TPP signing-an important milestone: trade ministers

Trade and economic ministers of the 12 member countries of the freshly-sealed Trans-Pacific Partnership (TPP) agreement have affirmed that the signing of the deal signals an important milestone and the beginning of the next phase for TPP.

In a joint statement issued on February 4 following the signing of the agreement in Auckland, New Zealand, the ministers called the TPP a historic achievement for the Asia-Pacific region.

The countries should now focus on completing their domestic legal procedures, they said.

According to the statement, the TPP will set a new standard for trade and investment in one of the world’s fastest growing and most dynamic regions.

With a market of more than 800 million people, the 12 participating countries account for nearly 40% of the global economy and one third of the world’s trade.

In the statement, the ministers affirmed that the deal’s objective is to enhance shared prosperity, create jobs and promote the sustainable economic development of all member nations.

“After five years of negotiation, signing the TPP is an important milestone in our efforts to set high-standard rules of the road in the Asia-Pacific region and more generally,” they said.

Speaking with the press after the signing ceremony, Australia's Trade Minister Andrew Robb said the TPP is likely to bring opportunities to Australian businesses, both exporters and importers.

The Australian Government had enough time to examine the 6,000-page trade document ahead of signing, the said.

The minister noted that TPP will add extra momentum to the trade negotiation on the Regional Comprehensive Economic Partnership (RCEP) which is expected to be completed this year.

TPP is a free trade agreement between 12 countries - Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States and Vietnam.

It’s main function is to lift different types of taxes and barriers to goods and import-export services between the nations.

The TPP will now undergo a two-year ratification period in which at least six countries - that account for 85% of the combined gross domestic production of the 12 TPP nations - must approve the final text for the deal to be implemented.

Clients warned about borrowing risks

Consumers have been urged to think twice before using borrowing for consumption from commercial banks and financial companies as they rush to prepare for Tet (Lunar New Year Festival).

This message is delivered by the Ministry of Industry and Trade's Competition Authority as disputes over this type of service was one of the issues most received by the authority last year.

The service is to provide loans to individuals and households to buy goods such as home appliances, vehicles and houses mainly under the pay-by-installment method without collateral.

The authority had been receiving complaints about the service since the beginning of 2015, Cao Xuan Quang, director of the authority's Consumer Protection Division said yesterday.

So far, the number of complaints has totaled 91, of which 19 cases have become complicated issues, he added.

The disputes often stem from the difference between interest rates that consumers were offered before signing contracts and the rates that they actually had to pay, Quang said.

He noted that in fact, most of the cases were partly due to consumers' carelessness and lack of knowledge about this type of credit. They were often attracted by the easy lending procedure and collateral-free characteristic of the service so they did not check the contracts thoroughly, he said.

A customer who was looking for a new motorbike in a shop on Tran Quang Khai Street said that she saw a leaflet advertising the pay-by-installment service offered by a bank. She said the interest rate on the leaflet was written "nearly 1.5 per cent," but without "per year" or "per month," making her confused.

If it was quoted on yearly basis, it was impossible because the bank would have no profit, but if it was on monthly basis, the rate was quite high for low-income people, she said.

"I don't mind paying the interest if I choose the service as the rate is acceptable, but at least the rate must be clearly stated. Otherwise, people who have low income and little knowledge about finance would be confused."

Nguyen Thi Kim Thanh, former director of the Banking Strategy Institute under the State Bank of Viet Nam, commercial banks are trying to raise outstanding loans aimed at individuals to boost their overall credit growth and offset the slowdown of enterprise lending services.

Many banks and financial companies are launching promotion campaigns during Tet to stimulate consumption.

Nguyen Tuan Linh, director of the Military Bank's Le Trong Tan Branch, said that this was a favourable time for banks and financial companies to encourage people to borrow as their demand often increases strongly before the Lunar New Year festival. Thanh said people should consider their ability to pay before borrowing and buying because the interest rates for the loans were normally high.

People should not complain about the interest rates, she said, adding that they must be high as loans for consumption were often small in value and free of collateral, and obviously became very risky for lenders. People should be aware that riskier assets must come with higher returns, she stressed.

Chau Dinh Linh, a lecturer at the Banking University of HCM City, said that middle-income individuals and people aged from 23 to 35 were potential customers of the banks and companies. This group had more incentives to consume but limited financial resources, he explained.

But if they did not manage their budgets well and could not control their needs, they would easily fall into the trap of debt, Linh warned.

The interest rates for the loans could rise up to 85 per cent per year, but the loans were often divided into small amounts, so consumers hardly recognise it, he said.

Therefore, consumers should learn to protect themselves, he added.

Thanh agreed, saying that because more and more credit services were offered in the financial market, consumers should also improve their knowledge to assess them properly and to choose the right services for themselves.

HCM City reviews socio-economic plan

The HCM City People's Committee reviewed its socio-economic development and State budget for January, and mapped out its priorities for next month.

The municipal People's Committee said at a conference held on Monday that total sales of goods and services in January reached VND64.69 trillion ($2.9 billion), up 4.1 per cent from the previous month and 12.7 per cent on the year.

Exports, excluding crude oil, were expected to reach US$2.26 billion, an increase of 6.4 per cent against the same period last year. Imports were estimated at $2.86 billion, a 6 per cent decrease from the previous month but a year-on-year rise of 9 per cent.

Support policies have shaken up investment in the city, with the number of newly registered businesses rising 30 percent year on year to more than 1,900, with a combined capital of VND11 trillion ($496.7 million).

About 2,770 companies added nearly VND16.37 trillion ($734 million) to their registered capital, up 8.4 per cent and 68.4 percent respectively, compared with the same period last year.

International tourist arrivals in the city rose 8 per cent on the year to 445,500 during the first month of 2016, earning the city VND8.34 trillion in revenue – an increase of 7 per cent.

City People's Committee Chairman Nguyen Thanh Phong asked departments and local authorities to work hard to prepare a united, safe, joyful, cost-efficient Tet holiday for all residents.

The city is working to stabilise the prices of primary goods before and after Tet. It will also enhance management to prevent speculation, and ensure food safety and hygiene.

Bui Xuan Cuong, director of the municipal Department of Transport, said the city would provide sufficient vehicles to meet surging travel demand as people rush to return to their hometowns to celebrate Tet with their families.

Ten per cent more pre-Tet supplies were collected than expected – up 40 percent from last year, said City Department of Industry and Trade Deputy Director Nguyen Ngoc Hoa.

Le Van Khoa, deputy chairman of the Municipal People's Committee, urged banks to monitor their ATMs to avoid any unwanted breakdowns. Firms must also pay full salaries and bonuses, he said.

On goals for February, Phong said relevant bodies needed to work with local enterprises to learn firsthand about their difficulties with administrative procedures and create a better business climate.

EVN reports official 2014 profit

The Electricity of Viet Nam (EVN) reported a profit of more than VND800 billion (US$36 million) in the year 2014, the Ministry of Industry and Trade (MOIT) said.

This was the figure audited by independent accounting firm Deloitte Viet Nam. The electricity tariff and other business figures were also reviewed by the team established by the MOIT, the finance ministry, electricity associations and the Viet Nam Standards and Consumer Association. The results were based on checks at EVN and some of its member units.

The previous estimated profit announced by EVN in early 2015 was VND300 billion ($13.3 million) due to increasing input costs.

Statistics from the audited report released at the conference to announce the electricity input cost held in Ha Noi on Tuesday revealed that power output in 2014 was 128.63 billion kWh while the power lost was 8.49 per cent, which was 0.9 per cent lower than the set target of 9.39 per cent.

The total cost for power production and trading was VND198 trillion ($8.8 billion), or VND1,539 for every one kWh.

The total amount for power generation was VND152.9 trillion ($6.79 billion) while the total cost for power transmission wasVND10.5 trillion ($466.6 million).

The EVN spent VND33.6 trillion ($1.49 billion) for electricity distribution and retail. Meanwhile, the total cost for supporting services and management was VND905.1 billion ($40.2 million).

The power sector earned VND197.1 trillion ($8.76 billion) from power sales while turnover from other related activities wasVND1.69 trillion ($75.1 million) in 2014.

Of this, the turnover from financial activities from EVN and National Power Transmission Corporation and power corporations was VND1.15 trillion ($51.1 million), and turnover from investment into its corporations was VND101 billion ($4.48 million).

However, EVN's Deputy General Director Dinh Quang Tri said the profit was too low when compared with their charter capital of VND160 trillion ($7.1 billion).

Tri added that the figure did not take into account the exchange rate difference.

"If EVN had brought in VND5 trillion in the exchange rate difference, we would have been in a loss in 2014," he said, and added that EVN was asked to pay back the losses in instalments of 10 years to 15 years.

This is the special mechanism for EVN as its power tariffs are stipulated by the government.

According to the report, expenses not accounted for in the electricity cost price was about VND4.78 trillion ($216.48 million), as of 2014. This includes losses of VND1.68 trillion ($74.6 million) due to exchange rate fluctuations from the National Transmission Corporation, and VND642 billion ($28.5 million) from Power Generation Corporation 1.

Tri also confirmed that EVN has no plans for a power tariff increase this year based on estimates of production costs in 2016 as well as supply and demand. In January, the power demand was increased between 6 per cent and 7 per cent.

However, he noted that in the summer of 2016, EVN would need several solutions to save power as they could not forecast the weather and power capacity.

"We will strive to prevent power tariff rise this year. We always expect stability in our business, and EVN could increase the price only if it is unavoidable," he said.

Following Decision 69/2013/QD-TTg that took effect on January 10, 2014, the average electricity tariff can be revised every six months, following the Government's price frame. There will be at least a 7 per-cent increase, compared with the current average level.

If input costs increase from seven per cent to less than 10 per cent, compared with the current level, EVN is allowed to raise electricity tariffs correspondingly after receiving the approval of the MOIT.

Every year, EVN will prepare an electricity pricing scheme to submit to the MOIT and the finance ministry. After considering the production costs, business and production situation of EVN and socioeconomic conditions, the ministries will decide a specific price scheme.

If the electricity tariff needs to be increased by 10 per cent or more or higher than the Government's price frame, the MOIT must report the case to the Government after discussing it with the finance ministry.

Vinamilk's profit rises 28 per cent

The Viet Nam Dairy Products Joint Stock Company (Vinamilk) posted an after-tax profit of nearly VND7.8 trillion (US$350 million) last year, an increase of 28 per cent year-on-year.

The company's total revenue in 2015 reached VND40.2 trillion ($1.8 billion), up 14 per cent against 2014.

Vinamilk reported revenue of VND11.1 trillion ($500 million) in the fourth quarter of 2015, an increase of 19 per cent year-on-year. The company earned VND1.9 trillion ($85 million) in after-tax profit, up 10 per cent compared with the same period last year.

Although a majority portion of Vinamilk's revenue comes from the domestic market (more than 80 per cent), the revenue earned from overseas markets has witnessed strong growth, increasing 39 per cent compared with 2014.

The company's expenditure in 2015 rose by 70 per cent to touch VND6.2 trillion ($280 million), of which advertising expenditures comprised VND1.8 trillion ($80 million), up 82 per cent.

Tho Loc People's Credit Fund put under special supervision

The State Bank of Viet Nam (SBV) on Wednesday announced that it had put the Tho Loc People's Credit Fund under comprehensively special supervision within three months.

This step had been taken as the credit institution was facing insolvency and unaffordability.

According to the central bank, the Tho Loc People's Credit Fund, which is located at the capital's Phuc Tho District, had committed numerous violations in financial management and credit grants, causing a negative impact on the fund's financial status and its business performance.

During the supervision period, besides direct supervision on the fund's daily performance, the central bank will also co-ordinate with relevant authorities at the Phuc Tho District and legal agencies to enhance the retrieval of the fund's non-performing loans through the application of serious punishment on those who deliberately delayed repayment to the fund, causing losses to the State and depositors.

The central bank will also implement comprehensively necessary measures to maintain and recover the fund's performance and protect legal interests of depositors.

Early this year, the Government instructed the central bank to focus on handling ailing credit institutions this year, in which it allowed the central bank to adopt strong measures, including State intervention.

SBV Deputy Governor Nguyen Phuoc Thanh recently also announced that the central bank was considering allowing some ailing financial companies and People's credit funds to declare bankruptcy this year.

According to Thanh, the plan was aimed to gradually inform the market about the bankruptcy in the banking system and warn bank owners to be much more serious in conducting business.

Though there had been some distressed credit institutions in the domestic banking system, the country had not seen any bankruptcy issues for the past years as the central bank was concerned that it could have a negative effect on the entire banking system.

Under a restructuring scheme for the banking system from 2011 to 2015, the number of commercial banks was cut from 42 to 34. Besides restructuring 10 banks through mergers, the central bank also dealt with three ailing banks – Ocean Bank, Viet Nam Construction Bank (VNCB) and Global Petroleum Bank (GPBank) – by acquiring them at zero dong.

Thanh said that transparency in the banking system has improved significantly in the past four years. Cross ownership at banks has been put under control and liquidity of the banking system has been secured.

However, Thanh required banks to take more drastic measures this year to enhance their financial and governance status to meet the rising demands.

Car rental prices to double during Tet

The cost of automobile rentals has risen as much as 20-100 per cent as Tet (Lunar New Year) approaches, according to rental car agencies.

Cars such as Innova, Vios, Laceti, and Matiz, among others, for example, cost between VND800,000 (US$35.88) and VND1 million ($44.86) per day, compared with VND650,000 ($30) on ordinary days. This is about 20 per cent higher than usual.

For more luxury models, prices are expected to rise to VND2 million ($89.72) a day instead of VND1 million ($44.86) per day, a 100 per cent rise.

Most visitors rent cars to travel to tourist destinations like Vung Tau in the southern province of Ba Ria-Vung Tau, Nha Trang in the central province of Khanh Hoa Province, and Da Lat in the Central Highlands province of Lam Dong, according to Hong Ngoc Quang, director of a travel transport cooperative in HCM City's District 10.

Tet, which falls on February 8, is Viet Nam's biggest traditional celebrations honouring family reunions and recreation.

During the holiday, some Vietnamese people travel while others visit pagodas or return to their hometowns for family reunions and holiday celebrations.

Duyen Hai 1 power plant connects to grid

Thermal power plant Duyen Hai 1 in the southern province of Tra Vinh officially has started operating and is now connected to the national grid.

Le Hai Son, deputy director of the management board for thermal power plant 3 project said yesterday that after two weeks of commercial operations, Duyen Hai 1's first and second turbines are generating nearly 10 million kWh per day.

This year the two turbines, with a designed capacity of 1,245MW, are expected to add 5 billion kWh to the national grid.

Turbine 1 started a trial run on January 31, 2015. The second turbine was connected on April 26, 2015.

Since their trial operations began, the turbines have contributed 1.8 billion KWh to the national grid.

Electricity of Viet Nam's Power Generation Corporation 1 funded the project, part of the Duyen Hai power complex, at a cost of VND111.4 trillion (US$5 billion)

The complex is home to four coal-fired thermal power plants and the Mekong Delta's largest coal port. Turbines 1 and 2 at Duyen Hai 3 are slated to begin commercial operations in late 2016 and 2017, respectively.

By late 2018, an expansion of Duyen Hai 3 should be complete.

In December, the Ministry of Industry and Trade and Malaysia's Teknik Janakuasa Group signed a contract to build Duyen Hai 2.

The plant has a total investment capital of more than VND44.6 trillion ($2 billion), 80 per cent from loans. The plant will use imported coal and two turbines with a total capacity of 1,200 MW.

The plant is expected to start up in 2020 and contribute an additional 30 billion kWh to the national power grid per year. It is also expected to play an important role in ensuring the southern region's energy security.

Vietnam, New Zealand forum in Auckland promotes trade

Vietnam and New Zealand business leaders met on the side lines of the TPP signing ceremony in Auckland to get a better handle on emerging issues surrounding increased trade and cooperation between the two countries.

Dozens of business, community and government leaders were in attendance at the event sponsored by the Ministry of Industry and Trade (MoIT) in collaboration with the ASEAN Business Council-New Zealand (ANZBC).

At the forum, Vietnam Minister of Industry and Trade Vu Huy Hoang talked about where the Vietnam economy has been, where it is headed and how the proposed TPP and governmental laws and regulations under consideration would affect them.

Forums like this are designed to improve Vietnam and New Zealand trade and cooperation relationships, said Hoang because by being there and talking face to face it gives people a better fingertip feel for what's going on.

Hoang said Vietnam’s combined imports and exports with New Zealand have increased more than two-fold over the last five years to US$707 million in 2015, which has barely scratched the surface of the future potential.

In addition, Hoang said he was confident that passage of the TPP would be important to maintaining export momentum with New Zealand and result in prospering trade and investment relations between the two nation’s business communities.

New Zealand Minister of Trade Todd Michael McClay, agreed with Hoang’s assessment that the TPP would stimulate economic trade and cooperation between the two nations in a vast array of fields.

McClay also unveiled the planned launch of a new direct air route between Auckland and Ho Chi Minh City later this year by New Zealand Airlines that is expected to play an important role in enhanced trade between the two nations.

Experts: TPP deal spurs aquatic export

Economic experts have forecast that Vietnam’s aquatic export to the US, Japan and other Trans-Pacific Partnership (TPP) members will increase after the deal was officially signed on February 4.

The effective free trade agreement with the European Union as well as the TPP will help spur domestic aquatic export to key markets in 2016, said Ngo Van Ich, President of the Vietnam Association of Seafood Exporters and Producers (VASEP).

According to Truong Dinh Hoe, VASEP General Secretary, domestic aquatic exporters will be ready to meet the standards of import markets to fully tap potential from the agreement.

Even before joining the international free trade agreements, they have long fulfilled the strict standards of import nations, such as the BAP, ASC and MSC CoC standards of the US, he affirmed.

With zero tariffs, firms will focus their investment in aquaculture, processing and exporting, thus improving their product value, he said.

The deal also contributes to facilitating negotiations with international partners, thanks to the nation’s enhanced reputation as a TPP member country, Hoe added.

Deputy Director General of the CADOVIMEX 2 Seafood Import-Export and Processing Joint Stock Company Nguyen Phuoc Buu Huy said his company has applied BAP-met technologies in its production, processing and export line.

His company stands ready to meet the strict requirements from importers in the US and Japan, among others, Huy said, suggesting that domestic firms actively expand their markets to ensure stable export.

Meanwhile, Director General of the Hung Vuong Joint Stock Company Duong Ngoc Minh stressed the need for the sector to tap the potential from the domestic market.

Domestic firms should enhance their product quality to increase their competitiveness in the domestic market, thus ensuring the sustainable development of the sector, Minh said.

Other experts from VASEP called on the Ministry of Agriculture and Rural Development (MARD) to review relevant legal framework and devise incentives for the sector to help firms better meet the requirements of the international market.

MARD Minister Cao Duc Phat pledged that the ministry will stand side by side with domestic aquatic exporters to overcome challenges exposed from the free trade agreements and the TPP.

Small-and medium-sized enterprises need more attention

There is a need to have more preferential policies for small-and medium-sized enterprises (SMEs) to help them grow as a core force of the local economy, said Minister of Planning and Investment Bui Quang Vinh.

In an interview granted to the Vietnam News Agency, Minister Vinh affirmed that the Government always attaches importance to all economic sectors and is trying its best to promote SMEs.

A series of issued laws such as the Investment Law, the Enterprise Law, and the law on amendments and supplements to several articles of tax laws favour SMEs and private businesses, he said.

He cited that the 2014 Investment Law gives more favourable conditions for domestic enterprises as they do not need to have a project to get an investment licence, as foreign invested enterprises must do.

However, the minister admitted that the country has not yet paid full attention to facilitating the development of SMEs and private businesses.

Therefore, the Ministry of Planning and Investment has built a number of laws to support these enterprises, he said, adding that it is drafting a law on supporting SMEs.

In 2014, the Government entrusted the ministry to set up an SME support fund to provide businesses with preferential loans through commercial banks.

The ministry has also proposed the Government establish business incubators that encourage creative ideas from businesses and people, especially the young.

Regarding SME support policies to come, Vinh suggested the State have policies to assist businesses in start-up activities, access to credit and in market assessment.

Enterprises anticipate opportunities brought by newly-signed TPP

Vietnamese enterprises are ready to bring into full play the opportunities as well as face the challenges brought by the Trans-Pacific Partnership (TPP) agreement, which was officially signed on February 4.

According to Minister of Industry and Trade Vu Huy Hoang, the TPP is a high quality new-generation agreement, which will boost exports, attract more foreign investments and increase the position of Vietnam in the region and the world.

In anticipation of those opportunities, the Vietnamese garment sector has implemented many initiatives to restructure itself to conform with the integration process.

Numerous production chains have been put into operation to meet the agreement’s requirements on rules of origin, which help increase the localisation rate and the prices of several garment companies’ shares.

General Director of the Vietnam National Textile and Garment Group (Vinatex) Le Tien Truong said that Vietnam has to import a large amount of materials.

Therefore, the group has prepared for a long time and coordinated with foreign companies in building material production regions.

As an outstanding unit of the garment and textile sector, the Phong Phu Corporation has coordinated closely with Vinatex’s subsidiaries and other companies to form a large supply chain, while reforming management capacity and technologies in order to stay firmly in front of big foreign rivals.

However, there still remain businesses which have not made any moves to restructure, as they lack knowledge about TPP. Many of them do not know how to benefit from the zero percent tariff rate applied when Vietnamese products are proved to have a domestic materials content of 60%.

Head of the Ministry of Industry and Trade’s Light Industry Department Phan Chi Dung pointed to the fact that if the sector wants to invest in material sources, it has to find thousand-hectare material regions.

However, this is a challenge because many localities do not provide large fields to develop materials, as they are afraid of environmental pollution risks caused by garment production.

In addition, once the agreement comes into effect, companies will face fiercer competitiveness on goods, services and investment, numerous trade protection measures, and tighter requirements on product quality.

Deputy chief of the Inter-sectoral Steering Committee on International Economic Integration, Trinh Minh Anh, suggested businesses make efforts to meet global standards to increase competitiveness.

They were also urged to have a thorough understanding of integration to analyse the process’s influence on their products, and have appropriate plans of action.

Minister Hoang asked Government, State management agencies, and relevant ministries and sectors to pay attention to building standards that ensure the quality of products sold in Vietnam and prevent substandard goods from entering into the country, thus facilitating domestic firms’ development.

He added that it is necessary to promote communication work to raise enterprises’ awareness of the TPP contents, helping them identify advantages as well as challenges, in order to take responsive measures and get the best out of opportunities arising from the deal.

Toyota Vietnam sells 5001 cars in January

Toyota Vietnam sold 5,001 cars in the first month of 2016, up 17% compared to the same period last year.

The northern and southern markets captured the lion’s share of 43% and 41%, respectively, while the central region consumed 16%.

Sales of saloon cars reached 2,625, up 8% compared to 2015’s January.

The Vios model continues to be the top selling saloon with 1,456 units sold, an increase of 32% year-on-year. The Camry model came second with 520 cars sold, but that was a surge of 157% compared to the sales recorded 12 months ago.

The number of commercial vehicles sold in the month hit 2,376 units, an increase of 30% against last year, with the Fortuner model selling 983 units and the Innova 950 units.

The latest semi-truck Hilux 2015 model made record sales since its introduction last October, with 278 cars sold in January. The model has an accumulated sales figure of nearly 1,000 cars.

Besides these, the Toyota sold a total of 233 Yaris cars, 86 Prado cars, 27 Hiace cars and 52 Land Cruiser cars over the month.

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