is expected to be a prototype for higher-level regional and global trade development in a time of rapidly growing production forces and extensive international integration.

Prime Minister Nguyen Tan Dung said the TPP allows comprehensive market access, ensures free movement of goods, services, capital, and technology, creates an equal business environment, and facilitates trade and investment. The TPP will formulate new production and supply chains in the 12 member nations, stimulate growth, create jobs, increase incomes, and improve people’s living conditions.

It also guarantees opportunities for member economies with different levels of development and businesses to benefit. The TPP respects each country’s political institution and recognizes the need to abide by national laws and international commitments.

Prime Minister Dung said that while Vietnam’s economy is not fully developed joining the TPP demonstrates the political will and vision of the Party and state and the strength of the Vietnamese people.

Prime Minister Dung said new-generation FTAs will create momentum for socio-economic growth, particularly in attracting investment and boosting exports to major world markets including the EU, which has a GDP of US$18 trillion.

TPP commitments will help Vietnam develop its market economy, accelerate its restructuring, and change its growth model. Joining the TPP is also a new step in Vietnam’s implementation of its foreign policy in a region with increasing strategic competition.

Prime Minister Dung said Vietnam will face fierce competition at home and abroad at 3 levels: product, business, and nation, particularly in terms of institution and business environment.

If businesses, after reorganization, fail to catch up, they will go bankrupt and their workers will lose their jobs. The agricultural sector and farmers will be the most vulnerable and the gap between rich and poor people will widen if Vietnam’s rapid, sustainable growth strategy is not effective.

TPP implementations requires Vietnam to adjust its legal system to improve its human resources.

Prime Minister Dung called for greater efforts to increase economic competitiveness with businesses improving the competitiveness of their products and services. The state needs to stabilize the macro-economy, develop an appropriate legal and management system to create a transparent business environment to ensure business freedom and fair competition.

Prime Minister Dung said Vietnam needs to continue fine-tuning its institutions and laws to conform to the market economy and FTA commitments politically and economically.

Efforts should be made to establish a state governed by law of the people, by the people, and for the people while accelerating the restructuring of state-owned enterprises and encouraging the development of the private sector.

Property brokering market rampant

The property brokering services market has been going unchecked with uncertified brokers and poor-quality brokerage training programs remaining rampant.

A broker identified as Nam at a real estate exchange in Binh Duong Province yesterday told the Daily that he had yet to obtain a practicing certificate as required by a new Ministry of Construction regulation. The 24-year-old administrative business graduate has been working in the sector for six months but he has spent only two weeks on an intensive brokering course, mainly to learn about the projects distributed by the center.

Hai, a broker at a property exchange in HCMC’s Binh Thanh District, said she was not required to produce a practicing certificate when applying for the job. After just two days of apprenticeship, Hai got a uniform to begin work and is now working at a high-class project in District 2.

As observed by the Daily, brokers on many real estate exchanges in Thu Thiem area in HCMC’s District 2 have no practicing certificates, with some even unaware of the new the Ministry of Construction rule that took effect on Tuesday.

“Brokers ought to find customers and give them advice. They are responsible for preparing contracts with investors. There is no need for them to get certification,” a broker said.

Meanwhile, property broker training courses have mushroomed in HCMC. Most of them are organized in the form of free-admission seminars.

At the end of the seminars, organizers will introduce more training courses lasting two or three days and give sharp tuition discounts to those signing up right away. However, lecturer qualification at those seminars remains questionable.

Doan Chi Thanh, deputy general secretary of the Vietnam Association of Property Brokers, said strict implementation of the Ministry of Construction’s Circular 11/2015/TT-BXD will support sustainable growth in the real estate market with professional brokers.

Under the circular, property brokers who want to get certification must pass a test on laws on real estate trading, property market and investment, anti-money laundering, real estate services, and brokering and relevant skills.

Sanctions should be imposed on those exchanges failing to the meet the certification requirement, Thanh said.

Besides, it takes only two or three months for brokers to study and take a test. Meanwhile, courses lasting just two or three days cannot provide proper knowledge for brokers, Thanh said.

Can Tho agencies urged to aid business

Can Tho City’s new chairman Vo Thanh Thong on February 18 called on the heads of agencies under the city government to schedule meetings with enterprises to look into their woes and thus offer them timely support.

Thong told a conference on the investment environment in the city on February 18 that the top priority of the city is to give investors and enterprises more help, and create favorable conditions for projects to be up and running early.

Local agencies should work harder to increase investment disbursements and expand production in the economic center of the Mekong Delta.

From March, the city chairman will chair monthly meetings to hear problems faced by enterprises.

Firms are encouraged to request a meeting with leaders of the city if their problems come up.

Thong told the directors of the departments of planning-investment, natural resources-environment, construction and taxation in Can Tho and other relevant agencies to meet businesses every Monday.

Departments and district-level authorities were told to collaborate with customs and taxation agencies to give the city government advice on tax, land, import and export matters in sectors like processing industry, agriculture, services and technology, as well as draw up lists of priority projects under their management. Their policy proposals should be sent to the Department of Planning and Investment before March 5.

By the end of 2015, the city had had 388 valid projects with total pledged capital of VND85.35 trillion (US$3.82 billion). They include 68 foreign direct investment (FDI) projects worth over VND20 trillion (US$899 million) and 320 domestic projects capitalized at VND65.3 trillion (US$2.92 billion).

The city now has around 15,340 enterprises with total registered capital of less than VND95.2 trillion (US$4.26 billion). They are active in fields such as manufacturing, trade, services, and import-export.

Ministry to carry out 23 PPP road projects this year

The Ministry of Transport looks set to implement 23 projects worth a combined VND40 trillion (US$1.78 billion) under the public-private partnership (PPP) format in 2016.

About VND39.43 trillion (US$1.76 billion) of the total will be financed by enterprises, according to the PPP project management department under the ministry.

Currently, the ministry manages 80 PPP projects with total capital of of VND223.67 trillion (US$9.99 billion), including 33 completed projects worth VND41.68 trillion (US$1.86 billion) and 47 projects valued at VND182 trillion (US$8.13 billion) underway.

The department is weighing implementing 62 projects. Forty-two of them are road projects with 10 expressways, seven aviation undertakings, six inland waterways, five railways and two maritime ventures.

Selection of investors for the 23 PPP projects planned this year will be finalized soon.

Speaking at a meeting on Wednesday, Deputy Minister of Transport Nguyen Hong Truong told the PPP project management department to announce PPP projects in different sectors planned to get off the ground in 2017 and thereafter to help interested investors make preparations.

To accelerate work on PPP projects, Truong requested investment procedures to be streamlined to pave the way for early implementation of these projects. International tenders will not be necessarily organized for projects which are not funded by official development assistance (ODA) loans.

In 2011-2015, the ministry mobilized VND186.66 trillion (US$8.34 billion) from all sources but the State budget to finance road and bridge projects and most of these projects were executed under the build-operate-transfer (BOT) format. Investors of these BOT projects were allowed to collect tolls to recover investment capital.

The Government’s Decree 15 on PPP investment, which took effect on April 10 last year, approves BOT and build-transfer (BT) as PPP investment format.

Earlier, investors of BOT road projects were required to cover all construction costs and then collect tolls for a certain period to recoup their investment capital. However, Decree 15 permits investors to get part of the total investment from the State and collect tolls for capital recovery.

HCM City leader pledges full support for residents, businesses

Agencies of HCMC will provide full backing for firms and citizens by removing the difficulties they are facing, improving the business environment and further streamlining administrative procedures, the city’s chairman said.

Nguyen Thanh Phong told a review meeting on activities during the Lunar New Year holiday (Tet) on February 18 that the city government would strengthen the monitoring of infrastructure projects, especially long-delayed ones.

He told departments and agencies to reduce red tape which has hindered business activity.

The HCMC government will not let bureaucracy mar the business environment and sanction those officials intentionally making life hard for businesses, he stressed.

The chairman requested departments and agencies to cut down on unnecessary meetings so that they can have more time to do important tasks and work with businesses and citizens to solve their difficulties. He said in case meetings are needed, they should be held in an efficient and time-saving manner.

The departments of planning-investment, finance, natural resources-environment, zoning-architecture and construction must take prompt action to simplify business conditions and assist firms with efficient operation. This is to fuel the city’s economic growth and enhance its competitiveness.   

Phong highlighted the crucial roles of department and agency leaders in realizing the above-mentioned goals, saying that they must be held responsible for any failure to realize socio-economic tasks.

Local agencies will strengthen inspections and fight trade fraud and smuggling of poor quality and counterfeit goods to support domestic production.

Phong told departments, agencies and district authorities to provide adequate, accurate and timely information for media so that citizens can be well informed of Party and State policies.

HCMC sets 12 major targets for 2016, including gross regional domestic product (GRDP) growth of 8%, total factor productivity (TFP)’s contribution to GRDP at a minimum of 35%, investment accounting for 30% of GRDP and trained workers making up 75% of the total workforce.

The city aims to create jobs for 125,000 people, reduce the jobless rate to less than 4.5% and lower the poverty rate by one percentage point.

Vietnam attractive to Italian firms

Vietnam has turned attractive to Italian production enterprises and many of them have plans to relocate their investments from China to this Southeast Asian market to enjoy policy incentives and low labor cost.

Italian companies said labor cost in China has been going up and foreign enterprises no longer get as many incentives as before, Bruna Santarelli, director of the Italian Trade Commission in Vietnam, said at a press conference in HCMC on Wednesday.

More Italian firms know there are better incentives for foreign investors in Vietnam, Santarelli told the press conference on the International Processing and Packaging Exhibition and Conference for Vietnam 2016 (ProPak Vietnam 2016) and Vietnam International plastics and rubber technology and materials exhibition and conference 2016 (Plastics and Rubber Vietnam 2016).

What makes Vietnam attractive to foreign investors is the country’s stronger international integration commitments. The country is considered both an important gateway to Southeast Asia and a strategic location that will create advantages for Italian investors.

In addition, Vietnamese enterprises have higher demand for buying Italian machinery and a number of Italian enterprises are setting up shop in Vietnam, encouraging Italian machine suppliers to eye Vietnam, she said.

BT Tee, deputy chief of Singapore Exhibition Services’ Vietnam representative office, one of the two organizers of the exhibitions, said once enterprises shift their investments to a market, their suppliers will also follow suit. Samsung is a good example of this trend.

Santarelli said most Italian enterprises interested in Vietnam are small and specialize in technology and machinery manufacturing.

Data of the Italian Trade Commission in Vietnam showed Italian enterprises are involved in 67 projects worth 304 million euros (US$337.26 million) in Vietnam.

Most Italian firms in Vietnam are active in manufacturing and processing, footwear, construction, and steel sectors.

Previously, the Japan External Trade Organization (JETRO) in HCMC said most Japanese firms operating in China and Thailand have chosen Vietnam as their next destination for investment expansion or factory relocation owing to low labor cost and and improvements in the investment environment.

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