Global partners support Vietnam’s agriculture restructuring plan

International partners have pledged to assist Vietnam in restructuring its agricultural sector, following an action plan unveiled by Minister of Agriculture and Rural Development Cao Duc Phat in Hanoi last week, prioritising cultivation, animal husbandry and seafood.

The United Nations’ Food and Agriculture Organisation (FAO) has provided technical assistance to the ministry on the development of the scheme.

The organisation will give support on institutional reform, climate change adaptation, science and technology, the formulation of sustainable regulations on goods and services, and the implementation of effective agriculture and food systems, FAO Vietnam representative Lan Huong said.

Nguyen The Dung, a representative of the World Bank in Vietnam, said the bank is backing a “Sustainable agriculture transformation in Vietnam” (VnSAT) project.

The WB proposes that in future the project focus on rice production in the Mekong Delta and coffee in the Central Highlands, as well as enhancing the restructuring of the agriculture sector and supporting initiatives for the sustainable production of these crops.

Meanwhile, the Canadian Government has funded the implementation of a technical and policy support project to restructure agriculture in Vietnam .

The country is committed to supporting Vietnam in the field, Canadian Ambassador David Devine said, noting that incentives in agriculture, particularly in the field of advanced technology and environmental services, would attract more Canadian investors.-

Japan’s growing appetite for restaurant and food sector

The restaurant and food industry in Vietnam is a delectable – hot and juicy spot for foreign investment and has been garnering the eye of large numbers of Japanese investors.

At a recent seminar in Tokyo, Japan External Trade Organisation (JETRO) called on increased investment in the restaurant and food industry in Vietnam as well as the Southeast Asian nations of the Philippines and Indonesia.

Four of the six Vietnamese participants at the seminar – Vingroup, Golden Gate, SATRA and Takahiro Food – gave speeches at the seminar introducing the nation’s strengths, cooperative prospects and investment environment to potential Japanese partners.

They touted their advantages over other investment opportunities in the region for which they proclaimed the restaurant and food industry is the key for Japanese investors to penetrate the Vietnam retail market.

Shopping centres are springing up like mushrooms throughout the nation and provide investors in this sector exponential opportunity for growth and profits, they said.

JETRO representatives spoke glowingly of the highly qualified and skilled labour force in Vietnam and the potential for cooperation between Vietnamese and Japanese businesses.

Vingroup’s retail chains and Golden Gate’s chains of restaurants across the country like Kichikichi, SumoBBQ, Ba Con Cuu and Vuvuzela are prime examples of the success businesses are having in Vietnam, they said.

SATRA trumpeted its strength in food processing, services, import-export and investment development while Takahiro Food ballyhooed its achievements in restaurants and Japanese cuisines.

Overseas remittances to HCM City hit nearly US$2.8 billion

Overseas remittances to Ho Chi Minh City are estimated at US$ 2.75 billion during the first eight months of 2014, a year-on-year increase of 6.2%.

In August alone, around US$333 million was sent to the City, a two-fold increase over a month earlier, ,according to Nguyen Hoang Minh, Deputy Director of the HCM City-based State Bank of Vietnam (SBV) branch.

The city expects to receive this year’s total overseas remittances of around US$4.8-US$5 billion higher than the 2013 figure of US$3.8 billion.

Vietnamese remittances have still consistently increased despite low dollar interest rates and an increase in the VND/USD interbank exchange rate by 1% in mid June.

Binh Duong likely to achieve 2014 export goal

The southern province of Binh Duong is likely to achieve its export target for 2014 of nearly 17 billion USD, up 16.5 percent from that of 2013.

According to the provincial Department of Industry and Trade, in the first eight months of this year, Binh Duong earned nearly 9.4 billion USD in export revenue, a year-on-year rise of 13.3 percent. The foreign-invested sector contributed 7.9 billion USD to the figure.

In August alone, the locality earned an estimated 1.37 billion USD from exports, up 5.4 percent against the previous month.

Head of the Binh Duong Association for Exporters Pham Van Xo said that the province’s main exports, such as wood products, garment and textiles and footwear, still maintained the growing trend.

From now till the end of this year, Binh Duong will focus on helping businesses overcome difficulties, speeding up trade promotion activities in order to expand its export markets, and attracting more investment in developing support industry to reduce the import of materials.-

Free trade pacts’ effects on employment under spotlight

Vietnam will face remarkable challenges in terms of employment, labour relations and trade union activities when the country joins the Trans-Pacific Partnership Agreement (TPP) and the Vietnam-EU Free Trade Agreement (EVFTA), experts said.

At a seminar in Ho Chi Minh City on August 29, Vu Quang Tho, Director of the Vietnam General Federation of Labour (VGCL)’s Institute of Worker and Trade Union, said those free trade pacts contain many non-trade regulations which require participating countries to adjust their policies and laws on labour and trade union.

Participants agreed that the agreements will have a comprehensive impact on all sectors and economic activities.

Le Thanh Thuy from the Vietnam Chamber of Commerce and Industry in HCM City said while these agreements will greatly benefit Vietnam by generating more jobs, improving the quality of human resources and promting businesses to participate in environmental protection, the unemployment rate may rise because many small enterprises with weak competitiveness will be forced to dissolve.

In addition, the pacts will facilitate the flow of labourers among countries, which will bring fierce competition to the local workforce, she said.

Delegates recommended that employment centres should enhance their capacity and serve as a bridge to provide useful information to employees and employers.

At the same time, they emphasised the need to establish a forecast centre for human resources and labour market, making it possible for businesses to devise their operation strategies.-

First double-shell petrol tank installed in Hanoi

The trial installation of a double-shell petrol tank, the first in Vietnam, began in the capital on August 28, paving the way for applying the new technology to filling stations nationwide.

The technology has been used widely in the world, especially in Japan, Vice Director General of the Vietnam National Petroleum Group (Petrolimex) Vuong Thai Dung said, adding that the double-shell steel tank is able to curb the possible leakage of hazardous agents and guarantee safety.

The tank was made by Petrolimex’s construction company No. 1 using technology transferred by Japan’s Tamada industrial company.

Vietnam uses mostly single-hull steel petrol tanks that pose risk of leakage and environmental pollution.

Chikahiro Masuda, Assistant Resident Representative of the Japan International Cooperation Agency (JICA) suggested Vietnam come up with legal frameworks to spread the technology across the country.

The second tank of this kind will be installed Ho Chi Minh City.

Nghe An pursues international economic integration

The central province of Nghe An is expanding external economic relations in a bid to make full use of all resources for fast and sustainable economic development.

On one hand, the province continues to reinforce ties with its traditional partners in Laos, RoK, France and Russia. Nghe An has long maintained good relations with Xiangkhouang, Bolikhamsay, Khammounne, Vientiane and Savannakhet provinces of Laos, Gyeonggi in the Republic of Korea (RoK), Cotes d’Armor province and Tours city in France, and Ulyanovsk in Russia.

On the other hand, Nghe An is seeking out new partners for trade, investment, and culture exchange, particularly localities in Japan, Australia, Indian, EU countries, Canada and the US, through the assistance of Vietnamese representative agencies abroad and foreign representative agencies in Vietnam.

At the same time, the province devotes its resources to develop local key economic zones, including the Southeast economic zone, and the coastal areas, while making endeavours to access loans from the World Bank (WB), the International Monetary Fund (IMF) and the Asian Development Bank (ADB).

In August alone, Nghe An has sent delegations to Laos, Thailand and Japan to promote investment, and also received hundreds of delegations of these countries who came to study business and investment opportunities.

By the end of 2013, the province was home to 39 foreign direct investment (FDI) projects with combined pledged capital of 1.49 billion USD.

However, several problems are hindering the northern central province’s efforts to promote international economic integration, particularly the low competitiveness of local enterprises and poor skills of external affairs officials.

Gia Lai attractive to investors

More investors are finding the Central Highland province of Gia Lai an attractive destination not only for its investment incentives but also the locality’s advantage in land, mineral resources and labour.

Since the beginning of 2014, the province has licensed 10 projects with a total registered capital of 1.3 trillion VND (62 million USD), which include two factories processing cassava, a power plant fired by sugarcane bagasse, and a pepper processing factory.

Nine investors have also applied for a licence for their investment schemes in the locality while two others asked to expand their existing investment. If approved, these investors will pump a total of nearly 16.5 trillion VND (775 million USD) in the province.

Besides general incentives in line with national rules, Gia Lai authorities have adopted a number of local measures to facilitate business operation. The province has been building infrastructure such as power and water supply networks as well as roads to designated industrial zones (IZs), tourism sites and border gate economic zones (EZs). Investors will also benefit from support in terms of research or attending technology and trade fairs.

Gia Lai sits in the Central Highland intersection connecting with the central coastal area. The province is rich in land and minerals, boasting more than 100,000 ha of land under rubber, nearly 80,000 ha and 10,000 ha for coffee and pepper.

Reforms key to Can Tho IZ success

In addition to its advantages in geography, raw material resources and skilled workforce, leaders of the Can Tho Municipal Export Processing and Industrial Zone Management Authority have gone to great lengths to make the city as attractive as possible to investors.

Therefore, in order to create the most optimal conditions the authority has developed an open investment climate and has gone to great lengths to simplify administrative procedures within the city’s export processing zones and industrial parks (IPs).

Back in 2007, the Can Tho Municipal Export Processing and Industrial Zone Management Authority (CEPIZA) chief Vo Thanh Hung founded a steering committee for the implementation of global quality management standards ISO 9001-2000 to tackle the diverse range of administrative procedures handled by CEPIZA.

The committee is operating a quality management system that follows Vietnamese standards ISO 9001:2008 and tackles these administrative procedures on site at CEPIZA. A specific section was established for receiving and delivering results under CEPIZA management, which vastly improved efficiency at the city’s IPs. This went a long way towards creating a modern, one-stop shop state administration mechanism.

According to CEPIZA’s deputy head Huynh Viet Dung, reforms in administrative procedures have brought many practical benefits, including huge savings in both time and costs.

Many requested certificates and investors’ documents are now processed three to five days earlier than the regulated time, with certain investor certificates processed after only one day.

Last year, CEPIZA’s section in charge of processing investors’ documents received 387 files across 32 different administrative procedures. Of this number, 134 files were delivered ahead of time, accounting for 34.6 per cent, while the remaining 253 files were completed on time, accounting for the remaining 65.4 per cent. No records were delivered behind schedule.

Nguyen Van Thoi, head of the administrative department at Dai Phong Wheat Flour Company Limited, came to CEPIZA to source a revised investment certificate to expand the company’s existing flour mill in the city’s Tra Noc IP.

“With active support from CEPIZA staff, our company was given a revised investment certificate after only three days, compared to 15 days as regulated. I was really happy with the polite attitude of the staff there,” he said.

At present, 28 different types of administrative procedures are processed directly at CEPIZA, belonging to eight discrete areas: environment, goods circulation, investment, foreign employment, occupational safety, construction, construction planning, and business start-up and development.

These procedures are fully listed at CEPIZA’s one-stop shop or on its website. Throughout its years of operation, the administrative mechanism at CEPIZA has been constantly improved in conjunction with staff capabilities.

Besides helping investors to complete procedures quickly, CEPIZA frequently hosts meetings with businesses based in the city’s IPs to listen to any production or trade issues they may be having, and from there finding a timely and effective solution to the problem.

CEPIZA’s efforts to promote administrative procedural reforms have garnered rewards not just for the individual businesses, but for the authority and the city as well.

To date, the city’s export processing zones and IPs are home to 213 on-going projects covering 564.9 hectares of industrial land with the total committed capital of $1.9 billion. Disbursed capital accounts for 44.4 per cent of this, at $849.2 million.

Within the city’s IPs, there are 190 domestic investment projects worth $1.709 billion in the total committed capital and realised capital of $677.3 million. There are also 23 foreign invested projects worth $203.5 million in the total registered capital and realised capital of around $172 million.

In terms of industrial land occupancy rate, Can Tho’s IPs took the lead among locations in the Mekong Delta region with Tra Noc 1 IP fully leased by investors and Tra Noc 2 IP reporting an occupancy rate of nearly 90 per cent.

 Government praises businesses for cost savings

Deputy Prime Minister Vu Van Ninh on Monday sent a dispatch praising some ministries and state-owned economic groups and corporations for well implementing the Prime Minister’s instruction on management cost saving and cost price reduction in 2013.

Vietnam Airlines is one of the companies that were praised for cost savings by the Government.

The commended Ministries include Finance, Industry and Trade, National Defense, Transport and Construction.

The mobile network operator Viettel Group, the Vietnam National Oil and Gas Group, the Vietnam National Chemical Group, the national flag carrier Vietnam Airlines, the Vietnam Cement Industry Corporation, and the State Capital Investment Corporation were praised for their achievements in the program.

Deputy Prime Minister Ninh instructed the groups and corporations to take the initiative in building annual production and trading plans and cost saving measures from now on. They will have to report their results by year-end.

Economists support PM's speech on closing weak banks

Many banking experts have expressed agreement with Prime Minister Nguyen Tan Dung's assertion that weak banks should be dissolved.

At the regular government meeting, held from August 27 to 28, Prime Minister Nguyen Tan Dung asked agencies to deal with bad debt during this time of bank restructuring. He said, "Weak banks must be strictly monitored and shut down if necessary."

In June, the National Assembly gave its consent to the new banking bankruptcy policy. From January 2015, credit institutions will be able to file for bankruptcy. If an insolvent facility does not file for bankruptcy on its own, the State Bank of Vietnam will file for bankruptcy on behalf of that facility. Those which have taken out special loans from the state bank will have to pay their debts before distributing assets and paying salaries and insurance to employees.

One banking expert said that this is a strong message to bank shareholders, meant to urge them to quicken the restructuring process. Many banks have tried to improve their operations by making new development plans and offering more credit services. However, some banks have been slow to reform, some still operate with negative charter capital due to the heavy load of bad debt. He said, "The state bank has been supporting the banking system, but the state cannot subsidise a weak system forever."

The leader of a commercial bank in Hanoi said, "Bankruptcy of institutions in the financial sector is not necessarily a bad thing. It could serve as a warning to other banks. I think Vietnam has too many small banks and most of them are performing poorly." He went on to say that the true value of a bank does not lie in virtual profits or adventurous loans, but in the benefits for its shareholders and customers.

Keith Pogson, the head of Asia-Pacific Financial Services, Ernst & Young, agreed that Vietnam should dissolve its 'zombie banks'.

Dragon fruit prices skyrocket in crop end

Dragon fruit prices have rocketed up after drastically falling at the end of the main crop in the fruit farming Binh Thuan Province in the south central region.

The prices have increased five times over last month to reach VND16,000-17,000 a kilogram of best dragon fruits, said Mr. Pham Huu Thu from the province’s Department of Agriculture and Rural Development on September 1.

Normal kind fetches VND5,000-7,000, up from only VND1,000 a month ago, he said.

The main dragon fruit season is going to end. Farmers now prepare for an unseasonal crop which will bear fruits two months later.

 Textile, garment achieves record export turnover

Textile and garment exports hit a record high $2.16 billion in August, taking the total to $13.6 billion in the first eight months this year, reported the Vietnam Textile and Garment Association.

The eight month number was a year on year increase of 20 percent. In July, the export turnover hit US$2.14 billion.

This year, the textile and garment export is targeted at 12 percent growth rate and expected to exceed US$20 billion turnover this year.

The textile and garment exports have strongly grown thanks to opportunities from the under-negotiation Trans-Pacific Partnership and Vietnam - EU Free Trade Agreement, according to the association.

Increase in luxury goods imports means bigger income gap

Even though Vietnam’s economy has yet to show any clear signs of a stable recovery, consumption of luxury goods has significantly increased in recent months.

According to the latest statistics from the Ministry of Industry and Trade, luxury imports have been on the rise, reaching USD3.77 billion in the first eight months of this year, up 8.75% compared to a month earlier and up 12% from the same period last year.

In the first seven months of 2014, the value of gem imports reached USD348.61 million, up 30% on-year.

Completed auto imports reached 6,000 in August, valued at USD120 million. This is triple against the same period last year. The figure brought the number of car imports to 37,000 valued at USD800 million, during the first eight months of this year, up nearly 72% on-year in volume and up 91% on-year in value.

A survey conducted at car showrooms in Hanoi found that car sales at Toyota Phap Van were up over 10% per month; Toyota Thang Long and Toyot My Dinh were up over 15%.

According to those inside this business circle, despite the slow sales of ordinary goods, sales of luxury goods, such as Charles and Keith, Louis Vuitton, and Gucci, are thriving.

Trade expert Pham Tat Thang said that imports of luxury products account for only from 4% to 5% of the country’s total imports.

“This is a paradox. The country is trying to earn every cent of foreign currency by exporting crude materials, but still spends billions of USD on importing luxury products. It will be necessary to take more drastic measures to curb these imports,” Thanh emphasised.

Increasing demand for luxury products in the domestic market shows that purchasing power still resides in the hands of the upper classes. Many economists have commented that it also shows a lack of investment channels.

“The increase in demand for luxury products amid unchanged or even lower average incomes this society shows that the income gap is increasing,” said Dr. Luu Ho Bich, former director of the Development Strategy Institute.

Vietnam attends APEC Energy Ministerial Meeting

Deputy Minister of Industry and Trade Cao Quoc Hung delivered a speech at the 11th Asia-Pacific Economic Cooperation (APEC) Energy Ministerial Meeting held in Beijing, China, on September 2.

Hung shared Vietnam’s experience in implementing the Law on Energy Efficiency and Conservation, and the National Target Programme on Energy Efficiency and Conservation in particular.

As part of the programme, Vietnam has focused on raising public awareness on energy saving, intensifying the application of new technology, setting up an energy management system, and providing technical assistance for industries with high energy consumption, such as steel, cement and fertilizer manufacturing, he said.

The meeting passed a joint statement in which ministers expressed their support for a general future course of action for the sector.

The APEC economies agreed to work together to diversify energy supply, strengthen cooperation to develop liquefied natural gas (LNG), and increase the ratio of renewable energy sources.

They also reached a consensus on the continuation of the “APEC low carbon town” concept, and called for more collaboration in the development of non-traditional oil and gas sources.

The ministers pledged to support freedom of navigation via the region’s major energy transportation routes, and to strengthen cooperation and the exchange of information with the International Energy Agency.

This year’s meeting brought together 29 delegations from 21 APEC member economies and international organisations.

PM backs VAT exemption for animal feed

The Prime Minister is supporting the proposal of the Ministry of Finance to include animal feed in the list of products exempted from value added tax (VAT) payment.

The Prime Minister told the ministry to submit for review and approval the proposal at the Eighth Session of the 13th National Assembly due late this year.

A 5% VAT rate is currently being imposed on animal feed. The proposed exemption aims to stabilise the price of feed in the domestic market and benefit the farmers, who have had to deal with diseases, declining consumption and other difficulties in breeding farm animals in recent years.

The farmers' situation further worsened following the increase in feed prices last year. The Department of Livestock Production attributed the increase to the country's dependence on imported raw materials for production and foreign producers' domination of the industry.

Figures from the Ministry of Agriculture and Rural Development (MARD) showed that Vietnam has 58 animal feed producers with more than 200 feed production plants. Foreign animal feed producers make up one-third of the total and account for around 65% to 70% of the market.

According to Nguyen Dang Vang, President of the Vietnam Husbandry Association, a VAT exemption for animal feeds is good news for farmers, who expect the price of animal feed to fall.

To further boost breeding and aquaculture and ensure that Government support reaches the farmers, the Ministry of Finance has been asked to help the Ministry of Agriculture and Rural Development and other concerned authorities in tightening management of the pricing of imported and locally-produced animal feed, as well as quality standards for and measures to protect local animal feed production.

Regarding tax policies on agricultural inputs such as fertilisers, pesticides and veterinary medicine, the Prime Minister ordered concerned ministries to formulate policies that conform with the Government's agricultural development and taxation system reform strategies for 2011-2020.

SOEs slow to withdraw from non-core businesses

For the last three years, most State-owned enterprises (SOEs) have had stable operations with acceptable profits, but capital withdrawal from their non-core businesses contiues to be sluggish.

The HCM City People's Committee reported that the city has 108 enterprises which are fully owned by the State.

During the 2011-13 period, SOEs had an annual total turnover of VND121.5 trillion (US$6 billion) and annual profits totalled VND2 trillion ($98 million).

"State-owned enterprises have reformed their technologies; improved their models and quality; increased skills and capacity for human resources; and saved expenditures for meetings, working abroad, guests' welcome parties; and usage of electricity, water and telephone," Le Thi Huynh Mai, deputy director of the municipal Planning and Investment Department, was quoted as saying in the Thoi bao Kinh te Viet Nam (Viet Nam Economic Times).

State-owned enterprises were recognised as effectively using capital and assets, especially for enterprises in transport, trade, tourism, services, gold and precious stones.

In addition, these enterprises had significantly contributed to the State budget; implemented investment for important projects; served the city's long-term socio-economic strategies; and contributed to the city's shift to biotechnology, high-tech agriculture, food processing, manufacturing and engineering.

To implement the State-owned enterprise re-structuring project, with focus on State corporations and groups during the 2011-15 period, 17 corporations and groups have set up re-structuring projects and 14 of them have been approved.

Another 29 State-owned enterprises will be equitised this year and in 2015, and equitisation plans for three of them were approved.

"The slow process of equitisation was due to resolving current problems on finances, land, workshops and other assets," Mai added.

Furthermore, time for restructuring has been short, and enterprises must spend their resources for the time ahead.

At the same time, corporations and groups have listed their investments in non-core businesses and their plans to withdraw capital from those businesses.

However, progress of capital withdrawal from non-core businesses has been very slow.

During the 2011-13 period, 14 corporations and groups have withdrawn VND30.2 billion ($1.5 million) from non-core businesses.

In 2014, it is expected around VND1.5 trillion ($70 million) will be withdrawn.

The problem is the difficulty in finding buyers, especially in a time of continuing economic downturn.

"The enterprises which haven't listed on the stock exchange will face more difficulties in seeking partners to transfer their shares," Mai added.

Tea exports plunge on quality issues

Vietnamese tea exports fell but its average market price rose in the first eight months of 2014, based on figures from the Ministry of Agriculture and Rural Development (MARD).

The Thoi bao Kinh doanh newspaper quoted figures from the ministry showing that Viet Nam experienced a 6.9-per cent year-on-year plunge in the export volume of tea to 83,000 tonnes, and a 1.4-per cent year-on-year drop in the export value of the crop to US$139 million.

According to the ministry, Viet Nam's tea exports in August reached 11,000 tonnes and was sold for $20 million. Meanwhile, the average export price in the first seven months rose by 5.8 per cent to $1,655 per tonne compared with that of the same period of last year, because of high demand in the world market.

Pakistan was the largest export market, with a 60.32 per cent increase in volume and 92.43 per cent increase in value for the first seven months. Kuwait was the export market with the highest growth rate in volume, at 70.6 per cent for the first seven months.

But the number of export markets fell, from 77 countries and territories to 61. The European Union, usually the market with the highest export value, fell off the list of the top 10 importers of Vietnamese tea. This was largely attributed to inconsistency in the quality of Vietnamese tea, with 70 per cent of production coming from small households.

The agriculture ministry noted that only a few large tea companies had invested in developing regions that supply raw material for tea processing facilities.

Viet Nam has 455 tea processing facilities with a total capacity of 400,000-500,000 tonnes of dried tea per year, but only five per cent of them have regions supplying the tea for them. As a result, the industry could only produce 185,000-200,000 tonnes of dried tea for processing, and lack material for processing the tea for export, said Vitas.

The association is asking provincial authorities to inspect tea processing factories in their respective areas and revoke the licences of those that fail to meet the MARD's standards.

The association has also proposed the setting up of a national coordination committee that would restructure the tea industry with the cooperation of concerned sectors and provinces. The proposed committee includes the MARD; ministries of Planning and Investment and Industry and Trade; and Vitas.

Viet Nam expects to earn $245 million from tea exports for the entire year, said the association.

Trade with Brazil surpasses $1.7b on export growth

Bilateral trade between Viet Nam and Brazil reached more than US$1.74 billion in the past seven months, with $770.3 million coming from Vietnamese exports.

Figures from the Vietnamese Trade Office in Brazil also showed that the country's exports to the market increased by 29.4 per cent year-on-year while imports increased by 41.4 per cent year-on-year.

Exports showing high growth included fibres, which increased by 112 per cent, along with mobile phones and components by 100 per cent; garments by 45.2 per cent; handbags, suitcases, hats and umbrellas by 43 per cent; and bamboo products by 40 per cent. Also in the list were means of transportation, which increased by 26 per cent, and seafood by 19.4 per cent.

The Voice of Viet Nam (VOV) quoted representatives of the office as saying they were co-operating with local authorities in accelerating trade promotion while assisting Vietnamese companies to boost their exports to the market to reach the $3 billion bilateral trade goal set for this year.

The representatives also urged Vietnamese enterprises to immediately take full advantage of opportunities in Brazil, the world's seventh largest economy, with a population of more than 200 million.

According to them, top priority should be given to increasing trade promotion and showcasing products at international trade fairs and exhibitions, especially at the Sao Paulo Economic Centre. This will enable the companies to penetrate further into this lucrative market, establish partnerships and gain access to other markets in South America.

In 2013, bilateral trade between Viet Nam and Brazil jumped 42.3 per cent year-on-year to reach a record $2.33 billion. This enabled Brazil to maintain its position as the country's largest Latin American trade partner.

EVN purse strings tightened

The Prime Minister has issued Decree 82/2014/ND-CP on the financial management of Vietnam Electricity (EVN).

The Decree, issued on August 25, stipulates that EVN's capital for business activities includes funding from the Government, other investments and funds.

The corporation will have to abide by strict capital management standards and must report any losses, unmet payments or misconduct to the Ministry of Finance (MoF).

EVN will be allowed to raise capital from domestic or overseas sources, whilst being held responsible for the efficient use of capital, loan repayments and interests to creditors.

Under the new rules, the company's liability-over-equity ratio must not be more than 300 per cent, including guaranteed loans by EVN-invested enterprises.

The corporation can raise capital through issuing bonds, bills and debentures; or incurring loans. It can also mobilize unused capital from subsidiaries whose charter capital is wholly owned by EVN, and they cannot purchase shares in EVN units following their equitisation.

The corporation will need be required to get permission from shareholders to borrow funds, while interest rates are not permitted to exceed the market rate.

The Decree also says that EVN can invest its capital in the businesses defined by its operation and organization charter.

External investments must comply with the law and guarantee the efficient development of capital, increase earnings and be consistent with EVN's stated targets.

EVN is forbidden from making investments and financial contributions in a number of fields, including real-estate projects, bank shares, insurance companies, securities companies or securities investment funds.

The corporation is also not allowed to take investments from subsidiaries and secondary enterprise subsidiaries.

HCM City to host international franchise expo

The International Franchise and Business Opportunities trade show will be held for the first time in Viet Nam to showcase and introduce opportunities in the country and create opportunities for more international brands to gain a foothold here.

The IFBO, to be held from September 4 to 6 at HCM City's Tan Binh Convention and Exhibition Centre, also aims to provide a facilitative environment for Vietnamese franchise players to network and forge business partnerships with their international counterparts.

US restaurant chain Subway, Manhattan Pizza of Singapore, and Chicken Rice Shop of Malaysia will be among 70 companies from 11 countries and territories at the event.

Winston Lim, director of Singapore-based Bizlink Exhibition Services, the exhibition organiser, said most are coming for the first time, looking for Vietnamese franchisees.

Before deciding to attend, they had done surveys to get information and gauge the market, he said.

Food and beverage chains make up the largest number.

The education and training sector will feature entities like Adam Khoo Center and SoulKids of Singapore, List Premier Education of Australia, ActionCOACH of the US, and Q-dess and Brainchecker Global Group of Malaysia.

Other sectors with a substantial presence will be fashion and technology. Lim said franchise deals in these sectors are more likely to achieve success in the Vietnamese market because of its large and young population which is willing to explore new products and services.

With Viet Nam showing renewed signs of high growth, franchising is set to blossom in the country with more international firms coming to explore opportunities, he said.

Ho Khai Weng, franchise sales manager (Asia) at Subway Systems Singapore, said his company is impressed by the positive signs in Viet Nam and wants to franchise in the country.

The exhibition will be organised jointly with the VCCI Trade and Service One Member Company Limited.

Price-stabilised goods to get new logo

All goods sold under HCM City's price stabilisation programme will be labelled with a new logo by the end of December, the city's Department of Industry and Trade has said.

Le Ngoc Dao, the department's deputy director, said the logo would help customers recognise price stabilised goods more easily.

The department will work with agencies and certain newspapers to raise public awareness about the logo, she added.

Sixty-eight companies and eight commercial banks are taking part in the price stabilisation programme this year, which runs from April to the end of March in 2015, she said.

Eight firms from An Giang and Dong Thap provinces have joined the programme for the first time.

The municipal government did not provide fund to support businesses joining the price stabilisation programme, but eight banks taking part in the programme are offering low interest rates on loans to participating companies, Dao said.

Banks have signed agreement to provide total loans of VND8.3 trillion (US$392.99 million) to businesses in the programme, a figure four times higher than last year, she said.

The annual interest rates are 5.5-6 per cent for short-term loans and 7-10 per cent for medium- and long-term loans.

Under the programme, four essential groups, including food and foodstuff, milk, medicine and school supplies, are offered at prices 5-10 per cent lower than market prices, Dao said.

Initiated in 2002, the programme has 8,479 shops selling price-stabilised goods in the city, including in outlying areas and in industrial parks.

Hanosimex to invest $5m in Vinatex operations

The Ha Noi Textile Garment Company (Hanosimex) said it would spend VND111 billion (US$5.2 million) to expand activities in Vinatex Hong Linh in the central province of Ha Tinh.

The money will be used to buy equipment to enhance production capacity and increase fibre ouput from 3,600 to 5,400 tonnes per year.

The move is part of the company's investment plan for the 2014-15 period.

Banks iron out post-merger teething issues

The new Saigon Commercial Bank (SCB), formed by its 2012 merger with two other joint stock banks, Viet Nam Tin Nghia and De Nhat, is turning things around after a difficult start.

The merger between three lenders, all of them considered weak, was the first of its kind in Viet Nam and helped the new entity expand its network and market share, improve financial capacity, and reduce costs.

But it ran into severe liquidity and bad debt problems.

A restructuring programme began soon after the integration with support from the central bank and shareholders to bolster its financial capacity and resolve the bad debts.

Things have improved, with deposits growing by 88 per cent last year. The bank has sold VND6 trillion (US$285 million) worth of bad debts to the Vietnam Asset Management Company (VAMC).

Last year it increased its legal capital by VND1.711 trillion ($81.4 million) to VND12 trillion ($571million) and a further increase of VND2 trillion ($95.2 million) is expected this year.

Its bad debts are expected to fall bellow the 3 per cent safe level regulated by the State Bank of Viet Nam, and it hopes to double gross profit to VND121 billion ($5.76 million).

Around the same time TP Bank was acquired by Doji Gold and Gems Group. Its legal capital was increased to VND5.55 trillion($264 million) from VND3 trillion ($143 million), retail deposits and credit growth doubled, and bad debts fell to 2.7 per cent from 6.4 per cent.

Last year HDBank merged with DaiABank and then acquired French group Societe Generale's SGVF financial company. This resulted in a network of over 200 branches and transaction offices besides 1,200 branches of HDFinance. Last year HDBank mobilised deposits of VND76.3 trillion ($3.6 billion) for an annual growth of 26 per cent while its outstanding loans were up 34 per cent at VND44 trillion (over $2 billion). Its return on equity was 5.66 per cent, which it hopes to increase to 9.52 percent.

Saigon – Hanoi Bank (SHB), which merged with Habubank in 2012, targets a 27 per cent growth in pre-tax profits this year to VND1.27 trillion, and expects to trim bad debt to 3 per cent.

Chairman Do Quang Hien said there are plans to increase legal capital from the current VND8.866 trillion to more than VND11 trillion before year-end to fund expansion by issuing shares to existing shareholders.

The bank also plans to boost retail banking activities and improve risk management and human-resource development to ensure growth.

Bad debts however remain a challenge to all these banks. SCB general director Vo Tan Hoang Van said his bank has managed to collect only VND200 billion ($9.5 million) out of VND6 trillion (US$285 million) worth debts that went bad.

Thouh much of the loans are backed by mortgages, it is not easy to liquidate them in this economy, he said.

By early in this quarter the VAMC had bought bad debts worth VND50 trillion from banks, which have registered to sell VND70 trillion this year.

The VAMC is in the process of reselling the debts it acquired to foreign institutions. But transparency related to the debts and the legal framework are among the issues buyers have reportedly brought up.

According to central bank deputy governor Dang Thanh Binh, several more M&A proposals are under consideration and should be wrapped up this year.

Nguyen Thuy Duong, partner in charge of financial and banking services at auditing and consulting firm Ernst&Young had said in the Vietnam Investment Review recently that before embarking on M&A deals banks should do due diligence, assessing the target bank to help the valuation and studying its development strategies to ensure synergies.

Transport projects begin to take shape in Mekong Delta

The Ministry of Transport broke ground for three transportation projects in the Mekong province of Kien Giang and Can Tho city on Saturday.

They are a 65.3km section of the Ho Chi Minh Highway from Ben Nhat to Go Quao, upgrade of National Highway No 61 between Cai Tu and Go Quao, and the Rach Soi, Ton Chat, and Doc Dinh bridges on National Highway No 80.

According to the ministry, the Ben Nhat-Go Quao section is part of the highway between Rach Soi and Vinh Thuan. The work includes 12 large, 14 medium, and two small sized bridges, and will cost over VND4.26 trillion (over US$200 million).

The upgrade of the 14km section on National Highway No 61 will cost around VND471 billion ($21.2 million).

The two projects will use funds raised by issuing Government bonds.

Construction of the three bridges on National Highway No 80 is part of a project to upgrade 44 weak bridges across the country at a cost of VND4.11 trillion ($194 million).

Speaking at the groundbreaking, Deputy Minister of Transport Nguyen Van The said the three projects were important for the development of the Can Tho-Kien Giang-Ca Mau Economic Triangle.

When completed, the highways and bridges would help connect the Ho Chi Minh Highway with the highways 1A, 61, 63, and 80 and the coastal road, creating an uninterrupted road system in the region, he added.

Vietnam attends BEXASIA expo in Singapore

Representatives from nearly ten Vietnamese companies along with 10,000 participants of 400 firms from 35 countries around the world are attending the 7thBuild Eco Xpo (BEXASIA) taking place in Singapore from September 1-3.

The expo is generally considered a leading business forum in the region for construction material producers, construction bidders and designers. This year’s event features the latest in environmentally friendly materials and green building technology.

The organizing board announced more than 300 business meetings are scheduled during the three-day event along with many seminars and conferences on eco-construction, technical solutions and advanced technology in construction.

Louise Chua, BEX Asia project director, said she welcomes Vietnamese businesses to the event and expressed her hope that participating businesses can share experience in developmental trends of eco-construction which can benefit Vietnam.

Meanwhile, Nguyen Viet Chi, Trade Counsellor to Singapore, said construction materials, particularly float glass and stone sand, are key products Vietnam exports to Singapore.

The event provides Vietnamese businesses an opportunity to locate cooperation partners and expand exports, in addition to learning of the latest technologies in the industry.

In the first seven months of the year, Vietnam grossed around US$200 million in revenue from exporting the products to the market, Chi said.

Many Singaporean companies attending the event have also expressed a keen interest in the real estate market in Vietnam, Chi said.

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