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Vietnam business Brief in June 2017

Vietnamese dragon fruit has been exported to 40 countries and territories such as China, Thailand and Indonesia, according to the Ministry of Agriculture and Rural Development (MARD).

The fruit is also entering new markets including India, New Zealand, Australia and Chile, said the ministry.

The MARD is coordinating with the Ministry of Industry and Trade to complete procedures to ship dragon fruit to Australia in 2017.

Earlier this year, in January, the Australian Ministry of Agriculture and Water Resources released its final review of bio-security requirements for Vietnam’s fresh dragon fruits.

In mid-June, a letter was sent to the Vietnamese Ministry of Industry and Trade by the Australian Embassy in Vietnam, detailing the process of opening the market for Vietnamese fresh dragon fruit.

The embassy also recommended supporting Vietnam in asking permission from the Food Standards Australia New Zealand to use irradiation treatment on dragon fruit shipped to Australia.

Dragon fruit is a Vietnamese agricultural staple, with export earnings of 895.7 million USD in 2016, making up of 50.3 percent of the country’s fresh fruit exports and 36.1 percent of overall vegetable exports.

Price of pig down, breeders sell pork on roadside

Because price of pork is down and consumption is difficult, local breeders have slaughtered the animal and sold at VND100,000 four kilogram on the roadside in the Mekong delta province of Vinh Long.

These days, prices of pork in the Mekong delta have gone down driving breeders into despair.

The Department of Agriculture and Rural Development in Mang Thit District in Vinh Long Province yesterday said that local breeders are facing difficulties due to market saturation though prices fell drastically.

With the price of VND18,000-VND20,000 a kilogram of pork, breeders suffered loss of over VND10,000 per kilogram.  Pork consumption had become saturated therefore breeders slaughtered their animal and sold it on roadside at the cost of VND100,000 for four kilogram.

Similarly, breeders sell pork at same price along streets in districts Cho Lach, Mo Cay Nam, Mo Cay Bac in Ben Tre Province pork.

Huynh Thi Thu in Son Dinh Commune in Cho Lach District said traders buy pork at VND17,000 – VND20,000 a kilogram, breeders will suffer big loss at a such price.

Despite efforts to reduce pigs, the province still has many herd of pigs in farms. Statistically, from October, 2016 to now, herd of pigs in Tien Giang Province has decreased over 200,000 pigs the province still has a herd of about 500,000 pigs.

Breeders in the Mekong delta have even left farms empty or they just raised some pigs because they run out of money.

As per the Department of Agriculture and Rural Development, for long-term strategy, breeders must associate with enterprises to raise the animal as per VietGap standards to cut cost.

Vinataba-Philip Morris to reclaim over $2 million in tax refund

Vinataba-Philip Morris Ltd., based in Can Tho city, is in the legal process to reclaim a tax amount of over $2 million that has been withheld over the past few years in relation to the copyright licence fees that the company filed and submitted to the Can Tho Department of Customs.

In November 2010, Vinataba-Philip Morris Ltd. (VPM) signed an agreement with Philip Morris Global Brands Inc. (PMGB) to the effect of which VPM was permitted to exclusively produce and distribute tobacco products bearing the Marlboro brand in Vietnam. In order to legally use the brand, VPM is required to pay a copyright licence fee to PMGB on the basis of the total net selling price of finished tobacco products it produces and sells.

In 2011, VPM imported materials, including loose tobacco for the production of finished tobacco products bearing the Marlboro brand.

On August 17, 2012, after a post-customs audit, director general of the Can Tho Department of Customs issued Decision No.219/QD-HQCT (Decision 219) imposing import tax on the materials that VPM imported in 2011, citing the reason that the company failed to file the copyright licensc fee paid in 2011 into taxable value for the imported goods. The additional tax amount that the company had to pay was VND4.9 billion ($217,943).

On October 2, 2012, director general of the Can Tho Department of Customs issued Decision No.01/QD-HQCT (Decision 01) to stipulate a penalty of VND495 million ($21,794) against VPM for the violation of tax regulations due to its misfiling of the imported goods’ taxable value. Despite having submitted the two aforementioned amounts in full, VPM filed an administrative complaint and subsequently filed a lawsuit against Decision 219 and Decision 01.

While awaiting a decision, VPM still complied with Decision 219 to attain custom clearance for the imported goods and was required to add the copyright licence fee into the taxable value of imported materials during the period from 2012 to the second quarter of 2016.

The additional fee amounted to VND46.1 billion ($2 million). However, when filing and submitting these taxes, VPM sent a document to the Can Tho Department of Customs in order to reserve the right to claim refund on the tax amount the company had paid in relation to the copyright licence fee.

On August 29, 2016, the Supreme People’s Court of Ho Chi Minh City issued an appeal decision to annul Decision 219 and Decision 01. Accordingly, VPM was no longer required to add the copyright licence fee into the taxable value for imported goods.

Pursuant to this decision, on November 14, 2016, VPM sent a document to the Can Tho Department of Customs to request a refund on the excess payment, amounting to VND51.6 billion ($2.27 million).

However, the Can Tho Department of Customs only returned an amount of VND 5.4 billion ($237,654) in accordance with Decision 219 and Decision 01. The rest of the amount, VND46.1 billion ($2 million), the company submitted during the waiting period is yet to be resolved.

Tran Thanh Luong, deputy director general of the Can Tho Department of Customs, stated that because the appeal decision did not mention the additional tax amount VPM submitted from 2012 to the second quarter of 2016, the department issued a document soliciting opinions and would be awaiting further instruction from the General Department of Customs.

On September 8, 2016, the Post-Clearance Audit Department under the General Department of Customs issued a decision on the post-clearance audit of VPM.

On January 16, 2017, director general of the department signed Conclusion No. 24/KL-KTSTQ, part V, Article 3 of which stated that “the copyright licence fee must be added to the taxable value for imported goods, such as loose tobacco (processed and scented), filter, aluminum foil… (these materials only need to go through the rolling process to make the finished cigarettes).”

Pursuant to this conclusion, on April 25, 2017, the General Department of Customs issued document No. 2772/TCHQ-KTSTQ-NV in response to the document by the Can Tho Department of Customs regarding the refund of tax payment and overdue fines according to the administrative judgment.

The General Department of Customs requested that the Can Tho Department of Customs consider the actual record of tax payments by VPM in order to decide on the additional tax payment on the basis of the conclusions by the Post-Clearance Audit Department.

Nguyen Van Vu, deputy director general of the Can Tho Department of Customs, told VIR that the department has informed VPM of the response by the general department.

According to the instructions from the general department, the copyright licence fees from the company must be added to taxable value for imported goods, therefore, the Can Tho Department of Customs would not return the excess of $2 million that the company submitted. If VPM does not agree, they can file a complaint or a lawsuit to resolve the case.

Do Doan, CEO of VPM, said: “The basis cited by the Post-Clearance Audit Department to add the copyright licence fees to the import taxable value is not in accordance with Article 14 of Circular No.205/2010/TT-BTC issued on December 15, 2010 by the Ministry of Finance (MoF). It also goes against Article 1 of Circular No.29/2014/TT-BTC issued on February 26, 2014 and Article 14 of Circular No.39/2015/TT-BTC issued on March 25, 2015 by MoF.”

Doan remarked that according to these articles, the copyright licence fee only needs to be added to taxable import value when the goods satisfy the following three conditions: copyright licence fee is paid for the use of intellectual property rights related to the goods; the purchaser pays the copyright licence fee as a condition of the transaction; and the copyright licence fee is yet to be included in the actual price paid or to be paid for the imported goods.

Since the first two among these conditions were not satisfied, the copyright licence fee that VPM paid should not be added to taxable value for materials.

“Remarkably, the basis in the conclusion issued by director general of the Post-Clearance Audit Department on which the copyright licence fee is to be added to taxable value is also the very basis that the Can Tho Department of Customs issued Decision 219 that the court annulled. Does the general department not know?” said Do Doan.

VPM is an enterprise with large contribution to Can Tho city. In 2016, the company contributed VND1.176 trillion ($51.7 million), accounting for 10 per cent of the total budget revenue of the Mekong Delta city.

SCG showcases innovative building materials at Vietbuild 2017

Thailand’s SCG Building Materials, one of five core businesses of SCG, a leading ASEAN conglomerate, showcased its latest building materials, high-performance integrated systems, and flexible and smart products to bring better living at the Vietbuild International Exhibition 2017 at Ho Chi Minh City’s Saigon Exhibition and Convention Center (SECC) between June 24 and 27.

With the theme “SCG Firmly Trusts in Quality for Ensuring the Future”, SCG’s exhibit this year underlined the high performance of its integrated systems with comprehensive functions and design for various lifestyles, flexibility, and smart benefits, with materials that meet specific needs with functional features and tailored design, ensuring better living and realizing a commitment to R&D to innovate high quality products.

“With over 100 years of experience in construction and building materials and over 25 years of operations in Vietnam, SCG recognizes Vietnamese families’ needs for better living,” said Mr. Jaturong Kurowat, Sales and Marketing Director at SCG Cement Building and Materials in Vietnam. “We commit to innovating product and service quality in building materials for new Vietnamese lifestyles to provide comfortable living with integrated functional benefits and outstanding design.”

To deliver better living, SCG introduced three core benefits enabled by its innovative solutions: high performing integrated systems, sustainable roofs, and ventilation systems innovated by SCG to cope with Vietnam’s tropical climate. This consists of SCG’s roofing products and accessories that form a system that offers temperature comfort, durability, and long lasting beauty over time.

COTTO, a brand under SCG, also showcased its collection of four bathroom styles under the concept “Bring Bathroom Happiness to Your Home with COTTO”, including Minimalistic Space of Relaxation, Luxurious Spa at Home, Small Space, Big Happiness, and Family Paradise.

Visitors were able to attend various activities held by SCG to explore the benefits of its solutions for better living. The Interactive House Style Test helped visitors identify the ideal housing style that matches their lifestyles.

Meanwhile, the talk show series with famous architects Ngo Ky Chu and Ho Le Phuong discussed the topics “Better Living in Different House Styles” and “Passion for Better Living”, providing home owners with knowledge and inspiration to enhance their living experience.

SCG also introduced the House Style Book of 2017, featuring six house models that suit the different lifestyles of Vietnamese consumers, and recommended SCG products in each design.

Jetstar Pacific receives first A320ceo airplane from Airbus

Vietnam’s low-cost carrier Jetstar Pacific received the first A320ceo airplane of ten aircrafts of this kind that the firm has ordered from the European aviation giant Airbus in 2017, at a hand-over ceremony held in Toulouse, France on June 27.

The purchase deal was announced last June during the 2016 Farnborough International Air Show in the UK.

Chief Executive Officer of Jetstar Pacific Nguyen Quoc Phuong said that the purchase of A320ceo airplanes is part of Jetstar Pacific’s development strategy of gradually replacing old aircrafts with new-generation ones in an effort to continually enhance customer service.

The new fleet of A320ceo planes are scheduled to be put into operation on major domestic air routes and international ones, including the newly launched direct routes connecting Da Nang/Ha Noi and Osaka (Japan), he added.

After the hand-over ceremony at Airbus, the first A320ceo jet will depart for a long-distance flight to Tan Son Nhat Airport in Ho Chi Minh City, in preparation for its first passenger flight in Vietnam. From now until the end of 2017, Airbus will continue transferring the remaining nine aircrafts to Jetstar Pacific to serve the firm’s update of its fleet and improvement of its service quality.

Didier Evrard, Head of Programmes at Airbus, spoke highly of the significance of Jetstar Pacific-Airbus cooperative relations, whilst expressing his belief in Jetstar Pacific’s development outlook with the addition of A320ceo airplanes to its fleet.

On the occasion, Jetstar Pacific signed a deal to purchase 24 V2500 aircraft engines from IAE International Aero Engines to be installed on its ten new A320ceo airplanes and four available backup engines.

Jetstar Pacific is currently operating 36 domestic and international air routes, connected with Jetstar Group’s low-cost flight network of 80 destinations in 17 countries via 4,000 flights per week operated by Jetstar Airways (Australia and New Zealand), Jetstar Japan (Japan), Jetstar Asia (Singapore) and Jetstar Pacific.

Vinamilk invests in three Hanoi dairy farms

Vietnam’s largest dairy producer Vinamilk has decided to invest in three high-tech dairy farms with 8,000 heads of cattle, worth VND1.4 trillion ($61.6 million) in Ba Vi district, Hanoi.

Within the framework of the  “Hanoi 2017 –  Investment and Development Cooperation” held on June 25, a representative from Hanoi’s leadership and Ms. Mai Kieu Lien, CEO of Vinamilk, signed a memorandum of understanding for investment in the hi-tech dairy farms.

The project aims to promote hi-tech dairy farms in the capital and create a source of fresh milk materials to ensure production and food safety.

Vinamilk will ensure capital and conditions for the construction of the three farms and building satellite milk stations in the area to meet daily demand for raw milk materials.

As part of the program, Hanoi authorities introduced a list of 136 projects to investors with total investment of $48.4 billion.

The investors signed many memorandum of understanding totaling VND134.8 trillion ($5.93 billion).

Hanoi also handed over investment decisions to 48 projects with total registered capital of VND74.4 trillion ($3.27 billion).

Last month, Vinamilk signed a memorandum of cooperation with a Chinese partner to export dairy products to the country, witnessed by senior Chinese leaders and visiting State President Tran Dai Quang, who was in China from May 11-15 to pay a State visit to China and attend a high-level forum on the Belt and Road Initiative.

China is a huge market, with a total dairy market value of about $30 billion a year. Vinamilk hopes the memorandum will be an opportunity to export dairy products in the near future, when a trade agreement between the two countries is signed.

Vinamilk is the largest dairy company in Vietnam and among the Top 50 dairy companies in the world in terms of revenue. Its products are not only consumed in the domestic market but also exported to 43 countries around the world, including the US, Japan, Thailand, and the Philippines, as well as the Middle East. Its export turnover stood at $258 million last year.

Da Nang welcomes 3.2 million tourists in first six months

The central city of Da Nang welcomed more than 3.2 million tourists in the first six months of the year, an increase of 33.2% over the same period last year. Of the figure, 1.22 million were foreigners, up almost 72.2% over 2016.

According to a report on the city’s socio-economic development in the first half of 2017 recently released by the municipal People’s Committee, its gross domestic product (GDP) recorded a year-on-year increase of 8.1%. Industry, agriculture, service, FDI attraction, budget collections have all seen considerable growth.

Public administration reform continues to be accelerated. Da Nang continued to lead the country for the fourth consecutive year in the Provincial Competitiveness Index (PCI) and the PAR Index, it also topped the Networked Readiness Index for the eighth consecutive year.

The city is also stepping up efforts to prepare infrastructure for the APEC Economic Leaders’ Week, which is less than six months away. The hosting of the APEC Economic Leaders’ Week is expected to help popularise Da Nang as a city of marine and MICE tourism. It will also help improve local officials’ and residents’ integration capacity and expand the city’s external relations.

The city has exerted efforts to implement commitments to the development of the maritime economy, while resolutely safeguarding the country’s sovereignty over sea and islands.

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

National development requires contributions from overseas enterprises

Deputy Prime Minister Truong Hoa Binh has expressed the hope for more overseas enterprises to invest in Vietnam to contribute to national economic development.

He made the remarks at a meeting with the Vietnamese Business Association in Australia (VBAA) in Ho Chi Minh City on June 27.

The Deputy PM emphasised the important role of the overseas Vietnamese community, particularly overseas Vietnamese enterprises to national development.

He noted that the Politburo issued Resolution 36 on Overseas Vietnamese in 2004 while the Government issued the Action Plan on Overseas Vietnamese in 2016 which affirmed overseas Vietnamese as an integral part of the nation and a significant factor in the country’s foreign relations.

He also noted that Vietnam and Australia are enjoying a fruitful relationship, recording two-way trade revenue of around US$5 billion.

However, there still remains huge potential for both sides to unlock as Vietnam has an increasing demand for exporting agricultural products to Australia and the advanced education system in the country. Meanwhile, Australia has advantages in high technology and renewable energy sectors which can supplement the Vietnamese economy.

Binh also informed VBAA enterprises about Government efforts in administrative reform and improvements made to the business environment in a bid to attract more overseas enterprises to invest in Vietnam.

VBAA President Tran Ba Phuc expressed his delight with the results of the recently concluded fifth meeting of the 12th Party Central Committee which issued a Resolution on developing the private sector, making it an important driving force for economic development. Thus, the Resolution contributes to boosting overseas Vietnamese confidence to return to Vietnam to do business, Phuc noted.

Phuc said that the VBAA has received many Vietnamese business delegations to Australia to learn about the Australian market and acted as a bridge connecting the enterprises of both countries.

The VBAA has also worked with domestic Government agencies and enterprises to carry out a number of projects in the areas of solar energy, high technology and tourism, Phuc added.

LG’s plan to increase investment in Vietnamese project on hold

Korean firm LG Display’s proposal to increase registered capital at their project in Hai Phong by US$90 million has been put on hold as their financial plan is ‘not convincing enough’, according to the finance ministry.

LG Display Vietnam Hai Phong, the Vietnamese unit of South Korea’s LG Display Co. Ltd, has sought permission to increase registered capital in its display-making plant in the northern port city to US$1.59 billion from the current US$1.5 billion.

The facility, which broke ground in Hai Phong’s Trang Due Industrial Park in 2016, is expected to produce OLED screens for smartphones, smartwatches and tablets.

The management board of the Hai Phong Economic Zone has consulted the Ministry of Finance on the request of the South Korean firm, with the latter ordering that the proposal not be approved “until the investor presents a sound financial plan for the capital increase.”

According to the finance ministry, LG Display’s equity in the current $1.5 billion in capital registered to the Hai Phong project is only $100 million.

The South Korean firm is also unwilling to increase its own equity despite the increase in capital investment.

This means that 100% of the additional US$90 million in capital proposed for the project would come from outside loans, which Vietnam’s finance ministry believes “could lead to an unhealthy financial status, unstable production and uncertainty in business activities.”

According to the finance ministry, Hai Phong authorities should request that the South Korean company adjust their financial plan for the capital increase in a way fit to hike its own equity in the plant.

Also, in its initial proposal, the Korean investor failed to include financial statements of LG Display Vietnam Hai Phong for 2016, nor the parent firm LG Display.

Consequently, the finance ministry has also requested that these two documents be submitted so that it can properly evaluate the financial capacity of the firm and decide whether the plan to increase capital investment should be approved.

Vietnam to complete procedures for fresh dragon fruit export to Australia

The Ministry of Industry and Trade and Ministry of Agriculture and Rural Development are trying to complete procedures for shipping fresh dragon fruit to Australia this year.

After Australia opened door for Vietnamese fresh lychees and mangoes, the two ministries have actively worked with the Australian Department of Agriculture and Water Resources to export other fruits like dragon fruit, rambutant, star apple and longan to the market.

On June 15, the Australian Embassy in Vietnam sent a letter to the Minister of Industry and Trade updating information about Australia’s opening door for Vietnam fresh lychees and offering support for the application for  the Food Standards Australia New Zealand’s permission for irradiation treatment of dragon fruits before shipping to Australia.

Meanwhile, the Vietnamese Trade Office in Australia has developed a trade promotion plan and collected information on markets, tastes, quality standards and regulations and distribution networks to help domestic businesses enter the demanding market successfully.

Dragon fruit is one of Vietnam’s key export fruits with export sales of US$895.7 million last year, accounting for 50.3% of total fruit exports and 36.1% of total fruit and vegetable exports.

MoIT strives to boost agri-aquatic products export to Australia

The Ministry of Industry and Trade (MoIT) has joined hands with other ministries and sectors to promote the export of agri-aquatic products to Australia.

According to the Ministry’s Import-Export Department, Australia is among the largest buyers of farm and aquatic products of Việt Nam, resulting in an annual average import value of US$450 million in 2011-16.

MoIT has actively worked with the Ministry of Agriculture and Rural Development (MARD) to address technical barriers to bring shrimps and fresh fruits to Australia.

Following a long period of negotiations, Việt Nam’s lychees and mangoes were first shipped to Australia in 2015 and 2016, respectively.

MoIT and the MARD have been working hard for the export of other fresh fruits such as dragon fruits, longan, star apple and rambutan to this market.

The two ministries have worked tirelessly to win Australia’s acceptance of Việt Nam’s applications for importing raw shrimps that are caught naturally in Australia for processing, and then re-exported to Australia.

The two ministries are working together to urge the Australian Department of Agriculture and Water Resources to accelerate the recognition of Việt Nam’s shrimp safety from white sport disease and the quality safety control system to allow Việt Nam to ship its fresh whole shrimps to the market at the earliest.

They have also provided support for the Việt Nam-Australia Group and Minh Phú Company to soon sell high-quality shrimp products to the Australian market.

According to Việt Nam’s Trade Office in Australia, Australia is the seventh largest import market of Vietnamese shrimps, which consumes 3.6 per cent of the country’s total shrimp export volume. In the past five years, Việt Nam has been the largest supplier of processed shrimps for Australia. Despite the market’s strict requirements, it is considered a promising market for Vietnamese firms due to high and increasing demand.

In 2016, Việt Nam earned $114.6 million from shipping shrimp to Australia, 78 per cent of which was processed shrimps.

Meanwhile, Australia tends to narrow down its import markets and focus on only major ones, which is also an advantage for Việt Nam.

Portfolio investment turns key channel for foreign funds in city

Portfolio investment in HCMC in the first half of this year has far outpaced foreign direct investment, and the trend is expected to continue in the years to come as opportunities for foreign indirect investment (FDI) abound.

Foreign companies in the January-June period actively purchased stakes or shares of local firms on the stock market, with 915 deals worth US$1.4 billion, according to data from the city’s Department of Planning and Investment.

Meanwhile, the FDI inflow trails far behind. Data shows city authorities approved 340 FDI projects with total pledged capital of US$375 million, and if additional capital of US$345 million injected into operational FDI project is included, the total amount of FDI in the period would amount to US$720 million, slightly over half of portfolio investment.

These figures suggest an established trend for foreign investment into the city, as foreign investors turn more interested in mergers-and-acquisitions (M&A) deals compared to previous years, when FDI was still the dominant channel for foreign funds.

Analysts said foreign investors now see M&A as the more efficient and rapid way to penetrate Vietnam and expand business here. They said this trend will continue this year and next.

The 2014 Investment Law taking effect in the middle of 2015 also invigorates this trend as it provides a clear legal corridor for M&A investors, giving them peace of mind when investing in the country. Synchronously, efforts by HCMC authorities to create favorable M&A mechanisms also help lure more foreign investors.

The city’s Department of Planning and Investment has launched online services for those foreign investors wanting to buy into domestic companies. In the year’s first half, the department handled as many as 612 online applications by M&A investors.

The Department of Planning and Investment is currently preparing for the second phase of online registrations for a number of investment procedures to make life easier for those wanting to engage in M&A deals here.

Another positive factor is Decree 60/2015/ND-CP allowing for expanding foreign ownership at local listed companies from 49% to 100%. The decree, which opens the door wider for foreign investors in most listed firms apart from a limited number in conditional business areas has created more business opportunities for portfolio investors.

* In related news, data from the city’s Department of Planning and Investment also show domestic investment in the year’s first half also increased strongly.

The department said over 18,000 enterprises were established in the period with total registered capital of VND227.5 trillion, or US$10 billion, rising 10.5% and 57.5% respectively.

In addition, over 26,100 domestic enterprises registered to expand business and raise capital by an additional VND265.16 trillion, a 3.5-fold increase over the same period of last year.

Newly-established enterprises were overwhelmingly licensed into the real estate sector with 40% of the total number of new startups with combined capital of VND90.9 trillion.

PM points out shortcomings in agricultural production

Prime Minister Nguyen Xuan Phuc, speaking at a meeting with Haiphong leaders June 26 , said the small farmland limit is one of the major shortcomings in agricultural production.

There are 17.5 million farms nationwide, he said, so this means each farmer has a small plot of land for agricultural production. Data shows more than 80% of farmers in the country have less than one hectare of farmland each.

The country cannot boost farming productivity with those small farms, he said.

Inappropriate policies have led to low investment in agriculture. Outdated technologies and unstable markets have caused many difficulties for farmers.

“The Government will focus on solving these shortcomings. We have mapped out a good agriculture development plan, including calling for more investment, applying new technology and making better policies,” he said.

According to Deputy Prime Minister Vuong Dinh Hue, as of September 2016, Vietnam has only 4,424 businesses active in agriculture, accounting for less than 1% of the country’s total. After three years of implementing Decree No. 210 on support for agricultural production, there were only 64 agricultural projects getting insignificant aid.

In 2015, only 40 projects in 21 provinces received total aid of VND200 billion (US$8.8 million) and in 2016, disbursements to implement supporting policies in line with Decree 210 totaled only VND185 billion. Hue said these investments are insignificant while the procedures for receiving aid are complicated.

The PM said the economic outlook is brighter with inflation under control, macro-economic stability, economic recovery, strong export growth and stock market rallies.

In the first five months of 2017 the nation’s foreign exchange reserves rose to more than US$40 billion, new foreign investment approvals reached more than US$12 billion and newly-established enterprises totaled 50,000.

Pig farmer rescue campaign hits chicken breeders

An ongoing campaign to rescue pig farmers from the price plunge has delivered a blow to chicken farms in Dong Nai Province, the country’s key poultry farming area.

Chicken prices have plummeted by VND10,000 to VND22,000-24,000 a kilo, causing big losses for poultry farmers. The pig farmer support endeavor has led to consumers increasing pork consumption.

A representative of Hoang Thanh Tra Co Ltd said the price of chicken at the company’s farms ranges from VND22,000 to VND24,000 per kilo this month.

The pork supply glut and the steep decline in pork prices have fueled consumption, said the representative.

Nguyen Thanh Phi Long, technical director at Long Binh Livestock Co Ltd in HCMC, said the price of white-feathered chickens has declined by VND3,000 against the previous week to VND22,000-23,000 per kilo.

Buff chickens in Dong Nai have hovered in the range of VND24,000 and VND26,000 a kilo, far below the production cost of VND33,000-35,000, according to Nguyen Kim Doan, vice chairman of the provincial Husbandry Association.

He added the province is home to 17 million chickens, with only 10% of them being white-feathered chickens.

Meanwhile, Pham Thi Ngoc Ha, director of HCMC-based San Ha Co Ltd which specializes in poultry products, said her company was still buying chickens that meet quality, and food safety and hygiene standards from farms in neighboring Long An Province at VND32,000 a kilo.

Some farmers are reeling from low poultry prices due to the low quality of their products, she noted.

Strong EU demand for tra fish with low ice ratio

The European Union market’s demand for tra fish (pangasius) products with the ice-to-fish ratio of 10% or less has improved even though their prices are higher than tra fillets with 20% ice.

Data of the Vietnam Association of Seafood Exporters and Producers (VASEP) shows the country shipped around US$72 million of tra fish to the EU in January-May, a 28% decrease compared to the same period last year.

The fall mainly resulted from poor demand for tra fish fillets with a ratio of ice to fish of 20%. Tra fish products with 0-10% ice were selling well in the EU market and their prices ranged from US$3.07 to US$3.95 per kilo in the United Kingdom, Belgium, Germany, Greece and the Netherlands.

Meanwhile, prices of products with the ice-to-fish ratio of 20% were US$1.2 to US$1.75 per kilo in Hungary, France and Italy.

The Government’s Decree 36/2014/ND-CP issued in 2014 sets the maximum ice and moisture ratios of 10% and 83% respectively in the net weight of frozen tra fish fillets for export.

Local enterprises said the decree would make life difficult for them and proposed raising the ice-to-fish ratio to 20%.

More than two years later, the Ministry of Agriculture and Rural Development issued Circular 07/2017/TT-BNNPTNT on national standards for frozen tra fish fillets and seafood, with effect from May 5 this year. The circular caps the ratios of ice and moisture at 20% and 86% respectively.

But products with an ice-to-fish ratio of less than 10% were in high demand in the five-month period. Therefore, VASEP urged exporters to reduce ice content in tra fish products and diversify their product portfolios to improve outbound sales.

Bac Lieu fishermen enjoy good catches

Fishermen in the Mekong Delta province of Bac Lieu have gained big profits in recent weeks thanks to favourable weather.

Near-shore fishing ships were able to earn about 1.5 million VND (66 USD) in profit a day and long offshore trips up to 45 days could help the fishermen earn 300 million VND (13,190 USD).

Nguyen Van Nam, a fisherman in Dong Hai district said the cooperation of authorities, businesses and ship owners to form logistics teams has supported fishermen in their long fishing trips.

Since the beginning of this year, fishermen of Bac Lieu province have caught more than 45,000 tonnes of seafood, up 0.3 percent year-on-year. The catches are expected to increase as the latter half of the year is the best time for sea fishing.

Meanwhile, some fishermen are facing difficulties to borrow capital to build and fix their fishing ships and equipment, which caused by complicated procedures and poor cooperation of relevant agencies.

The province has asked the agricultural and banking sectors to smooth out problems to assist fishermen.

Thanh Hoa approves nearly 70 vessels under Gov’t decree

Sixty seven vessels have been approved to be built for fishermen in the central province of Thanh Hoa over the past three years of implementing the Government’s Decree 67 on measures to develop fisheries.

The fleet includes 18 logistic ships and 49 offshore fishing vessels. 46 of them have been put into operation, 23 of which are steel ships and the remaining wood boats.

As of June, commercial banks in the provinces, including branches of the Vietnam Bank for Agiculture and Rural Development (Agribank), Bank for Development of Vietnam (BIDV), and the Joint Stock Commercial Bank for Foreign Trade of Vietnam (Vietcombank), have signed credit contracts worth a total 569 billion VND (25 million USD). Over 90 percent of the amount has been disbursed.

Nguyen Duc Cuong from the Sub-Division of Fishing and Marine Resources Protection under the provincial Department of Agriculture and Rural Development said the ships built under the Decree have helped enhance offshore fishing efficiency.

In operation, 15 out of the 23 steel vessels were found encountering technical troubles, Cuong said, adding that they have been repaired in shipbuilding facilities.

The Department has advised steel ships owners to report any problems with their ships to local authorities for timely repair, and not to leave them ashore, Cuong said.

Thanh Hoa is allowed to build 94 ships under Decree 67.

The province will continue providing financial assistance for repairing, maintaining ships built under the Decree and for operation of logistic ships with the capacity exceeding 400 CV by 2020.

Ministry discusses pharmaceutical industry development strategy

The Health Ministry discussed a strategy to develop the pharmaceutical industry at a seminar it jointly held with the Party Central Committee’s Commission for Economic Affairs and the Australian Embassy in Vietnam in Hanoi on June 27.

Deputy Head of the Party Central Committee’s Commission for Economic Affairs Ngo Dong Hai stressed that Vietnam is said to be a potential market for the pharmaceutical industry.

The Party and State’s policies on health care that targets full health insurance coverage for the whole people will drive up demand for medicines, he said.

Vietnam boasts great potential for developing the sector as it has a rich pool of medicinal plants and traditional medicine, he said, adding that if cooperation in research is promoted along with proper investment for the sector, Vietnam is able to produce medicines that meet international standards and export-related standards.

Participants shared the view that the pharmaceutical sector is facing difficulties and challenges due to inadequate State budget and great dependence on imported pharmaceuticals.

According to Health Minister Nguyen Thi Kim Tien, Vietnam aims to raise the ratio of locally-made medicines to 80 percent by 2020, with 40 percent of which being proven bioequivalent. However, the target is hard to achieve in the context of extensive globalisation and international integration, and fierce competition.

The rate of use of domestically produced medicines in central-level hospitals remains low, she said, attributing the situation to insufficient attention to distribution work in the sector.

Additionally, medicinal plants grown on an area of only 15,000 hectares meet nearly 30 percent of the domestic production needs.

Participants said it is necessary to address difficulties facing the sector, focusing on improving the business climate, promoting technology application in production, bettering the quality of human resources, and increasing investment for the sector.

They also recommended a number of policies to attract more investment for the industry, towards developing the country into a pharmaceutical production centre of the region by 2035.

Seminar seeks to develop productive, quality agriculture

A seminar on developing quality and productive agriculture took place in Hanoi on June 27 as part of the Vietnam Economic Forum 2017.

Speaking at the event, permanent deputy head of the Party Central Committee’s Economic Commission Cao Duc Phat said the agriculture sector grew strongly in the 2011-2015 period with improved farm produce quality and increasing number of agricultural firms.

However, high-tech agriculture tends to stall due to barriers regarding land, market and capital access.

Nguyen Thi Thanh Thuy, head of the Ministry of Agriculture and Rural Development (MoNRE)’s Department of Science-Technology and Environment, said the State has issued a number of policies to facilitate high-tech agriculture, but administrative procedures and the lack of insurance for the field pose difficulty to the effort.

She suggested encouraging firms to establish research centres and forming close linkage between businesses and technological organisations to promote high-tech application.

Thuy stressed the need to increase negotiations and the signing of trade deals to facilitate businesses’ access to markets.

Participants called for reviewing and amending regulations on hi-tech application in agriculture and the Law on Land, as well as providing incentives for hi-tech farming enterprises.

The southern provinces of Hau Giang, Phu Yen and Bac Lieu are currently home to three hi-tech agricultural zones approved by the Prime Minister.

The MoNRE has granted licenses to 26 hi-tech firms while Thai Nguyen, Thanh Hoa and Lam Dong provinces have devised plans to establish hi-tech agricultural zones.

As of the late March, the State has provided 156.3 billion VND (6.79 million USD) for 15 hi-tech projects in agriculture.

According to the MoNRE, firmed invested more than 21.2 trillion VND (921.7 million USD) into 25 hi-tech agricultural projects from June 2016 – February 2017.

The event was co-hosted by the MoNRE and the Party Central Committee’s Economic Commission.

Cuba workshop on Vietnam’s engagement in Pacific super deals

Major economic deals will assist Vietnam’s modernisation and industrialisation, heard a workshop themed “Vietnam and super agreements in the Pacific Rim” held in Havana, Cuba on June 26.

Researchers from the Cuba Centre for International Economic Research sketched out the geopolitical and economic significance as well as position and benefit of each state joining the agreements, namely the Trans-Pacific Partnership (TPP), the Free Trade Area for the Asia Pacific (FTAAP) and the Regional Comprehensive Economic Partnership (RCEP).

Dr. Ruvisley Gonzalez from Cuba’s Centre for International Political Research said that Vietnam’s engagement in the three super deals is part of the country’s intensive global integration serving its national modernisation and industrialisation, with priority on spaces for the strengthening and diversification of investment and trade.

At the same time, he also pointed out internal and external advantages and challenges that Vietnam has faced when joining the ambitious agreements in the Pacific Rim that is considered the driving force of the world economy in the 21st century, he said.

As the keynote speaker of the event, Assistant Prof. Dr. Cu Chi Loi, head of the Vietnam Institute of American Studies under the Vietnam Academy of Social Sciences, focused on analysing Vietnam’s process of joining the TPP, as well as the Vietnam-US relations and possible effects stemming from the TPP.

He also evaluated the current status of the TPP after the US’s withdrawal.

Speaking on the sidelines of the event, Loi affirmed that the workshop create a chance for Vietnam and Cuba to share experience and deepen mutual understanding.

Meanwhile, Dr. Ruvisley Gonzalez hailed the Vietnam’s reform experience and its significance to Cuba’s update of socio-economic model. He also stressed that the two sides hold abundant opportunities to lift up their economic ties to match the sound traditional political relations.

Forum seeks to unleash potential for sustainable economic growth

The Party Central Committee’s Economic Commission and the Australian Embassy held the Vietnam Economic Forum 2017 in Hanoi on June 27 under the theme “Unleashing the potential for sustainable economic growth”.

Chairman of the Economic Commission Nguyen Van Binh said Vietnam has made great strides in economic growth since the Doi moi (reform) process began in 1986. It has recorded an average annual growth rate of 6.4 percent since 2000, and reduced the poverty rate to under 3 percent from about 50 percent in the early 90s.

Up to 65 percent of Vietnam’s exports are products of the manufacturing and processing industries, but a majority of them are made by the FDI sector. Domestic enterprises mainly export such goods as textile-apparel, leather-footwear and agricultural products with modest added value.

“That means an important contribution to Vietnam’s current growth rate comes from external resources, instead of the economy’s internal strength,” he noted.

Binh stressed that it’s high time to review the sustainability of the comparative advantages that Vietnam has usually mentioned such as an abundant and low-cost workforce while the golden population structure is forecast to exist for only another 10 years and the competition from other countries with lower production costs is increasing.

Briefing about the six-month economic situation, Deputy Minister of Planning and Investment Dang Huy Dong said the macro-economy remained stable with controlled inflation and the six-month average consumer price index rising about 4.2 percent year on year.

The GDP growth rate in the year’s first half could reach 5.5 – 5.7 percent, approximating the rate targeted by the Government, he noted, adding that the Government’s resolve to attain a growth rate of 6.7 percent this year is completely sound and reasonable.

“Although this task is very difficult, it is realisable if we are determined to implement all the set solutions,” Dong said, adding that once overcoming the difficulties and achieving the target, there will be a driving force and confidence to realise bigger aspirations in the long term.

A representative of the World Bank (WB) in Vietnam said Vietnam’s economy is stable while inflation is under control and the business climate and exchange rate remain steady. The country has also recorded credit and export growth, improved balance of payments and good liquidity.

The WB predicted Vietnam’s economic growth rate at some 6.3 percent in 2017, suggesting the country focus on carrying out trade supporting measures and free trade agreements to create better growth momentum.

At the forum, participants pointed out bottlenecks in the economy and proposed medium- and long-term solutions. They discussed the position of Vietnam’s economy in the global economic competition and the country’s untapped internal resources and economic restructuring.

The event saw the presence of Australian Ambassador to Vietnam Craig Chittick, representatives of central and local agencies, international organisations, businesses and research institutes, along with domestic and foreign experts.

Economic forum opens as attendees call for fairer globalization

Vietnam Economic Forum 2017 opened in Hanoi today (June 27) as participants called for a fairer distribution of the benefits from globalization.

Under the theme of promoting inclusive and sustainable economic growth for all the population, the opening day of the forum attracted hundreds of attendees from across the country, including government heads and ministry officials, business leaders and experts.

Nguyen Van Binh, head of the Party Central Committee Commission for Economic Affairs said that the economy of the country is beginning to show positive signs of economic growth from globalization with the GDP per capita having pushed into the low middle-income ranks.

However, he cautioned, the economy is also facing certain challenges and risks as the benefits are not being shared inclusively by all the population, with tens of millions having received practically no benefit whatsoever.

The major challenges facing the Vietnam government today require it to take effective measures to improve national governance to achieve a fairer distribution of the benefits from globalization for all the population, thereby ensuring sustainable and balanced development, Mr Binh said.

economic forum opens as attendees call for fairer globalization hinh 1 During the opening ceremony, Craig Chittick, Australian Ambassador to Vietnam, also said that globalization and technology have expanded wealth in the country— while simultaneously widening the wealth gap among the population.

An upturn in the national economy or an increase in the GDP per capita does not solve all problems.

Fragility is everywhere. Population growth, rapid urbanization, food insecurity, water scarcity, and above all climate change are all challenges facing the Southeast Asian country.

That is why it is important to urge reforms in all sectors and find solutions to make globalization fairer, he added.

Various discussions on the global economy, scientific and technological research and development, of the national economic prospects will be held during the forum.

In addition, a string of contracts and agreements covering some wide-ranging sectors are expected to be announced during the event that will help expand international cooperation and collaboration.

Pepper export revenue loses spice due to oversupply

Vietnam’s pepper shipments are forecast to reach around 101,000 tons for the first six months of 2017, up 13% on-year, but revenue is likely to fall 13%, according to Vietnam Pepper Association (VPA)’s chairman Do Ha Nam.

“When supply exceeds demand, importers try to pull prices down. Vietnam, which provides some 60% of the global pepper output, will be heavily affected,” Nam told VnEconomy.

In the peak harvest season, farmers need to sell large volumes of pepper to cover expenses, causing prices to fall. Local farmers are stuck in a dilemma: the more pepper they sell, the sharper prices decline.

Domestic pepper prices have been falling throughout May and June, so the VPA is urging local farmers to hang on to their stocks and wait for prices to recover.

“If farmers can hold on for the next 1-2 months, prices will rise again,” Nam said.

The VPA has attributed falling prices to a 15% increase in pepper output in for this crop and the 20,000 tons of Cambodian pepper Vietnam has shipped in.

However, the greatest problem facing the sector is the expanding pepper plantations.

If the plantations continue to expand at their current rate, pepper prices will suffer as supply exceeds demand in the future.

To reduce these risks, the VPA has advised farmers to stop growing pepper in unsuitable soil and switch to alternative crops to provide an additional income.

Despite these warnings, farmers are continuing to expand their pepper plantations.

The reason is that a hectare of pepper can earn farmers at least VND240 million (US$10,600), while the same area of coffee will make them only VND100-150 million.

In addition to this, Vietnam’s pepper industry also faces food hygiene and safety concerns in foreign markets.

For example, in order to export 40,000 tons of pepper to the European Union, Vietnamese firms need to import 22,000 tons of clean pepper from Cambodia, Malaysia or Indonesia to process and export.

Similarly, in order to ship the product to Japan, local companies must import raw pepper to process first.

This is because in the past, Vietnamese pepper has been found to contain excessive chemical residue.

To address the issue, Vietnamese and foreign firms are working with farmers to clean up the plantations.

According to experts, organic pepper is slowly catching on, which may mean lower productivity but should ensure higher prices in a more stable market.

Vietnam urged to increase labor productivity for sustainable growth

Vietnam needs to increase its labor productivity and competitiveness in order to make an economic breakthrough, Professor Jay Rosengard, a public policy lecturer at the Harvard Kennedy School, has suggested.

Vietnam’s annual GDP growth per capita has surpassed US$1,000 since 2008 to make Vietnam a lower-middle-income country, Professor Rosengard said, adding that this milestone opened the possibility of Vietnam soon becoming a high-income country. In an interview with Vietnamese media, Professor Rosengard noted Vietnam can achieve even higher GDP growth with its economic potential.

“I think there are three areas to make Vietnam probably better. The first is investment in hard infrastructure. The second is investment in soft infrastructure, and the third is investment in wet infrastructure.

Hard infrastructure we’re talking about is the basic infrastructure a country needs to enable the private sector to grow,” Rosengard elaborated.

’Business as usual’ won’t drive growth: official

Key advantages that have driven national growth will not last much longer, and policy breakthroughs are needed to unleash the nation’s ‘inner potential,’ a senior Party official said on Tuesday.

Nguyen Van Binh, member of the Party Central Committee’s Commission for Economic Affairs, told the Viet Nam Economic Forum 2017 held in Ha Noi that the nation’s exports were largely dependent on the foreign direct investment sector, while local companies were mainly exporting products and produce with little added value.

“This means the growth still comes significantly from external forces,” Binh said, adding that competitive advantages such as cheap labour would not last forever, especially with increasing competition from countries with lower production costs.

“Viet Nam has reaches an economic development level which requires policy breakthroughs to become a higher-income country,” he said.

Statistics compiled by the Organisation for Economic Co-operation and Development (OECD) show that only 13 out of 113 middle-income countries in the 1960s managed to escape the middle-income trap and become high-income countries.

“What are the choices for Viet Nam? What should we do to escape the middle-income trap and make Viet Nam a new tiger of Asia?” Binh asked.

Jay Rosengard, a lecturer in public policy at the Harvard Kennedy School, felt Viet Nam needed to focus on three things to gain higher growth before its population aged: investing in an infrastructure system to boost the private economic sector, improving public governance and creating a transparent and stable environment for long-term investment, and developing human resources.

Deputy Minister of Planning and Investment Dang Huy Dong said at the forum that in the first half of this year, the macroeconomic situation remained stable.

GDP growth was initially estimated at 5.5-5.7 per cent in the first half of the year and was on track to reach the Government’s target.

Dong said that the 6.7 per cent economic growth targeted for the year was a difficult task, but achievable with determination and effort. The pressure to achieve the target would be high in the second half of the year, he added

Nguyen Xuan Thanh, director of the Fulbright Economics Teaching Programe, said that a growth rate of 6.2-6.5 per cent for 2017 would be more reasonable.

He said efforts to clean up the banking system and speed up privatisation of State-owned enterprises should go along with improving the efficiency of public investments.

Nguyen Hong Son, deputy director of Viet Nam National University, Ha Noi, felt the Government should strive for 6.7 per cent growth, but not at all costs.

Growth must be based on macroeconomic stability, he said, adding that Viet Nam must consolidate confidence of the private economic sector.

Economist Can Van Luc said that Viet Nam should not exploit more crude oil to fulfill its GDP growth target, but promote consumption and tourism while improving the domestic business climate.

According to Truong Van Phuoc from the National Financial Supervisory Commission, it was important that the growth model is renovated and productivity improved to achieve sustainable growth in 2018-20 period.

Nguyen Dinh Cung, Director of the Central Institute for Economic Management, said that the Vietnamese economy had the potential of reaching 8-9 per cent growth rates.

He said such high growth rates could be achieved by improving the efficiency of SOEs which had $300 billion in assets; and boosting the private economic sector, which has $200 billion in assets.

Speeding up disbursement of FDI and cutting costs for businesses would also speed up growth, he said.

”If the Government issues appropriate policies, the economic growth could potentially reach 8-9 per cent rather than struggling at 6-7 per cent at the moment,” Cung said.

Interest rates for different term deposits are likely to decline by 0.5–1 percent over 2016 thanks to positive signals from the stock and property markets, macro-economic indexes, the Government’s attention to businesses and banks’ strategies for attracting new clients, lawyer Bui Quang Tin with the Business Administration Faculty of the Banking University of HCM City said at the forum.

However, he also said that there will be more challenges to stabilising interest rates on deposits in the remaining months of 2017, compared to 2016, as inflation and interest rates are expected to increase because the US Federal Reserve is projected to make at least three interest rate hikes this year.

Also, bad debts haven’t been fully settled, creating a big barrier to the lowering of interest rates, Tin said, adding it will exert bigger pressure on deposit rate hikes.

In the first quarter of 2017, deposit rates for different terms rose by several dozen basis points at some small and medium-sized banks. However, as a whole, deposit rates have not changed much from the beginning of the year.

Interest rates for deposits of less than six months were kept below the ceiling rate of 5.5 per cent per annum, mostly between 4.3–5.5 per cent. The rates were about 5.3–7 percent for deposits of  six to under 12 months, and 6.5–8 per cent per annum for 12 months upwards.

Meanwhile, lending rates were relatively stable. In prioritised areas, the rates ranged between 6–7 per cent per annum for short term loans and 9–10 per cent for medium and long term loans. The corresponding rates were 6.8–9 per cent and 9.3–11 per cent for loans in normal production and business areas.

The recent increase in deposit rates at some banks was attributed to their need to increase capital and meet capital adequacy-ratio requirements.

The shortage of liquidity, high inter-bank interest rates which have hampered some banks’ access to capital sources in the inter-bank market, and better credit growth are also reasons behind banks’ move to attract more deposits, the forum heard.

However, the pressure to increase deposit rates only applied to some banks, with major banks facing no liquidity shortage. The State Bank of Viet Nam still has room to regulate the market and ensure low interest rates to support growth.

To stabilise lending rates, Tin suggested that the banking system should step up settlement of bad debts and restructuring of credit institutions. The difference between interest rates for loans and deposits in USD and VND should also be kept at reasonable levels, he added.

Vietnam promotes financial services in China

An event to promote Vietnam’s financial services was recently held in Nanning city in China’s southwestern province of Guangxi, gathering nearly 100 representatives from China, Vietnam and Thailand.

Speaking at the event, Vietnamese Consul General in Nanning Pham Thanh Binh said China has been the largest trade partner of Vietnam for the past 13 years.

The Vietnamese government will create favourable policies in product processing, a strength of Chinese enterprises, noted Nguyen Quang Vinh, an official of the Investment Promotion Centre, under the Foreign Investment Agency.

During the event, Thai Consul General in Nanning Chairat Porntipwarawet pledged that Thailand will create strong trade balance in transport, goods distribution, finance and banking for China and other ASEAN members.

Suntory PepsiCo Vietnam opens fifth beverages plant

Suntory PepsiCo Vietnam Beverages (SPVB) has held an opening ceremony for its new beverage plant at the Dien Nam – Dien Ngoc Industrial Zone in central Quang Nam province’s Dien Ban town.

This is its fifth plant in Vietnam, joining those in Ho Chi Minh City, Bac Ninh province, Can Tho city, and Dong Nai province.

The new plant has a maximum capacity of 850 million liters per year and ten production lines. Five production lines are in operation, with a capacity of 300 million liters per year, while the remainder will go into operation in the plant’s second phase.

The Quang Nam plant is of the same scale as others belonging to Suntory Holdings Limited (Japan) and PepsiCo, Inc. (US). It is located on 14 ha with investment of $56 million and its products are expected to meet domestic and export demand.

PepsiCo officially entered Vietnam in 1994. By 2004, SPVB had penetrated into and expanded its production and business in Quang Nam through the merger and acquisition of a plant in Dien Ban to develop more markets and meet the needs of people in Vietnam.

SPVB is a strategic alliance between PepsiCo Inc. and Suntory Holdings Limited, officially formed in April 2013 and increasingly asserting its leading position in the domestic food and beverages (F&B) market. Suntory holds 51 per cent and PepsiCo 49 per cent.

Founded in 1899, Suntory is a major multinational beverage company with 337 subsidiaries and around 42,000 employees in Japan, the US, Europe, and Asia-Pacific.

PepsiCo is a global F&B leader with net revenue of more than $65 billion and a product portfolio that includes 22 brands generating more than $1 billion each in annual retail sales.

Garment 10 outsourcing for Uniqlo and Aeon

The Garment 10 Corporation is planning to provide outsourced work for Japanese clothing apparel company Uniqlo and retail giant Aeon, Mr. Than Duc Viet, Deputy CEO of Garment 10, was quoted by local media as saying.

The agreements are included in the corporation’s business development strategy for 2017 and the next decade. Garment 10 and Uniqlo are beginning the first steps of this plan and the company has also met with Aeon’s partners to send products to its supermarket network in Japan.

“We have experience working with Aeon so this agreement will be easier,” Ms. Hoang Huong Giang, Head of the Market No.2 Department at Garment 10, told the Dau Tu online newspaper. “We will produce garment products with private labels for Aeon.”

Mr. Nishitoghe Yasuo, CEO of Aeon Vietnam, told a conference held by the Ministry of Industry and Trade that many Vietnamese enterprises are exporting products such as tra fish, fruit, garments, food, and household appliances to Aeon supermarkets.

Aeon imported $200 million worth of Vietnamese goods to its supermarket network last year, mainly garments and food. It is expected the volume will continue to increase in the years to come.

Garment 10’s export turnover to Japan accounted for more than 12 per cent of its total in recent years, up 15-20 per cent.

Vietnam’s textile and garment export turnover reached $28.5 billion in 2016, up 5.4 per cent against 2015 and the lowest rate since 2010.

Key markets for Vietnam’s major imports declined: the US by 4.5 per cent and the EU 3 per cent, while only Japan increased more than 1 per cent.

Japan is one of the key markets for Vietnam’s textile and garment sector, with export turnover of $2.9 billion in 2016, up 4.2 per cent against 2015.

Sofitel Legend Metropole Hanoi names new GM

Sofitel Legend Metropole Hanoi announced on June 27 the appointment of a veteran of the hospitality industry, Mr. William J. Haandrikman, to lead the hotel and its 650 staff as General Manager and he will he also serve as Area General Manager of AccorHotels North Vietnam.

“Vietnam is one of the fastest growing markets in Asia,” said Mr. Haandrikman. “I look forward to immersing myself in all that Hanoi has to offer and to continue building on Metropole’s reputation as one of the top hotels in Asia.”

Mr. Haandrikman was previously General Manager of Thailand’s Sofitel Bangkok Sukhumvit. He relocated to Hanoi in June and has 25 years of experience in the hospitality industry, having started with AccorHotels in 1992.

Since joining the French hotel chain, Mr. Haandrikman has held senior management positions in Amsterdam, Brussels, New York, and Moscow, as well as with the Sofitel brand in The Hague, Paris, Vienna, Shanghai and, most recently, Bangkok.

During his assignment in Bangkok, he served as the Cluster General Manager for two AccorHotels properties, including the 345-room Sofitel Bangkok Sukhumvit, which under his leadership was positioned as one of the leading five-star properties in Thailand. The Dutch national also oversaw the opening and managed the prestigious Sofitel Vienna Stephansdom in Austria and the well-known Sofitel Paris Defense in France.

Mr. Haandrikman is a graduate of Glion University, Hotel School in the Netherlands, the ESSEC Executive Management Program and the Executive Management Program at Cornell University in the US.

Dong Nai attracts 640 million USD in FDI in first half

The southern province of Dong Nai has lured 640 million USD in foreign direct investment (FDI) in the first six months of the year, reaching 64 percent of its yearly plan, said the provincial Department of Planning and Investment.

The sum came from 37 new and 51 existing projects. According to the department, all the projects are in high technology, supporting industry and are environmentally friendly. They are in line with the province’s policy to prioritise hi-tech projects.

Most of the projects in Dong Nai in the period were from the Republic of Korea (RoK), Japan, Singapore, Germany and the British Virgin Islands.

Notably, Pou Phong Vietnam Ltd. invested in a 55 million USD project, while Powerknit Vietnam Ltd. launched a 60 million USD project, both coming from the British Virgin Islands. Chang Hae Vietnam company and Long Thai Tu fabric company from the RoK added 20 million USD and 50 million USD to their ongoing project in the province.

Dong Nai is home to 1,703 projects with total investment of nearly 31 billion USD, including 1,286 valid projects worth 26.1 billion USD and 417 revoked projects worth 4.8 billion USD.

The FDI projects’ investors are from 45 countries and territories, mostly the RoK, Taiwan (China) and Japan.

Multiple power generators online soon

The Vietnam Electricity Group (EVN) will commission at least five more power generators with a combined capacity of 1,075 MW in the second half of the year to increase supply for the national grid.

These generators belong to Song Bung 2 and extended Thac Mo hydropower plants, and Thai Binh and Vinh Tan 4 thermal power plants, according to EVN.

EVN is also focusing on other generators at Vinh Tan 4, extended Duyen Hai 3 thermal power plants, and extended Da Nhiem hydropower plant, among others, which will come on stream next year.

The State utility is striving to complete 238 projects installing 110-500 kV power transmission lines so as to guarantee sufficient and uninterruptible power supply for Hanoi, the Asia-Pacific Economic Cooperation (APEC) leaders’ meeting in Danang City, and the southern part of the country, EVN explained.

EVN has operated five extra generators at Trung Son hydropower and Thai Binh thermal power plants to provide an extra 560 MW for the national grid.

The national electricity system has come under considerable pressure as the demand for electricity has been surging sharply this year as hot weather has triggered the higher-than-normal use of air-conditioners.

Therefore, EVN has made use of all available power sources including coal, gas turbine, and hydropower stations to meet the power demand,  which has leapt 12% compared to the same period last year.

The capacity of the power supply system briefly soared to 31,800 MW this month, well above the first-quarter peak of around 27,066 MW.

To secure electricity supply for the southern region, EVN said, it is speeding up work on Vinh Tan 4 and extended Duyen Hai 3 thermal power plants, extended Thac Mo and Da Nhim hydropower plants, and multiple thermal power projects at Quang Trach and Tan Phuoc power centers.

EVN has disbursed VND49 trillion of VND55 trillion (US$2.4 billion) earmarked for power development projects in the first half, 40.13% of its full-year plan.

EAEU-Vietnam Free Trade Area and opportunities discussed in Russia

A roundtable discussion on “The Free Trade Area between the Eurasian Economic Union (EAEU) and Vietnam: New Opportunities for Business” took place in Moscow on June 27, inspired by the upcoming visit of President Tran Dai Quang to Russia.

The event was organised by the Russian Chamber of Commerce, the Workshop for Eurasian Ideas Fund and the NGO “Business People”.

It was attended by more than 100 diplomats, policymakers, economists, analysts and experts in the field of Eurasian economic integration and representatives from authorities and commercial companies from Vietnam and Russia.

The roundtable discussed economic cooperation between Vietnam and Russia as well as Vietnam and the EAEU. Delegates proposed ways to solve problems, including new bilateral cooperation models, which can help bring up Vietnam-Russia trade to 10 billion USD by 2020.

Nearly 5,000 tariff lines to go down to zero under Vietnam-EAEU FTA

In his opening remarks, Chairman of the expert council of the Workshop for Eurasian Ideas Grigory Trofimchuk said taking place ahead the of President Quang’s visit, the event has political significance and drives the development of cooperation between the two countries.

Chairman of the Vietnamese Association in Russia Do Xuan Hoang outlined several barriers to bilateral investment, particularly in terms of tariff and administrative systems, but he believed these issues will be soon solved.

During the event, attendees said that Vietnam plays an important role in Russia’s “Look East” policy and in improving the economies of the EAEU and Russia. They expected Vietnam will act as a bridge for Russia to make inroads into Southeast Asia and Pacific Asia markets.

Rice exports forecast to grow in H2

Rice exports are forecast to further flourish in the second half of 2017, helped by increasing demand.

As of mid-June, rice exports had reached over 2.9 million tons, up more than 27% compared to the same period last year.

Vietnam has the strongest rice export growth rate among the top five rice exporting countries in the world. The U.S. posted rice export growth of 25.54%, Thailand 13.57% and India 3.57%, but Pakistan saw a 33.44% decline in rice outbound sales.

Data of the Vietnam Food Association (VFA) showed that as of late May 2017, its members had shipped a total of nearly 2.3 million tons, up 9.71% year-on-year and the total FOB value of the volume was nearly US$975 million, up 11.29%.

According to VFA, rice exports will further grow in the rest of the year, supported by government-to-government contracts.

Huynh The Nang, chairman of VFA and general director of Vietnam Southern Food Corporation (Vinafood 2), said since last month, Vietnam had secured contracts to export about 880,000 tons of rice to markets under G2G deals.

There is a high possibility that Vietnam can win a tender to export 250,000 tons of rice to the Philippines early next month, Nang said, as Thailand’s current rice inventory is around 160,000 tons, only enough for domestic demand, and moreover, Thai rice prices are higher than Vietnam’s.

The Mekong Delta, Nang said, is expected to have three million tons of rice for export after the summer-fall crop. Last year the nation exported a total of 6.3-6.4 million tons of rice.

The brighter rice export outlook has bolstered domestic rice prices in recent times. Fresh IR 50404 rice is now sold for VND5,000-5,200 per kilo, up VND500-600 against two weeks ago, while IR 50404 material rice has edged up from VND6,700-6,800 per kilo toVND7,200-7,300.

Deputy PM: Streamline clearance procedure

Deputy Prime Minister Vuong Dinh Hue June 26  told ministries to focus on improving processes, procedures and mechanisms for cargo inspection and allow the private sector to invest in inspection equipment.

Currently, many ministries want to conduct inspections with a lot of money spent on inspection equipment, Hue said at a working session on trade facilitation and logistics development with the World Bank (WB) June 26 .

According to WB specialists, Vietnam is facing challenges as goods transport has grown faster than the pace of infrastructure development, causing huge backlogs.

Ousmane Dione, WB country director for Vietnam, said the nation should build four pillars, namely developing a legal framework for trade facilitation, improving the efficiency of infrastructure for trade exchanges and the quality of connectivity, developing a competitive logistics industry, and strengthening interdisciplinary coordination and cooperation with the private sector.

Expressway construction alone is not enough. If border gates or ports face a backlog of cargo, well-developed infrastructure could become useless. Therefore, to facilitate foreign trade, it is necessary to improve domestic connectivity and logistics, said Sebastian Eckardt, a senior economist of the WB in Vietnam.

According to Eckardt, pre-clearance paperwork accounts for up to 76% of the total time for imports, with goods loading time making up one-third. Meanwhile, 72% of administrative measures and procedures are provided by the ministries of trade, agriculture and health, so if these ministries streamline their procedures, the competitiveness of the nation could be much improved.

Calculations by the WB show 60% of goods went through the green channel with 10 million customs forms in 2016, an indication that Vietnamese enterprises followed regulations well. However, they were subject to 346 legal documents.

Goods imports via the yellow channel made up 34.8%, a higher ratio than other countries, as specialized inspections were not reduced as per a Government resolution designed to improve the business environment and the nation’s competitiveness. Meanwhile, the red channel accounted for 5.3%.

In the green channel, goods are free from physical inspection. The yellow channel applies to goods with low duties or goods imported for export processing while the red channel is used for commodities requiring permits and subject to high tariffs.

According to the WB, the Government and ministries should review all procedures and regulations on environmental protection and work hygiene.

The WB suggested the Government mobilize capital from the private sector for transport infrastructure projects and raise the capacity of infrastructure operation with the participation of private firms. As per data of the Ministry of Industry and Trade, the nation needs around US$24 billion for the projects in the 2016-2020 period but the State budget can provide just US$8 billion.

Dau Giay Wholesale Market puts into service

Dau Giay Agro-Products & Foodstuff Wholesale Market was officially inaugurated and put into operation in Dong Nai province this morning.

The market located in Dau Giay T-junction, Xuan Thanh commune, Thong Nhat district; in intersection of Dau Giay- Ho Chi Minh City, Phan Thiet, Dau Giay- Long Thanh- Trung Luong Expressway, North–South Railway Line and Long Thanh International Airport, covers an area of 55 hectares with total investment capital of VND 1.4 trillion.
It is considered the biggest market about farm products of the province. .

The market that borders Ho Chi Minh City, Binh Duong, Ba Ria- Vung Tau, Binh Duong, Lam Dong and Binh Thuan with more than 60 the big industrial clusters, is a advantageous place for transporting and distributing agricultural products from the localities, especially Dong Nai.

Speaking at the inauguration ceremony, Deputy Chairman of People’s Committee of Dong Nai province Mr. Vo Van Chanh said that the Dau Giay Wholesale Market will provide safe fresh, dry and frozen agricultural products in line with VietGap and Global Gap standards for the locality and neighboring provinces and cities.

The customer could easily track the origins of the products.

After putting into the operation, the market is expected to contribute strengthening multi-way connection, raise effectiveness of transportation, distribution and business trade of the typical agricultural products of the southeastern region and neighboring provinces and cities.

Dau Giay Wholesale Market is opened every day and night.

Hanoi moves to tackle widening trade deficit

The capital city of Hanoi has carried out trade promotion plans targeting both traditional and new foreign markets in order to tackle its widening trade deficit, which exceeded the national average in the first five months of this year.

Statistics show that during the January-May period, Hanoi’s export turnover reached 4.73 billion USD, up 12.2 percent over the same period last year, mainly driven by local enterprises.

Meanwhile, its import value stood at 11.67 billion USD, resulting in a trade deficit of nearly 7 billion USD, compared with the national average of 2.7 billion USD. More than half of the figure was contributed by Hanoi-based centrally-run businesses.

The city’s major imports include equipment, machines and materials for projects or production chain installation. In many cases, import items were declared by firms based in Hanoi but transported to other localities.

To reduce the trade deficit, Hanoi will cut exports of raw materials and increase exports of high value-added products while developing the supporting industry to join the global value chain.

Trade promotion will focus on handicrafts, agricultural products and garments-textiles.

Meanwhile, the city will create favourable conditions for foreign importers and support local businesses in international integration through workshops that provide them with information about markets, preferential policies and benefits generated by Vietnam’s free trade agreements, said Nguyen Thanh Hai, Deputy Director of the municipal Department of Industry and Trade.

Hanoi is also working on several large and modern logistics centres to serve exporters.

Economists have also suggested establishing technical barriers regarding product quality and safety to curb imports of low quality products.

Ensuring sustainable lobster production

Phu Yen province has re-zoned lobster production areas to prevent disease and pollution and ensure sustainable growth.

Phu Yen has been involved in lobster production for more than 20 years. There are more than 3,000 households in the province who harvest an average of 750 tons of lobsters annually.

Song Cau township is the province’s largest lobster production area,with nearly 2,600 households raising lobsters in 16,000 cages.

Luong Cong Tuan, Vice Chairman of the Song Cau township People’s Committee, said, “Song Cau township has asked the provincial administration to make a detail plan based on the master plan approved by the provincial People’s Committee. Xuan Dai Bay has been recognized as a national scenic spot, so lobster production planning needs to be done carefully. We also need a budget for the plan.”

Phu Yen province intends to protect the environment and aquatic resources to ensure sustainable lobster production, increase its added value, and develop the sector into a key export earner.

By 2020, the province hopes to maintain the current yield, apply more advanced technology, and train farmers in commercial production and processing.

Phu Yen province has asked the Ministry of Agriculture and Rural Development and the Ministry of Natural Resources and Environment to support lobster production.

Mr. Nguyen Tu Cuong, Head of the Committee for Sustainable Aquatic Development of the Vietnam Fisheries Association, said, “Farmers have mastered cage-building and production skills. They know how to raise and protect aquatic species against climate change and environmental threats.”

Farmers have been taught to reduce the density of lobsters in a cage, expand the gap between cages, control aquatic diseases, and protect the environment.


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