Vietnam attends economic integration talks in Argentina

A representative from the Vietnam Trade Office in Buenos Aires on May 21 introduced Vietnam’s international economic integration policy and the government’s incentives for foreign investors to a talks held by the Centre for International Commercial and Economic Studies (CEECI).

He also talked about opportunities to invest in Vietnam and trade exchange between Vietnam and Argentina which have witnessed significant progress in recent years.

Two-way trade turnover increased from US$830 million in 2010 to US$1.9 billion in 2014.

Argentina, Brazil and Mexico are 3 Latin American countries which have a bilateral trade value with Vietnam surpassing US$1 billion.

Ambassador Felipe Frydman who had worked in ASEAN countries for several years spoke highly of Vietnam’s economic achievements in the integration process and highlighted ASEAN’s economic and investment cooperative potential.

The talks draw the participation of a large number of businesses, and experts and students on trade and economics.

Similar talks were held by the CEECI with representatives of Russian, Chinese, Ecuadorian, Bolivian and Venezuelan embassies earlier.

Local food showcased in IFEX Philippines

A Vietnamese business delegation is attending the International Food Exhibition (IFEX) Philippines 2015 held in Manila from May 21-24.

Four businesses namely Vinamilk, Trung Nguyen Coffee, Trung Thanh Food and HOGANO are showcasing their products in four pavilions.

ViNa Gourmet Ville – Vietnam’s exclusive distributor of genuine savory food products in the Philippines is also displaying their products in six pavilions.

Vietnamese businesses introduced the Filipino and international visitors to Vietnam’s typical and unique products such as dairy and nutritional products, fruit juice, coffee, processed food including tomato, fish sauce, and supplementary food.

Master Chef Vietnam 2014 Hoang Minh Nhat joined the event and prepared Vietnamese dishes to serve visitors.

After visiting the Vietnamese pavilions, Vietnamese ambassador in the Philippines Truong Trieu Duong affirmed that the Vietnamese embassy in the Philippines will further help Vietnamese businesses survey the Philippine market and taste of local consumers to improve their product quality.

The four-day event was organised by the Philippine Department of Trade and Industry (DTI) to mark APEC 2015 Philippines.

NA asked to pass 2013 budget deficit

The Government requested the National Assembly pass a budget overspending of VND41.26 trillion (US$1.9 billion) on day one of the legislature’s ninth session in Hanoi on May 20.

On behalf of the Government, Minister of Finance Dinh Tien Dung told National Assembly (NA) deputies on May 20 afternoon that the nation’s budget overspending in 2013 swelled to 6.6% of the gross domestic product (GDP), much higher than approved by the NA.

Dung explained that in 2012, the NA issued a resolution approving 2013’s budget deficit of VND162 trillion (US$7.4 billion), or 4.8% of GDP, but then revised up to VND195.5 trillion, or 5.3% of GDP.

However, the State budget overspending amounted to VND236.7 trillion in 2013, or 6.6% of GDP, Dung said.

The higher-than-approved overspending indicates the NA’s budget resolution was not respected.

Explaining the figure, Dung said the nation had to spend an additional VND29.4 trillion as reciprocal capital to have official development assistance (ODA) disbursed and an extra VND13.2 trillion as value added tax rebates induced in 2011.

Of the extra spending on counter capital in ODA projects, nearly VND28.7 trillion went to projects whose construction had to be accelerated such as Cai Mep-Thi Vai International Port, Nhat Tan Bridge and Hanoi-Ha Dong urban railroad. Meanwhile, over VND5.7 trillion disbursed in the previous year must be counted in 2013 as per regulations.

In a review of the State budget in 2013, chairman of the NA Finance-Budget Committee Phung Quoc Hien said the higher-than-approved spending indicated that there was no fiscal discipline.

However, Hien suggested the NA approve the overspending.

Minister Dung said the Government also managed to cut spending from domestic sources by over VND1.3 trillion to over VND41.26 trillion in 2013.

To offset the deficit, Dung said the Government borrowed over VND180 trillion from domestic lenders and external loans of VND56.4 trillion.

Ending 2013, government debt was 42.6% of GDP, foreign debt 37.3% of GDP, and public debt 54.5%. The figures were still within the limits approved by the NA, Dung said.

HVG to buy five million of its own shares

Hung Vuong Joint Stock Company (HVG) announced that it will buy five million of its shares on the market for a maximum VND90 billion (US$4.17 million).

HVG can purchase the shares through a negotiation between sellers and buyers, trading orders, and in large share packages on the HCM Stock Exchange (HSX).

The transaction must be completed within 30 days after it is approved by the State Securities Committee, and HVG is responsible for publishing the information about the transaction on the market.

In the first quarter of this year, HVG's revenue was VND3 trillion ($139 million) and its after-tax profit was VND37 billion ($1.7 million), 16 per cent of this year's revenue and 7.4 per cent of this year's pre-tax profit.

The company said its revenue and after-tax profit in the first quarter decreased when compared with last year's figures as it could not sell products during the New Year and Tet holiday while it still had to pay salaries, interests, and other expenses.

Bad debts decline at Sacombank

The bad debt ratio of Sai Gon Thuong Tin Commercial Joint Stock Bank (Sacombank) fell from 1.46 per cent to 1.19 per cent during the first quarter of this year.

Further, according to the bank's Q1 report, its after-tax profit reached VND637 billion (US$30.33 million), up 3 per cent over the same period last year. Also, net revenues expanded 24 per cent year-on-year at VND1.94 trillion ($92.38 million).

The bank's total asset value reached VND198.74 trillion ($9.46 billion) on March 31, an increase of 5 per cent from the 2014 year-end figure. Also, deposits at the bank grew 5 per cent to VND171.1 trillion ($8.15 billion) and outstanding loans increased 4.7 per cent to nearly VND134 trillion ($6.38 billion).

However, operational costs rose by 11 per cent year-on-year to VND1.10 trillion ($52.38 million), and the provisional value extracted by the bank to support risks was 3.5 times higher in Q1/2015 than that recorded in Q1/2014, reaching VND332 billion ($15.81 million).

Support industry gets strong backing

Thailand's Reed Tradex Co, Japan External Trade Organisation (Jetro) in Ha Noi, and the Ministry of Industry and Trade's Trade Promotion Agency will join hands to strengthen Viet Nam's support industry.

Under a contract signed by the three parties Wednesday, they will cooperate in organising two large-scale exhibitions on the support industry – the Viet Nam Manufacturing Expo 2015 and the sixth Exhibition on Support Industries in Ha Noi 2015, at the International Centre for Exhibition in Ha Noi from September 10-12.

The Viet Nam Manufacturing Expo 2015, which will be hosted by Reed Tradex, will focus on mould making and plastic injection technologies.

Meanwhile, the sixth Exhibition on Support Industries in Ha Noi 2015, co-organised by Vietrade and Jetro Ha Noi, will facilitate the procurement processes of industrial parts and components for automobiles, motorbikes, electronics, metal, plastic products, and packaging materials.

Dong Nai stable market leads export turnover rise

Export turnover in the southern province of Dong Nai has performed well due to market stability and export market expansion, according to the provincial Department of Industry and Trade.

The province's export turnover in May is estimated to reach US$1.1 billion, up 7.3 per cent compared to the same period last year.

Some products are expected to have particularly high export turnover, such as computer spare parts and transport vehicles (34 per cent), electrical products (25 per cent) and cashew nuts (40 per cent).

Major markets including the US, China and Japan are continuing to enjoy high growth of 13.5 per cent, 9.5 per cent and 2 per cent, respectively. Other markets seeing positive growth include the UK, Singapore, Canada, India and Australia.

According to the department's director, Le Van Danh, the province aims to bring home up to $14.6 billion, an increase of 10-12 per cent against the previous year, from exporting local products.

LienVietPostBank announces pre-tax profit in Q1

Lien Viet Post Joint Stock Bank (LienVietPostBank) yesterday announced that its total pre-tax profit rose by 15.2 per cent to VND212 billion (US$9.8 million) in the first quarter of this year.

However, the bank set aside VND98 billion ($4.5 million) from the pre-tax profit for provision to deal with bad debts and financial risks.

Hence, the bank recorded a pre-tax profit of VND115 billion (US$5.3 million) in the first quarter of this year, a decrease of 37.7 per cent over last year.

The bank also reported that it achieved a credit growth rate of 16.2 per cent in the first quarter, with a total outstanding loan of VND48 trillion ($2.2 billion).

The bank reported a total deposit of VND81.3 trillion ($3.76 billion), an increase of 4.5 per cent, while its total assets increased by 2.4 per cent to VND103 trillion ($4.77 billion).

According to the bank, it recorded further losses in some sectors, including foreign currency exchange, with a loss of VND4 billion ($200,000) compared to last year's profit of VND13 billion ($600,000), and securities investment with a profit of VND9 billion, a decrease of 81.6 per cent over last year.

FLC makes bid to buy hospital stake

Property developer FLC Group has proposed the Ministry of Transport to allow it to buy all the shares of the strategic investors of Central Transport Hospital when it undertakes equitisation.

The group, which owns nearly VND4 trillion (US$183.48 million), has pledged to provide the hospital with capital investments in facilities to improve its services. In the healthcare field, the group has invested in and owns 100 per cent shares of Ha Thanh General Hospital in Ha Noi.

FLC group is one of many investors queuing to buy the hospital's shares. They include domestic firms Vingroup and T&T Group as well as foreign investors from Singapore and Malaysia.

Earlier in March, the Transport Ministry submitted the hospital's equitisation plan to the Prime Minister. Under the plan, the hospital will sell a part of State-owned capital contribution and issue bonds to increase its charter capital.

The hospital is worth VND158 billion ($ 7.4 million), which includes 86 per cent of the State capital. After the equitisation, it is expected to have a charter capital of VND168 billion ($7.8 million), equivalent to 16.8 million shares.

In the initial public offering (IPO) launch, the State will hold 30 per cent of charter capital, while the hospital's staff will have 8.7 per cent. As many as 30 per cent will be for strategic investors and the remainder 31.3 per cent will be auctioned in public.

Transport Hospital, which is a 21,200sq.m general hospital at Chua Lang Street, Dong Da District, recently opened a healthcare building on a total investment capital of US$15 million.

The seven-storey building, built on nearly 17,000sq.m, has been equipped with advanced healthcare facilities and 200 beds. It was built on capital from the OPEC Fund for International Development's official development assistance.

The hospital will be the first public healthcare centre in Viet Nam to complete its equitisation. It plans to launch its IPO in September this year.

HCM City mulls highway upgrade

The HCM City People's Committee has instructed the Department of Transport to consider a proposal to upgrade a section of the National Highway No 1 A between the Tan Kien Intersection in Binh Chanh District and the Long An Province border.

The proposal by the Infrastructure Development and Investment Joint Stock Company (IDICO) includes widening of the 8.2km section from 25m to 38.2 m, the same as the section of the highway between the Station 2 Intersection (in Thu Duc District) and Tan Kien.

The section has eight lanes with separators between them, and pavements measuring 3 to 4 metres wide on either side.

IDICO will arrange an estimated VND750 billion (US$34.4 million) for the work, which will be carried out under the BOT (build – operate – transfer) mode, according to Tuoi Tre (Youth) newspaper.

Banks use profits for risk provision

Large-sized commercial banks had to set aside nearly half of their profits for credit risk provision in the first months of the year.

The move had been in accordance with the State Bank of Viet Nam's debt classification regulations.

Circular 02, which came into effect early this year, strictly regulates asset classifications, the levels and methods of risk provisioning, and the use of provisions to handle risks in the operation of credit institutions and the branches of foreign banks.

According to banks' statistics, 10 of them had to use nearly VND7.6 trillion (US$350.23 million) as risk provision funds, accounting for 46 per cent of their pre-provision profits, in the first quarter.

The ratio has been higher than that of the first quarter of last year, when risk provision often accounted for roughly 35 per cent of banks' profits. However, it remained lower than that of the fourth quarter of last year, when banks' risk provision represented 56 per cent of banks' profits.

In Q1 this year, Techcombank was at the top of the list, with about 77 per cent of its pre-provision profits, or VND1.387 trillion ($63.92 million), set aside for risk provision funds. Vietcombank and Vietinbank also used 51 per cent of their pre-provision profits, equal to more than VND1.5 trillion ($69.12 million) for credit risk provision, while the Bank for Investment and Development of Viet Nam (BIDV) roughly used 30 per cent of its VND3.251 trillion ($149.815 million) profits on provision.

The SHB also had to keep VND397 billion as risk provision funds.

Previously, the Tien phong (Vanguard) online newspaper reported estimates by Saigon Securities Inc researchers, which said that domestic banks will have to establish provisional funds, with a total value of about VND37.6 trillion ($1.732 billion), for bad debts this year. The figures were based on bad loan handling situations and current regulations.

It is expected that the funds, which equal nearly half of the pre-provision profits that banks are set to earn in 2015, will help reduce the NPL ratio of the entire banking system from 3.25 per cent in late 2014 to less than 3 per cent by the end of this year.

Iran, Vietnam enhance investment and trade cooperation

Vietnam Ambassador to Iran Nguyen Hong Thach has made a two-day working visit to Esfahan province with the purpose of seeking opportunities for investment cooperation and trade promotion between the two nations’ businesses.

During the visit, Ambassador Thach toured economic and cultural establishments in Esfahan’s Mohammadabad city.

Thach and Mohammadabad Mayor, Mehdi Nasr Esfahani at their meeting informed each other about the potential strengths as well as the cultural identities of their respective nation and agreed to sign a Memorandum of Understanding (MoU) between the Vietnam Embassy in Iran and Mohammadabad City on tourism cooperation and cultural exchange.

On the occasion, the Vietnamese diplomat also discussed economic and tourism cooperation between Vietnam and Iran and the possibility of exploring sailplane services in Esfahan, and visited asphalt production and steel facilities, the petrochemical industrial zone and the biggest Hyper Esfahan trade centre.

Some Esfahan businesses expressed their desire to step up cooperation with their Vietnam counterparts and pledged to finance Vietnam entrepreneurs’ trip to Iran for seeking cooperation opportunities in the time ahead.

JETRO boosts cooperation with Vietnamese enterprises

Japan External Trade Organization (JETRO) has issued a list of the 150 outstanding Vietnamese enterprises with an aim of promoting exports of Vietnamese products to the Japanese market.

The list was released by Hanoi JETRO Chief Representative, Atsuke Kawada at the 6th Vietnam-Japan Exhibition on Supporting Industries which took place on May 20.

Director of Vietnam Trade Promotion Agency (VIETRADE), Bui Huy Son said that the agency and JETRO will cooperate to organise another support industry exhibition from September 10-12.

At the event, 50 Japanese companies will showcase a number of products they want to buy from Vietnamese producers.50 local businesses will have a chance to introduce their quality manufactured goods to Japanese customers.

Son added that the exhibition will act as an opportunity for businesses to find industry partners and promote exchange.

Vietnam food watchdog reassures consumers amid fake rice rumor

The Vietnam Food Administration (VFA), the country’s food safety watchdog, has asked members of the public to settle their nerves as a rumor about fake rice made of plastic is sweeping through several Asian countries.

The VFA is cooperating with relevant forces to verify the information and will notify the public as soon as possible, according to an announcement posted on its website on May 20.

The watchdog also “recommends that people should not panic,” adding consumers should notify local agencies immediately if they find anything abnormal in the rice they eat or sell.

Rice is present in almost every meal of the Vietnamese, and the Southeast Asian country is also one of the world’s largest rice exporters.

A rumor of Chinese-made fake rice has circulated on popular social networks since early this week, according to Singaporean and Malaysian media.

The Vietnamese press also reported the news, thus worrying members of the public and prompting the VFA to reassure them, the food safety watchdog said.

The plastic rice is reportedly made from potatoes or sweet potatoes, with synthetic resin molded into the shape of real rice, according to The Straits Times.

The poisonous fake rice, which is also said to stay hard once cooked, is rumored to have entered many countries such as Singapore, Malaysia, India, Indonesia, and Vietnam, the Singaporean newspaper said on May 19.

Food safety watchdogs in these countries are verifying the news, with Singapore’s Agri-Food & Veterinary Authority asserting that they have so far “not received any feedback on fake rice," according to The Straits Times.

Rumors about fake rice also flew through Vietnam in 2011 and 2012, but authorities later confirmed these were all false, according to the VFA.

Thai firm replaces Swiss company to manage HCM City hotel

Thailand-based Absolute Hotel Services (AHS) has taken over the management role in a five-star hotel under the management of Switzerland-headquartered Mövenpick Holding AG in Ho Chi Minh City.

The takeover was completed with the opening of Eastin Grand Hotel Saigon, formerly known as Mövenpick Hotel Saigon, on Nguyen Van Troi Street, Phu Nhuan District on Wednesday, the hotel said the same day in a press release.

Le Duc Binh, deputy general director of A-1 International Vietnam Corporation, the Vietnamese owner of the hotel, said at the opening ceremony that this is the third time in 21 years that the firm has changed the management group for the property.

The hotel, opening in 1994 as Ho Chi Minh City’s first international hotel, was known as Omni Saigon Hotel and changed its name to Mövenpick Hotel Saigon in July 2008.

“Due to some specific reasons, like other companies owning many popular hotels in Vietnam and around the world, we have appointed a new professional management company to manage our hotel,” Binh said.

“This is a normal move of the owning company for better performance to meet desired results,” he added.

Eastin Grand Hotel Saigon, consisting of 268 well-appointed deluxe rooms and suites, all of which are equipped with modern amenities and provide large conference rooms and a variety of dining options.

With the official opening, the new hotel is now part of the Eastin chain of 61 international hotels and residences covering Thailand, Vietnam, Indonesia, Myanmar, India, and the Middle East.

CPI keeps rising throughout Vietnam

The consumer price index (CPI) for May showed continued growth in Hanoi and HCM City, reported the cities' statistics offices.

The Hanoi Statistics Office announced on May 21 that the capital city's CPI showed a month-on-month increase of 0.12% over April and a year-on-year surge of 0.93%.

The office said the increase was mainly due to a surge in petrol price since May 5 that pushed many commodity prices up, especially transport items, which jumped 1.06% since last month.

Housing, electricity, tap water, fuel and building materials jumped 1.44% in the last month because of the rising price and demand for electricity and tap water in the summer, the office said.

Other goods also showed growth - 0.47% for drink and tobacco; 0.3% for garments, hat and footwear; and 0.28% for cultural, entertainment and tourism services.

Only restaurant and catering services had a price reduction, which was 0.43% compared to April.

In contrast to the CPI, the price of gold in Hanoi continued its decline by 0.13% in the last month and the price of the US dollar went up 0.44%against last month.

The HCM City Statistics Office said the city's CPI only had a slight increase of 0.3% over April.

Goods with price growth included garments, hat and footwear up 0.1%; home appliances up 0.02%; transport services up 1.05%; and cultural, entertainment and tourism services up 0.07%.

Housing, electricity, tap water and fuel jumped 2.18% against last month because of the new electricity rates and increase in demand due to the hot summer weather.

Some goods items reduced in price. Like Hanoi, restaurant and catering services went down 0.06%. Postal and telecom services declined 0.02%, and the other-goods and services group fell 0.04%.

Of note, rice continued its reduction by 0.13% and general food products went down 0.13%.

In HCM City, the price of gold also dropped 0.4%.

Five-star hotel inaugurated in HCM City

The five-star Eastin Grand Hotel Saigon was officially opened on May 20 in Ho Chi Minh City, marking the first presence of the Eastin brand in the city.

The hotel, which has 268 deluxe rooms and suites equipped with modern amenities, provides large conference rooms with precise facilities and dining options.

Eastin Grand Hotel Saigon is part of the Eastin chain of international luxury hotels and residences covering Southeast Asia, India and the Middle East.

As of the end of the first quarter of 2015, HCM City had 99 hotels with a combined 13,100 rooms, according to Savills Vietnam’s statistics.

Four new five-star projects are expected to come on line this year, raising the total stock of this segment by 22 percent.

Ministry works on farm export issues

The Ministry of Industry and Trade has proposed that the Government should establish a working group to resolve difficulties faced by enterprises in consuming and exporting farming and fishery products.

Deputy Minister of Industry and Trade Tran Tuan Anh said the group would have regular meetings with enterprises and associations of the farming and fishery sector to produce timely solutions for difficulties faced by the enterprises as well as for meeting the needs of the market, reported the Nong thon ngay nay (Countrysite Today) newspaper.

The group would ensure efficiency in exporting these products to enable the country to reach its export target for 2015, Anh said.

The trade offices of Vietnam via the group would recognise the difficulties faced by local enterprises in exporting goods to foreign countries and would know exactly what kind of support the enterprises need, he said. The offices would also provide market information to the local enterprises regarding the demand for Vietnamese farming and fishery products.

Tran Thanh Hai, deputy director of the ministry's Export-Import Department, said the group would make note of export problems to resolve them as quickly as possible, including the problem of fruit trucks being held up at border gates and the problem of goods receiving warnings or being returned or seized by import markets for not meeting quality standards.

Pham Vu Ha, General Secretary of the Vietnam Cassava Association, said farming products have stalled at border gates because the farmers and enterprises had no knowledge about the import markets, and the policies on support for enterprises from the production to consumption stages were vague.

Ha fears the group would be unable to resolve many of the more complicated problems in consuming and exporting farming and fishery products because of the numerous challenges involved in exporting those products.

For instance, trade activities at border gates involve customs officers, border police and local authorities along the border, he said.

Nguyen Hoai Nam, Deputy General Secretary of the Vietnam Association of Seafood Exporters and Producers, said if the ministry and trade offices in foreign countries provided precise information about the export market, the problem of farming products being held back at border gates would be resolved.

Economic expert Pham Tat Thang suggested that the group should cooperate with the relevant sectors in managing farming production to meet the market demand.

Vietnamese products showcased in Myanmar

The Vietnam-Myanmar Trade, Service and Tourism Exhibition 2015 (Ho Chi Minh City Expo 2015), organized by HCM City’s Investment and Trade Promotion Centre, opened in Yangon city of Myanmar on May 21, according to Saigon Giai Phong newspaper.

The city’s 80 leading enterprises are displaying a variety of products ranging from processed food, household utensils, garment, textile, electronics, and interior decorations at 125 stands.

A highlight of the fair is a “Common House” introducing achievements in politics, culture and economics of Vietnam and Ho Chi Minh City in particular.

Addressing the opening ceremony, Vice Chairwoman of HCM City People’s Committee Nguyen Thi Hong said the annual expo is an effective bridge connecting Vietnamese enterprises with Myanmar customers, and helps the two countries’ enterprises exchange information and seek new business opportunities and partners.

The exhibition will run until May 26.

Vietnam now ranks eighth among foreign investors in Myanmar with seven projects worth 513 million USD. Two-way trade reached 480 million USD last year and enjoyed an average growth rate of nearly 40 percent between 2010 and 2014.

Trade between the two countries is expected to hit 1.5 billion USD in the next two years and 1.7 billion USD by 2020.

SMEs called to develop e-commerce

It is advisable for small- and medium-sized enterprises (SMEs) to utilise information technology such as e-commerce to increase their competitiveness in the global economic environment.

Businesses should also prepare measures to grab opportunities and cope with challenges posed by new generation free trade agreements (FTAs), trade experts recommended at a workshop on May 20 in the northern province of Hai Phong.

Participants heard about the current situation and development trend of e-commerce in Asia and Vietnam in particular.

They were told that Vietnam could sign a number of bilateral and multilateral free trade agreements with foreign partners in 2015, including the Trans-Pacific Partnership (TPP) agreement, the trade pacts between Vietnam and EU; Vietnam and the Republic Korea; Vietnam and the Customs Union of Belarus, Kazakhstan and Russia .

The low tariff regulated in the deals is expected to help the country to expand trade relations with overseas partners.

Nguyen Van Thoan, a representative from the Vietnam Chamber of Commerce and Industry (VCCI), said sales from e-commerce transactions between businesses and customers in Vietnam topped 2.97 billion USD in 2014.

E-commerce is expected to become an important tool to develop SMEs since it helps connect local businesses with partners and customers around-the-clock and around the world, while cutting marketing costs.

To grab this opportunity, businesses should build and develop their own online brand names.

According to Nguyen Van Hoc, Director of the southern branch of PA, one of Vietnam’s leading domain registration and web hosting companies, the selection of the domain name is the first step to build an online brand name successfully.

Vietnam Airlines moves to join SkyTeam alliance

Vietnam Airlines signed an agreement with SkyTeam on Wednesday in a move to join the global airline alliance, probably next year, enabling the national flag carrier to fly to more markets and provide more benefits to passengers.

Pham Ngoc Minh, general director of Vietnam Airlines, described the agreement the airline signed in Hanoi as important as it was the first step for the carrier to become a full member of SkyTeam, hopefully in 2010.

“The agreement confirms Vietnam Airlines’ position as a major airline in the region and a global reliable partner of SkyTeam in competing with other global airline alliances,” Minh said in a statement.

Minh added Vietnam Airlines would be able to provide passengers with thorough services in accordance with international standards of SkyTeam when the airline became a full member of the world’s second largest airline alliance after STAR Alliance.

Vietnam Airlines said in the statement that it was the only partner airline in Southeast Asia that SkyTeam had chosen to become its member.

Speaking to reporters after the signing on Wednesday, the air carrier’s deputy general director Duong Tri Thanh said joint operations, frequent flyer programs and airport services would be the three areas of most important cooperation among alliance members. Thanh said Vietnam Airlines had considered three air alliances over the past ten years before deciding to apply for SkyTeam membership.

Dominique Patry, chairman of SkyTeam Steering Committee, said Vietnam Airlines would give great support to the flight network of SkyTeam and help expand its presence, especially in Indochina.

“With wide flight coverage and services to more than five gateway airports of SkyTeam, Vietnam Airlines will be a strategic partner of SkyTeam,” said Patry, who is Air France’s vice president for international affairs and alliances.

He told reporters it often took airlines some two years to complete all admission formalities, but “I hope Vietnam Airlines will complete all formalities within 12 months.”

Vietnam Airlines now uses 50 aircraft of different types including Boeing 777s, Airbus A330s, A321s and A320s for its flights to 20 domestic destinations and 24 international destinations.

Despite the global economic turmoil, Vietnam Airlines last year posted a year-on-year revenue increase of 31.32% to more than VND26.6 trillion (over US$1.5 billion), including pre-tax profit of VND240 billion (some US$13.7 million).

The significant pre-tax profit marked a great achievement for Vietnam Airlines as this carrier incurred a loss of VND83 billion (more than US$4.7 million) in the first half of 2008.

Vietnam Airlines is looking to transport nearly 9.5 million passengers on its domestic and international flights this year, as against more than 8.8 million passengers last year.

Minh said earlier this year that 2009 would be a difficult year for the airline industry but the carrier would continue to improve competitiveness and kept following a long-term development strategy to become the second largest airline in the region after Singapore Airlines in the next seven to eight years.

Established nine years ago, SkyTeam now has 10 member airlines and three associate airlines including Air France-KLM, Continental Airlines, China Southern, Korean Air, and Northwest. These carriers with 2,500 airplanes now operate flights to 905 destinations in 169 countries and territories, transporting 462 million passengers a year.

Vietnam’s farm produce to find Japan’s market wide open

Japan will open its market wider for Vietnam’s farm produce from July this year by slashing most tariffs to between 0% and 5% and ease many quantitative restrictions under the Vietnam-Japan Economic Partnership Agreement, officials said.

Speaking at a conference organized here on Tuesday by the Ministry of Industry and Trade and the HCMC government to disseminate information on the agreement, they said a wide range of products would enjoy preferential tariffs, but farm produce will benefit most.

Le Trieu Dung, head of the ASEAN Office of the ministry’s Multilateral Trade Policy Department, said the agreement provides the most preferential tariffs compared to other agreements that Vietnam has signed with other countries. The country is finalizing all procedures for the validity of the agreement, which was signed on December 25 by the two countries, from early July this year, he told some 300 business executives joining the conference.

Trade liberalization between the two countries will be strong for such groups of items as fishery, garment, steel, and electronics, according to the agreement, which specifies that over 7,250 Vietnamese products out of the total 9,100 will enjoy 0% tariff. Shrimps of all types, for example, will see the tariff from between 10% and 15% now slashed to 0%.

Under the agreement, Vietnam pledges to liberalize 87.66% of trade turnover with Japan within ten years while the northeast Asian country will liberalize 94.53% of the trade volume. Almost all the tax rates on Vietnam’s industrial products to Japan will enjoy a low rate of 0-5%.

Dung stressed the greater benefits for Vietnam’s agricultural products.

“Japan will slash 83.8% of tariffs on Vietnam’s farm produce within ten years,” he said, adding that 23 of the 30 farm and aquatic products that have the biggest export turnover to Japan will immediately enjoy a tax rate of 0% within 10 years,” he said.

Some of the farm and aquatic products that are advantageous to Vietnam such as shrimp, crab, bee honey, durian, garlic, ginger, and litchi among others will enjoy sharper tax cuts than the products of other ASEAN countries.

Quantitative restrictions will also be lifted gradually. For example, Japan will reserve an import quota of 100 tons of bee honey for Vietnam’s exporters each year, then raise up to 150 tons annually with a fixed tax rate of 12.8%.

In 2008, Vietnam’s export to Japan generated revenue of some US$8.5 billion, an increase of 37% over the previous year. Japan is the second largest export market for Vietnam after the U.S.

Dao Tran Nhan, deputy director of the ministry’s Department of Asia and Pacific Ocean, told the conference that as a whole, Vietnam’s export products have been accepted in Japan, but with a very modest market share, and the agreement is poised to help change the picture.

Nhan said that the market share for Vietnam’s products in Japan is only some 1.19% of the total import revenue of Japan, while other nearby countries such as Malaysia, Thailand, Indonesia and China are respectively taking market shares of 3.05%, 2.73%, 4.27% and 18.83%.

Nhan predicted some items that Japan will need in large amounts in the coming time include processed foods, fresh vegetables and flowers, household mechanical products and household plastic products.

Australian steel maker launches specialized products

BlueScope Steel Vietnam on Wednesday launched new Clean COLORBOND steel products for manufacturing facilities as well as curved roofs and walls of structures in a move to further tap the local market.

Le Anh Tuan, vice president of the Australian-invested company, said the pre-painted steel products were made with zinc-aluminum coating and anti-fungus performance.

“BlueScope Steel turns out the products in various colors to meet diverse needs of companies for developing industrial facilities including retail and wholesale stores in Vietnam,” Tuan told the Daily before the launch ceremony in HCMC.

He underscored the importance of having new products to provide project developers with more options for construction materials in a time of falling demand due to the impact of the global economic turbulence on the world’s steel industry.

“Vietnam’s steel industry is not an exception,” Tuan said. He quoted sources including the Vietnam Steel Association as saying that steel makers in this market had seen their turnover fall by at least 30% over the past six months.

Earlier this year, the association estimated domestic steel production in the first quarter plunged by 24% year-on-year to 761,000 tons while steel consumption slumped by up to 71% compared to the year earlier period to around 700,000 tons.

“BlueScope Steel Vietnam faces the same difficulties,” Tuan said, pointing out the decline in foreign direct investment (FDI) in the country in recent months as one of the reasons.

The Ministry of Planning and Investment’s figures showed Vietnam drew over US$6 billion in FDI including injected capital in operational projects in the January-March period, down nearly 40% year-on-year.

However, Tuan said BlueScope Steel was optimistic about Vietnam’s steel market as this was a developing market and many investors would return and come to build factories in this market.

“New opportunities come when investors return to Vietnam again as they will need steel, especially the quality products,” Tuan said.

Currently, BlueScope Steel Vietnam turns out pre-painted and zinc-aluminum alloy-coated steel sheets in addition to other steel materials. The company has operated a US$105-million metallic coated and painted rolled steel mill in Phu My 1 Industrial Zone in the southern province of Ba Ria-Vung Tau since November 2005.

The facility includes a 125,000 ton per annum metallic coating line and 50,000 ton per annum paint line.

Banks post stronger loan growth

Banks nationwide had reported credit growth of 3.69% as of May 8 against the end of 2014, much higher than in the same period of previous years.

Data of the Credit Department under the State Bank of Vietnam showed that credit grew a mere 1.31% a year ago, Vietnamplus reports.

Bank loans grew stronger in Hanoi City and HCMC. Total outstanding loans in Hanoi were estimated at VND1,077 trillion (US$49.5 million) as of April, up 6.6% against last December, suggesting that local banks saw an improvement in lending.

Banks in Hanoi had mobilized a total of over VND1,257 trillion (US$57.7 million) as of last month, a year-on-year rise of 5.5%.

Earlier, the central bank’s HCMC branch reported higher credit growth in the city in January-April than the same period of previous years. Bank loans were VND1,120 trillion in the first four months, rising 4.14% against the end of 2014. Loans in Vietnam dong grew 4.5% to VND944 trillion. Medium- and long-term loans inched up 7.6%. Enterprises took out nearly VND31 trillion worth of preferential loans through the city’s bank-business capital program.

In the period, banks in HCMC saw capital mobilization increasing 1.91% to more than VND1,300 trillion in the first four months of this year.

Cao Sy Kiem, chairman of DongABank, said banks have seen lending pressure subsiding this year. DongABank obtained higher credit growth than in previous years, buoyed by a pickup in credit for agriculture, small- and medium-sized enterprises and small traders in HCMC and neighboring provinces.

The National Financial Supervisory Commission said more credit has flowed into priority sectors this year.

Vo Tri Thanh, vice president of the Central Institute for Economic Management (CIEM), said credit growth this year was not too high and still under the central bank’s control.

This year, credit grew higher than in the two previous years, showing clearer signs of an economic recovery, especially in the industrial sector.

Besides, the State Treasury has seen unsuccessful government bond sales in recent months due to low yields as investors projected inflation to bounce back slightly but still within 4-5%.

G-bonds usually have long tenors while commercial banks are interested in terms of less than five years. Therefore, banks have diverted capital from G-bonds to manufacturers, traders and consumers, Thanh said.

Credit demand usually picks up in the second half but the central bank is able to put credit growth under control, he added.

However, the Ministry of Planning and Investment warned that too much capital for the real estate sector would probably heat up the market. Therefore, the central bank and relevant agencies should closely oversee lending to secure healthy credit growth, which is put at 13-15% for this year.

Expressways may be opened to big bikes

The Ministry of Transport has said it will launch a pilot scheme permitting motorcycles with engines of over 175cc to use expressways that have so far been exclusively used by automobiles.

When the plan translates into reality, Hanoi-Lao Cai, HCMC-Long Thanh-Dau Giay and HCMC-Trung Luong expressways would be opened to those motorbikes.

Transport Minister Dinh La Thang gave the nod to the scheme at a meeting in Hanoi on Wednesday. However, it made no mention of when heavy duty motorcycles are allowed on the expressways as the ministry is still working on specific regulations.

Thang explained that as local firms can import heavy duty motorcycles for local sale and more people hold driving licenses for these bikes, qualified riders should be permitted to use the three expressways.  

According to the Directorate for Roads of Vietnam, some Asian nations like China, Japan and South Korea permit heady duty bikes on expressways but set lower speed limits than those for cars. For instance, Japan limits motorcycle speeds at 70-90 kilometers per hour for big bikes.  

The ministry called for riders of such motorcycles to strictly respect regulations for expressways when they travel on the expressways. After the pilot period, the ministry would weigh whether to ask the Government to revise relevant regulations.

Speaking at a seminar in HCMC on May 6, members of heavy duty motorcycles clubs suggested the National Traffic Safety Committee open expressways to big bikes. They said their motorcycles cannot travel at 30-40 kilometers per hour like smaller bikes but if they ride faster than speed limits on normal roads, they would be fined.

Imported CBU auto sales up but lower than in 2009

The sales volume of imported completely built-up (CBU) autos has grown faster than that of locally-assembled autos since last year but their share of the total car sales is still lower than in 2009.

Jesus Metelo Arias, vice chairman of the Vietnam Automobile Manufacturers’ Association (VAMA) and managing director of Ford Vietnam, said auto sales in 2009 reached a record high of around 180,000 units with imports accounting for 29%. Meanwhile, he added, the current percentage of imported autos in the total sales is 25-26%.  

However, the domestic auto market has plunged steadily since 2009, so consumption of CBU autos has also dropped with their proportion falling to 16-17%.

Arias said CBU auto sales would depend on Government policies for the industry. He added many domestic assemblers have shifted to importing cars as locally assembled versions cannot compete with those manufactured in regional countries like pick-up trucks made in Thailand.

Ford Vietnam now imports Ranger pick-up trucks and assembles Transit, Everest and EcoSport as these models still sell well on the domestic market.

Vietnam’s auto industry development strategy until 2025 with a vision towards 2035 came out long ago but specific policies to prop up the market have not been introduced.

Carmakers are waiting for such policies to decide whether to continue assembling or shift to importing cars from regional markets. This will affect the volume of CBU auto sales in the coming time.

Vietnam has committed to slashing import duties on autos from ASEAN countries to 0% in 2018 from the current 50%. Therefore, local auto firms will find it hard to compete with cars made in Thailand and Indonesia in terms of prices.

According to VAMA, 157,810 units were delivered to customers last year and domestically assembled vehicles made up 133,588 units of the total. Nevertheless, sales of vehicles manufactured in Vietnam picked up 32% while imported autos jumped 83% against the previous year.

Besides, 18,178 autos were sold last month, up 60% year-on-year, including 13,980 domestically assembled units, up 9%, and nearly 4,200 units imported, up 19%.

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