Shopping site deca.vn shut down

Vietnam’s shopping website specializing in goods for mothers and babies, deca.vn, stopped operation last week for unknown reasons.

Phan Minh Tam, deca.vn founder and general director of 24h Online Advertising Joint Stock Company, said on his Facebook page that it was difficult to make such a shutdown decision and pledged all unfinished orders would be implemented for all partners, suppliers and buyers with responsibility of the management.

Tam said that the company decided not to continue e-commerce business for the time being although its finances remain strong. He noted that the company could resume business in the field in a near future.

According to the management of deca.vn, the website got around 3,000-4,000 shopping orders per day for various products including cosmetics and fashion items before the closure. Females are key customers of the shopping website.

Founded in September 2014, key products of deca.vn also included diapers and powdered milk.

Experts said e-commerce requires long-term investment. Previously, major e-commerce site beyeu.com was closed due to a lack of capital and online food ordering website foodpanda.vn was taken over by Vietnammm.com.

Foreign fund to invest in Vietnamese drug retail

Representatives of SAM and My Chau Investment Corporation shake hands after signing their deal. (Photo: bizlive.vn)

The Saigon Asset Management Corporation (SAM), a Cayman Islands exempted company, signed a deal on January 5 that will enable it to become a strategic partner of My Chau Investment Corporation, owner of the My Chau drug store chain.

Under the pact, SAM will acquire a 15 percent stake of My Chau. The investment will contribute to expanding the scale of My Chau drug stores and improving management and transparency.

The new deal is part of SAM’s long-term business strategy that focuses on forming cooperation with prestigious brands in the Vietnamese retail market, stated SAM Chairman and CEO Louis Nguyen.

Founded in 2007, SAM is a fund management/private equity firm based in Ho Chi Minh City and Los Angeles (the US). It has been managing two Vietnam-focused investment funds, namely Vietnam Equity Holding (VEH) and Vietnam Property Holding (VPH). VEH and VPH have thus far invested over 250 million USD in over 45 companies and projects in Vietnam.

My Chau has taken the lead in opening online pharmacies with home delivery service. It aims to establish 80 physical stores across the country within the next three years.

Strong recovery in HCM City property market in 2015

Strong recovery was seen in the Ho Chi Minh City housing market in 2015, particularly in the mid- and hi-end segments, according to an expert from CBRE Vietnam.

During the year, close to 42,000 apartments from 78 projects were put up for sale in the city, with nearly half in the eastern part (47 percent), up 122 percent from 2014, Director of CBRE Vietnam’s Research and Consulting Services Duong Thuy Dung told a meeting on January 5.

More than 36,000 flats were sold in wholesale and retail, marking a 98 percent increase year-on-year. Up to 75 percent of total sales were those priced at 1-1.3 billion VND (45,000-60,000 USD).

In the fourth quarter alone, the figure was 10,340.

CBRE also reported that foreigners accounted for 41 percent of customers seeking information on housing in Vietnam during the year, predominantly Singaporeans.

Housing prices were on the rise, averaging 2,012 USD USD per sq.m, up 4.4 percent from the previous year.

In 2016, several projects in downtown area are expected to list an asking price of more than 7,000 USD per sq.m.

Over 45,000 apartments in 90 projects will be made available next year, with the supply of hi-end developments rising 20 percent compared to 2015.

Marc Townsend, CBRE Vietnam Managing Director, said it is time to open training centres for real estate brokers in preparation for a more intense competition, especially when more foreigners join the market.

Quang Tri to mobilise all resources for e-commerce development

A set of comprehensive measures were drawn up by central Quang Tri province in a plan to support e-commerce development from 2016-2020.

The five-year plan looks to increase the prevalence of e-commerce among local businesses and state agencies as part of efforts to enhance their management efficiency and competitiveness and speed up local industrialisation and modernisation process.

The locality intends to involve the private sector in building e-commerce infrastructure. It aims to encourage all enterprises to use emails in transactions and communication, 50 percent of them to develop their own websites and 30 percent to conduct e-trade.

It will also develop online public services for better communication between the local authority and enterprises and cooperate with northern central and Central Highlands provinces in joint projects to develop e-commerce.

Challenges, yet still remain, notably the companies’ lack of competent staff and insufficient funds for e-commerce activities.

Furthermore, their websites are mostly for promotional activities but not online transactions. Incomplete legal framework also hinders a healthy climate for e-commerce development.

Agro-forestry-fisheries export fetches 140.6 bln USD in 2011-2015

The cumulative export turnover of the agro-forestry-fisheries products reached 140.6 billion USD from 2011 to 2015, with an average annual growth rate of 9 percent.

The figures were released by Minister of Agriculture and Rural Development Cao Duc Phat at a conference in Hanoi on January 5 to review the sector’s 2015 performance.

Compared to 2010, the export turnover of these products rose 54.6 percent to 30.14 billion USD in 2015.

 Ten exports present in the “1 billion USD” club were rice, coffee, rubber, tra fish, shrimp, cashew nuts, pepper, vegetable, cassava and woodwork.

The sector aims for an agro-forestry-fisheries export turnover of 31 billion USD in 2016 and 39-40 billion USD by 2020, Phat revealed.

In the reviewed period, the sector’s GDP growth rate reached 3.13 percent, surpassing the 2.6-3 percent target set by the 11 th National Party Congress, he said, adding that the rate is expected to hit 3-3.5 percent this year and 2.5-3 percent in 2016-2020.

To realise these goals, the minister said that the sector will focus on restructuring and improving production value and efficiency while developing post-harvest preservation and processing.

Science-technology crucial to agriculture restructuring

Promoting the application of science and technology is the decisive factor to agriculture restructuring, Prime Minister Nguyen Tan Dung told the agriculture sector at a conference in Hanoi on January 5.

He urged the sector to build specific mechanisms and policies to facilitate the application of science and technology to increase productivity, create high-quality and competitive products, and improve farmers’ incomes.

The PM also suggested multiplying integrated production models towards large-scale production with high efficiency to enhance competitiveness in the context of integration.

Special attention should be paid to restructuring State-run farm and forestry enterprises as well as developing infrastructure in rural areas and encouraging businesses to invest in the countryside, he said.

At the same time, the Government leader required continued efforts to implement the national target programme on building new-style rural areas, with the focus on renovation production models in rural areas to increase farmers’ income and mobilising social resources for investment in rural areas.

Coping with natural disasters is another important task for the agricultural sector, he said, instructing the sector to map out plans on preventing and mitigating impacts of natural disasters, particularly when Vietnam is forecast to be one of the nations most vulnerable to consequences of climate change.

It was reported at the conference that between 2011 and 2015, the agriculture sector posted an annual GDP growth of 3.13 percent, surpassing the target of the 11 th Party Congress’s Resolution of 2.6-3 percent.

By the end of 2015, the country had 1,478 new-style rural communes (16.5 percent of total communes nationwide), up 693 communes against the previous year, while 15 districts won recognition as new-style rural areas.

Minister of Agriculture and Rural Development Cao Duc Phat said the agro-forestry-seafood sector aims for a GDP growth of 3 percent in 2016 and 2.5-3 percent between 2016 and 2020.

The sector will also strive to reduce the number of poor households in rural areas by an average 2 percent annually between 2016 and 2020.

As many as 23-25 percent of communes are hoped to fulfill 19 criteria of new-style rural areas by the end of 2016 and the figure will be raised to 50 percent by 2020.

VNR to complete divestment from 19 affiliates in Q1

The State-owned Vietnam Railways (VNR) plans to complete the divestment of its capital from 19 equitised affiliates during the first quarter of 2016.

The information was released by VNR Deputy Director General Doan Duy Hoach at a conference reviewing the corporation’s 2015 performance and launching its 2016 tasks in Hanoi on January 5.

As of the end of 2015, VNR divested its capital from seven out of its 27 companies. The process is underway in another four.

So far, it has withdrawn over 192 billion VND (8.57 million USD) of State capital.

The first meetings of the shareholders of 19 companies have been successfully organised.

All equitised companies will start operation on January 1, 2016 as scheduled.

Quang Ninh promotes PPP model for further development

The northern coastal province of Quang Ninh has been promoting the public-private partnership (PPP) investment and management model aiming to mobilise all resources and initiatives for its target of becoming a service-industry oriented locality by 2020.

Chairman of the provincial People’s Committee Nguyen Duc Long described Quang Ninh as a great construction site where many projects are underway.

2015 recorded strong development for the PPP model, especially in infrastructure development, transport and tourism projects, Long said.

Local authorities have granted an investment license to the joint venture between Cong Thanh Investment and Construction JSC and Phuong Thanh Investment and Construction JSC to build the Ha Long- Van Don expressway and upgrade the Ha Long – Mong Duong section of National Highway 18 under the build-operate-transfer (BOT) model with a total investment of nearly 14 trillion VND (616 million USD).

Once completed by the end of 2017, the project will help reduce traffic on National Highway 18 and shorten the distance from Hanoi to Ha Long city and the Van Don Special Economic Zone, and from Ha Long to the Mong Cai Border Economic Zone.

Chairman Nguyen Duc Long said the projects will help complete the infrastructure network in the province and attract more investment, promoting socio-economic development in Quang Ninh and the key northern economic region.

He said that local authorities will create the best conditions for investors to implement their projects on time.

The provincial People’s Committee said that 25 PPP projects have been conducted on schedule so far.

Vu Van Khanh, Director of the provincial Department of Transport said the transport sector will coordinate with relevant sectors to accelerate the construction of the Ha Long-Hai Phong expressway for completion by late 2016.

Apart from transport infrastructure projects, Quang Ninh has also applied the PPP model to social and working infrastructure, medical and educational establishments and information technology. Local authorities have also asked for approval from the Government to build the Quang Ninh airport and Van Don-TienYen-Mong Cai expressway under the model.

In 2015, the province attracted a total investment of 51 trillion VND (2.244 billion USD), a year-on-year increase of 12.5 percent. The province has put forth a number of policies to facilitate investment and overcome business difficulties. This helped increase investor confidence in local authorities and the investment climate of the province.

During the year, it welcomed a number of major projects worth trillions of VND from both domestic and foreign businesses such as the Vincom Centre Ha Long and Vinpearl Ha Long invested by Vingroup, Ha Long Ocean Park invested by Sun Group, and Ha Long Star Tourism Urban and Entertainment Complex Casino invested by real estate developer Nakheel from the United Arab Emirates.

Vinacomin targets $4.8b turnover

The Viet Nam National Coal and Mineral Industries Group (Vinacomin) anticipates a turnover of VND110 trillion (US$4.8 billion) this year, along with an average salary of VND9.1 million ($404) per worker in 2016.

Vinacomin said, during a conference to launch business plans for 2016, held recently in the northestern province of Quang Ninh, that it planned to mine 39.87 million tonnes of coal, while consuming 38 million tones.

The group also said they would strive to reach their targets this year, despite the challenges and difficulties.

Last year, Vinacomin and its units worked to stabilise production and income for labourers, while ensuring the companies' finances remain balanced. Its turnover in 2015 reached VND105.5 trillion ($4.68 billion), posting a three per cent year-on-year rise. Of which, turnover from coal production was VND53.6 trillion ($2.38 billion) with estimated profits of VND500 billion ($22.2 million).

The company contributed VND12.5 trillion to the State budget, posting 8 per cent higher tax revenues than in 2014.

The company employed 124,400 labourers last year, at an average salary of VND8.6 million per month, an increase of 2.5 per cent from the previous year.

Also, some 9.2 million workers were employed in coal production, which was 3.5 per cent higher than in 2014.

Wood exports set to climb this year

Viet Nam's wood industry is expected to gain a total export value of wood and wooden products of US$7.7 billion for this year, higher than $7.1 billion in 2015.

According to the Viet Nam Wood and Forestry Products Association (Viforest), exports of wood and forestry products from Viet Nam will have the advantage of starting operations through the ASEAN Economic Community (AEC) and the Trans Pacific Partnership (TPP) deal.

Local enterprises have done good business with ASEAN partners for many years so the AEC will create favourable conditions for them to develop further business incoming time.

Meanwhile, TPP will also usher in opportunities for the domestic wooden product makers to have more legal wooden material for export processing because the TPP member countries have great potential for high quality wooden materials with legal origins, according to Nguyen Ton Quyen, chairman of Viforest.

That will create more opportunities for Vietnamese manufacturers to export their products to the European Union (EU) and the United States (US) where there is a high demand for licensed wooden products.

In 2015, Viet Nam achieved total export value of wooden and forestry products at $7.1 billion, 8 per cent higher than 2014, according to the Ministry of Agriculture and Rural Development.

The three largest export markets of Vietnamese wooden products are the US, Japan and China, accounting for 67 per cent of the total export value.

Last year, there were many export markets of Vietnamese wooden products with high export value such as India with a growth rate at 64.45 per cent, Hong Kong with rate at 41.95 per cent, the US at 17.8 per cent and Germany at 10 per cent.

Quyen said the export value increase was due to high demand in the world market in 2015, the Thoi bao Kinh doanh newspaper reported.

For instance, the US market needs to import wooden products worth $27 billion per year while Viet Nam exported wooden products between $1 billion and $2 billion per year. The EU market has a demand for wooden products worth $85 billion but Viet Nam's export value to the EU reaches only between $700 million and $800 million per year.

Moreover, Viet Nam's wooden products had high competitive ability and a reputation on the world market. Therefore, Vietnamese enterprises would have numerous opportunities to export their wooden products to those markets, he said.

PMI improves in December

The Purchasing Managers' Index (PMI) in Viet Nam, an indicator of manufacturing performance, increased from 49.4 in November to 51.3 in December, a Nikkei report, released on Monday, said.

The first increase in new orders in four months supported the strengthening of the manufacturing sector, amid improving client demand. New export orders also grew in December, the first solid expansion since May, the report said.

The registration of more new enterprises also was a boosting factor in December. Meanwhile, the consumer goods sector also grew, the report said.

"Employment also increased again in the final month of the year. Staffing levels increased for the eighth time in the past nine months, albeit only marginally," it said.

However, the report said there was still evidence of spare capacity at manufacturers as work backlog fell for the sixth time in the past seven months.

Falling input prices were recorded in the sector in December, with firms linking this to lower raw material costs, especially the oil price.

Following the fall in input prices, manufacturers cut their selling prices. The prices of products have fallen every month since October 2014, with the rate of deflation remaining solid in the latest survey period, the report said.

It said Vietnamese manufacturers increased their input purchases for the first time in four months in response to increased new business. This led to a marginal accumulation of stocks, following a fall in November.

"It was something of a relief to see the Vietnam PMI bounce back above the 50 no-change mark in December as it suggests that the recent soft-patch experienced both at home and in the wider region may have passed its worst point. A particular positive from the latest survey was a return to growth in new export orders after six successive months of decline," Andrew Harker of Markit, which compiled the survey, said.

"Firms will be hoping to see demand pick up further as we move into 2016," the analyst said.

National quality awards events begin

The Ministry of Science and Technology held a ceremony to announce a series of events titled "20 years of the Viet Nam National Quality Award 1996 -2016" in Ha Noi yesterday.

This is an annual award aiming to review, assess and bestow awards to businesses achieving excellent performances and outstanding achievements in innovating, improving quality and contributing to the country's productivity and quality movement.

Through 20 years of development, the award has attracted attention and created a reputation among enterprises, management agencies as well as consumers. It has also honoured businesses with outstanding achievements in improving product quality and service, competitive capacity and performance.

The series of events will last from January to April this year, including an announcement ceremony, conferences, a press gathering to announce the results of the 2015 National Quality Award and Global Performance Excellence Award of the Asia-Pacific Quality Organisation, meeting among state leaders, ministries and entrepreneurs, a live programme and other media activities.

The ministry will also honour 20 excellent enterprises for constructive contribution in the past 20 years.

Science and technology can only be vital and be spread when it is applied in practice, especially in enterprise activities, Nguyen Quan, minister of science and technology said.

"Therefore, the event is essential because productivity and quality are imperative for the survival of enterprises and the core issue of the Vietnamese economy, as the country has signed the Trans-Pacific Partnership (TPP) deal and joined the ASEAN Economic Community (AEC)," the minister emphasised.

Firms are judged on seven criteria of leadership, strategic planning, customer service, and knowledge in addition to measurement, analysis and management, workforce focus, and process management and results.

Nearly 1,700 awards have been presented in the past 20 years and 37 awards were won at the Asia-Pacific Global Performance Excellence Award.

Beverage sector contributes $1.3b to budget

The beverage industry contributed VND30 trillion (US$1.3 billion) to the State budget last year, according to the Viet Nam Beer, Alcohol and Beverage Association (VBA).

At a conference held in Ha Noi yesterday, VBA Chairman Nguyen Van Viet said the beverage industry continued to grow over the past five years despite the difficult economic times that have resulted in many other kinds of companies struggling or shutting down.

Besides, the sector also created jobs for dozens of thousands of labourers as well as adequately met the domestic demand with high quality products, enhancing competitiveness amid anticipated rising competition pressure associated with intensive international integration, Viet said.

According to a report of VBA, in 2015, the beverage industry produced over 3.4 billion litres of beer, an increase of 40 per cent compared to 2010.

Viet Nam currently has 129 beer establishments, most of which are concentrated in large cities such as Ha Noi, HCM City, and Thua Thien Hue. The majority of the market share is still controlled by the Sai Gon Beer, Alcohol and Beverage Corporation (Sabeco), the Ha Noi Beer, Alcohol and Beverage Corporation (Habeco) and the multinational breweries Heineken and Carlsberg.

In the reviewed period, non-alcoholic beverages also witnessed an impressive growth with a production capacity of five billion litres per year and more than 1,800 production facilities.

By 2020, the beverage industry is forecast to reach a higher capacity, with 4.25 billion litres of beer, 9.2 billion litres of non-alcohol and 360 million litres of alcohol expected to be produced per year.

While joining the Trans Pacific Partnership (TPP) agreement and other Free Trade Agreements (FTAs) would give Viet Nam the chance to attract more investment, it would also pose a significant challenge, Viet said, adding that domestic beverage companies should enhance their production quality and improve their distribution system to protect their domestic market shares.

Tuan Chau Group to build tourism complex

The Tuan Chau Group will build an entertainment, tourism and real estate complex with total investment capital of VND3 trillion (US$133 million) in Dien Ban town in the central province of Quang Nam later this year.

The Head of investment and co-operation office under the provincial department of planning and investment, Doan Ngoc Minh, confirmed to Viet Nam News that the project would boost investment flow among domestic and foreign investors in the east region of the province..

He said Tuan Chau Group completed its land clearance to begin the first stage of the project this year on 35 hectares.

He said the project will be crucial in boosting the socio-economic development of the province.

Steel imports hit US$7.3 billion

Vietnam imported more than 1.25 million tons of steel last December, bringing the total imports volume in 2015 to more than 15 million tons which was valued at US$7.3 billion, according to latest statistics from the General Department of Vietnam Customs.

Most of the imported steel products came from China, Japan, the Republic of Korea (RoK) and Taiwan, of which those from China accounted for over 50%.

Imports volume jumped 28% while value dipped more than US$500 million compared to 2014.

Cheap imported steel flooding the domestic market caused numerous difficulties for domestic businesses. The Ministry of Industry and Trade has recently decided to conduct an investigation against imported steel ingots and steel bars for the application of safeguards.

The investigation was carried out following the proposal of four local steel companies, Hoa Phat Steel Joint Stock Company, Southern Steel Company, Thai Nguyen Iron and Steel Joint Stock Corporation, and Viet Y Steel Joint Stock Company, who accounted for 34% of the domestic output.

The plaintiffs proposed the imposition of a tax rate of 45% on imported steel ingots and 33% on steel bars produced from imported steel ingots in 200 days before the conclusion of the final investigation.

They gave proof that import of steel ingots rose quickly from 588,000 tons in 2014 to around 1.5 million tons in 2015 and steel bars from nearly 830,000 ton in 2014 to more than 1.2 million in 2015.

Domestic production just increased by 5-10% while imports skyrocketed by 150-160% in 2015.

MovaMart opens retail outlet in HCM City

On January 5, a spokesperson for the A&P Group headquartered out of Dubai announced the opening of the company’s first MovaMart building materials and supplies outlet in HCM City and its fifth in Vietnam.

To celebrate the occasion, the store is offering huge savings on select products and discounts of up to 30% on a wide selection of products. Customers are encouraged to act fast as supplies are limited.

All items will be sold on a first come, first served basis.

Philippines to buy 50,000T of rice to prop up reserves

The Philippines' National Food Authority (NFA) has announced plans to purchase up to 50,000 metric tons of rice from Vietnam and Thailand, according to NFA Director Renan B Dalisay.

The purchases are being made to ensure there are adequate inventories on hand in the event of a natural disaster, said Dalisay.

Dalisay toured NFA rice stores in Caraga on January 4-6 to check rice reserves and held working sessions with officials in provinces and cities to formulate disaster plans for the upcoming year.

Seafood exports down in 2015

Overall fish and seafood exports by Vietnamese producers fell a walloping 14.5% for 2015 compared to 2014 to US$6.7 billion, with shrimp sales plummeting 30% to US$3 billion, roughly the same global sales figure as Ecuador.

The Vietnam Association of Seafood Exporters and Producers (VASEP) has reported preliminary estimates show that the Southeast Asian nation’s overseas consignments of shrimp dropped precipitously for 2015.

Official statistics show Vietnam, as opposed to Ecuador, has a less focused shotgun approach to shrimp, fish and other seafood exports with shipments to innumerable less targeted markets in some 164 countries.

Chairman Ngo Van Ich of VASEP said the shrimp industry clearly has fallen into a state of disarray brought about by a lack of market focus, emphasis on quality and the failure to develop a targeted winning competitive strategy.

Ich said Ecuador’s success in the Asian market should serve as a wakeup call to those in the shrimp industry.

Meanwhile, statistics from the Department of Agriculture and Rural Development in the Cau Ngang District of Tra Vinh Province show that 52% of the 6,000 farmers in the region suffered losses or just broke even in 2015.

Chairman Vo Bang Truc of Thanh Phuoc Commune People’s Committee in turn reported most farmers in the commune and surrounding region were hard hit by shrimp diseases and 80-90% incurred losses for the year.

Most leading experts say the problem has little if anything to do with exchange rates— but has everything to do with a lack of focus on food safety, quality, appropriate business strategy and meeting the needs of the global consumer.

The bottom line is that overall shrimp production and exports out of Ecuador in 2015 were at record levels and trended 12.5% higher per month throughout the year compared to 2014, capturing the Asian market.

Meanwhile, Ecuador’s shrimp farming industry seems to have found a formula for success and they are rapidly becoming the dominant force to reckon with in Asian markets, with exports to China up sharply in 2015.

Official statistics through November show Ecuador’s shrimp exports, led by head-on frozen shrimp, to all Asian markets surged 65% over the same period last year to roughly 350,000 metric tons (US$3.0 billion).

Most of the shipments were bound for China, as sales to Asian customers exploded to 42.5% of the South American nation’s overall exports to major markets for the year, followed by the EU (at 30%) and US (at 23.7%),

Leading producers say they prefer to harvest head on shrimp as it keeps their labour costs down and prioritize the Chinese and EU markets where buyers generally prefer head-on shrimp.

Such shrimp are also used for reprocessing in China and other Asian markets.

Additionally, they concentrate on markets such as China and the EU where buyers tend to prefer 41 and smaller count shrimp, which command a much higher price than in other markets such as the US.

The crux of the matter is that Ecuadorian producers focus on satisfying the Asian and EU markets and put the US market on the back burner, according to Jose Campasano, president of Ecuador’s Chamber of Aquaculture.

In a recent widely reported statement to the press, Campasano said Ecuador’s strategy is for a sustainable growth rate that guarantees quality for consumers and profits for farmers, adding he believes a 10-15% advance in the Asian market in 2016 is within grasp.

Halida honoured at World Beer Championships

A spokesperson for the Carlsberg Group based out of Denmark has announced that its Halida brand brewed in northern Vietnam has won a silver medal at the World Beer Championships held in Chicago last December.

Founded in 1994, The World Beer Championships is the oldest international beer competition in the US.

The medal-based competition is open to all commercially produced beers from around the world and relies on a blind tasting methodology developed by Tastings.com. Beers are rated on a 100-point quality rating scale.

Labor productivity still down in region

Average productivity per worker in Vietnam has improved significantly since 2010, by 23.6 per cent, according to figures from the General Statistics Office (GSO), but the gap between productivity in Vietnam and elsewhere in the region remains.

Productivity increased 3.9 per cent each year from 2006 to 2015. The increase since 2010, though promising, still fell short of the target of 29-32 per cent. Average output per worker in 2015 reached VND79.3 million ($3,660), up 6.4 per cent compared with 2014.

Improvements, however, are disproportionate between sectors and the gap between Vietnam and ASEAN countries such as Singapore, Malaysia, Thailand, and Indonesia increased.

This was caused by a the slow transformation of the country's economic structure, a high rate of rural workers, and low productivity in agriculture. Machinery, equipment, and technological processes used in Vietnam are outdated, and the quality and structure of labor use does not meet requirements.

Improvements in labor productivity have been regularly discussed by authorities after a study by the International Labor Organization (ILO) showed that the productivity index in Vietnam in 2013 was among the lowest in Asia-Pacific.

Vietnam’s productivity was put at 15 times less than in Singapore, eleven times less than in Japan, and ten times less than in South Korea. The study also identified causes, which included low education standards, poor technology, and problems in economic restructuring.

According to the GSO, Vietnam’s working-age population (15 years and over) in early 2016 stands at 54.6 million, an increase of 185,000 people since early 2015. Unemployment in 2015 was 2.31 per cent higher than in 2014.

Healthy growth a feature of 2015

The General Statistics Office (GSO) has reported that inflation in 2015 increased by its lowest level for 14 years, at 0.63 per cent, and GDP growth was at its highest for five years, at 6.68 per cent. The figures confirm that Vietnam’s economy has regained momentum after a few difficult years.

According to Mr. Nguyen Bich Lam, Director General of the GSO, the macro-economic situation continued to be stable, the business confidence index rose substantially, and major sectors saw impressive growth. “These are important factors contributing to the high GDP growth rate,” he said.

The report showed that the price of most raw materials for production and consumption was stable and at low levels, creating sound conditions for production and the socio-economy.

“Stable prices resulted in sales by enterprises increasing, while aggregate demand in the population and the government also rose, stimulating production,” Mr. Lam said. “Higher aggregate demand will support sustainable growth.”

Foreign direct investment (FDI), meanwhile, also continued to its upwards trajectory, reaching $22.76 billion for the year, up 12.5 per cent against 2014. Disbursement stood at $14.5 billion, an increase of 17.4 per cent year-on-year. Increases to both newly-registered capital and disbursement are evidence that Vietnam’s investment environment has improved.

The number of new enterprises was at a record high, at 94,754, with total registered capital of VND601 trillion ($27 billion), up 26.6 per cent 39.1 per cent, respectively.

Mr. Pham Dinh Thuy, Director of the Industrial Statistics Department at the GSO, said that economic growth in 2015 was driven by the industrial sector, which increased 9.64 per cent compared to 6.42 per cent in 2014 and comfortably exceeded growth in other major sectors, such as services, which rose 6.33 per cent, and agriculture 2.41 per cent.

A survey on business trends among enterprises in manufacturing and processing conducted in the fourth quarter of 2015 showed a clear recovery in underway. Nearly 45 per cent of respondents said production for the year increased much higher than in 2014 and they expect this to continue in the first quarter of the new year.

The economy, however, still has many shortcomings in need of resolution. Total exports reached more than $162 billion, up 8.1 per cent compared with 2014 but lower that the target of 10 per cent. The main causes were the tumbling global crude oil price, pressure on the exchange rate, and the exports of domestic firms remaining weak, leading to an overall trade deficit.

Mr. Lam predicted that 2016 will be more difficult than favorable. The impact of many free trade agreements reducing tariffs to zero will increase imports and domestic competition will be tougher. Deeper integration will make the economy much more exposed to global economic factors.

The country’s exchange rate policy operated in a relatively flexible manner during the year but is under pressure from external factors, such as the possibility the US Federal Reserve many increase interest rates. Mr. Lam, therefore, said it is necessary for Vietnam to be proactive and flexible in policy matters to overcome the difficulties.

AEC comes into being

The ASEAN Economic Community (AEC) was officially established on December 31.

It features all three pillars (politics-security, economics, and culture-society) of the ASEAN Community. The region is actively developing, with a combined population of 630 million, total GDP of $2.6 trillion, and trade turnover of $2.53 trillion in 2014.

“ASEAN has brought important and practical benefits to its members and strongly affirmed the value of solidarity and the principles of consensus and unity in overcoming challenges during the course of its development,” Prime Minister Nguyen Tan Dung said in welcoming the establishment.

“The building of the ASEAN Community is a continuous and long term process. The bloc has set up a vision to 2025 that affirms the determination of member countries to continue consolidating and deepening ASEAN connectivity and to build a rule-based and truly people-oriented ASEAN Community that ensures people’s rights and interests, boosts extensive relations with partners, and results in ASEAN gaining an increasingly important role and profile in the region and the world,” he said.

From 2015 Vietnam reduced 93 per cent of its tariffs to zero and most of the remainder will be reduced to zero by 2018. Tariffs include those on motor vehicles and components, iron and steel, motorbike spare parts, machinery, equipment and spare parts, bicycles and spare parts, wine and beer, plastic products, and types of paper.

From 2018, Vietnam will retain tariffs of three to five per cent on intensive agricultural products such as poultry, eggs, rough rice, citrus, sugar, processed meat, and brown rice.

The roadmap for removing tariffs has significantly affected trade turnover between Vietnam and regional countries. ASEAN is the third-largest importer of Vietnamese goods, behind the US and EU. Major items are rice, crude oil, textiles and garments, footwear, seafood, coffee, rubber, computers and electronic products, and iron and steel. ASEAN is also the third-largest source of Vietnam’s imports, behind China and South Korea. Major items include petroleum products, machinery and equipment, home appliances, chemicals, and plastic. Vietnam is making all possible effort to bridge its trade deficit with ASEAN members.

2015 budget revenue exceeds estimates

State budget revenue exceeded targets in 2015 despite global oil prices being down 50 per cent on estimates, thanks in part to the efforts made by the financial sector, Deputy Prime Minister Vu Van Ninh told a conference on December 30 summarizing activities in the sector.

2016 will still present many challenges, he added, especially from unpredictable developments in global financial markets that will require further determination from the sector.

A report from the Ministry of Finance (MoF) showed that budget revenue in 2015 reached VND976 trillion ($42.9 billion), VND65 trillion ($2.86 billion) higher than the VND911 trillion ($40 billion) estimated. Budget revenue was therefore 7 per cent higher than estimates and rose 13 per cent compared to 2014.

A further highlight was that revenue from tax debts stood at VND38 trillion ($1.67 billion), exceeding the target of VND34 trillion ($1.49 billion).

Total budget expenditure from 2011-2015 were around targets, increasing more than 70 per cent in 2015 against 2010. Expenditure to GDP fell from over 30 per cent in 2010 to 26 per cent in 2015.

Deputy Minister of Finance Vu Thi Mai said that policies reducing collections and increasing expenditure made balancing the budget a problematic task, with the budget deficit remaining high and public debt increasing rapidly. Appropriate measures, she said, are needed to address the situation in the future.

She added that 2016 will be more positive than 2015 but risks remains from both domestic and international economic circumstances. The formation of the ASEAN Economic Community along with the signing and implementation of free trade agreements will present many opportunities for development but also create problems for production by domestic enterprises.

2016 is the first year of implementing the Socio-economic Development Plan for 2016-2020 and will also see major events such as elections for National Party Congress XII and People’s Councils at all levels around the country, so there must be more determination in managing budgets, Deputy Minister Mai added.

Based on the socioeconomic development plan for 2016 and expectations for the domestic and global economic situation, the government approved budget revenue estimates of $44.6 billion for the year. Expenditure, meanwhile, is estimated at $56 billion, of which development expenditure is to be $11.2 billion, recurrent expenditure $36.2 billion, and debt and aid repayments $6.82 billion.

Fine regime introduced for multi-level marketing

Illegal multi-level marketing (MLM) may be subject to fines of VND100 million ($4,400) under new Decree No. 124/2015/ND-CP from the government, supplementing the provisions for administrative sanctions in the trade and manufacture of fake or banned goods to protect the interests of consumers, which took effect on January 5.

Fines from VND30 million ($1,320) to VND50 million ($2,220) will be imposed on businesses conducting MLM without being properly licensed. Fines will double if the violation occurs in more than two central-level cities or provinces.

MLM participants paid commissions, bonuses and other economic benefits in one year that exceed 40 per cent of revenue they create will be fined from VND20 million ($880) to VND30 million ($1,320).

The government previously asked the Ministry of Industry and Trade (MoIT) to work with related ministries and localities to inspect the operations of MLM organizations around the country.

According to the Vietnam Competition Authority under MoIT, the MLM model appeared in Vietnam in the late 1990s. By 2004 there were 20 companies operating in the field. In the early years in Vietnam MLM activities took place absent of any legal framework.

Since being recognized and regulated in 2004, the MLM industry has flourished, with the advent of numerous businesses. As at 2013 there were more than 100 enterprises registered in the field with more than 1 million participants.

Viettel leads way in telecoms growth

Viettel, MobiFone and Vinaphone recorded VND348.7 trillion ($15.9 billion) in revenue and VND56.4 trillion ($2.57 billion) in profit in 2015, according to the three telecom operators.

Viettel recorded the most impressive growth of the three, with revenue of VND222.7 trillion ($10.1 billion), up 13 per cent against 2014, and profit of VND45.8 trillion ($2.09 billion). As at the end of the year it had 72.6 million subscribers.

Revenue at MobiFone was VND36.9 trillion ($1.68 billion), up 8.29 per cent, and profit VND7.4 trillion ($337.8 million). By the end of 2015 its subscriber numbers were 15 million. Mr. Le Nam Tra, Chairman of MobiFone, told its 2016 planning conference that the company aims to record turnover of VND100 trillion ($4.56 billion) by 2020.

Vinaphone, meanwhile, earned VND89.1 trillion ($4.06 billion) in revenue and profit of VND3.2 trillion ($146 million), up 20 per cent against 2014. Subscriber numbers were 29.7 million.

According to the Ministry of Information and Communications (MIC), Vietnamobile, one of the two small telecom operators in the country, recorded revenue of VND9.9 trillion ($456.6 million) and had 11 million subscribers in 2015. Gmobile, the other small telecom operator, is to cease operations.

Tea exports up against it

Vietnam’s tea exports in 2015 are estimated at 123,000 tons worth $211 million, down 6.8 per cent and 7.4 per cent, respectively, compared with 2014, according to figures from the Ministry of Agriculture and Rural Development (MARD).

In Pakistan, Vietnam’s largest tea export market, volumes increased 0.64 per cent but value was down 7.4 per cent against last year. Exports volumes declined in major markets such as Taiwan, India, the Middle East, the EU, and Japan.

Only in a few non-traditional markets did volumes rise year-on-year, by 22.55 per cent in Russia, 44.94 per cent in Indonesia, and 35.76 per cent in the UAE.

Over recent years the price of Vietnam’s exported tea has halved compared to average global prices, with targets in place to increase the price towards this global average by 2020. Paradoxically, as the price of Vietnamese tea continued to fall in 2015 the price of tea from other countries increased.

The decline in both volume and value partially stems from higher requirements in certain markets, according to Mr. Doan Trong Phuong, Deputy Chairman of the Vietnam Tea Association. “Vietnamese tea exporters have not paid sufficient attention to improving product quality,” he said.

Vietnam’s tea industry faces a range of problems regarding seeds, the age of its tea plantations, food safety, the use of pesticides, transport, and harvesting, according to Mr. Dang Kim Son, former Director of the Institute of Policy and Strategy for Agriculture and Rural Development (IPSARD).

These shortcomings result in low added value for Vietnam’s exported tea. The country has signed a range of FTAs and these may increase exports as tariff barriers fall. These FTAs, however, also set strict requirements on export products, especially food safety standards. “This is a weakness of Vietnam’s tea industry,” Mr. Son acknowledged.

Moreover, enterprises in the domestic tea industry produce what they have without giving due regard to market demand. “Producers have shown little interest in consumer tastes,” Mr. Son added.

Lam Dong province in the central highlands has the largest tea growing area and highest production capacity in the country, with 23,000 ha and 223,000 tonnes per year, accounting for 21 per cent and 30 per cent, respectively.

Its tea exports, however, are facing hardships and volumes are in serious decline.

Without reform the province’s key agricultural product will be unable to expand its international markets, Dr. Pham S, Deputy Chairman of the Lam Dong Provincial People’s Committee, said.

After incidents in which Lam Dong’s exported tea was disposed of upon arrival in export markets, many enterprises in the sector were found to have paid inadequate attention to managing input materials.

Famous local tea exporters such as Tam Chau Co., Phong Giang Co., and TCB Manufacturing and Trade Co., which have headquarters and factories in the high-quality growing areas of Bao Loc and Bao Lam, are now strengthening the monitoring of raw material inputs.

Northern Thai Nguyen province is another major tea growing area in Vietnam, ranking behind only Lam Dong in area and capacity.

Most of the province’s tea production, however, only sells in the domestic market, with just 20-30 per cent being exported.

To strengthen the branding of Thai Nguyen tea, the provincial government has approved a decision on researching the registration of the Thai Nguyen brand name in China, the US, and Taiwan, which are regarded as being major export markets for Thai Nguyen tea in the future.

Northern Phu Tho province, meanwhile, is also trying to promote a new model of tea production and processing following linked chains, to improve production capacity and quality.

Large tea areas in the province, including Phu Tho town and Thanh Son and Yen Lap districts, have been using the model.

Linked chains focus on assessing conditions for producing safe tea, upgrading preservation, guiding management measures such as VietGAP (Vietnamese Good Agricultural Practices), HACCP (Hazard Analysis and Critical Control Point), and ISO (International Organization for Standardization), and improving product quality, packaging, and identification labels.

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