Government requests flexible monetary policy

The State Bank of Vietnam (SBV) has to work with ministries and localities in regulating the monetary policy in a proactive, flexible manner in close association with the fiscal policy, so as to have active control of inflation, keep macro-economic stability, boost economic growth, and support the development of the financial and securities markets.

The Government made the request in its Resolution 01/NQ-CP issued recently, during which it assigned the bank to manage interest and exchange rates in line with developments of the macro-economy, inflation, and the monetary market.

At the same time, the SBV should control and enhance credit quality, while applying measures to effectively manage the foreign currency and gold markets, continue measures against the dolarisation and goldenisation of the economy, and increase the national foreign reserves, said the resolution.

The bank is requested to design measures to mobilise gold stocks in society for the country’s socio-economic development.

It is also asked to coordinate closely with ministries and agencies to design proper solutions to accelerate non-cash payment, tighten the supervision and monitoring of operations of credit institutions, absolutely ensuring the safety for the system, and strictly handle violations in accordance with the law.

Meanwhile, the Finance Ministry is required to collaborate with ministries and localities to closely manage State budget expenses in conformity with the estimate.

The ministry is requested not to issue new policies and regulations that lead to a rise in State budget spending when a guarantee source is absent.

The Government demanded to minimize State budget spending for conferences, seminars, festivals, ground-breaking and inaugural ceremonies, and overseas business trips by ministries, State offices, and localities as well as the purchase of public cars. State budget advances are also not allowed, except for cases involving natural calamities, disease epidemics and defence and security tasks.

The Ministry of Planning and Investment is to focus investment on important and urgent projects that are supposed to complete in 2015, while removing administrative obstacles to step up the disbursement of development investment, and ensuring corresponding capital for ODA projects.

Nghe An, Tra Vinh aim to increase FDI inflow

The authorities in Nghe An and Tra Vinh are determined to improve investment climate in the two provinces by attracting more foreign direct investment (FDI) in 2015 and going forward.

Following the formulation of a plan, aimed at attracting investment to the central province of Nghe An from now till 2020, which was recently approved by Nghe An's Department of Planning and Investment, the province expects to lure approximately VND100 trillion (US$4.65 billion) in investment by 2020, half of which will be drawn from foreign-invested projects.

To this end, the province will implement consistent measures to lure investment projects, considering it a key task to accelerate local socio-economic development, the plan stated.

It will also better facilitate investors by establishing land funds, award incentives and support them in recruiting workers and accessing raw material.

According to the plan, Nghe An will also aim to top the list of 30 provinces and cities nationwide on the provincial competitiveness index (PCI).

Currently, the province is seeking investment for areas, such as agro-forestry, fishery and industry, where it holds an advantage.

Last year, Nghe An authorities licensed 105 new projects with a combined investment capital of more than VND18.52 trillion ($861.4 million), representing an annual increase of 46 per cent in the number of projects and a 44 per cent rise in capital.

Large-scale projects in the province include the Lan Chau-Song Ngu tourism complex, worth VND1.96 trillion ($91.6 million), the Masan Food project, valued at VND1.2 trillion ($55.8 million) and the Ha Noi-Kim Lien urban and hotel complex, pegged at VND720 billion ($33.5 million).

Meanwhile, the southern province of Tra Vinh will offer investors several incentives for investing in the locality this year, according to the provincial People's Committee.

These incentives include financial assistance for land clearance compensation and infrastructure development for projects in the province-based economic and industrial zones.

Reduction in land rental fees and trade promotion expenses, as well as support for trademark registration and labour training will also be extended, the committee noted.

Last year, the province attracted five new projects, bringing the total number of on-going projects in the area to 92, which are valued at $3.47 billion. Of these projects, 30 have foreign investment and specialise in fields, such as garments, footwear, seafood and agriculture processing, as well as automobiles.

Big C pledges to keep prices stable for Tet

The Big C supermarket chain has pledged not to change quoted prices on more than 90 per cent of its goods during the peak shopping season from December 12 to February 20.

Prices of fast-moving consumer goods (excluding fruits and vegetables, fresh and frozen food, beer and wine, milk and milk based products), clothes, electronic products and household utensils will remain unchanged during the period.

Goods prices usually fluctuate strongly ahead of Tet (Lunar New Year) as demand increases strongly.

Seafood export target challenged with many difficulties

The seafood industry faces many difficulties to maintain export momentum last year and obtain the turnover target of US$8-8.5 billion this year, said experts.

The Ministry of Agriculture and Rural Development has targeted at US$8.5 billion export turnover this year while the Vietnam Association of Seafood Exporters and Producers (Vasep) has set it at US$8 billion.

Vietnam’s seafood export turnover exceeded 2014 plan by US$1 billion to reach US$7.92 billion, much higher that in the previous year when it hit US$6.7 billion, said Dr. Nguyen Huu Dung, deputy chairman of Vasep at a meeting hosted recently.

The export achievement has taken Vietnam to the list of the five largest seafood exporters in the world.

Of the export turnover last year, shrimps accounted for 53 percent with US$4 billion in value. Despite of suffering consequences from out of control development, tra fish export turnover remained unchanged at US$1.7 billion.

Besides Vietnam imported over US$1 billion shrimp material mainly from India for local processing which has developed far beyond farming and exploiting.

According to Dr. Dung the high export turnover has not appropriately profited farmers and businesses. 2014 was a successful export year but also a hard year for them who have faced with diseases and material shortage. Shrimp breeders have worried about stunted growth.

Tra fish businesses have struggled to change their processing process to meet with new quality standards in a Government’s new tra fish decree whose implementation has been postponed a year until the end of this year.

Shrimp farming industry has yet to have a suitable farming process to prevent diseases and ensure the quality of breeding shrimp, putting both breeders and processing plants in the risk of losses due to antibiotic residue.

Deputy Chairman of My Thanh Shrimp Farming Association in Soc Trang province Vo Quang Huy said that the shrimp farming process has not been improved to help increase output and quality.

Director of Minh Phu Seafood Company from Ca Mau province Nguyen Van Quang said that because authorized agencies have not provided breeders with a suitable farming process, diseases are unavoidable.

Farmers have been forced to use antibiotic to save their sick shrimp ponds which are their entire fortune, causing risks for businesses that will be held responsible if their export consignments contain antibiotic residue higher permitted levels set by import countries, he said.

Vietnam cow breeders dump milk over poorly planned business

In early 2014, Nguyen Thi Thanh Hoa borrowed VND1 billion (US$47,068) in bank loans to invest in a 20-cow farm in the Central Highlands province of Lam Dong, and now does not know what to do with the 150kg of milk they produce every day.

Milking only results in losses, but otherwise the dairy cattle will die, “so I have to save the cows,” the farmer, based in Tu Tra Commune of Don Duong District, lamented.

Tu Tra is a key dairy cattle raising area of Lam Dong, with a herd totaling more than 2,600 cows. However, half of these are raised by farmers who have not contracted any dairy firms to be the permanent buyers of their products.

Nguyen Dinh Tai, another dairy cattle keeper, had to seek buyers for his milk in other districts on his motorbike on a daily basis.

“But each customer only bought a few liters, so sometimes I had to dump the milk,” Tai said.

Some 4.5 tonnes of milk produced daily here are either unable to find buyers, or sold at a dirt cheap price of VND7,000 ($0.33) a kg, according to the Lam Dong agriculture department.

A profitable price for breeders is VND14,000 ($0.66) a kg, if they sell to dairy producers such as Vinamilk, Dalat Milk or FrieslandCampina Vietnam.

But the companies say breeders should have discussed their plans with them before buying the cattle. “Farmers cannot just pass responsibility to us when they cannot find an outlet for their milk,” the dairy firms said.

Elsewhere, in the southern province of Long An, many dairy farmers have also fallen into the same tough spot. Nearly 100 households in Duc Hoa District have started raising dairy cows over the last year, adding 500 cattle to the district’s herd, according to a local animal healthcare official.

There are now around 5,800 dairy cows in Duc Hoa, far exceeding the buying plan of local dairy firms, so farmers have faced challenges in distributing their milk, the official added.

In the meantime, the total dairy cattle herd in Lam Dong has amounted to 14,000 cows.

“In 2014 the number of cows rose 72 percent from a year earlier,” said Nguyen Van Son, deputy director of the provincial agriculture department.

Farmers jumped in to raise cows in the hope of selling milk to major firms, but they “took a reverse approach,” Son said.

“While they were supposed to sign contracts with dairy firms before raising the cows, they did the last thing first,” he elaborated.

Dairy producers also blamed the breeders for their ill-planned business.

“Milk supply currently exceeds the storage capacity of our tanks so we have to prioritize buying from contracted farmers,” said Luu Van Tan, director of the milk development program with FrieslandCampina Vietnam.

Tan added that it takes up to six months for the company to add new milk tanks.

“During this time, we will sign no new contracts with dairy farmers,” he said.

Vuong Ngoc Long, technical director with Vietnam Dairy Cow Co., a Vinamilk subsidiary, said farmers should have contacted the company in advance if they wanted to sign a contract so “we could have time to check their farms for hygiene and quality standards.”

On the other hand, an expert with knowledge of the milk industry said dairy firms are reducing purchases of fresh milk from local farmers as the products, selling at VND13,000-14,000, are up to 50 percent costlier than imported raw material milk.

“Firms will mostly import the material to cut production costs,” he said.

Hanoi cuts new business registration time

Hanoi trimmed the time it takes to start a business to three days as of January 1, 2015.

Prior to the plan taking effect, the city’s Department of Planning and Investment announced that the city would be Vietnam’s first locality to reduce the time it takes to complete procedures for establishing an enterprise from the existing five days to only three days.

All procedures will be conducted at the department’s one-stop door.

Actually, under the new Law on Enterprise recently adopted by the National Assembly late last year, localities are similarly required to reduce the time for starting a business to only three days.

“But the city has taken the initiative in implementing this regulation now. This will help attract more investors as they will find it more convenient to establish enterprises,” said Deputy Minister of Planning and Investment Dang Huy Dong.

“I am sure that the city’s index for competitiveness will remarkably improve thanks to this move. Enterprises are the economy’s backbone and they have the right to enjoy the best business conditions,” he said.

“We highly value the city’s new move which will greatly benefit enterprises, especially amid their increasing difficulties,” said Trinh Thi Ngan, head of the Hanoi Small and Medium-sized Enterprises Association’s Consultancy Board.

“However, the department will need to further clarify procedures and business incentives so that enterprises can more easily complete the procedures,” she suggested.

In 2014 in Hanoi, more than 13,400 enterprises were established, equal to 96.5 per cent of the 2013 figure. The total chartered capital was VND98.43 trillion ($4.7 billion), down 11.4 per cent on-year.

The number of enterprises that went bankrupt in the city was 735, up 1.5 per cent against 2013. More than 2,400 enterprises registered to suspend operations, down 11.5 per cent against 2013. The number of enterprises changing their business type was nearly 32,300, up 28 per cent on-year. Two enterprises had their business licences revoked as they had submitted fake business registration dossiers to the department.

In 2014, the city attracted 418 new foreign invested projects with the total  registered investment capital of nearly $1.4 billion, up 26 per cent on-year and 7.4 per cent compared to the earlier set target of $1.3 billion.

SBV allows foreign currency lending to continue through 2015

The State Bank of Vietnam has just issued a new circular allowing credit institutions to continue offering short-term foreign currency loans to the end of 2015.

Accordingly, credit institutions including foreign bank branches, can continue providing short-term foreign currency loans to petroleum-importing enterprises and export companies in need of capital for their manufacturing and trading of exported commodities through December 31, 2015. This circular has replaced another issued last year that was void on December 31.

In particular, forex-licensed banks can grant foreign currency loans to borrowers with capital needs. Petroleum businesses that require foreign currencies to pay for their imported petroleum or companies that need foreign currencies for the manufacture and trade of commodities used for export can take out short-term loans.

Prior to this circular being issued, some experts stressed that there was no need to restrict or stop foreign currency loans since businesses that meet the terms and conditions for these loans generally make sales in foreign currencies and therefore use this financing to balance their flow of capital and save on costs.

According to SBV’s Deputy Governor Nguyen Thi Hong, to achieve 6.2 per cent GDP growth in 2015 the SBV needs to support the corporate sector by providing plausible solutions. Therefore the SBV has ensured that credit institutions can continue offering short-term foreign currency loans through the end of this year.

The extension will help businesses minimise their borrowing costs since the forex market is considered stable and the foreign currency lending rate is lower than the VND lending rate. Also, it is expected to help banks expand their credit growth in accordance with the SBV’s target.

Outstanding foreign currency loans for the permitted enterprises currently account for nearly 30 per cent of total outstanding foreign currency loans in the banking system. Petroleum enterprises amount to 6 per cent while export businesses make up the other 24 per cent.

As well as these businesses, the new circular also allows borrowing by import firms and businesses that have licensed overseas investment projects.

The circular took effect on January 1 and replaces Circular 29.

E-invoices piloted at 200 businesses

The General Department of Taxation under the Ministry of Finance said it has officially launched a pilot project permitting 200 companies to use electronic invoices in Hanoi and Ho Chi Minh City.

The pilot project will be reviewed by the end of this year before being widely implemented at all businesses.

Businesses are permitted to issue invoices through an ‘online anti-fake invoice system’ of tax agencies and use digital signatures.

The system will attach a string of numbers to each invoice to prevent it from being counterfeited. Businesses will send invoices to their customers online.

E-invoices with high security level help businesses reduce invoice print and storage costs, and tax agencies manage businesses’ revenues and the tax amount that they have to pay a single day.

Small banknotes come with exorbitant fees

The rising demand for small changes to donate to temples or give out as lucky money during Tet has created a boost in unregulated currency exchange services.

The providers often operate near temples or relic sites.

Currency exchange services can be found anywhere along the way from the parking lot to Ba Chua Kho Temple in Bac Ninh Province. Dozens of shops near Huong Pagoda in Hanoi also incorporated this service and raked in high profits.

Money exchange services can also be found on internet with attractive advertisements. The providers even offer free delivery for their customers.

In order to change VND50,000 into VND10,000 notes, customers have to pay VND5,000 in fee. The service fees get higher with smaller value notes. Many providers offer to get 80% of total money worth in exchanging for VND500 banknotes.

"VND200 and VND500 notes are harder to come by because the government has already set a limit for printing new small banknotes. The fees for exchanging these notes will be higher than previous years," said a provider.

Small banknotes are often donated to temples during worship with hope that they will bring luck to benefactors. At Ba Chua Kho Temple, small banknotes can also be used to make flower or tower offerings to the goddess.

In December 2013, the governor of State Bank of Vietnam asked the Ministry of Industry and Trade and Ministry of Public Security to deal with unregulated money exchange issues but the services still boom when Tet comes.  

HCM City supports HOSE to attract more equitized firms

The HCMC Steering Committee for Enterprise Reform and Development on January 5 struck a memorandum of understanding with the Hochiminh Stock Exchange (HOSE) to help the southern bourse attract more enterprises to be equitized in the coming time.

HOSE is targeting equitized State-owned enterprises (SOEs) this year, the final year of equitizing SOEs in the 2014-2015 period in line with a road map approved by the Government.

Last year, the number of firms listed and launching their initial public offerings on HOSE picked up strongly, including large corporations such as Vietnam National Textile and Garment Group (Vinatex).

The VN-Index last year hit a record high since the global financial crisis in 2008 with liquidity almost doubling 2013 and average trading value exceeding VND2.1 billion (US$98.2 million) per session.

The debut of the first exchange-traded fund (ETF) on the Vietnam stock market last year helped diversify products on the market.

Vietnam spends big on animal feed imports

Vietnamese enterprises have spent at last US$3 billion importing animal feed and materials in the January-November period of last year, up 5.86% compared to the same period last year.

The latest figures of the General Department of Customs showed that animal feed and material imports in November alone soared nearly 28% year-on-year to US$243 million.

According to the Ministry of Agriculture and Rural Development, Vietnam imported more than 4.6 million tons of corn and 1.56 million tons of soybean worth a total of over US$2.11 billion last year.

The Ministry of Industry and Trade said local farmers have to buy animal feed products at higher prices than other countries, as materials are mainly imported and subject to some additional costs as a result of strict controls by the customs, veterinary and plant protection agencies.

Animal feed cost accounts for 70% of total value of the local husbandry market (some US$6.96 billion in 2012 and US$7.643 billion in 2013). Despite stable material prices, improved output and a 5% VAT exemption for animal feed, animal feed prices have remained high, making life tough for farmers.

Vietnamese animal feed products cannot compete with those in other regional countries as their prices are always 15-20% higher. Therefore, the industry ministry has called for the Government to take measures to break the monopoly of certain foreign-invested firms which dominate the local husbandry market.

According to the Vietnam Feed Association, there are 239 animal feed factories nationwide, with 59 owned by joint-venture and foreign-invested enterprises and the remainder by local companies.

C.P. Vietnam Corporation currently holds 19.42% animal feed market share, followed by Cargill Vietnam with 8.11% and Vietnamese French Cattle Feed Joint Stock Company (Proconco) with 7.51%.

According to the General Statistics Office (GSO), Vietnam had had 5.24 million cows, 26.8 million pigs and 327.7 million poultry as of October last year, up 1.5%, 2% and 3.2% respectively over the same period of the previous year. Output of tra fish and shrimp reached 3.4 million tons, rising 5.5% year-on-year.

New Year sales at supermarkets fare well

Supermarkets in HCMC have reported strong sales during the New Year holiday when the nation had a four-day holiday.

The rises were credited to stable prices and promotions during the holiday, which ended on Sunday.

Lotte Mart reported a sales increase of 5-15% at its supermarkets on the New Year Day compared to normal days, and welcomed more than 78,000 customers on the first day of the new year, soaring by 35% over the last two days of last year.

Particularly, sales of essential food such as vegetables, meat and fish jumped 15%, dry food 28%, and household items 70% at Lotte Mart stores. Confectionery, beverages, dairy and frozen products, cosmetics and fashion products attracted more buyers.

Ho Quoc Nguyen, public relations director of Big C, said sales at this supermarket chain on the New Year Day doubled normal days and even tripled at its supermarkets in the central and northern regions as large numbers of people returned home for family reunion.

Sales revenues of Maximark stores surged during the four-day holiday. Nguyen Thi Phuong Thao, director of Maximark Cong Hoa Supermarket, said sales doubled last Thursday, especially foods.

Despite increasing demand, supermarkets in HCMC kept their prices unchanged during the holiday and even offered discounts on many products.

The Co.opmart supermarket chain cut prices of thousands of products to attract customers. For example, prices of essential food went down 15%, confectionery and cosmetics 10%, fashion products 25%, and electronic devices and kitchenware around 50%.

Besides gifts, Big C halved prices of more than 1,000 products including foods, household appliances and cosmetics.

Nguyen Thanh Ha, deputy director of Thu Duc Wholesale Market, said the volume of goods transported to the market increased to 3,000-4,000 tons per night on the final days of last year.

Vendors at traditional wet markets in the city reported strong sales, particularly of clothes and fruit.

A vendor identified as Mai at a market in Go Vap District said prices of fruit did not go up though demand rose 20-50% during the holiday.

However, prices of vegetables grown in Dalat City edged up 5-20% at many wet markets in HCMC on the occasion, leading to a decrease in sales.

A vegetable seller at Pham Van Hai Market in Tan Binh District explained that heavy frost had affected vegetable farming in the Central Highlands city, resulting in supplies shrinking.

Skilled Vietnamese can settle in Canada

The Consulate General of Canada in HCMC said Canadian Minister of Citizenship and Immigration Chris Alexander had announced a new immigration system that offers express entry to qualified immigrants, including from Vietnam, for filling jobs for which there are no available Canadian workers.

This program provides swifter entry into Canada, wherein immigrants will be selected based on the skills and attributes that Canada needs. Interested immigrants will have to answer a series of questions about their professional skills, experiences, education and languages spoken, among others.

The system will then match the skills of the prospective immigrants with the requirements of the provinces, the territories and employers. The immigration authorities will offer Express Entry to a prospective immigrant applying via the Federal Skilled Workers Program, Federal Skilled Trades Program, and Canadian Experience Class Program.

Prospective immigrants with the highest scores will be invited to apply for permanent settlement. Such applications will be processed over six months or less from the date of submission.

Minister Alexander was cited in the statement issued by the consulate as saying that the Express Entry program allows Canada to attract skilled workers who have the ability to succeed and contribute to the development of the country.

Those chosen under the Express Entry program can immediately start working in Canada, he said.

Hai Au flies to Phan Thiet

Hai Au Aviation Joint Stock Company has commenced its seaplane service connecting HCMC and Phan Thiet City in the south-central province of Binh Thuan, targeting domestic and international tourists.

Luong Hoai Nam, chief executive officer (CEO) of Hai Au Aviation, told the Daily that the company organized two chartered flights for Russian tourists to travel between HCMC and Phan Thiet City over the weekend, and these were the first commercial flights of the carrier in southern Vietnam.

Hai Au plans an official launch of the HCMC-Phan Thiet service this Saturday and fares for this service will be made available soon after the company completes administrative procedures, he said.

Hai Au is also working on plans to launch HCMC-Can Tho and HCMC-Nha Trang flights later this month.

The company has conducted three daily flights to shuttle tourists between Hanoi and Halong City since September last year. A trip by seaplane from Hanoi to Halong takes around 30 minutes and costs VND5.3 million (US$250) per person.

A seaplane can carry a dozen of passengers at a time and has large windows for passengers on board to view tourist attractions, including the UNESCO-listed World Heritage site of Halong Bay in Quang Ninh Province. The seaplane can land at and take off from normal airports and water surfaces.

Hai Au is the first carrier in Vietnam to offer transport services using seaplanes.

Structural weaknesses still cause for concern

Policymakers and economic experts are still concerned about structural weaknesses faced by the country although major indicators of the economy have improved.

Vuong Dinh Hue, head of the Party Central Committee’s Economic Commission, told the Daily that many local and international assessments of Vietnam’s economy last year were quite consistent, with the macro economy being more stable and better than in 2013.

Hue said inflation was much lower than the level approved by the National Assembly (NA) while economic growth exceeded the target. These were the nation’s remarkable economic achievements last year.

The financial market fared better with savings and lending rates falling, the exchange rate between the U.S. dollar and Vietnam dong fairly stable, foreign reserves rising, and the local stock market becoming one of the world’s top five fast-growing markets.

Hue said economic restructuring moved faster last year. For instance, the reform of State-owned enterprises (SOE) was put on the fast track, especially after the Government issued Resolution 15 allowing capital divestments in line with the market mechanism. SOEs’ divestments from non-core businesses in the January-October period last year were 3.5 times higher than the same period in the previous year.

The efficiency of public investments improved. The Incremental Capital Output Ratio (ICOR) of the economy is forecast to drop from 6.96 in 2006-2010 to 6.5 in 2011-2015. Meanwhile, ICOR in the State corporate sector declined to 7.5 in 2011-2013 from 9.6 in 2006-2010.

However, Hue admitted a host of challenges remained in the economy.

“Though the economic situation is more stable, some macro-economic indicators are not sustainable, especially the State budget,” Hue said.

According to Hue, while only half of the national budget should be for routine expenditures and 15-20% for debt payment, actual routine spending accounted for 68% and a modest proportion went to repaying debts.

High public debt and pressure on budget collections were also big problems.

Hue quoted statistics of the General Department of Taxation as saying that only 30% of the operational enterprises paid corporate income tax as many were still in distress.

Minister of Planning and Investment Bui Quang Vinh said Vietnam had been able to stabilize the macro economy three years after Resolution 11 was issued. But he said if money supply had not been tightened and if there had been more supporting solutions for the business community, the economy and enterprises would have faced fewer difficulties.

“If we had been aware of the impact of bad debt, the consequence would have been less severe,” Vinh told the Daily.

Though gross domestic product growth was higher than targeted last year, some economic experts were concerned about some factors that might affect growth.

Le Dinh An, former head of the National Center for Socioeconomic Information and Forecast Center of the Ministry of Planning and Investment, pointed out higher-than-targeted GDP growth last year was mainly supported by the additional sales of one million tons of crude oil and around 500,000 tons of coal.

An said the country’s economy performed better last year mostly owing to a rescheduling of tax payments, tax reductions and supporting policies for enterprises and the agriculture sector, and foreign direct investments injected by a number of multinationals assembling and outsourcing products in this market.

Rising exports were mainly fueled by outsourced and assembled items and low-cost labor. While labor productivity was lower than other countries in the region and tended to drop, the application of technological and scientific advances to back economic growth was in decline.

“These fundamental problems remain to be solved,” An said.

Nguyen Dinh Cung, director of the Central Institute for Economic Management (CIEM), said the main drivers for economic growth last year were expanding exports and trade surplus, but contributions of the dometic corporate sector to these growth factors remained insignificant.

Cung said domestic enterprises had not got out of difficulties due to limited access to credit, slow settlement of bad debt and banks’ reluctant cuts of loan interest rates.

CIEM warned boosting growth by increasing public investments and loosening credit might cause the same macro-economic troubles as seen in the past.

Backing business and production expansions need to be carried out in line with the restructuring process. Cung predicted 2015 would be a real test for Vietnam’s economy to get back to the high growth path.

Flamboyant apparel sector looks to higher export revenue

The apparel sector, buoyed by its strong export performance last year and the country’s upcoming signing of free trade agreements with other countries, has set an ambitious target of obtaining US$28-28.5 billion in outbound sales this year.

The sector’s 2014 exports amounted to nearly US$24.5 billion, a year-on-year improvement of 16%. Its major markets were the U.S. with a 12.6% rise, Europe with a 16.9% pickup, Japan with an 8.8% increase and South Korea with a 26.6% surge.

The U.S. remained Vietnam’s biggest garments importer with a total bill of US$9.8 billion.

According to the Vietnam National Textile and Garment Group (Vinatex), the industry will continue stepping up shipments to those key markets this year, with exports to the U.S. and Europe forecast to edge up to US$11 billion and US$4 billion respectively.

Last year, Vietnam was the largest clothing exporter to the U.S. with two-digit growth. Meanwhile, apparel shipments to America by China and India grew a slight 1% and 6% respectively.

For the European market, when a free trade agreement (FTA) between Vietnam and the European Union (EU) is signed, the nation’s apparel exports to the EU could significantly pick up, especially jacket, trousers and suits.

Nguyen Dinh Truong, vice chairman of the Vietnam Textile and Apparel Association (VITAS), said at a recent textile and apparel industry exhibition in HCMC that Vietnam’s signing of FTAs with South Korea, the EU, and Eurasian Customs Union, and the Trans-Pacific Partnership (TPP) agreement, probably early this year, could result in the sector doubling its production in the next 10 years.

However, those deals will require local firms to quickly integrate and make good preparations such as improving product quality; otherwise, they may be left behind, he said, suggesting the industry should increase output, product quality, production and price competitiveness.

Foreign investors have been scaling up investments in the domestic textile and apparel sector since early last year in anticipation of grasping the business opportunities which the FTAs will certainly bring. Most of them are from China, Hong Kong, Taiwan, Japan, the U.S. and South Korea.

Unlisted SOEs must trade on UPCoM

State-owned enterprises (SOEs) must trade in the unlisted public companies market (UPCoM) within 90 days of an initial public offering (IPO) and before official listing, the Ministry of Finance said.

The Ministry of Finance's Circular 01/2015 / TT-BTC issued on January 5 has laid down regulations for unlisted securities operating in the local stock market.

The circular, which will become effective on March 1, 2015, replaces the ministry's earlier decision No 108 in 2008.

In this circular, the Ministry has specified that before listing on the two bourses of HCM and the Ha Noi stock exchange, SOEs, who have issued an IPO before November 1, 2014, must trade in the UPCoM within a year, while SOEs with IPOs issued after that date can make transactions in UPCoM within 90 days after getting the enterprise licences.

The circular added that other public companies, which had issued an IPO before July 1, 2011, but have not yet listed on the local bourses, must also trade in the UPCoM within a year.

Also, delisted companies must trade in the UPCoM within 30 days before relisting.

According to vov.vn, the Government of Viet Nam plans to equitize 532 SOEs during 2014 to 2015.

By the end of 2014, two giant SOEs—the Vietnam National Textile and Garment Group and Vietnam Airlines had issued their IPOs.

Tien Giang targets $1.6b in export turnover

The Cuu Long (Mekong) Delta province of Tien Giang aimed to earn US$1.6 billion from exports in 2015, a year-on-year increase of 8.1 per cent, local authorities said.

The province is also aiming for an average annual export growth of 23 per cent for the 2011 to 2015 period, surpassing the already set target by 5 to 7 per cent.

To realise this goal, Tien Giang will continue luring investment to industrial parks and clusters, as well as help investors address difficulties and complete procedures for the scheduled implementation of their projects.

It also plans to encourage businesses to diversify their exports and adopt measures to improve product quality and competitiveness, while providing them with updated information on export markets.

Last year, the province's export value hit a record $1.48 billion, exceeding the set target by 26.5 per cent and recording a 23.8 per cent jump against 2013. Major exports were for garments, processed seafood and plastic products.

SBV to get rid of old banknotes

To improve the quality of banknotes and reduce pressure on storage vaults, the State Bank of Viet Nam will expedite the elimination of substandard banknotes out of circulation in 2015.

The Deputy Governor of the central bank, Dao Minh Tu, said during a meeting on Tuesday that the volume of banknotes due to be destroyed in 2015 for not meeting standards for circulation will be 2.5 times higher than that of last year.

This reflects the central bank's efforts to enhance the quality of banknotes in circulation in response to complaints about the quality of polymer banknotes.

Tu said the supervision for destroying poor-quality banknotes needs to be tightened to meet the goal.

The central bank had earlier reported that the goal for last year had been fulfilled and the safety of the State property ensured.

According to Circular 02/2014/TT-NHNN, which regulates the destruction of damaged banknotes, the process must ensure the absolute safety of the State property. After destruction, damaged banknotes must be turned into waste that cannot be recovered.

The damaged banknotes must be counted carefully before they are destroyed.

Garment makers import more materials

Viet Nam spent US$15.8 billion last year to import materials for the garments and textiles sector, posting a 16 per cent year-on-year increase.

Data from the Ministry of Industry and Trade showed that the imported materials include cotton, fibre and fabrics. Of these, cotton imports were pegged at 743,000 tonnes, increasing 28 per cent over 2013, with a total value of $1.4 billion. Imported cotton prices last year were $1.95 per kilogram, 3 per cent lower in comparison with the previous year.

The imports of fibre amounted to $1.6 billion for 745,000 tonnes, representing 7 per cent and 3 per cent year-on-year increases in terms of quantity and value for 2014 and 2013, respectively.

The country also spent $9.5 billion on fabrics, while the imports of other materials touched $4.7 billion, increasing 25 per cent over 2013.

However, the Viet Nam Textile and Apparel Association (VITAS) said the import growth rate was lower than export growth despite the high import value.

Last year, the country earned $24.5 billion from exports of garments and textiles to foreign markets, posting a 19 per cent year-on-year rise.

Of these, garment and textile exports to the United States touched $9.8 billion; to Japan, $2.7 billion; and to South Korea, $2 billion.

VITAS said Viet Nam's garment and textile sector will see favourable conditions due to the effects of the existing Free Trade Agreement (FTA).

The industry this year has targeted an export turnover of $28 billion to $28.5 billion, increasing $4 billion to $4.5 billion over the last year. The United States is a promising market with a turnover of more than $10 billion.

The Viet Nam National Textile and Garment Group (Vinatex) claimed it expects to produce 55 per cent of the material for garments and textile products by 2017.

Vinatex has invested VND9 trillion (US$.... ) in fabric production in several industrial parks with high productivity.

This is considered one of the strengths of the sector that will help it tap into opportunities from upcoming FTAs as the pacts pay much attention to the origin of fibre and fabrics.

In addition, the increasing localisation rate will also follow the strategy of improving the value and position of the domestic sector in the global supply chain.

ODA programme fosters creative innovation

The second phase of the Finland-Vietnam Innovation Partnership Programme (IPP) was introduced to interested Vietnamese organisations, individuals and teams at a workshop in Ha Noi yesterday.

IPP, which is an official development assistance (ODA) programme financed jointly by governments of Viet Nam and Finland, entered its second phase in 2014 and will conclude in 2018.

Speaking at the workshop, IPP project director Tran Quoc Thang said Viet Nam can achieve sustainable development through not only infrastructure improvement and poverty elimination but also by building creative innovation systems.

"Technological innovation is crucial for development. Finland is the first country to offer an ODA to Viet Nam to develop national creative innovation," he said. "During the second phase, the programme will support the boosting of innovative activities at enterprises and help them achieve sustainable development to make contributions to national socio-economic growth."

IPP also assists projects for new innovative growth at companies targeting international markets and at consortia that develop the local innovation system.

Riku Makela, IPP's senior innovation advisor, said organisations hoping to receive funds from IPP must have a clear plan about what they will do with the support and the activities for which the funds will be used.

"Innovations supported by IPP must meet the following criteria: They have to be novel and innovative. The innovations must be scalable solutions with long-term operations," he said, adding that their products should target international markets.

Makela also expressed his strong belief that some companies participating in the program can conquer international markets, become billion-dollar firms and support others.

He took the achievement of Finnish company Rovio, famous for its Angry Birds game, as an example. He said Rovio had followed a certain process to achieve success, which consisted of defining the needs of customers and stakeholders, finding solutions, imparting benefits, and having direct/indirect competition, as well as possessing adequate human and financial resources.

Rovio created the game in 2009 when it realised that there were no games available for families to play on mobile phones. During 2009 to 2010, it decided to become a global brand after achieving a million downloads of its game on mobile phones. The company has awarded licences for various companies to use the Angry Birds image and has earned considerable profits from it.

Similar workshops will be organised in HCM City on January 9, in Can Tho on January 12 and in Da Nang on January 14.

The funding calls will open in spring 2015, and the first funding decision will be made by the summer. The winners will be carefully selected from proposals, based on a market need assessment and the firm's capacity to implement the new innovation.

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