Local shopping website signs deal with Sumitomo

E-commerce website Tiki.vn inked early this week a strategic partnership with Japanese corporation Sumitomo.

A strategic partner of Tiki, the Japanese corporation will own a 30 per cent stake in the Vietnamese e-commerce website, which started by selling books, but now trades in a great variety of products from fashion to electronics.

The deal is a series B round of funding for Tiki, which secured series A funding from the Japanese investment fund CyberAgent Ventures in 2012.

The funding from Sumitomo will help Tiki.vn, in a bid to better serve its customers countrywide, boost investment in their warehouses, delivery network, as well as research and development on new products, the company said in a press release.

Viettel expands mobile market in Cameroon

Vietnamese telecommunications operator Viettel has announced an exciting new tie-up with Bestinver Cameroon S.A.R.L to build mobile network Viettel Cameroon S.A.R.L and provide advanced integrated mobile services in the African country.

The joint venture is set to become the largest telecommunications company in the country, with 6,000 employees and a network covering 81 per cent of Cameroon.

Phung Van Cuong, chief information officer of Viettel Group, said: "This agreement marks our significant commitment to Cameroon – the second African market we have invested in."

With smarter computing solutions from US-based IBM Corporation, the joint network will develops its 3G infrastructure and provide high-speed mobile data and voice services.

HP unveils SME-tailored servers

HP on Thursday launched a range of their ProLiant server brand servers that aims to help small and medium-sized businesses (SMEs) to simplify the deployment time and the management and maintenance of their technology infrastructure.

Pham Vinh Thai, HP Viet Nam's Technology Director said SMEs are challenged by limited financial and human resources when responding to growing customer demands and evolving business needs.

He said the new HP ProLiant MicroServer Generation 8 (Gen8) has been an ideal first server that provides simplified set-up, and management and maintenance with some of its technologies.

Further, the microserver offers centralised, anywhere, anytime data access for employees to boost productivity and collaboration through data sharing – and it is small and quiet enough to sit on a desk.

Thai Nguyen steel mill starts work

The Thai Trung Rolling Steel Joint Stock Company on Thursday inaugurated a rolled steel mill with a capacity of 500,000 tonnes per year in the northern province of Thai Nguyen.

With total investment of VND1.3 trillion (US$61.3 million), the 66,000- square metre project is part of efforts to expand production of the Thai Trung Rolling Steel JSC, a subsidiary of the Thai Nguyen Iron and Steel Corporation (TISCO).

The factory was equipped with the latest technologies from Europe. Its major products include rolled steel and steel bars.

New PP duties a blow for businesses

Viet Nam will increase import taxes on polypropylene (PP) from zero to 1 per cent by 2014, 2 per cent by 2015 and 3 per cent by 2016.

The tax adjustments are mentioned in Circular No 107 recently issued by the Ministry of Finance.

The circular contains changes to preferential import tax rates on certain commodities that have been in force since September 26, 2013.

According to the Viet Nam Plastics Association (VPA), PP is one of three major raw materials used in producing plastic items, so households that make low-value utensils will suffer the most from the tax hike.

Domestic firms only turn out 150,000 tonnes of PP annually while local demand is 750,000 tonnes per year, forcing industry players to import 600,000 tonnes to make up for the shortfall, VPA reports.

Based on current import prices of $1,500 a tonne, enterprises will have to pay an extra VND500 billion to import the same volume when the tax rate is raised to 3 per cent.-

Mitsubishi recalls faulty vehicles

For safety reasons, Vinastar, the sole distributor for Mitsubishi in Viet Nam, has announced a recall nearly 2,000 Triton double cab and sports utility Pajero Sport.

The company fears that the steering wheel at the front of the vehicle could disrupt stability.

Vinastar also said the risk of fire and fuel leakages was heightened by technical errors.

The recall applies to 707 Mitsubishi Triton and 1,291 Pajero Sport cars with models produced between 2011 and March 2013.

Viet Nam Register has recommended people to bring all vehicles under the recall to the agents authorised by Vinastar for examination and replace the new ones as soon as possible.

The examination will be conducted from September 3.

Refurbished Metro An Phu reopens

Metro An Phu officially re-opened on Thursday after two months of renovation and expansion.

Metro Cash & Carry Viet Nam said it has expanded its An Phu outlet in District 2 to 8,000sq.m, enabling it to distribute more than 25,000 food and non-food products.

The expansion is part of its efforts to support its distributors and serve customers better, company officials said.

Metro An Phu is currently the largest distribution centre for fresh food products in the country's modern trade channels, with more than 1,200sq.m earmarked for the purpose.

Vietinbank, JFC hold customer forum

VietinBank and Japan Finance Corporation (JFC) and the Japan External Trade Organization (JETRO) held a customer conference for Japanese small and medium-sized businesses operating in Viet Nam yesterday in Ha Noi.

The conference aims to concretise the content of the co-operative terms on providing financial services to Japanese businesses which was signed by Vietinbank and JFC in May this year.

Under the agreement, the JFC will introduce VietinBank's services to small - and medium-sized Japanese enterprises and issue Stand-by Letters of Credit to guarantee their loans at VietinBank.

The two sides also agreed to promote information exchange, as well as introduce potential partners and clients to each other.

VietinBank will provide diversified services for its customers, including services on deposit, accounts, cash management, internet banking, foreign exchange. Especially, VietinBank will provide flexible financing solutions to meet capital needs quickly and efficiently for clients.

SBV gold auctions continue to grow

The State Bank of Viet Nam (SBV) sold 19,700 taels to 13 credit institutions on Friday at VND38.45-38.48 million ($1,831-1,832) per tael at its 57th auction.

The Saigon Jewellery Company (SJC) posted gold prices of VND38.20-38.45 million ($1,819-1.831) on its website at 3pm yesterday, while international gold prices declined to $1,396 per ounce, or $1,682 a tael, on the kitco.com trading floor.

This made gold prices in Viet Nam $149 per tael higher than global rates. The lowest gap was $124 on Wednesday when global gold prices climbed.

Since the first SBV gold auction in March, the bank has sold more than 58 tonnes of gold.

On Friday morning the yellow metal inched up in Asia, posting its second monthly increase.

India is considering a radical plan to direct commercial banks to buy gold from ordinary citizens and divert it to precious metal refiners in an attempt to curb imports and take some heat off the plunging currency.

Singapore interest in VN imports grows

According to International Enterprise (IE) Singapore, Singapore's cumulative imports from Viet Nam in the first seven months of this year reached almost S$1.8 billion (US$1.4 billion), an increase of 15.7 per cent over the same period last year.

Among the key imports from Viet Nam, electrical machinery and sound recorders made the highest value of S$627.8 million; followed by machinery appliances (nearly $217 million) and glass and glassware ($162.6 million).

The IE Singapore also reports that Singapore's cumulative exports to Viet Nam in seven months were valued at nearly S$7.8 billion, equivalent to that of the corresponding period last year. Domestic exports to Vietnam almost reached S$3.54 billion and re-exports, S$4.3 billion.

Of Singapore's exports to Viet Nam, electrical machinery recorded the highest value (nearly S$2.2 billion) and also the biggest increase over the same period last year (118 per cent).

Topping Singapore's domestic exports to Vietnam in the first seven months was mineral fuel oils, waxes and products (over S$1.35 billion); followed by printed books, newspapers and products of printing industry (about S$395 million) and electrical machinery (about S$386 million).

Two-way trade between Viet Nam and Singapore in 2012 was recorded at S$15.8 billion, of which imports from Viet Nam valued at S$2.8 billion and exports to Viet Nam, S$12.9 billion.

Support industry stumbling despite development demand

Although the support industry was among prioritised sectors for Viet Nam, enterprises were struggling to find ways for further development, it was announced at a conference on Thursday.

The Ministry of Industry and Trade held the conference, aiming to create advantageous conditions for the development of support industry in member countries of APEC.

According to Sotaro Nishikawa, director of the Japan External Trade Relations Organisation (JETRO) in Ha Noi, Japan remained among the top FDI investors in Viet Nam. Japanese enterprises were not really "satisfied" with Viet Nam's support industry, however.

Jetro's survey on more than 8,000 Japanese enterprises operating in Asian countries showed that only 27.9 per cent of Japanese enterprises in Viet Nam could buy locally-produced components. While the percentages in Indonesia, Thailand and China were much higher, at 43 per cent, 53 per cent and 60 per cent, respectively.

Although the country had lower labour costs, the total production costs in Viet Nam could be higher due to enterprises having to import components and parts from other ASEAN countries and pay import taxes as regulated.

The general secretary of the Viet Nam Chamber of Commerce and Industry, Pham Thi Thu Hang, said the development support industry of Viet Nam still lacked overall planning and was at a low technology level in comparison with other countries in the region.

The co-ordination of domestic manufacturers with FDI enterprises also remained weak, while the capacities of local small and medium-sized enterprises (SMEs) could hardly meet the demand of quantity and quality for production of big foreign companies, she said.

According to Hang, the Government of Viet Nam should have had policies to grasp chances when the ASEAN region was becoming the world's component supply centre, while selecting core industries to focus investments in.

Cao Bao Anh from the ministry said that the support industry of Viet Nam currently encountered a lot of challenges, citing small outputs and poor quality despite high demand of supportive products.

Anh pointed out that an advantageous environment was necessary to encourage investments in support industries, stressing the importance of research and development (R&D), technology transfer and infrastructure development.

According to Koji Ito from the Japanese Ministry of Industry and Trade, developing support industry played an important role for a country to engage deeply into the global value chain and integrate into the world market.

Mainly drawing the participation of SMEs, the support industry needed incentives from the Government to increase the competitiveness, he said.

Fisheries sector seeks to net FDI

Provinces involved in rearing and catching fish have called for foreign investment in the processing industry.

This is seen as a way of increasing the income of farmers who are paying high input costs, according to the chinhphu.vn site.

In June, the People's Committee of central Binh Dinh Province organised promotions in the Japanese cities of Tokyo, Osaka, Sakai and Kyoto, calling for investment in rearing and processing fish, especially tuna.

The Japan-Viet Nam Friendship Association suggested that Binh Dinh province should send farmers to Japan to train in ways of preserving tuna for export.

Fisheries enterprises from Osaka have already visited Binh Dinh, seeking a place to build a processing factory and to cooperate in expanding exports of shrimp, fish and tuna, to Japan.

Other coastal provinces, including Quang Ninh and Ba Ria – Vung Tau, have promoted programmes to attract foreign investors.

Nguyen Viet Thang, chairman of the Viet Nam Tra Fish Association, said foreign investment in the fisheries sector was low.

However he advised the sector to be careful that foreign investors did not dominate the local market.

Vingroup's profits up five fold

Property giant Vingroup (VIC) said it earned a revenue of VND3.13 trillion (US$147.6 million), a drop of 17 per cent over last year.

However its net profit during this period reached more than VND4 trillion ($188.6 million), almost five times more.

The jump in profits was due to the selling off of several subsidiaries to other companies.

The group's total assets as of June 30 reached over VND58.5 trillion ($2.7 billion), a rise of VND2.7 trillion ($127.3 million) compared to the end of last year.

This was raised mainly from the Royal City, Times City and Vincom Village projects.

Foreign sales weigh on bourses

Low valuation after several falling sessions helped buoy investors' trades last Friday but strong selling by foreign investors throughout the week, particularly in blue chips, pushed the two markets down overall.

On the HCM City Stock Exchange, the VN-Index lost 2.9 per cent during the week, closing the Friday session at 427.70 points, while the HNX-Index on the Ha Noi Stock Exchange fell lower 0.37 per cent to a close at 61.19 points.

Pessimism overshadowed both markets, driving down liquidity.

The daily market volume on the southern bourse declined 27 per cent, averaging 43 million shares worth over VND865.5 billion (US$41.2 million) per session.

The northern bourse showed similar figures with more than 16.1 million shares worth VND144.5 billion ($6.9 million) exchanged per day, down nearly 30 per cent compared to the previous week.

Continuous net selling by the foreign sector in large-cap shares such as dairy giant Vinamilk (VNM), insurer Bao Viet Holdings (BVH), Vietcombank (VCB), Vietinbank (CTG) and property developer VinGroup (VIC) were attributed to the market tumble.

The VN30, monitoring the top 30 flagship shares, retreated 2 per cent to 531.23 points.

Overseas investors concluded last week as net sellers on the southern market, unloading combined shares worth VND370.3 billion ($17.6 million). They were also net sellers on the Ha Noi market with a net sell of VND54.2 billion ($2.6 million).

The stocks mostly sold were in the portfolio of the Market Vectors Viet Nam exchange-traded fund (VNM ETF). The fund's investors withdrew around VND137 billion ($6.25 million) during last week's trades. Particularly, about 300,000 VNM fund certificates worth $5.6 million were sold last Monday.

According to many stock analysts, the unloading of shares by the foreign sector in Viet Nam last week is in line with their capital divestments from other emerging markets, on concerns of the prospective military attack on Syria by the US and its allies.

Mounting political instability in the Middle East caused unease in funds and increasing capital outflows which are knocking down currencies and stock markets for many Asian emerging markets.

In Viet Nam, overseas investors were responsible for a whopping net sell worth up to VND880 billion ($41.9 million) on both markets in August. Of which, 33.5 million shares worth VND789 billion were sold on the HCM City market and nearly 8 million shares worth VND92.5 billion were sold on the Ha Noi market.

"In the short term, foreign investors will likely sell shares in the domestic market. Their strong sells will negatively affect major stocks such as BVN, VNM, VIC or MSN which increase the possibility of a further reduction in the VN-Index," said Le Thi Bich Hang, analyst at FPT Securities Co.

Along with weak macro economic data, especially the return of inflation in August, the domestic market was predicted to be volatile in the short term and may retreat 450-455 points, Hang wrote in a report.

Committee proposed to regulate State firms

The Ministry of Planning and Investment would like to set up a committee in charge of managing and supervising State-owned enterprises (SOEs) in an effort to enhance their operational efficiency.

The ministry said that the foundation of this committee would help separate the ownership and the State management function, which complied with international practices.

This management model would help control the operation of SOEs while enhancing their accountability and creating a fair playing ground for SOEs and other economic sectors.

According to economic expert Tran Du Lich, the foundation of a committee in charge of managing and supervising SOEs was necessary, saying that no SOEs would be under the management of ministries or local authorities except public service enterprises.

He said the committee must be responsible for continuing the restructuring of SOEs – one of three focuses of economic restructuring.

However, expert Le Dang Doanh said that he was worried that the operation of such a committee would not be effective due to the large number of SOEs, adding that thorough privatisation was important.

Statistics showed that the number of SOEs was around 1,000, down from 5,655 in 2012 following privatisation, with more than 1,200 others with State holdings.

Innovation vital for global business

With the economy not recovering and natural resources running out, innovation and creativity have become imperative for businesses globally, experts said.

They said the benefits brought by money, machines, and labour are limited compared to those yielded by creativity and innovation, which decide the competitiveness of a company.

But not many Vietnamese businesses realise that, they lamented at a conference in HCM City last week on the creative economy.

Underlining their point is the fact that last year Viet Nam slipped to the 76th position out of 141 countries in the global creative index.

But they admitted that companies and entrepreneurs have to pay a cost for creativity and for creating an innovative environment.

One attendee said it is time for Vietnamese companies and the whole economy to embrace the world's innovative trends, which would bring new energy.

Sai Gon Beer Alcohol Beverage Joint Stock Corporation is one company that has adopted innovative methods.

Pham Dang Tuat, its chairman, said companies must believe in their own strengths and not be chained to market trends, adding this is the only way to be creative and innovative.

Another delegate said most Vietnamese firms depend on Government policies rather than innovate by charting their own course.

To innovate and create, a company must ensure that human resources at all levels – from managers to staff – have effective strategies, he said.

At the conference, which was attended by 300 business executives and experts, delegates analysed the common aspects behind the successes of Google, Facebook, and Apple.

Experiences related to managing and developing innovative methods at big companies were also discussed.

The conference was organised by Viet Nam Report and online newspaper Vietnamnet.

Ministry vows to tackle tax transfer pricing

Viet Nam is currently piloting an advance pricing agreement (APA) to deal with the popular tax-ruse of transfer pricing, a representative from the Ministry of Finance (MoF) confirmed.

Transfer pricing - the trick of misrepresenting tax bands to avoid paying extra – poses a serious headache for tax collectors, so the APA is intended to avoid future transfer pricing disputes by entering parties into a five-year fixed agreement on their tax band.

Taxpayers may enter into APAs with more than one tax authority – i.e, bilateral or multilateral APAs – through the mutual agreement procedure (MAP) included in most income tax treaties. Unilateral APAs involve agreements between the taxpayer and one government.

Pilot participants include Samsung and other FDI companies, under which, these companies will declare their costs, prices and projected profits in Viet Nam for the next three years.

MoF also released a draft circular advising on the application of the APA in tax administration.

In another move to avoid tax fraud, the Amended Tax Law regulated that though frauds can be punished up to five years from the date of the violation, offending tax payers must now pay the full amount owed if their frauds were committed in the past 10 years.

Accordingly, tax authorities can inspect any suspected cases from the past 10 years - if they find any frauds they can collect the amount of tax owed and punish the tax collector responsible for the oversight.

Can Tho pursues industrial park development

Despite struggling to attract new investments, Can Tho has decided to speed up construction of industrial parks, hoping investors will return when the global economy recovers.

The Cuu Long (Mekong) Delta city has faced difficulties in attracting new investment this year due to the world economic downturn, ineffective promotion work, and poor infrastructure, according to the Can Tho City Export Processing and Industrial Zones Authority (CEPIZA).

It also blamed the reduction in incentives and inconsistency in investment policies.

Industrial parks and export processing zones have only managed to attract five new projects with a total investment of $18.6 million in the first eight months, CEPIZA said.

Another 16 projects have increased their investment by $20.7 million, it added.

There are now two IPs – Tra Noc 1 and 2, both almost fully occupied – and the city is building six more, namely Hung Phu 1, 2A, and 2B, Thot Not, O Mon and Bac O Mon.

Hung Phu 1 (270ha), Hung Phu 2A (134ha) and Hung Phu 2B (62.63ha) will come up in Cai Rang District, four kilometres from the city centre, 12km from the airport, and 11km from the main port.

They are also situated near Cai Cui Seaport and warehouse and are equipped with modern equipment and services.

They can fully meet investors' electricity, water, and telecom needs.

They will prioritise investment in certain sectors like mechanical engineering, electronics, and agricultural and seafood processing.

The 600ha Thot Not IP is situated in Thot Not District, 60km from the city centre and conveniently located near National Highway 91 and the Hau River.

It will mainly focus on agricultural and seafood processing and manufacture of agricultural machinery.

The 600-ha O Mon and 400-ha Bac O Mon will be built in O Mon District, and the city is looking for developers.

CEPIZA has told IP developers to report on difficulties they face so that it can resolve them.

Can Tho has so far attracted of $1.87 billion in 205 projects, including 23 foreign projects worth $184.44 million.

Cooking gas prices continue to increase

The retail price for a 12kg gas canister rose by VND12,000 (US$0.57) from Sunday in line with rising world prices.

This is the fourth time the price has increased domestically this year.

The retail gas price of a 12kg canister of Sai Gon Petrol Co is now VND398,000 ($18.95), while Gas Pacific Petro and Petrolimex Sai Gon are selling for VND397,000 ($18.90) and VND404,000 ($19.23), respectively.

Rubber plant opens in Phu Yen

A new rubber processing plant worth VND25 billion ($1.19 million) opened its doors last Saturday in the central province of Phu Yen's Song Hinh District.

Financed by Dang Phuc Gia Limited Co, the plant, the first ever of its kind in the province, will provide 6,000 tonnes of products annually.

Viet Nam had fetched $1.52 billion from exporting more than 630,000 tonnes of rubber during the past eight months, according to the Ministry of Agriculture and Rural Development.

The exports, despite witnessing a yearly rise of 5 per cent in volume, experienced a decrease of 14.1 per cent in value.

China remained Viet Nam's largest rubber importer, consuming 44 per cent of the country's total rubber export value, followed by Malaysia with 20.5 per cent.

VN exports to Czech Republic on the rise

Viet Nam's exports to the Czech Republic reached US$16 million in July, up 33 per cent year-on-year, according to the Ministry of Industry and Trade.

The latest addition took Viet Nam's export turnover to the country in the past seven months to $94 million.

A trade centre aiming to advertise Vietnamese goods to the market would be established in Prague, announced the Association of Vietnamese Small- and Medium-sized Enterprises in the Czech Republic.

Vietinbank pays high dividends

Vietinbank (CTG) has announced it will pay a dividend in cash at 16 per cent of charter capital. The rate is the highest amongst the commercial banks.

The total cash payment will mount to nearly VND4.2 trillion (US$198.1 million), in which State shareholders will receive VND3.37 trillion ($158.9 million).

The charter capital referred to is the level before the Bank of Tokyo-Mitsubishi UFJ became its strategic foreign partner, equivalent to VND26.2 trillion ($1.2 billion).

The dividends are expected to be paid on September 24.

Development firm posts losses

The Kinh Bac City Development Company (KBC) has recently announced its audited financial statement for the first six months of this year, revealing losses of VND70.75 billion (US$3.3 million), a surge of VND9 billion ($424,500) compared to the initial report.

The biggest change after the audit was the deferred corporate income tax in the first six months.

The company had reported its deferred tax at VND43.3 billion ($2 million), while the audit shows that the figure was just VND29.3 billion ($1.38 million).

Analysts tip FDI to skyrocket

Foreign direct investment (FDI) inflows in Viet Nam is expected to sharply increase in the 2014-15 period as the stable economy would create favourable conditions for the flow.

The National Financial Supervisory Committee (NFSC) last week released the latest forecasts for the economy in the 2014-15 period, showing that the FDI would see a high growth rate because of world economic improvement.

The World Bank earlier predicted that the world economy would have a growth rate of 3 per cent and 3.3 per cent in 2014 and 2015 respectively, much higher than 2.2 per cent this year.

In addition, the committee said FDI attractions would be higher as Trans-Pacific Partnership Agreement (TPP) would be signed in 2015.

It added that domestic private investment would also be improved because supporting policies will be brought into play in the next few years, while solutions to restructure the banking sector and resolve bad debts would upgrade the financial system.

Exports are forecast to continue at a high growth rate due to FDI projects, and would be momentum for the economy, the NFSC said.

However, the committee said the economy would be challenged by risks of public debt in Europe and decreasing growth in China and India.

Domestic enterprises would still face difficulties, especially in the agricultural sector. The State budget balance would be limited, causing capital shortage for development.

It also said Viet Nam's economy was expected to grow by 5.6-5.8 per cent and 6.0-6.2 per cent for 2014 and 2015, respectively.

The NFSC said total social investment capital would have to reach 30-31 per cent of GDP in 2014 and 2015; credit growth at 15 per cent and exports at 12-14 per cent in 2014 to jump to 13-15 per cent in 2015, to achieve the above mentioned GDP growth rate.

The committee also sees inflation of around 7 per cent in 2014 and to fall to 6.5 per cent in 2015. Its forecast for this year's GDP growth of 5.3 per cent.

It said the Government's policies should focus on improving demand and supply in the economy, enhancing productivity and effectiveness.

It was the reason that economic restructure acceleration played an important role to create new changes for the economy, it added.

The Government should also take solutions to gradually improve agriculture and rural areas while supporting local industry and businesses.

The outlook is given based on business and operation results in the first eight months of this year and forecasts about the global economic situation given by credit institutions worldwide.

Construction firms report crumbling turnovers

Firms under the Ministry of Construction in August made a turnover of VND11.81 trillion (US$557 million), bringing the total for the first eight months to nearly VND94.84 trillion ($4.47 billion), down 7.2 per cent year-on-year.

Of this total, the turnover of industrial and construction materials in the first eight months was VND38.895 trillion, up by 3.7 per cent, data from the ministry showed.

Cement production in January-August reached 33.32 million tonnes, equal to 59.5 per cent of the annual target.

The industry sold roughly 30.57 million tonnes of cement domestically and exported roughly 8.79 million tonnes in the first eight months, equal to 63 per cent of its annual target.

During this period, the turnover from consulting services for the construction industry also fell by 6.6 per cent to VND832 billion.

Earnings from other fields including housing and infrastructure also dropped 1.1 per cent to VND2.58 trillion.

The industry's import value in August was $34 million, making a total of $135 million for the same period. The imports were mainly machinery and equipment.

The industry earned an export value of $114 million in eight months, equal to 67.8 per cent of its annual target.

The ministry added that it will keep a close watch on the real estate and construction material markets and suggest more effective measures on how to improve management and boost growth to the state budget.

Supervising the publishing of an index of construction prices in cities and provinces nationwide will also be undertaken to create a more competitive and transparent housing market, it said.

Viet Nam's economic margin of error decreasing

Viet Nam is at a crucial juncture where it has to take decisions with little room for error, representatives of foreign business associations said at a conference yesterday.

Nicola Connolly, vice chairwoman of Eurocham (European Chamber of Commerce), said "Viet Nam is standing at a cross-roads where every decision taken will impact the economic well-being of the country in the mid-to long term.

"Making the right decision is absolutely key, especially as ASEAN starts taking more shape."

She spoke of the fact that an estimated 40 per cent of the economy is in the hands of the State sector is not a problem in itself.

However, the preferential treatment that State-owned companies receive in some areas, including favourable access to land and credit, and having limited profit targets generates inefficiency that is hampering economic growth, she said.

She said Viet Nam is currently competing internationally based on low labour costs.

While the Government has expressed the desire and need to move away from a labour intensive economy into technology and value added areas, investors are unlikely to bring their technology to Viet Nam unless there is real protection of intellectual property rights, she added.

Furthermore, "our members are finding it difficult when laws and decrees are not implemented in the same way across Viet Nam," Connolly said.

Paik In Ki of Kocham (Korean Chamber of Commerce) hoped the Vietnamese Government will offer more support and be active in solving difficulties that foreign businesses face.

In the first seven months of this year, South Korea invested US$12 billion in Viet Nam, of which newly-invested capital was $7 billion (in 667 projects), and additional capital for existing businesses constituted the remaining $5 billion.

Kimio Yamaguchi, chairman of the Japanese Business Association in HCM City, said "the current business environment in Viet Nam has not yet reached the level we expect."

He said Japanese businesses are facing several difficulties ranging from "very fundamental issues to daily operational and administrative ones."

These include poor transport infrastructure, road safety concerns, duplication of many papers needed under the e-customs system, restrictions on overtime work and mandated minimum increases in salaries that affected companies' business plans.

"We understand that these issues are not easily solved very quickly and some of the issues may come from lack of information and understanding on our end.

"In this regard, we believe that regular dialogue on such specific issues between foreign investors and central and local government is very important and essential," Yamaguchi said.

Rational decisions

Nguyen Thi Dan, head of the labour management and wage division under the HCM City Labour, Invalids and Social Affairs Department, said the mandated increases in minimum wages were based on socio-economic figures and living standards of workers.

Before issuing a decision, the Government collected opinions from foreign associations and informed them in advance of the decision so that the latter can prepare their business plans well, he said.

And the minimum salary has only been increased by 10-15 per cent instead of the 30 per cent suggested by foreign associations.

Do Nhat Hoang, head of the Ministry of Planning and Investment's (MPI) Foreign Investment Agency, said current laws allowed overtime work not exceeding 300 hours per year.

The limit is necessary to protect the health of workers as also give them time to recover their strength, he said.

Herb Cochran, executive director of Amcham (American Chamber of Commerce), said Viet Nam was experiencing its longest spell of slow growth since the beginning of economic reforms in the late 80s.

"The World Bank and the IMF have concluded that Viet Nam is in a ‘structural growth slowdown,' because the ‘delayed and inadequate implementation of structural reforms, including … bad debts in the banks, SOEs, and public investment, are dragging down the country's long-term growth potential,'" an Amcham statement said.

It noted "a lack of Government-business coordination on structural reforms for both State-owned enterprises (SOEs) and small and medium enterprises (SMEs) to increase competitiveness and adapt to the WTO environment."

Amcham recommended that SOEs be restructured and managed with transparency, responsibility, and accountability, and that they operate on a "level playing field" with private sector enterprises, both Vietnamese and foreign invested ones.

Russia, Vietnam eye US$20bln trade by 2020

Russia and Vietnam have plenty of opportunity to raise bilateral trade turnover to US$20 billion by 2020, according to the Voice of Russia.

The radio service quoted Russian experts saying both counties need to adopt a new approach to economic, trade and investment cooperation, as traditional methods are no longer suitable in the current context.

Oil and gas exploration projects symbolise Vietnam-Russia cooperation (Photo:vietsovpetro)

The experts said priority will be given to establishing free trade areas (FTAs) with Vietnam and developing new cooperation projects to balance both sides’ concerns and interests.

Vietnam and the Customs Union of Russia, Belarus and Kazakhstan are currently conducting negotiations of a free trade agreement.

Evgeny Popov, Director of the Department of Asia and Africa under the Russian Ministry of Economic Development, said that the appraisal of these prioritised projects will be carried out along with FTA negotiations.

“We are planning to simultaneously sign FTA and investment agreements with the prioritised projects,” said Popov.

The radio service reported many big Russian companies are keen to invest in big projects in Vietnam.

Inter RAO, a Moscow-headquartered diversified energy holding company, is considering Vietnam’s proposal to build three thermal power electric plants. A Russian power generator manufacturer has agreed to supply equipment to these plants.

VSMPO-AVISMA Corporation wants to build a titanium powder plant, while Geopromining is interested in a project to modernise an ilmenite manufacturing factory in Vietnam.  

Other Russian companies are engaging in the Dung Quat oil refinery expansion project.

Uralvagonzavod has proposed establishing a joint venture company in Vietnam to manufacture approximately 2,000 train carriages a year. The project was proposed after Vietnam had approved a large-scale rail transport plan.

According to the experts, Vietnamese companies also show their interest in Russian projects. The Vietnam Oil and Gas Group (Petrovietnam) is teaming up with leading Russian companies to exploit oil and gas in the two countries’ territories, as well as in the third countries.

Other Vietnamese businesses want to establish joint venture companies in Russia, specialising in light industry, timber processing, and electronic appliances manufacturing.

At present Russian investment in Vietnam has amounted to US$4 billion, while Vietnamese investment in Russia remains modest, at US$500 million.  

Footwear exporters urged to seize new opportunities

Vietnamese leather and footwear exporters must take advantage of a shift in demand from China to Vietnam, said experts from the Ministry of Industry and Trade (MoIT).

Their advice was based on increasing orders for Vietnamese goods from countries such as Japan during recent negotiations for the Trans-Pacific Partnership (TPP) Agreement.

They said foreign importers are shifting orders for leather and footwear products from China to Vietnam, urging Vietnamese companies to improve their competitiveness on the global market.

Vietnam is finalizing its participation in the TPP and is negotiating free trade agreements (FTA) with countries in the European Union (EU) to attract further investment in the leather and footwear industry.

Ho Thi Kim Thoa, Deputy Minister of Industry and Trade, said Vietnam aims to bring modern technology and prominent brands to the domestic industry.

The Vietnam Leather and Footwear Association (LEFASO) said importers of prominent leather and footwear products on the world market are planning to shift their orders from China to Vietnam to capitalise on cost and labour advantages.

Dang Van Chien, Director of the Hung Yen Footwear Joint Stock Company, said the trend is merely a “signal” and that foreign importers have just visited Vietnam to conduct market research.

In fact, there remain snags in attracting foreign orders, adding that high taxes, production costs and limited capacity need to be addressed first. Currently, 80 percent of footwear exporters in Vietnam are engaged in partial production of footwear products with limited capacity for end-to-end production, including design work.

Domestic producers still find it difficult to invest adequately in new technologies for lack of management skills, not to mention their failure to predict foreign market trends.

He urged the Government to support training programmes aimed at improving the quality of the labour force and attract more foreign partners.

LEFASO's deputy chairman, Diep Thanh Kiet, said enterprises should review their market strategy, improve their competitive edge and set up areas specialising in the production of raw materials.

In the first seven months this year, Vietnam's footwear export value jumped 15.6 percent from last year to US$4.79 billion.

Binh Duong’s FDI attraction surpasses yearly target

The southern province of Binh Duong attracted US$1.49 billion in foreign direct investment (FDI) in the first eight months of 2013, surpassing its target of US$1 billion set for this year.

During the period, the province licensed 88 new FDI projects worth US$648 million, bringing its total FDI projects to 2,174 with combined investment of over US$18.4 billion. It also saw US$400 million added to 88 existing projects.

This year, Binh Duong province has seen more investment from large groups, not only operating in industrial production but also real estate and services.

Among new outstanding projects are the Hoa Binh-Binh Duong VSIP Complex with a total investment of US$199 million and Japan-based Panasonic Eco Solutions Vietnam Company’s US$38 million electric equipment project in VSIP industrial park.

In order to lure more foreign investment in the coming time, the locality continues to boost administrative procedure reform and enhance investment promotion through consulates, trade offices and business communities while improving the quality of workforce and services and ensuring security and social order and safety, especially in industrial parks.

Besides, Binh Duong will also pay more attention to attracting new investment projects in high-tech industries such as electricity, electronics, pharmaceutics and precision mechanics as well as giving priority to developing support industries for garment, footwear and woodwork and services such as health, education and banking.

Businesses honoured with Gold Star Award

As many as 200 businesses were presented with Vietnam Gold Star Award in Hanoi on September 2, recognizing their efforts to improve performance and accelerate international integration.

Congratulating the 200 awardees, Deputy Prime Minister Nguyen Xuan Phuc said the Party and State always create the best possible conditions for businesses of all economic sectors to develop rapidly and maintain success.

Young entrepreneurs and businesses in general should focus more attention on developing reputable brand names on a  par with international level, Phuc urged.

“Given the global unexpected complications, I believe Vietnamese businesses, with their dynamism and creativity, will shoulder the burden with the government to overcome difficulties,” said the Deputy PM.

He asked relevant agencies and local authorities to ease business difficulties, including accelerating administrative reform, to support the business community. The award recipients, representing 200 outstanding brand names of various economic sectors, earned over VND743 trillion in revenue, and VND71 trillion in post-tax profit, contributed to VND6,000 billion to the State budget and generated 466,000 jobs last year.

The top ten Gold Star Award Businesses’ include FPT, Thaco, Vietinbank, Vissan, Phu My Fertiliser, VRG, Traphaco, PVEP, Thien Long and HoaSen Group.

This year’s Vietnam Gold Star Award marked its 10th anniversary. Over the past ten years, the award has become a prestigious prize, raising the profile of Vietnamese brand names and businesses in the international integration process.

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