National power plan falls behind schedule

Fears that the Government would miss its target of universal electricity coverage by 2020 are growing, as more than 500,000 rural households continue to live without light, according to the Ministry of Industry and Trade (MoIT).

A Government plan being carried out by MoIT and Electricity of Viet Nam Group (EVN) aims to bring electricity to all corners of the country, from mountainous areas to isolated islands, within the next five years. It also aims to provide that electricity at an across-the-board regulated price, which has proved difficult.

But in reality rural areas have two options for buying electricity. Residents can either purchase it directly from EVN, the national electricity provider, or from third parties – local electricity co-operatives. The co-operative build grids in the regions themselves and distribute power to consumers – generally at higher prices than the Government's.

To standardise prices EVN needs buy up the co-operatives' local power grids. But more than 20 per cent of the country's co-operatives – 2,000 – didn't properly record their investments, making it difficult for EVN to take over their properties, Industry and Trade Minister Vu Huy Hoang told the National Assembly that the co-operatives.

"The MoIT and Ministry of Finance are working together to find solutions, both on clearance for transitioning control over the grid and minimising the co-operatives' losses at the same time," Hoang said.

However, most rural grids were decaying, and even posing a safety hazard in some areas.

A majority of the VND30 trillion (US$1.4 billion) set aside for the national power coverage goal will be spent on local grid maintenance.

June CPI picks up in major cities

Hanoi’s consumer price index (CPI), an indicator of inflation growth in the city, grew by 0.13% in June from the previous month and 0.98% against the same month last year, buoyed by the increase in petrol prices.

Triggered by the petrol price adjustment on May 20, the price bracket saw the sharpest rise in transportation, soaring 3.58% from May.

Meanwhile, price decreases were seen in food and restaurants (0.43%), thanks to the abundant supply of food and farm produce.

Slight surges were seen in garments, footwear and hats (0.14%); housing, electricity, water, fuel, and building materials (0.06%); home appliances (0.1%); beverages and tobacco (0.49%); medicine and healthcare services (0.05%); culture, entertainment and tourism (0.17%); and other commodities (0.1%).

Prices in post-communication and education sectors remained unchanged.

Last month, the Hanoi Statistics Office announced that the capital city's CPI showed a month-on-month increase of 0.12% from April and a year-on-year surge of 0.93%.

The office said the increase was mainly due to a surge in petrol prices since May 5 that pushed a number of commodity prices up, especially transport prices, which jumped 1.06% from April.

Meanwhile, the HCM City Statistics Office also reported 0.62 % growth in the city's CPI for June and a year-on-year increase of 0.78 %.

The rise was attributed to the impact of strong increases in the transport and pharmaceutical-healthcare sectors. Of this, transport rose 3.94 % over May due to the petrol price adjustment.

Surges in the city this month include pharmaceuticals and healthcare (3.98 %), transport 3.94 %, food and catering service 0.32 % , drink and tobacco (0.12 %), garment and footwear (0.03 %) and household appliances (0.01 %) and culture and entertainment (0.39 %).

Bank guarantees for property meant to safeguard buyers

A regulation ordering bank guarantees to become mandatory for property purchases, which was to be completed in the future, has caused mixed concerns among property developers and buyers.

Following Article 56 of the Law on Real Estate Business, to take effect on July 1, property developers, before selling or leasing unfinished or future property, must obtain guarantees from eligible commercial banks as assurances of their financial obligations to buyers.

Accordingly, in case property developers fail to hand over apartments to buyers following commitments, banks would be responsible for returning the buyers' money, in line with signed contracts.

The regulation was expected to protect the rights of home buyers, as well as contributing towards cleaning up the realty market.

According to Nguyen Manh Ha, Director of Housing and Real Estate Market Management Department, this would eliminate risks for home buyers, as their money would be guaranteed by banks, which would strengthen overall buyers' confidence.

Further economic expert Nguyen Tri Hieu said the regulation would stimulate home purchases and improve liquidity in the real estate market. Financial disputes arising when property developers failed to complete their obligations were also expected to be reduced.

Huynh Trung Minh from HDBank was quoted by Tri Thuc Tre (Young Intellectual) online newspaper as saying that bank guarantees reflected that the project met certain standards and development potentials. Therefore, home buyers could feel secure when spending money on guaranteed projects.

However, there were concerns that the regulation would increase property prices and cause disadvantages to small developers.

According to Le Hoang Chau, president of HCM City Real Estate Association, guarantee fees might be a factor to be calculated in property prices, which would push up selling prices.

Thus, it would be unreasonable to apply the regulation to all property developers, as guarantees for projects of prestige developers were, in fact, not necessary, Chau said. He added that, instead, buyers should be allowed to request a guarantee if they found it necessary.

While the regulation was expected to eliminate incompetent property developers and enhance market transparency, Nguyen Van Duc, the association's deputy president, worried that this regulation might burden small developers who could need to purchase less favourable guarantee fees, in comparison to large firms, or might face difficulties in negotiating with banks for guarantees.

Further, some voiced concerns that this would undermine their competitiveness and even force them to leave the market.

However, no guarantee fees have been disclosed, as the fees should be competitive, several banks said.

While several developers were taking pioneering steps in signing agreements with commercial banks to guarantee their property projects, others remained confused with the regulation, claiming detailed instructions about guarantee procedures were urgently needed.

To date, no decree or circular outlining the implementation of the regulation have been issued.

Most recently, Sacomreal signed agreements with OCB, ACB and HDBank to guarantee all of its projects. Previously, Novaland signed with VPBank to provide guarantees for its four projects and Thao Dien Company signed with Techcombank to guarantee its Masteri Thao Dien project in HCM City.

Meanwhile, a representative from a property company said he remained unclear about guarantee procedures due to the lack of instructions.

Doan Chi Thanh, general director of Hoang Anh Sai Gon Company, said detailed instructions were urgently needed, as there were only two weeks left before the regulation was to be enacted.

Ministry seeks ODA for social housing plans

The construction ministry has proposed to the government to consider the pilot use of official development assistance (ODA) in social housing projects.

Deputy Minister Pham Hong Ha was quoted by vietnamplus.vn as saying that the construction ministry had sent a document to the planning and investment ministry at the end of last year, suggesting for the pilot use of ODA from Korea International Co-operation Agency (Koica) in developing social housing projects in major provinces and cities.

However, the document did not receive the planning and investment ministry's approval as social housing development was not listed as a prioritised sector for the use of ODA.

The construction ministry and a Korean housing company had jointly prepared a project proposal on developing a pilot model for investment in social housing projects that were proposed to receive finance from Koica.

The project aimed to prepare a master plan for social housing development, an investment model and appropriate housing designs to ensure adequate supply of accommodation for low-income earners by 2020.

In October last year, the construction ministry reportedly received Koica's decision that said the project proposal would be considered for financing from Koica in the 2016 fiscal year, the online newspaper said.

Therefore, the construction ministry proposed the project should be put in the list of projects requiring ODA from Korea for Viet Nam.

According to the construction ministry, social housing projects should be included in the list of prioritised sectors for financing from ODA, in line with established regulations, specifically the Law on Housing and the Decree 38/2013/ND-CP about the management and use of ODA.

Construction Minister Trinh Dinh Dung recently said social housing development required efforts to be taken by the government, developers as well as residents, especially credit and capital support by the government.

Dung said social housing projects were a long-term programme and Viet Nam was only in the first stage of social housing development. He said great efforts were needed to meet the huge demand for social housing projects in the country.

Statistics showed that the country needed about 700,000 social apartments during the 2012-15 period, and another 200,000 would be needed by 2020, with Ha Noi, HCM City, Da Nang and Dong Nai, as well as Binh Duong likely to see high demand.

State Treasury issues bills to raise funds

The State Treasury has put up for sale VND6 trillion (US$275 million) worth of treasury bills this week and plans another auction for VND6 trillion next week to raise funds for the central State budget.

The treasury bills aim to improve budget collections for the State budget while demand for government bond sales has dwindled since late last year given impacts of the National Assembly’s Resolution 78 and the central bank’s Circular 36.

On Monday, the agency held a bidding for VND6 trillion worth of short-term treasury bills, including VND3 trillion for a 13-week tenor and VND3 trillion for a 26-week tenor.

The bills were registered at the Vietnam Securities Depository and listed on the Hanoi Stock Exchange. The principle will be paid to investors upon maturity.

Banks and financial organizations snapped up roughly half of the volume put up for sale with annual winning coupons of 4% for the 13-week tenor and 4.8% for the 26-week term.

The issue showed the Finance Ministry’s effort to finance the State budget deficit.

Up to now, the State Treasury has fulfilled less than one-third of this year’s mobilization target of VND250 trillion (US$11.47 billion). Some G-bond auctions even failed to attract buyers.

The State Treasury has strongly raised bond yields for all tenors from five to 15 years. However, some foreign financial organizations have kept offloading G-bonds to reduce their holding ratios as per Circular 36.

Article 17 of the circular regulates the highest ratios of 15% for commercial banks with the majority State ownership, 35% for commercial joint stock banks, joint venture banks and wholly foreign-invested banks, 15% for branches of foreign banks and 5% for non-banking credit institutions.

Furthermore, Resolution 78 stipulates that the State Treasury can issue bonds only with tenors of five years or longer.

Philippines may buy more rice from Vietnam

The Philippines’ National Food Authority (NFA) is expected to import an additional 100,000 tons of 25% broken rice from Vietnam at a price of US$416 per ton.

The director of a big rice export enterprise in the Mekong Delta region told the Daily that the NFA rejected the bids of Vietnam, Thailand and Cambodia at a rice tender on Tuesday as they were higher than the agency’s expected price of US$408.14 a ton.

He said the NFA then decided to allow the three nations to offer new bids but Thailand quit as the price of US$408.14 a ton was too low. Vietnam offered to sell 100,000 tons at US$416 per ton, down US$1 against the previous bid while Cambodia lowered its bid to US$455.5 a ton for a batch of only 50,000 tons, down US$8.5 per ton compared to the bid at the tender on Tuesday.

Though Vietnam’s new bid of US$416 a ton is still higher than the NFA’s planned price, the agency may decide to buy rice from Vietnam.

The Philippines has imported 650,000 tons of rice under government-to-government contracts in the year to date, including 450,000 tons from Vietnam and 200,000 tons from Thailand.

HCM City determined to accelerate old apartment building reconstructions

The government of HCMC has shown a strong determination to put reconstruction of old apartment buildings on fast track as the process has been moving slowly in the past years.

Nguyen Van Danh, deputy director of the HCMC Department of Construction, told a meeting on deteriorating condo buildings in the city on June 18 that the city targeted to replace old apartment buildings with total floor space of 445,000 square meters in 2011-2015 but only 60% of the target has been realized.

Danh attributed this to the stagnation in previous years of the property market, a lack of State funding for inspections and assessments at the buildings and limited land for resettlement areas.

Competent agencies have been able to assess only 40 out of the 178 old apartment structures subject to checks in the city.

Danh said the city has 1,244 apartment buildings, including 533 with a total of 50,460 units built before 1975.

The city plans to demolish deteriorating condo buildings with combined floor space of 120,000 square meters and construct 180,000 square meters to replace the old buildings in 2016-2020. Priority will be given to the buildings whose quality is less than half the standard and those classified as extremely dangerous.

The old buildings to be reconstructed include Co Giang in District 1; the buildings on the corner of Nguyen Dinh Chieu and Pasteur streets and 11 Vo Van Tan Street in District 3 and 6bis Nguyen Tat Thanh Street in District 4; Truc Giang in District 4, Tan Da-Ham Tu in District 5, Ngo Gia Tu and An Quang in District 10.

Speaking at the meeting, HCMC vice chairman Nguyen Huu Tin told the Department of Construction to propose incentives to attract investors to reconstruct old apartment buildings and urban embellishment projects in the city.

The department was assigned to suggest a list of old apartment buildings in Thanh Da in Binh Thanh District and District 10 and those urgently needing reconstruction. The agency should find effective measures to prevent investors from selling projects before these structures are built and completed.

Vietnam’s tuna exports to Russia see 218.4% growth in four months

Vietnam’s tuna exports to Russia boasted strong growth in the first four months of 2015 as export value reached US$1.65 million, up 218.4% year-on-year, according to the General Department of Vietnam Customs.

Frozen tuna loins (HS0304) remained the most exported product with a value of US$1.58 million, accounting for 95% of the total turnover.

Vietnam also began exporting fresh chilled tuna to Russia this year achieving a four-month export value of US$66,700

From a small import market in 2014, Russia has become the ninth largest importer of Vietnamese tuna in early 2015.

The free trade agreement (FTA) signed with the Eurasian Economic Union on May 29, with an import tariff pledge of 0% for all imported seafood items, will open up numerous opportunities for Vietnamese seafood to enter this market, including Russia.

Besides Russia, Vietnam also saw growth in its tuna exports to the US (US$58.2 million, up 3.3%), ASEAN (US$10.06 million, up 13.8%) and Mexico (US$3 million, up 91.7%).

As shown in statistics from the International Trade Centre, Vietnam was the third largest tuna exporter to Russia in the first quarter of 2015, behind Thailand and China.

Impacts of FTAs on state budget collection discussed

A workshop assessing the impacts of free trade agreements (FTAs) on State budget revenues was organised in Hanoi on June 19 by the National Institute for Finance (NIF) and the US Agency for International Development (USAID).

According to NIF Deputy Director Truong Ba Tuan, the USAID and NIF have been working together in the Vietnam Governance for Inclusive Growth (GIG) project to establish a set of assessment tools for FTA impacts on key sectors as well as state budget collection.

The workshop would provide a platform for attendees to discuss methodologies for assessing the potential impacts of FTAs, such as the Trans-Pacific Partnership (TTP), on state budget, he noted.

Prof. Inkyo Cheong from Inha University in the Republic of Korea (RoK) said that the analysis of the TPP impacts on state budget is very complicated, requiring evaluation of all components of the TPP.

NIF Director Nguyen Duc Thanh believed that Vietnam joining FTAs might reduce direct tax collection from import-export activities, however economic growth fueled by the FTAs would benefit state budget in return.

As the private sector, including the SMEs, is the key driver of economic growth, there should be reform of administrative institutions and favourable business climate for them to develop, the director added.

Integration has double-edged effect on domestic production, requiring efforts of not only the government but also the entrepreneurs. Domestic firms need to actively look for information on the FTAs and its impacts on the market.

Vietnam is seeking to conclude the TPP with eleven other countries which is expected to fuel the country’s economy by reducing trade barriers, boosting exports and increasing employment opportunities for its citizens

Oversea remittances forecast to further flow in real estate market

Oversea remittances to Vietnam have run into real estate market since last year, which is expected to continue increasing because of recovery signs in this market and the revised Housing Law, which will take effect in July to permit foreigners to buy houses in Vietnam.

Le My Hoa from District 10 said that her husband was working in China and transferred home about US$30,000 a year. Because the Vietnamese dong interest rate has dropped low for the last two years, she decided to withdraw her VND1 billion deposit to buy a 200 square meter land in Cu Chi District.

Director of an oversea remittance company in HCMC said that the remittances have more and more been invested in properties for the last two years because of low reward interest rates for both U.S. dollar and Vietnamese dong.

The revised Housing Law will further property investment if relevant procedures are transparent, he added.

The State Bank of Vietnam in HCMC reported that oversea remittances to the city reached US$1.7 billion as of May, up 18 percent over the same period last year and accounting for 35 percent of the whole year’s number.

Remittances to Vietnam have mainly come from Europe and the US.

Positive signs in the world economy and the warming real estate market are expected to increase Vietnam’s remittances to US$5.3 billion this year, it forecast.

The bank deputy director Nguyen Hoang Minh said that the ratio of remittances invested in the real estate market was forecast to hike 23-24 percent in 2015. It was 21.2 percent last year.

6,600 apartments from seven new and 13 already existed projects have been offered for sale in the first quarter this year, a quarter on quarter increase of 40 percent and year on year hike of 137 percent, according to the real estate service provider Savills Company. That was the highest quarterly increase since 2011.

The latest report from the Ministry of Construction showed that the number of successful transactions grew well, mainly in small and medium apartment segment and on-schedule projects.

It totaled 5,850 in the first four months this year, up 2.5 times over a year ago. April alone recorded 1,600 successful transactions, up 10 percent over March.

Banks have step up lending, the number of projects has more and more increased, and the volume of capital invested in the real estate market has been on the rise. These together with the remittance flow are feared to signal a property bubble.

Therefore, Prime Minister Nguyen Tan Dung has asked authorized agencies to control over the condition and prevent the bubble in the real estate market.

Fair trade certification enables exporters to expand markets

Receiving fair trade certifications would give a big advantage to Vietnamese exporters of tea, coffee, cacao, spices and handicrafts in expanding their market, as heard at a recent workshop in Hanoi.

Fair trade certifications simplify business activities since they focuses on controlling the production process rather than checking the quality of products separately. Its registration fee is also less expensive than that of other certifications, said Director of the Vietnam Rural Industries Research and Development Institute Nguyen Bao Thoa.

A report on the potential of fair trade in the aforementioned commodities indicates that more than 95 percent of the products were sold through exports. The markets are expected to expand due to advantageous natural conditions, labour and material resources.

Under the EU-funded fair trade promotion project in Vietnam, enterprises will receive support to build business plans for the EU market and register for fair trade certifications. Participants will also receive training and have opportunities to join domestic and international trade fairs.

Nguyen Thu Thao, a representative from the Vietnam Handicraft Exporters Association, said all handicraft firms with certified fair trade standards in Vietnam could join exports at different scales. The sector’s export turnover reaches nearly 3 million USD per year and more than 65 percent of importers are fair trade customers, mainly the US, Europe, Japan, Australia and South America.

However, according to Nguyen Thi Hong Minh, an expert in fair trade promotion projects, only a few businesses have received fair trade certifications so far: five from the handicraft sector, 11 from coffee, three from tea and none of the spices and cacao firms have earned the label.

Additionally, the connection between fair trade recipients is weak, she noted, suggesting businesses set up a fair trade network at home and the State promote fair trade in promotion activities.

International conference talks incentives for industrial development

Senior officials and international experts gathered at a conference in Hanoi on June 20 to seeks ways for effective industrial development in Vietnam.

Addressing the event, Deputy Prime Minister Hoang Trung Hai stressed the need for accurately identifying opportunities and challenges in order to devise suitable policies for the success of the National Strategy for Industrial Development through 2020.

He pointed to the two-digit growth rate recorded for many years by the industrial sector and positive changes in the sector’s structure, including the increasing proportion of manufacturing and processing in the total industrial value and the expansion of the non-State and foreign-invested economic sectors. The industrial sector has become able to meet the supply of essential products for other production sectors as well as for consumption, thus enhancing the economy’s self sufficiency, the Deputy PM said.

At the same time, he highlighted the existing weaknesses, particularly the low added value of products and the dependence on extensive growth. The support industry is under developed, while industrial development planning is of low quality, lacking a national vision.

In particular, productivity and labour skill are low compared to many regional countries, the Deputy PM said, adding that only a small proportion of workers have good technical skills while the majority only received short-term training.

Furthermore, technologies in use in the country are mostly outdated even compared to those used in regional countries, according to the government leader.

He said therefore, the country faces great challenges in realising its goal of become an industrialized economy by 2020.

Outlining the directions for industrial development policies, the Deputy PM said they should include incentives for small- and medium-sized enterprises, as well as support industry.

Other focuses include training skills for both managerial staff and workers in tandem with improving infrastructure facilities to draw international investment, he added.

Deputy PM Hai also emphasized the protection of intellectual property, saying that it will help raise the creativity and the development of science and technology in the industrial sector.

Meanwhile, Head of the Committee Vuong Dinh Hue stressed the need for developing a roadmap for developing the national industry with medium- and long-term visions.

He also suggested incentives be devised for industries of fundamental and strategic significance for fast and sustainable economic growth which will help enhance the economy’s self sufficiency as well as its role in the global production and distribution network.

Echoing Hue’s opinion about focusing on key sectors, World Bank Country Director for Vietnam Victoria Kwakwa called for stronger shift to productivity-based growth.

She also urged the Government to further promote the private sector, saying that without a strong and dynamic private sector, the industrialisation process will be slow. The World Bank is willing to assist Vietnam in developing the sector, she said.

HCM City talks tax, customs-related hindrances with firms

State agencies of Ho Chi Minh City talked face to face with representatives of locally-based foreign invested companies on June 19 with a view to address obstacles relating to new tax and customs regulations.

A recent survey conducted by the Hepza Business Association show that the business community supports the application of e-customs which has brought about practical benefits, including shortened time for customs procedure and goods clearance.

Association Chairman Nguyen Van Be said however, companies still reported difficulties when working directly with customs officers. While the most time-consuming steps are verifying dossiers and considering the rate of goods to be checked, certain difficulties still exist due to lax coordination among customs sub-departments.

Dinh Ngoc Thang, Deputy Director of the municipal Customs Department, explained some new customs regulations and said businesses should actively update related policy changes in order to save procedure handling time.

Nguyen Duc Khanh, an officer of the department, said errors in e-customs systems are inevitable during the transition from the old system to the new one.

The sector will use old methods in case the new system encounters errors so as to ensure goods clearance, he added.

Regarding tax reform, Deputy Director of the municipal Taxation Department Tran Thi Le Nga said her sector plans to continue reducing the required time to deal with tax procedures by 45 hours by the end of this year, compared to 2014.

She noted the Taxation Department will also increase dialogues with businesses to timely tackle hindrances facing them.

The dialogue on June 19 was held by the HCM City Investment and Trade Promotion Centre, the Taxation and Customs Departments, and the HCM City Export Processing and Industrial Zones Authority (Hepza).

Vietnam – ideal destination for Cyprus businesses: ambassador

Vietnam is an ideal destination for Cyprus enterprises, with great opportunities to be opened up with the signing of the Vietnam-EU free trade agreement, stated Vietnamese Ambassador to Italy and Cyprus Nguyen Hoang Long during a Vietnam-Cyprus business forum on June 19.

Addressing a crowd of Cyprus business executives at the forum, the ambassador noted that besides the FTA with the EU, Vietnam has signed a number of free trade agreements with partners and is negotiating for similar deals with other countries and regions.

The scheduled formation of the ASEAN Community of which Vietnam is a member is also a favourable condition for Cyprus businesses to invest in Vietnam and expand operation to regional markets, according to the ambassador.

During the forum, participants also shared ideas on how to make it easier for enterprises of both sides to meet and connect.

The same day, Ambassador Nguyen Hoang Long had a meeting with Cyprus Foreign Minister Ioannis Kasoulides, who spoke highly of efforts that the Vietnamese Embassy as well as Ambassador Long have made to boost the bilateral friendship and cooperation between the two countries.

Vietnam and Cyprus set up diplomatic relations on December 1, 1975. Currently, around 12,000 Vietnamese expatriates live in Cyprus.

New business council to boost Vietnam-West Australia trade

The West Australia - Vietnam Business Council (WAVBC) made it debut in Perth on June 18, aiming to provide information for enterprises of both sides and support their exchanges and promotion of business and investment ties.

Addressing the event, Vietnamese Consul General in West Australia Le Viet Duyen highlighted the significance of the council in the context of the growing partnership between the two countries, with two-way trade surging by 227 percent in the past two years and reaching 1.185 billion AUD (approximately 921 million USD) in 2014.

He said he hopes the council will help build stronger connections among businesses, further fostering economic and trade ties between the two countries.

On the occasion, the diplomat also introduced to Australian firms Vietnam ’s lychee, a new product entering the Australian market recently.

Meanwhile, Deputy Premier and Minister of Health and Tourism of West Australia Kim Hames said he is delight at the impressive trade growth between Vietnam and West Australia .

He expressed belief that with the support of the WAVBC, trade partnership between the two sides will be further bolstered in the future.

WAVBC Chairman Graeme Sheard said the council will build an operation plan and set up regular links between enterprises of both sides, while acting as a bridge for the enhancement of the growing trade ties between Vietnam and West Australia .

In his greeting letter, West Australia Premier Colin Barnett highly values the role that the council plays, saying that he believes that the formation of the council is a milestone in the development of partnership between West Australia and Vietnam.

Both West Australian and Vietnamese firms at the launching ceremony showed their delight that the new council will serve as an information centre and a venue for them to enhance their connectivity and partnership.

They pledged to help the council expand its network in both Vietnam and West Australia.

Clarity key to industrial success

The success of Viet Nam's industrial development strategy depends on accurate identification of opportunities and challenges, Deputy Prime Minister Hoang Trung Hai said on Saturday.

Addressing a conference seeking ways to effectively promote industrial development in the country, he highlighted several impressive achievements to date.

He said the sector had maintained a two-digit growth rate for several years and effected positive structural changes, including a higher proportion of manufacturing and processing in industrial value and larger roles played by non-State firms including foreign investors.

The sector had developed the capacity to supply essential products for other production sectors as well as for consumption, making the economy more self-sufficient, the Deputy PM said.

He also spoke of persisting weaknesses, particularly low value additions to many products, an underdeveloped supporting industry, low quality planning and the lack of a national vision.

Productivity and labour skills were low compared to many regional countries, the Deputy PM said, noting that only a small proportion of workers had good technical skills, the majority being recipients of short-term training.

Furthermore, technologies used in the country were mostly outdated, even compared to countries in the Southeast Asian region.

These factors constituted major obstacles to realising the goal of becoming an industrialised economy by 2020, Hai said.

Outlining possible solutions, the Deputy PM said policy incentives were needed for development of both small and medium-sized enterprises (SMEs) and the supporting industry.

He stressed the need for quality training for both managerial and technical staff alongside improving infrastructure facilities in order to attract foreign investment.

Better protection of intellectual property would boost creativity as well as application of scientific and technological advances in the industrial sector, Hai said.

Finance Minister Vuong Dinh Hue, who also heads the Party Central Committee's Economic Commission, said a development roadmap based on medium and long-term visions would effectively promote the sector's growth.

He suggested that special incentives are devised for industries of fundamental and strategic significance. He felt that this would not only enable rapid, sustainable economic growth and greater self-sufficiency, but also enhance the national economy's role in the global production and distribution network.

Echoing Hue's opinion about focusing on key sectors, World Bank Country Director for Viet Nam Victoria Kwakwa called for a stronger shift to productivity-based growth.

She urged the Government to further promote the private sector, saying that without a strong and dynamic private sector, the industrialisation process would be slow.

The Ha Noi conference, which sought to devise suitable policies for the success of the National Strategy for Industrial Development through 2020, attracted the participation of many senior officials and international experts.

VN firms urged to tap fair trade potential

Fair trade certification would give Vietnamese exporters of tea, coffee, cacao, spices and handicrafts a huge advantage in expanding their market, but enterprises that qualify are far too few, experts say.

The lack of a national policy on fair trade development meant that such practices were still sporadic and disjointed with very weak links between sellers and buyers, and even between fair trade firms, Nguyen Thi Hong Minh, a lecturer at the National Economics University, said at a workshop held in Ha Noi last week.

Other experts noted that there were just five enterprises and production facilities in handicrafts that had received the Fair Trade certification, while the coffee industry had 11 units and the tea industry, two units. There were no firms or facilities in the cocoa and spices industries that qualify for the special certification.

Awareness of fair trade practices was different in each industry, Minh said.

A recent study found that 80 per cent of enterprises in the coffee industry were aware of free trade certification, 75 per cent in the handicraft industry, 56 per cent in the cacao industry, 54 per cent in spices, and 27 per cent in the tea industry.

Demand for fair trade products in the domestic market was also very low, with just 24 per cent of consumers aware of the certificate, Minh said.

The market for fair trade products was mainly outside the country, and while its scale is narrower than non-fair-trade products, it was growing rapidly, she added.

She said fair trade was good for sustainable development of tea, coffee, cocoa, spice and handicraft industries, as also assuring benefits for vulnerable producers, she said. Boosting this practice would take a concerted effort by all stakeholders including producers, enterprises, buyers, and policy makers, she recommended.

Fair Trade is an international movement that seeks to establish and develop a global trading system based on the principles of equality in production and business and respect for a sustainable living environment.

It has been accepted worldwide for nearly 70 years, and with consumers more and more concerned about the origins of goods and the conditions in which they are produced, the trend to choose fair trade products is only likely to rise.

The workshop was held to announce the report on the assessment of Fair Trade development potentials in Viet Nam's tea, coffee, cocoa, spice and handicraft industries.

The report is a part of the project to promote fair trade in Viet Nam. It was funded by the European Union and jointly compiled by the Viet Nam Rural Industries Research and Development Institute (VIRI), the Viet Nam Tea Association, Viet Nam Coffee and Cocoa Association, and the Viet Nam Handicraft Exporters Association (Vietcraft).

Binh Duong posts $1.1b trade surplus

The southern province of Binh Duong recorded a trade surplus of approximately US$1.1 billion in the first six months of this year, according to the provincial Statistics Office.

During the reviewed period, the province gained more than $8.5 billion from exports, up 16.6 per cent against the same period last year, with $7.2 billion contributed by the foreign-invested sector and $1.5 billion by the domestically invested sector.

Among its major exports, wooden furniture raked in $1.7 billion in exports, a year-on-year rise of 15.4 per cent and accounting for 12.6 per cent of the provincial total export turnover, while garment exports experienced a yearly increase of 11.2 per cent to $904 million, fuelled by the positive influences of free trade deals signed with South Korea and the Eurasian Economic Union (EEU).

Export revenue growth was also recorded in footwear ($741 million, up 16.4 per cent) and ceramic products (nearly $51 million, up 6.6 per cent).

During the January-June period, the province's imports topped $7.4 billion, surging 16.9 per cent from the same period in 2014. Of the amount, nearly $6 billion was spent on the imports of foreign-invested sector; the import value of the domestic economic sector was nearly $1.5 billion.

In the first three months alone, the province exported goods worth $4.22 billion, an annual increase of 15.6 per cent, while its imports hit $3.63 billion, a 15.5 per cent rise compared to last year's corresponding period. That resulted in a trade surplus of $591 million.

According to Binh Duong People's Committee, the State initiatives to clear business hurdles took effect in Q1, with enterprises recording strong and stable operations.

Rubber exports register slight growth

Viet Nam's local rubber industry made a small recovery as rubber exports in May recorded higher prices and volume than April, according to the Ministry of Agriculture and Rural Development.

In May, the country exported 78,000 tonnes of rubber, earning US$114 million, against 58,000 tonnes exported and $84 million earned in April, the ministry noted.

However, in the first five months of this year, the exports of Vietnamese rubber had a year-on-year increase of 30.1 per cent in volume to reach 330,000 tonnes but a year-on-year reduction in value, of 2.9 per cent to $475 million.

Meanwhile, the ministry said that in the first half of May, the export price of Viet Nam's key rubber product (SVR 3L) reached $1,655 per tonne, higher than $73 per tonne in the previous month.

The export price of SVR 3L rose to $1,700 per tonne in the end of May and $1,790 per tonne last week, according to the ministry.

Due to the high inventory of rubber on the world market, its export price is expected to remain low between $1,500 and $2,500 per tonne until 2020, Tran Thi Thuy Hoa, head of the Viet Nam Rubber Association's administrative office, was quoted as saying by the Thoi bao Kinh te Viet Nam (Vietnam Economic Times) newspaper.

The price will possibly increase after 2020, Hoa added.

The rubber industry should reduce its output, production costs, and investments for production, she remarked.

For consumption, the industry should change the structure of export products as per market demand, ensure the quality of export products, and expand export markets, she added. It should also build brand names, increase trade promotional activities, and offer incentives for the development of the processing industry.

The National Agro-Forestry-Fisheries Quality Assurance Department pointed out that to ensure the quality of rubber products, producers should strictly monitor the process of extraction, transportation, preservation, as well as quality checks.

Producers should also upgrade their production line with modern technologies, the department observed, adding that it would soon start cooperating with the association and related offices to set up quality standards for rubber material and processed products.

Ha Bac fertiliser factory completes major upgrade

The upgrade and expansion of the Ha Bac Nitrogenous Fertiliser Factory in Bac Giang Province, an affiliate of Vietnam National Chemical Group (Vinachem), have been completed.

The project cost $US568.6 million and began in November 2010. The project upgraded the old factory, constructed a second factory and outfitted it in the latest technology to increase capacity, enhance product competitiveness and reduce environmental impact.

The new factory, covering 33.4 hectares, has a capacity of 500,000 tonnes of fertiliser and generates jobs for 2,000 local labourers.

Speaking at the event, Deputy Prime Minister Hoang Trung Hai asked Vinachem and the Ha Bac Fertiliser Factory to hold true to their goals. He noted that the chemical sector currently meets more than 80 per cent of domestic demand for fertiliser, an impressive feat.

Knauf Vietnam announces gypsumboard distributor in southern Vietnam

Knauf Vietnam Limited, part of Knauf Group- a multinational producer of building materials and construction systems based in Germany, yesterday presented its gypsumboard distributor in southern Vietnam, the J & J Joint Stock Company (JnJ).

Approximately 180 guests from gypsumboard distributors, contractors, architects and media came together to celebrate this special event with the Knauf Vietnam team.

On the occasion, general director of Knauf Vietnam David Victor Thomas said, “Building the foundations for our business and our channel to the market is one of the most critical aspects of our business. The strategic decision to select JnJ as our southern distributor was based on a similar approach to the market and the belief JnJ, like Knauf, will grow into a market leader in Vietnam building material industry.”

“The selection of JnJ as our southern distributor will strengthen our nationwide coverage and help us to promote the Knauf brand and our broad range of products and systems,” Thomas added.

According to Thomas, construction of the company’s new gypsumboard plant in Haiphong city will soon be finalised and the company expects to produce gypsumboard locally right this year.

“Our new plant will produce 20 million square metres per year so it is essential we have our nationwide distribution network in place to enable us to supply the Vietnamese market effectively,” said Thomas.

In the past 18 months Knauf Vietnam has set-up offices in Vietnam’s major cities including Hanoi, Haiphong and Ho Chi Minh City.

The company has made constant efforts to expand its distribution network throughout the country.

Knauf Vietnam is supplying the Vietnamese market with high quality gypsumboard products such as StandardShield, MoistShield and FireShield, as well as AMF mineral fibre ceiling tiles which have received positive customer feedback.

Knauf Group, founded in 1932, currently operates more than 220 production plants in over 60 countries with roughly 25,000 employees.

Recently, Knauf has been spreading the market to East Europe and Asia. Knauf Vietnam gained an investment license in 2013 to build a gypsumboard manufacturing facility in the northern port city of Haiphong that is expected to be operational in 2015.

Government instructs capital mobilization for iron exploitation project

Deputy Prime Minister Hoang Trung Hai has instructed relevant agencies on measures to mobilize capital for an exploitation project of the country’s largest iron ore mine in the central province of Ha Tinh.

He ordered the Ministry of Industry and Trade to guide shareholders of the project’s investor to change their capital contribution rates if they fail to sufficiently provide their parts by July 15.

In case these changes are still unable to mobilize enough capital, the Vietnam National Coal and Mineral Industries Group (Vinacomin) would raise their contribution level which will be considered by the Ministry of Industry and Trade.

The Thach Khe iron mine exploitation project was invested by Thach Khe Iron Company (TIC) that was established in 2007 with a total chartered capital of VND2.4 trillion.

The project aims to dig and process iron ore from the mine to supply local steel mills and exports. Afterwards, a steel billet plant will be built to use this material source.

Its implementation has been scheduled in nine years. Exploitation capacity is expected to reach five million tons a year in the first seven years and increase to 10 million tons in the next two following years.

The project was started in September 2009 with a total capital of VND14 trillion (US$642 million). Of these, 30 percent comes from shareholders and 70 percent from other sources.

Nine initial shareholders include Vinacomin, Ha Tinh Minerals and Trading Company, Vietnam Steel Corporation, Vietnam Posts and Telecommunications Group (VNPT), Song Da Corporation, the Bank for Investment and Development of Vietnam, Vietnam Shipbuilding Industry Corporation (Vinashin), Binh Minh Export Import Production Company and Thang Long Mineral and Metallurgy Company.

They contributed only VND221.5 billion instead of VND1.3 trillion as per commitments in 2010.

Mid 2011, the Prime Minister instructed four large shareholders including VNPT, Song Da, BIDV and Vinashin to withdraw capital from TIC to focus on their main fields.

Thach Khe is the largest iron ore mine in Vietnam locating eight kilometers northeast of Ha Tinh city and 66 kilometers from Vung Ang Seaport. It was spotted in 1960 with a reserve of 544 million tons.

Authorized agencies calculated that exploitation output will reach 370-400 million tons.

The project is expected to make Ha Tinh among the country’s largest heavy industry centers and biggest steel exploitation and production centers.

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