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BUSINESS IN BRIEF JULY 17

Brighter economic outlook accelerates car sales in H1; HOSE sees busy year for securities trading; Investors lack clear regulations; Forex rate tumbles after State Bank announcement; Viet Nam, Argentina sign MoU; FPT buys 123mua.vn from VNG

Minister visits firms hit by anti-China riots

Minister of Planning and Investment Bui Quang Vinh yesterday visited foreign companies affected during the anti-China riots in mid-May in Binh Duong Province.

He was accompanied by local leaders to the Viet Nam-Singapore Industrial Park in Thuan An township.

Le Thanh Cung, chairman of the Binh Duong People's Committee, told Vinh that the province had acted on the Government's instructions and provided compensation and support to firms that suffered losses.

It has so far announced recompense worth VND286 billion (US$13.6 million) for 37 enterprises and support policies in a first phase.

The amount would be deducted from land rental, cost of services, income and import taxes, and others, and procedures are being completed to compensate the remaining companies and would be announced next month, he said.

Thanks to the prompt assistance, the affected firms have resumed operations, he said.

Vinh praised the prompt action and also approved a proposal related to paying salaries to workers for May 12-25 when many factories remained closed.

Kent Teh, general director of Hongkong-owned Esquel Corporation, which produces T-shirts at the Viet Nam-Singapore Industrial Park and has been in Viet Nam for 14 years, told the minister that during the riots some of the company's workers tried to protect the factory.

Production returned to normal a week later, he said, adding that last month 100 more workers had been hired to meet orders.

South Korean-owned Sewoon Medical Vina yesterday began production at the Viet Nam-Singapore Industrial Park.

The $7 million project was disbursed for constructing the factory for producing medical equipment one year since after investment license was granted.

Cung said the province encourages investment in projects using advanced technologies and in the knowledge sector and supporting industries and those that are environmentally friendly.

Binh Duong was the top province in terms of foreign direct investment in the first half, attracting over $1 billion.

This is expected to rise sharply in the second half. 

Brighter economic outlook accelerates car sales in H1

Low interest rates and a brighter economic outlook in Viet Nam sent new-vehicle sales soaring in the first half of the year.

This allayed worries of a market slowdown and set the industry up for a strong second half.

Sales in the first six months of 2014 rose 27 per cent over the same period last year to 54,986 units, according to the Viet Nam Automobile Manufacturers Association (VAMA).

Of the figure, cars were up 36 per cent and trucks up 24 per cent.

The association, which comprises country's 21 leading auto makers, said in its monthly report yesterday that this was the 15th consecutive month that sales had been higher.

VAMA's chairman Jesus Arias said with this momentum, the full year total industry forecast for 2014 was adjusted up to 130,000 units, a 18 per cent growth from 2013.

Nguyen Van Dung, general director of Northern Automobile Corporation, a prominent auto dealer in Viet Nam, said incoming indicators were consistent with a rebound in the economy.

"We've seen good improvement in manufacturing activity. Consumer sentiment has been good, and incomes are gaining ground." he added.

Viet Nam's economy has been stable for the first half of the year with a GDP growth rate of 5.18 per cent and inflation at 1.38 per cent against December last year – the lowest rise in the past 13 years.

In addition, the latest forecast from the World Bank shows that Viet Nam's economic growth will be around 5.5 per cent this year, better than expected. Of the VAMA's list, Vietnamese manufacturer Truong Hai Auto Corp, which assembles trucks, buses and sedans, extends its leading position, which it gained from Toyota in May.

The company, based in the central province of Quang Nam, sold 17,851 vehicles in the first half, registering a year-on-year increase of 40 per cent. Japanese invested Toyota ranked second with 16,653 units sold, up 12 per cent, followed by Ford with 5,264 units, up 54 per cent.

Meanwhile, the country imported 25,000 completely built units (CBU) cars worth US$500 million in the first half, an increase of 44.4 per cent in volume and 53.9 per cent in value year-on-year. About 25 per cent of the imports were luxury sedans and sports utility vehicles (SUV), according to the Customs Office.

HOSE sees busy year for securities trading

HCM City Stock Exchange expects securities trading to thrive till this year-end, riding on initial public offerings by State-owned enterprises and the operation of the first domestic exchange-traded fund.

According to Tran Anh Dao, the bourse's Deputy Director, Viet Nam National Textile and Garment Group (Vinatex) and Viet Nam Vegetable Oils Industry Corporation (Vocarimex) would implement IPOs this month. These were expected to attract the attention of both foreign and local investors.

The first domestic exchange-traded fund ( VietFund Management VN30 ETF) , which recently received the licence for its IPO, would also help boost the market liquidity, she said.

The bourse statistics showed that the total market capitalisation on the southern bourse reached (US$46.9 billion) as of the end of the second quarter, 2.2 per cent lower than the end of the first quarter, but up 21 per cent over the end of last year.

Notably, the second quarter saw foreign investment in the HCM Stock Exchange increase from not only the first quarter but also last year's same period.

Between April and June they bought securities worth more than VND16.3 trillion (US$777.6 million) and sold VND11.2 trillion worth for net purchases of VND5.1 trillion.

This compared to VND15.9 trillion and nearly VND15 trillion in the first quarter, and 10.8 trillion and VND11 trillion a year earlier.

Their trading represented 22 per cent of the transactions on the exchange.

SSI, HSC, and ACBS were the top brokerages, accounting for 13.22, 13.13, and 6.23 per cent of the market.

According to VietstockFinance, with expectations of a recovery in the realty market, stocks of property sectors were the most heavily traded on the southern bourse in the first half of the year. FLC Group (FLC), Tan Tao Group (ITA) and Hoang Quan Corporation (HQC) were the top three with respectively 8.4 million shares, 8.1 million shares and 4.1 million shares averagely traded per session.

Investors lack clear regulations

The lack of clear and specific regulations on incentives offered for agricultural investment is the biggest stumbling block for foreign investors hoping to enter the industry.

Managing director of major US-based investment consultant BowerGroupAsia Inc, Nguyen Viet Ha, was quoted by Dau tu (Investment Review) as saying that the number of US investors in the Vietnamese agricultural sector is now negligible, though many US companies wanted to implement agricultural projects in Viet Nam.

Currently, only animal feed maker Cargill and Monsanto are operating in Viet Nam's agricultural sector.

Ha believed that policy impediments stopped investors from entering the market.

Foreign agricultural projects have theoretically got big incentives like exemptions or reductions in corporate income tax, import taxes, land rental and many other priorities, but there are no clear and specific regulations on how to apply these incentives. Most of these regulations are still on paper.

Though land incentives have been prescribed for foreign agricultural projects, many projects with regard to planting of forests and sugarcane have only found small areas of land compared with big areas licensed in their investment certificates, she said.

Credit policies for foreign agricultural projects have also become impractical because there is a belief that foreign investors do not need the credit support; or due to complicated and unclear procedures. Previously, US food and agricultural companies, including famous brand names like ACX Pacific Northwest, Case New Holland, Commercial Lynks and ConAgra Foods came to Viet Nam to explore business opportunities.

Others who came here were Dantzler, Dragonberry Produce, Intervision Foods and John Deere along with Novick Industries, PTC International, TRC Trading Corporation, and Verdant Ocean. Wilbur Packing Company, Zafi Beverages and Agriculture Technologies were among a host of firms that showed up, but almost no investment deals were reported after the visit.

Experts hoped that the Trans-Pacific Partnership would open a new opportunity not only for agricultural exports and imports between Viet Nam and the US, but also for US investment in Viet Nam's agricultural industry.

However, they said, a lot depends on specific regulations that Viet Nam will apply and its measures to overcome impediments against foreign direct investment in agriculture.

Forex rate tumbles after State Bank announcement

The US dollar prices in commercial banks fell sharply yesterday after the State Bank of Viet Nam announced that the domestic currency market was still stable.

Accordingly, most of the commercial banks rated down their prices of the US dollar. The buying price of the dollar fell by VND70 and the selling price by VND90 in the local market.

In the morning session, the commercial banks of Vietcombank, BIDV and VietinBank ACB listed their dollar buying rate at VND21,160 and VND 21,185, and the selling rate between VND21,250 and VND21,230.

On the same day, SBV kept the US dollar's exchange rate at VND21,246, unchanged from its new rate since June 19. The central bank also set the ceiling price for a dollar at VND21,458.5, which commercial banks were allowed to apply as an effective exchange rate, +-1 per cent.

In the flea market, the US dollar's buying and selling rates were VND21,230 and VND21,260 respectively.

Two days ago, the central bank released the preliminary report on the currency market in the first six months. The report said that after the new rate was applied on June 19, the forex rate has stabilised and the market liquidity has been stable. The report also said that credit rose by 3.52 per cent, while the forex reserves hit a record US$35 billion.

It also said that dollarisation continued to decline. By the end of June 2014, the rate of foreign currency deposits to total means of payment was only about 11.4 per cent, down from about 12.4 per cent at the end of 2012-2013.

Viet Nam, Argentina sign MoU

A memorandum of understanding (MoU) signed with Argentina on agro-fisheries export will open up business opportunities for Vietnamese seafood processors, according to NAFIQAD.

Under the MoU, signed by the National Agro-Forestry-Fisheries Quality Assurance Department of Viet Nam (NAFIQAD) and the National Service of Agricultural Food Health and Quality of Argentina (SENASA), 204 Vietnamese seafood products would be exported to Argentina. The number of seafood firms exporting products to that country would be increased as SENASA would review the agreement in the future.

The MoU also stipulates that each shipment of Vietnamese seafood to Argentina must have a NAFIQAD certificate.

The Viet Nam Association of Seafood Exporters and Processors (VASEP) said that the new export market would help seafood businesses maintain production and boost exports in the context of decreasing exports to the EU and the US.

Viet Nam Customs' statistics showed that Viet Nam's earnings from exports to Argentina reached nearly US$64.5 million in the first five months of the year, with the main products being rubber, garments, footwear, garment and footwear materials, and ceramics.

Meanwhile, Viet Nam imported mainly animal food, corn and soya beans worth more than $399 million. In South America, Vietnamese seafood has penetrated the Brazilian market, with tra fish being the main export. Its five-month seafood export value was more than $52 million, trailing behind mobile handsets and components.

VN steps up footwear exports due to preferential tax

Viet Nam earned US$4.8 billion from exporting footwear in the first half of this year, a year-on-year increase of 21.9 per cent.

Exports attributed the increase to the Generalised System of Preferences (GSP) tax, offered by the European Union to Vietnamese exporters since January.

Earnings from footwear exports to the traditional markets of the US, Japan, Belgium and Germany soared during the reviewed period, while those from a number of other markets such as Chile, Greece and Poland also surged drastically. Along with new business opportunities, this increase is expected to help the sector reach its export turnover target of about $11 billion in 2014.

Four FDI factories licensed in Hai Duong industrial zones

The industrial management board in Hai Duong granted investment licenses to four FDI businesses yesterday to build factories in the city's industrial zones.

Believe Zone Limited Company, a joint venture between Viet Nam and Korea, will cover an area of 2,535 sq.m.

Korean-invested SD GLOBAL Vietnam Limited Company, with investment capital of $20 million, will cover 30,000 sq.m in Dai An IZ. Another Korean-invested company, DUSCO VINA Company in Nam Sach industrial zone, has total investment capital of $5 million and an area of 13,211sq.m.

CHANGHONG Vietnam Limited Company, funded by the Republic of Seychelles with a total investment of $15 million, will cover an area of 21,700sq.m in Tan Truong IZ.

Much remains to be done to better FDI quality

Much remains to be done to attract quality foreign direct investment (FDI), and State agencies will do their best to facilitate FDI firms’ operation and bolster their confidence in Vietnam, Director of the Foreign Investment Agency Do Nhat Hoang said.

The agency reported that registered FDI in the country approximated 6.6 billion USD in the first half of 2014, representing 64.7 percent of the same period last year’s figure. The implemented FDI rose by 0.9 percent annually to 5.75 billion USD.

Dang Xuan Quang, Deputy Director of the Foreign Investment Agency, said existing incentives have failed to pull the FDI flow along desired directions. He noted that the flow still focused on certain localities and little went to remote and rural areas which are in urgent need of investment to improve local socio-economic situation.

On the other hand, real estate has attracted a great amount of FDI even though no incentive is offered for the sector, while important sectors such as agriculture have not interested foreign investors despite numerous impetus.

Chairman of the Vietnam Association of FDI Enterprises Nguyen Mai said it is vital to change investment promotion methods, of which publicising the necessary information for investors via the Internet is an effective way.

At the same time, the process of FDI project verification needs to be streamlined so that investors can quickly begin their projects, he added.

Selecting the right projects and investors is decisive to the success of FDI attraction, economist Le Dang Doanh said, noting that authorities should not make commitments when they haven’t known thoroughly investors’ intention and potential.

He stressed that instead of offering too many incentives, localities need to work harder to improve their investment climate, infrastructure and manpower quality to draw FDI.

Brian Portelli, an expert from the United Nations Industrial Development Organisation, said financial incentives can play an important role in FDI attraction, but they should not be crucial elements, but supplementary ones.

Reports by the General Statistics Office said as of the end of December 2013, there were 9,093 FDI businesses in Vietnam, 83 percent of which completely owned by foreigners.

FDI enterprises accounted for 45.4 percent of total profit and 30.5 percent of contribution to the State budget of all enterprises in Vietnam.

Pham Dinh Thuy, Director of the office’s Industrial Statistics Department, said this year 31.7 percent of FDI firms plan to increase their capital, 79 percent expect higher revenues, and 81.1 percent hope to gain better yields compared to 2013.-

Trade promotion programme focuses on agricultural exports

The national trade promotion programme would priotise the search for new markets for agricultural products in the coming time, Director of the Vietnam Trade Promotion Agency Bui Huy Son was quoted by the Vietnam Economic News as saying.

The national trade promotion programme has effectively implemented tasks to promote exports, improve production capacity of the business community and organise trade promotion activities, supporting enterprises to consolidate their positions in key markets as well as explore potential markets.

Thanks to the support from the national trade promotion programme, Many Vietnamese products are now available in many markets, especially traditional markets like the US, EU, Japan and China. In addition, the programme has actively supported exporters to return to traditional markets such as Russia and the former Eastern European countries, expand and consolidate their positions in Laos and Cambodia and develop new markets such as Myanmar, Latin America and Africa.

In addition to positive results in terms of market expansion, the national trade promotion programme has also contributed to help enterprises and localities attract investment, renovate technology and restructure production.

The national trade promotion programme has made positive contributions to export-import activities between 2003 and2013. During the period, average export turnover growth reached 23.6 percent per year while its figure in the 2006-2010 and 2011-2013 period reached 18.3 percent and 22.61 percent per year, respectively.

In 2013, Vietnam’s export turnover totaled 132.13 billion USD, recording a trade surplus in the two consecutive years. In 2014, export turnover is expected to reach 147 billion USD and growth would stand at 10 percent compared to 2013.

In recent times, the Ministry of Industry and Trade has paid special attention to trade promotion activities for agriculture, forestry and fisheries products and focused on promoting agricultural exports to major markets. It can be affirmed that agriculture, forestry and fisheries products have been a top priority of the Ministry of Industry and Trade in the national trade promotion programme.

In 2013, in terms of agriculture, forestry and fisheries, 23 trade promotion projects in the national trade promotion programme were approved with a total budget of 28.07 billion VND, accounting for 28.64 percent of the programme’s total budget.

According to exporters, the national trade promotion programme has contributed to promoting exports to key markets such as the US, EU, Japan, China and some Eastern European countries.

As many as 19 trade promotion projects in the national trade promotion programme for agriculture, forestry and fisheries continued to be approved in 2014 with a total budget of 25.64 billion VND, accounting for 36.6 percent of the programme’s total budget.

In the first five months of this year, units successfully implemented many projects such as participating in seafood exhibition in North America, the global seafood fair, the international fair on food and beverage (Foodex Japan 2014), the international tea fair in Dubai and the International Food Industry Exhibition Seoul 2014.

Through these exhibitions and fairs, businesses signed contracts worth tens of millions of dollars, contributing to increase export growth and diversifying and expanding export markets.

Mekong Delta’s economic growth reaches 8.5-9 percent

The Mekong Delta’s Gross Domestic Product totaled VND237 trillion (US$11.14 billion) and economic growth was estimated at 8.5-9 percent in the first six months this year, said the Steering Committee for the Southwestern Region in Can Tho City on July 9.

The economic growth rate was equivalent to that in the same period last year. Budget revenue hit VND19,388 billion (US$911.25 million), accounting for 50 percent of the year estimates.

Deputy Prime Minister Vu Van Ninh, head of the committee, said that Mekong Delta provinces have striven to implement the State and Party policies to maintain economic development and ensure social welfare.

Mekong Delta provinces should focus on restructuring agricultural restructure, broadening the market, building sustainable modals of production connectivity and intensifying science and technology application, he said.

The Government has instructed agencies to look for domestic material sources and improve product quality to expand their export markets, he added.

Sabeco targets two-stage share sell-off and courts strategic partner

The Ministry of Industry and Trade has just submitted a detailed plan to the government for the selling off of part of the state’s stake in Vietnam’s leading beer maker Sabeco to a strategic investor in 2014-2015.

Sabeco shares allured many investors in anticipation of the firm and the beer industry’s good prospects

Two blocks of shares will be sold, with the first to reduce the state’s position in the firm from 89.59 per cent to 65 per cent, and then later down to 40 per cent, according to a ministry official.

The first sell-off will see a 20 per cent stake of the company, or 128,257,000 shares, sold to Sabeco’s strategic partner, which has yet to be named but is familiar with Sabeco’s stockholders. Around 5 per cent will be sold to the public, raising some VND2.2 trillion ($104.76 million) for the government.

Sabeco started focusing on attracting and selecting strategic partners in early 2008, when it convened a general shareholder meeting to commence operations under a joint stock model. In late 2012, three leading foreign brewers, including Heineken, Asahi, and SAB Miller, as well as two other finance and securities firms expressed interest in investing in the company. But so far Sabeco has only floated its shares on the Unlisted Public Company Market (UPCoM) and has not yet announced an agreement on any specific strategic partner.

Under the law, if Sabeco wants to list shares on the Ho Chi Minh City or Hanoi bourses, it will need a strategic partner holding at least a 20 per cent stake.

At present, the Ministry of Industry and Trade (MoIT) has the power to exercise authority over the state’s 89.54 per cent ownership in the corporation.

According to the MoIT’s Vietnam Beer Development Plan 2013, Sabeco is leading in Vietnam’s beer market with 44.59 per cent market share. Global brands such as Heineken, Tiger and Larue only account for 22 per cent.

In terms of its competition with Heineken, Sabeco has a greater production capacity and has nearly double the sales.

Asahi and SAB Miller are also overshadowed by Sabeco. While the formers focus primarily on Hanoi and Ho Chi Minh City, Sabeco has a nationwide distribution system. Sabeco has also invested into having the most modern breweries in the country.

Despite global brand awareness, international firms are struggling to compete with Sabeco, and if they join the firm as a strategic partner, given the direct competition between their respective products, there would undoubtedly be conflicts of interest.

In its first January 2008 auction, Sabeco successfully raked in VND70,003 (about $3.29) per share. If a 20 per cent stake is sold, the minimum unit price is likely to be around this number, which would earn the beer giant VND8.97 trillion ($427 million).

This year Sabeco is targeting a sales volume of 1.33 billion litres, an increase of 1 per cent against 2013 with total turnover of VND29.44 trillion ($1.38 billion), up 3 per cent on-year. It forecasted before-tax profits of VND3.67 trillion ($170 million), up 3 per cent on-year.

According to Sabeco’s quarterly report, the company’s first quarter after-tax profits reached VND586.49 billion ($30 million), a drop against the same period last year.

Stringent tax inspections help spur State budget income

More stringent inspections at enterprises conducted by taxation and customs agencies in the year’s first half have helped recover trillions of Vietnam dong for the State coffer, said the Ministry of Finance.

Nearly 21,000 enterprises were probed in the first six months of the year, an increase of over 64% against the year-earlier period, and such an activity helped the taxman collect an additional VND4 trillion, the ministry said in a report reviewing tax collections in the year’s first half.

Tax agencies had also reviewed and settled tax arrears totaling over VND17 trillion as of the end of 2013 that were carried over to 2014, making up 29% of the total tax debt.

Along with tax authorities, customs agencies also tightened their grip over import-export activities, reviewing 1.3 million customs declarations, inspecting 610,000 declaration documents, and inspecting the cargos stated in 237,000 declarations. Such efforts helped this agency uncover and handle more than 8,900 violation cases with a combined value of VND146 billion worth of goods.

Such inspections by both the tax and customs departments – two key arms of the Ministry of Finance – are meant to tighten tax management, recover tax arrears and timely make up for the State Budget deficit.

Thanks to strict inspections, the State budget overcame its hardest time, even at the peak in the end of 2013. The State budget revenue in the first six months of this year reached approximately VND413.6 trillion, achieving 52.8% of the estimate and rising 15.8% compared to the same period in 2013.

The Ministry of Finance noted that the positive results come from the drastic measures of the tax and customs authorities battling tax evasion.

Spending from the State budget in the first six months of 2014 is estimated at VND492.4 trillion, making up 48.9% of the estimate and rising 8.8% year on year.

The overspending in the first six months is estimated at VND78.8 trillion, 35.2% of the level endorsed by the National Assembly for the whole year. The overspending is being financed by domestic and foreign borrowings as planned.   

As of the end of June, the Government had mobilized VND196.5 trillion through G-bonds, equivalent to 62.3% of the whole year’s target.

AGPPS cuts deal with R&D center for organic agriculture

A strategic cooperation agreement was clinched on Tuesday between An Giang Plant Protection JSC (AGPPS) and Plant Protection Research Institute with an aim to develop solutions for producing organic products.

According to the cooperation, the research and development (R&D) institute will make studies to create biological products for use in agriculture and transfer them to AGPPS for mass production.

Both parties also pledged to cooperate in creating new products based on AGPPS’ orders.

Huynh Van Thon, general director of AGPPS, said 78% of the farmers have demand for biological products in agriculture, citing a survey conducted by the company in the Mekong Delta and other southern provinces.

Thon stressed that his company would strengthen cooperation with universities, institutes and foreign partners for developing organic products, minimizing pollution and ensuring food safety.

Last Tuesday, AGPPS opened the first phase of the center for bio-products research and development in An Giang’s Chau Thanh District. Thanh said this center would serve as a bridge linking his company and other research centers.

In the first phase, the center covers an area of 3,800 square meters, which will be expanded to 5,700 square meters in the next phase.

Online FMCG retail takes fast-track move

The online Fast-Moving Consumer Goods (FMCG) retail is accelerating in many countries including Vietnam, so local traders should catch up with this trend, or else they will be put at a disadvantage, said the market researcher Kantar Worldpanel.

In Vietnam, the online FMCG market is still in its infancy with only 2% of urban households going for online shopping, making up a mere 0.1% of the total FMCG consumption last year. However, it is predicted to develop quickly in coming years because the young generation has a growing tendency towards online shopping facilitated by the 63% Internet penetration rate of urban households in Vietnam.

A survey conducted among 100,000 Vietnamese households shows the average frequency of online FMCG buying in each family was two times in 2013. In addition, the online shopping cart is three times higher than that in other traditional shopping channels.

According to Stéphane Roger, Global Shopper and Retail Director at Kantar, selling products on online stores will help boost revenue rather than reducing consumption in retail stores.

As reported, businesses are afraid that online stores will affect the income of other channels and the customers will be less faithful. However, the survey proved the reality is definitely against their worries.  

Roger announced on Tuesday the growth of online FMCG market is impressive in many countries although it only takes a small segment in the total market value. The Asian FMCG market is predicted to post the highest growth.

At present, Korea is taking the lead with 55% of households purchasing FMCG products online.

Kantar forecasts online shopping will generate US$53 billion for the global FMCG market by 2016, rising 47% compared to US$36 billion currently, and contribute 5.2% to the global FMCG revenue.

The growth in online FMCG market opens up opportunities for businesses because most online buyers who have high and median income prefer branded products. The sharp-witted brand names and retailers who take the advantage to expand their target market will beat the others, said Roger.

FPT buys 123mua.vn from VNG

Sen Do Company, a member of FPT Group, on July 9 officially took over the trading floor 123mua.vn of VNG Corporation.

Sen Do Company, which is operating the online trading floor sendo.vn, after taking control of 123mua.vn will continue to implement all contracts that the trading floor had signed with partners before.

A source said the deal includes the network management system and the database of customers, but it is not clear whether the human resource is transferred or not.

Tran Hai Linh, general director of the e-commerce floor sendo.vn, said the deal is part of the development strategy of sendo.vn.

This e-commerce website will provide new services for its customers, such as goods delivery, payment by cash and online transactions through the FPT’s system.

Sen Do JSC, an offshoot of FPT Online Company, was established on May 13 2014 with the legal representative being chairman Nguyen Dac Viet Dung, former general director of FPT Online Company.

The e-commerce floor 123mua.vn has around six million visitors and 2,500 new stalls registered a month. It has 80,000 products on sale, mainly technology and fashion items for young people.

PetroVietnam welcomes new leader

The Vietnam National Oil and Gas Group (PetroVietnam - PVN) on July 15 announced the Prime Minister’s decision to appoint Nguyen Xuan Son Chairman of the group’s Board of members.

Addressing the ceremony, Deputy PM Hoang Trung Hai expressed hope that Son will work closely together with the group’s leadership to develop PVN into a powerful, highly competitive economic group in the world.

He asked PVN’s leadership and staff to focus on technological and human resource research and development to surmount difficulties and seize opportunities to move the company forward.

PVN Chairman Son vowed to work hard to develop the company steadily. He said PVN’s primary tasks are to tackle pending issues in a number of its affiliates, speed up economic restructuring, and concentrate on energy development projects.

Born in Ha Tinh province in 1962, Son graduated from the US University of South Carolina, majoring in business administration. He has worked for the oil and gas sector for almost 30 years.

Tokyo firms seek cooperation opportunities in Ha Nam

A delegation of business community leaders from Tokyo has made a fact-finding tour of Ha Nam to seek investment opportunities in the province.

At a July 15 working session, Mai Tien Dung, chairman of the provincial People’s Committee, briefed the Japanese guests on investment policies and incentives, underscoring the point the province strictly adheres to commitments it makes to foreign investors.

“Most especially the province will do its utmost to ensure security and safety of foreign investors and their projects,” Dung said.

A representative from the Tokyo Chamber of Commerce and Industry (TCCI) Koyama Kduji said Southeast Asia in general and Vietnam in particular is the premiere investment choice for Japanese firms.

All eight participating business leaders conveyed strong desires to cooperate with their Vietnamese counterparts, including those in Ha Nam province, Koyama revealed.

A representative from Tokyo Braze Company specialising in welding said his company is desirous of opening a production branch in Vietnam and transferring welding advanced technologies to Vietnamese partners.

Another representative from Tokyo Byora Company which trades different kinds of screws and metal fasteners hoped to locate a partner in Ha Nam to transfer production technology.

Cooperation will benefit both sides as Ha Nam can produce different kinds of screws and fasteners for many businesses, the representative said.

Last but not least, Yasahiite Company which supplies nurses to take care of the elderly said the company needs to recruit around 6,000-10,000 nurses each year.

To date it has only employed a few Vietnamese nurses but wants to employ more in the future. During this trip to Ha Nam, the company visited Ha Nam Medical College to discuss measures for strengthening training cooperation.

Textile investors keen on Vietnamese market

Garment and textile projects attracted 70.62% of all domestic and foreign investment capital in HCM City’s export processing zones (EPZ) and industrial zones (IZ) during the first six months of the year.

According to the Ho Chi Minh City Export Processing and Industrial Zones Authority (Hepza), advanced textiles cumulatively surpassed the US$200 million mark, accounting for 82.44% of all total foreign direct investment (FDI) in its EPZs and IZs.

Tran Viet Ha, head of Hepza's Investment Department, said that foreign investors are implementing large investment projects in the textile and garment sector in the city’s industrial and processing zones at an ever increasingly faster pace.

The surge in international investment in these zones is largely attributable to textile processors’ anticipation of Vietnam fully opening the market in line with World Trade Organisation commitments and the signing of the Trans-Pacific Partnership (TPP) in 2015, Ha said.

The projects include a US$140 million facility producing high-end garments by Worldon Vietnam Co., Ltd. and a US$50 million factory producing high quality textiles of Sheico Vietnam Co., Ltd.

Ha added that in the coming time, there will be more textile investment facilities taking shape in HCM City’s new industrial zones such as Southeast Cu Chi and Northwest Cu Chi.

With the aim of expanding investment and channelling it into support and hi-tech industries, Hepza will also continue to accelerate the establishment of specialized industrial zones in Vinh Loc, Tan Tao, and Tan Thuan.

Ho Xuan Lam, office manager of Hepza noted that the authority has on the agenda plans to launch a Japan-Vietnam support industry forum aimed at enticing Japanese small and medium enterprises to invest in priority areas.

As of June 30, Hepza reported total newly registered and supplementary investment capital in the nation has reached US$333.47 million, up 55.49% over June 30 of last year.

Export target tough task for tuna industry

The domestic tuna industry will find it difficult to reach its export value target for the year because of reduction in exports since the beginning of this year.

According to the Vietnam Seafood Exporters and Producers (VASEP), the exports of tuna, the seafood product having the third largest export value after shrimp and tra fish, reduced in volume and value two years ago.

Last year, its export value had a year-on-year fall of 7% to US$526 million, and the value was initially expected to gain a year-on-year of 6.46% to US$560 million for this whole year.

However, that expectation is cut to US$450 million for this year because of numerous challenges faced by local tuna exporters.

In major export markets of Vietnamese tuna, including the US, Japan and ASEAN, exports of the local tuna have reduced since the end of last year.

In the first five months of this year, Vietnam exported tuna products to 86 markets in the world, 16 markets more than in the same period last year. But the total export value of tuna saw a year-on-year drop of 19% to US$203.8 million.

During the first five months, the tuna export value to the US and ASEAN countries fell 26.5% and 29.5%, respectively.

The tuna export value to Japan had a growth against the same period of last year but reduced 60% as compared with the value in the early part of this year. Meanwhile, the value to the EU had a year-on-year increase of 0.6%.

The reasons for the reduction in export value include lack of supply, trade barriers and competition with other tuna exporting countries.

VASEP said that the larger markets have asked the exporter to meet the requirements on origin of seafood including the new EU Illegal, Unreported and Unregulated (IUU) fishing law and a certification for seafood traceability in the US.

However, Vietnamese exporters are finding it hard to meet these requirements due to inadequate data on journals of seafood exploitation and preservation from fishermen.

The export markets have also tightened activities on managing food hygiene and safety, making it difficult for local tuna exporters to increase business in the large markets.

Vietnam has not had a sustainable development plan for the tuna industry so the supply and quality of tuna has not been stable. Equipment for fishing and preservation of tuna is also antiquated.

Additionally, competitive ability of Vietnamese tuna products has also reduced due to low domestic supply and high import tax for tuna that used to be processed for export. Now, Vietnam has imported 50% of its demand for tuna with import tax between 10 to 24%.

Dong Nai seeks to boost exports to RoK

Dong Nai province’s exports for June to the Republic of Korea (RoK) skyrocketed 250% over last year’s same period to US$190 million, bringing total cumulative exports for H1 to US$644 million.    

Director of the provincial Department of Industry and Trade Le Van Danh said that with these exceptional financial results for June, the RoK has now become the province’s second largest export market.

Key export products to the RoK during the six month period included footwear, garments, textiles and fibre, wood and timber products, and agricultural products.

The significant increase in gross exports is directly attributable to increased trade resulting from the ASEAN-RoK free trade agreement, Danh said.

Danh added that currently Dong Nai is experiencing high demand from the RoK for fruits like rambutants, mangosteens, jackfruits and bananas and similar agricultural products.

Last year, the RoK imported 6,000 tonnes of mangoes and figure is expected to increase to 10,000 tonnes this year.

Provincial businesses are optimistic about prospects for increased trade and are scurrying to coordinate a joint marketing effort with Korean partners aimed at introducing Vietnamese fruits to broader segments of the Korean consumer market.

Nguyen Thi Le Hong, General Director of the Dong Nai Food Industrial Corporation (Dofico), said her company has strengthened coordination with Korean Nam Sa and other companies to market agricultural products in Korea.

As one specific example, Dofico has teamed up with Korean Nam Sa in an Italian Rygrass project specifically targeting the Korean husbandry industry market.

Nam Sa General Director Choi Young Chul said that Korean people need healthy food like fruits. However, the Korean demand far outstrips the nation’s supply, creating an opportunity for Vietnamese fruits to penetrate the market.

Nam Sa is bullish on Vietnamese fruits and is currently investigating several opportunities for joint projects with Vietnamese businesses, particularly those in Dong Nai.

However, it is quite difficult to bring Vietnamese fruits to the Korean market as the country imposes strict requirements on the quality of products.

The Korean Government requests thorough investigations of each farm exporting products to the market; including a wide variety of tests covering such areas as soil, factory processing procedures, preservation, packing and transport processing procedures.

Nguyen Van Thu, Director of the G.C Food Company at Giang Dien Industrial Zone, said the RoK imposes strict requirements for high quality products, including ISO 22000 on quality management.

All requirements can be met by G.C Food Company so Korean partners plan to visit G.C Food factory to sign export contracts in August, Thu said.

Fines mulled on slow dividend payers

The companies slow in paying dividends to shareholders will face fines in the coming time as relevant agencies are mulling this, said a deputy general director of the Hochiminh Stock Exchange (HOSE).

Tran Anh Dao told reporters in HCMC on Tuesday that a number of listed enterprises have delayed dividend payment to shareholders for years and this affects the interests of the latter. HOSE has warned the firms of their long delays but there has not been any legal document on punishing them as existing rules regulate the payment is decided by enterprises based on their profits.

HOSE used to propose imposing fines on the slow dividend payers and the State Securities Commission discussed the issue late last year.

If Decree 108/2013/ND-CP on administrative fines in the securities sector is revised, the fines for late dividend payment will be added. Dao said specific fines are being considered and will likely be applied next year at the latest.

Dao said HOSE wants regulations on dividend payment to be made stricter and practical instead of letting enterprises decide this based on their net profits.

As usual, enterprises attribute their late dividend payment to late revenue collections and the profits used to invest in ongoing projects.

At the meeting with reporters, Dao painted a positive picture of HOSE despite the fact that only three firms listed their shares on this southern bourse in the first six months of this year. She expected that things will change in the second half and next year.

Dao forecast more than 10 enterprises will get listed on the southern bourse this year compared to four last year. However, there will be more listed firms next year as companies still cope with a host of barriers, including those linked to regulations on return on equity (ROE).

Circular 73/2013/TT-BTC, which took effect on July 15 last year, states that joint stock companies must post ROE of at least 5% in the year right before their listings after being merged if they want to get listed on either the northern or southern bourse. Therefore, many firms wait for more time to have better business results to improve their ROE.

Incentives – not the key to attracting foreign investment

Many hold the misconception that the key to attracting investment is simply to offer more incentives. The theory is the more incentives offered the more foreign investors will flock to Vietnam.

However, this rather simplistic supposition does not always bear out and, indeed, is not grounded in the reality of Vietnam’s experience.

According to many leading economists and market analysts, incentives are only one factor to attract investors, and most often not the most important factor.

Dang Xuan Quang, the Ministry of Planning and Investment (MPI)s Foreign Investment Agency (FIA) Deputy Head said that in recent years Vietnam has offered many incentives to lure direct foreign direct investment (FDI) to the country, especially in remote areas and in the agricultural sector.

“However the effectiveness of these incentives has been noticeably limited,” Quang said.

In support of his assertion, Quang cites FIA statistics that revealed as of June 2014, Vietnam had 16,589 FDI projects with a total registered investment capital of US$239.773 billion.

Most of the projects operated in the larger metropolitan areas of Hanoi, HCM City, Ba Ria-Vung Tau, Binh Duong and Dong Nai, which account for 56% and 51.5% in the volume and value of FDI projects in Vietnam.

Other provinces such as Dak Nong, Bac Kan, Ha Giang and Lai Chau only comprise 0.15% and 0.22% of the total figures in terms of volume and value, respectively.

In these latter provinces the government and local officials offered tremendous incentives, particularly in the agro-forestry and fishery sectors.

However, as of June 2014 these provinces have only attracted a modest number of 508 projects with investment worth US$3.382 billion in total, accounting for 3.06% in volume and 1.41% in value of Vietnam’s FDI projects.

In direct contrast, Quang cites the real estate market, which in spite of having received no special incentives to speak of, has developed into a highly lucrative market that investors are eagerly pumping money into.

In the first half of the year, out of the total FDI in Vietnam of US$8.65 billion the Vietnamese real estate sector has attracted US$692.3 million.

Meanwhile only a fraction of that total, US$27.38 million, or 0.3% of total FDI, was injected into the agro-forestry and fishery sector.

This is a clear and unambiguous example of a situation where investment incentives were not effective in luring investment.

Dr. Le Dang Doanh, a leading economic expert, said the key to luring foreign investors, setting aside the provision of incentives, is improving infrastructure, increasing the quality of human resource and boosting institutional reforms.

The United Nations Industrial Development Organisation (UNIDO) recently released a study on Vietnam’s industrial sector. Nearly 1,500 surveyed FDI businesses said preferential incentives were a supplementary factor in their decision to invest.

“The survey results indicated many businesses who did not receive preferential incentives are operating well and have expansion plans,” Doanh said.

Brian Portelli, an official of UNIDO, shares Doanh’s views saying that from his knowledge and experience there have been no clear differences in operation results in Vietnam between firms having investment incentives and those without them.

He listed preferential tax and other incentives, political stability and favourable business climate as primary factors affecting their decision to invest in the country. Human resource also plays a vital role, he added.

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

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