UMA nation's top furniture retailer

Home decor brand UMA has opened a store in Ha Noi's Ba Dinh District to become the largest furniture retail chain in the country.

There are 10 UMA stores now, with an 11th set to open in the capital's in Dong Da District next month.

UMA is a 50-50 joint venture between Vietnamese and Swedish partners.

The Swedish ambassador to Viet Nam will inaugurate the Dong Da store on December 2.

Ambassador Camilla Mellander said "UMA represents a successful cooperation model between Swedish and Vietnamese businesses that is expected to further develop in the future."

Five VN firms in ASEAN 100 list

Five Vietnamese companies have been listed in ASEAN's 100 most powerful and influential by Japanese newswire Nikkei Asian Review.

ASEAN 100 features Viet Nam Dairy Products Joint Stock Co (Vinamilk), Vietcombank, FPT, PVGas, and Vingroup.

The list includes 25 companies each from Singapore, Indonesia, and Thailand and 22 each from Malaysia and the Philippines.

Vinamilk is the Viet Nam's biggest dairy companies that makes up half of the local market share. Its market capitalization is the second largest in Viet Nam at around $5.5 billion.

In ten months of this year, Vinamilk's revenue was VND26.924 trillion ($1.28 billion).

While FPT is Viet Nam's biggest listed information and communication technology company, PVGas, a wholly owned member of the Vietnam Oil and Gas Group (PetroVietnam), is the country's largest gas provider.

HCM City failing to meet SOE equitisation goal

HCM City is unlikely to achieve the year's target for equitising State-owned enterprises, the People's Committee has admitted.

The Government's plan to equitise 432 SOEs this year and next includes 31 in the city, which have to be converted into shareholding companies, and the city had planned to equitise 15 this year.

But a recent People's Committee meeting on SOE restructuring heard that the city would be unable to achieve its equitisation plan for this year. Of the 15 firms earmarked for equitisation, only three have so far made initial public offerings (IPOs): Sai Gon Cultural Products Corporation, Tan Hoa Water Supply Company, and Trung An Water Supply Company.

Of the rest, 10 have had their equisation plans approved while one each is in the process of valuation and having equitisation plans considered for approval.

Huynh Trung Lam, deputy head of the HCM City Board of Management Renovation, told Dau Tu Chung Khoan (Securities Investment) magazine that there are indications the remaining IPOs would also be launched successfully.

Speaking about the reasons for failing to achieve the SOE equitisation target, many participants told the meeting that the biggest difficulty relates to SOEs' investment in non-core sectors.

People's Committee Chairman Le Hoang Quan said the restructuring process remains tardy because there is little demand for the shares of equitised SOEs.

But he underlined the city's determination to complete the equitisation as planned, with all the SOEs converted into shareholding companies by 2017 at the latest.

The city has urged SOEs to sell off their investments in non-core sectors.

The investments they have to pull out are estimated at VND4.82 trillion (US$226.72 million) in the 2014-15 period, of which VND1.13 trillion is planned for the fourth quarter of this year.

Investors buy still-unfinished apartments

Domestic investors have bravely purchased property projects facing financial difficulties to ensure their completion, amid positive market signals for medium-priced apartments since end-2013.

The Nguoi lao dong (Labourer) newspaper quoted Nguyen Dinh Trung, general director of Hung Thinh Real Estate Trading Joint Stock Company, as saying his company had paid attention to the construction of medium- and high-priced apartments because of the availability of funds and the willingness of banks to disburse thousands of billions of dong to the company.

Nguyen Thi Hoa, general director of the National House Organisation Joint Stock Company (NHO), revealed that her company made partial purchases of the projects and entered into deals with the original investors to continue their development.

Next year, the NHO plans to invest triple the amount it has invested in difficult projects this year, Hoa added.

Financial expert Nguyen Tri Hieu explained that, based on their financial status, domestic real estate projects can be classified into three: those implemented on schedule, those suspended for lack of funds and those used as collateral for loans that became bad debts.

Both investors and banks want immediate solutions to the second and third kinds of real estate projects, Hieu added, and partly attributed the existence of such projects to economic stagnation.

The availability of loans from either foreign financial organisations or domestic banks is advantageous to real property project investors and the domestic real estate market.

Hau Giang fair promotes products

A fair on agro-industry, trade and tourism opened Saturday in the southern province of Hau Giang as part of the sixth Culture, Sports and Tourism Festival of the Khmer ethnic people in southern Viet Nam.

Three hundreds and fifty stands put their products on display for the fair, which runs until Nov. 29. Of those, 92 stands will focus on the strengths, potential and development of the economy, culture and tourism of southwestern provinces, as well as the traditional culture of Khmer ethnic people.

The event represents an opportunity for firms that make handicrafts and agro-forestry-aquatic products to promote trade and investment, and enhance their competitiveness.

The fair is an important economic and cultural event for both the province and the Cuu Long (Mekong) Delta area as a whole.

Forex fluctuations normal: experts

Experts predicted more fluctuations in foreign exchange rates from now till year-end because of higher domestic demand and clarified that this was normal.

Banking expert Nguyen Tri Hieu told the Tuoi tre (Youth) newspaper that the fluctuation was normal and in accordance with the economic cycle.

Hieu explained that domestic demand for the US dollar from the Government and businesses, to be used for foreign loan payments, would often increase in the last quarter of the year.

Besides, rising import demand ahead of the country's largest festival in the New Year would also push up demand for dollars.

A huge gap between domestic and global gold prices had also sparked an increase in gold smuggling that was in turn sparking higher dollar demand, he said.

The foreign exchange rate in the last months of the year might reach the State Bank of Viet Nam's (SBV) regulated cap because of high demand, predicted Hieu.

The Vietnamese dong-US dollar exchange rate of commercial banks cooled down in the past week after the SBV affirmed that it would maintain the current average interbank exchange rate till year-end. Banks last Friday quoted a rate of VND21,335/21,385, a VND45 decrease from that of last Tuesday.

Previously, commercial banks sharply increased the exchange rate in the wake of an adjustment rumour. SBV deputy governor Nguyen Thi Hong attributed the increase to psychological factors arising from the rumour that the central bank may adjust the exchange rate upwards.

Hong said the SBV would continue to closely watch the foreign exchange market to ensure its stability as well as that of the monetary market.

If necessary, the SBV would sell dollars to stabilise the market in the set band, Hong added.

The SBV said the country's dollar supply and demand sources remained stable, with a surplus of roughly US$11 billion in the first nine months of the year.

CPI falls on lower transport costs

Viet Nam's consumer price index (CPI) fell in November 2014 by 0.27 per cent month-on-month largely because of decreasing transport costs, the General Statistics Office (GSO) revealed yesterday.

This is the second time the country's CPI has decreased since last March, when prices fell by 0.44 per cent from February.

The CPI increased in November by 2.6 per cent year-on-year, which was lower than the 3.23-per cent year-on-year increase last October but still the lowest CPI in the past 10 years, the GSO noted.

Do Thi Ngoc, deputy head of the GSO's CPI Department, attributed the decline to the 20-per cent fall in the retail prices of petrol, leading to a sharp reduction in transport costs of up to 2.75 per cent month-on-month, thereby contributing to a 0.24-per cent CPI decrease.

"Transport costs will continue to fall in the future," Ngoc said, adding that gas prices likewise posted a remarkable decrease. In addition, the prices of building materials and housing fell by 0.74 per cent.

Notably, the food and restaurant services groups, which account for the biggest portion of the CPI basket of goods and services, decreased by 0.03 per cent while the telecommunications group decreased by 0.01 per cent.

Seven of 11 goods in the basket saw a slight increase of 0.03 to 0.34 per cent. In particular, shoes, garments and textiles increased by 0.34 per cent because of a rise in demand for clothing during the cold season.

Entertainment and tourism increased by 0.1 per cent while education increased by 0.03 per cent and health care services, by 0.04 per cent.

Ngoc observed that the CPI this month reached its lowest level since 2009. This is abnormal because the index usually increases during the year-end months, she added.

The November CPI in the country's two big cities fell by 0.30 and 0.36 per cent. Other localities such as Da Nang, Hai Phong and Can Tho experienced the same decrease. In November, gold averaged VND3.5 million per tael and the US dollar, VND21,350.

Vietnamese Prime Minister Nguyen Tan Dung also said last week that Viet Nam's inflation this year would likely be below three per cent, its lowest level in decades.

Economist Ngo Tri Long agreed, saying the low CPI would have both positive and negative effects on the economy.

Long revealed that at the end of the third quarter, the country's GDP growth rate reached 5.62 per cent, so the growth rate for the entire year was expected to reach 5.8 per cent because of an expected increase in foreign direct investments and overseas Vietnamese remittances in the year-end months.

A CPI at 4.5 to five per cent will have a positive impact while that at three per cent will result in higher inventory, low purchasing power, decreasing investment and slow consumption, he added.

However, Long suggested that the Government refrain from increasing prices now, as high inventory, lower demand and increasing bad debts were causing the drop in the inflation rate.

If prices are increased, purchasing power will fail to recover and consequently, production will fail to improve, he warned.

Regional experience shared in disease prevention in aquaculture

As many as 200 veterinary specialists and aquaculture researchers and students from more than 30 countries are gathering in Ho Chi Minh City for the ninth Symposium on Diseases in Asian Aquaculture (DAA9).

The objective of the event, jointly organised by the Fish Health Section (FSH) of the Asian Fisheries Society (AFS) and the Department of Animal Health under the Ministry of Agriculture and Rural Development (MARD), is to share experience in and scientific research on disease prevention.

Speaking at the opening ceremony on November 24, Deputy MARD Minister Vu Van Tam highlighted that the symposium provides opportunities for Vietnamese and international businesses to seek partners and expand research cooperation, seafood trade links, and aquatic veterinary medicine exchanges, with a view to producing high-value added food, promoting sustainable development and minimising pollution.

During the five-day event, participants discussed a number of issues related to aquatic animal health, such as the application of biological security, epidemic prevention, and common parasites and diseases in tilapia, tra fish and shrimp.

The meeting also discusses the early mortality syndrome and acute hepato-pancreatic necrosis disease in shrimp (EMS/AHPND), which is one of the biggest challenges for the development of aquaculture in Asia.

Italian firms seek investment opportunities in Vietnam

As many as 100 Italian organisations and enterprises are taking part in a number of trade promotion activities in Hanoi and Ho Chi Minh City from November 24 to 26.

They include official discussions, governmental-level bilateral meetings, and an Italy-Vietnam economic forum.

A meeting of the Vietnam-Italy joint committee for economic and trade development will also be held on this occasion.

The visit, led by Italian Deputy Minister for Foreign Affairs and International Co-operation Benedetto Della Vedova, aims to strengthen relations between the two countries in various fields including economy, trade, technology, health care, energy, and infrastructure.

In addition, both sides will discuss investment potential and cooperation opportunities offered by 110 industrial areas throughout Vietnam.

Currently, Italy is Vietnam’s 18th largest exporter and 15th largest importer.

The country also remains the third largest EU trade partner of Vietnam with two-way trade turnover of 3 billion Euro in 2013. The figure is expected to go up to 3.5 billion Euro this year and 5 billion Euro in 2016.

Trade decline via Lao Cai border gate

Since early this year, the quantity of Vietnam’s agricultural products exported to China through Lao Cai border gate has fallen by 13.6% and Chinese products imported to the country reduced by 42.8%.

According to the Plant Quarantine Sub-Department of Region VIII, Vietnam’s major export items include green bananas, timber, fresh cassava roots, cardamom, and fresh lemon and mango.

Imports from China include a wide range of traditional products such as potato, fresh pomegranate and apples, cabbage, cauliflower, tomato, garlic, sunflower seeds and hybrid rice seeds.

Among 14 temporary import and re-export products from Laos, South Africa, Iran and Australia to China through Lao Cai border gate are Dalbergia cochinchinensis, almond, walnuts, pistachio nut, dried figs, and rapeseed.

RoK – top FDI investor in Vietnam

Since early this year, 60 countries and territories have directly invested in Vietnam. The Republic of Korea tops the list, followed by Singapore, Japan and Hong Kong.

In the 11-month period, the newly registered and the extended FDI capital of Korean businesses reached US$6,82 billion,

Foreign businesses have invested in 50 provinces and cities nationwide. Thai Nguyen province ranks first in attracting FDI capital, followed by Ho Chi Minh City, Binh Duong, Bac Ninh, Dong Nai and Haiphong.

According to the Ministry of Planning and Investment (MPI), in the reviewed period, foreign investors have registered a total investment capitalization of US$17.33 billion or 83.3% against the same period last year.  It is estimated that US$11.2 billion FDI capital has been disbursed, a year-on-year increase of 6.2%.

The manufacturing and processing sector attracted most of the FDI with 689 newly registered projects. It is followed by the real estate sector with 32 new projects and the construction sector.

Science, technology, innovation to drive sustained growth in Vietnam

Vietnam needs to rely more on productivity gains driven by innovation in order to boost its economy, according to a new joint study by the World Bank and Organization of Economic Co-operation and Development (OECD) released on November 24.

The study, The OECD-World Bank Review of Science, Technology and Innovation in Vietnam, looks at the key elements, relationships and dynamics that drive the Vietnamese innovation system and opportunities to enhance it through government policy.

Increased competition in globalizing markets means that it is more important than ever to invest early in advanced technological capabilities, said Victoria Kwakwa, World Bank Country Director for Vietnam. This will help Vietnamese enterprises better position themselves in global value chains.

Despite its historical record of scientific research, Vietnam’s innovation system in the modern sense is only emerging. Current science, technology and innovation capabilities are weak and the national innovation system is in a nascent and fragmented state. Research and development both in the public and private sectors still have a lot of room for improvement, according to the report.

Vietnam’s challenge is to achieve sustainable high GDP growth in a less buoyant international environment, said Andrew Wyckoff, Director for Science, Technology and Innovation at the OECD. To avoid falling into a ‘middle-income trap’, the country will need to considerably improve its domestic innovation capabilities, he added

The World Bank-OECD joint review provides several recommendations for policy makers to foster science, technology and innovation in Vietnam, including improving framework conditions for innovation, improving public governance of the innovation system, strengthening the human resource base for innovation, fostering innovation in the business sector, increasing the contribution of public research, and fostering innovation linkages.

Italian, German papers hail Vietnam’s business climate

Italian and German newspapers have run stories praising Vietnam’s business climate.

Italy’s best-selling daily Corriere della Sera described Vietnam as a market of 93.4 million people that presents a golden opportunity to Italian firms active in apparel, leather, footwear and precision engineering.

Its comments came in anticipation with Italy’s Deputy Foreign Minister Benedetto della Vedova’s visit to Vietnam and chair of the first meeting of the Italy-Vietnam joint committee on economy from November 24-27. The official is accompanied by 130 businesspeople.

Alessandro Terzulli, economic analyst of SACE export credit agency, said Vietnam’s manufacturing sector is expanding rapidly, which is what exactly happened in China many years ago and made the country known as a “factory of the world”. Vietnam is moving the same way thanks to low labour cost.

Italian enterprises are increasingly interested in Vietnam since it is their country’s fifth largest market in Southeast Asia and eighth biggest in Asia. In 2014, their exports surged 34.6 percent to 674 million USD.

Germany’s Deutsche Welle (DW), meanwhile, named the German sportswear manufacturer Adidas as an example of successful commercial engagement in the country.

Vietnam, along with China and Indonesia, is one of the three major supplier countries for Adidas worldwide, Adidas' Simone Lendzian told DW.

"Furthermore, the importance of Vietnam as a consumer market is growing. The country's young population has a strong interest in international brands. We are seeing a high level of awareness about our brand and growing popularity for it, thus leading to increased demand for our products," he said.

While Japan and the Republic of Korea are the top sources of foreign investment in Vietnam, Germany is currently the 22 nd biggest foreign investor in the Southeast Asian nation.

As many as 750 representatives of the German business network attended the recently-concluded 14 th Asia-Pacific Conference of German Business (APK) in Ho Chi Minh City, indicating their growing interest in the country.

"Vietnam would like to see more economic engagement with Germany, as the European country has good reputation as an investor," said Thomas Hundt of Germany Trade & Invest (GTAI), an economic development agency.

The article mentioned foreign direct investment as a contributor of almost 20 percent to Vietnam's economy that expanded by 5.4 percent in 2013.

It quoted the World Bank report as saying that management and professional training for workers need to be improved in order to attract more foreign investors .

Nevertheless, thorough preparation and professional advice for all businessmen who want to be active in Vietnam is essential, Hundt argues.

"Whoever wants to invest in Vietnam or conduct commercial transactions must be well prepared," he said. "And good legal advice must also be taken in advance."

Can Tho enjoys three-year record GDP growth

The Mekong Delta city of Can Tho reported a 12.5 percent increase in GDP this year, generating 69.5 trillion VND (3.26 billion USD), the highest level in three years.

A conference on November 24 to review the locality’s socio-economic development in 2014 stated that the local industrial sector continued to undergo positive developments, with the industrial production index predicted to grow by 8.4 percent compared to 2013.

Local industrial parks attracted five new projects with a total registered capital of 48 million USD, up 23 million USD compared to last year.

The locality’s combined retail and service sectors generated revenue of more than 71.7 trillion VND (3.36 billion USD) this year, up 16.4 percent year-on-year. The city welcomed over 1.3 million holiday-makers, raking in around 1.1 trillion VND (51.7 million USD), which accounts for 9 percent more tourists and 20 percent more revenue than in the same period last year.

Throughout the year, local farmers produced 1.4 million tonnes of rice, a 3.9 percent increase compared to 2013. The large-scale paddy field model was expanded to a total area of 39,000 ha, a 51 percent year-on-year increase.

At the conference, the municipal Party Committee approved a resolution, setting a target of 12-12.5 percent GDP growth in 2015 and GDP per capita of 79.3 million VND.

The locality’s revenue from exports and services, and the total budget collection are expected to reach 1.6 billion USD and 460 million USD, respectively.

In order to achieve these objectives, the local authorities will focus on developing industrial sectors that serve agricultural production, while promoting services with potential for added value, such as finance, banking, insurance and logistics, according to Tran Quoc Trung, the Deputy Secretary of the Committee.

In addition, the city will also pay heed to boosting trade and tourism with a view to becoming a centre for services, trade and entertainment in the Mekong Delta in the future, Trung said.

Dong Nai’s FDI exceeds target by 600 million USD

By mid-November, the southern province of Dong Nai recorded total foreign direct investments (FDI) of 1.5 billion USD, surpassing the annual target for 2014 by 600 million USD, according to Bo Ngoc Thu, Director of the provincial Department of Planning and Investment.

This year, 73 new FDI projects were registered, valued at 587 million USD, while over 977 million USD were added to the capital of 75 existing projects. Most of the projects are in the high-tech and support industry sectors.

Dong Nai has so far revoked the licences of 11 projects, worth nearly 95.5 million USD.

Director Thu said the results were attributable to the province’s sound investment climate, effective long-term promotion programmes and improved administrative procedures.

The volume of foreign-funded investment is expected to hit 1.6 billion USD by the end of 2014, a year-on-year increase of 23 percent.

The southern provinces of Dong Nai and Binh Duong, together with Ho Chi Minh City, are amongst the most attractive FDI destinations in Vietnam.-

Vietnam to increase added value of coffee

Vietnam should encourage domestic and foreign investors to focus on producing high value-added coffee, since it is one of the country’s leading agricultural exports, according to the Vietnam Coffee and Cocoa Association (VICOFA).

Vietnam has a total coffee cultivation area of 614,545 hectares, with 92 percent of cultivation areas located in the Central Highlands provinces. Each year, the country exports 1 million tonnes of coffee beans, generating an export turnover of more than 3.4 billion USD.

Chairman of the VICOFA Luong Van Tu said Vietnamese coffee accounted for 20 percent of the world’s total production volume. However, the country only generated 2 percent of the global coffee value, adding that each coffee producing household earned around 2 USD from the sale of one kilogramme of coffee beans.

According to the master plan for coffee development by 2030, domestic and foreign businesses will benefit from incentives to upgrade and build integrated processing plants with a capacity of more than 135,000 tonnes per year, including the production of 60,000 tonnes of instant coffee.

VICOFA suggested the Ministry of Agriculture and Rural Development develop a detailed plan with a focus on mechanisms and policies to develop the coffee processing network in line with cultivation areas.

Lao Cai aims to diversify industrial production activities

The mountainous northern province of Lao Cai has recently made a big change in industrial development strategy by diversifying its industrial production activities, said the Vietnam Economic News.

The province’s industrial sector has expanded its production activities to metallurgy, fertilizer, chemicals, construction materials, hydroelectric power, agricultural processing and support industries, added the Vietnam Economic News.

The mining sector has focused on exploiting copper, iron, gold, and kaolin to serve for domestic production. In addition, metallurgy, fertilizer production and chemicals have recorded strong growths.

The province’s hydroelectric power has seen rapid growth, attracting investment capital of tens of trillions of Vietnam dong. To date, the province has 32 hydroelectric power plant projects, contributing to provide power to all communes and almost all villages in the province.

According to Lao Cai Department of Industry and Trade, in 2013, the proportion of industrial production, trade and services accounted for 82 percent of the province’s economic structure.

According to Director of Lao Cai Department of Industry and Trade Do Truong Giang, the establishment of industrial zones and clusters has created a breakthrough in the province’s industrial development. For example, the Tang Loong Industrial Zone with an industrial production area of about 650 hectares is given for metallurgy, chemicals and fertilizer production.

Meanwhile with advantages of location and good infrastructure service, Dong Pho Moi Industrial Zone and Bac Duyen Hai Industrial Cluster are home to production activities such as engineering, agricultural processing, construction materials and consumer goods.

The province aims to develop a complete production line for its mining sector by providing both mining and smelting services.

According to statistics, Lao Cai province ranked second in terms of iron reserves. To date, iron has become a main material for the Lao Cai Iron and Steel Plant with a capacity of one million tonnes per year at the initial stage.

Economic cooperation a Vietnam-India strategic objective

The Vietnamese and Indian leaders have agreed that economic cooperation between both countries should be pursued as a strategic objective, said an Indian expert.

Talking to a Vietnam News Agency correspondent in New Delhi , Jayadeva Ranade, President of the Centre for China Analysis and Strategy (CCAS), stated that potential for economic cooperation between Vietnam and India is still very large and has not been fully tapped.

The two countries have been cooperating extensively in the economic field and India has offered Vietnam 18 Lines of Credit to date, he said, adding that Prime Minister Nguyen Tan Dung’s recent visit to India focused mainly on economic engagement besides the other facets of strategic cooperation.

It was also noted that there has been strong growth in bilateral trade in recent years, particularly after the India-ASEAN trade in Goods Agreement.

According to the analyst, the recently-signed FTA between India and ASEAN in services is expected to create a strong momentum for India-Vietnam economic collaboration. RCEP is another multilateral agreement that will enhance economic engagement between the two nations in the future.

Priority areas for economic cooperation include hydrocarbons, power generation, infrastructure, tourism, textiles, footwear, medical and pharmaceuticals, information & communications technology (ICT), electronics, agriculture, chemicals, machinery, and support industries.

The two countries have set to raise their two-way trade to 15 billion USD in 2015 from the current 7 billion USD.

Vietnam’s economic success grabs headlines in Latin America

Cuban and Argentinean media recently ran stories with a focus on Vietnam’s economic achievements.

In an article on its website, the Cuban Journalists’ Association highlighted Vietnam’s renewal process, starting in 1986, that has turned the war-torn country into one of the strongest economies in Southeast Asia.

The article said Vietnam focused its renewal on updating economic mindset so as to create positive changes in its economic model and management mechanisms. Economic elements from State-run, private and cooperative ones to joint ventures co-exist in harmony, taking the country along the chosen path to a socialism-oriented market economy.

The story cited published data that Vietnam’s gross domestic product (GDP) rose at an average annual pace of 7 percent over two decades with GDP per capita increasing by 3.2 times from 1986.

With incentives to agriculture, rice and coffee have become Vietnam’s staple exports while industrial and tourism sectors have also received the best possible conditions to develop, it added.

Meanwhile, Argentina’s La Nación newspaper called the Southeast Asian country as a symbol of economic success in Southeast Asia with surging exports and foreign direct investments.

It said Vietnam, together with Cambodia, Laos, Myanmar and Thailand, is becoming an attractive industrial hub with competitive labour cost and dynamism.

The nation is switching from producing simple electronic products to more advanced ones as a number of global electronic giants have invested here, such as Intel beginning its production in Vietnam in 2010, the newspaper said, adding that major Taiwanese, Korean and Japanese groups such as Bridgestone and Panasonic also chose Vietnam as their investment destination.

La Nación underlined the case of Samsung Electronics, which was recently licensed to build a 3 billion USD mobile phone factory, bringing its total investment in Vietnam to more than 11 billion USD. About 40 percent of the firm’s smartphones worldwide are expected to be manufactured in the country next year.

Vietnam, Hong Kong promote commercial ties

The Vietnam Chamber of Commerce and Industry (VCCI) and the Hong Kong-Vietnam Chamber of Commerce on November 21 signed an agreement to further expand investment and trade between their two business communities.

Addressing the function, Executive Vice-President of VCCI Doan Duy Khuong said: "The agreement will help both sides' enterprises strengthen business exchange and increase investment in Vietnam and Hong Kong, and boost Vietnam-China economic and commercial relations to an even a higher level."

Jonathan Choi, Chairman of the HKVCC, said: "Apart from the ASEAN + China, Japan, and Korea Free Trade Area negotiations, Hong Kong in July this year began negotiations for our trade arrangement with ASEAN."

Bilateral and multilateral agreements combined with an in-depth integration of regional economics will bring the East Asian region into a competitive and vibrant economic region, said Choi, who is also Chairman of Sunwah Group.

Regarding bilateral trade with Hong Kong, Khuong said it had reached 4.96 billion USD, a growth of 22.68 percent over last year. Of that amount, exports from Vietnam were worth 4.11 billion USD, up 30.38 percent over 2013, and imports to Vietnam were 850.5 million USD, down 4.59 percent.

The items traded include clothes, textiles, accessories, leather and shoes, metal and steel, computers, electronics and accessories, machinery and tools, parts, fishery, rice, wood and wooden products.

In the field of investment, by October 20, Hong Kong had 853 projects with a combined investment capital of 14.1 billion USD in Vietnam, he said.

The signing ceremony took place as part of the visit of Gregory So, the Secretary for Commerce and Economic Development of the Hong Kong Special Administrative Region.

Vietnam enjoys US$2.18 billion trade surplus in 11 months

Vietnam’s export value reached US$130.02 billion as of mid November, up 13.8 percent over the same period last year, and import value hit US$127.83 billion, an increase of 11.7 percent, reported the General Department of Vietnam Customs.

The total export import turnover gained US$257.85 billion, up 12.7 percent over the same period last year.

In the first half of November, most export items saw a turnover decrease. The most reduction was dropped in the group of cell phone and components with US$240 million.

Garment and textile turnover fell US$212 million, machines and accessories dropped US$210 million and seafood declined US$129 million.

The export value of foreign invested enterprises totaled US$81.03 billion, a year on year increase of 15.1 percent, accounting for 62.3 percent of the country’s export value.

The import value amounted to US$71.69 billion, increasing 11.5 percent and occupying 56.9 percent.

NA query SOE sector involvement

A regulation on the state investment scope in enterprises in the draft Law on Management and Use of State Capital Invested in Production and Business has come under fire from many National Assembly members.

Article 10 of the draft currently discussed by the National Assembly explains that state capital shall be used for establishing enterprises providing essential products and services, operating in industries in service of national defence and security, operating in state monopolies, and enterprises with high technology and large-scale investment that can serve as an impetus for other sectors to develop.

However, many National Assembly deputies have expressed doubts, saying the proposal was so broad it would continue to allow the state and state-owned enterprises (SOEs) to do business in a huge variety of sectors, particularly when many SOEs were operating inefficiently.

Deputy Tran Ngoc Vinh from Haiphong city said the scope for state investment in Article 10 was “too broad”. It was also difficult to define the list of sectors in need of large-scale investment, and serving as a propellant for other sectors to develop. “Therefore it is vital to clarify the sectors that will wholly need state capital, the sectors that will partly need state capital, and the sectors that will need no investment from the state.”

“No government in the world like Vietnam wants to pour money into business, except for into key sectors,” said deputy Ngo Van Minh representing Quang Nam province. “Vietnam’s government should not invest for profit. I strongly recommend that the National Assembly reconsider this regulation.”

“What are essential products and services? I think it is necessary to have thorough quantitative analysis about these sectors, so that the state will not be able to use the term ‘essential’ as a pretext for all products and services, in order to hold a monopoly,” echoed deputy Do Van Duong from Ho Chi Minh City.

Currently SOEs operate in almost all economic sectors and monopolise production of the economy’s key products, with telecommunications (91 per cent), insurance (88 per cent), fertilizer (99 per cent), coal (97 per cent), gas and electricity (94 per cent).

“The state should focus its investment in national security and defence, not necessarily in essential and high-technology sectors which are currently done very well by local and foreign private enterprises,” said deputy Ha Sy Dong from Quang Tri province.

The regulation was actually discussed in May this year by the National Assembly, but almost nothing has been revised since then. At that time, the National Assembly’s Chairman Nguyen Sinh Hung stressed that the regulation would continue discouraging private enterprises from engaging in sectors currently dominated by the state and SOEs.

“Everything can be defined as being essential to society, from clothes, machinery, cement, steel, transport to education and health care. If this regulation is applied, the state may continue controlling these sectors that private enterprises want to engage in, and this is during a period when we are boosting SOE equitisation,” he stressed. “I highly recommend that the regulation be reconsidered.”

New strategic partnership formed to tap renewable energy potential in Vietnam

HBRE Wind Power Solution Limited and Huy Hoang Transportation & Logistics Corporation (HTL) recently signed a framework agreement on comprehensive strategic partnership with the aim of promoting investment efficiency of renewable energy projects in Vietnam.

Under the agreement, HTL will become the EPC contractor, performing the whole process from design, material and equipment supply, to construction, testing and hand-over to the project developer- HBRE.

Initially, the two companies will cooperate in implementing phase I of Tay Nguyen (Central Highlands) wind farm project in Vietnam’s Central Highlands’ DakLak province.

HTL is also an equity investor in the project through 25 per cent capital value contribution, tantamount to VND150 billion ($7 million).

The Tay Nguyen wind farm project is positioned in DakLak province’s EaH’Leo district in the Central Highlands, one of the regions having the highest potential for wind energy in Vietnam as assessed by world’s leading wind turbine manufacturers such as VESTAS, and GE.

Licensed by DakLak People’s Committee, HBRE Wind Power Solution envisages implementing the project in three phases from present to 2020, with expected total capacity reaching 120MW.

In particular, phase I with capacity of 28MW and total investment of nearly VND1,400 billion ($66.6 million), is expected to generate electricity in June 2016, producing more than 100,000,000kWh per year.

After finishing all three phases, it is expected to become the largest-capacity wind farm in Vietnam producing 400,000,000kWh per year, equivalent to demand of 200,000 households.

Tran Viet Hung, deputy head of the Central Highlands Steering Committee said,  “HBRE is the first company to run wind power project in Tay Nguyen area. Hopefully, the cooperation between HBRE and HTL in this project will bring prosperous outcome that contributes to Tay Nguyen’s sustainable development and general development of renewable energy in Vietnam.”

Hung said that Tay Nguyen was the region having a high potential for wind energy. According to a recent research by the Ministry of Industry & Trade, wind power capacity in Tay Nguyen accounts for 25 per cent of the country’s total capacity, which concentrates in DakLak and Gia Lai province, reaching capacity of 1,350MW.

Ho Ta Tin, chairman of HBRE affirmed, "The cooperation with HTL in Tay Nguyen wind farm project is a favorable starting point, initially strengthening bilateral relationship between two parties based on long-term and sustainable development. We are committed to cooperating effectively to further develop clean energy which is environmentally friendly and economically efficient, not only in Tay Nguyen but also in other areas in Vietnam."

“We are delighted to work with HBRE and believe that the experiences and strengths of both parties will bring success to the upcoming collaborative projects. As a contractor of Bac Lieu wind power project, we are strengthening our position and capabilities in the field of construction and installation of wind power equipment in local market,” said Ho Xuan Hung, director of HTL.

“This cooperation is also a great motivation for HTL to contribute more to the development of potential wind power in Vietnam,” Hung emphasised.

On September 23, HBRE and General Electric (GE) signed a memorandum of understanding for cooperation in developing the Tay Nguyen wind farm.

Last October, HBRE chose GE as the provider of 14 turbines in phase I of the project.

As an US leading corporation, GE has been operating in 170 countries over the world. With an installed capacity of more than 2,000 megawatts, GE equipment today supplies approximately 10 per cent of the country’s power.

Bad debts set to surge as year draws to a close

The year’s later months have proven a challenging time for banks, with bad debts rising sharply.

According to Nguyen  Kim Xuyen, DongA Bank’s deputy general director, bad debts made up 6.8 per cent of the bank’s total outstanding loans at the end of this October against a rate of 4 per cent at the end of last year.

The bank executive attributed rising bad debts to a domestic economy that is still largely struggling, making it hard to recover outstanding loans.

The application of new regulations on debt classification has resulted in rising bad debt volumes across the whole banking sector.

Eximbank also saw its bad debts sharply increase while the banking sector struggled to boost lending.

Eximbank’s credit actually contracted nearly 4 per cent in the first nine months of this year, while its bad debts amounted to VND2.68 trillion ($128 million), up 62.8 per cent against the end of 2013.

Bad debts account for 3.35 per cent of the bank’s total outstanding loans against 1.98 per cent rate early in the year.

In the case of ABBank, credit growth actually contracted 1.4 per cent by the end of the third quarter, meanwhile overdue debts reached VND3.73 trillion ($178 million), representing 16 per cent of total outstanding loans compared to 14.2 per cent at the end of last year.

PG Bank saw its bad debts inch up from 2.92 per cent to 3.06 per cent in January-September period.

In case of state giant BIDV, by end of the third quarter, bad debts reached VND7.96 trillion ($379 million), equal to 1.93 per cent of its total outstanding loans. Bad debts rose 7.3 per cent against the end of 2013.

At the Military Bank, bad debts jumped 31.6 per cent during the period to VND2.82 trillion ($134.5 million), making up 3.09 per cent of the bank’s total outstanding loans.

At Vietcombank, by the end of September bad debts represented 2.54 per cent of its total outstanding loans. However, Group 5 debts, which pose a real risk of default, accounted for nearly half of the bank’s bad debts, and rose approximately 70 per cent against the end of 2013.

Many bank executives say bad debts are emanating from not only old loans but also new credit contracts. However,  debt classification requirements introduced by the State Bank of Vietnam’s (SBV) Circular 09, which came into effext from March 20 this year, have piled added pressure on banks in terms of risk provisions.

In this context, selling distressed assets remains a tough nut to crack for banks, since 75 per cent of their collateral is tied up in the real estate market, which is still relatively weak.

“Bad debts may even increase more sharply in the coming months after banks fully apply stringent requirements on debt classification and risk provisions,” said the director of a Ho Chi Minh City based bank, who also wanted the SBV to consider reducing the risk provision rate on special bonds provided by state-owned bad debt buyer Vietnam Asset Management Company (VAMC).

Tran Du Lich, a member of the National Financial and Monetary Advisory Council, said “For the banking sector to reach its full-year credit growth target of 12-14 per cent this year, the economy would need to absorb an additional VND100 trillion ($4.7 billion) before the end of the year. This is far too large an amount given the currently modest demand for capital.”

Car market increase in year-end

Sales of automotive industry in Vietnam are in a vicious spiral in 19 months and it is estimated that as many as 150,000 vehicles will be sold in 2014.

Along with the growth in sales, many types of imported and domestically assembled cars are available for choosing in the yearend shopping season. Truong Hai Auto Corporation (Thaco) launched four types of vehicles including Peugeot 208, 3008, 508 and RCZ at a cost of around VND1 billion (US$ 46,839). It also introduced a fleet of middle-ranking cars including Kia Morning Si, Kia Rio sedan and Kia Rondo.

LEXUS Vietnam also introduced GX460 2015, the full-capability premium SUV with Lexus amazing services, in Vietnam, costing VND3.7 billion.

According to representative from Lexus Vietnam, though car market in Vietnam is not really developed, the company planned to sell over 300 cars in the country in 2014 for the luxury segment.

Toyota Vietnam also presented its new types of cars including Fortuner, Vios, Yaris , Corolla Altis and Hybris FT-Bh which use environmentally friendly technology.

Generally, in the first ten months of the year, Vietnamese customers bought 121,648 vehicles. The figure showed an increase of 40 percent in comparison with the same period last year. Thaco leaded the first with 32,883 vehicles, a surge of 40 percent; Toyota with 31,919 cars, a leap of 20 percent; Ford with 10,786 cars, an increase of 69 percent and Honda with 5,259 cars, a rise of 66 percent.

Jesus Metelo N. Arias, president of the Viet Nam Automobile Manufacturers Association (VAMA) said that the market shows every sign of making a strong recovery. Only in October, 2014, nearly 15,000 vehicles were bought, an increase of 45 percent in comparison the same period last year. It is forecast that 150,000 vehicles would be sold, which manifested an increase of 36 percent compared last year.

According to the figure reported by the General Customs Department, in ten past months, the country imported 51,600 cars, posting an increase of 96.4 percent compared to the same period last year. Most of imported cars are 9-seater cars with 22,800 vehicles.

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