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BUSINESS IN BRIEF 29/4

 Huge FDI capital flows into IZs, EZs; Lotte eyes US$2 bln high-end trading centre in HCMC; Donaco delight at new Lao Cai casino; Nation lags behind peers in entrepreneurial zeal; Banks expect higher profits from recovery

Huge FDI capital flows into IZs, EZs

With their streamlined regulations and many advantages Vietnam’s industrial and economic zones (IZs & EZs) have become home to the successful operation of many foreign owned affiliates.

As of March 2014, more than 50% of all foreign investment in Vietnam was concentrated in the industrial and economic zones, with roughly 5,300 foreign businesses reporting more than US$112 billion in registered capital.

In the first quarter of this year alone, there were 70 FDI projects invested in IZs and EZs nationwide with combined registered capital of more than US$800 million.

A typical project is Triple Eye Infrastructure from Canada, which is constructing a 200-bed hospital in Hai Duong’s Dai An IZ at an estimated cost of US$225 million.

The Ministry of Planning and Investment reported that these FDI projects are primarily specializing in telecommunications and support industries. World-wide names making an appearance included Samsung, LG and Nokia.

These projects have attracted a large number of satellite investors that are now jostling to get in on the action, raising expectations of leading economists and market analysts optimistically to predict that investment and production in IZs and EZs will continue to grow.

However, the government has been urged to loosen credit to create the best possible conditions for businesses to develop infrastructure at IZs and EZs, cautions Tran Duy Dong, Deputy Director of the Economic Zone Management Department.

Lotte eyes US$2 bln high-end trading centre in HCMC

The Republic of Korea’s Lotte retail group has received approval from Ho Chi Minh City authorities to proceed with construction of a US$2 billion international financial center.

Covering 10 hectares, the complex will consist of world class commercial plazas, hotels, serviced apartments, and office suites.

A spokesperson for Lotte said the company hopes the complex will become the centerpiece international financial centre in HCM City and the Southeast Asian region.

A detailed zoning plan of the project, co-financed by Japanese investors, is scheduled for completion in 2014.

Spring forum proposes solutions to economic woes

Although the socio-economic situation doesn’t appear to have changed drastically, or much at all, a number of economic sectors have seen significant positive growth in the first quarter of the year.

Nguyen Van Giau, head of the National Assembly’s Economic Committee (NAEC) made the remarks at this year’s Spring Economic Forum held by the (NAEC) in Ha Long City on April 28.

In the first quarter of the year, most economic sectors gathered steam, signaling that the horizon for the economy is brighter, Giau said.

However, he warned many difficulties still remain such as low growth of aggregate demand, low credit growth, slow disbursement of construction capital, and a high number of dissolved and bankrupt businesses.

At the forum Giau solicited proposals from participants, asking for viable solutions to bolster socio-economic development in 2014 and beyond.

“Your input is important, contributing to the Government and National Assembly’s ability to devise proper policies,” he concluded.

Tran Dinh Thien, Director of the Vietnam Economic Research Institute, in turn cautioned that the economy has paid the penalty for obtaining such growth on the back of weak purchasing power and fragile business health.

The most important issues facing the macroeconomy are non performing loans (NLPs) and public debt, as they closely effect capital circulation, and the economy will remain weak until these issues are adequately resolved, he added.

Nguyen Hong Son, Vice Rector of the Economics University said it is high time to examine micro issues which help create economic power and competitions.

If the micro-management changes, it will generate a driving force behind national development, he said.

The Spring Economic Forum is a venue for experts to review economic development and macro-policies in 2013 and devise proposals for 2014. The forum’s evaluations provide important inputs for the NAEC to support the implementation of the NA’s resolution on socio-economic development plan in 2013 and in 2014.

US businesses show interest in Vietnam market

US business entrepreneurs are quite keen on doing business with their counterparts in Vietnam as they believe there is huge potential for further enhancing beneficial cooperation.

At an April 27 dialogue sponsored by the American Chamber of Commerce (AmCham) in Singapore, the businesspeople also expressed their eagerness to learn more about recent legislative changes in Vietnam affecting foreign investment and solicited opinions from those in attendance on the best opportunities in the country.

At the event, Vietnamese Minister of Planning and Investment Bui Quang Vinh told the gathering that the government is seeking to attract projects which use environmentally friendly technology and churn out higher added value products, especially in infrastructure development, as well as in information technology and biotechnology to buttress agricultural production.

Vinh also suggested AmCham in Singapore coordinate with relevant authorities in Vietnam to schedule a series of regular exchanges with the US business community to provide them with complete information on investments in health care, education, high-tech, information technology and infrastructure development in Vietnam.

For her part, Executive Director of AmCham Judith Fergin stated that US businesses eye Vietnam as a highly lucrative alternative trade partner to China, primarily attributable to lower costs of production in Vietnam.

Potential partners are closely monitoring the Vietnamese market because its Government is undertaking important reforms in administration procedures, business restructuring and legislation, to create a healthier competitive environment, she added.

She strongly recommended that the Vietnamese Government speed up negotiations on the Trans-Pacific Partnership (TPP) agreement as the trade pact will help promote foreign investment necessary to build the economic infrastructure for improved supply chains, generating better jobs for citizens.

Donaco delight at new Lao Cai casino

Australia’s casino operator Donaco International has just received an amended investment certificate for expanding its hotel and casino business to newly built five-star hotel in the northern border gate province of Lao Cai, where it is expected to enjoy robust growth.

“This will allow the company to open its expanded five-star hotel and casino complex on schedule,” a company statement announced, adding that the soft opening of the new property was set for May 19 this year.

The five-star hotel and casino Lao Cai International Hotel will comprise 428 rooms and be located near existing identically named three-star hotel which was built in 2003. Donaco holds a 95% stake in the hotel, with the token remainder held by the Vietnamese state-owned Sapa Petroleum Tourism Joint Stock Company.

According to Donaco, the Vietnamese government has given permission for a maximum of 50 gaming tables at the new Lao Cai International Hotel.

The Lao Cai International Hotel has joined seven hotel and casino complex licensed in Vietnam, and acted as the flagship business for Donaco International. Located in Lao city, which borders China’s Yunnan province, Donaco anticipated most of the casino’s clients would be cross-border visitors from China.

Donaco managing director and CEO Joey Lim on the release of the company’s annual financial report in March claimed the level of demand for gambling at the Lao Cai International Hotel had given the firm “great confidence in the success of our new 428 room, five star property.”

According to the financial report, the company’s operating revenue for the six months ending December 31, 2013 increased 100% compared to the period. This was driven by a 44% increase in VIP turnover at the company’s already –operational three-star Lao Cai International Hotel which comprises 34 rooms, 8 gambling tables and 36 slot machines.

However, visits to the casino declined by a marginal 3.2% primarily as a result of bad weather which reduced the number of walk-in customers. In September 2013, heavy rains caused a temporary closure of border crossing from China, and in December 2013, snow blanketed the highlands surrounding Lao Cai.

Donaco explained their growth was driven by an influx of higher spending VIP customers, reflecting the success of the company’s ongoing junket marketing programme. Due to the decline in walk-in customers, mass market turnover declined by 15%, but this was more than outweighed by the growth in VIP turnover, with the total table game turnover increasing by 33%.

Slot machine turnover boasted very strong growth of 122%, primarily due to the introduction of 12 new machines in February 2013. These have proven to be far more popular with customers than the 24 older machines, which remained in operation.

Nation lags behind peers in entrepreneurial zeal

Awareness of business opportunities among citizens in Vietnam is lower than in other countries with the same level of development, a new report reveals.

However, those attending the launch ceremony of the Global Entrepreneurship Monitor (GEM) Vietnam Report 2013, held in Hanoi on April 27, were told that entrepreneurs in the country are increasingly valued and the number of citizens seeking to become businesspeople has also increased.

This report, the first of its kind in Vietnam, revealed that the percentage of adults who acknowledged opportunities to start a new business in 2013 was only 37%, much lower than the average rate of 60% in countries which have similar development levels to Vietnam.

Luong Minh Huan from the Vietnam Chamber of Commerce and Industry (VCCI)'s Business Development Institute said in terms of business conditions in Vietnam, there are three indices, including infrastructure, dynamic characteristic of domestic market and culture and social standards, which reach an average ranking of three.

Nine remaining indices, such as business support services, accounting, auditing and legal consultancy, are also not developed to their potential, said the report. The Government's support programmes, financing for businesses and business education at high schools are listed at the bottom of the list.

"This shows that the country has had a lack of consultancy and business support services," Huan said.

Further, VCCI chairman Vu Tien Loc said the report provided an overall picture on business landscape in Vietnam throughout various periods.

It also helped Vietnam have comparisons with other countries in the ASEAN region.

Loc also recommended that Vietnam should build trust for entrepreneurs by maintaining policies to stabilise the macroeconomy, making policies transparent and creating an equal environment for competition among economic sectors.

The report is expected to serve in creating polices and decisions for business development in the future.

The GEM report collected data from more than 200 respondents in 70 countries accounting for 75% of the world's population and 90% of global GDP.

Banks expect higher profits from recovery

Many banks have planned higher profits this year as they expect better recovery in the economy.

This year, the total expected pre-tax profits of 26 banks, which have announced their business plans this year, are estimated at VND36.7 trillion (US$1.748 billion), rising 5.18% as compared to last year.

The Vietnam Joint Stock Bank for Industry and Trade (VietinBank) led in terms of pre-tax profit plan in 2014 with VND7.28 trillion (US$346.66 million), followed by Bank for Investment and Development of Vietnam (BIDV) with VND6 trillion (US$285.7 million).

At the shareholders meeting held last week, the Bank for Foreign Trade of Vietnam (Viecombank) chairman Nguyen Hoa Binh noted that his bank expected to gain a pre-tax profit of VND5.5 trillion (US$261.9 million), besides setting aside VND5 trillion (US$238 million) for risk provision.

Vietcombank also targeted its total assets to rise by 11% against last year to VND520.6 trillion (US$24.79 billion). The bank's lending and capital mobilisation are estimated to increase by 13% to reach VND309.97 trillion (US$14.76 billion) and VND384.49 trillion (US$18.3 billion), respectively.

Military Bank (MB) and Sai Gon Thuong Tin Bank (Sacombank) also aimed to gain pre-tax profit of VND3.1 trillion (US$147.619 million) and VND3 trillion (US$142.8 million), respectively in 2014.

Another notable name this year is the Vietnam Prosperity Commercial JS Bank (VPBank) with a profit target of VND1.89 trillion against last year's VND1.35 trillion (US$64.5 million), surpassing many other listed banks, including SHB and ACB. VPBank's total assets are also targeted to reach VND155 trillion (US$7.38 billion) against VND121.26 trillion (US$5.8 billion) of last year.

Binh said although the domestic economy is forecast to improve, many difficulties and challenges still lay ahead. Therefore, his bank will still adopt a cautious approach with regard to its performance plans this year. He further pointed out that it has planned to set aside VND5 trillion (US$238.1 million) for risk provision against VND3.5 trillion (US$166.66 million) of last year. However, he remarked that Vietcombank's move towards the market will be also flexible.

Meanwhile, VPBank General Director Nguyen Duc Vinh explained that the banking system this year will undergo continuous restructuring. Therefore, he stated that profits and size cannot be the top priority, but greater emphasis should be laid on risk management and business model streamlining to prepare for a leap in the post-restructuring period.

By the end of the first quarter of this year, several indications have hinted at dismal improvements in the profits made by the banks. The unsatisfactory improvement has been attributed to the difficulties faced by the banks' biggest income source from credit activities amidst low credit growth.

Furthermore, due to the impact of the macroeconomic context, especially the real estate, this year, bad debts will continue to affect the profits of the banking sector, industry insiders have forecast.

Vital indications of banking improve

The health of the banking system has improved, with good reports coming in about asset quality, capital adequacy ratio and liquidity, according to the National Financial Supervisory Commission (NFSC).

In a recent overview report of the financial markets in 2013 and the forecast for 2014, the NFSC said that the total bank assets in 2013 increased by 15%.

More importantly, it said, the asset structure had improved, with the share of interbank assets falling from 23% in 2011 to 17% in 2013.

The liquidity of the system also increased with a 23.6% growth of capital mobilisation against the 12.5% increase of credit. Therefore, the loan to deposit ratio (LDR) fell sharply from 98% in 2011 to 85.4% in 2013.

Another important criterion which shows the banking system's good health is that the capital adequacy ratio is always higher than the minimum prescribed level of 9%. In 2013, the capital adequacy ratio reached 12.8%.

NFSC Deputy Chairman Truong Van Phuoc said that while the credit growth in 2013 was higher than in 2012, the interest rates were lower. Credit in 2013 rose to 12.5% against 9.8% in 2012. The average lending rates, as calculated by the NFSC, tumbled from 20% in 2011 to around 12% last year.

Besides, the credit structure in terms of currencies was more balanced. The credit in Vietnamese dong rose to 85% in 2013 from 81% in 2012, while foreign currency credit fell to 15% from 19%.

In the 2011-13 period, short-term credit accounted for about 58 to 59%, while medium- and long-term credit accounted for about 41 to 42%, showing that there was little change compared with the previous years.

Although credit rose fast, its quality also improved, Phuoc said, adding that the figures calculated by NFSC as per the international rules showed that the NPL ratio of approximately 9% has sound basis.

The NPL ratio of the whole banking system, as reported by the commercial banks, fell sharply from 4.73% at the end of October 2013 to 3.63% at the end of 2013. However, according to the State Bank of Vietnam (SBV), with prudent calculation, including all subprime loans restructured under Decision 780, the NPL was about 9%.

According to NFSC's report, the credit institutions handled VND106 trillion, or US$5.047 billion, of NPLs, including about VND66 trillion, or US$3.14 billion, by risk provisions and about VND44 trillion, or US$2.09 billion, by selling to the Vietnam Asset Management Company (VAMC).

Phuoc believed that VAMC and the risk provision made by banks will partly contribute to controlling NPLs.

He said this year's challenge was the slow recovery of the economy that would restrict the credit absorbability. However, he expected the existing economic policies, which are designed to boost aggregate demand, to create favourable conditions for credit growth.

PM holds dialogue with businesses

Prime Minister Nguyen Tan Dung is to meet with the business community on April 28 to address their concerns, making it easier for them to operate and benefit from economic recovery.

Four Deputy Prime Ministers and nine ministers will also attend the dialogue.

In a report prepared by the Vietnam Chamber of Commerce Industry (VCCI), businesses have made more than 300 recommendations concerning the business environment, enterprise restructuring, capital accessibility, land, administrative procedures, and labour relations.

As many as 224,200 businesses were licensed to begin operations between 2011 and 2013, making up nearly 41% of the total number of newly-established businesses from 1991 to 2010.  

In the first quarter of 2014, more than 18,000 businesses were established with a combined registered capitalisation of VND98 trillion, up 17% in number and 23% in capital compared with the same period of the previous year.

However, nearly 17,000 businesses were dissolved or suspended operations in the reviewed period, a year-on-year increase of 9.6%.

In its report, VCCI has examined difficulties facing the business community and proposed viable solutions.  

VCCI president Vu Tien Loc revealed that a number of proposals are directly associated with adjustments to laws on business and investment which are being tabled for discussion.

Loc said developing the private business sector is considered the driving force in fuelling economic growth. However, businesses, especially small and medium-sized, are encountering difficulty in accessing development resources, including capital, market, and lack of incentives from the government.

Before 2006 the dialogue between the Prime Minister and businesses had been held annually and become an important forum on the business and investment environment.

Realising the importance of the business community in national economy, the Party’s Political Bureau issued a resolution in late 2011 on building and bringing into full play the role of Vietnamese entrepreneurs in the process of national industrialisation and modernisation, as well as international integration.  

Seminar helps boost Vietnam-Belarus ties

A seminar focusing on how to promote trade, investment, tourism and labour cooperation between Vietnam and Belarus was held in the latter’s capital city of Minsk on April 25.

Vietnamese Ambassador to Belarus Do Van Mai said that the two countries are making efforts to raise their two-way trade and investment, as well as expand connections in industry, credit and export assistance.

In addition to tourism and trade ties, labour export has emerged as a new potential field that attracts attention of both sides’ businesses. Hoang Kim Ngoc, deputy head of the Overseas Labour Management Department under the Ministry of Labour, War Invalids and Social Affairs, suggested Vietnamese companies recruit and train workers carefully in order to gain a firm foothold in the Belarusian labour market.

Meanwhile, Belarusian Ambassador to Vietnam Valery Sadokho noted that the two sides are enjoying stable development in terms of economic relations, with current two-way trade reaching nearly US$200 million.

He said Belarus and Vietnam certainly can bolster their trade exchange in the context of the progress of negotiations on a free trade area between the Customs Union of Russia, Kazakhstan and Belarus and Vietnam.

The seminar also offered a chance for the two countries’ businesses to meet and seek partners towards raising their trade turnover to US$500 million by 2015.

Difficulties facing 2014’s economic growth target

The National Assembly (NA) Committee for Economic Affairs has predicted that Vietnam's GDP is likely to increase by 5.71 % this year but its economic growth will struggle to reach the set target.

According to the Committee, this year’s GDP will gradually recover by up to 5.98 % in 2015, based on comparable prices of 2010.

Meanwhile, since the end of last year, the Vietnamese Government announced a 5.8% GDP growth target in 2014.

Although the impact of short-term economic growth is still bound, there have been some positive changes, not only in improved credit growth for the economy but also high credit quality and investment efficiency.

Looking at this year’s economic outlook, the committee said the economy in general and trade in particular will have more opportunities as opposed to difficulties and challenges. Remarkably, after a long period of fluctuations between macroeconomic instability and economic downturn, the economy has become more stable due to the Government’s great efforts and international facilitation.

Vietnam’s participation in a host of free trade agreements (FTAs), including TPP and FTA with the EU, will bring more opportunities for the country’s market access and investment attraction.

However, export products, especially those from intensive labour or investment from foreign-invested sectors in the region based on static comparative advantage, have not yet contributed to creating dynamic comparative advantage (the elements of quality, generating higher added value from technology and a higher quality workforce).

More importantly, continual increased pressure of the international integration process on Vietnam requires more extensive reform to improve the investment environment and engage in the regional and global production networks.

In addition, the Government should promote technological transfer from FDI enterprises to domestic firms and improve employee skills.

"The lesson after 7 years of Vietnam’s WTO admission shows, staying active for international integration is a necessary condition.  Opportunities for the country’s socio-economic development are only realized if we continue to maintain domestic reforms with a proper roadmap.” the committee noted.

Rise in Vietnam’s real estate revenue

The property market has begun to show positive signs, with a recent increase in capital inflows.

Construction Minister Trinh Dinh Dung reported that by mid-April, the number  of transactions in the real estate market in Hanoi doubled compared with last year’s final quarter.

Meanwhile, the State Bank of Vietnam (SBV) said that by the end of March, investment credit and real estate business increased by 3.95%, much higher than last years’ figure of 1.09%, for the first quarter.

Foreign capital inflows into Vietnam’s real estate are higher than other fields.

According to the Foreign Investment Agency, up until April 20, 2014, the property market ranked second in attracting FDI with additionally increased and newly-registered capital hitting US$392.3 million, accounting for 8.1% of total investment. In particular, an apartment project in HCM City’s Binh Thanh district has been licensed with investment capital totaling more than US$200 million.

Earlier, in the first quarter of the year, the real estate market also ranked second in attracting FDI with additionally increased and newly-registered capital reaching US$288.3 million, making up 8.6% of total investment.

Ho Chi Minh City welcomes Chinese investors

Ho Chi Minh City is willing to invite Chinese investors, including those from southwestern Yunnan province, to explore business opportunities.

Vice Secretary of the municipal Party Committee and Chairwoman of the City People’s Council Nguyen Thi Quyet Tam made the remarks at the April 26 reception for Vice Secretary of the Party Committee of China’s Yunnan province Qiu He, who is on a working visit to Vietnam.

The visit, which aims to strengthen cooperation with Vietnamese localities, falls on the local celebrations of the 39th anniversary of Vietnam’s Liberation Day (April 30).

The host highlighted the long-standing relations and mutual understanding between the two Parties and people, which have been furthered through regular high-level exchanges.

She said the city is always keen on developing wide-ranging cooperation with other countries, including China.

Both the City and Yunnan province share a lot of similarities and strengths, especially in tourism – the industry expected to be forged ahead in the coming time, Tam said. Qiu He said he is impressed by the city’s rapid growth. Advantageous transport links and infrastructure will allow the pair to work together, he added.

He suggested more bilateral exchanges in the fields of mutual interests in the time ahead.

He also invited the municipal leaders to attend the 22nd Kunming Trade Fair which is slated for June in the province.

Can Tho hosts Mekong Expo 2014

Roughly 400 Vietnamese businesses are showcasing their Made in Vietnam wooden products and fine art handicraft exports at Mekong Expo 2014, which opened in Can Tho City on April 26.

The week-long event is part of the festivities celebrating the 39th anniversary of southern liberation  and national reunification (April 30) May Day (May 1).

This year’s event themed “Mekong Delta exports”, aims to provide domestic businesses with a good avenue to display a host of products, such as furniture, handicrafts, garment and textiles, leather and footwear, as well as local specialties.

Nguyen Thi Kim Len, Head of a business delegation from Central Highland Dak Lak province, said this is the first time she is participating in the event as part of a bid to advertise her products and expand consumer market.

“Mekong Expo 2014 is a great venue for both domestic and foreign businesses. The newly-established Dak Nong province is seeking consumers for its local products and services,” she added.

Farm exports hit nearly US$9.7 billion

Farm exports jumped 13.8% from a year earlier to US$9.69 billion in the first four months of 2014, according to the Ministry of Agriculture and Rural Development (MARD).

The Ministry’s latest report showed that in April alone, export value from farm produce was estimated at US$2.63 billion.

Key agricultural export items reaped approximately US$4.74 billion, up 5.8%, including US$2.22 billion from aquatic products (up 31.2%), and US$2 billion from the forestry sector (up 20.4%).

Among high hard-currency earners were rice, coffee, rubber, tea, cashew nuts, and cassava.

The US, China and the Netherlands remained Vietnam’s largest importers of cashew nuts, making up 28.44%, 20.01% and 9.12% of its total export revenue.

Japan keen on urban projects in Binh Duong

Vice Minister of Land, Infrastructure, Transport and Tourism, Kotaro Nogami, and other Japanese officials worked with leaders of southern Binh Duong province on April 26, focusing on urban development projects.

Mai Hung Dung, Director of the Binh Duong Department for Planning and Investment, highlighted the province’s impressive GDP growth and spoke about the numerous investment opportunities in the region.

Since the beginning of this year, Binh Duong has attracted additional US$823 million in foreign direct investment (FDI). As a result, about US$19.6 billion have been injected in 2,200 FDI projects, with about 219 Japanese-funded projects totaling US$4.68 billion, he said.

Dung cited Tokyu - Becamex group (US$1.2 billion) as one of big Japanese investors in the locality. Binh Duong has become an attractive investment destination thanks to its incentive policies and simplified administrative procedures. It is calling for investors in such fields as high technology, services, health care, education, and infrastructure development, he added.

Binh Duong provincial People’s Committee Chairman Le Thanh Cung affirmed that his province always considers Japan as its important partner. The province is actively implementing projects on ecological urban areas, transport, and water environment. It plans to send a delegation to attend a trade fair in Japan next year, he said.

Cung asked Vice Minister Kotaro Nogami to grant further official development assistance (ODA) to Binh Duong-HCM City- Dong Nai subway construction project.

Nogami also called for Binh Duong to create the best possible conditions for Japanese investors, adding that Japanese businesses are expected to engage in a waste water treatment project in Binh Duong.

Tea sector coordinating committee taking shape

The Ministry of Agriculture and Rural Development (MARD) should establish a coordinating committee to provide effective oversight of sustainable development for the tea sector.

Representatives from Unilever Group of the UK and the Netherlands made the proposal at a conference in Hanoi on April 26, emphasizing that the active involvement of state management agencies and representatives from localities is of crucial significance to the overall success of developing the sector.

Addressing the event, Flovio Corsin, a representative from the Sustainable Trade Initiative (IDH) said that the Vietnamese tea sector has not been restructured satisfactorily and it is ripe with defects.

The quality of tea products remains substandard and factories are experiencing an inordinately high level of production inefficiencies, Corsin said.

Additionally, tea growers have not fully coordinating their production activities and many are fully unaware of the benefits of producing tea sustainably and, most significantly, the need to use agricultural chemicals sparingly and responsibly, he continued.

Sharing the viewpoint, the MARD Cultivation Department Head Pham Dong Quang in turn said that the tea sector has revealed far too many shortcomings in scale, breeds, output and quality, leading to export products with low value.

At present, the price of Vietnamese export tea are at the lowest levels among the world’s ten leading tea exporters, Quang said.

For his part, MARD Minister Cao Duc Phat urged businesses to expand cooperation among relevant units in the sector by setting up a coordinating committee in the immediate future, tightening control over processing establishments and issuing regulations to punish violators.

Minister Phat emphasized that the overall objective of the committee is to reach a consensus on the strategy for development of the tea sector, focusing on providing farmers with technical guidelines to develop the tea sector sustainably and meet the standards of the international marketplace.

Construction on Int’l Danang Marina gets underway

A groundbreaking ceremony, officially signaling the start of construction on the first phase of the Danang Marina Complex, was held on April 26.

The international complex, which includes plans for a wharf, underwater sports club along with a visitors dock and anchorage, has a total investment of over VND203 billion for the first phase.

The complex is being erected on an area of the city covering more than 56.766 sq.m, situated along the eastern side of the Han River.

The project, the most modern complex of its kind in Vietnam, also includes plans for a ferry terminal to transport customers and a floating cruise when fully operational.,.

Danang municipal People’s Committee Vice Chairman Nguyen Ngoc Tuan, said that the city plans to make the complex the centerpiece of its bid to develop a service-oriented economy with a focus on the tourism industry.

We have high expectations that the Da Nang Marina will greatly facilitate transport activities and attract more tourists to the city, Tuan said.

Thailand opens first department store in Hanoi

Thailand’s leading retailer Central Group has officially set foot in Vietnam with the launch of a Robinson department store in the capital, aiming to turn it into a preferred retail outlet for young consumers.

The store occupies 10,000 sq.m of space on B1 floor of Royal City, a modern megamall project containing over 200,000 sq.m and more than 5,000 residential units.

It is divided into nine areas displaying apparel for children, men and women, sportswear, cosmetics, footwear, a variety of backpacks and handbags, and household appliances.

Alan Thomsom, President of the Robinson Department Store Public company, who is overseeing its operations, said it is the first time the store has moved outside its home country.

Throughout this April, shoppers will have chances to enjoy discounts of up to 50 percent and receive promotional gifts. They can also apply for membership cards.

Ministry proposes ways to improve export competitiveness

According to the Agency of Foreign Trade under the Ministry of Industry and Trade, Vietnamese exports still show some limitations which must be surmounted for them to become more competitive. A report by the ministry's Vietnam Economic News.

In 2013, Vietnam exported 132.14 billion USD worth of products and recorded a slight trade surplus. From 2007-2013, Vietnamese exports grew an average 18 percent per year and were present in almost every country in the world. Many ò these have taken a firm position in hard-to-please markets such as the EU, the US and Japan.

H owever, Vietnamese exports remain low-grade in terms of technological content and added value. Most agricultural products and minerals are exported in their raw or preliminarily processed forms, so their export value remains low. Many key exports are produced on the basis of orders from foreign companies, making domestic businesses dependent on imported materials. Although the export of processing industry-related products has strongly increased, these mostly include labour-intensive ones while the percentage of products made with support of high technology remains limited.

V ietnamese exports have rapidly grown but are vulnerable to external changes, especially price changes and new trade barriers from importing countries. This can be attributed to limited ability among domestic businesses to forecast changes in the world market as well as their weak adaptability and capability to cope with trade barriers.

V ietnam remains slow in developing support industries and so the production of exports still depends on material imports. Price rises in the world market will increase domestic production costs, thus reducing the competitiveness of Vietnamese exports.

Due to these limitations, Vietnamese exports have to fiercely compete with foreign products, especially those from other emerging economies which are striving to improve their positions in export value chains while Vietnam is gradually losing its comparative advantages in terms of labour costs.

According to the Ministry of Industry and Trade, it is necessary to improve the competitiveness of Vietnamese exports. To do this, new, appropriate production, trade (market), investment and financial policies must be put in place. At the same time, it is necessary to set advanced technological standards and tighten supervision to ensure that Vietnamese exports meet these standards - this will improve the competitiveness of Vietnamese exports in terms of quality and their added value in either short or long term.

Regarding production development, it is necessary to promote technological innovation in making products of high export value such as engineered products, wood products, textiles and garments, leather and footwear in order to increase productivity and improve quality; and develop products which are of great export potential and high added value such as construction materials, petrochemical products, rubber and hi-tech products.

It also a need to encourage investment in support industries to meet domestic demand and get Vietnamese businesses involved in global supply chains in fields such as mechanical manufacturing, electronics, information technology, auto components, textiles and garments, leather and footwear, and hi-tech products; while setting standards for export agricultural, forest and aquatic products.

On trade policies, it is necessary to intensify commodity marketing and distribution activities; negotiate and sign agreements on mutual recognition of product quality, facilitating the circulation of export goods; forecast changes in the commodity markets, laws, policies and trading customs of importing countries to assist domestic businesses in export activities.

In addition, it is necessary to concentrate on trade promotion activities targeted at new export products with competitive advantages; build and protect brands for potential export products in major markets; encourage overseas Vietnamese to distribute Vietnamese goods in importing countries; accelerate the construction of trade-related infrastructure in border-crossing areas to boost cross-border trade; and seek updated information about the markets, policies and cross-border trade policies of neighboring countries.

On financial, credit and investment policies, it is necessary to intensify the attraction of investment into export activities; encourage multinational groups and large international businesses to invest in Vietnamese support industries through technology transfers and assistance in the development of highly qualified human resources; and provide loans on a timely basis for businesses which make products for export, giving a priority to small- and medium-sized businesses. It is a call to implement flexible monetary and foreign exchange rate management policies to encourage export; develop storage and transportation-related infrastructure and diversify sources of investment in logistics services; and intensify human resources training and development.

Two decades of North-South power line reviewed

The Electricity of Vietnam’s National Power Transmission Corporation (EVNNPT) on April 25 held a conference in the central city of Da Nang to review the 20-year operation of the North-South 500kV transmission line.

Chairman of the Vietnam Power Association Tran Viet Ngai said the line’s Circuit 1, stretching nearly 1,500 km from the northern province of Hoa Binh to Ho Chi Minh City, was inaugurated on May 27, 1994.

That was the first time Vietnam had constructed such an extra high voltage line, he said, adding that it had taken two years to build despite other countries saying it would take 8-10 years.

Prof. Tran Dinh Long said the project marks a milestone in Vietnam’s electricity sector as it connects three separate power systems in the north, the centre and the south of Vietnam.

In the past two decades, both circuits of the line have transmitted more than 12 billion kWh per year.

At the event, EVNNPT Deputy General Director Tran Quoc Lam said the firm is working hard to put into use the Pleiku-My Phuoc-Cau Bong 500kV line, which is deemed as the third circuit of the North-South 500kV line.

State-owned groups discuss road to reform

Increasing the efficiency of State-owned corporations has long been recognised as vital to Vietnam’s economic sector, and this was reinforced once more during a working session between representatives from State-owned groups and corporations and the steering committee responsible for reviewing the success of reforms.

For five years, State groups have been implementing a resolution reached during the Party Central Committee’s sixth plenum, which targets the perfection of a socialist-oriented market economy mechanism.

During the meeting, participants discussed the role of the public sector in building the economy, and debated how they can best achieve success in line with socialist principles.

They exchanged feedback about the difficulties they have faced in their attempts to improve management, including the difficulties in accessing State funding and implementing equitisation.

State-owned groups and corporations in Vietnam operate in a large scale, with several complex management structures. They are actively working to restructure themselves in order to improve efficiency, help stabilise the macro economy and boost economic growth.

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

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