Mobile phone industry leads export growth

Vietnam’s telephone and component exports in the five months leading up to June jumped 18.5% on-year to US$11.8 billion, according to latest statistics from the General Department of Vietnam Customs.

The sector was the largest revenue generator for the nation followed by the garment and textile sector at a distant US$8.11 billion.

Major importers included the EU, United Arab Emirates and US.

The export growth is principally attributed to foreign invested multinational groups like Samsung, LG and Microsoft who have shifted their production facilities to Vietnam.

Long Hau IP commits to supporting investors

The Long Hau Industrial Park Management Board pledged to continue improving the park in order to ensure its tenants will have a stable environment to operate.

Long Hau JSC, the park developer, made the commitment at the May 26 meeting between the company, the People’s Committee of Long An province as well as many government agencies, with participation of more than 70 companies in the Long Hau Industrial Park, the American Chamber of Commerce in Vietnam and Japanese Business Association of Ho Chi Minh City.

At the meeting, firms talked to local authorities and government agencies on the difficulties they had been facing during their operations and heard answers for their questions. Firms asked for proper notification before power outages in order to plan their activities accordingly, investment in roads to make transportation easier, help in completing administrative procedures, healthcare for workers. They also expressed concern about the lack of trained workers and asked the province’s department of taxation to update them on tax policies more timely so that they could better fulfill their responsibility.

In addition, Deputy Chairman of the Long An Provincial People’s Committee Pham Van Ranh informed firms of incentives and policies in investment, infrastructure, taxation and environment as well as the development plan of Long An.

On the occasion firms also displayed their products and met with other firms to discuss possible cooperation.

According to the local authorities’ data, in the year to end-April, the province saw the establishment of 240 new companies with the investment capital of VND1.75 trillion ($82 million), up 8 in number and VND112 billion ($5.25 million) in the registered capital. As of end-April there were 381 active projects in the province with the combined investment capital of $2.29 billion.

Long Hau Industrial Park currently houses 96 firms and their 12,000 employees.

Mapletree begins work on Grade-A office building

Singapore’s property developer Mapletree has started work on Mapletree Business Center, the second phase of the Saigon South Place Complex in HCMC’s District 7.

The leading real estate developer of Singapore has proceeded to the second phase of the project on Nguyen Van Linh Boulevard following the successful opening of SC VivoCity last April.

Mapletree Business Center is a 17-storey office tower of Grade A and part of the Saigon South Place Complex. This is a commercial mixed-use development covering 4.4 hectares on Nguyen Van Linh Parkway consisting of three office towers, two towers of serviced apartments and SC VivoCity shopping mall.

Having a gross floor area of 28,700 square meters, Mapletree Business Center is scheduled for completion in quarter two of next year and is aimed to meet demands of multinational companies in different sectors like information technology, research, development, banking and finance.

VSIP Quang Ngai to develop into a green township

The VSIP Quang Ngai integrated township and industrial park in the central province of Quang Ngai hopes to attract plenty of projects from the upcoming wave of investment into the region.

The complex, comprising a 1,200-hectare industrial park (IP) located in the province’s Dung Quat economic zone, as well as a 504ha site zoned for commercial and residential purposes near downtown Quang Ngai city, is expected to become a bustling area in Quang Ngai as well as the central region of Vietnam.

Similar to the other Vietnam-Singapore industrial parks (VSIP) (Binh Duong in the south of Vietnam, VSIP Bac Ninh, and VSIP Haiphong in the north), VSIP Quang Ngai is more than just a run-of-the-mill IP, as it ensures people who work in the park have access to accommodation, education, and entertainment as well as other facilities that meet the needs of a young family.

“We saw that an integrated township and industrial park in provinces is going to meet the demand of employees and their families at the same time,” Kelvin Teo, chief executive of Sembcorp Development and co-chairman of VSIP, said.

VSIP Quang Ngai was designed by architects and engineers experienced in urban development. To ensure the safety of the urban area next to the IP, VSIP only chooses investment projects that don’t harm the surrounding environment to be admitted to the park. This ensures sustainable development for firms in the park and their employees.

According to the approved 1/2000 masterplan, VSIP Quang Ngai’s urban and service area is located in Truong Quang Trong and Tinh An Tay communes in Quang Ngai city. The first phase of the project has an area of about 100ha, which contains commercial, urban and cultural areas. The project also boasts a gym, healthcare and education facilities, and dining and entertainment  services. These areas are peppered with parks which are carefully landscaped to provide a scenic place to live, learn, work and play.

A year after beginning construction, VSIP Quang Ngai has already completed the first phase of its infrastructure on 180ha of industrial land. In the next phase, VSIP Quang Ngai is going to develop the infrastructure as well as attract investment into another 435ha of industrial land and 100ha of urban and service land.

Since its ground-breaking ceremony on September 13, 2013, VSIP Quang Ngai has successfully attracted nine customers from six countries with the total investment capital of nearly $200 million. Once completed, VSIP Quang Ngai is expected to attract $2 billion in investment and create a vibrant area peopled with 80,000 from the region as well as foreign specialists.

Developed by VSIP, a joint venture between Becamex IDC Corporation and a Singapore consortium led by Sembcorp Development, VSIP Quang Ngai is VSIP’s fifth project in Vietnam and the first in the country’s central region. VSIP Quang Ngai completes the map of VSIP’s strategic locations in Vietnam  and brings the total gross area of VSIP developments to 6,000 hectares, making VSIP the largest integrated township and IP development in Vietnam.

To date, VSIP has attracted $7.4 billion in the total investment capital from over 534 companies. Companies operating in the VSIP developments employ more than 140,000 workers. In 2013 and 2014, VSIP was named the ‘Best Industrial Developer in Vietnam’ by UK Euromoney.

HNX offloads fewer G-bonds in May

Ha Noi Stock Exchange (HNX) sold VND3.818 trillion (US$175.1 million) worth of government bonds in 24 auctions in May.

The exchange said the total value of bonds sold in May was less than half of the G-bonds sold in April.

The State Treasury of Viet Nam offloaded bonds worth VND3.408 trillion ($156.3 million), and the Vietnam Bank for Social Policies sold bonds worth VND410 billion ($18 million) during the sale.

HNX said compared to April, the trading volume of G-bonds sold in the primary market in May fell by 55.2 per cent. The trading volume of bonds sold in April was already 50.9 per cent less than that in March, HNX said.

The coupon rate of five-year bonds was 5.40 per cent per year, 0.08 per cent lower than the rate in April. The coupon rate of 15-year bonds was between 7.52 and 7.70 per cent per year, an increase of 0.28 per cent over April.

Meanwhile, in the secondary market, the total volume of outright trading in May amounted to 537 million bonds, worth VND57 trillion ($2.6 billion). Compared to April, it was an increase of 11.5 per cent.

The trading volume through repurchase agreements (repos) was 240 million bonds, equivalent to VND34 trillion ($1.559 billion), an increase of 23.2 per cent over April.

The repos of government-backed bonds constituted VND7.2 trillion ($330 million) of the total. Foreign investors made outright trading, worth VND9.3 trillion ($426.6 million) in purchase value and VND7.8 trillion ($357.7 million) in sales value. Foreign investors also made repo buying of VND727 billion ($33.3 million) and had no repos selling in May.

PMH urged to dole out profits

Phu My Hung Development Corporation has revealed reasons why it had not distributed profits within the joint venture partnership for the 2010 - 2014 period despite repeated requests from the Ho Chi Minh City People’s Committee.

According to its statement released last week, Phu My Hung has decided not to distribute profits to the Vietnamese partner Tan Thuan Industrial Promotion Co. Ltd. (IPC), which are estimated at VND1,444 billion ($68.7 million) between 2010 and 2014, in order to relieve financial burden and re-invest in new projects.

According to Nguyen Buu Hoi, deputy general director of Phu My Hung, in 2014, the company contributed  more than VND1,292 billion ($61 million) to the local city budget, making it one of the top five companies in terms of financial contributions.

To date, it has paid VND7,071 billion ($336 million) into the city’s coffers.

Up to 2010, IPC had received VND2,452 billion ($117 million) of profits.

Phu My Hung, which is the developer of the best-selling Phu My Hung New Urban Area in Ho Chi MInh City, revealed that the joint venture has so far contributed a total of VND15,323 billion ($729 million) to the city’s budget.

Hoi stated that the business activities of the joint venture became more difficult as the real estate market had faced hard times since the end of 2009. To improve service quality and attract new customers, the company had to invest heavily in large-scale projects such as The Crescent Mall, which required a total capital of VND2 trillion ($92 million).

In addition, following the prime minister’s instruction and Ho Chi Minh City People’s Committee in 2011, the joint venture has had to pay land use fees amounting to VND5.8 trillion ($277 million) for the 63-ha land plot, which it had yet to open for sale.

Hoi claimed that to relieve this financial burden, the company has mobilised all of the financial resources at its disposal. Although the business has shown signs of recovery from 2010 to 2014, the company has yet to rectify its own financial difficulties.

Therefore, its board of members reached a consensus on a 67 per cent vote that neither of the partners of the joint venture will receive a profit share for the hard times endured between 2010 and 2014.

“This decision was made based on sound business sense and the long-term interests of the joint venture,” Hoi said.

He added that if profits were to be given to both parties, the joint venture would have to operate on bank loans at 10 per cent interest per year, thus increasing the financial burden and reducing earnings in the following years.

He stated that the temporary decision of not distributing a profit share for both parties was appropriate based on the law.

As stipulated in Article 61 of the Law on Enterprises 2005, joint venture companies are only obliged to distribute profits to members if they generate a profit, fulfill taxation and other financial obligations, as well as guarantee the payment of all debts and due asset commitments.

“The distribution of profits will be implemented in line with the law, the joint venture contract, and the actual financial situation of the company,” Hoi stressed.

Phu My Hung is a joint venture between IPC, 100 per cent owned by the city’s administration, and Taiwan’s Phu My Hung Asia Holdings Corporation.

This joint venture was established in 1993 with a legal capital of $60 million, of which the local partner contributed $18 million for a 30 per cent share, while the foreign partner makes up the remaining 70 per cent.

Cases where foreign partners in a joint venture refuse to share profits are not rare in Vietnam. In previous cases where the foreign partners refuse profit sharing for several years, the Vietnamese partner is ostensibly forced to withdraw from the joint venture.

In order to make sure that this situation is not repeated, Ho Chi Minh City authorities have requested that the Ministry of Planning and Investment revise the regulation on profit sharing in joint ventures, stipulating that the profit must be shared for every year after the joint venture finishes its taxation and other financial obligations to the state budget.

Finance Ministry refuses petrol price increase by environmental tax hike

The Ministry of Finance yesterday reaffirmed that the recently increase of 300 percent on environmental tax rate did not push petrol price up as it was made in combination with import tariff cut.

Environmental tax rates raised from VND1,000 to VND3,000 a liter of gasoline and VND500 to VND1,500 per liter of diesel on May 1.

According to the ministry, it has cut import tariff rates to prevent the environmental tax hike from increasing petrol prices.

Specifically, gasoline import tariff slid from 35 percent to 20 percent on May 5.

Diesel rate fell from 20 percent to 12 percent on the same day after reducing from 30 percent to 20 percent in April. It continued dropping to 10 percent on May 20.

On May 31, basic gasoline price plus the old tariff rate of 35 percent and new environmental tax rate was VND23,582 per liter. It is only VND21,540 a liter with  the new tariff rate.

The import tariff reduction has cut basic gasoline price by VND2,042 a liter, VND42 higher than the increase level of environmental tax.

Similar calculation for diesel leaves a difference of VND1,356 a liter between the new and old import tariff.

From these calculations and analyses, the Ministry of Finance reaffirmed that the environmental tax hike did not affect petrol price.

After environmental tax rate increased by VND2,000 on May 1, petrol price has accelerated by VND1,950 on May 5 and VND1,200 on May 20 totaling VND3,150.

Retailed petrol price is VND20,430 a liter now.

New regulation slows disbursement of social housing package

The disbursement of the Government’s social housing credit package has been slowed or even obstructed this year after the Ministry of Construction issued a new document defining low-income people.

Chairman of Ho Chi Minh City Real Estate Association Le Hoang Chau said that the slow or deadlock disbursement started from Document 395 passed by Deputy Minister of Construction Nguyen Tran Nam on March 3.

The document specifies that low income people are those who do not have to pay personal income tax, meaning those earning less than VND9 million (US$413) a month.

It has immediately slowed down the package disbursement, Mr. Chau said.

A heavy atmosphere has covered property projects related to the package recently.

Director General of Hoang Anh Saigon Company Doan Chi Thanh said that the purchasing power was very good last year when the company successfully linked 1,000 customers to the package.

At present, banks have rejected dossiers of over 100 customers because they fail to meet new disbursement regulations.

Citing a project in the western side of HCMC, Mr. Thanh said that an apartment is priced VND1 billion (US$45,800). Customers must pay 30 percent in advance.

The rest amount is VND700 million would be paid in 15 years or 180 months with the interest rate of 5 percent a year. House buyers hence would have to pay nearly VND7 million a month. Many have been unable to do so with a monthly income of VND9 million covering many costs including rent, water, electricity, food and others.

Therefore, this group of customers has automatically been removed from the loan list.

Mr. Thanh wondered why the Ministry of Construction has entered such a vicious circle.

When the package was jammed in 2013, Deputy Minister Nguyen Tran Nam had signed Circular 18 not requiring borrowers to prove their income level in October of the same year.

Now the new regulation determines they are those out from the group of personal income tax payment.

Director of Nam Tien Company Tu Duc Phuong lamented that since the new regulation was issued, the disbursement rate has dropped by 50 percent.

Earlier the higher income level meant the better payment ability. Now, banks have refused to loan either customers earning more than VND9 million a month or many of those earning less.

House buyers can get assistance from their parents or brothers and sisters but these groups are usually old or in school age without payment ability.

The HCMC Real Estate Association has sent two documents to the Ministry of Construction, reporting that the disbursement of the housing credit package attended by 15 banks has reached only 20 percent.

This is far behind expectations while the package will be expiring by June next year.

However, a response document from Housing Management Department Head Nguyen Manh Ha on May 15 comprised contradictory reports, saying the disbursement rate had increased month after month thanks to efforts and close coordination between the Ministry of Construction and the State Bank of Vietnam and other commercial banks under the social housing loaning program.

Budget collection rises 7.9% in five months

The State budget collection was estimated at VND380.76 trillion (US$17.51 billion) in the first five months of 2015, representing a year-on-year increase of 7.9% and equivalent to 41.8% of the year’s estimate.

According to the Ministry of Finance, about VND61.5 trillion (US$2.83 billion) was added to the State budget in May, VND42.4 trillion of which came from domestic sources.

Domestic collection reached roughly VND283.19 trillion (US$13.02 billion) in five months, up 16.3% over the same period last year, accounting for 44.3% of the year’s estimate.

Total budget spending in the January-May period was estimated at VND455.6 trillion (US$20.95 billion), equivalent to 39.7% of the year’s estimated figure, resulting in a budget deficit of VND74.8 trillion (US$3.44 billion).

Protectionist trade measures underused

Vietnam has underused the protectionist measures allowed by the global trade club WTO and free trade agreements (FTA), heard a seminar in HCMC on Monday.

Tariffs and subsidies have not been fully used to support domestic producers, experts told the seminar on the protectionist trade policies for local manufacturers. The seminar was held by the Vietnam Chamber of Commerce and Industry (VCCI) and ActionAid.

Nguyen Thi Thu Trang, director of the WTO Center under VCCI, said Vietnam has made many commitments to the WTO and eight FTAs, and has recently signed bilateral FTAs with South Korea and the Eurasia Economic Union. As such commitments are mainly in the fields of trade in goods and services, investment and intellectual property, supporting policies for domestic firms in these fields are limited.

With trade in goods, Vietnam is only committed to lowering import tariffs when joining the WTO but bringing most taxes down to 0% in FTAs. The nation is currently in negotiations over FTAs with nearly 50 countries and allowable tax tools would be less in the coming time if these trade pacts are signed.

Trang said with the FTAs under negotiations like the Trans-Pacific Partnership (TPP), Vietnam would fewer defense measures left.

Subsidies face legal procedures but Vietnam can apply technical barriers regarding sanitation and trade defense measures to protect domestic producers.

Currently, there are seven anti-subsidy lawsuits against Vietnamese goods.

Nguyen Hang Nga from the Vietnam Competition Authority said enterprises in Vietnam are often sued for such a kind of subsidy but in reality they have neither benefited from nor known about it.

According to Nga, anti-subsidy lawsuits against Vietnam are normally about programs regarding preferential interest rates, tax cuts and exemptions and land rent reductions.

“However, we find out that many subsidy programs in Vietnam are not effective and investigated enterprises are not aware of such programs when we handle the cases,” Nga said.

As subsidies are important to prop up production of major industries or those in trouble in developing countries like Vietnam, the nation could consider applying allowable and effective measures. But the beneficiaries should be ready in case they are sued, according to Nga.

City drums up Japanese investment in key sectors

HCMC is calling for Japanese firms to invest in major sectors like mechanical engineering, chemical, food processing, fashion and production of textile-garment materials and pharmaceuticals, HCMC vice chairman Tat Thanh Cang said.

Cang mentioned the key sectors in need of Japanese investment at a meeting with a business delegation from Japan’s Saitama Prefecture on June 2. The delegation, headed by Saitama deputy governor Iwasaki Yasua, is in the city to foster economic cooperation between the two localities.

Cang that some 700 Japanese enterprises have invested in HCMC and that more companies from the northeast Asian country are coming to explore business and investment opportunities in this city.

The city government has developed industrial parks to facilitate operations of Japanese firms. Infrastructure facilities are being improved at Hiep Phuoc Industrial Park in Nha Be District and at the Automobile Mechanical Industrial Zone in Cu Chi District.

Cang said the HCMC Department of Planning and Investment will set up a Japan division to help Japanese investors and build a strong bridge between them with local enterprises.

Yasua said 80 companies based in Saitama Prefecture are active in sectors such as industrial devices, electromechanical and automobile sectors in HCMC, and that he hoped many more enterprises will enter this market.

Ministry seeks VAT exemption for animal feed

The Ministry of Agriculture and Rural Development will request the National Assembly lower the value added tax (VAT) on animal feed to 0%.

Minister Cao Duc Phat told a meeting with animal feed firms in Hanoi over the weekend that the ministry has spent much time seeking the VAT exemption for animal feed. The Government and the ministry want to remove the tax on animal feed.

Phat said the proposed VAT exemption would be submitted to the legislature at its on-going session in Hanoi.

A leader of Ha Tinh Minerals and Trading Corporation said at the meeting that the Ministry of Finance has actually added animal feed and related materials to the list of products subject to a VAT rate of 0% instead of 5%. But businesses still have to pay the tax of 2.5-3%.

An animal fee producer told the Daily that VAT exemption means firms will not be deducted for VAT for input materials. At present, a tax rate of 5% is imposed on packaging and 3% on transport charges.    

Therefore, enterprises hope the VAT would be cut to 0% instead of reductions and exemptions for certain products as per Circular 26/2015/TT-BTC of the finance ministry.  

A representative of Vinh Ha Food Processing & Construction Company under Vietnam Northern Food Corporation said Vinh Ha has not benefited much from the circular.   

Some materials used for animal feed production such as corn and soybean are considered food and input material at the same time, and tax agencies insist enterprises declare a tax rate of 5% for these materials.

“Therefore, the circular fails to support the animal feed production sector as targeted,” he said.

On February 27, the finance ministry issued Circular 26/2015/TT-BTC on VAT, invoices and tax. It clarifies animal feed products subject to VAT tax exemption as bone, fish and shrimp powder and other feed items for cattle, poultry and fish.

Exports to Turkey: rice down, vegetables up

Rice exports to Turkey continue to dip sharply while vegetable and fruit exports to the market jump high, according to the Vietnam Trade Office (VTO) in Turkey.

The General Department of Vietnam Customs reported that rice exports to Turkey dropped 72.28% to US$249,000 in the first quarter of this year. It was due to the recovery of Turkey agricultural production after a year of drought.

Another key reason was that Vietnamese rice is not the taste of Turkish customers.

Meanwhile, Turkish currency – Iira – was devaluated compared to US Dollar, pushing the import price up. Furthermore, Vietnamese rice found it difficult to compete with rivals from Pakistan and India due to geographic distance.

However, the VTO said vegetable and fruit exports still obtained a robust growth of 466% to more than US$409,400 in the first quarter of this year. This was the highest growth among export items to Turkey in the reviewed period.

Haiphong: New US$100 mln plant to make electronic spare parts

The Haengsung Electronics Vietnam Ltd Company will build a US$100 million plant to manufacture electronic spare parts within the Trang Duae industrial zone in the northern city of Haiphong.

Covering 10 hectares, the plant is expected to go into operation in January 2017.

Once operational, the plant is expected to produce more than 4.77 million sets of electronic boards, 6.86 million sets of electronic circuit boards for mobile phones, 3.96 million sets of IVI electronic boards and over two million microchips of home appliances, generating jobs for over 500 local workers.

The Haengsung Electronics Vietnam Ltd Company, owned by the Republic of Korea, will be the biggest satellite factory supplying electronic spare parts for the LG electronics complex also situated in the zone.

Exports to China surge 10% per year

Vietnam’s exports to China rises by 10% per year, however, the country’s trade deficit with China remains large.

Deputy Head of the Finance Ministry’s International Cooperation Department Ha Duy Tung told a press conference on international economic integration held in Hanoi on June 3.

According to the ASEAN-China Free Trade Area (ACFTA), a 0 percent tariff will be applied to 90% of traded goods, which would enhance and promote bilateral trade relations. The question is that who can make use of the tariff cuts, Tung noted.

The General Department of Vietnam Customs said that China is the second largest importer of Vietnam (after the US). In the first eleven months of 2014, Vietnam exports to China reached US$13.53 billion, accounting for 9.9% of the country’s total export turnover.

However, there remains a big gap between imports and exports and in the last five years Vietnam has seen a trade deficit with China.

Domestic consumer spending lifts Vietnam’s growth

Vietnam’s domestic consumer spending has risen in the first five months of 2015, indicating a boost for the country’s economic growth, according to the Dau Tu (Investment) newspaper.

After enjoying rapid growth from 2001 to 2010, total consumer spending (excluding spiraling prices) snapped back in the past four years with an annual average growth rate half of what was seen in the previous period.

The consumer spending slowdown brought the Consumer Price Index (CPI) growth between 2012-2014 to 6.63% a year compared to the annual 9.35% recorded in 2001-2011. The national Gross Domestic Product (GDP) growth also tapered off to 5.72% a year from 6.82% in the respective periods.

However, increases in domestic consumption, which is reflected in the total retail sales of goods and services, in the first five months of this year has surpassed GDP growth, a crucial contribution to the country’s economic recovery.

In the past five months, the private sector accounted for 85.7% of the total retail sales of goods and services, while the public sector made up 11%.

Despite representing just 3.3%, the foreign-invested sector recorded the highest growth (9.7%) and the trend is expected to continue as Vietnam enters several new free trade agreements (FTA) and joins the ASEAN Economic Community (AEC) by late 2015.

Retail of goods accounted for a majority 76.4% of the total figure with a soaring pace of 10.2%, and revenues from services also rose with an exception of tourism, as the number of international visitors dropped 12.6% from the same period last year.

Although Vietnam’s consumer spending is rebounding remarkably, total domestic demand remains weak.

The paper said the country should intensify investment and exports as well as increase per capita income to increase overall domestic demand and spending, contributing to the recovery of the country’s economy.

RoK investors contribute to Hoa Binh’s development

Chairman of the People’s Committee of the northern Hoa Binh province Nguyen Van Quang has spoken of the contributions by investors from the Republic of Korea (RoK) to the locality’s economic development.

Quang had a working session with a delegation from the Korean Trade and Investment Agency (KOTRA) led by RoK Ambassador Jeon Dae Ju on June 4.

He told the guests that his locality is carrying out measures to improve its business climate, while supporting enterprises to overcome difficulties to efficiently implement invested projects.

He expressed his hope that the ambassador and KOTRA will work closely with the province to introduce and promote its potential, advantages and preferential policies to RoK investors.

RoK Ambassador Jeon Dae Jun showed his interest in human resources quality, water supply in the Da River left bank industrial zone and traffic safety for workers.

RoK investors are now running 11 projects in Hoa Binh with a total registered capital of over 100 million USD, ranking first in the number of foreign-invested projects in the province.

Conference to promote Vietnam as attractive IT outsourcing destination

A conference will be held in Ho Chi Minh City from October 14-16 promoting Vietnam as an attractive emerging information technology (IT) outsourcing destination.

The Vietnam IT Outsourcing Conference (VNITO 2015) is expected to attract more than 150 multinational companies from 20 countries along with 200 outsourcing firms and 20 leading IT universities in Vietnam, presenting a chance for Vietnam to present its potential and seek cooperation opportunities, said Lam Nguyen Hai Long – Head of the VNITO 2015 organising board – on June 4.

Long added that Vietnam boasts numerous IT outsourcing advantages, including a large number of high-tech companies like Intel, Samsung, LG, Renesas, Foxcon, Fujitsu, Canon and Panasonic all with factories in the nation. Some major groups such as HP, CSC, Cisco, Toshiba, NEC and Boeing have also conducted software research and development activities in Vietnam .

The country provides incentives for investments in hi-tech zones while its software outsourcing cost is competitive, and inflation is stable, he noted.

Tholons, a services globalisation and investment advisory firm, places HCM City at 18 th and Hanoi at 20 th in the 2015 list of the top 100 outsourcing destinations.

Vietnam was also ranked first in the business process outsourcing location index 2015 by global real estate adviser Cushman & Wakefield.

Da Nang withdraws delayed projects

The authorities of central Da Nang City have instructed sectors and localities to withdraw delayed and inefficient coastal developments.

The Department of Planning and Investment is to work with relevant bodies on promptly withdrawing the investment licences of a number of coastal projects by the end of this June.

They include the De Nhat entertainment park project on a plot of 8,000 sq. metres, the De Nhat Tourism Zone (45,000 sq. metres) and the Huy Khanh Sport Zone (4,000 sq. metres).

The bodies are requested to strengthen their monitoring of the land use and implementation progress of other developments in the locality, such as the Nam Phat Tourism Zone project, the Asian Pearl coastal tourism zone, the I.V.C tourism zone and the Nam Khang tourism zone.

The outcomes of the inspection should be reported at another meeting later this month.

Master plan for macadamia industry to be issued at year-end

The Ministry of Agriculture and Rural Development (MARD) will release a master plan for the development of the macadamia industry by the end of this year.

MARD Deputy Minister Ha Cong Tuan revealed the intention at a June 4 conference on the development orientations for macadamia, a plant indigenous to Australia which is dubbed the “Queen of Nuts”.

He noted that the master plan for the macadamia industry is different from one designed for cultivation expansion, explaining that the industry plan should also forecast the market for the products.

The plan will also map out synchronous solutions from preservation, processing to marketing to help prevent risks and losses for farmers and investors, he said.

The deputy minister stressed that sustainable production requires proper investment in post-harvest preservation and processing, ensuring the quality of nuts meets international standards.

He cited the lesson of South Africa, which produces the same volume of macadamia as Australia but earns just one half due to poor harvesting, preserving and processing technology.

According to the CEO of the Australian Macadamia Society, Jolyon Brunett, macadamia nut supply is expected to grow rapidly in the next five years, as South Africa will double its output to 80,000 tonnes, while China hopes to produce 50,000 tonnes and Australia will turn out 55,000 tonnes.

He pointed out that in such context, besides the matter of prices, market development will be very important to macadamia producing countries.

Participants at the conference focused their discussions on technical, planning and marketing solutions with a view to minimize risks for farmers and businesses when invest in the plant.

Well-known for its nutritional value and high concentration of mono-unsaturated fats, macadamia was introduced to Vietnam in 2002 for trial cultivation in several Central Highlands provinces, including Lam Dong, Dak Nong and Dak Lak.

After more than a decade under trial farming, it was found that Vietnam produced a higher yield of macadamias than other countries.

Local scientists have tested and found that the northwestern and Central Highlands regions have conditions best suited for the plant's growth.

The plant has so far covered over 2,000ha in the Central Highlands.

Milk price stable, but still high

Efforts to stabilise milk prices have succeeded to an extent, but concerned agencies continue to face difficulties in carrying out this task, a Finance Ministry official says.

Nguyen Anh Tuan, head of the ministry's Price Management Department, told a Tuesday meeting on the issue that the prices of milk for children under six have been kept stable for a year, even reducing by between 0.1 per cent and 34 per cent over the period prior to stabilisation efforts.

Online newspaper Hai Quan, which organised the meeting, reported that serious implementation of measures by State management agencies as well as businesses made the stabilisation possible.

The stabilisation of milk prices in the domestic market was a timely policy introduced by the Government, Tuan said.

Since April 20, the market has seen price reductions in 50 kinds of milk products for children under two because of a requirement to remove advertising costs from the selling price.

However, Tuan conceded that prices of milk products for children under six still had the potential to fluctuate. He noted that while the price of milk materials had reduced on the world market, the prices of finished products had remained mostly unchanged. The average selling price per kilogramme of formula milk products for children under six in Viet Nam is higher than in several other ASEAN countries.

There are differences in selling prices because milk producers have different distribution systems and pricing policies for different countries based on the business environment, incentives, competition and market segments, Tuan said.

Additionally, the raw material or finished milk products are imported under direct agreements with foreign partners, so State agencies found it difficult to control and determine input factors and their prices for production and distribution of milk products, he added.

In this situation, the State encourages milk producers and traders to maintain stability in selling prices in the domestic market, while relevant agencies persist with current measures to keep prices stable until the end of 2016, Tuan said. He said the measures are implemented to ensure the interests of both businesses and consumers.

Banks up dong deposit rates to improve liquidity

Many banks have raised deposit rates over the past few weeks to improve liquidity amid the pressure of a stronger US dollar.

Viet Nam Bank for Agriculture and Rural Development (Agribank) was the latest among them to take the measure, raising its long-term Vietnamese dong deposit rates by 0.3-0.5 per cent per year as of June 2.

Accordingly, Agribank raised deposit rates for individuals from 6.2 per cent to 6.5 per cent per year for an 18-month term and from 6.3 per cent to 6.8 per cent per year for a 24-month term. For organisational customers, the bank also lifted its 24-month deposit rate from 6.3 per cent to 6.8 per cent per year.

Previously, Asia Commercial Bank (ACB) also lifted its deposit rates for 6-36 months by 0.2 per cent from May 25. The deposit rate for the 36-month term is the highest, 6.7 per cent per year. Meanwhile, the 12-month and 24-month rates are at 6.2 per cent and 6.5 per cent per year, respectively.

Similarly, on May 21, Eximbank raised its deposit rates for some terms and the highest rate of 6.9 per cent has been for a 36-month term. Meanwhile, the 18-month and 24-month rates are at 6.6 per cent and 6.7 per cent, respectively.

Several other banks have also lifted deposit rates slightly.

ACB's Chief Executive Officer (CEO) Do Minh Toan told online newspaper Vnexpress that the move was just to balance capital source and will not affect lending rates considerably.

According to Tuoi tre (Youth) newspaper, Truong Van Phuoc, vice chairman of the National Financial Supervision Commission (NFSC), attributed that banks had raised deposit interest rates to improve liquidity and this was a normal action and not a basis for them to hike lending rates accordingly.

Financial expert Nguyen Tri Hieu observed that although inflation remained stable, with CPI in May rising 0.16 per cent over the previous month and up 0.95 per cent year-on-year, somehow a stronger US dollar recently affected capital mobilisation as some people withdrew their dong savings to buy the dollar; hence, banks had to raise dong deposit rates to attract capital.

Last week, the National Financial Supervisory Commission (NFSC) said that deposit rates were under pressure and set to rise as the growth rate of deposits had been lower than that of credit.

According to the NFSC, total deposits rose 0.98 per cent in the first quarter, in which deposits in the dong rose 1.9 per cent and deposits in foreign currencies fell 4.9 per cent. Total outstanding loans, meanwhile, increased 1.7 per cent, in which outstanding loans in dong climbed 2.4 per cent and outstanding loans in foreign currencies dropped 0.9 per cent.

As a result, the loan to deposit ratio (LDR) rose to 84 per cent from 83 per cent in December 2014, of which LDR in foreign currencies climbed to 87 per cent from 83.4 per cent at the end of 2014, the NFSC reported.

Focus on innovation, meeting told

As Viet Nam's economy matures, the country will need to focus more on innovation than on efficiency if it wants to be globally competitive, the chair of the finance depart-ment at Nanhua University in Taiwan said at the second International Conference on Finance and Economics that kicked off yesterday in HCM City.

Professor Wann-Yih Wu, in one of three keynote speeches yesterday, spoke about the relationship between the global economy and "multinational knowledge management", comparing the economic outlook and competitiveness of Viet Nam and Taiwan.

He said that global competitiveness was driven by efficiency and innovation and that an innovation-driven economy must be essential after the economy reaches a certain level of maturity.

He emphasised the importance of "knowledge management" in the growth of the economy, especially in the mature stage of economic development, which needs "more concentration in business innovation rather than a focus on efficiency."

Hundreds of researchers, practitioners and scholars from universities and companies worldwide are taking part in the conference, which is being held at Ton Duc Thang University.

In another keynote speech yesterday, Professor Tomas Pavelka of the University of Economics in Prague discussed the impact of recession on the labour markets of the Czech Republic.

He said the highest unemployment rates in the country belonged to young people and people with the lowest levels of education.

Also speaking at the conference, Professor Ji-Chai Lin, chair and professor of the Finance Department of Hong Kong Polytechnic University, said there were rewards and risks of investing in R&D (Research and Development)-intensive firms.

Lin said that he and another researcher found evidence that a high R&D capacity relative to firm valuation made R&D-intensive firms attractive takeover targets.

The higher takeover probability also requires higher returns to compensate for the risk, he said.

Today, Professor Fred-eric Bouchon, associate dean of international relations at the School of Hospitality, Tourism and Culinary Arts at Taylor's University in Malaysia, will discuss the security perception of foreign tourists before and after visiting North Cyprus.

Dr Dinh Tho Nguyen, chair of research at the International School of Business at the HCM City University of Economics, will talk about fuzzy-set comparative analysis of marketing capability configurations.

The conference will also feature sessions on accounting policy choices, firms' decisions on long-term debts, interest-rate policy and monetary policy prior to and since Viet Nam joined the WTO, the relationship between budget deficit and economic growth in Viet Nam, and the impact of microcredit on living standards, among other topics.

All papers of the conference will be published in the Conference Proceedings and will be submitted for inclusion in the well-known Thomson Reuters Conference Proceedings Citation Index database.

Ton Duc Thang University, along with the University of Economics in Prague and Corvinus University in Budapest, organised the conference.

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