Workshop promotes Vietnam-India trade links

Vietnam and India should focus on fully tapping economic cooperation potential, especially in electricity production, the steel industry, hi-technology, sea port construction, hotel development, traffic infrastructure and urban development, an Indian economic expert remarked.

Speaking at a workshop in West Bengal state on January 25, Former President of India ’s Merchant Chamber of Commerce and Industry (MCCI) Kumar Saraf, suggested the two countries consider a concessionary trade agreement, towards reducing tariff and non-tariff barriers for goods and services exports between the two countries.

Vietnam is one of the most dynamic economies in the region after nearly 30 years of its Renewal (Doi Moi) process, becoming one of the world leading exporter of rice, coffee and pepper, he stressed.

Vietnamese Ambassador to India Ton Sinh Thanh, highlighted the great potential for Vietnam and India to expand their trade and investment links.

According to Thanh , Vietnam is a member of 13 free trade areas. Apart from joining free trade agreements (FTAs) between ASEAN and India , China , the Republic of Korea (RoK), Australia , and New Zealand , Vietnam signed bilateral FTAs with the RoK and the Eurasia Economic Union (EAEU). Vietnam is also participating in FTA negotiations with the European Union and the Regional Comprehensive Economic Partnership (RCEP).

Vietnam-India trade ties has developed rapidly in recent years, hitting 5.6 million USD in 2014. In the first seven months of 2015, the figure reached over 3 billion USD. The two nations aim to lift their two-way trade to 15 billion USD by 2020.

Vietnam's key exports to India include mobile phones, electrics, rubber, cashews, textiles, steel and iron, and wool and wood products; while its main imports from India are machinery and chemicals.

IPs in HCM City to see more foreign funding

Foreign investment in HCM City's industrial parks and export processing zones is expected to rise this year as Vietnam is scheduled to sign the Trans-Pacific Partnership (TTP) on February 4, according to the HCM City Industrial Parks and Export Processing Zones Authority (HEPZA).

Last year, foreign capital in IPs and EPZs rose to 553 million USD, 59 percent higher than in 2014.

Most of the foreign enterprises are from the British Virgin Islands, the Republic of Korea, Singapore, Hong Kong, Japan, Taiwan, France, the US, China and Australia. They operate mostly in textiles, food and chemicals, among other products and services.

HEPZA targets attracting investment capital of 700 million USD from foreign and domestic enterprises.

Last year, the IPs and EPZs lured more than 840 million USD in total investment, an increase of 11.74 percent compared to 2014.

Capital from domestic projects, however, fell by about 29 percent.

This year, HEPZA will focus on the support industry which serves four main industries of mechanics, electronics-computers, chemicals, food processing and high technology.

HCM City attracts Japanese support industry firms

The southern metropolis of Ho Chi Minh City has attracted several Japanese firms into its Vietnam-Japan Technology Park, an all-in service park model designed specifically for the supporting industry.

According to Dau Tu (Investment) newspaper, Araimichi is the first firm to start operation in the park this year. It produces precision mechanical components for Toyota and other Japanese manufacturers in Vietnam.

The newspaper also quoted the park’s deputy director general Nguyen Quoc Vinh as saying that six other Japanese enterprises have completed workshop leasing negotiations and they are expected to install machinery for production after the Lunar New Year holiday.

Covering an area of 13 ha in Hiep Phuoc Industrial Park, with a total investment of 31 million USD, the Vietnam-Japan Technology Park offers complete service packages of readily-built workshops, management and legal procedures for investors.

Under the first phase, the park has built 14,000 sq.m of production facilities, most of which have been leased out.

The second phase of construction is expected to start soon.

Vinh said many Japanese enterprises operating in different fields have shown interest in leasing facilities in the park in order to benefit from its preferential treatments and services.

He proposed that the second phase of the Hiep Phuoc Industrial Park should be designed to meet demands of these enterprises.

The construction of the Vietnam-Japan Technology Park began in February 2014, with investment for phase one at about 7.6 million USD.

Of which, the Vietnam-Japan Technology Park shouldered 55 percent, and the remaining came from the Hiep Phuoc Industrial Park Joint Stock Company.

Ministry to develop support industry

The Ministry of Industry and Trade (MoIT) has created programmes for the 2016-25 period to provide support for organisations and individuals in developing industries.

According to the draft, major support activities of the programmes include investment promotion activities at home and abroad for attracting investment for producing products, as well as to support industries and develop local and export markets for those products, reported chinhphu.vn website.

The programmes involve providing information and databases on the support industry, to transfer technology, manufacturing support for industry products, and to build production management systems to meet international standards for support industry enterprises. They will also combine support industry enterprises with multi-national groups, and train skilled managers and staff for support industries.

The ministry has proposed capital of VND300 billion (USVND305,746 million) for 2,000 support industry enterprises to provide support for those enterprises in developing international management standards and systems.

Also, another VND115 billion (VND117,251 million) will be given for support industry enterprises to become suppliers of support industry products for multi-national companies and other local and foreign support industry producers.

In addition, a programme on investment and trade promotion and support in seeking markets of consuming support industry products will receive VND115 billion (VND117,251 million).

Assistance in training managers and staff; and building and updating databases on support industries at home and abroad at websites specialising in the support industry will get funds of VND220 billion (VND223,335 million) and VND80 billion (VND81,517 million), respectively.

Myanmar market holds potential

Vietnamese firms should study the Myanmar market and act quickly to take advantage of trade and investment opportunities there, the Investment and Trade Promotion Centre of HCM City has said.

Pham Thiet Hia, the centre's director, said that Myanmar, with its population of 55 million, has high demand for many kinds of products that Vietnamese companies manufacture at a high standard.

"Myanmar people favour Vietnamese goods," he said.

They include electric and electronic equipment, construction materials, information and technology, food, confectionary and agricultural materials and production technologies.

Le Tan Minh, deputy head of the centre's Trade Promotion Division, said voltage regulators were in demand in Myanmar as its electricity grid was being improved.

Myanmar's agricultural production is mainly based on traditional cultivation method.

"So it needs hi-technology from Viet Nam to apply agricultural production and processing," he said.

Do Ngoc Tam, deputy chairman of the Viet Nam-Myanmar Friendship Association, said the manufacturing sector had not developed in Myanmar.

As a result, Myanmar mostly imported consumer products from other countries, mainly from the two bordering countries of China and Thailand.

In recent years, Vietnamese firms had expanded exports to Myanmar, but they still accounted for a small market share due to high transportation costs, he said.

Vietnamese goods have also faced fierce competition from Thai and Chinese goods.

"Myanmar is currently offering incentives to stimulate investment in manufacturing sector, so Vietnamese firms should study the market and act quickly," he said.

Minh said there was still room for Vietnamese goods to penetrate various segments of the market.

Vietnamese firms should clearly understand Myanmar's customs and tariff policies if they want to penetrate the market, he said.

In addition, firms should pay attention to research on consumer culture to map out an appropriate means to approach customers and partners.

They should also clearly state information on their products in both English and Burmese on the packaging, he said.

In an effort to help Vietnamese firms promote trade in Myanmar market, ITPC will organise the Viet Nam-Myanmar Trade, Service and Tourism Exhibition 2016 (HCM City Expo 2016) in Yangon from April 1-4.

The expo will feature 90 leading Vietnamese enterprises involved in sectors such as processed food, household utensils, garments and textiles, as well as electronics and interior decorations in 120 booths, said Ho Hong Long, head of the ITPC's Trade Promotion Division.

In addition, the centre will organise a market research programme by visiting wholesale markets, supermarkets and others in Yangon and Mandalay from March 31 to April 5 to help Vietnamese firms understand more about the Myanmar market, he said.

Last year Viet Nam's exports to Myanmar were worth more than VND8,453,230 million compared to the 2014 figure of VND7,725,158 million.

Firms stock up on goods ahead of Tet

More than VND230 trillion (US$10.2 billion) of goods have been reserved by businesses and price stabilisation outlets for the upcoming Tet (Lunar New Year) Holiday. This year's reserves were 10 to 15 per cent higher than the previous year, said Vo Van Quyen, director of the Domestic Market Department under the Ministry of Industry and Trade.

Quyen said several supermarkets had committed to opening till New Year's Eve to prevent price hikes before and after the holiday.

Goods for Tet have been distributed through around 8,600 markets, over 750 supermarkets, 150 commercial centres and thousands of shops and fairs nationwide.

Towards the end of the year, the ministry organised conferences to connect supply and demand in Ha Noi, Da Nang and HCM City with the participation of nearly 1,000 firms. Around 130 MoUs and contracts were signed between producers and big distributors such as Co-opMart, Vinmart, Hapro, Fivimart, Big C, Lotte and AEON.

The ministry's market watch departments have enhanced inspections before and after Tet to tackle smuggling, trade fraud, counterfeit goods and substandard food hygiene.

The Ha Noi Statistics Office said that supermarkets reserves for the holiday in the capital had increased by 10-15 per cent, of which Vietnamese goods accounted for 75 to 80 per cent.

The office said commercial centres and supermarkets such as Metro, Big C, Coopmart, Fivimart, Intimex, Hapro and Citimart had planned carefully for the holiday.

Research conducted by Germany's Statista Market Research Company showed that the scale of Viet Nam's retail market could reach $100 billion in 2016.

With a young population and increasing number of people visiting commercial centres, the country's retail industry holds huge potential.

Big retailers from Japan, Thailand, France and Germany have poured into the retail market, creating fierce competition.

The Economist Intelligence Unit also announced its report on the prospects of various sectors in 2016.

It said the retail sector's revenue could see stable growth of 2.7 per cent this year.

It added that the liberalisation of the retail industry would help Viet Nam become an extremely attractive market, especially in e-commerce.

Trade remedies should protect business interests

While remedial measures are necessary following strong liberalisation of trade, the protection of domestic steel producers' interests while applying these measures is a problem, industry insiders have said.

Data from the Viet Nam Steel Association (VSA) show that Viet Nam produced nearly 15 million tonnes of steel products in 2015, up 21.5 per cent year on year, and sold almost 17.9 million tonnes (including imported products), up 26 per cent annually.

However, the steel indtry faced 12 trade-remedy and anti-dumping lawsuits in its export markets last year. It also witnessed an influx of more than 13 million tonnes of imported steel products, worth VND201,002 billion, compared with 2.8 million tonnes of exported steel, worth VND44,667 billion.

With export destinations to be expanded in 2016, Viet Nam's steel industry will have more opportunities to ship its products overseas and reach its target growth rate of 15 to 20 per cent.

Nguyen Phuong Nam, deputy director-general of the industry and trade ministry's Viet Nam Competition Authority, said when Viet Nam boosted its exports, its exports markets would consider that a threat to their domestic industries and thus enhance trade remedies. Even some ASEAN nations such as Malaysia, Thailand and Indonesia have launched trade-remedy lawsuits against Viet Nam.

He said although Vietnamese businesses were not strong and experienced enough, they were still capable of coping with trade remedies. Enterprises should co-operate with foreign agencies and be patient, when the agencies consider imposing trade remedies, or else these remedies would be levied immediately.

VSA Chairman Ho Nghia Dung said steel firms should prepare their personnel and data for possible lawsuits that they would face or launch.

He said a sudden and abnormal surge in billet and long-steel product imports recently had seriously damaged the domestic steel industry. Many companies have requested that the competition authority should impose trade remedies at a proposed tax rate of 45 per cent on steel billets and 33 per cent on long-steel products.

However, some steel companies said trade-remedy lawsuits would impact their own benefits.

Le Minh Hai, chairman of the board of directors of the Viet Nam – Germany Steel Pipe Joint Stock Company, said he supported trade remedies when local billet factories were able to ensure sufficient billet supplies.

In reality, the domestic billet output is not enough to meet the production demand, and imported billets are cheaper, making it easier for Hai's firm to buy foreign products. If trade remedies are applied, imported billet prices will rise, forcing Vietnamese companies to raise their product prices, which will affect buyers.

He said while trade remedies were essential and legitimate, the VSA and its members should discuss how to launch the remedies at appropriate levels and suitable points of time, since the interests of one company were also associated with those of other firms.

The proposed tax rate of more than 40 per cent on imported billets is too high. A rate of 15 to 16 per cent should be more reasonable, compared with the current nine per cent, to ensure benefits for all enterprises, Hai said.

EVN agrees on thermal power service

Power Generation Corporation No 3's Power Service (EPS), Power Engineering consulting No 2 (PECC 2), and Doosan Heavy Industries Viet Nam (Doosan Vina) have signed a Memorandum of Understanding (MOU).

Doosan Vina is building the 1,200 megawatt Vinh Tan 4 Thermal Power Plant in the Binh Thuan Province. - Photo vinaincon.com.vn

The MoU was with regard to co-operation on the aftermarket service of thermal power plants.

At the same time, Duyen Hai Power Plant Operation Company and the United Kingdom's Amec Foster Wheeler also signed a MoU with EPS.

A source from EPS said the MoUs aim to target the service market in Viet Nam as coal fired power production is expected to grow and the aftermarket service business will need to be expanded.

Doosan Vina is building the 1,200 megawatt Vinh Tan 4 Thermal Power Plant in the Binh Thuan Province, with a total investment capital of US$1.4 billion.

Vinh Phuc seeks to export farm products

The northern province of Vinh Phuc plans to expand cultivation of its strongest exports in farm produce, such as red-flesh dragon fruit, Hong aromatic bananas and chayote (a type of gourd.)

Hong aromatic bananas is a special fruit in the northern province of Vinh Phuc. It's expected to export to Taiwan, Japan and Malaysia in the future. - Photo vinhphuc.gov.vn

Recently, local authorities signed memoranda of understanding (MOU) on cooperation in production and export of agricultural products with enterprises from Taiwan, Japan and Malaysia.

The province has been accelerating agriculture restructuring, focusing on developing its strongest products for large-scale production using high-tech methods.

It has zoned off an area for cultivating safe vegetables by 2020, and has so far outlined 39 safe vegetable production practices.

As many as 113 agricultural production establishments were recognised to meet safe vegetable production regulations, while 35 others received Vietnam Good Agriculture Practices ( VietGap) certificates.

To realise its objectives, the locality is calling for investment in agriculture and hopes to attract interest from many domestic and foreign investors.

A red dragon fruit growing project was piloted in Lap Thach district from 2011-2013 on an area of 100 ha. Annual profit from the fruit reached around VND350-400 million (US$15,750 – 18,000) per ha.

Thousands of hectares of Hong aromatic banana and chayotes are also being planned for Tam Dao, Yen Lac and Vinh Tuong districts.

$76.7 million program for support industries

The Ministry of Industry and Trade (MoIT) is drafting a development program for support industries in the 2016-2025 period.

VND1.72 trillion ($76.7 million) is needed for the program, to assist organizations and develop individual capacity within support industries.

The program will provide assistance through activities such as promoting domestic and international investment for production at support industries; furthering the development of domestic markets and the export of products from support industries; providing information and data on support industries; recognizing enterprises adapting to standards; assisting start-up enterprises and encouraging technology transfer and production testing; creating management systems of international standard for enterprises in support industries; and enhancing cooperation between enterprises in support industries and multinational corporations and improving personnel training in management and scientific and technical services for production at support industries.

Six specific programs will be introduced. Activities to assist the research and development of technological applications and transfer in production testing of components and materials will receive the highest investment, of VND890 billion ($39.7 million), or 51.7 per cent of the total.

The program assisting enterprises in applying international standards in business and production management is expected to receive VND300 billion ($13.4 million) and provide consultancy to 2,000 enterprises on the application of international management standards.

VND115 billion ($5.1 million) will be invested in assisting domestic enterprises to become suppliers of products for multinational corporations and other manufacturers in support industries.

The investment promotion program for support industries, meanwhile, is estimated to receive VND115 billion ($5.1 million) to attract foreign direct investment in support industries through organizing fairs and promoting such investments in the media.

Two other programs will train human resources and build or update databases on support industries on a specialized website, with funding of VND220 billion ($9.8 million) and VND80 billion ($3.5 million), respectively.

MoIT is now receiving comments on the draft via its electronic portal.

Thai corporation keen on cement factory

SCG is looking at the possibility of building a cement factory in Vietnam, either by itself or in a joint venture.

SCG, the leading Thai industrial conglomerate, is looking seriously at expanding further in Vietnam, especially in the cement and upstream petrochemical businesses, according to The Nation newspaper.

Country Executive Director of SCG in Vietnam, Mr. Dhep Vongvanich, said the company is determined to have a cement factory in Vietnam and will also push ahead with its $4.5 billion integrated petrochemical complex in the country, called Long San Petrochemicals, despite the recent withdrawal of Qatar Petroleum, one of the four key partners in the project. “Our target is to have a cement factory in Vietnam but we still can’t say when,” he said. “We are studying whether we should invest on our own or through a joint venture.”

The start of the Long San Petrochemicals project will be delayed by no more than six months, from late 2019 to early 2020.

“Vietnam is an outstanding destination for its stable politics, cheap energy costs, and diligent workers,” he said. “Here there are opportunities, while in Thailand the real estate and construction industries are slowing down.”

Starting operations in 1992, SCG, which has already poured $700 million into Vietnam, runs 22 operations in the country, including two its acquired last year: the Prime Group, the country’s largest ceramic tile player, and Tin Thanh Packing (Batico), a flexible packaging company.

According to an SCG presentation at a conference in Singapore earlier this month, Vietnam is its third-largest investment destination.

“Indonesia is the largest destination because of our cement plant there,” Mr. Vongvanich said. “Because of this we are looking also at investing in upstream petrochemicals here, since Vietnam still has to import all upstream petrochemical products.” He also announced that some 80-90 per cent of output from the project will be to meet domestic demand.

SCG recently met with Vietnamese authorities to reaffirm its commitment to the Long San Petrochemicals project, with the Vietnamese Government offering its full support.

South Korean enterprises recognize training needs

In addition to focusing on expanding production investment, South Korean enterprises in Vietnam also attach great importance to training local human resources, Mr. Ryu Hang Ha, Chairman of the Korea Chamber of Business in Vietnam (KorCham) told a workshop held by Vietnam Economic Times on January 22 on the opportunities to push trade between Vietnam and South Korea, adding that enterprises hope for support from the Vietnamese Government in such training.

He stressed that South Korean enterprises recognize that Vietnam has major potential for development, with political stability and dynamism in global integration.

Vietnam is also more attractive in the eyes of South Korean enterprises because of its young, abundant, and low-cost labor. In his 14 years at Doosan Heavy Industry Vietnam he has found Vietnamese workers to be diligent and quick learners.

Technical expertise, however, remains weak. “The training of highly-quality engineers is very important but this training is lacking,” he said. “Many South Korean companies recruit workers then have to take time to hold training courses. The Vietnamese Government does not have a truly effective policy to develop talent, so a long-term policy is necessary that should focus on key areas and meet market demand.”

Many enterprises represented at the workshop also emphasized the importance of the VKFTA for banking and financial markets. Mr. Nguyen Thanh Binh, Deputy General Manager of Shinhan Bank Vietnam, Hanoi Branch, asked how foreign banks like Shinhan Bank would benefit from the agreement.

In response, Mr. Le An Hai from the Ministry of Industry and Trade, who was directly involved in negotiating the VKFTA, said that the financial sector is closely tied to investment activities. During the negotiations the Ministry of Finance committed to offering preferences and detailed a schedule for the opening up of Vietnam’s banking and finance sector to foreign investors. “Vietnam wants a long-term structure for a healthy financial system, especially in restructuring capital market and financial markets,” Mr. Hai said.

The commitments in the VKFTA do not create additional legal conditions for investment activities by foreign banks. The agreement provides the conditions for foreign banks to open more branches, and credit institutions like Shinhan Bank will be able to expand and grow.

Vietjet receives two new aircraft

Vietjet Air’s latest aircraft, an A321 coded VN-A667, landed at Ho Chi Minh City’s Tan Son Nhat International Airport late on January 21 after setting out from Hamburg in Germany.

The aircraft is the twelfth in the milestone agreement between Vietjet and Airbus on acquiring or leasing 100 aircraft. With its advanced design, fuel efficiency, and low CO2 emissions, the new aircraft will boost the carrier’s efficiency and protect the environment.

On the same day Vietjet also received a leased A321 coded LZ-PMZ, which landed at Tan Son Nhat International Airport in the middle of the afternoon.

“With these additions to its fleet, Vietjet is now operating 32 brand-new and modern A320s and A321s, helping the new-age airline further develop its network in Vietnam and across the Asia-Pacific region,” said Mr. Luu Duc Khanh, Vietjet’s Managing Director.

Vietjet can now operate 1,000 more flights with 200,000 more passengers. To meet the surging demand during Tet holiday it has launched new routes connecting destinations within Vietnam and other countries.

TMT Motor profit takes hit in Q4 2015

TMT Motor’s business results for the fourth quarter of 2015 were surprisingly poor, with profit after tax coming in at VND6.8 billion ($303,348). With the result in the fourth quarter of 2014 being VND29 billion ($1.29 million), after nine months of solid business its profits then fell away badly in the final quarter of last year.

Though revenue in the fourth quarter was roughly in line with the same period of 2014, at VND532 billion ($23.73 million), and gross profit was VND74.6 billion ($3.33 million), an increase of $477,434 against 2014, costs cut into TMT’s profits significantly. Sales costs totaled VND24.8 billion ($1.11 million) against just VND4.7 billion ($209,667) in the fourth quarter of 2014.

TMT Motor nonetheless recorded good performance in 2015 despite the poor fourth quarter result. Total profit for the year was VND186.6 billion ($8.33 million), or three times higher than in 2014. The value of TMT shares increased strongly last year and now trade at around VND45,200 ($1.9).

Its Board of Directors has approved a plan to reward the Executive Board with 1.5 million additional shares if the share price reaches the VND50,000 ($2.25).

TMT’s total assets as at the end of 2015 stood at VND1.996 trillion ($89.06 million), an increase of VND770 billion ($34.36 million) against the beginning of the year. Its inventory totaled VND1.531 trillion ($68.31 million), equal to 76.7 per cent of total assets, for an increase of VND813 billion ($36.28) against at the beginning of the year. Most of the inventory is finished goods and goods for delivery.

Vietcombank picks up bond award

The Bank for Foreign Trade of Vietnam (Vietcombank) is among six entities to receive a Market Maker Best Bond Award 2015 by the Vietnam Bond Market Association (VBMA).

The award is in recognition of Vietcombank’s accurate forecasts on bond markets and positive contribution to the activities of VBMA, where Vietcombank had a role as a founding member.

Vietnam’s bond market is facing a host of difficulties due to low market demand and an unfavorable environment for the bond business, according to Mr. Pham Thanh Ha, Deputy General Director of Vietcombank and Deputy Chairman of VBMA.

VBMA acts as a bridge in dialogue with State agencies and promotes the development of the bond market towards the standardization of transactions in accordance with international practice, Mr. Ha said.

Vietcombank was established on April 1, 1963, from the Foreign Exchange Bureau of the State Bank of Vietnam. As the first State commercial bank chosen for pilot equitization by the government, Vietcombank officially came into operation on June 2, 2008 after successfully conducting an IPO.

During its more than 50 years of development it has contributed significantly to the stability and growth of the national economy, facilitating efficient domestic economic growth as well as influencing the regional and global financial community.

VBMA is a non-profit organization aimed at promoting the professional and effective development of Vietnam’s bond market, guaranteeing the legitimate rights and interests of members and at the same time ensuring the national interest.

Vingroup makes a play for golf courses

Vingroup has announced it intends to attract even more golfers and tourists to Vietnam through its golf course developments.

“It’s the most ambitious move anyone here has ever made to put Vietnam on the world golf map,” said Mr. Niklas Robinson, Director of Sales and Marketing at Vingroup’s golf division, Vinpearl Golf. “The landscape here has always been conducive to golf. We are committed to unlocking its potential and delivering a suite of products as good as any you’ll find elsewhere.”

Vinpearl Golf currently has two golf developments in its portfolio: Vinpearl Golf Nha Trang, a hilly, resort-style layout overlooking a secluded bay on Hon Tre Island, just off the coast of Nha Trang, and Vinpearl Golf Phu Quoc, a 27-hole facility that opened last year and is situated within an old-growth forest on the north end of Phu Quoc Island, the country’s top island destination.

Both courses were conceived by IMG, one of the world’s premier golf course design companies. And the next Vinpearl Golf project to come on line will have IMG’s fingerprints on it as well.

Vingroup is currently developing courses near Hanoi and Hai Phong. The Vu Yen Golf Community, located in Hai Phong, will offer two distinct championship courses, with one routed through marshland and the other featuring an abundance of lakes. On the outskirts of Hanoi, the multi-course Vinpearl Golf complex is taking shape and when finished will include 54 holes along the Red River. Both are expected to debut in October.

The group plans to do the same in Quy Nhon and Can Tho for the sole purpose of attracting golfers to two of southern Vietnam’s most compelling destinations.

Industrial real estate holds promise

Demand for industrial land is on the rise in both Hanoi and Ho Chi Minh City, making the industrial segment a promising investment channel, according to the latest report on real estate in the fourth quarter of 2015 from Cushman &Wakefield (C&W), released on January 19.

In Hanoi the overall market performance continued to experience gradual improvements, with average occupancy reaching well over 72 per cent in the quarter, up 1.7 ppts year-on-year. Six out of eleven industrial parks (IPs) (46 per cent of the total stock) were fully occupied.

Among the remaining IPs with vacancies at the end of the quarter, the Hoa Lac Hi-tech Park recorded the highest vacancy, at 70 per cent, or 346 ha.

The average asking rent at IPs in Hanoi continued to be the highest in the northern region and about 50 per cent higher than in Hai Phong and Bac Ninh, at $111 per sq m per month.

Average occupancy rates, which remained at 71 per cent, were mainly due to lower occupancies of under 50 per cent at three IPs in Nha Be, Cu Chi and Binh Chanh districts, which started operations only recently. The majority of established IPs reported robust occupancy rates of above 90 per cent.

Average asking rents in the quarter stood at approximately $126 per sq m per month, about double the figure in neighboring provinces such as Long An, Binh Duong, and Dong Nai.

C&W predicted that an additional supply of about 6,000 ha from 14 identified IP projects will enter the Hanoi market through to 2020. By 2030 the market will have 33 IPs with an area of 8,000 ha in total.

In Ho Chi Minh City the total increase in industrial land to 2030 is projected at approximately 3,000 ha, 85 per cent higher than the existing stock. Twelve new IPs are expected to be added to the 18 currently in operations by 2020.

With the TPP and other free trade agreements Vietnam has signed recently, stable economic conditions, favorable government policies, and low labor cost, the country will attract more investments from foreign manufacturers as they look to enjoy tariff benefits, with demand for industrial land rising as a result.

2016 has first billion dollar export category

According to the General Department of Vietnam Customs, phones and phone components has become the first billion dollar export category this year with the total turnover of US$1.06 billion in the first half of January.

The second largest category in export turnover was garment and textile products with US$886 million; followed by computers, electronic items and components with $584 million and footwear with US$530 million.

By the end of January 15, Vietnam’s export turnover totaled US$5.59 billion, up 3.6 percent equivalent to US$205 million over the same period last year.

Items contributing most to the export turnover included garment and textile which increased US$66.5 million; machines, equipment and accessories $58.2 million; vegetables and fruits $44.4 million; footwear $38.1 million and rice $33.8 million.

Last year phones and phone components also posted the largest export turnover with a total of US$30.18 billion, making it the first category hit $30 billion turnover.

Watermelon growers hurt as China demand moves elsewhere

China's demand for watermelons from Vietnam has nosedived, leaving growers in Ninh Thuan and Binh Thuan provinces facing huge losses from low prices and surplus production.

The Ministry of Agriculture and Rural Development warned last December that China was sending its own farmers to Laos and Cambodia to supply their own market with higher quality produce.

But farmers still borrowed to expand production, hoping they could at least match last year's prices of VND5,000 to VND10,000 (US47 cents) a kilogramme. Now the price has fallen to only VND1,000/kg.

Nguyen Duc Binh, chairman of Duc Linh District's Association of Farmer in Binh Thuan Province said 6,000 tonnes of watermelon was harvested from 200 hectares, up 60ha on a year earlier.

Local firms losing ground in domestic market

Vietnam's huge textile and garment export industry is struggling to compete with cheaper and more diverse imports in the local market, mainly because of an immature support structure.

Big industries such as garments and textiles, leather shoes, mobile phones and electronics products have high outsourcing costs, making prices higher than products from neighbouring countries.

Clothing products from China and Thailand are cheaper and have a wider range. Online shopping has opened Vietnam to US and EU makers.

The Vietnam National Textile Garment Group said only 20 percent of textile companies give priority to the domestic market, and the focus of local firms is on export, particularly with advent of the ASEAN Trade Bloc this year and the Trans-Pacific Partnership, which slashes tariffs across the board.

Vietjet to launch Hanoi-Chinese Taipei route

Low-cost carrier Vietjet Air will introduce a new flight route from Hanoi to Taipei, Taiwan (China) starting February 1, reported Ha Noi Moi newspaper.

The flight will take 2 hours and 40 minutes, and will operate every Monday, Wednesday and Thursday.

The flight will depart from Hanoi at 3:10 p.m. and arrive at Taipei at 6:50 p.m. (local time). The return flight will depart at 7:50 p.m. and arrive in Hanoi at 9:30 p.m (local time).

Vietjet currently offers daily service between Ho Chi Minh City and Taipei.

The air carrier now operates nearly 200 flights a day on 44 domestic and international routes, including to Singapore, the Republic of Korea, China, Thailand, and Myanmar.

Nation’s CPI moves flat this month

Vietnam’s consumer price index (CPI) has stayed unchanged in January from December though nine of 11 groups in the basket of commodities used for CPI calculation have inched up in price, the General Statistics Office (GSO) said.

Data of the GSO released on January 24 showed prices of the nine groups have risen by less than 1% this month over the final month of last year, with the highest increase of 0.89% in education. Prices are up 0.44% in beverage-tobacco, 0.37% in apparel-headwear-footwear, and 0.21% in pharmaceuticals and health services.   

Prices of food and catering service, the most weighted group in the basket of commodities used to determine the CPI, has edged up 0.25% in January over December, with food up by 0.48%, foodstuff by 0.3% and dining-out services by 0.02%.

The two groups of commodities whose prices are down this month are transport and telecommunications, with respective falls of 2.82% and 0.06%.

Overall, the national CPI has moved flat this month compared to December and edged 0.8% higher than the year-earlier period.

The GSO reported that January’s CPI has inched up 0.03% in cities over December but gone down by 0.03% in rural areas.

Many localities have posted lower consumer prices in the first month of 2016 such as Thai Nguyen Province (down 0.4%), Danang City (0.27%), Khanh Hoa Province (0.08%) and Can Tho City (0.09%).

The nation’s core inflation has gone up by 0.27% in January over December and 1.72% compared to the same period last year.

HCM City’s CPI down 0.03% in January

The HCMC statistics office said the CPI has dropped 0.03% this month against December.

The January CPI is down because three groups, including a high weighted one, in the basket of commodities used to calculate the CPI have remained unchanged from the previous month and three groups have marked down in prices.

The transport group has seen the strongest fall of 3.36% in January given the fuel price cuts on December 19 and January 4 – the period for CPI calculation. Prices of pharmaceuticals and health services have declined by 0.01% and those of telecommunications have dropped by 0.13%.

The food and catering service group, which is a high weighted group in the basket of commodities used for CPI calculation, has stayed unchanged, with food up by 0.4%, foodstuff down by 0.11% and dining-out services inching up 0.02%. Two other groups of commodities whose prices have stayed stable are education and culture-entertainment.

In the first months of 2016, five groups of commodities have seen higher prices. In particular, goods and other services have nudged up 0.99%, home appliances up 0.09%, apparel-headwear-footwear up 0.08%, beverage-tobacco up 0.42% and house-electricity- water-gas-building materials up 1.02% compared to December.

Overall, January’s CPI in HCMC has fallen 0.03% against December and 0.26% year-on-year.

Meanwhile, data of the Hanoi Statistics Office indicated that the CPI in the capital has edged up 0.12% this month compared to December and 1.19% from a year earlier.

The increase is attributable to eight groups of commodities whose prices have inched up with education registering the biggest spike of 3.74%. The only group with prices sliding is transport (down 2.1%) thanks to fuel price cuts.

Apartment inventories in HCMC plunge

Apartment inventories in HCMC had plummeted to 2,378 by the end of last year as some 12,112 units in stock had been sold, according to the HCMC Department of Construction.

The department told a 2015 review meeting last Friday that there had been 14,490 unsold apartments in the city as of December 2012 but only 16.5% of the number had remained in stock by end-2015.

The agency credited the strong fall to the Government’s support for both property investors and homebuyers over the past years.

Property investors were allowed to adjust sizes of apartments, convert commercial apartments into social ones or transfer projects. More of the Government’s VND30 trillion loan package for homebuyers has been disbursed.

For example, the HCMC government approved conversion of two commercial housing projects having a total of 1,492 apartments into social homes last year, bringing the total figures in this city to 10 social housing projects with 9,105 units respectively.  

A condo project in District 2 was turned into a hospital, according to the department.

The department reported that around 26,000 out of 49,000 apartments offered for sale in HCMC found buyers last year, accounting for 53%. This percentage was equivalent to 2014 when property developers found buyers for 17,000 out of 32,700 apartments offered.

On the same day, the Housing and Real Estate Management Department under the Ministry of Construction submitted a report to Minister Trinh Dinh Dung showing that HCMC’s value of housing inventories had been VND9.5 trillion (more than US$424 million) as of January 20, down nearly VND8 trillion compared to the end of December 2013.

HCM City taxman to screen firms suspected of tax evasion

The tax authorities of HCMC will focus on inspecting enterprises with signs of tax evasion and big revenues.

The authorities will keep a close watch on beer, wine and tobacco firms as well as enterprises earning big revenues in the petroleum, power, telecommunication and real estate sectors, according to the city government’s report on budget collections in 2015 and tasks for 2016.

More tax inspections are also planned for enterprises with huge special consumption tax payments in the sectors of franchising, advertising, aviation, banking, and milk processing and trading.

The taxman will carefully screen companies entitled to value-added tax refunds for exports and imports, tax cuts and exemptions; enterprises free from inspections for a long period; and businesses with losses and signs of transfer pricing.

HCMC will take measures to reduce tax arrears and limit new tax debts. The city’s target is that new tax arrears until December 31, 2016 will not exceed 5% of total budget collections this year.

HCMC is tasked with budget collections of VND298 trillion (US$13.27 billion) this year, rising by 9.53% against 2015. A leader of the city said this is a difficult job but it must be done.

Of the total, the city expects to collect VND177.6 trillion from domestic sources, VND18.2 trillion from crude oil, VND102.5 trillion from exports and imports, according to the report.

Besides, this year’s tax collections include VND2.15 trillion from lottery business and VND350 billion from the environmental protection fee on wastewater.

Cai Mep-Thi Vai port complex inefficient

Cai Mep-Thi Vai port complex in Ba Ria-Vung Tau Province has operated inefficiently due to underdeveloped infrastructure, logistics shortcomings and competition from ports in HCMC and Binh Duong Province.

Enterprises and experts pointed out this problem at a seminar held on Wednesday by the ministries of transport, and planning-investment, and the Japan International Cooperation Agency (JICA) to evaluate the performance of the Cai Mep-Thi Vai port complex.

It is costly to transport goods from HCMC or Binh Duong to Cai Mep-Thi Vai as the port complex does not have yards for empty containers, forcing enterprises to bring their goods to Cat Lai Port in HCMC, said Nguyen Thanh Tam, deputy director of HCMC-based company InterLog.

In addition, the time for transporting goods to other Asian countries from Cai Mep-Thi Vai is over ten days compared to only three days from Cat Lai Port in HCMC, leading enterprises to shun Cai Mep-Thi Vai, he said.

Le Duy Hiep, chairman of the Vietnam Logistics Business Association (VLA), said currently enterprises have to transport their goods by barge to avoid traffic jams on the road, thus spelling trouble for exporters.

What should be done now is to build roads and upgrade inland waterways linking Cai Mep-Thi Vai and nearby localities.

Hiep said another point that makes Cai Mep-Thi Vai unattractive is the lack of space for empty containers while there are nearly 40 depots for empty containers around ports in HCMC and Binh Duong.

It costs up to VND4.3 million (around US$192) to transport goods on a 40-kilometer section from Dong Nai’s Nhon Trach District to Cai Mep-Thi Vai but only around VND3.3 million to bring goods through a section of 80 kilometers from Nhon Trach to Cat Lai, he gave figures to prove his point.

According to the Vietnam Marine Administration, services at Cai Mep-Thi Vai have not been fully developed and along with its underdeveloped infrastructure, the port complex has been unattractive to transport firms.

As calculated, a port with a 600-meter pier should have an annual capacity of one million TEUs to boost the development of other services but the total capacity of six to seven piers at Cai Mep-Thi Vai is only 1.3 million TEUs per year compared to an annual designed capacity of eight million TEUs.

Cai Mep-Thi Vai port complex was commissioned in late January 2013 after four years of construction. The project was financed by Japan’s official development assistance (ODA) loans and Vietnam’s reciprocal capital.

Deputy Minister of Transport Nguyen Van Cong said the port complex can accommodate vessels of 160,000 DWT.

Work on roads linking the port with other localities has started, such as Ben Luc-Long Thanh and Bien Hoa-Vung Tau expressways, and when they are in place, the time for goods transport from the Mekong Delta to the port complex would be shortened.

Besides, the transport ministry is working on a project to dredge the Dong Tranh River to facilitate the inland waterway transport between HCMC and Cai Mep-Thi Vai.

In the future, if the project receives more funds from Japan or other foreign investors, the authorities will build Phuoc An Bridge.

The total volume of goods imported or exported through ports nationwide reached 427 million tons last year, up 14.5% year-on-year.

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