BUSINESS IN BRIEF 4/10
Most companies confident of better performance in Q4
Enterprises, especially foreign-invested and State-owned ones, expect better business performance in Q4, according to the General Statistics Office (GSO).
Up to 85.6 percent of the surveyed companies believe that their production and business situation will remain stable or improve in the last quarter of 2016. Among them, 48.8 percent expect improvement while another 36.8 percent hope for continued stability.
About 50.3 percent of the businesses forecast their production output will increase from Q3 while 36 percent said it will remain unchanged. Only 13.7 percent said their production may decline.
An augmentation in export orders is forecast by 38.6 percent of the questioned firms, and another 46.3 percent hope for the same volume of export orders as in Q3.
The GSO said while 16.2 percent of the respondents believe their products will be sold at higher prices in Q4 compared to the previous quarter, 75.4 percent expect unchanged prices. Only 8.4 percent of the businesses predict lower prices.
Meanwhile, 30.4 percent of the companies are confident of a drop in their unsold inventory, and 54 percent think their inventory will remain unchanged from Q3.
As many as 91.3 percent of the surveyed enterprises plan to expand or maintain their workforce in the last quarter. Only 8.7 percent said they will reduce the number of employees.
GSO General Director Nguyen Bich Lam highlighted a positive business panorama in the first nine months of 2016, including over 100,000 companies established or resuming their operations. Up to 95.8 percent of the 81,000 new businesses immediately went into operation, indicating a healthy economy.
Deputy Prime Minister hosts Thai Central Group’s leader
Deputy Prime Minister Vuong Dinh Hue noted his hope that Thailand’s Central Group (CG) will continue to invest in product distribution, retail and wholesale trade in Vietnam.
At a reception for CG General Director in Vietnam Jariya Chirathivat in Hanoi on October 3, the official called on the group to introduce the world’s quality goods, especially those from ASEAN, to Vietnamese consumers.
He suggested the group join Vietnamese businesses in production chains in the fields of industry and agriculture to churn out quality and safe products, while closely coordinating with competent Vietnamese agencies in guiding its branches to observe local law.
The Deputy PM hailed the group’s contribution of over 2 trillion VND (90 million USD) in tax from its acquisition of Big C Vietnam super market chain.
Jariya Chirathivat, who is also CG’s legal representative in Vietnam, promised that CG will provide high-quality products for the country, adding that the group is seeking Vietnamese producers to introduce good products in Big C supermarket chain and Thailand.
The group has partnered with the Vietnamese Ministry of Industry and Trade to successfully organise Vietnamese Goods Day in Thailand to seek promising Vietnamese producers, she said.
Apart from retail trade, CG will invest in real estate and commercial centres in Vietnam, the guest noted.
Earlier, the Thai group purchased Big C Vietnam and 49 percent stake of Nguyen Kim electronics retailer and Lan Chi Mart. The group, together with Nguyen Kim, took over Zalora Vietnam.-
Vietnam-India trade hit 3.47 bln USD in eight months
Two-way trade between Vietnam and India hit 3.47 billion USD in the eight months of this year, up 1.23 percent year-on-year, according to the Ministry of Industry and Trade’s Vietnam Trade Office in India.
Of the figure, Vietnam exported 1.76 billion USD and imported 1.7 billion USD worth of goods, up 7.4 percent and down 4.4 percent, respectively.
In August alone, Vietnam ran a trade surplus of 25.72 million USD with India, marking a 5 percent rise, raising the total to nearly 60 million USD since the beginning of this year.
The country shipped tea, cashew nuts, metal, garment materials, leather, footwear, coffee and apparel to India. In August, the total garment export reached 7.22 million USD, increasing three-fold from July, bringing the total to 22.81 million USD in January-August.
Several kinds of goods saw falling shipments, including coal, confectionary, cereals, plastic materials, phones and spare parts, down as much as 48.8 percent annually in eight months.
Vietnam upped the imports of vegetables, gemstones, precious metal, computers and spare parts, papers, iron and steel products while decreasing the imports of animal and plant cooking oil, animal feed, and fertilisers.
According to the office, the Vietnam-India strategic partnership has been increasingly growing since the ASEAN-India free trade agreement was signed.
As one of the top 10 trade partners of Vietnam, India has invested in 87 projects worth 298 million USD in Vietnam, ranking 30 th out of 101 countries and territories investing in the country, mostly in manufacturing and mining.
On the back of India’s Act East policy and Vietnam’s renovation process, India continues considering Vietnam an attractive destination in the fields of oil and gas, steel, mineral resources, tea, sugar, information technology training, and a goods transit point in Southeast Asia.
In 2015, India organised trips for 25 business delegations to Vietnam to explore the market and seek opportunities.
The Indian government has offered incentives in land and taxation for foreign investors.
Apparel, engineering and farm produce are in the list of priority set by the two governments.
In order to raise two-way trade to 15 billion USD by 2020, the ministry suggested encouraging firms to join exhibitions and fairs, as well as liaison with embassies and trade offices to seek cooperation opportunities.
New economic complex expected to boost Yen Bai’s growth
Work on an economic complex worth 1.25 trillion VND (56.05 million USD) started in Mu Cang Chai district, the northern mountainous province of Yen Bai on October 3, with expectations that it will spur the locality’s socio-economic growth.
The complex, invested by the MCC Company, covers 150 hectares of land and houses a son tra (Fructus Crataegi) tea and green tea factory with a capacity of 700 tonnes per year, a biological coal plant, and a resort.
The tea factory and the coal plant is scheduled to become operational in July 2017, employing more than 200 labourers whose monthly income is about 6 million VND each.
The MCC company also pledged to supply the locals with varieties of son tra tree and cultivation techniques and buy back all son tra fruits at a price of 5,000 VND per kilo for its tea plant.
Currently, Yen Bai has about 1,200 son tra trees, with an output of about 3,500 tonnes of fruits.
According to Nguyen Van Khanh, Vice Chairman of the Yen Bai People’s Committee Nguyen Van Khanh, the complex is significant to the socio-economic development of the province and Mu Cang Chai district in particular, helping the locality fulfil its targets and the agricultural structuring plan for the 2016-2020 period.
He also asked the provincial departments and agencies to support the investor to ensure the progress of the project.
Vingroup named Vietnam’s best developer by Euromoney
Vingroup has been named the best developer in Vietnam in three categories by British finance magazine Euromoney.
Accordingly, it is the best retail developer, the best mixed-use project developer and the best leisure/hotel developer of Vietnam.
The Euromoney Real Estate Awards are one of the most prestigious to honour real estate developers in the world. They are compiled basing on developers’ products, service quality, long-term investment strategies, and reputation, among others.
Duong Mai Hoa, Vingroup General Director, said the three awards affirm her business’s prestige, scale and standing in Vietnam’s property market. They also help Vietnam’s real estate sector integrate into the regional and global market.
Last April, Vingroup also ranked first in three categories of the Asia Pacific Property Awards.
Vinhomes, a brand of Vingroups, was evaluated at 511 million USD by brand valuation consultancy Brand Finance in September, becoming one of the five most valuable brands in Vietnam.
Swedish trade minister highlights importance of free trade
Sweden’s Minister of EU Affairs and Trade Ann Linde will be accompanied by the largest ever business delegation during her upcoming official visit to Vietnam from October 4-6.
Ahead of the visit, Minister Ann Linde discusses priorities in Sweden-Vietnam cooperation programme and emphasizes the importance of free trade in an article.
The following is the full text of the article.
“Vietnam and Sweden enjoy a long standing diplomatic and unique relationship. Over the last decades, we have moved from development cooperation into a new phase of partnership, not least as trading partners. While our countries are far apart geographically, we share the conviction that good governance, respect for human rights, the rule of law and adherence to the international rule-based system are determining factors for development. Vietnam has achieved major success in its economic development and has rapidly been moving up the development ladder. Today, Vietnam is a country and a market with significant potential.
In 2015, Vietnam and EU signed a Free Trade Agreement (FTA). The agreement is one of the most ambitious and comprehensive FTAs that the EU has ever concluded with a developing country. It shows Vietnam’s dynamic approach in pursuing international integration for the good of its citizens. It will help Vietnam to integrate successfully as a market economy into the global economy.
Like Vietnam, Sweden is a staunch supporter of free trade. The economic and social wellbeing of our respective nations depends on a transparent, rules based and open global trade regime. For us, free trade is the only way going forward.
But while free trade may be indisputable in Vietnam and Sweden, it is increasingly being criticized elsewhere. Today we see a trend in which more people are demanding that the doors we have fought for decades to open, now be closed to both people and trade with the rest of the world. Some people feel that their jobs are being destroyed by global competition and technological developments – and therefore that their life situations are under threat.
The Swedish Government understands that frustration. Essentially, it is about increased inequalities, a lack of security and inadequate welfare. Stagnating or even declining real wages are a reality for many employees in large parts of the EU and the US. At the same time, the safety nets for those who lose their job are often too weak.
But directing anger at trade and development is not only the wrong approach – it is a dangerous approach. The Swedish model shows that development and security goes hand in hand. Secure people are not afraid of progress. In Sweden, the labour movement acknowledges that structural transformation of the labour market is good for workers. Workers compete on the basis of knowledge and skills, which means that globally competitive businesses are needed. Without free trade, Sweden risks missing out on jobs, and losing out to global competition. In the long term, inefficient and unprofitable operations are devastating for wage earners and for our society.
The structural transformation that Sweden has undergone in recent decades has made us one of the world's leading innovation and industrial nations. Since 2014, 120,000 new jobs have been created in Sweden. Today, 1.3 million Swedes are directly or indirectly employed thanks to our exports - a third of the Swedish work force.
The Ericsson Globe is the largest spherical structure in the world and was finished in 1989. It has since then become a symbol for Stockholm. It can house up to 16,000 people in a concert arragement (Photo: Swedish Embassy)
The Swedish government has adopted an ambitious export strategy aiming at increasing trade and boost participation of Swedish companies in the global economy. Bilateral trade and investments in Southeast Asia, the growth engine of the world, forms an important part of this aim. By having the second biggest growth rate in the world, Vietnam has a key role to play in the region. With the implementation of the progressive Free Trade Agreement, Swedish trade with Vietnam, and Swedish companies investing in the country, would certainly grow.
More trade would benefit Vietnam and Sweden, as well as the whole of Southeast Asia, by creating new jobs and more prosperous societies. Sweden supports the earliest possible implementation of the EU-Vietnam Free Trade Agreement, not least as the agreement forms an important building block towards the possibility of a future region-to-region EU-ASEAN Free Trade Agreement. In this regard, Vietnam is leading the way in the region. Our strengthened partnership will allow us to better address future challenges on the road towards prosperous, democratic and just societies.
I am therefore very happy to visit Vietnam for three days in October, leading the largest delegation of Swedish companies that has ever visited your country, to learn more about Vietnam, discuss innovation and sustainability and explore how Sweden and Vietnam can work together for more open and free trade, for the benefit of both our countries.
Sweden firmly believes that we must push for more open and free trade through a progressive free trade agenda that not only aligns with, but also supports the implementation of the United Nations’ Sustainable Development Goals. For us it is a given that in trade policy we must stand up for human rights, our environment, people's health and our democratic space. Based on this approach, more free trade means more prosperity for all.”
Mekong Delta urged to use advanced farming techniques
Experts have recommended that the Cửu Long (Mekong) Delta, the country’s largest producer of fruit, set up concentrated fruit cultivation areas and apply advanced farming techniques.
The delta has a fruit cultivation area of 300,000ha, accounting for 37 per cent of the country’s total area, according to the Ministry of Agriculture and Rural Development’s (MARD) Plant Cultivation Department.
The region produces an annual total output of 3.5 million tonnes of fruit a year.
Tiền Giang, Vĩnh Long, Hậu Giang, Sóc Trăng and Bến Tre are the delta’s largest fruit cultivation provinces. They have many fruit varieties with high value, such as mango, orange, grapefruit and dragon fruit.
Last year, the delta exported US$1.8 billion of fruit to 60 countries and territories, including the US, EU and Japan, according to MARD.
Speaking at a forum in Tiền Giang Province on August 12, Trần Văn Khởi, acting director of the National Agriculture Extension Centre, said the quantity, varieties, export markets and value of the delta’s fruit had increased rapidly.
However, linkage between farmers and consumption outlets where sales occur remains weak.
In the delta, many farmers have to sell fruit at retail markets during peak harvest seasons as they can not find traders to buy their fruit.
Small-scale, unzoned cultivation and poor fruit processing facilities are the major limitations, according to MARD’s Plant Cultivation Department.
Lê Hoàng Anh, who grows 1.2ha of Cát Chu mango with an annual output of 15 tonnes in Đồng Tháp Province’s Cao Lãnh District, said that farmers were most concerned about sales outlets.
“The sale of mango depends on traders, so the price is not stable,” he said.
Nguyễn Văn Hoà, deputy head of MARD’s Plant Cultivation Department, said policies to improve links between fruit growers and companies had yet to be created.
Though companies link with farmers to buy fruit, they do little to establish links in cultivation.
The obligations of farmers and companies under their sale contracts are not secured, so when one party breaches the contract, nothing can be done, according to Hoà.
Nguyễn Hữu Đạt of the Việt Nam Fruit and Vegetables Association said cooperation should be improved in fruit cultivation and use of advanced farming techniques to produce off-season fruits under Good Agricultural Practices (GAP) standards.
Companies should also be more proactive in establishing linkages as well.
Only about 3 per cent of the delta’s fruit cultivation area is cultivated under Vietnamese or global GAP standards.
Most of the VietGAP and GlobalGAP cultivation areas contain dragon fruit, according to MARD’s Plant Cultivation Department.
The development of co-operatives and teams in the delta has helped secure outlets for many farmers, improving income and sustainable development.
A co-operative requires a minimum of seven members, while a co-operative team has at least three members.
The delta has 69 fruit-cultivating co-operatives with a total of 4,022 members and 489 co-operative teams with a total of 12,722 members, according to MARD’s Co-operative Economy and Rural Development Department.
They grow a combined area of 7,662ha of fruit, accounting for 4.1 per cent of the delta’s farming area.
Võ Chí Thiện, director of the Mỹ Tịnh An Dragon Fruit Co-operative in Tiền Giang’s Chợ Gạo District, said the Mỹ Tịnh An Fruit Co-operative was set up based on demand of participating members.
The co-operative aims to develop the brand name “Chợ Gạo Dragon fruit”, a specialty of Tiền Giang.
The co-operatives ensure the purchase of dragon fruit at a minimum price of VNĐ10,000 (45 US cents) a kilo and VNĐ2,000-4,000 higher than the market price.
Before joining the co-operatives, the members with small-scale farms and unzoned cultivation areas had to sell their dragon fruit at a low price after a good harvest because traders had pushed the price down.
MARD’s Co-operative Economy and Rural Development Department said the delta should focus on developing so-called new-style fruit co-operatives linked with companies to ensure material input supply and sales outlets.
Under a Government pilot project approved in March, about 300 co-operatives in the rice, fruit and fisheries sectors will be turned into new-style co-operatives in the Mekong Delta over the next four years.
The project is focusing on improving the capacity of management and technical staff of co-operatives and providing capital solutions for production and business operations of co-operatives.
Hoà, deputy head of MARD’s Plant Cultivation Department, said the department would consult MARD and relevant agencies to increase linkage in fruit cultivation, and manage the cultivation of off-season fruits and fruit zoning areas.
He said the Government should outline new policies on fruit cultivation development.
Tien Giang province posts 14.6% rise in exports
The Industry and Trade Department of the Mekong Delta province of Tien Giang reported export earnings of US$1.48 billion in the past nine months of this year.
This was a surge of 14.6 per cent from the same period last year.
The figure, which accounted for 70 per cent of the yearly plan, is expected to help the province reach its export value target of $2.1 billion for this year.
Foreign-invested businesses continued asserting their leading role by making up 63 per cent of total exports with products such as handbags, shoes, apparel and processed aquatic products, as well as vegetables, fruits and plastic items.
Businesses have been striving to expand their export markets beyond the traditional European ones, the department said..
The United States, a new, potential market, accounted for 90 per cent of the locality's export earnings from the American region.
The export results reflected the local administration's efforts to continuously improve business and investment environment, accelerate trade promotion activities and encourage the start-up spirit.
That effort allowed the province to reel in 17 new investment projects with more than VND9.2 trillion ($414 million) capital over the past nine months, a four and 3.6 times increase in terms of the number and value of projects, respectively, compared with the same period last year. In addition, eight operating projects asked to increase their capital by over VND1.35 trillion, four projects more and 75 per cent higher in terms of registered capital year-on-year.
Tran Hoang Phong, vice director of the Planning and Investment Department, noted that the effort should focus on bettering investment and business climate, hastening administrative reform, building complete technical infrastructure and promoting dialogue between local agencies and businesses and investors to tackle obstacles in production and export in a timely manner.
VN goods face stiff AEC competition
Nine months after joining the ASEAN Economic Community (AEC), Vietnamese goods still face strong competition in national and regional markets from products from other ASEAN countries, experts said.
Tran Thi My Van, director of administration and personnel and communications representative of Acecook Viet Nam Joint Stock Company, said the products of her company have been exported to 47 countries and territories, including three ASEAN countries – Cambodia, Laos and Myanmar.
But Acecook Viet Nam did not manage to enter the Indonesian market, the largest instant noodle market in the ASEAN region which buys five billion units of noodles per year, she said. As a result, the company has not yet realised its expectations of increasing its exports of instant noodles after Viet Nam joined the AEC.
Doan Trong Hieu, director of Thuy Binh Ltd Company, said the company's main export market was Cambodia but the business has faced more difficulties since Viet Nam joined AEC. The company has studied its market carefully and improved the quality of its products as the market demanded. But it has not built its distribution system in ASEAN countries nor opened branches in regional markets.
My Hao Chemical and Cosmetics Joint Stock Company, a company with long experience doing business on ASEAN markets, said local products have faced strong competition in the ASEAN markets, though most customers in ASEAN countries such as Malaysia, Thailand and Cambodia say Vietnamese goods are of good quality, reported vietnamplus.vn.
In Thailand, for instance, Vietnamese companies such as My Hao have sold products in locations around Bangkok but could not compete with foreign rivals, a My Hao company representative said.
In the first seven months of this year, Viet Nam experienced a trade surplus with markets on other continents and a trade deficit with Asian markets, especially the ASEAN market, the Ministry of Industry and Trade's Import and Export Department reported. On the ASEAN markets, Viet Nam experienced a large trade deficit with Thailand, Malaysia and Singapore.
The department said Viet Nam joined AEC but exports to ASEAN countries did not increase as expected and local enterprises have braved many difficulties in expanding market share in ASEAN countries.
Meanwhile, local enterprises have also faced fierce competition with ASEAN companies in their home market.
Le Thi Thanh Lam, general director of Sai Gon Food Commercial Joint Stock Company, said local companies have had difficulty retaining their market share of the domestic market due to high competition with foreign companies and their own financial, technological and other weaknesses.
Dinh Thi My Loan, chairwoman of the Association of Viet Nam's Retailers, said local companies, especially retailers, should have close and comprehensive cooperation in production and business at home. Comprehensive reform to improve competitive ability is also needed.
The association proposed that the State develop large retailers strong enough to compete with foreign retailers, Loan said.
Deputy Minister of Industry and Trade Nguyen Cam Tu said companies should take advantage of integration to join AEC to overcome existing difficulties in production and business and to improve competitive ability.
They should also build brand and quality standards for large-scale business operations in the long term future, he said.
Meanwhile, experts said the Government should promote administrative reform to create favourable conditions for trade activities, especially with ASEAN markets.
The Government also should focus on attracting investment in capital and technique, as well as focusing on attracting foreign experts to promote technological transfer and to improve the quality of Vietnamese goods and services.
Ba Ria - Vung Tau seeks to build aerodrome
Authorities of the southern Ba Ria – Vung Tau Province have proposed Prime Minister Nguyen Xuan Phuc consider a project to build a specialised aerodrome in the province, be invested by Ho Tram Project Company Ltd.
A specialised aerodrome is a small airport serving passengers, baggage, goods, airmail and postal parcels.
If the project is approved, the province expects the Government to add the aerodrome into the national aviation development plan from now to 2020 with a vision to 2030.
The aerodrome was designed to cover 200 hectares, with a 2.5km runway and capacity to receive aircraft such as Airbus A320, Airbus A321 and Boeing 737. Its investment capital is estimated at US$100 million.
The aerodrome is proposed to be built in Loc An Commune in Dat Do District, along the coastal road system in the province.
Deputy Chairman of the provincial People's Committee Nguyen Thanh Long said if the project was approved, it would attract more domestic and foreign visitors to the province.
In the province, Ho Tram Complex Tourism Project, which is also being invested by Ho Tram Project Company Ltd, is a key project that has attracted a great number of visitors.
The project's Zone A1, including a five-star hotel block, entertainment area and international standard 18-hole golf course with total investment capital of nearly $800 million, is in operation with about 200,000 visitors annually.
However, the project is far from Tan Son Nhat International Airport so visitors have to travel to the area on road.
Vietcombank signs financing agreement with Vietcomreal
The Joint Stock Commercial Bank for Foreign Trade of Viet Nam (Vietcombank) has signed an agreement with the Viet Real Estate Commercial Joint Stock Company (Vietcomreal) to finance the latter's real estate projects.
Under the agreement signed on October 2, the bank will fund total capital of nearly VND1.5 trillion (US$66.96 million).
Of the total capital, Vietcombank will finance nearly VND800 billion for Vietcomreal's Viva Riverside real estate project, which is located at HCM City's District 6, with total investment capital of some VND1 trillion. The project includes 567 apartments.
Under the agreement, customers who buy apartments at the Viva Riverside project will be lent up to 70 per cent of the apartment's value.
Truong Thi Thuy Nga, Vietcombank's deputy general director and director of Vietcombank's HCM City branch, said to implement instructions of the government and the State Bank of Vietnam, Vietcombank has, so far, lent money to individuals and enterprises at 52 industries and sectors.
In the real estate industry, Vietcombank lent funds to customers in HCM City, Da Nang and Ha Noi, she said.
Singapore-based PropertyGuru invests in VN real estate portal
Asia's leading online property group PropertyGuru has become a major stakeholder of Viet Nam's No 1 real estate portal batdongsan.com.vn.
The company is eyeing expansion in the rapidly growing Southeast Asian market where it can promote Viet Nam's property products to regional investors.
The financial terms of Singapore-based PropertyGuru's strategic investment in batdongsan.com.vn were not disclosed at yesterday's press conference, held in Ha Noi.
With support from PropertyGuru, batdongsan.com.vn expected to improve access to a wide range of property information for home-seekers and investors in both local and overseas markets as well as contribute to the development of Việt Nam's realty market, Le Xuan Truong, executive director of batdongsan.com.vn said.
Steve Melhuish, co-founder and CEO of PropertyGuru, which acts as a platform for some US$15 billion in transactions annually with footholds in nine markets, said that Viet Nam's rapid economic growth, fast growing population and urbanisation, together with its policy of opening up the market to foreigners had made real estate an exciting and attractive market.
Under its strategic partnership with batdongsan.com.vn, PropertyGuru expects to promote property products in Viet Nam to regional investors, Melhuish said, adding that he saw increasing interest among foreign investors in Viet Nam's realty market. In addition, PropertyGuru enables Vietnamese investors to gain access to property information in other Southeast Asian countries.
Batdongsan.com.vn, officially launched in 2008, has developed into the country's leading real estate portal, drawing huge traffic of nearly 50 page views per month and more than 2 million regular users.
Vinacomin's member plans for trading on UPCoM
Vinacomin Viet Bac, a member of the Viet Nam National Coal-Mineral Industries Holding Corporation Limited (Vinacomin), has submitted its portfolio for listing on the Unlisted Public Company Market (UPCoM).
Vinacomin Viet Bac plans to trade 105 million shares and be coded as MVB on UPCoM. The company's largest shareholder is Vinacomin, holding more than 98 per cent of the miner's charter capital.
Vinacomin Viet Bac mainly operates in examining, exploiting, processing and producing, and trading products made of coal and other minerals, as well as producing and selling cement and other construction materials.
The company holds more than 50 per cent of capital in nine other sub-units such as Tan Quang Cement JSC, and possesses a 29 per cent beneficiary stake in an associate firm in trading construction materials.
Exchanges, depository strengthen co-operation
HCM City and Ha Noi stock exchanges and the Viet Nam Securities Depository will strengthen co-operation to achieve strategic goals for the domestic stock market over the next five years.
Officials from the three parties signed a memorandum of understanding in HCM City last week.
The exchanges and the Depository will share information related to the market, enterprises and investors, and jointly develop new products and sets of indices.
The aim is to provide more secure operations for the local markets, in line with international benchmarks.
State Securities Commission chairman Vu Bang said the collaboration will help market operators improve services, which will help enterprises and other market members operate more efficiently.
This will create a better environment for investors, improve public confidence in the markets and sustain development, he said.
Late last week, officials from HCM City and the Ha Noi exchanges also introduced VNX Allshare, a joint index to cover stock developments on both bourses. It is scheduled to be launched on October 24 and will begin at 1,000 points.
Award ceremony held to honor farmers using information and technology
An award ceremony was held in Ha Noi on Sunday for a contest entitled "Farmers with information and technology".
The contest honored those farmers with basic electronic skills, including using the Internet, sending and receiving electronic mail, seeking to sell in the market, and using information and technology in agricultural production and the breeding industry.
According to the organizing committee, the contest provided a first prize of VND30 million, two second prizes of VND20 million each, three third prizes worth VND10 million each, and 57 consolation prizes of VND3 million.
Speaking at the ceremony, Lai Xuan Mon, Chairman of the Vietnam Farmers Association (VFA), said the VFA always identified IT as a critical tool that aimed to help farmers improve their production to meet the requirements of global integration. Amid this global trend, farm produces in Viet Nam have to fiercely compete. Integration brings with it both opportunities and challenges. The biggest challenge is in the field of agriculture, in planting crops and in raising livestock. If farmers do not gain access to information and technology, as well as advanced methods of production to produce high quality agricultural products, their products may not be competitive in domestic and international markets.
The contest is expected to help farmers, who account for 70 per cent of the nation's population, have an opportunity to learn how to use information and technology to their advantage in production, in order to increase productivity and product quality.
Through the contest, the organizing committee seeks to send a message to 15 million farming families across the country that Vietnam's agricultural products are facing fierce competition worldwide due to the country joining the Trans-Pacific Partnership (TPP).
In many countries, the use of IT in agriculture has taken great strength to liberalise and improve labour productivity for farmers, while developing agriculture into highly-valued goods. Agriculture with ICT applications, also known as "smart agriculture", is becoming a new trend, changing ways of organising production and significantly improving productivity, as well as the quality of agriculture in many parts of the world, he said.
Foreign sector moves to takeover Vietnam property market
Singapore-based PropertyGuru has announced the acquisition of a controlling interest in Vietnam real estate portal batdongsan.com.vn in a strategic move designed to take over the Vietnam real estate sales market.
Financial and other detailed terms of the deal to acquire batdongsan.com.vn were not disclosed at the presser on October 3 in Hanoi announcing the acquisition, other than its clear PropertyGuru is acting as a front agent for the yet undisclosed true purchaser(s).
The deal, said Le Xuan Truong, executive director of batdongsan.com.vn, at the presser, is expected to improve access for the company to a wide range of property information for the company’s domestic and foreign customers.
It’s clear from what little is known about the transaction that San Francisco, US based TPG Capital is fronting a considerable chunk of the funds to close the deal as is Emtek based out of Indonesia.
TPG Capital is one of the largest private equity investment firms globally, focused on leveraged buyouts, growth capital and leveraged recapitalization investments in distressed companies and turnaround situations.
Vinafood 1 subsidiary selling 34 per cent stake
Vinafood 1 Flourmill & Trade, a subsidiary of state-owned Vietnam Northern Food Corporation (Vinafood 1), is selling 8.2 million shares, a 34 per cent stake.
The shares will be auctioned at the initial price of VND10,000 (45 US cent) per share on October 28. Domestic and foreign investors are invited to register and submit the deposit by October 21 to participate in the event.
Vinafood 1 Flourmill & Trade produces and processes food, flour, and related products and produces and trades animal feed production materials. Vinafood 1 Flourmill & Trade expects its chartered capital to reach VND242 billion ($10.85 million) after going public, of which Vinafood 1 is going to hold 65 per cent, employees 0.99 per cent, and other investors 34 per cent.
Vinafood 1 Flourmill & Trade earned a revenue of VND252 billion ($11.3 million) and a net profit of VND894 million ($40,000) in the first half of 2016. As of the end of June, 2016, its total assets value was VND316 billion ($14.1 million). The company targeted to pay a dividend of VND200 (0.8 US cent) per share in 2017. The figures for 2018 and 2019 are VND220 (0.9 US cent) and VND240 (1 US cent), respectively.
At the moment, the company holds land use rights over three plots of land, all in three major cities in Vietnam. One is the headquarter at 94 Luong Yen street, Hai Ba Trung district, Hanoi with an area of 408.3 square metres, the second is a 20,842-square metre plant in Vinh city, and lastly, the 19,805-square metre flour production facility in Hai An district of Haiphong.
In 2015, Vinafood 1 Flourmill & Trade earned a revenue of VND527 billion ($23.6 million), down 29 per cent on-year, and incurred a loss of VND2.7 billion ($121,000) in light of a net profit of VND143 million ($6,400) in 2014.
Parent company Vinafood 1 expects to sell a part to the public in 2017.
MoIT refuses to move polyester import tax
The Ministry of Industry and Trade (MoIT) has refused Vietnam Textile and Apparel Association (Vitas)’s proposal to move the 2 per cent import tax to zero per cent on polyester synthetic fibre products.
Previously, according to PVTex Dinh Vu Joint Stock Company (PVTex)’s proposal, one of Vietnam’s largest polyester fibre and yarn producers, the Ministry of Finance (MoF) issued Circular 131/2015/TT-BTC dated August 27, 2015 changing the preferential import tax rate imposed on polyester synthetic staple fibres to 2 per cent.
However, according to Vitas, the 2 per cent can not help PVTex maintain its operations in the context of its recent financial problems.
Thereby, Vitas requested the MoIT to propose the MoF to move the preferential import tax rates imposed on polyester synthetic staple fibres.
However, the MoIT decided to maintain the preferential import tax rates until the end of this year. Representatives of the MoIT said that the interdisciplinary working group is still working on a resolution to PVTex’s difficulties and is building plans to resume the operation of the factory’s polyester synthetic fibre manufacturing line.
According to the latest movement, Vietnam's state-run oil and gas group PetroVietnam is seeking prime ministerial approval to sell its entire 74 per cent (or at least a 38 per cent) stake in PVTex, due to its recent string of losses.
PVTex started commercial operation in May 2014 with a capacity of 236 tonnes of polyester fibre and yarn per day, equalling 48 per cent of its designed capacity. However, the factory had to suspend operation numerous times due to unsold products piling up.
New fund offers cheap loans for SMEs
Small and medium enterprises (SME) can now take out cheap loans from the Small and Medium Enterprise Development Fund (SMEDF), a SME financing arm of the Ministry of Planning and Investment.
Speaking to the Daily on the sidelines of a seminar on finances for SMEs in HCMC last week, Hoang Thi Hong, SMEDF chairwoman, said the fund was set up by the Government in 2013 but it had just come on stream because it had taken time to devise an operating mechanism and establish a workforce.
Since its debut in April this year SMEDF has picked three banks -- Vietcombank, BIDV and HD Bank -- to represent it to lend to SMEs in need. It has just begun receiving borrowing requests from SMEs.
Bui Hoang Tung at the supervision and risk management department of SMEDF said SMEs could borrow a maximum of VND30 billion each with a maximum term of seven years or up to 10 years, and an annual interest rate of 5.5% for a tenor of less than 12 months and 7% for medium and long tenors. The interest is fixed throughout the loan term and the borrower would have not to pay a fine for premature loan repayments.
The three assigned banks are responsible for evaluating all borrowing requests transferred from SMEDF, disbursing money, managing all loans and receiving borrowing proposals on SMEDF’s behalf.
SMEDF, Hong noted, would pick more banks in the coming time and in the future, finances would come from banks rather than the State budget while banks would have the opportunity to gain access to a new target group of clients that are SMEs.
“Our goal is to diversify funding sources for enterprises,” she said.
SMEDF currently has four lending programs for SMEs. The first is to lend to SMEs with innovations, the second to SMEs joining the production, processing and storage chains for agricultural, forestry and seafood sectors, the third to SMEs in supporting industries in the electronics and engineering sectors, and the fourth to SMEs participating in waste and wastewater treatment and management activities.
More information about SMEDF can be found at www.smedf.gov.vn.
US$100 billion needed for public investments in 2016-2020
Vietnam will need VND2,000 trillion (nearly US$100 billion) to fund public investment projects in 2016-2020 amid the increasingly tight State budget.
According to a General Statistics Office (GSO) report released last week, budget revenues amounted to VND665.2 trillion in the first nine months of this year, or 65.6% of the full-year plan, while budget expenditures totaled VND819.4 trillion, 64.4% of the 2016 estimate. This means overspending stood at VND154.6 trillion in the nine-month period.
The country used VND109.8 trillion to pay foreign debts in January-September, representing 70.8% of the plan.
By mid-September, disbursements for basic construction projects had reached 51% of the full-year estimate while disbursements from Government bond sales had met 40% of the plan.
According to a conclusion signed by Deputy Prime Minister Vuong Dinh Hue on the 2016-2020 public investment plan, foreign capital and proceeds from lottery sales in provinces in this plan must be adjusted to reduce the central Government’s financial allocations for provinces.
Hue ordered the Minister of Planning and Investment to work with the Minister of Finance over budget deficit in provinces and the use of proceeds from lottery sales to finance transport, irrigation and other key projects.
Priority must be given to major projects such as the North-South Expressway, coastal roads, border patrol roads and those coping with climate change, drought and salinity.
The two ministries are told to cooperate to give the Government advice on how to use VND10 trillion from sales of State stakes in 2015 to supplement capital for investment projects next year.
Disbursements for development projects have made up smaller proportions in the State budget in recent years while regular expenditures have accounted for 72% of the budget and debt payments have edged up.
Vietjet wants to upgrade Chu Lai airport
Local budget carrier Vietjet is seeking Ministry of Transport approval to invest VND20 trillion (US$896.8 million) to upgrade Chu Lai airport in the central province of Quang Nam into a transit airport for local and international flights.
In a report sent to the ministry last week, Vietjet said Chu Lai is a potential airport as it has abundant land for more development and is located in the heart of the central region, and between the nation’s two biggest economic centers, Hanoi and HCMC, where there are many large-scale projects.
The airport currently has weak infrastructure with only one runway while its passenger and cargo terminals are in the same place with total floor space of 3,360 square meters.
Therefore, Vietjet is keen to upgrade the airport in three phases to meet its development demand.
The first phase would lengthen the runway to 3,250 meters and widen it to 65 meters from now until 2020.
It would build a passenger terminal with an annual capacity of two million people, a cargo terminal for two cargo transport firms and two hangars for aircraft maintenance and repair.
Lasting until 2025, the second stage would expand the passenger and cargo terminals to raise its passenger capacity to four million people per year and allow it to serve four cargo transport enterprises.
For the third phase after 2025, Vietjet would develop a second runway which is 3,250 meters long and 65 meters wide in the east of Chu Lai airport.
In this final stage, the airline would construct the second passenger terminal which can handle four million passengers per year, and construct a cargo terminal to fulfill the need for transporting goods in Quang Nam Province and nearby areas.
The Civil Aviation Authority of Vietnam (CAAV) under the transport ministry said Vietjet’s proposal matches the already-approved master development plan for airports.
Deputy Minister Nguyen Nhat has asked the airline to draw up an investment plan for the project and submit it to the CAAV before reporting to the ministry in November.
Joint effort proposed to combat transfer pricing
Different ministries would have to make a concerted effort to fight transfer pricing to cope with lost budget revenues if the Government approves a Finance Ministry-drafted decree .
According to the draft, which is available on the website of the General Department of Taxation, the tax authority would need cooperation from the State Bank of Vietnam, and the ministries of finance, planning-investment, science-technology, and information-communications.
Good communication and exchange of information between these agencies would make the fight against transfer pricing more effective.
For instance, the draft requires the central bank to provide the Ministry of Finance with details about monetary transactions between related legal entities with a business, such as account holder, content of transaction and persons involved.
The central bank would also have to give the tax authority information about loans which local companies get from foreign enterprises within a company that transact with each other. That information includes loan value, ceiling, interest, term, principle, disbursement and paid interest.
Similarly, the Ministry of Planning and Investment would have to provide and exchange information with the tax authority in a probe into suspected signs of transfer pricing.
Whether the crackdown on transfer pricing is successful or not would depend largely on the level of coordination between ministries and government agencies, but such coordination has so far been lax.
This would become the first Government decree governing transfer pricing if it comes out.
There are a couple of ministerial circulars regulating transfer pricing, such as Circular 66/2010/TT-BTC of the Ministry of Finance which provides ways to determine market prices of transactions between divisions of a company, and Circular 201/2013/TT-BTC which governs advance pricing agreement.
HCMC tax officials, however, said when reached by the Daily that the two circulars do not comprehensively cover all aspects of transfer pricing, so they do not provide a sufficient legal corridor for battling transfer pricing.
Meanwhile, transfer pricing has become sophisticated, especially at a time when mergers and acquisitions (M&A) are growing strongly. In some transactions, tax officials said stake sellers report no profit while the tax authority has no evidence to prove otherwise.
The General Department of Taxation has taken steps to clamp down on transfer pricing to arrest a rise in lost budget revenues, including setting up transfer pricing inspection offices in Hanoi, HCMC, Dong Nai and Binh Duong where a lot of enterprises are suspected of transfer pricing.
Rigorous inspections into suspected transfer pricing cases have paid off, with some lost tax revenue recovered.