The Vietnam trade deficit is not a terrible thing!
The Vietnam trade deficit has been reported by the General Statistics Office (GSO) at US$1.9 billion in the first quarter of 2017.
The trade deficit exists because Vietnam exports to other countries were only US$43.7 billion while imports from other countries tallied in at US$45.6 billion, according to the GSO best estimates.
Initially, a trade deficit is not a dreadful thing.
It raises a country's standard of living. Its residents have access to a wider variety of goods and services at a more competitive price. It reduces the threat of inflation, since it creates lower prices.
A trade deficit indicates that the country's residents are feeling confident and wealthy enough to buy more than the country produces.
Contrary to much of the ‘fake news’ that continually circulates in Vietnam— companies that depend on import materials in production to make goods for export do not contribute to the deficit.
They as a matter of fact and simple common sense contribute to either a trade surplus or a reduction of the trade deficit.
To the extent that there are foreign sector companies in Vietnam importing machinery, equipment and other materials that are incorporated into an FDI venture, those costs could add to a trade deficit.
This is because the value of the asset is not offset against the cost of the import.
However, in any thoughtful analysis one should obviously consider that the FDI manufacturing plants being constructed will generate positive exports for many years to come.
Certainly, it is true that trade deficits that result from Vietnamese consumers purchasing foreign goods over extended periods of time could have negative consequences, but this is not the situation in Vietnam.
There simply is no reason for anyone to get analysis paralysis over the trade deficit of Vietnam in the first quarter of the year.
During the first three months of 2017, total export value grew 12.8%, while the total import value had a year-on-year increase of 22.4%.
Vietinbank celebrates five years in Laos
VietinBank Laos, an affiliate of the Vietnam Joint Stock Commercial Bank for Industry and Trade (VietinBank), marked its five-year operation in Laos at an event on March 31.
Speaking at the event, VietinBank Laos General Director Le Quoc Nam expressed his gratitude for the support from both governments for the bank’s operation since 2012.
He noted that starting with US$22 million of charter capital and 17 members of staff, the VietinBank Laos has grown into the second biggest Vietnamese bank in Laos. He reported that the bank’s asset was valued at nearly US$222 million in 2016 and total outstanding debt reached US$158 million while mobilized capital hit US$157 million. Vietinbank Laos recorded profit for five consecutive years and had no bad debt.
The bank has granted approximately US$900,000 to local social welfare and charitable activities.
The General Director said the bank aims to become the best Vietnamese bank in Laos to contribute further to Laos’s national construction cause and the Vietnam-Laos special friendship.
Lao Deputy Prime Minister and Finance Minister Somdy Douangdy lauded the VietinBank Laos’ performance and contributions to the local socio-economic development in the past five years.
He said the bank has adhered to the country’s regulations, created jobs for locals, and actively engaged in social welfare activities, praising it as a trade-investment bridge connecting Vietnamese and Lao businesses.
Deputy Governor of the State Bank of Vietnam Dao Minh Tu said the robust growth of the bank also reflects the effective cooperation between Vietnam and Laos.
At the ceremony, the State bank of Laos presented a certificate of merit to the VietinBank Laos for its significant contributions to the local socio-economic development.
Police arrest meth smugglers carring 4,000 pills in northern Vietnam
Anti-drug forces in Vietnam's northern province of Lao Cai arrested two men in possession of 4,000 methamphetamine pills on April 1.
Sung Seo Trang, 34, and Giang Seo Tinh, 33, were stopped on their way to sell the pills at a motel named Ngoc Tuan in Bac Lenh Ward, police said.
The two suspects said Trang received the shipment from a man named Khai, who has yet to be identified, about six days ago.
Trang then called Tinh and told him to hide the package while he found a buyer. On the afternoon of March 31, he called Tinh and told him to bring the pills to the Ngoc Tuan Motel, but the deal fell through.
The following day, police raided the motel and caught Tinh and Trang trying to sell the pills again.
A subsequent search turned up two packages wrapped in silver foil containing a total of 4,000 pills. The suspects admitted they were synthetic drugs.
Vietnam has some of the world’s toughest drug laws. Those convicted of smuggling more than 100 grams of heroin, cocaine, methamphetamine or ecstasy are punishable by death by lethal injection or 20 years in jail.
Although the laws are strictly enforced with capital punishment handed down regularly, drug running continues.
Tien Giang earns record export revenue
The Mekong Delta province of Tien Giang has earned record export revenue this year, said Director of the provincial Department of Industry and Trade Ngo Van Tuan.
As of March, local export earnings neared 627 million USD, or nearly 27 percent of the yearly target and up more than 50 percent year-on-year, 58.5 percent of which was contributed by the foreign-invested sector.
Most key earners such as handbags, apparel, bronze pipelines, processed seafood and footwear recorded strong growth. Handbag export value hit nearly 157 million USD with a 52.3 percent increase in prices while bronze pipelines weighing up to 14,000 tonnes fetched 93.3 million USD, up 38 percent in volume and 60.8 percent in value, respectively.
Processed seafood soared 57.3 percent in volume and 56.3 percent in value to 44,400 tonnes and 88.4 million USD.
Major importers still come from American markets, followed by Asia and Europe.
Since the beginning of this year, Tien Giang has pushed forward an action plan to implement the 2011-2020 export-import strategy with orientations to 2030 along with business development, investment attraction and job creation.
Tuan said the locality has helped firms diversify export markets and informed them about bilateral and multilateral free trade agreements, helping them pursue new business opportunities.
This year, the province hopes to earn 2.35 billion USD from exports, up 11.4 percent year-on-year.-
Tien Giang strives to catch 98,000 tonnes of seafood this year
The Mekong Delta province of Tien Giang has caught nearly 23,000 tonnes of seafood since early this year, up nearly 3 percent year-on-year, said acting Director of the provincial Department of Agriculture and Rural Development Cao Van Hoa.
The province strives to bring ashore 98,000 tonnes of seafood for domestic and foreign consumption this year, he said.
Fishing is the main livelihood for the populations in the coastal districts of Go Cong Dong, Go Cong Tay, Tan Phu Dong, Go Cong township and My Tho city.
The province is currently home to more than 1,300 fishing vessels, 994 of them are able to go for deep-sea fishing.
My Tho and Vam Lang fishing ports, part of the national fishing port system, have handled some 10,000 tonnes of fish and shrimp from more than 2,000 fishing vessels since the beginning of this year.
In Vam Lang township, Go Cong Dong district, a seafood processing village has been built, accommodating 120 facilities and about 900 households specialised in purchasing and processing seafood into dried produce or fish sauce serving domestic and foreign markets.
Special administrative economic zones plans requested
Deputy Prime Minister Truong Hoa Binh has asked ministries and Quang Ninh, Khanh Hoa and Kien Giang provinces to submit plans to establish special administrative economic zones in these regions.
The plans have to be submitted before April 3 to accelerate the creation of the Law on Special Administrative and Economic Zones.
Binh said the plans should have specific policies and mechanisms that are divided into categories of land use, immigration, finance-banking, infrastructure development sectors.
The provinces should have proposals on policies to help develop their strengths, prevent competition with each other and be attractive to regional and international investors.
On December 12, 2016, the Government promulgated Resolution No 103/NQ-CP, agreeing in principle to establish three special administrative economic zones in Van Don (in the northern province of Quang Ninh), Phu Quoc (in the southern province of Kien Giang), and north of Van Phong Bay (in the central province of Khanh Hoa).
The government asked the three provincial People’s Committees to collaborate with the Ministry of Planning and Investment (MPI) and other concerned ministries to draw up plans.
The MPI is working on the Law on Special Administrative and Economic Zones, with an aim to creating a new development model with breakthrough policies and mechanisms to improve investment environment while increasing competitiveness for attracting investments.
The ministry said the building of special administrative and economic zones had become urgent, necessary work as over the past 25 years the models of industrial zone, processing zone, economic zone and hi-tech park had not been sufficiently flexible, despite their contributions towards socio-economic growth.
Also, the policies and mechanisms in the current models are not attractive enough for foreign investors. The current models face shortcomings related to administrative procedures and poor human resources.
Since 1942, many countries have developed successful models of special economic zones, special administrative zones, freedom cities and intelligent, industrial and hi-tech cities with more open policies.
Building of special administrative and economic zones in Vietnam will have positive effects on neighbouring areas too, the ministry said.
Quang Ninh province is seeking capital for 43 investment projects across several sectors for the 2016-20 period. It has 121 registered foreign direct investment (FDI) projects with a total investment capital of 5.9 billion USD, as per the MPI’s Foreign Investment Agency.
The Van Phong Economic Zone was established in 2006 and is spread across 150,000 hectares. This includes 80,000 hectares of sea and 70,000 hectares of land, which are under the supervision of Van Ninh District and Ninh Hoa Commune. A multi-sectoral economic zone, it has a designed focus on container and petroleum transit services, oil refining, and petrochemistry. So far it has attracted 145 investment projects with a total registered capital of 1.47 billion USD; 79 projects with an implemented capital of 600 million USD are operational.
Shares drop off after 10-year high
Shares declined unexpectedly on March 31 on the two exchanges, beating analyst forecasts of a continued rise after the VN-Index surpassed the previous ten-year high.
On the HCM Stock Exchange, the VN-Index sank for the first time in three days, edging down 0.2 percent to close at 722.3 points. The southern index increased 0.7 percent in the last two trades.
On the Hanoi Stock Exchange, the HNX-Index was down 0.3 percent to end at 90.8 points. The northern index gained 0.6 percent in the previous two sessions.
Banks and food and beverage companies, which were the main driving force of the market in the previous sessions, lost their steam.
Except Sacombank (STB) which climbed 1.8 percent and Nam Viet Bank (NVB) closed unchanged, seven other listed lenders slumped, including Vietcombank (VCB), Vietinbank (CTG), BIDV (BID), Military Bank (MBB) and Asia Commercial Bank (ACB) which dropped around 1 percent each.
Prices of bank shares have climbed around 10 percent in the last two weeks, driving investors to capitalise on short-term profits.
Credit growth in the first three months hit a 6-year high at 2.81 percent, according to a report by the General Statistics Office. This data indicated positive capital absorption of enterprises early in the year, thereby raising the interest income of banks.
In the food-drink sector, only Masan Group (MSN) maintained a modest rise of 1.2 percent, other big companies such as Vinamilk (VNM), Sabeco (SAB) and Habeco (BHN) decreased 0.5-3.5 percent.
“The market is still facing a high risk of short-term decline,” said Tran Duc Anh, a stock analyst at Bao Viet Securities Co.
In a market report yesterday, Anh said most stocks showed a signal of forming a short-term peak in the previous session and the index’s rally was mostly backed up by large-cap stocks.
“Investors should take profit when the index surpasses a peak,” he said.
On the positive side, steel stocks gained as investors speculated on the information that the Ministry of Industry and Trade has imposed an anti-dumping tax on imported coated steel from China and the Republic of Korea.
This decision is expected to help local steel manufacturers boost sales as well as profits.
The biggest listed steel firm Hoa Phat Group (HPG) increased 2 percent. Nam Kim Steel (NKG) was up 3.2 percent while Hoa Sen Group (HSG) and Viet-Italy Steel (VIS) rose by less than 1 percent.
Total liquidity remained high at over 256 million shares worth 4.3 trillion VND (188.4 million USD) being traded in the two markets.
Da Nang boosts agricultural cooperation with China’s Shandong
The central city of Da Nang hosted a seminar on March 31 to promote its economic and agricultural cooperation with Shandong province of China.
Vice Chairman of the municipal People’s Committee Ho Ky Minh said the seminar aimed to provide Shandong’s businesses with an insight into the city’s investment environment, advantages and potential as well as its development orientations.
It was also a chance for enterprises of the two localities to seek partners, especially in the field of hi-tech agriculture, Minh added.
Wang Jun Min, an official of Shandong, said his province has been taking the lead in China in terms of agricultural production and export. It has been ranking first in terms of agricultural export revenue for 17 consecutive years, making up one-fourth of China’s total farm produce export earnings.
As Shandong holds a lot of advantages in agriculture and machinery manufacturing, it will encourage Vietnamese firms, including those from Da Nang, to invest in these areas.
Wang hoped that Da Nang will provide favourable conditions for Shandong enterprises to invest in the city, and that more Vietnamese key agricultural products will be exported to Shandong and vice versa.
Shandong province also wants to cooperate with Da Nang in the industry and service sectors, he added.
In 2016, Da Nang earned 22 million USD from exports to China while importing 210 million USD worth of goods from this country. By the end of March 2017, the city had housed 12 FDI projects invested by Chinese companies with total capital of 6.2 million USD.
Vietjet Air launches Hanoi-Siem Reap air route
Low-cost carrier Vietjet Air’s first flight on the Hanoi – Siem Reap air route was launched on March 30, connecting two famous tourism destinations of Vietnam and Cambodia.
According to Vietjet, the airline operates one daily return flight on the route with a flight time of 1 hour and 45 minutes.
The flight from Hanoi departs at 16:55 and arrives in Siem Reap at 18:40 (local time). The return flight starts in Siem Reap at 19:30 and arrives in Hanoi at 21:15.
Siem Reap is one of Cambodia’s famous destinations, which is near world culture heritage such as Angkor Wat and Angkor Thom. It is attractive to tourists thanks to its peaceful scenes and ancient architectures.
Vietinbank celebrates five years in Laos
VietinBank Laos, an affiliate of the Vietnam Joint Stock Commercial Bank for Industry and Trade (VietinBank), marked its five-year operation in Laos at an event on March 31.
Speaking at the event, VietinBank Laos General Director Le Quoc Nam expressed his gratitude for the support from both governments for the bank’s operation since 2012.
He noted that starting with 22 million USD of charter capital and 17 members of staff, the VietinBank Laos has grown into the second biggest Vietnamese bank in Laos. He reported that the bank’s asset was valued at nearly 222 million USD in 2016 and total outstanding debt reached 158 million USD while mobilized capital hit 157 million USD. Vietinbank Laos recorded profit for five consecutive years and had no bad debt.
The bank has granted approximately 900,000 USD to local social welfare and charitable activities.
The General Director said the bank aims to become the best Vietnamese bank in Laos to contribute further to Laos’s national construction cause and the Vietnam-Laos special friendship.
Lao Deputy Prime Minister and Finance Minister Somdy Douangdy lauded the VietinBank Laos’ performance and contributions to the local socio-economic development in the past five years.
He said the bank has adhered to the country’s regulations, created jobs for locals, and actively engaged in social welfare activities, praising it as a trade-investment bridge connecting Vietnamese and Lao businesses.
Deputy Governor of the State Bank of Vietnam Dao Minh Tu said the robust growth of the bank also reflects the effective cooperation between Vietnam and Laos.
At the ceremony, the State bank of Laos presented a certificate of merit to the VietinBank Laos for its significant contributions to the local socio-economic development.
Quang Ninh looks to improve public services for businesses
A conference took place in the northern province of Quang Ninh on March 31 to launch the implementation of the Government’s Resolution 19 on improving the business climate and national competitiveness.
Speaking at the conference, Chairman of the provincial People’s Committee Nguyen Duc Long said Quang Ninh’s provincial competitiveness index (PCI) was 65.6 points in 2016, ranked second nationwide.
The overall ranking jumped one place from 2015, he said, taking note of administrative shortcomings that led to lower places in a number of PCI criteria, including time costs, labour training, legal institutions, and transparency.
He urged local officials and public servants to do their best in providing quality services for residents and enterprises.
As heard at the function, Quang Ninh was set to continue to organise dialogues between provincial leaders and business representatives once every quarter, while district- and commune-level officials were encouraged to hold regular meetings with local businesses and promptly help them access land sources and handle difficulties.
All local policies and announcements on business administrative procedures would be made public.
IT application was considered a priority in building an e-governance system in the province, which would offer cost-saving online administrative procedures.
A hotline connecting businesses with relevant officials and an online support service to receive and process local feedback will be put in place.
Ta Duc Quyet, head of the Mai Quyen service firm, said administrative services in Quang Ninh have become more efficient in recent years.
In 2016, Quang Ninh attracted 567 million USD in foreign direct investment, up 30 percent year-on-year.
Stock volatility expected this week
Shares are expected to decline further this week as investors seek profits from a 10-year high, but the decline will not be heavy as foreign investments and first-quarter performances will boost investor confidence in listed companies.
Vietnam’s benchmark VN-Index on the HCM Stock Exchange edged down 0.2 percent to finish at 722.31 points on March 31. The major index gained total 0.7 percent in the previous two sessions.
The HNX-Index on the Hanoi Stock Exchange lost 0.3 percent to close at 90.82 points on March 31. The northern market index retreated from a two-day increase of 0.6 percent.
The March 31’s falls ended a sideway weekly move for the two local exchanges compared to the previous week’s closing level of 722.14 points for the VN-Index and 91.37 points for the HNX-Index.
Market trading liquidity declined from the previous week, with an average of more than 258.4 million shares being traded in each session, worth 4.43 trillion VND (194.38 million USD).
The VN-Index had mainly struggled to stay in the range of 715-720 points in March, according to Chau Thien Truc Quynh, head of the brokerage division at Viet Capital Securities Company.
“As the benchmark index met strong resistance at that range, the signal of short-term correction has appeared, and the stock market will decline in the next two or three weeks.”
The short-term support level for the VN-Index is 717-722 points, for the HNX-Index 90.5 point and the stock indices will test these levels in the first trading days of this week, she added.
However, the stock market is still an attractive channel for investors, Quynh said. At the end of the first quarter, the average trading value on the two local exchanges was 3.56 trillion VND in each session, an increase of 27 percent compared to last year’s same period.
Stocks will correct on a technical basis in the next two weeks rather than declining sharply, said Phan Dung Khanh, a senior manager at Maybank Kim Eng Securities Company.
The stock market will continue to attract investment as macroeconomic conditions are positive, interest rates have been reduced and other assets like gold and foreign currencies become less attractive, he said.
Domestic and foreign investment has remained strong, spreading around all sectors in the market, Khanh added. Foreign investors last week recorded a net buy value of 855 billion VND, 12 percent lower than the previous week’s figure.
In addition, listed companies, especially large-cap ones, have released their earnings reports for the first quarter, which have been better than expected and will boost investor confidence, he said.
According to analysts, the sectors that could be attractive to investors this week include steel, banks and construction and property firms.
Steel producers such as Hoa Phat Group (HPG) and Hoa Sen Group (HSG) will benefit from the latest decision of the industry and trade ministry regulating anti-dumping tax on imported steel products from China and the Republic of Korea. The new decision will take effect on April 13 and be valid in the next five years, promising to boost performance of local steelmakers.
In the banking sector, Sacombank (STB) will be the centre of attention over speculations on the bank’s restructuring plan. Vietnam’s property giant Nova Group has proposed to the central bank to purchase 20 percent of Sacombank’s capital to participate in the restructuring of the HCM City-based bank.
2017 first quarter experiences low economic growth
2017 is an important transitional year of the implementation of Vietnam’s 2016-2020 socio-economic development plan. However, the country’s GDP posted 5.1 percent in the first quarter, lower than the corresponding periods of the two previous years.
Being one of the big garment and textile firms, Hung Yen Garment Company is facing a host of challenges from both world economy’s impacts and domestic business environment.
Industry sector recorded 3.85 percent growth in the first quarter, the lowest level since 2011, attributing to diminishing the overall growth.
Experts say Vietnam should take a number of economic scenarios into account, given that world’s economies are projected to witness low growths in 2017, not including risks from financial market as well as protectionism.
During the process of economic restructuring, Vietnam has to suffer weaker growth in a short time before garnering a sustainable growth in the long run, experts say.
Reference exchange rate up 5 VND
The State Bank of Vietnam set the reference VND/USD exchange rate at 22,281 VND/USD on April 3, up 5 VND from the end of the last week.
With the current + /- 3 percent VND/USD trading band, the ceiling exchange rate is 22,949 VND per USD and the floor rate is 21,613 VND per USD.
In the opening hours, commercial banks made slight changes to their rates.
Vietcombank listed the buying rate at 22,710 VND/USD and the selling rate at 22,780 VND/USD, down 10 VND.
Techcombank set its buying and selling rates at 22,710 VND and 22,800 VND, per USD, unchanged from the end of last week.
Vietinbank offered its buying and selling rates at 22,700 VND and 22,780 VND, per USD, unchanged from the end of last week.
Vietnamese farmers rush into raising catfish over Chinese demand
A surge in demand for catfish from the Chinese market has led farmers in Vietnam’s Mekong Delta to grow a large volume of the type of fish, despite many warnings from experts.
As catfish prices have topped VND27,000 (US$1.18) per kilogram, the highest in several years, local residents are scrambling to begin farming the aquatic animal or switching from raising other types of fish.
The fad is triggered by the rising demand from the Chinese market, experts stated, warning that there is no guarantee that the market would keep purchasing for a long time.
A sudden drop in demand will potentially lead to heavy losses for local farmers, the experts said.
P., a catfish farmer in Ke Sach District, Soc Trang Province, stated that his family current owns three ponds of catfish and are looking to rent extra space to expand their operation.
“One of my friends from Ho Chi Minh City, who has no experience in farming fish, intends to buy some seven ponds to begin cultivating the fish,” P. continued.
Many households in Hong Ngu District, Dong Thap Province, have been switching from snakeheads, whose price has recently dropped, to catfish following the new trend, said Pham Thanh Nhi, head of the local agriculture office.
During an interview with Tuoi Tre (Youth) newspaper, Vo Hung Dung, vice-president of the Vietnam Pangasius Association, China has bought much more Vietnamese catfish over the years.
The Chinese market only accounted for 3% of the Southeast Asian country’s catfish exports in 2011, Dung said, adding that the number had exceeded 18% in 2016.
Despite such statistics, experts from the association are studying the market in order to provide helpful suggestions for businesses and farmers, according to Dung.
“Fish farmers should be cautious as catfish prices fluctuate more often than not,” Nguyen Minh Nhi, former chairman of the People’s Committee in An Giang Province, said.
The An Giang Department of Agriculture and Rural Development has encouraged local residents to join businesses in farming catfish.
The cooperation will help ensure that the fish would be sold out, preventing farmers from suffering losses.
National Quality Award presented to outstanding businesses
The Ministry of Science and Technology has presented the National Quality Award and the Global Performance Excellence Award for Asia-Pacific 2016 to outstanding businesses.
Speaking at the award ceremony in Hanoi on April 2, Deputy Prime Minister Vu Duc Dam underlined the importance of effective allocation of resources to enhance the economy’s competitiveness and urged enterprises to improve their productivity, quality, and market management to boost their growth and serve consumers.
"By improving their performance, many Vietnamese enterprises have conquered the domestic and strengthened their foothold in overseas markets.
Vietnamese enterprises have managed to dominate the domestic market and gained consumers’ trust thanks to improving their quality, I hope that these two awards will draw attention from both enterprises and society and at the same time encourage Vietnamese enterprises to promote innovation and increase their quality," he said.
Over the last 20 years, more than 1,680 enterprises have been honored with National Quality Awards. Since 2000, 40 Vietnamese enterprises received the Global Performance Excellence Awards.
Vietnamese airlines rowing over floor, ceiling rates for domestic services
Vietnamese airlines did not see eye to eye with one another when responding to a Ministry of Transport's plan to cap airfares for domestic services.
The transport ministry, through the Civil Aviation Authority of Vietnam, is soliciting feedback on a plan to lift the ceiling prices for domestic routes by 7-16% to deal with the rising jet fuel costs.
According to the proposed pricing scheme, the maximum price for the Hanoi-Ho Chi Minh City route will be VND3.65 million (US$163) instead of the current VND3.2 million (US$143).
Flag carrier Vietnam Airlines and two budget airlines, Vietjet and Jetstar Pacific Airlines, have all provided feedback to the plan, with one suggesting scrapping the ceiling price, whereas the other two said a floor rate for airfares should also be stipulated to ensure fair competition.
Low-cost carrier Vietjet said the ceiling rate for airfare should be removed as it is no longer necessary and appropriate for the current rapid growing and highly competitive aviation market in Vietnam.
“The government should only manage and oversee the service quality of airlines, rather than capping their domestic airfares,” Vietjet said in a statement.
“The state should respect the healthy competition principles as per the market-based mechanism all airlines are following.”
According to Vietjet, once the ceiling airfare is scrapped, carriers will be able to upgrade and improve their service quality to better serve passengers.
In the meantime, Jetstar Pacific Airlines supported the idea of raising the ceiling price and at the same time suggested that a floor price for domestic airfares should also be put in place to “stop carriers from competing by cheap tickets.”
Jetstar said local carriers have had to repeatedly cut airfares to stay competitive in the last few years, and at some points “offered tickets that were even lower than their cost prices and cheaper than tickets of trains or passenger buses.”
The carrier underlined that this has put pressure on the aviation infrastructure and “affected the business effectiveness and sustainable development of airlines.”
The floor price should be 29-34% of the ceiling price, Jetstar suggested.
If the floor price is applied, the minimum ticket for the Hanoi – Ho Chi Minh City service will be around VND1.5 million (US$67) per turn for Vietnam Airlines passengers, and VND1.1 million (US$49) for those flying with Jestar, according to Vietnamnet.
The Hanoi-based newswire said Vietjet only supported raising or scrapping the airfare cap and strongly opposed to the floor price idea.
The no-frills carrier said applying a floor price for air tickets goes against both the Vietnamese law on competition and international practice, as no country is currently imposing such a price control, according to Vietnamnet.
Vietjet said some 90% of Vietnamese population have yet to fly, mostly because they cannot afford a ticket. The floor price for airfares, once imposed, will prevent the chance to access air travel for these people even harder.
While the airlines have opposite opinions on the floor and ceiling for airfares, most experts interviewed by Tuoi Tre (Youth) newspaper said scrapping the cap and imposing the floor rates are both unnecessary.
Nguyen Tien Thoa, general secretary of the Vietnam Valuation Association, said local airlines are in fact selling tickets at only 85 percent of the allowed rates, so it is not necessary to remove the price cap.
“When there is no price cap, airlines can freely increase airfares, causing disadvantages for consumers,” Thoa said.
Ngo Tri Long, a pricing expert, also said flyers will suffer the biggest toll should the ceiling airfares are removed.
“The airline with the biggest market share may hike its airfares, and other carriers have no choice but to follow suit, and ultimately it is passengers who have to pay more,” he elaborated.
Thoa added that without the price floor airlines have to try to cut costs to be able to offer more affordable airfares, which is good for passengers.
“If a minimum airfare is stipulated, carriers will lose the motivation to compete and cut costs,” he said.
Thoa turned down concerns that the lack of an airfare price floor will lead to unhealthy competition, where as an airline may sell below cost price to manipulate the market.
“Don’t forget that we have the law on competition to oversee the market,” he said.
“You may cut your airfares but if you violate the law, you will be immediately sanctioned.”
AirAsia plans Vietnam venture as travel demand surges
Malaysian budget airline AirAsia said it will develop a low-cost carrier in Vietnam by teaming up with local businesses to catch up with the country’s travel boom.
AirAsia, the region’s biggest budget airline, has signed an agreement with Hanoi-based Gumin Co, Hai Au Aviation and Tran Trong Kien to form the venture, the airline said in a statement filed on March 31 to Malaysia's stock exchange. Kien runs the two Vietnamese businesses, Bloomberg said.
The venture, expected to start flying in early 2018, will need investments of VND1 trillion (US$44 million), with AirAsia contributing 30 percent and Gumin holding around 70%, the statement said.
Vietnam’s aviation market grew 29 percent in 2016 with passengers reaching 52.2 million, the Civil Aviation Authority of Vietnam said. Low-cost carriers served 55 percent of passengers on domestic trips last year, it said.
"There is great potential for growth in Vietnam," AirAsia said in the statement, citing the country's fast-growing economy, a sizable population, and its ranking as Southeast Asia's fifth largest aviation market after Indonesia, Thailand, Malaysia and Singapore, apart from being the world's fastest growing aviation market in 2015-2016.
Bloomberg said Air Asia CEO Tony Fernandes, who seeks to build a pan-Asian budget airline, has interest in Vietnam as its growth in passenger traffic was triple the pace in other Southeast Asian nations.
But Brendan Sobie, Singapore-based chief analyst at CAPA Center for Aviation, forecast “huge challenges” for AirAsia as the market in Vietnam is now well served by two low-cost carriers VietJet and Jetstar Pacific. “AirAsia is very late to the party,” he told Bloomberg.
“The rate of growth will likely slow in the coming years as the market is now more mature,” he said.
AirAsia has established affiliates in Indonesia, Thailand, India and Japan, and has ordered hundreds of planes worth billions of dollars to meet its growth ambitions, Bloomberg said.
Vietnam beats China in product reputation ranking, but scores below most ASEAN peers
Vietnam has been ranked 46th on the Made in Country Index 2017 released by Germany's Statista Market Research Co, which asked more than 43,000 people in 52 countries and territories to look at goods produced in 49 countries and the European Union as a group.
Vietnam hit an index score of 34, while China took the 49th position with a score of 28, said the survey.
However, it stood behind most Southeast Asian countries in the survey, except for the Philippines, which ranked 47th.
The index features 10 categories: high quality, high security standards, very good value for money, uniqueness, excellent design, advanced technology, authenticity, sustainability/eco-friendliness, fair production and status symbol.
Vietnam scored low in all categories but "very good value for money", where it made it to the top 10, standing in eighth place. "Made in China" products claimed the top spot as voted by over a third of respondents.
Even “in Vietnam itself, 'Made in Vietnam' does not have a good reputation", the survey said.
Vietnamese consumers like products from Japan the most. Other products most preferred in Vietnam come from Denmark, Australia, the Netherlands and South Korea.
“Made in Vietnam” products are found popular in Ecuador and the United Arab Emirates, where they rank 10th and 20th, respectively.
Germany tops the Made-In-Country Index, scoring 100 points, while Switzerland and the EU are runners-up, scoring 98 and 92, respectively. Iran sits at the bottom of the pile.
In most countries, products from Germany, the U.S. or Japan are the most favored.
Specifically, in 13 of the 52 responding countries, Germany has the best image as a manufacturing country. The U.S. holds this status in eight countries, while Japan claims seven.
Siemens launches Totally Integrated Automation Portal V14
German industrial giant Siemens has just launched Version 14 of the Totally Integrated Automation (TIA) Portal in Vietnam, helping to shorten the time to market for machine manufacturers and increase the productivity of end users.
This Version 14 of the engineering framework is enriched with a wide range of new functionalities for the digital enterprise and the requirements of Industry 4.0.
The TIA Portal interacts with other systems and exchanges data through open interfaces.
The Teamcenter gateway has a new interface for product data management in Teamcenter, the Siemens data collaboration platform for design, planning and engineering.
The user can easily create model-based programmes with a new interface to Matlab/Simulink.
The cloud-based engineering is also new. From their private cloud, users can access the plant controller with the new TIA Portal Cloud Connector, or use MindSphere, the Siemens cloud solution for industry, for additional digital services from Siemens.
Another new feature is PLCSim Advanced with interfaces to simulation software, such as Plant Simulation and Process Simulate. A Simatic S7-1500 controller can be simulated as a digital twin with PLCSim Advanced to achieve efficient, virtual commissioning.
“There can be varied machine and system components in an engineering process, making it complex and challenging to manage. With added features such as simulation via a digital twin, an open interface system and cloud solutions, processes and data can be seamlessly integrated via the TIA portal, reducing commissioning time, redundant workflows and increased flexibility,” said Tindaro Michele Danze, Digital Factory and Process Drives Division lead and vicepPresident, Siemens Vietnam.
“This would be especially beneficial to manufacturers in Vietnam, which has recently seen an emergence in new players in the industry.
“Through our various conversations with customers, we are beginning to see that manufacturers in the food and beverage, cement, water and wastewater as well as chemical sectors are starting to realise the need to digitalise in order to remain competitive by reaping the benefits of increased production flexibility, higher levels of efficiency and reduced time-to-market of their innovation cycle,” he added.
Sovico Investment, BS Refining talk equitisation
Investment firm Sovico Holdings is in talks with the Binh Son Refining and Petrochemical Company (BSR Co Ltd) on exploiting opportunities arising out of the latter’s equitisation process.
The talks are focusing on BSR’s equitisation plan for 2017 as well as its Dung Quat Refinery expansion project, another major task undertaken by the company.
“The equtisation process is a chance for potential investors to partake in BSR’s progress, while the Dung Quat expansion programme is still in its developmental stage.
“Once it is operational, BSR’s market value will surely change accordingly,” said Tran Ngoc Nguyen, BSR General Director.
As the operator and overseer of the Dung Quat Refinery, BSR intends to complete the expansion in 2021, he said.
The refinery will increase its capacity by 30 per cent to 8.5 million tonne of crude oil per annum, meeting about 50 to 60 per cent of domestic oil demand, and generate export products meeting EURO IV and V standards.
Executives of both companies are also discussing import and export channels for BSR’s crude oil to accommodate Dung Quat’s expansion, operating capacity and growth opportunities in the context of fluctuating world oil prices.
“We hope to have further in-depth meetings with BSR to gather enough information before making our decisions on investing in BSR’s equitisation,” said Nguyen Thanh Hung, Chairman of Sovico Holdings.
Once the equitisation process starts in the third quarter of 2017, BSR expects to leave 49 per cent of its shares owned by the Vietnam Oil and Gas Group (PetroVietnam).
BSR aims to have three main investor groups: strategic shareholders, financial shareholders and registered shareholders.
Sovico Holdings’ current registered capital is VND1 trillion (US$45 million), with interests in a wide range of businesses including real estate. It is a majority shareholder in private airline Vietjet Air.
BSR’s 2016 revenue totalled VND5 trillion ($224.6 million), down 21 per cent from 2015. In the first quarter of 2017, however, the company has already earned a post-tax income of VND1.8 trillion ($80.8 million).
BSR general director Nguyen disclosed that at the end of 2016, many foreign partners had asked to purchase shares in the Dung Quat Refinery, including Russia’s Gazprom Neft and oil companies from Thailand and Singapore.
Key criteria for BSR’s future strategic partners include strong financial capability and experience in the oil refining field, he said.
VEF/VNA/VNS/VOV/SGT/SGGP/Dantri/VET/VIR