Poor auto sales see tax figures spin out

Plummeting auto sales and imports have smashed tax figures.

The Customs Department in Haiphong port city was assigned to raise VND53.2 trillion ($2.53 billion) worth in taxes this year, with VND47.2 trillion ($2.24 billion) coming from Haiphong area alone.

However, the first seven months witnessed just 35 per cent of the assigned figure.

Haiphong area’s completely built unit (CBU) car import value shed 74 per cent on-year, falling to $155 million, making cars the item with most sinking import figures among the city’s top 10 items in import value and tax collection each year.

The import value of auto parts via Haiphong also slid 30 per cent on-year to $80 million.

Sharply declining CBU car imports took a hit on value added tax and import duty collections in Haiphong. The city’s Customs Department figures show that 74 per cent sinking auto import value was tantamount to VND7.8 trillion ($371 million) tax loss out of approximately VND9 trillion ($428 million) total declined tax amount.

In fact, Haiphong port city is one of five venues with permission to import CBU cars together with Cai Lan in Quang Ninh province, Danang, Ho Chi Minh City and southern Ba Ria-Vung Tau province.

Dwindling car consumption led to decreasing budget collections in many localities. In its first six month report, the Ministry of Finance (MoF) revealed car ownership fee collection just met 33.2 per cent of the projection and fell 29.7 per cent on-year.

Besides, the state coffers saw a decline of nearly 13 trillion ($619 million) resulting from sliding CBU car imports and VND1.5 trillion ($71.4 million) from sagging auto component imports on-year.

The MoF also reported 38 localities across the countries failed to reach budget revenue targets in the first half. For instance, Vinh Phuc just attained 36 per cent tax collections from domestic sources against the projection.

With a sales volume of 30,000 car units in 2011, Toyota Vietnam paid around VND16 trillion ($761 million) to Vinh Phuc provincial budget. Its sale volume fell to just 11,000 units in 2012’s first half, casting a dent of around VND1 trillion ($47 million) to the provincial budget.

In 2011, the tax collection from GM Vietnam was VND507 billion ($24 million) and from Ford Vietnam VND88 billion ($4 million) lower than projections on the back of sinking production and business, according to MoF.

In the first seven months of 2012, Vietnam imported around 16,000 CBU cars worth over VND330 million, down 57 per cent on-year, according to MoF statistics.

Car sales volume in the domestic market also dropped 39 per cent on-year.

SJC reprocesses 45,000 taels of gold

Saigon Jewelry Holding Co. (SJC) finished reprocessing over 45,000 taels of deformed gold bars on Monday, replenishing gold supply in the market, said a senior executive from SJC.

The source informed SJC gold bar factory had resumed operation. The factory is handling 7,000 taels of deformed SJC gold bars as well as reprocessing disfigured gold bars of other traders.

Gold bars are continuously launched from SJC to stabilize the market. According to the source, this is the reason why gold prices cooled down again on Monday afternoon.

At present, gold bars under processing at SJC amount to tens of thousands of taels, sufficient to supply to the market in the coming days. A tael equals 1.2 troy ounces.

After falling sharply last weekend, gold prices picked up again on Monday morning as demand of citizens still stayed high.

SJC quoted gold prices at VND44.4 million per tael for buying and VND44.6 million for selling at 1 p.m. on Monday, up VND350,000 against last Saturday. There were times when gold prices hit VND44.7 million per tael on Monday morning.

Nguyen Cong Tuong, deputy sales manager of SJC, said buying demand continued to rise on Monday morning. However, selling energy got stronger by the afternoon, balancing supply and demand.

SJC bought 2,800 taels and sold 3,300 taels on Monday morning, up slightly against last weekend.

Global gold prices in the Asian market inched up by US$3 per ounce on Monday over the previous session, standing at US$1,673 an ounce.

According to the gold market newsletter of Sacombank-SBJ Jewelry Company, gold prices are forecast to increase in September.

In related news, the U.S. dollar price went down on Monday after almost hitting VND21,000 per dollar last Friday.

The greenback was quoted at Vietcombank at VND20,830 for buying and VND20,880 for selling, down VND110 against last Friday. Prices quoted at ACB and Eximbank fluctuated around this level.

Vietnam has the fifth biggest soybean milk plant

Quang Ngai Sugar Joint Stock Company has inaugurated a new soybean processing plant in northern Bac Ninh province.

Spanning 60,000 square metres, the plant is capitalised designed capacity of 1 billion cartons per year and equipped with synchronous and automatic equipment from Sweden’s Tetra Pak group.

Ngo Van Tu, Quang Ngai Sugar Joint Stock Company’s director, said the new plant would help create over 200 direct jobs for local people.

The second soybean plant after Quang Ngai Sugar Joint Stock Company’s first one in central Quang Ngai province is targeted to complete the first phase and come into operation in May, 2013, becoming one of five biggest soybean processing plants in the world.

The investment capital until the first phase would be VND650 billion ($31 million), said Tu.

Founded in 1962, Quang Ngai Sugar Joint Stock Company includes 14 local member companies specialised in food and beverages. As of 2011, Quang Ngai Sugar Joint Stock Company generated revenue of VND4,300 billion ($2 billion) and is ranked at top 500 biggest enterprises in Vietnam.

Over half of Vietnam FDI from Japan between Jan-Aug    

Japanese companies pledged to invest a total USD4.33 billion in Vietnam in the first eight months of this year, accounting for 51.1% of the country’s combined foreign direct investment (FDI) in the period.

Japan was also the largest among 52 foreign investors in Vietnam between January and August, according to the Foreign Investment Agency under the Ministry of Planning and Investment.

Following Japan is Samoa with USD889.8 million, 10.5%; South Korea with USD654.7 million, 7.7%; Singapore with USD523.2 million or 6.2%.

During the eight-month period, Vietnam licensed 672 new FDI projects totaling USD5.52 billion, down 43.5% year-on-year. The country also allowed 244 existing projects to to increase their capital on existing investments by USD2.95 billion, down 3.2% from a year earlier.

The manufacturing and processing industry proved most attractive to foreign investors, with USD5.74 billion, followed by real estate with USD1.72 billion.

Binh Duong Province took the lead in luring FDI between January and August, with USD1.84 billion, followed by Haiphong with USD1.05 billion, Dong Nai with USD972 million, HCM City with USD922.9 million, Bac Giang USD902.7 million and Hanoi USD413.1 million.

Most of FDI projects in the eight-month period were small-scale, the largest being one capitalised at USD1.2-billion in the real estate sector, a project named Tokyu Binh Duong urban area invested by a Japanese company.

The Foreign Investment Agency said, FDI disbursement so far this year reached USD7.28 billion, down 0.3% against the same period last year.

The export value of FDI companies, including oil, was estimated at USD45.6 billion, up 34.1% on-year, accounting for 62.2% of the country’s total export value. Their import value was at USD38.5 billion, up 25.5% and making up 52.5% of the nation’s total import value. Between January and August the FDI sector saw a trade surplus of around USD7 billion.

Prospects of restructuring State-owned enterprises

Economists say that the current restructuring of State-owned enterprises (SOEs) is facing four main obstacles, namely unequal benefits, incomplete legal frameworks, outstanding debts, and implementation costs.

The first obstacle is an unequal distribution of benefits in the process of restructuring SOEs. Some organizations and individuals expect to enjoy large profits from SOE equitization, while others are worried about their losing benefits when new investors come in and State subsidies are cut. Therefore, those who expect to gain more benefits from current SOE operations want to prevent SOE restructuring, or slow the reform process and extend the time for withdrawing capital.

The second major problem is that Vietnam has not yet completed its legal frameworks related to the transparency of market information, business operation and management. It should allow an independent organization to evaluate and monitor business operation.

The third problem is that many big corporations and groups are running up huge outstanding debts.

Last but not least, restructuring SOEs is so challenging as it requires a large amount of funding. At present, no SOEs have any detailed plan for restructuring their business operations. This is, in part, attributed to convoluted policies and complicated connections between businesses and other economic sectors.

First, it requires closer cooperation and stronger support from relevant ministries, agencies and economic sectors to ensure SOEs play a leading role in boosting the national economy.

In fact, many SOEs have invested in areas outside their field of expertise and experience to face serious financial risks and imbalances in their operations. Therefore, it is urgent to help them readjust investment plans for fair competition with other businesses in the State economic sector within a proper legal framework based on market principles.

Although Vietnam has been a member of the World Trade Organization (WTO) since 2007 with commitments to finalize its legal framework by 2012, the country is still confronted with snags in the legal mechanism. Due to overlapping regulations and policies, many businesses are unable to draw up their own strategies for both medium-and long term development.

Even worse, the Government’s offer of many incentives to SOEs has given rise to speculation and monopoly in an unhealthy business climate.

Against this backdrop, joint efforts are needed to speed up the equitization and restructuring of SOEs at any cost to make them fit in nicely with other organizations and agencies.

So to speak, a detailed roadmap should be developed to withdraw State investment capital from loss-making businesses, according to specific regulations on the roles and responsibilities of all shareholders issued by the State Capital Investment Corporation (SCIC).

What if inflation goes up?

There is growing concern about inflation in the face of rising prices for essential goods and services.    

After showing some negative signs in two recent months, the consumer price index (CPI) in August rose 0.63 percent over July to 2.86 percent - a record high since the beginning of this year.

According to the General Statistics Office (GSO), inflation remained at a low level in the past months, even when the CPI continued dropping to -0.29 percent in June and -0.26 percent in July.

Apart from the impact of petrol prices, the CPI in August was affected by rising prices for essential goods and services such as hospital and medical fees (+5.44 percent), vehicles (+1.07 percent), houses and building materials (+2.03 percent).

Economic expert Dr Vu Dinh Anh says this is not a good sign since inflation is likely to return with unforeseeable consequences in the domestic market.

Many experts say that the monetary policy is the cause of inflation as Vietnam has to prime the pump to keep CPI rising after a sharp decline.

The 2012 target of keeping inflation at 7-8 percent is within reach but the country will face the risk of high inflation growth if monetary and financial policies are not tightened in the next year.

Dr Vu Dinh Anh attributes macroeconomic instability and runaway inflation to relying too much on capital sources and foreign investment.

Anh cites increasing public spending as another reason to consider when the pressure of monetary policy is easing.

The Hanoi Statistics Office says the capital’s credit growth in August is estimated at 0.92 percent, with total outstanding debt of VND613,343 billion. However, this figure is still much lower than the 2.17 percent increase in the amount of mobilised capital and not as high as the 8 percent credit growth set for the whole year.

The State Bank of Vietnam (SBV) recently increased the credit growth rate for some banks to 30 percent, but that of the entire banking system remained low, at 1.06 percent on average, for the first seven months.

Despite low purchasing power and large inventories, the prices of essential goods have risen in tandem with ever higher input costs, an initial sign of inflation growth.

Judging by rising global oil prices, domestic petrol enterprises have gone to great lengths to increase their prices while transport businesses are also asking for higher fees. In such a difficult situation, the possible resurgence of inflation will be a major obstacle to economic recovery.

Economic experts say market fluctuations, low credit growth, and rising prices for essential goods and services are negative factors that need to be dealt with to prevent inflation from rearing its ugly head.

It is essential to devise long-term policies to rein in inflation, carry out the current financial, monetary, and pricing policies properly, and improve the quality of credit, instead of meeting credit growth targets, Anh notes.

 Deputy PM pledges best conditions for Swiss businesses

Vietnam will create the best possible conditions for Swiss businesses to operate efficiently in the country, said Deputy Prime Minister Nguyen Thien Nhan.

At a meeting with 43 Swiss businesses in Zurich on August 29, Deputy PM Nhan said Vietnam is always willing to perfect the country’s business environment as suggested by foreign investors.

The Deputy PM said since former State President Nguyen Minh Triet’s visit to Switzerland in 2010, two-way has increased steadily despite the impact of the world economic recession, the European debt crisis, and the appreciation of the Swiss franc.

Mr Nhan spoke highly of the role of the Swiss-Asian Chamber of Commerce (SACC), in arranging for businesses from both countries to meet, exchange information and seek partners, for the mutual benefit of economic, trade, and investment cooperation.

Also at the meeting, Deputy Minister of Industry and Trade Nguyen Nam Hai briefed Swiss businesses on Vietnam’s economic situation, and participation in the WTO, as well as new investment opportunities in the Southeast Asian nation.

Deputy Minister Nam said Swiss businesses have 89 projects in Vietnam with a total capitalization of US$2 billion, ranking fourth in Europe and 19th in the world in terms of investment in the country. Last year’s two-way trade between Switzerland and Vietnam reached US$3 billion.

Deputy PM Nhan and Adolf Meier, Chairman of the Vietnam Committee under the SACC expressed their belief that two-way trade turnover will grow considerably in the near future.

Marco Martinelli, Director of the TIM Investment and Management Consulting JSC in HCM City, affirmed Vietnam’s huge potential for investment and trade development.

Mr Nhan is scheduled to meet with Chief of Federal Department of Economic Affairs Schneider Ammann, Chief of Federal Department of Home Affairs Alain Berset, and visit Swissmedic (a Swiss Agency for Therapeutic Products) and the Vietnamese Embassy on August 30.

Banking industry on an even keel

The domestic monetary market has become rather stable after several CEOs of local banks and a financial tycoon were arrested due to alleged illegal activities.  

On August 20, Nguyen Duc kien, one of the founders of the Asia Commercial Joint Stock Bank (ACB), and also one of the richest tycoons in Vietnam’s banking industry, was arrested for conducting alleged” illegal business”.

Three days after, the police also detained ACB chief executive Ly Xuan Hai on suspicion of “deliberately acting against state regulations on economic management”.

These events have sent shock waves through the country’s financial market and many customers to the extent that they rushed to get their money out of ACB.

Fearing that the public lack of confidence could spread beyond ACB, Vietnam’s central bank pumped more than US$1 billion to ensure the stability of the local banking sector.

Speaking about these events with the media on August 25, the central banks’ Governor Nguyen Van Binh said that a huge amount of money was withdrawn from the ACB on August 21, 22 and 23 but it dropped significantly on August 25.

He said that activities of the ACB and the banking sector have returned to normal.

The governor affirmed that the central bank has taken sufficient measures to ensure stable operations of the banking sector and the ACB. From August 21-27, total deposits at the bank reached VND33.44 trillion (US$1.59 billion), including more than VND5 trillion (US$238 million) redeposited.

Transactions at the bank have returned to normal, according to Nguyen Thanh Toai, the bank’s deputy director.

By the end of August, there had been wide fluctuations in the price of gold and exchange rate between the dong and the US dollar in the domestic market.

Independent market watchdogs said the gold market became hot over the last week with the gold price jumping to VND44.7 million per tael on August 23 from VND42.6 million in March, while the global price remained stable.

The exchange rate between the dong and US dollar also climbed to over VND21,000 per dollar on August 27, up by over VND100 compared with August 23.

DongA bank join IFC’s financial support programme

The DongA Commercial Joint Stock Bank (DongA Bank) will join the International Finance Corporation (IFC) in a joint global financial support programme to help more businesses access capital.    

Under the contract signed between the two sides in Ho Chi Minh City on August 29, IFC will provide a guarantee worth US$20 million to DongA Bank to ensure the bank’s obligation to beneficiary banks worldwide.

At the signing ceremony, Simon Andrews, IFC Regional Director for Vietnam, Cambodia, Laos and Thailand, and Tran Phuong Binh, General Director of DongA Bank, expressed their hope that the contract will contribute to supporting businesses and creating links between the two sides for mutual development in the future.

DongA Bank will also have a chance to cooperate with many long established regional and global banks. The bank can provide floating capital to enterprises, mainly in the field of export and import.

Vietnam, Russia strengthen finance cooperation

Vietnam and Russia have agreed to cooperate in areas of mutual concern related to economic stabilization and management, financing, state budget collection and spending, social welfare and human resource training.   

A memorandum of understanding (MoU) in this connection was signed by the Vietnamese and Russian Ministries of Finance in Moscow on August 29, on the sidelines of the Asia-Pacific Economic Cooperation (APEC).

Accordingly, the two sides will exchange working delegations and co-ordinate in organizing seminars, conferences and short-term training courses in Vietnam and Russia.

The MoU will be valid in three years from January 1, 2013 to December 31, 2015 and can be renewed as agreed by the two sides.

 2012 trade and agriculture fair in Phan Thiet

A trade and agriculture fair opened in Phan Thiet city, southern Binh Thuan province on August 29.     

It has more than 400 stalls put up by 170 domestic businesses from southcentral provinces.

On display are different kinds of agricultural products and advanced machinery.

In addition, a seminar on the potential of agricultural development in the southcentral region, a food festival and arts performances will be held during the fair which lasts until September 3.

Thai group eyes Vietnam’s retail market

A leading retailer of Thailand is implementing new plans to penetrate Vietnam’s retail market, said President of the BJC’s Management Board Aswin Techajaroenvikul on August 29.
   
If the contract worth Baht 1 - 3 billion (US$32 – 96 million) is signed with a Vietnamese retail corporation, the Berli Jucker Corporation (BJC) will expand the supply network to 200,000 stores from the current 50,000 to become a leading supplier in Vietnam.

It is an important step to expand its retail system in all member countries of the Association of Southeast Asian Nations

The BJC is seen as one of the big businesses in the retail industry in Thailand, employing 50,000 people. Its annual turnover is about Baht 10 billion.

Tax relief for gold from Cambodia

The Government has agreed to grant tax exemption for farm goods grown in Cambodia by Vietnamese enterprises and individuals.
   
This follows the growing number of people cultivating and investing in farming in border provinces.

Statistics show that in southern Tay Ninh Province alone 120 individuals from the districts of Chau Thanh, Tan Bien, Trang Bang and Tan Chau have invested in 2,400 ha in Cambodia.

However, the exemption does not cover processed farm products.

S&P highlights Vietnam’s economic improvements

Standard & Poor's Ratings Services announced on August 29 that the resultant liquidity pressure was limited to the Asia Commercial Bank (ACB) after a recent arrest of one of its founders.   

S&P believes that it is unlikely that other Vietnamese banks will face a similar situation.

“We believe that assurances by the State Bank of Vietnam of liquidity assistance to ACB could mitigate the risk of contagion. Nevertheless, if other banks inVietnam face liquidity pressure that leads to a systemic or  confidence crisis, our ratings on these banks may come under downward pressure,” it said.

S&P spoke highly of Vietnam’s macro-economic improvements, saying that after several years of high credit growth, economic imbalances have reduced somewhat following the government's stabilisation policies in 2011.

A much-needed moderation in the growth of loans, stabilisation of asset prices and a reduction in inflation have taken place as a result of these policies.

Policymakers have recently started showing intent to tackle long-standing problems in the banking sector. Recent initiatives include moves to consolidate and strengthen the industry, increase recognition of asset quality problems, and enhance regulatory supervision.

The government eased monetary policy earlier this year in response to receding inflation, loan stress faced by borrowers and a slowdown in growth.

However, S&P said, the process of restoring confidence in the banking system and monetary policy is in an early phase and calls for careful management.

RoK, Vietnam to hold first round of FTA talks

The Republic of Korea (RoK) and Vietnam will hold their first round of negotiations for a free trade agreement on September 3 to strengthen economic ties, announced the RoK Ministry for Trade on August 29.

In early August, both countries agreed to launch FTA negotiations after finalising a joint study on the feasibility of an FTA in October 2011.

The RoK already has an FTA with the Association of Southeast Asian Nations (ASEAN), which took effect in 2007.

The RoK Ministry for Trade considers Vietnam as a fast-emerging country which is enjoying average economic growth of 5-8 percent per year.

The Southeast Asian nation was RoK’s 15th largest trading partner in 2011, with RoK exports to Vietnam reaching US$13.55 billion, up 40 percent from 2010.

The East Asian nation’s imports from Vietnam also surged 53 percent to US$5.08 billion over the period, the ministry said.

Industrial production index improves

Vietnam’s index of industrial production (IIP) rose by 4.1 percent in August, bringing the eight-month figure to 4.7 percent over the same period last year according to the General Statistics Office (GSO).   

Sectors recording a high year-on-year increase include shipping (over 150 percent), communication equipment production (64 percent), traffic vehicles (44 percent), electronic spare parts (29 percent), and crude oil (14 percent).

The gas and electricity sector rose by 12.7 percent, followed by water and sewerage treatment (9.8 percent), mining (4.9 percent), and processing and manufacturing (3.9 percent).

However, the GSO reported that inventory levels are rising in the processing and manufacturing sector. Other industries which have growing stockpiles are producers of fertilisers, plastics, cement, packaging products, and seafood.

It is predicted that local businesses will continue facing difficulties over the near term as consumer purchasing power has yet to improve.

Hanoi to host Northern Agricultural Products Fair

Agricultural products and handicrafts from northern areas will be showcased in 200 booths at the Vietnam Agricultural Marketing and Trade Fair Centre in Hanoi from September 27 to October 1.    

On display will be agro-aqua-forestry produce, processed food, fresh food, plant seeds, livestock and cattle, along with fine arts such as pottery, sculpture, mosaics, rattan and bonsai cultivation.

The event is part of the Ministry of Agricultural and Rural Development’s trade and investment promotion program in 2012.

It is an opportunity for enterprises to introduce their trademarks to domestic and foreign customers, aimed at attracting new investment in the agricultural sector.

Under the framework of the fair, the organising board will work with the Vietnam Craft Village Association to hold seminars on sustainable development with the participation of leading experts.

Exciting activities such as folk games, cultural performances and craft shows are also scheduled as part of the fair.

Vietnam-Egypt cooperation gathers momentum

Vietnam is willing to cooperate with Egypt in agriculture and other potential areas.  

Ambassador Dao Thanh Chung told Egyptian reporters at a reception marking Vietnam’s 67th National Day (September 2) in Cairo on August 28.

From a food importer, he said Vietnam has now become one of the world’s leading rice exporters. In 2011, its GDP reached nearly US$120 billion with total import-export earnings estimated at US$203 billion.

Vietnam is set to keep economic growth at 7-7.5 percent, agricultural growth at 17-18 percent, industrial growth at 41-42 percent, high tech growth at 35 percent and export growth at 12 percent year-on-year from 2011-2015.

The diplomat said the two countries have agreed to boost bilateral cooperation in all fields and will organize a series of activities to mark the 50th anniversary of diplomatic ties next year.

At the gathering, local representatives and reporters expressed their keen interest in Vietnam’s economic development experiences and hope that bilateral cooperation will continue to grow and flourish after EgyptAir opened a direct route to Ho Chi Minh City in the first quarter of this year.

Banking industry recovers from scandal
 
The domestic monetary market has become more stable after it was shaken by the news that several CEOs of local banks and a financial tycoon were arrested due to alleged illegal activities.

On August 20, Nguyen Duc Kien, one of the founders of the Asia Commercial Joint Stock Bank (ACB), and also one of the richest tycoons in Viet Nam's banking industry, was arrested for conducting alleged "illegal business".

Three days later, the police also detained ACB chief executive Ly Xuan Hai on suspicion of "deliberately acting against state regulations on economic management".

These events have sent shock waves through the country's financial markets and prompted fears among customers who rushed to get their money out of ACB.

Fearing that the public lack of confidence could spread beyond ACB, Viet Nam's central bank pumped more than US$1 billion to ensure the stability of the local banking sector.

Speaking about these events with the media on August 25, the central bank's Governor Nguyen Van Binh said that a high volume of money that had been withdrawn from the ACB on August 21, 22 and 23 but it had dropped significantly on August 25.

He said that activities of the ACB and the banking sector had returned to normal.

The ACB was able to meet all depositors' demands for withdrawal of Vietnamese dong, US dollar and gold.

The governor affirmed that the central bank had taken sufficient measures to ensure stable operations of the banking sector and the ACB. In ACB latest report, from August 21-27, deposits at the bank totalled VND33.44 trillion ($1.59 billion, of which more than VND5 trillion ($238 million) was redeposited.)

Transactions at the bank have returned to normal, according to Nguyen Thanh Toai, the bank's deputy director.

At the end of August, the market also saw strong price fluctuations for gold and for the exchange rates between the dong and the US dollar on the domestic market.

Independent market watchdogs said the gold market became hot over the last week with the gold price jumping to VND44.7 million per tael on August 23 from VND42.6 million in March, while the global price remained stable.

The exchange rate between the dong and US dollar also climbed to over VND21,000 per dollar on August 27, up by over VND100 compared with August 23.

Canada keen to boost co-operation
 
Canada's experience and technological capacities can be used to boost bilateral co-operation with Viet Nam in several fields like supply chain, agriculture, education, oil and gas and information and communication technologies.

Ed Fast, Canadian Minister of International Trade cum Minister for the Asia-Pacific Gateway, who paid an official visit to Viet Nam from August 26-28 to boost trade and investment ties, said many large Canadian companies like Manulife, Bombardier, Talisman and Scotiabank have had a well-established presence in Viet Nam.

Canada-based Manulife and Sun Life insurance providers, for instance, have significantly contributed to the development of the insurance industry in Viet Nam.

Talisman has also invested more than US$2.5 billion into the country's oil and gas sector.

In addition, Canada is also a global leader in the information and communication sector and in educational expertise. "Canada wants to encourage more Vietnamese students to study in Canada," he said.

"Beyond the increasing number of Vietnamese students who choose Canada for their studies, Canadian schools are working closely with Vietnamese partners to deliver high-quality programmes and curriculum," he said.

He said bilateral trade between the two countries has gone up by more than six times over the last 10 years.

Canada-Viet Nam bilateral trade reached an all-time high of nearly $1.7 billion last year.

"But when you look at total numbers for bilateral trade and especially investments, there is so much more that we can do," he said.

"My role here in Viet Nam is not only to meet with some of my Government counterparts but also to evaluate Viet Nam as a destination for Canadian investment."

Canada and Viet Nam will start the ninth round of negotiations for a Foreign Investment Promotion and Protection Agreement in Ha Noi yesterday.

"The agreement is expected to boost investment between the two countries as well as ensure the security that investors are looking for," he said.

East-West Economic Corridor hits roadblocks
 
Red tape and inconsistent trade and immigration policies are hindering the development of the East-West Economic Corridor, a 1,450km highway linking 19 provinces in Viet Nam, Laos, Thailand and Myanmar, says the former director of the Institute of World Economics and Politics, Luu Ngoc Trinh.

The central city of Da Nang was strategically located as the corridor's gateway to the East Sea shipping, Trinh said, but the city had yet to fully exploit its advantages. Last year, for instance, the combined import and export value of the city to the other three countries along the corridor was US$50 million, or only about half-a-per-cent of the national trade value.

Trinh blamed the modest value on cumbersome administrative procedures that have scared off investors, constrained the flow of goods and passengers, and increased time and costs for businesses.

Procedures for immigration and import-export activities along the corridor were also inconsistent, he said. At the border gate between Thailand and Laos, he noted, drivers were required to report information in six categories to pass through the border gate, but at the border between Viet Nam and Laos, 46 categories of information were required.

Marine shipping costs were also inflated. Freight for a 20-feet container on the 1,000-nautical-mile voyage from Bangkok to Hong Kong was $200 while the same container departing from Da Nang to Hong Kong, a trip of just 511 nautical miles, carried freight charges of $350. Such high charges have left Viet Nam's logistics services less competitive.

Since June 2009, pursuant to an agreement of the four countries, righthand-drive vehicles have been authorised to operate on the entire length of the corridor, yet Viet Nam continues to block vehicles with steering wheels on the right to enter from Laos or Thailand.

To avoid cumbersome procedures to apply to use righthand-drive trucks, many Vietnamese exporters have opted to tranship at the border with Laos, a measure that drives up costs.

Trinh said that countries along the corridor needed to boost co-operation to develop consistent policies, including custom clearance procedures and toll collections.

Policies should be made simple, consistent, quick, convenient and effective, said the former head of the domestic market department of the Ministry of Industry and Trade, Hoang Tho Xuan.

Co-operation should also be increased among border police, customs officials, and healthcare and quarantine officials to help facilitate the flow of goods and passengers along the entire corridor, Xuan added. A detailed development plan for seaports and the airport in Da Nang was also needed to help the logistics industry to develop in the city, he said.

Seminar aims to help bolster bilateral trade with Japan

The Viet Nam Chamber of Commerce and Industry and the Japanese-ASEAN centre hosted a seminar in Tokyo on Tuesday to promote Vietnamese-Japanese trade.

Addressing the event, Nguyen Trung Dung, commercial counsellor of the Vietnamese Embassy in Japan, said Japan was Viet Nam's third largest trading partner and the second largest importer of Vietnamese goods.

In the first half of this year, two-way trade hit over US$12 billion, a year-on-year rise of 28 per cent, of which Viet Nam 's exports to Japan reached about $7 billion, up 45 per cent on the same period of last year.

Notably, Japanese enterprises working in Viet Nam contributed over 50 per cent of Viet Nam's total exports to Japan.

Masaaki Okano, a representative from the Asia New Power company, said Japanese enterprises should provide more specific requirements for their Vietnamese counterparts, who also needed to study the Japanese market carefully, especially quality requirements and laws, in order to successfully penetrate the market.

Deputy director of the Binh Thuan provincial Department of Industry and Trade Ngo Minh Hung said the locality was speeding up administrative reforms and incentives to lure more domestic and foreign investors.

Huynh Cong Trung, deputy director of the Sai Gon Trading Group (SATRA), said the group had established a representative office in Yokohama city to share information and promote economic, trade and investment ties with Japanese localities and businesses.

Trade fair promotes sea tourism

A trade fair on sea tourism opened yesterday in the central coastal province of Binh Thuan.

The six-day fair has around 170 booths with various products, plus an area with local and international food dishes, including specialites of Binh Thuan Province.

The fair also includes an exhibition of products and services of hotels and resorts, including in Mui Ne, a tourist destination for international visitors.

Among other events are photo exhibitions promoting tourism and displays of water and flying sports equipment, including hot air balloons, paragliders, paramotors, gliders and ultralight aircraft.

Johan Paul Aime, from France, who has been living in Binh Thuan Province for six years, said the fair was showcasing products in anticipation of the Viet Nam International Hot Air Balloon Fiesta, which will open tomorrow in the province.

The three-day fiesta will include more than 20 balloons and 50 balloon experts from 12 countries and territories and is expected to attract thousands of local and foreign visitors.

Confab promotes business incubators

A seminar in HCM City yesterday highlighted the benefits to the economy from business incubators and encouraged businesses to join incubator networks.

Delegates say business incubators are still a relatively new concept in Viet Nam and it requires universities to promote them.

Nguyen Hai An, director of the Centre for Business Incubation of Agricultural High Technology run by the HCM City-based Agricultural Hi-Tech Park, said: "The functions of business incubators include reducing risks and investment costs and increasing the business start-up rate."

Besides, they also helped new commodities, business models, and technologies, he said.

They offered new businesses opportunities for research co-operation and testing services, training courses, information, and consultancy services, he said.

Dang My Chau of the TOPICA Education Group said business incubation has become a major movement in the Asia-Pacific.

China boasted of the largest number of incubators (670) and incubated companies (45,000), she said.

In Viet Nam around 11 incubators have been set up and they had huge potential, she said.

They include the Sai Gon Hi-Tech Business Incubator run by the Sai Gon Hi-Tech Park, Quang Trung Software Business Incubator run by the eponymous software park, HCM City University of Agriculture and Forestry's Technology Business Incubator, and HCM City University of Technology's Science and Technology Business Incubator.

"When they join a incubator network, businesses receive financial, technological, organisational, and management support during the incubation process, ensuring sustainable growth when they operate independently," Chau added.

An said the Centre for Business Incubation of Agricultural High Technology would help individuals and organisations with sound agricultural business projects.

"Enterprises up to two years old are also eligible for assistance", he said.

Mai Thanh Phong, director of the HCM City University of Technology's incubator, said business incubators play the role of a bridge linking businesses, universities and other institutions, and government agencies to help businesses overcome difficulties related to research and use of new technologies.

"Business incubators will be a factor in promoting science and technology in the country, especially HCM City," he said.

The sectors that the university incubator prioritises include bio-technology, food technologies, environmental technologies, information technology, automation, and renewable energies.

In the two years since it began operation, the centre has incubated eight businesses.

Five of them have been set up as a legal entity with an average annual turnover of VND500 million (US$23,800) each, Phong said.

Three out of the five have signed contracts and carried out technology transfers worth billions of dong, he said.

Apart from providing consultancy and training to businesses, the centre also seek markets for technology businesses.

For instance, it surveyed the domestic market and foreign ones, especially in Africa, that are thought to be a potential destination for Vietnamese technologies.

The seminar was organised by the Centre for Business Incubation of Agricultural High Technology in collaboration with the Ho Chi Minh Communist Youth Union's Youth Science and Technology Development Centre and HCM City University of Technology's Science and Technology Business Incubator.

Industry ramps up while inventories remain high

The industrial production index in the first eight months of this year reflected a better performance but inventory index was still rather high, reported the General Statistics Office (GSO) yesterday.

The industrial production index (IPI) increased by 4.1 per cent in August against the previous month. Consequently, the IPI rose by 4.7 per cent in the first eight months from the same period last year.

Some manufacturing sectors made great contributions to the index's positive growth. Notably, the ship-building industry skyrocketed 150 per cent and communication equipment production went up 64 per cent.

Production of spare parts for motorised vehicles also accelerated by 44 per cent. Electronic component manufacturing went up 29 per cent and crude oil exploitation was up 14 per cent.

Other manufacturing industries that saw positive growth included minerals, power and gas, water supply and sewage drainage.

However, according to the GSO, the inventory index of industrial products was still high. Particularly, the inventory index of fertiliser and plastic products in the first eight months increased by 81 per cent and 69 per cent respectively.

The inventory index of the battery sector grew 40 per cent, and the seafood and beer industries went up 35 and 29 per cent respectively.

The GSO experts said that production was better, but poor consumption did not improve, so enterprises would continue to face difficulties.

Therefore, besides preferential policies on commercial loans' interest rates, the Government and relevant State bodies should further bolster solutions to accelerate consumption and decrease inventories, they said.

DongA Bank signs deal with IFC

The joint-stock DongA Bank yesterday signed a contract to join the International Finance Corporation's Global Trade Finance Programme.

The IFC, the financial arm of the World Bank, will provide DongA Bank with a total credit guarantee of US$20 million for its international trade-related transactions.

The guarantee can take the form of letter of credit, bill of exchange, or draft so that DongA Bank will be able to provide working capital to importers and exporters.

Its general director, Tran Phuong Binh, said the bank met IFC's criteria on corporate governance and credit and risk management, so it was able to join the programme.

In an unrelated event, five commercial banks – Sacombank, Vietcombank, Vietinbank, HDBank, and MHB – signed contracts on Tuesday with 18 HCM City businesses to provide them with credit of almost VND96 billion (US$4.7 million).

Sacombank would bring in VND50 billion of that amount. The annual interest rates range from 11 to 13 per cent.