Garment exports enjoy strong growth

Vietnam earned 6.75 billion USD from garment and textile exports in the first quarter of 2017, up 12.4 percent against last year, according to the Vietnam Textile and Apparel Association (VITAS).

Exports to new markets grew strongly, with Russia up 115 percent, Singapore 38 percent, Cambodia 36 percent and Brazil and India 34 percent.

Traditional markets like the United States and the European Union saw more humble export growth at 6.3 – 6.4 percent.

The VITAS noted that traditional products grew by 13 – 17 percent while newer ones, including swimming suits, raincoats and scarves, increased by 18 – 41 percent.

New products and different ways to approach markets have resulted in higher and more stable growth, while helping the industry rely less on traditional partners, the VITAS said.

The association forecasted exports to increase by 10 percent in the second quarter of the year based on the recovery of main markets such as the US, the EU and Japan as well as the stability of the global economy and politics.  

The industry aims of a 10 percent growth to reach 31-32 billion USD in export turnover in 2017.

To achieve the goal, businesses have been encouraged to invest in new equipment and enhance competitiveness with new technologies.

Vietnam eyes 7,000 ha of shrimp farming on sandy land by 2025

Vietnam aims to expand shrimp aquaculture on sandy land to 7,000 hectares by 2025, produce some 110,000 tonnes per crop, and ensure 70 percent of these areas have developed infrastructure, according to the Directorate of Fisheries at the Ministry of Agriculture and Rural Development.

Shrimp aquaculture on sandy land will help the country use unproductive sandy land along coastal areas to cultivate high-value brackish shrimp, bringing more jobs and economic benefits to local residents, the directorate said.

The directorate plans to only raise shrimp in areas with sufficient surface water to reduce the use of ground water, which is limited in central Vietnam. It will also take into account effects of climate change and apply advanced technology to save fresh water.

The state agency will encourage private sector investment in shrimp farming on sandy land to develop self-contained shrimp ecosystems.

It will formulate a master plan to facilitate shrimp growing on sandy land in central provinces as part of the national action plan to develop the shrimp industry in Vietnam by 2025 and invest to develop infrastructure for areas of large-scale shrimp production.

In addition, it will set tight controls on production input – such as breeds and feeds – environment management, disease prevention, and food safety, and encourage cooperation between shrimp growers, input suppliers and distributors.

In 2016, Vietnam had more than 3,700 hectares of shrimp farming on sandy land across 14 central provinces, generating some 41,700 tonnes per crop. Binh Thuan had the most area, accounting for 28 percent of the country’s total. It was followed by Ninh Thuan (18 percent), Phu Yen (16 percent) and Thua Thien-Hue (14 percent). 

Quang Nam produced the highest yield of more than 20 tonnes per hectare, followed by Quang Ngai with 17 tonnes per hectare.

Auto imports drop in April

The quantity and value of imported cars fell by 38 percent and 6 percent respectively in April from March.

In the month, Vietnam imported 1,065 cars from China for 41 million USD, up 143 percent in quantity and 153 percent in value. 

According to the Vietnam Automobile Manufacturers’ Association, April’s auto sales stood at 21,942 units, down 18 percent from March and 15 percent from last year.

The downward trend also hit domestically assembled cars and full car imports, which posted decreases of 10 and 35 percent compared to March.

Experts said the reduction was due to customers waiting for auto import tariffs to hit zero percent in early 2018, which will significantly drive down car prices.

Fourth-month auto imports and sales, however, grew 15 and 1 percent from the same period last year, respectively.

VCCI calls for realistic startup targets

The Vietnam Chamber of Commerce and Industry (VCCI) has warned against setting unrealistic targets as provinces have scrambled to announce their lofty goals of having new enterprises coming in being in the next three years.

The central Government has set a target of having one million active enterprises by 2020 but the number of enterprises which cities and provinces have registered has now reached a staggering 1.5 million.  

VCCI Chairman Vu Tien Loc said in a report prepared for a second meeting between Prime Minister Nguyen Xuan Phuc and the business community in Hanoi on May 17 that some provinces have set general goals of doubling the current numbers of businesses.

In 2016, the number of newly-registered enterprises hit a record high of 110,100, with total capital of VND891.1 trillion, up 16.2% and 48.1% respectively from 2015, according to VCCI. In the first four months of this year, 39,580 new businesses came into being, bringing the total number of registered enterprises by April 30, 2017 to a little more than one million.

With those firms suspended, disbanded and resuming operation in 2016 taken into account, the nation had an estimated 546,281 active enterprises on December 30, 2016.

However, a high level of insolvency is still cause for concern. In 2016, over 73,000 enterprises turned inactive or were dissolved, down 9.5% from 2015, of which around 12,500 completed dissolution procedures and the remainder stopped operating.

Loc said, “So far this year, the number of newly-established enterprises has increased but the companies that have suspended operations and been disbanded make up about half the number of newly established entities.”

These are signs of unsustainable business development, according to the VCCI report.

Labor use efficiency went down in 2007-2015 and capital use efficiency dipped as well. The percentage of loss-making businesses rose in 2011-2015 with an average of 40.9%. The return on equity fell from 6.6% in 2012 to 3.2% in 2015.

Business size has not improved much, with the average number of employees per enterprise staying at around 30, far below the criterion for small businesses with fewer than 50 employees.

For three consecutive years (2014, 2015 and 2016), domestic firms were outperformed by foreign-invested enterprises. It was domestic enterprises that caused the trade deficit, and contributed less to the nation’s total exports, only 28.4% in 2016.

Corporate governance at Vietnamese enterprises remains woefully poor. Worse still, they can turn out large volumes of goods but their quality is low.

The tax dilemma

A tentative scheme to impose a high environment tax on fuels is put forth, despite strong objections in the recent past whenever the issue was let fly. This time again, protests from experts and economists are even more vigorous, when the so-called environment tax policy is designed to not protect the environment but to increase State budget revenue, evident in a seminar in Hanoi this week.

The tough question emerges this time: Which is more important between business development that promises long-term and sustainable streams of revenues for the State budget, and quick measures for short-term tax gains? It seems, for State agencies, that the short-term benefit outweighs the long-term one.

The aim was expressly and bluntly declared at a seminar titled “Fuel markets and institutional issues” organized by the Vietnam Petroleum Association (Vinpa) in Hanoi this Tuesday. Phan The Rue, chairman of the association, asserted at the seminar that “it is necessary to raise fuel tax to cover a State budget deficit as import tariffs are going down,” according to Tuoi Tre newspaper.

In fact, the Ministry of Finance has several times indicated its intention to raise the environment tax for fuels from the current VND4,000 a liter to VND8,000. This goal by the ministry was strongly advocated by Vinpa at the aforesaid seminar.

“It is necessary to ensure that the total tax sum accounts for half the retail fuel price. As the import tariff goes down to zero, other taxes must be raised to offset the shortfall; this is the people’s responsibility to the country,” Rue, former deputy minister of trade, is quoted by Tuoi Tre.

Rue explains in Nguoi Lao Dong newspaper that for every VND1,000 increase in the fuel tax, the State budget could get an extra trillions of Vietnam dong, so if the tax is raised to the ceiling of VND8,000 per liter, extra revenue would be colossal.

This stance is also confirmed by the Ministry of Industry and Trade.

Vo Van Quyen, head of the Domestic Market Department under the ministry, told the seminar that “the tax on fuels is being reconsidered in accordance with the tax reduction roadmap…, and the environment tax on fuels is suggested at an upper limit of VND8,000 a liter.”

Last month, the Ministry of Finance also affirmed at a news briefing that “the draft Law on Environmental Protection will be submitted to the National Assembly in October, which also allows for the maximum tax on fuels to double (to VND8,000 a liter),” according to Thanh Nien newspaper.

Such a viewpoint has faced stiff resistance.

Bui Danh Lien, chairman of the Hanoi Transport Association, says on Bao Dat Viet news site that a shortfall in the State budget requires other solutions than hiking the environment tax, which is not used to benefit the environment. “There are many solutions to the budget shortfall, the most important one of them being to cut public spending… Raising the environment tax on fuels is absurd,” Lien is quoted as saying.

Truong Dinh Tuyen, former Minister of Trade, disapproves of the tax hike on fuels. While such a tax hike can apply as a temporary measure, it is unacceptable in the long run to raise the environment tax on fuels to offset the falling import tax revenue, he says. “What is more important is to lower taxes to help enterprises reduce input costs,” he is quoted by Tuoi Tre.

Fuels are an essential constituent in the input cost of most enterprises, say experts.

Pham Tat Thang, a senior specialist with the Ministry of Industry and Trade, says that any plan to raise tax on fuels must take into account multiple impacts on input costs of enterprises and the market, according to VOV.vn, a news website of the Voice of Vietnam radio station.

Echoing the point, Nguyen Tien Thoa, former head of the Ministry of Finance’s Pricing Department, reasons in Nguoi Lao Dong that it is unwise to impose a high tax on inputs. “(We) should lessen the tax burden on inputs to create conditions for business development, which results in lower-cost products for consumption. Higher tax should be collected from consumption,” says Thoa, adding that he disagrees with the plan to impose a higher environment tax on fuels. The pricing expert advises relevant State agencies to attend more to taxing the output rather than the input.

Meanwhile, Truong Dinh Tuyen asserts on VOV.vn that lowering the fuel tax will help enterprises cut costs, and subsequently the State will be able to gain higher tax revenue from more efficient enterprises and the market.

Le Dang Doanh, a veteran economist, shares the view not to raise the fuel tax. He says that the environment tax of VND8,000 per liter is too heavy for both people and enterprises, according to Tien Phong.

“Raising the (environment) tax to VND8,000 a liter will spike the transport cost, which in turn pushes up prices of many commodities, causing problems for the economy in the current context,” Doanh is quoted in the newspaper. 

Bui Danh Lien of the Hanoi Transport Association refers to a recent news report that the cost of transporting a container from Hanoi to Haiphong is three times higher than that from South Korea or China to Vietnam. The high cost is due to both formal and informal costs borne by enterprises, Lien says in Bao Dat Viet, hinting at the fuel cost as a factor.

The dilemma still stays there for the taxman to address: either to look forwards to long-term sustainable sources of revenue or to focus on quick bucks. “We should ‘eat’ less in the first tier so that business as the second tier can grow, and we can collect more from consumption as the third tier. This is also the sustainable way of tax collection, nurturing the future sources of income that the finance sector often mentions,” says pricing expert Nguyen Tien Thoa in Tien Phong.

Unsold live pigs total 200,000 tons

Farms are sitting on about 200,000 tons of live pigs weighing 100 to 150 kg each that have remained unsold, according to a report by the Department of Livestock Production.

At a conference on livestock consumption promotion on Wednesday, the department said live pig prices are on the wane in Mekong Delta, southeastern and northern provinces. Pig prices dipped to VND20,000-25,000 per kg in March and April, the lowest in 10 years.

In early May, pigs were sold at VND18,000-20,000 per kg. Farmers suffered losses of VND1-1.5 million (US$44.34-66.51) a pig on average.

Hoang Thi Bich Hang, chairwoman of the Dong Nai Farmers' Union, told the Daily that 7,000-8,000 pigs are sold daily to major meat processor Vissan, two wholesale markets in HCMC and enterprises, supermarkets and markets in Dong Nai. Thus, buyers have been found for 300,000 pigs in Dong Nai Province.

Pig prices in the province now range from VND22,000 to VND30,000 per kg. Pork prices at markets and supermarkets have dropped to VND45,000 per kg of pig legs and VND70,000 per kg of lean pork, Hang added.

Supermarkets in HCMC have implemented numerous promotion programs to boost pork consumption to support farmers.

Doan Diep Binh, public relations manager at Lotte Mart, said Lotte Mart supermarkets will launch a non-profit pork sales program on May 30, with a 30% discount offered for all pork products.

Vo Hoang Anh, Saigon Co.op marketing director, said shoppers can get 10-20% off prices of pork products at Co.opmart supermarkets until May 25.

Pork consumption has improved 15-20%, helped by discounts. The Co.opmart store chain currently sells about 1,000 tons of pork a month, said Anh.

Pork prices at traditional wet markets in HCMC are stable as well.

Dung Quat refinery to undergo comprehensive maintenance

Binh Son Refining and Petrochemical Co Ltd (BSR), the operator of Dung Quat Oil Refinery in Quang Ngai Province, has said the refinery will carry out a comprehensive maintenance plan, its third since it came into commercial production.

The 52-day maintenance is expected to allow the refinery to operate at 110% capacity or above and extend its operation time by four years, up from three previously.

During the maintenance, which start on June 5, more than 6,000 items of work will be implemented by nearly 4,000 workers and supported by specialized machinery and equipment.

BSR general director Tran Ngoc Nguyen said the overall maintenance plan would check the state of the machinery and equipment at the facility and repair or replace any pieces of equipment if need be.

If the maintenance process is shortened, the company could earn VND250 billion (US$11.12 million) and contribute VND30 billion to the State budget a day with the oil price standing at US$50 per barrel. Therefore, BSR will try its best to shorten the maintenance period by five to seven days.

Three contractors from Singapore, Malaysia and South Korea have previous experience oil refinery maintenance.

Dung Quat Oil Refinery was put into commercial operation in 2009 and maintained in 2011 and 2014.

HCMC faces power shortage risks

The Steering Committee for Power Supply and Conservation of HCMC has forecast that in 2017, especially in the dry season, drought and high temperatures will lead to high demand for electricity and thus power shortages.

Data of the HCMC Power Corporation (EVN HCMC) showed that at the moment, the city's daily electricity consumption amounts to 76.5 million kWh, 5% higher than the same period last year, and is forecast to rise in the coming time.

To ensure sufficient power supply for production, business and household activities, the steering committee has called for energy saving.

According to the city government, the Department of Industry and Trade is coordinating with EVN HCMC to closely monitor electricity consumption. Enterprises have been urged to use energy efficiently, restrict power use at peak hours and prepare backup generators.

In addition, the Department of Industry and Trade will provide energy saving guidelines for public agencies to make sure at least 10% of electricity costs could be saved.

Meanwhile, EVN HCMC will work with districts to promote electricity conservation by encouraging households to restrict the use of high-capacity devices at peak hours to prevent the power grid from overload.

The city is accelerating preparations for backup power sources to ensure normal business and production activities in case of a power shortfall.

To deal with a possible electricity shortage in the dry season that begins in the second quarter of 2017, Vietnam Electricity Group (EVN) said it will make the most of all power sources, including coal, gas and diesel-fueled and hydropower stations.

EVN predicted electricity demand in the dry season will increase 12% over the same period last year. The electricity generation capacity of the entire system could be up to 31,800 MW in May and June, much higher than the maximum capacity of 27,066 MW in the first quarter.

Coal and gas-fired power, and hydropower plants, especially Vinh Tan 2, Duyen Hai 1 and Duyen Hai 3, will run at full tilt. In case of emergencies, EVN will mobilize diesel-run power stations to stabilize electricity supply.

Coffee output forecast to fall

The 2017-2018 coffee crop is forecast to yield around 1.4 million tons, slightly lower than in the previous crop, according to the Vietnam Coffee and Cocoa Association.

The association’s vice chairman, Nguyen Nam Hai, said Vietnamese farmers often harvest coffee in October and November and that if weather is favorable, the Central Highlands provinces, which are responsible for over 90% of the country’s coffee acreage, would be able to produce around 1.3 million tons.

Farmers have faced no problems with irrigation given no severe drought this year. However, the country’s coffee production is being affected by an increasing number of old coffee trees.

Hai said the coffee price has been in decline. For instance, it sold for VND43,200-43,700 per kg on May 18, up a mere VND700 against the previous day, while it was as high as VND47,000 in January.

Vietnam had shipped more than 960,000 tons of coffee abroad as of late last month. If things go well, Vietnam’s coffee exports could reach 1.4-1.5 million tons this year, he said.

The country exported 1.79 million tons of coffee worth US$3.36 billion last year, up nearly 34% in volume and some 26% in value against 2015. The export price averaged out at US$1,872 per ton, a 6% decline, according to the Ministry of Agriculture and Rural Development.

However, the first quarter of this year saw the average coffee export price improving to US$2,267 per ton, up a staggering 33% over the year-ago period. Around 592,000 tons worth US$1.34 billion was exported, down 11% in volume but up 19% in value.

Vietnam mulls local financing for cross-nation expressway

Deputy Prime Minister Trinh Dinh Dung has told the ministries of transport, finance, and planning-investment to consider a central bank proposal to use domestic credit to fund the massive North-South Expressway project.

These ministries should come up with solutions to arrange capital for the project and find ways to remove any barriers to public-private partnership investment.

The 1,372-kilometer expressway will require a total of around VND314.1 trillion, according to a document which the Transport Ministry has sent to the Government.

The Government has approved the use of VND55 trillion from the proceeds of G-bond sales in 2016-2020 to cover site clearance costs while the remaining capital will come from other sources like official development assistance loans and private sector investments.

However, capital mobilization from the private sector might prove to be tough given the large number of existing build-operate-transfer (BOT) road projects. Moreover, banks have been tightening lending to infrastructure projects.

Earlier, the Government asked the Transport Ministry to finalize a report on the project’s cost and schedule.

In regard to site clearance, the Government has decided to clear 684 kilometers, instead of the entire route, to prevent land from being wasted.

Meanwhile, investment policies and mechanisms will be needed to attract investors and accelerate the project. However, tenders must be held in an open and transparent manner, so no-bid contracts will be prohibited.

Relevant ministries and agencies must maintain a strict supervision mechanism over the project, prevent possible losses and group interests, and avoid seeking guarantees from the National Assembly for minimum revenues, foreign exchange rates, and insurance for a third party representing the Government to honor contract terms.

Govt offers science, technology enterprises more incentives

Science and technology firms can enjoy corporate tax, training and consulting incentives, as well as preferential credit, according to the HCMC Department of Science and Technology.

Chu Ba Long, deputy head of the technology and technology market division of the department, said at a seminar in HCMC on Wednesday that if these enterprises meet conditions, they would be entitled to a corporate income tax of 10% for a period of 15 years from the first year of generating revenue.

Otherwise, they will get a corporate income tax exemption in the first four years and a 50% tax reduction in the following nine years from the first year of obtaining taxable income.

They will also be exempt from registration fees for home ownership and land use right certificates.

Besides, they can gain access to investment credit at the Vietnam Development Bank and financial incentives from the National Fund for Science and Technology Development and the National Technological Innovation Fund.

Enterprises are provided with consulting and training services from incubation facilities. Especially, they can get priority access to labs and incubation facilities to do scientific research.

Moreover, they can benefit from the lowest land and infrastructure rentals if they are based in industrial and hi-tech parks, and export processing and economic zones.

Land incentives can be extended to them. Notably, they may be awarded the right to own or use State scientific research and technological development findings.

Govt wants toll stations reviewed

The Government has told the Ministry of Transport to work with other relevant agencies to review the way toll stations are located nationwide in order to ensure the rights and interests of nearby communities are protected.

Document 5039 dated May 17 of the Office of the Government says many toll stations fail to meet the rule that requires the two nearest stations on the same road are 70 kilometers apart. Some stations are even located on other roads than those entitled to toll collection, which has recently sparked a public uproar.

In August 2015, the Ministry of Transport reviewed toll stations across the country and found 33 stations failing to meet the 70-kilometer requirement.

Later, the Government told the ministry to complete the planning for BOT road toll stations on national highways. While the planning awaits approval, no new toll stations can be set up if they do not meet the distance requirement.

However, in mid-February 2017, the ministry wrote to the Prime Minister proposing delaying the planning for toll stations on national highways and expressways until 2020 and possibly 2030. The ministry reasoned the planning might improve management of BOT road projects but jeopardize efforts to call for hefty investments in road projects under public-private partnership (PPP) format.

The ministry noted no other countries have such road toll station planning but some nations have rules on the distance between stations to ensure the interests of all stakeholders.

Moreover, the ministry said, the current regulations require no planning for road toll stations. Planning is like forecasting while whether toll stations are needed or not depends on each particular project, traffic, and macro-economic conditions.

Such planning would not work based on scientific and practical grounds, according to the ministry.

In March 2017, the Government gave the nod to a suspension of the planning for toll stations. However, given rising public complaints over some BOT road toll stations in recent times, the Government once again requested the ministry to review the way toll stations nationwide are set up.

Vietnam to relax auto import rule

There is a high possibility that the rule on import of autos, including cars of nine seats or below, will be relaxed.

Circular 20/2011/TT-BCT issued on May 12, 2011 by the Ministry of Industry and Trade requires importers of autos with nine seats or less to have an authorization letter from an original equipment manufacturer (OEM), a condition which has reportedly thrown small importers out of the market.

But the above requirement is left out in a draft Government decree on conditions for production, assembly, import, warranty and maintenance of automobiles, prepared by the Ministry of Industry and Trade.

According to the draft decree, auto importers must have auto maintenance and service facilities and recall those vehicles having technical problems or involving violations of regulations.

If this draft is approved, the import of autos, including those of nine seats or less, will become easier for small businesses.

Notably, the draft decree does not compel auto importers to wholly own maintenance and service centers. They could own at least 30% of such a facility or sign a maintenance and service contract with an auto manufacturing or assembly enterprise.

However, auto traders said if this regulation takes effect, it would be hard to protect the rights and interests of consumers.

Credit institutions required to boost lending programme

The State Bank of Việt Nam (SBV) last week instructed credit institutions to continuously boost the lending programme for market stabilisation.

Under Document No. 3522/NHNN-TD, the central bank asked credit institutions to broaden the list of borrowers participating in the programme. The lists cover distributors, traders of subsidised goods, businesses from priority fields and those attending regional connectivity models, as well as value chains, hi-tech applied agriculture and clean farm produce production.

The credit institutions have been told to map out lending programmes with reasonable interest rates to the enterprises besides cutting operation costs and enhancing business performance to be able to further cut the rates.

In addition, they need to revamp and simplify lending procedures while still ensuring safety.

It is also necessary to create favourable conditions and timely remove difficulties so that the enterprises can gain access to loans easily.

The central bank also required credit institutions to combine this programme with the Bank-Business Connectivity Programme to make it more effective.

A close link between producers and traders of goods taking part in the programme must be built to ensure the stabilisation of goods supply and demand sources for the market, the central bank stated.

Under the document, SBV branches in provinces and cities should be proactive in grasping information and consulting provincial and municipal People’s committees on measures to implement the programme efficiently.

They should co-ordinate with local agencies to choose necessary commodities produced domestically with good quality, food safety and reasonable prices to participate in the programme and encourage businesses to join hands.

The lending programme for market stabilisation, which was launched in 2015 and combined with the "Vietnamese people give priority to using Vietnamese products" campaign, is aimed at stabilising the macro economy and controlling inflation according to the Government’s instruction.

With the price stabilisation, especially for necessary goods, the programme has achieved good results, especially in large cities during the country’s year-end holidays.

In Hà Nội alone, which contributes 15-16 per cent to Việt Nam’s total retail sales revenue of goods and services, 11 credit institutions provided loans totalling VNĐ10.3 trillion (US$451.75 million) for businesses participating in the programme last year, according to Hà Nội Industry and Trade Department deputy director Trần Thị Phương Lan.

The programme was implemented throughout the capital last year with more than 12,200 points of sale, 711 of which were based in traditional markets, 379 in supermarkets, 160 in convenience stores, 612 in groceries and 452 in canteens.

Viglacera begins apartments for workers

State-owned glass and construction ceramic corporation Viglacera started constructing a complex of apartment blocks for workers at Đồng Văn 4 industrial park in Hà Nam Province on Friday.

The project is spread over 16.69 hectares (ha) and can accommodate over 9,100 people.

It includes social housing units for sale or rent, a public service centre, a kindergarten, a clinic and green space.

It is expected to address the housing problems of workers and experts at the park and help them cut travel cost.

Viglacera is the third biggest industrial park builder in Việt Nam, having ownership of some 10 industrial parks covering an area of 3,580ha.

According to Deputy Minister of Construction Bùi Phạm Khánh, around one million workers in 320 industrial parks nationwide have demanded accommodation.

To serve the demand, 167 projects, with combined capacity of about 126,800 apartments, have been executed. Of the total projects, 97 have become operational, offering 38,800 apartments.

TPP members promise to keep trade deal alive

Eleven signatory countries of Trans-Pacific Partnership (TPP) have shown their unity in pursuing the trade deal without the United States.

The United States pulled out of the TPP – frequently called a “21st century trade agreement” – soon after US President Donald Trump took office in January.

Without the United States, 11 countries remain in the trade agreement including Japan, Australia, Canada, Brunei Darussalam, Chile, Mexico, New Zealand, Malaysia, Peru, Singapore and Việt Nam.

Meeting on the sidelines of the APEC Ministers Responsible for Trade Meeting (MRT) in Hà Nội on Sunday, the 11 remaining nations agreed to seek ways to move forward with the free trade pact without the United States.

The meeting reaffirmed the balanced outcome and the strategic and economic significance of the TPP and highlighted its principles and high standards as a way to promote regional economic integration and contribute positively to the economic growth prospects of its member countries.

“The ministers agreed on the value of realising the TPP’s benefits and to that end, they agreed to launch a process to assess options to bring the comprehensive, high quality agreement into force expeditiously, including how to facilitate membership for the original signatories,” a joint statement after the meeting said.

Minister of Industry and Trade Trần Tuấn Anh said Việt Nam maintained the standpoint that TPP is a free trade pact with high standards and high levels of commitment which would benefit economic and trade growth of both member states and global trade.

“It is a pity that a country won’t participate in the TPP process because it will affect the balanced outcomes of all nations involved in the negotiation process, as well as the validity and enforcement of the agreement,” the minister told reporters after the meeting.

He said the remaining nations had continued interests in pursuing the trade pact but cautioned that the next steps must safeguard balanced and harmonized benefits of all participating countries.

The minister said this would be an open agreement that would enable other countries to participate at appropriate times and under conditions that can preserve the high standards of the TPP, including the return of the United States.

New US Trade Representative Robert Lighthizer said the United States would not consider the return and confirmed bilateral negotiations were better for the United States. But he reaffirmed the country would continue to cooperate with TPP member economies on a bilateral basis.

“We’re willing to negotiate bilateral agreements with other partners in the world,” Lighthizer said, but pledged the United States’ commitment to the Asia-Pacific region and said regional trade played an important role in US trade policy.

Commenting on the prospects for the TPP, New Zealand Minister of Industry and Trade Todd Michael McClay expressed hope that the deal would be deployed, bringing benefits to businesses and people.

Twelve countries that border the Pacific Ocean signed up to the TPP in February 2016, representing 40 per cent of the global economy. The pact aimed at deepening economic ties between these nations, cutting tariffs and promoting trade to boost growth.

After the United States left the agreement, only Japan and New Zealand have ratified the deal.

Following the meeting in Hà Nội, eleven countries agreed to engage in work to prepare an assessment of options before they meet on the sidelines of the APEC Economic Leaders Meeting in November in Đà Nẵng.

Banks await debt trading market

Banks’ bad debts now seem to be lower than in previous years. But the total amount remains high, affecting the lenders’ business as well as their goal of reducing interest rates.

An analyst at a securities company said that as of March 31 Sacombank had the highest bad debts rate, an estimated 4.89 per cent, followed by Eximbank with 3 per cent, BIDV with 2.14 per cent, and MB with 1.35 per cent.

Data from the State Bank of Viet Nam (SBV) indicates that the banking sector’s bad debt rate as reflected in balance sheets is under 3 per cent.

Some banks may however have significant amounts of off-balance sheet assets and liabilities.

In December 2016 the bad debts reported in balance sheets, bad debts managed by the Viet Nam Asset Management Company (VAMC), and latent bad debts was around 8.86 per cent of total outstanding loans, according to the SBV data.

The VAMC’s handling of bad debts is too slow, according to banks and many of them are looking for ways to buy back the bad debts they had earlier sold to it, hoping to settle them by themselves.

Some of them even plan to trade bad debts.

At shareholders meeting this year, the bosses of many lenders like VIB, OCB, VietinBank, Techcombank, MB, SCB, ACB and VPBank proposed plans to buy back most of their bad debts from the VAMC.

Vietcombank has already bought back all its bad debts totally worth VND4.3 trillion (US$184.43 million).

Analysts said the reason for this is that sooner or later the Government would force the banks to put all their bad debts in the balance sheet instead of allowing some to be off it.

So buying back the bad debts from the VAMC makes sense since they can keep it all in one place to make things less unwieldy.

So why did they not take this route in the first place instead of selling to the VAMC?

The chief of a bank admitted that the VAMC had come to the rescue of the banks in their darkest hour.

Analysts said thanks to consigning their bad debts to the VAMC for a few years, the banks have had the time and conditions to recover enough to handle their bad debts by themselves.

Besides, most lenders had expected the VAMC to miraculously fix their bad debts, and this had not happened, they said.

But not all banks are capable of buying back their bad debts, only those that have low bad debt rates of under 1.5 per cent and abundant resources.

Some also plan to participate in the debt selling and buying market.

At its recent shareholders meeting, Vietcombank tabled a proposal to set up a debt selling and buying company for approval.

Last week the bank got a licence from the SBV for debt trading.

VIB shareholders also approved a plan to buy debts estimated at VND6 trillion (US$264.32 trillion) from credit institutions.

Market observers see a trend, saying many banks are keenly awaiting a debt market, which is expected to take shape soon.

Another encouraging sign for banks is that their bad debts are becoming attractive to investors since more than 70 per cent have properties as collateral and the real estate market is recovering strongly.

FPT’s tech and telecom account for most profit     

FPT Corporation recorded a consolidated revenue of nearly VND12.98 trillion (US$569.3 million) in the first four months of this year, a year-on-year increase of 13 per cent that equals 104 per cent of its year-to-date target.

Profit before tax reached VND904 billion, up 14 per cent over the same period last year, while the profit after tax rose 18 per cent to VND759 billion.

Profit after tax attributable to parent company’s shareholders and earnings per share (EPS) both achieved growth rate of 15 per cent year-on-year, to VND581 billion and VND1.26 trillion, respectively.

Profit growth of FPT remained driven by the two core businesses including technology and telecom sectors, which accounted for 75 per cent of the consolidated profit before tax of the group. Specifically, profit before tax of the technology and telecom sectors increased by 48 per cent and 20 per cent, respectively.

The distribution and retail sector has fulfilled 104 per cent of targets for both revenue and profit before tax for the first four months.

Meanwhile, the retail segment continued to perform outstandingly in the first four months, with its revenue up 31 per cent and pre-tax profit up 45 per cent.

Overseas markets grew 16 per cent to hit VND1.96 trillion in revenue and 15 per cent to VND284 billion of profit before tax. 

FDI drives imports of capital goods to record high levels

The growth in imports of capital goods in the early months of 2017 has outpaced the figures for last year by as much as 40%, according to the latest statistics from the General Department of Vietnam Customs.

The rise in imports of machinery, equipment, tools and spare parts used in the production of other commercial goods is predominantly driven by foreign sector direct investment in manufacturing, said Department officials.

Imports of capital goods accounted for 18% of the total imports of the country in the four months leading up to May. The top three suppliers of such goods in descending order of magnitude of dollars were the Republic of Korea, China and Japan.

The continued foreign sector investment in manufacturing and capital goods bodes well for overall gross domestic product growth throughout the remainder of the year, noted Department officials.

Vietnam clothiers, textilers look to source yarn from India

Nguyen Thi Tuyet Mai, deputy general secretary of the Vietnam Textile and Garment Association, recently told an audience that the clothing and textiles segments are overly dependent on raw material imports from China.

Speaking at a seminar in Hanoi, she noted that businesses in the segments import an estimated six billion metres of fabric annually, which is equivalent to roughly two-thirds of annual demand for product. 

The in-country supply chain supplies three out of the nine billion metres of fabric and yarn needed each year, said Ms Mai, adding that it’s time businesses in the segment diversify their sources of intermediary product.

They need to lessen dependence on China, the Republic of Korea and Taiwan, the three primary supply sources, and look for viable alternatives, she argued.

Depending almost entirely on three sources unnecessarily puts production at risk if unforeseen circumstances arise that cause an interruption in the flow of product from any of them to Vietnam.

She noted members of the Association have talked extensively about the dilemma with the Association of Garments Textiles Embroidery and Knitting in Ho Chi Minh City and said there is consensus that seeking alternative suppliers in India is in the best interest of the segment.

Many Vietnamese clothiers and textilers have conducted due diligence tours of the industry in India and concluded that suppliers in India can satisfy their needs for quality product on a consistent and timely basis.

Nguyen Xuan Hong, president of the Association of Garments Textiles Embroidery and Knitting, in turn, noted that India has a trade agreement with ASEAN that provides benefits in the form of lower tariffs and other trade relief to the Vietnam segments.

Mr Hong noted that several attempts in the past were made to boost supply chain links with businesses in the Indian segments but little advancement was made and the results obtained were far below expectations.

A representative from Thanh Cong Garment Company pointed out that the turnaround time on orders placed in India was 60-90 days as opposed to the much shorter 45-60 days on orders in China.

Mr Cong indicated this time factor was a major reason for his company sticking with Chinese suppliers.

The governments of Vietnam and India have put clothing and textiles reform at the top of their priority list for further development, Mr Cong told the audience, and have set major talks to be held on the side lines of Textile India 2017.

The event running from June 20 to July 2, inclusive, in Gujarat is a huge annual textile trade event in India and this year the Honourable Prime Minister of India, Shri Narendra Modi will deliver the keynote address.

The three-day event is expected to attract around 1,000 international and domestic exhibitors and 2,500 buyers from countries across the globe and consequently provide an excellent platform for business to business interactions.

Garment exports enjoy strong growth

Vietnam earned US$6.75 billion from garment and textile exports in the first quarter of 2017, up 12.4% against last year, according to the Vietnam Textile and Apparel Association (VITAS).

Exports to new markets grew strongly, with Russia up 115 %, Singapore 38 %, Cambodia 36 % and Brazil and India 34 %.

Traditional markets like the United States and the European Union saw more humble export growth at 6.3 – 6.4 %.

The VITAS noted that traditional products grew by 13 – 17 % while newer ones, including swimming suits, raincoats and scarves, increased by 18 – 41 %.

New products and different ways to approach markets have resulted in higher and more stable growth, while helping the industry rely less on traditional partners, the VITAS said.

The association forecasted exports to increase by 10 % in the second quarter of the year based on the recovery of main markets such as the US, the EU and Japan as well as the stability of the global economy and politics.  

The industry aims of a 10 % growth to reach 31-32 billion USD in export turnover in 2017.

To achieve the goal, businesses have been encouraged to invest in new equipment and enhance competitiveness with new technologies.

USD190m solar power plant to be built in Thanh Hoa

Thanh Hoa Province have agreed a USD190m solar power project at a local industrial zone.

Thanh Hoa Chairman Nguyen Dinh Xung has signed an agreement to build a solar power plant at Nghi Son Industrial Zone, Tinh Gia District. The German BS Heidelberg Solar GmbH Company will be the project's investor. The project will cover 170 hectares and have 100% FDI with the expected capacity to produce 190 million kWh a year.

Construction will start in the third quarter and is expected to completed in the third quarter of 2018. The BS Heidelberg Solar GmbH Company will directly manage and operate the plant. They are also asked to make a deposit to ensure capital flows and follow procedures about land use and environmental protection.

Xung also gave the approval to another USD35.6m solar power project that will be built on a 650,000-square-metre land in Yen Thai Commune, Yen Dinh District. The construction of the 30MW plant will start this third quarter and be completed in 2019.

TTC Group seeks to take over HAGL’s sugar business

Bien Hoa Sugar Joint Stock Company and Tay Ninh Sugar Joint Stock Company, two subsidiaries of TTC Group, will take over the sugar operation of Hoang Anh Gia Lai in a bid to make TTC Group the biggest sugar producer in Vietnam in terms of output.

The boards of directors of Bien Hoa Sugar (HoSE: BHS) and Tay Ninh Sugar (HoSE: SBT), the two biggest sugar producers under TTC Group, have just approved the strategic investment in Hoang Anh Gia Lai Cane Sugar Limited Company. The two companies are going to hold extraordinary shareholders’ meetings at the end of May in order to ratify the merger.

Specifically, BHS is going to buy 60 per cent of HAGL Sugar from Hoang Anh Gia Lai Agricultural Joint Stock Company (HoSE: HNG). The long-term financial investment contract has a value of VND798 billion ($35.1 million) and will be carried out by the end of 2017.

TTC Tay Ninh Sugar will buy 40 per cent of HAGL Sugar from HNG and an individual shareholder. Though the investment has only been announced just now, HNG already assigned management positions and the right to operate the sugar factory, the sugar cane farm, and related assets to SBT.

Nguyen Quoc Viet, key personnel at TTC Group, has been assigned as the general director of HNG. He is currently also the deputy general director of BHS.

HAGL Sugar was established in Vietnam. It owns 100 per cent of Hoang Anh Attapeu Cane Sugar Limited Company, which owns a factory and a farm in Laos. The parent company HNG reported a net profit of VND7.16 billion ($315,500) in the first quarter of 2017, down 92 per cent on-year. The profit broke a three-quarter loss streak for the company.

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