Experts: FTA will not solve Vietnam trade deficit with South Korea

The Vietnam-South Korea free trade agreement (VKFTA) signed early this month will open up many opportunities for Vietnam to boost exports to Korea but will not help reduce Vietnam’s trade deficit with the northeast Asian country when it takes effect, experts said.

At a seminar on the commitments and impacts of VKFTA on Vietnamese enterprises in HCMC last week, Pham Khac Tuyen from the Ministry of Industry and Trade’s Asia-Pacific Market Department said this bilateral trade pact is likely to lead to Vietnam’s growing trade deficit with Korea due to more trade and investment flows.

However, Tuyen said Vietnam’s trade deficit with Korea is not to worry in the short term as Vietnam mainly imports materials and machines for the production of Korean firms in this market. Most of the products made by these enterprises are exported to other markets and only a small proportion is shipped back to Korea.

Dao Thu Huong, head of international economic integration at the Ministry of Finance’s Department of International Cooperation, said besides material imports for production, the community of South Koreans in Vietnam is quite large and thus their demand for South Korean goods is on the rise.

Under VKFTA, Vietnam will reduce and liberalize tariffs on materials imported from Korea. For instance, with materials for garments and footwear, Vietnam has committed to bring the import duty down to 0% between 2016 and 2018.

Vietnam has also pledged to cut tariffs for South Korea’s plastic materials with a road map lasting 3-5 years and eliminate tariffs for cosmetics in a ten-year road period.

Though Vietnam is the first FTA partner that South Korea will open the market to sensitive products like garlic ginger, honey and sweet potato whose tariffs range from 241% to 420%, it is not easy for Vietnam to boost exports of such products to Korea in bulk. The reason is that Vietnam’s farm produce will have to face tough sanitary and phytosanitary barriers when exported to this market, according to Tuyen.

For example, it takes four to five years for each type of fresh vegetable or fruit to be tested eligible for export to Korea. Vietnam now has only thanh long (dragon fruit) and mango approved for export to that market.

Korea currently imports US$2.2 million worth of tropical fruit, with a mere US$1 million from Vietnam and the remainder mainly from Thailand, the Philippines and Malaysia.

However, Tuyen said with VKFTA, Vietnam and South Korea have proposed mechanisms to quickly deal with technical barriers.

Besides, Vietnam is the first ASEAN country that Korea has pledged tax reductions for garlic, fruit, ginger and honey, and this promises a big chance for Vietnam. The tax cut road map will be implemented for 10-15 years.

According to Tuyen, as Vietnam’s farm products will take many years for quality tests required by Korea, the tax reduction road map lasting ten years is not too long.

Statistics of the General Department of Customs, Vietnam imported over US$21.73 billion worth of products from Korea last year and posted export revenue of only US$7.14 billion from that market. Vietnam mainly imported computers, electronic devices and components (US$5 billion) and machinery parts (US$3.1 billion).

Local steel exports thrive in Pakistan

Pakistan is heavily dependent upon steel imports from Vietnam to bridge the gap between domestic production and the nation’s demand a leading marketing agent and distributor in South Asia recently unveiled.

In addition to steel, importers are desirous of purchasing large quantities of cement, building materials and interior decorating items related to construction work in the country, said Amer Malik, director of the Olympias Pakistan Company.

At the meeting with business leaders on May 26 in HCM City, Malik said the construction market in this country is vibrant thanks to foreign investment and contractors are pretty much relying on steel imports from Vietnam.

A Vietnam commercial counsellor in Pakistan said Vietnam’s exports to the Pakistani economy in the first two months of 2015 reached US$65.98 million, an increase of 131.66% compared with the same period a year ago.

Business failures decline

Business failures in Vietnam fell by 0.5% to 3,884 in the first five months of the year compared with the corresponding period last year, according to the General Statistics Office (GSO) of Vietnam.

During the January-May period, the number of start-up ventures registering with the GSO jumped 15.5% to 36,055 businesses listing capital of VND219.3 trillion on their registration forms.

The figures indicate an encouraging medium to long-term outlook for the nation’s economy, according to the GSO.

Commenting on the results, a GSO representative said the number of newly-established businesses should create jobs for an estimated 518.400 workers, showing a promising start to the new year.

Trade sector looks for green growth-connected opportunities

Green development and trade opportunities it can bring to Vietnam were the focus of a workshop held in Hanoi on May 27.

Deputy Chief of the Office of the National Committee for International Economic Cooperation, Trinh Minh Anh, said green growth and developed environmental industries will support export by helping products meet strict requirements of importers worldwide.

He pointed to the fact that most Vietnamese businesses have yet to meet environment-related requirements due to weak financial capacity and outdated technology.

He went on to note that the Government should concentrate on research efforts to establish the national criteria for eco-products and environmental services.

According to Nguyen Huy Hoan, deputy head of the Industry and Trade Ministry's Science and Technology Department, the industry and trade sector aims to reduce greenhouse gas emission by up to 10 percent in 2020 compared to 2010 level.

He said this year, the ministry will calculate and set targets on emission and energy consumption reduction for the electricity, chemical fertilizer and steel industries. The ministry will then build the targets for other industries including oil refinery, paper, industrial ceramics, drinks and textiles and garment during the next two years.

The Ministry of Planning and Investment reported that Vietnam will need approximately 30 billion USD to implement its green growth strategy but the State budget can only fulfil about 30 percent of the estimated sum.

In a bid to address the financial shortage issue, Nguyen Tuan Anh, deputy head of the Department of Science, Education, Natural Resources and Environment under the Ministry of Planning and Investment, proposed building a legal framework, boosting the engagement of the private sector and launching pilot green models.

The economic community should enhance their awareness about green production and switch to suitable technology, given the growing demand for eco-products in both domestic and foreign markets, he stated.

The Institute for Trade Studies & Research in collaboration with the European Trade Policy and Investment Support Project (EU-MUTRAP) organised the workshop.

Vietnam association of real estate brokers debuted

The Vietnam Association of Real Estate Brokers (VAREB), a member of the Vietnam Real Estate Association (VREA), made its debut in Hanoi on May 27.

Nguyen Manh Ha, Head of the Housing Management and Real Estate Market Department and Chairman of the VREA, said brokers’ role has been growing in recent years.

Brokers not only are catalysts for the success of real estate transactions but also drive the development of the market, Ha added.

Ha said that the VAREB will strengthen cooperation in the sector, improve professionalism, build common profession standards and eventually contribute to the healthy, transparent and sustainable development of the real estate market in Vietnam.

According to Vu Van Phan, Deputy Head of the Housing Management and Real Estate Market under the Ministry of Construction, Vietnam now have roughly 26,000 real estate certificates granted.

Quang Nam moves to develop tourism

The central coastal province of Quang Nam is looking to encourage a tourism boom by improving service quality and expanding connectivity between tourist destinations on the mainland, sea and islands.

Quang Nam is home to three famous attractions - the World Cultural Heritage Sites of Hoi An Ancient Town and My Son Sanctuary, and the World Biosphere Reserve surrounding the Cham Islands.

Hoi An, recognised by UNESCO as a heritage site in 1999, is an old trading port that dates back to the 15th century. Its architecture and layout reflect the indigenous and foreign influences that melted together to produce the unique character of the town.

My Son Sanctuary is a cluster of abandoned and partially ruined Cham temples. Constructed between the 4th and the 13th century AD, it used to be the religious and political capital of the Champa Kingdom.

Meanwhile, the Cham Islands (Cu Lao Cham) constitute a group of eight islets, which form part of the Cu Lao Cham Marine Park, a World Biosphere Reserve also recognised by UNESCO. The islands are well-known for their rich marine ecosystems with more than 300 species of coral, as well as beautiful sand beaches and forested hills.

However, the advantages and potential of these tourist attractions have yet to be fully tapped, especially those of the Cham Islands.

According to Director of the provincial Department of Culture, Sports and Tourism, Dinh Hai, the province is carrying out appropriate investment policies, actively coordinating with the business community, and focusing on domestic tourists to improve the situation.

Quang Nam has also pledged favourable conditions for enterprises and localities to diversify tourist products and improve their quality at the famous destinations.

With the support from Mangroves for the Future (MFF), the Cu Lao Cham Marine Conservation Centre has coordinated with local residents to implement a project restoring coral reefs around the Cham Islands to attract more tourists, especially those fond of diving.

A number of new tourist products have also been introduced, including tours to traditional trade villages of fishermen.

Last year, the central coastal province welcomed 1.7 million tourists.

Four-month wood export value hits 2.1 billion USD

Wood exports gained the highest value among Vietnam’s farm exports in the first four months of this year, hitting nearly 2.1 billion USD, a year-on-year increase of 6.2 percent.

According to the General Department of Vietnam Customs, the US is still the largest importer for Vietnamese wood and wooden products, with the value of 762 million USD. It was followed by Japan and China with import values of 306 million USD and 289 million USD, respectively.

According to Huynh Van Hanh, Vice Chairman of Ho Chi Minh City’s Association for Fine Arts and Wood Processing, the situation is due to a reduction of wood production in the main exporting countries such as Italy and Germany because of the ripple effects of the economic downturn in Europe.

Additionally, Vietnamese wood exporters were also active in taking advantage of European markets to expand their market share there.

The formation of the ASEAN Community, which is scheduled to take place by the end of the year, will also offer excellent opportunities, as wood will be one of the 12 prioritised industrial sectors. Vietnam will have a real opportunity to raise its wood export value.

Vietnam’s wood exports to foreign markets are forecast to be going smoothly in the final months of this year as local wood businesses have been contracted by a large number of international customers to provide goods for the whole year.

Currently, Vietnam is the sixth largest wood exporter in the world, with export value growing 27.15 percent a year on average from 2001 to 2010, and 15 percent on average in the last five years to reach 6.23 billion USD in 2014.

The Ministry of Industry and Trade has set a target of earning 7 billion from exporting wood and wood products in 2015, up 800 million against 2014.

The HCM City Association for Fine Arts and Wood Processing said that Vietnam’s wood export value is quite capable of reaching 7.2 billion USD this year.-

Vietnamese economy well on the road to recovery

Since 2014 the Vietnamese economy has undergone many positive changes in almost every aspect with GDP growing by 5.98%, followed by a 6.03% expansion in the first three months of 2015, the highest first-quarter growth rate since 2011.

It should be noted that growth in the first quarter of 2015 was much higher than the same period of 2011-2013, by nearly one percentage point, indicating that the Vietnamese economy has made a strong recovery from the third quarter of 2014.

The question is whether this recovery trend is sustainable or not. On the supply side, growth in 2014 and the first quarter of 2015 was led by industrial production and construction, especially manufacturing, which is not affected by seasonal factors. The index of industrial production in the first quarter of 2015 rose by 9.1%, nearly the same as the average increase during the previous boom and much higher than the growth rate in the first three months of 2014. The purchasing managers index had a reading of 53.5 in April, up from 50.7 in March. On the demand side, domestic demand is gradually improving. Seasonally adjusted retail revenues in the first quarter of 2014 went up 9.1%, a significant improvement from the 5.1% rate posted in the same period in 2013 and 2014.

There are also a number of positive changes to drivers of growth. First, credit growth in the first quarter and April of 2015 was 1.25% and 1.51% respectively, compared with 0.52% and 0.91% in the same periods last year. Moreover, monthly credit growth has stabilised since June 2014. In 2014, there was also a marked increase in the percentage of both domestic and foreign enterprises planning to expand their business. Since February 2015, the number of dissolved and temporarily suspended companies has been on the decline and lower than the number of newly established ones, a major difference from previous months. Capital productivity has also increased with the ICOR, a measure of how efficient capital is used, falling from 6.2 in 2010 to 5.18 in 2014.

Foundations of growth, notably the business environment, have improved remarkably. Macroeconomic stability has been increasingly strengthened. Inflation has been declining and stabilised, which is essential for long-term investment and expansion. On the microeconomic aspect, the government is implementing Resolution 19 on improving the business environment and enhancing national capacity, and has achieved encouraging results. Last year also marked breakthroughs in institutional reform. Thanks to the adoption of new laws, the freedom to do business has been expanded to the maximum and protected in a better way while business risks, legal risks and compliance costs have also been reduced.

The above-mentioned changes make the market operate better, creating favourable conditions for enterprises and encouraging their entrepreneurship.

Nonetheless, there remains many concerns. The budget spending structure is unreasonable with a rapid increase in recurrent spending and spending on debt payment, while spending on investment and development is shrinking. Budget deficit is running high, exceeding the threshold allowed by the National Assembly, while budget management remains poor and investment efficiency of the State sector has yet to improve. Public debt is rising quickly in recent years and bad debt is far from being resolved. These factors risk causing macroeconomic instability and undermine the growth potential of the Vietnamese economy.

Although Vietnam’s economy is showing strong signs of recovery, there remains factors that could clog up and slow down that trend. Besides continuing to promote institutional reforms, improving the business climate and reinforcing macroeconomic stability, it is necessary for the government to make greater efforts to reform budget management mechanisms, improve the efficiency of public spending, reduce budget deficit and manage public debt in a better way.

Exports of agro-forestry-fishery hit 11.4 bln USD

Export turnover of Vietnam’s agro-forestry-fishery products is estimated to reach 2.37 billion USD in May and total 11.4 billion USD in the first five months of 2015, down 7.3 percent compared to the same period last year.

Shipments of main farm produce, including coffee, rice, rubber, and tea experienced a downward trend in both value and volume.

In the first five months, around 2.4 million tonnes of rice were shipped abroad for 1.05 billion USD, down 11.4 percent in volume and 14.6 percent in value year on year. China remains the largest importer of Vietnamese rice, making up 33 percent of the market share though cutting its import volume by 28.11 percent.

Coffee continued to record a sharp fall in both volume and value. During January-May, Vietnam sold abroad 578,000 tonnes of coffee for 1.2 billion USD, down 39.4 percent in volume and 38 percent in value from the same period last year.

While recording a rise in volume, rubber, however, faced a decline in value. During the reviewed period, 330,000 tonnes of rubber were traded, bringing home 475 million USD, up 30 percent in volume but down 2.9 percent in value year on year.

Tea has not seen any improvements in export. The product earned 70 million USD for 43,000 tonnes, down 0.6 percent and 2.5 percent, respectively, compared to the same period last year.

The exports of pepper and cashews were in the limelight with their upward trend.

Vietnam pocketed 667 million USD from pepper (up 2 percent) and 828 million USD from cashews (27.3 percent).

The export turnover of forestry products reached 2.69 billion USD, a rise of 7 percent while aquatic products accounted for 2.41 billion USD, a fall of 17 percent from the same period of 2014.

The US remains Vietnam’s biggest aquatic importer, accounting for 19.5 percent of the total, but its imports declined sharply by 30 percent year on year.-

Vietnam attends tourism fair in Russia

Vietnam received a warm welcome from international friends at this year’s Pacific International Tourism Exро (PITE-2015) recently held in Vladivostok city in Russia’s Primorsky Krai region.

The Vietnamese stall showcased documentations on national heritage and useful tourist information along with traditionally popular food and drink, like spring roll and coffee.

At the annual exhibition, which is the 19th of its kind, the Consulate General of Vietnam in Vladivostok in collaboration with Primorsky Krai’s authorities organised a workshop on their potential for tourism cooperation.

Currently, a huge number of Far Eastern tourists visit Vietnam every year, particularly central coastal Nha Trang city and some southern destinations, not vice versa.

Thus, participants paid a great attention to discussing measures that will boost the two-way tourist flow between the sides.

They noted that a direct flight connecting Vietnam and Vladivostok should be opened as quickly as possible.

PITE-2015 gathered 268 businesses from 20 countries and territories worldwide including Japan, the Republic of Korea, China, and Guam.

Impetus on green growth to boost trade prospects

Green growth will open trade opportunities in all fields, including agriculture, forestry, fisheries, industrial production, renewable energy, and tourism, said Bui Huy Son, director of Viet Nam Trade Promotion Centre.

Speaking at a workshop on green growth and trade opportunities for Viet Nam in Ha Noi yesterday, Son noted that over the past 10 years, green growth has become a new economic model, which has been applied by several countries, especially those in Asia and Pacific regions. The model has also seen the participation of international organisations.

"Green growth has supported economic development together with reducing negative effects on the environment by minimising waste generation and greenhouse gas emissions, while using natural resources sustainably," he remarked.

He added that Viet Nam has been one of the few developing countries determined to follow the green growth model.

Green and sustainable growth are necessary for Viet Nam, especially as the country has entered a new period in the global economy that requires better exploitation of free trade benefits.

Sharing the view, Pham Nguyen Minh, director of Institute for Trade Representative from EUD/EU-MUTRAP Project, said the Vietnamese Government in September 2012 approved the National Green Growth Strategy for the period 2011-20, with a vision for 2050. In March 2014, the Government approved the National Action Plan on Green Growth for the period 2014-20.

Meanwhile, at the ministerial level, the Ministry of Industry and Trade has also created an action plan for green growth for the period of 2015-20.

Minh said the plan will help reduce greenhouse gas emissions by promoting the use of clean and renewable energy resources, effectively utilising natural resources, and encouraging the development of green industries in the agriculture, transport, and construction sectors.

"Green growth is a prerequisite for building a green economy. In addition, trade has been an important factor for economic growth as well as environmental protection," he said, adding that green growth will create more chances for sustainable development and competitiveness.

Tran Huy Hoan, deputy head of the Division of Environment and Trade under the Institute for Trade, agreed that the production sector uses 35 per cent of the world's electricity, over one-fourth of basic natural resources, and is responsible for more than 20 per cent of CO2 emissions.

Moreover, chemical components in agriculture and industries have been one of the five leading causes of deaths in the world.

"Products that are designed and produced by environmentally friendly companies and fulfil sustainable production standards will be at an advantageous position in world markets. Several suppliers tend to follow sustainable production to ensure their position in the global supply chain, Hoan explained.

Production and transaction through renewable energy sources will help access clean and cheap materials and electricity.

World technology markets promoting effective and low carbon products are expected to increase by three times to US$2.2 trillion by 2020.

However, he said, the green growth strategy in Viet Nam has been faced with many challenges as total spending for climate change preventive measures remained low at 2-6 per cent of the GDP, equivalent to $3-9 billion.

The country still lacked policies for mobilising domestic and foreign players, especially international climate funds, to invest in green growth.

He suggested that Viet Nam should review and adjust action plans at each sector and region for limiting the development of economic sectors, which can cause environmental pollution and reduce natural resources.

It should also facilitate new green production sectors while developing green models in rural areas as well as a legal framework to support green growth.

Twenty seven of the top 30 stocks in terms of market value and liquidity on the Ha Noi Stock Exchange reported profits in the first quarter of this year, data on the bourse shows.

Total net sales of these 30 shares reached VND10.067 trillion (US$464 million) ending March, down 1.63 per cent over the same period last year. After-tax profits also decreased 2 per cent, totalling VND1.519 trillion ($70 million).

Asia Commercial Bank (ACB) topped the gainers with a net profit of more than VND280 billion (nearly $13 million) in the first three months, a hike of 12 per cent over the first quarter of last year.

PetroVietnam Technical Services Corp (PVS) retreated to the second position, earning almost VND276 billion ($12.7 million), up 16.2 per cent over the same period of 2014.

In total, 16 companies saw positive earnings growth, of which Viet Nam Construction and Import Export Corp (VCG) and PetroVietnam Northern Gas Co (PVG) were the most impressive. Both firms leapt spectacularly from losses in the first quarter of 2014 to profits in the same period this year.

VCG's revenue declined 6.6 per cent year-on-year, reaching VND1.483 trillion ($68.3 million), but it still saw a profit of VND100.4 billion ($4.6 million) by the end of March while recording a loss of nearly VND10.2 billion ($470,000) in the same period last year.

Meanwhile, PVG climbed from a loss of VND21.5 billion ($991,000) in the first quarter of 2014 to a profit of almost VND4 billion ($184,300) in the three months ending March.

In the other end of spectrum, 14 businesses had negative earnings growth in the first quarter. Three firms, including Song Hong Construction (ICG), Kim Long Securities Corp (KLS) and An Phat Plastics and Green Environment Co (AAA), moved from profitable positions to losses.

KLS was the biggest surprise. It reported a loss of more than VND39 billion ($1.8 million) in the first quarter of this year, but posted a profit of VND91.6 billion ($4.2 million) in the first three months last year.

The company attributed this loss to an increase of VND50.8 billion ($2.3 million) in provisional funds to hedge possible share downturns. Meanwhile, it had a return of VND21.8 billion ($1 million) from this fund during the same period of last year.

AAA also reported a loss of VND6.4 billion ($295,000) in the first three months while it earned a profit of VND14.8 billion ($682,000) in 2014's first quarter.

AAA explained rising competition from China, accompanied by economic slumps of the eurozone, the main exporting market of the company, had adverse impacts on its performance.

ICG also reported a loss of over VND1.1 billion ($51,000) in the first quarter, a slide from a profit of VND3.3 billion ($152,000) in the same period of last year .

All-New Triton introduced in Viet Nam

Vina Start Motors (VSM) the exclusive producer and distributor of Mishubishi Motors in Viet Nam, officially introduced its new pick-up truck, the Triton, with a distinctive J-line design yesterday.

The company is aiming to regain its crown in the pick-up market and enhance VSM's business strategy in Viet Nam.

First introduced in 1978, pick-up trucks have gained a strong user base worldwide, from the first Forte to the fourth generation Triton/L200 models, which all together have accumulated more than 4,000,000 units of production volume

"We are focusing more on SUVs, pick-ups and electric vehicles as key products and also in ASEAN countries such as Viet Nam," President and COO of Mitsubishi Motors Corporation Tetsuro Aikawa said. "Last year, we recorded high profit. Around 30 per cent came from ASEAN."

DLG takes over Mass Noble Investments Ltd

Furniture dealer Duc Long Gia Lai Group (DLG) announced on May 26 that it had officially taken over the electronic component producer Mass Noble Investments Limited through a share swap.

DLG will issue more than 19.93 million shares in exchange for the shares of Mass Noble shareholders – Ansen Holdco Limited, Hampora Investments Limited and Valtec Capital Corporation – who collectively own 97.73 per cent of the foreign producer.

Under the swap agreement, each DLG share will be exchanged for 1.4 Mass Noble shares at a rate of VND12,500 (US$0.58) per share.

Mass Noble is the production unit of the Hong Kong-headquartered electronic components company Ansen Electronics. It has a five-storey plant, spanning 40,000sq.m, in Guangdong province, mainland China. Manufacturing hi-tech telecommunications equipment, LED lighting products and LCD screens, the factory has achieved an annual turnover of $75 million for Mass Noble. Its major consumption markets are Europe, the United States, Japan, Korea and China.

Mass Noble possesses registered capital of almost $14.6 million. It posted a profit of some $1.19 million in the last fiscal year and plans to achieve a profit of $6.4 million by 2017.

Established as a furniture dealer in the central highland province of Gia Lai, DLG now holds charter capital of VND1.5 trillion ($69.7 million) and focuses on its core business of agriculture, energy, infrastructure and electronic components.

This year, DLG plans to earn net revenue of VND2.5 trillion ($114.6 million) and a profit of VND265 billion ($12.15 million), including VND1.2 trillion ($55 million) from Mass Noble.

Through the swap, the group would not only take over Ansen Electronics but would also record a surplus of VND60 billion ($2.75 million).

The group said when it achieved stable revenue from its overseas operations, it would build more plants in HCM City, Da Nang and Binh Duong to serve the local and export demand.

On May 27, DLG shares closed at a value of VND8,300 ($0.25) each on the HCM City Stock Exchange.

Up-market real estate enjoys buoyant growth

As liquidity increases in the real estate market, opportunities are arising in Ho Chi Minh City’s up-market housing sector.

Managing director of Savills Vietnam Neil MacGregor told VIR that he was witnessing a period of rapid change in the high-end real estate market with a growing number of excellent, international-quality developments set to enter the country throughout 2015. These developments oversee a notable increase in demand for high-end properties during the last two quarters.

Massive projects such as Masteri ThaoDien by ThaoDien Investment, Vinhomes Central Park by Vingroup and Scenic Valley by Phu My Hung Corporation have made this segment more active.

The last tower consisting of 750 apartments in the heart of the Masteri complex was marketed last week. This follows the launch of three other towers from last October.

According to MasteriThaoDien business director Trinh Hoai Duc, the project has more than 3,000 apartments in total with an average sales rate of around 90 per cent.

Meanwhile, Vingroup has recently attracted over 2,300 visitors to the launch of The Landmark complex as the heart of Vinhomes Central Park in the city. The Landmark complex comprises of The Landmark 81, the tallest tower yet in Vietnam, in addition to the three apartment buildings of Landmark 1, 2, and 3.

Phu My Hung will also market the final phase of the Scenic Valley project on June 6. Already in the fifth phase of opening sales, 80.2 per cent of the apartments have been sold.

In addition, several condominium projects developed by Novaland have lured many more customers. Currently, Novaland is building 15 condominiums in prime locations of the city such as The Sun Avenue, The Botanica, Rivergate, Lucky Dragon and Lexington Residence.

“These projects are achieving high absorption rates, especially at recently launched projects, including Estella Heights and MasteriThaoDien, as well as some of the other projects such as Riviera Point and Xi Riverview,” MacGregor commented.

According to Marc Townsend, managing director of CBRE Vietnam, the original prices for high-end projects  had witnessed a slight increase. This trend can be attributed to good localities, reputable developers and where progressin construction has been visible.

He said that while recovery continues, high-end apartment sales have bounced back with new launches up 163 per cent year-on-year and sales up 138 per cent year-on-year.

Echoing this view, MacGregor shared with VIR that up-market properties are increasingly attractive to buyers due to the prestige of the developers and also to high standard facilities, higher quality building management and the increasing availability of affordable mortgage financing.

“There have been genuine efforts from developers to deliver projects to international standards, whilst keeping prices  comparatively cheap by regional standards. Buyers are also recognising the need for an international standard property management in order to maintain the value of their investment. We are also seeing a growing number of buyers seeking mortgage financing as interest rates come down,” he noted.

When asked about the potential of the high-end market, he stressed that improved infrastructure, particularly in District 2, and changes in the Housing Law will lead to a growing demand from both occupiers and investors, as well as the increasing participation of foreign buyers.

Vietnam Register accepts online applications

Vietnam Register has started to receive registration applications for motorcycles as well as imported motorcycle engines and electric bicycles this week in an effort to help enterprises save time and money.

Enterprises now do not have to go to the agency’s offices to submit applications, complete related procedures and get results as before. They can now do these steps on www.vnsw.gov.vn. The agency will reply to applicants by mail.

Companies can pay fees by bank transfer and get certificates.

The agency said registration procedures on the website take only one to two days, instead of five to ten days as before.

Dang Viet Ha, deputy head of Vietnam Register, said in addition to time and cost reductions, the new way is expected to cope with irregularities in the registration process as applicants do not have to meet officers in person.

Vietnam Register continues accepting applications at its offices in the next three-six months so that firms can have more time to familiarize themselves with the online registration procedure.

The Ministry of Transport plans to implement a one-stop-shop mechanism in sectors such as registry, road and inland waterway in order to simplify procedures for enterprises.

Since early this month, the one-stop-shop mechanism has been applied by port authorities in HCMC, Vung Tau, Danang, Quang Ninh and Haiphong. The ministry plans to expand this mechanism to the road and inland waterway sectors from August.

Manufacturers must recall discarded products- Prime Minister

According to a Decision by Prime Minister Nguyen Tan Dung, manufacturers must recall discarded accumulators, batteries, some electric and electronic products, tires and engine oil from July 1, next year.

The recall time for abandoned automobiles and motorcycles will begin January 2018.

The decision specifies that companies are responsible for reclaiming abandoned products that they had manufactured and sold in Vietnam and set up collection spots to receive them.

Consumers can either transport these items to the collection spots by themselves or transfer them to collection units.

Vietnam’s notable economic developments in first half of 2015

Vietnam’s economy in the first half of 2015 continued to grow steadily. Social investment and investment by enterprises posted strong growth. The financial and property markets saw positive changes.

Industrial production recorded the highest growth rate in three years. The consumer confidence index compiled by ANZ-Roy Morgan in the first quarter of 2015 reach 142.3 points, higher than the average of 133.3 in 2014. Social security, traffic safety and the environment gradually improved.

In the first four months of 2015, the index of industrial production posted a strong rise, at 9.4% compared with 5.5% in the same period of 2014. The inventory index of the manufacturing sector rose 11.3% compared with the 13.9% rise as of April 1, 2014. Total retail sales and consumer services, excluding seasonal factors, rose by 8%. Passenger and freight transport volume increased steadily.

Merchandise exports were estimated at US$50.1 billion, up 8.2% with electronic products and computers up 62.9%, phones up 13.9% and footwear up 19.1%.

Agricultural production saw improvements in both cultivation and output, but falling prices and limited market access were creating pressure on many types of produce, especially rice, rubber and watermelon.

Agricultural exports saw drops in both volume and value with the exception of cashew and cassava, up 25.1% and 44.6% respectively. Rice fell 0.5% in volume and 5% in value; coffee down 40.6% in volume and 38.2% in value; seafood down 15% in value.

Commodity imports reached US$53.1 billion, up 19.9% with completely built units up 188.8% and machinery up 44.4%.

The trade deficit rose to about US$3 billion, equivalent to 6% of exports, compared with a surplus of US$2 billion in the same period last year, largely due to falling oil prices and sharp declines in agricultural exports.

International arrivals to Vietnam fell 12.12%. The number of newly established enterprises rose 9.7% with registered capital up 13.3% year on year. The number of enterprises resuming their operation also rose by 7.7%, a positive sign of improvement in the business environment and opportunities despite a 4.5% increase in the number of enterprise forced to suspend their operation.Foreign direct investment pledges dropped 23.3% but disbursement was up 5%, with three quarters poured into the manufacturing sector.

The amount of disbursed capital from the State budget rose 6.2% and was equivalent to 26.2% of the yearly plan.

Budget revenues reached 34.5% of the whole-year estimate, up 9.4%, while spending rose 9.5%, equivalent to 31.6% of estimate. Budget deficit was equivalent to 21.5% of whole-year estimate.

The government’s ratio of direct debt payment to budget spending was 16.1%, compared with 13.8% in 2014 and 15.2% in 2013. At the end of 2014, the ratio of public debt to GDP was more than 60%.

In the long term, Vietnam will quickly restructure its debt by increasing the proportion of long-term debt to ease pressure on short-term loans, tighten conditions for granting guarantees, and step up checks on the use of loans.

The consumer price index in April rose 0.14% against the previous month, 0.04% against December 2014 and 0.99% over the 12-month period. The average CPI in the first four months of 2014 rose 0.8% compared with the same period of 2014.

Credit growth improved with outstanding loans to priority sectors and geographical regions rising at a faster pace than the national average. At the end of the first quarter, total loans to the Central Highlands increased by 4.78% compared with the end of 2014, higher than the 2.65% average and accounting for 3.74% of the country’s total.

The Vietnamese dong was devalued by 2% but the value of the local currency remained high, especially when compared with the 15-40% rise of the US dollar against many currencies in the world. Vietnam had a balance of payments surplus of US$2.8 billion, indicating that the majority of imported machinery is funded by foreign investment capital.

The restructuring of domestic commercial banks was being actively implemented in three ways: purchase by the State Bank, compulsory merger with State-owned commercial banks and voluntary merger with the participation of foreign partners.

The property market saw positive signs thanks to credit support for home buyers, and looser requirements on property trading and home ownership.

According to the Ministry of Construction, as of April 20 the total value of unsold properties in Hanoi was estimated at VND8.9 trillion (US$409.4 million), down 48.01% year on year. In Ho Chi Minh City, the figure was VND13.5 trillion (US$621 million), down 52.93%. In these two markets, although the land price has increased two-fold compared with 2014, the number of successful transactions also increased by three times with a strong rise in mergers and acquisitions and foreign investment from Asia, Europe and the United States in large property projects.

In the coming time, there will be a strong rise in the supply of offices and apartments for rent as well as villas and adjacent houses. Outstanding loans of commercial banks to the property market reached nearly VND330 trillion (US$15.2 billion), a marked rise compared with the lowest level of VND180 trillion (US$8.28 billion).

In the early months of the year, social security was improved with a positive sign in the number of jobs thanks to newly established enterprises. The number of workers in industrial enterprises as of April 1 increased 5.5% year on year.

Overall, the outlook for the Vietnamese economy is positive, but a more comprehensive effort is needed. According to the Asia Development Bank, Vietnam’s economy is expected to grow by 6.1% in 2015 and 6.2% in 2016, compared with ASEAN’s average growth rates of 4.9% and 5.3% in 2015 and 2016 respectively. Inflation is expected at 2.5% in 2015 and 4% in 2016. However, the current account surplus will narrow from 3.1% of GDP in 2015 to 1.5% of GDP in 2016. Meanwhile according to an ANZ report released on April 17, Vietnam’s GDP growth in 2015 and 2016 will reach 6.5%, or even higher given positive results in the first months of the year.

Overall, economic growth is still below potential. Inflation is running low but could be higher due to pressure from rising prices of electricity, coal, global oil environmental tax and global oil. Public debt and bad debt are rising. Exports of rice, coffee and seafood are struggling.

In order to achieve the GDP growth of 6.2%, export growth of 10% and a trade deficit of less than 5% of total exports, competent authorities need to maintain a cautious monetary policy; adjust lending rates in line with deposit rates; control bad debt; prioritise capital to important projects; accelerate State-owned enterprise equitisation; create favourable conditions to encourage private enterprises; and expand and diversify export markets.

Draft decree looks less liberal

The liberal laws on investment and enterprise are being challenged by a draft guidance decree as it sets conditions for business startups and changes in business fields.

Article 7 of the draft decree, which has been put up for comment, says that when registering to set up business and change fields of business and business registration certificates, individuals and enterprises must catalogue all business areas and business codes for the sectors with four-digit codes in their applications.

As the drafter of the decree, the Ministry of Planning and Investment explained that requiring enterprises to write down all business area codes is merely for statistical purpose.

However, such a condition has triggered concerns among organizations representing enterprises and the Central Institute for Economic Management (CIEM), the unit assigned to draft the revised law on investment for implementation from July this year.

Nguyen Thi Dieu Hong from the legal department at the Vietnam Chamber of Commerce and Industry (VCCI) said the improvements in the Enterprise Law hailed by the business community are the abolition of the requirement for business area declaration and the simplification of procedures. But the draft decree requires individuals and enterprises to detail all business areas and codes for the sectors where they register to operate.

“How will enterprises be able to fully know all business areas they operate in and the correct codes for them?” Hong asked. “Enterprises would have to seek help from registration officers.”

In its comment on the draft decree, CIEM requests eliminating the requirement for enterprises to detail codes of business areas as it will push up cost and takes more time to complete procedures. Besides, the requirement is not consistent with the enterprise law if it is just for statistical purpose.

CIEM wants Article 18 of the draft decree removed as it requires enterprises to rely on planned business areas to name their companies. The institute said this condition limits the right to choose company names and is inconsistent with the regulation on company names provided in the Enterprise Law.

According to the drafting committee, the draft decree covers business conditions that have been illegally set in circulars and decisions of ministries and ministry-level agencies and will be nullified from July 1 this year.

Some 302 articles and terms of 127 circulars and decisions issued by ministries and other agencies will be invalidated from July 1 when the laws on investment and enterprise take effect.

Ministry proposes higher natural resource tax

The Ministry of Finance will seek approval from the National Assembly Standing Committee to adjust up tax on key natural resources to bolster budget collections and tighten management of resource mining.

The ministry will present the petition to the committee’s session in September this year, suggesting revising Resolution 712/2013/UBTVQH13 on natural resource tax. The agency is now garnering suggestions from relevant units for the proposal.

As per its calculation, tariffs on some metallic and non-metallic minerals should be adjusted up; for instance, iron from 12% to 15%, titanium from 16% to 18%, gold from 15% to 20%, nickel from 10% to 16%, wolfram and antimony from 18% to 20%, and bronze from 13% to 18%.

Others like coal, sand, sand used for glass making and granite will be subject to tax increases of three percentage points. The taxes on precious stones such as diamond, ruby and sapphire will be increased by five percentage points.

The tariff increase would result in an additional collection of nearly VND3.4 trillion (US$155.7 million) a year. Total tax collections from natural resources (excluding crude oil, natural gas and coal gas) are forecast to near VND14.2 trillion (US$650.5 million) annually.

Explaining the coal tax, the ministry said Vietnam was a coal exporting country before 2012. Since 2013, coal export value has tumbled due to rising domestic demand, especially the need for electricity production.

Currently, coal and power price policies are made in line with market forces. The Government has banned dust coal exports and revised exploitation and reserve schemes to facilitate electricity production from 2018 to 2020.

Therefore, the Government wants higher tariffs on coal to secure supply for thermal power plants. As estimated, tax collections from coal will increase by VND1.4 trillion to nearly VND5.2 trillion.

Vietnam National Coal-Minerals Industries Group (Vinacomin) reported it earns around VND74,000 (US$3.38) from each ton of coal extracted. If the tax goes up by three percentage points, its earnings will contract to around VND33,500 per ton.

The tax on wood is expected to drop from the upper to the lower limit, (from 35% to 10%) depending on categories. Meanwhile, rates on precious wood such as tram huong (aloeswood) and ky nam would be revised up to 30% from 25%.

Given the new rates, tax collections from wood would fall by VND13.1 billion a year.

The new rates will be applicable from January 1, 2016 if they are approved.

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