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BUSINESS IN BRIEF 7/2

 Local company boosts Cameroon investment; Vinamilk expands world market; Binh Dinh unveils prioritised investment projects; Big challenge for economy in 2014; Haiphong licenses Hong Kong investment project

Germany – a big trade partner of Vietnam

Germany is Vietnam’s largest European trade partner, making up 20% of the country’s total trade turnover.

Vietnam Customs statistics show Vietnamese exports to Germany last year reached US$4.72 billion, a year-on-year rise of 15.4%.

Its major export items include mobile phone handsets and components, footwear, garments, coffee, timber products, seafood, rucksacks, bags, purses, handicrafts, computers, and electronics.

Among the exports, mobile handsets and components topped the list, earning US$1.54 billion, representing an annual increase of 32% and making up one third of the total export value.

Germany is the largest EU garment importer, creating plenty of opportunity for Vietnamese garment makers. In 2013 alone, Vietnamese garment exports to this market were valued at US$652 million, an annual rise of 16.7%, and accounting for 13.7% of the total export earnings.

Computers and electronics posted the highest growth of 108%, raking in US$337 million in value.

Other export items attaining high growth include seafood (up 2.6%), handbags, hats, cases, umbrellas (17.6%), plastics (6.4%), steel (9.3%), cashew nuts (6.7%), rubber (35.7%), cookies and cereals (49.8%) and fruit and vegetables (16%).

Local company boosts Cameroon investment

Xuan Thien Ninh Binh has been licensed to invest in a 2,000 MW hydro-power plant and a cement factory in Cameroon.

Under the license, the company, an affiliate of the Xuan Thanh Economic Group, will manufacture first commercial cement products in 2015 and generate power in 2018.

Cameroon is one of the company’s 54 African markets in is development strategy to expand investment in hydro power, cement production, and mineral ore exploitation on this continent.

With a population of nearly 1 billion and rich mineral ores, Africa has a great demand for power and cement to meet its rapid development in the coming years.

Doan Trinh, a CEO of Xuan Thien Ninh Binh, explains the company has a wealth of experience in developing hydro power and cement, and Cameroon is its primary investment target in Africa.

Cameroon has the second largest African hydro power development potential after the Democratic Republic of Congo. The country is in dire need of power generation to feed  

its population and industrial production, but it currently meets only 16% of its demand.

The company is conducting other market surveys in Central and Northern Africa.   

Vinamilk expands world market

Since its establishment 37 years ago, Vinamilk has developed a reputable brand in Vietnam and gradually penetrated the world market.

Its products are now available in 26 countries worldwide, with its 2013 export earnings reaching US$230 million, a year-on-year increase of 27%.

The company plans to set up a factory in Cambodia – a lucrative market that consumed US$40-50 million worth of Vinamilk products last year.

It has a joint venture company with a dairy product factory in New Zealand to produce powdered milk for domestic use and pasteurised milk for export to Vietnam.

Last year the US Food and Drug Administration (FDA) licensed Vinamilk to ship its products to the US, opening up an opportunity for the company to break into this demanding market.

In 2013 Vinamilk invested in two modern factories in Binh Duong to produce 54,000 tonnes of powdered milk and approximately 400 million litres of fresh milk per year.

The two state-of-the-art production lines are expected to market highly competitive products, meeting international standards.

In 2010 Vinamilk was the first and only Vietnamese business recognised as one of the 200 leading Asian businesses by Forbes Asia.

Its CEO Mai Kieu Lien was honoured as one of the 50 female Asian entrepreneurs in 2012-13 by Forbes.

Vinamilk also topped the list of the 50 leading businesses on the Vietnam Stock Exchange in 2013.    

Binh Dinh unveils prioritised investment projects

The central coastal province of Binh Dinh is calling for US$1.8 billion in 18 projects in its Nhon Hoi economic zone and other industrial parks.

It prioritises investment in infrastructure construction, real estate, trade, services, tourism, agro-forestry fisheries, and health care.

The province hosted a ceremony on February 3 to call on domestic and foreign businesses to invest in these projects.

At the ceremony, the provincial Entrepreneurs Association committed more than US$500 million to investment and VND10 billion to social welfare over 2014-15.

The Bank for Investment and Development of Vietnam (BIDV) agreed to pour VND10 trillion into industrial production and aquatic product processing over 2014-16, alongside its VND10 billion commitment to local social welfare.

Deputy Prime Minister Nguyen Xuan Phuc acknowledged Binh Dinh’s efforts in maintaining high economic growth and competitiveness index in 2013.

He reminded the province to fully tap its natural resources to develop its chemical, tourism, and aviation services.

Big challenge for economy in 2014

Maintaining last year’s reasonable rates of economic growth in 2014 presents a major challenge in the current economic context.

Vietnam’s GDP grew at 5.42% in 2013, approaching the 5.5% set target for 5.5% and higher than 2012’s 5.25%.

Vietnam’s General Statistics Office (GSO) Director Nguyen Bich Lam is reasonably content the trend accords with long-term socio-economic development goals, especially considering the Government’s macroeconomic stability priorities. Slower growth is part of its policy strategy.

Lam says economic restructuring that favours the quality of growth over its magnitude will help Vietnam secure consistent, steady development.

Industrial production showed sign of recovery in 2013. The Index of Industrial Production (IPP) rose 7.4%, much higher than 2012’s 5.5% improvement. The processing and manufacturing industry accounted for more than 70% of added value.

Nearly half of the value of industrial production came from the foreign direct investment (FDI) sector. Impressive IPP improvements of 9–22% were seen in FDI businesses manufacturing textiles, drinks, clothes, electronics, computers, and leather. Exports also grew by more than 20%.

The increases in FDI production promote growth, expand export markets, and generate jobs. It demonstrates the health of Vietnam’s investment environment and its attractiveness to foreign investors. But added value remains low because of manufacturing’s and assembly’s reliance on imported input materials.

The manufacturing and processing industry’s consumption index is also following positive trends, rising from 1.5% in 2011 and 3.6% in 2012 to 9.2% in eleven months of 2013.

By December 1, 2013, the manufacturing and processing industry’s stockpiling index had risen 10.2% above the previous year’s levels—another positive sign.

Statistics indicate domestic manufacturing lags behind in growth, management, competitiveness, and professionalism. Support industries and input material production is still substandard.

Sustainable development depends on high productivity, investment, and competitiveness in both the domestic and FDI sectors.

Lam acknowledges the Government’s 5.8% growth target is a major challenge in 2014. Achieving its nine specific tasks will require united and assiduous efforts from all ministries and departments.

World prices, rising levels of investment, and the forecast spikes in the costs of commodities will affect the Consumer Price Index in 2014.

The lessons learned from recent macroeconomic management experiences, together with monetary and fiscal policy flexibility, should keep a 2014 inflation rate below 7% well within reach.

Haiphong licenses Hong Kong investment project

The Haiphong Economic Zone Management Board has just granted an investment license to Hong Kong’s Apex Wealth Internatiol Limitenad.

The US$14 million factory, to sit on 29,810sq.m., is designed to produce 12 million pairs of high-quality stockings a year at the Vietnam-Singapore Industrial Park (VSIP) Haiphong.

The project is scheduled to get off the ground in June 2014 and churn out first commercial products a year later.

Apex is the third foreign direct investment (FDI) project Haiphong has attracted so far this year.

The Ministry of Planning and Investment reports Vietnam attracted US$397.2 million in newly-registered and additional FDI in January 2014, equivalent to 78.1% of last year’s January figure.

A total of US$465 million was disbursed in the reviewed period, a year-on-year rise of 3.3%.

The northern key economic region’s ascendancy

The northern key economic region (NKER), as a leader in economic development, is expected to account for 32 percent of total national exports.

Prime Minister Nguyen Tan Dung has approved a master NEKR socio-economic development plan that incorporates a vision towards 2030 and explicitly positions the region as an emerging national political, cultural, scientific, and technological centre.

The strategic convergence of national resources and competitive advantages makes the region the nucleus of Red River Delta development, a hub for trade exchange, international integration, and a status marker within ASEAN and the global community.

The plan also elaborates how the NKER is at the centre of national economic restructuring, growth model renewal, and the next stages of national industrialization and modernization.

Projections place regional per capita income at US$5,500 by 2020. The agro-forestry-fishery sector will contribute 5.5 percent of GDP, the service industry 45.4 percent, and industry- construction 49.1 percent.

The NKER wants to reduce the number of regional households formally classified as poor by 2 percent annually and raise poor household per capita income 2.5–3.5 times every five years. Authorities want at least 80 percent of regional communes to meet national health standards.

The NKER is also striving to bring the trained proportion of its labour force to 80–85 percent, with 40–45 percent of workers receiving specialised vocational training.

Under its master plan, the NKER’s service industry, trade activities, and cultural sphere are intimately linked to Red River civilisation, festival, and spiritual tourism.

It will concurrently focus on modernising financial and banking services and cultivating a business environment capable of transforming the capital city into a finance centre of international standards.

The NKER prioritises improving the competitiveness of highly localised industrial sectors with footholds in the global value chain, including electronics, science and technology, telecommunications, mechanical engineering, ship building, maritime facilities, high quality steel, construction materials, pharmaceuticals, food processing, garments and textiles, and leather & footwear.

The region wants to encourage industrial sectors that are technologically advanced, minimise carbon emissions, and produce environmentally products.

The development of rural areas and agriculture should be linked to the region’s expanding pharmaceutical and food processing industries.

Industry and construction is set to grow at a rate of 8.2 percent for 2011–2015, 10 percent for 2016–2020, and 9 percent for 2021–2030.

The region will develop intensive farming to maximise the income value of its cultivated area.

Newly formed fishing industry logitistics centres in Hai Phong, Cat Ba, and Bach Long Vi Island will be in charge of intensifying offshore fishing while subsuming smaller scale inshore fishing into more efficient economic activities.

Cattle and poultry husbandry and aquaculture will be subject to food hygiene and safety and environmental protection regulations. The region will invest in building refrigerated warehousing to serve its exports.

The NKER has outlined a network of “nucleus and satellite” municipalities as a framework for regional development. Relatively established urban centres such as Bac Ninh, Vinh Phuc, Ha Long, and Hai Duong will support satellite urban areas in Son Tay, Tu Son, Xuan Mai, Chi Linh, Cam Pha, Uong Bi, and Mong Cai.

The NKER divides itself into two sub-regions. The Hanoi sub-region includes Vinh Phuc, Bac Ninh, Hung Yen, and Hai Duong. The coastal sub-region consists of Hai Phong, Quang Ninh, and sea and island areas.

FDI down 22 per cent in January

The country attracted US$397.1 million in foreign direct investment (FDI) during January 2014, down 22 per cent against the same period last year, the General Statistics Office reported.

Forty new foreign-invested projects, capitalised at $211 million, were granted licences, representing yearly decreases of 51 per cent in the number of projects and 53 per cent in the level of capital invested.

Six other projects, however, were given permission to add a cumulative $186.1 million to their existing investment.

There was good news, though, as January's FDI disbursement saw a slight increase of 3.3 per cent to $465 million, the office said.

During the month, processing and manufacturing industries made up 47.6 per cent of the nation's total FDI, luring $189 million, while the real estate sector accounted for  

44.4 per cent, attracting $176.3 million, and other sectors shared the remaining 8 per cent, absorbing $31.8 million.

New projects were licensed in 12 provinces and cities. Among these localities, southern Ba Ria – Vung Tau Province took the lead in terms of FDI attraction with $61.5 million.

This was followed by the northern provinces of Thai Nguyen and Vinh Phuc, with $31.3 million and $31 million, respectively, as well as southern Binh Duong Province with $28.9 million.

Officials report that the majority of January FDI capital came from South Korea ($88.8 million), Malaysia ($27.2 million), France ($19.5 million) and Belgium ($17 million).

Last year, FDI topped $21.6 billion, up 54.5 per cent, according to the Ministry of Planning and Investment.

Of this, $11.5 billion has already been brought into the country, an increase of nearly 10 per cent over the previous year.

Analysts said this indicated that foreign investors feel confident about investing in Viet Nam, despite the continuing economic woes.

Foreign-invested enterprises last year added $88.5 billion to the country's exports, a rise of 22.4 per cent from the previous year.

VN's exports to Russia set to increase

Viet Nam is on the cusp of a sea of opportunities that will boost exports to Russia.

According to Vietnamese trade counsellor in Russia Pham Quang Niem, Russia's accession to the World Trade Organisation (WTO) in August 2012, and the free trade agreement with the Customs Union of Belarus, Kazakhstan and Russia that is expected to be completed by the end of this year, will bring opportunities to Viet Nam for penetrating a large market with preferential taxes.

After Russia accession to WTO, several Vietnamese exports to that country will attract lower taxes, with cuts between 30 per cent and 50 per cent.

Niem also said that the FTA between Viet Nam and the Customs Union would be a breakthrough for bilateral trade and investment. However, he urged enterprises to seek market information carefully, especially about tax reductions, before penetrating or expanding into Russia.

During the past three years, the turnover of Vietnamese exports to Russia grew 62 per cent, the latter being among the import markets with the fastest growth rates.

In 2013, the turnover of Vietnamese exports to Russia reached $1.9 billion, a rise of more than 20 per cent. These exports included phones and components, computers, garments and textile products, footwear, coffee, seafood, cashew and rice.

Capital inflow into stock market expected to grow

The capital inflow into the stock market is expected to grow in the Year of Horse along with innovations in policies and improvements in the macro-economy.

This would boost the benchmark indices on both the bourses. During the January 27 trading, the VN-Index on the HCM City Exchange lost 0.66 per cent to close at 556.52 points, while the HNX-Index on the northern bourse gained 0.76 per cent to reach 74.22 points.

According to FPT Securities, investors will remain cautious when they return to the market after the nine-day holiday for Tet (the Lunar New Year). The market will resume operations tomorrow.

In the short term, the VN-Index is expected to fluctuate in a narrow band of 550-560 points but the market trends will be positive, FPT Securities said.

In the long term, experts forecast that the VN-Index could reach 600 points in the best-case scenario, 550 in the medium-case scenario and 500 points in the worst-case scenario.

The stock market in Viet Nam in the last few months of 2013 and in January 2014 witnessed a shift of capital flow from speculative stocks to blue chips with improved liquidity.

Foreign capital was the highlight of blue chips. In December 2013 and January 2014 alone, the net buying value of the foreign investors reached VND2.37 trillion (US$1.12 billion), reflecting investor confidence in the recovery and development prospects of the stock market of Viet Nam.

More room for foreign investors at listed companies was a hot topic over the past few months. Once the regulation was passed, it will boost foreign capital in the stock market, experts said.

The State Securities Commission said that the regulation was under consideration and would be issued soon.

In addition, a series of large State-owned enterprises such as Vietnam Airlines, Vinatex and Vinamotor, which are expected to be privatised or offer initial public offerings (IPO) this year, would help improve the equity supply.

The founding of the Viet Nam Asset Management Company (VAMC) with its capacity to handle bad debts is expected to have positive impact on the stock market this year.

In addition, the decree about derivatives, expected to be issued this year, would be another stimulator.

Tuy Hoa seamen hope for a bumper year

As many as 77 tuna fishing boats based at Ward 6 Port in central Phu Yen province’s Tuy Hoa city sailed to the Truong Sa (Spratly) Archipelago on February 5 on their first offshore fishing voyage this lunar new year.

Tran Van Dong, together with his nine-person crew, are spending over 150 million VND (7,050 USD) on the trip. They expect to return home in one month.

Fisherman Le Duc Tuyen in Phu Dong ward said he is hoping for a successful mission, adding that he gained almost 80 million VND (3,760 USD) during an expedition before the Tet holiday.

According to Captain Nguyen Ngoc Ry from the Tuy Hoa border post, there will be more than 150 vessels heading to sea by February 11.

Other boats operating between one and five nautical miles from the shore can bring back up to 200 kilograms of fish, earning a profit of up to 3 million VND (141 USD) every day.

Meanwhile in Quang Ngai province, fishing unions in Binh Son district and Ly Son Island held ceremony to launch the fishing season in 2014, hoping to catch more than 142,000 tonnes of aquatic products this year.

Positive year forecast for industrial production

The industry and trade sector of Vietnam expects the index of industrial production (IIP) to grow to 6.3 percent this year as the world economy recovers, though slowly, helping boost exports.

Restructuring will continue to be a priority this year, according to the Ministry of Industry and Trade (MoIT).

Industrial production showed signs of recovery in 2013, with the IIP increasing by 5.9 percent and inventories decreasing. However, the macro-economy did not fully stabilise, consumers continued to budget carefully and free trade agreement negotiations remained unfinished. In addition, natural disasters and diseases presented a continued threat.

Deputy Minister of Industry and Trade Le Duong Quang said that industrial production of Vietnam was still dependent on the world economy and thus vulnerable to global fluctuations.

He added that technology remained low-level and the support industries did not receive adequate investment, meaning the country had to depend on imports for many raw materials.

Nguyen Tien Vy, MoIT’s Director of Planning Department, said that the industry and trade sector would hasten restructuring, especially of State-owned enterprises, to enhance efficiency and competitiveness.

He added that technology should play a bigger role in production and the localisation rate should be increased.

According to the Vietnam Chamber of Commerce (VCCI), 42.5 percent of companies planned to expand business in 2014 while 50.7 percent would maintain the size of their businesses.

This suggested that enterprises felt a better business year was coming in 2014, said Pham Thi Thu Hang, VCCI's General Secretary.

Hang suggested enterprises improve their risk management capacity in order to take advantage of the Government's support policies.

Chairman of the Vietnam Association of Mechanical Industry (VAMI) Nguyen Van Thu said that preferential capital sources should be made accessible to enterprises to help them boost production.-

One third of Vietnam localities earn over 1 bln USD from export

More than 30 percent of provinces and cities nationwide enjoyed export turnover of over 1 billion USD in 2013.

According to data from the General Department of Customs, Ho Chi Minh City and northern Bac Ninh province are the two most effective localities, earning more than 25 billion USD each from exports.

The Red River Delta, Mekong Delta and southeastern regions earned the most, with five localities from each region exporting over 1 billion USD last year.

In January 2014, the country earned 10.3 billion USD from exports, down 10.8 percent against the same period last year.

The decrease has been attributed to the fall in the export turnover of coffee, tea, rice and crude oil.

Ho Chi Minh City resolves to maintain growth in 2014

Ho Chi Minh City is determined to retain its role as the heart of the national economy in the year 2014 and will do all it can to ensure this remains the case.

Secretary of the municipal Party Committee Le Thanh Hai stressed that the key task for the city this year is to make full use of available resources to remove difficulties for businesses, restore production and expand markets for the four major industries and nine services sectors.

“The municipal administration must stand shoulder by shoulder with businesses at times of difficulty,” he said.

At a year-end working session with the city’s officials, Prime Minister Nguyen Tan Dung instructed that the city should continue with measures to stabilise the macro-economy, particularly controlling inflation at a suitable level and maintaining stable foreign exchange rates and the gold market.

At the same time, the city should try to improve the quality of growth and increase the productivity and added value of its industries in order to perform its leading role in economic growth and restructuring, both locally and nationally.

HCM City posted an economic growth rate of 9.3 percent in 2013, lower than the target (9.5 percent). However, the city has managed to fulfill 21 out of 25 targets set for the year. The three other unfulfilled goals are social investment in development, export growth and medical waste treatment.

The city’s growth rate is 1.7 times higher than the national figure, and as the country’s largest economic hub, it has helped the country achieve a suitable GDP growth of 5.6 percent in 2013, despite negative impacts from the prolonged financial crisis and economic downturn worldwide.

As a result, per capita GDP in the city has increased to 4,513 USD for the year, and is projected to reach 4,800 USD in 2015.

HCM City has managed to fulfill the goal of collecting tax for the State budget. With 229.5 trillion VND (nearly 11 billion USD), the city contributed almost 30 percent of revenues to the State coffers.

Foreign investment in the city totaled 1.7 billion USD for 2013, which was poured into 450 new and 130 existing projects.

A total of 80,000 households in the city have escaped poverty during the 2011-2013 period, bringing the poverty rate down to 0.8 percent.

A major setback for the city recently has been a drop of 5 percent in export value, which stood at an estimated 26.33 billion USD. In addition, local banks reported a high bad debt rate at 5.49 percent of outstanding loans.

Hanoi sets socio-economic development targets

Hanoi is targeting a GDP growth rate of between 8.5-9.0 percent, per capita income of 57.5-58 million VND, and an unemployment rate of less than 4.8 percent this year.

The target was approved at a recent meeting of the municipal People’s Council, which reviewed the implementation of goals set for 2013, and put forward targets and tasks for 2014.

Under the targets, the city’s services sector is expected to expand by 9.4-9.8 percent; the industry-construction sector, 8.0-8.8 percent; and agricultural production, 2.0-2.5 percent, while export turnover will climb 6-7 percent.

In 2013, although meeting with difficulties and challenges caused by global economic risks as well as the domestic economic downturn, the city attained three key targets of socio-economic development - it stabilised economic growth, curbed inflation and ensured social security.

The city’s GDP growth rate for 2013 is estimated at 8.25 percent (the set target was 8.0-8.5 percent), up 0.19 percent over the previous year’s figure and equivalent to 1.53 times the national rate.

The rise of the consumer price index (CPI ) was kept under eight percent, while the capital mobilisation of credit organisations saw a rise of 12.78 percent.

During the year, the city government undertook drastic measures to solve difficulties faced by enterprises, stabilise and develop production and business, expand markets and boost exports, as well as to thaw the real estate market.

It was reported that about 14,950 enterprises were set up in 2013, up 12 percent over the previous year, while there was a decrease in the number of business dissolutions.

The city also focused on developing the urban infrastructure system by hastening the construction of many transport projects, contributing to reducing congestion and accidents.

Remarkable achievements were seen in the new rural development programme, with as many as 48 communes in the city achieving all 19 criteria in new rural area construction at the year end.

Other fields such as culture, education, science-technology and healthcare were given priority and heavy investment; national defence and social order were ensured and reinforced; external relations and exchange were broadened and promoted.

In addition, main sectors have basically completed their development plans on the basis of the city’s socio-economic development strategy to 2020 with a vision to 2030.

However, great efforts will be required of the municipal authorities in the new year to boost exports and budget collection, as the city failed to achieve the targets in these two fields in 2013.

Environmental pollution, particularly at trade villages and industrial areas, remains a big challenge for the city.

Vietnam-South Asia 2013 trade turnover tops 6 bil USD

Vietnam's total trade turnover with countries in South Asia last year reached 6.2 billion USD, posting a 30 percent increase over the previous year.

Figures from the Ministry of Industry and Trade's department for Africa, West Asia and South Asia markets showed that bilateral trade between Vietnam and the region had a higher growth rate than others.

Vietnam's export turnover to the region was estimated at 3.25 billion USD, increasing 35 percent against 2012's imports worth 2.95 billion USD, representing a 20 percent year-on-year increase.

In the region, India is Vietnam's largest trade partner, with an average export turnover growth rate of 40 percent in the past five years. Since the signing of the ASEAN-India Trade in Goods Agreement (AITIG), the two countries' trade turnover saw a continuous increase.

Vietnam's key exports to India have been diversified with increased value.

Vietnamese industrial products including telephones, spare parts, machines, computers, electronics and their accessories accounted for a high percentage of exports to India.

The combined export turnover of these products last year was 1.5 billion USD, accounting for 70 percent of the country's total exports to India.

Export turnover to Pakistan also saw an average rise of 20 percent per year in the 2011-12 period. Pakistan mainly imported tea, pepper, seafood, cashew and steel from Vietnam, with turnover of 181 million USD, increasing 4 percent in comparison with the year 2012.

Pakistan 's exports to Vietnam saw a 34 percent decline over the previous year as Vietnam reduced imports of products that serve the garment and textiles, leather shoes and cotton industries.

Statistics from the General Department of Customs also revealed that last year's total bilateral trade turnover between Vietnam and Sri Lanka reached 155 million USD.

Vietnam's exports to the country were cotton, rubber, electric cables, mobile phones and spare parts. Its imports included cattle food, materials for making leather shoes, and pepper.

For Bangladesh, Vietnam's total export turnover last year was more than 500 million USD, surging 42 percent over 2012. All of the exported items including cotton, garments and textiles, machines and spare parts saw an increase in the growth rate.

However, investment cooperation between Vietnam and the region was still limited in comparison with other regions.

By the end of last year, India had 77 projects invested in Vietnam, with total capital of 250 million USD, while Sri Lanka had nine projects; Pakistan , 10; and Bangladesh,  two.

Vietnamese businesses invested in only three projects in India, with total capital of 860,000 USD, and one project in Bangladesh, Vietnam and countries in the region have targeted strengthening their multi-faceted cooperation efforts in the future to better exploit their full potential./

Insurance market seeks to thrive

Insurance is an important sector to any country and it has proved itself a potential industry in Viet Nam in the time to come

Ensuring financial safety for production and trade is a regular requirement to insurance businesses.

The important intermediary financial market has been officially run since 1993 when the Government issued Decree 100 on establishing and organizing insurance businesses in Viet Nam.With the participation of groups and multinational corporations, the market has recently seen all forms of business ownership, which are regulated by a modern legal system and a specific strategy.

According to the Ministry of Finance, the market with a 20%/year average growth is attractive to foreign insurance companies. The premium turnover reached VND40,968 billion ($1.9 billion) in 2012 and VND20,922 billion ($938 million) in the first half of 2013.

The local insurance businesses have grown by learning international-standard management approaches and experience of international companies and accepting fair competition. Though facing the pressure of making profits and limitations on advertising costs, State-owned companies have competed successfully with international insurance businesses.

The insurance market has worked as an important medium-term investment channel for the national economy. In the first half of 2013, insurance businesses re-invested approximately VND100 trillion ($4.7 billion) in the economy, doubling the figure in 2008. Through diversified and effective investments in socio-economic development projects, they have provided a shield for the national economy.

The global economic downturn in the past is still challenging the health of the insurance market.

Therefore, to realize its set targets for the 2011-2015 period, there is a need for it to improve the legal system, enhance the safe performance, management and competitiveness of players, as well as promote international cooperation and integration.

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

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