BUSINESS IN BRIEF 5/12 HCMC to ensure sufficient goods supply at Tet   Goods supply for the upcoming Lunar New Year holiday (Tet) in HCMC is forecast to abound but city authorities should closely coordinate to cope with any signs of goods scarcity and price rises, said Deputy Minister of Industry and Trade Ho Thi Kim Thoa. Preparations for stocking up on goods for Tet early next year are 80% complete, Pham Thanh Kien, director of the city’s Department of Industry and Trade, told a working meeting with Thoa on Tuesday. Local firms have more than VND17 trillion (US$749 million) worth of products ready for the holiday, up by VND860 billion over the same period last year, Kien said. The total value of products under the city’s price stabilization program is over VND6.8 trillion. They include many items in high demand such as meat, poultry, egg, sugar, cooking oil, rice and processed food. Particularly, local companies have stored goods worth VND9.7 trillion for the peak pre-Tet shopping period from December 29 to January 27, including more than VND3.76 trillion worth of products under the price stabilization program.     Kien said participating companies have promised to keep prices stable before and after Tet. They will offer discounts on essential goods such as pork, poultry and egg. Nguyen Nguyen Phuong, head of trade management at the HCMC Department of Industry and Trade, said district-level economic management divisions and authorities of traditional wet markets have asked vendors to ink price stabilization commitments. Deputy Minister Thoa said the department should work with manufacturers and distributors to take measures to ensure food safety and hygiene during the busiest holiday shopping season. The department should launch more inspections to keep substandard products from circulating on the market, she said. According to the department, consumers can trace the origin of pork thanks to a mobile phone app or a device available at more than 500 selling points from December 10. The pilot project is being implemented by the city’s Department of Industry and Trade.  Additional capital higher than fresh approvals Extra capital registered by operational domestic enterprises in January-November surpassed the total sum pledged by newly-established businesses. According to a report by the Business Registration Management Department under the Ministry of Planning and Investment, 101,680 enterprises were registered in the 11-month period with total pledged capital of VND797.68 trillion (US$35.16 billion), up 17.1% in number and 48.1% in capital versus the same period last year. Meanwhile, existing enterprises added an extra VND1,463 trillion to their projects in the period. In all, the freshly registered capital of startups and operational firms amounted to VND2,261 trillion, with each entity having average capital of VND7.8 billion, up 26.5% year-on-year. The first 11 months saw 24,560 suspended firms returning to business, up 31.7% year-on-year, showing the Government’s business assistance measures paid off. However, 18,900 firms halted operation in the period, up 27.3%, while 35,145 came to a virtual stop without registering with authorities or waiting for dissolution decisions by authorities. Of them, 92.6% were small entities with registered capital of less than VND10 billion each. Manufacturing stability guarantees sustainable budget revenue HCMC will foster business development and ensure manufacturing stability to make budget revenues more sustainable so as to accomplish the significantly higher budget collection target set by the central Government. In 2017, the city is assigned to collect more than VND347.88 trillion, up 16.6% from 2016, with domestic revenues to rise a staggering 27.5%. “Domestic revenues primarily come from the manufacturing sector, so it is necessary to promote its growth, and adopt policies and mechanisms to spur production expansion and startups,” said HCMC Chairman Nguyen Thanh Phong at the eighth session of the 10th HCMC Party Committee’s Executive Board on December 1. There will be three key factors impacting on the city’s budget revenues next year, namely the tariff reduction roadmap under the signed free trade agreements, the lowering of retained budget revenue to 18%, and bureaucratic bottlenecks, Phong noted. He said the city would provide priority funding for social and cultural areas, seven breakthrough programs and key projects, and introduce new ways to attract investment capital. Some key economic goals approved at the session on December 1 are GDP growth of 8.4-8.7%, total investment at 36% of GDP, and 50,000 startups Su Ngoc Anh, director of the HCMC Department of Planning and Investment, said total capital for investment and development in the city this year was VND310 trillion. In particular, 8% of the sum comes from the municipal budget, 11% from State-owned enterprises, 17% from foreign-invested enterprises, and the remainder from other businesses and citizens. With total investment accounting for 35% of GDP in 2017, the figure will amount to VND400 trillion, a three-fold increase from the average of previous years. Given a reduction of VND10 trillion in shared budget revenue, all major budget expenditures must be approved by the municipal People’s Council. The local budget should be prioritized for ODA-funded projects and used as seed capital for public-private partnership (PPP) projects, among others. Pham Phu Quoc, general director of HCMC Finance and Investment Co. (HFIC), proposed the municipal government create easy conditions for the formation of private investment funds for infrastructure development, thus easing the financing burden for the city. Finance Ministry talks to southern businesses The Ministry of Finance, the General Department of Vietnam Customs and the General Department of Taxation yesterday held a dialogue with over 400 businesses in the southern region, listening to their difficulties and opinions for better services. The dialogue was held in Ho Chi Minh City which is the economic hub of the country. Hoa Binh Refrigeration Electrical Engineering and Trading Company, importing water heaters for sale, said that in July the company unexpectedly received a decision of ten-day inspection from customs agency who wanted to check to all import documents of the company for the last five years. The inspection largely affected the company’s operation because it had to supply and print out a pile of documents. Import water heaters were not levied taxes until June 29, 2016 but a circular was issued to change the product’s code making it belong to the taxable list. Inspectors said that the company used a wrong code for the product and make a decision to fine the company and collect tax arrears totaling VND3.5 billion (US$154,000). It was forced to pay the penalty and arrears to prevent operation stagnancy and damage from signed contracts. Mr. Vu Ngoc Anh, deputy head of the General Department of Vietnam Customs, said that businesses must keep their documents within five years after customs clearance and authorized agencies are entitled to inspect the documents to prevent budget losses. He urged customs agencies to return the tax they had collected for Hoa Binh Company. Can Tho city based Kim Xuan Company importing steel to make export items said that according to regulations, these items are exempt from taxes but the company has to pay safeguard duty. A representative from the General Department of Vietnam Customs answered that the new anti-dumping tax has been issued by the Ministry of Industry and Trade. Customs agencies just collect the tax in advance. Afterwards they will inspect to determine if the company dumps goods. If the company does not, the agencies will give it drawback. However the answer did not satisfy the company so deputy minister of Finance Vu Thi Mai said that she would talk to the Ministry of Industry and Trade about the issue. At the conference, businesses say that the lump sum tax policy to individual business households is unfair. Some earn high turnover but pay a low amount of the tax because they have not invoiced. Hence businesses proposed the Ministry of Finance to uniform regulations forcing all individual business households as well as businesses to issue invoices for an item sold at the price of VND200,000 and higher. Soc Trang province Food Association said that when tax refund exceeds VND40 billion ($1.76 billion), businesses will receive the rebate first and tax agencies will inspect later. In fact the agencies have reversed and much slowed down the process. Enterprises have to pay fines for late tax payment, so why officials have not been penalized for slowing the tax refunding, asked an association representative. In response, deputy head of the General Department of Taxation Cao Anh Tuan said that it was wrong for tax officials to inspect before refunding tax when the amount tops VND40 billion. He promised to look over and tackle the issue. Khuong Mai Steel Company said that tax agencies raised it difficulties in tax refund. Deputy Minister Vu Thi Mai asked the HCMC Taxation Department to have a specific answer. Mr. Nguyen Nam Binh, deputy head of the agency said that inspections found that 70 percent of the company’s purchasing invoices, attached in documents it filed to propose tax refund, were from 13 shutdown companies. In addition, the company refused tax agencies’ requirement to examine its warehouse. Therefore they have transferred the case to investigation agencies, he said. Deputy Minister Vu Thi Mai said that the Government creates the best conditions for businesses to develop. However they will be strictly handled in accordance with the law if breaking regulations. Indirect foreign investment increases this year   While foreign direct investment capital slightly reduced for the last 11 months because of no large certificated projects, indirect foreign investment was found accelerate via capital contribution and share purchase, reported Foreign Investment Agency under the Ministry of Planning and Investment.  Specifically, foreign investors contributed capital to and purchase shares of 2,194 businesses with the total registered capital of US$22 billion, a year on year increase of 8.9 percent. Since early this year, the disbursement rate of FDI projects reached $14.3 billion, up 8.3 percent over a year back. FDI capital is forecast to slightly increase in the next couple of years and approximate $24 billion in 2017 with disbursement hitting $15.5 billion, up 3 percent over 2026. Taiwanese businesses visit HCMC to tighten economic cooperation Taiwanese businesses from over 15 countries has been visiting HCMC to tighten economic cooperation and exchange with local firms, share small and medium enterprise (SME) connectivity and market development. Being part of a string of activities during their visit to the city, a SME connectivity forum was hosted by HCMC and Taiwan Young Entrepreneur Associations yesterday afternoon.  According to chairman of the Taiwanese association Wo Kuo Pen, information access to Vietnamese business environment has no longer been a barrier for foreign companies including Taiwanese firms.  He hoped that the visit will help Taiwanese businesses find more cooperation and development opportunities in HCMC and Vietnam and that Vietnam will create the best conditions for them to set their mind at rest and keep investing in the country. On the same day, 100 Taiwanese firms planted 500 trees in Long Thanh commune, Can Gio district to raise businesses’ awareness of environmental protection. Export import turnover reaches $300 billion The export import turnover of Vietnam hit US$300 billion by mid November this year, up 5.3 percent equivalent to $15 billion over the same period last year, reported the General Department of Vietnam Customs. Of the number, export value reached $151.5 billion, up 7.5 percent and import touched $149 billion, up 3.1 percent. Import volume increased to the group of machines, equipment, accessories and plastic material and reduced to soybean, cashew nuts, transport facilities, accessories, computers, electronic items and components. Equitization of state owned enterprises earn $290 million for budget this year Fifty six state owned enterprises (SOEs) have been equitized, bringing VND6,569 billion ($290 million) since early this year. Specifically these enterprises’ total real value hit VND34,017 billion, of which the government has withdrew VND3,558 billion from the companies, bringing $290 million. The Prime Minister is about to approve the state owned enterprise restructuring project in the phase of 2016-2020, which will prompt ministries, agencies and businesses to increase transparence, publicize equitization information and intensify inspection over the process. The Ministry of Finance has proposed state capital representatives at equitized enterprises to speed up them to list on the stock market as per regulations. Authorized agencies should strictly handle enterprise leaders who implement the equitization project inefficiently. Binh Son to finance refinery expansion from stellar loan package Binh Son Refining and Petrochemical Co., Ltd. (BSR) plans to take up a loan $1.2 billion to enhance and expand its Dung Quat Oil Refinery. The company is in the process of selecting an adviser for the loan package.  General director Tran Ngoc Nguyen told Vnexpress that the expansion is expected to be completed in 2020 with a total investment capital of $1.82 billion, 30 per cent of which will be equity and the remaining 70 per cent would be covered from loans.  Upon completion, the expanded refinery’s capacity will increase by two million tonnes a year, to 8.5 million tonnes. It will be able to meet half of Vietnam’s fuel demand.  Earlier, in September, BSR released plans to launch its initial public offering (IPO) at the end of 2017, attracting interest from top global energy firms, especially Russian and Thai conglomerates.  The company is also hiring consultants to build its equitisation plan and calculate its corporate value, as well as the auctioned shares’ price. The Prime Minister’s decision to allow BSR to calculate its own selling price will create a platform for attracting domestic and foreign investors to the company’s IPO. Since commercial operations began at the refinery in February 2009, BSR has imported 47 million tonnes of crude oil to produce 42 million tonnes of products, including propylene, polypropylene, liquefied petroleum gas, and gasoline, as well as kerosene, diesel, and jet fuel. Nine months into the year, BSR earned VND51.89 trillion ($2.32 billion) in revenue, equalling 63 per cent of the annual target, however, it achieved a VND1.04 trillion ($46.5 million) profit, equalling 130 per cent of the target. ILA Vietnam’s shareholders seek $150 million from sale      The Hong Kong-based investment fund HPEF Capital Partners and other shareholders are seeking to sell their ownership of the education company ILA Vietnam, Bloomberg reported early this week. HPEF Capital Partners, with a 60 per cent stake in ILA Vietnam, and other shareholders are seeking at least US$150 million from the sale. The sale is expected to draw attention from both international equity firms and education firms. The first-round bids could be due by the end of this year. ILA Vietnam declined to comment. According to local newspaper Nhip Cau Dau Tu, the $150 million deal is 15 times the Viet Nam-based English training establishment’s earnings before interests, taxes, depreciation and amortisation. The consultancy company for this deal could be the Singapore-based Rippledot Capital Advisers. The rate is much comparatively higher than that of all merger and acquisition (M&A) activities happening in 2016 and equivalent to that of M&A activities in the United States. HPEF Capital Partners used to be the private equity unit of the British financial and banking services company HSBC. The Hong Kong-based fund split from HSBC in 2010 with the name Headland Capital Partners. Headland Capital Partners bought 60 per cent of ILA’s stake from the founders in 2013, and the value of the deal has remained unknown. ILA Vietnam, which was founded in 2001, is running 31 English training centres in six big cities of Viet Nam and employing more than 400 foreign teachers. The company has admitted about 165,000 learners so far. According to Dezan Shira & Associates, Viet Nam is an attractive market for foreign investment in the education sector with 42.1 per cent of the population being under the age of 24. In 2015, nearly 110,000 Vietnamese students enrolled in other countries, costing total $3 billion. In the country, total value of foreign direct investment (FDI) was also $3 billion by November 2015. Private equity funds have also invested in Viet Nam’s education sector. In 2004, International Finance Corporation – a member of the World Bank – invested $7.25 million in the Australian-owned RMIT University. In 2010, the HCM City-based Mekong Capital invested $6 million in the Vietnam-Australia International School.  Online Friday 2016 report surge in sales      The total sales of 30 large companies on Online Friday 2016, falling on December 2, reached VNĐ664 billion (US$28 million), triple the sales compared to last year’s event. Some companies reported sales that were 10 times higher than last year. The Việt Nam E-Commerce and Information Technology Agency (VECITA) revealed that the country’s biggest online shopping day saw more than 700,000 customers visiting the websites of participating companies during this year’s event. Over 3,000 companies took part in the day, by offering discounts on 360,000 products and services. Big firms in the e-commerce sector, such as Lazada, Tiki, Adayroi, Hotdeal and Sendo, reported higher sales of 200-300 per cent, in comparison with normal days. The Omni-channel, including FPT Shop, Viettel Store and Pico, had increasing numbers of orders, both online and offline. Some new businesses participating in the e-commerce market, such as Lotte, also saw sales 10 times higher than normal. More than 50,000 shoppers joined in activities hosted by 20 firms in the BigOff event, organised by Viettel, VnPost, Lazada, Tiki, Sendo, Lotte, Adayroi, Acer, Asus, Oppo, HP, and Nagakawa. The event took place along pedestrian streets around Hồ Gươm Returned Sword Lake in the centre of the city from December 1-3. The number of complaints in the Online Friday 2016 was reduced from the fall Online Shopping Day 2016, which was on September 30, despite higher numbers of both businesses and visits. Also, banks and credit institutions implemented cash-back, with a total of more than VNĐ2 billion.  Quang Ninh develops local tourism brand The northeastern province of Quang Ninh, with mainland and sea surface coverage of 12,000 sq.km and a 1.2 million population, is described as a “mini Vietnam” thanks to its special topography characteristics similar to the country’s. Quang Ninh is known as the only province sharing overland and coastal border lines with China and possessing an important and most vibrant trade gateway with China and ASEAN member states. Blessed with favourable natural conditions, Quang Ninh has an edge over its golden population with more than 60% in working age, 63% of them are skilled workers who are hard-working, creative, disciplined and professional-mannered.  Over the past time, Quang Ninh has made great leap with creative and breakthrough mind, particularly in administrative reform, renewal of economic growth model, business climate improvement, transport infrastructure, and tourism.  In order to attract more foreign investment, the province has performed several important tasks, including making important planning from the district to the provincial level. It has officially announced seven strategic master plans until 2020 with a vision till 2030.  More attention will also be paid to socio-economic infrastructure, particularly in modern urban areas, industrial and economic zones. Trade, tourism, health care and education infrastructure up to international standards will be developed to meet investors’ expectation.  The province commits to all possible support to investors by taking practical measures to improve the business climate.  It is building Van Don special economic zone – the first of its kind in the country, which is entitled to special incentives involving finance-banking, securities, taxation, land and housing. A high-end tourism-services complex which accommodates a casino (Vietnamese entry is allowed), together with entertainment, cultural, financial-banking, hi-tech and ecological agriculture industries, is also planned for. Vietnam lottery firms eye new products amid harsh competition from computerized rival Lottery companies in southern Vietnam have announced plans to introduce new products to combat the skyrocketing popularity of the computerized lottery c 6/45. While sales of traditional lottery tickets in Vietnam tend to climb towards the end of the rainy season, lottery companies in southern Vietnam have witnessed an opposite trend this year, with sales continuing to drop in December, according to Do Quang Vinh, chairman of the Southern Lottery Council. Vinh attributed the plummet in traditional lottery ticket sales to the increasing popularity of the computerized Mega 6/45 lottery run by state-owned Vietnam Computerized Lottery Co. Ltd. (Vietlott). The Mega 6/45 lottery came to public attention after its first jackpot winner bagged over VND92 billion (US$4.11 million) in prize money, followed by four multimillion-dollar jackpot wins in under a month. Traditional companies in southern Vietnam have seen a drop of between three and over ten percent in their daily revenue and are facing the looming prospect of not being able to fulfill this year’s quota on state budget contribution. According to Vinh, southern lottery companies are looking to build an official website to publish information on the companies’ business reports, jackpot wins, state budget contributions, and other charitable activities for the people to monitor. In addition, the companies are also considering implementing new types of lottery games into their portfolio. Administrators of the traditional lottery in southern Vietnam last month announced that it would next year raise its jackpot prize money to VND2 billion (US$89,300) from the current VND1.5 billion (US$67,000), a move considered its answer to stiff competition from Vietlott. In the first nine months of 2016, lottery companies in southern Vietnam made over VND50.6 trillion (US$2.26 billion), nearly half of which (US$1.1 billion) was spent on prize payouts. Vinamilk aims for US$3 billion in annual revenue for 2017 The dairy firm is expanding in the domestic and overseas markets. Vietnam Dairy Products Joint-Stock Co., the nation’s largest dairy producer, is expanding rapidly overseas in a bid to boost its annual revenue to US$3 billion in 2017. Last year, Vinamilk posted US$1.7 billion in revenue, up 14% year-on-year and close to its US$2 billion target. If it hits the revenue target in 2017, Vinamilk will break into the list of the top 50 milk producers in the world. The dairy firm has also set a growth target of 8% over the next five years by expanding in the domestic market and boosting exports. Under the plan, Vinamilk will expand its overseas business to account for half of its total revenue in the next five years. The dairy firm has unveiled plans to gain a strong foothold in Asia through mergers and acquisitions after 40 years of focusing on the domestic market. Vinamilk is speeding up its international expansion through acquisitions and investments in local dairy plants, including the purchase of a 22.8% stake in the Miraka plant in New Zealand, a 70% stake in Driftwood, a U.S producer, and a 51% stake in the Angkor plant in Cambodia. The Vietnamese dairy firm reported revenue of over US$1 billion in the first half of 2016 and US$222.6 million in net profit, up 33% from the same period last year. State investment arm SCIC, which holds a 44.7% stake in Vinamilk, said it will sell a 9% stake in Vinamilk for at least US$829 million on December 12, offering a minimum bidding price at VND144,000 (US$6.3) per share earlier this week. Boosting Vietnamese exporters to develop sustainably Foreign direct investment export businesses in Vietnam are contributing a great deal to national economic development. But the Vietnamese government still needs new policies to help domestic exporters to reduce dependence on the foreign invested sector.  Over the past 10 months, FDI enterprises earned more than US$100 billion from overseas exports, up 8% from last year, garnering more than 70% of Vietnam’s export revenue. This helped Vietnam record a trade surplus of US$3.52 billion over 10 months and reduced its trade gap. Economist Luu Bich Ho says domestic exporters should consider FDI a boost to growth that will eventually make them less dependent on FDI. “FDI plays an important role in Vietnam’s exports and industry. In the future, on one hand we’ll continue to attract more FDI, especially in the industrial and agricultural sectors. On the other hand we must try to encourage domestic companies to contribute more to production and exports”, Ho noted. It’s impossible to deny the benefits FDI has brought to the Vietnamese economy. But in the long run, Vietnam needs to lessen its dependence on FDI companies. Economist Nguyen Minh Phong advised Vietnamese enterprises to find ways to improve their competitiveness to meet the strict requirements of foreign partners and the current integration. “If we can make full use of FDI, that capital will help connect the national economy with the global supply chain. Regarding environmental pollution and labor disputes, state management agencies should refine the legal system to reduce risks and direct FDI flows and FDI activities to achieve set targets. In that way, we can reduce unsustainable pressure,” said Phong. Nguyen Van Toan, Vice President of the Vietnam Association of Foreign Invested Enterprises, said “It’s best if FDI companies which have been doing business for a long time in Vietnam and have wide spread influence can connect export value chains with Vietnamese businesses. On the other hand, if that link isn’t established, efforts to attract foreign investment in Vietnam will be meaningless.” Vietnam vulnerable to US restrictive trade stance A more restrictive trade stance by a Trump administration is likely to hurt exports and investment in a country like Vietnam, HSBC said in a report released on December 1. Britain’s vote to leave the European Union triggered economic and political changes. And now Donald J. Trump’s stunning win in the U.S. election is raising risks of trade protectionism. Although it is too early to know about the specific policies Trump will pursue, for Asia, if he does what he promised during the presidential campaign, there would be cause to worry. A more restrictive trade stance by the U.S. is likely to hurt exports and investment in a country like Vietnam, where the U.S. accounts for about a fifth of its exports. The U.S. and China are Vietnam’s largest trading partners. Last year, America accounted for 21% of Vietnam’s exports and China 10%. Therefore, if America begins to throttle back imports, Vietnam’s exports would be hurt. China could also feel the brunt of an American restrictive trade stance. If that happens, Chinese demand for Vietnamese imports might decrease as well, especially for components used for re-exports from China to America. The indirect effects of more restrictive U.S. trade policy could thus lead Vietnam’s exports to slow down. The report said the current state of affairs underscores the need for reform. “We think that Vietnam rightly remains committed to its structural reform agenda. The National Assembly adopted three reform targets for 2016-2020, relating to public investment, State-owned enterprises and financial institutions. Financial institutions will be strengthened by speeding up bad debt divestment and having at least 12 to 15 commercial banks in compliance with Basel II standards,” the HSBC Global Research team said. “We believe that if pursued properly, the gains from these reforms will have far reaching consequences in strengthening the fundamentals of the economy. In turn, the economy should find itself less vulnerable to external shocks.” According to the General Department of Customs, America is a key market for Vietnam’s major export items like apparel, footwear, seafood and wood. In January-October, Vietnam earned some US$19.68 billion from outbound sales of textile-garment products, up 4.1% from a year earlier, with exports to America making up over 48% of the total.      America is Vietnam’s biggest importer of seafood and wood with respective export revenues of US$1.2 billion and US$2.52 billion in the ten-month period, accounting for 21% and 50% of Vietnam’s total. Vietnam’s coal exports down in ten months Vietnam exported 827,500 tons of coal during the first 10 months of this year to earn US$83.4 million, down 45.94% in volume and 48.63% in value, according to the statistics from Vietnam Customs. Coal was shipped to nine countries, principally to Asia, accounting for 90% of total export volume. Japan led the pack for Vietnam’s coal imports with 421,600 tons at US$40.7 million, making up 53%, trailed by the Philippines with 106,500 tons at US$7 million and Malaysia with 83,000 tons at US$10.6 million. In the reviewed period, 78% of export markets saw declines while merely 22.2% enjoyed positive growth. It’s worth noting that coal exports to Laos dropped sharply by 95.58% in volume and 96.55% in value with 3,000 tons at US$272,300. Quang Ninh heats up with investment flows The northern province of Quang Ninh has proved its attractiveness to both domestic and foreign investors, which can be seen in the flow of investment in recent years. During the past two years, Vingroup, a big domestic real estate  firm, has launched two massive projects in Quang Ninh, including the Vincom Ha Long shopping centre, worth 1.1 trillion VND (48.4 million USD) and the Vinpearl Ha Long Bay Resorts on Reu Island valued at 1.2 trillion VND (52.8 million USD).  The group also planned to build a complex of shopping centre, service and apartment on an area of 4,000 ha in Quang Yen. Meanwhile, it has plans to pour over 2 billion USD in developing the project Ha Long Marina in Ha Long, which has been carried out for the past three years and will continue in upcoming years. As of beginning of this year, FLC Group set its hallmark in Quang Ninh with the project FLC Ha Long with a total investment of 3.4 trillion VND (149.8 million USD). Covering an area of 224 ha, the project includes a 18-hole golf course, a 1,500-seat international convention centre, a five-star hotel and luxury resort villas. The locality also attracts foreign big names such as ISC Corp, Wyndham and Starwood from the US, Amata of Thailand and Nakheel Properties of the UAE. The provincial Department of Planning and Investment reported that there were 111 valid foreign direct investment (FDI) projects with a total registered capital of 5.1 billion USD in Quang Ninh as of the beginning of this year. The locality’s provincial competitiveness index (PCI) has jumped to the third place from the 20th among 63 provinces in the past three years, according to Vietnam Chamber of Commerce and Industry (VCCI). Quang Ninh’s PCI is now the top of the northern region. Dau Anh Tuan, Head of VCCI’s Legal Department and Director of the national PCI programme, said the indices on leaders’ dynamism and business support service of Quang Ninh are better than those of other provinces. He also noted that the provincial administrative centre model has been effective and offered favourable conditions to investors. Work starts on 63.4 mln USD wood processing factory in Ha Tinh   Construction on a 1.44 trillion VND (63.4 million USD) wood processing factory commenced in the central province of Ha Tinh on December 3. Invested by the Thanh Thanh Dat Joint Stock Company, the facility will be built on an area of 18 hectares in the Vu Quang industrial cluster in Vu Quang district. Designed to have the annual capacity of 120,000 cubic metres of medium-density fibreboard (MDF) and 2,400 cubic metres of wood slats, the factory is expected to start operation in the fourth quarter of 2019. The project aims to fully tap the local forest potential in line with the province’s planning for forest development for wood processing from 2013 to 2020, and a vision through 2030. Addressing the groundbreaking ceremony, Chairman of the provincial People’s Committee Dang Quoc Khanh urged sectors and the district People’s Committee to work closely with the investor to accelerate land clearance for the project. The investor was asked to ensure the progress of the project and prioritise recruiting local labourers once it becomes operational. Set up 14 years ago, Thanh Thanh Dat Company now has 25 factories across the nation, with 2,500 employees. Its revenues reached 2.16 trillion VND (95.04 million USD) in 2015. G-bond sales almost meet full-year target The Ministry of Finance had issued over VND277 trillion of Government bonds by end-November, meeting over 98% of the 2016 plan. G-bond sales in the rest of the year are not a difficult task though the U.S. dollar’s appreciation against the Vietnam dong over the past fortnight has discouraged credit institutions from acquiring bonds and caused bond yields to edge up.  This year’s bond sales were initially targeted at VND220 trillion and the figure was then revised up to an all-time high of VND281 trillion. The Finance Ministry has offered seven-year bonds for the first time this year. Positive bond sales help ease pressure on budget collections. The bond market’s growth backs debt sales though the Government’s plan to issue at least US$3 billion of sovereign bonds on world financial markets this year is effectively canceled due unfavorable market conditions. The State Treasury on December 1 sold VND2.9 trillion of five-year bills with the winning coupon of 5.25% per annum, 0.05 of a percentage point higher than at the November 23 auction. It put up for sale VND3 trillion of five-year bills and VND1 trillion of seven-year debt. Last week, the State Treasury fetched over VND1.37 trillion from G-bond sales with a tenor of five years. However, the winning coupon climbed from 4.9% per annum at the November 4 auction to 5.25% per year last week. Vietnam Bank for Social Policies and Vietnam Development Bank also held auctions of G-bonds but found no buyers. Overall, G-bonds worth a total of VND109 trillion fell due while VND165 trillion of bonds were issued last week. On the secondary G-bond market, the average transaction value inched down to VND5.7 trillion per session last week from VND6 trillion in the previous week. Banks mainly sold three- and five-year bonds to take profit.  Annual bond yields dropped slightly to 3.9% for the one-year tenor, 4.4% for the two-year tenor, 4.9% for the three-year tenor, 5.3% for the five-year tenor, and 6.2% for the 10-year tenor. Foreign investors net sold over VND2 trillion of bonds, sending their net purchases dipping to VND12 trillion in the year to date. Nevertheless, it is likely that foreigners will be net buyers on the domestic bond market this year. Tax agency finds difficult to combat e-commerce transfer pricing Legal limitations as well as loose and asynchronous coordination among authorized agencies have made it difficult to manage e-commerce and combat transfer pricing in Vietnam, said the General Department of Taxation at a conference in HCMC on December 1. Tax agencies have been able to manage businesses attending e-commerce not individuals. Deputy Head of the department’s Reform and Modernization Division Nguyen Thi Hanh said that e-commerce has advantageous conditions to operate in Vietnam with strongly developed IT infrastructures, over 40 million internet users and 130 million mobile subscribers. E-commerce has attracted the attendance of many businesses under different types comprising online games, goods trading and advertisement. Online goods purchase has become the habit of many citizens while businesses have sped up online trading to reduce costs. Still the quick development of digital technology in accordance with e-commerce has posed many challenges to management works. E-commerce via internet has raised difficulties in determining prices and impose taxes. It neither requires much goods stockpiling nor have time and premise limitations with 24/7 cross border transactions. Goods owners can trade under the state of anonymity and delete transaction information to prevent tax agencies from inspecting their activities. Director of Financial Training Institute Hoang Tran Hau said that transfer pricing combat was not easy even in developed nations like Britain, the US, Japan and South Korea, where have tight legal and modern information systems, abundant database and good agency coordination. In Vietnam, tax agencies have met with difficulties in determining e-commerce revenues and costs of businesses and individuals. So far, the General Department of Taxation and tax agencies have applied Circular 66 issued on April 22, 2010 with detailed regulations on transfer pricing fighting. Some fraud cases have been spotted and inspected. Vietnam has also signed agreements against double taxation. In addition, the General Taxation Department has established a division in charge of transfer pricing by businesses. Tax officials have been supplied and trained with basic knowledge and skills to combat the issue in e-commerce activities. However authorized agencies should improve the legal system and better coordinate together to prevent e-commerce attendeees from taking advantage of loopholes to dodge the law and evade taxes. The Ministry of Finance is now working with authorized agencies to study and issue a slew of legal documents to fight tax fraud and evasion via e-commerce transfer pricing. They will also speed up building policies to suit the reality of the activity and better management to prevent budget losses. VMG sells entire stake to South Korean company      VMG Group on Thursaday announced it will sell its entire 62.25 per cent stock in VNPT EPAY to South Korean UTC Investment Company. The transfer agreement is expected to be completed in 2017. After withdrawing its investment from e-commerce, VMG will continue to divest from the payment sector to focus on digital content – its main business in the past few years. Established in 2008, VNPT EPAY has rapidly become one of the companies with continuously high growth rate in e- payment. UTC Investment Company has managed seven investment funds with total value of US$100 million. It has been successful in investing in e-payment firms in South Korea. With UTC’s investment, VNPT EPAY will have opportunities to further develop its new payment services and expand its operation to foreign markets.  Nonghyup Bank opens branch in Hanoi South Korea’s largest bank Nonghyup Bank has received an official license from the State Bank of Vietnam (SBV) to open a branch in Hanoi. Founded in 1961 in Korea, Nonghyup is a co-operative bank with 100 per cent of the capital contributed by farmers and local people. Nonghyup is both a commercial bank and an agriculture policy one to provide credit services for households and businesses, contributing to the Korean economy through credit financing in the field of rural agriculture. Since 2012, Nonghyup Bank has had the representative office in Vietnam. With the branch official establishment in Hanoi, Nonghyup Bank will participate in Vietnam financial market with full functions of a commercial bank and continue supporting economic development of Vietnam and activities of both countries’ businesses. Speaking at the launching ceremony in Hanoi, Lee Woo Sik, CEO of Nonghyup Bank – Hanoi Branch said: “The opening of Nonghyup branch in Hanoi not only supports financial resources for Korean entrepreneurs in Vietnam but also contributes to the financial development of both countries through interbank cooperation projects. Besides, we will always expand corporate social responsibility (CSR) activities with a wish to contribute to the prosperity of Vietnam.” Over the years, Nonghyup Bank is known with the motto "sharing economy" in order to improve social welfare of farmers and disadvantaged people. Moreover, the bank is at the forefront of sustainable rural development through many meaningful activities. In particular, with Nonghyup Foundation established in 2004, the bank has implemented diversified CSR activities. Nonghyup Bank has been chosen as the No.1 in CSR activities for five consecutive years in South Korea. At present, Nonghyup Bank is implementing many CSR activities to support Vietnamese brides in multicultural families and focus on mountainous areas of Vietnam. In the future, the bank will continue deploying various CSR activities in order to support Vietnamese community, especially the activities to support Vietnamese brides and the volunteer activities in drural areas in coordination with the local community. Recently, Nonghyup Bank is one of six South Korean enterprises in Vietnam awarded with the 6th CSR Award, held by the Ministry of Planning and Investment in collaboration with Korean Embassy in Vietnam and Korean Trade Investment Promotion Agency (KOTRA).  The Grand Ho Tram Strip’s Michael Kelly elected to board of Amcham Vietnam Recognising dynamic potential of Vietnam’s economy and the importance of enhancing commercial and investment links with a change in US administrations, members of the American Chamber of Commerce (AmCham) in Vietnam have elected executive chairman of The Grand Ho Tram Strip Michael Kelly to the organisation’s board of governors for the year 2017. Kelly, who resides in Vietnam, will be the highest-ranking American executive serving on this board and will play a prominent role representing US business interests in the country to both US and Vietnamese policymakers.  Since being appointed executive chairman of The Grand Ho Tram Strip – Vietnam’s leading integrated resort situated in the southern province of Ba Ria-Vung Tau – in late 2015, Kelly has been a driving force behind the acceleration of investment and developments in the project.  Bringing to The Grand Ho Tram Strip over 25 years of senior leadership experience in the hospitality and gaming industry, including time spent managing a joint partnership project with Trump Entertainment Resorts from 1996 to 2004, Kelly immediately initiated a number of new developments to expand the resort’s offerings to both domestic and international visitors.  Among Kelly’s achievements was hosting the Ho Tram Open – Vietnam’s first Asian PGA Tour golf tournament – at The Grand’s award-winning golf course, The Bluffs, in December 2015. The event was the largest sporting event in Vietnam’s history, with coverage reaching viewers in 180 countries, and firmly established Ba Ria-Vung Tau as a go-to destination for golfers and international tourists alike.  As chief executive of one of the largest foreign invested projects in Vietnam, Kelly has placed substantial emphasis on aligning developments at The Grand Ho Tram Strip closely with the goals of the government of Vietnam, serving as a role model for foreign businesses operating in the country.  Given its substantial investments and wide network of industry partners, The Grand Ho Tram Strip is also one of the most prominent US investments in Vietnam, and in the past year, Kelly has played a leading role in supporting the growth of US-Vietnam commercial ties. Notably, in May of this year, Kelly was honoured to be part of an investment promotion event attended by President Obama during his historic visit to Vietnam, during which The Grand Ho Tram Strip’s partnerships with domestic giants CotecCons and VietJet were featured.  Kelly also serves as the chairman of the tourism committee for the AmCham in Vietnam. In the several short months since his appointment in September 2016, he has already made his mark in this role through his work with The Grand Ho Tram Strip in support of the government of Vietnam’s tourism promotion and investment expansion initiatives. Forecast: 100 million Vietnamese by 2026 The value of agro-forestry-fishery exports in November is estimated at US$2.69 billion, pushing the total value in the first 11 months of the year to $29.1 billion, according to the Ministry of Agriculture and Rural Development (MARD). This figure marks an increase of 5.9 per cent over the same period last year, it reported. The export of major agri-products like coffee, pepper, rubber and tea continued to grow. Coffee grew the most with export volume of 1.6 million tonnes worth $2.98 billion in the January-November period, an increase in volume and value of 36.1 per cent and 24.3 per cent, respectively against the same period last year. The domestic pepper industry saw a year-on-year 11-month growth of 36.7 per cent in export volume to 170,000 tonnes, and a 15 per cent rise in value to $1.37 billion. China continues to be the largest importer of Vietnamese rice at 36 per cent of rice exports. But about 4.54 million tonnes of rice worth $2 billion were shipped until November, a year-on-year drop of 25 per cent in volume and 20.3 per cent in value. The ministry said the fall in rice exports was due to lower demand on the world market, and a domestic market over-supply. In the wood and wood products market, Vietnamese businesses earned $6.2 billion from exports in the first 11 months of the year. The US, Japan and China remained the top three largest importers, accounting for 69 per cent of the sector’s total exports. MARD statistics also show that seafood export value increased by 6.9 per cent to $6.4 billion in the January-November period. The US, Japan, China and South Korea were the four largest importers, accounting for 54.1 per cent of the total value. Seafood exports to China, the Netherlands, the US and Thailand rose 47.7 per cent, 16.1 per cent, 13.1 per cent and 12.6 per cent, respectively. The quality of products has been an impediment to export growth, officials say. Speaking at a forum on food safety and hygiene held in Ha Noi last week, deputy head of the Ministry of Trade and Industry (MoIT)’s Trade Promotion Agency, Do Kim Lang, said the country was facing difficulties in exporting agro, forestry and seafood products, partly due to strict quality regulations in the importing markets. Lang blamed this on the lack of close links between the production process and the market, and between businesses and farmers. He said this meant products were of uneven quality, with some containing antibiotic and chemical residues, not meeting food hygiene and safety standards. “Many Vietnamese businesses have had to take back their export products; several importers have even visited Viet Nam to warn ministries and agencies that the country’s exports can come to a standstill until problems regarding antibiotic and high chemical residues are solved,” said Lang. Le Thanh Hoa, deputy director of the Viet Nam Sanitary and Phytosanitary Notification Authority, said enterprises should inspect and supervise food safety in production chains, instead of the current practice of checking finished products.  VEF/VNA/VNS/VOV/SGT/SGGP/Dantri/VET/VIR