Better legal framework needed to attract foreign investors to road projects
Viet Nam News
Thứ Hai, 31 tháng 10, 2016
Financial markets to restructure towards balance, transparency
HÀ NỘI - As Việt Nam is integrating rapidly into the global economy, the financial markets need to be restructured towards balance, efficiency and transparency to eliminate the risks of instabilities and achieve sustainable development.
Equitisation is key to grow economy
At the World Economic Forum last week, Prime Minister Nguyen Xuan Phuc confirmed the government’s policy to allow foreign investors to engage more in Vietnam’s economy via accelerated equitisation of state-owned enterprises and capital divestments.
“We will resolutely equitise state-owned enterprises (SOEs), with a special focus on withdrawing state-owned capital from enterprises under approved roadmaps and plans,” Phuc told leaders of 150 global firms at the forum in Hanoi.
“We will re-structure the state-owned sector’s investment capital portfolio and assets, foremost in SOEs, and transfer commercial assets and business opportunities to the private sector,” he said.
Many SOEs are now faced with major debts and losses, while their equitisation remains slow and their corporate governance is weak.
Last week, the Ministry of Finance (MoF) reported to the National Assembly that the total debt of parent SOEs last year was $39.22 billion, up 5 per cent year-on-year.
The total foreign debt of state-owned groups and corporations last year reached $15.83 billion, including nearly $1.77 billion in short-term loans and $14 billion in long-term loans.
Of the $15.83 billion in foreign debt, parent enterprises incur $13.65 billion – with Electricity of Vietnam ($9.5 billion), PetroVietnam ($1.075 billion), mining group Vinacomin ($1.038 billion), Vietnam Expressway Corporation (over $1 billion), and Airports Corporation of Vietnam ($596.4 million).
Among loss-making groups and corporations, Vinalines made a loss of $152.27 million in 2015, Vinafood 2 ($45.5 million), the Ministry of Defence’s Corporation 15 ($32.6 million), Vietnam Coffee Corporation ($18.2 million), and Vietnam Expressway Corporation ($5.2 million).
The National Assembly’s Economic Committee Chairman Vu Hong Thanh reported to the legislature that many SOEs are either suffering from losses or delaying their state-funded projects. This list includes the $325 million Dinh Vu polyester fibre plant in the northern city of Haiphong, the $100 million bio-ethanol Dung Quat plant in the central province of Quang Ngai, the $363.63 million expansion of Thai Nguyen steel plant, and the $545.45 million Ninh Binh nitrogenous fertilizer plant in the northern provinces of Thai Nguyen and Ninh Binh.
Meanwhile, according to MoF, Vietnam is very slow in implementing SOE reforms.
Specifically from 2011 to late September 2016, 557 enterprises had their equitisation plans approved, including 49 in this year’s first nine months.
However, out of 557 SOEs, only 426 have completed their initial public offering – of which merely 254 could sell their stakes under the approved equitisation plans, with total value of $1.97 billion.
Kobayashi Yoichi, chairman of Japan-Mekong Business Cooperation Committee, commented that Vietnam needs to boost SOE equitisation to create a level playing field for private firms.
“Many Japanese firms want to buy stakes from SOEs in Vietnam, but fail due to many obstacles,” said Yoichi, who is also vice chairman of Itochu Corporation. “Vietnam can develop its economy sustainably if private firms have more space to play.”
Over the past few years, the World Bank and the Asian Development Bank (ADB) have continuously urged the government to boost SOE reforms in order to make room for private enterprises – helping improve the economy’s competitiveness.
Stressing the importance of the government’s move to determinedly reform SOEs, the World Bank commented that Vietnam needs to focus on the equitisation quality.
“The majority of transactions only involve minority shares which may dampen the intended impact of private ownership on firm performance, in terms of enhanced management, technology transfer, and market access,” said Sebastian Eckardt, lead economist for the World Bank in Vietnam.
Agreeing with this view, the ADB also commented that Vietnam’s existing SOE equitisation “mostly involves the sale of minority stakes, which is likely to limit the potential for better performance at these companies.”
“SOEs continue to absorb a very large share of aggregate investment, yet their relative contribution to real GDP and aggregate employment is low relative to private enterprises,” said ADB country director for Vietnam Eric Sidgwick.
Currently, Vietnam has more than 650 SOEs that have yet to be equitised.
By Nguyen Thanh, VIR
Vietnam mulls taxing multiple-house owners
An aerial view of a residential area in District 7, Ho Chi Minh City. Tuoi Tre
The ministry has tasked its tax policy department with developing the plan, deputy minister Huynh Quang Hai confirmed to (Youth) newspaper on Sunday.
Hai admitted that it is unlikely that the new tax policy will be issued before next year, but “it must be enacted in the future,” given the current tight state budget and the fact that “other countries have been collecting this kind of tax for years.”
The finance ministry began considering taxing multiple-home owners as early as 2009, with three possible tax plans on the table then.
The first plan was to levy fixed taxes on the second and any subsequent homes. Buildings under two stories would be exempted, while those with three stories and above would be subject to a tax of VND2,000 per square meter per year, according to the tentative tax plan.
The second plan considered a 0.03 percent tax on the value of the second and any subsequent homes after deducting VND1 billion ($44,643). For example, if the house is valued at VND1.2 billion ($53,571), the owner would pay a 0.03 percent tax on a VND200 million ($8,929) value per year.
The final proposal sought to tax the extra area of the house, after deducting 200 square meters, with the tax ranging from VND2,000 to VND4,000 a square meter per year. This meant that if the house measured 300 square meters, the ‘taxable area’ is 100 square meters.
The plan failed to meet with approval from the lawmaking National Assembly, with lawmakers saying it was not the right time to impose housing taxes and that taxes collected would not contribute significantly to the state coffers.
However, seven years on, the finance ministry and several experts now believe it is high time the plan was reconsidered.
In an interview with on Sunday, Professor Dang Hung Vo, former deputy minister of natural resources, said that Vietnam is lagging way behind other countries in imposing property tax.
Vo said homeowners must pay taxes, and that tax rates must be progressively increased on the second and any subsequent homes.
“Some houses are built on very large land plots so the owners should pay taxes that ensure social equality,” he underlined.
Prof. Vo explained that the current social inequality meant that the state only collects a modest amount of land use tax from homeowners, which is insufficient to cover expenses that maintain working public amenities.
Vietnam sets a land use tax of 0.03-0.07 percent based on the government-stipulated property prices, while other countries impose taxes of 1 to 1.5 percent on the property's market price, according to the professor.
“The government’s prices are always much lower than market prices,” he said.
“For instance, I have a 150 square meter house in Hanoi but only have to pay VND1 million [$45] in land use tax per year, which is unreasonably low.”
Assoc. Prof. Nguyen Dinh Chien, from the tax department of the Academy of Finance, backed the idea that people who own multiple homes pay taxes that ensure social equality.
“Multi-home owners only live in one of their many houses, and the remaining are up for rent,” Chien said, implying that their rental incomes are to be taxed.
Dr. Do Thi Thin, another tax expert, said people who own multiple houses are high-income earners so “regulating their income via tax” will create fairness.
Other industry insiders said the multiple-home tax will prevent property speculation.
“As they do not have to pay any taxes for the ‘extra’ properties, and the land use taxes are modest, many people are willing to ‘stockpile’ homes in the hope of deriving profit,” one financial expert said.
Property speculation sometimes sends house prices skyrocketing, making them unaffordable for buyers with shallow pockets.
TUOI TRE NEWS
BUSINESS IN BRIEF 31/10
VN firms advised to study UN rules
Vietnamese businesses should study the United Nations Convention on Contracts for the International Sale of Goods to boost exports and reduce uncertainty related to export contracts, a seminar heard in HCM City yesterday.
Dr Nguyen Minh Hang, dean of the Foreign Trade University's law faculty, said the CISG provides an equitable and uniform framework for sales contracts, which are the backbone of international trade in all countries, irrespective of their legal tradition or level of economic development.
The convention will take effect for Viet Nam on January 1 next year.
Hang said the CISG established a comprehensive legal code for contracts for the international sales of goods, the obligations of the buyer and seller, remedies for breach of contract and others.
Often, contracts signed between Vietnamese and foreign firms do not stipulate jurisdiction, meaning, in case of disputes, there are disagreements over which law would prevail, she said.
The convention would also benefit Vietnamese firms by reducing legal expenses for consulting on foreign law, helping resolve disputes quickly, reducing the risk of conflict and boosting trade with CISG partners by enhancing confidence, she said.
The convention has 85 member countries who account for two thirds of international trade, and most countries that have trade ties with Viet Nam have signed up, according to Hang.
There are many free sources of data about the CISG available on the internet, and Vietnamese exporters should take advantage, she said.
At the seminar, Nguyen Trung Nam of EPLegal Company spoke about drafting a contract with a focus on product quality, quality inspection, sanctions and arbitration.
Chau Viet Bac, deputy general secretary of the Viet Nam International Arbitration Centre, said business groups could apply CISG to create a sample of contract to help their members handle the risk of disputes while implementing sales contracts.
Organised by the Viet Nam International Arbitration Centre in collaboration with the Investment and Trade Promotion Centre of HCM City and the Foreign Trade University, the seminar attracted more than 200 business executives, members of business groups and others.
Signed in Austria in 1980, the CISG is a project by the United Nations Commission on International Trade Law. The self-executing treaty aims to reduce obstacles to international trade, particularly those associated with law issues, by creating even-handed and modern substantive rules governing the rights and obligations of parties to international sales contracts.
Savills Vietnam to officially manage Masteri Thao Dien
Savills Vietnam was appointed to provide property management services at Masteri Thao Dien, a landmark project in District 2 of Ho Chi Minh City.
According to Phan Thi Anh Tuyet, acting managing director of Thao Dien Investment, the appointment serves to the company’s strategy to highlight the Masteri Thao Dien as a professional and up-scale residential project.
Tran Minh Ai, director of Property Management at Savills Vietnam, said that together with the developer, Thao Dien Investments, Savills welcome residents to the project, with full confidence in the convenient location and outstanding facilities on offer.
“As the real estate market continues to grow in Vietnam, we look forward to working with more developers to ensure residents can benefit from the best services available, allowing them to truly relax in the comfort of their homes,” said Ai.
Masteri Thao Dien is located at the heart of District 2 and is set to further benefit from the development of Metro Line 1, to be finished by 2020.
This is the biggest residential and commercial complex in Savills Vietnam’s management portfolio.
According to the appointment, Savills will be in charge of property management for over 4,000 apartment units at Masteri Thao Dien from June 2016, when the units are handed over.
Currently, the Savills property management team is detailing the apartment hand-over process as well as management services to welcome new Masteri residents.
Other notable residential projects in Vietnam under the hands of Savills include Xi Riverview, Saigon Pearl, The Vista, Estella, Avalon, Riviera Point in Ho Chi Minh City, and Mandarin Garden and Richland Southern in Hanoi.
Savills Vietnam has been established for over 21 years currently holds over 2.5 million square metres under management. Looking to capitalise on the unlocked potential of the Vietnamese real estate market, Savills is expanding services throughout the country, including investment brokerage, commercial leasing, research and valuation, as well as residential sales.
Spain to provide concessional loans
Spain has offered Vietnam concessional loans totaling 325 million euro ($364.2 million), with up to 275 million euro ($308.2 million) being assigned to Spanish-tied financing of Ho Chi Minh City’s Metro Line No. 5.
The offer was announced on the sidelines of the “Vietnam - Spain Multilateral Partnership” business-to-business (B2B) meeting in Hanoi on October 18, held by Spain Trade and Investment (ICEX) and the Economic & Commercial Office of the Embassy of Spain in Vietnam.
The aim of the meeting was to facilitate the exploration of business cooperation agreements and partnerships with a view to increasing the options of both parties to be awarded contracts for projects financed mainly by development banks in Vietnam, such as the Asian Development Bank (ADB), the World Bank, the Japan International Cooperation Agency (JICA), and others and any other projects in the region.
The meeting provided Vietnamese companies with the opportunity to meet over 15 renowned Spanish companies with expertise in the fields of transport infrastructure (construction and installation of related systems), energy (conventional, renewable, and efficient), and environment (water, wastewater and solid waste treatment).
“Spanish enterprises have experience in cooperating with Vietnamese enterprises, in which some Spanish enterprises are operating effectively in Hanoi, Hai Phong and Da Nang,” said the Ambassador of Spain to Vietnam, H.E. Alfonso Tena Garci. “Spanish enterprises shared their experience with Vietnamese enterprises, supporting Vietnam to build transport infrastructure and environment and energy projects.”
Mr. Nguyen Danh Huy, Director of the Public-Private Partnership (PPP) Department at the Ministry of Transport, identified priority projects to be based on the PPP model.
Mr. Jose Antonio Bretones Cordero, Economic and Commercial Counselor at the Embassy of Spain in Vietnam, said that Spain’s Ministry for Economic Affairs and Competitiveness is now negotiating with the Ministry of Planning and Investment over the terms of the 5th Financial Cooperation Program between Vietnam and Spain.
Spain’s infrastructure industry is the world’s second-largest in terms of turnover, with a worldwide portfolio of 88 billion euro ($96 billion), 87 per cent of which is carried out abroad, in more than 130 countries. In Vietnam, Spain has participated in the construction and supervision of highways, refineries and water supply projects, among others. The country is also a major donor to Ho Chi Minh City’s Metro Line No. 5 project.
Vietnam posts US$3.72-billion in trade surplus in Jan-Sept
Vietnam had a trade surplus of nearly US$3.72 billion in January-September, shows data of the General Department of Customs.
The country’s total import and export revenues in the period grew 3.9% over the same period last year. Exports amounted to US$128.58 billion while imports totaled US$124.86 billion.
Import and export revenues of foreign-invested enterprises increased 5.5% year-on-year to US$163.75 billion. These entities saw their exports soaring 9.8% to US$89.93 billion and their imports edging up 0.6% to US$73.82 billion, resulting in a trade surplus of US$16.11 billion.
This indicates domestic firms caused a trade deficit of US$12.39 billion in the nine-month period.
According to the customs department, the top 10 Vietnamese export earners generated higher revenues in the period.
There were three groups of items registering export turnover of more than US$10 billion each, including cell phones and phone parts with US$25.5 billion, inching up 10.9% year-on-year and accounting for 19.8% of the country’s total exports; textile and garment with US$17.78 billion, rising 4.9%; and computers, electronics and components with US$12.9 billion, up 13.7%.
Other products on the top ten list are footwear, seafood, machinery, equipment, tools and machine parts, wood and coffee.
The country’s import bill in Jan-Sept inched up 0.9% against last year’s period. Imports of computer, electronics products and components amounted to US$20.1 billion, up 16%.
For steel and iron, Vietnam imported 13.92 million tons worth more than US$5.48 billion, surging 24.7% in volume and only 2.3% in value.
Imports of machinery, equipment, tools and machine parts, cell phones, phone parts, fuels, and apparel material dropped in the period.
U.S. may lift anti-dumping tax on Vietnam steel firm
The U.S. Department of Commerce (DOC) is considering removing an anti-dumping duty on steel products of a Vietnamese company.
The DOC has issued a preliminary decision on an administrative review of the anti-dumping duty order on certain oil country tubular goods (OCTG) from Vietnam for the period from February 25, 2014 through August 31, 2015, according to the Vietnam Competition Authority (VAC) under the Ministry of Industry and Trade.
The DOC has still imposed a common tariff of 111.4% on Vietnam’s OCTG exporters while only SeAH Steel Vina Corporation (SSV) working hand in hand with the DOC during the review period is subject to an anti-dumping duty of 0%.
The DOC preliminarily determined that SSV did not sell subject merchandise in the U.S. at prices below normal value.
The DOC plans to issue the final results of this administrative review within 120 days of publication of these preliminary results in the Federal Register.
On July 11, 2014, the DOC announced its final decision confirming dumping margins for OCTG imports from Vietnam, India, South Korea, the Philippines, Saudi Arabia, Taiwan, Turkey and Ukraine as well as steel pipes made in India and Turkey.
SSV, one of the two compulsory defendants in Vietnam subject to the U.S. investigations, was imposed an anti-dumping duty of 24.22% while Hot Rolling Pipe must pay a general anti-dumping margin of 111.47% for steel exporters in Vietnam as it refused to fill in the DOC’s questionnaire. VAC considers the rate levied on Hot Rolling Pipe and other companies in Vietnam is the highest anti-dumping margin claimed by petitioners.
Long Thanh airport designs unveiled
The council responsible for deciding architecture for the passenger terminal of the Long Thanh International Airport project has selected three designs with the highest scores to seek public comment.
The three designs, chosen from nine entries, were made by reputable and experienced consultants that have got involved in some of the major airport terminals in the world, says the Airports Corporation of Vietnam (ACV).
Council members said all the design plans met the basic criteria set out by the council. Some even display an innovative concept of architecture. The Ministry of Transport will display the three winning designs to gather feedback from citizens nationwide.
Below are the three winning designs:
Like a lotus, the terminal is designed by South Korea’s Heerim Architects & Planners Co. It is dotted with light boxes, breaking the monotony of the roof. The outdoor parking lot and the rooftop are utilized as a green park with a large lake in the center as a highlight, which is also inspired by the image of a lotus. The roof of the main hall is designed with a long reach. In addition, the installation of a small roof by the viaduct is relatively harmonious (similar to the layers of a lotus).
The terminal is like a coconut leaf as designed by three companies from Singapore, Vietnam and Japan, with its roof inspired by the signature image of Vietnam’s countryside and riverine culture. The designers want to promote the image of an airport terminal characterized by Vietnamese culture. Inside the departure hall, the counters are designed as boats traveling in the rivers in rural Vietnam. Modern architecture is combined with green space, interior landscape and harmonious use of materials to present the image of a dynamic terminal.
Vietnam encourages SMEs to develop production: PM
Prime Minister Nguyen Xuan Phuc yesterday afternoon affirmed that the Party and State always keep a close eye on the development of businesses, record their contributions and create conditions for them, especially small and medium enterprises (SMEs), to develop.
At meeting with the Association of SMEs at the Government’s Headquarters, the PM stressed that SMEs play a significant role in the world and in Vietnam where they have not only provided jobs but also contributed to increasing budget revenue.
He hoped that the association to propose to the Government and local authorities policies to build up this type of businesses and contribute appropriately to the country’s development cause.
After ten years of establishment, the association has had 55 provincial associations with 62,000 members operating in most fields and economic sectors.
SMEs accounts for over 98 percent of the total number of businesses operating in Vietnam now. Of these, medium firms account for 2.2 percent and small ones 29.6 percent. The remaining one is super small firms.
Annually, they create over one million jobs, use 51 percent social labor, attract 38 percent social investment, contribute 31 percent the country’s export import turnover and 40 percent gross domestic product.
Association of SMEs advised to better function, capacity
The Association of Small- and Medium-Sized Enterprises should continue proposing policies and mechanisms to the Government in order to facilitate the development of SME businesses, said Prime Minister Nguyen Xuan Phuc at a meeting with the association in Hanoi on October 29.
The PM highlighted the role of SMEs in the world and Vietnam, saying SMEs in Vietnam play a significant role in generating jobs and increasing income to the state budget.
He said the Party, State and Government always create the best conditions for SMEs to grow, while urging the association to help its members’ development, contributing to national development.
The Association of Small and Medium Sized Enterprises has been extended to 55 provinces with 62,000 members operating in diverse economic realms.
SMEs account for over 98 percent of businesses operating across the country and are considered one of the main drivers of national economic development.
They generate over 1 million jobs, employ 51 percent of the nation’s workforce and contribute 40 percent to the Gross Domestic Product (GDP) and 31 percent of export value each year.
Vietjet Air opens more domestic and foreign routes
New-generation carrier Vietjet Air on October 30 launched two new air routes between Hanoi and Taipei city of Chinese Taiwan and between Hanoi and Hue city of the central province of Thua Thien-Hue.
The launch ceremony was attended by Deputy Foreign Minister Le Hoai Trung, Deputy Minister of Culture, Sports and Tourism Huynh Vinh Ai, officials of Hanoi and the central province of Thua Thien-Hue, and Chief Representative of the Taipei Economic and Cultural office in Vietnam Richard Shih Rui Chi, among others.
The airline will conduct its flights everyday on the Hanoi-Taipei air route, with flight duration of about three hours.
Meanwhile, the daily flight route between Hanoi and Hue city will begin on November 1, with each flight spending about one hour and ten minutes.
The opening of the two new routes helped increase the total number of Vietjet’s routes connecting Hanoi with domestic and international destinations to nearly 20, contributing to the capital’s economic and tourism development.
Vietjet Air now owns more than 40 A320 and A321 planes which make some 350 flights every day. Its flight network has covered almost all destinations in Vietnam and many others in Singapore, the Republic of Korea, China, Thailand, Myanmar and Malaysia.
It has provided services for more than 30 million passengers so far.
Reference exchange rate down 6 VND
The reference exchange rate for VND-USD at the opening of the week was set by the State Bank at 22,039 VND for one USD, down 6VND from the end of last week.
With the current trading band of +/-3 percent, the ceiling exchange rate is 22,702 VND and the floor rate, 21,376 VND per USD.
The rates listed by commercial banks saw almost no change in the opening hours, with major banks such as Vietcombank, BIDV, Eximbank and Techcombank keeping the buying-selling rates at the same levels as the end of last week.
The rates listed by Vietcombank were 22,295 VND (buying) and 22,365 VND (selling) per USD.
BIDV listed the rates at 22,300 VND (buying) and 22,370 VND (selling), while at Eximbank, one USD is bought for 22,280 VND and sold for 22,360 VND.
At Techcombank, the rates were listed at 22,280 VND (buying) and 22,390 VND (selling).
FDI-invested gypsum board plant inaugurated in Hai Phong
Knauf Vietnam Co ., Ltd. inaugurated its gypsum board manufacturing plant in the northern port city of Hai Phong on October 30 after nearly two years of construction.
The plant, worth 30 million EUR (32.9 million USD), is one of the biggest foreign direct investment (FDI) projects in the city.
Covering nearly 63,000 square metres in Dinh Vu industrial park, the plant is expected to produce 12 million square metre gypsum board and 15 million linear metre metal profile on an annual basis.
General Director David Victor said the company has just launched two distributors in Vietnam , one in the south and one in the north.
He expressed his belief that the plant will help the company gain a considerable market share in Vietnam and the north in particular.
Vice Chairman of the provincial People’s Committee Le Thanh Son said the city will create the best condition for the company to implement its manufacturing activities.
In the first nine months of 2016, Hai Phong led the country by attracting 2.7 billion USD in FDI, five times against the same period last year and surpassing over 42 percent of the yearly target.
The city strives to draw more than 3 billion USD in FDI at the year’s end, the highest level so far.
Founded in 1932, Knauf is a multinational producer of building materials and construction systems that operates more than 220 production plants in over 60 countries.-VNA
Price growth recorded in 8 goods categories in HCM City
Eight of the 11 surveyed goods categories in Ho Chi Minh City had price increases in October, leading to a 0.62-percent monthly rise in the local consumer price index (CPI).
This month’s CPI went up 3.15 percent from the same period last year, the city’s statistics office said on October 29.
The transport category posted the strongest price hike, 2.27 percent, from last month. That is attributable to higher petrol prices which were revised up 440 VND per litre on October 20.
Other categories with increased prices are education (2.05 percent); housing, electricity and water (0.56 percent); beverage and cigarette (0.45 percent); food and eating outside (0.37 percent); medicine and healthcare services (0.09 percent); and garment, footwear and hat (0.06 percent).
Meanwhile, price drops were seen in postal services and telecommunications (down 0.54 percent); along with culture, entertainment and tourism (0.2 percent).
Prices of household appliances and goods remained almost unchanged compared to those in September.
Sharing the same upward trend with CPI, the USD price index climbed 0.14 percent. The gold price index fell 1.73 percent month on month, the statistics office noted.
Stronger trading fuels HCM City’s 10-month growth
Faster expansion in trading activities has substantially contributed to overall economic growth in Ho Chi Minh City over the first 10 months of 2016.
The city earned 26.6 billion USD from exports in the reviewed period, up 6.5 percent year on year, while that of the same period of 2015 declined 3.8 percent, Director of the municipal Department of Planning and Investment Su Ngoc Anh said at a meeting to review local socio-economic performance on October 28.
Shipments to some countries have risen considerably, including Indonesia (up 61.1 percent), India (52.6 percent), China (36.5 percent), Thailand (31.5 percent) and the Republic of Korea (26.4 percent).
Meanwhile, commodities posting strong export augmentation included coffee (50 percent), machinery and spare parts (24.5 percent), and cashew (11.6 percent).
About 30.3 billion USD worth of goods were imported into HCM City from January to October, climbing 10.7 percent from a year earlier. The rate was 8 percent in the corresponding period last year.
Imports from the US rocketed 113.9 percent, from the Republic of Korea up 38 percent and from France 28.8 percent.
The southern economic hub of Vietnam mainly purchased equipment and material for production such as electronic devices and components (up 43.8 percent in turnover); other machinery, equipment and spare parts (up 46.04 percent), and plastic materials (up 12.3 percent).
Strong activities to promote investment and the local investment climate have helped attract domestic and foreign capital, Anh said, noting that 29,899 businesses were set up during the 10 months with a total registered capital of over 242.16 trillion VND (nearly 10.9 billion USD), increasing by 15.9 percent in the business number and 46.1 percent in capital.
Up to 44,495 companies registered to raise their capital by almost 169.97 trillion VND (7.6 billion USD), rising 0.8 percent in the business number and 58.7 percent in additional capital.
He added the city granted the investment registration certificate to 668 foreign invested projects, up 44 percent year on year, with a combined capital of 798.7 million USD. About 477.3 million USD was also added to 145 existing projects over the period.
HCM City also allowed foreign investors to contribute capital to and buy stakes in local companies, at some 1.23 billion USD in total. It attracted 2.5 billion USD in overall foreign investment in the first 10 months, Anh noted.
Chairman of the municipal People’s Committee Nguyen Thanh Phong said the administration will push forward with measures to improve the business and investment environment and the provincial competitiveness index, while supporting small- and medium-sized enterprises to make innovation.
Trade deficit indicates Vietnam lacks competitiveness
Commercial trade with ASEAN is a microcosm of the challenges facing the Vietnamese domestic sector globally.
The trade deficit with the 10 member nations of the ASEAN trade bloc widened by US$4.5 billion during the first nine months of 2016, higher than the US$4.1 billion shortfall for last year’s same period, reports the General Department of Vietnam Customs.
“The trade deficit continues a decade-long trend and is a surrogate measure of competitiveness,” Le Dang Doanh, member of the United Nations Committee for Development Policy, explained in an interview.
Revenues from Vietnam exports to ASEAN members tallied in at US$12.2 billion while imports stood at US$16.7 billion for the nine-month period, said Mr Doanh, who is widely regarded as one of the country’s leading economists.
Out of the 10-member bloc, Vietnam imported more goods from Thailand than any other country.
Vietnam imports from Thailand for the nine months January-September consisted of computers and electronic devices valued atUS$729 million, machinery at US$589.6 million, and vehicles at US$440 million.
Notably, fruit and vegetable imports from the neighboring country soared 76.4% on-year to US$289.6 million.
Agriculture in one of the largest segments of the Vietnam economy and the magnitude of these imports does wave a red flag that we as a country may not be as competitive as we need to be, Mr Doanh underscored.
Mr Doanh noted that Vietnam has been posting trade shortfalls with ASEAN since 2004 and the situation shows no sign of abating and will most likely continue into the foreseeable future, adding that it indicates Vietnam has become an A consumption market.
He said the Vietnamese growing appetite for imported food and more open borders resulting from the ASEAN free-trade agreement are also reshaping agriculture and industry in the Vietnam domestic sector.
For agriculture, that suggests companies are going to need to find ways to differentiate the country’s food offerings, he said.
The risk is that Vietnam is increasingly becoming a food commodity exporter rather than a shipper of value-added products, causing negative repercussions throughout the agricultural supply chain.
Pham Ngoc Hung, vice president of HCM City Business Association agrees with Mr Doanh. The continuing trade deficits with Asean reveal limitations of local companies in understanding how to effectively compete in the marketplace.
Vietnamese local companies, by and large, have shortcomings in marketing and advertising their own products as well as a complete lack of knowledge about the cultures and consumer preferences of other nations.
In addition, local companies lack product distribution systems and sales agents in foreign markets, making it impractical if not virtually impossible for them to access foreign markets in any meaningful manner.
Sharing the same view, Pham Ngoc Hung, vice president of HCM City Business Association said it is blatantly evident that Vietnamese local companies have not adequately prepared for Asean integration. Meanwhile, other nations like Malaysia and Thailand have made thorough preparations.
Vietnamese local companies need to regroup and focus on enhancing competitiveness if their products are to integrate well in the Asean market. If not, Vietnamese goods will lose out in both the Asean and domestic markets, noted Mr Hung.
Bloomberg ASEAN Summit in Ha Noi
The 2016 Bloomberg ASEAN Business Summit will be held in Ha Noi on December 8 at the JW Marriot Hanoi Hotel.
In its third year, this annual conference will convene ASEAN leaders across business, finance and government in Viet Nam for the first time, to reflect on the progress the region has made, discuss ways to overcome challenges and identify key opportunities for growth, collaboration and development.
Parry Ravindranathan, Managing Director, International, Bloomberg Media, said "We anticipate incredibly stimulating conversations on ASEAN's economic advancement set against the backdrop of global uncertainty, fluctuations in commodities and oil prices, financial markets volatility, and the impact of the anticipated recovery of growth in key Asia markets in 2017.
Cross-border collaboration amongst companies and countries in ASEAN continues to be top of the agenda because it will accelerate growth and development."
Key topics of discussion at the summit will include a review of the ASEAN Economic Community (AEC) and intra-regional policy to date, Viet Nam and ASEAN's next stage of development, and cross-border investment and trade in the region.
Specific panel discussions will also take place to focus on growth sectors such as consumer goods, infrastructure, commodities and energy, banking and finance, and media and technology.
VN farmers improve export chain
Viet Nam's agricultural production has gradually entered the global supply chain, according to the Viet Nam Logistics Institute (VLI).
Speaking at a seminar on improving the supply chain for export products preserved in cold and frozen storages held in HCM City last Friday, Thomas Nguyen, a lecturer at the VLI, said more and more farmers produced products following orders from overseas buyers instead of selling only what they have.
Many farms produce following international standards, he said, adding that they had invested in building cold warehouses right at their farms to preserve their fruits better so as to keep them fresh longer in foreign supermarkets.
Delegates at the seminar said growth in export-import activities as well as an expansion in internal trade had led to increasing demand for logistics services.
Enhancing supply chain quality and management is a must, they said.
A synchronous supply chain will not only bring higher efficiency for production and trading but also contribute to the country's economic growth.
Nguyen Thi Thuy Duong, another VLI's lecturer, said enterprises should have the right awareness about the role of logistics in export competitiveness.
To improve competitiveness, Vietnamese import-export firms should access outsourcing logistics services as well as negotiate with potential logistics services providers to map out a proper transportation plan.
Organised by the Viet Nam Trade Promotion Agency, the seminar was part of the programme to improve export competitiveness for Viet Nam's small and medium-sized enterprises via a local trade promotion system funded by the Swiss Government.
Fresh fruits, tra (catfish), pepper, tuna, tea, litchi are among sectors that are beneficiaries under the programme, with a focus on consulting export logistics since logistics remained a weakness at most firms in these sectors.
Bac A Bank's profit in Q3 surges 5 times
Bac A Bank's pre-tax profit in Q3 surged five times against the same period last year to VND115 billion thanks to a sharp drop in provisions for risk loans.
In Q3, the bank had to spend only VND7 billion for provisions, down sharply from VND86 billion in Q3 last year. Its operation costs also inched down to VND149 billion.
The bank's bad debt ratio by the end of September was at 0.72 per cent.
Following promising results in Q3, the bank posted pre-tax profit of VND387 billion in nine months, up 30 per cent year-on-year.
In the first nine months, the bank's credit growth rose 7.3 per cent to VND44 trillion, while its deposits increased 11 per cent to VND58 trillion.
According to the bank's consolidated financial report, total assets by the end of September reached more than VND68 trillion, up eight per cent against the same period last year.
Corporate giants upbeat on Q3 results
Thirteen of the 30 largest companies on the HCM Stock Exchange have reported third-quarter earnings, of which nine firms saw increases in revenues and profits while four witnessed their businesses sag.
Steelmakers showed the strongest growth in the last three months of this year. The two biggest listed steelmaking firms, Hoa Phat Group (HPG) and Hoa Sen Group (HSG), both posted striking results.
Hoa Sen Group (HSG) earned VND9.3 trillion (US$417 million) in revenues and VND764 billion in net profits in the third quarter, up 23 per cent in revenues and 200 per cent in profits over the same period of last year.
Similarly. Hoa Phat Group (HPG) posted VND8.3 trillion in total sales and VND1.6 trillion in net profits. As of September's end, the company made VND4.7 trillion in profits, up 60 per cent year-on-year and surpassing its yearly target by 45 per cent.
"This is the best nine-month business result in our history," the steelmaker said.
Financial firms and banks were also upbeat following their positive earnings in the first nine months of this year.
Saigon Securities Inc (SSI), the largest brokerage firm on both HCM City and Ha Noi Stock Exchanges by the market shares, saw high increases in both revenues and profits. It posted VND690 billion in revenues and VND406 billion in profits in the third quarter, up 80 per cent and 50 per cent year-on-year, respectively. Its nine-month profits rose 53 per cent during the period, reaching VND947 billion.
The HCM City Securities Corporation announced VND229 billion in profits in the first nine months, a rise of 59 per cent over the same period of last year.
To date, two banks have reported their nine-month earnings. Vietcombank (VCB), the second largest-valued lender, had pre-tax profits of over VND1 trillion, up 40 per cent year-on-year, while net profits of BIDV (BID) increased just 7 per cent during the period, taking in VND4.6 trillion.
The biggest listed firm, Vietnam Dairy Products JSC (Vinamilk), witnessed revenues up 18 per cent and pre-tax profits up 27.6 per cent in the last three quarters, being VND35.1 trillion and over VND9 trillion, respectively.
Big earners also included software producer FPT Corporation (FPT) with profits of over VND2 trillion, up 2 per cent year-on-year, and PetroVietnam Power Nhon Trach 2 JSC (NT2) with VND860 billion in profits, up 24.3 per cent.
On the other end of spectrum, PV Gas (GAS) saw a steep fall in profits due to decreasing global oil prices. GAS's nine-month net profits declined 46 per cent year-on-year to VND4.2 trillion.
The average global oil prices declined 25 per cent, from $60 per barrel in July-September last year to $45 per barrel in the last three months. Crude oil was traded around $50.6 per barrel last week. Market insiders forecasted that the oil price can rebound to $56-$62 per barrel.
Petrovietnam Fertilizer & Chemicals Corporation (DPM) and HCM City Infrastructure Investment JSC (CII) also witnessed their profits down 16 per cent and 20 per cent, respectively.
A third of Vietnamese set to shop online by 2020
The online shopping trend is growing so rapidly in Vietnam that it is forecast 30% of the population will be buying goods and services over the internet by 2020, according to the Vietnam E-Commerce and Information Technology Agency (VECITA) under the Ministry of Industry and Trade.
The agency estimated that each shopper will spend an average of US$350 per year, which means online spending will total US$9.76 billion.
Revenue from online retail is expected to account for 5% of total nationwide revenue from sales of goods and services in 2020, up from only 2.8% last year, VECITA said.
Last year, Vietnamese consumers spent about US$4.07 billion shopping online, a jump of 37% from the previous year, the 2015 Report on Vietnam E-commerce showed.
However, the country's e-commerce market is comparatively small in Asia, with China hitting US$617 billion, the Republic of Korea US$39 billion and India US$14 billion.
“E-commerce in Vietnam is growing exponentially. Revenue from online retail is expected to to hit US$10 billion by 2020, accounting for 5% of the total nationwide revenue from the sales of goods and services,” said Lai Viet Anh, VECITA’s deputy head, at a workshop in Hanoi.
“We are working to boost business-to-business cross-border e-commerce to as high as 30% of total import and export trade by 2020,” Viet Anh added.
According to Internet World Stats, Vietnam is currently ranked 18th in the world in terms of the number of internet users, with more than 54% of the population online.
Mobile subscription rates in Vietnam have doubled over the past five years and now 4 out of 10 people are active users.
In an attempt to boost e-commerce, Vietnam is trying to convince 50% of local enterprises to set up online stores and 80% to do business through e-commerce platforms, according to the government’s e-commerce development plan for 2016-2020.
In order to increase non-cash transactions, Vietnam will require all supermarkets, shopping malls and convenience stores to accept payments via credit and debit cards.
The country also wants around 70% of utility service providers, including telecommunications companies and electricity and water suppliers, to move their billings online.
Production by value chains increases Vietnam’s vegetable and fruit exports
With a year-on-year growth of 130%, vegetable and fruit exports have been topping Vietnam’s exports of farm produce over the past 8 months, earning US$1.7 billion and exceeding the rice export value for the first time.
The sector’s export value is expected to reach US$2.5 billion for the whole year.
Vietnam has recently shown strong growth in fruit and vegetable exports. In 2005, Vietnam’s fruits and vegetables were available in 36 countries and territories, earning more than US$235 million in revenue.
Now 60 countries import Vietnamese fruits, bringing in US$1.8 billion. The growth has attracted more investors and helped farmers increase their income by applying the VietGAP or GlobalGAP standards to their production.
Giap Van Thanh of Kep 1 village in Luc Ngan district, Bac Giang province, leads a group of farmers specializing in producing safe litchi for export to the US.
“With 270 households in the village and only 6 zone codes, many households haven’t been able to participate in the project, though they have realized benefits from planting safe litchis for export. We hope litchi cultivation areas will be expanded so that all villagers and farmers in Hong Giang hamlet can benefit from the project,” said Thanh.
The vegetable and fruit sector has been trying to expand to demanding markets in the US, EU, Japan, the Republic of Korea, Canada, and Australia.
Customers in Australia and the US now have access to Vietnamese litchi and in the near future Vietnamese mango will also be available in Australia.
Nguyen Tri Ngoc with the Advance International Company of the AIC Group, which specializes in exporting agricultural products and investing in high-tech agriculture, said the successful penetration of demanding markets will have double benefits. It will make domestic vegetables and fruits less dependent on a single market and encourage farmers to produce what the export markets need.
“Economic integration requires production by value chains. This creates sustainable development for Vietnam’s farm produce and stabilizes farmers’ incomes. This is very important for domestic exporters because quality is a vital factor for penetrating new markets and signing contracts with partners”, Ngoc said.
Tran Dinh Long, Chairman of the Vietnamese Seed Association (VSA), said Vietnam has a great potential in vegetable and fruit exports and the world has a high demand for these products. Although exports are growing, the volume remains modest compared to the global demand.
Long said “The global vegetable and fruit market is growing fast. Farmers now understand the need to apply Vietnamese Good Agriculture Practice (VietGap) standards to increase the value of agricultural products.
The sector will be more successful if more high-tech businesses and research institutes providing qualified seeds get involved.”
The biggest hurdle is quarantine regulations. Le Son Ha, head of the Quarantine Section of the Department of Plant Protection under the Ministry of Agriculture and Rural Development, emphasized that more and more Vietnamese fruits are in markets which require high quality products.
"We’ll study market demand, focus on markets with high demand, and tap regional markets like ASEAN and China. For each market, we’ll put forth solutions to make exports more profitable,” Ha said.
Developing coffee zones in Dak Lak province
Sustainable coffee production has benefited many farm households in Cu M’gar district, Dak Lak province.
More than 30 cooperatives and clubs following a sustainable coffee production model have been set up in the district, which has started to change old production habits, helping farmers access advanced technologies, cut input costs, boost product value and incomes, and contribute to local economic growth.
Ngo Van Binh’s family in Quang Phu village, Cu M’gar district, has 1.8 hectares of coffee. In the past, Binh and his family experienced low productivity – about 2.5 tons of coffee beans per hectare.
Since he joined a club to support sustainable coffee production and learned intensive farming techniques, his productivity has increased to 5 tons per hectare. In the dry season, he only needs about 400 liters of water to irrigate a coffee tree instead of the 700 liters he needed in the past.
“When I decided to participate in the model, my family received technical instructions. Each year, the price of our product has increased,” Binh explained.
A total of 30 cooperatives, cooperative teams, and clubs applying the sustainable coffee production model have been set up in Chư M’Gar district.
The teams have been given information about weather and epidemic diseases of coffee trees, and the model has linked farmers, managers, scientists, and enterprises toward sustainable production.
Through training, coffee production households have learned to conserve water resources and collaborate with each other in harvesting and processing to turn out products of higher quality.
Nguyen Van Phuc, Director of the Ea Kiet Agriculture and Service Cooperative in Cu M’gar, said “Each year three or four training courses are held for members of cooperatives to introduce new science and technologies, and teach them how to increase food safety and occupational safety.”
He said even “Specific plans have been made for each month for each production team and communication campaigns have increased public awareness of the model and its importance.”
Cu M’gar has more than 35,500 hectares of coffee and nearly 10,000 households producing 37,000 tons of certified coffee meeting standard regulations. The model has helped locals access new technologies; the value of coffee has increased, and the environment has been protected.
According to Nguyen Van Minh, Deputy Chairman of Cư M’gar People’s Committee, “The district plans to continue persuading people to join cooperatives or clubs to develop coffee sustainably. We will also instruct communes to establish more agricultural cooperatives involving farmers, managers, scientists, and enterprises to help local farmers access new methods of production and improve the quality of the district’s main crop.”
Vietnam confirms tariff cuts for numerous products from China
Goods from China are expected to come flooding in as Vietnam will soon remove or cut tariffs on a wide range of products to fulfill its commitment as a member the ASEAN-China Free Trade Area.
Vietnam has committed to eliminating 90 tariff lines by early 2018. In a new list released by the government, zero tariffs will be applicable to various meat products, vegetables, beverages, airplanes, fishing vessels, among many other products.
Then by 2020, about 475 sensitive tariff lines are to be cut to 5%, including those imposed on iron and steel products, rubber products, paper, cement, plastic and other industrial products as well as some types of vehicles.
In return, China has also pledged to make similar cuts for goods from Vietnam and other members of the 10-nation Southeast Asia bloc.
Experts anticipate that trade between China and Vietnam will grow significantly in the coming time.
Vietnam had a trade deficit of US$21.3 billion with China in the first nine months, according to official statistics. Imports from China were US$36 billion, the highest in all trading partners, with many products under zero tariff.