BUSINESS IN BRIEF 16/6 Firms await more incentives to invest in HCMC   Business executives are of the opinion that more incentives are needed to encourage firms to invest more in HCMC and thus help the city become a leading economic and financial center in the region. The city needs to develop infrastructure and offer stronger policy support in terms of human resources, finances and taxes to make the goal into a reality, heard at a meeting between the city’s chairman Nguyen Thanh Phong and members of the Young Presidents’ Organization (YPO) on June 13. To bring multinational corporations and financial institutions to Thu Thiem New Urban Area, the city should offer incentives such as income tax cuts to encourage them to come, said Vo Sy Nhan, general director of NP Capital Partner Limited. Phong said some large financial groups from the U.S. have expressed interest in developing Thu Thiem into a major financial center. The city plans to attract big corporations, he added. Don Lam, CEO of VinaCapital Group and chairman of YPO Vietnam, said investors involved in infrastructure projects in HCMC are facing so many disheartening problems such as lengthy negotiations on site clearance compensation. Most foreign investors want the city to offer them cleared land so that they can quickly carry out their projects. Meanwhile, Nguyen Quoc Khanh, chairman of the Handicraft and Wood Industry Association of HCMC (Hawa), requested the city government to support developing a research center for wood processing. He also proposed a bigger exhibition and convention center than the existing one in District 7, as it is small (around 20,000 square meters) and does not have enough space for big events. Phong said the city government is seeking the Prime Minister’s approval to give a no-bid contract to a consortium to develop an international-standard exhibition center covering 12 hectares in Thu Thiem. Phong said the city has set aside 80 hectares at Hiep Phuoc Industrial Park in the outlying district of Nha Be to construct multi-storey buildings with workshops measuring 50-100 square meters to meet the needs of investors for small workshops. Such workshops have already been up and running at Tan Thuan Export Processing Zone in District 7 and leased out to Japanese enterprises. According to Phong, the city is focusing on making the investment environment more favorable for businesses. As for human resources, general director of Talentnet Corporation Tieu Yen Trinh suggested the city introduce special policies to attract talent from foreign countries, including overseas Vietnamese. The city should pay more attention to retaining talent, providing free education for children of foreign experts, attracting foreign investment in education and developing quality educational institutions, Trinh said. “If we can do all these, I believe everyone will be dreaming of working in HCMC in the next 5-10 years,” Trinh said. YPO, founded in the U.S. in 1950, now has 24,000 members in 130 countries. Total sales of YPO members make up around 15% of global gross domestic product (GDP). YPO Vietnam was established in 1996 and currently has 31 members. Government to continue investment in Vung Ang EZ infrastructure After ten years of building and development, the 22.78 hectare Vung Ang Economic Zone has gradually been built into an industrial, commercial and service center and a modernly and sustainably developed urban area in the north central province of Ha Tinh, said the provincial Economic Zone Management Board. The Government will continue giving capital priority to building of technical infrastructure of the key coastal economic zone in the phase of 2016-2020, according to the board. The Vung Ang is now home to over 500 businesses and 109 projects which have been licensed with VND46,146 billion (US$2.07 billion) and US$11,469 million in registered capital. Projects at the zone have been implemented and operated with a growth in production and trading. The Vung Ang EZ submitted VND12,571 billion to the state budget in the phase of 2011-2014. The contribution amount was VND8,027 billion in 2014 and VND7,470 in 2015 accounting for 62 percent of the province’s total budget revenue. As of April this year, the zone has had 21,860 workers with the average income of VND6.8 million a person a month. In the future, the Vung Ang is expected to be a steel refining center with its capacity of 22.5 million tons a year, thermal power center with the capacity of over 7,000 MW and oil refinery center having the capacity of 16 million tons a year. In addition, the Son Duong deep seaport complex will receive vessels of up to 300,000 tons. The total investment capital in Vung Ang EZ is expected to approximate US$30 billion. VAMC to use cash to buy NPLs The Viet Nam Asset Management Company (VAMC) this year will use cash, departing from the usual practice of using only special bonds, to buy non-performing loans (NPLs), officials said. Online newspaper Infonet quoted the company's chairman Nguyen Quoc Hung as saying that the new measure was aimed at accelerating the bad debt resolution process and supporting commercial banks so they have enough capital to boost their lending. Under current regulations, VAMC issues special bonds in exchange for bad debts, which banks may use as collateral to secure funding from the central bank. As most of the NPLs purchased from commercial banks are still stuck at the VAMC, experts expected that the step would help resolve the bad debt instead of moving it around. Despite praising the new measure, however, experts are still concerned about the application, saying the size of the bad debts is large while the VAMC's capital source is limited. Banking expert Can Van Luc told Infonet that the use of cash to clear the bad debt was very good for boosting the bad debt resolution process, but it was unclear whether VAMC had sufficient funds to buy the bad debts or whether this was just the first step to creating the next catalyst. According to VAMC, the company plans to settle roughly VND30-35 trillion (US$1.33-1.55 billion) of purchased bad debts this year through retrieving the debts and selling them and mortgaged assets. The amount is nearly double that of last year. Besides cash, the company will also issue roughly VND40 trillion of special bonds to buy bad debts from credit institutions this year. On Thursday, Director of the State Bank of Viet Nam's (SBV's) HCM City branch To Duy Lam said that NPLs in HCM City in the first five months this year rose 4.46 per cent against the end of last year, of which potentially irrecoverable debts accounted for 72.8 per cent. Nguyen Van Dung, director of the Banking Supervision and Inspection Agency in HCM City, said the rise was due to better debt classification. Previously, the debt classification was inaccurate and the authorities are now trying to make the domestic classification meet international standards. In a government-sponsored project to restructure the banking system in the 2011-15 period, Lam said only two out of 12 joint stock commercial banks and a financial leasing company had failed to complete the approved restructuring plans as they were restructuring in accordance with the central bank's requirements. According to the SBV's HCM City branch, the city's capital mobilisation in the first five months rose 4.46 per cent, while credit increased by 5 per cent. Textile exports inch up 6.1% in first five months Garment and textile industry exports in the first five months of this year rose 6.1 per cent to US$8.6 billion, according to the Ministry of Industry and Trade. The rise was lower than the targeted growth of 10 per cent this year. In May, the industry earned $1.75 billion, up only 3.8 per cent. The United States was the largest export market of the industry, with $3.4 billion, up 6 per cent. The European Union, Japan and South Korea followed with $936 million, $845.17 million and $677.2 million, respectively. Industry insiders are concerned with meeting the industry's export target of $31 billion this year due to falling export prices and difficulties in finding new export contracts, especially for shirts, pants and jackets. Than Duc Viet, deputy general director of the Garment No.10 Corporation, said this year's business results for local textile and garment exporters, especially among small- and medium-sized firms, were not as good as expected due to rising input costs and falling demand. The chairman of the Viet Nam Textile and Apparel Association (VITAS), Vu Duc Giang, said some traditional customers of Viet Nam's garment exporters were moving their orders to Laos and Myanmar, which have preferential tax rates for exports to the United States and European Union. Currently, the tax imposed on Viet Nam's textile and garment exports to the United States averages 17 per cent, while the rate to the European Union is nearly 10 per cent. The taxes are expected to drop to zero by mid-2018 when the Trans-Pacific Partnership and Viet Nam-EU Free Trade Agreement take effect. Giang said domestic textile and garment exporters will therefore have to compete fiercely against producers from Laos, Myanmar, Cambodia and Bangladesh. VITAS said export growth rates among these producers were rising faster than in Viet Nam. It offered Cambodia as an example. Viet Nam's textile and garment exports to the European Union were valued at 2.53 billion euros in 2014 and 3.13 billion euros in 2015. Meanwhile, the European Union imported textiles and garments worth 2.26 billion euros in 2014 and 2.97 billion euros in 2015 from Cambodia. Vinatex eyes export growth The Viet Nam Textile and Garment Group (Vinatex) is expecting the export turnover to grow by 10 per cent this year to US$2.6 billion. At the annual shareholders' meeting in Ha Noi yesterday, Vinatex General Director Le Tien Truong said that the group would focus on supporting its subsidiaries in trade promotion to enlarge export markets to meet the target. The group would also set up research boards on free trade agreements to take up the initiative in building effective business and investment strategies, Truong said. Vinatex has invested in developing supply chains from materials to finished products over the past year. After launching operations of the Kien Giang project in 2015, the group is completing the Phu Hung Fibre Plant and a yarn dyed cloth project. Besides, the group has also developed the Supply Chain Development Centre (SCDC) to be dependent on material sources. So far, the SCDC has eight regular customers for garment products and has been developing 20 customers in the United States, Europe, South Korea and Japan. The centre has had 10 customers for cotton and fibre and has been developing 30 customers for its products in Chile, China, Thailand, and Malaysia, in addition to South Korea. Vinatex gained good business results last year with high growth rates from 7 per cent to 13 per cent from most of its large export markets. The group reported an export value of $2.37 billion and a pre-tax profit of VND628 billion last year. Illegal business conditions must end: conference Vietnam should terminate illegal business conditions to boost competitiveness, lawyer Truong Thanh Duc proposed at a conference hosted by the Vietnam Chamber of Commerce and Industry (VCCI) in Hanoi on June 14. According to Duc, who is also Chairman of law firm Basico, thousands of business conditions included in various circulars issued by ministries, ministry-level agencies, people’s councils and all-level people’s committees in the past ten years are basically illegal. Clause 5 of Article 7 of the Enterprise Law issued in 2005 stipulates that such regulations are beyond the authority of these bodies, he said, adding that the number of unlawful regulations has soared to approximately 6,000. If the law is not fully respected by authorities, the local business climate cannot truly progress, he noted. Head of the VCCI Legal Department Dau Anh Tuan said conditions do not concern enterprises, but the lack of their transparency does. Head of the VCCI quality assessment office Nguyen Huu Dung noted policy planning requires consistency and innovative ideas, which would help underpin the economy. Russian revenue from tours to Vietnam on the rise Revenues from tours to Vietnam will rise by 8-10 percent this year, Russia-based Sputnik News quoted press-secretary of the Russian Tourist Industry Union Irina Turina on June 13. A large number of Russian holidaymakers have chosen Vietnam over Turkey and Egypt, Turina said, adding that the most popular destinations in Vietnam during summer are beach resorts in Phan Thiet city of Binh Thuan province, Nha Trang city in Khanh Hoa province and Phu Quoc island off Kien Giang province. Many local hotels are offering discounts of 10-12 percent to boost demand while Russian tour operators are promoting tours running between summer and the beginning of this autumn. The press-secretary noted that Vietnam is a safe and peaceful country with good customer services. In addition to that, Russian visitors are allowed to enter Vietnam without a visa for 15 days, she said. The visa-free policy for Russian people is in accordance with the exemption agreement between the two countries. About 130,000 Russian people holidayed in Vietnam last year. The country hopes to welcome at least 400,000 Russian visitors this year and about one million by 2020. Vinamilk’s organic products meet US standards The Vietnam Dairy Products Joint Stock Co. (Vinamilk) on June 14 launched its organic milk products meeting the US Department of Agriculture (USDA)’s standards. Vinamilk organic products meet all requirements of the USDA National Organic Programme’s standards, which means they are free of the residues of pesticides, chemical fertilizers, growth hormones, antibiotics and genetically modified organisms (GMOs). Vinamilk Marketing Director Phan Minh Tien said Vinamilk is the first Vietnamese milk supplier to introduce organic products that meet US standards to the domestic market. Vinamilk is shipping its products to 42 foreign markets. The company owns 13 plants across Vietnam and has invested in New Zealand, the US, Cambodia and Poland to increase its global market share. Its turnover reached over 40 trillion VND (1.8 billion USD) in 2015, up 15 percent year-on-year. During 2010-2015, Vinamilk saw an average sales growth of 38 percent in the Middle East. 200 Vietnamese firms to join CAEXPO 2016 About 200 Vietnamese enterprises will attend the 13th China –ASEAN Expo (CAEXPO) which is scheduled to be held from September 23-26 in Nanning city in the Chinese province of Guangxi. The information was revealed by Yang Yanyan, deputy secretary general of the CAEXPO Secretariat, at a press conference to introduce the event in Hanoi on June 14. The Vietnamese businesses will display their products in an area of 5,000 square metres, forming the largest exhibition space among the ASEAN nations at the expo. This year, Vietnam is named as the Country of Honour, which is a mechanism first introduced at the CAEXPO 2007 in order to make it easier for a country to popularise its images during the event. It is chosen alternately among the 10 ASEAN member countries, which include Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam. Vietnam will also co-host sideline activities to celebrate the 25th anniversary of China-ASEAN Dialogue Relations.  The annual CAEXPO was first held in 2004 under the Chinese government’s initiative with the consensus of ASEAN member countries at the seventh ASEAN-China Summit.  To advertise the CAEXPO, the Vietnamese Ministry of Industry and Trade’s Trade Promotion Agency in collaboration with Guangxi’s authorities will organise the 2016 CAEXPO Vietnamese Exhibition from June 16-18 in Hanoi. The exhibition is expected to attract the participation of about 160 Chinese leading businesses displaying products, including industrial machines, electricity device, hi-tech products and construction materials. The event will offer the two countries’ businesses a chance to strengthen cooperation and take advantage of the ASEAN-China Free Trade Agreement, said Ta Hoang Linh, deputy head of the trade promotion agency at the press conference. Vietnam may have new agency to manage state enterprises The Vietnamese government is considering setting up a new agency to manage state-owned enterprises more effectively, but some economists have questioned the necessity of such a plan. If the plan goes through, this will be the second agency after the sovereign fund State Capital Investment Corporation (SCIC) to manage Vietnamese SOEs, whose combined assets were estimated at nearly US$250 billion. The new agency will take over companies which are directly under the management of ministries and government agencies, while SCIC will manage the rest, according to the plan being prepared by the Central Institute for Economic Management. The institute reports to the Ministry of Planning and Investment (MPI). A ship of state-owned Shipbuilding Industry Corporation, formerly Vinashin. The company was restructured in 2013 amid corruption and debt scandals. The establishment and operation of the new agency will be discussed by the government before the final plan is submitted to the National Assembly next month for approval, Nguyen Dinh Cung, chief of the institute, told Thanh Nien. The new agency is "urgently" needed, considering SOEs lack transparency and are not managed efficiently, with many costly but unsuccessful projects going bankrupt, Cung said. However, the plan has drawn criticism from several economists who dismissed the plan for another manager of state holdings as "unnecessary." Economist Ngo Tri Long urged the government to consider the plan thoroughly, arguing that a new agency means more resources for administration, which goes against the goal of reducing public spending. Figures from the Ministry of Finance show that the government's expenses were VND376.62 trillion (US$16.66 billion), or 44.2% of the total spending in 2010. The ratio jumped to over 70% last year when the expenditure was estimated at VND704.4 trillion (US$31.16 billion). Nguyen Hoang Hai, general secretary of the Vietnam Association of Financial Investors, said the government should focus on speeding up selling stakes in state-controlled businesses. Or it can just give SCIC more power to save money and time involved in establishing a new agency, Hai said. SCIC now has stakes in 197 companies which have a combined market value of nearly VND95.7 trillion (US$4.22 billion), local media recently reported. The fund reportedly earned around VND5.06 trillion (US$223.42 million) in dividends last year, or nearly half of its revenue which also included proceeds from selling shares. Latest official figures show the combined revenues of 781 businesses owned wholly or partly by the government grew only 1% in 2014 to VND1,709 trillion (US$75.61 billion). Their net profits fell 1% to nearly VND187.7 trillion (US$8.3 billion). Australia suspends cattle supply to Vietnam slaughterhouses Australia has suspended cattle supply to a feedlot and several abattoirs in Vietnam amid an investigation into alleged animal cruelty, according to media reports. The ABC reported on June 13 that the live export industry has enforced the ban as the Federal Department of Agriculture is investigating footage of alleged animal cruelty obtained by Animals Australia, which shows animals being killed by sledgehammers. Alison Penfold from the Australian Livestock Exporters Council said it has not been given access to the footage, but the industry takes the allegations seriously. “They’re serious allegations and could well involve livestock which we’ve exported,” she said, as cited by the ABC. The Australian agriculture department said in a statement to ABC that it received the footage late on June 10 night and is still working through it. Penfold said the suspended feedlot in Hai Phong in northern Vietnam was owned by the importer Animex, which had been suspended within the past year due to animal welfare breaches. She said that if the allegations are proven, it would be “disappointing” as the facility has not only breached the contractual obligations but the good faith extended to give it the second chance. “I’d doubt they’ll receive cattle again.” Australia exported more than 360,000 cattle to Vietnam in 2015. Animex alone imported 75,000 between 2012 and the start of 2015. Animals Australia in May last year lodged a complaint to Australia's agriculture department, saying it has “shocking and distressing” footage showing slaughterhouse workers in northern Vietnam give Australian cattle repeated blows to the head with a sledgehammer. But Australia did not suspend cattle exports to the country at the time. Australia announces conditions on mango imports Australia’s Department of Agriculture and Water Resources officially announced conditions on the importation of Vietnamese mangoes on May 27, according to the Vietnamese Trade Office in Australia. Prior to the importation of goods into Australia a valid import permit issued by the Department of Agriculture is required. Imported mangoes must be produced in Vietnam in accordance with the relevant conditions and work plan. To demonstrate compliance with this requirement, export enterprises must have a phytosanitary certificate stating “The fruit in this consignment has been produced in Vietnam in accordance with the conditions governing the entry of fresh mango to Australia and in accordance with the Work Plan ‘Export of Irradiated Fresh Fruit from Vietnam to Australia’”. Fresh mangoes from Vietnam must undergo mandatory irradiation with a minimum absorbed dose of 400 Gy (Gy is an abbreviation for gray, the SI unit of the absorbed dose of ionizing radiation) at a treatment facility approved by the relevant Vietnamese authority. The maximum absorbed dose for mangoes must not exceed 1 kGy as per Australia New Zealand Food Standards Code (FSC) requirements. The FSC is administered by Food Standards Australia New Zealand (FSANZ). An original phytosanitary certificate must accompany each consignment and be correctly completed. Information in this regard can be found on the International Plant Protection Convention (IPPC) website. Consignments must be free from pests and diseases (other than those that will be neutralized by the approved dose of irradiation). The consignment must also be free from contaminants, including refuse such as leaves, stem material, soil, weed seeds, splinters, twigs and other plant material. Consignments must be securely packaged at origin prior to treatment. Packaging must be synthetic or highly processed if of plant origin. No unprocessed plant material such as straw may be included in the packaging. A Treatment Facility Code (TFC) and a Treatment Identification Number (TIN) must be printed on each carton. The Australian Government requires that treated product must be protected from pest contamination at all times during and after packing, treatment, storage and movement between locations. Containers must have been inspected by the Vietnamese authority prior to loading, to ensure pest freedom and that vents are covered to prevent the entry of pests. Consignments must be inspected and cleared by bio-security officers at the first port of entry. No air or land bridging will be permitted until the fruit have been released from quarantine. If any bio-security risk material is detected that may not have been mitigated by the irradiation treatment, the consignment must be held at the importer’s expense and subjected to either appropriate treatment to address the bio-security risk or returned or destroyed. Should any discrepancy be found with the produce or certification (indicating a possible system breakdown), the produce will be detained until an Import Services Team can determine the cause of the breakdown and provide advice on the appropriate remedial action. Remedial action in Australia may include further inspection, treatment, destruction or export. Consignments that have a phytosanitary certificate that is not correctly endorsed or where the original phytosanitary certificate has not been sighted by the Department of Agriculture will be held pending presentation of a correctly filled out and original phytosanitary certificate. The Department will accept appropriately amended or re-issued phytosanitary certificates (including faxed or scanned copies transmitted directly to the Department from the certifying authority). The Department may review the import policy any time after trade begins or if Vietnam’s pest or phytosanitary status has changed. Once bio-security requirements have been met it is the importer’s responsibility to ensure that all imported food complies with the Imported Food Control Act 1992. Binh Dinh woos Taiwan investors The government of Binh Dinh has pledged to create favorable conditions for Taiwanese firms to set up shop in the south-central province. At a meeting in HCMC with about 100 Taiwanese firms operating in Vietnam over the weekend, Ho Quoc Dung, chairman of Binh Dinh, said that Taiwan has big corporations in the areas where the province needs investment, including road, port, airport, electricity, high-tech, finance and banking. In addition, the province called for Taiwanese companies to invest in trading and services; tourism; assembly and production of machines, auto parts, motorcycles, bicycles and industrial equipment; food processing; electronics and telecommunications; and medical equipment. Dung said that compared to other provinces, Binh Dinh has huge land resources for industrial production and developed infrastructure for enterprises in electricity, water, waste treatment, and telecommunications. The province has streamlined licensing procedures for investors. The province applies low land rent and supports investors to train local workers. The province’s leaders are ready to solve problems faced by investors, Dung said at the meeting, which was jointly organized by Binh Dinh, the Bank for Investment and Development of Vietnam (BIDV) and the Taipei Economic and Cultural Office (TECO) in HCMC. A representative of the Taiwan Business Association in HCMC said Binh Dinh has a favorable location for transportation to the south and the north. However, the province should learn how to attract investors as Dong Nai, Binh Duong and HCMC have done by developing roads and industrial infrastructure since Taiwanese investors prefer sites with good infrastructure. According to the Taiwan Business Association in Dong Nai Province, a majority of Taiwanese enterprises are small and medium and they often follow in the footsteps of large firms. Therefore, the province was asked to take this into account and find ways to attract major Taiwan investors. For Taiwan companies, stable supply of local workers is an important part of their investment decisions. Replying to these concerns, Dung said Binh Dinh’s infrastructure has been improved with new roads, railways and air routes in place to meet travel demands of business and leisure travelers. Binh Dinh is home to the country’s third largest seaport system which facilitates cargo transport between the province and other parts of the world. Dung said Binh Dinh has over 900,000 people of working age, more than 50% of them skilled workers. In addition, new living and entertainment facilities, including resorts and hotels, can meet the demand of investors and tourists. According to TECO in HCMC, Vietnam is one of the strategic destinations for Taiwanese investors. Taiwanese firms have mainly invested in southern provinces but a number of them are expected to come to gauge the investment environment in Binh Dinh after the meeting. By the end of May, Taiwan had got involved in nearly 2,530 projects in Vietnam with total registered capital of over US$31.8 billion. ANT animal feed factory worth US$3 million is the only Taiwanese-invested project in Binh Dinh. Vien Phu puts up organic farm for sale Vien Phu Organic & Healthy Food Joint Stock Company (JSC), the owner of HoaSuaFoods brand, has announced a plan to sell a 320-hectare organic farm in Ca Mau Province. Vo Minh Khai, director of Vien Phu, said that having operated the farm in the Mekong Delta province for 15 years, the company now wants to sell it given the lack of support from the Government and partners. Khai said priority will be given to investors who continue using the available infrastructure of the company to develop organic farming. Vien Phu has spent big growing organic products under the HoaSuaFoods brand, including black, white and red rice, basil, cilantro and fish. These products are sold via an extensive distribution network covering most provinces and cities in the south. The company got an organic rice certificate from BIO Organic in 2012. Earlier, Khai said the company had had difficulty finding finances for the farm. Le Thanh Tung from the Cultivation Department under the Ministry of Agriculture and Rural Development said this was a sad ending of the organic farm of Vien Phu because Khai was a pioneer in organic farming and had been successful in building a strong HoaSuaFoods brand for organic products. Tung acknowledged this was due partly to a lack of policy support. Organica, a producer of certified organic vegetables, said investment in organic farming is tough. Apart from policy issues, many consumers are not yet fully aware of the benefits of organic products. Other producers of organic goods have also complained it is difficult to sell their products on the local market. Prices of organic goods are always higher than normal items. Drug firm to launch IPO next week State-owned Vietnam Pharmaceutical Corporation (Vinapharm) looks set to launch an initial public offering (IPO) with 42.5 million shares (18%) offered at the starting price of VND10,000 each on the Hanoi Stock Exchange on June 22. After Vinapharm goes public, the State will hold 154 million shares (65%) while 40.2 million shares will be sold to strategic investors and 103,000 shares to employees.       According to data of the northern bourse, Vinapharm is attractive to investors thanks to its efficient operation. It specializes in pharmaceuticals, functional foods and medical equipment, as well as research and development (R&D) activity. Vinapharm is using 9,900 square meters in the center of Hanoi. The company is cooperating with Viet Land Corporation and Song Hong ICT Company to develop an office and apartment complex at 95 Lang Ha Street. The company is joining forces with Vinaconex-PVC Construction Investment Company to implement a commercial and apartment project at 60B Nguyen Huy Tuong Street, Thanh Xuan District, Hanoi. The project will be up and running at the end of 2017. Vinapharm is headquartered at 12 Ngo Tat To Street in the capital city. In HCMC, its office is at 178 Dien Bien Phu Street and its showroom at 126A Tran Quoc Thao Street. Vinapharm’s revenue has risen sharply over the past three years, with VND117.3 billion in 2013, VND139.7 billion in 2014 and VND204.1 billion in 2015. Its respective after-tax profit reached VND80.7 billion, VND136 billion and VND129 billion. In the 2015-2020 period, the company plans to implement a number of projects on R&D, medicinal herb farming, and treatment. Vinapharm will operate as a joint stock company in 2020 and concentrate on R&D, sales, warehouse-logistics services, advanced technology, medicinal herb farming and packaging. In 2016-2020, it looks to attain revenue of VND258 billion to VND1,559 billion and after-tax profit of VND41.2 billion to VND115.7 billion, and pay dividends at 2-4% per year. In the five-year period, Vinapharm will invest in an R&D-pharmaceutical material center on 30,000 hectares meeting Good Agricultural and Collection Practices (GACP) standards and a factory to extract medicinal herbs meeting Good Manufacturing Practice (GMP) standards. Another plant to produce specialty drugs meeting GMP standards will be built by Vinapharm to help reduce prices and meet demand of patients. Industrial production cools in Jan-May Vietnam’s index of industrial production in the January-May period was lower than in the same period last year, showed a report of the Ministry of Industry and Trade. The report on trade and industrial production released last week indicated the index grew 7.5% in the first five months, well below 9.2% in the same period of 2015. The industrial index of the mining sector declined by 1.2% over the same period last year, with crude oil and natural gas dropping by 2.4% as the world oil price fall led to lower output. Meanwhile, the processing-manufacturing sector surged 9.7% but the growth was still lower than 9.9% in the same period last year. Growth of some key industries, including electrical devices, chemical and leather, eased in the period due to weaker demand in the first months of this year. However, the ministry is pinning hopes that industrial production will grow strong in the coming months since the world oil price has bounced back. Many enterprises in the apparel and footwear sectors have won contracts for the third and fourth quarters. Demand for domestically-assembled autos remains high, having expanded over 30% in the first five months. In addition, higher sales of beverages, electronic devices and home appliances in summer support production. This year’s industrial growth is put at 9-10%, according to the ministry. HCMC to bury 1,800 more kilometers of power cable HCMC Power Corporation has proposed a plan to underground 650 kilometers of medium-voltage cable and 1,150 kilometers of low-voltage cable between now and 2020 to free the cityscape from the ugliness of tangled power lines. The corporation will focus on undergrounding wiring in inner-city areas, including districts 1 and 3. Speaking at a meeting last week with Vietnam Electricity Group (EVN), the parent firm of HCMC Power Corporation, HCMC chairman Nguyen Thanh Phong said all power lines are buried in new urban areas, but tangled overhead power lines exist in many parts of the city. Phong asked EVN to make its units speed up the undergrounding of power lines and work with corporations and the Ministry of Information and Communications to strictly handle telecom firms that have not undergrounded their wiring. Apart from EVN, military-run telecom group Viettel, HCMC Telecommunications, Saigontourist Cable TV (SCTV), and FPT Telecom are burying their cables. In the 2013-2015 period, about 228 kilometers of telecom wiring was undergrounded in the city, mainly in the downtown area, administrative and commercial centers, and the main roads connecting outlying and linner-city areas. In late 2015, the HCMC Department of Information and Communications submitted to the city government a plan to underground telecom cables in 2016-2017. Accordingly, the city will implement multiple works to bury telecom cables and dozens of power lines in the two-year period. Consistent policies urged for budget housing projects Property experts are of the opinion that HCMC needs to apply consistent policies for housing and infrastructure development, instead of relying solely on interest rate subsidies as a major way to develop housing for low-income people. The policies were discussed at a conference jointly held by Thanh Tra newspaper and the Vietnam Association of Real Estate on opportunities for low-income people to buy social and budget homes. Economic expert Tran Du Lich said a reason behind enterprises’ reluctance to invest in low-cost apartment projects is that land is too expensive in the city, especially in inner-city areas. High land prices have led investors to focus on high-end housing projects to ensure profitability. Lich said affordable housing projects are inconsistent to the city’s infrastructure and road development plans. For instance, Metro Line No. 1 connecting Ben Thanh Market in the central business district and Suoi Tien Park in District 9 will not run through any low-cost housing development projects. It is necessary to extend the city’s transport systems to outlying areas to encourage investors to build low-income homes in places where land is cheaper. Lich forecast demand for affordable housing in HCMC will be huge in the next five years as the city is proceeding with plans to clear 22,000 slum houses along the canals and rebuild 474 old apartment buildings. Finance-banking expert Nguyen Tri Hieu shared Lich’s view, saying that interest rate subsidies are not enough to fuel the development of the budget housing market. Preferential credit packages are only short-term solutions. Apart from the VND30-trillion home loan package, Prime Minister Nguyen Xuan Phuc has allowed the Vietnam Bank for Social Policies to provide cheap loans for buyers of low-priced apartments. An annual interest rate of 4.8% applies to borrowers who meet the requirements provided in the Government’s Decree 100/2015 on development and management of social housing projects until the end of 2016. However, Hieu said banks have their own regulations to protect their capital. People who use their assets as collateral and have sources of stable income can borrow more while people with no assets for collateral and monthly salaries of VND4-5 million may find it hard to buy a house. Therefore, there should be rules specifying groups of borrowers and loan terms rather than just focusing on interest subsidies. Nguyen Thanh Hai, head of the housing and office building management division under the HCMC Department of Construction, said the city has approved 51 social housing projects having 48,587 apartments and occupying 150.9 hectares. Of them, a dozen with a total of 3,886 apartment units have been completed while the remaining 39 projects will be up and running in the 2016-2020 period. Vietnam prefers ‘amicable solutions’ to trade defence In the face of heightened competition brought about by the emergence of the ASEAN Economic Community (AEC) and other free trade agreements— many voices across Vietnam are advocating the nation start backpedalling to protectionism. In the name of shielding local businesses from being so-called “robbed of revenue, earnings and jobs”, these individuals advocate misusing trade defence measures as a disguised method of avoiding competition. Nguyen Phuong Nam, deputy head of Vietnam Competition Authority (VCA) under the Ministry of Industry and Trade is one of those who says not so fast. At a recent workshop in Hanoi, Mr Nam openly acknowledged that many foreign countries are using trade defence measures such as anti-dumping lawsuits to gain an unfair competitive advantage against Vietnamese imports. Though he considers these actions deplorable, Mr Nam does not advocate that local companies retaliate by following suit and initiating spurious lawsuits against multinational companies looking to export to Vietnam. Local businesses should not fear head-to-head, fair and honest competition, said Mr Nam. But on the other hand, antidumping actions should legitimately be utilized as a punitive action against a multinational company that sells its product in the Vietnamese market at below the local industry’s cost. In other words, if it costs the local industry US$10 to produce a widget, then a foreign company who is exporting widgets to Vietnam and selling them at US$9 each is dumping (selling at below cost) and an anti-dumping action is warranted. “If local companies don’t file anti-dumping actions in situations like these where foreign companies are flagrantly selling their exports at below cost they’ll go bankrupt,” said Mr Nam. Safeguard measures, on the other hand, are much more complex but essentially involve restricting all imports of a product temporarily if a domestic industry is seriously jeopardized or threatened with serious injury caused by a sudden surge in imports. Generally, it is the affected domestic industry which urges the government to take up safeguard measures against importing companies. In order to stop protectionism from escalating into trade wars, instruments for administered protection such as anti-dumping and safeguard measures must be restricted to the purposes they are designed for, said Pham Chau Giang, deputy head of Trade Remedies Board of the VCA. “If local companies improperly use anti-dumping and safeguard measures as a way to disguise protectionism, the consequences could be devastating to the economy as a whole, as it’ll negatively impact all imports and cripple manufacturing,” she said. To date Vietnamese companies in collaboration with the government have only filed one anti-dumping action, said Ms Giang, as the government prefers to resolve these types of predicaments through ‘amicable solutions’ brought about by diplomacy. Another Vinachem plant announces huge losses State-run Vietnam National Chemical Group’s (Vinachem) fertiliser subsidiaries have had difficulty in selling products due to oversupply, leading to continuous losses. Another subsidiary of Vinachem, named Ha Bac Nitrogenous Fertiliser and Chemical Company Limited (Hanichemco), suffered huge losses worth VND700 billion ($31.3 million) in 2015 alone. The loss is considered more serious than Ninh Binh nitrogenous fertiliser plant’s loss of VND500 billion ($22.3 million). The plant made a loss after the expanded plant, upgrading its capacity to 500,000 from the initial 180,000 tonnes per year, started operation in June 2015. The golden age of urea nitrogenous fertiliser was in the 2011-2012 period, and the market was quickly saturated when a series of nitrogenous fertiliser plants came into operation. The most noteworthy contenders on the market are Ca Mau fertiliser plant with a capacity of 800,000 tonnes per year, Ninh Binh nitrogenous fertiliser plant with an annual capacity of 500,000 tonnes, and the expanded Ha Bac plant with an annual capacity of 500,000 tonnes. According to experts in the fertiliser sector, the domestic demand for urea fertiliser is currently approximately two million tonnes per year, while the total supply amounts to 2.65 million tonnes, leading to an extremely out-of-balance the oversupply situation. Along with the saturation, the domestic fertiliser manufacturing sector also needs to compete with imported products, especially low-price Chinese fertiliser which take up 49 per cent of the total imported fertiliser volume in Vietnam. Furthermore, Vinachem’s fertiliser plants in general and the Ha Bac plant in particular have difficulties competing in price with other plants’ products, because most fertiliser plants are fuelled by gas, while Vinachem still uses coal. While gas fuel prices are on a continuous decrease, coal prices are immobile, leaving the Ha Bac plant unable to compete. In late March, Ninh Binh nitrogenous fertiliser plant was forced to call a temporary halt to its operations by its continuous losses. The company temporarily laid off 400 of its 1,100 workers, paying the monthly unemployment allowance of VND3.1 million ($139.37) to each in order to convene them when the plant opens its gates again. Vinachem has submitted 11 plans to deal with the above difficulties to the government and the Ministry of Industry and Trade, one of which is closing the plant. VPBank Securities wins ‘Best Investment Bank and M&A House in Vietnam 2007-2016’ award VPBank Securities just won the ‘Best Investment Bank and M&A House in Vietnam 2007-2016’ award from Alpha Southeast Asia Magazine. This was one of eight awards presented by Alpha Southeast Asia to financial institutions in Vietnam this year. Following a review of more than 200 submissions from locally-incorporated brokerages, commercial and investment banks, and a select number of foreign banks from throughout the region, the award winner was selected based on a combination of criteria – evaluated over the entire period from 2007 until present. The criteria covered the firms’ comprehensive financial advisory capabilities in the equity market, bond market, and mergers & acquisitions, as well as other corporate advisory services. Other factors, such as the value and volume of transactions, the role played in the structuring of deals and financing arrangements, the types of investors, and customer feedback, were also carefully considered during the evaluation. Alpha Southeast Asia is the first and only institutional investment magazine purely focused on and totally devoted to Southeast Asia. This year is the 10th Annual Best Financial Institutions Awards honouring the best securities firms and investment banks, and is the first year in which institutions have been honoured for their achievements over a period of 10 years – from 2007 to the present. This is the third consecutive year in which VPBS has received a prestigious award from Alpha Southeast Asia. In 2014, VPBank Securities won the ‘Best Bond House in Vietnam’ award, and in 2015 was named ‘Best Investment Bank in Vietnam’. VEF/VNA/VNS/VOV/SGT/SGGP/Dantri/VET/VIR