BUSINESS IN BRIEF 6/2

Vietnam welcomes over 1 million foreign visitors in January


BUSINESS IN BRIEF 6/2


Vietnam welcomed more than 1 million foreign visitors in the first month of 2017, representing rises of 12.3 percent compared to the previous month and 26 percent year-on-year.

 According to the Vietnam National Administration of Tourism, the flow of tourists from almost markets witnessed an increase, with China topping the list (up 67.9 percent).

It was followed by Laos (up 41.7 percent), Russia (36.5 percent), Belgium (27.6 percent), Sweden (27.3 percent), Spain (27.2 percent), the Netherlands (24 percent), New Zealand (20.8 percent) and Finland (18 percent).

Meanwhile, the number of domestic holidaymakers reached 5.7 million in January. Total earnings from tourism services hit 38.6 trillion VND (1.7 billion USD), representing an increase of 28.5 percent year-on-year.

Vietnam’s tourism sector expects to welcome 11.5 million international visitors and served 66 million domestic holidaymakers in 2017, raking in 460 trillion VND (20.3 billion USD).

The sector also aims to receive from 17-20 million international tourists and serve 82 million domestic visitors by 2020, contributing 10 percent to the gross domestic product (GDP). Its revenue from tourism is expected to reach 35 billion USD.

Agro-forestry-aquaculture export at 2.54 billion USD in January

The export turnover of agriculture, forestry and aquaculture in January is estimated at 2.54 billion USD, a year-on-year decrease of 1.4 percent, according to the Ministry of Agriculture and Rural Development. 

Of which, aquatic products earned 518 million USD, down 5 percent against the same period last year, while major forestry products brought home 652 million USD, up 2.1 percent year-on-year. 

Vietnam exported about 325 tonnes of rice worth 136 million USD in the review period, a year-on-year decreases of 32 percent in quality and 35.1 percent in value, the ministry said.

Meanwhile, 127,000 tonnes of coffee were shipped abroad in January for 287 million USD, down 25.5 percent in volume and 3.6 percent in value against the same period last year.

Strong tumbles were recorded in the export value of other farm products such as tea, cashew nut, pepper, and cassava.

The country earned 16 million USD from exporting 11,000 tonnes of tea in the period, reducing by 3.6 percent in volume and 8.6 percent in value compared to those in January last year. 

The export of cashew nut saw decreases of 20 percent and 4.4 percent in terms of volume and value, respectively. 

Rubber was the only product maintaining stable export growth, with 193 million USD earned from shipments of 102,000 tonnes, up 84.8 percent in value  and 10.5 percent in volume from the same period last year.

Bach Long Vi island district thrives from sea

Bach Long Vi is the farthest island of Vietnam in the Gulf of Tokin and it is making all-out efforts to implement the national marine strategy by 2020 in a bid to prosper from the sea.

Covering around 2.5 square kilometres when the tide is rising and about 4 square kilometres when the tide is receding, the island became a district of the northern coastal city of Hai Phong under the Government’s Decree 15/CP dated December 9, 1992. 

Despite its small scale, the island with its significant strategic position has long been regarded important in the country’s marine economic development, security and national defence strategy in the Gulf of Tonkin. 

Later in 1994, the Prime Minister issued Decision 397/TTG approving the development of the Bach Long Vi island district into a district-level administrative unit and a fishery logistics centre in the Gulf of Tonkin.

With a harbour that went into operation in 2000, the island district provides storm shelters for about 11,000 fishing boats each year.

Bach Long Vi is home to many species of sea grass, 65 seaweed species, 94 coral species, 110 species of marine zooplankton, 227 species of marine phytoplankton, and 451 species of marine fish. 

It also boasts 17 species of mangroves and 125 benthic or seafloor dwelling species.

The island, housing nearly 1,000 residents, has been built to become a fishery logistics centre, thus receiving average annual arrivals of up to 30,000 boats and 200,000 fishermen.

Do Duc Hoa, Chairman of the Bach Long Vi People’s Committee, said his district has been prioritizing three strategic missions for socio-economic development by 2020, which are protecting the national sovereignty over seas and islands, building infrastructure system and developing the economy based on sea and island.

Bach Long Vi, together with Song Cam, Dinh Vu, Lach Huyen, Nam Do Son, formed the main terminals of Hai Phong seaport.

Endowed with a huge resource of valuable marine creatures, Bach Long Vi has chosen fishery and services as its spearheaded sectors.

From 2017, the locality is aiming to develop a wide range of key services, including logistics, oil & gas, banking, insurance, marine medicine and finance.

Bach Long Vi has all potentials needed to become a hub of eco-tourism as well as high-end marine and convalescence tourism in the future.

The local authorities are also working to make the Bach Long Vi marine reserve set up under the Prime Minister’s Decision No 2630/QD-TTG operate in a more efficient manner.

The Bach Long Vi marine reserve is among the eight biggest fishing grounds in the Gulf of Tonkin. Its fish and squid reserve amount to 78,000 and 5,000 tonnes, of which 38,000 and 2,500 tonnes can be caught on an annual basis. People also found sea cucumbers and abalones gathering in large here in addition to the residency of many rare and endemic species.

The sea-based economic activities have contributed to better the living standards of islanders. 

Recently, the Hai Phong youth association has launched a number of projects in a bid to accelerate the economic growth in the Bach Long Vi island district.

One of these projects is the construction of a clean water reservoir with a capacity of 60,000 cubic metres. Under a total investment of almost 188.2 billion VND (8.3 million USD), the project will soon complete its first phase.

Once become operational, it is expected to supply 500 local residents with drinkable water and contribute to encouraging more people to relocate to the island.

The youth association has also put an abalone breeding centre into operation, which helped create jobs for locals, protect the environment and sustainably develop the economy.

According to Dao Trong Tue, Vice Chairman of the Bach Long Vi district People’s Committee, the district recorded positive outcomes in socio-economic and cultural development in the first half of 2016 that exceeded all quotas set for the period.

Bach Long Vi will steer future development of its economy towards industry & construction, trade & commerce and agro-fishery, with average budget collection growing between 12 and 15 percent per year.-

Da Nang set to achieve robust maritime economic growth

The central coastal city of Da Nang has issued a planning for the economic development of sea and island areas to 2020 with the aim to optimise the locality’s strength and potential to create socio-economic development breakthroughs.

The planning, seen as part of the city’s efforts to realise Vietnam’s sea and island strategy to 2020, also clarifies prioritised areas and projects for both local and foreign investments in sea and island areas.

Da Nang is among the 28 coastal localities of Vietnam and one of the 14 central cities and provinces having the coastline. Six out of its eight districts border the sea. The city has 90km of the coastline and 80 percent of population living in coastal districts and wards.

Thanks to its wide sea area, Da Nang city has high potential in fishery, tourism and sea transportation.

The city’s sea has a fishery reserve of about 1.14 million tonnes, accounting for 43 percent of the country’s total, with more than 670 species, including 110 species with high economic values.

The south Hai Van-Son Tra peninsular area is home to a diverse ecosystem, including coral reefs, sea grass, seaweeds and rare creatures and plants.

With a goal to become a fishery centre of the central region posting a 14-15 percent growth in seafood exports per year, Da Nang has set to focus on offshore fishing and minimize near-shore fishing activities in a bid to restore and preserve fishery resources. The city aims to rapidly expand the fleet of offshore fishing vessels with high capacity and upgrade those with small capacity.

The city has paid much attention to vocational training to provide high quality workforce with skills and knowledge needed to operate modern fishing equipment to serve the fishery sector.

At the same time, Da Nang has invested in a fleet of 10 fishery logistic vessels with a capacity of 800-1,000CV each, thus supplying fuel and at the same time buying fresh seafood at sea. It fishermen are being supported by modern communication information system when operating at sea.

To improve catch output and minimize human and property losses during operations at sea, the city has issued a regulation on fishermen’s teams that laid the foundation for the activity of gathering individuals to an organization in which members help each other in production as well as in search and rescue activities, safeguard the traditional fishing grounds, assist each other in the procurement of fishing tools and equipment, connect vessels, maintain contacts between fishermen at sea and the mainland, and receive weather forecast and guidelines on disaster response and search and rescue from the mainland.

The model has been lauded by local fishermen who found that the groups meet their demands during their production at sea.

Vu Dieu Ngan from the Da Nang Institute for Socio-economic Development Research said that to make the maritime economy play the core role in the city’s economy, Da Nang should focus on strengthening fishing activities, especially offshore fishing, while continuing improving the capacity and effectiveness of the sector.

She also stressed the importance of increasing the application of science and technology as well as quipping modern equipment for fishing vessels.

The city should expand the seafood processing system for exports, while upgrading Da Nang port to ensure its performance as the gateway to the sea for the Central Highlands as well as Laos, Cambodia, Thailand, Myanmar and other northeastern Asian countries, said Ngan.

Meanwhile, Dan Hung from the municipal People’s Committee said that the city has exerted efforts to implement commitments to the development of the maritime economy, while resolutely safeguarding the country’s sovereignty over sea and islands.

The city has built its own strategy to realize the country’s sea and island strategy, with solutions and steps suitable to the country’s conditions while  making the best use of foreign investment and technology to conquer the sea, serving the country’s economic development in a rapid and sustainable manner, said Hung.

Thua Thien – Hue develops Lang Co tourism trademark

The central province of Thua Thien – Hue aims to establish a tourism trademark for Lang Co, which was listed as one of the most beautiful bays of the world by the Worldbays Club in 2009.

Thua Thien – Hue also aims to make Chan May – Lang Co a modern marine urban zone, an ecotourism site and a hi-tech centre, creating impetus for the development of the central key economic region by 2020.

Lang Co, in Phu Loc district, lying between two major central cities, Hue and Da Nang, plans to explore its favourable geographical location and beautiful scenery to become an attractive destination on the Central Vietnam Heritage Road, which includes the world heritages of Phong Nha Ke Bang National Park, Hue ancient city, Hoi An ancient town and My Son sanctuary. 

It is home to Chan May deep-water port, one of the gateways to the sea for the East-West economic corridor.

Over the past years, investment capital has been poured into developing infrastructure in Lang Co, including Chan May port, the Hai Van Pass and Lang Co bridge, laying a foundation for socio-economic development in the locality and enhancing trade in the region.

Effortshave been made to develop infrastructure in the Chan May-Lang Co economic zone in order to make it a large and modern international trade hub in the central region, as well as a tourism centre of regional and international stature.

The province has also built a modern Chan May urban zone with Hue-styled architecture, linked with the urban chain from Hue – Chan May – Lang Co – Da Nang – Chu Lai – Dung Quat – Nhon Hoi – Van Phong, with a view to turning Lang Co into a magnet to investors at home and abroad.

Chan May port, with an upgraded wharf at 12.5 metres deep can now accommodate 30,000 - 50.000 tonne vessels and cruise ships carrying over 3,000 passengers. In 2016, it welcomed 60,000 international tourists to Hue. It is expected to handle between 4.8 – 5.4 million tonnes of cargo by 2020, and 8.9 – 10.2 million tonnes by 2030. 

Director of the Chan May Port JSC Huynh Van Toan said the port is among 46 sea ports selected by the Asia Cruise Association as a stop for pleasure boats in Southeast Asia. Located between the central cities of Hue and Da Nang, and near numerous local tourism landscapes, it connects the central Vietnam with Laos, Thailand and Myanmar. 

Over the past five years, Lang Co has witnessed fast economic and social development.

The Lang Co touristsite has seen an annual increase of 25 percent and 20 percent in tourist number and revenue, respectively. This year, Lang Co aims to draw 700,000 tourists and generate around 1 trillion VND (44 million USD) in revenue.

According to Director of the provincial Department of Culture and Sports Phan Tien Dung, besides offering discounts, coastal resorts should expand sea-based tourism products, such as meetings, incentives, conferences and exhibitions tourism.

The province will continue connecting with regional localities to tap the potential of the Central Vietnam Heritage Road and tourism sites along the East – West economic corridor to promote Lang Co tourism.

The locality also encourages investment in developing infrastructure in Lang Co in order to form a cultural and ecological tourism triangle together with Bach Ma National Park and Chan May port.

The tourism sector aims to focus on human resources training while expanding and improving tourism services to lure more tourists, Dung said.

Lang Co is situated 45km from Hue and 55km from Da Nang. Endowed with blue waters and white sandy beaches and vast forests atop mountains, the bay is a prime tourist destination with many hotels, motels, and resorts. 

Lang Co is Vietnam's third bay to be admitted to the World-Bays after Ha Long and NhaTrang.

PVFCCO makes list of 500 top firms for 10th year     

PetroVietnam Fertiliser and Chemicals Corporation (PVFCCo) has been named among the Top 500 leading enterprises in Viet Nam (VNR 500) for the 10th consecutive year.

The VNR500 list, issued by the Viet Nam Report Company, shows PVFCCo maintaining its position as the country’s leading enterprise in the fertiliser industry.

PVFCCo was also named in the list of 50 Most Profitable Large Enterprises in 2016, another new ranking of the Viet Nam Report Company, which aims to honour firms with impressive business results and strong financial capacity, as well as a high level of after-tax profits in the past five years.

VNR 500 rankings are based on revenue, profit, total assets, growth, employee number and other criteria.

Vice President of PVFCCo, Duong Tri Hoi, said the company’s VNR 500 listing created a huge impetus for further development. PVFCCo was currently developing projects operating fertiliser production lines, such as its Phu My NPK Plant, to manufacture high-quality NPK fertiliser.

The company is also operating the Phu My Fertiliser Plant, with a capacity of 800,000 tonnes per year, located in Phu My 1 Industrial Zone in southern Ba Ria–Vung Tau Province, providing about 40 per cent of the market demand for fertiliser.

PVFCCo is also actively developing its chemical segment, striving to become the leading enterprise in the country and the region in the field of chemical production for oil and gas.

Central province adds more industry and service complex     

Quang Nam province has approved the Ha Lam-Cho Duoc Industry-Trade-Service Complex on 83.5ha in Thang Binh district.

The province said the complex will be reserved for investors in agriculture and forestry, seafood processing, pharmaceuticals, mineral processing, garment, leather and craft.

To date, the province has developed 19 industrial parks and complexes on a total area of 4,700ha.

According to latest reports, Chu Lai Open Economic Zone which was opened in 2003 has 109 investment projects, of which 29 are foreign direct investment (FDI) projects with combined registered capital of more than US$1.52 billion. Sixty-six projects, worth more than $837 million, are in operation, creating 12,000 jobs for locals.

The province also invested VND825 billion ($39 million) to dredge the ports of Tam Hiep and Ky Ha, to help cargo ships with capacity of 10,000 deadweight tonnage (DWT) and 20,000 DWT reach them.

Meanwhile, Chu Lai Airport plans to handle 2.3 million passengers and 1.5 million tonnes of cargo by 2025.

Quang Nam has so far attracted 128 FDI projects with total investment capital of $2.1 billion.

Last year, the province commenced construction on two key projects – the Nam Hoi An Integrated Resort Project, invested by VinaCapital and Gold Yield Enterprises Corporations, and the expansion of the Truong Hai-Chu Lai Mechanical Automobile Industrial Zone, with initial capital of $535.3 million. 

Business community and the goal of a startup country

Vietnam is working hard to realize the goal of 1 million startups by 2020. This endeavor requires great efforts by both the Government and business community.

The startup movement is growing strongly in Vietnam, mostly in the IT and service industries. 30% of 200,000 businesses in Hanoi are startups.

The Hanoi Association of Small and Medium Enterprises has established a fund to support businesses and encourage bigger companies to assist startups.

Mac Quoc Anh, the Association’s Vice Chairman and Secretary General, said “Startups should focus on breakthrough products to avoid competition from bigger and more experienced businesses. In addition to advanced technology application, creativity and dynamism are among the most important factors for startups.”

The FPT group is cooperating with foreign foundations and incubators to create 5,000 technology firms in Vietnam by 2020.

Tran Huu Duc, Director of FPT Ventures said that FPT will offer financial support and expertise to help startups create products for both domestic consumption and export.

“We’ve cooperated with Korea’s Hanhwa group, Dragon Capital, and BIDV Securities Company to establish a foundation which supports startups with access to capital, international markets, and training,” he said.

President of the Vietnam Chamber of Commerce and Industry Vu Tien Loc said “The Government’s target of 1 million startups by 2020 is very important to develop Vietnam into a country of startups. A series of policies and measures have been introduced to encourage startups and innovation and build a constructive and business-serving Government.”

Overcoming challenges to create momentum for economic growth

The year of 2016 was considered as a year full of challenges for Vietnam's economy as internal problems remained cumbersome while the international situation witnessed unpredictable developments.

Nevertheless, Vietnam’s macro-economy continues to be maintained and consolidated, creating momentum for economic growth in 2017.

According to the Ministry of Planning and Investment, GDP growth in 2016 was estimated at around 6.21%, macroeconomic stability was maintained, and inflation was controlled at 4.75%. 

Economic experts said that amidst difficult conditions, Vietnam's economic growth of over 6% showed a remarkable effort. 

More importantly, Vietnam saw steady economic development, macroeconomic objectives related to growth, inflation, employment, money value, foreign exchange reserves, macroeconomic stability, were all on the whole achieved.

Specifically, in 2016, Vietnam's budget collection increased while interest rates were reduced, foreign currency and gold markets also maintained stability. 

Foreign exchange reserves of Vietnam reached a record high of about US$41 billion. In 2016, Vietnam still recorded a trade surplus of US$2.68 billion as exports rose by 8%. 

Meanwhile, total social investments accounted for 32.5% of GDP. Disbursement of foreign direct investment (FDI) capital in 2016 was estimated at US$15.8 billion. 

The stability of the economy recorded positive outcomes in regards to the inflation index. 2016 was a successful year in controlling inflation amidst rebounding prices of some essential goods, as the CPI in December increased by 4.75% from 2015, lower than the 5% target set by the National Assembly.

Another positive signal for the economy is that the number of newly-established firms hit a record high of 110,100 in 2016, up 16.2% from 2015, according to the Business Registration Management Agency under the Ministry of Planning and Investment. 

The new enterprises have a combined registered capital of VND891 trillion (US$39.2 billion), a year-on-year increase of 48.1%. The number of businesses resuming operations in 2016 reached 26,689, up 43.1% from 2015.

Deputy Minister of Planning and Investment Dang Huy Dong said the figures reflect the recent growth of Vietnamese enterprises and improvements in the investment climate, creating an impetus for the country’s economic development in the period of international integration.

The newly-established firms created jobs for nearly 1.3 million workers. Most of them are operating in real estate, health care and social assistance, and education and training.

Exerting efforts to reach 2017 target

Despite the encouraging results achieved in 2016, Vietnam’s economy is still facing many difficulties and challenges in the coming year, notably the slow process of economic restructuring, bad debt, and high public debt, among others. This has put tremendous pressure on the State budget collection, and economic growth.

The National Assembly has adopted a resolution on the socio-economic development plan for 2017, which aims for a gross domestic product (GDP) growth rate of about 6.7%. The plan also targets a 6-7% rise in export-import revenue, and a trade deficit accounting for some 3.5% of the total trade turnover.

While the consumer price index is hoped to increase by around 4%, total social development investment is expected to reach 31.5% of the national GDP. Vietnam is set to have its household poverty rate decline by 1-1.5% under the multidimensional measurement.  

The respective health insurance and forest coverage is hoped to reach 82.2% and 41.45% next year. The plan targets a stable macro-economy, economic restructuring associated with growth model reform, and improvement of the economy’s competitiveness. 

It also looks to encourage sustainable start-ups, ensure social welfare, proactively respond to climate change, increase environmental protection, and step up administrative reforms.

According to Le Quoc Phuong, Deputy Director of the Vietnam Industry and Trade Information Centre, if the regional and global economic situations witness favourable developments, Vietnam could reach 6.5% of GDP growth in 2017.

Meanwhile, the World Bank (WB) and Asia Development Bank (ADB) have forecast that Vietnam’s GDP growth will reach 6.3% this year, while the International Monetary Fund (IMF) have set the figure to 6.2%.

The National Financial Supervisory Commission of Vietnam (NFSC) has predicted that this year Vietnam’s economy will improve due to the reform of institutions and the investment environment, as well as the price recovery of energy and farming products on the world market, creating a new impetus for the private sector.

The National Centre for Socio-economic Information and Forecast (NCIF) under the Ministry of Planning and Investment has two scenarios for domestic economic development this year based on the impact of the Government’s directions and an IMF forecast of global GDP growth of 3.4%.

According to the more likely first scenario, the domestic economy will remain stable and development and local investment will continue to improve. Vietnam will benefit from its global integration to improve exports and investment. That would translate into 6.44% GDP growth and inflation of 5% in 2017.

The second scenario forecasts a 6.72% GDP growth rateand inflation of 6% if it further improves the structure and efficiency of the economy. Policy management as well as legal and investment environment reforms in 2016 have begun to have an effect, the NCIF says. 

The consumption index is increasing slowly and steadily. The State implemented flexible management of monetary and exchange rate policies, in the hope of achieving an average basic interest rate of 6% in 2017. The nation is forecast to achieve its money supply and credit growth goals.

VN’s vegetable, fruit export value up by 14% in Jan

The domestic vegetable and fruit industry in January witnessed a year-on-year increase of 14 per cent in export value to US$230 million, according to the General Statistics Office (GSO).

So far this year, Vietnamese vegetable and fruit products have been shipped to more than 60 countries. Lychee, rambutan, dragon fruit, mango and longan, in particular, have been exported to markets with string regulations such as the United States, Australia, Japan and South Korea.

To enter these markets, local vegetables and fruits must meet strict quarantine conditions, food safety standards and have documents of origin.

According to the Việt Nam Vegetable and Fruit Association, Việt Nam last year witnessed a 30 per cent year-on-year increase in export value of vegetables and fruits to $2.5 billion. The export value exceeded the export value of some major farming products, including rice, pepper and rubber.

Experts said the vegetable and fruit industry would export many kinds of fruit in the future, resulting in a 3-4 times surge in export volume against the current volume.

At present, the relevant offices have completed necessary procedures to export local fruits to new markets.

Jetstar Airways to launch direct flights to HCMC

Jetstar Airways has said it will start direct flights connecting Australia’s two largest cities, Sydney and Melbourne, with Vietnam’s HCMC in May this year to meet strong demand for air travel between the two countries.

Jetstar Airways will launch flights from HCMC to Melbourne on May 10, and those to Sydney on May 11. But prior regulatory approval is required.

The airline said in a statement that the new routes would make Jetstar the only low cost carrier to operate direct services between the countries.

Jayne Hrdlicka, chief executive officer of Jetstar Group, said in the statement Vietnam has been a source of consistent growth to Australia’s tourism in the past and that the increase will continue.

“Indeed in the last 12 months, there had been a 21% increase in visitors from Vietnam to Australia, and with our new service, we aim to be an impetus for even more growth on the route,” Hrdlicka said. 

Vietnam has seen a surge in outbound travel in the past year. A recent survey of MasterCard showed a 15% year-on-year rise in outbound travel from the ASEAN country, making the Vietnamese Asia’s second-most prolific travelers.

According to the General Statistics Office, more than 44,140 Australians visited Vietnam in January, up 64.4% month-on-month and 4% year-on-year. In 2016, Vietnam welcomed over 320,670 travelers from Australia, increasing 5.6% over 2015.

Jetstar expected the new direct Australia-HCMC connection would drive up visitation to the continent.

Ties between Australia and Vietnam have expanded in multiple fields, with over 31,000 Vietnamese nationals presently studying in Australia, and a domestic Vietnamese population of over 220,000.

“Australia already features prominently in the top 10 source markets for Vietnamese tourism, with Aussies drawn by the nation’s cuisine and rich cultural heritage. Offering an affordable means for more Australians to explore all that Vietnam has to offer is a tremendous opportunity for Vietnam to grow its tourist trade,” Hrdlicka said.

With the flights to HCMC in May, Jetstar Airways will become the only low cost carrier to fly direct to Australia, with four weekly services to Sydney and three weekly services to Melbourne using Boeing 787 Dreamliner jetliners.

Jetstar said from HCMC, travellers can fly to 15 other destinations within Vietnam on budget carrier Jetstar Pacific, which offers the same low fares that Jetstar can sell.

VN needs major institutional reform to carry out FTA with EU

Vietnam will have to proceed with major policy and institutional reform to implement a free trade agreement (FTA) with the European Union (EU), said the president of the Central Institute for Economic Management (CIEM).

Nguyen Dinh Cung, speaking at a seminar on implications for policy and institutional reform in the process of implementing the Vietnam-EU Free Trade Agreement (EVFTA), held by CIEM and the Embassy of Denmark in Hanoi before the start last week of the Lunar New Year holiday, said the Government of Vietnam would set up an agency in charge of State holdings in enterprises this year.

“In 2017, the agency acting as the State owner of shares at enterprises will be established to ensure and promote the neutrality of State-owned enterprises (SOEs),” Cung said, describing this forthcoming move as a big policy change.

For instance, dozens of large state-owned corporations would be detached from the Ministry of Trade and Industry and others, he said. “The role of ministries would be fundamentally changed as they would no longer oversee SOEs.”

The Competition Law would be amended, with the Vietnam Competition Authority to be vested with greater power and separated from the Ministry of Industry and Trade to become a government agency.

Cung said, “These changes are aimed at fostering a market economy, making Vietnam compatible with the new-generation FTA, promoting fair competition, and elevating the status of Vietnam’s market,” he remarked.

Hoang Van Phuong, head of the ASEAN division under the Ministry of Industry and Trade’s Department of Multilateral Trade Policy, said the EVFTA is a high-quality and comprehensive agreement as it touches on multiple areas such as government procurement, environment and SOE reform.

The trade pact is divided into several chapters and 17 main components, including goods, customs, trade in services, investment, competition, SOEs, government procurement and sustainable development.

Regarding trade in goods, the deal features a high commitment. Vietnam’s roadmap is to remove 48% of tariff lines as soon as the agreement takes effect, and 99% of them will go after 10 years.

In return, the EU will offer Vietnam faster tax adjustments. In the first seven years after the agreement goes into force, the EU will slash 99.2% of tariff lines to a mere 0.8%, or almost fully open its market to Vietnamese goods in seven years.

“Vietnam’s exports to the EU will enjoy tax reductions following a certain roadmap. The major items like textiles will benefit,” Phuong said. “Major changes would come if the EVFTA becomes effective in 2018.”

The agreement is under expert-level review, Phuong said. “Many companies have asked us why the approval process takes so long. The process is still going on. We are doing a legal review. Vietnamese and EU delegations are sitting together to discuss chapter by chapter and solve the remaining differences.”

Local fertiliser industry growing     

Viet Nam uses 11 million tonnes of fertiliser annually, 90 per cent of it inorganic, and its consumption of local products is rising, the Ministry of Industry and Trade said.

More and more domestically produced fertilisers are being used and there is a drop in imported products, the ministry said. In recent years, the country’s fertiliser sector has seen strong growth.

The country has been active in ensuring the supply of urea fertilisers for agricultural production even as it develops new fertilisers such as DAP and kali. Vietnamese fertiliser producers have invested in technologies, equipment and quality of phosphate and NPK fertilisers, the ministry said.

Local producers can meet demands for urea, phosphate and NPK fertilisers, and even manage to export some products to Cambodia, Laos, Indonesia, the Philippines, South Korea and Japan. However, Viet Nam still has to import its entire requirement for SA fertiliser.

Nguyen Gia Tuong, general director of Viet Nam Chemical Industry Group (Vinachem), said that in 2017, his company had targeted an industrial production value of VND42.4 trillion, which was an 8.3 per cent rise from last year.

Its turnover is expected to reach VND43.5 trillion, a 3.9 per cent year-on-year increase. The company’s units have to increase production to meet the demands for agricultural production and export, he said.

The group is also working to stabilise the domestic fertiliser market and avoid shortage and unreasonable price spike, Tuong said. Vinachem has asked its units to improve trade promotion activities and expand its markets. At the same time, the company is implementing the give-priority-to-Vietnamese goods policy to increase utilisation of rubber, phosphate, urea and DAP fertilisers.

Vinachem has requested the ministry to take drastic measures to stop the sale of poor-quality and fake fertilisers as well as curb trade fraud so that the business environment is healthy. It has called for trade defence measures such as imposing an anti-dumping tax on urea and DAP-imported fertilisers.

Reference exchange rate drops 1 VND

The State Bank of Vietnam set the reference VND/USD exchange rate at 22,197 VND per USD on February 6, down 1 VND from the rate at the end of last week.    

With the current trading band of /-3 percent, the ceiling rate for commercial banks on the day is 22,862 VND per USD and the floor rate, 21,533 VND per USD.

The opening hour rates listed by commercial banks saw strong reductions from the previous week. 

Vietcombank cut both buying and   selling rates by 20 VND, listing the buying rate at 22,585 VND and the selling rate at 22,655 VND for one USD. 

Both the rates listed by BIDV went down by 30 VND, to 22,590 VND (buying) and 22,660 VND (selling) per USD.  

At Eximbank, the buying rate was listed at 22,570 VND per USD and the selling rate at 22,660 VND, both down 20 VND.

Vietjet Air offers 500,000 promotional tickets

Low-cost carrier Vietjet Air on February 5 announced its promotion programme in the year with 500,000 super-saving tickets priced from only 5,000 VND (0.21 USD) for flights from March 1 to December 31.

The promotional tickets are available at www.vietjetair.com from 12 to 14pm on the three consecutive days, from February 8, 9 and 10.

The programme is applied for all domestic routes from Ho Chi Minh City to the Central Highlands cities of Buon Ma Thuot, Pleiku and Da Lat, the central cities of Khanh Hoa, Da Nang, Hue, Quy Nhon, Dong Hoi, Vinh and Thanh Hoa, Phu Quoc island, Can Tho city in the Mekong Delta region, Hanoi, and Hai Phong.

Vietjet is the first airline in Vietnam to operate as a new-age carrier with low-cost and diversified services to meet customers’ demands. It provides not only transport services but also uses the latest e-commerce technologies to offer various products and services for consumers.

The carrier recently became a fully-fledged member of the International Air Transport Association (IATA) after receiving the IATA Operational Safety Audit (IOSA) certificate two years ago. 

Vietjet was also named as one of the Top 500 Brands in Asia 2016 by global marketing research company Nielsen and “Best Asian Low Cost Carrier” at the TTG Travel Awards 2015, which compiles votes from travelers, travel agencies and tour operators in throughout Asia. The airline was also rated as one of the top three fastest growing airline brands on Facebook in the world by Socialbakers.

Currently, the airline boasts a fleet of 42 aircraft, including A320s and A321s, and operates 350 flights each day. It has already opened 60 routes in Vietnam and across the region to international destinations such as Hong Kong, Thailand, Singapore, the Republic of Korea, Taiwan, Malaysia, China, Myanmar, and Cambodia. It has carried nearly 35 million passengers to date.

Aluminum hydroxide exported to overseas markets

The Dak Nong Aluminium Company (DNA) under the Vietnam National Coal – Mineral Industries Holding Corporation Limited (Vinacomin) exported the year’s first batches of aluminium hydroxide on February 4.

The batches include 11,600 tonnes shipped to the Republic of Korea and 3,000 tonnes to Japan.

Deputy director of the company Ngo To Ninh said this was the biggest order since the DNA turned out the first tonnes of aluminium hydroxide in November 2016, adding that Vinacomin is negotiating with foreign businesses to export about 15,000-20,000 tonnes of aluminium to Japan within this month.

The Nhan Co Aluminium Factory in Dak Nong was a key project built by Vinacomin with a total investment of over 16.8 trillion VND (800 million USD) and an adjusted capacity of 650,000 tonnes of aluminum per year.

The plant is on trial run at present, and is expected to begin commercial operation in the first quarter of 2017.

As of February 2, the factory produced 60,000 tonnes of aluminium and 33,000 tonnes of aluminium hydroxide.

VN Index retreats from 9-year high

The VN Index on the HCM Stock Exchange on February 3 retreated from its nine-year high as investors tried to take profits from stocks’ recent good gains.

The benchmark index was down 0.4 percent to close at 700.35 points. It had rallied total 3 percent in the previous five sessions to touch a nine-year high of 703.18 points on February 2.

Trading market liquidity increased slightly from the previous trading day with more than 124.6 million shares being traded, worth 2.39 trillion VND (106.34 million USD).

The performance of the banking sector was negative as most listed banks on the southern bourse saw their values decline during the session while only Eximbank (EIB) maintained its upward trend, rising 6.3 percent to total a four-day jump of 15 percent.

Vietcombank (VCB) fell 1.9 percent from a four-day increase of 3.8 percent, Vietinbank (CTG) lost 1.3 percent after rising 8.1 percent in the previous six sessions, and MBBank (MBB) edged down 0.4 percent following its three-day gain of 2.9 percent.

Other blue chips such as PetroVietnam Gas Corp (GAS) and property developer Vingroup (VIC) also ended in the red on profit-taking. These two stocks ended down 1.2 percent each. GAS had gained 5.4 percent in the previous seven days.

On the opposite side, some companies with impressive earnings reports for 2016 helped the southern bourse avoid falling further, including property firm FLC Group (FLC) and Faros Construction Corp (ROS).

FLC reached its daily price increase limit of 7 percent after reporting total revenue of 6.34 trillion VND, up 19.2 percent from 2015, and total post-tax profit of 987 billion VND, up 9.6 percent year on year.

On the Hanoi Stock Exchange, the HNX Index rallied for a fourth day, increasing 0.5 percent to end at 85.03 points. The northern market index has moved up total 2.4 percent in the last four sessions.

Market trading liquidity on the northern bourse increased sharply from February 2 with more than 28.5 million shares being traded, worth 259.6 billion VND.

PM speeds up SOEs restructuring     

Prime Minister Nguyen Xuan Phuc issued a directive on Thursday to speed up the restructuring of State-owned enterprises (SOE) during the 2016-20 period.

The overhaul of SOEs in the previous five-year period helped reduce the number of SOEs, promote divestments from non-core businesses and increase the operational efficiency of SOEs. However, the restructuring progress remained stagnant; the State still held controlling stakes in many sectors, and the efficiency of SOEs was low, compared to its resources, according to the decree.

In addition, there was a lack of regulations on accountability in evaluating the value of SOEs, along with a failure in separating State ownership and management performances at SOEs.

In the next five-year period, the Prime Minister asked relevant ministries and organisations to gear up efforts for hastening the restructuring of SOEs, with a focus on quality, rather than quantity.

Accordingly, the Ministry of Finance was assigned to issue, in the first quarter of 2017, decrees which aimed at clarifying accountability of consultancy organisations in evaluating State assets at SOEs for privatisation and divestment, as well as raising mechanisms to attract strategic investors.

Of note, the Ministry of Planning and Investment must propose a special committee which would function as the owner of State assets at SOEs, for the Government’s consideration this month.

Other relevant amendments must be introduced by the second quarter of this year, to ensure compliance with the laws on Enterprise, Investment and Management and Use of State Capital Invested in Production and Business at Enterprises.

The decree said that appropriate mechanisms must be raised to attract competent strategic investors and reduce State stakes to a level that could enable change in corporate management. In addition, business strategies must be developed for each SOE, while their brand values must be accounted as an asset privatisation occurs.

The Prime Minister also asked to increase supervision to prevent losses to State assets during the restructuring progress, affirming the determination to handle loss-making SOEs and inefficient projects.

Accountability in the restructuring of SOEs must be clarified, while violations must be strictly handled, the decree said.

Between 2011 and 2015 almost 600 SOEs were equitised, or 96 per cent of the targeted number. The number of SOEs has since fallen from some 6,000 to over 700 during the past 15 years.

In December, the Prime Minister issued Decision 58/2016/QD-TTg which fixes the rate of State ownership in individual firms that are to be equitized, rather than the sector-wise rate the Government used to fix earlier.

Accordingly, the Government will hold 100 per cent stakes at 103 SOEs, while 137 others will be equitised from 2016-20. 

New regulations issued on securities margin trading     

The State Securities Commission (SSC) has issued new regulations on which Unlisted Public Company Market (UPCoM) shares on the Premium list will be allowed for margin trading from April this year. This decision will replace existing regulations on securities margin transactions.

Margin trading allows investors to buy more stock than they would be able to normally.

Under the new rules, shares on the UPCoM (under the UPCoM Premium list) will be eligible for margin trading purchases. The old regulations defined securities on the UPCoM as unapproved for margin trading.

It means about 80 shares registered for trading under the UPCoM Premium list which meet the conditions for margin trading will be eligible for margin purchases. However, this regulation needs approval from the Ha Noi Stock Exchange which operates and manages the UPCoM.

The new decision defines securities eligible for margin trading as those which comprise shares and investment fund certificates listed for trading for at least six months up to the time of announcement of the list of approved securities.

According to the draft decision in September last year, securities with total listing time of three months are qualified for margin trading transactions. This period was said to be suitable as the number of new listings on the two exchanges is rising rapidly.

Under the new rules, shares of companies which violate information disclosure and tax regulations and have financial reports not fully accepted by auditors are not eligible for margin trading. The SSC also added time limits for companies to publish their financial statements to be eligible for securities margin trading.

Margin ratio is the ratio of equity over total assets in a margin trading account at market value.

The initial margin ratio - a portion of the purchase price that investors have to deposit - is regulated by securities companies but must be at least 50 per cent of the purchase price.

The maintenance margin ration which is the minimum account balance that investors must maintain must be 30 per cent at the minimum.

Other regulations on limits on financing margin trading applied for broker companies were kept unchanged.

The new decision will take effect on April 1, 2017. 

SCG operates well in Vietnam

Based on Q’4/2016 report,SCG in Vietnam owned 21,113 Billion VND (US$ 943 Million)worth of total asset, an increase of 10% y-o-y. The company reported Q’4/2016 Revenue from Sales at 3,871 Billion VND (US$ 175 Million), a -1% decrease y-o-y. For H’2/2016 Revenue from Sales at 7,638 Billion VND (US$ 348 Million).

For the latest movement in Vietnam, SCG Packaging started up the new paper machine no.2 of Vina Kraft Paper. The success reaffirms SCG Packaging’s strong leadership in high-growth Vietnam market as the largest high-quality packaging paper manufacturer. The new machine allows SCG Packaging to increase its capacity from 243,000 tons per annum to 489,000 tons per annum to its portfolio through the newly-installed capacity and gains from efficiency optimization, which is more than doubled its existing capacity in Vietnam. 

Regarding the latest activities, SCG announced sponsorship for Hanoi FC in 2017-2018 as the main sponsor which logo shall be incorporated on the team’s jerseys as well as other outfits. This is the initial effort of SCG to support for the development of professional football in Vietnam. Furthermore, as part of the plan, SCG will exchange knowledge of the football club management knowledge with Hanoi FC, and also co-operate to bring Kick & Share activities to help the youngsters in Vietnam get the foundation knowledge in football.

SCG, one of the leading conglomerates in the ASEAN region, comprises three core businesses: SCG Cement-Building Materials, SCG Chemicals, and SCG Packaging. With more than 200 companies under its umbrella and approximately 52,500 employees, SCG creates and distributes innovative products and services that respond to the current and future needs of consumers.

SCG began its business operations in Vietnam since 1992 with trading business and gradually expanded investment in diversified businesses in the cement-building materials, chemicals, and packaging industries.

Today, with total of 22 companies across Vietnam driven by approximately 6,900 employees, SCG offers variety of premium products and services to markets. Available products in cement-building materials include, concrete roof, fiber cement board, fiber-cement wood substitute products for floor and ceiling, white cement, ready-mixed concrete under the brand ‘SCG’ and wall and floor ceramic tiles under the brand ‘COTTO & Prime’ and sanitary ware & fittings, bathroom fixtures under the brand ‘COTTO’. 

In the packaging business, available products are reading & writing paper under the brand ‘IDEA’ and corrugated containers, kraft paper and flexible packaging. In the chemicals business, available products are downstream chemicals products such as PE&PP, XLPE, PVC resin and compound, etc. Besides, SCG also has a building materials showroom in Hanoi to welcome customers to experience SCG products and services.

VEF/VNA/VNS/VOV/SGT/SGGP/Dantri/VET/VIR

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