Ho Chi Minh City attracts over 3.1 billion USD in FDI

Ho Chi Minh City, the largest southern economic hub, has attracted 3.15 billion USD in foreign direct investment (FDI) in the first 11 months of this year, the Dau Tu (Investment) newspaper said, quoting a report from the city’s People’s Committee.

The figure represented an increase of 95.3 percent compared with the same period last year.

The city licensed 370 new FDI projects with a total investment capital of 2.78 billion USD in the period, down 10.2 percent in terms of projects but up 194.6 percent in capital year on year.

Samsung group’s Samsung CE Complex project alone has an investment capital of 1.4 billion USD, accounting for 50.4 percent of the total newly-registered capital.

Meanwhile, an additional 365 million USD was poured into 123 existing projects, dropping 45.4 percent on a yearly basis.

HCM City to need 265,000 workers in 2015

Ho Chi Minh City-based businesses will recruit 265,000 workers next year, according to the municipal Centre for Manpower Need and Labour Market Forecast.

The recruitment demand will be seen in the fields of trade, services, health care, tourism, insurance, finance-banking, mechanical engineering, construction, information technology, electronics and electricity.

Deputy Director of the centre Tran Anh Tuan stressed the need for workers to enhance soft skills and foreign languages to meet requirements of the integration process.

According to the centre, in 2014, the city’s labour market has seen a stable growth and a reduction in job changing rate.

The city has also witnessed a severe competition between new graduates and experienced workers, who accounted for 85 percent of the total job seekers.

According to the municipal Department of Labour, Invalids and Social Affairs, HCM City has so far this year created 290,000 jobs, including 121,381 new ones. The local unemployment rate in October was 4.67 percent.

HCM City hosts international trade fairs

Manufacturers, traders, investors and visitors were eager to visit three big international trade fairs which opened at Saigon Exhibition and Convention Centre (SECC) on December 3.

VIETNAM EXPO 2014 has drawn the participation of over 420 businesses from countries and territories like France, China, Sweden, Korea, India, Malaysia to showcase their latest products at 450 booths.

VIETNAM EXPO, an annual fair, has become one of the most important promotion trade events to boost trade among enterprises, producers and domestic and foreign investors, especially in Asia.

Meanwhile, touring bicycles, hybrid bicycles, electric bicycles and bicycle accessories with various brands are also on display at the INTERCYCLE VIETNAM 2014 with the participations of popular brand names such as Thong Nhat, Fonix, Sun Electric, Vietbike and renowned foreign brands.

Over 50 Turkish enterprises and groups from diverse sectors including machines, agricultural products, building materials, and garments showcased their products at the first Turkish Products Expo in Vietnam at SECC.

The 12th Vietnam International Trade Fair (VIETNAM EXPO 2014), Vietnam International Bicycle Exhibition 2014 (INTERCYCLE VIETNAM 2014) and Turkish Products Expo will run until December 6.

WB reports early signs of Vietnam's economic recovery

The World Bank said on December 3 that there were early signs of recovery for Vietnam's economy, with its economic growth expected to improve from 5.4 percent in 2013 to 5.6 percent in 2014.

According to the WB’s new report issued on December 3, the country’s GDP expanded by 6.2 percent in the third quarter and 5.6 percent in the first nine months of this year, which are early signs of the country’s economic recovery.

The bank attributed the positive outlook to the country’s ongoing macroeconomic stability and continued strong performance of the foreign-invested manufacturing export sector.

It noted that positive macroeconomic conditions contributed to Vietnam’s improved sovereign risk ratings, enabling 1 billion USD of government bonds to be issued on international capital markets on favourable terms.

The report found that underlying the broad pattern of economic recovery, the performances of foreign-invested and domestic firms remain dichotomous. The foreign-invested sector continues to be a significant source of growth, while the domestic private sector remains subdued, as reflected in the rising number of domestically-owned businesses that have closed or suspended operations.

Regarding Vietnam’s financial sector, the report underlined the need to accelerate the Government’s reform programme, which was designed to address basic challenges facing the sector.-

Vietnam attends largest Asian oil & gas trade show

Many Vietnamese businesses are showcasing their products at the 20th International Oil and Gas Industry Exhibition and Conference (OSEA 2014), which opened in Singapore on December 2.

OSEA 2014 is seen as one of Asia’s largest connection network in the oil and gas sector with the participation of more than 1,500 enterprises from 49 countries and territories. The four-day event aims at promoting gas & oil-related products and services.

In addition to introducing breakthrough technologies and new solutions in the industry, the event also features an exhibition of the latest high-end precision engineering products.

The organising board will hold 12 discussions with leading experts on the future oil and gas provision and exploitation, natural resources management, and the latest technologies in tapping oil and gas in deep seas and special environments.

Representatives of Vietnamese businesses attending the event told a Vietnam News Agency correspondent in Singapore that this is the first time they has joined OSEA, which offers a good chance for them to promote their products and services to foreign partners.

OSEA is a biennial tradeshow that has served the offshore oil & gas market and its support industries since 1976.

Phu Yen licenses luxurious tourism project

The People’s Committee of central Phu Yen province on December 3 granted an investment certificate to build an 80-million-USD tourism complex to Sunrise Vietnam Co. Ltd. from the Republic of Korea.

The complex, to be built on 52 ha of land and 56 ha of water surface in Tuy An district and Tuy Hoa City, will feature 5- and 6-star leisure facilities such as high-end villas, coffee shops, swimming pools, beaches and restaurants.

The construction will be carried out in three phases, and the first part is scheduled to be put into operation in 2017.

Tran Quang Nhat, Vice Chairman of the municipal People’s Committee, said he hopes the project will help boost the tourism industry in the province.

HCM City hopes to learn Belgian province’s seaport development

Ho Chi Minh City wants to cooperate with and learn the Belgian province of East Flanders’ experience in seaport planning and development, Vice Chairman of the municipal People’s Committee Le Manh Ha has said.

At a reception for a visiting East Flanders delegation led by Vice Governor Geert Versnick in the city on December 3, Ha said that HCM City is planning to develop and expand the Hiep Phuoc Port in Nha Be district.

As a southern economic hub of the country, HCM City boasts strengths in health, high technology and biological technology, he said, adding that the two localities may step up collaboration in these fields in the future.

For his part, Geert Versnick highlighted the effective operation of his province’s seaport systems, logistics services, bio-technology, agricultural processing, education and health.

He expressed hope to cooperate with Vietnam in animal husbandry.

Trade between Vietnam and East Flanders reached 1.2 billion EUR in 2012, of which Vietnam ’s export was 976 million EUR, a year-on-year increase of 34.7 percent.

The province now operates many projects in Vietnam specialising in diamond industry, port services and logistics, high technology, health, pharmaceuticals, chemicals, agricultural processing and education. There are about 100 Vietnamese students studying in the regional capital city of Ghent .

The country mainly shipped footwear, garment and textile, leather products and precious stones to the Belgian province.

Thailand helps Vietnam come closer to its market

The Thailand Convention and Exhibition Bureau (TCEB) has announced that it will support Vietnamese businesses in seeking partners and expanding their markets through trade exhibitions and fairs in Thailand in 2015.

At a press conference in Ho Chi Minh City on December 3, TCEB said its assistance will provide good chances for Thai private businesses to boost trade links and set up partnerships with Vietnamese partners.

Two-way trade between the two nations hit 7.6 billion USD in January-September, a year-on-year increase of 11 percent.

As of October 2014, Thailand ran 365 investment projects in Vietnam with the total registered capital of 6.63 billion USD. Meanwhile, Vietnam invested around 9 million USD in eight projects in Thailand .

The two countries strive to raise their two-way trade to 15 billion USD by 2020.

Quang Ninh inaugurates 47 million USD wheat flour mill

The Vietnam Flour Mill-Wilmar (VFM-Wilmar) inaugurated a new wheat flour mill at the Cai Lan Industrial Park in the northern coastal province of Quang Ninh on December 3.

The 47.4 million USD factory has a design capacity of 500 tonnes of wheat a day, and employs 150 workers. The plant is expected to contribute 200 billion VND (9.4 million USD) to the province’s budget each year.

The project helped to increase total new foreign direct investment (FDI) in Quang Ninh to a record high 586 million USD.

The VFM-Wilmar is a joint venture of Singapore’s Wilmar group and the Federal Flour Mills Berhad group of Malaysia.

Businesses learn about new trends in sustainable development

A workshop in Ho Chi Minh City on December 3 helped businesses identify their potential of resources and all possible support tools on way to achieving sustainable growth.

Nguyen Quang Vinh, Director of the Office for Business Sustainable Development and General Secretary of the Vietnam Business Council for Sustainable Development (VBCSD), said businesses play a role in creating economic value and a healthy community lifestyle, adding that sustainable development now requires a harmonious and close combination between socio-economic progress and environment protection.

Commenting on the corporate path to sustainable development in Asia, Regional Director of Edelman’s Sustainability Practices in Asia-Pacific Ashley Hegland said not many firms are committed to the sustainable growth, through strategically incorporating sustainability into all business operations.

Foreign and domestic attendees introduced new trends in sustainable development, including strategies to create growth fuelled by green industries and consumer behaviours.

VBSD sees the facilitation of dialogues on sustainability between business community, the government and social organisations as its key role in the coming time, its representative said.

Recently, several social projects launched by enterprises have proved fruitful, including Saigontourist’s charity activities for visually-impaired children, PepsiCo Vietnam’s environment protection campaign and Holcim Vietnam ’s efforts to preserve biodiversity.

The workshop was co-hosted by Vietnam Business Council for Sustainable Development (VBCSD), Vietnam Chamber of Commerce and Industry (VCCI) and WWF-Vietnam.

HCMC to kick off $569.4 mn road-bridge project in Thu Thiem

The Ho Chi Minh City People's Committee has signed a Build - Transfer (BT) contract with an investor for building four roads and 12 bridges in the Thu Thiem New Urban Area in District 2 with a total investment of VND12,182 billion (US$569.4 million).

The four roads, including an arc avenue, a lakeside road, a Saigon riverside road and a flyover, will have a total length of 11.9 km, according to the contract signed between the authorities and the city-based Dai Quang Minh Real Estate Investment Joint Stock Company on Monday.

Of the twelve bridges, two will be viaducts, according to the contract.

Of the total investment, VND8,265 billion ($386.3 million) is the cost of construction.

The construction of the project started on February 15, 2014 and is expected to complete after 36 months.

According to Nguyen Thi Huu Hoa, head of Management Board for Investment and Construction of the Thu Thiem New Urban Area, this project will contribute to perfecting the technical infrastructure of the area.

Upon completion, the four roads will play a significant role in the development of the new urban area, linking it with main traffic works in the city like Thu Thiem Bridge, Vo Van Kiet Highway and Saigon River Tunnel, authorities said.

In addition, the city authorities and the company also signed another BT contract for building a 9-hectare central square and a 20-hectare riverside park.

At the signing ceremony, Vice Chairman of the People's Committee of Ho Chi Minh City Nguyen Huu Tin said after completing the four roads and twelve bridges, the authorities will call on other investors to invest in building other works to improve infrastructure in the area.

Hai Phong remains among top FDI attractive destinations

Hai Phong city remained one of the most attractive destinations for foreign investors with 406 valid projects valued at 9,887 million USD so far, according to a city senior official.

The city attracted investors from 25 countries and territories, with most projects focusing on industry and high technology, said Vice Chairman of the municipal People’s Committee Dan Duc Hiep.

Notably, the city was the choice of some world giants, including Bridgestone with a 447.8 million USD factory launched in October, as well as Nipro, Pharma, Fuji Xerox, and LG Electronics, he noted.

Currently, Hai Phong has 19 industrial parks covering 9,716 hectares, including Nomura-Hai Phong, Dinh Vu, VSIP Thuy Nguyen, Cat Hai and Lach Huyen, said Hiep.

However, he also pointed to a number of shortcomings that can hinder the FDI inflow into the city, including a lack of professional investment promotion campaigns, and slow implementation of projects and ground clearance, along with poor infrastructure system and a short of skilled workforce.

In the future, the city will focus on designing policies to support and encourage investors, while working with domestic and foreign partners in speeding up ground clearance and building infrastructure, focusing on industrial parks for support industry, he said.

The official also stressed the need to step up international economic cooperation and expand the city’s economic space, along with broadening relations with strategic partners, including Japan, the Republic of Korea, Russia, the US, the EU and other regional countries, international organisations and multi-national groups.

Will GrabBike face same legal challenge as Uber in Vietnam?

People in Ho Chi Minh City can now easily grab a xe om, or motorbike taxi, with their smartphone after GrabTaxi added the new service to its fast-growing taxi-booking app last week.

But whether the new service, dubbed GrabBike, will face the samelegal challenge as ridesharing app Uber remains to be seen.

GrabTaxi, developed by a Malaysia-based startup, allows passengers to find the nearest taxi in less than a minute with just two taps on their smartphone.

All information related to the driver and the booked taxi, including their name, the plate number, the phone number, as well as the estimated fare, is made known to the passengers before they get in the cab.

The GrabBike service, officially launched on November 27, has just the same function: it allows people to find the nearest xe om and get the full knowledge of who is going to give them a ride, and how much they will have to pay.

The new feature is included in the existing GrabTaxi app.

“Users can tap away at their smartphone to have a xe om pick them up right where they are,” GrabTaxi said on its Facebook page.

GrabTaxi connects passengers with cabs operated by licensed taxi firms, a key factor that will likely keep it away from legal challenges Uber is facing in Vietnam.

Any individual who has a car can apply to be an Uber driver, which Vietnamese authorities said is against the transport law and regulations.

Drivers are required to provide Uber with the necessary documents to drive and wait for approval, the San Francisco-based firm says on its website.

Once approved, they will receive a phone with the Uber app and officially become an Uber driver, according to the website.

A deputy transport minister asserted on Monday that the Uber service is illegal in the Southeast Asian country.

“Any transport activity which directly charges passengers but does not operate through a registered transport business is against the law on road traffic and decree on automobile transport,” Deputy Minister Nguyen Hong Truong told reporters during a meeting in Hanoi.

GrabBike’s driver policy is apparently similar to that of Uber.

“Anyone can become a GrabBike driver, from white-collar workers to students,” GrabTaxi said on its website.

Interested motorbike drivers are encouraged to send their applications to GrabTaxi to join what the company has admitted is still “a modest fleet of GrabBike drivers.”

If anyone can become a GrabBike driver, the situation will be the same as the case of Uber. Vietnamese authorities are now demanding that Uber drivers be members of licensed transport businesses.

Local authorities have so far made no comment on the xe om booking service.

A GrabTaxi representative told a Ho Chi Minh City-based newspaper that Vietnam is the first market to have the GrabBike service.

Developed by two Harvard Business School graduates, GrabTaxi was launched in Malaysia in 2012 as MyTeksi, and then expanded to Singapore, Vietnam, Thailand, Indonesia, and the Philippines.

SOE equitisation requires $5-10 billion

Vietnam's financial market needs US$5 billion to $10 billion to absorb shares of State enterprises to be equitised in the future.

The amount needed will also depend on the size of State capital offered for sale, said Dominic Scriven, head of the Vietnam Business Forum's Capital Market Working Group.

According to Scriven, the Vietnamese stock market has not really attracted big and long-term investment capital from foreign investors as shown in market capitalisation that is quite small compared with other ASEAN countries.

Vietnamese market capitalisation is just one-fifth of the Philippines and one-tenth of Malaysia, he noted.

Scriven suggested that the Government speed up the equitisation process of State-owned enterprises (SOEs) and increase the proportion of State capital put up for sale, at least 30 to 40 per cent of enterprise equity, to boost market liquidity in the market.

The working group pointed out that investors, particularly foreigners, lacked information on State enterprises' initial public offerings, which could leave them unprepared for such share sales.

They proposed that the authorities make up the list of groups, corporation and companies that would carry out IPOs, including timetables on a quarterly basis, for investors to have enough time to study and prepare plans for purchases.

Last month, the Ministry of Planning and Investment reported 100 SOEs equitised in the first 10 months of this year at a pace that Prime Minister Nguyen Tan Dung said was slower than expected.

Dung estimated the amount of State capital to be sold at $56.4 billion and urged concerned agencies to accelerate this process to raise funds for development projects and improve SOEs' corporate governance.

On the issue of increasing foreign ownership in domestic companies, Scriven expressed disappointment over the delay in the State Securities Commission (SSC) plan to extend the time for lifting foreign ownership limits from 49 to 60 per cent to October 2015.

Since the beginning of this year, the Vietnamese stock markets have attracted only $150 million in foreign capital, which is far below the $10-billion foreign direct investment target.

Scriven said the current 49-per cent limit on foreign stakes in a domestic company relegated foreign investors to the purchase of shares worth a mere $3.1 billion or only five per cent of market capitalisation.

SSC Chairman Vu Bang explained that the commission has proposed the plan of raising the limit on foreign stakes to 60 per cent in businesses where foreign investment was allowed by law, but the new regulation needed some legal changes that required more time and preparations.

Speculation on the easing of foreign stakes restrictions helped boost the stock market by 22 per cent last year and 13 per cent this year.

Remove interest rate cap: experts

Banking experts have recommended that the State Bank of Viet Nam (SBV) remove the interest rate cap regulation as the Vietnamese banking system's liquidity was quite abundant.

Commercial banks have continuously adjusted their deposit interest rates down by 0.2 to 0.5 percentage points, as their liquidity was also quite abundant. State-owned Vietcombank and Vietinbank, for example, now list one-month deposits at 4.3 per cent and five per cent, which was much lower than the SBV's 5.5-per cent interest rate cap.

Other private commercial banks have stopped offering promotion programmes to attract depositors as in previous years.

Nguyen Thu Ha, deputy director of the SBV Monetary Policy Department, also affirmed that credit institutions' liquidity was ensured and profuse while their business performance was stable. The inter-bank market is also stable with interest rates remaining low, she said.

Expert Nguyen Tri Hieu told Dau tu Chung Khoan (Securities Investment) magazine that the SBV should on occasion further cut the deposit interest rate by 0.5 percentage points to five per cent every year before floating the rate.

He explained that if the inflation stayed at 4.5 per cent, the deposit interest rate would remain positive, so depositors would still select banks over other investment channels such as property, securities, foreign currency and gold since these were not attractive enough.

The country's inflation in the first nine months of 2014 stood at 2.08 per cent, the lowest level in the past decade.

Leaders of some joint stock commercial banks likewise confirmed that banking system liquidity was quite profuse while many banks have directly adjusted their rates lower than the SBV cap.

They proposed that the SBV remove the cap and manage it using indirect instead of direct measures such as the cap regulation.

Can Van Luc of the Bank for Investment and Development of Viet Nam suggested that the SBV seriously study the cap's removal, as it was obvious that the cap currently made a modest impact on the currency market.

The time is ripe to float the rate, Luc said, adding that the currency market was currently stable with abundant liquidity. Administrative measures are only temporary and should be taken only when the currency market is volatile, he pointed out.

However, Luc explained, the SBV should still apply a lending interest rate cap for the Government's priority sectors such as agriculture, exports, support industries, small and medium enterprises and hi-tech businesses. He also urged the SBV to further speed up the restructuring of remaining ailing banks to avoid unfair competition in attracting depositors.

SBV calls for agriculture credit boost

The State Bank of Viet Nam (SBV) has required commercial banks to increase their lending to mitigate losses in agricultural production, as implementation of the policy has remained restricted.

After six months of implementation, lending has remained modest. Last April, the SBV issued Circular No 13/2014/TT-NHNN to guide commercial banks in granting loans to enterprises, co-operatives, co-operative teams, households and individuals to help them mitigate losses in agricultural production.

Under the regulation, borrowers will get Vietnamese dong loans to buy machinery and equipment in the list of machinery and equipment manufactured domestically or imported under the guidance of the Ministry of Agriculture and Rural Development. The loans could be up to 100 per cent of the machines' total prices.

Commercial banks will provide loans with the lowest rate applicable in the service of the agricultural and rural sector, with the same tenure and period. Interest payment on loans is waived in the first two years and half of the interest payment is waived on the third year.

Preferential loans will also be offered to develop production and storage facilities projects. The loans could be up to 70 per cent of project value and may last for a maximum of 12 years.

According to the SBV, Viet Nam's credit for agriculture in the first 10 months of 2014 increased by 8.2 per cent.

Vietnam offers huge opportunity for retail banking market

The 2014 ASEAN Banker Forum was held in Ho Chi Minh City, on December 3, highlighting the prominent role of modern technologies in the development of retail banks.

At the forum, regional leading experts in the field discussed opportunities and challenges for retail banks in Vietnam between now and 2020. Experts also spoke of main risks in operation of retail banks at developing countries.

Can Van Luc, a financial specialist from the Commercial Bank for Investment and Development of Vietnam (BIDV), said more and more Vietnamese banks have prioritised improving their services and risk management system based on advanced technologies. Notably, the online banking services for individuals are promoted, he added.

Developing e-payment service is one of strategic solutions of retail banks, Luc stressed.

According to the participating experts, the e-payment service will be developed strongly in Vietnam between 2015 and 2020 due to an increasing trend of collaboration among banks, telecommunications companies, shopping centres, and supermarkets. Besides, the social networks have become a potential source for commercial banks to find and serve its target customers.

Nguyen Hoang Long, Vice Director of Smartlink Card JSC, said that 32 Vietnamese banks are currently applying mobile banking service with more than 3 million monthly users.

According to Ernst & Young’s Global Consumer Banking Survey 2014, 75 percent of 90-million-Vietnamese-population have no access to banking services, reflecting a huge opportunities for retail banks in Vietnam.

The forum was co-organised by the Vietnam Bank Association and International Data Group IDG Vietnam.-

Investors push for stronger administrative reforms

Investors attending the 2014 Vietnam Business Forum (VBF) asked the host country to continuously speed up institutional and administrative procedure reforms along with improving the investment environment and human resources training so as to fully support the national economy when joining new free trade agreements.

According to Director of the Vietnam Chamber for Commerce and Industry (VCCI) Vu Tien Loc, poor access to the government’s plans and local administrations’ regulations failed businesses’ efforts to be fully prepared for changes stemming from the legal system.

He stressed the urgent need to drastically push for stronger administrative and institutional reforms, especially the administrative apparatus, which was echoed by an American Chamber of Commerce (AmCham) representative at the event.

At the forum, which took place in Hanoi on December 2, participants seek ways to encourage the development of private enterprises.

A report by the VBF Investment and Trade Working Group revealed the private sector still meets with difficulties accessing capital sources, land and energy as well as dealing with weak administrative system, workforce, and support industry.

Meanwhile, taxation, customs, transportation, land management and trade agencies are yet to play their roles as providers of support for the sector, the report found.

According to Head of the VBF Investment and Trade Working Group Fred Burke, to make the private sector the backbone of the business activity in Vietnam requires the creation of a fair playing ground for all players.

The VCCI leader, meanwhile, pointed out that in the coming time, businesses’ growth will be determined by capacity and governance skills rather than their investments.

The Government could lend a helping hand with capital assistance for small and medium enterprises, incentives for support industry players, and measures to boost information technology, Loc said.

A more competitive climate, where decisions are made quickly, administrative procedures are simpler, and laws are enforced equally, will spur the development of private businesses and open up new opportunities, said the AmCham.

Participants at the forum pointed out that in the context of international integration, Vietnam’s abundant workforce have yet been adequately trained to meet multinational companies’ requirements.

Gaurav Gupta, Chairman of the AmCham in Vietnam, underlined that with young, plentiful and low-cost workforce as advantages, Vietnam is seeking to gain larger market shares in total global production, especially from multinational firms.

A challenge came when average expense for factory workers in Vietnam is only one fourth of that in China, but the average productivity in the country is just equal to 7 percent of China’s average, a recent survey showed.

A short of skilled technicians posed a thorny problem to Vietnam since the country is embarking on the goal of industrialisation and modernisation and broader international integration, the VBF Education and Training Working Group said.

The group proposed state agencies, businesses and training institutes coordinate in sharing information on training programmes and recruitment needs to meet market demand.

A survey by the Japan International Cooperation Agency on over 100 Japanese firms showed that 89 percent of the firms said they need technicians in the future.

In a World Bank survey, 80 percent of employers said Vietnamese candidates for the posts of experts and technicians lack skills required to ensure work progress.

Vietnam is gaining global market share, says HSBC

Vietnamese goods made up 0.7% of global exports in 2013, representing an increase of 0.4% since 2007, according to latest report by HSBC.

In labour intensive manufacturing, items such as footwear and apparel are growing more rapidly, HSBC said.

The goal, of course, is to export to richer economies, especially the US, to improve the standard of living. Last year, Vietnam was the US’ 20th largest supplier of goods, totalling US$25 billion.

Vietnam’s exports to the US grew 23.5% from January to September 2014. The Trans-Pacific Partnership (TPP)’s ultimate prize is a free trade agreement (FTA) with the world’s largest economy, allowing better access for Vietnamese goods. Whether it is an agreement with the Eurozone FTA or the Regional Comprehensive Economic Partnership (RCEP), Vietnam is trying to improve connectivity so its goods can gain better access.

The November HSBC manufacturing PMI index shows that new export orders are increasing and output is expanding. Sluggish global demand is causing firms in developed economies to find ways to cut costs, pushing even small and medium enterprises to find cheaper alternatives.

Thanks to a steady disbursement of FDI and cheap wages, the employment sub-index of the PMI has grown steadily, a positive sign for a country with plenty of workers to productively absorb into the labour force.

However, beyond cost advantages, Vietnam will need to improve its trade infrastructure (logistic costs, roads and airports) and technical skills, to name a few examples, to move up the value chain, HSBC suggested.

Lukewarm reception for bio-fuel E5

Petrol dealers are facing difficulties after bio-fuel E5 was sold in seven cities and provinces, including Hanoi, Danang and Ba Ria-Vung Tau, since December 1.

Exactly 48 of 94 petrol stations in central Danang City have distributed bio-fuel E5 and Mogas RON 95 instead of Mogas RON 92. Quite a few customers were observed to have purchased Mogas 95 even though the price of bio-fuel E5 was lower than that of Mogas 95.

On the other hand, representatives of petrol stations in Danang City revealed that they were facing difficulties in purchasing bio-fuel E5 to fill the tank, including transportation fare increases.

Meanwhile, an official of the Ba Ria-Vung Tau industry and trade department said about 340 petrol stations here would provide bio-fuel E5 after selling the remaining Mogas 92 and washing the tanks.

Numerous private petrol stations in Hanoi have not sold bio-fuel E5 in place of Mogas 92 as regulated because of consumers' habits and the low demand for bio-fuel, which was a difficulty for them.

To date, three of 10 petrol dealers are selling bio-fuel products at 169 of 13,000 petrol stations throughout the country. Consumers prefer the traditional Mogas 92 and Mogas 95 fuel products over bio-fuel.

Figures from the Ministry of Industry and Trade show that bio-fuel represents a mere one-eighth of the consumption of traditional fuel products.

Besides, the benefits of bio-fuel E5 have not been widely communicated, and customers might not change their habit of purchasing traditional fuel products as quickly as expected by petrol production and distribution enterprises and State authorities.

Consisting of 95% petrol and 5% ethanol, bio-fuel E5 reportedly contributes to the reduction of environmental pollution and ensures the country's energy security.

Seminar boosts Vietnam, Indonesia tourism

With nearly 250 million people and the increasing travel demand, Indonesia is one of Vietnam’s most important tourism markets.

The statement was made at a seminar on tourism cooperation between Vietnam and Indonesia in Hanoi on December 3.

However, Ha Van Sieu, Vice Chairman of Vietnam National Administration of Tourism said that cooperation in such field has been yet commensurate with the potential and desire of the two countries due to the shortage of tourism promotion, tourism products and the number of direct flights between Vietnam and Indonesia.

In 2013, about 8 million Indonesians travelled abroad, only 70 thousand of them visited Vietnam.

At the event, participants exchanged information on the needs and tastes of Indonesian tourists and famous tourism destinations in Vietnam. They also suggested solutions to further connect travel agencies and aviation companies between the two countries.

Future of agriculture lies in high technology

The future of Vietnam agriculture lies in an alliance with Japan, Israel and New Zealand in support of a modernized sector with improved product quality in conformity with the highest of international standards, says Dr. Tran Dinh Thien, Director of Vietnam Institute of Economics.

The bilateral trade turnover in 2014 between Vietnam and New Zealand has expanded significantly by 23% compared to 2013 to NZD2 billion. Both nations have agreed to work cohesively to bring the figure to US$1 billion in 2015.

In turn, New Zealand’s key exports to Vietnam have historically been milk and wood products while Vietnam’s major exports to New Zealand have included beverages, coffee and food, says Mike Petersen, a New Zealand Special Agricultural Trade Envoy (SATE).

Both nations have been able to cooperate effectively as their trade needs are not competitive but rather are complimentary.

New Zealand has invested on average US$10 million each year supporting Vietnam’s agricultural sector with a focus on projects aiming to develop a value chain that benefits farmers and enhances capacity for small and medium-sized enterprises (SMEs).

A project on planting a new variety of dragon fruits in Tien Giang and a food safety and hygiene project in Binh Dinh province have been the most high profile New Zealand projects to date. However, these projects are incipient of New Zealand’s desire to become highly competitive through innovation.

New Zealand’s approach has been aimed at reforming agricultural production systems, improving the product quality and taking full advantage of limited agricultural land to make greater profits on a per ha basis.

The country wants to share these experiences with Vietnam to develop an agricultural chain with higher added value, which is mutually beneficial for both nations Petersen says underscoring that  sharing experiences is highly beneficial to both sides.

For his part, Le Quoc Doanh, Deputy Minister of Agriculture and Rural Development, says Vietnam has taken the lead in the world in exporting differing types of farm produce than New Zealand such as pepper, coffee, cashew nuts, rice, tra fish, shrimp and rubber.

Vietnam’s farm produce has increased remarkably in quantity Doanh says but has remained unacceptably low in terms of quality, leading to low added value of products.

Several nations with advanced agriculture have often supported Vietnam in poverty reduction projects over the year, which has contributed significantly to improving the quality of farm produce. However, obstacles still remain as the quality of farm produce and food safety has not been ensured.

Recently several batches of agricultural exports have been returned by foreign markets. Vietnam has hopes that through cooperation with New Zealand, both nations will share experiences to raise farmers’ awareness of agricultural production.

Dr. Tran Dinh Thien  says Vietnam should turn to a hi-tech agriculture sector to process less exports with higher added value instead of aiming just to take the lead in the world by exporting huge quantity of farm produce with low added value.

In its future orientations, Vietnam’s agricultural sector need to concentrate its efforts to develop trade alliances with Japan, Israel and New Zealand. The move will offer the best opportunity to improve the quality of Vietnam’s farm produce in compliance with the international standards.

Although New Zealand has only 4 million people and is not a highly lucrative market for Vietnam’s farm exports, its technology can prove invaluable to Vietnam’s agricultural sector and both nations can join forces to support each other competing in the global marketplace.

New Zealand businesses can cooperate with Vietnamese counterparts to create modernized agricultural production zones, develop rice production in line with New Zealand’s production models and enhance quality, quantity and value of produce.

During the dialogue, the two sides  have agreed to organise annually a trade policy dialogue forum while they are set to sign a food safety agreement next year.

Germany, Vietnam sign cooperation agreements

On December 2, the Vietnamese Ministry of Finance and the German Ministry of Economic Cooperation and Development inked a 2013-2014 finance cooperation agreement in Hanoi.

Under the agreement, the German Government will provide Vietnam with 70.5 million EUR in official development assistance (ODA) and 8 million EUR in non-refundable aid.

It will also grant 100 million EUR for power network improvement projects in Hanoi and Ho Chi Minh City under a financing agreement inked the same day.

Deputy Minister of Finance Truong Chi Trung said with the agreements, Germany has enhanced its status as Vietnam’s third largest bilateral donor after Japan and France.

Germany is currently Vietnam’s largest European trade partner with two-way trade volume hitting nearly US$8 billion, comprising more than 20% of the total trade between Vietnam and the EU.

As many as 300 German businesses have been licensed for operations in Vietnam.

New circular targets safer growth for banks: SBV

State Bank of Viet Nam Deputy Governor Nguyen Thi Hong has affirmed the need for Circular 36, saying the regulations would help the Vietnamese banking sector develop more safely.

Hong was responding to this week's recommendations from the Viet Nam Business Forum's (VBF) banking working group.

Last November, the SBV issued Circular No 36/2014/TT-NHNN, regulating prudential ratios for the operations of credit institutions and foreign bank branches.

Under the circular, a commercial bank can hold shares in a maximum of two other credit institutions, and its stake at each institution should not exceed five per cent of the total equity of that institution.

The SBV will allow higher shareholding ratios in specific cases where it designates banks to either prop up the financial situation or support the restructuring process of fragile organisations.

The circular takes effect on February 1, 2015. Banks are given about 15 months to completely adjust their holdings and ensure that stakeholder limits are met.

However, the VBF's banking working group suggested that the SBV extend the circular's date of effectivity, saying the deadline was too pressing for banks to prepare for their liquidity.

Implementation of the circular as scheduled can shock the market, as banks have to reduce their bond issuance in such a short time to meet the new regulations, the group noted.

It added that an extension could also help the country develop the bond market and avoid the experience of 2008 to 2009, when bond interest rates accelerated from seven per cent to 21 to 25 per cent.

Hong said the circular aimed to meet the Vietnamese Government's target of restructuring the banking sector and help credit institutions govern risks in accordance with international rules.

It also aims to help secure banking operations by restricting cross-ownership situations, earlier singled out as responsible for the fragility of the domestic banking system in the last few years.

As for the group's other recommendations, Hong said the SBV would review them and make suitable adjustments to further create a healthy business environment and ensure the banking system's safety.

She added that the SBV would continue discussions with the working group regarding their recommendations on some regulations such as financial companies' consumer lending and the draft circular on money laundering that the SBV would be issuing soon.

The SBV has agreed with the group's recommendations on developing the capital market and granting capital to small and medium enterprises, Hong pointed out.