Exporters eye market Down Under

Viet Nam has great potential to boost exports to Australia and New Zealand, building on significantly improved trade relations with both nations under a regional free trade pact, a senior government official says.

Chu Thang Trung, deputy director of the Asia-Pacific Market Department under the Ministry of Industry and Trade, said in a report submitted at a seminar last week that the improvement in trade ties has been made over the last two years of implementing the ASEAN-Australia-New Zealand Free Trade Agreement.

Trung said Vietnamese enterprises had many opportunities to export to Australia and New Zealand as these two markets have recovered quite well from the global economic slowdown.

The trade pact opened up further opportunities for Vietnamese firms to export traditional as well as new products to the two markets, he said.

He emphasised that Australia and New Zealand has been among the most important export markets for Viet Nam.

Australia's leading imports include machinery, equipment, computers, crude oil and telecommunication equipment, among others.

Last year, bilateral trade between Viet Nam and Australia reached $4.64 billion compared with $4.14 billion in 2010 and $3.3 billion in 2009, according to statistics from the General Department of Customs.

Exports to Australia reached $1.341 billion in the first half of this year, accounting for more than 50 per cent of the total export value last year.

Meanwhile, bilateral trade between Viet Nam and New Zealand reached $535.33 million last year compared with $475.61 million in 2010 and $320 million in 2009.

Exports to New Zealand reached $151.4 million last year compared with $122.6 million in 2010. First half exports in 2012 to New Zealand was $74.3 million, less than 50 per cent of last year's figures.

Trung said that although bilateral trade between Viet Nam and New Zealand was still low, the potential was high.

"Viet Nam targets wiping out the trade deficit it has with New Zealand in the near future," he said.

New Zealand had high demand for fertilisers, cocoa and mango and Viet Nam was capable of exporting these products to that country as it had many advantages in producing them, Trung said.

He said Viet Nam should diversify exports to Australia and New Zealand to increase value and competitiveness.

However, there are many challenges in boosting exports to the markets because, as of now, the market share of many Vietnamese products in these countries are small and unstable.

The strict quality, safety and hygiene requirements present another stiff hurdle for Vietnamese exporters as does the distance between Viet Nam and the two markets.

Yet another major difficulty, especially for small- and medium-sized enterprises, was they lacked information about these markets and their export potential, Trung said.

Trung recommended that Vietnamese businesses learn about the business customs as well as culture of these export markets as well as the lifestyle of consumers in these countries.

If they cannot have face-to-face encounters with overseas companies, they should seek information through websites to understand better their potential partners, he said.

Trung said "simple things can make a big difference."

Vietnamese businesses should respond to emails quickly during negotiations to gain the trust and confidence of Australian companies, Trung said.

He also said that for the Australian market, the brand of Vietnamese products did not really a matter now, but quality and prices would be factors that would influence buyers' decisions.

He recommended that local exporters take care and learn all they can about buyers in Australia and New Zealand. He said this preparation would enable them to save money and negotiate better deals.

Exporters of farm produce, seafood and processed food should pay attention to regulations on quarantine, packaging and weight of products in these countries, he said.

Vietnamese businesses should contact reputable distributors in Australia and New Zealand so that they can have their products supplied to supermarkets and other outlets to increase their market share and compete better with products made from China, he said.

Huynh Khanh Hiep, deputy director of HCM City's Department of Industry and Trade, said Vietnamese businesses should be patient and have a long-term vision for the Australian and New Zealand markets.

He said export businesses should contact the Asia-Pacific Market Department and the Import-Export Department under the Ministry of Industry and Trade as well as Viet Nam's commercial attache offices in Australia and New Zealand for help and support in approaching these markets.

They should also contact local trade promotion agencies and associations for further assistance, he added.

PM considers incentives for sponge iron factory

The People's Committee of the central province of Nghe An has proposed that the Prime Minister offer incentive policies to the US$1 billion Kobelco Viet Nam Co Ltd's sponge iron factory.

Under the proposal, the province suggested the Government to provide the project with a 50 per cent corporate income tax reduction within 15 years since operation and a waive of import tax in first five years.

 Local firms head to Thai scientific instruments expo

Many Vietnamese companies will take part in an exhibition and conference on scientific equipment, technology, instruments, and laboratory to be held in Bangkok from September 26 to 28.

The exhibition (Thailand Lab 2012), organised by VNU Exhibitions Asia Pacific, will showcase the latest innovations in bio-technology, analysis, diagnostics, and laboratory technology and equipment.

Nguyen Ba Vinh, representative of the Thailand Convention and Exhibition Bureau in Viet Nam (TCEB), said TCEB will offer incentives for exhibitors as well as visitors taking part in the event.-

 Meeting looks at ways to support local enterprises

The director of northern province of Thai Binh's Department of Industry and Trade will this month focus on supporting local businesses in the economic slowdown.

The department's director Vu Ngoc Khieu said that bank and business representatives who attend the meeting with him will learn how to confront a variety of business challenges, such as how to reduce high inventories.-

 Vietinbank launches automatic toll service

Vietinbank has officially deployed nine automatic toll service stations nationwide. The stations are intended to help reduce traffic congestion because drivers will no longer need to stop to pay tolls.

The station can automatically calculate the appropriate toll based on the distance the vehicle has traveled.

The 9 stations will include Cau Gie in Ha Nam Province, Luong Met in Lang Son Province, Binh brige in Hai Duong Province, Phu Bai in Hue city, northern Hai Van tunnel in Da Nang city, Gianh bridge in Quang Binh Province, Da Nang and Tan Son Nhat airports and T1-toll service station in highway 51 southern Bien Hoa city.-

 New co-op model may profit farmers

New large-scale rice cooperatives are expected to reduce farmers' production costs and cut out several middleman traders, according to Deputy Minister of Planning and Investment Dang Huy Dong.

Under the cooperative model, the paddy fields would belong to participating farmers, Dong said.

The ministry's proposal, which is expected to be approved by the Government, would begin with a pilot project in one or two provinces in the Cuu Long (Mekong) Delta.

When farmers join the co-operative, they will be given reasonably priced materials of good quality.

Dong said that farmers would have a voice in buying materials and selling their products.

Under the co-operative model, product quality and origin would be ensured and products could be sold at better prices because many middlemen traders would be cut out.

In addition, farmers would have the same benefits and receive Government support, including loans and instructions in farming techniques.

The country's distribution network, including in the Cuu Long (Mekong) Delta, still has too many middlemen. Because of this, costs from farmers to the end-users have risen.

If approved, the ministry would begin the project immediately without waiting for the new Law on Co-operatives.

The Ministry of Planning and Investment (MPI), in co-operation with the Ministry of Agriculture and Rural Development, would set up the model in one commune and if farmers liked it, it would be expanded.

MPI has also proposed to build a seafood centre and then a rice centre.

Dong said the centre would help reduce costs for trade promotion as traders would go there to buy products.

The centre would be a stable outlet for high quality products, he said.

 Ha Noi introduces price stabilisation plan

Ha Noi People's Committee will offer local traders VND328 billion (US$15.6 million) at an interest rate of zero per cent so that they can take part in the city's price stabilisation programme.

Under the programme, 15 enterprises will sell 10 essential commodities at prices that are lower than market prices from now until April next year.-

 Nation ranks fourth in slurping instant noodles

Viet Nam ranks fourth in instant noodle consumption worldwide, according to the Ministry of Industry and Trade.

An average Vietnamese person consumes one to three packs of instant noodles per week. The country has 50 producers, resulting in an annual output of 50 billion packs.

 Retail sales see modest rebound during July
 
Retail sales value of goods and services in July surged 0.12 per cent to VND189.18 trillion (US$9.10 billion), according to the General Statistics Office (GSO).

The increase, though modest, has helped lift the total retail revenue in the first seven months of 2012 to above VND1,327 trillion ($63.22 billion). This number represents an increase of 6.8 per cent from 2011, and the rate is the highest level since the beginning of this year, the GSO said.

GSO expert Vu Manh Ha attributed the rebound in domestic purchasing power to the State's influential policies- which encourage local consumption, facilitate promotion programmes and bring goods to rural areas - as well as the ongoing efforts of retailers and supermarkets to slash prices, cutting items' cost as much as 70 per cent.

The seven-month rebound in retail trade has also had an impact on the nation's Index of Industrial Production (IIP) which rose by 4.8 per cent year-on-year during the period, with increases of 4.2 per cent in the six months and 4.1 per cent in the first quarter.

As of July 1, the stockpile index surged by only 20.2 per cent against the same time last year, far lower than 29-35 per cent recorded in the first three months and four months respectively.

However, the index was still double what it would be in a more stable economic context, Ha said.

Viet Nam's total retail revenue will increase by 23 per cent per year between now and 2014, according to a report by AT Kearney. This means the Vietnamese retail market will offer many opportunities for both domestic and foreign retail businesses.

The report, "Viet Nam Retail Market Forecast to 2014," said that modern retail channels will play a crucial role in future growth, improving their position in the market. Increasing purchasing power and changing lifestyles have been some of the key growth drivers in the country's modern retail market, it said.

The modern retail market will be the key distribution channel in Viet Nam in the near future due to its huge market of nearly 90 million consumers, AT Kearney's report predicted. Vietnamese consumers' shopping habits are changing, with more spending in modern retail outlets due to consumer concerns about convenience and health issues. Many consumers said that modern retail outlets gave them good access to new products, more confidence in food safety, and clean facilities.

The country currently has 636 supermarkets, 120 commerce centres and over 1,000 convenience stores. Experts said this figure still does not meet the demand. As a result, Viet Nam's retail market holds many opportunities for both foreign and domestic investors.

Rules govern listing of shares after IPO

The Government issued Decree No 58/2012/ND-CP on July 20 to implement portions of the Law on Securities relating to private placement and public offerings of securities. The new decree repeals Decree No 14/2007/ND-CP as amended by Decree No 84/2010/ND-CP and Decree No 01/2010/ND-CP.

Decree No 01 previously required one year before securities acquired under private placement could be transferred. Decree 58 scraps these requirements for an unlisted company and retains them for public companies.

Decree No 58 also updates provisions governing public offerings, adding the additional condition for initial public offers (IPOs) by infrastructure or hi-tech enterprises that the board of management must undertake to list sold shares on the securities market within one year from the date in which the enterprise was established.

The decree further provides stricter conditions for bond issues denominated in Vietnamese dong by international financial organisations in Viet Nam. The maximum term of such bonds is set at 10 years. The capital raised from issue cannot exceed 30 per cent of the total project cost, and the issuing organisation must undertake to bring list the bonds on the market within one year of their initial public offer.

The decree also imposes additional burdens on foreign issuers who seek to make an IPO in Viet Nam. Issuers must have been profitable for the preceding two years. Proceeds from the IPO cannot exceed 30 per cent of total project capital. For an offer of convertible shares, there must be an undertaking by general shareholders meeting or board of management that such securities will be listed on the securities market within one year from the IPO.

Decree No 58 takes effect on September 15.

Certain commercial contractors to be subject to tax

The Ministry of Finance issued Circular No 60/2012/TT-BTC on April 12 governing the tax liability of foreign organisations or individuals doing business or having incomes in Viet Nam. Under the circular, foreign organisations or individuals selling goods in Viet Nam under the specified commercial terms must pay the foreign contractor tax. The tax also applies to foreign organisations and individuals providing goods in Viet Nam through on-the-spot import or export. The circular, which took effect on May 27, also changes the tax rates applicable to some business lines of business. It replaces Circular No 134/2008/TT-BTC of December 2008.

 Builder eyes bigger stake in fixtures maker

HCM City Infrastructure Investment Co's (CII) management board plans to increase its ownership in Lu Gia Mechanical Electric (LGC) to 80.24 per cent. The purpose of the move was to attract foreign investment in the future.

CII's director Le Quoc Binh said they had much in common that could improve operational efficiency for both sides.

CII specialises in the construction of urban infrastructure, industrial and civil engineering, while LGC specialises in manufacturing mechanical devices and electrical lighting.

"Transforming LGC into one of our subsidiaries will create benefits for both companies," he told the Dau tu Chung khoan (Securities Investment) publication.

In addition, he said the LGC share price was lower than its intrinsic value.

Excluding brand value and LGC's business contracts, its fixed assets in a Binh Duong-based factory and the Lugia Plaza Building in HCM City were worth VND500 billion (US$23.8 million).

The company's debts were modest at around VND100 billion ($4.7 million).

"At the current price, LGC is a very attractive long-term vision," Binh said.

Earlier this year, a plan to delist shares was not discussed during LGC's shareholder meeting. Instead, it planned to allow CII to buy more than a 25 per cent stake without making a public offering.

CII has now acquired a 45 per cent stake in LGC. However, Binh noted his company was merely a financial investor.

Meanwhile, a source from LGC on the condition of anonymity disclosed that Japanese investors were also interested in the company.

"CII's move may be to serve the purpose of selling a large amount of shares to foreign investors," the source said. "Divestment activities in affiliates of CII have been quite common over the past two years, so I think it could be a possibility with LGC too," they added.

Binh, who is also the Chairman of LGC, said if foreign investors wanted to invest in LGC, it was a positive sign.

He added that LGC's profits were connected to its real estate operations. However, electrical products were being tested and showed potential. "If foreign investors are interested, instead of building factories, buying shares is a smarter choice," he advocated.

 Southern province builds new markets

Ten new fresh food markets have been built in the south-eastern province of Dong Nai since 2011, and 12 others will be opened by the end of next year to improve food safety.

The total funding is US$1.1 million, which came from the national Livestock Competitiveness and Food Safety Project (LIFSAP) implemented by the Ministry of Agriculture and Rural Development with financial support from the World Bank.

In a meeting between the provincial People's Committee and the project management held yesterday, participants claimed that the markets have attracted a large number of customers.

 Illegal wolfram refinery shut

An illegally built, US$10 million Wolfram refinery, funded by the Hoang Thai Joint Stock Company, has been closed down in Quang Nghia Commune in northern Quang Ninh Province.

More than 4,000 tonnes of wolfram ore stored at the refinery for processing has been removed from the site. Authorities have demanded that the environment be restored to its original state.

Wolfram, also known as tungsten, is a chemical element used mainly in electrical applications. Its many alloys have numerous applications, most notably in incandescent light bulb filaments and X-ray tubes.

It's reported that the company bought 4.9ha of land from Nguyen Van Phat, a resident in Quang Nghia Commune, in 2011. The land was owned by the city and it was given to Phat to grow trees.

While waiting for approval to build the tungsten plant, the company carried out site clearance and built roads and houses for workers.

When this was discovered, Mong Cai City authorities immediately told the company to stop construction and investment.

The company admitted its mistake and pledged to stop its construction. However the company paid no heed.

City authorities have fined the company VND30 million ($1,400) for its illegal construction. Disciplinary measures will be taken against officials in Quang Nghia Commune, where the plant was being built – and its building inspectors and environmental staff.

The authorities have also revoked Phat's use of the land and fined him VND20 million ($960) for illegal sale of forest land.

City plans for temporary parking

The municipal Transport Department has submitted to the People's Committee a draft plan to use 119 streets in the city as temporary parking spaces.

The draft was prepared after all streets had been cleaned up under a request from the Government and the National Transport Safety Committee.

The department said demand for parking space is huge in the nation's largest city, but underground or above-the-ground parking facilities are still on paper.

Downtown HCM City has a lot of office buildings, hotels and restaurants, but most of them have very small parking spaces, it noted.

According to statistics from the Construction Department, only 14 out of 79 downtown high-rise buildings have enough space for parking. Fifty-nine others have smaller spaces and six have no parking space at all.

Nowadays, it is very hard to find parking space for motorbikes, despite the price is very high, often VND10,000, three times higher than usual.

Residents of many apartments in the city are also suffering, especially those that were built several decades ago without any parking space.

Along with the old apartments built before 1975, many others constructed recently lack parking space as well.

In District 5, there are a whopping 247 apartments without parking lot.

Residents of such apartments have to arrange for their motorbikes to be guarded for payment of monthly fees. Such arrangements come with several inconveniences, including limited time periods during which the motorbike can be left or collected.

Insiders blast new personal tax law’s long delay

The personal tax law amendment that has recently been approved by the government seems at first to be good news for tax payers, but their joy would immediately fade away when they notice the application date, which is exactly one year away.

The new law proposes to increase the personal tax threshold to VND9 million a month, up from the current VND4 million, and the deduction for dependents, defined as those whose monthly income is less than VND500,000, will also be raised from VND1.6 million to VND3.6 million a month. (VND1 million = US$48)

But it is not until July 1, 2013 that taxpayers can enjoy this tax relief.

It is because “the ministry needs time to compose relevant decrees and circulars, amend the tax calculation software, and train tax officers,” said Deputy Minister of Finance Vu Thi Mai in a press briefing Tuesday.

The explanation, however, does not please taxpayers and analysts.

“The amendment only focuses on increasing the tax threshold and dependent deduction, so it is illogical for such a small change to take a year to be implemented,” said economic expert Le Dang Doanh, former head of the Central Institute for Economic Management.

Doanh, who holds a doctorate decree, added that: “The explanation may send taxpayers into thinking that the finance ministry is trying to prolong the old tax rule as much as possible to meet their tax collection target.”

He also demanded that the norm to identify an individual as a dependent should be revised.

“The VND500,000 ceiling is totally outdated at this time of high prices,” he asserted.

Lawyer Nguyen Dang Trung, from the Ho Chi Minh City Law Association, also lodged that it is unnecessary for the new rule to be delayed for a year.

The bill is set to be submitted to the National Assembly in October, and Trung said it is well suitable to take effect as of the beginning of next year.

Amid these hard times of poor consumption, the lawyer said the tax relief will help ease the public’s burden and economic turbulence.

“If the date proposed by the finance ministry is unreasonable, the NA should intervene and set a nearer time,” he urged.

Military Bank wins ASEAN ‘Famous Brand’ award

The Vietnam Military Commercial Joint-Stock Bank (MB) received the “ASEAN Famous Brand” award at a ceremony in Vientiane, Laos, on July 28.

This prestigious award honors outstanding ASEAN enterprises, businesspeople and individuals for their contributions to the region’s prosperity, promoting cultural, socio-economic and friendly relations between ASEAN countries.

This year, 86 enterprises and businesspeople received the award, including the Vietnam MB, which won the award for the second consecutive year.

The MB is one of Vietnam ’s best and most effective banks. It takes part in numerous charitable activities and has actively integrated into the region and international economy.

Despite being its first branch to open overseas, the MB’s branch in Laos has a stable operational base, earning a before-tax profit of VND10 billion in the first six months of this year.

Currently, the MB has two overseas branches, in Laos and Cambodia.

Seafood exports hit by economic recession

The seafood sector estimates that it will earn $3.4 billion from exports in the first seven months of this year, a year on year increase of 6.5 percent.

However, this is a much lower growth rate than that in the same period of 2010, which recorded 20 percent, according to the Ministry of Agriculture and Rural Development.

Economic analysts have forecast that the sector’s export value will be nearly the same as last year, unless current obstacles are removed and the major import markets recover.

A shortage of capital for tra fish breeders and a lack of credit sources and complex administrative procedures are just some of the obstacles that hinder export activities.

The US , the EU and Japan are Vietnam ’s three key seafood markets. However, exports to the US and the EU dropped sharply at the beginning of the year.

According to the deputy head of the General Fisheries Department, Nguyen Huy Dien, to boost exports in the remaining months of this year, the ministry is proposing that the Prime Minister issues a directive to provide urgent support for aquaculture farmers and seafood exporters.

The ministry is also developing a distribution network for Vietnamese aquatic products.

In large markets such as the US, Japan and the EU, the ministry will look to sign contracts with businesses that supply to distribution centers and supermarkets. It will also set up seafood promotion centers in these markets to provide information on Vietnamese aquatic products.

Farmers distrust domestic seed, make their own

Many vegetable and flower growers have lost trust in domestic seeds, and thus have to do the job of scientists to produce seeds on their own.

The fact that farmers have to create seeds and breeders on their own is going against the development of modern cultivation production, according to experts.

But at a time when domestic seeds are of poor quality, and imported ones are only available at exorbitant prices, paving their own way is the only thing farmers can do to save themselves.

Le Van Hai, from the Central Highlands city of Da Lat, has been growing chrysanthemum over the last seven years with seeds from his own laboratory.

“I could not find an adequate source of the flower seeds,” Hai told Tuoi Tre.

“[Seeds] bought from the dealers produced wrong colors, while the flowers easily caught diseases.”

Hai then invested money to build a lab, employed four engineers, and turned himself into a “scientist,” though all of the effort was only to serve his small 2-hectare flower garden.

Hai, however, incurred an enormous VND500 million (US$24,000) loss in the first two years.

“But I didn’t give up and am striving to get back what I have lost,” he shared.

Now the scientist-farmer is confident that he has perfected custom tissue implanting.

“But I still have to depend on luck when it comes to choosing samples to make seeds,” he admitted.

The situation is not that lucky for Mai Van Khan, another farmer in Da Lat, as he cannot become a scientist like Hai.

Khan has been sourcing the seeds for his pumpkin and purple lettuce farm from a company based in Switzerland over the last 10 years, and now has to struggle to find seeds to switch to other vegetables as the supplier has ceased operation.

“Leaving the 4-hectare plot uncultivated is wasteful, but I have no choice,” he said.

Even in the animal husbandry industry, farmers too have to spend time on experimenting on, selecting, and eliminating the breeders to find the most acceptable ones.

“Many of the current high-quality pig breeders are our own work,” said Nguyen Tri Cong, chairman of the Dong Nai Animal Husbandry Association.

Vietnam has to earmark $200 million per year just to import seeds for the domestic cultivation industry, according to the Ministry of Agriculture and Rural Development.

While the country can produce seeds for tomatoes, cucumbers, bitter melon, and okra, such seeds have still been imported in large quantities.

Deflation likely to continue in second half

The falling inflation index in the first half of this year is attributed to unanticipated factors and the lack of middle and long-term strategies for stable economic growth.    

The Head of the Pricing Department under the General Statistics Office (GSO), Nguyen Duc Thang, says that over the past six months, the low purchasing power and large inventories, coupled with adjusted petrol prices and pay rises have had little impact on the consumer price index (CPI).

Economic experts put the falling inflation rate in the reviewed period down to difficulties in the national economy that resulted in lower inflation and market prices.

The Head of the Scientific Research Institution under the Ministry of Finance, Ngo Tri Long, says the trend of deflation is unsteady, adding that the continuing economic downturn and above-mentioned factors will greatly affect market prices in the remaining months of this year.

There is concern about the risk of deflation in the second half as the country’s CPI in June was at a rock-bottom level of minus 0.26 percent compared to a month earlier.

According to Vu Vinh Phu, Chairman of the Hanoi Supermarket Association, 80 percent of consumers are going to supermarkets to buy food and retail sales have dropped by 10-20 percent.

Phu says aggregate demand fell sharply in the first half of 2012 and is likely to drop further into next year.

To stimulate the public purchasing power, Phu argues, the State needs to lower the current corporate income tax rate from 25 percent to 15-18 percent for the next three to five years.

Retail consumers at supermarkets and shops across the country should also be exempt from paying 5 to 10 percent of value added tax (VAT).

To help farmers and fishermen make a profit of 20-30 percent, it is essential to set up an effective retail and wholesale distribution network to cut out unnecessary middlemen, Phu says.

The Deputy Head of the Domestic Market Department under the Ministry of Industry and Trade, Nguyen Loc An, says the production of domestic consumer goods will remain stable as there are minor fluctuations in the prices of consumer goods on the global market.

However, the recurrence of blue-ear pig disease and other difficulties in farming may lead to a shortfall in supply of foodstuffs in the remaining months of this year, but thanks to stable interest and exchange rates the prices of some essential goods are expected to increase slightly.

It is estimated that the number of domestic businesses who face bankruptcy or have to suspend operation will increase because they cannot afford high-interest loans to pay rising costs of production and taxes.

In the meantime, the prices of some essential goods such as electricity, milk, baby food and household water in major urban areas are predicted to go up in the near future.

Judging by such estimation Thang emphasizes the need to boost production, maximize the purchasing power, stabilize the macroeconomy and lower lending interest rates in tandem with the falling CPI rate.

Most economic experts are optimistic about a brighter economic picture in the second half of this year, saying that with positive developments in the macroeconomy, the purchasing power will be back on track.

Sharing this view, Phu gives a positive assessment of the banks’ liquidity, increased outstanding debts and stable exchange rates. However, he says the State should ensure adequate funding and steady credit growth to prevent a resurgence of inflation.

Business confidence returned to Vietnam in the second quarter of 2012 and many enterprises were optimistic about higher revenue in the next 12 months, according to the latest Grant Thornton International Business Report (IBR).

Business confidence plunges

The IBR is conducted quarterly through questionnaires on 3,000 entrepreneurs from many countries and territories around the world.

The report shows business optimism in the Southeast Asia region decreased from 27 percent in the first quarter to 23 percent in the second one. However, it says, Vietnam’s business optimism saw a slight increase to 8 percent from 6 percent in January-March period. The figure was 34 percent in the last three months of 2011.

According to the IBR, about 86 percent of Vietnamese businesses are optimistic about a rise in revenue in the following months, while 78 percent of them believe that they can earn a higher profit.

The Grant Thornton says despite global economic fluctuations, Southeast Asian businesses are not hesitant to increase investment for future growth. Approximately 24 percent of regional businesses plan to invest in the construction of new buildings in the next four quarters, and 39 percent will pour money in building factories and buying machines.

However, it says, Vietnam is now facing a negative impact caused by the global economic downturn, resulting in lower goods orders that poses a real challenge to further growth.

The Grant Thornton International is one of the world's leading firm providing assurance, taxation, corporate secretarial, corporate recovery and consulting services.

Vietnam, Japan jointly develop support industry

The Investment and Trade Promotion Centre and the Japan External Trade Organization (JETRO) hosted the third forum on Vietnam’s support industry in HCM City on August 1.
 
Hiroyuki Mizunoe, expert of the support industry development project under the Japan International Cooperation Agency said the promotion of local supply for Japanese companies operating in Vietnam is a top priority.

Under the project, Vietnam’s small and medium-sized enterprises will receive free assistance for between three months and a year.

As many as 29 Vietnamese businesses have so far benefited from the project, which will be carried out in 22 more firms in the near future.

JETRO statistics showed that the local supply of materials and spare parts reaches just 30 percent of Japanese companies’ need in Vietnam, lower than other countries need in the region.

The forum’s organisers announced that the fifth exhibition on supply and demand for the support industry and the Metalex – Nepcon Vietnam exhibition 2012 are due to take place in HCM City in October.

 Manufacturing index hits record low

Vietnam’s Manufacturing Purchasing Managers’ Index (PMI) dropped to 43.6 points in July from 46.6 in June, the lowest level since the first PMI survey was conducted in April 2011.
    
The figure was announced in a recent report, jointly conducted by the Hongkong and Shanghai Banking Corporation (HSBC) and the Markit Economics Company.

The July index showed a slowdown to less than 50 points for four consecutive months due to a sharp reduction in both goods orders and purchasing volume.

HSBC attributed the decline to current economic difficulties and low consumer expenditure.

Exports to China and European markets saw a decrease in the past month, forcing local producers to scale down production, reduce material imports and reduce their staff.

At present, local businesses are offering promotions to increase sales and lower inventory level.

 Retail sales see modest rebound in July

Retail sales value of goods and services in July surged 0.12 percent to US$9.10 billion, according to the General Statistics Office (GSO).

The increase, though modest, has helped lift the total retail revenue in the past seven months to US$63.22 billion. This number represents an increase of 6.8 percent from 2011, and the rate is the highest level since the beginning of this year, the GSO said.

GSO expert Vu Manh Ha attributed the rebound in domestic purchasing power to the State's influential policies, which encourage local consumption, facilitate promotion programs and bring goods to rural areas - as well as the ongoing efforts of retailers and supermarkets to slash prices, cutting items' cost as much as 70 percent.

The seven-month gain in retail trade has also had an impact on the nation's Index of Industrial Production (IIP) which rose by 4.8 percent year-on-year, with increases of 4.2 percent in the first half and 4.1 percent in the first quarter.

As of July 1, the stockpile index surged by only 20.2 percent against the same time last year, far lower than 29-35 percent recorded in the first three months and four months respectively.

However, Ha said, the index is still double what it will be in a more stable economic context.

Vietnam's total retail revenue is expected to increase by 23 percent per year between now and 2014, according to a report by AT Kearney. This means the Vietnamese retail market is offering many opportunities for both domestic and foreign retail businesses.

The report, "Vietnam Retail Market Forecast to 2014," said that modern retail channels will play a crucial role in future growth, improving their position in the market. Increasing purchasing power and changing lifestyles have been some of the key growth drivers in the country's modern retail market, it said.

The modern retail market will be the key distribution channel in Vietnam in the near future due to its huge market of nearly 90 million consumers, AT Kearney's report predicted. Vietnamese consumers' shopping habits are changing, with more spending in modern retail outlets due to consumer concerns about convenience and health issues. Many consumers said that modern retail outlets gave them good access to new products, more confidence in food safety, and clean facilities.

The country currently has 636 supermarkets, 120 commerce centres and over 1,000 convenience stores. Experts said this figure still does not meet the demand. As a result, Vietnam's retail market holds many opportunities for both foreign and domestic investors.