Mercedes-Benz to invest $20m in Viet Nam

Mercedes-Benz Viet Nam on Wednesday announced plans to invest over US$20 million this year in the country in production, distribution and other areas and to introduce 20 new variants.

The company plans to introduce 20 new cars to celebrate its 20th anniversary in Viet Nam, producing a minimum of three here.

On Wednesday it unveiled four new cars: GLA 250 4Matic, CLS 500 4Matic, Mercedes-AMG GT S, and Mercedes-Maybach S600. The Maybach will cost nearly VND9.7 billion (US$461,000).

The company has brought 47 models to the Vietnamese market in 2013-15.

"To satisfy the sophisticated and diverse demand of customers, we are introducing ever more top-of the-segment products," Dirk Adelmann, sales and marketing director of Mercedes-Benz Viet Nam, said.

In 2014 the company achieved a record year in Viet Nam selling 2,467 vehicles. With 43 per cent growth, Viet Nam also became its fastest growing market in Asia and the second fastest in the world.

Its market share in the luxury segment increased from 52 per cent to 54 per cent.

SeABank offers soft loans

Vietnamese SeaBank will offer VND10 trillion (US$470 million) in preferential loans to businesses in HCM City. The commitment was made at a workshop linking commercial banks with businesses in the city.

Under the programme, interest rates of 6.5 to 6.9 per cent per year will be offered.

SeaBank will also generate incentives for businesses to expand production and business.

HCM City to host rubber, tyre expo

The third international rubber and tyre industry exhibition, to be held in HCM City in June, will offer domestic and foreign firms a forum for swapping information and finding trade partners.

To be held at the Saigon Exhibition and Convention Centre in District 7 from June 10 to 12, Rubber and Tyre Vietnam 2015 will showcase the industry's latest equipment, technologies, products and services. The three-day expo will also include conferences and seminars. The fair will also help connect Vietnamese tyre and rubber producers with foreign buyers.

VN Expo to be held in April

The 25th Viet Nam International Trade Fair – Viet Nam Expo 2015-will be held in Ha Noi's Viet Nam Exhibition Fair Centre (VEFAC) from April 15 to 18.

Nineteen countries and territories will take part - Algeria, Poland, Bangladesh, Belgium, Cuba, Cambodia, Taiwan, Indonesia, South Korea, Laos, Malaysia, South Africa, Nepal, Singapore, Kenya, Spain, Thailand, China and Viet Nam.

Five hundred trade booths from about 450 enterprises have already registered for the event. Vietnamese firms taking part will be mainly exporters of agricultural foods and drinks, or production and distribution firms.

The expo is expected to have 700 trade booths aimed at a hoped for 20,000 visitors.

S Korean firms favour Viet Nam

Viet Nam was the most popular destination for South Korean enterprises expanding overseas, according to a survey released by the Korean International Trade Association (KITA).

About 49 per cent of 537 Korean firms said they had plans to develop their business in Viet Nam this year.

Indonesian, Thai and Malaysian firms showed interest in descending order (37.4 per cent, 30 per cent, 28.5 per cent). Turkish firms showed 20.7 per cent interest.

The firms surveyed were asked to select from 32 countries showing annual growth of more than 3 per cent in the past three years.

More than 53 per cent of South Korean companies polled said they were aiming for the local consumer market in the target countries. Another 24.8 per cent said they would use the countries as a production base, and 22.2 per cent said the expansion was to utilise the merits of existing free trade agreements, according to the survey.

Standard Chartered ups GDP forecast

Standard Chartered Bank expects Viet Nam's gross domestic product growth to accelerate to 6 per cent in 2015, higher than its previous forecast of 5.8 per cent.

The increase is expected to be driven by the success of structural reforms, which are delivering tangible economic benefits.

The bank made the announcement in a news release on Wednesday, adding that the forecast was highlighted in its recently published global research report entitled "The Year Ahead: Rekindling Animal Spirits".

The report revealed that Viet Nam continues to move in the right direction and that the overall global growth is also set to rise this year, although it noted that international investor confidence remained low. The bank's economists are upbeat about the economic outlook for the country, with foreign investment likely to gather pace and exports to recover this year.

The report also pointed out that multinational companies have expressed a keen interest in increasing investment in the country, thanks to the country's geographic advantages, low labour costs and operational costs, and increasing participation in regional trade pacts.

"We think Viet Nam's foreign direct investment and exports are likely to accelerate in 2015, leading to economic growth," said David Mann, the bank's head of macro-research in Asia.

"We also expect some progress to be made on structural reforms in 2015, the last year of the country's five-year socio-economic development plan. This should improve domestic sentiment," he added.

Nirukt Sapru, CEO of Standard Chartered Bank Vietnam, said, "Viet Nam is showing early signs of economic recovery and a transformation towards higher-value economic activities.

"The government took important measures in 2014 to improve business conditions, which are expected to bear fruit from 2015."

According to the global research, Viet Nam's inflation, contained at 3.4 per cent, is likely to provide more room for policy manoeuvrability, and the Trans-Pacific Partnership trade agreement should attract increased foreign direct investment.

The research also highlighted that the country's fiscal policy is likely to be accommodative as the authorities' focus remains promotion of growth, and further progress on reforms is expected.

Rice traders to expand sources

Rice exporters must build new areas for sourcing raw material in direct proportion to their export volumes, the Ministry of Industry and Trade said in a decree issued last week.

The decree talks about a roadmap for the development of areas from where raw material can be sourced, as well links rice production and consumption between farmers and traders for the 2015 to 2020 period, which is aimed at restructuring the farming sector, enhancing rice quality and raising rice exporters' competitiveness.

Accordingly, rice exporters can develop their raw material sources in three ways, including building large-scale paddy fields, signing contracts with farmers or developing their own raw material areas.

Rice traders with an export volume of below 50,000 tonnes per year must develop a minimum raw material area of 500ha during the first year and widen this area by 300ha each in the following years.

For those with an export volume of 50,000 to 100,000 tonnes per year and 100,000 to 200,000 tonnes per year, the minimum raw material areas needed during the first year will be 800ha, 1,200ha and 2,000ha, respectively.

The Ministry of Industry and Trade is aiming to encourage traders to develop stable raw material sources for major crops harvested during the year.

Support and incentives, such as agricultural insurance premiums, preferential loans will be provided to rice traders, who participate in developing new raw material sources.

The regulation will come into effect from March 1, 2015.

TPBank, Vietjet agree US$400m credit deal

The Tien Phong Bank and Vietjet signed a credit agreement yesterday in Ha Noi for buying an airbus to serve Viet Nam's fastest growing airlines for the 2015 to 2020 period.

The financial agreement follows the success of an earlier contract between the two to purchase two Airbus A320s, which were part of a larger order to acquire 100 aircraft and was signed between VietJet and Airbus in 2013.

The aviation industry has been a niche market for domestic credit institutions and is mostly controlled by foreign institutions. The participation of local banks in the industry reflects their improved financial ability.

Speaking at the signing ceremony, Nguyen Hung, TPBank's general director, said the bank and Vietjet will tap each other's strengths for further development.

‘This can also help Vietjet develop its aircraft to meet growing demand from the aviation transport market and provide customers with better access to its services", Hung added.

Luu Duc Khanh, Vietjet's managing director, said TPBank has been a dynamic and stable institution that has reported impressive operational results. The bank has been a pioneer in joining new and potential sectors, such as aviation and high technology.

Last year, the bank had achieved breakthroughs as its total assets surpassed VND50 trillion ($2.3 billion), and it reported a credit growth rate of over 50 per cent. Its profit was 22 per cent higher than the set target, while its debt rate was only 1 per cent.

Vietjet has seen strong development and has brought new development trends to Viet Nam and the regional aviation market.

It operates 20 Airbus A320s and will add nine to ten aircrafts each year going forward. It has 150 flights that fly on 28 domestic and international routes.

By the end of this month, it will also welcome its 10 millionth passenger.

January business shutdowns up 23%

Nearly 11,000 businesses were dissolved or suspended their operations in January, reflecting a 23 per cent increase from a year ago, according to the General Statistics Office.

Of these, the number of dissolved firms, which were mostly small-and medium-sized enterprises (SMEs) was 993, with a registered capital of less than VND10 billion (US$470,000), while more than 9,700 companies suspended operations.

However, the official figures revealed that over 2,800 businesses had resumed operations.

Around 6,900 enterprises were newly established, with a total registered capital of VND31.7 trillion ($1.48 billion), representing 27 per cent drop from last year.

Accordingly, the average registered capital was pegged at VND4.6 billion for each company, down 20 per cent in comparison with the same period last year.

In addition, the number of labourers for newly-established companies slipped by 7.4 per cent from the corresponding period last year.

Notably, some sectors saw a growth in the number of new firms, such as entertainment with 147 per cent, education and training at 45 per cent and real-estate trading at 42 per cent.

The sectors of healthcare, electricity, gas and water distribution, as well as mineral exploration, wholesale, retail, and automobile repairs, saw fewer new companies being opened.

GSO said the number of labourers in localities with a big industrial scale, including Thai Nguyen, Hai Duong, Binh Duong, Dong Nai, as well as Quang Nam, Hai Phong and HCM City sharply surged from the same period last year.

Purchasing power leaps before Tet

The total retail sales and service revenue earned in the country in January this year was more than VND275.4 trillion (US$13 billion), data from the General Statistics Office (GSO) revealed.

The figure represents a 13 per cent year-on-year rise, GSO said, adding that the increase will be 11.9 per cent if price hikes are excluded.

GSO statistician Vu Manh Ha said that January recorded the highest total retail sales growth (inflation excluded) over the past five years. He saidretail sales saw yearly increases of 8.9 per cent in January 2011; 4 per cent in January 2012; 1 per cent in January 2013; and 7.2 per cent in 2014.

Ha attributed the significant rise in 2015 to surging consumer demand for the forthcoming Tet holiday, as well as the country's low consumer price index and sharp decline in the global petroleum price, which has curbed price hikes of essential goods. That has encouraged local consumers to buy more. During the month, the trade sector, which accounts for 77 per cent of total revenue, surged 13.6 per cent year-on-year. Several products posted increases in trade, including garments ( 6.2 per cent) and home appliances (5.7 per cent). Meanwhile, the hotel-restaurant sector, which comprises 11.3 per cent of the total revenue, was up 2.9 per cent month-on-month and 5.2 per cent year-on-year. However, tourism and other services had a yearly sales revenue fall of 1.8 per cent and 4.2 per cent respectively in January.

The GSO reported that the country's total value of retail sales of goods and services in 2014 increased approximately by 10.6 per cent, when compared to last year.

Experts revealed that last year's increase in purchasing power was below expectations as the rate was just half the value attained in 2010. They explained that while supply exceeded demand, incomes did not improve much.

Deputy PM champions cars

The auto industry will only develop further in the future if it has specific policies governing it, the Deputy Prime Minister Hoang Trung Hai said at a meeting on Wednesday.

At the meeting, which was held between the Government with the ministries of Industry and Trade, and Finance, the two ministries put forth some proposals for implementing a development strategy for Viet Nam's auto industry, based on current facts and keeping in mind a development direction for the future.

These include initial proposals for import tax rates to complete a build-up unit for auto and auto components, from now until 2018. Another proposal suggested the levying of a special consumption tax on all kinds of autos with directions for opening the local market for some lines of automobiles and encouraging their use, reported chinhphu.vn.

Representatives from the ministries also laid down proposals on policies for corporate tax, fee and intensive policies for projects producing auto lines that get priority in development.

At present, Viet Nam's auto industry's total capacity for production and assembly has been pegged at 460,000 units per year, including half of them being sedans. However, the local auto industry has not achieved its targets for investment and production because almost all of them are products that need a simply assembly. Therefore, the Deputy PM said it was necessary to formulate specific and complete policies on credit, taxation, fee and other issues related with the auto industry and to develop the industry going forward.

The industry should also have a clear action plan so that investors recognise stability in the state's policies and are spurred to invest in production and business, Hai said.

He also said the ministries, especially the ministries of Industry and Trade, and Finance, must cooperate closely and reflect unity in accepting proposals and drafts on tax policies to ensure stability for the long term, which is suitable with its integration commitments.

The ministries should consider carefully the effects of these policies on other issues, including budget and the ability of transport infrastructure meeting development of the auto industry, the Deputy PM pointed out.

In July 2014, the Government had approved a new development strategy for the auto industry to enable it to meet domestic demand and join world production. Vehicles defined in the strategy included trucks, cars with more than 10 seats, cars with up to nine seats, and specialised vans.

Small and multifunctional vans for agricultural use and those serving customers in rural and mountainous areas will also be encouraged.

The support industry for the sector will use advanced technologies and enter partnerships with leading global manufacturers to become eligible to supply spare parts for global vehicles.

By 2020, the auto support industry is expected to be able to meet about 35 per cent of the demand for domestic spare parts and accessories. It should also be able to satisfy more than 65 per cent of local needs between 2026 and 2035.

Vietnam’s Consumer Confidence Index falls

ANZ-Roy Morgan Vietnam Consumer Confidence has dropped to 135.4 points in January, 0.2 below last month’s figure.

The index is calculated on the basis of five sub-indices, including the financial context compared to a year ago, predicted financial context next year, expected economic conditions next year, expected economic conditions over the next five years, and the best time to buy major household items.

In terms of personal finances, 33 percent (a 1 percent drop) of Vietnamese consumers said their families are “better off” financially than a year ago compared to 21 percent (also a 1 percent drop) who said their families are “worse off” financially.

Glenn Maguire, ANZ Chief Economist for South Asia, ASEAN & Pacific said after a year of uncertainty, Vietnamese consumers have commenced 2015 with slightly higher confidence in the average index of 2014, despite plummeting crude oil prices.

Power grid development in HN, HCM City approved

The PM has approved the financial mechanism of the Ha Noi and Ho Chi Minh City Power Grid Development Sector Project, which is sponsored by the Asian Development Bank (ADB) and the ASEAN Infrastructure Fund (AIF).

The project is financed through a 20-year loan worth of US$272.7 million with a grace period till March 15, 2020.

The Ha Noi Power Corporation and Ho Chi Minh City Power Corporation will be responsible for balancing and arranging 100% of the corresponding capital for the project.

The project, launched from 2014-2020 in Ha Noi and Ho Chi Minh City, will develop and upgrade substations, expand 110 kilovolt and 220 kilovolt transmission lines, and increase transformer capacity to ensure a smoother and more reliable supply and reduce outages caused by overloading.

Woodwork exports down in January

Timber and woodwork export revenue this month decreased by 8.2 percent from January 2014 to only 494 million USD, according to the Ministry of Agriculture, and Rural Development.

The three biggest importers of the country’s wood products – the US, Japan and China – remain unchanged.

Meanwhile, Vietnam imported 170 million USD worth of timber and wood products, an annual increase of 8.6 percent.

Lao timber comprised 26.9 percent of the total imports, with the US contributing 11.5 percent and Cambodia 11.3 percent.

Construction sector restructured to optimise efficiency

The Prime Minister recently approved a blueprint for the restructuring of the construction sector to maximise its efficiency and competitiveness before 2020.

The scheme seeks to raise the construction sector’s capacity to satisfy socio-economic development demand and serve national industrialisation and modernisation. It aims to augment the average annual growth of the sector’s production value by 9-14 percent.

Between now and 2020, the sector must eradicate the scatter, loss, waste and corruption in its investment, especially in projects funded through the State budget. It is required to gradually raise the proportion of non-budget capital in projects, and increase the application of the public-private partnership (PPP) investment model.

The newly approved blueprint aims to raise the development of cities to match the modernity and competitiveness of those in neighbouring countries. Some cities will have specified functions, such as specialising in heritage, tourism or scientific activities. The urbanisation rate is expected to reach 40 percent by 2020.

Per capita housing area is set to stand at 25 square metres nationwide by 2020. About 12.5 million square metres of social housing will be built in urban areas between 2016 and 2020.

The plan also defined the directions for restructuring the sector’s major industries and products, including social housing development, the real estate market and construction materials production.

The Government will introduce policies encouraging all economic sectors to invest in social housing and allowing Vietnamese expatriates and foreign individuals and organisations greater operation scope in the real estate market.

The construction sector is also set to accelerate the privatisation of State-owned enterprises and apply modern administration methods to facilitate company operation under the market mechanism.

Dong Nai businesses look for opportunities in US market

Over 150 manufacturing and export businesses attended a conference evaluating trade and investment opportunities in the US held in the Mekong Delta province of Dong Nai on January 28.

Dao Tran Nhan, Vietnamese Minister-Counsellor for Trade in the US, highlighted increasing access to the US market for Vietnamese goods, especially seafood and woodwork products.

Notably, four Vietnamese fruits—rambutan, dragon fruit, longan and litchi—have been allowed to be imported directly to the US market, while mango and star fruit are under review for market licensing, he added.

According to Director of Sourcing Services of Target Group in Vietnam Giovanni Rojas, there are vast possibilities for cooperation between Vietnamese suppliers and his company. The group is currently importing Vietnamese apparel products and seeking to widen its collaboration with Vietnamese partners.

Many US business representatives agreed that while opportunities are abundant, the question is whether Dong Nai businesses can meet US market’s requirements on both quantity and quality.

According to data from the General Statistics Office (GSO), Vietnam’s exports to the US in 2014 reached 28.5 billion USD, up 19.6 percent year on year.

Belgian enterprise invests in Vietnam

The Belgian firm Molenbergnatie inaugurated its branch at the Vietnam-Singapore Industrial Park in southern Binh Duong province on January 28.

The company has invested 21 million USD in the 12-hectare establishment in Vietnam, providing first class warehouse, logistics, food processing and packaging services for business clients.

According to Molenbergnatie Vietnam, its clients are mostly exporters of farm produce such as coffee, cocoa, rice and cashew nut.

Tran Thanh Liem, Vice Chairman of the provincial People’s Committee said Molenbergnatie’s operations are in line with the province’s priority in foreign investment attraction.

Founded in 1867, Molenbergnatie has become the world’s leading supply chain manager for coffee, cocoa, tea and nuts.

Deputy PM urges accelerating fishery development policy

Deputy Prime Minister Nguyen Van Ninh urged ministries, sectors and localities to continue working towards fishery development targets and speed up implementation of relevant policies.

Speaking at a meeting with stakeholders on their enforcement of the Government’s Decree No. 67 on fishery development strategies in Hanoi on January 28, he asked them to reorganise fishery production to ensure effective decree implementation while enhancing offshore operations in tandem with safeguarding the country’s sea and island sovereignty.

The Deputy PM also called for the ministries and sectors’ collaboration in seeking alternative financial sources and improving fishermen’s access to preferential loans.

After five months of decree implementation, the Ministry of Agricultural and Rural Development has received project proposals from 16 of 28 targeted provinces and cities, according to the ministry’s report.

As many as 12 localities have approved the construction and upgrading of more than 400 vessels and five have provided insurance for vessels, fishing equipment and fishermen worth more than 6.4 trillion VND (304.5 million USD).

More than 380 trillion VND (18 billion USD) has been allocated for the ministry to carry out projects on aquatic products and devise tax incentives in 2015.

During the meeting, participants suggested accelerating appraisal and approval processes by allowing local and commercial banks to join in the Steering Committee on the implementation of the decree.

They also requested expansions to the scope of targeted beneficiaries and services to ensure the comprehensive realisation of the policies.-

Domestic industrial production makes a good start

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

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

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

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

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

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

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

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

Quang Binh, Russian company to build thermal power plant

The central Quang Binh provincial People’s Committee and Russian Inter RAO Group have freshly signed a Memorandum of Understanding on the development of Quang Trach 2 thermal power plant.

Under the Build-Operate-Transfer contract, the plant, to be located in Quang Dong commune, Quang Trach district, is intended to cost 2.4 billion USD.

It is designed to have two turbines with a full capacity of 1,320 megawatts. The plant is slated to become operational in 2024 at the latest.

The province pledged to fully support the investors, with site clearance and the construction of crucial infrastructural facilities, like roads, power grids and water pipes.

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

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

The province and the Vietnam National Oil and Gas Group are working to tackle difficulties to make the plant become operational by 2020.

Crop protection concerns MARD and agriculture sector

Representatives from 63 provinces attended a conference held by the Ministry of Agriculture and Rural Development (MARD) on January 29 to outline key tasks for the upcoming year to ensure higher yields of crops for export and protection from environmental threats.

Speaking at the conference in Hanoi, Le Quoc Doanh, MARD Deputy Minister, said the ever increasing pressure on effective crop protection means farmers are facing a growing challenge to producing the high quality food international consumers want.

Most importantly, the government and the agriculture sector need to continue to be proactive in implementing regulations relating to pesticides and installing the latest in technological innovation to protect crops, he said.

The agriculture sector also needs to be clear on the consequences of short sighted decisions on issues such as disease, pest and weed resistance, and fully realize that the overuse of chemicals holds the potential to destroy sustainability for the sector.

Nguyen Thanh Liem, deputy director of the Department of Agriculture and Rural Development in Vinh Long called for developing plant disease forecasting systems to improve quality and combating environmental factors of farm produce.

Vinh Long is now one of localities which has had the most productive cultivation zones for fruit exports in the country.

RoK supports central region development

The Korea International Cooperation Agency (KOICA) in Vietnam has announced a series of new projects it is funding with Official Development Assistance (ODA) in central Vietnam.

The projects include a US$6 million planning scheme for the Huong River and Hue city and a US$6.2 million project to upgrade the Vietnam-Korea Friendship Information Technology College in Da Nang city.

They also include a US$4 million project to strengthen capacity for the Thua Thien Hue general hospital and Da Nang hospital and a US$9.7 million Heangbok programme in the central province of Quang Tri.

Over the past 20 years, KOICA has expended 60% of its total budget to support the central region.

The KOICA chief representative said in the future his organization will continue to support the central region by intensifying the participation of the private sector to increase the efficiency of ODA funding.

RoK ranks Vietnam top emerging market

The Korea International Trade Association (KITA) reported on January 29 that business enterprises from the Republic of Korea (RoK) view Vietnam as the most promising emerging foreign market for expansion.

According to KITA, the results of a survey of 537 Korean enterprises showed that 49% of the respondents chose Vietnam the most attractive investment market followed by Indonesia (37.4%), Thailand (30%), Malaysia (28.5%) and Turkey (20.7%).

Founded in 1946 to represent the interests of the RoK’s international traders, KITA has been a critical part of the country’s transformation into one of the world’s most preeminent trading nations.

Today, KITA is the RoK’s largest business association with 65,000 member firms, and continues to support Korea's business community through research, training, and networking of Korean enterprises with the global trade community.

 Deputy PM urges accelerating fishery development policy

Deputy Prime Minister Nguyen Van Ninh urged ministries, sectors and localities to continue working towards fishery development targets and speed up implementation of relevant policies.

Speaking at a meeting with stakeholders on their enforcement of the Government’s Decree No. 67 on fishery development strategies in Hanoi on January 28, he asked them to reorganise fishery production to ensure effective decree implementation while enhancing offshore operations in tandem with safeguarding the country’s sea and island sovereignty.

The Deputy PM also called for the ministries and sectors’ collaboration in seeking alternative financial sources and improving fishermen’s access to preferential loans.

After five months of decree implementation, the Ministry of Agricultural and Rural Development has received project proposals from 16 of 28 targeted provinces and cities, according to the ministry’s report.

As many as 12 localities have approved the construction and upgrading of more than 400 vessels and five have provided insurance for vessels, fishing equipment and fishermen worth more than VND6.4 trillion (US$304.5 million).

More than VND380 trillion (US$18 billion) has been allocated for the ministry to carry out projects on aquatic products and devise tax incentives in 2015.

During the meeting, participants suggested accelerating appraisal and approval processes by allowing local and commercial banks to join in the Steering Committee on the implementation of the decree.

They also requested expansions to the scope of targeted beneficiaries and services to ensure the comprehensive realisation of the policies.

Second thoughts on SMEs readiness for AEC

Vietnam small-and medium-sized enterprises (SMEs) had hoped to readily take full advantage of the ASEAN Economic Community (AEC) that will come into effect by the end of 2015.

The establishment of the AEC marks the comprehensive integration of Southeast Asia's economies, uniting them into a production, trade, and investment bloc composed of a consumer market 600 million strong.

Leading economists forecast that the bloc collectively will command an annual gross domestic product (GDP) of roughly US$2 trillion in 2016, making up 40% of global GDP.

However, despite all the rosy forecasts and figures, many leading experts are now experiencing second thoughts or buyer’s remorse if you will, and are questioning whether or not SMEs are adequately prepared.

They are just not quite sure where SMEs fit into the overall economic landscape once the AEC officially comes into effect and whether they will be able to effectively compete in the new marketplace.

Economic expert Pham Chi Lan said Vietnamese SME’s shortcomings are weak capacity to access markets and capital, shortage of state of the art technology, weak management skills and low labour qualification.

In addition, limited export markets and deficient trading skills prevent them from identifying potential markets.

A representative from the Vietnam SME Association said the AEC will open up more challenges for SMEs so they must improve upon their resources and capacity if they want to move ahead to become a leading business in the region.

SMEs should consider capacity as a priority to focus on as well as developing human resources, renovating technology and technical capacity and raising management capacity.

They also need to restructure their businesses, apply better production methods, build a long-term business strategy to expand production capacity and a business network, Lan said.

When the AEC officially forms, SMEs will have to operate in a much fiercer competitive environment, requiring them quickly to adapt to exist and develop sustainably in the market.

However, to grasp opportunities brought about AEC, the Government must devise proper support policies for SMEs to help them easily access bank loans, advanced technologies and markets.

The Government also needs to continue to strive to upgrade and revamp infrastructure, and ensure security, transparency and comprehensive legal framework for businesses to operate.

The legal framework should facilitate SMEs in trading and expanding export markets. To realise this, procedures, like business registration, licence granting, capital borrowing, payment method, tax declaration should be simplified.

In addition, relevant agencies should create the best possible conditions for SMEs to register doing business, change their products, and carry out import-export activities in accordance to law.

SMEs leaders are encouraging SMEs to take training courses on international business skills. Particularly, they have to closely coordinate with state-owned enterprises to raise competitiveness in the deep and wide AEC integration process.

Ha Nam cooperates with Japan to develop organic agriculture

The An Phu Hung Joint Stock Company in the northern province of Ha Nam is cooperating with H.B.C International of Japan to carry out a project on vegetable growing and processing to serve both domestic consumption and export.

The project, which began in July 2014, grows okra, sweet potato and soybean across two hectares in the Phu Van commune, Phu Ly city using seedlings imported from Japan.

According to Nguyen Thu Dang, Director of An Phu Hung, the soil has been processed to remove unwanted components and no artificial fertiliser was used.

All vegetables harvested from the field have met Japanese standards for imports.

After the successful pilot project, An Phu Hung intends to expand the cultivation area to 100 hectares in 2015, Dang said.

The project also opens up opportunities for further cooperation between the province and Japan in agriculture.

In an investment promotion trip to Japan late last year, the provincial authorities sought collaboration with Shiga and Ibaraki prefectures which are strong in agriculture.

A business delegation from Shiga Prefecture recently visited Ha Nam to study cooperation prospects.

In mid-January, representative from a Japanese group, Showa Denko, also came to the province to research the possibility of building an organic vegetable cultivation farm using LED lighting.

According to Nguyen Van Oang, Director of the provincial Department of Planning and Investment, modernising agriculture is one of three pillars of the province’s economic development, seeking to improve income and living conditions for people in rural areas.

Vietnam High Quality Goods 2015 awards

The Business Association for High Quality Vietnamese Products announced on January 28 that this year the – Vietnamese High Quality Goods – award will be presented to 520 enterprises.

In making the announcement, Hoang Trong, a representative of the association, said the winners have been selected based on the results of a survey of 20,000 consumers adding; this year there are 42 winners that have won for 19 consecutive years.

Over the past three years a grand total of 339 businesses have been honoured with the award based on the results of consumer surveys in 20 cities and provinces throughout the country.

Vu Kim Hanh, the association’s chairwoman, in turn said the survey has changed many times over the past 19 years to conform to the ever changing market conditions and the development of business.

Bank M&A activity likely to speed up this year

The Government’s resolution on financial system restructuring for the phase 2011-2015 has been implemented for the last three years and achieved success but its progress has been slow. The State Bank of Vietnam (SBV)’s circular 36 issued last November has put more pressure on cross ownership reduction among banks and been expected to speed up M&A activity this year.

The restructuring program has brought more achievements in the banking sector than in two other fields including state own enterprises and public investment.

As of October last year the total asset value of joint stock commercial banks rose VND160 billion against the previous year to reach VND2,624 trillion. Meantime the asset value of state commercial banks reduced nearly VND6.5 trillion to VND2,172 trillion. Joint venture and foreign banks’ asset value dropped VND7,331 billion to VND619,112 billion.

Available funds of the banking system rose over VND497 trillion. Capital adequacy ration (CAR) hit 13.22 percent, far higher than the permissible level of 9 percent. These numbers show positive results from the credit institution restructuring. However its progress has been slow.

At the end of 2011 the first three joint stock commercial banks were merged into Saigon Commercial Bank (SCB). Afterwards six out of nine weak joint stock commercial banks were handled. Habubank was merged into Saigon-Hanoi Bank in 2012.

Last year there were no considerable moves in the restructuring program.

Governor of the State Bank Nguyen Van Binh has recently affirmed that the banking system would enter the second restructuring phase from 2015. The first half of the year will be peak time when SBV has mandatory interventions to tackle weak banks that are unlikely to recover and develop. They might be dissolved, merged or go bankrupt.

Official information related to M&A deals this year has not been revealed. However financial experts forecast that the first deal will be Sacombank – Southernbank or Maritime Bank -  Mekong Bank because they have the same majority shareholders.

Singapore's United Overseas Bank (UOB)’s purchase of 100 percent stake of GPBank has been much discussed since last year.

Nam A Bank revealed that it is going to merge into another bank to increase the competitiveness in the market after raising its chartered capital and listing on the stock market.

Vietcombank shareholders have also approved the merger policy with Saigonbank at an unusual shareholders’ meeting. Vietcombank is the largest shareholder of Saigonbank with an ownership rate of over 8.2 percent.

BIDV is expected to merge with another bank possibly Mekong Housing Bank and Vietinbank is likely to merge with Oceanbank or PGbank.

Opportunities in Argentina’s cassava trade

The American Market Department under the Ministry of Industry and Trade (MoIT) sees huge opportunities to export cassava to the Argentine market in the coming time.

The department revealed that its market research indicates Argentina has a great demand for the consumption of cassava due to lack of cultivation zones.  

Annually, Argentina imports nearly 300,000 tonnes of it to complement production of its key exports of soy beans, oats, sunflower seeds, corn, rice and cotton. Last year, the South American country imported some 250,000 tonnes of cassava worth an estimated US$3 million.

Vietnam’s exports of cassava to Argentina in recent years have been modest, estimated at just 153 tonnes last year.

Despite difficulties such as high import tax and geographical distance, the MoIT sees bright prospects for the export of cassava and thinks Vietnam can be competitive in the market.

Vietnam, India trade swells in 2014

The two-way trade turnover between Vietnam and India jumped 6.81% on-year to US$5.59 billion in 2014, according to the Vietnam Customs office.

Last year, Vietnam’s imports from India outpaced exports nearly twofold withimports rising 8.71% to US$3.13 billion while exports modestly increased 4.36% to US$2.46 billion.

Vietnam imports from India consisted principally of seafood, cotton, machinery, metal, garments and automobiles.

The country’s exports to India that saw high growth included pepper, coal, chemicals, coffee, textiles, seafood, leather, ceramics and spare parts.

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