Innovation vital for int’l integration
     
Productivity and innovation are considered leading factors for Viet Nam’s international integration, said Dang Huy Dong, deputy minister of Planning and Investment.

Dong told a workshop titled “Viet Nam economy’s innovation and productivity: Evidence from empirical analysis” held in Ha Noi last week that the two factors are required for the Fourth Industrial Revolution as well as joining global supply chains that take advantage of digitalisation in production.

Dang Duc Anh, head of the Analysis and Forecast Board under the ministry’s National Centre for Socio-economic Information and Forecast said Viet Nam had exploited traditional resources such as capital, natural resources and cheap labour for its economic development, exhausting such resources. The quality of growth therefore was not high and lacked sustainability.

“If the country continues this development trend, it would result in environmental pollution and a loss of competitiveness in comparison with the region and the world in the long-term,” Anh said.

However, Viet Nam’s productivity has long suffered a gap with the region. In another way, the quality of its human resources has not provided momentum for productivity growth. The rate of young labourers who were not given training and education is too high, becoming a barrier for the country’s productivity to increase.

Experts agreed that Viet Nam has a shortage of skilled labourers. As many as 11 out of 20 economic sectors which had positive growth rates in the 2006-16 period were not due to increasing productivity. Of which, four of 20 economic sectors saw declines in productivity in the period and another 7 had added value based on productivity less than the ideal level of 60 per cent.

They suggested that the Government should speed up renovation and restructuring of State-owned enterprises effectively and drastically. It was expected that economic output could rise by 10 per cent through increasing productivity.

Experts calculated that if SoEs’ productivity rises by 2 per cent, it would lead to a GDP increase of 1.14 per cent, industrial production of 2.26 per cent and export output of 1.15 per cent.

The rapid growth requires active participation of the private sector with small-and-medium sized enterprises (SMEs). Research also revealed that if SMEs promote the application of new technologies, productivity would increase by 25 per cent.

Anh also said the country’s growth rate had been relatively impressive and sustainable with positive export results. However, export and GDP growth depended on the FDI sector while local firms and their investment effectiveness had not significantly improved.

In addition, one of the main reasons for low productivity was education and training quality as well as human resources that did not meet requirements. Viet Nam risked moving backwards in terms of human resources and losing the advantage of its cheap labour.

He proposed that the Government and relevant agencies should focus on institutional and business environment improvement to serve businesses in combination with speeding up the privatisation of SoEs.

Especially, the Government should enhance start-up spirit and support the training of entrepreneurs to help them increase added value through new technologies.

Dr. John FitzGerald from the Economics Faculty of Trinity Dublin University said Viet Nam should concentrate on three factors including capital, science and technology and human resources for sustainable development and catching up with developed countries. Viet Nam could improve its productivity through developing science and technologies while resolving issues of economic structure, labour, working environment and administrative reform to increase productivity. 

Viet Nam’s fruit imports from South Korea surge

     
Korean exports of pears and apples to Viet Nam have soared in the past years, according to the Korea Agriculture Food Trade Association.

Korea’s pear exports to Viet Nam surged by 9,440 times in the 2011-16 period, from US$52,000 in 2011 to $4.96 million last year.

Its apple exports to Viẹt Nam also went up by 928.8 per cent in the period, from $66,000 to $679,000.

Speaking on the sidelines of a seminar in HCM City on Friday, Cao Thị Quỳnh Giao, director of Lam Khải Hoàn Co.Ltd, said her company imports about two to five containers (each container having a loading capacity of 600kg) of pears and apples from South Korea to distribute to supermarkets in Viet Nam.

“Many Vietnamese consumers are fond of Korea’s pears due to its good quality and reasonable prices,” she said.

Her company plans to import more pears and Fuji apples from Korea, kiwi from Australia and gala apple from the US, she said.

Ta Minh Thanh, deputy director of Tu Son Supermarket in Chau Doc, An Giang Province, said the supermarket started to sell Korean pears and apples two and a half years ago, with sales of pear very good.

“We are here to meet Korean firms as we want to find suppliers of apple/pear gift boxes to serve customers on the occasion of Lunar New Year holiday,” he said.

Lee Soon Nyung, managing director of Hyun Jin Corporation, said Korea exports about 25,000 tonnes of pears a year, with the US (10,000 tonnes), Taiwan (10,000 tonnes) and Viẹt Nam (2,000 tonnes) being three biggest export markets.

It exports about 3,400 tonnes of apples a year, of which 2,000 tonnes is exported to Taiwan and 300 tonnes to Viẹt Nam.

As Viet Nam does not cultivate pears and apples, many businesses have imported them from other countries to supply in the market. Vietnamese people are fond of Korean fruits, especially apples and pears, he said.

“Viẹt Nam is a very potential market. We want to export more apples and pears as well as other kinds of fruits into Viẹt Nam.”

“The business meeting today will help us understand more about requirements of our Vietnamese partners so as we can satisfy their demand.”

Lee Sun Hyung from Gyeong Buk Corporation, said "Viẹt Nam is an emerging market for Korea’s fruits".

Many Korean companies as well as his company have prepared high-grade pear and apple gift boxes with nice design, hoping that the products will be consumed well in Viet Nam in the future, he said.

Organised by the Korea Agriculture Food Trade Association and the Viet Nam Chamber of Commerce and Industry, the Viẹt Nam-Korea business seminar attracted seven Korean fresh fruits exporting firms and 15 Vietnamese enterprises.

The two sides exchanged information on import-export situation, prices, and quality of products as well as difficulties accounted during the import process. Korean firms talked about ways to improve the problems and propose ways to increase exports in the future.

The association said it plans to invite Vietnamese fruit importers to visit South Korea to understand more about the production process of the fruits as well as discuss business opportunities.

Viet Nam imported vegetables and fruits worth $1.02 billion in the first eight months of 2017, a year-on-year increase of 94 per cent. Of which, the import value of vegetables was around $200 million, while fruits imports were more than $800 million, double the same period last year, according to the Ministry of Agriculture and Rural Development. 

Work starts on $19m area in Binh Duong
     
Construction on a US$19-million production area began in the southern province of Binh Duong’s Bau Bang Industrial Zone (IZ) last week.

The 13ha area is financed by four Taiwanese firms – DDK Viet Nam, Yi Xing, T-Star and Ever Young companies.

These firms are involved in real estate, factory leasing, industrial infrastructure investment consultation, environmental protection equipment, electricity and aluminum product production.

The construction of the area is considered the start in forming a concentrated production cluster of Taiwanese firms in the province. The cluster, expected to cost $200 million, will cover an area of 80ha in the IZ.

In his speech at the ceremony, Vice chairman of the provincial People’s Committee Tran Thanh Liem spoke highly on the Taiwanese firms’ investment in the IZ, as well as their contributions to local socio-economic development.

Local authorities would continue to create the most favourable conditions for the investors during their operations in the locality, Liem said, while expressing his hope that more Taiwanese enterprises would choose Binh Duong as their investment destinations.

Currently, Taiwan is the province’s leading source of foreign direct investment with 772 projects worth over $5.5 billion. 

US imports over $10b of VN’s textiles
     
In the first 10 months of this year, Viet Nam’s export value of textiles and garments in the country was US$21.43 billion, a year-on-year increase of nine per cent.

The United States is the top market for Viet Nam’s textile and garment products, with $10.2 billion, up 7.8 per cent against last year, followed by the EU market with $3.06 billion and Japan with $2.52 billion, up 5.7 per cent and six per cent, compared to the same period last year, respectively.

The Vietnamese export value of textiles and garments to the Republic of Korea market was valued at $2.34 billion in the reviewed period, ranking fourth, but is the highest growth market, with a 12.2 per cent increase over the same period last year.

Pham Xuan Hong, chairman of the HCM City Association of Garment Textile Embroidery-Knitting (Agtek), said the export growth rate of the textile industry is stable at a rate of 10 per cent, and with favourable trends for the rest of the months of the year, the export turnover is expected to reach the year’s target of $30.5-31 billion.

Last year, the export turnover of Viet Nam’s textile industry was $28.1 billion. 

42 banks to provide guarantees for home purchases
     
The State Bank of Viet Nam (SBV) has released a list of 42 commercial banks, which are eligible to provide guarantees for future home purchases, according to Circular 13/2017.

The list includes domestic large-sized joint stock commercial banks such as Agribank, Vietcombank, Vietinbank and ABBank, as well as ACB and LienVietPostBank.

One-member limited liability banks such as ANZ Vietnam, Hong Leong Vietnam, HSBC Vietnam and Shinhan Vietnam, as well as Standard Chartered Vietnam, Woori Vietnam, CIMB Vietnam and UOB Viet Nam, in addition to Public Vietnam, Indovina and Vietnam - Russia Joint Venture Bank are also in the list.

Last month, the SBV issued Circular No 13/2017, which has taken effect since November 15, to amend Circular No 07/2015 on bank guarantees.

Under the new circular, commercial banks must issue guarantees for buyers of future property within 10 days from the date the real estate purchase contract is signed.

The guarantee means that banks would implement financial obligations to the buyers on behalf of the housing developers, in case they fail to hand over the property before the committed deadline without adequately refunding the advance.

The maximum guaranteed amount would be equal to the amount the developers are allowed to receive in advance from the buyers.

Banks eligible to provide a guarantee for home purchases must meet two requirements. Firstly, their establishment and operation licenses should have regulations on guarantees and secondly, banks should not be banned from providing guarantees in the period of being under special control. 

VPBank and MobiFone introduce mobile financial products
     
The Viet Nam Prosperity Bank (VPBank) and Viet Nam Mobile Telecom Services Corporation (MobiFone) announced a strategic co-operation in developing mobile financial products.

Together, they also launched the MobiFone-VPBank co-branded card.

Accordingly, MobiFone subscribers will enjoy preferential programmes and financial support from VPBank while purchasing products at the corporation’s retail shops, and be able to easily access the bank’s consumer loans without mortgages.

MobiFone users will not be required to prove their income when using VPBank’s credit lending to help them save time.

The co-branded card can grant a credit limit of up to VND500 million (around US$22,000) each, with many advantages, such as 50 per cent discount to MobiFone’s mobile phone prepaid card payment through VPBank Online every Friday.

In addition, while purchasing products, the co-branded cardholders can register for payment through installments with a zero interest rate. 

Ecopark’s super-luxury precinct makes debut
     
Viet Hung Urban Development and Investment Joint Stock Company (Vihajico) on Thursday introduced its Ecopark Grand and Marina Arc.

This is the second phase of its Ecopark urban township in the northern province of Hung Yen.

Vihajico’s deputy general director, Nguyen Dung Minh, said it is the right time for his company to invest in ultra, high-end real estate, which will be perfect pieces in the 500-ha Ecopark complex, with a total investment of nearly US$10 billion.

The Ecopark Grand villa complex features the magnificent palm island, such as the one in Dubai, where all the villas are built atop the lush landscaped grounds by the world’s five leading companies.

Meanwhile, the Marina Arc will comprise 20 high-rise shophouses, with prizes from VND36 billion (US$1.31 million) for the 280sq.m ones and VND100 billion ($3.64 million) for the ones covering 630sq.m. 

Hiep Phuoc IP to raise capital to $44.4 million
     
Hiep Phuoc Industrial Park Joint Stock Company (HPI) plans to sell shares to existing shareholders to raise its charter capital to VND1 trillion (US$44.4 million) from the current level of VND600 billion.

The company will issue an additional 40 million shares at value of VND10,000 per share to current shareholders to receive VND400 billion in cash.

Each shareholder is eligible to buy two shares for every three shares that they own. The issuance was approved at the company’s shareholder meeting in April.

Hiep Phuoc Industrial Park JSC was founded in June 2007 as a project managed by Tan Thuan Industrial Promotion Company Limited.

The company has the sixth largest total area of industrial parks in Viet Nam.

The company’s 60 million shares debuted on the Unlisted Public Company Market (UPCoM) in early October, having declined by 28.5 per cent to end Wednesday at VND16,000 per share.

In the first half of 2017, the company its profit of VND38.2 billion, six times last year’s figure.      

Proptech to alter real estate industry
     
After financial technology (fintech), which changed the way the financial sector worked, now, property technology (proptech) is expected to effect a change in the real estate industry.

Proptech has emerged in the world after nearly a decade and has started to grab attention in Viet Nam.

A report by real estate and investment services firm, Jones Lang LaSalle (JLL), showed that US$4.8 billion, out of $7.8 billion worth of funding, was poured into Asia Pacific proptech start-ups between 2013 and 2017.

Asia Pacific was leading the investment into proptech start-ups, with a great deal of potential, according to JLL. “With its young population, rapid urbanisation and popularity of mobile phones, all the conditions are in place for this new sector to grow,” JLL’s report said.

According to Nguyen Quoc Anh, deputy director of Dai Viet Group, which owns property information website batdongsan.com.vn, proptech would help minimise risks for both buyers and sellers.

Proptech is defined as technology applied to real estate information, transaction and management to digitalise services and products, so as to improve real estate processes and solve modern challenges.

Proptech would help property developers and real estate businesses to make changes and adapt to a new generation of customers via the internet, build brands and direct their products to the right targeted buyers, Quoc Anh said. He said that applying the technology would also promote sales efficiently.

With proptech, customers could search for products to meet their demands, compare prices and choose the best financial solutions to minimise risks. In addition, all transaction procedures would be conducted online, Quoc Anh said.

Besides Dai Viet Group, other firms in Viet Nam also invested in proptech or hastened the application of proptech in their real estate business, such as Holomia – a startup offering virtual reality in marketing for real estate projects and Homedy – a website which helps search project information and compare projects.

Recently, a number of developers such as Vingroup, Sun Group and BIM Group made use of virtual reality and augmented reality to provide customers with real-life experiences of their projects.

According to the Viet Nam Association of Real Estate Brokers, the development of proptech was an indispensable trend, but it was important to improve the awareness of both buyers and firms in applying proptech to fuel a boom in Viet Nam.

Nguyen Thanh Hung, chairman of the Viet Nam e-Commerce Association, said at a recent online forum that proptech would also help promote the transparency of the real estate market because it made access to real estate information much easier.

According to Pham Van Hung, from property developer CenGroup, technology such as big data, artificial intelligence, augmented reality and the Internet of Things was being applied in the real estate industry of Viet Nam, catching up with the global trend.  
 
HCM City set for Vietnam International Trade Fair
     
The 15th Vietnam International Trade Fair will be held from December 6 to 9 at the Saigon Exhibition & Convention Centre in HCM City’s District 7.

Vietnam Expo will have on display electronic devices and products, technology devices and equipment, tools and hand tools, construction materials, household products, consumer goods, food and beverages, and cosmetics.

There will be 800 booths set up by 750 companies from 16 countries and territories such as India, Taiwan, Germany and South Korea, Indonesia, Malaysia, the US, and China.

This year there will be more than 140 Korean businesses bringing popular products and services such as household electronics and appliances, cosmetics, processed foods, beverages, and kitchen utensils.

Several conferences and trade promotion programmes will be held on the sidelines of the four-day event, including a conference on Việt Nam-China exchanges in the mechanical and electrical industries and a workshop on economic, trade and investment co-operation with Beijing and the provinces of Tianjin and Hebei in China.

A dialogue on infrastructure quality in Asia and a seminar on opportunities and challenges for Việt Nam’s supporting industries in the context of the industrial revolution 4.0 will be held.

A concurrent event will be the 2017 Vietnam Hardware & Hand Tools Expo, with 200 businesses from 16 countries and territories showcasing thousands of hand tools, power tools, air compressors, and welding equipment; DIY (Do It Yourself) and building hardware; fasteners and securities; and locks and fittings.

Fairs organised by the Viet Nam National Trade Fair & Advertising JSC (VINEXAD) enable Vietnamese and international businesses to explore business co-operation opportunities and promote trade and investment. 

Biggest farm-fisheries expo to open in Ha Noi
     
The spotlight will be on business to business (B2B) collaboration opportunities in the agriculture-forestry and fisheries sector when the sector’s biggest exhibition opens in Ha Noi next week.

The first ever Viet Nam International Exhibition on Machineries and Technologies of Agriculture, Forestry, Fishery (Growtech 2017) from November 30 to December 2 will be organised by the Ministries of Industry and Trade, Science and Technology and Agriculture and Rural Development.

For the first time in Viet Nam, farmers and fishermen will be able to participate in an international exhibition showcasing the latest technologies and innovations in agriculture, forestry and fisheries.

The exhibition will also seek to contribute to national development, enabling Viet Nam to remain among the top five agricultural-forestry and fisheries exporters and accelerate the sectors’ growth rates, the organisers said.

The exhibition has attracted 150 companies from 10 nations and territories including Viet Nam, the UK, Italy, the Czech Republic, Israel, Indonesia, South Korea, Japan, and China who will set up 300 booths to display their products and solutions.

The exhibits will be divided into several categories like solutions and technologies supporting cultivation; machine system to build agriculture construction; greenhouse technologies; chemical and fertiliser manufacturing machinery; animal care equipment; storage technologies; cooling machinery; and wood processing machinery. 

Productivity and innovation vital for international integration

Productivity and innovation are considered leading factors for Vietnam’s international integration, said Dang Huy Dong, Deputy Minister of Planning and Investment.

Dong told a workshop titled "Vietnam economy’s innovation and productivity: Evidence from empirical analysis" held in Hanoi last week that the two factors are required for the Fourth Industrial Revolution as well as joining global supply chains that take advantage of digitalisation in production.

Dang Duc Anh, head of the Analysis and Forecast Board under the ministry’s National Centre for Socio-economic Information and Forecast, said Vietnam had exploited traditional resources such as capital, natural resources and cheap labour for its economic development, exhausting such resources. The quality of growth therefore was not high and lacked sustainability.

“If the country continues this development trend, it would result in environmental pollution and a loss of competitiveness in comparison with the region and the world in the long-term,” Anh said.

However, Vietnam’s productivity has long suffered a gap with the region. In another way, the quality of its human resources has not provided momentum for productivity growth. The rate of young labourers who were not given training and education is too high, becoming a barrier for the country’s productivity to increase.

Experts agreed that Vietnam has a shortage of skilled labourers. As many as 11 out of 20 economic sectors which had positive growth rates in the 2006-16 period were not due to increasing productivity. Of which, four of 20 economic sectors saw declines in productivity in the period and another 7 had added value based on productivity less than the ideal level of 60 percent.

They suggested that the Government should speed up renovation and restructuring of State-owned enterprises effectively and drastically. It was expected that economic output could rise by 10 percent through increasing productivity.

Experts calculated that if SoEs’ productivity rises by 2 percent, it would lead to a GDP increase of 1.14 percent, industrial production of 2.26 percent and export output of 1.15 percent.

The rapid growth requires active participation of the private sector with small-and-medium sized enterprises (SMEs). Research also revealed that if SMEs promote the application of new technologies, productivity would increase by 25 percent.

Anh also said the country’s growth rate had been relatively impressive and sustainable with positive export results. However, export and GDP growth depended on the FDI sector while local firms and their investment effectiveness had not significantly improved.

In addition, one of the main reasons for low productivity was education and training quality as well as human resources that did not meet requirements. Vietnam risked moving backwards in terms of human resources and losing the advantage of its cheap labour.

He proposed that the Government and relevant agencies should focus on institutional and business environment improvement to serve businesses in combination with speeding up the privatisation of SoEs.

Especially, the Government should enhance start-up spirit and support the training of entrepreneurs to help them increase added value through new technologies.

Dr. John FitzGerald from the Economics Faculty of Trinity Dublin University said Vietnam should concentrate on three factors including capital, science and technology and human resources for sustainable development and catching up with developed countries. Vietnam could improve its productivity through developing science and technologies while resolving issues of economic structure, labour, working environment and administrative reform to increase productivity.

RoK wants cooperation with Vietnam in air accident investigation

The Ministry of Land, Infrastructure and Transport of the Republic of Korea (RoK) wants to work with Vietnam in holding inquires into aircraft accidents, according to the Civil Aviation Authority of Vietnam (CAAV).

The CAAV said that the collaboration is necessary for both sides to respond to accidents on Vietnam-RoK routes. Experience exchanges through the cooperation will help improve the investigation capacity of both sides.

Regarding air accident investigation cooperation, Vietnam has joined cooperative frameworks in the ASEAN bloc, between ASEAN and China and with France.

Ten airlines of Vietnam and the RoK run flights between the two countries. Air Busan, Asiana Airlines, Eastar Jet, Jin Air, Jeju Air, Korean Air and Tway Air operate 168 one-way flights per week from Incheon, Busan and Dacgu to Vietnam’s Hanoi, Khanh Hoa, Ho Chi Minh City and Da Nang.

Meanwhile, Vietnam Airlines, Vietjet Air and Jetstar Pacific operate 76 one-way flights per week to Busan and Incheon.

In the first eight months of the year, carriers of both sides transported more than 3.16 million passengers, up 19.8 percent from the same time last year.

Vietnam, India eye textile cooperation

There is a lot of potentials for cooperation between Vietnam and India in the textile and garment sector, a Vietnam-India business meeting heard in Ho Chi Minh City last week.

K Srikar Reddy, Indian Consul General in the city, said Vietnam is among the top five textile and clothing exporting countries along with India.

But it has to import a lot of the raw materials, while “India’s textile industry has developed a complete product supply chain and India is also one of the suppliers of high-quality materials and fabrics at competitive prices in the world.”

Cooperation between the two countries would help Vietnamese enterprises diversify their raw material sources and sell high-quality products in the international market, he added.

Nguyen Thi Tuyet Mai, Deputy General Secretary of the Vietnam Textile and Garment Association, concurred with him, saying Vietnam has a shortage of cotton, fabric and yarn while India has an abundant supply of these products, making them perfect partners. 

The General Statistics Office estimates that Vietnam spent 18.5 billion USD to import cotton, un-spun fibre, fabric and auxiliary materials last year and around 15.5 billion USD in the first nine months of this year.

Vietnam imported all is cotton needs, with the US and India being the largest suppliers, besides also importing fabric and yarn from India.

Shailesh Martis, joint director of the Cotton Textiles Export Promotion Council, said last year India was the sixth largest supplier of textiles to Vietnam, but only accounted for a 1.83 percent market share, while China and the Republic of Korea, the largest suppliers, accounted for 65.4 percent.

India’s export of textiles to Vietnam, especially fabrics, is very low but it is the second biggest supplier of cotton yarn after China, according to the director.

“Vietnam has established itself as one of the leading garment makers to the world, not only to major markets like EU and the US but also to newly emerging large importers China and the Republic of Korea.”

India is the world’s largest producer of jute and the second largest producer of cotton and silk, and accounts for 22 percent the world’s spindle capacity, he said.

“Vietnam needs huge quantities of right-priced, quality woven and knitted fabrics to continue its growth momentum.

“India could be an economical source of quality yarns and fabrics to bridge the gap and make Vietnam’s garments even more competitive.”

He also suggested ways to increase bilateral trade, including exchange of technical know-how, trade-related information and demand – supply trends for important product groups on a regular basis.

The event attracted nine Indian companies that export cotton, fancy yarns, viscose/blended yarns, fabrics, staple fibre and others, who are also participating in the Vietnam International Textile & Garment Industry Exhibition in HCM City from November 22 to 25, besides local firms.

HCM City exports to top 35 billion USD in 2017

Ho Chi Minh City is likely to achieve export value of 35.2 billion USD this year, a 15.1 percent increase from last year, and imports of 43.1 billion USD, a 13.2 percent rise.

The city accounts for 72 percent of the Southern Key Economic Zone’s total imports and exports and 19.4 percent of Vietnam’s.

An import-export gateway for the southern region, a lot of the city’s imports make their way to neighbouring provinces such as Dong Nai, Binh Duong and Long An, often to serve production for exports.

The provinces enjoy large trade surpluses - Binh Duong 4 billion USD; Dong Nai 2 billion USD; Long An 500 million USD.

Pham Thanh Kien, head of the Department of Trade and Industry, said his department is boosting trade promotion in key markets that buy more than 1 billion USD worth of goods such as mainland China, Singapore, Taiwan, Thailand, and the Republic of Korea to reduce the trade deficit.

It is developing a plan to enhance exports in 2017-2020, he said.

The plan would guide policy making for increasing export of high value-added items like computers and parts, software and digital products.     

EVFTA’s impact toward Vietnam's transportation sector

After coming to effect, the EU – Vietnam Free Trade Agreement (EVFTA) is expected to have a big impact to Vietnam’s macro economy, as well as each economic components, including the transport sector.

Firstly, the increase in trade and investment cooperation between Vietnam and EU’s members are expected to improve the flow of goods through transport models. The opening of the goods market, decentralization investment and services in EVFTA will be the prerequisite to increase demands for transport, logistics and storage. As such, these commitment will stimulate transport demands between Vietnam and EU, thus expand the logistics market and creating more opportunities for Vietnam’s transport enterprises. 
 
Secondly, commitment with regard to transport in the EVFTA willl also open new doors for two parties to access markets, creating advantages in the context when some other countries competing with Vietnam do not have FTA with EU. Besides, the EVFTA will create opportunities for Vietnam to access modern technologies, learning experiences from management and improving vocational skills and creating jobs in transport sector. As such, it will improve Vietnam’s competitiveness for enterprises to survive and develop.

Thirdly, EVFTA will create conditions for transport sector to attract investment from big foreign corporations in the context of limited financial resources for transport infrastructure development. With preferential treatments when taking part in EVFTA, participated countries will increase investment in Vietnam, including developing transport infrastructure, supporting the consistency in overall infrastructure development such as road, railway, seaport and airport. 

In addition to these above opportunities, transport sector will face certain challenges when EVFTA comes into effect. 

Firstly, the participation in EVFTA will create a competitive environment for Vietnamese enterprises, especially in logistics. This is not a new issue, due to enterprises have gotten used to commitment of opening markets in framework of WTO, ASEAN, as well as other FTAs, however, the competitive level is expected to be fiercer and more difficulties. 

Secondly, Vietnamese transport enterprises are mostly of medium and small scale, with low professionalism. As such, prepareness and capabilities to take advantage and facing challenges when taking part in the EVFTA, as well as new generation trade agreements are still low. Meanwhile, transport infrastructure have not met with the transport demand, resulting in high transport fee compared to other countries. 

Thirdly, Vietnamese transport enterprises’s awareness on commitment in the framework of EVFTA in spite of some improvements, but are limited and insufficient due to the complexity of the EVFTA. With this being said, information with regard to instruction has not been provided sufficiently to enterprises. Besides, policies and regulation in Vietnam are under the process of finalization to meet the FTA’s requirements, as well as to support enterpirses during the process of global integration. 

Fourthly, managerial capabilities of Vietnamese enterprises in global scale, especially human resources and access to financial resources are limited. This is also the biggest challenges for transport enterprises right after the EVFTA coming into force. 

Foreign enterprises, even some in South East Asia such as Singapore or Malaysia with experiences and financial resources will have advantages in competing with Vietnamese enterprises in term of quality and price. 

More Taiwanese investors keen on Vietnam's market

According to a Taiwanese official, several Taiwanese firms (China) plan to explore more investment opportunities in Binh Duong southern province of Vietnam.

During a meeting with the provincial People’s Committee on November 21, Guo You Ting, Head of the Association of Taiwanese Enterprises hailed the improved local investment climate, saying Binh Duong is an attractive destination for foreign investors.

Speaking at the event, Tran Thanh Liem, Vice Chairman of the provincial People’s Committee lauded the projects and contribution of Taiwanese firms and the association in local socio-economic development.

He updated his guests on the province’s investment attraction plans and its measures to improve the business climate, thus creating optimal conditions for enterprises. He expressed his hope that more Taiwanese companies will invest in the province.

According to Liem, Taiwan is the province’s biggest investor, with 772 projects, worth more than 5.5 billion USD. Construction of a Taiwanese factory producing polyester will begin on November 24 on nearly 200 hectares in Bau Bang Industrial Park, Liem said.
 
According to Liang Guang Zhong, Head of the Taipei Economic and Culture Office in HCM City, Taiwan is willing to work with the locality in implementing projects using official development assistance on flood prevention and waste treatment.

About 40 Taiwanese enterprises specialising in sectors including electronics and electronic components, automobiles and computers were at the conference organised by the Chinese International Economic Cooperation Association and the Vietnam Chamber of Commerce and Industry. 

Phan Huu Thang, director of the Foreign Investment Agency, said Vietnam would implement open policies and improve its foreign investment policies to catch investment flows when the global financial crisis ended. Thang said he wanted Taiwanese investors to comply with Vietnamese laws with more focus on improving conditions for workers. 

As of last month, Taiwan had invested in more than 2,000 projects in Vietnam at a total capital cost of 21.2 billion USD. In terms of project numbers, Taiwan ranked top among the 84 countries and territories investing in the country and second on value. 

Taiwanese investors have contributed to Vietnam ’s economic development as the majority of their projects used advanced technologies, Thang said. 

Trade between the countries had significant growth in recent few years, reaching more than 8 billion USD in 2007 and 9.7 billion USD last year. Of the total, 1.4 billion USD came from Vietnamese exports. The global crisis was blamed for exports to Taiwan falling 28.5 percent to 386 million USD during the first five months of this year.

Vietnam needs to make efforts to improve FDI quality

Vietnam attracted 24,397 foreign direct investment (FDI) projects worth 312.9 billion USD from 128 countries and territories in the first 10 months of this year.

However, experts said that the projects’ influence on the economy is still modest, necessitating a change in mindset to lure investment. FDI has been poured into 18 out of 21 sectors and all 63 localities nationwide.

According to the Foreign Investment Agency under the Ministry of Planning and Investment, the FDI sector’s contributions to GDP rose rapidly to 19 percent in 2016 from only 2 percent in 1992.
 
Exports from the sector accounted for 71.5 percent of the country’s total in 2016, up from 64 percent in 2012. Its contributions to State budget collection also rose from 1.8 billion USD in the 1994-2000 to 14.2 billion USD in 2011-2010. In 2016, the sector paid about 7.1 billion USD to the State budget, accounting for 20 percent of domestic collection and 15 percent of the country’s total income.

However, along with positive contributions, the FDI sector has also faced many problems, as attracting high technology has been difficult.

Wim Douw, a senior expert for trade and competitiveness policy at the World Bank, said that Vietnam’s FDI attraction over past years has depended largely on low-cost labour resources and investment incentives, while the quality of the investment has stayed low.

But the country’s advantages are fading, while the fourth industrial revolution is changing the world rapidly, he said, stressing that Vietnam should change mindset in calling for investment.

Le Duy Thanh, Vice Chairman of the People’s Committee of Vinh Phuc province stressed that Vietnam should prioritise environmentally friendly projects with modern technology and a strong effect on domestic growth.
 
Currently, the Ministry of Planning and Investment is building a draft strategy on FDI attraction for 2018-2022, which is expected to tackle problems in the field, driving investment quality upwards.
 
The Vietnamese economy urgently needs to find new drivers for growth in the period from 2018-20 to achieve rapid but sustainable development. The economy was growing but uncertainty about the future lingers, given the challenges posed by trade liberalisation, technological change, the impacts of climate change and constraints on fiscal and monetary policies.

The policies for attracting FDI must aim at promoting the domestic sector and establishing value chains to prevent the development of two sectors in one economy, or even two economies in one country. In addition, there is a lack of indicators to evaluate growth quality, as statistical figures still lacked reliability.

Tran Dinh Thien, Director of the Vietnam Institute of Economics, said Vietnam should not chase growth targets every single year but rather focus on the growth quality of a whole period. “The new period will need new drivers,” Thien said. “We need comprehensive changes in thinking and methods.”

Targets should be based on the international commitments and technology advancements, he added. Thien added that the most important goal is building a transparent Government.

According to Sebastian Eckardt, the World Bank’s Lead Economist for Vietnam, the Vietnamese economy was experiencing a cyclical uptick in growth accompanied by macroeconomic stability. But it also faces emerging structural headwinds, including slower labour force growth, weaker investment and lower productivity growth.

Vietnam should take advantage of cyclical uptick to strengthen macroeconomic resilience and enhance structural reforms to boost productivity growth and lift potential growth, he said.

Eckardt said that it was critical to enhance the business environment, deepen State-owned enterprise reforms and develop effective factor markets to modernise institutions and create a level playing field, including for the domestic private sector. Besides, investing in people and innovation is important to meet the demands of a modern industrial and increasingly knowledge-based economy, he said.

Draft strategy on attracting new FDI generation in 2018-2023

The Ministry of Planning and Investment is drafting the foreign direct investment (FDI) strategy for 2018-2023 to fully capitalize on the capital source in the new stage.

With the assistance from the World Bank, the FDI strategy drafts that Vietnam at this stage should focus on sectors having advantages, and those that foreign firms could bring more benefits to, rather than domestic firms.

Under the draft strategy, Vietnam should set out priority sectors for attracting FDI, such as those that needs increased value and competitiveness, including manufacturing (high-grade metals/minerals/chemicals/plastics and high-tech/electronic components); service (logistics and maintenance, repair and overhaul - MRO); agriculture (innovative agricultural products, high value such as rice, coffee, seafood); and travel (high-value tourism services).

In the short term, priority is to be given to industries with narrow opportunities for competition, such as production (automotive and transport equipment OEMs - Original Equipment Manufacturers and suppliers), and environmental technology (water conservation equipment, solar, wind).

In the medium term, priority should be given to sectors that create and develop skills, including manufacturing (pharmaceuticals and medical equipment), services (education and health services, financial services, financial technology (Fintech), information technology and intellectual services (accounting and design).

The draft also proposed solutions to enhance efficiency in the operation of the Foreign Investment Agency (FIA) under the MPI.

It recommended that Vietnam should remove entry-barriers and maximize the impact of incentives in attracting investments.

Reforms are also needed to more effectively anchor existing investors and motivate them to expand their activities in Viet Nam.

The nation needs to maximize the absorption potential of local companies by strengthening linkages with global value chains.

Nguyen Mai, chairman of the Vietnam Association of Foreign Invested Enterprises (VAFIE), said that this is one of the important contributions for the orientation of foreign investment in the future.

However, Mai said foreign investment cannot be separated from the socio-economic development strategy being carried out throughout the country. At present, Vietnam is implementing the 10-year socio-economic development strategy from 2011-2020. Therefore, the period of the FDI strategy should be adjusted to be appropriate for the 10-year socio economic development strategy, because the period of the FDI strategy for 2018-2023 is too short.

The FDI strategy also needs to address the issue of attracting more investors from the US and the EU, Mai said.

What Vietnam needs to focus on is attracting investment from the US and the EU in the future, but not Japan, South Korea and China. If not resolved, investment in Vietnam will remain based mainly on Asian countries, Mai said.

The strategy should pay attention to promoting more foreign investment in difficult provinces. Although the Government has offered many incentives, few investors have come to the northern mountainous and Central Highland provinces, he said.

Meanwhile, Phan Huu Thang, former director of the FIA, said that the strategy on attracting a new generation of FDI should take into account policies relating to the three special economic zones of Phu Quoc, Van Don and Bac Van Phong, because the final development plan of three zones will be approved next year.

Land lot segment market rebounds

Land lot segment has regained attention from investors with increasing selling prices and transaction numbers reported.

Nguyen Van Dinh, vice chairman of the Vietnam Association of Estate Agents, said the market has witnessed a fluctuation in the selling price since March, with land lots seeing the highest increase.

This market segment is expected to see impressive growth rate in the near future, Dinh said.

Thuy Lien in Hanoi’s Hoang Mai District said her family used to spend money on buying apartments, which could later be sold for profit. However, she felt investing in apartments was no longer a safe and attractive option. Instead, she was now buying land lots as a new avenue to gain profit.

She explained that a significant number of apartments had been sold, leading to saturation of the segment and low liquidity. In addition, the apartments were dependent on construction progress, investors’ reputation and legal disputes, in spite of a high investment value. Investing in apartments was therefore riskier than putting money into land lots.
Those with strong financial capacity bought land lot projects that were progressing slowly, and were therefore available at low prices. They then waited for the projects to speed up to sell at higher prices.

Land lots in new urban areas had the advantages of available infrastructure, transport connectivity and better construction density in comparison with the older residential areas.

In addition, the land lot segment had attracted investors as it met both the targets -- accommodation and investment.

Most Vietnamese believed that the value of land would increase more than the value of apartments.

In the past two years, the “fever” for land lots has been witnessed in the three large cities of Hanoi, Da Nang and Ho Chi Minh City.

For example, Ho Chi Minh City saw a high demand for land lots in the city’s eastern area, while the price of land lots in Thanh Ha Cienco 5 in Hanoi’s Ha Dong District rose by 1.5 to two times in comparison with the initial price.
He said State management agencies should have solutions to stabilize the segment to prevent “virtual” price hike, causing negative effects on the market.

The ministry said localities should publish information on planning and progress of transport, infrastructure and property projects to prevent a bubble for the land lot segment.

Statistics from the Department of Housing Management and Real Estate under the Ministry of Construction showed that in the first nine months of the year, total property inventory in the country was some VND26.2 trillion (US$1.15 billion.
Pham Hong Ha, Minister of Construction, forecast that the country’s real estate market is expected to maintain growth rate during 2018.

“The segments of land and small-and-medium sized apartments would have changes, in term of prices in some areas. Meanwhile, resort properties will continue to develop,” he said.

Fitch Group: Positive on Vietnam’s economic prospect

Southeast Asian countries` economic prospects look bright over the coming years, supported by greater regional integration, better transport connectivity, and continued reform momentum, a report from Fitch Group said Friday.
Citing the Regional Comprehensive Economic Partnership (RCEP) and China's Belt and Road Initiative as two key factors aside from the Association of Southeast Asian Nations (ASEAN)'s Economic Community (AEC), Fitch Group unit BMI Research said such elements will bring the region closer together and fuel growth in the coming years.
 
Among the countries, the research house expected Myanmar and Vietnam to be the growth out-performers, while Singapore and Brunei which already have much higher gross domestic product (GDP) per capita are likely to see much slower rates of expansion.

Myanmar is expected to grow 7.2 percent average per annum over the next 10 years due to an increase in investment, aided by improvements to the business environment and greater political stability, the report said.

As for Vietnam, the growth will be supported by a stable political environment, growing reform momentum, an improving business environment, and with the manufacturing sector benefiting from multinationals relocating in Vietnam for lower production costs.

The research house continued to see the Philippines as one of the regional bright spots, with GDP growth likely to average a solid 6.2 percent over the coming decade. "But the risks are weighted to the downside as the business environment has been weakening slightly," it added.

BMI also remains positive on Indonesia's growth prospects, due to its huge young population, and the country will be one of the largest recipients of projects under the Belt and Road Initiative in ASEAN, the report said. "We continue to expect the economy to benefit from further improvements to the business environment," it said.

For the first 9 months of 2017, the average Consumer Price Index (CPI) increased 3.79%, which is estimated to go up to 4% for the whole year, while the inflation rate is at 1.6%. Revenue for the state budget is expected to increase by 2.3% compared to the estimation and up 10.1% compared to 2016; overspending is at 3.5% of the GDP, which is equivalent to the threshold approved by the National Assembly. In particular, the public debt is within the limit and decreasing at 62.6%, in which the government’s debt is 51.8%, and the country’s foreign debt is 45.2% GDP.

In opposite of the slowing down inflation rate, the growth rate of GDP for the first 9 months reached 6.41%, which is expected to increase to 6.7% for the whole year, thanks to the steadily growth in 3 sectors: agriculture increased 2.78% (4 times higher than the same period of last year), in which fisheries increased 5.42%; while the export of agricultural products for 2017 is estimated to be 35 billion USD. Industry and construction increased 7.17%, in which the processing and manufacturing industry increased 12.8%. Tourism increased 7.25%, which is the highest growth rate since 2008. 

This is also the sector with significant improvement, when international tourists coming to Vietnam reached 9.45 million, resulting in the forecast for 2017 at 13 million, up 30%; while domestic tourists reached 57.9 million, expected to reach 75 million for the whole year, up 12%.