Thứ Hai, 9 tháng 10, 2017

BUSINESS IN BRIEF 9/10

Vietnamese farm produce seeks path to Middle East

Vietnamese farm produce seeks path to Middle East, Vietnam yields over 2.6 million tonnes of aquatic products in nine months, Deep C IZs chain up to line Haiphong, Rice exporters should diversify markets 

With a total population of more than 400 million, the 16-country Middle East is a promising market for Vietnam’s farm exports, economic experts said.

Statistics released by the Ministry of Agriculture and Rural Development show that export-import revenue between Vietnam and the Middle East reached newly 10.89 billion USD in 2016, up more than 100 percent from 2011.

However, Vietnam mainly ships electronics and spare parts, and garments-textiles to the Middle East, which make up 68.4 percent of the country’s export value to the region of 8.06 billion USD.

Meanwhile, the region needs about 5-7 million tonnes of rice each year, along with vegetables, fruits, juice and seafood, which are among Vietnam’s strengths.

Vo Quang Huy, Director of Huy Long An Co., Ltd., said the Middle East in general and Iran in particular are promising markets for banana exports, adding that his company used to deliver bananas to the region but had difficulties in the payment process.

To export bananas to the Middle East, a company needs high-quality post-harvest preservation while bananas grow all across Vietnam, he said, noting transportation as another obstacle.

Le Thanh, Director of the Institute of Vietnam Organic Agricultural Economics, described the Middle East as an “attractive paradise” for Vietnamese goods and a huge market for the country’s farm exports.

However, he said, Vietnamese exporters still face barriers regarding logistics and payment.

Ministry of Agriculture and Rural Development Nguyen Xuan Cuong, said the Middle East is a gateway to Europe, highlighting the potential for export-import activities between Vietnam and the Middle East.

Tran Van Tri, Director of An Viet International Investment JSC and Chairman of the Vietnam-Iran Business Council, said Iran is a promising market for Vietnamese electronics, garments-textiles and agricultural products like banana, pineapple, lemon, rice and seafood.

Iran imports about 1.2 million tonnes of rice each year, he said, adding that An Viet International Investment JSC, the first Vietnamese firm licensed in Iran, recently shipped 207 tonnes to the country and aims to deliver another 200,000 tonnes in 2018. 

He also said that payment issues remain the major barrier to bilateral trade.

Le Quang Nhuan, General Director of Louis Rice Import Export Co., Ltd., suggested Vietnamese exporters cooperate with each other to hire a transportation company, explaining that transportation costs greatly impact on goods prices.

According to the Commercial Counsellor at the Vietnamese Embassy in Iran, the country imports about 600,000 tonnes of bananas and 300,000 tonnes of rubber each year, noting that Iran can buy up to 500,000 tonnes of Vietnamese rubber annually.

Regarding the payment barrier, the State Bank of Vietnam said Vietnamese commercial banks put themselves at risk when conducting payment activities in Iran.

The central bank is expected to support one or two commercial banks to establish cooperative ties and payment channels with their Iranian counterparts.

Experts suggested Vietnam set up a production chain to ensure product quality, while paying attention to Halal certificates for the Muslim-majority countries in the Middle East.

Idemitsu Q8 officially joins Vietnamese petroleum retail sector

Foreign investors’ joining the retail distribution of petroleum is expected to break domestic distributors’ dominance, heating up the competition in this sector.

On October 5, Idemitsu Q8 Petroleum Limited Liability Company (IQ8), a joint venture between Japanese company Idemitsu Kosan Co., Ltd. and Kuwait Petroleum International Ltd. (KPI), held the opening ceremony of the first Idemitsu Q8 service station at Thang Long Industrial Park, Hanoi, marking the first station of a petroleum retail network named IQ8 that will spread across Vietnam.

The move is expected to create competition for the domestic petroleum retail market and benefit customers because both Idemitsu Kosan and KPI are well-known enterprises with numerous achievements in the petroleum retail business in Japan and Europe.

Speaking at the ceremony, IQ8 general director Hiroaki Honjo stated that the company set to establish the professional retail petroleum trading network in Vietnam.

IQ 8 will operate in petroleum import, wholesale, and retail, mainly through the construction and management of service stations, across Vietnam. The products will come from the upcoming Nghi Son oil refinery and petrochemical complex in the central province of Thanh Hoa, in which Idemitsu and KPI both have stakes.

“The first station is considered the beginning for IQ8’s operation in Vietnam as well as a foundation for its expansion to emerging markets in the Pacific Belt region,” said Ghanim Al Otaibi, chairman of IQ8 cum vice president of KPI in Asia.

IQ8’s petroleum stations will apply an automatic management software, permitting card payments and numerous convenient functions for customers.

Besides, stations will be equipped with the most modern safety technologies and facilities to maximally prevent leakages, thereby minimising environmental risks. Furthermore, the staff will be trained to meet Japanese standards.

IQ8’s service stations will offer plenty of advantages to attract customers, while simultaneously creating competition on the retail petroleum market that is currently dominated by domestic distributors.

“Foreign newcomers will create pressure on domestic petroleum distributors to upgrade their existing facilities and improve service quality. Petrolimex anticipated the competition created by foreign distributors and has started preparations ten years ago, thus we are ready to take on IQ8 and other competitors,” said Nguyen Quang Dung, deputy general director of Petrolimex.

However, Dung stated that in general, foreign investors financial potential is a strong advantage when they start operations in Vietnam, however, in the petroleum trading sector alone, this advantage is not as pronounced, as success also depends on market share, business site, as well as the operation network. Dung expressed confidence thanks to Petrolimex’s existing advantages.

Accordingly, with 50 years of experience in the petroleum trading sector, Petrolimex is the biggest petroleum distributor in Vietnam with an extensive distribution network. The petroleum giant currently holds almost 50 per cent of the petroleum retail market, with over 50 per cent of its products directly sold to consumers and around 20 per cent to industrial customers.

The Vietnamese petroleum retail market is considered highly attractive by potential foreign investors. Petroleum sales volume at present is between 17-19 million tonnes per year, 65 per cent of which is imported.

Reference exchange rate goes down at week’s beginning

The daily reference exchange rate for VND/USD on October 9, the first day of the week, was set at 22,469 VND, down 1 VND from the last working day of the previous week (October 6).

With the current trading band of +/-3 percent, the ceiling rate applied to commercial banks during the day is 23,143 VND/USD and the floor rate 21,795 VND/USD.

The opening hour rates at major commercial banks saw some fluctuations, with Vietcombank cutting its buying rate by 25 VND from October 6 to 22,690 VND/USD and selling rate by 35 VND to 22,760 VND/USD.

Meanwhile, Vietinbank and BIDV kept their rates unchanged from October 6.

The greenback is being traded at 22,695 VND (buying) and 22,765 VND (selling) at Vietinbank, and at 22,690 VND (buying) and 22,760 VND (selling) at BIDV.

Vietnam yields over 2.6 million tonnes of aquatic products in nine months

Vietnam recorded over 2.6 million tonnes of aquatic products in the first nine months of 2017, a year-on-year rise of 5.2 percent, according to the Ministry of Agriculture and Rural Development.

In January-September, the central provinces of Binh Dinh, Phu Yen, and Khanh Hoa caught 15,320 tonnes of ocean tuna, up 9.1 percent against the same period last year.

The Mekong Delta harvested 998,000 tonnes of tra fish, a year-on-year increase of 9.8 percent. Dong Thap and Can Tho still led in output with 390,000 tonnes (up 18.7 percent) and 134,000 tonnes (up 13.5 percent), respectively.

In the nine-month period, the total shrimp output reached more than 468,000 tonnes, up 27.1 percent year-on-year.

Ambassador visits Japanese prefectures to seek investment cooperation

Vietnamese Ambassador to Japan Nguyen Quoc Cuong has paid visits to the Japanese prefectures of Okayama, Tottori, and Shimane in Shikoku region to seek investment cooperation with Japanese businesses.

While meeting local enterprises, Ambassador Cuong underlined the message of Prime Minister Nguyen Xuan Phuc delivered during his visit to Japan in June that it is time for businesses and localities of the two counties to boost cooperation and foster win-win ties in the next five or 10 years.

Governor of Okayama Ibaragi Ryuta said Vietnam is receiving the most attention from the prefecture’s businesses to study investment opportunities with 122 firms, compared to 72 in China, 57 in Thailand and 56 in Indonesia.

With a population of nearly two million people and gross domestic product (GDP) of about 70 billion USD, Okayama is developing hi-tech industry, agriculture and tourism.

Meanwhile Tottori Governor Hirai Shinji said many local businesses are eying Vietnam. He wants to introduce local businesses with advanced technologies to Vietnamese hi-tech special economic zones.

Whereas, Shimane prefecture is home to many small-and medium-sized enterprises in machinery manufacturing, electronic spare parts production, food processing, and agro-fisheries.

Japanese enterprises said they were interested in the tax and custom system and the opening of representative offices and bonded warehouses in Vietnam, and hoped to expand investment in the Southeast Asian country in the coming time.

Garment and textile enterprises’ qualms over new wage and social insurance policies

The minimum wage increase, coupled with the increase for social insurance and union fees, is putting financial burdens on enterprises operating in labour-intensive sectors, such as the garment and textile sector.

At the October 4 conference on estimating the impacts of labour, wage, and social insurance policies on garment and textile enterprises organised by the Vietnam Textile and Apparel Association (Vitas) in Hanoi, representatives of organisations and enterprises in the garment and textile sector expressed concerns over the minimum wage increase as well as social insurance policies due to their negative impact on their manufacturing operations.

According to a representative of Nguyen Hoang Garment Co., Ltd., the new wage and social insurance policies, which will come into effect from early 2018, are considered a burden preventing the development of garment and textile enterprises in general and Nguyen Hoang in particular.

Nguyen Hoang’s representative stated that almost all enterprises present at the processing stage with low profit, while salary expenses make up approximately 70 per cent of the total manufacturing expenditure, thus further wage increases will increase manufacturing expenditure, and product costs, in turn. Thereby, enterprises will find it difficult to find orders.

Besides, we have seen consecutive increases in the minimum wage without the appropriate evaluation of its impact on labour productivity.

According to statistics released at the conference by Truong Van Cam, vice president of Vitas, in 2008-2017, the government adjusted the minimum wage ten times with the average annual growth of 21.9 per cent for domestic enterprises and 15.2 per cent for foreign invested enterprises.

Meanwhile, in 2008-2016, we saw the annual average growth of 5.96 per cent in gross domestic product (GDP), 8.7 per cent in consumer price index (CPI), and 4 per cent in labour productivity. These statistics reinforce enterprises’ panic on the minimum wage increase schedule.

Along with the minimum wage increase, the new regulations on social insurance, especially the extension of subjects participating in compulsory social insurance, also causes enterprises worry for to its impact on manufacturing expenditures.

Accordingly, the new regulation add people working under labour contracts with a term between one month and less than three months to be covered by compulsory social insurance.

Hoang Minh Khang, deputy general director of Hanoi Textile and Garment JSC (Hanosimex), stated that the new regulation on social insurance will add to enterprises’ financial burdens. Thus, adding this group to those covered by compulsory social insurance will not only increase manufacturing expenditures but also cost enterprises time to completing administrative procedures.

Responding to the minimum wage regulation, Khang said that Vietnam should remove this regulation because in competitive markets, enterprises offering attractive wages and allowance policies will recruit high-quality employees, while those failing to meet workers’ demands will struggle to retain or recruit employees.

Previously, at the workshop themed “Labour Productivity and Wage Growth in Vietnam” organised in September, Truong Dinh Tuyen, former Minister of Trade, now Minister of Industry and Trade, said that local authorities need to remove the minimum wage policy and permit enterprises and employees to negotiate employees’ income among themselves, while skilled employees need to be encouraged to increase their labour productivity via wage increase.

If this policy comes into effect, it will increase competition between enterprises, forcing them to voluntarily increase wages.

Vietnam represented at int’l travel market in Ukraine

A delegation led by Vietnamese Ambassador to Ukraine Nguyen Anh Tuan attended the 24th Ukraine International Travel Market in Kiev on October 4-6.

On display at the Vietnamese booth were images of the country’s landscapes and people as well as its famous destinations, attracting visitors and tourism businesses.

Vietnam also attended seminars held during the event to provide more information for travel agencies of Ukraine and other countries.

The Ukraine International Travel Market was attended by the United Nations World Tourism Organisation along with 200 travel agencies of Ukraine and nearly 30 other countries, serving an estimated 15,000 visitors.

It is held twice a year as one of the biggest events for Ukraine’s travel industry. In 2016, the travel fair drew about 14,000 visitors.

Tourism is among major fields of cooperation between Vietnam and Ukraine. Two-way trade has grown, with a 12 percent rise in 2016 to 264.2 million USD and a 19.1 percent increase year-on-year in the first seven months of 2017.

Kien Giang boosts exports in remaining months

The Mekong Delta province of Kien Giang is striving to gross more than 42 million USD from exports in the fourth quarter of 2017, fulfilling its yearly target of 400 million USD.

Head of the import-export office under the provincial Department of Industry and Trade Ngo Quang Binh said one of the most important solutions in foreign trade activities in Q4 is providing key export businesses with global market information so that they can have flexible business plans and improve their competitiveness.

Global import demand in the remaining months of this year is forecast to surge, ahead of the Christmas and New Year holidays, he said, adding that it is necessary to reinforce traditional markets while seeking new ones as well as long-term partners.
Businesses should prepare seafood material, high-quality rice, and ensure food safety to supply for export processing plants, focusing on aquatic products with high economic values, he said.

The province helps businesses access loans and has increased trade activities at the Ha Tien international border gate and Gia Thanh national border gate on the local border with Cambodia, he added.

It also plans to implement a project improving the competitiveness of Vietnamese export products, a rice export development strategy, and to establish a steering committee on international integration.

In the first nine months of 2017, the export turnover in Kien Giang exceeded 357 million USD, a year-on-year rise of 38 percent, of which farm produce earned 136 million USD and aquatic products 144 million USD.

EuroCham opens Hai Phong chapter
   
The European Chamber of Commerce in Viet Nam, EuroCham, opened a new chapter in the northern port city of Hai Phong last week. This is its second regional branch after a central Viet Nam chapter was launched in November.

Representatives of EuroCham also participated in the ground-breaking ceremony of the Deep C Industrial Zones, and toured the new industrial facilities around Hai Phong, most notably Lach Huyen Port and Tan Vu Bridge.

They also met with business leaders, local authorities and European diplomatic representatives to discuss the potential of the north-eastern region of Viet Nam as a prime investment destination.

Experts and officials discussed local investment practices, tax incentives, talent management, real estate development and new infrastructure projects, providing a unique opportunity to hear from experts and government representatives about the current business potential of Hai Phong and northeastern Viet Nam.

The region is well-positioned to become the next leading destination for business, trade and investment in Viet Nam, and EuroCham has taken a decisive step to ensure support for its present and prospective members involved in business in the country’s north-eastern region.

Deep C IZs chain up to line Haiphong

Dinh Vu Industrial Zone JSC, backed by leading Belgian port, industrial zone, and green energy group Rent-A-Port, recently started developing its Deep C III Industrial Zone, creating a chain of state-of-the-art industrial zones to capitalise on Haiphong’s emerging investment advantages.

With a total investment capital sum of US$260 million, the new DEEP C Industrial Zone (IZ) covers a total land area of 520 hectares, including an inland waterway port on Haiphong’s Cat Hai Island. Deep C III is well connected to Lach Huyen International Gateway Port, Tan Vu-Lach Huyen Bridge, Hanoi-Haiphong Expressway, and Haiphong-Halong-China Expressway. In addition, Cat Bi International Airport is 40 minutes away by car, with direct flights to several Asian countries providing for many shipment possibilities.

“We trust that Deep C III is a perfect location as an international logistics base. With a first deepwater seaport for the north of Vietnam, this will allow cost-efficient imports and exports due to direct connections, avoiding transshipment in Hong Kong or Singapore,” said Frank Wouters, general director of Dinh Vu Industrial Zone JSC at the groundbreaking ceremony.

He added that the new zone will prioritise attracting automotive suppliers, logistics businesses, and general industries thanks to its proximity to Vietnam’s largest potential automobile manufacturing hub and international gateways.

“Deep C wants to attract automobile parts suppliers who are eyeing Vietnam to supply ASEAN and find an alternative for the increasing costs in China, Thailand, or Indonesia. This is in line with the vision of the Vietnamese government to develop the country’s automotive industry. We also trust that our automobile supporting industrial park can be a good combination for our neighbour, the Vinfast automobile manufacturing complex,” Wouters said.

The construction of the electric motorbike and automobile manufacturing complex Vinfast, invested by Vietnam’s leading property developer Vingroup, began last month. The complex, with a total investment

capital sum of VND35 trillion ($1.5 billion), is expected to debut  its motorbikes in September 2018 and automobiles in 2019. The complex, located in Haiphong’s Dinh Vu-Cat Hai Economic Zone, has an annual designed capacity of 500,000 units.

According to the statistics, the Vietnamese car market is expanding rapidly. It is forecasted  that 220,000 cars will be sold in Vietnam annually by 2020, and by 2030 the estimated sales will soar to 1.5 million annually.

“We believe Vietnam is the next automotive hub for both original equipment manufacturers and Tier 1 and Tier 2 suppliers – not only in Southeast Asia, but also for Europe and North America. With the Deep C IZs in Haiphong, we are looking to turn the vision into a reality,” said Hans Kerstens, head of Business Development of Dinh Vu Industrial Zone JSC.

Dinh Vu Industrial Zone JSC, with stakeholder Rent-A-Port’s leadership and contribution from the Haiphong People’s Committee and Infra Asia Investment Hong Kong, started developing the first Deep C IZ 20 years ago. Today, it is a symbol of the firm co-operation and relationship between Belgium and Vietnam, as the Deep C cluster is the largest Belgian investment in Vietnam.

The consortium’s two Deep C IZs, occupying a total land area of 2,000ha, have become premier IZs in the north of Vietnam, attracting 70-plus projects backed by multinational companies from Japan, Germany, the US, Vietnam, Singapore, and the Republic of Korea, with a total investment amount of over $3 billion. Prominent investors in the two Deep C IZs include Bridgestone, JX Nippon Oil & Energy, Idemitsu, Shin-etsu, Chevron, PV Oil, IHI, Nippon Express, Yusen, Knauf, C. Steinweg, Flat Group, and more.

The most significant difference to its sister IZs is that the new zone will be developed to become a true eco-IZ, where green energy production and supply facilities will be built, clean water will be produced from available sources of raw water by green power, and all projects in the zone will be high-tech and environmentally friendly.

“We are the first pioneer in Haiphong to take part in the city’s initiative to invest in environmental improvements. Implementation of eco-park initiatives for sustainable IZs in Vietnam is a major goal for us,” said Wouters.

On the same day, Dinh Vu Industrial Zone JSC and Vietnam Electrical Equipment JSC (GELEX) signed a principal agreement for a land lease contract for 50 hectares in Deep C III, making it the first tenant in the IZ.

Following this agreement, GELEX will invest in a $300,000 power equipment complex, the product of which will be sold domestically and exported throughout the Asian market.

As scheduled, the first phase of GELEX’s complex will become operational by the end of 2018, creating jobs for 200 local workers.

“We are happy to welcome GELEX as the first Vietnamese company in our new zone, and are sure we will do some ‘electric’ business with GELEX to assure the best services to all new tenants. It’s a pure win-win operation for all newcomers in the zone,” said Hans Kerstens, head of Business Development at Dinh Vu.

Incorporated in 1995, GELEX operates under a nine-member company model and focuses on electrical equipment production as its main business line. GELEX has also successfully expanded its activities in various fields including energy investment, logistics and port services, real estate investment, and financial investment. GELEX’s annual revenue has consistently hit double digits, and is expected to exceed $1 billion by 2020.

Times Garden Halong ties the know with Swiss-Belhotel International

Times Garden Halong, a five-star condotel located in the heart of the northern coastal province of Quang Ninh’s Halong city, has partnered up with Swiss-Belhotel International.

In June, Times Garden Halong was awarded the “Halong Best Real Estate” title at Vietnam Property Awards 2017.

Swiss-Belhotel International currently manages some 150 luxury hotels, resorts and real estate projects around the world.

Through this co-operation, the complex will be operated under the brand "Swiss-Belhotel Halong Bay."

The complex consists of 50 luxury terraced shophouses, with a view on an 11-metre walking street, in addition to 236 luxury condotels managed as modern hotel apartments owned by investors.

The complex’s entire interior and mechanical, electrical, and plumbing (MEP) system, which comprises of heating, ventilation, air conditioning, plumbing, and sanitation and fire alarm, are of a five-star standard, managed and ultilised by Swiss-Bel Hotel International for a minimum of 10 years.

Residents and visitors can enjoy amenities, such as swimming pools, a spa, luxurious international restaurants, convention centres, and entertainment venues fitting for expatriates.

On October 5, Times Garden Halong Festival was held at the project site and along its walking street. The event was a simulation of European street festivals, with special activities taking place from October 5 to 8.

The launch of the Swiss-Belhotel Halong Bay brand and the five-star international-standard condotel complex was held on the evening of October 7, featuring special art programmes to visitors.

The festival is a spiritual event for Times Garden Halong, Swiss-Belhotel International, as well as residents and visitors to the coastal city of Halong.

Rice exporters should diversify markets

Diversifying into high-value rice markets could be a boon for Vietnamese rice exporters, experts have suggested.

Vietnam earned 2 billion USD from shipping about 4.5 million tonnes of rice abroad in the first nine months of 2017, representing year-on-year rises of 18 percent and 19.6 percent, respectively.

The Vietnam Food Association (VFA) has set a rice export target of 5.7 million tonnes in 2017, up 800,000 tonnes compared to the previous year.

China accounts for 38 percent of Vietnam’s total rice exports with some 1.5 million tonnes worth more than 700 million USD.

Apart from China, the Philippines and Malaysia are strong consumers of Vietnamese rice.

From now to late 2017 and 2018, the VFA said the rice market will be led by demand from Malaysia, Bangladesh, the Philippines, Sri Lanka, China and Africa.

Vietnam’s rice exporters will face fierce competition from Thai rivals. Cambodia also wants to enter Vietnam’s traditional rice export markets.
In the context of climate change, the Mekong Delta – the largest granary of Vietnam, should focus on growing high-quality and high-value rice.

Minister of Agriculture and Rural Development Nguyen Xuan Cuong said “We can accept reducing the area but have to increase rice value. This requirement is urgent to improve the livelihood of farmers.”

Experts said the rice sector needs to take measures to shift to cultivation of rice with higher value and food safety.

More importantly, rice businesses should aim to produce high-quality rice using advanced technologies.

Vietnam & Netherlands establish Fresh Academy

Fresh Academy - a training center focused on knowledge and practical application to support the development of Vietnam’s agriculture towards becoming a sustainable and advanced sector - has been officially established.
With the support of the Dutch Government, since 2015 a group of training organizations from Vietnam and the Netherlands have come together to prepare for the establishment of the Fresh Academy. The long-term goal is to provide training in all key areas of agricultural production throughout the country.
The Fresh Academy offers practical training sessions for private sector organizations (farmers / producers, distributors / traders, retailers and service providers) as well as the public sector and NGOs active within the agricultural sector.
Dutch partners include HAS University, Wageningen University, Lentiz Group, Demonursery Westland, and Kenlog BV. On the Vietnamese side are Fresh Studio and four agriculture and forestry universities: Da Lat University, Dong Thap University, the Ho Chi Minh City Agriculture and Forestry University, and the Vietnam National University of Agriculture.

At the launch ceremony, Ambassador of the Netherlands to Vietnam, H.E. Nienke Trooster, congratulated those involved in the establishment of Fresh Academy and said that this is a great opportunity for farmers and agricultural enterprises in Vietnam and the Netherlands to exchange experience to develop sustainable agriculture.
“This is the start and there are some obstacles ahead,” she said. “But we are convinced that successful models such as Fresh Academy will provide the basis for the success of Vietnam’s agricultural sector in the years to come.”
Vietnam and the Netherlands have close cooperative relations in agriculture. Water, agriculture, and climate change were the most important matters discussed during the official visit by Prime Minister Nguyen Xuan Phuc to the country in July.
The two signed a strategic partnership agreement in sustainable agriculture and food security in 2014, involving Dutch help in responding to climate change, among other things.
The Netherlands is also among the largest European investors in Vietnam, ranking eleventh out of the 119 countries and territories investing in the country, with 287 projects worth $7.7 billion.
After establishing diplomatic ties with Vietnam in 1973, the Netherlands began providing non-refundable ODA to the country, mainly in humanitarian activities, education and training, and healthcare.

Shrimp exports to US set to increase

The latest figures from the Vietnam Association of Seafood Exporters and Producers (VASEP) show that shrimp export turnover to the US is rising while tra fish products continue to decline.
Total shrimp export turnover in the first seven months of the year reached $344.7 million, down 5.5 per cent year-on-year, with the eight-month figure reaching $416 million, down 4.4 per cent year-on-year. 
The EU surpassed Japan to become Vietnam’s largest shrimp export market. China followed, with the US again fourth.
VASEP forecasts that demand for shrimp imports in the US will continue to improve in the closing months of this year, contributing to higher export turnover, albeit not significantly.
While shrimp exports to the US have improved, the export of tra fish to the country continues to decline. According to VASEP’s figures, tra fish export turnover to the US in the first seven months reached $223 million, down 1 per cent over year-on-year. The eight-month figure fell 6 per cent year-on-year, to $241 million.
“From now until the end of the year, the export of tra fish to the US market will continue to decline,” VASEP forecast, adding that a catfish inspection program and antidumping tariff barriers are behind the decline.
China therefore became Vietnam’s largest tra fish export market in the first eight months, with turnover of $247.4 million, up 43.9 per cent over the same period last year.
Vietnamese seafood businesses will continue facing obstacles over the remainder of the year, including in quantity and quality of input materials and barriers in import markets, General Secretary of VASEP, Mr. Truong Dinh Hoe, told a recent conference in Ho Chi Minh City. 
VASEP forecasts that total seafood shipments are likely to hit $8 billion for the whole year, up 14 per cent against last year’s figure, thanks to key exports like shrimp, tra fish, tuna, and squid.
Experts, however, said that major challenges, such as high anti-dumping duties and the US inspection program, require domestic exporters devise appropriate export plans, in particular adapting to market fluctuations.

UPS bolsters export & import services in central and southern region

Global logistics service provider UPS has recently announced in will enhance its services in ten provinces in central and southern Vietnam: Ba Ria Vung Tau, Binh Dinh, Binh Duong, Binh Phuoc, Dong Nai, Quang Ngai, Quang Nam, Tay Ninh, Thua Thien Hue, and Tien Giang.
The company has cut transit times for export and import shipments within Asia from two days to one and improved shipment times from Europe from three days to two. In addition, the cut-off times for pick-up have been extended by up to three hours. This service enhancement is part of UPS’s long-term strategy to provide local small and medium-sized enterprises with greater access to global trade.
“As a trade enabler, UPS is focused on reducing barriers for businesses looking to engage in cross-border commerce,” said Mr. Daryl Tay, Managing Director of UPS Vietnam. 
“The Vietnamese Government has expressed a commitment to pursue 6.7 per cent GDP growth. Positive discussions are taking place around easing inter- and intra-regional trade with the Regional Comprehensive Economic Partnership (RCEP) and the EU-Vietnam Free Trade Agreement (EVFTA). We remain confident that trade will continue to flourish with Vietnam’s growing middle class and shifts in manufacturing.”  
UPS also recently enhanced services in nine northern provinces, bringing the company’s presence to 19 provinces in the country.
“Suppliers are under increasing pressure to provide more products and services of higher quality, at greater speed and at lower cost,” Mr. Tay added. 
“By offering later export cut-off times and improved transit times, UPS’s customers in Vietnam can extend their production lead times to process more orders and still deliver goods to satisfy their end-consumers’ needs. When combined with UPS’s broad range of logistics solutions, retail, high tech, industrial and automotive manufacturers can maintain an agile and robust supply chain while enjoying competitive advantages in the international marketplace.”  
Vietnam is the EU’s second most important trading partner within the ten-member ASEAN bloc, and is one of the world’s fastest-growing economies. UPS’s latest expansion of the UPS Worldwide Express Plus™ service saw its earlier morning deliveries expanded to 28 new countries, including Vietnam, and enhanced in 25 existing countries including China, Japan and the UK.
UPS is a global logistics service provider, offering a broad range of solutions including transporting packages and freight, facilitating international trade, and deploying advanced technology to more efficiently manage the world of business. Headquartered in Atlanta, US, UPS now serves more than 220 countries and territories worldwide.

LienVietPostBank plans to sell 25% stake to foreign strategic investor

LienVietPostBank is currently in talks to sell a 25 per cent stake to an overseas strategic investor as it seeks expertise to expand its foothold, CEO Mr. Pham Doan Son told an October 2 meeting with investors.
He did not, however, name the foreign partner or the price the shares may be sold for. His statement comes after the bank announced it has decided to on a foreign ownership limit of 5 per cent. As at July 17, the bank’s largest shareholder was the Vietnam Post Corporation, with 12.54 per cent.
Its co-founder, the Him Lam Corp., has not been a shareholder since June, shortly before Him Lam’s Chairman Mr. Duong Cong Minh stepped down as Chairman of the bank and was elected Chairman the Ho Chi Minh City-headquartered Sacombank.
LienVietPostBank expects its foreign partner to support it in building a governance and organizational strategy as well as provide financing, Mr. Son said.
Foreign ownership in Vietnamese banks is capped at 30 per cent, while a single foreign strategic investor can own a 20 per cent stake at most. The government has several times said it would loosen the cap to make investment in a local bank more attractive.
“A number of foreign investors have shown interest in acquiring shares and we are holding talks with several renowned institutions,” Mr. Son said. “We cannot reveal the price now and it will take years, not days, to complete the sale.”
The executive also denied rumors that LienVietPostBank would merge with Sacombank and noted that it would also not acquire a consumer finance company, as other banks have done, as it will make use of the 200 branches and transactions offices and the right to use 10,000 post offices of the Vietnam National Posts and Telecommunications Group (VNPT) nationwide.
On October 5, LienVietPostBank floated 646 million shares on the Unlisted Public Company Market (UPCoM) at VND14,800 ($0.65) a share. The bank had nearly VND150 trillion ($6.6 billion) worth of assets as at the end of August, and earned a pre-tax profit of VND1.29 trillion ($56.78 million) in the first eight months of the year.

Vietnamese exporters face compliance challenges from US market

The US Food and Drug Administration (FDA) sent 32 warning letters to Vietnamese exporters in the first seven months of 2017. During the 2009-2017 period, the number of warnings totalled nearly 500, mostly concerning seafood products.

In order to export goods subject to FDA regulations for the US market, exporters must comply with this agency’s strict requirements and obtain its certificates.

The FDA will send a letter of warning to exporters whose shipments are found to have issues on quality, safety, pesticide residues and even labelling. The agency also warns the enterprises which fail to comply with new import regulations or update their information when it is changed.

According to the American Chamber of Commerce in Vietnam, the FDA’s information is publicly available on its website and it is not difficult to find information about the US import policy updates as well as the list of Vietnamese enterprises given warnings on its website.

Since Vietnamese enterprises do not keep abreast of the latest information, those under warnings will risk being inspected by the FDA, having their goods audited and customs clearance time prolonged. This will lead to higher costs and unexpected consequences such as being banned from exporting to the US.

Therefore, enterprises should arrange personnel to proactively collect information on new regulations of their export markets and make adjustments to ensure compliance, thereby maintaining their export opportunities.

In addition, it is necessary to enhance the role of relevant agencies such as the Ministry of Industry and Trade, the Ministry of Health, the Ministry of Science and Technology, Vietnamese trade representatives abroad and domestic trade associations in helping enterprises increase their awareness and capacity in food safety and diversify channels to provide enterprises with information on any new regulations.

In that spirit, an initiative to compile a set of quality standards for Vietnamese goods is a move being welcomed and should include universal international standards.

As taxes are being lowered under new trade agreements, it has become a trend in importing countries to put up non-tariff barriers with which exporters must comply. But this is also an opportunity for Vietnamese enterprises to enhance their competitiveness by increasing the quality of their products.

At the same time, it will help Vietnamese regulators to change their perception and create more effective and diversified technical barriers to protect domestic enterprises and consumers in the age of deepening international integration.

HSBC: More Thai firms to tap Vietnam market

Many Thai enterprises are interested in the Vietnam market and they will strengthen investment in the country to catch new opportunities in various fields, said Kelvin Tan, CEO of HSBC Thailand Bank.

Speaking to local reporters at a conference in HCMC yesterday, Tan said Thai firms would raise investment via direct investment and merger and acquisition deals.

In recent time, the nation has seen many mergers between Thai and Vietnamese firms, among which HSBC Vietnam has participated in large transactions between BJC and Metro’s Cash & Carry, Central Group’s PowerBuy and Nguyen Kim shopping center.

Thai investors pay much intention to the retail market, focusing on the food and beverage and consumer goods sectors. In addition, they have plans to invest in other fields such as building materials, power plants and feed production.

Thai firms favor investment in Vietnam as the two countries are in close proximity and have many similarities in culture, Tan added.

In addition, Vietnam has turned attractive to international investors due to its active participation numerous in free trade agreements (FTAs) and the ASEAN Economic Community. When tariffs are removed, Thai firms will eye Vietnam as a transit point to enhance exports to other countries.

When 16 FTAs Vietnam has participated become effective in 2020, Vietnam will join a network with 59 partners, including 15 G20 member countries. Meanwhile, Thailand does not have as many FTAs as Vietnam.

Besides, Vietnam has advantages of macro-economic and political stability, low labor cost and the Government’s incentives.

According to Pham Hong Hai, general director of HSBC Vietnam, the lender has visited some ASEAN countries to call for investment into Vietnam over the past three years. In Thailand, many investors said Vietnam was their top priority.

As HSBC concentrates on Asia, especially ASEAN markets, HSBC Vietnam has developed business in nations with large investment in Vietnam.

According to the General Statistics Office, Thailand had invested US$8.13 billion in 458 active projects in Vietnam, ranking 10th among 115 nations and territories with largest investment in the country by March. It had ranked third in the ASEAN region after Singapore and Malaysia.

Between January and June, Thai enterprises poured US$146.4 million in 20 projects in the country.

SMEs need to improve transparency for easier access to capital

Information transparency is one of the key factors that help small and medium enterprises (SMEs) get funding from credit institutions, said experts at a conference on financial solutions for SMEs held by the State Bank of Vietnam in Hanoi on October 5.

Can Van Luc, an expert in finance and banking, said SMEs are classified as those with an average number of employees covered by social insurance in the preceding year of no more than 200 each. Besides, their total capital in the preceding year should not exceed VND100 billion (US$4.4 million) and turnover in the preceding year not higher than VND300 billion.

There were about 590,000 operational SMEs in Vietnam as of late 2016, with 68% of them micro enterprises.

SMEs mainly get funding from the State budget, foreign investment, stocks and bonds, business partners, credit, and their own capital.

Luc said many SMEs lack access to finance, which hinders their growth. The reason is that SMEs are not attractive to credit institutions because they have poor credit and high operating costs.

Credit institutions have not had specific products and services for SMEs, and complicated procedures have caused slow capital disbursement.

According to Luc, most SMEs have poor business governance and lack transparency, use obsolete technologies and unskilled laborers, and are unable to meet the banks’ lending criteria. Besides, they lack business strategies, strong brand, competitive products, assets as mortgage, risk insurance, and deep understanding of financial policies.

Hoang Thi Hong, chairwoman of the Small and Medium Enterprise Development Fund (SMEDF) under the Ministry of Planning and Investment, said SMEs need to make their information transparent if they want to get access to financial support. The most important information that credit institutions need before they make lending decisions include the SMEs’ total assets, owner’s equity, annual revenue and profit, and business performance.

Hong suggested SMEs actively work with credit institutions, create effective business plans, enhance their understanding of the Government’s financial and supporting policies, cooperate with each other, and improve management skills.

For credit institutions, they should launch products and services aligned to SMEs’ specific characteristic, with simple lending procedures and favorable interest rates.

According to Doan Duy Khuong, vice chairman of the Vietnam Chamber of Commerce and Industry (VCCI), SMEs account for 97% of Vietnam’s total number of enterprises and 45% of the country’s gross domestic product (GDP). They contribute 31% to the State budget, and employ over five million workers.

HSBC: Public debt to stay within safety zone

HSBC Bank expected that Vietnam’s public debt this year would not exceed the limit imposed by the National Assembly as the strong economic growth in the third quarter helped reduce the burden on the Government.

In a report released on Wednesday, HSBC said Vietnam’s economy has soared above its expectations. The economy grew at a staggering 7.5% year-on-year in the third quarter from 6.4% in the previous three-month period.

The annualized growth this year has reached 6.4% from just 5.7% in the first half of the year, putting the Government closer to reaching its 6.7% target for 2017.

A continued rise in exports and industrial manufacturing were some of the primary drivers of growth, as the strong tech cycle in the second quarter persisted throughout the third quarter. Exports grew 22% year-on-year in the third quarter (the same as the previous quarter), led by higher shipments of phones and electronic components, while industrial manufacturing grew by an average of 10% year-on-year from 8% in the second quarter.

Moreover, agricultural production and foreign direct investment (FDI) have picked up handsomely since the first half of the year, further lifting growth. Higher tourist arrivals and agricultural production also provided an additional lift to growth.

Importantly, the strong print in the third quarter eases the load on the Government and the State Bank of Vietnam (SBV) to enact further stimulus measures that might exacerbate risks in the economy.

In July, the SBV cut its policy rate by 25 basis points to 6.25%, alongside simultaneous cuts to various other rates, in a bid to boost growth. Moreover, Prime Minister Nguyen Xuan Phuc in August called for an increase in the credit growth target from 18% to 21% to further incentivize private consumption and investment.

While credit-driven growth is not necessarily a problem given the rising role of private consumption and non-state investments, it may also create new risks for the banking sector if new credit is placed in less productive industries. In addition, reaching (or at least getting close to) the government’s 6.7% growth target this year makes it less likely that the country would exceed the National Assembly’s mandated debt-to-gross domestic product (GDP) limit of 65%, HSBC commented.

According to the Finance Ministry, public debt will reach a record high of 64.8% of GDP in 2017-2018 before gradually falling in subsequent years, assuming growth remains around 6.7%. Of course, there remain risks that growth in 2018 would be subpar, especially if global trade drastically cools off, but at least the risks for this year have been tempered.

With the most recent reading, HSBC also revised up its GDP forecast to 6.6% in 2017 and continue to expect growth of 6.4% in 2018.

National Assembly's 2017 targets are within reach: PM

All 13 norms set by the National Assembly for 2017 would be fulfilled, of which five would exceed targets and eight others would meet goals, said PM Nguyen Xuan Phuc.

The Government chief noticed that 2017 will be the first year the Government accomplishes all the 13 norms set by the National Assembly.

Government members commended that in the first nine months, the socio-economic performance witnessed three outstanding achievements, including good GDP growth pace; stable macro-economy; improved business and investment environment, and national competitiveness.

Specifically, the economic growth  improved remarkably. In Q3, GDP growth pace reached a record high of 7.46%, exceeding expectations. Generally, in the first nine months, GDP expanded 6.41%, higher than the rate of 5.99% in the same period last year, making it possible to accomplish the preset norm of 6.7%.

In the January-September period, the economic growth reflected the transformation of the growth modal which reduces heavy reliance on natural resources and focuses on production, service, trade, and deep development.

In addition, the higher GDP growth rate also showed the effective and timely solutions of the Government, drastic management of all levels, sectors, and localities.

The macro-economy was kept stable. Meanwhile, large balances were ensured.

According to PM Phuc, with the growth pace, without large-scale natural disasters, 2017 will be the first years Viet Nam succeeds in fulfilling all 13 norms of the National Assembly.

In early October, a series of international organizations showed their optimistic outlooks on Viet Nam’s economic performance.

The Hong Kong and Shanghai Banking Corporation (HSBC) just raised Viet Nam’s growth forecast from 6.0% to 6.6% in 2017 in its latest report. HSBC believed the Vietnamese economy will continue to perform well and may expand 6.4% next year.

 The World Bank (WB) on October 4 announced the East Asia and Pacific Economic Update. According to the report, Viet Nam’s economy maintains stable growth. Manufacturing and processing industry heading to exports and domestic demands sharply increased. Viet Nam’s economic growth is forecasted to stand around 6.4% in the 2018-2019 period, the report says, adding that the poverty proportion will continue reducing if there is no disadvantages of natural calamity.

Earlier, the World Economic Forum’s latest global competitiveness list, released on September 28 ranked Việt Nam 55th overall, up five places from last year and 20 from five years ago.

However, PM Phuc stressed that despite the positive socio-economic performance in September and the first nine months, it is necessary to avoid subjectivism, negligence, and satisfaction.

There remain heavy duties during the rest minths of the year, requiring every ministry, agency, and locality to be active and creative to accomplish the assigned missions.

Ministries, agencies, and localities were urged to take drastic steps, especially to achieve the set 6.7% GDP growth pace.

Vietjet hailed as tourism pioneer
   
The Guide magazine of Viet Nam Economic Times has awarded Vietjet “The Pioneering Airline Award” for its outstanding contribution to the development of Vietnamese tourism.

The award ceremony was held in Kien Giang Province’s Phu Quoc Island last week.

The award results were based on votes, opinions of readers, in addition to the performance and practical survey of The Guide’s organisers, and other trustworthy information sources.

The awards committee described the carrier as a pioneering airline in using the latest generation airplanes, opening new routes, painting a Vietnamese tourism logo on airplanes, and introducing the Hello Viet Nam tune on more than 100 international and domestic routes.

VNA/VNS/VOV/SGT/SGGP/TT/TN/Dantri/VNEVET
 
 

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