Housing projects restricted around Long Thanh airport site

The government of Dong Nai Province will restrict the granting of licenses for residential areas around the Long Thanh international airport site, according to the province’s vice chairman Tran Van Vinh.

At a recent meeting, Vinh told the provincial Department of Construction and the authority of Long Thanh District to keep a close watch on land transactions and housing construction near the premises of the future airport before a master zoning plan for the area is approved.

Currently, the department and relevant agencies are drawing up the zoning plan for an area of some 21,000 hectares around Long Thanh airport.

Of the total area, more than 5,700 hectares north of the airport project site will be for housing projects for aviation industry employees, resettlement, services and greenery. This area is adjacent to the operational HCMC-Long Thanh-Dau Giay Expressway, the planned Ben Luc-HCMC-Long Thanh expressway and National Highway 51.

Over 4,400 hectares south of the airport will be used for new urban areas, international transportation services and industrial centers, parks and areas for industrial trees and orchards. Meanwhile, over 11,000 hectares northeast and southwest of the airport and near the runways will be for farming, resorts and rural residential areas.

Therefore, the provincial government told relevant agencies to license the construction of agricultural and low-rise service buildings in the area of the zoning plan to ensure safety for aircraft landings and takeoffs. This is why the authority of Long Thanh District has rejected plans of investors to build warehouses and factories near the airport.

Long Thanh airport project won National Assembly approval in June this year and the Ministry of Transport expects the project will get off the ground in 2019 and come online in 2023.

At present, Airports Corporation of Vietnam (ACV) is preparing a feasibility study for the three-phase airport project, which will cost a total of over US$16 billion and cover a total of 5,000 hectares.

The international airport is envisioned handling up to 100 million passengers and five million tons of cargo after three phases of the project are complete in 2050. The first phase will cost an estimated US$5.4 billion, sourced from the State budget, official development assistance (ODA) loans and others.

The international airport is designed to have one runway and one terminal able to handle 25 million passengers and 1.2 million tons of cargo a year in the first phase. The airport will have one more runway and a cargo terminal in the second phase to handle 50 million and 1.5 million tons of cargo.

More facilities would be built in phase three to increase the airport’s capacity to 100 million passengers and five million tons of cargo in 2050.

Rail passenger transport to rise

The Ministry of Transport will upgrade the existing railways and use different types of train to enable the railway sector to make up 1-2% of passenger transport and 1-3% of cargo transport by 2020. 

According to the development plan for the sector announced on Tuesday, the ministry will implement upgrade projects for railways and railway stations to enable the sector to handle large numbers of passengers.

Flyovers for trains at places with high traffic density will be built to remove intersections between roads and railways. In addition, new trains with modern facilities will be made.     

The ministry will look into the possibility of constructing high-speed railways and rail track of 1.4 meters in width so that they could be ready in the 2020-2030 period, with priority given to the high-demand sections of the north-south route.

Railway transport is set to meet 3-4% of travel demand and 4-5% of cargo transport demand until 2030. Work on 1.4-meter-wide high-speed rail lines on the north-south route will be complete in the 2030-2050 period. After 2050, the railway sector will operate trains able to travel at a maximum speed of 350 kilometers per hour.

Railways leading to the Central Highlands, the trans-Asia railway and rail lines connected to seaports and industrial parks will be developed to meet at least 5-8% of passenger transport and 5-6% of cargo transport.

Vietnam Railway Corporation reported that though the enterprise cut train fares and improved service quality in the first six months of this year to attract customers, it failed to meet targets. Notably, the number of passengers using the Hanoi-Lao Cai service dropped 15-20% against the first half last year since the Noi Bai-Lao Cai Expressway was put into use.   

Low-cost airlines have attracted more passengers as they can save much time for travel. 

Data of the ministry showed that roads account for 95.7% of passenger transport, trains 1.14%, airplanes 2.05%, inland waterways 0.19% and maritime transport 0.01%.

Transport Minister Dinh La Thang said such proportions are unreasonable and wanted them to be adjusted to 93.2%, 3.4%, 3.23%, 0.17% and 0.07% respectively.

Thai cosmetic brands coming to stores across Vietnam

Thai cosmetics brands are tapping new global markets and are increasingly reaching into Southeast Asia, Thai Consul General to Ho Chi Minh City Malinee Harnboonsong disclosed at a recent conference in Ho Chi Minh City.

“The shift comes as rising consumer incomes and changing lifestyles in markets like Vietnam are driving higher sales and bottom line profits and that hasn’t gone unnoticed by Thai beauty and wellness professionals,” said the Consul General.

She said Thai industry export revenues jumped three and one-half fold year-on-year to US$7 billion in 2014 of which approximately one-quarter was shipped to markets in Southeast Asia.

Vietnam is a big market with people constantly on their mobiles and they are increasingly demanding convenience, whether it’s restaurants, bars or entertainment. The cosmetics industry is no different.

Products such as shampoos have found favour in Vietnam, especially among the youth and industry leaders now have ambitious plans— betting that the growing middle class and rising disposable incomes will continue to drive revenue growth.

We are still in the early days of the new trend and industry leaders believe there is exponential potential for further growth as “Some of the most discerning skin-care consumers are Vietnamese women and men,” she said.

Ketmanee Lertkitcha, President of the Thai Cosmetics Manufactures Association in turn said Thailand has now become the globe’s second largest shampoo supplier and 12th largest exporter of skin care products.

“The cosmetic industry in Thailand has targeted to outperform last year’s figures with gross revenues to climb to an all-time record high US$7.6 billion this year.”

She said the formation of the ASEAN Economic Community (AEC) by year’s end presents an ideal occasion for the expansion into market such as Vietnam, Laos, Cambodia and Myanmar.

A few market analysts have suggested Vietnamese and Thai businesses join forces to produce cosmetics as the combination of the former’s advantages in labour and the latter’s cutting-edge technologies, innovation and experience could be a winning combination.

Nowadays, Thai products can be seen everywhere in Vietnam and they are rapidly becoming the dominant brands on the retail shelves due to their high quality and eye-catching products packaging.

Market research shows that Vietnamese consumers are turning towards natural and organic cosmetics and Thai businesses with abundant resource of materials and self-contained production chains are moving to take command of the market.

Lertkitcha stressed that to promote its products, Thailand has and will continue to organize numerous exhibitions and trade fairs throughout Southeast Asia, most notably COSMEX, which emphasizes the production side of the industry.

The 2015 COSMEX trade fair set for this upcoming November 3-5 at the Bangkok International Trade & Exhibition Centre has about 6,000 businesses already registered to attend.

Vietnam’s total commercial and services trade with Thailand has increased on average 13% per annum over the past five years and is anticipated to increase again this year as Thai brands make their move to take over the cosmetics industry.

Rubber exports to hit US$1.6 billion

Vietnam expects to earn around US$1.6 billion by exporting 1.1 million tonnes of natural rubber this year, up 3.2% in volume but down 10% in value compared to last year, according to the Ministry of Industry and Trade (MoIT).

The MoIT reported that 760,000 tonnes of rubber valuing at US$1.09 billion were shipped abroad in the first nine months of this year, a year-on-year rise of 9.5% in volume but a fall of 11.3% in value.

Tran Thi Thuy Hoa, Chief of the Office of the Vietnam Rubber Association said large rubber stockpiles currently constitute a pressure for the sector to lower prices.

Despites having 70 export markets, rubber exports still depend on China which had accounted for 70% of the export revenue. However, Vietnamese businesses have taken great efforts to diversify export markets and reduced the rate to below 50%. Emerging markets like Malaysia and India have recorded a high growth while the US remained stable.

Hoa said the cutting down of export duties from 3% to zero has also helped lessen the burdens of rubber exporters.

A reliable destination for investors

Industrial parks (IPs) in the Mekong Delta province of Soc Trang has become a trusty destination for both local and foreign investors.

After more than 20 years of re-establishment, Soc Trang has gained positive achievements in socio-economic development, meeting economic growth targets of developing infrastructure for production and improving local people’s living standards.

Being a coastal province abounding in fertile land and favorable climatic conditions, Soc Trang gains strengths in agriculture, aquaculture and sea economy. The province is connected with other localities in the Mekong Delta and the southern key economic zone through four national highways, including 1A, 60, Nam Song Hau and Quan Lo Phung Hiep.

Of course, advantages aside, Soc Trang also has some weaknesses. The economic restructuring toward non-agriculture has yet to meet expectations and industrial and service sectors develop modestly. Meanwhile, sea economy development has yet to tap potential, unemployment in rural areas is on the increase and the number of poor households remains, especially in the Khmer community.

To help Soc Trang overcome these shortcomings, the Prime Minister has allowed the province to establish six IPs, namely An Nghiep, Tran De, Dai Ngai, Vinh Chau, Long Hung and My Thanh, with a total area of 1,106.38 hectares. An Nghiep IP has been fully developed and put into operation. 

Site clearance and compensation are under way for Tran De IP. The province is calling for investors capable of developing infrastructure at the remaining four IPs.

As part of the effort to materialize the projects, Soc Trang Industrial Zones Authority (STIZA) has suggested the provincial People’s Committee implement policies and incentives for investment into IPs.

Apart from administrative reforms and business environment improvement, incentives on land, taxes, credit, vocational training and investment and trade promotion campaigns have been launched. Investors in these IPs have been heartily supported by local authorities to complete all the procedures quickly. 

Updated information about local and international markets are available for investors who are sponsored to join exhibitions and fairs, and vocational training.
These policies and incentives have paid off: IPs in the province have attracted a larger contingent of enterprises. As of September this year, An Nghiep IP had been home to 39 enterprises investing in 47 projects with combined registered capital of VND3,095 billion. 

Leasing a combined area of 136.64 hectares (nearly 84% of the total area for lease), these enterprises employ up to 24,704 workers. At present, 23 investors, including one foreign-invested enterprise, are operational in the park and six others are building factories. The remaining 10 investors are proceeding with investment procedures.

Of the VND2,207.6 billion worth of industrial production in the first nine months of this year, foreign investors made up VND20.1 billion. Main products were frozen shrimp (16,619 tonnes), farm produce (631.21 tonnes), plastic utensils (2,062 tonnes) and beer (29.84 million liters). 

Aside from contributing a great deal to the provincial economy, An Nghiep IP has created jobs for thousands of workers, accelerated labor transition from agriculture to industry and services, and stabilized social welfare in the province.

Many of the six IPs are located along national highways 1A, Nam Song Hau and Quan Lo Phuong Hiep (along the Hau River), which are favorable for overland and waterway transport. Moreover, these IPs comply with the master plan for investment attraction, helping boost urban and socio-economic development in a comprehensive way.

IP development is one of the key solutions to boosting industrialization and modernization processes in Soc Trang which helps turn it into an industrial province by 2020. According to the master plan, funds for developing these parks are from the State budget as well as many other sources. This fact has encouraged private enterprises to invest in developing IP infrastructure.

In the near future, STIZA focuses on calling for investors who develop infrastructure at IPs. It will also boost site clearance and compensation to timely transfer cleared land to investors. STIZA also suggests the province develop technical infrastructure outside IPs, and services and supporting industries.

Vietnamese among the most socially conscious consumers: global survey

Vietnamese consumers are the most socially-conscious among Southeast Asians, with 86% expressing their willingness to pay extra for products and services from firms which are committed to positive social and environmental impact, a new Nielsen survey found.

The survey also showed that consumers in Southeast Asia are the most willing globally to pay more for sustainable products and services.

Eight in 10 consumers in Southeast Asia prefer to buy socially responsible brands, compared to only 51% in Europe and 44% in North America, the survey found. 

“Consumers are trying to be responsible citizens of the world, and they expect the same from corporations. Committing to sustainability might just pay off for consumer brands,” Connie Cheng, Head of Shopper Insights for Nielsen in Southeast Asia, North Asia and Pacific, said in a statement.

According to the Nielsen report, sales of consumer goods from brands with a demonstrated commitment to sustainability grew more than 4% globally in the past year.

“Integrating sustainability into their business models and objectives helps society and at the same time, raises goodwill toward their brands”, said Cheng. “Companies with strong reputations outperform others when it comes to attracting top talent, investors, community partners, and importantly, consumers.”

One of the top sustainability factors that influence purchasing for 77% of Vietnamese consumers is health and wellness, according to the survey.

Moreover, products made with fresh, natural, or organic ingredients carry similar weight with consumers in Vietnam.

“Finding opportunities to bridge health benefits and the ingredients that support the claim is a powerful and impactful way to connect with consumers,” said Cheng.

Equally important among consumers in Vietnam is brand trust. 

Cheng said brands that have already built a high level of trust with consumers would do well by evaluating where best to introduce sustainable products into the market to drive growth.

“Bigger global consumer-goods brands that overlook sustainability increase reputational and business risk. It leaves them vulnerable to competitors of all sizes who will seize the opportunity to build trust with the predominantly young, socially-conscious consumers looking for products that align with their values,” she said.

The survey also found that commitment to the environment has the power to sway product purchase for 62% f consumers in Vietnam.

The Nielsen survey polled more than 30,000 consumers in 60 countries across the globe between February 23 and March 13, 2015.

Consumers were asked how much influence factors such as the environment, packaging, price, marketing, and organic or health and wellness claims had on their purchase decisions.

While the survey seems to paint a very positive picture about Vietnamese consumers, it remains a question to what extent that picture reflects the reality.

Livestock sector must restructure

As one of the most vulnerable sectors to be economically impacted with the Trans-Pacific Partnership (TPP) approaching, the livestock industry must move towards improving competitiveness to avoid being defeated.

Luckily enough, there was time for preparation, Doan Xuan Truc, Vice President of the Vietnam Animal Husbandry Association, said at a conference held within the framework of the two-day VIETSTOCK Confex 2015.

"It is a golden opportunity to hasten the restructuring of the livestock industry, while lowering prices and enhancing quality and hygiene," Truc said, quoting Deputy Minister of Industry and Trade Tran Quoc Khanh, and added that there would be roadmap for tariff liberation and the industry would have at least 10 years for preparations ahead of zero duty.

The association anticipated rises in imports of many husbandry products from partner countries with free trade agreements (FTAs) when tariffs are liberalised, including frozen beef from the United States, Canada, and Australia, in addition to India and New Zealand, milk and powder products from Australia and New Zealand, frozen pork from the US, Spain, Denmark and frozen chicken from the US, Korea and Thailand.

Challenges would be severe, given the industry's small-scale production, low productivity, dependence on imported inputs, disease risks, inadequate restructuring efforts and lack of understanding of involved firms and farmers, experts at the conference pointed out.

"The challenges should be viewed as opportunities for the livestock industry to grow up," Ngo Chung Khanh, Deputy Director of the Ministry of Industry and Trade's Department and Multilateral Trade Policy said.

At the conference, experts raised three sets of solutions for the livestock industry to cope with economic integration's impacts, which included technical, restructuring and policy measures.

Among the measures, experts stressed the importance of improving quality of livestock breed and the development of the value chain for the livestock industry as breakthrough solutions.

According to Le Ba Lich, President of the Animal Feed Association, improving food hygiene and safety is the number one factor while competing with imported products, followed by prices and other factors.

The livestock industry involved 11.3 million households, or more than 60 percent of the country's population.

VIETSTOCK Confex 2015 was the Vietnam's leading feed, livestock and meat industry show jointly held by UBM Asia and the Vietnam Animal Husbandry Association. The show provided knowledge and technical updates for participants in the livestock industry.

High GDP growth – positive economic sign

Over the past 9 months, Vietnam’s GDP growth rate stood at 6.5%, the highest rate in recent, which shows the national economy has maintained its momentum. 

Economic recovery has been recorded in all sectors. The industry and construction sectors have developed strongly to become a driving force of the economy. Agriculture increased 1.77%, and services obtained positive results.

Growth momentum since the beginning of the year has come from industrial production recovery, particularly in the manufacturing and processing sectors, and in exports of foreign-invested companies. Domestic consumption has increased due to people’s trust in Vietnam’s stable macro-economy, economic recovery, and low inflation.

The inflation rate of 2-3% is considered reasonable for sustainable economic growth.

In the reviewed period, 68,000 new enterprises were registered. Total registered capital and the number of enterprises resuming operations have increased. 

Nguyen Tu Anh, Head of the Macro-Economic Research Committee of the Central Institute for Economic Management, said, “Over the past 9 months, industrial production has rebounded, particularly manufacturing. There are positive signs in both capital supply and demand."

"Revenues in the retail, service, and commodity sectors increased 9.1%, to the highest level in 5 years. This result can be credited to economic restructuring. Since 2011, we have stabilized the macro-economy which is the basis for greater confidence among investors and consumers,” Anh added.

Vietnam’s economy is predicted to continue its recovery for the rest of the year. To obtain a yearly growth rate of 6.5%, systematic measures are required. 

The government should push ahead with the equitization of state-owned enterprises and technology reform, and improve the productivity of major export sectors. Ministries and sectors need to improve the trade environment and Vietnam’s competitiveness. 

Nguyen Tu Anh said again, “If we want to advance, we have to stabilize the macro-economy. The market will decide resource allocation and the State is in charge of supporting market development and competition.”

Economic growth is the most important index of Vietnam’s 5 growth indexes, which also include inflation, balance of payments, unemployment, and poverty. A GDP growth of 6.5% over the past 9 months shows that Vietnam is on the right track with economic reform. 

Vietnam making big gains in corporate responsibility

The electronics industry has made remarkable contributions to the nation’s economic development, says Vietnam Chamber of Commerce and Industry (VCCI) Vice President Hoang Quang Phong.

Comprised of some 500 multinational companies employing approximately 250,000 workers, the electronics industry is the nation’s second largest exporting industry—dominated by brands like Samsung, Fujitsu, Canon, Intel, and Foxconn.

Similar to the clothing industry – the number one exporter – the majority of workers are female and a relatively high proportion consist of domestic workers who have migrated from rural to the larger metropolitan areas.

“Decent work deficits [DWDs] include occupational health and safety related matters as a result of exposure to toxic chemicals, precarious employment contacts, unfair wages and the lack of the right to collectively bargain and associate freely,” Phong underscored.

As in the clothing industry, Phong said some international buyers have encouraged their suppliers to comply with employer-employee codes of conduct and have provided assistance in this regard.

Nevertheless, issues pertaining to noncompliance with national law and international standards continue to be the norm and a fundamental challenge for companies and there is a dire need for improving labour practices.

In response to this need, Phong said the VCCI has launched a project to encourage multinational companies to contribute positively to economic and social development through socially responsible labour practices.

The program has a special focus on the electronics industry.

The VCCI partners in the program include the Vietnam General Confederation of Labour, Ministry of Labour, Invalids and Social Affairs, International Labour Organization (ILO) and a raft of business associations.

The US$481,822 project entitled ‘More and Better Jobs Through Socially Responsible Labour Practices in Asia’ runs August 1, 2015 through December 31, 2015 and is funded by the Government of Japan.

“We fundamentally believe that taking joint action to renovate the way multinational corporations interact with their employees will yield the most favourable results for improving working conditions,” said Phong.

Yukiko Arai, a senior ILO expert in turn echoed Phong’s views saying the project will help encourage multinational corporations to make further contribution to socio-economic development through the exercise of social responsibility.

As a first step, an exploratory study with ILO’s technical support will be undertaken to identify the DWDs and real employment situation as it currently exists in the electronics industry.

Second an action plan will be developed. The action plan will help in the implementation of specific activities to promote socially responsible labour practices addressing the DWDs and help define the role of multinational corporations.

Third, the generation of labour-related data and their analysis is expected to help identify ways in which more and better jobs could be generated in collaboration with multinational corporation’s cooperation.

Once completed, the findings and recommendations of the study will be extrapolated to all industries and presented to the ILO’s tripartite constituents and other key stakeholders for validation and agreement on a joint plan of action.

Luxury car demand to climb on consumption tax increase

The demand for luxury cars could steadily increase after the Government recently proposed raising special consumption tax on cars, particularly luxury vehicles.

Under the proposal, vehicles with an engine displacement of 3,000cu.m to 4,000cu.m; 4,000cu.m to 5,000cu.m; and 5,000cu.m to 6,000cu.m will see tax increases from 60 per cent to 90 per cent, 60 per cent to 110 per cent, and 60 per cent to 130 per cent, respectively.

In particular, vehicles with engine displacement of more than 6,000cu.m will see the highest tax increase of up to 150 per cent from its current tax rate of 60 per cent.

Meanwhile, the Government has proposed that tax levied on vehicles with engine displacement of under 2,000cu.m should be reduced by between 5 per cent and 25 per cent.

If the proposal is approved by the National Assembly, it would take effect from next July.

Many businesses forecast that the number of imported luxury cars sold from now through the second quarter of next year would steadily increase for fear of an increase in the special consumption tax.

A staff of an automobile showroom in Hoang Mai District, Tran Van Hoan, said the number of customers buying luxury cars would likely increase in the coming months following the Government's proposal to increase special consumption tax.

During the Viet Nam International Motor Show which ended last week in Ha Noi, about 200 car dealership contracts were signed. A majority of vehicles were luxury cars valued at about VND1 billion (US$44,400) each, such as Audi, BMW, Porsche and Land Rover, besides Renault. About 45 Audis, 42 BMWs, 11 Mini Coopers, and six Motorrads, in addition to 25 Renault vehicles, were sold during the show.

A representative from a business, which specialises in supplying luxury cars, told VietnamNet online newspaper that demand for such cars was increasing steadily.

Many customers expressed a special interest in luxury cars at the motor show, he said. They particularly paid attention to the time when cars would be delivered to avoid the tax increase.

According to the Viet Nam Register, there were 572 cars valued between $150,000-300,000, 42 valued between $300,000-500,000, and 4 cars valued at more than $500,000, which were registered in the third quarter of this year. 

Sugar factories see raw material shortage

Sugarcane production plants in Tay Ninh, Soc Trang and Hau Giang provinces do not have enough sugarcane to process for the 2015-16 production season, as many farmers have shifted to other products.

As the province with the biggest sugarcane area in the Southeast region, Tay Ninh Province has three plants with a capacity of 15,000 tonnes of sugarcane per day.

However, the sugarcane crop cultivation area in the province for the 2015-16 period is 50 per cent less than the crop in the previous season.

The sugarcane fields in the region have been shrinking rapidly, according to a research conducted by provincial authorities in the Mekong Delta region.

Long An Province's sugarcane area has shrunk by one-third compared with last season, and Hau Giang Province fell by 1,300ha to 11,000 ha this year.

Dao Van Su, deputy director of Soc Trang Province's Department of Agriculture and Rural Development, told Tuoi Tre (Youth) newspaper that, like other provinces, Soc Trang had faced a decrease in its sugarcane area.

Although Cu Lao Dung District had the biggest sugarcane area in the province with more than 7,400ha, farmers shifted to cash crops and brackish water aquaculture over nearly 60 per cent of the sugarcane area.

They did so after facing long-term losses caused the low prices of sugarcane compared to other plants as well as disease outbreaks. The 10-20 per cent increase in production costs for fertiliser, pesticides, labour and shipping was also a contributing factor.

Competition among sugar plants for raw materials has also increased the price of sugarcane.

The plants are now buying sugarcane for at least VND860 per kilo, VND119 higher than the price set by the Ministry of Agriculture and Rural Development, according to the Viet Nam Sugar and Sugarcane Association (VSSA).

Truong Van Phi, agricultural director of Thanh Cong Sugarcane and Sugar Joint Stock Company in Tay Ninh Province, said that to meet raw material demand, the company took proactive actions to ensure supply. It signed supply contracts with farmers in neighbouring provinces and rented Cambodian land to plant sugarcane.

Over the long term, the company will cooperate with the local agricultural sector to invest in high-yield seeds and modern technology to reduce production costs and stabilise material zones.

Nguyen Thanh Long, chairman of VSSA, said the agricultural sector should restructure the sugarcane sector to raise the plant's value and output, and to meet domestic as well as export demands.

Small factories with a capacity of less than 1,000 tonnes of sugarcane per day should be merged, he said, adding that inefficient material zones should be shifted to other crops.

The Ministry of Agriculture and Rural Development recently drafted a decree on sugarcane production and trading, which called for provinces' financial departments to set prices for raw materials, in discussion with farmers and sugar processing plants.

Under a circular issued in 2012 by the ministry, raw materials must meet national quality standards.

The ministry has also conducted a research project on new disease-resistant sugarcane varieties with high productivity.

Government agencies have also been urged to develop large-scale raw material areas and encourage linkages among local farmers to reduce production costs and increase quality. 

Trade law needs revised: experts

The Law on Commerce 2005 should be revised to prevent smuggling and trade fraud, experts said at a workshop to review its implementation, held in Ha Noi yesterday.

Dinh Thi My Loan, chairwoman of the Viet Nam Association of Retailers, said after 10 years of implementation, the law had become backward and could not catch up with new trade activities.

In the modern goods distribution channels, nine per cent of supermarkets and commercial centres which were owned by foreign direct invested (FDI) enterprises accounted for a high and increasing portion.

With the strategy of cheap pricing and transfer pricing, several FDI firms had been in unhealthy competition with domestic companies, Loan said.

Statistics from the Ministry of Industry and Trade showed that some FDI distributors reported low profits or even losses and were not contributing corporate income tax to the State budget. For example, Metro reported a profit of VND116 billion (US$5.1 million) in the only year of 2010 though it had begun operations in Viet Nam since 2002. It reported accumulated losses of VND1.78 trillion by the end of 2012.

Notably, State agencies have not paid attention to supervision and checks in time to prevent violations relating to FDI such as price transfer, prolonged losses despite expanding their network.

Loan said the favouring of certain localities by foreign investors had been a big barrier for local investors, especially in land lease and investment procedures.

Lawyer, Ngo Viet Hoa from the USAID Governance for Inclusive Growth (GIG) programme added that several regulations in Law on Commerce 2005 had not been applied in the last decade due to other regulations in special laws.

In addition, the management of import-export activities had seen certain shortcomings. The gaps in the law created favourable conditions for smuggling and trade fraud.

Hoa said most of the important regulations on trade and commercial policies had not been found in the law but in other guiding regulations.

Several regulations in the law had caused unnecessary overlapping of the legal system.

Phan Thi Thu Ha from the Supreme People's Court of Viet Nam said several regulations relating to licences and administrative procedures had lacked specific criteria for investors.

"This has resulted in policies becoming unpredictable for businesses while creating conditions for State agencies to cause trouble for firms," Nguyen Thi Dieu Hong, from the legal department at the Viet Nam Chamber of Commerce and Industry (VCCI) said.

Tran Huu Huynh, head of VCCI's Advisory Committee on International Trade Policies noted that the law should ensure integration, transparency and feasibility to international commitments as well as real context to facilitate trade activities. 

Resort investors bemoan sharp land rent spikes

Many resort investors and tourism enterprises in Binh Thuan Province and other localities have voiced outcries over strong land rent increases and unreasonable calculation methods which have rendered them helpless.

They said it is unfair to impose the same rent on land used for commercial facilities and that for greenery at resorts. Land for greenery normally accounts for half of the total area of a resort or above, they noted.

The land use fee has been revised up in recent years but the Government has agreed to lower the land rent applicable in 2013-2014 for resort investors.

Nguyen Van Khoa, chairman of the Binh Thuan Tourism Association, said land rent in the 2011-2012 period was adjusted up by 8-10 times compared to that in 2010, making life tough for hundreds of enterprises in the central province of Binh Thuan.

For example, land rent at Saigon Mui Ne Resort rose from VND192 million in 2010 to VND1.47 billion in 2012. In the same period, the land use fee slapped on Palmira Beach Resort soared from VND167.5 million to over VND1.28 billion, Coco Beach Resort from VND114.6 million to more than VND877 million and Muine Bay Resort from VND84 million to VND672 million.

The Government approved cutting 50% of the land rent in 2013-2014 and a further reduction if the fee remains two times higher than that of 2010 after the first reduction.

However, a number of resorts in the province have been unable to pay the high land rent, leading to their bank accounts being frozen, according to Khoa. 

“High land rent and unpredictable change have made life difficult for enterprises. A majority of tourism enterprises in Binh Thuan Province have been on tenterhooks due to the high land rent,” Khoa said.

The Ministry of Culture, Sports and Tourism has proposed a 50% land rent reduction for the area used for greenery and a land rent cut for the 2011-2012 period to pull resort investors out of this difficulty.

Transport ministry boosts SOE equitization

The Ministry of Transport will accelerate equitization at many State-owned enterprises (SOEs), including big ones, in the final months of this year so that there will be only six entities with 100% State ownership from next year.

In a recent report, the ministry listed Vietnam National Shipping Lines (Vinalines) and Airports Corporation of Vietnam (ACV) among those subject to equitization in the final quarter of this year.

The ministry announced earlier that it was completing the final procedures for ACV to launch an initial public offering (IPO) in December after the Government approved an equitization plan for the corporation, which operates airports across Vietnam.

The Government allowed ACV to sell part of the State stake at the corporation and issue more shares to increase its chartered capital. The corporation had total chartered capital of VND22.43 trillion (US$1 billion) by the end of last year and plans to sell 2.243 million shares at VND10,000 each.

The State will own 75% of ACV’s chartered capital after the corporation goes public. Of the remaining stake, the corporation will sell 20% to strategic investors, 3.47% at auction, and 1.53% to its staff and labor union.

Toward the year-end, the ministry will complete the IPO for Central Transport Hospital and transform it into a joint stock company as well as submit the equitization plan for Nam Thang Long Hospital to the Government for approval before 2015 is out.

In addition, the ministry will conduct a corporate value assessment and submit the equitization scheme for the holding company at either Vietnam Expressway Corporation (VEC) or Cuu Long Corporation for Investment-Development and Project Management of Infrastructure (Cuu Long CPMI).

The ministry looks set to finish equitization schemes for 24 subsidiaries of Vietnam Railway Corporation (VRC) within this year. As planned, the ministry will let 10 public service units go public after getting approval from the Government.

The ministry aims to equitize all enterprises where 100% State ownership is not needed toward the year-end.

After 2015, the ministry will manage six enterprises mainly operating in the public service sector. They are Vietnam Railway Corporation, Vietnam Air Traffic Management Corporation, Northern Vietnam Maritime Safety Corporation, Southern Vietnam Maritime Safety Corporation, Vietnam Maritime Communication and Electronics LLC and Transport Publishing House.

In the January-September period, the ministry launched IPOs for seven enterprises, held general meetings for shareholders at 29 equitized enterprises, and turned 26 others into joint stock companies.

Earlier, the ministry got the Government’s permission to equitize 16 public service units this year including 10 schools, two hospitals and four vehicle registration centers.

Steel industry might grow 12 percent in next 2 years

The steel industry will grow 12 percent in the next two year under the impact of the Trans-Pacific Partnership (TPP), Nguyen Minh Nhut, director of BlueScope Steel Vietnam Limited, said at a press conference on October 21.

He noted that the sector itself does not benefit from tariff reduction or elimination under the TPP.

However, the TPP is expected to boost investment in other sectors, which will drive demands for construction, thus pushing up demand for steel.

The sector’s current annual growth rate is seven percent.

Australian steelmaker Blue Scope has established its facilities in Vietnam for 20 years with three factories built at a cost of 130 million USD. It manufactures a range of products for building and construction, manufacturing and automotive applications.

Decree ensures safety in oil, gas exploration

The Government has issued Decree No. 95/2015/ND-CP detailing a number of articles stipulated in the Petroleum Law and related laws on ensuring safety in oil and gas exploration and exploitation. 

The document says organisations and individuals who conduct oil and gas search, exploration and exploitation activities have to zone off safe areas and maintain safety signals for their work sites and equipment in accordance with current legal regulations. 

The decree also regulates subjects entitled to enter the safe areas and undersea activities within the areas. 

Those involved are not allowed to build facilities and drop floating subjects around areas where they can hinder the circulations of maritime routes essential to international navigation. 

They are also required to follow regulations on oil and gas exploitation as well as approved oil and gas development plans. 

They can apply advanced technology to enhance exploitation efficiency but ensure safety and no harms to the eco-environment.

VN brands need better promotion

Domestic retailers should join hands and set up Vietnamese brands to compete with foreign rivals, experts said at a seminar on opportunities and challenges in the international economic integration process.

At the seminar held by the Ha Noi Industry and Trade in the capital city on Tuesday, Vo Van Quyen, head of the Ministry of Industry and Trade (MoIT)'s Domestic Market Department said growth rate of total retail value in the period of 2001-14 was at 15 to 16 per cent, which was lower than the rate at 25.4 per cent from 2006 to 2010.

Of which, the total retail value of the state economic sector had a downtrend while the retail value of the private economic sector and foreign invested companies showed an uptrend.

By 2014, Viet Nam had 80 supermarkets and trading centres, 50 specialised small shops and 250 convenience stores of foreign invested companies. There are 10 retail brands from Europe and Asia coming to Viet Nam to develop their business.

Quyen said the foreign retailers have had the advantage of experience and financial ability to expand their retail system in the local market and compete with local retailers.

Meanwhile, Phan Chi Dung, head of the Light Industrial Department, said the competitive ability of the domestic enterprises was limited due to lack of capital, small production scale, and low capacity, apart from high production costs, and the non-competitive selling price.

In addition, they have not undertaken any professional market research activity, have limited ability in building product strategy and do not have a large distribution system.

To create good conditions for local retailers to develop their distribution system in the future, Quyen said the State should review and complete regulation-related distribution activities to protect rights and interests of Viet Nam under international commitments.

The State should also receive support for local firms to improve the quality of human resources and trade promotions, apply information technology and approach credit, he said.

Enterprises should co-operate or merge to build retail enterprises with Vietnamese brand names that have the ability to compete with foreign retail brand names, Quyen said.

Local retailers should co-operate with local producers to manufacture products at a cheap selling price, high competitive ability and with a suitable demand from local consumers.

They should also combine with business households in residential regions to develop chains of convenience stores.

Vo Tri Thanh, deputy head of the Central Institute for Economic Management (CIEM), said local enterprises should seek out business opportunities and expand the market when the nation's economy integrates into the world market. They should accept competition and change from competing in price to not competing in price.

They should also learn to mobilise capital, manage instability and use efficiently the tools to avoid risks.

Trinh Minh Anh, deputy head of the National Committee on International Economic Co-operation's administration office, said local enterprises should study carefully and follow closely the changes in the market to understand the trends of market development in the short, medium and long terms.

Then, they will see reasonable development in their business, he added.

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