BUSINESS IN BRIEF 4/11
An Giang highlights agricultural bounty
The Mekong Delta province of An Giang has alerted companies to its investment potential with its plan to restructure its agricultural sector towards raising added value and sustainable development.
The province’s agricultural restructuring will be centred on cultivation, livestock, fisheries and forestry products.
Cultivation is a key area that helps ensure national food security and increase export turnover, so the restructuring of the sector will be carried out on strategic products such as rice, vegetables and fruit.
An Giang will prioritise investment in developing large-scale rice production under the model of large paddy fields with an aim to enhancing the quality and value of rice harvests.
In addition, the province will focus on sustainable and safe vegetable and crop production using safe agricultural practices set out by the VietGAP and GlobalGAP organisations. Special zones for growing vegetables will be set up, applying advanced technology to raise productivity and quality.
An Giang will also set up key fruit tree growing zones for mango, banana and dragon fruit following good agricultural practices in combination with eco-tourism.
Livestock restructuring will see An Giang shift from small to larger breeding models, applying modern technology based on local farmer financial capacity, and invest in environmentally friendly waste treatment systems.
Regarding fisheries, the province will prioritise rearing tra fish and blue-leg shrimp, while diversifying seafood products. It will invest in an irrigation system and infrastructure serving aquaculture.
Through the restructuring of the forestry sector, An Giang hopes to develop a sustainable industry which promotes environmental protection, biodiversity, is capable of coping with climate change and contributes to improving people’s livelihoods.
In order to improve the forestry sector’s economic efficiency in line with maintaining environmental protection standards, the province aims to develop forests to preserve biological diversity, while also encouraging eco-tourism and developing forest garden models.
Further added value is planned to be added to the sector by boosting wood processing. By applying advanced science and technology in timber processing higher value products can be produced.
In a bid to restructure the local agricultural sector, An Giang is making efforts to re-organise production, while simultaneously incentivising businesses to co-invest in the sector with farmers. Studies into which policies will best stimulate this investment are ongoing for future proposals to central-level agencies.
The province’s restructuring plan will additionally focus on training and developing human resources, raising the capabilities for farmers and local agricultural managers, specifically cultivating knowledge about economic management and the market economy.
An Giang is an agricultural province and home to total cultivatable land of 246,821 hectares, with rice-growing land accounting for more than 82 per cent. The province boasts the largest area of cultivatable land in the Mekong Delta.
Over the years, the province’s agricultural sector has obtained enormous achievements in growing rice, vegetables and aquaculture. The province’s rice output increased to four million tonnes in 2012 from 3.1 million tonnes in 2005, vegetable and fruit output increased to 892,000 tonnes from 569,000 tonnes and seafood output increased to 300,000 tonnes from 181,000 tonnes in the same period.
ACE Life wins new landmark licence
ACE Life, part of the ACE Group, has got the nod from Vietnam’s State Securities Commission to open its first fund management company in Asia.
The full licence for the establishment of ACE Life Fund Management Company (ACE Life FMC) in Vietnam was awarded to ACE Life Insurance Co., Ltd. (ACE Life Vietnam) at a welcome reception hosted yesterday by Vietnam’s Ministry of Foreign Affairs in conjunction with the US-ASEAN Business Council’s (USABC) first Board of Directors meeting in Hanoi.
The licence, issued after three months since the in-principle approval given by Vietnam President Truong Tan Sang during his official visit to the US in July 2013, eamarks significant development for the ACE Group and ACE Life Vietnam, as well as reflects the fast developing economic ties between Vietnam and the US, as dubbed by Vietnamese government officials and USABC executives participating at the event.
“We are excited to establish our first fund management company in Asia – ACE Life Fund Management Company. The country is one of the fastest growing economies in Asia and plays a critical role in our innovative growth initiatives across Asia Pacific,” said Kevin Goulding, regional president of ACE Life Asia Pacific.
“This is a milestone for ACE Life as the fund management company will help enhance our local business operations and demonstrate our commitment to investing in Vietnam while concurrently delivering more value to our customers,” he added.
Headquartered in Ho Chi Minh City, ACE Life FMC aims to demonstrate ACE Life’s increasing responsibility to its customers, while optimising results of its investment activities. AFMC also helps to achieve ACE Life’s objectives to benefit customers and Vietnam’s growing economy by developing pension products and unit-link products, enhancing professional investment activities, raising funds and attracting investment from individual and institutional investors.
“Besides the strong support from ACE Life Vietnam in terms of capital, management experience and manpower, ACE Life FMC will also receive valuable support from the ACE Group with its global expertise in insurance, reinsurance and asset management,” said Lam Hai Tuan, ACE Life Vietnam chairman and country president.
“We believe ACE Life FMC will provide domestic and foreign long-term investors with various attractive offerings through the establishment and management of different types of funds, including pension funds. This will contribute to supporting one of the Vietnamese government’s major proposals, and help improve and enrich the capital market in Vietnam,” Tuan said.
Operating in Vietnam since 2005, ACE Life has gained sustained rapid growth with total assets exceeding 2,000 billion VND ($95 million). ACE Life Vietnam offers a comprehensive array of quality life insurance products to meet the needs of financial protection and security of a broad range of customers. The company pioneered the introduction of the Universal Life plan to the local market in March 2006. Since then, it has developed a full range of Universal Life products.
ACE Group is one of the world’s largest multiline property and casualty insurers with operations in more than 50 countries. ACE Limited, the parent company of the ACE Group, is listed on the New York Stock Exchange (NYSE: ACE) and is a component of the S&P 500 index.
Japan to pump 30 bln yen into buying Vietnamese SOE debts
At a time when many Vietnamese state-owned enterprises (SOEs) are struggling to find capital to resolve the bad debt issue, the finance ministry said some 30 billion yen, or $300 million, is waiting to be disbursed to buy their liabilities.
Dang Quyet Tien, deputy head of the Corporate Finance Agency under the ministry, said SOE restructuring is among the top priorities for the seven assistance packages the Japanese government has recently pledged to support Vietnam with.
“The finance ministry is currently working with the Japanese International Cooperation Agency (JICA) over an agreement in which Japanese businesses will help local SOEs restructure by buying their debts,” he said.
Specifically, JICA will help boost the financial muscle of the Vietnamese agencies in charge of trading bad debts, namely the Debt and Asset Trading Corporation (DATC) and the Vietnam Asset Management Corp (VAMC).
Japanese investors, both public and private, will buy bad debts from Vietnamese SOEs, thus enhancing their restructuring process.
“It is estimated that some 30 billion yen will be pumped into this plan,” Tien said.
Tien added that Japanese investors are interested in the electronics and shipbuilding industries, as well as the beverage and confectionary sectors.
The VAMC is also buying bad debts from local state-run enterprises by issuing special bonds, and Tien said the difference between VAMC and JICA programs is that the foreign investors, instead of the local government, will cover most of the debts being traded.
“Moreover, while VAMC and DATC only buy debts of businesses with assets, JICA will classify them into groups with different solutions,” he said.
Debtors with feasible development plans will be restructured, while those with too much debt will be forced to declare bankruptcy.
“Japan has successfully deployed this mechanism for their own SOE restructuring,” Tien asserted.
Dai Quang Minh named developer of major urban area roads
The Ho Chi Minh City People’s Committee has named Dai Quang Minh Real Estate as the project developer for the four main roads of the Thu Thiem New Urban Area. They will be built under the build-transfer (BT) and “land in exchange for payment” models.
The Vietnamese developer will receive their payments in the form of properties in zones throughout the project for building residential and hi-rise buildings, the yacht wharf, and other projects.
In building the roads, Dai Quang Minh is supported by the Vietnam Infrastructure Development and Finance Investment Company (VIDIFI).
In May, the southern hub also named Dai Quang Minh as the developer of a pedestrian bridge connecting District 1 with the Thu Thiem peninsula in District 2 under a BT format. The bridge runs from Bach Dang Wharf across the Saigon River to the District 2 Square.
The company is also developing some low-storey residential areas on the peninsula, which is home to 20 projects including resettlement apartment buildings, a tower, and exhibition and convention centre. Thu Thiem is designed to house Vietnam’s first financial district.
Vietnam, Middle East – North Africa to push trade ties
Policymakers and businesses from Vietnam , the Middle East and North Africa will gather at a forum in Hanoi on November 4-5 to seek ways to better their cooperation, especially on economics, trade and investment for common prosperity.
As one of the most important external economic events in Vietnam this year, the forum is a manifestation of the Vietnamese Government’s attention to economic ties with Middle East and North African countries.
Middle East – North Africa , with a population of over 520 million, is a market of great potential for Vietnam’s goods.
Despite their geographical distance, Vietnam and countries in the Middle East and North Africa have long established friendly relations, which serve as the foundation for them to develop all-round ties during recent years.
Vietnam has established diplomatic relations with most of the countries in the region and all-level visits have been maintained between the two sides.
Two-way trade between Vietnam and the region hit 7.4 billion USD last year, up 87 percent from 10 years ago. Bilateral trade between Vietnam and some regional countries has already surpassed 1 billion USD each year.
Investors from the Middle East are pouring capital in several major projects in Vietnam , such as the Nghi Son refinery and petrochemical complex, Long Son oil refinery complex, Ha Long Star hotel and Hiep Phuoc container port in Ho Chi Minh City.
Meanwhile, the Vietnam National Oil and Gas Group is conducting an oil and gas exploration and exploitation project in Algeria . About 26,000 Vietnamese labourers are working for infrastructure projects in the region.
The forum on economic cooperation between Vietnam and the Middle East-North African aims to brief guest businesses on the country’s economic policies and investment opportunities while giving policy makers a chance to meet and exchange views on how to boost ties and cooperation.
Participating businesspeople are also expected to extend their contact bases and reach cooperation deals.
B-WTO supports Vietnam’s global economic integration
The Beyond WTO Programme (B-WTO) has helped Vietnam perfect its market economy institutions and address integration’s socio-economic challenges to rural areas after four years of implementation.
As Vietnam is integrating deeper into the regional and global economy and continuing to perfect integration policies and step up reforms, the country continues to need support and technical assistance from donors, stated Deputy Minister of Industry and Trade Nguyen Cam Tu.
With its goal of strengthening the Government’s capacity, the B-WTO Programme, a post-WTO technical assistance programme, has provided Vietnam with much-needed assistance to policy and institution building, he said.
It has also helped Vietnamese ministries, agencies and localities implement the Government’s action programmes on some major guidelines and policies for the rapid and sustainable development of the Vietnamese economy as a WTO member, he added.
According to Trinh Minh Anh, head of the B-WTO Programme Steering Committee Office, between September 2009 and September 2013, 48 projects were carried out as part of the B-WTO Programme – Phase II.
Of which, 23 supported the completion of the market economy institutions, six helped solve socio-economic challenges of integration to rural areas, 11 improved integration management and coordination capacity, and the remaining eight assisted localities in realising their action plans.
The majority of the programme’s short-term objectives have been achieved, actively contributing to implementing the priorities of the Government’s Action Plan, he said.
One of the major projects is to improve the capacity of the Competitiveness Management Department (CMD) in order to enhance market economy institutions in Vietnam .
With the support of the B-WTO Programme, the CMD has investigated and handled trade defence lawsuits under Vietnamese law, including the cases against imported float glass in 2009 and refined vegetable oil in 2013.
It has also investigated and imposed anti-dumping measures against cold-rolled stainless steel imported from China , Taiwan , Malaysia and Indonesia , which was the first case made under the Ordinance on Anti-dumping of Imports into Vietnam .
CMD Director Bach Van Mung said that thanks to the programme, the department has built a competitive environment database and assessed the competitiveness of 30 economic sectors.
Since the programme was launched, 17 countries have recognised Vietnam as a market economy, raising the total number to 38, he said.
Another outstanding result of the project was the establishment of an early warning system on anti-dumping lawsuits and the training of staff capable of dealing with trade defence cases lodged by foreign countries, he added.
However, Deputy Director of the Central Economic Management Institute Vo Tri Thanh said that despite remarkable reform and development achievements over the past 27 years, many reforms have lost the momentum and the Vietnamese economy has revealed a number of shortcomings in structure, resistance, and social and environmental issues.
Therefore, Vietnam needs a new reform push in three major directions, which are economic restructuring with a focus on State-owned enterprises, finance-banking and public investment; deep and comprehensive integration centring on economic integration and prioritising ties with the ASEAN, East Asia, Asia-the Pacific and strategic partners; and combining economic reforms with institutional and political reforms, he stressed.-
Seminar focuses on new generation FTAs
Opportunities as well as challenges for Vietnam when participating in new generation free trade agreements are the focus of a seminar held in Hanoi from October 28-29.
Held by the Party Central Committee’s Commission for External Relations, the Ministry of Foreign Affairs and the United Nations Development Programme, the seminar is part of a project on the enhancement of the capacity to serve deep and broad international integration.
Participants heard reports of experts and exchanged views on the results and experience Vietnam has gained after five years of joining the World Trade Organisation.
They analysed opportunities and challenges posed by new generation FTAs to the country’s production, investment, trade and social culture, as well as its national sovereignty.
Delegates also discussed what Vietnam should do when negotiating FTAs as well as the need to conduct economic restructuring and raise the capacity and efficiency of State management, in order to ensure the country’s goals and benefits when joining these agreements.
Vietnamese goods come to southern border area
A diverse array of Vietnamese goods are up for grabs at a fair in the border commune of Vinh Xuong, the southern province of An Giang, that has attracted over 11,000 local and Cambodian shoppers.
Featuring high were 40 booths operated by 25 firms, showcasing local specialities, farm produce, craft products, garments and household appliances.
Besides local exhibitors were 18 from Ho Chi Minh City and the Mekong Delta province of Dong Thap. Their sales have so far hit a record 800 million VND (38,000 USD).
Previously, two fairs took place in provincial rural areas in order to make quality and affordable items available to residents.
Another fair will be up and running soon in the lead-up to the traditional New Year festival which is the most important in a year that will come at the end of January next year.
2.48 mln preferential shares for Mekong Delta farmers
The An Giang Plant Protection Joint Stock Company (AGPPS) recently issued 2.48 million preferential shares to be sold to farmers in the Mekong Delta at half price in a bid to raise their position in agricultural production.
This is the first time Vietnamese farmers have had the opportunity to become the shareholders of the country’s leading company specialising in the agricultural sector.
More than 6,000 farmers will be able to buy each AGPPS share at the preferential price of 30,000 VND (1.4 USD) and are expected to enjoy an annual dividend of 30 percent.
Approved by the AGPPS Annual General Meeting of Shareholders in April, it is one of the company’s moves to support farmers, in addition to the provision of technical support and input materials plus ensuring the purchase of farm produce.
To help farmers sell their products, the company has built five rice processing plants and will complete the construction of 12 factories of the same kind, each with an annual capacity of 200,000 tonnes, in Mekong Delta provinces by 2018.
Setting a sustainable pangasius supply chain
A project on the sustainable pangasius supply chain in Vietnam is expected to help boost the sector. Report by the Vietnam Economic News.
With total value of nearly 2.4 million EUR (3.1 million USD), a project aimed at establishing a sustainable pangasius supply chain in Vietnam (SUPA), presided over by the Vietnam Cleaner Production Centre (VNCPC), with the participation of the Vietnam Association of Seafood Exporters and Producers (VASEP), the World Wildlife Fund (WWF) Vietnam and the WWF Austria, has begun.
The project is expected to boost the development of the Vietnamese pangasius sector in the direction of cleaner production and contribute to the establishment of a sustainable pangasius supply chain for the sector.
Pangasius is a major export product of Vietnam. For the last many years, however, due to strict quality and product origin requirements of importing countries, the Vietnamese pangasius sector has met numerous difficulties in seeking new markets to boost exports.
The SUPA project has been developed in such a context. Under this project, a supply chain involving all stages of pangasius production will be set up. Involved in the chain will be those who produce feed for pangasius, young fish and chemicals, those who breed pangasius and small and medium enterprises (SMEs) which combine pangasius breeding and processing, pangasius processing companies, purchasers, international distributors and Vietnamese traders, big retailers and shops. The project will link all sides concerned into a chain consisting of farmers, businesses, importers, retailers and processing plants to create quality and competitive finished products.
According to Ngo Tien Chuong, WWF Vietnam’s Aquaculture Coordinator, the project proposes comprehensive solutions to deal with problems facing the pangasius sector. Specifically, the project will focus on improving production capability and promoting responsible production in order to improve the quality of products, minimize environmental impacts and reduce production costs through the effective utilization of natural resources and the application of cleaner production methods (RE-CP) as well as efforts to innovate products and develop the market. Chain links will be tightened to optimize the interests of all sides involved while standards set by the Aquaculture Stewardship Council (ASC) will be applied to meet market requirements.
The project will help SMEs and household-sized producers exchange information and provide them with technical assistance so that they can apply ASC standards to promote sustainable production and enhance the competitiveness of the Vietnamese pangasius sector in the global market.
The project will provide farmers with training on fish breeding techniques and quality management to that they can create the best products. Pangasius processing companies will be assisted to apply the most advanced technologies so that they can efficiently use energy and material resources and launch products which meet the highest requirements of import markets.
The implementation of the project began in April 2013 and will finish in March 2017. Its goal is turning Vietnam into a sustainable, environmentally friendly pangasius producer and exporter by 2020, bringing it socioeconomic benefits. At least 70 percent of businesses in the Vietnamese pangasius sector will produce and process pangasius at a medium or large scale; 30 percent will produce feed for pangasius and have independent small-sized farms, taking the initiative in joining efficient natural resource utilization and cleaner production processes; at least 50 percent will be able to supply the market with sustainable, international-standard products.
Total expenditure on the SUPA project is nearly 2.4 million EUR or 64 billion VND, of which 1.9 million EUR (80 percent) is funded by the EU through the EU Switch-Asia Program and the remainder, 20 percent, is contributed by organisations which take part in implementing the project.
Vietnam to introduce business opportunities in Singapore
A Vietnam Forum to be held by the Institute of Southeast Asian Studies (ISEAS) in Singapore on October 30 will provide some insight about the policy making process as well as business and trade opportunities in Vietnam , said a forum presenter.
Talking with Vietnam News Agency’s Singapore-based reporter ahead of the forum, Dr. Aekapol Chongvilaivan, fellow of ISEAS’s Regional Economic Studies Programme, said the Vietnam Forum is especially marked the 40th anniversary of the Vietnam-Singapore diplomatic relations.
Since its inception in 1973, the friendship between the two countries has grown hand in hand in terms of trade and investment. Singapore is the second largest trading partner to Vietnam.
Vietnam served as an investment destination for Singapore companies. At the same time, the country also sees Singapore as a catalyst for economic development and urbanisation, including industrialisation.
“Over the past 40 years we have seen an increase in bilateral relations not only in political relations but also in economic and social collaborations,” he said. “So many reforms had been implemented in Vietnam . These have drawn significant interest among the public.”
“We have seen development in Vietnam recently in terms of economy, education reforms and financial reforms. Nevertheless, the reforms will not be trouble free. There are many obstacles to development and therefore the Vietnam Forum is being organised to look at challenges.”
Aekapol, one of presenters at the forum, the event will also provide some insight into the policy making process as well as business opportunities that emerge in the country.
About the impact of the Vietnam - Singapore Strategic Partnership agreement, he said that under the initiative, Singapore and Vietnam governments will sit down together to set out future plans for mutual agreements as well as mutual plans to strengthen economic and political relationships.
“It’s very important to the business sector that will build confidence as well as optimism about investment and business opportunities in Vietnam . And definitely that will be mutual benefits between the two countries.”
On Vietnam ’s external economic policies, Aekapol said that the more significant milestone for Vietnam ’s international economic relationship with global economy is perhaps its access to the World Trade Organisation (WTO).
Vietnam has emerged in the ASEAN as an investment destination after Asia financial crisis in 1997. After that, there have been tremendous potentials in Vietnam and it has substantial impacts on foreign investment and international trade volume in Vietnam .
So with the access to the WTO, Vietnam is very serious to be part of global economic community and it wants to liberalise in terms of trade, investment and be serious about sustainable development in the country.
“To that extend, I think it is perhaps something that is very important to ASEAN because it will strengthen the ASEAN enthusiasm,” he noted.
He described Vietnam ’s entering into Trans-Pacific Partnership (TPP) negotiations as beneficial for Vietnam and Singapore who are members of the TPP.
“By being the membership of the TPP, Vietnam will have to negotiate in something like WTO plus negotiations with broader and deeper than ASEAN negotiations,” said Aekapol.
He expected that Vietnam will push forward in many ambitious areas like intellectual property rights, investment protection, service sector, saying that it will be beneficial for Singapore and Vietnam and also good for ASEAN as a whole.-
HCM City set to develop collective economy
Ho Chi Minh City is set to establish 600 new working groups, 75 cooperatives and three unions by 2015 in order to push the annual growth of the collective economy to 10 percent, contributing one percent of the city’s gross domestic product (GDP) and generating 18,000 jobs.
The ambitious plan was revealed by Deputy Chairman of the municipal People’s Committee and head of the Steering Committee for Collective Economy Development Le Manh Ha at a conference in HCM City on October 25. He called for faster progress in the implementation of the Resolution on developing the collective economy by 2020, adopted by the ninth Party Central Committee.
Ha added that the number of new working groups, cooperatives and cooperative unions will hit 1,500, 175 and 10 respectively between 2016 and 2020. They are expected to contribute 1.2 percent of the city’s GDP and create jobs for 50,000 workers.
To realise their goals, local departments and agencies were requested to review the quantity and quality of cooperatives in each sector, and make it easier for them to access production facilities, credit capital, managerial staff and skilled workers.
The State management apparatus on the collective economy will be perfected while the working efficiency of the city cooperative unions will be improved.
HCM City is now home to over 500 cooperatives working across varied areas such as industry, construction, transport and public credit funding. Ten years after implementing the Resolution set at the fifth meeting of the 9 th Party Central Committee, the rate of well-performing cooperatives has jumped from 40 percent to 70 percent.
An outstanding example is the Saigon Union of Trade Cooperatives, which runs a network of Coopmart supermarkets in 30 cities and provinces nationwide.-
Russia’s WTO membership to impact Vietnam
Influential Vietnamese businesspeople based in Russia gathered at a seminar in Moscow on October 26 to discuss the opportunities and challenges facing them once Russia joins the World Trade Organisation (WTO).
Trade Counsellor at the Vietnamese Embassy in Russia, Pham Quang Niem, talked about the impacts of Russia’s admission to the WTO on the economic and trade cooperation between the country and Vietnam.
He also briefed the guests of the ongoing free trade agreement negotiations between Vietnam and the Customs Union of Russia, Uzbekistan and Belarus.
He said Russia’s WTO membership and the FTA will offer Vietnamese firms ample opportunities to gain a foothold in a large, lucrative market of nearly 170 million customers with an average income per capita of more than 16,000 USD.
Issues like taxation, quotas, trade protection and market trends also came up during the discussions.
Compared to other WTO commitments, the Vietnam – Customs Union FTA will contain more incentives, including substantially lower taxes, thus facilitating Vietnam’s exports to Russia and other Customs Union members.
The document is expected to be signed in late 2014 or early 2015.
New companies outnumber old in HCM City
More than 20,000 new companies opened in Ho Chi Minh City in the first nine months of the year, with the city's support policies have seen thousands of businesses resume operations.
The city's Tax Department reports that in the reviewed period, the number of companies that stopped operations was less than that of the newly registered and re-opened ones.
More than 20,700 new companies were established as of September, pushing the total number of companies in the city to more than 137,700.
During this period, more than 5,200 firms resumed operations, which is a positive sign for the city's economy, the department said.
It noted that the companies that resumed operations were mostly in trade, services, garment, and timber industries.
As of September, just 18,000 companies had closed shutters, significantly lower that similar figures last year.
The department attributed this result to the city being able to help enterprises overcome various challenges, particularly through preferential credit and tax policies.
These policies have helped companies re-plan their strategy and resume production, the report said.
New strategy needed for ODA management, use
Vietnam needs a new strategy for the more effective management and use of official development assistance (ODA), said a senior Vietnamese official.
ODA commitment to Vietnam from 1993 to 2012 amounted to nearly 78.2 billion USD, according to the Ministry of Planning and Investment. International donors highly valued the country’s effective use of the source, and pledged to continue to cooperate with and support the country in its future development.
At the same time, the donors said as Vietnam has entered the rank of middle-income countries, it will see shrinking assistance sources in terms of quantity and preferential level. Therefore, they urged Vietnam to consider using part of ODA capital and low-rate credit for developing countries for production and development investment.
To ensure the effective use of ODA sources, Minister of Planning and Investment Bui Quang Vinh suggested implementing solution packages of policy improvement, simplifying procedures and facilitating the implementation of invested projects.
The country should also revise and supplement related legal documents such as the Law of Construction, Law of Investment, Law of Bidding and regulations on ODA and preferential loans in the Law of Public Investment, the minister added.
Sharing the view on reduction in ODA flow and increase in less-preferential loans, WB Country Director Victoria Kwakwa proposed the Government focus on its green growth and climate change strategies, saying that they “position it well to benefit from planned new climate and green financing platforms at the international level once they come into place”.
Representatives from the Japan International Cooperation Agency (JICA) said that development cooperation will be more effective and sustainable thanks to the Government promptly refreshing the decree on ODA management and use and other preferential loans from donors in April this year and changing the donors’ meeting into the Vietnam Development Partnership Forum this year.
Meanwhile, Pratibha Mehta, UN Resident Coordinator in Vietnam, expressed her belief that with the future progress, Vietnam will likely become a donor first of all in terms of knowledge sharing in poverty reduction and social development experience with other countries.
Among the nearly 80 billion USD in ODA commitment to Vietnam , agreements have been signed for the use of 63 billion USD with 42.09 billion USD already disbursed. Japan is the largest among Vietnam ’s 50 ODA providers with 24 billion USD, accounting for 30 percent of the total commitment, while Finland is the most long-time donor, starting 40 years ago.
In 1993, Vietnam was one of the poorest countries in the world with income per capita of about 100 USD and low indicators of social progress, said Kwakwa at the celebration of 20 years of development cooperation in Vietnam last week.
“Today, Vietnam is an emerging middle-income country with a 154 billion USD economy and income per capita of around 1,700 USD. Poverty has declined from 58 percent in 1993 to about 10 percent in 2012 with over 30 million people lifted out of poverty. Indicators of social welfare are now better than for most other countries at similar levels of per capita income and comparable even to some countries with higher incomes,” she said.
In addition, support for socio-economic development policies from foreign donors has created trust and encouraged foreign private businesses to invest in Vietnam . Foreign direct investment (FDI) contributed two percent to the country’s gross domestic product ( GDP ) in 1992. The figure grew rapidly to 18.97 percent last year.
An Giang: Farmers earn high profit from Japan’s rice varieties
Farmers in the Mekong delta province of An Giang have earned high profit of at least 30 percent from cultivating Japanese rice varieties.
The varieties, namely Kinu, Akita, Koshi and Hana, have been provided by the Angimex –Kitoku Co., Ltd, with the aim of helping An Giang farmers produce clean rice with high output.
The company also assists farmers throughout the farming process through guiding them in rice tending techniques, preventing diseases and insects and supplying fertilizers. It buys all rice output from contracted farmers to export to Japan.
During the last five years, the project attracted over 4,000 farmers in four districts of Chau Thanh, Chau Phu, Thoai Son, Tri Ton and Long Xuyen city who plant Japanese rice on a total 8,000 ha, harvesting 32,000 tonnes of rice for export.
The company said it has plans to further expand the cultivation area next year.
Airport to be built in Binh Thuan
Minister of Transport Dinh La Thang has signed a decision approving the planned Phan Thiet airport in central Binh Thuan province.
The 543-ha airport will be built in Thien Nghiep village of Phan Thiet city. It will provide general aviation as well as search and rescue and emergency services.
The passenger terminal building will be around 5,000 square metres with maximum capacity of 300 passengers.
Quang Ninh develops transport infrastructure
The northern province of Quang Ninh has paid much attention to transport infrastructure investment, which is pinpointed as a major local policy to spur its socio-economic growth.
As part of “two corridors, one belt” economic cooperation between Vietnam and China, and Pan-Tonkin Gulf economic cooperation, the locality plans to pour money into building and upgrading facilities such as airports, seaports, railways and highways.
Chairman of the provincial People’s Committee Nguyen Van Doc said his province is mobilising all capital sources besides the local budget to promote investment in the field under the modes of BT (Build-Transfer), BOT (Build-Operation-Transfer) and PPP (Public-Private Partnership).
The province and the Ministry of Transport have implemented many transport projects by these means, including the road connecting Ha Long city with Bach Dang Bridge, which is expected to start construction by the end of this year.
Local authorities are appealing for foreign investors in the construction of Van Don Airport and the Ha Long-Van Don-Mong Cai highway, and at the same time asking the Government to expand and upgrade some sections of highway.
They have also created a healthy environment for transport service providers to compete, and encouraged local people to use public transport, helping reduce traffic jams and accidents.
Home to over 500 scenic, cultural and historical sites, including the World Natural Heritage Ha Long Bay, the province is in a great position to develop its tourism services, especially the entertainment industry.
The province welcomed over seven million tourists last year, including more than 2.4 million foreign arrivals thanks to transport development.-
Coastal province announces “Ba Ria Salt” brand
The southern coastal province of Ba Ria–Vung Tau on October 25 announced the “Ba Ria Salt” brand in order to help consumers select the right product and protect farmers’ rights.
The province’s salt received its brand certificate from the Department of Intellectual Property, Standardisation and Metrology under the Ministry of Science and Technology.
The certification will enhance trade promotion, the effectiveness of quality management, and the product’s economic value.
Salt production in Ba Ria–Vung Tau is said to date back 160 years thanks to the intensity of its sunlight, wind and higher sea water salinity than other localities.
Vietnam intensifies cash flows into economy
The Governor of the State Bank of Vietnam (SBV) has allowed many commercial banks to raise credit growth to 20 percent by 2013. Lower credit rate has failed to give a strong boost to lending although the year’s end is inching in - the time when the demand for finances is usually the highest in the year. Report by the Vietnam Business Forum.
Interest rates have been on a downward trend through 2013. So far this year, interest rates have been slashed by 3-5 percent from the end of 2012 when commercial lending rates were pegged at 13-17 percent per annum. Presently, rates hover at 12-13 percent per annum. Besides, some borrowers with good profile can access loans bearing an interest rate of 11 percent per annum. Lending rates for five priority borrowers have slid from 12 percent per annum to 9 percent.
Interest rates on old loans have also been revised down by some banks to some 13 percent per annum. Commercial lenders have also actively supported corporate clients to restructure their debts in order to help them restore operations and improve bad debt ratios.
Lending rate reduction also resulted in a rapid deposit rate decrease. Ceiling rate on VND deposits is capped at only 7 percent per annum, applicable to only deposits with a maturity of less than six months. Currently, common deposit rates are 4.6-7 percent per annum for 3-month term, 5-7 percent for 6-month term, and 5.5-8.5 percent for 12-month term.
Rapid rate reduction and easing borrowing conditions failed to boost credit growth for the time being, because of economic slowdown. Therefore, there is a silence but fierce competition among banks to draw new customers. Many banks have launched various promotional programmes and soft loans for personal borrowers towards the end of the year.
From now until December 31, 2013, Southeast Asia Commercial Joint Stock Bank (SeABank) continues to implement its home loan programme called “Your home, our priority” with zero interest rate in the first month and a fixed interest rate of as low as 10 percent per annum in the next 11 months. The lender allows borrowing up to 70 percent of house value in 15 years, plus a potential grace period of 12 for principal repayment. Their houses are the collateral for the loans.
Vietnam Technological and Commercial Joint Stock Bank (Techcombank) also reported to spare a huge credit for personal clients to buy real estate, vehicles and consumer products at an appealing interest rate of 9.99 percent per annum in the first nine months in the event of 5-year or longer borrowing term, in six months in the event of 3-5-year term, and in three months in the event of three-year or shorter term.
For corporate clients, Techcombank offers a soft loan programme, featuring an interest rate of 8.2 percent per annum on VND loans and 3.8 percent on USD loans through December 31, 2013. The rates are very competitive and applicable during the borrowing period.
Saigon Thuong Tin Commercial Joint Stock Bank (Sacombank) also announced lending of 2 trillion VND to corporate borrowers, bearing an preferential interest rate of 9 percent per annum, to meet the rising demand for finances before the Lunar New Year 2014.
Other banks also have their own promotion programmes to stimulate credit demand towards the end of the year. This has credit easing, with lower interest rates and easier access to capital.
Companies are still hungry for capital although borrowing costs have dropped dramatically. Poor business performance has inhibited them from accessing new loans. New business plans are postponed by unfavourable business operations. Meanwhile, really capital-hungry companies cannot access loans because banks do not want to fund highly risky plans. These companies have often incurred bad debts at banks, which are subject to being restructured.
It is two months ahead of the Lunar New Year - the busiest business period in the year for most enterprises. This leads to growing borrowing demand during this time. However, the situation seems to be different this year. Credit growth is half of the full-year target of 12 percent. At a recent conference, Le Quang Trung, Deputy General Director of Vietnam International Bank (VIB), predicted the credit growth would be just 9 percent in 2013.
Interest rates are attractive, but this is not as much a primary concern of enterprises as it was one year ago. Many companies have shrunk production on contracting demand to reduce costs to live through this difficult time. Hence, although banks are offering appealingly low interest rates, they are not eager to borrow.
Normally, personal consumer demand also soars ahead of the Lunar New Year. But this year stagnant production, rising unemployment and declining income have contracted consumer demand. The housing market remains gloomy. Fears of unemployment and decreasing incomes in the future have forced many people to delay vehicle purchase, home repair and expensive furniture purchasing. So, consumer credit is hard to find customers.
Although deposit rates drop, the public is still keen on placing their money at banks. If credit is not boosted, excess capital at banks may occur. Then, banks will be in a greater difficulty because their incomes are still largely relying on credit. This is a driving force for banks to intensify cash flows into the economy in the coming time.
Rice husk- fired power plants to be built
Viet Nam's first rice husk-fired power plant will be built in December 2013 on a land area of 9 ha in southern Hau Giang Province with a total investment of US$31 million.
It comes from Malaysia’s Che Group Sdn Bhd's plan to build 20 thermal power plants worth US$600 million in Viet Nam in partnership with is cooperating with the Hau Giang Power Plant Joint Stock Company.
Che Group Managing Director K.K. Chang said each plant can produce 10MW by using rice husks as main materials.
The first will be constructed in Hau Giang province later this year and the remaining ones will be built in six other provinces within five years.
All machinery and equipment will be supplied by CHE Group which cooperates with the UK’s Torftech Ltd and Germany ERK Eckrohrkessel GMBH in designing modern system using rice husks.
CHE Group and Torftech have established a joint venture named Torche Energy Sdn Bhn as the building contractor to do the work.
More petty enterprises set up in city
The number of newly-established enterprises in HCMC continued to rise further in the past on emonth, but most of them are small-scale ones in terms of charter capital compared to last year.
Between September 16 and October 15, the city’s Department of Planning and Investment issued 2,292 business certificates to new business startups, an increase of 333 enterprises compared to the previous month-long period and up 237 enterprises year-on-year.
In this year to October 15, as many as 21,087 new enterprises were set up, a rise of 7.5% on year, while their combined registered capital totaled only VND95.37 trillion, or a fall of nearly 43% on year. The average capital of each new enterprise is equal to only half of that in 2012, according to the HCMC Statistic Bureau.
Pham Viet Anh, board chairman of the consulting firm Left Brain Connector, observed that the prolonged economic slowdown has hit the business circle hard.
“The majority of newly-established enterprises are small in terms of capital as they have been affected by protracted economic woes,” he said.
Furthermore, though lending has been loosened, most enterprises find it hard to access banks for loans, he added.
“In my process of providing consultancy to enterprises, I’ve found that most of them are still downbeat about the economy,” Anh said.
Of over 21,000 new enterprises established this year to date, there are 959 private firms, 2,283 joint-stock entities, and over 17,800 liability-limited companies.
During the January-September period, as many as 17,232 enterprises suspended operations or shut down business, a slight fall of 2.6% compared to the same period of last year, according to the HCMC Statistic Bureau.
Foreign reserve eases pressure on forex rate, says ANZ
There would be less pressure on the central bank to devalue the local currency owing to the country’s ample foreign reserve, ANZ says in a recent report on Vietnam’s economy.
The bank gave an unofficial estimate on Vietnam’s foreign reserve at US$32 billion. The central bank has not published official foreign reserves data but the estimate of ANZ followed the recent report of the Government to the National Assembly that stated the reserve had increased to 12 weeks of imports, which is much higher than the level of 6-6.5 weeks in 2012.
“This affirms our view that there is less pressure for the central bank to devalue (Vietnam dong). We maintain our expectation for a gradual depreciation towards VND21,500 per dollar by mid-2014,” the foreign bank said in the report.
Joint-stock banks on Monday quoted buying-selling prices of the U.S. dollar at VND21,080 - VND21,120, while prices at State-owned banks were VND5 lower. Meanwhile, the dollar price on the unofficial market was equal to banks, at VND21,120 as of Monday evening.
Other sources of dollar supply in Vietnam have been reported robust. According to the latest report of the Foreign Investment Agency, from the year’s beginning to October 20, over 1,000 fresh projects with total registered capital of VND13.1 billion were approved, rising by 79% year-on-year. The total FDI amount in January-October period has amounted to US$19.23 billion, up 65.5% year-on-year and exceeding the whole year’s target of US$13-14 billion.
Trade surplus was also a factor supporting the stability of the forex rate. ANZ’s report said that the 12-month trade balance remained in a narrow surplus of US$521million, despite posting a deficit in October. This is in stark contrast to the average trade deficit of US$15.1billion in 2010, prior to the record devaluation of 9.2% in February 2011, it said.
Besides, positive remittances to Vietnam this year has contributed to the forex rate stability. Nguyen Hoang Minh, deputy director of the central bank’s HCMC branch, said that in the first nine months of this year, remittances sent via banks in the city amounted to nearly US$3 billion, and is expected to reach US$4.8-4.9 billion compared to US$4.1 billion last year.
Vietnam recently is expected among top ten recipients of officially recorded remittances by the World Bank with the estimation of US$11 billion this year.
Meanwhile, the dollar demand has fallen as the central bank had cut short the list of enterprises eligible to borrow U.S. dollars from banks, giving nod to only exporters that have income in dollars and importers of essential goods.
“If strictly following the regulation, demand on dollars would decrease by 30% which would help to ease pressure on the forex rate,” he added.
ANZ expected the country’s 2013 inflation to fall in the lower half of its 6-8% forecast range. The 12-month average inflation currently stands at 6.8% year-on-year and the bank forecast the inflation to remain manageable.
In addition, ANZ also reiterated its view that the central bank would keep its benchmark refinancing rate on hold at 7% until the first half of next year.
This rate is among factors impacting banks’ lending rates to customers and also the signal on monetary policy of the central bank.