BUSINESS IN BRIEF 18/10 Trade surplus recorded in nine months The nation enjoyed a trade surplus in the past nine months of this year, with export reaping over US$96.27 billion and import earning US$96.26 billion, according to the Viet Nam Customs. The figures are against the General Statistics Office’s forecast on a trade deficit of US$124 million. In the last fifteen days of September, Viet Nam’s export reached US$6.25 billion and import, US$5.98 billion. Phones and spare part ranked first, earning US$1.35 billion, followed by garment (US$870.58 million), computers and electronics (US$496.15 million). During the period, Foreign Direct Investment (FDI) businesses earned US$4.12 billion from exports and spent US$3.61 billion on imports. In the nine-month time, FDI businesses made an export value of US$58.69 billion and an import of US$54.84 billion. Consumer product forum gathers firms The second "Connecting producers and distributors" conference for southern provinces scheduled to be held in HCM City early next month will bring together players in many consumer-goods industries. HCM City, the regional distribution hub, and the Ministry of Industry and Trade seek to set up a co-operation mechanism among southern provinces to bolster the region's strength and reduce expenditure as part of efforts to mitigate the current economic difficulties. Last year, 16 provincial Trade and Industry Departments and 200 companies, half of them based in the city, attended the first event. Then 33 kiosks were set up to showcase foods, fruits, vegetables, sweets, and candy among other goods. On the occasion, producers signed 43 contracts with supermarkets like Co-op Mart, Citimart, Maximark, and Big C. Following its success, this year even more favourable conditions will be created for firms to introduce their products to distributors. The number of kiosks is expected to double, with HCM City firms getting 10 kiosks, northern firms and banks getting slightly fewer, and firms based in southern provinces the rest. At a seminar, producers and distributors will swap information about quality for supermarkets, raw materials, and localities' specialties. Organisers expect over 200 participants. Road show steers consumers towards auto expo A road show to promote the upcoming Viet Nam Motor Show featuring 15 automobile brands will be held on October 19-20. This includes eight Viet Nam Automobile Manufacturers Association members: Ford, GM, Hino, Honda, Mercedes-Benz, Suzuki, Toyota and Vinastar, together with seven imported brands, Audi, BMW, Land Rover, Lexus, Renault, Nissan and Infiniti. The road show aims to provide information about the Viet Nam Motor Show as well as help the public register for complimentary tickets to the event. A photo competition, "Viet Nam Motor Show 2013 Photo Hunter", will take place between October 23 and 27. The Viet Nam Motor Show 2013 will open on October 23 at the Saigon Exhibition and Convention Center District 7 in HCM City. Southern steel mill now active Production began yesterday at the China Steel Sumikin Viet Nam Joint Stock Company in southern Ba Ria – Vung Tau Province, providing 800 jobs. The factory in the My Xuan A2 Industrial Zone was built at a cost of VND18.368 trillion (US$1.15 billion in 2009 when the company was established). It has an annual capacity of 1.2 million tonnes of pickled and oiled steel coil, cold rolled coil, steel sheets, and hot dip galvanized steel. They are meant for use in construction and manufacture of automobiles, motorbikes, home appliances, and pipes. CSVC has a charter capital of $574 million and is owned mostly by China Steel Corporation (Taiwan, 51 per cent) and Nippon Steel&Sumitomo Metal Corporation (Japan, 30 per cent). Formosa Ha Tinh Steel Corporation (Taiwan), Sumitomo Corporation (Japan), and Nippon Steel&Sumikin Bussan Corporation (Japan) each hold 5 per cent, and Chun Yuan Steel Industry Co. and Hsin Kuang Steel (both Taiwan) own 2 per cent apiece. Vietcombank unveils new mutual fund Registration for buying Vietcombank Fund Management's Tactical Balanced Fund, opened yesterday. The open-ended fund got an IPO license from the State Securities Commission last month, and can be bought at Vietcombank's HCM City branch and at Vietcombank Securities and Sai Gon Securities Joint Stock Company. The minimum investment is VND5 million and subsequently in increments of VND1 million. Deutsche Bank AG's HCM City branch will manage the issue, providing supervisory, custodial, and other services. TBF is the first open-ended mutual fund from VCBF, a joint venture between Vietcombank and global fund management company Franklin Templeton Investments. It will also be the first to invest in both equity and fixed income securities. The fund plans to invest in stocks, mainly those with large market capitalisation, government bonds, municipal bonds or bonds guaranteed by the Government, and high-quality listed corporate bonds, VCBF said in a release. "We believe VCBF Tactical Balanced Fund provides investors with a unique opportunity to participate in the growth of the Vietnamese economy through an investment strategy that is focused on creating long-term wealth by balancing the risks and rewards," Avinash Satwalekar, CEO and CIO of VCBF, said. "The current low-interest rate environment coupled with the growth-oriented economic policies initiated by the Vietnamese government have created an extremely favorable investment environment for the fund." The issue closes on November 29. Hanoi’s economy expected to expand by 8.2 percent The Hanoi People's Committee has predicted that the city’s economy in the fourth quarter could grow by 8.9-9 percent and rise to 8.1-8.2 percent for the entire year, fulfilling the yearly target. In the third quarter, Hanoi’s GDP post an 8.35 percent growth, higher than the 7.5 percent and 7.85 percent growth of the first and second quarters respectively. The GDP growth in the first nine months of this year reached 7.88 percent, much higher than the country’s average growth of 5.14 percent, with positive growth seen in such areas as services (8.9 percent), industry and construction (7.42 percent), and agriculture (2.35 percent). Also during the nine-month period, 11,410 new enterprises were set up with a total capital of 69.3 trillion VND (3.26 billion USD), up by 8.2 percent year-on-year, while 6,538 enterprises stopped operations, down by 19 percent year-on-year. Savings among local credit institutions had been safer and liquidity more secure, meeting capital demands for trade and investment from local enterprises. Authorities said one of its key tasks was to remove difficulties for enterprises to boost production and business activities. From the beginning of this year, the municipal Department of Industry and Trade has strived to expand the export market. Pham Duc Tien, Deputy Director of the department, last week told The Voice of Vietnam Radio that so far this year, Hanoi has spent 50 billion VND on trade promotion. Apart from such traditional markets as the US and the EU, Hanoi will approach new markets like South Africa , Brazil and South America . Some businesses have agreed to export goods to the Brazilian market. The city’s administration also said its key task in the last three months of this year is to be patient to adopt the support measures for the local enterprises, helping them boost production and business operations, reported the Vietnam Economic News. Hanoi also creates favourable conditions for enterprises by improving management efficiency and of local authorities at different levels, implementing administrative reforms with a focus on simplifing administrative procedures, intensifying the fight against corruption and waste, practising thrift and creating a transparent working environment for local enterprises. Rising food prices limit buyer choices Rising food prices will restrict grocery product choices for 70 per cent of Vietnamese people, according to a new Nielsen study. The Viet Nam survey was part of the Nielsen Global Survey of Inflation Impact, which had over 29,000 Internet respondents in 58 countries and aimed to understand how people of all income ranges adjust to rising food prices. The study showed that price increases would not only affect food cooked at home. The Vietnamese respondents would also change their spending on dining out (66 per cent), buying new clothes (63 per cent), recreation and entertainment (46 per cent), travel/vacation (46 per cent) and communications services (37 per cent). Nearly two-thirds of local respondents said they would buy fewer candies, cookies and other sweets, carbonated beverages, alcoholic beverages, prepared meals, chips and other snack foods. Rising prices also altered where and how people shopped. Thirty per cent of Vietnamese respondents indicated they would grow their own food or shop more at clearance and discount stores. More than half would shop in traditional markets and 47 percent would shop less in supermarkets or convenience stores. During such a time, many look out for promotions; 40 per cent of local consumers said they would use social media to find specials. Kenya could hold key to exporters' success in Africa Viet Nam should look to export more goods to Kenya as well as other African countries, according to the Ministry of Industry and Trade. Nguyen Ba Hai, head of the Information and Corporate Consulting Division under the Trade Promotion Agency's Enterprise Support Centre, said Vietnamese-made goods were selling rapidly in Africa. Kenya, located in the north of the continent, could serve as a gateway for the products to penetrate further into Africa, where many countries have large populations and high demand for many kinds of goods. African countries have similar export regulations to Viet Nam, which could be advantageous, he added. In 2011, Viet Nam gained US$1 million from shipping goods to Kenya, Hai said. In 2012, Viet Nam's export value with Kenya jumped to $80 million. Major local exports to Kenya included rice, computer, electronic parts and plastic products. In the first half of this year, the export value reached $24.9 million. Rice export value accounted for 60 per cent of the total, followed by machines, equipment, computer and electric products. Potential future export products include building materials and seafood products. Vincent D.Naidu, chairman of the Malaysia – Kenya Commercial Council, welcomed Vietnamese firms to export their products through Kenya to other countries, such as Burundi, Rwanda, Tanzania and Uganda. Kenya imports an estimated $50 billion of goods every year, he said. However, like other African countries, this is an emerging market, so few enterprises have paid attention to its potential. Hai warned that local exporters would face difficulty in shipping their goods to Africa because the long distance and lack of information about potential trading partners. Banks want to lower interest rates to boost business Credit institutions are expecting interest rate to be lowered 1% this year, according to the State Bank of Vietnam's Department of Monetary Forecast and Statistic. Even though the economy and business environment have not improved from the previous quarter, both domestic and foreign credit institutions in Vietnam hope for better changes in the last quarter of this year. Surveys conducted in June indicated that customers' finance and business situations remain the key factors to the banks' operation. However, the decreasing credit demand is also one of the big challenges to banks' credit growth rate. To encourage customers to borrow money and use banking services, it is hoped that lending interest rates will remain stable or to be lowered by 1% in the last quarter. The credit institutions also forecast that deposit accounts and outstanding loans for 2013 will increase by 10-20%, in which the rate of accounts and outstanding loans in VND will be higher than in foreign currencies. The institutions also promised to continue to give preferential loans in accordance with government's directives. In addition, 50% of institutions said they have increased the amount of individual consumer loans outstanding until the end of 2013; 36.6% have shifted focus onto FDI enterprises and 40% have cut the amount of outstanding loans to real estate sector for the rest of this year. Despite the tough times, over 80% of institutions maintained operations or hired new staff, preparing for when the situation improves. They do not hold much hope for a breakthrough development this year but hope that their business will improve a little after many stimulus projects and plans to control bad debts are implemented. Bond indices to be launched in near future A new set of indices will be created for Government bonds, officials announced at a meeting last week organised by the Ha Noi Stock Exchange, the State Treasury and the Viet Nam Bond Market Association. Initially, the index would be based on bonds issued by the State Treasury as these are "the commodities with the lowest risk and are a reference for investors to price other bonds in the market," according to exchange officials. The exchange is likely to launch more bond indices such as a Government-guaranteed bond index, municipal bond index and bond liquidity index in the near future. The bond market has achieved remarkable results in developing a legal framework, market size and infrastructure. Bond issuance continued to increase: a total of VND421 trillion (US$19.8 billion) were purchased as of September this year. The proportion of bonds successfully finding buyers increased from 32 per cent in 2010 to 52 per cent last year and reached 53 per cent during the first three quarters of this year. Trading was also conducted on an increasingly large scale: the highest bidding session hit more than VND2 trillion ($94.3 million). After the exchange applied a new bond trading system, the average scale per session reached VND1.7 trillion ($80.1 million), rising by 4.5 times compared to 2010. Shrimp hoarding hurts firms Farmers are holding onto their shrimp to capitalise on further expected price increases, but the action may harm shrimp profits for enterprises that have pinned their hopes on export demand. Supply factors, including shrimp diseases and competition from foreign shrimp buyers have pushed up the price of shrimp by VND40,000 (US$1.9) per kilo during the past two months and VND70,000 ($3.3) during the past year to VND240,000 ($11.4). Farmer profits have jumped significantly due to the higher prices, particularly in the current harvest, according to shrimp producers in southern Tra Vinh and Ca Mau provinces. However, enterprises are taking a hit due to the lack of shrimp supply as farmers continue stockpiling shrimp, waiting for the market to spike. Deadlines for shipping shrimp exports are fast approaching, forcing many enterprises in the two mentioned provinces to concede losses by purchasing shrimp from other provinces, said the representative of the Minh Phu Seafood Joint Stock Company. The Cuu Long Seafood JS Company based in Tra Vinh Province said the competitiveness in purchasing shrimp has happened since the early of this year so the company has had many difficulties in purchasing shrimp and export processing activities. The company has bought shrimp at the higher price, but has fallen short of export shrimp processing activities, reaching only 53 per cent of its export target in the first eight months of this year. Le Van Quang, general director of Minh Phu Seafood JS Company, said farmers believe the shrimp price will continue to rise in future and are hoping to sell their produce at higher prices. The action poses dangers to enterprises relying on shrimp farmers and facing export contract deadlines before October 15. After the deadline, enterprises will be unable to buy shrimp for their own production, Quang said. The Ca Mau Agriculture and Rural Development Department recommended farmers end the cut off of shrimp to the market, fearing long term damage to shrimp export activities. According to the Ministry of Agriculture and Rural Development, shrimp exports in the first nine months of this year reached $2 billion, including $952 million from white-leg shrimp exports - 80 per cent higher than the same period of last year, and $928 million from prawn shrimp exports - an increase of 2.1 per cent. Action plan for priority industries on hold The launch of a draft action plan for priority industries as part of the nation’s industrialization strategy has been put on hold since Japan as a partner in this policy making policy requires transparent information about the slow restructuring of State-run shipbuilder Vinashin. Economist Pham Chi Lan, speaking  at a seminar in HCMC on Thursday, said the Japanese government had requested Vietnam to make the Vinashin restructuring process transparent before other things were to be discussed. But it seems to be impossible to meet Japan’s requirement as no solution to Vinashin’s debacle is in sight, Lan told the seminar on doing business with Japanese companies held by the Association of High-Quality Vietnamese Goods Producers. Shipbuilding is one of the six priority industries in the nation’s industrialization strategy as part of the cooperation framework with Japan that was endorsed by the Government on July 1. The other five industries are electronics, agricultural machinery, seafood and farm produce processing, environment and energy saving, and auto components. At the seminar, Nguyen Thi Tue Anh, deputy director of the Central Institute for Economic Management (CIEM), noted that among the six industries, policy-makers would have to choose a number of specific and concentrated products and sectors instead of making scattered investments for all. As such, the priority products in the target sectors should have high added value, have strong technological pervasion and meet quality for export and domestic sale, Anh noted. For instance, Anh said, the Government will have to choose a strategic line of products in the automobile industry to focus on building incentives for the products and developing them rather than promoting all kinds of automobile. Similarly, with the farm produce processing industry, the Government will have to concentrate investments on rice, coffee, vegetables and fruits among others, she said, adding the investments in office equipment, mobile phones and electronic items in the electronics industry would be taken into account. Anh, now in charge of drafting the action plan for these industries, admitted that no specific items had been selected and that such information would only be unveiled in December. After that, the Government will need to build up concrete preferential policies for every activity to deploy them in succession starting from next year, Anh said. The Vietnamese Government in October 2011 signed a joint communiqué with the Japanese Government to seek the cooperation and support from the latter in construction and execution of the industrialization strategy towards 2020. Vietnamese policymakers then drew up a list of 39 industries in need of development strategies, which have been scaled down to 12 and then to six. Promising trade cooperation between Vietnam and Germany The Germany Business Association (GBA) has reported Germany is now Vietnam’s largest trade partner in Europe, with 250 companies investing as much as US$1.1 billion in the country. President Elmar Dutt said the GBA together with German Industry and Commerce Vietnam (GIC/AHK) has actively contributed to stimulating Vietnam’s economic growth by strengthening bilateral trade and investment links over the past five years. Bilateral trade grows at an annual 25–30 per cent, reaching US$6 billion last year. Dutt believed that high productivity and better product quality and design will help Vietnam gain a leg up on international competition. German investors are interested in long term business within the framework of cooperation. A strategic partnership signed in 2011 between the two countries is expected to achieve US$10 billion in turnover by late 2015 on the basis of current negotiations for an EU-Vietnam Free Trade Agreement. The GBA is involved in the joint German-Vietnam Mittelstand (Middle Class) initiative. “Germany’s Mittelstand” includes 99 percent of German companies with annual revenues averaging EUR2,000 billion. Germany’s three million small and medium-sized (SMEs) high-tech enterprises are ready to cooperate with Vietnamese counterparts. Germany has its 100-year history of vocational training apprenticeship at German companies operating in Vietnam and is keen to recruit Vietnamese labourers. All trainees are given not only allowances but also opportunities to seek long-term employment in German companies or get higher professional qualifications. Former German Prime Minister Gerhard Schroeder was known to have advanced his career through the similar training system. As the OECD’s third largest economy, Germany has taken the initiative to adopt strict regulations on environment protection, setting a typical example of environmentally friendly and sustainable growth. Vietnam wants to adjust its growth model in line with similar precepts. Germany and “Germany’s Mittelstand” can become Vietnam’s major European partner, delivering benefits to both sides. Germany is very interested in the fields of science and technology, research, education, and energy saving initiatives. The GBA wants the Vietnamese Government to facilitate technology transfers by minimizing import tariffs and encouraging long-term investment cooperation. HCM City, Emilia-Rogmana region (Italy) strengthen cooperation Emilia-Rogman region is keen to concretize its programmes on trade and technological cooperation with HCM City. The statement was made by Palma Costi, President of the Legislative Assembly of Italy's Emilia Romagna region at a meeting with Nguyen Thi Quyet Tam, Chairwoman of the HCM City’s People’s Council on October 15. Ms Costi said that the region has many small and medium-sized enterprises (SMEs) involved in the fields of healthcare, personal training and food processing. She emphasized that Emilia-Rogman is placed first in Italy in terms of high quality education, healthcare, social welfare, and environment protection. At the meeting, Ms Costi extended deep condolences over the death of General Vo Nguyen Giap. She hoped that the visit will create an opportunity for businesses of both sides to seek closer cooperation in the context of growing relations between Vietnam and Italy. In reply, Chairwoman Tam said HCM City is willing to create favorable conditions for businesses and investors from Emilia-Rogman and other regions of Italy to invest in various fields as they wish. Italian footwear industry praises Vietnam’s potential Vietnam has become an attractive destination for Italia’s leading footwear companies to build factories, according to Italian daily newspaper Sole 24 ore. One of its biggest Italian footwear producers, Coronet, has decided to move its factory from Guangdong province (China) to Vietnam. As from 2014, Coronet will make footwear products at its new factory in Ho Chi Minh City’s Giao Long industrial zone. Coronet senior adviser Umberto de Marco said the company aims to produce 2 million metres of leather a year and will raise its productivity in the near future. Most materials are transported from China and the China-ASEAN Free Trade Agreement (FTA) will prevent Coronet from violating the anti-dumping law. According to Sole 24 ore, Italian businesses have chosen Vietnam as a destination for investment due to some reasons, including available labour force and low production cost. Moreover, Vietnam is one of five largest footwear producers in the world with total revenue of US$7.25 billion. Alberto Vettoretti, an expert from Italian Dezan Shira & Associates Company which is operating in Vietnam, said the FTA between ASEAN and China, Japan and the Republic of Korea and price advantages will help Vietnam raise its competitive edge in the Asian market where all Italian businesses wish to profit from investing in the country. Vietnam, Laos cooperation in cassava Yen Binh Company and Lao Government representatives have signed a memorandum of understanding on the growing and processing of cassava and building of a processing factory in Sanamxay district, Attapu province, Laos. The signing ceremony took place in Vientiane on October 15. Accordingly, Yen Binh will survey 3,800ha of land in Sanamxay in three months to assess the feasibility of the project. Local authorities and revelant agencies will create the best possible conditions for Yen Binh Company to build the factory as scheduled. Yen Binh Company Director Tran Si Hung affirmed that the company has enough capital to build a material zone and put the factory into operation as soon as possible. The company will closely work with local authorities to ensure stable employment. Vietnam, Italy explore investment opportunities Business players from Vietnam and Italy were brought together at a forum in Ho Chi Minh City on October 15 to explore cooperation opportunities in trade and the manufacturing industry. Deputy Chairman of the Italian Chambers of Commerce cum President of the northern Emilia-Romagna region Carlo Alberto Roncati boasted technology, machine industry and packing as the region’s strengths. These sectors have competitive advantage in the global market and are fertile lands for small-and-medium-sized businesses to develop steadily, Roncati said. Italian enterprises eye Vietnam as an attractive market among the 10 ASEAN member countries, which boasts great potential with tariff incentives, he added. Meanwhile, Ho Chi Minh City now contributes over 20% of the nation’s Gross Domestic Product (GDP) and around 30% of exports, said Deputy Chairman of the municipal People’s Committee Le Manh Ha. The city is a dynamic economic hub that is always willing to cooperate with international entrepreneurs, especially in the support industry, manufacturing and automobiles, Ha added. He said he hopes the forum will help both sides explore a number of opportunities to reach bilateral cooperation in the aforementioned fields and become sustainable partners. Establishing a strategic partnership in 2013, Vietnam and Italy have enjoyed sound bilateral cooperation in socio-economics, investment, trade and science-technology over the past years. Their two-way trade enjoys an annual growth of 2%, hitting US$2.3 billion in the first eight months of this year. Italy ranks 9th among EU nations investing in Vietnam with 50 projects worth US$276 million. Vietnam, Belgium expand economic cooperation Vietnam and Belgium convened the second session of their joint committee on economic cooperation in Hanoi on October 14 and 15. At the session, Belgian partners signed environmental and health care memoranda of understanding with Vietnam’s southern province of Bac Lieu, Military Hospital 108 in Hanoi and Nghe An Tumour Hospital in the central province of Nghe An. The two sides also reviewed development cooperation projects and foreign direct investment ones in hi-tech, green technology, seaport and agro products. Belgium is Vietnam’s 7th largest trade partner in the European Union and the 35th largest investor in the country. The European country has committed 200 million euros in official development assistance to Vietnam since 2012. Vietnam-China trade sees annual growth China is currently Vietnam’s largest trade partner, with two-way trade turnover exceeding US$41 billion in 2012 (a year-on-year increase of 15.3 percent). At an October 15 banquet for Vietnamese and Chinese businesses, Prime Minister Dung said bilateral economic, trade, and investment relations have garnered remarkable achievements in recent years. Their trade value was estimated at US$32 billion after the first eight months of 2913, up 19.4 percent from a year earlier. Dung said Vietnam’s and China’s targeted US$60 billion 2015 trade turnover is within reach. The Vietnamese government leader noted as of September 2013, Chinese investors are involved in nearly 940 Vietnamese projects. Their total capitalisation of almost US$5 billion ranks 12th among the 100 countries and territories investing in Vietnam. Dung reiterated bilateral economic and trade relations have yet to reach the two countries’ full potential. Vietnam continually works to ensure favourable conditions for Chinese investors, he said. PM Dung urged Chinese businesses to seize the new investment opportunities bound to arise from the Regional Comprehensive Economic Partnership Agreement (RCEP) currently under negotiation. Vietnam is also involved in negotiating the Trans-Pacific Partnership Agreement (TPP) and free trade area (FTA) agreements with the European Union (EU) and the Customs Union of Belarus, Kazakhstan, and Russi. These agreements will open up more economic, trade, and investment opportunities for both Vietnamese and Chinese businesses. Chinese Premier Li Keqiang emphasised the similarities and friendship traditions linking Vietnam and China. Businesses from both sides have actively contributed to the relationship’s economic and trade successes, he said. Premier Li affirmed China’s commitment to its comprehensive strategic partnership with Vietnam. He pledged to encourage Chinese investment in Vietnam and invited Vietnamese enterprises to pursue opportunities in China. He praised Vietnam’s expanding role and responsibility within the ASEAN bloc, and hopes it will support China’s economic, trade, and investment policies in Southeast Asia. The same day, Chinese Premier Li Keqiang left Hanoi, concluding the three-day official visit (October 13-15) at the invitation of his Vietnamese counterpart Nguyen Tan Dung. Promoting Vietnam-Taiwan trade ties The Vietnam Chamber of Commerce and Industry (VCCI) and Taiwan’s Chinese International Economic Cooperation Association (CIECA) have held an October 15 trade cooperation conference in Ho Chi Minh City. CIECA Chairman Wang Chung-yu noted past cooperative agreements have proved successful in attracting more Taiwanese investors to Vietnam and encouraging Vietnamese guest worker flows to Taiwan. Vietnam has led Southeast Asia in terms of welcoming Taiwanese investment. Many small and medium-sized enterprises and major firms are keeping a close watch on the Vietnamese market, Wang said. He suggested Vietnam should focus on building trust, finalising its legislative framework, and upgrading infrastructure. Timber exports to Taiwanese market VCCI Deputy Chairman Hoang Van Dung said Vietnam-Taiwan trade turnover exceeded US$10 billion in 2012, including US$2.5 billion from Vietnamese exports and US$8.5 billion from its imports. The two sides are striving to balance trade. Taiwan is currently Vietnam’s third largest investor with about 2,260 projects worth nearly US$30 billion in total. Taiwan has also employed 100,000 Vietnamese guest workers, expanding cooperation in agriculture, export processing, and support industries. A large number of Taiwanese business representatives attended the conference to investigate market and investment opportunities in Vietnamese banking, infrastructure, real estate, mechanics, chemical, and food industries. Dong Nai’s Kansai Desk to assist Japanese firms The southern province of Dong Nai will establish a “Kansai Desk” dedicated to addressing any investment issues and queries from Japanese Kansai regional businesses. Organized under the Dong Nai Industrial Zone Management Board, the Kansai Desk is intended to serve as a communications centre for Kansai businesses. It will also work with Dong Nai Province’s relevant agencies to arrange consultations on behalf of potential investors. Dong Nai and the Kansai region signed an economic cooperation agreement earlier this year, strengthening exchanges and investment in support industries, environmental pollution treatment, energy efficiency, and human resources development. Dong Nai is home to over 1,000 foreign businesses with capital totalling US$23 billion. Their investment generates jobs for almost 50,000 labourers. One hundred and thirty firms are Japanese, representing total investment exceeding US$3 billion. Hanoi welcomes Italian investors Hanoi expects to cooperate with Italy in city planning, the field of its interest after expanding the administrative boundary, said Chairwoman of the municipal People’s Council Ngo Thi Doan Thanh. She made the comments while receiving President of the Legislative Assembly of Italy’s Emilia Romagna region Palma Costi in Hanoi on October 14. She also expressed her hope that the two countries will strengthen cooperation in all fields. Palma Costi showed her interest in the city’s 2020 development plan with focus on education, human resources development and building infrastructure, affirming that Emilia Romagna’s businesses see Vietnam and Hanoi in particular as a potential market. Hanoi will facilitate Italian investors’ businesses in Vietnam to deepen the two countries’ relations, Thanh pledged. The Italian delegation is visiting Vietnam from October 14-17 to explore the local market, especially Hanoi and Ho Chi Minh City. Kien Giang promotes border trade with Cambodia Southern Kien Giang province will further promote cross-border trade with Cambodia in the remaining months of this year, aiming to realise the target of US$180 million in two-way trade. Towards this goal, the province is accelerating the building of border markets under a 2010-2020 plan and infrastructure facilities at border gates, thus attracting more enterprises to invest in export-import activities in border areas. Kien Giang authorities have signed cooperation agreements with a number of neighbouring Cambodian provinces to boost trade promotion and expand market for local products. At the same time, the locality worked closely with Cambodia’s forces in fighting cross-border smuggling and trade fraud, especially in small roads and subsidiary border gates. Kien Giang shares almost 60 kilometres of land border with Cambodia, with the Ha Tien international border gate and Gia Thanh national border gate. Since the beginning of the year, the locality posted a cross-border trade turnover of over US$130 million, up 30 percent over the same period last year. The province exports mainly processed food, household goods, cattle-feed and aquatic products. Creating new competitive edge to attract FDI Pledges of foreign direct investment (FDI) were estimated at US$15 billion in the first nine months of 2013, exceeding the target of US$13-14 billion for the whole year. Although the world economy continues to struggle and the global flow of FDI has yet to recover fully, FDI pledges to Vietnam have risen 36.1% compared to the same period in 2012. Of the US$15 billion pledged from January-September, US$9.1 billion was poured into newly registered projects, underscoring the confidence that remains among foreign investors in the business environment in Vietnam. Disbursement also continued to rise, with the US$8.6 billion of disbursed FDI in the first nine months of the year representing a 6.4% year on year increase and approaching the entire 2013 target of US$10.5-11 billion. As domestic resources are scarce, the amount of FDI disbursement plays a significant role in raising total social investment, improving the balance of payments and increasing foreign reserves. In addition, FDI projects are an important driver of export growth. Over the past nine months, export revenue in the foreign sector reached US$63.9 billion, up 22.4% from 2012 and accounting for 66% of the national total. So far, FDI can be considered a bright spot in the economic picture of 2013. However, there is no room for complacency as Vietnam faces fierce competition from several neighbouring countries; notably Myanmar, which is emerging as a new attractive destination for investors. Meanwhile, Vietnam’s competitive advantages, such as cheap labour and resources, are wearing thin. In this context, it is urgent for Vietnam to develop new competitive advantages; specifically, high quality human resources, modern infrastructure and an effective legal system. These advantages cannot be gained overnight, but require an effort, money and a long-term process. But if Vietnam hesitates and fails to improve its investment environment, it will miss opportunities to attract new FDI flows. Only when the investment climate becomes more competitive can Vietnam shift from attracting as much FDI as possible to selecting high-tech, advanced and environmentally friendly projects. Clouds gather as Global Sphere quits solar project Global Sphere has announced its withdrawal from a $310 million solar panel manufacturing joint venture nearly a year after the United Arab Emirates-based firm and its Vietnamese partner broke ground on the project. Nguyen Trong Nguyen, general manager of Global Sphere in Vietnam, told VIR that the company was longer involved in the solar panel manufacturing project in Thua Thien-Hue province, adding that the company’s decision had been passed on to its Vietnamese partner. “We withdrew because our Vietnamese partner [WorldTech Transfer Investment] didn’t have the financial capacity. We found out about some non-transparent transactions between WorldTech Transfer Investment and some banks,” said Nguyen. Instead of investing in the manufacturing project in Thua Thien-Hue, Nguyen said Global Sphere was in discussions about another project in Ho Chi Minh City. He refused to go into more detail. Global Sphere and WorldTech Transfer Investment received an investment certificate for building a solar panel manufacturing plant in Thua Thien-Hue at the end of last year. Global Sphere would be responsible for 100 per cent of investment capital while Worldtech would be responsible for building, managing and controlling the plant. The solar energy project, located in Phong Dien Industrial Park, was to be divided into two phases. The $300 million first phase was scheduled to start construction late this year and would have started production in May 2015. Following Global Sphere’s withdrawal, the project’s future is now in question. Almost a year after the ground breaking ceremony, the project remains consigned to paper. “We learnt that there was debate between Global Sphere and WorldTech Transfer Investment, but the investors have not yet officially informed us whether they will follow through with the project or not,” said an anonymous official at Thua Thien-Hue’s Department of Planning and Investment. This solar panel project is the third of its kind that has been granted an investment certificate in Vietnam. None of two others, a $1.2 billion project in Ho Chi Minh City and a $390 million project in Quang Nam province, have been built so far because of low global demand. Amway insists ethical direct selling delivers While direct selling or multi-level marketing is legal in many countries, including Vietnam, the sector has faced criticisms due to unscrupulous firms. The sector has revealed some limitations in terms of business practices and ethics. To deal with some of the negative publicity associated with the actions of a tiny minority of firms engaged in the Vietnamese market, the Multi-level Marketing Association of Vietnam and the Direct Selling Business Association under the American Chamber of Commerce Vietnam (AmCham Vietnam) have worked together to develop a code of ethics for companies and individuals engaged in direct selling in Vietnam, claimed Phan Duc Que from the Competition Authority, Vietnamese Ministry of Industry and Trade. “The code is intended to underscore the sense of responsibility and good ethics of those companies and distributors towards consumers,” he added. Vietnam has seen strong public reactions to the behaviour of some unscrupulous firms that have employed direct sales methods. However, some companies in the sector have pursued a policy of complete transparency throughout their distribution network and with their partners. Those firms that have embraced transparency regard it as a key element in their long-term sustainable growth strategies. Compliance with the code of conduct and the willingness to observe domestic regulations will build a strong foundation for the sector, as well as provide the driving force for the sustainable development of ethical direct selling companies. How Kam Chiong, CEO of direct selling firm Amway Vietnam, said Amway was dedicated to long-term, sustainable development in Vietnam and was committed to investing in production, human resource development, healthy co-operation with the authorities and partners and raising public awareness of honest multi-level marketing. “Amway has just undertaken a special training programme for our distributors on Code of Conduct in business activities. We believe that our distributors will observe the rules. We’ll regularly conduct such courses and unceasingly dedicate ourselves to overcoming challenges to build Amway’s reputation.” This form of retailing has been present in Vietnam for more than a decade and seen strong growth. Some 60 companies and one million people participated in such sales in 2012, contributing more than VND500 billion (some $24 million) to the state budget. Budget revenues look certain to fall short of target Revenues for the State budget this year look increasingly certain to fall far short of the target, prompting the Ministry of Finance to call on all apparatuses in the State machinery to tighten spending. Deputy Minister of Finance Vu Thi Mai at a press conference in Hanoi on Thursday said budget revenues as of end-September totaled VND543.8 trillion, meeting only 66.6% of the year’s estimates. In the corresponding period of previous years, the rate always hovered around 80%, she gave the comparison. “The Finance Ministry anticipates a shortfall in the State budget revenue this year compared to the target endorsed by the National Assembly,” Mai told reporters. She said her ministry was measuring the shortfall and would make a report to the Government and the National Assembly at the next sitting. The ministry on behalf of the Government is also seeking a stamp of approval from the law-making body to raise the State budget deficit to 5.3% of gross domestic product (GDP) to cover expenses, instead of the 4.8% level approved by the National Assembly. Mai declined to reveal the total expenses from the State budget in the year to date, but in a report sent to the Prime Minister recently, the ministry said budget spending had amounted to VND684.6 trillion in the first nine months this year. As such, the budget deficit has amounted to VND140.75 trillion, equivalent to 87% of the deficit approved by the National Assembly for all of 2013. Mai commented that most sources of income for the State budget have fallen short of targets this year to date, such as the value added tax at 65.5%, the corporate income tax at nearly 58%, and personal income tax at 67%, while they should reach 75% after three quarters. As many as 40 out of the nation’s 63 provinces and cities have failed to realize the revenue targets proportionately, including major economic hubs like Hanoi, HCMC, Binh Duong, Hai Phong and Quang Ninh. Despite the constraints in tax collection, the Ministry of Planning and Investment in a recent report to the NA Economic Commission predicted the shortfall this year will be only some VND21 trillion compared to the earlier forecast of VND60 trillion given by the Finance Ministry in the middle of this year. Given the somber outlook for the State budget, the Finance Ministry has just issued a document calling on ministries, and central and provincial agencies to “review budget expenses already approved so as to eliminate or delay those schemes deemed as not urgent.” In the document also sent to the media on Thursday, the ministry said it had urged such agencies to strictly cut budget expenditures and step up tax collections to improve the State budget balance. The ministry has ordered the General Taxation Department to establish a body tasked with fighting tax losses. Meanwhile, the General Customs Department has been told to fight smuggling and other forms of illicit trade to generate more income for the State budget. Source: VEF/VNA/VNS/VOV/SGT/SGGP/Dantri/VIR