HCMC signs cooperation MoUs with RoK giants

Politburo member, Ho Chi Minh City Party Committee Secretary Le Thanh Hai and People’s Committee Deputy Chairman Nguyen Huu Tin on May 25 witnessed the signing ceremonies of Memorandum of Understandings (MoU) on cooperation between Vietnamese businesses and agencies with large economic groups of the Republic of Korea (RoK).

These were parts of their activities during an week long visit to RoK starting May 23.

Chairman of Lotte Group Dong Bin Shin said that they had done business in Vietnam since 2005. The company together with some Japanese groups is going to invest in Eco smart city project in the district 2's center of Thu Thiem New Urban Area in Ho Chi Minh City.

At the meeting, representatives from the HCMC Department of Planning and Investment and Lotte signed a Memorandum of Understanding (MoU) on the project’s implementation.

Lotte affirmed that they would pour a total of US$1.5-2 billion in the new urban area and HCMC also. The group expressed hope that the city would assist them to start the project on September 2.

In response, Mr. Hai affirmed that HCMC always welcomes and creates advantageous conditions for foreign investors including Lotte. However, the group has to ensure a green urban area with architectures harmonious with surrounding works while building the Eco smart city.

Mr. Hai appreciated highly investment and trade activities of Lotte in Vietnam and HCMC.

Right after the meeting with Lotte, Secretary Hai received permanent deputy chairman of CJ group Mr. Lee Chae Wook.

CJ operating in four fields of amusement, food, biological technology and transport has invested over US$250 million in Vietnam since 1998 and hoped to make Vietnam its third largest market in the world.

The group plans to invest US$500-600 million in state own enterprises (SOEs) that have been equalized such as Vietnam Meat Industries Limited Company (Vissan).

Mr. Hai said that the city advocated the company’s investment policy in Vietnam and proposed it to continue having positive contributions to the good relationship between the two countries.

Thereafter, CJ signed three MoUs with the HCMC Trade and Investment Promotion Center, CPK Company and Tien Phuoc Company.

According to Mr. Hai, the two countries’ relationship has comprehensively developed in all fields including health, education and culture.

The two sides have also signed a free trade agreement and set a target to raise bilateral trade turnover from US$40 billion now to US$70 billion by 2020.

Despite under influences of the world economic crisis, HCMC has still developed thanks to tourism and services. Services account for 60 percent of the city’s economic structure while the number of visitors to the city occupies 44 percent of the country’s total number of arrivals.

HCMC’s Gross Domestic Product (GDP) accounts for one fifth of Vietnam’s GDP and budget revenues contribute over 30 percent.

HCMC locating in the southern region’s economic hub is a gateway to enter surrounding markets such as Laos, Cambodia, Myanmar and Thailand.

Ha Tinh terminates trillion-dong steel complex project

The Economic Zone Management Board in the central province of Ha Tinh has signed a document terminating a steel complex project with total investment capital of VND1.76 trillion (US$81.14 million) for running five years behind schedule.

It was designed to have a capacity of 250,000 tons a year which would extend to 500,000 in the second phase.

The 25.81 hectare project was changed for the third time in December 2009. However many items of the projects have been abandoned for the last several years.

The plant should have completed a pilot production of commercial steel billets in 2010 but it failed to do so.

Many items have run downgraded while machines and equipments have been rusty and badly damaged.

Vietnam Airlines to expand its fleet with new modern aircrafts

The national flag carrier Vietnam Airlines (VNA) will receive 33 wide-body airplanes, including 19 Boeing 787 and 14 Airbus A350 from June till 2019.

Boeing 787-9 Dreamliner and Airbus A350-900 are among the world' s most modern and advanced wide-body aircrafts.

VNA said it is planning to change aircrafts which are able to help save energy and environmental friendly.

They will be used on international long routes and destinations in Europe and North America.

The change of its fleet makes Vietnam Airlines to become the first carrier in Asia to own the wide-body aircraft types.

Trade sees $1.87b deficit in first half of May

Viet Nam exported US$6.32 billion worth of commodities in the first half of May, a decrease of 9.5 per cent compared over the previous fortnight, the General Department of Customs reported.

Meanwhile, the country's imported goods were worth $8.19 billion, an increase of 34.7 per cent compared to the second half of April.

This meant the country's trade deficit was $1.87 billion for the first two weeks of May. This compares to a trade deficit of $3.7 billion from the beginning of the year.

The total export turnover from the beginning of this year to May 15 totalled $56.09 billion, while import turnover was $59.78 billion.

The import turnover for the first five months was expected to reach $66.2 billion, an increase of 15.8 per cent compared to the same period last year.

Regarding exports, key export products from the beginning of the year included telephones and components ($10.44 billion), garments and textiles ($7.23 billion), computers, electronic products and spare parts ($5.35 billion), footwear ($4.09 billion), machines, equipments and accessories ($2.78 billion) and wood and wooden products ($2.32 billion).

Meanwhile, Viet Nam's main imported products were machines and equipment serving production.

The General Statistics Office attributed the high trade deficit to an increasing demand for infrastructure investment and production. This led to an increase in demand for machines, equipments and materials.

Meanwhile, the economy is dependent on imported materials because a supporting industry has not fully developed in Viet Nam.

"FDI enterprises have ultilised opportunities from free-trade agreements which take effect this year", said the office.

Despite unsatisfactory production and business results for the first four months of this year, many enterprises hope that their business will improve in the next six months, said the the Viet Nam Chamber of Commerce and Industry.

For the last nine months of the year, 42.2 per cent of enterprises will expand their businesses, 56.1 per cent will remain the same, 1.7 per cent will reduce operations and 0.1 per cent might have to stop.

It was easier for businesses to access loans in the first four months of this year, which increased their optimism.

VietJet, VNPT to co-operate on telecommunications

VietJet and the Viet Nam Posts and Telecommunications Group (VNPT) will co-operate in areas such as air transport, telecommunications and multimedia entertainment services on the carrier's aircrafts.

The commitment follows a strategic deal inked between the two sides in HCM City late last week. The signing ceremony was witnessed by Minister of Transport Dinh La Thang and Minister of Information and Communications Nguyen Bac Son.

VietJet will expand and develop ticket sale channels on the VNPT system, while VNPT will develop telecommunications services on the airline's planes and receive preferential air service packages. The two will also join hands to draw up promotional packages for customers.

Southern province launches first Government-sponsored steel vessel

Southern Ba Ria-Vung Tau province’s first steel vessel built under a Government decree supporting fisheries development is set to go on its maiden voyage on May 26.

The logistics ship, BV 99999 TS, owned by Gia Han Fishery Logistics Co. Ltd, will carry fuel and basics for fishing vessels at sea, said Tran Phong Ba – Director of Gia Han company.

The vessel, 54m long and 10m wide, is equipped with two 822CV engines and modern facilities such as radar, the global positioning system, and digital map.

It is able to carry 400 tonnes of seafood, 100 cu.m. of fresh water, and 250 tonnes of diesel oil.

The ship was built at a cost of 35 billion VND (1.66 million USD), 30 billion VND of which was loaned under concessional terms by the Ba Ria-Vung Tau branch of the Bank for Investment and Development of Vietnam.

The Government’s Decree 67/2014/ND-CP, taking effect from August 25 last year, provides basic policies to encourage fishermen build high-capacity and steel ships capable of fishing offshore, a practice that could earn fishermen higher incomes and at the same time contribute to protecting the country’s territorial waters.

As many as 2,079 new off-shore fishing ships and 205 logistics ships will be built under the Decree, according to the Ministry of Agriculture and Rural Development.

Korean companies launch affordable supermarkets to cater to Vietnamese workers

Two Korean-owned companies in Vietnam are running their own supermarkets which offer goods at low prices to their workers in a bid to improve their living conditions.

Chang Shin Vietnam Co., based in Vinh Cuu District in Dong Nai Province, which borders Ho Chi Minh City, and Tae Kwang Vina Co., located in the Bien Hoa Industrial Park 2 in the same province’s Bien Hoa City, built their own supermarkets on their premises in 2010 and 2012, respectively.

Both the companies are Korean-owned producers of sneakers.

Their supermarkets are open exclusively to their workers, who have within their reach a wide array of consumer goods at prices equivalent to or less expensive than those at major supermarkets or conventional markets.

Their opening hours – before and after workers begin and finish their shifts – also save them the time and trouble of going to makeshift sidewalk markets.

Nguyen Xuan Phuoc, a worker at Chang Shin Vietnam Co., told Tuoi Tre (Youth) newspaper that it is harder to buy fresh vegetables and meat at sidewalk or conventional markets after his late shifts.

Dao Tien Minh, another worker, finds it considerably more comfortable and quicker to pick up items at his company’s supermarket than grocery stores.

Similarly, Nguyen Thi Thang, 52, another worker at Chang Shin, said she is assured of the origins and quality of her purchases at the supermarket.

Dang Tuan Tu, chair of Chang Shin Vietnam Co.’s Trade Union, toldTuoi Tre his company spent over VND2 billion (US$93,205) on its 200-square-meter supermarket.

“Our company has also earmarked money to make sure its workers benefit from quality, affordable buys,” he added.

The two companies’ trade unions also allow the workers “debits” of between VND500,000 ($23.3) and VND700,000 ($33) per month.  

According to a Tae Kwang Vina Co. supermarket staffer, the supermarket purchases goods worth a total of VND700 million ($32,622) each month, including over 150 different items, to cater to their workers’ diverse demands.

The supermarket also allows workers to mark their desired items on provided lists of articles and prices before giving them to supermarket attendants or dropping them into containers placed around the company.

As the supermarket staffers pick the chosen items beforehand, it takes customers only around five minutes to pick up their purchases after leaving work.

The service has proved particularly helpful to workers, especially after their overtime sessions, when they are too tired to shop.

“Improving our workers’ lives does benefit our company, as they will grow attached to their jobs, thus saving the company expenses and troubles recruiting new employees,” said Dinh Sy Phuc, chair of Tae Kwang Vina Co.’s Trade Union.

According to Nguyen Van Tuan, 27, a Tae Kwang Vina worker, his company also offers delectable breakfast dishes for a mere VND2,000 ($0.1) apiece.

Bui Thi Thu Thuy, another worker at Chang Shin, said the company also offers a tasty VND4,000 breakfast, which workers, particularly migrant ones, find to be excellent choices.

Russia, Vietnam to lift bilateral trade

Vietnamese enterprises should try to raise the bilateral trade turnover with Russia to US$20 billion by 2020 following a Free Trade Agreement between Vietnam and the Europe-Asian Business Alliance to be signed later this month, President Truong Tan Sang said on May 24.

He expressed his hope of doubling the present goal of US$10 billion by 2020 at the meeting with Vietnamese enterprises currently investing in Russia, and explained that the agreement would remove trade barriers.

Regarding the establishment of a Vietnam's light industrial park in Russia, Sang said that enterprises should choose the location with well-established infrastructure to invest in. They should form a joint stock company to manage the park, which Russia holds a 51% stake in.

When the park opened, Vietnamese workers residing in Russia should be given priority to work there and provided with all necessary support in social insurance and housing, he said.

Garments and textiles, wood, plastics, aqua-culture and food processing were the country's best opportunities for investment in the Russian market, he said.

Tran Bac Ha, chairman of the Bank for Investment and Development of Vietnam (BIDV), said the light industrial park in Russia aimed to create more chances for Vietnamese enterprises to invest in Russia and improve the production of consumer goods for the market.

The light industrial park will cover 100-120 ha and is expected to provide production and trade assistance, product distribution, as well as legal and logistics services.

There are 19 Vietnamese enterprises operating in Russia with 3,600 employees signing up to move in the park which is expected to open in September this year.

According to BIDV, Vietnam's investment in Russia hit US$2.5 billion this year from US$100 million in 2008. Last year, bilateral trade turnover between the two countries reached US$2.6 billion.

Fisheries sector urged to improve production technologies

Vietnam's fisheries industry should better utilise modern production technologies to improve its competitiveness in the global market, said Minister of Agriculture and Rural Development (MARD) Cao Duc Phat at a conference last on May 23.

The minister said that, though the fisheries industry made some remarkable achievements, it has performed less than expected, especially in applying the world's advanced technologies for the sector including the breeding.

He said that research institutions had not made the best use of the state budget to help developing the industry.

He stressed the importance of improving technology available to Vietnamese fishermen, who are responsible for 130,000 fishing boats at sea. However, Vietnam has been importing fishing nets from Thailand and second-hand engines from Japan for its fishing boats.

Vietnam's fisheries industry exploded in the last few decades. Pham Anh Tuan, MARD's Deputy Director of Fisheries Directorate, reported that export turnover increased from US$500 million in 1995 to US$7.8 billion.

Workers process tra fish at the An Do Duong seafood processing factory. Minister of Agriculture and Rural Development Cao Duc Phat said that Viet Nam's fisheries industry should use modern production techniques to improve its competitiveness. — VNA/VNS Photo Cong Mao

The country is now the world's third largest shrimp producer and among the top four exporters of fish and sea products in the world. Today, Vietnamese fishing products can be found in 170 markets around the globe.

However, Tuan said, despite the large budget the Government spent on the industry's programmes to study and apply new technologies, the results are insufficient, inconsistent and not advanced enough to solve problems in the industry.

He said the industry's technological level is still low and of poor quality. He said that companies are still unable to utilise high-tech applications to develop disease-resistant breeds, nor adapt to environmental changes.

In general, the country is under-achieving in technological development and few of the State-funded projects produced anything good enough to use in fishery production, said Tuan.

Economic restucturing ‘too slow'

Although economic restructuring has been recognised as a vital task, the process remains slow and requires greater efforts for a more comprehensive outcome, according to experts.

The Director of Central Institute for Economic Management (CIEM), Nguyen Dinh Cung, noted at a conference on May 22 that the economic restructuring process in Vietnam had been progressing at a slow pace.

At the conference on the monitoring and evaluation of the implementation of the master plan for economic restructuring, many economists agreed with Cung. The conference was organised by the institute within the framework of the Restructuring for a Competitive Vietnam project.

Economists Luu Bich Ho remarked that even after three years, the process remained far from substantial restructuring.

CIEM's former director Le Xuan Ba said that Vietnam should accept low growth rates, between 4 and 5%, in the short term to gain higher growth rates of 8-10% in the medium term.

According to Nguyen Tu Anh of CIEM, the restructuring process during 2011-14 posted achievements including a stable macro economy and improved business environment and productivity.

However, Anh pointed out, the public restructuring failed to focus on measures to enhance investment efficiency, while the privatisation of State-owned enterprises and resolution of bad debts were below expectations.

Rapid rise in public debt remained a threat to macro-economic stability, according to CIEM.

Experts at the conference stressed that greater efforts were needed to implement the economic restructuring comprehensively and thoroughly.

Vietnam has been pursuing economic reforms with its focus on three pillars, namely public investment, State-owned enterprises, and the banking system, in combination with a shift in the national growth model.

Where's Vietnam’s first seven-star resort complex?

A local conglomerate has started work on its beach and golf resort complex in a central province, with its beach villa clusters to be the country’s first to attain a seven-star standard.

Hanoi-based FLC Group on May 23 began construction on their FLC Nhon Ly Beach and Golf Resort complex, located in Quy Nhon City, the heart of Binh Dinh Province in the central region.

The 300-hectare complex costs VND3.5 trillion (US$160.77 million) to build and is expected to become operational in the first quarter of 2016.

It boasts a seven-star beach villa cluster, luxury resorts, golf courses, hotels, five-star restaurants, as well as an international convention center and a lavish entertainment area.

The plot which the complex is built on is adjacent to Eo Gio (Windy Strait), situated in the city’s Nhon Ly Ward.

The strait is said to be where people can behold the most gorgeous sunrises in Vietnam.

Ho Quoc Dung, chair of the provincial People’s Committee, said the Nhon Ly resort project, once operational, will help improve the province’s tourism sector, lure investment, contribute substantially to the local coffers, and provide jobs for locals.

Vietnam more attractive investment destination than it appears

Vietnam has much to offer as an investment destination, which remains largely underexploited as the country has not been paying due attention to promoting its reputation.

Vietnam is not doing enough to make itself known outside the region, explained Roland Schatz, founder and CEO of media intelligence firm Media Tenor. As a result, “too many companies still go to China and forget that if they would come to Vietnam they would be better off,” he said.

A recent research by Media Tenor shows that, besides China of course, other countries in the region, such as Thailand, Singapore, Cambodia, Malaysia and Myanmar, all have more coverage outside the Southeast Asia region than Vietnam does.

Vietnamese companies, meanwhile, only need better media relations outside of the region to capture investors’ attention, as companies in Europe and Africa are constantly on the look-out to build relations in Asia, according to Schatz.

During the first four months of 2015, Vietnam has attracted US$3.72 billion in foreign direct investment (FDI), signifying a decrease of 23.3 % compared to the same period in 2014, according to reports by the Ministry of Planning and Investment. The Republic of Korea became the biggest investor with 197 projects worth US$908.88 million, accounting for 24.4% of the total FDI in the country.

Media Tenor International, founded in 1993, provides media intelligence and helps businesses optimise communications, improve stock market performance and manage reputational risks. Media Tenor’s customer base extends to the public sphere as well as the company also assists  politicians and governments in navigating public and media opinions.

Japanese precision firm starts in Da Nang

Tokyo Keiki Precision Technology Inc inaugurated its first plant outside Japan at central Da Nang city’s Hi-Tech Park on May 22, following eight months of construction.

The 40-million-USD plant is the first to be operating in the 1,010-hectare park in Hoa Vang District, 20km west of the city centre.

The plant will manufacture electro-magnetic and hydraulic equipment, targeting to export more than 50,000 digital directional valves per month for the Asia-Pacific region.

According to members of the managing board of the Hi-Tech Park, another Japanese investor, Niwa Foundry company, a partner of Keiki company, also has begun construction of its first engine castings plant, at a cost of US$30 million.

It's scheduled to be put into operation in 2016.

Japanese businesses have invested US$330 million in 68 projects in the city, employing more than 27,000 people.

HCM City faces shortage of workers in clothing industry

A critical shortage of workers in the textile and clothing industry is hampering HCM City’s ability to transform itself into the fashion centre of the southern region, leading industry analysts report.

Late last year the HCM City Department of Trade and Industry announced that for 2015 it was targeting an increase in the industry’s production value by 8.5% over that of 2014 to US$1.7 billion.

To accomplish the goal would require an additional 19,500 workers and roughly 500-1000 skilled workers such as engineers, technical experts and designers, the department said.

Beyond 2015 the department anticipated an additional 20,250 workers would be needed by 2020 to meet the demand for future growth brought about by regional and global integration.

The shortage of skilled labour is the most immediate hurdle facing industry growth, said Bui Mai Huong, head of the Garment Technique Department of the HCM City University of Technology (HUT).

We just don’t have the capacity to train workers, Huong said— adding that HUT is only capable of training 80 engineers per year.

Citywide there are 11 vocational training centres, colleges and universities that are capable of training 1,900 workers, including 200 with Bachelor of Arts degrees, each year.

These figures are just too far below those needed to meet the demand of the textile and clothing industry.

This sentiment has been echoed by many of the city’s textile and clothing business leaders who say manufacturers do not yet have the skilled labour forces required to compete for the high-end manufacturing contracts.

We are always taking on new employees with no steady and stable work force, said one factory owner, and the high employee turnover is holding us back from getting production to the quality levels we need to be at.

Stiff competition with new industrial parks in almost all provinces in the central and northern regions and the higher costs of living in HCM City is also playing a role in the shortage of workers.

Many workers are finding they can enjoy similar income and working conditions at industrial parks in their hometown, where the cost of living is much less.

Irradiation costs make lychee exports difficult

The US and Australia will import Vietnamese lychees, but local businesses must bear the high cost of meeting these countries' irradiation requirements, officials said at a meeting earlier this month.

At the meeting on finding more markets for local products, Le Van Anh, head of the vegetable and fruit export-import joint stock company No. 1, said it would not be easy to make Vietnamese lychees compatible with US and Australian markets.

The US and Australia also opened their markets to dragon fruit, rambutan and longan, but they must also undergo irradiation to eliminate pathogens and diseases.

Participants at the event agreed to enhance the quality of Vietnamese agricultural products to meet requirements from high-end, competitive markets. So far seven firms are licensed to do so.

This year's lychee crop will be transported to southern Vietnam for irradiation treatment until a northern centre for irradiation becomes operational at the end of this year.

Businesses will have to bear the cost of transporting products to the south. Then the irradiation itself will cost between 80 cents and US$1 per kg.

Hoang Trung, deputy head of the Department of Plant Protection, said it would be difficult to expect Vietnam to export a large number of lychees to these new markets this year.

Officials estimate that domestic consumption will account for about 60% of the total production of lychees, and farmers and businesses will still have to rely heavily on China.

At the same time, Anh said authorities should work on clearance procedures to make sure lychees won't be caught up at the border.

But officials say they hope Vietnam won't have to rely so heavily on Chinese buyers when it enters more high-end markets like the US and Australia.

The Australian Department of Agriculture approved the importation of fresh lychees from Vietnam on May 12. The announcement came just in time for Vietnam's 2015 lychee harvest, which will last until the middle of July.

Environmental tax causes fuel prices to soar in Vietnam

It is said that we should never tell the same lie twice, but this seems to be the case of the argument that a“higher environmental tax does not mean higher fuel prices,” which was put forward during both of Vietnam’s fuel price increases over the last two weeks.

Vietnam’s petrol prices have gained 18 percent in 15 days, now selling at VND20,430 a liter following the latest VND1,200 per liter hike on May 20. (US$1 = VND21,770)

The Ministry of Industry and Trade and its finance counterpart said the price hike was inevitable thanks to the rise on the global market, and that the new VND3,000 per liter environmental tax is not to blame.

The tax used to be only VND1,000 before the higher rate was applied on May 1.

Along with the new environmental tax, the Ministry of Finance cut the fuel import duty to 20% from 35%, saying it would thus help keep retail fuel prices unchanged.

But the two price hikes this month prove the opposite.

Every liter of petrol imported into Vietnam was taxed VND3,945 under the old 35% duty, and it is subject to a VND2,254 tax pursuant to the new rate.

The reduced import duty therefore helped lower the base petrol price by VND1,691 a liter. Retail prices will be determined on the basis of this base rate.

But when the extra VND2,000 a liter environmental tax is counted, the base price increases by VND309 a liter, which means the higher environmental tax does affect retail price.

Vietnam has to import 70% of its fuel demand, mostly from Singapore. The import price from this market rose 2.7% between April 30 and May 20, whereas the domestic retail price was hiked 18% during the same period.

The Southeast Asian country consumes some 38 million liters of fuel on a daily basis, according to the Vietnam Fuel Association.

With a population of 90 million, each Vietnamese spends VND8,626 on their daily usage of 0.42 liter of fuel, or a monthly sum of VND258,780.

This is equal to some seven percent of their monthly income, given a GDP per capita of US$169 a month, according to data by the General Statistics Office.

This figure is high compared to other Southeast Asian countries, where fuel costs only account for 0.5 – 3.5% of individual income.

Sandeep Mahajan, lead economist of the World Bank Group in Vietnam, said fuel costs are “sensitive” to businesses and consumers, so any tax increase must come with supportive policies.

But Vietnamese consumers and businesses always fail to enjoy lower fuel prices even when global prices are slumping.

When global crude oil shrank to below $60 a barrel last year, Vietnam increased the fuel import duty to 40%, preventing domestic fuel prices from being slashed.

The finance ministry said the tax increase was meant to make up for the losses to the state budget caused by declining oil prices.

When Vietnam is forced to reduce the fuel import duties under the integration roadmap of several trade pacts, the ministry came up with the higher environmental tax rate for no purpose other than to offset the loss to state coffers.

These tax policies have prevented local consumers from enjoying reasonable fuel prices, whereas firms face difficulty in planning their business with the volatile fuel costs.

Local experts now wonder whom the fuel management policies benefit, when both the public and companies are hurt.

Pesticide traces in Vietnamese tea exceeds limits

Tea is the world’s most popular beverage, often touted for its healthful properties, however the Ministry of Agriculture and Rural Development (MARD) suspects some Vietnamese black tea may be contaminated.

MARD has announced it will investigate Vietnamese black tea producers following reports by Taiwanese officials of exported tea containing pesticide and dioxin residue exceeding mandated thresholds.

During April, Taiwan authorities issued 22 warnings for batches of black tea that tested positive for excessive pesticide residue and seven others for dioxin contamination.

The investigation by MARD will retrace the origin of the product, analyse samples as part of a concerted effort to determine if there were any violations, and if so, devise an appropriate remedy.

The investigation is expected to be completed and the results reported to MARD Minister Cao Duc Phat on or before June 30.

RoK to cut taxes on farm goods

According to the VCCI, trade turnover between Viet Nam and the RoK rose from US$500 million in 1992 to more than $26 billion in 2014. The RoK was Viet Nam's third most important partner and its largest investor, with 36.2 per cent of the total investment in 2014.

In 2007, Viet Nam also became an FTA partner with the RoK under the ASEAN-Korea FTA pact.

The VCCI said among the FTAs Viet Nam had signed, the Korean deal was the most advantageous in terms of exports, imports and investments. Thus, a direct FTA with the RoK would definitely bring more benefits.

With 17 chapters, 208 articles, 15 appendices and one agreement, the deal was signed by Minister of Industry and Trade Vu Huy Hoang and RoK Minister of Trade, Industry and Energy Yoon Sang-jick in Ha Noi on May 5.

The Republic of Korea has chosen Viet Nam as its first FTA partner that can export products such as garlic, ginger and honey with tariffs reduced to zero per cent over the next 10-15 years.

The information was shared at a conference to inform Vietnamese businesses about the recently signed FTA between the two countries on Thursday, organised by the Viet Nam Chamber of Commerce and Industry (VCCI).

The VCCI said the current export taxes applied to these products in the RoK stood from 241 to 420 per cent, but under the Viet Nam-Korean Free Trade Agreement (VKFTA) signed on May 5, taxes for these products would be held at zero per cent for the next 10 years.

This would give Viet Nam a significant competitive advantage over other competitors in the region such as China, Indonesia, Malaysia and Thailand, said Pham Khac Tuyen, head of the North East Asian Bureau under the Ministry of Industry and Trade.

Hong Sun, secretary general of the Korea Chamber of Business in Viet Nam, said the agreement was a big move as it included garlic, which is the first key ingredient for the Korean specialty, kimchi.

At the same time, Viet Nam will also be the RoK's first FTA partner to be able to export natural honey at a zero tariff 15 years after the agreement takes effect.

The tariff on rambutan's will also be cut from the current 611.5 per cent to no less than 20 per cent from January 1, 2016. The export tax on tropical fruit like pineapple, guava, mango and mangosteen will also be dropped in the next ten years.

The RoK will eliminate tariffs for seven types of shrimps imported from Viet Nam from next year. In 2016, Viet Nam has a quota to export 10,000 tonnes to the RoK, with a 10 per cent increase each year. By 2020, the country could export 15,000 tonnes of shrimps per year without tariffs.

Currently, Viet Nam can only ship 2,500 tonnes without tax under the ASEAN Korean FTA. Current tariffs are applied to imported shrimp from Viet Nam are 10 to 15 per cent.

According to the Viet Nam Association of Seafood Exporters and Producers, the South Korean market is the fifth largest consumer of Vietnamese shrimp, after the US, Japan, the EU and China. Viet Nam also overtook China to become the largest shrimp supplier to the RoK in 2014. In 2014, South Korea imported 62,878 tonnes of shrimp, including 27,791 tonnes from Viet Nam.

In return, Viet Nam will cut import taxes for textile raw materials, textiles, plastic materials, electronic components, trucks and passenger car automobile parts, electrical appliances, some iron and steel products, electrical wire rods and cosmetics.

Chamber secretary Hong Sun said Korean companies were eager to invest in Viet Nam's agriculture sector, and the FTA was likely to induce more FDI.

He said Viet Nam had good natural conditions and human resources for agricultural production, but in terms of technology and manufacturing techniques, Viet Nam was still weak.

The RoK was experienced in technology and logistics, he said, adding that there should be a chance for future co-operation between the two sides.

However, MoIT official Tuyen said it would not be easy to enter the RoK market if local enterprises were not well prepared.

Instead, Tuyen advised local enterprises to co-operate with big Korean companies to seek advice about quarantine barriers. He said customs procedures and the RoK market were "very complicated", making it difficult for foreign brands to enter a market where local people only trusted their own products or well-known international brands.

Tuyen said Vietnamese enterprises should find established partners for their exports, such as Lotte Mart, Emart and Costco.

Chairman of the Viet Nam Beekeepers Association Dinh Quyet Tam said he did not expect much from the FTA, saying the RoK would enforce stricter quarantine regulations on products. Tam gave an example that under the FTA signed with Japan, they could export local honey products with no export tariffs, but other strict barriers had made very little difference to exports.

Nguyen Ton Quyen, general secretary of the Viet Nam Timber and Forest Products Association (Vifores), said the agreement would also bring stiff competition from the RoK with advanced technology and machinery, and lower prices. Quyen said that many Vietnamese enterprises would lose out.

Fisheries sector urged to improve production technologies

Viet Nam's fisheries industry should better utilise modern production technologies to improve its competitiveness in the global market, said Minister of Agriculture and Rural Development (MARD) Cao Duc Phat at a conference last Saturday.

The minister said that, though the fisheries industry made some remarkable achievements, it has performed less than expected, especially in applying the world's advanced technologies for the sector including the breeding.

He said that research institutions had not made the best use of the state budget to help developing the industry.

He stressed the importance of improving technology available to Vietnamese fishermen, who are responsible for 130,000 fishing boats at sea. However, Viet Nam has been importing fishing nets from Thailand and second-hand engines from Japan for its fishing boats.

Viet Nam's fisheries industry exploded in the last few decades. Pham Anh Tuan, MARD's Deputy Director of Fisheries Directorate, reported that export turnover increased from US$500 million in 1995 to $7.8 billion by 201

The country is now the world's third largest shrimp producer and among the top four exporters of fish and sea products in the world. Today, Vietnamese fishing products can be found in 170 markets around the globe.

However, Tuan said, despite the large budget the Government spent on the industry's programmes to study and apply new technologies, the results are insufficient, inconsistent and not advanced enough to solve problems in the industry.

He said the industry's technological level is still low and of poor quality. He said that companies are still unable to utilise high-tech applications to develop disease-resistant breeds, nor adapt to environmental changes.

In general, the country is under-achieving in technological development and few of the State-funded projects produced anything good enough to use in fishery production, said Tuan.

HCM City urges banks to cut interest rates

Interest rates on long - and medium-term loans should be lowered by at least 1.5-2 per cent to speed up credit growth and help companies revive, National Assembly delegates from HCM City have told commercial banks.

At a recent meeting the lawmakers said the State Bank of Viet Nam (SBV) had directed lenders to keep interest rates steady and try to reduce them by a further 1 or 1.5 per cent to stimulate credit growth and boost economic development.

But interest rates on long- and medium-term loans stood at rather high levels that many firms could not afford, they said.

Dr. Tran Du Lich, also a member of the National Monetary and Financial Policy Advisory Council, said credit demand would rise this year, but banks needed to cut interest rates to ensure smooth credit flow.

"Inflation this year has been predicted at only 3 per cent. Yet firms are having to pay interest of 11 per cent for long- and medium-term loans, which is irrational. The lending rate should be cut to 9 or 10 per cent [so that] local businesses can afford them.

"With the current 5.5 per cent ceiling on deposit interest rates, the lenders' profit will not be affected if they reduce the interest [on] loans.

"The lenders are also enjoying very high interest rates on personal loans (14-15 per cent for secured loans and 34-35 per cent for unsecured)."

A report by the SBV's HCM City branch said though lending rates at most banks had fallen by 1-1.5 per cent since last year, they remained at 10-11 per cent for medium- and long-term loans.

Nguyen Hoang Minh, deputy director of the branch, said these rates were for non-production sectors while lending for production and business averaged 9 per cent interest.

Most banks offer deposit interest of only 4.44-5.02 per cent for under six months, 5.3-5.99 per cent for six to 12 months and 6.03-6.94 per cent for over a year.

Lich said the sharp cuts in interest on short-term deposits forced people to shift to long-term deposits because other asset classes had yet to show clear signs of recovery.

This meant banks had plenty of long-term funds to lend and could easily cut loan interest rates, he said.

Truong Trong Nghia, a lawyer by profession, stressed the need for caution while lending to the property sector to avoid a bubble.

Tasco largest investor in Thang Long

Thang Long Group Joint Stock Company (Thang Long Group) yesterday announced Tasco Joint Stock Company (Tasco) would become the company's largest investor.

Tasco would then benefit from construction projects that Thang Long Group participated in as the major contractor.

Tasco purchased 11 millon out of 20 million shares that Thang Long Group offered to investors under private placement from April 8 to May 14, raising its stakes in Thang Long Group to 35.4 per cent.

Thang Long Group sold more than 11.9 million shares at a price of VND12,075 per share and received net revenue of VND143.7 billion ($6.65 million).

Pham Quang Dung, the president of both companies' boards of directors, and his relatives also increased their stake to 24 per cent of Thang Long Group JSC's charter capital.

CII reduces foreign ownership

The HCM Stock Exchange (HOSE) yesterday announced that foreign ownership in the HCM City Infrastructure Investment Joint Stock Company (CII) would be reduced from 42.68 per cent to 37.83 per cent from May 21.

The decision was made as CII converted its bonds into shares to raise charter capital.

In the first phase, bondholders signed up to convert 783,148 bonds into shares at a price of VND11,000 per share and conversion rate of 1:90.9 (a single share was equal 90.9 bonds).

CII had to issue 71.19 million shares to convert its bonds for bondholders in the first phase.

After the first phase was completed, nearly 300,000 bonds were not converted, worth nearly VND300 billion ($13.9 million). CII will have to issue 27.15 million shares at VND11,000 to convert these bonds.

Last Tuesday, HOSE announced that the deadline for CII bondholders to register in the second phase to convert bonds into shares was June 23.

HBI opens housing, commercial complex

HBI company made its debut in its Imperial Garden office, housing and commercial complex in Nguyen Huy Tuong of in Ha Noi's Thanh Xuan District on Thursday.

The project covers an area of 42,000 sq.m, has over 1,000 sq. metres of green space and infrastructure facilities, including apartments, luxury villas, offices available for leasing and a trade centre.

The project is slated to become operational by the end of 2017.

Nguyen Hong Ngoc, the general director of HBI company, which is the owner of the project, said the property market, in general, and in the capital city, in particular, had undergone a dramatic change, which presents an opportunity for property developers.

Also at the ceremony, HBI signed strategic cooperation agreements with local partners to participate in the projects, including M.I.K corporation, VP Bank and STDA.

Railway sector plans restructuring

Vietnam Railway Corporation (VNRC) Deputy Director Doan Duy Hoach recently spoke with the Lao dong (Labour) Newspaper about plans to restructure the railway sector.

Hoach said after completing the VNRC restructuring plan for the period 2011-15, the corporation sets as a key goal to focus its activities on organising effective management, exploitation and business of the railway infrastructure and improving sources to collect fees for railway services.

According to the deputy director, the railway sector has set a target to reach 4.34 percent of the market share of the transport of interprovincial goods and 3.4 percent of the passenger transport market share by 2020. The quality of rail transport is to be improved, especially at stations and transport spots.

He said the railway infrastructure system will be developed, with a focus on upgrading and modernising the existing North-South railway route. Priorities would then be given to complete key projects to handle choke-points on the Thong Nhat Railway Route and to implement projects on railway and waterway connections.

The corporation also plans to complete feasible research plans for a high speed railway system on the north-south route and increase the transport of containers by railway to ease the overload on road transport during this period, he said.

Deputy Director Hoach said the VNRC is calling upon investors to research and propose investment co-operation projects on depot systems at railway stations or concessions to take advantage of branch routes.

According to him, some pilot projects are to be implemented at depots, as well as at warehouses at Yen Vien station in Hanoi, Dong Dang station in Lang Son province in the north and Song Than station in the southern province of Binh Duong.

He added that at the moment, 28 enterprises have registered to participate in the transport business.

According to Hoach, mobilising capital and strength from individual or organisations in implementation of some public services would help improve the quality of services in the railway sector.

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