BUSINESS IN BRIEF 20/3 HCM City: Exports forecasted to drop 4 percent in Q1 Ho Chi Minh City’s export revenue is estimated to hit 6.24 billion USD in the first quarter of 2015, an annual drop of 4 percent, according to the municipal Department of Industry and Trade. Excluding crude oil, the figure would be 5.25 billion USD, up 5.62 percent from the same period last year. Of the figure, a surge of 15.1 percent to 3.9 billion USD in industrial goods exports is expected, with garments and textiles contributing 1.19 billion USD, up 8.3 percent; electronics and components, 988.2 million USD, up 73.5 percent; and footwear, 565.2 million USD, a rise of 12.6 percent. Key markets for wood and timber product exports, such as Europe and Japan, have experienced difficulties since the outset of the year, resulting in less new contracts, said Tran Quoc Manh from the Handicraft and Wood Industry Association of Ho Chi Minh City (HAWA). The city’s export of agricultural, forestry and seafood products will see a 23.4 percent plunge to 919 million USD. The biggest contributor to the contraction is rice, bringing home only 93.6 million USD and down 70.2 percent annually. The same decreasing trend is seen in other staples such as seafood, coffee and rubber. Among the few exports with growth are peppers and vegetables, up 13.9 percent and 25 percent, respectively. Construction commences on milk factory in Ha Nam The Nutrition Food Joint Stock Company (Nutifood) held a ground breaking ceremony for a milk factory on March 18 in the northern province of Ha Nam. Construction of the factory will be implemented in two phases through 2018 with a total investment of 1.6 trillion VND (75 million USD), ultimately covering 10 hectares. After the second development phase, the factory will have the capacity to produce 200 million litres of liquid milk and 31,000 tonnes of powder milk annually. Addressing the ceremony, Secretary of the provincial Party Committee Mai Tien Dung said the province has created favourable conditions for the company to formulate and implement the project which is expected to help meet domestic demand maximise local resources. EAEU, Vietnam to sign free trade deal in May The Eurasian Economic Union (EAEU) and Vietnam are expected to sign a free trade agreement (FTA) in May 2015, announced Eurasian Economic Commission (EEC) Trade Minister Andrey Slepnev. Andrey Slepnev revealed that information while addressing a March 17 seminar on managing transport chain in the context of economic downturn, Sputnik news reported. The EEC Trade Minister was quoted as saying that EAEU and Vietnam are completing the final round of negotiations on bilateral FTA. “In fact, EAEU - VN FTA negotiations have been concluded, and we are completing technical documents for the signing in May,” he noted. This is the first FTA to be signed with a rather large economy, so it is essential to draw more experience, he added. According to Andrey Slepnev, the creation of a free trade zone between the union and Vietnam could increase the trade flow from the current level of US$4 billion to US$10 billion a few years after the agreement comes into force.  Maritime exhibition opened in HCM City The international maritime expo, INMEX Vietnam opened on March 18 at the Tan Binh Exhibition and Convention Centre in HCM City’s Tan Binh district, drawing over 300 leading industry companies and brands around the world. The international maritime expo, INMEX Vietnam opened on March 18 at the Tan Binh Exhibition and Convention Centre in HCM City’s Tan Binh district, drawing over 300 leading industry companies and brands around the world. Participants to the event are 120 countries and territories that are known for their strong maritime industries including Singapore, the Netherlands, the Republic of Korea, the United Kingdom, and Norway. Co-hosted by the Vietnam Trade Fair &Vinexad Advertising Joint Stock Company and Informa Exhibitions, the event is expected to improve networking opportunities, capture visitor interest and encourage activities in the Vietnamese maritime business community. Deputy Minister of Trade and Industry Ho Thi Kim Thoa said Vietnam is increasingly seen as an attractive retail market to foreign investors and a gateway market to the region, as evidenced through US$298 billion in export revenue in 2014. With a coastline of more than 3,200 kilometres, Vietnam has huge potential in shipping and other sea-related services. Managing Director of Infoma Exhibitions David Bondi said Vietnam’s maritime sector is expected to reach up to US$1.5 billion in revenue in 2020 due to a number of trade transactions between Vietnam and other countries expected to be signed. INMEX Vietnam is the most comprehensive international business platform encompassing all aspects of ship building, ship repairs, shipping, maritime engineering, offshore engineering & technology, dredging equipment and ports & logistics. The event will run through March 20. Workshop on mobile e-commerce development A workshop was organised in Hanoi on March 18 to look at prospects of mobile e-commerce in 2015. The event, co-hosted by the Vietnam e-Commerce and Information Technology Agency under the Ministry of Industry and Trade and the Vietnam e-Commerce Association, was also designed to connect ministries and sectors in management of activities in the field. Deputy Minister of Industry and Trade Tran Tuan Anh highlighted the potential for developing mobile e-commerce in the domestic market, saying Vietnam’s rate of smart phone and internet users is still below the average Asian rate, leaving much room for the service to expand. Mobile e-commerce plays a significant part in e-commerce, as seen in the Republic of Korea and Japan where it constitutes nearly 50% of the total e-commerce revenue. China reported a 91% growth in mobile e-commerce last year, according to the Deputy Minister. Mobile e-commerce has grown quickly in Vietnam with outstanding and highly applicable software for transportation and online shopping and paying, among others. According to the e-commerce agency's report, revenue from business-to-customer e-commerce in Vietnam was estimated at US$2.97 billion last year, up 35% year on year and accounting for 2.12% of the country's gross sales of retail goods.  Vietnam becomes largest leather hiking shoes exporter in RoK Vietnam has surpassed China to become the biggest exporter of leather hiking shoe to the Republic of Korea (RoK) with a market share of 42.9 percent, according to a report released by Korea Customs Services on March 18. The report also stated that RoK’s leather shoe imports are tending to taper off as lighter fabric hiking shoes are favoured by most consumers. Import revenue fell 7.6% annually consecutively from 2010-2014 with an especially large plunge of 16.1% to US$41 million in 2014. Meanwhile, average import prices for the commodity increase by 10.5% each year, with a rise of 2.4% last year to US$34.69 each pair.-Vietnam has surpassed China to become the biggest exporter of leather hiking shoe to the RoK with a market share of 42.9%, according to a report released by Korea Customs Services on March 18. The report also stated that RoK’s leather shoe imports are tending to taper off as lighter fabric hiking shoes are favoured by most consumers. Import revenue fell 7.6% annually consecutively from 2010-2014 with an especially large plunge of 16.1% to US$41 million in 2014. Meanwhile, average import prices for the commodity increase by 10.5% each year, with a rise of 2.4% last year to US$34.69 each pair. Workshop connects Vietnam, Japan enterprises Eighty Vietnamese and Japanese enterprises operating in the fields of mechanical engineering and sample mould equipment met in Ho Chi Minh City on March 17 to seek co-operative opportunities. At the event, the enterprises introduced their products and strengths to each other. The Japanese site also heard of Vietnamese enterprises’ demand for machines and equipment. Yasuzumi Hirotaka, executive director of Japan External Trade Organization (JETRO) in Ho Chi Minh City said that diverse activities have been held by the organization in HCM City to further connect Japanese and Vietnamese enterprises. In July last year, JETRO in coordination with HCM City Export Processing and Industrial Zones Authority (HEPZA) held a Japan-Vietnam Supporting Industries forum to foster trade exchange between the two countries and help Vietnamese enterprises develop the domestic supporting industry. In order to promote trade between the two countries, this time JETRO assisted Japanese 32 enterprises working in the fields of mechanical engineering and sample mould equipment to visit Vietnam to seek partners, he said. HCM City’s Metro picks up pace for completion Construction on Ho Chi Minh City’s Metro Line 1 has been accelerated with the anticipated completion date brought forward to 2019, and  with the first trains to begin running by 2020. Duong Huu Hoa, deputy director of the Project Management Unit Metro Line 1 under the Ho Chi Minh City Management Authority for Urban Railways (MAUR) said that, “we are speeding up the implementation of package 2 which covers the line along the Hanoi Highway. So far, we have completed more than half of the main construction work.” In the near future, the construction will be carried out along the Van Thanh, Saigon, and Rach Chiec bridges, as well as the Hanoi Highway and Dien Bien Phu overpasses. “By the end of 2015, the elevated section of the railway along the Hanoi Highway will have taken shape,” he added. Some changes in the implementation of the project have been made in the city centre with the construction unit handing over land at the junction of Nguyen Hue and Le Loi streets and one part of the Municipal Theatre Station. Nguyen Hue street will also be pedestrianised by April 30. According to Hoa, the project contractors have continued work at the city’s Lam Son Park and a section of Le Loi street. The work on retaining walls is scheduled to be finished by the end of April.   Although the project has shown progress, there have been some delays, especially related to site clearance. Regarding delays involving a private company in the neighbouring province of Binh Duong’s Di An town, Hoa said that the provincial authorities were proposing  measures to force the company to hand over land by the end of the month. In the meantime,  Japanese contractor Sumitomo Corporation has requested the city to pay compensation of up to $100,000 per day due to delays in the construction of the Metro Line 1. As the hand-over of the site has been delayed for over 20 months when compared to the deadline in the contract, the Japanese contractor has unsurprisingly submitted a written complaint. “Apart from the reasonable additional costs,” Hoa said, “not all the expenses will be covered. Currently, MAUR and the contractor are negotiating to address the problem adequately.” In February, Deputy Prime Minister Hoang Trung Hai during his visit to the project site told Binh Duong to speed up the site hand-over for the construction of the Metro Line 1 by the end of March. “Following guidance, MAUR is actively co-operating with the provincial authorities to provide cleared land for the contractor,” Hoa stressed. In addition, MAUR is showcasing a train carriage from March 16 to April 15 to draw comments from the public. The exhibition is aimed at collecting feedback on the design, colour, and interior design of the train. Based upon this, the city authorities will pass on these details to the train designer. “The first train will be shipped to Vietnam in June next year. It will be inspected before the contractor builds the remaining 16 trains. MAUR will also differentiate  various metro lines using different colours,” Hoa noted. Toshiba to supply steam turbines and generators for Duyen Hai 3 extension coal-fired power plant Toshiba Corporation (Tokyo: 6502) today announced to have received an order to supply 688MW super-critical steam turbine and generator (STG) for the Duyen Hai 3 extension coal-fired power plant in the Mekong Delta province of Tra Vinh. The contract was awarded by Japan’s Sumitomo Corporation, the engineering, procurement and construction (EPC) contractor for the project. Toshiba will make delivery in 2016 and the plant will start operation in 2018. The Duyen Hai 3 extension coal-fired power plant invested in by the state-run Electricity of Vietnam with the total investment capital VND22.7 trillion (more than $1 billion), start construction in December last year. The new power plant, a part of the 4,348 megawatt Duyen Hai power centre, will be able to produce 3.9 billion kWh of electricity every year. Toshiba has a track record for supplying electric generation equipment for large coal-fired thermal power plants in Vietnam. In the last six years, the company has been awarded orders for the Vung Ang 1 thermal power plant, the Thai Binh 2 thermal plant and the Vinh Tan 4 Thermal Plant. This experience, and the performance and reliability of Toshiba’s STGs, won a positive evaluation from Sumitomo Corporation. Toshiba said that the firm would continue its effort to develop thermal generation equipment with the world’s highest level of efficiency for super-critical coal fired plants and for combined cycle thermal power plants, and to reinforce its thermal power plant business in emerging countries. Going forward, Toshiba Group will look to contribute to economic development in emerging countries by supporting measures to secure stable power supply. Toshiba Corporation, a Fortune Global 500 company, channels world-class capabilities in advanced electronic and electrical product and systems into five strategic business domains: energy and infrastructure, community solutions, healthcare systems and services, electronic devices and components, and lifestyles products and services. Founded in Tokyo in 1875, today’s Toshiba is at the heart of a global network of over 590 consolidated companies employing over 200,000 people worldwide, with annual sales surpassing 6.5 trillion yen ($63 billion). Developers to add six luxury hotels in Vietnam’s Nha Trang this year: Savills Nha Trang City in south-central Vietnam is expected to see the opening of six more luxury hotels this year, according to the Vietnamese branch of a global real estate services provider. The city is the capital of Khanh Hoa Province, located on the south-central coast. The Vietnam News Agency cited a recent survey by the Vietnam business of Savills, which is a global real estate services provider, as indicating that six four- and five-star hotels will be inaugurated in the city by the end of 2015. The new hotels will provide 3,200 deluxe rooms to meet the demand of domestic and international tourists. The resort city saw the inauguration of four new deluxe hotels last year. It now boasts over 4,000 rooms in 20 four- and five-star hotels, which means a 24 percent rise compared to 2013, the Savills Vietnam survey said. Most of the city’s extravagant hotels are auspiciously located along the coast and boast gorgeous sea views. Savills Vietnam added that international tourist arrivals to Khanh Hoa Province witnessed a surge of 18 percent per year from 2007 to 2014. The province welcomed over 850,000 international tourist visits last year. However, the city’s hotel activity has slowed down compared to 2013, as Russian tourists, who make up a major portion of its clientele, have tightened their belt. Hotel room renting capacity now attains only 70 percent of that in 2013, the survey pointed out. Last year saw a 65 percent rise in the number of Russian visits, and South Korean visits came second, Khanh Hoa Province’s Department of Culture, Sports, and Tourism reported. The number of Chinese tourists has not seen a recovery until recently and is expected to soar this year. However, last year witnessed a marked drop in the number of tourists from such markets as the U.S., the U.K., France, Germany, and Japan. The province’s tourism sector earned over VND6 trillion (US$279.62 million) in revenue in 2014. The tourism department predicted that the number of international tourists to the province, particularly Russian visitors, will fall this year and in a few more years to come. However, Savills Vietnam experts remain confident about Nha Trang City’s tourist appeal and the growth in hotel clienteles. Savills is a global real estate services provider listed on the London Stock Exchange, according to the company’s website. It boasts an international network of over 600 offices and associates throughout the Americas, Europe, Asia Pacific, Africa and the Middle East, and offers a wide range of specialist advisory, management and transactional services to clients all over the world. Vietnam to join in Southeast Asian rubber trading floor According to talks between Minister of Agriculture and Rural Development of Vietnam and Thailand Minister of Agriculture & Cooperatives , both Vietnam and Thailand have proposed establishment of trading network between Southeast Asian rubber producers, aiming to actively control their own export rubber prices and fix export general rubber prices on the world market. Currently, Thailand, Malaysia and Indonesia have agreed to participate in the trading network, inviting Vietnam, Laos, Cambodia and Myanmar to join them. Through the regional trading floor, seven countries are expected to control their own export rubber prices, and have own rubber-trading floor. Accordingly, in Vietnam, the trading floor may be opened in the central city of Da Nang. In the recent years, rubber price has decreased rapidly. The selling price is even lower than product price, making many difficulties and challenges for the rubber producing countries in Southeast Asian region in general and Vietnam in particular. Vietnamese furniture companies seek for new direction In 2014, export turnover of wood processing industry of Vietnam reached US$6.2 billion. Wood processing industry has posted an average two-digit growth for a long time. However, it is hard to maintain this level of growth in the next one or two decades if Vietnam remains as wood processor. Along with the German fair IMM Cologne, every year, the International Furniture Fair of Singapore (IFFS) attracts more than 20,000 visitors from 115 countries. This year, it was held from March 13 to 16. The highlight of the event is the SingaPlural where the showcase features rising design stars from the multi-faceted creative spectrum — Advertising, Architecture, Urban Planning, Landscape Architecture, as well as Interior, Furniture, Graphic and Fashion Design.  This year, the Handicraft and Wood Industry Association of Ho Chi Minh City (HAWA), for the first time, brought eight works that won Apricot Blossom Furniture Design Competition, organized by the association, from 2010 to date to showcase at the IFFS. The Vietnamese delegation comprised of the representatives of the association, wood businesses, and eight young designers - the owners of eight prize-winning works. At the IFFS, these young designers also had opportunities to join other events, such as Singapore Design Business Summit 2015 where designers and businesses presented and displayed new design projects and new design trends. Architect Nguyen Quoc Khanh, chairman of HAWA, said that the association wants to provide young designers with opportunities to exchange and learn from designers from other countries. Participating in the IFFS is a chance for them to be in contact with global designers and tell the world that Vietnam is ready to join the furniture supply chain, not only as an elite wood processor but also as a country with many skilled and professional furniture designers.  It is also aimed to make the country become one of a few countries who produce furniture under ODM (Original Design Manufacturer) model in order to gain more value on their products. According to architect Tran Viet Tien, director of Lavanto Home Décor, through international fairs, furnifure businesses have realized that designing brings more business deals. Instead of passively waiting for customers to come to them, if they have designed products, they will easily seek for customers. Mr. Khanh said that if Vietnamese wood businesses remain processors, they will not have chances to participate in furniture fairs to have more parters and customers. In addition, furniture importers will choose the processors who offer lowest prices, hence, wood processors are hardly able to raise their prices. Meanwhile, with self-designed products, wood processors have the upper hand on dealing their prices. Therefore, in order to escape the path of processor, they will have to focus on designing. Some Vietnamese furniture companies, including AA Interior Design Furniture Corporation and Gia Long Joint Stock Company, have successfully become ODM companies with skilled designers. Chinese famtrip delegation surveys Khanh Hoa tourism A famtrip delegation of 20 Chinese travel enterprises visits the central coastal province of Khanh Hoa from March 16-19. The delegation will tour to some of popular tourist sites, such as 100 Egg Mud Bath, Vinpearl Land , using diving services of  Labixa Travel – Event, , taking day trips to the islands around Nha Trang. Khanh Hoa saw an increase of Chinese tourist market by 17.65 percent, last year. The number is expected to be higher in 2015 than in any year. In addition, some airlines have offered more routes and charter flights from China’s cities and provinces to Cam Ranh Airport in Khanh Hoa. State Treasury sells $288.3 million worth of G-bonds The State Treasury of Viet Nam sold another VND6.1 trillion (US$288.3 million) worth of Government bonds on March 12. A week ago, the treasury had offloaded $288.6 million worth of bonds, said G-bond auction organiser, the Hanoi Stock Exchange (HNX). HNX said of the total VND8 trillion ($375.58 million) worth of bonds offered by the treasury on March 12, VND4 trillion ($187.7million) were denominated in five-year term bonds, VND 2 trillion ($93.9 million) in 10-year term bonds and VND2 trillion ($93.9 million) in 15-year term bonds. Following the auction, the treasury offloaded more than half or VND2.1 trillion ($98.5 million) of the five-year bonds at a coupon rate of 5.32 per cent per year, said HNX. Meanwhile, it has sold out all the long-term bonds offered. The 10-year term bonds were sold at a coupon rate of 6.35 per cent per year and the 15-year term bonds were sold at a coupon rate of 7.25 per cent per year. After having conducted eight auctions since early 2015, the treasury has mobilised over VND52.6 trillion ($2.469 billion) in G-bonds. Cam Ranh Port sells 582,000 shares in IPO Cam Ranh Port Co. Ltd. sold 582,000 shares, or only 9.5 per cent shares during its initial public offering (IPO) organised at the Ha Noi Stock Exchange on March 16. The staff of Cam Ranh Port launched new year activities in 2012. The company sold only 9.5 per cent shares during its IPO on March 16. Photo camranhport.vn The local press said 50 individual investors had bought the shares at an average winning bid of VND10,172 (US$0.48) per share. The company earned more than VND5.9 billion ($280,952) through the transactions. It had announced recently on its website that it will auction about six million shares during this IPO, and its total charter capital was expected to reach roughly VND264.52 billion ($12.60 million) after the privatisation. The six million shares would account for 23 per cent of this equity, and a similar stake would be sold to strategic investors. Cam Ranh Port's parent company, Viet Nam National Shipping Lines, would represent the State's stake of 51 per cent, while 2.98 per cent would be reserved for employees. Cam Ranh Port is based in the central province of Khanh Hoa and specialises in seaport services, such as onshore transport, vessel repair and fuel trade, along with goods loading and storage for hire. Cholimex 2014 revenue jumps 19 per cent Chilli sauce producer Cholimex Food Joint Stock Company reported net revenue of over VND1 trillion (US$46.9 million) for 2014, reflecting an increase of 19 per cent from a year ago. A financial report released on March 17 said Cholimex earned a pre-tax profit of VND50 billion ($2.3 million), indicating a year-on-year jump of 18 per cent and 7 per cent above its target. At the same time, the company also spent VND135 billion ($6.33 million) and VND48 billion ($2.25 million) as sale costs and management fee, both up 23 per cent and 25 per cent from last year, respectively. Established in 1983 in HCM City, Cholimex has total assets of VND 408.5 billion ($19.17 million) and is one of the dominant players in the domestic chilli sauce market. In late 2014, Cholimex stopped being listed in the local stock market. The company also announced that its shareholder general meeting would take place on April 23 in the city. Vietnam attends Langkawi International Maritime and Aerospace Exhibition The 2015 Langkawi International Maritime and Aerospace (LIMA) Exhibition opened in Langkawi, Malaysia on March 17, attracting participation of over 512 groups and companies from 36 countries around the world. The event saw presence of defence ministers from the ten ASEAN countries and delegates of over 50 countries. A high-ranking military delegation, led by Defence Minister General Phung Quang Thanh also attended the event. Speaking at the opening ceremony, Malaysia’s Prime Minister Najib Razak, said that this year’s exhibition has attracted the largest warships and aircrafts in history. He said according to the IHS Jane's forecast, defence spending in Southeast Asia will reach US$44.5 billion in 2018 compared to US$38.5 billion this year. For this reason, the region is considered as a key growth market for aerospace and maritime spending, not just in defence but also in the commercial sector. Since 1991, the biennial event is the largest and most popular exhibition of aerospace and maritime technology in the entire Asia region. The 2015 LIMA is showcasing 110 aircrafts and 65 ships from Russia, the US, Republic of Korea (RoK), China, Japan, France, Canada, Singapore and Indonesia. After the opening ceremony, General Phung Quang Thanh and Vietnam’s high-ranking military delegation toured the exhibition. Vietnam’s attendance at the exhibition aims to update new breakthroughs in the defence industry around the world, while seeking co-operation opportunities in the field. The exhibition runs until March 21. Lotte eyes US$250-million coffee project  South Korea’s Lotte Group has worked with the government of Daklak over a coffee planting and processing project worth US$250 million in the Central Highlands province. Dinh Van Khiet, vice chairman of Daklak Province, revealed the project at a recent coffee seminar in the biggest coffee producing province of Vietnam. Khiet said Lotte wants 4,000-5,000 hectares of land to plant coffee and build a processing factory in line with its own standards. This condition makes it hard for the province to meet though it has focused much on calling for investments in the local coffee industry in the past years. “It is not easy for a local government to meet such a requirement and thus we have reported the case to the Prime Minister. The project is still under consideration,” Khiet said. If approval is forthcoming, the South Korean group will turn out coffee products with high added value like canned coffee on the market, Khiet said. South Korea is one of the major importers of Vietnam’s coffee but coffee exports to this northeast Asian market have dropped considerably in recent years. Vietnam’s coffee exports to South Korea reached over US$80 million five years ago but plunged to around US$60 million last year. The figure might drop further this year, according to Dr. Phan The Cong from Vietnam University of Commerce. If the project of Lotte is materialized, the shipments of Vietnamese goods in general and coffee in particular to South Korea could increase considerably. Figures of the Ministry of Agriculture and Rural Development showed Vietnam exported 242,000 tons of coffee worth a combined US$511 million in the first two months of this year, down 25% in volume and 16.4% in value compared to the same period last year. Vietnam earned US$3.62 billion from exporting 1.73 million tons of coffee in 2014, up over 33% in volume and more than 32% in value year-on-year. Germany and the United States were among the top importers of Vietnamese coffee last year, according to the Ministry of Agriculture and Rural Development. Lotte Group has recently stolen the limelight for its hefty investments in various sectors in Vietnam, including hotel, food, supermarket, construction, home shopping and entertainment. In the property sector, Lotte has acquired a majority stake at the joint venture which owns and operates the commercial, office and apartment complex Diamond Plaza, which had an initial investment of some US$60 million, in HCMC’s District 1. Lotte holds a 70% stake at the five-star, 283-room Lotte Legend Saigon on Ton Duc Thang Street in downtown HCMC. The group and its Japanese partners are working on the Eco Smart City project worth US$2 billion in Thu Thiem New Urban Area in District 2. Fuel import tariff cuts not in sight The Ministry of Finance at a seminar on March 16 did not detail a roadmap for fuel import tariff reductions as expected, saying that the decision could not be made immediately as this must be weighed. Last week, the National Assembly Standing Committee passed the Government’s plan to raise environmental protection fees on fuels from May 1 this year. Finance Minister Dinh Tien Dung at that time said the adjustments would be applied together with import tariff cuts, so retail fuel prices on the domestic market would not be affected much. But at the seminar organized by the Government’s portal on March 16, Pham Dinh Thi, head of the ministry’s Tax Policy Department, said import tariffs and environmental protection fees are among the many factors that constitute fuel and gas prices. Time is need to consider fuel import tariff cuts without impact on retail fuel prices and the issue must be put in the general context of the local economy, Thi said. According to the ministry, tax hikes are necessary to offset the fuel import duties cuts Vietnam is obliged to do under its trade agreements with ASEAN, China and South Korea. Vietnam is fulfilling the commitments to free trade agreements with partners, so there are two different import tax rates. At present, the nation levies import tariffs of 35% on gasoline, heavy fuel oil and kerosene, 30% on diesel oil and 25% on jet fuel. Fuel imports from ASEAN, China and South Korea are subject to rates of 5-35%. From May 1, the new environment protection fee on gasoline will triple to VND3,000 per liter. Other officials at the seminar admitted that the recent increases in taxes, electricity and gasoline prices will leave much impact on enterprises and citizens. Vo Van Quyen, head of the Domestic Market Department under the Ministry of Industry and Trade, said a fuel price spike would result in prices of all other goods edging up. As the retail gasoline price was revised up by over VND1,600 per liter last week, the nation’s consumer price index (CPI) is expected to add 0.03% this year. Thi of the finance ministry said higher prices of necessities will affect business and production, and profit of enterprises. He acknowledged better business competitiveness will lead to higher tax collections. Economic expert Ngo Tri Long told the Daily on the telephone on March 16 that the CPI would rise slightly in March due to the recent fuel price hike while the electricity price rise from on March 16 would be factored into the index next month. Besides, the price hikes will cause a domino effect on other products. Expert worries about WB’s high construction permit ranking President of the Central Institute for Economic Management (CIEM) Nguyen Dinh Cung has expressed concern over Vietnam’s high ranking of construction permits in the annual Doing Business report of the World Bank (WB). Cung told a seminar in Hanoi on March 16 that the high ranking may make people, especially policymakers, complacent, which could in turn affect the reform process. “This means no pressure for reform,” Cung said. WB expert Joanna Nasr said in the Doing Business report, the indicator on dealing with construction permits of Vietnam is higher than the average of East Asia & Pacific and member countries of the Organization for Economic Cooperation and Development (OECD). A construction company in Vietnam needs to complete 10 procedures to get a permit to build a warehouse, while 14.6 and 11.9 procedures are required in East Asia & Pacific and OECD countries respectively. In terms of time, it takes a construction firm in Vietnam 114 days to obtain the permit compared 134 days in East Asia & Pacific and 149.5 days in OECD countries. Besides, the cost of getting the permit to construct a warehouse in Vietnam is about 0.7% of the warehouse value, which is equivalent to one-third of the average cost in the East Asia & Pacific region. According to Nasr, Vietnam has done quite well in comparison with other countries, including developed ones like Denmark. However, Cung cast doubt on the WB’s calculations, saying the construction permit is just one of the five steps for a project to get off the ground as companies still need to complete land and investment procedures, environmental impact assessment, and construction. Cung noted there are many problems with land procedures alone such as site clearance and rental payment. This step might take nearly two years as found in a study done by CIEM. Cung said perhaps calculations of the WB are based on legal regulations, not on actual situations which are much more complicated. Besides, the respondents of the WB report might be those who know laws clearly, not companies with real experiences. Nasr said the report is produced on the questionnaire the WB sent to architects and construction companies which have built warehouses in HCMC, as well as construction regulations. Kazakhstan seeks to bolster economic cooperation with Vietnam Kazakh Ambassador to Vietnam Beketzhan Zhumakhanov said he would strive to promote ties between the two countries, especially in trade and economic cooperation. At a workshop in Hanoi last week, Zhumakhanov introduced to representatives of Vietnamese ministries and agencies new economic policies of Kazakhstan. The free trade agreement between Vietnam and the Eurasian Economic Union (EAEU) will create new cooperation opportunities for the two countries. Vietnam and EAEU concluded the final round of FTA negotiations late last year. Both sides are expected to sign the trade pact this year after resolving remaining technical issues. Zhumakhanov told the workshop that Kazakhstan has opened its embassy in Hanoi for over one year though that country and Vietnam established diplomatic relations in 1992. After Vietnam and Kazakhstan signed the joint action plan for the 2011-2013 period to foster political and economic cooperation, bilateral trade grew by 85% annually on average in the period. Kazakhstan’s imports from Vietnam kept rising, from US$26.7 million in 2010 to US$231 million in 2013. Meanwhile, Kazakhstan’s exports to Vietnam were small and tended to decline, with a reduction from US$10.8 million in 2010 to US$1.4 million in 2013. According to Dr. Do Huong Lan from the Foreign Trade University, both countries have huge potential to boost economic cooperation. Vietnam can meet Kazakhstan’s needs of tropical farm produce, seafood, apparel, footwear, pharmaceuticals, electrical devices, computers and computer parts. Kazakhstan can provide metals, leather materials, fur, chemicals, rubber and mining machines for Vietnam. Vietnamese enterprises can invest in the sectors of mining, construction, food industry, telecom, medicine, restaurant and hotel in Kazakhstan. Aeon’s success story in Vietnam makes headlines in Japan The quick success of Japan’s shopping mall brand Aeon in Vietnam has made headlines in Japan, said Adachi Masahide, director of the Japan Council of Local Authorities for International Relations in Singapore. Masahide said at a meeting with HCMC chairman Le Hoang Quan last week that his working group would visit Aeon Mall Tan Phu Celadon in Tan Phu District to learn about how the company has introduced its products and services to local consumers. Many Japanese firms have reaped success in Vietnam and Aeon Mall Tan Phu Celadon is an example of quick success of Japanese companies in Vietnam’s retail sector. Masahide said Japanese people have known about the success of Aeon in Vietnam. Aeon Mall Tan Phu Celadon was inaugurated in early 2014 in HCMC’s outlying district of Tan Phu and it has since attracted a large number of shoppers, especially at weekends. Aeon Mall Binh Duong was opened in the southern province of Binh Duong last November. The company plans to put into operation a shopping mall in Hanoi in the first half of this year. The Japanese retailer has an ambitious plan to open 20 shopping malls in Vietnam until 2020. Early this year, Aeon acquired a 30% stake at Fivimart and 49% at Citimart in an attempt to expand its presence in this market. Currently, Fivimart has 20 stores in Hanoi and some other northern provinces while Citimart mainly operates in HCMC with 27 outlets. Ministry to sell 70% stake at hospital The Ministry of Transport will sell a 70% stake at Giao Thong Van Vai Hospital in line with the Government’s policy to restructure public schools, hospitals and other utilities. Vu Anh Minh, head of the enterprise management department at the ministry, told a meeting with transport firms last week that the department is looking into the equitization scheme of the hospital before submitting it to the Government this month. The hospital was evaluated at VND158.4 billion (US$7.4 million) late last year with the State holding VND136.5 billion, and the total amount excludes land and brand value. If things go smoothly, the hospital can become the first major public utility to operate as a financially-independent entity. As scheduled, the ministry will sell 70% of the hospital’s shares to investors. A number of foreign joint-venture firms in the health sector have expressed interest in acquiring the stake. Besides the hospital, the ministry will sell shares at other public utilities under its management in the education and health sectors. Last month, the Government issued Decree 16/2015/ND-CP approving financial autonomy for public utilities with an aim to make these entities operate under the market mechanism as ordered by the Prime Minister earlier this year. This has been supported by many ministries and agencies. The decree allows public utilities to be independent in organization, activities, human resources and finance based on their financial capacity. They are encouraged to find feasible ways to raise funds and operate profitably, and reduce reliance on the State budget. The decree, which will take effect on April 6 this year, also clarifies the prices of services with or without subsidies from the State budget for public utilities. Bumpy ride ahead for furniture exporters to U.S. Experts have warned that Vietnamese exporters of wooden products, chiefly furniture, will face stricter requirements for the legality of their products shipped to the United States in the coming time. The warning came at a seminar in HCMC yesterday on challenges for exporters in the U.S. market. The HCMC Department of Industry and Trade, and the Handicraft and Wood Industry Association of HCMC (HAWA) organized the seminar as part of the eighth Vietnam International Furniture and Home Accessories Fair (VIFA Expo 2015). HAWA’s vice chairman Huynh Van Hanh said last year Vietnam became the second biggest wooden products exporter to the U.S. with total shipments amounting to US$2.23 billion, rising by 11.1% year-on-year. The U.S. market still holds much growth potential for domestic wooden goods exporters to boost sales at a time when they are having difficulty stepping up exports to the European Union still mired in debt problems. But to further tap into the U.S. market, Vietnamese exporters will have to meet conditions on the origin of wood. Local sources can meet half of the wood needs of processing enterprises, so the remainder has to be imported. HAWA quoted figures of the General Department of Customs as saying that wood imports stood at nearly US$1.64 billion last year. Hanh called for local processors to limit wood imports from Laos and Cambodia to process products for export to the U.S. and the EU; otherwise, they will have trouble explaining the origin of wood used for their products. Most of the exports to the U.S. market are indoor furniture. HAWA noted that local firms should use creative designs for their items if they want to speed up exports to this selective market. Nguyen Tuan Anh, deputy minister of Industry and Trade, told the opening of VIFA Expo 2015 that wood processing was identified as one of the key sectors in the master plan for industrial development until 2020 with a vision toward 2030 as approved by the Prime Minister. Anh said in addition to the origin of wood requirement, enterprises should invest in modern technology to improve the quality of their products and productivity. As observed by the Daily, exhibitors showcase many items with new designs at VIFA Expo 2015 and look for long-term partners. VIFA Expo 2015 is taking place at the Saigon Exhibition and Convention Center in the city’s District 7 until this weekend. Air conditioner, fan sales rise Choosing a fan at an electronics shop on Hoang Van Thu Street, Ngoc Van of Tan Phu District said he needed to buy one more fan for his home since the weather has turned hot. Nguyen Tien of Thu Duc District said he bought a water misting fan a few days ago to cope with hot weather. Electronics stores in HCM City like Nguyen Kim and Thien Hoa said the demand for air conditioners and fans have recently skyrocketed with the onset of summer. Le Pham Anh Thy, marketing director of Nguyen Kim Electronic Appliance Centre, said sales of air conditioners, fans and refrigerators have gone up by 15 per cent year-on-year in the first two weeks of this month, with customers opting for energy-efficient gadgets. The most popular are 1-1.5 HP air conditioners from Toshiba, Daikin, LG, Panasonic, and Reetech, he said. Tran Tan Hoang Hau, marketing director of Thien Hoa Electronics Centre, said sales of cooling products have shot up since the end of last month. Fan sales are up by more than 50 per cent from recent months and sales of air conditioners and water misting fans are up 10-20 per cent over last year, he said. Air conditioners of 1-1.5 HP capacity are among the top sellers, he said. Small electronic shops also report higher sales of cooling products. A shop owner on Hoang Van Thu Street in Tan Binh District said sales of fans, fruit juicers and blenders at her shop had risen significantly. Thy of Nguyen Kim said demand is expected to continue rising in the coming months, with his stores forecasting sales to go up by 25-30 per cent. Both large stores and shops are offering promotions to boost sales. Thien Hoa, for instance, is offering a discount of 10-50 per cent on some air-conditioners, refrigerators and water cooling fans. According to the Southern Hydro-meteorology Station, the city and south-eastern region have entered the hot, dry season 10 days earlier than normal and this weather will continue until the end of April or early May. Source : VEF/VNA/VNS/VOV/SGT/SGGP/Dantri/VIR