Business forum addresses economic reforms

How to accelerate economic reforms to facilitate business operations was a major theme of the Vietnam Business Forum that opened in Hanoi on June 3. Deputy Prime Minister Vu Van Ninh attended the event.

As the largest business dialogue venue in the country, the forum is the mid-term event of the Consultative Group Meeting of Donors for Vietnam under the auspices of the World Bank’s International Finance Corporation and the Ministry of Planning and Investment.

It is the second year that the Associations of Local and Foreign Businesses have chaired the event and recommended policies to the Government.

The event started with a general assessment of the domestic investment environment.

Ten reports on banking, capital market, education, infrastructure, investment and trade were also delivered.

According to Vu Tien Loc, Chairman of the Vietnam Chamber of Commerce & Industry, delegates discussed the new draft Constitution, which is vital to the development of businesses. Secondly, they shared the view that corporate income tax should be cut to 20 percent, especially for large companies, to drive the local economy, he said.

As many as 500 delegates from the Government, ministries, departments, domestic and foreign enterprises attended the event.

The forum offers a chance to forge a continuous and close dialogue mechanism between the Governments and businesses at home and abroad. It aims to improve business and investment conditions to boost the development of the non-state sector, contributing to Vietnam ’s sustainable economic growth.

IDA Credits for better health care, R&D in Vietnam

The World Bank on May 31 approved two credits from the International Development Association (IDA) worth US$250 million to Vietnam for two healthcare projects in the country.

Of the total, US$150 million will go to the Northeast and Red River Delta Regions Health System Support (NORRED) Project, which aims to provide better health services for 15 million people, especially children and women.

It will help strengthen the capacity of provincial and district hospitals to deliver better quality hospital services as an alternative to patients seeking care in Hanoi, and will reduce the financial barriers, especially by supporting the expansion of the national health insurance system to include households above the poverty line.

The Fostering Innovation through Research, Science and Technology (FIRST) Project, which received funding of US$100 million, will support science, technology and innovation in Vietnam.

The Project’s main beneficiaries are R&D institutions and innovative technology enterprises that invest in R&D.

Spin-offs and start-up enterprises that are incubated from R&D institutions or universities will also benefit.

It will support the establishment of a public-private partnership research laboratory in the R&D zone of the Hoa Lac High-Tech Park.

Deputy PM attends China-South Asia Expo in China

Deputy Prime Minister Vu Van Ninh is in China to attend the 2013 China-South Asia Exposition, which opened in Kunming, Yunnan province, on June 4.

During his stay from June 4-7, Ninh was scheduled to have a meeting with his Chinese counterpart Ma Kai and work with Yunnan provincial leaders to build mutual political trust, strengthen the traditional friendship and boost the strategic partnership between the two countries.

Vietnam attaches importance to tightening links with Yunnan province and other localities sharing the common border with Vietnam, especially in the fields of economics, trade and investment.

The , which was held for the first time in Kunming in 1993, has become an annual event hosted by Yunnan, Chongqing, Si chuan, Quizhou, Guangxi, Chengdu, and the Tibet Autonomous Region.

At last year’s event, Vietnamese businesses had a total of 196 pavilions showcasing their latest products.

This year’s Expo, scheduled for June 4-10, is expected to promote external economic cooperation and attract investment through 4,000 pavilions – the largest number ever seen so far.

Singaporean investors keen on Vietnamese market

Singaporean businesses strongly believe in Vietnam’s long-term development potential based on its huge domestic consumption and rich natural resources.

The Chief Executive Officer of International Enterprise (IE) Singapore, Teo Eng Cheong made the statement on June 2.

Teo said the consumer sector in Vietnam has developed quickly thanks to urban population growth, improvement in human resources training and increasing incomes of labourers.

This is a good opportunity for foreign businesses to operate in such fields as education, safe water and medical care in the country, he emphasized.

To seize the opportunity, Singapore’s NTUC Group has just opened the first supermarket in HCM City in the hope of developing the group’s supermarket chain nationwide, said Teo.  

He argued that the demand for urban infrastructure construction will increase rapidly when the population in Hanoi, HCM City and Hai Phong triple by 2020.

At present, Singapore’s Sembcorp group is investing in the fourth Vietnam-Singapore Industrial Park (VSIP) and will develop the fifth VSIP model in the central province of Quang Ngai.

In 2012, Vietnam welcomed 6.8 million foreign visitors and served 32.5 million local visitors, earning roughly US$7.7 billion in revenue. Singapore’s Banyan Tree capitalised on this growing market by opening a luxury resort in the central region of Vietnam last November.

Singapore now ranks third among nations and territories investing in Vietnam, with over 1,000 projects capitalized at US$22 billion. It is also the sixth trading partner of Vietnam with a total turnover reaching nearly US$13 billion last year.

Hanoi targets 8.5-9.45 pct growth in second half

Hanoi has set an economic growth rate of 8.5 - 9.45 percent in the second half of this year to realise the preset Gross Regional Domestic Product (GRDP) goal of 8-8.5 percent for the entire year.

The target was specified during the municipal People’s Committee’s monthly session held to review the outcomes of the city’s socio-economic development performance and budget execution in the first half of the year.

According to the committee, the city still maintained a stable growth rate in the reviewed period with GRDP estimated to rise 7.5 percent.

Noticeably, the city’s Consumer Price Index (CPI) in May went down 0.22 percent from April.

Hanoi ’s sound development, however, was not firm as a number of its planned socio-economic goals failed to achieve in the reviewed period, the Committee said.

Committee Chairman Nguyen The Thao asked relevant departments and agencies to focus on figuring out the reasons behind the failure and seek effective measures to fix it.

Taps open on waste water treatment plant

A waste water treatment plant with a treatment capacity of 17,650 cubic metres per day has been opened in the southern province of Binh Duong.

 The waste water treatment plant that opened yesterday in Binh Duong Province. With a treatment capacity of 17,650 cubic metres per day, the plant will collect and treat waste water for the 13,000 residents of Thu Dau Mot and improve the environment of southern Binh Duong Province

The plant, the first of its kind in the province, is financed by the Japan International Cooperation Agency (JICA). The Binh Duong Water Supply Sewerage Environment Co Ltd (BIWASE) is in charge of its operation.

The first phase of the project was funded with a loan of JPY7.77 billion (US$77 million) from JICA.

JICA will also loan JPY19.961 billion ($197.95 million) for the second phase, in which a sewer network in Thu Dau Mot City will be expanded and a waste water treatment plant will be built in Thuan An Town in the province.

Thu Dau Mot City in southern Binh Duong Province has a high economic growth rate.

Most household and industrial waste water in the province is discharged directly into the environment without first being treated properly.

The plant is expected to help protect the Sai Gon and Dong Nai rivers, which provide HCM City with most of its water.

Fuel traders petition ministry for another petrol price hike

Domestic petroleum wholesalers have lobbied the Finance Ministry to approve an increase in retail prices, claiming they have taken losses despite the recent falls in the world fuel price.

People queue to buy petrol at a station on Tran Hung Dao Street, Hanoi. Domestic petroleum wholesalers have proposed the Finance Ministry increase retail prices, claiming they have suffered losses despite the recent decline in the world fuel price.

The proposal was made right after the ministry approved to cut fuel tariffs from 19 to 18 per cent and the world oil price had just fallen for the fifth time consecutively.

Trinh Quang Khanh, vice chairman of the Vietnam Petroleum Association told newspapers that petrol importers have been making profits of VND270 per litre on petrol, VND290 per litre on DO oil and VND130 per kilo on FO oil after deducting all taxes and fees.

Khanh said it was for this reason that petrol wholesalers have given higher commissions of VND650-700 or even VND900 per litre to their retailers.

However, the interdisciplinary team of Industry and Trade and Finance ministries on the petroleum market issued another rebuttal, saying the higher commissions would help wholesalers resolve their inventory and pay off interest.

A representative from the team said the reference price in the Singaporean market - where Vietnam sources most of its fuel – had in fact increased over the past 10 days.

He said fuel prices in the market had increased from US$106 a barrel to $112-113 a barrel since the beginning of last month.

He added that petrol enterprises had taken losses of VND150-200 per litre on petrol and VND200 per litre on oil.

Nguyen Tan Phat, director of Petrolimex retailer South Sai Gon Trading Company, said Petrolimex had given a commission of VND670 per litre (including transport fees) to retailers.

He said other companies would receive higher commissions if they were located further from Petrolimex warehouses.

Economist Le Dang Doanh said fuel wholesalers' profits and losses had not been transparent and properly announced to the public.

People found it difficult to check information from petrol enterprises, he added.

Switzerland helps improve local SME capacity

The Vietnamese and Swiss Governments inked an agreement in Hanoi on May 31 to cement their cooperation in improving export competitiveness of Vietnam’s small and medium-sized enterprises (SMEs) through a local trade promotion system in the 2013-2016 period.

The four-year programme, valued at US$3.89 million, will enhance the skills and capacity of trade promotion agencies and trade supporting organisations in three regions.

It is expected to help SMEs improve their efficiency by exporting products with more added value rather than those with low labour costs.

The programme is built on the basis of the outcomes of the VIE 61/94 project funded by the Swiss and Swedish Governments, which focuses on supporting trade promotion and export development in Vietnam in the 2004-2010 period.

Addressing the signing ceremony, Deputy Minister of Industry and Trade Tran Tuan Anh affirmed that Vietnam has taken steps to participate in the global supply chain with value-added products and services.

He highlighted the increasingly important role of SMEs and expressed his hope that the programme will help local firms tackle difficulties in their efforts to increase their participation in the country’s export development.

Through the Swiss State Secretariat for Economic Affairs (SECO), the Swiss Government has supported Vietnam ’s sustainable economic development since 1993.

In the framework of its new national strategy for Vietnam from 2013-2016, SECO has reaffirmed its commitment to support Vietnam in the long-term to help it achieve comprehensive and sustainable growth.

RoK willing to share environment experience with Vietnam

Businesses from Vietnam and the Republic of Korea (RoK) have used Entech 2013 to negotiate a number of trade contracts on waste treatment, energy saving equipment, and recycling.

Vietnamese businesses were impressed by the products and environmental solutions RoK businesses showcased at the exhibition. Many products matched the quality of those offered by European, Japanese, and American competitors but at much lower prices.

RoK National Environment Research Centre Expert Oh Geun Seok said Korea’s high-tech products are well suited to Vietnamese conditions. They can reduce costs without sacrificing quality.

Hankook Coatin Director General Kim Gyung Doo said his company—which specialises in manufacturing shipbuilding and mining industry equipment—is willing to share experience with and transfer technologies to its Vietnamese counterparts. Its products are durable and minimize environmental impact.

The Entech International Exhibition on Energy Technology and Environment is being held in Hanoi from May 29–31.The Busan Exhibition and Convention Centre (BEXCO) worked with the Hanoi Department of Industry and Trade to host the event.

BEXCO will hold a similar exhibition in Busan, the RoK, from September 4–6. Hundreds of Korean and international businesses are expected to attend the event.

Exports to Germany hit US$1.6 bln

Vietnam raked in US$1.6 billion from exports to Germany in the first four months of this year, a year-on-year increase of 24.8 percent.

In April alone, Vietnamese exports to this EU member state rose 50 percent to US$421 million.

Major exports are garments and textiles, footwear, cashew nuts, rubber, and tea.

Germany has been Vietnam’s biggest European Union trade partner for many years.

Vietnam has sustained its surplus in trade with Germany, reaching US$1.7 billion in 2012.

 More Japanese businesses eye Vietnam market

Japan External Trade Organisation (JETRO) Managing Director HirotakaYasuzumi believes Vietnam will attract more Japanese businesses if its support industry develops strongly.

In a recent interview granted to the Vnexpress newswire, Yasuzumi said Japanese businesses are currently shifting their production bases and material suppliers from China to Vietnam.

He said Vietnam is also benefiting from sharp increases in Thailand’s labour costs, making finding human resources in the vicinity of Bangkok more difficult.

Japan contributed 51 percent of the total US$7.8 billion in foreign direct investment Vietnam attracted last year. It has invested US$3.7 billion in Vietnam in the first five months of 2013, making it the country’s largest foreign investor.

Yasuzumi warned support industry deficiencies continue to hamper Japanese investment in Vietnam.

He recommended Vietnam focus on five support industry areas, including mould manufacturing, plastic injection and stamping, electrical and electronic components, machinery equipment, and heat and surface treatment.

The Japanese expert also suggested replicating a training exchange model involving sending employees of small and medium-sized enterprises to Japan for additional spare part manufacturing training. These workers will eventually constitute important human resources for the domestic support industry.

 Local steelmakers call for action on anti dumping

Two local steelmakers have filed a petition with the Vietnam Competition Authority (VCA) under the Ministry of Industry and Trade (MoIT) saying imported cold-rolled stainless steel is being dumped on the local market.

The petition by Posco VST Co Ltd and Hoa Binh Inox Joint Stock Company called for anti-dumping measures against cold-rolled stained steel imports from mainland China, Taiwan, Malaysia and Indonesia.

According to Article 10.4 of Ordinance 20/2001/PL-UBTVQH11 on anti-dumping of goods into Vietnam, MoIT must issue a decision within 60 days on whether to initiate an investigation.

This is the third time local producers have filed a petition against imported products. The two previous cases were brought against float glass and vegetable oil imports.

Most stainless steel items enjoy a zero import tariff, except cross-section, which subjects to a 10 percent duty, according to Circular 193/2002/TT-BTC dated November 15, 2012 issued by the Ministry of Finance.

In October last year, the Finance Ministry brought forward the amended version of Circular 157/2011/TT-BTC dated November 14, 2011, raising the duty on cold-rolled stainless steel imports to 7 percent from the previous 5 percent.

Such an adjustment was made after Posco VST, the largest cold rolled stainless steel producer in Vietnam, complained about poor sales.

Belgium’s East Flanders keen to do business in Vietnam

More than 70 Belgian officials and business representatives have recently met in Gent, capital of East Flanders province to mark the 40th anniversary of diplomatic ties between Belgium and Vietnam.

Vice mayor Geert Versnick, who is in charge of economics and diplomacy, expressed hope that Belgian businesses will consider the possibility of investing in the potential market of Vietnam.

The CEO of Flanders Investment and Trade (FIT), Claire Tillekaerts, spoke highly of the growing economic relations between Belgium and Vietnam as well as between the Flanders region and Vietnam.

She cited Vietnam’s impressive economic growth rates in recent years, its growing attraction of foreign investment, and its favourable geographical position in the region. In addition, a hardworking labour force and an increasing demand for high quality services are also the key factors to attract Belgian businesses to the market.

In his speech, Vietnamese ambassador to Belgium Pham Sanh Chau emphasized that the Vietnam-Belgium friendship has continued to grow and flourish over the past 40 years since the establishment of diplomatic ties in 1973, providing fresh impetus for closer cooperation in all fields.

Serge Cappon, Marketing Manager of VK Group, a leading construction enterprise in Belgium said Vietnam is emerging as a dynamic market-oriented economy in Asia and a development centre in Southeast Asia. The fine relationship between the two governments and the presence of Belgian businesses in Vietnam are good reasons for VK Group to select Vietnam as an investment destination.

Dominique Casier, Consul General of the Royal Belgian Consulate in Ho Chi Minh City emphasized that the Flanders Economic Office in HCM City will co-ordinate with the Consulate to help businesses in Belgium and the Flanders region penetrate the Vietnamese market.

European enterprises spur investment up in Vietnam

The eleventh quarterly survey on business climate index of European enterprises conducted by the European Chamber of Commerce in Vietnam in May this year shows that confidence and business prospects among the European business community have gradually improved.

After standing below 50-point levels for three consecutive quarters, this quarter, the index rose from 48 points to 50 points.

The key indicators of this development include improved business outlook, increasing revenue and orders, and optimism about the overall economy.

More than half of European enterprises participating in the survey are services providers, a quarter are manufacturers, and the rest are traders and in other sectors.

According to the report, investment plans have been improving with firms planning to significantly increase investments at a rate double that of 7 percent in the last quarter, to 13 percent. Especially, 84 percent of enterprises said that their orders/ revenue remained stable or had improved.

Nha Trang fish sauce producers hit by anchovy scarcity

Many traditional fish-sauce producers in Khanh Hoa Province were reportedly in despair as they are facing a severe shortage of materials.

Nha Trang Fish Sauce Association currently has 35 members who produce fish sauce in the traditional way and provide tens of millions of liters of fish sauce to the domestic and international markets. The main ingredient to make traditional fish sauce is anchovy. However, this year, anchovy has become scarce, sending fish sauce producers into a flurry.

Statistics show that, every year, fish sauce producers in Nha Trang produce more than 20 million liters of fish sauce and require about 15,000 tons of anchovies. However, until now, they said that they have just bought less than 10 percent of the required amount of fish. In order to have fish to produce fish sauce, producers have looked everywhere but still failed to meet requirement, some were not even able to find any fish at all.

Nguyen Hoai Son, director of Chau Son Private Company, said that his company needs 800 tons of anchovies each year, but this year, it only managed to buy a few tons of anchovies. Thus, two thirds out of 60 fish tanks of the company were left empty and the company has been perfunctorily operating on the amount of anchovies it stockpiled since last year.

Mr. Son also said that despite a shortage of anchovies, his company dares not buy other kinds of fish because it will affect the quality of the fish sauce.

Experiencing the same situation, 584 Nha Trang Fisheries Joint Stock Company was also able to buy 5 percent of 8,000 tons of anchovies it needs to produce 10 million liters of fish sauce, accounting for one tenth compared to the same period last year.

Do Huu Viet, director of 584 Nha Trang Fisheries Joint Stock Company, and chairman of Nha Trang Fish Sauce Association, said that earlier traders from other provinces brought fish to the company to sell to them, this year, on the contrary, the company had to go to Quang Tri, Nghe An, Thanh Hoa, and Ninh Thuan Provinces but still failed to find any fish.

Due to scarcity of anchovy, some fish sauce producers had to buy other kinds of fish, causing the quality of fish sauce to drop which will seriously damage traditional Nha Trang fish sauce brand name.

According to firms, a scarcity of anchovy was because fish catching declined. In addition, a huge amount of anchovies was sold to companies who produce dried anchovies for export. Although the price of anchovy rose by more than 30 percent, there was still no anchovy to buy. This situation led to stagnation in production, more unemployed workers, and a drop in fish sauce supply. Many fish sauce producers in Nha Trang will possibly be fined for failure to fulfill their contract.

Artichoke price in Da Lat triples from last year

According to Ho Ngoc Dinh, chairman of the Farmers Association of Ward 12 in Da Lat City, traders recently purchased dried artichokes at a record high price of VND300,000 per kilogram, triple that from last year.

The price of artichokes climbed as producers collected them to make products and expand markets.

Due to the high price, many farmers in Thai Phien Village in Ward 12 have switched back to growing artichokes. Forecasts say that artichoke growing area in the next crop will rise by 10 percent compared to the previous crop, to cover around 45 hectares.

VietJetAir offers Hanoi-Thailand air ticket for VND450,000

VietJetAir officially launched a new route on June 1 with seven flights per week between Hanoi and Bangkok.

Flights will depart from Hanoi at 10.50 am and land in Bangkok’s Suvarnabhumi Airport at 12.40 pm. Return flights will take off at 13.45 pm and arrive in Noi Bai International Airport at 15.25 pm. VietJetAir has cooperated with the Tourism Authority of Thailand to promote tourism and trade links between the two nations and is offering one way tickets on the new route for only VND450,000.

VietJetAir said that all flights to Bangkok from HCM City and Hanoi use Suvarnabhumi Airport,the most modern airport in the Thailand, because of its many links to other well-known destinations in the country as well as convenient 15-20 minute travel to Bangkok city centre via high-speed metro Children flying with VietJetAir on June 1 will also come face to face with some much-loved cartoon characters at the airport and receive bags of candyand other gifts from VietJetAirstewards.

To celebrate International Children's Day, VietJetAir also presented 100 gifts to children being treated at Children’s Hospital 2, the Tumor Hospital, the Institute of Hematology and Blood Transfusion, and the Hospital for Orthopedic Injuries.

 Tan Son Nhat-Binh Loi outer belt road to open by September

Le Hoang Quan, chairman of the People’s Committee of Ho Chi Minh City has instructed execution units of the Tan Son Nhat-Binh Loi outer belt road project to complete all works and open for traffic the stretch from Gia Dinh Park to Go Dua flyover before September 2.

He was speaking with representatives from relevant departments of the City while on an inspection tour of the ongoing work of the belt road.

He ordered execution units to speed up the project so as to open the entire route for traffic at the earliest. After September, more sections will be completed which will further add to ease in traffic flow.

According to the South Korean GS Engineering and Construction Group, the investor of the project, all four bridges including Rach Lang, Binh Loi, Go Dua and four pedestrian flyovers on the route are complete.

Seventy two percent of the road is already complete. However, some sections are still incomplete due to slow site clearance. About 115 households are continuing to refuse to remove from Tan Binh, Go Vap and Thu Duc District areas.

Chairman Quan instructed the above districts to hand over vacant land for the project within June. Go Vap District must coerce with related households to relocate them from their present houses and complete the first phase of the project in time.

Mr. Quan also asked the contractor and execution units of the project to ensure work safety and environmental hygiene in and around the construction area.

Relevant departments should plant trees, build parks as well as parking lots along the route. They should also prevent residents from building impractical houses such as small, narrow and congested structures in the area.

The 13.7km Tan Son Nhat-Binh Loi outer belt road begins at Truong Son Road near Tan Son Nhat Airport in Tan Binh District and runs through Nguyen Thai Son Crossroad in Go Vap District. This section includes two 20m wide sections with three lanes.

The road then goes straight over Saigon River via Binh Loi Bridge to reach Binh Trieu Crossroad in Thu Duc District. This 60m wide section will have two lanes.

The 30m wide final section will run straight to Linh Xuan Intersection in Thu Duc District and connect with National Highway 1A, comprising of six lanes.

Tan Son Nhat-Binh Loi outer belt road is expected to be the most beautiful inner road in the City. After opening for traffic, it will ease pressure on routes moving from the central parts of the City to the east of the City.

Economic reform needs a boost

How to accelerate economic reform to facilitate business operations was the major theme of a mid-term business forum which opened in Hanoi on June 3.

The event offers Government officials, domestic and foreign businesses, donors and diplomatic corps the chance to examine ways to improve Vietnam’s business climate, according to the Vietnam Business Forum, one of the organisers of the forum.

There is growing concern that Vietnam will lag behind other countries in Southeast Asia unless its investment environment is improved.

David Whitehead, president of the Australian business society in Vietnam, said Indonesia, Thailand, Cambodia and Myanmar have emerged as attractive investment destinations.

Despite the global economic slowdown, global foreign direct investment (FDI) has increased considerably in recent times, and if Vietnam does not create a better investment climate, its FDI will keep falling, he warned.

At the 2012 Vietnam Business Forum, VBF also warned that if Myanmar got the most favoured nation (MFN) status from the US and European Union, its export products such as garments, footwear and decorations would have highly competitive advantages compared to similar Vietnamese products.

VBF has received a great deal of proposals from businesses, expressing concerns about the slowness in equitising and restructuring State-owned enterprises (SOEs).

Its working groups even proposed completing a legal framework on the Public-Private Partnership (PPP) model, citing the fact that the pilot PPP model has not lived up expectations.

Cumbersome administrative procedures are hampering investment attraction efforts, and it’s time to act to support investors, they said.

However, the Vietnamese economy seems to have bottomed out of the difficult times. The European Chamber of Commerce in Vietnam (EuroCham) recently announced its Vietnam’s business climate index (BCI), showing that business confidence and outlook among European businesses in Vietnam continues to improve.

EuroCham Executive Director Paul Jewell said that the BCI has experienced incremental improvements across the indicators, and this is a very healthy sign demonstrating that European companies are slowly regaining trust in the Vietnamese market.

He noted that this is only the half-way and the BCI needs to significantly improve, if Vietnam is to remain competitive within ASEAN.

Singaporean investors keen on Vietnamese market

Singaporean businesses strongly believe in Vietnam’s long-term development potential based on its huge domestic consumption and rich natural resources.

The Chief Executive Officer of International Enterprise (IE) Singapore, Teo Eng Cheong made the statement on June 2.

Teo said the consumer sector in Vietnam has developed quickly thanks to urban population growth, improvement in human resources training and increasing incomes of labourers.

This is a good opportunity for foreign businesses to operate in such fields as education, safe water and medical care in the country, he emphasized.

To seize the opportunity, Singapore’s NTUC Group has just opened the first supermarket in HCM City in the hope of developing the group’s supermarket chain nationwide, said Teo.  

He argued that the demand for urban infrastructure construction will increase rapidly when the population in Hanoi, HCM City and Hai Phong triple by 2020.

At present, Singapore’s Sembcorp group is investing in the fourth Vietnam-Singapore Industrial Park (VSIP) and will develop the fifth VSIP model in the central province of Quang Ngai.

In 2012, Vietnam welcomed 6.8 million of foreign visitors and served 32.5 million of local visitors, earning roughly US$7.7 billion in revenue. Last November, Singapore’s Banyan Tree already opened a luxury resort in the central region of Vietnam.

Singapore now ranks third among nations and territories investing in Vietnam, with over 1,000 projects capitalized at US$22 billion. Singapore is also the sixth trading partner of Vietnam with a total turnover reaching nearly US$13 billion last year.

Power sector set for FDI inflow

A new wave of foreign direct investment (FDI) is expected to flow into Vietnam’s power sector to meet the country’s high electricity demand which local power plants have been struggling to meet.

According to Tata Power, a subsidiary of the Indian Tata Group, the company has gained a Vietnamese Government approval to conduct a feasibility study for the Long Phu 2 thermoelectricity plant in southern Soc Trang Province with a capacity of 1,200MW.

Having received the green light, the company would now rush to carry out the next steps toward the project, the firm added.

The Khanh Hoa Provincial’s People’s Committee also said the 2,640MW Van Phong Thermal Power Plant 1 has been the subject of negotiations between Japanese Sumitomo Group and Hanoi Industrial Investment and Construction Corporation (Hanoico).

Sumitomo’s representative said they had been in talks with the Ministry of Industry and Trade to sign a build-operate-transfer (BOT) contract in the first quarter of next year, Thoi Bao Ngan Hang (Banking Times) reports.

Once the contract is signed, an investment license should be approved in the second quarter of 2014.

Construction work is scheduled to start in August 2015, with the plant’s opening set for October 2019.

Ken Robinson, director of the multinational Howden Group which has officially opened a representative office in HCM City, said the potential of the country’s power industry was huge. They had been active in investing in modern technologies and expanding investment in sector, he added.

The group has provided more than US$1.5 billion worth of facilities, including blowers and fans, to regulate temperature for power projects in Vietnam including Mong Duong 2, Vung Ang 1, Nghi Son1, Vinh Tan 1 and Thai Binh 2.

Experts said Vietnam’s power industry is in a favourable stage of development, now making an ideal time to boost the sector’s growth by mobilizing FDI.

However, many power sector FDI projects have faced implementation difficulties due to inappropriate policies. Van Phong Thermal Power Project 1, for example, had shortcomings in the land lease contract with Khanh Hoa Province as well as electricity purchase contracts with Electricity of Vietnam.

Nguyen Chien Thang, chairman of the provincial People’s Committee told Vietnam Investment Review the province is committed to ensuring a favourable land hire contract for the project’s investors. To support this, the Japanese group was asked to provide a specific project completion timetable to help avoid delays.

Another project, Hai Duong BOT Thermal Power project is behind schedule due to unresolved investment agreement issues.

Experts said the country should produce an effective legal framework to help investors resolve difficulties in exploring the sector.

Aquatic exports to Africa on the rise

Vietnam’s aquatic export turnover to Africa reached US$30.3 million in the first quarter of this year, up 15 percent against the same period last year.

Last year, the turnover to 25 African countries hit US$150 million, a 38 percent surge from 2011, with key exports including Tra and Ba Sa fish, shrimp and tuna.

According to the African, West and South Asian Markets Department under the Ministry of Industry and Trade, Vietnamese exporters have a good opportunity to promote seafood exports to African countries as the nations have to import numerous aquatic products to meet their domestic demand and their aquaculture industry is under-developed.

Vietnamese exporters are even able to study the possibility of implementing aquaculture projects in the continent and exporting seafood to surrounding countries.

Moreover, the profuse domestic supply of Tra fish at stable prices facilitates Vietnamese exporters’ trade with the continent.

Egypt has become Vietnam’s most promising aquatic export market with turnover of US$79.6 million in 2012, up 33 percent over the previous year.

However, Vietnamese exporters have encountered several difficulties in exporting their products to the African market.

It takes around 40 days to transport goods from Vietnam to Africa by sea, and there is no direct air route between them.

In easing the difficulties and stepping up aquatic exports to Africa, domestic enterprises need to ensure the quality of their products and meet importers’ food hygiene and safety standards.

They have also been asked to set up a distribution network with a single price in the continent’s key markets in order to avoid dumping.

The ministry says Egypt tops the list of Vietnam’s aquatic export markets in Africa.

It is followed by Tunisia with export turnover of US$11.16 million, Algeria with US$9.5 million, Cameroon with US$7.1 million, and Libya with US$6.5 million.

VN-Italy direct air cargo route to open

A direct air cargo route linking Brescia, Italy, and Ho Chi Minh City will be launched following an agreement between Vector Aviation Co Ltd Vietnam and its Italian partner, Catullo Spa.

This was announced during a recent press conference at the Vietnamese embassy in Italy.

According to the agreement, during the first phase the two companies will use  Airbus 330 freighters to transport goods between the two cities every week beginning in October this year.

Boeing 747-400F aircraft will be used in the second phase as of April 2014.

Vietnamese ambassador to Italy, Nguyen Hoang Long, thanked Italian agencies and local authorities for supporting Vector Aviation and Catullo Spa in establishing the air route.

He said it will help promote trade, exchange programmes and exports between Ho Chi Minh City and Brescia, an important air transport centre for Italy’s northern industrial and commercial region, and also connect southwestern European countries with Southeast Asia.

Developing IPs, EZs to attract more FDI

A score of synchronous measures are needed to develop industrial parks (IPs) and economic zones (EZs) into attractive destinations for foreign direct investment (FDI).

These areas play an important role in socio-economic development by creating jobs, increasing budget revenues and export earnings, and expanding markets.

More than 280 IPs and IZs have been established in Vietnam as of early 2013, attracting more than 4,300 FDI projects with total registered capital of US$64.8 billion, of which 51 percent has been disbursed.

Annual FDI capital poured into IPs and IZs accounts for 40-45 percent of the country’s total increased registered capital.

Positive results have also been recorded in attracting FDI attraction to coastal IPs, attracting, to date, 144 FDI projects with a total capitalization of US$38.4 billion.  Forty percent of the total land fund for industrial production, tourism and services is covered by these projects.

According to economic experts, the foreign-invested sector at IPs and EZs has made significant contributions to raising the added value of the industrial sector. FDI capital invested in IPs and EZs constitutes up to 80 percent of the FDI capital for Vietnam’s entire industrial sector.

Exports produced in IPs and EZs grew by 20 percent in 2005 and by 20-30 percent in recent years.

In addition, businesses in IPs and EZs have generated jobs for two million workers, including 1.2 million that are employed by FDI businesses.

However, IPs and EZs have revealed some weaknesses in attracting FDI.

Professor Dr. Nguyen Mai, Chairman of the Vietnam Association of Foreign Invested Enterprises, attributes the limitations to imperfect legal frameworks for controlling IP and EZ operations.

Continually changing incentive investment policies have also caused many problems for investors, he added.

National and local investment promotions for IPz and EZs have failed to attract projects with high technological value, while poor infrastructure, low quality human resources, weak connectivity between businesses and unimproved environmental protection are also a major obstacles to attracting FDI.

Head of the Overseas Investment Department, Do Nhat Hoang, says many domestic and foreign investors are currently seeking investment opportunities in IPs and EZs that will create a strong inflow of revenue.

Thorough preparations are necessary to seize these major opportunities by developing IPs and EZs in parallel with socio-economic development and improving the quality of their technical infrastructure and public amenities.

Proper mechanisms should also be adopted to facilitate EZ operations based on different investment models such as Build-Transfer (BT), Build-Operate-Transfer (BOT) and Public-Private-Partnership (PPP).

All ODA, FDI, State budget and government bond capital resources should be mobilized to build key infrastructure projects in EZs in order to stimulate more investment, Hoang said.

Agreeing with Hoang’s views, Vu Dai Thang, head of the EZ Management Department, argues that IPs and EZs should prioritize attracting investment for sectors and areas that promote advanced and environmentally friendly technologies, in addition to strengthening connectivity to sharpen the competitive edge and improve operational efficiency.

It is also imperative to supervise adherence to legal regulations on environmental protection and revamp policies and laws to improve working conditions and the lives of employees at IPz and EZs.

Streamlining administrative procedures, fine-tuning mechanisms and policies for IPs and EZs, and enhancing State management is another solution for developing IPz and EZs in the future, Thang adds.

Mekong Delta region exports 237,000 tonnes of tra fish

The Mekong Delta provinces shipped 237,000 tonnes of tra fish in the first five months of this year, earning US$ 616 million, down 6 percent from last year’s period.

Vietnam’s largest Tra fish importers were the EU, ASEAN, the US, Japan, Mexico, Brazil, China and Hong Kong.

In the five-month period, tra fish exports dropped in price and volume in many traditional markets.

The regional provinces zoned off 5,700 hectares of water surface for tra fish breeding and supplied 390,000 tonnes of material tra fish for processing factories.

The Ministry of Agriculture and Rural Development (MARD) said local breeders still face difficulties due higher production costs than selling prices and they find it difficult to access bank loans.

To help the farmers, the provinces have sent technical staffs to guide them how to produce tra fish meeting standards for export. They have also encouraged the breeders to apply new farming methods to raise the fish quality.

VietGap products to enter traditional markets

High-quality farm produce such as fruit and vegetables meeting Vietnamese Good Agriculture Practices (VietGap) standards will make their way into traditional markets in HCMC under a program intended to increase the competitiveness of traditional markets.

With a plan to build up a distribution system for high-quality products, the HCMC Department of Industry and Trade wants to find stable outlets and improve the prestige of traditional markets which are struggling to compete with modern distribution channels, especially convenience stores, said Nguyen Nguyen Phuong, trade management head at the department.

The department will work with its counterparts in the 13 Mekong Delta provinces to create supply-demand connectivity, with these provinces active as suppliers for the city market, he noted. A conference will be organized in Can Tho next month, while two others will be held in the Central Highlands province of Lam Dong in July and in HCMC in August to connect suppliers and distributors, Phuong said.

Such a program is much needed since traditional markets are facing a fierce competition from the modern retail networks.

Consumption at traditional markets in HCMC is falling as consumers have shifted to shopping at air-con supermarkets and convenience stores, according to the department.

Before the program, the department had launched food safety and hygiene programs at local markets, with Ben Thanh Market and Hoc Mon wholesale market selected as pilot venues.

Under the programs, dining services providers and vendors of fresh foodstuff, fruit and vegetables are encouraged to make clear origins of goods, pack products and comply with food safety and hygiene requirements. The programs then will be expanded to all first-grade markets.

VAMC not guarantee for stronger credit growth

Vietnam Asset Management Company (VAMC) is expected to help reduce bad debt, but it is far from removing the bottleneck currently blocking credit growth, said economist Ngo Tri Long.

VAMC is designed to cope with bad debt, reduce risk for banks, and maximize debt recovery. But bad debt is just taken off the balance sheet, not completely settled, he noted.

Unlike other countries, where debt is traded directly, VAMC will buy debts from banks through the issuance of special bonds.

It remains to be seen whether any shortcoming would emerge from this process. The process needs to be transparent and avoid the influence of interest groups, or else the consequences would be even more severe, he said.

Under the scheme, debtors whose mortgaged assets are sold to VAMC may apply for new loans if they have viable business plans. However, “it is unsure whether banks will grant them loans or not,” he said.

Weak firms will be required to show viable business plans and mortgage other assets for new loans. Meanwhile, unhealthy debtors will certainly find it hard to gain access to new credit.

Therefore, it is unrealistic to say VAMC is the magic wand to solve the present bad debt issue, said the economist.

It is feared that the maximum refinancing of VND40 trillion under the scheme for VAMC establishment and VND30 trillion worth of loans for homebuyers and low-cost condo developers may stoke a return of high inflation.

Long said: “VND30 trillion may not be used up, and even VND40 trillion to be supplied through refinancing can hardly flow into the economy since banks may impose stringent lending conditions. If so, inflation wouldn’t be a concern.”

However, bad debt is still there, not yet settled. When such a large sum of money is injected into the economy, it might lead to certain economic uncertainty, he stressed.

If the property market got stable five years later, mortgaged assets could be settled. However, the recovery of the property market heavily depends on how the economy performs, he noted.

“In other countries, it takes 5-10 years for the economy to recover. In our country, if the economy remains uncertain, the real estate market can hardly recover, even 20 years later,” he said.

He stressed the most fundamental task now was to restructure the economy, but this process remained to be done. A comprehensive plan should be drawn up first, followed by detailed plans, but a reverse order is in place.

“If the above problems remained unresolved five years later, not only the property market but the entire economy could sink into crisis. Now is the pre-crisis period, given the weakened purchasing power, low incomes of people, increasingly high numbers of corporate bankruptcies and bad debt,” said Long.

VAMC would not help much as long as the crux of the matter remained unresolved, said the economist.

Solutions to budget overspending

The assigned tasks on budget collection, spending and overspending must be resolved by the year end.

As of May 15, the total budget collection was estimated at VND268.4 trillion, representing 32.9% of the estimate.

Some sectors and products posting higher- than- average-rate contributions included crude oil (meeting 43.1% of the preset target); the FDI sector (38.5%); individual income tax (38.3%) and fees (34.1%).

However, budget collection at other fields remained low, of which export and import revenue touched 27.7%; domestic collection was 32.7% including environmental protection tax of 29.2%; SOEs 31.1%; land fees 23.4%.

Meanwhile, total budget spending was VND335.6 million, equivalent to 34.4% of the estimate.

Administrative spending accounted for 70.1% of total expenditure. Development investment was 35.5%. Debt payment was higher than the estimate, at 36.5%.

 According to economic experts, the Government should propose the National Assembly loosening public debts and increasing budget overspending level to resolve difficulties for enterprises and support market.

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