Plenty of opportunity for Belgium businesses in Vietnam

Twenty eight cooperative projects between Wallonie-Bruxelles and Vietnam will be implemented in 2013-2015 with total investment capitalisation of US$4.5 million.

These projects focus on French language teaching, communications, cultural diversification, human resource improvement, healthcare cooperation, technical and vocational training, and scientific research and environment protection.

Ambassador to Belgium Pham Sanh Chau made the announcement at a seminar on investment in Vietnam, opportunity and challenge held in Liege City, Belgium on December 5 within the framework of the international trade fair.

Chau briefed Belgium businesses on Vietnam’s current investment environment and growing relations between Vietnam and Wallonie-Bruxelles over the past 20 years.

Awex Investment Company’s Director General, Philippe Suinen spoke highly of Vietnam’s investment potential and emphasised that Belgium businesses have plenty of opportunity to invest in Vietnam, especially in the fields of agricultural processing, waste treatment and environment protection.

He stressed that the two countries should boost bilateral cooperation to create development opportunities for Vietnam and more jobs for local people.

Cooperation between Vietnamese and Belgium localities has developed strongly, as seen in the growing of flowers and bonsai between East Flanders and Da Lat, the rearing of basa fish between East Flanders and Can Tho, urban planning and waste water management between Namur and Thua Thien-Hue, heritage protection between Brabant Wallon and Phu Tho and infrastructure construction between Anvers Port and Haiphong and Ho Chi Minh City ports.

Currently, Belgium has 40 investment projects worth 98 million euro in Vietnam

Vietnam to join TPP negotiations in Singapore

Minister of Industry and Trade Vu Huy Hoang will lead the delegation representing Vietnam at the Ministerial Meeting on Trans-Pacific Partnership (TPP) Agreement Negotiations in Singapore from December 7–12.

The results of this final meeting could decide whether ministers can fulfill their goal and negotiate a completed TPP Agreement by the end of 2013.

Ministers will have to consider and strive for agreement on outstanding issues related to goods exchange, intellectual property, the environment, labour, and State-owned enterprises.

Tran Quoc Khanh, the head of Vietnam’s TPP negotiation delegation, believes goods-related disagreements are the most pressing facing ministers ahead of the Singapore meeting.

Progress on goods exchange negotiations will provide positive momentum for consensus on other matters.

Successfully concluding TPP negotiations later this year demands commitment from all 12 TPP participants—Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the Philippines, the US, and Vietnam.

The TPP group would become one of the world’s biggest trade areas upon its establishment, representing more than 792 million people, nearly 40 percent of global GDP, and one third of global trade.

The TPP also includes plans for staggered expansions aimed at deepening international economic integration towards an eventual Free Trade Area of the Asia Pacific (FTAAP).

Promoting Vietnam-Bulgaria trade ties

Vietnam and Bulgaria should focus on ironing out snags in each specific field and give priority to areas of their strength to raise their total trade turnover.

In recent years, Vietnam and Bulgaria have made significant progress in economic cooperation, but it is not yet up to par as expected as annual two-way trade turnover remains below US$100 million, says Nguyen Tuan Hai, a representative from the Vietnam Chamber of Commerce and Industry.

According to the Ministry of Industry and Trade, Vietnam mainly exports rice, cashew nuts, coffee, pepper, frozen seafood, rubber products, leather, garment, footwear, computers and electronic components and imports pharmaceuticals, pesticides, wheat, animal food, materials and additives for animal food processing, manufacturing machinery and equipment, and construction materials.

Svetla Zapryanova from the Belgium Ministry of Economy and Energy says the volume of trade exchange between the two countries has not matched their potential. “We are determined to lift bilateral trade ties to higher level,” Zapryanova affirms.

Bulgaria considers Vietnam as a bridge to its business penetration into Southeast Asian markets and it is ready to help Vietnamese businesses enter European markets, Zapryanova adds.

Currently, many Bulgarian businesses are willing to cooperate and share experience with Vietnamese partners in the fields of energy, health care, education and cosmetics.

Bulgarian Ambassador to Vietnam Evgueni Stoytchex says the two sides should join efforts to promote and diversify bilateral trade activities. One of the best ways is to turn Bulgaria into a destination for Vietnamese exports to Balkan and the EU through Varna, Burga and Danube ports as well as industrial zones.

Foreign direct investment (FDI) is an important factor behind effective economic cooperation between the two countries. So the two sides should increase their investment cooperation in the potential areas of energy, pharmacy and garment.

Bulgarian companies are keen to invest in construction, irrigation and other infrastructure projects in Vietnam.

Ambassador Stoytchex says his Government is looking forward to more foreign investment in joint ventures to raise the competitiveness of Bulgarian exports.

A MoIT representative says Vietnam’s trade exchange with Bulgaria is still at a low level as compared with other Central and Eastern European countries as Bulgaria has a small population of 7.3 million.

To raise bilateral trade turnover, the two countries should give priority to areas of their strength, such as electric power, renewable energy, clean energy, energy security, transport infrastructure, information technology, biotechnology transfer, post-harvest processing and tourism.

They should also join efforts to conduct market research through trade promotion programs, business forums, fairs and seminars, says Zapryanova.

Lotte Mart inaugurated in Binh Thuan province

The Lotte retail group from the Republic of Korea on December 5 put into operation its Lotte Mart in the central province of Binh Thuan, bringing the total number of its stores in Vietnam to six.

The shopping centre, the largest of its kind in the central region, is a seven-storey building worth US$45 million with total floor space of over 7,000 square metres, located in Phan Thiet city.

It serves as a modern complex selling high-grade products including jewellery, fashion and food products. Of the 35,000 items for sale, more than 90% are high quality Vietnamese products.

Lotte Mart will also house an entertainment area, cinema, supermarkets and restaurants.

It is expected to greatly change the retail market in Binh Thuan province and neighbouring areas, as well as become a new tourism spot for visitors.

The General Director of Lotte Mart Vietnam, Hong Won-sik said the Phan Thiet store is the group’s biggest retail centre in the Central region, generating jobs for around 600 local residents.

Similar projects have been put into service in Ho Chi Minh City, Danang city, and southern Binh Duong and Dong Nai provinces.

Vietnam determined to pursue multilateral trade mechanism

The head of the Vietnamese delegation at the World Trade Organisation (WTO)’s ninth ministerial conference in Bali, Indonesia, has affirmed Vietnam’s political will and determination to pursue and support the multilateral trade mechanism within the WTO framework.

Deputy Minister of Industry and Trade Nguyen Cam Tu, together with 1,000 other officials from 159 WTO member countries, attended the last day of the three-day meeting on December 5, during which they exchanged views on three agreements of the Bali Package on agriculture, trade facilitation and the slowest developing countries.

Tu stressed that as a developing country, Vietnam wants the Doha Round on global trade liberalisation, which was launched by the organisation in 2001 but hasn’t come to an end, to soon be completed.

As a responsible and constructive WTO member, Vietnam will continue exerting efforts to create a consensus on the multilateral trade mechanism, he added.

Noting existing disagreements on several contents of the Bali Package, particularly in farming–related issues like agricultural trade and food security, Tu called on a greater flexibility and compromise of all WTO members and parties. He stressed that only goodwill and a new joint consensus can recover the motivation, break the Doha Round deadlock and protect the reputation of the global trade system.

He once again affirmed Vietnam’s support of WTO Director-General Roberto Azevedo as well as his initiatives to foster negotiations on trade liberalisation and consolidate the WTO’s role.

He also congratulated Yemen on becoming the 160th WTO member.

Donor assistance to Vietnam unchanged in 2014

Development partners have committed to maintaining their assistance level to Vietnam in 2014 as that pledged in 2013, although the country has risen to middle-income status, Minister of Planning and Investment Bui Quang Vinh has said.

In 2013, international donors pledged to provide nearly US$6.5 billion in official development assistance (ODA) to Vietnam.

At a press conference on the outcomes of Vietnam’s Development Partnership Forum 2013 (VDPF 2013) in Hanoi on December 5, the minister said over the past two decades, Vietnam has become a middle-income developing country thanks to its efforts and the effective support of the international community.

According to international practices, ODA support policies from donors will change once a country reaches middle-income status to concentrate assistance for poorer ones. Vietnam is now experiencing such a period, he added.

Vinh stressed that the forum is an important milestone in Vietnam’s development process. Since 1993, Vietnam has called for official development assistance through the annual Consultative Group (CG) meetings.

They agreed with the Vietnamese Government on specific strategies and challenges that the country faces in the coming period. The donors pledged to walk side-by-side with Vietnam on the path of realising the strategies, said Vinh.

The minister said international donors also lauded Vietnam’s effective use and management of ODA for economic development and poverty reduction.

It is a new period for the partnership between Vietnam and development donors when Vietnam, an ODA recipient, is now also a partner conversing and discussing with donors to engineer orientations and policies to help the country overcome challenges and develop, he said.

During the forum, which is considered the start for a number of high-level dialogues between the Government and donors, Prime Minister Nguyen Tan Dung frankly answered all concerns of the partners, thus creating trust and motivation for them to continue their attention to Vietnam, Vinh noted.

The Minister emphasised that Vietnam has entered a new development period, thus the country should change its mindset on ODA. The assistance will not only be invested in infrastructure projects and profitable ones, but also in those for social development, poverty reduction and other fields.

The assistance is part of the Vietnamese Government’s long-term loans, so the responsibility of managing and using the fund must be higher with clearer purpose and calculation of efficiency and refund capacity, he added.

Int’l seminar discusses post-harvest technology

Vietnamese and foreign scientists are meeting in Hanoi to examine the research, transfer and application of post-harvest technological advances to raise the quality of agricultural products.

Seventy-seven presentations at the December 5-6 seminar are focused on agricultural mechanization, post-harvest technology, food processing technology, energy and environment technology, as well as Asian agricultural strategies and policies.

Delegates shared the view agricultural engineering and post-harvest technology plays an important role in rural and agricultural modernization.

They said modernizing agriculture and increasing its competitive capacity agricultural mechanization requires the sector to accelerate the mechanization process, reduce post-harvest losses, and diversify products.

The seminar is jointly being held by the Vietnam Institute of Agricultural Engineering & Post-Harvest Technology, the HCM City-based Agro-Forestry University, Hanoi’s University of Agriculture, and the Japanese Society of Agricultural Machinery and Food Engineers.

Danang hosts ASEAN Insurance Regulators’ Meeting

More than 200 ASEAN country delegates are attending the 16th ASEAN Insurance Regulators’ Meeting (AIRM) and the 39th ASEAN Insurance Council (AIC) running concurrently in Danang.

Finance Minister Dinh Tien Dung told the December 5 opening ceremony insurance is an important pillar of ASEAN financial cooperation and has benefited from the progress towards realising a united ASEAN Community by 2015.

He said ASEAN financial integration has proven particularly successful in capital market development, capital account liberalisation, financial services liberalisation, and insurance cooperation.

ASEAN and Northeast Asian countries including China, Japan, and the Republic of Korea, have established premium risk prevention mechanisms, a roadmap for developing the securities market, and a credit guarantee and investment trust fund.

Vietnam urged meeting participants to focus on improving management and oversight via early warning systems, distance monitoring, and on-the-spot inspections. Vietnamese authorities are currently drafting the necessary legislation and regulations outlined in the 2011–2020 insurance market development strategy.

AIC member nations will share experiences in developing new insurance products and innovative risk sharing mechanisms, with priority given to natural disaster risks.

Vietnam’s insurance market has made significant progress since its humble beginnings in 1993. Many insurance companies now offer a wide range of products and services but generally still lag behind their regional equivalents in terms of scale and diversity. The Vietnamese Government has encouraged both domestic and foreign businesses to invest in insurance. It will continue to implement its insurance business reform scheme, improving the quality of management and services and reinforcing the sector’s ability to guarantee premiums.

Optimism over Vietnam property

A number of real estate companies and experts were quoted by New York Times as saying that Vietnam’s beleaguered property market is bottoming out just as macroeconomic indicators stabilise and the Party makes new pledges to reform a struggling and corruption-riddled banking sector.

Dinh Thien Thien’s barbecue business bloomed just as Vietnam’s property market wilted. It was not a coincidence, according to New York Times.

In 2010, Thien said he rented an empty lot downtown here, where construction had largely stopped, and installed a grill. He added some homemade wooden furniture intended to conjure the image of a saloon - a motif inspired by his love of American westerns. Word of his movable feasts began to spread on Facebook, and within months he was renting 15 lots for the equivalent of US$1,000-5,000 a month.

But as construction picks up again, Thien, 32, is down to five locations. Some of his former grill sites are dotted with cranes or cement mixers, and he predicts that in three years he will be forced to pursue an entirely new line of work.

Vietnam’s beleaguered property market is bottoming out just as macroeconomic indicators stabilise and the ruling Party makes new pledges to reform a struggling and corruption-riddled banking sector, say developers and businessmen here, the country’s commercial capital. And if Vietnam signs onto the Trans-Pacific Partnership, a proposed trade agreement that involves a dozen countries, including the United States, it may bolster the Vietnamese economy and speed a real estate recovery.

Yet although lending rates have fallen to 12.8%, from 20.3% in 2011, no one in Vietnam knows whether the market can rebound to the peaks it hit before 2008, much less whether the government’s statistics or commitments to banking reform are reliable. For the moment, the mid- to high-end apartment markets remain oversupplied in this city and in the capital, Hanoi.

“It’s going to be another year before things get more clear - it’s rather opaque at this point,” said Trinh Bao Quoc, chief executive at Son Kim Land Corporation, a local developer. “But if you talk to foreign investors, a lot of them who are here in Vietnam know that this is a good time to buy.”

In this city, asking rates for office rentals, now at about US$20-30 per square meter, or about 10 square feet, began to rise in late 2012 for the first time since 2007, according to the Los Angeles-based real estate company CBRE. And in recent months, average selling prices for low-end residential properties in Hanoi have held steady around US$800 per square meter after falling precipitously for two years.

Some foreign investors have bought real estate here this year, in what brokers suggest is a sign of rising liquidity and investor confidence. And a few major construction projects are in the pipeline, including a tower that will include Vietnam’s first Ritz-Carlton.

And in July, Vingroup, a real estate developer in Vietnam, opened the country’s largest shopping mall, which has a gross floor area of more than 200,000 square meters, or 2.1 million square feet. A company spokesman said 53% of the 4,518 units at a new apartment complex nearby had already been sold, and 29% of them were leased for 50 years.

“We believe the real estate market is recovering well now and is expecting a positive turnaround by the end of this year or early next year,” said Le Thi Thu Thuy, chief executive of Vingroup.

But Vietnam’s economy has underperformed relative to predictions that accompanied its 2007 entry to the World Trade Organisation, and its current annual growth rate of about 5.3% is the slowest in more than a decade. A central obstacle to economic recovery is that local banks are saddled with bad debts linked to speculative property investments.

Credit has tightened in the years since the market began to sour in 2008, and in July the government created an asset management firm tasked with buying bad debts in the banking sector. In September, PM Nguyen Tan Dung also pledged to raise the cap on foreign ownership in local banks to 49% from 30%.

But analysts say many of the bad debts are still linked to real estate.

Rural Vietnamese goods fairs a big success

A programme to hold Vietnamese goods fairs in rural areas has reaped success this year, generating total revenues of US$1.1 million, according to the Business Association of High-quality Vietnamese Goods.

The association’s member companies have organised a total of 22 fairs across the country in 2013, winning local people’s trust in Vietnamese brands.

The programme, which entered its fourth year this year, aims to change consumer behaviour towards buying more locally-made products and help businesses expand their domestic market share.

Next year, the association plans to organise 24 fairs in 13 provinces and cities nationwide.

The association’s chairwoman Vu Kim Hanh said 2014 will be an important time for Vietnamese businesses to strengthen its sale networks from urban to rural areas, in preparation for the opening up of market in 2015 in line with several free trade agreements between Vietnam and other countries.

Soc Trang earns nearly US$481 mln from export

The Mekong Delta province of Soc Trang has recorded an export turnover of nearly US$481 million so far this year, increasing 14.63 percent over the same period last year.

According to the provincial Statistics Department, the results were due to success in seafood exports, which saw a 26.21 percent rise year on year to hit US$450.5 million.

However, exports of the agro-forestry sector were low at US$29.11 million, equivalent to just 41.6 percent of the set target and down 49 percent over the previous year, the department said.

A particularly sharp fall was seen in both export volume and value of rice by 60,000 tonnes and an average US$18 per ton, the department added.

The reason behind the drop was the fierce competition from other strong exporters such as Thailand, India, Pakistan and the emerging exporters of Myanmar and Cambodia, it revealed.

Other currency earners from Soc Trang included mushrooms, eggs, fruit and machinery.

Bids open to investors for expressway

The competitive bidding process to select an investor for the Dau Giay-Phan Thiet expressway under the public-private-partnership model kicked off in late November.

A long-awaited ceremony to kick-start the process of selecting a second investor for the highway attracted representatives from the Ministry of Planning and Investment and Ministry of Transport (MoT).

“This is Vietnam’s first bidding of international investors for a PPP highway project,” said Hoang Dinh Phuc, general director of MoT’s Project Management Unit 1, assigned to oversee the road project.

Previously, the World Bank and MoT co-organised road shows in India, Singapore, and the Republic of Korea in July-August to promote the project to investors.

At the time the bid closed, seven international investors and investor consortiums had reportedly filed formal interest in the project.

They included, Egis Projects SA & Consortium of IJM Corp Berhad, VINCI Concessions from France, Hyundai E&C-Korea Expressway Corp, IL&FS Transportation Network and Oriental Structures Engineering PVT from India, and First Pacific & Metro Pacific Investment from Hong Kong and the Philippines.

Phuc said the investors will be competing to invest 40 per cent of the project’s total capital, the other part of which is held by Bitexco Group.

Investors passing the pre-qualifying round will take the standard request for proposals (RFP1) from the MoT.

According to regulations on executing the expressway project, these investors have the right to contribute their ideas to RFP1 before the RFP2 documents are distributed.

“Investors who pass the pre-qualifying round will hand in bidding records following the RFP2 model and the name of the successful bidder will be announced in late 2014,” Phuc said.

According to tender invitation records, viability gap funding (VGF) will be included and short-listed investors will do self-assessments of the project and set the VGF level they will need from the Vietnamese government.

The Dau Giay-Phan Thiet expressway has an estimated total investment of $757 million, to be shared between investors and funding from the government.

The government’s funding will come from a credit package from the International Development Association (IDA) and a loan from the International Bank for Reconstruction and Development (IBRD). It is likely the IDA loan would be injected directly into the investment project while the IBRD loan would be re-lent to the project enterprise.

NPLs rein in bank profitability

Many commercial banks might not hit their annual profit targets for the second year running due to low credit growth and the prevailing high levels of non-performing loans.

This year, VIB’s three-quarter after-tax profit was around VND26 billion ($1.24 million), equal to just 2.2 per cent of its target. Such dire result surpassed the disappointment of 2012 when the bank achieved only 41 per cent of its pre-tax profit target.

The low profits have been blamed on the increase in non-performing loans (NPLs). Potentially the bank’s irrecoverable loans, known as debt group 5, increased by 89 per cent, reaching VND516 billion ($24.57 million). Meanwhile, the lender’s credit growth was only 1.72 per cent.

NaviBank and PGBank both set markedly low profit targets for the year, aiming to make just VND120 billion and VND400 billion respectively. Yet even these modest targets look out of reach with Navibank completing just 11 per cent of the plan and PGBank’s completion ratio standing at only 18 per cent to date.

These two banks have the undesirably distinction of holding the highest ratio of NPLs and the lowest credit growth among Vietnam’s commercial banks. According to their financial statement, for the first nine months of the year, Navibank and PGBank’s NPL ratios stood at 8.78 and 9.5 per cent, while their credit growth was minus 8.53 and minus 5.3 per cent, respectively.

In the first three quarters of this year, a number of banks completed less than 50 per cent of their profit target, including Techcombank, Southern Bank, VPBank, DongABank and Eximbank.

In 2012, profits in the banking system decreased by around 50 per cent, and the troubled performances of many commercial banks look likely to see the slum continue.

Banks which have fared better, completing the lions share of their profit target, were BIDV (86 per cent), VietinBank (94 per cent), Saigonbank (94 per cent) and Sacombank (79 per cent).

Earlier in the year, VietinBank reduced their pre-tax profit plan to VND7,500 billion ($357 million) from VND8,600 billion ($409 million). In the first three quarters of this year, the bank earned VND7,047 billion ($335 million) in pre-tax profit, up 10 per cent on-year, and leaving them on target to meet expectations in the final quarter.

According to Nguyen Hoang Minh, deputy director of the State Bank’s Ho Chi Minh City branch, there is no surprise at such decline in banking profit. Bank’s main profits come from lending, but credit growth is very low. To try to counter this, some banks even reduced their lending rate below the deposit rate of 7 per cent in an effort to attract customers.

National Financial and Monetary Policy Advisory Council member Tran Du Lich said the profit decrease was a consequence of over lending to the real estate sector in 2008-2010. “Then when this market collapsed, NPLs began spiraling out of control at many commercial banks.”

The fourth quarter is generally considered the peak season for banks to pump capital due to the rise in demand from enterprises. However, with increasing NPLs as well low or even negative credit growth, profit targets are unlikely to be met by many banks.

Farmers barely benefit from higher rice prices

Local and export prices of rice are on the increase towards the year-end after the Vietnam Food Association (VFA) announced it had won a tender to ship 500,000 tons of rice to the Philippines, but farmers are not benefiting as their stocks have been emptied earlier.

Both export and local price rise

In the early months of the year, the offering price of Vietnamese rice was the lowest among the three biggest rice sellers, including India and Thailand and sometimes even lower than Thailand’s by up to US$120-130 per ton.

Now, on the rice market site www.oryza.com, Vietnamese rice exporting firms are offering 5% broken rice at US$420-430 per ton while the price offered by Thailand and India is only US$410-420 for similar types of rice.

Not only is this happening in the exporting market but the domestic market is also seeing higher rice prices, which have hit the highest level since the start of the year.

Duong Van Men, a rice trader in Dong Thap Province’s Lap Vo District, said that fresh IR 50404 rice was priced at VND5,300-5,400 per kilogram while the prices of long-grain rice strains increased by VND500-600 per kilogram to VND5,600-5,700 compared to the price recorded two weeks ago.

According to Ngo Ngoc Yen, director of Yen Ngoc rice trading enterprise in HCMC’s Tan Phu District, the strong price rise results from the deal to sell 500,000 tons of rice to the Philippines and many exporters are buying rice for their year-end contracts.

Few farmers benefit from good prices

Although rice export in the final months of the year is more favorable for both traders and farmers, only a few farmers are directly benefitting from the price increase as the rice volume yet to be harvested is small.

Cao Van Hoa, director of Tien Giang Province’s Department of Agriculture and Rural Development, said that the province planted rice in over 235,620 hectares this year. All the rice in the province has virtually been harvested with an average of over 5.7 tons per hectare and a total volume of over 1.3 million tons, he added.

According to the Ministry of Agriculture and Rural Development, the Mekong Delta region harvested 650,000 out of 800,000 hectares of autumn-winter rice while the harvest of the early winter-spring crop 2013-2014 will start in two months’ time.

Around 150,000 hectares which have not been harvested will supply some 750,000 tons of rice, which is not much. Meanwhile, most farmers have sold most of the fresh rice already.

According to a source, the total rice volume members of VFA have signed with partners has amounted to over 7.7 million tons. Meanwhile, the rice export of VFA’s members recorded last month was 6.14 million tons with the total value of over US$2.64 billion.

Electronics retailers expect good sales

The main shopping season of 2013 is about to begin and electronics companies are focusing on sales, as they seek to overcome the year's disappointing turnover, reports Vietnam Economic News.

According to retailers, the sale of electronic goods in the third quarter was better than in the second quarter, and is expected to increase in the fourth quarter of this year.

The domestic retail market warmed up in September and October, with increases in sales of laptops, tablets, and smart phones, compared with previous months.

Dang Thanh Phong from Thegioididong.com said, "Mobile phone sales in the third quarter rose approximately 15 per cent, laptops by about 80 per cent, and tablets by 70 per cent, which are fairly high percentages compared with the same period last year."

According to a representative of FPT Shop, smart phones priced from VND4-6 million sold well due to their perceived value.

Chairman of the Vietnam Electronics Enterprises' Association (VEEA) Le Ngoc Son said the phone market has risen since last year. However, the electronics market was generally growing slowly.

Meanwhile, Deputy Minister of Industry and Trade Le Duong Quang said that in the last months of this year, the Ministry of Industry and Trade and other departments will take drastic measures to improve production capacity and market demands.

For electronics, cars and motorcycles, it is necessary to strengthen the distribution system to provide consumers with lower prices, in order to reduce inventory and boost production.

In addition, the Ministry of Industry and Trade will also implement the agreement on priority use of products produced by enterprises under the ministry's management.

To create momentum for the year-end shopping season, electronics companies must adopt solutions to stimulate the market, especially through promotional programmes.

Most electronics stores, such as TopCare, Tran Anh, Pico, HomeCenter, and Media Mart, have prepared promotions to attract consumers, according to VEEA.

For example, the Nguyen Kim retail chain announced its five-star service for smart phone buyers who purchase phones from them. This will allow customers to exchange their purchases within seven days and be granted maintenance and upgrading vouchers.

Many other electrical retailers also promised to offer up to 50 per cent discounts and have partnered with banks and financial institutions to create sales programmes with incentives, such as low interest payments and zero per cent interest installments.

According to Son, in addition to promotional policies, these supermarkets also have actively changed sales policies, such as decisions to cut down on intermediaries to reduce product prices, creating competitive advantages.

The removal of intermediaries can reduce costs from 3-10 per cent, he added.

Also, Ha Noi-based Tran Anh Electronics' Business Director Ngo Thanh Dat said, "There is a further advantage for us as rental fees have fallen sharply. In Ha Noi, for example, the monthly rent was only $10 per square metre. This is also a good opportunity for electronics companies."

Government issues decree on Commercial Law

The Government issued Decree 187/2013/ND-CP (20 November 2013) providing details of implementation of Commercial Law on activities of international purchase and sale of goods, agencies for purchase or sale, processing and transit of goods involving foreign parties.

Export – import of goods

Vietnamese traders not having foreign direct invested capital are entitled to export – import goods not subject to their registered business scope, except goods banned or temporarily suspended from export – import.

Goods banned from import may be considered and permitted to import in cases of importing for scientific research or humanitarian aid, without environmental pollution, spreading of epidemic diseases, affecting human health, traffic safety, security, defense, social order, and adversely affecting ethics, habits and customs of Viet Nam.

Exported – imported goods subject to animal, plant or fishery quarantine must be quarantined before receiving custom clearances.

The trader is entitled to authorise another trader (the authorised dealer) to export – import or to act as the authorised dealer receiving export – import from another trader of all types of goods, except for goods banned or temporarily suspended from export – import.

With respect to exported – imported goods subject to issuance of a permit, the trader or the authorised dealer must have an export – import permit prior to either party signing the contract of authorised dealership.

Agency for purchase or sale of goods for foreign trader

The trader has the right to be an agency of purchase or sale of goods, except goods banned or temporarily suspended from export – import for foreign traders.

If the goods must be exported – imported under the permit, the trader enters into an agency contract, only once having the permit granted by the competent authority.

The trader can pay by Viet Nam dong to the foreign trader who has a presence in Viet Nam, remit foreign currency overseas to pay to the foreign trader, or pay by goods not banned or temporarily suspended from export. If the trader pays by goods subject to permit for export, then the trader must obtain the permit from the competent authority.

Goods under the agency contract with the foreign trader will be re-exported if they are not sold in Viet Nam.

The Vietnamese trader is entitled to engage the foreign trader to be an agency overseas to sell goods, except those banned or temporarily suspended from export.

In this case, a Vietnamese trader must enter into an agency contract with the foreign trader and remit amounts under the sale agency contract into Viet Nam.

Goods exported under the overseas sale agency contract are re-imported into Viet Nam if they are not able to be sold overseas. Such goods are not subject to import duty and are entitled to refund of export duty (if any).

Processing of goods involving foreign elements

Vietnamese traders, including foreign invested traders in Viet Nam, are entitled to process goods for foreign traders, except goods banned or temporarily suspended from export – import.

Processors may lease or borrow machinery and equipment from their suppliers for the purpose of implementation of processing contracts. The lease, borrowing or donation of machinery and equipment must be agreed upon in the processing contract.

The trader may have goods permitted to be circulated in Viet Nam processed overseas for business purposes.

Export of machinery, equipment, raw materials, accessories or supplies for processing overseas, and import of processed products, must comply with provisions on management of export – import.

Transit of goods through territory of Viet Nam

The trader having business registration of freight forwarding and transportation is entitled to provide service of transportation of goods transiting through territory of Viet Nam to foreign owners.

Transited goods are not sold in the territory of Viet Nam, except that which is necessary and subject to approval of the Ministry of Industry and Trade ("MoIT").

Most goods of foreign organisations or individuals are permitted to transit through the territory of Viet Nam, except weapon, munitions, explosive materials, highly dangerous goods and goods banned from business, or banned or temporarily suspended from export – import.

Weapon, munitions, explosive materials, and highly dangerous goods may be permitted to transit through the territory of Viet Nam subject to the Prime Minister's approval. Goods banned from business, or banned or temporarily suspended from export – import are permitted to transit after obtaining MoIT's approval.

This Decree takes effect on 20 February 2014 and replaces the Government Decree 12/2006/ND-CP.

Low credit growth target for 2014

Despite significant improvement, credit is unlikely to reach the 12 percent growth target this year. Economists are worried that the slow growth in 2013 would continue in 2014. For this reason, economic experts have offered proposals, regarding monetary policy for 2014.

The State Bank of Vietnam’s Money Policy Department Director Nguyen Thi Hong said, “The 12 percent credit growth target for this year can be adjusted to match realities. The credit growth has reached 7.18 percent so far this year and is expected to increase to 10-11 percent by the year’s end given that credit usually increases rapidly in the last months of the year. The State Bank will flexibly adjust credit growth targets for high-performing credit institutions and quickly resolve bad debts via the Vietnam Assets Management Company (VAMC).”

It is expected that the macro economy will improve in 2014 as a result of economic recovery. However, many economic experts warned of inflation again next year as a result of economic growth measures and the budget overspending rate increase to 5.3 percent.

They also said that businesses will still face difficulties and that to reach the economic growth rate of 5.8 percent next year, ministries and sectors need to take comprehensive measures to boost credit flows into the economy.

Small and Medium Enterprises Association Chairman Dr. Cao Si Kiem said that the State Bank of Vietnam has put in place money policy tools under the market principle, while ensuring publicity and transparency, which has received good response from the society, businesses and investors. However, systematic solutions are also needed to resolve problems, particularly bad debts.

Economist Dr Vu Dinh Anh said, “The macro economy will not change drastically next year and it will be ok to continue the money policy. The government should not loosen the money policy and set the credit growth rate of 12 percent. It is reasonable to increase credit by only 10 percent in 2014-2015 since both banks and businesses have realised their difficulties.”

“The most important thing for the Vietnamese credit system is not to grow but to improve the quality of credit and resolve bad debts, particularly stop new bad debts. In case that credit standards are loosened, the amount of bad debts will increase within three to six months," he stressed.

Many said that the money policy still need to be flexible and stable and the struggle with bad debts should be accelerated. National Financial Monitoring Committee Deputy Chairman Truong Van Phuoc said that resolving bad debts meant that credit will be reduced and that the credit growth rate could be lowered to 9 percent. “We have used profits for the next three years to resolve national bad debts,” he said.

HSBC Vietnam General Director Summit Dutta said that establishing a bad debt management authority is a good solution in the current situation. Dr. Cao Si Kiem also said that resolving bad debts should still be a major task for next year. Without this, businesses will be unlikely to recover and banks will be unlikely to become stable.

Business Development Research Institute Director Dr. Le Xuan Nghia said that if banks resolve their bad debts, the credit growth rate will increase to 14-15 percent in the near future.

He also suggested that the State Bank of Vietnam pay special attention to resolving bad debts, strengthening international-standard management, increasing supervision and information publicity and transparency to enhance people’s trust in banks and the government’s money management policy.

Lack of access keeps Phu Quoc port idle

Authorities in Kien Giang Province are reluctant to take over Phu Quoc Island's An Thoi International Seaport even though the Viet Nam Maritime Administration is planning to hand it over.

The Mekong Delta province fears that it will not have the budget to maintain the port, which is seriously underused.

Pham Vu Hong, deputy chairman of the province's People's Committee, was quoted in Tuoi Tre (Youth) newspaper as saying that the seaport was bringing in very little revenue.

Under the government's zoning plan to develop Phu Quoc Island by 2030, the An Thoi Port, worth roughly VND158 billion, will have the capacity to handle 500,000 – 700,000 tonnes and 360,000 passengers every year.

According to Nguyen Dinh Viet, director of Kien Giang Port Authority, few international cargo or passenger vessels have arrived at the port, besides those that carried asphalt and barges used for the construction of Phu Quoc International Airport.

Viet said major construction projects were being built in the central and northern parts of the island, while the port is located in the southern area of the island.

Recently, the port received a barge and three foreign vessels to support the installation of the Ha Tien – Phu Quoc undersea power cable line.

The port's total revenue came from 39 turns of vessels, 19 turns of barges and three tug boats, or roughly VND583 million, Viet told the paper.

"Currently, the port has areas for 3,000DWT that is now accommodating only fishing boats and small cargo boats of local residents," he said.

The biggest hurdle for the port's effective operation is the inefficiency of an approach road that links the port with the North – South road on the island.

In order to reach the port, only vans can travel through a market.

Heavy trucks cannot access the port, according to Lam Minh Thanh, chairman of Phu Quoc District's People's Committee.

He said the An Thoi Port was placed in an inappropriate location near a military port and traditional fishing ports of local residents.

Without a well-built approach road, the port would not operate effectively, Thanh said.

It is estimated that at least VND1 trillion would be needed for land clearance compensation if the local government wants to build the road linking the island's North – South road to the port.

The local government said it could not afford to pay compensation to displaced residents.

Pham Vu Hong, deputy chairman of Kien Giang Province's People's Committee, suggested that the Viet Nam Maritime Administration complete infrastructure linking the port before handing it over to the local government.

Local authorities are discussing the matter before making a final decision.

Under the government's plan, Phu Quoc will be an administrative unit at the same level as a city directly under control of the central government, with 10 wards and communes.

Besides the An Thoi International Port, the government of Kien Giang is calling for investment in at least four other ports, including the 675-ha Nam Du deepwater port with VND16.8 trillion ($840 million) on Nam Du Islet, Bai Dat Do Port worth VND10.5 trillion, the VND1.1 trillion ($55 million) Hon Chong Port, and Bai No Port.

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