BUSINESS IN BRIEF 14/3 De Heus to build two new factories in Vietnam De Heus, a global leader in the production of animal feed from the Netherlands, said it plans to build two additional factories in Vietnam by the end of 2015, bringing its total number of production centres in the country to seven. Several days ago De Heus broke ground on its fifth factory in northern Vinh Phuc province. The new facility, estimated at $30 million, will produce feed for pigs, poultry, cows and aqua with an annual capacity of 150,000 tonnes in its first phase. “Currently De Heus animal feed products are mainly sold in the south of Vietnam and exported to Cambodia, Myanmar and the Philippines. The factory in Vinh Phuc is to expand the consumption of De Heus products in the north of Vietnam,” said Gabor Fluit, De Heus Vietnam’s general director. He added, “Our difference from others lays in our product quality and management method. We not only sell animal feed, but also support farmers with animal raising techniques.” De Heus is a top ten animal feed producer in Vietnam with an output of 385,000 tonnes last year. The company is trying to make it into the top five producers in the near future. Vietnam furniture exporters can still sharpen edge Wooden furniture producers still have many advantages in cutting costs and improving product quality to sharpen their competitiveness in the international market, said a local industry source at a furniture exhibition in HCMC on March 11. Huynh Van Hanh, vice chairman of the Handicraft and Wood Industry Association of HCMC (HAWA), said at the opening ceremony of the exhibition VIFA EXPO that among the ten biggest wooden furniture exporting countries, Vietnam enjoys good conditions to boost competitiveness. “Vietnam has many advantages in terms of production potential and opportunities. If there are right policies, Vietnam can raise its global market share from the current 1.5% to 5% in the next five years, meaning additional revenue of US$15 billion,” Hanh said at the seventh Vietnam International Furniture and Home Accessories Fair (VIFA EXPO). The total export turnover of Vietnam’s wooden furniture this year is predicted to reach more than US$6.5 billion, increasing by 20% compared with nearly US$5.6 billion in 2013, while domestic sales of the industry are estimated at US$2 billion. This year’s VIFA EXPO features many domestic wooden furniture producers with their newest indoor and outdoor products using environmentally friendly materials that can compete with products from Thailand, Malaysia and China. The number of foreign viewers coming to the expo on the morning of March 11 is higher than expectation of the organizer. “We have equipped six computers and four printers to give updated information about foreign customers visiting the fair but such machines are still overloaded as the number is big. In the next three days if foreign viewers continue to come like this morning then it would be a success that goes far beyond our expectations,” he said. VIFA EXPO, held in four days at the Saigon Exhibition and Convention Center in HCMC’s District 7 by the HCMC Department of Industry and Trade, HAWA and HAWA Corporation, has seen participation of 141 enterprises with 625 stalls, up 3% over last year, of which 18% belongs to nine foreign countries and territories such as Belgium, Denmark, Australia, China, Taiwan, South Korea, and Japan. The stall displaying products that won Vietnam’s Apricot 2013-2014 award, an annual wooden furniture designing contest held by HAWA, attracted many foreign customers as the products show unique designing ideas and is useful for houses in cities. VND2.13 trillion for 8 kilometers of expressway Vietnam Expressway Corporation (VEC) has started work on an eight-kilometer section of the expressway connecting Danang City and Quang Ngai Province with an investment of over VND2.13 trillion. According to VEC, this section in Danang City, known as Package No. 1, includes construction of Tuy Loan intersection, 6.3 kilometers of road on the soft ground, seven bridges, 11 sluices and 33 drains. Civil Engineering Construction Corporation No. 5 and Civil Engineering Construction Corporation No. 1, two units about to launch initial public offering (IPO), are in charge of implementing this package. On March 4, VEC signed a deal with the consortium consisting of Vietnam Construction and Import-Export Corporation, Thanh An Corporation and Vinaconex Technical and Construction Investment Joint Stock Company to build ten kilometers (Package No. 6) of Danang-Quang Ngai Expressway. Package No. 6 going through Quang Nam Province’s Thang Binh District has an investment of VND1.370 trillion. Danang-Quang Ngai Expressway was officially kicked off on May 19, 2013 and expected to open to traffic in 2017. Stretching 139 kilometers, the expressway allows for a designed vehicular speed of 120 kilometers per hour. Other supporting works of the expressway comprise the traffic control center, the operation and maintenance center, a service station, rest stop, toll station and intelligent traffic system (ITS). The expressway’s total investment is nearly VND28 trillion, or US$1.472 billion, with World Bank loans accounting for US$631 million, loans from the Japan International Cooperation Agency (JICA) US$673 million, and Vietnam’s reciprocal capital accounting for the balance. After completion, Danang-Quang Ngai Expressway will not only help shorten transport duration in central provinces, especially from Danang City to Quang Nam and Quang Ngai provinces but also reduce traffic volume on National Highway 1A. It will also facilitate international transport among Vietnam, Laos and Cambodia via the East-West Economic Corridor to ports in central Vietnam. Vietnam Airlines spends large on insurance Vietnam Airlines has spent nearly US$20 million on aviation insurance for the year 2014 plus about VND10 billion for other insurance expenses. The company has signed contracts valued at US$4 billion for this year with PetroVietnam Insurance Joint Stock Company (PVI), Vietnam Aviation Insurance Joint Stock Company (VNI) and Bao Viet Insurance Joint Stock Corporation. According to the contracts, the contracts cover aircraft body insurances, liability insurance for passengers and aircrews, war risks, hijacking and terrorists among others. Besides, the air carrier has also spent around VND10 billion on other insurance policies for pilots, aircrews and ground services. According to the Finance Ministry’s Insurance Management and Supervision Department, the insurance revenue in Vietnam reached VND24.36 trillion in 2013, or 6,6% higher than in 2012. For the non-life insurance sector, Bao Viet Insurance took the lead with 23.1%, followed by PVI with 21%, Bao Minh 9.47% and PJICO 8.11%. AIA Vietnam reports growth in 2013 Life insurer AIA Vietnam has preliminarily reviewed its business results for the fiscal year that ended November 30, 2013 with value of new business up 58%. The firm has also estimated a 35% increase in pre-audit annualized new premiums during the period. Stephen Clark, chief executive officer of AIA Vietnam, said in a statement released late last week that 2013 was a challenging year for the life insurance industry in the nation. Concerning this year’s strategy, Clark said AIA Vietnam continues focusing on developing the professionalism of its agencies. “We have to improve all aspects of our business to bring real satisfaction for all customers,” he said. Vietnam only needs fewer large banks Vietnam needs only 30-40 large banks to ensure the sufficient supply of capital for national enterprises, said Dr. Tran Hoang Ngan from the National Advisory Council on Monetary and Financial Policies. According to Dr. Ngan, if Southern Bank and Sacombank successfully merge, the country will still have a total number of 62 banks. “It is difficult to say how many banks are enough to supply enough capital for the national economy because this depends on size of each bank and the banking system,” Ngan said. If the merger plans continue, the country will likely end up with around 30-40 banks. If these banks are large enough, they will be able to meet the demand for capital for an economy with a GDP from 2-3 times higher than it is now. He added that, “If we have hundreds of smaller banks, they would fail to meet the capital demand for the economy.” In 2010 Vietnam’s GDP surpassed USD100 billion for the first time. At that time, Vietnam had nearly 100 banks of different kinds. Due to the large number of banks compared to real demand, many banks suffered from bad bussiness, forcing the government to carry out a restructuring plan to remove weak banks through means such as mergers and acquisitions. Besides the mergers and acquisitions, the government can use state-owned commercial joint stock banks such as Joint Stock Commercial Bank for Foreign Trade of Vietnam (Vietcombank), Bank for Investment and Development of Vietnam (BIDV), Vietnam Joint Stock Commercial Bank for Industry and Trade (VietinBank) to buy stakes in poorly-performing banks to help restructuring. After mergers, banks will be stronger in terms of both capital and network expansion, the two most important factors in banking operations.The mergers will also help to simplify operations and costs, raising the overall efficiency of banks, according to Dr. Ngan. 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 1.2 billion USD. Vietnam's Fruit and Vegetables Association (Vinafruit) was quoted as saying fruit and vegetable exports jumped more than 22% against a year earlier to 136 million USD in the first two months of this year, according to radio The Voice of Vietnam (VOV). 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 (China) finalised 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 and star apple exports. Vinafruit also said 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 1.04 billion USD, nearly 200 million USD more than the figure in 2012. China was Vietnam’s biggest importer, accounting for 27.6 percent of the local market share. It was followed by Japan with 5.59 percent and the US with 4.7 percent. Vietnam’s fruit and vegetables are now present in 40 markets around the world. Best sellers include dragon fruit, grapefruit and frozen and canned vegetable.- Vinh Tan 2 plant ready to generate power The first turbine of Vinh Tan 2 thermal power plant in the central province of Binh Thuan will start generating electricity for the national grid on March 15. According to Do Hoai Nam, an official from the project’s management board, the first turbine is able to generate 600 million kWh in the first six months of 2014, helping significantly reduce power shortages in the southern province during the dry season. Meanwhile, the second turbine of the plant is expected to join the national grid on July 10, Nam said. The two-turbine Vinh Tan 2 plant with a combined capacity of 1,244MW shapes part of the Vinh Tan Power Centre, the country’s largest coal-fired power station, comprising of Vinh Tan 1, Vinh Tan 3, and Vinh Tan 4. Invested by EVN Power Generation Company 3, construction on Vinh Tan 2 started in 2010. Vietnam enjoys 2 bln EUR trade surplus with France Vietnam enjoyed a trade surplus of over 2 billion EUR with France last year, slightly lower than a record 2.1 billion EUR seen in 2012. French customs statistics showed that two-way trade between Vietnam and France grew 6 percent from 2012 to 3.5 billion EUR, including 2.79 billion EUR in Vietnam’s exports and 704 million EUR in imports, up 4 percent and 14.7 percent, respectively. France remains one of Vietnam’s leading European markets despite the regional economic turndown. It spent 956 million EUR on Vietnam’s mobile phones and accessories, 484 million EUR on footwear and 323 million EUR on garment, among others. Notably, France’s spending on pharmaceutical materials shot up over 300 percent year-on-year, from 36,000 EUR to 142,000 EUR. Meanwhile, pharmaceuticals topped Vietnam’s imports from France with a value of 142.6 million EUR, followed by electronic goods and spare parts with 49.7 million EUR and mechanical products worth 49 million EUR. Aviation equipment, mainly aircraft and satellites also posted an impressive import value, from 6 million EUR in 2012 to 106.6 million EUR in 2013. Commercial counsellor of the Vietnamese Embassy in France Nguyen Canh Cuong said Vietnamese exporters of consumer goods see bright prospects in France ahead as their products well cater to mid-end and low-end French markets.- Export to US increases 26.5 percent Vietnam has raked in 3.9 billion USD from its exports to the US since the beginning of 2014, a year-on-year surge of 26.5 percent, according to latest statistics released by the General Department of Customs. The garment and textile sector, which contributed 36 percent (8.6 billion USD) to the national export earnings from the US market in 2013, continued to lead exports to the US this year, followed by wooden products, aquatic products, and footwear. Domestic importers have spent 936 million USD purchasing goods from the US in the reviewed period, a year-on-year increase of 22.4 percent. In total, two-way trade turnover between the two countries in the first two months of 2014 reached an estimated 4.9 billion USD, up 25.8 percent from one year ago. Last year, two-way trade reached 29.10 billion USD, a year-on-year hike of 18.8 percent, of which 23.87 billion USD was Vietnam’s export earnings. EU-funded project promotes sustainable aquaculture Outcomes of the EU-funded “Sustainable Trade in Ethical Aquaculture” (SEAT) project, which was implemented in the Mekong Delta region from 2009-2013, were announced on March 12 in Can Tho city. Coordinated by the University of Stirling in Scotland, the project was conducted in Vietnam, Thailand, China and Bangladesh, which are main aquatic product exporters to markets in the EU. It aimed to analyse aquatic production chains and their impact on socio-economic development, environment, food safety and community health, thus mapping out development orientations and enhancing sustainability of aquaculture in Asia. In addition, it has also investigated the social and ethical effects of aquaculture in the countries. Assessments from the project showed that the chemical residue in Vietnam’s products exported to the EU is not dangerous to users. The rate is only equivalent to those produced in the bloc. Through the project, the countries were encouraged to establish an international standard on the maximum limit of chemical residue in their aquatic exports. Southeast Asia forum explores green growth funding Policy-makers and climate change experts from Southeast Asia have discussed ways of financing low-carbon green growth in the region at a workshop held on March 12 in Hanoi. The participants also held a dialogue to explore options for funding green investments in energy, transport, agriculture, and manufacturing. The two-day workshop was hosted by the Ministry of Planning and Investment with support from Asia LEDS Partnership's members, including the United Nations Development Programme, US Agency for International Development, and the World Bank. "Investment in low-carbon technologies, businesses, and infrastructure are central to achieving green growth," stated Orestes Anastasia, the co-chair of the Asia Low Emission Development Strategies Partnership. It can simultaneously help reducing poverty, increasing economic competitiveness and energy security, and reducing emissions that contribute to climate change, he emphasised. In the meantime, achieving green growth requires a significant shift in investment, and identifying and accessing new sources of climate change funding, as well as mainstreaming climate change and environmental aspects into business financing strategies, all of which continue to pose key challenges to the governments, businesses, and other organisations that seek ways to implement low-carbon strategies, the participants noted. In response to accelerating environmental degradation and the growing threat of climate change, an increasing number of countries in Asia are transforming their economies towards a more sustainable and low-carbon development model. Speaking at the workshop, Deputy Minister Nguyen The Phuong stated that Vietnam had developed a National Green Growth Strategy to help improve people's living standards through employment in green industries, agriculture and services, investment in natural capital, and development of green infrastructure. He added that all of these investments will require funding from the Government, non-State sector, and the international community. Pham Hoang Mai, the head of the ministry's Department of Science, Education, Natural Resources and Environment, remarked that the cost of damage to the economy of Vietnam due to the climate change should be about 2-6 percent of the Gross Domestic Product per year. So, Vietnam was not just swift in taking steps to mitigate the effects of climate change, but was also keen to join the international community to deal with climate change and reduce greenhouse gas emissions, though, at the moment, the emissions of the country are still low, he claimed. The workshop, which wraps up on March 13, covered a variety of financing mechanisms, including public climate investment funds to programmes for small and medium-sized enterprises.- Over 80 firms to get national quality awards As many as 82 local firms will be honoured with the 2013 annual National Quality Awards in Hanoi on March 16 in recognition of their performance excellence. There will be 20 golden prizes and 62 silvers, said Deputy Director General of the Vietnam Directorate of Standards, Metrology and Quality Tran Van Vinh at a press conference in Hanoi on March 11. The top 20 winners include 10 involving in the manufacturing industry and six in services. In 2013, the Vietnam Commercial Bank for Industry & Trade and Traphaco company were awarded the Asia – Pacific Global Performance Excellence Awards (GPEA) in services and manufacturing categories, respectively. Between 1996 and 2013, over 1,500 enterprises received the national quality awards and 31 won the GPEA. The event will be broadcast live on VTV1 channel.- Israel considers Vietnam a potential market Dozens of representatives from the Israeli business community thronged a seminar in Tel Aviv on March 12 to learn more about investment opportunities in Vietnam. Arie Zief, Vice President Federation of the Israeli Chamber of Commerce, said besides their traditional markets in Europe and Americas, Israeli companies want to explore new markets, and Vietnam is one of their target destinations. Over the past four years, Israeli businesses have been actively pursuing opportunities to cooperate with Vietnamese partners, he said. Zief noted the two sides have an untapped reservoir for economic and trade cooperation, and they anticipate a flood of investment into the Vietnamese market in the next five years. Vietnamese businesses can capitalise on Israel’s strengths in agriculture, water treatment, energy, high tech and biology. Two-way trade turnover is expected to double in the next five years, he concluded. Rafi Kaufman, Director of the Israel-Vietnam Corporation, echoed Zief’s view, saying Vietnam boasts great investment potential for Israeli businesses. Vietnam will add 17 million young consumers in the next 10 years to its already lucrative retail market, setting the stage for increased demand for products and services. The country’s GDP growth ranks third in Asia. Along with Brazil, Russia, India, China and South Africa, Vietnam is one of the six leading emerging countries in the world. Vietnamese Ambassador to Israel Ta Duy Chinh said the seminar provided only a glimpse of Vietnam’s true potential and encouraged Israeli businesses to invest in the country. Bilateral trade reached U$S604.29 million last year, a year-on-year increase of 37.9%, of which Vietnam’s exports rose 43.7% to US$401.29 million. Vietnam mainly exports agricultural products, seafood, garments, and electrical equipment, and imports fertilizers, machinery and equipment, and electronics. The two sides have also actively cooperated in agriculture, telecommunications, science and technology, maritime transport, finance and industry, and shared experience in management, and environment treatment technology at industrial zones and urban areas. Israel currently ranks 62 out of 101 countries and territories investing in Vietnam. Its businesses are implementing 16 projects worth US$20.65 million in Vietnam. Korean investor eyes US$1 bln depot in Vinh Phuc The Republic of Korea’s Daehan Group wants to build an inland container depot (ICD) on 100ha in Vinh Phuc province’s Vinh Xuyen district, at a total cost of US$1 billion. An executive of the RoK group expressed his desire at a working session with leaders of Vinh Phuc on March 11. The RoK executive said when the logistics ICD is put into operation, it will help spur local economy as the depot plays an important role in the multimodal transportation model. Chairman of the provincial People’s Committee Phung Quang Hung assured his guest Vinh Phuc will create the best possible conditions for foreign businesses, including those from the RoK, to invest in the locality. He said the province has completed the ICD planning in Binh Xuyen lying on te Noi Bai-Lao Cai expressway. If the group invests in this depot, the province will immediately hand over land to them to carry out the project very soon, Hung said. Opportunity for banana growers to join global chain Although Vietnam is a tropical country highly suitable for banana cultivation, it has yet to capitalise and make great headway into the regional and global marketplace. The country currently produces roughly 1.4 million tonnes of bananas per annum and its cultivation area makes up approximately 19% of the total areas devoted to fruit farming. However, banana plantation is not concentrated in any specific area and there is a definite lack of adequate transportation and preservation methods to assure that the fruit can timely find its way to the marketplace before spoiling. Le Si Cong, Director of La Ba Da Lat Company in Central Highland Lam Dong province, says Japan needs to import around 10-20 tonnes of laba banana a day, but Vietnam does not produce enough laba banana to meet the demand. In addition to Japan, the UK, Russia and Ukraine are also keen on laba banana – a specialty fruit of Lam Dong province. In the meantime, the cultivation area has been shrinking sharply and now only accounts for a mere 200ha in Lam Dong as farmers are shifting production to other fruits. Vietnamese export value of bananas to China, Singapore, the Republic of Korea and many Eastern European countries, was reported to have increased significantly for the past few months.. Export prices also rose by 20% correspondingly, but farmers simply do not have sufficient bananas to supply. Currently, China needs to purchase around 20-30 tonnes per day, and Japan asks for 15-20 tonnes, yet Vietnamese bananas are in short supply. In the near future, Vietnam is advised to coordinate and step up production and quality control standards to meet the regional markets’ demands. HCM City targets $2.5b in FDI The southern hub of HCM City aims to attract US$2.5 billion in foreign direct investment (FDI) this year, which is 20 per cent higher than last year's figure. According to the municipal Department of Planning and Investment, the top priority would be given to foreign-invested projects in high-value added industries such as engineering, electronics, IT and biological technologies; processing and manufacturing; banking and finance; telecommunication; real estate as well as tourism. It added that the prioritised sources of foreign investment would be the US, Japan, Singapore, South Korea and Germany. The goal was set based on the city's encouraging FDI investments in 2013 and in the first two months of this year as well, head of the department's investment registration division Le Thi Huynh Mai said. In spite of the global and domestic economic difficulties, Mai said that last year, FDI in the city surged significantly by 52 per cent to touch $2.08 billion. Of the total, $1.05 billion came from 477 newly-licensed projects, up 77 per cent in terms of capital and 9.5 per cent in the number of projects. The remainder came from 139 existing projects which added $1.03 billion to their capital. Up to 46 new projects were granted investment licences during the period, up by 12.2 per cent year on year, with a total registered capital of $164.3 million, up by 267.2 per cent over last year. The city started this year also with a significant amount of $217 million in FDI being registered in the past two months, which is 226 per cent higher year on year. Meanwhile, 14 ongoing projects were also allowed to increase their capital by $52.6 million. Singapore investors see VN potential Potential investors should consider Viet Nam as an investment destination, particularly in manufacturing operations, said Ahmad Md Magad, Group Managing Director of II-VI Singapore Pte Ltd. In an interview with the Vietnam News Agency's Singapore-based reporter on the sidelines of the "Doing Business in Viet Nam" seminar, held by the Singapore Manufacturing Federation and sponsored by Sembcorp, Ahmad said the legal framework of doing business in Viet Nam has improved over the years. The law has become more and more flexible and seems to be quite friendly. Combined with a vast market and the ASEAN economic framework, which will come into effect in 2015, it will provide very good opportunities to potential investors, he said. Addressing the seminar, Daniel Pok, Investment Promotion Manager of Sembcorp Parks Management Pte Ltd, affirmed that Viet Nam is the next investment destination. Sembcorp is one of Singapore biggest investors in Viet Nam with five Viet Nam-Singapore Industrial Parks (VSIP) located in the Bac Ninh, Hai Phong, Quang Ngai and Binh Duong provinces. It has about 500 tenants, including 56 Singaporeans, and employs more than 100,000 Vietnamese workers. Low Beng Tin, Vice President and Chairman of ASEAN Regional Business Group of Singapore Manufacturing Federation (SMF), said that "the long-term outlook is good" for doing business in Viet Nam and "we have joint ventures with Vietnamese companies and they are good now." He affirmed that the SMF will provide businesses with information to enter Viet Nam easily, and will organise a seminar for the said purpose. According to Low Beng Tin, the seminar will help SMF members understand about doing business in Viet Nam, the Singapore Government's scheme to help local businessmen invest in other countries, taxation and the business law of Viet Nam. Vietnamese Ambassador to Singapore Tran Hai Hau said that about 80 businessmen are taking part in the event and that in the medium – to long-term, Viet Nam has great potential for economic growth. "We will do our utmost to ensure a competitive and transparent business environment, to create more favourable conditions for Singaporean enterprises," he stated. In 2013, Singapore continued to be the third largest trading partner of Viet Nam in ASEAN, and invested US$4.2 billion. With the total registered FDI from Singapore to Viet Nam reaching $29.3 billion, Singapore is Viet Nam 's second largest investor. The bilateral trade between Viet Nam and Singapore for the first time exceeded the threshold of $14 billion in 2013, up 11 per cent over the previous year, said Nguyen Viet Chi, Viet Nam's Commercial Counsellor in Singapore. She expressed the hope that the figure will increase between 10 and 15 per cent this year. Hai Phong Port to launch May IPO Hai Phong Port, the biggest port in the country's northern part, is expected to have an initial public offering (IPO) in May. Deputy Director of the Viet Nam National Shipping Lines (Vinalines) Vu Khac Tu was quoted by Transport newspaper as saying that Vinalines' members' council decided to approve the value of the Hai Phong Port as a preparatory step towards equitisation. Accordingly, Hai Phong Port is valued at VND4.32 trillion (US$205.7 million), as much as 201 per cent of its book value. The state's holdings in the port are estimated at VND3.269 trillion ($155.6 million). According to Tu, Hai Phong Port's equitisation plan was scheduled to be approved by mid-April. It then plans to go for an IPO and will seek strategic partners within a month and a half after that. Effective July, Hai Phong Port will operate under the joint stock corporation model, he added. Vu Anh Minh from the Ministry of Transport said that 25 per cent of the State's holdings in Hai Phong Port will be put on sale. Last April, the Prime Minister pushed for privatisation of the country's major ports, including Hai Phong, Sai Gon, Quang Ninh, and Da Nang ports, with a directive that 25 per cent of the State's holdings in these ports should be made available to the public through IPO's and it must be implemented within the year 2014. This is aimed to diversify investment resources for the development of ports. Chinese firm plans Nam Dinh plant The Jiangsu Julun Textiles Group Co, Ltd of China will build a factory worth US$68 million in the Bao Minh industrial park in Vu Ban District. The People's Committee of the Song Hong (Red River) Delta province of Nam Dinh has granted an investment licence to the Chinese company. Covering an area of 80,000sq.m, the factory will produce 9,816 tonnes of yarn, woven cloth of 21.6 million metres and dyed cloth of 24 million metres. The construction of the factory, whose land lease contract is for 46 years, is scheduled to be completed in June 2016. VN plans boost to oil production Viet Nam aims to have four fully operational oil refineries by 2030, capable of processing between 16 and 20 million tonnes of crude oil per annum by 2020. The Ministry of Planning and Investment made the announcement at a recent meeting in Ha Noi, discussing the orientations of the oil refinery industry and projects for coastal socio-economic development along with adaptation to climate change. The project is expected to incrementally increase the production capacity of the Nghi Son Oil Refinery and Petrochemical Complex to 10 million tonnes per year between 2013 and 2020. The Dung Quat Oil refinery's production capacity will be increased from its current annual 6.56 million tonnes to 10 million tonnes, while three Ethanol plants will gradually step up production to 300 million litres per year. The plans for the 2021-30 period include increasing the production capacity of the Long Son and Vung Ro oil refineries to 10 million tonnes and 8 million tonnes per year respectively, bringing total capacity to 38 million tonnes per year. Can Tho rice shipments rise The Cuu Long (Mekong) Delta city of Can Tho recently sold 14,000 tonnes of rice abroad, bringing its total rice exports so far this year to 193,000 tonnes. This is an increase of 5.7 per cent year over year, and the city earned US$99.5 million from the exports. The increase in exports is attributed to efforts by the city's rice exporting businesses in seeking new markets in Asia and Africa. They have also signed contracts to export 70,000 tonnes of rice to mainland China and Hong Kong. The city's businesses are aiming to ship 1 million tonnes of rice abroad in 2014, up 140,000 tonnes from last year, for over $516 million. . An Giang pens agriculture agreement Saigon Co.op has signed an agreement with An Giang Province for co-operation in cultivation and consumption of fruits and vegetables. Under the agreement, the two sides will join forces to develop more sophisticated horticultural techniques, such as the use of netting and mulch for growing fruit and vegetables, with the aim of improving quality and productivity. They will also introduce VietGap and GlobalGap standards to fruit and veg cultivation in An Giang, to ensure food safety and hygiene as well as reducing production costs. According to An Giang Province, revenue from selling products to Saigon Co.op accounts for more than 85 per cent of the province's HCM City sales last year. Land clearance delays highway projects The land clearance needed to be completed prior to upgrading National Highway No1 [from central Thanh Hoa Province to southern Can Tho City) and HCM Highway in Central Highland region was not finished as expected, said Transport Minister Dinh La Thang. At a meeting yesterday to discuss the land clearance process in the projects, Thang reported that the upgrading of National Highway No1 project required the clearing of nearly 1,800 ha, but only some1,000 ha have been cleared as part of this project. It was also reported that the project on HCM City Highway in Central Highland Region has received over 81.5 ha of the 91 ha needed. Until early this month, only four provinces – Kon Tum, Gia Lai, Ha Tinh and Ninh Thuan – finished land clearance activities, while other provinces have completed only one-fifth of the expected work, noted officials. Further, of VND5.8 trillion (US$275.5 million) in funding for land clearance, over VND2.3 trillion ($109.25 million) has been disbursed. Minister Thang said that provinces faced difficulties in arranging locations and funding for resettlement areas, as well as removing existing infrastructure. Additionally, some residents who must be relocated to make way for the transport work in some provinces have not agreed with compensation rates imposed by local authorities, Thang said. For example, in northern Ninh Binh Province, a sub-project on a railway bridge was stalled because of the slow pace of land clearance involving over 1.25 ha to relocate four households. Meanwhile, Deputy Prime Minister Nguyen Xuan Phuc urged local authorities to take drastic measures to speed land clearance and relocation, as well as help people to understand the Government's policy on developing key transport projects. Additionally, provinces that were unable to afford resettlement funding should report to the Government so that appropriate agencies could provide assistance. He also asked builders to report their land clearance activities to the Transport Ministry so that funding could be disbursed in a timely fashion. Infrastructure problems listed A fundamental challenge for Viet Nam is to improve the affordability and efficiency of infrastructure investment, according to a report released by the World Bank. The Assessment of Financing Framework for Municipal Infrastructure Report, which is a joint study carried out by the World Bank and the Finance Ministry with the financial support of AusAID, was released yesterday. It highlighted key constraints, opportunities and options for enhancing government's access to financing for infrastructure development. Accordingly, Viet Nam's transition to a market economy has been accompanied by rapid urbanisation and the annual economic growth that has averaged 7.3 per cent in the last two decades, resulting in a fivefold increase in the per capita income. The urbanisation had resulted in increased needs and investment in the field of infrastructure. The country also pursued a path of fiscal decentralisation through greater autonomy for sub-national governments – provinces and cities – over public finances and infrastructure development. The fragmentation of public infrastructure investment results in duplication and waste, and this is a major underlying cause of investment inefficiency, the report pointed out. Within Viet Nam's highly decentralised administrative structure, individual provinces select and undertake their own infrastructure projects and compete with each other, while they lack predictability in the availability of funds for investment from year to year. These result in allocative inefficiency in the selection of projects and areas for investment. For instance, they rushed to develop major projects of airports and deep-sea ports. Dang Duc Cuong of the World Bank Office in Ha Noi, who led the study team, noted that currently to develop infrastructure projects in provinces and cities nationwide, authorities mostly relied on the allocation of funds from the central Government, government bond issuance or the use of land for the creation of investment capital for the construction of infrastructure projects. However, the central government was restructuring its public investment and tightening its budget. Additionally, the bond market in the country was largely underdeveloped with government bonds dominating the market and few local governments, including HCM City, Ha Noi, Da Nang, and Dong Nai, have accessed financing in the capital market through bond issues, he claimed. "In the commercial banking sector, lending to sub-national governments has been very limited. Banks are reluctant to finance local governments and view lending for infrastructure as too risky," Cuong stated, adding that the repayment capacity of projects and borrowers was rarely considered because of the assumption of implicit guarantees by the local or central government. The constraints were due to the absence of recourse mechanisms and limited capital base of banks and maturity mismatches between short-term deposits and the long-term financing needed for infrastructure development, he remarked. As per the report's recommendations, Viet Nam needed to strengthen its enabling environment for municipal bond issuance through improving the overall regulatory framework and pilot ratings and financial management assessments for sub-national governments. Moreover, the World Bank suggested a gradual development of a municipal development fund (MDF). MDF is based on the successful examples of Finaciera de Desarrollo Territorial (FINDETER) in Colombia and Municipal Infrastructure Financing Company in the Czech Republic where these MDFs act as second-tier lenders, encouraging first-tier lenders (commercial banks) to lend to sub-national governments on a market-driven basis. When a local government applies for a loan to a commercial bank, the bank conducts the appraisal based on the MDF guidelines. If approved, the commercial bank lends to the local government. The commercial bank is responsible for servicing the loan from the MDF and absorbs the full credit risks of loans given to the local governments. Vice Minister of Finance Do Hoang Anh Tuan appreciated the MDF, stating that it would help the local government to have an additional capital mobilising channel to timely invest in urgent infrastructure, instead of awaiting for allocation from the State's budget. However, he stressed that it was necessary to set up clearer mechanisms for capital mobilisation, lending, and recourse to ensure that the loans will be spent effectively and the local government could repay the loans. He noted that the changed mechanisms must be accompanied by changing regulatory tools and now was the right time as Viet Nam was amending the Law on State's Budget and Public Investment Law. Singaporean firms keen on Vietnam market Dr Admad Md Magrad, Vice President of the ASEAN Business Group under the Singapore Manufacturing Federation (SMF) has said that companies in Singapore find Vietnam a highly lucrative location to expand production activities. Speaking on the sidelines of a recent seminar “Doing Business in Vietnam”, Dr Admad stated that Vietnam’s laws on business activities have been much improved in recent years. “This in conjunction with a strong labour force, a huge retail market potential and the impetus for establishment of the ASEAN economic region by 2015 provide ample incentives for investment attraction” he said. Meanwhile, Daniel Pok, Investment Promotion Manager of Sembcorp Parks affirmed the consensus of Singaporean businesses assess Vietnam as an attractive investment market. “Sembcorp is one of Singapore’s largest investors in Vietnam with five Vietnam-Singapore Industrial Parks located in Bac Ninh, Hai Phong, Quang Ngai and Binh Duong.” he said. Dr Admad, who is also Group Managing Director of II-VI Singapore Pte.Ltd.said that from 2004 till now, his company has constructed six factories that provided high paying jobs for more than 800 workers in southern Binh Duong province’s Vietnam-Singapore industrial park (VSIP) He added that Vietnamese workers are very intelligent, diligent and obedient to the laws and self-motivated to improve their working skills. Low Beng Tin, Co-Chair of the ASEAN Business Group under SMF said that in the long term, it is good to do business in Vietnam. “At present, we have teamed up with Vietnamese companies and all these joint ventures are operating very effectively”, he said. He affirmed that SMF will update Singaporean businesses with the latest information on investment in Vietnam and organize seminars which serve as an information channel for investment in Vietnam. Businesses, through the event, can learn more about Singaporean Government’s incentive policies towards businesses keen to invest abroad and gain information on Vietnamese laws, tax and business potential. For his part, Vietnam ambassador to Singapore, Tran Hai Hau affirmed that Vietnam boasts great potential for developing the economy in the long-term. The ambassador pledged that Vietnam will do its best to ensure a competitive and transparent business environment as well as offering favorable conditions for businesses, especially the Singaporean business community. In 2013, Singapore was Vietnam’s third largest trade partner within ASEAN. It also ranked second among 100 nations and territories investing in Vietnam with total FDI capital reaching US$29.3 billion. Nguyen Viet Chi, Vietnam’s commercial counselor in Singapore said that last year’s two-way trade turnover hit US$14 billion including more thanUS$3 billion from Vietnam. Vietnam’s Singaporean key exports included farm produce, food, seafood, garments and textiles, computers and mobile phones. Meanwhile, Singapore’s key exports to Vietnam are oil and petrol, hi-tech products, chemicals and fertilizers. Chi expressed her hope that this year’s bilateral trade turnover will increase by 10%-15% over the previous year. Consumer optimism revs up car sales The number of imported cars in the first two months of this year increased sharply in terms of value and volume, according to the General Office of Statistics (GSO). The country imported 6,000 completely built units (CBU) worth US$113 million in the January-February period, an increase of 39.8 per cent in volume and 26.1 per cent in value year-on-year, the GSO estimated. The figures reflect the recent influx of retail units of international auto makers such as Lexus, Infiniti and MG Car. "More and more people choose imported cars instead of locally assembled cars as the quality of the imported ones is much better," said Luong Van Dung, director of Northern Automobile Company, a prominent auto dealer in Ha Noi. Dung told Viet Nam News that the rising number of imported vehicles is evidence of restored consumer confidence following the improvement in the economy. In 2013 also, there was a marked rise in the imports of CBUs. As many as 34,500 CBUs, valued at US$709 million, were imported, marking an increase of 25.9 per cent in volume and 15.2 per cent in value, year-on-year. However, the number of vehicles imported this year is lower than in 2011, when 54,600 units, valued at over $1 billion, were imported. Imports of vehicles are expected to increase in 2014 after the reduction of the import tax on cars from ASEAN countries to 50 per cent, effective from January 1 this year. The tax cut is in compliance with Viet Nam's signing of the ASEAN Trade in Goods Agreement (ATIGA). While ASEAN countries are not centres of automobile production, there are some large manufacturing giants such as Japan's Toyota and Honda in the region. Statistics by the Customs Office revealed that 8,826 cars, valued at nearly $150 million, were imported from Thailand and Indonesia in the first 11 months of 2013, more than double the imports in the same period in 2012. Source: VEF/VNA/VNS/VOV/SGT/SGGP/Dantri/VIR