Enterprises to benefit from law supporting SMEs

The Vietnamese government aims to have one million enterprises operating effectively by 2020. This target aims to create a driving force for economic growth.

According to experts, in the first four months of 2017, 27,400 enterprises left the competitive market, up nine percent compared to the same period last year. The figure has raised the question of how to tackle difficulties for enterprises, especially small and medium sized ones.

In this context, a draft law on supporting small and medium sized enterprises that will be passed on June 12th,2017 is expected to push business development.

The enterprise community will have a proper legal document, and based on that they can make petitions. The law is expected to help enterprises to operate more effectively.

The draft law targets groups, including household firms, start-ups and affiliated enterprises. The policy making board has revealed that  the draft law is based on demands of small and medium sized enterprises such as capital, tax policies, land, human resources as well as shortcomings to help the business community grow.

HCM City, Japan boost cooperation in administrative reform

Ho Chi Minh City wants to learn from Japan’s experience in administrative reform and developing an urban administration with effective interactions between residents and authorities, a local official has said.

During a reception for Japanese Deputy Minister of Internal Affairs and Communication Sasajima Takayuki in the city on June 7, Chairman of the municipal People’s Committee Nguyen Thanh Phong affirmed that HCM City has identified stepping up administrative reform, creating favourable conditions for socio-economic development and improving people’s living standards as three among key tasks in the city’s construction and development process.

HCM City aims to facilitate residents’ participation in supervising and building a strong and effective local administration while better serving its locals and enterprises, including Japanese investors, he added.

For his part, Takayuki said Japan will continue implementing effectively agreements signed with the Vietnamese Government Inspectorate and localities regarding inspection, handling administrative claims, and administrative consultation.

Japan wants to strengthen cooperation with HCM City in administrative reform, thus helping turn the biggest city of Vietnam into an Asian economic hub, he said.

Measures sought for sustainable pepper development

Measures to develop the pepper sector sustainably were discussed at a forum jointly held by the National Agricultural Extension Centre (NAEC) and the Department of Agriculture and Rural Development of Dak Nong on June 7.

Speaking at the event, NAEC Acting Director Tran Van Khoi said that pepper is a key export staple of Vietnam. Last year, the country shipped abroad 177,000 tonnes of pepper, earning 1.42 billion USD. Vietnam’s pepper products have been exported to 95 nations and territories, accounting for 40 percent of the world’s market share.

However, Khoi noted, the sector is facing three major matters that need to be handled: a rapid increase in pepper growing areas, unsustainable cultivation with weaknesses in terms of technology and varieties, and food safety and hygiene.

According to Vice Chairman of the provincial Dak Nong People’s Committee Truong Thanh Tung, the rapid increase of pepper planting areas is resulting in negative impacts which farmers have to suffer, including diseases and a decline in pepper price.

The price of pepper currently stands at around 75,000 VND per kg, equal to only 40 percent of the figure in the same period last year. 

Therefore, pepper farmers are easily facing bankruptcy or debts as they have to invest from 350-500 million VND (15,400-22,025 USD) in one hectare.

Therefore, Tung proposed ministries and centrally-run agencies closely control pepper cultivation to produce clean products with stable quality, and enhance connection between major pepper production provinces in terms of planning, production, processing to consumption.

Dr. Nguyen Nhu Hien from the Cultivation Department stressed the need for provinces to boost trade promotion, especially in major and choosy markets such as the US, EU, and Japan.

At the forum, experts shared results of several studies on preventing several diseases, as well as measures to reduce impacts of drought on pepper trees amid climate change.

Automobile sales rebound in May

As many as 23,232 cars were sold in May, up 6 percent from the previous month, according to the Vietnam Automobile Manufacturers’ Association on June 7.

During the month, sales of tourist cars rose 20 percent to 12,915 units while sales of commercial vehicles fell 6 percent to 9,005 units and specialised vehicles plummeted 22 percent to 1,312 units.

While domestically assembled cars saw a rise of only 1 percent in sales to 16,656 vehicles, imported car sales shot up 20 percent from the previous month to 6,576 units.

The increase was attributed to big discounts offered from renowned carmakers like Hyundai Thanh Cong, Truong Hai JSC (Thaco) Toyota, Honda, and Nissan Vietnam.

Thaco led the market with total sale of 8,263 units, accounting for 37.9 percent of the market share. It was followed by Toyota Vietnam with 5,151 units, making up 23.9 percent; and Ford Vietnam with 2,451 units, or 11 percent.

In the first five months of 2017, total automobile revenue dropped 1 percent year on year. The sales of tourist cars climbed 6 percent while those of commercial and specialised vehicles fell 9 percent and 19 percent, respectively. 

While the domestically assembled vehicles decreased by 7 percent in sales, the imported cars surged 16 percent year on year.

Vietnam’s tuna exports witness impressive growth

Vietnam’s tuna export turnover reached 216 million USD in the first five months of 2017, a year-on-year rise of 20 percent.

The strong growth was recorded in canned tuna products (35 percent) and frozen tuna (11 percent), reported the Vietnam Association of Seafood Exporters and Producers (VASEP).

Vietnam is exporting tuna to 79 countries and territories across the globe, with the US and EU being traditional major markets.

Despite the impressive growth, tuna exports are encountering some difficulties in raw materials and import duties in some key markets.

Therefore, VASEP has proposed the Directorate of Fisheries under the Ministry of Agriculture and Rural Development develop fishing that uses purse seines. 

It suggested the Directorate of Fisheries and the Ministry of Agriculture and Rural Development work with the Ministry of Industry and Trade (MoIT) to soon reach an agreement with the EU on the specific quota for tuna exports to the market.

VASEP also requested the MoIT consider reducing tariffs on tuna exports to Japan to zero percent like Thailand and the Philippines to improve the competitiveness of Vietnamese products.

Da Nang expects to lure at least 10 hi-tech projects by 2020

The central city of Da Nang expects to attract at least 10 investment projects into its hi-tech park by 2020, including at least one major project of a multinational hi-tech company.

The target is set in Da Nang’s plan on industrial development until 2020. Under this plan, the city also wants to become an investment destination of two or three leading IT firms of the world.

Chairman of the municipal People’s Committee Huynh Duc Tho said Da Nang has favourable mechanisms for hi-tech industry projects. It also encourages and will assist projects that invest in the supporting industry, machinery manufacturing, car and transport vehicle production, consumer goods with high added value, and environmental industry.

The city welcomes projects which save natural resources and fuel, use clean technologies, and create consumer-safe and eco-friendly products. Meanwhile, projects consuming much energy, using outdated technologies and posing high risk of environmental pollution will be rejected. 

To attract hi-tech projects, Tho stressed, Da Nang is calling for investment in developing infrastructure, training and research establishments, and hi-tech business incubators. It is also hastening procedures for the foundation of new industrial parks and clusters.

The municipal authorities have assigned relevant agencies to devise policies to support businesses in manpower training, he added.

Da Nang is currently home to six industrial parks accommodating 446 investment projects. The Da Nang Hi-tech Park has attracted seven projects with a total investment capital of 157.6 million USD.

Farm products – main exports of Vietnamese firms in Dong Nai

Agricultural products are main export commodities of Vietnamese businesses in Dong Nai province while FDI firms here favour the shipment of products of processing, manufacturing and electronics industries.

The southern province has raked in more than 6.6 billion USD in export revenue since the outset of 2017, a year-on-year increase of about 11 percent, according to the provincial Department of Industry and Trade.

Over 5.7 billion USD, or 87 percent, of the sum came from export activities of FDI enterprises whose goods with biggest turnover include footwear, fibre, computers, electronic products and components, and machinery.

Meanwhile, domestic enterprises mostly shipped abroad coffee (nearly 240 million USD), cashew nuts (over 110 million USD), and pepper (13 million USD).

The industry and trade department said although industrial products bring home high export value, it is very difficult for Vietnamese businesses to compete with FDI firms since they lack capacity and experience in global markets.

As Dong Nai, part of the southern key economic region, is home to a number of high-quality farm products, domestic companies should optimise this advantage and coordinate with farmers to export agricultural products, it added.

Central agencies should learn more about foreign demand for agricultural products in order to set up appropriate orientations and help producers access potential markets, the department noted.

MARD seeks to increase livestock product exports

Measures to boost the export of livestock products were discussed at a workshop held in Hanoi on June 7 by the Ministry of Agriculture and Rural Development (MARD).

Dam Xuan Thanh, Deputy Director of the MARD’s Department of Animal Health revealed that Vietnam exported about 11,000 tonnes of pork for 100 million USD in 2016. The figures for the first five months of 2017 were approximately 10,600 tonnes and 46 million USD.

Six slaughterhouses have exported pork to Hong Kong (China) and two others have shipped products to Malaysia. 

Only two companies, Koyu & Unitek Co. Ltd. and CP Vietnam Co. Ltd. have registered for the export of processed chicken products to Japan.

Pham Van Dong, Director of the Department of Animal Health, said closed supply chains from farms to slaughterhouses are needed to ensure food safety and fulfill requirements from imported countries.

In the long term, the establishment of disease-free areas for pig and poultry breeding is necessary to increase exports, he added.

Nguyen Duc Hoang, Chairman of Thang Loi Co. Ltd., said the State should build disease-free areas as businesses do not have enough resources.

Deputy Minister of Agriculture and Rural Development Vu Van Tam suggested local companies invest in modern production lines and cold storage facilities to produce processed products for export.

The MARD will propose the Government provide credits for businesses to expand export markets, he noted.

Industrial, manufacturing fair kicks off in Binh Duong

The Vietnam Industrial and Manufacturing Fair 2017 (VIMF 2017) opened in the southern province of Binh Duong on June 7, drawing thousands of visitors.

The event offered a chance for firms in Binh Duong and neighbouring localities to get access to new machines and equipment, seek partners and expand markets.

VIMF 2017 brought together more than 250 booths from 15 countries and territories, including Singapore, Japan, the Republic of Korea, India, China, Thailand, Malaysia, the US, Indonesia, Turkey, Italy, Germany, Australia and host Vietnam.

On display are the latest tools and equipment used in metalworking, metrology and measurement, 3D printing and software for manufacturing, among others.

Various activities will also be held during the fair such as symposiums on automation, manufacturing connection, 3D printing and design, with the participation of foreign and Vietnamese experts.

The fair runs until June 9 at the Binh Duong Convention and Exhibition Centre.

Int’l exhibitions on ICT, broadcast open in HCM City

The Vietnam International Exhibition on Products, Services of Telecommunication, IT and Communication (Vietnam ICT COMM) 2017 and the Vietnam International Broadcast and AV Show (Broadcast Vietnam) 2017 opened in Ho Chi Minh City on June 7, attracting 250 enterprises from various countries.

With 350 booths, leading businesses from Japan, India, the Republic of Korea, Malaysia, China and other countries showcase technologies in broadcast, satellite, HD digital television, software solutions, media reaction, optical cable, along with decoding technology and solutions to support economic organizations and e-government.

According to Hoang Vinh Bao, Deputy Minister of Information and Telecommunications, Vietnam is one of the top 10 countries in Asia in terms of ICT growth index. The country’s radio and television sector is booming with high competitiveness.

The exhibitions are chances for ICT enterprises to access cutting-edge achievements and solutions in the fields, while opening up new opportunities for foreign firms to access the promising Vietnamese market.

Within the framework of the exhibitions, a conference on Internet of Things (IoT) development and application, as well as issues related to the building of smart cities and urban areas will be held.

The events will run until June 9.

Vietnam, US discuss ways to boost trade-investment ties

A programme entitled “Meet the USA 2017” was held in Ho Chi Minh City on June 7 to step up economic-trade-investment relations between Vietnam and the US, especially in the fields of smart city development, renewable energy, environmental protection, hi-tech agriculture, healthcare and education.

The event was jointly organized by the Ministry of Foreign Affairs, the municipal People’s Committee, the US Consulate General in HCM City, and the American Chamber of Commerce (AmCham).

Nguyen Thien Nhan, Politburo member, President of the Vietnam Fatherland Front (VFF) Central Committee and Secretary of the municipal Party Committee, said US businesses are right to choose Vietnam and particularly HCM City as an investment destination with a stable and peaceful political environment.

It is a proper time for US firms to make use of strengths and advantages of the Vietnamese economy to make investment based on the close cooperation between the two countries’ leaders and the bilateral growing trade relations, he said.

The official called on US enterprises to seek more investment opportunities with the city and pledged to support them to do long-term business in HCM City.

In his opening remarks, Deputy Foreign Minister Ha Kim Ngoc said both nations are seeing  new opportunities to strengthen their comprehensive partnership after the recent visit to the US by Prime Minister Nguyen Xuan Phuc.

The programme, which took place in HCM City – a leading locality nationwide in external rapports with the US, aims to enhance collaboration between Vietnamese and US localities for the sake of the two countries’ people.

US Ambassador to Vietnam Ted Osius described the event as an activity to realize the commitments and agreements reached by the two countries’ leaders to expand trade and investment ties.

The US pledged to intensify cooperation with Vietnam, especially in the field of free trade, and hopes to bring to the country with the latest hi-tech solutions, he said.

The Ambassador hailed efforts of Vietnamese localities in improving the provincial competitive index (CPI), which is one of the key issues in the local economic development policies.

The programme will offer numerous opportunities for the two sides to propel the bilateral economic and trade ties forward, particularly between Vietnamese localities and US businesses, he added.

Vietnam’s exports to US reach 12.4 billion USD

Vietnam’s total shipment to the US in the first four months of the year rose 8.7 percent year-on-year to 12.4 billion USD, according to the General Department of Vietnam Customs.

Vietnam’s key exports to the American nation included aquatic products, garments, footwear, wood and wooden products, computers, electronics, spare parts and farm produce.

However, shipments of such products will taper off as Vietnam is facing myriads of free trade barriers, experts said at a conference held in Ho Chi Minh City on June 7.

They stressed that Vietnamese enterprises also face difficulties in enhancing domestic production capacity and have no comprehensive access to food safety and hygiene regulations as well as current procedures to enter US market. 

Analysing new daunting challenges for Vietnamese exporters, Vice President of Registrar Corp David Lennarz said that Vietnamese enterprises need to have representatives in the US or the designated party.

According to the US law, all of the foreign firms exporting food and beverages for people and animals into the US market must re-register every two years. This included registering their manufacturing facilities and representatives in the US so that they could be issued with a new valid business code. This task needed to be completed before the shipment arrives in the US.

However, since 2017 the US Food and Drug Administration (FDA) has changed the method of verification for issuing new business codes and established further regulations. After being designated by the manufacturing facilities and registered with the FDA, the firms’ representatives in the US must send a letter or document to the FDA confirming their authorisation to represent a Vietnamese manufacturing facility in the US.

If the FDA does not receive the letter or document, the re-registration is considered incomplete and the business code will be cancelled. 

From the end of 2016 to the beginning of 2017, number of Vietnamese businesses having registration with the FDA for exports to the US fell 45 percent. This was due to the fact that Vietnamese businesses have no representatives in the US or the representatives do not send verification to the FDA.

Shipments by Vietnamese firms that are unaware that their FDA business codes have been revoked will be refused entry to the port.

Vietnam currently ranks 16th among the US’ leading trade partners. Bilateral trade grows 20 percent annually and Vietnam has enjoyed a trade surplus with the US in the past 10 years. 

Traditional medicine fails to meet standards

Various shortcomings still exist in traditional medicine in terms of healthcare and paying health insurance fees.

This was revealed at a meeting organised by the Ministry of Health and the Vietnam Social Insurance Agency on June 5 in Hanoi.

Some traditional medicine hospitals do not have doctors specialised in diagnostic imaging, leading to less patients coming to the hospitals as they cannot benefit from the services, according to Nguyen Ngoc Tuan, deputy head of the ministry’s Traditional Medicine Management Department.

Another shortcoming is a lack of detailed instructions for insurance agencies on how to pay health insurance fees for patients diagnosed with chronic diseases, who are the typical patients visiting traditional medicine hospitals.

Normally, patients with chronic diseases need to be treated for a long time.

Thus, the lack of instructions affects patients and heath insurance agencies as they are confused on how to pay health insurance fees for these patients.

At present, many medical universities declined to train traditional-medicine doctors in modern medicine, Tuan said.

"This means traditional medicine hospitals fail to meet standards required by the health ministry to become primary healthcare facilities where health insurance card holders can register for examination and treatment," he said.

Pham Luong Son, deputy general director of the Vietnam Social Insurance Agency pointed out defects in implementing and paying health insurance fees for patients treated with traditional medicines.

Some traditional medicine hospitals were found to keep patients for longer than necessary, he said.

Son also said the price of ba kich (Indian Mulberry) – a kind of traditional medicine, differed between localities. For instance, the price was 338,500 VND (15 USD) per kilo in Quang Nam province, 630,000 VND (28 USD) in Thanh Hoa province and 730,000 VND (32 USD) in Dien Bien province.

He asked for the difference to be clarified.

He gave an example that an insurance agency branch in Binh Dinh province revoked 1 billion VND (44,000 USD) after finding a difference between the real price of traditional medicine with the price a local hospital quoted to the agency in 2016.

Tuan said inconsistencies in policies were behind the shortcomings.

He asked the ministry and the insurance agency to sit down together and issue a consistent policy to fix the shortcomings, Tuan said.

Son asked the ministry to assess examining and treating patients by traditional medicine at national level.

He also advised the ministry to evaluate the effectiveness of traditional medicine in treating patients with health insurance cards at hospitals.

The ministry was asked to publicise the average bid winning prices for each kind of traditional medicine, he added.

Deputy Minister Nguyen Viet Tien urged reaching a consensus between the two agencies to deal with the shortcomings soon.

Vietnam boosts institutional reforms to lure Japanese investment

Vietnam will push ahead with institutional and legal reforms and increase its transparency in line with international practices to attract Japanese investment in the coming time, said Deputy Minister of Planning and Investment Nguyen The Phuong in a recent interview granted to the Vietnam News Agency.

The move is expected to help Vietnam promote its advantages of a dynamic growing economy, a potential consumption market, a strategic manufacturing location, and an important link in the global value chain, he said.

Implementing the policy of active international economic integration, Vietnam has signed 12 new-generation free trade agreements (FTAs) and is undertaking negotiations to ink other important deals in the time ahead, he added.

This creates favourable conditions for foreign investors, including those from Japan, to carry out major projects in Vietnam, especially in the fields of their strength such as high technology and infrastructure.

Vietnam has continuously worked with Japan via special dialogue channels to address difficulties and seek solutions to improve the business environment and increase bilateral investment cooperation, he said.

Such dialogue mechanisms as Vietnam-Japan common initiative; policy dialogue of Keidanren (Japan Business Federation), Vietnam-Keidanren economic dialogue; and policy dialogue between Vietnam’s Ministry of Planning and Investment and the Japan Chamber of Commerce and Industry (JCCI) are being effectively carried out and hailed by the Japanese business community, he noted.

A number of margin activities have been held on the occasion of Prime Minister Nguyen Xuan Phuc’s official visit to Japan to attend the 23rd International Conference on the Future of Asia from June 4-8 to promote trade and investment between the two countries, he said.

The PM talked with representatives from Japanese big companies and had dialogues with Keidanren and entrepreneurs in Kansai region, he added.

From which, it could be said that the PM’s ongoing visit to Japan has received special attention from Japanese businesses, he said, hoping that the flow of Japanese investment will strongly increase in the coming time to live up to the expectations of the two countries’ leaders and people as well as their cooperation potential.

Vietnam and Japan established diplomatic ties in 1973. Since then the bilateral cooperation has been incessantly increased across trade, investment and development cooperation.

Japan is currently the biggest supplier of official development assistance (ODA) for Vietnam, making up about 30 percent of total ODA committed to the Southeast Asian country.

At present, Japan provides about 200 billion JPY (1.8 billion USD) of ODA for Vietnam annually, focusing on fields to promote economic growth and increase global competitive edge; improve social affairs; protect the environment; and enhance administrative management capacity.

Japan is running over 3,400 investment projects in Vietnam with a total registered capital of nearly 44 billion USD. In the first five months of 2017, Japanese businesses poured nearly 2 billion USD in Vietnam. The figure is expected increase in the time to come.

Japan is the fourth biggest trade partner of Vietnam after the US, the EU, and China. 

Two-way trade increased to 30 billion USD in 2016 from 16.7 billion USD in 2010.

Japanese foreign direct investment (FDI) has contributed to establishing some key industrial sectors in Vietnam such as telecommunication, oil and gas mining and processing, electronics, and information technology.

According to a survey conducted by the Japan External Trade Organization (JETRO) in 2016, up to 60 percent of Japanese businesses revealed their plan to expand investment in Vietnam.

Ca Mau looks to develop shrimp sector

The Mekong Delta province of Ca Mau is implementing various measures to realise its goal of 2 billion USD worth of shrimp exports by 2020.

The goal increases to 3 billion USD by in 2030. 

According to the provincial Department of Agriculture and Rural Development, to achieve the goals shrimp output must be expanded, with total output predicted at 280,000 tonnes in 2020 and more than 400,000 tonnes ten years later.

Ca Mau is diversifying production and distribution methods, establishing more cooperatives and building supply chains linking traders and farmers.

Classification and quality assessment of aquatic farms and facilities producing aquatic breeds and animal feed have also been intensified, with locals updated on farming regulations and standards and violators strictly punished.

Ca Mau plans to develop its export markets via market surveys, product diversification, and trade promotion.

Ca Mau is the largest shrimp producer in Vietnam with output of more than 145,000 tonnes in 2016, 23 percent of the country’s total shrimp output and 32 percent of the Mekong Delta’s. 

The province has 34 processing plants with total capacity of 150,000 tonnes per year. 

Ca Mau’s shrimp exports were estimated at more than 167 million USD in the first quarter of this year.

New international container route goes through Quang Ninh

Cai Lan International Container Terminal (CICT) announced the launch of a new route for container vessels ACS Cai Lan connecting India, Malaysia, Singapore, Vietnam, China and the Republic of Korea on June 6.

The operator of Cai Lan Terminal also welcomed the 5,023 TEU Hyundai Premium container ship from Hyundai Merchant Marine to the port during the launch.

Founded by an alliance between two leading carriers, Hyundai Merchant Marine and Gold Star Line, the new route goes through Cai Lan Terminal in northern Quang Ninh province of Vietnam once a week.

The Cai Lan link to the ACS international route is an opportunity for Quang Ninh province and other northern localities to unleash their potential in the marine industry.

Chairman of the provincial People’s Committee Nguyen Duc Long said the province will establish a team delivering streamlined public administration services at the port and not collect port infrastructure fees to aid marine-based businesses.

Vietnam’s five-month tea export sees strong growth

Vietnam exported 48,000 tonnes of tea in the first five months of this year, raking in 73 million USD, representing year-on-year increases of 14.3 percent in volume and 12.4 percent in value.

In May alone, export volume was estimated at 10,000 tonnes with turnover of 17 million USD, according to the Ministry of Agriculture and Rural Development.

However, the tea price for export in the last five months decreased 3.8 percent compared to the same period last year, to 1,452 USD per tonne on average.

India was the top consumption market of Vietnamese tea in the period, with export volume to the market increasing 11.6 times year-on-year.

It was followed by Poland, the United Arab Emirates (UAE), Taiwan (China) and Russia, with respective rises of 93.6 percent, 77.5 percent, 44.3 percent and 17.5 percent. 

However, exports to Pakistan, the biggest market of Vietnam’s tea with 25.5 percent of the market share, decreased by 1.4 percent in volume and 6.3 percent in value compared to the same period last year. 

The Vietnam Tea Association (VITAS) predicted that the country’s export volume in 2017 will increase by about 10 percent from 2016. 

Vietnam exports tea to 110 countries and territories worldwide, with the Vietnamese tea brand registered for protection in 70 countries and regions. 

Vietnam’s key tea export markets are Afghanistan, Indonesia, Russia, Pakistan, Taiwan (China), the US, China, the UK and the UAE. 

Vietnam mainly exports black tea, accounting for about 78 percent of total tea exports. 

According to Nguyen Huu Tai, President of the VITAS, Vietnam has great potential to expand production of “Shan Tuyet” tea, which is hoped to become a key tea product for export soon. 

Vietnam is the world's seventh largest tea producer and among the top five tea exporters. However, the country ships mainly material tea and low-value tea products. 

Experts said Vietnam should look to export high-value tea products instead, adding that the State needs to change management institutions to support tea producers and exporters.

SME support won’t be in cash

Support provided to small and medium-sized enterprises (SMEs) will not be in cash, but rather take the form of favourable conditions in order for SMEs to grow, Deputy Minister of Planning and Investment Dang Huy Dong has said.

Dong spoke at an online conference held by the Government’s e-portal on June 6, saying that the draft Law on Support to SMEs, which was under discussion by the National Assembly and is expected to be passed next week, would focus on three programmes so as to realise the Government’s goal of doubling the number of firms to one million by 2020.

Those include support to firms converting from business households; support to start-ups and the development of the ecosystem; and support to firms involved in the global value chain.

“Support provided in cash is inefficient and difficult to implement, given the Government’s limited budget,” Dong said, adding that SMEs would instead receive support in market information, administrative procedures, tax and credit incentives.

According to Nguyen Van Phuc, former Chairman of the National Assembly Economic Committee, this law was critical to the development of businesses but the issuance of this law would require changes in many policies, such as ones on land, to create a synchronous and consistent legal system to facilitate business operation.

Phuc said that support should be specific to ensure it is applicable to reality and SMEs would benefit.

To Hoai Nam, General Secretary of the Association of SMEs said that Vietnamese SMEs were struggling with land and credit access, technology, human resources, as well as market information.

In the first four months of this year, the number of firms halting operations rose 9 percent compared to the same period last year to 27,000, which was alarming.

When the law is passed, drastic measures must be taken to ensure that the law works in practice and benefits SMEs.

There are around 500,000 firms in Vietnam, 97 percent of which are SMEs.-

Vietnam int'l arbitration centre holds dispute workshop

The Vietnam International Arbitration Centre (VIAC) organised a workshop on June 6 with the International Finance Corporation (IFC) to promote the use of alternative dispute resolution (ADR) methods in the banking and finance sector.

The conference, named ‘Benefits and Challenges of Using ADR for Banking Disputes’, focused on the principles, conditions and procedures of commercial mediation as an ADR method, as well as the conditions for establishment of mediation centres in Vietnam and the implementation of Decree 22 on commercial mediation, which has been in effect since April 15, 2017.

According to the decree, the settlement of disputes via trade reconciliation must ensure the principle of voluntarism and equality in terms of rights and duties between parties to the disputes who participate in reconciliation, said Nguyen Thi Mai, Deputy Head of the Justice Support Department.

In recent years, global banks and financial institutions have considered many ADR methods like Meditation and Arbitration as an effective way to solve disagreements. According to Tran Huu Huynh, VIAC’s Chairman, this trend arose due to the need for a customised dispute resolution mechanism for the financial sector which must also ensure efficiency and promptness.

Truong Thanh Duc, Chairman of the Legal Club Bank of the Vietnam Bank Association, agreed with Huynh, saying that on average, a financial or credit dispute takes the litigation court two to three years to reach a final ruling. An arbitration court should take only five to six months. And even at a normally higher legal fee, arbitration methods have proved more effective and specialised than the traditional court, particularly in cases involving foreign entities.

Nina Mocheva, a World Bank Dispute Resolution Specialist, said at the conference that World Bank had been working closely with Vietnam and the VIAC since 2013, and that they are deeply impressed by the country’s arbitration modernisation.

However, Mocheva also raised her concern over the temporary lack of legal framework and practical application of ADR methods in Vietnam.

In response to Mocheva’s insight, Mai suggested a number of possible improvements, such as the Supreme People’s Court of Vietnam taking responsibility in encouraging firms and organisations working in the financial dispute resolution field to popularise ADR methods, and the Ministry of Justice proactively completing an absolute and uniform trade dispute resolution legal framework. She was also in favour of involved parties solving disputes through negotiation and appeasement before taking matters to court. 

Similar to arbitration, commercial mediation is only applicable when concerned parties have entered a mediation agreement before or after the dispute has arisen, or at any point during the dispute resolution process.

The conference included two discussion panels in which representatives from commercial banks, credit organisations and legal firms discussed the future of ADR methods in Vietnam with the speakers. 

Michael Hwang, member of the Chartered Institute of Arbitrators, proposed a comprehensive approach to ADR, with trade mediation support from both the Vietnamese government and courts.   

Hwang recommended ADR methods in commercial arbitration on the ground of both parties being able to employ lawyers of choice, which proves effective for both financial institutions and financial service users.

At the conference, VIAC’s Deputy Secretary General Phan Trong Dat also introduced a model arbitration clause reserved for the banking and credit sectors, divided into two categories for credit contracts and contracts of guarantee in order to cover all credit activities.-

Japanese project hoped to help spur Vinh Phuc’s development

The next phase of the Thang Long-Vinh Phuc Industrial Park project in Binh Xuyen district, the northern province of Vinh Phuc will be implemented under a memorandum of understanding signed on June 6.

The signatories of the document are the Vinh Phuc provincial People’s Committee, Japan’s Sumitomo Group and Thang Long-Vinh Phuc Industrial Park Co., Ltd. 

Over the past two years, Vinh Phuc created the best possible conditions for Sumitomo Group to implement the project with 213 ha of land cleared for the construction. 

The province has also paid attention to building roads and power and water supply systems to the industrial park while completing relevant procedures. 

Akito Shiraishi, General Manager of Sumitomo’s Overseas Industrial Park Department, said the Japanese group and Thang Long-Vinh Phuc Industrial Park Co., Ltd. will work together to ensure the progress of the project and attract high-tech investors, contributing to generating jobs for local labourers and spurring local socio-economic development. 

On October 22, 2015, Vinh Phuc province handed over an investment licence to Sumitomo’s project on building infrastructure in Thang Long-Vinh Phuc industrial park, which is expected to help lure 79 Japanese investors to the park. 

The project is scheduled to be completed in December, 2024.

Interest rates remain stable: survey

Interest rates for deposits and loans and bond yields have remained relatively steady since the end of January, as inflation is under control and foreign exchange rate is stable.

These are the findings of the latest survey on interest rates done by HCM City Securities Company (HSC).

Currently, interest rates for VND deposits are 4.5 to 5.4 percent  for one- to six-month terms; 5.4 to 6.5 percent  for six- to below-12-month terms; and 6.4 to 7.2 percent  a year for more than 12 months.

The VND lending rates average 6 to 7 percent  per year for short-term loans, and 9 to 10 percent  a year for medium- and long-term loans in priority fields. The average rate for ordinary loans is 6.8 to 9 percent  a year for short term, and 9.3 to 11 percent  a year for medium- and long-term loans.

The yields of the Government’s five-year, seven-year, 20-year and 30-year bonds are 5.03, 5.35, 7 and 7.55 percent  a year, respectively.

The consumer price index in May slid 0.53 percent  against the previous month, according to the General Statistics Office, suggesting that inflation would not rise in the short term. Together with the stable foreign exchange rate, it has helped keep interest rates stable in the first part of 2017, HSC said.

HSC expects the devaluation of the VND against the dollar to be less than 2 percent  this year. The dollar has strengthened against the VND by 1 percent in the first five months.

Interest rates, especially of deposits, may inch down over the next few months, HSC said, adding that credit growth might exceed the 16 percent target, helping the GDP meet the 6.7 percent  growth target set for 2017.

Nguyen Hoang Minh, deputy director of the State Bank of Vietnam’s HCM City branch, has also forecast that interest rates for the rest of the year may decline by 0.5-1 percentage points against December 2016, if the VND remains stable.

Last week, market research company Market Intello also predicted that the average interest rate this year would drop by 0.5 percentage points compared to 2016. It expects the exchange rate to increase by 1-1.5 percent  as the US Federal Reserve’s plans to raise rates and trade deficit may raise the demand for US dollars much more than in 2016. However, it does not expect the đồng to be depressed further, as inflation is well under control at below 4 percent  and the central bank has abundant foreign reserves.

Sơn La to improve competitiveness for business development

A seminar on improving provincial competitiveness to encourage business development was held on Wednesday in the northern mountainous province of Sơn La.

Speaking at the event, Hoàng Văn Chất, secretary of the provincial Party Committee, said Sơn La recently honoured co-operatives and firms earning more than VNĐ200 million (US$8,810) per hectare of land and more than VNĐ2 billion per hectare of water every year.

However, of the 1,959 businesses in the region, highly profitable ones account for a mere 0.7 per cent.

The Việt Nam Chamber of Commerce and Industry (VCCI) said that 63 per cent of the local firms complained that they faced red tape while going through administrative procedures, and that all surveyed businesses meet with difficulties in completing administrative procedures related to land, and have to pay unofficial fee.

Nguyễn Ngọc Sơn, permanent vice president of the provincial Business Association, said the province should take more steps to improve its business climate.

On Friday, a provincial public administrative centre will become operational in the region.

At the seminar, Phạm Ngọc Thạch, deputy head of VCCI’s legal affairs department, asked provincial authorities to review and improve the clearance of administrative procedures for businesses, as well as make information available on all local authorities’ websites.

The event was co-hosted by the provincial People’s Committee, VCCI and the provincial Union of Science-Technology Associations.

Private firms grapple with high operational costs

Vietnam’s private enterprises are struggling with high operational costs, triggered by the State’s effort to increase budget revenues, said Tran Dinh Thien, director of the Vietnam Institute of Economics.

He told a seminar in Hanoi on May 30 that foreign and State-owned enterprises had a slew of competitive advantages such as easier access to land and markets.

“We should find ways to eliminate this bottleneck. This is an unfair investment environment,” he stressed.

The number of firms that went bust and temporarily shut down business in 2016 rose 30.7% and 27.8% to 12,370 and nearly 20,000 respectively against the previous year, said Tran Thi Hong Minh, director general of the Business Registration Agency under the Ministry of Planning and Investment.

Over 500 of the enterprises that closed were in agriculture, forestry and fisheries, up a whopping 107.1%; 63 in healthcare and social work, up 90.9%; 195 in real estate, up 69.6%, and 176 in mining, up 61.5%.

Private firms are playing an increasingly important role in Vietnam’s economy but they are dogged by poor efficiency, said Ho Sy Hung, director of the Business Development Department at the Ministry of Planning and Investment.

The Party Central Committee’s Economic Commission said the private sector contributes around 40% to gross domestic product (GDP). However, the sector has seen slower growth in recent years as private enterprises have remained small and micro.

External information awards contribute to improving service’s efficiency

Sixty nine press works were honoured under the National External Information Service Awards 2016 at a ceremony in Hanoi on May 31.

The awards included six first prizes, 15 second prizes, 18 third prizes, and 30 consolation prizes.

This is the third time the awards have been organized by the Party Central Committee’s Information and Education Commission and the Central Steering Committee for External Information Services.

The 2016 contest received 893 entries in 17 languages, up 21 percent in number of entries and six languages more compared to the event in 2015.

President Tran Dai Quang and head of the Party Central Committee’s Information and Education Commission Vo Van Thuong presented awards to the first prize winners.

The prize winning works focused on such themes as Vietnam’s political and diplomatic activities, sea and island, culture, environment and climate change. 

The State-run Vietnam News Agency (VNA) won one first prize, four second prizes, two third prizes, and five consolation prizes.

The first-prize photo work “Early election in Truong Sa (Spratly) archipelago” by Tran Le Lam from the VNA’s Press Photography Department was evaluated to have produced good impact with excellent photographic techniques.

The VNA’s e-newspaper VietnamPlus won the second prize with a series of stories in the “mega-story” style, featuring the Monsoon Music Festival in Hanoi. 

Speaking at the event, Thuong said external information is an important part in the communication and external work of the Party and State, which will help people around the world understand better Vietnam’s policies and the country’s stance on regional and international issues.

The work also promotes the country’s land, people, history and culture as well as achievements in the “doi moi” (renewal) process, he added.

At the same time, the external information service keeps the domestic public updated on the latest developments in the region and the world, connects Vietnam with the international community and Vietnamese abroad, and garners support and cooperation from international friends along with consensus and contributions of expatriates to the cause of national building and defense, the official said.

The service also provides accurate information to fight against wrong viewpoints and distorted allegations about Vietnam of hostile forces, he noted.

The head of the Party Central Committee’s Information and Education Commission urged external information agencies to continue with efforts to improve their performance and reach wider audiences.

The National External Information Service Awards was launched in 2014.

Greater Mekong Subregion countries to boost transportation connectivity     

Greater Mekong Subregion (GMS) countries are accelerating negotiations to sign a Memorandum of Understanding (MoU) on the implementation of a cross-border transport facilitation agreement.

The agreement will reduce non-physical barriers to transport and trade in the region.

The information was revealed at a meeting of the Joint Committee for the Greater Mekong Subregion Cross-Border Transport Agreement (GMS-CBTA), which concluded in Ha Noi on Thursday.

The memorandum will allow each of six member countries -- Viet Nam, Cambodia, China and Laos, as well as Myanmar and Thailand -- to issue a maximum of 500 GMS Road Transport Permits and Temporary Admission Documents for commercial vehicles of member countries.

According to Viet Nam Deputy Minister of Transport Nguyen Hong Truong, head of the host country’s delegation at the meeting, regional countries have built roads to connect with each other. However, they are still short of implementing intra-regional transportation activities.

“The memorandum is aimed at solving this issue as well as facilitating the travel of people and enterprises in GMS countries,” he said.

He said Viet Nam expects to complete all the final internal procedures by June towards signing and implementing the MoU.

Representatives from other countries also agreed to speed up the signing of the MoU and pledged to fast-track the completion of their internal procedures to implement the GMS transportation activities at the earliest.

GMS-CBTA is a single comprehensive legal instrument that includes all of the non-physical measures for cross-border land transport. Under the CBTA, vehicles, drivers, goods and passengers will be allowed to cross national borders through the GMS road transport system.

Starting as a trilateral agreement among Viet Nam, Laos, and Thailand in 1999, the agreement, supported by the Asian Development Bank, was then expanded with the participation of Cambodia, China and Myanmar. The full implementation of GMS-CBTA is expected by 2019.

Conference talks foreign exchange in Vietnam-China border trade

A conference discussing the management of foreign exchange activities in Vietnam-China border trade took place in the northern mountainous province of Lao Cai on May 26 

The event underscored the need to amend Decree 89/2016/ND-CP stipulating requirements for foreign currency exchange agents and payment services of economic organisations, and the draft Circular in place of Decision No.689.2004/QD-NHNN on payment regulations in trade of goods and services in border areas and border economic zones between Vietnam and China. 

Nguyen Ngoc Canh, Director of the State Bank of Vietnam (SBV)’s Foreign Currency Management Department, expressed concern over shortcomings in the management of Chinese yuan exchange, particularly in border areas. 

Licensing requirements for individual foreign exchange desks remain too simple, resulting in their massive presence that makes it hard for the State management, he said, adding that it is necessary to issue particular conditions and requirements to ensure close control and effectively uphold the use of currencies of border-sharing countries. 

The draft amended decree rules that individual foreign exchange desks could continue their activities within one year since the decree takes into force. After such duration, they must apply for business establishment so that the SBV could consider licensing their currency exchange activities. 

Meanwhile, the draft circular also revokes regulations on licensing the collection of Chinese yuan in cash for duty-free shops and providers of services for foreigners.     

Maritime Bank has no plans to merge

Two small-sized banks have expressed a hope of merging with Maritime Bank but the Board considers it may not be good for its long-term plan and the handling of backlogs following a previous merger in 2015, Chairman of Maritime Bank, Mr. Tran Tuan Anh, told its annual general meeting (AGM) on May 26.

The Board has planned to divest from PG Bank, but due to the ongoing merger between PG Bank and Vietinbank, this has now been delayed until that process is completed. According to the Chairman, Maritime Bank currently holds 4.85 per cent of Military Bank, 9.98 per cent of PG Bank, and less than 5 per cent of PVcomBank.

On another note, only 3 per cent of shareholders with voting rights approved the bank’s plan to list on Vietnam’s stock exchanges. It had announced in January the listing of 1.17 million shares on the Unlisted Public Company Market (UPCoM), but the bank’s shares as of now are still traded in the over-the-counter (OTC) market.

Like most other Vietnamese banks, Maritime Bank last year focused on recovering and resolving major non-performing loans (NPLs) under the State Bank of Vietnam (SBV)’s guidance. It had an NPL ratio of 2.17 per cent at end-2016, with risk provision costs up 3.3 times from a year earlier, resulting in the bank’s pre-tax profit for 2016 increasing just 3.8 per cent from a year ago, reaching VND164 billion ($7.2 million).

As at December 31, the bank’s total assets had increased 11 per cent against 2015 to VND92.6 trillion ($4.07 billion) and total customer lending was up 8 per cent to VND54.2 trillion ($2.4 billion). Conversely, total mobilized capital fell 6 per cent to VND61.8 trillion ($2.7 billion), mainly due to an incident last June, when rumors began to circulate regarding the bank’s business activities and liquidity.

In 2017, Maritime Bank considers safety and caution as top priorities, with the NPL ratio to be below 3 per cent by the end of the year. It projects a 15 per cent rise in total assets, 17 per cent in mobilized capital, and 14 per cent in outstanding credit. Pre-tax profit is to rise only slightly compared to 2016, to VND165 billion ($7.26 million), and the bank plans to pay a 5 per cent dividend, which won shareholder approval at the AGM. It will be conducted after being approved by the central bank.

As part of the country’s banking sector reforms, Maritime Bank completed its merger with the small, unlisted Mekong Development Bank in 2015.     

Breeders worry over falling chicken price

The prices of battery-farmed chickens and their egg are falling rapidly, causing concern for breeders nationwide, especially in Hà Nội and Đồng Nai – the two localities raising the highest numbers of battery chickens.

Phạm Văn Dũng, a breeder raising over 30,000 battery chickens in southern Đồng Nai Province’s Thống Nhất District, said at present a kilo of live battery-farmed chicken sells between VNĐ22,000-25,000 (96 cents – $1.1), while an egg sells at VNĐ1,000-1,100 (4.4-4.8 cents), the Lao động (Labour) newspaper reported.

“The first thing I do every morning is calculate how much I’ve lost from my chickens,” Dũng said.

Another breeder in Thống Nhất District said that at the current price he was losing about VNĐ400-500 (1.7-2.2 cents) per egg sold.

On average, he sold about 40,000 eggs daily, meaning losses of up to VNĐ16-20 million ($705-880) per day.

By selling a kilo of live battery-farmed chicken at VNĐ25,000 ($1.1), breeders made no profit, he said.

“The price is just enough to break even,” he added.

Vương Thị Minh, who buys battery chickens to sell to canteens in Hà Nội’s Mê Linh District, said she had recently been buying fewer chickens due to reduced consumption.

The slow consumption of battery chickens has been partially blamed on the campaign to ‘save pigs’ across the country, an effort to solve oversupply, according to Minh.

The Ministry of Agricultural and Rural Development estimated that the country has tens of millions of battery chickens.

The number raises the question of whether people will have to ‘save’ chickens once the campaign to save pigs has ended.

In response, Nguyễn Thanh Sơn, head of the ministry’s National Institute of Animal Sciences, said the rearing of chickens had grown rapidly in recent years.

Data from the agricultural ministry estimated the number of chickens in Việt Nam at 217 million, an increase of nearly 5 per cent compared to last year.

Sơn said that even last years’ number was 9.9 per cent higher than in 2015.

"This results in a situation of oversupply and a subsequent drop in prices," he added.

Nguyễn Kim Đoán, deputy head of Đồng Nai Livestock Association said the process to raise battery chickens often lasts between 42-60 days, therefore, breeders could stop hatching chickens to fix the situation.

“It means we do not need a campaign to save battery chickens,” he said.

However, Đoán advised breeders to think carefully before raising chickens or other animals, to avoid flooding the market further and putting more pressure on prices, he added.

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