Agriculture seeks to gain growth momentum

Agriculture contributes nearly 20% of Vietnam’s annual GDP. In the wake of climate change effects and shrinking markets, the agricultural sector is making full use of its strengths to gain growth momentum.

Attention is now being paid to aquaculture, which is considered a spearhead for exports.

The 560 thousand ha shrimp farming area in the Mekong delta is increasing its output.

Deputy Minister of Agriculture and Rural Development Vu Van Tam stressed the need improve the quality of brine shrimps.

“The tiger prawns can be sold in many markets, but white-leg shrimps face stronger competition. So we need to improve their quality and reduce prices. Exported shrimps should be free from antibiotics, residues, and banned chemicals. Efforts should be made boost trade promotion and expand the markets,” he said.

Vegetables and fruits have also posted high growth of 37%. Experts say cultivation areas and crops should be expanded and product quality, safety and hygiene should be ensured.

Major products, including dragon fruits, mangoes, durians, longans, rambutans, litchis, and bananas need more attention.

Ho Xuan Hung, President of the General Assembly of Vietnam Agriculture and Rural Development, said, “It’s important to review crop selection. We need to adapt to climate change. Salt water intrusion is caused by unfavourable weather and by humans."

"If there are reliable forecasts, we will restructure farming production. The agricultural sector needs to focus on aquaculture and cultivation of vegetables and fruits in addition to developing the forest-based economy,” he added.

The agricultural sector‘s longer-term measures include administrative reform, investment attraction, market expansion, and food safety assurance.

Vietnam M&A forum to be held in Ho Chi Minh City

The Vietnam Merger & Acquisition (M&A) Forum 2016, the eighth of its kind, will take place in Ho Chi Minh City on August 18, as heard a conference in Hanoi on July 25.

The forum themed “M&A in open economic space”, co-organised by the Investment paper and AVM Vietnam company, is expected to attract 500 representatives from domestic and foreign businesses and investment funds which contribute to 85 percent of M&A value in Vietnam.

Speaking at the event, Deputy Minister of Planning and Investment Dang Huy Dong said this year’s forum will assess new opportunities and challenges and put forward specific proposals to refine the legal framework for M&A activities while serving as a bridge to connect domestic and foreign investors.

Le Trong Minh, Editor-in-Chief of Dau tu (Investment) paper, head of the organising board, said M&A has emerged as an effective capital mobilisation channel over the past decade, contributing to accelerating economic restructuring, equitisation of State-owned enterprises and improving governance capacity of domestic firms.

In 2015, M&A deals matched the record high of 5.2 billion USD reached in 2012. The figure for the first 6 months of 2016 surpassed 3 billion USD, up 28 percent year-on-year.

The year 2015 marked an important milestone when Vietnam made progresses in the Trans-Pacific Partnership (TPP) negotiations and the ASEAN Economic Community (AEC) was established. Once acquiring or merging businesses in an ASEAN member state, investors are able to access a market with a population of more than 600 million people and a supply of young workforce.

The forum will feature investment connectivity programmes, an M&A deal award, and a training course on M&A strategy.

Three major sessions will focus on reviewing the M&A market in Vietnam for 2015-2016 and prospects for 2016-2020, the impacts of AEC and TPP on the M&A market, and analysis of M&A and investment opportunities in Vietnam in an open economic space.

Politburo member receives visiting US treasury official

Nguyen Van Binh, Politburo member and Head of the Party Central Committee’s Economic Commission, received vising US Treasury Under Secretary Nathan Sheets in Hanoi on July 25.

At the meeting, Binh spoke highly of positive development in the two countries’ cooperation in trade, investment and other fields, bringing practical benefits to the peoples of the two countries and contributing to the Vietnam-US comprehensive cooperation.

Binh briefed Sheets on key issues Vietnam prioritises in the spirit of the 12th Party Congress’ Resolution, including keeping the macroeconomy stable, reforming the growth model, controlling inflation, and promoting sustainable economic growth in association with ensuring social security and environmental protection.

Binh emphasised Vietnam’s increasingly deep international integration into the region and the world, saying its signing of free trade agreements creates both opportunities and challenges. He said Vietnam wants the US to advocate for and accelerate the completion of the negotiation process of the Trans-Pacific Partnership (TPP).

Under Secretary Nathan Sheets spoke highly of Vietnam’s achievements in socio-economic development and affirmed that the US attached importance to boosting multifaceted cooperation with Vietnam, as it considers Vietnam an important partner in the region.

He said he believes the relationship between the two countries, especially after the TPP takes effect, will develop to give stronger benefits for each country, towards peace, stability, cooperation and development in the region and the world.

Vietnam increasingly attractive to French investors

Vietnam’s stable economic growth rate and improved business and investment environment over a long period has enticed French big corporations to invest or expand their projects in Vietnam.

The viewpoint was agreed by participants at the Vietnam-France Business Meeting that took place on July 24 at Vietnam’s Embassy in France.

The meeting was organised on the sideline of the Fourth High-Level Economic Dialogue between Vietnam and France with the attendance of leading French corporations like Airbus, Alstom, ADF, EDF, Areva, La Poste and Vietnamese businesses like FPT and Viettel.

Speaking at the meeting, Vietnam’s Ambassador to France Nguyen Ngoc Son said the Vietnam-France relationship has been further expanded since the beginning of 2016 with visits of French President of the National Assembly Claude Bartolone and French Minister of Defence Jean-Yves Le Drian.

2016 will also be marked by two big economic events: the Fourth High-Level High-Level Economic Dialogue in Paris, the Vietnam-France Decentralised Cooperation Conference in Can Tho city in September and the Vietnam-France Business Forum in HCM City in October.

French President Francois Hollande’s visit, which is scheduled to take place in September, is expected to become a boost for the development of a diversified, deep and comprehensive relationship between Vietnam and France, further promoting the Comprehensive Strategic Partnership the two countries signed on September, 2013.

For his part, Deputy Minister of Planning and Investment Nguyen The Phuong reviewed Vietnam’s economic situation in 2015 and the first half of this year.

Phuong said Vietnam has signed many bilateral and multilateral trade agreements, including the Trans-Pacific Partnership (TPP) and the conclusion of negotiations on the European Union-Vietnam Free Trade Agreement (EVFTA).

According to Phuong, foreign investors have been pouring money into Vietnam to take advantage of the FTAs when they take effect, as evidenced by Vietnam’s steady increase of foreign direct investment in recent years.

Vietnam is also perfecting legal corridors for investment and business with the introduction of the modified Law on Investment and Business 2014, the Law on Bidding 2015 as well as focusing on reforming administrative procedures.

At the meeting, French companies introduced their technological advantages and financial capability and indicated they wished to expand their operation or seek new opportunities in Vietnam.

Vietnam’s bad debts surge as bank wrongdoings rise: state audit

An audit conducted last year into the 2014 performance of state-run Vietnamese companies and banks has found the country’s bad debt continuing to rise while little change is forced upon lenders found gaming the system.

By the end of 2014, the nonperforming loans of state-run banks in Vietnam totaled VND145.2 trillion (US$6.48 billion), up 24.6% from 2013, according to a report the State Audit of Vietnam submitted to the lawmaking National Assembly this week.

The bad debt in 2014 accounted for 3.25% of the banks’ total outstanding loans, down 0.36% from 2013. The State Bank of Vietnam said their 2014 bad debt ratio was 4.83%.

The Vietnam Development Bank posted a bad debt ratio of 11% in 2014, up a massive 68% from a year earlier, state auditors noted.

The State Audit of Vietnam commented that the state-run banks failed at managing their nonperforming loans and most lenders were still relying on selling bad debts to the Vietnam Asset Management Co. (VAMC), the national asset management firm.

The VAMC was founded in 2013 to buy nonperforming loans from banks in an effort to revive an economy choked with bad debts.

In 2014, state-run banks sold a total of VND79.61 trillion (US$3.55 billion) of their VND143.5 trillion in bad debts to VAMC. However, VAMC only handled VND627 billion (US$27.99 million) of its acquired loans, according to the report.

The audit also pointed out many wrongdoings of state-run banks, including having low loan loss provisions and violating loan granting regulations, resulting in bad debts.

A loan loss provision is an expense set aside in the event that a loan defaults. The loan loss provision reserved for 2014 of Vietinbank fell nearly VND20.5 billion (US$915,179) short of requirements, while respective figures for BIDV and VCB were VND36.5 billion (US$1.63 million) and VND41.3 billion (US$1.84 million).

Aside from examining the nonperforming loans of the state lenders, auditors have also looked into the financial and asset management of 234 enterprises, managed by 38 state groups and corporations.

According to the audit report, five out of the 38 state groups reported losses in 2014, especially the national shipping line Vinalines, which incurred a hefty VND3.47 trillion (US$154.91 million) loss.

The audit also found that state-run enterprises were preparing improper financial balance reports, ineffectively using their allocated land plots, and violating laws relating to natural resource exploitation.

Vietnam probes for new clothing export markets

Domestic clothiers, leather and shoemakers have actively begun to seek new markets on the back of sagging shipments to the EU and US economies, says the Vietnam Textile and Apparel Association (VITAS).

“Although the EU and US are important regions for us, we are aggressively exploring new outlets for exports to reduce our dependence on these two economies,” said Vu Duc Giang, chairman of VITAS.

In the fallout from Brexit, we are seeing a particularly hefty drop in the number of orders coming in from EU bloc members, said Mr Giang, which we expect will continue over the near term.

The cause is multi-fold, he said, as a depreciated euro and sterling are making Vietnamese exports more expensive while at the same time making EU produced goods less costly and much more appealing.

Moreover, the decline in consumer confidence in the UK is weakening demand at both the macro and micro level.

Additionally, the preferential tariffs afforded producers in countries like Pakistan, Bangladesh, Laos, Myanmar and Cambodia under the EU ‘Generalized Scheme of Preferences’ makes their products more price attractive to consumers.

Currently, the import tariffs imposed on Vietnamese goods to the EU are nearly 10%, which for all intents and purposes will remain in effect even after the EU-Vietnam free trade region comes into play in mid-2018.

Overly complex rules of origin and yarn forward rules make complying with them cost prohibitive and it is doubtful that any domestic companies will be able to avail themselves of tariff free exports once the new economy is given effect.

Mr Giang cited official figures of the General Statistics Office that show clothing and textile exports in the first half of the year jumped 5.1% when compared to the first half of 2015 to US$10.7 billion.

Notably, said Mr Giang, this is the slowest rate of growth for the six-month period in the past three years.

Even more striking, he said, is that it puts the annual export target for 2016 of US$31 billion out of reach. With orders petering out, it is highly unlikely the shortfall of roughly US$20 billion can be made up in the remaining months of the year.

To make the target, sales would have to double that of the first six months of the year, a feat that just isn’t in the cards, said Mr Giang.

Le Tien Truong, vice chairman of VITAS, in turn underscored the importance of refocusing sales efforts in traditional markets such as the Republic of Korea and Japan and expansion into new markets including Russia and Eastern Europe.

However, he cautions that even the rise in the yen in the aftermath of Brexit could have an adverse impact on Vietnamese domestic exports of clothing and footwear to the Japanese market.

Foreign investors bullish on Vietnam property market

A contingent of Japanese real estate investors performing a due diligence tour of the Ho Chi Min City and Hanoi markets have said they find them to be highly attractive ‘Frontier Markets’ with high potential.

They said they had also considered Thailand and Indonesia as places to invest but after visiting both places they found the markets to be fully saturated and turned their attention to Vietnam.

Yasuyuki Enomoto, a member of the contingent, said his research points to Japanese businesses as being one of the largest investors in manufacturing in Vietnam and that was a big factor in making his decision.

He said he would like to use Vietnam as a place to get a toehold in the Southeast Asian property market and branch out and expand into the markets of Cambodia, Myanmar, Laos and other neighboring countries.

Foreign funds back Vietnam healthcare startup: report

Vicare, a website providing information about clinics and doctors in Vietnam and online health consultancy, has secured its second funding round from Japan's CyberAgent Ventures and Singapore's Pix Vine Capital.

Pham Anh Duc, director of the startup, refused to reveal details, merely telling news website Saigon Times Online that the funding would help improve database quality, develop mobile applications and expand manpower.

Since its launch in January ViCare has built up a database of more than 19,000 clinics and 20,000 doctors around the country, the website said. It now records 200,000 visits a month and 3,000 comments and 6,000 inquiries.

The website reportedly received the first funding round from private investors in Hanoi and Ho Chi Minh City in March.

Nguyen Manh Dung, investment manager of CyberAgent Ventures in Vietnam and Thailand, was quoted as saying that the healthcare sector has great potential for growth.

Vicare is addressing issues that are facing Vietnam, like a shortage of healthcare services and equipment as well as doctors, he said.

CyberAgent Ventures launched a second fund worth US$50 million for new and existing investments in Southeast Asia at the end of last year. In Vietnam it has reportedly invested in around 20 startups since 2008.

Emirates seeks airport fee discount for new daily flight to Hanoi

Emirates, the world’s biggest long-haul airline, is asking for a 30% discount on the landing fee at Noi Bai International Airport when it begins a daily passenger service next month.

The Dubai-based carrier told the Ministry of Transport that its existing cargo service between Dubai and Hanoi would become a daily one which also carry passengers, and asked for a reduction in the landing and takeoff fees for the first year.

The Civil Aviation Administration of Vietnam has backed the request, saying the discount would encourage international airlines to fly to Vietnam, the Saigon Times reported.

Vietnam announced a similar incentive in 2013, halving the fees for international carriers flying to five smaller airports, Phu Bai, Cam Ranh, Lien Khuong in the central region, and Can Tho and Phu Quoc in the south, for the first three years.

But only Phu Quoc and Cam Ranh have seen an increase in international activities.

Emirates, which began to fly to Vietnam in 2012, now operates one passenger route to Ho Chi Minh City and one cargo-only service to Hanoi.

Hanoi’s industrial production up 7 percent in 7 months

Hanoi’s index of industrial production (IIP) in the first seven months of this year grew robustly, surging by 7 percent year-on-year.

From January to July, the processing and manufacturing industry posted a yearly rise of 7.3 percent while electricity production and distribution grew 7.8 percent. Water supply and waste and sewage management and treatment increase by only 0.6 percent.

Industrial products that posted high growth included food (21 percent), clothing (31.9 percent), medicine (25.4 percent), steel and iron (20.7 percent) and furniture (107.2 percent).

The IIP, however, declined for several products such as mining (36 percent), wood and wood-based products (35 percent), beverage (9.3 percent), textiles (4.4 percent) and chemicals (6.5 percent).

The outlook for the city’s industrial production in the second half of the year is bright thanks to the expansion of processing and manufacturing and the development of support industries.

HCM City weighs logistics industry master plan

Authorities and experts in HCM City are considering a master plan to comprehensively develop the logistics industry that fully utilises the city’s advantages and meet both urgent and long-term requirements in the context of the country’s global integration.

The plan is expected to be based on a logistics development plan outlined by experts from ministries and agencies, over six years ago for 2010-20.

At a meeting held last week, the city’s Department of Industry and Trade (DoIT) and the Vietnam Logistics Agency (VLA) agreed that the city has the necessary conditions to develop a strong logistics industry.

It has a strategic location and is an important transport hub not only for Vietnam but also the region.

Moreover, the city has all modes of transport - road, rail, air and waterway - and a system of pipelines.

The main goal of the new master plan is to fully tap all the above advantages, particularly seaports and inland waterways.

The plan envisages building an international-standard gateway port, which will be the most important port for import-export activities in the south of the country.

Some locations suggested by experts from the DoIT, VLA, Department of Transport, Maritime University and logistics companies are Hiep Phuoc, Cat Lai, Cu Chi and Linh Trung –Thu Duc.

The other main goals are to develop ring transport systems and axis roads leading to the international gateway port, locate industrial parks and trade centres based on sound logistics principles, and supply logistics services to many countries and territories around the world.

To realise the goals, the city will have to develop a professional logistics information system and organise production and distribution based on logistics rules.

It will also have to modernise financial and payment services and other services that can support logistics activities, including training of human resources.

According to the city statistics agency, the city’s foreign trade has been increasing consistently, rising from 55.58 billion USD (27.29 percent of the country’s total) to 64.34 billion USD last year.

HCM City and its neighbouring provinces have 12 inland container depots (ICDs) like Tan Cang, Song Than, Bien Hoa, Transimex, Tanamexco-Tay Nam and Sotrans, many of which are connected with roads but not waterways.

Infrastructure facilities near ports are almost always overloaded.

All these have contributed to raising transport costs, thus stymieing the competitiveness of the domestic logistics sector.

There are currently 1,300 logistics firms, more than 60 percent of them in HCM City, mainly operating in shipping and delivering, transport, warehousing, ports, loading and uploading, distribution, customs procedures and integrated logistics services.

Seventy two percent of the local logistics companies are small- or medium-sized, and only 5-7 percent of human resources are properly trained.

A Vietnam Logistics Association (VLA) spokesperson said some major seaports are operating at below capacity due to the lack of road connectivity, but others with good road connectivity are overloaded and cannot keep up with the increasing demand from logistics firms.

Human resources also pose a difficult problem for the industry, he said.

HCM City would only be able to achieve its ambitious plan to develop its logistics industry if it has support from the Government, logistics experts and businesses, he added.-

Cà Mau to raise villagers' incomes

The southernmost province of Cà Mau over the next five years plans to raise the incomes of workers at craft villages that make fishing nets, repair fishing boats, and produce dried sea shrimp and fish.

Expansion of fishing logistics services and ice production is also part of the plan for the coastal craft villages, according to a report in Tin Tức (News) newspaper.

From now to 2017, Cà Mau will focus on weaving and repairing of fishing nets and other fishing tools, an activity that has been part of the area for hundreds of years.

However, the work has always operated on a small-scale without any overall plan.

The 2,500 people who knit and repair fishing nets and tools have low  incomes, under an average of VNĐ3 million (US$136) a month.  

Cà Mau also has more than 50 establishments that make various kinds of dried sea shrimp and fish and provide jobs for 1,200 labourers.

Under the 2016-2021 plan, the province aims to increase the number of workers who make dried sea shrimp and fish to 3,000 by the end of 2017.

By then, the average income of workers is expected to reach VNĐ4 million ($180).

In 2017, the province will set up two co-operatives for dried shrimp and fish producers.

Cà Mau has several well-known dried shrimp and fish products, including Rạch Gốc dried shrimp, dried cream fish and dried anchovies.

Rạch Gốc dried shrimp was granted an official brand name by the National Office of Intellectual Property.

The Rạch Gốc Dried Shrimp Village in Ngọc Hiển District produces dried shrimp from sea and fresh-water shrimp. The district has about 25 establishments that produce 25-30 tonnes of dried shrimp a month.

The establishments, which consume about 20 per cent of the district’s shrimp output, provide jobs for about 250 labourers.

In Trần Văn Thời, U Minh and Phú Tân districts, about 300 families make dried cream fish.

The price of dried cream fish is VNĐ200,000-250,000 a kilo. Producers earn profits of VNĐ20,000-25,000 a kilo.

UK investors have sights on HCM City: consul

Many British business executives will visit HCM City this year to explore the investment environment and co-operation opportunities, the country’s envoy in the city has said.

UK Consul General Ian Gibbons, at a meeting on Thursday with Nguyễn, Thành Phong, chairman of the city People’s Committee, said ties between the UK and Việt Nam, especially HCM City, are growing consistently.

Through the good offices of the British Government, many companies would come to Việt Nam and HCM City soon to look for co-operation in finance-banking and smart urban development.

He hoped the city would create the most favourable conditions for UK investors and offer preferential policies for them to participate in some of the city’s key projects.

Phong said the city has always paid close attention to ties with British localities and created good conditions for UK investors.

“Finance – banking and smart urban development are key sectors of HCM City and we would like to welcome more UK investors.”

He called on the envoy to tell the British business community about the city’s business environment and incentives to investors.

British businesses have invested US$3.6 billion in 266 projects in the real estate, automation, manufacturing and mining sectors in Việt Nam to stand 15th in a list of 116 investing nations.

SKorean tech firm opens plant, research centre in Bac Ninh

Samil CTS Vina Co Ltd of South Korea, which specialises in producing computers and computer peripherals, inaugurated a plant and a research and development (R&D) centre in the Yen Phong Industrial Park, northern Bac Ninh province on Friday.

The same day, representatives from the firm and the Viet Nam-Korea Technological Innovation Centre for Standards, Metrology and Quality (Incentech) under the Ministry of Science and Technology's Directorate for Standards, Metrology and Quality signed a memorandum of understanding (MoU) on enhancing co-operation in the future.

Under the MoU, Incentech will support Samil CTS Vina in implementing its projects in Viet Nam. The two sides will work closely to develop products and expand market in other ASEAN nations.

Speaking at the signing ceremony, Deputy Director of the Directorate Nguyen Nam Hai highlighted the significance of the events and increasing production and investment activities of South Korean enterprises in Viet Nam in recent times.

He said that his agency and the Korea Trade-Investment Promotion Agency also signed a co-operation agreement two months ago with a view to supporting the implementation of the Viet Nam-South Korea Free Trade Agreement (FTA), which was signed in 2015.

The formation of Incentech aims to promote trade co-operation between the two counties, he noted.

Co-operation between Incentrech and Samil CTS to set up the R&D centre will lay a foundation for the two sides to provide greater support for Vietnamese and Korean businesses, thus contributing to socio-economic development in the two nations, Hai stressed.

For his part, Commercial Attache of the Korean Embassy in Viet Nam Choi Jong Won said the opening of the plant and R&D Incentech-Samil centre in Bac Ninh will be the first steps for Samil CTS to enter into the Southeast Asian market.

Textile firms propose wage freeze

Local textile and garment enterprises are at risk of missing their export target for 2016 due to reduced competitive ability and lack of export orders, said experts who spoke at a conference of Viet Nam Textile and Apparel Association (VITAS) late last week in Ha Noi.

Viet Nam's currency policy vis-a-vis the US dollar has remained stable, while competitors in textile and garment products such as India, Bangladesh, ASEAN countries and China, have devalued their currencies, increasing their export competitiveness, said Truong Van Cam, deputy chairman of VITAS.

In addition, interest rates on banking loans are high - between 8 and 10 per cent, making capital more expensive for local enterprises, he said.

Other factors impacting the reduced competitive ability are the minimum wage, which has risen an average 26.4 per cent per year for local enterprises and 18.1 per cent each year for enterprises with foreign investment in the period of 2008-16.

The increases in minimum wage also entail increased payments of insurance and union dues, further burdening enterprises, according to VITAS.

The association reported that Viet Nam's garment and textile export value in the first half of this year reached US$12.6 billion, an increase of 4.72 per cent over the same period last year, accounting for 41 per cent of the sector's annual target for 2016.

The growth in the industry's export value was largely attributed to foreign direct investment (FDI) firms, while local firms had difficulties getting new export contracts, especially orders of shirts, trousers and jackets, said the association.

It warned that the lack of export orders could worsen and many small- and medium-sized firms may have to shut down. Therefore, VITAS predicted the industry might earn only $29 billion from exports this year, down $2 billion from the set target, if the situation does not improve.

To solve those difficulties, VITAS proposed that the Government not increase minimum wage in 2017 and only increase it once every two or three years to create favourable conditions for competition.

Other experts at the conference also urged local textile and garment firms to invest in modern technology for the production of yarn and fabric. High-tech machinery could produce higher quality products, especially fabric for export, reported cafef.vn - a local online newspaper.

However, few local enterprises have invested in the production of yarn, textile and dying because they have large investments in building production and waste water treatment facilities, said Phi Ngoc Trinh, deputy general director of Ho Guom Garment Company.

Local textile and garment enterprises also proposed reducing the frequency and time it takes to check garment materials for customs clearance as a means to increase production and competitiveness.

Cam said at a recent meeting between VITAS and the Ministry of Justice's Department for Control of Administrative Procedures that many local textile and garment enterprises have complained about the number of procedures for import and export of textile and garment products.

For instance, despite having animal quarantine and origin certificates from exporting countries that are members of CITES (Convention on International Trade in Endangered Species of Wild Fauna and Flora.) for fox fur, feathers and bear fur for processing export jackets, local garment enterprises are still required to get import licences according to domestic regulations. The procedure takes six to 10 days, according to the VITAS representative.

The association has asked the Ministry of Agriculture and Rural Development to reduce administrative procedures for quarantine of fox fur, feathers and bear fur if the enterprises have had animal quarantine and certificates of origin of export countries, Cam said.

VND devaluation expected

The central bank is expected to devalue the Vietnamese dong against the US dollar by 2-3 per cent in the second half of this year to support exports and fight against the dollarisation in the local economy, according to a Vietinbank report.  

In the recent report on expected financial market developments in the second half, Vietinbank analysts said that an expected trade deficit in H2 would put pressure on the exchange rate.

According to Vietinbank, export growth is forecast to decline in H2, possibly causing the dollar supply to remain at a low level.

The Ministry of Industry and Trade (MoIT) forecast after a sluggish export growth in H1, exports in H2 will face additional challenges and fail to meet its export growth target of 10 per cent set by the National Assembly for this year.

In a regular Cabinet meeting this month, the ministry reported that exports would only grow 8 per cent this year.

In H1, export turnover slowed down against the same period last year, rising only 5.9 per cent to US$82.28 billion. According to the MoIT, the export growth was much lower than the 9.2 per cent rising rate seen in H1 2015.

Industry insiders attributed the sluggish export to decreasing demand in world markets due to global economic difficulties. Some other regional countries such as Malaysia, Thailand and China even saw a negative export growth, they said.

In the report, Vietinbank analysts also suggested the State Bank of Viet Nam pay special attention to movements by the People's Bank of China (PBoC) as its policies would put pressure on the USD/VND exchange rate due to the deep trade ties between Viet Nam and China. The PBoC devalued its yuan by 5.32 per cent to date this year.

SBIC successfully divests capital from aircraft leasing company

The Việt Nam Ship Building Industry Corporation (SBIC) has sold more than 7 million shares, or 5.72 per cent, of Việt Nam Aircraft Leasing Company (VALC), at a cost of VND116.8 trillion (US$5.2 billion).

The shares were sold for VND16,600 each to an individual investor whose name was not disclosed.

In comparison with its book value of more than VND70 billion, SBIC saw profits of more than VND46.8 billion from this purchase.

The divestment is expected to help SBIC restructure its capital and investment in other businesses to add capital for its operation and business development.

VALC is the only firm in Viet Nam leasing aircraft. It does not operate flights, but purchases planes and rents aircraft to domestic airlines. It has set a target to earn US$68.5 million in revenues this year, with an after-tax profit of $15.15 million, which is a decrease of 10.81 per cent and 22.31 per cent compared to the same period last year.

Railway industry lowers revenue target this year

The March collapse of Ghenh Bridge has caused the railway industry revenue reduction for the last six months and unlikely to obtain its target this year, reported the Vietnam Railway Corporation.

Therefore, the company has reduced its revenue this year to be equal to last year instead of increasing 8 percent.

The industry’s revenue in the first half of 2016  accounted for only 80 percent of that during the same period last year. Preliminary calculations show that the incident resulted in a total revenue fall of VND471.6 billion (US$21.15 million).

In addition, the corporation had to pay transport companies over VND60 billion (US$2.69 million) to transit passengers from Saigon Railway Station to Bien Hoa station and vice versa.

Moreover, the corporation organized train trips over short distances to meet travel demand such as Long Bien-Quan Trieu, Yen Vien-Ha Long-Cai Lan, Mai Pha-Na Duong, Hanoi-Lang Son and HCMC-Binh Duong. Revenue from these trips was too low and unable to cover expenses.

The bridge collapse caused by a sand barge in March sent many railway customers to choose other means of transportation. The new bridge has been built and opened to traffic by the end of June.

Vietnamese goods week to open in Russia in September

A Vietnamese goods week is scheduled to open at the Hanoi-Moscow Multifunctional Complex in Russia from September 9-14, announced the Vietnam Trade Promotion Agency.

The event will create an opportunity for businesses to promote investment and trade in Russian market and showcase many types of goods including garment and textile, footwear, handicraft products, farm produce, food, wooden items, electronic and health care products.

The fair’s organization board will provide businesses with 100 percent of booth rental, 50 percent accommodation costs at Hanoi-Moscow hotel, air ticket fare reduction on HCMC-Moscow route and freight rates.

In addition, they will be assisted to implement communication and advertisement programs to attract visitors and customers.

Businesses can register to attend the fair from now until August 10.

The free trade agreement between Vietnam and the Eurasian Economic Union (EAEU) has been signed since mid-2015 with the attendance of Russia, Belarus, Kazakhstan, Kyrgyzstan and Armenia.

The agreement will help businesses increase the volume of export import goods with tariff cut or removal after taking effect.

Vietnam faces headwinds to meet full-year growth target

Signs of slowdown appeared across all sectors of the Vietnamese economy in the first half of 2016, with overall GDP growth reaching only 5.52%, significantly lower than the rate of 6.32% during the same period last year.

Growth decelerated as a result of several factors, including extreme weather as seen in cold spells, drought and saltwater intrusion, falling global commodity prices and increasing pollution, especially marine pollution, which caused seafood output to drop sharply.

As such it is a formidable challenge to achieve an economic expansion of 7.6% over the remaining six months of the year to reach the targeted full-year growth figure of 6.7%.

Supporting enterprises and maintaining growth drivers will be the primary task of the government, executive agencies and the business community itself.

Growth in the second half of the year cannot rely on increasing public investment as the ratio of public debt is approaching the ceiling of 65% of GDP and is likely to exceed that threshold by the end of the year.

Other measures such as lowering interest rates and expanding preferential lending programmes have also been exhausted as deposit rates are trending upwards along with rising inflation.

Growth now can only be achieved by a number of drivers including accelerating disbursement of approved public investment projects, newly established enterprises, enterprises expanding their business or resuming their operation, and actions to attract more tourists.

Vietnam can also take advantage of lower import prices which on average fell 7.8% compared with a 3.85% in export prices, which makes imports cheaper, thereby reducing input costs and saving foreign currency.

Other drivers could come from increases in money supply, outstanding credit, social investment capital and foreign capital funds.

However, further government efforts are needed to improve the business environment, enhance the national competitiveness and support enterprises.

The government is currently considering cutting numerous regulations stipulated in legal documents that are restraining the ability to do business, and making sure that new regulations are compatible with the amended investment and enterprise laws.

In addition, the government will continue to pursue a flexible exchange rate policy, channel credit to priority sectors, restructure agriculture to make it adaptable to climate change and step up trade promotion activities.

The Vietnamese economy is continually growing below its potential. As such it is absolutely necessary to tap into and direct more sustainable growth drivers so that Vietnam can achieve not only this year’s target but also accelerate and enhance the quality of growth over the years ahead.

Import-export turnover exceeds US$177 billion as of July 15

Vietnam’s total import-export turnover reached more than US$177 billion as of July 15, an increase of 2.8% over the same period last year, announced the General Department of Customs on July 22.

Regarding exports, some groups of commodities saw high growth including clinker and cement (up 36.5%, US$6 million), vegetables and fruits (28.7%, US$26 million) and rubber (18.3%, US$12 million).

In contrast, several commodities recorded a decrease in export revenue such as coal (down 98.9%, US$3 million), iron and steel (48.3%, US$59 million), precious stones, non-ferrous metals and their products (36.9%, US$35 million), and chemicals (31%, US$16 million).

Vietnam reported nearly US$87.7 billion in import revenue, a year-on-year decrease of 0.7% (US$584 million).

Compared to the second half of June, the group of cameras, camcorders and spare parts posted the highest growth in import revenue in the first half of July at 45% (US$16 million), followed by cattle feed and raw materials at 41.9% (US$53 million) and motorcycles, spare parts and components at 29.9% (US$5 million).

Meanwhile, some commodities have decrease in import turnover including soybeans (73%), other vehicles and spare parts (61.6%) and liquefied gas (59.7%).

Bac Lieu to host Mekong Delta Economic Cooperation Forum

Deputy PM Vuong Dinh Hue, Head of the Southwest Steering Committee approved the proposal to organize the Mekong Delta Economic Cooperation (MDEC) Forum in 2018 in Bac Lieu Province.

The Deputy PM assigned the Southwest Steering Committee to coordinate with Bac Lieu Provincial People’s Committee and relevant ministries, agencies and localities to organize the event.

The forum aims to strengthen cooperation and connection among provinces and citifies in the Mekong Delta as well as the Mekong Delta with international organizations and nations in order to promote socio-economic development.

The event also aims to promote the images, potentials and advantages of the region, enhance economic cooperation, develop cooperative programs among localities, and strengthen cooperation with other nations in management and exploitation of natural resources in the Mekong River as well as trade, investment and tourism.

Foreign funds back Vietnam healthcare startup: report

Vicare, a website providing information about clinics and doctors in Vietnam and online health consultancy, has secured its second funding round from Japan's CyberAgent Ventures and Singapore's Pix Vine Capital.

Pham Anh Duc, director of the startup, refused to reveal details, merely telling news website Saigon Times Online that the funding would help improve database quality, develop mobile applications and expand manpower.

Since its launch in January ViCare has built up a database of more than 19,000 clinics and 20,000 doctors around the country, the website said. It now records 200,000 visits a month and 3,000 comments and 6,000 inquiries.

The website reportedly received the first funding round from private investors in Hanoi and Ho Chi Minh City in March.

Nguyen Manh Dung, investment manager of CyberAgent Ventures in Vietnam and Thailand, was quoted as saying that the healthcare sector has great potential for growth.

Vicare is addressing issues that are facing Vietnam, like a shortage of healthcare services and equipment as well as doctors, he said.

CyberAgent Ventures launched a second fund worth US$50 million for new and existing investments in Southeast Asia at the end of last year. In Vietnam it has reportedly invested in around 20 startups since 2008.

Vietnam considers criminal penalty for drunk drivers

Ministry of Public Security will propose the institution of criminal charges against drunk drivers after carrying out a thorough study, according to a police official.

The National Traffic Safety Committee organized a press conference on July 21 to announce a plan aimed at cutting down the number of drunk drivers in the country.

Answering Tuoi Tre (Youth) newspaper regarding a recent proposal to criminally charge those driving under the influence of alcohol, Senior Lieutenant Colonel Do Thanh Binh, deputy chief of the Traffic Police Department under the Ministry of Public Security, stated that the idea could be realized.

The current financial penalty for drunk driving is severe, up to VND18 million (US$807), Binh said, adding that violators can also be punished criminally as per specific guidance and regulations promulgated by competent authorities.

According to Article 260 of the new Penal Code, violators of traffic offenses that could potentially endanger people’s lives, health, and property can be fined between VND10 million (US$448.5) and VND50 million (US$2,242), the police official underlined.

Offenders are also subject to one year of non-custodial sanctions or sentenced to three months to a year in prison, he continued.

“As soon as the new Penal Code comes into effect, we will coordinate with relevant agencies to study and issue guidance with regard to the imposition of criminal charges against drunk drivers,” Binh stated.

The police official also mentioned harsher punishments for repeat offenders.

“We will discuss carefully with competent authorities before submitting a report to the government and proposing an amendment to the law,” he concluded.  

Hanoi Int’l Film Festival registration opens

The Vietnam Cinema Department has announced that online registration is now open for media, industry and students wishing to participate in the fourth edition of the Hanoi International Film Festival (Haniff).

The event will run from November 1-5, inclusive, at the Daewoo Hotel – No 360 Kim Ma Street in Hanoi.

Heading into its fourth year, Haniff has earned a reputation as the leading destination for Asian cinema and viewing of some of the most anticipated films from around the globe.

This year’s Haniff promises to be an invigorating market place, with an increasing demand for stands and representation of sales companies and film commissions; it’s the perfect place for filmmakers to pitch new ideas, meet potential production investors and production partners.

Now open for online registration, Haniff is offering media and industry candidates exceptional access to the fourth edition of the Festival, an unrivalled program of screenings, red carpet galas, masterclasses, discussions, industry support, workshops and the opportunity to meet filmmakers, onscreen talent and industry professionals from across the globe.

Students, media and industry professional planning to register for this year’s extravaganza are urged to register early. Complete information on the rules and regulations along with application forms can be obtained at http://www.haniff.vn/en/.

Applicants should submit completed forms via email: at info.haniff.vn no later than August 1, 2016.

Emirates seeks airport fee discount for new daily flight to Hanoi

Emirates, the world’s biggest long-haul airline, is asking for a 30% discount on the landing fee at Noi Bai International Airport when it begins a daily passenger service next month.

The Dubai-based carrier told the Ministry of Transport that its existing cargo service between Dubai and Hanoi would become a daily one which also carry passengers, and asked for a reduction in the landing and takeoff fees for the first year.

The Civil Aviation Administration of Vietnam has backed the request, saying the discount would encourage international airlines to fly to Vietnam, the Saigon Times reported.

Vietnam announced a similar incentive in 2013, halving the fees for international carriers flying to five smaller airports, Phu Bai, Cam Ranh, Lien Khuong in the central region, and Can Tho and Phu Quoc in the south, for the first three years.

But only Phu Quoc and Cam Ranh have seen an increase in international activities.

Emirates, which began to fly to Vietnam in 2012, now operates one passenger route to Ho Chi Minh City and one cargo-only service to Hanoi.

PM approves higher power tariff for Cong Ly

Prime Minister Nguyen Xuan Phuc has authorised Cong Ly Construction-Trade-Tourism Co., Ltd. to sell electricity to state-run Electricity of Vietnam (EVN) from its Khai Long-Ca Mau wind farm for 9.8UScents per kWh, not including value added tax.

The figure is equivalent to the purchase price at its Bac Lieu wind power, which is much higher than the 7.8 UScents fixed by the government under Decision No.37/2011/QD-TTg dated June 29, 2011 on the mechanism supporting the development of wind power projects in Vietnam.

Previously, Cong Ly’s general director To Hoai Dan told VIR the reason for its call for a higher feed-in-tariff than currently regulated by the government is that the project is located on the coastline, thus the company incurs extra charges on constructing the foundations of the wind turbines. The company also used the most advanced turbines, which pushed up the investment cost.

“The purchase price is lower than we hoped, but it is acceptable,” Dan added.

On January 16, the construction of the first phase of the Khai Long-Ca Mau wind power farm was kicked off in the southernmost province of Ca Mau. The 100 megawatt wind farm, to be built on a total of 2,165 hectares of land and sea surface area, is scheduled for completion in 2018. It will be connected to the national grid and will also sell power to EVN. The plant’s total investment value is about VND6.5 trillion ($291.5 million).

On January 17, Cong Ly started the full operation of the 99MW Bac Lieu wind farm in the southern province of Bac Lieu. The farm, which has been constructed on an area of 1,300ha since 2010, has the total investment capital of VND5.2 trillion ($233 million).

Since the first wind turbines were connected to the national grid in May 2013, the plant has produced 130 million KWh, earning a revenue of VND150 billion ($6.7 million) and paying VND15 billion ($672,000) in taxes.

A representative of the company said that they planned to implement the next phase soon, building 71 additional wind turbines of 2MW each for VND8.850 trillion ($397 million). The construction is scheduled to be carried out over 36 months and operation is going to start in 2018.

According to the data released by the Ministry of Industry and Trade, a total of 50 wind power projects have been registered but only five saw implementation. Three of these, namely 30MW Tuy Phong in Binh Thuan, a 6MW wind power project on Phu Quy Island in Binh Thuan, and the 99MW Bac Lieu plant, are generating commercially.

Of these three, only Cong Ly sells electricity at 9.8 US cent/kWh, because its wind farms are on the sea. The other two, as per Decision 37 sells for 7.8 US cent/kWh, of which 6.8 US cent is paid by EVN and 1 UScent is paid by the Vietnam Environment Protection Fund.

Air conditioner vendors battle it out over Vietnam

Japanese Daikin Industries will invest $93.6 million to build an air conditioner manufacturing plant in Vietnam, as part of its plans to capitalise on the Southeast Asian nation's potential for rapid growth, according to newswire Nikkei.com.

The plant will be located in an industrial park in the outskirts of Hanoi and is expected to start operation in 2018, with an annual capacity of 500,000 units. The figure will increase to one million by 2020, depending on the demand.

The reason for constructing the plant in Vietnam is that almost all Daikin air conditioners in Vietnam are imported from Thailand, while its Thai production facilities have been operating at full capacity since the third quarter of 2015, yet still falling short to meet the increasing demand in Vietnam market and other countries.

In addition, Daikin is facing market saturation in Japan and other developed countries. Furthermore, the company has to compete with large brands, namely Chinese Gree Electric Appliances and American United Technologies, which are boosting investment in their Southeast Asian markets.

In Vietnam, Daikin is expanding its speciality outlets. The company will also double the number of service centres to 30 by the fiscal year of 2020.

Vietnam has a population of about 93 million with steadily increasing income, who consume about two million air conditioning units per year. The figure has increased by an average of 30 per cent annually.

Thus, Vietnam is considered a desirable market by numerous air conditioner producers, namely Panasonic, Samsung, Hitachi, Toshiba, Nagakawa, Mitsubishi, and Carrier, among others, a number of whom established air conditioner assembly facilities in Vietnam, including, Panasonic, Hitachi.

Regarding Carrier, the group opened representative offices in Hanoi and Ho Chi Minh City in 1991. In March 1997, the company was licensed to establish Carrier Vietnam Air Conditioner Co., Ltd., which specialises in assembling, manufacturing, and distributing air conditioners.

In April 2011, Japanese air conditioner  Nagakawa was licensed to build a plant in the northern province of Vinh Phuc, with a capacity of 250,000 products per year. However, in July 2011, the company submitted a document to the Vinh Phuc People’s Committee to withdraw from the project due to difficulties in land clearance.

In 2015, Samsung released plans to develop a plant in Vietnam in 2016, however, as of now, there has been no further movement on it.

First bank of India officially opens in Vietnam

Bank of India- BOI, the first state-owned commercial bank of India in Vietnam, was put into operation at Saigon Trade Center, No. 37 Ton Duc Thang Street, Ben Nghe Ward, district 1 on July 22.

BOI has opened its representative office in Ho Chi Minh City since 2003; and this is the 61st overseas branch of BOI.

After signing a Memorandum of Understanding (MOU) with the Reserve Bank of India in 2012, State Bank of Vietnam licensed No.10/GP-NHNN on July 31, 2015 to BOI to establish its branch in Ho Chi Minh City.

BOI was established in 1906, and has been one of the fourth biggest banks in the country with total global invested capital up to US$ 133 billion. With its 5, 016 extensive branches and 7, 807 automated teller machines (ATM) across India, BOI network currently covers 22 countries with 60 branches and headquarters in five continents. Of these, five subsidiaries, four representative offices and one joint venture company are located in the big financial hubs and the world’s banks such as Tokyo, Singapore, Hong Kong (China), London, Jersey, Paris and New York.

The establishement of BOI contributes to respond trade and transaction demand for two countries’ importers and exporters.

India current is one of Vietnam’s top 10 biggest trading partners while Vietnam ranks 24th in India. The bilateral relations between two countries have increased continuously in recent years. The bilateral trade reached US$ 9billion in 2014-2015, passed the trade target of US$ 7billion in 2015.

Currently, over 100 projects of Indian enterprises have been investing in Vietnam with total investment capital of US$ 1.1 billion. Two countries have set a target of US$ 15billion in bilateral trade by 2020.

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