BUSINESS IN BRIEF 11/8 Ways sought to boost Mekong Delta farm produce consumption A conference was held in Can Tho city on August 5 to seek measures to boost farm produce production and consumption in the Mekong Delta. Addressing the event, Minister of Agriculture and Rural Development Cao Duc Phat said as the Mekong Delta region plays the central role in the national agricultural sector, the region has a heavy task in helping the sector fulfil the yearly growth target. He noted that with a 2.96 percent growth in the first half of this year, the agricultural sector should strive for a 3.65 percent increase in the second half in order to meet the yearly target of 3.29 percent. The export of rice and tra fish was high on the agenda of the conference, as local prices of these two products are rising. Participants focused on the difficulties arising in both export and domestic consumption of farm and aquatic products and ways to remove these problems. According to the Ministry of Agriculture and Rural Development, the region’s total rice area in 2014 is estimated at over 4.2 million ha with an estimated output of 25 million tonnes, up 510,000 tonnes against last year. The volume of husked rice for export is forecast to reach 8 million tonnes this year. By July 31, exporters had signed contracts to ship 5.72 million tonnes of husked rice, up 10.3 percent year-on-year. However, they are facing difficulties in purchasing rice, pushing local prices up. Meanwhile, the region’s six-month aquatic export turnover hit 3.61 billion USD, a rise of 24.7 percent compared to the same period last year. The production of tra fish is expected to resume growing thanks to the Government’s Decree 36 on the farming, processing and export of the fish, one of the key aquatic products for export. Domestic shipping lines sinking in difficulties Most domestic shipping lines are underperforming and sinking in difficulties partly due to unreasonable structure of domestic vessel fleet, according to reports at a meeting between the Ministry of Transport and domestic shipping lines on August 5. According to the Vietnam Maritime Administration, the vessel fleet structure in Vietnam is in excess of bulk carriers and shortage of container ships, which counts only 28 out of the total 1,700 vessels. Development index of Vietnamese container ships averaged only 1.1 percent for the last four years compared to 6.8 percent in the world. Their operation area is narrow within in the Southeast Asia, China and Taiwan (China). They are unable to conduct straight trips to farer markets in the world. Domestic vessel fleet undertakes barely 10-12 percent of the country’s export and import output. The remaining is transported by foreign vessels. Several companies in the industry have suffered long lasting losses and been in the verge of bankruptcy. Mr. Do Xuan Quynh, secretary general of the Vietnam Ship-owners Association, said that most of their members have to sell their services at prices lower than cost prices. They are in a severe shortage of capital to maintain production and develop their vessel fleets. Mr. Ngo Minh Tuan, deputy director of Saigon Newport Corporation, proposed the ministry to issue floor price regulation on loading and unloading services at ports in Hai Phong and Ho Chi Minh City. This aims to stabilize the market and prevent domestic shipping lines from plunging their prices to keep customers. Deputy Minister of Transport Nguyen Van Cong said that the ministry has worked with the Ministry of Industry and Trade and other agencies to bring more opportunities to Vietnamese shipping lines. Large export companies have agreed to use domestic vessels for delivery of goods to near markets. After a certain period, Vietnamese carriers can transport cargo to farer areas if they can meet requirements. He proposed the shipping companies to pay attention to two vacant fields including cement, and gas and liquefied products. Minister of Transport Dinh La Thang promised to continue administrative reform and submit a floor price regulation to the National Assembly Steering Committee for approval. Multiple charges erode seafood competitiveness Seafood exporters are now subject to a myriad of charges, which make Vietnamese seafood less competitive on global markets, according to the Vietnam Association of Seafood Exporters and Producers (VASEP). In its latest document sent to the Ministry of Industry and Trade and relevant agencies, VASEP said for every kilogram of fish and shrimp shipped overseas, exporters must pay nearly 10 types of charge and surcharge, such as those on terminal handling, container imbalance, container hygiene and repair, post service and port congestion. In addition, exporters must pay several other surcharges and fees for procedures, bills, storage, toll and bulk container. Some of these charges should be collected by port authorities as regulated but in reality shipping lines collect the charges from exporters before transferring them to the ports. In some cases, shipping lines have collected higher fees than those adopted at certain ports. For example, shipping lines apply their terminal handling charges of US$60-70 per 20-feet container and US$100-120 per 40-feet container, which are much higher than US$20 and US$35 respectively announced by terminal authorities. VASEP general secretary Truong Dinh Hoe said exporters find it difficult to pay the charge imposed by many shipping lines as they do not usually get informed of this or receive late announcements and must pay different levels of charge. Many and high surcharges cause production cost to surge and erode the competitiveness of Vietnam’s seafood export sector. Moreover, the sea freight charges of Vietnam are still 10-15% higher for a 20-feet container than in other countries, including Thailand and the Philippines. VASEP claimed year-on-year increases of 20-30% in surcharges on seafood exports have eaten into profits of local seafood firms in the year to date. Vietnam Development Partnership Forum to take place in December The Vietnam Development Partnership Forum (VDPF) 2014, which is scheduled to open in December, will focus on institutional reforms within the Vietnamese economy, strengthening self-reliance and competitiveness of the Vietnamese economy, the Government news portal reported. Delegates to the forum will discuss about socio-economic performance in 2014 and plans for 2015 as well as economic development orientations for the coming years. There will be two separate sessions on the institutional reforms and on the development of private economic sector in order to build a sustainable and independent economy. VDPF 2014 will offer a good opportunity for Government agencies and their foreign development partners to exchange views, experiences, and mobilise foreign partners’ support in policy making and solutions to carry out institutional reforms in economic performance in the coming time. “This is the important moment for Vietnam to implement institutional reforms to be able to achieve robust and sustainable economic growth,” Minister of Planning and Investment Bui Quang Vinh was quoted as saying. Relating to private sector issue, VDPF 2014 will discuss measures to develop domestic small and medium-sized enterprises (SMEs); enhance their competitiveness and participation into global value chains, boost supporting industries so as to reduce heavy reliance on foreign raw material suppliers and increase domestic producers’ independence. According to the Minister Vinh, private sector is a major driving force in every economy. In Vietnam , the sector accounts for a majority of number but fails to play a significant role in the economy. “It is necessary to take measures to develop the private sector especially SMEs,” said Minister Vinh. The VDPF was held for the first time in 2013, replacing the Consultative Group Meeting of Donors. VDPF has reflected the new position of Vietnam, from being a recipient of official development assistance (ODA) to become a development partner of other countries and international organisations. At VDPF 2013, the Government and foreign partners approved four groups of actions namely poverty reduction and ethnic minority poverty reduction; strengthening private sector’s access to services and participation in supplying public services; environmental protection; and enhancing competitiveness of labour force through vocational training and skill development. As scheduled, the Ministry of Planning and Investment will announce a report on the implementation of the groups of actions at VDPF 2014. High input costs put pressure on moon cake price Moon cake businesses said that they were striving to keep the price from rocketing up as material costs have never been as high as this year while the number of orders and their value are not high. Material prices have increased at least 10 percent, according to Ms. Nguyen Thi Ngoc Thuy, director of Thanh Long Company. Some materials see the price up three times over the same period last year, she said. Melon seed price goes up to VND185,000 a kilogram from VND65,000-70,000 a year ago. Sesame jumps from VND60,000 to touch VND80,000 a kilogram. Cashew nut price is double and labor cost is half as much again as it was last year. Besides, petrol prices have increased four times since last year and tightened control over overloaded trucks has pushed up transport costs. We were calculating how to reduce costs and accept less profit to make up the costly materials for better sales, she said. Ms. Thuy predicted that most companies would not be able to increase their output by 10-20 percent because of weak purchasing power. So far, only Kinh Do and Bibica companies have announced to hike their output by 12-25 percent over the same period last year. Most others have not intended to do so. Deputy director general of Bibica Company Phan Van Thien said that the company would raise the price by 5-10 percent to swing VND36,000-130,000 per cake. High-class variety will be priced VND350,000-790,000 a box. Kinh Do cake price will surge 7 percent over last year while other brands like Thanh Long and Nhu Lan announce a 5 percent increase. Moon cakes are being made to serve Full Moon Festival which falls in the fiftieth day of the eighth lunar month every year. Vietnam craft village fair to feature 300 unique stands Around 300 stands will be displayed at the 10th Vietnamese Craft Village Fair 2014, scheduled to be held at the Centre of Exhibition, Economics and Commercial Transactions, No 489 Hoang Quoc Viet Road, Hanoi from September 11-15. The fair will showcase and sell products from various crafts, demonstrate craft making skills and introduce exhibits from craft villages from many different regions nationwide. Traditional craft items on show will include pottery, lacquer ware, bamboo and rattan, wood sculptures, silk weavings, paper flowers, silk flowers, silver and gold. Additionally, a series of workshops on technical breakthroughs in the production of craft products, waste treatment and the development of craft villages will be held during the fair. As part of the fair a Vietnamese cuisine space will offer visitors unique traditional Vietnamese foods. The fair aims to promote and honour the cultural value of Vietnamese handicraft products. The event, held by the Ministry of Agricultural and Rural Development (MARD) presents a golden opportunity for enterprises and craft villages nationwide to exchange with each other, learn from others’ experiences, expand their consumer markets and look for new business partners. It also allows Vietnamese craft villages to introduce their trademarks and traditional handicrafts to new foreign and domestic customers. Fragrant rice comes to throne in Mekong Delta Fragrant rice export in the Mekong Delta has made a breakthrough to reach about 700,000 tons this year, an increase of 31.2 percent over the same period last year. In the first eight months, export of six out of eight rice products declined in volume except fragrant rice, which export price topped US $600 per ton. Businesses are paying over VND6,000 a kilogram of fragrant rice, VND2,000 higher than that of normal varieties, said farmer Tu Sang from Thoi Tan Commune, Thoi Lai District of Can Tho City. The fragrant rice has mainly been produced in large-scale paddy fields, in which farmers and businesses link together to produce and consume the product. Fragrant rice variety is mainly cultivated in large scale fields in the Mekong Delta (Photo: SGGP) The Mekong Delta had 76,500 hectares of rice under this modal last year. It is expected to approximate 200,000 hectares this year. The large-scale modal yields higher profit than normal production method from VND2.2-7.5 million per hectare and it is result thanks to technical measures to increase productivity and reduce costs. Soc Trang is the largest growing province of fragrant rice in the Mekong Delta. Local residents have farmed 80,000 hectares this year, an increase of 26,000 hectares over last year. Marketing skills needed in Vietnamese craft villages Many traditional craft villages in Vietnam have yet to create effective marketing strategies, focusing only on production without analysing demand or promoting their brands, making it difficult to broaden their markets. As of June 30, Vietnam had 1,578 registered traditional craft villages. Even though sales of specialty products are essential to these villages, most have not found ways to promote the goods they intend to sell. Dao Van Ho, director of the Ministry of Agriculture and Rural Development's (MARD) Agricultural Trade Promotion Centre, said the markets open to traditional craft villages are diverse and it is important for villages and craftsmen to actively study those markets. “Many craft villages and enterprises operating in this sector are not aware of the important role of market strategy. When they take part in certain trade promotion meetings, their focus is usually on short-term sales and entrance fees, forgetting about the long-term benefits of PR and marketing," said Ho. He pointed out that many of these villages are struggling to sell their products because they do not pay attention to trends in the market and are not informed about changes in consumer habits and tastes. According to Ho, in order to support these villages, they will hold the 10th Craft Village Trade Fair (CraftViet 2014) from September 11-15. in Hanoi. “We’ll encourage the participation of craft villages by charging residents of villages only half the entrance fee. This is a good chance for them get familiar with marketing strategies," he said. He emphasised that, apart from organising domestic fairs for craft villages, local authorities are also actively taking part in regional and international fairs to promote Vietnamese crafts. Metro development costs dearly in Vietnam Investment costs of metro development projects in Vietnam are higher than in many countries in the world as the nation imports almost everything from cars to locomotives and technologies. Vietnam also has to hire foreign specialists for metro development, Nguyen Ngoc Dong, deputy minister of Transport, told a meeting between the HCMC government and the National Assembly’s Committee for Science, Technology and Environment on urban railway planning last week. Dong said it takes Vietnam many years to study and develop metro projects as the country lacks experience in building this kind of railroad. On top of that, imports of locomotives, carriages and machines as well as employment of foreign experts are among the main reasons for cost overruns. Metro Line No.1 in HCMC is a case in point. This track connecting Ben Thanh Market in downtown HCMC and Suoi Tien Theme Park in District 9 was originally projected to cost nearly US$1.1 billion but now the actual amount is US$2.07 billion. Hoang Nhu Cuong, deputy director of the HCMC Management Authority for Urban Railways, said metro projects are now facing a host of difficulties. The investment procedures and regulations of lenders and the Vietnamese Government are different in terms of cost estimates and salaries for specialists. The absence of detailed regulations and criteria on construction investment management, urban railway construction and operation has also hindered the construction progress of metro projects in the country. Dong said the Ministry of Transport is currently drafting amendments to the Law on Railway to address the existing shortcomings. HCMC vice chairman Tat Thanh Cang said an overall assessment is needed for the use of ODA loans to make adjustments to harmonize the demand of finance providers and the interests of the nation. According to Cang, metro projects require huge capital but fare revenue is forecast to be modest, making it hard to recoup investment capital in a short period of time. This is a difficult issue for the HCMC government to solve. According to a revised zoning plan, HCMC will have eight metro lines with a total length of 172.6 kilometers, or 78.2 kilometers longer than the plan approved in 2009. Currently, Metro Line No.1 is currently under construction while relevant agencies are preparing for auctions for Metro Line No.2. Funding for part of Metro Line No. 5 has been secured. The city is now seeking investments for the remaining lines. VCCI opens consulting center in delta The Vietnam Chamber of Commerce and Industry (VCCI) in Can Tho City on August 4 inaugurated a center providing financial and restructuring consulting for businesses in the Mekong Delta region. The center will aid firms in financial advisory, merger and acquisition deals, human resources management, trade disputes and business strategies. Nguyen Phuong Lam, deputy director of VCCI Can Tho and director of the center, said businesses could get information about the Government’s policies, needs of enterprises, investment and trade environments, credit policies and new market surveys. Vo Hung Dung, director of VCCI Can Tho, said the center would serve as a bridge between firms in need of selling assets to settle debt and buyers, and help them reach agreeable prices. Dung pointed out a reality that many loss-making enterprises want to sell their assets to pay bank loans or restructure in the context of Vietnam’s economic slowdown and the number of asset buyers is not small. Statistics from VCCI Can Tho showed 33,450 businesses went bust or suspended operations in the first half of this year, up 16.3% over the same period last year. Hundreds of businesses in the sectors of seafood, fertilizer, pesticide and animal feed in the Mekong Delta have been forced to restructure due to financial difficulties. Lam said partners of the center are local and foreign experts in the fields of State management, finance, credit, export-import and laws. Therefore, they will meet the demand of enterprises in need of consulting services. The center will provide small and medium enterprises with free services regarding information about markets, State policies, and consulting for business establishment and bank loans. Sri Lanka – Vietnam trade centre opens in Colombo A Sri Lanka - Vietnam trade centre was officially opened in Colombo capital, Sri Lanka, on August 6 to serve as a platform to intensify investment, trade and tourism cooperation between the two countries. Ajith Nivard Cabraal, Governor of the Centre Bank of Sri Lanka, said the establishment of the centre meets the demand of the two countries’ business circles. He expressed his hope that it will strongly contribute to bilateral partnership in trade, investment and tourism. Vietnamese Ambassador to Sri Lanka Ton Sinh Thanh emphasised that the opening of the centre took place amid the rapid growth in bilateral relations. Over the past three years, two-way trade turnover has surged by 30% - the fastest pace Vietnam has recorded with a South Asian country. The figure hit 109 million USD in the first half of 2014, equivalent to the whole 2011 number. In particular, Sri Lanka’s exports to Vietnam reached 43 million USD, higher than the value made in 2013, he noted. Thanh stressed that there is much room for trading activities between both countries once barriers like high taxes, fees and cumbersome procedures are cleared. The diplomat suggested both Governments soon mull over a bilateral preferential trade agreement and head towards the signing of a free trade agreement. Drastic restructuring needed among SOEs The Ho Chi Minh City authorities need to invoke drastic measures to restructure State-owned enterprises as the process faces cumbersome policies and poor corporate governance, experts have warned. Nguyen Van Dien from the Political Academy said that the restructuring process of state-owned enterprises (SOEs) in the city required some drastic renewal. Dien said, although it had been over ten years since the restructuring of SOEs by HCM City, the process remained sluggish due to difficulties in policies and corporate governance. According to the HCM City Board for Business Management Renewal, after equitisation, SOEs witnessed positive development and growth. Many SOEs maintained and developed their strong brands such as Saigontourist, Ben Thanh Group, Satra, SJC and CNS. Leading SOEs in the city acknowledged that they needed to rearrange their investment structure, disinvest capital from non-core businesses to further invest in their key business sectors. They added that one of the keys to successfully restructuring SOEs was to train qualified human resources who are able to reach new positions. According to the HCM City Institute for Development Studies, although the city had seen rapid growth in recent years the quality remained low. Therefore, restructuring of SOEs in the city was a pressing problem. It said that a comparison of labour productivity last year of the regional countries showed that labour productivity in Indonesia, Malaysia, and Thailand stands at 4,539 USD, 16,076 USD and 6,651 USD per employee, respectively, while in Vietnam it is only 2,071 USD per employee per year. In HCM City alone it is 5,133 USD per employee per year. To ensure economic growth, the city needed to increase the number of employees, creating an increasing pool of migrant workers. On the other hand, the use of capital resources, labour productivity and land fund face low investment efficiency, especially in the public investment sector. To raise the efficiency of SOEs, advanced corporate governance was the key, according to Nguyen Minh Chau from the Ho Chi Minh National Academy of Politics and Public Administration. He said the individual responsibility of State employees in the effective use of State capital in SOEs should be clarified. In an attempt to enhance the SOE's management capacity, suitable policies on wages and employment should be outlined clearly to encourage and attract talented people into corporate governance. Pham Thi Hong Yen of the Party Central Committee's Economic Commission said that State incentives offering strong and potential businesses without discrimination were an important driving force to help spur development and competition in key business sectors regionally and globally. Pham Chi Lan, an economist, emphasised that if the equitisation process was conducted comprehensively and drastically, it would create a transparent business environment thus providing fair competitive opportunities for all enterprises. Vietnam: an attractive destination for Japanese investors Vietnam has numerous advantages that could attract more foreign direct investments (FDI) from Japan in the future, according to experts. Sato Motonobu, Chairman of the Association of Japanese Investors in Vietnam, said Vietnam has great advantages in attracting FDI from Japan in compare with other countries, reported Government portal chinhphu.vn. The advantages include political stability, similar culture and religion, and a potential market along with a young labour force, he said. Atsusuke Kawada, Chief Representative of the Japan External Trade Promotion Organisation (JETRO), said 30 percent of Japanese enterprises having overseas investments have considered Vietnam as one of the leading choices. In Jetro's report released in February, Vietnam became the first priority investment destination for Japanese businesses, he said. Meanwhile, 70 percent of existing Japanese investors in Vietnam are planning to expand their business this year, he said. However, experts said Vietnam has still faced challenges in attracting more FDI from Japan. Japanese investors said the Vietnamese business environment still had a lack of synchronous policies, complicated administrative procedures and high tax and fees. Motonobu Sato said Vietnam didn't have enough managers in both quantity and quality. The country has also faced with poor infrastructure and unstable power generation sources. Yasuaki Tanizaki, Ambassador of Japan to Vietnam, said that to attract stable investment from Japan in the long term, Vietnam should have administration reforms, complete its infrastructure projects and improve human resources. Minister of Planning and Investment Bui Quang Vinh said if Vietnam does not improve its investment environment, Japanese FDI will go to regional countries around Vietnam, including Indonesia, Myanmar, Laos and Cambodia. Vinh said the Government and provinces/cities of Vietnam must find solutions to attract and support foreign investors in all fields, especially administration reforms and reduction of taxes. Vietnam expected Japanese investors to have a regular exchange of views on investment activities with the Government. This would ensure that the Government has timely solutions in solving difficulties of investors, Vinh said. Vietnam expects Japanese enterprises to promote the transfer of technology to firms here and also encourages Japanese investors to invest in the farming sector. Recently, Tokyo Bank of Japan has proposed preferential interest rates for Japanese investors when they invest in the farming sector in Vietnam. The Ministry of Planning and Investment's report said Japan was the largest foreign direct investor for 2012 and 2013. In the first half of this year, FDI from Japan to Vietnam was more than 800 million USD, lower than the same period of last year due to weaker yen. Japan has largest FDI volume in Vietnam with 2,300 projects and a total registered capital of 35 billion USD. Businesses increase to invest in agriculture Many businesses have been very successful in their agricultural investment, this has led to a big shift in investment direction, the Vietnam Economic News reported. Many high-tech flower and ornamental plant production models in Hanoi, Da Lat and Ho Chi Minh City have brought farmers incomes from 600 million VND to 1 billion VND per ha per year. Moving to agriculture and forestry sectors has helped many enterprises in difficult times. For example, the Tan Tao Group has set up a company specialising in fragrant rice research, production and marketing. At present, rice brands of the group like Nang Yen, Nang Dao and Nang Nga have been sold in large quantities at supermarkets. Tan Tao group targets to grow 50,000ha meeting GlobalGAP standards by the end of 2015 to supply for domestic market first then will export clean rice brands later. Dong Nai province is already well known for strong investment in industrial sector but investment growth in agriculture stood at just 2-3 percent a year. However, this growth rate has increased to about 16 percent a year. In the first half of this year, about 70 enterprises have been involved in agriculture production and business including many foreign enterprises like Japfa Company Limited and Emivest Vietnam Co, Ltd. Although the Dong Nai Biological Technology Centre has not been fully built, five enterprises have asked to invest in seed production here. Despite the lack of land for high-tech agriculture development at the centre, many enterprises still wants to register for investment. The remaining land fund will be used to attract processing enterprises to increase the value of agricultural products. Chairman of the Singapore Business Group in Ho Chi Minh City Norman Lim said for a long time Singaporean enterprises have invested in the production of agricultural products in Indonesia and Malaysia . Now, they are coming to Can Tho and Vinh Long provinces to conduct surveys for food production. Israel also invested 1 million USD in the Dairy Demonstration and Experiment Farm in Ho Chi Minh City . Vietnam and Israel are also discussing to set up a common research fund for the high-tech agriculture development in Vietnam, through which Israel will send experts to work on specific projects, conduct trial production and then expand these production models. Vietnam remains attractive to foreign investors: paper Despite a decrease in foreign direct investment (FDI) inflow in the past seven months, other related indices including disbursement, industrial production and exports from the FDI sector indicate stability in the investment environment for foreign investors, Nhan Dan (People) online newspaper reported. Statistics from the Department of Foreign Investment under the Ministry of Planning and Investment (MPI) revealed that FDI registered capital reached 9.53 billion USD by July 20, a year-on-year decrease of nearly 20 percent. However, the downward trend has showed signs of slowdown, and in the January-July period, foreign investors registered to invest in 889 new projects and expand capital in 300 ongoing projects. The drop in FDI registered capital since early this year has raised concern over the investment environment in Vietnam. However, the MPI said that the fall in FDI pledges was because a series of large-scale projects were licensed in 2013 and this year lacked such projects. In the past seven months, there was only one 1 billion USD project licensed – the Samsung Display project in Bac Ninh province. Other projects have registered capital ranging around 200 - 300 million USD each. MPI Minister Bui Quang Vinh has affirmed that FDI commitments this year are not less than last year, as many large projects were under preparation for being licensed. Another Samsung project, with a total registered capital of 1.4 billion USD, is expected to gain an investment certificate this year in Ho Chi Minh City. Intel Corporation, the world's largest computer chip maker, has announced the closure of its chip assembly plant in Costa Rica and will move its operations to Asia, including Vietnam. This move indicates that foreign investors, particularly major corporations, still see Vietnam as an attractive destination. "Everything goes well and I am optimistic about Vietnam prospects. Regardless of tensions due to China's illegal placement of its oil rig in Vietnamese exclusive economic zone and continental shelf, we see no signal of the withdrawal of foreign investors from Vietnam. This shows that the investment environment in Vietnam remains good," the Chairman of Dutch Business Association Vietnam Remco Gaanderse was quoted as saying. Moreover, localities affected by the riots in May such as Ho Chi Minh City, Binh Duong and Dong Nai still top the nation’s list of FDI attraction. Other evidence indicating the stability of Vietnam's investment environment is the operation of FDI enterprises. Statistics from the Department of Foreign Investment showed that the FDI disbursement in the first seven months of this year increased by 2.3 percent over the same period last year. The total export revenue of FDI sector reached 55.83 billion USD, a 15 percent year-on-year increase, accounting for 66.8 percent of the total national export revenue. According to Prof Nguyen Mai, Chairman of the Foreign Investment Business Association, the FDI disbursement rate in the seven-month period is rather good, and is sure to raise the total disbursement for the whole year to 12 billion USD, making up 25 percent of the total social investment capital. In addition, with a trade surplus of 9.78 billion USD in seven months, the FDI sector has made a significant contribution to the total national trade surplus in the period. In future, the FDI sector is expected to make more contributions to the nation, when a series of multinational corporations will officially start their operations in Vietnam. Vice Chairman of Hai Phong city's People Committee, Dan Duc Hiep said that LG Electrics will begin production within two months, only one year after this Republic of Korea's corporation was granted a licence for its 1.5 billion USD project. Bridgestone Corporation, the world's largest tyre and rubber company, is also on its final stages in preparation for tyre production in Hai Phong. However, investors still encounter many challenges such as poor infrastructure, a skilled workforce shortage, complex administrative procedures and a developing legal system. Remco Gaanderse said that Vietnam is attracting FDI projects through its political stability, good economic growth rate and high potential of the consumption market. If the country can remedy its shortcomings, the FDI inflow will probably increase to stronger levels. Vinh Phuc- a boon to foreign investment A good geographical position and strong support from local government has made Vinh Phuc a favoured home to many domestic and foreign investors. Recently, Japan’s Suzukaku Vietnam Limited became the second foreign investor to set up shop in the Ba Thien 2 industrial park (IP) in Vinh Phuc, a northern province bordering Hanoi. As planned, the company’s $5 million auto part manufacturing plant will finish construction and be commissioned this month, providing jobs to several hundred local labourers. According to the management of the company, after conducting market surveys in several countries in Southeast Asia, Suzukaku Vietnam decided to drop anchor in Vietnam with Vinh Phuc province as its top choice location. “We got an investment offer from the provincial authorities and given the strong and skilled workforce in the area and its proximity to an airport, which makes it convenient for material imports, as well as active support from the local government in tackling investment procedures, we made our decision to build our factory in Vinh Phuc,” Suzukaku Vietnam chairman Kakunori Suzuku said. The company is just one of several Japanese firms settling down in the province amid a still challenging business climate. Its opening of an auto part manufacturing facility in the province showcases Vinh Phuc’s appealing investment environment that has led it to take a leading position in terms of industrial production in northern Vietnam. Drastic measures to accelerate site clearance and get investors the space they need to invest and grow has been a major advantage in the province successfully luring investors. Vinh Phuc has urged authorities at every level to take measures to improve the investment climate. The province has also proven flexible in respect to applying the law (within regulations) to maximise investor comfort, which has made it a friendly venue for investors. A key task this year is to further improve the investment climate and capacity of provincial management at a number of levels to further facilitate business development. This task is of foremost importance to the Vinh Phuc People’s Committee and it will be carried out continuously over the long-term. Towards this end the provincial people’s committee formed a working group responsible for land acquisition and land fund development, it has also promulgated Vinh Phuc general urban planning, sector planning, socio-economic development planning and land use planning at diverse locations. Efforts have been made to push up construction of transport infrastructure, enact policies supporting vocational training, and promote the area as an investment destination to strong regional and international markets. The province has also accelerated reform of administrative procedures via breakthrough measures such as successful deployment of a single window, one-stop shop mechanism to help people and businesses save time and costs and ensure transparency in settling investment and business procedures. Notably, in January 2013 the province established a committee to promote investment under the direct management of the people’s committee. Its core functions are to support the provincial steering committee for investment promotion, chaired by the people’s committee chairman, to conduct activities that help the province attract domestic and foreign investors, and then to help them tackle administrative procedures and keep them supported throughout their project lifespan. Also, given a challenging business climate, provincial authorities frequently meet with investors to help them address hardships in a timely manner. Diverse incentive policies such as tax reductions/exemptions and credit provisioning have been effectively applied to ease investor burdens. Investment has been made on a selective basis targeting the completion of important infrastructure projects while diverse resources and support from government and relevant state agencies have been tapped for development of a modern socio-economic infrastructure. Over the past several years, the province’s leaders have taken due heed to promoting investment and the province has hosted trips to a number of locations in Japan such as Aichi, Shizuoka, Akita and Korea including Chungcheoungbuk to attract businesses to the area. A number of delegations from the US, France, Japan, South Korea, and Italy have visited the province hunting for investment opportunities. To further improve the local business climate, the province has made great efforts to upgrade the road network, water supply and sewer systems, the power grid, and social and technical infrastructure outside IPs. Great attention has been paid to improving human resource quality to satisfy ever-growing demands from investment projects, particularly major hi-tech projects. More dialogues have been opened between provincial authorities and businesses to help overcome obstacles. Improving the efficiency of forecasting and tailoring diverse support programmes to benefit small and medium businesses, as well as start-ups, have also been prioritised. According to Vinh Phuc People’s Committee chairman Phung Quang Hung, in the coming time the province will pay even more attention to capital intensive hi-tech projects that produce export goods, as well as foster co-operation in training to satisfy enterprise demands. In the year ending July, Vinh Phuc licenced 47 investment projects that included 22 domestic projects with total committed capital of VND3.825 trillion ($182 million), of which five projects increased existing investment in the province by a total VND1.49 trillion ($71 million), 255 per cent of the annual target. Also licensed were 25 foreign direct investment projects valued at $241 million (four projects increased their capital by a total $36.7 million), reaching 134 per cent of the full year target. Vinh Phuc is currently home to 21 Japanese projects worth $717 million in total committed capital, putting Japan in second place in this regard and in the top position in terms of total disbursed capital among countries and territories doing business in the province. At a recent workshop in Singapore to promote investment in Vinh Phuc, representatives from many businesses based in Singapore showed particular attention to Vinh Phuc’s investment environment. Accordingly, education developer KinderWorld plans to spend $100 million to build and operate three campuses in the province, including an Outward Bound Vietnam School, a Vietnam-Singapore International School, and a Singapore education complex. CEO of energy firm ReEx Capital Asia Yanis Boundjouher unveiled the company’s intention to build a solid waste treatment facility in the province. Representatives from Amata Corporation PCL and Gammon Capital also expressed interest. Lena Ng, board advisor at Amata said the company has posted returns on its 20-year investment in Vietnam and therefore, besides its existing project in southern Bien Hoa province, it is now contemplating new projects in other locations in Vietnam. Source: VEF/VNA/VNS/VOV/SGT/SGGP/Dantri/VIR