AEC to promote both investment and competition

ASEAN investment inflows to Vietnam are expected to surge in the coming months, when many large projects are licensed and the ASEAN Economic Community is established.

After 20 year joining ASEAN, Vietnam has become an attractive destination for investors from the region. The country has so far lured over $54.6 billion from regional investors, with the majority coming from Singapore, Malaysia, and Thailand, which respectively rank 3rd, 8th, and 10th among the 103 countries and territories with investments in Vietnam. ASEAN investments have greatly contributed to fueling Vietnam’s economic development.

Currently, Singapore is the biggest investor among the ASEAN member nations in Vietnam, with total registered capital of $33.2 billion, followed by Malaysia ($10.9 billion), Thailand ($6.8 billion), and Brunei ($1.7 billion).

Industry insiders attributed Singapore’s ranking to huge investments from its leading groups, such as Sembcorp, Keppel Land, VinaCapital, Mapletree, and Banyan Tree. Singapore’s firms also contributed capital to Samsung’s billion dollar projects in Thai Nguyen, Bac Ninh, and Ho Chi Minh City.

Sembcorp has expanded its investment in Vietnam by partnering with Becamex Binh Duong to develop industrial parks, urban areas and service centres in Binh Duong, Bac Ninh, Haiphong, Quang Ngai, Hai Duong and Nghe An.

Meanwhile, Malaysia is acknowledged for its investments in the Berjaya Vietnam International University Township project worth $3.5 billion, as well as the $1.84 billion Hai Duong thermo-power project.

Notably, Vietnam has seen a wave of Thai investments in recent times, as many major and small- and medium-sized enterprises from Thailand have expanded operations in Vietnam. In particular, Thailand’s Siam Commercial Bank (SCB) has been allowed to establish its branch in Vietnam on the acquisition of VinaSiam Bank (VSB), a joint-venture between Vietnam Bank for Agriculture and Rural Development (Agribank) with 34 per cent, Thailand’s Siam Commercial Bank (SCB) with 33 per cent, and Charoen Pokphand Group Co. (33 per cent). Meanwhile, Thai giant Berli Jucker (BJC), owned by billionaire Aswin Techajaroenvikul, announced that it had held a controlling stake in Phu Thai Group since 2013, and bought stakes in Japan’s Family Mart in a joint venture with Phu Thai to operate 95 BJC Mart outlets.

The Vietnamese market also witnessed the advent of another Thai retailer - Central Group. The company bought one of the largest electronics shopping centre operators in Vietnam, Nguyen Kim Trading JSC, through its subsidiary and leading Thai electronics store operator Power Buy.

In 2013, Siam Cement Group (SCG) spent a huge  sum on acquiring Prime Group, a Vietnamese tile manufacturer. SCG also joined the development of the $4.5 billion Long Son refinery project in Ba Ria-Vung Tau province.

Another famed Thai firm is Amata, the investor of the Amata industrial park in Bien Hoa city, located in the southern province of Dong Nai. Amata also has plans to invest in projects in Quang Ninh and Binh Dinh provinces.

Recently, industry insiders are keeping  a close eye on PTT, Thailand’s largest oil and gas conglomerate, and its partner Saudi Aramco, who have been seeking a Vietnamese partner to take the next steps toward investing in the Victory refinery and petrochemical project, worth $22 billion in the central province of Binh Dinh. If the project is approved, Thailand’s total investment in Vietnam would increase significantly.

It is forecast that when the ASEAN Economic Community (AEC) is established at the end of 2015, FDI inflows into ASEAN nations will increase greatly, and Vietnam will benefit from the trend. However, Vietnam might have to face fierce competition with Thailand, Indonesia, Myanmar, Cambodia, and Laos in attracting foreign investors.

Abundant liquidity key driver in OMO development

During the second quarter of 2015, the State Bank of Vietnam (SBV) withdrew large amounts of funds by issuing bills. At the same time, banks had little demand for borrowing from the SBV, demonstrated by the limited value of reverse repo transactions. Ample banking liquidity, limited issuance in the primary bond market in line with large foreign capital inflows were likely the most important drivers.

A total of VND201 trillion ($9.24 billion) of SBV’s bills were issued in the second quarter, up 14.4 per cent compared to the previous quarter. Meanwhile, there was only VND39 trillion ($1.81 billion) in reverse repo transaction value, down 76 per cent compared to the first quarter. So while the SBV net withdrew money via Open Market Operations (OMO), the outstanding balance of reverse repo and bill issuance increased throughout the quarter.

The total transaction value of reverse repos and bills issuance via the OMO in the first half of 2015 reached VND580 trillion ($26.6 billion), up 5 per cent compared to the same period last year. Lending volume through reverse repos was VND202 trillion ($9.3 billion), accounting for 35 per cent of total volume. Meanwhile, the volume of SBV bills issued in the first six months was VND377 trillion ($17.3 billion) contributing 65 per cent of total volume.

Abundant liquidity in the banking system was the key driver for OMO development in the second quarter. In this regard, it was similar to the interbank market.

First, the banks’ Tier 1 and Tier 2 capital grew strongly. As of May-end, the capital of the banking system rose 8.0 per cent from the beginning of this year, much higher than the growth rate of 2.3 per cent for the same period of last year. Following the SBV’s request, banks did not pay high dividends and retained most of their profit in order to raise equity.

Second, demand for borrowings via OMO as well as the interbank market fell due to a lower issuing volume of government bonds. In the primary bond market, the State Treasury (ST) only issued more-than-five-year bonds. As most of the funds in banks are short-term, their demand for long-term assets was not significant. Additionally, the winning yields of government bonds did not meet investor’s satisfaction.

Third, Circular 36 allows increasing short-term capital for medium and long term loans. This circular also allows the risk ratios of loans for real estate and stock investments – which account for the majority of banks’ outstanding loans – to be reduced from 250 per cent stipulated under Circular 13 to 150 per cent, the lowest levels ever allowed. As a result, banks now can provide more credit based on the same amount of capital and the same capital structure. This narrowed the borrowing demand from the SBV as well as in the interbank market.

Fourth, the SBV and the government may have purchased a significant amount of foreign currency during the quarter, although we don’t have an accurate figure for this at present. Among them were the $1 billion dollar-denominated G-bond issued to the Vietcombank. Asides from this, in this quarter, foreign investors were net buyers in the stock market, totalling $228 million; and net buyers in the bond market, totalling VND1.38 trillion ($63.5 million).

By the end of the second quarter, bill yields increased slightly compared to last quarter for almost all tenors. In particular, four-week bill yields reached 3.9 per cent per annum, up 40 bps compared to the yield level by the end of March. Similarly, the eight-week and 13-week bill also rose 30 bps and 10 bps respectively to the 4 per cent per annum. In contrast, the yield of two-week bills dropped sharply from 5 per cent per annum at the first issuance to 3.52 per cent per annum by the end of the second quarter, down 148 bps. 26-week bill yields remained constant at 4.3 per cent per annum.

In the last two weeks of June, the ST resumed the offer of short-term bills of 13 weeks and 26 weeks. The SBV therefore stopped issuing the 13-week bills, and in turn, raised yields of eight-week bills from 3.7 per cent to 4 per cent per annum, just slightly lower than the winning yields 4.08 to 4.10 per cent of the ST 13-week bills.

Decree eases constraints

Following the relaxation of procedures for foreign investment under the new laws on Investment and Enterprises, the government has also relaxed the limits for foreign investment portfolios in a decree.

The decree also provides for the equitisation of state owned enterprises (SOEs), and this action is expected to attract more share acquisition in stock markets soon, as well as private equity. Previously, a foreign investor could purchase up to 49 per cent of the total shares in a public joint stock company (JSC) or a listed company. From September 1 2015, this general restriction will be removed under Decree 60/2015/ND-CP, dated June 26, 2015.

In the absence of this, new restrictions will be subject to World Trade Organization commitments or other specific domestic laws. If there is a certain restriction under domestic law that has yet to be specified, then the rule of thumb is 49 per cent. When there is no restriction under domestic law (for example, for production companies, or distribution companies), then there is no limit for the foreign shareholding ratio. This rule also applies to equitised SOEs, with the aim of attracting more foreign investment in the privatisation programme.

As for securities companies (or investment banking), those who are eligible to establish 100 per cent foreign owned securities companies are allowed to buy up to 100 per cent equity of local securities companies. Those who are not eligible can acquire up to 51 per cent total shares. Decree 60 also lifts all restrictions on foreign investors in regards to bond investments. With respect to share certificates or derivative products of JSCs’ stock, the restriction will be relaxed as mentioned above. For this purpose, open funds or securities funds that have foreign shareholding at more than 51per cent equity will be deemed foreign investors.

Decree 60 also addresses a myriad of other issues: the private placement of public companies, the share swap of public companies, public offering of shares in public companies for swapping shares in non-public companies, equity in limited liability companies, private placement filing at the State Securities Commission (SSC) for public companies, the public offering process, the use of an escrow account for public offering proceeds, public offering of investment certificates or shares abroad, redeeming shares, tendering offers, the sale of treasury shares, the listing of merged or amalgamated companies, upcom transaction registration and listing, real estate capital valuation, and contributions to real estate investment funds.

Opening the door to and creating more options for foreign portfolio investment, along with the deregulation of various procedures at SSC, are certainly attractive factors to foreign investors. However, it is unclear how other restrictions under such different ministries as Health, Education an Training, and Industry and Trade may impact the government’s intention to open the market. It should also be noted that Article 74.3 of the Law on Investment allows for the “non-compliant” restriction of business to be valid until July 1 2016, suggesting there could be more grounds for more clarification to come.

Seafood struggles in first half

Vietnam Customs has revealed that in the first six months seafood export turnover stood at $3 billion, down 16.3 per cent compared with the first half of 2014. In June alone exports were down 11.8 per cent year-on-year, to $563.8 million.

Of the top 15 largest markets in the world, only Mexico, ASEAN and the UK recorded growth in seafood imports, of around 11 per cent to 49 per cent. In contrast, the US, the EU, Canada and other countries were down by 16 per cent to 38 per cent.

In terms of products, crab and spidercrab saw slight growth in value. Shrimp, tuna, and tra fish fell sharply, in shrimp’s case by 30 per cent.

Although the domestic economy is growing at around 6.3 per cent the value of agricultural, forestry, and fishery has declined considerably compared to previous years.

In the remaining six months of the year the government has set a target for the agriculture sector to earn a profit of VND22 trillion ($1.01 billion) with the aim of achieving growth of 3.3 per cent for the year as a whole.

Piquing interest

Mr. Phan Thanh Hung, a 38-year-old sales and marketing manager in Hanoi, has just returned home after six months in hospital undergoing multiple surgeries on a broken leg he suffered in a motorcycle accident. “Thank God I wasn’t disabled for life,” he said, adding that his family was significantly out of pocket due to his “bad luck”. The accident made him change his mind about the risks that face him and his family and encouraged him to seek out information on life insurance products.

For a country ranked among the top in terms of traffic fatalities and injuries, with 20 people losing their lives and 70 becoming permanently disabled every day, according to National Traffic Safety Committee figures released in December 2014, the insurance penetration rate in Vietnam is rather modest. According to the Annual Report on Vietnam’s Insurance Market 2014 issued by the Ministry of Finance (MoF), only 10 per cent of its 90 million people are insured. “One of the greatest obstacles to the development of the insurance industry is public awareness,” Mr. Phung Dac Loc, Secretary General of the Association of Vietnamese Insurers (AVI), told VET.

Though first appearing in Vietnam in 1996, life insurance is still viewed as a new industry in the country. Many potential Vietnamese consumers continue to see insurance as an investment rather than a device to share the financial burden when misfortune strikes. They therefore prefer bank deposits or investing in gold or real estate to earn a higher rate of return rather than taking out an insurance policy.

With low insurance penetration and a largely untapped insurance segment, Vietnam holds significant promise for insurers. Foreign life insurers are attracted to the country because of its rising population and growing middle class. According to figures from the Insurance Supervisory Authority (ISA) at MoF, life insurance premium revenue grew by 26.81 per cent in 2013 and an estimated 17.3 per cent in 2014. The market share of life insurers in terms of premium revenue, as at April, was led by Prudential (with 30.98 per cent) and Bao Viet Life (30.97 per cent), followed by Manulife (12 per cent), AIA (9.9 per cent), Dai-ichi (8.9 per cent), ACE (4.3 per cent), Hanwha Life (1.9 per cent), Generali (1.8 per cent), and Prévoir (1.4 per cent).

Recent figures from the AVI show that life insurance companies are competing strongly in urban areas, where 30 per cent of the population now resides. It hasn’t been easy, however, to convince people to take out insurance policies. Companies have had some success with fruit growers and aquaculture farmers but have faced challenges in signing on city-dwellers. Life insurers, as a result, have focused on adopting strategies and products that meet the needs of urban Vietnamese customers.

AIA Life, one of the Top 5 in life insurance, introduced a new customer service model in March in the heart of Ho Chi Minh City that targets busy city-dwellers.The insurer plans to bring similar one-stop service centers to Hanoi and other major cities in Vietnam.

ACE Life, meanwhile, has strengthened its presence in different localities around the country after opening a new office in Buon Ma Thuot city in the central highlands province of Dak Lak in May, following on from new offices in Lam Dong and Quang Ngai provinces a month ago. “The expansion to Buon Ma Thuot is an important part of ACE Life’s sustainable growth strategy, particularly in the central highlands,” said Mr. Lam Hai Tuan, Chairman and Country President of ACE Life in Vietnam.

The preference for purchasing investment-linked insurance has continued to increase since insurers received MoF approval to provide the products in 2007. “Fubon Life has seen a significant increase in market demand for investment-linked insurance in recent times,” Mr. Anton Chang, CEO of Fubon Life Vietnam, told VET. “We will launch these products in the third quarter of this year, to bring diverse and better choices to our clients.”

The life insurance market also witnessed a wave of new products last year based on Vietnam’s specific cultural characteristics, such as investments for the future of children and financial planning for retirement. “VietinAviva plans to conduct research and assess the Vietnamese market’s demand to develop pension insurance, focusing on major cities such as Hanoi and Ho Chi Minh City,” Mr. Mark Wilson, CEO of Aviva Corporation, told a meeting with leaders of ISA in April. VietinAviva life insurance, a joint venture between VietinBank and the Aviva Corporation that began in 2011, is also implementing a strategy that involves selling insurance through a multitude of channels, with a special focus on selling insurance via banks (bancassurance) by taking advantage of VietinBank’s extensive network throughout Vietnam.

The ambitious plans of insurance companies, however, may fail to bear fruit because of shortcomings in human resources. Many new graduates still consider working as an insurance agent to be a temporary job where they can earn income while looking for a “real” job. When other opportunities arise, agents often leave their company, leaving it with the burden and expense of training fresh agents. The increasing numbers of insurance companies starting out in Vietnam over recent years and inadequacies in insurance training have created a serious shortage of skilled staff. “This has led to some unfair competition among insurance companies in attracting experienced staff and agents,” Mr. Loc said.

Rubber Exports decrease: General Customs

Ph.d Dao Ngoc Tien at Trade Foreign University in HCMC said at Rubber sector’s meeting organized on July 24 in HCMC that rubber exports in the country has fallen recently.

Rubber export value in 2015 is estimated to reach US$ 1.7billion, a decrease 4 percent compared to last year. The major reason for the lateness is the unstable market causing unfavourable conditions for rubber enterprises, said Mr Tien .

According to the General Department of Customs, rubber exports in the first 5 months of this year reached 330,000 tons, accounting US$ 476million, an increase 30.04 percent in volume but a decrease 2.71 percent in value compared to the same period last year.

The export value decreases due to rubber export prices cost US$ 1,441 per ton, a decrease 25.19 percent compared to last year.

Snail-pace progress puts equitisation target in doubt

In its update on Vietnam’s recent economic developments, the World Bank commented that reforms of state-owned enterprises (SOEs) were being conducted slowly. “Progress slowed somewhat during 2015 and only 29 SOEs were equitised in the first quarter, suggesting that the annual target of 298 SOEs may not be feasible this year.”

At a July meeting on SOE equitisation, Deputy Prime Minister Vu Van Ninh also noted, “if ministries, localities and enterprises do not make greater efforts, the government’s plan of SOE equitisation for 2015, and the whole period of 2011-2015, will fail.”

Two weeks ago, the National Steering Committee for Enterprise Renovation and Development also said Vietnam’s SOE equitisation was progressing very slowly. This year’s first half saw 61 SOEs equitised, meaning 38 SOEs must be completely equitised each month for the remaining six months of the year.

Experts have pinpointed a series of impediments to equitisation.

“In addition to complex procedural requirements, implementation of equitisation is also hampered by subdued demand for some of the assets, especially for non-controlling shares in SOEs”, said the World Bank’s senior economist Sebartian Eckardt.

“Implementing the legal and regulatory framework for SOE management and corporate governance and increasing the ownership cap for the private sector should remain key priorities,” he suggested.

Japan Business Association in Vietnam chairman Shimon Tokuyama said many Japanese investors wanted to become strategic investors of Vietnamese SOEs.

“Whether strategic investors, even minority shareholders at the start, holding over 50% of shares may run a business or not is a vital point when one considers his investment options,” he said.

“We hope the government seriously considers relaxing the restrictions on the ratio of equity financing in SOEs, and listed and publicly traded companies,” he stressed.

Echoing this view, European Chamber of Commerce in Vietnam’s vice chairman Tomaso Andreatta said the number of shares offered to private investors was often too small (only 5%-20%) to effectively attract private strategic investment.

“Foreign investors are usually only interested in buying SOE shares of they can obtain decision-making power in the enterprise. Instead, the state tends to retain the power to appoint all or a majority of the board members and SOEs continue to enjoy preferential treatment when compared to private enterprises. Furthermore, equitisation often means shares are bought by employees of the SOE.

“For these reasons, interest from the foreign private sector to invest in SOEs has been rather low,” he said.

Ninh required ministries, localities and state-owned economic groups and corporations complete the approval of equitisation plans for 44 SOEs and announce the value of 127 SOEs in the year’s third quarter.

In the fourth quarter, these 127 SOEs’ equitisation plans must be approved.

SOEs currently account for about one-third of all business assets, one quarter of output, and one eighth of employment in the business sector.

The Vietnam Railway Corporation (VNR) will cooperate with Vingroup in initiating steps to invest in the upgrade of railway stations.

This follows the Transport Ministry's call for investment in the railway sector from various economic sectors.

In a statement sent to Vingroup in response to the group's proposal to invest in upgrading and using Hanoi, Da Nang and Saigon stations, the VNR said it wanted Vingroup to become a strategic partner in using the railway infrastructure managed by it.

VNR said it would help in effective utilisation of the railway infrastructure, while reducing the pressure on the state budget.

Earlier, Vingroup sent a document to VNR in late June, proposing cooperation in upgrading rail infrastructure.

Vingroup has informed the Transport Ministry that it would submit a cooperation plan with VNR on upgrading Saigon and Hanoi stations before July 30.

The two sides have discussed measures to ensure the stations operate effectively and to improve financial efficiency.

Last week, Vingroup sent a letter to the Transport Ministry, expressing its interest in investing in a new railway station in the central city of Da Nang, as the authorities plan to move the existing station out of the city.

The proposed investments in the railways are in response to the government's policies allowing various economic sectors to invest in the sector to modernise it, and to ease the burden on public funds.

VNR said it spent 7 trillion VND (352.58 million USD) in the 2011-15 period to upgrade the network and introduce new technologies to manage the operations.

By 2020, an estimated 2 trillion (93.02 million USD) more will be needed for continued implementation of these plans, and 60 trillion VND (2.79 billion USD) for 12 projects to modernise the main routes.-

Vietnam, UK enjoy trade growth

Vietnam and the UK posted 1.32 billion GBP worth of trade revenue within the first five months of 2015, climbing seven percent from 2014 according to the Vietnam Commercial Office at the Vietnamese Embassy in the UK.

During the period, Vietnam shipped commodities exceeding 1.2 billion GBP to the UK. Major export earners included mobile phones , footwear, garment-textiles, furnishings, machines, plastics, coffee beans, fruit and children’s toys.

The Vietnam-UK bilateral trade revenue has increased three-fold in the last ten years from more than 800 GBP in 2005 to almost 3 billion GBP in 2014, shared Nguyen Thi Hong Thuy, Commercial Counsellor at the embassy while talking with a Vietnam News Agency correspondent.

However, apart from apparel and footwear, British consumers are rarely aware of other made-in-Vietnam products, Thuy noted, recommending that domestic enterprises carry out more regular market research in the European country.

She pointed out recent instances of Vietnamese businesses not fulfilling contracts with their British partners in terms of quantity, quality or schedule.

The Commercial Counsellor said local agricultural produce constitutes a fraction of the UK market. The UK annually spends an average of over 34 billion GBP on livestock and agricultural products, only 230 million GBP of which is channelled into Vietnam.

The low figure is due largely to the low activity of Vietnamese enterprises in the market than in the US and the EU and as such, greater efforts from those businesses to stimulate trade could help, Thuy said.

She continued to underscore the positive contribution of the Vietnam-EU free trade agreement slated to be signed in 2015 to trade between Vietnam and the UK through the elimination of several tariff barriers.

UK interest in the Vietnamese market has been shown among local business communities and officials; UK Prime Minister David Cameron is scheduled to visit Vietnam in July. In September, the UK’s seventh richest billionaire Richard Branson will also make a trip to the Southeast Asian country.

E-Regulations likely to improve business

The launch of an e-Regulations system is viewed by experts and users as a boost to Vietnam's business and investment environment.

The United Nations Conference on Trade and Development (UNCTAD) conceived e-Regulations as a tool to help governments make rules and procedures fully transparent and facilitate business, trade, and investment.

The Ministry of Planning and Investment's Foreign Investment Agency (FIA) launched the third phase of the e-Regulations system in June, and it is available at vietnam.eRegulations.org in English, Japanese and Chinese with step-by-step guidelines on investment procedures to help foreign investors in Vietnam.

There is a summary of each procedure, with points such as institutions involved, expected results, requirements, average duration, and legal justification. At each step investors can see the contact details of bureaucrats in charge, forms and requirements, costs, duration, and legal provisions.

FIA Director Do Nhat Hoang said the system would ease difficulties for investors, enabling them to navigate Vietnam's investment procedures and processes and comfortably do business in the country.

Phan Khac Nghiem, a lawyer with Minh Long Law Office, told online newspaper Dau tu that the new system would make it convenient for investors, particularly foreign investors, to quickly search for information they need.

The e-Regulations does not only provide general information related to the establishment of businesses and amending investment certificates but also give specific information and a step-by-step description of investment processes and procedures in each participating locality, he said.

More specifically, investors can get information on rules and procedures through detailed, practical and up-to-date descriptions of the steps to follow at each industrial zone, he said.

Luu Quang Huy, who used to be Vietnam's commercial counsellor in Japan, told the newspaper that the system, available in various languages, would help investors from different countries find information.

Japanese investors, particularly small- and medium-sized businesses, prefer to use their own language because many of them are not proficient in English, he said.

Other experts praised the system for providing detailed information about each official in charge of investment procedures, saying pressure to improve the business and investment environment would now not only be on the Government but also on officials.

This pressure is expected to help change the behaviours of officials, they said.

Frank Gozel, a senior UNCTAD expert and a consultant for creating the e-Regulations, told the newspaper that the system would provide momentum for the seven participating localities in improving their business environment.

Investors can use the system to compare and choose the most favourable investment destination, he pointed out.

Claude Jentgen, Charge d'Affaires at the Luxembourg Embassy in Hanoi, was quoted by the newspaper as saying that his Government's target in supporting the programme was to speed up the process of making Vietnam's business environment more open and transparent.

When investors know what should be done, who they should work with and where, it would be easier for them to make decisions related to their investment and business plans, he said.

Moreover, when the investment process becomes more transparent and open, it would help to prevent corruption and tackle bottlenecks in administrative procedures, he added.

Ngo Hai Phan, Head of the Ministry of Justice's Department of Administrative Procedures Examination, said localities are willing to provide information for the system as well as receive feedbacks from investors.

This means local administrations really want to fix problems to improve their business environment, he said, adding that investors would surely benefit from this.

Agriculture sector’s 7-month exports plunge

Export turnover earned by the agro-forestry-fishery sector was estimated at 16.93 billion USD in the first seven months of 2015, an annual drop of 3.6 percent, according to the Ministry of Agriculture and Rural Development.

Earnings from the export of coffee saw the biggest drop (down 33.7 percent), followed by aquatic products (down 17 percent), rubber (down 9.2 percent) and rice (8.3 percent).

In the reviewed period, a total of 792,000 tonnes of coffee products were exported thus, gaining 1.63 billion USD but decreasing 33.9 percent in quantity and 33.7 percent in value compared to the same period last year. Germany and the US have maintained their roles as the biggest importers of Vietnamese coffee, accounting for 15.31 percent and 11.53 percent of its market share.

The rubber industry sold 519,000 tonnes of commodities overseas and earned 760 million USD, representing an annual increase of 13.9 percent in quantity but a drop of 33.7 percent in value. Rubber prices were reported to climb only in China and India while declining in eight other major markets.

Exported rice has undergone a similar downward trend with the quantity and value reducing annually by 3.1 percent and 8.3, respectively. China is still the largest market for Vietnamese rice exports but has shown signs of falling demand. Meanwhile, more than doubling its Vietnamese rice imports has brought Malaysia to third place.

On the contrary, cashew nut and woodwork products have enjoyed a seven-month value growth of 26.6 percent and 8.3 percent, respectively. Pepper exports also followed the positive trend.

Lam Dong holds trans-border economic cooperation conference

The fourth annual conference on Vietnam-Cambodia- Laos economic cooperation was held in Da Lat city in the Central Highlands province of Lam Dong on July 27.

Co-organised by the Vietnam Academy of Social Sciences (VASS), the Lao National Social Sciences Institutes and the Royal Academy of Cambodia , the event aims to discuss impacts of the ASEAN Economic Community (AEC), border issues and transnational natural resources on the three countries.

According to President of the VASS Nguyen Xuan Thang, the countries should strengthen research studies and dialogues to determine key collaboration and policy cooperative mechanisms which effectively boost trans-border cooperation, resolve issues relating to competitiveness competency and poverty reduction and domestic socio-economic inequality.

Chaleune Yiapaoheu, President of the Laos institute said in order to successfully implement trans-border economic relations, specific methods and regulations should be introduced.

During the conference, experts expressed concern over opportunities and challenges in each country as well as cooperation between the three countries when the AEC is officially formed, particularly on ASEAN’s goods circulation commitment

On the other hand, investment activities among the three countries will face competition from other advanced ASEAN members with the free movement of capital and investment flows.

A report by Chheng Vannarith and Som Somuny from the Cambodian academy stressed the significance of ensuring effective and sustainable trans-border natural resource exploitation.

Additionally, Sok Touch, Diector of the Cambodian academy emphasised the significance of building good neighbourliness, ensuring security and growth and promoting economic cooperation between Vietnam, Cambodia and Laos.-

Bac Kan works to optimise NGO assistance

The northern mountainous province of Bac Kan has disbursed 4.9 million USD of the 5.7 million USD in assistance from non-governmental organisations (NGO) in the past five years, noted a provincial leader at a recent meeting with a working group from the Committee for NGO Affairs.

According to Do Thi Minh Hoa, Vice Chairwoman of the provincial People’s Committee, NGO aid in 34 projects and programmes has significantly contributed to solving urgent matters of the locality, benefiting locals and helping fulfil the province’s socio-economic growth targets.

A number of infrastructure projects in the locality have helped to improve local living conditions, she said, adding that the diversity of projects has raised the level of activity and responsibility of the locality and its community.

However, Hoa pointed out that the province is facing a number of problems during the disbursement, implementation and management of the projects and programmes, including the lack of sufficient relevant regulations as well as limited capacity in corresponding capital and human resources.

Moving forward, she said the province will focus on calling for support in healthcare, schools, sanitation, disaster relief and environmental protection.

The province will continue fostering relations with NGOs operating in the locality while creating a favourable environment to attract more investment, said Hoa, adding that Bac Kan also plans to open training courses for local officials on NGO assistance-related work.

Bac Giang earns billions of dong from lychee

The northern province of Bac Giang has earned around 2.7 trillion VND (about 123.8 million USD) from lychees so far this year.

Domestic consumption accounted for about 55 percent of the 190,000 tonnes harvested, which was the first time local consumption surpassed exports, said vice chairman of the provincial People's Committee, Duong Van Thai.

"This shows the domestic market still has a lot of potential," he added.

This year was also the first time Luc Ngan lychees have been exported to the US, Japan, Australia and some ASEAN countries. Luc Ngan is a district in Bac Giang well known for its delicious lychees.

Thai said that fresh lychees have already sold out, leaving only dried and processed lychees available until the new season next year.

Vietnam ranked top among world's biggest rising markets

Vietnam's VN Index topped a list of the world markets that rose the most between June 24 and July 24.

The VN index was followed by other international markets such as Denmark and the Czech Republic, according to the World Market Index (IndexQ).

The VN Index on the Ho Chi Minh Stock Exchange (HOSE) gained 7% during that period to end at 631.26 points by the end of last week.

IndexQ also reported that the VN Index rose the most in the last three months, with growth of 11.58% – more than the Chinese and Mongolian markets.

Since the beginning of the year, the VN Index has grown by 15.7%, which doubled growth of 8.1% last year and marked the third consecutive year of growth for Vietnamese securities markets.

This high growth came after the Government issued Decree 60 on June 26 to increase foreign ownership in local companies, which then sharply raised the foreign purchasing value on the stock market.

During the 20 trading sessions that ended last week, foreign investors were net buyers in 17 sessions on both local bourses – the Ho Chi Minh Stock Exchange and Hanoi Stock Exchange.

They totaled VND2 trillion (US$92.04 million) in net buy value from June 26 to July 24, including the highest value of VND457.2 billion (US$20.95 million) on June 26 – the first trading session after the decree was issued.

On average, foreign investors recorded a daily net buy value of VND100.4 billion (US$4.6 million) during this period, 2.5 times the value recorded in the first six months.

Last week, HOSE marked its fifteenth year of operation, during which increasing foreign investment has helped improve the status of Viet Nam's securities market, represented by the VN Index.

By the end of June, there were 303 companies on HOSE, with a total market capitalisation of more than VND1,100 trillion (US$500.5 billion), 87 member securities companies and 1.5 million investors.

Last year daily transactions performed through HOSE were valued at more than VND2.1 trillion (US$96.3 million), representing 77%, or the combined figure of exchanges in Ho Chi Minh City and Hanoi.

Vietnam strives to improve its trade statistics for ASEAN

Vietnam will strive to become one of the top five nations in international trade statistics of the Association of Southeast Asian Nations (ASEAN) by 2017.

This is part of a plan for Vietnam's integration into the ASEAN Statistics system in the 2016-20 period, as approved by the Prime Minister.

According to the plan's general targets towards 2020, Vietnam's statistics system will integrate comprehensively with the ASEAN system.

Vietnam's statistics system will also meet the basic requirements of the regional statistics system and will become one of the developed statistics systems in ASEAN.

To achieve these targets, Vietnam will establish a mechanism to provide and share information among domestic statistics agencies and organisations by 2016. Vietnam's General Statistics Office (GSO), under the planning and investment ministry, will provide Vietnam's statistical data to the ASEAN statistics system.

By 2020, Vietnam Statistics will meet 90% of the demand for figures by the ASEAN statistics system and the activities and figures of the ASEAN system will become popular in Vietnam, the chinhphu.vn website said.

The plan said Vietnam has to complete the legal framework, develop workforce and the quality of staff in the statistics system, set up statistics organisations and promote application of information technology in statistical activities.

Meanwhile, the main functions of the ASEAN Statistics system include the development of regional indicators, data frameworks and systems for monitoring the ASEAN community's goals and initiatives, according to asean.org.

The functions also include compilation, consolidation, dissemination and communication of statistical information on the ASEAN region and its member countries.

To carry out these functions, ASEAN Statistics will mobilise national statistical systems and institutions in its member states and assist in building their relevant statistical capacities.

It will also monitor and evaluate the implementation of programmes and activities on ASEAN statistical co-operation.

GSO Deputy Director Nguyen Van Lieu said measures, staff and information technology (IT) were the three key factors of a national statistics agency.

IT will be applied for many statistical activities such as collection, processing, analysis and forecast. The technology has been used in being public and keeping in stores for statistical information under a modern statistics system, he said.

The system needs a general strategy for developing IT, such as regulations on the management and operation of the system, IT infrastructure, database and a skilled IT workforce.

Over the past few years, Vietnam's statistics sector has promoted the application of IT in its activities, such as a project on the modernisation of the statistics office and the development of a wide-area network (WAN), connecting the GSO with its offices in 63 cities and provinces.

The statistics of Vietnam in all sectors, such as industry, agriculture, trade and prices, as well as population, social affairs and the environment, have been processed with the software, he said.

However, Vietnam did not have a national statistics database that is synchronised and unified, because the management of data and information was done spontaneously in state offices, he said.

Generali Vietnam expands operations in Vietnam

The Generali Vietnam Life Insurance (GVL) has officially inaugurated its modern customer service centre and insurance consulting office in the northern city of Hai Phong.

According to GVL representatives, Hai Phong is an important port city and a centre for economics, culture, health, education, science, trade and technology in the northern coastal area.

The opening of the office in Hai Phong will provide customers with convenient and professional services and diverse products of Generali Vietnam.

So far, the company has located consulting offices and customer service centres in major cities including Ho Chi Minh City, Hanoi, Dong Nai, Hai Duong, Ba Ria Vung Tau, Can Tho, Vinh Phuc, Quang Ninh and Hai Phong and has a customer base of more than 75,000.

Developers race to spruik properties as Vietnam opens door to foreign buyers

With foreign ownership of houses and apartments now allowed in Vietnam, international customers and brokers have begun frequenting real estate showrooms in Ho Chi Minh City, while realty developers are boosting promotional campaigns to attract the new category of buyers.

Foreign property brokers currently join their Vietnamese counterparts in examining apartment projects which are under development or on sale in the southern metropolis, as foreigners are now allowed to buy houses and apartments in the country, following a new rule which took effect on July 1.

While Salvatore Passari, an Australian broker, visited Vietnam to observe the realty market only a few times last year, he is coming more frequently this year, since foreign ownership has been approved.

Passari is slated to bring around ten Australian customers to Ho Chi Minh City to choose and buy apartments, he told Tuoi Tre (Youth) newspaper on Saturday, while attending the inauguration of the Landmark 81 project in Binh Thanh District.

Another broker from Australia, Mark Builksol, has also attended many ceremonies showcasing new realty projects in Ho Chi Minh City recently.

Builksol said around 30 of his customers are eying apartment ownership in Vietnam.

The Aussie is confident that many foreigners will buy houses and apartments in the Southeast Asian country, both for living or reselling, as prices are reasonable and the realty market is growing.

Choi Seok Hwan, general director of HanViet Invest Co., said many people from the Republic of Korea (RoK) also have plans to buy houses and apartments in Vietnam, at a time when the housing market in their home country is stagnant.

In the meantime, Vietnamese realty developers are offering various programs to lure foreign buyers.

Tuyet Hang, a salesperson at a realty exchange in District 2, said her company will grant a round trip ticket to travel to Ho Chi Minh City for any foreign customer who places a deposit for a project she is selling.

The company also offers many other preferential treatments, including allowing buyers to get a full refund if they want to return their apartment within one month of purchase, to appeal to foreign homebuyers.

Patrick Ferneini, a Lebanese customer, examined the project four times before deciding to place a deposit for a 98.75 square meter, three-bedroom apartment on July 24, apparently attracted by such incentives.

According to the new rule, foreign ownership is valid for 50 years, and can be extended by the same term only once.

A foreign individual must have a valid passport with an immigration stamp to be eligible to buy a house or an apartment in Vietnam, whereas an organization must have an investment license or a permit for their operations in the country.

The documents must be valid at the time a home purchase is conducted.

Nguyen Trong Ninh, deputy head of the department for housing and realty market management under the Ministry of Construction, said foreigners only need a valid visa for immigration to buy houses or apartments in Vietnam.

“Even a visa with only one day of allowed stay is eligible for house and apartment purchases,” Ninh told a meeting on July 18.

But many foreign homebuyers say there are still many issues they find unclear.

Builksol, the Australian broker, and Nguyen Nhat Hung, the legislative consultant for a realty project, both said many of their customers are in the dark about what kind of visas they must have to be eligible for foreign ownership.

“For instance, is a tourist visa accepted?” Hung asked.

While it is easy for foreign customers to place a deposit for a project, preparing and finalizing the purchase contracts is more complicated.

Ardis Gaetano, an Italian national, said a project developer told him that they could only prepare the apartment leasing contract for him, as they do not know how to create a trading contract due to the lack of legal guidance.

“We have to wait for instructions from a relevant decree and circular regarding the new law on foreign ownership,” Le Thi Thuy Nga, a salesperson at the Estella Heights project in District 2, explained.

Vietnam’s chicken imports surge, prices tumble

Imports of frozen bone-in pork and chicken parts have jumped in the early months of 2015 and are expected to grow by leaps and bounds in coming years, according to the Ministry of Agriculture and Rural Development (MARD).

Up to 2,432 MT of chicken and 68,100 MT of pork cutlets have entered Vietnam in the six month period leading up to July, a year-on-year respective spike of 47.0% and 54.5% in imports, official statistics of the Livestock Department attached to MARD show.

Overall meat shipments saw their strongest upswing after the ministry in mid-May issued certificates to 106 companies permitting them to import a variety of red and white meats including beef, pork and poultry, a MARD spokesperson announced.

The Vietnam Trade Promotion Agency (Vietrade) in turn reported that EU companies have set their sights on the Vietnam market with about 100 meat exporters from the EU having been recently issued quarantine certificates by veterinary authorities.

A Vietrade official said over the past three years, the volume of frozen pork imported from the EU has escalated seven and a half fold to 6,100 MT, while beef has leapt six fold to 1,000 MT.

The Vietnam Economic Times recently quoted a Vietrade official as saying imports from the EU market are expected to swell even further following the signing of a free trade agreement between Vietnam and the EU later this year.

The trade agreement with the EU in the offing provides for a concurrent lapse in import duties, setting the stage for further boosts to meat imports driven by lower costs to the nation’s importers.

Doan Xuan Truc, vice chairman of the Vietnam Poultry Association said the rise of pork and chicken imports – particularly over the past month – has put tremendous downward pressure on prices to the detriment of the country’s farmers.

The price of imported frozen chicken wings and legs have been hovering around VND21,000, which is approximately equal to one US dollar per kilogram and half the cost of comparable parts produced by Vietnamese farmers.

However, Truc cautioned that the quality of some imported chicken is highly suspect and often at the packaging expiration date due to the lengthy transit time it takes to ship meat from foreign markets and manoeuvre through administrative hurdles.

It can take up to a year to get from the slaughterhouse in a foreign country and to the supermarket shelves in Vietnam— and one always has to be cognizant of the risk of repackaging to disguise the true expiration date, Truc underscored.

Truc added that the price of foreign meat and poultry is oftentimes less expensive than its domestic counterpart because many cuts that are considered by-products overseas are considered specialties in Vietnam.

During a recent conference, MARD Minister Cao Duc Phat expressed his concern about trade liberalization between Vietnam and foreign countries specifically as it relates to the importation of beef, pork and poultry.

Phat suggested the most important thing for the country’s smallholders and small family farms to achieve prosperity is to push quality up, costs down and form cooperatives or producer associations to provide the link to the global supply chain.

The pursuit of export-led growth strategies in Vietnam has yet to bring them into the global value chains and until that happen small farmers are going to face substantial difficulties and hardship.

Phat also suggested that MARD should consider putting technical barriers in place to control the volume and quality of meat imports to make sure the health of consumers is adequately protected.

HCM City sees sound economic data for past year

HCM City's exports, retail sales, and revenue from services were all higher in July compared to a year ago and prices were well under control, the city People's Committee heard at a meeting yesterday.

Retail sales and services turnover were worth VND56.3 trillion (nearly US$2.6 billion) during the month and took the year's total to VND379.8 trillion (over $17.4 billion), 10.9 per cent up year-on-year.

Without crude oil, July's exports were worth $2.45 billion, a year-on-year increase of 1.5 per cent, and for the first seven months, $15.3 billion, up 9.4 per cent. But with crude oil, exports fell 4.6 per cent to $17.6 billion.

Thai Van Re, director of the city Department of Planning and Investment, blamed the decline in exports to the fall in oil prices.

Oil prices went down by 47.4 per cent on average, Re said.

Industrial production rose consistently, especially processing and manufacturing.

As of July 20 the city had issued licenses to 17,191 new businesses with total registered capital of VND113.4 trillion ($5.2 billion) this year, up by 27.7 per cent in number terms and 46.4 per cent in capital.

The city also licensed foreign investments worth $2.5 billion, up 2.3 times from 2014.

Tran Anh Tuan, head of the HCM City Institute for Economic Research and Development, said the increases in retail sales, investments and exports in July indicate that the economic growth is stable.

There is impetus for continued growth in the remaining part of the year, he said.

Addressing the meeting, People's Committee Chairman Le Hoang Quan said the city would make efforts to keep inflation down, sustain the economic recovery and growth, and promote exports and bank lending.

He called on relevant agencies to better control prices of consumer goods, improve market management and strengthen the campaigns to fight fake goods and smuggling.

ASEAN investments help fuel economic development

Twenty years after joining the Association of Southeast Asian Nations, Vietnam has become an attractive destination for investors from the region, the Vietnam Investment Review reported, adding that ASEAN investments have greatly contributed to fueling the country’s economic development.

According to the newspaper, the country has so far lured over 54.6 billion USD from regional investors, with the majority coming from Singapore, Malaysia, and Thailand, which respectively rank 3rd, 8th, and 10th among the 103 countries and territories with investments in Vietnam.

Currently, Singapore is the largest investor in Vietnam amongst ASEAN member nations, with a total registered capital of 33.2 billion USD, followed by Malaysia (10.9 billion USD), Thailand (6.8 billion USD), and Brunei (1.7 billion USD).

Industry insiders attributed Singapore’s ranking to huge investments from its leading groups, such as Sembcorp, Keppel Land, VinaCapital, Mapletree, and Banyan Tree. Singapore’s firms also contributed capital to Samsung’s billion dollar projects in Thai Nguyen, Bac Ninh, and Ho Chi Minh City.

Sembcorp has expanded its investment in Vietnam by partnering with Becamex Binh Duong to develop industrial parks, urban areas and service centres in Binh Duong, Bac Ninh, Hai Phong, Quang Ngai, Hai Duong and Nghe An.

Meanwhile, Malaysia is acknowledged for its investments in the Berjaya Vietnam International University Township project worth 3.5 billion USD, as well as the 1.84 billion USD Hai Duong thermo-power project.

Notably, Vietnam has seen a wave of Thai investments in recent times, as many major and small- and medium-sized enterprises from Thailand have expanded operations in Vietnam. In particular, Thailand’s Siam Commercial Bank (SCB) has been allowed to establish its branch in Vietnam on the acquisition of VinaSiam Bank (VSB), a joint-venture between Vietnam Bank for Agriculture and Rural Development (Agribank), Thailand’s Siam Commercial Bank (SCB) and Charoen Pokphand Group.

In addition, Thai giant Berli Jucker (BJC), owned by billionaire Aswin Techajaroenvikul, announced that it had held a controlling stake in Phu Thai Group since 2013, and bought stakes in Japan’s Family Mart in a joint venture with Phu Thai to operate 95 BJC Mart outlets.

The Vietnamese market also witnessed the advent of another Thai retailer - Central Group. The company bought one of the largest electronics shopping centre operators in Vietnam, Nguyen Kim Trading JSC, through its subsidiary and leading Thai electronics store operator Power Buy.

In 2013, Siam Cement Group (SCG) spent a huge sum on acquiring Prime Group, a Vietnamese tile manufacturer. SCG also joined the development of the 4.5 billion USD Long Son refinery project in Ba Ria-Vung Tau province.

Another famed Thai firm is Amata, the investor of the Amata industrial park in Bien Hoa city, located in the southern province of Dong Nai. Amata also has plans to invest in projects in Quang Ninh and Binh Dinh provinces.

Recently, industry insiders are keeping a close eye on PTT, Thailand’s largest oil and gas conglomerate, and its partner Saudi Aramco, who have been seeking a Vietnamese partner to take the next steps toward investing in the Victory refinery and petrochemical project, worth 22 billion USD in the central province of Binh Dinh. If the project is approved, Thailand’s total investment in Vietnam would increase significantly.

It is forecast that when the ASEAN Economic Community (AEC) is established at the end of 2015, FDI inflows into ASEAN nations will increase greatly, and Vietnam will benefit from the trend, the newspaper said. However, Vietnam might have to face fierce competition with Thailand, Indonesia, Myanmar, Cambodia, and Laos in attracting foreign investors.

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