BUSINESS IN BRIEF 24/4 All 3-year, most 15-year bonds offloaded last week  The State Treasury sold G-bonds worth nearly VND7.5 trillion (US$336.3 million), or 73.2 per cent of the bonds offered on the primary market, between April 11 and 15. In the previous week, the winning rate of bonds offered on the primary market was 86.3 per cent, the bond auction's organiser, the Ha Noi Stock Exchange (HNX), said. The deals included three-year bonds worth VND3.9 trillion, five-year bonds amounting to VND2 trillion, VND303 billion-worth ten-year bonds and 15-year bonds-worth VND1.237 trillion. The three-year bonds, the most attractive item at the auction, were all offloaded. 95 per cent of the 15-year bonds were also sold out, while the selling percentage of the five-year bonds and ten-year bonds was 50 per cent and 30 per cent, respectively. The annual coupon rate for ten-year bonds fell slightly by 1 basis point to 6.94 per cent, while yields for bonds of three years, five years and 15 years were unchanged at 5.55 per cent, 6.40 per cent and 7.65 per cent, respectively. In the primary market, as of April 15, the government issued VND100.8 trillion-worth G-bonds and government guaranteed bonds, including bonds worth more than VND87 trillion issued by the State Treasury, VND13 trillion-worth bonds issued by the Vietnam Development Bank and bonds worth VND600 billion issued by the Bank for Social Policies. Meanwhile, the transaction liquidity on the secondary market improved, with an increase of 27.5 per cent, to reach VND22.4 trillion for the week. Each day, average trading reached VND4.5 trillion. Outright transactions accounted for 56 per cent, mainly on the three-year bonds, while the repo transactions accounted for 44 per cent. Foreign investors sold bonds worth VND31.4 billion in the week. On April 20, the treasury offloaded another VND9.8 trillion-worth of bonds, including three-year bonds-worth VND3.9 trillion, VND5.2 trillion-worth five-year bonds, VND691 billion-worth 15-year bonds and VND7 billion-worth 20-year bonds. Steel giant HSG saunters to full-year profit target by 1st half Steel maker Hoa Sen Group (HSG) has reported a surge in second quarter profits that saw it achieve virtually the full financial year's profit target in just the first six months. The after-tax profit in the January-March quarter rose to VNĐ418 billion (US$19.1 million)) to take the year-to-date profit to VNĐ605 billion ($27.7 million), or 92 per cent of the year's target. Revenues in the second quarter and first half respectively were VNĐ4.1 trillion ($188 million) and VNĐ8 trillion ($367 million). The sharp rise in profits is attributed to the rising global steel prices and increasing domestic demand thanks to the current building boom. In Q2, the company sold 319,000 tonnes, an almost 18 per cent rise, including 118,000 tonnes of exports. HSG is one of the country's biggest steel makers with plants around the country. Its financial year is from October 1 to September 30. Da Nang, KPMG agree on investment promotion plan The central city's investment and promotion centre and KPMG, one of the largest audit, tax and advisory firms in the world, signed a Memorandum of Understanding (MoU) on co-operation, investment promotion and providing service for businesses and investors in Da Nang. The MoU, inked on April 21, aims to increase the amount of information on the investment environment, the city's preferential policies for investors and businesses, and hosting conference and seminars to attract investors to Da Nang. Da Nang drastically improved its administrative reform and Provincial Competitive Index over the past few decades, but poor investment promotion abroad has prevented key investors from approaching the city and central region in recent years. Located at the end of the East-West Economic Corridor that links Thailand, Laos, Myanmar and Viet Nam, Da Nang has attracted 372 FDI projects, with a total capital of US$3.5 billion. Of these, 25 FDI projects were from tourist real estate worth US$1.8 billion. The city has so far developed 16 tourist property projects consisting of 749 villas. Of these, 609 are for sale and 140 for lease. KPMG, one of the leading ‘Big 4' professional service firms, began operations in the central city last year as an expansion of its footprint in Viet Nam after 20 years of operation. The company said the introduction of the office in Da Nang was a strong commitment by the company to boost economic growth in Viet Nam and conform to Trans-Pacific Partnership (TPP) and ASEAN Economic Community (AEC) guidelines. "KPMG's office in Da Nang opened at the right time to help with development in the city and the central region of Viet Nam," said Chairman and CEO of KPMG in Viet Nam and Cambodia Warrick Cleine. "The opening of our new office in Da Nang reflects KPMG's recognition of the contribution that the central region has and will continue to play in fueling Viet Nam's economic growth and prosperity," Cleine said. He said it's a logical step for KPMG, given the number of clients in the region. Last year, KPMG also hosted an annual conference on taxes and audits with the participation of over 100 businesses and Government officials in preparation for the TPP and AEC. Lotte Mart to open 12th store in City South Korean retailer Lotte plans to open a store in HCM City’s Gò Vấp District on April 28, which will bring the total number of Lotte Mart outlets in the country to 12. Lotte Mart Gò Vấp on Phan Văn Trị will cost US$45 million, Hong Won Sik, general director of Lotte Vietnam Shopping, said. The new store will have shops selling fashion and jewellery items, a food court, an entertainment area, a cinema, a supermarket area and other facilities. The company has invested $600 million in its 11 stores the country, and plans to expand to 60 by 2020, he said. Hong told a press conference in HCM City yesterday that more than 90 per cent of Lotte Mart’s products are sourced in Việt Nam, and it would strive to increase the rate. This year the company would continue to organise programmes to promote exports of Vietnamese products to South Korea, he said. Lotte Group would invest in a $2 billion property complex in HCM City’s Thủ Thiêm, he added. VN firms investing abroad Việt Nam’s enterprises have recently promoted their investments in new fields and new markets and also expanded their operation in traditional markets, according to the Foreign Investment Agency (FIA). According to the agency, which works under the Ministry of Planning and Investment, in 2015, Việt Nam had a total investment of US$625 million in foreign countries from 102 new projects and 53 Vietnamese projects that were registered to increase their investment capital. The local enterprises expanded their investment activities to new markets such as the United States, Russia, Singapore and Germany and also promoted investments in traditional markets that included Laos and Cambodia, it said. They have focussed investment on some industries that are their strong points such as mining, farming, forestry and fishery. They have also expanded to other new industries including information, electric, property, financial, banking and insurance industries, the agency said. Phan Hữu Thắng, director of the Foreign Investment Research Centre under Hà Nội National Economics University, and also former head of FIA, said the promotion of local investment in foreign countries was necessary for Việt Nam when the nation has joined many free trade agreements and put the Law on Investment amended in 2014, effective since July 1, 2015. The amended law has created more favourable conditions for the enterprises in implementing investment activities. Vietnamese firms have mainly invested in projects in Laos and Cambodia as strategic markets for local companies, Thắng said, and added that now, they have entered Africa and the Americas with successful projects of the Việt Nam National Oil and Gas Group (PetroVietnam). The group was permitted by Myanmar to exploit and explore oil and gas in the nation. Meanwhile, Việt Nam’s military-run Telecommunications Group (Viettel) started to develop two new markets including Tanzania and Burundi in 2015, bringing its total foreign markets to 10 in the Asia, the America and the Africa with a total population of 260 million and a total of 75 million subscribers, the Người Lao Động (The Labourers) newspaper reported. The group expected to develop their business in 20 foreign countries by 2020 and it has studied new markets in the Eastern Europe, the Latin America, the Africa and the Asia. Nguyễn Mại, chairman of the Association of Foreign-invested Enterprises in Việt Nam, said Viettel has developed its investment in niche market and markets that have great potential because local firms could not compete with foreign rivals in the financial sector. However, Thắng said only oil, gas and telecom project have had large investment capital while most projects of local firms have funds on a small scale. Projects in service and banking industries have mainly aimed at providing supports for Vietnamese export products at foreign countries. Mại said the State should control capital resources in foreign currencies and encourage local firms to put investment to industries that strengthen enterprises. They could enter the American markets, including the US and Canada, via Cuban market due to lower spending. Trần Hữu Huỳnh, chairman of the Việt Nam International Arbitration Centre (VIAC), said the important thing for local firms in developing investment activities in foreign countries includes creativity, ability in seeking markets, and suitable products for foreign markets. Three strategies for firms to benefit from FTAs The Trans-Pacific Partnership and other free trade agreements that Việt Nam has signed can provide great opportunities for the country if it adopts appropriate business strategies, experts told a seminar yesterday. Patrick Tay, advisory executive director of consulting firm PwC Malaysia, told around 150 participants at the Economic Integration and Trade Liberalisation – Vision for Việt Nam Businesses seminar held by PwC Vietnam, that firms should follow three strategies – willingness to disrupt; innovation and spending on research and development; and embracing globalisation. “Attack is the best form of defence and businesses should understand and invest in disruptive technology before being disrupted.” Those who anticipate are rewarded, he said, urging businesses to build new capacities before existing ones become obsolete. He made it clear that embracing globalisation includes using technologies from outside to improve products currently made for the domestic market. He cited the example of Malaysian low-cost carrier AirAsia, saying first it dreamted big and aimed for the best and then went beyond borders. Miriam Garcia Ferrer, head of the trade and economic section at the Delegation of the European Union to Việt Nam, said businesses have to understand the European market to tap the opportunities offered by the EU-Việt Nam FTA. She said the EU with its 28 member countries and a population of more than 500 million is a large market for Việt Nam (representing 19 per cent of Việt Nam’s exports last year). To tap this market, Việt Nam’s businesses needed to find out which markets suit their products, know about consumers there, their spending capacity and their requirements, she said. European customers want high-quality goods and so businesses should add value to their products, she said, suggesting for instance that instead of exporting coffee beans, Việt Nam should add value to its coffee products that make them outstanding and different from others. Tastes differ from one European market to another, and this would help Việt Nam diversify its products, she said. Since their requirements are demanding, once Vietnamese businesses can sell to that big market, they would also be able to sell to the US and Canada, she said. Phạm Thị Việt Nga, CEO of Hậu Giang Pharmaceutical Company, spoke about her experience in making preparations for the opportunities and challenges likely to arise from the trade deals. “We invest in three areas -- technology, equipment and automation; innovation of corporate management; and distribution network management -- since with the TPP and FTAs more foreign pharmaceutical companies will enter this market and they will need distributors. “We choose co-operation instead of competition.” She is also focused on strengthening her company’s human resources. Võ Tấn Thành, deputy chairman of the Việt Nam Chamber of Commerce and Industry, said businesses should take the initiative to learn about the contents and requirements of the TPP and FTAs and work out long-term strategies while building a professional workforce and training a new generation of managers to meet the evolving needs. He also spoke about the need for Government support in the form of handling issues related to exchange rates, interest rates and loan procedures and institutional reforms, which should focus on creating a legal framework, drafting regulations for trading and import-export and for helping domestic businesses link up with global value chains. Việt Nam has signed 16 FTAs, including some ambitious ones like the EU–Việt Nam FTA and the TPP, nine of which are already in force. The TPP opens up a huge market for Vietnamese goods, which, under favourable economic conditions, should add up to US$33.5 billion to Việt Nam’s GDP and $68 billion to its exports by 2025. Bangladesh, VN to develop trade Bangladesh and Việt Nam are seeking to develop improved financial products and logistic services to facilitate trade to reach a value of US$1 billion this year, a conference heard yesterday. Hoàng Quang Phòng, deputy chairman of the Việt Nam Chamber of Commerce and Industry (VCCI), said at the conference jointly held with Bangladesh International Chamber of Commerce (ICC) that international payments and logistics services played critical roles in global economic integration to reduce the risk of international commerce. Of these, the use of a letter of credit (LC) was the most prominent and widely applied for various sectors in global trade, Phòng said. Developing trade finance products and logistics services was of pressing importance now since bilateral trade between Việt Nam and the South Asian country saw a drop last year. Ambassador of Bangladesh to Việt Nam, Mohammad Shahab Ullah, said at the conference that the two-way trade drop was from $758 million in 2014 to $600 million last year. There was large untapped potential, still, he was quoted as saying by a news story on VCCI’s website. He said he expected more Vietnamese firms to enter Bangladesh to seek business opportunities and the two countries would join hands to simplify banking procedures for trade facilitation. At the conference, Vũ Quang Minh, director of the Ministry of Foreign Affairs’ Economic Department, said that the trade framework must be improved to meet the co-operation demand between the two countries. Minh said that with an advantageous sea line for logistics services, two-way trade was expected to reach $1 billion this year. ICC’s chairman Mahbuhur Rahman said differences in banking, import and export procedures remain between the two countries. He said that the joint force between the two countries would tackle those problems to promote trade. The two-day conference would also discuss international standard banking practice (ISBP), global trade finance, and American depositary receipts, in addition to dispute resolution alternatives. At yesterday conference, Bangladesh and the Việt Nam International Arbitration Centre signed a co-operation agreement. Number of high-end developments to grow The real estate market in Viet Nam will see a growing number of property developments which offer quality living environments and amenities as developers are moving to meet the market demand amidst an improved economy. At a conference about breakthroughs in living standards co-organised by the economic and financial news website cafef.vn and the Viet Nam Real Estate Association on Wednesday in Ha Noi, experts said that home buyers were now more demanding, driven by improved income as the economy was on the recovery path. The General Statistics Office revealed that the Southeast Asian country's economic growth reached 6.68 per cent in 2015 with GDP per capita at VND45.7 million (US$2,109) - $57 higher than 2014. The report "Viet Nam 2035: Toward Prosperity, Creativity, Equity and Democracy" launched in February by the Vietnamese Government and the World Bank said the country would have the opportunity to achieve upper-middle-income status by 2035, given its goal of an average of 7 per cent economic growth per year. Accordingly, GDP per capita per year would reach a minimum of $18,000 by 2035. The association's chairman Nguyen Tran Nam said that living environment and amenities became decisive factors for purchase decisions rather than price as previously. "The recent crisis of the realty market helps buyers hold the upper hand," Nam said. He added that the protracted stagnation eliminated developers that had weak capacity and forced those remaining to meet home-seekers' demands, which would benefit buyers. "We, home-seekers, now have abundant choices," said Trinh Hao, who came from Hai Phong to work as an engineer in Ha Noi. "I prefer locations with good connectivity, plenty of green space for walking and fresh air, schools for kids and supermarkets. This will make life more enjoyable as people become more and more busy." According to Tran Ngoc Chinh, chairman of the Viet Nam Urban Planning and Development Association, urban living quality must be improved with high-quality planning focusing on technical and social infrastructure as well as green space density amid the country's rapid urbanisation. "Developing property projects with green living environments coupled with comfortable amenities appears to be an indispensable trend," Chinh said, adding that many property developments in Ha Noi and HCM City were following the trend such as Time City, Ecopark, Ciputra and Phu My Hung. The trend would be set towards smart, green and sustainable urban development with environmentally-friendly designs, modern amenities and energy-savings, Chinh said. Le Khac Hiep, deputy chairman of Vingroup, developer of Vinhomes housing projects, said that the development of townships which integrated green space, technical infrastructure and social amenities were changing the face of Vietnamese urban development and driving the realty market towards enhancing living quality for citizens. In a recent report, property service firm CBRE Viet Nam said luxury and mid-level apartments were dominating the market in the first quarter of this year with shares of 48 per cent and 36 per cent, respectively. The real estate market, since entering a recovery period last year, saw many new property developments offering not only quality living standards, but also investment opportunities, like condotels, shophouses and resort townhouses and villas. Experts said at the conference that macroeconomic stability was making real estate an attractive investment compared to gold or foreign currencies, and many property developers were grasping that opportunity. While living in apartments was becoming more popular in major cities and the development of this market segment will be a focus of the Government till 2020, it's time to set standards to classify property developments to define their market values, experts said at the conference. According to Nguyen Manh Khoi, deputy director of the Ministry of Construction's Department of Housing and Real Estate Management, the Law on Housing 2014, coming into effect in July 2017, stipulated that Government agencies would be in charge of "starring" apartment buildings, instead of developers as before. The construction ministry was drafting a circular about the classification of apartment buildings which was drawing mixed opinions. According to the draft, the stars would be A B, or C based on criteria including architecture, infrastructure, construction quality and management service quality. Khoi said at the conference that the circular would be issued in May and will have a great impact on both buyers and property developers. The circular was expected to help clean up the property market through preventing developers from exaggerating the quality of their projects and by encouraging them to develop projects with quality living environments. A representative from property service provider Savills Viet Nam said that when building townships property developers must pay attention to developing the technical infrastructure to meet the requirements of residents, ensure an ecological environment and provide professional management services for the sake of the community. Kia, Mazda and Peugeot offer promotions The Truong Hai Automobile Joint-Stock Company (Thaco) has offered a promotion programme for three car brands – Kia, Mazda and Peugeot – from April 19 to April 30. The Quang Nam-based automobile maker said 12 models of Kia will be sold in a two-week promotion at a special price between VND16 million (US$710) and VND67 million ($3,000). Mazda will also sell 13 models at prices ranging from VND15 million ($667) to VND72 million ($3,200). Meanwhile, Peugeot, which started manufacturing in Viet Nam in 2014, will offer six of its models with prices ranging from VND20 million ($889) to VND90 million ($4,000). According to latest report from Vietnam Automobile Manufacture Association (VAMA), Thaco was the leading automobile maker in Viet Nam market in the first quarter of this year having sold 23,485 units. VAMA said sales of Kia, Mazda and Peugeot cars reached 13,533 in the first quarter – an increase of 62 per cent – in comparison to the same time last year. VAMA also said Kia registered significant growth with 6,548 units sold in the first three months, earning 60 per cent increase as the same quarter last year, while Mazda saw a 63 per cent increase in sales. Thaco also said car models with an engine capacity under 1.5 litre will receive a five per cent reduction in special consumption tax from 45 per cent to 40 per cent from July 1. Thaco aims to increase its numbers to 100,000 units in 2016, comprising 40,000 trucks and 57,000 tour cars (Kia, Mazda, and Peugeot). Thaco, the largest automobile maker in Viet Nam, has produced and distributed vehicles for three car manufacturers, Kia from South Korea, Mazda from Japan and French giant Peugeot. LafargeHolcim Group considers restructuring its business in Vietnam Cement manufacturer LafargeHolcim Group, a joint venture between Swiss Holcim Ltd. and French Lafarge Group, may withdraw from Vietnam due to the oversupply of cement in the domestic market. The detailed plan will be published in the next three weeks, according to a VIR's source, adding that the group was restructuring its overseas market including Vietnam. According to industry insiders, Vietnam’s cement output is estimated at 81.56 million tonnes, while the consumption demand in 2016 is estimated between 75 and 77 million tonnes. Besides, later this year, Song Lam cement producing plant’s opening its gates, with the annual capacity of four million of tonnes, is expected to intensify competition amongst domestic cement manufacturers. In December 2015, Lafarge Vietnam, a subsidiary of French Lafarge Group, officially merged with Holcim Vietnam to form LafargeHolcim, which is currently the largest multinational cement producing company in the world by installed capacity. LafargeHolcim is present in 90 countries and focuses on manufacturing cement, aggregates, and concrete. In Vietnam, the post-merger LafargeHolcim has five cement plants and eight ready mixed concrete plants, with an annual capacity of six million tonnes of cement and one million cubic meters of concrete per year, overtaking Nghi Son Cement Corporation and Phuc Son Cement Company as the largest foreign-invested cement producing company in Vietnam. The firm retains the brands of Lafarge and Holcim’s products, namely Lavilla (Lafarge) and Holcim Power-S (Holcim). Holcim Vietnam presently holds a 26 per cent of domestic market share, while Lafarge Vietnam takes another 12 per cent, with their main products being cement, concrete, and aggregates. VCCI introduces Corporate Sustainability Index A Corporate Sustainability Index (CSI) was introduced by the Vietnam Chamber of Commerce and Industry (VCCI) in Hanoi on April 20, to rank the stability of Vietnamese enterprises. The CSI includes four categories: economy, society, environment, and stability in development and labor strategies. There are 137 sub-indexes in the three categories of economy, society, and environment, and 14 in stability. Mr. Nguyen Quang Vinh, Deputy Secretary General of VCCI, said that enterprises in all fields can participate in the rankings. The 100 highest-ranking enterprises will be honored in October at an event held by the Ministry of Labor, Invalids and Social Affairs, the Ministry of Industry and Trade, the Vietnam General Confederation of Labor, and the State Securities Commission. After creating the CSI, from March 2014 to August 2015, VCCI conducted pilot evaluations of 20 enterprises in the north and south of Vietnam. The pilot projects showed that one of the positive points of Vietnamese enterprises is their understanding of social responsibility. Applying the CSI is also said to encourage objectivity and honesty among enterprises. Enterprises were also evaluated as not being good at sustainable development, however. Ms. Dinh Thi Quynh Van, General Director of PwC Vietnam, said that sustainable development has become a crucial target in the development of every country. She believes that the rankings will encourage an understanding of sustainable development in Vietnam’s business community and encourage green growth in the country. BIDV sets lower pre-tax profit target The Bank for Investment and Development of Vietnam has released documents for its annual general meeting for 2016 containing targets for the year. The bank has set a lower pre-tax profit target of VND7.9 trillion ($354.47 million), down by VND49 billion ($2.19 million), or 0.6 per cent, against 2015's figure. Capital mobilization has been set higher than in 2015, by 21-22 per cent. Credit growth is 18 per cent higher, aiming for the 20 per cent approved by the State Bank of Vietnam. The non-performing loan ratio is targeted at less than 3 per cent, with efforts to be made to bring it down to less than 2 per cent. Return on assets (ROA) is set at 0.7 per cent, lower than last year’s 0.79 per cent. Return on equity (ROE) has been set at 13 to 14 per cent, lower than last year’s 15.5 per cent. In 2016 the bank will focus on selling shares to financial investors and strategic investors. Last year the bank recorded VND6.3 trillion ($282.68 million) in pre-tax profit, an increase of 28 per cent against 2014. When adding the losses of MHB, which were about VND552 billion ($2.47 million), post merger, the final after-tax profit of BIDV was VND5.84 trillion ($262.04 million), an increase of 18 per cent against 2014. French-standard technicians trained for plastics, rubber sectors The HCMC Department of Industry and Trade on April 20 launched a course at the Plastics-Rubber Technology and Energy Conservation Training Center (PRET) to train technicians for the plastics and rubber sectors under the French model INSA Lyon. The course aims to meet manpower needs of manufacturing enterprises in the city. Truong Van Long, director of PRET, said many college and university graduates in the city do not master knowledge and skills while training facilities have difficulty finding appropriate factories for their students to work as interns. Therefore, in November 2014, the city government decided to establish a group of experts responsible for building and implementing projects to train human resources under the training model of the National Institute of Applied Sciences (INSA) in France. The project aims to provide high-quality human resources to enterprises in the manufacturing sector in the city. The training model which focuses on skills has been deployed in France and other European nations for years. With limited training facilities in HCMC, the first phase of the project targets training technicians for the plastics and rubber sectors. The department plans to open four courses funded by the city government for around 160 students. Management and technical staff sought by enterprises for their long-term development strategies will be enrolled for the six-month course. The HCMC University of Technology and PRET are assigned to pilot courses in the initial time. If these courses are successful, the project will train employees for other sectors like electricity-electronics and mechanical engineering. Long said the training course is very essential and expected to provide employees meeting demand of enterprises. It also helps improve the quality and competitiveness of Vietnamese laborers who can work in the ASEAN Economic Community (AEC). Draft decree sets same registration fees for assets nationwide The Ministry of Finance will replace municipal and provincial authorities to set registration fees for all assets, except for those of houses and land, to ensure the same levels will be applied nationwide if a draft decree is issued. Under the prevailing regulations, registration fees for assets are decided by governments of provinces and cities, leading to different levels in different localities. However, the ministry will be assigned to calculate registration fees for vessels, motor boats, barges, cruise ships, aircraft, motorcycles, autos, trailers and semi-trailers, among others under the Government’s draft decree. The registration fees in the draft decree are almost the same as the current levels, with 1% of the total value applied to vessels, motor boats, barges, cruise ships, and aircraft; 10% to autos with less than 10 seats; and 2% to motorbikes. However, bikes of individuals and organizations in cities and towns would be subject to 5% for the first registration and 1% from the second registration. The draft decree specifies registration fee exemptions for the land lots allocated and leased by the State for agriculture, forest planting, fish farming and salt production; agricultural land reclaimed by households and individuals and licensed by competent agencies; leased land with annual rental payments; land used for community and religious purposes approved by the State, and land for cemetery projects. There is no registration fee for agricultural land whose land use right is transferred among households and individuals in line with the existing regulations. However, the draft decree limits the registration fee exemption for the change among households and individuals living in the same communes, wards and towns. State-run animation firm to launch IPO next week Vietnam Animation Company, the only State-run cartoon producer in Vietnam, will launch an initial public offering (IPO) at the Hanoi Stock Exchange next Wednesday. The company will offer nearly 590,000 shares, or an 11% stake, on the northern bourse at the starting price of VND10,300 each.   Compared to the recent IPOs launched by State-owned enterprises, the upcoming IPO has drawn more attention from investors as the cartoon maker has nearly 1,000 square meters of land at 7 Tran Phu Street, Ba Dinh District, Hanoi City, a prime location. This is where Thanh Giong cinema is located. The cinema is the first and only place to screen animated films in the country. Around 70% of Vietnam Animation Company’s earnings are from film production and distribution and cinema operation, and the remainder is from office leasing and other services such as events organization and equipment leasing. In 2015, the firm obtained VND12.8 billion (US$574,000) in revenue. It aims to raise the figure to VND15-16.8 billion a year in the 2016-2018 period. It was established in 1959 as an animated film studio under the Vietnam Animation Department. It specializes in making animated films for education, especially of children. At the end of 2014, the State holding at the company was valued at more than VND53.7 billion. After the equitization, the enterprise plans to maintain the State ownership at VND53.7 billion, or a 51% stake equivalent to 2.7 million shares, while strategic investors will hold a 36% stake and staff 2%. SME support fund launched The Ministry of Planning and Investment on April 21 inaugurates a fund intended to support small and medium enterprises (SMEs) as this is the Government’s commitment to back growth of the SME sector and the economy as a whole. A source told the Daily that with total chartered capital of VND2 trillion (US$89.72 million), the fund will make loans with interest rates of 5-7%, lower than those offered by commercial banks, for SMEs with feasible projects. The fund will also entrust banks to offer loans with preferential interest to eligible businesses. It will manage capital allocated to it by the State and other sources to fund programs to help SMEs improve their competitiveness and governance, and upgrade their facilities. It also finances the development of supporting industries. The fund targets firms meeting requirements specified in the ministry’s Circular 13/2015/TT-BKHDT on businesses in priority areas. HCM City announces public investment Representatives of Ho Chi Minh City’s People’s Council’s eighth term on April 21 approved a public investment proposal on 1,277 projects with a total investment of 137 trillion VND (6.2 billion USD) until 2020. Forty percent of the budget will be allocated to reducing traffic congestion and accidents in the city. About 20 percent of the total budget will be given to projects that would improve human resources, while 15 percent would be slated for flood prevention projects. About 107 trillion VND will be allocated for public investment, based on the ability to collect State budget funds to the city from 2016 to 2020, according to the municipal People’s Committee. The city has more than 370,000 households that cannot access clean water. It has built an additional 1,228km of pipelines and 28 water supply stations, bringing clean water to 150,000 households. With the allocated budget, the city plans to bring clean water to 117,000 households. Industrial firms in need of uniting to compete at home An industrial production federation should be established to help prevent Vietnamese firms from losing out in the domestic market once several free trade agreements take effect, as heard during the first 2016 industry and manufacturing forum on April 21. At the function, former Trade Minister Luong Van Tu said local enterprises have limitations in technologies that are often outdated imports. They are falling into a trap of obsolete machinery frequently transferred from more advanced countries, he noted, adding that the number of those obtaining middle- and long-term loans to invest in manufacturing remains low. Dang Duc Thanh, Chairman of the Board of the Dreamhouse Investment Corporation, stated domestic firms are behind their foreign peers in terms of capital, technology, human resources and management capacity. He concluded that the establishment of an industrial production federation is necessary for innovation and capacity enhancement. Agreeing with Thanh, Tu said each industrial sector in Vietnam has its own federation but there is not yet a general one to connect them all. Domestic firms need to not only unite at home and but also expand their network overseas, he stressed. Participants said a wider network would provide stronger sources of capital and inroads into different markets. Tran Dinh Thien, Director of the Vietnam Institute of Economics, under the Vietnam Academy of Social Sciences, said spearheaded and supplementary sectors need classification for more efficient distribution of resources. The forum was co-organised by the Vietnam Chamber of Commerce and Industry (VCCI) and the US-based Dow Chemical group. House prices in Vietnam may have bottomed out: industry group House prices in Vietnam may have hit bottom and are likely to remain stable before rising again in 2018, industry insiders have said at a recent conference in Hanoi. “It is not possible for prices to fall further. Prices have dropped by around half since 2010 and the profit margin for developers is now 10%-20%," said Nguyen Tran Nam, chairman of Vietnam Real Estate Association (VNREA). After the existing stock is cleared, prices will increase again in 2018, he said. According to the association, the property market started to pick up in 2014, with strong recovery in Hanoi and Ho Chi Minh City. “Transactions have increased not only for apartments but also villas, resorts and land,” Nam said. Industry insiders said that buyers have become more demanding and investors are also rushing to diversify their products. Vietnam's average housing area per person is around 20 square meters. The Ministry of Construction is seeking to increase that to 30 square meters. Le Khac Hiep, deputy chairman of Vingroup, said the market is demanding for houses with good quality and location. “Building a civilized and friendly community in a green and smart space is important in urban housing projects,” he said. Regarding a plan on categorize apartments, Nguyen Manh Khoi of the construction ministry said his ministry will issue a relevant circular in May that will specify criteria to classify apartments in A, B and C grades. The categorization, which will be implemented for apartments built from July 2015, will be the basis to calculate prices and relevant fees. Logistics conference explores Vietnam, Bangladesh int’l trade On April 21, distinguished scholars from home and abroad engaged in thought-provoking discussions on logistics and international trade between Vietnam and Bangladesh at a seminar in Hanoi. The aim of the two-day conference running through April 22 is to provide the 200 delegates in attendance insights into the practical and theoretical underpinnings of logistics and international trade. “It also hopes to open new avenues for commercial trade between the two nations,” said keynote speakers at the opening. The two-day conference has been organized by the Vietnam Chamber of Commerce and Industry (VCCI) in collaboration with the International Chamber of Commerce-Bangladesh (ICC-Bangladesh). Speaking at the event, Hoang Quang Phong, vice president of VCCI, drew attention to the institutional advantages possessed by Vietnam, namely its free port status, low and simple tax regimes, quick and transparent custom trading procedures, which benefit its international trade. The first day of the conference also featured speeches and insights on port-centric logistics, sustainable transport, technology and enterprise, challenges facing Vietnam ports, reverse trends in global manufacturing and others. Sessions on transport and trade logistics and transport and trade finance and economics were also held, complete with technical discussions on guaranteeing payment for goods and services using letter of credit and electronic payments. Vincent O’ Brien from the ICC got into the nuts and bolts of international trade finance including detailed in-depth discussion of terminology that is widely used in international commercial transactions and procurement processes. Mr O’Brien also led a rather interesting discussion with the delegates addressing the most common ways of resolving international disputes related to payment or quality of product disputes in commercial transactions and practical measures to avoid them. On the occasion, a temporary memorandum of understanding between the Vietnam International Arbitration Centre and Bangladesh International Arbitration Centre was signed to explore entering into a formal binding written contract to utilize arbitration as a dispute resolution procedure for the mutual benefit of the two nations. Role of financial services in international trade highlighted International payments and logistics services play a crucial role in global economic integration, especially the development of guarantee services and Standby Letters of Credit – the modern instruments that provide a sense of security for businesses’ transactions. Hoang Quang Phong, Vice President of the Vietnam Chamber of Commerce and Industry (VCCI) made the statement at a conference on financial services in international trade held in Hanoi on April 21. Guarantee services have been used in a line-up of sectors such as construction, pharmaceuticals, communications, finance, infrastructure and mining, he said. Meanwhile, Vincent O’Brien from the International Chamber of Commerce of Bangladesh (ICC Bangladesh) briefed some 200 attendees about surveys on global finance and trade in 2015, practices of the Standby Letter of Credit and rules of guarantee services. Regarding logistics services, the ICC Bangladesh representative mentioned the International Commercial Terms (INCOTERMS) – the internationally recognised standard trade terms used in sales contracts. They are used to clear up businesses’ queries such as who is responsible for the cost of transporting goods and where goods should be picked up from and transported to, among others. At the conference, the Vietnam International Arbitration Centre and Bangladesh International Arbitration Centre inked a cooperation agreement. The event, jointly held by the VCCI and ICC Bangladesh, aims to enhance trade exchange between Vietnam and countries in South Asia. It will run until April 22, covering discussions on depositary receipts and solutions to conflicts with a third party’s support. Confusion over regulation results in reimbursements The Ministry of Finance is likely to reimburse the tax arrears collected from numerous firms on income generated by additional investment during the period of 2009-2013. Enterprises that will benefit from the move are those which conducted investment within the aforementioned period, but did not see an increase in production scale, capacity or technology improvement against the registered figures. These enterprises, if involved in a tax arrears decision or in the midst of settling a complaint, will be allowed to offset the tax arrears amount to the income of the next financial year, or will qualify for reimbursement. The direction was included in the newly-released Dispatch 4769/BTC-TCT by the General Department of Taxation (GDT) in response to the European Chamber of Commerce’s (EuroCham) request, after seeking the advice of related authorities. There are several cases of EuroCham member companies which had newly purchased or replaced fixed assets during the 2009-2013 period. These purchases, as such, were deemed to be “business expansions” by the tax authority, which had abolished the investment incentives from 2009 onward. The EuroCham companies were then asked by the GDT to pay tax arrears on their declared income from “business expansion” activities which qualified for the incentives. EuroCham filed documents to the tax authorities, claiming that the purchases should not be considered as business expansion activities, since they did not result in any increase in investment capital or production capacity. EuroCham’s request was then endorsed by the Ministry of Planning and Investment (MPI), after the tax authority consulted the ministry on the issue. “According to prevailing regulations, business expansions are defined as investment resulting in an increase in scale, capacity, and technology innovation,” the MPI stated. As such, purchases of fixed assets to replace old ones, which do not result in an increase, are not business expansions. Instead, the MPI referred to such activities as “frequent investments”. The MPI recommended that the tax authority reimburse tax arrears in cases where enterprises were confused by the unclear definition of business expansions, and proposed that the Ministry of Finance amend Circular 151/2014/TT-BTC on taxation to include the definition of “frequent investment”. VEF/VNA/VNS/VOV/SGT/SGGP/Dantri/VET/VIR