Extension of toll collection right for HCMC-Trung Luong expy proposed

Cuu Long Corporation for Investment, Development and Project Management of Infrastructure (CIPM) has written to the Ministry of Transport proposing to continue collecting toll fees on the HCMC-Trung Luong Expressway for one year and a half after the commercial right over the expressway expires late this year.

CIPM petitioned that the toll collection will continue between January 2019 and June 2020, after the road commercial contract with Yen Khanh Trade Production and Service Company expires on December 31, 2018. Yen Khanh had purchased the right to collect toll fees for five years, starting from January 1, 2014, with a transfer price of some VND2 trillion.

CIPM in its petition said that the continued toll collection is meant to make the most of the public infrastructure asset to create fund for building another expressway section known as Trung Luong-My Thuan Expressway being developed under the build-operate-transfer format.

Earlier, the Government had approved continued toll collection for funds to finance the new expressway section, on the condition that the new expressway be completed by the time the aforesaid commercial right contract expires.

Specifically, according to CIPM, the Government issued Document No.2035 on October 14, 2014, to approve a project to build the Trung Luong-My Thuan Expressway under the build-operate-transfer format. The State would partially fund the project by using fund from maintaining the toll collection on the HCMC-Trung Luong Expressway after the commercial right contract expires and construction on the new expressway is completed.

However, CIPM said that the first stage of the Trung Luong-My Thuan Expressway project would not be completed before the second quarter of 2020 due to changes to its design, and the period between January 2019 -- when the aforesaid commercial contract expires -- and June 2020 would be a vacuum period when toll collection on HCMC-Trung Luong Expressway is suspended.

The 40-kilometer-long HCMC-Trung Luong Expressway became operational eight years ago, with a total investment of VND9,880 billion.

Earlier, BIDV Expressway Development Company had acquired the right to collect the toll fee for this expressway for 25 years, with a transfer price of VND9.1 trillion, but financial constraints forced it to return the project. The transport ministry then assigned CIPM to manage the toll collection, starting from February 25, 2012, prior to the purchase of the toll collection rights in early 2014 by Yen Khanh Trade Production and Service Company.


Shrimp prices forecast to bounce back in third quarter

 Prices of unprocessed shrimp are expected to rebound in the third quarter of this year, according to the Vietnam Association of Seafood Exporters and Producers (VASEP).

Many local shrimp processors have clinched major deals for important events and festivals in late 2018, reported the local media.

Some major shrimp suppliers, such as India, Bangladesh and Thailand, have finished their peak harvest seasons and have restricted the next cultivation due to losses. Shrimp supply, therefore, may fall in the second half of 2018.

As a result, shrimp prices are forecast to bounce back. Experts have recommended farmers raise sizeable shrimp for  higher prices and avoid rushing to sell small shrimp. In addition, farmers should cultivate shrimp with sparse density to minimize possible risks and extend the harvest time while awaiting price hikes.

Farmers are also encouraged to apply new technologies in shrimp farming in line with international standards, focus on cooperative production to enhance product quality and reduce production costs. Meanwhile, shrimp processors should also concentrate on developing top-notch products and targeting high-end segments for higher prices and a more stable consumption volume.

Earlier, many international organizations had predicted that major shrimp suppliers in the world would recover their shrimp yield this year, with volume exceeding 3.5 million tons, creating a record high spanning the last decade. They also said many major suppliers had mapped out programs promoting shrimp farming. However, global shrimp consumption in the first half of 2018 plummeted, resulting in a price slump worldwide.

Affected by the global price fall, the prices of unprocessed shrimp and shrimp export value in the country slipped, particularly in the second quarter of this year, according to VASEP. In April, shrimp exports totaled US$275 million, down by 0.4% compared with the same period last year, and May saw a 5.7% year-on-year decrease to US$309 million.

The price slump mainly affected the shrimp export revenue in June as it plunged 15% against the same period last year to some US$280 million. The price of white-legged shrimp witnessed a sharp decrease of 20-30%, depending on size, and there has been no sign of recovery so far.

More enterprises shuttered in first half of 2018

Despite the high economic growth, the number of businesses shutting down across the country in the first half of 2018 was higher than expected, leading to a slump in job creation compared with the same period last year, experts said.

A macroeconomic report on the second quarter of this year, released yesterday by the Vietnam Institute for Economic and Policy Research (VEPR), shows that the total number of newly established enterprises in the first half of 2018 went up by a mild 5.3% year-on-year, amounting to some 65,000 enterprises.

The combined registered capital of the firms amounted to some VND650 trillion, up by 8.9% year-on-year, while the average registered capital of each firm reached VND10.1 billion, rising by 3.4% against the same period last year.

Meanwhile, the second quarter witnessed a surge in the number of enterprises going out of business by 75.7% to 31,668 firms against 18,039 enterprises in the same period last year. As many as 52,803 firms shut down in the first half of 2018, soaring by a whopping 34.7% year-on-year.

Similar to the first quarter, the scale of new jobs in the second quarter continued to dwindle, with an additional 283,000 new jobs created, 15.7% lower than the second quarter of 2017.

That the number of new jobs fell while the country’s economy was on the rise raised questions about the quality of the economic growth, according to the report.

The labor growth in the foreign direct investment (FDI) sector in the first six months of 2018 amounted to 3.5%, a significant reduction against the same period in previous years (8.9% in 2016 and 6.6% in 2017), while labor forces in private enterprises bounced back by 3.5% after a 0.5% fall last year.

Thus, private enterprises are gradually regaining their importance in terms of job creation, while the FDI sector has witnessed high automation levels, resulting in minimal use of human resources.

VEPR Director Nguyen Duc Thanh noted that this situation highlighted the weakness of the Vietnamese economy in the first half of the year.

Litchi sales generate high revenue in 2018

The 2018 litchi crop in the northern provinces of Hai Duong and Bac Giang ended on July 12, with both output and revenue higher than last year, according to the two provinces’ departments of Industry and Trade and Agriculture and Rural Development.

Tran Quang Tan, director of the Bac Giang Department of Industry and Trade, praised the high yield, with total consumption amounting to some 216,000 tons valued at nearly VND5.8 trillion. Of this, litchi sales in the province generated revenue of VND3.45 trillion, while the revenue from supporting services reached more than VND2.3 trillion.

The litchi output of Bac Giang Province thus rose by 124,300 tons worth VND448 billion compared with the 2017 figures. Litchi prices averaged VND16,000 per kilogram, Tan added.

He stressed that litchi exports to more than 30 countries, including China, Russia, Thailand, Australia and Canada as well as the European Union, amounted to 97,100 tons, worth an estimated US$170.5 million, accounting for 45% of the total litchi output. Of this volume, China consumed 86,200 tons of fresh litchis. The volume of processed litchi products for export was 3,300 tons of dried litchis and nearly 9,700 tons of fresh litchis.

The domestic litchi consumption, mainly in neighboring provinces and cities, such as Hanoi, Quang Ninh, Hai Phong, Hue and Danang and HCMC in southern Vietnam, totaled 118,700 tons, making up 55% of the total consumption.

According to Vu Thi Ha, deputy director of the Department of Agriculture and Rural Development of Hai Duong Province, this year’s litchi output reached 60,000 tons, double that of 2017 at 28,000 tons.

The domestic consumption of litchis was the same as that in international markets, such as China, England, France, South Korea, Japan and Malaysia, of which China accounted for 40%.

“In addition to fresh litchi exports, Hai Duong Company exported frozen litchis and peeled fresh litchis to other countries,” Ha added.

Although the price of litchis at VND15,000 per kilogram was lower than that of last year’s at VND25,000-30,000 per kilogram, the total value was higher due to the large output.

Ha attributed this year’s reduced prices to the low prices set by Chinese traders, as some regions in China had enjoyed a bountiful crop.

To expand the output and value of litchis, Tan and Ha suggested growing litchis under VietGap and Global Gap standards and making use of favorable weather conditions.

Some 500 hectares of 10,200 hectares under litchi cultivation in Hai Duong Province has met VietGap standards. Twenty-five sites in the province cultivating litchis have also been provided with origin traceability codes.

Gloomy forecast for Vietnam’s rice exports in second half of 2018


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Vietnam's rice export prospects in the second half of this year are forecast to be bleak with a price decline, despite impressive exports in the first six months.

According to a report by the Ministry of Agriculture and Rural Development, the country exported some 604,000 tons of rice worth US$317 million last month, taking the total in the first six months of the year to 3.6 million tons worth US$1.8 billion, up by 24.6% in volume and 42.4% in value year-on-year.

The volume increase was attributed to deals to export rice to Indonesia, the Philippines and Cuba. The increase in the export volume and average export price (up by 13.4% year-on-year to US$505 per ton) led to higher export value.

However, the trend may not continue in the second half of the year as the export prices of rice are forecast to plummet.

According to Lam Anh Tuan, director of Thinh Phat Co., Ltd, Vietnam’s rice prices are higher than those of its rivals, so domestic enterprises have found it difficult to win new contracts to export rice.

Vietnam had secured a government-to-government contract on May 4 to supply 130,000 tons of rice to the Philippines. Thailand also signed contracts to sell 120,000 tons of rice to this market.

However, on May 22, Thailand won a tender to supply 90% of the rice volume needed by the Philippines. Vietnam was an outsider as it set a much higher price compared to Thailand.

Explaining Vietnam’s decision to not lower the price to compete with Thailand, Nguyen Thanh Phong, director of private firm Van Loi, said the company had purchased rice from farmers at high prices.

Currently, Thailand’s rice price is lower than that of Vietnam. The Thai Rice Exporters’ Association reported a price of US$398 per ton for 5% broken rice, while the price for the same rice is US$403-407 in Vietnam.

Tuan believes that many domestic rice exporters will reduce their prices to win rice export contracts in the near future.

Meanwhile, the Chinese Ministry of Finance has imposed new import tariffs of 50% on unhusked and whole-grain rice, and 5% on broken rice imported from ASEAN countries starting July 1. This will affect Vietnam’s rice exports as 30% of Vietnamese rice is annually shipped to its northern neighbor.

Sapo to share sales experience online

Multichannel sales platform developer Sapo will coordinate with its e-commerce partners to organize the annual Mobile E-commerce Day (MEDay) in HCMC on July 20 to discuss new trends and share experience in selling products through mobile devices.

Sapo will team up with Zalo Business, a provider of online marketing and sales solutions over the Zalo app, and the Lazada e-commerce platform to jointly organize the MEDay event, themed, “Sales on mobile devices: Proper understanding and performance.”

According to statistics from Sapo Web, 60% of visits to more than 33,000 websites are made on mobile devices.

A report by online shopping aggregator iPrice also showed strong growth in the number of mobile visits to websites in Southeast Asia, particularly Vietnam, averaging at 19% last year. Mobile visits accounted for 72% of the total number of visits to e-commerce sites.

Corresponding to the increase in mobile visits, along with the support of online shopping apps, the average conversion rate -- the percentage of website visitors who buy something on the site -- for computers was 1.7 times higher than for mobile devices, according to iPrice’s statistics, released early this year.

In addition, the value of transactions carried out on computers was 8-20% higher than those on smartphones.

According to the organizers of MEDay, enterprises cannot retain a large number of customers as they do not know how to improve their online sales and mobile conversion rate.

Four banks asked to report on ATM fee hikes over past 2 years

The Vietnam Competition Authority has asked four major banks that recently announced plans to increase their money withdrawal fees at ATMs to provide information on the history of their fee hikes over the past two years.

Vietcombank, Agribank, BIDV and VietinBank had planned to increase their same-bank money withdrawal fees from VND1,100 per transaction to VND1,650 per transaction from July 15 before refraining from their plans as told by the central bank.

The combined card volume of these banks amounts to 49 million, making up a combined market share of 63%. Therefore, most card holders will be affected by the fee hikes.

The competition authority quoted Article 9 of the competition law, which states that agreements to directly or indirectly fix the prices of goods and services are prohibited when the parties to the agreement have a combined market share of 30% or more.

Collusion to restrict competition may result in a fine of 10% of the total revenue in the financial year the violation is committed, as stipulated in Article 8 of the Government’s Decree 71/2014/ND-CP.

As requested by the competition authority, the banks will have to provide relevant information on their ATM services, including fee levels and fee hikes, both within the same banks and through different banks, from July 1, 2016.

The authority said it would closely monitor the case to adopt timely and necessary measures to ensure compliance with the competition law in every economic sector.

Tuoi Tre newspaper quoted a representative of the central bank as saying that it wanted banks to announce their plans to the public before charging high fees for ATM withdrawals.

According to the representative, following the banks’ announcements of fee hikes, questions have been raised by the public over the reason behind the fee hike. The banks need time to justify their fee hikes and find a way to balance their interests with those of customers, the representative added.

This is the second time in the past two months that the central bank has foiled attempts by commercial banks to increase their same-bank money withdrawal fees.

June’s CPI not unusual, says Deputy PM

The headline consumer price index (CPI) in June, which rose 0.61% from a month earlier and was the highest June rise in seven years, was not unusual, Deputy Prime Minister Vuong Dinh Hue said at a meeting in Hanoi City on July 10.

Deputy PM Hue, who is also head of the Government’s Steering Committee for Price Management, chaired the meeting on the economic situation for the first half of this year, and management orientations in the remainder of the year, the Government news website reported.

Nguyen Anh Tuan, head of the Price Management Department under the Finance Ministry, said the CPI between January and June was quite close to previous forecasts by relevant agencies.

Factors which caused increases in prices in the six-month period mainly came from market factors. There was almost no new price hike factor from the price management of the Government, according to Tuan.

Given signs of rising inflation, the Government has decided not to raise electricity prices this year, and stabilized the prices of State-controlled products in June.

Besides, the Government will possibly lower the prices of medicines and medical materials through auctions, and will take necessary measures to stabilize products whose prices are likely to be chased up.

Deputy PM Vuong Dinh Hue said June’s CPI at 0.61% was not unusual. With rising pork prices excluded, the inflation could have grown by only 0.27% that month, which could be seen as the lowest monthly CPI increase so far.

Deputy Governor of the State Bank of Vietnam Nguyen Thi Hong told the participants at the meeting that the base interest rate is as low as 1.35% while the credit growth of this year is estimated at 17%, lower than the target of 2017. Credit had grown by 7.88% as of late June, compared with 9.06% a year earlier.

She added the country gained a trade surplus of US$2.7 billion, with the balance of payment surplus at up to US$9 billion, and had stable interest rates. Therefore, they are not factors behind the abnormal hike in exchange rates.

The Price Management Department and the General Statistics Office at the meeting suggested price management scenarios for the rest of the year.

In the first scenario, the all-year inflation could range from 3.7% to 3.88%. This month’s inflation could decline by 0.2% against June’s, as prices in healthcare services could decrease by 0.34% while fuel prices without any adjustments could fall by 1%. However, prices of pork, domestic water, electricity, gas, and out-of-home dining services could rise.

Possible hikes in pork, fuel, gas, education services, environmental protection tax in oil products, as well as impacts of natural disasters between August and December could contribute to rises in inflation, compared with those in previous months.

Having taken these factors into account, the all-year average inflation of 2018 could grow by 3.9-4% compared with that of the previous year.

Deputy Minister of Industry and Trade Do Thang Hai said the possible increase in the environmental protection tax on gasoline should follow a road map, with the tax rising by VND500 per liter for the first time instead of a lump sum of VND1,000.

Deputy PM Hue supported the proposal, saying that the fuel price stabilization fund should be effectively used to reduce gasoline prices. The trade ministry was asked to come up with a tariff reduction plan on biofuel as well.

Meanwhile, Deputy Minister of Transport Le Dinh Tho stated that toll fees at build-operate-transfer infrastructure projects are now kept reasonable after the ministry has reviewed and verified their investment costs.

He added the Transport Ministry has asked the Civil Aviation Authority of Vietnam to keep air fares reasonable despite rising prices of petroleum-based products on global markets and exchange rate fluctuations. In case of high fuel prices, the ministry would ask local airlines to increase their fares slightly.

Regarding the issue, Deputy PM Hue asked the ministry not to revise up air fares at peak times, and to incorporate the adjustments of air and bus fares into its price management plan.

The deputy PM also urged the Ministry of Agriculture and Rural Development to be cautious about rampant pig farming, as farmers could put themselves at a disadvantage. In addition, the ministry was told to make a report about the management of pork supply and demand for the rest of this year.

Hue also asked the Health Ministry and the Vietnam Social Security to continue putting up medicines and medical materials for auction in a bid to reduce their selling prices.

He also asked the central bank to pursue monetary, fiscal and other macro policies flexibly to curb inflation in line with the National Assembly’s full-year target of 4%; and avoid huge pressures on exchange rates.

TNI opens first King Coffee in Gia Lai

TNI Corporation has opened the first cafe under the King Coffee brand in Gia Lai Province as part of its strategy to develop a coffee shop chain in Vietnam.

The corporation, where Le Hoang Diep Thao serves as CEO, aims to develop a distribution network covering 63 provinces and cities.

The high-end coffee shop, which was inaugurated on July 10, is located at No.2, Le Loi Street, in Gia Lai Province’s Pleiku City, and covers an area of 1,200 square meters.

The King Coffee brand has penetrated many foreign markets, including South Korea, mainland China, Singapore, Australia and India.

King Coffee Gia Lai and other cafes in the pipeline comprise two zones: one serving coffee and the other for relishing coffee art. The design of the newly opened cafe is inspired by the “Coffee World - Worldwide Coffee” concept. It offers its customers the chance to savor freshly brewed coffee produced in the country as well as from Brazil and Colombia, considered the holy lands for coffee cultivation.

TNI Corporation was formerly known as Trung Nguyen International, founded in 2008 in Singapore by Thao. It became operational three years ago and is headquartered in HCMC. The corporation rolled out its first King Coffee products in the United States in late 2016, distinguishing it from other local enterprises.

Thao, a co-founder of Trung Nguyen Corporation, had partly contributed to introducing the G7 coffee brand, a subsidiary of Trung Nguyen Corporation, in more than 60 countries.

Binh Quoi-Thanh Da urban development project to be put out to tender

The HCMC government has assigned the city’s Department of Planning and Investment to prepare a plan to hold a public tender to select a good investor for developing the long-stalled Binh Quoi-Thanh Da ecological urban area project.

After 26 years of planning, delays and seeing investors sign up but later drop out, the project on Thanh Da Peninsula, a prime location of HCMC, has had to return to the starting line. This has left thousands of households living in the area uncertain of their future.

The Binh Quoi-Thanh Da ecological urban area project won the HCMC government's approval in 1992. It was assigned to Saigon Construction Corporation in 2004, but the firm failed to execute it. The city government then decided on a project recall in 2010.

Following this, another domestic firm was tasked with adjusting the 1:2000 scale plan of the project, which covers some 427 hectares of land, or almost the entire area of Ward 28 in Binh Thanh District.

A joint venture comprising Bitexco and Emaar Properties PJSC, a property developer from Dubai, was chosen in late 2015 to develop the project, with a total investment of over VND30 trillion.

However, the foreign partner withdrew after a long wait for the land site to be transferred. As the project has been suspended for a long time, the site is now like an oasis, albeit just five kilometers from the city center.

Its roads are in poor condition, narrow and flooded. Houses at the farther end of the area have a countryside appearance. There are currently some 2,000 houses, 3,000 households and 13,000 people living on Thanh Da Peninsula.

Besides having the planning-investment department prepare for the tender, the HCMC government has also asked the Department of Construction to propose a plan to license temporary repairs of deteriorating homes on the peninsula and send it to the planning-investment department to present to the city government this month.

This is good news for local residents, though there still remains strong concern over whether the project will see further delays.

Lao Dong newspaper quoted Nguyen Van Hanh, a resident living on Binh Quoi Street, Ward 28, as saying that the locals have waited too long and suffered a lot. Over the past few years, houses have deteriorated, roads have been in bad condition and the locals have not been able to do anything with their houses.

According to Hanh, despite being near the city center, the living conditions in the area are worse than in the countryside.

Sharing the wishes of local residents, Hanh said that they wanted reasonable land compensation or on-site resettlement to settle down. If that is not possible, they want to be freed from suspended plans so that they can decide what to do with their land.

Solutions for next-generation FDI attraction proposed

Vietnam’s policy for attracting investment, including in high-tech sectors, might work well when luring first-generation foreign direct investment (FDI), but a more thorough evaluation is needed for the next generation of FDI attraction, according to the International Finance Corporation (IFC).

At a workshop on investment incentives on July 10, Vice Chairman of Vinh Phuc Province Le Duy Thanh noted that among the policies to attract investments, tax incentives were widely used in developing countries, including Vietnam. However, views on the efficiency of tax incentives are varied.

Tax incentives are viewed as efficient in some cases, but at the same time, they contribute to a decline in budget collections. In addition, these policies make it difficult to allocate resources in the economy and increase the complexity of the tax system. This is because tax incentives come in various forms, such as preferential tax rates, durations of tax exemption, tax reductions and reductions in land use fees.

Of the tax incentives offered, the most popular is special tax exemption and reduction durations, particularly in developing countries like Vietnam. Vietnam previously applied different tax incentives to domestic investments from foreign ones, but this discrimination is being restricted.

Nonetheless, investment incentives are not the critical factor for investors seeking opportunities in Vietnam, Thanh told the workshop co-organized by the Ministry of Planning and Investment and Deloitte.

In fact, tax incentives provided for investments in less-developed regions or for agricultural and seafood projects have not resulted in much investment in those regions and sectors. Further, Vietnam’s tax policies have not really appealed to foreign investors, as the scale of application is quite disparate.

Investment incentives are not the end of the line when it comes to attracting investors, Thanh said, adding that the investment environment being transparent, administrative procedures being handled quickly and on time and management authorities being dedicated play a greater role.

According to Bui Ngoc Tuan, deputy general director of Deloitte, tax incentives are more about particular locations than particular sectors. The provision of incentive policies according to sector has encountered difficulties with procedures, while service sectors with high added value do not have appropriate incentives and tax rates are quite rigid. In addition, FDI enterprises have difficulty accessing project information and guidance on project registration and business registration, among other things. Therefore, various solutions should be worked out to encourage investments.

The solution package for tax incentives proposed by Deloitte concerns the building of a more flexible and diverse mechanism with a combination of many incentive forms. Regarding investment procedures, the firm proposed the continued use of national and ASEAN single-door mechanisms, support for the simplification of procedures in areas with restrictive business conditions and the building of information channels that investors can access.

According to the IFC, a member of the World Bank Group, investment incentives only work under certain specific conditions. Not every development goal can be achieved with this tool.

The goals of many incentive policies in Vietnam, noted the IFC, are scattered. There are, in some cases, overlaps between investment promotion and comprehensive growth targets. A successful identification of the expected results and measurements is crucial in evaluating policy effectiveness and ensuring sustainable development.

An IFC representative said Vietnam greatly depends on tax holidays and preferential rates. Tax holidays have appeared to be more beneficial to investors with a short-term vision instead of ensuring long-term benefits for host countries.

As for investors with innovative investments, they often have to undergo many years of not generating profits when starting up their business or testing new models and technologies. As a result, short-term tax exemptions do not bring in many benefits.

For this reason, the IFC recommended Vietnam shift to efficiency-based policies, particularly tax deductions and tax subsidies. The management of these incentives will be more complex but will deliver higher efficiency.

HCMC targets economic growth of 8.3-8.5% in 2018

The HCMC government will adopt many solutions, especially credit expansion, to support enterprises and encourage investments to achieve a gross regional domestic product (GRDP) growth rate of 8.3-8.5% this year, officials said.

At the ninth meeting of the municipal People’s Council today, July 10, the city government expressed hope that private investment in the city would account for 35% of the GRDP and the city budget revenue target would be fully realized. The city also planned to develop a new hi-tech industrial park and establish an additional 46,000 enterprises this year.

In a statement from the HCMC government on socioeconomic missions for the second half of the year, delivered at the meeting, HCMC Vice Chairman Tran Vinh Tuyen noted that the city had achieved a GRDP growth rate of 7.86% in the first half of this year. The city budget revenue had reached nearly 48.7% of the estimate, of which the revenue collected from domestic production and business activities went up by 11.7% year-on-year.

The city also reported positive results in domestic and foreign direct investment (FDI) in the first half of the year. The number of FDI projects surged compared with the same period last year, while the investment environment has improved.

Tuyen outlined the objectives for the remaining months of the year, including raising the quality of water-borne tourism products, promoting street art, preparing appropriate solutions to ensure sufficient capital for the city’s economic development, and drafting projects to develop an innovative urban area in the east of the city, as well as a media center and multimedia infrastructure.

The city will also continue to promote industrial development, mainly focusing on key industrial sectors that have advanced technology and high added value, have high competitiveness and can join global value chains. In addition, the city will develop supporting industries, reduce the import of accessories and equipment for production to improve the localization rate and execute a plan to develop HCMC’s real estate market in 2016-2020, with a vision to 2030.

At the meeting, Nguyen Thi Quyet Tam, chairwoman of the HCMC People’s Council, stressed that despite economic achievements, the city faced shortcomings, such as untapped potential, unsustainable development, the decreasing competitiveness of some sectors, asynchronous administrative reforms, cumbersome State apparatus and the slow progress of seven breakthrough programs.

Secretary of the HCMC Party Committee Nguyen Thien Nhan told the meeting that the Government had allowed HCMC to convert 26,000 hectares of agricultural land into land for industry and services for socioeconomic development.

The conversion of farmland will create a big source of revenue for the city. Besides this, the city government will review the use of land for 1,400 projects to ensure the effective use of farm land in the city. These moves are necessary since the city has faced difficulties with capital mobilization to execute seven breakthrough programs, planned until 2020.

For example, the program to fight floods in the city needs VND73 trillion (US$3.2 billion), but the city has so far raised only 63% of the amount. To raise the rest, the city has called on private investors to get involved in the program to ensure its completion by 2020.

Other programs to reduce environmental pollution and traffic congestion as well as to revitalize the urban landscape have faced the same fate. Only 20% of the latter program, which aims to relocate a large number of makeshift homes along the city’s canals, has been achieved.

Nhan emphasized that the city should take full advantage of its strong workforce of five million laborers; apply technology in all sectors; connect scientists, enterprises and State management agencies and spur investment promotion.

HCMC currently has some 4,420 hectares of land earmarked for industrial parks, with plans to increase this area to more than 5,900 hectares. Meanwhile, the city will take back land lots allocated to projects whose progress is behind schedule.

Over the last five years, the HCMC government has taken back some 5,900 hectares of land allocated to 576 projects.

Land in HCMC makes up 0.6% of the country’s total, while its population accounts for 10% of the country’s total population. The city contributes up to 22% to the country’s gross domestic product.

European firms optimistic about local business environment

The sentiment of European and Europe-linked companies in Vietnam when it comes to local business conditions is moderately positive, according to EuroCham’s Business Climate Index (BCI) for the first quarter of this year.

The BCI score for quarter one is 78, up one point from the previous quarterly survey. Compared with the last quarter, respondents stating that the business situation was “Excellent” had dropped by almost 10%, with a 7% rise in responses describing the current context as “Good.” Negative responses remain marginal, close to the levels of the fourth quarter of 2017.

Confidence in the business outlook continued to be positive in the second quarter of the year. With changes on both ends of the spectrum – an 11% drop in “Excellent” and a 1% increase in “Very Poor” – positive answers were still predominant, with a total of 69% between those with “Excellent” and “Good” prospects. The “Neutral” attitude has, however, increased from 15% to 23% this quarter.

“The BCI survey results for Quarter 1, 2018 continue to show positive expectations from EuroCham members toward Vietnam, albeit not at the same levels of optimism that we saw in 2016. As shown in the survey’s results, almost 90% are either maintaining or increasing investment in the country,” said Nicolas Audier, co-chairman of the European Chamber of Commerce (EuroCham) in Vietnam.

EuroCham members confident of a stable and continuously improving macroeconomic scenario for Vietnam rose by some 9%.

Conversely, businesses that believe the macroeconomic situation could deteriorate remain exactly the same as in the last survey. The number of respondents expecting no change in the next quarter increased by almost 10%.

Inflation proved not to be a major concern for EuroCham members. As many as 84% believe inflation will have either “no impact” (19%) or just a “minor impact” (65%, the majority of the respondents).

Close to a quarter of respondents believe it may have a “significant impact” (17%, a slight decrease from the fourth quarter of 2017). Fears that inflation might threaten EuroCham members’ business are hereby dispelled with a resounding absence of answers in this direction (1%).

Regarding headcount, the number of businesses expecting to maintain the current size of their workforce remains at some 40%.

On the other hand, the scores indicating an intention to increase the number of employees suggest that 12% will significantly increase their workforce, while companies hiring moderately constitute 41% of all responses.

Responses toward lowering headcount have marginal changes: “Reduce a little bit” dropped from 10% to 5% and “Reduce significantly” fell from 3% to 2%.

EuroCham members that intend to maintain their level of investment in the country represent 45% of the total answers, a 9% increase from the October-December period of 2017.

However, intentions to increase investment also remain substantial, albeit with a 7% drop in those thinking about significantly increasing their investments and an 11% hike in those that will do so moderately. The share of answers indicating divestment is close to the quarter-four results.

Notably, EuroCham asked its members how they viewed the development of the regulatory landscape in Vietnam over the course of last year. Those who agreed that there was no change when compared with previous years take pole position, with 37%, while 25% said that it had “Slightly improved” and a small number (2%) noted that it had “Significantly improved.”

As for the negative responses, 16% mentioned that the regulatory landscape has become “Slightly complicated,” while 18% believe last year’s regulations have made it “Significantly more complicated” for businesses to operate.

EuroCham hopes that the Vietnamese Government will further improve the business environment, particularly with regard to changes to the legal framework that will enable the nation to fulfill its commitments under the EU-Vietnam Free Trade Agreement, expected to come into force later this year.

Nicolas Audier noted that these BCI scores reflect optimism regarding fast and efficient reforms in the short term and are also buoyed by expectations of a timely ratification of the trade pact. Even though this BCI score – 78 out of 100 – is very positive, there is still a fair amount of legal and regulatory work to do in Vietnam.

“EuroCham remains confident that the current hurdles to liberalization will be surpassed and that our next survey will again reflect an excellent outlook from the perspective of the European and Europe-related business community in Vietnam,” he added.

The BCI is a regular barometer of the business sentiment among European companies operating in Vietnam. It provides early signals of turning points in economic activity and tracks movements in business confidence.