Shadow economy measuring scheme to be proposed in Q1

The Ministry of Planning and Investment has been tasked with compiling a project on measuring Vietnam’s non-observed economy (NOE), to be submitted to the Government in the first quarter of 2018, according to Deputy Minister of Planning and Investment Nguyen The Phuong.

The Ministry of Planning and Investment has been seeking advices from relevant ministries and agencies on the statistical scheme, with one of the key issues being the definition of the unobserved economy that consists of five elements.

The first element comprises underground economic activities that are legal but deliberately concealed from the public authorities to avoid payment of taxes and social security contributions; or complying with certain legal standards, such as minimum wage, maximum working hours, and safety or health standards, and with administrative procedures, such as completing statistical reports.

The second comprises illegal economic activities that generate goods and services forbidden by law, for example, drug trafficking, prostitution, and human trafficking. Legal economic activities carried out by unauthorized producers also belong to this category.

The third one is the informal sector including productive activities conducted by households with the main objective to generate employment and income for the people involved. The production is operated on a small scale, at a low level of organization and generally based on casual employment, kinship or personal and social relations, and not on contractual agreements.

The fourth element is the household production for self-consumption including productive activities that result in goods or services consumed or accumulated by the households that produced them, for instance, producing crops and livestock, weaving cloth, and building one’s own house.

The last one comprises economic activities that are missed out by data collection programmes due to problems arising either from statistical coverage or statistical errors.

Vo Tri Thanh, former deputy director of the Central Institute for Economic Management (CIEM), said that since 1990, the GSO estimated the size of the underground economy to be more than 10% of GDP.

About 10 years ago, reports of evaluations conducted by other agencies and organisations measured the amount of cash outside official circulation. The results showed that the value of this area was about 30 to 35% of GDP.

DHL-VNPT Express has new general director

DHL Express, the world’s leading international express services provider, has appointed Shoeib Reza Choudhury as new general director of DHL-VNPT Express Ltd.

Based in Ho Chi Minh City, Shoeib will be responsible for all aspects of the business operations and activities of DHL Express in Vietnam, in particular, leading the company’s strategic development and ongoing investment in the country.

With seventeen years of industry experience, Shoeib has worked in various functions within DHL. In his previous role, he was chief financial officer of DHL Express Singapore and Emerging Markets. As part of the Singapore and Emerging Markets management team, Shoeib played a key part in the strong growth and expansion of DHL businesses across many countries.

Reporting to Yasmin Aladad Khan, executive vice president, commercial and managing director, Emerging Markets, DHL Express Asia Pacific, Shoeib succeeds George Berczely, who has been appointed as chief financial officer at DHL Express Mexico.

“Dynamic and passionate, Shoeib has a strong track record throughout his tenure in DHL Express. We are confident he will make significant contributions in his new capacity and grow the Express business in Vietnam from strength to strength,” said Khan.

Shoeib holds a Masters’ Degree in Business Administration from Warwick Business School and is a member of Chartered Institute of Management Accountants and Chartered Professional Accountants, Australia.

“I am excited to take on this new role and join the company’s strong management team in Vietnam, one of the most dynamic countries in the region,” commented Shoeib.

DHL is the leading global brand in the logistics industry. DHL family of divisions offer an unrivalled portfolio of logistics services ranging from national and international parcel delivery, e-commerce shipping and fulfillment solutions, international express, road, air and ocean transport to industrial supply chain management.

DHL is part of Deutsche Post DHL Group. The group generated revenues of more than 57 billion euros in 2016.

Ramping up tax audits to boost shrinking state budget

Many firms in Vietnam, both local and domestic, will face tax audits this year.

Vietnam’s General Department of Taxation (GDT) has issued Official Letter No.5339/TCT-TT directing local tax offices to create a tax audit plan for 2018.

Taxation is a major component of the state budget revenues and as the country’s budget deficit increases, taxpayers and enterprises will continue to face increased scrutiny from tax authorities trying to meet their revenue targets.

In a bid to curb tax evasion and swell state budget, the government stated in its recently-released Resolution 01 on major solutions to boost socio-economic development in 2018 that in addition to trimming unnecessary recurrent spending, authorised agencies must apply measures to ensure the nation’s financial health, including tax inspections, audits, and examinations.

The General Department of Taxation (GDT) has issued Official Letter 5339/TCT-TT directing local tax offices to create a tax audit plan for 2018.

Taxation is a major component of the state’s budgetary revenue and as the country’s budget deficit increases, taxpayers and enterprises will continue to face increased scrutiny from tax authorities trying to meet their revenue targets.

In a bid to curb tax evasion and the swell state budget, the government stated in its recently-released Resolution 01 on major solutions to boost socioeconomic development in 2018 that in addition to trimming unnecessary recurrent spending, authorised agencies must apply measures to ensure the nation’s financial health, including tax inspections, audits, and examinations.

Under GDT’s directions, local tax officials will be conducting on-site tax audits of at least 18.5 per cent of taxpayers under each local tax office. This is an increase from 2017’s target of 18 per cent. In addition, at least 1 per cent of taxpayers will face tax inspections, while the remainder will be subjected to tax examinations.

The taxpayers facing tax audits will be selected based on the tax probable risk system (TPR) system. The TPR system analyses taxpayers risk information for conducting tax audits.

As per the Official Letter, tax audits will mainly focus on taxpayers who claimed refunds on value added tax (VAT) and those involved in sectors with significant revenue. 

The latter group includes oil and gas, petroleum, private hospitals, airlines, credit institutions, pharmaceutical companies, hotels and casinos, lottery companies, seaports, airports, and multinational companies.

Besides, tax audits will also focus on firms involved in investment project transfers, capital transfers, and franchising; enterprises with numerous transactions with related parties, including ones who have reported continuous losses or lower profit margins than other enterprises in the same sector.

Moreover, tax audits will also centre on companies engaged in upcoming sectors, such as multi-level trading companies, gaming, and digital technology-based services.

Furthermore, tax audits will also target other sectors, including real estate, construction materials manufacturing, natural resource exploitation, FMCG, and automobile manufacturing/trading.

According to Asia Briefing, a subsidiary of pan-Asia consulting firm Dezan Shira & Associates, with growing scrutiny from tax authorities, firms need to have a tax risk management system in place to help identify risky tax areas in an organisation.

“Once identified, they need to evaluate them to understand the effects and likelihood of occurrence and managing risks to minimize tax exposure,” Asia Briefing said in a bulletin on tax audits in Vietnam in 2018. 

“With regulators and tax officials taking an aggressive approach in 2018, firms and taxpayers should be proactive in nature to reduce compliance costs and tax exposures.”

How a ‘fake doctor’ swindles $21mn from 500 Vietnamese rich-wannabes

More than 500 Vietnamese have been duped into joining and losing a hefty amount of money to a fraudulent ‘how to get rich’ scheme run by an unsuccessful businessman who claimed to hold a PhD.

Pham Thanh Hai, 52, managed to swindle more than VND476 billion (US$20.97 million) from 508 people by encouraging them to invest in ‘lucrative businesses’ that would yield easy money, according to the Hanoi People’s Procuracy.

Prosecutors have finished their probe into the case and decide to file charges against Hai for “swindling and appropriating assets” as per the Penal Code.

Failed businessman turn ‘teacher for rich-wannabes’

Hai used to be the chairman and CEO of a private company called IDT, registered and headquartered in Hanoi.

The company had been struggling with its internet-based business until 2008, when Hai decided to take advantage of its legal entity to mobilize investment from individuals for his personal purpose.

He then set up a website and social media page called 'hoclamgiau.vn' (Learn to get rich), and organized different conferences on the theme to lure people into investing in his bogus projects.

Hai then introduced himself as a PhD with extensive experience in doing business in the former Soviet Union, encouraging people to pour money in several highly remunerative investments run by IDT.

Even though IDT did not conduct any real business, Hai promised to pay his ‘investors’ interest rates of 40%-50% a year, and offered high commissions of up to 10% to those who introduced new members to the network.

Hai, in the name of IDT chairman and CEO, used the company’s seal in the investment authorization contracts he signed with investors to win their trust.

The trick enabled him to mobilize more than VND2,725 billion (US$120.04 million) in only a year from October 2014 to October 2015.

Hai only used a meager sum of VND114 billion (US$5.02 million) from this to put into real investment projects, with the remainders spent on his personal uses, paid interests and commissions to the investors and funded the ‘hoclamgiau.vn’ activities to expand its network.

According to investigation results, none of the investment projects Hai channeled his money to were as profitable as he promised to investors. None of these projects were run by IDT as Hai claimed with his victims.

As the network expanded, Hai had to spend a few hundred billion dong a month to afford payments to his investors, and had to try hard not to let the network collapse as investors would realize they were fooled and notify authorities.

Hanoi prosecutors said Hai is now incapable of paying his investors, with 508 people demanding that he compensated them a total of VND594 billion (US$26.17 million) for the VND476 billion he swindled of them.

Why foreign banks are turning tail and pulling out of Vietnam

HSBC, Standard Chartered and BNP Paribas are just some of the institutions that have joined a mass exodus.

Foreign banks concerned about high bad debt ratios and poor risk management in Vietnam have been steadily withdrawing their investments from local credit institutions.

The most recent case was Standard Chartered Bank, which sold its entire 8.75% stake in Vietnam’s publicly listed Asia Commercial Bank (ACB) in January after a 12-year partnership.

Standard Chartered had previously withdrawn its representatives from ACB’s board of directors for unspecified reasons.

Late last year, France’s BNP Paribas divested its entire 18.68% stake in the local Orient Commercial Bank (OCB), ending a decade-long partnership.

Also in 2017, HSBC sold is majority 20% stake in Techcombank, while the Commonwealth Bank of Australia (CBA) offloaded a 20% stake in VIB.

Economist Nguyen Tri Hieu said that foreign banks have accelerated their divestments from Vietnam over the past few years after rushing to invest in the country nearly two decades ago. The exodus gathered momentum in 2017.

Explaining the reasons for the sell-offs, he said many international banks have been unsatisfied with their businesses in Vietnam because of high bad debt ratios and poor risk management at local financial institutions, and a non-transparent legal system. Meanwhile, other lucrative markets have sought ways to draw their investment.

“The business environment in Vietnam is quite different from in their countries. Foreign banks have found it hard to do business in Vietnam due to overlapping legal regulations and inefficient risk management at local banks,” Hieu said.

Most foreign banks have invested in Vietnam under strategic partnerships or other joint arrangements with local partners.

A high ratio of non-performing loans has also contributed to reducing the attractiveness of Vietnamese banks, he said.

Bad debt in Vietnam's banking sector, mostly incurred due to a slowdown in the country’s real estate market in the early 2010s, had been cut to 2.34% by the end of September 2017, down from 2.46% at the end of the previous year, according to the central bank.

A low foreign ownership cap is another reason for the capital withdrawals by foreign partners, who have been waiting for the limit to increase for many years now, economists said.

The 30-percent cap covers total foreign shareholdings and limits a single foreign strategic investor to a one-fifth stake in a local bank.

This has proved unattractive for many foreign lenders who see little incentive in a minority share and limited control of banks requiring restructuring and recapitalization.

A limit increase would help retain foreign investors, many economists concluded.

Some other experts and industry insiders said the foreign capital withdrawal is individual and normal moves. It is not a trend. Foreign banks could leave a market for a new one when having new business strategies.

For example, Australian lender ANZ sold its retail business in Vietnam to the Republic of Korea's Shinhan in 2017.

Farhan Faruqui, ANZ's international group executive, said in a statement that the sale will allow the bank to focus its resources on institutional banking, its “largest business in Asia.”

“We will be maintaining our presence through our institutional bank in Vietnam which will continue to support our corporate clients in the Greater Mekong Region,” he said.

Nguyen Dinh Tung, CEO of the Orient Commercial Bank (OCB), said, “Banks leave markets where their business is ineffective or competition is too fierce. This happens not only in Vietnam, but in many other countries.”

Vietnam now has seven wholly-owned foreign banks, as well as 50 branches and more than 50 representative offices of foreign banks and joint-venture banks. Their total assets have topped US$35.8 billion.

2018, pivotal year for start-up nation building

Vietnam has made efforts to nurture the start-up ecosystem since the government defined 2016 as the “start-up nation year.” 2018 is considered pivotal in encouraging innovation and entrepreneurship.

Prime Minister Nguyen Xuan Phuc has delivered a strong commitment to building a righteous government who facilitates, acts, and serves businesses and people.

Ho Chi Minh City has led Vietnam’s start-up movement, allocating US$43 million from the municipal budget to aid start-up projects. By the end of 2016, 200 registered projects had received support. The city aims to help 2,000 start-up projects by 2020. 

Tran Thi Binh Minh, deputy director of the municipal Department of Planning and Investment, said, “The city will set up start-up support centers. These centers will offer advices and connect projects with investment funds.”

Vu Tien Loc, President of the Vietnam Chamber of Commerce and Industry, said 5 years from 2016 to 2020 are designated as start-up nation years. 

“Start-up has become a movement and trend of Vietnam’s economy. The future of our economy can be described in 5 words: “Facilitating government and all-people start-up.” So innovative start-up is becoming the most important requirement of the Vietnamese economy. By 2020, we should have at least 1 million businesses. This means that in 5 years the number of businesses should double. The workload is equal to what we did over 30 years of renewal. This is a breakthrough in Vietnam’s business development policy,” said Mr Loc. 

Vietnam is ranked one of the most entrepreneurial countries in the world. The 4th industrial revolution has created major changes in business and production, which will be opportunities for start-up in Vietnam. 

Economist Pham Chi Lan called on enterprises to map out sustainable development strategies and steady steps to take advantage of this revolution. She said, “Technology should serve sustainable development goals. The most important infrastructure of the digital era is database. Vietnamese enterprises, mostly run by young people, should work with each other and with other partners.”

ROK at forefront of foreign investors in Vietnam

The Republic of Korea (ROK) is the largest foreign investor present in Vietnam with investment capital of US$355.6 million, accounting for 28.3% of the country’s total foreign direct investment (FDI).

According to the Ministry of Planning and Investment, there are 24,941 valid FDI projects with a total registered capital of US$320.3 billion from businesses across 125 countries and territories.  The ROK tops the list with registered capital of US$58.1 billion, making up 18.1% of total investments, followed by Japan at US$49.46 billion (accounting for 15.4%), Singapore, Taiwan, British Virgin Islands, and Hong Kong.

Foreign businesses have invested in projects in each of the 63 provinces and cities nationwide, Ho Chi Minh City is the most attractive option with US$44 billion, trailed by Binh Duong with US$30.4 billion, and Hanoi with US$27.67 billion.

Up to January 20, Vietnam licensed 166 new projects with registered capital of US$442.59 million (just 35.6% of last year’s figure) and 61 existing ventures registered an additional investment level of US$456.78 million in their total capital (up 155% on the corresponding period of last year).

The general picture shows the total of newly-registered and additional investments and foreign investors' capital to buy shares of Vietnamese businesses reached US$1.255 billion in January, or 75.9% of last year’s figure for the same period. The disbursement of FDI reached US$1.05 billion, a year-on-year rise of over 10%.

Garment exports to China show impressive growth

Despite receiving huge imports of materials from China, Vietnam’s exports of textiles and garments to the vast market have consistently increased over recent years, rising from US$2.7 billion in 2016 up to around US$3.2 billion in 2017, and this growth pattern is expected to continue this year.

Economic experts say the fact that the average annual growth of exports has held at over 20% for the past three years.

According to the statistics of the General Department of Vietnam Customs, import value of textile and garment materials from China reached nearly US$9 billion last year, making up more than 42.7% of the country’s total imports and up more than 12% on last year. The value trade was nearly four times higher than that of the Republic of Korea and nearly five times higher than that of Taiwan (China) - the two major import markets of Vietnam in recent years.

China and Vietnam are seen as chief rivals in many garment export markets. China’s textile and garment exports have hit US$260 billion annually, while Vietnam’s apparel products were initially exported to the Chinese market, rising to over US$31 billion last year. 

The Vietnam Textile and Apparel Association (VITAS) forecasts that it will be easier for the association to ship greater numbers to China from 2018 as a result of drastic growth in Chinese, Russian and Cambodian markets. Especially, exports to China account for a relatively meagre 3% of the country’s total textile and garment export value.

Vu Duc Giang, Vitas president, has analyzed the contributory factors to the increase and concluded that Vietnam’s fibre exports to China benefit greatly from a zero percent tariff under the ASEAN-China Free Trade Agreement, while products from other markets such as India and Pakistan are subject to duties of 3-5%.

In addition, the Regional Comprehensive Economic Partnership (RCEP) between ASEAN and the six countries of China, the ROK, Japan, India, Australia, and New Zealand which is currently under negotiation will also give a wealth of create solid opportunity for Vietnam to boost its exports to China.

By the end of 2017, China was among the top five consumers of Vietnam’s textile and garment products with the value reaching over US$3 billion.

Le Tien Truong, General Director of the Vietnam National Textile and Garment Group (Vinatex), says Vietnam has so far been the world’s leading textile and garment exporters, but Chinese products are dominating the domestic market. However, remarkable improvements have been seen in Vietnam’s exports to China. 

China has begun to consume Vietnamese products, including fibre, fabric, and finished products like jackets and shirts, showing the great efforts by garment and textile businesses to make an entry into the huge potential market.

Vietnamese businesses say that China, as the world's most populous nation, has many goods divisions, thus enabling Vietnamese textile and garment products to gain a foothold for further success. If businesses know how to choose the appropriate product niche they will be able to develop their brands on the highly lucrative market.

With a firm grasp of the necessary steps to greater market penetration and the short-term and long-term investment programs, Vietnam’s textile and garment brands will be widely known internationally.

Agricultural exports flourish in first months of 2018

Agroforestry and seafood exports likely reach an estimated US$2.6 billion in February, bringing the two-month total export value of the year to US$6.1 billion, up 30.2% year on year, according to the Ministry of Agriculture and Rural Development.

In contrast to exports, the country spent US$5.29 billion importing agricultural materials. Consequently, the first two months’ trade surplus stood at US$819.3 million.

In the reviewed period, agroforestry and seafood products reported vigorous export growth, with agricultural products growing by 27.8% to US$3.3 billion, seafood by29.5% to nearly US$1.2 billion, and forestry products by 28.5% to US$1.43 billion, and by 101% for other products.

Since early this year, exports of many agricultural products such as rice, coffee, tea, cashew nut, fruit and vegetables, and cassava and cassava products have shown strong indicators of an upward trend in both volume and value. Cashew nuts achieved the highest export growth among agricultural products at 54,000 tons with a value of US$555 million (up over 73% in volume and nearly 95% in value).

Vietnam face a number of difficulties last year, particularly the European Commission (EC)’s issuance of a "yellow card" warning for the country’s failure to demonstrate sufficient progress in its fight against illegal, unreported, and unregulated (IUU) fishing worldwide.

Despite these hurdles, seafood exports still hit US$8.317 billion, exemplifying the seafood sector’s strong growth. With the subsequent impressive performance of 2017, businesses gave a boost to seafood exports from early this year as shown by the biggest ever consignment of seafood products worth more than US$590 million shipped via Cai Lai Port. 

The batch included a 20-ton container of frozen shrimp valued at more than US$290,000 for transport to Canada, a 20-ton container of sea fish worth over US$216,000 to the US, and a 22-ton container of fillet catfish valued at more than US$84,000 to the EU.

Although the EU was the largest importer of Vietnamese seafood soaring by 32.9% over two months, China – the second biggest consumer – posted the greatest growth at 102.9%, says the Ministry of Agriculture and Rural Development.

Based on the results of 2017 and over the first two months of this year, Nguyen Ngoc Oai, acting general director of the Directorate of Fisheries, says the US$9 billion seafood export target set for this year is a realistic aim.

This year, the seafood sector will continue to fully exploit profitable marine resources such as shrimp and tra fish by prioritizing hi-tech seafood farming models, speeding up intensive processing, and increasing added value products.

The major focus will be on dealing with the problem of removing market and trade barriers and having the EU’s yellow card rescinded. 

Price of cashew nuts surges high during Tet

The average price of cashew nuts increased by VND30,000 per kilo to VND280,000 as many processing plants in Binh Phuoc province have bought a large quantity of raw cashew nuts to meet the increasing demand during the traditional Lunar New Year (Tet) while supplies were limited.

The Ministry of Agriculture and Rural Development says the price of cashew nuts will continue upward trend due to limited supply in the crop period.

Cashew nut exports jumped 73% in volume to nearly 31,000 tons and 94% in value to US$317 million in January this year. The average export price hit US$10,254 per ton, up 1.3% compared to December last year.

The US remained the largest importer of Vietnam cashew nuts with 9,238 tons, trailed by the Netherlands and China. Cashew nuts exports to these markets are forecast to maintain a stable growth thanks to their rebounded economy and improved consumption demands.

With an export value of US$3.52 billion last year, Vietnam remained the world’s biggest cashew nuts processor and exporter. This year, the sector will focus on improving the product quality, processing technique and domestic market development.

Thai Binh begins $24.6m auto parts factory     

Construction on a US$24.6-million auto parts factory is under-way in the northern Thai Binh Province’s Tien Hai Industrial Zone with completion expected in July 2019.

Financed by the Japanese Toyoda Gosei Group, the 11.3ha-factory will manufacture airbags and leather steering wheels which will be mainly exported to Japan, the US and Europe. Work on the factory kicked off early this month, baodautu.vn reports.

Once operational, the factory is expected to create about 1,500 local jobs. The company said it believes that the project will contribute to accelerating the development of Thai Binh Province as it will create more jobs for local people and improve their skills.

Established in 1949 and headquartered in Kiyosu, Japan, Toyoda Gosei is a leading manufacturer of rubber and plastic automotive parts and LEDs. Today, the group provides a variety of high-quality products internationally, with a network of some 100 plants and offices in 18 countries and regions. 

Viet Tien Garment targets $13.6 million profit     

Viet Tien Garment JSC, one of the leading companies in the garment-textile industry in Viet Nam, has set a goal of grossing US$1 billion in export turnover by 2020 with an annual average growth of 10 per cent.

To realise this target, the company will take measures to improve the efficiency of investment projects, expand investment and shift towards green production, vietnamplus.vn quoted its general director Bui Van Tien as saying.

The company will invest in new production technologies, particularly automation, and business administration.

The company will launch campaigns to enhance productivity, encourage efficient practices, and increase the added value of products, as well as improve income and working conditions for employees while developing brands and distribution channels, striving to become a multinational economic group.

Last year, Viet Tien earned VND14.1 trillion ($627.1 million) in revenue, up 11.4 per cent. Of which the parent company recorded VND8.29 trillion, up 12 per cent and its subsidiaries grossed VND794 billion, up 1.5 per cent.

Pre-tax profit hit nearly VND695 billion, while export turnover was estimated at $871 million, of which revenues from the Japanese market made up 32 per cent, the US 22 per cent, and the EU 17 per cent. 

VN goods on show at Gulfood 2018     

Twenty four Vietnamese enterprises are displaying their farm produce, foodstuff and beverage at Gulfood Dubai 2018 – the world’s largest annual food and hospitality exhibition.

Gulfood, which is taking place at the Dubai World Trade Centre in the United Arab Emirates (UAE), attracts the participation of over 5,000 local, regional and international exhibitors and and 97,000 attendees bearing witness to the food industry’s latest trends and technology.

The four-day exhibition event, which wraps up on Thursday, is described as a good opportunity for Vietnamese firms to advertise their goods to international customers and seek new trade partnerships. This is the fifth consecutive year Viet Nam’s companies have participated in this large-scale event. During the show, Vietnamese goods, typically processed and organic ones, have captured the attention of many international buyers. 

Plastics export turnover to increase by 15%     

Exports of plastics are expected to grow by 12–15 per cent this year, according to the Viet Nam Plastics Association (VPA).

Ho Duc Lam, chairman of the association, said the country’s key export markets this year would be Japan and the US, which has high demand.

Other markets such as China, Laos, Cambodia and Myanmar are expected to become new export markets for plastics in the future.

Plastic bags made in Viet Nam are still subject to anti-dumping taxes in the US market, but the US imposition of anti-dumping duties has had almost no impact on exports of the sector, according to Lam.

Every year, the average US import turnover is more than US$50 billion for plastics and plastic products, accounting for 9.1 per cent of the world’s total import of plastics, according to VPA.

The largest plastic export market is Japan, with an average growth rate of 20–25 per cent per year. Viet Nam now ranks sixth in the top 10 countries exporting plastics to Japan, which is one of the most difficult markets with many strict regulations on the quality of goods. Vietnamese plastic exporters have been urged to improve quality, design and trade promotions to enter this market.

Lam recommended that Vietnamese plastic producers prepare long-term strategies and invest in market research to increase their penetration into the Japanese market.

In addition, the EU’s demand for plastic products imported from Viet Nam is high, especially plastic pipes.

Viet Nam’s plastic products are not subject to anti-dumping duties in the EU markets like other Asian countries (the average tax rate is from 8-30 per cent). Thus, Vietnamese producers are also urged to seek new export markets.

Despite the high export prospects and strong development in recent years, the plastics industry is still known only as part of the plastic processing industry.

More than 80 per cent of raw materials are still imported from other countries.

Each year, the plastic industry needs an average of four million tonnes of raw materials, but only manages to produce about 900,000 tonnes, with the rest imported.

Experts have said that a shortage of raw materials will reduce the competitiveness of exporters.

Because of regulations on the origin of goods, it is difficult to take advantage of tax incentives in free trade agreements.

Exporters also need to focus on environmentally-friendly and safe products for sustainable growth.

Viet Nam’s plastics industry earned $3 billion last year, posting a 17.3 per cent increase over 2016, according to VPA. 

Becamex IDC to trade on UPCoMin February     

The Investment and Industrial Development Corporation (Becamex IDC) will trade more than 23.4 million shares on the Unlisted Public Company Market (UPCoM) on February 21.

The firm’s shares will start trading at VNÐ31,000 (US$1.37) per share.

On December 1, 2017,Becamex IDC put 311.2 million shares, or 23.6 per cent of its chartered capital, for sale at its initial public offering (IPO) but sold only six per cent of the shares.

The company raised only VNÐ587 billion from its IPO, with foreign investors purchasing 56 per cent of the shares sold.

One month after the IPO, Becamex IDC attempted to sell 296.4 million shares left over at its previous IPO, but the second attempt was also unsuccessful as the company was able to offload only 5.1 million shares, earning VNÐ158 billion.

Thus, Becamex IDC sold a total of 24 million shares, or 7.7 per cent of the total shares offered for sale after two attempts, earning VNÐ745 billion.

Under the privatisation plan for Becamex IDC, the company has VNÐ13.17 trillion in chartered capital.

The company will offer 311.2 million shares in its third IPO, while a quarter of its capital will be sold to strategic investors and 0.4 per cent stake will be transferred to its employees.

The government will hold 51 per cent of the company’s chartered capital after it completes the equitisation process. 

Thaco opens plant to manufacture agricultural machinery     

Truong Hai Automobile Company (Thaco) has inaugurated an agricultural machinery manufacturing plant in the Chu Lai-Truong Hai Industrial Complex in the central province of Quang Nam.

The plant, which took one year to complete, has been built in collaboration with Korean company LS Mtron.

Thaco said the manufacturing plant, which was built under a cooperation agreement signed in 2017, aimed to provide made-in-Viet Nam agricultural machinery with a 50 per cent localisation programme for domestic use as well as for exports to ASEAN markets.

As planned, Thaco will be the exclusive agent of LS Group’s farming machinery’s distribution and production in Viet Nam under its own trademark from 2018.

Thaco and LS Mtron under the LS Group in Korea plans to speed up mechanisation of farming in Viet Nam to create a value chain in the agricultural machinery industry.

The LS Group has two LS cable and system factories in Dong Nai and Hai Phong and LS Mtron has an electronic components factory in Bac Ninh Province.

Meanwhile, Thaco and other partners have invested VND7.8 trillion (US$345 million) in an agriculture production project in the north of Viet Nam.

Thaco has manufactured and distributed vehicles of foreign brands – Kia of South Korea, Mazda of Japan, France’s Peugeot and BWM of Germany.

Sale of cars in January up 28% year-on-year     

As many as 26,037 cars were sold in January, marking a year-on-year increase of 28 per cent, reports the Vietnam Automobile Manufacturers’ Association (VAMA).

Of this, the sale of passenger cars grew 25 per cent to 18,371 units, while the volume of commercial cars and special-purpose cars reduced by 38 per cent and 78 per cent to 7,363 units and 303 units, respectively.

VAMA’s report shows that the volume of locally-manufactured cars reached 20,586 units, up three per cent compared to the previous month, while 5,451 imported cars were sold, down 30 per cent.

The main reason for the sharp decline in the import of complete built-up units was Decree 116, which came into effect in January. This decree tightens control over quality, technical safety and environment protection of imported autos. This is why many automakers, such as Toyota, Honda, Mitsubishi, Ford, Suzuki and GM, have announced that they will temporarily stop importing cars to Viet Nam. 

Ca Mau hopes crabs are the next big thing     

The southernmost province of Ca Mau is aiming to develop crab farming to make the crustacean its second biggest aquatic export after brackish shrimp.

Last December the province unveiled a programme to boost sea crab farming to VND2.3 trillion (US$101 million) worth of harvests a year by 2020.

The crab farming area will be expanded to 100,000ha by 2020 with average productivity of 70-80 kilogrammes per hectare and annual output of 12,000 tonnes.

Ca Mau has many advantages that aid its aquaculture plans including the sea on three sides, a coastline of 254km and 87 river mouths.

It also has 100,000ha of mangrove forests, which are a good habitat for raising shrimp, fish and crab.

Crab farming has been growing in the Cuu Long (Mekong) delta for the last two decades and generates good incomes for people in Ca Mau, Tra Vinh, Kien Giang, Soc Trang, and Ben Tre provinces.

The biggest wholesale crab market in the delta is located in Nam Can District in Ca Mau.

The market attracts hundreds of traders every day who come to buy crab and other seafood coming from the province and neighbouring areas.

There are around 50 local traders who pay a total of VND3 billion to buy 15 tonnes of crab on average per day.

Another 20 enterprises also buy a large quantity daily.

Most of the crabs are then resold to processing companies in HCM City for export.

About 70 per cent of live crabs with roe is exported by air; the rest is sold to consumers in the city and the delta.

Though crab generates as high incomes and its market is as good as for backish-water shrimp, the price volatility is a big challenge for crab farmers in the delta.

Two or three crops of crabs can be harvested in a year.

The seventh and eighth lunar months are usually the time for the year’s second crab harvest, but it is a time when many people are vegetarian.

Demand for crab drops leading to a decrease in crab prices.

During this period crab with roe type 1, which refers to the best quality, falls to VND250,000 per kilogramme or sometimes even VND100,000.

The prices of smaller crabs – weighing five or six to the kilogramme -- fall to VND150,000 and sometimes even to VND50,000-60,000.

This causes big losses for farmers.

China is the biggest market for the delta, and if Chinese traders stop buying, prices drop.

The lack of efficient distribution channels also causes price volatility.

Viet Nam exports crab to 42 markets, mainly the EU, the US, China, Japan, Australia, and Canada.

If the country can better monitor the production and consumption of the crustacean and set up a good distribution network, crabs have the potential to become the biggest export item after shrimp and tra fish. 

President calls on India firms to do business in Viet Nam     

Viet Nam always treasures and encourages foreign investors, including those from India, to invest and do business in the country, President Tran Dai Quang told Indronil Sengupta, Chief Executive – Vietnam at Tata Sons.

Speaking at a reception for Sengupta in Ha Noi on February 13, President Quang said the Government of Viet Nam is continuing with reform and improving business regulations to meet international standards and create favourable conditions for foreign investors.

He said developing energy, particularly renewable energy, is a priority of Viet Nam, expressing his belief that when Long Phu 2 thermal power plant is completed, it will pave the way for Indian projects to enter Viet Nam.

The President asked Tata Group to fast-track the project and put the thermal plant into operation on schedule.

President Quang spoke highly of Tata’s move to expand business operations to other fields in Viet Nam, including port development and coffee production and processing.

He hoped that enterprises from Viet Nam and India will propose ideas to step up two-way trade and investment between the two countries at the upcoming Viet Nam – India Business Forum in a bid to lift bilateral trade to US $15 billion as soon as possible.

Sengupta informed President Quang about the Tata Group’s projects in Viet Nam, including a $70-million coffee processing facility in Binh Duong and solar power projects in four provinces with a combined capacity of 250MW.

He affirmed that Tata is working hard to complete these projects on schedule and wants to expand to other fields in Viet Nam.

Found in 1869, Tata Group is one of India’s largest conglomerates, which has been present in over 40 countries and territories and among India’s biggest investors in Viet Nam. It is building the Long Phu 2 thermal power plant in the Mekong Delta province of Soc Trang.