Legal documents on business operations lack transparency

Legal normative documents (LND) governing business activities still lack transparency, according to a survey by the Vietnam Chamber of Commerce and Industry (VCCI).

Ministries and other Government agencies often ignored business associations' and enterprises' opinions and feedback, despite the Government's responsibility to create the legal documents that govern them, the survey found.

VCCI questioned 288 business associations representing more than 409,000 businesses across the country. The results were presented during the Ministerial Efficiency Index (MEI 2014) Conference VCCI held on June 22. Attendees evaluated and reviewed the development of business laws by ministries and the State Bank of Vietnam.

"The majority of business associations said they were not consulted about, not aware of and not allowed to participate in the making of legal documents, which were designed to govern their business activities," said Nguyen Thu Trang, deputy head of VCCI's Committee of Legal Affairs.

VCCI's MEI Report uses the business associations' survey results to rank ministries' efficiency in five categories, including the quality of LND, law dissemination and law implementation. This year's showed that six out of 14 ministries scored below average in LND transparency. The leading Ministry of Planning and Investment's score was just above average, while the scores for quite a few others were even lower than the previous ranking in 2012.

"It would seem Government ministries felt quite reluctant to publicise drafts of their legal documents, for fear of pressure from the public and added responsibility if they were not well-received," Trang said.

Pham Tat Thang, an economic expert, said asking businesses and residents for feedback was a crucial part of building policies and regulations. On top of collecting opinions from citizens of all walks of life, Government ministries needed to really listen to them to create practical, effective laws that reflect reality.

The MEI 2014 report says other than LND transparency, ministries scored higher than on the MEI 2012 in four out of five categories, with an average increase of 10.07 percent.

VCCI Director Vu Tien Loc said the MEI 2014 was an encouraging sign that ministries were continuing to reforms. The rankings would urge them to improve LND transparency, Loc said.

Exports to Africa on rise

Vietnam exports to major African markets like South Africa, Egypt, Tanzania and Senegal obtained a high growth in the first five months of this year, according to the General Department of Vietnam Customs.

Major export products included mobile phones and components, computers, electronic products, means of transport, machines and equipment, footwear, garment and construction materials.

South Africa remained the largest importer of Vietnam with an export revenue of US$439 million, a year-on-year rise of 39%.

Vietnam exports to Egypt also grew by 5% to US$146.6 million while exports to Ghana reached US$95.8 million, an increase of 15%.

Exports to Tanzania obtained the highest growth of 150% to US$37.5 million with major products as rice, computers and components.

Meanwhile Vietnam earned US$22 million from exports to Senegal, up 49% against the corresponding period last year and US$17.2 million from Kenya, up 23%.

Vietnam attends Int’l Trade Show in South Africa

Vietnamese businesses joined more than 1,000 others from 39 countries worldwide in the 22nd Southern African International Trade Exhibition (SAITEX) in Johannesburg, South Africa from June 21-23.

The Hanoi Association of Small-and Medium-sized Enterprises displayed agricultural products, textiles and garments, construction materials, computers, software, home appliances and handicrafts made in Hanoi and other localities at 3 stands.

The stands attracted more than 200 importers from South Africa and regional countries who came to study the quality of products, prices and import-export procedures.

Vietnamese businesses also had a chance to welcome Connie Bapela, Speaker of Council, the City of Johannesburg who was accompanied with a business and official delegation.

Bapela affirmed that Johannesburg leaders and businesses are willing to serve as a bridge for Vietnamese goods to deeply penetrate South Africa and regional countries.

Vietnam Ambassador to South Africa Le Huy Hoang revealed that the Embassy will continue supporting businesses in seeking market information and partners.

Domestic businesses should improve the quality and diversify products, actively study South Africa’s market demand and taste and invite partners to visit their quality, safe and environmental-friendly production lines in Vietnam, Hoang said.

The Government will also create a niche for businesses to boost export, Hoang asserted.

On the occasion, a visiting delegation from Vietnam’s Ministry of Industry and Trade held a working session with its South Africa’s counterpart to discuss measures to enhance potential import-export activities with the aim of raising bilateral trade from current US$1.2 billion to US$1.5 billion next year.

This year’s SAITEX attracted around 15,000 visitors.

AEC integration – no ‘magic bullet’ for Vietnam agriculture

The Ministry of Agriculture and Rural Development (MARD) recently said the realization of the ASEAN Economic Community (AEC) by the end of 2015 is not a panacea for agriculture’s sustainability.

Though the establishment will see tariffs on agriculture exports shipped to ASEAN member states progressively eliminated— a significant number of challenges will remain, particularly those related to overuse of chemicals and post harvest loss.

Officials at MARD revealed that during the first six months of the year, an alarming number of agriculture, forestry and aquatic products were unable to pass quality assessment tests.

They said 6.8% of meat randomly sampled tested positive for excess antibiotic residual. Meanwhile 1.24% of the samples for seafood and 5.4% for vegetables were substandard.

“This is a big red flag signalling violations of food hygiene and safety standards are at an alarming level,” they said adding that it poses a serious threat to the health and welfare of the nation’s residents.

Just as importantly these shortcomings are a forewarning the products won’t pass the strict standards for import set by other AEC member nations and therefore Vietnam will lose out on any increased export opportunities.

In addition, if products do not comply with the requisite quality standards of the importing nations, those products will be denied entry and importing nations allowed to impose high tariffs as a penalty.

The fundamental problem, according to MARD, is that businesses have failed to put internal control systems in place to insure products are consistently produced on a timely, economical and quality basis.

The problems associated with this haphazard and unorthodox approach to agriculture must be overcome if Vietnam is to become competitive in the marketplace following AEC integration.

Nguyen Minh Phong, a leading economist, in turn said he agrees with MARD’s assessment but also notes post harvest loss is another issue that must be resolved if Vietnam agriculture is to be competitive in the AEC.

Post-harvest loss (PHL) resulting from harvesting, drying and storage happens at all stages and results in substantial losses – both quantitative (physical losses caused by rodents, insects or infestations) and qualitative (loss of quality and value).

 “Farmers and businesses in the agriculture, forestry and aquatic sector must devise better post-harvest and transport plans to improve the freshness of their products for shipment to foreign markets.”

Products in these industries are quite naturally highly perishable and preservation methods need to be substantially revised to incorporate the latest technologies Phong said.

According to MARD officials, the abusive use of chemicals and antibiotics is the most alarming issue as it badly damages the reputation of agricultural products and serves as a low benchmark by which the Made-in-Vietnam label will be judged.

It’s a flagrant disregard for food hygiene and safety standards and with such an attitude businesses will find it difficult to establish themselves in any market, regardless of the tariff structure, they said.

Nguyen Phuong Nam, deputy head of the Competition Management Authority under the Ministry of Industry and Trade, in turn agreed that Vietnamese businesses are failing badly when it comes to food hygiene and safety.

“Most businesses in the agriculture and seafood industries need to completely revamp their production methods to ensure compliance with food hygiene and safety standards.”

Nam said the biggest stumbling block for producers and businesses seems to be post-harvest preservation methods and if not addresses satisfactorily will most likely result in their products being restricted from accessing other ASEAN markets.

Weak post-harvest preservation technology and capacity is not just a problem for the export market as it spills over and negatively impacts the domestic market due to spoilage and lost sales.

For his part, Hoang Trung, deputy head of the Plantation Protection Department (PPD), said substantial investment in upgrading the infrastructure with such items as new silos for storage and the latest technologies is the solution.

To deal with the current weakness in post harvest losses, the government must devise comprehensive specific policies and guidelines for agricultural businesses and raise the required investment needed, Trung said.

Currently, some businesses are experimenting with technologies such as GAP and some preservation technologies from Israel but there needs to be a more thorough coordinated broad based approach that extends to all kinds of products.

Hanoi to host Int’l Techmart Vietnam

A technology, equipment and trade fair, known as International Techmart Vietnam - ITV 2015, will be held at the International Centre for Exhibition in Hanoi on October 1-4.

On display will be 600 stalls with 3,000 equipments.

Within the Techmart, customers will be introduced to new technology and software solutions, and provided with free consultancy to use technology effectively.

Besides, seminars and exchanges among businesses will be held.

The event, co-organized by Ministry of Science and Technology and Hanoi municipal People’s Committee, aims to boost technology transfer and research cooperation among Vietnam and ASEAN+3, and EU, Russia and the US.

China companies want farm trade centre in Vietnam

The China Business Association in HCM City wants to set up an agriculture trading centre to bypass third-parties so Vietnam's farmers and China's consumers can get a better deal.

The idea to set up an agriculture trade centre in the Mekong Delta was discussed with the authorities of Can Tho City on June 17. The centre will be a place for all agriculture, aqua products and agriculture supplies, such as fertilizer and farm equipment.

China's companies buy produce through traders, but prices are unstable. Though Vietnamese produce fetches high prices in China, the farmer is paid low prices.

Professor Vo Tong Xuan, director of Nam Can Tho University, said the centre is a good idea because China has long been one of the biggest customers of Vietnam.

"An outlet for agriculture products of the Mekong Delta will be ensured," he said, "If the centre goes ahead, trade will be more transparent and prices can be kept more stable."

Son Van Luan, president of Binh Tan Sweet Potatoes Cooperative in Vinh Long Province, said, "Our potatoes are mostly sold into China through traders, and prices are quite volatile. There are no invoices or contracts, so it's a huge risk. We'd feel more assured if there is an official trade centre."

Luan said an official trade centre would help farmers better understand buyers and markets, so they can adjust production to match demand.

Some farmers remain skeptical and worry about their legal standing. They said more details are needed, such as who would act as their representative in negotiations, and who would manage the operation.

Tran Huu Hiep, head of the Economic Department, said domestic firms needed to become involved to help connect and coordinate provinces and cities of the Mekong Delta.

Chan May port in Thua Thien-Hue to be upgraded

The Royal Caribbean International Group of the US will invest US$5 million into a project to upgrade the infrastructure of Chan May Port in the central province of Thua Thien-Hue, which will allow the port to receive ships longer than 360 metres with 4,000-5,000 passengers on board.

The agreement was recently signed between the group and the Vietnam Shipbuilding Industry Corporation.

According to Phan Tien Dung, Director of the Thua Thien-Hue Department of Culture, Sports and Tourism, the province predicts it will welcome approximately 70,000 visitors by sea in 2015.

Chan May Port is an important receiving gate welcoming visitors entering the country via sea to Thua Thien-Hue, therefore the upgraded port will help raise the province’s turnover from tourism, Dung said.

The Celebrity Royal has committed to bring around 25,000-30,000 tourists to the province this year, he added.

Non-life insurance firms lack qualified actuaries

Non-life insurance companies in the country are faced with a shortage of actuaries who meet national standards, according to the deputy general secretary of Vietnam Insurance Association.

Beginning in January next year, non-life insurance companies are required to use actuaries who meet national standards, including being a fellow of international actuary societies, having at least five years of work experience and at least two certificates in the field issued by international actuary societies.

Only one actuary in the country meets these standards, according to Ngo Trung Dung, Deputy General Secretary of Vietnam Insurance Association.

Speaking at a recent workshop at the International University-HCM City, Dung said the country has 30 non-life insurance companies, 17 life insurance companies and two re-insurance companies.

No university in the country offers training in actuary, he said, adding that the International University-HCM City should be a pioneer in training.

It should cooperate with other international universities to offer training, he said, adding that incomes of actuaries are high.

The country's insurance market has seen rapid development. Within the last five years, the market's growth rate reached 16 percent, including 11.9 percent for non-life insurance.

Last year, the total revenue from insurance was around 2.6 billion USD. The total assets of insurance companies were 7.7 billion USD.

The workshop, held by the association in cooperation with the International University-HCM City and Vietnam Insurance Association, provided information about a relatively new statistical method called chain ladder. This method is used to estimate outstanding claims, whereby the weighted average of past claim development is projected into the future.

Move to help insurance brokers

The legal framework for the operation of insurance brokerage companies will be improved to enhance their competitiveness, according to the Insurance Supervisory Authority under the Ministry of Finance.

The department's director Phung Ngoc Khanh said at a conference on June 17 that insurance brokerage was becoming an important factor for the development of the insurance market as well as the country's socio-economic development.

At the conference, brokerage firms spoke about the difficulties they face and proposed various improvement measures to the insurance watchdog.

Firms said that detailed regulations for operations and insurance brokerage fees are needed.

They pointed out that in Vietnam, there are currently no regulations allowing firms to charge fees for providing consultancies to customers and this has limited the operations of insurance brokerage firms.

According to the statistics of the Ministry of Finance, total insurance premiums through the brokerage channel increased rapidly by 22 percent last year.

During the 2011-14 period, total insurance premiums through brokerage reached 21.165 trillion VND (979.8 million USD), or equivalent to 22.7 percent of the total non-life insurance premiums during the period, and contributed nearly 300 billion VND (13.88 million USD) to the State budget.

Commissions from insurance brokerage last year reached 492 billion VND (22.7 million USD), rising by around 10 percent.

A representative of the department said that studies on the development of insurance brokerage in foreign countries are being carried out to seek measures that can be applicable to boost the development of this sector in Vietnam.

Currently, there are major gaps between foreign insurance brokerage firms and domestic firms in management capacity and market shares. Last year, five foreign brokers dominated the market, holding a combined share of more than 92 percent.

In addition, insurance premiums collected through brokerage remained modest, just 12 percent of the total premium of the insurance market, while the percentage of Thailand and the US were 30 percent and 85 percent, respectively.

The department revealed that a regulation to allow insurance brokerage firms to offer consultancy services will be taken up for consideration in line with international practices.

Meanwhile, firms have urged the foundation of an association of insurance brokers to enhance their operation capacity and standards.

Can Tho strives to enhance local capacity

The Mekong Delta City of Can Tho has taken drastic measures to enhance the competitive capacity of local businesses since early this year in a bid to boost the industry sector, said the municipal Department of Investment and Planning.

The city’s authorities have provided local firms with legal consultations on preparing terms and documentation of business contracts alongside advice on diversifying their products.

Furthermore, firms have been updated on anti-dumping regulations and import procedures of a number of countries and trained to ensure they complete accounting and auditing forms correctly.

They have also been offered guidance on overseas technical regulations, standards and quarantine treatment which, should they fail to satisfy, will create unnecessary obstacles to trade.

The city recommended companies establish business cooperation with other firms in the Mekong Delta region in order to address trade barriers.

Other recommendations included intensifying market research and trade promotion in line with renewing production technology to improve product quality.

Thanks to the efforts, numerous businesses in Can Tho city have adopted international standards of quality management systems to ensure workplace safety and focused on expanding distribution networks and improving personnel training quality.

Additionally, the locality has amended its policies in accordance with Vietnam’s commitments to the World Trade Organisation (WTO) and prepared itself to support businesses and local products vulnerable to the integration process.

During the first half of the year, the city’s consumption of industrial products exceeded 40 trillion VND (1.84 billion USD) and imports reached 487 million USD, up 12.8 percent and 2 percent, respectively, compared to the same period last year.

European businesses encourage Vietnam to develop clean energy

Vietnam could draw further foreign investment through developing clean energy resources, experts commented at a recent meeting on the EU-Vietnam free trade agreement.

From now to 2020, Vietnam will need some 8 billion USD per year to meet the local energy demand, which doubles every six years, said Vice President of the Green Growth Business Sector Committee (GGSC) under the European Chamber of Commerce in Vietnam (EuroCham) Christoph Schill.

The country has vast potential in the field but has been focusing solely on low-cost energy, such as hydroelectricity and coal, without proper investment policies to develop clean energy, he said.

Developing clean energy will help the Southeast Asian country take advantage of its natural conditions and ensure energy security moving forward.

Energy price hikes do not affect investment from foreign firms, according to the latest survey conducted on 150 foreign businesses in Vietnam by the GGSC and the International Institute for Sustainable Development.

Most respondents said the price of energy was the least important factor among 10 contributing reasons for their decision to invest in Vietnam .

More crucial factors are the availability of skilled workers, costs, domestic market conditions and Government policies, they said.

A majority of companies revealed that they could bear nominal power tariff increases of 15 percent or more before planning future investments and over 65 percent could accept a price hike of 10 percent per year.

Foreign companies are more concerned about the quality of electricity supply than prices. Up to 65 percent of respondents said they were not satisfied with the power supply infrastructure and two-thirds utilise back-up power sources. Some 73 percent said unstable power supply, rather than power price hikes, had affected the country’s competitiveness in attracting investors.

Experts said Vietnam should draw up long-term plans to promote the use of green energy while encouraging private investors to join the field and building a legal framework for the development of renewable energy.

Europe is one of the biggest trade partners of Vietnam with 27.6 billion EUR worth of goods and is among the country’s largest investors with 1,810 investment projects. The figures are forecast to surge when the EU-Vietnam free trade pact is signed in 2016.

Central EZ hoped to become major trading hub

The Cha Lo International Border Gate Economic Zone (EZ) of central Quang Binh province has seen vigorous growth of commercial activities in recent years and is expected to become a goods and services trading hub for Vietnam with neighbouring Laos and Thailand.

The zone is located in a province that shares roads No. 8 and No. 12 with eight other provinces of Vietnam, Laos, and Thailand. Its position is also favourable to connect with other counterparts such as Lao Bao in nearby Quang Tri province and Cau Treo and the Vung Ang Economic Zone in Ha Tinh province.

Goods trading via the Cha Lo border gate so far this year have amounted to 929.5 million USD, surging by 34 percent from a year earlier, while 75 billion VND (nearly 3.49 million USD) in taxes have been collected here.

More than 33,000 vehicles have travelled and almost 250,000 people have passed through this port of entry, representing 96 percent and 101 percent of the respective figures during the same period last year.

In order to improve trading activities and services at the border gate, the Quang Binh People’s Committee has urged close coordination among administrative units, including the provincial Economic Zone Authority, border guards, customs, migration police, health quarantine, animal and plant quarantine and the State Treasury, said Pham Huu Loi – Deputy Head of the Economic Zone Authority.

On February 21, 2014, Prime Minister Nguyen Tan Dung approved a master plan on developing the Cha Lo International Border Gate Economic Zone before 2030.

The zone has now received a substantial facelift with basic infrastructure like roads and water supply facilities under construction at a quick pace.

Vietnam lychee enters Australian market

As many as 17 tonnes of Vietnamese fresh lychee have been exported to Australia, marking the first time the fruit has gained entry into this market.

Sending Vietnamese lychee to Australia has taken 12 years and several rounds of negotiations. It is hoped that successful lychee exports to Australia will pave the way for other Vietnamese agricultural products to enter the country.

According to Vietnam’s Trade Office in Australia, the goods arrived in major Australian cities including Melbourne and Sydney from June 12-19 and received a positive market response.

Vietnamese lychee was lauded by Australian consumers for its quality, fragrance and taste. It was sold for about 22 AUD per kilogramme in super markets.

Nguyen Hoang Thuy from Vietnam’s Trade Office in Australia said in an attempt to carve a niche in the country’s market, Vietnam should invest in irradiation and packaging facilities in harvesting areas to ensure product quality and save costs.

The office has cooperated with individuals and organisations to conduct a number of promotion campaigns to support Vietnamese agricultural products in the host market.

ASC, MARD cooperate to promote responsible aquaculture in Vietnam

The Directorate of Fisheries under the Ministry of Agriculture and Rural Development (MARD) and the Aquaculture Stewardship Council (ASC) signed a Memorandum of Understanding (MoU) on June 22.

Under the MoU, both sides pledged to work together to promote responsible aquaculture in Vietnam through a step-by-step approach from VietGAP to ASC certification.

According to Pham Anh Tuan, Deputy Head of the Directorate of Fisheries, aquaculture is one of four key sectors in Vietnam’s fisheries and accounts for 60 percent of the total output, which is expected to rise to 70 percent by 2020.

In order to promote sustainable aquaculture, Tuan said the MARD issued the Vietnamese Good Agricultural Practices (VietGAP).

Both sides reviewed the differences between VietGAP and ASC and agreed to implement a joint project to create guidance for VietGAP certified farmers to help them progress to the ASC certification.

Chris Ninnes, Managing Director of the ASC, said his group is engaging with a tier of farmers through this project that are not currently able to meet ASC requirements, including smallholders, who will benefit from greater support in improving their practices.

This approach will also enable the ASC to become a more efficient service provider by reducing costs for producers who wish to gain ASC certification, he said, adding that the ASC has granted quality certifications to around 3,000 labels on the market and over 500,000 tonnes of products.

In 2014, the Vietnamese Government issued Decree No 36/2014/ND-CP on growing, processing and exporting catfish, stipulating that farms must receive VietGAP or equivalent certifications by the end of 2015, evidence of the Vietnamese Government’s commitment to developing sustainable aquaculture.

Vietnam to create a strategy for developing cultural industry

The Ministry of Culture, Sports and Tourism has been asked to map out a strategy for developing Vietnamese cultural industries through 2020.

Under Deputy Prime Minister Vu Duc Dam’s conclusion on a draft of the strategy for developing Vietnamese cultural industries through 2020, the ministry is asked to review, formulate and issue mechanisms and policies to promote the development of cultural industries in Vietnam.

He noted that it is necessary to define the scope of the strategy to make it suitable with factual contexts in Vietnam and maximise Vietnam’s advantages.

The completed strategy is expected to be submitted to the Prime Minister at the end of the third quarter this year.

HCM City: CPI rises 0.62 percent in June

The June consumer price index (CPI) in Ho Chi Minh City increased 0.62 percent over May and 0.78 percent against the same period last year, the municipal Statistics Office said on June 22.

The average CPI in the first six months increased 0.65 percent compared to the same period last year.

Seven of 11 main commodity groups in the CPI brackets showed price increases, led by pharmaceutical products and medical services, which jumped 3.98 percent since last month. It was followed by transport (3.94 percent), culture-entertainment (0.39 percent), food and restaurant services (0.32 percent), garment and footwear (0.03 percent), and home appliances (0.01 percent).

The CPI for food and restaurant services increased due to hikes in the price of food by 0.62 percent.

Price decreases were seen in goods and other services by 0.05 percent and in housing, electricity, water, fuel and construction materials by 0.1 percent.

Telecommunications and education prices remained stable in June.

The price of gold decreased by 0.51 percent while the US dollar exchange rate rose 0.71 percent.

Hanoi’s CPI picks up in June over petrol price adjustment

Hanoi’s consumer price index (CPI), an indicator of inflation growth in the city, grew by 0.13 percent in June from the previous month and 0.98 percent 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 percent from May.

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

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

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 percent from April and a year-on-year surge of 0.93 percent.

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 percent from April.

Does integration threaten Vietnam’s economic autonomy?

Transnational companies are rushing into Vietnam in search of opportunities for growth and their entry into the market is a boon for consumers who benefit from wider choices of products lining retailers’ shelves.

However, many prominent business leaders are saying the influx appears to be a death sentence for domestic companies— many of whom have had a dominant position in the marketplace for decades.

Pham Nhu Bach, CEO of the Mai Lan Joint Stock Company, specializing in producing Kissme paper products, says competition with the large foreign invested businesses is proving to be the greatest challenge his company has faced since it was founded.

After a steady ascent in the rankings over the past 30 years of operations for which it has been recognized as a top Vietnam brand for 14 consecutive years, today the company is facing insurmountable problems.

Bach says transnational companies have substantially more financial resources along with a wide array of other advantages such as state-of-the-art technology, superior products, and well seasoned marketing and management skills.

He says over the past three to four years we have cut back production because we can’t compete in the major supermarkets and retail establishments with the global brands. Today the Kissme brand can only be found in Vietnam’s traditional markets stores.

We simply don’t have sufficient resources to invest in the requisite updated equipment and technologies required to compete on a level playing field with the large transnational companies.

Echoing these sentiments, Nguyen Dac Son, director of Hai Son Mechanical Engineering Co Ltd underscores the point that it’s not easy to obtain the long term financing the company needs to modernize.

Some short-term limited working capital type loans are available with preferential short term interest rates for up to two years but longer term financing packages are either not available or much too costly, Son stresses.

The fact is Son added that most transnational companies also pay higher salaries and wages leaving domestic companies struggling to pay competing remuneration in a fruitless effort to retain key employees.

Domestic enterprises are not only losing out on the home front, says Vietnam Association of Seafood Exporters and Producers (VASEP) General Secretary.Truong Dinh Hoe.

The quality of many Made-in-Vietnam products lack competitiveness because they are not on conformance with international standards and therefore are not permitted entry into foreign markets.

Domestic companies are simply at a complete disadvantage entering foreign markets when compared to the foreign invested companies that can draw on a rich body of knowledge and experience on how to approach them.

The management of domestic export businesses most often lack even a rudimentary understanding of the foreign market on attributes of consumer demand, market trends and distribution channels or even who their rivals in the foreign markets are says Hoe.

As a specific example, Hoe cites the case of the European Union (EU) for which out of a total of 400 domestic businesses just over 30 are up to par and accredited to export to the vast market.

Notably, the Republic of Korea (RoK) recently imposed higher quality requirements on import products, especially singling out Vietnamese shrimp after a shipment tested positive for excess ethoxyquin residue.

The situation was embarrassing for Vietnam because it highlighted the simple fact that Vietnamese businesses collectively have yet to devise simple business plans and marketing strategies to successfully enter a foreign market.

In the face of the high competitiveness businesses are facing in the domestic market the government should re-evaluate its policies with respect to transnational businesses says leading economist Dr Nguyen Tri Hieu.

In far too many instances the government has implemented policies and procedures that unfairly benefit the large transnational businesses at the expense of domestic businesses, Hieu suggests.

Last but not least, Vietnam Chamber of Commerce and Industry (VCCI) Chairman Vu Tien Loc,

also stresses the government should pay more attention to the plight of domestic businesses to ensure economic autonomy.

Norwegian business eyes gas power investment in Con Dao

The Ba Ria-Vung Tau provincial People’s Committee has allowed Gravi Float AS Company of Norway to make a feasible study on building a 45 million liquefied natural gas (LNG) power plant in Con Dao.

Accordingly, the project will include a LNG warehouse, a wharf and a 18MW-capacity LNG power plant.

Earlier, the province agreed with Norway LMG Marin Company on developing a LNG using ocean liner project to transport passengers and goods from Vung Tau to Con Dao and vice versa.

The liner will have a capacity of carrying around 350 passengers and 400 tonnes of cargo and its anchorage will be located at Cau Da port, PTSC port (Vung Tau) and Bem Dam port (Con Dao).

With the operation of the liner, the travel time from Vung Tau to Con Dao will reduce to five hours from current 13 hours.

Domestic investors request international passenger terminal

A joint venture between Viet Xuan Moi and Duc Binh Group joint stock companies has submitted to the transport ministry an investment proposal for Cam Ranh Airport's international passenger terminal.

The project, to be managed as a BOT (built-operate-transfer) operation, is estimated to have investment capital of nearly VND2 trillion (US$90.9 million).

The proposal was made to address the rapidly increasing number of passengers seen in recent years at the airport. Research showed that the current 13,995sq.m terminal had the capacity to serve 1.6 million passengers per year.

In 2013, the airport received more than 1.5 million passengers. Passenger numbers have greatly exceeded the airport's capacity since 2014.

If the proposal is approved, the airport will have two terminals. One will serve domestic passengers, while the other will be exclusively used by foreign visitors. The investors will also produce a feasibility report, complete construction and put the terminal into operation by 2018.

General Director of Viet Xuan Moi JSC Nguyen Thi Quyen said the construction of the international passenger terminal was essential and urgent for the airport's operations and to manage the increasing flow of passengers in the future.

To mobilise capital, the joint venture has suggested two methods: mobilising capital from domestic private companies through a BOT scheme or establishing a project management body or a joint venture company which will have capital contribution from the Airports Corporation of Viet Nam.

Competition from abroad heats up for animal husbandry sector

Viet Nam's animal husbandry industry is expected to face serious challenges under new and future Free Trade Agreements (FTAs) because of low productivity, high production costs and small scale of production.

Speaking at a conference held in HCM City yesterday, Doan Xuan Phuc, deputy chairman cum general secretary of the Animal Husbandry Association of Viet Nam, said that FTAs would adversely affect the industry more than any other agricultural industry.

But he noted that FTAs would also help the industry access new technology, products, and animal breeds as well as production methods.

Ho Xuan Hung, chairman of the General Association of Agriculture and Rural Development, said that lower import tariffs under new FTAs would lead to fierce competition with foreign producers.

The domestic industry is plagued with small-scale breeding, poor animal breed quality, poor breeding technology, low labour productivity, regular threats of disease and poor linkages in the production chain.

Phuc said that high bank loan interest rates had increased breeding costs, reducing the sector's competitiveness.

Production costs have also gone up because of dependence on imports for raw materials used to produce animal feed and vaccines.

In addition, technologies for processing and preservation are not advanced, limiting management of food quality.

Phuc said the domestic animal husbandry sector had been able to meet demand for 100 per cent of pork meat, 95 per cent of poultry meat and 75-80 per cent for beef.

"If the sector does not lower production costs, cheaper imported meat will enter the market," he said.

Le Ba Lich, chairman of the Viet Nam Animal Feed Association, said to compete with imported meat, locally made meat must be competitive in price, quality, and hygiene and food safety.

He said the sector should develop a closed production chain to reduce costs and improve quality. In addition, the government should offer support to enterprises that want to invest in concentrated breeding areas and modern slaughterhouses.

Training of human resources should also be promoted, as well as investment in environmental treatment and modern processing and preservation facilities.

Nguyen Xuan Duong, deputy head of the Animal Husbandry Department, said in 2013 pork accounted for 74.2 per cent of total meat output, poultry 17.3 per cent, cattle 8.5 per cent.

The country targets raising the ratio of poultry and cattle meat to 28 per cent and 10 per cent, respectively, while reducing the ratio of pork meat to 62 per cent, Duong said.

The conference was organised by the General Association of Agriculture and Rural Development and the Animal Husbandry Association of Viet Nam.

Despite FMCG sales growth, retailers remain cautious

Fast Moving Consumer Goods (FMCG) sales have shown signs of recovery in the first quarter of 2015, but retailers remain cautious about the future, according to the latest report released by international research agency Nielsen.

The first quarter witnessed a 3.4 per cent volume growth in the six key cities of Hanoi, Ho Chi Minh City , Haiphong, Cantho, Nha Trang and Danang, following a sharp downturn in 2014. Beverage is the key factor behind growth recovery, but other categories such as food and home care are also picking up.

The report also found that more than 80 per cent of FMCG sales in Vietnam still comes from traditional trade channels which include around 1.3 ,million FMCG stores across the country. The sheer number of traditional stores makes Vietnam one of the most complex markets for FMCG manufacturers to build distribution chains and manage logistics.

Furthermore, only 30 per cent of these traditional stores contribute to the top 80 per cent of sales. Therefore, to win in this traditional-trade dominated market, manufacturers must identify the right stores to target, which is not an easy feat in such a large, dynamic and ever-changing retail market.

In addition to the complexity and a large number of traditional stores, the power to make or break a brand or product lies with traditional retail store owners. The report shows that only 70 per cent of traditional retail stores comply with manufacturers’ request to stock their products, highlighting the importance of winning over a retailer.

Among the brands most supported by Vietnamese retailers, Hao Hao, Vinamilk and Coca-Cola stand at the top, with more than half of store owners indicating willingness to stock their products more and recommend them to shoppers.

Nielsen’s executive director of retail measurement services Nguyen Huong Quynh addressed the issue, stating: “Despite the growth of FMCG, the Retailer Confidence Index reached the score of only 71, which shows significant levels of hesitation. The main reason is that retailers are mainly concerned about what directly impacted their businesses, such as extra stock, margin and customer services support.”

“Therefore, it is critical for manufacturers to completely understand these concerns, identify the right stores to target and ensure that retailers comply and stock their products in-store throughout the year. This requires a combination of different strategies based on retailer and shopper understanding in order to build a picture of success for sales and to execute in the market,” she added.

With such a complex retail market, it is essential for manufacturers to identify the right stores to target their priority investment. Only when this stage is completed can manufacturers focus on launching a logical attack plan for market penetration, sales force deployment, direct vs. in-direct store strategy and stock availability.

A picture of success is normally comprised of a combination of pricing, assortment, trade activity and in-store communication. However, the big challenge for manufacturers is to find a way to ensure that these component parts are executed in store and complied by retailers.

Doosan Vina successfully lifts heavy girder for unit 1 of Vinh Tan 4

After nearly 15 months of construction by Doosan Heavy Industries Vietnam, the consortium of Electricity of Vietnam, Power Generation Corporation 3, Doosan Heavy Industries & Construction, Mitsubishi Corporation, Pacific Corporation, and Power Engineering Consulting JSC 2, held a ceremony to lift and place the "Heavy Girder" for Unit 1 of Vinh Tan 4, signalling the completion of phase I.

The plant is part of a larger thermal power centre complex in Vinh Tan commune, located in Binh Thuan’s Tuy Phong district. With this milestone, Vinh Tan 4 is now 30 per cent complete.

Starting construction on March 9, 2014, Vinh Tan 4 was the second power plant in the Vinh Tan thermal power centre to break ground.

The project consists of two 600MW units, with the total generating capacity of 1,200 MW. Once completed, it will provide 7.3 billion kWh per year for southern Vietnam. The total investment for the plant is over VND36 trillion ($1.7 billion).

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