Petrol price slashed for first time in 2016

The domestic retail price of petroleum dropped by VND373 to touch VND16,032 (71 US cents) per litre at 3pm yesterday, the Ministry of Industry and Trade said.

The price of E5 RON 92 biofuel has fallen by VND571 to touch VND15,339 (68 cents) per litre. The diesel price has increased by VND865 to reach VND11,119 (49 cents) per litre. The price of kerosene has risen by VND791 per litre to end at VND10,274 (45 cents), while that of mazut has increased by VND616 per kilogram to reach VND7,456 (33 cents) per kilogram.

The ministry said the falling domestic retail petroleum price was attributable to the downward trend of the world fuel price over the past fortnight.

The ministry and Finance Ministry also decided to keep the petrol price stabilisation fund unchanged.

US benchmark West Texas Intermediate (WTI) in its latest delivery was pegged at $36.60 per barrel, down 3.5 per cent from its selling price in electronic trading in New York.

Brent crude in London also fell by 3.5 per cent to $36.46 per barrel.

A representative from a petrol trading firm in HCM City said by the end of 2015, the basic petrol price was VND350 higher than the retail price.

This has been the first slump for the year 2016. Last year, petroleum retail prices fell 12 times and rose six times.

Purchasing power soars in supermarkets during New Year holiday

The retail sales of goods and services saw a surge in supermarkets and trade centres across the country during the New Year holiday from December 31 to January 3.

In Ho Chi Minh City, the Co.opmart and Co.opXtra supermarket chains of Saigon Co.op recorded a fourfold increase in the sales of beer, beverage, dried food and bakery in the reviewed period.

The purchasing power of fresh and processed food, consumption goods and clothes in the Big C supermarket chain also rose 50% compared to normal days.

Other supermarkets and shopping malls such as Aeon, Citimart, Maximark, Metro, Vincom and Diamond also drew crowds of visitors and consumers thanks to a string of discount programmes.

Meanwhile, traditional markets experienced a quiet atmosphere with purchasing power slightly increasing by 10-20 percent for fresh food.

Tourists from Ho Chi Minh City also flocked to renowned resorts such as Vung Tau, Long Hai, Mui Ne and Da Lat during the holiday, raising the prices of restaurant and recreational services.

Vietjet launches promotion to celebrate three newest routes

Vietjet has launched a three-day long promotion with 50,000 super-cheap fares from zero dong from January 6 to January 8 to celebrate its newest routes.

These routes connected Pleiku with Hai Phong and Vinh, and Ho Chi Minh City with Tuy Hoa.

As part of the airline's biggest-ever promotional event in 2015 named "Fly into an amazing fairy tale with Vietjet", these discounted tickets are applicable for travels between January 15 and December 31.

The Pleiku – Hai Phong route whose debut flight is on January 15 is operated at a frequency of four return flights per week, on every Monday, Wednesday, Friday and Sunday. Flying time per sector is about 1 hour and 35 minutes. Flights depart from Pleiku at 9:50am and arrive in Hai Phong at 11:25am. Return flights depart from Hai Phong at 12:00 noon and arrive in Pleiku at 1:35pm.

The Pleiku – Vinh route whose debut flight is on January 16 has a frequency of three return flights per week, on every Tuesday, Thursday and Saturday. Flying time per sector is about 1 hour and 25 minutes. Flights depart from Pleiku at 9:50am and arrive in Vinh at 11:15am. Return flights depart from Vinh at 12:00 noon and arrive in Pleiku at 1:25pm.

The HCM City – Tuy Hoa route whose debut flight is on January 20 is operated on a daily frequency. Flying time per sector is about 1 hour. Flights depart Ho Chi Minh City at 7:35am and arrive in Tuy Hoa at 8:35am. Return flights depart from Tuy Hoa at 9:10am and arrive in HCM City at 10:10am.-

Jetstar offers 20,000 cheap tickets

The low-cost airline Jetstar Pacific will offer 20,000 tickets with just 16,000 VND (7 US cents) per leg on its 20 international and domestic routes.

The campaign is scheduled to run from 11:00 am on January 4 until the end of January 6 at www.jetstar.com and Jetstar booking offices nationwide.

The tickets will be applied for 15 domestic routes from Ho Chi Minh City to Da Lat, Pleiku, Buon Ma Thuot, Nha Trang, Vinh, Da Nang, Thanh Hoa, Hai Phong, Hue, Quy Nhon, Chu Lai and Dong Hoi, and from Buon Ma Thuot to Chu Lai, Vinh and Thanh Hoa.

They will be also used for five international routes – Hanoi-Bangkok, Hanoi-Hong Kong, Ho Chi Minh City-Bangkok, HCM City-Singapore, and Da Nang-Singapore (conducted by Jestar Asia).

Jetstar Pacific – the first budget carrier in Vietnam – is currently operating 32 domestic and international routes.

The airline recently announced the operation of three more Airbus A320 as well as more flights on 12 routes to serve increasing demands during the Lunar New Year 2016.-

Bac Ninh attractive to foreign investors

The northern province of Bac Ninh has become a magnet for foreign investors thanks to its attractive investment environment and synchronous infrastructure system with a series of modern industrial zones (IZ).

In the 2011-2015 period, the province attracted more than US$12.13 billion in investment, of which foreign direct investment (FDI) was US$10.74 billion.

In 2015, Bac Ninh led the nation in investment attraction with a total of over US$3.68 billion.

Notably, the Samsung Display Vietnam Co. Ltd decided to increase its investment in the Yen Phong Industrial Zone by US$3 billion after pouring US$1 billion into the zone one year earlier, raising the total capital the Republic of Korea’s Samsung Group has so far invested in the province to US$6.5 billion.

After 18 years of development, Bac Ninh’s industrial zones have proven themselves as destinations for global economic giants including Pepsico, Samsung, Canon, ABB, and Microsoft.

With 573 operating businesses, the IZs have made great contributions to increasing the local industrial production, export and competitiveness. From 2011-2015, enterprises in the zones created an industrial production value of VND356 trillion (US$15.8 billion) and an export value of nearly US$17.4 billion per year.

The presence of FDI enterprises in the IZs has turned Bac Ninh into a major manufacture of mobile phone and electronic products for export. In 2015, the province earned US$22.5 billion from exports, ranking second in the country after Ho Chi Minh City.

To support businesses’ stable and long-term development, Bac Ninh has carried out 12 housing projects for workers, providing accommodations for 59,000 people.

In the coming time, the locality will prioritise attracting investment in high-tech and environmentally friendly industries, which create added value and help save natural resources towards sustainable development.

Tra fish export forecast to drop 5% this year

Officials expect Vietnam’s tra fish (pangasius) export value to continue falling this year, according to the Vietnam Association of Seafood Exporters and Producers (VASEP).

The decrease is due to anti-dumping tariffs, the US programme on monitoring catfish, and pressure from competition selling other types of white-meat fish, the association said.

Officials anticipate that the value of the tra fish export will see a year-on-year drop of 5% to US$1.5 billion this year. To regain its value, the domestic fishery industry should seek to sell in more export markets and increase its market shares in existing ones.

The association reported that in 2015, the total tra fish export value reached US$1.6 billion, which was 10% lower than that in 2014.

Six out of the eight largest export markets for Vietnamese tra fish saw reductions in the export value in 2015 against 2014. The export value of Vietnamese tra fish fell by 5.6% to the US, 14.3% to the European Union (EU), 4.3% to ASEAN, 39.8% to Brazil, 13.9% to Colombia and 13.2% to Mexico.

Meanwhile, the export value rose by 17% to the UK, 42% to mainland China and Hong Kong, and 2.4% to Saudi Arabia.

In most large markets, the export of Vietnamese tra fish products faced many challenges, such as lower demand, no increase in selling prices and increasingly strict standards on quality, food hygiene and safety, the association said.

Particular concern has been the recent US preliminary results of its anti-dumping duty administrative review (POR-11) on Vietnamese tra fish fillets, which caused an immense impact on exports.

VASEP Chairman Ngo Van Ich said the two mandatory reviewed exporters – Hung Vuong and Thuan An companies – will have to pay tariffs of 3.6 US cents per kilo and 8.4 US cents per kilo, respectively, while 16 other exporters will be taxed 6 cents per kilo. At the tax rate of 6 US cents, most companies will be unable to export to the US.

Also, the new US inspection rules on tra fish suppliers pose great challenges to Vietnamese exporters, he said. Since September 2017, all countries have to submit lists of establishments that currently export pangasius to the US, as well as documents proving that their products follow regulations set by the US Department of Agriculture's Food Safety and Inspection Service (FSIS). If the procedures are not followed, the companies will be barred from exporting products to the US.

The food safety service needs eight years for consideration of granting certificates to foreign companies on exporting their products to the US, according to US standards. That is a direct challenge to local firms, the association said.

Duong Ngoc Minh, VASEP Deputy Chairman and Hung Vuong Group's CEO, said that local seafood companies should not pay less attention to the US market and also focus on Asian markets with a total population of 3 billion people, including China and ASEAN.

To have stable and sustainable development of tra fish in coming time, the Ministry of Agriculture and Rural Development (MARD) should soon issue Decree 36 to ensure the quality of tra fish products, Minh said.

He also said the Government, the MARD and Ministry of Industry and Trade should have policies on advertising tra fish products at home and in foreign markets to promote consumption.

Officials said that tra fish consumption in the domestic market has accounted for only 5% of the total volume.

The Ministry of Industry and Trade has asked the Vietnam Chamber of Commerce and Industry (VCCI) and the General Department of Customs to investigate the granting of certificate of Vietnam origin for goods temporarily imported for re - export.

The ministry made the move after Khiet Tam Trade and Service Co., Ltd in Ho Chi Minh City and Quoc Viet Co., Ltd in the Mekong Delta province of Long An were found to have violated regulations related to the origin of goods when they shipped Vietnam labeled steel products originated from China to Europe to enjoy high profit.

The ministry also requested the agencies to take strict measures against organisations and individuals related to the case in order to protect the prestige of Vietnamese exports.

Slack technical barrier and loose enforcement of legal regulations are the reasons behind the massive import of Chinese steel into Vietnam, experts said.

Foreign credit institutions intending to contribute to establishing non-banking financial companies will be required to own minimum US$10 billion of assets at the end of the previous year as from February 8.

Under Circular 30/2015/TT-NHNN recently issued by the State Bank of Vietnam, these institutions also have to operate profitably in three consecutive financial years prior to the year they file for licensing.

Meanwhile, in order to eligible to become a founding member of join stock non-banking financial establishments, domestic enterprises must possess at least VND500 billion (US$22 million) worth of ownership capital and VND1 trillion (US$44 million) worth of assets in three consecutive financial years alongside meeting other requirements related to safe operation rates and financial violations.

For limited liability non-banking financial establishments, domestic enterprises are required to have VND1 trillion (US$44 million) in ownership capital and assets valued at at least VND2 trillion in three consecutive financial years.

Commercial banks must have at least VND100 trillion (US$4.4 billion) in assets in order to become founding members of financial and financial-leasing companies.

The nation targets high quality foreign investment projects in 2016

Vietnam faces new opportunities and challenges this year following the coming into force of its free trade agreements (FTAs) with the Republic of Korea, the Eurasia Economic Union and the establishment of the ASEAN Community.

Minister of Planning and Investment Bui Quang Vinh said Vietnam should be selective in welcoming foreign investment projects of high quality, modern and environmentally friendly technologies.

“The Ministry of Planning and Investment will advocate high quality FID projects in Vietnam to fuel national development and create more jobs. We will raise the positions of local businesses to get them connected to small and medium and enterprises and FDI companies to boost technological transfer," he said.

The Ministry of Planning and Investment’s Foreign Investment Agency reports that there were more than US$22.7 billion of foreign investment in Vietnam in 2015, a 12.5% increase over the previous year.

The Republic of Kore, Japan, Britain and Singapore are the top foreign investors in the Southeast Asian nation.

FDI outlook positive for year ahead

2015 has been a successful year for attracting foreign direct investment in Vietnam, with a bright future expected for 2016.

In the run up to the New Year, several major projects have been licensed for foreign direct investment, raising the total registered FDI in Vietnam during 2015 to about US$23 billion.

On December 29, the authorities of Saigon Hi-tech Park in Ho Chi Minh City granted a license to the Republic of Korea (RoK)’s Samsung Group to raise the investment capital of its Samsung CE Complex (SEHC) project from US$1.4 billion to US$2 billion.

The SEHC will facilitate the research, development, and production of hi-tech consumer electronic products and equipment. During the first phase of its strategic business plan, Samsung will focus on producing smart SUHD and LED TVs.

The second phase will oversee the production of other consumer electronics products, such as washing machines, fridges, and vacuum cleaners.

On December 28, the RoK’s biggest retail group Shinsegae officially launched its debut three-hectare Emart hypermarket in Ho Chi Minh City’s Go Vap district. The outlet has total investment of US$60 million.

Emart Vietnam’s director Choi Kwang Ho told VIR that Shinsegae was also planning to build another outlet in the city’s Tan Phu district.

On December 25, Vietnam’s largest US$10.5 billion FDI project-the Formosa steel complex and Son Duong deep-water port in the central province of Ha Tinh-churned out its first rolled steel products.

These three consecutive FDI events meant that in 2015, Vietnam’s FDI climate was very positive, both in terms of registered and disbursed capital.

Statistics from the Ministry of Planning and Investment’s (MPI) Foreign Investment Agency show that up to December 20, 2015, the registered FDI in Vietnam rose 12.5% year-on-year. Meanwhile, the disbursed FDI ascended 17.4% from the previous year.

“This was a record disbursement level for Vietnam. The country had a very successful year for FDI attraction and disbursement,” said MPI Minister Bui Quang Vinh. “This shows the fact that the country’s business and investment climate remarkably improved in 2015, with a strong rise in investors’ confidence.”

Vietnam began 2015 with difficulties attracting FDI. In the first four months of the year, only US$3.72 billion was registered, down by more than 23% year-on-year.

The downtrend in FDI continued in the following month, with an on-year 20% fall for the first five months of 2015. Overall, the first six months of the year saw an on-year 30% drop, with the total registered FDI of only US$3.84 billion.

At that time, concerns were raised over the effectiveness of the country’s FDI attraction in comparison to other regional nations.

However, the situation gradually improved during July, when the newly registered and additional FDI reached US$8.78 billion.

The situation continued to brighten up in August, Samsung Display was given an investment certificate to raise its investment capital from US$1 billion to US$4 billion, boosting FDI significantly. This pushed the newly registered and additional capital to US$13.33 billion, up 30.4% year-on-year.

Following the Samsung Display project, FDI recovered rapidly, largely thanks to the introduction of several billion-dollar projects, including the US$1.2 billion Emperor City in Ho Chi Minh City, the US$2.4 billion Duyen Hai thermal power plant in the southern province of Tra Vinh, and the US$1 billion Cheng Loong wrapping production project in the southern province of Binh Duong.

Vietnam can expect to attract more FDI in the future thanks to the economy recovery of local production and the country’s participation in various free trade agreements (FTAs), including the Vietnam-RoK FTA, the Vietnam Eurasian Union FTA, the Vietnam-EU FTA, and the Trans-Pacific Partnership Agreement.

The establishment of the ASEAN Economic Community, including Vietnam and nine other nations, will also bring more FDI to the country.

“Vietnam has become the first choice for investment for many international groups. Previously, multi-national companies were hesitant to invest in the country. However, recently established FTAs will now enable the nation to attract more investment from these groups,” said Glenn Maguire, lead economist for ANZ in the South Asian, Southeast Asian, and the Asia Pacific regions.

Several months ago, property consultancy firm Cushman & Wakefield released a list ranking locations for manufacturers in 2015. Vietnam was ranked first among emerging economies that attracted international manufacturers. According to Cushman & Wakefield, projects to make fast-moving consumer goods are expected to boom in the country, thanks to the country’s current retail opportunities.

Additionally, big manufacturers such as Samsung, Intel, Microsoft, Jabil Circuit, Hyosung, and Texhong have gradually turned to Vietnam for their production base. Many of these companies are now waiting to capitalize on the opportunities given by the FTAs signed in 2015.

According to Jonathan Choi, chairman of Sunwah Group and VinaCapital Group, Vietnam currently offers great opportunities to foreign investors in the sectors of infrastructure, agriculture, fishery, and forestry.

However, due to strong competition from other regional nations, in order to consolidate such investments, the country must improve its business and investment environment.

Minister Bui Quang Vinh also warned that, “Laos, Cambodia, and Myanmar are set to join Singapore and Malaysia in becoming the country’s rivals in attracting FDI.”

In addition to registered and disbursed FDI, the FDI sector has also boosted the economy via its contribution to the nation’s export-import turnover.

According to the MPI, the FDI sector’s export turnover (which includes crude oil export revenue) is estimated to have reached US$115.1 billion in 2015, up 13.8% year-on-year, and occupying almost 71% of the country’s total export turnover.

Besides, the FDI sector’s import turnover hit US$97.9 billion, up 16.4% year-on-year, and accounting for 59.2% of the nation’s total import turnover.

As a whole, the sector enjoyed a trade surplus of almost US$17.15 billion in 2015.

The sector has also contributed to a large rise in industrial production and GDP during 2015. It has served as the strongest driving force among the four key contributors to the economy, namely the state-owned, private-owned, household individual, and FDI sectors.

An example of this is Samsung’s two projects in the northern provinces of Bac Ninh and Thai Nguyen, which have contributed to expanding economic growth for many northern provinces, according to Nguyen Mai, chairman of Foreign Invested Enterprise Association.

However, concerns have been raised that FDI has been playing too big a role in the country’s economy, while the role of local enterprises remains humble. In response, Mai said that there was no reason to limit FDI, which is functioning as the strongest engine of the economy.

Vinh stressed that FDI remained a crucial part of the economy. “In reality, an economy’s strength must rely on local enterprises, not foreign ones. However, in the context that local economic drivers remain feeble, FDI is very important,” he said.

He highlighted the benefits reaped from the FDI sector, such as employment generation, the acceleration of industrial production, and the increase in exports and imports.

“So I would like to repeat that we must support FDI,” Vinh said.

“However, we must attract high-quality projects that offer large contributions to the country. Meanwhile, we must have good policies and incentives for developing local enterprises, which can then grow to become strong rivals of foreign enterprises,” he added.

Vietnam sizes up obstacles to surmount in year ahead

Although Vietnam embarks upon its socio-economic development for the 2016-2020 period with a string of bright achievements under its belt, enterprises are still somewhat hampered by certain hurdles that must be resolved, says Professor Nguyen Mai, former vice chairman of the Ministry of Planning and Investment.

The year 2015 has witnessed many positive changes in the government’s macro-monitoring, especially in terms of interest rate policies, exchange rates, and improvements in the business climate to bring them in line with international practice.

The economy grew 6.68% in 2015, with the consumer price index falling to 0.63% year-on-year. The economy’s value grew to US$204 billion, a doubling from 2010. GDP per capita also rose significantly hitting US$2,228, up 1.9 times against 2010.

According to ANZ, Vietnam’s consumer confidence index rose 2.5 points to 144.8points in December 2015, noticeably higher than the average of 136.6 points recorded over the previous two years. This level marked a record high for Vietnam’s consumer confidence, and put Vietnam in the Asian-region pole position for the first time.

66% of the 1,000 respondents to ANZ’s survey said that they believed that economic conditions in Vietnam would be “good” over the next five years. Only 5% forecast that the economic would be “bad” for the same period.

The year 2015 also saw the entry into force of the new laws on Enterprises and Investment, as well as the amendment and supplementation of the Law on Property Business. In addition, amendments and supplements were made to the laws on excise and housing.

The new policies have been warmly welcomed by both local and foreign enterprises, as they have created an open legal framework for enterprises to do business easily. They have also eased conditions for the establishment of almost 95,000 enterprises. New enterprises were up 26.6% in number, and 39.1% in terms of capital, as compared to 2014.

Additionally, in the year just gone, about 20,000 enterprises resumed operations, about US$14.5 billion worth of foreign direct investment was disbursed, and the export turnover reached US$162.4 billion, up 81% on-year. All these achievements have laid firm groundwork for Vietnam to perform in the next stage of its development.

Last year also marked a new milestone in Vietnam’s international economic integration. Vietnam signed free trade agreements (FTAs) with the Eurasian Union (Russia, Belarus, Kazakhstan and Armenia)-VCUFTA and the Republic of Korea (VKFTA). The country also concluded negotiations on the Trans-Pacific Partnership (TPP) with 11 partners and the FTA with the EU (EVFTA), and joined the newly-formed ASEAN Economic Community (AEC).

The new FTAs will enable Vietnam to access a global market of over 1.4 billion people and US$43.7 trillion in GDP.

Under the VCUFTA commitments, about 59% of tariff lines will be removed upon this agreement’s entry into force, and a further 25% will be reduced annually. It is forecast that Vietnam’s annual exports will rise by 63% to Russia, 41% to Belarus, 8% to Kazakhstan, and exceed US$10billion overall by 2020.

Under the VKFTA terms, RoK has committed to reduce import duties by 95.4% (or 11,668 out of the total 12,232 products imported from Vietnam). Over the next 15 years, Vietnam has pledged to reduce import duties by 89.2% for many Koreans products such as textiles and garments, plastic materials, electronic spare parts, and vehicle components.

The two countries have set a trade turnover target of US$70 billion by 2020. The figure for the first 11 months in 2015 was US$33.6 billion.

Meanwhile, under the TPP, the 12 member state have committed to eliminating 78%-95% import tariff lines for Vietnam upon the agreement’s entry into force.

The Peterson Institute International Economics has forecast that the TPP will help increase Vietnam’s GDP by another US$23.5 billion by 2020 and US$33.5 billion by 2025. It will also help add US$68 billion to Vietnam’s export turnover by 2025.

The World Bank has also predicted that the TPP will help Vietnam’s GDP increase by an additional 8%-10% by 2030 (as compared to a non-TPP status).

Regarding the EVFTA commitments, Vietnam and the EU will remove more than 99% of import tariff lines. A small number will remain, for which the EU and Vietnam have agreed on partial liberalisation through zero-duty tariff rate quotas.

According to the European Trade Policy and Investment Support Project (EU-Mutrap), the EVFTA will help Vietnam’s GDP increase by another 7%-8% in 2025, with an export turnover expected to climb by an additional 50% by 2020, and 93% by 2025 (as compared to a non-EVFTA status).

The year 2015 also witnessed some unsolved economic issues. For example, public debt, including government debt, is coming close to set limits. However, the government recently downplayed these concerns, stating that public debt remained a safe level.

According to the International Monetary Fund, Vietnam’s rate of public debt payment per total budget revenue has increased from 22% in 2010 to almost 26% in 2014. Local debts, in particular, are on an uptrend. Some localities are even suffering from a large budget deficit due to their expansion of current expenditures.

Additionally, the interest rate and exchange rate is being watched closely by enterprises every day as this has a major impact on their balance sheets. There has been a widening gap between the lending rate and the deposit rate, which has brought large profits to banks, because while the deposit rate has declined, the lending rate is still very high.

According to the State Bank of Vietnam (SBV) in 2015, the credit growth rate was 18%, which is the highest rise over recent years.

However, while the lending rate averages 5%-6% in many regional nations, in Vietnam this figure is far higher. Also, procedures for providing loans remain quite complicated. As a result, only 25% of loans go to small-and-medium-sized enterprises, while the remaining 75% of loans are obtained by large-scale enterprises whose governance and performance are weak.

Thus, while some economic achievements have been recognised, the majority of enterprises are currently tormented by cumbersome administrative hurdles in tax, customs, market management, and environmental policy.

Vietnam's insurance sale hits five-year high

Vietnam's insurance sale reached around VND68 trillion (US$2.96 billion) by 2015 end, up 21.43% year on year, the highest growth since 2011, according to latest figures released by the Ministry of Finance.

Non-life insurance sector accounted for more than 45% of the total sale and recorded a rise of 14%, while life insurance sector's revenue grew 29.5%, the ministry said.

Local insurance companies' combined payouts were estimated over VND21 trillion (US$916.35 million), it said.

Vietnam's insurance market is forecast to grow over 10% in 2016.

Restructuring agriculture for integration and development

To deal with challenges brought in by free trade agreements, this year the agricultural sector has stepped up the restructuring process to create a firm foundation for sustainable integration in 2016.

The Ministry of Agriculture and Rural Development has broken down the project on Vietnam’s agricultural restructuring into sub-projects in cultivation, breeding, forestry, aquaculture, irrigation, and processing of agricultural, forestry, and aquatic products, as well as salt.

In 2015 the sector earned US$880 million in production value, up 2% from the previous year. Economist Le Dang Doanh commented on this achievement, saying, Vietnam’s agriculture has been restructured, already showing moderate success. Most outstanding is the model of large-scale rice fields. Many enterprises have invested in agriculture, including the Vincom group, who have invested in safe vegetable and fruit production. The sector should accelerate restructuring to ensure food hygiene and safety for exports.

Vietnam is pursuing the restructuring of agricultural breeding systems by zoning, grouping animals, husbandry methods, and upgrading the slaughtering system to be able to join global production chains.

In 2015 the breeding sector’s economic value increased 5% from 2014, meeting both domestic food needs and export requirements.

Minister of Agriculture and Rural Development Cao Duc Phat said the agricultural restructuring is one of the factors that will help restructure the national economy and renovate its growth model, along with socio-economic development strategies and the plans of each locality.

Phat called for applying top-priority comprehensive measures to re-arrangement production of involving more businesses, cooperatives, and value chain links. This will be necessary to further increase the application of science and technology by providing more technical training for farmers to improve agricultural production and raise their incomes.

To deal with the opportunities and challenges brought in by free trade agreements, the Trans-Pacific Partnership deal, and Vietnam’s membership of the ASEAN Economic Community in 2016, the sector has been intensifying the application of science and technology to production and processing on a larger scale, according to Doctor Nguyen Minh Duc.

“We should improve competitiveness. But how can farmers increase competitiveness without support from relevant agencies and administrations at various levels, who will create better conditions for them to access information, markets, equipment, new technologies, and new machines,” he said.

Deputy Minister of Agriculture and Rural Development Tran Thanh Nam said with about 10 million households engaged in agricultural production, Vietnam should strengthen links among scientists, businesses, and farmers to enhance the competitiveness of domestic products.

“The requirements of the global market pressure Vietnam to restructure its agriculture to increase added value in our farm produce. Provinces should identify what kinds of plants or animals are their main product and find ways to raise their value,” Nam said.

Vinalines’ failing foreign joint ventures

The four ports co-owned by Vinalines with foreign partners are either making huge losses or ceased operations.

SP-SSA International Container Services Joint Venture (SSIT), a joint venture between Vinalines and Carrix/SSA, is in a temporary halt of operation. The remaining three joint ventures, namely SP-PSA International Port (with Saigon Port and Singaporean PSA), CMIT (with Saigon Port and Danish company APMT), and CICT (between Vinalines subsidiary Cai Lan Port Investment JSC (CPI) and Carrix/SSA) are contributing significantly to Vinalines’ debts.

According to its 2014 financial report, Vinalines has accumulated an overall debt of VND20.847 trillion (US$980 million), of which CMIT contributed VND2.112 trillion (US$99 million), SP-PSA VND1.691 trillion (US$80 million), SSIT VND1.186 trillion (US$55.7 million), and CICT US$95.6 million.

SP-PSA, CMIT, and SSIT, all located in the Cai Mep-Thi Vai area, are having trouble attracting cargo. In 2015, the number of ships to this area decreased from 16 to 7 a week. The ports have trouble competing with Saigon Premier Container Terminal (SPCT) and Saigon New Port in attracting intra-Asia ships after the dredging of the Soai Rap passage.

Initially, the price of service at these ports was calculated at US$57 per 20 feet container and US$85 per 40 feet container. The market price is now US$32 per 20 feet container and US$50 per 40 feet, which is lower than the Vinalines companies’ breakeven price, forcing the ports to incur losses and operate under their designed capacities.

Meanwhile, goods passing through CICT, such as wood chips, cement, and iron ore all have low added values. As of the end of 2015, CICT has incurred a debt of US$92.4 million to banks and US$3.2 million to contractors. According to Vinalines’ acting general director Nguyen Canh Tinh, CITC cannot pay the debt at all. It can only find money to maintain minimum operation.

Tinh said that these ports may improve performance in the future with better management, but it is difficult for Vinalines and Saigon Port to keep them operating over the next few years. Vinalines needs to divest from these ports to decrease its debt burden.

SSA Marine and sponsor IFC are waiting to negotiate with the investor that is going to help Vinalines reschedule these debts. SSA Marine has just recently contacted the Ministry of Transport, asking for information on the equitisation of Vinalines and prospective investors after Vinalines’ IPO. SSA Marine also inquired about the ministry’s plans regarding the state divestment from Saigon Port in order to make plans on financing SSIT and CICT operations, the two joint venture ports between SSA Marine and Vinalines.

According to Le Anh Son, chairman of Vinalines’ board of members, the company’s investment in these ports falls between US$200 million and US$350 million per port. 70 % of the sum is borrowed from financial institutions. Vinalines recently requested the lenders for a 1-2 year extension to pay the debts.

Cashing in on the African cashew nut boom

Global cashew nut production averaging about 2.1 million metric tons annually with revenue ranging US$1.5-US$2 billion represents a major product for tens of thousands of the nation’s small-scale farmers, according to the Vietnam Cashew Association (Vinacas).

“The main world cashew production regions in descending order of size are Africa, India, Vietnam and Brazil,” said Vinacas Chair Duc Thanh Nguyen.

Nguyen said the world demand for cashews has been growing strongly in terms of both volume and value over recent years and prospects are that demand will continue to increase for the foreseeable future.

The main consumers of cashews are from the US and European markets.

Currently 40% of the cashew world production of Raw Cashew Nuts (RCN) is produced in Africa, however only 10% gets processed (shelled and peeled) on the African continent.

He said India and Vietnam trailed by Brazil are the three biggest processors.

Notably a lot of value in the value chain get lost for Africa, a market characterized by low yields of between 400-500 kg per ha, while the world average yield is 840 kg per ha.

Nguyen said the interest of the major players in the industry has been shifting to Africa as major actors from India, Vietnam, China, Brazil and Europe investigate opportunities to invest with a focus towards large scale mechanized processing.

The cashew industry is clearly in transition and the competitive disadvantage of Africa as far as processing is concerned, will change at the moment more modern mechanization processes are implemented.

The changes in the industry create a new opportunity for the nation’s domestic businesses to become proactive and more involved in producing modern machinery and equipment utilized by the cashew industry.

Most recently Nguyen said domestic manufacturers introduced a cashew nut sheller that is second to none in terms of quality and highly competitive with the finest similar equipment that other manufacturers, such as those in Italy, have to offer.

Most notably, it is priced competitively at a much lower sales price.

Nguyen Xuan Khoi, director of Khuon May Viet (Viet Prototype), in turn noted that currently domestically manufactured machines are used in eight out of the nine cashew nut processing stages.

Khoi said this allows businesses in the industry to save tens of thousands of dollars and significantly reduce production costs, resulting in much higher profits.

 “Vietnam-made shellers, for example, allow a higher percentage of nuts peeled off than the top of the line Italian sheller,” he said

He said a director of a cashew export company, which is a member of the Vietnam Cashew Association (Vinacas), boasts domestically produced low-cost processing machines not only help businesses cut expenses on machines, but also allow them to reduce labour cost.

One business that he is aware of reduced the number of workers from 100 to 30 since the production line was automated with high quality Made-in Vietnam machinery and equipment.

Le Van Dat, director of the Gia Loi Company in Long An Province said durable domestically produced cashew processing machinery and equipment has an excellent shot at becoming favoured in the world.

Limited numbers of dryers, moisture meters, metal detectors, sterilizers, and the machines to classify nuts by size and pack products have been exported to overseas markets so far, but the potential for greatly enhanced exports is there.

According to Vinacas Chair Duc Thanh Nguyen, about 10 member manufacturers of the association are currently exporting machinery and equipment, mostly to Africa.

India, one of the countries with modern cashew nut processing technology, and formerly the major supplier of machines to Vietnam, has also recently placed orders for several domestically produced machines.

French company pursues asphalt plant in Binh Dinh

France Emulsion – a leader in paving solutions, processes and machinery – has announced its commitment to the local community by constructing a US$22 million asphalt emulsion plant in Binh Dinh Province.

“France Emulsion strives to positively impact the regions in which we operate,” said a company spokesperson in making the announcement.

“We view the development of the four-hectare site at the Nhon Hoa Industrial Park in An Nhon town as an investment in the community and look forward to our new partnership.”

Vice Chairman Phan Cao Thang of the Provincial People’s Committee confirmed the approval of the construction permit for the facility, emphasizing the plant will create many good paying jobs for residents.

The company’s products are widely used in road building and bridge construction.

Hanoi bourse launches first New Year session

The Hanoi Stock Exchange (HNX) launched the first New Year trading session in Hanoi on January 4.

Speaking at the event, Minister of Finance Dinh Tien Dung said Vietnam reaped significant achievements despite global economic downturn in 2015.

The stock market, in particular, was facilitated by a more synchronous legal system and framework, with important documents such as the Prime Minister’s Decree 60 to remove limits on foreign ownership in listed companies and another decisions on equitisation, market activities, and healthy stock companies, he noted.

The minister hails the HNX for its crucial role in 2015 with the operation of three trading markets: listed stock market, Government bond market, and unlisted public company market (UPCoM).

He requested the sector to double efforts to boost socio-economic development, while suggesting the State Securities Commission review the market in 2011-2015 to map out a development plan for 2016-2020.

It is necessary to continually implement the Government’s equitisation and divestment policies and push ahead with stock market restructuring in preparation for global integration, he added.

On the occasion, the minister presented the first-class Labour Order to the HNX.-

Vietnam’s trade deficit with ASEAN picks up since 2013

The deficit Vietnam runs with its Southeast Asian neighbors is going up as what the country has earned from exports are eclipsed by what it has paid for imports, according to newly released statistics from the General Department of Vietnam Customs.

Trade between Vietnam and ASEAN member countries has picked up since 2005, and so has the nation’s trade deficit with the group, which saw some brief declines in 2008-09 and 2011-13.

The ten-member ASEAN, which has just become a free trade bloc, covers Vietnam, Cambodia, Laos, Thailand, Myanmar, Malaysia, Singapore, Brunei, Indonesia and the Philippines.

Vietnam’s trade gap with ASEAN rose from US$3.9 billion in 2005 to US$9.2 billion in 2008 before retreating to US$5 billion the following year.

The figure surged to US$6 billion and US$7.1 billion in 2010 and 2011 before dropping to US$3.4 billion and US$3.2 billion in the next two years.

The trade deficit rose 25% year on year to US$4 billion last year, and it is estimated to increase 37.5% to US$5.5 billion in 2015.

The value of two-way trade between Vietnam and other ASEAN countries quickened at an average of about 26% per year in 2005-08, according to statistics from the General Department of Vietnam Customs.

In 2005, trade between Vietnam and ASEAN reached US$14.91 billion, and the figure doubled to US$29.77 billion at the end of 2008.

In 2009, influenced by the world economic crisis, Vietnam and ASEAN trade dropped 24% from the previous year to US$22.89 billion.

However, during 2010-12, it rebounded at a double-digit growth rate of 19% per year. Specifically in 2012, total import-export turnover between Vietnam and the grouping topped US$38.7 billion.

From 2013 to the present, bilateral trade between Vietnam and ASEAN has achieved positive growth, but showed some signs of slowing down.

Prior to 2010, Vietnam's main exports to ASEAN markets were crude oil and rice, accounting for over 50 percent of the total turnover.

Since 2010, Vietnamese shipments to the bloc have been diversified with many more products such as telephones and components, computers, electronic products and components, iron and steel, machinery, appliances and parts.

Vietnam now has advantages in exporting garments and textiles, footwear, seafood, coffee and rubber.

VEF/VNA/VNS/VOV/SGT/SGGP/Dantri/VET/VIR