BUSINESS NEWS 3/7

Southern transport network needs better planning: experts

BUSINESS NEWS 3/7

Developing the transport network in the south needs closer regional linkages and solutions to respond to climate change threats, Duong Nhu Hung of the Ho Chi Minh City University of Technology has said.

Speaking at a recent workshop in HCM City on identifying problems and finding solutions for sustainable development of transportation, he said developing transport infrastructure would help attract more foreign direct investment.

If the quality of transport infrastructure increases by 10 percent, FDI would increase by 24 percent and per capita income by 23 percent, he said.

“The four main factors that need attention are the quality of planning, management of transport infrastructure quality, capital resources, and climate change.”

"Investment is skewed too much in favour of roads," he said, pointing out that while inland waterways carry double the traffic as roads, they get only 14 percent of the total investment in transport infrastructure and a fifth of the investment in roads.

"The poor infrastructure leads to high transport costs and restricts trade competitiveness. Road transport costs 10-60 percent more than waterway transport," he said.

“We need to increase the ratio of investment in inland waterways.”

But funding is limited, and bank loans account for 80-90 percent of the cost of transport projects, according to Hung.

The Government should consider issuing infrastructure bonds and allowing flexible policies with regard to property taxes and investment for some localities, he said.

Research into new building materials that can adapt to climate change, improving the efficiency of the Road Maintenance Fund and giving HCM City a leading role in planning transport infrastructure were also needed.

Dr Martijin van de Groep, an expert on adaptive delta management, said it was necessary to focus clearly on the natural characteristics and competitive advantages of Cuu Long (Mekong) Delta.

The delta had a modern, commercial agricultural sector specialising in high-quality agro-food products, he said.

"A high-quality transport infrastructure is essential for a well functioning, modern, high-tech, competitive agro-based economy."

Urban and industrial development was concentrated in the HCM City-Can Tho corridor and socio-economic development lagged in rural areas, resulting in the migration of landless people, he said.

The delta had developed into a diversified economy with multiple primary, secondary and tertiary sector activities concentrated in designated economic zones, he said.

“It needs impeccable integrated planning and regional co-ordination.”

"It needs a multi-year programme for infrastructure, spatial planning and transport," he said.

Deputy Minister of Construction Nguyen Dinh Toan said the development of transport infrastructure must be linked closely with the urban planning for each locality and the overall region.

More multi-modal transport policy recommendations would be required to find ways to improve intra-regional connectivity in the south, he said.

The workshop was organised by the Vietnam National University, HCM City.

MTA Vietnam returns to HCM City

The 17th International Precision Engineering, Machine Tools and Metalworking Exhibition and Conference (MTA Vietnam 2019) returned to Ho Chi Minh City on July 2, gathering more than 500 exhibitors from 22 countries and territories.

The four-day event, organised by Informa Markets Vietnam at Saigon Exhibition and Convention Centre (SECC), features a wide range of products including metal cutting, metalforming, metrology, cutting tools, ancillary and supporting equipment.

With the aim to introduce new technologies to Vietnam, the “We are INDUSTRY 4.0 ready!” programme which displays innovative equipment and cost-effective ideas provided by the leading Industry 4.0 suppliers, is officially launched for the first time.

MTA Vietnam has become an effective annual exhibition and promotion event for Vietnam’s industry and gained international prestige, according to Informa Markets general manager BT Tee.

This year, over 80 percent of exhibitors are from foreign countries, 40 percent of them being small- and medium-size suppliers.

The exhibition includes 14 international group pavilions from the United Kingdom, Germany, the Republic of Korea, Japan, Singapore, Thailand and more. It is expected to be a good chance for Vietnamese firms to learn from international experience and seek business partnership and technological transfer.

This year, Taiwan (China) runs the largest pavilion, showcasing latest smart machines and equipment, said Karen Pai, Deputy Executive Director of the Taiwan External Trade Development Council (TAITRA). The “TAITRA Smart Machinery” seminar is also hosted to help Taiwanese businesses introduce their products and find ways to access Vietnamese market, she added.

The MTA Vietnam 2018 drew 11,131 trade visitors from 32 countries and territories, an increase of 7.05 percent from the previous edition.

Vietnam Airlines celebrates 25th anniversary of first Viet Nam-Japan flight

Vietnam Airlines held an event in Tokyo on Monday to celebrate the 25th anniversary of its first commercial air route connecting Viet Nam and Japan.

The ceremony was attended by Prime Minister Nguyen Xuan Phuc, who is taking part in the 14th G20 Summit in Japan, as well as Toshihiro Nikai, Secretary General of the Liberal Democratic Party (LDP) of Japan and Chairman of the Japan-Vietnam Friendship Parliamentary Alliance, representatives of the high-level delegation of the Government of Viet Nam and other guests.

Vietnam Airlines' first flight connecting HCM City and Osaka flew in 1994. Since then, the airline has expanded its routes, upgraded its fleet and become an important bridge to enhance investment attraction and the development of both countries' economies, cultures and societies.

After 25 years, the total number of Vietnam Airlines passengers has reached more than 12.5 million. It is currently the Vietnamese airline with the largest market share of travel between the two countries, reaching nearly 60 per cent.

Speaking at the event, Prime Minister Phuc said the deep strategic partnership between Viet Nam and Japan is developing well. Vietnam Airlines has developed into a modern and safe airline, and its flights to Japan have contributed to the two countries' relationship.

“In the new chapter of co-operation between the two countries, we must promote multi-faceted co-operation, including in aviation," PM Phuc said. "I believe that with Vietnam Airlines’ efforts of the past 25 years and with the co-operation of Japan, the carrier will modernise its fleet, improve service quality to grow and contribute to pushing relations between the two countries.”

Nikai expressed his admiration for Vietnam Airlines for its work to connect the two countries in the 25 years since the relationship between Viet Nam and Japan began to develop.

He said the solid friendship between the two countries will be expanded in the future with the support of Vietnam Airlines.

According to Duong Tri Thanh, CEO of Vietnam Airlines, Japan is always in the top five markets with the largest air capacity to Viet Nam, and is one of the markets with an important strategic role in the carrier’s long-term development plan.

Trade co-operation between the two countries is growing strongly, reaching US$37.8 billion in 2018. The sides have targeted $60 billion in bilateral trade by 2020.

In the aviation sector, 2016 marked the deepening of co-operation between the two countries when Japan's largest airline ANA Holdings bought an 8.7 per cent stake in Vietnam Airlines and became a strategic partner. The two sides have worked together on joint ventures, regular customers, ground technical services for passengers and goods, technical maintenance and vocational training.

In 2019, Vietnam Airlines was recognised by Skytrax as a four-star international airline for the fourth year in a row, while ANA continues to be the only Japanese airline to win a five-star rating from Skytrax. The comprehensive strategic partnership with ANA creates favourable conditions for Vietnam Airlines to upgrade its services and soon become the first five-star international airline in Viet Nam.

In 2018, more than 800,000 Japanese tourists came to Viet Nam. The number is expected to reach one million by 2020. The growth rate of Vietnamese tourists to Japan last year was 125.9 per cent, higher than any other country.

Vietnam Airlines currently operates 11 routes between Viet Nam and Japan with an average of nearly 80 flights per week, connecting Ha Noi, HCM City and Da Nang with major Japanese cities including Tokyo, Osaka, Nagoya and Fukuoka. In the coming years, the airline will continue to introduce more wide-body aircraft into operation and open new routes to Japan.

PM attends launch of Vietjet’s new flights to Japan

Prime Minister Nguyen Xuan Phuc attended a ceremony in Tokyo, Japan on July 1 to launch budget carrier Vietjet’s new routes connecting Ho Chi Minh City with Tokyo (Narita), and the central city of Da Nang with Tokyo (Haneda).

The event saw the presence of Secretary General of the Liberal Democratic Party of Japan and Chairman of the Japan - Vietnam Friendship Parliamentary Alliance Nikai Toshihiro, and Minister of State for Regional Revitalisation Satsuki Katayama.

On the occasion, Vietjet received a certificate recognising it as a member of the Japan Business Federation (Keidanren), making it the only low-cost carrier globally to ever join Keidanren.

Keidanren now groups leading Japanese companies, industrial associations, regional economic organisations and special members.

Speaking at the event, PM Phuc congratulated Vietjet on launching new air routes and becoming a member of Keidanren - Japan’s most comprehensive economic organisation.

While stressing the significant of the routes to connecting the two economies, he said each business should have its own responsibility for promoting the cooperation between Vietnam and Japan, especially in trade, investment, and tourism.

He said over 330,000 Vietnamese people in Japan now and the growing travelling demand of the two countries’ people open up opportunities for airlines.

The leader expressed his belief that with a fleet of over 80 existing aircraft and 20 ones to be delivered, Vietjet will become a strong airline in the region.

Apart from current Ho Chi Minh City/Hanoi – Osaka, and Hanoi – Tokyo (Narita) routes, Vietjet will offer daily Ho Chi Minh City – Tokyo round flight services from July 12 and daily Da Nang – Tokyo (Haneda) round trips from October 26.

Petrol prices rise over 400 VND per litre

The prices of oil and petrol have climbed over 400 VND (0.017 USD) per litre following the latest adjustment by the Ministry of Industry and Trade and the Ministry of Finance on July 2.

The two ministries review fuel prices every 15 days to adjust domestic prices in accordance with swings in the global market.

Accordingly, from 16:30 of the day, the retail price of RON95-III has increased 383 VND per litre to a maximum level of 20,517 VND per litre, while the ceiling price of bio-fuel E5 RON 92 is up 420 VND per litre to 19,653 VND.

In this review, the prices of diesel 0.05S and kerosene are capped at 16,949 VND and 15,937 VND per litre, respectively. Meanwhile, Mazut 180CST 3.5S is sold at no more than 15,220 VND per kilogramme.

Earlier, three consecutive adjustments were made, scaling the petrol prices up by total 3,500 VND per litre.

FPT and Shinhan Bank signed MoU in 2018.

Many leading groups and corporations of the Republic of Korea, which operate in banking, finance, electricity, retail sales, and technology, have expressed their interest in cooperation with Vietnamese partners, including FPT Corporation, in the fields of new technologies digital transformation.

The Korean businesses mentioned their intention at a recent meeting between FPT Corporation and 20 leading groups of the East Asian country, during which they discussed cooperative opportunities in the Fourth Industrial Revolution.

According to CEO of Shinhan Bank Jin Ok-dong, the bank has invested heavily in the Vietnamese market, and wishes to partner with local startups in Fintech.

Last year, the bank signed a cooperative deal with FPT to develop information technology measures in the financial sector like digital banks and fintech.

Meanwhile, tech giant Samsung said it wants to carry out digital transformation in semiconductor manufacturing. Other enterprises like KDB Bank, LG Chem and LS Corp also wished to work with FPT in the application of new technologies to improve business and production.

In 2016, FPT established a representative office in the RoK to seek cooperation with Korean giants in strategic technology clusters, including smart factory, automobile technology, consumer electronics and multimedia entertainment.

Seeing the RoK as a strategic market, FPT targets business growth in the market at average 60-80 percent per year. Besides, the corporation wants to enter the top five providers of information technology outsourcing (ITO) measures in this market.

Automotive industry expected to get stronger

A stronger automotive industry with higher participation of foreign firms will boost the domestic auxiliary industry, businesses said last week.

"The Vietnamese automobile and motorbike industries have been very lively in the last two decades and there is still room for further development," Nghiêm Văn Hùng, assistant manager at sales and marketing department, Inoac Vietnam Co Ltd, told Việt Nam News.

A large number of products are now produced and assembled in the country and foreign automakers have moved their plants to Việt Nam, he said.

Foreign companies have received preferential policies in terms of tax and administrative work, so the number of foreign companies in Việt Nam has increased, Hùng added.

Most foreign automakers come from Japan. Mitsubishi in 2018 inaugurated its first assembly plant in the southern province of Bình Dương, becoming the seventh Japanese automaker moving production to Việt Nam.

Some Indonesian carmakers and part companies are considering moving their plants to Việt Nam as well because they see potential in the Vietnamese market.

According to Indonesian Ambassador to Vietnam Ibnu Hadi, auto and autoparts are Indonesia’s two biggest exports to Việt Nam in terms of volume.

In the first four months of 2019, Việt Nam imported nearly 58,300 cars in total, worth US$1.3 billion. Of the figure, Indonesian car exports accounted for more than 12,700 units, worth $190 million.

Last year, Indonesian companies exported $289 million worth of cars to Việt Nam. The figure is expected to reach $600 million this year.

Sales volume of Mitsubishi Expander topped Indonesia’s car exports in the first four months, with more than 17,600 car units. Of the figure, more than 3,700 units were exported to Việt Nam.

Therefore, Indonesian companies are looking to expand their influence in Việt Nam by setting up offices and looking for local part suppliers.

According to Prihatanto Agung Lesmono, president director of Astra Visteon Indonesia, his company is looking for more tier-2 local suppliers with higher quality. Astra Visteon Indonesia has an office in Việt Nam, known as Astra Visteon Vietnam Co Ltd.

However, a number of Vietnamese part suppliers do not meet quality standards so they need improvement to meet the localisation requirements, he said.

But the competition between local suppliers would get fiercer, Hùng said, as foreign companies want higher quality and cheaper parts.

More Chinese companies have been present in Việt Nam as they shift production from China to avoid US tariffs, according to Hùng. Their products are of medium quality but the prices are much cheaper.

PV Power silent about Nhon Trach 3 and 4 thermal power projects

It has been 18 months since PV Power completed its equitisation, raising expectations to implement large-scale projects, including Nhon Trach 3 and 4 thermal power plants. However, the date for the construction of these two projects is still uncertain.

According to Ho Cong Ky, chairman of the board of directors of PV Power, the company has being preparing for the construction of two projects, namely Nhon Trach 3 and 4 thermal power plants located in Ong Keo Industrial Zone (IZ) in the southern province of Dong Nai.

To date, the government approved the investment planning and pre-feasibility study report of Nhon Trach 3 and 4. PV Power is selecting the contractor for building the feasibility study (FS).

“PV Power targets to complete the FS in this year in order to submit it to the board of directors and seek approval from the shareholders' meeting. Besides, the company expects to take Nhon Trach 3 and 4 plants into pilot operation by the end of 2022 and commercial operation in 2023,” Ky said.

However, in reality, it is difficult for the company to reach this deadline because Document No.58/BC-BCT of the Ministry of Industry and Trade reports that in the adjusted Power Development Plan VII these two projects, which have the capacity of 750MW per plant, were expected to start operations in 2020 and 2021, respectively. The construction duration would be 3.5 years for each plant, but in mid-2019 there has been no official move to begin construction.

Besides, the selling price of electricity at the Nhon Trach 3 and 4 projects is also a concern for the investor as the projects will use LNG imported from the Thi Vai storage terminal. However, according to the forecast mentioned at Document No.58/BC-BCT, after 2022, the southeastern region will run out of gas, which will have to be offset by LNG, thus, the supply of LNG for Nhon Trach 3 and 4 may be impacted.

In addition, using LNG will make electricity production more expensive, which will push up the selling price by VND2,500 per kWh. Thus, the current selling price on the market (VND1,864 per kWh) would not ensure profitability for the two projects.

Another challenge is the government guarantee for loans. With the total capacity of 1,500MW of the two projects, the estimated capital is $3 billion, $1.5-2 billion of which comes from loans, thus, if there is no guarantee from the government, the investor will face difficulties in arranging capital.

Previously, the prime minister approved the proposal of PV Power to take over the two projects from PetroVietnam after collecting the opinions of ministries and relevant authorities.

According to the plan, the two thermal power plants will cover an area of 34 hectares and have the total investment capital of VND33.3 trillion ($1.46 billion), with the generation capacity of 750-800MW each.

PV Power will spend VND9.99 trillion ($438.29 million) of its equity and VND23.31 trillion ($1.02 billion) from loans to develop the two projects.

Mobile World pockets huge income from selling watches

The strategy of “selling goods that they never sold before” partly helped technology retailer Mobile World to overcome the saturation of the smartphone market.

18 Mobile World stores that have begun selling watches and fruits in addition to the company's usual goods have been pocketing VND600-1,000 million ($26,086-43,478) of revenue on average for nearly two months. These stores sell an average of 500 watches per month.

With this quite satisfying business performance, leaders of Mobile World plan to add these products to more stores in the future.

Mobile World's net revenue and after-tax profit in this year’s first five months reached VND42.8 trillion ($1.86 billion) and VND1.79 trillion ($77.83 million), respectively. Cooling appliances are still its key goods, generating sales of VND2.3 trillion ($100 million), up 40 per cent on-year. In addition, online sales also occupied 16 per cent of the corporation's total revenue.

In May, Mobile World opened 47 stores across its multi-brand system, including thegioididong (specialised in mobile devices), Dien May Xanh (electronic goods), and Bach Hoa Xanh (food). The expansion raised the total number of Mobile World’s stores to 2,371.

In addition, during the period, the Bach Hoa Xanh chain also reported rosy performance. Accordingly, stores in the chain earned a revenuean average of VND1.4 billion ($60,870) per month, up 75 per cent on-year. The store chain also set the target of increasing the number of stores in the next six months.

Explaining the reason behind the shift towards watches and fruit, many experts stated that local demand for new gadgets is not as high as before, so retailers have been looking for new growth directions.

Germany-based market research company GfK forecasted that the local mobile market in 2019 will only grow by 1 per cent – the lowest ever growth rate.

Tai from MWG himself admitted that the time when people are lining up to buy new smartphones is over. “I use an older smartphone and don’t feel like upgrading because it’s still good enough to use.”

His example partly shows a new shopping attitude among Vietnamese consumers – purchasing new devices for their needs and not for new experiences and features.

Since early 2018, Mobile World has been limiting the expansion of thegioididong stores, with no new stores opened last year and 40 stores closed to focus on developing electronics chain Dien May Xanh. This is contrary to the corporation's speed of opening three stores every two days during 2015-2016.

Errors in equitisation of Vietnam Medical Equipment Corporation

The Government Inspectorate of Vietnam has just announced the conclusions of its inspection of the equitisation process at Vietnam Medical Equipment Corp. (Vinamed); the state divestment at Mediplast Medical Plastic JSC (Mediplast) and Danameco Health JSC (Danameco); and the merger of Mediplast into Vinamed.

The Government Inspectorate concluded that in 2007-2010, the Ministry of Health (MoH) did not request advice from the prime minister about the difficulties to complete the equitisation of Vinamed, which after the transition was not transformed into a joint stock company.

After being transformed into Vinamed, the enterprise did not research the production of medical equipment and neither did it increase the value of the state's interest in the company.

For the equitisation process of Vinamed in the 2014-2016 period, Decision No.4208/QD-BYT dated October 15, 2014 of the Minister of Health was not consistent with the provisions of Decree No.59/2011/ND-CP dated July 18, 2011 of the government. The MoH did not issue a plan or a roadmap to implement the equitisation in accordance with regulations.

Vinamed and Dong A Securities Co., Ltd. did not notify the authorities in time about completing the business valuation.

The Ministry of Health (MoH) issued Decision No.3854/QD-BYT on the value of equitised enterprises slower than prescribed; the implementation of the approved land use plan was slow and the land use was not in accordance with the plan.

The corporation until July 12, 2016 also had overdue bad debts.

The Government Inspectorate also pointed out that after the sale of the shares the company delayed returning the state's capital.

In addition, the equitisation steering committee did not report to the MoH the added value of Mediplast shares from VND25,200 ($1.1) to VND 29,484 ($1.3) per share and did not recalculate the value of state capital at the time it officially transformed into a joint stock company.

Along with that, the merger of Mediplast into Vinamed did not comply with the PM's directions. After one year of officially operating under the JSC model, Vinamed should have completed the divestment before merging with Mediplast, but the company reversed this order.

Prior to the above issues, the Government Inspectorate of Vietnam proposed the PM to direct relevant units to re-calculate the value of shares, the number of shares, and the percentage of shares held by the state at Vinamed to transfer to the State Capital Investment Corporation (SCIC).

The MoH redefined the value of state capital when the firm was transferred to the JSC model.

At the same time, the MoH clarified its responsibilities and determined penalties and solutions for these shortcomings.

 

Vinamed must immediately pay the interest and late payment fee due to delaying payments to the state. The state will also cancel and nullify the two valuation certificates and documents (one for the divestment and one for the merger).

The Hanoi People's Committee monitors and urges the handling of existing problems in the management and use of houses and land at No.1 Lane 135, Nui Truc, Kim Ma, Ba Dinh, Hanoi and No.89 Luong Dinh Cua, Dong Da, Hanoi.

The Hanoi People's Committee will also prepare documents to deal with land and house recovery in accordance with regulations if Vinamed is found to have violated regulations on land management and use in the two above facilities.

Resort real estate a bright spot

The resort real estate segment is forecast to be a bright spot in Vietnam’s real estate market this year, with great potential in attracting investment capital, the “Real Estate Investment Forum 2019: Risks and Opportunities”.

Mr. Vo Tan Thanh, Vice Chairman of the Vietnam Chamber of Commerce and Industry (VCCI), said that the resort segment, especially the condotel segment, has been targeted by many domestic and foreign investors this year. “The potential for developing the segment is still significant due to Vietnam’s high economic growth and its attractive natural landscapes,” he added. “However, the development of the real estate market poses many risks. Databases and information on the market, from planning, selecting investors, and implementing projects to transactions are not synchronous and lack transparency.”

Mr. Nguyen Tran Nam, Chairman of the Vietnam Real Estate Association (VNREA), told the forum that Vietnam’s legal framework still lags behind the development of resort real estate. “Investors expect legal regulations will be completed soon,” he said. “It is also necessary to recognize resort real estate as a product that can be purchased, sold, inherited, and transferred conveniently, especially in the context of Vietnam’s tourism growth fluctuating from 15 to 20 per cent per year.”

Meanwhile, Professor Dang Hung Vo, former Deputy Minister of Natural Resources and Environment, said a solution is to add provisions to the Land Law, the Housing Law, and the Real Estate Business Law on the management method for multi-functional properties like condotels.

Mr. Do Huy Hoang from the Housing and Real Estate Market Management Agency at the Ministry of Construction, said the Prime Minister has issued Directive No. 11/CT-TTg on a number of measures to promote the stable and healthy development of the real estate market, in which the ministry is required to supplement construction standards for types of apartments, condotels, tourist villas, and officetels.

According to analysts, investors must also be professional regarding their resort products in order for the market to develop in the right direction.

Ms. Tran Thi My Loc, Deputy General Director of the Vinhomes JSC, said resort real estate is not just constructing a building like a house. “In housing project investment, we only complete the project and put it into use and provide management,” she said. “In resort real estate, construction is just the initial stage of the investment process, with a long way ahead to bringing profitability to buyers.”

Why Vietnam bucked the trend on Grab-Uber deal

The finding that Grab’s acquisition of Uber’s Vietnam operations did not violate antitrust laws has bucked the general trend.

Last week’s ruling by Vietnam’s Competition Council came after similar deals were fined by antitrust watchdogs in the Philippines and Singapore.

Vietnam's main rationale for the ruling was that the deal did not take ownership of the exiting company.

The competition and customer protection authority under the Ministry of Industry and Trade said that GrabTaxi – the Vietnam operations of Grab Holdings – had a market share of 44.1 percent in Hanoi and 82.68 percent in Ho Chi Minh City after acquiring Uber Vietnam.

The country’s Competition Law states that if a company will gain a 50 percent market share after any merger or acquisition, it can only be carried out with official approval. The competition authority therefore concluded that the Grab-Uber deal violated the law.

But the Competition Council, which is independent of the trade ministry, ruled against this conclusion. It said that the acquisition, signed in March last year, was not of equity shares.

GrabTaxi, in which Grab Holdings own a 49 percent stake, did not have voting rights in Uber Vietnam after the transaction, the council said, adding that Uber B.V. continued to operate the Uber app after the deal, not GrabTaxi.

"Since it is not a share acquisition that leads to Grab’s control of Uber’s equity interest, there are not enough elements, as defined by law, to constitute an economic concentration," it said in a statement issued after the hearing on June 11.

"And since the case did not constitute concentration, the council has decided that identifying the relevant market and aggregated market share is not necessary."

Uber Vietnam doesn’t operate any ride-hailing services. Its business registration doesn’t include ride-hailing, and the company says it only provided market research and marketing services to its parent company Uber B.V. based in Netherlands.

"Uber International B.V. could acquire these services from other companies other than Uber Vietnam. The trade ministry’s competition department has taken aim at the wrong target in its investigation," a representative of Uber Vietnam said.

Citing these reasons, the Competition Council said that the Grab-Uber deal did not violate antitrust laws.

Furthermore, the trade ministry’s competition department needs to pay case fees of VND100 million ($4,322), the Competition Council said.

But the Grab-Uber deal didn’t win in other Asian countries. The Philippines’ competition watchdog had earlier fined the two companies a cumulative 16 million pesos ($296,900), saying they had completed the deal too soon and that the quality of service had dipped.

The Singaporean competition authority fined them a total of S$13 million ($9.5 million) and announced other measures to address competition concerns arising from the merger.

Viet Nam develops forestry industry, explores collaboration with US

Viet Nam has been moving towards building a sustainable wood processing industry that uses legal materials in accordance with international and Vietnamese law as well as regulations of major export markets like the US, EU and Japan.

The statement was released by Deputy Minister of Agriculture and Rural Development Ha Cong Tuan at a conference held by the American Hardwood Export Council and the Viet Nam Timber and Forest Product Association in Ha Noi on Tuesday.

Tuan said Viet Nam’s wood products had been exported to 120 countries and territories, of which the US is its most important market.

In 2018, the country’s exports of wood and forest products reached US$9.4 billion, about 42 per cent of which came from the US.

Tuan said Viet Nam also imported large quantities of timber and wood products from the US. Viet Nam is currently the top destination for US hardwood in Southeast Asia.

In the first five months of this year, the country imported US$138 million of timber and forest products from the US, an increase of 24.9 per cent compared to the same period in 2018.

“The potential to export even more US hardwood to Viet Nam is very big,” Tuan said.

Tuan said the US product had confirmed its important place in Viet Nam’s forest product processing and export industry.

“To make processing wood and forest products a key economic sector, we need co-ordination from the US, especially from suppliers of raw materials,” Tuan. "The Vietnamese wood industry aims to be transparent and apply good production processes to ensure sustainable development.

“Viet Nam’s wood export is currently ranked fifth in the world, ranking second in Asia. It can not rest on these achievements but must aspire to develop further, applying science, advanced technology and experience as well as expanding co-operation with the US in this field."

According to Nguyen Ton Quyen, Deputy Chairman of the Viet Nam Timber and Forest Product Association, the US has one of the largest forest areas in the world, with output of more than 300 million cu.m per year. US wood is guaranteed to be of traceable, legal origins and good quality. It has competitive prices.

“With these advantages and over 20 commercial timber species, American wood is always the first choice for Vietnamese importers,” Quyen said.

Quyen said Viet Nam had signed many free trade agreements, in which it committed to processing only legal timber.

Robert Hanson, Head of the Foreign Agricultural Service of the US Embassy in Viet Nam, said Viet Nam had accounted for 77 per cent of the US’s wood exports to Southeast Asia.

Hanson said the Forest Law Enforcement Governance and Trade Voluntary Partnership Agreement (FLEGT-VPA) between Viet Nam and the European Union has taken effect to ensure the legality and sustainability of Vietnamese wood products. Under the agreement, Viet Nam will give priority to importing wood materials from sustainable and legal sources.

Quyen said Viet Nam’s forest product processing industry had rapidly and stably developed in recent years, not only meeting domestic demand for wood products but also moving towards sustainable exports.

There are now 5,000 enterprises involved in the production and processing of wood products (excluding households and small businesses), about 1,800 more than there were five years ago.

Viet Nam has halted the exploitation of natural forests for three years and has been pushing forestation. The 3.5 million hectares planted for future exploitation will provide about 35 to 40 million cu.m of timber in the next five to 10 years.

The Vietnamese Government set a target for the forest products sector to reach $11 billion in exports this year. To help, the Government has committed to creating good conditions for businesses, including domestic and foreign invested enterprises.

At the conference, the organisers also explained the classification system for US wood to designers, processors and importers. The conference also served as a chance for Vietnamese and US businesses to explore future co-operation opportunities.

Enterprises urged to prepare for escalating US-China trade war

Vietnamese exporters have been urged to prepare for any trade-related lawsuits and disputes arising from the escalating US-China trade war amid concerns that the two major powers will not reach an agreement at a meeting in Japan this month.

According to Tran Du Lich, vice chairman of the Viet Nam International Arbitration Centre (VIAC), the trade war is expected to continue to cause disruption to the global supply chain and lead to a hike in prices and decline in FDI worldwide.

He spoke at a conference on the trade war held in HCM City on Tuesday.

Pham Sy Thanh, director of the Viet Nam Centre for Economics and Policy Research’s China Economic Research Programme, noted that the US and China are not expected to reach a deal at the G-20 summit in Japan at the end of this month.

“The trade war is expected to continue to be more stressful in the next year,” he said. “The war has caused a decline in global economic growth while mounting protectionism is detrimental to highly open economies like Viet Nam.”

Chinese products, especially electronics, phones and computers, are being exported less to the US, which could affect other countries.

Viet Nam’s exports to China in the first four months of the year dropped by 5.8 per cent over the same period, with mobile phones falling by 62.3 per cent and fisheries by 31.5 per cent.

The trade war could also cause China to increase exports to surrounding markets, creating pressure on other markets such as Viet Nam.

In addition, the devalued Chinese currency would put pressure on Vietnamese exports, Thanh said.

Nguyen Xuan Thanh, director of development from Fulbright University Viet Nam, said the trade war had affected the flow of goods, with the US increasing its trade safeguard investigations of major exporters, including Viet Nam.

Lawyer Bui Van Thanh, head of New Sun Law firm, said that businesses collaborating with Chinese partners could face legal risks in shipping goods to and from the US and China.

As for attracting investment capital, Viet Nam has many opportunities to cooperate with large investors but inadequacies in the current law are the main barrier to accessing such huge capital sources, according to Thanh.

To help businesses overcome legal restrictions, Thanh said they should be careful in negotiating their investment cooperation contracts and resolve any conflicts.

“Commercial arbitration is one of the effective methods for Vietnamese enterprises to conduct dispute resolution,” he said.

VIAC had handled many disputes between China and Viet Nam by protecting the rights and interests of Vietnamese enterprises when conflicts arose from their Chinese partners, he said.

Ken Dat Duong, executive lawyer at TDL Law Firm in the US, said that without strict regulations on the origin of imports and exports, China could send its products to Viet Nam to complete the final phases of production such as assembly, packaging and labelling.

Though this would help those goods avoid high tariffs, it could be a good reason for the US to investigate Vietnamese goods and apply trade defence measures, he said.

If the US discovers there is a transfer of goods from China into Viet Nam, similar products from Viet Nam could be subject to the same tax rate as China, according to experts.

Vietnamese businesses should stay up to date about trade remedy measures in importing markets, closely co-operate with government agencies and business groups, and enhance their relationships with foreign partners, they said.

In a related move, Viet Nam is upgrading an early warning system to help businesses predict which products could be exposed to trade lawsuits and to monitor goods imported into Viet Nam that could damage domestic products.

All information related to the US-China trade war for Vietnamese businesses is posted on the website www.viac.vn and hoinhap.org.vn.

Trade tensions escalated significantly after the US raised tariffs on US$200 billion of Chinese imports and threatened to impose sanctions on a further $300 billion, with China retaliating by placing tariffs on $60 billion of US imports as well as threatening additional countermeasures.

More than 200 lawyers and representatives from agencies and business associations took part in the “US-China Trade War: Opportunities and Challenges for Vietnamese Enterprises conference”.

The seminar was organised by VIAC in coordination with the HCM City International Integration Support Centre (CIIS).

Germans taking interest in Vietnam

In the wake of the United States-China trade tensions, German investors are rushing to pour money into industry, construction, trade, and services in Vietnam to benefit from growth potential following the country’s landmark free trade agreements.

At last week’s meeting to announce the AHK World Business Outlook 2019 (AHK WBO), Marko Walde, chief representative of the German Industry and Commerce in Vietnam (AHK Vietnam), said that German businesses consider Vietnam as a focus of their investment plans.

“Vietnam is a target, as it is one of the four countries in the ASEAN that are members of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership. Vietnam will also sign a bilateral free trade agreement with the EU,” said Walde. “In Vietnam, Germans do not focus on huge investment, but on long-term investment, bringing in state-of-the-art equipment, machines, and advanced technologies to the country.”

As shown in the AHK WBO, which studied over 3,500 German companies worldwide, German businesses operating in Vietnam assess both their current and future business situations significantly better than they did in 2018. Some 77 per cent rate their current business situation in Vietnam as good, up from 56 per cent in 2018, and higher than the ASEAN average of 61 per cent. The positive news does not stop there. From 2018 to 2019, the percentage of German business who rated their current business situation in Vietnam as negative fell from 4 per cent to zero.

What is more, 55 per cent of German companies in Vietnam intend to expand their activities within the country, while 59 per cent predict an increase in employment in 2019-2020.

“German investment in the country will increase in industry, construction, trade, and services, as well as in other economic sectors. German investment in Vietnam has tended to shift from basic projects into high-quality ones in line with Vietnam’s strategy to attract high-quality foreign direct investment,” the leader of AHK Vietnam told VIR.

The on-going US-China trade tensions have also impacted German investment in Vietnam, prompting companies to view investment in Vietnam as a safer, more reliable alternative to Chinese investments.

“German companies have tended to extend investments to a third country, including Vietnam, to ease risks in China. Hella is a typical example. As a leading developer and manufacturer of lighting technology and electronic products for the automobile industry, the company decided to establish a software centre in Ho Chi Minh City a few years ago, in addition to a similar centre in China,” explained Walde.

While the outlook for business in Vietnam has been increasingly positive, more than half of German companies (51 per cent) claim that economic policy framework is the greatest risk to their businesses in Vietnam. Some 28 per cent are worried about the potential for disadvantageous trade barriers, 44 per cent are concerned about a lack of qualified labour, and 31 per cent are worried about an increase in labour cost.

The concern regarding economic policy framework is increasing. Last year, 44 per cent of German business cited economic policy as the greatest factor of uncertainty for their business in Vietnam. In 2019, 51 per cent of German businesses share that concern. Despite these concerns, higher growth potential has increased German investment. According to statistics from the Ministry of Planning and Investment, as of May 20, German ­businesses invested in a total of 328 projects in Vietnam with the total investment capital of nearly $2 billion.

Vietnam seeks to increase economic efficiency of northern hub

The conference on seeking solutions to further develop the northern key economic region opened in the northern province of Hung Yen last week, hoping to open a new chapter for regional economic development in the months to come.

The event, which attracted the participation of Prime Minister Nguyen Xuan Phuc, deputy prime ministers and leaders of ministries, cities, and provinces, as well as domestic and international businesses, focused discussions on solutions to sustainable investment attraction, logistics services, and human resources development in the Fourth Industrial Revolution, transport, sci-tech and innovation, and tourism, among others.

Addressing the conference, Minister of Planning and Investment Nguyen Chi Dung said that together with improvements, the region now faces some problems that need to be solved to promote regional development in the future. Although service is the spearhead industry in the region, it has yet to grow sustainably. In 2016, the industry grew by 9.05 per cent. The rate, however, fell to 7.54 per cent in 2018.

The electronics industry only focuses on assembling and outsourcing with low added value. The development of hi-tech products aligning with the development of R&D centres remains weak. FDI projects concentrating on labour-intensive sectors and cheap labour advantages remain numerous. The Provincial Competitiveness Index (PCI) of some regional cities and provinces remains low and environmental pollution remains a hot issue.

Prime Minister Nguyen Xuan Phuc highlighted the development of the region. He also asked relevant ministries and regional localities to work closely on the possible solutions to increase the efficiency of regional co-operation.

“The northern key economic region should be the pioneer in the development of sci-tech and innovation activities, digital economy, circular economy, and green growth,” said the government leader.

Looking forward, the gross regional domestic product (GRDP) is aimed to reach 9 per cent in 2016-2020, while GRDP per capital will increase to $5,500. In addition, the northern key economic region's export turnover will make up 32 per cent of the country total by 2020, while the number of trained workers will rise to 80-85 per centby 2020. By next year, 98 per cent of urban solid waste, and 97 per cent of medical waste will be treated, while more than 90 per cent of industrial parks and export-processing zones will have standardised concentrated wastewater treatment facilities.

The northern key economic region comprises of seven cities and provinces – Hanoi, Haiphong, Quang Ninh, Hai Duong, Bac Ninh, Hung Yen, and Vinh Phuc – with a total GDP making up 32 per cent of the country’s and annual export turnover accounting for over 30 per cent of the country’s total.

Over the past years, the region has made great achievements, contributing significantly to the national social-economic development. In particular, transport network has been developed significantly, helping boost connectivity among regional localities. Big expressway projects include the Hanoi-Haiphong, the Hanoi-Cau Gie-Ninh Binh, the Hanoi-Thai Nguyen, the Hanoi-Lao Cai, the Ha Long-Haiphong expressways, while airports such as Noi Bai, Cat Bi, and Van Don and important seaports such as Lach Huyen and Cai Lan provide important regional and global connectivity.

In the 2016-2018 period, the GRDP grew 9.08 per cent on average, while GRDP per capita rose from $4,164 in 2016 to $4,813 in 2018, which is 86 per cent higher than the country’s average.

The regional economic structure changed positively towards increasing the contribution of non-agricultural sectors. The industry and construction sectors continue to be the pillars of regional development, attracting many big investment projects focusing on Hanoi, Bac Ninh, and Haiphong. In 2016-2018, these two regional industries contribute nearly 40 per cent of the country’s GDP, focusing on key industries such as electricity, electronics, automobile manufacturing, shipping, textile and garment, and supporting industry.

What is more, the business climate has improved. Regional foreign direct investment (FDI) inflows in 2016-2018 ranked second nationwide, just behind the southern key economic region with the total registered capital of $32.1 billion, or 27 per cent of the country’s total.

Healthcare, education, and environmental protection have also improved. Specifically, in 2018 67.8 per cent of the regional workforce consisted of skilled employees, higher than the country’s 58.6 per cent average, with Hanoi and Hai Duong named among the localities having the highest numbers of skilled manpower. IT has continuously developed strongly, with the presence of leading international groups namely Samsung, LG, Canon, and Microsoft, thus contributing to increasing the added value of industrial products.

In the first five months of 2019, the growth momentum continued. FDI reached $7.025 billion, while the index of industrial production (IIP) increased from the same period last year. For example, the IPP of Haiphong ascended by 23.06 per cent, Quang Ninh by 13.26 per cent, and Hai Duong's by 9 per cent. Moreover, total retail sales and service revenue of the region were up 12.5 per cent on-year.

Work starts on FLC Quang Ngai tourism-resort complex

The FLC Quang Ngai tourism-resort complex project, invested by Vietnamese real estate developer FLC Group, was launched in the central province on June 30.

The project covers 1,026 hectares, including four areas for hi-end hotels and resorts, and two areas for coastal urban zones, with total investment in the first phase reaching about 11 trillion VND (43 million USD).

FLC Quang Ngai also has a golf course to international standards and amusement park clusters.

Addressing the launching ceremony, Vice Chairwoman and General Director of FLC Huong Tran Kieu Dung said that the FLC Quang Ngai is part of a chain of high-end resorts that the firm is developing in all regions across the country.

In 2018, Quang Ngai welcomed more than 1 million visitors, up 23 percent over 2017, she noted, holding that the locality’s tourism has high potential for further development.

As of 2018, Quang Ngai has had nearly 300 accommodation facilities without any high-end hotels, she said.

Dung affirmed that FLC will work with provincial authorities and people in preserving cultural values and nature landscapes professionally.

The first items of the project are scheduled to become operational in 2020, she said.

Tran Ngoc Cang, Chairman of the People’s Committee of Quang Ngai said that the province has 130km of coastline and many beautiful beaches such as Binh Chau, My Khe and Sa Huynh, Ly Son island, and Ca Na mountain, which is considered a second Ba Na mountain.

HCM City’s CPI goes down slightly in June

Consumer price index of Ho Chi Minh City in June decreased by 0.04 percent compared to that of May and increased by 3.79 percent year-on-year, said the municipal Statistical Office on June 29.

Among 11 commodity groups, eight recorded monthly price increases, including beverages and tobacco (0.27 percent), apparel, headgear and footwear (0.23 percent); household equipment and appliances (0.23 percent); entertainment and tourism (0.22 percent); food and catering services (0.19 percent); water and electricity and fuel (0.12 percent); housing, electricity, water and fuel (0.12 percent), other goods and services (0.12 percent) and education (0.085 percent)

Meanwhile, decreases were seen in medicine and medical services (0.01 percent); transportation (1.89 percent) and post and telecommunications (0.25 percent).

HCM City’s CPI in the first half of 2019 was 3.92 percent higher than that of the same period of 2018

Gold and USD prices in June moved up 1.79 percent against May, and up 0.01 percent year-on-year.

RoK firms come hiring at HCM City job fair

Investment in Vietnam from the Republic of Korea (RoK) is expected to rise further, increasing demand for labour, according to the Korea Trade-Investment Promotion Agency (Kotra).

The RoK is already the largest foreign investor in Vietnam, according to the Foreign Investment Agency, with a total of 64.55 billion USD in 7,905 projects, accounting for over 18 percent of FDI.

At a recent Korea-Vietnam job fair in HCM City, 45 RoK firms hired Vietnamese for positions in production, quality management, import-export management, HR, interpretation, accounting, sales and marketing, with the largest demand being for sales, marketing and production management personnel and interpreters.

They included subsidiaries of major companies such as Lotte, Posco, LG, Daesang, Emart, Shinhan Bank, and Korea Exchange Bank,

Nearly 1,400 Vietnamese took part in the fair.

Speaking about the Vietnamese workforce, Kim Hyeri, a Kotra executive in HCM City, said its quality has improved significantly in recent years.

Vietnamese labourers are diligent and scrupulous but need to improve their technical skills, she said.

The fair also featured a seminar on start-ups to apprise students and graduates with information about the country’s start-up eco-system and support programmes that are available for start-up individuals and organisations.

Organised by KOTRA and the RoK consulate in HCM City annually since 2013, the fair seeks to support Korean companies but also offer Vietnamese students an opportunity to embark on careers.

 
 
 
 
 
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