BUSINESS IN BRIEF 4/3
Bac Ninh gives nod to $100 million project
The northern province of Bac Ninh Province on Thursday gave the go-ahead to a US$100 million project by South Korean firm Hanwha Techwin Security Company.
The provincial People’s Committee granted an investment certificate to the firm, which specialises in manufacturing electronic circuits, semiconductors, chips, computers and cameras. The unit will be built on a six-hectare plot in Que Vo Industrial Park.
Bui Hoang Mai, head of Bac Ninh’s Management Board of Industrial Parks, said that in the 2015-20 period, the province was prioritising the electric, electronic and mechanical manufacturing sectors. He expressed hope that the new project would generate more jobs for locals and contribute to the region’s socio-economic development.
Nguyen Tu Quynh, the committee’s chairman, reiterated that the province would create optimal conditions for investors.
Yang Jinseol, a representative of the company, promised that the factory would be built quickly and would start operations as scheduled.
In the first two months of this year, Bac Ninh has attracted $2.7 billion in foreign direct investment (FDI). On February 24, it granted an investment licence to Samsung Display Viet Nam Co. Ltd.’s $2.5 billion expansion project.
As of this February, industrial parks in Bac Ninh have attracted 1,086 projects with a registered capital of $15.87 billion, of which 659 are FDI projects worth $14.13 billion. These projects created jobs for around 230,000 workers and contributed VND7 trillion ($306.7 million) to the State budget in 2016.
Vietcombank branch in Bac Giang to support startups
A branch of the Bank for Foreign Trade of Viet Nam (Vietcombank) in the northern province of Bac Giang has committed to set aside a credit package to support startups.
The package, worth VND1 trillion (US$44.4 million), is offered under a cooperation agreement signed between Vietcombank Bac Giang and the provincial Department of Planning and Investment on Wednesday.
Under the agreement, the department will link the bank with customers planning new investment projects and seeking loans.
Short-term loans will be provided with interest rate of 7 per cent per year, while medium and long-term loans will have interest rates starting from 8 per cent per year.
The bank has promised to help clients by disbursing capital in a convenient way.
It will also actively participate in economic forums, investment conferences and dialogues with enterprises organised by the department and give firms advice on how to access loans and use banking services efficiently.
After signing with the department, Vietcombank Bac Giang also inked cooperation deals with several startups that were recently established this year and some companies launching new projects in the locality.
Nguyen Van Linh, chairman of the provincial People’s Committee, said he hoped the two sides would fulfill their commitments well so that the cooperation agreement provided considerable support to enterprises.
Number of Vietnamese millionaires to increase
A wealth report by leading UK independent real estate consultancy Knight Frank showed that Vietnam is among the countries with the fastest rise in the number of USD millionaires.
Last year, Vietnam had 200 millionaires with assets of over USD30m. This number increased by 32 people compared to 2015 and 50 people on 2014.
According to Knight Frank, this trend is increasing, reaching 170% compared to previous year's 140%. This rate is considered the fastest in the world, higher than India's 150% and China's 140%.
Similar to Forbes, Knight Frank also only recognises one USD billionaire Pham Nhat Vuong, chairman of Vingroup.
In term of the Vietnam stock exchange, the richest billionaire title belongs to Trinh Van Quyet, chairman of the FLC Group. Quyet's total assets on the Vietnam stock exchange on November 14 were valued at over USD1.4bn.
According to experts, there are "hidden" billionaires whose assets haven't been listed yet such as the CEO of Vietjet Air Nguyen Thi Phuong Thao.
Knight Frank predicts that Vietnam would make an increasingly large contribution to the growth of USD millionaires in the Asia. It also said that in the next decade, Vietnam will have three USD billionaires and the number of USD millionaires will increase from 14,200 to 38,600 people.
The number of billionaires in the world has reached over 2,000 last year. Most of the super-rich people are in North America and Europe, followed by Asia. The number of super-rich people in Asia may surpass Europe in the future.
Ambitious hi-tech project comes to Danang
Danang Hi-tech Park Management Authority has issued the investment certificate for QCM Technologies to construct its Centre for Embedded and Automation Systems applied in fisheries and agriculture industries.
The project is aimed at conducting research and development as well as piloting projects to transfer new automation technologies into the industries of agriculture, forestry, and fish processing.
In addition, the facility will aim to create high technologies to replace those imported from overseas.
The project will be set on a land area of 5,321 square metres and conducted in two phases. Specifically, the first phase, which is scheduled to start operating in September 2017, has a designed capacity of 50 products per annum. The capacity will be doubled by the second phase.
The total investment capital for the project is approximately VND50 billion ($2.19 million).
Tax agency criticized for poor inspection work
The inspection work of the General Department of Taxation in 2012-2014 contained several shortcomings and mistakes that affected the interests of businesses.
This is a conclusion of the Government Inspectorate of Vietnam published on Monday. In this conclusion, the agency reveals a series of shortcomings and weaknesses of the General Department of Taxation and its agencies in their planning, inspection and post-inspection jobs.
Specifically, the annual plans for tax inspections into enterprises drawn up by tax authorities are inappropriate and constantly adjusted. The General Department of Taxation does not appraise such plans thoroughly.
The adjustment and cancellation of inspection plans and decisions by the General Department of Taxation and local tax departments are also groundless. A number of enterprises have been named in an inspection plan for many years, but the tax agencies still have not done their job, putting such enterprises under tenterhooks.
The inspection plans of the tax authorities have always been unmet, reaching a very low level in certain years (for example, only 29% in 2012).
In addition, the General Department of Taxation has not regularly monitored, examined and supervised adherence to inspection conclusions, collection of unpaid taxes and post-inspection sanctions. Also, late payments are not well managed.
Those are the reasons why the post-inspection results are low.
The Government Inspectorate also said the lengthy process of inspection has affected operations of corporate taxpayers.
Notably, some inspection conclusions of the General Department of Taxation are inappropriately based on the guidelines on investment incentives, which is detrimental to the interests of enterprises. The tax authorities have changed the gross profit-to-cost ratio, the ratio of pretax profit to total expenses during the special inspections on transfer pricing without any foundation.
The Ministry of Finance and the General Department of Taxation have issued some guiding documents in the field of taxation that are unspecific and not in accordance with regulations.
For example, Dispatch 7227/BTC-TCDN dated June 7, 2010 and Dispatch 15827 released in 2012 are inconsistent with Circular 228/2009/TT-BTC. The guidelines on not collecting value added tax on loan interest from non-credit organizations and individuals in 2009-2011 go against the Law on Value Added Tax, (though the finance ministry has reported to the Prime Minister and received the nod).
Meanwhile, the General Department of Taxation has issued Dispatch 3342/TCT-CC instructing the collection of foreign contract tax which does not agree with Circular 134/2008/TT-BTC and Circular 60/2012/TT-BTC, affecting the interests of the business.
Tra fish price peaks on stronger export to China
The price of tra fish, or pangasius, has soared to VND29,000 (US$1.27) a kilo, a record high in years, due to the high demand of the Chinese market.
In early 2016, the tra fish price plunged to only VND18,000 a kilo, the lowest price since 2010. However, the price has increased gradually in the following months.
Although Vietnam has had difficulty boosting tra fish exports to Europe, the domestic market has not been much affected because exports of this product to China are increasing.
According to the Vietnam Association of Seafood Exporters and Producers (VASEP), the tra fish export turnover reached US$1.71 billion in 2016, up nearly 10% against 2015, as China overtook the EU as the second largest buyer of Vietnamese tra fish.
Last year, the revenue of tra fish exported to China reached nearly US$305 million, up nearly 89% against 2015. China may overtake the U.S. to become Vietnam’s largest tra fish export market in 2017.
The Ministry of Agriculture and Rural Development said farmers should focus on protecting the next fish farming season because the unstable water quality has been causing diseases lately.
Cold supply chain logistics: potentials and challenges
The cold supply chain logistics service holds strong potential as customers are more concerned about the quality of products, experts said at a seminar on the fresh and cold supply chain in HCMC on Tuesday.
An important link in the fresh and cold supply chain is the cold transport service. Basically, goods, especially pharmaceutical products, must be kept at certain temperatures to help maintain their quality during the transport process.
Vincent Goalard, a representative of International Pharma Services, stressed the importance of maintaining goods quality in the transport process.
He took the transport of vaccines for instance, explaining that vaccines contain weakened viruses that are no longer harmful to the human body. If temperatures are lower than the permitted level, viruses may be killed, rendering vaccines ineffective. Conversely, viruses may develop, and then become a threat to the body if temperatures are high.
Therefore, he said, vaccines should be kept at temperatures between 5 and 8 degrees Celsius during the shipping time.
The strong development of convenience stores, for instance, also leads to higher demands for the cold supply service, as those stores require products to be refrigerated in transport, such as yogurt, fresh milk, juice and ice cream. This has lent a helping hand to the expansion of the cold chain logistics service, opening up plenty of opportunities.
However, Luong Quang Thi, general director of ABA CoolTrans, said his company has had difficulty persuading customers into using the service since many of them see price rather than quality as the most important factor.
Quality assurance also needs a full cold supply chain, from temporary cooling treatment right at the after-harvest stage and the cold storage to the transport and the in-store display. However, the link among stages of the chain is not strong enough. This is seen as both challenges and opportunities for enterprises, Thi added.
Trung Thuy seeks new site for recreational area in HCMC
Trung Thuy Group is looking for a new site for a recreational area previously planned to go up on the Tau Hu-Ben Nghe Canal due to problems arising from the implementation of the project.
Trung Thuy planned to develop the VND150-billion recreational area based on the combination of eight tourist ferries on the canal section between Khanh Hoi Bridge and Mong Bridge. The ferries measuring 25 meters long each will be arranged like boats being anchored along the banks of a river, mirroring Saigon in the past and HCMC on March 2.
On board the ferries would be corners for coffee, display of images of famous persons in the country’s history, gastronomic streets and daily activities of communities. The group expected Goc Sai Gon (Corner of Saigon) area to be opened on National Day on September 2 this year and serve around 1,500 visitors at a time.
The group’s chairwoman Duong Thanh Thuy said the group previously planned to develop Corner of Saigon on a canal section near a sluice, but water levels sometimes ebb to near the bottom so it is not easy to balance ferries.
“We have reported the issue to relevant agencies. We will relocate the project to a section of the Saigon River, otherwise we will have to seek technical solutions to the issue,” Thuy told the Daily on March 1.
Trung Thuy wants to drive piles in the middle of the canal to keep the tourist ferries from tilting as one of the technical solutions. However, Thuy said it is hard for the group to get approval for the solution as it will affect boat travel on the canal.
Another problem is that the water of the canal turns black and smelly during certain hours of the day, so Trung Thuy will have to spend money dredging the canal if the group wants to attract tourists to the recreational area.
Trung Thuy is expected to work with relevant agencies over solutions to the problems, meaning the project would not be put into service on September 2 as planned.
Trung Thuy unveiled the project at a seminar on river tourism development in HCMC in November last year. HCMC hopes river tourism will help diversify tourism products and attract more tourists to the city, especially repeat visitors.
Illegal business no longer criminalized
That illegal business is no longer considered a crime is voted one of the best rules in the ranking of the Vietnam Chamber of Commerce and Industry (VCCI).
The 2015 Penal Code has eliminated the crime of doing business illegally in Article 159. With this, acts of doing business without registration, not complying with provisions in one’s business registration certificate or without a special permit in cases required by the law are no longer treated as a criminal offense.
VCCI deemed this move as essential. Recently, Vietnam’s law on business has made many provisions to support freedom of business.
In particular, Article 33 of the 2013 Constitution says, “everyone shall have the right to freedom of business in occupations not prohibited by law.” Thus, it is inappropriate and unnecessary to keep “illegal business” as a crime, which would be contrary to the spirit of business freedom that the State is aiming for.
With illegal business no longer seen as a crime, business freedom will be expanded. Business people are only prosecuted for crimes with the acts described in the law.
Practices like doing business without registration or not conforming to one’s business registration certificate are just administrative violations with no negative impact on society. Therefore, they should only be treated as an administrative violation.
In fact, the crime of illegal business was debated at a session of the 12th National Assembly on June 16, 2015. Some lawmakers suggested retaining the rule while others, including the then Minister of Planning and Investment Bui Quang Vinh, called for its abolition.
He said: “Economic activity must be dealt with by economic means, to recover the profits and the money illegally seized. This is our main goal, revoking what they want to achieve. The penalty may be even much heavier than what they have done to prevent future recurrence.”
Vinh’s words encouraged a majority of National Assembly deputies to pass the 2015 Penal Code without the crime of doing business illicitly, as well as the crime of deliberately going against the rule causing serious consequences.
Manufacturing output growth hits 21-month high
Growth of the Vietnamese manufacturing sector gathered momentum during February, with output and new orders increasing at faster rates and firms building their stocks of purchases at a record pace, said a Nikkei report released on March 1.
The headline Nikkei Vietnam Manufacturing Purchasing Managers’ Index (PMI) rose to 54.2 in February from 51.9 in January, signaling a solid monthly improvement in business conditions, and one that was the strongest since May 2015. The health of the sector has now improved in each of the past 15 months.
Commenting on the Vietnamese manufacturing PMI survey data, Andrew Harker at IHS Markit, which compiles the survey, said there were a number of positive aspects to the latest Vietnam manufacturing PMI report, which saw the health of the sector improve to the greatest extent since May 2015.
The rate of new order growth picked up, supporting a faster increase in production. Alongside this, confidence in the year-ahead outlook led to a record accumulation of stocks of purchases, while sharp rises in new orders and purchasing activity imparted capacity pressures on manufacturers and their suppliers alike.
“This should hopefully result in more hiring in coming months as firms adjust their operating capacity in line with higher workloads. Strength in the manufacturing sector should provide a boost to the wider economy, with IHS Markit forecasting a rise in gross domestic product (GDP) of 6.4% during 2017,” the expert said in the report.
Manufacturing production rose for the fourth month running amid reports of higher new orders. Moreover, the rate of growth in production quickened to a 21-month high. Output increased across the consumer, intermediate and investment goods sectors.
Besides, total new orders rose at a sharp and accelerated pace during February, with the rate of growth the strongest since May 2015. New export orders also increased at a faster pace during the month as firms reported improving demand from international clients.
Rising new business led to a second successive monthly increase in backlogs of work. However, the rate of accumulation was modest and slower than in January.
According to Nikkei, new order growth also contributed to another rise in employment in February. The latest increase was solid and faster than the series average. Staffing levels have now increased in each of the past 11 months.
Business confidence improved markedly and was at a one-year high. Optimism was built on planned company developments alongside expectations of further improvements in client demand. This optimism was reflected in manufacturers’ attitudes towards stock holdings in February.
Stocks of purchases rose at the fastest pace in the six-year survey history amid a sharp and accelerated increase in purchasing activity. Some respondents indicated that the prospect of further new order growth in coming months encouraged them to increase input buying.
Trung Luong-My Thuan expy project to be adjusted
Some components in the first stage of Trung Luong-My Thuan expressway will be adjusted to be in sync with the approved total investment and the overall scale of the HCMC-Can Tho expressway.
The Ministry of Transport and a consulting firm discussed the scale adjustment of the Trung Luong-My Thuan expressway project on Monday, said the ministry.
A report of the project’s consultant Transport Engineering Design Inc. showed some components would be adjusted, including the width of some road and bridge sections to be expanded to 17 meters from the previous 13.75 meters, the number of bridges, and flyovers’ span diagrams; and intersection designs.
The consultant said the adjustment aims to be in harmony with the overall scale of the HCMC-Can Tho expressway project and the transport ministry’s new regulations.
Foreign funding for the expressway’s expansion has now become infeasible. Therefore, the adjustment is also aimed to ensure that the construction cost would not exceed the approved level.
Deputy Minister of Transport Nguyen Nhat asked the investor to coordinate with local authorities to recheck the planned sites to facilitate site clearance. The investor must submit documents to the transport ministry no later than March 10.
The first phase of Trung Luong-My Thuan Expressway in Tien Giang Province will have a total length of 51 kilometers, plus 4.5 kilometers of approach road. The whole section requires a hefty VND15 trillion if it is carried out in accordance with the original plan.
The section will start from Than Cuu Nghia T-Junction at the end of HCMC-Trung Luong Expressway in Chau Thanh District, and end at the crossroads with National Highway 30.
The expressway in the first phase will be built under the build-operate-transfer format and have two lanes plus emergency lanes. It will be then expanded to six lanes using official development assistance loans in the second phase.
According to the initial plan, the expressway is scheduled for completion at the end of next year. However, for some reasons, work on the project has yet to begin despite two groundbreaking ceremonies.
The ministry said the project will be implemented this year.
The Trung Luong-My Thuan section is part of the HCMC-Can Tho Expressway, which is expected to substantially reduce the traveling time between HCMC and the Mekong Delta. This expressway has three sections, namely HCMC-Trung Luong, Trung Luong-My Thuan and My Thuan-Can Tho.
The 40-kilometer HCMC-Trung Luong section was opened to traffic in February 2010. The two remaining sections will be constructed later.
Vietnam’s auto industry facing crucial moment
Auto producers and assemblers in Vietnam have raised their concerns and suggestions for the future of the auto industry at a conference held by the Ministry of Industry and Trade on Tuesday in Hanoi.
Automakers are now fretting over the gloomy days ahead when the auto import tariff in ASEAN is slashed from the current 30% to zero next year, and by then, locally-assembled vehicles will be on the losing side as imported automobiles will be more competitive.
Tran Ba Duong, general director of Truong Hai Auto Corporation, said taking down the obstacles to Vietnam’s auto industry necessitates a great deal of work, including conducting research to point out the advantages and weaknesses of domestic auto enterprises.
According to Duong, State management agencies need practical assessments to foresee the future of the domestic auto industry and adopt appropriate policies in a timely way.
Toru Kinoshita, general director of Toyota Vietnam, said Toyota has always strived to increase local content in its products. However, the company has reduced the number of its auto models from five to four to ensure efficiency and productivity.
Kayano Kiwamu, deputy general director of Honda Vietnam, said their hopes of developing domestic production have been dashed by a small consumption market, poor infrastructure and vague supporting policies, among others.
Kiwamu suggested the Government issue policies for stable development and help auto enterprises reduce price differentials between domestic and foreign products by adjusting the excise tax.
At the conference, Do Thang Hai, Deputy Minister of Industry and Trade, underlined the indispensable role of supporting industries in developing the auto sector.
Hai said the Ministry of Industry and Trade will go alongside auto enterprises to bring down hindrances and find out solutions to the development of the auto industry. “The ministry will transfer the enterprises’ suggestions to the Government for consideration,” he said.
Since 2014, domestic auto output has seen average growth of 30% per year, meeting the rising demand of local consumers.
In accordance with the commitment of the ASEAN Free Trade Area (AFTA), import tariff applied to completely-built-up (CBU) autos will be 0% from January 1, 2018, putting great pressure on domestic auto producers and assemblers. They will have to choose between rearranging their regional production system, maintaining domestic production, or withdrawing their production from Vietnam to become pure traders.
With the population of more than 90 million and the fast expansion of the middle class and gross domestic product (GDP) per capita, Vietnam is considered a potential auto market, having reached average growth of more than 40% in the last two years.
The total auto market of Vietnam in 2016 reached around 460,000 units while the total capacity is currently 500,000 units per year. There are currently 12 auto brands with domestic assembly and production, including Toyota, Kia, Mazda, Honda, Chevrolet, Ford, Mitsubishi, Nissan, Suzuki and Mercedes-Benz, satisfying 70% of domestic demand.
Quang Nam to hold investment promotion conference
An investment promotion conference will be held on March 25 in Quang Nam in central Vietnam, with the participation of 500 delegates representing ministries, central agencies, large cooperations, and potentials investors, said Le Tri Thanh, vice chairman of Quang Nam.
The event will be graced by Prime Minister Nguyen Xuan Phuc, who has asked Quang Nam to be more proactive in boosting economic development, Thanh said.
“The Prime Minister has urged Quang Nam to play a more important role in the central region. This is why we organize the investment promotion conference with the participation of the Prime Minister and many other guests,” said Thanh.
The province has seen its economy picking up strongly.
Some years ago, Quang Nam is a poverty stricken province with only 200 enterprises and contributed a mere VND20 billion to the State budget. In 2016, the province had 5,000 firms and its budget collection increased to VND20.2 trillion, becoming one of Vietnam’s ten provinces with budget collections of over VND20 trillion .
Quang Nam recorded economic growth of 14.73% in 2016, the highest in ten years.
According to the province’s data, authorities there last year issued investment licenses to 30 local projects worth over VND3.41 trillion, and 17 foreign direct investment ones worth US$122.8 million.
Thanks to the preferential investment policies, many investors have established their long-term business presence in Quang Nam like Truong Hai Thaco, Suntory PepsiCo Vietnam Beverage, and Inax Vietnam.
PM warns of major challenges
Prime Minister Nguyen Xuan Phuc again warned of the huge challenges Vietnam is facing and offered some suggestions to government members during a regular meeting in Hanoi on March 1.
“The World Bank’s country director in Vietnam said the major challenges for Vietnam are labor productivity, poverty in part of the population, environment and climate change. Is this true? If it is, what should we discuss and how to overcome such challenges?” the Government leader said.
As industry and service are recording modest growth and agriculture can hardly grow high, there must be drastic measures to ensure the target growth of 6.7%, the Prime Minister stressed.
“The central agencies should give specific comments, as to what each area should do, what investment (authorities) should do, what finance (sector) should do, what credit should do, whether or not demand stimulus is necessary, and to what extent it should be. We’re already aware of the challenges to growth, so it is a must to solve them immediately, rather than waiting until the middle or the end of the year when things get very difficult,” he said.
He urged ministers to drastically give directions and guarantee the growth target of each sector to meet the goal of the entire economy.
Prime Minister Phuc raised the question: “Why are many enterprises and experts complaining the indirect costs of production are being pushed up, from land and seaport charges to informal costs of procedures when the Government has pledged to create favorable conditions to help businesses save time and cost? In tough times, a reasonable roadmap for price, charge and fee hikes should be carried out.”
The Prime Minister called for specific suggestions on the measures to practice discipline as “poor discipline along with directions inconsistent with the market economy affects the development of the country.”
He questioned the responsibility of the heads of ministries and local governments in dealing with issues such as natural forest closures, food safety and environmental protection. He wondered how such policies are executed, whether they should be stated only once or further repeated in a more specific and drastic manner at all levels and in all sectors.
Regarding the proposal for delaying the implementation of Decision 49 on the roadmap for the application of automobile and motorcycle emissions standards, the Prime Minister expressed his disapproval, saying environmental protection should not be ignored for the sake of certain industries. “This is a matter of discipline,” he stressed.
The Prime Minister asked the ministries, State agencies and localities to strictly implement Resolution 01 of the Government so that the first quarter of this year would be better than the same period last year. Thus, there would be no need to rush to accomplish the tasks and objectives as the year’s end draws near.
He requested the government members to analyze the situation of the country and the world in the context of Vietnam’s stronger integration. Despite good progress, Vietnam is still slower than other countries in the region and a lot needs to be done to improve the efficiency and capacity of the economy, better the business climate, and boost competitiveness.
“I’ve just received information from Japan’s economic magazine Nikkei that Vietnam’s PMI rose to 54.2 in February, the highest in 21 months, while the average PMI in ASEAN was 50.3,” said Phuc.
However, in general, the index of industrial production in the first two months picked up 2.4%, much lower than 6.8% in the same period last year, which is a major problem affecting the growth index. Total retail sales of goods and services in the first two months increased 8.7%, versus 9.7% in the same period last year, signaling a slow recovery in aggregate demand.
Hanoi Customs launches online public services
Hanoi Customs officially launched online public services for locals and businesses at the portal: http://pus.customs.gov.vn.
The portal will process 46 administrative procedures, including verifying tax submission, certifying copied customs documents and tax return, among others, at level 3 and level 4. Level 3 allows applicants to fill and submit the forms online while level 4 allows them to not only submit required forms but also make payments and receive results online.
As of the beginning of 2017, Hanoi Customs piloted a model of providing administrative procedures on the e- government system, of which 11 procedures were offered at agency level and 24 other services were provided at sub-agency level.
Import-export activities of enterprises are not affected by the launching of online public services, said Hanoi Customs.
The move not only boosts administrative reform but also reduces pressure for customs agencies while increasing transparency and simplification. In addition, it helps residents and businesses save time, money and papers while handling documents.
The customs agency plans to provide all public services online at level 3 as minimum and most of key services at level 4 by the end of 2017.
Logistics project hoped to spur border trade
Border trade is standing numerous opportunities to develop as Vietnam and neighboring countries have completed the demarcation of their land border.
In addition, the Ministry of Industry and Trade has recently approved a project to develop warehouses at border gates of Vietnam - Laos and Vietnam – Cambodia through 2025, with a vision towards 2035, which is expected to be a driving force for cross-border trade in the coming time.
According to the central steering committee for border trade, Vietnam shares about 4,600 km of land border with China, Laos and Cambodia. Along the entire border line there are 23 international border gates, 27 main border gates and 65 auxiliary ones, not to mention unofficial crossings.
Cross-border trade revenue makes up a large proportion of the total trade between Vietnam and its neighbours.
For instance, border trade accounts for 30 percent of the total trade between Vietnam and China every year.
Deputy Director General of the Mountainous and Frontier Trade Department under the Ministry of Industry and Trade Le Bien Cuong said there are 285 markets along the border line or at border gates and inside border gate economic zones.
Many underdeveloped localities have transformed into dynamic trade centres thanks to border gate economic zones.
Cuong, however, pointed out shortcomings in the management of border trade, including the inflexible trade policies and poor infrastructure.
Furthermore, the logistics systems at the Vietnam – Laos and Vietnam – Cambodia border gates are at small scale, hence, businesses have to sign contracts with different partners, causing waste and difficulties in establishing long-term relations in the supply chain.
The border gate warehouse project, hence, is expected to help spur trade activities across the Vietnam – Laos and Vietnam – Cambodia border.
Along the borders of Vietnam – Laos and Vietnam – Cambodia, there are 19 border gate economic zones, 18 international border gates, 20 main border gates, and 43 auxiliary border gates.
Khanh Hoa seeks investment from Japan
Officials of the central province of Khanh Hoa held a meeting on March 1 with the Japanese delegation attending the first APEC Senior Officials’ Meeting (SOM1) now underway in the province in order to discuss economic cooperation.
In the meeting, Chairman of Khanh Hoa People’s Committee Le Duc Vinh said six projects of Japanese investors in the province are operating stably, while three other large-scale Japanese projects are in the initial period, including the 4.5 billion USD Nam Van Phong oil finery complex and the Van Phong Thermal Power Plant with an investment of two billion USD.
Chairman Le Duc Vinh highlighted Khanh Hoa’s potential, advantages and demand, stressing that the province gives priority to investment in shipbuilding, seafood exploitation and processing, hi-tech agriculture, and tourism.
The Japanese delegates appreciated the cooperation and friendship relationship between Vietnam and Japan.
They took note of Khanh Hoa’s suggestions and promised to relay Khanh Hoa’s list of priority fields and projects to Japanese investors.
New auto parts factory opens in Ha Nam
NMS Viet Nam Co Ltd on Wednesday inaugurated a factory in Dong Van II Industrial Zone in the northern province of Ha Nam’s Duy Tien District.
Covering over 7,000sqm, the factory was built at a cost of US$5 million by the Japanese investor, and will specialise in producing telecommunications equipment and devices for the automobile industry.
The factory will create jobs for 1,000 locals.
Speaking at the inaugural ceremony, Nguyen Xuan Dong, chairman of the provincial People’s Committee, said the factory would play an important role in the development of the Vietnamese auto sector.
NMS Viet Nam Company must fulfil its investment commitment and comply with State regulations as well as the province’s production and business policies, Dong said. The company is also required to take care of its workers’ accommodations to ensure that they remain in the job on a long-term basis.
The chairman also asked the industrial zone’s management board, agencies and localities to cooperate in implementing the 10 commitments that the province has made to improve its investment climate and tackle hurdles faced by businesses so that they can operate more efficiently.
Vinalines tipped to become leading maritime firm
The Government has assigned a large number of port, shipping and logistics services construction projects to Vietnam National Shipping Lines (Vinalines) in an effort to make it the leading enterprise in the maritime sector.
Deputy Prime Minister Trinh Dinh Dung on Monday issued a decision approving the investment, development and business and production plans of Vinalines during the 2016-2020 period, allowing the enterprise to step up investments in numerous projects in various areas.
Regarding seaports, Vinalines will be responsible for developing some ports at Lach Huyen International Port complex in the northern coastal city of Haiphong.
The project invested by Haiphong Port Company Limited to build a Haiphong International Gateway Seaport will be carried out in 2017-2020. In addition, Lien Chieu Port in the central coast city of Danang will be developed by Danang Port Joint Stock Company in the 2017-2024 period.
In terms of shipping, the Government has asked Vinalines to develop a specialized ship fleet and decommission old vessels.
Regarding logistics services, Vinalines is required to boost investments in inland container depots (ICD), logistics centers, and goods distribution center in Lach Huyen (Haiphong), Hanoi, Danang, Can Tho, HCMC, Bac Ninh, Hau Giang, Gia Lai, Binh Duong, and Dong Nai provinces.
Vinalines has to map out a detailed investment plan and implement these projects under the prevailing rules.
In related news, Vinalines has just proposed building a logistics center in Hanoi City to cater to freight transport demands to and from main seaports in the area via the inland waterway system.
A leader of Vinalines said the logistics center together with the inland waterway network will satisfy the rising demand of domestic container transportation in the northern region, help ease overload of overland transport, and reduce freight cost and environmental pollution.
This will be a large-scale center for customs clearance, providing modern logistics services for waterway import and export, Vietnamplus reports.
Besides, the logistics center will be a hub to gather cargo from industrial zones in Hanoi, Bac Ninh, Bac Giang, Vinh Phuc, Phu Tho, Hung Yen, and Ha Nam by water. Cargo will then be transferred from the inland container depot (IDC) in the center to seaports for export. The logistics center will also serve import demands.
Combined with other transport and logistics services of Vinalines as well as other transport enterprises, the center will create a whole packaged logistics service chain for customers in the northern area.
The logistics center including an inland container depot and a logistics area was proposed to be built in Phu Dong port on the right bank of the Duong river in Gia Lam District, Hanoi City.
According to the plan of Vinalines, this center will have a riverfront length of 1,200m and will be expanded on an area of 40-50 hectares in 2030.
Vinalines suggested the Ministry of Transport work with Hanoi City government to hand over land at Phu Dong port for development.
Foreign investors keen on retail sector
A large number of foreign investors are expressing their keen interest in Vietnam’s retail market, according to a report of The Economist Intelligence Unit (EIU) issued on Monday.
EIU forecast that foreign companies will continue expanding their business activities in Vietnam in the coming years, the Vietnam News Agency reports.
For example, Hennes & Mauritz (H&M), Sweden-based multinational clothing retailer, announced it would open the first retail store on 2,000 square meters in the capital city of Hanoi sometime this year.
The retail sector has seen a large number of foreign investors coming to explore opportunities in the retail sector.
For example, the first store of Spain’s fashion brand Zara in Vietnam was inaugurated last year. Meanwhile, U.S.-based Gap clothing retailer and Spain’s Mango clothing design and manufacturing company are already present here in the local market.
Japanese supermarket chain operator Aeon Company Limited has recently decided to become a strategic shareholder of the Fivimart and Citimart, two supermarket chains whose numerous outlets are currently active in HCMC and Hanoi.
Furthermore, Takashimaya, one of Japan's leading department store operators, has inaugurated its first shopping center in downtown HCMC while South Korea's Lotte Group has mapped out a plan to launch around 60 new supermarkets in the country between now and 2020.
It came as no surprise that foreign enterprises have paid increasing attention to the country’s retail sector as it posted growth of a strong 13% per year during the 2012-2016 period.
Local consumer spending is forecast to rise sharply in the next five years as Vietnam has a population of around 94 million people, one-third of them aged under 35.
According to EIU, per capita spending will rise from US$1,450 last year to US$1,840 in 2021.
Another foreign video streaming provider connects in Vietnam
Malaysia-based video streaming startup iflix has officially launched in Vietnam with the aim of tapping into the country’s sizable population, the company has said at a press conference.
Vietnam is currently ranked by Internet World Stats at 18th globally in terms of the number of internet users, making it a lucrative proposition in the eyes of foreign streaming platforms.
The streaming video provider sees Vietnam as a huge market with enormous potential mainly because the country has a growing population and fee-based online streaming services like iflix are still virtually new in this market, business newspaper the Saigon Times cited David L.Goldstein, iflix manager in Asia, as saying.
Vietnamese consumers have long enjoyed access to free online videos, however, with the arrival of the US video streaming giant Netflix a year ago, and now Malaysia's iflix, this is changing.
iflix makes its money from charging subscribers a monthly fee of VND59,000 (US$2.59) after a 30-day free trial. This is about three times less than subscription fees currently offered by Netflix, and could start a price war between the two.
Customers in Vietnam can watch iflix on a variety of devices, including desktop computers, tablets, televisions and smart phones.
The streaming platform also allows its subscribers to select subtitles in English or in Vietnamese, said Country Manager Hoang Tung at the press conference.
iflix is now available in eight Asian markets, and its catalog includes both Hollywood hits and local content in Malaysian, Chinese and other regional languages. It has secured more than 1 million subscribers since its launch in 2015.