BUSINESS IN BRIEF 25/1
Measures to upgrade Tan Son Nhat International Airport discussed
Deputy Prime Minister Trinh Dinh Dung hosted a meeting with relevant ministries and agencies and Ho Chi Minh City’s People’s Committee to discuss measures to complete and upgrade Tan Son Nhat International Airport as a solution to solve congestion.
At the meeting, the Ministry of Transport presented three options, with details of items, the finishing time, expected cost and relevant issues, to upgrade the airport.
Addressing the meeting, Deputy PM Dung emphasised that the upgrading of Tan Son Nhat Airport is extremely urgent, requiring the drastic participation of ministries, branches and the City to accelerate the progress.
He also agreed that the third option for the upgrading of the airport was most beneficial and asked the Ministry of Transport to soon complete the required documents in order to submit them to the PM before January 25.
As outlined in the third option, the runway and landing area will be renovated, while T3 and T4 terminals will be constructed. The project is expected to receive a total investment of around VND19.7 trillion and is to be implemented within three years, ensuring the capacity of transporting 43-45 million passengers per year.
The Deputy PM urged the Ministry of Transport to direct consultancy agencies to complete the planning as well as co-ordinate with the Defence Ministry and relevant ministries and branches to identify issues related to defense areas and unify rational measures to use, converse and invest in the area.
Textile, garment sector finds way to restore
With fierce competition with international rivals, textile and garment sector is seen to face difficulties. It is predicted that many small and medium enterprises will lose its order; accordingly it is likely that the sector will get failure in local and export market.
The Vietnam Textile and Apparel Association (VITAS) said, the sector’s export turnover reached around US$28.5 billion in 2016, much lower than expectation of US$1.5 billion and completing 92 percent of the goal.
VITAS managers explained that there had been downturn in the world; therefore, all nations faced difficulties in expanding market even big countries like India, China whose export turnover reduced compared to 2015.
In addition, Vietnamese textile was in stiff competition with its strong Chinese, Indian, Pakistani and Bangladesh competitors which enjoy their governments’ preferential policies.
Despite these difficulties, Minister of Industry and Trade Tran Tuan Anh highly lauded the sector because its current market share in giant markets showed a growth; for instance, its market share in the US increased by 11 percent and also in Japan.
When it comes to 2017, VITAS said that the sector will still face difficulties because of fierce competition and strong competitors will continue attract more order than Vietnam thanks to its government’s tariff and foreign exchange preferential policies and political unrest in some countries.
Vinatex added that in 2017, Vietnamese textile and garment sector will not yet take full advantages of EVFTA and TPP which take effect in 2018.
With such prediction, the sector set target of 6.5-7 percent in 2017 or US$30 billion.
As per the Ministry of Industry and Trade, in 2017, in addition to opportunities, the integration will produce challenges for the sector especially for small and medium companies. Local small and medium enterprises can even lose its traditional commodity order which bigger companies especially FDI companies will grasp it. Subsequently, small and medium companies should have long broad and long-term strategies besides the government’s support to overcome the rough time.
The state-run Vietnam National Textile And Garment Group (Vinatex) General director Le Tien Tuong said that his group strives to push up production by 14 percent compared to last year. The group will make the effort to increase export turnover by 11 percent and import turnover by 9 percent. To complete the goal, Vinatex will focus on expanding its markets more especially key markets such as the US, EU, and Japan.
He petitioned that the government should have policies to encourage local enterprises in implementing of higher export processing methods, namely FOB, ODM and OBM. Moreover, the government should have preferential credit policies to purchase Vietnamese materials and for investment of special equipment as well as organizing promotion fair to attract more customers.
Colourful Ba Na Hills festival carnival in Tet holiday
Da Nang's Ba Na Hills will be sparkled with lights and colours during the second Carnival festival from January 29 to February 15 (on January 2-19 of the lunar calendar).
Performers in royal costumes will lead off the parade, followed by drummers, dancers, magicians, jugglers, stilt walkers and circus acts.
A spring flower show featuring 25,000ornamental plants will be divided into subjects, Happiness, Love, Friendship, Gathering and Joyful.
The event will bring a traditional atmosphere and cultural space of the Lunar New Year, aiming at giving a warm and happy Tet to visitors. Tourists will have a chance to join Banh Chung (Vietnamese Square Sticky Rice Cake) making, giving calligraphy and portrait drawing.
25km to the southwest of Da Nang at an altitude of 1,487m, Ba Na Hills are considered as “One temperate place in the tropical forest” because the climate is cool all the year round.
Ba Na cable cars hold two Guinness World Records: the world’s longest single cable car system (5,042.62 m long) and the world highest gap between its departure and arrival station (1,291.81 m high).
Consumer confidence traceable
Food safety has become an issue of utmost concern these days, not only for foreign importers but also for local consumers, so the key question is how and where food is produced. In other words, what today’s buyers want is that food items are traceable. Such a trend is now being proactively taken by both State management agencies and enterprises, who have become aware that it is a matter of survival.
So, when HCMC authorities initiated the food origin tracking program, first with pork last month and then with veggies this week, the move has got enthusiastic response as seen in local media.
As reported, the HCMC Department of Agriculture and Rural Development this Wednesday launched a veggie origin tracking program, allowing two cooperatives to sell traceable vegetables in the chains of Co.opmart, BigC and LotteMart. This is a follow-up initiative after a pork traceability program was launched by the HCMC Department of Industry and Trade on December 16, which has been met with wholehearted response from consumers.
HCMC vice chairman Le Thanh Liem asserts in Tuoi Tre newspaper that the traceability program for pork and vegetables is of paramount importance to ensure that local consumers can have clean foods, especially during the upcoming Lunar New Year when the food demand surges. Liem also reveals that the program is not just about pork and vegetables, but other products in modern shopping channels like supermarkets and traditional wet markets.
With the program in place, consumers need only a smartphone with some apps to obtain full information about pork and vegetables now on sale at designated outlets, such as the rearing farm, the cultivation area, the slaughterhouse and the process in which pigs are raised or vegetables are grown. Pham Thanh Kien, director of the HCMC Department of Industry and Trade, says on Vnexpress news website that in the next stage, authorities will go to greater lengths in controlling pig rearing steps at farms.
Also according to Vnexpress, up to 80% of the HCMC population has smartphones, so it is convenient for them to get full information about foods they purchase.
The program in HCMC has sent ripple waves to other localities as well. Most recently, Binh Duong Province has started a pilot plan to open selling points for safe pork with traceable origins at Thu Dau Mot and Bung Cau markets, according to Tuoi Tre.
Commenting on the benefits of this program, Tran Phu Cuong, head of the provincial animal husbandry, veterinary and seafood management agency, says that the safe pork selling points will help ease concerns of consumers about substandard pork on the market.
While making products traceable shows a great effort of HCMC authorities, many enterprises have long been aware of this need, because it helps enhance consumer confidence in their products.
Bui Huy Binh, managing director of a service company providing tracking solutions, says in Tuoi Tre that in the past couple of years, many farming and food processing enterprises have contacted his company to launch tracking systems in their networks. Enterprises from such provinces as Lam Dong and Dong Nai have launched their own systems when selling products in HCMC, including rice, fish sauce, meat and fish.
Enterprises, especially those shipping products to choosy markets like the United States, Japan and the European Union, have become used to stringent requirements, a special component among which is the tracking of product origin. So, it is natural that they are applying the practice to win consumer confidence.
Consumers have also been well aware of the need to trace product origins, as seen in the bustling atmosphere at outlets where traceability is introduced. Nguyen Thi My Chi, a consumer from Phu Nhuan District, enthusiastically says in Tuoi Tre that now she could learn how vegetables are fertilized, what pesticides are used, and who grows the products, all within just three seconds.
Dan Tri observes that origin-traceable vegetables at Rach Mieu Co.opmart are selling like hot cakes. The news site quotes a consumer named Nguyen Thi Hong Hau as saying that “I have peace of mind when purchasing foods, especially at the upcoming Lunar New Year.”
But, traceability alone is not a magic wand to help producers win consumer confidence if it is not accompanied by tough measures to ensure that producers fully observe standards in their production processes, says Tuoi Tre in an editorial. As regulated in the HCMC traceability program, vegetable farmers will make notes on their own on the use of fertilizers and pesticides, and submit such records to the cooperative concerned two days before harvest, and their produce will be given tracking stamps.
Therefore, there may be certain producers who intentionally cheat consumers by giving false information to make bigger gains. Nguyen Phuoc Trung, director of the city’s agriculture department, says in Tuoi Tre that tracking is just an assistance vehicle, and it is not meant to replace quality control measures by the State. That is to say State agencies must continue to maintain their close supervision on production.
Thoi bao Kinh te Sai Gon Online comments in a feature that traceability shows the commitment by producers to ensure the quality of their products, and is a step towards transparency. The compliance of producers to transparency standards and the close supervision of State management agencies will help restore the confidence of consumers that have been eroded following incidents on dirty foods and false and misleading information about foods.
Two deputy interior ministers disciplined
The Prime Minister has signed decisions disciplining two deputy interior ministers Nguyen Duy Thang and Tran Thi Ha.
Thang and Ha get the same disciplinary form of reprimand for their involvement in the transfer of Trinh Xuan Thanh to Hau Giang Province to serve as vice chairman of the province. Last year, the Ministry of Public Security issued an international arrest warrant for Thanh for his responsibility for losses of VND3.3 trillion (US$148 million) at PetroVietnam Construction JSC (PVC) while he was serving as chairman.
Thanh faces charges of deliberately violating the State’s regulations on economic management, causing serious consequences. His whereabouts have remained unknown since the arrest warrant came out.
Earlier, the Secretariat of the Party Central Committee imposed the disciplinary form of reprimand on Deputy Minister Thang as he got involved in directing, assessing and proposing competent authorities approve Thanh as vice chairman of Hau Giang Province for the 2011-2016 term.
The Party Central Committee’s Inspection Commission applied the disciplinary form of reprimand to Ha, who is also head of the Central Reward and Emulation Commission, for her role in directing the process of assessing procedures, conditions and criteria for competent authorities to award the Hero of Labor title and medal to PVC and the Prime Minister’s certificate of merit and medal to Thanh.
KPMG: Online shopping seen booming in Vietnam
Online shopping has been popular worldwide and Vietnam will keep up with the trend quickly thanks to its active Internet use, said a report by KPMG International launched early this week.
Chong Kwang Puay, managing partner and consumer markets lead of KPMG in Vietnam and Cambodia, said online shopping is becoming prevalent in developed economies.
With its high Internet penetration rate, Vietnam will see online shopping surging soon. Supply chain, distribution and retail channels, marketing channels, performance measurement and store turnover will all need to be re-assessed in this new reality, the expert said in the KPMG International survey titled “The truth about online consumers.”
According to the report, 18% of consumers in Vietnam and Cambodia purchase goods from an online-only retailer such as Amazon, Lazada and Nhommua. Some 10% purchased from the website of a retail shop, and only 3% purchased directly from a manufacturer or brand’s website.
The number one reason consumers gave for shopping online is the convenience of shopping. This is followed by having the ability to compare prices, or to find online sales or better deals.
Overall, consumers tend to trust online information and reviews. When asked about what is considered when deciding on a purchase, 9.9% of respondents went for online reviews, 9.8% for brands and only 0.2% for promotional and complimentary benefits.
The report also reveals that recommendations from friends and relatives are the most important channel (11.5%) when consumers seek information about a product before purchase. Other channels for information that organizations and brands should consider include social media (8.3%), online shops (8.2%) and online reviews (8%).
To gain consumer trust, companies and brands are recommended to improve online security and privacy protection. Most respondents (26.5%) consider customer data and information protection to be of utmost importance, and 20.4% consider food and product safety as the most important attributes.
KPMG International commissioned Intuit Research to conduct the survey of global online shoppers about their purchase behavior, purchase drivers, and perceptions and attitudes towards online shopping. The sample consisted of consumers aged 15 to 70 years old that made at least one online purchase in the past 12 months and who were within the top 65% of income earners in their country.
Vietnam, Swiss Re to discuss insurance for agriculture
The Ministry of Agriculture and Rural Development and global reinsurer Swiss Re will discuss an insurance program for the agricultural sector in the coming time.
The ministry mentioned the program in a statement released on January 19 to announce activities of Minister of Agriculture and Rural Development Nguyen Xuan Cuong at the ongoing World Economic Forum (WEF) in Switzerland. Cuong and other high-ranking officials are accompanying Prime Minister Nguyen Xuan Phuc in his trip to the event in Davos.
The ministry and Swiss Re will work over preparations for a clear legal framework and policies for the implementation of the program. The two sides will discuss how to deploy insurance products for the agro-aqua-forestry sector with participation of foreign and domestic insurance firms, production and trading businesses in the sector, credit institutions and State agencies.
Insurance for the agricultural sector has been piloted in Vietnam. According to the Prime Minister’s Decision 315/QD-TTg issued on March 1, 2011, insurance packages were provided for sugarcane, livestock and seafood farming in 21 cities and provinces in Vietnam on a trial basis.
Figures of the Ministry of Finance showed more than 304,000 farmers and production organizations participated in the pilot insurance scheme, with premiums totaling VND394 billion (around US$17.5 million) and insured payments of roughly VND7.75 trillion. Total compensation payouts neared VND713 billion.
The ministries of agriculture-rural development and finance proposed the Government approve an insurance package for farmers after the pilot scheme ended. However, the new package has not been passed and this is the reason why the agriculture ministry met Swiss Re to discuss insurance for the sector.
While in Switzerland, the agriculture ministry also worked with Gruner Group of Switzerland over cooperation in infrastructure development for the irrigation area, technical assistance in supervision of reservoir safety and the application of modern technology to designing and managing irrigation works given the rising impact of climate change on the local agricultural sector.
Investors turn back on Phuong Nam pulp mill
The Ministry of Industry and Trade has been calling for investors to participate in a multi-million-dollar pulp mill but to no avail, according to Le Tan Dung, vice chairman of Long An Province, at a review meeting on Wednesday.
He said the State-owned Phuong Nam plant is under the administration of the Vietnam Paper Corporation and that the Ministry of Industry and Trade is trying to restructure the project after huge amounts of capital have been poured into the project in the Mekong Delta province.
Local authorities have introduced the project to many potential investors so far but no investors have shown interest.
The ministry is seeking to equitize the poor-performing pulp mill project. However, many investors have turned their back on the project, according to Nguyen Xuan Hong, deputy director of the provincial Department of Industry and Trade.
Trillions of Vietnam dong has been poured into this paper pulp project owned by the Transport and Communication Development Investment Company (Tradico), but the plant still could not be commissioned. The Prime Minister has decided to transfer it from Tradico to the Vietnam Paper Corporation.
The new investor has upgraded the mill and sought to start operation again as directed by the Government. However, the whole production chain failed to work properly during the pilot period, resulting in long delays.
Even though foreign experts have been invited to inspect the plant, they still could not fix the problem.
Central city invests in infrastructure of hi-tech park
Da Nang has invested VND363 billion (US$16 million) to complete the second-stage infrastructure for the 1,010-hectare Hi-Tech Park in Hoa Vang District, 20km west of the city.
The park’s managing board said the fund will be used for construction of series of traffic, waste water treatment, lanes, land clearance, bridges, parks and water supply system projects.
The central city aims to create ‘clean’ land, working shops and available infrastructure for investors in coming years.
Last year, the city granted an investment licence to Da Nang Pharmaceutical Joint Stock Company (Danapha)’s first nano-technology and biotech project, with an investment capital of VND1.5 trillion ($67 million) in the park.
Two Japanese companies, Tokyo Keiki Precision Technology Inc and Niwa Foundry, with a total investment of $62 million, were the first investors since the park opened in 2013.
In 2015, Tokyo Keiki Precision Technology Inc inaugurated its first plant outside Japan on a 30-hectare at the park with a capacity of 50,000 digital directional valves per month for the Asia-Pacific region.
Da Nang will exempt 100 per cent land rent for infrastructure, research, training and housing project.
According to the latest reports, Da Nang has attracted 423 foreign direct investment (FDI) projects worth $3.68 billion to date.
FDI enterprises earned revenues of $776 million - of which $522 million came from exports - and contributed $112 million to the State budget in 2015.
Seafood exports to grow by 5%
Seafood exports are expected to increase by 5 per cent this year to around US$7.5 billion despite many possible hurdles, according to the Viet Nam Association of Seafood Producers and Exporters (Vasep).
Speaking at a review meeting held in HCM City on Thursday, Ngo Van Ich, Vasep chairman, said early last year many difficulties plagued exports before increased global demand enabled a recovery.
Exports for the full year grew by 7.4 per cent to $7.05 billion, or 24 per cent of the country’s total agricultural, forestry and fisheries exports, he said.
Shrimp and tra fish exports both rose by 7 per cent to $3.13 billion and $1.67 billion.
The exports went to 161 countries and territories last year, with the US, EU, Japan, South Korea and China being the largest buyers.
Truong Dinh Hoe, Vasep’s general secretary, said this year the seafood sector would continue to face difficulties, including a fall in fisheries output due to the impacts of climate change.
Import markets like the US, EU, Australia, and Japan are tightening hygiene and food safety norms for shrimp and applying regulations related to product origin, corporate social responsibility and others, he said.
Vietnamese exporters are also expected to face fiercer competition from seafood exporters in India, Indonesia, and Thailand, and the increase in minimum wage and a labour shortage are causing difficulties to seafood processors and exporters, he said.
“Despite difficulties, we believe seafood exports would increase by 5 per cent this year to $7.4 billion.”
Exports to the US is expected to top $1.5 billion, an increase of 5 per cent, much less than last year’s 11 per cent growth.
Due to political changes, the devaluation of the euro and slow market recovery in the EU, exports to the market would remain at last year’s level of $1.2 billion, he said.
Exports to Japan would increase by around 4 per cent to more than $1 billion since the yen is appreciating, he said.
With an increase in income, demand for seafood products, especially sugpo prawn, has increased in China, but its domestic shrimp production has not increased, he said.
“China’s demand for imported seafood, especially shrimp, increased strongly last year and the trend would continue,” he said.
Viet Nam’s exports to the market are expected to cross $1 billion this year compared to $829 million last year, he said.
Deputy Minister of Agriculture and Rural Development Vu Van Tam said some countries tend to erect technical barriers to limit imports to protect their domestic production.
Vietnamese businesses need to carefully study their target export markets to avoid risks, he added.
Nguyen Ngo Vi Tam, general director of Vinh Hoan Co., Ltd, said to enhance competitiveness, seafood firms need comprehensive policy support with markets, funding, and developing reliable raw material sources.
Businesses at the meeting agreed that enhancing linkages from breeding to processing and export for both shrimps and tra fish is imperative to cut costs.
Power tariff likely to keep unchanged this year
The Ministry of Industry and Trade (MoIT) has not yet decided to adjust power tariffs this year and has been calculating basic prices, the ministry on Friday announced at an electricity production cost conference in Ha Noi.
The ministry said that EVN is required to build a basic price for the year of 2017 based on calculation of 2015 and estimates of 2016.
Concerning those numbers, Electricity of Viet Nam’s (EVN) 2015 power turnover reached more than VND234.3 trillion (US$10.32 billion) or equivalent to electricity retail price of VND1,630 per kWh.
Turnover from activities relating to power production and trading in 2015 was VND2.5 trillion.
According to Deloitte Viet Nam’s independent audit report, the losses which have not been calculated into EVN’s electricity production and trading in 2015 were up to VND8.5 trillion. The losses came from the foreign exchange rate differences throughout the group’s wholly invested companies. Its foreign exchange rate difference at companies which EVN holding shares was over VND1.3 trillion.
EVN in 2015 therefore posted a slight loss in power production and continued to sell electricity lower than the production cost.
Nguyen Anh Tuan, director of the ministry’s Electricity Regulatory Authority, said that in 2015 the prices of main fuels including coal, oil and gas affected the electricity production. The Ministry of Science and Technology in the same year promulgated a decision to increase gas prices sold to electricity production by 2 per cent while keeping coal prices stable.
“The important factor in 2015 was that hydropower plants did not reach the set productivity due to unfavourable hydrological conditions. The power output from hydropower plants was reduced and EVN had to mobilise electricity from coal-fired and gas-power plants. This affected to production costs,” Tuan added.
He added that according to current regulations, construction costs of villas and tennis courts have not been calculated into power production cost. The construction has come from the EVN’s welfare fund, of which, turnover from EVN’s financial activities was around VND1.01 trillion and those from its corporations was VND194.3 billion. Turnover from dividend and profit was VND60.95 billion.
He said the losses from the foreign exchange difference would be gradually accounted into power tariffs.
Dinh Quang Tri, EVN’s deputy general director said in 2015 that the group has itself avoided roughly VND3.5 trillion in foreign exchange difference losses thanks to maximising costs and increasing profit. The remaining losses will be gradually accounted for.
“Normally, the foreign exchange difference losses must be accounted in a year according to the accounting mechanism. However, the EVN asked the ministry and finance ministry to gradually handle the losses over five years due to its special characteristics. If the loss was accounted all at once, power tariffs would surge. The losses would be taken into account of power tariff or reducing production costs,” Tri said.
“The ministry would review the basic prices. If there is a change of input prices such as fuel, foreign exchange and rates of power resources higher than 7 per cent, the power tariff would be adjusted,” he added.
GODACO seafood processing factory starts operation
Go Dang Joint Stock Company (GODACO) on Thursday put into operation its high-quality seafood processing factory in the An Hiep Industrial Zone in southern Ben Tre Province’s Chau Thanh District.
Covering an area of 20,000sq.m., the factory was built with investment of US$20 million and has an annual capacity of 10,000 tonnes of products of each type. It uses production technology transferred by Thailand’s GFS company and has created job for 400 local workers.
Speaking at the inauguration ceremony, GODACO general director Nguyen Van Dao said the factory will produce ready-to-serve food products, which will be exported to Singapore, Hong Kong and the United Arab Emirates.
Currently, GODACO is implementing a cycle production process from breeding, farming and food processing to export, Dao said.
This year, the company will strive to earn revenue of VND1.75 trillion (US$70.7 million). Export turnover is expected to reach $70 million.
Delta region targets 9.4% export growth
Provinces in the Mekong Delta region aim to generate US$15 billion from exports in 2017, surging 9.4 per cent from the previous year, according to the Steering Committee for the Southwest Region.
To reach the goal, the provinces plan to accelerate trade and investment promotion and seek new export markets for their agricultural goods.
Top priorities will also be given to changing the structure of exports towards high-value goods, applying advanced science-technology while reducing exports of low-value farm produce, the committee said, adding that provinces will also speed up administrative reforms to better facilitate businesses and support them in fostering technical innovations to improve production capacities.
Localities with large export turnovers, such as Long An, Tien Giang, Can Tho, and Dong Thap, will hold dialogues between leaders and enterprises to solve difficulties in capital, policies and markets.
Last year, provinces in the region earned $13.7 billion from exports, up 7.4 per cent year-on-year. The major export commodities included seafood, rice, processed food, garment and textile, footwear, and handicraft.
Several regional localities recorded high export value in 2016, including Long An with $6.6 billion; Tien Giang ($3.3 billion); Can Tho ($1.4 billion) and Dong Thap ($1.2 billion).
The Mekong Delta region comprises Can Tho city and 12 provinces – An Giang, Bac Lieu, Ben Tre, Ca Mau, Dong Thap, Hau Giang, Kien Giang, Long An, Soc Trang, Tien Giang, Tra Vinh and Vinh Long. The region has advantages in agriculture, seafood farming and fruit.
VN OilGas top list of 500 leading firms
Vietnam Oil and Gas Group topped the list of 500 leading companies announced at a ceremony in Ha Noi on Thursday. It was followed by Samsung Electronics Vietnam Co Ltd, Viettel Group, Electricity of Viet Nam, and the Vietnam National Petroleum Group.The annual event, the 10th of its kind, was held by the Vietnam Report Company to honour businesses for their excellent performance in the 2015 fiscal year.
The largest private businesses on the list were Truong Hai Automobile Co Ltd, Vietnam Dairy Products Joint Stock Company (Vinamilk), DOJI Gold & Gems Group, FPT Corporation, and Vingroup.
According to Vietnam Report, one of the key strategies that Viet Nam’s biggest companies are pursuing to increase competitiveness is embarking on core business fields.
They also move to improve labour productivity; keep and increase domestic market shares; and make inroads into the global market, the report said, adding that the equitisation of State-run businesses and the development of private ones have also helped to boost economic recovery in recent years.
Big companies have also focused on providing transparent information, developing management strategies and expanding export markets to reach those in the region and beyond.
Vietnam Report also announced the Top 50 Vietnam list, The Best 2016 list and The Top 50 Most Profitable Large Enterprises 2016.
The company also released a bilingual White Book featuring the 10-year development path of major Vietnamese enterprises from removing bottlenecks to creating a healthy business environment.
Deputy PM asks petrol giant to up efficiency
Deputy Prime Minister Trinh Dinh Dung has asked the Viet Nam Oil and Gas Group (PetroVietnam) to tackle loss-making projects to improve operation efficiency, while keeping a close watch on global oil prices in order to develop appropriate solutions to fulfil 2017 targets.
Dung was speaking at PetroVietnam’s conference reviewing 2016 results and implementing 2017 tasks held in Ha Noi yesterday.
Dung urged PetroVietnam to hasten its restructuring programme and continue efforts of becoming the backbone of the country’s oil and gas industry with strong financial capacity, technology and competitiveness not only at home but in international markets.
As crude oil prices are forecast to maintain low levels in 2017, significantly impacting the group’s operations, PVN should focus resources on fulfilling goals set for 2017, with oil exploration and exploitation being the core business, Dung said.
“Inefficient and stagnant projects must be handled thoroughly,” Dung said.
In addition, the quality of investment projects must be enhanced from the process of planning, exploration, implementation and operation, Dung said, adding that special attention must be attached to the environmental production.
General Director of PetroVietnam, Nguyen Vu Truong Son, said that the group would hasten exploration in 2017 with a focus on major projects such as Ca Rong Do (Red Emperor) and Ca Voi Xanh (Blue Whale) oil and gas fields.
The group would also speed up the implementation of projects which were scheduled to become operational this year.
The group targets production of 14.2 million tonnes of crude oil, 9.61 billion cubic metres of gas, 20.1 billion Kwh, 1.5 million tonnes of fertilisers and 6.8 million tonnes of petrol this year, with total revenue of VND437.8 trillion (US$19.3 billion), with oil price projected at $50 per barrel.
Son said at the conference that the group completed its goals in 2016. The oil and gas reserve expanded to 16.66 million tonnes with three new mines.
The group earned a total revenue of VND452.5 trillion and paid VND90.2 trillion to the State budget. After-tax profit stood at VND24.4 trillion.
Gov’t halts Indonesian seed imports
Deputy Minister of Agriculture and Rural Development (MARD) Le Quoc Doanh signed a decision to cease imports of several nuts and seeds from Indonesia to Viet Nam due to a high risk of contamination from the seed beetle Caryedon serratus.
The MARD has decided to stop importing Indonesian seeds, including peanuts, sickle senna seeds, cocoa seeds and string bean seeds.
The seed beetle, which causes groundnuts infestation, belongs to the list of plant quarantine pests in Viet Nam and is neither native nor present on Vietnamese soil. It could cause severe damage to currently stored agricultural products, according to representatives from the MARD’s Plant Protection Department (PPD).
The decision will be in effect 60 days from yesterday.
While the decision has yet to be put into practice, Doanh urged the PPD to conduct strict quality control regulations and pest quarantines on imported Indonesian shipments of peanuts, sickle senna, cocoa and string bean seeds.
The PPD will soon deliver official statements to authorised agencies on plant and pest quarantines in Indonesia to have a more throughout the solution.
In 2016, more than 5,000 tonnes of imported goods from Indonesia to Viet Nam through the Cat Lai Port and Hai Phong were discovered by the plant quarantine authority of the PPD to be contaminated with live Caryedon serratus beetles.
In the span of 11 days—from January 5, 2017 to January 16, 2017—the PPD discovered 40 more containers with nearly 1,000 tonnes of Indonesian peanuts infested by the same seed beetle.
In accordance with world regulations and Viet Nam’s own regulations on plant quarantines, the PPD has sent multiple notifications to Indonesia’s National Plant Protection Organisation.
On January 6, the MARD issued a decision to stop importing tamarind from Indonesia for the same reason, but the situation has yet to improve and no response from Indonesian authorities had been received by their Vietnamese counterpart.
Paper sector posts over $93m in 2016 revenue
The Vietnam Paper Corporation (VPC) earned revenue of over US$93 million in 2016, contributing $4.3 million to the State budget.
The information was revealed at a conference in the northern province of Phu Tho on Wednesday to review the company’s production and business last year and launch plans for 2017 plans.
According to reports, in 2016, the firm produced a total of 104,000 tonnes of paper. It exploited 261,000cu.m. of wood for paper material and planted 3,500ha of new forest.
Addressing the conference, corporation’s general director Vu Thanh Binh stressed the industry will have to face many difficulties and challenges in 2017 in the context of declining consumption of printing and writing paper and fierce competition in the market.
Binh stated, in the future, the firm will focus on promoting restructuring and equitisation in line with the plan of the government and the Ministry of Industry and Trade.
Attention will be paid to cutting production costs to reduce prices and improve products’ competiveness. The corporation will strive to better production and business efficiency of forestry companies.
The company has targeted earning over VND2.1 trillion in revenue in 2017, the same amount as last year.
Business groups, Wash DC forum sign mou on food-safety cooperation
The High Quality Viet Nam Products Business Association, the American Chamber of Commerce in Viet Nam and the Washington-based Global Food Safety Forum on Wednesday signed a memorandum of understanding on co-operation in food safety.
Herb Cochran, AmCham executive director, said food safety was an issue of concern in both Viet Nam and the US.
“The first objective of the MOU is to help Vietnamese companies join global food supply chains under the US Food and Drug Administration’s (FDA) International Food Safety Capacity Building Plan,” he said.
The US imports 15 per cent of its food, 20 per cent of vegetables, 50 per cent of fruit and 80 per cent of seafood.
The US Congress required, in section 305 of Food Safety Modernization Act, that the “FDA develop an International Food Safety Capacity Plan to help foreign and food industries that export food to the US.”
The US FDA will provide “training of foreign governments and food producers on US requirements for safe food. To reach our objective, we will arrange delegation visits to the US and Viet Nam, workshop and town hall meetings, websites in English and Vietnamese, Internet-based training programmes targeting company managers, technicians, and official representatives from safety regulatory agencies, special on-site training at Vietnamese companies.”
In March, a delegation will visit the US to meet with parties in the US Congress, US government agencies including FDA, USDA, USTR, USAID, State and Commerce, as well as business associations such as the International Food and Beverage Alliance.
In April, Dr. Rick Gilmore, founder and CEO of Global Food Safety Forum, will visit Viet Nam on an exploratory mission to establish contacts, hold workshops, plan future events, and gauge the needs of relevant parties in business and government, he said.
“Our co-operation under the MoU will help both Viet Nam and the US Government and business implement TPP and TFA (WTO’s Trade Facilitation Agreement). Ratification is an important legal step. Equally important is that businesses and government co-operate to understand and meet the food safety requirements.”
The signing ceremony was part of a year-end party of the Leading Business Club.
State audit asked to focus on SOE personnel management
Deputy Prime Minister Vuong Dinh Hue urged the State Audit of Viet Nam (SAV) to pay more attention to human resource management at State-owned enterprises (SOEs) when auditing their activities.
At a meeting on Tuesday with SAV authorities on restructuring the activities and business valuation of SOEs, Hue emphasised the importance of improving personnel management in SOEs over the next five years.
“It is necessary to review the number of employees at State-owned corporations and groups. Low productivity and low business efficiency stem from personnel redundancy,” he said.
Hue said improving organisational and personnel management was key to improving the efficiency of business activities and of State capital in enterprises. It is also one of the goals of the equitisation process that has been conducted at major SOEs in recent years.
According to Government regulations, all enterprises wholly-owned by the State must be audited on business valuation and handling financial issues before their equitisation plans can be approved.
A report by the SAV on the implementation of the “Plan for restructuring and business valuation at SOEs in 2011-2015” shows that 499 enterprises underwent equitisation during this period. All enterprises recorded better business performance after being equitised, which contributed more to the State budget and increase workers’ income.
By divesting from these enterprises, the State earned about VND36.5 trillion (US$162.2 million) from a book value of VND26.2 trillion (US$116.5 million).
However, SAV said it figured out that in many cases, the process of business valuation and handling of financial issues before announcing the value of enterprises were inaccurate and did not comply with current regulations. This resulted in the devaluation of State properties and considerably affected the State’s benefits.
The Deputy PM said that in order to tackle the problem, the Ministry of Finance was in the final phase of compiling a decree on defining the value of SOEs, with a focus on trademark and trade advantages.
He also asked the SAV to pay more attention to the assessment of allocating land funds before equitisation. This is due to the fact that many investors failed to use land in conformity with State planning despite a commitment to do so before the equitisation began.
He said the Government was asking related ministries and sectors to study whether enterprises should be allowed to change the purpose of land after equitisation and if so, who should be responsible for granting such permission. He also asked the SAV to contribute its views to the Government on this issue.
The Deputy PM emphasised that the State must maintained its role as major stake-holder in key enterprises and try to turn them into strong corporations and brand names highly competitive not only domestically but also internationally.
The number of SOEs may be reduced, but their business efficiency must increase and they must become stronger, he said.
Phu Quoc Waterfront Boutique Hotels an attractive investment
All Phu Quoc Waterfront boutique hotels which BIM Group put on sale in the first phase were sold within three weeks, reflecting significant interests in property on Phu Quoc Island.
The BIM group said that although introduced in the market after condotel, a condominium operated as a hotel which recently grabbed large market attention, boutique hotels were expected to measure up to condotel.
“The sale of Phu Quoc Waterfront boutique hotels in the first sale release proves the attraction of this type of investment property,” BIM Group said, adding that a number of investors still wished to purchase a unit here.
Tuan Anh who bought six Phu Quoc Waterfront boutique hotels said that the district island had large tourism potential which received an increasing number of tourist arrivals every year while the supply of hotel rooms remained modest. “I see this as a good investment,” he said.
Located in the BIM Group’s Phu Quoc Marina resort and recreation complex at the beautiful white-sand Trường Beach, Boutique Hotel Phu Quoc Waterfront, a street of 142 mini-hotels, is built in French colonial style in combination with modern design. It also has good connectivity to Phu Quoc International Airports and just hours by flight from major Southeast Asian cities.
Vietnam Airlines’ NASCO to list on UPCoM
The Noi Bai Airport Services Company (NASCO) will list its 8.3 million shares on the Unlisted Public Company Market (UPCoM) under the code NAS, according to the Ha Noi Stock Exchange.
NASCO, an affiliate of Vietnam Airlines, the country’s largest aviation corporation, has a chartered capital of VND83 billion (US$ 3.7 million). Currently, its parent company Vietnam Airlines holds 51 per cent of NASCO’s capital and Saigon Thuong Tin Commercial Joint Stock Bank (Sacombank) holds another 10 per cent.
The company, which is headquartered at Noi Bai airport in Ha Noi, offers various services at airports such as duty-free shops, restaurants, VIP lounge, and travel and transport services.
In the first nine months of 2016, NASCO’s revenue touched around VND400 billion, down 8 per cent year-on-year. Its post-tax profit was around VND24.5 billion, roughly the same as in 2015.
Of its total revenue, the income earned from the transport service segment was the highest at VND200 billion. Though the revenue gained from restaurants was lower, its profit accounted for half of the company’s total profit.
NASCO is currently the only firm at Noi Bai airport that offers a business-class lounge with its interiors meeting 4-5 star standards.
In 2016, NASCO faced business challenges after Terminal 2 became operational at Noi Bai airport as it affected the number of tourists using its services. The restructuring and upgradation of T1 has narrowed NASCO’s spaces at the airport, as well as thrown up fierce competition from new rivals.
Two other companies that operate in Viet Nam’s airport service sector are Tan Son Nhat Airport Services Joint Stock Company (SASCO) and Da Nang Airport Service Joint Stock Company (MASCO), both subsidiaries of Vietnam Airlines.
Vietjet files application for listing on HoSE
Vietnamese budget carrier Vietjet has filed a listing application to the HCM Stock Exchange.
Following the approval, Vietjet will float its entire 300 million shares on the bourse, HOSE said in a statement on its website.
Earlier last month, Reuters reported that the airline has set its initial public offering (IPO) of 44.78 million shares, equal to 14.9 per cent of the firm’s chartered capital of VND3 trillion (US$133.3 million), to raise US$170 million.
The share price will be VNĐ84,600 for institutional investors and VND86,500 for individual investors. The IPO will value the firm at $1.2 billion.
Separately, Vietjet said it is hunting for dynamic and customer-focused candidates to join the airline’s friendly and professional cabin crew to keep pace with the rapid development of its domestic and international networks.
Successful candidates will attend intensive training courses in Viet Nam and other foreign countries, enjoy an attractive income, many other benefits and unlimited promotion opportunities within the group, the airline said in its statement.