BUSINESS IN BRIEF 26/8 ACV set to expand Pleiku Airport The Airport Corporation of Vietnam (ACV) plans to start the expansion and renovation of Pleiku Airport in the central highlands province of Gia Lai. ACV announced on Wednesday that the project will increase the length of the runway and taxiway, and expand the parking space at Pleiku Airport. The project's VND945 billion (US$45 million) investment will be co-funded by the State budget, ACV and Gia Lai. Once completed, Pleiku Airport would be able to handle the A320/ 321 aircraft or their equivalent, in accordance with the development plan of Vietnam Airlines and other airlines. ACV estimated that the project would take 18 months to be completed and the Airport could be shut down for six months for the expansion. Japanese medical firm launches Dong Nai factory Paramount Bed Viet Nam Co., Ltd officially opened its factory in southern Dong Nai province on Thursday. As a subsidiary of Japan's Paramount Bed Group, a major manufacturer and distributor of hospital and nursing care supplies, Paramount Bed Viet Nam is operating on 3ha at Long Duc industrial park. The plant, which cost US$7 million, will provide about 350 tonnes of hospital equipment, including beds, trolleys, cabinets and dining tables. All products will be exported to Japan. Ha Noi to host expo for high-quality products A fair displaying Vietnamese high-quality goods and traditional products from many localities throughout the country will take place in Ha Noi from October 10-13, according to the Viet Nam Association of Small and Medium-sized Enterprises. Featuring about 300 booths, the fair aims to mark the 60th anniversary of the capital city's liberation and the 10th anniversary of Vietnamese Entrepreneurs Day. PetroVietnam becomes largest Ha Noi stock PetroVietnam Technical Services (PVS) has surpassed Asia Commercial Bank (ACB) as the largest stock on the Ha Noi Stock Exchange. Since the beginning of the year, the price of PVS stock has jumped by 90 per cent. It closed during yesterday's session at VND37,400 ($1.7), up by 0.5 per cent. PVS has a capitalisation of VND16.6 trillion (US$783 million), accounting for 13.3 per cent of the exchange's market value. ACB currently has a capitalisation of VND14.3 trillion ($674.5 million). Although the share has become less attractive to investors, foreign ownership in the bank remained at 30 per cent. It closed yesterday at VND15,300 ($0.7). Thai investor buys Vinamilk shares Thailand's F&N Dairy Investment reportedly bought 15 million shares of Vinamilk (VNM) at a price higher than the Vietnamese company's actual market value. Investors linked to Dragon Capital and a fund managed by VinaCapital reportedly sold a combined volume of 15 million shares to the Thai shareholder. Notably, VinaCapital announced the purchase price at more than VND122,000 (US$5.7), which was 9.7 per cent higher than VNM's value at the time of the transaction. VNM concluded yesterday unchanged at VND113,000 ($5.3). Foreign accounts rise in first seven months Foreign investors received more than 500 transaction accounts in the first seven months of the year, raising the total number of foreign investor accounts to more than 17,200 units. Figures from the Viet Nam Securities Depository also showed that new transaction codes granted to both domestic and foreign investors numbered around 72,300 units, a 71 per cent increase compared with that of the same period last year. This also raised the total number of accounts to to 1.4 million. Core business brings profit for property firm Real estate developer Kinh Bac (KBC) has reported a net profit of VND28 billion (US$1.3 million) in the second quarter of this year. The company explained that it achieved these results by focusing on its core business of building and leasing facilities. Its share price rose by 6.4 per cent to VND11,600 yesterday. According to KBC, its accumulated profit for the first six months reached VND42 billion ($1.98 million). In contrast, the company recorded a VND71 billion ($3.3 million) loss in the same period last year. Ha Noi, Hai Phong highway scheduled to open next year The Ha Noi-Hai Phong Highway must be completed as soon as possible to reduce the burden on National Highway 5, said deputy Prime Minister Hoang Trung Hai. Construction of the 105 km expressway kicked off in 2008 under a build-operate-transfer contract and should have been completed in 2012. However, by the end of last year, only half the work had been completed. Project investor Viet Nam Infrastructure Development and Finance Investment Joint Stocks Company (Vidifi) attributed the delays to incapable contractors. The contractors, in turn, blamed the delay on slow land clearance. After inspecting work on the highway yesterday, Hai, who is also head of the National Steering Committee for key transport projects, said that all possible resources should be mobilised to ensure the highway was completed by next year. These would include funding, staff and even overtime shifts. The first 25 km of the highway, which stretches from Hai Phong City centre to provincial highway 353, is scheduled to be complete by December and the rest by the end of next year. Land clearance was nearly complete, said Vidifi chairman Dao Van Chien. Moreover, few infrastructure works remained on construction sites in Hung Yen Province's Yen My District, Hai Duong Province's Thanh Ha and Gia Loc districts and Hai Phong City's Hai An District. Over 12.174 trillion (US$580 million) or 68.6 per cent of the contract value had been disbursed. Construction material supply had been affected by an April rule cracking down on overloaded vehicles, as suppliers shifted from roads to waterway transportation, Chien said. He added that foreign constructors in charge of nine out of 11 major construction packages had failed to mobilise sufficient equipment and staff. After hiring cheap Vietnamese sub-constructors, they did not supervise them adequately, thus delaying progress. Prime Minister to examine plan to upgrade Dung Quat oil refinery The final plan on the upgrade and expansion of the Dung Quat oil refinery will be submitted to the Prime Minister for review and approval early next month. News portal VnExpress quoted Nguyen Hoai Giang, Binh Son Refining and Petrochemical Company (BSR) Chairman, as saying that expansion of the refinery would soon be taking place, following completion of overall maintenance work on and resumption of operations of the refinery in the middle of this month. BSR, which operates the Dung Quat refinery in the central province of Quang Ngai, has so far completed its own feasiblility study on the proposed expansion, which it estimated to be worth around US$2 billion. Giang also revealed that Russia's Gazprom Neft, which was planning to buy 49 per cent of BSR's shares and to invest in the Dung Quat refinery expansion, has also finalised its own proposal for the expansion, which it estimated to be worth $1.5 billion to $3 billion. The expansion is expected to raise the refinery's annual output from the current 6.5 million tonnes to 10 million tones, thereby meeting 50 per cent of the country's demand for refined petroleum products. Gazprom Neft, under the Gazprom Group, is currently one of the leading oil companies in Russia. The group owns more than 70 permits for oil production in Russia with an annual output of 60 million tonnes, as well as five refineries with an annual capacity of 40 million tonnes. "We will select the appropriate and optimal processing technology to use and the crude oil sources to chase in order to ensure that the refinery is run in the most durable, stable and effective way possible," Giang said. Since launching operations in 2009, the Dung Quat refinery, the first of its kind in Viet Nam, has produced roughly 30 million tonnes of products, raking in VND580 trillion ($27.23 billion) in revenue and contributing VND93 trillion ($4.37 billion) to the State budget. In 2013 alone, it produced 6.6 million tonnes, or 17 per cent more than its target, and earned more than VND154 trillion ($7.3 billion) in revenue and VND2.9 trillion ($138 million) in profit. Local company joins South East Asia’s largest law firm Rajah & Tann LCT Lawyers – Vietnam and seven foreign law firms have merged to form Rajah & Tann Asia, the largest law firm in South East Asia (SEA). Chau Huy Quang, executive director of Rajah & Tann LCT Lawyers said the merger aims to create an opportunity for young Vietnamese lawyers to improve their skills in international law and enhance legal services to Vietnamese clients. Quang said that after the merger, the company’s clients will be provided with services in Vietnam and other markets without the need for a lawyer in foreign countries. In addition, with the support of foreign colleagues, Vietnamese lawyers can support Vietnamese businesses more efficiently at major regional forums on disputes, trans-border, and infrastructure projects. He emphasised that in some fields such as maritime, telecommunications technology and intellectual property, the company can timely mobilise international lawyers at an economical costs. August CPI growth hits 9-year low The national consumer price index (CPI) this month increased by 0.22 per cent over that of last month and 1.84 per cent over that of the end of last year. The General Statistics Office (GSO) provided the figures, which are the lowest levels recorded for August in the past nine years, as numerous factors have curbed price increases this month, said Do Thi Ngoc, Director of the GSO's CPI Department. The world prices of numerous essential goods remained stable and declined while domestic petroleum prices decreased thrice in nearly a month since July 18. In August, petroleum prices fell by 0.16 per cent month-on-month, public traffic service prices dropped by 0.15 per cent, and housing and building material prices fell by 0.31 per cent. Ngoc noted, however, that the average CPI for the first eight months of the year increased by 4.73 per cent over that of the same period last year, nearly hitting the 5-per cent to 5.5-per cent levels that the Government aimed for in 2014. Increasing rice exports to Southeast Asia and China pushed up rice prices, and foodstuff prices grew by 0.45 per cent in August as a result. Autumn festivals and rising breeding costs caused food prices to go up by 0.54 per cent, and greater demand for clothes, shoes and school materials also pushed up the prices of garment and footwear products by 0.32 per cent beyond the new school year. In August, gold prices declined by 0.34 per cent month-on-month and by 0.06 per cent year-on-year. The price of the US dollar likewise fell by 0.26 per cent month-on-month and 0.07 per cent year-on-year. The Ha Noi and HCM City departments of statistics reported earlier that the CPI continued to rise in the country's two largest cities. The CPI rose by 0.19 per cent in the capital and 0.05 per cent in the southern city, in August. Thanh Hoa boosts cooperation with German state Vietnam’s Thanh Hoa province on August 21 opened its representative office in Mittelsachsen county of Sachsen state and signed a number of cooperation deals over 2014-20 with this German county. The rep. office is located at the Innovation and Technology Centre (GIZeF) in Freiberg city, the capital of Mittelsachsen county. Addressing the ceremony, Volker Uhlig, Administrator of Mittelsachsen, highlighted the great cooperation potential between Thanh Hoa province and Mittelsachsen. The opening of the representative office in GIZeF and the signing of the documents marked a new milestone in bilateral ties, opening up opportunities to further promote cooperation of both sides, he said. At a press conference after the signing ceremony, Uhlig also introduced the county’s advantages, especially cooperation in the field of technology transfer and energy. He said many German businesses are keen on the Vietnamese market, primarily in new technology, education, vocational training, the exchange of energy, waste treatment and agriculture. The representative office will be a reliable address to help German businesses seek proper partners, Uhlig added. Mai Van Ninh, Chairman of the Thanh Hoa People’s Council, acknowledged the Mittelsachsen leaders’ keen interest in expanding cooperation with Thanh Hoa, and affirmed the opening of the representative office and signing of comprehensive documents are part of the province’s development strategies. At the signing ceremony, LSTW Construction Company from Freiberg also signed an agreement with Thanh Hoa for a  10km-road construction project. Earlier, both localities held a joint seminar on economic cooperation at GIZeF that drew the participation of 60 German enterprises and several Vietnamese businesses. At the seminar, Uhlig called on both sides to improve the scale of cooperation, stressing that Mittelsachsen is willing to provide technological support to Thanh Hoa. Meanwhile, Ninh also briefed German businesses on the province’s rapid transformation and incentive policies, notably the Nghi Son Economic Zone and some major projects to help them seek the proper investment fields. GIZeF Director Dr Thomas Lindner suggested both sides focus on promoting cooperation in trade, training and technology transfer. He expressed his belief that long-term cooperation will benefit both nations. Ten German enterprises operating in the field of banking, wind energy, manufacturing also introduced their hi-tech products and services at the event. VietinBank courts Japanese investment in agriculture A Bank for Industry and Trade of Vietnam (VietinBank) delegation led by its Director General Le Duc Tho recently paid a working visit to Japan, hoping to attract investment in the Vietnamese agriculture industry. They attended an agricultural investment promotion conference that gathered nearly 200 Japanese agricultural businesses and representatives from Vietnamese provinces which are strong in agriculture like Vinh Phuc, Lam Dong, Tien Giang and Ben Tre. This is the first time such a conference has been held in Japan. Despite having a modernized agriculture industry, Japanese agriculture only meets approximately 45% of domestic consumption demand. As a consequence, Japanese businesses are seeking cooperation opportunities with Vietnamese agriculture businesses. Since 2012, Vietnam and Japan have carried out a series of programmes with the aim of enhancing agricultural cooperation.  The Japan International Cooperation Agency (JICA) and VietinBank have conducted several surveys in Lam Dong and a few other provinces. With support from Tokyo Mitsubishi UFJ Bank, VietinBank has accelerated supplying Japanese businesses with comprehensive financial and banking services. VietinBank Director Le Duc Tho also worked with JICA high-ranking leaders to discuss a host of measures to boost JICA investment into Vietnam, especially in agriculture infrastructure. In recent years, VietinBank has been an important partner of JICA in serving key ODA projects in Vietnam. It was chosen to implement JICA’s first Public-Private Partnership (PPP) project. VietinBank and JICA plan to organise a working session between JICA, Vietnamese and Japanese businesses, and relevant agencies to devise innovative and improved mechanisms to attract Japanese foreign investment. Korean firms attend dialogue on tax, customs issues Representatives of more than 250 Korean businesses operating in Vietnam were updated on the country’s new tax and customs policies at a dialogue with the Ministry of Finance in Hanoi on August 22. The gathering addressed issues of Korean business concern, aiming to fulfil their duties and further improve their performance in the country. Deputy Minister of Finance Do Hoang Anh Tuan and leaders of the General Department of Taxation and the Vietnam Customs and the General Department of Customs directly responded to inquiries from the businesses on issues pertaining to all aspects of import-export and business operations. RoK Ambassador to Vietnam Jun Dae Joo appreciated the Ministry of Finance’s dialogue, which he said helps Korean businesses iron out snags and provided necessary information for them to achieve sustainable growth in Vietnam. The RoK business community welcomes the support from the Vietnamese Government, especially in tax and customs procedures, Jun said. Deputy Minister of Finance Tuan praised Korean firms’ effective operations in Vietnam over recent years, and pledged to create the best possible conditions for them to operate in the country, by improving tax and customs policies in a more transparent and effective manner  in line with international standards. Int’l experts share economic cooperation experience Over 150 international economic experts and managers shared experience in sharpening competitive edge and boosting international economic cooperation at a seminar in Hanoi on August 23. The second seminar of its kind is within the cooperative framework of a research and lecturer exchange programme between the National Economics University (NEU) and universities from Japan and some regional countries. Tran Tho Dat, NEU Vice Director, said the seminar provided a forum for scientists, experts and business managers to share initiatives aimed at developing cooperative ties in research for East Asian region’s common development. The seminar focused on main topics: economic renovation and development, improvement of competitive capacity, international economic cooperation and business strategy and administration. Speakers from Germany, Japan, Russia and Vietnam  also presented their reports on globalization trends in research and development of multi-national companies, knowledge transfer, research capacity sharing and business connectivity, managing personal brands; competitiveness of Japan in the automotive industry and innovation of financial management in Vietnam. Microsoft IT Academy debuts in central region The Microsoft Information Technology (IT) Academy, the first ever international standard IT training centre in the central and Central Highlands regions, made its debut in ceremonies held on August 23. During the ceremonies, Microsoft Vietnam and the Da Nang University, joint partners in the project to launch the training centre, also signed a deal on comprehensive co-operation in IT development. The deal includes the setting up of a data centre on private cloud and applications of Microsoft 365 for educational centres in the region and the boosting of the university's Software Development Centre as the Microsoft-authorised education reseller and member of Microsoft IT Academy. The university trains 85,000 students from the central and Central Highlands provinces and cities. LG Electronics set to launch new facility in Haiphong LG Electronics recently announced it is placing its new 100,000 square metre factory in Trang Due Industrial Park in the northern city of Haiphong into operation in October. The new facility to manufacture and export electronic products and electrical household appliances has an expected localization rate of 50%. LG Electronics Vietnam General Director Ko Tae Yeon, revealed the group plans to expand the facilities to 402,600 square metres over the next 10 years at an estimated cost of US$1.5 billion. Equity funds flock to Vietnam’s stock exchange Frontier-market equity funds from Sweden and South Africa are pouring millions of US dollars into the Vietnam stock market, lured by Southeast Asia’s improving economic outlook for growth. According to a report by Bloomberg, in light of the bright economic prospects, overseas money managers view current stock valuations of companies listed on the Vietnam exchange as low. Many money managers say they plan to double or even triple their equity investments over the next two years, Bloomberg reports. Asia Frontier Capital (AFC) – an investment fund specializing in investing in emerging market equity funds (frontier funds) recently released a 36-page report entitled “Why Vietnam” which provides a convincing analysis that the Vietnamese  economy is recovering along with reasons why investors should invest in the country’s emerging market. Managers from AFC have invested about 20% of their total portfolio (US$17 million) in Vietnamese stocks, higher than any other emerging market. Andreas Vogelsanger, AFC Vietnam CEO is bullish on the Vietnamese economy, saying that that AFC now holds shares in 70 small and medium-sized enterprises in Vietnam. Vogelsanger said that the Vietnamese Government has turned the economy around curbing inflation from 20% in 2008 to 5.4% at present. He is confident Vietnam’s economy is on the track. Frontier investment funds from Sweden and South Africa, including AFC, collectively have pumped a net US$277 million into Vietnamese stocks, 5.3% more than the whole of 2013 Bloomberg reports. OV businesses in Europe meet in Italy More than 300 overseas Vietnamese (OV) businesses and diplomatic missions in Europe, as well as trade counselors from various countries in the region gathered in Rome, Italy for the eighth Vietnam Business Forum from August 22-24. According to the head of the organising board of the business forum, Pham Van Hong the event aimed to draw orientation outline for Vietnamese business community in Europe to overcome challenges left by the regional financial and economic crisis. Through various activities at the event, businesses had opportunities to meet and discuss measures to boost their stable and sustainable development, he said. At the same time, they also shared experience in grasping opportunities for expanding their operations in European countries, said Hong. Meanwhile, Vietnamese Ambassador to Italy Nguyen Hoang Long said supporting the stronger connectivity of the Vietnamese business community abroad is one of the country’s focuses. He said he hopes the development of OV businesses in the region will help promote Vietnam’s trademarks and fuel economic growth at home. The event took place in a context where the European economy is experiencing a recession, which dramatically affected the operation of Vietnamese business community there. Hoang Manh Hue, a businessman from Poland , pointed to the need for the Vietnamese business community to further consolidate their solidarity in the context of the gloomy global economy. Participants at the event also voiced difficulties facing them currently, including the tension in the Russia-Ukraine relations, as well as a poor linkage among Vietnamese business community abroad. They also discussed opportunities and challenges generated by the Vietnam-EU free trade agreement, which is expected to be reached within this year. The next forum is slated to be held in Bulgaria next year. More credit needed to stop closures: experts Experts have urged the government to set up a centre for credit services for struggling small- and medium-sized enterprises (SMEs). The number of enterprises that have suspended or closed operations in the first seven months of the year was 37,612, an increase of 9.8% year-on-year. Most of the companies that closed were SMEs, according to the General Statistics Office. The number of newly established enterprises totalled 42,398, with total registered capital of VND262.4 trillion (US$12.5 billion), down 7% and up 17.8% in capital, compared to the same period last year. Analysts said many companies were still mired in hardship, resulting in an increase in bankruptcies and dissolved firms. For many of them, sales have declined, which has made it more difficult to access capital, even though lending rates have dropped to 2005 and 2006 levels. Meanwhile, aggregate demand remains weak and though the central bank has cut lending rates to help businesses access loans, the economy is still not absorbing enough capital, they said. Vietinbank general director Le Duc Tho said: "Only about 30% of SMEs have access to bank loans, and the remaining 70% have to depend on their own sources of capital (internal financing) or loans not from the banking sector, which often have very high interest rates." Tho said that bad debts, weak competitiveness, non-transparent financial reports and lack of assets that could be used as collateral were preventing SMEs from accessing capital sources, including bank loans. "For banks, most of them still hesitate to lend to SMEs because they are afraid of risks, so they have set strict lending criteria that SMEs cannot accept," he told Dau tu Chung khoan (Securities Investment). "Consumers have been tightening their belts, which has also caused a reduction in sales for businesses," he added. To help SMEs overcome development obstacles, analysts have stressed the need to have close cooperation between the Government, the banking sector and SMEs. They suggested that the Government develop support policies to meet requirements of SMEs, and involve various industries in the effort. They said the Government should set up a market information system to help SMEs outline effective sales and production plans, and build trade and brand-name promotions suitable to SMEs' financial abilities. Vu Dinh Anh, senior economic expert, has called for creating capital channels designated for SMEs only. This would help them easily access loans at reasonable interest rates. "Establishing a centre of credit services is also necessary. The centre would act as a ‘bridge' between SMEs and credit institutions. In particular, it would be responsible for providing SMEs with information on the banks'credit programmes, helping SMEs complete capital lending documents, and connecting SMEs with the Credit Guarantee Fund," he said. "The central bank should also issue policies to encourage commercial banks, such as reducing the compulsory-reserve ratio and refinancing interest rates so as they can set aside preferential capital packages to lend to SMEs. Top priorities should be given to the lenders that have a high proportion of outstanding loans to SMEs," Tho of VietinBank said. "The central bank should also help banks develop sources of capital for SME development, and support banks with long-term capital sources at reasonable interest rates in order that the latter would have more financial conditions to lend to SMEs," he said. Domestic steel producers voice concern over imported products The Vietnam Steel Association is proposing reasonable import tax rates for iron and steel products amid concerns over the effects of a possible mass inflow of imported steel from Russia. The concern was aired during free trade agreement (FTA) negotiations with the Customs Union of Belarus, Kazakhstan and Russia . It comes amid difficulties in Vietnam 's steel industry in recent years resulting from high inventories and oversupply, which have made competition, even among domestic steel producers, harsh. The setting up of import rates for Vietnam's products, including steel, at the negotiations is now underway, said the Hai Quan (Customs) online newspaper. The newspaper quoted association officials as saying that the competition in the sector would grow harsher since Russia was one of the world's largest steel producers. It cited figures showing that Russia ranked fifth in the world in steel production last year with 68.7 million tonnes, far beyond Vietnam's modest 5.6-million-tonne production. Russia 's iron and steel exports reached 23.6 million tonnes. The country's steel industry will be facing possible shutdown if imported steel from Russia is granted a zero tax rate under the proposed FTA, association officials said. The association proposed that import tax rates for steel under the FTA negotiations adhere to Vietnam's commitments to the World Trade Organisation even as it helps protect local producers from unequal competition. The sixth round of FTA negotiations with the Customs Union closed on August 20 in Russia 's Sochi City . The next round will also be held in Russia from September 15 to 19. Vietnam Airlines posts strong growth The national flag carrier Vietnam Airlines has recorded average growth of 14-15 percent per year over the past decade, the Vietnam Economic News reported. In the first six months of this year, Vietnam Airlines operated 119,200 flights with 24.7 million passengers and 448,100 tonnes of cargo, an increase of 10.6 percent, 15 percent and 22 percent compared to the same period last year. Vietnam Airlines has not only met transport needs but also made significant contributions to socio-economic development, especially in the tourism sector. Vietnamese airports have served a continuously growing number of passengers over the past decade. In 2003, Vietnam Airlines and foreign carriers transported 2.85 million passengers while total arrivals increased to 12.85 million passengers in 2013. During the 2003-2013 period, Vietnam Airlines reached a yearly growth of 16.3 percent and 18.4 percent for passenger and goods transport, respectively. According to a master plan, by 2020, total number of international and domestic passengers via Vietnamese airports would reach 28.2-31.5 million and 38.4-42.3 million and cargo transport would stand at 434,000-489,000 tonnes. In December this year, Noi Bai International Airport is expected to put the Terminal 2 into operation with a designed capacity of 10 million passengers per year. The new terminal has four floors with a surface area of about 139,000sq.m and is equipped with machinery and advanced aviation technology. In addition, a new cargo terminal is also under construction with a capacity of 200,000 tonnes per year and is expected to be put into operation by early 2015. To raise extra capital for operation, Vietnam Airlines is preparing for equitisation which aims at improving the quality of transport services, ensuring highly competitive environment and consumer interests. In terms of international transport, Vietnam Airlines will continue to consolidate and develop bilateral air transport in traditional markets such as Northeast Asia and Southeast Asia; open routes to the US and Canada; and promote aviation ties with South Asia, Africa, South America and the Commonwealth of Independent States. In terms of domestic transport, Vietnam Airlines will focus on the Hanoi-Da Nang-Ho Chi Minh City routes and form a network of private cargo routes.- Companies urged to show transparency in tax declarations Businesses should be fully prepared with tax- and customs-related documents since they could receive a notice from relevant authorities at any time that their books would be audited, a taxation expert warned at a seminar held in HCM City last Friday. Phan Vu Hoang, tax partner at audit and consultancy firm Deloitte Vietnam, told participants at the seminar on post-customs clearance and tax audits that they should strive to keep things transparent and genuine. According to Hoang, there are risks related to non-compliance with tax policies, whether out of ignorance or intentionally, that could pose a real challenge to businesses. Companies that have not been audited for years and those with signs of abusing transfer pricing are set to be the focus of an inspection this year. Other targets include companies applying for large VAT and import tax refunds and those in the areas of e-commerce, insurance, advertisement, real estate, and export production. Hoang said tax collection was set to be tightened after the Government ordered on August 13 that budget revenues should surpass targets by 8 to 10 per cent. Taxes and customs duties are set to contribute around VND783 trillion (US$37.2 billion) this year with the trade sector accounting for VND224 trillion ($10.7 billion). As of July more than VND497 trillion ($23.7 billion) had been collected, or 63.5 per cent the year's target. In 2007 around 31,700 tax audits resulted in collection of VND2.58 trillion ($122.8 million) in additional tax and penalties. Last year the figures were 58,300 and VND12.22 trillion ($581.9 million) . At the seminar, experts also provided updates on corporate and individual income tax policies, customs regulations, and transfer pricing. FTAs open door for plastics firms Free trade agreements (FTAs) have opened up opportunities for Vietnamese plastic makers to expand their exports, according to a report in the Vietnam Economic News. The article stated that the domestic plastic industry would need to foster joint production among businesses in order to take advantage of new markets. The country exported an estimated US$992.12 million worth of plastic products in the first half of 2014, up 17.61 percent from the same period last year. Japan remained the biggest importer of Vietnamese plastic products, shipping $245.98 million in plastic exports from Viet Nam in the first half of this year, accounting for 25 per cent of plastic exports in that period. Meanwhile, the US was the second biggest importer, importing $125.5 million worth of Vietnamese plastic products in the same period, accounting for 12.65 percent. The EU market had also become an important market for Vietnamese plastic makers, driven by improvements in quality. Vietnamese plastic exports to Germany numbered $55.97 million in the first half of this year, up 6.26 per cent from the same period last year, while exports to the Netherlands reached $50.97 million. Meanwhile, collective plastic exports to EU markets had grown between 3-6.1 per cent annually. Vietnamese plastic makers were also eyeing potential opportunities in India. According to the article, the need for packaging had seen Indian demand for plastic products soar in recent years. The boom in infrastructure, agricultural development, rising incomes and urban migration had also increased demand in the industrial and retail sectors. Vietnam Plastics Association Chairman Ho Duc Lam said the industry was focused on improving the quality of its products and scaling production to meet export demand. This would involve using modern technology, developing environmentally friendly products and fostering opportunities for joint-production, he said. With Vietnamese plastic exports set to grow between 13.5-16.5 per cent this year, Vietnamese plastic businesses needed to address issues in product quality and design, and study market trends to integrate with the global supply chain, Lam said. Customers embrace bank card payments Viet Nam's banking system recorded 14.6 million point-of-sale (POS) transactions worth VND75.7 trillion (US$3.57 billion) in the first half of this year. The State Bank of Viet Nam's statistics cited by showed that commercial banks managed 149,000 POS in H1, up 15 per cent against the end of last year, meeting 75 per cent of the year's target. The big four banks by assets in Viet Nam, namely, Vietinbank (49,600), Vietcombank (49,400), BIDV (10,600) and Agribank (9,100), own 80 per cent of the POS. About 30 per cent of the total POS are in Ha Noi (19,200) and HCM City (28,000). The central bank aims to cut the cash ratio to less than 11 per cent of the total money supply by the end of 2014, and raise the number of POS to touch 250,000 for handling 200 million transactions yearly. Earlier, the Viet Nam Bank Card Association's report said that 68.55 million bank cards were in use in the Vietnamese market at the end of the first quarter of 2014. This is an increase of 3.5 per cent against 2013. The growing popularity of bank cards is said to be reducing the share of cash transactions in the total money supply, from 20.3 per cent in 2004 to 12 per cent by the end of 2013. However, the association warned that most of the card transactions were money withdrawals, while the use of other payment services such as POS or money transfers was still at a modest level. The infrastructure of the bank card market needs to be improved to prevent congestion. The service fees for internet banking in Viet Nam is usually between VND10,000 and VND20,000, or between 47 and 96 US cents, per transaction depending on the type and destination of the transaction. Dong Nai supports local businesses The southern province of Dong Nai held a meeting yesterday in a bid to remove difficulties for businesses seeking financing and help local businesses find new markets. Speaking at the meeting, Le Van Danh, Director of the provincial Department of Industry and Trade, said the province was implementing closer linkages with other regions in the country to improve business co-operation. For oversea markets, the province would organise investment and trade promotions in the US to assist local business in expanding and developing markets. In the time to come, by continuously joining the Trans-Pacific Partnership (TPP) agreement, there would be increased assistance for local businesses seeking more opportunities to expand their export markets, he said. It is expected that export to the US market will increase by 10 per cent. However, the province's Industry and Trade Department warns that the largest difficulties facing Vietnamese goods are trade barriers, anti-dumping and anti-subsidiary policies from the US. According to the department, Japan is an important market, ranked only behind the US. The export turnover last year from Dong Nai to Japan reached more than US$1.15 billion, from exports such as rubber, timber products, textiles, computer and electronic spare-parts. The province authorities note that in the near future, many export items to this market will gradually enjoy tax exemptions and fees in line with the TTP roadmap. Accordingly, commodities such as farm produce, food processing, as well as electrical and electronic appliances from Viet Nam, will have access to the Japanese market with a zero per cent tax. Also, Dong Nai exports large volume of goods to other countries, such as South Korea and the EU. Additionally, the province has signed trade co-operation agreements with the United Arab Emirates to export farm produce. Concerning difficulties in receiving credit loans, Tran Minh Phuc, Vice Chairman of Dong Nai People's Committee, said his province instructed the State Bank's branch to work out a flexible lending policy to help businesses gain access to financing. In addition, businesses also suggested that local authorities continue improving administrative procedures and further simplify and reduce inconveniences to businesses involved in receiving export clearances for goods. Dong Nai is among the country's top five leading provinces for exports, with its Jan-August turnover estimated at over US$8.1 billion, which is a year-on-year increase of 14.5 per cent. In August alone, the province took in nearly US$1.2 billion from exports, the highest level since the beginning of this year. The success was largely attributed to efforts by local authorities in organizing trade and investment promotion activities in several countries, said Le Van Danh, Director of the provincial Department of Industry and Trade. Through these activities, local enterprises, especially those producing textiles, footwear and fiber, set up partnerships and signed long-term orders to ship their goods abroad, he noted. To reach its export target set for this year, Danh said local authorities would continue to increase promotional activities, as well as create all possible conditions for enterprises to bring their products to new markets, such as Africa, the Middle East and South America. From now until 2015, Dong Nai would focus on the markets of Cambodia, Japan, the Republic of Korea, India, Australia, Chile, Myanmar, Sri Lanka and the United Arab Emirates (UAE), which have great demand for the province's key products. Additionally, officials said the department would regularly hold meetings with firms to swiftly address difficulties facing them when exporting products. Ministry readies SME development fund The Ministry of Planning and Investment recently worked with commercial banks to study their capacity of lending to small and medium-sized enterprises (SMEs). The study was done because the ministry aims to put the SME development fund into operation at the end of this year or latest by the beginning of next year as its personnel system, budget and operation rules are being set up. Careful preparations are needed to ensure that the fund, which has received capital from the State budget, supports SMEs efficiently, according to the Department of Corporate Development. According to To Hoai Nam, deputy president of the Associations of Small and Medium Enterprises, SMEs are facing difficulties as their competitiveness and capital sources remain limited. The fund would help SMEs get preferential loans from banks. The Prime Minister issued Decision 601/QD-TTg about the establishment of the fund on April 17, aimed at enhancing SMEs' competitiveness, creating more jobs and raising incomes. In the first three years, the fund would receive VND2 trillion (US$95 million) from the State budget, then VND500 billion ($23.5 million) each year in the next two years and another VND1 trillion ($4.75 million) in the following year. The fund would entrust the Viet Nam Development Bank and other commercial banks with loans for SMEs that meet the fund's loan eligibility terms. The maximum loan for each project would not exceed 70 per cent of the project's total investment and would not exceed VND30 billion ($1.4 million). The loan must be repaid within seven years. There are more than 500,000 SMEs in the country, accounting for 97.5 per cent of the existing companies. Failure to conform with margin trading laws leads to added risks Margin trading generated more profits for investors as well as securities firms and higher market liquidity, but it also posed many risks if not complied, heard a conference in HCM City yesterday. In the first half of this year, margin loans of top 10 brokerages reached over VND6 trillion (US$283 million), rising 30 per cent compared to the end of last year. Some brokerages violated regulations of the lending ceiling to lure investors. But it created risks and an unfair competition among companies. A representative from Saigon Securities Inc revealed that some securities firms offered margin lending rates up to 80 per cent of the portfolio value compared to the ceiling of 50 per cent. If companies did not comply with legal administration, it would lead to losses and inadequate operational capital. In fact, it became practical cases with many companies. Investors also needed to follow the regulations. "Using leverage in times of market turbulence may cause great losses," said associate professor Tran Hoang Ngan, vice principal of the HCM City University of Economics. In addition, Ngan noted that idle money could come to the stock market if the market became more transparent and fairplay. The amount of individual deposits in the banking system was about VND2,200 trillion ($103.7 billion). "If 30 per cent of the current savings is poured into stocks, liquidity will increase significantly," Ngan said. Khang Dien to focus on affordable townhouse projects Khang Dien House Investment and Trading Joint Stock Company (KDH) will focus on developing affordable townhouses, its flagship and best-selling products, after incurring losses in the high-end housing segment. This announcement was made on Tuesday by company executives at a meeting to review the firm’s business performance in the first half of the year. Ho Thi Minh Thao, a board member of KDH, said her company lost nearly VND137 billion after divesting capital from the large, hi-end apartment projects that are beyond the reach of most homebuyers. However, the successful capital transfer of its stakes at two subsidiaries generated a profit of VND80 billion for the company. In October 2013, KDH launched Mega Residence project in District 9, located near the HCMC-Long Thanh Expressway. About 160 finished townhouses of this project were opened for sale in March and have sold out at the moment. In the coming time, this real estate firm will continue with popular townhouses of the Mega line, said the company. To Hai, general director of Viet Capital Securities Company (VCSC), a partner of KDH, said KDH had made right decisions to overcome difficulties, making it a strong player on the real estate market. The demand for townhouses in HCMC is high, said Hai. Vietnamese customers prefer housing products priced at around VND2 billion a unit and requiring simple transfer procedures coupled with a flexible payment plan. In the first half of the year, KDH gained VND41 billion in after-tax profit. The company expects to gain the entire revenue of the Mega Residence project this year, and launch the Mega Ruby project in October this year. KDH successfully issued 26.93 million shares in May 2014 and obtained VND363 billion, increasing its charter capital to VND750 billion. Source: VEF/VNA/VNS/VOV/SGT/SGGP/Dantri/VIR