BUSINESS IN BRIEF 21/10   Food security and farmer interests Although Vietnam has ensured food security and exported large amounts of rice, its farmers feel hunger here and there. Food security is a big challenge to any countries when their populations keep rising and farmland shrinks dramatically for urbanisation and industrial production. Statistics show the world has approximately 870 million hungry people, with 852 million living in developing countries, and tens of thousands of people die of hunger every year. The figures will increase considerably when the world’s population is forecast to reach 9 billion by 2050. In Vietnam, one of the world’s top three rice exporters, many people living in the Northern, Central and Central Highland regions feel hunger during the lean months. In the North-Western region, villagers can only afford rice for daily meals in three months at maximum and rely on other subsidiary crops such as cassava and corn in the remaining months of the year. No doubt farmers play a vital role in ensuring national food security, but millions of Vietnamese farmers do not enjoy substantial profit from their hard work.   A survey recently conducted by the Institute of Policy and Strategy for Agriculture and Rural Development (IPSARD) and Australia-based Oxfarm shows most rice growers are very poor, with monthly income per capita of approximately VND500,000 (roughly US$24). Farmers are the hardest workers in the rice production chain vulnerable to crop diseases and natural disasters, as well as fluctuations in market prices. Ironically, they get the least profit. Experts say Vietnam should pay more attention to long-term rice production policy and farmer benefit than to its position on the world rice production map.  A higher position could force Vietnam to fall into a trap with high risks, while rice prices are decreasing, a popular rice brand has not been developed yet, and farmers live a hard life. Farmers face hunger and poverty and they seem to go around in circles addressing the problems. It is not fair to farmers who are burdened with the task of feeding the society and maintaining national food security. In a nutshell, a national food security policy needs to ensure 3.8 million hectares of arable land should be preserved for rice cultivation and more attention should be given to farmers, enabling them to live off agricultural production. Vietnam to foster sustainable aquaculture development While several aquatic resources are being over exploited, Vietnamese consumers have been urged to consume sustainably caught and raised seafood. Experts said that destructive fishing methods are still rampant in some parts of the Asia Pacific, including Vietnam, and are rapidly destroying critical coral reef ecosystems, especially the Coral Triangle. While consumers in several foreign countries, particularly in the Europe are provided with consumer guides that help them to choose aquatic products with ecological labels, most Vietnamese consumers do not yet have ways of tracking the origins of such products in the market or provided at restaurants. In order to raise people’s awareness of the issue, a sustainable seafood partnership between the Worldwide Fund for Nature (WWF) in Vietnam and the chef Bobby Chinn was launched on October 15 in Hanoi. Speaking at the launch, Ngo Tien Chuong, WWF Vietnam’s Aquaculture Coordinator, said, “Without urgent measures from fishing companies, seafood retailers, and consumers, fish stocks will continue to decline and we may not have enough fish resources left in the near future to secure food and the livelihoods of those in the industry.” Bobby Chinn said that we are facing a major issue, as aquatic resources are declining and Vietnam is contributing to the situation. “I’ve lived in Vietnam for 18 years and don’t have any idea about the origins of aquatic products in the country until I worked with WWF. More people need to understand the direct link between the seafood on their plate and the state of our ocean’s resources,” Bobby commented. Under the partnership, Bobby Chinn introduced a “responsible seafood menu” at his restaurant, consisting of dishes using responsibly-sourced products from seafood companies that comply with best management practices in seafood production, some of which have been certified by the Marine Stewardship Council (MSC) and Aquaculture Stewardship Council (ASC)—the most credible certification and eco-labelling organizations for wild capture fisheries and farmed seafood respectively. “This is among first initiatives in Vietnam and it is considered an alarm bell for the country’s fishery industry to continue to pursue sustainable development,” Chuong said. As part of the effort to foster sustainable aquaculture, WWF has been working closely with the private and public sectors to help improve fishing practices through fisheries and aquaculture improvement projects that help fisheries adopt better management practices, and assisting them to eventually attain MSC and ASC certification. The WWF helped the clam fishery business in Ben Tre Province to be the first in Southeast Asia to get MSC certification in 2009. Other efforts include the persuasion of fishers to transform from using straight hooks to circle hooks in order to increase fishery quality and reduce the rate of turtles being coughed accidently. According to Chuong, 29 tra fish farming areas in Vietnam have been granted ASC certificates, accounting for 70% of the country’s tra fish exports. Ten more areas would receive the certification soon, proving the growing trend of sustainable production. He said, however, said that most ecologically-labelled products are for export, so many local consumers have yet to be aware of sustainability-related issues. He proposed that a market survey should be conducted on the study of local consumers’ taste and learn why they have yet to prefer tra fish in order to draw up a long-term development plan. Tran Thi Thu Nga, Chairwoman of Ben Tre Fishery Association, said that since clams in Ben Tre were granted with a MSC certificates, farmers’ selling prices have increased by between 10% and 15%. However, no significant changes in export prices have been recorded, which has discouraged farmers from expanding the sustainable clam farming model. She added that the government should issue policies to help increase MSC-certified clams, strengthen the development of a sustainable clam supply chain, increase support to localities that pursue MSC certificate and lower fees to get certification. Undersupply hits small cashew processors Despite crude cashew imports rising 81% in January-September, many processors in the industry in the southern province of Binh Phuoc, the country’s biggest cashew growing area, have put many of their workers on leave due to a cashew undersupply. A majority of small processing facilities in Binh Phuoc process products for bigger companies which have run out of stock, so they have no work to do at the moment, Dang Hoang Giang, general secretary of the Vietnam Cashew Association (Vinacas), said. Giang also attributed the situation to the fact that numerous cashew processors and exporters in the last two years have relied on cashew peel cutting machines to alleviate their dependence on workers and cut input costs. That’s why this year’s Vietnamese cashew export prices are lower than last year while local exporters have earned higher revenue and profit. Cashew nuts now sell for US$3.25-3.35 a pound (one pound is equivalent to 0.454 kilo). The country imported a total of 503,000 tons of cashew in the first nine months, and this volume was used up for production while imports for this month and next have yet to arrive, causing material shortages. Initial statistics by Vinacas indicate that there are around 1,000 operational cashew processors, with 40% of them large and the remainder small having less than ten workers each. Vinacas estimates this year’s crude cashew imports at some 600,000 tons, up 200,000 tons compared to the figure estimated early this year. But the association fears small cashew processors may continue to be out of work in the final months of the year. Multiple buyers from the EU, North America and Australia are seeking shipments to be delivered next month while other importers from these markets want to get local products within next year’s first quarter, Vinacas said. However, given the current low inventory at domestic enterprises and the risk of material import shortages, Vietnamese firms should take caution when signing export contracts, according to the association. VAMC debt buyouts gain momentum After buying $81 million of non-performing loans (NPL) from state-owned Agribank, reducing the it’s bad debts to 7.5 per cent two weeks ago the Vietnam Asset Management Company (VAMC) made similar purchases from Saigon-Hanoi Commercial Joint Stock Bank (SHB), Petrolimex Commercial Joint Stock Bank (PG Bank), and Saigon Commercial Joint Stock Bank (SCB). The VAMC bought $55 million in bad debts for a price of $40.2 million. SCB alone sold debts valued at $47.6 million. “On top of this we plan to sell more debts to the state asset company, hopefully sometime next month. We are aiming to reduce our NPL to below 3 per cent in preparation for a merger with a foreign partner,” said deputy director Vo Tan Hoang Van. In late 2011, Ficombank and TinNghiaBank were merged with SCG and experts say it has reinforced its structure by offloading these bad debts. Many smaller banks are selling, or trying to sell, NPLs to the asset corporation as part of their greater debt restructuring efforts. Also last week, Ho Chi Minh City’s Southern Bank held a meeting with the VAMC. The sliding economy has hurt banks. In 2011-2012 Southern Bank’s profits slid by nearly half while at the same time more borrowers defaulted on loans. The bank’s financial statement released in June showed it was $57 million deep in NPLs, totalling 2.7 per cent of its total outstanding loans. This poses a challenge as the VAMC announced it would buy debts mostly from banks with NPL rates higher than 3 per cent. According to VAMC deputy chairman Nguyen Quoc Hung, the corporation has received numerous proposals from banks aiming to sell, including others whose rates were below 3 per cent. So far the VAMC has issued special bonds totalling $121 million to buy debts off Agribank, SHB, PG Bank, and SCB. Hydropower projects getting the axe Minister of Industry and Trade (MoIT) Vu Huy Hoang last week announced that locally-owned Ho Chi Minh City Stock Exchange-listed Duc Long Gia Lai Group Joint Stock Company’s plan to build two major hydropower projects Dong Nai 6 and 6A were cancelled. “After reviewing a report done by the Ministry of Natural Resources and Environment, the prime minister issued a Document on September 23 that suggested they be disqualified from the national hydropower plan,” Hoang announced at a National Assembly Standing Committee meeting. The 135 megawatt $212 million Dong Nai 6 and 106MW $165.6 million Dong Nai 6A would have supplied a billion kilowatt hours and reduce 514,000 tonnes of carbon dioxide annually. Since 2011, both projects have been criticised heavily by scientists and experts for not complying with legal regulations and environmental safety standards. Most questionable was them being located in the southern Cat Tien protected forest and the Cat Tien National Park, which was named a world Biosphere Reserve in 2001. “These two projects are among many that have and will get the chop,” Hoang stressed. Since 2012, the prime minister has repeatedly asked MoIT and localities to review the development of hydropower projects, saying that ineffective or environmentally harmful projects would be removed. Under the previous plan approved by the prime minister, Vietnam has 1,239 hydropower projects in total, many running, others still planned. They have a designed capacity of 26,000MW. “However, we have recently cut out ineffective projects. 815 were retained with a capacity of 24,300MW including 268 that are operational, 205 under construction and slated to go on-line between now and 2017,” explained a MoIT report on Vietnam’s hydropower development released at the meeting. “Projects that need further review include 149 small-scale plants and nine cascade facilities,” the report added. Nguyen Ty Nien, a local expert with 50 years’ experience in the local water sector, said that although hydropower had greatly benefited the country, there were now far too many and the country’s plan was becoming excessive. “Deforestation and pollution are rampant in areas with hydropower projects which change waterways and damage the local ecosystem,” Nien said. Quang Nam province’s Department of Natural Resources and Environment reported that 43 hydropower projects had damaged and destroyed nearly 10,000 hectares of forest. It noted the Song Tranh 2 and 3 as the plant’s that had done the most damage. On average, 16 hectares of forest need to be destroyed to produce a single megawatt of power. Last year MoIT reported that hydropower made up 48.26 and 43.9 per cent of Vietnam’s total power capacity and volume, respectively. Experience a wider world with Microsoft and the new Windows Today, Microsoft Vietnam is organising an event titled "New Windows, New Wider World" to share details of the Windows operating system, helping participants to experience the new operating system and to better understand the Windows ecosystem, in the central of Danang city. The highlight of the event is the introduction of the new Windows 8.1 operating system that inherits outstanding advantages of Windows 8. Windows 8.1 also has several improvements, not only the interface or features, but also a lot of useful and productive built-in applications. It can be seen that, Microsoft is continuing to realise the PC revolution, bringing a new generation of Windows, raising the flexibility of PC and tablet productivity, with ease of use for latest mobile devices.- enables users to work efficiently, with flexible entertainment on personal devices. With the key message of: "Experiencing a wider world: New Windows, New Wider World ", through succinct presentations and impressive product demonstrations, Microsoft experts and partners will not only make an great impression but also bring about excitement to participants during the event. Also at the conference, the participants will have the opportunity to directly experience the Windows ecosystem including Windows Phone 8, Microsoft Office 2013, and especially the new Windows 8.1 operating system on a variety of new devices from partners such as HP, Sony, Asus, Lenovo and Nokia. Upon developing Windows 8, it is the first time in the computer history, Microsoft has helped users to have a chance to experience the amazing features of a unique operating system, which is compatible with all devices in the technology ecosystem: from PCs to tablets and even mobile devices. If it is said that, the advent of Windows 8 is Microsoft's and the tech world turning point, then Windows 8.1 will be a full update for the diverse ecosystem, including latest generation of touch devices. This update brings unified experience to users with the ability to work flexibly on any device, anywhere, anytime. The Windows 8.1 operating system has an intuitive computer interface, including improvements for multitasking, personalized customizations, Start button recovery, Live Titles dynamic applications, more deeply integrated Bing search engine into the system and SkyDrive cloud drive integration. The highlight of the Windows 8.1 is also security feature. Windows 8.1 is the most reliable OS to date with additional application of security certificates, adding more types of encryption and biometric security to any computer. "Work practices have changed significantly over the past decade. Personal devices are gradually getting into work environment to meet the increased demand on flexibility and productivity, while maintaining the convenience required for each individual. Home technology is rapidly becoming the focal point with the desire for constantly connected anytime, anywhere from a variety of user devices,” said Vu Minh Tri, general manager of Microsoft Vietnam. “Staying connected no matter which device is in use, for entertainment or work, to capture and to process collected information is also a desire of business managers today. There is also a need to look for technology solutions that help leaders to process information flexibly, employees to work effectively, bringing high efficiency, but also ensure a maximum level of security. Because security is a hot topic that attracts special attention of organizations and companies. All the above mentioned desires and needs will be met fully and completely by great features of Windows 8.1 on a variety of technology devices, from traditional PCs, laptops to tablets or "all-in-one products,” he added. Currently on the market there are many types of equipment pre-installed with Windows 8.1 and Windows 8 from Sony, Lenovo, HP, Dell, Asus, etc. With Windows 8 devices, users have the opportunity to upgrade to Windows 8.1 for free, starting October 18, 2013. Windows 8.1 is another proof of Microsoft's commitment in pioneering to meet new technology demands. It can be said that, in recent years, Microsoft has continued efforts to create new trends through technology products - not only for solutions and software but also towards services and equipment for both businesses and users - in order to make people's lives better. At the event, Microsoft will also release a series of "super cool" technology accessories. These are Microsoft products designed to be lightweight with health protection functions such as wireless mouse, wireless mouse curve (Arc Mouse), keyboard, Blue Track Technology optical eye. These products will work seamlessly with the New Windows operating system to provide endless inspiration for life and work of the people, including tech savvy, consumers and office staffs. Mobile phone export turnover hits new record high Vietnam exported a total of 15.1 billion USD worth of mobile phones and spare parts in the first nine months of this year, an increase of 75.5 percent as compared with the same period last year, according to the Ministry of Industry and Trade (MoIT). Mobile phones and spare parts topped the list of Vietnamese export items and are likely to surpass the target of exporting 20 billion USD for the whole year, said Chaiman of Vietnam Electronic Industries Association Le Ngoc Son. The European Union was the largest importer of Vietnamese mobile phones and spare parts, reaching 5.4 billion USD in the past nine months, a year-on-year increase of 71 percent. The rise in export volume was attributed to the foreign-invested enterprises which account for 99 percent of mobile phone production, said Luu Quang Khanh, Director of Service Economy Department under the Ministry of Planning and Investment.- First BOT power plant to start operation next year The first turbine of the Mong Duong 2 Thermal Power Plant, the first and largest coal-fired power plant built in the form of BOT (Build-Operate-Transfer), will begin operation in late 2014. Construction on the 2 billion USD plant began in September 2011 by the Mong Duong AES-TKV, a joint venture of American Electric Supply Inc (AES) which contributes 51 percent of total investment, Posco Power of the Republic of Korea with 30 percent and China Investment Corporation of China with 19 percent. The plant has two turbines with a total capacity of 1120MW. Once fully operational in mid-2015, the plant will generate roughly 7.6 billion kWh a year. The investors will transfer the plant to Vietnam after a 25-year operation period.- Japan’s bank helps investment promotion in Dong Nai The southern province of Dong Nai has just signed with Japan’s Bank of Tokyo Mitsubishi UFJ a memorandum of understanding (MoU) on cooperation in promoting investment in the province. Under the MoU, the two sides will exchange information and work together to organise seminars on investment in Dong Nai and meetings with potential investors in Japan. Speaking at the MoU signing ceremony, the bank’s director Go Wanatabe said Dong Nai province has a huge potential for attracting investment. Meanwhile, Dong Nai authorities valued the role the Japanese bank can play in providing financial and other assistance to foreign investors in general and Japanese businesses in particular in their operations in Vietnam and Dong Nai. Dong Nai is now one of the four leading provinces and cities in Vietnam in attracting investment. There are more than 18,700 businesses operating in the locality, including 1,365 foreign-invested enterprises with a total registered capital investment of over 23.6 billion USD. Japan ranks fourth among countries and territories across the world having investment in Dong Nai, with 167 projects worth 3.1 billion USD.- Property market targeting low-income people Heating up Vietnam’s real estate market and catching the cash flow of real estate transactions during the last months of the year is a target of the second property fair that will take place in Hanoi on October 18-20. Report by the Vietnam Business Forum. Speaking at the press conference introducing this programme, Nguyen Huu Cuong, Chairman of Hanoi Real Estate Club, said following the success of the first fair, the upcoming event will bring investors an opportunity to promote their images to consumers and customers through mass media. This is also a rare opportunity for project owners to attract potential investors, boosting sales. More importantly, this is a measure to help accelerate the sales and mobilising capital in the context of ailing economy having serious impact on the real estate market. According to the organisers, currently there are about 2,000 potential customers in demand for housing having registered to be involved in the fair. The project owners have also announced to bring teams of enthusiastic, professional and skilful consultants, capable of receiving around 1,000 – 1,500 registrations per day, to provide customers support needed. Additionally, customers would also get support from banks in loan procedure advisory and disbursement of assistance package of 30 trillion VND (1.41 billion USD) According to many experts, the most difficult time for Vietnam's real estate sector has not been over. The successful trade is relatively scarce, most of it is just a reference to look for better opportunities. However, the second property fair is designed for customers of low income, the one with real demand, not speculators trying to hoard properties. Statistics of the Ministry of Construction showed that there are about 30,000 civil servants having applied for social housing while the supply is limited. It’s widely concerned that whether the upcoming fair and its activities of advertising, offering social housing would be conducted in a transparent manner and introduce a reasonable price. Reply to this worry, Nguyen Quoc Khanh, Chairman of G5 Realty Trading Floor and a member of the organising committee, said in order to ensure consumers’ rights, fair organisers have established a group to carefully examine products to be brought to the fair. This would make sure that only real product with eligible legal binding can be introduced for purchase. On the other hand, the organising committee has also required written commitments from investors to have full responsibility for the legality of trading products. Nguyen Ngoc Thanh, Vice President of Vietnam National Real Estate Association, added that beside the 30 trillion VND support package of the government, customers coming to the fair would also be introduced to separate credit packages of commercial banks to support individual investors and house buyers. Some could be named including the Vietnam Construction Commercial Joint Stock Bank, the Military Commercial Joint Stock Bank (MBBank), the Vietnam Prosperity Commercial Joint Stock Bank (VPBank), and the Vietnam Export Import Bank (Eximbank). He also said that the real estate market would soon warm up in the coming years, but to get this market completely out of the crisis, the State Bank of Vietnam and the Ministry of Construction should propose to the Government solutions loosening some regulations in the procedures of identification, mortgaged properties, etc to accelerate the financial aid package. Nguyen Ngoc Thanh added that to best meet market demand, many commercial houses are now on sale with a 30-40 percent reduction compared to the original price, some projects are even offered at a nearly rock-bottom price of 13 million VND per square metre. Social houses are from just 310 million VND for an apartment. This is indeed a very encouraging signal for the civil servants and those in real needs of their own houses, they now would not have to put up with speculator hoarding houses and pushing up price point like in the "house fever" before. The goal of the organisers to create this fair is not only for profit, but first and foremost to establish a healthy playground with transparency for buyers and sellers, regaining consumers’ trust and creating good culture in the real estate market at the end of the year.- Industrial production needs a breakthrough Industrial production has seen significant progress in the third quarter of this year compared to the two previous quarters. However, there is no room for complacency as industrial production, considered as a key factor to develop the national economy, has declined since 2011. The Vietnam Economic News reports. At the Government’s regular meeting last September, Prime Minister Nguyen Tan Dung insisted on striving for gross domestic product (GDP) growth of around 5.4 percent and a consumer price index (CPI) of about 7 percent this year. This was the Government’s key economic targets for 2013, reflecting the efforts by the Party and State in controlling inflation, stabilising the macro economy and striving for reasonable economic growth. To successfully implement these goals, a breakthrough in industrial production is necessary. Enhanced industrial production is not only an urgent requirement for the economy now but also for next year. Statistics show that from the beginning of this year, Vietnam's economic growth has been mainly on the basis of the development of the services sector, contributing 2.71 percent to the overall growth rate of 5.14 percent GDP growth rate in the first nine months. However, only services related to education and hospitality have been developed. So the growth of the service sector is not sustainable and would not be enough to create a breakthrough in the national economy. The agro-forestry-fishery production continues to build on the comparative advantages of tropical agriculture, but the growth rate of this sector has also tended to decrease. In particular, the sector only registered a 2.39 percent growth in the first nine months of the year, lower than the 2.5 percent increase registered in the same period last year and the 3.74 percent increase in the same period of 2011. In addition, this sector is often heavily affected by natural disasters. Boosting industrial production is considered as a key factor to develop the national economy as pointed out in the 2011-2020 Socioeconomic Development Strategy, 2011-2015 Socioeconomic Plan and Socioeconomic Planning for 2013. Unfortunately, industrial production has declined since 2011: the industrial production index rose by 6.8 percent in the first nine months of 2011, but only by 5.4 percent in the same period of 2013; industrial GDP contribution increased 7.43 percent in the first nine months of 2011, but only 5.18 percent in the same period of 2013. However, a gradual recovery of the industry from the beginning of the year has been seen, with the index of industrial production growing by 4.9 percent in the first quarter, 5.2 percent in the second quarter, and 5.4 percent in the third quarter. These achievements resulted from the development of the processing and manufacturing sector with high manufacturing and consumption of export products. Industrial production has seen significant progress in the third quarter compared to the two previous quarters as industrial activities in a number of industrial centers such as Ho Chi Minh City and Hanoi were vastly improved. As capital investment in industrial development is limited, industrial investment should be focused on Ho Chi Minh City, Dong Nai, Ba Ria-Vung Tau, Hanoi, Binh Duong and Bac Ninh. These six localities are making up nearly 70 percent of total industrial production value of the country. Next are six provinces and provinces ranking second-class in terms of industrial production including Quang Ngai, Quang Ninh, Vinh Phuc, Hai Phong, Hai Duong and Long An which make up a combined nearly 15 percent of the total industrial production value. To create a breakthrough in industrial production, it is necessary to invest in key points in these industrial centres as well as key industrial products in these areas. That may be the best solution to boost the country’s economy in the final months of this year and create momentum for the first quarter of the next year.- Dialogue on tax, customs in HCM City A dialogue on tax and customs was held in HCM City on October 16, drawing the participation of 100 local businesses. The dialogue aims to promote businesses’ export, import activities. New regulations regarding the city’s tax and customs policies were also introduced at the dialogue. Departments’ officials answered businessmen’s questions on invoices, added value and personal income tax, the certification of products’ origin, the assessment of imports’ quality and the list of duty free goods. The municipal customs department said it is going to put Vietnam Customs Intelligent Database System (VNACCS/VCIS) into operation soon, and will provide technical training for import, export businesses so that they can master these systems. The event was jointly held by the HCM City Investment and Trade Promotion Centre and the Ho Chi Minh City Tax and Customs Departments.- IVB raises chartered capital to US$193 million Indovina Bank (IVB), a joint venture between VietinBank and Taiwan’s Cathay United Bank, announced on Tuesday that it had completed procedures to revise up its chartered capital from US$165 million to US$193 million. The central bank earlier allowed for IVB’s capital increase through the equal capital injections by both joint-venture partners. The higher capital will help IVB sustain long-term development and strengthen confidence of customers and shareholders. Le Van Phu, deputy general director of IVB, said IVB has been classified in the safe group despite strong turbulence on the local economy over the past two years. Bad debt at the bank was put at less than 1% before 2011 and stood at 1.59% by 2012. IVB lends mainly to small and medium enterprises and individual clients. The bank offers annual lending rates of 8.5-12% for Vietnamese dong loans and 2.5-6% for U.S. dollar credits. IVB has 32 banking units in big cities and provinces such as Hanoi, HCMC, Haiphong, Danang, Dong Nai and Binh Duong. Experts: Vietnam economy lags and grows rudderless Vietnam’s economy has remained on a growth trajectory but it has begun lagging behind other countries, according to a seminar in HCMC on Tuesday. At a seminar on Vietnam’s independence in international economic integration on Tuesday, Tran Dinh Thien, director of the Vietnam Institute of Economics, said the country’s World Trade Organization membership has entered its sixth year but State-owned and private enterprises are now in worse shape. Integration has helped fuel economic growth in Vietnam but the nation’s position has yet to pick up as it is still processing and assembling products, and exploiting natural resources without using modern technologies. That’s why Vietnam’s economic growth sustainability is low, with the country’s economy failing to compete on international markets, Thien noted. Internal forces have been underestimated as seen through the indicators on infrastructure, local firms, macroeconomic governance and human resources and through the number of company closures over the past time, he said. Meanwhile, Thien said, the foreign direct investment (FDI) sector has made tremendous headway, with Samsung Group serving as a good example. Samsung is responsible for up to 10% of Vietnam’s total exports, Thien said. He predicted the South Korean company would be able to increase the percentage to 20% sooner or later. A slew of other multi-billion U.S. dollar projects have got off the ground in Vietnam from Nhon Hoi in the central province of Binh Dinh to Vung Ang in the north-central province of Ha Tinh. Thien warned that Vietnam’s economy was depending heavily on foreign companies, saying this is a tragedy. “While other economies have escaped from the global recession in a sustainable way, Vietnam is still struggling with bottlenecks and when it can overcome the challenges remains unknown,” he stated. At the seminar, many experts noted that although Vietnam’s economic policies always focused on boosting economic growth based on internal forces, its economy is increasingly dependent on export markets and foreign investments. Nguyen Quang Thai, vice chairman of the Vietnam Economic Association, told the seminar that the independence of Vietnam has weakened gradually in its global economic integration process. The economy’s scope has risen but its internal forces have been on the wane as domestic entities are not well-prepared for the integration, Thai stressed. With the Trans-Pacific Partnership (TPP) agreement to be signed, hopefully at the end of this year, there would be an agreement on a five-year transitional road map for developing members like Vietnam and Malaysia, Thai said. But he pondered what Vietnamese businesses would do during the five years and whether they would continue hibernating as they had done in previous accessions. Thai urged the Government to take more drastic policy measures, he insisted. 31 million domestic tourists reported in Jan-Sept There were up to 31 million domestic tourists recorded in the January-September period, up 11% year-on-year and higher than the expectations of tourism officials. According to Hoang Thi Diep, deputy head of the Vietnam National Administration of Tourism (VNAT), VNAT has received reports of provinces and cities nationwide. Coastal destinations are still the favored options with a high number of domestic tourists flocking to the beaches. Danang, Khanh Hoa, Ninh Thuan and Quang Nam are among the localities seeing high growth rates with 20.5%, 16%, 30.6% and 30.2% respectively. “We expect to have 35 million for the whole year but the figure has amounted to 31 million. The number of domestic tourists will be higher than expected,” said Diep. Due to economic difficulties, many enterprises have launched travel stimulus programs and cooperated with enterprises offering transport and accommodation services to offer low prices to tourists. Although customers are still carefully selecting tours and their spending by buying short and economical tours, the number of tourists has still increased. “The number of tourists at our company has risen by an average of 10% from last year’s same period and the number traveling by air has increased by over 30% thanks to several promotions,” said Tran The Dung, deputy director of Young Generation Travel Co. According to a report of enterprises joining the stimulus program carried out by the HCMC Tourism Association and Vietnam Airlines, over ten travel enterprises sold package air tours to over 23,000 tourists during the four months of promotion, up 46% from last year’s figures. Such promotional tours helped tourists reduce costs by 36-40% compared to normal tours. Besides, some enterprises in HCMC that are cooperating with VietJetAir said that there were 1,623 tourists buying discounted package tours. Automated customs clearance to be launched in April 2014 The Vietnam Automated Cargo and Port Consolidated System (VNACCS/VCIS) is on track to become operational nationwide on April 1, 2014, according to the General Department of Vietnam Customs. The customs sector is providing training courses for import-export enterprises and related agencies to help them get acquainted with the automated system. The General Department of Vietnam Customs has also planned a beta test, to be conducted from November 15, 2013 to February 15, 2014, to ensure that the system will work properly when it is put into use in April 2014. The VNACCS has been developed using the expertise and technology of Japan's trade procedures and customs clearance systems, known as NACCS/CIS, which has been successfully applied in Japan. The automated customs clearance system will facilitate operations by simplifying administrative procedures, reducing clearance time and creating a more transparent, accurate and stable environment. Annual jewelry sales hit US$3.5 billion Buoyed by strong demand, the country’s annual jewelry sales are estimated at US$3.5 billion, heard the recent International Gemological Conference (IGC) in Hanoi. Vietnam is also a potential jewelry exporter but gold material prices are always higher than on international markets, making jewelry export unattractive, Do Minh Phu, chairman and general director of Doji Gold and Gems Group, said at the conference. Gold jewelry exports amounted to over US$2 billion in 2009-2010 but the recent unfavorable State policies have left a negative impact on jewelry export, which has fallen to less than US$50 million, Phu told the conference organized by Doji and the Hanoi National University. According to experts at the conference, there are as many as 12,000 jewelry producers and processors nationwide but few of them have strong financial capabilities and proper industrial manufacturing processes. Furthermore, the scale of production with highly-skilled workers remains too small. Banks say handling of mortgaged assets complex Bankers on Monday bemoaned the legal procedures required for handling mortgaged assets, saying the process is so complex that it can make debt recovery a difficult task. Bui Tan Tai, deputy general director of ACB, said at a meeting with HCMC’s National Assembly (NA) deputies that it usually takes three to four years to deal with a mortgaged asset while some banks have spent up to 10 years. This process also depends on policies of each province or city. For instance, in Haiphong City, when a bank wanted to liquidate a house as a mortgaged asset, the homeowner relied on the Constitution to ask the bank to provide a new place to live before liquidation can proceed. Therefore, tackling mortgaged assets is very slow while borrowers may take advantage of legal loopholes to delay the process, Tai said. Nguyen Huu Dang, general director of HDBank, shared the same view, saying some debts have not been solved though they have gone through different law enforcement agencies for 10 years. In addition, local authorities have different ways in selling mortgaged assets. Tran Ngoc Thanh, director of the Saigon branch of Mekong Housing Bank, said that banks cannot sell mortgaged assets by themselves. They must depend on authorities with complicated procedures required to complete. Banks at the seminar also said that the gloomy real estate market has also prevented them from liquidating mortgaged assets that are properties. Huynh Thanh Lap, head of the NA deputy delegation of HCMC, said NA deputies would work with banks to see how they can help. VNH mobilizes US$15.5 million Vietnam Holding (VNH) has mobilized an additional US$15.5 million, or VND327 billion, to continue investing in Vietnam’s stock market, becoming one of the few investment funds succeeding in raising money this year. According to Vietnam Holding Asset Management Ltd. (VNHAM), investors agreed to maintain the fund until 2016 at a meeting held in Switzerland last month. Investors spent more money buying fund certificates. After the call option ended last Wednesday, VNH has US$15.5 million, raising the total net asset value (NAV) to US$108 million. According to VNHAM, NAV of a fund certificate increased by 35.3% in January-September (VN-Index up 19.1%). High growth of NAV over the past two years is one of the reasons facilitating VNH’s capital attraction. VAMC to tackle Vinashin’s debts Vietnam Asset Management Company (VAMC) may join hands with local banks in the process of handling loans borrowed by the troubled shipbuilding group Vinashin, said HCMC Securities Corporation (HSC). HSC in a report sent to its clients last Friday said that VAMC has bought debts from Agribank, including loans borrowed by Vinashin. Debt and Asset Trading Company (DATC) has issued debt-convertible bonds with 18 local banks to restructure debts, including those of Vinashin and affiliates 100% owned by Vinashin. In the coming time, loans borrowed by affiliates and associated companies in which Vinashin’s stakes are under 100% will be handled. VAMC is likely to join this process. Speaking to the Daily, most banks who have given loans to Vinashin want to sell debts to VAMC as special bonds issued by VAMC can be used to take out refinancing loans with 70% of the book value of loans. Meanwhile, bonds issued by DATC enable refinancing loans of only 30% of the book value of loans. CSVC commissions 1.2-million-ton steel plant China Steel Sumikin Vietnam Joint Stock Company (CSVC) on Monday put into operation a steel plant having a production capacity of 1.2 million tons per year in My Xuan A2 Industrial Zone in Ba Ria-Vung Tau Province. The company said in a statement that the facility with total investment capital of around VND18.4 trillion produces cold rolled coils, pickled and oiled steel coils, and hot deep galvanized steel and electrical steel sheets. The plant employs 800 workers. Speaking to the Daily, a representative of CSVC said that in the first phase of operation, all products of the plant would be exported. CSVC was established in 2009 with total chartered capital of nearly VND9.2 trillion, with China Steel Corporation (Taiwan) holding a 51% stake, Nippon Steel & Sumitomo Metal Corporation (Japan) 30%, Formosa Ha Tinh Steel Corporation (Taiwan) 5%, Sumitomo Corporation (Japan) 5%, Nippon Steel & Sumikin Bussan Corporation (Japan) 5% and among others. The total production capacity of cold steel coils is now over three million tons per year while the demand is only around 1.6 million tons. Therefore, in addition to supplying steel products for the local market, steel mills have to expand their exporting markets if they want to survive, Dinh Huy Tam, general secretary of the Vietnam Steel Association, told the Daily on Monday. Foreign investors still keen on property market Foreign investors are still sounding out prospects in Vietnam’s property market even though it remains plagued by protracted woes, according to Cushman & Wakefield Vietnam. Chris Brown, general director of Cushman & Wakefield Vietnam, said at the introduction of a third-quarter report last week that while investors did not care much about the Vietnamese property market two years ago due to risks, many Asian investors now want to return here to explore investment opportunities. Cushman & Wakefield Vietnam has recently got a couple of requests from foreign investors wanting to venture into cash-strapped projects or build business links with local investors, according to Brown. Cushman & Wakefield Vietnam is working on a deal in which a European investor will get involved in a project in HCMC. The property market in Myanmar holds growth potential but a legal corridor there is unclear, while the markets in Laos and Cambodia are not big and that of Thailand is highly competitive. This is one of the reasons Vietnam is still favored by foreign investors, Brown said. The market survey of Cushman & Wakefield Vietnam indicated that office rates continued to decline in the third quarter, with an average rate of some VND960,000 per square meter (US$45.6) for grade-A office space and VND523,000 (US$25) for grade-B. After five consecutive years of fall, office rentals have started to be more stable given a drop in supply as some projects halt the implementation progress, according to Cushman & Wakefield Vietnam. Regarding the retail segment, the rates for retail space in the city downtown remains high at over VND2.2 million per square meter (US$106), three times higher than that in uptown areas. Brown noted many foreign firms as new market entrants do not place too much weight on sales but branding, so they are willing to pay high rates, and that this explained some buildings in the downtown had been able to find tenants. However, investors of office buildings should reconsider their rates if they want their vacancies filled up. Besides, investors of apartment projects have much to do as Hanoi and HCMC grapple with a combined unsold volume of around 27,800 apartment units. Partial property project transfer proposed Real estate investors facing financial problems may be allowed to transfer all or part of their projects to partners if the amended draft Law on Real Estate Business is passed. Investors now are forced to transfer entire projects given current regulations. In addition, they have to complete site clearance and compensation and finish technical infrastructure works while construction progress is approved. The draft law, meanwhile, allows investors to transfer either all or part of their projects if they meet financial difficulties and fail to continue construction. Le Hoang Chau, chairman of HCMC Real Estate Association, said that the partial or entire transfer of property projects is a normal activity of enterprises. The activity is performed under contracts, registered with relevant authorities and levied with taxes. Chau said that entire or partial real estate project transfers should be allowed at the demand of transferors and transferees. The transferees must bear the responsibility of conducting the project as approved. In addition, the draft law regulates that such transfers must include land use right. Contents and purposes of the projects will remain unchanged while benefits of customers and related sides must be secured. Project transfers have been taking place via share trading among enterprises. Some have bought up 80-90% stakes of partners to hold a majority stake in projects. Source: VEF/VNA/VNS/VOV/SGT/SGGP/Dantri/VIR