BUSINESS IN BRIEF 12/3 SMEs need more clarity, confidence Small enterprises can succeed if the leaders adopt clear business strategies and show self-confidence, stated Central Institute for Economic Management (CIEM) former director Le Dang Doanh. This was reported by Viet Nam Economic News yesterday. According to data furnished by the General Statistics Office in January 2014, Viet Nam had 6,900 newly-established enterprises, which is a 15.7 per cent increase in the number of enterprises. However, registered capital only reached VND43.7 trillion (US$2.08 billion), an increase of 11.5 per cent as compared to December 2013. The number of newly-established enterprises increased more as compared to the registered capital. Viet Nam had 76,955 newly-established enterprises in 2013, an increase of 10.1 per cent as compared to 2012. However, registered capital only reached VND398.7 trillion ($18.98 billion), a decline of 14.7 per cent as compared to 2012. General Statistics Office General Director Nguyen Bich Lam remarked that if the average capital size of a newly-established enterprise reached VND6.68 billion ($318,090) in 2012, its figure declined to VND5 billion ($238,095) in 2013. It is widely believed that the production activities and competitiveness capacity of newly-established enterprises were estimated to have worsened. However, according to Le Dang Doanh, a small enterprise with small capital can compete with large enterprises. If leaders focus on researching the market, techniques and technology, and stay away from pursuing immediate profits, they can achieve success. In addition to indulgence, entrepreneurs need to show self-confidence to start a new business. Doanh also said that in 2013, many Vietnamese enterprises faced bankruptcy or halted their operations, while some enterprises still strongly developed, such as Minh Long Ceramics , and the Rang Dong Light Source and Vacuum Flask Joint Stock Company. They are not huge businesses, but with creativity, they have made outstanding achievements in business and production activities. In February 2014, Minh Long Ceramics received an award by the Minister of Science and Technology. Doanh also advised leaders to show self-confidence, strength, and intelligence. In particular, leaders should focus on researching the market to create necessary goods serving consumer demands. In addition to self-confidence, strength, and intelligence, entrepreneurs need to take care of their staff, which will contribute to ensuring better living conditions for them. Entrepreneurs need to learn from the experiences of the older generations and make a profit to help enterprises, in general, and staff, in particular, to overcome difficulties. "If entrepreneurs take care of their staff, they can achieve success," Doanh noted. Another important issue to help small enterprises in achieving success is to have awareness of their position and spending. Phu Thai Group Chairman of the Board of Directors Pham Dinh Doan emphasized that young entrepreneurs should stay away from pursuing immediate profits. Hanoi to auction land-use rights for new development projects Ha Noi expects to earn VND1.5 trillion (over US$71 million) from auctioning off over 42ha of land use rights for the development of 34 new projects this year. The plan, announced by the municipal People's Committee recently, aims to meet increasing demand for land while boosting State budget revenue. Almost all the participating projects will be auctioned in the first half of the year. One project is still in the investment phase and will be auctioned by the last quarter. The committee has assigned the local department of finance, in collaboration with relevant bodies, to approve the start price for the 33 projects to be auctioned in the first quarter. The department is also responsible for pressing businesses that won auctioned rights to pay the requisite funds into the State budget and return investment capital to the city's Fund for Land Development. The committee ordered the Fund to prioritise investment in projects that can be finished by this year. It also urged districts and townships without ‘clean land' and projects for auction to start investing in such projects to increase budget collection and build new rural areas. Credit payments edge up in cash-only society Banks issued nearly 12 million bank cards last year, raising the total number of cards issued in the country to 66.2 million. This was an increase of 22 per cent over 2012, according to the latest data from the State Bank of Viet Nam. Of the total, the domestic cards accounted for 59.87 million, up 19.1 per cent, and the number of international cards increased by 57.3 per cent to reach 6.34 million. In the last quarter alone, 3.28 million cards were issued of which 2.64 million were domestic cards. The central bank said that credit cards were finding favour with the Vietnamese people, adding that their number doubled last year to 2.43 million. Debit cards were up 10.22 per cent to reach 61.11 million, while the number of prepaid cards doubled to reach 2.67 million. The country has more than 14,400 ATMs and over 111,000 points of sale. However, millions of bank accounts are mainly used to withdraw cash rather than make payments via cards and banking facilities. This is due to the fact that most businesses do not encourage the use of cards for payment. In many supermarkets and shopping centres, customers who use cards for payment are not entitled to discounts and other sales promotions. So they often withdraw cash from ATMs before a trip to the market. To accelerate non-cash payments, experts emphasised the important role of the relevant ministries and agencies. For example, the Ministry of Industry and Trade has stated that all shopping centres and restaurants should have the facility to accept payment via bank cards, and the Ministry of Finance should issue a tax reduction policy to encourage their use. The central bank is also drafting a decree under which individuals will not be allowed to pay in cash for securities, houses, land and vehicles including cars and motorcycles. Organisations will not be permitted to use cash for transactions involving the real estate, securities, aircraft, ships or cars, regardless of the value. There will also be a limit on the amount that individuals and organisations can be paid in cash. Ha Nam signs investment pact The representatives of northern Ha Nam province and South Korea's Yulchon law company signed a Memorandum of Understanding yesterday to increase cooperation for attracting investments into the province. Under the document, the company will assist the province in improving the local investment environment, establishing ties with investors from the Republic of Korea (RoK), and conducting the province's investment promotion activities in the country. Yulchon will also provide consultation to the RoK investors on potential projects in Ha Nam, enhance the image of the province in the country, and supply the investors with legal documents concerning investment activities in the province. The Ha Nam province pledged to create conducive conditions for the company by contacting the local authorities to collect information on the RoK companies operating there. Chairman of the Ha Nam People's Committee Mai Tien Dung emphasized that the MoU remanifested the province's determination in facilitating operations of foreign investors in the locality. VN firm builds floating unit to serve oil field The PetroVietnam Technical Services Corporation (PTSC) has successfully built a floating production, storage and offloading (FPSO) unit to serve the Thang Long-Dong Do field off the coast of Viet Nam. Owned by the Lam Son Joint Operation Company (LSJOC), the unit has been converted from an oil storage vessel at a total cost of over US$400 million. It is designed to store at least 350,000 oil barrels, process 18,000 barrels a day and operate non-stop for more than a decade. This is the first time a Vietnamese contractor has done all phases of the conversion from capital raising, designing and repairs to operation and maintenance. The unit was named "PTSC Lam Son" at a ceremony held in Singapore last Saturday by PTSC and its partners, including Keppel shipyard. PTSC General Director Phan Thanh Tung said the project is entering its final phase and PTSC Lam Son is expected to set sail for Viet Nam at the end of this month. Nguyen Hung Dung, Deputy General Director of the Viet Nam National Oil and Gas Group, said implementing this project has helped PTSC staff improve their management and operational skills for major projects, contributing to the group's efforts to ensure national energy security. Employers to focus on internal skill development Firms in Viet Nam will be focusing their HR efforts on strengthening skills and knowledge internally this year, according to the latest annual Global Salary Survey from international recruiter Robert Walters. Because of the intense competition for talent in the market, companies are expected to be flexible in their hiring approaches and consider candidates with broadly matching skill sets. Figures from the survey suggest that candidates who switched jobs in 2013 command an average 10-20 per cent salary increment, and this trend is likely to continue this year. Jon Whitehead, country manager of Robert Walters Viet Nam, said: "As companies continue to compete for top Vietnamese talent, the shortage of candidates and lack of skills in niche areas pose recruitment challenges. "Employers are likely to focus on training and development programmes for existing teams in order to nurture talent internally. "Attracting overseas Vietnamese back home is another viable option as such candidates are valued for their international exposure and expanded portfolio." Companies seek HR hiring specialists who can fill business-partnering roles and add commercial value. "Due to acute talent shortage in the market, we saw a strong demand for HR professionals experienced in learning and development as well as organisational development," the survey said. The entrance of new fast-moving consumer goods businesses in Viet Nam could potentially lead to increased demand for sales and marketing professionals. Hiring of procurement specialists is likely to increase due to growth within industries such as garment manufacturing, electronics/electricals, and FMCG. Internationally-recognised certifications like ACCA, CIMA, and CPA are gaining value in Viet Nam, it said. Exports to Canada fetch $143.6 million Viet Nam earned US$143.64 million from its exports to Canada in January, a year-on-year increase of 20.76 per cent, according to customs statistics. Out of this, $40.36 million, or 28 per cent, was contributed by the garments and textiles industry, followed by aquatic products with $15.73 million and footwear, with $12.26 million. Other Vietnamese exports to the North American country in January included electronic products and spare parts (up 51.13 per cent), base metals (up 196 per cent), and vegetables and fruits (up 111.96 per cent). Ever since the two countries signed a bilateral Trade and Commerce Agreement in 1995, two-way trade has surged by 20 times, hitting $1.6 billion in 2012 and approximately $1.54 billion last year. Binh Duong invites Japan investment Japanese businesses are being urged to invest in the southern province of Binh Duong, which is seeking funding for its support industries. Besides a superior infrastructure and qualified labour force, Binh Duong has allotted more than 1,500 hectares of land in industrial parks to new projects, the provincial People's Committee chairman, Le Thanh Cung, said during a meeting last week with 20 leaders of small- and medium-sized enterprises operating in support industries in Japan's Saitama prefecture. The province has also accelerated administrative reforms in order to assist foreign investors, he stated. Over the past two months, Japan has poured an additional US$246 million into Binh Duong, making up 35 per cent of the total foreign direct investment in the locality, he claimed. Vietnam wants to sign TPP soon Vietnam expects negotiations on the Trans-Pacific Partnership (TPP) agreement to conclude in the near future, Finance Minister Dinh Tien Dung told his US counterpart Jacob Lew during their March 10 talks in Washington DC. Dung affirmed the final trade pact must ensure benefits to all participating parties, including Vietnam and the US. For his part, Jacob Lew, who visited Vietnam last December, said getting the TPP negotiations wrapped-up and signed is of great importance to the US. The two ministers said the TPP is a monumental step towards promoting economic, trade and investment relations between the two countries and among other member countries. They spoke highly of cooperation results in recent times and agreed to further boost cooperation in customs, tax, and budget management to accelerate bilateral trade and investment ties. Lew noted restructuring State-owned enterprises is an important task for Vietnam in its endeavour to renovate the growth model. On the same day, Dung met with US Trade Representative Michael Froman, and senior leaders of the World Bank (WB) and the International Monetary Fund (IMF). He is scheduled to meet with the President of US Federal Reserve (FED) and hold a dialogue with the US business community. Vietnam, US trade sets new record The US is now Vietnam’s second largest trading partner with total export-import turnover increasing by 25.8% in the last two months to US$4.9 billion. According to the General Department of Customs, Vietnam’s export earnings from the US market this year are projected to shoot up 26.5% compared to 2013 and reach US$3.9 billion. Bilateral trade hit US$29.1 billion in 2013, up 18.8% against 2012, quadrupling the figure recorded in 2005. Since 2007 the US has been the biggest consumer of Vietnamese goods and the seventh biggest supplier of its products to Vietnam.   However, Vietnam only accounted for a tiny proportion in the total export and import value of the US (nearly 1%), according to the latest data released by UN Comtrade. From the US perspective, Vietnam ranked in 23rd place among all the exporters to this lucrative market and 40th among all the exporting markets of the US. Over the years, textiles and garments have topped the list of Vietnamese export commodities to the US with a total value of US$8.6 billion in 2013, accounting for 48% of the country’s total export turnover. Mobile phone handsets and components exports to the US saw high growth in 2013, a fivefold  increase compared to 2012’s figure. Other commodities including wood and wooden products, seafood, footwear also contributed significantly to the total export value from Vietnam to the US. Meanwhile, Vietnam mainly imports machinery and spare parts, computers, electronics and components, cotton, plastics, and soybean from the US. Huge prospects for vegetable, fruit exports Vietnamese experts are sanguine about the prospects for this year’s fruit and vegetable exports, expecting to rake in US$1.2 billion.   Vietnam's Fruit and Vegetables Association (Vinafruit) reports fruit and vegetable exports jumped more than 22% against a year earlier to US$136 million in the first two months of this year. Vinafruit Secretary General Nguyen Van Ky said five major importers of Vietnamese fruit and vegetables were China, Japan, the US, Thailand and Malaysia. He said Vietnam and Taiwan finalized an agreement in late 2013 under which the latter will consume a large amount of Vietnamese dragon fruit. Vietnam is also due to ship fruit to New Zealand and mangos to the Republic of Korea in the first quarter of this year. Longan and lichees are being processed for shipment into the US market and the two nations are currently negotiating on mango exports and star apples. All of these products were initially slated for export to the US in late 2011, but due to strict complicated regulations the agreements have just recently been completed. Vinafruit reports last year Vietnam exported 1,300 tonnes of dragon fruit and 300 tonnes of rambutan to the US, along with 300 tonnes of dragon fruit to Japan and a similar amount of the fruit to the Republic of Korea. Except for dragon fruit, exports of other kinds of fruit, such as pomelos, mangos, and rambutan to the US, remain modest. Vegetable exports to Europe have resumed but in a small volume. Last year, fruit and vegetable exports hit US$1.04 billion, nearly US$200 million more than the figure in 2012. Vietnam, Germany strengthen local cooperation A delegation of the northern mountain province of Lao Cai paid a working visit to Germany from March 2-11 to explore cooperation opportunities with German localities. They toured a number of companies such as sausage maker Willmann, automobile manufacturer Mercedes-Benz factory, and knife producer Johannes Giesser in capital Berlin and other German cities. At Willmann, they were introduced to its sausage production lines, where hundreds of Vietnamese nationals are working. The company’s management said they will consider employing workers from Lao Cai. At a working session with the Vietnamese Embassy in Germany, the delegation briefed ambassador Nguyen Thi Hoang Anh on the result of the visit , and expressed hope to strengthen cooperation with German localities, especially in economics, tourism, human resources development, and environmental technology. Ambassador Anh confirmed the Vietnamese Embassy in Germany will create favorable conditions for Lao Cai to establish partnerships with German localities. Chinese firms rev up operation in Nam Dinh The Red River Delta province of Nam Dinh has granted an investment licence to Jiangsu Julun Textiles Group Co., Ltd of China to build a factory worth US$68 million in the locality. Covering 80,000 square meters in the Bao Minh industrial park in Vu Ban district, the factory specialises in producing yarn with an annual capacity of 9,816 tonnes, weaving (21.6 million metres) and dyeing (24 million metres). Construction of the factory is scheduled to be completed in June 2016. According to Nguyen Viet Thang, from the managing board of industrial zones in Nam Dinh, another investor from Hong Kong (China) is planning to build a 10,000 ha garment and textile industrial park in Nghia Hung district. The province will submit the project to the Government for approval, he said. Nam Dinh province has three industrial parks including Hoa Xa, Bao Minh and My Trung, which are home a total of 127 businesses with nearly 25,000 workers. EU-Vietnam FTA challenges for agriculture, industry Vietnam and the EU are making significant strides in signing a Free Trade Agreement (FTA), which will bring both advantages and challenges for the country’s key sectors, particularly agriculture and industry. According to experts from the European Trade Policy and Investment Support Project (EU-Mutrap), agriculture and seafood have emerged as vulnerable sectors for both Vietnam and the EU during the FTA negotiation process. Both sides have applied the highest levels of protectionism and other subsidy instruments to support the sectors. Obviously, any changes in agricultural policy will have a big impact on employment, poverty reduction and rural development. That’s why both Vietnam and the EU try to protect their agriculture against fierce competition when opening markets. Do Lien Huong, an EU-Mutrap expert, reveals agricultural commodities are Vietnam’s strength and many of them such as coffee, potatoes, sugar and rice are able to compete with similar products in the EU market. The country exports a large amount of cashew nuts and seafood products, but does not pay due attention to shipping milk and dairy products abroad. On the contrary, Vietnam has a high demand for importing input materials to feed farm produce processing. For instance, 70% of livestock feed was imported last year. In addition, the EU’s non tariff measures (NTMs), such as food safety and hygiene requirements, and customs procedures are among the toughest in the world, and they are really a big challenge for developing countries, including Vietnam. Paul Barker, an EU-Mutrap analyst, says EVFTA will help fuel the growth of six key Vietnamese fields – garment, footwear, automobile, high-technology, handicrafts and timber processing. However, the industry still meets many challenges. Under the trade pact, the footwear sector will greatly benefit from import tax cuts and other incentives, but face fierce competition from other footwear producers such as India, Indonesia, Thailand and newly emerging markets like Myanmar. Meanwhile, the garment sector will find it a bit difficult to get the lion’s share in the EU market because it greatly relies on imported input materials, mostly from China, the Republic of Korea, and Taiwan. Therefore, its products are unlikely to compete with similar ones in the EU in terms of prices, designs, and technological advantages. The wood processing industry is no exception as up to 80% of its materials are imported. The handicraft industry which mainly uses domestic materials like bamboo, wood and ceramic, recently began importing these materials from China, Laos and Cambodia for production. This means both industries will go into fierce competition in the EU market. Furthermore, importers’ demanding requirements and strict EU rules of origin remain huge barriers to Vietnamese products. Businesses to be honoured for green operation The 12th Golden Dragon Awards and the 10th Vietnamese Powerful Trademark Festival will be held in Hanoi on March 15 to honour leading businesses that have excelled in operation. The event  themed  “Green Business” attracted hundreds of local and foreign-invested enterprises which overcame difficulties and reaped success last year. Most of them are operating in the banking, finance, insurance and and real estate sectors. According to event organiser Vietnam Economic Times, the winners were judged over strict criteria including the quality of products and services, environmental consciousness, and corporate social responsibility activities. A CEO forum will also take place in Hanoi, on March 14, with the participation of representatives from state agencies and enterprises. The forum will examine environmental impact on economic growth, investment attraction, and the development of a green economy in Vietnam. Policy makers and economic experts will discuss opportunities and challenges for businesses when a green business model is in place. Established in 2001, the annual event aims to promote links between management agencies, press agencies, enterprises, and consumers. RoK promotes investment in Ha Nam A law firm of the Republic of Korea and the Ha Nam provincial People’s Committee signed an agreement on March 10, aiming to promote investment cooperation between the two sides. Under the agreement, Yulchon, one of the most highly-regarded law firms in the RoK, will support Ha Nam in improving the investment environment, establishing relations with Korean investors, and implementing the province’s investment promotion activities in RoK. It will also introduce Korean investors to Ha Nam’s potential projects, popularize the province’s image in the Korean market and provide general information about Korean investors keen to do business in the province. In turn, the province will cooperate with the RoK company in organising investment promotion seminars, updating Korean investors on its key investment projects, as well as exchanging information on the amendment and implementation of investment laws, and related laws of Vietnam. Ha Nam will endeavour to create favourable conditions for the company to meet provincial authorities to discuss Korean operations within the locality, said Mai Tien Dung, chairman of the provincial People’s Committee. He emphasised that Ha Nam will implement the agreement’s commitments to strengthen Korean investment activities in the province. Export to Canada enjoys 20.76% surge Vietnam earned US$143.64 million from its export to Canada in January, a year-on-year increase of 20.76%, according to customs statistics. Of the total, 28 percent or US$40.36 million was generated by garment and textiles, followed by aquatic products with US$15.73 million, and footwear, US$12.26 million. Other Vietnamese exports to the North America country in January include electronic products and spare parts (up 51.13%), base metals (up 196%), and vegetables and fruits (up 111.96%). Since the two countries signed their bilateral trade agreement in 1995, two-way trade surged by 20 times, hitting US$1.6 billion in 2012 and approximately US$1.54 billion last year. Phone exports hit US$3.3 billion in 2 months Mobile handsets and spare parts raked in US$3.3 billion from exports in the past two months, representing a year-on-year rise of 22.9% and topping the list of processed industrial products. They generated US$1.7 billion in export value in January, up 14.6% year on year and 38.5% over December 2013, according to the Ministry of Industry and Trade. Major importers of Vietnamese mobile handsets and components were the EU, the United Arab Emirates, the US and Russia Their export value helped raise total two-month export earnings of processed industrial products to US$15 billion, up 16.8% over the same period last year. However, export earnings of these industrial products fell 18.8% to an estimated US$6.74 billion in February over the previous month. Key products attaining high growth included garment and textiles (US$ 3.21 billion, up 30,1%), footwear (US$1.51 billion, up 27.4%), wood and wooden products(US$ 884 million, up 20.2%), and machinery, equipment, tools, and spare parts (US$979 million, up 4.4%). Last year, export earnings of these products hit US$21.5 billion, taking the lead among Vietnam’s key export items. Japanese enterprises eager to invest in Vietnam At least 300 Japanese enterprises have enthusiastically expressed interest in investing in Vietnam, said Sato Motonobu, Chairman of the Japan Business Association in Vietnam (JBAV). Addressing a recent association meeting, Sato Motonobu voiced his high appreciation of Vietnam’s efforts in creating favorable conditions for foreign investors and stated Japan was its largest investor in 2013, funneling US$5.7 billion into projects, accounting for 26.6% of the country’s total foreign direct investment. He proposed Vietnam devise an incentive package, including tax incentives and simplified licensing procedures, for Japan’s small- and medium-sized enterprises (SMEs) to entice more inflow of capital into the country. “The Vietnamese government and agencies need to organize more investment promotions seminars in Japan during the whole year,” he said. “If Vietnam does that, the country has great potential to attract large numbers of Japanese businesses in the time to come”, he stressed. For his part, Vu Tien Loc, Chairman of the Vietnam Chamber of Commerce and Industry (VCCI), spoke highly of the contributions by the Japanese business community to promoting cooperation between the two countries. He said that the strategic partnership between Vietnam and Japan is especially bearing fruit in the fields of economics, trade and investment, which brings mutual benefit and boosts the traditional friendship. He affirmed that, in the future, Vietnam will continue down the path of creating favorable conditions for Japanese foreign investors and provide incentives and support Japanese businesses in investing in the country. Local firms join Singapore coffee fairs Seven Vietnamese businesses have showcased their products at the International Coffee & Tea Industry Expo 2014 and Sweets & Bakes Asia 2014 in Singapore from March 6-8. Vietnam’s pavilions caught the attention of Singaporean and other foreign investors for their high-quality products. Edward Liu, executive director of a Singaporean firm on tourism and exhibition services, spoke highly of the quality of Vietnamese coffee, which he said has especially good flavour. “Vietnamese coffee is among the best in the world,” he exclaimed. Eric Maurice Huber, a senior official of Boncafe International Pte Ltd in Singapore, said he truly enjoys Vietnamese coffee, especially Robusta and Arabica from the Central Highland city of Da Lat. Eric said his firm has purchased Trung Nguyen (Central Highland) coffee for seven years and is planning to visit Vietnam to explore further cooperation in the coffee market. Victor Mah, Chairman of the Singapore Coffee Association, said Singapore and Vietnam have a time-honoured relationship, particularly in trade. “We believe that Vietnam will soon become the world’s largest Robusta coffee producer,” he added. As the Chairman of the ASEAN Coffee Association, Victor Mah expressed his hope that Vietnam will take part in and affirm an active role in the association in the near future. The annual fairs , which this year have attracted about 100 businesses from 18 countries, aim to create a good venue for businesses around the world to boost cooperation, seek partnerships and grasp investment opportunities in the field of coffee, tea and confectionary industries. Programme helps strengthen int’l integration management Results and lessons learned from the Beyond-WTO Program helping Vietnam manage its international integration process after joining the World Trade Organization in 2007 were shared at a workshop in Hanoi on March 7. The programme has provided Vietnam with access to international experience so that it can perfect its laws and policies, especially those related to international economic integration, and enhance the participation of organisations and people in the policy making process, said Trinh Minh Anh, Head of the B-WTO Programme Office. Deputy Minister of Industry and Trade Nguyen Cam Tu stressed that results gained from the programme have also helped Vietnam implement its priorities under WTO commitment, develop its market economy, modernise the agricultural sector and rural areas. Former Trade Minister Truong Dinh Tuyen noted that the programme has importantly contributed to strengthening institutions of a market economy and creating a competitive business environment, while minimising bad impact of the integration process on vulnerable sectors and disadvantaged groups. Agricultural support agreement reached with UN The Ministry of Agriculture and Rural Development and the Food and Agriculture Organisation of the United Nations (FAO) signed a major cooperative project in Hanoi on March 7. Together, the two bodies will build capacity for an integrated food and energy system in Vietnam . The project will be carried out over three years with a total budget of US$770,000. At the event, Deputy Minister of Agriculture and Rural Development Tran Thanh Nam thanked FAO for its timely assistance to the development of green and low-carbon agriculture in Vietnam through the project. He expressed his belief that the initiative will help the country cut down GHG emissions from agricultural activities to 20% by 2020 and realise the green production and consumption targets of the National Green Growth Strategy. FAO Representative in Vietnam Jong Ha Bae said Vietnam has an urgent need of tackling climate change and its impacts and FAO is committed to supporting the country in this aim, of which this project is proof. Local exports to benefit from FTAs with EU The impacts of a Vietnam-EU trade deal were discussed at a seminar hosted by the European Trade Policy and Investment Support Project (EU-MUTRAP) in Hanoi on March 7. The seminar revealed that Vietnam’s exports will increase by 30-40% due to lower tariffs following the EU-Vietnam free trade agreement (EVFTA). Minister Counsellor and head of the Trade and Economic Section of the EU delegation to Vietnam, Jean-Jacques Bouflet, emphasised that the EVFTA will help boost investment, improve technology, increase productivity and create more output sources for many production sectors. The agreement will also protect investors on both sides, he said, adding that the deal is expected to be signed in September 2014. Accordingly, foreign businesses will consider Vietnam as a production venue to export to EU member countries and their trade partners, he noted. However, some delegates raised concerns over the EU’s strict requirements on sanitary and phytosanitary (SPS) and technical barriers to trade (TBT). They suggested Vietnam should gather more consultations before making decisions on these EU regulations while enhancing its capacity to meet new requirements. EU procedures should also be publicised among businesses, they added. Since June 2012, Vietnam and the EU have finalized six rounds of negotiations on the EVFTA, which will benefit businesses from both sides, especially those getting involved in garment, footwear and seafood sectors. Vietnam to cash in on external demand Vietnam continues to benefit from strong international demand, despite soft domestic consumption, according to a recent report released by the Australia-New Zealand Banking Group (ANZ). In February, activity indicators continued to show a slow but steady improvement with foreign direct investment (FDI) constantly surging. ANZ forecast Vietnam’s GDP growth at 5.6% and 5.8% in 2014 and 2015, and inflation rate at 7.0-7.5% this year. Vietnam’s external position remained robust in February as FDI continues to be the bulwark of the economy. Since February, there have been 122 newly licensed projects worth US$830.9 million in registered capital. Furthermore, 41 existing projects received additional funding of US$708.8 million, taking the total FDI capital infusion to US$1,539.7 million, said the report. International trade posted a narrow surplus of US$244 million. Initial estimates from the customs office reported an annual increase in exports and imports by 34.3% and 49.2% respectively, which reflect distortions from the celebrations of the Lunar New Year (Tet) holiday in February. ANZ revealed that February trade balance presented a deficit of US$1,200 million. This partially offset the revised trade surplus of US$1,444 million in January, from an initial print of a narrow deficit of US$100 million. Considering the continuous flow of FDI to the manufacturing sector, ANZ predicted both exports and imports would continue rising together, benefitting from the improvement in developed economies. With domestic demand and imports for consumption remaining modest. Industrial production (IP) rose an average of 7.9% annually over the January-February period. Manufacturing production, which we estimate accounts for 70% of the IP index, remains solid. Despite muted domestic consumption, IP continues to benefit from FDI-related export production, the report added. VN to cut animal feed imports Viet Nam hopes to import less than 50 per cent of its animal feed by 2020. According to the Viet Nam Feed Association, the country imported about nine million tonnes of corn, wheat and soybean feed and fish powder in 2013, accounting for 70 per cent of total consumption and costing about US$4 billion. The country's agricultural sector focuses too much on rice – a traditional staple –and not enough on producing livestock feed, experts warned. Nguyen Van Trong, head of the Animal Husbandry Department under the Ministry of Agriculture and Rural Development (MARD), said domestic feed production could not currently meet demand. Promoting investment into that and other supporting sectors for husbandry development will be a major priority in the coming years, according to a draft plan to restructure the livestock sector presented at a recent conference organised by MARD. Viet Nam imported 582,000 tonnes of corn worth $150 million in January, six times the amount imported in January 2013. Le Ba Lich, chairman of the Viet Nam Feed Association, said Viet Nam also imported soybean feed from the US, Argentina, Brazil and India, which use genetically-modified technology to increase productivity. "We need to expand areas that grow genetically-modified crops so we can reduce reliance on imported materials," Lich said. "And the ministry should encourage investment in factories processing fish powder, of which we also import a lot." Tong Xuan Chinh, deputy head of the Animal Husbandry Department under MARD, said the cost of animal feed accounted for 65-70 per cent of the cost of livestock products, so relying heavily on animal feed imports drove up the price of meat. Chinh recommended Viet Nam shift some of the land used for rice cultivation to growing corn and soybeans and use more technology in agriculture. Trong said the Ministry planned to increase corn cultivation area to about two million hectares by 2020. Experts said the Government should implement long-term policies to support farmers to shift from cultivating other plants, provide preferential credit policies for companies to invest in raw material production centres and increase investment in research and technology. Deputy Minister of MARD Vu Van Tam said the livestock sector must act as a driving force for restructuring the entire agriculture sector, ensuring the safety of products as well as the rights of both consumers and farmers. Many sugar firms report declining profits  Among six sugar firms listed on the stock exchange, only Lam Son Sugar Joint Stock Company (Lasuco) saw a rise in profits in last year’s final quarter while others reported declining profits or even incurred losses. According to the financial report of Lasuco, its after-tax profit earned last quarter was over VND11.6 billion compared to losses of over VND35 billion incurred in 2012’s fourth quarter. This helped Lasuco to gain a profit of nearly VND44 billion last year, up some VND10 billion from 2012. Bien Hoa Sugar Joint Stock Company’s after-tax profit dropped by VND13 billion in the fourth quarter to VND33 billion. Its profit amounted to nearly VND116 billion last year compared to VND119 billion in 2012 and VND147 billion in 2011. Meanwhile, Bourbon Tay Ninh Sugar Joint Stock Company obtained VND239 billion in after-tax profits last year compared to VND370 billion in 2012. Similarly, Kon Tum Sugar Joint Stock Company earned over VND6.4 billion in the fourth quarter and only VND13 billion last year, equivalent to 47% of last 2012’s . Gia Lai Cane Sugar Thermoelectricity Joint Stock Company (SEC) reported after-tax losses of nearly VND845 million last quarter compared to its profits of VND4.7 billion in the fourth-quarter of 2012. In a document sent to the State Securities Commission and the HCMC Stock Exchange, director of SEC Cap Thanh Dung said that such losses resulted from the low sugar price and high interest rates. When the 2013/2014 sugarcane crop started last October, the world sugar price stayed at US$480 per ton and continuously dropped to US$448 towards late last year. The price has declined to US$441 per ton this month. The domestic price fell from VND15,000 per kilogram at the crop’s beginning to VND14,000 late last year and VND13,000 currently. VFA sets tougher requirements on rice exporters The Vietnam Food Association (VFA) has required rice traders to have rice cultivation areas of at least 200 hectares each if they want to export rice, a condition that has met many strong objections since it was first suggested. Pham Thai Binh, director of Can Tho City-based Trung An Co. Ltd., a member company of VFA, confirmed the news with the Daily. According to Binh, many enterprises did not agree with the requirement that rice exporters have to engage in cultivation and VFA said the requirement should be piloted. However, a resolution to this effect has been approved by the National Assembly and VFA now forces traders to have cultivation areas of at least 200 hectares. Nevertheless, Binh said that the cultivation zone of 200 hectares was too small and the requirement was too symbolic as such a farming area could yield only some 1,000 tons of rice a crop. Le Van Banh, director of the Cuu Long Delta Rice Research Institute, said that enterprises needed to have at least 5,000 hectares under rice cultivation is the requirement is of any significance and if difficulties of the delta region’s rice farming could be partly addressed. According to Banh, with around 150 rice exporters like now and if one exporter must have at least 5,000 hectares, they will help find outlets for the output from some 700,000-800,000 hectares. “With around 1.5 million hectares of the winter-spring and 1.6 million hectares of the summer-autumn crop, if rice traders, drug firms and fertilizer manufacturers cooperate with each other, I think issues concerning rice consumption and inventory can be dealt with,” Banh said. Trung An Co., Ltd is cooperating with farmers in farming rice in a total area of 21,000 hectares. “Rice varieties we choose are of high quality to meet the demands in Asian and European countries,” Binh at Trung An Co., Ltd said. Source: VEF/VNA/VNS/VOV/SGT/SGGP/Dantri/VIR