BUSINESS NEWS 26/8

Thai businesses intensify trade promotional activities in Vietnam

BUSINESS NEWS 26/8

Thailand should organise exhibitions, trade fairs and send delegations to Vietnam to gain insights into investment opportunities and the consumers’ tastes to promote their products, said Thai ambassador Tanee Sangrat at a recent press conference to introduce the Thai Festival 2019 slated for August 23-28 in Hanoi.

thai businesses intensify trade promotional activities in vietnam hinh 0 Bilateral trade turnover between Vietnam and Thailand has enjoyed positive growth in recent times and is predicted to reach US$18 billion by the end of 2019, whilst 2020 will likely see the fulfillment of a US$20 billion target.
Ambassador Tanee Sangrat said the strategic partnership between both countries has been seen considerable consolidation in recent years. In particular, trade and investment ties between the two nations have developed well as Thailand ranked ninth among foreign investors in the nation and second among Southeast Asian nations injecting their money into Vietnam.

According to Thai ambassador Tanee Sangrat, Thailand has several strengths in producing and processing agricultural products, with a variety of Thai food products being popular among Vietnamese consumers.

In addition, products that contain medicinal herbs have great potential and advantages in the domestic market in the future. Moreover, fine arts and handicraft products enjoy a wealth of opportunities for future growth within the Vietnamese market.

In the context of the country’s comprehensive integration into the global economy, several goods and products from nations such as Japan, the Republic of Korea, and the EU have begun establishing a presence in the domestic market.

The Thai diplomat has advised businesses from the Southeast Asian country to undergo radical reforms in terms of production and packaging procedures in an attempt to attract Vietnamese consumers and enhance the competitiveness of Thai goods in the local market.

Simultaneously, it is pivotal that Thai businesses should provide safer and friendlier products that meet the increasing demands and tastes of Vietnamese consumers.

Thailand should organise exhibitions and trade fairs aimed at promoting their goods, the Thai ambassador recommended, adding that since the beginning of the year the Thai embassy has co-ordinated efforts with their Board of Investment to send five delegations to Vietnam to help them gain insights into investment opportunities and the consumers’ tastes so that they can make appropriate adjustments.

The ambassador noted that the Thai Festival 2019 in Hanoi will mark one of the Thailand’s major events in Vietnam, aiming to intensify trade and investment ties between the two countries as strategic partners.

The event will be held at AEON Mall Long Bien, drawing the participation of 70 Thai businesses to display and sell their products under the One Commune-One Product programme.

During the festival, Thai firms will introduce products that have been carefully selected from communes belonging to provinces and cities from across Thailand, including processed food, beverages, confectioneries, and handicrafts.

In order to provide Vietnamese people with a greater insight into products from the ASEAN partner, the Thai embassy hosted a wide range of connectivity activities in a bid to expand the network of business across all spheres that exist between the two countries. However, both sides need to make greater efforts to maintain the trade balance.

Currently, many Vietnamese people living in Thailand possess a deep understanding of the culture, customs, and tastes of Thai consumers. Like-wise, a large number of Thai-born Vietnamese people also live in Vietnam.

Furthermore, Vietnam has advantages of delicious fruit products, especially dragon fruit and lychee as the country should look to strengthen trade promotional activities for their products by organizing trade fairs in Thailand.

At present, two of Thailand’s major retailers, namely Central Group, the owner of the Big C supermarket chain, and TCC Holdings, the owner of the Mega Market system, are operating in the Vietnamese market.

These groups have also hosted a number of trade promotional activities which introduced Vietnamese products to the local Thai market, which is expected to make a contribution to maintaining trade balance between the two countries.

The governor of the Bank of Thailand recently paid a working visit to Vietnam to meet with the governor of the State Bank of Vietnam.

During the meeting, both sides expressed their desire to speed up the use of a common currency within the ASEAN bloc when making payments and transactions. This is considered to be an effective way to reduce costs and contribute to maintaining the trade balance.

In addition to promotional activities, ASEAN member states need to be active by enforcing measures such as removing trade barriers and reducing taxes for consumption goods within the bloc.

Moreover, the customs sector has been urged to apply advanced technologies in a bid to ensure that customs clearance procedures for import and export activities are conducted in both fast and efficient manner for all parties involved.

Trade war puts steel products at risk of unfair competition

Domestically-produced steel products are facing the risk of unfair competition from those originating from China as result of the ongoing US-China trade war, insiders have warned.

According to the Vietnam Steel Association, the steel sector has undergone rapid growth in the past time while making considerable progress in terms of both quality and quantity. Semi-finished and finished steel products imported from China annually account for more than 50 per cent of Vietnam’s total steel imports.

Nguyen Van Sua, an expert on steel production and business, claimed the US-China trade war has primarily resulted in negative impacts on the global sector, with the Vietnamese steel industry being no exception.

The domestic sector has yet to experience a large number of adverse effects caused by the trade war, but the US-China trade frictions once escalate, they could threaten the steel production and distribution of China which currently occupies up to half of the world’s steel output. The neighboring country could potentially face tremendous pressure to boost the export of steel products.

As a response to the US tariffs triggered by the trade war, yuan depreciation has enabled a drop in the price of China’s finished steel products while improving the competitiveness of such items.

The deep depreciation of yuan could leverage the intrusion of China’s cheap steel products into the Vietnamese market, especially construction steel, cold-rolled steel, and steel sheets. It could also lead to unfair competition between domestically-produced steel and Chinese items, Sua said.

Domestic steel manufacturers should seek to improve the competitiveness of their products by finding a way of both slashing cost price and ensuring the quality of products, he noted, adding that expanding their export markets is another must for domestic firms looking to stay competitive.

They are advised to update relevant regulations set by importing countries in order to take trade remedies if needed. They should also keep a closer eye on tariff and non-tariff measures, along with technical barriers required by importers so that they can outline export plans as a way of competing with Chinese rivals.

New resolution underpins security evaluation of FDI projects

A security evaluation mechanism will be applied to foreign-invested projects with risks of harming national security, a Party resolution notes.

General Secretary of the Communist Party of Vietnam Central Committee Nguyen Phu Trong has signed the resolution No. 50-NQ/TW on orientations to perfect institutions and policies to enhance the quality and efficiency of foreign investment cooperation through 2030.

The paper looks to make mechanisms and policies in foreign investment cooperation more competitive, meeting requirements in reforming the growth model and restructuring the economy, protecting the environment, dealing with social issues, and improving the quality, efficiency and competitiveness of the economy.

It encourages the transfer of technology and management methods to Vietnamese firms as well as the use of local labourers while projects damaging the environment and failing to effectively use land will be strictly handled.

The resolution highlights the significant role of the foreign-invested sector in the economy, while stating that the sector is encouraged to develop and cooperate, and compete equally with other economic sectors. Priority will be given to projects with advanced and environmentally-friendly technology and high added value.

The foreign direct investment (FDI) sector has seen rapid growth with the presence of an increasing number of multinational groups and large-scale projects.

However, it also points out that institutions and policies regarding foreign investment have yet to suit development requirements, adding that the number of small-scale projects with low technology remains high, the sector’s connection with other economic sectors is still loose, and the localisation ratio maintains modest.

To this end, the resolution mentions several solutions, including the synchronisation of the legal system to deal with existing problems, and ensuring equal treatment among foreign and domestic investors.

Banks raise certificates of deposit rates to more than 10 percent

Banks have increased their interest rates on certificates of deposit (CDs), bringing them in excess of 10 percent per year with the aim of mobilising long-term capital.

Ban Viet Bank recently announced it was issuing long-term CDs with record high interest rates. Specifically, an interest rate of 10.2 percent per year is applied for a 60-month CD valued at a minimum of 10 million VND (430 USD) for individual customers and 100 million VND for institutional customers.

The rates for shorter terms of 24, 36 and 48 months are also high at 9.5, 9.8 and 10 percent per year, respectively.

VIB and VietABank have also issued CDs with high interest rates of 9.1 percent per year to lure depositors.

The rates at many other banks, such as Sacombank, BIDV, SHB, MSB and SeABank, are averaging at more than 8 percent per year.

According to experts, CDs are increasingly popular as interest rates are currently some 1-2 percentage points higher than normal savings and they are easy to transfer.

Meanwhile, a bank leader, who declined to be named, said that banks are often willing to mobilise capital via the issuance of CDs with high interest rates when they need capital to fund projects or lend to customers at high lending rates.

Industry insiders also believed banks had to issue CDs at high interest rates as they faced difficulties luring long-term capital.

Many banks are in dire need of long-term capital as their ratio of medium- and long-term capital out of their total capital remains limited. According to State Bank of Vietnam (SBV) regulations, banks must reduce their short-term funds for medium- and long-term loans to 40 percent from this year against last year’s rate of 45 percent.

Banks also need more capital to meet a capital adequacy ratio (CAR) of 9 percent in 2020 as per the SBV’s Basel II norms. Fitch Ratings estimated the Vietnamese banking system could face a capital shortfall of almost 20 billion USD to meet the standards.

However, experts are also concerned that the rate hikes would cause a domino effect on interest rates of long-term loans.

Thua Thien-Hue strives to develop eco-friendly tourism

The tourism sector of the central province of Thua Thien-Hue has carried out various measures to bolster sustainable and eco-friendly tourism.

The province, housing the capital of the last feudal dynasty in Vietnam, welcomes 3.5-4 million tourists each year, greatly contributing to the provincial socio-economic development.

Competent agencies have started to hand over paper bags with the message “Hue relics say no to plastic bags” to visitors carrying plastic bags at tourist attractions. In the coming time, the province will work to halt the use of petrol engines at Dai Noi (Imperial Citadel) as sightseeing electric cars have been put into use.

The provincial People’s Committee has also granted permission to extend electric car tours in the southern area of Huong river, as part of a project on the development of public passenger transport network in Thua Thien-Hue province by 2020, with a vision to 2030.

Acting Director of the provincial Tourism Department Le Huu Minh said Thua Thien-Hue hopes to be the pioneer of the “saying no to plastic waste” campaign in tourism activities and development, in line with environmental protection and relic conservation.

The province’s tourism sector will step up communications to raise public awareness and call for efforts to the work from the people and authorities, he added. To date, more than 80 tourism businesses of the province have committed to cutting the use of plastic products and single-use plastic.

US firms sign memoranda of understanding on Da Nang investment

US firms have inked three memoranda of understanding (MoU) on investment in hi-tech and information technology in the central city of Da Nang during a recent working trip to the US and Canada by Chairman of the municipal People’s Committee Huynh Duc Tho.

The signing ceremony took place at the Da Nang Business Roundtable recently held in the US’s Silicon Valley, according to the municipal Investment Promotion Agency on August 21.

The first MoU between the Authority of Da Nang's Hi-Tech Park and industrial parks and Ai20X Silicon Valley will focus on developing Da Nang Hi-Tech Park.

The MoU between the US’s Meritronics AMT Company and Da Nang Hi-Tech Park Development JSC looks to establish Trung Nam Meritronics Technology JSC, which will provide electronic manufacturing services at the Da Nang Hi-Tech Park.

The third MoU, signed by Ai20X Silicon Valley and Da Nang IT Park Development JSC, aims to develop the Danang IT Park into an expanded Silicon Valley.

At the event, Chairman Tho said the US is now the third largest investor in Da Nang with 63 projects worth 595 million USD, accounting for nearly 19 percent of the total.

He invited US investors with financial and technological capacity to Da Nang to learn about its business environment and opportunities, especially in information technology, electronics, aeronautics, automation, artificial intelligence, support industry, health care, education and real estate.

This year, Da Nang will continue providing optimal support for businesses via vocational training, protection of intellectual property rights and incentives at Da Nang Hi-Tech and IT Parks.

Vietcombank in Forbes’ top 50 listed Vietnamese companies

The Joint Stock Commercial Bank for Foreign Trade of Vietnam (Vietcombank) has entered Vietnam’s 50 best listed companies in 2019 by Forbes Magazine for the seven consecutive years.

Honoured companies this year were rated on the basis of compound annual growth, profit, return on equity, earnings per share growth between 2013 and 2018, branding, quality of corporate management, source of profit, and the prospect of sustainable development.

This year's list includes leading companies on the HCM Stock Exchange (HOSE) and Hanoi Stock Exchange (HNX) such as dairy firm Vietnamilk, beer maker Sabeco, IT giant FPT Corp, DHG Pharmaceutical, insurance-finance group Bao Viet, digital retailer Mobile World and realty developer Vingroup.

The Ho Chi Minh Stock Exchange (HOSE) dominated the list as it is home to 45 of the 50 listings, leaving the Hanoi Stock Exchange (HNX) with five. There were 13 changes to the list from last year with 11 firms making their first appearance and two companies coming back on to the list.

According to Forbes, the companies have recorded a combined total post-tax profit of nearly 127.53 trillion VND (5.6 billion USD), a year-on-year increase of 19.2 percent. The total capitalisation of the enterprises reached 94 billion USD, accounting for 63 percent of the total market capitalisation on the two bourses as of mid-May.

For three consecutive years, Vinamilk led the market in terms of profitability, but this time Vietcombank surpassed the dairy giant, becoming the champion in after-tax profit with the growth rate of 60 percent.

Vietnam's best developers honoured in awards programme

The 5th Property Guru Vietnam Property Awards honoured 52 of Vietnam’s most prestigious and respected property developers at the InterContinental Saigon Hotel in Ho Chi Minh City on August 23.

Presented by Kohler and organised by Oriental Media in Vietnam, the awards included categories for HCM City and Hanoi, recognising affordable, mid-end, high-end and luxury condo, office, hotel and retail properties, as well as outstanding residential developments in Nha Trang, Da Nang and Ha Long Bay.

Kien A Corporation won the top award for Best Developer as well as the new Best Mixed Use Developer award at the country’s biggest and most respected property awards programme.

“Showcasing outstanding design vision, intricate development concepts and an applaud-worthy commitment to creating communities that inspire and thrive, Kien A Corporation is taking big, bold and brilliant steps forward with world-class developments in Vietnam such as Lavila Nam Sai Gon Township and is a noteworthy winner,” said the independent panel of judges.

The Best Boutique Developer award went to SonKim Land Corporation.

The event presented five other new awards in recognition of the industry’s niche segments: Best Sustainable Developer was won by Gamuda Land (HCM City) JCS, Best Hospitality Developer was given to CapitaLand Vietnam, Best Breakthrough Developer went to Alpha King, Best Industrial Developer was won by VSIP JSC and the Best Lifestyle Developer was given to MIKGroup.

This year’s event was supported by gold sponsors Hitachi Elevators & Escalators, An Cuong Wood Working, LMG and Malloca; silver sponsors Dulux Professional, Electrolux and VietCeramics; official portal partner Batdongsan.com.vn; official magazine PropertyGuru Property Report; official supervisor BDO and local representative Oriental Media Vietnam.

The media partners were Viet Nam News, Deluxe Magazine, Vietnam Heritage and Forbes Vietnam.

Last year, 43 awards were given to more than 25 companies and public-private entities.

The event is part of the regional PropertyGuru Asia Property Awards programme established in Thailand in 2005.

US-China trade war to exert pressure on local production: official

Domestic production has faced strong competition as the US and China are increasing exports to Vietnam on the back of their escalating trade war, head of the Ministry of Industry and Trade’s Trade Remedies Authority of Vietnam Le Trieu Dung said on August 9.

At a meeting with Minister of Industry and Trade Tran Tuan Anh on the day, Dung said the US-China trade conflict becomes more intense after the North American country announced to impose additional tariff of 10 percent on the remaining 300 billion USD of goods and products coming from China to the US, and sees China as “currency manipulator”.

This will result in considerable competition among local producers, and there is a strong possibility that shipments originating from Vietnam will face protective trade measures in many other nations. It will be a great challenge for the Vietnamese economy as the US and China could step up efforts to prevent trade fraud of origin and tax avoidance, Dung stressed.

While many nations, including Vietnam, are accelerating trade liberisation through joining various free trade agreements, protectionism is increasing in many others. Their protective policies are used as a tool to prevent imports and, therefore, Vietnamese products must satisfy a set of strict requirements in order to enter those markets.

Dung also described a lack of understanding of trade prevention process as a major challenge to many Vietnamese enterprises. In stark contrast, the foreign-invested sector has rational strategies in response to preventive measures of foreign nations.

He said his office will continue to keep close watch on the trade tension between the US and China so as to reduce impact of the two countries’ trade policies.

Meanwhile, a representative from the Vietnam Directorate of Market Surveillance suggested the establishment of an inspection group to find out businesses who are taking advantage of the situation to boost imports from the two markets.

For his part, minister Anh said Vietnam should stay prudent and have rational measures to respond to the trade war, and ordered competent authorities to boost coordination with the customs force to check items with sudden increase in import and export volume.

Measures sought to make HCM City’s housing market thrive

Real estate enterprises in Ho Chi Minh City are waiting for new measures to help them deal with difficulties related to policies and credit so as to grow more stably and sustainably.

Chairman of the Ho Chi Minh City Real Estate Association (HOREA) Le Hoang Chau said although the property market bounced back thanks to the Government and local authorities’ efforts in removing bottlenecks, it has not developed stably and risks still lie ahead.

According to the association, many property enterprises are facing risks as investors have paid much for ground clearance compensations but cannot complete legal procedures, so they are not allowed to implement their projects.

Risks related to finance and credit are also worrying enterprises, the HoREA said.

The State Bank is implementing a roadmap to gradually reduce credit to the real estate market and, as a result, enterprises are encountering difficulties in finding other sources of capital to replace part of credit capital. In addition to expanding cooperation with foreign-invested enterprises, or seeking capital on the stock exchange, real estate enterprises have decided to issue corporate bonds to acquire more capital.

Chau said that in the first five months of 2019, real estate, construction and infrastructure enterprises issued corporate bonds worth up to 16.2 trillion VND (695.7 million USD), accounting for 27 percent of the total value of bonds issued. Even real estate enterprises have issued bonds with very high interest rates of 12-14.5 percent per year, doubling the savings interest rate.

A fall in the real estate market has caused heavy impact on Ho Chi Minh City’s budget collection. According to the municipal Taxation Department, as of June 30, tax debts were 13 trillion VND (559.5 million USD), 4.9 trillion VND higher than those in late 2018. Of the total, 61 percent was owed by real estate enterprises.

Explaining this situation, the department said that since mid-2018, business activities related to the sector have experienced a slowdown. Several key projects cannot be carried out, leading to a reduction in budget collection.

Tran Vinh Tuyen, Vice Chairman of the municipal People’s Committee, predicted that the city’s domestic budget collection can be 15 trillion VND lower than the assigned target, including 12 trillion VND from land-related issues and 3 trillion VND from enterprises operating in the property sector.

 

To overcome difficulties, HoREA suggested the municipal People’s Committee to assign the Department of Planning and Architecture to receive and handle documents on detailed planning projects with the 1/500 scale proposed by investors.

It also proposed the committee direct the Department of Finance to soon develop the principles of land valuation criteria for real estate business projects, commercial housing projects, ensure the calculation of land use fees are reasonable and avoid losses of State budget.

The Department of Finance and the Department of Natural Resources and Environment should complete the process and administrative procedures on calculating land use fees for commercial housing projects in order to save time and increase State budget collection.

For projects under inspection, the association suggested authorities to have conclusions at an early date to allow investors to carry out their projects as soon as possible. Many businesses agreed that legal review on real estate projects is necessary, thus helping investors rectify their investment and business activities and fully implement their financial obligations. However, a delay in this procedure can have huge impact on investors and consumers.

Experts expect a brighter scenario for the second half of 2019 as large-scale projects will be rolled out very soon.

In terms of segments, mid-end and affordable will continue to dominate while new launches from luxury and high-end will account for only a small proportion. The east will continue to be a market hotspot with new projects in District 2 and District 9. Inventory will be absorbed in the next few quarters thanks to limited new launch supply.

Ho Chi Minh City’s realty market will welcome abundant supply from eastern areas, led by Vinhomes Grandpark in District 9 with more than 10,000 units, and five new projects in District 2.

The supply will come from other areas like the west with AIO City, Akari City and D-Homme projects, and the south with Eco Green Saigon, Sunshine City Saigon and Lovera Vista.

Over 835 million USD in tax arrears collected

The General Department of Taxation has collected over 19.4 trillion VND (835 million USD) in tax debts as of July 31, up 2.4 percent from the same time last year.

Total tax arrears fell 5.7 percent year-on-year, with tax debts exceeding the 90-day payment window accounting for 53.1 percent of the total debt, or 16.9 percent lower than the same period in 2018.

Meanwhile, uncollectible tax arrears made up of 46.9 percent, a year-on-year surge of 11.4 percent.

According to the department, tax authorities nationwide collected 725.74 trillion VND to the state budget during January-July, accounting for 62.1 percent of the estimate.

In the seven-month period, the tax sector rounded up additional 6.7 trillion VND through inspections.

The tax authorities have also kept a close watch on and updated enterprises’ business situation so as to better tax management.

More than 79,500 new companies entered the market in the period, over 73,700 firms halted or stopped operations, and nearly 13,370 businesses restored production.

To date, there are 734,840 operating companies, increasing 5.34 percent from the end of 2018.

Upturn seen in rubber exports in seven months

Rubber exports in the first seven months of this year rose in both volume and value, according to the Import-Export Department under the Ministry of Industry and Trade.

The department reported that in July, Vietnam shipped abroad 150,000 tonnes of rubber for 211 million USD, up 22.2 percent in volume and 20.9 percent in value compared to the previous month.

Compared to July 2018, the increases were 5.7 percent and 12.5 percent, respectively. The price rose 6.4 percent compared to the same period last year to 1,407 USD per tonne.

In the January-July period, rubber export volume reached 764,000 tonnes with a value of 1.05 billion USD, representing increases of 8.2 percent and 4.5 percent, respectively.

Statistics from the General Department of Vietnam Customs show that rubber prices were down in July due to impact from the US-China trade tension and worry of slow recovery of the global economy that may affect demand of the world.

Good growth was seen in the Republic of Korea (RoK) market. In the first six months of 2019, the country imported more rubber from Vietnam despite its falling demand. In the period, the RoK consumed nearly 280,000 tonnes worth 32.95 million USD of Vietnamese rubber, up 13.3 percent in volume and 2.6 percent in value over the same time of 2018.

The market share of Vietnamese rubber in the RoK market rose to 8 percent in the first six months of this year from 6.9 percent in the same period of 2018.

Land issues continue hindering SOE equitisation

Issues related to land use right continue to pose obstacles to the State-owned enterprises' process of evaluating the businesses and share prices and executing their equitisation plans, experts said at a meeting on August 8.

According to the Ministry of Finance, 35 of total 127 State-owned enterprises (SOEs) targeted by Decision 991, which was issued by the Prime Minister in July 2017, have executed their equitisation plans for the 2017-20 period.

At the same time, 88 of 403 SOEs have sold the required State stakes in their capital in accordance with the Prime Minister’s Decision 1232 issued August 2017.

At this pace, Government agencies and SOEs have lagged behind the schedule and land use is blamed for the failure.

For example, 20 SOEs have failed to execute their equitisation plans in the last two years though they were assisted in carrying out evaluation reports, Phan Van Ha, general director of the Vietnam Valuation IVC JSC, said.

Conflicts and overlaps among legal documents on land use right certificates are the cause of delayed equitisation plans, she said. For example, SOEs need to acquire provincial confirmation of their land use before finalising equitisation plans.

However, the process may take months and often exceeds the regulated time period for SOE equitisation, so both SOEs and evaluators must re-do the reports, she said.

In some cases, land use right certificates are not counted into the firms’ evaluations, making it more difficult for Ha’s company to evaluate the businesses.

According to Dr Ngo Tri Long, former director of the Ministry of Finance’s Price and Market Research Institute, land use right is among the decisive factors that make SOEs valuable to investors, especially local ones.

If the issues related to land use right are not resolved soon, SOEs’ equitisation plans will be delayed and it could mean more losses for the State budget, he said.

To resolve land issues, the Vietnam Valuation and Financial Services JSC’s general director Vu An Khang suggested the Government remove the rule on evaluating the firm’s annual land lease fee to make regulations comply with each other.

In addition, the Government must issue rules to evaluate land areas whether they are located in more expensive areas or not, so that the State would not suffer losses, he said.

New regulations on foreign exchange management

The State Bank of Viet Nam has issued Circular No. 06/2019/TT-NHNN on foreign exchange management for foreign direct investment activities in Viet Nam.

The Circular, scheduled to take effect since September 6, 2019, regulates such activities like capital contribution, opening and use of foreign currency and Viet Nam Dong direct investment capital accounts, transfer of capital, profits and lawful incomes abroad, and transfer of investment capital, and transfer of investment projects.

Applicable subjects include: (i) foreign-invested enterprises as specificed in clause 2, article 3 of the Circular, (ii) local and foreign investors in foreign-invested enterprises, (iii) foreign investors that are parties to business cooperation contracts, (iv) foreign investors that are parties to public-private partnership, and (v) organizations and individuals involving in foreign direct investment in Viet Nam.

Foreign invested enterprises are defined as: (i) the enterprises being established in the investment form of of economic organizations, in which foreign investors are members or shareholders and must carry out the procedures to obtain investment registration certificates in accordance with legal regulations on investment, (ii) enterprises with 51% or more of the charter capital of the enterprises owned by foreign investors.

Local and foreign investors shall be allowed to contribute the amounts of capital in local and foreign currencies as specified in their investment registration certificates.

The contributed capital shall be carried out through transfer to direct investment capital accounts, reads the Circular.

The transfer of capital, profits and lawful incomes abroad by foreign investors shall also be carried out through the direct investment capital accounts.

The Circular also stipulates the responsibilities of the licensed credit institutions in order to create a legal basis and enhance the responsibilities of the relevant institutions and individuals for complying with the regulations on forex management related to foreign direct investment operations in Viet Nam.

Japan’s fabric maker to set up plant in Vietnam

Japanese textile maker Suminoe Textile Co. will set up an electric carpet plant in Vietnam, its second overseas base, for exports to Japan.

The Osaka-based firm established a wholly owned local subsidiary, Suminoe Textile Vietnam Co., in the Dong Van III industrial zone 40 kilometres south of Hanoi, with a capital of 1.9 million USD, Japan’s Kyodo News reported.

The new company will rent a factory to produce electric heating appliances such as electric carpets and blankets.

Electric heating appliances are one of Suminoe's key products in functional goods business, produced overseas solely in Suzhou in the province of Jiangsu since 2003.

Suminoe, which made its first foray into overseas business in 1994 by establishing a Thai plant, now has 14 bases in seven countries, including the United States, India and Indonesia.

Agribank listed among Vietnam’s Top 10 prestigious banks

The Vietnam Bank for Agriculture and Rural Development (Agribank) has been named on the list of the Top 10 prestigious banks in Vietnam in 2019 by the Vietnam Report Company.

The state-owned bank also ranked first among Vietnamese commercial banks in the Top 500 largest companies in the country (VNR500 Ranking) for this year.

VNR500 is based on the Fortune 500 model, which lists the top 500 US companies by revenue of the previous year.

In Vietnam, the ranking of 500 largest enterprises is based on the results of independent research and evaluation as per international standards of the Vietnam Report Company.

It has been announced annually since 2007, with the advice of domestic and international experts, especially GS. John Quelch, former vice president of Harvard Business School.

In 2018, Agribank earned over 7.5 trillion VND (330 million USD) in pre-tax profit. The bank aims a profit of at least 10 trillion VND this year and to become one of 150 largest banks by asset in Asia by the end of 2020.

Exports of garment-textile, leather shoes surge 10.5 percent

Vietnam’s export turnover of garment-textile and leather shoes during January-July grew 10.5 percent year-on-year to 18.34 billion USD, the Ministry of Industry and Trade (MoIT) said on August 9.

According to the ministry, domestic production of garment and textiles has enjoyed robust expansion on the back of the new-generation free trade agreements like the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the EU-Vietnam Free Trade Agreement.

Good growth was seen in several key markets, including the US with export revenue of over 7 billion USD (up 10 percent), the CPTPP market with 2.5 billion USD (up 9 percent), the EU with 1.95 billion USD (up 5 percent), and the Republic of Korea with 1.4 billion USD (up 7.6 percent).

Chairman of the Vietnam Textile and Apparel Association (VITAS) Vu Duc Giang said the association set the industry’s export turnover for this year at 40 billion USD, a year-on-year increase of 10.8 percent.

According to Giang, the US will remain the biggest importer, accounting for 42 percent of Vietnam’s total exports, followed by the EU (21.5 percent), Japan (19.5 percent), and the Republic of Korea (14 percent). Meanwhile, the Middle East will be a new market of Vietnamese garment and textiles.

Regarding the leather and footwear sector, some 161.4 million pairs of shoes were produced during the seven-month period, increasing 7.1 percent from the same time last year. Exports of footwear rose 13.8 percent to an estimated 10.4 billion USD.

The MoIT said foreign-invested businesses contributed significantly to the export growth of garment-textile and leather shoes. In long term, local businesses should outline solutions to engage in global value chains to gain competitive edge over their rivals from Cambodia and Bangladesh.

Besides, experts recommended Vietnamese enterprises should work together to form a complete production chain so as to satisfy the rules of origin of the trade deals that Vietnam is a member. They said the move is significant for the firms to take full advantage of the preferences brought back by the trade pacts.

Vietnam keeps goal of export value growth at 7.5 percent in 2019

The Ministry of Industry and Trade would not adjust its import and export goals despite current difficulties.

Instead it would find the most effective solutions to achieve export growth of 7-7.5 percent as proposed, Industry and Trade Minister Tran Tuan Anh said in the meeting on August 7.

The minister requested in the last months of the year that the Department of Import and Export must research and build scenarios for export markets and industries as well as find solutions for export enterprises.

In addition, the department would coordinate with the Trade Protection Department to re-evaluate goods that have risks relating to trade defence cases and then coordinate with partners to fix problems.

It must coordinate with associations and industries to review export markets with a decline in value and find out why there was a reduction.

It must also look closely at the importation of cars and sugar, he said.

Phan Van Chinh, Director of the Import and Export Department said the seven-month export value reached 145.1 billion USD, about 1 billion USD lower than targets.

According to the ministry’s goals, the total export value for this whole year will reach about 262 billion USD, up 7 - 7.5 percent year on year. So from now until the end of the year, the average monthly export must reach about 23.2 - 23.4 billion USD.

“This is considered a difficult task because for the first time, Vietnam's export reached 23 billion USD in August 2018,” Chinh said.

“Meanwhile, down trend in the current economic and trade development on the world market is not considered a disadvantage for Vietnam to accelerate the exports by this year end.

“However, with efforts in expanding markets, enhancing trade promotion and increasing exports from the Government, ministries and businesses, the nation expects to achieve its goal in export growth rate at 7-7.5 percent for this year.”

To Ngoc Son, deputy head of the Asian and African Market Department under MoIT said China yuan devaluation could push the trade conflict between this country and the US into a currency war, which has a greater impact on the world market than the trade war.

Tension between Japan and the Republic of Korea began which could cause concerns in manufacturing industries and might have a knock-on effect with other businesses.

"These countries are important trading partners of Vietnam so they may affect exports," Son said.

For farming exports, the Ministry of Industry and Trade and the Ministry of Agriculture and Rural Development need to cooperate in market information and production planning, to avoid oversupply.

Minister Tran Tuan Anh pointed out the export value in the first seven months increased by 7.5 percent, a high growth rate.

This was due to efficiency from the international economic integration and administrative procedure reform, creating a good environment for businesses. The ministry has also developed legal documents on goods origin and anti-fraud of goods origin.

During the first seven months, the country earned 145.13 billion USD from shipping goods abroad, a year on year increase of 7.5 percent.

The growth in export value was mainly contributed to by 24 goods with a turnover of more than 1 billion USD. These staples accounted for 88.1 percent of the nation’s total export revenue.

Hanoi holds tourism connecting event targeting Australian partners

A tourism business matching event took place in Hanoi on August 23, gathering 32 Australian firms and 150 representatives from Vietnam’s state management agencies and travel companies.

It was hosted by the capital’s Department of Tourism to collect feedback from Australian businesses and enable participating firms to network and form partnerships.

Earlier, from August 19 to 23, the department in collaboration with the Vietnam Airlines organised a fact-finding trip for the Australian guests to tourist destinations in Hanoi and Quang Ninh province.

In Hanoi, they toured the Ba Vi national park, Duong Lam ancient village, Tay Phuong pagoda, Imperial Citadel of Thang Long, and One Pillar pagoda, among others. The group also experienced the Quintessence of Tonkin show, tried local food around the Hanoi Old Quarter, and enjoyed a performance at the Thang Long Water Puppet Theatre.

In the northwestern province of Quang Ninh, they visited the UNESCO-recognised World Natural Heritage Site Ha Long Bay and the provincial museum.

According to Director of the municipal Tourism Department Tran Duc Hai, the capital city welcomed visitors from more than 190 countries and territories, with the local tourism growing about 19 percent a year during 2015 – 2018.

For years, Australia has been among the top 10 tourist markets of Hanoi. In the first seven months of 2019, foreign arrivals to the city hit 3.73 million, of which 109,000 were from Australia.

Tours offered during National Day Holiday

Vietnamese people will have 3-day holiday for the upcoming National Day, September 2. Seizing the opportunity, travel companies have created short day-tours with several promotional programs.

Travel companies reported that the number of tourists booking for the upcoming holiday is up 20 to 30% from last year. The most popular destinations for the holiday are Quy Nhon city in Binh Dinh province, Da Nang, Nha Trang-Da Lat, Phu Quoc and Con Dao.

Tours of rivers in the southwestern region, buckwheat flower fields in Ha Giang province, Fansipan mountain, Sa Pa, and the Moc Chau plateau in the north are also popular, as are tours of Thailand, Singapore, and Malaysia.

Nguyen Hoang Nhung of the Saigon Tourist Company said, “We offer 2 to 4 day tours by air to Nha Trang, Da Lat, Phu Quoc, Da Nang, and the northern region. We also sell overseas tours of Southeast Asian countries, Japan, the South Korea and Europe.”

Though the number of tourists is growing, prices are no higher than in the summer. Some domestic tours are only 65 to 150 USD.

Saigontourist offers discounts of up to 260 USD for tours of the Republic of Korea, Japan, or Thailand. A 3-day tour of the northwest is only 130 USD while a 2-day tour on Emeraude or Bhaya cruise ship in Ha Long Bay is only 145 USD.

The Viettravel company has an autumn promotion offering tour discounts of 45 to 52 USD. The Viet Media Travel Corporation offers newly-wed couples 10% off all tours.

 
 
 
 
 
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