BUSINESS IN BRIEF 25/4 Vietnamese companies hope to make a splash at Seafood Expo Global Nearly 50 seafood processing enterprises from the Vietnam Association of Seafood Exporters and Producers (VASEP), and a number of private companies, are attending the 23rd Seafood Expo Global (SEG) in Brussels, Belgium. According to Truong Dinh Hoe, general secretary of VASEP, Vietnamese companies have brought a wide diversity of products to the largest seafood trade event in the European Union (EU), with shrimp, tra and basa fish among the products on show. Tuna products specially made for the European market were also introduced at the event, Hoe said. The EU accounts for 20 percent of Vietnam’s total seafood exports, equal to 1.5 million tonnes, Hoe added. Nguyen Thi Thu Sac, general director of the Hai Nam seafood processing company, which exports 40 percent of its products to Europe, said that the company has been attending the event since 2000 to seek new customers and keep old clients. The SEG is taking place from April 21-23 at the Heysel Exhibition Park in Brussels, Belgium’s capital city, drawing 2,000 enterprises from 100 countries. Bac Lieu exports 101 mln USD worth of frozen prawn The Mekong Delta province of Bac Lieu exported 2,700 tonnes of frozen prawn in April worth 32 million USD, bringing the total export of the product during the first four months of 2015 to 8,300 tonnes which generated 101 million USD. The April volume figure accounted for nearly half the entire first quarter’s 5,600 tonnes which brought home 68 million USD. The positive results stemmed from proactive moves by local businesses to seek contracts in new foreign markets such as Australia, Hong Kong, the Republic of Korea and several Arab countries. To improve their competitiveness in such markets, the local firms have tightened input quality control and food sanitation by carefully selecting suppliers. However, these firms found it difficult to gain access to banks loans, limiting their ability to build long-term business plans.- Vietnam to adopt int'l financial reporting norms in 2016 Vietnam will officially adopt International Financial Reporting Standards (IFRS) from 2016 in its efforts to enhance comparability and improve transparency. This information was revealed at a seminar held in Hanoi on April 21 on accounting standards updates for businesses. The seminar was organised by the Hanoi and Hochiminh stock exchanges in collaboration with the Ministry of Finance. "Shortening the gap between Vietnamese and international accounting standards is part of the country's consistent policy of deeper integration into ASEAN and world markets," said Vu Thi Kim Lien, Chairwoman of the Corporate Governance Advisory Council on the Hanoi Stock Exchange. She said that the new standards would drive Vietnamese companies to enhance financial transparency and improve risk controls for better asset management. This would not only generate profits for businesses but also contribute positively to the country's economic performance, she added. Finance Ministry officials informed the seminar of the latest changes in accounting standards as contained in Circular 200/2014/TT-BTC, issued in December last year to replace Decision No 15/2006 and Circular 244/2009/TT-BTC on the corporate accounting regime. Experts said the new circular was mostly up-to-date, practical and in increased accordance with international standards. The regulations are based on a flexible and open platform that is designed to meet the management requirements and decision making of businesses, as well as serve investors and creditors, but not made for taxing purposes, they said. Five major changes were highlighted in the new rules in the areas of currency accounting, accounts, financial statements, accounting records and accounting books. Businesses with many foreign currency transactions can now select one foreign currency for accounting purposes. However, their financial statements for publication and submission to the authorities must still be presented in Vietnamese dong. In the accounts system, short-term and long-term assets will not be differentiated. For financial reporting, "tax and other amounts payable to the State budget" will no longer fall under the mandatory information category. The circular also has a new regulation on accounting principles and financial statements for companies that do not meet the continuous operation requirements. Businesses can design templates for accounting records and accounting books for their own activities, but must comply with requirements in the Accounting Law and ensure clarity and transparency. Interim reports will include quarterly financial statements, including the last quarter, and half-year reports. Vu Duc Nguyen, Deputy General Director of Deloitte, said some of the differences between IFRS and the Vietnamese accounting standards (VAS) could be seen in the presentation of financial statements, fair value, financial instruments, impairment write downs, consolidated and separate financial statements, business combination, fixed assets, and revenue recognition. "Vietnam has set a roadmap to adopt IFRS in 2016. This requires strong determination from businesses as IFRS not only provides rules on financial reporting and accounting, but also affects all business operations," Nguyen said. Banks see improved business climate in 2015 Business performance at banks is expected to improve significantly during the second quarter, against the same period last year, a State Bank of Vietnam (SBV) survey said. The bank's business sentiment survey covered domestic and foreign banks in Vietnam and was released on April 20. Banks also expect better results for the whole of 2015, according to the survey. Previously, some were concerned about the application of a Circular 36 to capital adequacy and liquidity requirements for credit institutions, including the branches of foreign banks in February 2015, which was expected to hurt banks' businesses. The Circular 36 exhibited SBV's efforts to bring Vietnam's regulatory framework closer to Basel II, strengthening the transparency of institutions' operations, and promoting the development of and mitigating the risks in the local capital market. "The latest survey showed banks making a positive assessment of the central bank's latest policy adjustment, including the new regulations on managing the banking system's safety," the central bank said in a statement. Under the survey, banks forecast that the banking system's average credit growth would increase to 16.93 percent this year from 14.57 percent forecast in an earlier survey last December. The respondents also anticipated a slight decrease in both deposit and lending interest rates. More than half of the banks expected interest rates to ease by 0.6 to 0.7 percent in the three-month period ending June and slip by 0.87 to 1.1 percent for the whole year. Banks reported a rise in demand for loans since the beginning of March and they anticipated that demand would increase sharply for the whole of 2015. Deposits are also forecast to increase by nearly 15 percent from the previous forecast of 14.35 percent, with capital mobilisation in Vietnamese dong to grow faster than foreign currencies. Most of the banks involved believe long-term deposits, particularly those for six-month and longer terms, will increase in the second quarter towards the end of the year. Under the survey, most banks also expected their bad debt ratio to further decline and remain below 3 percent by the end of 2015 from 3.25 percent in December 2014. Bac Giang targets lychee exports to new markets The northern province of Bac Giang plans to promote litchi exports to the United States, the European Union (EU), Japan and the Republic of Korea (RoK). It will do so by implementing a master plan to zone off and produce litchi cultivation in accordance with modern food quality and hygiene standards. Nearly 100ha of litchi in the Luc Ngan district has been cultivated in line with GlobalGAP standards, and is expected to generate 500 to 600 tonnes for exports to traditional markets, such as China, Laos and Cambodia. Meanwhile, VietGAP-standardised litchi cultivation has been expanded to 9,500ha, producing 47,000 to 57,000 tonnes per year. The province has mapped out a specific plan to develop litchi in the Luc Ngan district to ensure an adequate supply for export to new markets, developing 150ha under the GlobalGAP in 2016 and 250ha in 2020. The provincial Department of Science and Technology, together with scientists from research institutes and universities, held a workshop to introduce Israel's irradiation technology to produce qualified litchi for export. The Luc Ngan litchi brand name has received protection certification in Japan, RoK and Cambodia and it is expected to be guaranteed in China and Cambodia during the second quarter of this year. The Department is also working to register brand name protection in the United States, Australia, Singapore, Israel, Germany, France and Russia. It is also currently preparing for a number of conferences to promote consumption and working with Vietnam Airlines to discuss ways to bring litchi into the carrier's in-flight food options. Meanwhile, the Luc Ngan District People's Committee is asking relevant agencies to instruct and inspect litchi cultivation processes by applying new technology in accordance with VietGAP and GlobalGAP standards. It has also requested litchi growers to follow preservation regulations before exporting it to foreign markets. Tran Van Loc, Director of the provincial Department of Industry and Trade, said the Dong Giao Export Food Company was working with the province to discuss measures for Luc Ngan litchi exports as it had signed a contract to sell 5,000 tonnes of frozen litchi to the United States, Japan and the RoK. In addition, the Thanh Binh Jeune company, a French-based importing business, wants to buy fresh litchi for sale in France. EU meat producers would like a bigger bite of Vietnam's market Vietnam is a promising market for EU beef, pork and meat products, the Poland-based Union of Producers and Employers of the Meat Industry has said. There had been rapid growth in EU meat exports to Vietnam in the last three years, it said. Export of pork, for instance, went up in the period from 822 tonnes worth EUR933,630 (US$1 million) in 2012 to 6,149 tonnes worth EUR6.7 million (US$7.2 million) last year, Agnieszka Rozanska, UPEMI's managing director, said. Beef and meat product shipments had also shot up, with export of meat products increasing by over 70 times, she said. Pork exports by Poland, one of the biggest meat producers in the EU, had increased sharply, but the country had not exported beef to Vietnam and was in the process of getting approval for it, she said. UPEMI is implementing a campaign called "Tradition and quality of European meat" in three target markets — the US, the Republic of Korea, and Vietnam — to promote the advantages, quality and principles of production of fresh, refrigerated and frozen beef and pork and products made from these meats. The main goal of the three-year campaign (2013- 2016) is to increase exports of European meats and meat products to the target markets and deepen knowledge of the quality, flavour and production standards there. The EU's meat exports to Vietnam were expected to rise by over 5% next year, Rozanska said. The Vietnam-EU free trade agreement, which is expected to conclude this year, would create more advantages for EU meat exports to Vietnam, she said. Europe is famous for its quality beef and pork as a result of breeding based on stringent EU regulations and the care given to every element of the food chain. Mariusz Boguszewski, economic counsellor at the Polish embassy in Hanoi, said trade between Vietnam and Poland was worth US$1.5 billion last year, a year-on-year increase of 30%. Vietnam enjoyed a surplus with Poland, with its exports being worth US$1.3 billion, he said, adding that Poland wanted to boost its agricultural exports to Vietnam to narrow the deficit. Rozanska said UPEMI along with seven Polish companies would take part in the 2015 Food and Hotel Vietnam to be held at the Saigon Exhibition and Convention Centre from April 21 to 23 to introduce and promote EU meat products. Vingroup announces major management change Vingroup has announced it will hold a partner conference on April 20 with Keller Williams, a Global Property Specialist based out of the US at Royal City in Hanoi to explore the possibility of utilizing their services. Vingroup is specifically contemplating a deal with Keller Williams to replace their current management team with respect to its two big projects – Times City and Royal City. Royal City has total leasing space of nearly 24,000 square metres. It offers thousands of European style residences, luxury apartments for rentals, modern elevators and the largest Mega underground mall in accordance with international standards. Keller Williams was established in 1983 in Austin, Texas in the US. It has become a leading global real estate company with the number of agents reaching 112,000. It also has more than 700 representative offices in all continents around the globe.   Tra fish exports to the US fall Tra fish exports to the US for the three months leading up to April dropped by 14.4% on-year to US$62.59 million on the back of high anti-dumping tariffs, according to the Vietnam Association Seafood Exporters and Producers (VASEP). Earlier this year the US Department of Commerce, following an anti-dumping duty administrative review (POR 10), nearly doubled the anti-dumping tax rate levied on Vietnamese tra fish fillets. The revised rate of US$0.97 per kilo applies to 24 Vietnamese tra fish exporters and is much higher than the US$0.58 rate previously imposed. Convenience – it’s what’s for dinner tonight The idea of planning and eating three square meals a day seems to increasingly be a thing of the past for many Vietnamese households. Vietnam imported US$44.2 million of pre-packaged food products for March, an increase of 46.1% against February, bringing the total imports for the first quarter of the year to US$122.8 million. The Vietnam Industrial and Trade Information Centre (VITIC) reported the US topped the import market at US$36.9 million, accounting for 30% of market share, trailed by Singapore (17.73%) and Malaysia (8.06%). According to the VITIC, on the flip side, Vietnam confectionary and cereal exports are available in 27 countries. Their revenue for the first two months of the year dipped 1.8% on-year to US$61.1 million. Roughly 44% of the export markets witnessed positive growth including China (up 28.74% to US$8 million) and the US (up 30.05% to US$4.7 million). It’s noteworthy that some markets enjoyed robust growth such as South Africa (721.43%), India (351.59%), the Netherlands (132.2%) and Laos (108.54%). VIB named Best Banking Deal Vietnam 2015 Vietnam International Bank (VIB) has been honoured by Global Banking and Finance Review as the “Best Banking Deal Vietnam 2015” and “Fastest Growing Retail Bank in Vietnam 2015”. The Global Banking and Finance Review awards are in recognition of VIB for its tireless efforts to provide excellent banking services and its commitments to supporting the business community in Vietnam. VIB has conducted successful bond issuances and is the mandated lead arranger and book runner through the use of the cross-currency swap and strong understanding of the client’s business strategy. Global Banking and Finance Review has also highlighted VIB for its application of advanced technologies to provide services and support to customers through social media, online banking and online branch with virtual tellers on facebook and live chat. It has also improved customer experience by providing innovative products and services through various distribution channels such as VIB MasterCard Debit or competitive and stable lending rates, etc. Previously, in March 2015, VIB was honoured to receive the “Leading SME Trade Bank" award from Asian Development Bank (ADB) and “Vietnam Excellent Brand” prize jointly offered by the Vietnam Economic Times and the Trade Promotion Agency (under Ministry of Industry and Trade). In addition, in the rating session by Moody’s in early April 2015, VIB continues to be one of the two banks with baseline credit assessment (BCA) of B3 – the highest rank among 9 local banks rated by the rating agency. Vietnam’s trade deficit with China hit nearly US$8 billion China remained Vietnam’s largest importer with a value of US$11.47 billion in the first quarter of this year. The General Statistics Office of Vietnam (GSO) has reported that Vietnam just exported US$3.54 billion to China, posting a trade fall of nearly US$8 billion. Vietnam’s key imports included machinery, equipment, tools, computers, electronic components, telephones and telephone accessories, and steel. In the reviewed period, the foreign direct investment (FDI) sector enjoyed a trade surplus of US$873 million, down 57.3% while the domestic sector recorded a trade fall of US$3.27 billion, up four fold over last year’s period. French expected to ratchet-up current investment French firms are deepening roots in Vietnam in anticipation of the EU- Vietnam free trade agreement and growing economic ties. Sanofi, a diversified global healthcare provider, recently affirmed their commitment to developing its presence in Vietnam’s market after visiting as part of a French government delegation led by Minister of State Matthias Fekl who is responsible for foreign trade, tourism, and the rights of French nationals abroad. Fekl was in Vietnam last week to attend the third annual high-level Vietnam-France Economic Dialogue. Sanofi is a trailblazer in building pharmaceutical plants in Vietnam Last March, the firm kicked off construction of a new drug manufacturing plant and a research and development centre in Ho Chi Minh City with US$75 million in the total investment capital, making it Sanofi’s largest investment project in Vietnam so far, according to Sanofi CEO Christopher A. Viehbacher. “With a 50-year plus track record operating in Vietnam, Sanofi is enjoying its number-one position in one of most dynamic nations in the region. The new project will continue affirming its pole position in this emerging market,” said Viehbacher. Other members of the French delegation, such as Alstorm, Airbus D&S, Thales and IMP Engineering all expressed interest into expanding their presence in Vietnam. Alstom, a global leader in power generation, power transmission, and rail infrastructure is hoping to team-up with other partners in order to spur on sustainable development city models in Vietnam. The group has already been involved in a string of large-scale projects in Vietnam such as the landmark Son La hydropower plant, and Hanoi’s metro line 3. International electrics and systems group Thales voiced its intention to develop surveillance satellite systems in Vietnam, while IMP Engineering is keen to building hospitals. IPM has engaged in a proposal to build a 500-bed hospital in the Mekong Delta city of Can Tho. This project, if it gets the go-ahead, will be funded using French official development assistance. The French investors’ proposals were all commended by Deputy Minister of Planning and Investment Nguyen Chi Dung who chaired dialogue. “Current French investment in Vietnam is well below its potential. We want French businesses to realize there are plenty of opportunities in the country, especially as we’re about to wrap-up negotiations on the European Union free trade agreement and become part of the ASEAN Economic Community,” said Dung. “Vietnam has a number of advantages in terms of its investment environment, reformed policies, coupled with low-cost labour and competitive infrastructure,” Dung said. The Ministry of Planning and Investment’s Foreign Investment Agency’s figures revealed that France had 429 investment projects in Vietnam worth US$3.4 billion in the total committed capital, ranking 16 out of 101 countries and territories investing in Vietnam by the end of March. Housing stimulus disbursement stagnates The disbursement of the VND30-trillion (US$1.38 billion) housing stimulus package has been stagnant, despite the increase in the number of successful transactions in the real estate market. Economists and estate businesses said the market had seen clear improvements. The number of successful transactions in Ha Noi in the first quarter of the year rose by three times over the same period last year, reaching 4,250. Most of the transactions involved apartments with small and medium areas of 70sq.m to 90sq.m. Deputy Minister of Construction Nguyen Tran Nam said the estate market this year would see more transactions in several segments such as land, apartments and offices. Apartments, especially, of less than VND1 billion ($46,300) that are suitable for low-income earners will sell well. Experts said it was time for the package to support the market and reduce the housing inventory. However, the package cannot be disbursed fully by June 1, 2016 as the Government's set target. The Viet Nam Real Estate Association said the disbursement was slow for social and cheap commercial housing projects, despite an increasing number of transactions and reducing inventory. About VND6.2 trillion ($287 million) or 20 per cent of the package has been disbursed so far. Chairman of the HCM City Real Estate Association Le Hoang Chau said the disbursement was too low, though 15 banks were contributing to the package. Chau said regulations stipulated that the total income of eligible low-income earners should be less than VND9 million ($416.7) a month. However, several commercial banks did not accept the regulation as they believed that the income would not be enough to repay debts. Nguyen The Hien from Bac Ninh Province is eligible to get a loan from the package. However, several banks rejected his application because they felt he would not be able to repay the loan with his low income. "I have to consider taking a commercial loan that has a higher interest rate and financial risks. I have paid 30 per cent of the amount for my apartment. If I'm unable to get a loan, I'll have to sell the apartment," Hien said. He suggested the loan duration should be extended from the current 10 to15 years to 20 to 25 years to reduce the pressure on low-income earners. A bank representative said the recent regulation promulgated by the construction ministry in March caused the package disbursement to stagnate. Such low incomes would not be able to cover the debt after deducting the daily expenditure. "The loan comes from people's deposits in banks. That is the reason why banks have been careful in giving loans to avoid bad debts in the future," he said. Nguyen Hoang Minh, deputy director of the State Bank of Viet Nam's branch in HCM City, said they had sent documents to 15 commercial banks to collect ideas that would then be submitted to the central bank for consideration. EU meat producers would like a bigger bite of Viet Nam's market Viet Nam is a promising market for EU beef, pork and meat products, the Poland-based Union of Producers and Employers of the Meat Industry has said. There had been rapid growth in EU meat exports to Viet in the last three years, it said. Export of pork, for instance, went up in the period from 822 tonnes worth 933,630 euro (US$1 million) in 2012 to 6,149 tonnes worth 6.7 million euro ($7.2 million) last year, Agnieszka Rozanska, UPEMI's managing director, said. Beef and meat product shipments had also shot up, with export of meat products increasing by over 70 times, she said. Pork exports by Poland, one of the biggest meat producers in the EU, had increased sharply, but the country had not exported beef to Viet Nam and was in the process of getting approval for it, she said. UPEMI is implementing a campaign called "Tradition and quality of European meat" in three target markets — the US, South Korea, and Viet Nam — to promote the advantages, quality and principles of production of fresh, refrigerated and frozen beef and pork and products made from these meats. The main goal of the three-year campaign (2013- 2016) is to increase exports of European meats and meat products to the target markets and deepen knowledge of the quality, flavour and production standards there. The EU's meat exports to Viet Nam were expected to rise by over 5 per cent next year, Rozanska said. The Viet Nam-EU free trade agreement, which is expected to conclude this year, would create more advantages for EU meat exports to Viet Nam, she said. Europe is famous for its quality beef and pork as a result of breeding based on stringent EU regulations and the care given to every element of the food chain. Mariusz Boguszewski, economic counsellor at the Polish embassy in Ha Noi, said trade between Viet Nam and Poland was worth $1.5 billion last year, a year-on-year increase of 30 per cent. Viet Nam enjoyed a surplus with Poland, with its exports being worth $1.3 billion, he said, adding that Poland wanted to boost its agricultural exports to Viet Nam to narrow the deficit. Rozanska said UPEMI along with seven Polish companies would take part in the 2015 Food and Hotel Vietnam to be held at the Saigon Exhibition and Convention Centre from April 21 to 23 to introduce and promote EU meat products. VN eyes Morocco as a potential new market Morocco has become a new potential market for Viet Nam as bilateral trade between the two countries reached US$156.3 million last year, with the annual growth rate pegged at 54 per cent. During the year of 2014, Viet Nam's exports to Morocco posted a 48 per cent year-on-year growth to $148 million. Morocco is one of the 10 largest African importers to Viet Nam. The country mainly ships telephones and components, coffee, seafood, computers, electronics and components, garments, fibre, footwear, fishing nets, chemicals and pepper to Morocco. Its imports remain modest, reaching just $8.7 million, resulting in a trade surplus of $139.3 million. The imported products from Morocco are computers, pharmaceuticals, DAP fertiliser, and raw material for the garment and footwear industry. Deputy Minister of Trade and Industry, Tran Tuan Anh, said Morocco had an important geographical location as a gateway for Vietnamese businesses to penetrate into the North African market. In addition, Viet Nam and Morocco had a similar open market. Morocco has cut tax tariffs under its commitments to the World Trade Organization, as well signed several bilateral and multilateral Free Trade Agreement including with the European Union and the United States. Anh said the ministry would update local businesses with market information, carry out more advertising campaigns in the country and formulate a development plan through 2020. The ministry would also assist businesses in setting up subsidiaries and rice storage warehouses in key markets, such as Cameroon, Angola, and Mozambique, he added. Zahra Maafiri, general director of the Moroccan Centre for Export Promotion, said the country has a modern infrastructure, transport and banking system, which would facilitate Vietnamese enterprises' import and export activities. Vietnamese goods have drawn the attention of the Moroccan people, she said, adding that Morocco would give priority to three main sectors of food and foodstuffs, leather shoes and information and technology. However, businesses still had to overcome numerous hurdles, such as the considerable geographic distance, a lack of market information, and differences in business customs, and languages. Bac Giang attracts $2.26b in FDI in first quarter As of March, 2015, the northern province of Bac Giang has attracted to 182 foreign-invested projects with a total registered capital of US$2.26 billion, ranking 26th among 63 cities and provinces in term of foreign direct investment (FDI) attraction. During the reviewed period, production and manufacturing sector attracted the largest share of FDI with $2.03 billion, the Ministry of Planning and Investment's Foreign Investment Agency said, adding that as many as 14 countries and territories pumped investment in the province. In the first quarter alone, the province lured more than $114.6 million in FDI, the agency noted. HCM City plans 2015 SOE divestment A meeting was convened by the southern city's People's Committee last week to discuss the completion of divestment at State-owned enterprises (SOEs) in HCM City in 2015. Addressing the event, the Deputy Head of the sub-committee for enterprise reform, Huynh Trung Lam, said 14 SOEs under city governance had been directed to withdraw over VND3.6 trillion (US$171 million) from non-core areas in 2015. However, the amount divested by the SOEs during the first quarter of 2015 would be a mere VND307 billion ($14.6 million). According to the city's leaders, the divestment has been delayed by an underperforming stock market, an abundance of stock supplies to businesses, and a myriad of regulations that must be abided. The Vice Chairman of the HCM City People's Committee, Le Manh Ha, has requested that SOEs pledge to complete their divestment process by the end of the year and take action to hasten the process. In 2014, there were 107 enterprises under the city's management, with 15 of them being restructured. Trade deficit expands in domestic business sector Domestic business sector posted a trade deficit of US$3.27 billion in the first quarter this year, quadrupling it in the same period last year, according to latest data from the General Department of Vietnam Customs. Import turnover from China touched US$11.47 billion while export turnover to this market reached only US$3.54 billion, creating a shortfall of US$8 billion. The most imported items from China included machines, equipment, instruments, computers, electronic items and components, cell phones, and steel. In the first quarter, foreign direct investment sector saw a trade surplus of US$873 million, down 57.3 percent compared to a year ago. SaigonCo.op-FairPrice joint venture opens new hypermarket The joint-venture company between Vietnamese leading retailer Saigon Co.op and Singaporean retailer NTUC FairPrice on April 19 opened its second hypermarket in the country in District 7's Tan Phong Ward. Located on the second and third floor of SC Vivo City Shopping Mall, the 10,000-sq.m Co.opXtra Tan Phong features more than 50,000 items along with support services and related activities. Besides essential items such as foodstuff, cosmetics and textiles, the hypermarket also sells electronic products, computers, sport equipment, vehicles and stationery items, targeting to meet customers' demand for high quality products. To mark the opening, Co.opXtra Tan Phong has launched five big promotional programmes, with discounts of up to 50 per cent on thousands of essential products, attractive gifts and among others. Incentives for loyal customers at Co.opmart and Co.op Food are also being offered at the new facility. Pundit calls for new approaches to keep Vietnam automotive industry alive Vietnam still has opportunities to save its automobile industry from a collapse following an announcement of Toyota that it may stop assembling vehicles in the Southeast Asian country to switch to imports in order to enjoy the preferential taxes of an ASEAN trade pact, a local expert has remarked. Dao Phan Long, vice president and secretary general of the Vietnam Association of Mechanical Enterprises (VAMI), told Tuoi Tre (Youth) newspaper in an article published on Monday that the country should have the resolve to move on and find out the right solution to the problem of a possible ‘disaster’ after Toyota has publicly announced its intention to take advantage of future cuts in taxes on ASEAN vehicles. Early this month Yoshihisa Maruta, president of Toyota Motor Vietnam, the Vietnamese unit of the world’s largest carmaker, said the firm is mulling over putting an end to production and switching to imports in order to enjoy the preferential tax treatment an ASEAN trade pact will offer in the next three years. ASEAN stands for Association of Southeast Asian Nations, including Indonesia, Malaysia, the Philippines, Singapore, Thailand, Brunei, Cambodia, Laos, Myanmar, and Vietnam. According to the road map of the ASEAN Free Trade Area, automobiles under ten seats imported from ASEAN countries are entitled to a 50 percent rate this year. The rate will be cut to 40 percent next year, 30 percent the following year, and 0 percent in 2018. Regarding a Tuoi Tre question on the fact that though Vietnam has supported the automobile industry for years, many still complain that its policies, with some unreasonable, have been continually changed, Long answered that the main beneficiaries of the policies in the past 15 years have been foreign-invested enterprises (FIEs). Though receiving many privileges, those FIEs always complain that Vietnam is a small-sized market with inconvenient and insufficient transport infrastructure, which has resulted in low sales. FIEs have moaned that it is difficult for them to raise the localization rate as they committed earlier, Long said. Vietnam then asked those firms to raise the localization rate, but the way the country has done it is wrong. “Instead of offering tax incentives to those who can make certain kinds of spare parts and accessories in Vietnam in large amounts that will both meet local demand and be enough for export, we have requested them to raise the localization rate in producing thousands of kinds of spare parts just for the local market,” the VAMI secretary general said. “In my opinion, what we should do now is pick some good domestic firms to help them become stronger and develop well-known brand names, while restructuring the sector to reduce those operating inefficiently,” he said. Regarding the question that the Vietnamese government should halt the protection of the local automobile industry, Long said even some industrialized countries having participated in many free trade agreements (FTAs) for a long time still maintain many measures to keep the market for local businesses through the erection of technical barriers. “Joining the World Trade Organization or other FTAs does not necessarily mean that a large part of the local share will be dominated by FIEs. The problem is that we need a system of solutions for maintaining the market share for local firms without breaking the rules of those trade pacts,” he said. As to what policies can be introduced to support the ailing industry, Long said some local enterprises have recently focused on certain niches of the market like the segment of buses, passenger cars, light trucks, and medium trucks. But according to the ASEAN road map, importing Chinese-made trucks, or completely build units, especially those of 10 metric tons or more, will be cheaper than purchasing components for domestically assembling. As Vietnam has issued a master plan for the development of the automobile industry, including encouraging the growth of light trucks, passenger cars, and buses, it must focus on that and create policies that can be effectively implemented, Long said. With the advantage of a few years left for complete tax reduction as committed, Vietnam can support a number of local firms in promoting their brands and create a production capacity to serve a 100 million people market, as the local population has already hit the 90 million milestone. When Vietnamese firms are capable of making light trucks, passenger cars, and buses, Vietnam should move on to make passenger vehicles under nine seats, the VAMI vice president said. “In my opinion, local firms currently have many advantages in the segments of buses, passenger cars, light trucks, and medium-duty trucks, and the cost for transportation from other countries to Vietnam will make their price higher than locally assembled vehicles,” he added. “We have successfully assembled them domestically and have gained a market share that is large enough for development.” Some Vietnamese businesses have built a strong brand in the car assembling industry and the country still has money for further investment in boosting manufacturing, Long said, adding that the state should have the right solution for encouraging and protecting domestic firms. Truong Hai Auto (Thaco), based in the central province of Quang Ngai, earned thousands of billions of Vietnamese dong in revenue and created jobs for about 8,000 workers in poor and rural areas in the central region in 2014 after having assembled light trucks for many years. Thaco has managed to find appropriate steps for effective investment, seek good partners, look for models that can sell well in Vietnam, and even accept losses, he said, noting that with some incentives from the government, the firm can be now considered a success story. Long said that it is time for the Ministry of Industry and Trade, as the body supervising manufacturing, and other relevant agencies work together to promulgate stable and coherent policies. “I emphasize here consistency and stability. We should avoid getting stuck in such paradoxes as one ministry encourages the development of the auto industry, while others have policies that hinder its growth,” he added. Housing stimulus disbursement stagnates The disbursement of the VND30-trillion (US$1.38 billion) housing stimulus package has been stagnant, despite the increase in the number of successful transactions in the real estate market. An apartment complex for low-income people in Binh Duong's Ben Cat Town. Disbursement from the $1.38 billion housing stimulus package has stagnated as low-income people are deemed unable to repay their loans in 10 to 15 years. VNA/VNS Photo Quach Lam Economists and estate businesses said the market had seen clear improvements. The number of successful transactions in Ha Noi in the first quarter of the year rose by three times over the same period last year, reaching 4,250. Most of the transactions involved apartments with small and medium areas of 70sq.m to 90sq.m. Deputy Minister of Construction Nguyen Tran Nam said the estate market this year would see more transactions in several segments such as land, apartments and offices. Apartments, especially, of less than VND1 billion ($46,300) that are suitable for low-income earners will sell well.Experts said it was time for the package to support the market and reduce the housing inventory. However, the package cannot be disbursed fully by June 1, 2016 as the Government's set target. The Viet Nam Real Estate Association said the disbursement was slow for social and cheap commercial housing projects, despite an increasing number of transactions and reducing inventory. About VND6.2 trillion ($287 million) or 20 per cent of the package has been disbursed so far. Chairman of the HCM City Real Estate Association Le Hoang Chau said the disbursement was too low, though 15 banks were contributing to the package. Chau said regulations stipulated that the total income of eligible low-income earners should be less than VND9 million ($416.7) a month. However, several commercial banks did not accept the regulation as they believed that the income would not be enough to repay debts. Nguyen The Hien from Bac Ninh Province is eligible to get a loan from the package. However, several banks rejected his application because they felt he would not be able to repay the loan with his low income. "I have to consider taking a commercial loan that has a higher interest rate and financial risks. I have paid 30 per cent of the amount for my apartment. If I'm unable to get a loan, I'll have to sell the apartment," Hien said. He suggested the loan duration should be extended from the current 10 to15 years to 20 to 25 years to reduce the pressure on low-income earners. A bank representative said the recent regulation promulgated by the construction ministry in March caused the package disbursement to stagnate. Such low incomes would not be able to cover the debt after deducting the daily expenditure. "The loan comes from people's deposits in banks. That is the reason why banks have been careful in giving loans to avoid bad debts in the future," he said. Nguyen Hoang Minh, deputy director of the State Bank of Viet Nam's branch in HCM City, said they had sent documents to 15 commercial banks to collect ideas that would then be submitted to the central bank for consideration. Singapore invests over US$33 billion in Vietnam Singapore has invested in nearly 1,400 projects in Vietnam with a total registered capital of US$33.05 billion as of March this year. Vietnam Singapore Industrial Park (VSIP) in Binh Duong province That was revealed at the 11th Ministerial Meeting on Vietnam-Singapore Economic Connectivity in the central province of Thua Thien-Hue last weekend, when the two sides talked about achievements obtained in six cooperation fields including banking-finance, information-communication, education and training, traffic, investment, trade and service. Singapore was ranked the third in nations and territories investing in Vietnam after South Korea and Japan. Average investment capital was US$23.75 million per project, much higher than that of foreign invested projects in Vietnam. At the meeting, the Vietnam National Administration of Tourism and the Singapore Tourism Board signed a memorandum of understanding (MOU) on tourist collaboration. Foreign Investment Agency under the Ministry of Planning and Investment and Singapore’s United Overseas Bank also contracted another MOU on investment promotion. VN strives for trade balance by 2020 Vietnam, in its 2011-2020 strategy, sets a target of achieving a balance of trade in 2020, Minister of Industry and Trade Vu Huy Hoang said.   “It will require great efforts from both Government and businesses to reach that goal,” Minister Hoang said at an online dialogue via the Government Web Portal on January 6. According to the minister, in 2011 Vietnam’s balance of trade was remarkably improved with an export turnover reaching US $96.3 billion, up 33% against the previous year. The country’s trade deficit was over US $9.5 billion, down 25% compared to the previous year and equivalent to 9.9% of total export revenues. This is an encouraging result, however, it will be difficult to maintain this figure in the coming years, Minister Hoang noted. He said that VN has always been a country suffering a trade deficit, as it has to import machinery, equipment, fuel and materials and other essential goods for daily use. “We will have to continue imports if we don’t have a strong enough manufacturing and mechanical industry, lack support industries and prefer foreign goods to locally made ones,” he said. Source : VEF/VNA/VNS/VOV/SGT/SGGP/Dantri/VIR