Authorities call for oversight of fraudulent retail websites

To tap the potential of online trade, stricter penalties should be imposed on websites that engage in fraud, a government source was quoted as saying in the Nguoi Lao Dong (Labourer) newpaper.

In recent years, improved legal regulations for online trade have helped reduce online trade fraud, but fraudulent practices continue, mostly due to the poor management of several agencies, according to the source.

"The online shopping model would develop strongly in Viet Nam if authorised agencies impose drastic measures against fraudulent prices," Tran Thanh Hung, an owner of one e-commerce website, said.

By 2015, at least 40-45 per cent of the country will be using the internet, and turnover from online retail will reach more than US$4billion, according to forecasts from the E-commerce Association of Viet Nam

In addition, average per capita income in the country could reach $820 by that time, and with a young population and increasingly high incomes, more money would be spent on non-essential goods.

The number of internet users is expected to rise to 37 million by 2016 from 30 million in 2011, according to Business Monitor International (BMI).

Meanwhile, the rapid development of high-speed internet services will offer ready access to online shopping services.

However, analysts have said that only 5 per cent of Vietnamese consumers now taking part in e-commerce are satisfied with the service.

Consumers have cited concerns about poor delivery services and complicated procedures, he said.

They have also said that product quality wa so lower than what had been advertised online, and prices were as high as similar items sold offline.

Nguyen Ngoc Dung, deputy general secretary of the HCM City E-commerce Association, said that nearly 1,500 websites of organisations and individuals nationwide had been informed of Decree No 52/ND-CP, which requires online businesses to register with the Ministry of Trade and Industry at its website.

However, only 1,100 websites in HCM City have been registered, much lower than the figure of 140,000 operating in the city, Dung said.

The city has yet to punish organisations and individuals for failing to register their websites, he said, adding that the city was focusing on disseminating the regulations.

A representative of the city's Department of Trade and Industry said the agency had organised many conferences and training courses to educate businesspeople about the decree. Meanwhile, the department is reviewing a list of e-commerce-related websites in the city and reminding the owners to register them.

Electronics sector in need of support

Domestic electronics industry still struggle to survive as local electronic manufacturers have to narrow their production.

The most important problem of the electronics industry is attributed to poorly-developed support industry. Electronics businesses are still facing difficulties in having access to bank loan and seeking workshop for their production.

In addition, Viet Nam still lack industrial zone complexes to adapt small scale electronics businesses and R&D centres to assist in supplying technology for electronics makers.

Most of locally-manufactured products are made in line with foreign design. Very few local makers are produced by local manufacturers and generate a very low added value and low competitive edge, reports Viet Nam Economic Times.

For a long period, Vietnamese electronics industry only have assembled electronic spare-parts and labelled Made-in-Vietnam products

On the other hands, local electronics manufacturers have low competitive edge in comparison with foreign direct investment companies as FDI businesses enjoyed huge tax and fee incentives. FDI businesses will enjoy a 10 per cent corporate income tax rate for 15 years, down from the usual 22 per cent. Furthermore, the investor will also enjoy a four year tax break and a 50 per cent reduction for the following nine years. While, local investors have to pay 20 per cent corporate income tariff. The tariff is applied in 2014.

Furthermore, one of the obstacles hinder local electronics manufacturers getting into global value chains in the electronics industry is the concept of building a comprehensive electronic industry ranging from eletronic accessories to CKD products.

Local insiders noted that to develop this concept is not a simple thing. To participate in the global value chains in the electronics industry, Vietnamese electronic makers need to shift their production structure by changing from production and assembling of civil electronics products to design and development of specialised ones. They are also asked to focus on specific investment strategies.

General secretary of Viet Nam Chamber of Commerce and Industry (VCCI) Pham Thi Thu Hang said local electronics makers needed to specify which are the best products and accessories having high competitive edge to be produced so as to meet the three following targets: "quality, on time delivery and reasonable price."

If the three targets were met, local electronic producers could participate in the global value chains in the electronics industry, she said.

According to the General Statistic Office (GSO), Viet Nam export turnover of electronic items reached US$20.5 billion or an increase of 90 per cent against 2011. In 2013, export turnover of this sector posted $32.2 billion taking the lead in the country's exports.

According to the annual report of the VCCI, the great achievement in export turnover of electronics sector in the last three years showing that this sector plays an important role in the country economic development. However, it noted that the great achievement is mostly contributed by FDI businesses while local businesses have not yet made any impressive development in the achievement.

Although FDI businesses account for 25 per cent out of 500 electronics businesses in Viet Nam, they account for 80 per cent of the market share and major of the export turnover.

Even distribution of FDI a must: experts

Viet Nam should drastically change its foreign investment policy, ensuring a more even distribution of funds and strengthening its focus on high-tech and environmentally-friendly projects, experts say.

A Viet Nam News Agency (VNA) report yesterday cited several experts as saying the nation's foreign direct investment (FDI) policy should also ensure added value for domestic products and services.

The report noted that as a global economic recovery begins to take shape, the Government and localities nation-wide are trying to offer greater incentives for FDI capital.

It said FDI has played an important role in Viet Nam's economic development,recording impressive achievements even during the economic turmoil that began around six years ago.

According to the Ministry of Planning and Investment, as of late 2013, some 100 countries and territories had invested in 15,300 projects with a total registered capital of over US$223 billion.

The VNA report quoted faculty of the HCM City University of Economics as saying foreign investment has become an important additional resource for the country over the last 25 years.

It said the FDI sector has seen the highest growth compared to other economic sectors, contributing 20 per cent to the country's GDP, taking technology to higher levels, improving the quality of human resources and generating jobs.

It also quoted Le Manh Ha, Vice Chairman of the HCM City People's Committee, as saying that since the beginning of this year, the city has enjoyed a nine-fold year-on-year increase in FDI inflow.

Ha said further that neighbouring cities and provinces like Dong Nai, Binh Duong and Ba Ria – Vung Tau, have also reaped success in attracting FDI.

Members of the Central Economic Committee as well as academics with the HCM City Economics University have stressed the importance of bringing about "drastic changes" in attracting foreign investment, mainly through a clear preference for advanced technology and environmentally-friendly projects, the report said.

Dr Hoang Xuan Hoa of the Central Economic Committee said that FDI resources should be allocated in such a way that they spur economic development in all cities and provinces.

Provinces in the southern region have taken the lead in offering many incentives to achieve their FDI goals for 2014 and coming years, the VNA report said.

Bo Ngoc Thu, director of the provincial Department of Planning and Investment, said that to reach its goal of attracting $900 million in FDI this year, of Dong Nai has instituted several preferential policies.

FDI businesses will enjoy a 22 per cent corporate income tax for both new projects and project expansions, she said. They will also benefit from a four-year tax exemption and a 50 per cent reduction for the following nine years. Businesses operating in industrial parks will also enjoy a tax rate of 22 per cent, as opposed to the usual 25 per cent.

Thu said Dong Nai has also issued policies to assist small and medium-sized FDI enterprises, with administrative procedures eased considerably for prrojects with an investment of less than VND100 billion ($4.7 million) that employ at least 300 people.

Meanwhile, HCM City has invested in an industrial park to attract Japanese businesses. The 100ha Vie-Pan Techno Park is located in the Hiep Phuoc Industrial Park.

Ha, vice chairman of the HCM City People's Committee, said the city enjoys several advantages including location, a large number of qualified employees, excellent living conditions for investors, and improved social infrastructure facilities.

To attract foreign investors, Binh Duong Province has built a many industrial parks with international standard infrastructure, local officials say. The province is also focusing on training qualified workers and enhancing services to meet investor requirements. Binh Duong has set a target of attracting $1 billion in FDI in 2014.

Hung So, General Secretary of the Korean Chamber of Commerce in Viet Nam, said investors from his country believe in the nation's potential and want to expand their business presence here, especially in retail and distribution.

However, they are hoping for further reforms in investment policies, he said.

Both experts and investors say that administrative procedures and inappropriate policies have hindered Viet Nam's ability to attract foreign investment, the VNA report said.

It noted that in a recent dialogue with foreign investors, Minister of Planning and Investment Bui Quang Vinh said that efforts are on to simplify the issuance of investment certificates, including exemptions for projects that do not use large land areas or cause high levels of environmental pollution.

Vinh also said that the corporate income tax policy will be changed gradually. From January 1, 2016, the tax will fall to 20 per cent from 25 per cent. For some priority industries, it will be further reduced to 17 per cent, he said.

Hoang Thi Tu of the Central Economic Committee said consensus has to be reached on tax and investment policies towards helping raise national competitiveness in attracting foreign investment.

The Internet should be used to highlight the investment attractions of Viet Nam in general and its different localities, said Prof Nguyen Mai, chairman of the Foreign Investment Business Association.

Mai also said that the Internet should provide information that investors need to make decisions.

Enterprise law seeks to open opportunities

The draft amendment to the Viet Nam Law on Enterprises 2005 allows enterprises to become involved in businesses not listed in their business register certification, except for those requiring specific conditions.

This change is seen by the business sector as an important point in the ongoing legal reform.

Under the proposed changes, enterprises could expand business lines with a notification sent to the business registration agency.

The amendment is also meant to separate the registration for receiving a business licence for consitional lines, which had caused confusion during the administrative and practical processes.

Under the current law, enterprises must register business activities and would be violating the Law on Enterprises if they carry out business activities not mentioned in their business register certificate.

Experts note that registering enterprises is a formality required when opening a business. But how an enterprise operates or invests is part of the process of developing a business idea.

Thus, the amendment would help reduce risks prone to re-registration of business certificates. These risks include modification costs, wasting time, litigation, conflicts and collapsing contracts, said Nguyen Dinh Cung, acting director of the Central Institute for Economic Management (CIEM).

"The change would also help implement a principle mentioned in the Constitution, that people are allowed to conduct any business which the law does not ban," said Cung.

However, lawyer Dinh Nhat Quang from Leadco legal counsel said the separation of business establishment registrations and business line registrations, and the abolition of the requirement for business conditions (such as a practicing certificate, certify legal capital) at the time of registration, would result in an inability to filter out investors who would normally not be approved to set up enterprises.

Additionally, the combination of business establishment registration and business line conditions would not waste the time and money of investors, but save a wide array of fees associated with opening and closing weak enterprises, Quang argued.

Another significant change is the draft amendment to the Viet Nam Law on Enterprises 2005, which focuses on the practices of State-owned enterprises (SOEs) along with the rights, obligations of ownership and managerial process.

The draft reflects the growing pressure to restructure this driver of the economy. According to the new chapter proposed by the Ministry of Planning and Investment (MPI), the amended law would identify the roles and missions of all SOEs and also each SOE, in particular.

The proposal legalises principles to secure and develop State capital in commercial operations.

In terms of ownership rights and implementing obligations, the draft proposes to separate the practice of ownership rights from other practices.

Every enterprise must have a representative body which takes responsibility before the Government and the National Assembly for State ownership practices in the enterprises. However, the body would not directly issue administrative orders or interrupt the enterprise's commercial operations.

The draft also regulates disclosure of periodic reports and requested information from SOEs.

The amended business law retains the fundamental structure of the current Law on Enterprise, which included 42 new articles, as 137 out of 172 articles were amended and supplemented, 39 articles were retained, and 5 articles were abolished.

Japan keen on hiring Vietnamese senior personnel

For Japanese companies, Vietnam is an attractive market for foreign investment, although the vagaries in the marketplace, along with its differing labour and business laws don’t necessarily invite smooth entry.

Increasingly, Japanese firms are finding that tapping into the local workforce skills and, most especially, recruitment of senior staff is a prerequisite to a successful expansion strategy to penetrate the market.

“Over 85% of foreign owned companies, including Japanese firms, need Vietnamese qualified senior personnel who can manage their companies in the startup phase and beyond” reports Nguyen Thi Van Anh, Managing Director of Navigos, an established executive recruitment agency.

Vietnamese candidates are in high demand, especially by Japanese companies thanks to their excellent oral and written communication skills, work experience and high-skill levels, said Van Anh.

Representatives from The Japan External Trade Organization (JETRO) in turn report that, in the coming time, Japanese firms have plans to invest heavily in the field of high technology and fully anticipate the demand for qualified human resources will increase dramatically, especially information technology (IT) senior engineers.

Currently, there are more than 2,000 Japanese companies are investing in Vietnam, including representative offices.

FDI businesses enjoy huge export surplus

Foreign direct investment (FDI) businesses remain the main contributor to the country’s trade balance, obtaining a record high of nearly US$4.1 billion in export surplus in the first four months of the year.

Foreign Investment Agency statistics show FDI businesses earned US$30.35 billion from exports (including crude oil) in the reviewed period, representing a year-on-year increase of 17.2% and accounting for 66.3% of the country’s total.

Mobile handsets and components topped the list of commodities attaining high export earnings, fetching US$7.7 billion, up 29.2%.

FDI businesses also imported US$26.25 billion worth of materials for production, up 18.2% from a year ago, or 58.3% of the country’s total.

While FDI businesses achieved a trade surplus of nearly US$4.1 billion, domestic businesses continued a trade deficit of US$3.4 billion in four months.

Great potential for Vietnam- Algeria trade cooperation

Vietnamese exports to Algeria have steadily increased in recent times, up almost 40% year-on-year in 2013, making the North African nation one of the country’s largest export markets.

In the first quarter of 2014, official statistics show exports jumped 32% compared to the same period last year tallying US$67.89 million. Of the figure, coffee exports accounted for the lion’s share at US$30.97 million, and telephone and component exports trailed a distant second at US$18.51 million.

Vietnamese major exports to Algeria are coffee, rice, pepper, coconut rice, and seafood. Due to the peculiarities of the market’s demand, there is a vast potential for Vietnam to also export such items as garment and textiles, footwear, wood, computers and components, construction materials, and electronics.

Additionally, a number of Vietnamese commodities have a good prospect of penetrating the market, including steel and iron, fruits and vegetables, rubber, ships, footwear, and handicrafts.

The Algerian Government is currently implementing programmes to attract investment in the processing industry, agriculture, and consumer goods production as part of an effort to boost the nation’s economy, diversify its industries and generate jobs.

Furthermore, the Algerian government has expressed a keen interest in cooperating with Vietnam in investment, technological transfer, especially in the processing and manufacturing industry.

Dragon fruit gain New Zealand import approval

Vietnam will be exporting its exotic dragon fruit to New Zealand after the Ministry for Primary Industries (MPI) decided the fruit was safe to import, according to Vietnam’s trade office in New Zealand.

In addition to the common requirements, applicable to all fresh fruit and vegetable imports to New Zealand, dragon fruits are subject to a sanitary certification requiring that they be treated by vapor heat for at least 45 minutes.

On May 1, 2014, the MPI issued a regulation on import and clearance of fresh fruit and vegetable into New Zealand. Under the new regulation, vapor heat treatment for these products should be a minimum of 20 minutes.

Footwear exports aim for US$12 billion in 2014

A sharp increase in footwear exports during the first four months is painting a picture of cautious optimism as the industry aims for an annual increase in sales of 20% to US$12 billion for 2014.

The General Statistics Office (GSO) reported that from January to April 2014, footwear exports jumped 21.9% from a year earlier to US$2.9 billion.

The average monthly growth in export sales in the first four months was over 20% thanks to rising consumption and improvements in standards of living in countries around the world, most notably in the EU.

Vietnamese footwear exports have been enjoying the benefits from many incentives from the Generalize System of Preferences (GSP) offered by the European Union (EU) as from January 2014.

Accordingly, the tariffs levied on made-in-Vietnam footwear exports dropped from nearly 7.7% to less than 4%, thus sharpening Vietnamese footwear’s competitiveness in the EU market.

A Puon Chen Vietnam company representative said exporters are poised to receive yet even more benefit as markets like the EU more fully recover spurring more sales.

In addition, the Trans-Pacific Partnership (TPP) agreement will also create numerous opportunities for footwear exporters in the near future. The Vietnamese footwear industry will be provided with more competitive advantages in such big markets as the US and Japan, as well as other TPP member economies.

At present, local footwear exporters are making use of importers’shift to new locations to select new goods suppliers. Many importers have chosen Vietnam instead of China since the beginning of this year as labour cost in the Chinese market is going up.

To meet the increasing demand for footwear of both domestic and overseas markets, Vietnamese businesses are expanding their production scale and improving product quality. Many local exporters report they are backlogged on orders for the next six months.

Nevertheless, there remains a paradox in the footwear sector. More than 70% of footwear exports are attributable to direct foreign investment (FDI) businesses, which means that the lion’s share of the profits are going to these businesses, and for 100% Vietnamese owned businesses, added value is still much too low.

In recent years, some large Vietnamese enterprises have increased investment in upgrading technology, modernizing production chain, and developing their own brand name for export.

This has improved the localization rate in Vietnam’s footwear sector, with some market analysts predicting it to hit more than 50%.

However, many small-and-medium-sized enterprises (SMEs) still depend much on imported input materials and more needs to be done to expand the production chain, they caution.

Cashew nut exports up in volume, value

Cashew nut exports are forecast at 20,000 tonnes in April with sales of US$132 million, according to the Ministry of Agriculture and Rural Development (MARD).

The April figure brings total cashew nut export volume up 14.5% to 73,000 tonnes in the first four months of 2014 with sales of US$456 million up 15.7% in value, compared to the same period last year.

MARD reports that the export price of cashew nuts stood at US$6,182 per tonne, up 1.76%.

The US, China and the Netherlands remain three largest export markets for Vietnamese cashew nuts, making up 28.44%, 20.01% and 9.12% respectively of total export value.

The Vietnam Cashew Association (Vinacas) predicts that with nut shell oil and other processed products, the cashew sector is likely to realise a turnover of US$2.2 billion this year.

Vietnam’s economy 39 years after national reunification

The Vietnamese economy has expanded 7.8 times since the country regained national independence in 1975, the Government news portal reported.

The economy posted a continuous growth since 1981 and the GDP per capita increased from US$86 in 1980s to US$1,899 in 2013.

Vietnam shifted from centrally-planned to market-based economy and has increasingly integrated into the global community.

Investors from 90 countries and territories have poured some US$270 billion and the disbursed volume reached US$114 billion. The FDI sector accounts for around 45% of Vietnam’s industrial production value and 20% GDP.

International friends have pledged to grant some US$81 billion in official development assistance (ODA) to Vietnam and over half of the total figure has been disbursed.

At present, Vietnam has set up trade relations with around 200 countries and territories with the aggregate trade value amounting to over US$264 billion.

The economy, however, is facing a number of big challenges, especially in terms of growth quality, investment efficiency, and productivity, the news portal added.

Enterprises urged to prepare for TPP

Vietnamese small and medium sized enterprises (SMEs) lack preparedness to cope with cross-cutting issues posed by the Trans-Pacific Partnership (TPP) and need changes in management and production methods to more effectively compete after the pact comes into effect.

The National Assembly Committee for Economic Affairs has approved Vietnam’s participation in the TPP as of April 2014 but cautions that in the future, membership is going to require deeper liberalization of trade policies.

Although the TPP offers opportunities for Vietnamese businesses to penetrate new markets and improve their competitive edge, Vietnam will face increased competitive challenges from other nations once the agreement is signed.

It is most certain that the TPP will directly and negatively impact all Vietnamese SMEs that do not adequately prepare for its implementation.

Dr Nguyen Duc Kien, deputy head of the NA Committee for Economic Affairs said that the participation of Vietnam in the TPP will provide Vietnamese domestic businesses greater access to the markets of other TPP member nations, each of which will have differing and complex requirements related to such things as quality standards that must be met before Vietnamese products will be permitted into the market.

Regarding TPP’s advantages, Dr Hoang Phuoc Hiep, head of the Faculty of Economics Law from the Hanoi University of Business and Technology (HUBT) said that the signing of TPP will help Vietnam better allocate human resources within the economy more effectively, speed up the restructuring process and bolster the renovation of the growth model.

Trade liberalization with major markets such as the US, Canada, Mexico and Japan and elimination of import tariffs will also give fresh impetus to Vietnamese exports. Most notably, this will open up tremendous opportunities for the garment, textile and leather footwear sector to expand markets in other TPP nations. While other sectors like seafood, wood and farm produce are also poised to enjoy great benefits.

Hiep noted that the impact of the TPP on the Vietnamese economy is not necessarily always going to positive for all sectors and businesses in Vietnam. Opportunities can turn to become challenges if the macro-economic strategy is inadequate or if governmental policies and reforms are lacking.

Factoring in recent trends in the flow of international foreign investment into Southeast Asian nations like Vietnam in what he refers to as the “Chinese factor”; Hiep says that, Chinese businesses and other economics are making proper adjustments in their business strategies.

Many Vietnamese businesses are not reacting to the signing of TPP with such vigilance and as a consequence may be setting themselves up for failure; Hiep said or they may just simply miss out on participating in the opportunities it affords.

Hiep quoted information from Bloomberg’s as saying that Chinese businesses have made early preparations for the TPP and cites one of China’s major garment and textile groups Tehong Textile, which has expanded their activities abroad, primarily in Vietnam, as a case in point.

From mid-2012 forward, Texhong Textile has poured US$300 million investment funds into expanding its fabric manufacturing facilities in the northern province of Quang Ninh, bringing its total factories in Vietnam to four.

Additionally, in November 2012, a joint venture of Shengzhou Sunrise Textile Co., Ltd and Thien Nam Investment and Development Joint Stock Co was established under the name of Thien Nam Sunrise Textile Joint Stock Company.

With total investment capital of US$24 million, the joint venture built a spinning factory with a capacity of 300 tonnes per month. As yet one more instance, Hong Kong’s Crystal recently announced that it will invest US$425 million in the Pacific Crystal textile project and another US$120 million in Tinh Loi garment project.

Meanwhile, Le Tien Truong, deputy general director of the Vietnam National Textile and Garment Group (Vinatex) said that one of the challenges his company faces is rapid and strong investment of foreign investors and the resulting competition it portends.

Chinese businesses are preparing to capitalise on the passage of the TPP in terms of finance, technology and market compared to local businesses, Truong warns.

Dr Tran Dinh Thien, Director of the Vietnam Economic Research Institute said that the competitive edge of Vietnamese SMEs in the international arena is going to be limited and in actuality may more than likely turn negative for some localities unable to adequately cope and fail to meet the demand for development, even in the agriculture, industry and service sectors. Most importantly, sudden trade liberalization could potentially lead to bankruptcy and unemployment at businesses with low competition capacity, if adequate preparations are not undertaken.

In addition, other significant issues faced by SMEs when joining TPP are the protection of intellectual property rights, environmental standards and rules of labour that all can have severe negative adverse consequences if these issues are not adequately addressed and prepared for.

These issues could represent the death knell for Vietnamese SMEs and offset all of the other advantages from reduction in import tariffs and increased market access if not properly addressed.

Most notably, Thien said that SMEs have inadequate information on TPP due to poor dissemination. Meanwhile, these businesses must be fully cognizant of the agreement, so that they can devise proper plans to make appropriate changes in production and business activities.

Therefore,  he warns that to reduce the risks of joining the TPP, Vietnamese SMEs are fully advised to adequately prepare for the TPP and make necessary changes in management and production to improve their competitive edge.

Government directs centralized capital for priority areas

A resolution on a regular cabinet meeting has been issued emphasizing the need to centralize investment capital on priority areas to help enterprises alleviate difficulties in production and business operations.

Accordingly, the Government requested the State Bank of Vietnam (SBV) to manage credit growth in line with the plan set early this year while ensuring credit quality and assisting businesses to restructure old debts to increase credit access.

The SBV was asked to intensify operational management of the banking system and closely monitor the implementation of safety ratio for banking activities.

It is essential to implement a plan to restructure credit institutions for the period 2011 – 2015, enhance the role of the National Asset Management Company and speed up the settlement of bad debts in the banking system, the resolution said.

The Ministry of Finance will direct budget collection activities to ensure the progress of revenue collection as planned, strictly control expenses and reinforce administrative reform and prevent acts of tax evasion, price rigging to protect consumer rights and ensure capital investment sourced from state budget and government bonds are used effectively.

The Ministry of Planning and Investment will coordinate with ministries, sectors and localities to implementing solutions to accelerate disbursement of investment capital primarily from State budget, government bonds, ODA and FDI for key construction.

The Ministry needs to provide enough capital for ODA projects and for those due for completion in 2014.

The Ministry of Agriculture and Rural Development is tasked to coordinate with ministries, agencies and localities in managing agricultural structure in conformity with the market situation and production capacity to benefit farms.

The Ministry should strengthen the examination and prevention of epidemics by closely monitoring the illegal cross-border transport of livestock and poultry to limit the spread of epidemics.

It should prepare to implement contingency plans for flood and storm control, accelerate the construction of irrigation works, prevent droughts and saltwater intrusion in the central, the Central Highlands and the south west regions.

The Ministry of Industry and Trade will work with ministries, sectors and localities on solutions to support and encourage exports, control market prices, help local businesses with market expansion and product consumption, combat smuggling and counterfeit and substandard goods, and duly punish acts of violations.

Green action plan for SMEs closer to reality

The country currently has approximately 543,963 business enterprises, nearly 97% of which are small-and medium-sized enterprises (SMEs).

SMEs are the backbone of the Vietnamese economy, accounting for more than 40% of the country’s GDP and generating millions of jobs for workers, helping to reduce poverty and ensure the social welfare.

However, in recent years, the majority of SMEs have not paid proper attention to environmental protection. Most of them use outdated machinery and technology, consuming too much energy and causing excessive environmental pollution.

To raise the SMEs awareness on the importance of environment protection, the Institute of Strategy and Policy on Natural Resources and Environment (ISPONRE) in coordination with the Stockholm Environment Institute and the SMEs Association launched a green action plan project for SMEs from November 2012 to December 2013.

The project aims to help SMEs formulate and implement green plans to improve their overall business operations.  It also aims to organise a network of SMEs to efficiently cope with climate change and effectively and sustainably use natural resources while protecting the environment.

Through green activities, businesses are not only increasing their ability to improve their products and services but are also attracting more customers, allowing for greater penetration into new and emerging markets.

Green activities help reduce production costs and time, allowing for optimal use of materials, raising productivity while limiting the negative impact on environmental pollution.

Sharing information among businesses is a fundamentally very important task as it can help SMEs choose safer business solutions, minimize risks and losses, develop international market and find the best environment management experience.

Dak Lak exports coffee to 60 countries worldwide

Coffee, the key export of the central highland province of Dak Lak, is capturing an ever increasing share of the world market and is now exported to more than 60 countries and territories around the globe.

Among them, 31 markets have an export value of more than US$1 million each while 13 others have obtained values in excess of US$10 million each including Germany, Japan, Italy, the US, Belgium, Spain, the Republic of Korea, Switzerland, France and Russia.

Since 2008, cumulative coffee exports of the province have reached more than US$3.5 billion.  In the first quarter of 2014 alone, total coffee exports were US$260 million, far outpacing the US$600 million for all of 2013.

According to the People’s Committee, the export volume of coffee has remained relatively stable and the increases in value are directly attributable to increases in the selling price. At present, Dak Lak leads provinces and cities nationwide in coffee cultivation area, with more than 202,022ha, accounting for over 40% of the total area in the central highlands dedicated to growing coffee and 30% of the total area nationwide. It yields around 400,000 tonnes of coffee bean per annum.

Given the current state of the market, leading economists are relatively confident that coffee will continue to play a vitally important role in boosting the locality’s socio-economic development for many years to come.

Industrial sector production accelerates 5.4%

Overall industrial production in the first four months of the year expanded by 5.4% year-on-year, concurrent with a 13.9% jump in inventory indices, according to the General Statistics Office of Vietnam (GSO).

The growth in the processing and manufacturing industry was 7.4%, 9.6 % for electricity production and distribution, and 5.4 % for water supply and wastewater treatment.

Mineral exploitation experienced an overall decline of 2% year-on-year.

Some sectors having high index of industrial production (IIP) included garments and textiles, leather production, electronics, computers, optics, and machinery manufacturing.

Meanwhile, there was a decline in IIP of some sectors- pharmaceuticals, drug, crude oil and gas exploitation, tobacco production, coal exploitation.

Inventory index of the processing and manufacturing industry shot-up 13.9% against same period last year’s figure, showing that industrial production still faces difficulties in production consumption. Average inventory rate of the sector in the first quarter of this year was a whopping 80.7%.

Employment rates at industrial businesses rose by 4.5% from last year’s same period, of which the State-owned enterprises fell by 1.6%, non-state sector went up 4% and foreign direct investment (FDI) sector up 7%.

Fiercely competitive food market

Food producers need to heavily invest to truly differentiate their products as competition is fierce from rivals, according to industry leaders and analysts.

The Statistics Office in HCM City reported that while some industries’ growth dropped last year, the food processing industry attained impressive growth of 7.1%.  In the first two months of 2014, it has continued the trend and has grown by 1%, while four key industry indices also rose 1.3%.

Analysts attribute foreign direct investment (FDI)  to the growth in the industry. As an example, they cite HCM City and point to the emergence of world food processing giants, such as Acecook, Lotte and Meiji and the heavy investment they have made in the city.

Domestic food producers in HCM City have a number of advantages including lower costs and clear origin of products. They continue to pour much investment in modernized technology to produce higher quality products with higher added value and in branding their products to differentiate them from the competition.

Vissan Company leads in transforming themselves in the marketplace. Its General Director Van Duc Muoi says his company put forward a strategy to change completely. It used to control all phases of production, ranging from husbandry, food animal, and slaughtering to distribution.

Now its market strategy is more narrowly focused on finding its niche in the marketplace limiting its attention to higher added value slaughtering, production and wholesale and divesting itself of investment in lower added value product lines.

A complicated issue is that many domestic businesses find it difficult to align themselves to form a chain of shops to collectively promote a brand name due to limited capital and related difficulties in locating good business locations, which generally are more expensive. FDI businesses do this better, as they have more ready access to investment for such start-up costs.

A director of a domestic food business in HCM City says domestic samples and designs are not as attractive as foreign ones, a direct consequence of lack of investment in the designs.

Furthermore, consumers are paying more attention to standards and parameters on production date, expire date, origin of products, and Hazard Analysis Critical Control Point (HACCP), and many domestic businesses don’t include these parameters.

Including this type of information on packaging requires an initial investment which companies simply don’t have.  Even though the initial investment will result in long term returns, that more than offset the initial investment many times over.

Therefore, domestic businesses are forced to compete with foreign rivals based on price and are forced to reduce prices substantially in order to do so.  In fact, prices of domestic products are often 5-10%, even 20% cheaper than imported ones.

Tran Thi Thanh Huong, Director of Quoc Huong Technology Company, says price competition is just suitable for those which have abundant products. Domestic businesses suffer from losses in a long-term.

Huong analysis is that small businesses often pay too much attention solely to price competition. Some are passive in updating information and even do not care for HACCP and other standards in circulation. Thus, they will suffer losses when exporting products to demanding markets.

Huong reveals that her company is striving to obtain reputable certificates to create special products to attract customers.

Vissan also can afford 80% of input materials and will pay more attention to origin of products in the future, Muoi says.

Regarding a food strategic project by 2020, Muoi says businesses are not strong enough to conduct survey for the project. The State should be involved in order to have a completed project for the food processing sector.

Vietnam, UK increase telecom cooperation

Vietnam and the UK will sign a memorandum of understanding to strengthen cooperation in telecom market management, telecom services development, and quality improvement.

They will also create favourable conditions for their information technology businesses to expand cooperation and seek investment opportunities.

The agreement was reached at a working session in London on April 30 between UK Office of Communications (OFCOM) leaders and visiting Vietnamese Minister of Information and Communications Nguyen Bac Son.

Son spoke glowingly of the assistance OFCOM has provided Vietnamese broadcasting and telecommunications management agencies over the past years in developing a healthy and competitive marketplace.

The Vietnamese telecom sector has developed strongly over the past 20 years, especially in mobile communication and internet development, which is expected to continue, said Son.

The country currently has 13 businesses developing telecom infrastructure and 90 businesses providing telecom services, especially internet services.

It has more than 135 million telephone subscribers, including 126 million mobile phone subscribers, and over 31 million Internet subscribers. There are currently 67 radio and television stations at central and local levels throughout the country.

A premiere success of the sector came with the launching of the nation’s first telecommunications satellites (VINASAT 1 & 2), culminating in the launching of VNREDSat-1 - its first optical Earth observing satellite which is now in permanent orbit.

Total revenues of the telecommunication sector were an astounding US$9.9 billion last year, Son concluded, contributing significantly to the strong economic development the country is experiencing.

The country has also permitted businesses to pilot the Long Term Evolution (LTE) services in an effort to develop 4G mobile phone services by 2015.

OFCOM leaders shared the UK’s experience in telecom development and management, including television digitalization. They pledged to consider Vietnam’s proposal for support of its nomination for membership of the Radio Regulations Board (RRB) under the International Telecommunication Union (ITU).

Singapore encourages firms to invest in Vietnam

Singapore Minister for Trade and Industry Lim Hng Kiang has called on companies in the city-state to continue exploring business opportunities in Vietnam.

A press release of the Ministry for Trade and Industry quoted Lim as saying "Vietnam and Singapore are long-term trade and investment partners. With urbanisation and rapid economic growth in Vietnam, there is scope for further collaboration between the two countries in a diverse range of sectors. I encourage companies to continue exploring business opportunities in Vietnam."

The press release, issued following the 10th Singapore-Vietnam Connectivity Ministerial Meeting which was held in Singapore on April 29, wrote that the meeting was successful, highlighting the need for Singapore and Vietnam to continue seeking greater economic collaboration and forging stronger bilateral economic ties.

During the meeting, both sides noted good progress made across the six pillars of Connectivity, namely finance, education and training, transportation, investment, information technology and telecommunications, and trade and services.

Since its implementation in early 2006, the Connectivity Framework has successfully facilitated several private sector projects into Vietnam, and directly or indirectly contributed to the US$21 billion worth of Singapore’s registered investments into Vietnam. The projects include the development of the Vietnam-Singapore Industrial Parks (VSIP), PSA’s joint venture with Saigon Port to build and operate a deep-sea container terminal in the Ba Ria-Vung Tau province as well as the establishment of branch offices by Singapore banks in Vietnam.

The Connectivity Framework has also strengthened public sector cooperation in all six sectors. For example, Singapore agencies have organised a wide range of capacity building programmes for Vietnamese officials in urban development, education and civil aviation, amongst others. The agencies have also facilitated study visits and seminars to share Singapore’s experience in areas such as ICT regulations, monetary policy and technical education.

Noting the strong growth in bilateral trade and investment services between the two countries over the past decade, both sides at the 10th Connectivity Ministerial Meeting agreed that there is potential for deepening and expanding bilateral economic collaboration.

The ministry added, as Vietnam is liberalizing and developing its economy, Singapore companies can contribute and participate in Vietnam’s economic development in a wide range of sectors, including urban solutions, retail and food services, logistics, telecommunications as well as tourism and hospitality.

Bilateral trade has grown steadily over the last decade, achieving a three-fold increase since 2003 to reach SGD17.4 billion in 2013. As of March 2014, Singapore is the third largest foreign investor in Vietnam, with about US$30.2 billion in registered cumulative investments in 1,258 projects.

Other upcoming projects include Singapore real estate developer Mapletree’s project to develop SC VivoCity, a one-stop ‘family- lifestyle–destination’ mall as well as Keppel Land’s development of Saigon Centre Phase 2 with Takashimaya as the anchor retail tenant. Both projects are in Ho Chi Minh City.