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BUSINESS IN BRIEF 5/3

Number of newly-established businesses up 26.6%; Vietnam sees trade deficit in first two months; Growing container inventory at seaports creating problems; Gov't decision to stockpile rice raises domestic prices

Japan's Dentsu acquires full-service digital marketing agency Emerald

Japan's Dentsu Aegis Network on March 3 announced that it is set to acquire a stake in Emerald, a full-service digital marketing agency in Viet Nam, to strengthen its size and scale in Viet Nam market.

Emerald, which has over 80 employees, will become a company within Isobar, Dentsu Aegis Network's global digital marketing agency, and will be called Emerald - Linked by Isobar.

Thi Anh Dao will continue as managing director and report to Toshinori Aoki, CEO of Dentsu Aegis Network Viet Nam.

TV accounts for almost 80 per cent of advertising spending and digital accounts for only around 3-5 per cent, according to Aoki. But with more and more people using digital tools as well as smart phones, sooner or later budgets would shift to digital, meaning potential for digital growth in Viet Nam is huge, he added.

Nguyen Khoa Hong Thanh, Emerald's operations director, said this partnership would allow the company to leverage the global resources and talent of the group to improve its service quality as well as deliver groundbreaking work for its clients.

Emerald has been an affiliate of Isobar in Viet Nam since 2012.

The financial terms of the transaction have not been disclosed.

HCMC leaders undertake to solve difficulties for businesses

Most businesses at the meeting talked about issues concerning to capital, tax and administrative procedures.

Chairman of HCMC Business Association Huynh Van Minh said that HCMC saw 22,423 businesses stop operation in the first 11 months last year or an average of 2,038 a month. The number was only 1,871 companies a month in 2013.

The figures showed that many businesses have still met with difficulties. The housing credit package of VND30 trillion (US$1.4 billion) has been disbursed very slowly to help recover the real restate market.

Many firms have been trapped with deep debts and unable access bank loans. As a result, Mr. Minh proposed authorized agencies to help them lower the interest rate of old loans, extend debt payment time and give interest rate priorities to those making consumer and export products.

Chairman cum director general of Maseco Company Nguyen Xuan Han said that businesses faced with severer competition from global economic integration. Many of them have been forced to go bankrupt and a number of renowned brand names have fallen into the hand of foreign firms.

The existence and development of the rest companies depend on Government’s mechanisms and policies, he said.

Administrative procedures are very complicated now raising difficulties for businesses. For instance, it took over four months for businessmen who have to visit 7-8 agencies to renew their APEC Business Travel Cards, Mr. Han cited.

On the other hand, too many new regulatory documents have been issued and businesses do not have time to read all, making them vulnerable to violations.

This has caused many enterprises wrongly declare business income tax and forced them to have the court prove them innocent, he added.

Director General of Viet Huong Joint Stock Company Hang Vay Chi worried that the 90 million Vietnamese market would become a consumption market for products of other nations as it has not carefully prepared for deeper integration into the region and world economy in 2015.

He proposed relevant agencies to reconsider lowering long term interest rates to suit businesses’ situation and land rent, which is 4-5 fold higher than that in 2010.

Authorized agencies should have clear norms to define small and medium enterprises (SMEs) type, from which to give suitable assistance policies. Current regulations, identifing companies with the annual turnover of less than VND20 billion (US$939,000) as SMEs, are completely impractical.

A fund should be established to sponsor SMEs, and low interest rate should be offered to assist businesses to improve their product’s quality.

Chairwoman of Mechanics - Electricity Association La Thi Lan said that mechanics has weakly developed compared to that in the country. Low investment efficiency has not encouraged investors to move in this field.

The price of locally made mechanic products has been pushed up because electricity, water and other service prices as well as wage have surged an average of 10-12 percent. Social insurance premium was found a rise of 22 percent for some years.

HCMC has determined mechanics as one of key industries but has built no industrial zone for businesses in the sector. Support industry development should be implemented as a macro strategy instead of by some businesses.

At the meeting, Chairman Le Hoang Quan has recorded and responded to opinions and proposals of businesses. He instructed authorized agencies to repair or replace unreasonable mechanisms and policies.

Secretary Le Thanh Hai said that HCMC would arrange more fund for the demand stimulation program, the total capital of the program has reached only VND27 trillion (US$1.27 billion) for the last ten years.

In addition, the city will assist businesses to renovate their equipment and factories, reconsider loan interest rates to help enterprises boost investment, increase the localization rate of their products, reform administrative procedures, and develop human resources to meet economic development demand, he added.

HCMC leaders would carry out drastic measures to solve difficulties for businesses because they consider businesses’ difficulties and benefits as the city’s, and regularly meet with and listen to businesses to solve issues for the city’s development, Mr. Hai concluded.

Oil prices send CPI down, Tet ups purchasing power

Although Vietnam saw its consumer price index slip in February due to plunging oil prices, purchasing power surged during the Tet (Lunar New Year) holiday.

According to the General Statistics Office (GSO), total retail sales of goods and services in February touched 276.2 trillion VND (12.97 billion USD), up 3.7 percent from the previous month and 11.6 percent against February 2014.

The private sector contributed more than 86 percent, while the State sector and the foreign-invested sector contributed 10 percent and 4 percent, respectively.

GSO said as the Tet holiday fell in February, consumption demand rose with purchasing power for food and foodstuffs, which was up 8.9 percent and for garments, which rose 3.6 percent.

Goods retail sales totalled 210.9 trillion VND (9.9 billion USD), up 4.2 percent against the month before and 12.6 percent from the same period last year.

Revenue for accommodation and catering services totalled 32.5 trillion VND (1.52 billion USD), rising by 2.3 percent over January and 17.7 percent from a year ago.

During the first two months of this year, combined retail sales touched 542.7 trillion VND (25.4 billion USD), indicating an 11.4 percent fillip over  

the same period last year. Excluding the price increases, total retail sales were up 6.2 percent over the same period last year.

GSO expert Vu Manh Ha said that the improved purchasing power was thanks to falling CPI, which dropped by 0.25 percent in the first two months of this year, in comparison with the 1.24 percent rise in the same period last year.

A recent report by Epinion, a market research company, found improved optimism of consumers with two-thirds of the population saying that they was prepared to spend more for Tet in 2015 than in previous years, according to Jay Kumar Kamala from Epinion Vietnam.

Notably, consumer confidence was found to have improved strongly in many areas outside Hanoi and Ho Chi Minh City, suggesting that companies could also earn profits from markets located outside the country's two major cities.

Epinion's survey also found that younger Vietnamese people, especially those in the 18 to 24 age group, spent more this Tet than people in any other age bracket. This resulted in a growing demand for luxury products ahead of the Tet holiday.

The younger population was also the driving force for growth in the country, Kamala pointed out, adding that shopping for fashion and technology products was an emerging trend, especially at a time when online shopping is becoming more and more popular.

Vietnam sees trade deficit in first two months

Vietnam experienced a trade deficit of 61 million USD in the first two months of 2015, compared to a 1.35 billion USD surplus in the same period last year, according to the Ministry of Industry and Trade.

The deficit was the result of a trade surplus of 2.01 billion USD, including crude oil, in FDI enterprises and a 2.07 billion USD deficit in the domestic sector.

Experts said the return of a trade deficit after a long period of surplus does not indicate an economic downturn, as it is normal for a developing country like Vietnam to have elevated rates of imported materials for production. The increase in imports is expected to stimulate the economy on the basis of valid free trade agreements.

The ministry said besides measures to boost exports, the business community must also seek new and potential export markets for Vietnamese commodities.

Growing container inventory at seaports creating problems

Thousands of containers holding goods are lying unused at seaports across the country, limiting the storage area, incurring expenses for preserving goods and creating difficulties in inventory management.

This has been brought to light by the Viet Nam Maritime Administration (Vinamarine) under the Ministry of Transport.

At the end of August last year, more than 5,400 containers and more than 1,300 parcels were in stock at the country's seaports, according to Vinamarine.

More than 5,000 containers were kept in the Hai Phong port, with the Quang Ninh port holding 52 containers, the Da Nang seaport keeping 99 and the HCM City seaport holding 177 containers and more than 1,300 parcels.

Most of the goods are used rubber tyres, clothing, electrical devices, electric goods, frozen food and scrap.

Nguyen Nhat, Vinamarine director, said some containers at the Hai Phong seaport had been kept in storage for the last five to 10 years. More than 1,000 containers out of 5,000 at the seaport had remained in storage since 2006.

The reasons for this problem are that the goods are listed for re-export. They are taken to the Hai Phong seaport and then re-exported to China or other countries, but China has strict policies governing re-exported goods received via border posts so these goods cannot be exported, Nhat explained.

Confectioner's net profit up 9 per cent over 2013

Giant confectioner Kinh Do Corporation has reported an over 9 per cent growth in after-tax profits for 2014.

In dong terms, the profit rose to VND547 billion (US$26 million) from VND500 billion ($23.8 million) in 2013.

The turnover increased by nearly 9.3 per cent to VND5 trillion ($238 million), up from 6.5 per cent.

Central region station links to national power grid

Thanh My-Nam Giang's 500 kilowatt (kV) transformer station is operational and was connected to the National 500kV grid last week, the Management Board of Power Projects in the Central Region revealed.

The station, which was built with a total investment of VND928 billion (US$44 million) in the second phase, will help improve power transmission from the Xe Kaman 3 Hydro-power Plant in Laos and through the Dak Mi 1, Dak Mi 4, Song Bung 2 and Song Bung 3 plants in Quang Nam Province.

The first phase of the project was completed and connected to the national power network in 2011.

Lines one and two of the trans-Viet Nam 500 kV station and line 3 connecting Pleiku, My Phuoc and Cau Bong were completed last year.

Hai Phong industrial zones receive FDI injection

Industrial zones in this northern city earned some US$35 million in foreign direct investment (FDI) in February, proving the city's economic strategy and infrastructure system are attractive to investors.

The Hai Phong Economic Zone Authority (HEZA) granted a new investment certificate to Hansung PTC Co from the Republic of Korea, to conduct a project in Trang Due Industrial Park.

The project, worth $3 million, will focus on producing galvanised coating systems and coating plastic products and household appliances and is scheduled to become operational this month.

Meanwhile, the HEZA issued adjusted investment certificates for Japanese-invested Zeon Viet Nam to add new business operations, adjust its production scales and increase invested capital in VSIP Hai Phong Integrated Township and Industrial Park. The capital was adjusted from $25 million to $27.69 million.

Two other foreign-invested projects, also run by Japanese investors, received approval to inject a combined $27 million of capital.

Gov't decision to stockpile rice raises domestic prices

Rice prices in the domestic market have increased after the Government's last week decision to buy and stockpile 1 million tonnes of rice.

Paddy prices rose by VND400 to 500 per kilo to VND4,200 to 4,300, while rice prices are currently pegged at VND6,300 to 6,400 per kilo, up VND200 to 300.

Local grain prices have also been seen a fillip following the news that the Viet Nam Southern Food Corporation (Vinafood 2) has just won a contract for supplying 300,000 tonnes of 15 to 25 per cent broken rice to the Philippines.

Vinafood 2 beat strong rivals from Thailand to win the contract. The corporation had last year also won a bid to export 500,000 tonnes of rice to the country and has sought to further broaden its market to the United States, Europe and other regional countries this year for realising a year-on-year export growth of up to 12 per cent.

Under the Government's decision, the grain purchase and stockpile will be carried out from March 1 to April 15 for the winter-spring paddy crop for February and March, in the country's rice granary of the Cuu Long (Mekong) Delta region.

According to the Agriculture and Rural Development Ministry, the yield for the winter-spring paddy crop in the Cuu Long (Mekong) Delta region is roughly 8 to 9 million tonnes.

Viet Nam is expected to export 1.4 million tonnes of the grain during the first four months of this year, with the figure for the whole year expected to be 7 to 7.5 million tonnes.

Rice is mainly exported to China and Southeast Asian countries.

Vinafood 2 anticipates that local rice exporters might face many more difficulties this year. Rice demand in the Philippines, Indonesia and Malaysia is forecast to escalate, but Viet Nam will have to compete with Thailand, which also wants to reduce its considerable rice stockpiles.

As the same time Vinafood 2 has also asked the government to extend loans to rice traders at preferential interest rates, citing that many traders are facing a shortage of capital.

About 80 per cent of the total 144 rice traders currently have a restricted financial status, Vinafood 2 said.

In order to boost rice shipments this year, the industry and trade ministry has suggested that rice exporters should diversify their markets and try to make full use of the opportunities stemming from bilateral and multilateral trade agreements, and follow them with updates for their export markets.

Vietnam to work effectively with ODA donors

The Prime Minister has outlined tasks to improve the efficiency of cooperation between Vietnam and donors of official development assistance (ODA) and preferential loans.

He requested the Ministry of Planning and Investment to work with the World Bank (WB) to prepare an in-depth report on the status of Vietnam’s investment and business climate, specifying any existing drawbacks, sectors in need of reform, and recommended steps to help Vietnam meet the ASEAN 6 standards.

The Ministries of Transport, Planning and Investment, Finance and other agencies concerned have been assigned to work with the WB to commence the Dau Giay – Phan Thiet highway project under the public-private partnership model without delay.

Also in collaboration with the WB, the State Bank, the Ministry of Agriculture and Rural Development, and the Ministry of Planning and Investment are to design a project on rural development in response to climate change in the Mekong Delta.

The Ministry of Planning and Investment (MoPI) is responsible for providing the WB with Vietnam’s socio-economic development plans over the next 5 -10 years and working on the long-term Vietnam 2035 Report.

The PM called attention to the economic use of ODA and preferential loans, especially those used in technical support, partly by restricting working trips abroad and pouring the majority of the sum into project components.

The above tasks will be monitored and reported to the PM and donors by the MoPI.

According to the Office of the National Steering Committee for ODA and Preferential Loans, donors awarded over US$4.3 billion in grants to Vietnam in 2014, including more than US$4.16 billion in ODA and concessional loans and US$202.05 million in non-refundable aid.

The amount of disbursed ODA and preferential loans neared US$5.6 billion, including a US$5.25 billion in refundable aid and US$350 million in non-refundable aid.

Of major donors, Japan disbursed the most assistance with over US$1.77 billion, followed by the WB with just over US$1.3 billion and the Asian Development Bank with US$1 billion.

Quality seafood fuels surge in exports to China

While Vietnam seafood exports set records in 2014, the real story has been the spectacular rise in exports to China, which traditionally has not been a major market for seafood.

Fresh import data from the Vietnam Association of Seafood Exporters and Producers (VASEP) shows that China has gone from an insignificant market in terms of value to the third largest seafood market in 2014.

Last year seafood exports rose 9% on-year to US$624 million and in terms of value accounted for 7.9% of total Vietnam seafood exports, trailing the US and EU markets in first and second ranking respectively.

Leading market analysts have said that demand in China, especially for high-quality products, has been increasing as a result of strong economic growth and an expanding middle class.

Although its domestic production has increased, it has not kept pace with the increase in demand for certain products – therefore the need for increased exports in general and seafood in particular.

Specifically, shrimp exports have been gaining in greater volume and China was the fourth largest importer of Vietnam shrimp, following by the US, Japan and the EU, accounting for 10% of the total value of exports.

The lion’s share of shrimp has been the white leg species, which has been steadily increasing, while imports of prawns over the past two years have been trending downwards. Overall shrimp and prawn exports skyrocketed 62.6% in 2014.

Market analysts have also reported that another reason for China’s growing demand is its consumers’ comfort with buying fresh and frozen seafood online and they have been advising Vietnamese to get up to speed on ecommerce to increase their revenue.

China’s ecommerce platforms such as yiguo.com, tmall.com, and yihaodian.com will allow Vietnamese seafood suppliers to market their high-end seafood products, both live and frozen, directly to consumers across China.

E commerce has been particularly growing in second and third-tier cities that don’t have access to modern supermarket retailers.

Truong Dinh Hoe, VASEP General Secretary said the biggest obstacle Vietnam seafood exporters need to overcome if they are to expand into China relates to payment methods and terms.

China is one of the top priority markets identified in the industry export plan and there is a real opportunity for Vietnamese companies to take advantage of the growing consumer demand for high-quality products, Hoe said.

If the payment method and term issue can be resolved and ecommerce boosted Hoe believes Vietnam seafood exports to the highly lucrative market will continue to surge in the future.

Exports to Laos surge to record high

Vietnam’s exports to Laos for January swelled 47.96% on-year to US$53.43 million according to the latest official statistics from the Vietnam Industrial and Trade Information Centre (VITIC).

The nation’s export strategy with an emphasis on quality products and improving distribution channels to fuel growth in the market appears to be paying off a representative of VITIC said in reference to the marked improvement.

The iron and steel sector saw the largest rise in the one-month period escalating 116.97% to US$13.49 million, accounting for 25% of the total value of the nation’s combined exports for the month.

Meanwhile the transport equipment manufacturing sector also witnessed high growth expanding 58.25% to US$6.24 million while oil dropped sharply by 50.79% to US$5.58 million.

Products with high export growth in January included plastics, machinery, equipment, and tool, coal, steel and iron products, electric wires and cables, ceramics and confectionary and cereals.

Meanwhile items that witnessed the most significant declines were and fruit, vegetables, fertiliser and metal and other products.

Japan steps up efforts to attract visitors from Vietnam

A seminar to promote attractive destinations in Japan's Kanagawa Prefecture near Tokyo was held in Ho Chi Minh City on March 2, with the participation of nearly 30 Vietnamese travel agencies.

At the event, two latest videos to introduce Kanagawa's Yokohama and Kamakura cities, made by the Ministry of Internal Affairs and Communications of Japan in collaboration with Kanagawa Prefecture, were shown to the attendees.

Kanagawa Prefecture is known for its modern cities and charming old towns such as Kakone, Kamakura and Odawada.

It is home to many of Japan's top attractions, including Minato Mirai (Yokohama's futuristic port with offices, hotels, convention centres, shopping, dinning art, culture and entertainment), CupNoodles Museum, Great Buddha of Kamakura and Yokohama Marine Tower.

The Odawara Castle, Sankeien Garden and Kenchoji (one of the largest and oldest temples in Kamakura) and Motomachi shopping streets are also popular sites.

The promotional videos will be broadcast on HNTV1, VTV Da Nang and VTV9 this month to help more Vietnamese learn about the province.

More Vietnamese are choosing Japan for holidays because of the country's beautiful nature, friendly people and similarities in culture and customs, according to domestic travel agencies.

With strategies to promote tourists and effective co-operation with Vietnamese partners, the number of Vietnamese tourists to Japan is expected to increase further in the near future, they said.

Seizure of food exports by US Customs

All Vietnamese businesses that export goods for human consumption to the US market were required by the Food and Drug Administration (FDA) to renew their registration between October 1 and December 31 of last year.

The registration of any Vietnamese business that was required to re-register and failed to do so has now lapsed, making it illegal for them to export food to the US and the FDA has announced it will now seize food shipped at its US port of entry until the registration is properly renewed.

The requirement, compelling businesses to re-register in all even numbered years,was first established in 2011 by the Food Safety Modernization Act (FSMA) to ensure that the FDA always has access to updated information for businesses exporting to the market.

Over the past few years the US has become a highly lucrative market for Vietnamese agriculture exporters.  The leading categories of exports have been tree nuts and coffee.

US consumers have also been acquired a particular fondness for Vietnamese food and beverages, especially fruit and vegetable.

A recent research by the US Department of Agriculture forecast that there would bean increase in imports of fresh fruit and vegetable in 2015.

It also showed that longan and litchi fruits have become popular in the US market.

Phu Ha Industrial Park project to enter first stage

Locally-owned building material producer Viglacera has commenced the construction of the 350 hectare first stage of the Phu Ha Industrial Park in Phu Tho town, located in the similarly named northern province.

With this VND1.73 trillion ($82.38 million) project Viglacera has become the first enterprise to build an industrial park in the province, after receiving the investment certificate for this project two months ago.

The corporation has also inked a memorandum of understanding with a local and a Japanese company making garment products. These companies will build their factories at the park and will employ nearly 3,300 local workers.

The park, being one of the province’s prioritised industrial park construction projects listed by the government, is aimed to foster the development of high-tech sectors like electronics, construction material production, food processing, beverage, mechanics and pharmaceuticals.

The park is located only 300 metres from the Ho Chi Minh and Noi Bai-Lao Cai roads, and two kilometres far from National Road 2. It lies 70km from Hanoi, 170km from Haiphong city, and 200km from Quang Ninh province’s Cai Lan deep-water port.

As an increased competitive advantage, Phu Ha offers low land rental prices at $35-40 per square metre, whereas other industrial parks in neighbouring areas ask for $60-65 per square metre.

New decree cleans up PPP mode confusion

The government has just issued a long-awaited decree on public private partnership investment modes, replacing previous decrees intending to promote private investment in infrastructure to boost economic growth.

The new decree (Decree 15/2015/ND-CP) does not include a limitation on state funding in a public private partnership (PPP), which will seek to cool investor anxiety over the limited financial support provided by the government to such projects – an issue that emerged as a major barrier for private investment in the country’s infrastructure.

“This regulation will make PPP projects more feasible and attractive to private investors. Depending on the project, the government or local authorities will decide how much state funding will be invested,” said Le Van Tang, director of Procurement Department under the Ministry of Planning and Investment (MPI).

According to the decree, the PPP is an investment model implemented through a contract between a state authority and private investors to invest in infrastructure or public projects.

Apart from build, operate and transfer (BOT), build, transfer and operate (BTO) and build-transfer (BT), PPP will include forms of build, own and operate; design, build, finance, maintain, operate and transfer; build, finance, operate and maintain, and operate and maintain forms.

Tang, who helped draft the decree, expected private companies to invest more into infrastructure projects this year after the decree takes effect from April 10.

The new decree is a combination of two previous legal documents which guided the implementation of PPP investment. Those documents include the prime ministerial  Decision 71/2010/QD-TTg guiding the implementation of pilot PPP projects, and Decree 108/2006/ND-CP guiding the implementation of infrastructure projects under BOT, BTO and BT contracts.

Decision 71 and Decree 108 previously confused investors when considering opportunities.

The MPI, which drafted and proposed the decree to the government, noted that  while Decree 108 set an important milestone to promote private investment into infrastructure sector, especially in road and power projects, it still contained unclear regulations on investor selection and ways finance would be raised.

Meanwhile, Decision 71 failed to attract private investors in infrastructure projects under PPP models because it did not clearly regulate how much exposure the state would accept when putting up funding for a PPP project.

“Given the shortcomings in these two previous legal documents, a merger was needed not only to remove any shortcomings, but to also ensure we have a comprehensive and effective PPP policy,” Tang said.

The MPI estimated that from now until 2020, Vietnam would need around $170 billion to develop its infrastructure, including transport, bridges, power plants, water supply network, waste treatment plants and ports. Meanwhile, traditional, public sources of capital, including the state budget, government bonds and official development assistance, would struggle meet more than half of this sum, therefore, this decree could prove to be a timely opportunity for both the government and the Vietnamese economy.

Hong Kong firm invests in high-end HCM City apartment

Hong Kong-based private-equity, real estate and financial investment player Hamon Group and Vietnamese property company SonKim Land have last week signed an agreement to develop a high-end property project in HCM City's in District 2 called Gateway Thao Dien.

Hamon representative Hugh Simon said the company chose to invest in Thao Dien Gateway with SonKim Land expecting it to be a highlight among luxury apartments in the east of the city.Gateway Thao Dien located in District 2 is one of the most luxury apartment projects in the East of HCM City.

To cost US$100 million, Gateway Thao Dien will offer 546 units in four towers. There will be 3 towers of upscale apartments for sale and a serviced apartment tower with the 5-stars level of management and services by Hamon Developments.

It will be launched soon and finished in the third quarter of 2017.

Number of newly-established businesses up 26.6%

As many as 13,766 businesses were set up in the first two months of 2015, with a combined capital registered at VND77,500 billion, up 26.6% in terms of number and up 23.3% in terms of capital.

Remarkably, some fields witnessed a sharp increase in the number of newly-established enterprises such as art, entertainment and leisure up 241%, real estate up 88.8%, agriculture, forestry and aquatic up 57.9%, finance, banking and insurance up 55.4%, construction up 50.3% and education and training up 48.9%.

The new businesses were estimated to create 197,200 jobs, a year-on-year increase of 19%.

Over the past two months of the year, 2,055 businesses completed procedures to dissolve, up 8.7% and 14,040 ones were forced to stop operating, up 25%.

The nation recorded 4,376 enterprises re-operating in the reviewed time, up 20.2%.

In February only, 6,899 businesses were established with a registered capital of VND45,800 billion, up 44.6% in terms of capital compared to the previous month.

Zero tariffs on 95 percent of goods from Vietnam, Laos

Tariffs are scheduled to be eliminated on more than 95 percent of goods from Vietnam and Laos.

A document to this effect was signed by Minister of Industry and Trade Vu Huy Hoang and his Lao counterpart Khemmani Pholsena on March 3 in Vientiane, Laos. It replaces the 1998 trade agreement.

Addressing the signing ceremony, the Vietnamese Minister said once the new agreement comes into effect, it will form the legal framework for bilateral cooperation in goods and services trading and make a significant contribution to fostering the relationship between Vietnam and Laos.

Lao Deputy Prime Minister Somsavat Lengsavat hailed the signing of the bilateral trade agreement between the two countries and urged relevant ministries and sectors to work closely together with MoIT to effectively implement the agreement.

Power price adjustment to be submitted to PM in March

The Ministry of Industry and Trade (MoIT) is currently appraising the Electricity of Vietnam (EVN)’s proposal to adjust the price of power and will submit a report to the Prime Minister within March, said Minister-Chairman of the Government Office Nguyen Van Nen.

Nen said at the monthly Government press conference on March 2 that the adjustments, with rises of between 7-10 percent, are within the retail price frame for electricity and falls within the MoIT’s authority to decide.

MoIT Deputy Minister Do Thang Hai explained that the increase is necessary to match real costs in line with the market mechanism.

He clarified that the falling price of oil has little effect on electricity price as oil-fuelled plants produce only 0.55 percent of power generation. Meanwhile, a 22 percent increase was seen in the price of coal from the last price adjustment in August 1, 2013, he said, noting that coal-fuelled plants generate 32.37 percent of the electricity output. He added that the price of gas has also been hiked several times.

Responding to concerns of deflation after the consumer price index (CPI) continued to decrease, even during the Lunar New Year festival (Tet) in February, Nen attributed the situation to decreased fuel prices affecting transportation prices.

Domestic production still rose last month with continued growth in purchasing power, he noted, adding that total retail and service revenue in the first two months of this year rose by 11.4 percent from 6.2 percent in the same period last year.

According to the Ministry of Planning and Investment, price stability was ensured thanks to efforts of the government in fixing market prices before and after the Tet festival.

The industrial production index increased 12 percent in the first two months of the year on a yearly basis. Power production rose 13.3 percent, processing and manufacturing 12.9 percent, and mining 9 percent.

Total exports in January and February combined reached over 23 billion USD, a surge of 8.6 percent annually, while imports hit 23.07 billion USD, up 16.3 percent.

Foreign direct investment disbursement hit 1.2 billion USD, a rise of 7.1 percent compared to the same period last year, mostly in processing and manufacturing sectors. As many as 148 new projects were licensed and additional capital was injected into 58 ongoing projects.

Nen also revealed that the Government will continue focusing on stabilising the macro-economy as well as seeking measures to remove difficulties for business while improving the investment environment and enhancing national competitiveness.

Ninh Binh works for greater socio-economic development

The northern province of Ninh Binh is implementing a series of measures to stimulate its socio-economic development.

During a conference held in the locality on March 3, Chairman of the provincial People’s Committee Dinh Van Dien asked relevant local sectors and agencies to roll out relevant and effective policies to maximise the Ninh Binh’s potential and strength.

The Chairman underlined the necessity of promoting sustainable development in both industry and tourism, urging for upgrades and rapid construction of infrastructure serving the two sectors.

He also requested intensifying investment and trade promotion activities to attract more investment inflows, especially in the support industry and using environmently friendly technologies.

Ninh Binh has targeted at least 8.5 percent economic growth in 2015 with hopes that the value of industry production and construction will rise 16 percent, the agro-forestry-aquaculture by 2.1 percent, and the service sector around 10 percent.

To realise these goals, local authorities are focusing on new production projects in industrial parks (IPs), while accelerating administrative reform and supporting enterprises to upgrade equipment and technologies and improve productivity and the quality of products.

IP management boards will work closely with the provincial industrial development board to outline strategies to overcome difficulties facing enterprises in their production and business and improve their access to capital for development.

Ninh Binh is also focused on developing its handicraft industry and trade villages.

It aims to have at least 30 communes meeting all 19 criteria for new-style rural areas in 2015.

First fresh water reservoir built for Bach Long Vy Island

Construction on the first fresh water reservoir in Bach Long Vy Island in the northern city of Hai Phong began on March 2, the first step towards tackling the water demand of hundreds of residents in the locality.

The 40,000 sq.m reservoir, to cost 188 billion VND (8.8 million USD), will has a capacity of 60,000 cubic metre of water.

The construction project, invested by the volunteer youth organisation of Hai Phong, is scheduled to be completed in 2016.

The fresh water reservoir project will not only help ensure water supply for the local people but also serve fishermen who operate offshore in the Tonkin Gulf, said Secretary of the Central Committee of the Ho Chi Minh Communist Youth Union Nguyen Anh Tuan.

About 150 kilometres from the mainland, Bach Long Vy Island has experienced years of severe fresh water shortage. Local residents rely on drilled wells for water but during the dry season, they have to purchase water at the elevated cost of 40,000 VND (1.87 USD) - 50,000 VND (2.34 USD) per cubic metre.

Taxi fares show sharp drop, says ministry

Taxi fares have fallen by 0.92 to 32 per cent, the latest report from the finance ministry has revealed.

The latest report from the Ministry of Finance has revealed that taxi fares have dropped by 0.92 to 32 per cent. - VNA/VNS Photo Hoang Hai

Transport companies have also reduced their charges by three to 25 per cent.

The ceiling price of economy-class air tickets has fallen by about 15 per cent since the ministry issued a new rule on economy-class fares of domestic flights on December 19, 2014.

The fall in various transport fares and charges are linked to the oil and gas crisis, which has led to a large drop in fuel prices around the world.

Mekong Capital wins Frontier Market Firm of the Year 2014 Award

Mekong Capital was just awarded Frontier Market Firm of the year for 2014 by Private Equity International. The Private Equity International Awards 2014 are voted by investment industry professionals, and included more than 35,000 votes across all categories for the 2014 awards.

This is the second year in a row Mekong Capital won an award by Private Equity International, after having won the Operational Improvement Firm of the year for the Asian Small Cap category in 2013.

2014 was an extraordinary year for Mekong Capital when its investee companies achieved weighted average net profit growth of 128 per cent, led by MobileWorld, Nam Long, Intresco, and PNJ.

“This is a great honour for our team, and also reflects the strong track record that is emerging in Vietnam’s private equity industry in general. The results that our investee companies have been delivering is also an affirmation of the strong management teams they have been building, their investment in developing corporate cultures that deliver results, and their general openness to applying best practices,” said Chris Freund, founder and partner of Mekong Capital.

Chad Ovel, partner of Mekong Capital shared, “This recognition is a clear validation of the large investment we have made to transition into a truly operating-centric firm. Our ability to provide our investee companies access to global best practices has been an absolute game-changer for their businesses and our returns.”

Mekong Capital is a Vietnam-focused private equity firm, specialising in consumer driven businesses.

Mekong Capital’s funds have completed 26 private equity investments in Vietnam, of which 16 have been fully exited and 3 have been partially exited.

These companies are typically well-established firms in consumer-driven sectors which operate in fragmented and fast growing markets with attractive growth opportunities.

BASF achieved annual target

BASF, a leading global chemical company, increased its sales and revenues in the fourth quarter and in the full financial year of 2014, and expects a further slight rise in sales with income from operations (EBIT) before special items are likely to match the level of 2014.

The group reported fourth quarter sales at €18.0 billion, almost matching the level of the previous year, with sales volumes increased by a single per cent. EBIT before special items rose by €40 million to €1.5 billion.

EBIT before special items increased mainly in the Chemicals and Agricultural Solutions segments, while the company experienced a significant decrease in earnings in the Oil & Gas segment due to lower oil prices.

For the entire financial year of 2014, sales hit €74.3 billion, matching 2013 levels. EBIT before special items grew by €280 million to €7.4 billion, due to a larger share contribution from the chemicals business.

 “We stand by our dividend policy and will propose a dividend of €2.80 per share at the Annual Shareholders’ Meeting. This is an increase of 3.7 per cent compared with the previous year. Based on the year-end share price for 2014, BASF shares again offer a high dividend yield of 4 per cent,” said BASF chairman Kurt Bock.

“The outlook for the full year of 2015,” Bock said, “is subject to significant uncertainty. Oil and raw material prices are volatile, as are currencies; the emerging markets are growing more slowly; and the global economy is being dampened by geopolitical conflict. For 2015, we nevertheless anticipate somewhat stronger growth in the global economy, industrial production and the chemical industry than in 2014.”

BASF plans a total capital expenditure of €4.0 billion this year, less than the €5.1 billion in 2014. In the Oil & Gas segment, investment levels will be lower than in the previous year.

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

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