Thứ Hai, 31 tháng 3, 2014

BUSINESS IN BRIEF 1/4

Vietnamese seafood available in 156 markets
Vietnamese seafood has been exported to 156 global markets, or 16 more than in 2010, with the European Union, the US, Japan, the Republic of Korea and China being the main consumers.
A March 30 conference in Phu Yen province heard Vietnam now ranks first in the world in terms of Tra fish production and third in shrimp production.
Despite the global and domestic economic difficulties, the Vietnamese fisheries sector has achieved annual growth of 4.85% over the past three years.
It has gradually reduced overexploitation and increased the volume and value of farmed products, significantly contributing to agriculture restructuring.
The meeting announced a fisheries sector restructuring scheme approved by the Ministry of Agriculture and Rural Development on November 22, 2013.
Under the scheme, the sector will increase the added value of its products and the competitive capacity on the market, striving to achieve annual export growth of 6%.
Vietnam joins Malaysia Int’l Tea & Coffee Expo 2014
Vietnamese businesses from the tea and coffee industry are making a hit – especially Trung Nguyen coffee – at the Malaysia International Tea and Coffee Expo 2014 (MITCE) taking place from March 27-31.  
Speaking at the event in Malaysia, organizing board head, Ooi Wee Boon said that tea and coffee are the most important commercial products in Asia and that the Malaysian national consumption has nearly doubled in the past decade, having gone from 14,000 tonnes to 24,000 tonnes.
He emphasized that the exposition aims to promote the exchange of information and economic cooperation in the world’s tea and coffee industry, as well as educate consumers about the positive effects of tea and coffee on health.
Hoang Thi Lien, a trade office representative of the Vietnamese embassy in Malaysia, said in turn that the event provides Vietnamese tea and coffee businesses with an excellent opportunity to display their wares and seek cooperation partners.
Vietnam-Malaysia trade relations have developed positively over the years with bilateral turnover posting an annual increase of 24% in the 2011-2013 period.
Last year, two-way trade turnover hit over US$9.1 billion, including US$850 million from Vietnamese trade surplus.
Positive signs for the economy in Q1
The General Statistics Office (GSO) reports Vietnam has maintained steady economic growth for the fourth consecutive quarter in a row, establishing a trend that bodes well for the economy in 2014.
Entrepreneurial business startups and new venture capital in the reviewed period witnessed exponential growth, according to the statistical agency.
GDP increased by 4.96% in the first quarter of this year, higher than the comparable period for the past two years (4.76% in 2013 and 4.75% in 2012).
The three sectors experiencing higher growth included services (up 5.95%), industry and construction (up 4.69%) and agro-forestry and fisheries (up 2.37%).
The services sector, the engine driving the country’s growth broke down into retail and wholesale services (up 5.61%), stay, food and drink services (up 7.58%) and financial, banking and insurance services (up 5.91%).
The Index of Industrial Production (IIP) increased by 5.2% while manufacturing and processing industry surged by 7.3%.
The employment rate rose by 4.1% in the industry sector, 3.8% in non-State owned enterprises, 6.4% in the foreign direct investment (FDI) sector, and 1.7% in State-owned enterprises.
Three-month export earnings rose 14.1% to US$33.3 billion. Products attaining high export growth include telephone handsets and components, means of transport, tools, footwear and seafood.
Imports were estimated at US$32.3 billion, a year-on-year increase of 12.4%. The high import value, mostly for industrial production, shows the economy is continuing its upward trend reinforced in the previous quarter.
Despite the high import growth, Vietnam still enjoyed a trade surplus of US$1 billion in Q1, or 3% of the country’s total export value.
The foreign direct investment sector produced an impressive performance in the reviewed period, with US$3.9 billion recorded in its trade surplus.
Approximately 4,622 businesses resumed operations in the first quarter, an increase of 48.9% against the same period last year.
Q1 also saw 18,358 newly-registered businesses with a combined capitalisation of VND97,983 billion, up 16.9% in number and 23.4% in capital.
Around 16,745 businesses ceased operations or were dissolved, up 9.6%.
Judging from positive signals in the past three months, the GSO suggests Vietnam go ahead with flexible fiscal and monetary policies to contain inflation and stabilise the macro-economy.
In addition, it says the banking restructuring should be accelerated in a healthy, effective and transparent manner, helping to deal with non-performing loans, increase liquidity, and create conditions for businesses to expand investment and production.
Binh Duong earns high export value in Q1
The southern province of Binh Duong raked in nearly US$3.2 billion from exports in the first quarter of this year, up 12.7% from a year earlier, and meeting 19% of the annual target.
The provincial Department of Industry and Trade says its export earnings in March alone rose 15% from the previous month to US$1,069 million.
The positive result is attributable to an increasing consumer demand in the first quarter in its traditional markets including the US, the EU, Japan, and ASEAN, the department reports.
In addition, the backlog of export orders is continuing to show positive signs as local businesses are reporting high export orders for the second and third quarters, a year-on year increase of 10-15%.
Key export products which saw high growth included timber (US$388 million, up 7.8%), garments and textile (US$448 million, up 28%), and footwear (US$289 million, up 24.9%).
Wood exports hit US$1.4 bil in Q1
Wood product exports are expected to hit US$490 million in March, bringing the total for the first three months of the year to US$1.4 billion, up 20.1% against the comparable period last year
The Ministry of Agriculture and Rural Development (MARD) also reports that wood exports to the US and China increased 19.85% and 57.88%, respectively for the first quarter of 2014 compared to the first quarter of last year, accounting for 52.89% of the country’s total export value.
The Vietnam Timber and Forest Products Association (VIFORES) said that the wood processing sector aims to achieve a target of US$6-6.2 billion in export turnover this year due to its bright prospects.
Last year, export turnover of wood processed items increased over 19%, gaining US$5.5 billion.
Vingroup announces plans to launch into e-commerce
Real estate giant Vingroup has announced plans to expand its leadership presence in the emerging field of e-commerce, establishing a start-up venture headed by its former Chief Executive Officer.
While all of the details have not been shared, the company has announced the formation of an affiliate – VinE-Com Co, Ltd – with chartered capital of VND1.050 billion, for which the company is a 70% stakeholder
Chief Executive Officer (CEO) of Vingroup Ms Le Thi Thu Thuy has been appointed as President of the Executive Board and General Director of Vin-Ecom.
E-commerce plays an ever-increasing important role in the world’s economy and is expected to develop into a highly lucrative market in Vietnam, with average gross revenues between US$1.3 billion and US$1.5 billion forecast by 2105.
According to an annual index report on e-commerce in 2013 by the Ministry of Industry and Trade (MoIT) Department of E-Commerce and Information Technology, Vietnam is one of the leading emerging e-commerce markets in Southeast Asia.
The sheer number of online transactions and the rate of use by businesses of email shot up significantly in 2013 from 2012 and statistics show that roughly 83% of businesses utilized email to process orders in 2013 compared to just 70% in 2012,
Just under 43% of businesses have set up company websites while 35% of those are sophisticated sufficiently to process online orders, compared with just 29% in 2012.
Market research surveys by comScore Inc. in turn confirm these trends and statistics on the Internet situation in Southeast Asia till the end of July 2017.
According to comScore’s research reports, 16.1 million people use the Internet each month in Vietnam, making it the leading nation in Southeast Asia using the internet, followed by Indonesia (13.9 million) and Malaysia (12 million).
Vietnam is also the second fastest nation in the region in terms of the number of internet users. In 2013, it internet users has soared by 14% over 2012, comprising nearly 36% of Vietnam’s population (equivalent to nearly 32 million internet users).
ComScore’s report also states that Vietnam and Thailand have the highest proportion of young internet users in Asia (aged 14-24) with 42% in Vietnam and 45% in Thailand.
Additionally, Vietnam and Thailand take the lead in time spent online by internet users with an average of 26.2 and 27.2 monthly hours, respectively.
According to leading analysts, long online-time use of internet users bodes well for opportunities of online services and e-commerce fields to find a niche in the market, especially in emerging markets like Vietnam and Thailand.
Along with growth in the number of internet users, in recent years, the e-commerce market has also experienced strong developments of online transactions under groups such as Nhommua, Muachung and Hotdeal.
These internet users’ websites continue to prosper and are flexible enough to adjust to the business environment. In addition, there are also numerous online showrooms which have successfully been developed.
Speeding up disbursement of ODA projects
Reforming the approach to managing official development assistance (ODA) infrastructure projects with the aim of speeding up disbursement of funds was the subject of a conference held in Hanoi on March 29.
Deputy Prime Minister Hoang Trung Hai, who is head of the National Steering Committee for ODA and Preferential Loans, said that currently there are too many redundant administrative procedures which slow down the process and hamper the distribution of ODA funds.
He believes that the steering committee and the six ODA development banks (Asian Development Bank, World Bank, JICA, Korea Eximbank, KfW-Germany and AFD-France) need to work directly with each other to improve coordination which will result in more rapid distribution of the funds into the projects.
The Committee reported that in 2013, Vietnam attracted US$5,137 million of ODA, including US$4,686 million from preferential loans, and US$451 million in non-refundable aid), representing a year-on-year increase of 23%.
A high ratio of funding from big donors was disbursed effectively in 2013  with US$ 1,686 million from the Japan International Cooperation Agency (JICA) and US$1,359 million from the World Bank (WB).
In addition, the Asia Development Bank (ADB) level of disbursed ODA exceeded US$1,300 million, the largest it has ever recorded.
Participants at the conference expressed concerns that even though distribution of ODA funds is on the rise, yet more effective disbursement of them could be achieved with better oversight and management of the projects.
They pointed out shortcomings in feasible study reports and consultation work, especially on matters related to technical issues that impede implementation and  retard the disbursement of  investment capital.
Improvements are also need in  expediting site clearance on transport and urban development projects, they said, adding that too much time is wasted clearing the sites and addressing resettlement issues which delay investment in the projects.
The attendees also criticized some bidders and project managers of several transport projects for their lack of quality management and failure to keep the projects on schedule.
Deputy Minister of Planning and Investment Nguyen Chi Dung proposed a package of five key measures to boost the disbursement of ODA funding as follows:
First, administrative reforms, supplements and amendments to a number of existing laws relating to ODA, such as the construction law, the bidding law, and the law on public investment need to be made.
Special attention needs to be paid to completing procedures required by donors, including those on site clearance, resettlement, bidding, financial management, and auditing.
Second, State management agencies need to beef up their exercise of management and oversight of ODA-funded programmes and projects to promptly identify problems and dealt with them effectively before they cause unnecessary delays in the progress of the work on the project and in turn a disbursement of ODA funds.
Third, the National Steering Committee for ODA and Preferential Loans should work hand in hand with the six development banks and, for example, organize regularly scheduled quarterly conferences to review and evaluate the implementation of ODA projects.
Fourth, the responsibilities of project managers and officers on projects needs to be clearly delineated along with clear dispute resolution procedures so that tighter control of the project management construction schedule can be exercised directly by the project manager directly.
Last but not least, it is important to improve the project selection process to ensure that on a cost benefit analysis the selected ODA-funded programmes and projects are the best for the nation and are effectively implemented on schedule, thus pushing up socio-economic development and improving people’ living standards.
Hi-tech updates from Malaysia’s offshore technology conference
Vietnamese representatives joined 15,000 leading experts, scientists and mangers in the oil and gas industry from 65 countries and territories from around the globe at the 2014 Offshore Technology Conference Asia (OTC Asia) in Malaysia on March 25-28.
The event gave them a good chance to exchange knowledge and ideas and share  experience in the development trends of the oil and gas industry.
OTC Asia 2014, the largest of its kind to be held in an Asian country, focused on the challenges facing growth in Asia.
It included an outdoor exhibition covering 10,000 square metres for more than 200 companies to showcase advanced technologies and modern machinery in the field.
Vietnamese delegates took the opportunity to introduce their capacity and latest products and services to international guests.
OTC Asia 2014 was regarded as a great chance for Vietnam to approach oil and gas technological advances and seek hi-tech partners in the industry.          
Shrimp industry protests US imposition of anti-dumping taxes
Attorneys representing the Vietnamese shrimp industry are proceeding to file a petition with the US International Trade Commission (ITC) objecting to the imposition of anti-dumping duties by the US Government.
Shortly after the US Department of Commerce (DOC) issued its decision to impose a penalty tax rate of 9.75% on shrimp exports during the eighth period of review (POR8), Vietnamese exporters strongly objected asserting the tax rates during the POR7 period of zero %, should continue.
Chu Van An, Minh Phu Seafood Joint Stock Company Deputy Director, called the DOC’s decision arbitrary and unfair asserting the anti-dumping allegations are not true and there should be no penalty tax imposed.
Meanwhile, a preliminary tax rate of  4.98% has been levied on his company’s shrimp exports to the US during the POR8 period.
The company is therefore proceeding with the filing of a petition objecting to the decision by the DOC’s on the basis that it violates the ordinary course of conduct business standard established by the parties over the years, among other reasons, An said.
For years there has been no or a low penalty and nothing in the conduct of the parties relationship has changed, he continued.
An said there may have been some misunderstandings or miscommunications with the DOC and the issues may be amicably resolved by getting legal representation to insure there is clear and concise communication and all sides have ample opportunity to thoroughly explain their positions.
If so, we will again have an opportunity to enjoy low tax rates, even zero % six months from now in the next period, he concluded.
A representative from Soc Trang Seafood Joint Stock Company said that his company is following a similar path as Minh Phu Seafood JSC and hopes the issue can be resolved with a fair hearing and the filing of a formal petition.
Singapore-Vietnam trade continues to thrive
Two-way trade between Vietnam and Singapore in the first two months of 2014 enjoyed a year-on-year increase of 20% to reach US$2.2 billion.
According to the International Enterprise Singapore, during January-February, Singapore spent US$377 million on importing products from Vietnam, down 0.2% year-on-year.
Vietnam’s main exports to Singapore include mobile phones and spare parts, boilers, coffee and tea.
Meanwhile, Singapore earned US$1.8 billion from exports to Vietnam, up 25% from the same period last year.
The country’s key exports are petrol and oil products and assorted phones.
Singapore Customs’ statistics show that the two countries’ trade turnover hit US$14 billion in 2013, up 36% from the previous year. Of the total figure, Vietnam’s exports make up more than US$3 billion.
Hanoi strives to raise competitiveness index
Despite climbing 18 notches in the provincial competitiveness index (PCI) list last year, Hanoi still ranks a modest 33rd out of 63 provinces and cities.
The PCI was initiated by the Vietnam Chamber of Commerce and Industry (VCCI) as part of efforts to quantify subjective measures of business competiveness.
Matters pertaining to business environment, quality of economic management and administration reform are difficult to assess, but are highly important factors in measuring business performance.
VCCI President Vu Tien Loc noted Hanoi has gone to great lengths to improve its PCI.
Climbing up 18 notches demonstrates that the capital city is fully committed to implementing programmes to raise the index, and their highest accomplishments have been in human resource training and services support.
Other indices which have witnessed dramatic increases are transparency and information accession, up 26 notches compared to 2012, ranking the capital 13th out of 63 provinces and cites.
Businesses report that they highly value information from the Hanoi Portal, leaping up 12 places to come in 4th out of all 63 provinces and cities.
PCI research group reports the overall market access cost index in 2013 was stable. The length of time required to obtain a land use rights certificate was cut from 30 days to 20 days, climbing up 43 notches to 4th position.
In addition, Hanoi’s other indicators are lower than the country’s average level, such as access to land, stability in land use, time spent on enforcing State regulations, informal costs, proactive municipal leadership and legal institutions.
Dau Anh Tuan, Head of the VCCI’s Legal Department, said if Hanoi further improves the quality of management and administration procedures, it will attract more investors, particularly those from the EU.
A locality has a high PCI when it has low market access costs, easy access to land, stable land use, transparent business environment, easy access to business information, low informal costs and high quality of support services, Tuan said.
Pham Van Khanh, Vice Director of the Municipal Department of Natural Resources and Environment, said the department granted 1,200 land use rights certificates last year, meeting 120% of the set target. It plans to hand out 2,000 such certificates this year and cut the licensing time to less than 20 days.
Currently, the city has detailed development zoning plans, making it easier for investors to follow and make a decision, and helping them feel secured about their investment.
Khanh revealed that the department regularly holds meetings and talks with businesses to timely address their concerns..
Vu Xuan Bach, Deputy Head of the Hanoi Taxation Department, said the department is streamlining tax declaration procedures, striving to shorten the period from the current 10 days to 6 or even 2 days.
It has eliminated 32 improper administration procedures and offered online services to support businesses.
Pepper exports up in value, volume in Q1
Vietnam’s pepper exports jumped 29.4% in volume to 49,000 tonnes and 32.3% in value to US$331 million in the first three months of 2014, compared to the same period last year.
The Ministry and Agriculture and Rural Development (MARD) reported that 25,000 tonnes of pepper worth US$170 million was shipped abroad in March at an average price of VND6,828/tonne, or 3% higher than the same period last year.
MARD announced that the US, Singapore and India emerged as Vietnam’s largest pepper consumers, accounting for 43.63% of total market share.
According to the Ministry of Industry and Trade (MoIT), the country is currently the world leader in terms of pepper output and export volume, and plays a key role in stabilizing the global pepper market.
The Vietnam Pepper Association (VPA) predicts the country’s pepper output may reach 120,000-125,000 tonnes by the end of 2014, posting  export revenue of US$900 million.
Last year, Vietnam raked in US$899 million from exporting 134,000 tonnes, or a year-on-year increase of 15% in volume, and over 13% in value.
Vietnam learns to develop energy market
Navigating the risks and obstacles in developing Vietnam’s energy market was the topic of an international seminar held in Hanoi on March 28.
An elite group of leading scientists, economists, government officials and energy executives from around the globe participated in the seminar to explore the challenges inherent in developing the market.
It was reported that in the 2010-2013 period, the annual output of Vietnam’s energy increased by 14%, fulfilling 98% of local people’s demand, and gradually ensuring national energy security.
However, delegates agreed the domestic energy market reveals a number of shortcomings, including the imbalance between supply and demand, an inefficient use of energy, and unsteady energy development.
They spoke of scientific basis for a genuine energy market, stressing the need to develop a market-based price mechanism to regulate the law of supply and demand.
They said such a mechanism must be developed in a transparent manner and take into account input costs and competitive factors.
To boost energy development, they said it is essential to delineate detailed plans for different energy sectors, including electricity, coal, oil and gas, new energy, and renewable energy, while intensifying management oversight.
Delegates also dilated on speeding up the restructuring of State-owned enterprises in the energy industry, building a healthier competition environment, as well as encouraging the engagement of the private economic sector in the industry.
They also underlined the need to promote scientific research and new technology application, especially in such areas as exploration and exploitation of coal, and oil and gas.
The seminar was the result of a joint effort by the Party Central Committee's Economic Commission, the Ministry of Industry and Trade, and the Vietnam Energy Association.
EuroCham Vietnam selects new leader
The European Chamber of Commerce in Vietnam (EuroCham) has elected Nicola Connolly, General Director of Adecco Vietnam, its chairwoman.
The announcement that she was selected to replace outgoing Preben Hjortlund, who has served as president for the past two years, came at EuroCharm’s recent annual meeting simultaneously held in Hanoi and HCM City.
Connolly said she embraces the appointment as “a new beginning for Eurocham” and is wholeheartedly committed to improving the chamber’s activities to elevate the image of Vietnam throughout the world’s business community as an attractive investment destination.
Connolly said it is her honour to lead the organization and have the opportunity to work with the Vietnamese Government, Eurocham members, and Vietnamese and European partners in a concerted effort for a more prosperous Vietnam.
Member businesses also elected Remco Gaanserse, who is Chief Representative of ING N.V Bank its Standing Vice President in Hanoi.
Five Vice Presidents were also announced, namely Tomaso Andreatta - Chief Representative of Intesa Sanpaolo Bank; Michael Behrens - General Director of Mercedes Benz Vietnam; David John Champion – Executive Director of Bayer Vietnam; Kristof Claes – Partner Marketing at Brand Partner; and Thien-Nga Ngo-Rocaboy – General Director of eXo Platform.
The Chamber’s 16-member executive board includes representatives from nine different European nationalities and a number of high-profile businesses in Vietnam.
Urban consumers reduce cash payment
Consumers in some big cities tend to reduce bringing cash when going shopping, and instead use card for payment, according to a study just released by the global payment technology company Visa.
The Payments and Cards market in Vietnam study was conducted between 2012 and 2013 in Hanoi, Danang, HCMC and Haiphong by TNS Vietnam on behalf of Visa Vietnam.
When asked what payment method made them feel they were being smart with their money, credit cards came out on top at 53%, while debit cards and cash scored 38% and 30%, respectively. Similarly, credit and debit cards scored the equally highest in terms of consumers feeling like they were doing the “right thing” with their finances.
“These results reflect a very positive outlook for the growth of electronic payments in this rapidly developing market. In an economy that is heavily reliant on cash, these figures are certainly encouraging,” said Lorijon Bacchi, Visa country manager for Vietnam, Cambodia, and Laos.
The study also uncovered some interesting attitudes towards cash, which is currently the predominant payment method in Vietnam. Some 42% of the respondents felt safe carrying credit cards, but only 20% felt safe having cash along. 19% indicated they felt vulnerable while carrying cash, and only 4% felt vulnerable carrying credit cards.
Project kicks off to dredge waterway to Hau River
The project to dredge and upgrade 46.5 kilometers of the Hau River and nearby canals in the Mekong Delta region was resumed last Saturday after years of suspension caused by capital shortage.
It is expected that big vessels can enter the delta region late next year to transport goods, according to the Vietnam Maritime Administration as the project owner.
The project’s investment amount has been revised up to VND9.781 trillion compared to around VND5 trillion estimated previously. Major components like building a breakwater of 2.4 kilometers and dredging the river for ships of 10,000-20,000 tons will be finished late next year.
The second phase, to be executed after 2015, will include embankments along the Hau River and Chanh Bo Canal, a station for barges of 500 tons, roads along the waterways and connecting roads, and the signal system.
The project to dredge the waterway passage to the Hau River was first started in late 2009 and was scheduled for completion in 2012. However, the project was put off due to financial problems.
Due to the importance of the passage, the Ministry of Transport had petitioned the Government to resume work on the project.
According to the Vietnam Maritime Administration, the volume of cargo transported via waterways in the Mekong Delta in 2012 was only 6.6 million tons compared to the demand of 30 million tons. Up to 80% of import-export cargoes had to transit in HCMC before being shipped to the buyer, since the Hau River waterway only allows for vessels of 5,000 tons, causing the transport cost to surge by US$170-180 a container.
Once the passage is completed, commodities from the Mekong Delta can be shipped directly overseas.
In related news, Soai Rap waterway leading to Hiep Phuoc port complex in southern Saigon is expected to open on April 19, slashing the time for vessels to enter the port complex, said the port operator.
Nguyen Ngoc Quynh, deputy general director of Saigon Premiere Container Terminal (SPCT), told the Daily that Soai Rap waterway will be completed ahead of schedule earlier set for June 2014. The waterway will cut by half the time needed to transport cargo into the port compared to the current passage via the Long Tau River, as well as to assist HCMC’s group of ports in taking larger vessels.
Long Tau waterway is 8.5 meters deep compared to 9.5 meters of Soai Rap. The Soai Rap dredging project aims to make Hiep Phuoc the main southern gateway, she added.
The project incorporates three phases. The first one aimed to dredge the passage to a depth of 9.5 meters, allowing vessels of 30,000 to 50,000 tons to navigate. The second phase targets a depth of 11 meters, handling ships of 50,000 to 70,000 tons. The last is 12 meters in depth, accommodating vessels of over 70,000 tons.
Vessels from the East Sea and the Mekong Delta to HCMC via Soai Rap can shorten the distance, thus facilitating the city’s maritime economy and stimulating development of other ports nearby.
“SPCT is the first foreign-invested terminal in Vietnam able to handle 1.5 million twenty-foot equivalent units (TEU). It is also connected to other ports such as Phuoc Long ICD, Dong Nai, and Phu Huu to support enterprises with barge services,” said Quynh.
At the moment, there are 11 international carriers using the services at the port. SPCT in 2003 saw a throughput of 250,000 TEUs, or nearly 25% of the capacity of the port.
“As Soai Rap is widened, the port’s operating costs will drop significantly and transit will be easier,” added Quynh.
Improved PPP legal framework pledged
Viet Nam will improve the legal framework for creating favourable conditions for benefiting investors and state and public service users in public-private partnership (PPP) projects, a Ministry of Planning and Investment senior official has said.
Le Van Tang, head of the ministry's Bidding Management Department, addressed a consultation workshop held yesterday to discuss the draft decree on PPP.
He further added that currently, Viet Nam has set regulations over the co-operation between the State and private sector, including the 2009 Decree No. 108/2009/ND-CP on the investment in forms of build-operate-transfer, build-transfer-operate, and build-transfer contracts and the 2010 Decision No. 71/2010/QD-TTg on promulgation of regulation on pilot investment in PPP form.
However, Tang clarified that the shortcomings were revealed during the implementation of the regulations, which impelled Viet Nam to improve the legal framework in this field, especially when it has a huge demand for infrastructure development but has tightened its public spending and wanted to mobilise its resources from the private sector.
Last September, the Prime Minister approved the development of a PPP decree that consolidates the Decree No. 108 and Decision No. 71. So far, three drafts of the PPP decree have been introduced and the fourth draft is expected to be submitted for the Justice Ministry's appraisal next month. It will thereafter be submitted for receiving the Government's approval in May.
Minister of Planning and Investment Bui Quang Vinh, who is also the leader of the drafting committee of PPP decision, said that compilers must consider themselves as investors to gauge expectations.
Under the third draft decree introduced yesterday, the PPP investment was defined as the implementation of projects based on a contract on the rights, responsibilities, and risk allocation between an authorised state agency and the investors for investment, construction, restoration, modernization, expansion, management and operation of infrastructure facilities, and provision of public services in sectors including transportation, water supply and drainage, power plans, and healthcare.
The draft also has a separate chapter on investor selection and signing of the investment agreement and project contract as well as a chapter on the responsibilities of parties with respect to project preparation and implementation.
Tang remarked that the procedures for the PPP projects would be more simplified and favourable for the investors.
"Any public investment projects that can be executed under the form of PPP investment will be given priority," Tang added.
Under the draft, investors and the project enterprise shall be entitled to incentives, support, and guarantees in investment, corporate income tax, and import tax, if they import goods to implement a PPP project.
Moreover, they shall be exempted from land use fees for the areas of land allocated by the state or be exempted from paying land rent for the entire term of the project implementation.
The PPP decree will not impose the proportion of the state's contribution in PPP projects and the contribution will be identified based on certain financial foundation of the projects. In contrary, under the Decision No. 71, the State's contribution can be at the most 30 per cent of the project's investment, which may detract investors from huge projects.
As per Decision No. 71, investors are not encouraged to submit the PPP project proposal and only the Prime Minister can approve PPP projects. The PPP decision is expected to fix the shortcomings to be at par with international practices.
EVN ensures power supply during dry season
Vietnam Electricity (EVN) plans to produce and buy 140.5 billion kWh this year, a 9.9 percent increase on 2013, to meet the increased demand during the coming dry season in the north and to provide sufficient power for the south, the Vietnam Economic News reported on March 18.
EVN said that the power industry would produce 391 million kWh per day this March and would make the most of hydropower plants, coal-fueled thermopower plants and gas turbines to ensure sufficient power during the dry season.
EVN General Director Pham Le Thanh told the paper that the EVN produced 9.455 billion kWh this February and a record 384.4 million per day during the month to meet demand for power for socio-economic development and domestic use. Power production amounted to 19.79 billion kWh in the first two months of the year, a 5.5 percent increase from the same period last year.
EVN said that major power resource projects kept up with the schedule. In the first two months of the year EVN inaugurated Turbine 1 of the 622MW Vinh Tan 2 Thermopower Plant and Turbine 2 of the 300MW Hai Phong 2 Thermopower Plant.
It also began work on the 600MW Thai Binh Thermopower Plant and the Vinh Tan 4 Thermopower Plant on March 9. Vinh Tan 4 is expected to contribute to providing sufficient power in the south in an economical manner, reducing power transmission from the north to the south, reducing power loss and increasing safety, stability and economy of the power system. These major projects could provide stable power in the next two to three years.
The national power system has a total design capacity of 26,700MW, of which 20,400MW could be produced compared with the need of 18,600MW. The industry would produce an additional 4,466MW this year.
EVN Southern Power Company (SPC) Deputy General Director Pham Ngoc Le said that EVN SPC set a goal to produce 44,120 million kWh of commercial power and save 882 million kWh this year. It would also try to ensure sufficient power for the south during the dry season.
According to the EVN General Director, EVN had put into operation several hydropower plants so as to not reduce power supply in the south during the dry season.
This February EVN also began operation of Turbines 1 and 2 of the Song Giang 2 Hydropower Plant, Turbine 2 of the Dakdrinh Hydropower Plant and Turbines 1 and 2 of the Dong Nai 2 Hydropower Plant, which have a combined capacity of almost 170MW.
It accelerated the pace of construction of the 500kV Cau Bong Transformation Station, 220kV Cau Bong-Cu Chi Transmission Line and 220kV Cu Chi Transformation Station in preparation for launching the 500kV Pleiku-My Phuoc-Cau Bong Transmission Line at the end of this coming April and before the demand increases to peak levels in June-July in the south.
The new 500kV transmission line is expected to increase flexibility of the power supply system, reduce power loss by 1-2 percent, or 1.3-2 billion kWh per year, and reduce the pressure for the southern power system during the dry season.
Pham Le Thanh believed that putting new turbines into action and building new power projects this year could increase power supply and reduce black-out in the south during the dry season.-
Esquel opens new facility in the north
Esquel Group Esquel Enterprises (Singapore) Pte, a subsidiary of Hong Kong based clothing giant Esquel Group, opened its $25 million garment project in the northern province of Hoa Binh today.
The project is divided into two phases with designed capacity of 11.52 meters of garment per year. The firm was licensed in 2012, covering 70,000 hectares in Hoa Binh’s Luong Son Industrial Park.
This will be Esquel Group's third plant in Vietnam, and joins its existing 13-year-old facility in the southern Binh Duong province which now employs 3,900 employees as well as another factory in the neighbouring Dong Nai province with 1,400 employees.
According to the Esquel Enterprises (Singapore), all products made at the plant will be exported to the group's international brand clients including Hugo Boss, Lacoste, Marks & Spencer, Nike, Ralph Lauren and Tommy Hilfiger.
Esquel Group is one of the world leading producers of premium cotton shirts. With production facilities in China, Malaysia, Vietnam, Mauritius and Sri Lanka, and a network of branch offices serving key markets worldwide with the total number of employees of 54,000.
PVC begins divestment drive
PetroVietnam Construction last week announced that it would divest from 13 listed companies by the end of 2015 but its proposal could face difficulties as it targets a par value payment on its shares.
The order-matching price for each share will meet the market price at the moment of sale but it must not be lower than the share value when Petro Vietnam Construction or PVC (coded PVX) invested in the company. The divestment will begin from March 10 and run until December 31, 2015.
The corporation has contributed trillions of dong to the 13 companies, but many of them have reported losses for many consecutive years.
Noticeably, two companies managed consecutive losses running over three years - PVC-Saigon (coded PSG) racked up three year total losses of VND547 billion ($26 million) for 2011-2013, exceeding the charter capital of VND350 billion ($16.6 million) and PVC-Nghe An (PVA) booked a loss of VN175 billion ($8.3 million).
Several other companies ignominiously achieved losses over 2012 and 2013 such as PVC-PetroLand (PTL) which recorded total losses of nearly VND140 billion ($6.7 million); Vinaconex-PVC (PVV) with a two year losses of VND105 billion ($5 million) and PVC-Dong Do (PFL) with a loss of VND100 billion ($4.8 million).
Most shares on the divested list are now worth less than par value of VND10,000 ($0.47) per share. Therefore, it will prove difficult for PVC to withdraw capital from these companies at prices not lower than when they bought them.
The PVC board also approved a plan to divest from unlisted Ha Long Cement JSC and PetroVietnam - SSG Real Estate JSC at market price, but not lower than the par value of VND10,000 per share.
PVC’s member companies have suffered losses over the past three years which has negatively affected the business results of the mother company due to the difficult economic situation and struggling real estate market.
In 2013, PVC achieved a net revenue of VND5,096 billion ($242.6 million), up 14 per cent year-on-year, but it still saw a net loss of VND2.6 trillion ($123.8 million), double that of 2012.
As of 2013, the corporation’s short-term loans rose to VND12,113 billion ($577 million) which exceeded its short term assets of VND10,875 billion ($518 million). Cumulative losses reached VND3,342 billion ($159 million), while its equity remained at just VND808 billion ($38.47 million), much lower than the initial investment capital of VND4 trillion ($190 million).
Listing proposal to up transparency
The Ministry of Planning and Investment’s Development Strategy Institute has issued a proposal to ensure the performance of state-owned enterprises becomes more transparent.
At discussions at the Ministry of Planning and Investment (MPI) last week on the draft of Vietnam’s hallmark economic institutional reform project for the next 15 years, the institute suggested that the government should embrace regulations on forcing state-owned enterprises (SOEs) to list on the country’s stock markets.
“It would need time for SOEs to do this. It would also probably need about a year to enact the regulation and for it to take effect. All SOEs would be forced to make clear their performance via their listing on the stock market,” said Bui Tat Thang, head of the institute assigned by the prime minister to draft Vietnam’s socio-economic plans and strategies.
“The stock market is one of the best ways of raising capital and it insists on transparency. The presence of SOEs on the market would allow private investors to improve the efficiency of SOE operations,” Thang said.
The proposal received a thumbs-up from MPI Minister Bui Quang Vinh.
“It is a good idea helping boost the sluggish pace of equitisation. I also think that the best solution is to define which SOEs would need to be liquidated and retained. The problem now is to maximise SOE equitisation, so that private investors can engage in the sectors currently dominated by SOEs,” he stressed.
The prime minister in early March issued Announcement 85/TB-VPCP on the restructuring of SOEs during the 2014-2015 period. He ordered ministers, chairpeople of people’s committees of provinces and cities, and chairpeople of the economic groups to take responsibility for SOE restructuring and equitisation under their charge. Those who blocked reform or were too slow in enacting change could be removed or assigned to other posts.
The National Steering Committee for Enterprise Renovation and Development reported on the pace of equitisation (see table), valuing the shares issued at nearly VND19 trillion ($905 million).
“The current equitisation process is too slow,” Vinh said.
Regarding SOE divestment, only some VND4.1 trillion ($195.2 million) of nearly VND21.8 trillion (over $1 billion) worth of non-core investments has been withdrawn by SOEs, according to the committee.
Some 432 SOEs will be equitised during the 2014-2015 period.
After the conclusion of the current round of equitisation, Vietnam will still possess 485 wholly state-owned SOEs by 2015. The government has committed itself to issuing criteria on classifying the remaining 100 per cent state-owned firms with an eye to their future equitisation.
Sugar stockpile proves bitter harvest
Vietnam-based sugar producers are facing bankruptcy because of poor anti-smuggling efforsts which have contributed to a domestic market surplus.
According to Vietnam Sugar and Sugarcane Association (VSSA), Vietnam produced an estimated 300,000 tonnes of sugar in March, while Vietnam’s sugar inventory is likely to hit 500,000 tonnes by the end of the month.
The association’s general secretary Nguyen Hai said the sugar inventory in the first months of this year had already topped last year’s 300,000 tonnes. Hai told VIR that local sugar firms were struggling and Long My Phat and the Hau Giang Sugar Company had already shut two plants.
“Other plants in Ben Tre, Tra Vinh, Soc Trang and Hiep Hoa have been operating at only moderate levels,” he added.
He said high inventories were the by-product of slow demand and illegally imported sugar from Thailand via Cambodia, which currently accounts for 70-80 per cent market share in the Mekong Delta. He also worried that high inventories would force sugarcane prices down, leaving farmers to suffer.
According to domestic sugar firms, they now suffer losses of over VND1,000 for every kilo they sell. Despite incurring losses, firms cannot lower the price of the sugarcane they buy from local farmers.
The black market in sugar had also damaged tax coffers and unfairly penalised Vietnamese sugar firms, said Nguyen Ba Chu, general director of Bourbon Tay Ninh Corporation, Vietnam’s biggest listed sugar company.
“While smuggled sugar has no tax, sugar producers in Vietnam have to pay 15 per cent tax including 5 per cent value added tax and 10 per cent corporate income tax. Vietnamese sugarcane costs from $45-$50 per tonne, while in Thailand, India and Cambodia it is only $35-$38 per tonne,” Chu explained
The price of sugar has continuously dropped, sinking to around VND13,000 per kilo wholesale and VND 18,000-VND21,000 a kilo retail while illegally imported sugar costs just VND11,000-VND12,000.
Vietnam’s sugar prices are the highest in the world,” Chu said. “However, it is hard to cut as the price is directly related to the life of the sugarcane growers.”
However, general director of Khanh Hoa Sugar Joint Stock Company Do Thanh Liem, who declined to release its inventory, said that in fact the domestic sugar price was out of step with the rest of the region and smuggled imports were hurting the domestic industry.
Last year the Hanoi Stock Exchange-listed Khanh Hoa Sugar Joint Stock Company’s after-tax profits plummeted 67 per cent to VND 39 billion ($1.85 million).
Other listed sugar firms that shared a gloomy year on the markets included Kon Tum Sugar Joint Stock Company and Gia Lai Sugar-Thermal Power Company.
VSAA also estimated that every year, Vietnam was missing out on VND500 billion ($23.8 million) in tax from smuggled sugar.
The Ministry of Industry and Trade earlier this year set a 77,200 tonne annual limit on imported sugar.
Source: VEF/VNA/VNS/VOV/SGT/SGGP/Dantri/VIR

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