Trading ends week at a low

Benchmark indices closed lower last week on both national stock exchanges as profit-booking pressure intensified, though slight recoveries were seen during the final trading session.

The VN-Index on the HCM City Stock Exchange lost 1.24 per cent to end at 594.29 points, while the HNX-Index on the northern bourse closed 0.35 per cent lower at 90.04 points.

The market was seen opening the week with a gain, boosted by speculative stocks of real estate, construction and securities sectors, with the VN-Index approaching the 610-point level. Meanwhile, blue chips suffered from the selling pressure of foreign investors.

However, as investors sold stocks to take profits, shares reversed the upward trend, closing in the red on Tuesday and Wednesday.

According to analysts from Vietstock.vn, the net selling of foreign investors on blue chips was a major cause for the investors' growing caution.

While the benchmark indices posted losses on Tuesday and Wednesday, the trading volumes and values were the highest during the week. On Tuesday, the trading value on the southern bourse topped at VND5 trillion (US$238 million) on the exchange of 261 million shares, while the figures on the Ha Noi Exchange were VND1.7 trillion ($80.9 million) and 147 million shares.

The market witnessed a recovery on the final trading day of the week, as the bottom-fishing capital flow became more active, which helped improve investors' confidence. Stocks of securities, real estate and construction sectors soon regained their attractiveness.

However, liquidity eased along with the benchmark indices' gains. On HCM City Exchange, the trading value averaged VND3.48 trillion ($165.7 million) on the exchange, with an average volume of nearly 197.8 million shares.

The average trading volume and value on the northern bourse reached 118.5 million shares and VND1.38 trillion ($65.7 million).

Foreign investors boosted selling last week, on stocks such as Masan Group (MSN), Hoang Anh Gia Lai (HAG), Vingroup (VIC) on HCM City Exchange and PetroVietnam Technical Services Corporation (PVS), Vinaconex (VCG) and Sai Gon-Ha Noi Bank on the Ha Noi Exchange.

Meanwhile, FPT Securities said it worried that foreign investors would continue to be net sellers, which would have a negative impact on benchmark indices.

Still, the company said that the market might not witness huge losses, supported by positive macroeconomic information, as well as expectations about first quarter business results. 

Vietnam enjoys trade surplus with the US

In the first two months of the year Vietnam achieved a trade surplus of nearly US$3 billion with the US, according to Vietnam Customs statistics.

Two-way trade between Vietnam and the US was estimated at US$4.9 billion, a year-on-year increase of 25.8%,

Of the total, Vietnamese export earnings hit US$3.9 billion, up 25%, and its imports fetched US$936 million, up 22%.

Garments topped Vietnam’s export items to the US, raking in US$1.43 billion in value, rising 15% compared to the same period last year.

They were followed by shoes (US$444 million, up 23.4%) and wood products (US$293 million, up 19.25%)

Notably, export earnings from mobile phone handsets and components to the US increased by 11 times against the previous year.   

Gloomy forecast for Vietnam’s coffee output

Vietnam’s coffee output in the 2014-2015 crop is forecast to fall considerably against the previous season due to the prolonged unfavourable weather conditions so far this year, according to the Vietnam Coffee and Cacao Association (Vicofa).

Recent cold spells in the northern mountainous province of Son La have damaged over 1,300 ha of local Arabica coffee, which accounts for 10 percent of the total 11,000 ha of the provincial coffee farming land.

Coffee in the Central Highland provinces of Dak Lak, Lam Dong, Gia Lai and Kotum has also deteriorated as the dry season has reached its peak, resulting in water shortages.

The region, which boasts the country’s largest coffee growing area, is now able to ensure water for only 60 percent of coffee cultivation land, while the remaining is suffering from drought.

Adverse weather was also behind the drop in coffee production last year, during which Vietnam earned around 2.75 billion USD from exporting 1.32 million tonnes of coffee, down 25.1 percent and 23.6 percent in value and volume respectively against 2012.

Trade promotion activities help firms boost exports

Under two major programmes, namely the National Trade Promotion Programme and National Brand Programme, promotion activities have helped boost exports and business activities both at home and overseas.

According to the Vietnam Business Forum (VIB Forum), the National Trade Promotion Programme was carried out with three phases, consisting of 144 projects deployed by 71 units.

The programme focused on supporting leading export industries of Vietnam like fisheries, textile, footwear, agricultural product, food, wooden furniture and handicraft.

Vietnamese enterprises took part in well-known general trade fairs and specialised trade fairs in China, the US, Belgium, Germany, Russia, Japan, the Republic of Korea, Laos, Cambodia and Myanmar.

Many companies also attended trade fairs in foreign nations with different scales, with the most frequent destination being China, aiming to boost exports to this market and reduce trade gap with the neighbouring nation.

A wide range of international trade fairs were organised in Hanoi, Ho Chi Minh City and other major localities, with a primary focus on Vietnam Expo. Vietnam - China rotational border trade fairs were also hosted in Quang Ninh, Lang Son and Lao Cai provinces in 2013.

Vietnam also organised specific festivals for some key commodities including Tea Festival, Coffee Festival, Fruit Festival and Flower Festival in localities where such commodities were famous for hundreds of exhibitions, based on inter-regional model. Vietnamese goods fairs in the countryside and industrial zones were renovated to attain better results.

Vietnamese companies signed contracts worth of hundreds of millions of US dollars at trade fairs in foreign nations and international trade fairs in Vietnam. At domestic trade fairs, the number and value of contracts signed also increased.

Trade fairs and exhibitions belonging to the National Trade Promotion Programme supported 1,834 enterprises in 2013, representing an increase of 34% from 2012, installed 10,623 booths, attracted 1.85 million visitors, witnessed 572 contracts and memorandums of understanding signed with a combined value of over US$1.4 billion and VND162 billion, and raked in aggregate sales revenue of VND400 trillion.

Activities of the National Trade Promotion Programme always sticks to export-oriented promotion, gives priority to the development of domestic market in border-sharing, mountainous and offshore localities, thus contributing to the success of the “Buy Vietnamese” Campaign which encourages Vietnamese people to give priority to Vietnamese products.

The National Brand Programme, also known as Vietnam Value, continued to support joining businesses. It focused on popularising Vietnam Value-certified products.

Right from the start of 2013, the Council for National Brand Programme held a ceremony to announce 54 companies to be certified the National Value in 2012, including 37 companies also winning the title in 2010. As many as 25 companies earned the title in three consecutive times.

Trade - investment promotion agencies organised many activities throughout the year. They organised business delegations to Russia and Belarus to attend trade - investment promotion events where many companies signed export and distribution contracts.

Attending a similar event in the Republic of Korea, Ha Nam province handed three investment certificates to the Republic of Korea’s investors with a total pledged capitalisation of US$21 million. Shortly after that, a delegation of 20 companies from the Republic of Korea arrived in Ha Nam province to explore investment opportunities. A Republic of Korean firm decided to inject US$230 million into Ha Nam.

Together with 500 promotion programmes certified by the Vietnam Trade Promotion Agency (Vietrade) under the Ministry of Industry and Trade, hundreds of promotion programmes were granted by provincial/municipal Departments of Industry and Trade.

Importantly, competent agencies tightened supervision over promotion programmes and timely handled unfair programmes to ensure fair competition and the legitimate interests of consumers. Thus, promotional activities, commercial advertisements, monthly sales, holiday stimulus programmes were effectively carried out.

Creativity key for handicraft boost

Domestic handicraft exporters would gain 30-50 per cent turnover if they made efficient investments in design and enhancing creativity for meeting the demands and tastes of foreign markets, stated local experts.

Vietnamese artworks and handicraft products have been favoured by many overseas markets due to their high quality, said the deputy head of the Ministry of Industry and Trade's Trade Promotion Agency, Ta Hoang Linh.

However, poor design remained the biggest weakness of locally-made handicraft products, Linh said, accounting this to a lack of professional designers and inadequate capabilities of those currently working in the industry, who have failed to update themselves at par with the latest trends in the world market.

Handicraft producers agreed that creating new handicraft designs, which currently accounted for 30 per cent of the products' value, was an urgent requirement apart from ensuring good quality. It was also not an easy task for them due to insufficient investments and shortage of experience in product development, the firms claimed.

Thai Dai Phong, the director of Duc Phong Co, a firm that recorded an annual export turnover of US$1 million, described participating in domestic and overseas training courses and projects on product designs run by ministries, associations, and international trade promotion agencies, as a good opportunity for the handicraft producers to improve their capabilities and keep abreast with the latest trends.

Ho Tan Duong, the deputy chairman of the Viet Nam Design Association, said that his group, along with the ADS International Design and Art Centre and Vietrade, were working on a handicraft sustainable development project in collaboration with designers.

The association will help the designers in enhancing their corporate relations, customer research, and partnership opportunities.

The designers will be provided up-to-date design trends by the local and international experts via design education, training, and workshops.

Festivals, exhibitions, and competitions will also be organised. They will also have the opportunity to enhance their practical knowledge while working with these businesses.

Property firms warn of price hikes to boost sales

As the long-sluggish property market has started showing signs of recovery this year, certain housing developers have hinted at price hikes in an apparent attempt to attract buyers who fear a price rise.

Hoa Binh Co., Ltd, the investor of the Hoa Binh Green City project in Hanoi’s Hai Ba Trung District, is planning to increase apartment prices this month.

Nguyen Huu Duong, general director of Hoa Binh, said the price hike may be around 10%. The company is quoting the price at VND20.5 million per square meter for unfurnished units and VND26 million for furnished units, VAT excluded. With such prices, Hoa Binh earns almost no profit due to higher investment cost and interest rate, Duong noted.

Hoa Binh Green City has 560 apartment units, with over one-fourth of them already finding buyers. The property market in Hanoi late last year was taken by surprise when the project’s investor announced the apartment building’s balcony rails, elevators and lobby were all gold-plated.

Early this year, Viglacera launched a sale of apartments in the Thang Long Number One project, which attracted attention of many customers as it is located near the city center. Then there was a rumor that the price of Thang Long Number One apartments could rise.

According to a report on apartment prices recently released by the Hanoi Department of Construction, the housing price fall has shown signs of easing since the final quarter of last year and some projects, especially high-end ones, have reported price rises of 1-3%.

Nguyen Quoc Khanh, chairman of G5 property exchange, said some investors had raised apartment prices by 3-5%.

Some high-end projects at prime locations and those soon to be handed over to buyers have proven attractive to customers but supply is limited.

Investors and speculators have taken advantage of this to push up selling prices.

The price of Mandarin Garden apartments invested by Hoa Phat Group, for instance, has been increased by investors who can enjoy a profit margin of VND300-500 million per unit. Similarly, Vinaconex 7’s project at 136 Ho Tung Mau Street in Tu Liem District has also seen prices surging VND1-2 million per square meter from the original price.

According to Dieu Lanh at Thang Long property exchange, since the year’s beginning, a lot of customers have called to ask for information, leading investors to raise prices.

Explaining the price hike at Hoa Binh Green City apartment project, Duong said the announcement is aimed at prompting customers to quickly make decisions.

“The apartment segment is improving with many successful transactions reported by projects at good locations or with good progress. Therefore, price adjustments are unavoidable,” he said.

However, some have cast doubt over what might be apartment developers’ trick to lure customers as the property market is still in distress and transactions have improved at some projects with affordable prices and small apartment sizes.

Exporters object to forthcoming removal of e-customs

Exporters have expressed outcries over an internal memo in which the Ministry of Finance requests a strengthening of anti-fraud activity relating to e-customs clearance procedures, which will eventually make life hard for the export sector.

At a monthly meeting of the Ministry of Industry and Trade last week, Dang Phuong Dung, vice chair and general secretary of the Vietnam Textile and Apparel Association (Vitas), asked the ministry, its import-export department, and relevant enterprises to adopt a position against the Ministry of Finance’s move.

The Ministry of Finance has instructed the General Department of Customs to revise regulations governing e-customs in a way that will leave adverse impact on exporters from early April.

The association has written to the Ministry of Finance, the General Department of Customs, the Ministry of Industry and Trade and the Ministry of Justice expressing grave concern over this regulatory adjustment.

According to the controversial plan of the Ministry of Finance, exporters would not be allowed to file customs declarations before goods are amassed, nor exempted from customs requirements even if they are in priority areas.

After amassing goods, exporters should submit a statement making clear a tentative schedule for shipment, and goods loading into containers and trucks so that customs officers could inspect.

The places where goods could be amassed should be seaports, airports and bonded warehouses, among others which must be registered with the customs as areas for customs inspection.

Export shipments of goods currently subject to inspection exemptions would have to be scrutinized  by the customs as well.

This is a move of the Ministry of Finance to prevent trade fraud, falsification of export documentation and smuggling, which means customs officers must eyewitness the goods registered for export.

The ministry has ascribed this legal change to the fact that a host of businesses have taken advantage of the liberal electronic customs clearance mechanism to make illegal gains. Of more than 4,000 exporters who have chosen e-customs to have their export documents processed, the customs have found hundreds of them falsifying their documentation.

In many shipments, the customs discovered no goods in containers, smuggled goods, illegal drugs and arms. A case in point is 229 kg of heroin passed through the customs at Tan Son Nhat International Airport thanks to the e-customs procedure late last year.

Dung of Vitas said the Ministry of Finance’s internal memo would have catastrophic impact on the export sector as it is seen as a binding legal document.

She said she shared the difficulties faced by the customs in the fight against illegitimate practices committed by a couple of enterprises but she objected to a tendency in which a total ban will apply when authorities become helpless.

This will adversely affect law-abiding exporters, especially those of Vietnam, she said, adding growing competition would not allow for any delay in delivery and any additional cost for goods transportation.

For garment exporters, delivery time is a factor that decides the success or failure of business, she noted.

The current rule that permits exporters to prepare an export document and fill in the e-customs form in advance makes life easy for exporters to fast-track delivery, ship at any border gate they wish, and choose to package, containerize or parcel out goods.

But when the new rule comes into force, exports will have to transport goods to a designated location. This will throw exporters into a difficult position as it will take them more time to collect goods from different manufacturing sites and then bring them to the designated area.

The resulting outcome is exporters will have to cover extra costs for transportation and storage.

Vitas has requested the Ministry of Finance and the General Department of Customs to keep the current e-customs mechanism in place and sort things out, such as increasing inspections of just those enterprises suspected of trade fraud.

Overseas investment path needed

The State should provide more detailed regulations and guidance on handling overseas investment activities for local enterprises in the latest draft amending the Law on Investment, said an expert.

Nguyen Mai, chairman of the Viet Nam Association of Foreign Invested Enterprises (VAFIE), said State management of activities related to overseas investment has been addressed by only a few regulations in the draft, reported the Thoi bao Kinh te Viet Nam (VnEconomy) newspaper.

Meanwhile, the process for establishing enterprises and the State management activities for those enterprises differ completely according to whether the enterprise has an investment in Viet Nam or whether it has overseas investments, he stated.

If the committee compiling the draft wants to maintain the regulations on overseas investment activities, the committee should create more detailed regulations and guidance for these activities, Mai noted, adding because in the past, overseas investment activities were scattered, and it is unclear whether they brought any benefits to the country.

According to the latest statistics on investment in foreign territories and countries, released by the Ministry of Planning and Investment, Viet Nam's enterprises backed 742 investment projects in foreign territories and countries in the first quarter of 2013, with total registered capital of US$15.5 billion.

During the period 2006-13, domestic firms made investments in 59 territories and countries, of which the largest volume, 227 investment projects, was made in Laos, with total registered capital of $4.2 billion, and the second largest volume, 129 projects, was made in Cambodia, with total registered capital of $2.7 billion.

A total of $3.8 billion has already been disbursed and includes $691 million sent to Laos and $621 million sent to Cambodia.

The disbursed investment amount was $2.9 billion for the oil and gas sector, $500 million for the rubber industry, $400 million for the hydro power sector and $249 million for the telecom sector.

Overseas investment activities have surged over time, but the Law on Investment 2005 has not introduced any strict regulations for these activities.

According to the committee compiling the draft, there are no clear regulations on State management for overseas investment capital because each project includes investment capital that must be transferred from Viet Nam to foreign territories and countries and investment capital that is mobilised in the foreign territories and countries where the project is located.

In the coming period, the State will promote the management of the investment capital transferred from Viet Nam to other territories and countries to ensure that the enterprises use it in accordance with the Law on Investment, the committee stated.

Dang Huy Dong, deputy minister of planning and investment, said that the management of overseas investment activities involved the management of investment capital. So, the law should define which office manages the overseas investment activities.

Dong also pointed out that the law should encourage enterprises to provide an initial investment in the project and then mobilise more capital in the territories and countries where the project is located.

Therefore, the State should manage real capital transferred to the project, not only the registered capital, he said.

In January, the State Bank of Viet Nam (SBV) issued Circular 36/2013/TT-NHNN on the opening and usage of foreign currency accounts for investment activities abroad.

Under the newly approved circular, after receiving a certificate for overseas investments, an investor must open an account for all transactions related to investments in foreign currencies at a competent credit institution.

The investor will also have to register with the State Bank or its branches in the provinces and cities. Investors with several overseas investment projects must open an account for each project.

If a project receives investments from multiple investors at home, each investor must open an account for his/her investment at the same competent credit institutions, in accordance with the investment certificate issued by the authorised agencies of Viet Nam.

The SBV's Department of Foreign Currency Management is in charge of verifying the registration of overseas investments, account changes and capital transfers.

The circular came into effect on February 14, 2014.

Apparel group seeks more capital in anticipation of TPP

To take full advantage of the benefits from the Trans-Pacific Partnership Agreement (TPP) to raise more capital for material production projects, the Vietnam National Textile and Garment Group (Vinatex) has appealed to the Government to allow enterprises to keep the money obtained from selling the State stakes for five years after equitisation. An insight by the online Vietnam Economic News of the Ministry of Industry and Trade.

General Director of Vinatex Tran Quang Nghi said 2014 is an important and decisive year for preparation of textile and garment enterprises in anticipation of the TPP. It is expected that in the first half of 2014, the TPP will be officially agreed, bringing a huge opportunity for Vietnam’s textile and garment export growth.

According to its plan, in 2014 Vinatex will carry out 57 investment projects, including 15 on yarn, eight on weaving, 24 on sewing and two on farm cotton.

Nghi explained that Vinatex’s weaving and dying projects this year require a large source of capital which will be slow to retrieve and the projects are not backed by local authorities as they are concerned about environmental issues. Meanwhile, the group’s charter capital is too small to meet the requirement, meaning it needs to borrow.

According to Le Tien Truong, Vinatex Deputy General Director, investment in material projects is very important for the group to take full advantage of the benefits from the TPP. However, these are capital-intensive projects and also require a team of skillful workers. That is the reason why in 2012 and 2013, Vinatex mainly invested in sewing and weaving projects while the yarn production and dying projects are left for this year, close to the moment the TPP is signed, for more efficiency.

Vinatex is now on the horns of a dilemma because of the failure in meeting the timing of the investment, it will not take advantage of the TPP and it is also being stuck in capital shortage for the implementation of these projects. However, there is still an opportunity for the group as it is going to undergo equitisation by the end of June 2014, after which the group’s charter capital will increase to 5 trillion VND (235 million USD), with 49 percent of the shares to be sold, with the State retaining a 51-percent stake.

To solve Vinatex’s capital shortage, the group’s leaders has appealed the Government to allow enterprises to keep the money obtained from selling the state stake for five years after their equitisation to support their investment projects, especially in material production. They also asked for more favourable policies in terms of lower land rent and adjustment of the environmental criteria to attract more investment.

Making use of EU regulation to boost exports

Vietnam is one of 88 countries enjoying tariff cuts under the European Union’s revised Generalized Scheme of Preferences (GSP) which came into effect as of January 1, 2014.

However, leading experts say the GSP scheme, in fact, only provides modest benefits to Vietnam, and its incentives are definite.

Under the scheme, GSP is applied to most of Vietnam’s export products, including footwear, hats and umbrellas which have already been listed under the ‘graduation’ mechanism for competitive products.

Tran Ngoc Quan, deputy head of the European Market Department under the Ministry of Industry and Trade, postulates the GSP scheme will no longer be valid when a free trade agreement (FTA) between Vietnam and the EU is signed and comes into effect.

Although graduation thresholds increase from 15% to 17% on products, excluding garments, many of Vietnamese exports are likely to reach these threshold levels and will not enjoy EU preferences.

If the new GSP is applied, the market share of Vietnamese coffee, tea and spices in the EU will increase to 21.68% from the current 12.11%, meaning these products will cross over the graduation threshold and will not receive preferences.

Similarly, Vietnamese seafood and footwear are no exception, as these two groups of products are expected to make up 19% and 34% of the EU’s market share respectively.

Claudio Dordi from the EU Investment and Trade Policy Support Project says EU tariff incentives create a competitive advantage for Vietnamese garment businesses, especially when their major rival, China, is paying Most-Favoured-Nation (MFN) taxes which are 3% higher than GSP levels on average

Customers, therefore, will place orders with Vietnam, in lieu of China to benefit from lower tariffs, he says.

However, Dordi warns the GSP brings a definite competitive advantage as the validity of the GSP is not permanent.

Than Duc Viet, a Garment 10 Corporation representative, says the most difficulty in gaining GSP advantages is to meet Rules of Origin of materials to get certificate of origin (C/O) form A.

Currently, the company cannot apply for incentives for its FOB products as most of its materials are imported from China at the customer request.

Vietnam, an export-driven economy mainly based on outsourcing contracts, has no choice but to meet Rules of Origin to enjoy trade and tariff incentives. With its added value of less than 40%, Dordi suggests the garment sector play by these rules to make the most of preferences.  

Former Trade Minister Truong Dinh Tuyen posits GSP does not exert sufficient pressure on economic restructuring, thus affecting a trade balance. Exports may rise thanks to GSP, but imports may also increase due to low competitiveness in labour productivity, quality and production costs.

As Vietnam is integrating more deeply into the world economy and has signed many free trade agreements, tariffs will be slashed gradually, normally over a period of 10 years, and as a result GSP will no longer be important to businesses.

This means GSP creates an external source of competitive advantage and domestic businesses should not rely on this source, Tuyen says. Instead, he advises businesses to grasp GSP rules to avoid obstacles, even losses when exporting products to these markets.

To this end, the former Trade Minister says business should make full use of GSP incentives by improving product quality, diversifying their exports, and reducing costs and prices to sharpen the competitive edge of Vietnamese products.

In addition, a greater effort is needed to accelerate economic restructuring and growth model shifting, he concludes.

Cement export to ease overproduction

Promoting exports is still viewed as a potential solution for a cement industry currently domestic oversupply pressures.

Hoang Manh Truong, chairman of the board of the Vissai Ninh Binh Group, a big multi-field non-state economic group with cement production as one of its core functions said the group’s cement and clinker was being exported healthily, fetching $54-60 per tonne depending on the market.

He said that last year although domestic consumption was low, the group reached its sales target of 6.2 million tonnes.

Vietnam Cement Industry Corporation (Vicem), which holds a 38 per cent market share, exported 2.3 million tonnes of cement and clinker last year, a 7.8 per cent increase on-year.

Chairman of the board of Vicem Luong Quang Khai said exports were key to helping ease oversupply pressures.

“Exports will help offload surplus inventories and attract foreign currencies. At current the clinker and cement export prices stand around $38 and $55 per tonne, respectively. And at this price Vicem can get back its production cost with a little profit,” he added.

The group aims to export 2.6 million tonnes of both clinker and cement this year.

Vietnam is estimated to produce 8-10 million tonnes domestic surplus of cement every year. The oversupply resulted from a mushrooming of manufacturing facilities in recent years. At present the country has 106 cement factories.

The Ministry of Construction (MoC) estimates cement consumption will reach 62-63 million tonnes this year, a mere 1.5-3 per cent increase compared to 2013. It announced an export goal of around 14 million tonnes, on level with last year.

Vietnam to receive more FDI projects

Another foreign investment wave has been forecast to come to Vietnam from multi-national companies during the 2015-2020 period.

The forecast was made by several experts at a recent conference about Vietnamese economics and multi-national companies held by Bizlive News.

According to Nguyen Mai, chairman of the Foreign Investment Association, multi-national companies are recovering from the recession but still searching for potential markets. Vietnam is included in this group of potential markets for various reasons, such as its large population. Vietnam's economic growth is also expected to be around 6-7.5%.

Even though the legal framework is currently considered to be incomplete, Vietnam has the advantage of political stability in the Southeast Asian region. Park Chang Eun, deputy head of a South Korean trade promotion and investment, said another advantage is Vietnamese people's ability to learn new from technologies quickly.

In addition, the upcoming trade agreements, especially the Trans-Pacific Partnership (TTP), will expand investment opportunities in Vietnam. "We received two foreign investment waves for 1991-1997 and 2003-2007. I think we'll have a third one for 2015-2020 period," Nguyen Mai said.

At the conference, deputy head of Foreign Investment Agency of Vietnam's Ministry of Planning and Investment, Nguyen Noi, said, "In near future, multiple measures to improve the economic environment will be implemented to streamline customs procedures."

The US, Japan and Singapore have the highest number of multi-national companies that invest in Vietnam, focusing on processing, hospitality and real estate. According to the experts, foreign investment into the real estate sector might increase as the government starts to allow foreigners to buy property beginning in July.   

Vietnam Farm Expo 2014 to be held in October

Vietnam Farm Expo 2014 will be held at Tan Binh Exhibition and Convention Center in Ho Chi Minh City on October 8-12.

Around 250 booths will display Vietnamese agricultural products and processed agricultural food. There will be a seminar on building and developing brand name and export market.

The event is a chance for domestic enterprises to promote their products, seek business opportunities, and develop the agricultural industry.

Australia International Sourcing Fair 2014 featuring garment and textile products, clothing and footwear will be organized in Melbourne on November 18-20 by the Vietnam Trade Office in Australia, according to the Ministry of Industry and Trade.

Binh Duong applies national one-door customs mechanism

Binh Duong Customs Department was chosen by the General Department of Customs as a pilot unit in applying and launching the national one-door customs mechanism, including declaration, receipt, exchanges and feedbacks of information on the national one-door customs portal.

According to the Binh Duong online, the department is eager to apply new technology to cut time and cost for businesses and stands ready to instruct enterprises how to use their new system.

The project of building and launching e-customs programme and national one-door customs mechanism, which helps modernise the Vietnam Automated Cargo and Port Consolidated System and the Vietnam Customs Information System (VNACCS/VCIS) is supported by the Japanese Government.

The project’s goal is to transfer modernisation system being applied by the Japanese customs sector and agencies to Vietnamese partner. Once transferred, the system will become an effective tool to support Vietnamese customs sector and relevant agencies successfully applying the national one-door customs mechanism.

As a matter of fact, it will create advantages of trade and investment in Vietnam as well as strengthen efficiency in the State management in general and the State management on customs in particular.

Applying VNACCS/VCIS into Vietnamese Customs sector is a high determination of the Vietnamese Government, the Finance Ministry and the General Department of Customs. With strong determination,Binh Duong Customs has actively launched test of VNACCS/VCIS system.

Binh Duong Customs invited software enterprises to co-host training classes on VNACCS/VCIS system for about 2,000 local companies. In addition, Binh Duong Customs’ leaders have held activities to help businesses learn about benefit and importance of the project.

At this moment, enterprises have been given consultancies on completing customs declaration on the VNACCS/VCIS system at Binh Duong Customs’ branches. Customs agencies’ assistance has helped businesses master and positively participate in the test. Especially, Binh Duong Customs and software companies are ready to help companies to take part in this system.

Binh Duong Customs’ vice head Nguyen Truong Giang said “After training, nearly 2,000 businesses voluntarily register to apply the VNACCS/VCIS system. To learn and listen to business community’s ideas relating to advantages and disadvantages of the system, Binh Duong Customs’ leaders paid visits to businesses to hear their aspiration and solve their problems.

Masumoto Kazuya, Vice General Director of Maruichi Sun Steel Company in Di An town said “Over the past time, the provincial agencies, especially customs sector, have facilitated investors’ procedure completion. Our company will double output of import and export commodities in the coming time. We hope that local customs sector will continue to solve difficulties for businesses.”

In March, 2014, Binh Duong Customs will organise three dialogues with foreign businesses to solve obstacles relating to customs procedures.-

EU-Vietnam FTA: Opportunities and challenges

After six rounds of negotiations, Vietnam and the European Union are now close to signing the EU-Vietnam Free Trade Agreement (EVFTA) which is expected to benefit the Vietnamese economy, especially in the export sector, said weekly Vietnam Business Forum magazine.

However, experts at the seminar "Social, Economic and Environmental Assessments of the EU-Vietnam Free Trade Agreement" have raised concern about how the Vietnam's economy will be impacted once the agreement is signed, Vietnam Business Forum reported on March 17.

The seminar was organised by the EU-Vietnam Multilateral Trade Project (EU-MUTRAP) in collaboration with the WTO Centre in the Ho Chi Minh City.

Claudio Dordi, Chief Advisor of the European Trade Policy and Investment Support Project (EU-MUTRAP), was quoted as saying that in the recent agreements, the EU has almost liberalised commodity entirely for partners or maintained the protection under one percent of the trade turnover (as with the Republic of Korea). The removal of tariffs tends to focus on the first year and not longer than 10 years for the EU. Particularly for Vietnam, the EU expects that the FTA between the EU and Vietnam the tariff lines at 95 percent will be liberalised within 7 years. Based on the typical economic model of the Vietnam's economy, if the EVFTA is signed, Vietnam will benefit from the agreement, particularly related to the increase of actual salary and national income.

"Even if EVFTA has not been signed, the trade between Vietnam and the EU basically has also increased; however, when the rules of the Agreement is executed, only the negotiated tariff reduction is expected to increase the Vietnam's exports to the EU by about 30 percent to 40 percent, higher than the rate increased in the imports. The sectors which most likely benefit from the EVFTA include textiles, footwear, and processed food (including seafood),” Claudio Dordi stressed.

“However, the expansion of the production capacity of Vietnam to meet the increasing demands of the EU on a number of items will determine whether the overall increase in exports will be significant or not. Also thanks to the FTA, the service sector is also expected to expand significantly and probably contribute to the improvement of the performance of the entire economy of Vietnam," he added.

According to Paul Baker, Specialist of the EU-MUTRAP project, the impacts of the EVFTA on environment are unremarkable. The FTA has a neutral impact on the national carbon emissions if the emission per unit of output in each sector is stable. But basically, whether the FTA is signed or not, the carbon emission of Vietnam will increase in correspondence to the growth of the economy today.

Former Minister of Trade Truong Dinh Tuyen, who is also a senior expert of the EU-MUTRAP project, said Vietnam is now negotiating many trade agreements, of which the EVFTA is seen as a comprehensive and high-quality agreement based on the WTO's standard. Accordingly, some fields in the WTO agreement in goods, services, and technical barriers will be committed more intensively by Vietnam.

Other fields in investment, government procurement, the state-owned enterprises and competition policies, sustainable development, and renewable energy will have to be committed and adjusted by the EVFTA. Former Minister Tuyen recommended that Vietnam should also set out the inquiries associated with the negotiation process, which require EU to recognise Vietnam as a country with market economy to help the country’s benefits be guaranteed.

In terms of legal and business environments, the EVFTA and other agreements in negotiations will inevitably impact the institutional and business environments of Vietnam. Specifically, in terms of institution, Vietnam is forced to amend and enact many laws such as corporate law, investment law, and land law. In addition, the agreements also make impacts on the business environment through the commitments on customs, border measures and transparency of the legal framework.

Tuyen emphasised that Vietnam can only take advantage of opportunities and gain power and strength to overcome challenges after the EVFTA as well as other free trade agreements are signed to bring more transparent investment environment, ventilation and reduce business costs.

On the other hand, Le Trieu Dung, Deputy Director of the Multilateral Trade Policy under the Ministry of Industry and Trade, said the signing of the EVFTA will bring great benefits to many industries and economic sectors of Vietnam as well as contribute to the increase of the bilateral trade.

However, the top concern of Vietnam relates to the non-tariff measures (SPS and TBT) that are applied by the EU. Accordingly, Vietnam needs more consultation when making decisions related to these rules and starts build up capacity to help the businesses meet the new standards.

Vietnam's institutional framework needed to support the introduction of EU procedures to the enterprises and create favourable conditions for them to export to the EU. In addition, Vietnam should also pay attention to the negotiations of the EVFTA in terms of quality and standards at the same time.

Besides, Vietnam should focus on the impacts on the key areas such as attraction of FDI, improvement of competitiveness, job creation and improvement of quality of life for workers, to effectively tap into every opportunity and overcome challenges.-

Vinalines plans port share sale

Vietnam National Shipping Lines has announced plans for an initial public offering in May for the biggest seaport  operator in the north.

The corporation (Vinalines) general director Vu Khac Tu said the equitisation plan for Haiphong Port would be approved by April 15 and make an initial public offering (IPO) and sell stakes to strategic shareholders within the coming one and a half months.

“The biggest port in the north of the country plans to officially operate as a joint stock company from July 1, 2014,” said Tu.

The Vinalines board last week announced that it approved a corporate valuation for the equitisation of Haiphong Port at VND4.32 trillion ($206 million), equivalent to 201 per cent of its book value.

Haiphong Port is the biggest and busiest in the north, accounting for some 40 per cent of cargo volumes in the northern region. In 2013, Haiphong Port recorded a profit of VND150 billion ($7.14 million) and processed VND18.8 million tonnes of cargo.

The corporation will sell a 25 per cent stake in the port as part of the group’s wider restructuring plan for the 2012-2015 period.

According to Vinalines’ restructuring plan, profitable ports such as Haiphong, Saigon, Quang Ninh and Danang and its subsidiaries would be equitised by the end of this year.

Deputy general director of the Haiphong Port Bui Chien Thang said this meant that trillions of dong worth of shares would be up for grabs, but it was proving difficult to find buyers for such large stakes.

Thang told local media that investors would face tight scrutiny if they were considering becoming strategic shareholders in Haiphong Port.

He elaborated that domestic investors would need to have at least five years of experience in port and maritime operations, total assets of VND1 trillion ($47.6 million) and minimum equity of VND700 billion ($33.3 million).

The strategic shareholders would also have to boast at least three years of post-tax profits and not already be a strategic investor or founding shareholders or even a shareholder with a 5 per cent or greater stake in the charter capital of any business in the port sector in the northern region.

Ho Kim Lan, general secretary at Vietnam Seaports Association, said that it would be difficult to find strategic shareholders based on such tight requirements, especially in the current difficult economic situation.

However, Lan emphasised that Haiphong Port still offered good value given the successful equitisation seen at the city’s other port at Doan Xa.

Prior to 2001, Doan Xa Port had never surpassed VND8 billion ($380,952) in annual revenue until equitisation. The port’s revenue had jumped to VND40 billion ($1.9 million) in 2004, just three years after equitisation.

Golf course land use sparks row

The proposed shift to turn the premium golf course Ocean Dunes Golf Club in the south-central coastal city of Phan Thiet into a residential development has sparked controversy.

The redefinition of the land used by the Ocean Dunes golf course for residential development has sparked controversy

In early March, Rang Dong Group, headquartered in the south-central coastal province of Binh Thuan and also the new owner of Ocean Dunes Golf Club, received the Binh Thuan Provincial People’s Committee’s permission to change the 18-hole golf course - one of the first in Vietnam - into a residential township development.

Le Tien Phuong, Chairman of the Binh Thuan Provincial People’s Committee said there was consensus on the decision, “it proposed that the provincial party committee consider the case. We’ll undertake the necessary procedures, including seeking approval from the prime minister.”

The provincial authorities said the ineffectiveness of the Ocean Dunes course was a key reason behind the move, citing the fact that in ten years of operation during 2004-2014 it had incurred cumulative losses amounting to VND115 billion ($5.5 million), according to the Binh Thuan Provincial Tax Department.

Nguyen Van Dong, chairman of Rang Dong Group said that if the proposal was finally approved, the group would invest in a multi-function urban area consisting of multi-storey buildings, villas and garden houses.

Dong said the changing function of the project would make more efficient use of the land and provide an estimated VND1 trillion ($47.6 million) in land taxes for the provincial budget.

With the estimated investment capital of around VND3 trillion ($142.8 million), a third of the investment capital will be put into roads, power and water, drainage and landscaping.

The proposal however, has encountered opposition from some that still claim the golf course promotes tourism or that instead it should be converted into a park to improve Phan Thiet city’s environment.

Former Deputy Chairman of the Binh Thuan Provincial People’s Committee Nguyen Van Thu was quoted as saying by local media “in the long run, retaining the golf course land and turning it into a park would be much more beneficial to Phan Thiet tourism then collecting VND1 trillion in taxes from developing it into an urban development.”

“Phan Thiet is a tourism city but it doesn’t have a decent park. Local people mainly entertain themselves in coffee shops or food shops, I don’t see why we’re focusing on developing a new urban area when there are plenty of houses still available to buy,” Thu stressed.

According to former provincial Party Secretary Dinh Trung, there would be further discussion on the proposed change.

Ocean Dunes was established by US billionaire Larry Hilblom - one of the founders of global DHL Group - in 1993. The billionaire built a 62 hectare golf course and upgraded a state-owned hotel into the 4-star Novotel resort.

However, after the billionaire died in an aircraft accident, the golf course and the resort were sold twice to foreign partners before falling into the hands of Rang Dong Group in November 2013 at the cost of about $20 million.

Although the proposal has far from being agreed, golfers at Ocean Dunes Golf Club were told by Rang Dong Group to move to play at the Sea Links golf course (also managed by the group) as the Ocean Dunes course would close from early April.

Apartment developers wring buyers in rash dash for profit

Despite continuing difficulties with huge stockpile of apartments, some real estate developers have marked solid sales over the past few months and are increasing prices.

On March 15, the Hoa Binh Group - developer of the Hoa Binh Green City project in Hanoi - suspended sales in order to adjust prices. Nguyen Huu Duong, general director, said prices would rise by at least 10 per cent, from current VND20.5 million ($976) per square metre of bare-shell apartments.

“The prices at Hoa Binh Green City have been held back and are well below our high level of quality and peace-of-mind. Compared to projects of a similar scale and quality, we invested 25 per cent more to ensure these things,” Duong said. Another reason Duong is confident is the high speed of construction. It is now 70 per cent complete and aims to begin handing over finished units in June this year.

Hoa Binh Green City is not alone in increasing prices. Thang Long Number One, in the west of Hanoi, put them up 9 per cent compared to those quoted in November 2013.

Another Hanoi project, Golden West is also expected to increase its prices by 7 per cent in the coming time.

“The gap [between the old and new price] will recapitalise developers after a long period of little to no returns on their investments,” said Vu Cuong Quyet, general director of Dat Xanh North Joint Stock Company. But Quyet warned that projects planning to increase prices should be on-schedule and of good quality.

Apart from that, these projects seem to be nearly finished and customers are preparing to receive their apartments. “This schedule seems to have convinced customers,” he added.

Nguyen Quoc Khanh, chairman of G5 Real Estate Alliance, said increasing prices were a sign of a warming market but that it was not out of the woods yet. He advised developers to consider raising prices very carefully before making a decision, lest they lose potential clients.

In several other projects in Hanoi liquidity has remarkably increased recently with some speculative investors selling apartments still on paper for profits of VND100 to VND200 million ($4,760 to $9,520), a level rare seen for many years.

According to the Hanoi Construction Department, the apartment price index for the fourth quarter of 2013 for nearly all districts in Hanoi had increased by up to 3 per cent.

Additionally, the number of high quality apartment projects in the inner city still under construction was few. Those projects range in price from around VND30 to VND40 million ($1,428 to $1,900) per square metre.

Sales of high-end apartments in Hanoi have picked up considerably in recent months after a few years in dormancy. Thang Long Number One, for instance, have sold 90 per cent of 970 units compared to just 40 per cent sold a year ago. Cen Group recently sold nearly 50 apartments at StarCity Le Van Luong for average $1,600 per square metre of bare-shell units.

Chinese firm targets Quang Ninh expansion plans

Texhong Group, one of the largest suppliers of cotton and spandex in the world and among the top 10 businesses in China’s textile and garment sector, is making a further push into Vietnam with its newest $300 million cutting-edge fabric plant proposed to open in Quang Ninh this May.

The group entered Vietnam in 2006 with a $200 million facility in the southern province of Dong Nai.

In the eyes of numerous Chinese investors, Vietnam is still a highly attractive destination for new and expansive investments. Immediately after joining a conference on promoting investment in Quang Ninh in late February 2012, Texhong made the bold decision to open this plant there.

Two years later the project has been nearly realised and will boast 500,000 spindles and 4,000 workers when it opens its doors in May. The speed of the construction is a testament to the group’s vision and confidence in the locality.

“The possibility of the Trans-Pacific Partnership (TPP) agreement being signed in the near future represents multiple growth opportunities and has helped fine-tune our development vision for higher operation efficiency,” said Texhong chairman Hong Tian Zhu.

When asked about why Texhong decided to open a new facility in Quang Ninh’s Mong Cai Economic Zone, Hong said “We appreciate the infrastructure conditions of the area. They are conducive to investment and trade. We can also tap the advantage of the available workforce in the Red River Delta.”

“The attractive investment climate and active support of Quang Ninh’s authorities was instrumental in our decision to settle down in Quang Ninh,” he underscored.

In reality, Texhong is acting as a strategic partner to Quang Ninh. At this time the group is also working on a project to build the Hai Ha seaport industrial park (IP), slated for execution in the first quarter of this year.

The IP’s prime target is to promote textile and garment and supporting industry chains to address growing market needs and satisfy TPP requirements.

“We hope more domestic and foreign investors tap Quang Ninh’s advantages and contribute to building a more prosperous Vietnam,” Hong said.

Founded in 1997 and listed on the Hong Kong Stock Exchange in 2004, Texhong boasts an expansive network of more than 1,600 major customers and sales agents in Hong Kong, China, Korea, Bangladesh and several countries throughout Europe.

To satisfy ever-increasing global demand the group has built 11 textile and garment plants in China’s Changjiang triangle (Shanghai, Jiangsu and Zhejiang) and three plants in Vietnam’s northern and southern regions.

By the end of 2013 the group’s headcount surpassed 18,000 with the total production value exceeding $1.62 billion per year.

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