VN economy improving: CBRE

Viet Nam's GDP grew 5.62 per cent in the first nine months of 2014, along with accelerating foreign investment that increased exports and manufacturing, according to a report released by CBRE Viet Nam.

By the end of August, as reported by the State Bank of Viet Nam, credit in the real estate market had expanded by 9.85 per cent compared to the beginning of the year, higher than the credit growth for the entire economy (5.82 per cent) and other sectors.

However, credit growth projected for the first eight months was only 4.5 per cent year-on-year, half of the target for 2014 and despite government efforts to gradually lower lending rates from 20 per cent in 2011 to the current 13 per cent.

Some banks in the first few months even offered lending rates as low as 7.5 per cent to 8.5 per cent.

The Viet Nam CCI (consumer confidence index) followed the trend of the stock market (VN-Index) closely, with both increasing since January, according to a consumer survey conducted by ANZ – Roy Morgan.

Almost 60 per cent of respondents expect economic conditions in Viet Nam and their personal family situation to improve next year.

A recovery in consumer confidence may be a good sign for credit growth in the last three months of the year, according to CBRE.

The performance of the economy is also supported by investment in the manufacturing sector, which remains the most significant sector for foreign investment, accounting for almost 70 per cent of total FDI.

South Korea has overtaken Japan as the biggest foreign investor. Samsung has invested nearly US$8 billion in Viet Nam while Lotte Mart plans to double its current number of stores to 2020.

Following manufacturing, the real estate sector is ranked second in FDI, accounting for 11 per cent, equivalent to $1.2 billion. Large amounts of money are expected to flow into southern realty.

There are several large real estate projects, including Smart Complex by Lotte in HCM City's Thu Thiem Area ($2 billion) and Amata City Long Thanh from Amata in Dong Nai Province ($530 million).

CBRE said there would also be additional investment in ports in HCM City, which will be replaced by mixed-use projects including Sai Gon New Port, Nha Rong-Khanh Hoi Port and Ba Son Shipyard.

VN urged to step up reforms

Viet Nam should perfect its market economy institution and accelerate administrative reform to increase its national competitiveness in order to maximise the benefits of the ASEAN Economic Community (AEC) once it is established in 2015, a conference heard in Ha Noi on Tuesday.

Participants in the conference urged businesses to actively research the AEC and put forward measures to increase competitiveness and participate in the region's supply chain.

Addressing the event, Head of the Party Central Committee's Economic Commission Vuong Dinh Hue said that once it is formally set up, the AEC will help Viet Nam grow more rapidly, generate more jobs, attract more investment, increase production capacities and improve its standing in ASEAN and international forums.

However, he noted that the country will face challenges during the AEC integration process as there is still an economic development gap between Viet Nam and other countries in the region.

He called upon all ministries, sectors and enterprises to prepare for the opportunities and challenges involved in joining the regional arena.

According to expert Yoshifumi Fukunaga from the Economic Research Institute for ASEAN and East Asia, participating in the AEC will help Viet Nam's economy grow by an additional 3.5 per cent thanks to tariff cuts and the liberalisation of trade and services.

The AEC is scheduled to be shaped in late 2015. From then onwards, ASEAN will be a common market on which goods, services, capital and labour can be exchanged freely.

Agroforestry, seafood exports bring in $2.28b

Viet Nam earned more than US$2.28 billion from agroforestry and seafood exports in October, raising total export turnover in the first 10 months of 2014 to $25.39 billion.

The turnover represents a year-on-year increase of 11.2 per cent, according to the Ministry of Agriculture and Rural Development (MARD).

Agriculture and Rural Development Minister Cao Duc Phat said the MARD has predicted that, given current trends, export turnover from agroforestry and seafood would likely reach more than $30 billion this year.

Figures from the MARD showed that in the past 10 months, rice exports reached 5.68 million tonnes worth $2.59 billion. This represents a 2.7 per cent decrease in volume and 1.2 per cent increase in value year-on-year. The increase in value is attributed to the 3.6-per cent increase in export price from 2013.

China remained the largest market for Vietnamese rice exports with 32.48 per cent of market share, followed by the Philippines with 22 per cent and Malaysia with seven per cent.

Coffee exports reached 1.49 million tonnes worth $3.1 billion. This represents a 37.1-per cent increase in volume and 33.5-per cent increase in value year-on-year. Recently, the Belgian market witnessed an increase in coffee imports from Viet Nam. However, Germany and the United States remained the two largest importers of Vietnamese coffee.

Cashew nut exports reached 257,000 tonnes worth $1.68 billion. This represents a 20.5-per cent increase in volume and 24.4-per cent increase in value year-on-year.

Pepper exports earned $1.1 billion, mostly from the five largest pepper importers: the US, Singapore, the United Arab Emirates, the Netherlands and India. The five importers accounted for 50.62 per cent of market share.

Rubber exports remained the most valued item, posting a turnover of $1,767 per tonne or a year-on-year decrease of 25.46 per cent. In spite of the increase in rubber export volume, the value is likely to fall compared with the same period last year.

In contrast, tea exports posted a six-per cent year-on-year increase. Pakistan was the largest importer of Vietnamese tea with a 94.4-per cent increase in value year-on-year.

To date, seafood exports brought in $6.48 billion, a 20-per cent year-on-year increase, while agroforestry exports brought in $5.24 billion, a 13-per cent year-on-year increase.

Binh Duong runs trade surplus

The southern province of Binh Duong recorded a trade surplus of more than US$2.3 billion during the first 10 months of 2014.

According to the provincial General Statistics Office, exports fetched more than $12.7 billion, a year-on-year rise of 15.2 per cent. Of which, over $10.5 billion was generated by foreign investors, up by 16.2 per cent compared to the same period last year.

Footwear, garments, and timber were the key earners, bringing more than $1 billion to the province, while computers, electronics, and textiles also recorded rapid growth.

According to the provincial Department of Industry and Trade, as many as 111 foreign-invested projects increased their investment capital to a total $757.6 million.

Bac Ninh welcomes smartphone plant

Microsoft will build its second largest smartphone manufacturing plant in the world in the northern province of Bac Ninh.

The group’s leaders recently met provincial officials in Singapore, saying that Microsoft would expand its existing $302 million mobile phone production factory in the province’s Vietnam-Singapore Industrial Park.

“Microsoft will triple its employees from 5,000 where it currently stands to 15,000 in the near future,” Deputy Chairman of the Bac Ninh Provincial People’s Committee Nguyen Van Nhuong told VIR. “The total additional investment capital has yet to be revealed, but it will be very big. Microsoft is aiming to employ an additional 500 new workers every week.”

Nokia Vietnam opened the plant in October 2013. The factory was acquired by Microsoft in April this year.

Nhuong said Microsoft would gradually narrow its mobile phone manufacturing in Hungary, China and Mexico and relocate production lines to Vietnam.

According to the committee, Microsoft will also apply state-of-the-art environmentally-friendly technologies. With its sizable investment and high technology, that group will be entitled to a 10 per cent corporate income tax exemption for the first four years of operations and a 50 per cent reduction for another nine years. This incentive is in line with the government’s incentives for hi-tech projects. Samsung also enjoys this incentive.

“Additionally, based on its own incentives for these projects, the province will give another a 50 per cent reduction for another four years to Microsoft,” Nhuong said. “We highly value this investment.”

Nhuong said Microsoft would support the province in producing skilled workers and developing e-government.

Nhuong also said the province was deploying many investment promotion programmes to attract foreign firms operating in the supporting industries, thanks to Samsung and Microsoft’s presence in the province.

In 2009, Samsung inaugurated a $670 million Samsung Electronics Vietnam (SEV) factory to produce mobile phones in Bac Ninh. After that, the total investment capital was raised to $2.5 billion.

In March 2014, Samsung  started operations of its $2 billion hi-tech complex in the northern province of Thai Nguyen, on an area of 100 hectares. It exported nearly $2 billion in smartphones and tablets, totalling six million units by the end of June, just three months after starting production.

SEV’s exports in 2013 were valued at $23.9 billion. Together the two factories are expected to achieve an export value of $35 billion this year.

Early this month, Samsung also received an investment certificate from Ho Chi Minh City’s authorities for construction of another $1.4 billion electronics manufacturing complex in the city.

Anti-flood projects, left idle for six years, now cost six times more

Many of Ho Chi Minh City’s anti-flood projects that have been left undeveloped for six years will now require nearly six times as much investment as originally planned due to inflation, a seminar was told Tuesday.

The information was released at a workshop jointly conducted by the Ho Chi Minh City Anti-flooding Program Operation Center and the World Bank to review performance in the management of flooding risks in the city.

Speaking at the event, many experts said that the irrigation plan for inundation prevention was approved six years ago, but most of the projects under the plan have yet to be developed.

Therefore, due to the escalation of prices over time, the initially estimated investment in these projects has increased from VND11,531 billion (US$542.7 million)  to VND67,655 billion ($3.18 billion), or 5.86 times higher (according to commodity prices in 2013).

The city’s rainwater drainage systems have become obsolete and ineffective, and are not able to cope with the impacts of climate change, experts said.

They need to be replaced by the projects included in the plan, but due to climate change many of these developments need to be modified to match actual conditions and survive future changes.

For example, the embankment along the Tham Luong-Ben Cat-Nuoc Len canal needs to be built higher than initially designed.

Experts also suggested that the program on management of flood risk be included inthe city’s urban development plan.

Also yesterday, Le Hoang Minh, deputy director of the HCMC Transport Department, and other officials from concerned agencies visited a number of areas where water currents have been restricted due to the ongoing renovation of the Tan Hoa-Lo Gom canal.

The inspectors found that the construction of roads and embankments around the Hau Giang Bridge in Ward 11, District 6, blocked the discharge outlet that transmits water to the canal.

“The obstruction of the outlet does not directly cause flooding on Hau Giang Street, but will exacerbate flooding in other areas,” Minh said.

At other construction sites related to the project, such as the Ong Buong 2 and Tan Hoa bridges, the respective construction units have enlarged the currents, but the drains have yet to be improved, the inspectors said.  

The city’s Urban Upgrading Works Investment Management Board must ask relevant contractors to arrange pumps at the construction sites to drain water during heavy rains, Minh said.

At the same time, contractors must also continue to widen currents and dredge canals to improve water drainage to ease flooding in flood-prone areas.

At a meeting on October 21 with the department and other relevant agencies to discuss urgent solutions to the city’s ongoing flooding issues the city People’s Committee Vice Chairman, Nguyen Huu Tin, requested that the department eliminate all areas vulnerable to inundation within the next year.

According to the transport department, the city now has 27 flood-prone areas.

Keeping public debt at a safe level

Public debt could reach 60.3% of GDP by the end of the year, according to official figures reported by the Government to the National Assembly Standing Committee.

On the basis of expected State budget deficit and expenditure, experts estimate that public debt is capable of reaching almost 64% of GDP by the end of 2015. Some also assumed that if the State budget had to cover bad debts by State-owned enterprises, public debt would probably exceed the safety threshold of 65% of GDP.

However, recent events visibly show that foreign investors remain confident and continue pouring capital into Vietnam. Investors consider Vietnam to be an attractive and safe investment destination with political and socio-economic stability and, in hand, an ability to control public debt.

Vietnam is more than deserving of this reputation and, if need be, can certainly enact measures to lower the public debt rate relative to GDP.

Specifically, the Government can target revenue worth tens of trillions of VND from taxes, fees, and land use costs that were not fully and promptly paid to the State budget. It is necessary to instill a strong sense of respect of the laws and social responsibilities in businesses and entrepreneurs to ensure the State budget balance.

The Government can also swiftly identify others revenue sources worth trillions of VND that can be obtained from the process of SOEs restructuring, such as equitisation and non-core business divestment. These sources should be affirmed as national assets and need to be counted during budget balancing procedures.

At the same time, it is also necessary to improve the legal system to effectively manage revenue sources to the State budget.

In the fight against corruption, there also exist measures for higher recovery of significant funds through investigation and trials of cases.

Combining a range of measures ─ including ensuring effective operation of the State budget, covering all sources of revenues, and exercising expenditure savings, as well as promoting the role of the State Treasury ─ could help control the budget deficit and keep public debt from exceeding the safety threshold.

The question of new motivation for economic growth

The question of which sector of the economy holds the largest potential for the national economic growth attracted much attention from economic experts at the Autumn Economic Forum held last month.

Vietnam's economy has gone through three quarters of 2014 with many positive signs, particularly a record trade surplus of US$3 billion in late August.

Aggregate demand is on the road to recovery, the total export revenue has seen a year-on-year increase of 14%, and the gross domestic product (GDP) over nine months surged 5.62% against the same period in 2013, exceeding the estimate figures of 5.3-5.4%.

Most notably, the macroeconomy has maintained long-term stability, inflation has been kept in check, the consumer price index (CPI) is stable, and the country can boast high foreign currency reserves.

However, it can still be said that the Vietnam's economy has bottomed out and worries of a slow recovery remain.

Economic experts shared the same assessment on the slow and not-yet sustainable recovery of the national economy: weak domestic demand has led to an economy vulnerable to external shocks and lack of a motivation for a breakthrough in such a quiet period.

The question is, what is the driving force for Vietnam’s future economic growth? And furthermore, should we stimulate aggregate demand or supply to make the economy quickly back to its growth trajectory ─ 7% or higher ─ as expected

Boosting aggregate demand is a way to recover the economy in the short term and prevent economic decline.

The Government has made considerable efforts to enact operating policies to reduce interest rates, spur credit growth and promote public investment projects. These solutions have brought about positive results, helping the economy emerge from the most difficult periods.

But demand stimulus is only a supporting solution and it cannot solve systemic problems in the economy. The fiscal space for expanding public investment is very limited due to constraints on overspending and maintaining safe public debt, leaving narrow room for implementing a demand stimulus policy.

As such, a stimulus policy should not be in place so long as to cause a threat to the safety of national finances and trigger inflation.

Improvement to supply will be a fundamental solution to the growth of the economy in the coming period as it helps deal with current economic issues including improving social productivity, enhancing investment efficiency and bettering the competitiveness of the economy.

Supply side policies are carried out through restructuring programmes aligned with the renovation of growth models. And as long as the restructuring programmes have not yielded practical results and new growth models with higher productivity have not been formed, economists have reasons to believe that the economy does not have the momentum to make a breakthrough.

So, which sector will be the driving force and motivation for the national economy?

Much research shows that the State-owned enterprise sector no longer operates effectively, with its investment efficiency declining. Indicators of capital productivity, investment performance and employment elasticity in this sector are all second to non-state sectors.

The FDI sector is forecast to continue attracting more investment and expanding further in the future, making more significant contributions to Vietnam's economy, particularly when Vietnam completes the signing of free trade agreements (FTAs) including the Vietnam - EU FTAs, Vietnam - Republic of Korea FTAs, Trans-Pacific Strategic Economic Partnership Agreement and others.

However, the facts indicate that the private sector is indeed the sector recording the highest investment efficiency with capital efficiency two times higher than that in the State-owned enterprise sector. Its contributions to the nation in tax payment and GDP growth are even higher than FDI sector.

These analyses show that it is time to give more priorities to the private sector. It is necessary to put the focus of the strategy on enhancing the productivity of the national economy on this sector as it is absolutely the motivation for stronger economic growth in the future.

To achieve the target, Vietnam needs more changes and reforms to build up trust for enterprises and create favourable conditions for the private sector, especially through reforms in its institutions, legal frameworks, administrative reform, and State-owned enterprise equitisation among others.

Processing & manufacturing industries grow sharply

In the first ten months, the industrial production index (IPI) was estimated to go up by 6.9% against the same period last year, said the General Statistics Office (GSO).

The IPI's quarterly growth rates were 5.3% in Q1; 6.9% in Q2 and 7.8% in Q3.

The GSO on October 27 reported that the processing and manufacturing sectors achieved an expansion of 8.4% and 7%, respectively.

Electricity production expanded by 11.5% (the rate of 8.6% was made last year); followed by water and sewage treatment with 6.4% and the mining industry 0.7%.

Production of some products went up sharply including mobile telephones, up 54.6% against the same period last year; automobiles up 28.5% and fresh milk 21.6%.

Large-scale production centres included Long An province (up 12%); Hai Phong city (up 11.8%); Da Nang city (up 11.1%); Hai Duong province (up 9.9%0 and Binh Duong province (up 8.4%).  

In October, the IPI saw a month-on-month increase of 4.6% and year-on-year surge by 7.9%.

As of late September, consumption index of the processing and manufacturing industries went up 10.1% against the same period of 2013.

As of October 1, inventory level of the processing and manufacturing industries picked up 2.4% against last month and 10.9% against the same period of 2013.

Trade surplus in 10 months: Satisfactory but unsustainable

Viet Nam's trade surplus recorded in the first ten months of the year chiefly stemmed from the good performance of the FDI sector and the industries that processed and assembled imported raw materials, according to the General Statistics Office (GSO).

The GSO argued that foreign trade activities  generated low added value and were  unsustainable.

In October, export volume was estimated at US$ 13.2 billion, seeing a month-on-month increase of 4.5% and year-on-year surge of 5.5%. The FDI sector earned US$ 8.9 billion in export revenue (including crude oil) (up 2.8%); while the domestic sector made US$ 4.3 billion (up 8.2%).  

Biggest hard currency earners included garments and textiles (up 21.3%); computers and spare parts (up 15.5%); footwear (up 11%); coffee (up 72.9%).

In the January-October period, export turnover was estimated at US$ 123.1 billion, representing a year-on-year increase of 13.4% of which the domestic sector contributed US$ 40.6 billion (up 12.9%) and FDI sector US$ 82.5 billion (up 13.6%).

In the reviewed period, the US was the largest export market, posting the sum of US$ 23.4 billion, up 20% against the same period last year; followed by the EU, ASEAN, and China.

Meanwhile, in October, import turnover was estimated at US$ 13.6 billion, up 2.9% against the same period last year of which the FDI sector contributed US$ 8 billion (up 1.2%) and the domestic sector US$ 5.6 billion (up 5.5%).

In the first ten months, Viet Nam imported US$ 121.2 billion of goods, posting a year-on-year increase of 11.2% of which the FDI sector contributed US$ 68.7 billion (up 10.7%) and the domestic sector US$ 52.5 billion, up 12%.

Biggest imports included machines, equipment, and spare parts with US$ 18.3 billion (up 20.4%); fabric US$ 7.7 billion (up 13.4%).

In the January-October period, Viet Nam mainly imports goods from China with US$ 35.6 billion (up 17.1%). The country ran an estimated trade deficit of US$ 23.1 billion (up 17.6%) with China; followed by US$ 19 billion with ASEAN(up 6.6%); US$ 17.1 billion (up 2.7%) with the RoK; US$ 10.3 billion with Japan (up 7.9%) and US$ 7.5 billion with the EU (down 3.3%).

Pepper traders warned of hasty contract signing

The global pepper market is forecast to face a supply shortfall next year which will certainly drive prices up, so local traders should not hastily sign contracts with buyers to avoid losses, the Vietnam Pepper Association (VPA) suggested.

Tran Duc Tung, office manager of VPA, said farmers usually sell pepper in bulk at harvest time in the first quarter to cover investment costs and other expenses on Lunar New Year holidays. Therefore, selling prices are often low in the first months of year.

Currently, Vietnam is accounting for 30% of the global pepper production and 50% of the commercial volume in the global market.

Tung said the export pepper price hovered around US$6,500 per ton in the first half of this year, but traders have almost emptied their pepper stocks at this low price.

The total amount of pepper export in the first six months was equal to that of 2013. However, when the pepper price shot up to more than US$8,000 per ton in July, there was little left.

Many local businesses suffered losses because they had signed contracts at low prices and found it tough to secure sufficient pepper for delivery. The losses are all the deeper now as the export price is approaching US$10,000 a ton.

“Pepper is a commodity with wild price volatility. Therefore, businesses should avoid signing futures contracts. Contracts should only be signed when traders have secured 70% of the volume in stock,” Tung suggested.

“VPA gives such recommendations based on production and trading situations so that farmers and businesses can avoid losses,” he said.

Statistics from VPA showed the export price of pepper was US$6,500 per ton in the first quarter before going up to US$8,335 in July and over US$9,000 in September, rising by US$1,800-2,500 per ton in just a few months.

The local price has also risen accordingly, from VND149,000 a kilo in the first quarter to VND190,000 in September. Pepper price in the market on October 28 was VND182,000-189,000 per kilogram.

According to the Ministry of Agriculture and Rural Development (MARD), the continuous increase helped raise the average export price in January-September to US$7,558 per ton, up 14% year-on-year. The export volume in the first 10 months of the year was 145,000 tons worth more than US$1.1 billion, rising 18.5% in volume and over 35% in value compared to the previous year.

MARD is organizing an international pepper conference from October 27-30 in HCMC with the participation of major pepper producing countries such as Vietnam, India, Indonesia, Malaysia, Brazil and other spice exporters from the U.S., the EU and Japan.

Vietnamese flock to Japan on reduced prices

Around 10,000 Vietnamese come to Japan a month and many of them are tourists, heard a seminar held at the Pullman Saigon Centre Hotel in HCMC last week.

Some 130 representatives from 45 local travel agencies and 30 hotels and travel firms from Japan gathered at the seminar to discuss how to cooperate to cash in on the surging number of Vietnamese visitors to the northeast Asian country.  

An executive of a local travel agency told the Daily before the seminar that Japan tours have been selling well in recent times thanks to reduced prices and that his company now arranges regular trips for Vietnamese to visit Japan rather than seasonal tours in previous years.

“The number of Vietnamese visitors to Japan will soar when visa procedures are simplified. Therefore, we have to find new partners to help design new tours and lower prices,” he said.

As scheduled, the Consulate General of Japan in HCMC will next month announce information about criteria for the travel firms subject to lax visa procedures when they organize package trips for Vietnamese travelers to Japan.

According to the Japan Tourism Agency, more than 84,000 Vietnamese came to Japan last year, up 53.1% compared to the previous year. In January-August this year, the number soared 50% year-on-year to 80,100.

The agency expected the number of Vietnamese tourists will grow higher thanks to favorable conditions in travelling, strong partnerships between companies of the two nations to offer more tours at lower prices, and Japan’s aid in promoting destinations in that country.

Earlier this year, Japan relaxed conditions for multiple-entry visas for citizens of Indonesia, the Philippines and Vietnam as announced at a meeting of the Ministerial Council on the Promotion of Japan as a Tourism-Oriented Country in June this year, according to a statement by Japan’s Ministry of Foreign Affairs.

Next month, Japan will simplify the application procedure for single-entry tourist visa for Indonesians, Filipinos and Vietnamese in package tours arranged by accredited travel agencies.

According to local travel firms, the loosened visa requirements will lead tour prices to Japan to fall sharply as this enables them to book air tickets and hotel rooms earlier to enjoy bigger discounts.

Minister Vinh says falling FDI approvals no cause for concern

Though foreign direct investment (FDI) approvals have declined sharply in the January-October period, Minister of Planning and Investment Bui Quang Vinh said the drop is not a major concern given the challenges companies around the world are coping with.

Vinh raised the point before the General Statistics Office (GSO) released an updated report containing figures about FDI. Accordingly, more than 1,300 FDI projects had been licensed in the year to October 20 with combined registered capital of US$9.95 billion, up 24.4% in number but down nearly 24% in investment capital year-on-year.

The report said the investors of 469 projects licensed in previous years had registered investment increases of nearly US$13.7 billion, tumbling by 28.8% over the same period last year.

Despite strong declines in both fresh and additional FDI approvals, the minister told the “Citizens Ask, Ministers Answer” program aired Vietnam Television (VTV) over the weekend that Vietnam has done whatever it can to create the most favorable business environment to attract investors and the decisions to invest in Vietnam are in the hands of foreign investors.

Vinh said many foreign investors have been affected by different factors, including difficulties of the parent companies which make them unable to proceed with their investment plans overseas.

Vinh assumed that five years would be an appropriate time for Vietnam to assess FDI approvals rather than short periods. “We should not and the world does not do what we are doing now, that is comparing FDI attraction of a certain period of one year with the same period of another year,” he said.

He said registered FDI investment capital reached US$22 billion last year when many huge projects were licensed. Investors had surveyed the country for years and waited until last year to apply for investment licenses like the project of Samsung or the Nghi Son refinery project.

“This year we don’t have many big projects like last year and we will be confused if we continue comparing the FDI attraction with that of last year,” Vinh said and expected that FDI approvals would stand at US$15-16 billion this year.

Vinh said the UAE group Sama Dubai mulled a project to develop a special economic zone but the project has not translated into reality due to the global economic crisis. There are also a number of projects whose investors are financially incapable.

“Therefore, I can say that the implementation of FDI projects depends not only on us but also the investors themselves and the economic, political situations in their countries,” he said.

The GSO has estimated the amount of realized FDI in the ten-month period at US$10.2 billion, up 5.9% against a year earlier.

In the January-October period, the processing and manufacturing industry has total registered FDI approvals of nearly US$9.7 billion, accounting for 70.8% of the total pledges. The respective figures of real estate are 8.9% and US$1.23 billion, construction 7.5% and over US$1 billion.

Among 47 localities with FDI projects licensed in the January-October period, HCMC takes the lead with investment capital pledges of US$2.66 billion, or 26.7% of the total. But the updated figure announced by the HCMC government is US$2.9 billion.

HCMC is followed by Bac Ninh Province with nearly US$1.29 billion (12.9%), Haiphong City US$786.3 million (7.9%) and Binh Duong Province US$660 million (6.6%).

Tra fish farming expands strongly in Q3

The total area for tra fish farming in the Mekong Delta rose by 1,000 hectares in the third quarter this year to 7,000 hectares, which is the largest area for tra fish in the region ever, the Ministry of Agriculture and Rural Development said.

By summing up statistics of each province in the delta, the ministry estimated a total tra

fish area of over 7,000 hectares and a combined output of 890,000 tons in the January-October period. The expansion is attributed to the increase in prices of tra fish, which has helped growers earn profits.

Statistics from the agriculture department of Vinh Long Province showed that tra fish prices range around VND23,000-24,200 per kilo in October, rising VND1,000 per kilo month-on-month and bringing a profit of VND500-1,000 per kilo for growers.

In June, tra fish prices in the delta fell to VND21,500-22,000 per kilo, which were lower than production costs at between VND22,500 and VND23,500 per kilo. The price declined after the U.S. Department of Commerce (DOC) slapped an anti-dumping duty of US$0.42-1.2 per kilo on Vietnam’s tra fish.

The punitive tariff hit the whole tra fish sector in the delta and reduced the fish farming acreage in the region to 5,800 hectares, along with total output of 489,000 tons at that time.

But farmers have boosted farming following the price hikes.

The expansion and reduction of tra fish farming area in the Mekong Delta in the past years have depended on the fish prices. When the price is lower than the production costs, growers will halt their business and when it is higher, they will quickly expand the farming area.

According to the agriculture ministry, total seafood export revenue in the January-October period rose 20% year-on-year to US$6.48 billion.

The U.S. remains the biggest importer of Vietnam’s seafood, accounting for over 22% of the total revenue.

Seafood export value to other markets also increased in January-September with exports to Japan surging 8%, to South Korea soaring 43% and to China rising 25%.

For tra fish, ASEAN nations and the Middle East are among markets posting high import growth, which helped make up for the decrease in tra fish exports to the EU, said the Vietnam Association of Seafood Exporters and Producers (VASEP).

Gov’t continues tax support

Deputy Prime Minister Vu Van Ninh said the Government will continue providing support tax incentives and to local enterprises to help them ride out difficulties despite possible adverse impacts on the State budget.

Ninh told reporters on the sidelines of the ongoing National Assembly (NA) session in Hanoi City on Monday that concerns have been raised over a reduction in budget collections after the Government applied tax cuts or payment extension to help businesses deal with their current hardship.

Adverse impacts on the State budget are inevitable but the Government needs to stand by enterprises and give them a helping hand to overcome difficulties. This is a long-term goal to nurture budget collections, Ninh said.

However, it is necessary to balance collection and spending. In the current context, collection is important but the Government must calculate spending as well to secure financial sustainability, he stressed.

To increase budget collections, the Government will work toward recovering tax debts in many provinces and cities. At present, the Ministry of Finance is going to report tax debt settlements to the NA.

Many experts worried about shrinking development investments given the current collection-spending structure. However, Ninh said the problem is not too bad.

Firstly, the nation is developing sources for investment. Aside from direct investment from the State budget, the NA has approved capital mobilization through bond issues.

Secondly, though domestic debt has increased sharply, foreign debt is not a big concern due to long tenors and low interest rates. The most important thing now is to restructure debts to reduce repayment pressure.

Provincial debt worrying

The overall picture of public debt looks gloomier following a just-released report of the central Government on debt owed by provincial governments, which has increased five times over the past four years.

In a report sent to the National Assembly Finance-Budget Committee, the Government said provincial governments’ debt has risen almost five-fold in the 2010-2013 period.

Specifically, the total amount of such debt soared from VND6.77 trillion in 2010 to VND10.88 trillion in 2011, up to VND24.5 trillion one year later and VND30.01 trillion last year. The amount is predicted to surge to VND33.5 trillion by the end of this year and VND38 trillion in end-2015.

HCMC is the biggest debtor with VND12.42 trillion as of the end of 2013, with VND10 trillion arising from the issuance of municipal bonds, followed by Hanoi with VND4.65 trillion, with VND4.4 trillion from bond issues. Danang and Quang Ninh also face big amounts of debt, at VND1.65 trillion and VND1.55 trillion respectively.

Although provincial governments cover their investment with different sources of capital, municipal bonds have emerged as the preferred option in recent years. Most projects funded by municipal bonds are underway or yet to be developed, so it is difficult to assess their business efficiency.

In many localities, debt owed by provincial governments to contractors of capital construction projects is still sizeable, and authorities have to set aside part of their annual State budget to service such debt.

Transport charges unchanged after fuel price cuts

While fuel prices have been adjusted down significantly, prices of essential items and transport charges have remained almost unchanged despite their earlier increases being triggered by the previous fuel price hikes.  

Ta Long Hy, deputy general director of Vinasun Corporation, told the Daily that the leading taxi operator in HCMC did not raise fares when fuel prices went up in the first months of this year. Moreover, as the average minimum salary rose at the beginning of this year, Vinasun now has to spend more on social insurance for its taxi drivers.

Ho Huy, chairman of Mai Linh Group, said his company is considering whether to adjust down taxi fares or not after eight rounds of fuel price reductions this year.

Do Xuan Phu, director of Minh Lien Transport Company, said the enterprise has plans to revise down transport fees as fuel prices dropped by a total of VND1,000 per liter after the two recent cuts of fuel prices. However, the director declined to elaborate on the plan.

Prices of necessities and some vegetables have also stayed steady despite fuel price drops.

Veggie prices at Pham Van Hai Market in HCMC’s Tan Binh District are the same to the time before the latest fuel price cut last Thursday. A kilo of green cabbage is sold at VND17,000, carrot at VND27,000 and waxy pumpkin at VND10,000.

Meat prices are also stable, with the price of pork hovering around VND85,000-120,000 a kilo. A kilo of beef fillet and beef thigh stands at VND230,000-250,000, shrimp at VND100,000, codfish at VND180,000 and red tilapia fish at VND50,000.

Traders at Pham Van Hai Market said prices of necessities are not affected by the decline in fuel prices but by weather and supply factors.

Jan-Oct CBU auto imports surpass US$1 bil.

Completely built-up (CBU) automobile imports have exceeded US$1 billion in the January-October period, nearly doubling the figure a year ago.

Data of the General Statistics Office indicated that the volume of CBU autos shipped to Vietnam this month is around 7,000 units worth US$150 million. In all, the total number in the first ten months of this year has climbed to 51,000 cars worth over US$1.1 billion, year-on-year rises of 76.1% in volume and 93% in value.

Notably, though automobiles are in the list of products subject to import restriction, the quantity of imported CBU autos has still surged in the year to date.

Industry insiders attributed the strong rise in imported autos to soaring domestic demand in the period as total auto imports were only US$709 million last year.

The demand for locally-assembled autos has also increased sharply from January to October.

Auto traders said 2014 is a bustling year of the local auto market after a long time of dropping sales.

The Vietnam Auto Manufacturers Association (VAMA) forecast 145,000 autos will be sold this year, 35,000 units higher than its estimate earlier this year and up 32% versus last year. This revised projection would be equal to the figure of 2011 but still lower than 160,000 units in 2009.

Vietnam remains world’s leading pepper exporter

Leading economists have forecast pepper exports to remain at high levels this year, amounting to 150,000 tonnes in volume and raking in more than US$1 billion in total revenue.

At a four-day international pepper conference, which concluded in Ho Chi Minh City on October 30, they also projected that Vietnam would retain its position as the leading pepper exporter in the global market.

They also estimated Vietnam exporters would produce 30% of the world market share of peppers this year.

Those in attendance discussed measures for sustainable development of the local pepper industry, with a focus on increasing product quality and export value, building the Vietnamese pepper trademark, and meeting requirements of importers from the US, Europe and Japan.

They reported Vietnam currently has more than 60,000 ha under pepper cultivation in 28 provinces and cities nationwide, principally in the south-eastern and central highland regions.

Despite its high export volume, the pepper export value of Vietnam has consistently been lower than other nations like India, Indonesia, and Brazil, they said.

Chairman of the Vietnam Pepper Association, Do Ha Nam, said delegates shared valuable experience at the conference.

He hoped that the Ministry of Agriculture and Rural Development, relevant agencies and local authorities would soon implement practical measures to help the pepper industry grow faster in the future.

Hanoi, HCM City office space rental costs rise

The cost of leasing office space in the third quarter of the year jumped 2% in Hanoi and 1% in HCM City, according to an office rental report recently released by Savills Vietnam.

Savills said the office rental index for the Hanoi metro area stood at 50.3 points for the quarter, a decrease of 3.9 points on-year. It decreased by 2.5 points in the city centre and increased 1.3 points in the neighbouring areas .

In HCM City, the office rental index stood at 77 points for the quarter, up 3.6 points on-year, which is attributed to an overall increase in leasing capacity and rental prices.

However, Savills said construction of many high-rise buildings is expected to be completed over the next few quarters, which will exert downward pressure on the office rental market in HCM City.

Flower growers prepare for Tet

Major flower growers in the Central Highland city of Da Lat have imported an estimated 18 million varieties of lilies from Europe in preparation for the 2015 Lunar New Year Festival (Tet).

Workers for the 11 growers have begun busily cultivating the fields planting the flowers on an area spanning 72 hectares, which is 23 hectares more than last year.

The varieties imported included Soebone, Tiber, Manisa, Yellowen, Benlla, Robina andConcador, mainly coming from the Netherlands and New Zealand.

There were also a few breeds imported from China.