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BUSINESS IN BRIEF 30/1

Nearly 7,000 businesses established in January; TISCO to get $63.2 million to expand production; State Bank calls for lending interest rates to be lowered; Vinamilk announces export plan; 41 Vietnamese firms join billion dollar club

Vietnam opposes US anti-dumping tariffs on tra fish

The Vietnam Tra Fish Association (VTFA) has voiced its objection to US anti-dumping tariffs on Vietnamese tra fish.

The association explained that the export price of Vietnam’s tra fish products is low since Vietnamese businesses have built a series of linkage chains from breeding, processing to shipping, resulting in cost reduction.

The decision of the US Department of Commerce (DOC) to choose Indonesia as the reference country to calculate the anti-dumping tariffs is unfair as the breeding methods of the two countries are different.

The VTFA asked the DOC, the US International Trade Commission (ITC) and the US Congress to consider the removal of the anti-dumping duties on Vietnamese tra and basa fish.

On January 17, the DOC announced the final results of its 10th administrative review on tra fish fillets imported from Vietnam, in which the anti-dumping taxes Vietnamese firms have to pay range from 0.97 USD to 2.39 USD per kilo for batches shipped between August 2012 and August 2013.

Nearly 7,000 businesses established in January

The General Statistics Office announced on January 28 that in January 6,867 new businesses were established with a total registered capital of VND31.7 trillion (US$1.5 billion) — approximately the same number of newly-established businesses as the same period last year, but with a 27.5% fall in the registered capital.

The average registered capital per business was VND4.6 billion (US$216,200), a 20.4% year-on-year decrease, while the newly-established business created 103,500 jobs, a 7.4% year-on-year fall.

Rises in newly-established businesses were seen in the arts, recreation and food service (147.6%); education and training (44.9%); real estate (41.9%); employment services, tourism, equipment and utensil rental, and other support services (30.8%).

Fewer new businesses were established in such sectors as health care and social support activities (42.9% fall); power, water and gas production and distribution (36.9% decrease); mineral extraction (19% fall); retail, automobile and motorbike repair (14.6% decrease).

As many as 993 businesses completed procedures for dissolution or termination, a 3.4% year-on-year decrease. Most of them had registered capital below VND10 billion (US$470,000).

The number of businesses postponing operations was 9,772, a 22.9% increase, in which 3,367 businesses registered to suspend operations and 6,405 postponed to wait for their business codes be closed or did not register.

Meanwhile, 2,872 businesses resumed operations.

Experts prompt businesses to improve for deeper integration

Vietnamese businesses especially small and medium enterprises must continue innovations and improve their competitiveness for deeper international integration, said experts at a seminar on challenges for business development in 2015 in Hanoi yesterday.

Deputy Head of the Business Development Department under the Ministry of Planning and Investment Bui Thu Thuy said that despite of playing an important role in economic growth, employment provision, and State budget contribution; small and medium enterprises are limited in scale, capital, technology and management skills leading in competitiveness and operation effectiveness limitations.

Dr. Vo Thanh Tri, head of the Central Institute for Economic Management, said that small and medium enterprises in Vietnam contribute less to Gross Domestic Product than that other nations. The number of business of these scales is few and the number of large scale companies is even fewer. These two weaknesses make Vietnamese businesses do not have many advantages in global integration.

Inflation rate will be curbed low and monetary policies will be more flexible this year. However it will be a difficult year for the business community amid the US dollar depreciation and difficulties in fiscal policies and bond issue, he forecast.

Dr. Nguyen Thi Thu Trang, director of WTO Center under the Vietnam Chamber of Commerce and Industry (VCCI), said that Vietnam has signed free trade agreements (FTA) with Japan, Chile and ASEAN nations for the last 20 years.

However these agreements just concentrate on taxes with limited trade liberalization.  FTA with the EU (EVFTA) or Trans-Pacific Partnership (TPP) that will be signed this year will cover more fields with higher liberalization level, and affect not only export and import but also the market and institutions, she said.

2015 is the last year to remove tariff on most commodities. Businesses should be clearly aware that how far Vietnam opens its market door to have preparations for deeper integration, she stressed.

VCCI secretary general Pham Thi Thu Hang said that Vietnam will conclude negotiations to sign TPP and EVFTA in 2015 and officially enter a new international integration phase full of difficulties, challenges and opportunities also.

HCMC to stimulate investment in support industry

Ho Chi Minh City Party Committee Secretary Le Thanh Hai has instructed the city People’s Committee to quickly build an investment stimulation program, continue administrative procedure reformation and support businesses with utmost assistances to develop the poorly developing support industry.

Mr. Hai made the statement while chairing a seminar hosted by the HCMC Steering Board for Support Industry Development on Tuesday, where most delegates said that Vietnam’s support industry has been weak and outdated.

Deputy Chairman of HCMC Mechanics Association Do Phuoc Tong said that support industry products of local mechanical companies have low and unsteady quality.

The number of mechanics is unstable at companies, graduates from vocational schools or colleges have to be retrained before they can start working. However after being trained and having working experiences, these mechanics usually quit and move to foreign invested enterprises and labor export companies for higher salary.

Many small mechanical companies do not have a quality management system or have but do not seriously follow the system’s production process resulting in discontinuous quality control.

Input materials are mainly imported, most small and medium enterprises use secondhand machines causing low productivity. Purchasing new machines requires large capital while many have been unable meet mortgage requirements for bank loans, said Mr. Tong.

Director General of Saigon Transportation Mechanical Corporation Tran Quoc Toan added that the output of local support industry products is low while price is higher than imported items. Businesses lack of connectivity to develop the support industry.

Sharing the same view director general of Saigon Industrial Corporation Chu Tien Dung said that the support industry is weak forcing businesses to import materials for domestic production, resulting in higher cost prices and low competitiveness.

On the other hand, limited human resource level and technologies cause domestic products’ quality fail to meet international standards, he added.

Other experts said that in fact most support industry businesses have been unable to access Government’s assistance policies. Domestic loan interest rate is too higher compared to that in nations with developed support industry, causing locally made products unable to compete with import goods.

Administrative procedures are complicated discouraging businesses to broaden investment in the support industry. Hence they just import materials for local assembly.

Dr. Huynh Thanh Dien proposed HCMC to have policies providing small and medium enterprises with assistances from capital, technology to space to develop the support industry.

Principal of the HCMC Open University Nguyen Van Phuc said that support industry businesses need supports in export and import tariffs, business income taxes, and loan interest rates. Besides the Government should offer land incentives to establish and develop support industry zones and clusters.

In response, HCMC Party Committee Secretary Le Thanh Hai said that the above opinions will be synthesized in a document to debate at future congresses of the city Party Committee.

Electricity price hikes to cover losses by state generator

Vietnam may face more power price rises this year and into the near future as state-owned Electricity of Vietnam Group (EVN) continues to incur big losses.

Deputy Minister of Industry and Trade Do Thang Hai told reporters there were three options on the table for higher  power prices this year, but the final decision would be based on the ability of people to pay a market-based price balanced against the country's economic growth.

If power prices remain low, EVN may have to file for bankruptcy as it doesn't have the financial resources to continue selling electricity at below cost, Hai said.

EVN has reported a group loss of more than VND8.8trn due to foreign exchange rate fluctuations, noting it had been ordered by the government to get its balance sheet in order by 2015.

Hai said it was inaccurate to claim a hike in power prices was designed to help EVN offset its losses, maintaining that power prices were much lower than its cost of production.

“The foremost purpose of price increase is to build up a competitive power market upon the government’s policies," Hai said.

“Many people disagree with sharp power price hikes, claiming that Vietnam is still an average-income country. However, I wonder whether people really have so little money when they consume a lot of electricty,” he said.

Hai expected that higher electricity prices would encourage people to use energy more efficiently.

Several international organisations have urged Vietnam to increase electricity prices by 40 percent over three years, so the country can build a competitive power market in order to attract investment and raise competitiveness in the power sector.

Due to low power prices and increasing demand, EVN has had to import electricity from foreign sources, including China. The government subsidises electricity, which can be seen as supporting energy exporters to the detriment of local consumers.

The European Chamber of Commerce in Vietnam (EuroCham) recently published a "white book" on energy in Vietnam, in which it saw great potential for wind energy, and stressed the need for transparency and competitiveness in Vietnam’s electricity industry.

MoneyGram, DongA Bank to deliver remittances to customers' door

MoneyGram and its strategic partner Viet Nam DongA Bank yesterday (Jan 27) launched a new service that will deliver remittances to the homes of the recipients.

The signing of an agreement on the delivery of remittance payments at customers' homes.

The director of the DongA Bank Remittance Company, Tran Van Trung, said his company was the sole partner of MoneyGram offering such services in Viet Nam.

Yogesh Sangle, director of MoneyGram Asia, said the new service would ensure safe and convenient receipt of remittances.

The DongA Bank Remittance company has 250 employees to provide the service nationwide. Customers in urban areas will receive the money within six to 12 hours, and up to 24 hours in other areas.

TISCO to get $63.2 million to expand production

The Vietnam Development Bank's Bac Kan–Thai Nguyen branch intends to loan VND1,359 billion (US$63.2 million) to the Thai Nguyen Iron and Steel Joint Stock Corporation (TISCO) to expand production.

The capital from the loan will be invested in the second phase of TISCO's production expansion project, business news website baodautu.vn reported on January 27.

The project, which was commenced in September 2007, required an estimated initial investment of VND3,843 billion ($178.7 million). However its total investment has more than doubled to VND8,104 ($377 million) and the construction has been delayed since the first quarter of 2013 due to paucity of capital.Earlier in September 2014, the Prime Minister allowed the State Capital Investment Corporation (SCIC) to contribute VND1 trillion (US$47.6 million) to TISCO's project.

In December 2014, TISCO successfully organized a shareholders meeting to boost its charter capital and issue shares for SCIC.

TISCO has been operational for half a century and its annual revenue has touched of VND8,000 billion ($372 million).

State Bank calls for lending interest rates to be lowered

The State Bank of Viet Nam (SBV) on Tuesday announced its monetary policy execution for this year.

According to the announcement, the SBV has instructed credit institutions to continuously cut the annual interest rate for medium and long-term loans by one to 1.5 percentage points to help businesses.

Under Directive 01/CT-NHNN, SBV Governor Nguyen Van Binh directed credit institutions to implement monetary policies to help businesses, co-operatives and households in getting access to credit in a move to aid the development of production and business.

The governor also directed credit institutions to give credit priority to agriculture and rural development, exports, supporting industries and small and medium-sized enterprises, as well as high-tech application firms.

Under the directive, the central bank also announced that it will execute the monetary policy actively and flexibly, and in accordance with the fiscal policy this year.

The total balance of payments is planned to increase roughly by 16 to 18 per cent this year, while the credit growth will fluctuate between 13 to 15 per cent. The foreign currency and gold markets will be kept stable with the devaluation of the Vietnamese dong against the US dollar by less than two per cent.

SBV instructed its branches nationwide to implement the above policies well, in a move to meet the government's target of controlling inflation at below five per cent, stabilising the macro-economy and supporting economic growth at 6.2 per cent. The results of the implementation have to be reported to SBV on a monthly and quarterly basis.

On the same day, the central bank issued another directive on improved handling of NPLs of credit institutions and for reduction of non-performing loans (NPLs) of the whole banking industry to below three per cent by the end of the year.

Under Directive 02/CT-NHNN, the governor asked credit institutions to handle at least 60 per cent of their NPLs according to their approved plans before June 30, 2015, besides selling 75 per cent of the NPLs for the Viet Nam Asset Management Company (VAMC).

The central bank directed VAMC to closely work with credit institutions in handling NPLs, besides creating favourable conditions for domestic and foreign investors to buy NPLs.

The central bank will also streamline the legal framework related to the handling of NPLs, and plan a project on handling of NPLs based on market mechanisms, to be submitted to the Prime Minister for implementation this year. This is a move to help VAMC in selling NPLs. The bank will also scrutinise the risk provision regulations to help credit institutions that face difficulties in the restructuring process.

Besides enhancing credit quality and strengthening the handling of NPLs, the central bank also directed credit institutions to obey the regulations on debt restructuring and risk provision funding to ensure safety.

NEC Vietnam launches new retail point-of-sale solution

NEC Vietnam, a leading infocommunications technology provider, today announced the launch of its latest retail point-of-sale (POS) terminal TWINPOS G5 52V1.

The new TWINPOS G5 52V1 has a 15-inch touchscreen and weighs seven kilogrammes. It’s easy-to-clean, with hard-disk and components easily accessible for repairs and replacements, which will help reduce time and costs in maintenance and servicing. The robust system design provides environmental durability that can support the needs of multiple retail environments.

The systems will be distributed nationwide by appointed distributors Dinh Thien Co., Ltd (APEX), Digiland Co. ltd. (Digiland) and iPOS VN JSC (iPOS) to small and medium sized businesses in the food and beverage, convenience store, retail chain store and specialty shop sectors. New retail systems will come with a three year warranty, with full support service provided nationwide.

“Our leading technology retail solutions will help the rapidly growing retail businesses here enhance their services to customers. The high performance G5 52V1 will enable retailers to better manage their sales, to help them focus on their core business,” said Keita Ito, general director of NEC Vietnam.

For the past 40 years, NEC has implemented retail point-of-sales solutions for convenience stores and retail chain stores within Asia Pacific, with leading retailers 7-11 and Alfamart as some of their customers. As part of its commitment to growing the retail business in Asia, NEC established a Retail Business Service Centre supporting Asia Pacific in 2013.

Central Highlands examines how to attract more foreign investment

The Central Highlands region lags behind other areas in the country in attracting foreign investment due to its poor infrastructure and lack of skilled labour.

According to the Foreign Investment Agency under the Ministry of Planning and Investment, as of the end of last year, the region, which comprises Kon Tum, Gia Lai, Dak Lak, Dak Nong and Lam Dong, had 148 valid foreign-investment projects with a total registered capital of US$819 million.

Of these provinces, Lam Dong led with 122 projects capitalised at approximately $500 million and accounting for 82 per cent of the region's total foreign-invested projects and 61 per cent of total registered FDI, the agency noted.

Dak Lak ranked second with six projects, valued at $150 million, while Gia Lai placed third with 11 projects valued at $80 million. The two remaining provinces of Kon Tum and Dak Nong had 9 projects with a combined capital of $89.6 million.

Of note, Hong Kong was the region's leading foreign investor with $150 million, making up 18 per cent of its total FDI. It was followed by Taiwan, with $122 million or 15 per cent, and Japan with $103 million or 12 per cent.

During the reviewed period, the agro-forestry-fisheries sector absorbed the largest share of FDI with $350 million, accounting for 42 per cent of the region's total FDI, following by processing and manufacturing industries with $198 million, or 24 per cent of FDI pledged in the region.

To attract more FDI, the agency suggested that these five provinces accelerate investment promotions to publicise their investment climates, potentials and prioritise sectors to alert foreign investors about investment opportunities.

Top priority should also be given to further upgrading infrastructure and improving human resources to better attract investors, it added.

Vinamilk announces export plan

The Viet Nam Dairy Products Joint-Stock Co (Vinamilk) will focus on exploiting Middle East, Africa, Cuba and US markets as its primary export strategy for the next three years.

The purchase of a 70 per cent stake of the US Driftwood dairy factory has brought the company good business results, with revenue of more than VND2.6 trillion (US$123.8 million) last year.

The company's total revenue reached nearly VND36 trillion ($1.7 billion), an increase of nearly 14 per cent compared to 2013.

Last year, Vinamilk produced and launched 5 billion dairy products of all kinds into the market to serve domestic consumers.

According to market research company Nielsen, Vinamilk takes the lead in sales and revenue in the group of fresh milk brands in Viet Nam.

To reach the revenue target of $3 billion and be included on the list of the world's top 50 biggest dairy firms by 2017, the company will also develop key export markets such as Cambodia, Poland, and Europe.

Last year, the company broke ground for factory construction in Cambodia with total investment of $23 million.

This year, when the factory is put into operation, revenue for the first year is expected to reach $35 million.

The company has also invested $3 billion in a company in Poland that will provide agricultural products and poultry to support key items of Vinamilk.

In addition, the company has bought a 19.3 per cent of stake of New Zealand's Miraka factory to develop exports.

Domestic industrial production makes a good start to the year

The national index of industrial production (IIP) grew significantly by 17.5 per cent in January, up from the same period last year, according to the General Statistics Office (GSO).

The processing and manufacturing sector, which account for more than 70 per cent of total industrial output, saw a year-on-year growth of 19.4 per cent, while production and distribution in the electricity sector jumped by 20.9 per cent. Production in the water supply, sewage and waste management sector grew by 9.5 per cent.

Some industrial products recorded high IIP increases during the month, included handsets (up 91.1 per cent); televisions (88.7 per cent); steel (35.7 per cent); animal feed (29 per cent) and cement (27.1 per cent).

Encouraging growth was also reported for other products such as fresh milk (21.9 per cent); footwear (19.8 per cent) and fertilisers (18.5 per cent).

Several products, however, reported industrial production drops, such as powdered milk, down 18 per cent, liquid petroleum gas (10.9 per cent) and sugar (4.7 per cent).

As of January, the inventory levels in the processing and manufacturing were up 9.6 per cent, a little lower than the figure we saw at the same time last year, GSO noted.

Major industries reflected higher levels of inventory, included paper production (100 per cent); means of transport (74.4 per cent); beverages (59.5 per cent), electronics, computer production (37.8 per cent) and metal manufacturing (32.4 per cent).

Vu Quang Ha, a statistician at GSO said top priority should be given to accelerating consumption to further reduce inventory this year. Last year, the processing and manufacturing reported an average inventory index of 73.8 per cent.

Customs dep't offers preferential treatment

Customs and storage agencies will be allowed to give preference to qualified businesses in a move to encourage the businesses, according to a newly-issued Government decree.

As per Decree 08/2015/ND-CP, which was released this week, goods from qualified businesses will be checked, delivered or handled earlier than others.

In case the goods require special checking rights at the border, the qualified businesses will be allowed to transport the goods to their storage while waiting for customs inspection results.

To qualify for these priorities, the businesses must not have violated legal regulations related to taxation and customs in the past and since their application for the preferential treatment.

Besides obeying legal regulations on accounting and auditing, they will also be required to apply management and supervision standards to their entire import and export supply lines.

According to the new decree, exporters of made-in-Viet Nam products with an annual export value of more than US$40 million for the last two consecutive years since their application will also qualify for the prioritised treatment.

As for agricultural and fishery exporters, the export value will be capped at $30 million per year. Those with an annual export and import revenue of $100 million will also benefit from the regulation, according to the decree.

Viet Nam has so far also created some other customs priority programmes for exporters and importers such as the Granted Authorised Economic Operator (AEO) status. The programmes have been customised in accordance with the global development trend and international rules.

Experts said the recognition of programmes will raise the reputation and prestige of companies among customers, partners and State management agencies.

Viet Nam currently has approximately 50,000 exporting and importing companies.

Watchdog calls for dual-language reports

A market watchdog plans to direct public companies to disclose their information in both Vietnamese and English in a move to boost the Vietnamese securities market to the global level.

However, this will prove to be a big challenge for most companies at present.

Speaking at a workshop about the improvement of the legal framework for information disclosure on the stock market on Monday in HCM City, Nguyen Son, director of the State Securities Commission's Market Development Department, said disclosing information in English is a necessary step for upgrading the Vietnamese market from the frontier to emerging markets, and will also help attract more foreign investment.

The new draft, which is expected to replace an earlier circular guiding the disclosure of information on the securities market, will require large public companies, listed businesses, stock exchange authorities and the Viet Nam Securities Depository to deliver information in English.  

Listed companies with a charter capital of VND500 billion (US$23.4 million) or more, or which has a foreign ownership of at least 20 per cent over a period of one year, will have to disclose information in both Vietnamese and English.

41 Vietnamese firms join billion dollar club

As many as 41 local enterprises joined the Billion US Dollar Club for recording annual revenues of over US$1 billion. They were listed among the country's 500 largest enterprises (VNR500) in 2014.

According to the VNR500 2014, released by the Viet Nam Report Joint Stock Company (Viet Nam Report) on Tuesday, Viet Nam National Gas and Oil Group (PetroVietnam) secured the top spot.

PetroVietnam earned VND745.5 trillion (US$34.8 billion) in revenue in 2014. This is its seventh consecutive year in the top position.

Other big names included Samsung Electronics Viet Nam, VietNam National Petroleum Group (Petrolimex), Electricity of Viet Nam (EVN) and Viettel Group. The VNR500 rating is internationally standardised by Viet Nam Report, aiming to honour Vietnamese enterprises' achievements each financial year.

Wood exports off to a slow start for 2015

Vietnam wood and wooden product exports fell unexpectedly by 8.2% on-year toUS$494 million despite the forecast for 2015 to be a record setting year for the sector.

According to the Ministry of Agriculture & Rural Development, Nguyen Ton Quyen, General secretary of the Vietnam Timber and Forest Products Association recently revealed the association forecasted the sector’s annual export volume for 2015 at US$7 billion.

Meanwhile, the sector’s imports for January were up 8.6% to US$170 million on-year, suggesting the sector has been stockpiling raw material and supply inventories in anticipation of finalizing many major contracts.

Gold jewellery exports glitter in 2014

Vietnam’s gem, gold and jewellery exports rebounded in 2014 jumping 16.2% on-year to US$673.07million, the Vietnam Industry and Trade Information Center (VITIC) recently revealed.

Exports were helped by a relaxation of import policy and recovering demand from major consuming countries, particularly the US, the VITIC said.

The US remained Vietnam’s largest importer, accounting for 56% of market share at US$379.93 million, trailed by Belgium (US$59.57 million) and Switzerland (US$55.52 million).

Vietnam’s gem, gold and jewellery exports to other countries saw high growth as well including the UAE (up 11.43%), Australia (up 7.7%), Republic of Korea (up 39.09%), Germany (up 8.63%), Thailand (up 29.37%) and Spain (up 12.8%).

Vietnam seeks way to boost exports to US

A workshop on pushing exports to the US was held in Dong Nai province on January 28, attracting more than 150 local exporters and the US’s business community in Vietnam.

At the event, Dao Tran Nhan, Trade Minister Counselor and Vietnam Trade Office Chief Representative in the US said that the US is a large market and Vietnamese goods now have more opportunities to access this market.

Vietnam’s key exports to the US are shrimp, tra fish, wood and wood products. In particular, four kinds of Vietnamese fruits are allowed to export directly to the market, including rambutan, dragon fruit, longan and litchi, he noted.

Nhan urged Vietnamese exporters to ensure that the product quality meets international standards.

According to the General Statistics Office (GSO), in 2014 Vietnam’s export revenue reached US$150 billion, up 13.6% compared to the previous year.

The US is the largest importer of Vietnam. The nation’s export value to the US achieved US$28.5 billion, showing a year-on-year increase of 19.6%.

Korean ginseng festival opens in Ho Chi Minh City

A Korean ginseng festival is set to open at Crescent Mall, Vincom Centre in Ho Chi Minh City from January 31 to February 1.

The event, co-organised by Geumsan prefecture and Korean ginseng company, is a golden opportunity for Vietnamese customers to taste free food from Ginseng and benefit from incentives and attractive discounts up to 30%.

Visitors will also have a chance to enjoy a wide range of art performances, attend interesting games, and meet with Korean and Vietnamese singers at the festival.

In the framework of the event, a seminar on Korean Geumsan ginseng will be held at New World Hotel, district 1, on January 30.

Ride economic recovery to market success, SMEs urged

Small and medium–sized enterprises (SMEs) have been urged to improve their competitiveness amid rapid global integration, to grab opportunities as signs of economic recovery are already emerging in 2015.

Bui Thu Thuy, deputy director of the Agency for Enterprise Development under the planning and investment ministry, said at a conference held by the Viet Nam Chamber of Commerce and Industry yesterday that SMEs would continue to struggle this year, despite their large contribution of 50% of the GDP.

Thuy pointed out that SMEs were encountering problems of credit difficulties, small capital scales, outdated technologies and weak management capacity, despite their large contribution to the economy in the 2009-12 period.

She said that most domestic firms were of small scale, while pointing out that medium-sized enterprises in the private sector account for just 1.6%. In addition, SMEs failed to keep pace with technological innovations, while the government's support remained limited.

She added that enterprises should also improve technologies and boost technology transfer to enhance quality, productivity and competitiveness, coupled with the government's support to encourage SMEs to participate in the supply chain.

The restructuring of the financial market, simplification of procedures and provision of preferential loans were also important measures to improve businesses' access to capital, Thuy said.

Vo Tri Thanh, deputy director of the Central Institute of Economic Management, said at the conference that the contribution of SMEs to the GDP of Viet Nam was lower than in several countries, while the advantages of participating in the global value chain remained limited due to low-quality technology and management capacity.

Thanh added that inflation was expected to be low this year, but difficulties remained and competition would intensify, especially with the formation of the Asean Economic Community, which would bring opportunities. However, in the long term, it would be critical for businesses to enhance their renovation capacity and competitiveness to seek higher added value.

At the conference, Nguyen Thi Thu Trang, director of the VCCI's WTO Centre, said that 2015 would be a year of preparation for new policies and a new stage of integration, with the negotiations for the new-generation free trade agreements (FTAs) to be concluded and signed.

Enterprises must understand clearly the opportunities as well as challenges arising from these FTAs in order to outline their strategies, Trang said.

Ride economic recovery to market success, SMEs urged

Small and medium–sized enterprises (SMEs) have been urged to improve their competitiveness amid rapid global integration, to grab opportunities as signs of economic recovery are already emerging in 2015.

Bui Thu Thuy, Deputy Director of the Agency for Enterprise Development under the Ministry of Planning and Investment, said at a conference held by the Vietnam Chamber of Commerce and Industry in Hanoi on January 27 that SMEs will continue to struggle this year, despite their large contribution of 50 percent of the GDP.

Thuy pointed out that SMEs are encountering problems of credit difficulties, small capital scales, outdated technologies and weak management capacity, despite their large contribution to the economy in the 2009-12 period.

She said that most domestic firms were of small scale, while pointing out that medium-sized enterprises in the private sector account for just 1.6 percent. In addition, SMEs failed to keep pace with technological innovations, while the government's support remained limited.

She added that enterprises should also improve technologies and boost technology transfer to enhance quality, productivity and competitiveness, coupled with the government's support to encourage SMEs to participate in the supply chain.

The restructuring of the financial market, simplification of procedures and provision of preferential loans are also important measures to improve businesses' access to capital, Thuy said.

Vo Tri Thanh, Deputy Director of the Central Institute of Economic Management, said that SMEs’ contribution to GDP of Vietnam was lower than in several countries, while the advantages of participating in the global value chain remained limited due to low-quality technology and management capacity.

Thanh added that inflation is expected to be low this year, but difficulties remained and competition will intensify, especially with the formation of the ASEAN Economic Community, which will bring opportunities. However, in the long term, it will be critical for businesses to enhance their renovation capacity and competitiveness to seek higher added value.

At the conference, Nguyen Thi Thu Trang, Director of the VCCI's WTO Centre, said that 2015 will be a year of preparation for new policies and a new stage of integration, with the negotiations for the new-generation free trade agreements (FTAs) to be concluded and signed.

Enterprises must understand clearly the opportunities as well as challenges arising from these FTAs in order to outline their strategies, Trang said.-

Workshop updates information on ASEAN Economic Community

A workshop was held in Ho Chi Minh City on January 28 to update the press and business community on information pertaining to the ASEAN Economic Community (AEC) which is slated to be formed in late 2015.

The event aims to help participants, especially businesses, to understand better about the opportunities and challenges posed by the country’s integration process so that they can build effective strategies for economic integration in the coming time, said the head of the Ho Chi Minh City Office of the Party Central Committee’s Commission for Popularisation and Education, Dao Van Lung.

Vietnam will accelerate preparations, particularly those related to the legal framework and capacity to carry out international commitments, for economic integration, Deputy Chief of the Office of the National Committee for International Economic Cooperation Trinh Minh Anh said. He added that the business community and localities should actively join in the integration process.

Participants agreed on the need to promote communication work to enhance awareness of the AEC, proposing that central agencies coordinate with local authorities in this work.

A recent survey conducted by the Ministry of Planning and Investment revealed that 76 percent of domestic firms had no knowledge about the AEC, 94 percent did not understand the content of AEC-related negotiations, while 63 percent were unaware of the opportunities and challenges involved in the AEC participation.

When the economic community is formed, there will be a free flow of human resources among member countries, which might put Vietnam at risk of brain drain and boost competition from other labour markets that possess better skills and higher productivity.

The AEC is expected to be formed by the end of this year. ASEAN has 10 member countries, namely Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam, with an estimated combined GDP of 2.5 trillion USD.

Solutions for support industry development proposed

Solutions and recommendations for developing the support industry in Ho Chi Minh City have been put forward at a conference titled “Developing the support industry in association with small- and medium-sized enterprises in HCM City” held in the southern economic hub on January 27.

The conference was organised to provide a forum for experts and managers to discuss the role of small- and medium-sized enterprises (SMEs), including how to utilise them as driving forces of the support industry and increase their contributions to the city’s industry and the nation’s economy.

Enterprise representatives and city authorities agreed that the support industry’s weakness is largely attributed to the lack of existing policies suitable for each section of the industry.

At the forum, experts and enterprise representatives listed a slew of recommendations and solutions to breathe new life into the sluggish support industry.

Among their recommendations are new tax policies such as reducing, applying a 10 percent income tax for the first 15 years, and offering tax breaks for materials used in processing export products and products replacing import products.

Assisting enterprises with cleared land, offering tax exemptions for enterprises who build apartment buildings and workshops in the early years, and devising policies to update the knowledge and expertise of managers and skilled employees were also put forth at the forum.

Participants also pointed out that enterprises often face difficulties gaining access to support policies due to procedural barriers.

According to Tat Thanh Cang, Vice Chairman of Ho Chi Minh City’s People’s Committee, SMEs account for 95 percent of all enterprises and 42 percent of the work force in the city’s industrial sector.

SMEs, however, are producing only 21 percent of the total revenue, 6.8 percent of total profits and contributing just 9.8 percent of the City budget. The ratio of profits to the total asset is just 1.8 percent, compared with 6.9 percent for the entire industry.

Addressing the forum, Le Thanh Hai, Secretary of the Ho Chi Minh City Party Committee, said four key industrial sectors – electronics, mechanics, pharmaceutical chemistry, and food processing – account for 65 percent of the whole industry, reflecting a growth both in quality and scale.

The growth, however, is still below expectations partly due to the sluggish support industry, unable to take part in the production chain at home, Hai said.

According to Hai, in upcoming years, the city must examine and revise loan programmes for SMEs who are unable to provide adequate collateral but demonstrate feasible investment projects.

Besides streamlining administrative procedures to help facilitate enterprise access to preferential policies, breakthrough solutions are needed to address obstacles for around 118,000 SMEs, Hai added.

RoK firms wish to pour money into Tay Ninh IPs

A delegation of 12 garment-textile businesses from the Republic of Korea (RoK) on January 27 had a working session with authorities of southern Tay Ninh province to explore the investment climate at local industrial parks.

The businesses were briefed on investment opportunities, incentives and regulations at the Thanh Thanh Cong and Phuoc Dong-Boi Loi industrial parks in Trang Bang and Go Dau districts, respectively.

Located nearly 67 km from Saigon and Cat Lai ports and 44km from Tan Son Nhat International Airport , the 760ha Thanh Thanh Cong boasts transport advantages in both road and waterway. So far, it has attracted 13 foreign direct investment projects worth 118.78 million USD and eight domestic ones worth 650 billion VND (30.2 million USD).

It has also built a system supplying 37,000 cu.m of clean water and another treating 22,000 cu.m of sewage per day.

Meanwhile, the Phuoc Dong – Boi Loi park has so far drew a total of 17 investment projects worth 1.5 billion USD, including 15 run by foreign firms. A system being able to treat 5,000 cu.m of sewage per day has also been built here.

Speaking at the working session, Chief executive officer of the Kofoti garment-textile company Kim Nam Young revealed that 620 Korean businesses are investing in Vietnam with a total capital of over 13 billion USD.

In the coming time, RoK apparel enterprises will increase investment in the Southeast Asian country, which boasts abundant and skilled workforce, he said.

Vice Chairman of the provincial People’s Committee Huynh Van Quang welcomed RoK businesses to invest in Tay Ninh province, particularly in the garment-textile sector.-

Quang Binh accelerates thermal plant project

The authorities of central Quang Binh province and the management board of the Vung Ang-Quang Trach Power Project are implementing a range of measures to speed up the construction of the Quang Trach 1 thermal power plant to ensure it is operational by 2020.

The province will focus on compensation and site clearance to hand over the property to the project management board before the third quarter of 2015, while building electricity and transportation systems to facilitate the construction of the plant.

It also pledged to create favourable conditions for the investor to carry out the project in a timely manner.

Meanwhile, the project management board will work to complete legal procedures dictating the selection of a contractor and consultant group so that construction can commence in June 2016.

The 34 trillion VND (1.59 billion USD) Quang Trach 1 thermal power plant, invested by Vietnam National Oil and Gas Group, was launched in Vinh Son hamlet, Quang Dong commune, Quang Trach district in September 2011.

The 1,200 MW plant was scheduled to be completed within four years but its progress has been delayed due to unforeseen economic recession.

Dong Nai support industry earns 3.2 billion USD in exports

The annual export value of Southern Dong Nai province’s support industry reached 3.2 billion USD, according to the provincial Department of Industry and Trade.

Industrial parks in the province have attracted 422 Foreign-Direct-Investment (FDI) projects with a total capital of 6.9 billion USD to the support industry in various sectors including garments and textiles, footwear, electronics, auto and bike spare parts, and mechanics and equipment.

Support companies account for 23.5 percent of all enterprises and employ more than 200,000 employees—or 37 percent of those working in industrial parks.

The support industry continues to be the province’s priority for attracting FDI capital.

During the first 20 days of January, the province granted investment licences to two support industry projects worth one million USD.

So far, investment licences have been given to 1,473 projects with a combined capital of 26.19 billion USD.

 

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

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